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Devolved Administrations

11. Mr Mark Williams (Ceredigion) (LD): What his policy is on the mechanism for the provision of funding from the Exchequer to the devolved Administrations; and if he will make a statement. [928]

The Chief Secretary to the Treasury (Danny Alexander): The Government recognise the concerns expressed by the Holtham commission about the system of devolution funding, but as we made clear in the coalition programme for government, the first priority has to be reducing the deficit.

Mr Williams: I thank my right hon. Friend for that answer, and for the acknowledgement in the coalition agreement of the work of the Holtham commission. Its message was that there was historical underfunding of Wales to the tune of £300 million a year; that was backed up by Lord Barnett himself and a Lords Committee. Does my right hon. Friend accept the report's conclusion that Wales has, historically, been underfunded? We acknowledge that cuts will be borne right across the UK, and across all its regions and nations, but will he use this opportunity to confirm the Government's commitment to fair funding across the country?

Danny Alexander: In the coalition agreement, we say that we recognise the concerns raised by the Holtham commission, but the priority must be to reduce the deficit. We also said that once the forthcoming referendum has taken place, there will be a Calman commission-like process. The Calman commission looked at greater financial accountability for the Scottish Parliament, and a similar process for Wales might help to address some of my hon. Friend's concerns.

Anas Sarwar (Glasgow Central) (Lab): Will the Chief Secretary please tell us why his party campaigned throughout the election against immediate spending cuts, but is now, in return for jobs in the Cabinet, willing to risk tens of thousands of jobs across the country?

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Danny Alexander: The hon. Gentleman just needs to look around the world to see that the argument for rapid fiscal consolidation is becoming stronger by the day. He should look at the G20 and the independent assessments. Clearly, making the sort of decisions that we are making now-the £6 billion exercise and the decisions that will no doubt be announced in the Budget-is absolutely essential to create a responsible basis for the public finances and return the country to the right economic track.

Tax Avoidance

16. Mr Adrian Sanders (Torbay) (LD): What steps his Department is taking to reduce the level of tax avoidance. [933]

The Exchequer Secretary to the Treasury (Mr David Gauke): Tackling tax avoidance is essential, and we will make every effort to do so. We are committed to preventing avoidance through deterrence, and by ensuring that we have a robust legislative framework. We detect avoidance early using the disclosure of tax avoidance schemes rules and other information. We tackle avoidance quickly where we find it by strengthening legislation or through the operational work of Her Majesty's Revenue and Customs.

Mr Sanders: Recent research has shown that up to £120 billion a year is lost to tax avoidance. Will the Minister ensure that he looks at the way in which HMRC works, and does better so that people will not have to pay higher taxes and receive poorer services as a consequence?

Mr Gauke: I am grateful to the hon. Gentleman for his question. We would disagree with the number, as the tax gap estimate produced by HMRC is £40 billion. None the less, that is a significant sum, and it is absolutely right that people pay the tax that is due, and HMRC will continue to pursue matters to reduce tax avoidance.

Kate Green (Stretford and Urmston) (Lab): Is not the general view correct, and the estimated tax gap of £40 billion a significant underestimate? Will the Minister explain how cuts to HMRC staffing and capacity are to be aligned with attempts to close the tax gap?

Mr Gauke: Staff in HMRC have been reduced for many years, from 97,000 to 69,000. Any Government will want to ensure that HMRC's resources are deployed as effectively and efficiently as possible, and we will certainly seek to do so.

Bingo Industry

17. Simon Kirby (Brighton, Kemptown) (Con): What his policy is on taxation of the bingo industry; and if he will make a statement. [934]

The Economic Secretary to the Treasury (Justine Greening): We keep all taxes under review. It would not be appropriate to discuss taxation in relation to bingo before the Budget in a couple of weeks, but we are keen to have a dialogue with the industry.

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Simon Kirby: Does the Minister agree that sometimes it is possible to increase revenue by reducing taxes?

Justine Greening: I think that my hon. Friend is probably referring to the well-known Laffer curve. I am sure that he is aware, too, that the tax on bingo participation clubs was reduced in the last Budget from 22% to 20%. As I said, I look forward to talking to the industry over the coming months.

Kelvin Hopkins (Luton North) (Lab): Is it not the case that bingo is taxed more severely than other more dangerous forms of gambling, and that the Government would do well if they at least brought them into line?

Justine Greening: I know that that argument has been made by the industry, and I am aware of its campaign on fair taxation. We want fair taxation. One of the Government's key priorities is tackling the budget deficit, and ultimately the best way for us to support not just bingo clubs but other companies in Britain employing staff is to get the economy back on its feet, creating jobs so that people have money in their pocket to spend, including in bingo clubs.

Budget Deficit

18. Mr Peter Bone (Wellingborough) (Con): What recent representations he has received on the level of the budget deficit. [935]

The Economic Secretary to the Treasury (Justine Greening): We have received a number of representations on the budget deficit, not least from many other European countries, which are now taking steps, as we are, to reduce their deficit-a point that still seems lost on the Opposition.

Mr Bone: I am grateful to my hon. Friend for answering my question and for her arrival at the Dispatch Box, which is very welcome on our side of the House. Will she take a representation from me on reducing the Budget deficit? Can the emphasis be put on cutting public expenditure, rather than increasing taxes? Does she have any idea of the proportion that will be raised by tax increases and by public expenditure cuts?

Justine Greening: We have said that we want to see the bulk of the deficit reduced by restraining public spending. I know that a number of other countries have taken proportions of roughly 80%:20% on restraining public spending and increasing taxes. We are particularly keen to cut out as much of the waste as possible. As we work our way through the previous Government's horrific spending plans-not that they had any projections into the future-we will do our best to make sure that we do not just bring down our public spending, but use this opportunity to ensure that it delivers better public services for the public whom it is there to serve.

Mr Clive Betts (Sheffield South East) (Lab): In The Sun the Deputy Prime Minister wrote about the enticing prospect of progressive cuts. Can the hon. Lady explain what a progressive cut would look like?

Justine Greening: The hon. Gentleman might be better off directing that comment to the Deputy Prime Minister. I did not see it in the paper. We are conscious of the
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need to make sure that we can protect front-line services that people depend on. We have already debated pensions this morning, for example, and we are doing our best to protect money that supports the most vulnerable in our society.

Topical Questions

T1. [943] Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op): If he will make a statement on his departmental responsibilities.

The Chancellor of the Exchequer (Mr George Osborne): The core purpose of the Treasury is to ensure the stability of the economy, promote growth and employment, reform the banking system and manage the public finances so that Britain lives within her means.

Mark Lazarowicz: Whether the amount lost by tax avoidance or tax evasion is £100 billion or £40 billion a year, it is a lot of money which could go a long way to tackling the deficit. Will the Chancellor tell his ministerial colleagues sitting next to him to give a higher priority to tackling tax evasion and tax avoidance so as to make sure that those who are most able to pay the costs of the deficit do so, rather than those who are least able to pay?

Mr Osborne: Yes, we will.

T6. [949] Mr Philip Hollobone (Kettering) (Con): At a time of low investment returns, which mean that many people in the private sector are struggling to fund a pension for their retirement, what steps will be taken to tackle the ballooning public sector pension bill?

Mr Osborne: The Government will establish an independent commission to look at public sector pension provision. We will make an announcement on that in due course.

T3. [945] Mr Graham Allen (Nottingham North) (Lab): Has the Chancellor yet had a chance to have a one-to-one with the Secretary of State for Work and Pensions to discuss the thing that would most affect the structural nature of the deficit: early intervention with our babies, children and young people to ensure that we do not accumulate massive costs of failure that need to be met much later? If he has not done that, will he undertake to do so, please?

Mr Osborne: I have had several conversations with my right hon. Friend the Secretary of State for Work and Pensions on this issue and on the broader issues of welfare reform. I broadly agree with the point that the hon. Gentleman makes-he made it forcefully in the last Parliament-that support for children in the early years can yield real results later on. We will bear that in mind as we conduct our spending review.

T2. [944] Tom Brake (Carshalton and Wallington) (LD): While the Chancellor is reviewing the projects agreed by the previous Government since 1 January, may I commend to him the Better Healthcare Closer to Home programme and the plans that it has for St Helier hospital? May it draw it to his attention that the plans were very enthusiastically endorsed by the
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new Secretary of State for Health when he visited my constituency just a couple of days before the general election?

The Chief Secretary to the Treasury (Danny Alexander): I am grateful to my hon. Friend for his question and pay tribute to his assiduous campaigning on the issue over many years. He will know that we are carefully reassessing the projects agreed by the previous Government between 1 January and the election, and we will make an announcement shortly. He will also know that it is right that we are making sure that each and every one of the many projects that were announced is affordable and represents value for money.

T5. [948] Kerry McCarthy (Bristol East) (Lab): I was disappointed to see no mention of the credit union movement in the coalition agreement. Although I admit that I have not yet got my head around what the big society is, I hope that there is a role in there for the credit union movement. When can we expect the Legislative Reform (Industrial And Provident Societies and Credit Unions) Order 2010 to be laid before the House?

The Economic Secretary to the Treasury (Justine Greening): We do support credit unions. In fact, one of the first things that the new Secretary of State for Wales did on her appointment was to visit her local credit union in Wales. We have said that we want vibrant, sustainable credit unions. We are looking at the legislative reform order to which the hon. Lady referred and I hope that we can come back with some further dates in the next few weeks. As she can imagine, the focus right now has been on the emergency Budget, but I am aware of the order and officials are talking to me about the time lines for it.

T4. [947] Mr Mark Williams (Ceredigion) (LD): There was great relief in the tourism sector when the furnished holiday lettings rules were scrapped just before the election in the wash-up. What will the Government do to ensure that the rules are EU compliant, but do not disadvantage tourist operatives in the way that it was feared that the old rules would do?

The Exchequer Secretary to the Treasury (Mr David Gauke): My hon. Friend raises a very good point, and what was proposed on the furnished holiday lettings rule would have caused great difficulties. There is an issue with the EU law, but I can assure him that we are working hard on the matter and we hope to be able to say more in the next few weeks.

T8. [951] Alun Michael (Cardiff South and Penarth) (Lab/Co-op): The Chancellor will be aware of the public and cross-party support given to the proposal to turn British Waterways into a sort of national trust for the waterways of the UK. That was given official endorsement in the last Budget. Can the Chancellor confirm his intention to pursue this proposal, and perhaps give an idea of the time scale within which it might be brought about?

Mr Osborne: If the right hon. Gentleman will allow me, I will look into the details of the proposal to which he refers and write to him.

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T7. [950] Mr Peter Bone (Wellingborough) (Con): In 2008-09, our contribution to the EU was £2.5 billion. This year it will be £6.4 billion. Why does every budget have to be cut except the EU's, which can increase by 150%? Is it not a case not of ring-fencing, but of gold-plating?

Mr Osborne: I am sure that my hon. Friend will be glad to know that in my first ECOFIN I proposed to the Council that we freeze the EU budget, and there was support from other countries around the table. [Interruption.] If the hon. Member for Rhondda (Chris Bryant) is supporting an increase in the EU budget, he should tell the House.

Ian Austin (Dudley North) (Lab): I welcome the Chancellor and his team to their new posts. As part of the consultation on cuts that is being announced today, would he be prepared to visit Dudley, so that we can discuss the importance of maintaining investment in education and training as our No.1 priority, so that we can bring to the area the new industries and jobs on which our future prosperity will depend? While he is there, I can take him to Priory road, and he can see the devastating impact that his decision to cut spending on housing is having on that community.

Mr Osborne: I am always very happy to visit Dudley. I have done so many times in the last three or four months-which was half successful.

We have found additional money to support social housing. We discovered that the housing commitments made by the Labour Government just before the general election were completely unfunded. We have found money to fund additional social housing, which during the past 13 years the previous Government almost completely failed to do.

T9. [952] Bob Russell (Colchester) (LD): Further to excellent question of the hon. Member for Bristol East (Kerry McCarthy), can the Minister who was briefed to answer the excellent Question 25, in my name, now give a more substantive answer? What will the Government do to support credit unions such as the excellent one in Colchester?

Justine Greening: The best thing that we can do to support credit unions is make sure that they are on a sustainable footing. When I talk to Conservative Members, many of them say that they want to see their credit unions merge. We need to ensure that credit unions can offer a broader range of products to local people, and we need to look at how credit unions operate. Interestingly, although complaints to the financial services ombudsman are broadly increasing, when it comes to credit unions they are falling. The most recently released statistics show that just one in 66,000 complaints related to a credit union. The hon. Gentleman is right to ask how we can support credit unions. The Prime Minister has been supportive of them and we look forward to seeing what more we can do to support them over the coming months.

Mr Dennis Skinner (Bolsover) (Lab): If everybody has to share the burden of cutting the budget deficit, will the Chancellor start at the very top, and call upon the royal family to tell them that under no circumstances will they get a single penny of the £7 million increase that they are demanding in the civil list?

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