“which meet the FSA definition of high quality liquid assets for the purposes of inclusion in the liquidity buffer”.

I hope that the House will agree that it is right to move quickly to close the scintilla of a possibility that ingenious lawyers could help any bank to avoid paying its full contribution to the levy.

Chris Leslie: It is good to see the Minister popping up in the debates on the Finance Bill for the first time, at the eleventh hour. [Interruption.] That is not true; I apologise. He took part in Committee of the whole House, although he did not do the heavy lifting in Committee upstairs. Perhaps it seems now as though it never happened.

This is an interesting little Government new clause. Because of the hour, it would not be surprising if hon. Members’ eyes glazed over and they did not necessarily spot what is going on, but this is an admission from the Government that their bank levy has not been successful. In fact, they are having retrospectively to adjust the rules around the bank levy to make sure that they can net in the supposed £2.5 billion of revenue that the Prime Minister, no less, promised it would yield.

Let us recall the facts about the bank levy. In the last financial year, 2012-13, the bank levy did not bring in £2.5 billion, it did not even bring in £2 billion—it

1 July 2013 : Column 708

brought in a pathetic £1.6 billion. We should not forget that that does not include the cut in corporation tax that the Chief Secretary and others collaborating in the coalition gave away to the banks at that time. In other words, it raised a net £1.4 billion—a shortfall of over £1 billion on the amount that the Government said that it was supposed to produce. My hon. Friend the Member for Bassetlaw (John Mann), and others in the Chamber, could certainly think of ways in which £1 billion of revenue could be put to good use. That was the giveaway that the design of the bank levy set in train for the banks. It raised not £2.5 billion but just £1.4 billion in the last financial year.

It is worse than that, because in the previous financial year, 2011-12, the bank levy raised just £1.8 billion. Deducting from that the £100 million in corporation tax, it raised a net £1.7 billion. The levy has not brought in the money it should have. The Government said that it would raise £2.5 billion, but in total it has brought in £1.9 billion—nearly £2 billion—which is less than they said it would raise.

If any other Department promised to bring in £5 billion over those two financial years but raised only £3 billion, there should and would be outrage. However, given that the Treasury hide a lot of these issues in the complex lexicon of bank taxation, many would be forgiven for not spotting that this is an absolute scandal.

John Mann: I thank my hon. Friend for inviting me to suggest what this money could be spent on. The infrastructure projects of Serlby Park school and Elkesley bridge—not started in three years under this Government—are shovel-ready and could immediately be commenced. I have launched a campaign today to send a postcard a day to the Chancellor until he gets his shovel out and starts work on them.

Chris Leslie: That is the point. The Government like to say that they are trying their best to bring in revenues, but when it comes to the banks and the wealthy they have a blind spot. Is that any wonder when nearly £2 billion of bank levy money has gone uncollected over the past two financial years?

Will the Minister give us an absolute, cast-iron commitment that the £2.5 billion from both 2011-12 and 2012-13 will retrospectively be brought into the Treasury? That, as a basic minimum, should be the intention of this new clause, although I do not necessarily think that it is the only tweak that will have to be made to the bank levy. Can we be sure that the lost £2 billion will be brought into the Treasury?

Will the Minister confirm that, by making this change, he is in effect ceding the bank levy policy to the regulators? If tax deductibility for liquid asset buffers is to be set by the regulators, does that not mean that bank levy policy will henceforth be in the hands of the Financial Policy Committee and the Prudential Regulation Authority? Will the Minister explain the consequences of last week’s decision by the Financial Policy Committee to relax the liquidity buffer rules for many of the banks? That big change will reduce significantly the amount of liquidity that banks are required to hold. That could be good news, because it may mean that there will be less tax deductibility for bank levy purposes. Will the bank levy be allowed to rise above £2.5 billion—that would be welcome—or will the Minister adjust the revenue available

1 July 2013 : Column 709

back down to £2.5 billion for each financial year even though the liquidity deductibility is not relevant in this particular case?

Will the Minister also explain whether the regulators will be given the right in statute to define equity or other liabilities? Other aspects of the bank levy that are enshrined in legislation could nevertheless be affected by the regulators, such as the definition of capital requirement.

I want a sense of what the new clause will do. We know that the Government are soft on the bankers because they do not want to repeat the bonus levy, which will result in a big tax cut for those bankers who did very well on their bonuses—they went up 64% in one month—in April. We also know that the millionaires’ tax cut has handed 643 bankers in this country a tax cut of at least £54,000 a year, so they are doing very well. We want to hear commitments on the bank levy. Will the Minister bring in the full £2.5 billion for financial years 2011-12 and 2012-13?

10.15 pm

Greg Clark: I am glad to respond to this short debate.

I do not think that the hon. Member for Nottingham East (Chris Leslie) listened to my remarks earlier, in which I said that the purpose of the new clause was not to raise additional revenue, but to protect the assumptions that were there from the outset. It was always envisaged, going right back to the consultation documents that the Government published before introducing the levy, that the deduction had to be in line with the regulatory requirement. It was a rumour that legal advice was being taken on whether liquid assets could be deducted that went beyond that regulatory buffer which caused us, in anticipation, to close off that possibility and to emphasise that this definition was always what was intended and that there should be no possibility of wriggling out of it. I hope he would acknowledge that that is sensible.

The new clause is not one of the measures that we are taking to increase the yield of the levy. That is dealt with elsewhere. It will protect the yield that was always assumed would be made by the levy. As the hon. Gentleman raises the question of the yield, he will recall our debates in Committee of the whole House on the new clauses that I moved to increase the rate of the bank levy, reflecting our commitment to raise £2.5 billion from it. He will know that in the Budget earlier this year, the Office for Budget Responsibility made its assessments on the basis of the proposed increase in the levy that we have set out. This year, rather than raising £2.5 billion, the OBR forecasts that we will raise £2.7 billion. Next year and for every subsequent year, the OBR estimates that the levy will raise £2.9 billion. That means that we will recoup the under-collection of the bank levy. It is a new levy and it is not always possible to know exactly what such a levy will raise. It has always been clear that the Government intend it to raise at least £2.5 billion. The OBR’s central estimate is that we will more than recoup the requirement that we set out.

Chris Leslie: The Minister has said that there will be a £200 million increase above the £2.5 billion for this financial year. However, we have established that the Government are £2 billion behind the curve. There is £2 billion to be recouped. The Minister is culpable for

1 July 2013 : Column 710

the loss of significant sums of money. He has not given any commitments on that. It would be wrong if he did not go back to the drawing board and think again about this issue.

Greg Clark: Our commitment is clear that we will raise £2.5 billion a year. The amendments that we have made to the Bill will do precisely that. We have introduced a permanent bank levy, in contrast to the one-off tax that the Labour party imposed on the banks. During 13 years in government, the only bank levy that the Labour party introduced was, in effect, a levy by the banks on the taxpayer. This levy is the opposite of that: the taxpayer is benefiting from revenue from the banks.

It is right that we target the £2.5 billion yield that we have always had in mind. In addition, when we spot opportunities that might be taken to avoid the levy, we should close them. That is what the new clause does.

Question put and agreed to.

New clause 6 accordingly read a Second time, and added to the Bill.

New Clause 12

Anti-abuse measures

‘(1) Her Majesty’s Revenue and Customs shall review the possibility of bringing forward measures as part of the GAAR to work in conjunction with other G8 countries to require multi-national companies to publish a single easily comparable statement of the amount of corporation tax they pay in the UK.

(2) The Chancellor of the Exchequer shall review the effect of incorporating a global standard for public registration of ownership of companies and trusts via a convention on tax transparency, including a requirement on companies to publish a single easily comparable statement of the amount of corporation tax they pay in the UK, on Treasury tax receipts.

(3) The Chancellor of the Exchequer shall consider, when counteracting tax advantages arising from tax arrangements that are abusive, what steps HM Government could take, working alongside developing country governments, to assess how UK companies could report their use of tax schemes that have an impact on developing countries, and how the UK could assist in the recovery of that tax.

(4) Within six months of the passage of Royal Assent, the Chancellor of the Exchequer shall place copies of the review in the House of Commons Library, and consult with G8 countries on their effectiveness.’.—(Catherine McKinnell.)

Brought up, and read the First time.

Question put, That the clause be read a Second time.

The House divided: Ayes 231, Noes 300.

Division No. 39]


10.19 pm


Abbott, Ms Diane

Abrahams, Debbie

Ainsworth, rh Mr Bob

Alexander, rh Mr Douglas

Alexander, Heidi

Ali, Rushanara

Allen, Mr Graham

Anderson, Mr David

Ashworth, Jonathan

Austin, Ian

Bailey, Mr Adrian

Bain, Mr William

Balls, rh Ed

Barron, rh Mr Kevin

Bayley, Hugh

Beckett, rh Margaret

Begg, Dame Anne

Benn, rh Hilary

Benton, Mr Joe

Berger, Luciana

Betts, Mr Clive

Blackman-Woods, Roberta

Blomfield, Paul

Blunkett, rh Mr David

Bradshaw, rh Mr Ben

Brennan, Kevin

Brown, Lyn

Brown, rh Mr Nicholas

Brown, Mr Russell

Bryant, Chris

Buck, Ms Karen

Burden, Richard

Campbell, Mr Alan

Campbell, Mr Ronnie

Caton, Martin

Champion, Sarah

Chapman, Jenny

Clark, Katy

Clarke, rh Mr Tom

Clwyd, rh Ann

Coaker, Vernon

Coffey, Ann

Connarty, Michael

Cooper, Rosie

Cooper, rh Yvette

Creagh, Mary

Creasy, Stella

Cruddas, Jon

Cryer, John

Cunningham, Alex

Cunningham, Mr Jim

Cunningham, Sir Tony

Curran, Margaret

Danczuk, Simon

Darling, rh Mr Alistair

Davidson, Mr Ian

Davies, Geraint

De Piero, Gloria

Denham, rh Mr John

Dobbin, Jim

Dobson, rh Frank

Docherty, Thomas

Donohoe, Mr Brian H.

Doran, Mr Frank

Doughty, Stephen

Dowd, Jim

Doyle, Gemma

Dromey, Jack

Dugher, Michael

Durkan, Mark

Eagle, Ms Angela

Eagle, Maria

Edwards, Jonathan

Efford, Clive

Ellman, Mrs Louise

Engel, Natascha

Esterson, Bill

Evans, Chris

Field, rh Mr Frank

Fitzpatrick, Jim

Flello, Robert

Flynn, Paul

Francis, Dr Hywel

Gapes, Mike

Gardiner, Barry

Gilmore, Sheila

Glass, Pat

Glindon, Mrs Mary

Godsiff, Mr Roger

Goggins, rh Paul

Goodman, Helen

Greatrex, Tom

Green, Kate

Greenwood, Lilian

Griffith, Nia

Gwynne, Andrew

Hain, rh Mr Peter

Hamilton, Fabian

Hanson, rh Mr David

Harman, rh Ms Harriet

Harris, Mr Tom

Havard, Mr Dai

Healey, rh John

Hepburn, Mr Stephen

Hermon, Lady

Hilling, Julie

Hodge, rh Margaret

Hodgson, Mrs Sharon

Hoey, Kate

Hopkins, Kelvin

Hosie, Stewart

Howarth, rh Mr George

Hunt, Tristram

Irranca-Davies, Huw

Jackson, Glenda

James, Mrs Siân C.

Jamieson, Cathy

Jarvis, Dan

Johnson, rh Alan

Johnson, Diana

Jones, Graham

Jones, Helen

Jones, Mr Kevan

Jones, Susan Elan

Kaufman, rh Sir Gerald

Keeley, Barbara

Kendall, Liz

Lammy, rh Mr David

Lavery, Ian

Lazarowicz, Mark

Leslie, Chris

Lewell-Buck, Mrs Emma

Lewis, Mr Ivan

Llwyd, rh Mr Elfyn

Long, Naomi

Love, Mr Andrew

Lucas, Caroline

Lucas, Ian

MacNeil, Mr Angus Brendan

Mactaggart, Fiona

Mahmood, Shabana

Malhotra, Seema

Mann, John

Marsden, Mr Gordon

McCabe, Steve

McCann, Mr Michael

McCarthy, Kerry

McClymont, Gregg

McCrea, Dr William

McDonald, Andy

McFadden, rh Mr Pat

McGovern, Alison

McGovern, Jim

McGuire, rh Mrs Anne

McKechin, Ann

McKenzie, Mr Iain

McKinnell, Catherine

Meacher, rh Mr Michael

Meale, Sir Alan

Mearns, Ian

Miller, Andrew

Moon, Mrs Madeleine

Morden, Jessica

Morrice, Graeme


Morris, Grahame M.


Mudie, Mr George

Murphy, rh Mr Jim

Murphy, rh Paul

Murray, Ian

Nandy, Lisa

Nash, Pamela

Onwurah, Chi

Osborne, Sandra

Owen, Albert

Pearce, Teresa

Perkins, Toby

Phillipson, Bridget

Pound, Stephen

Raynsford, rh Mr Nick

Reed, Mr Jamie

Reed, Mr Steve

Reynolds, Jonathan

Ritchie, Ms Margaret

Robertson, Angus

Robertson, John

Robinson, Mr Geoffrey

Rotheram, Steve

Roy, Mr Frank

Roy, Lindsay

Ruane, Chris

Ruddock, rh Dame Joan

Sarwar, Anas

Sawford, Andy

Seabeck, Alison

Shannon, Jim

Sharma, Mr Virendra

Sheridan, Jim

Shuker, Gavin

Simpson, David

Skinner, Mr Dennis

Slaughter, Mr Andy

Smith, rh Mr Andrew

Smith, Owen

Spellar, rh Mr John

Stringer, Graham

Sutcliffe, Mr Gerry

Tami, Mark

Thomas, Mr Gareth

Thornberry, Emily

Timms, rh Stephen

Trickett, Jon

Turner, Karl

Twigg, Derek

Twigg, Stephen

Umunna, Mr Chuka

Vaz, Valerie

Walley, Joan

Watts, Mr Dave

Weir, Mr Mike

Whiteford, Dr Eilidh

Whitehead, Dr Alan

Williams, Hywel

Williamson, Chris

Wilson, Phil

Winnick, Mr David

Winterton, rh Ms Rosie

Wishart, Pete

Wood, Mike

Woodcock, John

Wright, David

Wright, Mr Iain

Tellers for the Ayes:

Nic Dakin


Tom Blenkinsop


Adams, Nigel

Afriyie, Adam

Aldous, Peter

Alexander, rh Danny

Andrew, Stuart

Arbuthnot, rh Mr James

Bacon, Mr Richard

Baker, Norman

Baker, Steve

Baldwin, Harriett

Barclay, Stephen

Barwell, Gavin

Bebb, Guto

Beith, rh Sir Alan

Bellingham, Mr Henry

Benyon, Richard

Beresford, Sir Paul

Berry, Jake

Bingham, Andrew

Binley, Mr Brian

Birtwistle, Gordon

Blackwood, Nicola

Bone, Mr Peter

Bradley, Karen

Brady, Mr Graham

Brake, rh Tom

Bray, Angie

Brazier, Mr Julian

Bridgen, Andrew

Brine, Steve

Brokenshire, James

Brooke, Annette

Bruce, Fiona

Bruce, rh Sir Malcolm

Buckland, Mr Robert

Burley, Mr Aidan

Burns, Conor

Burns, rh Mr Simon

Burrowes, Mr David

Byles, Dan

Cairns, Alun

Campbell, rh Sir Menzies

Carmichael, rh Mr Alistair

Carmichael, Neil

Carswell, Mr Douglas

Cash, Mr William

Chishti, Rehman

Chope, Mr Christopher

Clappison, Mr James

Clark, rh Greg

Clifton-Brown, Geoffrey

Coffey, Dr Thérèse

Colvile, Oliver

Cox, Mr Geoffrey

Crabb, Stephen

Crockart, Mike

Crouch, Tracey

Davey, rh Mr Edward

Davies, David T. C.


Davies, Glyn

Davies, Philip

Davis, rh Mr David

Dinenage, Caroline

Djanogly, Mr Jonathan

Dorrell, rh Mr Stephen

Dorries, Nadine

Doyle-Price, Jackie

Drax, Richard

Duncan, rh Mr Alan

Duncan Smith, rh Mr Iain

Dunne, Mr Philip

Ellis, Michael

Ellison, Jane

Ellwood, Mr Tobias

Elphicke, Charlie

Eustice, George

Evans, Graham

Evans, Jonathan

Evennett, Mr David

Fabricant, Michael

Fallon, rh Michael

Featherstone, Lynne

Field, Mark

Foster, rh Mr Don

Fox, rh Dr Liam

Francois, rh Mr Mark

Freer, Mike

Fullbrook, Lorraine

Fuller, Richard

Garnier, Sir Edward

Garnier, Mark

Gauke, Mr David

George, Andrew

Gibb, Mr Nick

Gillan, rh Mrs Cheryl

Glen, John

Goldsmith, Zac

Goodwill, Mr Robert

Graham, Richard

Grant, Mrs Helen

Gray, Mr James

Greening, rh Justine

Grieve, rh Mr Dominic

Griffiths, Andrew

Gyimah, Mr Sam

Halfon, Robert

Hames, Duncan

Hammond, rh Mr Philip

Hancock, Matthew

Hands, Greg

Harper, Mr Mark

Harrington, Richard

Harris, Rebecca

Hart, Simon

Harvey, Sir Nick

Hayes, rh Mr John

Heald, Oliver

Heath, Mr David

Heaton-Harris, Chris

Hemming, John

Henderson, Gordon

Hinds, Damian

Hoban, Mr Mark

Hollingbery, George

Hollobone, Mr Philip

Holloway, Mr Adam

Hopkins, Kris

Horwood, Martin

Howarth, Sir Gerald

Howell, John

Hughes, rh Simon

Hunt, rh Mr Jeremy

Huppert, Dr Julian

Hurd, Mr Nick

Jackson, Mr Stewart

James, Margot

Javid, Sajid

Johnson, Gareth

Johnson, Joseph

Jones, Andrew

Jones, rh Mr David

Jones, Mr Marcus

Kawczynski, Daniel

Kelly, Chris

Kirby, Simon

Knight, rh Mr Greg

Kwarteng, Kwasi

Laing, Mrs Eleanor

Lamb, Norman

Lancaster, Mark

Lansley, rh Mr Andrew

Latham, Pauline

Laws, rh Mr David

Leadsom, Andrea

Lee, Jessica

Lee, Dr Phillip

Leech, Mr John

Lefroy, Jeremy

Leigh, Sir Edward

Leslie, Charlotte

Letwin, rh Mr Oliver

Lewis, Brandon

Lewis, Dr Julian

Liddell-Grainger, Mr Ian

Lilley, rh Mr Peter

Lloyd, Stephen

Lord, Jonathan

Loughton, Tim

Luff, Peter

Lumley, Karen

Macleod, Mary

Main, Mrs Anne

Maynard, Paul

McCartney, Jason

McCartney, Karl

McIntosh, Miss Anne

McPartland, Stephen

McVey, Esther

Menzies, Mark

Mercer, Patrick

Metcalfe, Stephen

Mills, Nigel

Milton, Anne

Mitchell, rh Mr Andrew

Moore, rh Michael

Mordaunt, Penny

Morris, Anne Marie

Morris, James

Mosley, Stephen

Mowat, David

Mulholland, Greg

Munt, Tessa

Murray, Sheryll

Neill, Robert

Newmark, Mr Brooks

Newton, Sarah

Nokes, Caroline

Norman, Jesse

Nuttall, Mr David

O'Brien, rh Mr Stephen

Offord, Dr Matthew

Ollerenshaw, Eric

Opperman, Guy

Ottaway, Richard

Paice, rh Sir James

Parish, Neil

Patel, Priti

Pawsey, Mark

Penning, Mike

Penrose, John

Percy, Andrew

Perry, Claire

Phillips, Stephen

Pickles, rh Mr Eric

Pincher, Christopher

Poulter, Dr Daniel

Prisk, Mr Mark

Pugh, John

Raab, Mr Dominic

Redwood, rh Mr John

Rees-Mogg, Jacob

Reevell, Simon

Reid, Mr Alan

Rifkind, rh Sir Malcolm

Robathan, rh Mr Andrew

Robertson, rh Hugh

Robertson, Mr Laurence

Rogerson, Dan

Rosindell, Andrew

Rudd, Amber

Ruffley, Mr David

Russell, Sir Bob

Rutley, David

Sanders, Mr Adrian

Sandys, Laura

Scott, Mr Lee

Selous, Andrew

Shapps, rh Grant

Sharma, Alok

Shelbrooke, Alec

Simpson, Mr Keith

Skidmore, Chris

Smith, Miss Chloe

Smith, Henry

Smith, Julian

Soames, rh Nicholas

Soubry, Anna

Spelman, rh Mrs Caroline

Spencer, Mr Mark

Stephenson, Andrew

Stevenson, John

Stewart, Bob

Stewart, Iain

Stewart, Rory

Streeter, Mr Gary

Stride, Mel

Stuart, Mr Graham

Stunell, rh Sir Andrew

Sturdy, Julian

Swales, Ian

Swayne, rh Mr Desmond

Swire, rh Mr Hugo

Syms, Mr Robert

Teather, Sarah

Thornton, Mike

Thurso, John

Timpson, Mr Edward

Tomlinson, Justin

Tredinnick, David

Truss, Elizabeth

Turner, Mr Andrew

Tyrie, Mr Andrew

Uppal, Paul

Vaizey, Mr Edward

Vara, Mr Shailesh

Vickers, Martin

Walker, Mr Charles

Walker, Mr Robin

Wallace, Mr Ben

Walter, Mr Robert

Ward, Mr David

Watkinson, Dame Angela

Weatherley, Mike

Webb, Steve

Wharton, James

Wheeler, Heather

White, Chris

Whittaker, Craig

Whittingdale, Mr John

Wiggin, Bill

Williams, Mr Mark

Williams, Stephen

Williamson, Gavin

Willott, Jenny

Wollaston, Dr Sarah

Wright, Jeremy

Wright, Simon

Yeo, Mr Tim

Young, rh Sir George

Zahawi, Nadhim

Tellers for the Noes:

Nicky Morgan


Mark Hunter

Question accordingly negatived.

1 July 2013 : Column 711

1 July 2013 : Column 712

1 July 2013 : Column 713

1 July 2013 : Column 714

New Schedule 1

‘Transfer of deductions

New Part 14A of CTA 2010

1 After Part 14 of CTA 2010 insert—

“Part 14A

Transfer of deductions

730A Overview

‘(1) This Part makes provision restricting the circumstances in which deductible amounts may be brought into account where there has been a qualifying change in relation to a company.

(2) For the meaning of “deductible amount” and “qualifying change” see section 730B.

730B Interpretation of Part

‘(1) In this Part—

“arrangements” includes any agreement, understanding, scheme, transaction or series of transactions (whether or not legally enforceable),

“C” means the company mentioned in section 730A(1),

“deductible amount” means—

1 July 2013 : Column 715

(a) an expense of a trade,(b) an expense of a UK property business or an overseas property business,(c) an expense of management of a company’s investment business within the meaning of section 1219 of CTA 2009,(d) a non-trading debit within the meaning of Parts 5 and 6 of CTA 2009 (loan relationships and derivative contracts) (see section 301(2) of that Act), or(e) a non-trading debit within the meaning of Part 8 of CTA 2009 (intangible fixed assets) (see section 746 of that Act),

but does not include any amount that has been taken into account in determining RTWDV within the meaning of Chapter 16A of Part 2 of CAA 2001 (restrictions on allowance buying) (see section 212K of that Act),

“qualifying change”, in relation to a company, has the same meaning as in that Chapter, and

“the relevant day” means the day on which the qualifying change in relation to C occurred.

(2) In this Part, references to bringing an amount into account “as a deduction” in any period are to bringing it into account as a deduction in that period—

(a) in calculating profits, losses or other amounts for corporation tax purposes, or

(b) from profits or other amounts chargeable to corporation tax.

730C Disallowance of deductible amounts: relevant claims

‘(1) This section applies where a relevant claim is made for an accounting period ending on or after the relevant day.

(2) “Relevant claim” means a claim by C, or a company connected with C, under—

(a) section 37 (relief for trade losses against total profits), or

(b) Chapter 4 of Part 5 (group relief).

(3) A deductible amount that meets conditions A and B may not be the subject of, or brought into account as a deduction in, the claim.

(4) But subsection (3) does not exclude any amount which could have been the subject of, or brought into account as a deduction in, the claim in the absence of the qualifying change.

(5) Condition A is that, on the relevant day, it is highly likely that the amount, or any part of it, would (disregarding this Part) be the subject of, or brought into account as a deduction in, a relevant claim for an accounting period ending on or after the relevant day.

(6) Any question as to what is “highly likely” on the relevant day for the purposes of subsection (5) is to be determined having regard to—

(a) any arrangements made on or before that day, and

(b) any events that take place on or before that day.

(7) Condition B is that the main purpose, or one of the main purposes, of change arrangements is for the amount (whether or not together with other deductible amounts) to be the subject of, or brought into account as a deduction in, a relevant claim for an accounting period ending on or after the relevant day.

(8) “Change arrangements” means any arrangements made to bring about, or otherwise connected with, the qualifying change.

(9) This section does not apply to a deductible amount if, and to the extent that—

(a) section 730D(2) applies to it, or

(b) for the purposes of section 432, a loss, or any part of a loss, to which section 433(2) applies derives from it.

730D Disallowance of deductible amounts: profit transfers

‘(1) This section applies where arrangements (“the profit transfer arrangements”) are made which result in—

1 July 2013 : Column 716

(a) an increase in the total profits of C, or of a company connected with C, or

(b) a reduction of any loss or other amount for which relief from corporation tax could (disregarding this section) have been given to C or a company connected with C,

in any accounting period ending on or after the relevant day.

(2) A deductible amount that meets conditions D and E may not be brought into account by C, nor any company connected with C, as a deduction in any accounting period ending on or after the relevant day.

(3) Condition D is that, on the relevant day, it is highly likely that the amount, or any part of it, would (disregarding this Part) be brought into account by C, or any company connected with C, as a deduction in any accounting period ending on or after the relevant day.

(4) Any question as to what is “highly likely” on the relevant day for the purposes of subsection (3) is to be determined having regard to—

(a) any arrangements made on or before that day, and

(b) any events that take place on or before that day.

(5) Condition E is that the main purpose, or one of the main purposes, of the profit transfer arrangements is to bring the amount (whether or not together with other deductible amounts) into account as a deduction in any accounting period ending on or after the relevant day.

(6) Subsection (7) applies if— Subsection (2) applies only in relation to such proportion of the deductible amount mentioned in subsection (6)(a) as is just and reasonable.”

(a) (disregarding subsection (7)) subsection (2) would prevent a deductible amount being brought into account by a company as a deduction in any accounting period ending on or after the relevant day, and

(b) in the absence of the profit transfer arrangements and disregarding any deductible amounts, the company would have an amount of total profits for that accounting period.

(7) Subsection (2) applies only in relation to such proportion of the deductible amount mentioned in subsection (6)(a) as is just and reasonable.”

Consequential amendments

2 (1) In section 1(4) of CTA 2010 (overview of Act), after paragraph (a) insert—

“(aa) transfer of deductions (see Part 14A),”.

(2) In section 432 of that Act (sale of lessors: restriction on relief for certain expenses), after subsection (1) insert—

“(1A) For the purposes of subsection (1), an expense is to be disregarded if, and to the extent that, section 730D(2) (disallowance of deductible amounts: profit transfers) applies to it.”

(3) In Schedule 4 to that Act (index of defined expressions), insert at the appropriate places—

“arrangements (in Part 14A)

section 730B”

“as a deduction (in Part 14A)

section 730B”

“C (in Part 14A)

section 730B

“deductible amount (in Part 14A)

section 730B”

“qualifying change (in Part 14A)

section 730B”

“the relevant day (in Part 14A)

section 730B”.

Commencement and transitional provision

3 (1) The amendments made by this Schedule have effect in relation to a qualifying change if the relevant day is on or after 20 March 2013.

(2) But those amendments do not have effect if before that date—

(a) the arrangements made to bring about the qualifying change were entered into, or

1 July 2013 : Column 717

(b) there was an agreement, or common understanding, between the parties to those arrangements as to the principal terms on which the qualifying change would be brought about.

(3) If—

(a) the relevant day in relation to a qualifying change is before 26 June 2013, or

(b) paragraph (a) or (b) of sub-paragraph (2) was satisfied before that date, those amendments have effect in relation to the qualifying change as if section 730C(9)(b) were omitted.’.—(Mr Gauke.)

Brought up, read the First and Second time, and added to the Bill.

New Schedule 2

‘Restrictions on buying capital allowances


1 Chapter 16A of Part 2 of CAA 2001 (avoidance involving allowance buying) is amended as follows.

Restrictions where certain conditions met

2 (1) Section 212B (circumstances where Chapter 16A applies) is amended as follows.

(2) For subsection (1)(d) substitute—

“(d) the qualifying change meets one of the limiting conditions.”

(3) For subsection (4) substitute—

“(4) Sections 212LA and 212M set out the limiting conditions and specify when those conditions are met.”

3 After section 212L insert—

“Limiting conditions

212LA Limiting conditions

‘(1) The qualifying change meets one of the limiting conditions if condition A, B, C or D is met.

(2) Condition A is that the amount of the relevant excess of allowances is £50 million or more.

(3) Condition B is that the amount of the relevant excess of allowances—

(a) is £2 million or more but less than £50 million, and

(b) is not insignificant as a proportion of the total amount or value of the benefits derived by any relevant person by virtue of the qualifying change or change arrangements.

(4) “Relevant person” means a person who, at the end of the relevant day, is—

(a) a principal company of C,

(b) a person carrying on the relevant activity in partnership, or

(c) a person who is connected to a person within paragraph (a) or (b) (within the meaning of section 1122 of CTA 2010).

(5) Condition C is that—

(a) the amount of the relevant excess of allowances is less than £2 million, and

(b) the qualifying change has an unallowable purpose.

See section 212M for the meaning of “unallowable purpose”.

(6) Condition D is that the main purpose, or one of the main purposes, of any arrangements is to procure that condition A or B or paragraph (a) of condition C is not met.

(7) In this section—

the amount of the relevant excess of allowances is the difference between RTWDV and BSV (see sections 212K and 212L);

“change arrangements” and “arrangements” have the same meaning as in section 212M.”

1 July 2013 : Column 718

4 In consequence of the amendments made by paragraphs 2 and 3, the heading to Chapter 16A becomes “Restrictions on allowance buying”.

Extension of restrictions to other qualifying activities

5 (1) Section 212B (circumstances where Chapter 16A applies) is amended as follows.

(2) In subsection (1)—

(a) in paragraph (a), for “a trade (“the relevant trade”)” substitute “a qualifying activity (“the relevant activity”)”, and

(b) in paragraph (c), for “trade” (in both places) substitute “activity”.

(3) In subsection (3) for “trade” substitute “activity”.

6 (1) Section 212C (when there is a qualifying change in relation to C) is amended as follows.

(2) In subsection (4)—

(a) after “Condition C is that” insert “the relevant activity is a trade (within the meaning of this Part) and”, and

(b) for “trade”, where it appears after “the relevant” (in both places), substitute “activity”.

(3) In subsection (5) for “trade” (in both places) substitute “activity”.

7 (1) Section 212I (relevant percentage share) is amended as follows.

(2) In subsections (1) and (3) for “trade” substitute “activity”.

(3) In subsection (2) for “a trade” substitute “an activity”.

8 In section 212J(1) (relevant excess of allowances) for “trade” substitute “activity”.9 In section 212K(2), (3), (4) and (5) (relevant tax written-down value) for “trade” substitute “activity”.10 In section 212N(2), (3) and (4) (old and new accounting periods) for “trade” substitute “activity”.11 (1) Section 212P (effect of excess on pools) is amended as follows.

(2) In subsection (3)—

(a) for “a trade (or part of a trade)” substitute “a qualifying activity (or part of a qualifying activity)”,

(b) for “the activities of that trade (or part of a trade)” substitute “that activity (or that part of an activity)”,

(c) after “its trade” insert “or business”,

(d) for “those activities” substitute “that activity (or that part)”, and

(e) after “separate trade” insert “or business”.

(3) In subsection (4)—

(a) after “section 37” insert “, 62 or 66”,

(b) omit “trade”,

(c) for “earlier” substitute “other”, and

(d) after “period)” insert “or section 259 or 260(3) of this Act (special leasing)”.

12 (1) Section 212Q (when there are postponed capital allowances) is amended as follows.

(2) In subsection (3)—

(a) for “a trade (or part of a trade)” substitute “a qualifying activity (or part of a qualifying activity)”,

(b) for “the activities of that trade (or part of a trade)” substitute “that activity (or that part of an activity)”,

(c) after “its trade” insert “or business”,

(d) for “those activities” substitute “that activity (or that part)”, and

(e) after “separate trade” insert “or business”.

(3) In subsection (4)—

(a) after “section 37” insert “, 62 or 66”, and

(b) after “CTA 2010” insert “or section 259 or 260(3) of this Act”.

1 July 2013 : Column 719


13 (1) The amendments made by this Schedule have effect in relation to a qualifying change if the relevant day (within the meaning of Chapter 16A of Part 2 of CAA 2001) is on or after 20 March 2013.

(2) But those amendments do not have effect if before that date—

(a) the arrangements made to bring about the qualifying change were entered into, or

(b) there was an agreement, or common understanding, between the parties to those arrangements as to the principal terms on which the qualifying change would be brought about.’.—(Mr Gauke.)

Brought up, read the First and Second time, and added to the Bill.

Bill to be further considered tomorrow.

Business without Debate


Motion made, and Question put forthwith (Standing Order No. 118(6)),


That the draft Coroners and Justice Act 2009 (Consequential Provisions) Order 2013, which was laid before this House on 8 May, be approved.—(Anne Milton.)

Question agreed to.



That Mr Kevan Jones and Mr John Spellar be discharged from the Administration Committee and Mr Tom Harris and David Wright be added.—(Geoffrey Clifton-Brown, on behalf of the Committee of Selection.)

1 July 2013 : Column 720

EU Funding (Rotherham and Barnsley)

Motion made, and Question proposed, That this House do now adjourn.—(Anne Milton.)

10.33 pm

John Healey (Wentworth and Dearne) (Lab): These end of day Adjournment debates are normally confined to the Member, the Minister and, of course, you, Mr Speaker. The Minister will note the strong presence of my Labour colleagues tonight, especially from South Yorkshire, but also from Merseyside, which I welcome. All the points of concern and criticism about Barnsley and Rotherham, and our position in relation to the new European Union funding, apply equally across South Yorkshire, the Sheffield city region and the Liverpool city region. In our area, and for the rest of South Yorkshire and for Merseyside, we face cutbacks in European funding that are much more severe even than our worst fears—massively deeper than in any other area in the UK.

The Minister of State, Department for Business, Innovation and Skills (Michael Fallon) indicated dissent.

John Healey: It is no good the Minister shaking his head, because we face a cliff-edge cut in the funding for the new European funding period as compared with the previous ones. The European funds are designed to give a boost to the economy of flagging regions. I have to say that it is an outrage that areas of the UK with more wealth, more jobs, more business and more prosperity are also getting more European funding in the period ahead.

Let me tell the Minister that it aggravates our anger to learn that the major factor in this unfair distribution and the cuts that our areas will uniquely take is the Government’s plan to direct top-up funds from South Yorkshire and Merseyside in order to support Scotland, Wales and Northern Ireland—to limit their losses to 5% when we face cuts of more than 50% in our funding for the next period. There is no logic and no equity in that and we have seen no effort to be even-handed.

Paul Blomfield (Sheffield Central) (Lab): I am sure that my right hon. Friend will share my incredulity at seeing the Minister sitting there shaking his head. Will he note, as I do, that the chairman of the Sheffield City Region local enterprise partnership—the Government look to local enterprise partnerships to provide business leadership—would disagree vehemently with the Minister, because he has pointed out that our arguments have been ignored and that our EU funding allocation has been cut by about a half?

John Healey: My hon. Friend is right to voice the view from the chairman of a local enterprise partnership, which has been echoed by the Liverpool City Region’s LEP. Both are concerned that the potential for boosting our economies will be lost in Barnsley and Rotherham, as in our other two city regions.

Steve Rotheram (Liverpool, Walton) (Lab): In his usual eloquent manner, my right hon. Friend makes a good point about the unfairness. Can he see any rationale to justify how the Government have gone about allocating this European funding?

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John Healey: No. My hon. Friend is right; I was saying that these decisions defy equity and logic, and there appears to be no attempt to be even-handed in the allocation of this funding.

Michael Fallon: The right hon. Gentleman says that we are defying logic. Is he seriously suggesting, given the wealth of his region at 84.6% of gross domestic product, that South Yorkshire should be entitled to more funding than Shropshire and Staffordshire, Merseyside, Lincolnshire, Tees Valley and Durham, all of which are poorer than the South Yorkshire region? Where is the logic in that?

John Healey: The Minister will have a chance to respond in full, but he is perfectly aware—I have had meetings with him and written to him on this point—that the comparison I make is regarding the special protection put in place for Scotland, Wales and Northern Ireland. Scotland has a GDP higher than that of South Yorkshire, Northern Ireland has a GDP higher than that of South Yorkshire and Wales has a GDP roughly on the same level. That is not fair, and it does not make good policy sense.

Jim Shannon (Strangford) (DUP): I thank the right hon. Gentleman for bringing this very important issue before the House for consideration. Obviously, as an MP for Northern Ireland, I am concerned that Northern Ireland receives its full share. Unemployment is higher, youth unemployment is higher and job opportunities are even scarcer than in other parts of the United Kingdom. Does the right hon. Gentleman want to see the same opportunity given to Rotherham and Barnsley as has been given to Northern Ireland?

John Healey: Indeed. The hon. Gentleman sums up my full argument in a nutshell, and I am grateful to him for that.

Mr Dave Watts (St Helens North) (Lab) rose

John Healey: I shall give way to my hon. Friend, but for the last time.

Mr Watts: Is not the key point that the Government have taken money from some poor parts of the country and given it to other poor parts of the country? If we look at Cheshire and Warrington, for example, although its GDP is at 119%, it will get £157 compared with Sheffield’s figure, which is less, and Merseyside’s, which is less. How can it be right for a more affluent area to get more funding per person than some of the most deprived parts of Britain?

John Healey: Over the last year, my hon. Friend and I have campaigned for special transition region status for the purposes of the new European funding programme, and have tried to persuade the Minister of the case. My hon. Friend has anticipated some of the points that I shall be making later, which lie at the heart of the problem. I want to deal with the facts, the fix and the future. I want the Minister to confirm the facts, explain the fix, and pledge to make good the funding of our areas for the future.

Let me begin with the facts. As the Minister knows, I welcome the commitment to the European regional development fund and the European social fund as part of a European budget settlement that represents the

1 July 2013 : Column 722

first-ever real-terms cut overall. I welcome the inclusion of transition region status for ERDF purposes, although the Government held out against it until the final agreement. I welcome, in particular, the Minister’s commitment in his statement on 27 June to a local rather than a central programme, with decision-making powers in local areas. I also welcome the decision to enable European funds to take their place as part of the strategic plans of the local enterprise partnerships.

We know how to use European funding in South Yorkshire, we know how to use it well, and we have firm plans for its use in the future. The advanced manufacturing park on the edge of Rotherham would not be there without support from European funding, and the nuclear advanced manufacturing research centre and the knowledge transfer centre in Rotherham would not be there without £15 million from the ERDF. We have plans for the future. We can put the money to good use, and that will include support for the city deal and for 4,000 extra apprenticeships throughout South Yorkshire.

However, whereas our current seven-year programme of funding from the European Union is worth is worth more than €400 million in South Yorkshire alone, the new seven-year funding programme will provide €203 million, not just for South Yorkshire but for the five north Nottingham and north Derbyshire districts as part of the Sheffield city region. As was pointed out by my hon. Friend the Member for St Helens North (Mr Watts), that is about €117 per head in an area with a population of nearly 1.8 million and a GDP that is 84% of the European average. It represents a cut of more than 50% in South Yorkshire’s funding for the current seven-year period.

Ours is one of the 11 transition regions in the United Kingdom. That means that our GDP is between 75% and 90% of the European average. Which economies have been earmarked for extra funding to boost jobs, skills and businesses? All the more developed regions have a GDP of at least 90%, and nine of them will receive more, not less, funding than the Sheffield city region. They include Worcestershire, Leicestershire and, as my hon. Friend said, Cheshire and Warrington. Cheshire and Warrington has not a GDP of 84% like South Yorkshire but a GDP of 119%, and will receive EU funding of not €117 a head like South Yorkshire, but €157 a head.

Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab): Will my right hon. Friend give way?

John Healey: I will give way one more time.

Mr Blunkett: I am very grateful to my right hon. Friend, and I congratulate him on the work that he has done on this issue.

The purpose of objective 1 was to recognise levels of deprivation, and the purpose of the transitional arrangements was to recognise what had been invested and how the work needed to be done. Was it not an insult to the people of our communities for the Minister to use Shropshire as a comparator? I went to school in Shropshire, on the border of Wales, and I know the area very well. The notion that a comparison between Shropshire and South Yorkshire, North-East Derbyshire and Nottinghamshire can be anything but a gerrymander is palpably absurd. We should ask why this is being

1 July 2013 : Column 723

done, and what the objective is. A cynic would obviously ask about Cheshire—as my hon. Friend has just done—given the nature of the constituencies there and the nature of the Chancellor.

John Healey: My right hon. Friend makes a full point. He is right. This decision is unfair and unjustifiable and undermines the very purpose of the European funds.

To develop my right hon. Friend’s point, let me turn from the facts to the fix. Three months ago, out of the blue, the Minister announced on 26 March:

“EU Structural Funds are important for supporting economic activity. The EU formula would have seen several areas in most need of funds lose out, so we have taken the decision to correct that.”

He also said that

“the UK government has decided to re-allocate EU Structural Funds to minimise the impact of sudden and significant cutbacks in Northern Ireland, Scotland and Wales.

This decision means that each Administration is only subject to an equal percentage cut of around 5 per cent in funding compared to 2007-13 levels.”

It seems that no one in government was there to speak up for England when these deals were done for the devolved regions. There is one pot of European funding for the period, so England must pay to protect the other UK nations. Ministers are ripping funds away from South Yorkshire and from Merseyside to top up Scotland and Northern Ireland, where GDP is higher, and Wales, where GDP is at a similar level.

Let me illustrate the point about the deep flaws and unfairnesses of this decision with the highlands and islands of Scotland. The highlands and islands is an ex-objective 1 area, like South Yorkshire. It is a current phasing status area, like South Yorkshire. It has a GDP of 84%, like South Yorkshire. It will have transition region status, like South Yorkshire, but unlike South Yorkshire its funding will not be €117 per head. It will not even be €147 per head, as in Merseyside. It will be €741 per head. Its economic status is similar but it will have over six times more funding for every man, woman and child in the highlands and islands. The Chief Secretary has clearly been doing his job for his area. What has the Deputy Prime Minister been doing for our area? This is Forgemasters mark II. There has been no evidence of concern, and certainly no evidence of influence from the Deputy Prime Minister when this critical decision for Sheffield city region was taken. He is standing up while the Government blatantly make bad and damaging decisions for our area in South Yorkshire.

Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op): Will my right hon. Friend give way?

John Healey: If my hon. Friend will forgive me, I have been generous in giving way and I am running out of time.

I turn to the Minister’s position on this matter. He kindly wrote to me a couple of weeks ago to try to justify the anticipated announcement of the deep cuts in South Yorkshire. He said in the letter on 19 June:

“In the case of Merseyside and South Yorkshire, current EU Structural Funds are gradually reducing from 2007 to 2011, due to their relative rise in prosperity…Their funding has been a taper…For 2014-20 it is therefore not envisaged that either of

1 July 2013 : Column 724

these regions will enjoy special status…especially as these two regions are no longer amongst the poorest of the English Transition regions.”

I want to say three things to the Minister. First, the relative rise in prosperity in South Yorkshire anticipated at the start of the period has not happened as we were hit harder than many other areas by the global financial crisis and the austerity-driven downturn after 2010. Secondly, the profile of the spend each year during the seven-year period has been broadly equal and not sharply declining towards the end of the period. Thirdly, unfortunately, it remains the case that only three regions in the UK are poorer than Merseyside and only four regions, including Merseyside, are poorer than South Yorkshire. I hate making the case in those terms because I want to talk about the new businesses, the jobs programmes, the skills base, the investment plans and the economic potential of our area, but that is the argument that the Government are using, so that is the argument that I must counter.

Finally, let me turn to the written ministerial statement confirming these allocations for England issued on 27 June. At the end of the statement, it says:

“All allocations are subject to final agreement on the EU regulations and the EU 2014-2020 Budget in the European Parliament. The European Commission will also need to agree the UK Government’s specific proposals.”—[Official Report, 27 June 2013; Vol. 565, c. 9WS.]

I have to say to the Minister that seeing UK regions with a level of prosperity so much higher than ours getting so much more than ours seems to me to ride roughshod over the purpose of the EU budget agreement. That is why I and my hon. Friend the Member for St Helens North have written to Commissioner Hahn asking him to take a hard look at the UK’s decisions and whether they breach the intention of the EU’s allocation policy and formula, and our MEPs, Linda McAvan and Arlene McCarthy, have done the same. There must be a strong case for a judicial review, which I know is also being seriously considered. Although I say to the Minister that we have no wish to hold up the allocation of these funds, as all our areas can put these funds to very good use, we have to fight for funding that treats all our areas equally and that directs the most support to those areas with the greatest need and the greatest potential.

The Minister told me in his letter and in our meeting:

“Unfortunately, very little flexibility remains here.”

Well, he has been painted into a corner by his colleagues in Government making special provision for the devolved regions and making that an early announcement. Tonight we want him to make good this wrong and to balance this deeply flawed decision by reviewing the allocations to South Yorkshire and Merseyside and making a commitment to use other funding routes to rectify the shortfall. We are asking not for special treatment, but just for the same treatment as Scotland, Northern Ireland and Wales, and certainly not to be singled out for such special and swingeing cutbacks.

This is not an argument about a one-off annual grant. The Minister’s decisions now will stand for the whole of the next Parliament and Government, and beyond. That is why what he has to say to the House and the action he takes following this debate are so important.

1 July 2013 : Column 725

10.52 pm

The Minister of State, Department for Business, Innovation and Skills (Michael Fallon): I congratulate the right hon. Member for Wentworth and Dearne (John Healey) on securing this debate, and thank him for the opportunity to address some of the concerns he has raised. I know they are shared more widely than South Yorkshire; obviously they extend to Merseyside, some of whose Members are present tonight.

Before I come to last week’s announcement of the provisional allocations of the structural funds to England, I want to remind the House why we faced a number of extremely complex and difficult decisions when making these allocations. First, let us go back to the overarching goal of the funds. The aim of the funds is to provide EU member states and regions with assistance to overcome structural deficiencies and to enable them to strengthen competitiveness and increase employment. For the next seven-year period, the focus of the funds will be on enhancing economic growth, with a focus on innovation and research, small and medium-sized enterprises, the low-carbon economy, skills, employment and social inclusion.

During the current programming period, there were two notable decisions that impacted on us. First, the last Government decided to prioritise the north when making allocations for the current seven-year period, which expires this year. I have had many representations from those representing the interests of the south, and some of the poorer areas of the south, arguing passionately that the Government should not repeat what happened in 2007 and should shift funding back to the south. While I concede that the south is richer overall, we must not forget that within many areas in the south there are significant pockets of deprivation.

Secondly, the area that includes Rotherham and Barnsley was categorised as a “phasing-in region” for the current funding period, 2007 to 2013. For hon. Members less familiar with the technicalities, let me explain that “phasing-in” is a designation given to a region that is emerging from the poorest regional category—“convergence” or “objective 1”—and into the mainstream “competitiveness” category. Competitiveness regions characterise most of the wealthiest countries of the EU. As such, it is the current EU budget period—2007 to 2013—that is the transitional period for South Yorkshire, and the EU funds have been on a declining taper for the entire seven-year period, in order for partners in that area to adjust to a lower level of EU receipts. The highlands and islands, of course, were not on a phasing-out regime; they were on a phasing-in regime. The precise objective of the phasing-in status is to avoid a cliff edge for these regions. Therefore, comparing the allocation that South Yorkshire received for the whole of 2007 to 2013 with the allocation announced for 2014 to 2020 and concluding that there is a 66% reduction ignores the reality of what phasing in actually means.

The current programme clearly states:

“Because of its phasing-in status South Yorkshire’s financial allocation annual profile is heavily weighted towards the first four years and tapers off towards the end of the programming period”.

That is mirrored in the ESF operational programme. Over the current programme, structural funds to South Yorkshire started at €153 million in 2007 and have ended up at €20 million in the current year. Let me be clear that in each of the past three years that has been

1 July 2013 : Column 726

the figure. For each of the next seven years the figure will be €23 million—an increase. So let us just be clear: there will be an increase in funding for South Yorkshire, not a decrease.

John Healey: As I said, it is patently incorrect to say that the planned profile reflects the reality of how the money has been spent over the period. May I ask the Minister either to confirm or correct any of the facts I gave the House in my speech in a letter to me afterwards? As he clearly may not get to this, given the sort of technical detail he is keen to read out to the House, will he also confirm what, if anything, he proposes to do to try to rebalance this very significant shortfall of funding for South Yorkshire and for Merseyside?

Michael Fallon: I am certainly very happy to write to the right hon. Gentleman about any technical detail that I may have missed, but I do not want him to mislead the House. In the last three years of the current Parliament, South Yorkshire has had €20 million a year. In each of the next seven years, South Yorkshire will receive—

John Healey: On a point of order, Mr Speaker. I think that the Minister was suggesting that I had misled the House, when in fact what I had told him was that the patterns of actual spend in the European regional development fund funding for the final years of this current programme are broadly similar right across the range and have not sharply dropped as the original plan envisaged.

Mr Speaker: I was listening and I thought the Minister was saying that he did not want the House to be misled. I am sure that he would not accuse any Member of misleading the House, because he would be in breach of our procedures if he did. The Minister was not suggesting that, was he?

Michael Fallon: I certainly was not, Mr Speaker. I just wanted to make it absolutely clear that in each of the past three years the allocation has been €20 million and for each of the next seven years it will be €23 million. I cannot call that a cut, and if other colleagues can, I am extremely puzzled.

Steve Rotheram: I thank the Minister for giving way, but I thought the preamble to his speech seemed like it had been written by Antony Jay and Jonathan Lynn; it was certainly like something out of “Yes Minister”. He spoke earlier about fairness and criticised my hon. Friend the Member for St Helens North (Mr Watts) for the comparison he made. If Cheshire is getting more than Merseyside, can the Minister explain the rationale for that?

Michael Fallon: Let me be clear: overall, Cheshire is not getting more than Merseyside. The issue for Merseyside is very simple, as it is for South Yorkshire. I cannot justify to the House why either South Yorkshire or Merseyside should get more than the Tees Valley, Durham or Lincolnshire, which are poorer regions.

Mr Clive Betts (Sheffield South East) (Lab): Does the Minister accept this basic fact: over the seven-year period of the spending review, comparing the last spending

1 July 2013 : Column 727

review round with the round to come, South Yorkshire will get less than half the previous amount, whereas Scotland and Wales will get 95% of the previous amount? Are not those facts true?

Michael Fallon: What is true is that South Yorkshire is transitioning. It was a poorer region and is now becoming a wealthier region. Let me repeat: in each of the next seven years, South Yorkshire will get more than in the past three years. Really, we need to be very clear about this.

Mr Watts rose

Michael Fallon: I think I have been very generous in giving way.

What is a transition region? It is a category of region introduced to support those that have a GDP level between 75% and 90% of the average. It means that those regions are no longer eligible for the highest levels of support—that for the so-called less developed regions—and nor are they considered more developed regions. “Transition region” means that they will get benefits providing greater flexibility in how to spend the funding. I want to highlight that during the current funding regime, for which the right hon. Member for Wentworth and Dearne was responsible as one of the Ministers involved, 50% of the funding was retained by central Government to determine how it was spent. I am sure

1 July 2013 : Column 728

that that was expedient to the effective delivery of Government programmes and so on, but I am very pleased that in the seven years beginning next year, local areas will define and have at their disposal 95% of all the funding available. Of course it is true that some areas would have had higher levels of funding in the past, but they will certainly be able to direct more of the money they want in the same way.

Mr Watts: On that point, will the Minister give way?

Michael Fallon: I am sorry, but I only have a minute left.

I have focused my remarks on the structural funds, but that is not the only way in which we are helping South Yorkshire. We have granted enterprise zone status across the Sheffield city region, we have a city deal leading to £72 million in public and private investment and we have a transport fund that could be worth £500 million to the Sheffield city region. No other transition region has a deal like that. More than £80 million has been awarded through the regional growth fund, including a local enterprise partnership-led £25 million unlocking business investment programme.

The footprint of all that growth will be approximately 2,000 sustainable private sector jobs. In Rotherham, we are supporting the advanced manufacturing research—

11.3 pm

House adjourned without Question put (Standing Order No. 9(7)).