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Oral Answers to Questions
(13 years, 8 months ago)
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Liz Kendall (Leicester West) (Lab)
1. What plans he has for the future of the Land Registry; and if he will make a statement.
The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)
The findings of the feasibility study of the options for greater private sector involvement in the delivery of Land Registry services have now been reported to Ministers. Given the registry’s importance in the housing market, we must give thorough consideration to those findings before making any decisions or announcements about its future direction.
Liz Kendall
The Land Registry provides a state guarantee of title for land ownership covering registered property worth more than £2.5 trillion across England and Wales. Can the Secretary of State confirm that previous reviews conducted by both Conservative and Labour Governments have found the registry’s public sector status to be crucial to the impartiality and integrity of its work? Will he agree to meet me to discuss the future of this vital service, which is a cornerstone of the housing market and the wider economy?
Mr Clarke
I agree that the registry’s state guarantee of title to land and property is essential, and that it must be retained in any arrangements that we make. Previous investigations of the registry have featured all the options that we are considering now, including the possibility of involving private sector partners—indeed, I have the original operational efficiency programme for 2008, which refers to private sector opportunities. We will, however, proceed with great care.
I know that the hon. Lady has a constituency interest because there is an important branch of the registry in Leicester. I, or one of my colleagues, will meet her in due course, once she has given us a little time to consider the findings of the feasibility study.
Lilian Greenwood (Nottingham South) (Lab)
I recently met local representatives of the Public and Commercial Services Union from the Nottingham branch of the Land Registry. Unsurprisingly, they expressed concern about not only their own futures but the future of the service. What discussions is the Secretary of State having with staff trade unions to ensure that their valuable expertise and experience are taken into account in shaping the future of the service?
Mr Clarke
We will certainly take account of all staff comments, and we hope to include the staff in our consultations. If there were any question of any change in the registry’s status, we would embark on a full and careful consultation before taking action. We are pursuing the same objectives as the last Government: guaranteeing title, improving efficiency, lowering costs, and taking advantage of the opportunities provided by the Land Registry system to offer further service to the public.
Tony Baldry (Banbury) (Con)
2. What steps he is taking to increase educational opportunities in prisons.
The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)
Together with the Department for Business, Innovation and Skills, the Ministry of Justice has undertaken a review of offender learning. Our proposed new approach has received strong support from the heads of learning and skills in prisons, and I hope that when we publish the results of the review, which we will do shortly, my hon. Friend will share their enthusiasm.
Tony Baldry
Does my hon. Friend agree that punishment is the deprivation of liberty, and that we should all try to ensure that when people leave prison, the time that they have spent there makes them less inclined to reoffend? Education is an important part of that. The position is very straightforward. When my hon. Friend’s proposals are made public, I hope that they will present opportunities for a substantial increase in educational opportunity in prisons.
Mr Blunt
I share my hon. Friend’s view. It is important for the pathway that leads the offender through the custody system—and, indeed, the supervision system in the community—to assist his progress towards rehabilitation, and that must be done through the delivery of learning and skills and education. Prisoners should be given effective work that enables them to make proper recompense to their victims, and learning and skills associated with that work will be an important rehabilitative tool.
Helen Goodman (Bishop Auckland) (Lab)
While in government Labour increased the offending learner budget by 300%, and I am pleased to hear that the Minister is building on that. Does he agree with his hon. Friend the Member for Witham (Priti Patel), who on 9 March was quoted in the Daily Mail as saying that offender education was
“yet another example of gold-plated rights for convicted criminals”,
and that prison education
“sends out the signal that crime pays”?
Mr Blunt
The reason for the review of offender learning is that, as usual, the last Administration spent a vast amount of money and secured precious little extra output for it. The hon. Lady has made the case very clearly. I am satisfied that we will largely protect the budget for offender learning and that people will leave prison with skills and training, better equipped to be contributing members of society following their release.
Mr Rob Wilson (Reading East) (Con)
The Minister will know that Reading young offenders institution received a dreadful report on its education service from the independent monitoring board, particularly the part of the service that is run by The Manchester College. What action is the Department taking to deal with the shortcomings of the college, and to give more power to prisons to opt for excellent local education provision?
Mr Blunt
My hon. Friend has been assiduous in holding the offender learning contract to account in Reading prison, and the Skills Funding Agency has completed an investigation into the allegations made against The Manchester College in respect of its education contract there. The report of that investigation is being finalised, and I am not able to comment on it until it has been completed, but my hon. Friend is absolutely right that we must get the heads of learning and skills in the prisons much more clearly in charge of the direction of the skills training in their institutions.
Yasmin Qureshi (Bolton South East) (Lab)
3. What the evidential basis is for his proposals on the future of universal jurisdiction.
The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)
Requiring the consent of the Director of Public Prosecutions before an arrest warrant can be issued does not affect in any way the principle of universal jurisdiction or the Government’s commitment to that principle in the future. The reason for making this change is that at present a warrant can be issued where there is no realistic prospect of a viable prosecution.
Yasmin Qureshi
As the Lord Chancellor will know, universal jurisdiction is an ancient civil right: it is the right of an individual citizen to take court action against somebody suspected of committing a war crime. In the last 10 years, only 10 such applications for arrest warrants have been made, and only two of them were successful. As the Lord Chancellor will be aware, these arrest warrants are issued by the chief district judge for the London petty sessional area. In light of the fact that only two of these applications have been successful, why are the Government considering abolishing this ancient principle?
Mr Clarke
It is not being abolished. First, universal jurisdiction is not as old as suggested, but we welcome the application for, and enforcement of, universal jurisdiction here just as much as the previous Government did. The trouble at present is that the test for issuing an arrest warrant is so low that it is possible for a warrant to be issued when there is not the faintest chance of any serious prosecution going ahead. While I understand the feelings behind some of the applications, there is no doubt that publicity is being sought rather more than a prosecution, and the likely targets are people such as Israeli or Sri Lankan politicians coming here whom dissident groups want to be arrested. The DPP can act promptly, and we will enforce the law when there is a genuine case for a prosecution. Indeed, one Afghan warlord has been successfully prosecuted in this country and is currently in prison.
Duncan Hames (Chippenham) (LD)
In the DPP’s evidence to the Police Reform and Social Responsibility Public Bill Committee, he said about assessing such applications:
“We have people who can work around the clock and we have enough trained people so that someone is always available.”––[Official Report, Police Reform and Social Responsibility Public Bill Committee, 20 January 2011; c. 126, Q241.]
Can the Lord Chancellor confirm that it will be possible for cases to be submitted in advance of a suspect travelling to the UK so that decisions can be made in time to act?
Mr Clarke
I will check with the DPP, but I am almost certain he will confirm that that is the case, because I have had assurances from his officials that they are ready to act very quickly. In a proper case, they should act quickly and a warrant should be issued, but at present the fact that warrants can be comparatively easily sought and occasionally obtained is deterring people from coming to this country who are politically controversial but probably not guilty of any war crime or crime against humanity. Indeed, over the years attempts have been made to arrest people such as Henry Kissinger.
Ann Clwyd (Cynon Valley) (Lab)
The Foreign Secretary gave a very direct answer to my question last week on the same subject. He explained that the Government are changing the law in order to be able to talk to the Israeli politician Tzipi Livni. Does the Justice Secretary really think the request of one foreign Government is a good enough reason for changing the entire law in the UK?
Mr Clarke
The case of Tzipi Livni is a very good example of why the law needed to be changed. She was the leader of the opposition when an attempt was made to get an arrest warrant. It was believed she was in this country, but in fact she was not. However, she was a leading Israeli politician coming here for political purposes, and it is in the interests of our country that we have negotiations and discussions with a wide range of political representatives from many countries. If guilty of war crimes, they will be prosecuted, but we put people off coming here if they are liable to have publicity-conscious arrest warrants served on them.
Stephen Gilbert (St Austell and Newquay) (LD)
4. What plans he has for the use of innovative community sentences as an alternative to custody; and if he will make a statement.
The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)
We are examining ways of making community sentences more clearly associated with the principles of sentencing, not least so that those elements relating to protecting the public, such as residence, reporting, and curfew and tagging requirements, and those relating to punishment—fines and unpaid work—carry greater public confidence.
Stephen Gilbert
I am grateful for the Minister’s reply. Is he aware of the “Community or custody” inquiry commissioned by Make Justice Work, which has found that schemes offering tough and effective alternatives to short prison stays are facing funding cuts? Does he agree that that would be a step in the wrong direction?
Mr Blunt
We are trying to ensure that funding decisions are delegated more effectively locally, so that where decisions have been taken for alternatives to custody pilots to be mainstreamed or for alternative funding to be found for them, and they are found to be of value at a local level, they should be able to be protected at a local level.
Dr William McCrea (South Antrim) (DUP)
Does the Minister agree that any alternative to custody must contain the essential element of punishment for the crime, as well as rehabilitation, in order to prevent a recurrence?
Mr Blunt
I wholly agree with the hon. Gentleman. It is very important that community sentences reflect the principles of sentencing—I made that point in the original answer. If they do not carry credibility in respect of punishment and protecting the public, people will rightly expect us to make a greater use of custody. As we know, short custodial sentences are not always in everyone’s best interests.
Philip Davies (Shipley) (Con)
Given that the probation service says that there are already 6,600 high-risk or very high-risk people serving community sentences, and that the reoffending rate on the intensive supervision and surveillance programme in recent years has ranged from 74% to 92%, may I urge the Minister to ignore the siren voices of those on the Liberal Democrat Benches, and perhaps even in his own Department, who are calling for more community sentences and fewer people to be sent to prison? What Conservative Members want is more robust sentencing and more people sent to prison.
Mr Blunt
I know that my hon. Friend agrees that what we want is what works, and we want to ensure that there are fewer victims of crime in future. When our policies deliver rehabilitation far more effectively than those of the previous Administration, we will have protected the future victims of crime, and I know that he will—
Mr Speaker
Order. I am extremely grateful to the Minister, but we must move on. I am afraid that these answers are rather long and they need to get a bit shorter.
Graham Jones (Hyndburn) (Lab)
5. What level of resources his Department plans to provide to the Prison Service in 2011-12; and if he will make a statement.
The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)
The resource budget for the National Offender Management Service for 2011-12 is £3.679 billion, £2.181 billion of which relates directly to expenditure incurred in prisons.
Graham Jones
If, as the Secretary of State predicted in The Daily Telegraph on 11 February, crime increases under his Government, will he reverse his prison closure policy and undo the scaling back of the prison building programme? If not, what will he do with the criminals?
Mr Blunt
I am not entirely sure that my right hon. and learned Friend’s comments bear that interpretation, but what we have to do in the Ministry of Justice is ensure that we successfully imprison those people sentenced to prison by the courts and not get ourselves into the state of affairs that occurred under the previous Administration, whereby people had to be let out early because they had run out of space.
Andrew Bridgen (North West Leicestershire) (Con)
The shadow Justice Secretary has argued:
“Playing tough in order not to look soft made it harder to focus on what is effective.”
Given that, does the Minister agree that despite record spending and the record prison population, Labour failed to improve public safety?
Mr Speaker
Order. I am sorry, but on several occasions I have had to say to the hon. Member for North West Leicestershire (Andrew Bridgen) that questions must be about the policy of this Government, not a previous Government. I think we will leave it there. I call Lorraine Fullbrook.
Mr Speaker
I beg the right hon. Gentleman’s pardon. In dealing with that matter, I failed to allow him to make his contribution from the Opposition Front Bench, as he is, of course, entitled to do.
Sadiq Khan
I have a question for this Government. Given that the prison population is rising—it was 82,991 on 7 January and last week it stood at 85,454—and that, at the same time, this Government are closing prisons and slashing the prison building programme, what is the Minister going to do if the number of people who should be in prison exceeds the number of places?
Mr Blunt
Unlike the previous Administration, we will not get ourselves into that position. As the shadow Secretary of State will know—he will be well on top of his brief—there is a seasonal rise in prison numbers following Christmas. I am happy to say, however, that our policies are already having an effect. The prediction we inherited that we would end up with 96,000 prisoners by 2014-15 is unlikely to come true.
Sadiq Khan
Those of us who stayed awake for the entire Budget know that the Chancellor has no plan B and I am afraid that the complacency of that answer shows that the Ministry of Justice has no plan B. If crime goes up, as the Secretary of State predicts it may well do, and if the prison population continues to rise, the Government will have no choice but to release offenders who should be in prison without due process or to use police cells. Which will it be?
Mr Blunt
As of now, we have an overhead in managing the prison estate of about 3,000 places. We will manage the estate to ensure that we sustain an overhead and do not get ourselves into a position whereby we run out of space, as the last Administration did. It is basic administration. We will keep a very careful eye on the prison numbers and ensure that we have sufficient capacity.
Lorraine Fullbrook (South Ribble) (Con)
6. What proportion of the cost of accommodating foreign national prisoners awaiting deportation after serving their sentences is provided by his Department.
The Minister for Policing and Criminal Justice (Nick Herbert)
Currently, about 40% of the cost of accommodating foreign national prisoners who have completed their sentence and are awaiting deportation is borne by the Ministry of Justice.
Lorraine Fullbrook
The Prime Minister has, on a number of occasions, expressed his desire to see such prisoners deported after serving their sentence. Why are they not then transferred to secure immigration centres in readiness for their immediate deportation after their sentence is completed?
Nick Herbert
I agree with my hon. Friend that that is what we should be aiming to do. Wherever possible, detainees should be transferred to immigration removal centres. We are opening a new centre and the majority of detainees are already in those centres. We want to ensure that that number increases.
Andrew Gwynne (Denton and Reddish) (Lab)
7. What plans his Department has for the future of the probation service.
The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)
We will fundamentally reshape probation services to reduce unnecessary bureaucracy, empower front-line professionals and make them more accountable. Probation staff should be able to spend more of their time working directly with offenders; we are lifting the burden of bureaucracy that has hindered them from doing that.
Andrew Gwynne
I agree with the Minister that our probation service does a magnificent job in very tough circumstances and, under his self-styled rehabilitation revolution, should have an even greater role in successfully returning offenders to society. Will he therefore explain to the House how he can possibly square the increased work load and responsibility with cutting 3,000 experienced and front-line probation staff as a result of his Government’s spending cuts?
Mr Blunt
That is not a result of our Government’s spending cuts. The efficiency savings for the probation trusts for next year are largely the plans that those trusts had for the transfer from board to trust status, which was inherited from the previous Administration. The National Offender Management Service is taking 37% out of its headquarters’ overhead precisely in order to protect the front-line professionals in the probation service in delivering effective offender management.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
Are probation trusts going to be providers of services, commissioners of services or both? If both, is there a conflict of interest?
Meg Munn (Sheffield, Heeley) (Lab/Co-op)
Will the Minister tell me how much work is going on in our probation services with violent offenders, particularly those who have been violent in domestic circumstances? Tackling the issue is enormously important in preventing future offending.
Mr Blunt
I agree with the hon. Lady about the importance of addressing the issue of domestic violence. Every probation trust I have visited has had programmes to address it. It is a particular priority and we will want carefully to examine the delivery of interventions and programmes to ensure that they are sustained. I accept that that is an area of priority.
Tom Brake (Carshalton and Wallington) (LD)
What help can the Minister give to probation trusts to enable them to compete on a level playing field with the large private sector contractors that might be doing a lot of the work they are currently doing?
Mr Blunt
I think that my hon. Friend is referring to the competition for community pay-back. The first competition will be for the London area, where the boundaries overlap precisely with those of the London probation trust. That will give those probation trusts that need to get together to make a collective public sector bid involving a number of trusts the time and opportunity to put an effective bid together.
Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)
Is the Minister aware of the evidence that was given to the Select Committee on Justice about the whole issue of competition and/or commissioning providers and so on? Those points have been very well made by the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith). Is the Minister aware that if there is a conflict of interest then, prima facie, the whole system will be unlawful? Does he realise how important it is to separate those functions, because the probation trusts do not have a clue where they are going?
Mr Blunt
This is an area of change for probation trusts, and the competition for community pay-back, which we inherited from the previous Administration, is an exemplar of that. I look forward to the opportunity to review all the evidence that has been given to the Justice Committee and I shall come to a view on the basis of the evidence that has been received. I will give my own evidence and take questions in due course in the Committee, presumably at greater length than is allowed here.
Nic Dakin (Scunthorpe) (Lab)
8. What progress he has made on his proposed reform of legal aid.
Kate Green (Stretford and Urmston) (Lab)
15. What progress he has made on his proposed reform of legal aid.
The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)
The consultation for the reform of legal aid closed on 14 February and we have received some 5,000 responses from members of the public, lawyers and their representative bodies, advice providers, charities and many others. We are continuing to review all the representations received and we hope to publish our finalised proposals, which will include plans for implementation, after the Easter recess.
Mr Djanogly
We do not accept the figures provided by Citizens Advice, but we do recognise that early advice can certainly be helpful in a range of contexts. Often, people need general advice on welfare benefits or debt rather than legal advice.
Kate Green
The Government are announcing a huge programme of welfare reform, which means that, at least for a time, there will inevitably be confusion and uncertainty about entitlement. Will the Minister explain how it can be right to consider removing funding for legal aid for welfare benefits and social law matters right now? What guarantees will he give about continued funding for such advice?
Mr Djanogly
There is never a right time to do these things, but we feel that legal aid needs to play its part in reducing the deficit and that is what we propose to do. In terms of benefits, there could be an issue with more benefit claims coming through from the Department for Work and Pensions and we are working closely with that Department to ensure that we maintain a smooth service.
Mrs Helen Grant (Maidstone and The Weald) (Con)
Does my hon. Friend agree that the proposed reforms will have a disproportionate impact on women—I declare an interest as a legal aid family lawyer—especially in the categories of employment, family and housing?
Mr Djanogly
Not necessarily. It is true that individuals featuring protected characteristics are over-represented in the civil legal aid client base and as such any reform to civil legal aid is likely to have a greater impact on those groups when compared with the population as a whole, but that is a function of demographics. When affected clients are compared with unaffected clients, proportions are very similar.
Mr Robert Buckland (South Swindon) (Con)
Will my hon. Friend take on board all the careful representations he has received about the potential problem of using domestic violence as the criterion for granting legal aid in family law cases?
Mr Djanogly
The Government’s position is that domestic violence should be the gateway to receiving legal aid in relation to family law. However, my hon. Friend has asked specifically about the definition and I am pleased to tell him that many representations have come in on this issue and that we are going to consider them very carefully when we make our final report.
Mr Andy Slaughter (Hammersmith) (Lab)
What the Minister told the Justice Committee is at odds with what he has said to the hon. Member for Maidstone and The Weald (Mrs Grant) today. He said that he wanted legal aid to be directed towards the most vulnerable, but every authoritative voice the Committee heard, and even his Department’s impact assessment, said that the opposite will be the case and that the most vulnerable will be disproportionately hit by his cuts. We will see tomorrow, when the Committee publishes its report, whom it found more credible, but may I offer him the opportunity today finally to accept the overwhelming evidence that his cuts to social welfare legal aid will hit the most vulnerable the hardest?
Mr Djanogly
It is interesting that the hon. Gentleman mentions social welfare and misses criminal legal aid, because when it comes to eligibility and defining who is vulnerable, it was the previous Government who decided that criminal legal aid would be means-tested. We are not addressing that, but in relation to civil legal aid, yes, we do believe that the eligibility tests need to be looked at, and that is what we are doing.
Jessica Lee (Erewash) (Con)
9. Which organisations he has met to discuss the draft Defamation Bill.
The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)
Prior to the publication of the draft Defamation Bill, my Department carried out informal consultations with a wide range of interested parties. Since the draft Bill was published on 15 March my right hon. Friend Lord McNally has held meetings with a number of these parties to discuss their initial reactions to the draft Bill, and further meetings will take place during the consultation period.
Jessica Lee
In explaining the difficulties of defamation litigation to my constituents in Erewash, does my right hon. and learned Friend agree with the President of the Supreme Court, Lord Phillips, who stated that when defamation cases can be so complex,
“jury trial simply invites expensive interlocutory battles”?
Mr Clarke
I agree with my hon. Friend and her quotation. Jury trial is rarely used in defamation cases, but it greatly adds to the length and the cost when used, so there is a wide consensus that it is not usually appropriate. It also cuts out the ability of the judge to settle a lot of preliminary points before going on to the full hearing, in a way that cuts down costs and speeds up justice for all parties. So far, there has been a favourable reaction to our proposals that in defamation cases there should be a presumption against jury trial. That has nothing whatever to do with the coalition Government’s commitment to the use of jury trial in criminal cases.
Mr Denis MacShane (Rotherham) (Lab)
But does the Lord Chancellor accept that one organisation that he will not be able to meet is the organisation of the little man and the little woman, because it does not exist? They are the ones who most often face defamation and malicious or inaccurate comments and reports, as do even right hon. and hon. Members occasionally, difficult as that may be to believe. Do we not need a small claims court for libel cases which could quickly and expeditiously, at a low cost in damages and expenses, deliver remedial justice, apology and correction?
Mr Clarke
I think we need low-cost, quicker, simpler and more efficient procedures in most of the civil justice system. The statement that I hope to be allowed to make at half-past 3 will take that further in various ways. Defamation has never been eligible for legal aid, but anything that simplifies the process and gets more matters treated as preliminary questions will make it more accessible to the ordinary citizen when his reputation is unfairly tarnished.
Lindsay Roy (Glenrothes) (Lab)
10. How many foreign national prisoners he expects to have repatriated in 2011.
The Minister for Policing and Criminal Justice (Nick Herbert)
In 2010 about 5,000 foreign national prisoners were removed or deported. However, the number transferred through prisoner transfer arrangements is too low. We expect to transfer about 50 prisoners this year. The Government believe that foreign national prisoners should serve their sentence in their own country, and we are seeking to secure further compulsory prisoner transfer agreements wherever possible.
Lindsay Roy
I thank the Minister for his detailed answer. Can he explain why that small number differs so markedly from the autumn predictions of the Prime Minister that thousands would be repatriated? What is holding things up, or was that just a wild estimate or a rash promise?
Nick Herbert
As I said, more than 5,000 prisoners have been removed. Of course, the situation will change in December when the EU prisoner transfer agreement comes into force. As a consequence of that, we will be able to remove many more prisoners to serve their sentence in other countries.
Simon Hughes (Bermondsey and Old Southwark) (LD)
I thank the Minister for his robust answer. Of the nearly 200 countries in the UN whose citizens could potentially be here in prison, do the Government have any targets for the number of additional agreements we expect to implement outside the EU, or in particular to implement with those countries whose citizens constitute the largest number of prisoners in this country when they should be somewhere else?
Nick Herbert
We have to negotiate this with individual countries. We cannot simply remove prisoners to countries to serve a sentence there unless those countries accept it, but we can compulsorily remove prisoners if the countries agree. We already have agreements with Uganda, Rwanda and other countries, and an agreement is being negotiated with Nigeria. We would like to negotiate as many more arrangements as we can, but some countries simply disagree.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
11. What discussions he has had with representatives of the Serious Fraud Office on his proposed guidance in respect of the Bribery Act 2010.
The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)
The Serious Fraud Office has been fully involved in the preparation of the guidance under section 9 of the Act about commercial organisations preventing bribery, as indeed has the Crown Prosecution Service.
Mr Bailey
I thank the Secretary of State for his reply. He will be aware that the continued delay in the publication of the guidance is causing considerable confusion and concern within the business community. Can he give me assurances that the guidance will be consistent with that for other OECD countries and that it will be published and issued quickly?
Mr Clarke
I am as committed to the Act as anyone else. The UK should remain at the forefront of the fight against corruption and bribery internationally. The delay, as the hon. Gentleman calls it, has been the result of consultation to ensure that legitimate business is not faced with additional costs and burdens that are not necessary for the implementation of the Act. We will announce the results of our consultation and information on when we will implement the Act very shortly.
Robert Flello (Stoke-on-Trent South) (Lab)
The United States has expressed concern about guidance watering down the Bribery Act. The OECD is concerned that Britain will be weak on corruption. Business is rightly worried about London’s reputation, as shown by the letter from investment fund managers in today’s Financial Times. Even the Ministry of Justice must be concerned, as it still has on its website an announcement that my right hon. Friend the Member for Blackburn (Mr Straw) is the anti-corruption champion. With the head of the Serious Fraud Office warning about weak guidance, will the Secretary of State now wake up to the seriousness of the issue and, with the eyes of the world on him, draw up robust guidance that protects Britain’s reputation and British business?
Mr Clarke
I have been in touch with the United States Attorney-General and with Angel Gurría, the secretary-general of the OECD, and reassured them that Britain’s commitment to the anti-corruption drive internationally is not remotely in doubt. I am happy to join the right hon. Member for Blackburn (Mr Straw), as his successor as a champion against corruption. We are introducing the Act in a way that will enable us to modernise the law and catch corruption without putting burdens and costs on legitimate businesses, which are easily frightened by some sections of the compliance industry into believing that millions of pounds need to be spent on complying with it and that perfectly ordinary hospitality has to be banned. It has other fears that we hope to be able to dispel.
Mike Weatherley (Hove) (Con)
12. What progress he has made on reform of legislation on squatting.
The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)
The Government take this issue very seriously and are therefore exploring options for strengthening the existing legal framework and its enforcement. We hope to be in a position to announce our plans soon. In the meantime, we have published guidance for home owners about the steps they can take to regain possession of their properties.
Mike Weatherley
I thank the Minister for his reply. In my constituency of Hove and Portslade we are often plagued by serial squatters, who cost the city and taxpayers many tens of thousands of pounds. Will the Minister confirm that the proposals he is considering will be a sufficient deterrent to these well-organised squatters?
Karen Lumley (Redditch) (Con)
13. How many prisoners convicted of violent offences and released under the early release scheme between 2007 and 2010 have since been returned to prison.
The Minister for Policing and Criminal Justice (Nick Herbert)
Over 80,000 prisoners were released under the end of custody licence scheme. Over 16,000 of these were violent offenders, of whom 494 were recalled to custody during the ECL period. It is not possible to calculate how many were recalled or imprisoned for a new offence after the ECL period.
Karen Lumley
I thank the Minister for his answer. Will he inform me of his plans to avoid a repetition of the shambolic and incoherent justice policy that saw a mass early release of many prisoners, many of whom went on to commit new offences and were returned to jail?
Nick Herbert
I can reassure my hon. Friend that we will do everything possible to avoid a return to the scheme that was cynically stopped by the previous Government just before the last election, but not before they had released over 80,000 prisoners. There were 1,600 alleged offences committed by the prisoners who were released early, including six serious further offences and one murder. The Opposition should certainly not be lecturing us on that area.
Margot James (Stourbridge) (Con)
14. What steps he is taking to support drug rehabilitation in prisons.
The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)
We are working with the Department of Health to reshape drug treatment in prisons to sustain a better path to abstinence, not least by addressing a transition from prison to the community. Our proposals to improve the rehabilitation of drug-misusing offenders were published in the Green Paper, “Breaking the Cycle: effective punishment, rehabilitation and sentencing of offenders”, in December 2010, and they include piloting drug recovery wings, supporting the Department of Health in developing payment-by-results drug recovery pilots and reducing the availability of drugs in prison.
Margot James
I visited Winson Green prison last month and was shocked at the number of drug-addicted prisoners being prescribed methadone. In our system, almost 24,000 prisoners are now maintained on methadone. Does my hon. Friend agree that that undermines opportunities for effective drug rehabilitation in prison?
Mr Blunt
I share my hon. Friend’s concern about that issue. Methadone has been used increasingly to tackle heroin dependency, and the number of clinical interventions has gone from 21% in 2007-08 to 39% in 2009-10. Although we do not dispute that methadone has a role to play, we agree that drug treatment in prison ought to have a greater focus on recovery and should provide a clearer route to abstinence either in prison or when offenders return to community, and preferably on a pathway that includes both.
Kerry McCarthy (Bristol East) (Lab)
I very much welcome the announcement this week about funding for the national liaison and diversion service, which will try to divert people with mental health issues from the prison system. Does the Minister think that, in time, that model could be used to divert people with drug addiction from prison, too?
Mr Blunt
I am grateful to the hon. Lady for her endorsement of our policy on addressing mentally ill offenders and delivering on that very substantial element of the Bradley report. There will not be quite the same method of having a liaison diversion service at courts and in police custody suites, but we will be looking at the drug recovery pilots as the model for the future, with local assessment and referral centres that identify the appropriate place for people to get drug treatment in the community.
John Pugh (Southport) (LD)
16. If he will assess the extent of regional variation in the rate of custodial sentencing of offenders under the age of 17; and if he will make a statement.
The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)
There is regional variation in the proportion of 10 to 17-year-olds who receive a custodial sentence of between 4% and 8% of those sentenced. There are national guidelines to promote consistency in sentencing, but levels will vary for reasons such as offence seriousness, local practices and criminal justice agency relationships.
Mr Blunt
What we want to do is to begin to transfer responsibility to local authority areas, so that they begin to appreciate the cost of custody. At the moment, youth custody is extremely expensive, but it comes as a free good to local authorities. We want to incentivise them to deliver earlier intervention to divert people away from custody and, indeed, from youth crime in the first place.
Mark Lancaster (Milton Keynes North) (Con)
17. How many prisoners serving indeterminate sentences of imprisonment for public protection have been released to date.
The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)
As at 17 November 2010, 187 prisoners had been released into the community from indeterminate sentences of imprisonment for public protection or detention for public protection, including offenders who have subsequently been recalled to custody.
Mark Lancaster
I am grateful for the answer, but it highlights the logjam that IPP prisoners are causing in our prison system, so how does the Minister intend to address that problem?
Mr Blunt
When those sentences were introduced in the Criminal Justice Act 2003 and implemented in 2005, the then Government estimated that there would be 900 such prisoners; there are now more than 6,000, and more than 3,000 of them are beyond tariff. [Interruption.] I can understand why the shadow Justice Secretary is ashamed of the record in that area. That is why there has been an increase in the size of the Parole Board; and that is why we are consulting on proposals to raise the tariff to a 10-year determinate sentence before an IPP can be enforced, and to examine the Parole Board test. Those are the proposals in the Green Paper on which we are consulting.
Mark Menzies (Fylde) (Con)
18. How much was paid to convicted criminals by the Criminal Injuries Compensation Authority in (a) 2008-09 and (b) 2009-10.
The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)
The Criminal Injuries Compensation Authority paid £6.9 million in 2008-09 and £12 million in 2009-10 to people with unspent convictions. These figures reflect only cases where the CICA reduced the award due to unspent convictions, which the current compensation scheme says it must do. However, there are still cases being considered under previous schemes that did not make such reductions compulsory, so the real figures are likely to be higher.
Mark Menzies
Does the Minister agree that it is slightly perverse and repugnant to be paying out compensation to criminals who have often caused severe injury and offence to their victims?
Anna Soubry (Broxtowe) (Con)
19. What progress has been made on proposed changes to the payment of fees to criminal law barristers through the Legal Services Commission.
The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)
The processing, validation and payment of claims under the advocates graduated fees scheme is being transferred from Her Majesty’s Courts Service to the Legal Services Commission. The transfer is taking place on a phased basis between 7 February and 18 April of this year.
Anna Soubry
I know that it is not proper to talk about lawyers and fees in the same sentence, but this is an overly bureaucratic system that does not pay out, as may be familiar to many Members of this House. There are criminal barristers who have not received fees for many, many months after they have completed their work. Does the Minister agree that that is plain unfair?
Mr Djanogly
If my hon. Friend would like to contact me with specifics, I would happily take them up. However, the responsibility for processing claims began to be passed to the LSC only on 7 February, so delays of six months are impossible. Properly completed claims are currently being processed within two weeks.
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)
In recent years, the threat of costly libel actions has begun to stifle scientific and academic debate and impede investigative journalism. I have therefore published proposals for long-overdue reform of our defamation laws. The draft Defamation Bill will fulfil the coalition’s commitment to protect free speech and restore important civil liberties after a decade of neglect under the last Government. It will mean that anyone who makes a statement of fact or expresses an honest opinion can do so with confidence, but it will also restore a sense of proportion to the law, ensuring that people can defend themselves against untrue allegations and that a fair balance is struck between freedom of expression and the protection of reputation. I welcome hon. Members’ views on the draft Bill and on the wider issues raised in the consultation.
Mrs Hodgson
Yesterday in the other place, Members voted through an amendment to the Public Bodies Bill to remove the Youth Justice Board from the list of organisations to be scrapped. Will the Secretary of State confirm that he will accept that defeat? Will he also confirm that he endorses the excellent work of the Youth Justice Board and will no longer seek to abolish it?
Mr Clarke
Another place is taking a very long time to discuss this, quango by quango, and it is rescuing several of these bodies. There is an enthusiasm for outside public bodies in the upper House that I am not sure is totally shared here. We will of course carefully reflect on the debate and vote in another place on the future of the Youth Justice Board. Since it was created—it did a very good job at first—time has moved on; peers kept referring to circumstances that they remember before it was created. We now have youth offender teams who do not need the level of supervision that they are getting from the Youth Justice Board. However, I will see whether any of my former friends and colleagues, and current hon. and noble Members of the upper House, have persuaded me to reconsider the policy.
Mike Freer (Finchley and Golders Green) (Con)
T3. The Minister may be aware that the Gaddafi house is a high-profile squatting incident in my constituency. Just this week, we have had two further squats. Will he meet me and my hon. Friends the Members for Hove (Mike Weatherley) and for Bury North (Mr Nuttall) to discuss this pressing issue?
The Parliamentary Under-Secretary of State for Justice (Mr Crispin Blunt)
I will be happy to meet my hon. Friend to discuss squatting. I would hate to think that anyone would use the example of the Gaddafi house as any excuse for this pernicious offence.
Sadiq Khan (Tooting) (Lab)
The Justice Secretary is not afraid to speak his mind, and he has many fans on the Labour Benches as a result. Does he agree that there has been a great deal of confusion on the Government’s policy on the Human Rights Act 1998 and the Bill of Rights? Can he explain in plain, simple English whether his Government are in favour of abolishing, or in favour of keeping, the Human Rights Act, which brought into domestic law the European convention on human rights?
Mr Clarke
I would welcome vigorous attacks from the Opposition on any of my policies. The lack of such attacks might undermine my credibility with certain sections of the House and the outside world.
We have carried out the coalition commitment to set up a commission to investigate the case for a British Bill of Rights. Of course the Government accept the commitments and obligations under the European convention on human rights. The commission will look at the whole range of issues in this subject. Personally, I would like the debate to concentrate on what is more immediately attainable, which is sensible reform of the Court in Strasbourg. That is much overdue. I think that we could command a wide range of support from other member states of the Council of Europe on such reform. Perhaps we might decide on subsidiarity, and on the role of the Court vis-à-vis the Parliaments and courts of member states.
Stuart Andrew (Pudsey) (Con)
T4. Will my hon. Friend inform me of whether the principles of joint enterprise will remain after the sentencing review, as they were instrumental in bringing successful prosecutions against a number of people who were involved in the murder of the son of a constituent of mine?
Mr Blunt
My hon. Friend will be pleased to know that there are no plans to consider the joint enterprise principles in the sentencing review. The existing law ensures that if a person commits an offence as part of an agreed plan or joint enterprise, all parties to the enterprise may be guilty of the planned offence. That factor indicates higher culpability and justifies a tougher sentence than would otherwise be imposed.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
T2. In an earlier answer, the Minister acknowledged the role played by offender learning services in prisons in preventing reoffending. Given that about 60% of young offenders have communication difficulties so severe that they cannot benefit from such services, will he give an assurance that he will talk to the Royal College of Speech and Language Therapists to ensure that the service is in no way damaged as a result of public spending cuts?
Mr Blunt
I think that the hon. Gentleman might be confusing what happens in the adult estate and in the youth estate. However, his substantive point stands and I accept it. I am happy to talk to the Royal College, because I accept that communication is an extremely important tool in addressing offending behaviour. In many cases, a lack of communication skills leads to offending in the first place and, if it is not addressed, leads to reoffending.
Jeremy Lefroy (Stafford) (Con)
T5. When I was a member of the independent monitoring board of a young offenders institution, I was often concerned about the underuse of the sports facilities on site. The reason that was sometimes given was that there were stringent rules on who could supervise them. Will the Minister consider those restrictions so that there is more sport and less television watching?
Jim Shannon (Strangford) (DUP)
Earlier, the Under-Secretary of State for Justice, the hon. Member for Reigate (Mr Blunt) referred to the Government’s policy on drug rehabilitation. Like many Members, I am concerned about the availability of drugs in prisons. What new steps will the Secretary of State take to ensure that drugs are not available, and that the road that starts people on drugs is curtailed?
Mr Clarke
I share the hon. Gentleman’s concern entirely. There are people who enter prison drug free and leave with a drug problem. Drugs are more expensive in prison, but sometimes they are more widely available than in the outside world. We are therefore taking steps urgently to introduce the first drug-free wings. Alongside our rehabilitation programmes, we hope to get people off drugs and thereby perhaps get them away from crime, rather than introducing people to drugs when they go to prison.
Karen Lumley (Redditch) (Con)
T8. Given the great work that West Mercia probation trust does in Redditch with the payback scheme, which I know the Minister has also visited, will he reconsider the new form of payback contracts, which cover large parts of the country but not necessarily our local communities?
Mr Blunt
Although I have seen that good work and applaud it, I will have to disappoint my hon. Friend. There is no prospect of our revisiting the contract arrangements that have been briefed out and presented to probation trusts and the private sector. That competition will progress.
Mr David Crausby (Bolton North East) (Lab)
T7. How will the Secretary of State ensure that the tightening-up of no win, no fee arrangements will deliver lower insurance premiums, not higher insurance company profits?
Mr James Clappison (Hertsmere) (Con)
Given the misery that is caused by the drug trade, does my right hon. and learned Friend agree that all those who choose to play a part in drug distribution networks should face a custodial sentence, not least because those who play even what is termed a subordinate role are often indispensible to the making of large profits by drug barons higher up the chain?
Mr Clarke
I agree with my hon. Friend that any connection with the drugs trade should be dealt with by the courts with considerable severity. I invite him to have a look at the Sentencing Council guidelines put out today, which I think he will find are more balanced than some of the reports have suggested. They will actually increase the sentence for the more serious dealers and retain the right to imprison anybody involved.
Some of the comments that have been made have arisen because sometimes very low-level runners, often women, who are themselves drug abusers, are used as carriers by serious drug dealers. The judges and the Sentencing Council have addressed that point. They are consulting and we will consider our reaction, but the guidelines are produced by an independent body, and underlying them continues to be the principle of dealing severely with those responsible for the trade in illicit drugs, about which my hon. Friend and I agree.
Mr Speaker
In addition to the pleasure of hearing the Secretary of State’s voice, it would be a joy to have the pleasure of seeing his face as well.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
Will the Secretary of State explain to the House why the Government have yet to put into practice the provisions of the Crime and Security Act 2010, leaving victims of overseas terrorism such as Will Pike without the compensation that they expected to receive?
Miss Anne McIntosh (Thirsk and Malton) (Con)
If it is the case that squatting has been made illegal in Scotland, will the Justice team look favourably on the Scottish proposals and make it illegal in this country as well?
Mr David Hanson (Delyn) (Lab)
The Minister for Policing and Criminal Justice mentioned the repatriation of Nigerian prisoners and the contract that is being signed. Will he tell the House, following three years of discussion by the previous Government, how many prisoners from Nigeria have been repatriated this year and how many more he expects to repatriate next year?
The Minister for Policing and Criminal Justice (Nick Herbert)
The Nigerian Government and Parliament have to agree to it, as the right hon. Gentleman knows, and we are awaiting that.
Richard Drax (South Dorset) (Con)
Morale among the prison officers in the two prisons in South Dorset is at an all-time low. Will the Minister reassure me that their rights will be upheld as well as the prisoners’ rights?
Valerie Vaz (Walsall South) (Lab)
The Forensic Science Service provides impartial evidence to the courts. What discussions has the Secretary of State had with it to secure its future and ensure that its primary duty remains to the court, not to shareholders?
Nick Herbert
As the hon. Lady will know, there have been considerable difficulties in relation to the Forensic Science Service, and we have been in extensive discussions with it about how we can ensure the future provision of forensic services.
Mr Peter Bone (Wellingborough) (Con)
The Prison Minister is being very quick in his answers. Could he be very quick in answer to this question? Will he confirm that Wellingborough prison is not to close?
Mr Blunt
There is a continual review of the whole prison estate to address precisely the issues that the shadow Secretary of State mentioned. It would therefore be wrong to confirm that about any prison in the system, because there is a process of review to ensure that we have sufficient prison places to jail those sent to us by the courts for the term of their sentence. The last Administration did not achieve that.
Heidi Alexander (Lewisham East) (Lab)
The Government are proposing to remove legal aid for all asylum support law cases, while retaining it for other asylum matters. Why is the Minister drawing that distinction, when the vulnerabilities involved are surely the same?
The Parliamentary Under-Secretary of State for Justice (Mr Jonathan Djanogly)
The fundamental principle that we are following is that when security or liberty is at risk, legal aid should be provided. That is why we propose to maintain legal aid for asylum cases, but not for asylum support.
Paul Maynard (Blackpool North and Cleveleys) (Con)
A report last year from the Prison Reform Trust found that children with developmental disorders were being processed through the criminal justice system without their having much understanding of what was happening to them. As a consequence, they were more likely to have a custodial sentence imposed upon them than those who were more articulate and more able to defend themselves. Does the Secretary of State believe that that situation exists, and if so, how does he propose to remedy it?
Mr Clarke
I certainly agree that that is a very serious problem, and we intend to address it. I had a meeting yesterday evening with the Prison Reform Trust, the Women’s Institute and my right hon. Friend the Health Secretary. Our two Departments, together with the Courts Service, the police and the Crown Prosecution Service, hope to set up diversion route services for those who in fact require treatment for mental illness. Often, those people should be diverted out of the prison system and the criminal justice system altogether, both for their good and the good of society.
Prison is often not a suitable place in which to treat mental illness. I am told that no fewer than 3,000 prisoners appear to be in prison largely because that is the most convenient place to hold them while attempts are made to get them care and treatment for their condition.
Stephen Pound (Ealing North) (Lab)
When the hon. Member for Aldershot (Mr Howarth) and I were in Dartmoor prison together, we noticed that the second most popular prisoner workshop produced excellent plaster garden gnomes. In view of the great and burgeoning success of the film “Gnomeo and Juliet”, will the Minister have a word with the governor of Dartmoor to see what advantage can be taken of that serendipitous circumstance?
Mr Blunt
I am delighted to answer that question and to refer to my niece’s part in “Gnomeo and Juliet”. I was in Dartmoor last week. I did not see the garden gnome factory, but I did see the some of the gardens, which make up for an otherwise bleak place. Prison industries are a very important part of the future development of our prisons strategy to ensure that, in future, prisoners have wider employment and work than they have now.
Bob Blackman (Harrow East) (Con)
The Government have decided to close a number of magistrates courts in this country, as a result of which, many valiant volunteer magistrates will travel far longer distances and incur additional costs. What action will my hon. Friend take to ensure that people are properly compensated for their time and travel costs?
Mr Djanogly
Our proposals will adequately compensate magistrates by aligning magistrates’ subsistence and travelling allowances with those of the salaried judiciary and, indeed, Members of Parliament. The proposed travel allowances will align with rates commonly used across voluntary, private and public sectors. It is estimated that these changes will save Her Majesty’s Courts and Tribunals Service £3.2 million a year.
Reforming Civil Justice
(13 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)
With permission, Mr Speaker, I wish to make a statement. I have today laid before Parliament two documents—the Government’s response to our recent consultation on Lord Justice Jackson’s recommendations for reforming no win, no fee arrangements, and a fresh consultation document on proposals further to overhaul the civil justice system. Copies of both documents will be available in the Vote Office and on the Ministry of Justice website. I hope to bring forward legislation on the Jackson reforms as soon as parliamentary time allows.
To many people in this country, the prospect of legal action is an expensive, daunting nightmare. One of the worst features of our compensation culture is that our justice system has increasingly become closed to vast rafts of the ordinary public by legal costs out of all proportion to the dispute or the claim. The proposals that I am announcing today will, I hope, begin to restore proportion and confidence in our system of justice, for both claimants and defendants.
First, following careful consideration of the consultation responses, I have decided to reform no win, no fee arrangements to stop the perverse situation in which fear of excess costs sometimes forces defendants to settle, even when they know they are in the right.
I can therefore announce that the Government will seek legislation to return the no win, no fee system to the first principles on which it was set up. We plan to end the recoverability of success fees and insurance premiums that drive legal costs; to award claimants a 10% uplift in general damages where they have suffered loss; and to ensure that they take an interest in controlling the bills being run up on their behalf by expecting them to pay their own lawyers’ success fee. We will also bring forward our plans to encourage parties to make and accept reasonable offers, to protect the majority of personal injury claimants from paying a winning defendant’s costs, and to allow claimants to recover the cost of expert reports in clinical negligence cases.
I am also publishing a consultation paper that I believe paves the way for the more efficient and effective delivery of civil justice after 15 years of stagnation. The current system is slow, stressful and expensive, and change is long overdue. My aim is to help people to avoid court wherever possible, while reducing costs where that is unavoidable. We are proposing that small-value cases should automatically be referred to mediation so that many people are able to avoid the experience of court entirely; and that the maximum value for small claims be raised from £5,000 to £15,000 to enable more cases to be heard through the simple small claims process rather than a more costly, complicated trial.
We are also proposing: to increase the value below which claims cannot be brought in the High Court to £100,000 so that the county court jurisdiction is extended and the High Court is reserved for only genuinely complex or high-value cases; new measures that will improve the ability of courts to tackle those who evade payment of their debts even though they have the means to do so, while ensuring that those who cannot pay continue to be protected, for example by setting a minimum level of consumer debt at which property could be put at risk for non-payment; and the extension of a successful online system to cut waiting times and legal expenses in personal injury cases, as recommended by my noble Friend Lord Young of Graffham.
We have a duty to deliver a civil justice system that is more equitable, accessible and just. Resorting to the law need not be the long, drawn-out and expensive nightmare that so many people experience today, but could become a sensible and affordable way of resolving disputes in a proportionate manner. I believe these reforms, on which we are now consulting, will help to restore those fundamental values of proportion and fairness in our civil justice system, and I commend this statement to the House.
Sadiq Khan (Tooting) (Lab)
I thank the Secretary of State for his usual courtesies and advance sight of his statement, which, on face value, is difficult to disagree with. We accept that the issue of costs in civil proceedings is worth investigating, and did so in government. I note that my right hon. Friend the Member for Blackburn (Mr Straw) is in his place. Those suffering injury through the negligence of public and private bodies who cannot afford to fund actions privately must have recourse to the civil justice system. There is a fear, however, that these plans go so far in trying to keep down costs that some claimants with meritorious cases will find it difficult, if not impossible, to find a lawyer to take on their case.
I am afraid that the devil will be in the detail of today’s announcement. I have a number of questions for the Justice Secretary that I hope will tease out some of the detail. He referred to the Lord Justice Jackson report to justify his announcement. However, has he taken into account Lord Justice Jackson’s view that his proposals are a package and should not be subject to cherry-picking, and will he take into account Lord Justice Jackson’s desire to retain civil legal aid for criminal negligence and housing cases currently under threat from the Government?
The Justice Secretary proposes that claimants’ solicitors will be able to recover up to 25% of their costs from the damages that a claimant recovers. He will be aware that the increase in compensation from defendants to claimants will be only 10%, not 25%, and will apply only to general damages, not to total damages. Why should someone who has suffered the trauma of an injury at work be told that the money they have justly received as compensation will go to their lawyer?
Has the Justice Secretary had a chance to assess the road traffic accident portal scheme, which was introduced by the last Government to reduce costs? The scheme uses fixed fees and efficient processing to limit costs, and came into force in March last year. Does he accept that it has reduced costs by half in 75% of personal injury cases? Does he agree that expanding the scheme to personal injury claims would save costs?
The Government have said that one aim of the reform is to reduce the costs that defendants have to pay. Many defendants are insurance companies. In light of that, can the Justice Secretary say what reductions he expects in insurance premiums? Can he confirm whether an impact assessment has been conducted on how the changes affect access to justice, cost to defendants and reductions to insurance premiums? Is he concerned that, although there will be limitations on a claimant’s ability to bring a case and the costs incurred by their solicitors, there will be no such controls on a defendant in defending a case, raising concerns about the inequality between the two sides?
Finally, a fundamental principle of our justice system is proper access to justice. I agree with the previous Government, who agreed with senior judges such as the Lord Chief Justice, Lord Judge, as well as Lord Justice Jackson and others, that the costs of civil litigation were sometimes excessive. We would all like the costs of litigation to be reduced and alternatives to it found wherever possible, but the effect of the proposals could be to restrict access to justice, particularly for those who do not have their own means of funding. It will be on this key issue that we will hold the Government’s actions to account.
Mr Clarke
I welcome the right hon. Gentleman’s agreement with me on the importance of tackling cost. He has focused principally on the conclusions that I have announced today of the Government’s consideration of the consultation on Rupert Jackson’s proposals, which I accept were initiated by my predecessor, the right hon. Member for Blackburn (Mr Straw), under the previous Government. We are trying to get the cost of litigation down.
The right hon. Gentleman talks about access to claims. We are going back to no win, no fee arrangements of the kind that existed when they were first set up by my noble Friend Lord Mackay in the mid-1990s. It was the changes made at the turn of the century that led to the cost escalating to such an extraordinary extent. Among other things, in many cases the legal fees paid by a losing defendant now far exceed the damages paid to the claimant. Indeed, it can be an extremely profitable area of practice if people have some successes. We will keep no win, no fee on the basis of the kind of arrangements we used to have—the kind that are familiar in most jurisdictions. The arrangements that we are proposing to sweep away are unparalleled in any other country and are making litigation too expensive for those faced with it.
The right hon. Gentleman then asked about the cost that can be borne by the plaintiff out of his damages. As he quite rightly said, the 10% enhancement to the level of damages that can be awarded is designed to help plaintiffs and claimants, but it will be confined to general damages, otherwise the figure could be astronomical in some cases. However, the costs that can be recovered—the success fee or bonus paid to a solicitor who has won a case—will be limited to 25%, so they will be kept in proportion.
The right hon. Gentleman mentioned the road traffic accident portal scheme, which has certainly speeded up and helped many personal injury cases. We are indeed proposing to extend the scheme to other personal injury cases, as he suggested.
The right hon. Gentleman asked me what would happen to insurance premiums. The answer, of course, is in the hands of the insurance industry and the competitive market in which it works. We all think, “Oh well, it doesn’t matter: it’s only the insurance company that is paying colossal legal fees”—on top of damages—“in no win, no fee cases,” but that could be one explanation for why car insurance costs have leapt to such an extraordinary extent in this country. I hope to see insurance premiums come down.
Impact assessments were produced at an earlier stage, after Sir Rupert had received wide representations from all sides. We have taken quite a long time getting to this point, and we are pretty clear on what the impact will be. On balance, I think it will be highly desirable. [Interruption.] I cannot read my notes on the last question that the right hon. Gentleman asked.
Sadiq Khan
It was about cherry-picking, and clinical negligence and housing cases.
Mr Clarke
Yes, the right hon. Gentleman raised an important point about clinical negligence cases, which can be very expensive to start. We are therefore making an exception in regard to the non-recoverability of insurance premiums. We will allow the recoverability of such premiums when they are used to cover the cost of expert evidence in clinical negligence cases. We are, however, working with the NHS Litigation Authority with a view to getting the NHS and other defendants to co-operate with claimants to produce joint medical reports. That should narrow the dispute and cut the costs for all parties, making justice more easily attained.
Mr Speaker
Order. I emphasised yesterday and I repeat today that, in accordance with long-established convention, Members who came into the Chamber after the Secretary of State started his statement should not expect to be called.
Sir Alan Beith (Berwick-upon-Tweed) (LD)
Given the Lord Chancellor’s characteristic willingness to take what in “Yes, Minister” would have been called “courageous decisions” about success fees, insurance fees, after-the-event insurance and the scope of the small claims courts, will he tell us what he thinks about referral fees and claims farming, which are probably major contributors to the compensation and litigation culture?
Mr Clarke
The Legal Services Board is looking into that whole area. My right hon. Friend Lord Young of Graffham has referred to this as well, and it is an important area that we should look at. We are all in favour of no win, no fee; it has been introduced and no one is ever going to get rid of it, but a rather extraordinary form of practice has now developed at the margins. Claims advisers advertise for people who have had an accident to bring a claim; we see their advertisements on the backs of buses. They pay people to give them their claim if it looks good, and they then sell the claim to a solicitor. Solicitors may then trade the claims between themselves, before bringing a no win, no fee action. If they are successful, they get very high costs and a kind of bonus, called a success fee, on top. That is what makes these actions so expensive. I understand why, in response to consultation, some people defended that system vigorously, but I believe that the whole thing needs examining from beginning to end. As Sir Rupert Jackson’s report made clear, this explains why the whole process has become so frighteningly expensive for so many litigants.
Mr Jack Straw (Blackburn) (Lab)
May I add to the broad welcome from my Front Bench for the decisions that the Secretary of State has announced today? I also add my thanks, as I am sure he does, for the extraordinary work of Sir Rupert Jackson, which underpins them. I should like to pick up on the point raised by the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith). Is the Secretary of State aware that, in my constituency and in many others across the north-west, car insurance premiums for decent, honest drivers with impeccable records have rocketed, despite the fact that the number of accidents and thefts from vehicles has gone down? That is because of the work of those parasitic claims management companies and because the insurance companies, who are complaining about the costs, are themselves guilty of selling on personal data, including the facts relating to a claim, to those companies, often without the agreement of the insured person. Does the Secretary of State agree that we need to close down those claims companies altogether? They are parasites milking the system. I apologise for coming late to this decision; I should have taken it when I was in his seat. Does he also agree that we should use data protection legislation to ban insurance companies from selling on personal data?
Mr Clarke
When I took over the right hon. Gentleman’s desk and chair about 11 months ago, one of the first things I picked up was the Jackson report, which he had commissioned. As he says, it was on his desk, but he had not had time to implement it. I was immediately attracted by its approach to cutting costs, so I am glad that he and I continue to agree on that. I am astonished to hear his description of insurance companies selling claims, although I have come across it. They do not all do it, but this just adds gloss to the strange way in which this has all developed. I am also struck by the huge cost of these practices for institutions such as the national health service, which, in a bad year, can spend about £400 million—little short of half a billion—on legal fees. In many areas of practice, the legal fees are the biggest bill for the defendant. They often exceed the amount of compensation paid to the claimant. The right hon. Gentleman was obviously anxious to reform the system, and I am anxious to do so as well. I am glad to have taken up the baton.
Mr John Whittingdale (Maldon) (Con)
Is my right hon. and learned Friend aware that the Culture, Media and Sport Select Committee received considerable evidence that the massive increase in the cost of libel actions that can result from the use of conditional fee arrangements is having a seriously chilling effect on investigative journalism? Does he accept that the measures he has announced this afternoon are in some ways even more important for sustaining investigative journalism and scientific debate than the measures contained in his draft Defamation Bill?
Mr Clarke
I think that is right. This will have a big impact on defamation cases where people threaten the publisher of something they do not like with enormous costs if they want to defend the action. This is having, to use the jargon phrase, “a chilling effect” not only on scientific and academic work, but on proper investigative journalism. When we put the draft Defamation Bill together with what we are proposing to do in the light of Rupert Jackson’s proposals, the way in which we are setting up no win, no fee generally and the announcements I have made about the jurisdiction of the courts, I think we will make a significant impact on lowering the costs of all this litigation to the advantage of plaintiffs who have a legitimate grievance and of defendants. We are going to stop the whole thing being a high roller’s gamble, which is what it is at the moment, as to whether the other side dare face the risks of the huge costs being piled up the moment a claim is brought.
Tony Lloyd (Manchester Central) (Lab)
Whilst welcoming anything that will reduce the unnecessary costs to lawyers and others, will the Justice Secretary give a reasonable guarantee to constituents like my own, who are generally among the poorest people in Britain, that they will still be able to find legal assistance? The obvious problem with the 25% rule is that it might drive people below the threshold at which lawyers would be prepared to take the cases on. Will anything in the proposals deter people from obtaining proper expert evidence when that is necessary for them to fight their claim?
Mr Clarke
I think that people will think twice, as it were. At the moment, they are lured into making a claim by an advertisement on the back of a bus or in some local office. There are many people with perfectly legitimate personal injuries claims and the method I would wish them to pursue is to go to a solicitor who will consider the reasonable prospects of success and take it on on a no win, no fee basis—on the sort of terms that were always envisaged when we introduced the system into this country in the 1990s. People will have to think more carefully; there will be fewer purely speculative actions; and there will be fewer actions brought in the hope that the size of the legal costs is so great that the other side might be bullied into making an offer of settlement, regardless of their chance of success. I hope, however, that legitimate claims will prosper under a no win, no fee system, which is much closer to the lower-cost systems that other jurisdictions operate.
Mr Tobias Ellwood (Bournemouth East) (Con)
Thanks to the blame culture that developed under the last Government, one school in my constituency deemed it necessary to concrete over a very shallow paddling pool, in case a child had an accident and the school were sued. Another school considered cutting down all its trees in case children were to fall out of them, injuring themselves so that the school might be sued. I hope today’s statement will be the start of a fresh approach to this compensation culture.
Mr Clarke
I feel strongly, as does my hon. Friend, that we have an unacceptable compensation culture in this country. Like him, I notice it in my daily life. I think that doctors, teachers, policemen and most professional people are constantly concerned about the possible risk of litigation when they do perfectly ordinary things in the course of their daily lives. I dare say that the kind of submissions coming to Ministers are, in comparison with when I first received them, now so full of concerns about judicial review, the Human Rights Act and other legal constraints on what can be done that we are getting further and further away from common sense whereby people can exercise their judgment and, of course, be accountable to the law when they are at risk of breaking it—but only when they are at risk of breaking sensible law and might face litigation at reasonable cost.
Keith Vaz (Leicester East) (Lab)
I think that what the Lord Chancellor has said today has cross-party support. May I take him back to his comments about mediation? Is he suggesting that there should be mandatory mediation for very small claims? If he is, we have a problem with the number of qualified mediators. Will he look at this issue because it is all very well referring these cases, but we need the mediators to be able to deal with them?
Mr Clarke
We will make mediation an automatic part of the process if the result of the consultation supports such a move. Of course there will be cases that mediation will not resolve, and in those cases people will undoubtedly have the right to go to court. In the small claims courts we are already seeing a rapid extension of very successful mediation, often by means of telephone conference, which is resolving the smaller disputes.
As for the county court, following our extension of its jurisdiction, we will expect people to go along and be introduced to the prospect of mediation. We are consulting on the kind of people who will be required to conduct mediation sensibly, because, as the right hon. Gentleman says, a certain amount of skill and experience will be required for the process to produce the right results.
Tom Brake (Carshalton and Wallington) (LD)
Has the Secretary of State had time to consider the possible implications for the overall number of county courts of the proposal to rationalise the county court by, for instance, allowing back-office functions to be combined?
Mr Clarke
We have just completed a consultation on our estate, and we have announced the closure of a number of courts. We aim to reduce back-office costs and the unnecessary expense that flows from different jurisdictions. Obviously we keep the proper usage of our estate under continuous review, but I do not expect the proposal to have any significant effect on the future of the courts that survived the consultation that we carried out a few months ago.
Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)
I accept the need for rationalisation of the jurisdictions of the county courts and High Courts. I also accept that, ultimately, mediation will be a good thing. However, evidence from the Access To Justice Action Group provides numerous instances in which poor people will be excluded altogether following the change in the no win, no fee arrangements, and I am desperately worried about that. The evidence contains no special pleading. It is excellent evidence, and I ask the Ministry to re-examine it in due course. If something is not done, this will prove to be a benefit match for the insurance companies only.
Mr Clarke
We considered very carefully the large number of responses to the consultation document, many of which opposed changes based on Sir Rupert’s proposals. Most of them came from plaintiff solicitors, but I do not dismiss them on that ground, because I share with those solicitors an interest in proper access to justice. We considered whether modified no win, no fee arrangements could be justified in that context.
There are two questions to be asked: have we affected people’s access to justice, and have we affected the profitability of practices that engage in no win, no fee with a reasonable level of success? Most of the responses that we received dealt with much more complicated questions, but I believe that we have retained proper access to justice while lowering the costs—and therefore, unfortunately in some cases, the profit margins—to more reasonable levels.
Tony Baldry (Banbury) (Con)
Some of us spend a large part of our professional lives trying to persuade litigants to accept reasonable offers. It is often difficult to explain to them what is a realistic quantum of damages in personal injury cases. Surely, with all the technology of the 21st century, it must be possible to devise a public website that could be updated with whatever decisions the Court of Appeal, the Supreme Court, the High Court and other courts have made in personal injury cases. That would provide a much more accessible and transparent explanation of the quantum in such cases at any given time, enabling litigants to assess the probability of a successful claim and the level of damages that they were likely to receive.
Mr Clarke
If my hon. Friend looks at our proposals, he will see that we intend to provide greater incentives for the settlement of cases. We also intend to impose cost penalties—beyond those that already exist—on those who either refuse good offers or do not meet the reasonable first demands of their opponents, but settlement is always preferable when it is possible.
I think I shall have to discuss with the judiciary the question of whether wider circulation could be given to recent awards of damages. However, I agree that in this day and age it ought to be possible to move on a little from the old days when gossip among members of the Bar about what they considered to be the current tariff for a particular injury was the best way of spreading knowledge about the direction in which the figures were moving. I will discuss my hon. Friend’s proposal with the Lord Chief Justice and others.
Geraint Davies (Swansea West) (Lab/Co-op)
The Secretary of State will know the situation facing families with household savings of less than £15,000, and that families with savings of over £16,000 are ineligible for benefits. Does he not think that raising the bar for access to justice through the small courts from £5,000 to £15,000 may be seen as rough justice for the many poorer families who might want a proper hearing for their case? It will have a massive impact on their household budget, and a much greater one than a larger amount for a richer family.
Mr Clarke
This has sometimes been looked at, hence it has been possible to raise these levels by quite large amounts as they have not kept in line with inflation for the last 15 years. What we are doing in respect of the small claims courts should be of assistance to people of low means, because the small claims courts have been quite successful as a reasonably informal, very low-cost way of resolving simple disputes or collecting straightforward debts which people cannot recover from those who owe them. It is right to extend that jurisdiction so that people are not faced with the daunting prospect of appearing before a judge in a formal court setting, and possibly having a lawyer on the other side and so forth, which comes at the next stage up, at county court.
Jake Berry (Rossendale and Darwen) (Con)
On the small claims courts, it is interesting that we are increasing the limit from £5,000 to £15,000. Will personal injury cases now be included, and will the recovery of legal fees be precluded in all cases up to £15,000?
Mr Clarke
We are only consulting, so we are open to arguments about whether or not £15,000 is the right figure; we might put it up further, or we might be persuaded to take it down. I personally think that extending the small claims court jurisdiction is a very desirable thing to do, but it will not be extended to personal injury cases, because the small claims court is intended for quick and easy disposal of fairly straightforward cases. Too many personal injury cases would clog up the system which is meant to be quick and relatively informal and for straightforward disputes.
Dr William McCrea (South Antrim) (DUP)
Can the Justice Secretary assure the House that all the proposed changes will safeguard the innocent, protect the vulnerable and ensure that access to justice remains the cornerstone of our society?
Mr Clarke
Well, I hope I can answer yes to all those questions. We are talking about civil jurisdiction here; there is no criminal jurisdiction. I think civil justice should be quick, efficient and accessible to most members of society. As the hon. Gentleman will know, most ordinary people regard any question of being muddled up with litigation, or having to go to court, with mortal dread. Middle England—or middle Ireland—feels itself completely excluded from a civil justice system that exists for the very poor, the very rich or the big corporations. We are, I hope, moving in the direction of enabling the ordinary citizen to make some use of the civil justice system again, and without quite as much fear as most people have of it at the moment.
Mr Robert Buckland (South Swindon) (Con)
Although I think there will be a general welcome for the 10% uplift in general damages, which should help to cover the payment out of success fees by claimants, does my right hon. and learned Friend agree that in a small number of cases where special damages form the lion’s share of an award, there is still a live issue as to the potential erosion of the value of the damages awarded by the payment out of success fees to lawyers?
Mr Clarke
The cap of the success fee—which is a kind of bonus to a winning lawyer who has taken a no win, no fee case—will not be applied to special damages. As my hon. Friend rightly says, special damages can be enormous, such as in cases where the plaintiff has been disabled for life, and if the so-called success fee—the bonus—is taken as a percentage of that, it could be colossal, even though the size of the award might not reflect the complexity and difficulty of the case, but just the fact that the plaintiff was very severely injured. We are increasing damages by 10% of general damages, and we are capping the success fee that the plaintiff will have to meet at 25% of the general damages. Special damages will not be affected.
Rehman Chishti (Gillingham and Rainham) (Con)
Can the Secretary of State confirm that the online road traffic accident scheme will be expanded to cover employers’ liability, public liability and personal injury claims up to the value of £50,000?
Andrew Bingham (High Peak) (Con)
The tentacles of the compensation culture have wrapped themselves around British life for far too long, and I congratulate the Secretary of State on his proposals. Local authorities and public bodies face paying out more and more, so does he see his proposals as the first step towards a semblance of normality in this area?
Mr Clarke
I hope so. Let me make it clear that I am in favour of people who have suffered injury because of the fault or negligence of somebody else receiving proper compensation. In all those cases, people should have access to the courts and the right to have their case argued in the normal way, but what has happened is that this has become a widely publicised, rather commercial activity, which is having a considerable effect on the way in which many people lead their ordinary day-to-day lives. Let us go back to a sensible system of civil justice which does proper justice to both the claimants and the defendants, and get away from this rather extraordinary way we live at the moment, whereby huge sums can be made, mainly in legal costs rather than in damages, by bringing speculative claims against defendants who cannot afford to defend them.
Stephen Phillips (Sleaford and North Hykeham) (Con)
As those of us still practising can tell my right hon. and learned Friend, the costs associated with civil litigation are of just as much concern in higher value claims as they are in lower value claims, particularly to British businesses which need their rights adjudicated upon. In many jurisdictions, including some in the United States, mediation is compulsory in all civil cases. Will he consider ensuring that that is the position in England and Wales as well?
Mr Clarke
I will certainly consider that, and I am interested to hear about my hon. and learned Friend’s knowledge of the American experience. We are certainly seeking to extend mediation considerably, and we are consulting to see how far we can go in getting people to contemplate mediation before deciding which cases cannot be resolved that way and so have to go to ordinary litigation. I am glad that he welcomes that; we certainly wish to see a considerable extension of mediation and we will go as far as is sensible.
Jessica Lee (Erewash) (Con)
I declare my interest as a family lawyer.
Constituents involved in these proceedings are often frustrated about the length of the court process. They can be involved for a long time only for the case to be settled at the door of the court. Will my right hon. and learned Friend set out the steps being taken to case-manage matters at the earliest opportunity?
Mr Clarke
The new portal process should significantly speed up a very high proportion of cases. We will certainly continue to address the real point that my hon. Friend makes as we go on to consult. Quite apart from the dread of the cost, the main experience members of the public have of the courts, be they criminal or civil, is the astonishing amount of time they are likely to waste in abortive visits during a slow-moving process. They will often have to attend the court building needlessly on occasions when the court is adjourned before they can get to be a party, a witness, a juror and so on. I therefore appreciate the spirit of my hon. Friend’s question and we are certainly seeking to address it in this consultation process.
Children (Access to Parents)
Charlie Elphicke (Dover) (Con)
I beg to move,
That leave be given to bring in a Bill to require courts, local authorities and other bodies, when determining or enforcing issues of residence and contact, to operate under the presumption that the rights of a child include the right to grow up knowing and having access to and contact with both of the parents involved in the residence or contact case concerned, unless exceptional circumstances are demonstrated that such contact is not in the best interests of the child; to create an offence if a relevant body or person does not operate under or respect such a presumption; and for connected purposes.
There are 3 million children who live apart from a parent in the UK, about 1 million of whom have no contact with the non-resident parent three years after separation. We know from the statistics that the number of court applications is rising. In 2005, it was 110,330 and in 2009—the most recent year for which the figures are available, I understand—it was 137,480.
We also know that the Children and Family Court Advisory and Support Service case load has been rising sharply. In 2007-08, there were 39,432 cases, and in 2009-10 there were 44,722. That was the subject of a recent Public Accounts Committee report and a National Audit Office investigation, which found that CAFCASS is not timely and that eight out of 10 Ofsted cases are failed. That is not good enough and as a result we have a massive delay in the court system. Even after a contact order is granted, as we all know from our surgeries it is all too often ignored, not enforced and not dealt with. The situation is simply unacceptable.
I am promoting the Bill today because I believe that there is a better way. First, we should reform things so that we have mediation rather than endless court cases. On average, mediation costs £752 a case whereas court proceedings cost £1,682 a case, and mediation takes 110 days whereas court cases take 435 days—more than a year. Some 95% of mediations are complete within nine months whereas only 70% of court cases are complete within 18 months.
Secondly, we need to reform and enforce contact properly. We need to place a duty on all involved. Too often, people say it is about mums’ rights or dads’ rights, but actually it is about the rights of a child to know and have a relationship with both their parents. That is the nub of what the Bill is about. It is not right that parents should sink their children’s right to know them in a sea of acrimony when they split up.
There are those who would say, “That doesn’t happen. The Bill is not necessary; it is a waste of parliamentary time. It’s not an issue. Why is Mr Elphicke bothering to do this?” Let me give some case studies. Mrs A, of Wootton in my constituency, wrote to me about her son’s experience with his children. She said:
“Each time a visit is due their mother creates a great deal of hassle—never being able to give a precise date etc. and has twice prevented the visit completely.”
The son went off to court to get a contact order. The letter went on:
“He has been in front of several different judges and every one has refused to do anything at all—just shrugging their shoulders, treating my son like a criminal, not even looking at the paper work and evidence. They just say there is nothing they can do.”
Mr G of Dover writes to me:
“I understand as they are my children I should help towards their upbringing, but surely this should not just involve paying my ex money and only speaking to them on a Sunday morning for 30 mins.”
Some people might think that this is all about dads. No, it is not. Let me give an example. Kenn Griffiths of mychildcontact.com sent me details of a case involving a mother who was divorced several years ago. The father has residence and the mother tells a moving story about how the father has been poisoning her children against her, telling them that she is ill and will never get better and that if they live with her they will make her even more ill. He has been saying the same to the CAFCASS representative. The only information the CAFCASS representative had in front of her was the father’s allegations, and she recommended that the mother see the children every other weekend in a contact centre, not for half the time as she does at the moment. Surely that cannot be the right way forward.
Let me give another case from just last week, of Tommy, a soldier from Coventry. He has a six-year-old daughter who lives with her mother. Court proceedings started last year. There was contact until January of this year, when the mother ended it. There was a court hearing and it all kicked off because CAFCASS could not get its ducks in a row until October of this year, but there is an issue here. Tommy is a soldier and he is about to be deployed to Afghanistan at the end of this month—this week, he will go to Afghanistan.
In January, Tommy applied for a specific order so that he could see his six-year-old daughter and take his leave of her before he went to serve his country—and, possibly, did not come back. He applied to the court. Was the judge at the hearing sympathetic? Did he allow Tommy to take leave of his six-year-old daughter before he went off to war? The judge said that it was unreasonable of him to ask to see his daughter and he should wait until October 2011 before the court would resume proceedings. This is a man who is off to serve his country. I wholeheartedly condemn that judge at Leicester county court for living in an ivory tower and having no idea about the real world and the parents’ feelings about seeing their children.
Let me detail the case of an alienated mother in which the father has the residence order for their two boys. They had 46 hearings between 2000 and 2006 before contact was finally achieved, by which time the damage had been done and the children were so alienated that they had no relationship with their mother. How can that be right? This is the existing law that we have to contend with.
Then there are the blackmail cases. Danny saw his six-year-old daughter every other weekend and on Wednesday evenings. He pays his ex-partner’s mortgage and he pays maintenance through the Child Support Agency, but one Friday before he was due to make a visit, mum said, “I need a new bed; if you don’t buy one, you won’t see your daughter tomorrow.” That was two years ago and he has not seen his daughter since because the judiciary will not enforce the contact orders. The system is stacked against him.
The reason I am putting this Bill before the House is to ensure that there is a clear and enforceable right of the child—a clear presumption in law—that will send a clear message to all those involved, including CAFCASS and all the weak-kneed judges who will not make or enforce any orders. To the parents who have residence orders and should know better, I want us to send the message that this is not about their rights: it is about their children’s rights to grow up knowing both their mother and their father.
Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)
I rise to oppose the Bill and declare that I practised in family law as both a solicitor and a barrister for about 35 years. I therefore draw on a number of years’ experience in the courts. I believe that the motion has been made with the best possible intentions, but if the Bill was passed, it would fall foul of the law of unintended consequences.
In all cases in which decisions are made regarding contact arrangements for children, paramount consideration must always be given to the welfare of the child, as required under the Children Act 1989 and article 3 of the UN convention on the rights of the child. Thus far, the hon. Member for Dover (Charlie Elphicke) and I agree. Sustaining meaningful relationships with non-resident parents and other carers such as grandparents, whether male or female, is important for meeting a child’s emotional needs. Thus far we still agree. It is often in the best interests of the child to ensure that contact with both parents and other carers is maintained. Again, we agree.
However, many organisations, including the National Society for the Prevention of Cruelty to Children, do not support any measures that seek to alter the paramountcy principle defined in the 1989 Act, which ensures that the welfare of children overrides all other considerations. That is a view with which I entirely concur. There is evidence to suggest that the paramountcy principle might be undermined by informal arrangements. Research published by Her Majesty’s inspectorate of court administration shows that courts already operate with an informal presumption of contact despite there being no legislation to require that. HMICA found that this informal arrangement has had the effect of undermining the safety of children who were at risk by focusing courts’ attention on contact rather than on the welfare of the child. More research is needed to assess the extent and impact of the informal use of presumption of contact in family courts.
Fewer than one in 10 cases in which parents divorce or separate comes before a family court for decisions to be made or disputes to be settled regarding contact arrangements involving children, but it is important to appreciate just how regularly the risks to a child’s welfare need to be actively considered by judges when ruling on parental access in family courts. Research for the Ministry of Justice in 2008 on applications for child contact across 11 courts found that the majority of cases included serious welfare concerns about the impact on the child of domestic violence, parental mental health issues, parental drug or alcohol misuse, a parent’s learning disability or the likelihood of a parent abducting the child. Only 37% of applications did not contain any serious welfare concerns which might affect the child. The most frequent welfare concern was domestic violence, which affected 154 of the 308 case files reviewed. Domestic violence is widely recognised as a major child protection issue, with 750,000 children witnessing domestic violence annually.
Victims of domestic violence face greatest risk post-separation, and research shows that children ordered by courts to have contact with a violent parent are likely to be abused themselves and, in the most extreme cases, killed. In 2005 HMICA published a report on the handling of safety in family proceedings. The research found that courts already operate with an informal presumption of contact, even when there is nothing in legislation to require this. The report said:
“The presumption of contact was evident in all the practice sessions observed during this inspection and there was consistent evidence that inappropriate assumptions about contact were made, rather than assessments about whether there was any risk associated with domestic abuse cases.”
More research needs to be carried out by the Ministry of Justice. The forthcoming interim report from the Family Justice Review, likely to be published by the end of this month, may address the matter and its findings should not be pre-empted.
The issue of parental contact was debated in detail in the 2005-06 parliamentary Session during the passage of the Children and Adoption Bill. The resulting Children and Adoption Act 2006 amended the Children Act 1989 to allow greater flexibility for courts facilitating contact and gave courts powers to require parents to undertake a contact activity, such as attending a parenting programme or information session. Following that Bill’s passage, the then Government committed to carrying out further research on parental access issues. Any further consideration to alter the current arrangements should result from evidence-based research and further study of the effects of contact on the welfare of the child.
I will offer one case study, that of Vivian Gamor. In 2007 a judge criticised decisions which allowed a mentally ill woman access to her children, whom she subsequently killed. Vivian Gamor, 29, beat Antoine, 10 years old, and suffocated Kenniece, three years old, in east London, in January 2007. The judge, Peter Rook QC, said that in retrospect Gamor should not have been given free access to the youngsters. The serious case review highlighted many problems. It showed that despite reports of some successful contact visits by Ms Gamor and her plan to have the children live with her, further efforts should have been made to contact the children’s father, with whom they had been living, to assess the situation before deciding whether to support Ms Gamor’s request for further contact. Judge Rook said that
“this terrible tragedy could have been avoided if Gamor had not been allowed unsupervised access and the children’s father’s grave concerns had been given weight.”
Ms Gamor was sectioned for serious mental illness in early 2006 and the children moved in with their father. However, she was later released from care after doctors concluded that she posed no risk to herself or others. Following her release, she was gradually granted supervised access to the children in November 2006, and then, on three occasions, unsupervised access to her children. It was on the third occasion of unsupervised access that Ms Gamor killed her children during the night at her flat, just two weeks after overnight contact had begun.
In conclusion, we should be very wary of diluting the paramountcy principle because it is clear that in any family breakdown, the most vulnerable players are the children. We must continue to have their welfare in mind first and foremost, and nothing that I have heard today or witnessed in the family courts persuades me that a change in the law is required.
Question put (Standing Order No. 23) and agreed to.
Ordered,
That Charlie Elphicke, Penny Mordaunt, Priti Patel, Charlotte Leslie, Kwasi Kwarteng, Margot James, Caroline Dinenage, Chris Heaton-Harris, Tracey Crouch, Nadhim Zahawi, Karen Lumley and Jane Ellison present the Bill.
Charlie Elphicke accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 13 May and to be printed (Bill 174).
Points of Order
Dr Julian Lewis (New Forest East) (Con)
On a point of order, Mr Speaker. There are certain politicians who arouse very strong feelings both in favour and against their political initiatives. One such politician is Lord Tebbit. I wonder whether there is any way within the rules of order that we may place on the record our appreciation of his long political career on this his 80th birthday, noting that he has gone from bovver boy to blogger in successive generations.
Mr Edward Leigh (Gainsborough) (Con)
Further to that point of order, Mr Speaker. Although you are impeccably impartial, I know that deep in your heart there still lurks a little Tory. You will know the love and esteem in which Lord Tebbit is held on these Benches. May we not have some suitable memorial erected to him—perhaps a bicycle draped in the Union flag and carved in solid British oak?
Mr Speaker
The House should hold to the phrase “impeccably impartial”. I say to the hon. Member for New Forest East (Dr Lewis) that the short answer to his question whether that could be done within the rules of order is no. However, he and the hon. Member for Gainsborough (Mr Leigh) have found a disorderly but very far from disagreeable way to pay tribute to their illustrious colleague. I think that I can safely say that the remarks of both hon. Gentlemen will be appreciated by the noble Lord’s admirers and detractors in this House, the other place and around the country on the occasion of his 80th birthday.
Ways and Means
Budget Resolutions and Economic Situation
Amendment of the Law
(13 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
21:59 - The House divided: - Ayes: 327 / Noes: 250 - Question accordingly agreed to.
22:15 - The House divided: - Ayes: 334 / Noes: 13 - Question accordingly agreed to.
22:28 - The House divided: - Ayes: 333 / Noes: 236 - Question accordingly agreed to.
22:41 - The House divided: - Ayes: 330 / Noes: 9 - Question accordingly agreed to.
Mr Speaker
I must notify the House that motion 12, which relates to tobacco products duty rates, has not been printed correctly on the Order Paper. The correct version has appeared on the Order Paper on previous days and is available today on a separate sheet. A large number of Members wish to speak in the debate and a time limit of six minutes on Back-Bench speeches has been set. I remind Members not to approach the Chair to inquire where they are on the list. The Chair will do his or her best to accommodate Members in the course of the afternoon, but it will not be assisted by people making inquiries.
The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)
In concluding the Budget debate, and recognising what you have just said, Mr Speaker, I will take interventions. However, I will try to make some progress, as many Members wish to get in and many of the points have probably already been made.
I think that it has been an excellent Budget, given the circumstances we find ourselves in. The Chancellor is to be congratulated on focusing on his priorities, which he stated clearly, for rebuilding the shattered economy that we inherited. Let me remind the House that when Labour came to power in 1997 they received a golden economic inheritance, the like of which few Governments since the war have received, which gave them money to spend. Despite that, the painful scar of youth unemployment hardly changed, some 4.5 million were stuck on out-of-work benefits, 1.4 million had never worked at all and we had the largest structural deficit of any G7 economy. Intriguingly, the worst thing is that that point was reached even before the recession had started.
After that, things just got a whole lot worse: 5 million on out-of-work benefits; working-age poverty up; youth unemployment at a record high; more children in workless households than the rest of the European Union; and the largest budget deficit in the UK’s post-war history, of more than £150 billion. That deficit is for one year, piling on top of the outstanding debt mountain, and £120 million is spent on interest payments alone—every single day. There was even talk of an International Monetary Fund bail-out, bringing alive memories of the dark years of the late 1970s—and, of course, the House knows who was in power then.
Geraint Davies (Swansea West) (Lab/Co-op)
Does the right hon. Gentleman not agree that two thirds of the deficit—£84 billion—was due to the financial crisis, and that the Budget’s overall fiscal tightening is £98 billion? Does he not agree that he is going too far, too fast, savaging whole communities, choking growth with cuts and stoking up inflation with VAT? Is that not completely wrong? That is why so many people marched against it.
Mr Duncan Smith
That gives me an opportunity to put the shadow Chancellor right. He said in one of the Budget debates last week that the structural deficit was low as we entered the recession. We had the highest structural deficit in the whole developed world, and intriguingly he is in denial about that, so whether he talks about debt or deficits, in reality as we entered the recession, the economy had been badly run, leaving us with a record structural deficit.
Importantly, what has been Labour’s response as a result of that? Acceptance that it had lost control; perhaps even a little humility? Not a bit of it. Instead, we have seen a desperate scramble to find almost anybody else to blame for the problems, and it appears, even today, no attempt to make any amends publicly. In the Labour playbook, the previous Government were just innocent bystanders in somebody else’s evil game. Poor old Britain. Apparently, we were just minding our own business when along came some nasty industrialists and bankers who ganged up on us in some international capitalist conspiracy. It is like some ghastly, poor script. It really does read like some really poor script from an Austin Powers movie, and I am pretty sure that any minute now the shadow Chancellor is going to try to blame Dr Evil and bring him into the script as well.
Hazel Blears (Salford and Eccles) (Lab)
Is the right hon. Gentleman suffering from some kind of amnesia? Has he forgotten that, after some 20 years of the previous Conservative Government, we had almost 3 million people unemployed? In two of my inner-city wards, I had 50% male unemployment and 75% youth unemployment. Is the right hon. Gentleman about to embark on the same mistakes that caused such massive unemployment after 20 years of the previous Tory Government?
Mr Duncan Smith
It is always a pleasure to give way to the right hon. Lady, because if anything she is always honest with her own side. I understand that quite recently she said that her own party had been pretty much unrealistic about the situation, and I seem to recall that she even said that it should be more specific about what reductions it would make. She was a part of a governing party that left this country with the worst recession, the worst deficit and massive debts, so I do not need to explain where we were in ’97; she needs to explain why we got to where we were at the last election.
Mr Oliver Heald (North East Hertfordshire) (Con)
Does my right hon. Friend think that it is actually the right hon. Lady who is something of an amnesiac? She seems to have forgotten the £5 billion a year taken out of pensions, and the fact that Labour sold the gold.
Mr Duncan Smith
Indeed. My hon. Friend is, as ever, right.
It is worth reminding—
Emma Reynolds (Wolverhampton North East) (Lab)
Will the Secretary of State give way?
Mr Duncan Smith
No. I am going to make some progress, because Mr Speaker has already told us that we need to let others speak.
Let me remind Labour Members that they were the ones who let the bankers rip as they pleased, leading to a 10-year spending spree that sent personal debt to the record level of £1.3 trillion. They let public spending rip, too, but Members should not take my word for it; strangely, Tony Blair—not now spoken about much on the Labour Benches—said that
“from 2005 onwards Labour was insufficiently vigorous in limiting or eliminating the potential structural deficit.”
Insufficiently vigorous? That is possibly the biggest understatement that I have ever read. The reality is that they did nothing at all about controlling the deficit, so it is small wonder that the No. 1 priority for this coalition Government was to get the finances straightened out, and my right hon. Friends the Chancellor and the Chief Secretary are doing just that.
Mr Duncan Smith
I will give way to the hon. Lady, and then I am going to make some progress.
Emma Reynolds
Why, then, did the right hon. Gentleman’s party pledge to match our spending plans right up until the start of the financial crisis?
Mr Duncan Smith
What we are dealing with here—[Hon. Members: “Ah!”] I will tell Labour Members what the big “Ah!” is. It is “Ah, who were in government for the past 12 years?”, it is “Ah, who left us with the worst structural deficit?”, and it is “Ah, who left us with massive debts, rising youth unemployment and a total shambles from which we are going to have to pick up the pieces?”
One of our biggest challenges was getting to grips with the welfare system, which many Members on both sides of the House will recall. Spending on working-age welfare increased by some 50% under Labour, from £48 billion to £73 billion in real terms. People talk about the problems of increasing welfare spending in difficult times, but let me remind the House that that increase took place during a period of growth. Notwithstanding that extra spending, improvements were quite poor. The universal credit is about getting the incentives right. That is the sort of reform that we have to bring through, recognising that people have to see the financial benefits from taking up employment, and simplifying the byzantine benefits system that we inherited. Alongside it, the Work programme is about supporting people to be work-ready so that British business no longer has to look abroad when it wants to commit to bringing in employees.
We are finally getting to grips with a housing benefit system that has been allowed to run out of control. The failure to reform housing benefit has left us in the absurd situation whereby some benefit claimants can claim up to £100,000 a year to live in large houses in expensive areas. The local housing allowance formula was behind all this madness. I remind Labour Members that it was their Government who introduced the local housing allowance, which pumped fuel into that growth. The difference between the average award under the LHA and under the older schemes for private deregulated tenants that it replaced was an additional £10 per week, or about 10%. As a result, the costs of housing benefit rocketed from £14 billion in 2005-06 to £21 billion in 2010-11. Left unreformed, the housing benefit budget was projected to reach £24 billion in 2014-15. That is, frankly, unsustainable and unacceptable to hard-working British taxpayers.
Housing benefit is an issue on which Labour Members have shown themselves at their very worst. First, we got ludicrous claims about social cleansing from central London, whipping up fury and fear. [Hon. Members: “That started with you.”] No, it started with them, and I know exactly who it was. Then, on top of that, we were told that the real reason was that we are a Government bent on some kind of plan for ethnic cleansing. Labour Members are not averse to a bit of dog-whistle politics when it suits them, scaring some of the most vulnerable people in society and leading them to fear what is coming next.
The problem is that the Labour Government had over 10 years to get to grips with the welfare system, and literally nothing was done about it—it was fiddle, more fiddle, and more expense. The Office for Budget Responsibility has confirmed that as a result of the changes to expenditure that we brought through, we remain on track to eradicate our structural deficit over the course of this Parliament.
It is important, too, to reflect on how the Budget for growth has gone down with people. Sir Martin Sorrell says:
“The coalition from the very beginning had said it was crucially important that Britain had a competitive tax landscape. They've gone further than I expected on corporate”
tax
“and also on personal taxation.”
He went on to say that
“it looks as though we will make that recommendation”
to return his company’s headquarters to the United Kingdom. That is a real endorsement.
A letter in The Daily Telegraph yesterday from 39 leading venture capitalists stated:
“These changes are a shot in the arm for enterprise. Thanks to them Britain is being positioned as a world-class place to launch new businesses. Now British entrepreneurs and those relocating to Britain will find it easier to raise the funds they need to do what they do best: create and expand world-beating businesses.”
John Cridland, the CBI director general, said:
“This Budget will help businesses grow and create jobs. The chancellor has made clear the UK is open for business.”
David Rutley (Macclesfield) (Con)
I wonder whether my right hon. Friend has seen the latest statement from the Institute of Directors, which says that 58% of company executives are now more confident about the long-term economic outlook, and that just 9% are less optimistic.
Mr Duncan Smith
I am bowled over by that—what can I say? That was a timely intervention by my hon. Friend. I apologise for not producing that point myself. It is yet more evidence that this Budget, which was shaped by my right hon. Friends the Chancellor of the Exchequer and the Chief Secretary to ensure that Britain is open for business, has opened it for business. That is what business men are saying.
I want to bring one more person to the attention of the House. This tribute is perhaps more difficult for the Opposition to cope with. It is from none other than Duncan Bannatyne—a great name. He said:
“This Budget has convinced me that George Osborne is serious about growth and enterprise.”
I remind the Opposition that he was a huge and strong supporter of the previous Government. Even when almost every other business man had deserted them, he still supported them. To use his own wise words, he has said, “I’m in!” I think that the rest of the country is too.
Getting to grips with the public finances is just the starting point, not the destination. Of course we have to balance the Budget, but this Government are about much more than that. Our ambition is to make the next decade the most dynamic and entrepreneurial in Britain’s history. That is why we have set out plans to create the most competitive tax system in the G20. That is why we are reducing the rate of corporation tax yet further from 28% to 26% in 2011-12, and crucially, all the way down to 23% from 2014-15. That will give the UK the lowest rate of corporation tax in the G7. I thought that I would hear a cheer from the Opposition for that, because they must surely want that to happen. Perhaps they do not.
That ambition is why we are making the UK the best place in Europe to start, finance and grow a business. We are supporting small firms with a moratorium on domestic regulation, which will give them a real chance to plan and to get going. We are investing £100 million in science capital development. That ambition is also why we are encouraging investment and exports as a route to a more balanced economy. We are setting up 21 new enterprise zones with superfast broadband, lower taxes and low levels of regulation and planning controls.
From our perspective, we can see that even as the economy grew under the previous Government, too many people in this country missed out. More than half the additional jobs that were created went to foreign nationals. It is therefore hardly surprising that youth unemployment was higher when we came into office than when Labour took power. As growth picks up again, we have to ensure that this group does not miss out once more. Some 900,000 additional jobs will be created over the course of this Parliament, and our welfare reforms are about ensuring that our people are ready and able to take them.
The previous Prime Minister spoke about British jobs for British workers, but the reality is that most of the jobs did not go to British workers. That point is not about immigration, but about supply and demand. We have to ensure that British workers are ready and able to take the jobs. That is why this Budget introduces new and hugely welcome measures to provide extra support for young people. They will be helped to find sustainable jobs in the private and voluntary sector. We will fund an additional 50,000 apprenticeship places over the lifetime of this Parliament, and importantly, 40,000 of them will be targeted at the young unemployed. That is on top of the 75,000 places announced last year.
Overall, with the new measures in the Budget, the Government will deliver at least 250,000 more apprenticeships over the next four years compared with the previous Government’s plans. Those apprenticeships will be very valuable, because they will give young people in particular, but others as well, real training, real skills and a proper job at the end of it.
Alongside that, we are aiming to assist in the process of getting apprenticeships by providing up to 100,000 work experience places over the next two years. Those placements will last a minimum of eight weeks, rather than the two weeks made available under the previous Government. We will also offer employers an extra linking month when it will provide a route into an apprenticeship. If an employer says after the eight weeks that they will put a young person into an apprenticeship, or even into work, we will be prepared to give the young person an extra month of work experience so that the employer can sort out whatever is necessary without having to let them drop out of the company.
That work experience will be a crucial head start for young people. As David Frost of the British Chambers of Commerce said in January:
“Employers will be key to getting young people into work. This programme is a way of not only providing quality work experience but also of introducing individuals to the modern world of work.”
The programme has also got the backing of Hayley Taylor, star of Channel 4’s “The Fairy Jobmother” series, whom I saw the other day—a great woman. She has said:
“It’s hard to get a job with no experience, and you can’t get experience without a job. That’s why this work experience scheme is a really good idea.”
However, this Budget is not just about securing the position of workers today; it is also about securing their position in the future, as they enter retirement. We have done a great deal for current pensioners. We have restored the earnings link and given a triple guarantee that the basic state pension will rise by the highest of the growth in average earnings, the prices increase or 2.5%.
Mr Duncan Smith
Yes, exactly. That will provide a really generous state pension that gives a firm financial foundation. Someone retiring today on a full basic state pension will receive £15,000 more over their retirement than they would have done under the old prices link. We have also permanently increased cold weather payments from £8.50 to £25.
Notwithstanding the prospects of today’s pensioners, the prospects for the next generation are very different. I hope that Members of all parties will recognise that those who are not near to receiving their pension, and who perhaps are just starting their career, face a very difficult time indeed.
Albert Owen (Ynys Môn) (Lab)
On the subject of pensioners, was the Secretary of State as disappointed as I was that the Chancellor did not have the guts to mention in his Budget statement that he was reducing the winter fuel allowance from £400 to £300? His decision not to continue with the £400 payments comes after he said they would be protected and permanent in future. Some 12 million pensioners will be upset by the Government’s policy not to continue with them at a time when bills are going up year on year.
Mr Duncan Smith
I am interested that the hon. Gentleman raises the matter, because it was originally mentioned in the comprehensive spending review. We have stuck to the last Government’s plans on the winter fuel payment. In fact, I was intrigued by the issue so I looked up what the right hon. Member for Edinburgh South West (Mr Darling), who is in his place, said when he was Chancellor. He said a lot of straightforward things, and I congratulate him on that. He said about the winter fuel payments that they
“were temporarily increased to £250, and £400 for the over-80s…I will guarantee this higher winter fuel payment for another year.”—[Official Report, 24 March 2010; Vol. 508, c. 263.]
When we look at the Red Book produced at the time, we find that there was no allocation for any more winter fuel payments. We stuck to the last Government’s plans. Perhaps the hon. Member for Ynys Môn (Albert Owen) should ask his right hon. Friend why he did not plan for more. We did exactly what we said we would do.
The real problem is that 7 million people are not saving enough for the retirement that they want, and few will be able to rely on a guaranteed income in retirement, because the numbers saving in defined benefit schemes in the private sector have more than halved in the last 20 years. In fact, less than half of the entire working-age population is currently saving in a pension at all.
Our plans automatically to enrol all workers in a pension scheme will make a real difference—we have continued the work started by the previous Government—but my hon. Friend the Minister and I do not think that auto-enrolment will work unless it pays people to save, which is why we have determined finally to get to grips with the state pension. As all hon. Members know, not only is the state pension extremely complex, leaving millions of people unsure as to what they will receive in retirement, but it completely fails to reward those who make the effort to save but who do not quite get there.
Too many people reach state pension age having scrimped and saved all their life to find that others, who have not saved or who have made no effort to save, get the same income as them through pension credit. The Budget is about rewarding those who do the right thing, which is why we will shortly publish a Green Paper on state pension reform, with an option for a single-tier state pension, which will provide a clear foundation for saving. We currently estimate that it will be set at around £140 a week, which is above the level of the means-tested guarantee credit, but we must send out the clear message across the welfare and the pension systems that people will be better off in work than on benefits, and better off in retirement if they save.
Glenda Jackson (Hampstead and Kilburn) (Lab)
If the change in the pension system is to benefit the whole country and all pensioners—current and future—why have the Secretary of State’s policies targeted specifically women born between ’53 and ’54? They expected to retire, but now discover that they must work at least four years longer. That does not strike me as a policy that benefits the entire population.
Mr Duncan Smith
The hon. Lady’s comment on working four years longer is simply incorrect, but I take what she says. The reality is that the Government are doing what we were asked to do—equalise the ages—and increasing the age to 66. I recognise the group she mentions, but they will be covered and supported in other ways anyway, so this is not a loss—
Mr Duncan Smith
It is not a specific group in the sense that they were targeted. That policy is part of trying to get the pensionable age up first to 65, and then to 66.
Mr Frank Field (Birkenhead) (Lab)
The House will be pleased that the Government want to move to a standard pension of about £140 a week, but how will that be paid for? Will it be by pooling the contributions of those who have already paid under the national insurance and state earnings-related pension schemes? If so, how many will lose out, and what sort of message would that send to people about saving?
Mr Duncan Smith
First, we will publish the Green Paper very shortly. We are finalising it, so I do not want to get into the full detail now, but I promise the right hon. Gentleman that we will answer all such questions. Less means-testing is the key. I leave him with that thought, but I will tantalise him not much longer: there is some really good stuff coming in the Green Paper, and I am sure he will find every reason to support it, given that he has been so positive about pensions for many years.
Alec Shelbrooke
Like many hon. Members, I have received representation from constituents who wonder why there is a two-year jump in the pensionable age. Will the Secretary of State outline why that must be done?
Mr Duncan Smith
That is to do with the process of equalising, which we are doing slightly faster. It is in the interest of the nation and individuals for us to do that. If we do not do it, there is a cost implication, which could be as high as £10 billion. I say simply to my hon. Friend that if the Opposition and others do not want to do that, they should please let us know where they think the money will come from.
We are making responsible choices for the British economy. I am particularly proud of the decision we took with my right hon. Friend the Chief Secretary to the Treasury on the potential for a single-tier pension. That is in stark contrast, I think, to the mess we saw from the previous Government. What is interesting is that the Labour party has been out of power for 10 months, but listening to what Labour Members say about the current situation, one would think that it has been more like 10 years and that they had nothing to do with it. They do not know whether they are coming or going. Interestingly, half of them seem to support the Darling plan, and the other half do not. For the shadow Chancellor, it rather depends on who asks him, when they ask him, and what time of day it is.
It seemed that the Labour party would not cut, but then we heard that theoretically it would. More frightening still, it has made it clear how it would spend more of our money. Notwithstanding the plan set to start on 1 April, in the past month or so, the Opposition have made some £12 billion of unfunded spending commitments, which actually makes their spending profile even worse. They will tell us that it would all be funded by an extra tax on the banks. Oh dear! I remember that they used to attack the Liberal Democrats for making a similar claim over the extra 1p on income tax. They said, “This is the longest p in history.” Well, this is now the biggest, longest tax in history. It would have to be raised at least six times to pay for the sort of commitments they have engaged in. However, we should not be surprised to discover that fiscal mathematics is not Labour Members’ strong point.
Now we see the Leader of the Opposition joining a march for an alternative solution. I personally hope he has found it, but I do not think he did on the podium the other day. Instead, we see that he is now linked with some of the great names of history: the suffragettes, the anti-apartheid movement and Dr King in America. I am pleased that the Leader of the Opposition also has a dream, but for us it is not having a dream that matters, but that soon enough he should wake up and smell the coffee. The reality is that this Government are sorting out the deficit; this Government are getting Britain back to work; this Government are dealing with the mess that Labour left; and meanwhile they are in denial.
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
I know that the Secretary of State learned some time ago that attack is the best form of defence, but I expected him to do a better job of defending the Budget that we heard last week. The Budget debate started with no acknowledgement that growth was coming down—and the same is true of its conclusion. The right hon. Gentleman refused to admit that this so-called Budget for growth has knocked 0.5% off the rate of growth this year and next, put unemployment up by 200,000, and is putting the benefits bill up through the roof—and he seems to think that we are the ones in denial.
A fortnight ago, the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling), who has responsibility for work, was rolled through the television studios and asked to give his progress report on how well the Chancellor had done in his first year. He was asked to report on how good a job the Chancellor was doing of getting the country back to work. Fifteen months after the end of the recession, the House could be forgiven for expecting unemployment to be falling rather than rising. However, at the very point when unemployment should be falling, the Minister was forced to report that it was actually rising. He decided to choose his words very carefully. He said that the jobs market was “stabilising”.
Last week it was left to the Chancellor to tell us that the jobs market was doing nothing of the sort. He did not dare spell it out, but in the fine print of the Budget we learned the truth: this is not even the beginning of the end. His first year has gone so well that unemployment, which should be falling, is set to rise until the summer. In fact, it is not expected to fall below 2.5 million until way through next year. Now we face the prospect that unemployment is not going to fall below 2 million for the rest of this Parliament.
Kwasi Kwarteng
Will the right hon. Gentleman remind the House which member of the previous Cabinet wrote a note saying, “There’s no money”?
Mr Byrne
I would rather have written a bad joke in public than a bad Budget in public.
Now we know—and now the Secretary of State has been forced to admit—that unemployment is not going to fall below 2 million. He will remember, just as we remember, the last time that happened. For those with long memories, what has happened is all too familiar. The last time the Tory party was in office, it took a couple of years to get unemployment above 2 million, but after that it did not fall below 2 million for 18 years, until the Labour party was elected in 1997. Now the Government have decided that that record of the 1980s is worth a rerun, or something of a repeat, because there is one thing that has not changed: the Conservative party still believes that unemployment is a price worth paying.
Alec Shelbrooke
I am grateful to the right hon. Gentleman for giving way, and I am listening carefully to him. While we are discussing the figures, does he welcome today’s news that construction grew by 2.3% in quarter four, and that productivity was also up?
Mr Byrne
Of course, and the hon. Gentleman will also recognise that, despite the fact that we are some way out of the recession, today’s figures also confirmed that in the last quarter for which records are available, the economy shrank. I am not sure that that is a record of which he can be proud.
In the circumstances, I would have thought that the House could expect to hear rather more from the Secretary of State about what the Budget would do to get people back into work. The Office for Budget Responsibility is well aware of the Secretary of State’s Work programme and the Chancellor’s tax breaks on offer for business, yet its conclusion was the cold fact that unemployment will continue to rise. Every time the Chancellor stands up at the Despatch Box to deliver a Budget, he revises down his forecast for growth and revises up his estimate for the number of unemployed people in our country. He is costing this country a fortune.
What, then, did this Budget offer for jobs? Incredibly, it said that by the first quarter of 2013, unemployment would be 200,000 higher than was forecast just last October. What a triumph! Under the circumstances, we could have expected a rather bigger push from the Secretary of State and his right hon. Friend the Chancellor to get people back to work. After all, his Minister for the unemployed, the right hon. Member for Epsom and Ewell, told the Select Committee on Work and Pensions on 14 March:
“If there was a very substantial change in the labour market, one way or the other, frankly, that is the kind of circumstance in which we might need to revisit some of the assumptions.”
Well, 200,000 more people on the dole sounds like rather a substantial change to me.
What is the Government’s response? Some £20 million for work experience. This morning I had a look at the Secretary of State’s accounts for January. It would appear that his new work placement scheme, which was so proudly trumpeted this morning, will cost less than his Department spends on stationery every year. At the very least, we would have expected more resources for the Work programme. The Prime Minister is fond of telling us that the Work programme is
“the biggest back-to-work scheme this country has seen since the 1930s.”—[Official Report, 16 February 2011; Vol. 523, c. 951.]
In fact, as the BBC has shown, there are 250,000 fewer places on it than Labour had last year, when unemployment was lower. The association of bidders for the Work programme now has so much confidence in the Secretary of State’s plans that it says:
“the design of the Work Programme is fraught with risks which may impact significantly on the number of unemployed people who can benefit from it”!
That is hardly a vote of confidence. When my hon. Friend the Member for Westminster North (Ms Buck) asked the Secretary of State how much extra he had received from the Treasury to get people back to work, he refused to give her a straight answer, and we all know what that means: that he asked for nothing and he got nothing. With unemployment now forecast to rise, the very least that we could expect from this Secretary of State is to stand up for his Department, fight his corner and get some extra help to get this country back to work.
Mr Tobias Ellwood (Bournemouth East) (Con)
The right hon. Gentleman understands that whoever had won the last election would have had to introduce some tough measures, and we are experiencing those now. Bearing in mind that all other recessions have seen unemployment rising, is he genuinely telling the House that if Labour had won the last general election, unemployment would be continuing to fall today?
Mr Ellwood
The right hon. Gentleman is being very generous in giving way, but this is an important point. Labour was in denial before the election about introducing major measures to bring the economy under control. Labour now knows—as we have known—that important measures needed to be introduced after the election. That is what is causing the difficulties now. He is now saying, “Yes, you’d be able to bring those measures in without having any effect on employment.” That is completely wrong; he misleads the House.
Mr Byrne
Well, let us go through it, shall we? The deficit plan that we put in place would have involved £57 billion-worth of discretionary action—[Interruption.] Will the Secretary of State just pause for a moment? I know that he has read all 40 pages of chapter 6 of the Budget that was published in March last year, but let me just remind him of their contents: £57 billion-worth of discretionary action; £19 billion-worth of tax rises; and £38 billion of cuts, £18 billion of which would have fallen on capital, and £20 billion of which would have fallen on current expenditure, of which £12 billion would have fallen in Whitehall, £5 billion would have fallen on lower priority projects and £3 billion would have been achieved through a pay freeze and asking public sector workers to—
Mr Deputy Speaker (Mr Nigel Evans)
Order. I just want to clarify that the hon. Member for Bournemouth East (Mr Ellwood) meant that the right hon. Gentleman was inadvertently misleading the House.
Mr Duncan Smith
Now that the right hon. Gentleman is into the Darling plan, will he specify what those cuts are, what he supports right now, and therefore what the plan really is? After all, it was due to come into force three days from now.
Mr Byrne
I have just gone through them. They involved £57 billion-worth of discretionary action—[Interruption.] The difference between us—[Interruption.] Well, let us take the Secretary of State’s own Department. Regarding the £18 billion savings in annually managed expenditure, we said that where there is a temporary switch from RPI to CPI for the next three years, we will support that; where there is a need to reform the disability living allowance, we will support it; and where there is a need to introduce new limits on employment and support allowance, we will support that. We do not think, however, that the Government should introduce reform simply by cutting. They should couple some of those reforms with the need to look again at the support that working families actually need.
Mr Duncan Smith
Okay, now we are into this specifically. DLA reform has a line item in the Budget of about £1.4 billion in savings. Does the right hon. Gentleman consider that to be a reduction that he supports?
Mr Byrne
The Secretary of State put in place a programme to make the cut before he figured out what reform was actually needed. He is under such pressure from disability groups because he is not listening to the voices of disabled people in this country telling him what kind of support they need in order to live full and fulfilling lives. That is because he is locked into a programme that is putting more people on to the dole and sending benefits bills through the roof. He is beginning to fracture the bonds of support between the Government and the people in this country who need extra help. He should not be abolishing DLA; he should be reforming it. He should also start listening to the needs of disabled people.
Mr Duncan Smith
I am intrigued by this. The right hon. Gentleman now seems to be at odds with his shadow Chancellor, who in his opening speech in the Budget debate last week, in response to a specific question about what spending cuts he wanted in the coming year, said:
“We said…that we would go ahead with the disability living allowance gateway reforms.”—[Official Report, 24 March 2011; Vol. 525, c. 1142.]
That involves £1.43 billion. Does the right hon. Gentleman support that now?
Mr Byrne
No, because we have not specified—[Hon. Members: “Ah!”] We have not specified the level of cuts or savings that we think should come from DLA. The Secretary of State knows as well as I do that we believe that a gateway should be introduced for DLA—[Interruption.] He should listen to this, because it speaks to the concerns of millions of people with disabilities. He has said that he is going to cut £1.4 billion from DLA, and, in written answers to the House, he has said that 170,000 fewer people will receive that benefit in the future—[Interruption.] The Secretary of State might just want to listen to the implications of this. It is a bit late for him to be getting a briefing on his DLA reforms from his own Minister, the Under-Secretary of State for Work and Pensions, the hon. Member for Basingstoke (Maria Miller). If he is cutting DLA for 170,000 people and cutting £1.4 billion from that benefit, £8,500 will be cut from each of those 170,000 families. Will he intervene on me again and tell me whether he understands that that is the implication of his benefit cut?
Mr Duncan Smith
I have a very simple question. The shadow Chancellor said that he supported the reform, which has a very simple line item in the Red Book. The right hon. Gentleman now says that he does not support it. This is the problem: the Opposition have no idea what they are doing. No wonder the British public are fed up with them.
Alec Shelbrooke
The right hon. Gentleman is most generous in giving way. I have just listened, as has the rest of the House, to a whole host of numbers that he reeled off relating to where cuts would be made, but he has not said where those cuts would be made, or what exactly would be cut. Will he enlighten the House?
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
Does my right hon. Friend share my astonishment that the Secretary of State can produce savings figures, yet when we put specific questions to him we are told, “This is a matter for review”?
Mr Byrne
Precisely right. Indeed, the Secretary of State presented to the House of Commons a Bill that would abolish DLA before he had even bothered to finish consulting people up and down the country about what the reform of DLA should look like.
One of the greatest failures stemming from the Secretary of State’s inability to extract further money from his right hon. Friend the Chief Secretary to the Treasury is, of course, the failure to get young people back to work. I met a delegation of young people from my constituency this morning and I asked them what they thought of the Government’s plans. Their thoughts were very simple: it just seems, they said, that the Government are stopping young people being what they could be. I could put it no better myself. Youth unemployment is now approaching 1 million. The Secretary of State likes to pretend—he did it again this afternoon—that this is somehow a problem that he inherited. [Interruption.] What he fails to remind us is that in the final nine months of our term of office, youth unemployment was falling by 67,000.
I know that the right hon. Gentleman is fond of quoting figures that do not include the number of people in higher education, for example. Fine: let us look at what the figures tell us. Since the election this is what has happened: after nine months in which youth unemployment was falling, it is now going up by 60,000—and that when the economy is supposedly growing. All the good work we did is now completely undone.
Mel Stride (Central Devon) (Con)
The right hon. Gentleman said that if Labour had won the last election unemployment would, of course, be falling. He raised the issue of youth unemployment, so will he inform the House whether youth unemployment fell or rose during the period of the last Labour Government?
Mr Byrne
All unemployment fell. Then, once the scale of the global recession we confronted became apparent, it of course went back up again. What we never had under a Labour Administration is unemployment going up through the 3 million mark—not once but twice, as it did under the Conservatives. Every job lost is a tragedy for one family, and all the jobs lost are a tragedy for all of us—and, indeed, for the Exchequer. Lost jobs mean not only that our performance as a country cannot match our full potential, but that a bill is created that we all end up paying.
The Governor of the Bank of England has warned us of what is to come. He says that we now confront the biggest squeeze on living standards since the 1930s, and that because this Government’s economic plan is creating so few jobs, there is less and less demand for workers. Now there are five people chasing every job and the growth in people’s pay packets and wages is slow. The Office for Budget Responsibility forecasts 2% earnings growth this year, 2.2% next year, but when prices are growing by more than 5% this year and 3.6% next year, the squeeze on family budgets is now all too obvious.
In the circumstances, one would have thought that the Government would step in to help. Not a bit of it. Next month 10 Tory raids on the family budget get into full swing: tax credits cut for families earning more than £40,000; tougher criteria on families wanting to claim family support; reducing the income disregard; freezing basic rates of working tax credit; removing the baby element of child tax credit; reducing payable costs of child care; abolition of grants for pregnant mums; £500 taken away from families with more than one child; child benefit increases ruled out for another three years; and cancelling the child savings accounts.
This Government are proud of some of the measures foisted on them by Liberal Democrat Members. I am sure that is right. Once we take this list into account, however, £1.1 billion is going to be stripped from family budgets starting from next month, with another £300 million coming from children. By the end of this Parliament, £16.5 billion will have been taken out of family pay packets.
Mr Byrne
No.
Why are the Government not doing more to help? Because the cost of economic failure is sending the benefits bill through the roof. Last week we learnt from the detail of the Budget book just how big that bill has now become.
This afternoon the Secretary of State liked to boast about his reforms of housing benefit, but forgot to tell the House that the housing benefit bill is projected to rise by more than £1 billion in the next few years. In the small print of the Budget we saw something more: his benefits bill over the next few years is now projected to increase by £12.5 billion. That is £500 for every household in the country.
Almost as shocking is what will happen to the unemployment bill as a result of the Secretary of State’s great endeavours to get so many extra people back to work. When the Chancellor came to the House last year, he somehow forgot to tell us that as a result of his Budget higher unemployment figures would increase the dole bill by £700 million. Now we learn that it is going to go up again, by another £1.9 billion. In other words, since the Government came to office they have put the unemployment bill up by £2.6 billion. That is an indictment of their record in getting people back to work. In fact, £2.6 billion is the same amount that the Government are cutting from tax credits for people with children. The right hon. Gentleman is cutting support for our children in order to pay the bills for his economic failure.
What does this mean for the average British family? A single earner family with a child and an income of £23,000 will lose £400 a year. The Secretary of State may not care about what is happening to ordinary families, but I assure him that plenty of people are interested in the bills for his economic failure. Households with child care costs will be hit even harder. A family with average child care costs will lose nearly £500 a year, and for some it will be even worse. A single earner on the minimum wage with two children will lose more than £2,000 a year—6.5% of his or her income. Even for low earners, any gains that they make as a result of changes in income tax and child tax credits will be wiped out by the VAT rise. The Secretary of State is squeezing Britain’s families harder than ever to pay for his failure to get the country back to work. Does that not sound all too familiar?
Stephen Lloyd
In my constituency, the average family household earns £27,500. According to the BBC’s calculator, if the household contains two children under 16 and both parents are working, the family will be just over £700 per annum better off as a result of the Budget.
Mr Byrne
But the challenge from this Budget is that there are simply not enough winners, because the bills for sending people to the dole queue rather than back to work are now going through the roof. Surely the hon. Gentleman recognises that more than £2.5 billion in extra dole bills does not constitute a wise use of public money. If only the Chancellor would do more to get people back to work, the squeeze on working families would not be anywhere near as hard.
Finally, we must ask what the Budget means for some of the most vulnerable people in our country—the people who are in need of help from the wider community, and those who need extra support in order to live a full life in one of the world’s biggest economies. I know that, like me, the Secretary of State believes that a country as rich as Britain should have high, not low, standards of civilisation and compassion—but the Chancellor is pressing ahead with measures that will deny thousands of people their independence. The question that the House must ask is: what is the Secretary of State doing to stop it?
The right hon. Gentleman told the House yesterday that after his review of DLA had been completed the mobility component for people in care homes would still exist, but he still cannot explain why the Chancellor announced that he was taking £400 million more out of the mobility component than previously planned. The Budget confirmed that he would press ahead with his abolition of DLA. I repeat that we support the right kind of reform of DLA, but no matter how he tries to dress it up, he is taking £2.9 billion out of a well-targeted benefit, and he himself is saying that 170,000 fewer people will receive the benefit by the end of the Parliament. That is £8,500 per family. With figures like that, surely he can understand why so many people with disabilities up and down the country are so worried.
Finally, it was confirmed in the Budget that the Government are pressing ahead with their plans to limit employment and support allowance to just one year. The Secretary of State has a chance to fix that in Committee on the Bill, but the Budget confirmed an ambition to save £3.5 billion from people on ESA. However, he knows as well as I do that many people do not recover from cancer in under 12 months, and he also knows that cancer charities up and down the country are now asking him to think again.
The Minister of State, Department for Work and Pensions (Steve Webb)
Will the right hon. Gentleman give way?
Mr Byrne
No, because I want to make an important point to the House. The Minister’s Department knows that three quarters of cancer patients still need ESA after one year. The message from the charities to the Front-Bench team was blunt. They say:
“this proposal, rather than creating an incentive to work, will lead to many cancer patients losing their ESA simply because they have not recovered quickly enough.”
Will the Minister confirm that he will withdraw this terrible measure?
Steve Webb
I am grateful to the right hon. Gentleman for giving way. He tried to frighten disabled people by saying the average DLA loss was £8,500 per year. Does he think that figure is right?
Mr Byrne
Well, the Minister will know as well as I do how much he is cutting from DLA, and he knows as well as I do how many people he anticipates will receive the benefit in the future. He can do the maths as well as I can. The obligation is on him to come clean and be straight with people with disabilities. What will the reform of DLA mean for them? Will he drop this measure from his Bill?
This afternoon we have heard a pretty poor defence of a Budget that puts more people out of work, fails to deliver on ambitions for our young people, and hits families harder than ever to pay the bills of economic failure. Worse still, it begins to endanger the contract of a proud and civilised country with the people who need help most. This is not a big society; it is a society in which the bonds that tie us together are weaker and weaker. This is not a Budget that is working; it is a Budget that is hurting—and the Chancellor should think again.
Mr Deputy Speaker (Mr Nigel Evans)
Order. Please resume your seats. As Members can see, more than 40 colleagues have applied to take part in today’s debate, so there is a six-minute limit on speeches, with the usual injury time for two interventions. As happened yesterday, persistent interveners will be moved down the list. I also remind Members of Mr Speaker’s instruction to them not to approach the Chair during the debate to find out where they are on the list. Those who can finish their speeches in less than six minutes will be helping colleagues. I call Mr Peter Lilley.
Mr Peter Lilley (Hitchin and Harpenden) (Con)
I congratulate my right hon. Friend the Chancellor on sticking to his plan to reduce the Budget deficit. Far from these cuts being too much, too deep, too soon, I believe that what he has proposed is the minimum over the longest credible period that we can reasonably expect will enable us to avoid the sort of financial crisis that has hit many neighbouring countries.
I want to address an illusion. The right hon. Member for Birmingham, Hodge Hill (Mr Byrne), whom it is normally a privilege to follow, based his speech on it, and it permeated the speech of the Leader of the Opposition at the weekend when he addressed the large rally on cuts. It is the illusion that we can have something for nothing. We live in a world of finite resources. If we spend more on one thing, we have to spend less on another. If we spend more now, we must expect to spend less—substantially less—in future, when we repay our debts with compound interest. The Opposition do not seem to realise that. I would be more than happy to engage in debate with either of them if when they advocated the restoration of spending in one area, they simultaneously spelt out the additional cut they intended to propose in another area of spending, but they never do so and the right hon. Member for Birmingham, Hodge Hill did not do so today. As long as hon. Members refuse to spell out alternative cuts to those that they reject, rational debate in this place is simply impossible.
Mr Deputy Speaker, I know that you are well aware that the ancient states of the Peloponnese resolved these problems by rules of debate that required those advocating increased spending on programmes that would require extra taxation or more borrowing to stand up in the public forum on a platform and argue their case with a noose around their neck. If they succeeded in persuading their fellow citizens of the need for increased spending and taxation, the noose was removed, but if they failed, the platform was removed. I understand that this healthy discipline meant that those states remained solvent for centuries on end.
Mr Edward Leigh (Gainsborough) (Con)
The slight problem with that is that if we had a similar system here, under whichever Government, there would be no Members of Parliament left.
Mr Lilley
That is slightly unworthy of a former Chairman of the Public Accounts Committee, who at least would remain, if in solitary glory.
A related illusion that the Opposition purvey is the call, frequently made by the Leader of the Opposition, for the Government to prepare a plan B in case the economic road gets rocky—a plan B would, by implication, involve higher spending and borrowing. Of course it is a bit rich for the Leader of the Opposition to ask for a plan B, given that he has not yet spelt out a plan A, but the reality is that if we abandon the plan set out by the Chancellor, we will get a plan B, but it will not come from the Opposition or from my right hon. Friend the Chancellor—it will come from the savers and pension funds whose money we would need to borrow to finance that increased borrowing. If we did bottle out of what we have proposed, they would demand deeper cuts over a shorter period and they would require us to pay a higher rate of interest. The net result would not just be deeper cuts in the public sector, as we have seen the markets impose on Portugal, Greece and Ireland; those higher interest rates would kill off and abort the recovery in the private sector on which we depend to create the jobs to take up the people not employed in the public sector. So it would be a disaster for this country if we were to go down that route.
The third illusion that some Labour Members purvey—perhaps the more honest elements among them—is the belief that we could avoid public spending cuts if we were prepared to put up taxation. But who would pay those higher taxes? Ultimately, taxes are always paid by individuals and if the squeezed middle are not going to pay them—they have been precluded from bearing a higher burden of taxation by the Leader of the Opposition —either the poor or the rich must do so. I would not put it beyond a party that sought to double the burden of taxation on the lowest paid by removing the 10p tax rate to seek extra revenues from the very poor, but that would not yield much money so Labour must look to the very rich for it. I just remind Labour Members that if they read the Red Book, they will see that the top 1% of income tax payers in the coming year are expected to pay no less than a quarter of the entire revenues of income tax—last year, the top 5% paid more than half of all income tax. We are reaching the point at which any further burden of taxation on those people would kill the goose that lays the golden eggs. In the words of my old friend, the sadly now deceased Lord Harris of High Cross, punitive taxes beyond a certain point do not redistribute income, they redistribute people. We have reached that point and we would go beyond it if we accepted the advice of the Opposition.
I urge my hon. Friends to support the Chancellor and my right hon. Friend the Secretary of State in what he is doing at the Department for Work and Pensions and to ignore the blandishments and illusions of the other side.
Mr Alistair Darling (Edinburgh South West) (Lab)
In the short time available, I shall not follow up on any points made by the right hon. Member for Hitchin and Harpenden (Mr Lilley), except to say that when he talks about any element of fairness in the Chancellor’s last Budget and this Budget as regards those on the top incomes, I think he will find that some of the things he talks about have more to do with measures that were announced by the previous Government than with those announced by this Government.
In many ways, the Budget is an annexe to last June’s Budget, which set the direction for this Government and the tone for this year’s Budget. I want briefly to consider how that will impact on this country as well as what is happening in other parts of the world. Although it does not quite fit the Tory story, what is happening to our economy will be very much influenced by what is happening in other parts of the world.
In some ways, it is quite remarkable that the global economy is growing at all. Three years ago, when the International Monetary Fund reported for the first time that it had stopped growing, it was possible that we were in for a serious downturn. It is now growing, but it is a two-speed recovery that is strong in Asia and far less so in the west. In Europe, we see strong growth in Germany and far less growth in southern Europe in particular. Here at home, manufacturing is doing well because the pound has depreciated, but the service and business sectors are not doing so well at all.
The recovery in this country and in Europe is fragile. We saw the economy grow more strongly than we expected in quarters two and three—the summer and autumn of last year—although again that had an awful lot more to do with measures that were implemented before rather than after the general election. We saw a sharp slow-down after that, which was largely brought about by people’s fear of what was to come. People are losing confidence—we saw the confidence survey published just after the Budget last week—and that should worry any Government. If we continue to get sluggish growth, the risk is that we will bump along the bottom and we will not get the jobs or growth on which this country depends.
Incidentally, I followed with interest what the Secretary of State said but one question that he failed to answer was that put by my hon. Friend the Member for Wolverhampton North East (Emma Reynolds): if our spending was so wrong, how come the Conservatives supported it right up until the end of 2008 and the Liberal Democrats supported it until a week after the general election, when they promptly changed their minds? The Secretary of State has revealed this afternoon that he is not quite the details man I remembered, but he might care to note that our structural deficit in 2006, according to his Government’s own measure, was 0.4%. It is simply not true to suggest that all our problems today are the result of spending. The main problem that we faced was an acute banking crisis that hit us and hit other countries in the world. That is why we are not the only country to have a very large deficit.
Mr Duncan Smith
I am listening to the right hon. Gentleman with great interest and respect, but I want to get this absolutely straight because one of his right hon. Friends said this the other day. The OECD measurement of the UK’s structural deficit in 2007 was 3.9% of GDP, the highest in the G7. Can he confirm that?
Mr Darling
The structural deficit was 0.4%. Throughout the past decade, we were spending money, but I must say, as a Minister in that Government, we were greeted with calls from the then Opposition not to spend less but to spend more on just about every occasion. They cannot have it both ways.
What worries me is that as we look forward, we face a number of pressures that are a threat to sustained recovery in this country. We, along with most other European countries, are following a deflationary policy and we are doing it together. This is not like Canada or Sweden 10 years ago, who reduced their deficit on the back of rapidly expanding neighbouring economies. That will have an effect. America, sooner or later, will have to deal with its very large debt problem that has been overhanging that country since the Bush years. That is not a recent phenomenon but it will have to be dealt with and it will have a knock-on effect on the rest of the world’s economies.
On inflation, for 10 years we in the west have lived off cheap goods coming from the far east. Now what is happening, as one would expect, is that those economies are growing and there are inflationary pressures. Commodity prices are increasing and wages are starting to go up, so those days are finished for us. It worries me that we are likely to face deflation as a result of Government policy with inflation as well. All that will result in lower growth, which is exactly what the Office for Budget Responsibility has said.
Mary Macleod (Brentford and Isleworth) (Con)
Does the right hon. Gentleman agree that many measures in the Budget will stimulate growth in future?
Mr Darling
I think there are many measures in the Budget, such as the reduction in corporation tax, the reform of planning law—if the Government can see that through their Back Benchers and councillors—and some others that will be helpful, but the thing that drives whether companies set up, take on more people or put in more investment is whether they can sell their goods and services. For as long as companies doubt that that is the case, we are going to have this problem with lack of confidence and we simply will not get the levels of growth that we expect.
That is why the story of this Budget was in many ways what the OBR—now independent of Government, which is a good thing—had to say. For the third time in 10 months it has downrated the growth that it expects in this country over the next couple of years and that should worry us. Yes, it picks up after that, but I suspect that is a function of the model that the OBR adopts: if growth is depressed in the short term, it is automatically assumed that growth comes back. However, I cannot see any evidence of where that growth is going to come from, either in the world economy or in Europe, especially if the eurozone insists on following what I regard as punitive policies towards those peripheral countries that are getting into trouble—visiting on Greece and Ireland conditions that I do not think they will be able to meet. Sooner or later, they will have to renegotiate or default, and the eurozone countries—principally Germany, which is the main driver of what is happening in the eurozone—will have to rethink the policies they are currently adopting. Otherwise, there will be a risk not only that Europe will fail to grow but that parts of it will go back into recession. That would be an absolute tragedy for the people living there and would also be extremely bad for us.
I have mentioned the uncertainties in the United States, but here at home we still have problems with the banks and their inability to lend. I recognise all the difficulties in that regard. I endured much criticism from the parties now in government when I was in charge of these things, but interestingly they have come up against exactly the same problems that I did, which is why their attempts to make the banks lend have had exactly the same reception as mine did. Next month, we will have the Vickers report into the future of banking but there is a risk that if we spend a long time discussing these matters and there is a lot of uncertainty about what should happen with the banks, that uncertainty will lead to lending being depressed. I hope there will be a full debate on the Vickers inquiry after the Easter recess, but I hope also that the Government will move to a conclusion one way or another in reasonable time. There is still uncertainty about banking regulation, particularly in Europe, and I regard the stress tests now being put in place as wholly inadequate and repeating the same mistakes that were made last summer. It is high time that we got to grips with this problem, which has not yet been resolved.
On the financial services sector, there is a lot of talk about rebalancing our economy and I am in favour of that, but we need to make sure that we build up other sectors of the economy and that we do not end up inadvertently running down one sector, which happens to employ more than 1 million people in this country.
Finally, it is important to recognise that in 2008 and 2009 international co-operation managed to prevent our collapsing into the abyss. There is a limit to what can be done through international agreements but they do matter when we are dealing with currency imbalances, trade talks, energy and so on. I hope that the Government will re-engage in that regard and will recognise that the policy they are currently pursuing within the United Kingdom runs the risk of derailing the recovery, meaning a long, slow recovery that will not bring the growth and jobs we need.
Andrew Griffiths (Burton) (Con)
I am grateful for the opportunity to speak in this important debate. I begin by paying tribute to the Budget that was delivered by the Chancellor which has been warmly welcomed in many parts of my constituency. It was particularly warmly welcomed by the people involved with the Staffordshire air ambulance, who feel that they will benefit greatly from the changes to charitable giving. As the president of the East Staffordshire Community and Voluntary Service, I have been contacted by many charitable and third sector groups that believe this is a real way for them to build for the future and offer more help and support in the community.
The Budget was also well received by businesses in my constituency. The changes to corporation tax will be a big boost to growth. Businesses were delighted to hear talk of manufacturing, which they feel has been overlooked and forgotten for so long in this country. To hear a Chancellor and a Government talk about manufacturing was a boost for businesses and they are excited about the future.
The Budget was welcomed by families in my constituency. The poorest families were pleased that many of them will now be taken out of tax completely. More importantly, it was welcomed by many in my constituency who feel that it reinforces what many of them consider the most important plank of what we as a Government are trying to achieve—that is, to make work pay. The decision within the changes to personal taxation to make it more rewarding to go out to work and to support people back into work has been welcomed not only by those who do the right thing, pay their taxes and work hard, but by many people who are desperate to get back into work and feel that this is a great opportunity which will make it more financially viable for them to do that.
However, there is one element of my constituency where the Budget was not so well received. It is fitting that the former chairman of the all-party parliamentary beer group should be in the Chair when I make these points. I must declare an interest as the MP for Burton, the home of British beer—the home of Marston’s Pedigree and Carling Black Label, and Punch Taverns, the largest pub company in the country. Brewing and the future of pubs are hugely important. This is an issue on which there is usually agreement across the Chamber. The need for us to support the brewing industry and pubs is recognised in all parts of the House.
We regularly have debates, particularly in Westminster Hall, about what we can do to support pubs and the brewing industry, and there is general support across the House, even from the shadow Minister with responsibility for pubs, the hon. Member for Derby North (Chris Williamson), who in a recent debate admitted to us that not only was he teetotal but that he did not use pubs very often. Even he recognises the need for us to support pubs and the brewing industry.
I recognise that the Chancellor was hamstrung when he inherited a massive deficit—£120 million a day in interest payments alone—and a decision to increase beer duty by means of the beer escalator by 7.2% this year. It was somewhat unfair of the Chancellor to say in his statement that there would be no changes to beer duty in the Budget. Whether it was his fault or not, we will see an increase in beer duty equivalent to about 10p a pint. That will impact on brewers across the country and on publicans in each and every one of our constituencies.
We all support the community pub. We all recognise that a pub is a safe environment for us to enjoy alcohol and for us to encourage young people to drink safely and responsibly. Increasing beer duty by 7.2% is a major problem, particularly because beer duty in the UK is already 7.9 times greater than in France, 12.4 times greater than in Germany and 12 times greater than in Spain. We have the second highest beer duty in Europe. I hope the Government will look again to see what they can do to support brewing and the beer industry in this country.
For instance, the Government could look at the inequality between cider and beer. Why is it that a pint of cider attracts half the duty that is charged on a pint of beer brewed in my constituency? I welcome the Government’s decision to reduce tax on beer of 2.8% strength. That is very useful, but I urge them to go to Europe, fight the case on behalf of British beer, and raise that 2.8% to 3.4% or 3.5% so that we can have some great British beer and support our pubs in the process.
Jack Dromey (Birmingham, Erdington) (Lab)
This is a Budget for growth: growth in insecurity, growth in inequality and growth in unemployment, which was up by 27,000 in the west midlands last month alone. It is not a Budget for economic growth, which was down last and this year and will be down next year, as are living standards. Not only is unemployment up, but so too are borrowing, inflation, debt interest payments and higher debt interest, which is up by £17.8 billion. Yes, the Budget contains some modest measures, but despite evidence that the economy is getting into choppy waters and despite the widespread concern being expressed, the Government remain lashed to the mast, rejecting any but plan A and sailing on regardless, oblivious to the consequences of their actions.
I want to focus on the consequences for the people of Erdington and Birmingham of the Budget measures of the past nine months in relation to the public, private and voluntary sectors. In the public sector, this Friday 1 April we will see the biggest cut in local government history—£212 million. It is a Budget launched by a laughing Conservative leader and supported by a Liberal Democrat deputy leader who only 24 hours earlier had been one of those who wrote to The Times to protest about the scale and speed of the cuts being imposed on local government.
The consequences will be felt by everyone, whether they are three, 13 or 73: three-year-olds who go to one of Birmingham’s excellent children’s centres will find the centres’ budget cut by 16%; 13-year-olds who go to one of Birmingham’s 60 excellent youth service centres will see many of those centres face closure; and 3,500 73-year-olds, those who built Birmingham and Britain, face losing their care packages altogether, which for them make the difference between a decent life and a life on the margins.
Jack Dromey
Bankers’ bonuses and, as our Front-Bench team proposes, among other things, we would have a sensible programme of investment, just as we invested in the construction industry to get it going at a time of recession, providing 110,000 homes, 70,000 jobs and 3,000 apprenticeships. We would invest now in a fresh stimulus package of much-needed social housing, creating jobs, apprenticeships and hopes. That is what we would do, and that is the difference between them and us.
The police, too, are feeling the consequences. This Friday 300 of the most experienced police officers in the west midlands will be forced out under regulation A19. I was with five of them this morning. They included an inspector, the national champion of designing out crime, who on one Birmingham estate achieved a 97% reduction in crime levels; a sergeant leading an excellent team of neighbourhood policemen; and a detective constable, the specialist in robbery, who has put away those who robbed old people at cash points and those who robbed shops with a machete. They all now face having to leave the force against their will. The Government have said to them, “Thanks for your past loyalty, but here’s your notice.” Governments should cut crime, not the police.
With regard to the impact on the private sector, 1.2 million people in that sector depend on public expenditure, particularly the £38 billion spent on local government procurement. If local government budgets are cut by 28%, major job losses in the private sector are inevitable. The estimate for the midlands is that 67,000 jobs will go as a consequence of what is happening in local government.
On rebalancing the economy, the Government have abolished the most successful regional development agency in Britain—Advantage West Midlands—and put in its place local enterprise partnerships that have no money, no power, no statutory basis and no power over skills. The planning proposals are a cocktail of confusion and the regional growth fund has only a third of the funds that were available to the RDAs. Incidentally, the RGF is the most elastic fund in history, designed to cope with all sorts of applications according to the Government.
Then there is the impact on the voluntary sector, the good society. Billions will be lost to the voluntary sector, including, in Birmingham, the oldest citizens advice bureau in Britain and 13 advice centres—all facing closure. The CAB was founded in 1938 and is the quintessence of the good society. Excellent people give first-class advice with an army of volunteers, but, just when the people of Birmingham need their support and advice most, those centres are facing closure.
My constituency of Birmingham Erdington is one of the 10 poorest in Britain, but it is rich in talent, with young people who are deeply aspirational and want to get on. What now haunts the people of Erdington is the spectre of the 1980s and TINA: there is no alternative. I know families in Erdington, Kingstanding and Castle Vale, where excellent men and women in the 1980s were made redundant two, three, four, five times. Some of them never worked again, because they gave up hope. The idea that once again the spectre of mass unemployment should haunt north Birmingham is absolutely wrong.
Stephen Lloyd
Is the hon. Gentleman aware that, after 13 years of Labour Government, there are 2 million children in households where no one works?
Jack Dromey
We acted, by way of a range of measures, to help the poorest families, including the poorest families with children. It is a record of which we are proud.
There is a fundamental difference between the Government and this Opposition, not just on economic strategy but on this point: for us, unemployment will never, ever be a price worth paying.
Martin Horwood (Cheltenham) (LD)
The cornerstone of this Budget is undoubtedly the need to tackle the deficit. Spending £50 billion a year just on debt interest, which is double what we spend on transport, was clearly intolerable and could not go on. If we had not tackled the deficit, we would have found that an Irish, Greek or Portuguese economic future awaited us all, meaning more cuts, more public billions down the drain and higher interest rates, which would have hit everyone with a mortgage, everyone with an overdraft and every business dependent on bank borrowing. There is no point pretending that the cuts are not painful, but interest rates of 7%, 8% or higher would have been extremely painful, too, so I am glad that the Chancellor did not take that risk.
I am also very glad that the Chancellor is well on the way to fulfilling a Lib Dem election pledge to take more than 1 million people out of income tax, benefiting 24 million more by raising the income tax threshold. That will take nearly 2,000 of my constituents out of income tax altogether and benefit nearly half the population of the town.
There are also many welcome measures in the Budget for business and for investment. The cut in corporation tax will help small businesses in my constituency; I hope that we will benefit from some of the 40,000 new apprenticeships for young people not in education, employment or training; and it would be churlish of me not to mention the redoubling of the Swindon to Kemble line, which will be good for Cheltenham, good for business and good for the environment.
Good for the environment, too, will be the tripling of the endowment to the green investment bank to £3 billion, and the news that that bank will in due course be able to borrow on its own account. That is an important signal to green investors, and it will help us to lay the foundations of a low-carbon economy. So, too, will the commitment to a floor price for carbon, and, although £30 a tonne by 2020 is a pretty modest ambition, it gives an underlying message and confidence to those investing in green industry and green jobs.
I hope, however, that the measure will not lead to an accidental, back-door subsidy to the nuclear industry—not just to new nuclear but to the existing nuclear industry, which already costs us £1.5 billion of public money a year to clean up and close down. That is important, because any subsidy to the nuclear industry would run counter to specific pledges made in opposition by both Conservative and Liberal Democrat spokesmen, and I know because I was one of them.
I have a few other slight worries about the Budget. Not all red tape is bad, and I am concerned about the relaxation of the rules to be able to request flexible working. In my experience as an employer, I found that flexible working generally increased staff commitment and productivity. Progressive and innovative companies are trying to do more of it, not less.
My biggest worry about the Chancellor’s speech is about planning. He said that
“we will introduce a new presumption in favour of sustainable development, so that the default answer to development is yes.”—[Official Report, 23 March 2011; Vol. 525, c. 956.]
It may have been a shame that he did not have the space or time to explain that statement more fully, because, on the face of it, it is rather alarming. Not all development is sustainable, so how can the default answer possibly be yes?
I hope the Chancellor was guilty of no more than radical oversimplification, but one or two other statements in “The Plan for Growth” give cause for alarm. It states that the Government will enable
“businesses…to bring forward neighbourhood plans and neighbourhood development orders.”
There are many definitions of a neighbourhood, which was not clearly defined in the Localism Bill, but I am pretty sure that a business is not a neighbourhood.
“The Plan for Growth” states also that the Government will
“localise choice about the use of previously developed land, removing nationally imposed targets”.
I do not welcome nationally imposed targets, but it is important that localities are able to prioritise brownfield sites over greenfield, and any qualification of that ability would not be helpful.
Possibly the most alarming news of all in “The Plan for Growth” is:
“Local Enterprise Partnerships (LEPs) will be able to play a vital role in supporting local authorities plan for key sub national infrastructure… providing a powerful voice for business in the planning system”.
My constituents generally think that business has a pretty powerful voice in the planning system already, as it usually deploys battalions of barristers and consultants, but “sub national” worries me, because it has unfortunate echoes of Labour’s old regional spatial strategies.
People in the parish of Leckhampton with Warden Hill in my constituency know a bit about regional spatial strategies. They fought a battle against the south-west RSS for many years, and they are still fighting to protect the last substantial green space in the parish from disappearing almost completely. Such green spaces next to urban populations are vital for people’s health and physical welfare. They are opportunities for recreation; important for local food production; they absorb carbon dioxide and particulate pollution; and they are the most visited parts of the country and treasured by local people. Once lost, they are gone for ever, but they are exactly the spaces being targeted by developers, who in the past were supported by Labour’s myth that endless growth in urban extensions was sustainable. It simply was not.
The Localism Bill offers local communities real hope and the prospect that they will have a voice in the future of their own areas—
Chris Ruane (Vale of Clwyd) (Lab)
I was hoping and praying that this Budget would offer some employment chances for the people in my constituency. It has done nothing for employment chances in Vale of Clwyd; in fact, it has increased the chance of unemployment there.
There are 650 parliamentary constituencies in the UK, and of the top 50 for percentage of jobs in the public sector—including Edinburgh South with 67% and Swansea West at No. 50 with 41%—76% are Opposition constituencies and only 24% are Government constituencies. That speaks volumes. The policies that the Government are drawing up are policies not for Britain, but for the Tory and Liberal Democrat areas of Britain, and that is not one-nation conservatism. We are seeing on the economy the same partisanship that we saw on constitutional issues.
There are 13,000 public sector workers in my constituency.
Chris Ruane
I am not giving way.
There are 10,000 public sector workers in the neighbouring, Conservative constituency of Clwyd West. [Interruption.] I will give way to the hon. Gentleman.
Martin Horwood
Does the hon. Gentleman think that the policy of the pupil premium, which is gearing education funding towards schools supporting the least well-off families, will support more Conservative and Liberal Democrat constituencies than Labour ones?
Chris Ruane
I will deal with that shortly; the hon. Gentleman does not have to worry about that.
In my constituency, there are already six people chasing one job. If the Government implement these 10% to 25% cuts in the public sector, another 2,000 to 3,000 people will become unemployed, with 20 people chasing each job. The Government state that they want the private sector to take up the slack of jobs in the public sector. What have they done to promote that in my constituency? Nothing. One of the biggest employers in north Wales is Sharp, which has the biggest solar panel factory in the whole of western Europe. There is also Kingspan in Delyn. In my constituency, we have the Technium OpTIC centre, which has the biggest solar panel in the whole of the UK. The changes to the feed-in tariff that the Government have announced will mean that these sectors are hit, and there will be job losses, not job expansions, in my constituency. An article in today’s edition of The Guardian stated that the UK had gone from third to 13th in green technology jobs in one year. This is not a green Government.
Young people in my constituency were looking to the Chancellor to help them to gain employment. They had help from the previous Government—a Labour Government. In my constituency, the Rhyl city strategy put 450 young people back to work in the space of 12 months. They were given hope; they were given a wage packet; they were given a future. All that has ended. The last day of the future jobs fund is tomorrow; after that, there will be nothing like it in my constituency.
Another article today in The Guardian mentioned that seaside towns and communities have the worst deprivation in the country. This Government did nothing to help those seaside towns; in fact, they worked against them. The changes that they have made to housing benefit will mean, as Boris Johnson has said, a Kosovo-style clear-out of the inner cities, especially London. Where will those people go? They will go to houses in multiple occupation in towns such as Weston-super-Mare, Hastings, Margate, Jaywick, Rhyl, Colwyn Bay and Blackpool. They will be moved from areas of employment to areas of unemployment, where slum landlords will make money out of misery—helped, aided and abetted by the Conservatives, who are altering the rules and regulations on the licensing of slum landlords.
Stephen Lloyd
Is the hon. Gentleman aware that according to figures that I received last week on Eastbourne, which is of course a splendid seaside town, the unemployment rate for February 2011 was down by 340 compared with February 2010? We welcome anyone to whom we can hope to give jobs in Eastbourne, which has a successful economy.
Chris Ruane
What will the figures be in February 2012?
I speak from the perspective of a Welsh MP in a seaside town in an area with high public sector employment. We had made progress under the Labour Government, who created an extra 7,000 jobs over a 13-year period, with 3,500 in one business park alone—St Asaph business park, built by the Tories, empty under the Tories, and full under Labour. We were able to achieve that because we engaged with Europe. We applied for objective 1 funding—something that the Tories never did in their 18 years—and we got it. In my county of Denbighshire, we have had £124 million over the past seven years to create jobs, and we have done that. We have engaged with the Welsh Assembly Government; I give some credit to Plaid Cymru in this regard. Plaid Cymru and Labour, in a proper, working coalition, have pumped £38 million into five principal seaside towns along the north Wales coast: Prestatyn, Rhyl, Towyn, Kinmel Bay and Colwyn Bay. We have engaged with the Department for Work and Pensions in running national pilots in Rhyl—the Rhyl city strategy and Fit for Work.
We have put hundreds of people back to work, not by shaking a big stick at them but by engaging with them. I am talking about drug addicts, alcoholics and ex-prisoners who are now making honey on a farm in Wales. I am talking about Rhyl football club, which is using football as a means to connect with parents and children. I am talking about Rhyl college and the Hub young people’s centre, which has 1,000 young people engaged with the back-to-work agenda. We have made progress, but all that is under threat from the Budget that we have witnessed.
We saw the Tories at work in the 1980s. We have seen what they did to coal, steel and inner-city communities. Remember the riots; remember the closure of the pits and the steelworks. That legacy is still being felt in many of those communities today. I make a prediction: if specific help is not given to areas with high public sector employment, then we will be looking at those areas as the new coal, steel and inner-city communities of this Parliament. Specific help must be given; otherwise, it will be back to the future—back to the 1980s.
Stephen Metcalfe (South Basildon and East Thurrock) (Con)
I am grateful for the opportunity to speak in this important and wide-ranging debate. As many people know, I come from a small business background, and so I take an active interest in the health of our economy and companies of all sizes. I was absolutely delighted to hear last week’s statement by my right hon. Friend the Chancellor, who put growth very much at the heart of his agenda to support businesses. He has very little wriggle room—we recognise that—but the creative approach that he adopted to try to demonstrate his support for businesses, large and small, and to help companies start on the path of creating jobs again, was welcome up and down the country.
We have to contrast that with the landscape that we inherited from our Labour colleagues. I do not quite know how to put it—whether it was neighbours at war or a family in crisis—but the situation was very much that they had maxed out the credit card and ceased to open the post. Time and again, I hear a degree of denial from Labour Members saying that we do not face a real problem, but we know that we do, because when we got round to opening the post, what did we find? A message stating that all the money had gone. That is what we have to deal with.
When I talk to people in businesses around my constituency and the south-east of England, all I hear is that they understand the need for the measures that we are taking, but they want us to remind them, the public, again and again of why we are having to do this—the fact that we are paying £120 million a day in interest alone and having to borrow £400 million a day to keep the country afloat. It is against that background that we have to find a way of balancing the books. I believe that my right hon. Friend the Chancellor started that process last week. Many organisations, such as the Institute of Directors, the Federation of Small Businesses and the British Chambers of Commerce, agree. They all welcomed the measures, in part, because they understand the problems.
I want to focus on three areas. First, there is the support for business. The cut in regulation is welcome as a stated aim, as is the focus on better skills for our young people so that we can have a well-trained work force. Secondly, I welcome the support for entrepreneurs, because it is they who will take a small business and grow it into a big business so that it pays its tax and employs, we hope, many thousands of people. Thirdly, there is the simplification of the tax system.
However, the people to whom I speak also express some concerns. At a recent meeting of influential businesses in south Essex, they were worried that a degree of gold-plating still goes on with regulation. We all accept that some regulation is needed, but please let us make it fair, even and easy to understand. They also express concern—I know that my right hon. Friend the Secretary of State for Work and Pensions has looked into this—about the scrapping of the default retirement age. They have used it, rightly or wrongly, to manage their work forces, and are concerned that raising it will create greater problems for them in the future and stop new openings being created in their organisations.
I also ask that we look at how we classify truly small businesses. This Budget uses the number 10, but businesses with 20 and perhaps even 50 employees are small businesses as well. They need a greater degree of support than the previous Government gave them and than we are currently proposing to give them.
Finally on the business side, we know that we need to grow our exports. We need to reach out and trade across the world. I heard the statistic recently that there are now 350 million people in India who describe themselves as middle class—people who have disposable income. We need to reach out and show them that British companies and products can address their needs and wants. However, we need to provide some security for those companies. I have a constituent who has been trading in north Africa. He is concerned about whether he will be paid for work that he has undertaken. He is a small business man. Perhaps we should consider how the Government can support businesses that are trading abroad in places where there is not total confidence and security that they will be paid. I welcome the support that we showed for science and technology, because it is companies with innovative and technology-based ideas that will drive growth in our economy.
Of course, I also welcome the help that was announced for families, such as the raising of the tax threshold, the council tax freeze and the 1p cut in fuel duty. Although that 1p on its own may not be significant, the scrapping of the 5p escalator is significant. It means that petrol will be 6p cheaper next month than it would have been under the previous Administration.
Above all, that tax cut and the other measures announced in the Budget demonstrate that this Government are willing to listen and to adapt to the changing landscape. I hope that we will continue to do that, and that we will continue to listen to our residents, individuals and companies, and work with them to create growth.
Simon Danczuk (Rochdale) (Lab)
I listened to the hon. Member for Burton (Andrew Griffiths) with interest. The Budget has not been as well received in my constituency of Rochdale as it clearly was in Burton. I am not sure whether that is to do with the amount of beer that is consumed in Burton compared with the amount that is consumed in Rochdale. However, like him, I will concentrate my comments about the Budget on my constituency.
One of my central concerns since the coalition announced its programme of spending cuts has been that we will end up with a jobless recovery. I suspect that that is exactly where we are going. I understand that the Conservatives are motivated by their ideological belief in small government. They cut Government spending and public sector jobs because they believe that it is the right thing to do. Once upon a time, the Liberal Democrats agreed with Labour. Before the general election, they led voters to believe that they were a party of the centre left. I know that that is hard to believe now. Page 13 of their manifesto stated:
“If spending is cut too soon, it would undermine the much-needed recovery and cost jobs.”
That is what is happening today.
The Budget provided the Chief Secretary to the Treasury and his colleagues with the chance to use their influence in the coalition Government to help constituencies such as Rochdale that suffer from chronic unemployment. Rochdale’s unemployment statistics make worrying reading. Currently, 8.6% of the town’s active population is claiming jobseeker’s allowance, with almost 15 claimants per vacancy at the jobcentre. No doubt the 4,000 unemployed people in my constituency were unimpressed to hear the Chancellor increase his unemployment forecasts. Those forecasts tell them not only that it will be a long time before they will have an opportunity to gain employment, but that more people will be joining them on the dole queue—and all because the Chancellor will not change his course.
Rochdale is heavily dependent on the public sector. We face £64 million of cuts from this Government’s Budget just in local government. That will force even more people in Rochdale on to jobseeker’s allowance. The Government have long argued that they will create the conditions for the private sector to sweep in and create the jobs that are needed. Let us look at the reality in Rochdale. In many respects, the Chancellor has only increased Rochdale’s disadvantages. The enterprise zone at Manchester airport will continue the worrying trend of investment being drawn away from Rochdale to other, often more prosperous, parts of Greater Manchester. The new enterprise zone will create a disadvantage to Kingsway business park in my constituency. What is more, the Centre for Cities report shows that every job created in an enterprise zone costs more than twice as much in real terms as a job created by the future jobs fund, and more than four times as much as a new deal job. The Chancellor has made much of his tax incentives to encourage businesses to create jobs. However, the research and development tax relief for small businesses will help less than 1% of those businesses.
In conclusion, we have learned nothing new about the Conservative party. We have known all along that it would prefer to give tax cuts to bankers than invest in the future jobs fund or in manufacturing. However, the Liberal Democrats once portrayed themselves as the defenders of places such as Rochdale. They should be ashamed of what they are party to. This Budget shows that they are unable to stick up for their ideas and for the people they purport to represent. It is no wonder that this weekend, yet another Liberal Democrat councillor in Rochdale announced that she would not renew her membership of that party.
David Rutley (Macclesfield) (Con)
I am grateful for the opportunity to speak in this important debate. Given the restrictions on time, I will focus on the Government’s plan to achieve long-term sustainable economic growth. I welcome their commitment to make that their biggest economic priority.
I welcome the Chancellor’s clear signal that Britain is open for business, and the steps that he has taken to revitalise the country’s enterprise culture. Reducing corporation tax by a further percentage point to just 23% in 2014 is another boost to business and will help to establish the UK again as a great place to do business. Like many Government Members, I welcome the Chancellor’s move to increase tax relief on new business investments to support our entrepreneurs and wealth creators. That will help to grow businesses across the country, including those in Rochdale. Yesterday’s StartUp Britain launch will encourage more people to create their own companies.
Businesses like what they see. It was good to hear from the Institute of Directors today that 70% of businesses surveyed believe that the Budget will have a positive impact on the economy. The incentives that I have mentioned are vital in recreating the enterprise culture. Many small businesses in Macclesfield tell me that they want the Government to break down the barriers that have built up progressively and which, collectively, block businesses from expanding. I therefore welcome the Government’s commitment to reduce the burdens on business by looking at planning, tackling excessive health and safety regulations, and, importantly, simplifying the tax system.
The Chancellor’s approach to deregulation, as set out in “The Plan for Growth”, is very pragmatic. It will support industry sectors that are critical for the economic growth that we need. Those industries rightly include advanced manufacturing, digital and creative industries, and life sciences and health care.
Macclesfield is home to one of AstraZeneca’s largest pharmaceutical manufacturing sites, so I was delighted to see that David Brennan, its chief executive, had given his support to Government plans and said:
“We welcome the package of measures announced by the Government…Those on clinical research and the environment for undertaking clinical trials represent a powerful statement of intent about the government’s determination to maintain the attractiveness of the UK as a centre for R&D activity.”
That is a ringing endorsement from one of our most important pharmaceutical companies. My request to the Chancellor is that he break down the barriers to business success with the same energy and pace that he has shown in so many other areas of economic policy. It is an urgent priority.
We can learn a lot from Macclesfield’s proud entrepreneurial tradition. The local economy was built on silk, and Macclesfield became the world’s largest producer of finished silk. Since that time there has been an entrepreneurial thread running through our economic development. Silk led to dyes, and dyes brought ICI to Macclesfield after the second world war. Today we benefit from AstraZeneca’s strength in pharmaceuticals, and that entrepreneurial tradition is still alive. We have higher than average business start-up and survival rates. We are proud of that tradition, but in the current challenging economic climate, no one is taking growth for granted.
One of the most rewarding parts of my job is being able to work with local businesses and community groups to make Macclesfield a stronger destination and to help boost the local economy. We have made big strides, and working with the support of Cheshire East council, we have created regular business breakfasts for Macclesfield’s businesses to have their say on the local economy. They wanted a clear action plan, so with their support we have created a Macclesfield economic forum, which will steer a course towards stronger economic growth. We are building on that momentum, and the proposals that have been put forward in this Budget will help us with that task.
It is often said that two “Eds” are better than one, but based on what we have heard from Opposition Front Benchers, it is clear that that is not always the case. [Interruption.] It took a while for some people to get that. It seems that the Opposition are suffering from a number of seemingly delusional conditions, which are getting progressively worse. It started with the credit crunch, when they had a bad case of what Lord Turnbull has called “wishful thinking”. They thought that they had put an end to boom and bust, but all too clearly, they had not.
Then came a well-documented case of deficit denial. The Opposition blame the deficit on the economic crisis, but they are unable to face the fact that they ran cyclically adjusted deficits in each of the six years to 2007-08. Sadly, in more recent days, Opposition Front Benchers have started to exhibit signs of a new condition—alternative avoidance. The symptoms are there for all to see. They say they have an alternative and tell millions of people that they have one, but they are completely incapable of articulating what it is.
The Labour party has no alternative. In stark contrast, the Government have set out a positive plan to tackle the deficit and put the UK back on the path to sustainable long-term economic growth. I commend the Budget to the House.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
I begin where I ended my speech a few weeks ago on Second Reading of the Welfare Reform Bill—by referring to the Government’s approach to disability living allowance. It is always helpful after a Budget to have a look at the Red Book, and on that subject, as on others, I have done so. I found that the Chancellor of the Exchequer states that the Government intend to recoup about £470 million during this Parliament as a result of removing the mobility component of DLA.
This debate gives us a wonderful opportunity to clarify a subject that has been discussed again and again, but which has led, even today, to sheer confusion. For some 80,000 disabled people, the planned removal of the mobility component of DLA from people living in residential homes is causing great concern, and the issue is clouded by the obfuscation that we have heard from the Government, including from the Secretary of State for Work and Pensions today.
Last week the Prime Minister claimed that the Government did not plan to remove the mobility component, even though again and again at the same Dispatch Box, the same Prime Minister had compared the people involved with patients who are in hospital for two or three weeks. Whatever the Government say—I hope we will get some clarity from them tonight—clause 83 of the Welfare Reform Bill, which is being discussed in Committee as we speak, will legislate precisely for the removal of that benefit. My hon. Friend the Member for Glasgow North East (Mr Bain) has pointed out to the House that 2,000 disabled children could lose out.
The Parliamentary Under-Secretary of State for Work and Pensions (Maria Miller)
indicated dissent.
Maria Miller
I thank the right hon. Gentleman for allowing me to intervene. I point out to him that clause 83 of the Bill is about overlaps. He will have heard the Prime Minister make it very clear from the Dispatch Box that we do not intend to remove the mobility component of DLA from residents in care homes from 2012. We will, however, as he would expect, examine all DLA recipients as we move forward with the reform—with which, as we have heard from the Labour spokesman today, the Opposition agree.
Mr Clarke
I heard the Prime Minister, and I have heard the hon. Lady on numerous occasions. I even had a private meeting with her, along with Lord Rix, who co-chairs with me the all-party group on learning disability. She has not once said that there will be a change to the money that the Red Book anticipates will be saved by the removal of the benefit, or that the Government are changing their mind. If the Minister who winds up tonight’s debate says that, there will be joy among thousands of disabled people and their carers, but it has not been said yet.
What we are being told is that the Government inherited a financial crisis. I consider the views of my constituents on that and other matters, but the fact is that they are bored stiff with the blame game. They know about the deficit, but they also know about growth. They know that the Government said precious little about growth in the Budget, as has also been the case today.
Take, for, example, fuel. I argued that the VAT increase should be reversed, but the Chancellor expects drivers to be grateful for a 1p cut in fuel tax when VAT is going up by 3p in the pound. That will not allow the Government to ingratiate themselves with people who can no longer afford to fill up their tanks on the forecourt. If Government Members have some doubt about that, may I refer them to, of all newspapers, yesterday’s Sun? It indicated that one fifth of people had given up driving. If that represents growth, I do not understand the meaning of the word.
A woman in my constituency, a nurse called Sandra, does a round trip of 80 miles a day to do her job. She fears for the future and, like me, regards the energy regulations in the Budget as being too little, too late.
Stephen Barclay (North East Cambridgeshire) (Con)
The right hon. Gentleman says that the measures are too little, too late. Why did his party set a 10-year target in 2000 and then miss it in 2010, only to set in 2009 a far more ambitious target for 2020 that no one expects any Government to reach?
Mr Clarke
If I had another six minutes I would be very happy to answer the hon. Gentleman, but if he does not mind, I will just make my own speech.
There is profound disappointment with the influence of regulators, particularly in the energy sector, for gas, electricity, oil and the rest. We are seeing the impact of that influence in what people are actually paying day by day, and in the job losses being experienced as a result.
As I said, my constituents are well informed, as the House would expect them to be. Mrs Agnes Baillie, from the lovely little village of Auchinloch, who is 85, knows what the change in the pensions inflation link from retail prices index to consumer prices index means, even if the Secretary of State does not—he skipped over that in his speech. She knows that from 2011 that change will apply to state second pensions, public service pensions and some private occupational pensions, that RPI is not CPI, and that both the Conservatives and the Liberal Democrats gave firm pledges in their election manifestos that they would not change the existing arrangements—they certainly did not say that they would change things to the disadvantage of current and future pensioners.
The Secretary of State scoffed at the mention of the banks, which is both astonishing and disagreeable. The banks’ behaviour is at the heart of the all the problems that we are dealing with, and we will not get the economy right if we do not address that; instead, we will get stagnation and lack of growth. Firms will be unable to get off the ground and young people will be unable to get on to the housing ladder if the banks are not challenged more profoundly than they have been so far.
The last words of the Chancellor’s Budget statement were:
“We have put fuel into the tank of the British economy.”—[Official Report, 23 March 2011; Vol. 525, c. 966.]
Is that at the expense of 80,000 people, including 2,000 disabled children who live in residential care homes? If so, it tells us a lot about this coalition Government and the values that they hold.
Stephen Barclay (North East Cambridgeshire) (Con)
First, further to a number of the speeches from Labour Members, including the hon. Members for Rochdale (Simon Danczuk) and for Birmingham, Erdington (Jack Dromey), who I am pleased to see are still in the Chamber, I shall first suggest that the difference between the parties is less than is claimed. Secondly, I shall highlight the fact that significant waste remains, and that waste cannot be cut too fast or too deeply. Thirdly, I shall highlight the disconnect between the House’s responsibility for setting a Budget and debating it, and the information available for effective scrutiny.
Is the gap between the parties as wide as Opposition Members claim? All parties would have spent beyond their means in this Parliament. The Office for Budget Responsibility says that under the coalition, national debt will be £1.31 trillion at the end of this Parliament. Had Labour remained in office, national debt would have been £1.38 trillion. A difference of £62 billion is not insignificant, but to put that in context, it is less than we will be spending in a year on debt interest by the end of the Parliament. It is therefore not credible to say, as a number of hon. Members have done, that public services will be put at risk. After all, the Government will spend £700 billion a year, which is 40% of gross domestic product—more, in fact, than Tony Blair was spending when he left office.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
Will the hon. Gentleman clarify that point? Does he not recognise that one crucial difference is the configuration of spending under Tony Blair? That spending went mainly on services, but under this Government, the money will be spent on massive unemployment.
Stephen Barclay
Had the hon. Gentleman bothered to be here for the whole debate he would have heard some of the points made by my colleagues, including the fact that £42 billion is being spent on debt interest this year alone.
The hon. Gentleman is quite right to ask where the money is going, which brings me to my second point: waste in spending. The focus is often on top salaries in the public sector, but in Cambridgeshire there is one station manager, or a more senior officer, for every four full-time firefighters, one police sergeant for every four constables, one inspector for every three sergeants, and one chief inspector or above for every inspector. There has been huge inflation in management costs.
Opposition Members may chunter, but let us look at what many of those managers do. The Ministry of Justice asked local authority youth offending teams to collect more than 3,000 bits of data on process, and yet outcomes were still not measured, so the YOTs still cannot say which prevention schemes work. There has been an inflation of management salaries, but often the same people are paid for the same performance. The chief fire officer of Cambridge earns £190,000—£60,000 more than the chief constable—and has three deputies on £150,000, £140,000 and £130,000 each. Perhaps Opposition Members were marching on Saturday to protect such salaries, but we need to look at productivity, and at what we get in return for those salaries and that inflation in management spend.
Jack Dromey
On productivity, the Prime Minister hailed local government as the most efficient part of the public sector. Can the hon. Gentleman square that with demanding up-front, front-loaded 28% cuts, the consequences of which are being felt in my constituency?
Stephen Barclay
The hon. Gentleman mentioned productivity, but I urge him to read what the independent National Audit Office says about the health service. Spending doubled, so of course waiting lists went down—we would expect that—but the NAO found that health productivity fell dramatically. The spending fell to many of the best-paid staff such as consultants, so productivity did not match funding.
On procurement waste, the NAO says that Firebuy, an arm’s length body set up by Labour, cost twice as much to set up and run as the savings that it made. On NHS procurement, the NAO found that
“NHS…trusts pay widely varying prices for the same items.”
One NHS trust bought 177 types of surgical gloves.
The huge waste in the opaque spending in local budgets needs to be addressed. For example, Cambridge fire service spends £1.77 million, an increase of £600,000, on what it defines as “other services and supplies”. It cannot explain what that spending is. Cambridgeshire police define £7 million of spending as “other”.
Stephen Barclay
I would attribute it to a number of factors. Let me give an example. I have mentioned local spending in Cambridgeshire, but a national organisation, Ofcom, is an arm’s length body run by a former adviser to Gordon Brown and Tony Blair. He was paid £1.5 million over the last four years, and he reduced his head-count but managed to increase his staff budget. Last year he spent £9.8 million on 180 different consultancy providers. Ofcom even managed to spend £200,000 on newspapers and magazines, but it has only 800 employees, which works out as more than one free newspaper a day for every member of staff. Seven Ofcom staff managed to claim in expenses more than the average wage, with one racking up £5,500 on taxis. I do not know whether they took taxis to the protest on Saturday, but that is the waste that we hear about.
My local police bought six Land Rover Freelander cars for senior officers at £28,000. Bobbies on the beat are far cheaper than the management tier, and I suspect that they make more arrests. We should look to protect front-line services, not to make cuts in them when there are other significant costs.
My final point is on the disconnect in terms of the information that the House has when it sets Budgets. I do not believe that we are effectively scrutinising what happens. In 2009-10 we spent £1.5 billion on consultants and £700 million on arm’s length bodies, without any central data being collected. So we know there is waste. Gershon, Green and many others have looked at the matter, and I welcome the steps taken by the Front-Bench team in setting up the Major Projects Association, even if at the moment it only has 38 members of staff. In 13 years in office, however, the Labour party did not even define what a major project was, which is why we have such wide variations in Government.
Despite all the differences in the headline figures and some of the scaremongering we have heard, I hope that we do not lose sight of how money is spent. We cannot cut waste too fast or too deeply. It is clear that there is waste in our system, and unless we have good-quality data with which to benchmark, standardise and give visibility to the problem, our debates will end up returning to the soundbites that we have heard too frequently over recent days.
Emma Reynolds (Wolverhampton North East) (Lab)
There seems to be agreement across the House that one of the main lessons of the global financial crisis is that we need to rebalance the economy. In my view, the major objective for the Budget should have been precisely that, because it is the only way to drive sustainable growth and job creation. There are two major ways to do that, and correspondingly two tests that I set the Budget. First, it should rebalance the economy away from an over-reliance on financial services, and secondly, it should reduce the regional economic disparities in our country.
On the first test, we should recognise that our country has a proud history of making things, and we remain the sixth-largest manufacturing country in the world. Manufacturing growth is currently outstripping growth in the service sector. In my constituency, which is part of the black country—once the beating heart of the industrial revolution—manufacturing still accounts for one fifth of jobs. The aerospace cluster in my constituency is thriving, although against a backdrop of a worrying overall rate of 8% unemployment. One company in that sector, Goodrich, is currently on a recruitment drive, creating 100 new jobs. At the end of his Budget speech, the Chancellor said that he wanted to give meaning to the words, “Made in Britain”, but if the Chancellor wants goods to be made in Britain, why did he slash capital allowances in his emergency Budget in June and use the £2.7 billion to deliver a cut in corporation tax, as set out on page 44 of the Red Book? This transfer will disproportionately benefit the banks at the expense of manufacturing. How is that consistent with the Chancellor’s desire to prioritise manufacturing?
The tax reliefs that the Chancellor announced last week are a flimsy sticking plaster for the much deeper wound he left in June. In the words of the Institute for Fiscal Studies, the Chancellor is
“giving with one hand and taking away with many others”.
The same is true of the Government’s local enterprise partnerships, which they trumpet as an innovative scheme. I want to pay tribute to those businesses in the black country that have successfully formed an LEP, but again the Government have given a false prospectus to these businesses. They tell people to apply for the regional growth fund, but it is a tiny pot of money—one third of what was available for regional development agencies—and is said to be over-subscribed by 10 to one. The Government know that it will leave many more disappointed than successful among those who have applied.
The regional growth fund comes nowhere near filling the hole left by the very successful regional development agency, Advantage West Midlands, which was mentioned by my hon. Friend the Member for Birmingham, Erdington (Jack Dromey). Once again, the Government give with one hand, but take away with the other. I would like to think that the enterprise zones will in reality deliver what the Government claim they will deliver, but I am worried because even the Conservative Chairman of the Treasury Select Committee, the hon. Member for Chichester (Mr Tyrie), warned last week that they risk distorting activity and adding no new jobs. The risk is that they will simply incentivise existing businesses to move into a low-tax zone without employing more people. Britain needs job creation, not job relocation.
On the second test, there needs to be a rebalancing of economic wealth across our nation as a whole to reduce growing regional disparities. Globalisation has brought many opportunities to the UK, but all too often the communities in the midlands and the north have borne the brunt of the risks and insecurities of globalisation, while the rewards have tended to flow to London and the south-east. Unemployment in my constituency is 8%—double what it is in the south-east—and we are losing 300 jobs at New Cross hospital and 500 jobs at Wolverhampton city council. And this is just the tip of the iceberg. The Chancellor is taking a reckless gamble by expecting the private sector to pick up the pieces of his massive public sector cuts. He is driven by an ideological commitment to a smaller state. The Budget crucially fails to redress the growing economic disparity between the south-east and the rest of the UK. Areas such as the west midlands need more stimuli for the private sector than other areas. For example, the decisions about the regional growth fund need to prioritise areas hit hardest by the global financial crisis.
The Budget fails both my tests: of rebalancing the economy towards manufacturing, and of redressing growing regional disparities. We want to see more goods made in Britain, but the Chancellor’s actions do not match his rhetoric, and in fact run contrary to it. With growth down, unemployment rising, youth unemployment at a record high and consumer confidence sinking, households are seeing their living standards falling as prices outstrip wage increases. The Chancellor should have had the humility to realise that his cuts are too deep and too fast, and that his massive private sector gamble simply is not working. My constituents are bearing the brunt of his reckless Budget.
David Mowat (Warrington South) (Con)
We have heard a lot this afternoon about the serious deficit left to this Government, but there is another aspect of the economic legacy referred to by the hon. Member for Wolverhampton North East (Emma Reynolds): the incredible imbalance in our economy between London and the regions in the north, Wales and the midlands. At the tail end of the previous Government, gross value added in London per head was accelerating away from the rest of the country and now is approximately double what it is elsewhere. That is an awful statistic. In no other country in the world does the capital city dominate the economy to that extent. It is not a natural situation. It does not happen in France, Germany, Holland or anywhere else, but it happens here.
I disagree with the hon. Lady. I think that the Budget has started to deal with the legacy left to the Government. One thing that the Budget has to do is tackle the problem I have outlined, and I am delighted to say that we have started to do that. The Budget has developed 21 regional development areas, one of which I hope will end up in Warrington. One policy developed before the Budget was the national insurance holiday for start-ups in the regions, and I was genuinely disappointed that Labour Members voted against it, in favour of a different proposal that, by the way, would have simply put more money into London. We have to address the imbalance, and that is what we will do. The Budget has started to do it already.
There are three other areas in which we have to make progress. We have not talked during this debate about energy policy. Energy is a regional issue. One unit of GDP growth in the regions is more reliant on energy than it is in London and the south, because in the regions we manufacture, whereas London and the south tend to be more financial-services oriented. Energy prices matter, but I am concerned that we are sleepwalking into becoming a high-energy economy. I support the announcement of a carbon floor price in the Budget. It is right to have that stability, because we have to invest in power stations, but I am concerned about the haemorrhaging of money that is costing industry a great deal. I am talking about some of the renewables investment we are having to make.
Thanet wind farm was a stunning technical achievement, but it requires a subsidy of £1 billion over its lifetime. We cannot just keep doing that. If we are going to meet our climate change commitments by moving industries from the north of England and the midlands to India and China, it will not be a great success.
The other aspect of economic policy that matters to regional rebalancing is infrastructure, which generates jobs and transfers wealth between locations. I make no apology for heavily supporting High Speed 2. The economic case and business case for it are strong, and I hope that we make progress on it quickly. KPMG has estimated that High Speed 2 on its own will bring 40,000 further jobs to the north and to Yorkshire. Those are jobs that we need very much. I understand if Members on both sides of the House—and certainly Government Members —are sceptical about aspects of that or if they question the business case. If the business case needs to be questioned, it is right that we should do so; I just note in passing that the business case for neither High Speed 1 nor Crossrail was questioned in the same way.
My final point about building regional strength involves skills. I was pleased that the Budget had more money for science—and in particular more money for Daresbury, although I will be churlish and say that I was disappointed that Harwell got more. I am also delighted that we continue to make progress on apprenticeships. However, that is not enough by itself: we have to build a technology-based economy. That will be the only way in the future. A shocking statistic is that, despite increasing the number of graduates by a factor of five over the past 25 years, we now have fewer people studying engineering at university than we did 30 years ago. That is not how we will build technology-facing companies such as Microsoft, Apple, Dell and Yahoo!, which did not exist 15 years ago and which, had they been in this country, would frankly have wiped out all our unemployment in one go.
I disagree with the hon. Member for Wolverhampton North East. The Budget has made a start to fixing the appalling legacy of the misbalanced economy that we have been left. It is a long, hard road, but we have to start somewhere.
Ian Lavery (Wansbeck) (Lab)
Many of the people affected by last week’s Budget were in attendance in Hyde park on Saturday. Some 500,000, I believe, were there, marching against the Government’s cuts. It was a privilege and an honour to stand shoulder to shoulder, along with many Labour colleagues, with so many people in the UK—nurses, doctors, teachers, policemen, prison officers, council workers and trade unionists, among many others, including many people representing local charities, community groups or professional organisations. It was an absolute credit to the TUC and Brendan Barber that they organised such an historic event. Those 500,000 people gave a clear message to the Con-Dems about last week’s Budget and the cuts agenda, which is going too far, too fast. The Budget again hit the less well-off, not the more affluent people in this country—not the millionaires on the Government Benches.
I want to focus on two issues. The first is the Chancellor’s announcement last week about the carbon tax—or the carbon floor price. It could have a devastating impact on Rio Tinto Alcan, which is the biggest private sector employer in my constituency; in fact, it is the largest in Northumberland, employing 600 people and probably serving more than 1,000 people indirectly in the community. Alcan has put £100 million into the local economy, which is something that we greatly need. However, last week’s introduction of the carbon floor price, in addition to the EU’s emissions trading scheme, means that nearly a third of Alcan’s running costs are due to legislation. It simply cannot sustain that. I am concerned that if we do not look at that, Alcan—a huge employer—might consider closing the plant. The Budget announcement certainly threatens the progress of what has been a tremendous employer. I would ask the Government to rethink their policy on the carbon floor price; and if possible, I would like to discuss that with the Ministers concerned.
Last week’s forecast showed that growth figures had been cut, with inflation up, borrowing up, unemployment up and youth unemployment up to record levels. Again, that is extremely concerning. They say that the devil is in the detail. I would refer to the Deputy Prime Minister, who has established a record in betraying the young people of our country. Perhaps he should have read the Red Book, as probably we all did. If he does, he will realise that the coalition Government did not announce from the Dispatch Box last week that they were reducing winter fuel payments to pensioners. It is an absolute disgrace that no one had the guts to stand at that Dispatch Box to tell the House and explain to the country that the Government were reducing winter fuel payments to people aged between 70 and 80. That is another broken pledge—another broken promise—from a broken man who is completely out of his depth.
Ian Lavery
No.
Quite frankly, the Deputy Prime Minister is controlled like a sycophant—a political Buzz Lightyear—by the very hands of the Prime Minister himself.
The other issue is the significant changes to the Health and Safety Executive and the Lord Young review—which was implemented last week in the detail of the Budget—which will cause huge problems for workplace inspections across the country. That is a great concern, because many people are still being killed in the UK or contracting illnesses or diseases as a result of working in industry. Again, I would like that reviewed. We should be proud of our health and safety culture—Opposition Members certainly are, but I am not so sure about Government Members.
Last week’s Budget did nothing for the hard-working people of this country—some people describe them as the squeezed middle. There has been an attack on pensions, pay and conditions, rights in the workplace and health and safety. No wonder 500,000 marched so proudly against the cuts and the Budget on Saturday. The coalition Government would do well to listen to those people, rather than the inane ramblings of Batty Boris, the Mayor of London.
Mr Tobias Ellwood (Bournemouth East) (Con)
It is a pleasure to participate in this debate, and I am pleased to see so many hon. Members who also want to participate. I have done my best to speak in other Budget debates, and I am under no illusions that this speech will be read or listened to any more than my previous contributions.
This year’s debate has a different atmosphere from previous years. In 2007 and 2008, there was a sense of denial. In 2009, there was a period of inertia as we waited for whoever was going to win the general election—either Labour or Conservative—to grasp the nettle and make the decisions that the country needed. Finally, in 2010, we saw the launch of the long overdue plan. It is only this year, 2011, that we are really experiencing that pain, which has been debated at length today and in the past four days.
The state of the economy clearly dominates our lives. It is complex: like the cockpit of a 747, there are many buttons, switches and levers. Knowing when to pull a lever and for how long affects the overall performance, the direction of travel and the comfort—or, indeed, the displeasure—of the passengers, who rely on a duty of care. There are four principal levers that we have for the economy: fiscal policy, which determines the management of our deficit and our debt; monetary policy and interest rates, which are now set independently; the regulation of the financial sector and the relationship between the Bank of England, the Treasury, and the financial and business sectors; and finally, micro-economic policies—how we approach education, how to get a competitive tax system, and so on. We need to decide how to use all those levers at this delicate time, as we try to mend the economy. We can be dedicated and vigilant pilots, but we will have our work cut out if we are handed a machine that has been battered and bruised by the previous owner. It is exactly the same with the economy.
We have had five days of debate on the provisions in the Red Book. I will not go into the details of all the issues that have been raised. At the weekend, as I was thinking about what to say in my speech today, I watched the rally that was taking place in Hyde park. I saw all the banners; it was like a summer camp for the unions, like a revival for them as they all called for more money for their own area. They wanted more money for pensioners, for health, for education and so on, but no one said where the money was going to come from or how it was going to be generated, and we have heard no such explanation from Opposition Front Benchers today.
The rally said a lot about Labour, in that the Leader of the Opposition is now firmly embedding himself with the unions. Incidentally, I think he was unwise to make comparisons with previous struggles, such as those of the suffragettes or the US civil rights movement, or with the fight against apartheid. It would also have been nice to hear a bit of mea culpa, a bit of recognition that Labour was partly to blame for what is going on.
Frank Dobson (Holborn and St Pancras) (Lab)
Does the hon. Gentleman accept that the issues to which the Leader of the Opposition referred all had one thing in common with the rally on Saturday—namely, that no Tories took part in any of them?
Mr Ellwood
I did not receive my invitation. Perhaps I shall find it in my office when I go back there.
The bottom line is that we inherited an economic nightmare—the worst of the messes in the G20. The gap between the richest and the poorest had grown since Labour came to office, and the size of government had bloomed. In the past decade, the civil service had grown by an additional 800,000 people. I have no idea what those people actually did, but they were in addition to those who were running the country a decade earlier. That is the bloated government that we need to try to get rid of. There was also a culture of encouraging people not to work. It was never easier than under Labour to do nothing and get paid for it. Those are the kinds of issues that we need to tackle.
The number of regulations introduced under Labour was astonishing. We are now faced with about 21,000 regulations, of which about 10,000 were created by the last Government. As I said earlier, Labour was planning huge cuts, had it won the election; it just did not say where they were going to be made. Had it won, it would have received a lot of the grief that we are receiving today, because it would have had to implement very much the same measures that we are implementing.
Looking back at the legacy that we left Labour, we can see that there was an unbroken period of growth from 1992 to 2008. We had growth up to the economic downturn in 2007. The deficit in 1997-98 was £15 billion. By 2007—before the economic downturn—it had already increased to £33 billion. We were not living within our means.
Emma Reynolds
I want to put the same question to the hon. Gentleman that I put to the Secretary of State. Up until 2008, his party backed our spending commitments, so is there not a little bit of revisionism on his side of the House?
Mr Ellwood
I was not in government then. The spending commitments that we backed did not take into account the state of the economy at the time. They were the plans for the future, but they did not take into account the money that had been spent.
The point that I was trying to make was that, from a deficit and a debt perspective, the previous Government wasted money during the boom years. They lived beyond their means, which placed us on the back foot when the economic downturn came. Again and again, we hear Labour say, “It isn’t our fault. It was an international issue. It was the Americans. It was Fannie Mae and Freddie Mac. It was the sub-prime market.” Well, that was possibly the case at the start, but in 2007, 2008 and even 2009, I could have gone to Bradford & Bingley and picked up a 125% mortgage. That was simply wrong. We were still not in control of the situation well after we knew that things were going down the pan.
The Opposition’s approach is now based on several themes. They tell us that, 12 months ago, unemployment was falling, growth was rising and inflation was low and stable. However, unemployment was higher when Labour left office than when it came in. In fact, that has happened every time Labour has been in office. No emergency measures had been put in place. Unemployment goes up in every recession; that is one of the impacts. It was wrong of the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) to suggest that if Labour were in power now, unemployment would continue to fall. That is completely incorrect. The Opposition also talk about growth, but it is actually continuing to rise. It rose by 1.3% last year, and the figure will be 1.7% this year. That is not what we expected, but the economy is still growing faster than the EU average. Of course, 2011 is going to be a year of pain. Urgent measures have been introduced, and the VAT rise will hit us.
I do not have time to go through all the other aspects of the situation, but I will end by saying that the Budget is all about continuing to bring spending under control. It is about gaining sustainable revenues from the banks and protecting the most vulnerable in our society. It is also about a shift from big government to small government, and about providing businesses with the tax breaks and incentives to expand, to compete in new markets and to tackle the expected rise in unemployment. History will show that we came close to the economic abyss, but that this Government took the tough decisions necessary to build a strong and stable economy.
Frank Dobson (Holborn and St Pancras) (Lab)
In the debates in the run-up to the last general election, I was in the habit of saying that there would be four ways of dealing with the deficit. The first would be to make cuts. The second would be to introduce tax increases. The third was the method that dare not speak its name but which would be employed by every Government around the world: inflation, which would involve paying money back at a lower value than that at which it was borrowed. The fourth would involve growth. This Government have been pretty good on the first three, but they have been very poor on growth.
The Government are now, as ever, turning their attention to holding down the living standards of people on middle and lower incomes. There is now talk among the Tories about restricting the legal rights of people at work and of paring back the minimum wage. There is also talk of reducing job security, and they have certainly done that for practically everyone in the country. We have also heard them say today, and yesterday, that they want to slash regulation, because it is a burden on business. In fact, good regulation is vital. It protects employees, consumers, the environment, public health and the taxpayer. Some regulation is unnecessary, and some of it is out of date. Some of it is cumbersome and time consuming, and some of it is out of proportion, but we have to accept that virtually all of it has been passed by this House, so we should not go blaming other people; we have introduced it over the years.
Another argument put forward by the Government is that British business is over-regulated. The Chancellor was quoting the OECD with approbation in his Budget speech, but he obviously does not read, or approve of, everything that the OECD does. It produces a league table of employment protection. Are we, according to that league table, the most over-regulated country in the world? No, we certainly are not. The United States is the least regulated country. Canada is the second least regulated, and the United Kingdom is the third least regulated. The Chancellor also referred favourably to Germany, so I looked Germany up in the league table. It is the 19th least regulated country. The German economy is far more regulated than ours, yet it is recovering more quickly. There has always been higher investment in plant and equipment in Germany than in this country, and a lower turnover of employees.
What we really need is better regulation, and, in some cases, more and newer regulation, particularly to help agency staff. Let us look at how the Tories are always trying to create a great fuss and fear. When the great Michael Foot introduced health and safety measures, which I have to say were welcomed from the Front Bench by that decent old Tory, William Whitelaw, there were dire predictions from a lot of Back-Bench backwoods Tories that it would lead to all sorts of terrifying consequences. Well, there has been one massive improvement. When people talk about reducing the “burden” of regulation in health and safety, I point out that before the Health and Safety Executive was set up, 651 people were killed in accidents at work; the comparable figure is now 152—and it ought to be lower still.
It was obviously good for employees that there were fewer injuries and less pain and suffering, fewer people suffering from bad health and fewer people losing income because they were out of work as a result of what had happened to them. However, it was also good for employers. The employers did not lose vital staff to accidents; they did not lose the value of the training that vital staff had received before they were injured; they did not lose a great deal of production; they did not lose money; and if they obeyed the law, they were not in a position of facing court action.
The health and safety regulations were also good for taxpayers, because they reduced the demand on the national health service and meant that benefits did not have to be paid. People were not off work so they continued to pay tax and we did not lose production in the British economy. I hope that the Tory party, including the Prime Minister, will therefore stop all this scaremongering about regulation and health and safety, and take a much more careful and thoughtful approach to the problem. Conservative Members should try to make sure that when people are working in this country, they are safe from accidents and safe from illness caused by the conditions in which they work.
Kwasi Kwarteng (Spelthorne) (Con)
I am glad to have been called—a happy outcome for me.
It seems to me that Labour Members are ostrich-like inasmuch as they are not aware of what is going on or of what led us to the position we are in. There is always a context, and we appreciate that savings had to be made in Government spending. Everyone knows that. When we ask ourselves why we are in the position we are in, we get conflicting answers. As Government Members have said, Labour Members suggest that it was the fault of American bankers, of evil people in the City of London who were making too much money and of international business. I think my right hon. Friend the Secretary of State for Work and pensions even suggested that at some point they would blame Dr Evil. None of those reasons, however, is remotely relevant to the deficit or the fiscal situation we are in.
The simple fact is that we had a much larger deficit than any other country in the G7. These facts are known to the world. Labour Members have to accept that when they came into office in 1997, there were balanced Budgets. For four years, the then Chancellor of Exchequer essentially balanced the Budgets and it was a matter of deliberate policy in 2001 when the Labour Government turned the taps on and presided over a massive engorgement of the public sector.
It was that decision in 2001-02 that led to the position we are in now. The cause was simple: the last Prime Minister, when he was Chancellor, believed in his hubris that he had abolished boom and bust. He thought that the economy would keep on growing and that he could then use tax and other income to fund his bigger national projects and his huge public spending. What happened, of course, was that the economy stalled. The income receipts to the Exchequer stopped coming in, so we were left with this massive deficit of £160 billion—the largest in peacetime. The coalition Government came in with the principal purpose of dealing with the deficit. That has always been this Government’s purpose. It was almost a Government of national unity, with two historic parties with different views and different traditions coming together to sort out the mess that the Labour party had left behind.
It is a very simple narrative, but because of all the obfuscation and the deliberately misleading comments of Labour Members, all that has been forgotten. My constituents are all too well aware of the mess that Labour made. In fact, one man said to me, “Well, we have seen it all before; exactly the same thing happened in the 1970s. Labour comes in and makes all sorts of spending commitments, and we run out of money.” It was that simple—and exactly the same thing has happened in Labour’s last two years in power. Blaming the global crisis for what was essentially decisions taken by the Labour party in government is entirely wrong.
Emma Reynolds
Does the hon. Gentleman blame Labour Members for the recession in Germany, for the recession in France, for the recession in the United States and for the recession in other parts of the world? How can he stand up and say it was all our fault? It was a global financial crisis.
Kwasi Kwarteng
Let me point out to the hon. Lady that in Germany the deficit to GDP ratio was 3.3%; our deficit to GDP ratio was 12.8%. That differential had nothing to do with the global crisis; it had everything to do with spending commitments made on the Treasury Bench when the hon. Lady’s party were in government. It is a deliberate obfuscation to try to blame the sub-prime crisis in America and all the rest of it for decisions taken by her party in government. It is like a magician’s trick: one always tries not to let the audience focus on what is actually being done. That is what magicians do, and it is exactly the sort of tactics that Labour is employing. As I say, it is trying to obfuscate and shift the blame for decisions that it made.
I think it is a scandal and an insult to the intelligence of Members generally that Labour Members are still in denial about the mess they created and the errors they made, which were based on hubristic assumptions about the economy growing for ever and ever. We all remember the former Prime Minister himself saying that there was an end to boom and bust. What does that mean? Anyone who says “an end to boom and bust” genuinely believes that there will be no downturn and so makes spending assumptions on the basis that money from income receipts will keep coming in. That is absolutely crazy.
Emma Reynolds
I ask the question for the third time in this debate, as I have yet to receive an answer from Conservative Members. Why on earth did the Conservative party back our spending plans right up to the start of the global financial crisis? This is revisionism by the hon. Gentleman’s side; it is his side that is being ostrich-like, not ours.
Kwasi Kwarteng
With respect to the hon. Lady, that is entirely irrelevant. Her party was in office; her party had the ultimate responsibility for the government of this country—not only in 2007, but for the 13 years before the last election. It is a strange paradox that when Labour Members got into power in 1997, they did the right thing. They balanced the books; for four years, we were not running deficits, as they stuck to our spending plans. The Chancellor was prudent; “prudence” was his favourite word. Then, all of that was deliberately swept away, and they went on a mad spending spree, which directly caused the deficit and the savings that have to made now.
George Freeman (Mid Norfolk) (Con)
Does my hon. Friend agree that the honest answer to the question put thrice by the hon. Member for Wolverhampton North East (Emma Reynolds) is that if we were guilty of anything, it was to fall for the same lie that the British public fell for—to believe that new Labour had become the party of economic competence and that in government it could be trusted with the public finances?
Kwasi Kwarteng
My hon. Friend is exactly right. I think there was an element of delusion in the country inasmuch as people believed that Labour could be trusted with the economy. That was clearly not the case. Older voters I speak to in my party association and more widely in Spelthorne remember the appalling legacy of the 1970s, when exactly the same thing happened. None of this is new; we have seen it all before. Exactly the same thing has happened 30 years later: Labour came into power, made all sorts of spending commitments with the best intentions, but found that we had run out of money. It was that simple. On that note, I urge the House to vote in favour of the Budget motions.
Mr Frank Field (Birkenhead) (Lab)
Labour Members have already expressed the deep anxiety that is felt in not just Labour households but many households in the country about what the future holds for them. At the end of my short contribution, I shall return to a refrain that the Chancellor used at quite an early stage in his introduction of measures intended to rebalance the economy. We all know that we are experiencing immensely difficult times, but the Chancellor told us that we were all in it together. The question to which I intend to return is this: are we sharing those sacrifices fairly or not? However, I also intend to describe the challenges that the economic situation has posed both to the country and to the political parties.
Let me deal first with the question of national debt. Given that we hope to win the next election, I want to consider the position that we will inherit if we are entrusted with power by the voters on that occasion. Comment has already been made about the size of the national debt when the Government came to office. It was £760 billion then. We are told that we are now experiencing an extreme programme of cuts the like of which we have never seen before, and that at the end of this Parliament the national debt will stand at £1,400 billion. In other words, it will have doubled.
Our views cannot entirely be explained away by the fact that we disagree with the Government’s policy of allowing unemployment to rise and the effects that that will have on Exchequer costs and revenues. Already, a third of the money that we borrow each year is to service our debt. The level of our long-term interest rates is therefore crucial and fundamental to our survival. It is difficult to see how we can come out at the other side as a great industrial and trading country if we lose our current rating and costs rise.
I have three more points to make, one to my own side and two to the Government. This is the first. Before the last election, we had a clearer view of our cuts programme. At this stage of a Parliament it is easy to blame the other side and to oppose all cuts, but the next election may be closely contested. We will have to account for our behaviour in this Parliament, and my plea to my party’s Front Benchers is that we regain the clarity that existed before the last general election about where we would cut, where we would not cut, and where we would fight cuts.
My second point concerns inflation. Although what we have is not wage-induced inflation but inflation that is imported, the Bank of England has been directed to reduce inflation to below 2%. The Government’s current strategy for growth is based on a tough fiscal stance and a loose monetary policy. My worry is that in abiding by that inflation target, we might encourage the Bank of England to drive up interest rates in a vain attempt to control inflation. We know that that policy will not work, but it might satisfy those who feel that we should make more of an effort to reach the 2% target. It is impossible for Governments, once they have set themselves such targets, ever to abandon them, but this Government need to take such action if they are to safeguard future growth.
My last point is the one about our all being in it together. I have never known a Parliament in which the changes came so fast and were plainly so important, and I have no clear view on who is getting off lightly and who is not. A few weeks ago, in a letter to the Prime Minister, I wrote that I would be very surprised if I were the only person in the country who wanted all of us to be in this together but wondered whether we were. I suggested that he set up, in public, a committee whose remit was to examine that very question: are we all in it together?
If we are concerned about families, we should bear in mind that families, both rich and poor, have taken a significant beating from the Government. Obviously, however, my concern is not only with them but with the poor in general. I do not believe that any Minister on the Treasury Bench could stand up and tell us honestly that we are all in this together, and I consider that appalling. I think that the Government ought to take measures enabling us all to be better informed about the question on the occasion of our next major debate.
Mr John Leech (Manchester, Withington) (LD)
It is a pleasure to follow the right hon. Member for Birkenhead (Mr Field), who made some very measured comments.
I am delighted to be able to contribute to the debate, and to welcome a number of measures that will be good for Manchester and good for the people of Manchester. I must confess that I approached the Budget with a certain amount of trepidation because of the difficult decisions that the coalition Government had already made in order to deal with the mess with which the previous Government left us. However, I was also well aware of all the work done in the Treasury and between Departments to produce a Budget that would stimulate growth and help to kick-start the economy.
The question is whether the Budget has delivered for Manchester. Before it had even been announced, Manchester Labour councillors tabled a motion which is to be dealt with in the council tomorrow, stating that the council
“notes the damaging impact of George Osborne’s budget on the people of Manchester.”
It was pretty clear that, regardless of what the Chancellor announced, Labour would try to spin it as terrible for Manchester, just as it has tried to absolve itself of any blame for the financial mess in which the country finds itself and the unnecessary and vindictive political cuts that it has proposed in Manchester.
Of course, we would expect the Liberal Democrat opposition in Manchester to take a more positive view of the measures in the Budget. We would, perhaps, expect Simon Ashley, the leader of the Liberal Democrat opposition on the council, to say something like
“This is good news for… Manchester.
It’s a double win because not only does it give incentives for new businesses to develop at Airport City, it also generates income we can use to encourage development across the whole of Greater Manchester.”
However, he did not say that, although he has warmly welcomed the good news of the enterprise zone for Manchester. That comment was, in fact, made by Richard Leese, the Labour leader of Manchester city council, who, interestingly, is one of the signatories to the Labour motion that condemned the Budget even before the Chancellor had come to the Dispatch Box to deliver his speech. Yes, even the Labour leader of the council has been forced to admit that the Budget has delivered good news for Manchester.
Under the last Labour Government, private sector job growth in Manchester lagged massively behind that in the rest of England between 2003 and 2008, at less than half the average percentage. That is set to change under the coalition Government. Manchester airport was a beneficiary as one of the first enterprise zones, and up to 13,000 new jobs will be created in the city—more than five times as many as there are unemployed people in my constituency. At the same time, the Chancellor has given the go-ahead for the Ordsall Curve rail project, which will increase rail capacity and improve journey times and encourage investment, growth and job creation in Manchester. During 13 years in government Labour failed to deliver that vital infrastructure project, but it has been delivered in fewer than 11 months by the coalition Government, which is proof of the Government's commitment to investing in our rail infrastructure. Moreover, an extra £873,000 will come to Manchester to help to repair our damaged roads. That will go a long way towards dealing with the thousands of potholes in our streets.
All those measures will help to get people in Manchester into work and protect existing jobs, and the additional 40,000 apprenticeships that have been announced will help more Manchester residents to gain the skills and experience that are needed to grow the economy further.
What about those surviving on pensions? One of the lasting memories of the previous Labour Government was the derisory 75p rise in the state pension. For all their talk, the last Labour Government failed to deliver for pensioners. When the coalition Government were formed, there was a real commitment to give a better deal to pensioners. Pensions have been re-linked to earnings—which was unaffordable, according to Labour—and the triple-lock guarantee will ensure that there is never a repeat of the disgraceful 75p rise. Instead, as a result of this Budget, pensioners will receive an extra £4.50 a week, taking the pension above £100. That is in addition to the decision to make permanent the increase in the excess cold weather payment to £25 for every week of excess cold in the winter. My only objection is that the Chancellor has decided to follow Labour’s plans and not to make permanent the temporary increase in the winter fuel allowance. In my view, that is a mistake and should be looked at again.
Finally, the Budget has also delivered on the coalition promise to take some of the lowest-paid out of paying tax altogether. The increase in the personal allowance by £1,000, and the announcement of a further increase next year, will scrap income tax for more than 1 million of the lowest-paid people. That puts the coalition on track to deliver a key Liberal Democrat manifesto commitment: to increase the personal allowance to £10,000. That has been welcomed by the Institute for Fiscal Studies as “progressive” and by The Times leader column for increasing “the incentives to work.” These changes mark a stark contrast to the Labour Budget that abolished the 10p tax rate, increasing the tax burden for some of the lowest paid.
Overall, the Budget is good news for Manchester—
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
Last week, the Chancellor delivered a Budget and promised a plan for growth. There is no doubt that we in the north-east need growth, and it must be growth that creates jobs. The fact that the Office for Budget Responsibility’s growth forecasts have had to be revised downward yet again is therefore deeply worrying for people across the north-east. In my constituency, there are currently 8.8 jobseekers per advertised vacancy, and in some parts of the north-east—mainly on Teesside—there are more than 19 jobseekers for each job available. Those figures are alarming, but we should compare them with the figures for the constituencies of the Prime Minister and the Chancellor of the Exchequer, which are, respectively, 1.9 and 1.6 jobseekers per vacancy. That makes it clear that we are simply not all in this together. Moreover, these are the figures for the period of time before many of the Government’s spending cuts have started to bite; about 50,000 jobs in both the public and private sectors are expected to be lost across the north-east.
The Government believe that the private sector will move in to fill the gap, but I believe that is misguided. The abolition of One North East has left a gaping hole in the capacity of the north-east economy to drive growth, and there is genuine and widespread concern that many of the opportunities for growth in the region could be lost due to the lack of properly funded and co-ordinated structural support. I hope I am proved wrong for the sake of our region, but this Budget and the downgraded growth forecasts do not fill any of us with much hope.
The Chancellor announced in his speech last week the creation of 21 new urban enterprise zones, and he stated that one of them would be located on “Tyneside”. Although I have grave doubts about the overall policy, I acknowledge that we need swift action, clarity and leadership in implementing it if it is to deliver the positive impact the Government intend. Yet how do the Government intend to ensure that the policy does not simply lead to jobs and businesses moving from one part of Tyneside to another? How will they guarantee that it genuinely creates new jobs? Serious thought will need to be given to how these zones will contribute to a genuine rebalancing of the economy, when so many zones have been announced across the country, including in London. That view appears to be shared by the North East chamber of commerce, which last week expressed its concerns that
“the plan for 21 across the country smacks of spreading a policy too thin.”
Ever since I was elected to the House, I have been campaigning for apprenticeships. The benefits are clear and widely accepted. Apprenticeships provide a structured career path for young and older people alike, while also helping to develop the skills that UK plc needs if our economy is to move back into growth and compete effectively on the global stage. Expanding the number of apprenticeships is vital for employers and employees, and for the country as a whole. I therefore believe the Government should be doing everything in their power to increase the number of places available.
That is why I introduced my Apprenticeships and Skills (Public Procurement Contracts) Bill, which seeks to increase the number of apprenticeship places by making that a requirement of public procurement. I have had a number of discussions about my proposals with the Minister for Further Education, Skills and Lifelong Learning, and I thank him for his positive response. He recently confirmed to my local paper that he is
“a strong advocate of the use of public procurement to support our objectives”,
and I have no doubt that his support and persistent enthusiasm have been very influential in securing the further 50,000 apprenticeship places that have been announced for the next four years. I am concerned, however, that the Minister has a real challenge ahead to ensure that all of his colleagues are singing from the same hymn sheet on this issue, particularly as Construction News recently quoted the Minister for the Cabinet Office and Paymaster General as stating that the Government would not be backing his idea because the use of public procurement to stimulate the creation of more apprentices was simply not appropriate.
Governments cannot create apprenticeships; businesses do that. Government must provide support for businesses by helping with training costs, incentives and encouragement, but without growth in our economy, real, new apprenticeship opportunities will not be delivered.
The Secretary of State outlined earlier a chicken and egg situation: young people are unable to get work experience and therefore unable to get a job, and as they are unable to get a job they are unable to get work experience. The same applies to apprenticeships. Businesses are required in order to create apprenticeships, but they will not have the confidence to provide those opportunities if we do not have growth. Therefore, although I welcome the positive moves in this Budget in relation to apprenticeships, providing funding for places is not enough. Government must take the lead, and be seen to take the lead, by using all available levers to increase both the number of apprenticeship places available, and the number of apprenticeships completed. I truly believe that one of those levers has to be the use of public procurement, for Government to lead the way for businesses.
Mr Edward Leigh (Gainsborough) (Con)
It is a pleasure to follow the hon. Member for Newcastle upon Tyne North (Catherine McKinnell), and her comments about the importance of apprenticeships are right, of course. I want in particular, however, to congratulate the right hon. Member for Birkenhead (Mr Field). In the past he chaired the Select Committee on Social Security, and I was proud to serve on it with him. He gave the best speech of the debate—with the exception, of course, of the contribution from the Secretary of State; I will be in trouble if I do not say that. The right hon. Gentleman was realistic about the position we are in. I do not want to say a great deal about the structural deficit; we all know it is there, and how much it is. We all know the political imperative behind the Labour party campaign against the cuts. We also all understand that it is in the interests of the Government to play up that campaign because it makes them look stronger and more determined. It is therefore in the interests of both parties to talk about this topic in that way.
The right hon. Gentleman highlighted a point that I want to emphasise too: we have yet to turn the tide against the culture of spending and the fix of borrowing. We are going to borrow £485 billion over five years. That is more than our total public debt in 1997. The annual interest repayment on the UK debt for last year alone was £42 billion. I know the public cannot visualise what £42 billion is, but if we consider that we are spending more on simply repaying the interest on our debt than the entire amount we spend on educating our children, that should bring home the scale of the crisis facing us.
I am not a very party political person, so I am not very good at apportioning blame. We all know the last Government had to go through a massive international crisis, but we also all know that there was an underlying structural deficit that they did not deal with. The key question, however, is: what are we going to do now? I want to take as my text what the TUC has been talking about, because I would like to bring a few Opposition Members with me. The TUC asks how we are going to deal with this deficit without making cuts in public services, and it says there is £13 billion-worth of tax avoidance by individuals and £12 billion-worth of tax avoidance by corporations. Let us assume for a moment that that is true. How are we going to deal with it? If we follow the TUC line, the only way in which we can deal with it is through a radical simplification of how tax is raised and how the Government spend it.
The Chancellor made one historic announcement that has not been discussed much today, on the merging of national insurance and income tax. I urge him to continue with that theme, despite the siren voices that we have already heard, including that of a former Chancellor, who has said that it will result in winners and losers. The Chancellor must embark on this essential crusade. It may take many years, but it is vital, because simplification of the entire tax system lies at the heart of how we are going to deal with the deficit, with tax avoidance and with tax evasion.
The UK tax code has more than doubled in size since 1997 and it is now the world’s largest, recently surpassing even that of India. The only way to achieve simplicity in taxation is through a gradual move towards a much flatter rate of tax for both personal and corporate income, while eliminating the complicated system of loopholes, deductions and exemptions. Thus we would, eventually, have a system whereby we would set a single exemption for individuals, so that low-income earners would pay tax only if they earned more than a determined level of income. Many countries have already taken such an approach, including nine in eastern Europe, Hong Kong and Russia, the largest country in the world.
On defending the poor, I say to the right hon. Member for Birkenhead that it is not in the interests of the poor to have a so-called “progressive” income-based tax system. Such a system is structurally biased against them because they do not have the same access as the wealthy do to accountants and lawyers, and so cannot be instructed by them in the complex methods of tax avoidance. The poor are also caught in the poverty and unemployment trap. Many scenarios and Treasury models can be used, but it is estimated that if we had a flat tax rate of 22% with a £15,000 tax-free allowance, about 10 million of the poorest taxpayers would see their entire income tax burden disappear.
I know that people will say that the wealthy must pay more, but every time the top tax rate has been significantly reduced anywhere in the world, the wealthy have increased the proportion of tax income that they contribute. Under Mrs Thatcher’s Government, the top tax rate declined from 83% in 1979 to 40% in 1990, but high-earning individuals paid 35% of the total in 1979 compared with 42% in 1990. So it makes sense to have a much flatter rate of taxation—it makes sense for the economy and for the poorest in society, and it makes sense in terms of re-creating a sense of enterprise in the nation.
Once we dramatically simplify the tax system and get rid of all those loopholes and deductions, we will be able to explain the whole Budget process so much more easily to Parliament. At the moment, the Budget process is largely incomprehensible. I have been involved in the “Clear line of sight” project, and we want to simplify the whole process so that we know, line by line, what we are spending on behalf of taxpayers and how we are trying to get the nation moving forward again. I urge the Chancellor to be vigorous and brave in this debate.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
Thank you, Madam Deputy Presiding Officer. [Interruption.] I am sorry, Madam Deputy Speaker; I knew I would do that one day. I have just left the Scottish Parliament, so I should have been slightly more careful in ensuring that I got the terminology right.
People I have met on the doorstep in my constituency are pretty clear about why they did not vote for either of the parties that make up this Government—it was because they remember what happened the last time there was a Tory Government. In Kilmarnock, people recall the loss of the factories that made the town well known worldwide: BMK carpets; Glenfield and Kennedy; and others. In the Irvine valley, the textile industry was all but destroyed as cheap imports produced in sweatshop conditions flooded the market. And in the former coalfield communities of Auchinleck and Muirkirk people remember how Tory policies deliberately and systematically killed off the mining industry, leaving a generation of people on the dole for the long term.
My constituents resent getting lectures on a big society from people who have never had to worry about whether their weekly income is going to stretch to the extras that others take for granted, be it the school trip for the kids, the birthday present, or the day out to try to give the family some respite from the daily grind. They are angry that their public services are being slashed and that the voluntary sector is being left to pick up the pieces without proper funding. Over the years those former industrial communities have tried hard to stand on their own two feet. They looked to the Government for a hand up, not a handout, and we got people back to work during Labour’s years in government.
Although people in my constituency did not vote for this Government, some of them perhaps had at the back of their mind the vain hope that maybe, just maybe, these Tories would be different, and would deliver a Budget that would bring some hope for hard-pressed families already worried about their jobs and keeping the roof over their heads. What did they get in reality? The facts are simple: unemployment forecasts have risen; inflation forecasts have risen; the growth forecasts have fallen; an increase in the personal allowance threshold was cancelled out by an increase in the cost of living; the cut in fuel duty was swallowed up by the increase in VAT; and the rise for pensioners was wiped out by the small-print cut in the winter fuel allowance.
The people on the Government Benches can have their private conversations, they can laugh and they can sit and smile—they can do what they like—but behind the figures we have heard about today are real people whose real lives are being affected now. The number of unemployed claimants in my constituency in February was more than 3,500, which represents a rate of 8.1%. Those people, who are desperately trying to get a job, feel that the Tories are reverting to type; they do not feel that the revised projections of unemployment rising are a price worth paying, but it is clear that the Tories do.
In Scotland Labour has pledged that there will be a Scottish future jobs fund that will create real jobs and provide training for about 10,000 young people, and for others who have been unemployed for six months or more. It will be supported by up-front and flexible funding for businesses to create those jobs. By contrast, the Tory Government here have announced only an extra 40,000 two-month work experience placements a year, and only 12,500 more apprenticeships a year.
I heard the Chancellor say in his Budget speech that the Government would consult the Scottish Government on how a new set of enterprise zones might operate north of the border. I welcome that. But before he does that, I want him to think about some of the criticisms of the previous incarnation of enterprise zones and ensure that his proposals do not fall into the same traps. The Institute of Chartered Accountants of Scotland has pointed out that although 63,000 jobs were created in the enterprise zones between 1981 and 1986, only 13,000 of those were new, the rest had simply been displaced. That will not do in the future. It will be important for those initiatives to be backed by significant infrastructure investment, and there must also be engagement with local authorities to build on economic regeneration work already under way. I am pleased that my constituency has just received the news that we are to get £2 million in European regional development fund money, but we need more help from the Government to back that.
In conclusion, Madam Deputy Speaker—I got it right that time—when I was elected I pledged that I would work with anyone who had the best interests of my constituents at heart, even if that meant putting aside political differences. That is exactly what I have done in my support for the “Make it Kilmarnock” initiative, because East Ayrshire council, which set it up, is of a different political persuasion from me. But sadly, what will define this Budget in history will be the economic mindset of a political class that is walking in Margaret Thatcher’s footsteps but has failed to learn the lessons of taking the wrong path on the economy.
Bob Blackman (Harrow East) (Con)
It is a privilege to follow the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson).
Every Budget is a step along the way in implementing the strategy of any Government. Part and parcel of the strategy that the Government have chosen to follow is wholesale welfare reform, which I welcome. A plethora of benefits are being simplified, people are being taken out of taxation, and the central issue at the heart of that strategy is that work should always pay. In this country—including London—today, I could take hon. Members to places where there are three generations of people who have never worked. They feel that it is better to be on benefits than to work, and we have to change that fundamental view in society.
My right hon. Friend the Secretary of State mentioned in his opening speech the scandal that is housing benefit in society today. It has fuelled rental rates and has got totally out of control. The squeals from Opposition Members when we try to implement fairly simple and straightforward reforms to housing benefit are legion. The housing benefit reforms are long overdue, and I welcome them.
Last year, after the general election, we had an emergency Budget that set out the emergency position that had to be implemented to counter the inheritance that this Government received. Some tough decisions had to be made at the time, and we were all warned that they would have a catastrophic effect on the economy. Clearly, the financial markets and every sane and sensible individual in this country could see that those decisions had to be taken, for the long-term benefit of this country.
We then had the comprehensive spending review, which set out tough targets for public expenditure over a range of years. There was tremendous consultation, certainly among Government Back Benchers, to ensure that the decisions taken were in the long-term interests of this country. Now, of course, we have the Budget for growth. That is the third part of the story.
It is clear that we must have private sector growth that generates job opportunities for the people of this country. Governments do not create wealth-creating jobs; it is up to the private sector to do that, but it is Governments’ duty to ensure that they create the environment in which the private sector can invest. The problem we inherited was that over the last 10 years of the Labour Government, the growth in employment all came in the public sector. Unsurprisingly, we hear from Labour Members about the percentage or number of people in their constituency employed in the public sector. We need to rebalance the economy completely to make the private sector predominant, and that is clearly where we are going.
The Opposition have two mantras: “It’s hurting but it isn’t working” and “The cuts go too far and too fast”. I detect the whiff of fear from Opposition Members that the Government’s strategy will work, and that by the next general election the public will realise that all the tough choices the Government have made were in the best interests of the economy and that the Opposition were wrong, and Labour will be defeated heavily at the polls as a result.
The Budget has brought in long overdue planning changes. I am concerned, as I do not want local people to be overridden, but I want business to have certainty about the decisions that are taken. Decisions on planning will be taken within a 12-month window that allows businesses to plan for the future and allows everyone to express their objections and comment on areas of uncertainty.
The council tax freeze has, without a doubt, already worked. Every council in England and Wales has frozen its council tax this year, and the Government have provided additional funds to ensure that services are provided by local authorities. I look forward to the Government, next year and the year after, providing a similar type of grant to freeze council tax again, so that instead of council tax more than doubling, as it did under Labour, it is frozen under the coalition agreement.
We clearly need a work force who are fit for purpose and apprenticeships that are available. I welcome the decision to fund more apprenticeships and training and to ensure that the work force are ready for the jobs as and when they are created. That is a key part of the strategy. The challenge now, after this Budget for growth, is for the private sector to start to create the jobs that the Budget wishes to see.
There is also a challenge for the Opposition. There is a potential alternative: we could borrow more money, increase taxation, increase interest rates and get into a position where there is more bust in society. I am sure the whole House will take the view that the Government have embarked on the right strategy and the right course, and will endorse the Budget tonight.
Graeme Morrice (Livingston) (Lab)
Thank you for calling me to speak, Madam Deputy Speaker—although I am from Scotland, I can get your title right.
The Budget has been billed as the Budget for growth and jobs, yet many right hon. and hon. Labour Members have already demonstrated ably why it has failed to live up to its billing on growth. It is also crystal clear that it is not a Budget for jobs either. Unemployment continues to rise, reaching a higher level than at any point under the previous Labour Government, yet the Chancellor’s Budget did next to nothing to address that serious issue.
The Government, like all previous Tory Administrations, basically believe that rising unemployment is a price worth paying. When they say that we are all in it together, we know that what they really mean is that the vulnerable, the unemployed and the poor are all in it together as they will bear the brunt of the Government’s reckless policies.
Labour’s priority in responding to the recession was to keep people in work. The previous Labour Government were determined to prevent the same devastation to families and communities that the Tories presided over in the 1980s and early 1990s, when unemployment rose to more than 3 million. Labour’s strategy was working and unemployment was falling, but now, less than a year into the life of this Government, unemployment is rising again, reaching its highest level for 17 years. That should have put jobs at the forefront of the Chancellor’s plans last week, but the evidence from his statement proves otherwise.
The £20 million funding allocated next year to support initiatives aimed at creating jobs is a pitiful amount in the grand scheme of things and the centrepiece of the Government’s plans for promoting the creation of new jobs, the establishment of 21 enterprise zones in England—not applicable in Scotland—simply takes us back to the failed past of the Thatcher and Major years. Indeed, entrepreneur William Chase, founder of the Chase distillery and Tyrrells crisps, described the plan for enterprise zones as a “criminal waste of cash”. He said:
“The Thatcher government wasted huge amounts of cash on enterprise zones in the eighties. They didn’t work then and I don’t see any reason why they should work now.”
According to a recent Centre for Cities report, which my hon. Friend the Member for Rochdale (Simon Danczuk) mentioned earlier, the cost to the public purse of each additional job created in an enterprise zone during the 10 years of the programme was estimated at £17,000 at 1994-95 prices or £26,000 at 2010-11 prices, yet Labour’s future jobs fund cost only £6,500 per job created and the new deal for young people just £3,500 per job.
Stephen Lloyd
Is the hon. Gentleman aware that recent research showed that 50% of people who had been placed through the future jobs fund were unfortunately back on benefits seven months afterwards? Does he agree that that shows that it might not have been money well spent?
Graeme Morrice
And 50% of those people continued in full-time employment.
The Centre for Cities report also said that most jobs had simply been displaced from elsewhere and so they may bring short-lived prosperity to one area at the expense of another. That point was ably made earlier by my hon. Friends the Members for Wolverhampton North East (Emma Reynolds), for Kilmarnock and Loudoun (Cathy Jamieson) and for Newcastle upon Tyne North (Catherine McKinnell). Given the Government’s professed enthusiasm for efficiency it seems bizarre that they should pursue such an inefficient means of creating new jobs, but when it comes to unemployment the Tories continue to be stuck in a time warp. They believe that the Thatcherite policies of the 1980s are the solution to today’s job crisis, but we know they are no more the solution now than they were then, when millions were left on the unemployment scrap heap.
The most alarming aspect of unemployment today is the UK’s high level of youth unemployment. As Members will know, the number of unemployed 16 to 24-year-olds increased by 30,000 in the last quarter to reach nearly a million—some 20% of all young people—which is the highest figure since comparable records began in 1992. The Government have been pretending that this is somehow not their problem and that they are not responsible for that record high, but let us look at what they have done since taking office last year. They have axed Labour’s future jobs fund—a criminally short-sighted decision—they have axed the education maintenance allowance, thereby disincentivising young people to stay in further education and improve their skills, and they have axed other employment schemes that were aimed at supporting into the workplace young people who have been out of work for more than six months. Let there be no doubt that this Tory Government and their Lib-Dem pals are the ones who are responsible for the record levels of our young people out of work.
Youth unemployment in my constituency stands at nearly 1,000, which is certainly not the worst figure in the country by any means, but every unemployed young person is one too many. I know from speaking to young people in my area that many feel a sense of hopelessness about their situation. They feel that little is being done to support them, that no one in Government cares about their plight and that their future is bleak. Once again, a whole generation of young people is being cut adrift by the dogmatic policies of the Members on the Government Benches.
The Government’s work experience placements will not improve young people’s employment prospects in the same way that six months of real work would. The Department for Work and Pensions has already said that
“the target group for work experience will be a very small proportion of young claimants aged 18-21”
and that it is not about guaranteeing young people a permanent job. The extra 12,500 apprenticeships a year announced in the Budget are woefully inadequate given that nearly a million young people are out of work and need help.
The Federation of Small Businesses has said that the Chancellor’s Budget did not go far enough to incentivise job creation, so action on job creation is another clear dividing line between the Government and the Opposition. The Government stick with their reckless cuts and do nothing to address the record level of unemployment, particularly youth unemployment, that they are presiding over.
Mary Macleod (Brentford and Isleworth) (Con)
Thank you, Madam Deputy Speaker, for allowing me the opportunity to speak in this Budget debate, which affects each and every household in the country. The Budget presented last week was unique in post-war British history because the country has never found itself in more difficult times and the level of borrowing is at an all-time high in modern memory. We needed to face that challenge. Real politicians do not come into politics to be popular—they come to do what they believe is right. Politicians need do what is right for the country and that is why the Government have taken some very difficult spending decisions. We need only look at Portugal, which has singularly failed to implement a credible plan to deal with its budget deficit, to see why we need to continue with our plan to get our country back on track. We need to continue to deal with the deficit while also ensuring that the conditions for economic growth are in place and I commend the Chancellor on a job well done in achieving the balancing act referred to by the Institute for Fiscal Studies.
The Budget is first about promoting business growth, as we have heard already, secondly about helping households and families and thirdly about dealing with the tough issues that need to be addressed. First, on business growth, one aspect that stood out in the Budget was the measures to encourage business growth. The Prime Minister recently spoke of his desire to implement the
“most pro-business, pro-growth, pro-jobs agenda ever unleashed by a government”
and I believe that the Government will achieve that.
How will we rebuild our economy? The new, low rates of corporation tax will help our home-grown businesses and will encourage new investment from overseas companies. Other measures include the entrepreneur’s tax relief and new finance available for small and medium sized firms, the simplification of the tax system, the removal of red tape and unnecessary bureaucracy, the extension of the small business rate relief holiday and the increased funding for work placements and apprenticeships, which will encourage investment and trade, as my hon. Friend the Member for South Basildon and East Thurrock (Stephen Metcalfe) has said. There is also the support for science and technology that my hon. Friend the Member for Warrington South (David Mowat) mentioned. Those measures and others will help to stimulate business growth.
The reaction to the Budget from business has been favourable. The CBI’s director general John Cridland has said:
“This budget will help businesses grow and create jobs. The chancellor has made clear the UK is open for business.”
I have been speaking to businesses in my constituency to get their views on the Budget and how it will impact on them. Frank Wingate, the chief executive of West London Business said that his company
“welcomes the measures aimed at stimulating business growth—particularly lower corporation tax, enterprise zones, fuel price caps, reduced red tape and simplified planning processes. They will all help.”
Mike Freely, the managing director of design firm Octink, who recently met the Prime Minister to discuss how the Government could help small and medium-sized enterprises, said:
“There is a lot in the Budget for Small and Medium Enterprises like ours and a feel good factor that should inspire more confidence throughout our sector”.
The Budget has a lot to offer businesses both large and small. My constituency is full of successful and aspiring entrepreneurs and I hope that some of the measures in the Budget will encourage new business start-ups and continued expansion and investment. I am particularly interested in encouraging women who would like to start their own business, because a recent Federation of Small Businesses report has suggested that women could contribute far more to the UK economy if they started up more businesses. If we had the same level of entrepreneurship among our women as there is in the US, there would be 600,000 extra female-owned businesses contributing an additional £42 billion to the economy. We also need to get more women on boards. I refer hon. Members to the recommendations in Lord Davies’ report that FTSE 100 companies should have 25%-female boards and that companies should publish and disclose the number of women at all levels in their organisation. I believe that that would help to create growth, improve performance and make use of the great skills that are available to us in this country.
Secondly, the Budget will help households and families. The oil price, the scrapping of the fuel duty escalator and the cutting of duty have already been mentioned. I am also delighted that the Chancellor has announced the next step in increasing the personal tax allowance, as was mentioned earlier. Also, the announcement of £250 million to help first-time buyers will directly benefit many young people and will help on to the property ladder people who would not otherwise have been able to get on it.
Thirdly, the Budget is about dealing with tough issues. The Government have proved that they are not afraid to deal with difficult issues and the Chancellor has shown that he is willing to be resolute in fighting the deficit.
In conclusion, the Budget is one for business growth, helping households and families and continuing to face up to and deal with tough issues. We have a job to do and we are getting on with it. This country of ours has a genius for invention, industry and trade. There are great and powerful forces awaiting liberation in our economy—the forces of commercial creativity and innovation. Entrepreneurs just need to have their hands untied so that they can create wealth for this country. The Budget supports aspiration, will help many people to achieve great things for themselves and will create a stronger, sustainable and stable economy—a better future for us all. I commend the Budget to the House.
Geraint Davies (Swansea West) (Lab/Co-op)
I am pleased to say that this morning we had a coalition ground force moving into Swansea in a dawn raid at 8.30 am, with the Business Secretary alongside the Secretary of State for Wales talking in the chamber of commerce, and they had a great deal of local resistance from people with placards and the like. In Swansea, 40% of people in public services are facing cuts and unemployment, and we have been denied electrification by the Government, which would have meant inward investment in Swansea. In addition, Tata Steel has just had a bomb dropped on it about the new carbon tax, which will focus only on its facility in the UK and not on those in any of the other 20 countries in which it makes quality steel. Obviously, it is a very valuable employer in the area.
The people resisting the Secretaries of State this morning were similar to the hundreds of thousands who marched in London on Saturday. Who were those people? They were nurses, doctors and teachers—people who keep our work force healthy and educated. They were tax collectors who face losing their jobs—people who are supposed to be collecting tax more efficiently. They were police officers, who are meant to patrol and police, as well as look after the riots and protests being incited by the cuts. They were small business people who are clearly concerned that the Government’s attitude to small business is, “If you make a loss, sell your tools,” as opposed to achieving growth through increased sales. They were service users—people who face cuts in libraries, leisure centres, pools, centres for the elderly, Sure Start and so on. The people on the march had one common cause—that there should be an alternative mix of growth, tax, cuts and timing that is optimal to confront the deficit before us.
It is worth reminding ourselves that the deficit did not come out of some sort of Labour inadequacy. It was the price paid to avoid a depression caused by the banks. Two thirds of the deficit—£84 billion—has been evaluated by the Institute for Fiscal Studies and others as being the impact of the financial disaster that we imported from sub-prime debt. The fiscal squeeze on which the Government have embarked is about £98 billion, more than the overall financial crisis. That is to take place over four years. The question is whether, if there is a massive outside impact on the country’s financial deficit, we can hope to get rid of that and more within four years without disrupting our economic capacity and social fabric. Should it be the case that three quarters of that is cuts and only one quarter is tax?
The OBR has reached its verdict. It has had to change the growth forecast from 2.6% to 1.7%, which shows that less revenue will come in from people working, and the Government will have to rely more and more on savage cuts. There is an alternative, the Labour alternative—to halve the deficit in four years rather than get rid of it completely, and to use three methods instead of just one, cuts. The three methods are to focus on growth, make the bankers pay their fair share and make savings over time. Germany, for example, is clearing its deficit through export-driven growth, rather than focusing on cuts.
I was over in Germany. I went to UK Trade & Investment, which markets Britain for inward investment. There are lots of German companies queuing up to invest in Britain. Those offers were put on a computer platform for regional development agencies to draw down, but because the RDAs have been abolished, those inward investments are not being taken up and are going to other countries. German regions, let alone the whole country, have offices in Seoul and other emerging markets and are trading and getting inward investment there, and we are not. We are undermining our ability to grow. Instead of a budget for growth, we have cuts.
Growth went negative in the last quarter of last year. Why? Because consumer confidence, the inclination to spend, and investment confidence were washed away by the talk of austerity and the reckless, breakneck speed at which the cuts were made. In addition to the 300,000 people who are to be sacked from public services, PricewaterhouseCoopers says that another million jobs will be lost in the private sector, costing around £7 billion in lost tax and benefit costs per year. Add to that the £4 billion that we have to spend on restructuring the NHS to help privatise it, and the other costs of unnecessary structural change at a time of shrinking budgets, and we can see that this is economic incompetence at its worst. It is not necessary in its current contortion, it is not fair and it is not sensible.
The key issue on banks is that they need to provide liquidity to small business as the engine for growth. We all heard about Merlin, but the question is whether that will be delivered. Sadly, a person in my constituency is on hunger strike over the issue. Finally, people may not have noticed the 3p reduction in inheritance tax given to bankers, who are now paying a smaller proportion. If they give money, for example through works of art, we can see from the fine detail—
Richard Drax (South Dorset) (Con)
It is a great pleasure to follow the hon. Member for Swansea West (Geraint Davies) and other Members who have spoken so well.
May I begin with a story? It is about a family brewery in Blandford, which is not in my constituency, but in the neighbouring one. The brewery was run by one of my closest friends, David Woodhouse. Tragically, he died prematurely of a heart attack recently, aged only 49. His brother, Anthony, now runs the business, which employs 1,500 people, and he plans to invest £5 million in a new brewery. When David was alive, he and I used to speak regularly about taxes, red tape, bureaucracy. His bugbear was the duty on beer. “Do they realise,” he used to say, “what politicians impose on our business every single year?” Our conclusion was that they—the politicians—did not realise, because so many have not operated in a business.
Now it is Anthony’s turn and he is aghast that the beer duty, as we heard from my hon. Friend the Member for Burton (Andrew Griffiths), has risen by 10p for no reason other than the nature of the product he produces. Why do we go on punishing this industry, year in, year out? Is it to discourage drinking? If it is, there is no logic in punishing publicans who serve, in the main, law-abiding citizens in a safe environment. The lager louts get their beer from cheaper sources, not least the supermarkets.
On that subject, Mr Woodhouse makes an additional point. Pubs have to pay VAT on food, while supermarkets which sell prepared meals—often full of salt and preservatives—do not. This inequality is crippling the pub business. On the continent, VAT has been reduced on eating out—what an excellent idea and incentive.
The only other reason for this annual tax raid is to fill the Treasury’s coffers. And this from a Government who want to encourage the private sector. Let us stop targeting the brewers, remove the escalator and allow a vital UK business to survive. On the subject of removing burdens, surely the Budget was a wonderful opportunity for boldness. Conservative economic principles—I emphasise “Conservative”—are simple: low taxes, the minimum of red tape and bureaucracy, fair and balanced employment law, and freedom from unaccountable institutions like the EU.
The EU is one of the main handicaps to business in this country and to growth and prosperity. We can talk until we are blue in the face about deregulating, removing taxes and all the rest of it, but unless we leave the EU and renegotiate a trade agreement, business will never truly be set free. The EU superstate will fail, as sure as eggs are eggs. The question is are we bold enough to lead the way to pastures new where our economy can thrive and our people prosper?
Let me dwell briefly on personal taxes. Why have we kept the 50p tax rate? I agree that we should all pay our fair share, but surely a ceiling of 40% is more than adequate. Taxes are not there to punish people who aspire, work hard and contribute enormously to their country. Regrettably, and all too often, it appears to many that taxes imposed by the Opposition were based on envy. Our coalition partners are no better. The Secretary of State for Business, Innovation and Skills suggested a mansion tax. That suggestion was spiteful, vindictive and regressive. Let us lower personal taxes. There is more than enough evidence to suggest that such a move increases the tax take.
Finally, let me touch on Saturday’s march. It proved to me and many others one point—how effective the Opposition had been in 13 years. Why? Because they effectively bought the electorate and created a bloated and unaffordable public sector. For those who are losing their jobs, I have every sympathy. We do not enjoy sitting on the Government Benches watching people lose their jobs, contrary to what many Opposition Members say. That is disingenuous of the Opposition. Now, as we have seen, tens of thousands of people are paying the price for Labour’s ideology. Wealth, which pays for the public sector, must come from the private sector. It is here that we must be bolder and far more far sighted.
The Government must free us from the EU yoke, lower and simplify business and personal taxes, review employment law and create a leaner public sector that we can afford. Let us finally take politics and politicians out of the economy and allow our business men and women get on with it. The Budget is a small beginning, but more boldness is needed in the years ahead.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
I apologise to the House for my brief absence from the debate, which was caused by my attendance at a meeting that I had requested in a previous debate. After I intervened on the hon. Member for North East Cambridgeshire (Stephen Barclay), he said that I had not been here for the duration, so I would like to make that clear for the record.
I believe that a major focus of the Budget should have been the inclusion of measures that would boost growth, stimulate the economy and increase employment opportunities as a result, but what we have seen yet again from the Government is a set of ideologically driven and politically based measures, rather than anything based on practical economics. Fundamental to the Government’s entire approach is the belief that cutting the deficit deeply and quickly will stimulate growth in our economy. The very cornerstone of this approach is wrong. A year ago a Member of this House responded to the previous Labour Government’s Budget by declaring:
“We must not cut Government spending too soon and risk plunging a fragile recovery back into recession. Cuts without economic growth will not deal with the deficit”.
The Member who said that is now the Secretary of State for Business, Innovation and Skills.
It seems that the Office for Budget Responsibility agrees with the Business Secretary. It has shown that growth is down for this year and next year. This revision of the figures is a sad reflection of the fact that the Government have got it wrong. It appears that the Government do not realise that if the economy is not growing, thousands more people will lose their jobs, fewer people pay tax, more people claim benefits and it becomes harder to get the deficit down. That is what we mean by cutting too fast and too deep, and I think that it is reasonable for us, as the Opposition, to ask the Government what their plan B is if the downward trend continues.
The lack of growth is the central story of the Budget, but the Chancellor did announce some measures aimed at mitigating this and they are worthy of consideration. Enterprise zones look interesting, but we will need more details of their resources. As a Greater Manchester Member, I am willing to give them a cautious welcome, given our inclusion in the initial list of zones, but I heed the comments of my hon. Friends the Members for Rochdale (Simon Danczuk) and for Livingston (Graeme Morrice) about the problems the zones might cause.
I had been hoping to hear more about improved resources for the regional growth funds, which seem to have modest budgets for what is expected of them. I worry that with the loss of the regional development agencies we in the north-west have lost more from this Government than we have so far gained. The Northwest Regional Development Agency was not a perfect institution, but research shows that it brought to the region more than £5 for every £1 it invested. I am not certain that local enterprise partnerships, which have more restricted powers and limited coverage, will be able to match that success.
I also welcome the Chancellor’s comments on manufacturing. I represent a part of the world where manufacturing is still very important and am often frustrated by comments in the House to the effect that there is almost no manufacturing industry left in the UK. Such comments are very misplaced. The UK is a world leader in a number of high-value manufacturing sectors, including pharmaceuticals, life sciences, advanced engineering and aerospace. Although we cannot deny that the number of people employed in manufacturing has been in steady decline for 30 years—people in my area know that only too well—the British Chambers of Commerce states that output and value have risen throughout that time, hitting an all-time high in 2007. Manufacturing will never return to the share of the economy it had in the 1980s, but there is a real potential for growth. There was an excellent meeting of the associate parliamentary manufacturing group this morning, where we looked at finance for small and medium-sized enterprises. I hope that the Government will engage with the group and look at some of its work.
I also note with interest the measures in the Budget that are designed to make the planning process simpler. I welcome any changes that would stimulate economic growth, but the biggest barriers to growth in some areas come from a lack of powers for local authorities to deal with planning blight. I have been working with local businesses in Stalybridge. I am passionate about retaining our town centre and the sense of identity it gives our community. Traders tell me how their businesses are often affected by the number of empty and unsightly properties around them. In some cases, these are large buildings with absentee owners who are unwilling to sell in the present economic climate, yet their very presence deters new investment from coming into the area. In one specific case, a consortium is interested in buying a building that is falling down, but complying with the legislation to use compulsory purchase orders and the powers to force a sale are difficult for local authorities. Piloting the relaxation of some of those regulations would be welcome, and I would be very pleased to see such developments.
I also want to say something about investment in infrastructure. I welcome the £85 million investment that the Government have promised in the Budget for a link between the Victoria and Piccadilly railway stations in Manchester, which will have a positive impact on journey times. I sincerely hope that in due course the Government will support the rest of the northern hub proposals, which would have a significant impact on economic growth in the area. In particular, I think there is a lot of scope to boost growth by improving transport links between the north-west and Yorkshire regions, and with that in mind I hope the Government will reinstate the planned Mottram-to-Tintwistle bypass through my constituency.
In many of the speeches made in the response to the Budget, Members have highlighted the impact of the Government’s agenda on the poorest and most vulnerable people in our society. I will never abrogate my responsibilities to speak for these people and I endorse what has been said, but I also want to speak for the thousands of my constituents who may not be the most vulnerable but who are still struggling to get by. These working and middle-class people are the backbone of Britain, and right now they are finding life hard. Rising fuel prices, the increase in VAT and changes to tax thresholds, particularly the changes to indexation, will increase the pressure. Next year, families with incomes as low as £26,000 will lose their tax credits entirely, and the year after l.5 million families will lose all their child benefit, which will be deeply felt.
For many of my constituents, the decisions taken by this Government are really hurting. With revised figures pointing to lower growth, higher borrowing and higher unemployment, there is no evidence that their approach is working. Is the Budget so ideological that the Government cannot see the danger signs staring us in the face? What we really need instead is practical and pragmatic economic leadership.
George Freeman (Mid Norfolk) (Con)
“Rescue, rebalance and recover”. No, Mr Deputy Speaker, I have not got hold of a copy of the late George Best’s doctor’s notes, nor a copy of the advice from the right hon. Member for South Shields (David Miliband) to his younger brother after a mauling at Prime Minister’s questions. I refer to the three words that the Chancellor used at the beginning of his Budget statement last week, which are so important in setting out its significance: “rescue” because the coalition has had to rescue the British economy from a debt crisis that would have seen our interest repayments rising to £70 billion a year; “rebalance” because the Labour party has tested to destruction the thesis that a modern economy can be driven through public spending and an unsustainable boom and bust; and “recover” because without a private sector-led recovery, we are condemned to a decade of stagflation.
Having listened to the debate yesterday and today, I must say that Opposition Members still do not seem to have got the two real golden rules of modern economics. The first is that every pound they commit at the Dispatch Box, claiming it as their own, has to be earned by the private sector before it can be spent on public services. The second golden rule, which we proved in the ’80s and must now prove again, is that cutting taxes on business increases the amount of money available to us in this House.
The truth is that, like a gambler forced to come home one day and ’fess up to his sad family that he has not been working but living off debt and gambling with his credit card, the British economy must now be weaned off the unsustainable boom that was fuelled by cheap credit under the Labour party. As in our personal lives, crises are always opportunities. The Budget was significant to me for this reason above all: it set out carefully the steps towards a sustainable recovery and the rebalancing of our economy. “What”, I hear Opposition Members ask, “will this rebalanced economy look like and where will the jobs come from?” Let me try to explain.
The Budget again contains the seeds of the recovery: in the enterprise investment scheme reforms, in the venture capital trust reforms and in the encouragement for investors putting their own wealth at risk to start small companies, it will first be an enterprise recovery. In the emphasis on the clean economy, high-technology jobs and life sciences, it will secondly be a smart-growth recovery. And in the emphasis on corporation tax reductions and sending a signal around the world that this country is open for business, it will be a global and export-driven recovery.
Nowhere will that be cheered more loudly than in my constituency, Mid Norfolk, and my region, East Anglia, a region that for 30, nay 40, years has been treated by London Governments as nothing more than a commuter reservoir to feed the London economy. Our area has huge resources in offshore energy, in high-tech engineering at the Hethel centre, in the headquarters of Lotus, in Norwich research park, a global centre of food science and agriculture, in the university of East Anglia, a leading, world-class centre of climate science, and 40 miles down the road, in what the Americans would term one cluster, Cambridge university, with all its strengths in science and research. How woeful that over the past 30 or 40 years we have treated the area as a commuter reservoir.
Well, the people of East Anglia are ready to rise to the challenge, and with the investment in infrastructure that this Government have laudably managed to secure from a difficult financing settlement, in terms of dualling the A11 and the money announced last week for regional rail, we finally have some hope that our area will be able to stand again and lead the economic recovery as we have in the past.
Norfolk, as Members will remember and not need me to remind them, was the county that gave us the agricultural revolution, our finest military hero and our first Prime Minister, but it is a county that has been left behind and failed by the model of state dependency which the Labour party has pursued. In championing the high-technology and life science potential of our area, I draw attention to the Register of Members’ Financial Interests. I am proud to have entered the House after a 15-year career helping to start some of those businesses and to help entrepreneurs to take the risk of creating new businesses.
In closing, I want to concentrate on the laudable support given to the life sciences. As we think about the markets throughout the world in which we have the chance to grow our economy, we should look no further than the recent Foresight report, which drew attention to the fact that the world’s population will rise to 9 billion. With that rise will come huge markets in food, medicine and clean energy. Those are the markets of tomorrow, the markets in which this country has the potential to lead; and those are the markets for which this Budget will begin to sow the seeds of a sustainable recovery.
The significance of that point is not just economic. The Budget last week set us on the road to a recovery that we can be proud of—a recovery that will give this country back a sense of purpose throughout the world. What finer mission is there than to be a small nation putting its experience in science, trade and enterprise to the benefit of people in the developing world, giving them the hope that there is a model for them and that they do not have to take 200 or 300 years to reach the privileged position that we have reached? It is therefore with huge pride that I support the Budget and commend it to the House.
Hazel Blears (Salford and Eccles) (Lab)
I want to talk about work, the value of work, the economic necessity of work and the consequences of millions of people being without work.
Work is more than what we do; it goes to the very heart of who we are. When we meet people, what is the first question that we ask? “What do you do for a living?” In the early 1980s in Salford, in my city, we had two really deep recessions, high unemployment and flight from the city, leading to a completely unbalanced community, low self-esteem particularly among our young people, very high crime and antisocial behaviour and lots of family breakdown. Again, in the 1990s, after almost 20 years of Conservative government, I had 50% male unemployment in two of my inner-city wards and more than 70% youth unemployment. That scarred our city, and it has taken us a whole generation to recover, and I am very worried that we are about to repeat some of the mistakes that we made then.
Unemployment has risen to more than 2.5 million, the highest since 1994; youth unemployment is almost 1 million, up 70,000 since the Government took office; and almost 30% of unemployed people in Salford and Eccles are between the ages of 18 and 24. But every statistic, every number, is a real person and somebody’s life. Just in the past three days, I have been contacted by a young man called Jack, who is about to graduate in criminology. He has been a special constable for the past three years and is desperate to become a police officer, but he has very little chance of that now, with the cuts to our police service. I have also been contacted by Tracy, a young mum with three children, who went out and became qualified as an adult residential nurse, but again, we are making redundancies in the hospital, and she has very little chance of getting such a job.
The increase in apprenticeships in the Budget is of course welcome, but it is simply not enough. The future jobs fund would have given 150,000 opportunities to our young people, and in Salford and Eccles alone 800 young people secured opportunities through that fund and many have full-time work.
The enterprise zone at Airport City is also very welcome, but all the evidence, including from IPPR North in a good report by Ed Cox, shows that the previous enterprise zones were far more about displacement than about creating new jobs—and what we really need are those new jobs.
We find that some people are juggling two or three jobs on very low pay. They are desperate to make ends meet, they see little of their families and they have no leisure time. Others have no work at all; at least 10 people are chasing every vacancy in my area. Just last week, a charity shop opened on our local shopping precinct, and 200 people queued up for it to open. That is an incredibly grim existence—a really depressing life and no money to enjoy anything else. I remember the days when we talked about the future and how it would mean a decent home, a decent job and lots of leisure time. It was like a painting of utopia—we would have time to go to the theatre and have arts, beauty, culture and all of that. What we are left with is a reality where people have very little money and no time with their families, and cannot enjoy that better life.
If we are going to get through this undoubtedly difficult time and get our country on to a better footing, then we all have to pull together and do our bit. There is a big, resounding silence at this point. Yes, we need more volunteers, and public services do need to be more efficient, but if we really are all in this together, business has to step up to the plate, think hard and change the way it operates. Old-fashioned capitalism that simply maximises profit and squeezes its workers is exactly that—old-fashioned, out of date, and not always even very efficient. It is time to think hard about a new capitalism that is socially responsible, respects those who work and contribute, and makes good economic sense rather than one that is based on a race to the bottom with people competing for the lowest wage.
The best, most modern and most forward-looking companies “get it”, whether it is Google or Microsoft. Andrew Witty, the chief executive of GlaxoSmithKline, said in the papers at the weekend:
“I really believe one of the reasons we’ve seen an erosion of trust…in big companies is they’ve allowed themselves to be seen as being detached from society and they will float in and out of societies according to what the tax regime is...isn’t it better to be in a country and say ‘let’s try and work through the difficult times and get to the good times’?”
That is the kind of company that we need—one that is dedicated to this country and recognises the value of its workers. The Co-operative bank has increased its dividend payments by 16%, and it has had a 38% increase in the number of current accounts and 140,000 extra customers. That is because it operates ethically. It did not take the high risks that many other banks took, and therefore it has a sense of trust and reliability. That is the kind of new industry that we need.
The new model for successful industry is to embed companies in the UK. We should not close our borders through protectionism, but want them to come here and stay here, creating the conditions for growth and—dare I say it—a true sense of corporate social responsibility, not a bit of charity at the end of the year. That will not be achieved by limiting rights to request flexible working or limiting maternity and paternity leave. That flies in the face of a proper joint enterprise. This is a moment when we should take a step back and realise the damage that has been done to our economy and to our people primarily by the actions of greedy, risk-taking banks selling loans that could never have been repaid. Let us say, “Never again.” We want a responsible capitalism that recognises the interdependence of those who finance the wealth and those who produce it.
The future looks very bleak for many people in Salford and Eccles who have little or no shelter from the storms that are heading their way—people without savings who struggle to pay the rent and have an insecure job, and hundreds of thousands who have little hope of any job at all. The economic numbers are appalling, with unemployment going up, growth down and inflation up. I believe that this Government will live to regret the political choices that they have made with our economy.
Charlie Elphicke (Dover) (Con)
It is a real privilege, as ever, to follow the right hon. Member for Salford and Eccles (Hazel Blears), who spoke so movingly and who is prepared and brave enough to set out an alternative—something that her Front Benchers are not courageous and bold enough to do.
I want to deal with the issue of poverty and the least well-off, and what this Budget does for people who struggle and do not have a lot of money. The previous Government were like a game of two halves. First, when Tony Blair was in charge between 1997 and 2001, they were a responsible Government who were quite effective in many ways, particularly when it came to fighting poverty. However, after that period, as the former Prime Minister increasingly got his hands on the levers of our public finances and wider economic policy, things started to go wrong.
It is against that backdrop that I am particularly keen to see the measures in this Budget succeed. It is not good enough that the 60% median for child poverty—relative poverty—went from 3.6 million in 2004-05 to 3.9 million in 2008-09, or that the number of those in deeper poverty went from 2.3 million to 2.6 million in the same period. That rise was really disappointing considering that the previous Government had pledged to take positive action on that problem. The problem is not just with child poverty; it is wider than that. The figures for all individuals show that 13.4 million people were worse off than the 60% median in 2000-01, and that in 2008-09, that figure was stuck at 13.4 million. To me, that is a real disappointment.
In this afternoon’s debate in the Welfare Reform Public Bill Committee, I raised what has happened to those who are of working age and are in poverty. According to the relative poverty measures, in 2000-01 6.5 million such people were in relative poverty, and that had risen to 7.8 million people by 2008-09. The second half of the game of two halves that was the previous Government was not a ringing endorsement of how we look after the least well-off in our communities. As we all know, the rising inequality in that period between those in the bottom quintile and those in the top quintile was a great shame. Over the whole period, inequality rose. That is a great shame.
I therefore welcome the measures in the Budget that aim to make work pay. That is the key message that we need to send. We are taking 1.1 million people out of tax altogether by increasing the personal allowance. We are helping and understanding by engaging in the issues of fuel duty and introducing the fair fuel stabiliser.
The most important measure is the universal credit. I am pleased to see from chart A.5 on page 78 of the Red Book that there is a clear plan that in 2012-13 the distribution will be such that the least well-off will be protected from expenditure decisions. I am pleased to see that the universal credit will make work pay. That is focused not on the middle classes who are on the fifth or sixth deciles, and who are frankly quite well off, relatively speaking, but on the least well-off, who are on the bottom two deciles. Too often under the previous Government, those people were sadly neglected. Those are the people who really need help and on whom we should focus. Those are the people for whom we should make work pay through incentives to enter work. What I particularly like about the universal credit, which is shown on pages 80 to 81 of the Red Book, is the real help for lone parents and first earners that was not there before. Those pages also show that the marginal withdrawal rate is under control, and that it will broadly incentivise work and make part-time work more possible and practical.
To conclude, I welcome the measures that should provide help on the issue of child poverty. The Budget measures are aimed at reducing child poverty by 50,000. That is really positive. I hope that as we come out of recession and out of the difficulties, things will start to improve for everyone across the board. However, we really need to look after the least well-off as best we can.
Mr Michael Meacher (Oldham West and Royton) (Lab)
The Government’s main jibe at the Opposition throughout this debate has been, “What is the alternative to the cuts?” I will spell out what I think that alternative should be. Of course the deficit has to be brought down —we all agree on that—but slashing public expenditure by £80 billion in four years is probably the most risky and counter-productive way of doing that. The Chancellor has largely ignored the other three ways.
First, there are the proceeds of economic growth. The estimate of the independent Office for Budget Responsibility for growth over the next five years, albeit recently scaled down, has growth at 1.7% this year, 2.5% next year, then 2.9%, 2.9%, and 2.8%. That means that, on the Government’s own estimates, there will be an increase in the national income of £185 billion. Governments always take about 40%. That means that there will be extra Government revenues over the next five years of £74 billion. That is half the current Government deficit of £146 billion, and nearly three quarters of the Government’s estimated structural deficit of £109 billion. Therefore—on their own estimates, I repeat—the Government would halve the budget deficit in five years without making a single public expenditure cut. I am not against such cuts, and I think there should be some, but I am simply pointing out that there are alternative and far better ways of dealing with the problem.
The reason why the Government have chosen to focus obsessively on benefit and public expenditure cuts is not because they are economically necessary on the scale that they say, but because of their overriding ideological objective of chopping back the welfare system and shrinking the state. That is what it is really about.
The second way to reduce the deficit is obviously through tax increases, but the Government have chosen to minimise that option and maximise the cuts option—the balance between the two is 77% and 23%. Thatcher never went beyond 50:50. The Chancellor has ostentatiously avoided any tax rises that might disturb the rich. The non-dom loophole has not been closed; it would bring in an extra £3 billion. The promised £2 billion to be saved in tax avoidance is really pretty small beer, given that even Her Majesty’s Revenue and Customs admits that avoidance will cost £16 billion this year and most independent experts think that the figure will be £50 billion. The tripling of the Government’s bank levy, which was recommended by the International Monetary Fund and would bring in another £6 billion, has simply been passed over.
Moreover, the Chancellor has simply turned his eyes away from any fiscal innovation that might produce a fairer Britain where all of us are in it together. A financial transaction tax at a modest rate of 0.05% would raise about £30 billion. An empty property tax would raise £5 billion, and a land value tax, which would be a great deal fairer than the council tax, which it could replace, would raise more than £30 billion. A minimum tax levy on high earners would put a cap on avoidance and raise more than £10 billion.
The Chancellor really ought to be less timid. The public want taxes that will hurt the rich, and particularly bankers. I do not think the Government realise that. Any permutation of the taxes that I have mentioned could raise at least £30 billion a year—probably rather more if the Chancellor chose, but of course he will not, because the Tory party gets half its funding from the bankers.
Then there is the third option for reducing the deficit, which is a jobs and growth strategy. The cost of putting a million people on the dole, which is what the Government are planning to do, is probably about £6 billion depending on the level of benefits involved. Instead of throwing a million people on the scrapheap, which will substantially worsen the deficit, the Government could invest in a million jobs to provide the social housing and transport infrastructure that are so desperately needed; to develop the green technologies that the green investment bank was supposed to fund if only the Government had not shrivelled its powers; to deal with the rising child protection case load; to train a more skilled work force; and to care for a growing ageing population, to mention just some of the service jobs that could be provided. There would be a significant net gain in deficit reduction for many reasons, not least because of instead of a million people being a drain on the Exchequer, they would contribute to it.
The real cause of the financial crash has not been addressed at all. It is astonishing that three years on, nothing has been done to address the massive flaws in the banking system’s structure and its use of derivatives, bonuses, lending practices, offshoring and speculation. The Budget sets out £80 billion-worth of spending cuts that are not economically necessary on such a scale, will do lasting damage to the social fabric and do not deal with the real—
Mel Stride (Central Devon) (Con)
I have listened to this debate with growing incredulity this afternoon and for some hours yesterday, as speaker after speaker on the Labour Benches has risen to deny that the last Government’s profligacy could in any possible manner have had an effect on the economic situation that we now find ourselves in.
We need to remind ourselves that we have a £150 billion deficit, which, as my hon. Friend the Member for Spelthorne (Kwasi Kwarteng) pointed out, represents about 12% of GDP. Back in 1976, when another Labour Chancellor, Denis Healey, went cap in hand to the International Monetary Fund because we were bust, that figure was only 7%. Our economy has been completely and utterly out of balance. We spend £43 billion on interest alone, which is more than we spend on education, and more than we spend on defence, the Foreign Office and overseas aid combined. That is an absolute disgrace.
There is no doubt that the previous Government brought us to within a scintilla of being where Greece is. We would have been there, if we had had a credit downgrade and our interest rates had gone up. That is where we would have been headed if Labour had won the election.
The previous Government presided over a halving of the manufacturing sector in this country, a fall in our share of world trade, and an expansion of the gap in prosperity between the north and the south. We should take no lessons on economic management from Opposition Members.
I welcome the Budget, which is a Budget for growth and jobs, against a tough background. Nobody enjoys figures such as the 0.6% contraction in the last quarter, or the OBR’s downgraded forecast of 1.7% growth for this year, but equally, nobody who looks at the previous Government’s record can imagine that under Labour, those figures would be anything but worse.
Labour Members offer no constructive alternative. Instead, they offer opportunistic objections to every sensible suggestion by the Government about saving on expenditure. Every time an Opposition Member stands up and says, “No. We don’t want this measure on tuition fees and we don’t like moving from RPI to CPI in pensions,” and so on, they are really saying, “We’re going to increase expenditure, and we’re going to increase either the deficit or taxation as a consequence.” That opportunistic approach is at odds with their rhetoric of prudence, which is in turn at odds with the marchers’ placards on Saturday calling for no cuts whatsoever. That did not stop the Leader of the Opposition strutting his stuff on the stage in Hyde park and trying to assume the mantle of Martin Luther King. He had the dreams, but he did not have the detail or the substance.
Tax for corporations will be reduced under this Government to 23%, which is 16 percentage points lower than the rate in the US. On the radio the morning after the Budget, Sir Martin Sorrell told us that WPP, the largest advertising agency in the world, would relocate to this country from Ireland. On that subject, even when suffering and having to go to the IMF, what is the one thing that Ireland holds on to and defends above all else? It is its low corporate taxation rate, which, at just 12.5%, has enabled that country to attract double the average level of EU inward investment. We need to bring taxes down.
I welcome the fact that small business taxes will be reduced to 20%, and that we will support entrepreneurship by doubling the enterprise allowance to £10 million, so that those who go out and create businesses and wealth for themselves are encouraged to do so. In the process, they employ people, generate wealth, and pay the taxes that pay for the front-line services that we all want protected.
I was astonished by what the right hon. Member for Holborn and St Pancras (Frank Dobson), who I am pleased to see is in his place, said. He regaled us with all the benefits of red tape and told us all about how regulation was such a marvellous thing. In the real world of business, not a single business person would ever say that. I have not heard one business person further that argument.
I welcome the fact that we will implement Lord Young’s review in full, and that we will ensure that companies that employ fewer than 10 people and genuine start-ups will be exempt from domestic regulation. That is a step forward.
I also welcome the support that we are providing for the young. There will be 50,000 new apprenticeships, increasing to 250,000 over the period of this Parliament, and the work placement schemes—the 80,000 places that we heard about earlier. We will also double the number of university technology colleges from 12 to 24.
I am pleased that something was done on fuel, particularly for rural areas such as mine in Central Devon, and I am particularly pleased about the rise to 45p of the tax-deductible mileage allowance, which will help many voluntary organisations that rely on voluntary drivers. I also welcome the fact that the Budget is fair in raising the tax threshold, because it means that we will take more of the poorest hard-working people in our land out of tax altogether. That is the right and the decent thing to do. I shall conclude now—because I am aware that others wish to speak—by saying that this is a Budget for growth, it is a Budget that stands for enterprise, and it is a Budget to which Labour Members have no answer.
Gemma Doyle (West Dunbartonshire) (Lab/Co-op)
As we debate the Budget it is deeply disappointing, but not a bit surprising, that Labours Members are once again forced to highlight the impact that the Government’s approach is having in our communities. The Budget was more of the same. The Chancellor has confirmed that he will not alter his course, in spite of the pain it is causing to ordinary families. The Government’s cuts are too deep and too fast, and they are hurting. In my West Dunbartonshire constituency the jobless total is at its highest for well over a decade, and the predictions are that many more people will lose their jobs.
Pensioners are feeling the pain of the VAT rise and now, thanks to the Budget, will be hit with another attack on their income, because the Government are doing what they promised they would not do and slashing the winter fuel payment. Shame on them. And let us not forget that pensioners will lose thousands of pounds through the Government’s plan to link public sector pension rises permanently to the consumer prices index rather than the retail prices index. The Government say that that is necessary to reduce the deficit, but pensioners now, and those who will collect their pensions in years to come, will continue to see the value of their pensions slashed long after the deficit has been paid off. That leads us to conclude that the changes are an ideological measure intended to make pensions much less generous.
The Government say that it is okay to cut public sector jobs because the private sector will fill the gap. Perhaps that will be achievable in some areas—I really hope it will—but in my constituency there are 35 unemployed people for every job vacancy. The Government’s approach, therefore, is breathtakingly complacent and reckless as far as my constituency is concerned. The fact that in many parts of the country there are such high numbers of people out of work compared with the number of vacancies goes to show just how out of touch the Government are, if they think that the private sector will come to the rescue.
Furthermore, the Government’s plans to equalise the state pension age earlier than previously planned and at a greatly accelerated rate means that hundreds of thousands of women in their mid-50s will lose thousands of pounds. This change is fundamentally unfair on women who have planned carefully for their retirement. It cannot be fair that with just seven years to prepare and plan, they find that they must work an extra two years before being able to draw a state pension. In contrast, men of a similar age have been given eight years’ notice of a one year change. On Friday in Dumbarton I met a woman who said that she could not continue to meet the physical demands of her job for that extra time. What is the Government’s response to such women? They are not arguing that the state pension age should not be equalised, and neither am I, but the Government are going about all this the wrong way.
The cuts will impact hard on vulnerable people. I support the basic principles of welfare reform—trying to simplify the benefits system and doing all we can to help people into work where they are able to work—but the Government are going too far. Imposing an arbitrary 20% cut to the bill for disability living allowance proves that the Government’s approach is ill considered, and by publishing the Welfare Reform Bill before they have finished consulting, they cannot even pretend that they have taken into account the impact on the vulnerable people who will be affected by these changes. Scrapping the mobility component of DLA for people in residential care shows pure indifference to the needs of millions of people with disabilities who need vital support. It is an outrageously unfair cut that will leave many disabled people trapped in their homes. We had an intervention earlier from the Under-Secretary of State for Work and Pensions, the hon. Member for Basingstoke (Maria Miller), but we still have not cleared up the confusion on this issue. Earlier the Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), who is not in his place at the moment, said from a sedentary position, “Stop frightening disabled people.” Let me be very clear with the Government Front-Bench team: it is their reforms that are frightening disabled people.
I have been contacted today by a number of individuals and charities that fear that the new work capability assessment will discriminate against many seriously sick and disabled benefits claimants, including, for example, blind people with guide dogs. The Government need to think again before rushing through any changes in that area.
The Government’s cuts are fundamentally unfair and completely contradict the claims that we are “all in this together”. They are driving up unemployment, cutting lifeline support for ordinary families and pensioners, and targeting women and vulnerable people. In response to a point made by the hon. Member for Mid Norfolk (George Freeman), let me say that public sector workers pay taxes too. It is ridiculous to suggest that they do not contribute to the economy of this country. Ordinary people are being forced to pay the price of the excesses of the bankers, while the banks themselves have been given a massive tax cut by the Government this year. The huge march in London at the weekend showed that the mainstream majority across the country want the Government to change course. Sadly, the Budget was just more of the same.
Neil Carmichael (Stroud) (Con)
It is a great honour to speak in this important debate. I am mindful of the contribution made by the right hon. Member for Oldham West and Royton (Mr Meacher), who talked about the importance of growth. He recognised that the economy would start growing soon and suggested that this would yield a considerable amount of additional money for us to spend. He is quite right, and I welcome that admission. However, he is completely wrong to think that growth will simply happen without our tackling the deficit. That is what we must do, which is why the Budget is essentially fiscally neutral: we have already set out plans lasting for four years that will deliver the outcomes that we need for growth. That is why the Budget is all about growth, and I want to focus on those important issues.
First, one reason why I was not marching in London on Saturday—although I would not have done it anyway—was that we were celebrating the Chancellor of the Exchequer’s announcement of massive investment in infrastructure in my constituency, with the Stroud to Kemble redoubling. That kind of development really matters. My constituents are delighted to know that we will have a better way of getting to London. Businesses are already gearing up for more investment, and there is a general feeling that the scheme will lead to more prosperity. That stands in sharp contrast with, for example, the haphazard way in which the regional development agency attempted to promote growth in our area. Indeed, it was more likely to end up building houses than promoting factories. I welcome the fact that the Government have invested so wisely, and they are doing so elsewhere in the country too.
The second important thing is the announcement about the green investment bank, with £3 billion to start with. That is a great start, and is exactly the sort of investment that we need—certainly in my constituency, but across the board too. I look forward to the day when the green investment bank can start raising capital on its own. I understand why there is caution about that, but we have made an excellent start and the green investment bank will deliver some important things.
The third important thing—my right hon. Friend the Secretary of State mentioned this in his opening speech, and I will develop it—is giving people the opportunity to get to work. Once people are in work, we need to ensure that they benefit from appropriate training, which is why I welcome the emphasis on training and apprenticeships. For far too long under the Labour Government, we were effectively training people up to a standard that was good, but not good enough: it was just level 2, and we want level 3. We should learn a few lessons from Germany’s export-led recovery, one of which is that good training matters. I therefore celebrate the Government’s efforts to deliver really good training for our young people.
It is important to mention planning, too. We need a more flexible and collaborative planning system, involving those being planned for—home owners and local communities—businesses and local authorities. We should see more agreement at an earlier stage, so that things happen more smoothly. We do not want to see the kind of attitude that we have seen in the past, which at worst has involved planning by appeal— and, sometimes, not a huge amount getting done. I welcome those changes.
I also welcome the measures on fuel. I have had a lot of complaints from my constituents about the rising cost of fuel, and I understand them. We are in a rural area, and we have a large number of haulage firms. For them, the changes in taxation will be welcome. We must stick to a fiscally responsible approach to public expenditure, but we need growth, and we need to be active in promoting it. The right hon. Member for Oldham West and Royton was correct in saying that growth would go up, and that it would do so on the basis of investment, good training and a sensible taxation strategy.
Alex Cunningham (Stockton North) (Lab)
Like others, my speech will focus on people. The number of unemployed claimants in my constituency is now 3,812, which is 9.2%. In the north-east of England, despite the progress made over the past 12 years in diversifying our industrial and business base, we still have the highest rate of unemployment in the whole country, at 10.2%. Even more worrying is the fact that 23% of our 16 to 24-year-olds are out of work. It is against that backdrop that I want to speak today.
The worst of the cuts are yet to come. Thousands of public and private sector workers are set to lose their jobs, and the cuts are being front-loaded, leaving local authorities with no choice but to make quick savings by making staff redundant. My own very efficient local authority, Stockton borough council, is faced with having to make savings of £29 million over the next four years. The Chancellor is effectively throwing hundreds of thousands of people out of work, but he is passing the axe to the local authorities and leaving them to do the chopping.
Let us not forget that recent analysis published by the TUC found that there were almost 10 applicants for every vacancy in Labour-held constituencies. The figure in Tory constituencies was 4.5, and in Liberal Democrat areas, it was 6.1. That is because the cuts are hitting the poorest communities the hardest. Recent research into the impact of the cuts reveals that all but two of the 20 worst-hit councils are in the bottom 20% most deprived council areas in England. It cannot be fair that low and middle-income neighbourhoods should carry the heaviest burden because of the Government’s choices.
We are told that there is no alternative, but there is a choice being made by the Government to cut far too fast. Under Labour, the economy was heading in the right direction. It was growing at 1.2% when Labour left office. In the last quarter of 2010, however, it had shrunk by 0.6%. So, under this Tory-led Government, growth has gone down last year and this year, and it will go down next year. The Chancellor blames the poor economic performance on the wrong type of snow, yet Germany and the US suffered from similar Arctic conditions last winter and their growth figures are not so grim.
Inflation is up, and unemployment is up. It is becoming increasingly clear that the Tory-led Government’s plan for the economy is, yes, hurting but not working. Yet we are repeatedly told that there is no plan B. What we have instead is a real-life economic experiment, and the disgraceful thing is that it is completely politically motivated. The coalition hopes to get the worst of the pain out of the way before the next general election. What an irresponsible way to deal with our economy, and with people’s jobs and lives.
What is the Government’s response to this bleak outlook? We have had the announcement of the local enterprise partnerships, but with no money. The Budget announced 21 enterprise zones, including one in the Tees valley. I hope that both those projects flourish and create much-needed new jobs, but the reality is that their funding is a fraction of the funding that was available for regional growth through the now abolished regional development agencies.
What are the Government doing to address the fact that almost 1 million 16 to 24-year-olds are out of work today, the vast majority of whom are desperate for a job to kick-start their adult lives? The budget announced just 40,000 two-month work experience placements a year, and an extra 12,500 apprenticeships a year. That will not deal with the tip of the iceberg. I fear that there will be a lost generation, which will cost this country a great deal, economically and socially, in the years to come if we do not tackle the problem head on. The Government’s Work programme also gives me cause for concern. Every person who receives incapacity benefits is to get a medical reassessment, and huge numbers face being moved on to the jobseeker’s allowance, losing a third of their payments, if they are found to be fit enough to work. Many of them might not be.
As a member of the Work and Pensions Select Committee, I recently visited Burnley, where we spoke to people who had been part of a pilot for these assessments, and some of the stories we heard were very worrying. The test has been severely criticised by groups such as Citizens Advice and some argue that it is not fit for purpose. I look forward to the Committee’s further inquiry into that matter.
Clearly, the proof will be in the pudding, but even if these people are moved on to jobseeker’s allowance and are able to get the comprehensive support they will need to make them job-ready, they then face finding work in a tough environment, competing against people who might recently have been made redundant and against all those young people for fewer and fewer jobs. This will be tough enough in Tory constituencies, never mind those like my own in Stockton North and throughout the north-east. The Government need to think again about providing realistic incentives to create jobs and help people back to work, while still protecting the most vulnerable.
The real spending cuts are only just starting to hit people. My real fear is that we are facing a jobless recovery. This would be a disaster for Teesside and the north-east, which, as I have already said, suffers from the highest unemployment rate in the whole country. The Government must do much better.
Priti Patel (Witham) (Con)
I am delighted to contribute to what has been a quite well-subscribed Budget debate, particularly because this Budget outlines how Britain can earn its way in the modern world. It is a Budget that seeks to reform the country’s economy and regain the ground that Britain has lost in the world economy.
Ministers on the Treasury Bench should be congratulated on bringing forward a package of measures that, against the backdrop of the most corrosive structural deficit on record, will provide practical and lasting measures to support hard-pressed families and people back into work, to help businesses grow and to stimulate long-term economic growth.
At the heart of this Budget is a clear message to make Britain a better place in which to do business. From the biggest multinational companies to the newsagents, convenience stores and beauty salons on all our high streets, which all employ our constituents, the Budget has recognised the insurmountable burdens that they have faced year on year with an unequivocal aim to give business the long boost that it needs to invest in jobs and grow in Britain. With the Government now accounting for half of our economy, we need a new economic model underpinned by investment, manufacturing and exports.
In my view, this Budget has kick-started the reform with an essential tax cut to business, rate relief for small firms, a doubling of entrepreneurs’ relief and more support for research and development. There are now clear plans to scrap the burdens of regulation that have cost business billions every year. It is absolutely right that we have brought in a moratorium on all new regulations for our smallest companies. I put out a challenge to the Treasury Bench right now: the Government should host a bonfire of the excessive regulations, including many of the gold-plated regulations emanating from Europe as well as those that hinder employment opportunities and stifle enterprise and opportunity across our country.
In the Witham constituency, more than 82% of jobs are in small and medium-sized businesses. That equates to more than 25,000 local people and their families who are dependent on the prosperity of thousands of businesses in high streets, town centres, industrial estates and in the rural communities. The recession has hit them all really badly, but many have survived through their own dogged determination, and it is the inherently Conservative policies of the Budget that provide the light at the end of the tunnel for them.
I know that businesses in my constituency will relish the additional opportunities to tap into the new apprenticeship schemes that are coming on board. With more than two thirds of all apprenticeships in small firms, I can assure this House that businesses throughout Witham and Essex are ready to respond to the Chancellor’s call to action and to take on more new apprenticeships. Young people are looking for work and by creating these apprenticeships and the right conditions for growth, local jobs will certainly be created.
Finally, Labour has left the British economy unbalanced, with far too much reliance on debt, household borrowing and the City of London and far too little emphasis on manufacturing, exports and balanced growth across the country. The creation of the new enterprise zones will, in my view, drive growth and new jobs everywhere. I have to say that I am tremendously disappointed at the negativity coming from Labour Members about the enterprise zones. If they do not want them in their constituencies, I can tell them that the county of Essex will welcome them with open arms.
The new zones will be targeted at areas with high growth potential, and the House may be not be surprised to learn that I know of one such area. Essex—including my constituency—would benefit from an enterprise zone, because it is a county of entrepreneurs. We not only work hard but save, and we have real drive, entrepreneurial spirit and flair. Our county consists of both urban and rural communities. Surely the point of enterprise zones is that while we should not focus disproportionately on urban centres, we should recognise that the urban parts of our communities offer much in terms of innovation and employment opportunities. There is a significant skills base that we must tap into. My constituency contains businesses ranging from window and glass makers to chocolate and jam makers to high-tech sat-nav companies.
I commend the Budget, which is not just good for jobs and growth but good for my constituency.
Glenda Jackson (Hampstead and Kilburn) (Lab)
I must tell the hon. Member for Witham (Priti Patel) that her speech was a bit like “all our yesterdays”. The one thing that she did not seem to think would create jobs in this country was slashing the national minimum wage, and I was surprised that she did not suggest that.
Today’s debate opened with one of the most lamentable speeches that I have ever heard the Secretary of State for Work and Pensions deliver, in which he presented—as have other Government Members—the rosy view that the Government’s proposals will automatically create jobs, that there will be people who will be qualified to fill them, and that the future will be golden. If we look at the Red Book, which Government Members have waved in our faces on many occasions, we see that what the Government are setting in train is a Budget that will create a vast increase in unemployment. Unless they intend to abolish the whole benefits system at a stroke, an astronomical amount will have to be spent on unemployment benefit and passported benefits—although, of course, they may wipe all those out as well.
Government Members have the audacity to accuse us of frightening some of the most vulnerable people in our society, but it is not us who are frightening them. In my constituency and in those of Government Members, it is the Government who seem to look at nothing but the bottom line. It is they who introduce swingeing policies which, nine times out of 10, do not mesh, and the Secretary of State responsible for delivering those policies does not know what impact they will have on the ground.
A precise example from today’s debate was what I understand to have been the initial proposal from the Department for Work and Pensions in regard to jobseeker’s allowance and housing benefit. It was proposed that 10% should automatically be slashed from the housing benefit of anyone who had failed to find a job after 12 months on jobseeker’s allowance despite doing everything demanded by the Government—and that is housing benefit which is being capped.
It is to his shame that, in his opening speech, the Secretary of State ran again with a canard that he is on record as saying he hoped would not be fulfilled: that the majority—he did not use the word “majority”, but it was implied—of people on housing benefit are living in properties where the rent is £100,000 a week. Everyone in the House, and certainly the Secretary of State, ought to know that the majority of people claiming housing benefit are pensioners, people with disabilities, or people on very low pay.
Many hard-working families in this country are entirely dependent on housing benefit. Nowhere is that more marked than in constituencies such as mine in central London, where housing, travel and training costs are vastly above the national average. However, nothing in the Budget appears to acknowledge regional variations, which will of course affect the potential for people to find jobs even if the private sector is capable of providing them.
Another remarkable feature of many speeches from Government Members was their contempt for public sector workers. It seemed that none of them wanted additional nurses in their hospitals, additional doctors in their surgeries, or additional teachers in their schools. Certainly we know that they do not want more policemen, because their numbers are being slashed all over the country, as will be the very people on whom the most vulnerable in our society depend.
That, of course, is the other great canard. This Government came into office saying that they would take tough decisions. They said the road was bumpy, but that they would protect the most vulnerable. They have betrayed the most vulnerable, however—the very young, the very old, people with disabilities. Women are a marked target for this Government. We women are clearly expected to have the broadest shoulders in the country because the cuts will fall on us. The Government are expecting women to go back to work—if there is a job to go to, of course—while at the same time taking away child care support, which is the absolute bedrock that enables a woman with children to go back to work.
The Government have markedly failed to think through their grievous policies. This is not a Budget for investment or growth. Rather, this is the Budget of a group of people who have markedly failed to understand the realities of the situation facing millions of people in this country who do want to work, who wish to take this country forward, and who have optimism and believe in all of us. The people who do not believe in the people of this country, or indeed in this country itself, are the Conservatives.
Mr Deputy Speaker (Mr Lindsay Hoyle)
One more Member wishes to speak, but unfortunately I cannot call him. I apologise for that. The Chancellor has also sent an apology, as he has been called away to the G20.
Ms Angela Eagle (Wallasey) (Lab)
I am gutted that the Chancellor is not present to listen to the winding-up speeches on his Budget.
In the Budget, the Chancellor had the opportunity to help millions of British people and families who are being hit hard by the biggest squeeze in their living standards for 80 years. He also had the opportunity to admit that ploughing full-steam ahead with cuts at the speed and on the scale that this Government have planned is about to have a devastating impact on people and communities up and down the country. People wanted some hope for the future from this Chancellor and this Government, but what they got was a Chancellor and a Government on autopilot. They got a man who refuses to see that the economic storm clouds are gathering around us once more; they got a man who will not admit that his cynical electoral strategy of scaremongering about a sovereign default has collapsed consumer confidence and weakened our prospects of recovery; and they got a man who has been so boxed in by his own political strategy that his only resort is to glory in the folly of sticking to his plan A, even if all the economic indicators show that it is hurting but it is not working.
Of course we accept that the deficit has to be reduced, but we disagree with the sheer speed and scale of the Government’s cuts plan. In the Chancellor’s self-styled emergency Budget last June, he embarked on a risky and extreme experiment with our nation’s future. He chose to cut the deficit deeper and faster than was economically necessary; he chose to cut it faster than any other major economy; he chose to order the largest spending cuts since the second world war with a nasty ideological relish; and he was cheered to the rafters by Members of both coalition Government parties in a distasteful display of enjoyment that none of us on this side of the House will ever forget.
Some £80 billion is to be sucked out of the economy in the next four years, in cuts to services and the public sector. With tax rises included, £126 billion in all will be withdrawn from the economy by 2015. Only Iceland and Ireland are cutting faster than this Government have decided that we should cut, and now the Chancellor is claiming, with his usual modesty, that he has rescued the British economy, but aside from his own vainglorious rhetoric, what are the facts actually telling us? The truth is revealed by the Office for Budget Responsibility: there has been a significant deterioration in economic performance since the Chancellor’s slash-and-burn Budget last year. As its latest forecast demonstrates, things are getting worse, not better, and that is before most of the cuts have really begun to bite.
After just 10 months of the Chancellor’s fiscal masochism, virtually all the important economic indicators are now moving in the wrong direction. Consumer confidence is at a 20-year low; inflation is at more than twice the Bank of England’s target; the VAT rise has pushed prices up, and the OBR expects them to rise even further this year; unemployment, which was falling last year, is now at a 17-year high—in my constituency, 22 people are now chasing every job; and the growth forecast has been downgraded again and again and again.
Because of this lower growth and higher inflation, the Government have admitted that they will have to borrow £46 billion more than they planned in November. We warned the Chancellor that huge and rapid cuts in public expenditure risk choking off growth, thereby increasing unemployment, and that that might make the deficit worse rather than better. Last March—conveniently before the election—the right hon. Member for Twickenham (Vince Cable), now the Business Secretary, said:
“We must not cut Government spending too soon and risk plunging a fragile recovery back into recession. Cuts without economic growth will not deal with the deficit”.
I could not agree more. It is a pity that he, like the rest of his party, is now supporting an economic policy which is the exact opposite of the one that he campaigned for.
We warned the Chancellor last year that he needed a growth strategy, alongside any deficit reduction plan, if the economy was to be restored to balance without doing untold damage to our social infrastructure. We waited and waited, but meanwhile growth faltered and then stalled. The economy shrank by a shock 0.5% in the last quarter of 2010. The Chancellor crossed his fingers and blamed the snow, and the Government’s spin machine then cranked into action. Just two weeks ago, at the Tory spring conference, the Prime Minister and the Chancellor promised to make this a pro-growth Budget. The Chancellor said that it was going to be “unashamedly pro-growth” and the Prime Minister went further, by declaring that it was going to
“tear down the barriers to enterprise and be the most pro-growth Budget this country has seen for a generation.”
If we look behind all the Government hype and the propaganda, and check out what really happened last week, we see something a bit different. The Chancellor actually came to this House and downgraded the growth forecasts—they are down this year to 1.7% and down next year too. Far from being a pro-growth Budget, this is actually a no-growth Budget which puts Britain into the slow lane. To distract attention from that inconvenient fact, the Government published, alongside the Budget document, “The Plan for Growth”, a self-styled “urgent call for action”. But this much-trailed growth plan achieves nothing in the short term, when growth is in such short supply. It consists of loud invocations of motherhood and apple pie, and it rehashes the familiar laissez-faire mantras shared by the Orange Book Liberals and the Thatcherite Tories. It is nothing more than a mish-mash of reheated, failed 1980s Thatcherite orthodoxy.
The passages on the Government’s growth strategy in the Chancellor’s speech were so riveting that the Justice Secretary actually fell asleep on the Front Bench right in the middle of them. We sympathised with him, but the 50 punters who had put money on at odds of 16:1 that he would sleep during the Budget were richly rewarded. Now I hear that Ladbrokes has slashed the odds that there will be a double kip from him some time in the next year.
The Office for Budget Responsibility was almost as unimpressed as the Justice Secretary, because page 39 of its report on the Budget states:
“we judge there is insufficient evidence at this stage to adjust our trend growth assumptions in light of these measures.”
In other words, despite all the ministerial proclamations, all the Government propaganda and all the cynically pre-arranged third-party endorsements, this is still a no-growth, go-slow Budget.
The Chancellor’s extreme austerity programme will suck demand out of the economy, and if growth continues to falter the plan will be irrelevant. We know that inflation is higher than it should be and unemployment is higher than it should be: there will be 30,000 fewer jobs this year and 80,000 fewer next year, and 200,000 more people will be unemployed by the end of this Parliament. I do not know what the Secretary of State for Work and Pensions finds so amusing about that.
Two weeks ago, at the same Tory conference where the Chancellor promised to make his Budget unashamedly pro-growth, he also promised to listen to public concern about the cost-of-living crisis. It is all very well listening, but it is real help that people need. Instead, we got a Budget in which the Chancellor gave a little with one hand but took away much more with the other. The well-trailed £45 tax cut next year is more than clawed back by the decision to raise national insurance thresholds only by the lower consumer prices index. That is a small-print stealth tax that, funnily enough, was not briefed in advance to the press but will raise more than £1 billion extra in income tax by 2015. The VAT rise is already costing a family with children an extra £450 this year alone. The banks have been given a tax cut while families and children bear the brunt of the spending cuts. Even the Chancellor has almost stopped claiming that we are all in this together and he can hardly keep a straight face when he does.
Pensioners were excluded from the tax cut con, only to discover that their winter fuel payment will be lower, too, by £50 or £100. The Treasury explained that that was not actually a cut but merely allowing a top-up to expire, but it seems that no one had told the Deputy Prime Minister that. He clearly had not even bothered to read the Budget that he had just signed off, because during a radio phone-in last Thursday he was questioned about this and claimed at first that winter fuel payments had been increased. He then resorted to accusing my right hon. Friend the shadow Chancellor of frightening people by
“throwing around a lot of…wild allegations”.
The trouble for him was that those wild allegations were actually part of his Government’s plans and, worse still, he had agreed to them. We all know that he will not accept any paperwork after 3 o’clock in the afternoon, but I really think he ought to have made an exception for the Budget. He should really learn that the pesky details in big documents can sometimes be quite important.
The headline-grabbing centrepiece of the Budget was the 1p off petrol duty announced with a great flourish and much waving of Order Papers on the Government Benches, but that is a paltry reduction when compared with the 3p a litre increase that the VAT rise has already added to fuel bills. I wonder how many Members of the parties opposite would have cheered quite so loudly if they had read the small print and understood that the Chancellor has merely delayed and not cancelled future fuel duty increases. Duty is due to rise by 3p a litre on 1 January and to rise again in August next year. VAT at 20% will only make it worse.
There is also mounting evidence that the fuel duty cut has not been fully passed on to motorists, despite the Chancellor’s pledge to watch “like a hawk” to see that it was.
Dame Anne Begg (Aberdeen South) (Lab)
What does my hon. Friend make of today’s announcement that Statoil, a Norwegian company—from a country where tax is not exactly low—is to put on hold its £3 billion-plus North sea development as a result of the Budget increase in oil and gas tax?
Ms Eagle
This smash-and-grab raid on the oil companies to pay for the tax cut appears to be unravelling. Certainly, sudden changes to tax regimes without notice have big implications for investment. The Government need to pay particular attention to what the oil companies are saying, especially about their investment intentions. Having a North sea oil regime that can switch and is not set, because of the $75 a barrel oil price, which is going to change the regime again, may be particularly damaging. We will have to take a close look in Committee at how the Government intend to implement this mechanism.
Dame Anne Begg
The offshore oil and gas industry, which was a growing industry and could have been the driver that took the country out of recession, tells me that the one thing it needs to invest in this country is stability, but the fuel duty stabiliser will not give it that stability. Indeed, it will do the very opposite and make things even more volatile.
Ms Eagle
My hon. Friend makes a very important point. We will have to look at precisely how the stabiliser mechanism will work. How long will the oil price have to be at $75 a barrel to trigger it and how will that be measured? What will be the implication for future investment decisions? We know that there is a great deal of competition in the oil and gas industry for the use of very expensive infrastructure. My hon. Friend has made very important points and we will be watching like a hawk—to use a phrase that has already been used—to see about the practicalities of the announcement.
I note that the Government are reportedly urgently considering handing out hundreds of millions of pounds in tax breaks to compensate energy companies that are apparently considering shelving existing plans for further investment in UK gas fields or raising domestic prices still further to make up for profits lost. By
“squeezing the maximum amount of tax revenue from Britain’s oil and gas assets,”
the Chancellor
“is putting further offshore investment at risk…He’s more interested in cash today than investment tomorrow.”
That was the current Chancellor speaking in 2007, but now he is in Downing street he seems to be ignoring his own advice. The truth is that this policy was cobbled together at the last minute, the OBR did not have sight of it and now it is descending into chaos. I must issue a warning to the Chief Secretary to the Treasury, because I read over the weekend that he is being blamed for this incompetent piece of policy making on the hoof—apparently it was all his idea. I would be watching my back if I were him. We now see the reality that the fuel duty cut was a classic Tory con that really will not help anyone at all.
Meanwhile, the small print of the Tory-Lib Dem Budget shows that the NHS will be hit with a £1 billion cut in real terms, breaking the Prime Minister’s pre-election poster pledge that he would not cut it. The OBR’s new inflation forecasts reveal that spending on the NHS will fall for the next two years for the first time since records began—that is before the Government waste billions more on a reorganisation that nobody wants. The Tories drained the life out of the NHS in the 1980s and now they are back and are trying to do it all over again.
We were told that the Budget was all about growth and the Government promised to help Britain’s hard-pressed families with the cost-of-living crisis, but they have failed dismally on both counts and today the Bullingdon boys have sent along a Lib Dem whipping boy to defend it. If the Chancellor has “Je ne regrette rien” playing on his iPod, then the Chief Secretary has “Puppet on a String” playing on his. Just last year he promised his party’s Scottish conference:
“In our first year in government, we will invest to create new jobs and boost the recovery.”
Well, 10 months later and two Budgets in he has done precisely the opposite. The fact is that this Government’s extreme experiment with the British economy is failing and British people are suffering.
This Budget was a dodgy Conservative con that was signed off by the ever-compliant Liberal Democrats—the human shields of British politics. Far from making life easier for people, the Budget will make life tougher. The Government’s agenda of cuts, cuts, cuts is ruining lives and dividing the nation. It seeks to pit the private sector against the public sector, the young against the old, the north against the south, the weak against the strong, and the rich against the poor. We reject the politics of division. This is the wrong Budget in tough times. The Government should come back and have a second attempt which does not cut too far, too fast. That is why we will vote to reject the Budget tonight.
The Chief Secretary to the Treasury (Danny Alexander)
There has been a good debate today and over the past four days. Today the debate was graced in particular by a contribution from the right hon. Member for Edinburgh South West (Mr Darling), the former Chancellor, who addressed the topic of business confidence and gave the House the benefit of his experience of issues in the world economy. He might have noticed that figures today show that business confidence is rising, but it was good to hear from him in the debate, and also from the right hon. Member for Birkenhead (Mr Field) who, among many other hon. Members, made the point that it was important to hear from the Opposition what they would cut.
This year’s Budget is about reforming the nation’s economy so that we have sustainable growth and jobs in the future. As many hon. Members observed in the debate, none of this would be possible without the difficult decisions that we have already had to take to tackle the enormous budget deficit that we inherited—decisions that have secured our international credit rating and been praised by the OECD, the International Monetary Fund and the World Bank; decisions that have provided the firm platform that we need to build a strong, sustainable and balanced economy; and decisions that have brought about economic stability and confidence in Britain’s ability to pay its way in the world. That stability and confidence would be forfeit if we stepped back from our plan, as some have suggested. To do so would cost jobs and growth and would mean more cuts for more people for longer in the future.
The action that the Government have taken is allowing us to move from rescue to recovery, from a decade of unbalanced, unsustainable policy to the hard road back to prosperity, for this Budget confronts the problems that our predecessors chose to ignore. For the past decade Britain has been losing ground in the world’s economy. While other nations have reduced their business tax rates, ours have increased. While other countries have removed barriers to enterprise, ours have grown higher still. While our competitors have improved their education systems, reformed welfare and increased exports, we have had to endure the opposite. That is the legacy of the Labour Government.
That is why, in the Budget, we have set out the Government’s new vision for growth—a vision that has four key ambitions at its heart. First, Britain should have the most competitive tax system in the G20. Secondly, Britain should be the best place in Europe to start, finance and grow a business. Thirdly, Britain should be a more balanced economy by encouraging exports—
Geraint Davies
If the right hon. Gentleman is creating an environment for inward investment and enterprise, how does he explain the fact that when I spoke in Dusseldorf to UK Trade & Investment, which markets Britain abroad, it said that it was generating lots of leads for inward investment, but because the Government had abolished the RDAs, those were not being drawn down and all that inward investment was going elsewhere? Is that not a pathetic indictment of the Government’s failure to generate growth?
Danny Alexander
I am grateful for that intervention, but I disagree with the point that the hon. Gentleman makes.
Danny Alexander
Let me answer the intervention before I give way again. We have abolished the regional development agencies, which were bureaucratic and inflexible, and we have replaced them with a localised, bottom-up process of local enterprise partnerships that are making a real difference in our economy.
Chris Ruane
I thank the Chief Secretary for giving way. Has he read the article in The Guardian today, which reports that the UK has slipped from third position to 13th in the whole world on green renewable energy technology under the Tory-Liberal Democrat Government?
Danny Alexander
I am afraid I have not read The Guardian today. I will turn to green issues later in my speech. I disagree with that assessment, although of course the hon. Gentleman is quoting one of the very few organisations that backed his party’s economic plans, if that is what they can be called.
The fourth objective of our growth strategy is to have a more educated work force who are the most flexible in Europe.
Let me turn first to creating a more competitive tax system. We used to have the third lowest corporation tax rate in Europe, but we now have the sixth highest, so from April this year corporation tax will be reduced not just by 1%, as we announced last June, but by 2%. It will continue to fall by 1% in each of the next three years, taking our corporate tax rate down to just 23% and giving us the lowest corporation tax rate in the G7.
Dame Anne Begg
Which oil and gas companies said that they would enjoy a lower tax take as a result of the Budget?
Danny Alexander
I will mention the oil and gas sector in the course of my speech, but it is worth observing at this point that, as a result of the very high oil price, oil and gas companies are expected to make £24 billion in profits over the next 12 months. Even with the tax changes that we have announced in the Budget, it is expected that they will make more profit per barrel of oil over the next five years than they did in the past five years, when the previous Government last changed the supplementary charge regime.
We are also creating a competitive tax system in relation to personal taxation. We have of course confirmed that the national insurance increase that the previous Government announced will have to go ahead at least partially, but because we have increased the threshold we are making it cheaper to employ people on incomes of less than £21,000 a year. Anyone earning less than £35,000 a year will, as of next week, be better off because of our £1,000 increase in the personal allowance that was announced in last year’s Budget, the largest increase in the personal allowance in history. That means that in real terms 23 million taxpayers will be around £160 a year better off—£200 in cash terms.
The coalition agreement also commits the Government to real increases in the personal allowance in each and every year of this Parliament. It also sets us the goal that no one earning less than £10,000 a year will be caught in the income tax net. I am happy to be able to tell the House that the £630 increase in the personal allowance announced for next year puts us on track to meet that goal in this Parliament. This is about rewarding work.
We are also reforming the welfare system, and I know that a number of comments were made in the debate on the disability living allowance regime. The right hon. Member for Coatbridge, Chryston and Bellshill (Mr Clarke) should look at page 55 of the Red Book for the answer to his question.
Mr Tom Clarke
I welcome the fact that the right hon. Gentleman has referred to the important mobility component of disability living allowance. Earlier today I invited the Government to take the time available to tell us whether they intend to continue with their plan to abolish that element, which would mean that many people with disabilities living in residential accommodation —82,000 in all, including children—would lose out. What exactly is the Government’s position?
Danny Alexander
As I was saying, the right hon. Gentleman should look at page 55 of the Red Book, which states:
“As announced by DWP at the introduction of the Welfare Reform Bill 2011, the Government will no longer remove the mobility component of DLA for people in residential care in October 2012. Mobility provision for people in residential care will be reviewed as part of the wider reform of DLA to be introduced from 2013-14.”
That is a clear and sensible position.
Sheila Gilmore (Edinburgh East) (Lab)
Will the right hon. Gentleman give way?
Danny Alexander
I am sorry, but I must press on and make some progress.
As well as a competitive tax system, we need a fair one, as the hon. Member for Central Devon (Mel Stride) observed in his speech, which is why we have responded to the concerns of hard-pressed motorists by cancelling Labour’s fuel duty escalator for the remainder of this Parliament.
That is on top of announcing a fuel duty rebate for the most remote parts of the UK; it is on top of introducing a fair fuel stabiliser to share the burden of high international oil prices; it is on top of cutting fuel duty by 1p per litre, which is already feeding through to the prices at the pump; and it is on top of reversing Labour’s planned 5p a litre in April. So, fuel will be 6p a litre cheaper than it would have been under the previous Government.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
When might the European Commission give the green light to the rural fuel derogation for the islands of Scotland, particularly as today in Benbecula diesel is £1.52 a litre?
Danny Alexander
The hon. Gentleman and I agree about the importance of that point. We have submitted the formal application to the European Commission, and I hope that, European processes willing—as he knows, they are not always entirely predictable—we will have that permission over the next few months.
The help that we are providing to motorists has to be paid for, and it is right that we ask the oil companies to pay a greater share of the extra profits that they are making from the high international oil price. Even with those changes, the profits on a barrel of oil are forecast, as I said, to be higher over the next five years than they were over the past five, so I say to the oil companies, “We do understand your concerns, and there is plenty for us to discuss with you, especially to support”—
Danny Alexander
No, no. I am not going to give way. [Hon. Members: “Give way!”] I am not going to give way. [Hon. Members: “Give way!”] I am not going to give way.
I say to the oil companies, “There is plenty for us to discuss with you, especially to support new gas exploration through the regime of field allowances.” That is the right decision, it is fair—
Mr Tom Clarke
On a point of order, Mr Speaker. You will have heard the Minister refer me to page 44 of the Red Book, which I have now read. Is it in order for the Minister to refuse to allow me to respond?
Danny Alexander
The right hon. Gentleman misheard me; I referred to page 55.
It is the right decision—
Danny Alexander
No, I am sorry; I am going to press on. I referred to page 55. I gave an answer to the right hon. Gentleman’s question and I must press on. There is very little time left.
Mr Speaker
Order. The right hon. Member for Coatbridge, Chryston and Bellshill (Mr Clarke) is well able to look after himself, but it is for the Chief Secretary to decide whether or not to give way. He is not giving way at the moment.
Danny Alexander
Our second ambition is for Britain to become the best place in Europe to start, finance and grow a business, and in that area there is pressing need for reform. A number of hon. Members referred to enterprise zones, including the hon. Members for Newcastle upon Tyne North (Catherine McKinnell), for Stockton North (Alex Cunningham) and for Witham (Priti Patel). I say to them that we have learned from the experience of previous enterprise zones, where of course there was some success and some concerns. By working with all the local authorities in the local enterprise partnership areas, we hope to ensure that we learn some of the lessons to which those hon. Members referred.
On the long road to sustainable growth, we cannot ignore the problems that businesses are facing when it comes to accessing finance. Small businesses, in particular, have been the innocent victims—
Mr Tom Clarke
On a point of order, Mr Speaker. It is patently obvious that the right hon. Gentleman is having trouble finishing his speech. Would he allow me to answer the point that he asked me to—
Mr Speaker
Order. I am grateful to the right hon. Gentleman, but he has been in this House long enough to know that that is not a point of order. I think that it is a point of frustration.
Danny Alexander
I am not going to give way to the right hon. Gentleman. I must press on. I have answered his point.
Small businesses, in particular, have been the innocent victims of the credit crunch. They have seen the flow of affordable credit dry up, which is why we have agreed with the banks a £10 billion increase in the availability of—
Ms Eagle
Will the Chief Secretary turn his attention to page 44 of the Red Book, and the “Measures announced at Spending Review 2010”? Measure d states:
“Disability Living Allowance: remove mobility component for claimants in residential care.”
It is scored to save £155 million in 2013-14, £160 million in 2014-15 and £160 million in 2015-16, so how could the Prime Minister say that it was not happening when it is still scored in the Red Book?
Danny Alexander
As I said in answer to the right hon. Member for Coatbridge, Chryston and Bellshill (Mr Clarke), that question is a subject of the review that my right hon. Friend the Secretary of State for Work and Pensions has announced and we are carrying out. We have made it very clear that we are looking at that question, and we will provide the mobility component at a level that is necessary in care homes when we have removed the overlaps and the issues quite rightly identified.
The Government’s third ambition for growth is to encourage investment in exports as a route to a more balanced economy. In “The Plan for Growth”, which we published last week, we set out specific measures to help out a range of businesses. In life sciences, which the hon. Member for Macclesfield (David Rutley) mentioned, we will radically reduce the time it takes to get approval for clinical trials; in our digital and creative industries, we will improve the intellectual property regime; and in manufacturing, which the hon. Members for Wolverhampton North East (Emma Reynolds) and for Warrington South (David Mowat) addressed, we are launching Britain’s first technology and innovation centre for high-value manufacturing, creating new export credits to help smaller businesses, doubling the limit on the capital allowances for short-life assets from four years to eight years and investing in infrastructure, which my hon. Friend the Member for Manchester, Withington (Mr Leech) referred to. These are some of the measures that we are taking to ensure that growth is more balanced and more sustainable, and supports employment across a wide range of sectors.
On green growth, first, we have announced that we will become the first country in the world to introduce a carbon price floor for the power sector. The price will start at around £16 per tonne of carbon dioxide in 2013 and move to a target price of £30 per tonne in 2020. That will provide the incentive for billions of pounds-worth of new investment in our dated energy infrastructure.
Danny Alexander
I will not give way.
The second step that we are taking is to create the green investment bank, as the hon. Member for Stroud (Neil Carmichael) mentioned. As part of the spending review we committed £1 billion to this new facility. Last week, we announced £2 billion more, funded from asset sales and underwritten by the Treasury. This is another step to ensure that we are the greenest Government ever.
Danny Alexander
I will not give way.
That leads me to our fourth ambition for growth—a better educated work force who are the most flexible in Europe.
Danny Alexander
No, I am about to finish.
Listening to many of the contributions made by Opposition Members, it seems that they are living in a parallel universe in which deficit-denial constitutes a credible economic strategy. It is a place where Labour economic plans involve cutting public spending, too, but where it is still perfectly logical to participate in an anti-cuts demonstration just as long as you never say where the cuts will fall—and we have not heard many suggestions on that point from the Government Front Bench. It is a place where Labour councils think that the responsible approach is to slash front-line services and sit on reserves just to score cheap political points. It is a place where an apology means saying—
Catherine McKinnell
On point of order, Mr Speaker. There appears to be a fundamental anomaly in this Budget, which hon. Members are expected to vote on—[Interruption.]
Catherine McKinnell
In one section of this Budget, Mr Speaker, it says that the disability living allowance mobility component will not be withdrawn, but another section—section d on page 55—clearly allows for that to happen. This is an anomaly that we are expected to vote on in three minutes.
Mr Speaker
That is a matter of debate, and it is for Ministers to decide whether and when to explain their position and in what way.
Danny Alexander
I have already explained this point in answers to interventions.
It is a measure of the Opposition’s denial about the problems that they created in the British economy that they do not want to talk about the mess they made of it. They think that the responsibility for fuelling the biggest peacetime deficit in our history is a badge of achievement. They think an apology means saying that it is everyone else’s fault. Labour Members had ample opportunity in this debate to show the British public that they had woken up to reality, but they failed on every count.
This Government are clearing up the mess that the last one left behind and putting Britain back on a path to sustainable, balanced growth. It is a hard road but it is the only one available. We will make Britain Europe’s leading destination for enterprise with the most competitive tax system in the G20, the most flexible work force and an economy that is able to compete on the world stage. The Budget will create a more balanced economy. It gives support to hard-pressed families and hope to those looking for work, and it will create jobs across Britain. It is a Budget that stands firm on our plan for the recovery. It is good for business and good for growth. I commend this Budget to the House.
Question put.
Description of wine or made-wine | Rates of duty per hectolitre £ |
|---|---|
Wine or made-wine of a strength not exceeding 4 per cent | 74.32 |
Wine or made-wine of a strength exceeding 4 per cent but not exceeding 5.5 per cent | 102.21 |
Wine or made-wine of a strength exceeding 5.5 per cent but not exceeding 15 per cent and not being sparkling | 241.23 |
Sparkling wine or sparkling made-wine of a strength exceeding 5.5 per cent but less than 8.5 per cent | 233.55 |
Sparkling wine or sparkling made-wine of a strength of 8.5 per cent or of a strength exceeding 8.5 per cent but not exceeding 15 per cent | 308.99 |
Wine or made-wine of a strength exceeding 15 per cent but not exceeding 22 per cent | 321.61 |
Description of Wine or Made-Wine | Rates of Duty per Litre of Alcohol in Wine or Made-Wine £ |
|---|---|
Wine or made-wine of a strength exceeding 22 per cent | 25.52” |
Mr Speaker
With the leave of the House, I propose to take motions 11 to 52 together—
Mr Speaker
I am grateful to the hon. Gentleman for his exhortation to read out the name of each motion individually, but I shall resist.
11. High strength beer duty
12. Tobacco products duty (rates)
“Table | |
|---|---|
1. Cigarettes | An amount equal to 16.5 per cent of the retail price plus £154.95 per thousand cigarettes |
2. Cigars | £193.29 per kilogram |
3. Hand-rolling tobacco | £151.90 per kilogram |
4. Other smoking tobacco and chewing tobacco | £84.98 per kilogram”. |
Months for which licence granted | Category A | Category B1 | Category B2 | Category B3 | Category B4 | Category C |
|---|---|---|---|---|---|---|
£ | £ | £ | £ | £ | £ | |
1 | 535 | 270 | 215 | 215 | 195 | 85 |
2 | 1070 | 535 | 425 | 425 | 385 | 160 |
3 | 1605 | 805 | 635 | 635 | 575 | 240 |
4 | 2140 | 1070 | 845 | 845 | 765 | 320 |
5 | 2675 | 1340 | 1055 | 1055 | 960 | 400 |
6 | 3210 | 1605 | 1265 | 1265 | 1150 | 480 |
7 | 3745 | 1875 | 1475 | 1475 | 1340 | 555 |
8 | 4280 | 2140 | 1685 | 1685 | 1530 | 635 |
9 | 4815 | 2410 | 1895 | 1895 | 1725 | 715 |
10 | 5350 | 2675 | 2105 | 2105 | 1915 | 795 |
11 | 5885 | 2945 | 2315 | 2315 | 2105 | 875 |
12 | 6110 | 3055 | 2405 | 2405 | 2185 | 905”. |
CO2 Emissions Figure | Rate | ||
|---|---|---|---|
(1) | (2) | (3) | (4) |
Exceeding | Not exceeding | Reduced rate | Standard rate |
g/km | g/km | £ | £ |
130 | 140 | 105 | 115 |
140 | 150 | 120 | 130 |
150 | 165 | 155 | 165 |
165 | 175 | 255 | 265 |
175 | 185 | 305 | 315 |
185 | 200 | 435 | 445 |
200 | 225 | 570 | 580 |
225 | 255 | 780 | 790 |
255 | - | 990 | 1000 |
CO2 Emissions Figure | Rate | ||
|---|---|---|---|
(1) | (2) | (3) | (4) |
Exceeding | Not exceeding | Reduced rate | Standard rate |
g/km | g/km | £ | £ |
100 | 110 | 10 | 20 |
110 | 120 | 20 | 30 |
120 | 130 | 85 | 95 |
130 | 140 | 105 | 115 |
140 | 150 | 120 | 130 |
150 | 165 | 155 | 165 |
165 | 175 | 180 | 190 |
175 | 185 | 200 | 210 |
185 | 200 | 235 | 245 |
200 | 225 | 250 | 260 |
225 | 255 | 435 | 445 |
255 | - | 450 | 460”; |
19. Aggregates levy (rate)
29. Reduced childcare relief for higher earners
39. Pension schemes
Business without Debate
Mr Speaker
With the leave of the House, I propose to take motions 3 to 8 together.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Pensions
That the draft Social Security (Reduced Rates of Class 1 Contributions, Rebates and Minimum Contributions) Order 2011, which was laid before this House on 3 February, be approved.
Social Security
That the draft Mesothelioma Lump Sum Payments (Conditions and Amounts) (Amendment) Regulations 2011, which were laid before this House on 3 February, be approved.
That the draft Pneumoconiosis etc. (Workers’ Compensation) (Payment of Claims) (Amendment) Regulations 2011, which were laid before this House on 3 February, be approved.
Family Proceedings
That the draft Access to Justice Act 1999 (Destination of Appeals) (Family Proceedings) Order 2011, which was laid before this House on 3 February, be approved.
That the draft Family Procedure (Modification of Enactments) Order 2011, which was laid before this House on 28 February, be approved.
Community Infrastructure Levy
That the draft Community Infrastructure Levy (Amendment) Regulations 2011, which were laid before this House on 7 February, be approved.—(Mr Newmark.)
Question agreed to.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Local Government
That the draft Code of Recommended Practice on Local Authority Publicity, which was laid before this House on 11 February, be approved.—(Mr Newmark.)
The Speaker’s opinion as to the decision of the Question being challenged, the Division was deferred until Wednesday 30 March (Standing Order No. 41A).
Mr Speaker
With the leave of the House, I shall take motions 10 to 23 together.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Electricity
That the draft Renewables Obligation (Amendment) Order 2011, which was laid before this House on 9 February, be approved.
That the draft Warm Home Discount Regulations 2011, which were laid before this House on 28 February, be approved.
Broadcasting
That the draft Media Ownership (Radio and Cross-media) Order 2011, which was laid before this House on 14 February, be approved.
Social Security
That the draft Guardian’s Allowance Up-Rating (Northern Ireland) Order 2011, which was laid before this House on 15 February, be approved.
Tax Credits
That the draft Tax Credits Up-Rating Regulations 2011, which were laid before this House on 15 February, be approved.
Social Security
That the draft Guardian’s Allowance Up-Rating Order 2011, which was laid before this House on 9 March, be approved.
Equality
That the draft Employment Equality (Repeal of Retirement Age Provisions) Regulations 2011, which were laid before this House on 1 March, be approved.
That the draft Equality Act 2010 (Public Authorities and Consequential and Supplementary Amendments) Order 2011, which was laid before this House on 14 February, be approved.
Immigration
That the draft Immigration and Nationality (Fees) Regulations 2011, which were laid before this House on 10 March, be approved.
Corporation Tax
That the draft Enactment of Extra-Statutory Concessions Order 2011, which was laid before this House on 8 March, be approved.
Insurance Premium Tax
That the Insurance Premium Tax (Discounted Insurance Premiums: Higher Rate) Order 2011 (S.I., 2011, No. 661), dated 7 March, a copy of which was laid before this House on 8 March, be approved.
European Union Documents
Motion made, and Question put forthwith (Standing Order No. 119(11)),
Offshore Activities
That this House takes note of European Union Document No. 14768/10, relating to a Commission Communication on Facing the challenge of the safety of offshore oil and gas activities and Addendum 1; agrees that the UK has a proven, robust offshore environmental and safety regime, and supports the Government’s intention to work closely with the Commission and EU Member States to ensure that high standards of health and safety and high levels of protection for the environment are maintained across Europe in respect of oil and gas operations.
Satellite Navigation
That this House takes note of European Union Documents No. 14701/10, draft Decision on the detailed rules for access to the public regulated service offered by the global navigation satellite system established under the Galileo programme, and No. 5530/11, Commission Report on the mid-term review of the European satellite radio navigation programmes; supports the Government’s aim of securing practical, proportionate and enforceable legislation that balances the need for appropriate security controls of manufacturers and users against favourable conditions in which a market for the PRS and associated equipment can grow; and supports the Government’s aim of beginning Galileo services as early as possible, albeit reduced in scope if the programme cannot be delivered within the allocated budget.
Milk and Milk Products
That this House takes note of European Union Document No.17582/10, Proposal for a Regulation of the European Parliament and of the Council amending Regulation (EC) No. 1234/2007 as regards contractual relations in the milk and milk products sector; notes the potential for the establishment of producer organisations in the dairy sector to enhance the bargaining power of producers; and supports the Government’s view that greater clarity of existing competition law and what producers may do collectively would better enable rebalancing of negotiating power in the sector rather than the Commission’s proposed exemption from competition law and limits based upon national milk production.
Recognition and Enforcement of Judgments
That this House takes note of European Union Document No. 18101/10 and Addenda 1 and 2, relating to a Draft Regulation of the European Parliament and of the Council on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters; and endorses the Government’s decision about whether to exercise the UK opt-in under Protocol 21 to the Treaty on the Functioning of the European Union. —(Mr Newmark.)
Question agreed to.
Sittings of the House (5 April)
Ordered,
That, on Tuesday 5 April, the House shall meet at 11.30 am and references to specific times in the Standing Orders of this House shall apply as if that day were a Wednesday.— (Mr Newmark.)
Business of the House (5 April)
Ordered,
That, at the sitting on Tuesday 5 April—
(a) proceedings on the Motion in the name of the Prime Minister relating to humanitarian relief may continue, though opposed, for three hours, and shall then lapse if not previously disposed of; and
(b) notwithstanding the provisions of Standing Order No. 14 (Arrangement of public business), the backbench business determined by the Backbench Business Committee may be entered upon at any hour, may then be proceeded with, though opposed, for three hours, and shall then lapse if not previously disposed of.—(Mr Newmark.)
Notices of Questions
Ordered,
That, notwithstanding sub-paragraph (a) of the proviso to paragraph (5) of Standing Order No. 22 (Notices of questions, motions and amendments), notices of questions to the Secretary of State for Scotland for oral answer on Wednesday 4 May may be given on Tuesday 26 April.—(Mr Newmark.)
Private Members’ Bills
Motion made,
That, notwithstanding the provisions of Standing Order No. 14(4), Private Members’ Bills shall have precedence over Government business on 9 September 2011, 21 October 2011, 25 November 2011 and 20 January 2012.—(Mr Newmark.)
Mr Speaker
As there is an amendment not supported by the Member in charge, I will follow the practice of my predecessors and treat it as an objection to the motion. Objection taken.
Rail Engineering (Jobs)
(13 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Speaker
Before I call the hon. Member for Hayes and Harlington (John McDonnell), may I appeal to right hon. and hon. Members who are not staying for the Adjournment to leave the Chamber quickly and quietly, extending the same courtesy to the hon. Gentleman as they would want to be extended to them in similar circumstances?
John McDonnell (Hayes and Harlington) (Lab)
I refer the House to my entry in the Register of Members’ Financial Interests. I have a railway estate in my constituency. It was a British Rail estate constructed to house railway workers. Although many of those properties have been sold off, it still predominantly houses railway workers, many of them retired but many of them still working. As a result, I have taken an interest in the railway industry for the past 30 years. I am also the convenor of the National Union of Rail, Maritime and Transport Workers group in the House. We come together as a group of Members interested in the railways to receive briefings from the union on issues of the day.
One of the key issues that has been raised consistently with us over the past year has been the current and future state of rail engineering in this country. Rail engineering concentrates on renewals, which includes the installation of new overhead lines and signals and the laying of track. It is skilled work and we have a skills base of trained and experienced workers developed over centuries. It requires that skill to produce the quality of work that ensures a safe transport system for the travelling public. We have learned to our cost over the years that if there is any undermining of that skills base, it produces accidents. I lost one of my constituents in the Paddington disaster, and others were injured in Southall.
Network Rail, the not-for-profit company that was established by the previous Government, is responsible for the rail infrastructure and for rail engineering. Network Rail puts out to tender to private companies all the renewals work. Jarvis was a major contractor in the field of renewals until a year ago, almost to the day. On 31 March 2010 Jarvis went into administration. Some 1,200 workers—skilled railway engineers—across Britain were sacked. That put a large section of the rail engineering skills base of this country in jeopardy and it is still impacting on the industry.
The impact on the workers and their families was disastrous and heart-rending in many cases. They were paid only statutory redundancy. Their accrued benefits were lost, and active and retired members of the Jarvis pension scheme suffered detriment to their pension entitlement. I have met a number of the ex-Jarvis workers and it has been extremely distressing. They appealed to me to explain to the House just what had happened to them and the effect of being sacked in that way. They asked me to give a couple of examples.
I met Mick. He was one of the workers who explained that they were sacked the week that they were due to be paid four weeks’ money, and the mortgage and bills still had to be paid. The loss of his job led to a strained relationship with family members and severe financial difficulties. They were forced to sell the family car. He suffered medical problems as a direct result of the stress brought on by his redundancy. The chief grievance for him is the pain of knowing that his former work is still being done, but by someone else on less pay and with worse conditions.
I met Brian, who had worked for Jarvis for 36 years. He had been a skilled worker. He told me that
“to sign on unemployed is soul-destroying and we have to live off our savings to pay for food and bills. I have applied for lots of jobs, over 50, and have received only one reply. I was unsuccessful in that application.”
He went on to say:
“The future looks bleak. I feel very let down by Jarvis and Network Rail for putting us in this life-changing situation.”
The last individual I met, Martyn, is in work. He said that other rail contractors have taken
“advantage of sacked engineers’ desperation to find work”.
He said there are now
“low wages, poor terms and conditions; long hours; zero hours working; long driving times and a culture of keeping quiet about safety for fear of not being picked for contracts… I hope my fears about accidents and death on a railway I just don’t recognise anymore prove to be untrue.”
Jeremy Corbyn (Islington North) (Lab)
I congratulate my hon. Friend on securing the debate and on his speech. Could he explain, if he knows, why the valuable and skilled workers of Jarvis were not taken into direct employment by Network Rail at the time of Jarvis’s collapse? Clearly, all their work was done for Network Rail anyway, as there are no other railway services in Britain to work for.
John McDonnell
I will explain, but first I will give another example of what I found among ex-Jarvis workers. We met workers who are now touring the country picking up days of work. These are skilled engineers, but some of them are unable to afford proper accommodation because they are now agency workers on low wages and are having to sleep in cars and vans so that they can pick up a day’s work wherever they can.
Let me explain what happened, because lessons need to be learned from what happened for the future of rail engineering in this country. Jarvis’s bankruptcy did not need to happen. It was forced into administration because Network Rail deferred renewals work to comply with the Office of Rail Regulation’s decree that it needed to make a 21% saving over the five-year control period 2009 to 2014. Jarvis’s bankruptcy was not the result of the recession. Despite the cash-flow problems, it had £100 million-worth of work on its order book.
My hon. Friend the Member for Islington North (Jeremy Corbyn) referred to the fact that Network Rail refused a rescue plan from the administrator for Jarvis’s rail division. The administrator put forward a proposal for a £19 million investment to cover the running costs and wages for a couple of months of operation, which would have enabled the staff of Jarvis to be transferred in an orderly way to other companies that were picking up the Jarvis contracts. That was rejected by Network Rail, and the Government refused to intervene and use their legal powers under the Railways Act 2005 to treat Jarvis’s work as an essential railway activity, as that would have allowed them to step in and protect the work and the workers themselves. We now know from freedom of information requests that the Government knew months in advance of Jarvis’s imminent crash.
The lesson is that we must never again allow the failure of one company to put railway engineering at risk in this way, because the results of this fiasco are horrendous. One year on, the majority of the ex-Jarvis workers are still on the dole and Network Rail is re-letting former Jarvis contracts to agency labour. We are discovering exploitative wages and conditions. Even if ex-Jarvis workers have followed their work, they have moved across to inferior terms and conditions. There is now a fear about the commitment and quality of the work being done by the agency work force.
The irony is that we now know from Deloitte, which communicated this to Jarvis’s creditors, that the book value of the rail debts that were written off was £10.7 million, and the vast majority of the amount that was written off was owed to Network Rail. If we add to that the cost of redundancy, which fell on the taxpayer because the staff were not transferred under TUPE, and the drain on the staff funds of the benefit payments for the unemployed workers, we find that the overall cost of allowing Jarvis to collapse into administration in this way outweighs the £19 million cost of the rescue plan that the administrator proposed. It was a false economy not to accept the rescue plan, and it had a tragic outcome for the workers.
There is also a longer-term cost that threatens the future of the rail industry and safe transport, because we are undermining the rail engineering skills base that we developed over two centuries. One of our concerns is that we have a demoralised work force, many of them unemployed, and that insecure work is being offered to agency workers with no stable future. We seem also to have undermined the attraction of a career in rail engineering, thereby jeopardising the recruitment of a future generation of rail engineering workers.
Jim McGovern (Dundee West) (Lab)
Is my hon. Friend aware, as I am, having found out just 10 minutes ago, that there are people employed in this House—in the Palace of Westminster—through an agency that charges £20 per hour and pays them £6.15 per hour?
John McDonnell
The reason why I raise the issue of agency workers in the rail industry is that such employment practice is becoming the norm for a number of companies. It is reflected throughout industry, and if it has now invaded the House. I find that disappointing. We as Members should take it up, because it does not seem to be a particularly cost-effective way of employing staff. The agency receives a large cut, but there is very little reward for the workers themselves.
The irony of what happened to the Jarvis workers is that, during the period in which they were laid off, the previous Government and the incoming Government were planning one of the largest railway industry expansion and modernisation programmes that we have seen for perhaps 50 or 70 years. It has happened just at a time when there is a huge job of work to be done in modernising the rail network, with the arrival of Crossrail, High Speed 2 and the electrification of the Great Western main line. We need a stable and skilled rail engineering work force and a national strategy that will retain and develop those skills, so that we can complete that modernisation and renew and enhance our rail network. In the long term, if we are to ensure that stability, we should bring renewals back in-house, back into Network Rail.
The McNulty interim report demonstrated that, when Network Rail brought maintenance in-house in 2004, there was a saving of £400 million per annum. I believe that bringing the renewals back in-house would achieve the same savings, but all the potential for the development, improvement and modernisation of our rail network will be jeopardised if we go through another Jarvis-type disaster.
I should welcome the Minister addressing several issues, and I express my gratitude to the Ministers we have met in recent months. The RMT parliamentary group, RMT union officials and the TUC have discussed with Ministers the plight of Jarvis workers and the future of rail engineering, and I am grateful to the Minister of State, Department for Transport, for writing to Network Rail to urge it to work closely with the unions and to meet members of the RMT parliamentary group. We have heard that the new chief executive at Network Rail, David Higgins, has expressed a willingness to attend a round table of stakeholders to discuss where we go from here on rail engineering.
I should like to ask the Minister here tonight to look at a number of concerns about the future. First, what is to happen to the ex-Jarvis workers who are still on the dole? Network Rail could assist in resolving some of the problems of the ex-Jarvis workers by stipulating that new contractors employ Jarvis workers or at least give them first refusal in any application for jobs. Part of the problem is that it is not clear where the former Jarvis contracts have been awarded, so it would be helpful if Ministers could intervene, asking Network Rail to identify through its Sentinel system exactly how many former Jarvis workers have been employed by contractors and how many are still out of work. In that way, we could work with them to secure their re-entry into the industry.
It would be helpful also if pressure could be put on the individual organisations—the five main companies that took over the Jarvis work—to meet the unions and other representatives of the work force to ensure that we overcome some of the outstanding claims from Jarvis’s going into administration. The companies are BAM Nuttall, Babcock Rail, Freightliner, DB Schenker and VolkerRail. In the long-term interests of the rail industry, we should do all in our power to ensure that this never happens again in this industry—that we never go through another collapse of a company when all the various agencies and stakeholders just stand to one side and allow it to happen.
Jim Shannon (Strangford) (DUP)
Is the hon. Gentleman suggesting that what is needed is for the Government to take a direct, hands-on approach to retaining skills and ensuring that those who have lost jobs get back into work again?
John McDonnell
Certainly. I will come on to an idea that I have about that, which I think will interest the hon. Gentleman.
To deal with the more immediate questions about learning the lessons of how this occurred, one of the concerns expressed was about the failure by Government to apply the powers of the Railways Act, which would have protected not only the contract work that was being undertaken but the workers who were undertaking those contracts. It would be helpful if the Minister could offer interested Members from all parties a meeting with the appropriate civil servants to discuss the procedures and criteria for when Government can apply the powers under the Railways Act if companies are threatened or in danger of going into administration, so that at least we get those procedures clear in case this occurs again.
I also ask the Minister to look at the arrangements under the Transfer of Undertakings (Protection of Employment) Regulations 1981 to see how they can be amended so that we are never again in a situation in which workers are unprotected and are made unemployed, not transferred across, and then taken back on under agency conditions, and, as a result, on worse wages and with worse conditions.
I would also welcome the Minster working with us to review the protection of railway workers’ pensions. The original pension rights of those who worked for British Rail, which Members from parties across the House thought would be protected on its privatisation, have been undermined by subsequent pensions legislation—I think unintentionally so.
Jim McGovern
Does my hon. Friend agree that it is a scandal that TUPE does not apply to pensions?
John McDonnell
It is a gap in the protection of workers’ living standards, and this instance is a classic example of how people’s futures have been damaged when they thought they were secure. The material that was provided to railway workers on privatisation of British Rail—the leaflets and documents that they received in the consultations that took place—assured them of the security of their pensions for the long-term. But then, as privatisation proceeded and individual companies took over individual contracts, those assurances were unfortunately not adhered to, and subsequent pensions legislation has undermined the protections that they had. Because this is not covered by TUPE, many of the workers have suffered detriment. That is something that we need to look at, on a cross-party basis, I hope.
My final point is about the long-term future of rail engineering, and it relates to the comments made by the hon. Member for Strangford (Jim Shannon). We are now facing an immense task in seeking to modernise our railways, and the success of that cannot be put at risk by the lack of a skilled engineering work force. One proposal that I have for the Minister is that he convene an urgent, industry-wide jobs seminar to examine rail engineering employment needs not only now but for the long term, so that we can work together to safeguard and enhance skills in railway engineering.
Mr Ian Davidson (Glasgow South West) (Lab/Co-op)
Surely that jobs summit, or meeting, must include provision for youngsters thinking of entering the industry to assure them that they will have a stable future and will be treated properly. The sort of casualisation that we currently have in the industry is undoubtedly a deterrent to entry.
John McDonnell
I think the experience of Jarvis has sent a message right the way through the industry that this is no longer a secure job. The message from what has happened to the ex-Jarvis workers is this: “No matter how skilled you are, you will not necessarily be properly rewarded in terms of wages, decent conditions or the long-term security of your pension, regardless of how hard you work and whatever skills you have in the industry as it now stands.” That is why it is critical that we take a lead in this matter and bring all the stakeholders together.
Karl MᶜCartney (Lincoln) (Con)
I have issues with Network Rail in my constituency, and I am interested to hear some of the information that the hon. Gentleman has given this evening, especially regarding the new chief executive. Does he think that the mindset of Network Rail has changed?
John McDonnell
I hope that it has. With the new chief executive, there is the potential for more openness and engagement. The previous chief executive even refused to meet a number of us on one occasion, although some of the less senior staff did.
I urge the Minister, as a matter of urgency, to get all the stakeholders in the industry together to look at the future of rail engineering and the skills base that we require. In that way, we can start planning the future of rail engineering on the basis of the needs that we now have, particularly as a result of the new investment that the Government are putting in. As I said, I think that this is a matter of urgency.
I save my last few words for the ex-Jarvis workers. I think that they have had an appalling deal and have been treated extremely badly. It behoves us as a House and those who are now in government to do everything we can to assist those workers to get back into work and to restore the dignity of work to them.
The Parliamentary Under-Secretary of State for Transport (Norman Baker)
I welcome the opportunity to debate in some detail the issues raised by the hon. Member for Hayes and Harlington (John McDonnell), who spoke with his usual integrity and humanity.
The hon. Gentleman will appreciate that the Minister of State, who has responsibility for this matter, is not able to be with us tonight, but I will make sure that his comments are drawn to her attention. I will ensure that a written response to the questions that I am not able to answer tonight is sent to him. I am grateful for his comments about her involvement. I understand that she is well aware, from the recent meeting and from correspondence, of the importance that the hon. Gentleman attaches to addressing the impact of events such as Jarvis plc’s entry into administration on the rail industry skills base and on former employees. I have sympathy for those who have lost their jobs, and for the impact that it will have on their families. It is always a tragedy when someone loses their job, and the impact is much more widespread than just the effects on the individual concerned.
The Government are progressing with an ambitious programme for rail investment, because we believe that the railway network is vital to economic growth and reducing carbon emissions. However, funding is not unlimited. We must ensure that every pound is spent efficiently, and secure the maximum long-term benefits and value for money. Of course, that includes having a safe railway.
The spending review settlement demonstrated the Government’s commitment to rail transport. We have announced that we will fund and deliver a wide-ranging programme of investment in rail infrastructure and rolling stock. As the hon. Gentleman said, the projects include Thameslink and Crossrail, and the associated 2,100 new carriages; the intercity express programme; extending the electrification of the Great Western main line to Bristol and Cardiff; and electrifying the lines between Liverpool, Manchester, Preston and Blackpool. Major station development projects will proceed at Reading, Birmingham, London King’s Cross and Gatwick airport. There are a number of other projects, including those announced in the Budget last week.
The sustained financial support that we have offered now needs to be matched by a relentless drive for efficiency on the part of the rail industry. Sir Roy McNulty’s value-for-money study will have a crucial role in tackling that challenge from an industry-wide perspective. Sir Roy’s emerging findings give a strong indication of the scope for improved value for money in our railways. The potential savings of up to £1 billion that are identified in the report are efficiencies that should be achievable while keeping the same level of services. From my point of view, achieving efficiencies in the railway means making a stronger railway for the future.
One of the key principles for making those savings is much closer working and an alignment of incentives between train operators and Network Rail. Alongside the Government’s response to Sir Roy’s interim findings, we therefore confirmed plans to reform the rail franchising system to make franchises longer, more flexible and more responsive to the needs of passengers, while providing better value for taxpayers. The railway as a whole faces significant challenges in terms of costs and affordability. Finding effective responses to those challenges will not be easy in such a large and complex industry. The study team has been encouraged by the ready co-operation it has received from many people within the industry. Its aim, with their help and support, is to chart a route to a sustainable future for rail in this country.
It is widely recognised that getting better value for money is key to a sound future for rail in this country. We want rail to be in a good place to compete with other modes, not least for carbon reasons. Sir Roy’s recommendations, and the industry’s response, will shape the Government’s proposals for the reform of the industry, which we intend to set out later this year.
However, we recognise that a bigger and more efficient railway needs the very best of engineering and other skills to succeed. The industry’s success in meeting the challenge of the future will depend on the skills, motivation and capabilities of its work force. That is tied into the issue of how the industry manages its supply chain, and how we manage our investment in the industry. We have registered the widely held view that the Government should try to avoid driving peaks and troughs in demand for various skills. In the future, the industry leadership needs to be able to play a greater role in addressing the issue, and it must consider the impact that investment decisions can have right down the chain and how those decisions can be balanced to provide the best value for the taxpayer.
I am conscious that I had less than 10 minutes for my speech, but I shall try to get through as much as I can. I turn to the specific issue of Jarvis plc’s entry into administration. We greatly regret the failure of Jarvis and the subsequent loss of jobs and impact on individual families. I know that my right hon. Friend the Minister of State welcomed the chance to meet the hon. Gentleman and others in the RMT parliamentary group on 15 February, and to hear the group’s views on the matter at first hand. Following that meeting, I understand that Network Rail’s chief executive, David Higgins, has been in touch to confirm his willingness to meet the group to discuss its concerns.
Network Rail re-let to Babcock Rail the track renewal work previously undertaken by Jarvis on the London North Eastern and Midland and Continental routes, which led to a number of staff gaining employment with Babcock Rail. However, as the hon. Gentleman is aware, the contractual arrangements for track renewal work are commercial matters between Network Rail and the infrastructure companies, in which the Government have no locus to intervene.
Network Rail has made it clear that all current track renewal work has been allocated, and that there are no outstanding contracts to be filled. It is tasked to deliver the value for money needed to meet the output and efficiency targets for the operation, maintenance and renewal of the network set out by the independent Office of Rail Regulation. The ORR’s latest industry review makes it clear that Network Rail is delivering improved efficiency through the use of new technology and improved working practices, including the use of high-output track renewal equipment and pre-assembled modular sets of points, which allow it to carry out renewal work more quickly.
The Government recognise the importance of maintaining a skilled work force in the rail sector. That is why Sir Roy McNulty’s value-for-money study is working to identify major improvements in asset and supply chain management, and to forecast future requirements for work force skills. The Government also believe that infrastructure investment is crucial for Britain’s future, so over the next four years we will provide £14 billion of funding to Network Rail to support capital maintenance and infrastructure investment.
As the hon. Gentleman will know, we support a Y-shaped national high-speed rail network from London to Birmingham, Leeds and Manchester, with connections on to existing main lines. That would release capacity to expand commuter, regional and freight services on existing lines. The benefits of that network would bring about £44 billion to the country. Building the London to west midlands line would create about 9,000 jobs during construction, 1,500 permanent jobs following completion and 30,000 jobs around the stations of the high-speed network.
The Government are determined to achieve a sustainable, efficient and growing railway. We are equally determined that no changes should be made that would jeopardise the impressive improvements in safety and punctuality achieved across the industry in recent years. We are determined to get those responsible for track and train to work together more closely, to drive down the costs to taxpayers and fare payers while improving the quality of services.
Underlying our determination is our recognition of the need to maintain a skilled and properly resourced work force in the rail industry. Sir Roy McNulty’s value-for-money study will forecast future requirements for work force skills. We will consider Sir Roy’s final recommendations very carefully when they arrive, including in relation to the matters that the hon. Gentleman raised, against the overriding need for any reform to be designed to secure the greatest long-term benefits to the fare payer and taxpayer.
Many of the specific matters that the hon. Gentleman raised are best taken forward by my right hon. Friend the Minister of State, and as I said, I will ask her to write to him formally to provide a response. He suggested that the new contractors should give first refusal to ex-Jarvis workers, but I do not believe the Department should require that, because we have no locus to involve ourselves in commercial arrangements between Network Rail and those whom it seeks to employ, let alone in deciding who contracting companies take on. However, his comments have been noted, and I am sure that those in the rail industry will pay attention to them.
The hon. Gentleman asked whether it would be possible to meet the appropriate civil servants to examine the criteria for when the Department might intervene under the Railways Act 2005. That is a matter for the Department, and notwithstanding the fact that my right hon. Friend the Minister of State is not here, I will suggest to her that that might be a sensible way for the hon. Gentleman to meet officials.
Jim McGovern
The Minister mentioned billions of pounds of investment. Could he tell me, or will he meet me—