Oral answers to questions (Commons): Treasury - Feb 27

Rushanara Ali (Bethnal Green and Bow) (Lab) 

1. What recent discussions he has had with the Secretary of State for Housing, Communities and Local Government on trends in the level of funding for local authorities since 2010. [904028]

Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op) 

2. What recent discussions he has had with the Secretary of State for Housing, Communities and Local Government on trends in the level of funding for local authorities since 2010. [904029]

The Chief Secretary to the Treasury (Elizabeth Truss) 

It is right that more of our money that is spent locally is raised locally. In 2010, councils were 80% dependent on Government grants. By 2020, they will largely be funded by council tax and other local revenues.

Rushanara Ali 

Local councils have faced devastating cuts. The Institute for Fiscal Studies estimates that, between 2010 and 2020, councils will have had their direct funding cut by 79%. In Tower Hamlets, we have lost £138 million through budget cuts since 2010. With one of the Conservative party’s own councils going bust, will the Minister now finally commit to funding local authorities properly, so that they can provide vital services to their communities?

Elizabeth Truss 

As I have pointed out, it is right that we rebalance council spending from central Government grants to locally raised taxes, to help to keep councils accountable. We have seen councils up and down the country finding innovative ways of working, such as sharing back-office services and doing things such as installing wi-fi and improving waste collection. We have also seen Labour councils wasting money. For example, Momentum-supported Birmingham City Council bin strikes have cost the taxpayer £40,000 a day, and Reading—

Mr Speaker 

Order. Resume your seat, Minister. That is the end of it. You answer for Government policy. You do not waste the time of the House by launching into rants about the policies of other parties. [Interruption.] I have made my point, and if the Chancellor is confused about it, he really is under-informed and I say to him: stick to your abacus, man.

Lloyd Russell-Moyle 

My own council of Brighton and Hove has had to make £52 million-worth of cuts in three years, despite superb Labour leadership in the city. With one of the Minister’s own Tory councils going bust, will the Chancellor finally commit to properly funding local government in tomorrow’s local government finance settlement?

Elizabeth Truss 

We have provided local councils with council tax flexibilities to enable them to fund spending in their areas. It is absolutely right that councils should not waste money and should find savings. The fact is that we went through an incredibly profligate period under Labour in which the Government were running record deficits, and we have succeeded in reducing the deficit by three quarters. I must also point out to the hon. Gentleman that councils have reserves of £23 billion. In fact, those reserves have increased by £8 billion since 2010.

John Stevenson (Carlisle) (Con) 

In Cumbria, the Labour council leaders failed to reach a devolution settlement with the Government that would have brought in additional resource. Does the Minister agree, however, that this is not just about resource and that it is also about council structures, leadership and creating efficient organisations?

Elizabeth Truss 

My hon. Friend is absolutely right. Lots of councils have done things better and more efficiently, and have led the way across government. We have given more powers to local Mayors, and we are giving Mayors across the country £4.8 billion of new investment over the next 30 years.

Sir Desmond Swayne (New Forest West) (Con) 

What priority does my right hon. Friend attach to local authorities building new housing?

Elizabeth Truss 

It is vital that we see more housing built across the country, and that is why in the Budget we committed to 300,000 homes a year being built over the next decade.

Charlie Elphicke (Dover) (Ind) 

Will the Chief Secretary to the Treasury join me in paying tribute to Kent County Council, which has managed to make substantial savings and efficiencies since 2010, while continuing to provide excellent services?

Elizabeth Truss 

My hon. Friend is absolutely right. We have seen the leadership of numerous Conservative councils across the country in finding new and efficient ways of doing things. That is what we need to do as a Government. We need to find better ways of doing things and more efficiency, rather than wasting money and crashing the economy, as happened under the previous Labour Government.

Ruth George (High Peak) (Lab) 

23. My county council of Derbyshire has seen its Government funding cut by over £200 million, and two thirds of its spending goes on adult social care. Does the Minister think that a postcode lottery of which counties can afford the most council tax should determine whether their elderly get looked after decently? [904050]

Elizabeth Truss 

We have put additional funding into social care, and we have also allowed councils to raise the precept, but it is a very important principle that local councils are accountable to local voters for the money they spend. The situation we inherited in 2010, when 80% of the money came from the Government, meant we could have profligate local councils and local taxpayers would not have to foot the bill.

Mr Philip Hollobone (Kettering) (Con) 

This week, having faced the same central Government cuts as everyone else, Conservative-controlled Kettering Borough Council, of which I am a member, can be expected to freeze its council tax for the eighth year in a row. Does it therefore appear that some councils are better at managing their affairs than others?

Elizabeth Truss 

My hon. Friend is absolutely right. I note that council tax doubled under the previous Labour Government, and we are hearing talk from the Opposition that there might be another rise if they were to get into government again.

Kirsty Blackman (Aberdeen North) (SNP) 

The issue of public sector pay is inextricably linked to the level of funding provided to both local authorities and other public bodies. Will the Chief Secretary commit to lifting the public sector pay cap across the board and to properly funding these pay increases?

Elizabeth Truss 

We put an extra £2 billion of spending power into the hands of the Scottish Government at the last Budget, and we have also said that we want to be flexible over public sector pay to make sure we are retaining and recruiting the best possible staff.

John McDonnell (Hayes and Harlington) (Lab) 

First, if you will forgive me, Mr Speaker, as we came into the Chamber we heard the news of the death of Simeon Andrews, who co-ordinated a large number of all-party groups and trade union groups, and, if we can, I would like us to send our sympathies to his family on behalf of the House.

The ministerial responses we have heard demonstrate absolutely no understanding whatsoever of the crisis created by the cuts of the past eight years and their impact on local government. Local councils are now facing a funding gap of nearly £6 billion by 2020, and it is the most vulnerable in our society who are suffering. The number of children taken into care is at its highest level since 1985, and one in three councillors are warning that the cuts have left them with insufficient resources to support these children. The leader of the Chancellor’s own Surrey council said:

“The Government cannot stand idly by when Rome burns.”

Will the Chief Secretary commit today to use the opportunity of next month’s spring statement to address the funding crisis in our local councils?

Elizabeth Truss 

First, the spring statement is not a fiscal event, and it is vital that we maintain the discipline that we have achieved over the past eight years and keep control of public spending, because that is what has led to the strong economy we are now seeing, with record levels of employment and an increasing number of new businesses starting up. The reality is that if Labour were to get into power, that legacy would be squandered.

Local government will see a 2.1% increase in cash terms between 2015 and 2019, and, as I have pointed out, they have also seen an increase in local council reserves of £8 billion—money available to spend on, and invest in, local services.

John McDonnell 

With the crisis in children’s services, to be frank this is not the time for political knockabout responses. I am not sure whether the Chief Secretary has witnessed a child being taken into care; I have, and it can scar that child for life. But do not listen to me; listen to the all-party inquiry into children’s social care, which warned that nine out of 10 councils are struggling to meet their legal duties to children. The president of the Association of Directors of Children’s Services has said:

“We cannot go on as we are”,

and it is reported that over half the councils in England are planning further cuts to children’s services.

Recent estimates of Government spending and income show that the Chancellor will have sufficient resources to protect our children from further cuts. So I appeal—once again—to the Chancellor to use the flexibility he has to use the spring statement to address the £2 billion funding gap in our children’s services, to protect our children.

Elizabeth Truss 

It is a bit rich of the right hon. Gentleman to suggest that we should not bring politics into this when that is precisely what he is doing. We are making sure that local councils have the flexibility to raise council tax to fund these vital public services. Labour has to acknowledge that this is not just about the money we spend but the way we spend it. The reality is that if the entire focus is on the level of spending rather than what we are doing, we end up with the situation that occurred in 2010—vast increases in spending and services actually getting worse.

Graham P. Jones (Hyndburn) (Lab) 

3. Whether he has reviewed his Department’s procedures for authorising and monitoring private finance initiative contracts as a result of the liquidation of Carillion. [904030]

The Chancellor of the Exchequer (Mr Philip Hammond) 

I am sure that the hon. Gentleman knows this, but just to put it in context, the vast majority of all current PFI projects—86%—were signed under the previous Labour Government. Since coming into office in 2010, this Government have reformed the approach, so that now PF2 contracts deliver better value for money for taxpayers. The performance of PFI contracts, including those where Carillion is involved, are monitored by the procuring authorities. New PF2 contracts will be subject to a rigorous value for money assessment. There are currently no PF2 projects in procurement.

Graham P. Jones 

I am concerned about the workers. Apparently, 90% of Carillion’s private sector contractors have suggested that they will continue to pay staff, but only in the interim period. What about the 10% who are not going to be paid, and what is going to happen to the staff after the interim period? Are the Government going to guarantee the employment status and pay of those individuals?

Mr Hammond 

The hon. Gentleman may be slightly confusing PFI contracts with outsourcing contracts that do not involve capital structures. The resolution of Carillion continues. So far, there has been a very high rate of uptake by private clients of Carillion to continue the services that are being delivered, and we have high hopes of protecting the vast majority of the jobs involved.

Alex Burghart (Brentwood and Ongar) (Con) 

What are the Government doing to improve transparency in public-private partnerships?

Mr Hammond 

We absolutely value transparency in the public-private partnerships that are delivered. They are an important part of the overall infrastructure. As I just explained to the House, there are currently no PF2 projects in procurement. That indicates that we have set the bar for value for money in public-private partnerships very high, and we will continue to do so.

Mr Speaker 

Order. This is a rather extraordinary state of affairs. I hope that the hon. Member for Hyndburn (Graham P. Jones) is not indisposed, and if he is I am sorry, but otherwise there is absolutely no basis for his leaving the Chamber during the exchanges on his question. That is a rank discourtesy to the House—and a discourtesy to the Chancellor as well, for that matter. It must not happen.

Anneliese Dodds (Oxford East) (Lab/Co-op) 

The shadow Chancellor recently wrote to the Chancellor asking when he will produce revised value for money guidance, as highlighted by the National Audit Office; an updated list of PFIs, as existing data is nearly two years old; and details of any assessment the Treasury carried out on Carillion’s readiness to fulfil its PFI contracts. When will we get them?

Mr Hammond 

I have not yet received a letter from the shadow Chancellor, but if he has written to me, I shall of course reply to him and answer his questions.

Damien Moore (Southport) (Con) 

4. What recent assessment the Government has made of the effect of the national productivity investment fund on road and rail infrastructure in the north-west. [904031]

The Exchequer Secretary to the Treasury (Robert Jenrick) 

This Government have put raising our national productivity at the heart of our mission. From the national productivity investment fund, we have already announced over £50 million of investment in road and rail in the north-west, and this is in addition to the transforming cities allocations to Manchester of £243 million and to Liverpool of £135 million.

Damien Moore 

Does my hon. Friend agree that the £31 billion national productivity investment fund, targeted at transport, digital communications, research and development and housing, will boost the infrastructure of the UK economy?

Robert Jenrick 

The latest statistics show that we have had the best run of productivity growth since before the financial crisis, but we are certainly not complacent. The national productivity investment fund is improving passenger journeys, our roads and our broadband connections and delivering more homes, all of which are key to raising the wages and living standards of people in Southport and across the country.

Derek Twigg (Halton) (Lab) 

The problem is that the national productivity investment fund is not doing anything to stop the disrepair on our roads and motorways. The Government are simply not putting in enough money for local councils and the national agency to make sure that repairs on motorways and local roads are brought up to standard. We now have a greater crisis than we have seen for some time.

Robert Jenrick 

I am afraid that I do not agree with the hon. Gentleman’s analysis. The Government have put a record amount of investment into our roads and rail. As the Chancellor announced in the autumn, there is further money for transport projects in the north. There is £13 billion in total to improve transport across the north of England.

Lee Rowley (North East Derbyshire) (Con) 

rose—

Mr Speaker 

I do not think the hon. Gentleman represents a north-west constituency.

Bill Esterson (Sefton Central) (Lab) 

This Government have done nothing to deliver local rail infrastructure in the north-west, which is vital for jobs and the economy. When are they going to invest in decent local rail services, including those used by my constituents from Southport to Manchester? If the Government will not do it, they should stand aside and let us get on with the job.

Robert Jenrick 

The Government have been investing more in railways across the country than any Government since Victorian times, including in the north of England. Across the country, the Government have invested £0.25 trillion in infrastructure projects since 2010, 4,500 of which have already been completed.

Julian Sturdy (York Outer) (Con) 

5. What plans the Government have to invest in major infrastructure during the 2017 Parliament. [904032]

Priti Patel (Witham) (Con) 

7. What plans the Government have to invest in major infrastructure during the 2017 Parliament. [904034]

Giles Watling (Clacton) (Con) 

8. What plans the Government have to invest in major infrastructure during the 2017 Parliament. [904035]

The Chancellor of the Exchequer (Mr Philip Hammond) 

As my hon. Friend the Exchequer Secretary to the Treasury has just told the House, there has been more than £0.25 trillion of public and private investment in infrastructure since 2010. We continued to invest in infrastructure in the autumn Budget 2017 by expanding the national productivity investment fund, so that it will now provide £31 billion of additional investment, including more than doubling the housing infrastructure fund to £5 billion. The Institute for Fiscal Studies said after the Budget that our plans will see public investment increase to levels not sustained in 40 years.

Julian Sturdy 

Through the major road network, vehicle excise duty will be made available for investment in strategic roads outside the remit of Highways England. I understand that economic growth must be a priority, but how much will the pressure of future housing developments be considered in any of these future schemes? My constituency in York, for example, is surrounded by the northern ring road and we have a lot of housing coming forward.

Mr Hammond 

My hon. Friend is right that the major road network will support the creation of new housing developments by improving access to future development sites and boosting suitable land capacity, so investment decisions for this funding will include consideration of how proposed schemes will unlock land for housing developments, helping to improve how transport is planned for new developments at the outset. The ring road to which he refers is, of course, part of the proposed major road network.

Priti Patel 

The Chancellor will know of the great eastern main line taskforce, which has made the economic and business case for rail infrastructure directly to the Treasury. He will also know that Greater Anglia commuters are forking out £3.7 billion to the Treasury under the current rail franchise. Will he ensure that we can get some of that money back out to invest in the much-needed infrastructure improvements for which our commuters are campaigning?

Mr Hammond 

My right hon. Friend is a great champion of infrastructure in Essex, and I share her wish to create a more dependable railway with an increased focus on punctuality and reliability, which is why the Government are pursuing the biggest rail investment programme since Victorian times. Under the Greater Anglia franchise, there is a commitment to deliver more services and faster journey times, including two “Norwich in 90” trains each way a day from May 2019. The great eastern main line proposals are currently at an early stage of development, but we will carefully consider the case she has made for the passing loop.

Giles Watling 

Will the Chancellor update the House on the steps being taken to ensure the Government’s ambitious plans for housing are supported by local infrastructure investment, such as through the housing infrastructure fund?

Mr Hammond 

My hon. Friend is right to observe that we cannot build the homes this country needs without infrastructure. Often, the push-back from local communities against the idea of accommodating greater numbers of homes is caused by the fear that infrastructure will not keep pace. The autumn Budget 2017 more than doubled the housing infrastructure fund, taking it to a total of £5 billion. On 1 February 2018, we announced the first £866 million of investment from that fund to support 133 projects, which will unlock infrastructure for up to 200,000 new homes.

Rachel Reeves (Leeds West) (Lab) 

It is now two years and two months since the Boxing day floods hit much of Yorkshire, including my constituency. Kirkstall in Leeds is no better protected from floods than it was on Boxing day 2015, and the Government still have not signed off money for the phase 2 Leeds flood alleviation scheme. When will that happen? The scheme is urgently needed to protect my constituents and local businesses from devastating floods such as those that we have already experienced.

Mr Hammond 

My constituency has also been affected by flooding, and some of the responses are major engineering projects that take time to develop. The Department for Environment, Food and Rural Affairs and the Environment Agency have funding for flood relief projects, but those developments have to be prioritised and worked up into proper business cases. I will look at the specific case the hon. Lady raises and, if I may, I will write to her and place a copy of my letter in the Library of the House.

Sir Vince Cable (Twickenham) (LD) 

Some of the most important national infrastructure projects include the network of tidal lagoons for low-carbon energy. As the Treasury has, apparently, approved the project as good value for money, why is it allowing dinosaurs in the Department for Business, Energy and Industrial Strategy to block it?

Mr Hammond 

I imagine that the right hon. Gentleman is referring to the Swansea Bay tidal lagoon project which, as he knows, is under consideration by the Government. An announcement will be made in due course.

Clive Lewis (Norwich South) (Lab) 

Contrary to the Treasury’s own assessment, a report by the Institute for Public Policy Research North recently found that transport investment in London is two and a half times higher per capita than in the north. We know that in Norwich Britvic is shedding hundreds of jobs, citing poor transport as a key cause. That inequality hurts business and local authority revenue, so what actions will Ministers take to redress this unjust imbalance? Will they commit to working with the Mayors of Manchester and Liverpool on the convention for the north that was announced this morning?

Mr Hammond 

I just do not recognise or agree with the hon. Gentleman’s figures. The Infrastructure and Projects Authority’s analysis shows that infrastructure investment per capita in the north is actually higher than in the south-east.

Kevin Hollinrake (Thirsk and Malton) (Con) 

21. The Chancellor has spoken out in favour of rebalancing the economy via a fairer distribution of transport spending. Will he therefore consider Transport for the North’s strategic transport plan, which calls for a 50% increase in transport spending across the north of England? [904048]

Mr Hammond 

The Government are committed to the northern powerhouse project and recognise that that has to be supported through infrastructure investment. We are looking at northern powerhouse infrastructure investment projects on a case-by-case basis, and we will continue to support the development of the northern powerhouse.

Geraint Davies (Swansea West) (Lab/Co-op) 

6. What recent assessment he has made of the effect on the economy of the UK leaving the single market and the customs union. [904033]

The Financial Secretary to the Treasury (Mel Stride) 

The Government are undertaking a wide-ranging set of analyses of the impact of our departure from the European Union. This is changing through time as we develop our approach and we move to a bold and comprehensive agreement with our EU partners.

Geraint Davies 

The Chancellor knew in 2016 that the majority of people would prefer a soft Brexit to a hard Brexit. I am referring to remainers, plus people such as the Foreign Secretary, who said he favoured a single market and would vote for it. Now that the Chancellor knows that a hard Brexit will cost us £45 billion in lost tax receipts, will he at least acknowledge that people such as me on both sides of the Chamber who support our remaining in both the customs union and the single market do so in the name of prosperity and of upholding democracy?

Mel Stride 

The Government have made their position very clear: we are leaving the European Union, and that means we are leaving the customs union and the single market. However, we are determined to negotiate a deal under which our trade with the EU27 is as frictionless as possible and we are able, as a globally facing nation, to secure free trade agreements with other countries around the world.

Anna Soubry (Broxtowe) (Con) 

Will the Minister confirm that the Conservative Government are and will continue to be the voice of British business, and that securing a strong economic future will be at the heart of the Brexit negotiations?

Mel Stride 

I thank my right hon. Friend very much indeed for that question. I can of course confirm that we remain entirely committed to the strength of our economy and to supporting businesses up and down the country, not least in our negotiations with the European Union. I have some responsibility for the customs part of the negotiations, and we are committed to making sure that goods and services move as frictionlessly as possible across the boundaries with the EU27 following our departure.

Alison McGovern (Wirral South) (Lab) 

Mr Speaker,

“I believe that the best way forward is for Britain to renegotiate a new relationship with the European Union—one based on an economic partnership involving a customs union and a single market in goods and services.”

Those are not my words, but the words of the Secretary of State for International Trade and President of the Board of Trade on his website. What representations has the Minister had from the Secretary of State in support of our membership of the customs union and single market?

Mel Stride 

The Secretary of State for International Trade is fully committed to the options that we set out in last year’s White Papers on the customs union and on trade. We are taking forward legislation to make sure that our aspirations in that respect for our negotiations with the EU can be landed when the deals are concluded.

Martin Vickers (Cleethorpes) (Con) 

Yesterday, I met a delegation of business representatives from my constituency who are optimistic about our prospects when we leave the single market and customs union. They are examining the concept of a free port for Immingham. Will the Minister agree to meet them when they have further developed their thoughts so that we can try to overcome possible obstacles?

Mel Stride 

I—or, indeed, the Chief Secretary to the Treasury—would of course be happy to meet my hon. Friend and the business colleagues from his constituency. We are potentially interested in free ports and will keep the idea under review.

Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op) 

Many Cabinet members have made their views clear about the single market and customs union. The Chancellor has said that he would like to see no tariffs with Europe after we leave the EU and no hard border in Northern Ireland. His exact words, which were in a letter to the Treasury Committee, were that he wants a deal

“that facilitates the freest and most frictionless trade possible in goods between the UK and the EU, and allows us to forge new trade relationships with our partners in Europe and around the world.”

Will the Financial Secretary therefore welcome the speech that the Leader of the Opposition gave yesterday in which he proposed a new UK-EU customs union that would, to quote the Chancellor directly, facilitate

“the freest and most frictionless trade possible in goods between the UK and the EU”

and allow us to

“forge new trade relationships with our partners in Europe and around the world”?

Mel Stride 

I am here to speak about Government policy, as you have quite rightly indicated, Mr Speaker. However, if I may say so, Opposition Members’ zig-zagging in respect of their position on the customs union has been quite extraordinary. If I understand what is being suggested, it seems to me, at a first take, that the idea that we can be in the customs union yet go out and have a high level of control over deals and free trade arrangements with other countries just does not hang together.

Chris Davies (Brecon and Radnorshire) (Con) 

9. What recent assessment his Department has made of the effect of Government investment on the Welsh economy. [904036]

The Financial Secretary to the Treasury (Mel Stride) 

My hon. Friend will know that my right hon. Friend the Chancellor announced an additional £1.2 billion for Wales in the Budget. We maintain our position of ensuring that Welsh Government funding per head is some 15% or more above the rate in England. As a consequence of those and other measures, Wales is now one of the fastest growing of the nations and regions of the United Kingdom.

Chris Davies 

Does my right hon. Friend agree that leaving the UK single market would represent a far bigger risk to the Welsh economy than leaving the EU single market?

Mel Stride 

My hon. Friend is entirely right. It is a simple fact that some 80% of Welsh exports go to the other nations of the United Kingdom, compared with just 12% going into the European Union. Those figures speak for themselves.

Chris Evans (Islwyn) (Lab/Co-op) 

Traditionally, Wales has lower wages than the rest of the economy. In the light of low productivity and growth forecasts, what are the Government doing to attract high-quality jobs to the Welsh economy?

Mel Stride 

As the House will know, we are doing a great deal for productivity throughout the country. We have agreed two city deals in Wales, with £500 million for Cardiff and £115.6 million for Swansea. Since 2010, employment in Wales is up by 7.3% and unemployment is down by 39%.

Jonathan Edwards (Carmarthen East and Dinefwr) (PC) 

My question is this: what investment? The Government have broken their promise to electrify the main line between the two main cities in my country, they will not commit to the Swansea Bay tidal lagoon, and the Swansea Bay city deal is 90% Welsh public and private money. At the same time, the Government are subsidising the most expensive railway in the world—in England. When will the British Government stop taking Wales for a ride?

Mel Stride 

I am surprised to hear the hon. Gentleman level those accusations against the Government because, as I have explained, we set aside an additional £1.2 billion for Wales in the recent Budget. I have referred to the two city deals, and we are also backing the south Wales metro, as he will know. We are committed to agreeing further growth deals with north and south Wales.

Catherine McKinnell (Newcastle upon Tyne North) (Lab) 

10. What recent discussions he has had with the Secretary of State for Exiting the European Union on the Government’s preliminary EU exit analysis; and if he will make a statement. [904037]

The Chancellor of the Exchequer (Mr Philip Hammond) 

The cross-Whitehall analysis referred to is provisional internal analysis—it is part of a broad, ongoing programme of analysis—and further work is in train. The analysis has been developed as a tool to inform Ministers on the European Union Exit and Trade Committee and its Sub-Committees about the choices that must be made as negotiations progress.

Catherine McKinnell 

I thank the Chancellor for that answer. Does he agree with the former permanent secretary at the Department for International Trade that giving up the single market and the customs union is like giving up a three-course meal for a packet of crisps in the future? If not, can he identify what specific evidence his Department has seen to suggest that the benefits of future trade agreements will outweigh the damage of leaving the single market and the customs union to businesses and jobs across the country, particularly in the north-east?

Mr Hammond 

The Government intend to maintain the greatest possible access for British businesses to European Union markets. The hon. Lady is right that we should approach this on the basis of evidence. We should look for evidence of the value of our trade flows with Europe and what jobs they generate in the UK, and we should look objectively at the opportunities that arise with third-country trade deals and with the likely profile of the new jobs, trade and opportunities that can be created, and then weigh those carefully.

Kirsty Blackman (Aberdeen North) (SNP) 

Leaks from the Brexit analysis show that UK Government borrowing will rise dramatically under Brexit, with figures ranging from £45 billion to £120 billion in a worst-case scenario. Can the Chancellor reassure us that he will not cut vital public services to plug this gap?

Mr Hammond 

As the hon. Lady knows, the analysis to which she refers is based on standardised, off-the-shelf trade models. The Government are seeking a bespoke deal with the European Union to deliver a deep economic partnership, which would have a completely different set of outcomes. That remains our objective.

Nick Thomas-Symonds (Torfaen) (Lab) 

11. What equality impact assessments his Department has undertaken on the Government’s policy on the public sector pay cap. [904038]

The Chief Secretary to the Treasury (Elizabeth Truss) 

It is for Departments to consider the equalities impact of their proposals on workforce strategy and pay. The important thing is that we reward public servants fairly for the work they do.

Nick Thomas-Symonds 

Well, public sector servants have certainly not been rewarded fairly, but let me turn to pay differentials in the private sector. Is the Chief Secretary as concerned as I am that many private sector firms are excluding partners’ income in their reporting obligations on the gender pay gap, on the basis that they are not employees? What will the Government do to close that loophole?

Elizabeth Truss 

We have announced new policies on reporting the private sector pay gap. The pay gap has come down under this Government and we are now seeing a record number of women in work, and the reason is that we have taken the difficult economic decision to close the deficit and ensured that we have allowed the private sector to flourish.

David Hanson (Delyn) (Lab) 

17. With inflation at 3% and Government cuts to council tax and police budgets forcing up precepts, why should low-paid workers, who are predominantly women, have an increase of only 1% next year, after four years of 1% already? [904044]

Elizabeth Truss 

First, I point out that those on the lowest pay have seen their real wages rise by 7% since 2015, which is the highest level for some time. Also, it is women who are more likely to be in work, with record levels of employment. We have also given additional flexibility to public services to ensure that they can recruit and retain.

Imran Hussain (Bradford East) (Lab) 

12. What plans he has to tackle household debt. [904039]

The Economic Secretary to the Treasury (John Glen) 

The Government are taking a proactive approach to support borrowers, to aid people to manage their money well, and to help those in problem debt. We reformed the regulation, giving the Financial Conduct Authority considerable regulatory powers, and we are setting up a new single financial guidance body to make it easier for people to get help with money matters.

Imran Hussain 

After seven wasted years, wages are still lower than they were in 2010. Self-employed people are paid less on average than they were a generation ago and 6 million people are earning less than the living wage. Does the Minister share my alarm that too many people have to worry about buying school uniform, affording a family holiday, or even just paying their rent or mortgage?

John Glen 

The Government recognise that it is very important that we focus on the poorest people in our society. That is why we have increased the national living wage by 4.7%, which will mean a pay rise of £600 for those working full time. We have also increased the personal allowance, frozen fuel duty and increased childcare support to attend to the concerns that the hon. Gentleman has raised.

Nicky Morgan (Loughborough) (Con) 

As part of the Treasury Committee’s inquiry into household finances, we are looking at the problems facing financially vulnerable households. Last week, my Committee colleague, the hon. Member for Bassetlaw (John Mann), and I visited the citizens advice bureau in Nottingham. Caseworkers there told us about the problems caused by banks and companies, but said that the harshest creditor of all is the Government. There is little forbearance for late council tax or welfare overpayments, and bailiffs are often the first port of call, rather than a last resort. Is the Minister concerned by this heavy-handedness? Does he agree that central and local government should lead by example in their treatment of the most financially vulnerable?

John Glen 

I acknowledge the vital work that my right hon. Friend and her Committee are undertaking in this important area. We will be implementing a breathing space as part of the work of the single financial guidance body. The Bill establishing that body is in Committee, as my right hon. Friend will know. I am absolutely determined that we will get this right and listen to best practice across the country. We committed in our manifesto to a six-week breathing space, and we will look carefully at the representations received from across the country.

Paul Blomfield (Sheffield Central) (Lab) 

22. Citizens Advice reports that there are universal credit claimants who are having more than 40% of their standard allowance taken from their monthly payment. There is a 40% cap on repayments to third parties, but that does not appear to cover repayments of advanced or budgeting loans. This is leaving people unable to make ends meet—for example, one person retained just £97. Will the Minister agree to meet his colleagues at the Department for Work and Pensions to ensure that people are not pushed into debt by the Government’s rules? [904049]

John Glen 

Of course I will meet with colleagues in government. I am meeting the relevant Minister as we seek to get this legislation right, and I would be happy to meet the hon. Gentleman as well.

Antoinette Sandbach (Eddisbury) (Con) 

13. What assessment his Department has made of the potential merits for the economy of the UK adopting an EEA Norway-style arrangement after the UK leaves the EU. [904040]

The Chancellor of the Exchequer (Mr Philip Hammond) 

Membership of the European economic area would require free movement of people with the rest of the European Union, and the UK Government have been clear that the free movement of people cannot continue as it does now. We are seeking a bespoke, comprehensive and ambitious economic partnership in the mutual interests of the UK and the EU.

Antoinette Sandbach 

The Government’s own forecast suggests that a no-deal Brexit will cut GDP growth by 12% in the north-west of England. What steps is the Chancellor taking to minimise the impact of a no-deal, WTO-terms Brexit on my constituents in Eddisbury?

Mr Hammond 

As I said in answer to a previous question, the figures to which my hon. Friend refers are based on standardised trade models, not the bespoke deal that we are seeking to achieve. She asks what steps I am taking to protect her constituents’ interests. I am supporting my colleagues in seeking to negotiate an ambitious economic partnership with the EU that delivers the maximum possible benefits for both the EU and the UK.

Thangam Debbonaire (Bristol West) (Lab) 

What assessment has the Chancellor made in particular of the potential benefits of EEA membership for the £91.8 billion contribution to the UK economy made by the creative industries that are so important for my constituents in Bristol West?

Mr Hammond 

The hon. Lady is absolutely right that the creative industries are one of Britain’s great success stories. More broadly, our services sector is our strategic strength in many respects. As we negotiate our future relationship with the European Union, we have to ensure that we protect not only the market in goods, but the market in services, where Britain has such significant comparative advantage.

Chris Green (Bolton West) (Con) 

14. What steps he is taking to ensure that the economic benefits of technological progress are shared throughout the UK. [904041]

The Economic Secretary to the Treasury (John Glen) 

By helping all places to access the benefits of technological progress and reach their full potential, we can drive growth at national level. Since autumn 2016, the Government have announced an additional £7 billion for science and innovation—an increase of about 20% to total Government R&D spending by 2021.

Chris Green 

Does the Minister agree that digital technology enables further devolution away from London of high-tech industries? What are the Government doing to support that?

John Glen 

The Government are expanding Tech City’s reach across the UK, creating Tech Nation by investing £21 million over four years to help people grow digital businesses. That includes a large-scale CityVerve smart city demonstrator in Manchester, which demonstrates how the internet of things, technologies and services can improve local services in transport, energy, health and culture.

Chi Onwurah (Newcastle upon Tyne Central) (Lab) 

Newcastle has national centres of excellence in data, health and energy—key drivers of our future economy. On Saturday, I held a business summit with Sadiq Khan, the Mayor of London, at which start-ups identified attracting investment as a key barrier to their growth. What are the Government doing to attract investment to businesses in Newcastle? Does that include a regional business bank, as supported by Labour?

John Glen 

We certainly have a national bank to encourage investment in small businesses. We also have the £400 million digital infrastructure fund. As a Minister, I am doing all I can to ensure that we find the best conditions for investing in small and medium-sized enterprises across the country.

Mike Amesbury (Weaver Vale) (Lab) 

15. What fiscal steps he is taking to support regional infrastructure development. [904042]

The Exchequer Secretary to the Treasury (Robert Jenrick) 

As the Institute for Fiscal Studies has confirmed, under our plan, public investment will reach levels not sustained since the late 1970s by the end of this Parliament. We want to see that investment across the United Kingdom. We are delivering £13 billion of transport investment in the north and have launched a £1.7 billion transport fund to transform our great cities.

Mike Amesbury 

Devolution in the Labour-controlled Liverpool city region and Greater Manchester is beginning to unlock opportunities for investment in infrastructure, research and development, and innovation in the north-west, allowing facilities such as the Daresbury campus in my constituency to develop and prosper. Does the Minister agree that if we are to be able to realise the full potential of our regions, devolution needs to extend to the many of my constituents and not the few?

Robert Jenrick 

I am delighted to hear the positive story that the hon. Gentleman has given to the devolution that we have created as a Government. In the past week I have met the Mayors of Liverpool and Greater Manchester. We are committed to working with anyone who shares our commitment to the economic growth and prosperity of the north of England.

Andrew Bowie (West Aberdeenshire and Kincardine) (Con) 

16. What recent assessment he has made of the effect of Government investment on the Scottish economy. [904043]

The Financial Secretary to the Treasury (Mel Stride) 

The Government are committed to driving up investment in Scotland; my right hon. Friend the Chancellor announced an additional £2 billion at the last Budget. We have already boosted city deals by £1 billion and have committed further to looking at city deals in Stirling, Tay Cities and the borderlands.

Andrew Bowie 

I am sure that my right hon. Friend will share my concern, and that of my constituents, at recent statistics showing that trend-based productivity in Scotland had declined by 3.2% in the year end to September 2017—well below the levels of the UK and its lowest level in eight years. Does he agree that instead of making Scotland the highest-tax part of the UK and increasing the tax burden on businesses, the Scottish Government should be encouraged to follow this Government’s lead—encouraging enterprise, boosting economic development and growing UK productivity to its highest levels in 10 years?

Mel Stride 

My hon. Friend is absolutely right to raise the critical issue of productivity, which is, of course, the responsibility of not just this Government but the Scottish Government. I totally agree with him about the tax matter that he raised. It is important that we keep taxes down. To the extent that that has been achieved in Scotland, it has been to a large degree because of the changes we have made to the personal allowance—a decision taken by this Government in this House.

Fiona Onasanya (Peterborough) (Lab) 

18. What recent discussions he has had with the Secretary of State for Housing, Communities and Local Government on trends in the level of funding for local authorities since 2010. [904045]

The Chief Secretary to the Treasury (Elizabeth Truss) 

We have made sure that local councils have the full ability to serve local residents by giving them additional council tax flexibility.

Fiona Onasanya 

I thank the Minister for that answer, but between 2010 and 2020, Peterborough City Council will have had its direct funding cut by 78.7%. Can she explain how my authority is expected to meet the rising children’s services and adult social care demands?

Elizabeth Truss 

As laid out in the local government settlement, councils have been given the ability to increase council tax levels to pay for those services. It is vital that those taxes are raised locally, so that local councillors are accountable for the decisions they make.

Neil O'Brien (Harborough) (Con) 

Can my right hon. Friend confirm that the Government will move promptly to a new fair funding formula for local government to replace the untransparent and unfair system? Will she look closely at the Leicestershire model for doing that?

Elizabeth Truss 

My hon. Friend makes a very good point. Local government funding has not been fair enough. That is why we are consulting on a fair formula at the moment, and I will look with interest at his representations.

Robert Courts (Witney) (Con) 

20. What progress is being made on reducing the deficit. [904047]

The Financial Secretary to the Treasury (Mel Stride) 

In 2010, we had a post-war record level of deficit at 9.9%, and we have reduced that to 2.3% as of last year. The Office for Budget Responsibility forecast in November is that the deficit will further decline to 1.1% of GDP by 2022-23.

Robert Courts 

Will the Minister give an estimate of the effect that our deficit reduction measures have had on relieving the tax burden for younger generations?

Mel Stride 

My hon. Friend raises a critical point about the importance of getting the debt down to make sure that future generations do not carry the burden of it. That is why we have reduced the deficit by three quarters and why we are going to hit our reduction in the level of debt as a percentage of GDP two years early, in 2020-21.

Mr Barry Sheerman (Huddersfield) (Lab/Co-op) 

rose—

Mr Speaker 

The hon. Member for Huddersfield (Mr Sheerman) is a really eager young pup, and at this early point in his parliamentary career, I think we ought to hear the fella.

Mr Sheerman 

Mr Speaker, you will know that I am not the most radical Member on the Labour Benches, but I want to tell the Minister that if the Government had been successfully reducing their budget, my constituents in Yorkshire could forgive her. The fact of the matter is that we have had the money for the electrification of the trans-Pennine railway stolen from us, and the Chancellor refuses to give it back. When will he make amends?

Mel Stride 

As the hon. Gentleman will know, whether he is young or a puppy or whatever he may be, we are awaiting the business case for the trans-Pennine project, and when we receive it, we will look at it most closely.

Rachel Maclean (Redditch) (Con) 

24. What recent assessment the Government have made of gender diversity in the financial services sector. [904052]

The Economic Secretary to the Treasury (John Glen) 

In summer 2015, the Government asked Jayne-Anne Gadhia, CEO of Virgin Money, to lead a review into gender diversity in the financial services sector. In response, the Treasury launched the women in finance charter, which asks firms to commit to four key actions as recommended in the review. So far, 162 firms have signed the charter, which covers more than 600,000 UK financial service employees.

Rachel Maclean 

I thank the Minister for that excellent answer. Following the Royal Mint’s appointment of its first female chief executive in its 1,100-year history, will the Minister join me in congratulating her on her new role?

John Glen 

Yes, I am delighted to congratulate Anne Jessopp, and I wish her all the best in her new role. If I may, Mr Speaker, I would also like to take this opportunity to applaud and congratulate my own constituent, Minette Batters, who was elected as the first woman president of the National Farmers Union. I wish the Secretary of State for Environment, Food and Rural Affairs all the best with that.

Mr Speaker 

I am sure he will read that with some anxiety.

Sir Hugo Swire (East Devon) (Con) 

T1. If he will make a statement on his departmental responsibilities. [904055]

The Chancellor of the Exchequer (Mr Philip Hammond) 

My principal responsibility is to ensure economic stability and the continued prosperity of the British people, and I will do so by building on the plans set out in the autumn Budget. This Government are determined to meet the important challenges we face and to seize the opportunities ahead as we create an economy fit for the future. Our balanced approach to the public finances enables us to give households and businesses support in the near term and to invest in the future of this country, while also being fair to the next generation by reducing a national debt that remains far too large.

Sir Hugo Swire 

Reducing tourism VAT to 5% after we leave the European Union would create an extra 121,000 jobs and £4.6 billion in revenue to the Treasury over 10 years. It would be a great boost not only to our great cities, but to our great coastal towns, such as Exmouth, Sidmouth and Budleigh Salterton in my East Devon constituency. Will the Chancellor commit to looking again at this issue as we leave the EU?

Mr Hammond 

My right hon. Friend is nothing if not persistent and consistent. I cannot remember how many times he has raised this issue. There have been numerous requests for new VAT reliefs since the referendum, some of which are currently not permitted under EU law. We have calculated that if we were to grant all the VAT relief requests that we have received, that would come to more than £38 billion a year. On VAT and tourism, the Government have received representations on this issue, and we are looking again at the case for change. We have issued a call for evidence on the impact of VAT and air passenger duty on tourism in Northern Ireland, and we will certainly keep this issue under careful review.

Peter Dowd (Bootle) (Lab) 

The Chief Secretary gave a speech last year calling for better value for money from the public finances and not spending money we do not have, and she has talked about not wasting money today, so how can she justify spending hundreds of millions of pounds on further tax giveaways worth £2,000 per child to the wealthiest families—those, for example, using private schools—via the tax-free childcare scheme? Is that not a waste of money and spending money we do not have?

The Chief Secretary to the Treasury (Elizabeth Truss) 

I would point out to the hon. Gentleman that the voucher scheme invented by the previous Labour Government benefited only 600,000 families whereas our scheme is much broader—it benefits 1.5 million people—and the Labour Government’s scheme was open to private schools and private nurseries as well.

Nigel Huddleston (Mid Worcestershire) (Con) 

T3. Last week in the Chamber, we yet again heard an Opposition MP complain that they believed they should personally be paying far more tax. Will the Minister confirm the mechanism by which anybody can currently do exactly that voluntarily? [904057]

The Financial Secretary to the Treasury (Mel Stride) 

As a Minister at the Treasury, I am delighted if people voluntarily step forward to pay more tax than they are due. I am pleased to inform my hon. Friend that that is already possible by way of a gift to the Crown. I am looking at ways of raising awareness of that particular opportunity, and I would be happy to meet him to discuss such options. I would also point out to right hon. and hon. Members the very generous gift aid reliefs that the Treasury provides for those who wish to make direct payments to charities of their choice.

Joan Ryan (Enfield North) (Lab) 

T2. Four in 10 of Enfield’s children are living below the poverty line, which is almost 34,000 children. The borough is the 11th most impoverished area for children in the UK, and my constituency is now among the top 20 constituencies in the country with the fastest growing levels of child poverty. Is the Chancellor pursuing any kind of joined-up policies with other relevant Departments to do what the Prime Minister said, and“make Britain a country that works not for a privileged few, but for every one of us”,including those 34,000 children? [904056]

Mel Stride 

The Government believe that work is one of the most important drivers of bringing people out of poverty, and we are rolling out universal credit as a consequence. There is evidence that that is more successful as a way of doing so than relying on legacy benefits. As the right hon. Lady will probably know, 200,000 fewer children are now in absolute poverty than was the case in 2010.

Charlie Elphicke (Dover) (Ind) 

T5. What preparations has the Treasury been making for leaving the European Union, and will the Treasury be ready on day one to ensure frictionless borders when we leave the European Union—deal or no deal? [904059]