PARLIAMENTARY DEBATE
Topical Questions - 14 November 2023 (Commons/Commons Chamber)

As we have a debate this afternoon, I will limit my comments to welcoming my outstanding new colleagues. The new Chief Secretary to the Treasury, my hon. Friend the Member for Sevenoaks (Laura Trott), will brilliantly solve the problem of how we stop the state expanding, building on the work of her wonderful predecessor, my right hon. Friend the Member for Salisbury (John Glen). The new Economic Secretary to the Treasury, my hon. Friend the Member for Hitchin and Harpenden (Bim Afolami), will single-handedly ensure that the City and stock market remain competitive, building on the superb foundations laid by his predecessor, my hon. Friend the Member for Arundel and South Downs (Andrew Griffith). The job of the new Financial Secretary to the Treasury, my hon. Friend the Member for Mid Worcestershire (Nigel Huddleston), will be to work out how to bring taxes down, following in the footsteps of his excellent predecessor, my hon. Friend the Member for Louth and Horncastle (Victoria Atkins), who as Health Secretary will no doubt be trying to push them up.

There is widespread consensus that growth is essential to the economy. With 800,000 fewer self-employed in the economy post covid and post IR35, does the Chancellor agree that increasing the VAT threshold to £250,000 for new registrations would boost growth and be a net gain in revenue terms in the long run?

I thank my hon. Friend for raising the support we give to small businesses. As he will know, supporting small businesses, particularly by rolling over the retail, hospitality and leisure business rates discount of 75%, was a major feature of the autumn statement. We will continue to keep under review anything that we can do to help our small businesses.

I call the shadow Chancellor.

I welcome all the new Ministers to their roles and wish them well in them. The covid inquiry is uncovering unsavoury examples of Government mismanagement. We already know that Ministers ignored warnings that their business loan schemes were vulnerable to organised crime, yet the Prime Minister left the vaults open to fraudsters. Will the Chancellor update the House on the latest estimates of taxpayers’ money lost to fraud from the covid support schemes?

I am happy to tell the shadow Chancellor that as of September 2023, HMRC’s compliance effort on covid-19 support schemes, which started when the schemes were set up in spring 2020, had prevented the payment of or recovered the overpayment of more than £1.6 billion of grants.

I thank the right hon. Gentleman for that answer, but according to the House of Commons Library’s most recent numbers, covid fraud losses total a staggering £7.2 billion—that is bigger than the fiscal headroom that he had in his spring Budget. More stories are coming to light about companies with undeclared interests and personal protective equipment contracts not delivering to the standards required. Ahead of the autumn statement, will he confirm that the Government have also had to write off more than £8.7 billion from pandemic PPE contracts?

Let me say two things. First, we have no quarter with any incidence of fraud. We have commenced 51 criminal investigations into suspected fraud cases and there have been a total of 80 arrests so far. Let me also say that during the pandemic we introduced £400 billion of support to businesses and families up and down the country and, according to the latest figures from the Office for National Statistics, the result is that our economy is nearly 2% bigger than pre-pandemic, while Germany’s, for example, is only 0.3% bigger.

I will take this question as well because my hon. Friend has lobbied me personally on this issue. Literally no one in this House has worked harder on it than he has. I have an example of the very problem he is talking about in my own constituency. He is right that it takes too long for housing development capital to reach NHS primary care projects. We will look into the issue carefully.

I am answering a lot of the topical questions today because I have a new team. I want to reassure the hon. Lady that we are very aware of the financial pressures that local authorities are under. I am having extensive discussions with the Communities Secretary.

I call the Chair of the Treasury Committee.

On the Conservative Benches we all agree that the way to sustainable economic growth without inflation is through business investment. It is early days, but I wonder whether we have indications of how well full expensing is working for encouraging business investment in this country. Is the Chancellor considering making that full expensing permanent next week at the autumn statement?

I welcome my hon. Friend’s interest in the topic. One of the reasons why our productivity is 15% lower than Germany’s, for example, is that it invests 2% more as a proportion of its GDP than we do in the UK. Improving the rate of business investment is one of the most effective ways to boost productivity and people’s real disposable income. We are proud of what we introduced in the spring Budget, and we will continue to see whether it is possible to extend it further.

With the Work and Pensions Secretary I continue to keep under review all the things that have an impact on poverty rates. We are proud to have made progress in reducing the number of people living in absolute poverty after housing costs by 1.7 million since 2010. When it comes to homelessness, we are investing £2 billion over the next three years. Rough sleeping is down 35% since its peak.

I refer Members to my entry in the Register of Member’s Financial Interests. The Chancellor has acknowledged that investment trusts, which make up one third of all FTSE 250 companies, are being plagued by misguided cost disclosure legislation, which is making them appear unduly expensive. That is restricting investment and does not happen in any other country. In addition to the positive dialogue between us and with the Financial Conduct Authority, will he consider supporting the First Reading of Baroness Altman’s private Member’s Bill in the other place next week, which helps to address this issue? Will he also address it in his autumn statement?

I welcome my hon. Friend’s expertise in this area, which is of great benefit to the House and to me as I consider fiscal measures. As we are so close to the autumn statement, I would say that the way that we treat costs in our investment and pension funds industries is not optimal, and we need to reform it.

My right hon. Friend the Member for Salisbury (John Glen) did an excellent job and we all salute his brilliant work. If he were here now, he would remind the hon. Gentleman that we have the lowest tax burden of any European country in the G7.

I know that the Chancellor is aware of just how important the whisky industry is to the economy of rural Scotland. It was very disappointing that the policy of a duty freeze was not continued in the Budget. Can he offer any reassurance that we will return to the policy of duty freeze in the autumn statement, and in next year’s Budget?

We are incredibly supportive of the Scotch whisky industry. In fact, the Scotch Whisky Association was my first meeting in post. In nine out of 10 previous fiscal events we either cut or froze duty on whisky, and we have acted to remove punitive tariffs on Scotch whisky in the US market. It will not be a surprise to my right hon. Friend that all taxes remain under review and he will not have long to wait until the next fiscal event.

There are two things I would say in response to that. First, it is important, when we talk about banks, that we have a globally broadly competitive tax regime, and we do not apologise for that in the Treasury. Secondly, the hon. Gentleman should bear in mind that the reduction he talks about in terms of the levy on banks was offset by rising corporation tax.

I thank the Exchequer Secretary to the Treasury, my hon. Friend the Member for Grantham and Stamford (Gareth Davies) for his recent visit to Darlington, where he opened a new branch of Darlington Building Society. He will know from that visit the impact that Treasury jobs are having locally, including an additional £80 million of spending in our local economy. Does he agree with me that Darlington Economic Campus is a fantastic levelling-up project, ensuring that people can stay local but go far?

It was a great pleasure to visit my hon. Friend and open the Darlington Building Society in his town, a very prominent business that is important for in-service banking facilities. The Darlington campus is an important part of our Treasury levelling-up agenda and long may that continue.

This is a complicated area of regulation and we are looking at it very closely. The consultation closed in April and we are working on it because it is very important we get it right, but I hear the hon. Lady’s concerns and will update the House in due course.

While the shadow Chancellor was busy scrolling through Wikipedia to copy and paste, the actual Chancellor has to look no further than the New Conservatives tax plan, which outlines scrapping the IR35 reforms, increasing the VAT registration threshold to £250,000, and delivering on the Prime Minister’s pledge when he was Chancellor to bring a 1p cut in income tax in 2024.

I thank my hon. Friend for adding to the litany of options I have in front of me for the autumn statement. What I can say to him is what I said in my party conference speech: we are committed to lowering the tax burden and will do so as soon as it is responsible to do so.

Can I say gently to the hon. Lady that interest rates have gone up by 3% in the UK since then? That is just above the United States and just below the eurozone, so this is a global phenomenon. There is no short cut to bringing down interest rates. We have to support the Bank of England as it bears down on inflation and then we can bring mortgage rates down.

Will the Chancellor look at the red tape around the apprenticeship levy? Many businesses in my area, such as Asda, Amazon and DPD, all say that they want to take on more apprenticeships but that the red tape around how they spend the money is very difficult. This is something that he could change overnight, and really help to grow and boost our economy.

I thank my hon. Friend for drawing attention to the apprenticeship levy, which has been a tremendous success in bringing a rigour to technical qualifications that was not there before. We are very open to reforms to the apprenticeship levy, providing they stick to the fundamental principle that any investment is not in in-house training that would otherwise have happened, but in transferrable, passport-able training that someone can take with them if they move to another business.

I will not pre-empt what I am going to say next week, but I will say to the hon. Lady that, as a former Health Secretary, I am well aware of the pressures on NHS dentistry and its importance to all our constituents.

Given that inheritance tax is the least popular of all taxes at every income decile and that scrapping it would not be inflationary, will my right hon. Friend consider doing so?

That was a very nice try, but my hon. Friend will have to wait for a week.

Opt-out savings are a little like auto-enrolment in pensions. They help those on lower incomes to save for a crisis—for the proverbial rainy day. Given that more than 9 million people in this country are in work with no savings at all, will the Chancellor note the impressive results of a small trial of the opt-out savings system in Manchester, and encourage its expansion?

I would be happy to do that. The hon. Gentleman is right: if we are to grow faster as an economy, the other side of the coin is we that need to save more, and we should be encouraging everyone in all income groups to do so.

Will my right hon. Friend seek to fix the anomaly that sees man-made fully synthetic fuels taxed at the same rate as their fossil equivalents?

I shall be happy to look into that issue in detail and get back to my hon. Friend.

Because we attract wealth creators from all over the world—and this may be uncomfortable for those on the Opposition Benches—we generate huge amounts of tax revenue. Financial services pay for half the cost of running the NHS. I am in favour of getting everyone to pay their fair share of tax, but I will not make reforms that mean less tax revenue for the NHS.

I call David Linden to ask the final question.

The Westminster-made cost of living crisis is having a devastating impact on household incomes, particularly in Broomhouse, where many young homeowners are seeing mortgage prices soaring. Will the Chancellor use the autumn statement to introduce mortgage interest tax relief to help people across Glasgow to deal with the cost of living crisis?

As the hon. Gentleman knows, we have taken enormous steps over the past year to help families throughout Scotland to deal with cost of living pressures. If he really thinks that people in Scotland believe that this was a “made in Westminster” problem, when we have experienced an invasion of Ukraine and a global pandemic, I simply say to him in return that after 16 years of SNP rule, GDP per head in Scotland is lower, productivity is falling, employment is lower, and inactivity is higher—[Interruption.]

Members need to give me a good reason not to bring them in at the end again: be careful! Let us come to the statement—[Interruption.] Angus, you’ll find the door, I think, in a minute.