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.
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 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.
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 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.
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.
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.
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.]
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.
Mr Speaker
With the leave of the House, I propose to take motions 11 to 52 together—