1. What steps the Government are taking to support the education of Syrian children in refugee camps in Lebanon.
The UK-led No Lost Generation initiative means that we fully back the Government of Lebanon’s Reaching All Children with Education plan. Our funding for education in Lebanon this year will increase from £10 million to £20 million, which will support the Lebanese Government’s efforts to double the number of Syrian children enrolled in Lebanese public schools.
Does the Secretary of State believe that her Department’s efforts are effective in preventing a new generation of Syrian children from becoming radicalised?
Yes, I absolutely do. Education is vital for all children, but especially children who are refugees: they are children and they should be in school. Many of the children I have met have been through hugely distressing situations. When asked to draw pictures, they draw pictures of places that have been bombed. When they hear a supply plane go over their room, they dive underneath their desks for cover. Education is possibly their main chance of having some prospect of a successful life ahead of them, and that is why it is so important.
I call the Chair of the International Development Committee, Mr Stephen Twigg.
I welcome what the Secretary of State has said. Globally, just 1% of humanitarian aid is spent on education. Does she think that is acceptable? At this week’s Oslo summit, it has been suggested that there should be a global humanitarian fund for education in emergencies. Are the British Government willing to support that?
In fact, the UK has in many respects pioneered how we ensure that children caught up in emergencies still get the chance to be in school. I pay tribute to the Norwegians for taking up the issue, too. We want more funding in this area. It is absolutely vital if we are to go beyond just providing life-saving supplies today to helping to preserve the futures of children for tomorrow.
What is the Secretary of State doing to ensure that Lebanese schools educating both refugees and Lebanese children are supported at this very critical time?
The main thing we are doing is to work hand-in-hand with the Lebanese Government, who have taken great steps over recent months to make sure that their schools can cope not only with their own children, but with a doubling in the number of Syrian refugee children who now need to use them. That means not just support for teachers, but support in schools, in their buildings and in textbooks as well.
The Secretary of State will be aware that the Lebanese Minister for Education said that Lebanon is facing a $100 million shortfall in the budget for educating Syrian refugee children. What representations has she made to her international counterparts to ensure Lebanon gets that $100 million?
The hon. Gentleman is quite right to raise that issue. As I have just said, the UK has already increased our investment. In fact, at the UN General Assembly last year, I held a pledge meeting to get international partners to fund more of the educational needs in both Lebanon and Jordan specifically. That raised $344 million at the time, but, as he set out, this is an ongoing requirement and the international community must step up to fund it.
2. What progress she has made on her strategy for private sector development in developing countries.
The Department for International Development’s private sector work has helped to mobilise £4 billion of investment, and we are expanding this work. We need to recognise that the private sector can often deliver development in ways that Governments and donors cannot. In fact, our development finance institution, CDC, reported last week that CDC-backed businesses directly and indirectly helped to create nearly 1.3 million jobs in 2014 alone.
I thank the Secretary of State for that answer. A recent Independent Commission for Aid Impact report on DFID’s private sector development stated: “We found it impossible to identify how much DFID actually spends on PSD.” Will the Secretary of State clarify how the £1.8 billion allocated for 2015-16 will actually be spent?
The strategic framework on economic development that we published several months ago gives the key pillars of work that we will invest in. As the hon. Lady points out, we are ramping up our investment in economic development. Later, we will have a question about migrants. If we are to stem the flow of migrants, it is vital that we do more to create jobs where those people are.
Thinking about the private sector in an alternative way, will my right hon. Friend ask our embassies and high commissions that operate in developing countries and have plants or offices in those places to source materials, including labour, as locally as possible and pay the relative living wage to those whom they employ?
That is a very sensible suggestion, which I will certainly pass on to the Foreign Secretary. We work hand in hand with the Foreign Office around the world, not least in countries such as Tanzania, with which we have a prosperity partnership that is helping to create jobs.
I recently met campaigners from Nigeria who told me that the privatisation of the country’s electricity system, which has been supported by DFID through projects worth £140 million over the past 12 years, has led to price rises, job losses and more blackouts. What evidence does DFID use when deciding to support privatisation as a means to improve the access to and affordability of public services such as electricity?
As the hon. Gentleman has, essentially, set out, investment in infrastructure, particularly energy infrastructure, is vital. The work in Nigeria has led to a doubling of the power supply that is available to Nigerian people and businesses, which I am sure he would support.
The ICAI report of May this year said: “Collaboration between business and aid agencies has the potential to deliver major benefits for the poor” of this world. However, the report also noted a “lack of clear targets” and oversight by the Department. Will my right hon. Friend indicate what she and her excellent officials are doing to remedy that?
We are developing our work with the private sector. I met John Cridland of the CBI yesterday to discuss how that ongoing work is progressing, and we both feel that the relationship between the Department and businesses has never been stronger. The relationship is evolving, but we are on the right path and I think that we should be proud of how far we have come.
Members on both sides of the House agree that decent work is the best route out of poverty, but last week, Radio 4’s “File on 4” revealed problems with a DFID programme in Nigeria. It alleged that the project exported rocks instead of leather products, and that it was used as a cover for export fraud and money laundering on an industrial scale. The right hon. Lady and her Department refused to speak to the programme makers, so will she tell the House what action she is taking as a result of those revelations?
The revelations were, as ever, not quite what they seemed. The export enhancement grant is not a mechanism that DFID is involved with at all; it is a Nigerian Government policy that was being misused and abused. We do work in the leather sector, but that work relates to helping local markets to develop. We became aware of issues with the export enhancement grant, and DFID worked with the Nigerian Government to encourage them, in the end, to shut it down, which they did about 12 months ago.
It is interesting that the right hon. Lady chose not to share that knowledge with the British public and had to say it here in the Commons. [Laughter.] Well, it is interesting that an answer was not given directly to the programme makers, but instead had to be dragged out of the Secretary of State. There is a lack of accountability, transparency and governance in another DFID project: the Private Infrastructure Development Group This year, DFID’s spending on private sector development will double to £1.8 billion, up to £400 million of which will be the UK’s contribution to the new Asian Infrastructure Investment Bank—China’s rival to the World Bank. What oversight and governance procedures has the right hon. Lady put in place to ensure that social and environmental standards and human rights are upheld in the work of the new bank?
The hon. Lady will be pleased to hear that we tried to make sure that the “File on 4” programme was well aware of the facts. It was aware of the facts and if she feels that the way in which they were presented gave her a misleading impression of the reality, that is an issue for her to follow up with the BBC. I obviously believe in freedom of the press. On the broader question, we are working to make sure that the new Asian Infrastructure Investment Bank has the same quality of safeguards that we expect in the World Bank. Treasury Officials are working very hard on that as well.
3. What her Department’s role is in tackling conditions in countries from which migrants are trying to reach Europe across the Mediterranean.
Last week I announced a package of initiatives that will provide emergency aid as well as jobs and education to help to address the root causes of the migrant crisis. This includes support worth £217 million to help some 2.5 million refugees and vulnerable people in Africa, and an additional £100 million to help those who have been displaced as a result of the Syria crisis.
Does my right hon. Friend believe that the number of people attempting to cross the Mediterranean would be far higher were it not for our aid programme that is helping to keep people in or near their own countries, thus preventing them from coming to Europe?
I believe that it does help. We know that people are moving to escape conflict as refugees, and to get jobs and a better future. Our work is upstream and is a long-term strategy, and our jobs agenda is providing jobs and better economic development to provide opportunities where people are. Our commitment to the Syrian crisis to date is £900 million, and as a result only 2% of the 11 million displaced Syrians have sought asylum in Europe.
8. A recent report by the Independent Commission for Aid Impact—the Government aid watchdog—gave Ministers an amber-red rating for their interventions in security and justice, and stated that they were not yet making“a real difference to fragile and conflict states”.Getting this issue right is crucial to solving some of the underlying reasons behind the migration crisis. What more is the Secretary of State doing to ensure that DFID funding is spent wisely?
The hon. Gentleman highlights a difficult area, and the issue of security and justice for a country such as Eritrea is one of the main drivers of people leaving that country. At the same time, our standards on human rights mean that we would not work with police forces, for example, if we thought that abuses were taking place while we were carrying out a programme. We try to strike the right balance and, as he mentions, tracking the results of that can be long term and not uncomplicated.
The Secretary of State has argued that so few Syrian refugees have sought safety in Europe because of aid sent to the region, but how does she square that with the increasing number of Syrians risking their lives to cross the Mediterranean?
As I said, that is a small proportion. The hon. Lady should be aware that the UN flash appeal, which is to encourage the international community to ensure the right level of support for refugees, is around 20% funded. We should not be surprised that the conditions that refugees end up living in are not good enough, and that they might want to seek a better life for themselves. We can be proud of the work that the UK is doing, but not enough other countries are joining us in that.
The Syrian crisis has created nearly 4 million refugees, yet fewer than 200 have settled back in the UK through the Syrian vulnerable persons relocation scheme. Given that, and the need for safe passage for those seeking asylum in this country, will the Minister say what discussions she has had with her counterparts at the Home Office to discuss expanding the numbers and the safety of those seeking asylum in the UK?
Alongside the vulnerable persons scheme, this country has accepted well over 4,000 Syrian asylum cases since the conflict began. We work across Government to ensure a joined-up approach to helping people who have been affected by the crisis.
4. What progress she has made towards achieving the aim of the London declaration on neglected tropical diseases to eradicate such diseases by 2020.
The UK is delivering on the commitment we made and our programmes are protecting millions of people from these diseases. My right hon. Friend the Minister of State for International Development participated in the recent launch of the third progress report on the London declaration.
By funding the global trachoma mapping project—the largest such project ever attempted—will my right hon. Friend say what the Department aims to achieve and how the lessons learned from that project can be used in the ongoing fight against other neglected tropical diseases?
My hon. Friend is right to point out the importance of accurately mapping trachoma. That will enable us better to apply the appropriate actions and activities to rid the world of the worst blindness disease in the world today.
Instances of trachoma, often involving irreversible blindness among children, are continuing, particularly in developing countries in Africa. What steps are we taking to try to address this very serious issue?
As I just mentioned, we have data from mapping the problem, and support from Sightsavers for the elimination of blindness and trachoma is also critical. The Government have put in £195 million, a large amount of money, through the 2012 process to help to tackle this disease, as well as many others.
5. What steps she is taking to ensure value for money in spending on UK-funded projects abroad.
Driving the best value for money is a top priority for the Government. Robust processes are in place for the 86% of aid spent by my Department. Business cases are required for all projects, and their performance is also appraised and monitored.
I am sure the Secretary of State will want to give an explanation for how she will ensure value for money in her Department. May I give her one project for which I could ensure value for money, where it takes four to five weeks to see a doctor, the roads are filled with potholes and the police are in crisis? I refer, of course, to that tribe inhabiting the frozen plains of the north, the Lincolnshire yellowbellies.
As ever, my hon. Friend makes his point very eloquently. I can assure him that my Department is probably the most scrutinised of any in government. We have the Select Committee on International Development, the aid watchdog and the Public Accounts Committee. I can assure him we are rising to that challenge.
One of the best criteria for value for money projects is to stop the flow—[Interruption.]
Order. There is quite a lot of noise in the Chamber. I was not able to hear fully the Secretary of State’s very important answers. I want to hear the right hon. Gentleman. Let us have a bit of order for the Chairman of the Home Affairs Committee, Mr Keith Vaz.
Thank you, Mr Speaker. One of the best criteria for value for money for our projects is to stem the humanitarian crisis occurring in the Mediterranean. Last week, I visited a camp outside Rome station where I met a number of migrants. If they had been provided with jobs and economic development in north Africa, they would not have travelled. Will she please make that one of the criteria?
The right hon. Gentleman will be pleased to hear that just a few days ago I announced additional support that includes in Africa creating additional jobs and livelihoods. As he sets out, many of these migrants are in search of better economic opportunities. If they cannot find them where they are growing up they will look for them elsewhere. We should be very aware of that and work to tackle it.
6. What steps she is taking to tackle the effects of climate change in developing countries.
The UK Government are playing a leading role in tackling the effects of climate change in developing countries through the £3.87 billion international climate fund. The ICF focuses on reducing poverty by promoting low carbon growth, building resilience to the impacts of climate change and tackling deforestation.
Combating poverty and tackling climate change are two sides of the same coin, as the poorest are often those who are hit first and most harshly by climate change. What steps is the Minister taking to ensure environmental sustainability and combating climate change are fully integrated into all the relevant sustainable development goals?
The right hon. Gentleman is absolutely right when he says the two are completely linked. That is why the £3.87 billion fund from the UK is so important. He is right to say we need to find new ways of delivering better climate outcomes, including, for example, through the UK Government’s efforts in Energy Africa, a programme that will help to ensure clean energy for the 1.2 billion people who have no energy in their homes.
T1. If she will make a statement on her departmental responsibilities.
Last week, at the Overseas Development Institute, in a wide ranging speech, I recognised the high value we place on our partnerships with civil society organisations and announced work on strengthening our relationship further. Yesterday, I had the privilege of joining the Prime Minister at an event for courageous recipients of the Ebola medal. In Sierra Leone, we continue to adapt our approach, including transitioning over the running of Kerry Town treatment unit from the Ministry of Defence. I will attend the international conference on Ebola in New York later this week. Next week, I will be at the Financing for Development Conference in Addis.
Given the substantial financial support that DFID provides for education in Pakistan, what assurances has the Secretary of State received from the Government of Pakistan that freedom of speech and religious tolerance of minority faiths, including Christianity, are being taught in Pakistan’s schools?
My hon. Friend makes an important point. DFID’s education programme, in both Khyber Pakhtunkhwa and Punjab, supports the implementation of the Pakistan 2006 reform curriculum, which teaches religious tolerance and respect for diversity.
T2. I am sure the Minister will join me in congratulating Malawi on reaching its 51st anniversary of independence this week. DFID’s aid tracker shows that funding to Malawi has reduced from a peak of more than £120 million in 2012-13 to just under £60 million this year. If DFID continues to cut its budget for Malawi, will he consider ways of assisting the Scottish Government in helping to maintain and grow their important links with the country?
I do not recognise the hon. Gentleman’s figures. We provide £72 million, plus another £10 million from the UK taxpayer through the Scottish Government, and that is just in bilateral aid; of course, there are then the multilateral and international programmes. In total, it probably adds up to more than £150 million to Malawi.
T3. On Monday, the British ambassador to Yemen said that 6 million Yemenis were on the verge of complete starvation. In the light of the ongoing commercial blockade of fuels and supplies to Yemen and the failure of the Geneva talks, what discussions are the Government having with the Saudi Arabian-led coalition to stop the violence and meet the increasingly desperate humanitarian need?
My hon. Friend is right to highlight the dire situation faced by millions of people living in Yemen. We are now urging the Governments of Saudi Arabia and Yemen to work with the UN so that we can get commercial shipping through a new inspections regime and have more humanitarian pauses during Ramadan.
T5. The movement of many thousands of refugees from Burundi into neighbouring countries is of real concern, but I understand that there are even larger internal movements away from Bujumbura and growing anxiety about the prospect of food and health crises in the months ahead. What discussions has the Secretary of State had with NGOs working in Burundi about action to tackle this worrying situation?
We have been discussing with civil society what steps we can take to help the situation in Burundi. As the hon. Lady knows, many countries in Africa routinely face refugee flows within and across their borders, which is why we are right to be doing the work we are on the ground.
T4. Would my right hon. Friend consider building more refugee camps in north Africa to which illegal migrants in Europe could be returned to allow their asylum claims to be heard in a fashion fair to all concerned?
There are many elements of the strategy that need to be in place to tackle the migration crisis. How and where we deal with applications can be part of that, and I know that those discussions are going on inside the EU.
T7. Ten years ago, 250,000 people gathered in Edinburgh as part of the Make Poverty History campaign to argue for aid, debt relief and trade justice. We have seen less progress on the third. What is the Secretary of State doing to ensure fair trade deals for the world’s poorest countries?
Scotland can be proud of the role it played in helping to shape that critical summit, which the Make Poverty History campaign supported. The hon. Gentleman is right that trade is a key mechanism for lifting people out of poverty, which is why the jobs agenda is now central to DFID’s work.
T6. How does last week’s Gaza resolution by the United Nations Human Rights Council help aid efforts when it draws an equivalence between Hamas, a proscribed terrorist organisation, and Israel, a democratic state defending itself against attacks on its citizens?
The UK is deeply concerned by the terrible human cost to both sides of the ongoing Israeli-Palestinian conflict, as underlined by the findings of the UN report that my hon. Friend refers to. We, along with our EU partners, voted in support of the resolution on the report last week. We would have preferred to see a text that gave more weight to Israel’s legitimate right to self-defence and to the threat that Israel faces from militant groups operating from inside Gaza, including Hamas.
T9. The Secretary of State will have seen coverage in the Daily Mail and other newspapers about four charities that are supported by her Department that are using aggressive fundraising tactics. No doubt she welcomes the decision by Oxfam to suspend all telephone fundraising in the UK while it investigates these claims of malpractice. What steps will she be taking to ensure that other charities embroiled in this case follow suit?
As I announced in my opening response to topical questions, we have a process under way within our Department, working with civil society both in the UK and internationally, to look at how we can strengthen that relationship. As part of that though, I believe there will also be a discussion around standards and commitments that NGOs can make to ensure that they are part of a strategy that we are delivering, but a good part and one that does not have reputational risk to it Prime Minister The Prime Minister was asked—
Q1. What recent assessment he has made of the adequacy of the NATO recommended minimum of 2% of GDP as the basis for future UK defence expenditure.
We assess our defence spending constantly as to whether it meets our obligations and keeps our country safe. As figures published last month show, we are meeting the 2% NATO target this year.
As the Prime Minister and, indeed, the Chancellor know, quality is not the issue with our armed forces, but quantity is. Given that we used to spend regularly between 4% and 5% of GDP on defence when we last faced a threat on the continent and a major terrorist campaign, should we not be aiming at a 3% target, rather than the bare NATO minimum figure?
My right hon. Friend is right: we do face very severe threats in our world. The point I would make to him is that the only way to have strong defence is to have a strong economy. That is absolutely key. We made some very clear commitments about the size of our armed forces, about the successor to the Trident submarine and also about the vital equipment programme, where we have the aircraft carriers and the other equipment vital to our armed services that are coming through. Those things are only possible because we closed the deficit in our MOD and the mess that we found when we became the Government and we have a strong economy.
Ten years ago, the 7/7 bombers cruelly took 52 precious lives. We remember them, the families’ courage and the injured, and we defy the terrorists Last month the Prime Minister celebrated Magna Carta, which set out that those who govern must be constrained in their exercise of power to protect those they govern. Our Human Rights Act is the very embodiment of those values. If he accepts that in a democracy there needs to be an effective check on Executive power, even though at times it can be uncomfortable for Government, will he abandon his plans to water down the Human Rights Act?
First of all, may I very much agree with what the right hon. and learned Lady said about the 10-year anniversary of 7/7 and about the bravery and the dignity of those families that lost their loved ones? She, like me, took part in the commemorations yesterday, which I thought were fitting and a permanent reminder of the threat we face and the work we must do to face down the evil of these terrorists and their narrative of extremism The point that the right hon. and learned Lady made about Magna Carta demonstrates that there were human rights before the Human Rights Act. The point I would make is that our proposed reform is to have a British Bill of Rights, so that more of these judgments are made by British judges in British courts.
It is very important that we are unhesitating in our compliance with international standards on this; otherwise it gives a strong signal to other countries that we want to undermine those standards. However, there have been mixed messages from the Government. Last week, senior Government sources briefed the newspapers that the Prime Minister’s view was that withdrawal from the European convention on human rights “is not going to happen”, but the Home Secretary, the Justice Secretary and the Leader of the House have indicated that they want to leave. So can the Prime Minister make it absolutely clear that Britain will be staying in the European convention on human rights?
As I have said to the right hon. and learned Lady before, there is a danger in believing everything that you read in the newspapers. Our intention is very clear: it is to pass a British Bill of Rights, which we believe is compatible with our membership of the Council of Europe. As I have said at the Dispatch Box before—and no one should be in any doubt about this—issues such as prisoner voting should be decided in this House of Commons. I think that that is vital. So let us pass a British Bill of Rights, let us give more rights to enable those matters to be decided in British courts, and let us recognise that we had human rights in this country long before Labour’s Human Rights Act.
If, as the Prime Minister reassures us, we are staying in the European convention, we might as well keep the Human Rights Act, which at least allows us to enforce it in our courts Ten years ago, the United Kingdom was awarded the 2010 Olympics and Paralympics. When he took office, the Prime Minister promised that the games would result in an increase in participation in sport. Will he tell us whether the number of people taking part in sport has gone up or down since the Olympics?
Participation in sport has gone up since the Olympics, and it has been a success. We should all remember what an excellent Olympic games that was. We have also seen a real success in primary schools, where there is more PE activity, and the primary school sports partnerships are working very well.
I do not know what it says in the Prime Minister’s briefing folder, but he is completely wrong. The number of people taking part in sport has gone down since 2010, and children at school are doing less sport too. Does the Prime Minister agree that what we now need is a proper national strategy for sports participation, so that we do not miss the golden opportunity presented by the Olympics—an opportunity that his Government have so far squandered?
Right. Are we sitting comfortably? There are 1.4 million more people playing sport once a week than there were when we won the bid to host the Olympic games. The recent Active People survey—[Interruption.]
Order. Mr Bryant, you are now an esteemed member of Her Majesty’s Opposition’s shadow Cabinet. [Interruption.] Order. Whether he is esteemed or not, he is a member of the shadow Cabinet.
He may be esteemed by you, Mr Speaker, but some of us take a different view As a result of the PE and sport premium for schools, the average time spent on PE at primary level has increased to over two hours a week, 91% of schools have reported an increase in the quality of PE teaching, 96% of schools have reported—[Interruption.] I know that Labour Members do not like facts, but when they ask a factual question, they should welcome a factual answer. [Interruption.] I have got all day, Mr Speaker.
Order. However long it takes, the answer will be heard.
There is not much else on today, Mr Speaker More than eight in 10 schools are seeing a rise in the number of children taking part in sport. The Olympics were a success for Britain, sports participation has gone up, more is now happening in our schools, and we will build on that legacy.
The fact that we do not like is the fact that since the Olympics, participation in sport has gone down, especially among children. The Prime Minister should get out and sort that out In the English manifesto that was published by the Conservative party, the Prime Minister promised that before making changes in the constitution on English votes for English laws, he would “Consult the House of Commons Procedure Committee prior to seeking approval from the whole House to the proposed Standing Order changes.” When did he do that?
There have been consultations with the head of that Committee, and there is plenty of time—[Interruption.] I have to say to Labour Members that at least we published an English manifesto I think that there is a very simple choice for the House. For once, why do we not talk about the substance rather than the process? Post-devolution, we have a problem of unfairness: English MPs have no say on Scottish issues, yet Scottish MPs have a say on English issues. That is the problem. We are proposing a very simple measure, which is that legislation should not be passed on English matters against the will of English MPs. It is a very modest proposal. Is the right hon. and learned Lady really saying that the Labour party will oppose that proposal?
We agree there is a problem and we agree there needs to be change, but it has got to be done properly—constitutional change has got to be done properly. Indeed the Prime Minister said at last week’s Prime Minister’s questions: “We will publish our proposals shortly and Parliament will have plenty of time to consider and vote on them”—[Official Report, 1 July 2015; Vol. 597, c.1471-72.]— and he cannot have consulted the Procedure Committee because it has not even been set up yet. The Prime Minister should recognise the strength of feeling in all parts of the House about the proper processes to get to this change. He should consult properly, or he will be breaking a promise he made in his manifesto.
The right hon. and learned Lady talks about proper processes: we have published proposals, we are having a debate in Parliament, and there will be a vote in Parliament. The Labour party has got to get off the fence and tell us: “Do you support this modest proposal or not?” We are still waiting for an answer.
Q2. If he will list his official engagements for Wednesday 8 July.
I have meetings with Cabinet colleagues and others and, in addition to my duties in this House, I shall have further such meetings later today.
Does my right hon. Friend agree that rural businesses in my constituency such as BSW Timber, which he visited during the election campaign, are benefiting from this Government’s long-term economic plan? What more can his Government do to further promote apprenticeships and create jobs in all sectors of the vital rural economy?
First, may I welcome my hon. Friend to his place, and say how much I enjoyed the visit to his constituency and that specific business? It has taken on a lot of employees and apprentices in recent years, and the claimant count in his constituency is down by 54% since 2010. What more we can do is encourage companies like this one to invest in training and apprentices because that is key to our future. We have got to ensure we do that, and that will only happen if we stick to our long-term economic plan.
This week we commemorate the worst atrocity in Europe since the second world war: the Srebrenica genocide. In a genocidal act, 8,372 unarmed boys and men were taken out of what was supposed to be a United Nations safe area and were murdered. Will the Prime Minister commit to doing everything in his power to ensure that this genocidal act is remembered and do everything he can to get the international community to mark this as well?
I absolutely agree with the hon. Gentleman about this issue: it was the largest act of genocide since the holocaust on the mainland of Europe—as he said, 8,300 people were murdered. The first thing is to be very clear that it was genocide, and to say to people who question that that they are genocide deniers. I am very proud of the fact that Britain has the second largest set of commemorations and events to mark the anniversary of these dreadful events. We have also been holding the pen at the UN in drafting a resolution to try and bring the world together to make sure it is remembered in the right way, and we should continue to do all we can to keep this at the front and centre of European and world politics so people realise this was a genocide, and we must learn the lessons from it.
I commend the Prime Minister on his answer and his efforts, and the Welsh First Minister Carwyn Jones who is hosting a commemorative event in Cardiff today, and Scotland’s First Minister Nicola Sturgeon who is doing a commemorative event in Scotland on Friday, but Bosnia’s suffering has continued since the genocide and the end of the war. Unemployment in Bosnia is more than 40%, among young people it is over 75%, and more than half the young people of Bosnia are considering leaving the country. Will the Prime Minister do everything he can, together with European partners, to support political and economic progress for Bosnia and Herzegovina and give the people there real hope for a better future
The hon. Gentleman is absolutely right, and that is why I met the Bosnian President this week to discuss some of those issues, as well as to talk about commemorating and remembering Srebrenica. What matters is making sure that the institutions in Bosnia work better, and the politicians work better together in understanding their past and their shared future. It is very important that we keep the door of access to the European Union open, but for that to happen the institutions need improving and issues need to be dealt with properly—corruption and problems need to be addressed. But there is no doubt in my mind that the pathway to membership of the European Union has helped in Bosnia, as it can help in the rest of the western Balkans, and it is vital that we keep that door open.
Q15. Seven-year-old Jagger Curtis from Romsey suffers from Duchenne muscular dystrophy. Every day that he waits for first NHS England and now the National Institute for Health and Care Excellence to make a decision about Translarna is a day that threatens his mobility. Last week’s decision to delay, potentially for up to five months, was a bitter blow. What action can my right hon. Friend take to make sure that NICE makes that decision with the utmost speed?
My hon. Friend rightly raises this issue, and I say to her that these are incredibly difficult decisions and we know how hard they are for patients and their families. I think it is right that it is expert clinicians at NHS England and not politicians who make these funding decisions, based on the available evidence. As she knows, NICE has not yet made a final decision on these drugs, so patients and their families, and other experts, can feed into its evidence-gathering and consultation process. She asks what we can do, and I think there are two things. First, when we have these drugs that cost over £400,000 per patient per year, it is right to ask some pretty challenging questions of the companies concerned and we should do so. Secondly, we must keep investing in our rare disease research and in genomics, and making sure that the NHS takes up these treatments rapidly. That is the sort of health service we want to build.
Q3. I put it to the Prime Minister again that in his manifesto for England, which was the only part of the UK where he won the election, he promised on English votes for English laws to:“Consult the House of Commons Procedure Committee prior to seeking approval from the whole House to the proposed Standing Order changes.”We all know that the Committee’s membership has not been agreed by the House and it will not meet until next week, and the EVEL vote will take place next Wednesday. Will the Prime Minister please tell us why he is breaking his manifesto promise?
We are consulting the whole of the House of Commons, and the whole of the House of Commons will have a vote. When it comes to have its vote, it might want to consider what the leader of the Scottish National party here said in 2007—you might find this interesting. He asked the then Prime Minister whether it is not “completely iniquitous that although English MPs are not able to decide on matters in Scotland, Scottish MPs from the UK parties vote on matters that affect only England?” —[Official Report, 6 November 2007; Vol. 467, c. 25.] That was the view. Given that our modest proposal would actually restrict the SNP from far fewer votes than its own self-denying ordinance does, I would think it should vote wholeheartedly with the Government on this modest proposal.
Q13. As the Prime Minister knows, my constituency covers four market towns, but our high streets have declined under years of Labour’s neglect. [Interruption.]
Order. The hon. Lady must be heard and she will be.
What support can the Prime Minister offer market towns such as Corsham, Chippenham, Melksham and Bradford-on-Avon?
First, let me welcome my hon. Friend to her place. I do know her constituency well and I spent a lot of time there with her before the election. What I would say to her is that the offer of devolution is not limited to cities; we are just as open to proposals from towns, counties and districts. To help our high streets we need a strong economy; to press ahead with these local plans; and to have deregulation of the class orders that sometimes prevent development from taking place. I would also argue, in the case of market towns, that we should make parking easier—and, preferably, free.
Q4. The decision to pause indefinitely the electrification of the TransPennine rail line through Stalybridge and Mossley means that my constituents face many more years of delayed trains, cramped journeys and less frequent services. Are those really the characteristics of a northern powerhouse?
Is it not typical of the Labour party today that instead of trying to get behind the northern powerhouse and trying to build a balanced economy—[Interruption.] The hon. Gentleman says that there is an indefinite pause, but that is not the case. We will be pressing ahead with this investment, and it is right that the Labour party should be supporting it.
Q12. Will the Prime Minister lend his support to plans to extend the Robin Hood line in north Nottinghamshire, so that people living in former coalfield communities can get access to transport and employment, and those people who want to come as tourists can enjoy all that Sherwood forest has to offer?
The idea of the Robin Hood line is a very positive one. It is something that we want to support and we hope to make progress on it in the months ahead.
Q5. Last Friday at Walsall football club stadium, there were tears, flowers and Walsall shirts and scarves as we remembered Joel Richards, aged 19, Adrian Evans, his uncle, and Patrick Evans, his grandfather, who were all Saddlers fans killed in Tunisia. Will the Prime Minister outline what steps he will take to ensure that bereaved families and the survivors of atrocities can have help immediately and in the future?
I thank the hon. Lady for her question. The thoughts and condolences of the whole House go out to the families of her constituents. I am glad to hear that Walsall football club is facilitating this very fitting tribute. I was very moved when I heard about it on television. As I announced to the House last week, I have asked the Cabinet Secretary for advice on a ministerial committee to ensure that work is properly co-ordinated across Government to support all those who have been affected. When I was talking to the victims of the 7/7 bombings yesterday, I was very struck by the way that they had been supported across many years in many different ways, covering all sorts of different issues in their own lives and the way they wanted to commemorate those terrible events in London. I want to ensure that we do it as well in the case of the Tunisian atrocities, and that is exactly what that committee will be set up to do.
May I associate myself with the Prime Minister’s remarks about the families of the victims of Tunisia, particularly the family of my constituent, Sue Davey? In the past three years, unemployment in Tamworth has fallen faster than anywhere else in the country. Will my right hon. Friend encourage high-tech firms such as Jaguar Land Rover and BMW to be the motors of the midlands engine, and remind the Labour party that Ed Balls’ comments that our long-term plan would choke off jobs and growth were just plain wrong?
I am delighted that Tamworth has that record, not least because it has such an association with Conservative Prime Ministers down the years and the Tamworth Manifesto. The point my hon. Friend makes is a good one. People who try to say that the jobs we have created are part-time and low paid should look at what is happening in places such as the west midlands where we see growth in manufacturing, engineering and jobs that have long-term successful careers attached to them, and we want more of that.
Q6. If the Prime Minister really is committed to the northern powerhouse, he will know that an essential element of that is improved transport connectivity between the key cities of Manchester and Leeds, and that is now under threat. Given the vague and evasive answer that he gave earlier, will he now join me in welcoming the Manchester Evening News campaign to get the electrification of the TransPennine line back on track?
I can certainly commit to that, because I said a minute ago that this is a pause and not a stop. We are absolutely committed to ensuring that the work goes ahead. We also want to get rid of the Pacer trains that were there all those years under Labour.
Does not the Greek crisis show that, when negotiating with the EU, it is very important to be clear about what one wants and not to accept its first or second offer because it will improve it under pressure?
I am sure that there are all sorts of things to learn from the Greek experience. I fear for the future of that country. Obviously, we want Greece and the eurozone to come to an agreement, but we have to be prepared for all eventualities and to make sure that, whether it is helping British tourists, British businesses or British pensioners living in Greece, we have made all the plans and taken all the precautions that are necessary. My approach to negotiation is a little different from the Greek approach, which is why I have been to see every Prime Minister and President in Europe to talk through what Britain wants to see in terms of change in Europe, and change for our membership in Europe, and I believe that that will be successful.
Q7. What does the Prime Minister have to say in response to new figures from Age UK showing that more than 1 million elderly people are not getting the basic help that they need to be washed, dressed or fed?
We need to see a continued improvement in social care, and we need to continue to help pensioners. Pensioner poverty is at an all-time low because this party has kept its promises to uprate the basic state pension, to support pensioners’ benefits and to make sure that people have dignity in their old age.
When my right hon. Friend speaks to President Hollande in the immediate future, will he make it plain that he expects the port of Calais to be kept open, now and in the future, for lawful travel in both directions?
My hon. Friend makes a very important point. I had a very good discussion with President Hollande last week. We have seen more action by the French police in arresting the ringleaders and trying to keep roads and ports open. As I have said at this Dispatch Box before, it is important that we do not engage in finger pointing with the French, but recognise that this is a shared problem. Our juxtaposed border controls in Calais work well for Britain and, I believe, can work well for France, and we should continue to work together to deal with this problem.
Q8. My constituents are still waiting for universal credit to be rolled out to them. In fact, they are still waiting for a timetable of planned rollout. We are about to hear about the latest stages of the Government’s welfare reforms. When will the Prime Minister finish the last one?
I make absolutely no apology for taking universal credit at a deliberate pace. Many of us in this House can remember what happened when Labour introduced tax credits in one go and people came to our constituency surgeries with problem after problem. It is quite right to roll out universal credit at a deliberate pace, but I can promise the hon. Lady that it will be coming to Bristol South soon.
Every child deserves the best start in life, not least those who need adoption. Will my right hon. Friend set out how the £30 million of extra funding will help even more children find a loving home?
I welcome my hon. Friend. It is important that we get this right. We saw a big increase in adoption during the last Parliament because of the changes that we made, and what we are putting on the table in this Parliament is not only extra money but the proposal to create regional adoption agencies so that counties and other adoption agencies can come together. What matters above all is finding a loving family and home for the child, rather than ensuring that it is in the precise geographical area where that child is in care.
Q9. I am told that the Prime Minister may be planning a vote shortly using EVEL to repeal our hunting laws. Will this be a case of English hunting for English foxes?
No, it will be an opportunity for the House of Commons to debate an issue and then have a vote, as we were discussing earlier. I do not know what everyone else came here for, but I think that that is quite a good idea.
Q10. I am sure that the Prime Minister had time to study the “Building Great Britons” report from the 1001 critical days all-party group earlier this year, which put the cost of perinatal mental illness and child maltreatment at £23 billion a year. Will he commit to focusing the welcome additional child and adolescent mental health services spending on a pre-troubled families programme which invests in strong attachments between parents and babies at the outset as the best way to secure well-rounded children brought up in strong, loving families?
My hon. Friend, who has great experience in these matters, makes a good point. We are looking at how to have proper parity between mental and physical health. Everything we can do to help to strengthen families should be part of our agenda of genuinely tackling poverty. We want to tackle the causes of poverty, and alongside worklessness, debt, addiction and the rest of it, family breakdown is a big cause of poverty, so the work he talks about is vital.
With people queuing to access food banks in my constituency, does the Prime Minister think it is a priority for the country to bring back foxhunting?
I think the priority for the country is to keep going with a growing economy that has seen 2 million more people in work, an economy that is going to see 3 million apprentices in the next Parliament, and an economy that is cutting taxes for hard-working people. That is the priority, and that is what the House is going to hear about in a minute or two.
Q11. Derbyshire is at the heart of the midlands engine, powering the economy of the country. Will the Prime Minister congratulate the workers of Bombardier on winning the £358 million contract to supply 45 more trains for London, securing local jobs for the next 35 years?
My hon. Friend is absolutely right. Just as the automotive industry has been so important for the west midlands, the growth in the train industry has been important for the east midlands in recent years, and the progress at Bombardier is truly impressive. I had the great pleasure of visiting the company earlier in the year, and was even allowed to drive a train. I was not very successful at that, but the company is doing very well: it is investing for the future, providing trains for our country, and pulling through jobs and skills for the whole region.
Q14. I was surprised to learn from responses to questions from myself and others that the Government do not know where the northern powerhouse is, so—[Interruption.]
Order. We do have a bit of other business to get on to, but the hon. Gentleman must be heard. Mr Madders.
So given the recent cancellation or pausing of major transport projects in the north, is it not the case that the only place where the northern powerhouse can be found is in the Prime Minister’s imagination?
The truth is that the Labour party ignored the north for years, and Labour Members cannot bear the fact that it is a Conservative Prime Minister and a Conservative Chancellor sitting for a seat in the north-west who are putting those issues firmly on the agenda and funding them.
rose—
Order.
Order. Before I call the Chancellor of the Exchequer, I remind hon. Members that copies of the Budget resolutions will be available to them in the Vote Office at the end of the Chancellor’s speech I also remind hon. Members that it is the norm not to intervene on the Chancellor of the Exchequer or the Leader of the Opposition, and the same convention applies to the spokesperson for the Scottish National party.
This is a Budget that puts security first. It is a Budget that recognises the hard work and the sacrifice of the British people over the past five years and says that we will not put that at risk; we have a job to do and we are here to get on with it. This will be a Budget for working people—a Budget that sets out a plan for Britain for the next five years to keep moving us from a low wage, high tax, high welfare economy to the higher wage, lower tax, lower welfare country we intend to create This is the new settlement. From a one nation Government, this is a one nation Budget that takes the necessary steps and follows a sensible path for the benefit of the whole of the United Kingdom. This is a Conservative Budget that can be delivered only because the British people trusted us to finish the job, because they know that the only way to have a strong NHS, strong schools and a strong defence is to build a strong economy. That is how we were elected, and that is exactly what we are now going to do The British economy that I report on today is fundamentally stronger than it was five years ago. We are growing faster than any other major advanced economy. Our businesses have created 2 million more jobs. Living standards are rising strongly. Our long-term economic plan is working. But the greatest mistake this country could make would be to think all our problems are solved. We have only to look at the crisis unfolding in Greece as I speak to realise that, if a country is not in control of its borrowing, the borrowing takes control of the country. Britain still spends too much; it borrows too much, and our weak productivity shows that we do not train enough, build enough or invest enough. This we are determined to change. We will be bold in transforming education, bold in reforming welfare, bold in delivering infrastructure and bold in building the northern powerhouse. We will be bold in backing the aspirations of working people. This is a big Budget for a country with big ambitions. It is a Budget that sets the way to secure Britain’s future Let me turn to the latest forecasts from our independent Office for Budget Responsibility. We thank Robert Chote and his colleagues for their hard work. We now have Budgets that fit the economic forecasts, instead of economic forecasts that were fixed to fit the Budget. At the March Budget, it was thought that the British economy had grown by 2.6% last year. We now know that it grew by 3%. But the global economic risks are rising. The US economy has slowed, so too has China, and even before the Greek crisis intensified this week, the forecasts for global growth had been revised down this year to 3.2%. It is all the more reason to get our own house in order For 2015, the OBR forecasts growth at 2.4%. That is faster than America, faster than Germany and twice as fast as France. For the second year in a row, Britain is expected to have the strongest economic growth of any major advanced economy in the world. In 2016, the OBR has growth unchanged at 2.3%, and then it is revised up to 2.4% in the following year—a level of strong, steady growth that it predicts for the rest of the decade. This growth is driven by stronger private consumption, and by stronger private investment, too. Indeed, business investment is now 31.9% higher than it was in 2010, and is revised up again this year. Now we need to see investment at home matched by exports abroad. Our decision to become a founder member of the new Asian Infrastructure Investment Bank is driven by our determination to connect Britain to the fastest-growing parts of the world, and our decision to seek reform to the EU is driven by our determination that this part of the world shall not price itself out of a prosperous future Higher investment leads to more jobs, which brings me to the OBR forecasts for employment. Over 2 million more people have the security of work as a result of this Government’s long-term economic plan. The OBR forecasts that under the current economic conditions, almost 1 million more jobs will be created over the next five years. Our ambition is to go further, and create 2 million more jobs on the road to full employment. To help achieve that progressive goal, we set out today how we will make work pay Jobs are not created by accident. They are created when businesses have confidence—the confidence to invest, to grow and to hire; confidence that comes because Britain is getting its house in order. So we seek to create a country that can truly pay its way. The budget deficit is now less than half the 10% we inherited, and economic security is returning, but all that progress is at risk if we do not finish the job. That means more than just eliminating the deficit; it means running a surplus to get our dangerously high levels of debt down That brings me to the first of the key judgments in this Budget—how fast do we cut the deficit? My answer is this: we should cut the deficit at the same pace as we did in the last Parliament. We should not go faster; we should not go slower. At this pace, the national debt is lower as a share of our national income in every future year than when I presented the Budget in March, and it is achieved without a rollercoaster ride in public spending This is why: first, our tax receipts are stronger than forecast, showing that the recovery is firmly entrenched; secondly, as a strong majority Government, we have been able to get on with making extra savings in this financial year; and thirdly, we can make faster progress in returning our banks, including RBS, to where they belong—the private sector. Indeed, the sale of Government assets this year will deliver the largest privatisation proceeds of all time, higher than the previous record in 1987. With stronger tax receipts, more asset sales and a strong Government who are getting on with the job, we can achieve a smoother path to the same destination, with a surplus a year later in 2019-20, but the national debt lower and that same surplus higher. For this is a Budget that puts economic security first. Many difficult but necessary decisions are required to save money, and this will be done with moderation but determination. This is a one nation Government who do the best thing for the economy and the right thing for the country. This plan is reflected in the forecasts for debt and deficit produced today by the Office for Budget Responsibility. The deficit was 10.2% of national income in 2010. This year, it is forecast to fall to 3.7%—one third of the deficit we inherited. It then falls again to 2.2% in 2016-17, down to 1.2% the year after, and then to just 0.3% in 2018-19. The following year, 2019-20, we move into a budget surplus at 0.4%, which is then maintained the year after at 0.5% of GDP. In structural terms, the OBR judges that this will be the largest surplus in at least 40 years—Britain back in the black, and in its strongest position for almost half a century This is, of course, all reflected in the amount of cash Britain has to borrow each year. In 2010, Britain was borrowing a staggering and unsustainable £153 billion a year. In March, the OBR forecast that we would borrow less than half of that, or £75.3 billion, this year. In this Budget, it has revised borrowing down this year to £69.5 billion. Borrowing then falls to £43.1 billion next year, £24.3 billion in 2017-18, and down to just £6.4 billion the year after. In 2019-20, we move into a surplus higher than previously forecast of £10 billion, which rises to £11.6 billion the year after—Britain finally doing the responsible thing and raising more money than it spends Five years ago, we inherited a situation in which our national debt as a share of our national income was soaring. This year, that national debt share is falling, bringing to an end the longest continued rise in our national debt since the 17th century. It is falling now, and it continues to fall in every year of the forecast, down from 80.3% this year to 79.1% next year, then down again to 77.2% in 2017-18, 74.7% the year after, and 71.5% the year after that, before falling again to 68.5% in 2020-21. Britain has turned a corner and left the age of irresponsibility behind Having come this far, there can be no turning back. We should aim for a new settlement across the political spectrum where it is accepted that, without sound public finances, there is no economic security for working people; those who suffer when Governments run unsustainable deficits are not the richest, but the poorest; and therefore in normal economic times Governments should run an overall budget surplus, so that our country is better prepared for whatever storms lie ahead. In short, we should always fix the roof while the sun is shining Today, I publish the new fiscal charter that commits our country to that path of budget responsibility. While we move from deficit to surplus, this charter commits us to keeping debt falling as a share of GDP each and every year and to achieving that budget surplus by 2019-20. Thereafter, Governments will be required to maintain that surplus in normal times—in other words, when there is not a recession or a marked slowdown Only when the OBR judges that we have real GDP growth of less than 1% a year, as measured on a rolling four-quarter basis, will that surplus no longer be required. The Chancellor of the day will have to set out their plan with clear targets to restore the nation’s finances to health and the House of Commons will test the credibility of that plan and vote on those targets. This is sensible, pragmatic and keeps Britain secure. We will put the new fiscal charter to a vote in this House this autumn, and I invite broad cross-party support for it To meet the new charter, further difficult decisions need to be taken to live within our means. We will take these decisions in a balanced and fair way. I can confirm that the analysis produced today shows that the richest are paying a greater share of tax than they were at the start of the last Parliament. And more than that, we are continuing to devote a greater share of state support to the most vulnerable. As I said they would, those with the broadest shoulders are bearing the greatest burden, for we are all in this together. And in the last fortnight we have seen independent statistics showing that since 2010 child poverty is down, and so is inequality. That comes on top of a record number of women in work, and the gender pay gap at an all-time low—all good news that should be welcomed on both sides of the House The fiscal plan set out in the Budget requires around £37 billion of further consolidation over the Parliament. Today, I set out how we will find just under half of that—£17 billion. We have found annual savings of £12 billion from welfare and £5 billion from tackling tax evasion, avoidance and planning and imbalances in the tax system. The other half will largely come from Government Departments through savings and cuts and will be set out at the spending review that the Chief Secretary and I will conduct this autumn. However, no year will see cuts as deep as those required in 2011-12 and 2012-13 Of course, I am conscious that a huge amount has already been done to increase efficiency across Whitehall, with administrative budgets down by more than 40% in real terms, but there is still much more we can do. There is also a simple trade-off between pay and jobs in many public services. I know that there has already been a period of pay restraint, but we said last autumn that we would need to find commensurate savings in this Parliament, so to ensure that we have public services we can afford, and to protect more jobs, we will continue recent public sector pay awards with a rise of 1% per year for the next four years Public spending should reflect public priorities and we have to make choices. Our priority is the national health service. We will fund fully the plan the NHS has itself produced for its future, the Stevens plan. That plan requires very challenging efficiency savings across the health service, which must be found, but it also requires additional Government funding. Our balanced approach means that I can today confirm that the NHS will receive, in addition to the £2 billion we have already provided this year, a further £8 billion. That is £10 billion more a year in real terms by 2020. It is proof that you can only have a strong seven-day NHS if you have a strong economy, and it is proof that the NHS is only truly safe in Conservative hands I have set out the difficult choices we are going to face on Government spending and the priority we will accord to our national health service. I turn now to combating tax evasion, avoidance and aggressive tax planning. In Budget after Budget, we have done more to combat that than any Government before us. We inherited a system where bankers boasted of paying lower tax rates than their cleaners and some multinationals shifted all their profits offshore. We have stopped these blatant abuses that were allowed to flourish, and many others, but we promised the British people we would do more and find a further £5 billion a year, and I can confirm we have done so We are boosting HMRC’s capacity, with three quarters of a billion pounds of investment to go after tax fraud, offshore trusts and the businesses of the hidden economy, tripling the number of wealthy evaders it pursues for prosecution and raising £7.2 billion in extra tax We are going to change the law to stop the use of losses that abuse our controlled foreign companies regime, and make sure investment fund managers pay the full capital gains tax rate on their carried interest We will stop corporates artificially increasing the value of stock for tax purposes, and to focus the employment allowance on employment we are restricting it so that companies where the director is the sole employee will no longer be able to claim We are consulting today on how to deal with the increasing abuse of the rules around disguised employment when working through a personal service company, and we are going to add tough new penalties to our general anti-abuse rule and name and shame serial users of failed avoidance schemes. These people should have nowhere to hide The non-domicile tax status is a long-standing feature of the UK tax system—in place since 1914—that plays an important role in allowing those from abroad to contribute to our economy before returning to their permanent home, and many countries have some version of this tax status Simply abolishing it altogether would, as Ed Balls correctly noted, probably cost the country money. Many of these people make a considerable contribution to our public life and to tax revenues, but there are some fundamental unfairnesses in the non-dom regime that I am putting a stop to today It is not fair that people who are born in the UK to parents who are domiciled here can later in life claim to be non-doms and live here. It is not fair that non-doms with residential property here in the UK can put it in an offshore company and avoid inheritance tax. From now on they will pay the same tax as everyone else. Most fundamentally, it is not fair that people live in this country for very long periods of their lives benefit from our public services and yet operate under different tax rules from everyone else Non-dom status was meant to be temporary, but it became permanent for some people. Not any longer. I am today abolishing permanent non-dom tax status. Anyone resident in the UK for more than 15 of the past 20 years will now pay full British taxes on all worldwide income and gains. We will consult to get the detail right. All these non-dom measures will come into effect in April 2017 and they will raise £1.5 billion in extra tax for the Exchequer over this Parliament. British people should pay British taxes in Britain, and now they will Turning to corporate tax rules, we will also broaden the base for corporation tax by removing, for future transactions only, the annual deduction for acquired reputational value. For big companies with profits over £20 million a year, we will bring forward corporation tax payment dates so that tax is paid closer to the point at which profits are earned. That is fair and more in line with what we are doing in personal tax, and it is what almost all other G7 nations do. Banks make a key contribution to our economy, but they also need to make a fair contribution. It is important that they help pay down the debts built up during the banking crisis, but equally important that they go on creating jobs, not just in London but in Edinburgh, Leeds, Birmingham, Bournemouth and across the country. The new remit I am issuing today for the Financial Policy Committee highlights the importance of productive investment, innovation and competition in finance Our bank levy was introduced to raise revenue and increase the stability of balance sheets, and it has worked, but now it risks doing harm unless we change it. So I will, over the next six years, gradually reduce the bank levy rate, and after that make sure it no longer applies to worldwide balance sheets. But to maintain a fair contribution from the banks, I will introduce a new 8% surcharge on bank profits from 1 January next year. By getting this balance right, it means we will actually raise more money from the banks this Parliament, but at the same time make our country a more competitive place to do business We have also taken action to make sure that consumers get a better deal from another important industry: insurance. The costs of premiums are down for families, and today we are announcing a major review of the regulation of claims management companies and we will cap the charges they can apply to their customers Britain’s insurance premium tax is well below tax rates in many other countries. I am therefore today raising insurance premium tax, which applies to only one fifth of all premiums, to 9.5%, effective from this November. With these measures I am putting in place an approach for taxing banks and insurers over this Parliament which is sustainable, stable and fair In each year, we have been able to use money from the banking fines paid by those who represent the worst of values to support those in uniform who demonstrate the best of British values. Today we announce funding for the Defence Medical Welfare Service and the Royal Commonwealth Ex-Services League. We are supporting the incredibly courageous members of our special forces who are injured, and, in the 75th anniversary of the Victoria Cross and George Cross Association, quadrupling the annual annuity we pay to those who demonstrated the highest valour and whom I had the honour of meeting yesterday In the week of the poignant anniversary of the 7/7 attacks, we should recognise, too, that our victims of terrorism overseas have no permanent memorial. We will now fund one, as well as a specific memorial to those murdered in Tunisia. We are committing £50 million to expand the number of cadet units in our state schools to 500, prioritising schools in less affluent areas, and we are going to support the Children’s Air Ambulance by funding an extra helicopter In every Budget, I also find an opportunity to fund the commemoration of famous events from our history and the buildings that symbolise them. This Budget is no exception. The RAF’s group fighter command centre in west London was the place where the battle of Britain was directed from and it badly needs repair. I want to thank the new Member my hon. Friend the Member for Uxbridge and South Ruislip (Boris Johnson) for bringing to my attention the dilapidated state of his campaign bunker. Let its renovation stand as a monument to the heroes of the battle of Britain and the days when aeroplanes flew freely over the skies of west London I turn now to the great economic challenge we face on productivity, for this is the key to delivering the financial security that families see when living standards rise. And it will ensure that Britain becomes what we want it to be—the most prosperous major economy in the world by the 2030s. That is within the grasp of our generation, provided we take the big decisions. On Friday we will set out our plan for productivity, to help realise this ambition. I want to thank my new Treasury colleague Jim O’Neill for his work as a world-leading economist in putting it together. Major British businesses, led by Sir Charlie Mayfield, have told me that they want to be part of the solution to this great challenge and we very much welcome that Let me today set out the key parts of that plan. First, on transport, four fifths of all journeys in this country are by road, yet we rank behind Puerto Rico and Namibia in the quality of our network. In the past 25 years, France has built more than 2,500 miles of motorway and we have built just 300. In the last Parliament I increased road spending, even in difficult times, and set out a plan for £15 billion of new roads for the rest of this decade, but we need a long-term solution if we are going to fix Britain’s poor roads Vehicle excise duty was used to fund our roads, but not any more. And because so many new cars now fall into the low carbon emission bands, by 2017 over three quarters of new cars will pay no VED at all in the first year. That is not sustainable and it is not fair. If someone can afford a brand new car, including some of the most expensive models available, they can pay no VED. If they can afford only an older, second-hand car, they have to pay more tax. Only a Labour Government could have designed something so regressive So this is what we will do. From 2017, for brand-new cars only, we will introduce new VED bands. The duty in the first year will be set according to emissions, like today, but updated for new technology. Thereafter there will be three duty bands: zero emission, standard and premium. For standard cars—that covers 95% of all cars sold in the UK—the charge will be £140 a year. That is less than the average £166 that motorists pay today. There will be no change to VED for existing cars: no one will pay more in tax than they do today for the car they already own. In total, we will only raise the same amount of revenue from VED in the future as we do today, but that revenue will be secure for the long term And I will return this tax to the use for which it was originally intended. I am creating a new roads fund. From the end of this decade, every single penny raised in vehicle excise duty in England will go into that fund to pay for the sustained investment our roads so badly need. We will engage with the devolved Administrations on how the money is allocated there. Tax paid on people’s cars will be used to improve the roads that they drive on. It is a major reform to improve the infrastructure and productivity of our economy, and deliver a fairer tax system for the motorist We will also consult on extending the deadline for new cars and motorbikes to have their first MOT test from three years to four years, which would save motorists over £100 million a year. I can also confirm that there will be no changes to the plans for fuel duty I set out in March: fuel duty will remain frozen this year Productivity means building more roads. It also means giving people the skills they need to secure a better job. It is to our national shame that we are almost the only advanced country in the world where the skills of our 16 to 24-year-olds are no better than those of our 55 to 64-year-olds. The education reforms we started in the last Parliament have begun to address this problem, and we are going further in this Parliament by tackling the coasting schools that simply are not good enough We have already doubled the number of apprenticeships to 2 million; now we are committed to 3 million more. To fund these apprenticeships and make sure they are of high quality we have to confront this truth: while many firms do a brilliant job training their workforces, too many large companies leave the training to others and take a free ride on the system, so we are going to take a radical and, frankly, long overdue approach We are going to introduce an apprenticeship levy on all large firms. Firms that offer apprenticeships can get more back than they put in. Britain’s great businesses will train up the next generation—3 million more apprenticeships with the security that will bring. The money will be directly controlled by employers, and we will work with business on how to do this. It is exactly the sort of bold step we need to take if Britain is going to raise its game Next, we have got to secure the success of our university sector, which is one of the jewels in the crown of the British economy. When we reformed student funding in the last Parliament, we were told by those who so opportunistically opposed us that it would put people from low-income backgrounds off going to university. Instead, we now see a record number of these students applying and succeeding. It is a triumph of progressive reform Now we are removing the artificial cap on student numbers, so we do not have to turn away from our universities people who want to go and who have the right grades. But we cannot afford to do this unless we tackle the cost of student maintenance grants, which is set to almost double to £3 billion over this decade. There is also a basic unfairness in asking taxpayers to fund the grants of people who are likely to earn a lot more than them The previous Labour Government actually abolished these grants, before reintroducing them. These grants have now become unaffordable. If we do not tackle this problem, our universities will become underfunded and our students will not get places. I am not prepared to let that happen, so from the 2016-17 academic year we will replace maintenance grants with loans for new students. The loans only have to be paid back once they earn over £21,000 a year. To ensure university is affordable to all students from all backgrounds, we will increase the maintenance loan available to £8,200, the highest amount of support ever provided To ensure our university system is sustainable, we will consult on freezing the loan repayment threshold for five years, and we will link the student fee cap to inflation for those institutions that can show they offer high-quality teaching. We will open the whole sector to new entrants who can deliver the highest standards. It is a major set of reforms to make sure Britain continues to have the best universities in the world. It is fair to students, fair to taxpayers and vital to secure our long-term economic future Britain’s weak productivity is also driven by the fact that too much of our economic strength is concentrated in this capital city. This is unhealthy and unproductive, and we must achieve a better settlement for the future, but not by pulling London down. One of the first pieces of advice I received in the Treasury was to cancel the plan for the Crick Institute, the Tate Modern extension and Crossrail, but I rejected that advice, because I have always believed it is to our nation’s great advantage that we have one of the world’s great capitals. Now we are working with the Mayor on what this city will need in the future, with projects such as Crossrail 2 and the exciting development of the Olympic village What really drives this Government is building up other parts of the United Kingdom as a balance to London’s strength. For Scotland, we are now delivering, as promised, major devolution of tax and welfare powers. Instead of complaining endlessly about process in Westminster, the SNP Scottish Government will soon have to answer the question, “You’ve got the powers, when are you going to use them?” In Wales, we are honouring our commitments to a funding floor and to more devolution there, and investing in important new infrastructure such as the M4 and the Great Western line. In Northern Ireland, we are working with all parties to deliver the Stormont House agreement and sustainable public finances there Devolution to the nations of the United Kingdom is well established. In my view, devolution within England has only just begun. Today, we go further in building the northern powerhouse. I can today announce that I have reached agreement with the leaders of the 10 councils of Greater Manchester to devolve further powers to that city. These include putting fire services under the control of the new Mayor, establishing a land commission in the city and further collaboration on children’s services and employment programmes The historic devolution that we have agreed with Greater Manchester in return for a directly elected Mayor is available to other cities that want to go down a similar path. I can also tell the House that we are now working towards deals with the Sheffield and Liverpool city regions and with Leeds, West Yorkshire and partner authorities on far-reaching devolution of power in return for the creation of directly elected Mayors. We have created Transport for the North, and I am now putting it on a statutory footing. I can announce £30 million of funding to this new body as it connects northern England together, with seamless Oyster-style ticketing across the region Next, with the Secretary of State for Business, Innovation and Skills, my right hon. Friend the Member for Bromsgrove (Sajid Javid), we are pushing for more powers and responsibility to be devolved to the midlands—that engine of growth. The massive £7.2 billion investment in transport in the south-west is under way, and in the first of our new county deals, we are making progress on a major plan to give Cornwall a greater say over local decisions Across England, we are launching a new round of enterprise zones for smaller towns. To celebrate the Queen’s 90th birthday, a new set of prestigious regius professorships will be created in universities right across the country. To give more power to counties and to our new Mayors, we are going to give them the power to set the Sunday trading hours in their areas. Let us invest across our country, let people decide and let us put the power into the northern powerhouse Another key to raising the productivity of our country is building more homes and creating a fairer property market. This is a Government that are unwavering in their support for home ownership. That is why we are introducing the new Help to Buy ISA this autumn, that is why we are giving housing association tenants the right to buy and that is why we will set out further planning reforms on Friday Today, I will set out three important changes that will address unfairnesses in our taxation of property and put the security of home ownership first. First, we will create a more level playing field between those buying a home to let and those buying a home to live in. Buy-to-let landlords have a huge advantage in the market as they can offset their mortgage interest payments against their income whereas homebuyers cannot, and the better off the landlord, the more tax relief they get. For the wealthiest, for every pound of mortgage interest costs they incur, they get 45p back from the taxpayer. All this has contributed to the rapid growth in buy-to-let properties, which now account for over 15% of new mortgages, something the Bank of England warned us last week could pose a risk to our financial stability So we will act, but we will act in a proportionate and gradual way, because I know that many hard-working people who have saved and invested in property depend on the rental income they get. We will retain mortgage interest relief on residential property, but we will now restrict it to the basic rate of income tax. To help people to adjust, we will phase in the withdrawal of the higher rate reliefs over a four-year period, and only start withdrawal in April 2017 Secondly, the rent-a-room relief is designed to help homeowners who rent out a room in their home. It is a good scheme, particularly in a world where more and more people are renting out rooms online, but the relief has been frozen at £4,250 for 18 years. Next year, we will raise it to £7,500 The third change fulfils a long-standing promise that I made, and one that I was unable to fulfil in coalition. The left will never understand this, but we on the Conservative Benches know that the wish to pass something on to your children is about the most basic, human and natural aspiration there is. Inheritance tax was designed to be paid by the very rich, yet today more families are pulled into the inheritance tax net than ever before, and the number is set to double over the next five years. It is not fair and we will act From 2017, we will phase in a new £175,000 allowance for someone’s home when they leave it to their children or grandchildren. That sits on top of the existing £325,000 threshold, which will be fixed until the end of 2020-21. Both allowances can be transferred to a spouse or partner. From today, we will make sure that those who choose to downsize do not lose any of the allowance from the property that they used to own, but we will taper the relief away for estates worth more than £2 million The result for families is this: they can pass up to £1 million on to their children free of inheritance tax. No more inheritance tax on family homes: aspiration supported, the tax paid only by the rich, the security of home ownership restored—promise made; promise delivered The cut in inheritance tax will be more than paid for by changes which we have set out to the pensions tax relief that we give to the highest earners. From next year, their annual allowance will be tapered away to a minimum of £10,000 Our pension reforms have given huge freedom to people who have worked hard and saved hard all their lives. Many thousands of people are, with the free guidance service we offer, making use of those freedoms to access their savings instead of buying annuities. Now it is time that we looked at the other end of the age scale—at those who are starting to save for a pension. For the truth is that Britain is not saving enough, and that is something we need to fix in our economy too While we have taken important steps with our new single-tier pension and generous new ISA, I am open to further radical change. Pensions could be treated like ISAs: people pay in from taxed income, it is tax free when they take it out and in between it receives a top-up from the Government. That idea, and others like it, need careful and public consideration before we take any steps, so I am today publishing a Green Paper that asks questions, invites views and takes care not to prejudge the answer. Our goal is clear: we want to move from an economy built on debt to an economy built on the more secure and productive foundations of saving and long-term investment If Britain wants to produce more, it needs to invest more. Many small and medium-sized businesses have benefited from our enhanced annual investment allowance. The allowance was set at £100,000 when we came to office. It is higher now, but without action it will fall to just £25,000 at the end of the year. That would especially hit middle-sized companies in areas such as manufacturing and agriculture, which we want to do more to build up in Britain, so I can confirm that the annual investment allowance will not fall to £25,000, but will be set at £200,000 this year and in every single year. That is a major, permanent boost to the incentives for long-term investment by small and medium-sized firms in Britain The large reductions in tax on North sea oil and gas that I announced in March are going ahead, and today we broaden the types of investment that qualify for allowances. Now that we have a long-term framework for investment in renewable energy in place, we will remove the outdated climate change levy exemption for renewable electricity that has seen taxpayer money benefiting electricity generation abroad We cut corporation tax from 28% to 20% over the last Parliament—one of the biggest boosts British business has ever seen. We cannot take it lower than that while such strong incentives are created for people to self-incorporate and pay the lower rates of tax due on dividends. The dividend tax system was designed partly to offset double taxation on profits, but the system has not changed despite sharp reductions in corporation tax. Lower rates are rapidly creating opportunities for tax planning. Irreparable damage was done when a previous Chancellor abolished the payable credit and deprived pension funds of billions of pounds. We have inherited a complex and archaic system, so I am today undertaking a major and long-overdue reform to simplify the taxation of dividends. The dividend tax credit will be replaced with a new tax-free allowance of £5,000 of dividend income for all taxpayers. The rates of dividend tax will be set at 7.5%, 32.5% and 38.1%—an increase of 7.5% where dividend income exceeds £5,000. Dividends paid within pensions and ISAs will remain tax free and unaffected by these changes. Those who either pay themselves in dividends or have large shareholdings worth typically over £140,000 will pay more tax; 85% of those who receive dividends will see no change or will be better off; and over a million people will see their tax cut That is an important reform. It comes into operation next year, and with our personal allowance and our new personal savings allowance, it means that from April, on top of the new ISA, people will be able to receive up to £17,000 of income a year tax free. The reforms that I have announced to dividend taxation also allow us to do something more, and go further in creating a Britain that is one of the most competitive economies in the world There are those in this House who said we were wrong to cut corporation tax in the last Parliament, but it created millions more jobs, brought businesses back to Britain and increased much-needed investment, so I profoundly disagree with them. Now at 20% for large and small businesses alike, we have the joint lowest rate of corporation tax in the G20, so there are those who say we do not need to do more. I profoundly disagree with them too. This country cannot afford to stand still while others rush ahead. I am not prepared to see that happen Today, I announce that I am cutting it again. Britain’s corporation tax rate will fall to 19% in 2017 and 18% in 2020. We are giving businesses lower taxes that they can count on, so that they can grow with confidence, invest with confidence and create jobs with confidence. A new 18% rate of corporation tax—sending out loud and clear the message around the world that Britain is open for business If we are to build a more productive economy, and our country is to live within its means, we have to make this fundamental change: we have to move Britain from a low-wage, high-tax, high-welfare society to a higher-wage, lower-tax, lower-welfare economy. For Britain is home to 1% of the world’s population, generates 4% of the world’s income, and yet pays out 7% of the world’s welfare spending. It is not fair to the taxpayers who are paying for it, and it needs to change Welfare spending is not sustainable and it crowds out spending on things such as education and infrastructure that are vital to securing the real welfare of the people. We legislated for savings of over £21 billion in the last Parliament, capped benefits for out-of-work families and started to introduce universal credit. Universal credit will transform the lives of those trapped in welfare dependency and deliver real social justice. It is the result of the Herculean efforts of my right hon. Friend the Secretary of State for Work and Pensions However, to live within our means as a country and better protect spending on public services, we need to find at least a further £12 billion of welfare savings. Let me set out the principles that we will follow and how they will be applied. First, the welfare system should always support the elderly, the vulnerable and disabled people. We will honour the commitments that we made to uprate the state pension by the triple lock and protect the other pensioner benefits. The BBC has agreed to take on responsibility for funding free TV licences for the over-75s. In return, we are able to give our valued public broadcaster a sustainable income for the long term In the last Parliament, we increased payments to the most disabled people, and we will not tax or means-test disability benefits. We will increase funding for domestic abuse victims and women’s refuge centres. We are also going to use the remaining funds available in our Equitable Life payment scheme, as it closes, to double the support that we give to those policyholders on pension credit who need this extra help most The second principle we will apply is that those who can work will be expected to look for work and take it when it is offered. The best route out of poverty is work. Our economic plan has created a record number of jobs, and now a third of a million fewer children are being brought up in workless families It is not acceptable that in an economy moving towards full employment, some young people leave school and go straight on to a life on benefits, so for those aged 18 to 21 we are introducing a new youth obligation that says that they must either earn or learn. We are also abolishing the automatic entitlement to housing benefit for 18 to 21-year-olds. Exceptions will be made for vulnerable people and other hard cases, but young people in the benefits system should face the same choices as other young people who go out to work and cannot yet afford to leave home To make sure that work pays for parents, I confirm that from September 2017 all working parents of three and four year-olds will receive free childcare of up to 30 hours a week. Once again: a promise made; a promise delivered. As a result, we now expect parents—including lone parents—with a youngest child aged three to look for work if they want to claim universal credit. That is all part of our progressive goal of securing full employment in Britain We also want to increase employment among those who have health challenges but are capable of taking steps back to work. The employment and support allowance, introduced by the last Labour Government, was supposed to end some of the perverse incentives in the old incapacity benefit, but instead it has introduced new ones. One of those is that those who are placed in the work-related activity group receive more money a week than those on jobseeker’s allowance, but get nothing like the help to find suitable employment. The number of JSA claimants has fallen by 700,000 since 2010, while the number of incapacity benefits claimants has fallen by just 90,000. That is despite 61% of claimants on the ESA WRAG benefit saying that they want to work. Therefore, for future claimants only, we will align the ESA WRAG rate with the rate of jobseeker’s allowance. No current claimants will be affected by that change, and we will provide new funding for additional support to help claimants return to work The third principle that we apply to welfare is this: the whole working-age benefit system has to be put on a more sustainable footing. In 1980, working-age welfare accounted for 8% of all public spending. Today it is 13%. The original tax credit system, introduced by the last Labour Government, cost £1.1 billion in its first year. This year, that cost has reached £30 billion. We in Britain spend more on family benefits than Germany, France or Sweden—[Interruption.]
Order. Both sides of the House have been very well behaved so far, so let us not spoil it as we get towards the end. I want the same dignity to be given to other speakers.
We in Britain spend more on family benefits than Germany, France or Sweden. It is, in the words of the right hon. Member for Birkenhead (Frank Field), the new Chair of the Work and Pensions Committee, simply “not sustainable”. As Alistair Darling has said, the sheer scale of tax credits is “subsidising lower wages in a way that was never intended.” Those who oppose any savings to tax credits will have to explain how on earth they propose to eliminate the deficit, let alone run a surplus and pay down debt We will take the following steps to put working-age benefits on a more financially sustainable footing. Since the crash, average earnings have risen by 11%, but most benefits have risen by 21%. To correct that, we will legislate to freeze working-age benefits for four years. That will include tax credits and local housing allowance, and it means that earnings growth will catch up and overtake the growth in benefits. Statutory payments such as maternity pay and the disability benefits—personal independence payment, disability living allowance and employment and support allowance group—will be excluded from the freeze We are also going to end the ratchet of ever higher housing benefit chasing up ever higher rents in the social housing sector. Those rents have increased by a staggering 20% since 2010. Rents paid in the social housing sector will not be frozen, but reduced by 1% a year for the next four years. That will be a welcome cut in rent for those tenants who pay it, and I am confident that housing associations and other landlords in the social sector will be able to play their part and deliver the efficiency savings needed We also need to focus tax credits and universal credit on those on lower incomes, if we are to keep the whole system affordable and support those most in need. From next year, we will reduce the level of earnings at which a household’s tax credits and universal credit start to be withdrawn. The income threshold in tax credits will be reduced from £6,420 to £3,850. Universal credit work allowances will be similarly reduced, and will no longer be awarded to non-disabled claimants without children. The rate at which a household’s tax credit award is reduced as it earns more will be increased by raising the taper rate to 48%. The income rise disregard will be reduced from £5,000 to £2,500—the same level at which it was originally set in 2003. Taken all together, the freeze in working-age benefits, the down-rating of social rents, and the focus of tax credits and universal credit on the lowest income households will reduce the welfare bill by £9 billion a year by 2019-20 The fourth principle that we will apply to our welfare reform is this: the benefits system should not support lifestyles and rents that are not available to the taxpayers who pay for that system—[Interruption.]
Order. This House will come to order. It may not be important to some Members, but it is to the rest of us and our constituents. I want to hear what the Chancellor says because it affects all the people we represent.
The benefits system should not support lifestyles and rents that are not available to the taxpayers who pay for that system—[Interruption.]
Order. Mr Gwynne, your constituents and mine need to hear this.
We have already introduced a cap on the total amount of benefits that any out-of-work family can receive at £26,000. When we introduced that, it was opposed by Labour Members who said that it would drive tens of thousands of people out of their homes. Instead it encouraged tens of thousands into work. We will now go further, and reduce the benefits cap from £26,000 to £23,000 in London, and to £20,000 in the rest of the country. We will also require those on higher incomes living in social housing to pay rents at the market rate. It is not fair that families earning over £40,000 in London, or £30,000 elsewhere, should have their rents subsidised by other working people. We will turn support for mortgage interest payments from a benefit to a loan Another decision that most families make is how many children they have, conscious that each extra child costs the family more. In the current tax credit system, each extra child brings an additional payment of £2,780 a year. It is important to support families, but it is also important to be fair to the many working families who do not see their budgets rise by anything like that when they have more children. This is the balance that we will strike: in future we will limit the support provided through tax credits and universal credit to two children. Families who have a third or subsequent child after April 2017 will not receive additional tax credit or UC support for that child. Support provided to families who make a new claim for universal credit—[Interruption.]
Order. We seem to have a little problem with the gang of three on the Opposition Benches. I believe that we need to hear the Chancellor. This measure will affect my constituents and yours. I want to listen—I think it important that we all listen.
Families who have a third or subsequent child after April 2017 will not receive additional tax credit or UC support for that child. Support provided to families who make a new claim to universal credit after that date will also be limited to two children, and we will make similar changes to housing benefit. There will be provisions for exceptional cases, including multiple births. In addition, those starting a family after April 2017 will no longer be eligible for the family element in tax credits, nor will new births and new claims be eligible for the first child premium in universal credit. We will make similar changes to housing benefit by removing the family premium for children born or claims made after April 2016. That approach means that no family sees a cash loss and, as promised, child benefit will be maintained. These changes to tax credits are not easy but they are fair, and they return tax credit spending to the level it was in 2007-08 in real terms. When we came to office in 2010 this country had reached the point where a benefit that was intended to support lower income households was instead available to nine out of 10 families in this country. Now, our properly focused reformed tax credit system will provide support to five out of 10 families; a much more sustainable balance in our welfare system. Taken together, all the welfare reforms I have announced will save £12 billion by 2019-20 and will be legislated for in the year ahead, starting in the welfare reform and work Bill which will be published tomorrow We are moving Britain from a high welfare, high tax economy to a lower welfare, lower tax society. The best way to support working people is to let them keep more of the money they earn. We promised the British people at the election that we would introduce a tax lock to prohibit any increase in the main rates of income tax, national insurance and VAT for the next five years. We will not only keep that promise, but legislate for it in the coming weeks. Our priority is not to raise taxes on working people; it is to cut their taxes In the previous Parliament, we raised the tax-free personal allowance from the £6,500 left by the previous Labour Government to £10,600, taking almost 4 million of the lowest paid out of tax altogether. When we went to the British people this May, we said we would go much further. Our two commitments were these: we would raise the tax free personal allowance to £12,500, so that no one working 30 hours a week on the national minimum wage pays tax; and we would raise the threshold at which people pay the higher 40p rate of tax to £50,000. These were our priorities at the election and they are the priorities in this Budget, for we on this side deliver what we promise The rates of income tax in the Budget remain unchanged, but the thresholds do not. Today, I am taking the first major step towards delivering our promise: I am raising the tax-free personal allowance to £11,000 next year. That is £11,000 one can earn before paying any income tax at all, boosting wages by over £900 in total and a down payment on our goal of reaching £12,500. We will now legislate, so that after that the personal allowance will always rise in line with the minimum wage and we never ask the lowest paid in our society to pay income tax The higher rate threshold currently stands at £42,385. I am today raising it to £43,000 from next year. It marks a strong start to our commitment to raise the threshold to £50,000 and it will lift 130,000 people out of the higher rate of income tax altogether. A personal allowance of £11,000 and a higher rate threshold of £43,000: 29 million people paying less tax; a down payment for a country on the up I began this Budget statement by saying that I put security first. I have set out the steps we will take to deliver economic security for a country that lives within its means and a welfare system we can afford, but there is also the financial security of families and the national security of our country. I turn to that now The Prime Minister and I are not prepared to see the threats we face to both our country and our values go unchallenged. Britain has always been resolute in defence of liberty and the promotion of stability around the world. With this Government, it will always remain so. So today I commit additional resources to the defence and security of the realm. We recognise that in the modern world, the threats we face do not distinguish between different Whitehall budgets and nor should we. I will guarantee a real increase in the Defence budget every year and, on top of that, create a joint security fund of £1.5 billion a year by the end of the Parliament. Defence and intelligence services will have to demonstrate they are delivering real efficiency. The strategic defence and security review will allocate the money in the most effective way. I am also protecting our overall counter-terrorism effort, and I reaffirm our international aid budget that saves lives and supports our values around the world I said that this was a Budget that delivered security to the people of Britain and I said we had to choose our priorities. Well, today, this Government makes this choice: committing to our armed forces who fight to keep us free; committing to the intelligence agencies who keep us safe; committing to the values we hold dear and defend around the world; and committing today to meet the NATO pledge to spend 2% of our national income on defence, not just this year but every year of this decade. We will ensure that this commitment is properly measured, because we know that while those commitments do not come cheap the alternatives are far more costly Let me turn to the final measure of the Budget, which speaks to the values of this Government. We have been clear that we want Britain to move from a low wage, high tax, high welfare economy to a higher wage, lower tax, lower welfare society. I have set out my plans to move us to lower welfare and lower taxes. That leaves us with the challenge of higher wages. It cannot be right that we go on asking taxpayers to subsidise, through the tax credit system, the businesses who pay the lowest wages. Subsidised low pay contributes to our productivity problem and Conservatives are against unfair subsidies wherever we find them In the past five years, we have taken the tough choices to drive down our borrowing, to make our business taxes competitive and to reform welfare. It is because we have taken these difficult decisions, and overcome the opposition to them, that Britain is able to afford a pay rise. Let me be clear: Britain deserves a pay rise and Britain is getting a pay rise. I am today introducing a new national living wage. We will set it to reach £9 an hour by 2020. The new national living wage will be compulsory. Working people aged 25 and over will receive it. It will start next April at the rate of £7.20. The Low Pay Commission will recommend future rises that achieve the Government’s objective of reaching 60% of median earnings by 2020. [Interruption.]
Order. Mr Buckland, you should know better. Don’t get carried away—there’s more to come! We’ve not quite finished yet.
Mr Deputy Speaker, let me repeat myself, because I do not think the Opposition heard it. Britain deserves a pay rise and Britain is getting a pay rise. I am today introducing a new national living wage. The Low Pay Commission will recommend future rises that achieve the Government’s objective of reaching 60% of median earnings by 2020. That is the minimum level of pay recommended in the report to the Resolution Foundation by Sir George Bain, the man the last Labour Government appointed as the first chair of the Low Pay Commission Let me address the impact on business and employment. The Office for Budget Responsibility today says that the new national living wage will have, in their words, only a “fractional” effect on jobs. The OBR has assessed the economic conditions of the country and all the policies in the Budget. It says that by 2020 there will be 60,000 fewer jobs as a result of the national living wage, but almost 1 million more jobs in total. It also estimates that the cost to business will amount to just 1% of corporate profits. To offset that, I have cut corporation tax to 18%. To help small firms, I will go further now and cut their national insurance contributions. From 2016, our new employment allowance will now be increased by 50% to £3,000. That means a firm will be able to employ four people full time on the national living wage and pay no national insurance at all Let me be clear on what this means for the low paid in our country: two and a half million people will get a direct pay rise. Those currently on the minimum wage will see their pay rise by over a third this Parliament, a cash increase for a full-time worker of over £5,000. In total, it is expected that 6 million people will see their pay increase as a consequence. Taken together with all the welfare savings and the tax cuts in this Budget, it means that a typical family, where someone is working full time on the minimum wage, will be better off This is the first Conservative Budget for 18 years. It was the Conservatives who first protected working people in the mills. It was the Conservatives who took great steps towards state education. It was the Conservatives who introduced equal votes for women. It was the Conservatives who gave working people the right to buy. So, of course, it is now the Conservatives who are transforming welfare and introducing the national living wage. This is the party for the working people of Britain The Budget today puts security first: the economic security of a country that lives within its means; the financial security of lower taxes and a new national living wage; the national security of a Britain that defends itself and its values. A plan for working people. One purpose, one policy, one nation.
I now call upon the Chancellor of the Exchequer to move the motion entitled “Amendment of the Law”. It is on this motion that the debate will take place today and on the succeeding days. The remaining motions will be put at the end of the Budget debate on 14 July.
The Chancellor is said to be liberated without the ties of coalition holding him back, but what we have heard today suggests his rhetoric is liberated from reality. He calls it a Budget for working people. How can he make that claim while making working people worse off with—[Interruption.]
Order. If Members have not the courtesy to listen, I suggest a cup of tea in the Tea Room. I wanted to hear the Chancellor, and I certainly want to hear the Leader of the Opposition.
The Chancellor is making working people worse off by cutting tax credits and scrapping grants for the poorest students. He says he has a long-term economic plan, but what kind of economic plan is it when they are ducking it on Heathrow? He talks about the northern powerhouse, yet he has pulled the plug on rail investment, and as for one nation Britain, how can he even stand and say those words when, while cutting tax credits for working people, he has not done enough to stop tax avoidance More than seven years after the financial crisis, five of which were under this Tory Chancellor, the country is still dealing with the consequences and the recovery is still fragile. Today’s Budget documents show that growth has been revised down this year. Of course, however, tough decisions are needed to get the debt down, and had we been in government, we would have cut spending outside protected Departments and reduced the welfare bill, so there are measures in the Budget to which we will give serious consideration When in opposition, the temptation is to oppose everything the Government do—believe me, I feel that temptation—but we best serve this country by being a grown-up and constructive Opposition. We will fiercely oppose policies that hit working people and expose policies that are unworkable, but where the Government come forward with sensible ideas, we will be prepared to look at them. We will be a different kind of Opposition. In turn, I hope the Government will reflect on how they conduct themselves. The Chancellor is renowned for his political traps, games and tactics, but that is not what he should be doing. Normally, it is the Government who govern, while the Opposition play politics, but the Government are playing politics with this Budget. It is less about economic strategy and more about political tactics designed by the Chancellor to help him move next door The most important thing for working people is sustainable jobs in productive firms in a competitive economy, and productivity is key to the virtuous circle of increasing investment, higher skills, successful businesses and rising wages—that is the route not just to raising living standards but to getting the deficit down—but when it comes to productivity, the Chancellor’s record is poor. It is not as though people are not working hard, but the things that turn their work into high productivity—skills, investment and infrastructure—are not there for them, which is why the UK produces on average 30% less per hour than workers in Germany, France and the US and output per hour in this country is 17% below the average for the G7. That is the lowest we have been in the productivity league table since 1992. It is not enough just to publish a productivity plan later in the week; we have to do it Businesses are clear that infrastructure is vital to raising productivity. Whether roads, rail, airports, energy supplies, broadband or housing, a modern economy needs modern infrastructure, but the Chancellor has pulled the plug on the electrification of the railways and pulled the rug from under investment in renewable energy, and he has flunked it on airports; and people are weary of hearing the same old re-announcements on roads. They could resurface the A14 with the Treasury press releases about it—and no doubt there will be more To be one nation, we need every region to be productive, vibrant and powering ahead, not just some. The Chancellor has made much of his commitment to devolution, but we cannot build a productive economy on a political slogan. With last month’s cancellation of railway electrification, the great northern powerhouse is starting to look like the great northern power cut. He should tell the House today that he will reinstate the electrification of the Manchester-Leeds trans-Pennine service. Will he do that? Or are there more excuses, such as, when it comes to the railways, perhaps we have the wrong sort of Government on the track. He should also tell the House today that he will end the delay on the electrification of the midland main line, or let us hear no more boasts about one nation Will the Chancellor undertake to consult on his announcement on Sunday trading? He needs to consult on this fully with the British Retail Consortium, the Federation of Small Businesses, the Association of Convenience Stores, the unions whose members work in these stores and councils. He talks about empowering local government in his devolution plan and he mentions future new city deals, but over the last five years, local government has taken a disproportionate hit from his spending cuts, particularly in the north and the areas that most need economic regeneration. The 10 most deprived areas had their spending cut by 12 times the amount of the 10 least deprived areas. Local government is key to regeneration. It drives growth throughout different parts of the country, raising productivity and, crucially, rebalancing our economy, but we cannot empower local government if we impoverish it. A key part of modernising infrastructure is building homes, but we have the biggest housing crisis for a generation. Home ownership is falling; we are building only half the homes we need; and the cost of renting or buying is soaring out of reach, especially in London and the south-east. We want people to be able to own their own homes—we want as many people as possible to fulfil that aspiration—but any credible housing policy must ease, rather than deepen, the housing crisis and enable more people to own their own homes. Although it is right to help people pass on their homes to their children, more important than inheritance tax relief for homes worth millions is helping millions more people own their own homes What businesses wanted from the Budget was substantial measures to improve the skills of the workforce. The Chancellor made further announcements on that today, but what he has said in the past he has not delivered. The number of young people starting apprenticeships is stagnating, not going up, while new apprenticeships are skewed towards lower levels, and businesses are crying out for higher skills levels. Anyway, much of the Government’s so-called apprenticeships programme is just a rebadging of existing in-work training. Businesses need to have the confidence to invest and they say they need longer-term certainty in the tax relief regime, but the Chancellor chops and changes tax reliefs, cutting them back one day so that he can boast about putting them up the next, and that is exactly what he has done again today With the higher productivity that we get from investment in infrastructure, people and industry, we get the sustainable jobs and rising wages that bring down the welfare bill. Indeed, one of the reasons why the national minimum wage was introduced by the Labour Government in the first place was to tackle the rising cost of in-work benefits. The Chancellor now claims that he wants a high-wage economy with lower welfare bills. Well, we all want that, but he is putting the cart before the horse. At the heart of his Budget is his announcement—heavily trailed in the press, but curiously not mentioned in the election campaign—to cut tax credits for working people. However, doing that without an across-the-board, effective plan for higher pay at the same time will make working people worse off. He is saying he will cut welfare, and wages will magically go up; we say get wages up first and the welfare bill will come down We heard the announcement about the national minimum wage and the living wage, but what—[Interruption.]
Order. There are too many conversations and too many comments being made. I want to hear the Leader of the Opposition; you should also want to hear the Leader of the Opposition.
Clearly, what hon. Members do not understand and have not worked out yet is that, even with the higher national living wage that the Chancellor has announced, it will not be enough for a family to live on because of the cuts in tax credits. That is the actual situation When it comes to tax cuts, we support the rise in the higher rate threshold and in the personal allowance, but we will look at the detail to make sure the Chancellor is not up to his usual trick of giving with one hand and taking away with the other. When it comes to tax, the burden of deficit reduction should be borne by those with the broadest shoulders. Instead, he has chosen to put the heaviest burden on low-paid working people. He is claiming to have found £12 billion in welfare cuts but is aiming to get only half that amount from tax avoidance, and most of that is from our tax avoidance policies On welfare, we back measures to get people into work to achieve full employment and thereby get the social security bill down, and in our manifesto we committed to a benefit cap. However, the Chancellor promised to protect the most vulnerable and disabled from his welfare cuts, and if he goes to break those promises, we will oppose him every step of the way The Chancellor has now accepted a slowdown in his original pace of cuts. We will look at the details, but we will want to be sure that all this amounts to is not just hitting working families one year later. We have said we support pay restraint in the public sector, but it should be based on a fair process that is not casually disregarded but is fair to those on lower incomes. In 2010, the Chancellor made that promise to the lowest-paid workers in the public sector, and he did not keep it On the NHS, people will take Conservative promises with a pinch of salt when they come from a Government who have cut funding for GP services, cancer services and mental health services The Chancellor has talked about the surplus, which no one would disagree with when economic circumstances allow. We will look at the detail of the Chancellor’s proposed new fiscal rule, but simply legislating for it has more to do with politics than economics. Anyone can legislate for a surplus; the question is whether it can be delivered, and he has signally failed to keep his promises on that in the past The Chancellor claims that this is a Budget for working people, but it does not put working people first; it ducks the big decisions on infrastructure and fails to give businesses the productivity boost they need. In the light of the measures set out in the Budget, let us look at what the Office for Budget Responsibility says about productivity. It says that his Budget will not improve productivity. True to form, what this Chancellor says and what he does are two very different things. That is why it is down to us to ensure that when he says it is fair, it is fair, and that when he comes up with some new proposal, he consults in good faith to make sure it is workable Before the Chancellor makes more promises, he has to deliver on those he has already made. He says that he stands up for working people; what he does is make them worse off. He says he has a long-term economic plan; what he does is duck the big infrastructure projects. He talks one nation, but many of the measures announced today will make this country more divided. The hopes of millions of working people are more important than his hopes of being the future Tory leader. This Chancellor is personally ambitious, but when the economic recovery is still fragile, he should be ambitious not just for himself, but for the country.
I would like to start by thanking the House of Commons—[Interruption] —or what is left of it, as three-quarters of the House goes to lunch, and quite right too—for being kind enough to put me back in my job. I would also like to welcome not only the three returning members of the Select Committee on the Treasury but the seven newly elected members. We will be meeting very soon to examine the Budget I congratulate the right hon. and learned Member for Camberwell and Peckham (Ms Harman) on her speech. It is an extremely difficult speech to make—probably for anyone to make in the House of Commons—immediately after a Budget that she has not seen. Of course, it is a Budget that I have not seen either. I note that in her speech she did not challenge the central Budget judgment—that is, to tackle the deficit. She did not say the deficit was being reduced at too great a speed. Of course, the Chancellor has announced that the Budget will be balanced in a couple of years, according to OBR forecasts. If the Chancellor succeeds, he will be delivering the pace of deficit reduction that Alistair Darling sought in his March 2010 Budget, so I do not think this was ever a great economic experiment. Like the decision in 1976 fundamentally to change monetary policy after the International Monetary Fund came in, this is something that both parties are beginning, slowly, to agree on.
I am grateful to the right hon. Gentleman for giving way, because there is a party here that does not agree with the consensus that appears to be building up. Today’s Budget will go down as a pivotal moment in the dismantling of the welfare state, with the Government’s own advisers saying that slashing the benefits cap will throw 40,000 more children into poverty. Can he say whether that is a price worth paying, when even the IMF has told the Government that low borrowing costs make austerity unnecessary, with the costs of paying down the deficit in this way outweighing the benefits?
That was a very interesting short speech. The hon. Lady made some important points, which I will not have time to address, with almost all of which I profoundly disagree and with which—this is the point I was trying to make—I think a large proportion of the House now disagrees The new Committee has a heap of new things to look at as a result of this Budget: the Green Paper on pensions and savings, the £12 billion of cuts to the welfare bill, the living wage, the new fiscal target, the shake-up of Sunday trading laws, the inheritance tax threshold changes and the avoidance measures, among much else. We will do our very best to report back to the House on these issues, and as soon as we can The plain fact, which I think is widely—almost universally—accepted, is that the backdrop for this Budget is dramatically better than it was when the Chancellor stood up and the right hon. and learned Member for Camberwell and Peckham replied exactly five years ago. The Chancellor deserves a great deal of credit for having brought about that transformation in the country’s economic fortunes I think, though, that it is worth mentioning a few risks in the economy. The first, which I consider very important and to which the Chancellor alluded, is the euro crisis and the Greek problem, which has the potential to turn from a manageable challenge into a major catastrophe. Were Greece to default, the United Kingdom could not take for granted the relatively compressed bond yields that help to keep our debt service costs low. The second is the bursting of the stock market bubble in China. Thirdly, we shall have to adapt to the moment when interest rates start to rise, because it could prove a shock for those who have become too used to the idea that they can remain at an artificially low level That is without taking account of quantitative easing—£375 billion of it—which will have to be unwound. I want to put down a marker about QE, on behalf of Parliament. When it is unwound, it may make a profit or a loss, and that profit or loss will need to be examined by the House and the Treasury. It is a matter for us, and not exclusively for the Bank of England. Any losses that are borne by QE do not score against the Bank’s balance sheet; they score against taxpayers. I think it extremely important for the House to be closely involved when big decisions are made about QE.
Does my right hon. Friend agree that one of the biggest vulnerabilities of the economy is household debt, which is currently greater than the national debt at slightly under £1.5 trillion?
Yes. We have a long way to go before we can fully restore a savings culture in this country. The savings ratio is still unacceptably low, much lower than it has been historically. There is a great deal more to do, and I think that the pensions and savings reform Green Paper will have a role in that Since my hon. Friend has—indirectly—raised this issue, let me add that, during the last Parliament, the Treasury Committee briefly examined the question of whether pensions could be treated like individual savings accounts. The idea did not find much favour in the press at the time, but I personally think that it merits careful consideration.
Will the hon. Gentleman give way?
I will give way to the hon. Lady, who is a new member of the Treasury Committee. I welcome her to her new job.
I am grateful to the Chair of the Committee If we want debt in the personal sector to fall, should we not bear in mind the fact that permanent budget surpluses in the Government sector will make that more difficult?
That is an interesting theoretical point. In fact, it travels under a very fancy name, “Ricardian equivalence”, and a heap of academic theory has been written about it. I greatly look forward to discussing it with the hon. Lady in the Treasury Committee, and I know that the other nine Committee members look forward to our exchanges as well The right hon. and learned Member for Camberwell and Peckham talked quite a bit about productivity. As the economy has begun to recover and growth has begun to return, people are saying that it is not the growth that they wanted. They are saying that it is in the wrong part of the country, that it is going to the wrong people, or—as we are hearing now—that it is not accompanied by productivity. That has been true so far, but it is important to bear in mind a few points about productivity First, we are recovering from the worst recession in economic history. There has been a 6% fall in output. A shock on that scale is huge for the economy to absorb, so of course that means that the recovery will be uneven. What really lies behind the recovery is a massive reallocation of capital as well as labour, across regions, across the labour market and across sectors of the economy, so we might well expect productivity not to move in line with that in previous recessions Secondly, in any case, much of the growth in the run-up to the crisis was fuelled by over-leveraged banks lending to over-leveraged households. That was unsustainable. Comparing productivity levels with what they might have been had growth continued at the pre-crisis rate is therefore highly misleading, because it means imagining that the unsustainable productivity levels could have been sustained, and we know that they could not have been. The peak levels of productivity are probably a chimera Thirdly, we should bear in mind the fact that lower productivity reflects much more flexibility in the labour market than many people had feared. Most had thought that unemployment would be much higher than it has turned out to be, perhaps 3 million or even 3.5 million. If the labour market had been less flexible, we would have had higher unemployment. We would also have had higher productivity, but I do not think there are many takers for that in the House, particularly now that we know how important it is to secure labour market participation among the young, on social as well as economic grounds There are other developments in the labour market that might affect the productivity statistics. For instance, productivity has been held down by rising rates of workforce participation among older people. That is an intended, and welcome, consequence of the Government’s pensions policy, and, to a degree, it represents the policy not only of the coalition Government, but of both Governments before that. So I think that, when all those factors are taken together, the productivity problem is not necessarily as serious as it initially appeared to be. However, I also think it important that the Chancellor’s measures bring about a pick-up.
One would expect marginal productivity to fall, but the fact is that there are 800,000 fewer people earning more than £20,000 a year than there were five years ago, in 2010. Is that not why the Government have had to borrow more in five years than Labour did in 13? Productivity is a catastrophe.
Responding to that would require me to do a bit of calculation on my feet, but I would guess that if it is part of the reason, it is only a very small part. Far more important has been the much higher level of overall labour participation. Millions of jobs are being created in the economy, which is a remarkable achievement.
rose—
I give way to my hon. Friend, who is another member of the Treasury Committee.
I am most grateful to my right hon. Friend. He may not have had a chance to look at the financing arithmetic, but I am happy to tell him that since April, the forecast for the total financing is down by £14 billion. Will he join me in welcoming that, and in congratulating the Government on their progress on precisely the issue that was raised by the hon. Member for Swansea West (Geraint Davies)?
One of the advantages of not having to make a speech immediately after the Leader of the Opposition is that one does at least have a chance to read the Red Book beforehand. I am operating under something of a handicap. However, I look forward very much to reading it I shall make only a couple more points, in order not to detain the House for too long. One of them relates to the deficit. During the last Parliament, all economic and financial policy was overshadowed by the need to address that colossal deficit, but the economic and financial policy of this Parliament can and should be about much more, and we heard some of that from the Chancellor. It needs to be about nothing less than the economic revival of Britain in the 21st century. Taken together, this Budget, the forthcoming autumn statement, the spending review, and the Chancellor’s second Budget in eight months’ time will present the biggest opportunity for a generation to achieve that The Government have not made their job any easier by tying their hands on tax—as the Budget made clear—and on spending. Moreover, we have just been through an electoral bidding war, and a good deal of ground has been conceded—probably too much, in my view. Almost half of public expenditure is now ring-fenced by pledges to protect or increase spending on health, schools, foreign aid, pensions and child benefit, and that, of course, excludes the defence announcement that we have just heard. While it is understandable on political grounds, it could make economic management considerably more difficult in the years ahead. However, as I mentioned earlier, all sides now agree on the need for deficit reduction, although they disagree to some extent on how it can be accomplished. We heard a little about that from the right hon. and learned Member for Camberwell and Peckham Let me say a few words about taxable capacity. Some have suggested that taxes should be higher, rather than spending being cut, in order to keep the deficit reductions at broadly the same rate. It is important to realise, however, that it is not at all clear that by raising tax rates we necessarily get any more money; we might get less. It is salient that over the past 30 years, despite the best efforts of some Governments at times to collect a good deal more revenue, the UK’s tax take has remained stubbornly between 32% and 35% of GDP There is a ceiling to how much can in practice be collected in tax, and my guess is that the UK is quite close to that ceiling now. That derives not only from the fact that it is difficult to get taxes from very wealthy individuals—something to which the Chancellor alluded. The fuel protests in 2000 were a timely reminder for the political classes and the bureaucrats who advise them of how difficult it can be to raise taxes. In any case, we live in an age of global tax arbitrage: countries are competing for a slice of an increasingly footloose tax base, particularly in corporate taxation. Along with a number of other countries, we have launched an initiative to try to ensure that multinationals pay tax where their profits are earned, and that is a worthy ambition, but I wonder how much extra tax yield can be protected in this way. I note that the attempt to get the increase in yield from Swiss tax avoidance raised much less than was forecast at the time the Chancellor announced it.
Does the right hon. Gentleman, as Chair of the Select Committee, feel that HMRC is fit for purpose?
Yes I do, and I think it is in better shape than it was. It is important to remember that HMRC is a much-maligned department. Have any of us ever met people who like taxmen and women? They are not the most popular bunch, and they are easy targets. They have certainly made their share of mistakes, but they are being asked to implement a difficult tax code, and they have been doing their best in very difficult circumstances Of course we need more supply-side reform: a simpler and less distortive tax system; deregulation; better regulation in some areas; simpler and less distortive taxes on energy; better education and transport systems; and more flexible labour markets. All these are necessary to release the energies of the British people and generate sustained improvements and growth in living standards The Chancellor’s decision—although he did not announce it today—to keep the Office of Tax Simplification and put it on a statutory footing is welcome. Fundamental reform of the tax system is long overdue. It is a scandal that Britain has the longest tax code in the world. “Tolley’s Tax Guide”, which seems to double in size every decade, now runs to 11,000 pages. With that length has come complexity. That is a massive burden on business. I draw that point to the attention of the hon. Member for Hornsey and Wood Green (Catherine West) who asked whether HMRC was fit for purpose The OTS recently published a list of 1,140 tax reliefs. A number of those could probably go. What is needed—and what has been needed in western economies, particularly ours, for decades—is fewer reliefs and lower taxes. We would be more likely to get the money in, there would be less scope for avoidance and the tax system would be less distortive of economic activity, and as a result the economy would grow more. This has not been done, however, because each relief has no doubt created its own, often vociferous, lobby group This is the first year of a Parliament, and it is in the first year of a Parliament that such special pleading can be faced down with intelligent tax reform. I hope we will see more of that in the next Budget in eight months’ time, building on what has been announced today The Chancellor has the opportunity to do some remarkable things in this parliamentary term if he has some good fortune: to balance the books; to reform and simplify the tax system; to complete fundamental reform of banking and the financial system, which he already has under way; to reduce the size of the state at least to the average of the first three years of Gordon Brown’s tenure as Chancellor; and above all to secure Britain’s long-term competitiveness. If he seizes that opportunity, it will be of enormous value to the country and his will come to be seen as one of the more remarkable tenures of any Chancellor of the Exchequer.
May I start by making a couple of brief observations? First, the Chancellor got his tone completely wrong when he seemed to suggest that only right-wing politicians understand the value of leaving things for one’s children. That was the wrong approach to take. Secondly, he got the tone wrong when he spoke about benefits paying for people’s lifestyles. I think if someone is aspirational and is striving, and is struggling on unemployment benefit of one form or another trying hard to get a job and to get by, that is not a lifestyle choice. Their lifestyle choice is to work and they should not be denigrated by someone who has never been short of a bob or two.
Will the hon. Gentleman give way?
Order. There are to be no interventions on this speech as the hon. Member for Dundee East (Stewart Hosie) is the SNP Front-Bench spokesperson. May I also advise all Members that I will be aiming for about eight minutes for contributions after this speech?
Thank you, Mr Deputy Speaker Also, the Chancellor promised at the election that he would introduce a tax lock to prohibit any increase in the main rates of income tax, national insurance and VAT and would legislate for that. He is not a stupid man, and I gently say to him that legislating to stop tax rises is just a gimmick and no one is going to buy it We welcome the living wage announcement. That is very sensible, but it is worth pointing out that the living wage that was announced is currently lower than the living wage in play in Scotland and in London, so I ask the Chancellor directly to guarantee that the balance between the living wage introduced today and the welfare changes will ensure that nobody in work is worse off. He can nod if he agrees The Chancellor said a number of things today about productivity. He repeated these sentiments from the Mansion House speech: “We don’t export enough; we don’t train enough; we don’t save enough; we don’t invest enough; we don’t manufacture enough; we certainly don’t build enough, and far too much of the economic activity in our nation is concentrated here in the centre of London.” We would agree with that; indeed, we would probably blame the Government for much of that. He went on to say in that speech, and again paraphrased this today: “We will tackle each and every one of these weaknesses with the same determination we have brought to tackling the deficit” I hope the plans to tackle productivity are rather more successful than the plans to tackle the deficit and the debt and borrowing, where he failed to meet every single one of the targets he set for himself The Chancellor also restated the problems the economy faces today, and he is right to focus on the issue of productivity because, as has been said, the UK lags way behind the US, Germany, France and even Italy in GDP per hour worked. Even on a GDP per worker basis, it is still uncompetitive, and, as I am sure he knows, the situation in Scotland is broadly similar—with, sadly, both countries sitting boldly near the top of the third quartile of productivity for advanced economies. We all know what could be done if we could increase total factor productivity by even a fraction of 1% While I welcome the fact that the Chancellor has identified productivity as the major challenge we face—as did the Chief Secretary in the debate on 17 June—there was little in this Budget actually to fix the problem. There should have been a laser-like focus on innovation, internationalisation and investment in infrastructure and skills, and a solid determination to promote inclusive growth so that no one gets left behind, but there was very little of that. For example, on innovation, although the last autumn statement increased the amount available for research and development tax credits, this Government actually reduced the qualifying expenditure, and there was nothing in today’s statement or in the Red Book on R and D tax credits or any other mechanism to help encourage innovation On internationalisation—on exports—we heard warm words but no substance. We need to understand the scale of the problem we face: the deficit in the trade in goods last year was £121 billion; and the deficit on the total trade current account was a record £97.9 billion. We would have expected a series of specific measures in the Budget to tackle that challenge, not least because the contribution to GDP from net trade was forecast to be negative throughout the entire forecast period. As we have found from the Red Book today, it is now actually worse. We would have expected action on that as there are likely to be further obstacles, particularly in our trade to the EU, because of euro depreciation and the difficulties in Greece. But we heard nothing, not even about promoting exports to non-EU locations On investment, particularly in infrastructure—this is key—the Chancellor spoke about roads and hypothecating vehicle excise duty, but he did not repeat the claim previously made, not least by the Chief Secretary, that the Government would be investing £100 billion in infrastructure over this Parliament. I was intrigued, because the Red Book from March suggested more than £350 billion of capital investment— annually managed expenditure and departmental expenditure limit—across this Parliament. We have just checked whether that £100 billion figure previously used and ignored today was real, new money or camouflaged a cut. Lo and behold, total capital spend is down every single year in this Parliament. The rhetoric was fantastic and I enjoyed the performance, but the actuality is going to be pretty difficult when local bodies and Parliaments are taking decisions Finally, on the issue of inclusive growth, which is essential if we are to narrow the inequality gap and vital for stronger economic growth, how can this Government say with any credibility that they are tackling the issue of inequality, given the scale of welfare cuts proposed today? The cumulative impact on the welfare budget over the five years is approaching £50 billion. In essence, that is £50 billion from the poorest and most vulnerable in the country, and it simply adds to the burden on those already hit by changes to incapacity benefit, reductions to tax credits, the freeze on child benefit, the removal of disability living allowance and the overall benefit cap. Given that 2.3 million children are in poverty—if we include housing costs the figure is 3.7 million—perhaps the Chancellor would have been better off listening to the children’s commissioners across the UK when they said that families and children should be protected from the welfare cuts. Instead, he pressed on with the cuts to tax credits, which are damaging for millions throughout the UK and counterproductive to economic growth One would have thought that there might, by now, have been better recognition of the economic benefits of an equal society, but having forgone 9% or so of GDP growth between 1990 and 2010 because of rising inequality, it seems the UK Government are prepared to be irrational and counterproductive, and make precisely the same mistakes all over again. Until we can raise wages substantially by increasing investment, productivity, internationalisation and innovation, cutting tax credits simply cuts household income and increases in-work poverty Let me turn to the impact on Scotland. As our First Minister said in March, between 2009-10 and 2014-15, Scotland’s overall budget fell by about 11% in real terms, with capital expenditure down by about 34%. That means Scotland’s budget was cut by about £3.5 billion in real terms. The Chancellor said today that the cuts in this Parliament would be much the same, and so we expect, before we see the detailed numbers from the Chief Secretary, that the cuts to Scotland will be of the same quantum as we have seen over the past Parliament—yet more trouble lies ahead because of the indifference of this Chancellor Of course, the Chancellor has taken a number of small measures, and I agreed with some and felt he could have gone further on others. Let me deal briefly with the annual investment allowance. I very much welcome the fact that we no longer have a cliff-edge from £500,000 to £25,000, because we asked for that cliff-edge to be removed, but in the past eight years, with six rates, we have gone from £50,000 to £100,000 to £25,000 to £250,000 and to £500,000—a modest extension. The cliff-edge has now been stopped, and that is to be welcomed, but let us be clear that we are still talking about a decrease of £300,000 a year, and six rates in eight years ain’t no way to run a tax system May I welcome the freeze on fuel duty levels, not least because in March, April and May there were rises in petrol and diesel prices? The prices in Scotland for both were the highest in the UK, and our prices have been above the average throughout that period. Surely today was the opportunity to put in place a proper fuel duty regulator to provide some certainty in the future. The Chancellor said little about energy today, but this was an opportunity at last to end the connectivity inequity of the £25 KW charge to connect to the grid in the north of Scotland compared with the £5.20 KW subsidy in London. Such a move would at least have counteracted some of the damage done by the ludicrous decision in the last few weeks to remove the onshore wind subsidies On tax evasion and avoidance, I welcome what the Chancellor said about finding £5 billion more and the action on offshore trusts, on removing some of the exemptions for foreign-controlled companies and on the non-doms, but would it not have been better to go a little further and to have moved more in the direction of Revenue Scotland, to base the general anti-avoidance principle more on “artificiality” rather than “abuse and artificiality”? Such an approach would make it easier to prove where an abuse is taking place simply by dint of the structure being artificial. May I also welcome the move on carry losses—tackling the so-called Mayfair loophole? He is taking action on that and it is long overdue. Let us hope it does bring in the £250 million to £750 million that the UK appears to be sacrificing each year Let me say something about the 40p tax threshold. We have made the point in the past that now nearly 5 million people pay that tax rate, which is far too many. I am pleased that the Chancellor has moved modestly today, although if he wants to reach his target of £50,000, he is going to have to move more substantially. I urge caution on that, because it would be wrong to increase that threshold too fast while the same scale of welfare cuts are taking place On the Royal Bank of Scotland, I wish to say one thing on the sell-off of the stock: the taxpayer must get their money back at the end—that is important On student grants to loans, I have a direct point to make: if the transfer of grants to loans sees a reduction in overall English education spending, we will pay a great deal of attention as to whether that has a knock-on consequence for Scottish funding. We would imagine that that would not be certified as an English vote for English-only Members, Mr Deputy Speaker At this Budget’s heart was the change to the fiscal charter rules. We know that under the old rules of achieving the cyclically adjusted current balance by the end of the third year of the rolling, five-year forecast, with the supplementary target of having public sector net debt as a percentage of GDP falling, this Chancellor was preparing to cut more than he needed to run a balanced budget. He made the point today that deficit and debt are falling faster than he planned, and that is a good thing. He then went on to boast about running a £40 billion surplus. That implies substantially more cuts than he needs to make in order to run the economy in balance. We have said before that he had flexibility and he still has that, and we hope he will change his mind What we really heard today is a denial of the damage done in the last Parliament and a determination to repeat those mistakes, but this time with an ideological edge. It was less of a plan to boost productivity, which should have been at the heart of this Budget, and more a sermon from the high priest of an austerity cult—I was very careful there, Mr Deputy Speaker. This was not the Budget the country needed and it was not the Budget that those who have suffered most over the past five years should have had to endure. The Chancellor was right in one regard: it was a Conservative Budget, taking from the poor, giving to the rich. The Tories have done it again.
We will now have a maiden speech. Victoria Atkins.
“To strive, to seek, to find and not to yield.” Those are wise words for a maiden speech and they sum up the first Conservative Budget since 1996. They are also the words of a former constituent, who was born and bred in the village of Somersby. His name was Alfred Lord Tennyson, and I hope that I will live up to those values in this place Let me take Members to my constituency. It is beautiful. We go from the rolling hills of the Lincolnshire Wolds—yes, Lincolnshire has hills—across some of the richest agricultural land in the country, to the miles of sweeping sandy beaches where half a million people holiday each year. There is the fine local architecture, including St James’s spire in Louth, which is celebrating its 500th anniversary this year This is the land of poetry, heroism and champions. Heroes include Sir John Franklin, who was a Spilsby resident and famous explorer. He travelled the world and perished when he was charting the Northwest Passage This part of the world also played a vital part in the second world war. The shadows of RAF bases, such as Binbrook, Manby and Strubby, surround us. The most famous of all is that of Woodhall Spa where Bomber Command was based and where, in 1943, the Lancasters flew on the Dambuster raids. I noted with interest during the Budget that the Chancellor was very generous to my hon. Friend the Member for Uxbridge and South Ruislip (Boris Johnson) with his Battle of Britain memorial. I will just mention that the Battle of Britain memorial flight flies from my constituency, so I shall be knocking on his door Today, the heroism continues, as fast jet pilots fly Typhoons from RAF Coningsby. They will be delighted at the Chancellor’s announcement that he will meet the NATO commitment of a 2% defence budget, and I am sure that this House will join me in thanking them and their families for their service to our country I am often asked whether there are enough women Members in the House of Commons. The good people of Louth made up their minds some time ago, in 1921, when they elected Margaret Wintringham. Mrs Wintringham ran a different campaign from my own, for she took a vow of silence and said not a word on the campaign trail—a difference that several constituents were keen to point out to me during the election—but I did not take her lead. I will not take her lead, and I look forward to being a strong voice for Louth and Horncastle when the time comes That brings me to my predecessor, Sir Peter Tapsell. As former Father of the House, he was well used to addressing the serried ranks of these Benches. He was a Member of this House for 54 years, or 19,730 days for the economists among us. He fought 14 general elections and one by-election, served under 10 Prime Ministers and was perhaps the first special adviser in his role as speech writer to Sir Anthony Eden. He also saved the British economy at least once. During one of the sterling crises of the 1960s, the then Labour Chancellor, Jim Callaghan, asked Sir Peter for help. Sir Peter had a think, rang the Sultan of Brunei—as you do—and persuaded him to buy £500 million of gilts, and the next morning the pound was saved. For anyone wondering, Sir Peter has not given me the telephone number of the Sultan of Brunei—sadly There is another former Member to whom I must pay tribute and that is my father. He showed me how much good can be done in this place, and made his maiden speech in the Budget debate of a new Conservative Government as well. This Budget will be welcomed by my constituents who know that a thriving economy pays for the things that we care about, such as schools, hospitals and defence. They believe that our country must live within its means, and, like the Chancellor, that it must be done fairly. In my previous life, I prosecuted serious organised crime, including tax frauds worth tens and hundreds of millions of pounds. I saw at first hand how fraud and tax evasion have both political and economic ramifications. In one case, the fraud was so large that it threatened to alter another country’s GDP. I therefore welcome continuing efforts to ensure that everyone pays their fair share in tax Locally, I will work hard to help the rural and coastal economies in the constituency. There are challenges. The Louth and Horncastle constituency measures 531 square miles, yet there are only a few hundred metres of dual carriageway. It has 157 parishes, but no railway station. My constituency helps to feed the country, but there is fewer than one person per hectare. The small businesses that are the lifeblood of the local economy must not be put at a disadvantage simply because of the vast distances of the Lincolnshire countryside. My constituents are hard-working, resourceful and resilient. There are pockets of genuine deprivation, and my constituents need better roads, better broadband and the implementation of the long-term economic plan for Lincolnshire. They will particularly welcome the announcement regarding the national living wage, as the median salary in my constituency is £480 a week. That is an example of how this Budget and this Government will help my constituents Finally, there is one more constituent whom I must mention. Being the Queen’s Champion is an honour held by the Dymoke family of Scrivelsby since 1377. For 450 years, the Champion, clad in full armour, rode into the coronation banquet in Westminster Hall where he threw down his gauntlet to any challengers to the Monarch. Mr Deputy Speaker—[Interruption.] Forgive me, Madam Deputy Speaker, I had not noticed you had taken the Chair. The people of Louth will not forgive me I throw down my gauntlet and promise my constituents that I will be their parliamentary champion in the years ahead.
It is a real pleasure to follow the very accomplished maiden speech of the hon. Member for Louth and Horncastle (Victoria Atkins). It was a little light, lyrical relief after the Chancellor’s Budget statement. I am sure that the whole House wishes her well in following the many years of her predecessor and of her father in this House This was a Budget that was trailed by both the Prime Minister and the Chancellor last week as offering economic stability for the country and security for working people. Today, it was trumpeted by the Chancellor as a big Budget and a new settlement from a one nation Government. But this is a full fat Tory Government. They launch a frontal assault on the finances of many low income families. They change nothing of the structural weaknesses in the British economy. They deny the truth that weak growth has been the central problem of the past five years, and they disguise the fact that there are economic choices that could give us a different debate and a different direction for the future. My right hon. and learned Friend, the Leader of the Opposition, said that there is always a temptation to oppose everything, and there is a lot to oppose in this Budget. Let me start by welcoming the action on the non-doms. Let me welcome the commitment fully to fund the Stevens plan for the NHS. Let me welcome the 2% commitment for defence spending; it matches what a Labour Government did in each and every one of our 13 years in power. Let me welcome also the new £9 national minimum wage for those over 25 in 2020, not least because I was on the National Minimum Wage Bill Committee and remember how hard it was fought and how strongly it was opposed by Conservative Members. I welcome their conversion to that cause The Chancellor likes to talk about growth figures for 2014. He did so again today in his statement. But one good year of growth does not absolve him from a poor economic record over his five years. Of all the G20 advanced countries in the world, only France, Italy and Japan have grown more slowly than the UK since 2010. The Chancellor has led the slowest economic recovery in Britain for over 100 years. Again, today, we saw the Office for Budget Responsibility revising down this year’s growth forecasts and keeping next year’s stable at a time when GDP per person is still lower than it was before the 2008 global banking crisis and recession hit, with most people still feeling their household finances getting worse, not better Why does that matter? Why is that our central problem? Weak growth means that there is less of our national income to go round, and productivity and wages are seriously depressed, which is why we have the worst and widest productivity gap in this country since 1992; the average earner is still £1,000 worse off in real terms than five years ago, and the minimum wage is worth less than it was in 2010. Weak growth means a more fragile economy—we are not saving enough, investing enough or exporting enough—which is why consumer debt is rising and we have the biggest balance of payments gap since records began in 1955.
Growth in this country is currently running at 3%—the highest of any developed economy. That is hardly weak growth. Yes, it took time to recover from the mess the Labour Government left behind, but this economy is now roaring ahead.
The OBR has today revised down the growth forecast for this year. It is not 3% but 2.4%. Over the five years—which is how we should judge the Chancellor, over his term—it has been one of the weakest growth rates in any of the major economies and the weakest recovery in over 100 years.
Does my right hon. Friend recall that in May 2010, when the Labour Government left office, the annualised growth rate was back to 1.8%, only a little below what we have now, and then it was wrecked by the incoming Chancellor sucking growth out of the economy?
My hon. Friend is right. If the Chancellor had not choked off Labour’s recovery, and the economy had carried on growing for five years at the rate at which it was growing under the last six months of the Labour Government, we would have had £100 billion of extra national income. That is a chunk of the national economy the size of Yorkshire taken out of what we produce as a country, with all the good jobs that go with it. Weak growth means a double blow for the debt and deficit, with lower tax receipts and higher borrowing, which is why the Chancellor failed to deal with the deficit during the last Parliament. This year, we learn from the Red Book, in the year he promised to have removed the deficit, it stands at £69.5 billion, with borrowing revised up over the Parliament ahead We know from the last Parliament that growth weakened as the coalition halved public investment in infrastructure, reduced Government investment in R and D, slashed vital capital investment in affordable homes and cut further education. What we have heard today risks reinforcing, not rectifying, those failings. Nothing that we have heard today will deal with the central growth challenge. Investment spending brings more benefit than just short-term economic stimulus. It is vital in the long run as a sure-fire way to lock in higher productivity and growth, which is imperative for good jobs for the future. Without investment in roads, in rail, in research, in science, in skills, in energy and in communications, we simply will not create and keep the well-paying jobs we need in Britain. Those are vital for the opportunities that our children will have tomorrow. When the Chancellor fails on public investment, he is failing our children’s future. Just as his overall surplus rule would not work for a family looking for a mortgage to buy a home, a teenager looking to borrow to go to university or a business aiming to expand, it is counterproductive too for a country that needs to invest in its future The Chancellor is no fool. The problem is not his intellect; it is his ideology. In this open, global, competitive economy, to get strong, broad-based growth the state needs to play its part. Government can be a force for good, not just in distributing national income, but in creating it too. Public investment in the UK is lower than in the large majority of advanced economies—well below the OECD average and lower even than countries such as Estonia, Latvia and even Greece. At the same time, the cost of borrowing to invest is at a near-historic low, with the Government paying a yield of less than 2% on benchmark, or 10-year, gilts Business gets it. Business organisations are crying out for the Government to lead an investment and infrastructure revolution. But just as the Chancellor halved infrastructure investment over the last Parliament, we learned today that public sector net investment this year will be lower than last year, and it will be lower at the end of this Parliament than it was at the end of the last Parliament. Yet there are choices for the Chancellor; there are choices for the country. He could set strong but more balanced fiscal rules to govern the public finances, both to stamp out any deficit on current spending and to recognise that job-creating, growth-generating investment is vital Figures from the Institute for Fiscal Studies show that over the next five years the Government could double investment spending while freezing rather than cutting departmental spending in real terms, making no further cuts to tax credits or social security payments, and raising no taxes, yet still eliminate the current budget deficit and have debt falling by the end of the Parliament. We should be debating that sort of reasonable settlement today, but this Budget, this Chancellor and this Government are denying the public that debate and those alternatives.
Perhaps I can anticipate something that my right hon. Friend will not welcome in this Budget. Does he agree that, be it in south Yorkshire or north Staffordshire, if one member of a family with children is earning £25,000 and their partner is earning, part-time, £6,000, £7,000 or £8,000, that family is not rich, and if they are living in affordable housing the incentive is for one partner to reduce their hours or even give up work entirely? Does he agree that it is not right—it is an insult—for the Chancellor to say that their rents are being subsidised by other working people?
My hon. Friend is absolutely right and anticipates my point. What he says signals serious trouble for many people resulting from this Budget Just as there are alternatives at the macro level, there are alternatives at the policy level. The Chancellor wants £12 billion in social security cuts. It is the Tories’ choice to hit working and low-income families, when the Chancellor could have cut back even further on the tax reliefs for buy-to-let landlords, which at present cost the taxpayer about £11 billion a year. He could have chosen not to sell the public’s interest in RBS while it still means a £13 billion loss to the taxpayer. The Budget promises pain for many people who can do little to deal with the financial shortfall they will suffer. They are trapped by low wages and high rents. Many are only just coping now, and this is a Budget that will strike fear and desperation into their lives I got an email yesterday from Mrs Smith—let us call her Mrs Smith—of Rawmarsh. She says that she is “very worried” about the cuts to tax credits going ahead: “I struggle as it is. I’m married with three children. I work long hours, and don’t see my family much as it is. I can’t afford to do my nursing as I can’t cut my hours down. I haven’t even taken my children on holiday in eight years” This welfare policy fails the head test as well as the heart test. Many of the cuts will punish poor families but not bring down the benefits bill because the Government are not getting to grips with the root causes of those welfare costs. We need a long-term plan now to control housing benefit costs, and we need to switch public spending from paying benefits to building homes on a big scale. In that way, we can build more affordable homes and make the Exchequer a profit in the long term through lower housing benefit bills This is a Budget with no compassion and little credibility, a Budget that risks repeating many of the mistakes of the last five years. Over the next five years, it will be our Labour task to prove that there is an alternative, not just as a protest, but as a programme for a different Labour Government from 2020.
rose—
Order. Before I call the next speaker, it has been pointed out that a vast number of people are trying to get in to this important debate. I do not want to impose a time limit, but if Members can keep to eight minutes and make very few and very short interventions, I think we can get everybody in. With that in mind, I call John Redwood.
I remind the House of my entry in the Register of Members’ Financial Interests, which reveals that I am an investment and business adviser to a couple of companies I congratulate my hon. Friend the Member for Louth and Horncastle (Victoria Atkins) on her excellent maiden speech, in which she gave us a very good portrait of her constituency. I have noted the need to beware of her arrival when she is in her armour; if she throws her gauntlet around, I think that I will be looking the other way. She will clearly be a champion for her area I welcome the emphasis on prosperity in the Budget. I want a party and a Government who drive more prosperity for everyone in our country, and I want that to benefit people on all income levels. I especially want to see more people get into work and find other routes out of low incomes and poverty. The Chancellor is right to say that Britain deserves a pay rise and that we need to reinforce that pay rise as people get it, or reinforce their success in getting into a job and getting a pay packet, with tax cuts. I want tax cuts for all, and I am glad that my right hon. Friend has made a start on the promises made in our Conservative manifesto It is crucial that, as the Chancellor goes about the task of getting rid of unemployment and poverty through supportive policies, people are better off. What I want to do when we get to the detail of the welfare cuts is to see what the impact is, because we need to look at the overall impact. If people are going from unemployment to work, staying in work, getting a pay rise or getting a tax cut, those are all positive things that will make them better off, and we need to make sure that they are not completely offset or badly damaged by the welfare changes he is making. I look forward to those more detailed debates The overall picture in the Budget is quite different from the picture of the next five years set out in the outgoing coalition Government Budget. There is nothing surprising about that. We now have the opportunity to think the strategy through, based on the success in getting the recovery this far in the last Parliament, and learning from the coalition’s experience of the difficulties of getting that recovery up to speed and getting productivity to come through as we would like. The Chancellor is right to make adjustments. People need to work smarter to be paid better. We need a pay rise but we have to earn it, and that is the purpose behind many of the measures The expenditure proposals in the March Budget were quite tight in the middle years of this Parliament, and the Chancellor seems to have reached that conclusion as well, because the Red Book sets out some quite big spending increases for those middle years. Current spend in 2016-17 will be £15 billion higher than the March forecast, and the 2017-18 current spend will be £25 billion higher. I think that will make things a bit easier. At the time of the March Budget, there was quite a lot of criticism that the numbers were tight, and the changes give us more scope. We have seen some of the benefit already in the defence statement, but there will be other benefits. We have rather more latitude By the end of this Parliament, on the plans set out today, we will be spending £69 billion a year more than we were in the last year of the last Parliament. No doubt, there will be arguments about whether or not that is a real cut. We had those arguments in the last Parliament, when there was a similar rise in spending. I argued that there would be no overall real cuts and was told I was wrong, but the subsequent figures showed that that is broadly what happened: we avoided overall real cuts, but within that, because health, education, the European Union contributions and overseas aid were priorities, some areas suffered, to balance the figures The way the deficit comes down is not through spending cuts, of course; it is through a large increase in tax revenues from a more prosperous and faster growing economy. The figures state that tax revenues will be £168 billion a year higher in the last year of this Parliament than in the last year of the coalition. I would have thought that that is a tax rise to suit all socialists. It is a large increase in taxation, but I am pleased that it will come not by raising the rates—indeed, if we raised rates, we would probably collect less money in many cases—but by growing the economy and by people being better off and so able to afford the taxes. By the end of the Parliament, tax revenues will be some £10 billion a year higher than was forecast as recently as March. That shows the improvement in prospects.
Has the right hon. Gentleman seen the OBR report, accompanying the Red Book, which states: “We have revised borrowing up in 2016-17 and more significantly in 2017-18, while the surplus of £5.2 billion in 2018-19 that we forecast in March is now expected to be a deficit of £6.4 billion.” Is he comfortable with that?
I am perfectly comfortable with that. It is the direct result of easing the squeeze on spending to which various people objected in the past. The figures show the deficit coming down and being eliminated over the course of this Parliament, which is exactly what ought to be done. I wonder whether the hon. Gentleman’s new enthusiasm for that is personal, or whether it is just to tease me, but if it is personal enthusiasm, it is welcome to hear that the Labour party would now like to go faster in deficit reduction in the middle years of this Parliament than will happen under these proposals The economic background to the official forecasts shows that the growth figures are still pretty good and we have had a welcome upward revision to figures for the immediate past. We also see a welcome upward revision to the number of people in employment, which is fundamental to the whole strategy. There has been a modest deterioration in the balance of payments, which shows that there is more work to be done. The productivity work will link into that to make us more competitive. We have to earn our living, so we need more competitive products. All that growth and improved revenue is taking place despite higher interest rates—the forecast assumes a modest increase in interest rates compared with past forecasts On productivity—working smarter and working better —I welcome the scheme that the Chancellor outlined today. It will mean better roads and spending money on railways more wisely to get extra capacity in the parts of the system where we need it and increased efficiency. There will have to be a lot of work on energy, because we will need cheaper and more energy: as the march of the makers begins and the northern powerhouse cranks up, more electricity and more gas will be required. I hope that we will find cheaper ways to produce them than we have under the policies followed in recent years. It is important that we price people back into energy-intensive markets, rather than export all our energy-intensive business to other countries. It is no great win for those who want to cut carbon dioxide emissions if it is poured out of a factory in China rather than one in the United Kingdom. We need to be conscious of the need to be competitive in our energy generation We will need more on broadband, and clearly much more on housing, as many people have mentioned recently. I look forward to an investment-led recovery, with much more private sector investment coming in. We need to pay special attention to cheaper energy and to fix the railways, where we are spending too much and getting too little. It is not just a question of big investment programmes; it is a question of managing them better. Above all, we need to make sure that, as we implement the welfare reforms, everyone is better off and gets the benefits of tax cuts and higher wages.
Like the right hon. Member for Wokingham (John Redwood), I congratulate the hon. Member for Louth and Horncastle (Victoria Atkins) on her maiden speech. She replaces the former Father of the House, who held the attention of the House whenever he spoke. I am sure she will follow in his footsteps and do that, too Presenting the Budget today, the Chancellor was smug, self-confident and arrogant. He told us that we were the fastest-growing economy in the world, then proceeded to tell us that we would be on a downward trend for the next year and the year after. That needs to be looked at carefully. He spoke about cutting the deficit. We were told before the 2010 election that this Government and this Chancellor would eliminate the deficit completely by this year, but he has not been able to do so. He says now that he will reduce it by 2020. He reminds me of a good councillor friend of mine, Councillor Barbara Dring, who says that such promises are like pie crust—meant to be broken. The Chancellor has been good at doing that The Chancellor spoke about the nation’s finances, but in his speech today, he did not recognise the one serious issue affecting us all—the elephant in the room: the current situation in Greece and what effect the next couple of days of negotiation will have. Negotiations have been going on for a long time and there is no way forward. It would have been right for the Chancellor to tell the people today what his response to that would be.
The Chancellor came to the House this week to make a statement on just that and was very clear. The good news from Britain’s point of view is that Greece is a very small part of the European economy and we are not very linked to it.
I agree, but if the right hon. Gentleman is saying that there will be no effect on our financial institutions or on us as a nation, the people to whom he gives financial advice should have another look at that. The Chancellor spoke about the wage freeze in the public sector for at least another four years. This is a real-terms reduction for those very important people who work in our services, particularly people in the national health service, and above all nurses. I have an interest to declare. Over the past four or five years, because of my personal health issues, they were at my service, supporting me through a very difficult time. When I was discharged, the duty nurse that day had worked for almost 11 hours, which she was not contracted to do, so that she could sort out the backlog that existed. For the Chancellor to keep those people at a 1% pay increase while he boasts about other things is a shame On apprenticeships and the proposed levy on large employers, if the Chancellor comes to my constituency, I will show him a brand-new centre set up by the Engineering Employers Federation, which I was fortunate enough to open. It has more than 330 full-time first-year students from members of the EEF in the west midlands, who are being properly trained. The issues relating to apprenticeships concern not only how we work with and support larger manufacturers, but how we deal with the smaller manufacturers—the people who have the skills. I know of a small company that is a world leader in submarine valves. It is a fantastic company, but it has had a huge problem trying to take new people on. It has had to keep people on past their retirement, so that they can hand down their skills to younger people. It does excellent work with Birmingham University. It is important for us to have that perspective when we talk about apprentices When we talk about apprenticeships in the engineering sector, the question is how companies afford the equipment that goes with that—lathes, millers, computer-controlled lathes and millers, and welding equipment, all of which is extremely costly. The EEF centre has obtained such equipment at huge cost because apprentices must be trained to use it if they are to be employed in the industry. We have had huge success with Jaguar Land Rover in Birmingham and the west midlands, but for us to supply the skills it needs, the Government must look at how we can support people who want to go back to real first-class engineering, which is what we should be engaged in The Chancellor has made a 40% cut in funding to adult colleges. We want people post-19 to be able to get apprenticeships, but colleges are having great difficulty operating with such a funding cut. The cut affects not just the post-19 age group, but the 16-to-19 group, because most specialist courses are run for both cohorts working together to provide a critical mass. Cutting the 19-plus funding affects 16 to 19-year-olds as well. Our colleges are at their wits’ end trying to meet those needs The Chancellor has made huge cuts to English for speakers of other languages provision. We have many people with the necessary skills, apart from spoken and written English. The more he cuts that provision, the more those people will stay on benefits, rather than working their way off benefits. Most of my colleges are proud to be working on giving people proper skills, but if the cuts continue, it will be difficult for them to do that The Chancellor announced that student grants are to be turned into loans. People in my constituency will be put off by more loans being imposed on them. What repayment do we get from those loans? It is all very well making such announcements, but the Chancellor has already had to sell the loan book to his friends. They bought it for a pittance before trying to recover some of the money owed. If a project is not working, we try to do something about it. That does not mean adding more to the loan book and selling it off to our friends, getting a better deal for them rather than for the people who need it and the universities A university in my constituency, Birmingham City University, decided unilaterally to move out of the constituency and seek a central location. We had a huge facility for the university, and we have had it for a long time. My predecessor, now Lord Rooker, formerly Jeff Rooker, attended that university, as did I, in engineering. [Interruption.] My hon. Friend the Member for Wolverhampton South West (Rob Marris) was also there. It is clearly a great seat of learning, as all these people were able to attend it. The chancellor unilaterally decided to up sticks and move to a different location at huge cost The changes to family tax credits will have a huge effect on my constituency and on people trying to make some sort of living by working. This Chancellor has succeeded in doing what his guru might have aspired to do. She took milk from the mouths of children. He has managed to take breakfast, lunch and dinner from the mouths of families and drive them to food banks. This is a Budget for a divided nation. It has given more to those who have more and taken from those who have less. It is a deplorable Budget, and I urge all fair-minded Members to vote against it.
It is interesting to follow the hon. Member for Birmingham, Perry Barr (Mr Mahmood). I enjoyed most of his speech, other than the peroration, with which I disagreed fundamentally Madam Deputy Speaker, it is a real pleasure to welcome you to the Chair. This is the first time I have spoken while you are in the Chair since your election to the deputy speakership. I know that the whole House is thrilled to see somebody who chaired the Backbench Business Committee with such distinction taking over as one of the Deputy Speakers I congratulate my hon. Friend the Member for Louth and Horncastle (Victoria Atkins) on her maiden speech. I hope that she will encourage the Queen’s Champion to return for a coronation banquet in Westminster Hall, which we had until the reign of George IV, but which were abandoned because they became too raucous. It is lucky that proceedings in this House are not abandoned when behaviour becomes too raucous I congratulate the Chancellor on his Budget. Turning to the Red Book, I want to start with something that will be particularly welcome in Somerset: the small cider exemption. That will allow producers to continue to provide 1,500 gallons of cider a year without coming under the auspices of the tax authorities. Our friends in Europe are having a go at the good people of Somerset and trying to tax that small quantity of cider, so I am reassured and relieved that the Chancellor has the best interests of my fellow county-men at heart The key to this Budget, I think, are the changes in corporation tax and the approach to make companies more competitive, which will give them the opportunity to pay people more and help get them out of the trap of welfare. That moral imperative underlies the whole tone of the Budget, making it not only economically prudent but morally right. That is quite a strong claim to be able to make for a Budget, because economics and morality do not invariably mix If we look at what is happening on the corporate side, we see that the Chancellor made the very important decision two or three years ago that examining corporation tax changes would be done on a dynamic basis. That meant that the increase in revenue, and in employment, that would result from reducing rates could be taken into account, in contrast to the historically flat approach taken by the Treasury, which assumed that other things would remain broadly equal—the ceteris paribus of economists, which always tends to be neither ceteris nor paribus. That approach has allowed him to reduce corporation tax, which has led to a much stronger underlying economic performance However, the quid pro quo that the Budget is asking for is that some of that extra profit should be devoted to increasing the wages of some of the poorest people in society. That is the moral underpinning of what the Chancellor is doing. Even better, people who then work will keep the fruits of their labour. Therefore, raising thresholds is a fundamentally good thing to do My noble Friend Lord Saatchi, along with another friend of mine, Peter Warburton, produced a book for the Centre for Policy Studies 10 or 15 years ago, in which they argued, “Stop poor people paying taxes.” It is idiotic to make people pay high levels of tax and then feed them back their own money through the benefits system. The more we can stop that, the more efficient the economic system will be. These corporate changes are crucial. They will help to grow the economy, boost employment and take poor people out of poverty and into solid earning work, where they will not pay tax until they are prosperous I think that there is more to do. I hope that the Treasury will examine national insurance further. Raising the threshold from £2,000 to £3,000 is certainly welcome, but national insurance still clicks in at much too low a level. In order to continue the process of ensuring that work pays and that people can keep the fruits of their labour, national insurance is the next challenge. Income tax will be done by the end of this Parliament, but the question of national insurance is still there In that context, what the Chancellor is doing about banks is very much to be welcomed. It was quite right that banks were punished, post-2008, for their manifold sins. That had to be done; the revenue was needed and society wanted to show its disapproval of the way in which some banks had behaved. But that has to come to an end eventually. We need a banking industry that is there to help businesses and individuals to prosper. Bringing down the bank levy and focusing it on UK assets will begin to do that, although whether the extra bit of corporation tax will ultimately prove necessary is another matter. Removing from the banks their pariah status is something we need to do eventually, but without forgiving them for all the flaws that they put upon themselves in the past Then there is the issue of welfare, which ties in with all this. The proposals will allow people on welfare to have a better chance of getting employment and being paid more, but with some benefits being reduced. Again, I think that is the right thing to do and the fair thing to do. The reason it is fair is that people who are in work ought to be better off than those who are dependent on out-of-work benefits. It is absolutely proper to defend the elderly and the disabled, because in a civilised society they deserve support, but those who can work ought to be given every financial incentive to do so. That is fair on those paying the taxes that pay for the benefits. The move to ensure that work always pays, and pays more, and that the lifestyle of those in work will be better than those who are not in work, is a good and moral imperative. With those underpinnings, and with economic sense and proper justification for fairness and good, I commend the Budget to the House.
It is an honour to follow the hon. Member for North East Somerset (Mr Rees-Mogg). I wonder whether he attended any of the banquets he spoke of with previous champions Just a few weeks into this parliamentary term, I had the pleasure of discussing with a right hon. Member of the Conservative party how the Scottish National party Members were being received by other Members of the House. He advised somewhat humorously, “Labour loathe you.” Naturally, I went on to inquire how his Conservative colleagues felt. With a wry smile he said, “We loathe you less.” I therefore take this opportunity to commend my SNP colleagues for a most auspicious start to our collective parliamentary careers On a more serious note, I hope the message that SNP Members have sent—that we are here to work constructively and positively with any progressive Member of this House for the betterment of all within these islands—is being received. Although we work first and foremost for our constituents, we are also aware that the social democracy practised in Scotland would be of great benefit to the majority of the people of England, Northern Ireland and Wales, and we actively seek to create an effective and cohesive opposition along those lines I am honoured to have been elected to represent the people of Coatbridge, Chryston and Bellshill. It is a burgh constituency, and although many have claimed theirs to be the most beautiful in the land, and although we have no shortage of beauty spots, such as Drumpellier country park and the under-siege Douglas glen, I cannot make that claim for my constituency, given the decades of neglect that our once heavily industrialised heartland has suffered. Rather, what we most value is our people. Our people are resilient, honest and resourceful, although far too many of us have had no choice but to leave to find work elsewhere in these lands. It has been that way for decades, and we deserve better I am happy to inform the House that my predecessor is well. Having dined with him only last week, I will pass on the message that he sends his “warmest regards to all Members of both Houses of Parliament past and present” That is from Tom Clarke, and it is befitting of a gentleman, as I am sure all Members agree. I am sure that they will all join me in wishing Tom all the very best in whatever future endeavours he takes up. In voting so emphatically for the SNP, Scotland has voted for anti-austerity; free education; an NHS protected from privatisation; balanced books—something you ought to try down here one of these years—an anti-nuclear stance; and an inclusive, tolerant society that has social and economic justice at its heart, instead of the right-wing neo-liberalism we see from the two main establishment parties of this House. This failure is serious, harsh and oft-times leads to absolute despair. With the additional cuts announced today, I fear for the wellbeing of many of my constituents and those of many other Members. Dark times are indeed ahead, especially as these cuts will see the further decimation of an already overstretched and struggling social security system That darkness can often lead to the loss of all hope and ultimately to something much more sinister, suicide. It came as a real, hard shock to me to learn that suicide is the biggest cause of death in Scotland for people aged 14 to 35, with three times as many young men taking their own lives as women, usually by very violent means. When we on the SNP Benches plead with the Government to stay the hand that cuts, it is not just because it does not work and never has; it is also to protect those who will suffer most, the vulnerable in our society. How terrible that suffering is when a loved one is so stretched that they are driven to take their own life. Thankfully, there are good folk around, particularly one Anne Rowan who has set up Chris’s House in my home constituency town of Coatbridge. Chris stands for the Centre for Help Respite Intervention Surrounding Suicide, and Chris’s House is a 24-hour service dedicated to engaging with people in distress, the first to be set up in Scotland, so that there will always be hope. It is a new charity I am proud and humble to be patron of What of hope? What is the difference between aspiration and hope? I hear many in these Chambers use the words “aspiration” and “aspirational”. When we compare the modern definitions, the none too subtle difference is clear. Aspirational means: “Having or characterised by aspirations to achieve social prestige and material success”, versus hope, which means: “Grounds for believing that something good may happen.” People have hope for the future not just for themselves but for others. In Scotland, although we are not without aspiration, it is with hope that we look to the future for all those who live and work in Scotland. We, the 56, have been sent south with a unique mandate to do our best by those who believe more in hope for all than in material aspiration exclusively for the few What we now see in Scotland is a people awakened to politics. Glib soundbites no longer cut it, as all the establishment parties should now realise. The now infamous promise of home rule, near-federalism and devo to the max was pivotal in giving this House one more chance to give Scotland the powers it voted for and to get it right. Perhaps it is presumptuous of me to believe that this House understands Scotland and its people. Of course, we ourselves have been wrestling with the idea of the Caledonian antisyzygy since the early 1900s. This very Scottish dichotomy needs at least to be considered, if not fully understood, if Members want to understand what we, the people of Scotland, are, what we believe in and what we voted for. A few weeks ago, the Secretary of State for Scotland—I see he is no longer in his place—stated that there was “no empirical evidence” that the now infamous vow affected the vote in the Scottish referendum last year. I direct him to Lord Ashcroft's exit poll on the question about the “most important reasons” for voting no by percentage of no voters, which shows that 25% of no voters—14% of the electorate—stated that the main reason was: “A NO vote would still mean extra powers for the Scottish Parliament together with the security of remaining part of the UK, giving the best of both worlds” I am, of course, happy to furnish the Secretary of State with this empirical evidence that was so hard to find This darkness of cuts and social deprivation can be found mostly in the lives of the poor souls affected but also in the soulless lives of those who would impose such evils on the most vulnerable in our society. Where is the empathy? What matters—materialism or people? Members of this House would be wise to take heed of the words of Scotland's national bard and to understand that people come before profit. After all: “The rank is but the guinea’s stamp The man’s the gowd for a’ that” That is something that we would all do well to remember in both Houses of this Parliament. Slàinte, Madam Deputy Speaker.
I, too, welcome you to the Chair, Madam Deputy Speaker. I congratulate the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) on a superb maiden speech. To secure a swing of just under 40% over a well-established incumbent was a remarkable achievement and I am sure that he will make a superb representative of that constituency I also pay tribute to my hon. Friend the Member for Louth and Horncastle (Victoria Atkins) for her maiden speech. She will also be an impressive Member of this Chamber. She took over from a near neighbour of mine, Sir Peter Tapsell, who was a terrific Father of the House and someone with whom I worked closely on local issues. I remember on one occasion we were dealing with local hospitals, and at the end of a meeting of local MPs I said to him that I would probably do a press release and speak to Radio Norfolk. I said, “Sir Peter, are you going to talk to Radio Lincolnshire?” He said, “Don’t be so ridiculous. I’ve never spoken to local radio in my life and I do not plan to start now.” I believe that the new Member for that constituency will probably take a more modern view of the media This Budget will help secure our ongoing recovery and prosperity. It will also be pivotal in getting our finances on to a more sustainable footing. As far as the welfare reforms are concerned, I thought that the Chancellor of the Exchequer made a telling point when he explained to the House that we have 1% of the world’s population, 4% of its GDP but 7% of the world’s welfare. I absolutely believe that he was right to home in on the tax credit regime, which I believe has reached a point at which it lacks credibility in any way, shape or form, particularly as far as child tax credits are concerned. They have no work requirement at all and in fact make work less attractive. The maximum amount received is received by those who do not work at all, so action had to be taken. Furthermore, tax credits overall impose ridiculously high marginal tax rates on recipients who earn more and have their credits withdrawn. We want a system that encourages people to go to work, rather than the reverse We will have to do a lot of work to explain the case, but if we weigh the changes to the welfare system and the reductions in the welfare budget against the extra measures to get people into work, the help that we will give people who are already in work, such as the new national minimum wage, which I welcome, the reduction in corporation tax, the new tax threshold and the measures to help small businesses, as well as the tax evasion measures announced by the Chancellor, we can explain that these were essential changes in the interests of Britain’s maintaining its growth and prosperity. Above all, they will help those people who are in work and encourage more people to get into work, providing a big incentive at a time when jobs are becoming ever more available On tax more generally, I certainly welcome the changes to corporation tax and I greatly welcome the increase in the basic tax threshold and the target of £12,500, as well as the increase in the 40% threshold. That is incredibly important, but we cannot be in any way complacent about taxes. If we look at higher rates of tax elsewhere in the world, we will see that this country’s top rate of 45% does not compare favourably with the global average of 31%. It is 41.6% across the OECD, 31.8% across Europe and 37% across the European Union, and in the US it is 39%, so we compare very unfavourably with all those countries. In fact, the only countries in the world with a higher high tax rate than us are the Nordics, a few small economies such as Austria and Belgium, and a few unknown economies such as Aruba and Saint Martin, with great respect to the Dutch and the French. I say to the Exchequer Secretary that more work needs to be done as we get the economy under control, as growth progresses and, above all else, as we start to live within our means. We must look at the competitive position of Britain, and our high rate tax is a very important part of that I certainly welcome what the Chancellor had to say about trying to make tax more simple. Indeed, my right hon. Friend the Member for Chichester (Mr Tyrie) has pointed out that Tolley’s tax guide is, for the first time in a long time, going to get slightly smaller after this Budget than it has after previous Budgets The Chancellor referred to Britain’s productivity challenges, and many people have described our productivity puzzle. It is staggering that on average the UK produces 30% per hour less than workers in Germany, the US and France. The key to that is to look not only at those areas that the Chancellor has made clear that the Government are looking at, including education, skills and training, but at technology and research and development In what was an excellent speech until its last few minutes, the SNP’s economic affairs spokesman, the hon. Member for Dundee East (Stewart Hosie), referred to some of the changes needed to sort out the productivity puzzle, one of which relates to technology. As a nation, we must spend more on technology and R and D. In Germany, there are 1,034 R and D staff for every 100,000 people. In this country the figure is 800. We need to be aware of that and do more. Perhaps we should look again at the R and D credits referred to by the hon. Gentleman Infrastructure is another key part of increasing our productivity. I welcome what the Chancellor said about infrastructure spending, particularly his commitment to maintaining expenditure on trunk roads. The reform of vehicle excise duty and the launch of a new roads fund will help guarantee that. I say to the Exchequer Secretary that in East Anglia we are really keen for the dualling of the A47 to be brought forward, and for the different programmes and schemes on that essential east-west trunk road to be given maximum priority On exports and trade, we are a great mercantile nation and we have always taken a lead in opening up new markets in the world. In fact, we were the first country to liberalise our own trade. Of course, in the 18th and 19th centuries we not only liberalised our own trade, but sent the Royal Navy to force others to do the same, even if they did not want to co-operate. It is absolutely essential that we do more to liberalise world trade In our renegotiations with the EU we should be not just asking what more the EU can do for Britain in terms of the repatriation of various competences—that is essential—but telling the EU that, in certain areas of activity, it could do more to help wealth creation, productivity and growth across Europe. It is essential that the EU completes the free trade agreements with the US and China as a matter of priority, because if we do not do that, there will be no significant improvement in either the EU’s or our wider trade. Trade has slowed down, so it is absolutely essential that it is given a kick-start In conclusion, this is a very bold Budget and a number of very imaginative and impressive measures have been announced, particularly with regard to wealth creation and small and medium-sized enterprises. Obviously, it is the first Conservative Budget for 20 years, as a number of my colleagues have pointed out. It spelled out above all else that Britain must now be really serious about living within our means. I ask right hon. and hon. Members on the Opposition Benches who are challenging our welfare alterations and changes what they would do about the ongoing budget deficit. According to our plans, the deficit will come down and we will reach a budget balance by 2019-20. If they are not prepared to support us in making those changes, we will not hit such a target. In a world where—
Will the hon. Gentleman give way?
I will not give way, because I am concluding As my right hon. Friend the Member for Chichester pointed out, dark clouds are blowing in over China and Greece. The parallels between China and Wall Street in 1929 are incredibly scary. In Greece, the oxi to austerity has already triggered a bond rout, to which Britain—with only 1%—is not overexposed. On the other hand, our much larger exposure to other economies on the periphery in relation to our banks’ capital buffers is hugely more worrying. Above all, the UK must continue to manage the economy prudently, and this Budget is a vital step in that direction.
May I start with an unusual and perhaps uncharacteristic thank you to the Chancellor, on one issue only? I thank him for his commitment to a memorial to the victims of the Tunisia bombing. Three of the victims—Adrian and Patrick Evans and Joel Richards—are constituents of mine, not, as the Prime Minister said earlier, of my hon. Friend the Member for Walsall South (Valerie Vaz) I congratulate the two maiden speakers, the hon. Member for Louth and Horncastle (Victoria Atkins) and the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell); I hope my pronunciation is correct. The quality of their speeches demonstrated that they will be very valuable additions to the House, and I look forward to listening to them on many occasions On the substance of the Budget statement, I could not help but remember the last one we had in March, less than four months ago. The Chancellor told us in his introduction that “Britain is walking tall again”, and he concluded that it was “the Budget for Britain, the come-back country.”—[Official Report, 18 March 2015; Vol. 594, c. 765, 779.] I did not realise at the time that the March Budget was designed just to win the election, and that he would be coming back to deal with the unpopular decisions that it had so obviously evaded. I know that many Members will want to analyse and discuss the impact of this Budget in this and subsequent debates, but I want to concentrate on the central economic issues that it has failed to address After five years under his supervision, the economy that the Chancellor has produced is one in which productivity has been reduced, our trade deficit with the rest of the world has grown, our investment has been far lower than what is necessary to sustain the level of growth needed to eliminate the public sector deficit, our living standards have dropped and tax receipts have fallen as a result. That is why we are in a pickle today, and why this Budget is in this form. Our regret is that, in dealing with that, we have more of the same: an attack on the living standards of some of the most vulnerable in our country The greatest failure has been in productivity. Amazingly, that issue was not even mentioned in the March Budget. The level of output per worker is the key to expanding our economy, delivering growth rates, and providing increasing standards of living and the tax receipts necessary to eliminate the public sector deficit.
Does the hon. Gentleman concede that the education and training of the workers whom he describes as underperforming in relation to productivity happened almost exclusively when the party that he supports was in government?
No, I do not. I will address that issue in a moment Before the recession, productivity averaged 2% per annum. It fell in the immediate aftermath of the recession, as it does after all recessions. Most significantly, as the economy has seemed to grow out of recession, productivity has not improved. That is virtually unique in our economic history. If productivity had continued to grow at the average level of the 10 years before the recession, we would not have had to introduce this Budget today, with all the restrictions and cuts that underpin it What the Chancellor has done—again, this is almost unique in our economic history—is to initiate an economic recovery that has failed to drive up living standards, failed to generate tax revenues and failed to pay off the public sector deficit. In its March assessment, the Office for Budget Responsibility forecast that productivity would return to normal and estimated that, if it did so, the public sector deficit would be eliminated by 2018-19. Unfortunately, its forecast on productivity has, even as of this moment, been proved incorrect and has been downgraded by the Bank of England. If productivity stayed at its current weak rate, the deficit would increase as a proportion of GDP by 2019-20 To achieve all the objectives the Chancellor says this Budget will achieve, there has to be a significant increase in productivity. It is therefore perfectly valid to measure the policy initiatives in the Budget against the likelihood that they will deliver that increase in productivity. Will they strengthen the sinews of the economy in the way that is necessary to enable the increased number of people in work to increase their output in order to sustain the level of economic growth that would eliminate the deficit? Those sinews are research and development—I welcome the comments of the hon. Member for North West Norfolk (Mr Bellingham) on that—as well as investment, skills and infrastructure. The hon. Gentleman spoke about how we lag behind. If we are to compete against other countries that are investing far more than us, we will have to raise our level of performance. Nothing in the Budget demonstrated that we would do so On private sector investment and business investment, I do not see any improvement in the availability of the much-needed funding for small businesses to expand production. The focus on corporation tax, while not unwelcome, overlooks the fact that for many businesses, things such as capital allowances are far more important in encouraging them to invest than a reduced headline figure of corporation tax A number of comments have been made about infrastructure. The Chancellor announced a whole series of measures, just as he has done for as long as I can remember. In the end, we must judge him on performance. What we want is a lot fewer launches and far more starts of infrastructure investment. Government investment in infrastructure is 1.5% of GDP. That is less than the 3.5% that is recommended by the OECD, and it is even scheduled to fall to 1.4%. Private and Government investment in infrastructure is still considerably lower than the pre-recession level. The cancellation of the projects on the midland main line and the trans-Pennine line demonstrate that this is a Government who talk the talk, but do not walk the walk.
The Red Book describes the midlands as the “engine for growth”. When the Chancellor visited the midlands before the election, he gave a cast-iron commitment to the electrification of the midland main line. Is it not hugely disappointing that there was no progress on that electrification in today’s statement?
Absolutely, and what the Chancellor said before the election, and what he does afterwards, is always revealing. For all the announcements, there is no indication of what the Chancellor will spend through this Government on investment in public sector infrastructure My hon. Friend the Member for Birmingham, Perry Barr (Mr Mahmood) mentioned most of the issues that I wish to raise, so I will make only brief remarks on those topics. The Government have increased the number of apprenticeships, but often they have been poorly focused. After all the investment, companies are still complaining that they cannot get the sorts of apprentices they want. The measures that the Chancellor announced may or may not improve that, but to attack funding for further education colleges, which are the most strategically placed to address the skills problem that the Chancellor says he is trying to solve, is counterproductive and likely to be self-destructive In conclusion, productivity is key to eliminating the deficit, raising standards and getting the sort of economy that we need to compete in the world. It is reasonable to judge this Budget on its ability to do something about that, and on that basis and measurement I think it fails miserably.
It is a pleasure to speak in this debate. It is an even greater pleasure to speak with you in the Chair, Madam Deputy Speaker, and I welcome you to it. I also express my support for those who have given their maiden speeches today. My hon. Friend the Member for Louth and Horncastle (Victoria Atkins) gave a fantastic speech, and I also congratulate the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) on his splendid speech. No doubt he will be a great champion for his constituents Let me start where I finished at the end of my speech after the last Budget in March, when I noted that a lot had been done and that there was a lot more to do. I hoped that the voters of Macclesfield and across the country would vote for the Conservatives to carry on and do that important work. The good news from my perspective and that of Conservative Members is that voters delivered an historic victory for us. It is now down to us to deliver the long-term economic plan that those voters want us to deliver This Budget certainly delivers: spending is being controlled, the deficit is being reduced, taxes are being cut, and we are ensuring that work pays, as it must. Yet again we have a record overall employment rate—now at 73.4%—including a record employment rate for women at 68.6%. Two million extra jobs have been created under this Government. Our unemployment rate is half that of France—the socialist alternative that the Labour party presented as the blueprint for its plan B. We stuck with plan A, and—this is difficult for Labour Members to believe—the electorate stuck with us This Budget again shows the positive approach of Conservative Members. We are moving the British economy forward with more jobs and ever-greater success in creating the right economic conditions for balanced growth. Our GDP growth is leading the way in the developed world. Household spending is increasing, which I welcome. Even more welcome is the increase in business investment, which is up by 5.7% over the same year. Gross fixed capital formation in quarter 1 of 2015 was at its highest level ever recorded since the sequence was developed in 1997 The right balance of policy measures is being put in place, from deregulation and incentives to work, to help to set up and grow a business and tax allowances for capital investment. All those things are creating the foundations for sustainable economic growth—something that the Labour party should learn more about There are now 4.5 million self-employed people in the UK. In Macclesfield, we have one of the highest levels of self-employment anywhere in the country. Those self-employed people are being supported and encouraged by the Government. I have worked with the Royal Society for the encouragement of Arts, Manufactures and Commerce and Demos to highlight the issues around self-employment. I am greatly encouraged that the Prime Minister recently announced—with Julie Deane, the founder of the Cambridge Satchel Company—that there will be a full review of self-employment under this Government. Many of the self-employed are first-time entrepreneurs. I hope they can be encouraged to go on to become first-time employers and first-time exporters, further boosting the enterprise culture that we on the Conservative Benches cherish and want to foster. The enterprise Bill will help us to go further in that direction We are making progress and we are continuing to make progress. We want to do so by trusting businesses, trusting local enterprise partnerships and trusting local civic renewal. In the north-west, we look to Manchester to see what lead it is taking. Sir Howard Bernstein, of Manchester City Council, recently called for “giving…the local control and might that a powerhouse needs.” It is the northern powerhouse, in which the Chancellor has invested so much time, on which I would like to address the remainder of my remarks It has been a long journey from the great recession, but at the end of the tunnel we can see the northern lights of the northern powerhouse ahead of us. The lights are so bright, in fact, they have attracted the so-called prince of darkness himself. Peter Mandelson, no less, put himself forward as a prospective chancellor of the University of Manchester. These are not my words, but Lord Mandelson’s: “something very exciting is happening in this region as part of the Northern Powerhouse” and “the Labour Party, I’m afraid, has a long way to catch up.” I wonder whether the Labour party is in the mood to listen to him. I do not think so, judging by the comments made today We are making great strides in the north-west, particularly in terms of gross value added per head, which has grown by an annual 3.4% according to the Office for National Statistics, a record unsurpassed by other regions in the country. On a sub-regional basis, Cheshire is the only county in the north of England to have higher GVA per hour than the UK average, outperforming such sub-regions as what might be called “Greater Bristol”. We in the north-west accept there is a long way to go if we want to be the economic equal of the southern powerhouse, London. As Sir Howard Bernstein has said, there is an £8.2 billion productivity gap between Greater Manchester and the rest of Great Britain on a per capita basis. Correcting that gap, as our policies are designed to do, matters for Britain. It matters to the market towns around Greater Manchester, too, the most important of which is, of course, Macclesfield.
Maiden speech!
It is well beyond that, thank you. [Laughter.] These towns play a key role in the future productivity of the north-west I want to focus on science. On 10 June, the Prime Minister said that we needed to increase our productivity “by encouraging entrepreneurship, by making sure we invest in success”— and, I wish to emphasise this bit— “by investing in science—these are the things that we have been doing as part of a long-term economic plan, mostly opposed by the Labour party. ”—[Official Report, 10 June 2015; Vol. 596, c. 1187.] Science, and in particular life science, is critical in our part of the world. Alderley Park, now owned by Manchester Science Partnerships, is key. AstraZeneca’s Macclesfield site alone accounts for 1% of UK goods exported; a driving force behind high-value, high-wage growth in Macclesfield, north-east Cheshire and south Manchester To play our part in future success across the north, we need to ensure that the Chancellor’s ambitions for science in Greater Manchester and beyond are fulfilled. Manchester has been selected as Europe’s city of science for 2016. There is plenty to showcase to academics and investors, not least Jodrell Bank Observatory, which is in part in the Macclesfield constituency. I am delighted that it has secured the Square Kilometre Array telescope project, and an additional £12 million of lottery funding to recognise the important and unique science heritage of the site In his speech on 14 May, the Chancellor said that Manchester was not yet as great as the sum of its parts, and the “Exploiting the Excellence” report by the very good North West Business Leadership Team supports that view. I am delighted that having recognised the problem, which Labour failed to recognise and act on, he is determined to do something about it. The Budget puts in place the conditions and key ingredients necessary for the northern powerhouse to evolve: leveraged investment in infrastructure, increased investment in science and other key industry sectors and a transfer of power away from Whitehall to the northern powerhouse itself. This is an important combination of factors and will have a multiplier effect In fact, we are seeing that already, with the promise of additional investment in the northern rail hub, HS2, HS3 and now the proposed £1 billion investment and 10-year transformation in Manchester’s international airport. Today, we also welcome the establishment of Transport for the North, a statutory body, and the £30 million of additional funding made available to assist with its duty of delivering a long-term transport strategy for the north. That is exactly what we need. It is not just about the north or north-west, however; there are now devolution deals across the country, including in the Leeds city region, West Yorkshire, the Sheffield city region and Liverpool. Of course, success breeds success, and there are now reports of a powerhouse in the midlands too—the “midlands motor” or perhaps the “Mercian dynamo”. Whatever it ends up being called, I wish it every success I wish the Budget every success as well, because it is working to balance the books, to rebalance the tax burden, to rebalance the economy towards the enterprise economy we hold so dear and to rebalance our economic geography. I back that balance and I back this Budget.
rose—
Order. Quite a number of people have dropped out of the debate, so the limit, which is not a fixed limit, is now more or less 12 minutes—[Interruption.] Members do not have to speak that long, but the limit is roughly 12 minutes. I call Sammy Wilson.
I think this is the first time I have spoken while you have been in the Chair, Madam Deputy Speaker, and given your generosity, I am glad you have taken the Chair. I wish you all the best for the future and look forward to your future generosity—and that is the end of my crawling I congratulate the two Members who have made their maiden speeches today, but I say to the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) that he need not have this Jimmy-no-friends paranoia about this place. We in the DUP are the cousins of Scottish Members. Only 20 miles of water separates my constituency from Scotland, and although we do not share their desire to break up the Union, nevertheless we regard them as cousins, so he should not feel loathed by everyone in the House We welcome many of the aspirations in the Budget. We welcome the Government’s commitment to growth and balanced growth across the United Kingdom. We welcome the measure designed to increase productivity, because that is one way to raise living standards for those in work. We welcome the commitment to making work pay, because I do not want my constituents confined to a life of no work without the dignity and esteem it gives them. It is important, therefore, that we make work pay and get people into jobs. Also, given the threats to the United Kingdom, and indeed the world in many theatres of war, and given the demands we make upon our armed forces, we also welcome the 2% commitment on defence spending I have a number of concerns, however, about the Budget. While I hope the Chancellor is right in his growth forecasts, he himself raised several warnings about the situation in Europe and Greece and the potential impact on a major export market and about the situation in China. Yet despite that, part of the growth forecast in the Budget is based on exports growing on average over the next five years by seven times more than they grew this year. If that is one of the components of economic growth, we have to say that there is a huge risk factor. The Budget is also based on consumer spending being the main driver of growth. Of course, consumer spending is the main part of GDP, but, against a period of wages not growing and so on, that increase in consumer spending can be achieved only through increased borrowing, and we have seen in the past the impact on the economy of unsustainable domestic and private borrowing So there are warning signs, and even when it comes to some of the incentives for industry to grow—a number of Members have mentioned this today—there is no great mention of what we do about energy prices. It really does not matter whether we are talking about what people would call old industries—whether steel manufacturing or whatever—or even the modern data-processing industries, all of them are huge energy consumers. Yet the environmental taxes, which are one of the things that have been driving up energy prices, are set to grow over the next five years by three times, from £5.6 billion to £16.1 billion. There are therefore a number of factors in this Budget that cause concerns about the Chancellor’s predictions There is another concern I have. I welcome the fact that the Government believe that “the only way to secure a truly national recovery is through a fundamental rebalancing of the British economy based on investment across the regions…driven by the private sector, and further devolution to increase local decision making.” That is a great sentiment, but for Northern Ireland I see nothing new here. The Chancellor has said that he is committed to the delivery of the Stormont House agreement. The Stormont House agreement is now nearly nine months old. It has not been delivered on—I have to say, that is not the fault of the Government, but the fault of the Social Democratic and Labour party and Sinn Féin in Northern Ireland—but if that is what the Chancellor is relying on, then there is nothing new in this Budget. Indeed, the growth in Government investment, which is one of the potential drivers, is set to fall by 50% over the period of this Budget. Already we know that in Northern Ireland that means there will be a cut in capital expenditure for this year and subsequent years, the details and timing of which the Treasury is still to tell us, including in negotiations with the Department of Finance in Northern Ireland. So there are worrying factors about this Budget The other issue I suppose I have some concern about is the proposed change in tax credits. It is one thing to say that we want to shift the burden of paying for workers from the state to employers—and that is good—but there is no point in saying that we will make the state reductions immediate, but then rely on employers to fill the gap in the longer term. All that does is leave people poorer. Given that we are usually talking about the low paid or unemployed, there is another downward factor. Taking £1 off them probably has a downward multiplier of about fives times, because they tend to spend all their money on things that are produced locally and in local shops. They do not spend it on expensive imported luxury goods, so this change could have a downward effect on the local economy. I would like to hear from the Chancellor what assessment he has made of the impact the change is likely to have in the short term. In the long term it may well shift the burden to employers, but in the short term I suspect it will shift it to the worker. That is morally not right, and it is economically not right either. I welcome the decrease in corporation tax rates. Once we get around to delivering on that part of the Stormont House agreement in Northern Ireland, it may well make the delivery of the corporation tax reduction that we have proposed in the Northern Ireland Assembly that much cheaper. Indeed, it may even enable us to lower the tax to 10%, and thus to become more competitive with our neighbours in the Irish Republic I am, however, very concerned about the welfare reform changes. We do not disagree with all of them, but we disagree with some of them fundamentally. While we support a reduction in the cap, I think that Members representing the north of England, Scotland and Wales ought to be concerned about the proposal to operate a different cap in areas outside London. I believe that it is the first step towards a regionalisation of benefits that would be detrimental to many of us who represent poorer regions of the United Kingdom. Once that foot is in the door, the door will be pushed further. Had there been a universal reduction in the cap, along with the rationale that the Government have given, we might have considered supporting it, as we did in the last Parliament, but we certainly cannot support this.
Is the hon. Gentleman aware that, at about the time of the referendum in Scotland, the Secretary of State for Work and Pensions gave a guarantee that there would be no different regional rate?
I was not aware of that commitment, but I do see the danger in the proposal that is before us today. Even some Conservative Members who represent less well-off areas that are heavily dependent on welfare payments ought to be concerned about it I want to send a message to people in Northern Ireland, and also to the Chancellor. I believe that the additional welfare reform changes which must be implemented at Stormont will continue to be resisted by Sinn Féin and the SDLP, which, unfortunately, have a blocking mechanism. That may bring an end to the Stormont Assembly, because we will be left with an unsustainable budget. There will probably be another gap of £300 million to £400 million. My message to the Government is this: they cannot continue to pussyfoot around with those who refuse to do the job that they are meant to do in Northern Ireland, which is to introduce legislation which, in any case, they promised to introduce more than seven months ago. The Labour party agrees with us about that, and so does the Conservative party. If no action is taken, I believe that it will be essential for the Government to step in and save the devolved Assembly.
My hon. Friend has raised an important point. Is not the irony that those who shout loudest about resisting welfare cuts are those who are inflicting more pain on vulnerable people by taking money out of other budgets? Moreover, members of Sinn Féin are not here to take their seats, represent their people, and vote against measures where it matters. It all amounts to no more than hot air.
That is the final point that I was going to make. There are those who complain that we are in the pockets of the Tories, but we actually come here to raise our concerns. We will be here to exercise our votes while those who are putting the institutions in Northern Ireland in jeopardy are absent, silent, powerless and ineffective on behalf of the vulnerable in Northern Ireland We accept the good parts of the Budget, and we will support the Government on those, but we will, of course, argue against the parts that cause us concern and that will, in our opinion, have a detrimental impact in Northern Ireland.
I welcome today’s Budget. The coalition Government inherited an awful economic legacy in 2010—the largest recession, a banking system still in a pretty bad state, a general fear that unemployment was going to shoot through the roof—and at about the time they started to get on with the job of tackling it, the eurozone started to blow up and get into difficulty, and clearly that is still a problem today The Government took the right decisions in 2010. First, they nursed back the real economy, so jobs could be created, people could keep their homes, and businesses could invest. Their second priority was to reduce the deficit, which they did at a slower rate than originally intended mainly to help the real economy recover, but they still managed to halve the deficit over that period. They used as the crutch a rise in the national debt, which was a sensible policy decision, as we could then borrow money at very low rates and we started off historically, as we normally do in the UK, with a very low debt. As a result, 2 million jobs were created, investment started to increase and the British economy started to recover The public finances have moved in the right direction, but we still have a very large national debt; it is not large by continental standards, but it is by British standards. It is right that in this Budget we start to close the gap still further, from just under 5% down to a balanced budget and we top off the national debt and start to reduce it. I am pleased that the Chancellor has set out a plan to both balance the budget and start reducing the national debt, from about 80% of GDP back down to 70% and all points lower. That is good news We have been through a difficult period, but our hard work over the past five years as part of the coalition has clearly paid off, because we now have rising tax revenues and an economy that is starting to perform Tax credits are probably one reason why unemployment did not rise as much as might have been expected, because to some extent the subsidy of employment helped employers keep people on and meant people stayed in work, but the fact that we are spending so much on welfare shows there is clearly a welfare issue. At a time when we have falling unemployment and rising pay levels—they are now starting to pick up—it is perfectly sensible that we should try and float people off tax credits. I take on board the points Members have made and we will have to look at the detail carefully, but if we can reduce tax credits at a time when people’s pay is going up, the national debt and the national deficit can be reduced and people will become less state-dependent. It is right and proper that, if profits go up and corporation tax is cut, employers take the strain now and the taxpayer does not have to, because there is a limit to what we can do in terms of national borrowing. I think that the outlook is pretty good. Chancellors always do too much and always mess about with too many taxes and, like his predecessors, my right hon. Friend the Member for Tatton (Mr Osborne) has a habit of doing that. Our tax code is far too large and there is a very good argument for tax simplification, but nevertheless the priorities that the Chancellor has set in his Budget are right: increase incentives to work; increase incentives to invest; and increase incentives to save There has been some criticism of the northern powerhouse proposal, but, as somebody from the soft south, I think that it is vital that we balance our economy. The parts of our nation that generated the industrial revolution have some first-class universities and a great resource of people, and we should use that to balance against London, because London’s economic impact on the UK is too great. If we can do that, it will lead to much more sustainable growth rates. We do not want to get into a situation where just at the point when parts of the north start to feel things are improving a little bit, London starts overheating and suddenly economic policy goes into reverse. For a one nation Chancellor with a policy of trying to get growth in all the regions, that has got to be right. I therefore welcome what the Chancellor is doing to try to have a more balanced approach to our economic growth in the UK I also welcome what the Chancellor has said about inheritance tax. It always seems to most of my constituents, who have paid an array of taxes over their lifetime, that when they die the state will jump in and take their house, which may be an expensive one, rather than letting it go to their children. These days, it is not difficult, particularly in London, to have a house worth £1 million—it does not have to be very big. As we have often seen, someone’s castle in Scotland can be worth less than an ordinary terraced house in London. The issue has to be addressed, and I am glad the Chancellor has done that It is good that we have addressed corporation tax and are continuing to bring it down. Southern Ireland has clearly benefited from very low tax rates, and making ourselves tax competitive is the most effective way to stop major corporations landing profits in other low-tax areas, because the incentives for doing so are much reduced I understand the concerns about productivity. Education, training, apprenticeships and investments in science will all make a difference. Ultimately, as wages go up and as the cost of employment goes up, employers will start to invest in many areas which will start to put productivity up. One reason why our productivity is lower is that the two sectors where we were the most productive—North sea oil and gas, and the financial sector—have taken a knock over the past few years. I am a sceptic about some of these things. There are things we can count, such as unemployment, but other things are formulae made up by statisticians, and I do not think they always get it right. An economy such as the British economy, growing at this rate and with relatively full employment, is a good place to be. I do not think that we need to worry too much about some of these things, which I am sure economics will put right as the economy goes forward In 2010, the right choices were made and today’s Budget has continued to do the job we started then. As a consequence, we will end up with a stronger, more employed, more flexible and more successful economy. Of course, some challenges remain—we see the challenge of Greece. Although I do not think that Greece will affect us, we must remember that French banks have loaned heavily to the Greeks and that very big figures are involved that could have an impact on the European banking system There are problems now in China, as its economic model is not as fit for purpose as it was. The BRIC countries—Brazil, Russia, India and China—have gone into reverse. If we look around the world, we see that the countries that are often written off are those that are still doing pretty well: the United States, Canada and Britain. In Europe, the Germans and the Dutch still have formidable economies. We have to stick with the policy we have, as it is the right policy. Not only is it a good long-term economic policy, but its resilience has meant that, despite all the storms and the difficulties of the world economy, Britain has managed to make progress Clearly, we have a trade deficit—that was one of our biggest difficulties to worry about—but it is not surprising, given that 50% of our exports go to an area that has had recurring financial problems, that it is difficult for us to export. We should not get too upset about that, as it will sort itself out. If the Greeks’ problems blow up, things may well sort themselves out in the right ways, because people will actually have to take actions to make a more sustainable European Union and euro I therefore fully support what the Chancellor is trying to do. We have made progress. There is more progress to be made, but I am proud of what the Government have done. Clearly, we have to look at a lot of detailed things, but over the next five years, Britain should continue to make progress and show the world that it has a lot of good things going for it. The British economy is growing in size and influence, and its people will benefit from that
I pay tribute to the two Members who have made their maiden speeches today, the hon. Members for Louth and Horncastle (Victoria Atkins) and for Coatbridge, Chryston and Bellshill (Philip Boswell). I mean no disrespect to the hon. Member for Louth and Horncastle when I say that we are all going to miss Sir Peter Tapsell and his view of history. I hope that all his recordings have been kept for posterity so that we can understand what a catastrophic mistake we made in Afghanistan—I agree with Sir Peter Tapsell on that The Budget we have just received today is the first Tory Budget for a very long time, but I have been here long enough to remember the last one. It is as though this is the land that time forgot, because this Budget is exactly the same. It has exactly the same narrative of cutting taxation for the very richest, making life worse for the very poorest and selling off state assets to pay for it all along the way It is time for the Conservatives’ strategy to be significantly challenged, and there are a number of points on which I wish to challenge them. The first is the Chancellor’s really strange statistic that Britain spends 7% of the world’s welfare budget, which is, he said, way above the average of every other country. He may be unaware of it, but many countries in the world have no welfare budget of any sort. In large swaths of Africa and Latin America, there is no public assistance for people in poverty or desperation. It is a ludicrous statistic plucked out of the air and used to justify a quite appalling attack on many of the poorest people in this country. I long for the day when a Chancellor of the Exchequer introduces a Budget, in a way that very few have done in the past, and says, “The priority is to have an expanding and sustainable economy with sustainable jobs in an environmentally friendly way and to eliminate poverty and destitution at the same time.” We had none of that. We had all this anti-benefit narrative as though nobody was sleeping on the streets of Britain, as though the number of children growing up in desperate poverty was not increasing day after day, and as though there were no young people who are unable to do their homework because their bedrooms are too crowded with their siblings.
The hon. Gentleman is extremely kind to give way. [Interruption.] Yes, I wish him extremely well with his Labour leadership bid. I would be happy to support him were I a member of the party. Will he join me in welcoming the fact that the number of children in relative poverty declined by 300,000 over the past five years?
I welcome the fact that the Chancellor has changed the method of calculating poverty to produce the statistics that he wanted in the first place. He is doing extremely well on statistical changes, and I admire his gymnastics in that regard This Budget, with its benefit changes, is essentially an attack on the poorest and on young people. What do the Conservatives and the Chancellor have against young people? We start off with a third child onward policy. What is that about? If the Chancellor is saying that children deserve to be supported through child benefit—I guess we all agree on that—why does it stop after the second child? If a family happens to have four or five children—some of us come from families of three, four or five children—is he saying that the third, fourth and fifth children are less valuable than the first and second? What has been suggested is outrageous.
Does my hon. Friend agree that this Budget is particularly bad for Londoners? Two thirds of Londoners on tax credits are actually working, so, far from encouraging people to go back to work, this Budget is a particularly cruel attack on working Londoners.
Indeed; my hon. Friend is absolutely correct. Although London has very high property prices and a number of extremely wealthy people—it is the centre for some of the world’s wealthiest people—it also has appalling levels of poverty. Some of those people in desperate poverty are being forced out of London by a combination of the high rents and the benefit cap, and the proposal now is to reduce the benefit cap. I am not pleased that we have to spend £25,000 or more on supporting some families, but from the way that this statistic is presented by the Chancellor, one would imagine that the entirety of that £25,000 went immediately to that family. Well, it does not; it goes straight into the pockets of a private landlord, just as the in-work benefit often goes to subsidise low wages. I am pleased that we are getting something approaching a living wage, though it is not very different from what the minimum wage would have been by that time anyway. We must look very carefully at the issues surrounding this Budget. There are also other problems for young people, such as cuts in benefit, their inability to access housing or to get a reasonable level of room rate if they are single, the continuation of the low wage rates and the conversion of all grants into loans for those from poorer backgrounds who were hoping, planning and aiming to go to university. What is it that the Conservative party has against the young people of this country? I find it very strange I represent a constituency that, in housing terms, has about 40% council tenancies, about 30% social private rents and about 30% owner-occupation. Because of the benefit cap and the very high rents in the private rented sector, many people are being forced out of the community. The same thing is happening all across central London. Those who say that it does not matter because they do not represent a London constituency should think on: this principle could apply everywhere else. The Chancellor’s proposals on housing are very interesting.
Will the hon. Gentleman give way?
No, I will not give way a second time First, the Chancellor does nothing to address the housing shortage—not the lack of council housing being built, not the lack of sufficient housing association properties being built, and not the lack of sufficient places being built for reasonable sale. The Chancellor’s solution is to force councils into right to buy, with a discount of up to £100,000—£100,000!—so that the councils are forced to sell off what is called high-value property because such property should not be owned by local authorities. The council in my borough is, to its credit, building homes. It has just completed a development of 25 new flats, but if the Chancellor’s proposals go ahead, we will have the ludicrous situation whereby nobody on the borough’s housing waiting list—nobody in housing stress—will get one because they will be sold on the open market to anyone who is able to buy them. What does that say to those people in desperate housing need who want to maintain communities in London or any other part of the country There is also the sale of housing association properties. Housing associations are quasi-independent, and their properties are not the Government’s to sell. I am concerned about the financial model of housing associations, which has gone down and down from having almost 100% public investment in the construction of new properties at the time of their foundation, so that they have effectively become building companies using private finance. There is no problem in borrowing private finance to build, but there is a problem if the rent model or building for sale at the end of the process does nothing to address the housing needs of the most desperate people in this country. What we are doing by stealth is privatising housing associations by forcing them to sell off their properties What happens to young people who cannot afford to buy—who have no bank of Mum and Dad—and who cannot afford to rent? Where do they end up living? Why is the age at which people here are able to leave home and live independently the highest in Europe, and why is it getting higher and higher? This Budget offers nothing to those people in housing stress The Chancellor is very keen on regulating local authorities, by increasing the rents for those on higher earnings and decreasing them for others, with no remarks about compensating the housing revenue account for the income lost, but he says nothing about regulating the private rented sector and tackling the astronomical rents being charged in some parts of London. In my constituency, it costs at least £350 a week to rent a two-bedroom flat; a house costs between £500 and £1,000 to rent. It is completely off the scale in terms of what most people can even begin to think about being able to afford Levels of tax evasion in Britain are high, and I am pleased that the Chancellor is prepared to address the issue, but why have the 15-year rule for non-doms? Why not abolish the non-dom status altogether? Why not, as part of the EU negotiations, consider the tax-evading loopholes that exist all over Europe? We have islands around our shores where tax rates are remarkably low. Switzerland manages to charge remarkably low rates of corporation tax, as do Luxembourg, Liechtenstein and Monaco. Should we not be looking to close all those loopholes? Instead, the Chancellor proposes yet another cut in corporation tax and says that the way forward is to continue the race to the bottom in lowering corporation tax The Budget reflects the long journey from the Prime Minister’s hug a husky days and the promise of being the greenest Government ever to the sale of the Green Investment Bank to the private sector—with what sort of requirements for its future performance, I know not, because nothing is made clear in the Red Book—and the cancellation of at least two major rail electrification projects, which were trumpeted before the election and used as part of an election-winning strategy to show that the Conservatives had really got it on railways and really wanted the railways to expand. Instead, they have cancelled the electrification of the midland main line and the Manchester to Leeds line. Is the western region electrification safe? There are many other projects one begins to worry about because of those announcements At the same time, the Government are investing a huge amount of money in road building. It is as if the whole transport strategy has been turned on its head, so that instead of going for the more environmentally sustainable rail transport, particularly for freight, we are once again on a road-building binge in a country that is already polluted and has too many vehicles on the roads. Surely we should be trying to rebalance our economy in favour of sustainable transport. I am not saying that we have to get rid of all cars—obviously not—but our transport policies have to be more sustainable.
On the subject of the Budget’s green credentials, the Red Book also sets out that renewable energy will be subject to the climate change levy. Does the hon. Gentleman agree that that is utterly perverse from the point of view of reducing carbon emissions?
Well, indeed. I hope there will be sufficient opportunity to question the Chancellor on the whole environmental strategy behind this Budget, because I really wonder if there is one at all. We live in an era when climate change is a serious problem around the world. Air pollution is a very serious problem, particularly in India and China, but it is also a growing problem in London and other cities. Surely we need to think hard about the health effects and the role that a financial strategy can play in improving our environmental standards. Asked how all this would be paid for, I turn to pages 28, 29 and 30 of the Red Book, where we see all the public assets that are to be offered up, totalling £30 billion in this financial year—the largest ever sale of public assets in the history of this country, and almost double what Margaret Thatcher achieved at the height of her privatisation mania. [Interruption.] Conservative Members say, “More.” Of course they do, because the only economics they can think of is getting rid of public assets to fund tax cuts for corporations and to pay for the inheritance tax cut that will largely benefit the wealthiest in our society.
Will the hon. Gentleman give way?
No. I am conscious of the time and want others to be able to contribute The BBC has been persuaded, willingly or unwillingly, to pay £150 million for the over-75s licence fee concession. There will be a £40 billion sale of shares in Lloyds Banking Group and £20 billion in fees from Lloyds, RBS and UK Asset Resolution. There is the sale of Eurostar, Royal Mail and remaining shares in Lloyds bank, and the sale of the Green Investment Bank, which I mentioned. There is even, for goodness’ sake, the sale of the King’s Cross property development, which did such a great job of developing King’s Cross into a wonderful place. And, of course, there is the sale of the remaining RBS shares—at a loss This Budget is a trick—a trick of smoke and mirrors. It hits the poorest, it does nothing to solve the housing problem, it creates greater inequality in our society, and it is paid for by the sale of public assets from which we should all be able to benefit. I hope that one day there will be a Government in this country that set as their priority a commitment to reduce inequality, to get rid of destitution and poverty in our society, and to bring about a society that is more at ease with itself. Inequality is the only message the Chancellor seemed able to offer today
It is a great pleasure to follow the hon. Member for Islington North (Jeremy Corbyn). Perhaps that was one of the many leadership speeches that he is going to make in the next few weeks. He spoke powerfully about the importance of young people. If the young people of this country had the opportunity to speak to the young people of Greece and of Spain, they would be very reassured that we have in this country a Government who take seriously the level of debt that we hand on to the next generation It is a great pleasure to speak in this part of the debate, having heard such brilliant maiden speeches from my hon. Friend the Member for Louth and Horncastle (Victoria Atkins) and from the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell). Both were accomplished speakers who, I am sure, will make a tremendous contribution to the House in the coming years We cannot overestimate the importance of this Budget speech. It represents a new settlement for Britain. It is about a country living within its means, moving from a culture of welfare dependency that was propagated too much under the last Labour Government to what I felt many people were speaking about at the last general election—an aspiration nation, with a Government who do not give with one hand to take back with the other, but who believe in the prosperity of this country for the long term Many families who I talk to in my constituency, Basingstoke, see that now there are more jobs on offer. We hear in the Budget today that when somebody works hard they can keep more of that money for themselves and their family, because of the increases in the tax thresholds, and that it is not just a dream for people to have a home of their own, because Right to Buy, which will potentially support up to 13,000 people in my constituency, and Help to Buy are practical ways of helping families get the start in life and the security that they want for the long term This Budget is built on authentic Conservative principles: lower taxation and making sure that people can get the sort of wages that they can live on. A new national living wage is a great example of that. Because we have a stronger economy, we have seen stronger support for and investment in the NHS and education. I want to pick up one of the smaller elements of the Budget today—the expansion of the number of cadet units in state schools to 500 by 2020. I am fortunate in my constituency to be able to pay tribute to the Vyne school, which is a trailblazer in this area, being one of the very few state schools that already have a cadet unit in place. I know how much that means to the young people who are able to take part in the unit, and I am sure this extra investment and support will spread that good practice elsewhere. I am sure many of my constituents will be reassured to hear the Chancellor’s commitment to the 2% pledge in respect of defence budgets There was much talk today about welfare reforms. There will be some reassurance after some of the headlines that we read in the newspapers over the weekend. I think particularly of assurances that disability benefits will not be means-tested. It is important that we make sure that disabled people receive the support they need, and I was reassured by the comments of my right hon. Friend the Chancellor earlier This Budget sets out a clear objective for our nation: that we want to be the most prosperous major economy; that we have sustainable welfare plans in place to make that work for the entire nation; and that we tackle and boost productivity. That will resonate in my constituency, which is one of the top 10 centres of employment in the south-east. We have one of the best local enterprise partnerships in the country, and businesses in my constituency will welcome the cut in corporation tax, the increase in employment allowances and the setting of the annual investment allowance at a new permanent level. All these things will help create certainty, because we need more jobs not just in the south-east but throughout the country. If we are to see that productivity boost, it is vital that we have the right conditions for helping businesses to grow I was interested to read in the Red Book a little more detail about the transport proposals that the Chancellor outlined today. I know that the Government are committed to spending around £56 billion on transport in this Parliament. The creation of a new road fund and a new investment strategy for roads is vital for constituencies such as mine, as we have endured massive underinvestment, despite the very high house building targets set by the previous Labour Government. Funding the new road fund through the changes in excise duty that the Chancellor outlined will help to ensure that we have a sustainable way of investing in that vital infrastructure for the future I note that my hon. Friend the Exchequer Secretary, whose constituency neighbours mine, is sitting on the Front Bench. He and I have had conversations about the importance of trains in our transport strategy. I was delighted to hear earlier this week that the refranchising of the south western routes will be brought forward to 2017. That is an important part of improving the trains offer to my constituents. I hope that my hon. Friend will also be mindful of the need to continue to invest in the hardware, particularly the investment that Network Rail needs to increase the capacity on the Wessex line, which runs through my constituency, by 60% over the next two decades. That will require considerable investment, either by the Government or by other means. It is important investment that needs to happen The Chancellor set out an exciting new opportunity to increase skills in our country through the apprenticeship levy on large firms, which will provide the opportunity to upskill even more of our young people. I know how important this Government’s commitment to apprenticeships has been for young people in my constituency, and also for older employees. With many employees going through a number of career changes, the ability to upskill or reskill through an apprenticeship is not appropriate only for young people. I once again in the House applaud the work of Basingstoke College of Technology, which will now offer graduate-level apprenticeships as a result of some very innovative work with local businesses The Chancellor talks eloquently about the northern powerhouse, but I always want to remind him gently about the southern engine room. Having been born and bred in the midlands, I am glad that a significant part of the Red Book is devoted to the importance of growing the midlands, but we must ensure that the south-east remains competitive. Part of that is by investing in infrastructure of the sort I have been talking about—trains and roads—and, I hope, through continued interest in the importance of city deals for southern towns and cities. There is a great deal of talk in my county about the importance of devolution to the shire counties. Hampshire County Council, which is one of the best run county councils in the country—[Hon. Members: “Hear, hear.”] A number of hon. Members clearly support that. I know that the county council would be very interested in talking about the devolution of further powers so that we can maximise efficiency in the south-east engine room, which is so important to the future of our country I will close by focusing on one final point: the importance of maximising the contribution of all members of society and all people in this country, particularly women. Many women listening to this debate will applaud the increase in the threshold for the personal allowance and the national living wage. They will welcome the 30 hours of free childcare for parents with young children. They will welcome the work that this Government have already done to modernise the workplace. They will note that the gender pay gap for the under-35s has all but disappeared for people in full-time work.
Does the right hon. Lady really think that women will applaud paragraph 2.103, at the top of page 88 of the Red Book, which reads: “The Department for Work and Pensions and HMRC will develop protections for women who have a third child as the result of rape, or other exceptional circumstances” when calculating their eligibility for child benefit? That is appalling.
The hon. Lady is picking up on a very small detail that I have not yet had a chance to go through. It is important that we ensure that support is there for people who have suffered the trauma of rape or domestic violence. I also draw attention to the additional support that the Government have pledged in the Red Book for victims of domestic violence to ensure that they get the support they need I realise that I have only a minute or so left, so let me return to my point about the importance of maximising the role of women in the workplace. Lord Davies showed what could be done by focusing on tackling the question of the importance of getting more women into non-executive directorships. We still have an unacceptable situation in this country as fewer than 9% of women take executive jobs in our top companies. By having so few women involved in the management of our companies, we cannot deal with some of the practice and culture problems we still have in firms in our country. It is important that we have in place support for those who need more flexible part-time working, particularly older workers, and that we ensure we have support for those who have caring responsibilities at all points in life, not just when they have young children. By tackling some of these problems, we can help encourage more women to take more of a long-term role in the workplace at the highest levels. The Budget will build the foundations on which we can have the sort of successful companies in which they can work.
I enjoyed the speech from the hon. Member for Islington North (Jeremy Corbyn). I am not making a leadership speech myself tonight, because nominations for the Liberal Democrat leader closed some days ago, but I agree with much of what he said about housing. Before the general election, there was an agreement from all political parties that something very substantial had to be done about that. Figures of 200,000 or 300,000 new homes were proposed, but I am afraid that what we have before us today will achieve nothing on that scale. The sort of people who come and see me, the hon. Gentleman and other Members who have problems with overcrowding or having to stay at home, often with three generations in the same house, will remain with us In May 2012, the Prime Minister gave an interview to the Daily Mail in which he complained that he would have governed like a true Conservative had it not been for the Liberal Democrats in coalition. Today, his Chancellor has set out what that means: attacking opportunity and entrenching the divide between the young and the old. This is the first real test of what happens to the Budget when the Liberal Democrat stabilisers are off; it lurches very heavily to the right. The Chancellor said today that the British people trusted his party to finish the job, but let us be clear that this Budget does not live up to the trust that the public placed in him. It does not continue on the path set out by the coalition Government but instead pursues an ideological approach that requires young people and the disabled to pick up the tab If we are to be a society of opportunity for everyone, surely we can all agree that investing in future generations is fundamental. That means supporting parents to meet the costs of their children, helping the poorest students get to and succeed at university and, when they look for a job, ensuring that they receive the same support as others. The message from the Chancellor is clear: those who are looking to get ahead and make a start in life are on their own. The Budget seeks at every turn to make it harder for the next generation to succeed, to get into work, to get a good education and to get back on their feet when things go wrong Let us consider a child’s path through life under the Government’s proposals. The Conservative party has made a great play of its increase in support to cope with the costs of childcare, enabling working parents to get 30 hours a week of free childcare. The Liberal Democrats support that, yet the decision to reduce the starting point for working tax credit and universal credit withdrawal will all but wipe out the benefits of this policy for those on the lowest incomes with children. What assessment has been made of the impact of those changes on the benefits accrued by low-income working parents from childcare support Of all the difficult decisions the Liberal Democrats took in government, it is fair to say that the decision to reform tuition fees was one of the hardest. Yet our decision was based on ensuring that young people wanting to go to university would have clarity about what they would pay back, and that those who earned the lowest incomes would pay back less. The Chancellor’s announcement today on a consultation on freezing the loan repayment threshold for five years would undermine the protections that the Liberal Democrats fought to put into the system Martin Lewis, who was asked by the coalition to head the independent taskforce on student finance information, undertook that work based on the principle that the £21,000 threshold would increase with inflation and he has publicly said he was promised that that would be the case. Why are the Government even considering such a change? Can Ministers assure us that, if experts who acted in good faith for the coalition Government are clear in their opposition, any consultation will take that into account It is clear that, for children and young people, this Budget is a bust, but it gets even worse when they enter the world of work. We welcome the decision on the living wage. It is right that people should receive through their pay packet the money to support themselves and their families, but we are astonished that that only applies from the age of 25. Why do our young people not deserve the same support? This decision opens the gulf between the minimum wage for younger people and the wages of others. What encouragement is that for those who really want to “work hard and get on in life” Even where young people are not deterred, this Budget introduces measures that will make it harder for those in areas of low employment to seek out jobs. The decision to abolish housing benefit for young people will mean that people cannot move to find work. What message does that send out to young jobseekers? The attack on housing benefit will hurt opportunity and young people’s employment prospects. It is not fiscally tough; it is simply wrong. What assessment have the Government made of the impact of these changes on the ability of young people to take up the chance of employment, and what assessment have they made of the risk of a serious increase in homelessness among young people The most worrying changes are for those who fall on hard times who do not have the same advantages as many of us. The majority of employment and support allowance claimants in the work-related activity group have mental health conditions. The decision to slash support for that group—who, let us be clear, have been medically assessed as currently unable to work—will destroy their chances of looking for work in the future. It means an annual cut of £1,500 for sick and disabled people who are trying to get their lives back on track. People with conditions that have affected their ability to work, such as depression and bipolar disorder, need support. They face additional costs in order to get their lives back on track. That they are being abandoned shows clearly where the Chancellor’s priorities lie This Budget not only hurts young people and the disabled; it also means four more years of pain for public sector workers. They have clearly been very hard hit in the past five years as a result of pay restraint—which the Liberal Democrats supported in coalition—but in the next couple of years the budget deficit will have been addressed and the debt will start to fall, so why are those public sector workers going to suffer the same restraint over the next five years as they have suffered for the previous five years If this Budget abandons our young people’s future, it also abandons our planet’s future. In government, Liberal Democrats fought hard to protect our environment, and today the Chancellor has shown just how little the Conservatives care about the future of our planet. By stopping the coalition proposals increasing the proportion of revenue from environmental taxation, the Chancellor has, indeed, got rid of the green crap. He talks about a security budget, but the greatest threat to our national and global security—climate change—is clearly not of concern to a Government who have abandoned the coalition goal of being the greenest Government ever Conservative Members may feel that I have been too churlish in what I have said so far. Clearly, we agree with some areas, such as the £8 billion funding commitment for the NHS. We are fully behind that, and I hope that it will help to fund the redevelopment of St Helier hospital in my constituency. We are fully behind the proposal to increase the tax allowance—it was of course Liberal Democrat policy, but before the last general election the Prime Minister said it was unachievable—and I hope that it will indeed hit £12,500 by the end of this Parliament. We also fully support getting another £5 billion through tackling tax avoidance. Finally, 2% for defence was delivered under the previous Government, and I welcome the fact that it will be delivered by this Government as well. I did not want to conclude my remarks without at least stating that there are areas in which we are supportive of what the Conservative Government are proposing. This Budget is supposed to be for working people—a “We are all in it together” Budget—but instead it is a “You’re on your own” Budget that abandons young people who want to get into work and start a family, but who fall on hard times. That shows just how clearly millions of people will miss the Liberal Democrats.
I want to declare an interest. I have one very small buy-to-let mortgage that ought to be brought to the House’s attention I pay tribute to the two Members who have made their maiden speeches, my hon. Friend the Member for Louth and Horncastle (Victoria Atkins) and the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell), whose constituency name is very long Many of my comments will be on the tax and tax credits side of the debate, but I want to start with the budget deficit. I am very pleased to see from the Red Book that Government spending is currently 39.6% of GDP, which will fall to 36% by 2020, when we will have a surplus. A surplus is what we need, and we were elected as the responsible party to deliver it. I am proud that we will have a fiscal responsibility charter so that the disaster, frankly, that we inherited in 2010 will not happen again I have always agreed with having a degree of hypothecation in our tax code, so I am very pleased that the road fund licence will be used for road funding, as it was always designed to be used. I certainly hope that it will generate a larger fund. I already have my eye on the dualling of the A256 so that we can have a proper east Kent highway from Ramsgate to Dover. It is to the credit of car manufacturers, which now make such low CO2 vehicles, that we have got to the stage of needing to look again at the road fund licence The freezing of fuel duty is a particularly pleasing facet of the Budget. Many thought that the duty might be subject to an increase. I am glad that it has been frozen once more. It now represents up to £10 per tank-fill compared with what might have been the case had we continued with the fuel tax escalator imposed by the Labour party some years ago. That is particularly relevant for those on low pay. In my constituency, we suffer from lower rates of pay than in the rest of the south-east. It is mostly the low-paid who suffer from higher fuel taxes, as fuel represents a high proportion of their disposable income Another hypothecation of tax is the apprenticeship levy on large employers. There has been a similar form of levy in the construction industry for some years, the construction industry training levy, and I am very happy that it will be extended so that all youngsters can have a proper opportunity to get a real apprenticeship, which will give them a really great future. I am very pleased to see that the number of proper apprenticeships in South Thanet increased from 300 to 720 in the past five years, and I certainly hope that the new fund will enable that number to more than double again.
Does the hon. Gentleman accept that the apprenticeship rate is currently set at £2.73, as part of the minimum wage regulations? How does he expect young people to live on that while serving their apprenticeship?
I think the hon. Lady will find that good apprenticeships become very good jobs. I always said, as an employer in my former life, that I was keen to see people with something on their CV, because they had the best chance of having a job into the future For far too long, there has been fiscal drag in the inheritance tax system. The £325,000 threshold, which is doubled for a couple, has been in place since 6 April 2009. One reason for that drag is the increased value of the family home. I am therefore pleased that the family home has a place in the proposals. There will be a £100,000 rate from 2017-18, which will rise by 2020-21 to the full £175,000 that has been proposed I had concerns before the Budget about how the downsizing relief would work. I thought that it might just cover people moving to a smaller home, but I am pleased to see that it will be available to those who simply cease to own, perhaps because health problems mean that they have to go into long-term care. There is nothing in the Red Book about how long the relief will be in place. It may be perpetual, which would be good, but many of us are familiar with the seven-year rule that applies to many inheritance tax proposals I am very much in favour of the simplification of the UK tax code. It is out of control and now runs to some 17,000 pages. When I was a councillor on a unitary authority, we managed to create 265 pages of local council legislation merely for the localisation of council tax, whereas the entire tax code of Hong Kong runs to only 235 pages The need for simplification leads me to ask why we do not just raise the threshold in general, rather than apply it to a house. There may be people who have chosen, for whatever reason, never to own a home. They may have decided that renting is for them, that it suits their lifestyle and that they can save money in their own way. Under the proposals, the home must pass down to children or grandchildren. There is a degree of discrimination against the childless in that. Such people may have family members who fulfil many of the functions of love and care that other people expect from their children Whenever I think about inheritance tax, I go back to the Burden sisters, who took their case to the European Court of Human Rights back in 2008. They were spinsters who faced being unable to pass assets between each other upon the death of one of them. They lived in the family home and, on the death of one of them, the other would have faced an inheritance tax bill that there was no money to pay I have come across other people who live in the family home that they received from their mothers and fathers, who have never married and who lead a prudent lifestyle. One man in particular has assets of approaching £500,000, but will face an inheritance tax bill because he has no spouse and no children or grandchildren. I have always maintained that it would be simpler for every person to have a nominated inheritance tax recipient, rather than it having to be a spouse or civil partner I welcome the increase in the employment allowance that is available to every employer to £3,000. The £2,000 level has been very welcome, and has encouraged and enabled many smaller employers to take the first step towards putting people on the payroll. The anti-avoidance measure that means that sole directors will not benefit from that is well made, because there has been use of that—dare I say it—loophole. I will move on to the proposals on buy-to-let landlords. Obviously, the Conservative party has a strategy to ensure that as many people as possible in this country have the opportunity to own their own home. That is a fundamental part of what we stand for. People who have a stake in their home have a stake in society. We have Help to Buy, the right to buy, a mortgage market that often helps first-time buyers, and many housing providers have numerous shared-equity arrangements. It is clear that the buy-to-let market has had a distorting effect, and those with good credit have been able to get on to what seems to be a one-way bet. That bet continues while we have housing shortages and a growing population, and it is right to address that I have no fundamental objection to the restriction of tax relief, which will be phased down to basic rate relief only over four years from 2017. I am, however, concerned that we risk creating a new anomaly that goes against the concept of “wholly and exclusively” that underpins our whole tax system. If taxpayers enter into a transaction with no surplus cash arising at the other end, normally there would be no tax to pay. Under the proposals so far, however, a taxpayer could make no surplus or even a loss, and that would result in a tax bill. That seems to be an anomaly. I would rather address the problems of the buy-to-let market with an increased rate of rental tax for higher rate taxpayers, as a surplus to the current 40% rate, or even the 45% rate for what I call super-tax payers. We should either use that type of tax system to change and skew behaviour towards the public good, or we should implement greater regulation of buy-to-let mortgage providers. I worry about introducing a precedent of behavioural skewing into our tax system, and it is unusual to encourage behavioural change in that way through the restriction of a deductible expense The changes to dividend taxation are to be welcomed. We must look back to changes by Gordon Brown and the advance corporation tax system that caused the destruction of a proud and well-financed pensions system and turned it into one that today has extreme difficulties. I am sure we will get details of how that will work—perhaps I will work it through myself later today The corporation tax reduction is welcome. I am not sure that big or even smaller businesses were clamouring for it, but it is certainly simpler now we are down to 20% and do not have to change rates and amounts if there is a multitude of companies—a good simplification. The main driving force of the measure is that it offsets any additional cost to companies as they implement the welcome and increased national living wage We had a debate on tax credits yesterday—I would like to have taken part but I was elsewhere. It speaks volumes that the UK has 1% of the global population, 4% of its economic output, and 7% of global welfare spending. I have said this before on other platforms, and I will say it here in the House: we have created the most expensive system of keeping people in poverty that has ever been invented. We now have a tax credit bill that approaches £30 billion One feature I am grateful to see is the prior year income disregard going down to £2,500. Back in 2009, the income disregard on prior year income was £25,000. That meant that somebody’s income could be £6,420 in year 1, £31,420 in year 2, yet they would receive full and complete tax credits. That much-needed welfare was frankly going to the wrong place. There are other failures with the tax credit system that I am confident universal credit will solve and replace. For example, the system has had no capital element. I have known of instances where people have more than £1 million in various assets but no great income, yet they are still claiming tax credits of upwards of £18,000 per year. Far from the dire pronouncements we heard during the previous Parliament that our proposals would somehow create a disaster for those on lower pay, what we have created is common sense, greater hope and a desire to get on. We are seeing an increasing number of people getting back to work and fewer workless families I very much welcome the increases in personal allowances, which were manifesto commitments, and the increase in the national living wage. There is now a better chance than ever to get a good job or a first-class apprenticeship. There will be 29 million people in this country with lower tax bills and 4 million out of tax altogether. That amounts to £5,000 extra to the low-paid over the Parliament. This is what counts. This is what matters. This is what we intend to deliver for this country: a country of opportunity where everybody gets on.
I pay tribute to the hon. Members for Coatbridge, Chryston and Bellshill (Philip Boswell) and for Louth and Horncastle (Victoria Atkins), who made their maiden speeches earlier this afternoon. I hope that they enjoy their time here representing their constituents The Budget was heralded as the first blue Budget for 18 years, but it certainly was not worth waiting for. Like my hon. Friend the Member for Islington North (Jeremy Corbyn), I heard echoes of previous Tory Budgets under Margaret Thatcher and John Major, particularly in relation to housing and the social rented sector. There was a certain irony in the big crescendo being about the national minimum wage. Those of us who were here in the first Labour Parliament will remember that we had to sit all night to force through the national minimum wage. The Tories fought against it tooth and nail, yet here we are with the Tories claiming to be the guardians and supporters of the national minimum wage. How right can we be? We were told that it was going to cost jobs and wreck the economy. None of that came about and the Chancellor is now increasing it substantially, which I welcome. I will come back to that My concern about the Budget, and the reason I wanted to speak today, relates to the proposed changes to welfare, particularly in relation to housing and the benefit cap. They will have a major impact because of the cost of housing in London. Only a few days ago, it was announced that there should be a higher income cap for people in social housing, who would then be forced to pay a market rent. I am concerned that what we are seeing, much as the Chancellor tried to portray this as a one nation Budget, is a division opening up between those who have property and those who do not. That causes me a great deal of concern There was very little, in what the Chancellor said, for the next generation. I am living in a house that, in the past 14 years, has more than doubled in value. I have not earned any of that money. Housing costs are leaving the next generation behind. What chances are we creating for the next generation? My right hon. Friend the Member for Wentworth and Dearne (John Healey) spoke very early in the debate. He undertook an excellent piece of work, which I encouraged the Labour Front-Bench team to adopt before the general election, outlining the “benefits to bricks” argument. If we invest in social housing at 50% or lower of market rents, the taxpayer actually saves money. We can chart the ballooning of the housing benefit budget right back to Sir George Young. When he was Housing Minister he said let housing benefit take the strain. Since then, we have seen a mushrooming in the cost to the taxpayer of paying for people to live in private rented accommodation At the time of the 2010 election, economic growth was 1.7%, owing largely to the action of the Labour Government to address the deficit and economic downturn that resulted from the international banking crisis—I wish they had had so much power that they could have created an international banking crisis, because then we might have changed much more, other than what we did do, such as introducing the national minimum wage When they came to power, however, the last Government removed all the stimulus from the economy, much of which involved housing. In spite of the depth of the downturn, we had managed to keep the number of repossessions resulting from the downturn lower than in the 1992 recession. We also created the home start scheme to support and keep going construction schemes that were faltering because the banks were not providing credit—we supported the supply of housing—but the last Government scrapped those schemes Incidentally, the last Government also scrapped the biggest council house building programme in 20 years. We can calculate the savings that that programme made to housing benefit. The Conservatives will claim credit for building more council housing than the last Labour Government—
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Oh God; it’ll be a good one, I know I admit that we did not build enough houses. I was here, firmly on the Back Benches, when we were in government, and the lack of house building, particularly social rented housing, was one of the big issues that I argued for, but right at the end we did invest a lot of money in building social housing, and the last Government scrapped it. The only social housing they have built and claimed credit for in the past five years was funded by my right hon. Friend the Member for Wentworth and Dearne when he was Housing Minister. I know that because I was his Parliamentary Private Secretary.
Does my hon. Friend agree that investment in affordable housing, particularly social housing, has a multiplier effect on the economy because it boosts construction and creates jobs in that sector, as well as providing an important stimulus to people who for whatever reasons—mainly economic—cannot provide housing for themselves?
That is absolutely right; it gets the supply side going as well The OBR figures in this booklet show that house prices are due to rise by 34.1% by 2021, so a considerable increase in house prices is still being predicted, but people’s ability to buy housing will only fall further behind. The Resolution Foundation states that 2.2 million households on medium incomes spend one third or more of their disposable income on housing, leaving an average of about £135 a week for other things. If they even attempt to buy their own home, they do not have enough income. The National Housing Federation’s report, “Broken Market, Broken Dreams”, states that the average first-time buyer needs a £30,000 deposit—10 times the amount needed in the 1980s—and to borrow 3.7 times their annual income now compared with just 1.7 times their income in 1979 Two thirds of home buyers now use the bank of mum and dad. They are getting support from the baby boomer generation—I am one of them: those born between 1946 and 1964. Our generation are sitting on the best pensions any generation has had, the windfall from our house prices and the greatest ever increase in the quality of life—and what has the Budget done? It has protected pensions for that group, who are already wealthy, and allowed them even greater opportunities to pass on their housing to their children, further opening up the divide between those who have houses and those who do not. That is completely and utterly unfair Let me turn to the benefit cap. I do not support reducing the benefit cap from £26,000. I will look carefully at the impact assessment that the Government produce to show us that it is justifiable in London—we are going to see a proposal for a £23,000 benefit cap in London. I want to see how that will impact on people in central London, because we are seeing a combination of the cap and the highest-value social housing having to be sold off, as my hon. Friend the Member for Islington North (Jeremy Corbyn) said. We are seeing housing association properties forced to be sold off, and we know that for every 10 houses that are sold, we get only one house to replace them—that is the woefully inadequate record that we have seen in the past The expensive houses are going to be in central London. They are the ones that are going to be sold. Even in my constituency—which is an inner-London constituency, albeit towards the outer part of that area, so we do not have the sort of high-value properties we see in places such as Camden, Islington, Kensington and Chelsea, and Hammersmith and Fulham—there will still be high-value houses that must be sold. That will reduce the availability of affordable rented accommodation for people in London. What will happen to those communities? Where will those people go? Where are the opportunities for the next generation? What this Budget is doing is removing whole sections of our communities that perform lower-paid jobs and live in social rented accommodation in large parts of London. Those communities are just being wiped out, and this Budget has moved that forwards in ways that Margaret Thatcher could not even dream about I want to turn to the national minimum wage. Based on what I heard from the Chancellor, I think that he has redefined the living wage and claimed it for himself. He has put the minimum wage up to £9, when the living wage is actually £9.15 and £7.85 outside London, not £7.20. Therefore, he has rewritten the living wage to start with, but also the living wage is calculated by including the rate of tax credits, which have just been massively reduced, so if I am not wrong, it will not be a living wage and we have had a little con trick. It was the big end for the Chancellor—“We’ve got a new living wage”—but we have not got a new living wage; we have got a Tory living wage. Again, it will impact on those with high housing costs, particularly in London.
Will the hon. Gentleman give way?
Yes, I will; I cannot resist.
The hon. Gentleman is very kind indeed. I find it slightly difficult to believe that he is complaining about such a massive increase in the minimum wage when it is set at 60% of median earnings, which is the level suggested by the Resolution Foundation.
Other benefits such as tax credits are taken into consideration in calculating the minimum wage. That is how we arrive at the living wage, so we cannot cut tax credits and, using the previous living wage, say that it is the living wage. It has to be completely recalculated Back in 2012, the London School of Economics did a study of the impact of the £26,000 benefit cap and concluded that, after all other bills were paid, households with children in some of the less desirable parts of London would be left to bring them up on 62p a day. I read an article the other day about Ban Ki-moon launching the new millennium development goals. He said that expenditure of $1.25 a day is not enough and that the target should be increased. Sixty-two pence a day is about half that. What we are saying therefore is that families with children in a capital as wealthy as London should have that much income to provide for them and to live on This Budget is not fair; it is completely unfair. It is very divisive between those who have and those who have not, in terms of property. As for the increase in the minimum wage, welcome though it is, it is not a living wage, and we must continue to campaign for an improvement in that regard.
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Order. Before I call the next speaker, I must draw attention to the rule that, for reasons of courtesy, it is essential for a Member who has just spoken to remain in the Chamber during the two speeches that follow his or her own speech. My criticism is obviously not aimed at any Member who is sitting in the Chamber now, as, by definition, the Members who are present are courteously sitting through the debate. However, I have observed that several Members have spoken and then left the Chamber before the end of the two speeches following theirs. I hope that those to whom I am addressing this criticism will pick it up by some means or other. They may think that it has not been noticed and that there will be no price to pay, but I can assure them that any discourtesy to the House is observed by the Chair, and will be noted and acted upon. As I have said, though, I have no criticism whatsoever of any colleagues who are currently in the Chamber and who are behaving most courteously.
I join others in congratulating the Members who have made their maiden speeches today: the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell), and my hon. Friend the Member for Louth and Horncastle (Victoria Atkins). I believe that my hon. Friend’s predecessor served in the House for 55 years, and I wish her well in her possible attempt to emulate that phenomenal record of service I also pay tribute to my right hon. Friend the Chancellor of the Exchequer for an excellent Budget statement—all the more so when we cast our minds back and consider the very difficult circumstances that he inherited when he first came to the Dispatch Box in 2010.
I thank the hon. Gentleman for giving way so early in his speech. Can he point to any measures in the Red Book that the Chancellor will be introducing to prevent a further crash in the American sub-prime mortgage market, which was, of course, the cause of the circumstances to which he has just referred?
I thought that the former Prime Minister, Gordon Brown, had abolished boom and bust, but he had clearly failed to do so. Moreover, I note that the last Labour Government had been running a deficit since 2002. Had they not been so grossly irresponsible as to run a deficit during the good years, the country would have been better prepared when the bad times came, and we would have been able to weather the storm. The blame is entirely to be laid at the door of the last Labour Government.
My hon. Friend may wish to remind the hon. Member for City of Chester (Christian Matheson) that the last Labour Government did pretty well on the economy between 1997 and 1999, because they stuck to the Conservatives’ spending plans. When they stopped doing that, things went wrong.
My hon. Friend is right to draw attention to the success that the Labour Government enjoyed while sticking to the economic plans of my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke) Let us return to the legacy with which the Chancellor came to office. GDP had contracted, employment had fallen, the number of housing starts had fallen dramatically —we have heard a lot about housing today—and the deficit had mushroomed to a gigantic 10% of GDP, partly because we were already running a deficit when the recession hit. All those matters were tremendously difficult to deal with Let us now look at what the Chancellor has achieved. Over the last five years, we have seen an impressive turnaround. Last year, GDP grew at a rate of 3%, the highest rate in any G7 country. Employment grew by a staggering 2 million over the last Parliament, a greater increase than was achieved in all the other European Union countries put together. As I mentioned in the House yesterday, the county of Yorkshire alone created more jobs than France. That is a record, and I note that the Under-Secretary of State for Transport, my hon. Friend the Member for Harrogate and Knaresborough (Andrew Jones), is particularly pleased to hear about it. The deficit came down from 10% to 5% of GDP, and even the cost of living issues experienced in the last Parliament have begun to ease. Wages are now rising at 3% but inflation is zero, so there has been tremendous progress over the last five years, and I am delighted to have heard today that the Chancellor has resolved to finish the job.
I do not think anyone in the House would disagree with the hon. Gentleman’s interpretation of how the economy has boomed with job opportunities and with unemployment decreasing. We in Northern Ireland have seen the advantages of that as well. However, does he share my concerns about how the changes to welfare reform, tax credits and benefits will impact on economic growth over the next few years? Rushing forward too fast, as the Chancellor said today, would be detrimental to the economy of the whole of the United Kingdom of Great Britain and Northern Ireland.
I thank the hon. Gentleman for raising that point. I am afraid I disagree with his concerns and I will address these matters in more detail shortly I was endorsing the Chancellor’s plan to continue deficit reduction and to eliminate the deficit by the end of this Parliament. If this country is to have a stable economic future, and if we are to be in a position where we can weather anything the future throws at us—there may well be further economic turbulence from overseas in the years ahead—it is essential that we have a balanced budget, and the Chancellor is right to aim to achieve that I note, however, that the Red Book tables C.3 and C.5 forecast significant increases in tax revenue over the next five years, which are essential if we are going to balance the books. Revenue over the next five years is forecast to increase by £168 billion, an increase of 26% from today. At the same time, expenditure is going to increase by £69 billion, an increase of 9% from today. If for any reason that 26% increase in revenue does not materialise, the Government will have to look again at their expenditure plans. I am sure Members will watch very carefully to make sure that those revenue assumptions do indeed come to pass over the coming five years I commend the Chancellor for his work on fairness over the past five years and in this Budget. He has taken action to make sure that the wealthiest in our society pay their fair share and the poorest are given the most help. The top 1% of earners pay as much into the system as the 9 million poorest people in our society. If any Member suggests that the richest are getting an easy ride, they are quite wrong; the richest are indeed paying their fair share. Measures were announced today to clamp down on corporate tax avoidance, which have been welcomed from all parts of this House, and to limit the scope of people using non-dom status to avoid paying their fair share of taxes. I am sure Members on both sides of the House will be quick to welcome that, too There has also been a continuation of measures designed to help the poorest in our society, such as further increases in tax allowances, which disproportionately benefit the poorest; and one of the heaviest taxes of all, the tax on fuel, which bears down proportionately most heavily on small businesses and people on low incomes, has once again been frozen. Had that freeze not started some years ago and been continued, each time we filled up our car the petrol tax would be about £10 to £11 higher. We should thank the Chancellor for alleviating that heavy burden that falls on the shoulders of those who can least afford it. This is therefore a Budget that has fairness at its heart, with the richest paying their fair share while those on lower incomes are protected, which is right I shall now turn to the issue raised in the last intervention: the reform of benefits, and in particular the reductions in tax credits. We had an Opposition day debate yesterday on tax credits, when many Conservative Members pointed out how staggeringly expensive tax credits are, at a cost of £30 billion a year, and how they often serve to— [Interruption.] Sorry, my voice is going a bit; I was cheering so loudly earlier that it is not as clear as normal—I hope the Chief Secretary’s Parliamentary Private Secretary takes note of that Tax credits reduce incentives to work, so it was right that the Chancellor today moved to reduce the cost of tax credits to the Exchequer, but it was equally important that that reduction was accompanied by such a significant increase in the minimum wage, introducing the new concept of a living wage—it will rise to £7.20 an hour next April and will continue up to £9 an hour by 2020.
I shall help the hon. Gentleman out a little. Does he accept that the cuts to tax credits are going to have a disproportionate effect on women? The Fawcett Society says that the freeze in working-age benefits will disproportionately affect women, with one fifth of women’s incomes coming in benefits compared with one tenth of men’s.
The benefits of people who are not working are unaffected, and people who are working will have the opportunity, via higher wages, to more than recoup the effects of the tax credit move that the hon. Lady just described. I strongly welcome the fact that the increase in the minimum wage will more than offset the effect of the tax credit reductions.
Again, the issue of tax credits worries me greatly, as my constituents have contacted me over the past few days intimating their concerns. In Northern Ireland, the figures from charities show that many children will be pushed into poverty as a result of the changes to tax credits. No matter what way the hon. Gentleman may put this forward, that is what the experts and the charities are saying. How can he answer that point?
I thank the hon. Gentleman for his intervention. The number of children in relative poverty—this was before the definition was changed—was reduced by 300,000 over the course of the last Parliament. As I mentioned in response to the previous intervention, although families on low incomes will receive less in tax credits than they currently do, that will be more than made up for by the increase in the minimum wage, and it will, therefore, be fair to people on low incomes. I do not think that the issues the hon. Gentleman just raised will come to pass in the way he described, although I am sure that further analysis will be done on this topic Ultimately, tax credits are a subsidy paid to employers who underpay their staff, and Members on both sides of the House will deplore employers who pay their staff less than is required to live on. A combination of reducing tax credits while increasing the minimum wage will end this abuse by some employers who do not pay their staff properly. A reform such as this is long overdue. For far too long, the general taxpayer has been subsidising employers who underpay their staff, and I am delighted that today’s Budget has taken a step towards ending that We have heard a great deal from Opposition Members about productivity, and it is right to say that productivity in this country needs to improve. I am delighted that somebody as distinguished as Jim O’Neill will be leading on that. I say to Labour Members who have raised this issue that the biggest fall in productivity in recent history—2.6% in a single year—occurred in 2009, on the Labour Government’s watch. They should therefore be a little careful when they seek to lay the blame for the productivity level on Conservative Members One contributory factor to low productivity is low wages, which are fuelled by tax credits: if employers can pay their staff very low wages, there is very little incentive to invest in IT, training, equipment or machinery because they can simply hire very low-paid staff. One side-effect of today’s increase in the minimum wage may be to increase productivity, because companies will be paying higher wages and so will be further incentivised to make sure that their workers, who will be costing them more, really are productive A second reason behind the relatively flat productivity figures is the relative decline of the oil and gas sector and the financial services sector after the recession. Both sectors had very high productivity, so if their participation in the economy is reduced, there will naturally be a bit of a drag on productivity. I am sure that the productivity plan, which will be published shortly, will go a long way towards addressing many of the issues The Chancellor mentioned aggressive claims management companies, which I do not think anyone has picked up on so far. He said that those companies are targeting people who have been involved in accidents and inducing them to make fraudulent claims. I had that experience a year ago, when my wife and I—I do not wish to pin the blame on either of us—had a small bump on the motorway. [Hon. Members: “Ah!”] It was nothing too serious. But in the year after that, my wife and I were inundated with phone calls on an almost weekly basis. Goodness knows how these people got our phone numbers. The insurance company or the accident pick-up company must have given them to this ambulance-chasing law firm. The firm phoned us up on a weekly basis, trying to persuade us to pretend that we had some sort of injury, such as whiplash or backache. No matter how many times we told them that we had no injury of any sort, they continued to try to persuade us fraudulently and falsely to claim that we were injured, which we obviously did not do. Some people may be tempted, and that would be outright fraud. Anything the Chancellor can do to stop this outrageous abuse is very welcome. Personally, I advocate an outright ban on payment protection insurance—PPI—or personal injury cold calls because people are being induced to make fraudulent claims, which act as a drag on the entire economy. I welcome the fact that the Chancellor made reference to this in his Budget statement Finally, I wish to touch briefly on housing. The timing is appropriate as the Minister of State for Housing and Planning is now in his place. I congratulate the Government and him on the national planning policy framework, which was launched in the previous Parliament, under which housing starts have significantly increased. In fact, the number of housing starts per year is around 50% higher than it was in 2009 and 2010. The Government can be very proud of the action they have taken so far to encourage house building. In my borough of Croydon, the number of housing starts increased fourfold in 2014 compared with 2013—they went up from 500 a year to about 2,000 a year. The Government have a good track record of making progress in this area. I have every confidence that the housing Bill, to be introduced in Parliament in October by the Minister of State, will put in place further measures that will increase house building even further. As we increase supply, affordability will improve as well On the subject of council housing, to which a previous speaker referred, we should note that over five years the coalition Government started more council houses than Labour did in the previous 13 years put together. That is a record of which the Government can be proud.
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As the hon. Gentleman gave way to me, I shall do the same for him.
The hon. Gentleman just cannot get away with what he said. That money was left over from the Labour Government. The house building programme that we started was scrapped by the Conservative Government when they took office. More houses could have been built if they had not done that.
As Labour’s outgoing Chief Secretary to the Treasury pointed out in his very helpful note, there really was not much money left when the Labour Government quit office. Council house building continues to this day. Even the hon. Gentleman cannot claim that council house starts today can in any way be attributed to a Government who left office five years ago. This Government have a very fine record on house building, and I know that they will continue with it in the future At its heart, this Budget does something profound and important: it shifts the balance in this country’s economy from welfare to work. The only real way to fight poverty and to create prosperity is through hard work and earning a living, not through state handouts. This Budget tips the balance back in favour of hard work and away from state handouts, and I heartily support it.
I start by welcoming the announcement about the living wage. I would feel a good deal happier about doing that if I had not noticed the guilty, sideways glance that the Chancellor gave immediately after he had made his announcement. It reminded me too much of Draco Malfoy. It set me thinking: what is the living wage in London at the moment? It is £9.15. The Chancellor said that it would be £9.35 by 2020. I thought, “Hang on. Is it really going to increase by only 20p in the next five years?” Then I realised what is really going on: one calls the thing by the same name, but changes what it is. We have been there before. We know very well that the practice exists. We remember the Chancellor’s colleague used it when we were given academies. Of course, those academies were not academies. What we called academies were those schools in difficulty, which were not doing well by the children that they were serving, and we put extra money into those schools and allowed them the freedom to try to do better. What the Conservatives called academies were excellent schools doing tremendously well, which were allowed to have that freedom and leave the system, taking with them money that was in the pot for those needing special educational assistance or free school meals. It is the opposite of rebadging: something different is called by the same name as something else. It does not fool people for long The Chancellor hit the wrong people, and he did so because of a genuine political problem that faces all modern Chancellors. Public demand for better services requires increased revenue, but international market competition for capital and labour drives down the ability of any country to raise either corporate or personal income tax. For any political leader, the issue of tax rates has become a straitjacket. The obvious answer has to be to raise revenue some other way. What is needed is a commodity that cannot be concealed or moved offshore. If it could help to establish a political narrative around fairness and equality, so much the better. Instead of hitting the working poor by removing working tax credits, perhaps the Chancellor should have considered taking a leaf out of the SNP’s book and taxing land, the possession of which is one of the defining indicators in our country of the divide between rich and poor, and between powerful and powerless Land is a very odd commodity. Take an unattractive piece of agricultural land worth about £5,000 an acre and give it planning permission. Suddenly one has an asset that is worth more than a hundred times that amount. An acre of development land can fetch between £500,000 and £l million. Of course, we all know that land is scarce on this crowded little island of ours—only we are wrong, and it is not. In fact, of the UK’s 60 million acres, only about 4 million are actually used to house our 61 million-strong population. It is true that about 15 million acres could not be used—not everybody wants to live on top of Cadair Idris—so we have to exclude the forests, lakes, rivers and mountains, but that still leaves 41 million acres of good land Most people are surprised to find out that the myth of the crowded little island is just that—a myth—but not as surprised as when they find out that the people who currently pay land tax, some £35 billion of council tax and stamp duty, are the 99.4% of us crowded on to the 4 million acres, while the 160,000 families who own the remaining 41 million acres receive from the public purse a subsidy of about £3.5 billion every year. That is about £83 an acre every year from us, their fellow citizens. Yet these fellow citizens are the very ones that my hon. Friend the Member for Eltham (Clive Efford) was talking about, who cannot afford to buy a home of their own because land is released slowly and selectively on to the market precisely to restrict supply and artificially inflate prices. The landowner benefits twice over. The current system subsidises a tiny elite, precisely encouraging them not to make their land available for housing until public demand has ramped up its price. Breaking that perverse cycle is a key way of resolving the problems of “generation rent”—the housing problems my hon. Friend was speaking about—but it is also a way of raising significant revenue A land valuation tax is a levy on the value of the land unimproved by buildings or other enhancements. The principle is simple: that because the value of the land has been created by its proximity to the infrastructure paid for by the community—the schools and hospitals, the roads and railway stations—that value should be captured by the community to be reinvested in public good, rather than appropriated for private profit. And if that sounds like a Labour policy, then so much the better!
The hon. Gentleman may know that, under the original planning Acts introduced by the Labour Government in the 1940s, the uplift in land value did accrue to the public sector and the taxpayer. That changed when the incoming Conservative Government under Winston Churchill changed the law.
I am so glad I took that intervention, because the hon. Gentleman makes an extremely important point—one that I totally agree with The amount of tax raised could be substantial: an annual tax of just £200 per acre could raise £9 billion—more than by putting an extra penny on income tax. The unpopularity of raising corporate or personal income tax has been a straitjacket. If the Chancellor feels comfortable wearing it, he may be madder than I think For 10 years, I ran my own business in the City of London. I focused on two things: first, manage your assets; secondly, manage your risks. The same is true for Government. One would not—should not—have any confidence in a management team that did not know the value of its asset base, and one would not have any confidence in a management team that either failed to properly quantify its strategic risks, or that, having quantified them, failed to take appropriate action to mitigate them. Yet we have a Government who have no proper account of their natural capital asset base, and although they have identified the risk of climate change and the linear economy as a real threat to growth, they are failing to take the necessary steps to mitigate those risks adequately Dr Richard Spencer of the Institute of Chartered Accountants in England and Wales has put the case for valuing our natural asset base most succinctly: “The argument for natural capital accounting is that measuring nature makes its contribution to the economy and our wellbeing visible and allows for effective decision making.” Global businesses extract an estimated $7 trillion from the environment each year. That $7 trillion does not appear on balance sheets; it consists of free goods—externalities as classical economics prefers to call them. No Government account exists that charts their contribution to the national wealth. Globally, they represent the annual income from a gigantic asset base that is, quite simply, the precondition of all other economic activity. What sort of economic managers do we have who fail to quantify an asset base of such magnitude and such importance The IMF has calculated the cost of the financial crisis at $11.9 trillion. Each year, the degradation of natural capital around the globe erodes our natural asset base by more than that. Our natural environment as represented in our natural capital stocks and flows faces a bigger crisis every single year than the world faced in the 2008 global financial crisis, yet the crisis of the environment is invisible. We were prepared almost to bankrupt ourselves to save our economic system. Our natural capital debt is, arguably, a much more urgent issue than our financial debt, yet this Budget does nothing—nothing—to reverse the decline of that asset base. Natural capital valuation is a powerful tool for policy making and policy delivery, and it is entirely absent from this Budget. So much for managing the assets But what about managing the risks? This Government have identified the risk of climate change. With considerably less clarity they have identified the risk of a linear economy. However, as Peter Young, the chair of the Aldersgate Group, said only a few weeks ago: “The UK is a world leader in environmental science and in writing policy; it is not a world leader in taking subsequent action.” Just over a week ago the Government’s independent advisers on these matters, the Committee on Climate Change, set out the key actions that Government needed to take if they were to respond appropriately in managing and mitigating the risks. The committee criticised the fact that many low-carbon policies have no investment certainty beyond the next few years. That, it says, is preventing efficient investment in low-carbon technologies and their supply chains, which often have long lead times. To bring those investments on stream the Government should give policy certainty and clarify ongoing funding commitments beyond the cliff edge that is currently 2020 What did the Chancellor announce? He removed the exemption for renewables from having to pay the climate change levy. Instead of incentivising investment and stabilising the low-carbon industries, the Chancellor put a £3.9 billion tax on renewables. It was very softly spoken in the Budget, but at a stroke he killed off our chances of developing this growing green economy. The jobs, the growth and the international exports that could have come from it have just been thrown away to raise £3.9 billion for the Exchequer. It is a dereliction of duty as a manager of risk The Committee on Climate Change says that the Government must do much more to support private innovation to develop the future technologies that still need research, development and demonstration. These are technologies such as electric vehicles, carbon capture and storage, and offshore wind turbine technology, that can help us meet our 2050 targets. They are also the new green industries that can bring growth and high-skilled jobs Specifically, the committee’s report called upon the Government to “ensure the power sector can invest with a 10-year lead time” To do this, they need to set a clear carbon target for the power sector by the end of the next decade, and extend the funding under the levy control framework to match project timelines out to 2025 with annual rolling updates. In his Budget speech today the Chancellor steadfastly refused to do so, against his own independent advisers In the built environment the report calls on the Government to “develop plans and policies that deliver low-carbon heat and energy efficiency”. Nothing! A strong Budget would have strengthened and implemented a zero carbon homes standard. It would have driven investment in low-carbon heating. A strong Budget would have provided increased support for electric vehicles, as well as pushing for stronger 2030 EU CO2 targets for cars and vans. The Economic Affairs Cabinet Committee, which the Chancellor chairs, received a report over a year ago saying that the cost to our economy of air pollution from existing vehicles from the 29,000 premature deaths it causes, was between £9 billion and £20 billion lost to our economy each year. A strong Budget would have mitigated those costs by tackling the problem at source The Chancellor talks about hypothecating vehicle excise duty to a road building programme, but he does nothing to put any money behind the electrification of those same vehicles to deal with particulate matter and nitrogen dioxide, which the committee says is costing so much every year. In this Budget the Chancellor failed to manage the natural asset base and failed to manage the environmental risks.
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Order. There is one hour left for this debate and I notice that there are six Members trying to catch my eye, which makes my arithmetic very easy indeed. I do not believe there is anyone here who cannot calculate that if everybody takes approximately 10 minutes out of courtesy to their fellow Members, everyone who wishes to speak will have an opportunity to do so, without the need for a formal time limit.
Thank you, Madam Deputy Speaker; I will stick as closely as I can to your request. I would first like to congratulate my hon. Friend the Member for Louth and Horncastle (Victoria Atkins) on her maiden speech. Her fantastic tour de force as the champion of her constituents was quite something. I was also grateful to hear—sadly by television, rather than in the Chamber—the maiden speech of the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) This is the first Budget that I have had the honour of hearing in this House. It is a delight to be able to support my right hon. Friend the Chancellor, because he has done some fantastic things for our country. The three that I will focus on are not exactly the same as those that have been extrapolated by so many of my right hon. and hon. Friends, which I will allow to stand on their own The first measure is the drop in corporation tax, which is linked, brilliantly, to the rise in the national living wage. That is an absolutely essential part of any Conservative manifesto, and it is absolutely right that my right hon. Friend has made it such a priority. Tying the amount that a company pays in taxation to the amount that a worker can earn is essential if we are to break the moment at which the state puts its hands in their pockets and, in so doing, merely adds grit to the engine of the economy. That is important because when taxes are taken the state charges for the privilege, and when it hands out benefits it does so again. By removing the state, all that happens is that both sides benefit. The reduction in corporation tax will have a further effect: it will spur industry and help to spur international competition. The United Kingdom already has one of the lowest rates of corporation tax in the European Union. I welcome it falling down that list. As it falls and moves towards the rate that Ireland has adopted, we will have a greater ability to compete with others, and we will do better because of the industry of our people, not because of the intervention of our state. I am confident that that, in turn, will lead to an increase in revenue. That increase in revenue is absolutely essential for the things that we need as a nation We need one of those things very much. I am very glad to welcome my right hon. Friend the Chancellor’s decision to link defence spending to the UK’s GDP. By making that 2% commitment, he has effectively guaranteed an extra £6 billion of defence spending a year by the end of this Parliament in 2020. That is a very important sum not only because of what it will contribute to immediate defence, by which I mean the purchase of ships and aircraft and the hiring and training of soldiers, but because of the message it sends to our friends and allies. By tying ourselves to NATO’s 2% target, we are stating very clearly that we are a committed member of NATO, that we will face the aggressions we see around the world, and that we will face them squarely. We will stand with our allies and face our enemies. I am very proud that this Government have made that commitment.
I thank my hon. and gallant Friend for allowing me to intervene. The commitment also sends to our armed forces the incredibly important message that this Government will be steadfast in their support, which will be very good for morale.
I welcome my hon. and gallant Friend’s comment. In fact, he pre-empts the next part of my speech. The amount we spend also points to our priorities as a nation, and he is right that this is vital for our future. It points to the importance of readiness. The amateurs always talk about numbers; about kit and money. The professionals talk about readiness, and they do so because that is what we get with those numbers. It is the morale that he talks about. It is the training and preparation that mean a group of young men are not a rabble, but an army; that a bunch of steel is not simply a welding exercise, but what my gallant friends in Her Majesty’s Royal Navy often refer to as Her Majesty’s sleek grey messengers of death. I am very pleased that the things I have described are what our soldiers, sailors, airmen and marines will be getting. This welcome increase comes as we are reconsidering our priorities as a nation at the time of the strategic defence and security review. I must declare a slight interest as my wife is working on it on behalf of the Foreign Office As the decisions are being made, I urge her and the Ministry of Defence to think hard about where they allocate this money. It could go to various areas. It could go, rightly, into a lot of the ship purchasing being done, whether that means the two carriers that are being built in Scotland, the submarines being built in Barrow or the equipment programme for the Army. But I would I urge that they put this money into the things that are so often overlooked: training and ensuring that our soldiers, sailors, airmen and marines are properly housed and that their families are cared for. I also welcome the joint security fund, which is a fantastic development that puts into the defence budget the flexibility that has so often been lacking. Those of us who have worked in defence know that very often the size of the budget is a fiction, not in the sense that it does not exist but in the sense that it is unusable in any flexible sense. It is so committed to a carrier or a submarine programme that when we suddenly need money for something else we do not have it. The joint security fund is a brilliant development that will inject that flexibility For example, today it could be used to fund GCHQ, the Royal Navy or our Border Force to deal with the scourge of people traffickers and that vile crime, which exploits the poorest and most vulnerable across the world. In a few years’ time, perhaps it could be used to hire cyber-experts to address the threats that are already coming from China and Russia, attacking our NATO allies and our own businesses. In the future, who knows what it could be used for? It could be used to develop technologies to put spy cameras into the small brooches that some people wear, Madam Deputy Speaker. All those things are possible, as the fund is entirely flexible.
One of the problems in our reconnaissance capability, particularly our maritime reconnaissance and drone capability, is that we have to import the equipment. When there is recognisably a gap, we will have to import it and that will add to our budget deficit. The OBR report accompanying the Budget statement shows a deterioration in the current account deficit to record levels. All that the hon. Gentleman is showing is the weakness in our manufacturing capability, and that has not been resolved in all the years of his Government.
The hon. Gentleman’s point is interesting, but I would argue that the manufacturing capability in our country for the defence technology we are talking about is largely there. The problem is that we are not bringing it together in a suitable manner. I urge the hon. Members from the Scottish nationalist party to support the development we need in the maritime patrol aircraft field and I would agree entirely with some of the comments made by the SNP that we must fill this gap with some urgency. I urge the Ministry of Defence to look hard at the money it will be getting and to use some of it to fill that gap Sadly, as there is a gap, I would urge the MOD to fill it with something that is more off-the-shelf than bespoke because of the urgency of the requirement, but if we look at the manufacturing capability across our islands, we will see that the technology required for the type of sea-penetrating radar and other such elements is completely available in the United Kingdom. We have a great series of businesses from the north of Scotland to the south of Cornwall, and some in west Kent, that can totally satisfy that requirement. I urge them to support us in ensuring that this capability comes about.
Given the budget constraints the hon. Gentleman is talking about, does he consider Trident renewal to be a good priority in the defence budget?
Yes, I do, and on the same basis that I believe that insurance is not something that should be cut in good times. The final element of my right hon. Friend the Chancellor’s speech that I welcome is the extension of the scope of the investigation into the Lewes-Uckfield line. I realise that this is a local priority, but, for those of us in west Kent, the ability to develop a rail link to the south coast will make the coastal powerhouse just as important as the northern powerhouse This Budget does many things to help the people of the United Kingdom and those of Tonbridge, Edenbridge and Malling. In my own constituency, 839 people have been lifted out of tax and nearly 50,000 will benefit from the increase in the personal allowance. Along with the fuel price freeze, this is going to be one of the most important and welcome Budgets in west Kent. I welcome the Chancellor’s commitment to fairness and to the principle that he has made very clear today, namely that work will always pay and that the state will stop creaming off the labour of the people only to give them their own money back.
I welcome parts of this Budget, including the announcement on vehicle excise duty; the reduction of buy-to-let mortgage interest relief to the basic rate; the restriction on higher-rate tax relief on pension contributions, which will pay for the changes to inheritance tax; the increase in the employment allowance from £2,000 to £3,000; and the apprenticeship levy I also welcome, if the Government can get it right—it is a big “if”—the changes to what the Chancellor is now pleased to call the national living wage. However, as has been pointed out, there is a sleight of hand—in terms of incorporating tax credits into it—with regard to how what Labour has always called the living wage will be calculated I welcome the increase in employment in the past two years, although too much of it is low paid, and I welcome the return to some growth in our economy, which was blown off course when this Chancellor sucked money out of it in 2011 and 2012 before he returned to classic Keynesianism, with counter-cyclical deficit spending at a huge level. That is what he has been doing for the past five years—more of that later Conservative Members and the Chancellor himself keep talking about the long-term economic plan, but I am a whole lot more worried about this Government’s short and medium-term economic plan, because this is an over-optimistic dash-for-growth Budget. Those of us who listened to several of Gordon Brown’s Budgets when he was Chancellor of the Exchequer will remember how over-optimistic they could be, and some of what he did did not exactly end well This Chancellor has taken steps to increase Government income with some of his policies, such as the restriction on non-dom status; the increase in the insurance premium tax; the increase in the cost of buy to let as a result of the restriction on relief; the restriction on tax relief on pension contributions; the abolition of the climate change levy exemption, which I am not wild about, but it will increase Government revenue; and the selling of some more family silver and assets There is also some revenue-neutral stuff in the Budget, such as the proposal on vehicle excise duty. However, I caution those Conservative Members who were jumping up and down about how wonderful that is, because if they read the policy, they will see that the proposal to spend VED on roads—which is hypothecated—will not kick in until 2020. That is the long-term economic plan we should be worried about, because we should be doing more of that now The dividend changes will, as far as one can tell, be tax-neutral. The apprentice levy is very welcome, but it will be tax-neutral in the sense that the money will come in from the levy and then be spent on apprenticeships. That is great, but it will not raise any more money for the Government. We have heard the usual stuff about tax evasion and tax avoidance that has been trotted out by every Chancellor back to Gordon Brown and beyond: sometimes it produces a bit of money and sometimes it does not We have also had the Chancellor tying his hands on other sources of revenue, with no increase in VAT, income tax or national insurance contributions, and a cut in inheritance tax, corporation tax and income tax through personal allowances going up and the thresholds to the higher rates going up. There will be a cut in the bank levy, because I do not think that that will be offset by the surcharge on bank profits; it may be, but I cannot see the figures. The annual investment allowance changes will cut revenue. A cut that was not highlighted by the Chancellor—unsurprisingly, because it was in his Budget earlier this year—is the cut in the tax on North Sea oil and gas. The Chancellor is tying his hands on Government revenue, so I caution Conservative Members that quite a lot of this stuff is about a dash for growth that I suspect will end in tears Then we have what Labour Members see as the nasty stuff. It has not been much remarked upon in this debate, but for four years there will be a further cut, effectively, in public sector pay—pay restraint of 1% for another four years—as if public sector workers have not had their pay restricted enough. If inflation is higher than that, they will have a pay cut. We also have the slashing of tax credits. I understand the theory of that, but it is putting the cart before the horse, because incomes have not yet gone up enough to counterbalance the cut in tax credits. Tax credits will be frozen, as will other benefits, and that has also not been remarked on in this debate. There will be a freeze on working-age benefits, including tax credits and local housing allowances for four years, from 2016 to 2020, to save £4 billion a year. That will hurt some of the most vulnerable in our society I have said this in this House before, but it bears repeating: the Government are trying to cut the deficit because of their fear about the intergenerational transfer of debt and, as is reinforced by this Budget, they are privatising that debt. We have had private borrowing at very high levels during the past five years. We have had the privatisation of debt through rising house prices, because of the restriction in supply. The Government introduced Help to Buy on the demand side of the equation, which has driven up prices but it has not increased supply by anything like the amount that we all know is needed We have had further privatising of debt through the abolition of the student maintenance grant. There was a significant privatisation of debt when the coalition Government said that the state would not take on debt for post-secondary education in England, but would get students to take it on with fees of £9,000. This Budget pushes that further by saying that students from the poorest backgrounds will no longer even get maintenance grants; they will have to take on debts. The irony about the privatisation of debt, as every Member of this House and his or her dog knows, is that the majority of that debt—I use the word “majority” advisedly—will never be paid back. Rates of applications to universities in England have not gone down, despite the tripling of tuition fees, because 17 and 18-year-olds are smart and know that they will never have to pay it back. Does it matter whether the debt is of £20,000 or of £50,000 or £60,000? No, because they will never have to pay it back. Who will pay it back? The state, so it is even a failed privatisation of debt The economy has not been rosy during the past five years, as the Chancellor and Conservative Members like to believe. There have been some good things, to which I have pointed, but we have also had a huge problem with productivity. There were jokes earlier about the socialists in France, but if we look at the Red Book, we find—surprise, surprise—that output per hour is 27% better in France, which means productivity is a whole lot better there. GDP per capita has stagnated, and half of our anaemic growth has been driven by immigration. We have a continuing problem, which has become a structural one, with the balance of trade being way out of kilter. We have had a lack of infrastructure spending. This week, we have already seen the Government cutting back on rail investment, and in the vehicle excise duty proposals in this Budget—with none of that recycled, hypothecated money until 2020—we see a cutting back in road investment During the past five years, the national debt has gone up by 55%. So much for getting the deficit down. Yes, it is almost down to 5% of GDP, but that is still enormous. It is actually far higher than Greece’s deficit. The Greek Government do not have a day-to-day deficit; they have accumulated debt, but no deficit. We are still running a deficit of 5% of GDP, and the national debt is up 55%, which is a terrible economic performance. As with the stock market, let us be careful, because this Chancellor’s past performance might well be a good indicator of the future performance of his long-term economic plan.
I warmly support the Budget that the Chancellor delivered today. I hope that the House will permit me to consider how the Budget will impact on my constituents in Bexhill and Battle. Indeed, I contend that my constituency contains many of the attributes and challenges that other hon. Members find in their localities. I will reflect on three key areas that were addressed by the Budget The first area is work and welfare. I am pleased that the number of my constituents claiming jobseeker’s allowance has decreased from 1,400 in 2010 to 613. Those aged 18 to 24 account for just 135 of that number, which is down from 385 in 2010. Those figures demonstrate that some of the 2 million new jobs that have been created in the UK have certainly been delivered in my constituency I was pleased to hear from the Chancellor that the Government will continue to protect those who, through disability, cannot work and will never be able to do so. Those individuals deserve our care and compassion, and I am pleased that the Government continue to focus their energies on that. I am passionate, however, about giving people the opportunity of work and equally passionate about ensuring that there is not a choice between work and welfare. I am therefore pleased that the welfare cap in my constituency will be reduced to £20,000, which will ensure that work always pays.
In my constituency, which is relatively rich, many people go to work and raise a family on well under £20,000.
I thank my hon. Friend for making that point. It applies to my constituency, too, which is just further south than his It has to be right that those who work should not feel disadvantaged and as though there is no incentive to work. The cap of £26,000 has been a great success. Indeed, the Labour party has adopted that policy, too I support the withdrawal of housing benefit from 18 to 21-year-olds. It cannot be right that people of that age who are in work are required to save up for a home of their own or to pay rent, whereas those who are not in work are able to move out and reside in housing that is paid for by the state In pledging to deliver a balanced economy that will permit the creation of a further 1 million jobs, I believe that we can help the 613 jobseekers in my constituency to find work and give them a fairer future than the downward spiral that benefits and welfare inevitably bring The second area is productivity. I welcome the Chancellor’s commitment to improve Britain’s productivity, particularly his recognition that investing in transport infrastructure will help towards that end. Bexhill and Battle has poor transport connections to London and beyond. Trains from Bexhill take almost two hours and spend more time going backwards or on pause than moving forward The Chancellor has brought the news that the Government will support a new high-speed rail service that could take my constituents from Bexhill to London in 78 minutes. Indeed, I noticed a typo on page 79 of the Budget report, where it speaks of the line going just to Hastings and Rye. I hope the author will ensure that that says Bexhill as well, which is planned to be on the route. The new rail link will help us attract new employers to the constituency Thanks to the Government, a new link road is being built from Bexhill to Hastings, which will deliver thousands of houses, a 42-acre business park and a country park, all of which will attract high-skilled jobs and boost our economic regeneration and productivity In addition—this is still linked to productivity—I welcome the commitment to freeze fuel duty for a further year. In a rural constituency such as the one I represent, a saving of £10 a tank will continue to remain a huge boost. I welcome the commitment to road building and the improvements via the new vehicle excise duty that—when it is introduced—will ring-fence motoring taxes for roads. I would be delighted if the Chancellor wished to spend some of that money on dualling the A21. The productivity gains from new roads, rail, housing and jobs will be immense in my constituency, and I welcome Government spending in that sphere. My third point is about making work pay. Increasing the tax allowance will take more than 800 of my constituents out of the tax system altogether in 2016. A further 50,000 of my 80,000 electors will benefit from having their tax allowances increased. Those changes show that the reward for those who work and move off benefits will be given to the worker, not taken back by the Government and merely recycled or wasted. To that end, I spoke yesterday in this House, and in urging a reform of tax credits and encouraging employers to pay their staff more, I suggested that “there is a case for the Government sharing the cost of this reduction with employers…with some of the savings being recycled as further corporation tax…reductions.”—[Official Report, 7 July 2015; Vol. 598, c. 274.]
You got in the Budget!
Indeed. I was therefore delighted that the Chancellor may perhaps have watched my speech on the television, and I certainly welcome his commitment to reduce corporation tax to 19% in 2017, and to 18% in 2020. With that cut in corporation tax and the increase of the employment allowance to £3,000, funding should be in place to ensure that the new living wage of £7.20 in 2016 and £9 by 2020 will not penalise employers—a vital requirement if we are to continue to encourage employers to expand and create more new jobs Let me highlight three further measures that I believe will help my constituents in Bexhill and Battle, due to its demographics. First, we have an ageing population and the increase in the inheritance tax threshold to £1 million will be welcomed by those who have worked hard and want to leave a legacy to their children. Secondly, my constituency contains a number of small businesses and a farming industry, and my constituents will welcome the proposal to keep the annual investment allowance at £200,000 per annum. Thirdly, my constituents regularly let me know that they are concerned about the UK potentially not meeting its commitments to NATO’s 2% spending pledge. My postbag will be all the lighter for the Government maintaining that commitment As with any Budget, there is a balance to be struck and the measures must be reviewed to assess impact. I am passionate about building new houses for constituents, particularly at an affordable level. Reducing housing rent by 1% at a time when we are rightly promoting the right to buy for housing association tenants must not cause house building to slow down in that sector due to the inability to tap markets for finance. This Government built more council houses in five years than the Opposition did in 13.
The hon. Gentleman mentioned affordable housing. Is he aware that the Office for Budget Responsibility forecasts that a 1% reduction in rent will lead to 40,000 fewer affordable homes being built over that period? Does he think that his constituents will welcome that?
That brings me to a point raised by the hon. Member for Eltham (Clive Efford). The Government aim to encourage people to buy their social housing. Once they do that, resources will be freed up to build more housing stock. It will also cause house prices to come down, making it easier for all to rent and buy, so, no, I do not agree with that statistic. I am passionate about giving those from disadvantaged backgrounds the opportunity of a university education. This Government have delivered more students from disadvantaged backgrounds than ever before, and I hope that those from poorer backgrounds are not put off going to university following the announcement that the student maintenance grant will be replaced by a loan. They should not be put off; it is the best investment that a student will ever make, as I know to my benefit In conclusion, I wholeheartedly commend this Budget. It rolls back the state and rewards those who make brave decisions and work hard. It maintains our commitment to look after those who cannot look after themselves, and it encourages those who can look after themselves to do so. In bringing them the path to work and prosperity, I believe that this Government will help my constituents and those of all Members.
I am afraid that I have to start by disappointing you somewhat, Madam Deputy Speaker—and no doubt the whole House—but because of a throat infection, I am unlikely to last 10 minutes I will come on to say a few words on productivity, but I was stunned by the comments made by the hon. Member for North East Somerset (Mr Rees-Mogg) earlier this afternoon. He talked about the Budget being a highly moral one, with a great moral imperative behind it. His comments reminded me that today is the 131st anniversary of the formation of the National Society for the Prevention of Cruelty to Children, the very day the Government are bringing in a Budget that attacks tax credits for children I was going to leave my remarks on that there, but I will refer to something my hon. Friend the Member for Glasgow Central (Alison Thewliss) raised. I will re-read, for those who were absent at the time, a small sentence on page 88 of the Government’s Budget. It read thus: “The Department for Work and Pensions and HMRC will develop protections for women who have a third child as the result of rape” Where is the morality in that? What on earth is moral about dragging women in to talk about the fact that they may have been raped, so they can get some decent treatment from the benefit system? What can possibly be moral about that? I appeal to the Government: for goodness’ sake, they may seek savings in many other parts of welfare, but they should not punish children and not force women, who have gone through the trauma of rape, to have to justify themselves to the taxman I shall move on now to productivity. The Government make great play that they have a plan for productivity, but any search for it in the Red Book will be in vain. Let me pick up on one or two matters that have been referred to by Members who are no longer in their place. Mention was made of science. Why is science and research important? If we are to stimulate investment, innovation and enterprise, one of the key things we need is the production of knowledge. In 2010, the Government chose to freeze the budget—or ring-fence it, as they grandly called it—for science and research at £4.6 billion a year. By the time we got to the Budget of March 2015, it had degraded in value by £900 million in the succeeding five years, yet they still proclaimed in the Budget that they had ring-fenced the budget for science and research. When I received the Red Book for today’s Budget, one of the first things I did was to search for the core budget for science. Surprisingly, the table produced in the March Budget is entirely missing. There is no comment about the retention, even in cash terms, of the core science and research budget. Perhaps that was a slip, but surely it cannot be justified in any way by any Government who claim they have a strategy for productivity Let me pick up one other matter—I am pleased that my throat is holding out. Mention has been made of a return to the 1950s by the bringing back of a levy for apprenticeships. Of course I welcome employers making a bigger contribution towards skills and development, but the problem in terms of productivity is not a general one about access to apprenticeships. We have had a structural weakness in the UK for more than 20 years in intermediate and higher intermediate skills—in other words, the technicians in science laboratories and the manufacturing sector, for example. I am not so much talking about the people at what might be traditionally called the pure craft end or at the higher professional end; OECD figures tell us that we have a worse record on producing higher intermediate skills than most of our competitors. I see no mention of that in either this Budget or the March Budget, so what are the Government going to do about it Madam Deputy Speaker, I feel myself in need of a Macallan 12-year-old, because of my throat, so I shall have to leave it there.
Today’s Budget is the final act in a financial crisis that has seen debts moved from the financial sector to the public purse and piled on to individuals who will be comprehensively unable to foot the bill for the Chancellor’s raid on tax credits, housing benefit for under-25s and families with more than two children I shall deal with this before hon. Members leap to intervene. The living wage is not set at a level that would permit households to cope without in-work support. The Resolution Foundation, which the Chancellor referenced, has said: “If in-work support is cut then, as night follows day, the Living Wage will rise.” Excluding in-work support raises the London living wage to £11.65, revealing the Chancellor’s announcement as mere rhetoric. As my right hon. and learned Friend the Leader of the Opposition said, it is giving with one hand and taking with the other The Budget serves notice that we have a Chancellor steadfastly refusing to tackle fundamental issues in our economy that are causing rising levels of household debt. It is ominous to listen to him talk with such confidence, given that significant underlying weaknesses in the economy that have been causing serious concern for some time are completely ignored. He might have wanted a rebalanced economy and a recovery built on rising incomes, but that is simply not happening. High debt, low pay, an economy based on credit and a housing bubble, a deregulated financial sector—back to business as usual. What was wrong in 2007 remains wrong to this day. It is that we do not have a resilient financial system. In the recently published “Financial System Resilience Index”, the UK ranked lowest of all G7 countries. It is that household debt is rising to levels not seen before—higher even than at the peak of the crisis. Last year alone, it grew by 9%, which was an increase of £20 billion on households’ credit cards and other debts. It is that the housing bubble continues apace and markets are overheating. Exhortations from the Governor of the Bank of England have been ignored. He warned: “What happens if households are borrowing at high multiples is they have to economise on everything else in order to pay their mortgages. And if enough people are highly indebted, that has a big macroeconomic impact… There is the possibility that currently responsible lending standards become irresponsible to reckless.” These issues are all interlinked. We have shifted the debts of the financial sector on to the public balance sheet, and now, in the final act of the financial crisis, the Chancellor is shifting it on to individuals. Ours is an economy built on the same old mistakes. I do not think that anyone in this place would care to suggest any longer that we are beyond the days of boom and bust—we are witnessing this in the international markets as we speak. While the world is understandably focused on Greece, China’s markets are in little short of meltdown. Unfortunately, crashes are far from being a thing of the past, and I would suggest that in the UK we are closer to the next one than we are to the last Before I entered this place, I worked in the City of London, and I can report to the House that the culture of risk taking, short-termism and excessive pay and bonuses remains as prevalent today as it was before the crash—although I hasten to add that I was not privy to such excessive pay.
Does the hon. Lady not agree that segregating retail banks from investment banks makes it less likely that if the investment bank collapses, it will contaminate the commercial bank? I declare an interest, having worked on the unwinding of the Lehman Brothers estate.
I absolutely agree that separating the investment arm from the high street banking arm was one of the answers to the cause of the financial crash, but we have not had an update recently, and as I understand it, the banks are not co-operating on this issue—either with each other or with the regulators. It would therefore be very helpful to have on update on that from the Minister The financial sector heaped masses of debts on to ordinary people—our constituents. We do not want it to pay; we are not vengeful sorts in this House—we want it to reform so that what happened can never happen again. However, instead of learning from the mistakes that I accept the last Labour Government made—mistakes that would have enabled the Government to build a sustainable economy in which everyone can share—the Conservatives have imposed their ideological agenda on a terrible crisis in order to shrink the state and entrench inequality. That is why the UK’s recovery was delayed by three years after America’s and Germany’s, squandering billions of pounds in lost output. However, what matters now is what the Government will do about that. The problem is that the Government are not merely acting with intransigence; they are exacerbating the problems. The measures in today’s Budget on tax credits may take debt off the Government books, but they heap it directly on to some of the most low-paid and the most vulnerable and those who can just about afford their mortgage, if they have one at all. Fourteen-hundred pounds for a working parent who lives on their own—that is what the Government have saved, but do they think that a lone parent can afford to lose £1,400 a year? He or she will take out credit cards to pay for their children’s school trip, clothes, the rent or the mortgage, and household debt will rise and rise. Turning maintenance grants into student loans, passing debt straight off the Government’s books on to those who can least afford it and who are the most averse to debt—a generation of young people is being created that is not just accustomed to personal debt but reliant on it The Chancellor said today that he wanted to move away from an economy based on debt, but he made no mention of records of household debt. Indeed, some of the OBR’s forecasts were not mentioned by the Chancellor today—for example, the forecast that the ratio of total household debt to income will rise by 26% by 2020, most of it unsecured debt, an additional £48 billion of which the OBR expects to be added by 2020, compared with the March outlook. Overall household debt is now expected to reach 167% of household income by 2020, while household disposable income will be down by 1.5% in 2020, compared with the estimate at the previous Budget Private debt turned into public debt and put on to the backs of individuals, and the same mistakes being repeated: if this were a Budget genuinely designed to help working people, we would have seen measures to tackle the inherent issues in our economy. We would have seen genuine ambition on lifting wages, not mere rhetoric. We would have seen action to lower housing costs, commitments to increase social housing, and measures to militate against spiralling household debt. Instead, we have seen yet more tinkering around the edges, just like in every Budget in the last five years. Not only does this Budget hurt working people; it stores up yet more problems for the future that it will take at least a generation to fix.
I welcome the chance to contribute to this debate. On 16 March 1944, Mr Henry Willink—later Sir Henry Willink—moved a motion: “That this House welcomes the intention of His Majesty’s Government…to establish a comprehensive National Health Service.”—[Official Report, 16 March 1944; Vol. 398, c. 427.] I think there is a lot to be said for having one day each year in this country for the national health service and one day for health. I welcome the Chancellor’s commitment to meet the request of NHS England for funding of the health service and I hope the same will apply in other parts of the United Kingdom. Others have welcomed the commitment to the NATO target of 2% on defence; if I may, I shall speak about the health service for a time Henry Willink talked about the importance of ensuring that what we had to pay for the health service, which in those days was going to come from taxation, the rates and social security contributions, would provide a service that was comprehensive and free at the point of use. I think we are maintaining that. We need to go further to see that the funding keeps increasing and that the staff in the health service—those who support the clinicians, the nurses and the doctors—get the support they need, but we also need to be more imaginative in trying to ensure that people live healthier lives and in trying to reduce the demands of visits We could have a national health service day and, separately, a health day—one might be on 17 February, for example, which is the day Henry Willink put forward the White Paper, following the Beveridge report of December 1942, and the other might be, say, on 16 March, when the motion was put to this House Too often, people with short memories, or political bias, claim that the national health service was created by the Labour party. It was actually created after the Liberal Beveridge published his report. The first party leader to welcome the proposal was Winston Churchill, who was the leader of the coalition Government but, in party terms, the leader of the Conservatives The Labour Government did a lot of work on it when they came to office in 1945, but, as in the case of steel, electricity, gas and so many other things, they made the mistake of nationalising the hospitals. I think that if they had left us with a diverse collection of hospitals, including those run by volunteers and local authorities, we would have avoided many of the problems that we have faced over the last 50 or 60 years Organising the nation’s finances is never easy, but I believe that the Government are beginning to reach the stage that was achieved by the person from whom I was supposed to have learned economics. He won the Nobel prize for demonstrating mathematically something that is blindingly obvious—namely, that the rich will not pay tax, the poor cannot pay it, and the people in between cannot avoid it. He did not believe in going much above 27% in real terms, although he may have become soft by now and made it about 33%. It was certainly nothing like the amount—over 40%—with which I believe we shall still be left, or the 45% or more that applied when this Government came to office. We must go on finding ways of reducing what is necessary from tax spending, and some of that is going to involve transfer payments Let me return for a moment to the demands on the health service. If it is true that most people my age—and, indeed, those 20 years younger—should be taking statins, why on earth do we still have a system that requires me to go my doctor and obtain a form that will enable me to have my blood tested in another part of the health service, in order to establish my cholesterol level, and then requires me to go back to my doctor to find out whether I should be taking statins? We are told that virtually everyone should be taking them anyway Why is it impossible to obtain birth control pills, which are needed by many people during their active reproductive years, without having to bother the doctor so often? Obviously nurses can deal with more of that, and there are other ways of arranging things. I have encountered some GPs’ surgeries where, in order to be given a flu injection, people had to ring up, or else go to the surgery and book in advance so that they can go there at a particular time. In others, people were told, “It is open house: come on Saturday morning”, and were processed in about two minutes, without the need for administration and without burdens being placed on the surgery Let me now turn to the subject of the economy itself. When I was knighted, the economics supervisor whom I mentioned earlier wrote to me saying that I was the fourth of his pupils to receive a knighthood, and that, having shared the credit with the first three, with me he shared only the pleasure. That was fair enough, as I was probably his most useless undergraduate student. I was certainly the laziest In economics, there must be people who are willing to take risks. I am glad that the House now contains—especially among the new intake—people who have been entrepreneurs, handling serious issues involving distribution, manufacturing and the like, and who can contribute their wisdom and knowledge. I think that that matters. I have been incredibly impressed not just by the way in which Members in all parts of the House have spoken, but by the kind of people who are now in the House. When I spoke just after the first speech of an SNP Member, I said I thought that what she had done in the past was an example of a useful qualification Of course, some Members arrive here almost by mistake. They may have said when they were selected, “Darling, I promise you that I will not be elected”, and then had to go back after the election and say, “I apologise; I was elected.” However, even if Members are here for only one or two Parliaments, their contributions will matter. I think that in future we shall be grateful to the new Labour, SNP and, certainly, Conservative Members. I am not sure that the Liberals had new Members this time I think we shall have a Parliament the quality of whose membership will match the intake of 1945. I am talking about people with experience not just of war, but of helping to run the country and keep the factories going, including those on the trade union side. I am talking about the contribution of people who have been foremen, people who have been owners, and people who have been salaried managers The House of Commons benefits when people can bring their experience to it. Too often, we come out with a straightforward “We were better than you”, or “We are going to be better than you.” What we ought to do is try to ensure that when parties lose elections, they say, “We were wrong, and we will now adopt some of the policies that the people have preferred.” It is remarkable that, within a week of the general election, when the people—unexpectedly, in the opinion of some—put the Conservatives into government without the need for a coalition, it was being said that what the Conservatives proposed had been right, and that the people were right to trust the Conservatives to govern alone. We will not get everything right, but this Budget has shown that it is possible to trust the Conservatives, and I think many people will be grateful that this has happened. I believe that when we have an election in five years’ time—if Parliament lasts that long, which it probably will—people will say this Budget was a good foundation for the economy and an even better one for society, and gave hope to all kinds of people I shall end with some remarks on minimum wages. I once went to see a Secretary of State for Employment and said, “Do you know what your Department has agreed with the trade unions to pay employees aged 17, 18, 19 and 20?” He said, “No.” I said, “Here’s the list”— I had looked it up and found it. I said, “Do you know how many people aged 17, 18, 19 or 20 you employ in this Department?” He said, “No.” I said, “One. You’ve agreed a rate of pay at which you will not employ people, not a rate of pay at which you will employ people. I suggest you start a cadetship, because if people can come into the civil service aged 17, 18, 19 or 20 and spend a year or two with the excellent training the civil service provides, you’ll find that they can go on either in the civil service or in outside jobs with the qualifications and the reference and the opportunity to move forward.” Whatever our achievements in school, college or university, all of us deserve the chance to show what we can do, learn from others at work, and get into the kind of habits that will make us valuable to others and give ourselves a more productive life. I suspect that that way we will leave fewer people behind and we will work together for a better future for us all Ordered, That the debate be now adjourned.—(Jackie Doyle-Price.) Debate to be resumed tomorrow.
With the leave of the House, we will take motions 2 to 12 together Ordered, Business, Innovation and Skills That Paul Blomfield, Richard Fuller, Peter Kyle, Amanda Milling, Amanda Solloway, Jo Stevens, Michelle Thomson, Kelly Tolhurst, Craig Tracey and Chris White be members of the Business, Innovation and Skills Committee Culture, Media and Sport Bill Wiggin, on behalf of the Committee of Selection That Nigel Adams, Andrew Bingham, Damian Collins, Paul Farrelly, Nigel Huddleston, Ian C. Lucas, Jason McCartney, Christian Matheson, John Nicolson and Steve Rotheram be members of the Culture, Media and Sport Committee Energy and Climate Change That Mr Alistair Carmichael, Glyn Davies, James Heappey, Ian Lavery, Melanie Onn, Matthew Pennycook, Dr Poulter, Antoinette Sandbach, Julian Sturdy and Dr Alan Whitehead be members of the Energy and Climate Change Committee Environment, Food and Rural Affairs That Sarah Champion, Chris Davies, Jim Fitzpatrick, Harry Harpham, Simon Hart, Dr Paul Monaghan, Rebecca Pow, Ms Margaret Ritchie, David Simpson and Rishi Sunak be members of the Environment, Food and Rural Affairs Committee Foreign Affairs That Mr John Baron, Ann Clwyd, Mike Gapes, Stephen Gethins, Mr Mark Hendrick, Adam Holloway, Daniel Kawczynski, Yasmin Qureshi, Andrew Rosindell and Nadhim Zahawi be members of the Foreign Affairs Committee. Health That Dr James Davies, Andrea Jenkyns, Liz McInnes, Rachael Maskell, Andrew Percy, Paula Sherriff, Emily Thornberry, Maggie Throup, Helen Whately and Dr Philippa Whitford be members of the Health Committee Home Affairs That Victoria Atkins, James Berry, Mr David Burrowes, Nusrat Ghani, Mr Ranil Jayawardena, Tim Loughton, Stuart C. McDonald, Keir Starmer, Anna Turley and Mr David Winnick be members of the Home Affairs Committee International Development That Fiona Bruce, Dr Lisa Cameron, Mr Nigel Evans, Mrs Helen Grant, Fabian Hamilton, Pauline Latham, Jeremy Lefroy, Wendy Morton, Albert Owen and Mr Virenda Sharma be members of the International Development Committee Transport That Robert Flello, Mary Glindon, Karl MᶜCartney, Stewart Malcolm McDonald, Mark Menzies, Huw Merriman, Will Quince, Iain Stewart, Graham Stringer and Martin Vickers be members of the Transport Committee Treasury That Mr Steve Baker, Bill Esterson, Mark Garnier, Helen Goodman, Stephen Hammond, George Kerevan, John Mann, Chris Philp, Mr Jacob Rees-Mogg and Wes Streeting be members of the Treasury Committee Work and Pensions That Debbie Abrahams, Heidi Allen, Mhairi Black, Ms Karen Buck, John Glen, Richard Graham, Mrs Emma Lewell-Buck, Craig Mackinlay, Jeremy Quin and Craig Williams be members of the Work and Pensions Committee.—(Bill Wiggin, on behalf of the Committee of Selection.)
I rise to present a petition signed by 2,824 of my constituents who are backing my campaign to keep open the fire stations in Kinver, Brewood, Codsall and Bilbrook The petition states: The petition of residents of South Staffordshire, Declares that the petitioners note that there have been proposals by Staffordshire Fire and Rescue Service to close fire stations in South Staffordshire; further that the petitioners believe that a reduced fire service across Staffordshire and the closure of the fire stations would impact on the safety of the residents; and further that the petitioners believe that these proposals should be rejected and the fire stations kept open The petitioners therefore request that the House of Commons urges the Government to request that Staffordshire Fire and Rescue Service ensures that fire stations in South Staffordshire remain open And the Petitioners remain, etc [P001533]
Today the Chancellor set out in his Budget a number of measures to help strengthen our national economy and keep the promises we made as a party to the British people in May, but before the general election the Conservatives set out a clear set of aims for the south-west in a speech given by the Chancellor in Plymouth. He outlined six clear strategic objectives They were: first, to increase the long-term growth rate of the south-west to at least the expected average of the UK as a whole—although the south-west constitutes 8.4% of the UK population, it provides only 7.5% of UK economic output; secondly, to sustain job creation in the region and have 150,000 more people employed by the end of the decade; thirdly, to transform connections, both in transport, via a £7.2 billion investment plan, and in the crucial area of digital connectivity; fourthly, to ensure that the large defence assets in our region support the local economy, high-tech manufacturing and high-end skills—we will have been heartened indeed today to hear the Chancellor commit to spending 2% of our GDP on defence; fifthly, to boost science, and support tech clusters and green energy to promote skills development and an innovative rural economy; and, sixthly, to make the most of the region’s outstanding natural beauty and unique cultural heritage as part of a boost to tourism To those aims, we, the south-west Members, would add one of our own: a fair and equitable funding settlement across education, health and local government, redressing the current underfunding in these largely rural areas. Not all those strategic objectives are of equal importance to all our constituencies. For example, the economic situation in Cornwall is quite different from that in North Somerset, which has the lowest unemployment of any constituency in the UK.
Small businesses are a key part of the economy in my constituency. Does my right hon. Friend agree that we need to ensure that information is made available to them so that they do not miss out on any opportunities?
My hon. Friend is right about that point, and I am sure the Minister will want to address it. Transparency and information are key to people being able to take the opportunities that the Government are making available by their economic approach.
Does my right hon. Friend agree that growth in our Devon and Somerset area in the items he has listed is very important? Does he also recognise that the Government have already done substantially good things and have demonstrated their support in the settlement on the growth deal funding for 2016 to 2021? The Heart of the South West local enterprise partnership got £130 million in growth deal 1, which was in the top 10, and in growth deal 2 we got £65.2 million, which is the highest award of all the LEPs across the country. That is a sign that the Government are serious about supporting the south-west.
My hon. Friend makes an important point. One thing we will all have to do, if we are to get the best out of the opportunities being made available by the Government, is to work with these emerging groupings, especially the LEPs. Those of us who have worked with these organisations where they are at their best can see the benefits they can bring. If Members of Parliament, as well as local authorities, can co-ordinate with the LEPS, we will get so much more from them.
Jobs are always welcome, and it is really good news that the Government are backing job creation across the south-west, but the type of jobs we will create is also very important. That is especially the case in Cornwall, where the average wage is 30% below the national average—indeed, in my constituency, the average wage is only £14,500 a year. It is vital that we create better jobs and invest in the economy to grow the average wages for our residents.
I am sure that is absolutely right. One thing we have to do across the region is ensure that the prosperity in the wealthier parts of the south-west is more evenly spread across the region. I am thinking, for example, about the tech clusters around Bristol. In my constituency, unemployment is now below 0.5%, and we need to ensure that many of the high-tech jobs we have are spread more widely, right across the south-west peninsula, rather than being concentrated around the big cities.
Does my right hon. Friend agree that there is a key role to play for local government and our district councils, through the planning process? If they can speed up decisions on planning applications that create jobs and opportunity, the growth will come faster.
Indeed, and I would add that we need co-operation among local authorities. Where we can get good, functional local government clusters, things work well. The one thing I would say to the Minister is that we do not want to push our luck where we have local authorities co-operating and working well together; we do not need to see a change in the organisational structure that would only be expensive and bureaucratic. Where it is working already, we should leave well alone—that is a very good Conservative principle One common thread that runs between us is that the economic welfare of the south-west is very closely linked to the transport infrastructure. The new large group of Conservative south-west MPs will be putting that transport infrastructure at the very front of what we intend to do.
Does my right hon. Friend acknowledge that one of the key decisions of the previous Government was the welcome investment in the A303—
Does my right hon. Friend acknowledge that one of the key decisions of the previous Government was the vital investment in the upgrading—the dualling—of the A303, particularly the contentious but much-needed investment in the Stonehenge tunnel in my constituency? That development will be pivotal in opening up the road to the south-west, which will be of vital significance to the whole region.
The tunnelling to which my hon. Friend refers is a big improvement not only in the transport infrastructure, but in the tourist infrastructure, which go hand in hand. I will come back to that point in a moment Such transport infrastructure issues are to be found right across the south-west. Those of us who have campaigned extensively on these matters know all too well how two points on a map, which might look pretty close, can, in effect, be a long way apart. A very good example of that is getting to Barnstaple. On that point, I will give way to my hon. Friend.
That seemed almost planned. Will my right hon. Friend join me in welcoming the announcement made by the Chancellor today in the Red Book of £1.5 million to start planning work for the North Devon link road? Will he join me in hoping that we can push that ahead, because it is a vital piece of infrastructure for economic development and tourism in North Devon?
The North Devon link road is a vital piece of infrastructure. If we are serious about spreading prosperity throughout the region and if we are able to get those with capital to invest and to create the jobs, they must be able to get there. One problem that we have, even in the more affluent parts such as around the southern part of Bristol, is the fact that our transport infrastructure is very poor. We may have low unemployment in my constituency and we may be able to provide many jobs, but where do we get the labour from if people cannot travel from a relatively close conurbation such as Bristol and Weston-super-Mare to get to where the jobs can be provided?
I thank my right hon. Friend for giving way and for securing this Adjournment debate. The south-west is the milk and honey of this country. It is a marvellous place to be. I welcome what the Chancellor said today, but there is still the Waterloo to Exeter railway line, the rest of the A303 from Ilminster to Honiton that needs to be finished, and the electrification and other work that needs to be done to the Great Western railways. As much as Bristol is important, there is a lot of west country beyond Bristol as well. I very much welcome this debate.
Rail electrification will be key to what we are able to do. If we are able to get the investments that we want, we need to get that central Government investment as well. What we are seeing in the House tonight are the very first stirrings, politically and economically, of the south-west powerhouse. I hope that the Treasury notices how many south-west MPs, compared with some of the other groups in this Parliament, have come to the Chamber to talk about their long-term economic plan.
My right hon. Friend is right to outline our issues with infrastructure. One of the most visible problems with our infrastructure was identified last year in the constituency of my hon. Friend the Member for Newton Abbot (Anne Marie Morris) when we literally had the hanging rails at Dawlish. Does my right hon. Friend agree that a key part of the investment plan is securing a more resilient and modern railway for those communities such as Torbay, which are west of Exeter St David’s?
It is understanding distance and the need to be able to connect the most far flung parts of the region. It is also understanding that people who live in rural areas require a different type of transport infrastructure to that which occurs in the cities. In funding decisions, we must take account of issues of rurality. Not everyone in Britain lives in Islington. We have to understand that there are different needs, and to meet them different solutions will have to be applied by central Government in conjunction with local government.
We have talked about the powerhouse of the south-west, but I see Taunton Deane as the gateway to the south-west. We need much investment in our transport network, but in particular junction 25 on the M5 needs investment in new roads and an upgrade. On that hinges the development of a new business park that will bring high-tech jobs to the area. Does my right hon. Friend agree that we need to put that into our plan as well?
The M5 is key, and we need to ensure proper investment in it all the way down, including at junction 19 where we have experienced problems, and at junction 21, where there will be new development. It would be very nice to have a motorway running all the way down the peninsula, to ensure a proper route down the spine for road traffic. We can give the Chancellor some very good candidates for the road investment that he announced today. I say to my hon. Friend, however, that one would not want to introduce a note of discord among the group by arguing about exactly where lies the point of entry to the powerhouse. It will be a multi-nodal powerhouse, and I am sure that there will be plenty of entry points to be mentioned in everyone’s press release.
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I give way to my hon. Friend because I know that she has taken a particular interest in different parts of the railway infrastructure.
Does my right hon. Friend agree that our transport links are vital to advancing the south-west’s economic growth, and that new stations, such as Corsham in my constituency, will be a huge boost for the economic growth of not only Chippenham but the entire region?
If we are to have railway infrastructure, it is very important that we have access to the railways, and the new station at Corsham is very important in that, as is wider access to the rail network for disabled people. When we are talking about developing a transport infrastructure, we have to remember that we must be able to give access to all the citizens in the region, not just those who are able-bodied. In my constituency we had to wait a very long time to get disabled access to one of our busiest stations. In this day and age, that is simply not good enough, so the sort of infrastructure that my hon. Friend mentions is vital The other common factor affecting all of us throughout the south-west, to one degree or another, is the health of tourism. That industry takes many different forms across the south-west but is important to the income of those who live and work there.
Of course it is not just the rich heritage, the stunning countryside and our rugged coastlines that bring people to our region; it is the fantastic food and drink produced by our farmers and food manufacturers. I am sure that my right hon. Friend will want to join me in emphasising to those on the Treasury Bench the importance of supporting our farmers and our food and drink manufacturers, not only as a driver for tourism in our region, but as something that we export with pride across the United Kingdom and around the world.
Indeed, the maintenance of our countryside and the protection of agriculture is not only important in itself in terms of generating wealth and jobs; it is important in maintaining the visual environment that is intrinsic to the tourism industry. I am sure that all my colleagues will want to thank my hon. Friend for his dedication to the food and drink industry and his single-handed generation of wealth in the region Apart from the countryside, our region has cities with many historical attractions that we need to maintain.
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I give way to my hon. Friend, who is one of the best examples, not of ancient relics but of modern thinking.
I quite agree. As my right hon. Friend will know, one of the key reasons tourists do not return to Bath as a key destination in the south-west is our clogged up transport network and infrastructure. Does he agree that investment in roads and infrastructure in Bath will enable our tourism economy, which is so crucial to our city, to expand?
The only city to compare with Bath in terms of difficulty of getting around, certainly as a driver, is Edinburgh. Anyone who can find a parking space in Bath is doing extremely well. These might seem like minor irritations, but they are major restrictions on a city’s ability to draw in wealth and tourists with spending power. The ability to do that is an important part of the wider economic picture I want to give my hon. Friend the Minister plenty of time to deal with all these issues, but may I finally raise the issue of fairer funding? It is a very sore point, not only in the south-west but in many rural areas across the United Kingdom. We have been told for such a long time that we are going to get a better formula that will reduce the discrepancy in per capita funding for those who live in the cities and those who live in the countryside. The countryside is not just where people from the cities go for their holidays or their weekends away, and the concept of rural poverty needs to be taken fully into account. There is no point in saying that the cost of living is lower in rural areas than in cities. We get lower funding per capita for healthcare, education and local government; we pay our taxes, yet our average wages are lower. We are being discriminated against in more than one way. The Government should equalise the formula much sooner than we have been led to expect. That is one of the key elements of being able to bring prosperity to our region.
Following that point, would my right hon. Friend give time to developing a Fox formula, to ensure that we can link public expenditure in the south-west to the money that Scotland receives?
I would settle for our fair share of funding in England. I have no intention of allowing my name to be used in a pejorative term, in the way that the Barnett formula has come to be regarded. I shall skip that opportunity.
Is my right hon. Friend aware that the cost of delivering services in rural areas is much higher than in urban areas, and in pupil funding there is a huge disparity, with many rural schools getting significantly less than urban schools—half as much in some instances? That is not good enough for our rural schools.
In my view, it is a simple question of discrimination. Why should a child who happens to be born in a rural part of our country get less money for their education than a child who happens to be born, not necessarily a large distance away, but in an urban environment? We are not asking for more than we deserve. We are asking for our fair share of funding for the children in our constituencies.
Of course, it is not just about rural areas. Does my right hon. Friend agree that the time has come to end the historic funding injustice to schoolchildren in Cheltenham, an urban area; and that we need to give schools in effective local authorities, such as Gloucestershire, the fair enhanced funding that is no less than they deserve?
That is exactly the point. One of the things we will be pressing the Government on in the next five years will be ensuring that we get our fair share. We want to make sure that we can reach our full potential economically, and no area in this country can reach its potential economically unless the next generation is given the appropriate education and the tools to advance in a meritocratic, open, pluralistic society.
Does my right hon. Friend agree that when it comes to local authority and health funding, there is not only the higher cost of delivery in rural areas, but the fact that we have a higher age demographic in Devon and much greater need, which is not reflected in the current formula?
My hon. Friend, typically, makes an excellent point. We are a part of the country that is a very attractive place for people to go to when they retire, but that brings its own financial problems for funding our local facilities. My hon. Friend is all too aware of the fact that as we get a more elderly population, that brings with it more complex medical needs. It is the complexity of the medical needs that adds to the cost, as well as the number of individuals involved, and that will continue to rise, so we must have a proper match between the funding and the demand if we are to be able to cope with the pressures that are coming.
Does my right hon. Friend agree that, as others have mentioned, in Dorset the education funding formula must be fixed, as well as the funding for our police forces and local authorities?
I hate difficult questions in the Commons. I entirely agree with my hon. Friend, who makes the point very well. It applies to police authorities, education authorities, health authorities and local government. This region has not spoken with a single voice sufficiently in recent times. Tonight we are seeing the beginning of that.
In the Chancellor’s excellent speech today, he hinted at enterprise zones for smaller towns. Does my right hon. Friend agree that the towns that we all represent are perfect locations for such zones to create wealth and jobs?
My hon. Friend makes a very good point. If the Chancellor is looking for places where it would be appropriate for him to invest the money he has and where he would get a good bang for his buck, I am sure those of us here tonight could give him one or two pointers.
My right hon. Friend has been extremely generous in giving way. As I sense that he is winding up, I wanted to ask him another difficult question. Has he spotted in the Budget resolution statement that £1.5 billion will be going to intelligence and security services? Does he welcome that, particularly as we in the south-west have a large number of constituents who are engaged in that vital enterprise?
I am extremely grateful to my hon. Friend for making that point. That concentrates our minds in the south-west, but it should concentrate the minds of the whole country because the threats that we face as a nation are increasing. It is therefore vital that we increase the funds available to the intelligence services, but probably and more controversially we will have to give them the powers they require to be able to deal with the threats that we face. That will be a very different argument that we will have in the House in time to come At the recent general election a blue tide swept through the south-west, and now every constituency between Bristol and Land’s End, with the exception of Exeter—next time—is in Conservative hands. We understand the responsibility and the duties placed upon us by what was a landslide in that election, but we are thrilled at the opportunity it brings to speak as one to our own Government about the issues facing the south-west, and we have seen that unity of purpose tonight. There may be 56 Scottish National party MPs speaking for Scotland, but there are now 51 Conservative MPs speaking for the south-west. If we are the south-west powerhouse, perhaps we are also politically the new Scotland. We will be constructive and supportive, giving the Government the time and the space to deliver on their promises, but we will not hesitate to hold Ministers to account when those promises do not materialise. This is a once-in-a-generation opportunity and we are collectively determined to take full advantage of it.
I congratulate my right hon. Friend the Member for North Somerset (Dr Fox) on securing this important debate. I welcome the interest from hon. Friends across the south-west. There is a slight show of strength from the region here tonight—probably the only constituency not represented is Exeter. I very much feel that I have been on a tour of the south-west. I am sure that colleagues in the Department for Transport and the Treasury—the Chancellor’s Parliamentary Private Secretary is here—will read Hansard intently to see what my right hon. Friend and other colleagues have said. I will try to answer as many of his points as possible in the short time remaining The Government’s economic ambition is to create a fairer and more balanced economy by supporting policies that grow the economy and generate new jobs and higher wages for everybody. In our election manifesto, we said that by attracting growth and new businesses we will improve connections to the south-west, with major investment in the road network and electrification of the Great Western main line, bringing new fast trains on to the route. We will increase the number of overseas visits to the south-west each year by investing in tourism. We will ensure that the world-class defence assets and cyber-security industries of the south-west benefit the local economy. We will focus on job creation by supporting business and investing in skills Employment in the south-west is up by 163,000 since the 2010 election; unemployment is down by 42% over the same period; and some 99,000 new businesses have been started in the south-west during that time. As my right hon. Friend has said, the Chancellor set out an ambitious six-point plan for the south-west earlier this year. It includes £7.2 billion of investment in the transport connections of the south-west, over £4 billion of investment in the electrification of the Great Western main line and a £10 million package of support for coastal towns across the south-west The south-west has an average annual growth rate of 4.17%, which is below the UK average of 4.23%. It is a small difference, but over time it leads to a significant difference in prosperity. It is driven by a gap in productivity; although the south-west accounts for 8.4% of the UK’s population, it accounts for only 7.5% of total output, as my right hon. Friend pointed out. It is that productivity gap that the Government want to address.
We are about start the largest infrastructure project in Europe: Hinkley Point C. The Minister and the Government have been very helpful in that. One of the most important things we have realised is that “learning and skills” is not synonymous with Somerset, Devon, Cornwall, Wiltshire or anywhere else in the south-west. Surely, we should be spending more in further and tertiary education and in universities in the south-west to encourage people to stay and work in some of our excellent industries. Does he agree?
I thank my hon. Friend for his comments. I am aware that growth deals have been put in place in his area to do just that, which is excellent news The employment rate in the south-west is above the national average, with over 35,000 more people in work in the past year alone. If we succeed in maintaining that momentum and in raising the long-term growth rate to the UK average, we could add £6.5 billion in real terms to the economy of the south-west by 2030 The Government have agreed 39 growth deals across England, in which £7 billion will be invested in a wide range of local projects. The money will go towards providing support for local businesses to train young people, create thousands of new jobs, build thousands of new homes and start hundreds of infrastructure projects. Some of the major projects in the south-west that will be built as a result of these deals include £23 million for a new road tunnel linking Swindon to nearby Wichelstowe, creating thousands of jobs and opening up a new site for thousands of homes; £4 million to create the UK’s first robotics institute at Bristol; and £12.9 million to unlock housing and employment sites at junction 25 on the M5 at Taunton, which my hon. Friend the Member for Taunton Deane (Rebecca Pow) referred to I was pleased to hear in the Chancellor’s Budget earlier the comment that we were making good progress towards a devolution deal in Cornwall, which is an important part of the south-west and of the south-west’s potential Let me pick up on a couple of the points made by my right hon. Friend the Member for North Somerset. I note what he says about education, which is extremely important. I can empathise with what he says, as in the county of Warwickshire we often suffer from the same funding inequality. I am sure that he, along with other colleagues, will be pleased that in the last Parliament the Government made strides to move that inequality in the right direction and to close the gap. He will know that our party made a manifesto pledge to continue that funding across this Parliament. I am sure that the Department for Education will have heard his comments and those of several other hon. Members loud and clear I hear what my right hon. Friend says on local government funding and rural sparsity. Over the next few months, we will be working on the funding allocations for local government. No doubt, during that process, I will receive many representations from this part of the country if tonight is anything to go by. The Government have also provided additional funding this year for rural areas to take the sparsity issue into account. Another of my hon. Friends mentioned local councils’ ability to benefit from business rate retention, the new homes bonus and additional council tax. I am sure that the growth deals that have been put in place across the south-west will be beneficial as regards those additional funding streams. I hear what my right hon. Friend the Member for North Somerset said about council structures. Obviously, we are working towards a devolution deal in Cornwall, but I can reassure him that with council structures, devolution deals or combined authorities there is no Government prescription for how local people should organise their affairs. This is purely a bottom-up process in which local areas can come together and tell the Government what they would like to see. I hope that that gives him some assurance that we will not make any councils go into shotgun marriages, shotgun divorces or any arrangements that local people are not pressing for I probably do not have time to go through every comment made by my right hon. and hon. Friends. One big point that came out loud and clear was that the south-west sees infrastructure projects as hugely important in improving the tourism industry, industry in general and the lot for the agricultural sector, which is extremely important in many parts of the south-west. A Transport Minister from the south-west was on the Treasury Bench during the debate, and the Department for Transport will listen carefully to what my right hon. and hon. Friends have said about ensuring that we try, within the difficult circumstances we face, to do whatever we can to support the economy in the south-west The Chancellor will probably also consider many of the suggestions for roads, dual carriageways, junctions and so on as bids during the spending review, the next autumn statement and the next Budget. I encourage colleagues to speak to the Chancellor’s Parliamentary Private Secretary, as the demands and requests are slightly above my pay grade This has been a fantastic debate. The south-west is an extremely important part of our country. The Government are committed to supporting it, and I thank my right hon. Friend the Member for North Somerset and so many of our colleagues for raising issues from the south-west, so that the Government could listen tonight Question put and agreed to.