House of Commons

Thursday 22nd March 2012 Commons Chamber

Thursday 22 March 2012

The House met at half-past Ten o’clock

Prayers

Thursday 22nd March 2012 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Thursday 22nd March 2012 Commons Chamber

The Secretary of State for Culture, Olympics, Media and Sport was asked—

[Julian Smith (Skipton and Ripon) (Con)]

1. What progress he has made on his plans to extend superfast broadband to rural areas.

[Karen Lumley (Redditch) (Con)]

10. What progress he has made on his plans to extend superfast broadband to rural areas.

[Caroline Nokes (Romsey and Southampton North) (Con)]

13. What progress he has made on his plans to extend superfast broadband to rural areas.

[The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey)]

May I apologise for the Secretary of State’s absence from questions today and thank you, Mr Speaker, for giving him leave of absence? The whole House will be aware of the happy reasons for that absence.

We anticipate that the broadband delivery framework contract will be signed with suppliers in mid-April, and we expect the first three projects to enter procurement using the framework immediately after. We have set a target for all broadband procurement to be completed by the end of 2012, so that delivery can be completed by 2015.

[Julian Smith]

I thank the Minister for that answer. Rural north Yorkshire is already benefiting from the Government’s investment in broadband, and after yesterday’s Budget cities will, too, but at higher speeds. How do we avoid a continued digital divide between rural and urban areas, but at higher speeds?

[Mr Vaizey]

My hon. Friend has been a doughty champion of his part of the world in securing superfast broadband. All the country will benefit from superfast broadband, but it is quite right that we continue to invest in higher speeds, particularly for cities, to maintain our global competitiveness.

[Karen Lumley]

Will the Minister congratulate Worcestershire county council, which has set aside £8.5 million in these difficult times to secure superfast broadband? In Redditch we have a £300,000 project to enable residents to stay at home and work instead of travelling into cities. What can the Government do in these times to help local authorities further?

[Mr Vaizey]

We continue to invest a substantial amount in broadband roll-out, and I am happy to join my hon. Friend in congratulating Worcestershire county council on investing alongside the Government. It is a great testament to the scheme that we have put in place that we have secured private funding and local government funding alongside central Government funding.

[Caroline Nokes]

What progress has been made to overcome the issues of state aid in unlocking the rural broadband fund, which will help in counties such as Hampshire?

[Mr Vaizey]

We have applied for a UK-wide scheme for state aid approval. We believe that we are close to approval, and we continue to work closely with the European Commission on the issue.

[Stephen Timms (East Ham) (Lab)]

The cumbersome and expensive Broadband Delivery UK process appears almost to have eliminated competition, which ought to have had a very important role in it. Ministers made a big strategic error in supporting superfast broadband at county level, rather than regionally. Does the Minister recognise that it will be a scandal if the outcome of the process is that, in the end, all the money is just handed over to BT?

[Mr Vaizey]

I am surprised that the right hon. Gentleman, as a former telecoms Minister, does not understand that, if we had had a national or a regional scheme, competition would have been even harder to secure. As it is, three major competitors remain in play in terms of broadband roll-out.

[Tony Lloyd (Manchester Central) (Lab)]

How, in rolling out broadband, will we ensure that the people who undertake installation in different regions—rural areas as well as urban—do not simply move from London and then take their skills back to London, and that a skill repository is left among the work force where broadband is installed?

[Mr Vaizey]

I cannot guarantee that the engineers who lay broadband will stay in the areas in which they work, but the key point about broadband roll-out is to ensure that all parts of the country benefit from the infrastructure so that we can base companies with high skills all over the country.

[Helen Goodman (Bishop Auckland) (Lab)]

Yesterday the Chancellor of the Exchequer found extra money to extend superfast broadband to small cities, but, as the hon. Member for Skipton and Ripon (Julian Smith) said, the real digital divide today is between those with broadband and those without. Peter Cochrane, former chief technical officer at BT, giving evidence in the other place, described access as “a fundamental human right”. Two million people, mainly in rural areas, are still without broadband, and Labour pledged to guarantee 2 megabits to almost every household by 2012, but this Government will not achieve that until after 2015. Why are Ministers so unfair in their treatment of rural Britain?

[Mr Vaizey]

I certainly reject the accusation that we have been unfair on rural Britain, and my glass, unlike the hon. Lady’s, is half full not half empty. I look forward to going on a tour with her to Belfast, Cardiff, Birmingham, Bristol, Manchester and so on and telling people that they are getting unfair treatment from the Government because we are investing in their broadband networks.

[Duncan Hames (Chippenham) (LD)]

Rural Britain, in the shape of the small town of Bradford on Avon in my constituency, welcomed the news this week that it is to have superfast broadband with the conversion of its exchange. [Interruption.] In the Budget yesterday the Government announced pilots, including one in Wiltshire, for rural growth networks to address the barriers to economic recovery. Will funding from those networks be available to increase the roll-out of superfast broadband in rural areas?

[Mr Vaizey]

I did not hear the entire question because of the continued carping from the Opposition at our support for our major and smaller cities. I will happily work with the hon. Gentleman to ensure that all broadband funding is used as effectively as possible in his area.

[Mr David Nuttall (Bury North) (Con)]

2. What progress he has made in improving access to superfast broadband.

[The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey)]

We have now approved the local broadband plans for Durham, Warwickshire, Northumberland and Staffordshire project areas, which means that 24 of the 45 plans received by the 29 February deadline have been approved; that is more than half. All submitted plans, including Greater Manchester’s, will be approved by the end of April 2012.

We anticipate that the contract for the broadband delivery framework will be signed with suppliers in mid-April and expect the first three projects to enter procurement using the framework immediately following the contract’s being signed. We have set a target for all broadband procurements to be completed by the end of 2012.

[Mr Nuttall]

Will there be any scope for transferring funds from the moneys announced for Greater Manchester —the city region—to fill in the gaps in rural broadband?

[Mr Vaizey]

I will happily discuss that issue with my hon. Friend. I take his point—unlike the Opposition, he welcomes the investment in Greater Manchester.

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

The announcement last August also indicated a figure of almost £70 million to be used in Scotland. What contact, if any, does the Minister have with the Scottish Government about how services are being developed north of the border?

[Mr Vaizey]

I have regular contact with the Scottish Government, who have welcomed the funding and are putting in their own funding to support broadband roll-out in Scotland.

[Jake Berry (Rossendale and Darwen) (Con)]

It was once said that the entire empire hung by Lancashire’s thread. Will the Minister join me in congratulating Lancashire county council on prioritising superfast broadband? The entire county now hangs from its fibre optic cable.

[Mr Vaizey]

I am happy to join my hon. Friend in congratulating Lancashire on its superfast broadband. It is a very innovative and go-ahead authority, which has also been particularly pioneering in libraries.

[Jim Sheridan (Paisley and Renfrewshire North) (Lab)]

3. What assessment he has made of the potential effects on local newspapers of the closure of the Press Complaints Commission.

[The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey)]

The Leveson inquiry was established by the Government last July and will make recommendations to my Department about reform for the system of press regulation. The closure of the Press Complaints Commission is a matter for the industry, but the new structure will apply to all newspapers, local or national.

[Jim Sheridan]

My local press are watching with interest to see what replaces the PCC. What measures are in place to defend or protect the general public when taking redress against, mainly, the national newspapers? Will the Minister share with the House how many meetings, if any, his Department has had with national newspaper editors or proprietors?

[Mr Vaizey]

I do not have the details of meetings with national editors, but I am happy to share them with the hon. Gentleman by way of a letter. The Press Complaints Commission mediation procedures will continue during the transit to a new arrangement.

[Chris Bryant (Rhondda) (Lab)]

I draw Members’ attention to my entry in the Register of Members’ Financial Interests. The Press Complaints Commission is engaging in a pretty ludicrous example of shenanigans at the moment; it is trying to bounce Leveson into some new plan that it is trying to put forward. Will the Minister make it absolutely clear that the only thing that the Government are interested in is what Leveson comes up with—not some shoddy deal struck by the editors?

[Mr Vaizey]

I am not sure that the hon. Gentleman is being entirely fair. My understanding is that although the final answer lies absolutely with Lord Leveson’s inquiry, Lord Leveson has made it clear that he wants the press to begin to make moves to get their house in order while he considers all the evidence.

[Ms Harriet Harman (Camberwell and Peckham) (Lab)]

The harrowing evidence at the Leveson inquiry from victims of phone hacking and other abuse by the press means that we all want a new press complaints system, which must be independent of politicians and editors and able to enforce its rulings on all newspapers. Does the Minister recognise that the proposals being put forward by Lord Hunt, chair of the Press Complaints Commission, fail to meet either of those tests? Until they do, they will amount to nothing more than a change of name and business as usual. That will simply not be acceptable.

[Mr Vaizey]

Lord Hunt has put forward his proposals and I urge the right hon. and learned Lady to work with him if she thinks that they are not adequate.

[Lindsay Roy (Glenrothes) (Lab)]

4. What consideration he has given to the response from the Football Association, Premier League and Football League to the Government’s response to the report from the Culture, Media and Sport Committee on football governance; and if he will make a statement.

[The Minister for Sport and the Olympics (Hugh Robertson)]

Before I answer, I am sure that the whole House will want to join me in sending our best wishes to Fabrice Muamba for a full and speedy recovery.

In their response to the Culture, Media and Sport Committee inquiry, the football authorities have proposed plans for a smaller FA board, a club licensing system, the establishment of an FA regulatory authority and a closer working relationship between clubs and supporter groups. I welcome all those moves, and I would like football to implement them as soon as possible.

[Lindsay Roy]

May I, on behalf of the whole House, endorse the sentiments expressed by the Minister about Fabrice Muamba? I thank all the medical and club staff for their timely intervention in saving Fabrice’s life. The unity of support from fans across the country has been impressive and demonstrates the best of British values.

What action will the Minister take if the working parties recommend that further powers are needed to remove barriers to the co-operative status of football clubs?

[Hugh Robertson]

We have decided to pass the initial report generated by the DCMS Committee back to it for further consideration and ask for its recommendations. I would not want to give the hon. Gentleman a firm commitment before I have seen the Committee’s recommendations, but I am absolutely determined to ensure that supporters are better represented and have a more central role in the running of their clubs.

[Damian Collins (Folkestone and Hythe) (Con)]

Does the Minister agree that the proposed FA regulatory authority needs to have real teeth and that there should not just be a rebadging of rules that have failed, in some cases, to identify the ultimate owners of clubs or to protect communities from the impact of a club’s insolvency?

[Hugh Robertson]

Yes.

[Clive Efford (Eltham) (Lab)]

Fans’ organisations are concerned that the response from the governing bodies does not go far enough. We will have achieved nothing if we do not create greater opportunities for fans to become involved in the governance of the game. Football’s governing bodies have indicated that they are prepared to co-operate and work positively with the Government’s expert working groups. When does the Minister intend to set up those working groups and when does he intend to have them report back by?

[Hugh Robertson]

I think that the debate has moved on as a result of the football authorities’ response in terms of a licensing system and an explicit commitment to supporters’ liaison officers. There has been a very considerable movement as a result of the Select Committee’s work. As I said, I want to wait to see what the Committee has to say. We will absolutely take on board its recommendations and also look at means to incentivise club owners to make shares available to fans.

[David Wright (Telford) (Lab)]

14. The key issue is supporter ownership of clubs, which is absolutely crucial. At AFC Telford United, we have a superb model of club ownership by supporters. What more is the Minister’s Department going to do to model, with clubs and owners, new structures for supporter ownership of clubs?

[Hugh Robertson]

I pay tribute to the work done at AFC Telford, which is a model of that sort of scheme. This is not an entirely easy problem to grapple with, because no two club ownership models are the same. Unlike, for example, the Spanish model and many other European models, the models in English football are very different from club to club and from division to division. We have to find ways to incentivise owners to place their shares in public ownership.

[Alun Cairns (Vale of Glamorgan) (Con)]

6. What support his Department is providing to the creative industries.

[Mary Macleod (Brentford and Isleworth) (Con)]

8. What support his Department is providing to the creative industries.

[James Morris (Halesowen and Rowley Regis) (Con)]

9. What support his Department is providing to the creative industries.

[The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey)]

We have introduced the Creative Industries Council and maintained existing direct support for film through the national lottery and film tax relief. Building on this success, I am sure that the whole House will welcome yesterday’s announcement by the Chancellor of the introduction of similar tax reliefs for the video games, animation and high-end TV production sectors. The UK has some of the world’s most successful creative industries, and yesterday’s Budget will ensure that they can continue to grow and support jobs up and down the country. [Interruption.] The hon. Member for Rhondda (Chris Bryant) is almost as loud as his tie.

[Alun Cairns]

I am grateful to the Minister for his answer and welcome yesterday’s statement by the Chancellor in support of the creative industries. The advertising industry is one of the most creative and innovative in the UK economy, and it is worth £7.8 billion. Does the Minister accept, though, that constant threats of regulation and red tape can stymie that innovation and creativity, and that the pendulum might have swung too far and there could well be a need for a review of some of the regulations?

[Mr Vaizey]

I never lose an opportunity to praise the advertising industry in the UK, which is one of the most successful, or its regulatory system under the Advertising Standards Authority.

[Mary Macleod]

I welcome yesterday’s announcement from the Chancellor about games tax relief. Does my hon. Friend agree that it will benefit companies such as Sega in my constituency, establish the UK as a world-leading games maker, and stop the brain drain of talented games developers to overseas?

[Mr Vaizey]

I never lose an opportunity, when I drive over the flyover, to look at the huge headquarters of Sega in my hon. Friend’s constituency. Not only will that proposal stop the brain drain; it will create a brain import scheme.

[James Morris]

Birmingham and the black country have a very creative software and hardware development industry, but it often finds it difficult to recruit the skilled people it requires from the region. What support can the Minister give to local centres of excellence, such as the Aston and Wolverhampton science parks?

[Mr Vaizey]

We continue to focus on skills. The higher apprenticeships scheme will help to provide talent for the UK’s IT industry. May I take this opportunity to praise Ian Livingstone and Alex Hope for their “Next Gen.” report, which has led to a revolution in the computer science curriculum in schools?

[Mr Ben Bradshaw (Exeter) (Lab)]

I welcome the Government’s U-turn on support for the creative industries, but I note that there is less talk today about this being a “Downton Abbey” Budget. I wonder why that is. Will the Minister explain the exact difference between the support that he has announced for the video games industry and the support that the Labour Government introduced two years ago, which his Government scrapped in their first Budget?

[Mr Vaizey]

The difference is that the new support includes help for television drama and animation. Fundamentally, the difference is between the ambition of the Government and the poverty of ambition of the Opposition.

[Pete Wishart (Perth and North Perthshire) (SNP)]

The Minister will know that the Hargreaves review of intellectual property and the Intellectual Property Office consultation continue to exercise and concern our creative industries. Does he believe that having the maximum number of exceptions to copyright helps or hinders our creative industries? Will he come and give evidence to the inquiry of the all-party parliamentary intellectual property group in the next few weeks?

[Mr Vaizey]

The hon. Gentleman has been a doughty champion for rights holders and the protection of intellectual property. As he knows, I ensure that rights holders’ views are expressed regularly during the Hargreaves consultation. I have not yet received an invitation to give evidence to the all-party parliamentary group, but I look forward to receiving it.

[Lilian Greenwood (Nottingham South) (Lab)]

The Government want philanthropy and corporate giving to replace public subsidy for the arts. However, the excellent Nottingham Playhouse tells me that sponsorship and donations are falling due to the flatlining economy. Does this funding black hole not threaten the future of our regional theatres?

[Mr Vaizey]

The hon. Lady is quite wrong. We do not want philanthropy to replace Government support for the arts; we want there to be a partnership between philanthropy and Government support for the arts, which is extraordinarily generous.

[Stephen Williams (Bristol West) (LD)]

Hundreds of my constituents who work for Aardman Animations, Europe’s largest animation company, were delighted by the reference to Wallace and Gromit in yesterday’s Budget. Does my hon. Friend agree that the extension of film tax credits to the TV and animation industries is important not only for maintaining British talent and ingenuity in Bristol and other places in our country, but so that children grow up watching programmes that are made in Britain and sound as though they are made in Britain?

[Mr Vaizey]

My hon. Friend is absolutely right. I was privileged to visit Aardman’s headquarters. I gather that it has just held the premiere of “The Pirates!”, its new film. Those in the House with young children may want to go and see it. He is right that the proposal is about keeping talent in this country.

[John Cryer (Leyton and Wanstead) (Lab)]

7. Whether he plans to submit evidence to the Leveson inquiry on culture, practice and ethics of the press.

[The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey)]

Following a request from the inquiry, the Secretary of State will submit evidence as part of the elegantly named “module 3”, which is considering the relationship between the press and politicians. In addition, my Department is working constructively with the Leveson inquiry by providing background information where possible.

[John Cryer]

In that evidence, will the Minister at least say that the replacement for the Press Complaints Commission should be politically independent and independent of what used to be Fleet street?

[Mr Vaizey]

As is well known, the desire is to see independent self-regulation that is independent of the press and independent of the Government.

[Brandon Lewis (Great Yarmouth) (Con)]

11. What economic legacy his Department expects to result from the London 2012 Olympics.

[The Minister for Sport and the Olympics (Hugh Robertson)]

The new £130 million tourism campaign to showcase Great Britain in 2012 aims to deliver an additional 4.6 million visitors, £2.7 billion of extra spend and the creation of about 60,000 job opportunities. The UK is already benefiting from the games, with 98% of the £6 billion-worth of contracts for the “big build” and 90% of the £1 billion-worth of contracts for staging the games going to UK businesses. If we add to that the £1 billion boost to British business that is expected through trade and investment, it amounts to a strong economic legacy from the games right across the UK.

[Brandon Lewis]

Some of us will have already had the good fortune to see the fantastic work that has been done at the Olympic park, and millions of visitors to this country and British residents will see the work done by British companies, workers and engineers to develop and produce that fantastic park. What more can we and the Government do to ensure that we get the message out that it is British engineering and British construction workers who have delivered such a fantastic venue?

[Hugh Robertson]

The answer is the GREAT campaign, which targets our 10 major markets around the world. It goes out to them on the back of the success of the Olympic park and tells them to come this country, do business and drive our tourism industry.

[Jim Fitzpatrick (Poplar and Limehouse) (Lab)]

After the Olympics and Paralympics, will the Department continue to play a role in the legacy arrangements, or will that pass to the Department for Communities and Local Government or the Mayor of London? What structure will there be for overseeing the continuing delivery of the Olympic project?

[Hugh Robertson]

That is a very good question and quite a difficult one to answer, because much of the park will of course pass to the mayoral development authority, so much of the area around the hon. Gentleman’s constituency will come under the ambit of the Greater London authority. The DCMS will continue to have overall responsibility, but each Department will have particular responsibilities for the part of the legacy related to its work.

[Mr Don Foster (Bath) (LD)]

Does the Minister agree that one economic legacy will be the tourism legacy? Does he see that there would be real benefit in allowing tourist information centres to have access to the footage made by the BBC of the torch relay, which will travel the length and breadth of the country, so that they can use it for future advertising? Will he work with me to ensure that the International Olympic Committee allows the BBC to make that footage available?

[Hugh Robertson]

Yes, of course we will. The Under-Secretary of State, my hon. Friend the Member for Weston-super-Mare (John Penrose), who is responsible for tourism, tells me that both VisitBritain and VisitEngland have access to a large number of images already, which we clearly want to promote on the back of London 2012. We will do all we can.

[Tessa Jowell (Dulwich and West Norwood) (Lab)]

Nearly 1,500 businesses from across the UK have built the Olympic park and will equip the Olympics. That is a great British achievement. Does the Minister therefore share my concern that those businesses, which have done so well, are too tightly constrained by the marketing rights protocol, which prevents them from publicising the part that they have played? Would not every Member, including my hon. Friend the Member for Bishop Auckland (Helen Goodman), whose constituency hosts one of those businesses and who has talked to me about the issue, want to promote, praise and thank those businesses for their efforts?

Does the Minister agree with me, with the “Building 2012” campaign and now with Sir John Armitt, the chair of the Olympic Delivery Authority, that we should seek from the London Organising Committee of the Olympic Games and Paralympic Games and from the IOC the necessary concessions to ensure a national celebration of our great British businesses that built the Olympic park on budget and on time?

[Hugh Robertson]

The right hon. Lady makes an extremely good point. She knows, as I do, that those regulations date back to the London Olympic Games and Paralympic Games Act 2006 and were put in place to give us the best possible chance of raising as much sponsorship as possible from the private sector. The result, of course, was that the organising committee was extraordinarily successful in raising £700 million of sponsorship, which brings with it intellectual property issues.

That said, I absolutely recognise the issue that the right hon. Lady has itemised. Because the process has been such a success, we want the country and individual businesses to go out and tell that story. The regulations, of course, apply only until just after the games, and we will do all we can to ensure that they work.

[Elizabeth Truss (South West Norfolk) (Con)]

12. What steps he is taking to promote the digital economy.

[The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey)]

My Department is delivering a number of programmes and initiatives that will support growth and innovation across the digital economy and the economy more generally. We are investing up to £830 million in digital communications infrastructure by 2015 and working with Ofcom to deliver the 4G spectrum auction this year, and we will shortly publish a Green Paper setting out proposals for a regulatory framework for the communications and media sectors aimed at providing a thriving environment for growth and innovation in the UK.

[Elizabeth Truss]

I was delighted to read earlier this week that Britain leads the world in e-commerce, with 10% of all business taking place online. However, I am concerned about getting more young people involved in the industry, given that the number of people studying computer science is lower now than it was a decade ago and the proportion of women doing computer science has gone down to only 14%. What are we going to do to get more young people involved in the industry?

[Mr Vaizey]

I thank my hon. Friend for that important question. As she is probably aware, e-Skills, the sector skills council, had a specific computing for girls scheme to encourage girls at school to study computing, but the Secretary of State for Education’s important speech on revolutionising the computer science curriculum in January shows that this Government are committed to ensuring that more people study computer science. We are working with industry to ensure that more children choose that option.

[Ian Lucas (Wrexham) (Lab)]

Why is superfast broadband being delivered in Morocco by 2013 and in Britain by 2015?

[Mr Vaizey]

Because Britain is bigger. [Laughter.]

[Mr Speaker]

Order. I am sure that that is an immensely amusing and informative reply and we are grateful, but the House will want to hear Mr Weatherley.

[Mike Weatherley (Hove) (Con)]

Will the Minister welcome with me and the digital economy in Hove the news yesterday that Hove will be included in the next round of superfast broadband bids?

[Mr Vaizey]

May I say, if you will indulge me, Mr Speaker, that I find it odd that Opposition Members have such distaste for Morocco? What is wrong with Morocco getting superfast broadband? Why is that seen as some kind of weird phenomenon? [Interruption.] Perhaps I am channelling my inner Boris.

May I congratulate my hon. Friend on how well he has campaigned for superfast broadband in his part of the world in Brighton and Hove? We will ensure that we work with him to ensure that the generous Government funding that is available supports his constituents.

[Dame Joan Ruddock (Lewisham, Deptford) (Lab)]

16. What information the London Organising Committee of the Olympic Games has provided to his Department on ticketing arrangements for the London 2012 Olympics.

[The Minister for Sport and the Olympics (Hugh Robertson)]

Ticketing for the London 2012 Olympic and Paralympic games is a matter for the London Organising Committee of the Olympic Games and Paralympic Games, a private company independent of the Government. LOCOG, however, has made public a wide range of information about the sale of London 2012 tickets to guide those who wish to purchase them and will make public a full breakdown after the final tranche of tickets is sold.

[Dame Joan Ruddock]

Rachel, my constituent, purchased her family’s Olympic tickets last year. Subsequently, she found herself pregnant, and expects to have a few-week-old baby at the time of her events. When she contacted LOCOG, she was told to purchase an extra seat for the baby, but that the seat could not be guaranteed to be next to the parents. Given that airlines allow babes in arms at 35,000 ft, surely it is possible in a stadium. Will the Minister intervene? [Interruption.]

[Mr Speaker]

Order. We all want to hear this answer.

[Hugh Robertson]

I will not even attempt to defend that one. However, as a result of the campaign run by Mumsnet, the organising committee is considering that exact issue. The situation the right hon. Lady describes is clearly an absurdity and a solution will be found.

[Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)]

17. What plans he has for the London 2012 Olympics media centre after the games.

[The Minister for Sport and the Olympics (Hugh Robertson)]

The Olympic Park Legacy Company aims to create a thriving commercial district on the Queen Elizabeth Olympic park that will generate several thousand job and training opportunities. In January, it announced a shortlist of three organisations from the fashion, technology and leisure sectors as potential long-term tenants of the press and broadcast centres. It aims to appoint those tenants later this summer.

[Meg Hillier]

In reference to the Minister’s previous answer, I hope the Department retains an interest in this matter even though it falls under the legacy company, because my constituents and the many businesses in my constituency are keen to see incubator and creative business spaces. Given that two of the bidders may now join forces, leaving only two, I hope that the Department is vigilant to ensure that we get that creative business thread running through the new Olympic park.

[Hugh Robertson]

To correct the hon. Lady, the responsibility for this matter will pass to the mayoral development corporation when it comes into being. It will have responsibility, and she will therefore have direct access to it through local councillors elected to the Greater London authority.

[Mr Speaker]

The appetite has been exhausted.

[Kevin Brennan (Cardiff West) (Lab)]

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

[The Minister for Sport and the Olympics (Hugh Robertson)]

Yesterday the European Hockey Federation announced that London, and the new Queen Elizabeth Olympic park, had been selected as the venue for the 2015 European hockey championships, the first such event on the park. This is in addition to the Commonwealth games, the rugby league, rugby union and cricket world cups, a world athletics championship, world championships in triathlon, gymnastics and canoeing, and bids out for a youth Olympics, rowing, swimming and eventing championships. It is an extraordinary success story for British sport and a hugely positive legacy from London 2012.

[Kevin Brennan]

Google is failing to enforce privacy rulings online, dragging its feet when told to take down offending material and prioritising websites that carry illegal, unlicensed content at the top of its search results. When will Ministers act to ensure that Google prioritises legal sites over illegal sites?

[Hugh Robertson]

We have regular discussions with Google on all these issues. It is better than the hon. Gentleman suggests at taking down illegal material, and those discussions will continue.

[Mr Edward Leigh (Gainsborough) (Con)]

T2. We, the taxpayers, have spent £9 billion on the Olympics and we are very proud of them. But everybody I talk to, including myself—I occasionally talk to myself—[Laughter.] Calm down, calm down. Will the House come to order, please? Nobody has actually got a ticket, apart from a chap I was talking to last night who had applied for £8,000-worth of tickets. He is the only person I have met recently who has got a ticket. I have raised this before with the Minister and it is a serious point. The Minister has told me in the past that he has to satisfy the corporate people because they have put in hundreds of millions of pounds, but we have put in billions of pounds. What more will he do to get tickets to ordinary people so that this becomes a people’s games?

[Hugh Robertson]

The problem to which my hon. Friend alludes is caused by the simple fact that 6.5 million tickets were available and 26.5 million applications were made. The fact is that demand massively outstripped supply. Some 75% of those tickets have gone to the general public, and a full breakdown will be available as soon as the next tranche of ticketing is over. The advice to him and everyone else who wishes to apply for tickets is to apply in the next tranche, which will go exclusively to those who were involved in the process earlier.

[Dan Jarvis (Barnsley Central) (Lab)]

Given the recent presentation by the WI of a 70,000-signature petition against library closures, demonstrating the strength of public support, and with no vision, no strategy and no urgency from a Minister who is fast becoming the Dr Beeching of libraries, does he share my view that he has a responsibility to act as a champion for libraries across government? If so, how would he assess his performance to date?

[The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (Mr Edward Vaizey)]

The trouble is that the hon. Gentleman has no view. When I was in opposition I gave my view on Wirral. What is his view on Labour-controlled Brent closing libraries? Has he got a view? When he gets a view, he can start talking about libraries.

[Alun Cairns (Vale of Glamorgan) (Con)]

T4. All local authorities in England, bar one, and certainly the Conservative local authority in Wales, publish details of invoices in excess of £500. I raised the matter with the BBC as I believe it should do the same, and Mark Thompson rejected the idea on the basis of the benefits of confidentiality and competitive tension. Does the Minister agree that it is time that the BBC followed the example set by others?

[Mr Vaizey]

My view is that the BBC is quite rightly independent from Government, but my hon. Friend may wish to take that point up with Mr Thompson’s successor who should be appointed some time later this year.

[Caroline Lucas (Brighton, Pavilion) (Green)]

T5. The Minister will not be surprised that I am delighted that a cross-party campaign has resulted in the announcement of £50 million for a competition for small cities, such as Brighton and Hove, for ultra-fast broadband. When will we get the bid information and what timetable does the Minister have in mind for the competition? So that we might welcome him for the second time and the Secretary of State for the first time to see first hand what Brighton and Hove’s digital cluster is already achieving, will they accept an invitation to come to Brighton’s digital festival in September?

[Mr Vaizey]

We will publish our consultation on this issue as soon as possible, and that will detail the chronology for awarding the £50 million. I am so pleased that the hon. Lady welcomes this funding, unlike the Opposition, who continue to carp about it. Of course I will come to Brighton, for the second time, for this wonderful digital festival.

[Graham Evans (Weaver Vale) (Con)]

T6. In north-west England, we have BBC Radio Merseyside, BBC Radio Manchester and BBC Radio Lancashire, but no BBC Radio Cheshire—it is an outrage. Furthermore, the community station, Cheshire FM, has recently closed down. What are the Government doing to encourage local stations and other local media to flourish and succeed?

[Mr Vaizey]

I could be here for hours talking about the success of local television, community radio, BBC local radio and commercial radio, but I will address the specific point about BBC Cheshire. The BBC is independent of Government and my hon. Friend may wish to take the matter up with the successor director-general when they are appointed later this year.

[Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)]

T3. I am sure that by now the Minister has seen the recent “Dispatches” programme “The Great Ticket Scandal”. If he and, in particular, the Secretary of State have not, they can have my DVD copy. It makes for good watching and I recommend that he watch it. As he knows, the programme provides the most damning proof yet that consumers are being ripped off—or at least priced out of cultural events —on an industrial scale. Will he now please commit to examining the secondary market again with a view to ensuring that we put fans first?

[Hugh Robertson]

The hon. Lady and I have debated this issue for many long hours in this Parliament. The matter raised in the programme to which she refers is now the subject of an investigation by the Office of Fair Trading, so I had better be careful. I simply say what I have said before: during the last Parliament, the Culture, Media and Sport Committee and the previous Government looked into the matter, and we have looked at it again. I think we are satisfied with the position as it currently sits, but should further evidence of criminal activity come forward, we will certainly reconsider the matter.

[Mr David Nuttall (Bury North) (Con)]

T8. Leaving aside the special rules relating to the Olympics, does the Minister agree that it is not the place of the state to interfere with the freedom of an individual or company to resell tickets for sporting or cultural events?

[Hugh Robertson]

The position at the moment is that we grant a ban on ticket touting for major events where it is a requirement of bidding for those events. That has become the settled position under successive Governments and as a result of the work of the Culture, Media and Sport Committee. Until there is evidence of widespread criminal activity, that will remain the position.

[Lilian Greenwood (Nottingham South) (Lab)]

T7. Last year, Arts Council funding was cut by £71 million, local authority funding was slashed and investment in the arts by private business fell by almost £10 million. Would the Minister like to have another go at providing a credible answer to Nottingham arts organisations about how to fill the funding gap that his Government have created?

[Mr Vaizey]

Overall funding for the Arts Council will be reduced by less than 5% because we have given it back the lottery money that the Labour party robbed from it to pay for the Olympics. The answer for Nottingham Playhouse is to have an MP who champions its work and talks it up, not down.

[Simon Kirby (Brighton, Kemptown) (Con)]

Would the Minister be surprised if I joined other Brighton Members in saying that Brighton and Hove would be an excellent place for ultra-fast broadband and that we look forward to bidding as soon as possible?

[Mr Vaizey]

Indeed, and I again congratulate the work of all the Brighton MPs, but particularly my hon. Friend the Member for Hove (Mike Weatherley), on their campaigning skills.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

In Manchester, as in Morocco, a digital economy requires a digital infrastructure, but more than 2 million people are excluded from that because they live in rural areas. Will the Minister reassure the House that he recognises the importance of geography by reinstating Labour’s universal broadband pledge?

[Mr Vaizey]

The hon. Lady mentioned Morocco. It is an interesting fact that Morocco has less than half the population of the United Kingdom.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

Now that BT has lost its challenge to the Digital Economy Act 2010, when will the Government publish the initial obligations code and statutory instrument?

[Mr Vaizey]

We will publish it as soon as possible.

[Mr David Lammy (Tottenham) (Lab)]

There has been lots of bombast this morning, but does the Minister appreciate that for working-class children, two to three libraries closing a week, the withdrawal of arts education in our schools and a £71 million cut to the Arts Council are significant? Does he understand the intrinsic value of the arts to young people in this country?

[Mr Vaizey]

Okay, the right hon. Gentleman has thrown down the gauntlet. Let me tell him a few facts. First, two or three libraries are not closing. Fewer than 100 libraries have “closed”, and many of those have been transferred to communities. More than 40 libraries are opening, but Labour does not talk about that. We have just published our cultural education plan, the first such plan this country has ever had. Overall arts funding will be reduced by less than 4% over the next four years, so the right hon. Gentleman should stop talking down what is happening in the arts and talk about the huge success we are having.

[Jo Swinson (East Dunbartonshire) (LD)]

The parents of young people suffering from eating disorders are often distressed to find a hoard of press and magazine articles with graphic images and details of low weights and tiny amounts of food eaten, which have been used as inspiration. The media are rightly very careful when reporting on suicide. In a similar way, will the Minister urge media outlets to take cognisance of the media guidelines created by the eating disorder charity B-eat, to avoid the sensationalism of this illness, which can be very damaging?

[Mr Vaizey]

My hon. Friend has campaigned vigorously on this important issue. Magazine editors take their responsibilities extremely seriously, but I would be happy to meet her to discuss her campaign and also to work with her to engage with magazine editors.

[Stephen Timms (East Ham) (Lab)]

The Minister said that competition is still in play for superfast broadband procurement, but as he knows, many of the projects have only one bidder, BT. As far as I know, only one other bidder in the whole country is still in the frame for those projects. Will he confirm that, and say why he thinks the exercise has been so unsuccessful in engaging the degree of competition that we would all have wanted?

[Mr Vaizey]

We engaged a great many companies, but we cannot invent competition. However, at least three organisations are still involved in the bidding, and I firmly believe that the way we went about it—ensuring that local government had a say and that the contracts were awarded across local government areas, rather than regionally or nationally—promoted competition and offered up the opportunity for community broadband providers, for example.

[Philip Davies (Shipley) (Con)]

How many jobs does the Minister expect to be created or lost in the gambling industry as a result of the changes in the Budget, how many online betting businesses that are currently offshore will come back onshore, and how many jobs will come back with them?

[The Parliamentary Under-Secretary of State for Culture, Olympics, Media and Sport (John Penrose)]

I am delighted to have a chance to answer at least one question. Unfortunately, the answer is that I do not know, because this is an issue for the Treasury.

[Chris Bryant (Rhondda) (Lab)]

None the less, could the Minister, who is responsible for tourism, please have a word with the Minister responsible for broadcasting and arts, the Under-Secretary, the hon. Member for Wantage (Mr Vaizey), and explain to him the geography of Morocco? It is twice the size of this country, and when it comes to expanding rural broadband, it is the size of the country that matters. Not very many people live in Blaenrhondda or Blaencwm, which are a long way from cities, but they are the people who really matter if we are to get our economy going.

[John Penrose]

I am enjoying busking this one. The short answer is that the population of Morocco, I am told by many people on the Benches behind me, is only half that of the UK—it is also economically smaller—and as I am sure everybody will appreciate, the density of population is also relevant when it comes to connecting people to broadband.

[Mr Speaker]

It sounds to me as though there is plenty of scope for an Adjournment debate on the matter.

[Chris Skidmore (Kingswood) (Con)]

Whitefield’s tabernacle is Kingswood’s only grade I listed building and has important religious significance in the history of non-conformism, yet it is in a severe state of disrepair, despite featuring on the TV programme “Restoration” several years ago. Will the Minister meet me to discuss how best to preserve this precious building?

[John Penrose]

The short answer to that one is yes.

The Leader of the House was asked—

[Mark Lancaster (Milton Keynes North) (Con)]

1. What plans he has for consultation with hon. Members on the Government’s proposal for a draft Bill on parliamentary privilege.

[The Parliamentary Secretary, Office of the Leader of the House of Commons (Mr David Heath)]

It is our intention to publish a Green Paper containing draft measures on parliamentary privilege before the end of the Session.

[Mark Lancaster]

Which particular aspect of the current system of privilege does the Minister feel is in most need of reform and why?

[Mr Heath]

I am going to have to say to the hon. Gentleman that he will need to read the paper that we are producing, because it will, I hope, be a comprehensive survey of everything that relates to privilege and ask some pertinent questions about whether reform is necessary and whether it would be helpful to Members of this House in going about their business. He will have to be patient and wait for the paper, which we hope to publish before the end of the Session.

[Chris Bryant (Rhondda) (Lab)]

I hope that whatever the Government produce will indeed be a “green” paper, because there is one key issue that has to be resolved before we move any further, and that is: should we be putting anything about parliamentary privilege into statute? The danger is that the courts would then choose to interpret our actions and proceedings in this House, which would rather undermine the Glorious Revolution.

[Mr Heath]

For once, I absolutely agree with the hon. Gentleman. The Green Paper will ask the specific question whether the case has been made for legislation. We have approached this issue with an open mind, and we want to seek the views of both Houses on whether legislating further on parliamentary privilege is either necessary or desirable.

[Duncan Hames (Chippenham) (LD)]

2. What criteria were used to determine the Government’s legislative programme for the next Session of Parliament.

[The Parliamentary Secretary, Office of the Leader of the House of Commons (Mr David Heath)]

The Government intend to introduce a legislative programme in the next Session to deliver deficit reduction, boost growth, support aspiration, reform public services and implement the priorities in the coalition agreement.

[Duncan Hames]

I thank my hon. Friend for that answer. That same coalition agreement described the introduction of a groceries code adjudicator as a “first step” in protecting the interests of consumers and farmers, not least those in the hard-pressed dairy industry. I do not know of any Member who represents as many dairy farmers as my hon. Friend the Member for Somerton and Frome (Mr Heath), so will he use his influence with the business managers to ensure that a Bill to introduce a groceries code adjudicator makes its way into the next Session?

[Mr Heath]

Obviously I cannot pre-empt what will be announced on 9 May, but the Government remain committed to introducing the Groceries Code Adjudicator Bill. I am pleased that the draft Bill has received pre-legislative scrutiny and that it has been warmly received across the House. As my hon. Friend rightly says, I have a clear constituency interest in the progress of that particular piece of legislation.

[Angela Smith (Penistone and Stocksbridge) (Lab)]

Will the Deputy Leader of the House confirm that the Committee stage of the House of Lords (Amendment) Bill will be taken on the Floor of the House? Will he also ensure that the Government will not ram the legislation through the Commons, as they did with the Parliamentary Voting System and Constituencies Act 2011, and that there will be sufficient time for debate?

[Mr Heath]

The House of Lords (Amendment) Bill is a constitutional Bill, and it is normal that the Committee stages of such Bills are taken on the Floor of the House. I have no reason to suppose that this Bill will be an exception. We will of course provide adequate time for debate.

[Philip Davies (Shipley) (Con)]

May I propose a change for the Government when they are considering their legislative programme for the next Session? Will they bear it in mind, just for a change, that they are in coalition with the Conservative party?

[Mr Heath]

I doubt that my right hon. Friend the Leader of the House ever forgets that fact.

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

3. What progress he has made on establishing a public reading stage for Government Bills.

[The Parliamentary Secretary, Office of the Leader of the House of Commons (Mr David Heath)]

The Government conducted an experiment with a public reading stage on the Protection of Freedoms Bill. Following an evaluation of the experiment, we intend to conduct trials in the second Session to determine the best ways for members of the public to comment on specific details of legislation. My right hon. Friend the Leader of the House and I will update the House on our detailed plans early in the next Session.

[Stephen Metcalfe]

I thank my hon. Friend for that answer. Will he tell the House from whom he will seek advice on how best to push this measure forward?

[Mr Heath]

It is very important that, before we undertake further pilots of public reading stages, we have an opportunity to reflect on any improvements that could be made to the technology and the processes involved. That will involve talking to many people. Hon. Members may have seen the recent announcement that Jimmy Wales, the founder of Wikipedia, has agreed to advise the Government on improving open government, and we will want that work to influence how we proceed with public reading stages.

[Jo Swinson (East Dunbartonshire) (LD)]

I welcome what my hon. Friend says about improving public engagement, particularly with regard to public reading stages. Does he agree that we need to make it easier for the public to follow Committee stages of Bills, too, once the public reading stage is over? Will he have discussions with Jimmy Wales and others, particularly those involved in social media and online engagement, on how we can demystify the legislative process in this country, so that more members of the public can contribute their views?

[Mr Heath]

My hon. Friend highlights the purpose of what we are trying to do, and she rightly says that we are trying to demystify the process. The more that members of the public can interact with the House and understand how we go about our business and how they can influence the progress of legislation, the better. I can certainly give her a commitment that we will be looking at that. We will be looking at a variety of innovative ways to help the public to understand the process of legislation and the legislation itself, when it is presented to the House and to the public.

[Brandon Lewis (Great Yarmouth) (Con)]

4. What steps he is taking to improve the effectiveness of scrutiny of legislation.

[Mark Menzies (Fylde) (Con)]

6. What steps he is taking to improve the effectiveness of scrutiny of legislation.

[Andrew Stephenson (Pendle) (Con)]

7. What steps he is taking to improve the effectiveness of scrutiny of legislation.

[Henry Smith (Crawley) (Con)]

8. What steps he is taking to improve the effectiveness of scrutiny of legislation.

[Graham Evans (Weaver Vale) (Con)]

9. What steps he is taking to improve the effectiveness of scrutiny of legislation.

[The Parliamentary Secretary, Office of the Leader of the House of Commons (Mr David Heath)]

The Government recognise the value of parliamentary scrutiny of legislation. We have ensured that Bills have adequate time for proper scrutiny in the House. The Government are also committed to publishing more legislation in draft to enable pre-legislative scrutiny.

[Brandon Lewis]

For how many Bills have the Government allowed two days on Report ?

[Mr Heath]

In this Session, five Bills have had a Report stage taken over two days. Indeed, both the Legal Aid, Sentencing and Punishment of Offenders Bill and the Finance (No. 3) Bill were considered over three days. This is more than in any Session of the previous Parliament, when there were none whatever in the first and last Sessions.

[Mark Menzies]

How many Bills had pre-legislative scrutiny in the last Session, and how did that compare with this Session? Will the Deputy Leader of the House make a statement on plans for the future?

[Mr Heath]

The Government have published nine draft measures this Session, and are committed to publishing more measures in draft in the next Session, with a view to pre-legislative scrutiny. Further specific announcements will be made at the start of the new Session. In the last Session under the previous Government, two Bills—just two—were published in draft.

[Andrew Stephenson]

Will the Deputy Leader of the House say more about the Government’s plans for post-legislative scrutiny?

[Mr Heath]

Like their predecessor, the Government are committed to reviewing every Act of Parliament three to five years after it has passed. Government Departments publish Command Papers, allowing Commons Committees to decide whether or not to conduct further post-legislative scrutiny of each Act, when it is appropriate to do so. Forty-four of these memorandums have been published since this system was introduced in 2008. We welcome the work undertaken so far by Select Committees to examine such memorandums, but it is up to the Select Committees to decide whether they wish to do more.

[Henry Smith]

I am a member of the European Scrutiny Committee which receives a thick bundle of policies and proposals from the European Union each week. What measures can be taken to ensure that more of these can go before departmental Select Committees, as they cover the whole vast area of UK national policy?

[Mr Heath]

Of course I understand the hon. Gentleman’s concerns. The Government are keen to explore possible ways further to improve the effectiveness with which this House deals with European legislation. My right hon. Friend the Minister for Europe is in discussions with Select Committees and others about possible changes.

[Graham Evans]

The effectiveness of scrutiny of legislation is important, and so is the cost of the effectiveness of such scrutiny. One mechanism that arguably assists with that scrutiny is that of early-day motions. I congratulate the Government on reducing the annual cost of early-day motions by 38% since 2010, but I hope my hon. Friend will join me in welcoming the Procedure Committee’s announcement that it will carry out a fresh review of early-day motions in the near future.

[Mr Heath]

I welcome the hon. Gentleman’s remarks and the fact that he recognises that the House of Commons Commission is looking across the House to establish where savings can be made. The interest of Members in the hon. Gentleman’s recent Adjournment debate, to which I responded, highlighted the variety of views on this issue. It is quite right that, if there is a swell of opinion for further reform in this area, it would be appropriate for the Procedure Committee to consider the issue of early-day motions.

[Kelvin Hopkins (Luton North) (Lab)]

Further to the question put by the hon. Member for Crawley (Henry Smith), will the Leader of the House look again at establishing permanent membership of European Standing Committees? The ad hoc approach, frankly, does not work.

[Mr Heath]

Again, I understand the hon. Gentleman’s concern. The Government are continuing to explore ways to improve scrutiny, and there remain areas that we need to explore. One issue to bear in mind is whether hon. Members would be willing to serve on such a Committee. If that is the case and if we can make satisfactory arrangements, we will of course bring them to the House.

[Paul Flynn (Newport West) (Lab)]

If there is a new look at early-day motions, will the Deputy Leader of the House ensure that Members will not be deprived of one of the rare opportunities to criticise parliamentary answers? A recent EDM suggested that the Under-Secretary of State for Justice, the hon. Member for Reigate (Mr Blunt), gave a parliamentary answer that reached a new low “in evasiveness and vacuity”, and recommends that in future Ministers should read the question before answering parliamentary questions.

[Mr Speaker]

Order. I am sure we are talking about these matters with reference to the scrutiny of legislation.

[Mr Heath]

Yes, and I am sure that the hon. Gentleman’s question was about the scrutiny of legislation. I have already set out our position on EDMs. We recognise that they have value, but sometimes some can, shall we say, come close to an abuse of the House in terms of their cost compared with their benefit. On the subject of questions to Ministers, the hon. Gentleman knows that if there are deficiencies in the responses Members receive, I and my right hon. Friend the Leader of the House are always happy to take that up with the Departments and Ministers concerned.

[David Wright (Telford) (Lab)]

What plans does the hon. Gentleman have to extend the time available for the consideration of Bills on Second Reading? It has become traditional for Second Reading debates to be considered on a single day. May we extend the time available, as many Members, especially Back Benchers, want to contribute on Second Reading?

[Mr Heath]

First, let me make the important point that the scrutiny of legislation is an essential part of the business of this House. People often talk about Government time as if it were unrelated to the business of the House when, in fact, it is Parliament’s time in order to scrutinise legislation. I merely make the observation that the more time that is eroded from so-called Government time by consideration of other matters that are no doubt of enormous importance—such as urgent questions and emergency debates—the less time is available to the House to scrutinise legislation properly.

[Harriett Baldwin (West Worcestershire) (Con)]

5. Whether he plans to submit evidence to the commission on the consequences of devolution for the House of Commons.

[The Leader of the House of Commons (Sir George Young)]

I welcome the announcement by the Minister for political and constitutional reform, my hon. Friend the Member for Forest of Dean (Mr Harper), of the terms of membership for the commission, and I will be following its work closely. Although I have no plans to submit evidence to the commission myself, it will no doubt wish to take account of the authoritative works and voices on this issue, and I hope that my hon. Friend will be among them.

[Harriett Baldwin]

When in opposition, the Leader of the House produced a distinguished pamphlet on the topic that the McKay commission will be studying. Does he propose to send that work to the commission? Also, does the commission intend to take written evidence, and to meet in public to take oral evidence?

[Sir George Young]

The commission will be meeting in public and it has asked for evidence. My hon. Friend is too kind about the work of the democracy taskforce to which I contributed when I was on the Back Benches, but I am sure this exchange will have drawn the commission’s attention to the existence of that important work.

[Pete Wishart (Perth and North Perthshire) (SNP)]

Is not the easiest and most elegant solution to the West Lothian question for Scotland to become a normal, independent, self-governing nation?

[Sir George Young]

“Bring it on” is what we on the Government Benches would say. That particular issue is beyond the remit of the commission, but I hope the hon. Gentleman will do what he can to bring forward the date when we can resolve it once and for all.

Petition

Thursday 22nd March 2012 Commons Chamber

Mr Tobias Ellwood (Bournemouth East) (Con)

- Hansard - - Excerpts

I should like to present a petition, a copy of which has already been presented to No. 10 Downing street, from more than 1,000 residents of Bournemouth East who seek the protection of precious green belt land in the wards of Strouden, Throop and Muscliff from the proposed development of three Traveller sites. Residents believe that Bournemouth is already affected by overdevelopment, and that this would be an inappropriate use of much treasured green belt land and open space.

The petition states:

The Petition of residents of Bournemouth,

Declares that the Petitioners are opposed to the proposed development of three permanent sites for gypsies and travellers in Strouden, Throop and Muscliff; that the Petitioners believe that Bournemouth has already more than adequately contributed to Dorset’s housing numbers; and that this would be an inappropriate use of much treasured greenbelt land and open space.

The Petitioners therefore request that the House of Commons urges the Government to bring forward legislation to strengthen the powers of local Councils to allow them to prevent residential developments from being built on the greenbelt.

And the Petitioners remain, etc.

[P001014]

Budget Leak Inquiry

Thursday 22nd March 2012 Commons Chamber

11:35

[Chris Leslie (Nottingham East) (Lab/Co-op)]

(Urgent Question): To ask the Chancellor of the Exchequer if he will make a statement on whether he will instigate a Budget leak inquiry, in view of the accurate pre-reporting of a number of the detailed proposals in his Budget statement, including one of the matters that was agreed under the Provisional Collection of Taxes Act.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

As with every Budget, we have seen a vast amount of speculation, and, as ever, a vast amount of it has proven to be unfounded. As the Chancellor has said, a Budget produced within a coalition is different. The days of the Chancellor coming up with a Budget in secret are gone. This was not a Conservative or a Liberal Democrat Budget; it was a coalition Budget. In the course of coalition Budget negotiations, various proposals were raised, discussed and debated. That occurred more widely than in the past, when the Chancellor told the Prime Minister what was in the Budget the day before or, as in even more recent days, when the Prime Minister told the Chancellor what should be in the Budget the night before. The Treasury does make announcements throughout the year. For my own part, people will have seen the work on tax transparency and personal tax statements, which was in response to a consultation on this very issue laid before the House in November and subject to a ten-minute rule Bill from my hon. Friend the Member for Ipswich (Ben Gummer).

On the specific question, it is a long-established practice of the Treasury not to comment either on whether a leak inquiry has been established, or on its conduct or outcome. There will be ample opportunity to debate the Budget over the coming days. Today is the second of four days of debate on the Budget. It is perhaps an unfortunate consequence of this urgent question that this is being delayed, and so is delaying the shadow Chancellor, from whom I am sure the House is eager to hear.

[Chris Leslie]

Coalition government is absolutely no fig leaf for these very serious breaches of the ministerial code—[Interruption.] Government Members may wish to listen. Paragraph 9.1 of the code states:

“When Parliament is in session, the most important announcements of Government policy should be made in the first instance, in Parliament.”

There have been clear and flagrant violations of this crucial principle. It is a significant insult to the primacy of Parliament and this House of Commons, to whom the Chancellor should be accountable. It is a shame he was not able to come here to answer for himself on this matter.

Our constituents expect that Members of Parliament should be the first to hear and question policy announcements from the Chancellor, and hold him directly to account. The Chancellor is treating Parliament as a peripheral afterthought, and that is totally unacceptable. But this is not just about the sovereignty of Parliament; if the Chancellor and his acolytes are prepared to pre-brief and leak key information about very sensitive tax changes, that risks handing privileged information to those who can take advantage of any advance knowledge.

The ministerial code is enforced by the Prime Minister, who should instigate a leak inquiry if the Exchequer Secretary refuses to do so. He did not say whether he was or was not going to have an inquiry—at least he could leak that little bit of information for us today. It is also necessary, of course, to include an investigation of conversations between the Chancellor’s special advisers and the civil service and the media. Of course, civil servants are guided by the civil service code. It is unlikely that newspapers will reveal their sources, but Ministers and special advisers should be interviewed and asked who they spoke to, when the conversations occurred and who sanctioned those conversations. If information was released pre-Budget without approval from the Chancellor and was leaked, it is a very serious breach of security and of the civil service code.

Yesterday’s Budget was described by The Economist as

“more of a newspaper review than a Budget”.

Another view was that

“the Budget has had all the leak-free qualities of a teabag in a sieve.”

It might be quicker to list what the papers did not publish before the Budget, but for the benefit of the House I shall list some of those measures that did come out: the reduction in the 50p rate appeared in The Guardian last week and in the Financial Times; the changes to the personal income tax allowance appeared on ITV News on Tuesday night, when the exact figure was given; the stamp duty land tax changes appeared very precisely in the Financial Times and in basically all the newspapers on Wednesday morning; the changes to stamp duty land tax on residential property associated with capital gains tax changes appeared on the “Andrew Marr Show” at the weekend; and the North sea oil and gas commissioning certainties appeared in the Herald Scotland on Saturday 17.

The one Budget change that was not leaked was the £3 billion raid on pensioners, now dubbed the “granny tax”. Some 4.5 million pensioners are to lose an average of £83 next year. In times gone by, Chancellors did the honourable thing when it was revealed that their Budgets had leaked. In contrast, when asked about the Budget leaks on this morning’s “Today” programme, the Chancellor said:

“inevitably the days when the Chancellor dreamt this all up in secret, shared it with the PM 48 hours before he delivered his speech...are gone”.

Well times are not so different that they give licence to the Chancellor to fling around the contents of the Budget red box to any passing journalist, regardless of the consequences. Mr Speaker, we have heard the usual dismissive indifference from the Minister to these serious concerns, so perhaps I need to ask you, as a point of order, for general guidance about how the rights of this House, and the public’s expectations of orderly policy announcements, can be protected? Can you take steps to ensure that the Chancellor does not treat Parliament and the wider public with such utter contempt in the future?

[Mr Gauke]

I was not entirely sure whether that was a question or a point of order, Mr Speaker, and at one point I was not entirely sure whether the hon. Gentleman was complaining about measures not being briefed in advance or being briefed in advance. He referred specifically to the 50p tax rate. In the days running up to the Budget there were various reports about the 50p rate and it was public knowledge that the Chancellor had commissioned HMRC to undertake a report on the 50p rate and how much that tax was raising—an issue that I am sure the hon. Gentleman does not want to debate for very long. In that time, it was very clear that the Chancellor was going to make a statement, but what did we see in the press? We saw stories that it was going to stay at 50p, be cut to 45p or be cut to 40p. We saw press reports that it was going to happen this year or next year. There were at least five different versions of what was going to happen on the 50p rate, so it is not surprising that one of them turned out to be correct. However, it is also the case that four of them turned out to be incorrect.

The hon. Gentleman asked about sensitive numbers. I can assure him that the numbers on the stamp duty land tax—the increase to 7%—which I am sure he welcomes, certainly did not come from the Treasury, and neither did the exact number regarding the personal allowance as far as I am aware. We also heard from the hon. Gentleman that in days past these things did not happen. May I remind him what happened when he was last a Government Minister? In the 2005 Budget there was a leak about tax credit increases that turned out to be correct, a leak about alcohol duties that turned out to be correct, a leak about fuel duty that turned out to be correct, a leak about inheritance tax that turned out to be correct and a leak about stamp duty that turned out to be correct. There were also leaks about council tax refunds and the winter fuel allowance, all of which were entirely correct.

I could look at more recent announcements such as those about VAT in 2008, about the green bank, the youth jobs package, fuel duty and schools, all of which turned out to be accurate. I am sure that Government Ministers would then have said that that was speculation and I am sure that in many cases they were absolutely correct. It is difficult to give full credit to the hon. Gentleman given that detailed information about Budgets has been put into the public domain by previous Governments for many years, but he has only now suddenly become very upset. I am not surprised that the Labour party wants to focus on an issue of process rather than on the substance because this Budget is going to get the country growing again and is reforming the tax system in a sensible and growth-friendly way.

[Several hon. Members]

rose—

[Mr Speaker]

Order. There is extensive interest in this subject, which I am keen to accommodate, but that requires brevity, a great example of which can now be provided by Mr Jacob Rees-Mogg.

[Jacob Rees-Mogg (North East Somerset) (Con)]

I wonder whether my hon. Friend notices the incongruity of those who oppose openness in the Budget but were all in favour of it in terms of risk registers. Does he agree that the criticism is either muddled or synthetic?

[Mr Gauke]

In the interests of brevity, Mr Speaker, I agree.

[Mr Ben Bradshaw (Exeter) (Lab)]

Given the failure of Ministers to admit whether they will benefit from the cut in the top rate of tax and the description by the Chancellor of tax avoidance as “morally repugnant”, will the Exchequer Secretary now ensure that all Ministers’ tax arrangements are published?

[Mr Gauke]

We do not have a tradition of politicians publishing their tax affairs, but I have to say that for a Labour politician to say that in the context of the current mayoral election takes some nerve.

[Several hon. Members]

rose—

[Mr Speaker]

Order. May I remind the House that this is a narrowly focused urgent question seeking a leak inquiry? It is a matter of great importance, but it is on that matter that exchanges should be focused. This is not a rerun of the Budget debate, which will be continued, but is about the subject of the urgent question.

[Mr David Evennett (Bexleyheath and Crayford) (Con)]

Does my hon. Friend agree that there will obviously be wild speculation before any Budget, much of which turns out to be wrong, and that we do not need any lectures from Opposition Members, who leaked everything all the time when they were in government?

[Mr Gauke]

I do not think that we can draw a conclusion that there has been a decline in the standards of journalism just from the fact that in 2005 the predictions of what was in the Budget were more consistently accurate than in 2012.

[Barry Gardiner (Brent North) (Lab)]

Surely a leak is an unauthorised or inadvertent publication of restricted and confidential information. On that basis, this could not have been a leak, because it was clearly not inadvertent and it was clearly authorised. It was none the less in severe conflict with the ministerial code, and that surely is what the Prime Minister should investigate.

[Mr Gauke]

I am not sure that there was a question there, but I thank the hon. Gentleman for his views. The Government clearly authorised some information to be put out in advance of the Budget. For example, there was a speech by the Prime Minister. The Prime Minister makes speeches from time to time; I am not sure that people should be getting upset about that.

[Lorely Burt (Solihull) (LD)]

Does my hon. Friend agree that it is rank hypocrisy on the part of Opposition Members to accuse this Government of leaking? Can my hon. Friend remember how many times the Labour Government held inquiries into leaks about their Budgets?

[Mr Speaker]

Order. Let us be absolutely clear about this. The hon. Lady can make a general charge. She cannot and will not make a personal charge against an individual Member in any part of the House. I trust that the hon. Lady is not accusing the hon. Member for Nottingham East (Chris Leslie) on the Opposition Front Bench of hypocrisy.

[Lorely Burt]

indicated dissent.

[Mr Gauke]

I, too, want to be very careful and not accuse the hon. Gentleman of hypocrisy, but there are dangers of inconsistency.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

On Monday the Home Secretary came to the House and confirmed that there would be a leak inquiry into the Hillsborough media reports. Why is it that the Home Secretary has that grace, but the Minister does not?

[Mr Gauke]

Let me repeat what I said earlier. It is a long-established practice of the Treasury not to comment on whether a leak inquiry has been established or on its conduct or outcome.

[Christopher Pincher (Tamworth) (Con)]

Is my hon. Friend aware that Labour’s record of leaking is as long as its record in office. Not only did the last Govt leak like a sieve but Hugh Dalton, a previous Labour Chancellor, was forced to resign for leaking Budget secrets—

[Mr Speaker]

Order. The hon. Gentleman will resume his seat. I made the position clear. This is a set of exchanges about a specific and narrowly crafted urgent question. It may be about many things within that context, but it is not about 1947. We will leave it there.

[Henry Smith (Crawley) (Con)]

The previous Labour Government leaked worse than the Titanic. Does my hon. Friend agree that, whatever the Labour party’s budgetary policies may be—we are not quite sure—they would be an equal disaster?

[Mr Gauke]

Within the constraints of the question, I will just say yes.

[John Healey (Wentworth and Dearne) (Lab)]

Will the Minister concede that the Chancellor has shot himself in the foot with such widespread leaks, because all that he had to announce yesterday was the tax grab on grannies, which he hoped people would not notice? Will he concede that the leak inquiry that may or may not be going on now in the Treasury should consider the leaks of Office for Budget Responsibility judgments, and that now is the time to put the OBR on a proper independent basis similar to that of the Office for National Statistics?

[Mr Gauke]

Of course the OBR is independent, and that may be some irritation to Opposition Members, given its conclusions about the failure of the 50p rate.

[George Freeman (Mid Norfolk) (Con)]

Does my hon. Friend agree that the only possible explanation for the general hypocrisy on the Opposition Benches, given their own leaking of this urgent question before the Speaker’s Office announced it, is their desire to avoid the good news of GlaxoSmithKline’s investment announced this morning?

[Mr Gauke]

I am interested to learn that this story was apparently briefed before any decision emerged. [Interruption.] I understand that that is incorrect and that it was not announced on Twitter before your decision, Mr Speaker. If it was, I am sure that there will be an internal Labour party inquiry.

[Clive Efford (Eltham) (Lab)]

The reference to Hugh Dalton in 1947 is of course wrong, because he resigned and the leak had been reported in an evening newspaper before he sat down. What we are talking about now is the ministerial code and the accurate and extensive reporting of what was in the Budget across the media the morning before the Budget statement. That is the difference, and that is what we want to be investigated. Are we going to have an investigation or not?

[Mr Gauke]

I have answered the hon. Gentleman’s first point. I should also reiterate that we have a coalition, which means that there are negotiations and discussions involving both sides. It also means that the Budget tends to be finalised some days in advance of the Budget speech. That is quite a contrast to previous years, when revisions were made, documents pulped and decisions taken at the last minute. I think that we have a much better process, thanks to the discussions within the coalition and the involvement of the Office for Budget Responsibility.

[John Hemming (Birmingham, Yardley) (LD)]

Does the Minister believe that the Opposition would improve by getting some consistency on whether information should or should not be released?

[Mr Gauke]

We can hope for consistency, but I am not an optimist on that front.

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

Leeks are normally very popular in Wales, but given that only 4,000 people in Wales pay the 50p rate of tax, compared with 94,000 in London, taken alongside the regional pay leak, this represents a massive transfer from poorer people in Wales to richer people in London. Does the Minister not agree that spreading that sort of fear through leaks ahead of the Budget announcement is disgraceful, and has he not admitted that he has given leaks by referring to our alleged leaks?

[Mr Gauke]

I am afraid that the hon. Gentleman’s analysis is wrong, because the rich will of course be paying five times the amount as a consequence of the Budget measures. I am afraid that his analysis is no better than his jokes.

[David Tredinnick (Bosworth) (Con)]

Will my hon. Friend accept that he made a mistake in saying that part of the Budget was leaked by the Labour Government in 2005? In fact, the whole Budget was leaked to the Evening Standard.

[Mr Gauke]

I suspect that my hon. Friend is right and apologise to the House for getting that wrong.

[Helen Goodman (Bishop Auckland) (Lab)]

One of the reasons why Budget leaks are particularly serious is that they facilitate tax avoidance. When the Budget speech was leaked in 1984, Lord Howe instituted a police inquiry and everybody working on the Budget was interviewed by the police. Why does the Chancellor of the Exchequer not do the same?

[Mr Gauke]

I know that the hon. Lady speaks with great knowledge on this issue. I agree that it is very important that sensitive information is protected and can assure her that, on the one potentially sensitive area of stamp duty, the Treasury was not involved. If something is announced in the morning, even if it comes into effect at midnight, people still have the opportunity to exchange contracts in the interim period, as indeed was the case when previous Governments raised stamp duty.

[Margot James (Stourbridge) (Con)]

I was an avid reader of pre-Budget commentary in the newspapers and found that there was plenty of new content in the Chancellor’s presentation yesterday that had not been covered at all and plenty that the media had got wrong. Is this not a complete waste of parliamentary time, and will my hon. Friend ensure that none of his official time is wasted in the pursuit of this phantom leak?

[Mr Gauke]

If the intention is to keep the shadow Chancellor’s speech off the lunchtime bulletins, I suspect that it will succeed, and who would blame the hon. Member for Nottingham East (Chris Leslie) for wanting to do that?

[Susan Elan Jones (Clwyd South) (Lab)]

Would the Minister describe it as a coincidence that the £3 million stealth tax on pensioners was one thing that was not leaked?

[Mr Gauke]

I am not sure whether we are now getting complaints that we are briefing too much, or too little.

[Bob Blackman (Harrow East) (Con)]

Clearly, the most difficult job in Parliament is to respond to the Budget speech. If everything was leaked in advance, why did the Leader of the Opposition get it so spectacularly wrong?

[Mr Gauke]

There is a theory that we might have wanted to help him, but I can assure my hon. Friend that that is not the case, although I can see the argument why the Leader of the Opposition might have wanted that help.

[Kevin Brennan (Cardiff West) (Lab)]

By describing the systematic and orchestrated leaks as somehow an accident, does the Minister not realise that he and the Chancellor remind people of Captain Renault in “Casablanca” when he goes into Rick’s place and is shocked to discover gambling going on, even as he collects his own winnings? Is this approach not simply amoral, and should Ministers not have a higher standard around the Budget?

[Mr Gauke]

I am afraid that if we were looking at the previous Government we could round up the usual suspects there, because there was plenty of leaking under them, but we heard none of the synthetic outrage from the Labour party then.

[Nigel Mills (Amber Valley) (Con)]

I have a dream in which the Budget is merely the confirmation of ideas that have been fully consulted on and people can actually understand what the tax regime will be in advance. I commend the Minister for his work in trying that, rather than worrying about this flim-flam.

[Mr Gauke]

My hon. Friend makes a good point about our more deliberative and consultative process for tax policy making, and some of the announcements in the Budget yesterday were the culmination of a long process of consultation, for example the reforms of controlled foreign companies, which have been widely welcomed. As a corporate tax regime, ours is increasingly recognised around the world, and I am delighted that, as my hon. Friend the Member for Mid Norfolk (George Freeman) pointed out earlier, we had the announcement from GlaxoSmithKline this morning.

[Mr Andrew Love (Edmonton) (Lab/Co-op)]

How does the Minister explain the headline on Wednesday morning in the Financial Times—it could have been any of the major newspapers—which stated: “Osborne in tax grab on top-end property”? The article went on confidently to assert that the duty would be 7% on properties priced at £2 million and above. Surely that was a leak. If it was not, what was it and what will he do about it?

[Mr Gauke]

I do not believe that the figure of 7% came from the Treasury, but we also ought to recognise that in last year’s Budget the Chancellor made it clear that we were looking at getting more money from those owning high-end properties, so it should not have come as a complete surprise that there was an announcement along those lines in the Budget yesterday.

[Chris Heaton-Harris (Daventry) (Con)]

It was widely reported in the press before the Budget, and in fact before Monday, that on Monday morning the quad would meet for a final sign-off of the Budget. Surely anything that was in the papers about the Budget before that point would have been complete speculation?

[Mr Gauke]

There is a lot of speculation, but one of the aspects of Budget policy making under this Government is that it is much more orderly and systematic and decisions are reached in a proper way, unlike the chaos that reigned under the previous Government.

[Diana Johnson (Kingston upon Hull North) (Lab)]

The Liberal Democrats were briefing extensively in the past few days, and I just wonder whether the Minister would like to investigate why they seem to have preferential access to information before Parliament does.

[Mr Gauke]

It is only to be expected that coalition parties will want to make their arguments and to set out their case, and we do have a Budget that is formed by a coalition, but it is a Budget that is good for the country.

[Brandon Lewis (Great Yarmouth) (Con)]

My hon. Friend mentions the consultation work that the Treasury does in order to reach final positions on the Budget. One of those was shown yesterday, with the new regime for oil and gas and decommissioning—something that the industry very much welcomes and which will provide a great boost. Does my hon. Friend agree that such consultations lead to speculation but are vital in terms of getting into the Budget the right result for people?

[Mr Gauke]

My hon. Friend is absolutely right, and our progress on oil and gas will be welcomed throughout the country and, especially, in Great Yarmouth.

[Ian Lucas (Wrexham) (Lab)]

On stamp duty specifically, will the Minister implement an inquiry into how many transactions of more than £2 million took place between the time that such reports were in the newspapers and the Budget announcement, and into how much that cost the hard-pressed British taxpayer and pensioners who are having to pay the granny tax?

[Mr Gauke]

On the general point about leak inquiries, I have said what I have to say on that, but we have to bear in mind that identifying a property of more than £2 million, reaching a conclusion on negotiations and exchanging in the course of one morning is somewhat ambitious.

[Simon Hart (Carmarthen West and South Pembrokeshire) (Con)]

If the Minister is ever tempted to go down the route of a leak inquiry, will he at least commit to backdating it to 1997?

[Mr Gauke]

My hon. Friend makes an excellent point. Presumably, the Labour party would be very supportive of, and co-operative in, any such venture.

[Tom Greatrex (Rutherglen and Hamilton West) (Lab/Co-op)]

The Minister has said three times now in his responses that the Treasury was not responsible for leaking the stamp duty changes. The first time that he said so, he added, “as far as I know.” Is not the point that he should know and, therefore at least on that point, that a leak inquiry should be instituted immediately?

[Mr Gauke]

I have absolutely no evidence that the Treasury briefed on the 7% stamp duty announcement, but none the less an announcement was made in the morning, and the measure came into effect at midnight last night. We also ought to make the point that that measure, on stamp duty land tax, is going to get more money out of the wealthy, and much more successfully, than the Labour party managed with its failed 50p rate.

[Penny Mordaunt (Portsmouth North) (Con)]

Does the Minister agree that the fact that the Opposition have tabled an urgent question today on media management is further evidence that the Budget was a good Budget and Labour has nothing to say on growth or jobs?

[Mr Gauke]

I agree. The focus on process not substance is very revealing.

[Derek Twigg (Halton) (Lab)]

I congratulate the Minister on some excellent press management this morning, and on the headlines, which have been very helpful to us. But I want to be helpful, so that he can be specific about the area of suspicion. Can he now say that no Treasury Minister directly, or special adviser indirectly on their behalf, gave information to the press about any Budget measures prior to the Budget yesterday?

[Mr Gauke]

Just to be clear, I will give the hon. Gentleman a Budget measure that was confirmed yesterday: personal tax statements. Ministers were aware that we were going to inform the press about personal tax statements, so the question he asks is extremely broad. There were measures announced yesterday in which Ministers were involved, but I am not aware of any Minister being aware of the briefing of market-sensitive information.

[David Rutley (Macclesfield) (Con)]

Does my hon. Friend agree that it is a bit rich to be asking this question today—[Hon. Members: “A bit rich!”] Does he agree that it is more than unfortunate to ask the question today, when articles such as the one I have with me, from The Guardian on 11 March 2008, state:

“Alastair Darling is set to deliver his first budget to the House of Commons tomorrow…but in reality, much of it has already been trailed”?

[Mr Gauke]

Some things are not entirely new. The Labour party really does have to think back to its time in government and to the behaviour undertaken then. What is remarkable is that Opposition Members managed to brief some of their announcements, given that most were decided only at the very last minute.

[Sheila Gilmore (Edinburgh East) (Lab)]

Will the Minister clarify whether he expounds the virtues of advance notification and discussion because we have a coalition, or whether he thinks that it is a bad thing to leak? Was the one thing that he did not share with his coalition partners perhaps the granny tax?

[Mr Gauke]

All Budget decisions were agreed by the Government as a whole, and the quad was heavily involved at all stages in that. People in a coalition will always make their arguments and set out their case, and some of that will be done in private, some of it in public, but it is a far more orderly process of Budget policy making than we have seen for many years.

[Glyn Davies (Montgomeryshire) (Con)]

In the context of coalition government, there will inevitably be much pre-Budget discussion and much greater media coverage. Does my hon. Friend agree that such coverage is bound sometimes to be right, and that it is ridiculous to interpret it as leaks?

[Mr Gauke]

I refer my hon. Friend to, for example, the 50p debate, which the hon. Member for Nottingham East (Chris Leslie) mentioned. In the days before the Budget there were five different versions of what was going to happen. One turned out to be correct and four turned out to be incorrect.

[Ian Lavery (Wansbeck) (Lab)]

We heard almost more information and detail on the Budget on Tuesday evening than we did on Wednesday evening. Was that due to the Liberal Democrats, was it due to the Conservatives, or were they simply all in it together?

[Mr Gauke]

My right hon. Friend the Chancellor set out yesterday a Budget for growth and for working people. There was an awful lot of information in it. It was an ambitious Budget, and one of which this Government are very proud.

[Mr Rob Wilson (Reading East) (Con)]

Does my hon. Friend agree that Budget leaks are to be deplored, as indeed is the alleged break-in at the Leader of the Opposition’s office, purportedly to find his Budget policies? I can inform the House that the would-be thief left empty-handed.

[Mr Gauke]

It would be a very foolish thief whose motivation was to find policies from the Leader of the Opposition.

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

Does the Minister agree that, if any profiteering took place due to leaking the announcement on stamp duty land tax, it would be morally repugnant? What action will he take if his secret leak inquiry finds evidence that it took place?

[Mr Gauke]

We ought to put the matter into proportion. The idea that someone would be able to identify a property and exchange contracts in the course of a morning is highly unlikely. As I have said, I have no reason to believe that the Treasury was in any way involved in briefing that particular item, but there was a lot of speculation that there would be something on properties, and that speculation turned out to be correct.

[Charlie Elphicke (Dover) (Con)]

Does the Minister agree that such discussion as that which took place between the coalition parties leading up to the Budget is more healthy—more open and transparent—for our democracy than leaving things all in the hands of one, lone control freak?

[Mr Gauke]

I certainly agree that we do not want to return to the days when a Chancellor, in close co-operation with his special adviser, worked in a sort of secret bunker, not sharing any information with anyone, including the Prime Minister. That is not healthy, and, as we saw, it did not result in sensible tax policy making.

[Paul Flynn (Newport West) (Lab)]

Is not the most serious aspect of leaks the further degradation of ministerial code reform? The Public Administration Committee has been told by the previous independent adviser on the code that the Prime Minister himself is in breach of the code. If the Committee decides unanimously that the present adviser on the code is not fit to hold office, should Sir Alex Allan resign?

[Mr Gauke]

That is clearly not an issue for the Treasury. The Government will respond to the points that the hon. Gentleman has raised in due course.

[Richard Graham (Gloucester) (Con)]

I would not dream of accusing anybody on the Opposition Benches of hypocrisy, but the last time I saw more assembled piety than there is on those Benches today was when I visited a Catholic convent in the southern Philippines in 1985. Has it occurred to the Minister, as it has occurred to me, that this urgent question is simply a distraction from the debate on a Budget for jobs and growth that helps working people? That is what my constituents in Gloucester want to hear us debate today.

[Mr Gauke]

I understand concerns about there being a debate before the Budget, but now Opposition Members do not seem to want a debate on Government measures after the Budget. I think we should have that debate.

[Harriett Baldwin (West Worcestershire) (Con)]

Given that the centrepiece of the Chancellor’s Budget yesterday was an increase in the personal tax allowance that gives a tax break to 24 million people on low and middle incomes, and given that that was in the coalition agreement, does the Minister agree that a journalist would not need to be Sherlock Holmes to speculate that that increase would be in the Budget?

[Mr Gauke]

My hon. Friend is absolutely right; that is in the coalition agreement. We have always said that we wanted to make progress on that, and I am delighted that we did yesterday.

[George Eustice (Camborne and Redruth) (Con)]

Does the Minister agree that it is typical of Labour Members to be obsessed by media headlines and spin when they ought to be doing what we do on the Government side of the House—make good policy?

[Mr Gauke]

My hon. Friend is absolutely right. Yesterday’s was a Budget of substance, this is a Government of substance and we will continue to get the country out of the mess that we inherited.

[Matthew Hancock (West Suffolk) (Con)]

The hon. Member for Nottingham East (Chris Leslie) based his case on different speculation in the newspapers about the future of the 50p rate. Does the Minister not recall that when the 50p rate was introduced by the previous Government, the first news of it came from a newspaper, not the Dispatch Box?

[Mr Gauke]

I am sure that my hon. Friend is absolutely right. My only query is that I thought it might have been on the television; but if he says it was in a newspaper, I am sure that he is right.

[Alun Cairns (Vale of Glamorgan) (Con)]

In 2005, the Evening Standard covered details of the entire Budget; in 2008, the Daily Mail covered the details of VAT and The Daily Telegraph had details on fuel; in 2009, The Observer covered details on youth jobs; in 2010, there were details on the green investment bank. Would my hon. Friend welcome at least some consistency in policy and practice rather than the lack of constructive opposition that comes from Labour Members?

[Mr Gauke]

I would welcome that consistency, but I do not expect it.

[Chris Skidmore (Kingswood) (Con)]

Before 10 o’clock this morning, the Labour party press office announced on Twitter:

“Urgent Question in the House this morning @ChrisLeslieMP calling for a Budget leak inquiry”.

Yet I understand from your office, Mr Speaker, that the urgent question was not officially announced to the House until exactly 10 o’clock. Will the hon. Member for Nottingham East (Chris Leslie) now call for a leak inquiry on that urgent matter?

[Mr Gauke]

Earlier this morning, the hon. Gentleman denied it. [Interruption.] He is shaking his head now, so he is clearly denying that that is the case. Presumably, it is reasonably easy to work out what time a Twitter post was made and to know what time the urgent question was announced. But it is not for me to lecture the Opposition; I am sure that they would be very concerned if there had been such a leak and they would be cracking down on it straight away.

[Mr Speaker]

It is not really a matter for the Minister. These matters are dealt with in a very specific and orderly fashion—the submission of a request, the consideration of the matter at the appropriate time of the day by my colleagues and me, and the disclosure of the result of the request to the interested parties. All was done—I know the hon. Member for Kingswood (Chris Skidmore) will be satisfied that it was—in an absolutely orderly way on this occasion as it is on every other.

[Duncan Hames (Chippenham) (LD)]

Has the Minister discussed this matter with his colleague the Chief Secretary to the Treasury? I have found the earliest published source of information on the Budget. It was written by my right hon. Friend the Chief Secretary—on the front page of the Liberal Democrat election manifesto nearly two years ago.

[Mr Gauke]

And it was all going so well. I confess that I have not spoken to my right hon. Friend the Chief Secretary this morning and that I have not read all that manifesto. But I would say that the Budget has Liberal Democrat policies and Conservative policies. It is a coalition Budget that is good for the whole country.

Business of the House

Thursday 22nd March 2012 Commons Chamber

12:15

[Ms Angela Eagle (Wallasey) (Lab)]

Will the Leader of the House please give us next week’s business?

[The Leader of the House of Commons (Sir George Young)]

The business for next week will be:

Monday 26 March—Conclusion of the Budget debate.

Tuesday 27 March—Motion relating to assisted suicide. The subject for this debate has been nominated by the Backbench Business Committee. Colleagues should be reminded that the House will meet at 11.30 am on Tuesday.



The business for the week commencing 16 April will be:

Monday 16 April—Second Reading of the Finance (No. 4) Bill.

Tuesday 17 April—Consideration of Lords amendments to the Legal Aid, Sentencing and Punishment of Offenders Bill.

Wednesday 18 April—Consideration in Committee of the Finance (No. 4) Bill (day 1).



Thursday 19 April— Consideration in Committee of the Finance (No. 4) Bill (day 2).

The provisional business for the week commencing 23 April will include:



Monday 23 April—Remaining stages of the Financial Services Bill (day 1).

[Ms Eagle]

I thank the Leader of the House for his statement.

Last week, I recommended to the Cabinet horses that they could back at the Cheltenham festival. Well, the verdict is in, and I have to announce that I will not be giving up the day job. Palace Jester, the horse that I recommended for the Deputy Prime Minister, was much talked about before the race and entered the field with high expectations, but it failed to live up to its overblown hype—it wilted at the first sign of pressure and ended up nowhere. That just proves that Palace Jester was exactly the right horse for the Deputy Prime Minister.

I have been forced to conclude that I am about as successful at tipping horses as the Chancellor is at managing the economy. Yesterday, the Chancellor made a rare appearance in the House to present his millionaires’ Budget. Although an appearance from him at the Dispatch Box is always a pleasant surprise, the content of the Budget certainly was not.

In future, the Government could dispense with the Budget Red Book altogether and just publish a collection of newspaper clippings; instead of delivering a Budget speech from the Dispatch Box, the Chancellor could just review last week’s papers. Will the Leader of the House undertake to update the House at next business questions on how the leak inquiry is going?

This time last year, the Chancellor said his budget would

“put fuel into the tank of the British economy.”—[Official Report, 23 March 2011; Vol. 525, c. 966.]

Since then, the economy has stalled, unemployment has risen and he is borrowing £150 billion more than he planned. What fuel has the Chancellor been using? After the lamentable record on growth, what was needed yesterday from the Chancellor was a Budget for jobs. Instead, we got a Budget that will be remembered for giving a huge tax cut to the richest 1%.

We were all astonished to learn from the Chancellor this morning that he was not a top rate taxpayer. The hunt is now on for the name of his accountant, who will surely find himself in spectacular demand. Given that the Chancellor has answered the question, surely the rest of the Cabinet should now do so too. Will the Leader of the House arrange for a note to be placed in the House of Commons Library listing which members of the Cabinet have benefited from the cut in the 50p rate?

Yesterday’s ideological Budget gave a £40,000 tax cut to the richest 14,000 people—wrong choice. Yesterday’s Budget introduced a stealth tax on pensioners to pay for that—wrong choice. Cuts to tax credits in April mean that 200,000 households will now be better off on the dole than in work—wrong choice. With VAT increased, fuel duty going up and child benefit cut, this is a Budget that leaves families £253 a year worse off—wrong choice.

It is not just the Government’s choices that are wrong; their entire philosophy is wrong. We now have a Government who believe that the top 1% will work harder if they are given a tax cut while everyone else can be made to work harder only by having their income cut. Will the Leader of the House find time for a debate on that notorious phrase, “We’re all in this together”? I have been trying to understand what the Chancellor could possibly have meant by it, so I looked up the word “all” in the Oxford English Dictionary, which said:

“All (noun): the entire number of; the individual components of, without exception.”

Having scoured the dictionary, I have to report to the House that I could not find a definition that excluded the top 1%, so will the Government be writing to the Oxford English Dictionary to ask it to correct its definition?

Were the Leader of the House to find time for a debate on the phrase, “We’re all in this together”, the Deputy Prime Minister could lead it, because he has claimed that this was a “Robin Hood” Budget. The Deputy Prime Minister had a very expensive education at Westminster school; what did they actually teach him? In my more modest school, we were told that Robin Hood took money from the rich and gave it to the poor, not the other way round. Every time I have asked the Leader of the House to find time for a debate on fairness, he has ignored my request, and now we know why. This was a Budget that was neither fair nor progressive and built unfairness on top of economic policies that have failed. Will the Leader of the House finally find time for a debate on fairness?

This week, Government Members waved their Order Papers for tax cuts for the richest 1% and the Cabinet banged the table when the Health and Social Care Bill was passed. Wrong choices; wrong philosophy; wrong ideology: same old Tories.

[Sir George Young]

It is perhaps unfortunate that the hon. Member for Wallasey (Ms Eagle) began by apologising for her tips on horses and then accused us of making all the wrong choices—not a good start. She apologised for her tips; I think she is going to have to start apologising for some of her jokes.

The hon. Lady asked a whole series of questions about the Budget. We have four days’ debate on the Budget. When we come back after the Easter recess, we will have a debate on the Floor of the House on the Finance Bill, and then two more days’ debate on the Finance Bill, as well as a debate on the Financial Services Bill. She asks me for time to debate these issues, but it seems that we are debating very little else over the next week or so. She and her hon. Friends have criticised us for taking a gamble with the Budget, but they took the gamble when they were in government by spending money they did not have and racking up debts that could not be paid.

On the hon. Lady’s comments about fairness, what was fair about selling off the nation’s gold at a record low price? What was fair about giving pensioners an insulting 75p a week increase in the state pension? What was fair about abolishing the 10p tax rate? What was fair about leaving this country with the biggest budget deficit in our history? Labour set back fairness in this country, not the coalition.

[Jessica Lee (Erewash) (Con)]

Will the Leader of the House kindly consider making time available for a debate on the Olympic legacy, with particular regard to the regions outside London and the south-east? In Erewash, Long Eaton United football club has recently been awarded £50,000 by Sport England—a very exciting investment that demonstrates how we must continue to provide support all round the country.

[Sir George Young]

My hon. Friend rightly draws attention to the benefits throughout the country of our hosting the Olympics. A firm in my own constituency is making tents for some of the Olympic sites. There is not only the spin-off impact of the purchasing but, as she says, the money that is being distributed by Sport England via the national lottery to promote sporting organisations in all our constituencies. Only last week, I was at two events where cheques for £50,000 were handed out to clubs in North West Hampshire; that is part of the Olympic legacy.

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

Given the number of occasions on which the House has discussed the situation in Sudan, does the right hon. Gentleman agree that it was a great pity that it took George Clooney to remind the international community that the situation there is getting worse and worse, day by day? May we have another debate of the whole House so that the Prime Minister can explain what actions he has taken, including whether he raised the matter with President Obama during his recent visit to America?

[Sir George Young]

The right hon. Gentleman rightly draws attention to the problems in Sudan. I commend the publicity that was generated last week in the United States. I cannot promise a debate in the near future, with the House rising next Tuesday for the Easter recess, but the right hon. Gentleman might like to apply to you, Mr Speaker, for a debate in Westminster Hall or on the Adjournment so that we can address this urgent matter when we return.

[David Mowat (Warrington South) (Con)]

The Leader of the House will recall the “Newsnight” revelations before Christmas that the head of the Student Loans Company was not having tax deducted at source. The Government subsequently initiated an inquiry across all areas of the civil service, but that did not include the BBC. Having submitted a freedom of information request to the BBC, this week I received a reply indicating that 41 non-talent-based members of its staff are being paid over £100,000 a year and are not having tax or national insurance deducted at source. Will the Government find time for a debate on the abuse of tax regulations in the public sector?

[Sir George Young]

I am grateful to my hon. Friend. The Government have made the position clear in so far as the civil service is concerned. As he will know, the BBC is an independent organisation, but I am sure that his question will have been heard by those at the BBC and that they will want to respond to the points that he made in the light of the FOI request that he has recently had answered.

[Ian Murray (Edinburgh South) (Lab)]

My constituents in Bruntsfield and Morningside are becoming increasingly concerned about the proliferation of mini-supermarkets, which are having a significant impact on local traders. May we have time allocated for a debate on the number of mini-supermarkets in our local communities and the detrimental effect that that is having on local traders?

[Sir George Young]

I am grateful to the hon. Gentleman for raising a key issue. I think that the Backbench Business Committee held a debate in January on the subject of the future of the high street and the Mary Portas inquiry. The Government have said that they will respond to that inquiry in the spring. I hope that it might be possible, perhaps with the assistance of the Backbench Business Committee, then to revisit this issue to see whether we can get the balance right between the supermarkets and the imperative to have a flourishing high street full of smaller shops.

[David Tredinnick (Bosworth) (Con)]

Will my right hon. Friend tell the House when he expects the remaining demonstrators to leave Parliament square and when he expects the road works outside Derby Gate to be completed, as apparently it has taken three months for two valves to be put on to a defective water main there?

[Sir George Young]

I will make inquiries about the last matter. I commend my hon. Friend’s work over many years in campaigning for Parliament square to be restored to its traditional glory. He will know that all but one of the encampments have been removed. I believe that the last remaining encampment is subject to an injunction that is to be heard quite soon. On the works on Parliament street, he will know that that is a matter for Westminster council, and I will raise it with the council. I am grateful to him for his initiative in ensuring that the road surface opposite the House of Lords is now much flatter, which is of great assistance to those of us who go on two wheels.

[Phil Wilson (Sedgefield) (Lab)]

May we have a debate in Government time to congratulate the previous Labour Government on their ability to attract inward investment? The announcement on GlaxoSmithKline that was made in the Budget yesterday is a result of what we introduced in 2009. Similarly, the Hitachi train-building factory which, as announced last year, is going to be built in my constituency comes as a direct result of Labour’s growth strategy. Does the Leader of the House think that we should have that debate, given that the only aspect of yesterday’s Budget that referred to growth was the result of Labour policy?

[Sir George Young]

I have seen the Glaxo press notice and, like the hon. Gentleman, I welcome the creation of new jobs. The press notice mentioned the confirmation in yesterday’s Budget of a specific regime for patents. I am not sure that the hon. Gentleman is entirely correct in claiming the credit for the company’s decision. I think that Government Members can share in the glory.

[Mark Garnier (Wyre Forest) (Con)]

Next week, I am holding a jobs fair in Kidderminster to provide practical support not just for the unemployed, but for local businesses that are seeking to expand. Will my right hon. Friend find time for a debate on how the Government can support local initiatives, such as my jobs fair, to stimulate the economy at a grass-roots level?

[Sir George Young]

I commend my hon. Friend’s initiative in Kidderminster to bring together employers and those looking for work. He may have an opportunity during the debate on the Budget to develop his point further. With the Work programme, which is helping more than 3 million people, the more than 400,000 apprenticeships this year, the youth contract and the work experience programme, there are a lot of initiatives that the Government are taking. It is up to each Member of Parliament to ensure that the benefits of those programmes filter through to their constituency. I commend him for the initiative that he has taken.

[Ann Coffey (Stockport) (Lab)]

The Chancellor announced yesterday that the Government plan to legislate to suspend the Sunday Trading Act 1994 for eight Sundays to coincide with the Olympics. There is concern that that is less to do with the Olympics than with testing the water for a permanent repeal of the Act. Will the Leader of the House confirm that it will be limited legislation, as announced by the Chancellor yesterday?

[Sir George Young]

I confirm exactly what the hon. Lady has said. Any legislation will have to pass through both Houses and will be subject to discussion through the usual channels. It will apply only to the Sundays during the Olympics and Paralympics, so it will be strictly confined to that period. It is not our intention at this stage to go for the wider reform to which she referred.

[Mr Julian Brazier (Canterbury) (Con)]

May I urge my right hon. Friend to grant a debate on the European arrest warrant? My constituent, Graham Mitchell, was acquitted 18 years ago of attempted murder in Portugal, after being held in prison for more than a year. The prosecutor fell asleep during the course of the trial and the assailant did not identify Mr Mitchell as his attacker. Eighteen years on, a new application has been made to take him to Portugal on a charge of murder, when the victim is alive and well and playing golf, I believe, in Germany.

[Sir George Young]

I commend my hon. Friend for championing the cause of his constituent. The case has received some publicity recently. He will know that I cannot comment on an individual case. I gather that it has been adjourned until 28 March. My right hon. Friend the Home Secretary is looking at the Scott Baker report and hopes to make her conclusions available shortly. In the meantime, we are asking EU countries to observe the principle of proportionality in considering whether such an arrest warrant is appropriate.

[Andrew Miller (Ellesmere Port and Neston) (Lab)]

I have received a letter from the Department of Health explaining that it is not yet in a position to respond to the report of the Select Committee on Science and Technology on alcohol. Yesterday in the Budget, at column 803 of Hansard, the Chancellor said that the Government would make an announcement on the subject shortly. Will the Leader of the House ensure that the Select Committee receives a proper reply from the Government ahead of that statement, in time for us to have a proper discussion and respond to the Government’s response?

[Sir George Young]

I commend the work done by the Select Committee. I will make inquiries, but I cannot give a categorical undertaking that we will respond in what will probably be a short time scale, given that we want to make progress with our alcohol strategy. However, I will make inquiries and write to the hon. Gentleman.

[Andrew Stephenson (Pendle) (Con)]

The Leader of the House may be aware that last year I tabled early-day motion 1518, following the assassination of the Pakistani Minister for Minorities, Shahbaz Bhatti.

[That this House condemns the assassination of Shahbaz Bhatti, the Pakistani Minister for Minorities, who was the only Christian in the cabinet; notes that this comes only days after the government of Pakistan’s retention of a minorities representative in the new cabinet and the Ministry for Minorities Affairs as an independent ministry; recognises the significant advances made in the interests of minority rights and interfaith dialogue by the Federal Minister Shahbaz Bhatti through this ministry; expresses concern at the ongoing misuse of the provisions of section 295 of the Pakistan Penal Code, known as the blasphemy laws, and the threats posed to all who challenge this legislation; and urges the government of Pakistan to reconsider reviewing the blasphemy laws as a matter of urgency.]

After speaking with the British Pakistani Christian Association earlier this month, I tabled early-day motion 2807 to mark the anniversary of Mr Bhatti’s death and to continue to raise awareness of the plight of minority communities in Pakistan. Will the Leader of the House find time for a debate on that important issue?

[Sir George Young]

My hon. Friend refers to an appalling and cowardly assassination, which struck at the heart of democracy and freedom of expression in Pakistan. Alongside our European partners, we will continue to intervene on human rights issues in Pakistan, where we believe we can make a positive difference. We engage regularly with the Government of Pakistan on this particular matter, along with broader matters that raise the same issues.

[John Robertson (Glasgow North West) (Lab)]

Following the written statement on military afloat reach and sustainability—MARS—ships that was sneaked through Parliament and my debate on the matter on Monday night, may I ask the Leader of the House for a statement or a debate on the Floor of the House so that we can discuss grey ships and warlike ships and the Government’s policy on protecting the jobs of maritime workers?

[Sir George Young]

I know that the hon. Gentleman had an Adjournment debate earlier this week. If we had another debate, I am not sure whether the Government would be able to add to what the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk) said in response to the hon. Gentleman. I will raise his concerns again with my hon. Friend and see whether there is anything that he can add to what he said earlier this week.

[Andrew Jones (Harrogate and Knaresborough) (Con)]

Work has started on a building project to create a new cancer care centre at Harrogate district hospital. It will be called the Sir Robert Ogden Macmillan centre and is named after a generous benefactor. Further funding has come from Macmillan Cancer Support and the local foundation trust. It will be a welcome addition to patient support in the area. May we have a debate on improving cancer care across our NHS?

[Sir George Young]

I applaud the generosity of Sir Robert Ogden in making those funds available. It is right that the building should be named after him. My hon. Friend will have read “Improving Outcomes: A Strategy for Cancer”, which was published in January last year. It outlines our commitment to improve outcomes for cancer patients and to save 5,000 additional lives every year by 2014-15. I understand that the new centre to which my hon. Friend referred is being funded jointly by Macmillan Cancer Support, the local NHS foundation trust and the donation. That is exactly the sort of progress that we want to see to enable us to hit our cancer targets.

[Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)]

My constituents in Cumbernauld, Kilsyth and Kirkintilloch were delighted to learn this week that the Olympic torch will be relayed through Cumbernauld on 13 June. That is particularly appropriate given that the British female handball captain hails from Cumbernauld. May we have a further debate on how we can ensure that everyone in the United Kingdom can get involved in these great Olympics? That is very important for the good of the country.

[Sir George Young]

We have just had questions to my colleagues at the Department for Culture, Media and Sport. I am not sure whether the hon. Gentleman was able to intervene in those exchanges. The issue of how we will ensure that the benefits of the Olympics are broadly shared throughout the country has been debated in recent exchanges and debates involving DCMS. I will see whether there is anything that we can say to the hon. Gentleman that impacts directly on his constituency. I hope that the handball captain leads her team to success.

[Jake Berry (Rossendale and Darwen) (Con)]

May I start by saying that I have given notice to the right hon. Gentleman to whom I will refer in this question? I join my hon. Friend the Member for Warrington South (David Mowat) in calling for a debate on the morally repugnant use of service companies by those in public life to avoid paying their fair share of tax. In that debate, can we look in particular at the tax arrangements of the Labour candidate for Mayor of London and the recent publication of the accounts for the Office of Gordon and Sarah Brown Ltd?

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

On a point of order, Mr Speaker.

[Mr Speaker]

The point of order will come after the business question. The hon. Gentleman should hold his horses. I am sure that he will.

[Sir George Young]

I hear what my hon. Friend says. We are, of course, having a debate on the Budget. My right hon. Friend the Chancellor made clear his views on tax evasion and what he called “aggressive tax avoidance”. I am sure that it would be in order to talk about the tax loopholes that are being closed by the Government during the Budget debate, as long as one remains within order.

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

May we have a Government statement to clear up the confusion about the cut to the top rate of income tax? A study published during the Budget suggests that it will cost the country billions of pounds if the Government’s assumptions are incorrect. If we are going to clear that up, perhaps the Leader of the House will also accept the suggestion of the shadow Leader of the House that he may wish to put in the Library a list of the Cabinet members who will benefit personally from this give-away, so that we can see from where the motivation for it might have come.

[Sir George Young]

This country has never adopted the practice that they have in the United States, whereby all those who stand for public office have to file their tax returns. If that is the hon. Gentleman’s proposition, I am sure that he can make the case during the Budget debate, but it is not our intention to introduce it. On the 50p tax rate, I just make the case that for 13 years, the Labour party did not introduce a 50p rate of tax. It left it to us, along with a letter saying that no money was left in the Treasury.

[Alun Cairns (Vale of Glamorgan) (Con)]

The Chancellor made the excellent announcement yesterday that Cardiff was to be included in the urban broadband fund. May we have a statement by the Secretary of State for Culture, Media and Sport on the details of the procurement and roll-out of that fund, to see whether neighbouring authorities can benefit from the investment in that area?

[Sir George Young]

There has just been an exchange on the Government’s broadband policy in Culture, Media and Sport questions, but I will follow up my hon. Friend’s question by asking the appropriate Minister to write to him to see to what extent companies and people outside the immediate area can benefit from the roll-out of broadband in Cardiff.

[Kevin Brennan (Cardiff West) (Lab)]

Further to the question asked by my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds), can we have a statement on the Cabinet and the higher rate of tax? The Twitter account of The Sun is reporting that friends of the Prime Minister say he pays the higher rate of taxation. We have not heard anything from friends of the Chancellor—or does he not have any left after mugging the nation’s grannies yesterday?

[Sir George Young]

Why should this outbreak of openness be confined to Members on the Government Benches? I hope that the hon. Gentleman will try to persuade all his friends in his party to be as open and transparent as he apparently wants us to be.

[Neil Carmichael (Stroud) (Con)]

Many constituencies such as mine have a large number of houses that are vulnerable to flooding. Can we find a way of ensuring that flood maps demonstrate and clearly indicate the impact of flood defences and natural defences when flooding risk assessments are made, so that home owners and insurers can make sensible judgments?

[Sir George Young]

My hon. Friend raises an important issue. Those maps can have a devastating effect on people who are trying to sell their houses, and it is important that they are up to date. He will know that the Government and the Association of British Insurers are committed to ensuring that flood insurance is available to everyone who needs it, and there is an ongoing programme of discussions with the insurers to ensure that we can achieve that objective. I will draw the issue of flood maps to the attention of my hon. Friends at the Department for Environment, Food and Rural Affairs, to ensure that the maps that are used are as accurate as possible and there is no collateral damage to people whose properties are not really at risk of being flooded.

[Ian Lavery (Wansbeck) (Lab)]

I have written to the Secretary of State for Business, Innovation and Skills and the Minister of State, Department for Work and Pensions, the right hon. Member for Epsom and Ewell (Chris Grayling), with regard to the urgent situation of the alarming unemployment statistics in my constituency. I asked for an urgent meeting, and one refused and the other said I would have to wait in excess of 30 days for a reply. Due to the urgency of the matter, will the Leader of the House make time to discuss unemployment rates in the north-east, and particularly in my constituency?

[Sir George Young]

The hon. Gentleman does a first-class job of championing the cause of those in his constituency who are out of work. Of course he is entitled to a response to the letter or questions that he sent to my colleagues, and I will do what I can to chase that up and ensure that he gets a prompt reply.

[Bob Blackman (Harrow East) (Con)]

Among the excellent measures announced in the Budget yesterday was £70 million of additional funding for London for the Growing Places fund, which will help Mayor Boris Johnson produce 200,000 new jobs over the next four years. That brings into sharp contrast the choices before Londoners on 3 May. May we have an urgent debate on those choices?

[Sir George Young]

I would welcome such a debate, but I am not sure I can find time for it out of the Government’s allocation in the remainder of this Session. We will be debating the Budget from now until Monday evening, and it would be perfectly in order for my hon. Friend to raise the matter at greater length in the debate and get a response about the £770 million of funding for the Growing Places fund, some of which has been allocated to London. The Mayor of London will complement that with his own resources, to give new opportunities to those who live in London who are looking for a job.

[Several hon. Members]

rose—

[Mr Speaker]

As usual, there is a lot of interest. I am keen to accommodate that interest, but we do now require extreme brevity—not preamble, but short, single-sentence questions, please.

[Paul Flynn (Newport West) (Lab)]

As the person who perpetrated the terrible atrocities in Toulouse claims to be a former al-Qaeda bomber who escaped with 500 others from Kandahar prison with the collusion of Karzai and his army and jailers, may we now debate why we tell our brave soldiers to dismantle bombs? The only reason is so that the perpetrators can be identified and jailed. As that is now a futile occupation, because the perpetrators escape almost at will, should we not debate the issue now and allow our soldiers to destroy bombs at distance?

[Mr Speaker]

I think that sentence contained a lot of commas and semi-colons, but I do not recommend that it be imitated by other colleagues.

[Sir George Young]

I say to the hon. Gentleman, who has pursued this issue with dogged ferocity, that there will be questions to my right hon. Friend the Secretary of State for Defence on Monday, which might provide him with an opportunity to pursue it with Ministers who have the answers at their fingertips.

[Simon Hart (Carmarthen West and South Pembrokeshire) (Con)]

May we have a statement or a debate on the Government’s plans for gift aid? A number of charities are finding it difficult to access the gift aid that they are due.

[Sir George Young]

I commend my hon. Friend for the question that he asked, I think, yesterday, and I commend the work of the air ambulances. We are committed to an online filing system for charities to claim gift aid, which will come online in 2012-13. I hope that will make it easier for charities to reclaim the money that they are owed and drive up the resources available for the causes that they promote in his constituency and others.

[Diana Johnson (Kingston upon Hull North) (Lab)]

Can we please have a debate on the Government’s plans to introduce VAT on holiday caravans? Their impact assessment states that that will probably result in a 30% reduction in demand for holiday caravans, which will have a particular impact in Hull, where we manufacture a lot of caravans. It will also have an impact on families who want to go on holiday and spend a week in a rented caravan, because hire prices will go up.

[Sir George Young]

If such a measure requires legislation, the Finance Bill has its Second Reading when we come back and there may be an opportunity for the hon. Lady to raise the matter.

[Jeremy Lefroy (Stafford) (Con)]

May we have a debate on the importance of the teaching of foreign languages to export performance, so that we can ensure that young people such as those who participate in the excellent Stafford and Stone young enterprise programme can spearhead the UK’s export growth in future?

[Sir George Young]

I very much hope that schools and colleges give priority to foreign languages that will help us win exports in competitive world markets. I commend the work in my hon. Friend’s constituency, where that is clearly seen as a priority.

[Valerie Vaz (Walsall South) (Lab)]

May we have an urgent debate on how we can extend the Freedom of Information Act to commissioning support groups? Under the Health and Social Care Bill they will not be statutory bodies, so no one will be able to get access to the information that they have, and they are set to be privatised by 2016. How will the public find out information that was previously available from primary care trusts but will not be available from commissioning support groups?

[Sir George Young]

The hon. Lady raises a good question. There will be Health questions on Tuesday, when there may be opportunity for her to ask it, but I will in any event raise it with the Secretary of State for Health and ask him to write to her, to ensure that information that should be in the public domain remains so.

[Angie Bray (Ealing Central and Acton) (Con)]

Many of my younger constituents will be delighted with the news about the enterprise loans announced in yesterday’s Budget, which will help them set up their own businesses. May we have a debate on how we can build on such measures to help our young entrepreneurs?

[Sir George Young]

We can indeed have such a debate, and it will commence when business questions finish. I am delighted to hear that the enterprise loans scheme is alive and well in my hon. Friend’s constituency, with which I have some acquaintance. We all have a role to play in making information about it available in our constituencies, so that young people can get access to those loans, build their own businesses and help build a thriving community in west London.

[Matthew Hancock (West Suffolk) (Con)]

We on the Government Benches care deeply about tackling tax avoidance, so when will the legislation come in to tackle the offshore gambling tax loophole? That was announced in the Budget yesterday and is vital for many of my constituents.

[Sir George Young]

I cannot anticipate what may or may not be in the Queen’s Speech on 9 May, but my hon. Friend is right that measures were announced that need legislation. As Leader of the House, I can say that they are on my radar.

[Stephen Hammond (Wimbledon) (Con)]

In the Budget yesterday, £130 million extra for London’s infrastructure was announced. May we have a debate on the coalition’s continuing commitment, combined with that of the Mayor of London, to the continual improvement of London’s infrastructure?

[Sir George Young]

As my hon. Friend knows, Crossrail is under way, and it would be wholly in order for him to develop that point at greater length in the Budget debate—perhaps tomorrow, if he is around. The Minister who replies to that debate will set out the coalition Government’s view on infrastructure. My hon. Friend will also have seen what the Prime Minister said in his speech on Monday about developing new models for financing infrastructure in this country.

[Chris Williamson (Derby North) (Lab)]

Can we have an urgent debate on the implications of the Government’s decision to cut the Environment Agency’s budget for flood defence work, because that is having a significant impact on my constituents in Darley Abbey and Chester Green, who are potentially exposed to devastating flooding and escalating—indeed, rocketing—home insurance bills?

[Sir George Young]

As the hon. Gentleman will know, the Government have had to take difficult decisions in order to get expenditure back under control, but I will pursue the issue he raises through the Under-Secretary of State for Environment, Food and Rural Affairs, my hon. Friend the Member for Newbury (Richard Benyon), and see whether the Environment Agency, which might be the funding body, has resources available to tackle it.

[Karen Bradley (Staffordshire Moorlands) (Con)]

The town of Leek—spelled with two Es rather than an E and an A—has been at the forefront of the arts and crafts movement and was a centre for silk printing for more than 100 years. However, sadly, that silk industry died out about 20 years ago. I am therefore delighted to learn that British clothes maker, Bonsoir of London, has started printing silk in Leek again. Will the Leader of the House find time for a debate on how we promote economic growth and prosperity by reviving traditional trades such as silk printing in Leek?

[Sir George Young]

I am delighted to hear of the revival of that industry in my hon. Friend’s constituency. It will be possible to raise that during the Budget debate. The Government have launched a number of programmes to assist manufacturing, including a £75 million programme to help small and medium-sized enterprises to take on apprenticeships. We have also set up the launch of a series of high-value manufacturing technology centres and a programme of manufacturing fellowships, and, of course, we have the regional growth fund and other initiatives. The Government recognise the challenge to which my hon. Friend refers, and a number of funding sources are available to promote progress.

[Glyn Davies (Montgomeryshire) (Con)]

We all depend on the regional media to spread public understanding of serious politics and activities in the House, and we must all be concerned when a reduction in regional media coverage is threatened. In Wales, we are particularly dependent on BBC Wales. Will the Leader of the House arrange an early debate on the plans of our regional media in the nations and regions of the UK to ensure that we have proper, serious coverage of politics?

[Sir George Young]

I agree entirely with what my hon. Friend says on the importance of regional media. We have just had Department for Culture, Media and Sport questions, when there might have been an opportunity to raise that. We have put the BBC’s funding on a more stable basis for the foreseeable future, and I will ensure that the BBC hears what my hon. Friend says and see whether appropriate resources are being allocated to the regional media that cover his constituency.

[Mr Speaker]

Just before we move to the next business, there is one matter with which I should like to deal. In the course of business questions, the hon. Member for Rossendale and Darwen (Jake Berry) prefaced his question by indicating that he had notified the right hon. Member to whom he was about to refer in advance of coming to the Chamber. I simply want to say this to the hon. Gentleman and the House: advance notification to a Member of an intention to refer to that Member is, of itself, not sufficient; much depends on what is then said. I say for the benefit of the hon. Gentleman and the House that where an accusation or implication of possible improper conduct is made, that must be done either by a reference to the Parliamentary Commissioner for Standards or upon a substantive motion. It should not be done in the course of a question. That was wrong, and a discourtesy—unintentional, I am sure—to the House. Therefore, I invite the hon. Member for Rossendale and Darwen to apologise to the House for that discourtesy. He should now rise from his seat and apologise for that discourtesy, which I accept and am sure was unintentional.

[Jake Berry]

Mr Speaker, I apologise for an unintentional discourtesy to the House.

[Mr Speaker]

I am grateful to the hon. Gentleman for his apology. I think that deals with the matter.

Ways and Means

Thursday 22nd March 2012 Commons Chamber

Budget Resolutions and Economic Situation

Thursday 22nd March 2012 Commons Chamber

Amendment of the Law

Thursday 22nd March 2012 Commons Chamber

Debate resumed (Order, 21 March).

Question again proposed,

(1) That it is expedient to amend the law with respect to the National Debt and the

public revenue and to make further provision in connection with finance.

(2) This Resolution does not extend to the making of any amendment with respect

to value added tax so as to provide—

(a) for zero-rating or exempting a supply, acquisition or importation,

(b) for refunding an amount of tax,

(c) for any relief, other than a relief that—

(i) so far as it is applicable to goods, applies to goods of every description, and

(ii) so far as it is applicable to services, applies to services of every description.

12:49

[Ed Balls (Morley and Outwood) (Lab/Co-op)]

The British economy is stagnating, unemployment is rising month by month, the Government’s deficit reduction plans have gone wildly off track, middle and lower-income families and pensioners are facing rising petrol prices, rising energy bills and falling living standards—and what did the Chancellor do in his Budget yesterday? Did he admit that his economic plan has failed? Did he act to kick-start the stalled recovery? Did he give any hope to young people facing long-term unemployment? Did he set out any vision of how, over the next 20 years, Britain can compete in the world and win the investment and skilled jobs we need? Did he ease the pressure on families by cutting fuel duty, or by cancelling perverse and unfair cuts to tax credits and child benefit? No. The centrepiece of the Chancellor’s Budget, his top priority, and the political imperative for this oh so political Chancellor, was to spend more than £3 billion next year cutting the top rate of income tax for existing top rate taxpayers. People earning more than £150,000 a year—300,000 of them—are getting an average tax cut of £10,000 a year. How out of touch can he get?

To add insult to injury, the Chancellor sprung another surprise tax rise by freezing the age-related personal allowance for 4.5 million pensioners and abolishing it entirely for soon-to-be pensioners. People on modest incomes who have worked hard and saved hard all their lives will be hit by the Chancellor’s tax grab on pensioners while he gives a £40,000 tax cut to 14,000 millionaires. What can we say about that?

[Andrea Leadsom (South Northamptonshire) (Con)]

rose—

[Michael Fallon (Sevenoaks) (Con)]

Will the right hon. Gentleman give way?

[Ed Balls]

I will in a moment.

Let me say to the Chancellor today: some of the electorate he really cares about—the selectorate in his own Conservative party—may be cheering, although after this morning’s headlines, I am not so sure.

[Andrea Leadsom]

Will the right hon. Gentleman give way?

[Ed Balls]

I will in a second—I look forward to it.

As the Financial Times reports this morning:

“Some Tory backbenchers offered support for the measure”—

on pensioners—

“although they refused to be identified for fear of alienating their elderly constituents.”

Perhaps in a second some of those Conservative Back Benchers will break cover and back the pensioners tax grab in the Budget, but they are right to be worried, because all across the country, the real electorate will be thinking, “A tax cut for millionaires, paid for by millions of families and pensioners across this country? Same old Tories: looking after their friends while families and pensioners pay the price.”

[Andrea Leadsom]

Will the right hon. Gentleman give way?

[Ed Balls]

I will happily give way to the hon. Lady. Perhaps on behalf of the thousands of pensioners in her constituency who will lose from the tax grab, she will tell us whether she supports the Chancellor.

[Andrea Leadsom]

I am grateful to the shadow Chancellor. Is he as delighted as I am that we will be introducing within the next couple of years a single, unmeans-tested pension at a significantly higher rate than the current one?

[Ed Balls]

We will have to wait to see the details. There will be some winners and some losers, but the one thing that we can categorically confirm today is that thousands of pensioners in the hon. Lady’s constituency will lose up to £300 a year as a result of yesterday’s Budget. She did not say whether she supported that—hardly a clarion call of support for the Chancellor’s pensions tax grab.

[Michael Fallon]

Could the shadow Chancellor make it absolutely clear—yes or no—whether he would restore the age-related allowance if he came to power?

[Ed Balls]

I will make it absolutely clear: we will vote against the change in the Budget debates and I hope that he will join us in the Lobby. We will vote against it, but the Chancellor knows very well that I will not go through every tax rate, relief, allowance or spending commitment and make commitments for three years’ time. But if the election were called tomorrow, our manifesto would be clear—we would rescind the measure and the Government would go ahead with it. That is the difference.

[Lindsay Roy (Glenrothes) (Lab)]

I am a relative newcomer to the House, so can my right hon. Friend explain what he means when he says, “The same old Tories”?

[Ed Balls]

The same old Tories who thought in 1988 that it was right to cut the top rate of tax for the richest people in our country and who now think that having a second Lawsonian Budget is a good idea. It is important to remember that after hubris comes nemesis. It did not take long for Nigel Lawson to find out the error of his ways.

We set two tests for this Budget. First, does it kick-start the recovery and boost growth and jobs? Secondly, is it fair? The Chancellor has failed them decisively. On growth and jobs, I remind the House what the Chancellor said a year ago in his Budget speech:

“we will create jobs and support families. We have put fuel into the tank of the British economy.”—[Official Report, 23 March 2011; Vol. 525, c. 966.]

Since then, our economy has ground to a halt and thousands of people have lost their jobs.

I remind the Chancellor of what he said in August, when Parliament was recalled:

“Those who spent the whole of the past year telling us to follow the American example…need to answer this simple question: why has the US economy grown more slowly than the UK economy”?—[Official Report, 11 August 2011; Vol. 531, c. 1108.]

What has happened since? Spurred on by the Obama stimulus, the US economy has been growing and unemployment falling. Here in Britain, our economy has flatlined and unemployment has been rising month after month. It does not look much of a safe haven to me.

What did we get in the Budget? We got a gaping hole when we so badly needed action to kick-start the recovery—Labour’s five-point plan for jobs and growth. We will not get the deficit down unless we have a plan for jobs and growth to get our economy moving and get people off the dole. When we needed a vision for the future, a modern industrial policy, what did we get? Roads privatisation and a credit-easing scheme that even the Office for Budget Responsibility says is not large enough to have any material impact.

Just look at the verdict from the OBR. The Chancellor claims it was a Budget for growth. But the OBR has downgraded its forecast for growth next year. What did it say about the ragbag of measures he announced? It said:

“We have made no other material adjustments to the economy forecast as a result of Budget 2012 policy announcements.”

It will have no impact as a growth plan.

The Chancellor claimed that it was a Budget for jobs, but not only does the OBR expect to see unemployment rising, it has increased its forecast for unemployment compared to November by 100,000—100,000 more people out of work at the end of the forecast period. As for the budget deficit, the OBR forecast confirms that the Chancellor is now set to borrow £150 billion more in this Parliament compared to his forecast at the time of the spending review. So much for “expansionary fiscal contraction”. To put it politely, that is oxymoronic. In plain language, it is just moronic.

On fairness, the Chancellor has failed too. Twenty-four hours after the Chancellor rose in the House, the full reality of the Budget is sinking in. At a time when fuel and food bills are going up for families on middle and low incomes, the Chancellor has added to them all. Whatever he says about the personal tax allowance, a family with children earning £20,000 will lose £253 a year from April. Nearly 4.5 million pensioners—[Interruption.] I am sorry for the stammer. Nearly 4.5 million pensioners who pay income tax will lose an average of £83 next April, and people turning 65 next year will lose up to £322.

At the very same time, the Budget gave a tax cut to the richest people in our country. The money could have been used to cut fuel duty or reverse perverse cuts to tax credits. It could have been used to put police officers on the beat. Instead, the Chancellor chose to cut taxes for the 300,000 top rate taxpayers.

[Stephen Hammond (Wimbledon) (Con)]

I must have missed it, but for the sake of clarity does the shadow Chancellor intend to put the top rate of tax back up to 50%?

[Ed Balls]

I am just coming to the issue of the top rate of tax. The Chancellor tries to claim that the top rate of tax does not raise any money, and that he is raising in stamp duty and tax avoidance five times the cost of cutting the top rate of tax. But his own HMRC report makes the true position clear, in table A2 on page 51. It says that next year he will give £3.01 billion in tax cuts to existing and legitimate top rate taxpayers, paid more than £150,000. That is a fact. That is six times more in tax cuts to the richest than he is raising in the stamp duty and tax avoidance measures. He is gambling that this will then bring in £2.9 billion in new tax revenues from people currently not paying tax, without any hard evidence to justify that claim—an estimate that the OBR says in the Budget documentation is “highly uncertain” and could lead to a much higher cost.

The head of the OBR said last night:

“This is a judgement based on not even a full year’s data based in terms of how people have responded to the 50p rate, in particular in terms of those self assessment tax-payers.

The costing of these sorts of changes is by no means unarguable”.

Just a few weeks ago, the Institute for Fiscal Studies said:

“If the future of the 50p rate is to be determined on the basis of evidence...then Budget 2012 will be too soon to form a robust judgement.”

Another expert has said on these matters:

“Some believe that if taxes on the wealthy are cut, new revenue will miraculously appear. I think their reasoning is this—all those British billionaires who demonstrate their patriotism by hiding from the taxman in Monaco or some Caribbean bolt-hole will rush back to pay more tax but at a lower rate. Pull the other one.”

That was the Business Secretary speaking to the Liberal Democrat conference last September. Pull the other one indeed. A £3 billion tax cut giving £10,000 each to 300,000 taxpayers and we are supposed to believe that all these people in tax havens are suddenly going to say, “I want to pay more tax.” Let me say to the Chancellor, “Pull the other one, it’s got bells on.”

[Harriett Baldwin (West Worcestershire) (Con)]

May I therefore assume that a 50p tax rate will be in the shadow Chancellor’s next manifesto?

[Ed Balls]

There will be a vote next week, and we will vote against the 50p change. It is the wrong tax cut at the wrong time. I have always said that no tax rate is set in stone, but how can anyone believe it is right to take tax credits from working families, child benefit from middle-income families and more tax from pensioners, but give £10,000, on average, to every top rate taxpayer in the country? If there were a general election tomorrow, our manifesto would state clearly that we would reverse it. That is the clearest answer I will give.

[Thomas Docherty (Dunfermline and West Fife) (Lab)]

Does my right hon. Friend think it would be helpful, ahead of next week’s debate, for the Prime Minister to place in the Library a list of which members of the Government will benefit from that cut in the top rate?

[Ed Balls]

I think we should leave people’s trust funds out of this. I will come back to that in a moment, but I will not press the Government on it.

The Chancellor took a reckless gamble on jobs and the economy, the Prime Minister and the Chancellor have taken a reckless gamble on NHS reform and police cuts, and now the Chancellor is taking a reckless gamble with the fairness of our tax system by handing out massive tax cuts to legitimate taxpayers in the hope—based on no evidence—that the cuts will pay for themselves by somehow bringing all the tax avoiders back into the fold. That is a fact.

[Angie Bray (Ealing Central and Acton) (Con)]

Will the right hon. Gentleman confirm that under the previous Labour Government the 50p tax rate applied for just 37 miserable days and that for the rest of the time their tax on the highest income earners was lower than under the coalition Government?

[Ed Balls]

In reply, let me quote what the Chancellor said in October 2010:

“The public must know that the burden is being fairly shared. That's why I said last year: we are all in this together. And I am clear…that those with the most, need to pay more. That is why… I have stuck with the 50p tax”—

the Chancellor of the Exchequer, Conservative party conference, October 2010. Eighteen months on, what has changed? The public still want the burden to be fairly shared, but far from keeping the top rate of tax, he is ditching it.

Let me read another quote. In October 2009, the Chancellor said:

“we could not even think of abolishing the 50p rate on the rich while at the same time I am asking many of our public sector workers to accept a pay freeze to protect their jobs. I think we can all agree that would be grossly unfair.”

We can all agree on that. What has changed? What is the truth? It was all a con. The mask has slipped. To 200,000 families struggling on less than £17,000 a year, he says, “I’m going to cut your tax credits to make you work harder”, but to the highest earners, he says, “I’m going to cut your taxes because if I don’t, you won’t work hard and pay your taxes.” That is it. To make the poor work harder, the Chancellor makes them poorer. To make the rich work harder, he makes them richer. Does that not tell us everything we need to know about the Chancellor? He is cutting tax credits for the poor, cutting child benefit in the middle, cutting tax help for pensioners and cutting taxes at the top. That is his priority.

[Christopher Pincher (Tamworth) (Con)]

It is apposite that the shadow Chancellor used the word “con”. If he believes that the top rate of tax is about economics, not politics, why, in 13 long years, when they had the money, time and majorities, did the Labour Government not introduce that top rate of tax?

[Ed Balls]

We all agree that, after the global financial crisis, tough choices need to be made on tax spending and pay to get the deficit down, and we all agree that it needs to be done fairly. Two years ago, the Chancellor said that he had a plan—with tax rises and spending cuts, the economy would grow and unemployment would fall—but he has had to come back to the House and announce further tax rises because his plan is not working. But who is paying more tax? The pensioners. And who is getting a tax cut? The millionaires. That is the reality.

The Liberal Democrats call this a Robin Hood Budget, but they have got it the wrong way around. Robin Hood took from the rich to give to the poor, but the Budget takes from lower and middle-income families to give to the rich. Do they not see? The Chancellor is not Robin Hood; he is the Sheriff of Nottingham. As for jobs and growth, he could not give a Friar Tuck. As for Maid Marian—trapped in the castle, desperate to escape—we all feel sorry for the Business Secretary, and not just because, as a result of the pensions tax grab, he is probably the only member of this millionaire Cabinet who will be not better off but worse off as a result of the Budget—possibly with the Justice Secretary as well. I am not sure. But he cannot say he was not warned.

[Chris Skidmore (Kingswood) (Con)]

I would be interested to know whether the shadow Chancellor has actually read the Budget and chart B5, which shows that the effect is worst on the top quintile? If he could be bothered to look at that and read the Budget, he might want to come back and change his mind.

[Ed Balls]

The hon. Gentleman should have read the small print. It is fine for him to accuse me of not having read the Budget, but is the effect of the 50p tax cut in that chart? I think not. I have read it. He has not. It is not there. If it were, the benefits would be off the scale.

After that disastrous and woeful intervention, let me return to the Business Secretary. The Business Secretary cannot say that he was not warned. In fact, he did the warning. On deficit reduction, before the election, he said:

“The IFS is right to point out that cutting spending further this year would be extremely dangerous given the weakness of the economy.”

He also said that

“it’s very difficult to believe that large sudden cuts would do anything other than a great deal of harm”.

He was right in his analysis of the dangers of going too far, too fast, and he is right today. In his devastating leaked letter to the Prime Minister, he said that the Government were without a

“compelling vision of where the country is heading beyond sorting out the fiscal mess”.

So why has he signed up to this completely vision-free Budget?

[Andrea Leadsom]

Will the right hon. Gentleman give way?

[Ed Balls]

No.

I am going to read again what the Business Secretary said on the top rate of tax, because it is such a great quote:

“Some believe that if taxes on the wealthy are cut, new revenue will miraculously appear. I think their reasoning is this—all those British billionaires who demonstrate their patriotism by hiding from the taxman in Monaco or some Caribbean bolt-hole will rush back to pay more tax but at a lower rate. Pull the other one.”

I have to ask him then: why is he going to stand here today and defend a Budget that tries to do just that?

We all know what the Deputy Prime Minister said last September. Let me tell the House—if anyone is interested in what he says. He said:

“I do not believe that the priority at a time like this is to give a tax cut to a tiny, tiny number of people who are much, much better off than anybody else.”

Let us be honest. None of us is remotely surprised that the Deputy Prime Minister has completely capitulated, just as he did on VAT, tuition fees and the NHS, but the Business Secretary is another matter. He knows that our proposal to kick-start the recovery is right because he told the Chancellor to do it. He knows that our proposal to set up a business investment bank is right because he told the Prime Minister to do it. And he knows that cutting the top rate of tax now is the wrong priority, deeply unfair and a betrayal of his and his party’s values and progressive tradition.

We all know all we need to know about the Deputy Prime Minister, but we all had—and have—higher hopes for the Business Secretary. I have to say to him—and to his colleagues—that I understand the incredibly difficult position he is now in, but I have to ask him: what on earth would the Vince Cable of five years ago think of what he is doing now? As the sketch writer in The Independent wrote last week:

“Vince has been so hammered by events…It isn’t clear any more that he could ‘press the nuclear button’ hard enough to make it go off.”

Prove us all wrong, Vince—prove us all wrong.

The Chancellor used to say, “We’re all in this together.” Not any more. In tough times, the choices that this Tory-led Government are making tell us everything we need to know about them and how totally out of touch they are with what life is like in our country. Here are the facts. The Chancellor’s plan has failed. Trying to raise taxes and cut spending too far and too fast has backfired. The country needs a Budget for growth and jobs. Instead, we got more of the same, and with his tax cut for millionaires, he is piling insult upon injury for millions of families and pensioners across this country.

13:21

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

The central issue on which this Budget—and, indeed, the coalition Government—will be judged is how we cope with the fallout from the massive financial collapse and the destruction of wealth, with the loss of approximately 10% of our national income, and put the economy back on a sustainable path.

The shadow Chancellor made some very kind and considerate remarks, and I thank him for his concern about my personal finances. Perhaps I can take him back to a toe-curling interview he gave a few days ago, when he described his two-decade relationship with his former boss, mentor, guide and friend as “unbelievably debilitating”. That is relevant to this debate, because it gets to the heart of the problem of who is responsible for the legacy that we are having to manage. We inherited not merely a large fiscal deficit, but the largest in the G20 and the largest amount of household indebtedness of any developed country.

We inherited an economy in which the share of the banking sector—the banking assets—had doubled in Labour’s period of government, to become the largest of any major economy, and in which, simultaneously, the share of manufacturing had contracted by almost a half, from 18% to 10%. We have heard a long speech about equality and fairness, but we also inherited an economy in which, throughout Labour’s period of government, the share of income of the top 1% and the top 10% of the population inexorably rose, and in which wealth became progressively more unequal.

[Sheila Gilmore (Edinburgh East) (Lab)]

rose—

[Vince Cable]

I will take the intervention in a moment.

A narrative has developed in which one man was responsible for this fiasco, but it was a genuine team effort, and the shadow Chancellor was an absolutely key member of that team. Being lectured now on how to manage an economy is a little bit like being given a talk on seamanship by the captain of the Costa Concordia—another believer in light-touch steering.

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

The Secretary of State talked earlier about indebtedness. Can he share with the House how much of the debt was down to the previous Government having supported the banks and the finance houses to get through the potential economic crisis?

[Vince Cable]

It was actually on the back of an uncontrolled housing boom. Personal indebtedness as a share of people’s incomes doubled in the period of the last Government. Of course the process of deregulation beforehand did not help, but the core increase—the fundamental problem of indebtedness—arose when the shadow Chancellor was a key decision maker in that Government.

I want to talk about the Government’s basic economic strategy, but before I do, I want to address the issue of unfairness and distribution. There were two allegations. One was that the policies have had a damaging effect on the so-called squeezed middle; the other was about the millionaires. Let me deal with each in turn. On the squeezed middle, if hon. Members look at the distribution charts, they will see that the squeezed middle has been squeezed a great deal less than the squeezed top. The major cash impact of the Budget was on low and middle-income families, as a result of lifting the threshold to over £9,200, with £220 for more than 20 million taxpayers. That was right, not just because of the fairness involved, but because it gives a significant economic stimulus, and at the margin—the 1 million people being lifted out of tax—it is a major incentive to work. The policy also contrasts favourably with the strategy that the Labour Government adopted in office—which we discussed many times—of using tax credits. By increasing tax allowances in the way we have, we are giving people the freedom to choose how to spend their own money, not taking it from them and then giving it back to them, through a complex, means-tested system, with high marginal rates of withdrawal.

[Sheila Gilmore]

Is the Secretary of State disappointed that he lost the battle to rescind the cuts to working tax credit for couples working 16 hours, given that they do not benefit at all from raising the tax threshold, because they already do not pay tax? Did he lose that battle or did he not fight it?

[Vince Cable]

The shift from a system based on tax credits to one based on tax allowances obviously benefits the middle and low-income population as a whole. The impact on particular groups depends on a variety of things, including the minimum wage, which we have just uprated, and the complex interaction of tax and tax credits.

However, let me turn to the point about pensioner income. I find it quite extraordinary to hear the shadow Chancellor expressing such alarm about the impact of the Budget on pensioners. I do not know whether he has looked at the scorecard, but it is clear. In 2012-13, the effect of the increase in the basic state pension and the pension credit minimum income guarantee will be to transfer £1.75 billion to pensioners. The impact of the changes on age-related allowances is £360 million—one fifth of the additional funding going to pensioners as a consequence of this Budget. When we look at the pensioner population, we of course see big differences. There are 5 million pensioners who do not pay tax, many of whom are poor, and who are not, of course, affected by the changes at all. There is a small group of people—frankly, my contemporaries—who have high retirement incomes and considerable asset wealth, and it is right in principle that they should pay a bit more. There is a group in between, as the shadow Chancellor rightly said, of people who are not wealthy and do not have particularly high incomes, but who could be affected to a limited extent, as a result of inflation eroding the value of the allowances—inflation is currently estimated at 2.5%. Those people will benefit enormously from the increase in the basic pension.

Let us just remind ourselves what is happening. We have an increase of £5.30 in the basic state pension for a single person. On top of the increase last year, we are talking about a £10 increase in the basic state pension, as a result of the protections that this Government have introduced. For many years, the pension steadily fell behind earnings as a result of de-linking, and, despite numerous promises, the previous Government did absolutely nothing about the problem. More and more pensioners were sucked into means-testing. This Government have corrected that problem. We have a triple lock system and, as a result of that, and of this Budget, the vast majority of pensioners on low and middle incomes will be considerably better off than they were before.

[Angela Smith (Penistone and Stocksbridge) (Lab)]

What does the Secretary of State have to say to the Institute for Fiscal Studies, which has today described the Budget as a “hotch-potch of reforms” that are risky because they might be “less fiscally neutral” than the Chancellor is claiming?

[Vince Cable]

I am sorry; I do not follow the logic of the question. The Budget is of course fiscally neutral. I have just quoted figures, which the Office for Budget Responsibility has validated, which show that pensioners as a whole will gain five times as much from the increase in the pension and from pension tax credits as from the change in allowances.

[Kate Green (Stretford and Urmston) (Lab)]

What will the Secretary of State say to people who have saved into a pension all their working lives and who have only modest additional pension provision to rely on, but who will now, completely unexpectedly, see the reward for making that effort to save wiped away?

[Vince Cable]

There is a genuine issue about pensioners with limited income, much of it savings income, which has been progressively ignored over the years. I have fought very hard in Parliament on the issue of annuities reform, as have many colleagues, particularly on the Government Benches. Many of the people the hon. Lady describes are annuitants who have been severely squeezed by the very low interest rates. Despite numerous appeals to the previous Government, absolutely nothing was done about annuity reform. We have made an absolute commitment to end compulsory annuitisation, which will offer far more practical help than any of the things that she and her colleagues are describing.

Let me turn to these millionaires. I agree with the Chancellor that the decision to cut the top rate of tax from 50p to 45p was economically the rational thing to do. I want to focus the debate not on symbols but on substance. I share the emotional reaction of the many people who are disgusted to hear pampered financiers whinging about their taxes. On an emotional level, nobody can sympathise with that. However, we have to deal with the practical realities that were burned on my consciousness as a result of sitting in my place on the Opposition Benches for 13 years, exchanging views on the top rate of tax with successive Labour Ministers from Blair to Brown to Balls. Year after year, they would tell the Liberal Democrats that it was economically stupid to raise the top rate of tax above 40%. That was their message, year after year. Then, a few weeks before the end of their Government—I think it was 57 days—they introduced the 50p rate in order to create a political dividing line. That decision had nothing whatever to do with economics. The point that they had been making over all those years was that raising the top rate in that way would raise relatively little revenue.

Despite the casuistry of the shadow Chancellor’s intervention a few moments ago, in trying to argue that vast sums of money had been sacrificed, line 3 of the scorecard makes it absolutely clear that we are talking about a revenue loss of £100 million a year. That figure has been endorsed by the Office for Budget Responsibility. The changes that have been introduced in the Budget, including increased taxation of high-value property, plugging loopholes and much tougher anti-avoidance rules, will bring in at least five times that amount.

[Ed Balls]

The HMRC report states that, in 2013-14, the static cost—that is, the cost to existing top rate taxpayers—will be £3 billion, rising to £3.35 billion, then £3.7 billion and £4.2 billion. It then states that that will be offset by a behavioural impact of £2.9 billion, £3.2 billion, £3.6 billion and £4 billion, which I think is heroic. The document states that behavioural responses are often “highly uncertain”, and the Business Secretary himself said that such assumptions were utter nonsense. He said, “Pull the other one!” Is he now saying, “Mea culpa—I got it totally wrong”?

[Vince Cable]

I am just trying to deal with the facts. I believe in evidence-based decision making. The information in the Budget document, which has been validated as the best central estimate by Robert Chote of the OBR, suggests that we are talking about a revenue loss of £100 million. I think that the right hon. Gentleman is fundamentally underestimating the financial significance of something that happened on an epic scale when his Government moved on the top rate, which involved simply switching from one year to another. The underlying impact on revenue has been independently estimated at £100 million.

[Ed Balls]

The document from HMRC makes it absolutely clear in section A.19 that that is not HMRC’s view but the Government’s view. It was a ministerial decision on those estimates. But that does not take away from the fact that a £3 billion cost—£10,000 on average for top rate taxpayers—will be offset by a behavioural impact that is huge and, in the Business Secretary’s own words, absolute nonsense. Let us deal in the complexity of the facts, not the simplistic nonsense that the Chancellor told the House yesterday. Does the Business Secretary, with his integrity, look at those numbers—£2.9 billion, £3.2 billion, £3.6 billion and £4 billion—and say, “Yup, I agree”?

[Vince Cable]

I think we are talking about integrity and statistics. Of course there has been a big change under this Government, compared with their predecessor. The numbers that the shadow Chancellor used to use were his own numbers. The numbers we are quoting here are independently verified by the Office for Budget Responsibility. We will analyse the underlying assumptions in those figures. The figures in the Budget document are absolutely unambiguous and they have been endorsed by an independent assessor—something that the right hon. Gentleman was never used to when he was in government—which confirms the value of the numbers that we have described.

[George Freeman (Mid Norfolk) (Con)]

Is not the shadow Chancellor’s knockabout class warfare much more to do with appeasing Labour’s union paymasters? The truth is that all the evidence shows that a competitive personal and corporate tax rate is a powerful driver of entrepreneurship. We proved in the 1980s, when we last had to dismantle Labour’s tax time bomb, that lower marginal rates of tax increased revenue. The announcement today from GlaxoSmithKline of inward investment in this country is a sign that this is working.

[Vince Cable]

It is certainly true. My hon. Friend’s central point, which was made very effectively by the Labour Government when they were in office, is that in a highly mobile world, we have to take account of marginal rates of tax in comparable countries. The current top rate of marginal tax in Canada, Australia, France and Germany is around 45%, and that is the level to which we have moved.

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

Does the Secretary of State acknowledge that business leaders, who will benefit from the tax cut, said yesterday that the priority should have been to cut taxes for those on low and middle incomes in order to stimulate consumer spending? Does he agree that that should have been the priority, rather than cutting the 50% rate?

[Vince Cable]

I do not know where the hon. Lady has been for the past 24 hours. The central feature of the Budget was a very large tax cut for exactly the group of people she describes, and it will have exactly the consequences that she describes.

Let me get back to the core issue, which exercises me and the shadow Chancellor. The basic economic strategy of the Government is to get back to a stable, sustainable form of economic growth. I want to address head-on his central criticism, which he has made many times. It can be summarised in the phrase “too much, too fast”. This Government have a deficit reduction programme that was developed following the autumn statement, and it involves removing the structural deficit over a period of six years.

The Darling plan, which the last Government set out, involved a deficit elimination programme of seven years. What I am not clear about, particularly in view of the stridency of the shadow Chancellor’s views, is: what is the Balls plan? Is it for seven years, eight, 10, 20 or never? What is the alternative speed of deficit reduction that the Opposition are urging on us?

We are acting, successfully, on good advice. A few weeks ago, the head of the International Monetary Fund, Christine Lagarde said:

“Those countries that have fiscal space, and that can slow down their fiscal consolidation efforts are very few, and I’m afraid Britain is not in that particular group.”

That is because of the sheer scale of the structural deficit that we inherited.

[Ed Balls]

rose—

[Vince Cable]

I will give way in a moment.

The CBI, quoted in evidence by the Opposition, was equally clear, as reflected in its view that we cannot afford to slow down the austerity programme. That is what authoritative people have to say about “too much, too fast”.

[Ed Balls]

The Business Secretary is a former chief economist. He read out a quote from the head of the International Monetary Fund. On the previous day, the chief economist of the IMF said exactly the opposite—that if growth was “undershooting”, a country like Britain should

“slow the pace of deficit reduction”.

Is the Business Secretary really saying that he is ignoring the advice of Olivier Blanchard, the chief economist of the IMF? I would have thought that the right hon. Gentleman would have recognised Mr Blanchard’s economic credentials.

[Vince Cable]

I think Mr Blanchard is very firmly on record as endorsing the strategy that we have adopted.

There is, of course, a fundamental dilemma, which any Government in this situation would face. If a deficit is cut very fast, it clearly has an impact on demand; and if it is cut too slowly, we lose the confidence of international creditors and markets. That is what we have not done. Unlike many eurozone countries that are now introducing budgets in panic and under pressure, we have introduced a politically and financially stable approach to deficit reduction. The underlying theme has to be one of financial discipline.

I cannot resist quoting an excellent statement of what this Government are about, and of what any Government should be about. It says that

“we must ensure we pass the test of fiscal credibility. If we don’t get this right, it doesn’t matter what we say about anything else.”

That was the shadow Chief Secretary, the hon. Member for Leeds West (Rachel Reeves). She is absolutely right and has brought fiscal rigour to the Opposition Front Bench for the first time. I just wonder what kind of response she has made privately to some of the commitments that the shadow Chancellor, and indeed the Leader of the Opposition, have been making in the last few weeks. They have been promising to get rid of the fuel duty changes, child benefit changes, child tax credit changes and the changes to public sector pay. I think the total volume of commitments is something in the order of £30 billion. Before we proceed any further with a debate on the Budget, we need to have absolute clarity about which of those measures the Opposition are committed to and to which they are not—and if they are committed, we need to know what else they are going to cut to make way for them.

Let me summarise where we as a Government are proceeding. Unlike many other countries in Europe, we have not introduced our Budget in an environment of panic or under pressure from financial markets. Unlike in the United States, we do not have political paralysis; we have stable government. This is our strategy: we have, and we will retain, fiscal discipline and we will stimulate the economy. There has to be demand—the shadow Chancellor is absolutely right about that—but this is coming through monetary policy. In order to have a monetary policy that stimulates the economy, we need the confidence of the central bank. The central bank has made it absolutely clear that the Government have to be fully committed to fiscal discipline in order to allow that to happen. Thus we have a combination of low interest rates, quantitative easing, now credit easing and a substantial devaluation. This is where the stimulus to demand comes from.

The third element is fundamental: we are dealing with a broken banking system—something we inherited. The banking system was massively expanded under the last Government, but collapsed with disastrous consequences. There is a continuing problem of credit supply. That is a very real problem—and every small and medium-sized enterprise would tell the same story. We have introduced a whole series of initiatives. The Chancellor has taken this forward with credit easing, while my Department has a new programme building on the Breeden report relating to non-bank finance. I have no doubt that we shall have to come back to this, because the banking system is still not functioning, but this is at the heart of the economic crisis that we are trying to manage. For the first time in our lifetimes, the financial system has collapsed—with disastrous consequences—and we are having to put that right.

The fourth and final element in the story is rebalancing the economy and putting it on a proper sustainable basis. That is why the Chancellor underlined in the Budget our commitment to the growth review and to improving infrastructure. We need to recognise that banks have to be properly regulated, which is why we have increased the bank levy, but in addition, we need to give backing to our successful industries, particularly our export industries—aerospace, creative industries, the oil and gas sector, and pharmaceuticals. Over the last few weeks and months, we have been correcting some of the long-standing errors of policy pursued by the Labour Government—the way in which, for example, public procurement took no account of supply chains; we are putting that right. We are beginning to see serious positive commitment by overseas investors—we are seeing it in the car industry and in pharmaceuticals—as a result of this industrial strategy.

[Clive Efford (Eltham) (Lab)]

With all due respect, we have heard it all before. In May last year, the Business Secretary said:

“I will fight, and do fight…for manufacturing industry…It is leading this country out of recession”.—[Official Report, 24 May 2011; Vol. 528, c. 793.]

Will he tell us what went wrong with manufacturing?

[Vince Cable]

Has the hon. Gentleman followed what is happening? The car industry, for example, has grown by approximately 20% over the last year, and all the major producers are investing in the UK.

[Several hon. Members]

rose—

[Vince Cable]

Let me finish my summary. Hon. Members can make their points in their own speeches.

We are dealing with an extraordinarily dangerous and difficult situation. Quite apart from our own horrendous legacy, we have to contend with the threat of high oil prices and the currently stabilised but continuing crisis in the eurozone. As a consequence, our economic position is very difficult. The economy is not, of course, growingly rapidly. Ever since we came into office, I seem to recall the shadow Chancellor predicting a double-dip recession, which has not happened. This year, growth is not spectacular, but it is higher than Germany’s and significantly better than the eurozone’s.

We acknowledge that we undoubtedly have major problems to deal with. Unemployment is far too high, but it is the same rate as in the United States, which is often regarded as providing a role model of how to deal with a crisis. We recognise the seriousness of the problem; what we will be judged by is our effectiveness in digging this country out of the enormous economic hole that we inherited. We are on track to do it, and we will stick with the policies that we have adopted.

13:48

[Mr Nicholas Brown (Newcastle upon Tyne East) (Lab)]

It is a pleasure to follow the Secretary of State, if only because he has confirmed me in my long-held prejudices about Liberal Democrat politicians. I think he redeemed himself in the last part of his speech about the financial services sector, which is where I would like to begin my remarks.

In his BBC business lecture, Bob Diamond observed:

“We stand today at the end of a long cycle of excess borrowing: borrowing by financial institutions, by governments, by consumers and by businesses.”

The Chancellor made a similar point yesterday when he referred to the

“days of large deficits and the illusion of cheap finance.”—[Official Report, 21 March 2012; Vol. 542, c. 797.]

As we all move in the opposite direction, there are obvious dangers in the cumulative impact of collective repositioning. We should focus our attention on the significant differences between the output forecasts and the actual outcomes. The differences are striking. Corporate tax cuts, for example, marginally help corporate profitability; they do not of themselves stimulate growth or create jobs.

The second feature to focus on is the public expenditure cuts that have not yet taken place. In the autumn statement, a further £8 billion in cuts was announced for 2015-16 and a further £15 billion in cuts for 2016-17 —that £15 billion alone is equivalent to a 3p rise in VAT—and yesterday the Chancellor announced a further £10 billion in public expenditure cuts. This represents an unprecedented challenge.

In referring to external uncertainties, both the Chancellor yesterday and the Business Secretary today mentioned the eurozone and a spike in oil prices. I would add that the secrecy and complexity of the unregulated financial services sector in the United States is a further cause for concern, not least because of its size.

The overall Budget stance is fiscally neutral, but, of course, the impact of the Budget changes is cumulative. VAT is still at 20%. A combination of wage freezes and inflation will reduce real earnings—again, the effect is cumulative. A cut in the top rate of tax is useless for those who do not earn £150,000 a year—and most of us do not. Similarly, a change in lower income tax thresholds is useless for the one third of households that do not have anyone resident who pays income tax because they are too poor. The regressive impact of all this is even greater if the citizen’s housing costs are being driven up by 7% or more a year, which is what has happened to social housing rents. Again, the effect is cumulative.

Pensioners may appreciate the simplification of the age-related personal allowances, but not their collective loss of about £1 billion per year resulting from the freezing of those personal allowances. That does not hit the poorest; instead, it is a nasty assault on people who, in the main, are not particularly wealthy, but have tried to look after themselves in their retirement years. It is a sneaky and disreputable measure. Even the Government seem ashamed of it, since they coyly describe it as a “simplification” and, significantly, it is one of the few bits of the Budget that was not briefed beforehand.

The Chancellor said a lot about the money he is spending, but less about the public expenditure cuts that are going to pay for the fiscally neutral Budget stance. Given the times, it would be reasonable for the Government to look again at whether big-ticket items should be dropped as unaffordable. I urge them to think again about the Trident renewal programme. Why do we need to duplicate a strategic weapon that is already in NATO’s armoury? Nor am I convinced that the high-speed rail link between London and Birmingham is worth the expenditure in the current circumstances. I urge the Government to look at whether valuable tasks carried out in the public sector can be discharged in less ponderous and more proportionate and cost-effective ways, rather than to look at abolition as the only way of making the savings.

In a significant move, the Chancellor announced a general anti-avoidance measure in the context of the move to the 45p top rate and the widespread avoidance of stamp duty on expensive houses. He announced other tax avoidance legislation as well. The obvious danger is that, having gone to the expense of setting up an anti-avoidance device, the avoider gets a taste for it. The lower rate at 45p is a certainty, but the effectiveness of the anti-avoidance devices is less certain. There are further dangers in a general anti-avoidance measure. If it is necessary, it should be focused on the rich and powerful, and not be used in a disproportionate way against small and medium-sized businesses.

My final point is about the impact of all this on the north-east of England. Our region is a net exporter. Whatever might be the case for the country more generally, a broadening and deepening of the private sector employment base of our region is the right way forward for us. The Government do not disagree with this point in principle, but the economic development structures they have put in place are the wrong ones for delivering the stated policy, and I urge the Government—and in particular the Business Secretary, whose responsibility this is—to consider the alternative Minister-led approach to regional economic development that I and other Members set out in our regional debate last year.

I also urge the Government not to go ahead with the regionalisation of public sector pay. This is a “blue herring.” As well as being manifestly unjust, it will cost more than it saves and will throw up a range of unintended and unwelcome consequences. It is a myth that high public sector pay is undermining the creation of less well-paid private sector jobs. I challenge anybody, both in this House and outside, to point out a job vacancy in the north-east of England for which no candidate can be found at the going rate. Why should public sector workers suffer austerity measures longer because of where they live? They are already on the receiving end of wage freezes, job losses, rent rises, general inflation and long-term reductions in their pensions—and are hit even harder if they are trying to help their children through university, and harder still if they have lost their tax credits. Between 2011 and 2015, the average public sector worker will see their wages increase by 2% while the consumer prices index increases by 14%. Now is not the time to depress demand in the most vulnerable regions of the United Kingdom. As well as both the uncertainties to which the Chancellor referred in his address and those to do with the transnational unregulated financial services sector, he has left us with a further set of uncertainties all of his own: the substantial public service cuts that are yet to come. Of course the poor are hurt by this Budget, but it is middle-income Britain that is disproportionately the loser.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Nigel Evans)]

Order. Before Mr Brown’s speech, I should have announced that there is an eight-minute time limit on speeches. He is so astute that I knew he would realise that, but I now say to the rest of you that there is an eight-minute limit.

13:56

[Mr David Evennett (Bexleyheath and Crayford) (Con)]

I am grateful to have this opportunity to participate in the Budget debate, in order to highlight the financial and economic issues that are of concern to my constituents, and in particular to raise the topics of families, fairness and the future. I congratulate my right hon. Friend the Chancellor of the Exchequer on his Budget, which I believe is fair, innovative and effective. There are a lot of very good measures in it: tax cuts, help for business, increases in pensions and personal allowances, and investment in infrastructure. That is all good news for our country. For my constituents, the key concerns are the cost of living, keeping their jobs, taxation and dealing with the appalling economic mess left to us by the last, unlamented Labour Government.

This Budget goes a long way towards dealing with the issues facing the United Kingdom, and I believe it will be strongly supported across the country. It is good news for hard-working people on moderate and low incomes. It helps families and businesses, and, most importantly, it encourages aspiration.

Shortly, I shall address families, businesses and taxation, and how this Budget will assist and encourage our economic recovery. Before doing so, however, I want to state that the infrastructure plans announced in the Budget will create jobs and opportunities for businesses and enhance our economy. In particular, I welcome the Chancellor’s announcement of a possible new river crossing in east London. As my constituents and others travelling to and from south-east London know, the Blackwall tunnel is inadequate and congested and still prone to vehicles breaking down on the approach roads or in the tunnel.

[Damian Collins (Folkestone and Hythe) (Con)]

My hon. Friend makes a valid point about the east Thames crossing. That will also be of great benefit to my constituents in Kent.

[Mr Evennett]

I am grateful for my hon. Friend’s support. As the Mayor of London has said, a new crossing at Silvertown is essential. It will enable commuters and business traffic to get to their destinations quicker, and it will relieve the pressures on the Blackwell tunnel. In order to ensure the regeneration of south-east London, such public sector projects and investment are essential, and I welcome the Government’s commitment to look further into this crossing and to support other investment to improve our infrastructure.

I commend my right hon. Friend the Chancellor on his measures on taxation and families. Conservatives instinctively believe in lower taxation, not only because it allows people to keep more of their own money, but because they then have more choice in how their money is spent. Government do not always know best. They have a role to play, but people will spend their own money more effectively; it is not for Government to tell people what to do. Unlike the Labour party, which always believes in increasing taxation, we believe that people who have worked hard should have the opportunities to get on with their lives and careers, and to spend their money as they want. I therefore welcome the Chancellor’s aspiration to raise the personal tax allowance to £10,000 as soon as possible. That is good news for all working families on low incomes.

In government, Labour professed sympathy for working families on low incomes but did little to help them—in fact, Labour hindered. We did not hear anything in the shadow Chancellor’s speech about the failings of his Government. They allowed families to get worse off, and the increase in poverty was greater under Labour. This Government do not believe that people should be allowed to remain on benefits for ever because benefits are more attractive than working and earning. That is unacceptable. We are, therefore, grateful that we are changing the benefits regime and helping people with the tax regime, so that work does pay. That is fundamental.

Under this Government, great progress has been made in the past two years, with personal allowances going up by 25%. This year there is to be another rise and next year, in April 2013, there will be an additional rise in the personal allowance of £1,100. That is a real, positive advance for people on low incomes, allowing them to keep more of their money. I particularly welcome the fact that some 2 million people will no longer pay any income tax; they are on low incomes and they should not be paying income tax. It is the Conservative-led Government—a coalition Government—who are doing this, and I welcome the Business Secretary’s speech, which highlighted what the Government are doing and the logic behind it.

[Kate Green]

I note the hon. Gentleman’s welcome for families being lifted out of income tax. How does he react to the fact that 230,000 pensioners are being brought into the ambit of taxation for the first time by this Budget?

[Mr Evennett]

The whole aspect of what we are looking at is increasing pensions and helping pensioners. This Government have done a lot more than the Government whom the hon. Lady supported—they gave a miserable 75p increase in the pension a few years back. Our Government are putting up the pension this year by more than 5%, which is a record and an achievement for this Government. We will take no lectures from the hon. Lady, because her Government let pensioners down.

Nationally, a total of 24 million people will receive a tax cut thanks to this Budget. That is good news for individuals, for families and for the economy. This Conservative-led coalition is proceeding to help working people, and the Opposition do not give us credit. I was disappointed with the shadow Chancellor’s speech. I usually listen to him with great interest, but he did not allude to anything that Labour would do if it were in government or to Labour’s failures when it was in government.

The family is the backbone of our society, and the issue of child benefit is always difficult. Fairness remains the key, and the original changes proposed caused considerable difficulty. I am pleased that the Chancellor listened to our concerns, and those of constituents, that the proposed changes were not really acceptable. By amending the proposals and tapering the benefit from an annual income of £50,000, some 90% of families will continue to benefit from financial support during these difficult financial and economic times. This Government are listening and changing policies after representations have been made, and that is to the credit of the Chancellor and the Treasury team.

Red tape, bureaucracy and taxation all adversely affect businesses. I welcome the news that more is being done to support small businesses and manufacturing. The investment in apprenticeships, lower corporation tax and extra support for start-ups will make a real difference. In addition, we heard the innovative idea of a student-style loan for young people to allow them to start up their own businesses, and I welcome the fact that the Chancellor is examining it. It would allow 18 to 24-year-olds who are keen on a business career to be helped. We all know that university is not for everybody; people may not want to go there and may want to go into business instead. So we need to provide the same sort of help for young entrepreneurs, whom we desperately need in this country, to enable them to go forward to make their name and their fortune. I welcome the fact that the Government are willing to examine that.

My constituency contains a number of innovative manufacturers, such as Texcel Technology in Thames road, Crayford, which I visited last month. I was really impressed with the dynamism of its leadership and its focus on high-tech products. I recently nominated it for the Made by Britain project. The NEPTUNE project, for which the company has provided power and switching solutions, will help to develop our understanding of the ocean and of many biological, chemical, physical and geological events that take place. I am pleased that such a successful firm in my constituency has designed and manufactured such innovative components for this international project. People at the firm were looking to the Government for some action and will be delighted with what the Government have proposed in the Budget to enable small firms like theirs to prosper and develop.

I know that the firm is concerned about regulations, bureaucracy and, of course, tax, so it will welcome the parts of the Budget dealing with business. Business is vital to our society; it makes the money and creates the wealth that allows us to invest in education, hospitals, all the other public services, pensions and all the rest that we want to invest in. If we do not allow business to flourish, we cannot make that wealth and we cannot have the taxes that come with it. This Government are focusing on those issues, to make sure that we are getting the wealth creation and the taxes from innovative small firms such as the one I mentioned.

We need to consider the whole of this Budget, as it works together as a rounded Budget, looking to the future. That is the great thing about what we saw yesterday from the Chancellor and the team; the Budget is looking to the future to make Britain better. It seeks to make Britain great again, as that will not come from the Opposition, after their 13 years. We remember how they “ended” boom and bust, and we remember all the things they had—the result was a disaster and it left us with the mess to clear up.

In conclusion, the Chancellor has been effective in looking to policies to solve our economic and financial situation. The Budget demonstrates that this Government are firmly on the side of those who aspire to do the right thing for themselves, their families, their businesses and this country, and I strongly back it.

14:06

[Mark Durkan (Foyle) (SDLP)]

Unlike Government Members, I am not in a rush to gush about how much this Budget does for families or firms in my own or anybody else’s constituency. However, I am also not here to pretend that everything in this Budget is bad, as it contains measures that will help some sectors and areas. Moving on general anti-abuse rules to deal with tax avoidance is good in principle and welcome. Obviously, we have to see the exact detail to know whether the effects will match up to the stated intent. Similarly, tax simplification for small businesses is a good thing in principle, but again the devil will be in the detail, as it will be in respect of removing borderline anomalies. Many of us have been lobbied by our local chippies and others about removing some of those anomalies, but of course there is always the danger that we end up redrawing the margins in particular businesses or sectors.

The Budget makes new provisions for the carbon price floor. Coming from Northern Ireland, I am sorry that the Government have not seen fit to open a window to relieve the serious competitiveness and investment problems that will be caused to our generating industry, because, in the context of the single energy market in Ireland, the carbon price floor will, in effect, incentivise investment to go south of the border and not stay in the north.

There are other issues to address, such as fuel duty. Again, I regret that the Government have not done more to help firms and families, who have both been affected deeply by these problems. The Government have boasted greatly about the measures that they have taken to date to protect people from the price surge, but that surge protection is still needed and now is not the time to let it go on the assumption that the other tax changes that the Government have announced will somehow carry people through or forward.

Obviously, not least in the context of Northern Ireland, I support the further moves in relation to “above the line” research and development tax credits and the tax reliefs in the creative sector, not least in film and high-end television, where Northern Ireland has recently been doing well.

On corporation tax, we in Northern Ireland are faced with the highly competitive corporation tax rate on the other side of the border and we have been looking for reductions and modifications there. I have no argument in principle with moves to reduce corporation tax, but I wonder about the Government’s measures on the control of foreign companies and the full reform that is there. Previously, I have asked about the impact that that would have on the moves to restrict the incentives towards using tax havens, and I remain concerned that while the Government have perhaps redressed some of the concerns that have been raised about the possible loss to business and revenue in the UK, there will still be a loss to developing countries’ revenue, which they absolutely need, as a result of the measure.

The Government are making much, not just in the Budget but more widely, about what they are doing for business lending. We have all heard this before. All the measures that are made relying on quantitative easing and now credit easing depend on the banks. We are told about the £20 billion guarantee, so that some banks—those that opt into the scheme—might give businesses credit at 1% less than they would otherwise have given. If yet more billions are being spent just to make that marginal difference, one has to wonder whether that is the best way of gearing support towards growth and the economy. More direct uses of that money could yield a much readier growth impact.

On the tax side, we have the hit on pensioners, with the move in the allowance and more people being brought into taxation. At a time when we are again encouraging people to save towards pensions and we again have a reform and recasting of the pension system, for the Government to come along and make another tweak that appears to hit pension provision and pension plans sends the wrong signal. It gives people the idea that the Government engage in jiggery-pokery—that they encourage people to save pensions but that then when they do so they will be clobbered. It is just a bad and unnecessary measure at a time when we are trying to encourage people to save more for pensions. Other people whom we are asking to save for their pensions are middle-income earners: we are asking them to make strong provision for their pensions and to make provision for their children’s third-level education. Many of them are still being hit by the change to child benefit. That will hit some of those people’s capacity to save for their own pensions as well as to support their children.

The Chancellor has told us of the Adam Smith principles of tax being simple and predictable, supporting work and being fair, but the tax charges being introduced in relation to child benefit go completely against that. It is a very complicated and clumsy system that is going to cause problems, and not just for those families who are affected—it will cause serious problems for employers. It will not be long before employers’ bodies will be coming to Government and saying, “You have created a very serious problem here”—a much bigger problem than the 50p tax ever created for those firms in how they could incentivise rewards and repay people. The Chancellor also mentioned the £10 billion cut in welfare coming after the next election, which he has been framing as necessary if other cuts are to be sustained.

[Sheila Gilmore]

Will my hon. Friend comment on the initial speculation in today’s edition of The Times, which is hardly a bastion of left-wing politics, that those cuts might affect attendance allowance, means-tested disability living allowance or mean the taking away of carers’ allowance?

[Mark Durkan]

Of course, these cuts could affect anything. We were told when the Welfare Reform Bill went through Parliament that that was the final destination of welfare reform. Now it is clear from the Chancellor that it is simply a staging post for further cuts. We were told about the spoonful of sugar—the extra money going into making universal credit work in the transition period—but is it the Chancellor’s plan to remove some of that, and to pull back the extra investment that has gone into making universal credit work and more acceptable, or will other benefits such as those for people with disabilities be affected? We know that families with disabilities are already being squeezed. Are they going to suffer more?

In the light of people in the Chamber teasing others about what they will put in their next manifesto, will the Government parties tell us what they will be putting in their manifestos about the £10 billion-worth of further cuts in welfare? Who will be hit? There is no point in people asking one party what they are going to put in their manifesto unless others are going to follow through. The Government are saying that such cuts will be needed after the election; will they say during the election campaign where those cuts will be made?

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

May I follow up the very important point that my hon. Friend made about the reduction of £12 billion in welfare? Does he recall that last week when we had the debate on women’s rights in Westminster Hall a number of our friends from Northern Ireland outlined just how serious that problem was? Does he think they will be in receipt of cuts as well?

[Mark Durkan]

Absolutely; that is the fear that we must have. The Chancellor has put forth the signal that such cuts would be needed and would have to be factored into the next spending review. Although this House has discharged its duties on the Welfare Reform Bill, we must ask what the changes will be. Contrary to what the Chancellor has said about support for families, the Government's direction of travel in everything they do is putting more of a squeeze on families—both low-income families on benefits and middle-income families given the pressures that they are facing.

The Chancellor also used the Budget to frame questions about moving towards regional pay in the public sector. Speaking from the Opposition Benches, I want to say straightforwardly that I know that he is not the first Chancellor to toy with the idea of regional pay and tinkering with the framework. I have heard that from previous Chancellors and Prime Ministers, so I am not in denial. I was as opposed to it then as I am now. I was intrigued to hear the Chancellor say that he had submitted evidence to the independent pay review body, so I went to the Library to see what that evidence was and I have the “Dear pay review body chair” letter from the Chancellor. Some 11 pages of evidence were submitted. I am not saying that it is dodgy dossier stuff, but in the material that it sources it really is dubious dossier stuff. It shorthands academic studies, possibly doing a disservice to the academics who completed them, in saying that the evidence suggests that the quality of public services would directly benefit if public sector pay became more responsive to local labour markets. It claims that one study

“found that over one quarter of hospital targets were negatively associated with the public/private wage differential.”

It said that another study

“found that a 10 per cent increase in wages outside of the nursing sector was associated with a 7.4 percent increase in mortality rates from heart attacks.”

When that is the quality of evidence that the Government are submitting to the pay review body, we need to examine it further.

14:17

[Michael Fallon (Sevenoaks) (Con)]

I remind the House of my interests on the Register of Members’ Financial Interests. One of the most remarkable things about the Opposition’s response to this Budget is that we have not heard a single pledge to reverse any of the changes being proposed. We have heard a lot of carping and that they are going to vote against some of the measures on Monday, but they are not actually going to change them should they ever come back to power. When they do carp, they seem to be carping on behalf of some rather strange interests. They want the top 10% of households to keep their child benefit. They want the better-off pensioners to keep their age-related allowances. Indeed, they want the super-rich to go on enjoying some £65 million-worth of evasion of stamp duty and abuse of tax reliefs. That seems to me an extraordinary position for the Opposition to get into.

[Mr Sam Gyimah (East Surrey) (Con)]

Is it possible that the opposition to these measures we are hearing, which my hon. Friend has outlined, is opportunistic politics dressed up as principle?

[Michael Fallon]

My hon. Friend is on to something. We note that the shadow Chancellor could not answer the questions on whether Labour would restore the age-related allowances, the changes to which its Members have been moaning about today.

Where I hope there is common ground across the House is that we all want a dynamic, high-growth economy. In my view, that can be built only on sound public finances, fully flexible labour markets and rising productivity in both the private and public sectors.

I shall begin with the public finances. I welcome confirmation in the Budget that we remain on track to eliminate the structural deficit, with the result that, even in difficult trading circumstances both in the eurozone and globally, the Chancellor was able to avoid big increases in taxation or further increases within this spending round. A broadly neutral Budget confirms that we are on course, but keeping our public finances on course will require continued firm control of public spending.

I note that in cash terms public spending continues to rise each successive year that is illustrated in the Red Book. It may be that we have to have a fresh look at some of the entrenched spending targets of the previous Government. We may well need to ask ourselves whether specific targets, for example on child poverty or climate change, are the best way of focusing our spending where it is most needed.

I welcome moves towards flexible labour markets and more local pay. The hon. Member for Foyle (Mark Durkan) is right—this is not a new announcement. If you look back at the spending review of 2002, Mr Deputy Speaker, you will see that the then Government were committed to more flexible local and regional pay. You will find it in the Budget documents of 2003. You will also see it in the previous Prime Minister’s last Mansion House speech as Chancellor in 2006. Of course, the Labour Government did nothing about it; their union paymasters would not allow it. But local pay has applied for the past 25 years at least across the private sector, and it would be wrong to continue to rope off the public sector from the real differences in the associated costs of labour up and down the United Kingdom.

It is unfair to local businesses to have to compete for labour with public bodies and offices that pay well above the market rate. It is certainly unfair to the jobless in those labour markets, who are priced out of jobs as a result. I hope that the Chancellor will go on to tackle some of the other inequalities, such as the big differences in sickness pay between the public and private sectors and the real difficulties that young people under 25 have in getting that first job. One third of the unemployed are under 25. That is the legacy of the Labour party, and we have to do everything possible to help those people to get their first job, not least when at the moment we control their wages and other conditions that create so many disincentives for small companies to take on a single extra member of staff. Why should the state make it so difficult for young people to get into employment?

The test of all the Budget measures in the end is whether they will improve our productivity, as so many Labour Budgets and so much Labour spending signally failed to do. The Office for National Statistics figures for 2010 say it all and are a good summary of 13 years of Labour government. In terms of GDP per hour, France is 18% more productive, Germany is 19% more productive and the United States is 24% more productive. That shows the importance of improving incentives at every level and it is why I welcome the new incentives for the lower paid and middle earners that will be created by the changes to the personal allowance. Taking 2 million people out of tax altogether in two years will improve those incentives. That is a coalition achievement in which both parties on this side of the House can take real pride.

Sound public finances, more flexible labour markets and higher productivity are the keys to the future and to the jobs that our children need. I welcome the progress being made in this Budget towards them.

14:24

[Mr Russell Brown (Dumfries and Galloway) (Lab)]

The Chancellor’s Budget statement yesterday was for the entire country, but for so many individuals, households and communities, it will result in many different outcomes. I want to concentrate on the impact that it will have on my constituency and the Dumfries and Galloway region as a whole. Yesterday, local people were looking for indications of potential growth in the economy and potential creation of jobs.

In the past 20 months unemployment in my constituency has risen month after month. It is a sad reflection that youth unemployment is at its highest level since 1996. Dumfries and Galloway is a rural constituency, which means that the two largest employers are the national health service and the local council. The shedding of jobs in those two specific areas has now been going on for four years, and for those who think that everything north of the border is fine under a Scottish National party Government, let me tell them that that is four years of cuts in the public sector. Yet the block grant that we all talk about—that Barnett formula, the Barnett consequentials—has been reduced only in the financial year that is about to come to an end. So there has been a lot of pain in Scotland that sometimes people do not read about in the wider UK press. The pain of loss of income spreads into the local economy. It spreads on to the high street. I regret to say that some of the pressure on households in my constituency is down to the fact that it is very much a low wage economy.

So the Budget statement cannot be taken in isolation, although that is what we are here to discuss today. We need to look at what has happened and what is about to happen. My hon. Friend the Member for Foyle (Mark Durkan) said that the welfare cuts would have an impact. That is happening at the moment. Let no one be under any illusion that only the current coalition Government have introduced welfare cuts and reforms. Our Government did on three occasions. They were trying to make those adjustments that said to people, “Work does pay. There is an opportunity there, despite any disability that you have. There is help and support to get you back into the workplace, perhaps not doing what you did in the past but it is there if you wish to seize the opportunity.” The big challenge will be in the next two weeks when so many households lose working tax credits. With the reductions in service provision through the voluntary sector that my local area has experienced, with welfare rights budgets being cut and with Citizens Advice services being cut, I am finding that more and more constituents are coming to my office for help and support.

Let me give the entire House a warning: colleagues had better batten down the hatches, because they are about to be inundated with households that are about to lose their working tax credit. The increase in tax allowance announced yesterday, which will mean £2 or £3 a week, will make not one iota of difference to households that will potentially lose £50, £60 or £70 a week. In no way whatsoever can the increase compensate for that.

The other point is that people will need to move from working 16 hours a week to 24 hours in order to avoid losing their tax credit. How on earth will that happen when people have voluntarily reduced their working hours over the past couple of years just to hold on to their jobs? Unfortunately, many of those people will be unable to keep a hold of their tax credit.

The granny tax grab, as it has been described today in the press, the changes to the age-related personal allowance, which when introduced took 680,000 pensioners out of tax altogether, is being done at the wrong time, if indeed it has to be done at all, with low interest rates and maturing annuities not delivering what people had expected.

In a rural locality fuel prices are vital, so I want to ask the Minister what has happened to the fair fuel stabiliser. FairFuelUK expected more from the coalition Government, who need to be honest about what has gone wrong. We were all inundated with e-mails from constituents about the report commissioned by FairFuelUK. I asked the Economic Secretary last week—she did not leak anything to me—what she and her officials thought of the report, but she said that she could not speak to me about it because the Budget was just a few days away. I would like to hear what Treasury Ministers and officials make of the report, because I have doubts about a 2.5p reduction in fuel duty creating 175,000 jobs; it verges on some sort of economic fantasy.

I would have loved to have seen, as I am sure would most of my constituents, an announcement yesterday of a temporary reversal in the VAT rise, because £450 extra for families would have been of real benefit to them and it would also have helped motorists. I am, and always have been, totally opposed to any kind of regional variations in these matters. I sat on the Committee that introduced the national minimum wage back in 1998 and—the Secretary of State for Business, Innovation and Skills is no longer in the Chamber—even then there were Liberal Democrat Members who wanted regional variations in the national minimum wage. It is not acceptable.

[Mr Tom Clarke]

Does my hon. Friend recall that the hospitality and tourism industries, which I know are very important in his constituency, were warned that the national minimum wage would cost them jobs, and does he agree that the opposite was the case?

[Mr Brown]

My right hon. Friend is absolutely right. In 1996 and 1997, when the Labour party was talking about a national minimum wage, the Conservative Government and others were saying that we would lose 1 million jobs as a result. In fact, the opposite happened and it created around 1.5 million jobs, especially in the service sector, so he touches on a relevant point.

My right hon. Friend mentions tourism, and it is on that point that I will bring my remarks to a close. I represent a rural constituency, and for many of my constituents using public transport is an absolute impossibility and they depend on their cars. The area is heavily dependent on agriculture and forestry. Hidden away on page A101 of “Overview of Tax Legislation and Rates” is the bombshell—it is a bombshell—that as of this October VAT will be levied on static holiday caravans. A £40,000 van will cost £48,000. There are many of these businesses in my constituency—nowhere in my constituency can someone be more than eight to 10 miles away from a static caravan site. Owners of these sites will find it much more difficult to upgrade and invest in their businesses and, importantly, those holidays will become much more expensive for hard-working families.

14:35

[Lorely Burt (Solihull) (LD)]

As a Liberal Democrat, I am as delighted as any of my colleagues or, indeed, any of our coalition colleagues by the further and faster move yesterday towards the realisation of our flagship tax policy—raising to £10,000 the threshold at which people start to pay tax. It was something that the shadow Chancellor would not acknowledge, and that was a little churlish. As the Liberal Democrat spokesperson for business, innovation and skills, however, I want, in the short time at my disposal, to focus on a small number of highlights and what the Budget means for business.

Much of the good news for business was announced in the autumn pre-Budget statement, and that is a good thing, because what business needs as much as anything is predictability, stability and simplicity. We knew that corporation tax was due to be cut to 25% this April, but I am sure the news that we will now cut it by a further 1 percentage point is good news that business will be able to deal with.

I also welcome simplifying on the basis of cash turnover the tax on our smallest businesses. What a difference that is going to make for them, as will integrating income tax and national insurance. Business has other things to worry about without collecting tax through two separate systems for the Government.

Despite the tough decisions that we had to take because of the “no money” legacy of the previous Government, we have managed to create an environment of low interest rates, and that has been vital to business. We only have to look over the channel at our European neighbours to see what a shocking state we could have been in if we had not been as tough and as firm as we have.

So, despite the tough going, we have been getting going and literally rebuilding our economy. The building trade has suffered badly during the recession, despite historically low mortgage rates, but we are helping, through the NewBuy system, by expanding the get Britain building fund to provide up-front finance to construction companies and by reforming planning.

For small businesses, the national loan guarantee scheme started operating this week, making £20 billion of guarantees available. That is all well and good as long as banks are prepared to lend, so it is important that their seeming intransigence is challenged by competition from alternative sources of finance, such as the £1 billion that we have made available to funds that lend directly to mid-cap businesses. We are also increasing funding to the business finance partnership by 20%.

The Green investment bank opens for business next month—a step towards our aspiration to become the greenest Government ever; greener business cars will get a series of tax breaks; and hauliers’ vehicle excise duty has been frozen. But most importantly, there will be £4.5 billion less in burdens on the motorist with the cancellation of the fuel duty escalator and the confirmation of the fair fuel stabiliser.

Business needs support in many ways. We are very clever and inventive—[Interruption]—all of us, as a nation, and we need to do much more on patent protection, but I welcome the cut in taxes on patents and was delighted to hear the news this morning that GlaxoSmithKline will now invest heavily in the UK and, as a result of that announcement, continue its valuable and lucrative life sciences work here.

The support for science announced yesterday was also very well received. The extension of tax credits to the creative industries, as well as to films, is also welcome. There was some banter yesterday when the Conservatives were compared to “Downton Abbey”, and perhaps the Labour party does include Wallace and Gromit, although which one out of the shadow Chancellor and the Leader of the Opposition is Wallace and which one is Gromit is something on which we have been speculating. As for the Liberal Democrats, let us not be left out. I fear that our signature film will be “Four Weddings and a Funeral” if we are not careful. [Laughter.] But these tax credits, joking apart, are most welcome.

Research and development tax credits make a big difference to companies, especially when they are deciding where to locate their R and D functions, so I welcome in particular the movement to above-the-line credits—a simpler system, which ensures that tax implications can be more easily factored into the decision-making process.

In a global world we really need to brush up on our technology and, especially, on our broadband speeds, so the provision for ultra-fast broadband and wi-fi in 10 cities, including my own of Birmingham, is very welcome, as is the extra help for smaller cities.

Overall, I am very happy with this coalition Budget. However, there is an issue on which the Chancellor and I disagree—the belief that we need a new airport in the south-east. Clearly, we need to be able to service all passenger requirements, but there is a pledge in our coalition agreement that there will be no new runway at Heathrow. Why does the Chancellor not raise his eyes a little further north? Birmingham airport’s runway is currently being extended and will be easily accessible when High Speed 2 comes in. It has spare capacity of 40 million passengers a year. In the midlands, we have the answer to the need for an English airport hub.

Our business focus is paying off. We are now in the top 10 most competitive places in the world to do business. However, we need to change the culture in this country. I am so concerned that too many young people leave school unready and unprepared to earn a good living. We must tackle that issue. We must enthuse and open the eyes of our youngsters to the opportunities out there, including starting their own businesses. I fully back the idea of enterprise loans for young people. I started my first business venture at the age of 10, and I think that it is never too early to feel the excitement of doing it oneself. I commend the Budget to the House.

14:41

[Andrew Miller (Ellesmere Port and Neston) (Lab)]

It is a great pity that the Chancellor is not here; I would love to look him in the eye and ask whether we are genuinely all in it together. He and I represent Cheshire constituencies, but I do not think that his position is quite the same as that of the good folk living in the Westminster ward—one of the country’s most disadvantaged—in my constituency. I would really like him to say to those people that he was in the same boat as them. That is manifestly not the case. The media have picked up on that and realised that the story that we were told yesterday is full of half-truths that present the facts differently from what is really happening on the ground.

In these tough times, what the Tory-led Government are doing tells us everything that we need to know about them. It proves that the Chancellor and Prime Minister are totally out of touch with what life is like for people in this country. At a time when bills are going up for families on middle and low incomes, the Chancellor has added to them all. Fuel duty is going up, even though petrol prices are at a record high.

I am glad that some Liberal Democrats are in the Chamber. In the west country, there is already a blog about the new pasty tax. The Lib Dems should watch out; that is not the only thing that they are under attack for. They will be the real losers on the issue of regional pay, raised by my hon. Friend the Member for Dumfries and Galloway (Mr Brown) and the hon. Member for Foyle (Mark Durkan). Areas where Liberal Democrats have traditionally been strong would duck out compared with places such as my county of Cheshire, which is also the Chancellor’s, or Oxfordshire, which is where the Prime Minister is. The Liberal Democrats have a real problem when they start looking at regional pay.

[Andrew George (St Ives) (LD)]

There is a debate to be had on regional pay, and my position is well known. On the sublimely fundamental and seriously important issue of pasty taxes in Cornwall, let me reassure the hon. Gentleman that we will be fighting them on the beaches.

[Andrew Miller]

So when I go to Ann’s pasty shop, I’ll be all right, will I?

The Lib Dems are supposed to be strong on matters related to solar power. This morning, the chief executive of the Solar Trade Association said:

“We cannot understand why solar has been singled out for rough treatment on Capital Allowances when it is a popular technology which will soon reach grid parity and provide businesses with a real alternative to dependence on fossil fuels.”

Again, the Liberals have bought into something that is totally contrary to their own policy position. At the same time, the Budget gave a tax cut to the very richest people in our country, with just 14,000 people earning £1 million or more getting a Budget boost of over £40,000 each year. No wonder the Centre for Policy Studies, which is advised by the Minister for Universities and Science, among others, says that the Budget amounted to small-scale tinkering, regional handouts, and a rearranging of the deckchairs. To be fair to the Minister, there is a lot that I do not agree with in the CPS’s press release. Nevertheless, the Government have chosen to cut taxes for 300,000 people earning over £150,000—the richest 1%. How can that be the priority now?

The Chancellor looked quite smug when he sat down yesterday, but I bet he did not feel so smug when he read today’s papers.

[Stephen Lloyd (Eastbourne) (LD)]

I had the pleasure of sitting in the Chamber yesterday to hear the Chancellor and the Leader of the Opposition, and then some of the later speeches. There was a lot of noise going backwards and forwards about the veracity of the figures on how much will be raised from the different wealth taxes. It is not that I do not trust Labour Members, but last night I thought that I would go and check the figures on Channel 4 FactCheck, which I think we all recognise is very accurate, and it confirmed independently that it estimated that five times more money would be raised from the very wealthy as a result of the various taxes.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I hope that the hon. Gentleman is going to save something for his speech. I remind him that interventions are meant to be short.

[Andrew Miller]

If the hon. Gentleman had been here earlier for the shadow Chancellor’s speech, he would have heard that point put down very firmly.

Let me refer to today’s papers. Did the Chancellor expect to wake up this morning to a 33 mm-high headline—

[Mr Iain Wright (Hartlepool) (Lab)]

Did you measure it?

[Andrew Miller]

Yes, I got the tape measure out. It said: “‘Granny tax’ hits 5m pensioners”. The papers referred to a £3 billion tax raid on pensioners over the next four years, and pointed out that nearly 4.5 million pensioners who pay income tax will lose an average of £83 per year next April and that people turning 65 next year will lose up to £322. As you are in the Chair and know me rather well, Mr Deputy Speaker, I suppose I should declare an interest, as it is my 63rd birthday tomorrow. Whatever the Chancellor says about increasing the income tax personal allowance, a family with children, earning just £20,000, will lose about £253 from this April. Shockingly, he slipped out that £3 billion tax raid on pensioners over the next four years. All this comes from a Government whose economic policies on growth, jobs and the deficit have utterly failed.

Of course, there have to be tough decisions on tax, spending and pay; otherwise, we would not get the deficit down. However, although the restoring of the cuts in the science budget is one of the few measures I agree with, a lot more funding is needed if we are to retain the quality of British science. I agree with Imran Khan, the director of CaSE—the Campaign for Science and Engineering—who said today:

“I suspect the Government realises that the multi-billion pound, 50% cut made to research capital in 2010 simply is not sustainable. Despite difficult times, they are trying to put it right, and it is not going to go unnoticed.

However, simply reversing the cuts isn’t going to be a game-changer for the UK. We need to be far more ambitious if we’re serious about having a high-tech future. The Chancellor should re-invest the windfall from the auction of 4G mobile spectrum, due later this year, into science and engineering.”

The Budget said nothing about that.

[Damian Collins]

Will the hon. Gentleman give way?

[Andrew Miller]

No I will not.

I also agree with the Engineering Employers Federation. Although it welcomed the changes to research and development tax credits, it stated:

“Whilst there are some helpful measures, they fail to send a strong enough signal to growing manufacturers”.

This morning’s Financial Times states that John Longworth of the British Chambers of Commerce said that

“small and medium-sized companies felt the Budget measures would ‘overwhelmingly benefit the biggest businesses’ and were disappointed he did not do more to boost confidence across the economy.”

Finally, as the shadow Chancellor said, the Chancellor’s plan has failed. Trying to raise taxes and cut spending too far has backfired. With his tax cut for millionaires, the Chancellor is piling insult upon injury for millions of families and pensioners across Britain. This is a Budget full of failed promises that will fail the country. I urge the House to vote against it on Monday.

14:50

[Sir Peter Bottomley (Worthing West) (Con)]

The House will appreciate that parts of the speech by the hon. Member for Ellesmere Port and Neston (Andrew Miller) were his own words and that others sounded a bit like a Whip’s handout. His birthday is to be welcomed.

I suggest to colleagues that it would be worth their while going through chapter 2 of the Red Book, because its 250 paragraphs contain all kinds of things, some of which are important and others of which are even more important.

As we all recognise, everything that we are discussing must be put in the context of the Government’s receipts and expenditure, which are shown on page 18. The attempt to close the gap between the two underlies everything that we are considering. Some of the matters in chapter 2 of the Red Book will not matter to many people, such as VAT being put on the rental of hairdressers’ chairs. Others have not been spotted by many, such as VAT relief being taken off alterations to listed buildings.

Anyone who has had dealings with English Heritage, as I have, will know that sometimes it is very helpful and that at other times it adds to the cost of what one is trying to do. If we have to take the VAT relief off alterations, perhaps we should consider giving VAT relief to the maintenance and repair of such buildings, or to a portion of those costs, because meeting the requirements of the listed buildings authorities can be expensive.

Paragraph 2.40 is on charitable giving. The Chancellor suggested that philanthropy in a person’s lifetime should be subject to a limit of 25% of their income in any year. I can imagine circumstances in which someone would have a very high income in one year, perhaps through the sale of an asset that is not protected by capital gains tax relief. If somebody gets £1 million over and above their normal income and wants to give away two thirds of it, what is the Chancellor thinking of in saying that they can give away only a quarter? It seems to me that we ought to have the same ability to give away our earnings as we have to give away our assets in death.

I ask the Chancellor, when he has his consultation with philanthropists, to ask a number of well-known philanthropists—without giving their names—how they would react to that. For people with established charitable funds, such as Dame Vivien Duffield, who gives fantastic support to charity, there is no problem, but there is a problem for people who, by chance, have a very high income for one year or a number of years and who want to give away a lot of money. That is a matter that the House should consider, but I would like to hear the Government’s response to a consultation before taking up the matter further.

I also have a question, not for answer immediately, about the lifetime limit on savings for self-invested pensions. The limit has come down from £1.8 million to £1.5 million. That does not affect me personally—not on my salary. However, somebody who has got to £1.6 million can now write in and say, “Please protect this amount.” What happens if the value of their investment goes up by 15% in the next five years? Or by 150%? Will they lose 55% of that increase? They have to take the risk that the amount of money might go down, but if it goes up, the Chancellor will say, “I will have more than half of that.” I may misunderstand the provision, and I am not saying that it was new in yesterday’s Budget, but it does matter and we ought to give it some consideration.

I welcome the provisions on employee ownership and the enterprise management initiative, some of which are really interesting.

I am not absolutely certain that I understand the gift aid and charitable giving provisions completely, but they are to be welcomed. Simplification matters, and the headline title in the Red Book is, “A fairer, more efficient and simpler tax system”. I should like to talk about that.

Some of the accusations that the Opposition have made about the so-called granny tax are exaggerated, and we have to realise that we need to get more people to have more provision for their old age. The Government are right to say that £140 should be the minimum pension level, but we need to apologise to people who did not have the chance to receive that. They often worked for much longer than the current qualifying period, but get lower pensions and are more likely to have to get means-tested support. It is unfair to them when we make things better for people in the future, and we have to apologise to those most affected.

I want to ask the Minister why we use the retail prices index for some things that people have to pay and the consumer prices index for some things that people receive. People can rightly go through the Government’s provisions and ask whether there is a philosophy to that or whether it is just what is now called fiscal consolidation, which means, “We’ll take all we can and pay out as little as we can.” That is a perfectly reasonable attitude for the Government to take, but would they like to say openly what the philosophy is?

I end by saying something about child benefit. I ran a campaign in the early 1970s to bring in family allowance for the first child, and I ran a campaign against Denis Healey when he said, “There’s no need to increase family allowance or child benefit—look at the married man’s tax allowance.” Half of that allowance went to people who had no children, and half of it went to people who had working spouses, so it was the least well directed way of supporting those caring for children.

Some of the arguments put forward over the past year, since we first heard about the proposal to cut child benefit for a certain number of people, have been grossly insulting. The idea that someone on £20,000 a year or less will support a person on £120,000 is nonsense. I saw one bit of paper suggesting that I could write to my constituents explaining why people with between £60,000 and £800,000 a year in earnings were being subsidised by the poor, but the difference between the taxation of someone earning £800,000 and someone earning £20,000 would pay for child benefit over and over again. The advantage of child benefit is that people register to get it when they are entitled, and stop getting it when their child ceases to be of eligible age. The amount of family formation, reformation and deformation, and the number of times people change or lose their jobs, will cause a lot of problems.

I say to the Government that whatever they get through this year against my wishes, they should not stick to this mistake. Amalgamating the value of the child tax allowance and the family allowance was right, and child benefit was the right way of doing it. It puts money in the purse more often than in the wallet. The Government are making a mistake, although less of a mistake than when the announcement was made a year ago. If they would like to have a serious debate about the matter, please count me in.

14:54

[David Simpson (Upper Bann) (DUP)]

I agree with a lot of what my hon. Friend the Member for Foyle (Mark Durkan) said about welfare cuts, regional pay and the £25 billion that the Government will provide to allow some banks—five at the moment, I believe—to help businesses. I trust that banks at home will take up that offer as well, because it would make a lot of difference to companies there.

I know that this was a very difficult Budget for the Chancellor, but I believe that some better decisions could have been made than the ones that we heard yesterday. First, I would like to deal with the corporation tax cuts to 24% and then to 22% by 2014. The Northern Ireland perspective, of course, is that we are in direct competition with the Irish Republic for investment. A former chief executive of the Republic’s Industrial Development Agency once remarked:

“In the battle to attract overseas investment to Ireland, no financial weapon has been more important than tax in convincing new industry to locate here. It remains the IDA’s unique selling point, giving Ireland a critical advantage in winning new investment.”

The measure in the Budget, therefore, is certainly welcome from Northern Ireland’s perspective.

Of course, not every business in Northern Ireland is liable for corporation tax and in a position to benefit—only 3% of businesses pay it. Some 99% of our businesses in Northern Ireland are small businesses. The measure is welcome news for those who will benefit, but it will have no impact on the overwhelming number of our businesses in our business community. That is why I welcome measures such as the proposal to allow the smallest businesses to move to a cash-based tax calculation. That simplification of the process could help up to 126,000 small businesses in Northern Ireland.

In the local press in Northern Ireland, the Federation of Small Businesses welcomed the Budget, but expressed disappointment that there were no plans to set up at the heart of government a small business administration to champion small businesses. Perhaps we will see that later.

I also welcome the devolution of air passenger duty, which will be included in the Finance (No. 4) Bill. That measure will allow the Northern Ireland Executive to set their own rate for long-haul direct flights—we have competed against the Republic of Ireland on that, so the measure will also help our investment strategy. The proposal for loans for young people to start their own businesses is another welcome part of the Budget.

Fuel duty, however, is one of the biggest problems that we have in Northern Ireland, especially for road hauliers. Because we rely so much on road transport to deliver our goods, fuel duty is causing a major problem. It is bitterly disappointing to people across the whole United Kingdom that the Government have decided to go ahead with the 3p duty increase, which will happen in August. I understand that in doing so, the Government will bring into their coffers somewhere in the region of £800 million from the motorist. Although the Government will get a lot of money from the measure, it will cause a lot of difficulty for those working people who must travel by car or another vehicle to their place of work. It is causing major difficulties.

[Bob Stewart (Beckenham) (Con)]

I support what the hon. Gentleman says about fuel duty in Northern Ireland. In my many times there, the one thing that always struck me was the scarcity of railways. There just is no railway system, and therefore everything must go by road. It is very sad, but the duty has an impact on Northern Ireland.

[David Simpson]

I thank the hon. Gentleman for his comments. That is one difficulty we have in Northern Ireland because for 40 years of the troubles, the infrastructure investment was not there. We are only now playing catch-up. Perhaps some day when he comes across to the Province, we will have a new railway link from Belfast International to the centre of Belfast, which will be beneficial. It could be some way off, but perhaps we will achieve it.

Many people will welcome the tax credit measure to be introduced for the video games, animation and high-end TV industries. The Northern Ireland Executive have tried to promote that sector for some considerable time. Of course, Northern Ireland has seen significant investment in the sector, especially in film production. I hope there will be added benefits to be derived from this announcement. Recently, it was announced in the press that the series “The Game of Thrones”, which was made in Belfast, is to return shortly to film a new series.

In a passing comment, the Chancellor mentioned an enterprise zone for Northern Ireland. I would welcome that, if we could just find out from someone what is meant by an enterprise zone in Northern Ireland. The Secretary of State tells us that it is an enterprise zone for the whole of Northern Ireland. When we tease it out, some will say that it is going back to the 1980s, when there were different enterprise zones across Northern Ireland. We are yet to have any beef on the bones, and we need that if we are to determine exactly what is meant.

One of the issues that has continually acted as a brake on business is the endless red tape and planning laws, and I welcome the announcement in the Budget that we will perhaps see a quicker response to businesses when they apply to expand their premises. Of course, it is a devolved matter for the Executive, but I am sure that the Minister in Northern Ireland will see fit to fall into line in order to create an environment that is helpful for businesses in Northern Ireland. We also have the dreaded dead hand of EU regulation. I urge the coalition to have a firm hand when it comes to all the directives and regulation that the EU imposes on businesses. That needs to be addressed and, frankly speaking, the coalition needs to tell the EU where to get off. This is the United Kingdom, and we make our own decisions for our businesses and companies.

Although there are some plusses in the Budget, there are of course some negatives, but I wish the Government well with it. I hope that the Government can turn around the fortunes of the United Kingdom, and that we can see the people of this United Kingdom having a better standard of living.

15:07

[Stephen Metcalfe (South Basildon and East Thurrock) (Con)]

I am pleased to have an opportunity to contribute to this most important debate. Before I start, I put on record my appreciation to my right hon. Friend the Chancellor for his statement yesterday, for putting growth at the heart of the Budget, for unashamedly backing business, and for rewarding hard-working families. Those are the areas I want to focus on, but first I want to talk a little about the cut from 50% to 45% in the top rate of tax.

I have to say that I did not campaign for the cut and I was surprised to see it in the Budget, although that does not mean I do not welcome it. As a Conservative, I believe that all taxes should be as low as possible so that everyone can keep as much of their money as possible and spend it how they wish. But I recognise that at a time of national austerity, when public sector workers are experiencing a pay freeze and then very modest pay increases, and ordinary families are struggling with high fuel and energy prices, giving what appears to be a tax cut for the wealthiest in society seems to make no sense. Our hearts say this cannot be right, but if we use our heads, look at the hard facts and stop listening to the class war rhetoric of the Opposition, it begins to make a little more sense.

The 50% tax rate left Britain isolated as the country with the highest income tax rate in the G20—higher than our competitors such as the United States and countries in Europe. It made Britain a less attractive place for wealth and job creators to set up and do business. It encouraged the wealthiest in society to be more creative about where in the world they paid their tax. It saw £16 billion of income deliberately shifted into a previous tax year, meaning that the total take from the 50% rate was only around £l billion. It did not raise the levels of income expected and it made Britain less competitive.

[Richard Fuller (Bedford) (Con)]

My hon. Friend is making a lot of sense. Would he also draw Members’ attention to the HMRC report and the chart on page 23 showing that even with a 45p tax rate we will still have the highest tax rate for top earners in the OECD and G20?

[Stephen Metcalfe]

I think my hon. Friend has just done that.

The higher tax rate made Britain less competitive, and if we are less competitive, it means less growth, fewer jobs, reduced prospects for economic recovery and fewer tax cuts for the rest of us. Despite the perception, therefore, that this cut benefits the wealthiest, I believe that it benefits us all. Having a top rate of 50% rather than 45% raises only £100 million in direct tax, whereas the other Budget measures introduced yesterday raise five times that amount—£500 million.

We should not listen to Labour on this matter. Its aim is to reignite the class war and divide Britain along the lines of envy for its own political gain. I want to say to the people of South Basildon and East Thurrock, “Ask yourself this simple question: what is in the best interests of you and your family? If you answer economic growth, better job prospects, low interest rates or lower taxes, welcome this change, because it goes some way to delivering those aims.” On its own, however, it is only a small step. To achieve real growth, we need more, and I am pleased that we are getting more. The Chancellor both confirmed existing growth measures and announced new ones. As a member of the Science and Technology Committee, I am pleased that the science budget is receiving continued support. Investment in science and technology is vital if we are to emerge from financial austerity. New technologies, deployed for our own economic gain, can provide both jobs and growth. I therefore welcome the maintenance of the £4.6 billion science budget. I believe—I think the Chancellor does too—that science and technology form the basis of our future competitiveness.

Investment in sectors that Britain excels in is also vital. Investments such as in the Francis Crick Institute at St Pancras, the establishment of a UK centre for aerodynamics, which will encourage innovation in the aircraft industry and help design and commercialise new ideas for decades to come, and the £100 million of support, alongside the private sector, for investment in major new university research facilities are important parts of that support.

Also important are the changes to research and development tax credits to encourage businesses to invest in innovation and technology. We also need to improve links with small businesses and the research base to assist in the commercialisation of research and, I hope, capture the value that can come from that. These will be the key drivers of economic growth, and the Government should continue to strive to create the best possible operating environment in which this can take place to encourage greater investment and international interest. We want the international research community to see the UK as the best place to invest in science and technology. I am therefore pleased that the Science and Technology Committee will be looking at how we can bridge the valley of death—the chasm between concept and commercialisation.

This goes wider than just science-based businesses, however. We want all businesses to see the UK as the best place to set up and do business, and I welcome the measures that the Chancellor has taken to ensure that this becomes a reality. The reductions in corporation tax, the introduction of corporation tax relief for video games, animation and high-end television, and the investment in broadband provision and infrastructure are all welcome additions to the growth programme.

[Mr Iain Wright]

Notwithstanding the 1% cut in corporation tax, what impact will the 5.6% rise in business rates have on growing businesses and economic growth?

[Stephen Metcalfe]

Obviously, any rise in cost base will have an impact, but we are working hard to reduce that to the absolute minimum, and we are putting in place a framework around which businesses can grow that will mitigate the 5.6% rise.

We all welcome the investment in infrastructure, which will be a driver for growth, although I add the caveat that I and my constituents remain wholly unconvinced that an airport in the Thames estuary is the right solution to maintaining our hub status. I would therefore encourage the Government to listen to my hon. Friend the Member for Solihull (Lorely Burt), who made a very good bid for that increased capacity in Birmingham.

I also want to put in a plea for small and medium-sized enterprises. In 2009, they accounted for 49% of private sector turnover. SMEs are vital to the economy. Cutting corporation tax, abolishing Labour’s job tax and offering support through the national loan guarantee scheme are all welcome, I am sure. However, if SMEs are to operate at their full potential, regulation, red tape and bureaucracy must be cut. They have been strangling the economy for too long. I am therefore encouraged to see measures that will allow greater freedoms for businesses in this area. My right hon. Friend the Chancellor’s announcement yesterday that he plans to reduce the number of UK SMEs required to undertake an audit and to reduce the burden of financial accounting for UK businesses has to be welcome. I hope that the consultation on a new cash basis for calculating tax, which the Federation of Small Businesses has welcomed, will benefit many small and micro-businesses, allowing them to concentrate on growing their businesses, rather than spending time, money and effort fulfilling requirements that were designed for much larger businesses.

[Bob Stewart]

As an expert, my hon. Friend will be able to confirm this, but I have heard that about 10% of what small businesses do is taken up with bureaucracy—filling in forms, and so on. Does he agree that we need to avoid that?

[Stephen Metcalfe]

My hon. Friend makes a good point. It varies from sector to sector, but that is not an unrealistic figure.

Finally, in the short time I have left, I want to talk about jobs. Businesses are vital for growth, but they are equally vital for tackling unemployment. I am delighted to see that unemployment is beginning to stabilise. Dealing with unemployment, through the building business and enterprise loans, will allow jobseekers to start their own businesses and unleash a new generation of entrepreneurs. However, we should not forget that our existing small and medium-sized enterprises have the potential to deliver sustained employment. We should redouble our efforts to create confidence for businesses to take on staff. I therefore reiterate my call to make it easier for firms to hire staff in the knowledge that employment regulation will support them if things do not work out.

As we emerge from the deepest recession in living memory, I applaud the Government’s commitment to addressing an over-leveraged economy, an unsustainable budget deficit and a broken model of growth, inherited from the previous Administration. Our plan of fiscal responsibility has allowed the UK to surge ahead of the curve. We have become a safe haven in the sovereign debt storm. As a result, we have been able to deliver record low interest rates for families, businesses and taxpayers, yet still remove millions of people from paying any tax at all, by increasing the tax threshold. Although we are not immune from events taking place on our own doorstep, we can—as this Government are demonstrating—steer this country out of a financial quagmire and deliver growth, employment and a future brighter than any alternative the Opposition may offer.

15:14

[Jack Dromey (Birmingham, Erdington) (Lab)]

Just about the only announcement that was not flagged up in advance of the Budget yesterday was the £3 billion granny tax grab, which means that those men and women in my constituency who built Birmingham and Britain, who are coming up to retirement next year, will face a cut in what they had hoped and planned for of £314.

There are many laughable examples from the historical lexicon of the politically disingenuous—for example, the spokesman in the dying days of the Nixon Administration who said at the height of Watergate that “all statements heretofore issued are now considered to be inoperative”—but to describe this granny tax grab as “simplification” takes some beating. There is one thing that the Business Secretary and I have in common: we are both follicly challenged. Neither of us detains hairdressers for too long. Following yesterday’s Budget announcement, the next time I go to Imad’s, the barbers on Slade road, I will ask for my hair not to be cut, but to be “simplified”.

Why has this happened? Quite simply, it is a granny tax grab to fund a £40,000 tax cut for 14,000 millionaires.

[Sir Peter Bottomley]

The Labour Government were in power for about 150 months. For fewer than two of those 150 months they had the 50p tax rate. Why?

[Jack Dromey]

I will contrast the record of our Government with the record of the hon. Gentleman’s Government, any time. After 13 years of a Labour Government, Britain was a stronger, fairer, better country. We have now been given a Bullingdon Budget whose first priority is millionaires, by a Cabinet who are oblivious to the consequences.

[Jacob Rees-Mogg (North East Somerset) (Con)]

rose—

[Jack Dromey]

I give way to the hon. Member for Downton Abbey.

[Jacob Rees-Mogg]

I am extremely grateful for that substantial promotion in my class standing. Will the hon. Gentleman explain why, when tax rates were cut in 1979 and again by Nigel Lawson, that led to more revenue coming in? This point has been ignored by the Labour party.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Just before the hon. Member for Birmingham, Erdington (Jack Dromey) resumes his speech, I want to make sure that he meant North East Somerset.

[Jack Dromey]

I stand corrected, Mr Deputy Speaker.

This Government are oblivious to the consequences of their actions. I am proud to represent Birmingham, Erdington. It is a constituency that is rich in talent but it is one of the 12 poorest in Britain. I see what too many Conservative Members shut their eyes to, which is the pain being felt in such constituencies as a consequence of the Government’s actions. Let us take as an example the hard-working Castle Vale family who have two wonderful children and earn just over £20,000. They face a £253 cut to their tax credits in April. Let us consider the one in four young people in Kingstanding who are unemployed. They are desperate for a job, but the Budget offers them no hope. Alongside the victims of the shameful changes to housing benefit and the changes in the Welfare Reform Act 2012, there are 1,333 households in my constituency who are now facing the iniquitous consequences of the bedroom tax.

Grotesque unfairness runs through everything that this Government do. For example, let us contrast how Birmingham and Wokingham have been treated. High-need, high-unemployment Birmingham has had £313 million of cuts to its local budget over the past two years, resulting in every citizen in Birmingham losing £164. In leafy Wokingham, the figure is £19. Whether we are talking about police budgets, fire budgets or the voluntary sector, why have the Government got it in for cities such as Birmingham? They should be standing by such cities; at a time of rising unemployment, they need more help, not less.

Now we are to have regional pay. I declare an interest, in that I have led many national bargaining arrangements in the national health service, in local government and in the Ministry of Defence. I worked with some Conservative Members when they performed various ministerial duties in that regard. For example, I was chair of the MOD unions at a time when a Conservative Minister was chair for the Government side. Anyone who has experience of national bargaining knows that it is efficient, that it is increasingly flexible in its approach and, crucially, that it is fair. The Government’s proposal will say to nurses, teachers, doctors, firefighters and home carers in Birmingham that they are worth less than their counterparts in Surrey.

[Angie Bray]

Does the hon. Gentleman’s dislike of regional variations mean that he does not support his own party’s take on the possibility of regional benefits?

[Jack Dromey]

We would never introduce the kind of unfair flexibility—if I can call it that—that the Government are now promoting. The simple reality is that hard-hit areas will be hit even harder in the next stages, be they in Wales, the north-east, the north-west, Birmingham or Northern Ireland.

In the time remaining to me, let me deal with something that commanded but a passing reference in yesterday’s Budget—housing. We have the biggest housing crisis in a generation. Millions of people in Britain are in need of a decent home at a price that they can afford. About 2.8 million people are on council waiting lists, 30,000 of them in the city of Birmingham. Owing to the combination of this Government’s economic mismanagement and the failure of their housing policies, this crisis gets worse by the day.

House building was down by 11% over the first 18 months of this Government in comparison with the last 18 months of the Labour Government. It was the vainglorious boast of the Housing Minister who gives hubris a bad name that he would beat Labour “hands down” year on year, but that is not what is now happening. Homelessness is up, with families presenting themselves as homeless up by 14%. Rough sleeping is up 23%, yet it fell by 70% under the Labour Government. We have a mortgage market where millions struggle to get a mortgage. Scottish Widows estimates the average age of unassisted first-time buyers to be going up from 37 to 40 to 44. We have a private rented sector growing rapidly which is characterised by soaring rents and, all too often, abuse of tenants.

What, then, of the “housing revolution” announced by the Government in November last year? All I would say is that if we had a house for every press statement issued before and after that time, we would not have a housing crisis. The Prime Minister and the Deputy Prime Minister donned wellies and went to a building site to say that all would be well. What came out the following day, however, was that as a consequence of the £4 billion cut instituted by the Chancellor in October 2010, affordable house building had collapsed by 99% throughout England.

What of the new homes bonus? It is both inefficient and unfair, while our planning system is being thrown into chaos by the Government.

[Richard Fuller]

The hon. Gentleman is talking about the building of affordable homes. Does he not regard it as appalling that, under the last Labour Government, the building of social houses went down by 25%?

[Jack Dromey]

Under our Government, there were 2 million new homes, 1 million more mortgage holders and half a million more affordable homes, and 1.6 million homes were renovated under our decent homes programme. Has housing been at centre stage as much as it should have been under successive Governments for 25 years? No, but I will compare our record any time with the failure of this Government.

In conclusion, housing matters. Housing matters to the economy. Housing matters to health, as evidence of the damage done by poor or overcrowded housing confirms. Housing matters to educational attainment. Kids are held back at school because they live in damp or overcrowded housing. That is why urgent action on housing matters. That is what we did in 2008, after the bankers’ collapse, with our kick-start programme, which had 110,000 homes built, creating 70,000 jobs and 3,000 apprenticeships. That is why we are absolutely right to say that we need a repeat of the bank bonus tax to build tens of thousands of homes, to create jobs for unemployed building workers and to create apprenticeships and hope for the young people of my constituency. I see the consequences of the Government’s actions every day, and I know what my constituency wants. It wants to put people back to work to build that which the community so badly needs—homes.

15:28

[Mr Sam Gyimah (East Surrey) (Con)]

Listening to today’s debate, I have heard little from Opposition Members to dissuade me from the conclusion I arrived at yesterday after hearing the Chancellor’s speech: that this is a fiscally responsible and fair Budget, but one that continues to build the foundations for our long-term growth and prosperity. What the Government are doing for growth and prosperity will be the focus of my speech. First, however, I want to make a few comments about fiscal responsibility allied to fairness.

I am pleased that the Chancellor chose to stick to the plan—a framework within which all the Government’s decisions are being made. At the beginning of this Parliament, the Chancellor made the right decision, to pay the debts of the past and, after a decade of uncontrolled borrowing, to tighten our belts. It is encouraging that the Chancellor continues to stick to that plan, which was initially unfashionable but has now entered the international mainstream.

The task facing us is not easy, and it will continue to be challenging. The gap between how much we earn and therefore take in and how much we spend has fallen from £156 billion—an all-time high, set just before the coalition came to office—to £126 billion. We have therefore made a lot of progress in balancing the books, but we must not take our foot off the gas, which is why I am glad the Chancellor continues to stick to his plan in this Budget.

It is interesting that Opposition Members no longer call for a plan B. A year or so ago not a day would pass without their calling for that. They are no longer calling for it because plan A is working: the deficit is falling and we are beginning to see private sector-led job creation. That is why the Chancellor is right to stick to his plan and to focus on being fiscally responsible. Very few western Governments could these days have announced the Budget that he has just delivered, and he has been able to achieve that because of his past decisions.

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

The hon. Gentleman says plan A is working. Does he agree that it must have been an oversight not to mention at the outset that it would result in damaging growth and therefore pushing up unemployment and the costs of some areas of borrowing?

[Mr Gyimah]

It is precisely because plan A is working that in this Budget we can afford to lift 2 million people out of tax—2 million people who were penalised by the 10p tax introduced by the last Labour Government. Because plan A is working, 24 million of the 30 million workers in the UK can get a tax cut—a very important tax cut in very difficult times. The hon. Member for Birmingham, Erdington (Jack Dromey) said that he would compare his record with our record any day. I say to him that we are lifting 2 million of the poorest people out of tax, while the previous Labour Government penalised them. Our record certainly stands up to scrutiny on that.

Labour has now quietly dropped its plan B, and is instead opportunistically opposing our measure on the 50p tax rate. However, Labour does not say that it would reinstate that rate if it were elected to office tomorrow. It is also saying it would somehow give child benefit to higher rate tax payers.

[Mark Durkan]

If the need for deficit reduction was the justification for the temporary nature of the 50p tax rate and the withdrawal of child benefit, why has the 50p tax rate remained a temporary measure while the withdrawal of child benefit will be permanent?

[Mr Gyimah]

All three main parties agreed that the 50p tax rate was to be a temporary measure. Also, we must ensure that any tax that is imposed actually raises the required revenue for the Government coffers. If it does not do so, it would be irresponsible of a Government to carry on with that tax just because it is good politics. It is right for the Government to set that tax at a rate that discourages avoidance and encourages people to pay.

Fairness must not be the only test of this Budget. Economic growth is also very important. In truth, the Chancellor has very limited room for manoeuvre, and it is good that we have nevertheless done quite a lot for hard-working people, giving back to them more of their hard-earned cash. However, only economic growth will lift the prosperity of all of us. Today, we focus on who are the winners and losers from this Budget, but growth is the most important theme.

I was therefore encouraged to hear the Business Secretary talk about access to finance from the banks. My party colleagues and I know that more borrowing, spending and debt is not the way to get economic growth and to create jobs. We believe that the way to achieve that is through encouraging a spirit of enterprise and adventure, but we cannot encourage that unless we ensure that finance gets into the real economy.

One of the biggest challenges we face in coming out of the 2008 financial crisis is the concentration in our banking system. Some 90% of small business lending is concentrated among five banks. No matter what they say, that means that there is little price competition and it is important that the Government do a lot to ensure that we can get money into the real economy. That is why I welcome credit easing, because by using the Government’s balance sheet to enable banks to borrow and lend to businesses, we enable a situation whereby even if a business had a 1% interest rate discount, it could refresh loans that may otherwise not be refreshed.

[Richard Fuller]

My hon. Friend is talking about credit easing and the use of banks. Does he not also think there is scope for considering alternative mechanisms to provide financing to our small businesses?

[Mr Gyimah]

I very much agree with my hon. Friend that credit easing is a temporary measure. In the long term, the Government have to change the lending landscape for small businesses—that is the point I was driving at. We cannot continue to rely on five major banks, which is why I welcomed the business finance partnership, a £1.2 billion fund that the Government are using to support non-bank lending institutions that are closer to small businesses. Many of these are peer-to-peer lenders, such as MarketInvoice or Funding Circle, or more traditional institutions such as M&G Investments. It is absolutely right to diversify the lending landscape, so that businesses in my constituency and in many others do not just have to rely on the same bank manager and, more importantly, the computer, which will say no to them when they try to refresh a loan or get the credit that they need.

I welcome the fact that the Budget realises that debt finance should not be the only source of finance for businesses. Equity finance is very important, especially in the context of businesses that do not have the cash flows or the revenues to support debt. That is why I welcome a lot of the flexibility associated with the enterprise investment scheme, venture capital trusts and the seed enterprise investment scheme. Those are all schemes in the Budget that would not make the headlines; nobody is going to focus on them because they do not immediately tell people who are the winners and losers in the Budget. However, it is those measures that will ensure that individuals who want to take risk, to start businesses and to build up their companies are capable of doing so. Whether we are talking about The White Company, lastminute.com or The Body Shop, it is these British success stories that will get us out of where we are at the moment.

What would I like to see as the Chancellor reflects on his Budget, and I hope, takes it further? On the diversification of the lending landscape in this country, we need to be very careful not to stifle innovation as we examine banking regulation. So much of what we are doing on banking regulation is about dealing with the crisis of the past. We should make sure that, in doing so, we do not freeze our banking system in aspic so that new, enterprising and innovative companies that can get credit to small businesses fail to thrive. The Government have announced £20 billion of credit easing, but we probably need to consider doing more in that direction to help businesses.

[Mr Iain Wright]

Does the hon. Gentleman think that the massive downgrading in business investment growth forecasts over the medium term is a sign that plan A is working?

[Mr Gyimah]

Anyone who has been in business before, as the hon. Gentleman has—he was an accountant—and as I have been, will know that one of the most important things is confidence. For businesses to gain confidence, they need to know, first, that the Government are going to create an environment of certainty in which they can operate. They also need to know that the Government are going to balance their books and to create the right environment in which to invest. Lowering corporation tax is a clear signal that we are going to be creating the right environment for businesses to operate in. I am confident that once we have that macro-economic framework right, businesses will have the confidence to invest. It is only through business investment that we will generate the growth and the jobs that all Government Members want and are fighting for. The Chancellor is on the right side of this argument, because we cannot do this through more borrowing, more spending and more debt—that is more of the same and it is all I have heard from Labour Members today.

15:39

[Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)]

The hon. Member for East Surrey (Mr Gyimah) might be persuaded that plan A is working but I can tell him that, even if it is working in his constituency and the rest of Surrey, it certainly is not working in Scotland. I hope to demonstrate that in my remarks. The truth of the matter is that we appear to be living, even in this Chamber, in two different worlds. Let us ignore the fact that, despite all the efforts of the Government and all the leaks that we debated earlier, we face a Budget that represents the reality of what the coalition means. This Government and this Budget will be remembered for cutting the top rate of tax for the rich while putting the boot into pensioners. I have already spoken to a number of my constituents and I have absolutely no doubt that that is their view.

It might seem odd for me to refer to a Foreign Secretary during a Budget speech, but some hon. Members might recall that some years ago a young representative at the Conservative party conference—a 16-year-old by the name of William Hague—addressed the conference, saying:

“Half of you won’t be here in 30 or 40 years”.

That may well be true, but what are we seeing in the Budget for the half who are left? While £30,000 a year is freely given to millionaires, the Chancellor is seeking to end age-related tax allowances, despite the evidence from HMRC, which says that 4.4 million pensioners will be £83 a year worse off in the long term. How can anyone defend that and give us the kind of nonsense we have heard about the so-called class war?

Let me address the real economy in our constituencies, which I believe the Chancellor had a wonderful opportunity to address but missed. Unemployment is by far the biggest problem we are now facing, certainly in constituencies such as mine where there has been a 54% rise in long- term unemployment and an 80% increase in youth unemployment. A league table of every constituency in Britain was produced last week, relating alcohol abuse to mortality, and it is with great regret that I have to say that my constituency came out as No. 1. Almost every professional who was consulted on those figures made the point that we cannot ignore poverty and its implications; we cannot ignore unemployment and what it means; we cannot say to young people that there are no jobs for them, whatever educational qualifications they might have attained, and not expect the kind of reaction that I have just described. Nearly a quarter of 16 to 24-year-olds in the UK are unemployed. That is a wholly unacceptable statistic and I make the point that we are talking not just about statistics but about people.

We can see from the unemployment figures that are available that in the UK there was a 22,000 increase in unemployment among women in the last quarter alone. I am seeing that in my constituency. Women are the bedrock of our society, as we are rightly told. They are at the heart of our families, whom the Government in earlier days told us were one of their priorities. Well, there is little evidence for that.

We need to restore the future jobs fund—initiative after initiative has been annulled by this Government—and we need to look at new opportunities in fresh sunrise industries, which I am happy to say exist in my constituency, particularly in solar energy. I welcomed what my hon. Friend the Member for Ellesmere Port and Neston (Andrew Miller) said a few moments ago, but I did not welcome the Government’s change to feed-in tariffs, which is frankly too deep and too fast. Home owners who seek to go along with developments in this sector now face soaring energy costs, and burgeoning industries such as AVC Sky in my constituency face enormous difficulties, which is bad for home owners, bad for jobs and bad for growth. The Government’s rhetoric is simply not matched by their actions, especially when the Government tell us that they are the greenest Government ever.

Mr Deputy Speaker—I beg your pardon, Mr Speaker; I welcome you to the Chair. We saw at points during the Budget speech yesterday Liberal Democrat Members waving their Order Papers. Were they waving them at the kind of measures that I describe?

[Lorely Burt]

We were waving our Order Papers with delight at the fact that our coalition Government are bringing the tax threshold towards our £10,000 target faster than we could ever have hoped.

[Mr Clarke]

They were waving their Order Papers at some of the most miserable measures that I have heard in the House. They reminded me of Jim Callaghan’s comment when he found that the Scottish National party—which is not even represented here today—was working with Mrs Thatcher to bring down his Government. He referred to SNP Members as “Turkeys voting for an early Christmas”, and deservedly in their case.

I wrote to the Prime Minister recently to draw his attention to the fact that Korean shipbuilders are given preferred bidder status for Royal Navy tankers, with almost £500 million involved. It simply cannot be right that, as we defend our country, as we should, defence orders exclude British and especially Scottish firms that are willing, able and skilled enough to respond to the task. I want to ensure that highly skilled workers are kept working for our nation’s security and for our people’s safety.

I finish with a reference to the Chancellor’s announcement of a £12 billion cut in welfare—a shameful figure that the Liberal Democrats were also cheering. That is added to the Remploy closures, which have never been fully explained. Hundreds of disabled people will be thrown straight on the dole. Two thirds of Remploy factories will close. We are seeing on top of that changes in benefits that are very much to the disadvantage of people with disabilities and their carers and families. We are seeing disadvantages even to disabled children and their families. It is not fair, not acceptable, and the Government deserve to be rejected and hounded by the British people.

[Several hon. Members]

rose—

[Mr Speaker]

Order. Angie Bray will be the next speaker, but before calling the hon. Lady I inform the House that, in view of the large number of Members seeking to contribute, the time limit for Back-Bench speeches will now be five minutes, with immediate effect.

15:49

[Angie Bray (Ealing Central and Acton) (Con)]

A little over a year ago I stood here and drew the Chancellor’s attention to the level of debt hanging over the heads of every single voter in my constituency. The amount—the generous legacy the Labour Government bequeathed to the people of Ealing and Acton—was an astonishing £37,000. I asked the Treasury team for reassurance that they were committed to putting that right. The answer was a resounding yes. Yesterday, a year on, the Chancellor’s Budget reconfirmed that. By sticking to his original plan he is reducing the structural deficit every day and lessening the burden on my constituents, their children and their children’s children.

Many of my constituents own their own businesses locally. The Budget will encourage them because it sends out the crystal-clear message that the Government are behind them and back aspiration, new ideas and creativity. Now these businesses know that from next month their corporation tax bill will be reduced to 24% and that it will drop still further to 22% by 2014, and hopefully 20% thereafter. They know that London’s coffers will be boosted to the tune of £70 million by a new development fund to attract new business and jobs and that the national loan guarantee scheme will step up to the plate and make bank loans easier by making them cheaper.

When those measures are allied to the reduction in the top rate of income tax to 45% from next year, it is clear that the Government are serious about supporting enterprise and encouraging aspiration. Long-term measures such as those help to instil confidence and encourage businesses to take the bold decisions needed to thrive. Only by allowing them to thrive will we create the conditions for growth and go some way to addressing the related problems of getting more of our young people into work and improving our communities.

Young people in my constituency can be encouraged, too. The Chancellor announced the introduction of enterprise loans to help 18 to 24-year-olds to set up and grow their own businesses. They will get the opportunity to pitch their ideas before a panel and, if they have a viable business plan, get a cash injection of between £5,000 and £10,000 to help them start up. So often it is the young, creative, positive ideas people who are stymied by a wall of red tape when they try to start up on their own. In the long term, schemes such as that can go some way to bridging the gap between great ideas and the start of a great business.

Already in my constituency I know of a number of set-ups that could benefit from that kind of scheme. The Doughnut Factory in Acton is supported by a number of organisations, including Action Acton and the university of West London. It is a creative hub where local entrepreneurs can rent affordable office space. Many of the young people based there would be eager to pitch their plans. I spent a happy morning there meeting a group of young, enthusiastic students, all looking to start their own businesses, the very people that that scheme is aimed at helping. It is just the latest in a raft of hugely positive measures that the Government have already introduced to help young people: the upcoming youth contract, the Work programme, a dramatic increase in apprenticeship places and the national citizen service for 16-year-olds, which is now entering into its second year.

The real headline news from the Budget has to be the largest real increase in the personal tax allowance for 30 years. An additional 840,000 people will be lifted out of income tax, meaning that altogether the Government will have taken 2 million people on the lowest incomes out of tax altogether. The personal tax allowance will go up to over £9,000, and we are well on our way to our target of taking everyone earning up to £10,000 out of tax. Of course, even those earning above that stand to benefit as well. That will help a great many of my hard-working constituents. It is also part of the Government’s overall strategy, sitting alongside the benefit reforms that ensure that work always pays.

London has done well out of the Budget. The Chancellor announced vital cash for London rail; £15 million for Transport for London, specifically for cycle safety; accelerated broadband; more support for the enterprise zones—please can we have one in west London?—new funds to help young people into work; and £70 million for the Mayor to help London businesses grow. As I have said, London has done well out of this Budget. Enterprise and aspiration have done well out of this Budget. In tough times, this is the right Budget for the country.

15:55

[Nick Smith (Blaenau Gwent) (Lab)]

In my maiden speech almost two years ago, I highlighted my constituency’s strengths: our beautiful land and strong sense of community; a pride in our radical past of Chartism and of Nye Bevan, who established the NHS; and its hard-working people, who started our industrial revolution. I highlighted also its challenges and, particularly, high unemployment and a creaking infrastructure that is badly in need of significant investment. Sadly, unemployment is even higher now and, in particular, almost 20% of our 18 to 24-year-olds are on the dole—a shocking figure for young people.

In Blaenau Gwent there are 18 decent and talented people chasing every advertised vacancy, so job creation, transport infrastructure and growth are still top of our agenda. Sadly, the Budget showed that they are not the Government’s top priorities, and we see no coherent strategy for jobs and growth. The UK Government must do more. We need investment in jobs and growth, and we need it now.

The fact is that we are losing jobs faster than we are creating them. Everybody I speak to about regeneration in Blaenau Gwent, in the public and private sectors, stresses the importance of good transport links. Being in the east of Wales, we have good access to the rest of the UK, but we need adequate infrastructure—both road and rail—to deliver the benefits of that access, and that is why I am campaigning for both.

Work to improve the Heads of the Valleys road is under way, and, although the work is disruptive in the short term, when it is complete we will see the benefits. Thankfully it started before the Government proposed linking road improvements to new tolls. Welsh business would also be given a real boost if the Severn crossing’s toll was axed.

Rail electrification to Cardiff is going ahead, and that is good. The Ebbw Vale to Cardiff line was resurrected under Labour, and it is now so successful that carriages are jam-packed and locals call it the “Bombay Express”, but it needs a more frequent service and a line upgrade. In the Budget the Government state that they are working with the Welsh Government on the electrification of the valley lines, with final proposals due this summer. The Ebbw Vale to Cardiff line must be included to give a boost to the place that, because of our high unemployment and related deprivation, needs it so much.

The Welsh Business Minister, Edwina Hart, has committed £2 million to the development of a world-class motor racing circuit in Blaenau Gwent, and that could lead to a £200 million investment and create 1,000 jobs —a real game changer for our area. I had hoped that the Chancellor would support this opportunity, hailed by some as the UK version of the famous German Nürburgring track, but from his statement yesterday it appears that Deeside in north Wales will be the only Welsh enterprise zone to benefit from enhanced capital allowances. Will the Minister please clear that up?

Such tax treatments are focused on plant and equipment costs, not on the infrastructure itself, but capital allowances need to attract individual as well as corporate investors. That would help kick-start those exciting automotive plans for Blaenau Gwent, and the Government should think much more creatively about enhanced capital allowances for business growth.

In the Welsh valleys we punch above our weight in terms of the number of brave men and women recruited to our armed services, so I welcome the measures in the Budget which improve military accommodation and help with council tax rebates and with forces families’ welfare. They are an important part of the military covenant and are supported by both sides of the House.

I should also comment on the Budget proposals affecting fuel prices. A stonemason in my constituency travels from job to job in his 4x4, but with the cost of fuel he thinks that he would be better off out of work, and that cannot be right. Many in Wales will also be fearful of the proposals for regional public sector pay, which would hit women hard in particular, and teachers and nurses especially.

Blaenau Gwent deserves more than this damp squib of a Budget. In the future can we see real Budget leadership on growth and improved transport infrastructure, and on support for business development and public health? Then Blaenau Gwent and Wales will be able to play their part in boosting our economy and make a further positive contribution to our UK budget.

15:58

[Andrew Griffiths (Burton) (Con)]

It is a pleasure to take part in this debate and to listen to the contributions. I was particularly pleased to listen to the speech made by the hon. Member for Birmingham, Erdington (Jack Dromey), who is no longer in his place. In his usual articulate and erudite manner, he opposed every single measure that the Government had brought forward to cut the deficit. He opposed changes to welfare, to benefits and to housing, yet he had not a single idea about how his party would begin to cut the deficit—the terrible legacy that we were left by the last Government.

I pay tribute to the Chancellor and the Treasury team for yesterday’s Budget announcement. I wanted a Budget that was good for business and hard-working families, and I feel that I got that. Thousands of families will be lifted out of paying tax as a result of yesterday’s announcement. It is important that that measure is particularly beneficial to women, who tend more to be part-time or low paid workers. A measure that lifts people out of paying tax is particularly helpful to the women in our society, and that is a good thing.

Now I come to the “but”, both as the MP for Burton and chair of the all-party group on beer. The Chancellor said that he intended to make no changes to the duty regime. That was a little disingenuous, shall we say, as he knew—and I knew, and brewers up and down the country knew—that that meant an increase of 5% on beer duty because of the continuation of Labour’s beer duty escalator. That is putting jobs and livelihoods at risk.

In the past four years, beer duty has increased by 42% in this country. Our beer duty is now the highest in Europe—eight times higher than France, 10 times higher than Spain and 11 times higher than Germany. We pay 40% of all Europe’s beer duty, yet we represent only 13% of its beer consumption.

We have seen a 52% increase in duty over recent years, yet only a 10% increase in revenue and, as a result, a 25% drop in beer sales in this country. Yet beer is a great British product. Some 80% of beer drunk in this country is brewed here. There are 800 breweries across the country, which employ people in all our constituencies. Compare that with the wine we drink, 90% of which is imported, and we see the unfairness of the current duty regime. Yesterday’s announcement will cost an average pub about £2,800. I commend the 106 MPs who signed the early-day motion in support of freezing beer duty.

I turn to the unfairness in how the system treats beer and cider. Cider pays half the duty of a 4% beer, and at high strength—8%—beer pays four times the duty on cider. That means that breweries and pubs suffer. The cider industry tells us that the reason is the increased costs in running an orchard and growing apples for cider.

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

Why, in the hon. Gentleman’s opinion, is there such discrimination in the coalition in favour of cider?

[Andrew Griffiths]

I should say that what I meant when I spoke about the Chancellor was a lack of clarity in relation to yesterday’s statement.

I have with me a private and confidential presentation—

[Neil Parish (Tiverton and Honiton) (Con)]

I welcome what my hon. Friend is saying about beer, but I am worried that he is suddenly targeting cider. There is a great amount of cider in my constituency, and I would be worried if he wanted extra tax on it.

[Andrew Griffiths]

I assure my hon. Friend that I am not targeting cider; what I want is fairness in the system.

The presentation I mentioned, which is used by the makers of Stella Cidre, clearly states the differences in duty. It says that the duty per hectolitre paid on Stella Artois, at 5% strength, is £86.60, the duty paid on Strongbow is £36.01, and that there is a difference of £50.59. At the top it says: “Why cider? Favourable duty position resulting in margin opportunity”. As a result of our taxation system, we are penalising beer. Every time somebody chooses to have a pint of cider rather than a pint of beer, the Treasury loses 50p. All we are calling for is some fairness in the system.

Last week at Prime Minister’s Questions, I asked the Deputy Prime Minister what measures he had in place for beer, and he said that he wanted to support community pubs. The best way to do that is to give beer a break. We want a fair taxation system that recognises the importance that beer, as a lower-strength drink, can have in our society. We want recognition of the efforts that brewers are making in relation to responsible drinking and reducing the alcohol by volume of their products. I commend the Government for their work on the 2.8% strength beers that were introduced recently. We recognise that the community pub is at the heart of the big society and that it has an important part to play in all our communities. I urge the Treasury to look at this again and work out what we can do to give British beer and British pubs a fair break.

16:06

[Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)]

The Chancellor’s Budget speech painted a positive picture, in some ways, of what his policies are doing for the UK economy. However, although some businesses in my constituency are doing well, at the grass roots, among small businesses, I find a lot of people who are very worried about the future of their businesses, and that many of those who have been struggling to survive over the past year are now on the brink. I am sure that my constituency experience is typical of that of many Members in constituencies up and down the country.

That is why the Chancellor has made a dramatic mistake by rejecting Labour Members’ call for a temporary cut in VAT, which could have provided an immediate boost to businesses, created jobs and provided real relief for those on the lowest incomes. On the main street in my constituency, there are all sorts of shops, offices and other types of businesses, and I am genuinely worried that many of them are in great danger of going over the cliff edge if there is not an immediate boost to the economy such as a reduction in VAT. The temporary VAT reduction that Labour introduced at the end of its period in government certainly had that effect, and another temporary reduction would be an important boost for all types of businesses, but particularly small businesses, in my constituency and up and down the country.

[Kwasi Kwarteng (Spelthorne) (Con)]

The hon. Gentleman talks enthusiastically about businesses. Do not the measures in the Budget to cut corporation tax support business?

[Mark Lazarowicz]

The measures on corporation tax will have a beneficial effect on some businesses, but not so much for the smallest businesses. I am particularly concerned about the small businesses in a fragile situation in many parts of my constituency, which does not, relatively speaking, have very high unemployment overall, although some areas do have high unemployment.

First, we need a general 2.5% reduction in VAT that would benefit all types of businesses, as well as relieving people on low incomes, in particular, from the difficulties in which they find themselves as a result of the general economic situation and the policies of this Government. We also need targeted cuts in VAT. It is extremely disappointing that yet again the Government have rejected the call, not only from Labour Members but from organisations such as the Cut the VAT Coalition, which has called for VAT on home maintenance, repair and improvement work to be cut to 5%. That would not only be a boost for the depressed construction sector but would create work for joiners, plumbers, electricians and painters, and opportunities for young unemployed people looking for their first job.

Of course, one has ask how one would pay for a temporary cut in VAT. If the argument is that the top rate of tax is being cut because it will bring in more income by encouraging economic activity—a fairly dubious argument in my view—surely temporary cuts in VAT of the kind that I and my party have argued for are much more likely to lead to an immediate increase in economic activity than the cut to the top rate that is proposed in the Budget.

[Neil Parish]

I am interested in why you say that it is dubious to cut the rate from 50% to 45%, when in 13 years of your Government, you did not put it up from 40% to 50%.

[Mr Speaker]

I am extremely grateful to the hon. Gentleman, but I am not sure why he refers to my Government. There should be no reference to my Government in these matters.

[Neil Parish]

I meant the Government of which the hon. Member for Edinburgh North and Leith (Mark Lazarowicz) was a member.

[Mr Speaker]

I am sure that that is what the hon. Gentleman meant. It would be good in future if that is what he said.

[Mark Lazarowicz]

Those points were covered earlier in the debate.

I want to highlight the problems for businesses in my constituency. I say again that a cut in VAT would certainly make a difference for businesses in my constituency that are on the brink. Such a reduction in VAT would increase business activity, increase sales, increase the taxation income of the Exchequer and decrease unemployment, with a consequent cut in spending on benefits. The boost for smaller retailers and smaller companies in the construction sector would have other beneficial effects. From my constituency office, which is in a street that is still relatively well occupied, I can see shops and businesses closing and the resulting cycle of deterioration not only in the local economy, but in the local environment. I can see that happening in my constituency. That is why I believe that the temporary reduction in VAT that we have called for would be a great boost not just for business, but for the wider economy.

There were some announcements in the Budget that will benefit my constituency. There was confirmation that Edinburgh will be one of the cities that will benefit from superfast broadband and the green investment bank was also mentioned. However, those two announcements have been made a number of times already. The announcement about superfast broadband for Edinburgh and a number of other cities was made at the end of last year. The fact that the Chancellor chose to highlight those innovations again only goes to show the lack of imagination in the Budget when it comes to growth. We could have had a Budget for jobs and growth. Instead, we had a Budget with very few specific policies. That is regrettable and it is bad for the country.

I hope that the Government will change course and reduce VAT, if not in this Budget, then at a later stage, to support smaller businesses in the construction sector, which would benefit greatly from such a change.

16:12

[Kwasi Kwarteng (Spelthorne) (Con)]

I am pleased to have the opportunity to speak in the Budget debate, because we had a significant Budget yesterday.

We have to consider what the Chancellor said in the Budget in the context of 10 years of Labour profligacy in public spending and in the context of the international economy. The Office for Budget Responsibility has been clear about the problems that face the British economy. There are structural problems caused by too much debt, which in turn was caused by too much spending. It is clear to everyone that spending more money or running a greater deficit would not help to get us out of this situation. The Government are doing what they set out to do and they are reducing the deficit. The Budget yesterday was a step in the right direction. We are trying to cut regulation and to encourage enterprise and aspiration. All that was clear in the Budget.

I would like to talk about tax cuts. The most significant tax cuts in yesterday’s Budget were not at the top end of the income scale, but at the lower end. It was an historic step to take hundreds of thousands of people out of taxation. It is striking that in this debate, the Labour party has made no comment about that. It has not given us the courtesy of saying that it agrees with the proposal, nor has it opposed it, yet it was the most significant move in the Budget.

There were other, perhaps more controversial moves, such as cutting taxes for wealthier citizens and subjects, which have created some debate. It is received wisdom, I think, that high taxes did not stimulate economic growth. Some Members will remember that there was a 98% super-tax in the 1970s, and we were a very highly taxed nation. Other Members were here when Nigel Lawson cut the top rate of tax from 60% to 40%. That was so successful that in 12 years, Labour did not touch it. It always accepted that 40% was a reasonable and good tax rate, not because it was friendly to the rich but because Labour’s leadership realised that there needed to be incentives to make the economy grow.

[Mr Speaker]

Order. I think the hon. Gentleman was referring to his noble Friend the Lord Lawson of Blaby. It would be good to preserve some of the courtesies of the House.

[Kwasi Kwarteng]

Indeed. I am very grateful to you, Mr Speaker, for putting me in my place. I will refer to him with proper courtesy with his title. The Budget in which he cut the top rate—the 1987 one, I believe—was the most significant in recent years, and only latterly have a series of political games been played and has the top rate been increased. Other Members have referred to that, and it is an elephant trap that the Government have mercifully dodged.

We have to consider the Budget in its national context, but also in an international context. It is no good our having worthy debates here without referring to what is going on in the rest of the world. I was very pleased to see that the Chancellor had finally realised that aviation capacity in the south-east is a massively important issue. The fastest-growing cities in the world need to have more connections. We will not be able to make money or trade with them without connections, and the Chancellor’s step of recognising the problem is mature and bold.

While we are focusing on spending and regulation, we have to realise that other parts of the world such as China, India, Brazil and places in the middle east such as Dubai have favourable regimes for business. If we are to compete seriously with those countries and their regimes, we will have to do an awful lot more even than we are doing to make ourselves competitive.

The Budget was excellent and a step in the right direction, although we need to do more to meet the targets that we have set ourselves. The Office for Budget Responsibility has said that it is looking for 3% growth in 2015 and, to meet that, we will have work an awful lot harder.

16:17

[Steve McCabe (Birmingham, Selly Oak) (Lab)]

I begin by apologising to you, Mr Speaker, to the respective Front Benchers and to other colleagues for the fact that I will not be here for the end of the debate. No discourtesy is intended, but I have a pressing constituency engagement.

As I listened to the tail end of the Business Secretary’s speech, I heard him outline the many problems confronting the economy and he cited the banks as one of the remaining problems. It strikes me that for that reason, it is important that Government Members try to appreciate that my constituents in Selly Oak, who work long hours for low pay or care for sick children or elderly relatives, will struggle to understand why one of the key tax give-aways in the Budget will amount to £325,000 a year for one of our leading bankers. He is hardly on his uppers, so people will find that very difficult to understand.

If the central argument about the 50p tax rate is that it has not raised much, that is because people have been avoiding it. The decision to cut the rate amounts to rewarding and reinforcing tax avoidance behaviour. What will prevent the group of people involved from trying to avoid the next band of tax? That is the problem—the Government are saying, “Because they avoided it, we’re going to reward them.”

I now turn to something that the Chancellor did not address. One of the most pressing problems of this age is youth unemployment—all hon. Members share that concern—and I was surprised the Chancellor did not take advantage of the opportunity in the Budget to do a bit more. The Government like to tell us about the number of apprenticeships, but most of those are not for people in the 16 to 18 age range. The vast majority that have been created tend to be for older people. There was an opportunity in the Budget to offer more incentives to small businesses to take on young people, but it was missed. Successful manufacturing companies in my patch such as B.H. Leake, Birmingham Powder Coatings and Cameron Price have all told me that they would like to take on a young person or apprentice, but they find the system extremely complex and apprenticeships difficult to fund. Something to improve that would have been welcome indeed.

I welcome the news on the loan guarantee. I hope the initiative is more successful than others. Quantitative easing has given the banks plenty of money; the problem is that they are still not passing it on to small companies. In the same vein, I welcome the proposals to give support to the computer games and animation industries. That is a really good thing that the Chancellor has done. I hope we get the details of how it will work soon, and that it will not turn out to be mired in complexity and red tape, because that would be a tremendous setback.

There is another area in which the Chancellor could have helped young people. National Express is keen on a travel card for young people. It has been in talks with the Government and was directed to the National Apprenticeship Service, which directed it to learning providers, who said, “We don’t have the budget. Go back to the NAS.” There is quite a lot of evidence that the cost of travel inhibits young people from finding the jobs they are looking for. Anything we can do on that front, Minister, would be most welcome.

I shall conclude by mentioning one other thing. I was relieved that the Chancellor said there will be a White Paper on social care. We cannot afford for that issue to be kicked into the long grass. If it is not tackled in the next year or so, it will not happen in this Parliament, and we will not address the problem.

16:22

[Jackie Doyle-Price (Thurrock) (Con)]

I am grateful for the opportunity to contribute to this debate and congratulate the Government on their increase of the personal tax allowance. I believe that a defining characteristic of the coalition Government is that we are taking so many more people who can least afford it out of paying tax altogether. It is an achievement of which we can be proud, and which reflects on both parties in the coalition. The measure also reflects the fact that Government Members have the right values when it comes to deciding who carries the burden of paying for public services. It should not be the lowest paid. We need to reward work and encourage aspiration.

The Opposition response has been predictable and disappointing. I was reminded why I got involved in politics in the first place many years ago when I heard the language of class war and envy being expressed by Opposition Members. They say, “Same old Tories,” but I say, “Same old socialists.” We have heard today the final nail going into the coffin of new Labour. The socialists are back in charge.

Let us be clear. The Government inherited an economy in which the state was borrowing more than it could afford. We certainly were not living within our means. The Chancellor’s achievement is that he has been able to reduce borrowing and establish credibility in the eyes of the markets, with the result that we retain confidence and continue to benefit from low interest rates. Our constituents benefit from lower mortgages.

I wholeheartedly welcome the Government’s decision to issue a statement to each taxpayer to explain how much of their tax is going on various areas of spending. It will strengthen the accountability of Government to the taxpayers. We on these Benches never forget that it is taxpayers’ money and we need to make sure that taxpayers have the opportunity to judge whether we are spending their money wisely and delivering the outcomes they wish to see.

What we really need now to move our economy on is a strategy for growth and job creation, and I wish to focus my remarks on those elements. I welcome the Government’s commitment to reviewing airport capacity in the south-east as that is clearly important for our international competitiveness. There has been a growing enthusiasm for a Thames estuary airport, most notably on the part of the Mayor of London. I have to put on notice my firm opposition to such a proposition. My objection is really that the Thames estuary reaches out to the rest of the world by ship and sea. In fact, the motto of the borough of Thurrock is “By Thames to all the Peoples of the World”. I want to retain the Thames estuary as a shipping centre, not as a centre for an airport.

The west London advocates of such an airport seem to think that north Kent and south Essex are economic wastelands waiting to be transformed, but nothing could be further from the truth. While the docks in east London have gone, they have moved east to accommodate the ever-larger ships. The ports in Thurrock are thriving and growing. The investment by DP World at Shell Haven and by Forth Ports at Tilbury docks mean that this sector will go from strength to strength. Within a couple of years, Thurrock will be the port capital of this country and it will strengthen the port of London and cement Thurrock’s role as a major logistics hub.

The debate about the future of a hub airport would have severe implications for Heathrow, if the new airport were constructed. The economic dislocation caused by such a move would be seismic. It would cost jobs and shift business: it would be displacement, not new economic activity. I hope very much that the review will consider what more can be done for Heathrow.

[Lorely Burt]

I totally agree with my hon. Friend about the inadvisability of a further airport in her lovely constituency. Does she agree that we already have the capacity in the west midlands—Birmingham international airport has 40 million spare passenger places?

[Jackie Doyle-Price]

I thank my hon. Friend for that intervention and I think a lot could be done by just increasing connectivity between existing airport capacity.

In the little time I have left I wish to address the issue of energy. The Chancellor has given notice that he will bring forward an energy strategy to look at what can be done to encourage more gas-fired power generation. I want to put on record a plea for biomass-fuelled generation to be given greater prominence in our energy mix. As part of a shift to more energy generation from renewables, we have had considerable emphasis on solar and wind, but when it comes to generating serious quantities of energy, biomass is clearly a great way forward. We are heading towards a situation in which a number of coal-fired stations will need to close due to their non-compliance with the large combustion plants directive from the EU. These stations are sitting on top of connections to the national grid and we could do much more to encourage energy companies to look at whether they can replace the redundant coal-fired plants with new plants that generate from biomass. That is something that the power station in Tilbury, run by RWE npower, is determined to do.

Opposition Members have mentioned regional pay. We already have regional pay. I live but two miles away from the boundary with London so public sector workers in my constituency are less well off than their London counterparts as they do not receive London weighting. We do not struggle to fill those public sector jobs. Public sector wages lag far behind those in the private sector in my constituency, and we need to encourage that elsewhere because we need to ensure that we are attracting the best talent into private sector jobs.

16:29

[Alex Cunningham (Stockton North) (Lab)]

I am proud to be a socialist, although hopefully not such an old one.

The rich will get richer and the poor will get poorer—the Tory party has very clearly reverted to type, putting the needs of the wealthy first while abandoning the poor, whether they are working or not. Even the Chancellor’s favourite red-top newspaper, which today portrayed him as Wallace, agrees and says that he has put money in “The Wrong Trousers”. Yes, Mr Speaker, women wear trousers! The Prime Minister, himself a man with young children and a working wife, once promised that he would make this country the most family-friendly in Europe, but this week’s Budget will make life even more difficult for ordinary, hard-working families—not that he knows what it means to struggle to feed a family.

Yesterday, I met Terry Fullerton from Holme House prison immediately after the Budget. He pointed out that the tax cut for many of the super rich, such as bankers, celebrities and others, is about the same as the starting salary for a prison officer. It is also several thousand pounds more than the average annual wage in my constituency. That is not fair.

Brendan Cox, director of policy and advocacy at Save the Children, said that some had called it a Robin Hood Budget. He said:

“Robin Hood was known for hitting his target. If help to the poorest was his aim, the Chancellor will be known for missing his.”

The Institute for Fiscal Studies says that an average family will be £530 a year worse off after the Chancellor’s tax and benefit changes. On top of that, the poorest 20% of households will see their incomes fall by about 1.5% in 2012-13, scuppering any chances of meeting coalition targets of reducing child poverty.

[Sheila Gilmore]

Will my hon. Friend comment on the fact that, as detailed in the Budget, the cut in the 50% rate will mean the Exchequer forgoing £3 billion of income, whereas it would cost £500 million to reverse the cut to working tax credits for people about to lose it because they only work 16 hours a week? Which does he think is the better choice?

[Alex Cunningham]

I am sure that my hon. Friend knows exactly what my choice would be—it would be on the part of working families.

I have mentioned the 1.5% cut. It might sound paltry, but even if it represents as little as £1 or less per week, it is still worth a lot for those on a low income who need to feed a family. It will also be the poorest families who are, or will be, hardest hit through the uprating of benefits in line with the consumer prices index rather than the retail prices index, through higher food and fuel costs, through the freezes to child benefit and working tax credit, and through the time-limiting of employment and support allowance.

We must not forget that for low-paid workers inflation is not 3.4%, as it was yesterday, but nearer 10%, because they spend proportionately more on food, fuel and transport. The Government’s raising of the personal tax allowance is welcome but sadly does nothing to help the one third of the adult population, including part-time workers and pensioners, who are too poor to pay income tax, yet still have to face those same challenges.

[Angela Smith]

Does my hon. Friend agree that the threat of £10 billion of further spending cuts to welfare after 2014 will only exacerbate the problems he is describing?

[Alex Cunningham]

I agree with my hon. Friend. I have people streaming through the doors of my surgeries, and e-mailing and phoning my surgeries, saying how worried they are now, let alone about the impact of £10 billion of cuts in the future.

In the borough of Stockton-on-Tees, 23% of children already live in poverty, and the Child Poverty Action Group has highlighted that the jobs shortage in the north-east region, exacerbated by further public sector jobs losses, will lead to even greater rises in child poverty. Quite simply, unless parents can access and remain in work, the economy will struggle to return to sustained growth and child poverty levels will be hard to reduce.

The Government’s changes to tax credit rules mean that 2,500 families with more than 5,000 children in the Tees valley alone, working between 16 and 24 hours a week, will have to work at least 24 hours a week or lose that working tax credit. That is as much as £3,870. What research have the Secretary of State for Work and Pensions and the Government done to find out how many people will be able to find those extra hours? Surely he understands that it is deeply unfair that a family already on a low income will lose vital cash to feed their families because their employer cannot provide them with more hours.

What about women? Some 72% of the Government’s changes to tax and benefits adversely affect women, and with 46% of working women being employed in the public sector in the north-east, they are bearing the brunt of the Government’s enforced public sector job losses. The number of women in work across north-east England has already fallen by 19,000, with unemployment among women increasing at twice the rate of men in recent times. I saw no hope whatever in the Budget that the hundreds of young people in my constituency would get the help to secure long-term employment. The Chancellor spoke of skills, but not how they would be delivered. He certainly did not talk about jobs for those young people.

I have tried to concentrate on poverty and the substantial increase in the number of families and individuals who are now facing the toughest of times. We desperately need economic policies that will deliver the jobs and growth that our people need. We do not want to see more and more people forced out of work in the coming months. We do not want to see pensioners penalised by having their personal tax allowance frozen. We do not want to see any growth in the number of soup kitchens and food banks springing up across the country, including at the New Life family centre in my constituency. We do not want to see women bear the brunt of the unfair cuts and rules being imposed on them. The Budget, read out to much cheering from the Tories and their Lib Dem allies yesterday, will not help to deliver any fairness whatever in our society; nor will it provide the platform on which to grow our economy.

16:35

[Pauline Latham (Mid Derbyshire) (Con)]

I would like to congratulate the Chancellor and his team on producing an innovative Budget in difficult times, but none the less a Budget for business and hard-working families. We need more jobs, more employment and more businesses set-up, because we cannot borrow our way out of a crisis, as Labour would like us to do. Rather, we have to earn our way out of this situation.

I find it strange that Opposition Members are so miserable all the time. All they can do is pour scorn and misery on what is a very good Budget. There are so many things in the Budget that are good for Britain and good for hard-working families, but Opposition Members never seem to be able to see it. The hon. Member for Blaenau Gwent (Nick Smith) is no longer in his place, but I was pleased that he mentioned the measures dealing with future armed forces spending, such as the doubling of the service accommodation relief for families and the welfare grant, along with council tax relief. I am sure that everybody in the House, including Opposition Members, will welcome anything that helps our hard-working service people, who are out there fighting for this country. However, apart from the hon. Gentleman, I have not heard anybody else mention the fact that the Chancellor is doing that.

There are so many positive things in the Budget that it is difficult to pick them out.

[Mr Gordon Marsden (Blackpool South) (Lab)]

Do try.

[Pauline Latham]

The hon. Gentleman should not worry; I will try, although I am disappointed that I have only five minutes to do so.

The Growing Places fund for the local enterprise partnership in my area will bring in an additional £8.5 million, which will be a tremendous boost to the area. Nobody over there on the Opposition Benches really seems to be all that pleased about the largest increase in the personal allowance for 30 years, which I find staggering. I would have thought that they would support the measure, which will take a lot of people out of tax altogether; indeed, 24 million people in this country will benefit from that.

[Mr Iain Wright]

The hon. Lady has mentioned the personal allowance and talked about those of us on the Opposition Benches being miserable. Does she think that the 16,994 pensioners in her constituency will be miserable as a result of the actions in yesterday’s Budget?

[Pauline Latham]

I do not know how you have calculated that for my constituency, because I am not even sure you know where it is. We are looking after pensioners. They will not be losing what you are talking about. They are getting a bigger increase than ever from the triple lock, and we are increasing their allowances. There will possibly be a year when some people will have to pay slightly more tax, but not the majority. Most people will not be spending any more money, and they will certainly not be losing any more money next year compared with this year, so you might like to look a little more carefully at what we are doing.

[Mr Speaker]

Order. I gently remind the hon. Lady, as I did the hon. Member for Tiverton and Honiton (Neil Parish) earlier, that we direct debate through the Chair. I am not involved in these arguments.

[Pauline Latham]

I do apologise, Mr Speaker.

The change to child benefit is also something that we should welcome, as it shows that the Chancellor has listened to what people out there have been saying. There will not be a cliff edge, as people have suggested, and no one earning £50,000 or less will lose anything. Only when people earn more than £60,000, which is quite a lot of money, will they lose their child benefit.

[Kate Green]

None the less, would the hon. Lady acknowledge that the Chancellor has been unable to resolve the anomaly whereby a couple earning £98,000 between them might be able to keep their child benefit, while a single parent on an income of £49,500 would not?

[Pauline Latham]

What the Chancellor has done is prevented us from having to go through a huge amount of paperwork that would have cost the country an awful lot of money. People might say, “Oh, but we don’t live together. We used to, but we are no longer together.” There will be so many loopholes, but he has done a good thing by going up to £60,000. I think that the majority of people in this country would agree with that, although of course Labour Members will not.

[Chris Leslie (Nottingham East) (Lab/Co-op)]

Will the hon. Lady give way?

[Pauline Latham]

I will not, as I do not have much time left.

We have not heard much about the rate of corporation tax going down significantly, yet that will benefit small businesses in particular. We need those businesses to thrive and to employ more people. The Chancellor has also introduced the new enterprise allowance and enterprise loans, which will help more people, particularly women, to start up businesses. That will give those businesses an opportunity to flourish and to take on more people to work for them.

No one has mentioned the fact that the national planning policy framework is to be published shortly. The increase in construction that that will bring will significantly help the country to move out of recession. There will be protections for the countryside, for the green belt, for national parks, for sites of special scientific interest and for areas of outstanding natural beauty, despite the doom-makers on the Opposition Benches trying to persuade people otherwise.

I am very pleased to see the introduction of an above-the-line research and development tax credit. In my area, Rolls-Royce, Toyota, JCB and Bombardier employ a lot of people from my constituency, and they will benefit from such a measure. We must remember that Rolls-Royce is doing exceptionally well in the aerospace industry in our area. We have not heard much about the investment decision by GlaxoSmithKline, which is a direct result of the Government’s policies. It would not have decided to spend that money in this country if the Government had not come up with the solutions that they put forward yesterday.

I would, however, like to put in two pleas to the Ministers. I would like Derby and the area of Derbyshire around it to be considered as one of the areas that will benefit from high-speed broadband. There is a part of my constituency in Derby that used to be the largest private housing estate in Europe, and it has some of the slowest broadband speeds around. I would like to put in a bid for Derby to be a recipient of any improvements. I should also like to point out that the electrification of the midland main line was missing from the Budget statement. I would have liked to have heard that in this Budget, but perhaps it is in the pipeline and the Chancellor will bring forward those plans in the future.

16:43

[Angela Smith (Penistone and Stocksbridge) (Lab)]

This is a millionaires’ Budget delivered by a Cabinet dominated by millionaires. It is regressive in what it does with tax, but it is equally a Budget that will do little, if anything, to deliver the jobs and growth that the economy needs. Exactly a year ago, the Chancellor told the House that he had just

“put fuel into the tank of the British economy.”—[Official Report, 23 March 2011; Vol. 525, c. 966.]

He told us that we would see the economy turn the corner in this financial year, that positive growth figures were forecast, and that unemployment would stabilise as the private sector rose to the challenge as the public sector retracted.

[Mr William Bain (Glasgow North East) (Lab)]

Is my hon. Friend aware that the OBR is predicting that the effect of this Budget will be to increase unemployment by 100,000 this year and next?

[Angela Smith]

I agree with my hon. Friend; unemployment already stands at 2.67 million, and youth unemployment is at a record level.

Despite the Chancellor’s predictions a year ago, things have turned out very differently in the real world. As we enter spring 2012, it is clear that the British economy is flatlining, and the OBR is forecasting just 0.8% growth for 2012.

In effect, the economy will continue to flatline. The Government have conceded that they will overshoot their borrowing target by £150 billion. Consumer confidence is also at a record low. As people see their income squeezed while VAT increases push prices up and inflation runs ahead of wages, many are fearful for the future. VAT costs a family an average of £450 a year, and while the increase in personal allowances reduces tax for the low paid, that is completely outweighed by the VAT rise, cuts to tax credits and higher fuel duty—again, smoothed over by the Chancellor yesterday.

The major beneficiaries of this Budget are, of course, those 14,000 people earning £1 million or more, who are receiving a tax cut of more than £40,000 a year. Some 300,000—just 2% of earners in the UK—will benefit overall from the cut of the top rate to 45%, yet just 4,000 houses a year are sold for more than £2 million. That means that the vast majority of those who gain from this tax cut for the richest will be totally unaffected by the rise in stamp duty to 7%.

[Sheila Gilmore]

What we hear from the Government is that if people are avoiding those taxes, we should just give up on it. Is there are any reason, however, in my hon. Friend’s opinion, why we cannot bring in measures to clamp down on tax avoidance while retaining the 50p tax rate?

[Angela Smith]

I completely agree with my hon. Friend, and I shall come to the point a little later.

To put the tax reductions for top-rate earners in context, we need to understand that these are people who earn £2,900 a week—that is right, each week. That is more than an average worker in Sheffield earns in a month. It is quite ironic, is it not, that this Government should believe that the best way to make the poor work is to cut their income, while at the same time believing that the best way to get the rich to work harder is to boost their income. The reduction is also a massive gamble. As Jonathan Freedland points out in The Guardian, today, it is built on

“a hoped-for influx of returning top-rate taxpayers: to most people that looks like giving up hard cash in return for a wish.”

Since when has tackling tax avoidance qualified as a tax increase for the rich?

Pensioners are also hard hit. The granny tax—the £3 billion raid on pensioners by freezing their personal allowance—will mean that people who turn 65 next year will lose out by £314. On average, 4.5 million pensioners will lose £84 a year from next April.

One has to ask what influence the Deputy Prime Minister has had on this Tory Budget, when the personal allowance increase delivers less than the recent increase in VAT, so it amounts to a tax cut for the rich. Let us not forget that the Chancellor has pencilled in more tax increases for after 2014 and a further £10 billion cut in welfare costs. To people out there, that means even further potential cuts to child benefit, pension credit and tax credit.

In difficult times—and these are difficult times for many families—a Budget needs to be fair, and it needs to give people hope. Is it fair that a one-earner family on £55,000 will lose much of their child benefit, while a couple on as much as £99,000 can keep every penny of it?

As for jobs and growth, as the Business Secretary has said, this Government do not have

“a compelling vision of where the country is heading”.

For once, I agree with the Business Secretary. There are no measures of substance in the Budget to help rebalance our economy, either geographically or structurally.

Last year, the Chancellor told us he had put fuel in the tank of the economy. Unfortunately, he put the wrong fuel in the tank and the economy has stalled. If he does not do something soon for the many in this country, the economy will not only continue to splutter along, failing to fire on all cylinders, but will continue irreparably to damage the lives of those who need jobs and growth to improve their life chances.

16:49

[Mr William Cash (Stone) (Con)]

I welcome many aspects of the Conservative parts of this Budget, including its emphasis on the need to encourage small businesses, enterprise and research and development, and its encouragement of economic growth, which is the key to everything. I welcome the simpler cash accounts system, which will bring significant benefits to small businesses, and the R and D tax credit system, as well as the seed investment programme for start-ups, which is very important. The patent box arrangements will be very useful, too, as will the proposals for young enterprise loans. Indeed, I recently attended an event in my constituency at which young people from Alleyne’s school in Stone were selling produce, based on proper commercial principles. They were learning key enterprise skills, therefore, and it would be wonderful if they could have access to some loans as well, to enable them to continue in that virtuous direction.

I welcome the reductions in corporation tax. In fact, I believe we should aim to reduce it to 15% by 2020, as the Institute of Directors proposes. I also approve of the proposals to reorganise personal allowances. That will be enormously beneficial to many people. However, despite the statements made this morning, I remain slightly concerned about the situation of pensioners. I am not yet convinced on that issue, so I think we shall have to tease it out during our deliberations on the Finance Bill.

I remain deeply worried about fuel duty. I do not think we should increase it at all. At least £31 billion comes into the Exchequer as a result of that duty, and 60% of the price at the pump is represented by taxation. Therefore, more positive policies were required. I would have liked fuel duty to have been reduced, and certainly not increased.

There will be no economic growth unless we have proper private enterprise, as that is what pays for every penny received by the public sector. There is no money except for what comes from reasonably taxed private enterprise. We must therefore ensure that we are truly competitive, and if that requires reducing our tax rates, that is the direction in which we must go.

I am deeply concerned about the failure to deal with the problem of over-regulation. I have read the Red Book, and it does not fill me with a great deal of confidence. On page 43, under the heading “Exports and inward investment”, there are a few comments about export finance. The next heading on that page is:

“Making the UK the best place in Europe to start, finance and grow a business”.

[George Freeman]

The best place in the world, surely?

[Mr Cash]

My hon. Friend anticipates what I was about to say: the UK should be the best place for businesses in the entire world, not just Europe.

That is very important. Especially given the current eurozone crisis, we cannot carry on kidding ourselves that our future depends on our trade with Europe. It is an important part of our trading relationships, but it is a failing part. Our balance of payments figures show that in just one year the deficit in our trade with the other European Union member states has risen from £14 billion to £46 billion. I understand the figures will be revised on 28 March. I trust the figures for 2010-11 will not show that the deficit is worse still.

The previous Government put all their eggs in the European basket. This Government, to their credit, are beginning to refocus their trading relations with the rest of the world. We have a monumental opportunity to be able to get that straight in terms of—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. Time is up.

16:54

[Mr William Bain (Glasgow North East) (Lab)]

In the past 24 hours, many people have attempted to provide a description of this Budget. Some have compared it to Lord Lawson’s giveaway Budget in 1988, others to the orthodox Budget of Philip Snowden in 1931, but in entrenching the disastrous mistakes in fiscal policy of its two immediate predecessors perhaps this Budget will deserve to be known as the great stagnation Budget. Despite the measures unveiled by the Chancellor yesterday, the verdict of the Office for Budget Responsibility was that they will make no difference to the levels of growth in this country in the next two years.

[Angela Smith]

Does my hon. Friend agree with The Guardian, which said this morning that the Liberals will live to regret the fact that they have moved so far away in principle from the Lloyd George Budget of 1909?

[Mr Bain]

My hon. Friend is entirely right. Staggeringly, in that year the Liberals introduced one of the most progressive Budgets—the people’s Budget. This Budget certainly does not compare to that remotely; it is a highly regressive Budget, as the Institute for Fiscal Studies has confirmed this afternoon.

The effects of this Budget are likely to be 100,000 more job losses—20,000 more in the public sector; £150 billion more borrowing than that forecast in June 2010; and a substantial rise in inequality across the country. Having choked off growth in the past two years, and having weakened both public and private sector demand with austerity cuts that strip eight times more public consumption from the economy this year and nine times more next year than even the eurozone average, the Chancellor is presiding over the weakest recovery from recession since the 1870s.

In addition, as the OBR revealed yesterday, despite the Chancellor’s rhetoric on diversifying the economy and promoting manufacturing, his plan for growth is based on the share of private consumption more than trebling, from 12% to 37.5% this year alone; half of all the new growth in the next five years is forecast to come from consumption. This is not an export-led recovery, but debt-fuelled consumption to maintain stagnant output, at a time when consumer spending has fallen in the UK by 0.8% in the past year. Small wonder that the OECD has found that domestic demand in Britain has slumped. It rose by 2.7% in 2010, when Labour was in government, but fell by 0.2% this year, under this Chancellor. The figure is massively below the 2012 OECD average increase in economic demand of 1.4%. It shows the crisis of the lack of demand that is in our economy, which the Chancellor did not begin to tackle yesterday.

On growth, the Chancellor has given up on fiscal policy as a lever of driving demand, even when the credit ratings agencies, the International Monetary Fund and his US counterpart warn him not to. We face a jobs crisis, and in a crisis of this magnitude, we need fiscal and monetary policy to work in concert to grow the economy out of a slump.

[Angela Smith]

Is it not also the case that the current use of monetary policy to drive growth—quantitative easing—is driving the markets but not necessarily the growth that this country needs?

[Mr Bain]

That is precisely the point that many small businesses up and down the country are making. What we should have had yesterday was a facility to securitise loans to small businesses and have them indemnified by the Treasury. That would mean that the quantitative easing money could flow directly from the Bank of England into small and medium-sized businesses, and not simply on to the balance sheets of the banks. That would have made a huge difference. As many businesses have said, the credit easing scheme launched by the Chancellor with great fanfare on Tuesday will barely scratch the surface of the £190 billion shortfall in credit financing from which our businesses are suffering at the moment.

The Chancellor is refusing to learn the lessons from Japan in the 1990s. He is placing all his eggs in the basket of long-term low interest rates, but in Japan that led only to a decade of stagnation because of similarly catastrophic mistakes in cutting spending too far and too fast.

Even on its own terms, the Budget was a failure for business, with levels of business investment £48 billion below their peak of 2008 and business investment growth having been slashed from 7.7% to just 0.7% in the OBR’s latest forecast. There should have been innovative ideas about promoting long-term investment; there should have been plans for a national investment bank; there should have been plans to bring forward more infrastructure spending; there should have been plans to enhance and boost the borrowing powers of the UK Green investment bank, which will not have those until 2016 because of the Chancellor’s failure on growth. But in yesterday’s Budget, sadly, there were no ideas that would really make a difference to business.

Shamefully, the Chancellor never even mentioned, much less produced, a plan to tackle youth unemployment. With 1 million young people out of work across the United Kingdom and with the figure approaching one in four in Scotland, he should have announced measures for a proper national insurance holiday for small and medium-sized firms employing young people. He should have repeated the bank bonus tax to help to create 150,000 youth jobs. He should have announced a temporary VAT cut, which would have boosted consumer demand, and he should have cut VAT for home repairs and maintenance to give the construction sector a much needed lift.

The test on which this Budget is found most wanting is that of fairness. We are told that the wealthiest 3% of the population require massive fiscal incentives to reward hard work, but it is a different approach when it comes to those on lower incomes or pensioners who have saved for their retirement. The poor are told to work harder and do extra hours of work that are not available in the depressed economy, but 14,000 millionaires will receive a permanent tax cut of £40,000. This Budget is highly regressive and I urge Members to vote against it on Monday.

We are told that the Chancellor has advised the Prime Minister on matters strategic, instead of focusing on the crisis of demand made in No. 11 Downing street—a flatlining economy, slumping business investment, rising unemployment and soaring inequality. The country will not forget that yesterday was the day when the part-time Chancellor produced a bit-part Budget.

17:02

[George Freeman (Mid Norfolk) (Con)]

I congratulate the Treasury team on a Budget that I believe will come to be seen as an historic Budget that will put Britain back on track for sustainable economic recovery. I want to say something in the time available about the problem we inherited, because it bears repeating, about the challenge we face and about the opportunity that I believe we can and should be optimistic and ambitious in tackling. The problem has been well chronicled, but the views and ignorance displayed by Opposition Members in this afternoon’s debate suggest that we need to repeat it for them.

We have inherited from the Labour party the worst deficit and debt crisis in this country’s peacetime history; a structural deficit that would have been a crisis alone; an annual deficit from Labour’s historical explosion in public spending; a crisis in the situation with debt as a percentage of gross domestic product; and interest payments that are set to rise, if we have not tackled them, by £76 billion a year—£1 in every £4 the Government spend. As a result, there is a deep fiscal crisis, with tax increases and restraint on public spending hitting every family in the country, and a legacy of rising unemployment because of the credit crunch and bank financing for small businesses. Most powerfully of all, and most damningly after 13 years, there was the unsustainable economic model—a labour boom fuelled on cheap credit and cheap immigrant labour and a consumer boom that Labour knew was unsustainable. Worst of all, perhaps, there is a deep crisis of trust and confidence in political economy and in the belief and faith that the Government can do anything about it.

The challenge is to restore some credibility and confidence, first, in the capital markets through the coalition’s programme for tackling the deficit, and secondly in the boardrooms and businesses of Britain that are the only true mechanism for sustainable recovery. There is also a need to restore credibility and confidence in relation to the entrepreneurs we will need to take the risks to drive growth and the citizens and consumers of this nation so they can have faith again. That requires a new economic model, which my right hon. Friend the Chancellor spoke passionately about yesterday—a model for sustainable recovery. We cannot borrow and spend our way out of a debt crisis.

Recovery needs to be sustainable not just in terms of avoiding the mistakes of boom and bust. We must produce the things that people around the world want to buy and we must have a clean economy in terms of resources and the environment. Recovery needs to be sustainable in the sense that our public services must be financed in a sustainable way. Every pound that we in this place claim as government money has to be earned by citizens and businesses and taken from them, and we should never forget it. At heart, that means that the coalition’s programme for a rebalanced economy must shift from over-dependence on the public sector to the private sector, from London and the south-east to the cities and the regions and to the real businesses of this country that can drive sustainable growth. I congratulate the Treasury team on keeping interest rates low, paying off the debt and supporting business. We have the most competitive corporation tax regime.

[Mr Bain]

Will the hon. Gentleman give way?

[George Freeman]

I am going to plough on if I may. The move on the top rate of income tax from 50p to 45p has set a clear direction.

[Angela Smith]

Will the hon. Gentleman at least acknowledge that a significant proportion of the private sector jobs created are part-time and in that sense are doing much less than he suggests to drive growth in the economy?

[George Freeman]

If my constituents were given the choice between a part-time job in a sustainable private sector business or a full-time job in the public sector that was not sustainable, I know which they would choose.

More than 600,000 new jobs have been created in the private sector since the election.

[Mike Weatherley (Hove) (Con)]

Will my hon. Friend welcome with me the measures for the video games industry, which are so important to Brighton and Hove, protect jobs in this country and stop them going abroad?

[George Freeman]

My hon. Friend makes an excellent point with which I entirely agree.

If I had only one small complaint about the Budget it was that, for reasons I well understand, the Government were unable to do anything to relieve the pain of rural fuel prices in areas such as my constituency, where the cost of living is an acute problem. I urge the Government to look at what might be done to relieve the effect of fuel prices on the rural economy.

I said that I would touch on why I believe that this country can begin to be optimistic about our future. The Government have begun to set out a credible and coherent plan for long-term economic recovery based on a model of trading again around the world. There is a high rate of growth in the emerging nations—the so-called BRIC nations, Brazil, Russia, India and China—and with the pace of globalisation and the explosion in those markets, if this country can set out a model of producing and selling the things that those countries need, we will be on the road to a secure recovery.

Last year saw the publication of the foresight report, which set out how the world population is rising to 9 billion, which will drive huge demand for life sciences such as food science, biomedicine and energy and environmental science. The Government have set out over the past 18 months a long-term strategy to unlock that science and research base and tackle the problems of sustainable development around the world. That is a sustainable model for us as well as for other countries.

There is a huge opportunity for the UK to trade on our great strengths and to unlock the power of the City and financial services sector to back and build the companies and businesses of tomorrow in the sectors of tomorrow. So I support—it is worth repeating—the measures that the Government have taken, especially in the Department for Business, Innovation and Skills, including the Green investment bank, new sources of finance for infrastructure, the enterprise zones, the competitive tax regime and the £20 billion of credit easing, allied with the reforms to welfare, schools, universities and science and research. The Government are setting out a modern industrial policy for a modern innovation economy. Will it work, I hear you ask, Madam Deputy Speaker? Well, it is already working. The programme has been welcomed by the Office for Budget Responsibility, the Institute for Fiscal Studies, the World Bank and the International Monetary Fund. Even the BBC’s business editor last night said that the Budget had had the most positive response of any Budget he could recall. If any more proof were needed, today one of the world’s great businesses, GlaxoSmithKline, announced a major £500 million investment in the UK, directly citing yesterday’s Budget as a reason. It is an historic Budget that will put us on track for a long-term recovery.

17:09

[Kate Green (Stretford and Urmston) (Lab)]

All Budgets have a tendency to create both winners and losers, but this Budget, unlike others, appears to create winners and losers in an inconsistent and illogical manner and without any clarity of guiding values or objectives.

[Mr Bain]

My hon. Friend is showing her customary generosity in giving way. I anticipate that she might make the point that 70% of the cuts in tax credits will affect people in the lower half of the income scale, but the Resolution Foundation determined yesterday that 70% of the gain from the change in the personal allowance will go to people in the top half of the income scale.

[Kate Green]

My hon. Friend does indeed anticipate my first point. Although there is of course an attraction in lifting more people at the bottom of the wage spectrum out of tax, it makes little sense to introduce a measure that still favours more men than women when women have already lost out under previous Budgets and spending announcements.

[Mr Tom Clarke]

On that point, which I dealt with briefly in my speech, is it not a great worry that female unemployment has risen by 22,000 in the past year, adding to the problems that were already there?

[Kate Green]

It is of deep concern to me, as I am sure it is to you, Madam Deputy Speaker, that female unemployment is now the highest it has been in a quarter of a century and that it was female unemployment that rose most rapidly in the last quarter, considerably outstripping what is happening to men.

I find it difficult to understand the fairness or logic of introducing a higher tax threshold that lifts some low-paid workers out of tax while at the same time disincentivising many other low-paid workers who are seeing their tax credits frozen or lost altogether if they cannot reach sufficient hours, to the extent that work will become hardly worthwhile for them at all. I cannot see the logic of the Government telling pensioners that on the one hand they will give to them through the triple lock, which I welcome, but with the other hand they will take away from them by raising the threshold and bringing 230,000 of them into tax, while at the same time trying to take people in low-paid work out of tax.

I am struggling to understand how a Government who said that they wanted to be fair and to operate a system that was simple can have arrived at the decision they reached on child benefit, according to which a couple with an income just short of £100,000 will be able to keep all their child benefit but another couple where only one member of the household has an income, but it is in excess of £50,000, will not. How can that be fair? How can a system be simple when it starts to claw back at the rate of 1% for every £100? How will people know where they stand in relation to their child benefit entitlement, and where is the incentive to work more and earn more in such a context?

I am struggling to understand why a Government who want to be progressive, who say that that is their reason for moving away from universal child benefit, which I hugely regret—I want to put on record that I absolutely stand by universal child benefit—and who say that they think there needs to be more progressivity, as they see it, in the way they administer child benefit, then introduce less progressivity in income tax by cutting the top rate from 50p to 45p when, as the OBR has said, there is considerable uncertainty that such a measure will deliver the tax receipts that the Government seem to believe will be brought into the Exchequer. With respect, I think that the Chancellor was a little over-optimistic in his analysis of the OBR’s comments on the likely efficacy of that measure, and it is also unclear to business commentators that the measure will be good for our economy.

Let us be clear that our corporation tax, even before this Government took office, was by no means among the highest in the developed world. I am interested in how a Government who make great play of seeing small businesses as the future of increasing employment, who want to reduce corporation tax, who are on a downward trajectory in relation to it and who want to enable small businesses to employ more workers have failed to notice that the very smallest businesses are completely unaffected by the cut in corporation tax because they already have a tax rate of only 20%. What are the Government doing to support those businesses when what they would really like is effective measures on employers’ national insurance contributions, something that again the Government have managed to address only in a most limited way?

[Lorely Burt]

What we are doing for small businesses, which will alleviate many administrative difficulties, is introducing measures such as cash accounting on cash flow, so we are working hard to help them in every way we can. We are also amalgamating national insurance with the other forms of tax paid so that only one lot of tax is collected.

[Kate Green]

It is not that everything the Government are doing is necessarily bad, but overall it is woefully insufficient in relation to business and not what the smallest businesses have been talking to me—or I suspect to the hon. Lady in her constituency—about. They have been talking about employers’ national insurance contributions, business rates and their concerns about the rise in VAT, which means that there is pressure on their turnover, but in the Chancellor’s statement yesterday the Government had nothing to say about any of those issues.

I should like to say a little about welfare and pensions. On welfare, I share with many of my right hon. and hon. Friends the deep concern that, after £18 billion of social security and tax credit cuts already from this Government, the lowest-income households in this country now face a further £10 billion of cuts. That will mean a hit on disability benefits and on the benefits that enable people to reach basic living standards. When the Government publish on people’s tax statements, as they say they will, a breakdown of where their spending has gone, I hope that they show in great detail who the losers are from that welfare spending. A broad-brush statement, “This is what is spent on welfare,” will not tell people that carers, the disabled and people raising children are actually the losers, so I hope that such information appears on the tax statements that the Government produce.

Finally, the Government propose to keep the state pension age under review in line with rising longevity. That, too, is a measure that will deliver greater inequality, because it will penalise most of all the poorest, who already have poorer health outcomes and poorer life expectancy, and those doing manual and hard, physical jobs. So buried in the detail there is considerable injustice, unfairness and inconsistency, and I shall vote against the Budget on Monday.

17:17

[Stephen Gilbert (St Austell and Newquay) (LD)]

I welcome a Budget which shows that the coalition Government remain determined to tackle the deficit and to drive growth and job creation throughout the country, and that we will deliver tax cuts for millions of hard-working people and demand from the wealthiest in our society that they pay their fair share. This really is a Budget for millions of ordinary families throughout the country who are struggling to make ends meet, not a Budget for millionaires.

I welcome in particular, of course, the increase in the personal income tax threshold, the largest increase for a generation and a thoroughly progressive policy. It has gone from the front page of the Liberal Democrat manifesto and been turned into action under the coalition Government, and both parties deserve credit for introducing it. In terms of helping the families whom I represent in Cornwall, the measure sits alongside a freeze in council tax and the Government’s determination to tackle the injustice of water bills throughout the duchy. Some 19,300 people in Cornwall will be taken out of paying income tax, and more than 4,000 in my constituency alone will no longer pay it. I thoroughly commend the measure to the House and hope that in future years the Chancellor will be able to go further and faster.

[Angela Smith]

Will the hon. Gentleman not at least acknowledge, as my hon. Friend the Member for Glasgow North East (Mr Bain) said earlier, that the biggest beneficiaries of the increase in the tax allowance will be higher-income earners, not the lowest-income earners?

[Stephen Gilbert]

It is a bit rich when the Labour party talks about benefits to higher rate taxpayers, given that it abolished the 10p rate of tax, making 5 million of the lowest paid pay more tax. The coalition Government are taking the lowest paid out of tax, and that is a better direction of travel for the people whom I represent—and, I am sure, those whom the hon. Lady represents as well.

I am also keen to welcome the measures in the Budget to drive business growth—the cutting of red tape on small and medium-sized firms; the introduction of cash accounting; the enterprise management incentive scheme; and the fact that the Government are making available £20 billion-worth of additional funding to ensure that businesses across our country, from which will come the growth that will get us out of our financial difficulties, have the money to invest, expand and grow.

[Alex Cunningham]

The hon. Gentleman has talked about investment. If the 50p tax rate had been retained, there would be more money for investment. The Chancellor said that the rate was making little impact on the amount of money coming into the Exchequer. If it was making so little money, could he not have just done away with it altogether—or is it actually a real source of income for the Government and the Exchequer?

[Stephen Gilbert]

Again, there is an obsession for a policy that Labour implemented only during the last 37 days of its Government. If it was so keen on the 50p rate, why did that not last for 13 years under Labour, rather than 37 days? This is nonsense from the Labour party.

Some of the measures to improve finance for small and medium-sized enterprises will build on some of the other mechanisms that the Government have introduced in Cornwall to try to drive the Cornish economy. I am thinking of the enterprise zone at Newquay airport, the Cornwall and Isles of Scilly local enterprise partnership, the fact that Cornwall will be the first county—not just in the United Kingdom, but across Europe—to have access to superfast broadband across its entire length, and the commitment to renewable energy generation as a way of driving some of the job creation of the future.

I also welcome the measures on housing growth that the Chancellor announced. Government and Opposition Members recognise that there is a serious housing crisis in the country. We need to get on and build our way out of it to ensure that we meet the aspirations of those, many from my generation, who simply want to start their lives with their partners, but are unable to do so because they do not have access to stable, decent and affordable accommodation.

In my remaining time, however, I would like to put a few concerns on the record. The first is about alcohol taxation. Duty on beer has gone up by 42% in the past four years. As my hon. Friend the Member for Burton (Andrew Griffiths), who is not in his seat, said earlier, the community pub is at the heart of many areas, including many of Cornwall’s villages. Community pubs serve a useful function, employing 300,000 young people across the country. When the Government bring forward their alcohol strategy, I hope to see some redress from the burden that beer taxation has taken on in recent years.

I am also concerned that air passenger duty has gone up by 360% over seven years. When I talk to the manager of Newquay airport, he tells me that that is having an impact on its ability to continue to drive custom.

I share the concern of my hon. Friend the Member for Stone (Mr Cash) about fuel taxation in rural areas. An innovative scheme is being trialled in the Isles of Scilly and other places, but the Government need to consider again whether the balance is right.

I have two final points. I disagree with my hon. Friend the Member for Sevenoaks (Michael Fallon), who thinks that the introduction of regional pay will be a welcome move. Far from it—it runs the risk of institutionalising some of the inequalities in regions, such as Cornwall, with above-average housing costs and below-average wages. I have deep concerns about this proposal, as do my hon. Friends on the Liberal Democrat Benches.

Finally, I turn to an issue that is exercising my countrymen in Cornwall. There is some ambiguity about whether the increase to 20% in VAT on hot food will include pasties that are served from bakeries. The Minister will no doubt be aware that the pasty is not only a staple, hearty meal but, in effect, employs thousands of people and brings millions of pounds into the Cornish economy. Will he give some clarity on whether we can avoid a pasty tax?

17:25

[Sheila Gilmore (Edinburgh East) (Lab)]

The altruism of the high-paid is remarkable. If they are not paying tax because of successful avoidance measures, their delight at the rate reduction requires some explanation. Perhaps they agree with the Chancellor’s statement that they will pay more tax as a result; if so, their delight is clearly because they are ready to pay more tax than they were previously.

[Mr Bain]

I wonder whether my hon. Friend has had an opportunity to consider what the Institute for Fiscal Studies has said this afternoon—that there is a one in three chance that the Treasury will recoup only 30% of the £2.9 billion in the Red Book that relates to behavioural changes and to people moving from the 50p to the 45p rate. Does not that bear out her point?

[Sheila Gilmore]

It definitely does.

Of course, that may not have been what people were cheering. They may have been cheering in relief at not having to do tiresome tax avoidance planning all the time. If the HMRC’s calculations are correct, high-paid employees are a bit like highway robbers who are holding a musket up to the rest of us and saying, “If you tax us, we are going to take our ball away and not play any more.”

[Mr Tom Clarke]

Is my hon. Friend as concerned as I am that the Government seem to pay little attention to HMRC’s informed views?

[Sheila Gilmore]

Clearly, the Government see tax planning as a perfectly rational and sensible reaction to tax changes. However, if a working couple who are about to lose £3,000 in tax credits make a sensible and rational decision to stop work because that will make them better off, will they be seen as merely making a sensible and rational decision, or will they be seen as lazy, as scroungers, and as people who prefer to watch daytime television than hold down a job? If they make that decision, which is rational for them, the outcome will be wholly irrational for the Government, because it will cost the Government more if that family stop work.

I have still not had a satisfactory response from the Government to a question I asked in an earlier intervention. I also asked it of the Deputy Prime Minister earlier this week, because he is fond of telling us that Government can do two things at once. Why can we not retain the 50p tax rate and deal with tax avoidance? Apparently, in the previous year, when people were expecting more tax, they brought their income forward, so presumably this year, knowing that the measure has only a year to run, they will be able to put their income back to the following year so that they do not have to pay more. If we know that such things are happening, why are we unable to find a means of stopping it? Perhaps people’s incomes should be looked at over two or three years to ensure that they cannot engage in these blatant tax avoidance games, which many people on lower incomes cannot do.

When we had the discussions some months ago about bankers’ bonuses and executive pay, the Secretary of State for Business, Innovation and Skills told us, “Well, these people are paying 50% tax.” Either they are paying it or they are not. One moment we are told that we do not need to bother doing more about bonuses and high pay because the tax rate is dealing with it and the next we are told, “It’s not bringing anything in, so we shouldn’t bother.” There is a lot of smoke and mirrors.

It is clear from the Red Book and it is even clear from the Daily Mail—I am hardly a friend of that paper—that the Exchequer plans to forgo £3 billion in making this change to the tax rate. It hopes to get that back through people willingly paying more tax in various ways and through the relatively small amount that is expected from the changes in stamp duty.

Since May 2010, we have been told regularly by the Government that the way to achieve economic growth is to cut the public sector, which has been stifling the private sector, and then the private sector will spring to life and replace the jobs that are lost. Two years on, we are still asking where those jobs are. Yesterday at Prime Minister’s questions, the Prime Minister told us yet again how good it is that so many private sector jobs have been created. The figure that he used was 600,000, which was repeated a few minutes ago by the hon. Member for Mid Norfolk (George Freeman).

More than a year ago, we were told that 500,000 jobs had been created since the election. Many commentators have made it clear that most of those jobs were created in the first six months of the financial year that started in 2010, and that the likeliest cause for their creation was the previous Government’s economic stimulus. The Government cannot keep recycling the figures. The number of times that the Prime Minister has talked about those 500,000 jobs is incredible. I accept that it has gone up slightly and he is now talking about 600,000 jobs. He should get a prize for recycling, even if he does not get a prize for job creation. If those jobs were created as a result of the economic stimulus, the Government should look again at whether they should continue to rule out such a stimulus.

Do we even know that those private sector jobs are completely new jobs? In my city, there has been a lot of outsourcing and people have moved positions through tendering processes. For example, 2,000 care workers in Edinburgh will now be in the private sector because of the decisions that the council has taken. No doubt those jobs will move from the public sector side of the equation to the private sector side, but they are not new jobs that are driving economic growth. Once again, this is smoke and mirrors and there is no economic growth. That is the important point. If we do not get jobs and growth, we will not get out of the recession.

[Several hon. Members]

rose—

[Madam Deputy Speaker (Dawn Primarolo)]

Order. I intend to start the winding-up speeches at 5.40. That gives us eight minutes. Members can work out for themselves whether they will share the time or not.

17:33

[Christopher Pincher (Tamworth) (Con)]

I will certainly attempt to share the time, Madam Deputy Speaker.

Although it is a great pleasure to follow the hon. Member for Edinburgh East (Sheila Gilmore), I hope she does not mind me saying that the performance that I most enjoyed from her side of the House was that of the shadow Chancellor, whom Government Members think of with great affection. His performance reminded me of that of an ageing, end-of-the-pier show entertainer, rather like Archie Rice in the film “The Entertainer”, who was once a great character actor, but who, as he gets to the end of his career, has to reheat jokes to get more and more lame laughs. Members will remember that the last words of Archie Rice in “The Entertainer” were, “I’ve had enough.” That sums up our view of the shadow Chancellor.

I was at the Pickerings business breakfast in my constituency just a few days ago, where small and medium-sized enterprises, the engines of growth in my constituency, made three points to me: we need to deal with access to credit, we need to deal with the cost of business taxation, and we need to deal with the burden of bureaucracy that weighs them down. I will not go over the points that many hon. Members have made, but we have heard about the national loan guarantee scheme and Project Merlin, which is providing more money to businesses, allowing them to invest, create jobs and build growth. We have heard about the reduction in corporation tax from 26p to 24p, with a view to taking it to 22p and an aspiration to reduce it to 20p.

[Mr Andrew Love (Edmonton) (Lab/Co-op)]

Will the hon. Gentleman give way?

[Christopher Pincher]

I will not, because I do not have much time.

The corporation tax reduction sends a message that this country and its businesses are open for business.

[Angela Smith]

Will the hon. Gentleman give way?

[Christopher Pincher]

No, the hon. Lady has had enough time to get herself into Hansard. I am not going to give way to her.

The reduction in corporation tax also sends a message to business that the Government are on its side and want it to create the jobs that pay the taxes that fund the public services we want and need. It is unfortunate that we have heard the shadow Chancellor today, and the shadow Chief Secretary bestriding the airwaves yesterday, saying that they would not have made the cut and would reintroduce corporation tax at 26p. What a message that sends to businesses in this country—that Labour has learned nothing and forgotten nothing from its mistakes. It does not want to kill the fatted calf; it wants to starve the entire herd.

I wish to give Ministers an important message about bureaucracy. Small and medium-sized enterprises have said to me that when they apply for a slice of the Government procurement pie, as the Government want them to do, they find the online application process time-consuming. For small businesses, time is a form of tax. I hope that my hon. Friend the Financial Secretary, who is in his place, will work with my right hon. Friend the Minister for the Cabinet Office continuously to streamline the process, with a view to reducing the time needed for initial online applications by just a few hours. That would help many small businesses apply for the slice of the Government procurement pie that we all know they need.

In the past, Chancellors have had a tin ear. Conservative Chancellors have made Budgets for accountants by accountants. The last Labour Government, after a reasonable start, began to write Budgets by spinners for spinners. It seems to me that Budgets should be made for the people. The Budget that we heard yesterday was an authentic Budget that spoke to the people. It spoke to the strivers, who want to get up, get on and make something of themselves. It spoke to the grafters, who are trying to build a business. It spoke to mums and dads who want their kids to grow up in a country that is free of crippling debt. It spoke to the aspirants, and I am happy to support it.

17:37

[Damian Collins (Folkestone and Hythe) (Con)]

We have heard a number of Members today say that the Government have no industrial strategy and no strategy for jobs. I say that they should make that argument to the people who will benefit from the £500 million investment in this country that GlaxoSmithKline announced this morning following the Budget; to the people who will benefit from the 2,000 jobs being created by Nissan in Sunderland and around the country with the support of Government money; or to the clients and employees of companies such as WPP, one of the world’s largest communications networks, which will headquarter in the UK under this Government’s new lower tax regime, instead of Dublin, to where it flew under the last Government.

The Government are setting out a bold and ambitious industrial strategy to bring jobs to this country in the sectors in which we will see the highest levels of growth. That is why I particularly welcome the announcements that the tax credit for production in the video games industry will be brought back and that the film tax credit, which a Conservative Government introduced in the 1990s, will be extended to sectors such as animation and high-end TV production.

It is ridiculous that Julian Fellowes’s new series “Titanic” has been filmed in Hungary, instead of in Belfast, where there is a film production studio in the shipyards where the original ship was built. That shows how our system has taken jobs and investment abroad instead of bringing them here. The changes will help big businesses, but also small animation companies such as Cognitive Media, which is based in Folkestone, in my constituency. It will help in the other creative clusters around the country where such jobs are providing necessary skills and employment. That is part of a strategy, with the Government supporting big investment in centres such as Tech City, where we will fulfil the Chancellor’s ambition to make Britain the technology capital of Europe and a leading player in the world. They will be a major driver for growth for our economy and new jobs in future.

I very much support the Government’s initiative to support the programme championed by Virgin to allow young people who want to set up their own business to borrow money to invest and start up on their own on the same terms as students can borrow money for tuition fees. That will be a great source of jobs for young people and give them the boost they need to get on to the job ladder.

17:39

[Mr Iain Wright (Hartlepool) (Lab)]

May I begin by wishing my hon. Friend the Member for Ellesmere Port and Neston (Andrew Miller) a very happy birthday? He does not look a day over 75, which is just as well, because he is only 63 tomorrow.

With the greatest respect to my hon. Friend, his is not the biggest birthday of the week. Today marks the birthday of my mother. I hope the whole House wishes her a happy birthday—[Hon. Members: “Happy birthday!”] She will not thank me for saying this, but my mother was born in 1948, so she is absolutely being hit by the Chancellor’s Budget provisions. She will lose out along with another 4.4 million pensioners. She has worked hard all her life, and still works hard, and will be penalised for it.

This has been an interesting and informative debate and I have enjoyed it immensely. My right hon. Friend the Member for Newcastle upon Tyne East (Mr Brown) mentioned regional pay, which is also a big concern to me as a fellow north-east MP, as did my hon. Friends the Members for Dumfries and Galloway (Mr Brown) and for Ellesmere Port and Neston. My hon. Friend the Member for Birmingham, Selly Oak (Steve McCabe) rightly mentioned the importance of youth unemployment, and his fellow Brummie and neighbour, my hon. Friend the Member for Birmingham, Erdington (Jack Dromey), stood up fiercely for housing, if not for hairdressers. My hon. Friend the Member for Stockton North (Alex Cunningham) mentioned the importance of child poverty and my hon. Friend the Member for Stretford and Urmston (Kate Green) mentioned the importance of ensuring that we tackle female unemployment.

I was interested in the points made by the hon. Member for Bexleyheath and Crayford (Mr Evennett) on ensuring that the Budget provisions are fair and innovative. I agree with that. I want to ensure that work is incentivised, but he failed to mention the concept of fiscal drag, which will bring 300,000 people who are trying to work hard and do what is best into the higher tax rate.

I was also interested, as I always am, in the comments of the hon. Member for Solihull (Lorely Burt). It is interesting that she is an out-and-out apologist for the Government. She has a majority of 175, so it will be interesting to see how she explains the fairness of the Budget to the 20,082 pensioners in her constituency.

In the opening paragraph of the financial statement yesterday afternoon, the Chancellor said that the Budget

“unashamedly backs business…and…is on the side of aspiration”.

The Opposition would want such a Budget, but if only yesterday’s Budget backed responsible business, rebalanced the economy in favour of manufacturing, built on the progress made by the previous Government on new industries and jobs, and put in place an active Government industrial policy that emphasised the need for Government procurement to establish a level playing field for British companies. Sadly, we did not get that.

We agree with the Chancellor that

“We earn our way in the world if we stop being afraid to identify Britain’s strengths and reinforce them instead”.—[Official Report, 21 March 2012; Vol. 542, c. 793.]

We also agreed with him when he said in his Budget speech in 2011:

“Yes, we want the City of London to remain the world’s leading centre for financial services, but we should resolve that the rest of the country becomes a world leader in advanced manufacturing, life sciences, creative industries, business services, green energy and so much more.”—[Official Report, 23 March 2011; Vol. 525, c. 953-954.]

The problem is this: the Chancellor keeps saying these things—these important warm words—but does not do anything about them. It is little wonder that the Secretary of State for Business, Innovation and Skills was forced to write in his leaked letter to the Prime Minister that the Government had

“something…missing: a compelling vision of where the country is heading beyond sorting out the fiscal mess; and a clear and confident message about how we will earn our living in future”.

The fact of the matter is that the Budget is yet another missed opportunity by the Government to put in place the framework needed for a 21st century rebalanced economy. Terry Scuoler, chief executive of EEF, the manufacturers organisation, was right when he said last night:

“The Chancellor began positively by setting out his thoughts for a new economic model. But, by the end of his speech, the task of rebalancing our economy looked as daunting as ever.”

He added that the measures in the Budget

“fail to send a strong enough signal to growing manufacturers that now is the time to bring forward their investment plans and to do it here.”

Steve Radley, policy director of the EEF, reaffirmed this when he said:

“This year it doesn’t look as though we will be making…much progress to a new economic model because we are now looking at business investment driving much less of the economic growth”.

That is the key point of a Budget that is meant to be backing business.

In the 2010 Budget, the Chancellor forecast that business investment growth would be 10%, and 10.9% in 2013. Last year’s Budget downgraded this forecast to 8.9% in 2012 and 10.6% in 2013. But according to yesterday’s Red Book, business investment growth this year is not going to be 10% or 8.9% but 0.7%, and next year 6.4%, as my hon. Friend the Member for Glasgow North East (Mr Bain) so rightly said. What on earth is the Chancellor doing with the British economy that he instils so little confidence in the business community? At a time when companies are sitting on record cash piles—something like £750 billion—which could be used to invest and make the British economy more productive and more competitive, the Chancellor is failing to persuade them to invest in Britain now.

Business investment as a share of GDP has fallen sharply since this Government took office and is now, at less than 8% of GDP, at the lowest level for more than half a century. So much for yesterday being a Budget for business. It is little wonder that John Longworth, director general of the British Chambers of Commerce, has said that small and medium enterprises—the very bedrock of this country’s economy and the firms we need to nurture today to make them the big, successful global companies of tomorrow—will be disappointed that the Chancellor did not do more to boost confidence. An additional 1% cut in corporation tax does not make up for the 5.6% rise in business rates still going ahead next month, or for the lower allowances for capital investment and a lack of incentives to boost employment, particularly for young people.

There was nothing in the Budget on supply chain improvement, despite the fact that the Business Secretary, in his leaked letter, specifically argued that

“There is as yet little attention given to supply chain issues.”

With this Budget the Chancellor has once again shown how he is a roadblock to reform. He has missed an opportunity to make Britain more competitive and fairer, and to ensure our economy is more balanced and productive. His own Budget figures, backed up by the OBR, reveal that his tweaks and fiddling, his tinkering and meddling, his leaks and pre-announcements, will make little difference to Britain’s growth prospects and global competitiveness. This is in a month when the likes of Brazil are powering away from us in terms of competitiveness and the growth and size of their economy.

The Chancellor’s tax cuts for the privileged and most prosperous, paid for by tax increases for pensioners, reveal that he, the Prime Minister and the Deputy Prime Minister are looking after their own. The Chancellor’s favouring of Mayfair over Middlesbrough and Belgravia over Burnley, aided and abetted by his Liberal Democrat accessories, shows that he has the wrong values and the wrong priorities, and he is making the wrong decisions. What we—and, more importantly, Britain—needed was the Chancellor to make a Budget focused on growth, on long-term business support, on a modern industrial partnership between business and industry, and on fairness in tough times. He failed to deliver any of it.

17:48

[The Financial Secretary to the Treasury (Mr Mark Hoban)]

I am grateful for the opportunity to respond to this debate. Over the course of the last two days, debate has been wide-ranging and there have been 60 Back-Bench speeches. At the heart of the debate is the Government’s determination to restore the UK to prosperity. As hon. Members are already aware, it is because of the decisive action that this Government have taken since the June Budget of 2010 that we have secured and maintained the stability of the UK economy, sheltering it from the turbulence that undermines our nearest neighbours and securing record low market interest rates that support families and businesses across the UK. Stability is a vital precondition for growth, and this Budget builds on those solid foundations, safeguarding a stable economy, creating a fairer, more efficient and simpler tax system, and driving through the reforms to unleash the private sector enterprise and ambition that are critical to our recovery.

The Government are unashamedly committed to building a recovery through enterprise, private sector investment and exports. That is why John Cridland, the director general of the CBI, has said:

“The Chancellor has also painted a clearer vision of how the UK will earn its living in the future and, by seizing the opportunity to make sure our corporate tax system is more internationally competitive, he has sent a powerful signal to companies to invest, do business and create jobs in the UK.”

Kevin Green, the chief executive of the Recruitment and Employment Confederation, said:

“Changes to corporation tax will encourage businesses to invest in their workforce. Plus, in continuing and speeding up year-on-year reductions the Chancellor creates certainty for businesses, which is so important in encouraging growth.”

This commitment to building a recovery through enterprise, private sector investment and export will help to unwind the imbalances and distortions that the previous Government built up, expanded and ignored, to everyone’s cost.

We will not return to growth fuelled by unsustainable debt, irresponsible spending and over-reliance on one sector and one region. I would have thought that the hon. Member for Hartlepool (Mr Wright) would at least have recognised that when Labour was in office, despite the many billions of pounds spent on regional development agencies, the gap between the north and the south widened, not narrowed. That is the legacy that they left to this country. Rather than growth being dependent on debt-fuelled expansion, as in the Labour days, Britain will earn its way in the world. While the previous Government let the economy slip into a stupor of spending and competitive decay, we are reversing that decline and revitalising our ambition.

[Mr Love]

Will the Financial Secretary explain why, after feeding in all the numbers related to the Budget, the OBR did not make any changes to its growth forecasts for the coming years?

[Mr Hoban]

We face a challenge. The OBR has said, on this Budget and the autumn statement, that the scale of the problem we inherited from the previous Government was bigger than everyone thought. The scale of the boom was bigger and the scale of the bust was bigger. That is the legacy that we are tackling.

Critical to realising our goal are the far-reaching tax reforms that the Chancellor announced yesterday. We are committed to creating the most competitive tax system in the G20—a tax system that supports work, encourages growth and keeps our most successful businesses here in the UK. While the previous Government increased taxes on small businesses, we have cut the tax rate on small companies to 20%; while the previous Government wanted to increase national insurance on jobs, we have cut it; and while the previous Government sat idle as our competitiveness drained away, we have already taken action to reduce the headline rate of corporation tax to 23% by 2014, cutting one of the most important and growth-impeding taxes there is.

As the Chancellor announced yesterday, we are going even further by cutting the rate of corporation tax to 22% by 2014—a headline rate of corporation tax dramatically lower than that of our competitors. It is the lowest in the G7 and the fourth lowest in the G20. It is a sign that we are open for business, an invitation for investment and a spur for prosperity and job creation across the economy. That is also why we are cutting the 50p rate of income tax—a rate higher than in the US, France, Italy and Germany, and a rate that damaged our competitiveness while raising nothing in additional revenue. From April next year, the top rate of tax will be 45%, which will restore our competitiveness and galvanise our private sector.

I turn briefly to what the Government are doing to help protect pensioners. I want to make it clear that the Government have taken action to help pensioners. We have taken action to protect the winter fuel allowance, free prescriptions and eye testing, free television licences and free bus passes, and our triple lock on state pension uprating means that the basic state pension is £120 a year higher than it would have been had the previous Government remained in office. The triple lock means that from next month, the state pension will increase by an extra £5.30 a week—in cash terms, the biggest increase in the state pension that we have seen. We are freezing the age-related allowance in cash terms, but no pensioner will pay more in tax. This measure simplifies the tax system, moving everyone towards a simple tax system, where everyone has the same allowance. Even taking into account the change in age-related allowances, everyone will be better off as a consequence of the increase in the basic state pension.

However, there are other things that we need to do to secure future economic growth. As a number of my hon. Friends have said, we need to lift the layers of stifling bureaucracy that serve to suffocate growth. For too long, businesses have been trapped by a web of bureaucratic cynicism and nimbyism. If we want our most innovative and entrepreneurial businesses to lead our economic recovery, we have to match their can-do attitude. That is why the Budget announced a fundamental overhaul of the planning system, replacing 1,000 pages of guidance with just 50, and introducing a presumption in favour of sustainable development and a new planning guarantee, so that no decision should take more than 12 months, including appeals.

However, if businesses are to seize the opportunities to grow, we have to ensure that they have the finance they need to feed their ambition. If we want businesses to take the risk to invest, hire new workers and take a leap into the export market, we need to ensure that they have access to finance. In particular, it is critical that we support smaller businesses, which provide more than 50% of private sector jobs and 30% of private sector investment and have the potential to become the global leaders of tomorrow. That is why the Chancellor launched the national loan guarantee scheme earlier this week, to give smaller businesses with a turnover of up to £50 million access to cheaper loans. Through the scheme, the Government will provide guarantees on unsecured bank borrowing, enabling banks to borrow at a cheaper rate and pass on the full benefit to their customers. We have provided £5 billion of guarantees in the initial phase, with up to £20 billion of guarantees available in total.

[Mr Iain Wright]

Will the Minister give way?

[Mr Hoban]

It is this Government’s deficit-reduction strategy that has earned this country market credibility and low interest rates, and it is this Government who are ensuring that the full benefits of those low interest rates are passed on to businesses across the UK. Barclays, Santander, Lloyds and the Royal Bank of Scotland are already participating in the scheme—a new bank, Aldermore, has agreed to join in principle—helping thousands of small businesses across the UK. However, in addition to the national loan guarantee scheme, we are trying to broaden the range of sources of finance available to new businesses and tackle some of the issues in supply-chain financing, while also ensuring that other sources of finance are available to businesses. That is why we have launched the business finance partnership. I was delighted to see a large number of people coming forward to take part in the programme and ensure that more money is available to invest in small businesses. That is an important change to ensure that businesses are in a position to take advantage of the opportunities before us today.

[Mr Wright]

Will the Minister give way?

[Mr Hoban]

It is this Government who are committed to making Britain the best place to start, grow and finance a business. It is this Government who are putting the ingenuity, innovation and enterprise of people and businesses at the heart of our recovery. This Government are releasing our ambitions for a private sector recovery, through a competitive top rate of tax, one of the lowest rates of business tax in the world, an overhaul of cumbersome planning rules and bold action to ensure access to finance for businesses to lead investment and job creation across the country.

[Mr Wright]

Will the Minister give way?

[Hon. Members]

Give way!

[Mr Hoban]

Opposition Members had plenty of time to make their arguments. They should take responsibility for the problems that this country is having to deal with. They left behind the deficit that this Government are sorting out. They left behind an economy that needs repairing and restoring. It is this Government who will ensure that the British economy will earn its way out of its problems.

17:59

The debate stood adjourned (Standing Order No. 9(3)).

Ordered, That the debate be resumed tomorrow.

Prevention of Development on Green Belt Land

Thursday 22nd March 2012 Commons Chamber

18:00

[Mr Tobias Ellwood (Bournemouth East) (Con)]

I should like to present a petition, a copy of which has already been presented to No. 10 Downing street, from more than 1,000 residents of Bournemouth East who seek the protection of precious green belt land in the wards of Strouden, Throop and Muscliff from the proposed development of three Traveller sites. Residents believe that Bournemouth is already affected by overdevelopment, and that this would be an inappropriate use of much treasured green belt land and open space.

The petition states:

The Petition of residents of Bournemouth,

Declares that the Petitioners are opposed to the proposed development of three permanent sites for gypsies and travellers in Strouden, Throop and Muscliff; that the Petitioners believe that Bournemouth has already more than adequately contributed to Dorset’s housing numbers; and that this would be an inappropriate use of much treasured greenbelt land and open space.

The Petitioners therefore request that the House of Commons urges the Government to bring forward legislation to strengthen the powers of local Councils to allow them to prevent residential developments from being built on the greenbelt.

And the Petitioners remain, etc.

[P001014]

Electricity Transmission (North Somerset)

Thursday 22nd March 2012 Commons Chamber

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

18:01

[Dr Liam Fox (North Somerset) (Con)]

Those who read the title of this debate might be tempted to think that it deals with a localised issue of interest only in North Somerset or the county of Somerset. That would be a major mistake. The issues at stake in this project are likely to be replicated across many other parts of the country, and the principles involved are universally applicable.

At the moment, there are some 22,000 high-voltage pylons carrying 7,000 km of overhead lines across England and Wales. National Grid, the monopoly provider of transmission infrastructure, is planning to build nearly 480 km of new overhead power lines at a cost of some £14 billion. That became an issue in our part of the west country in the autumn of 2009, when National Grid began what it termed a consultation on the installation of a new feed line with 400 kV of electricity to connect the proposed new Hinkley C nuclear power station to the national supply network at Avonmouth, a distance of some 57 km. The most direct route between the two points lies across a body of water, yet the debate centred entirely around a land route that would involve overhead transmission and new pylons. The concerns of local residents about the new 400 kV lines—the current lines carry about 132 kV—were exacerbated when they discovered that the new pylons would be around 150 feet high, and very much bulkier in design, thereby creating greater environmental impact. I will return to the question “When is a consultation not a consultation?” later.

Our experience has been mirrored by colleagues in other parts of the country, notably in Suffolk, and I would like to thank them publicly for the support that they have given us throughout our campaign. One of the biggest problems that we have faced has been the perceived inconsistency in National Grid’s arguments and in the figures it has provided. At a packed meeting in Nailsea in my constituency before the last general election, residents were first told that to lay the cables under the sea was not technically feasible. Then, when they challenged National Grid with the fact that it already owned three undersea cables, they were told that it would be too expensive.

We now have a further complication, in the welcome announcement by the Government of the south-west as the first marine energy park, which will utilise—guess what—undersea cabling. We are still unclear as to why subsea links of similar length should be suitable for Europe, for the New York-New Jersey link and for the Scotland-Wirral link, but not for us. National Grid and Scottish Power Transmission even put out a press release stating that

“the companies are working together to deliver a major project to build a 400 km high voltage circuit which will run predominantly under the sea from Scotland to England. The new circuit will enable the transfer of large volumes of energy from Scotland directly to England and Wales through subsea cables, bypassing the constraints of the existing transmission system.”

[Tessa Munt (Wells) (LD)]

Is it not also the case that Steve Holliday, the chief executive of the National Grid, said in June 2009 that putting cables under the sea was a “no brainer”?

[Dr Fox]

That is indeed correct, but one of the problems we have had, as I mentioned, is that what we are told one day can be diametrically opposed to what we are told the next week. That has resulted in the local population’s loss of confidence in their dealings with National Grid.

There have been huge variations in the costs and estimates of alternatives. National Grid originally estimated that undergrounding power lines would cost between 10 and 20 times more than overhead lines. That does not fit with the evidence produced by groups such as the Campaign for the Protection of Rural England or even with National Grid’s own experience in London or Oxfordshire.

Some clarity was achieved earlier this year with the report from the Institution of Engineering and Technology and Parsons Brinckerhoff. That was a useful contribution to the public debate—well constructed, informative and indicative of the approach that National Grid should have taken from the outset if a meaningful public debate were genuinely sought. It provides better costings for the alternative technologies, and shows that the price differentials are much less than the public were originally led to believe.

However, the report’s remit relates purely to the tightly defined engineering costs. It does not take into account any analysis of the aesthetic, human or environmental impacts of the proposed new overhead lines. It scarcely covers the AC subsea option and does not give an equivalent level of detail for gas-insulated transmission lines as for overhead lines and underground cables. It does not sufficiently take into account whole life costs, or the public’s willingness to pay for undergrounding new and existing electricity transmission lines.

National Grid commissioned Brunswick to look into the public’s willingness to pay for these changes, and the research revealed widespread public ignorance about the percentage of an electricity bill that is attributable to transmission. Most consumers thought that about 10% of their bills as opposed to the actual figure of about 4% related to transmission. Ofgem commissioned further research from London Economics to look at the same data, and we currently await the results of research commissioned by National Grid from Accent.

Throughout the process, National Grid has told us that it is constrained in the actions it can take by Ofgem. My first question to the Minister, then, is: what representations, if any, has National Grid made to the Government, outlining concerns about these restrictions; and what freedoms from those constraints have been requested? What can the Government do to free National Grid from the perceived and well used excuse that it must use the “least-cost option”?

Meanwhile, back in North Somerset, many of the changes originally ruled out as impossible magically became part of the agenda for discussion, following public pressure. The 50-metre pylons, which caused such outrage, might be reduced to the current height by altering the design, although we have subsequently learned that that is limited by the ability of the new pylons to allow transmission lines to bend through more than 3°. We have been told that the 18 lines can be reduced to 12, and that the existing Western Power distribution—the pylons we currently have—might be removed to make way for the new pylons, rather than running in parallel as we were originally told had to be the case.

Other concessions, such as the burying of cables for environmentally sensitive areas and places of greater housing density, have been brought forward. That is particularly important in relation to housing in the west of Nailsea, where those who bought housing close to the existing 132 kV lines might find themselves with housing blight and unknown health implications. I wonder how many National Grid executives or shareholders would choose to have their homes, or send their children to school, under the new 400 kV cables.

Let me return to the question of when a consultation is not a consultation. From the outset, it was the belief of residents in my constituency—particularly in Nailsea, Backwell, Yatton and the surrounding villages—that the alternatives represented were not real alternatives at all. We were offered a Hobson’s choice: we could either accept a transmission line that kept close to the current one, running around the western border of the town of Nailsea, or have another line that would totally destroy a nearby valley and produce widespread planning blight. To the great credit of the local community, nobody bought into the divide-and-rule tactics. To us, a consultation is not about the means of execution, but about whether we wish to be executed or not.

In this particular case, how do the Government define a consultation? Surely, all the aspects of all the schemes ought to be considered—their costs, advantages and drawbacks, whole-life characteristics, environmental impacts, potential health impacts and social costs, not least housing blight. What weight will ultimately be given to the consultation and the views of those affected? If 90% objected to these proposals, would they go ahead in any case? If so, why bother? If not, what level of public disquiet would be required to produce a change of policy? Under the proposed changes to planning law, how will the population be able to be satisfied that its voice has been heard in policy formulation? How can we be guaranteed transparency?

[Tessa Munt]

I wish to place on record that both Somerset county council and Sedgemoor district council believe that the consultation was deeply inadequate. There were more than 4,000 responses to the consultation from members of the local community—constituents of mine and of the right hon. Gentleman—which is far more responses than National Grid has received in any past consultation.

[Dr Fox]

The hon. Lady makes an important point. This issue is not simply about the consultation as it affects her constituency or mine: many people outside North Somerset and Somerset county will be wondering what precedent the decision on the Hinkley C transmission will set for future changes involving high-voltage lines elsewhere in the country. Many will be concerned that their options may be constrained, and that they may be railroaded into the wrong outcome on the wrong assumptions.

I shall now turn to the issue of the future of Hinkley C and where it fits into our broader energy policy. I have always been a supporter of nuclear energy on the basis that it makes a fundamental contribution to the nation’s energy security and guarantees a means of keeping the lights on if, for whatever reason, our imports of fossil fuels are interrupted. On balance, I remain very much of that view, but in light of the growing evidence of the abundance of natural gas worldwide and the massive potential for shale gas production, possibly including here in the United Kingdom, it is reasonable for us to pause and re-examine some of our energy policy assumptions. If the cost predictions we have made turn out to be wrong, and energy prices in the rest of the decade are lower than we anticipated, might there not be an unprecedented opportunity to overhaul our electricity transmission network without a significant impact on consumer prices? Indeed, consumers need to know what impact the options that are available will have on their electricity bills, so that they can make an informed decision in this debate. In other countries, notably Norway and Denmark, the decision has already been taken that any future transmission lines should be buried underground, and the development of new technology, such as gas-insulated transmission lines, offers a whole range of new possibilities.

On the Hinkley C project, we have already seen major changes to the original time scales. Initially we were told that the transmission lines had to be up and ready by 2015 for Hinkley’s operation in 2016. That has now slipped to the lines being ready in 2019 for Hinkley going live in 2021, assuming all is smooth in the Hinkley build and commissioning processes. The bottom line is that we may have more time than we thought, so why do we not use this time to pause for thought, examine all the evidence, consider all the possibilities and get it right?

Let me end by paying tribute to all those in Somerset, Suffolk and elsewhere who have campaigned with such tenacity and vision on this issue. In particular, campaign groups in Nailsea, Yatton, Backwell and Wraxall have shown extraordinary community solidarity against divide-and-rule tactics, using reason and persistence as their primary weapons. May I single out Wraxall and Failand parish council, Chris Ambrose, Hugh Pratt, Fiona Erleigh and Sue Turner, along with their respective groups, for the sterling service they have given to the community?

This coalition Government have put quality of life issues, a greener environmental agenda and long-term policy considerations at the forefront of policy making. A basic issue such as how we transmit our electricity and the considerations we give to our environment, to the well-being of future generations, to the implications for our tourist industry, the health of our people and our ability to welcome new and liberating technology can paint a vivid canvas of who we are and our ambitions for our country. The decisions we make today will have an impact for a generation or more. Technology has changed, public attitudes have changed and our priorities, not least the value we place on the physical environment around us, have changed. We now have an opportunity for public policy to change, and we should grasp that opportunity with relish.

18:16

[The Minister of State, Department of Energy and Climate Change (Charles Hendry)]

I thank my right hon. Friend the Member for North Somerset (Dr Fox) for securing a debate on this important issue. I am grateful that he has done so. I agree with him that the need for, and impact of, electricity transmission infrastructure is, inevitably, a complex and sensitive issue. So I welcome the opportunity to explain the need for upgrading the existing transmission network, and to clarify the approach to deciding where and how new infrastructure is delivered and how this relates to North Somerset, in particular. I hope that I can also reassure him that many of the changes he has been calling for are already being put in place by this Government.

The Government are committed to meeting the UK’s climate change targets and maintaining energy security. Achieving those combined objectives represents a major challenge. The United Kingdom is increasingly dependent on fossil fuel imports, leaving us much more exposed to risks from rising global demand, limitations on production, supply constraints and price volatility. At the same time, we expect to lose about a quarter of our existing electricity generation capacity by 2020, as old or more polluting generating plant closes.

My right hon. Friend rightly referred to the future costs of energy, and that is certainly an important consideration, however security of supply and reducing the carbon impact of generation are also important factors. That is why we need a mix of energy going forward. It is not for the Government to prescribe how much of each generation source is required, but we are setting the framework for delivering the appropriate energy mix through, for example, our proposals for electricity market reform.

I welcome my right hon. Friend’s support for nuclear generation. I wish to take the opportunity to reiterate its vital role in securing our energy future—we want it to be part of the future energy mix. The UK has everything to gain from being the No. 1 destination to invest in new nuclear. Nuclear is the cheapest low-carbon source of electricity around, so it keeps bills down and the lights on.

[Tessa Munt]

rose—

[Charles Hendry]

I will give way in a moment, but I want to respond to a further point raised by my right hon. Friend about the potential golden age for gas with shale gas emerging. For the United Kingdom, most of that gas would need to be imported, as our own resources decline. So we, too, need to look at how we can harness our own low-carbon electricity resources, such as nuclear and renewables. Putting off building new generation has got us into the mess we are in, where the previous Government identified that the lights could be going out around the end of this decade. We cannot afford to delay any longer in securing the investment in new capacity.

[Tessa Munt]

It is very kind of the Minister to give way. I am on record as being a little more resistant to nuclear power, mainly because of my concerns about the waste. I think that a number of community benefits could be put in place by companies such as EDF. They would be of much more significance to the community. Undergrounding or putting cables under the sea might be examples of that. I accept completely that I am not going to be able to stop Hinkley all on my own, but that is my point.

[Madam Deputy Speaker (Dawn Primarolo)]

Order. The hon. Lady has gone very wide of the issue of electricity transmission into its generation. Perhaps the Minister could respond on the transmission question only.

[Charles Hendry]

I will indeed, but the hon. Lady makes a relevant point in that when a nuclear plant is being proposed there is often strong local support, but that where transmission lines are proposed there tends to be much stronger local opposition. I think that ties in because it is all part of the security of the network that we need.

The existing electricity network will need to be substantially expanded to accommodate the new generation we require. That is particularly the case where new generation is located far from demand or where the existing infrastructure is insufficient. Developers of new generation need the reassurance that the network will be delivered in line with their project time scales so that they are able to generate electricity once their projects are completed. We should recognise that these are substantial long-term investments and that timely network delivery is crucial to these projects commencing.

My right hon. Friend referred to National Grid’s approach to engaging with local communities and its consideration of different network solutions. Before I address the issue of transmission lines in North Somerset it might be helpful for me to explain the wider approach for deciding upon new network infrastructure. Under the current regulatory framework, it is for network companies such as National Grid to submit proposals for new network infrastructure to the industry regulator, Ofgem, and the relevant planning authorities. Those proposals are based on a well-justified need case such as new generation connecting or maintaining a safe and secure network. The network companies also propose routes and types of infrastructure. In doing so they are required to make a balanced assessment of the benefits of reducing any adverse environmental and other impacts of new infrastructure against the costs and technical challenges of doing so following extensive consultation with stakeholders. Those requirements are set out in their licence obligations under the Electricity Acts to develop economic and efficient networks and to have regard to the preservation of amenity and the mitigation of the effects that their activities have on the natural beauty of the countryside.

My right hon. Friend asked about perceived regulatory constraints for network companies to propose alternative solutions. In addition to the legal requirements to consider the wider impacts of new network infrastructure, Ofgem published guidance, in March 2011, on how this should be taken into account. This clarifies that network companies are required to consider wider impacts and alternative solutions to overhead lines. In response to my right hon. Friend’s question on this point, this very much took into account the representations that the Government and National Grid had been making.

That regulatory approach is reinforced by the Government’s energy national policy statements, which set out the framework for factors to be considered when consenting to an infrastructure project of national significance. I emphasise to my right hon. Friend that we have changed those national policy statements from those we inherited specifically to take more account of these matters. They make it clear that for electricity networks, cost should not be the only factor in determining the type of transmission technology used and that proper consideration should be given to other feasible means of connection, including underground and subsea cables.

Within the framework, National Grid published in September last year its new approach to building new transmission infrastructure. Using that approach, it will put greater emphasis on mitigating the visual impact of its new electricity lines, and will balance that consideration against the need to manage the impact on household bills. I hope that this more sensitive approach provides reassurance to those areas potentially affected by cables and pylons that alternatives to new overhead lines are considered very seriously. As the costs and technical difficulties vary so much from project to project, it is important that each one is assessed on a case-by-case basis to ensure that the right planning decision is taken each time. My right hon. Friend has already referred to different projects with quite different characteristics where subsea cabling has been proposed or deployed. Indeed, the recently announced project, which he mentioned, between Scotland and England is specifically to get around an onshore constraint, and therefore new ways of dealing with that had to be found.

The Government consider that the costs and benefits of undergrounding transmission lines are important issues that must be kept under review in the light of new information and evidence. That is why the Department of Energy and Climate Change arranged for an independent study, to which my right hon. Friend referred, to be carried out to give clarity on the practicality, whole-life costs and impacts of undergrounding and subsea cabling as alternatives to overhead lines. That report was published in January 2012, and its findings are generally consistent with the comparative costs that National Grid has quoted when evaluating options on current projects, including in North Somerset. The report should provide a useful reference point to inform the planning process.

My right hon. Friend identified some issues that were not being looked at, but as I hope I have explained, the Government have already put in place those other wider issues in the national policy statements.

My right hon. Friend raised the question of consultation and how the views of stakeholders on a range of impacts are taken into account. Let me reassure him that the impacts he mentioned are indeed taken into account in the decision-making process. However—I know that he will accept this—there is a balance to be struck between impacts and there is no simple formula that can be applied to produce the right decision. I know that my right hon. Friend will understand that from the decisions that he had to make as Defence Secretary.

Network companies must proactively explore new and alternative technologies to overhead lines. National Grid is currently exploring the development of gas insulated lines and it would be for it to consider whether the use of this technology was appropriate for any project. However, the issues involved with gas insulated lines are complex. For example, gas insulated lines are still an emerging technology and untested, and much more work needs to be done for longer, directly buried installations such as the Hinkley Point connection. There is currently no directly buried gas insulated circuit longer than 1 km in operation anywhere in the world.

The application for transmission infrastructure in North Somerset will be decided by the appropriate planning authorities, which may include Ministers. It would therefore be inappropriate for me to give a view on the particulars of those proposed developments. However, I do recognise from the issues raised in the House and elsewhere that many people feel very strongly about pylons and the impact they can have on the landscape. When announcing its preferred route corridor for the Hinkley connection, National Grid reported that it had received over 8,000 responses.

Effective consultation with local communities and other interested parties is a vital part of the planning and regulatory approval process. When making proposals for new infrastructure, National Grid has to demonstrate that alternatives have been considered and why its preferred option is justified. This must show that stakeholders have been engaged effectively.

My right hon. Friend spoke in detail about his experiences with the National Grid consultation process. I think it fair to say that the new planning process requiring greater engagement with stakeholders and examination of options before submitting a planning application has been a learning process for all participants and can be significantly improved as it goes further.

I am encouraged, however, by the greater stakeholder engagement and consideration being given by National Grid to alternatives over the past year or so. This is the behaviour that the new planning and regulatory frameworks require. Having announced its preferred route corridor for the Hinkley Point connection, National Grid is considering carefully the type of technology it will use for the connection. It has stated that many people want the cables put underground, as indeed my right hon. Friend has said, or under sea, and as it continues its consultation, it expects that the final plans will include some undergrounding as well as overhead lines.

I would like to thank my right hon. Friend and the hon. Member for Wells (Tessa Munt), who have participated in a valuable and important debate. Our challenge is to build a low-carbon economy based on an energy mix that meets our environmental targets and security of supply needs. This will require a substantial expansion in the transmission network to accommodate the required generation. Deciding where and how this infrastructure is delivered requires informed and balanced consideration of a number of factors including costs, environmental impact, and the needs of local communities and the country as a whole. The planning and regulatory approval processes for new transmission infrastructure require that stakeholders are consulted on these important decisions and their views demonstrably taken into account. This is happening now in North Somerset, where National Grid continues to undertake an extensive stakeholder engagement exercise on developing its proposals.

National Grid has expressed the desire to work with stakeholders to lessen the impact of any new infrastructure using mitigation measures such as woodland planting, placing cables underground or use of lower height pylons where appropriate. I strongly encourage those with an interest to engage with National Grid as it further develops its proposals.

This is an important issue to which I know the House will return, but I hope that I have been able to reassure my right hon. Friend that we have already been acting on the concerns that he has expressed.

Question put and agreed to.

18:29

House adjourned.

Petition

Thursday 22nd March 2012 Petitions

Thursday 22 March 2012

Closure of Downhills Primary School, Tottenham

Thursday 22nd March 2012 Petitions

The Petition of residents of Tottenham,

Declares that the Petitioners believe that there has been inadequate consultation about the Secretary of State for Education’s plans to close Downhills Primary School and re-open it as an academy; that the Petitioners value the links with the community that the school has maintained over the last 100 years; that the Petitioners believe that the Secretary of State’s plans are undemocratic and undermine the recent progress that has been made towards improving standards at the school and that the Petitioners oppose any attempts to change the status of the school without the consent of the community.

The Petitioners therefore request that the House of Commons urges the Secretary of State for Education not to exercise his powers to close Downhills Primary School and re-open it as an academy.

And the Petitioners remain, etc.—[Presented by Mr David Lammy, Official Report, 23 January 2012; Vol. 539, c. 138.][P000998]

Observations from the Secretary of State for Education:

In June 2011, the Secretary of State set out an objective of turning around underperforming primary schools by finding new academy sponsors for them. The 2011 key stage 2 tests show that Haringey is the worst performing borough in inner London, with the highest number of primary schools below the floor standard.

Downhills primary school’s key stage 2 results have been below the floor standard from 2005-09. The school boycotted KS2 tests in 2010. In 2011 it remains below the floor on progression measures but is just above on attainment measures (61%). The school was judged by Ofsted as requiring significant improvement in January 2011 and was issued with a Notice to Improve. Upon re-inspection in January 2012, inspectors judged that standards at the school had deteriorated over the last 12 months and placed it into special measures. This is a serious judgment and not one given lightly by Ofsted. Ofsted found that the school was failing to give its pupils an acceptable standard of education and that those responsible for leading, managing and governing the school did not have the capacity to secure the necessary improvement.

Although the decision on whether a school should become an academy is voluntary for the vast majority of schools, we think it is right that action is taken at schools which are not providing an acceptable standard of education to their pupils. The Education Act 2011, which was granted Royal Assent on 15 November last year, gave the Secretary of State additional powers to intervene in poorly performing schools to help ensure academic standards are raised.

The Secretary of State informed the school in December that he was considering replacing the governors with interim executive members to give the school the leadership and expertise it needs to improve. The school was then given a period of time to respond to this proposed action. The school has been given a further opportunity to meet officials in the Department and make representations concerning the proposed action of the Secretary of State after the Ofsted inspection which found that the school required special measures. We considered the school’s representations carefully and have also considered Ofsted’s findings following their most recent inspection.

Based on all the relevant information before us we were not confident that the governing body would be able to make the improvements necessary to turn the school around. The Secretary of State decided, therefore, to issue an Academy Order requiring Haringey local authority to cease to maintain the school if a funding agreement for an academy is signed and to appoint an interim executive board. This was done on 15 March 2012. The interim executive board is responsible for securing improvements in the school and the Secretary of State has additionally asked it to consult on whether the school should convert into an academy sponsored by the Harris Federation.

The IEB will report the outcome of the consultation to the Secretary of State and he will consider this, and other relevant factors such as Ofsted’s findings, the performance at the school and its financial health before taking a decision on whether to enter into an agreement to allow the school to become an academy.

I understand the community value the links they have had with the Downhills school over the years and that they may be worried that they will disappear if the school were to become an academy. Academies have parents and other talented local people on their governing bodies, and are required to work at the heart of their communities, collaborating and sharing facilities and expertise with other schools and the wider community.

Our motivation is simply to raise and maintain academic standards for children. We want to find lasting solutions to underperformance so that children in Haringey can have the kind of opportunities enjoyed in neighbouring areas.

Westminster Hall

Thursday 22nd March 2012 Westminster Hall

Thursday 22 March 2012

[John Robertson in the Chair]

Services for Young People

Thursday 22nd March 2012 Westminster Hall

[Relevant documents: Third Report from the Education Committee, HC 744, the Committee’s Sixth Report, HC 1501, and the Government response, HC 1736.]

Motion made, and Question proposed, That the sitting be now adjourned.—(Tim Loughton.)

14:30

[Mr Graham Stuart (Beverley and Holderness) (Con)]

It is a pleasure to lead the debate under your august chairmanship, Mr Robertson. I am delighted to see that four fellow members of the Education Committee have made it to this Thursday afternoon debate. The hon. Member for Wigan (Lisa Nandy) is making a ticking movement with her hand, and she is right to imply that we deserve a medal of honour.

The debate is about our report, “Services for young people”. I intend to set out its key conclusions and the policy developments since its publication, and to comment on questions that the Government have still not answered. It is a pleasure to see the Minister present. I am sure that, given his personal commitment, those questions that have not yet been answered will receive answers this afternoon and that we will treasure them when they are duly delivered.

The Committee conducted its inquiry over six months during 2010-11. Our aim was to consider the relationship between universal and targeted services; who accesses services and what they want from them; the roles of the voluntary, statutory and private sectors; and the impact of funding cuts and the scope for commissioning services in future.

The Committee received 158 pieces of written evidence. We heard from young people, both in person and via an online forum, which we ran for several months with the Student Room and through which we received more than 200 responses. Young people were represented on the panels on many occasions when we took oral evidence—I say that for the benefit of anyone who may have ignorantly thought that young people were not involved fully and consistently throughout the process.

We published the report on 15 June 2011 and it was well received by the sector. The Young Men’s Christian Association said that,

“it focuses in on many of the key issues and problems that are being faced by youth service providers across the country.”

Children & Young People Now said that

“at long last there is an attempt from Westminster to address the challenge of serving young people in these austere times”,

and called on the Government to rise to that challenge. On receipt of the Government’s response, we decided to publish a further report commenting on it, because it did not tackle several issues satisfactorily.

Since then, the Government’s cross-departmental strategy on young people, Positive for Youth, was published in December 2011. The Government make a number of welcome commitments and take up some of the Committee’s recommendations. In other areas, however, they do not go far enough. I will return to the merits of that strategy document in a moment, but first I want to set out the Committee’s key conclusions.

Our inquiry found that young people spend more than 80% of their time outside formal education, yet local authorities spend 55 times more on formal education than on services for young people outside the school day. Acknowledging that inequality, we set out to understand which services are most effective at supporting and developing young people outside school.

Witnesses with different perspectives agreed on three key points: first, that public spending cuts had disproportionately affected youth services; secondly, that there was great potential for youth services to help transform young people’s lives; and thirdly, that services had long been poor at proving their impact and, thus, at making their case to Government—a weakness that is all the more pertinent in times of austerity.

On funding, the Committee concluded that the picture looked bleak and was likely to worsen. Funding had been doubly hit, with the removal of ring fences from central Government grants and the 11% overall reduction to the total value of youth service funds that go to local authorities and are redirected into the early intervention grant. We calculated that local authority spending on youth services in 2010-11 equated to only £77.28 per young person a year, which is about 21p a day.

Two surveys in 2011 showed that more than £100 million would be cut from local youth service budgets by March 2012, with average cuts of 28% and up to 100% in some areas. Even the Department for Education agreed, concluding that

“the scale of budget reductions and the pace at which decisions are being made”

was

“limiting the scope for… innovation and fundamental reform”.

The Committee was alarmed enough by the apparent extent of the cuts to urge the Government to consider using their powers to direct local authorities to commission adequate services for young people, which they have a statutory duty to do.

On the impact of services, we received strong personal stories from many young people about their value. One young person wrote on an online forum that

“when young people come to the centre they know they aren’t going to be judged and they can be who they want to be, for some of them it gives a break from stresses outside”,

while another stated that

“without my youth workers I would now be in a lot of trouble with education, work and drugs. But with their help I have been able to sort myself out and get onto the right path and stop the bad things I was doing over a year ago”.

We received a lot of anecdotal evidence about the efficacy of youth services and their individual impact, but, as I have said, collectively, services struggled to show the impact of their work in an easily defensible and statistically strong way.

The importance of youth services, coupled with the limited public resources available for them, makes it more vital that effective services are identified and funded. That is in line with the work of the hon. Member for Nottingham North (Mr Allen) on early intervention. The most important thing when spending limited public resources is to find those interventions that will make the greatest difference. Early intervention does not need to take place only during pre-school years; it could equally take place during the teenage years by getting involved with people who might be at risk and intervening early to support more positive behaviours.

[Damian Hinds (East Hampshire) (Con)]

I congratulate my hon. Friend on securing this important debate on the Committee’s report. Does he agree that it would be helpful if we moved away from the confusion surrounding the definition of early intervention? Some people take “early” to mean years 0 to 3, while others take it to mean early in the life cycle of an actual problem. Both things are, of course, important, but they are often conflated.

[Mr Stuart]

My hon. Friend is right. The hon. Member for Nottingham North is also right to not only emphasise the importance of early intervention, but to want to build an evidence base to justify additional public funding. If investing another £100 million into the lives of young people means getting a payback and saving many more pounds later, even the person with the driest heart in the Treasury will see the benefits. I am delighted—this is a tribute to the hon. Gentleman’s work—that the Government have agreed to fund an early intervention foundation that will do precisely that. I hope that, as that work develops, it will look not only at the early years but, as my hon. Friend the Member for East Hampshire (Damian Hinds) has rightly said, at early intervention throughout a young person’s childhood.

[Damian Hinds]

I am grateful to my hon. Friend for being so generous in giving way early in his speech. He may intend to address this issue later, but will he comment on some of the difficulties involved in measuring the effects of different programmes? We discussed and received evidence about those problems in Committee. The prisoner scheme in Peterborough is a perfect, text-book example of payment by results, but the proposition for a youth club is completely different because of the different client group, control group, time period and the different influences on people’s lives.

[Mr Stuart]

I am grateful to my hon. Friend for that question. As he has rightly said, we considered the issue. In principle, I do not think that there is any division between the parties on payment by results. The question is: who is paid by results? Are we really going to try and collect data on a once-a-week youth club in a particularly deprived area which has a brilliant community leader who builds on the history in that area, where parents themselves attended clubs locally and there is great support, and it really brings the community together? Will the expense be completely disproportionate to the effort of collecting it? The answer is probably yes. The danger of identifying something at a micro level where we can easily pay someone to deliver results is that they will then always have to be able to provide that at that micro level before we support the whole principle, and that could limit its impact.

Payment by results is probably better introduced at a higher level. For example, Birmingham city council could have a partnership with Goldman Sachs for the money, Serco for certain other skills, and seek to bring in additional private money to support and strengthen the focus of the services it provides. That extra money could be brought in to support those services on an evidence base that makes the council—and the hard-hearted business people—believe that they can deliver those improved outcomes for young people. As a Government and as a society, we need to be more effective in ensuring that the money to deliver improved outcomes for young people, which we vote for in this place, actually helps to deliver them. It is important to get the mechanics right.

[Damian Hinds]

I promise to be quiet after this brief intervention. Does my hon. Friend agree that what comes up time and again in talking about how to identify a good parenting programme or a good programme for teenagers, is that we know it when we see it? For payment by results, the trick is to leverage the knowing it when we see it so that we can identify the individuals or organisations who are good, and then work out who else to invest money in for the future of our young people.

[Mr Stuart]

My hon. Friend is absolutely right. As long as there is accountability and people are driven by delivering the outcomes at the end, they should have discretion over how they use their budget. There could be investment in the Friday evening group I mentioned if there was confidence that it was helping to meet our overall goals for delivering change in the local community.

[The Parliamentary Under-Secretary of State for Education (Tim Loughton)]

May I help my hon. Friend on this subject? Social impact bonds and payment by results are an important subject. I will give him two examples. The City Year London scheme is being piloted in many London schools, with the help of the Mayor’s Fund and Private Equity Foundation money. It can show, very clearly, a return on capital in terms of the kids catching up. The Private Equity Foundation has been funding literacy schemes, in partnership with local authorities and other public providers, that clearly show a benefit for those children in social outcomes, which are so important, and can be linked back to a return on capital. There are great possibilities for the youth service, too.

[Mr Stuart]

I agree with the Minister; that is exciting and interesting. My note of caution is that there must be many positive services, including youth services, which would struggle to collect the evidence, dissociated from all the other impacts and influences on young people’s lives, to prove that they were delivering. Perhaps that is why, in many cases, we might want to have the payment by results managed and triggered at a higher level, with those people making a discretionary decision. When they see great work—when they see it they can recognise it—they will realise that it is offering value for money. They could take things that did not have an individual evidence base, yet would none the less continue to be commissioned. A dangerous and perhaps self-interested parallel with my previous life as a publisher is an advertiser who places an advert for £1,000 and immediately receives £2,000 back in directly attributable profit on sales. He may spend the rest of his career thinking that advertising is just about getting money back immediately without any other elements to it, which would be a mistake. Life is more complicated than that, and the danger of finding such things as the work in Peterborough, or, possibly, the initiatives mentioned by the Minister, is that we are looking for everything to be able to justify itself on a payments by results basis. Perhaps councils, or other bodies at a higher level, should commission without having to expect that from each initiative in their portfolio.

[Ms Karen Buck (Westminster North) (Lab)]

While we are on this interesting issue, may I encourage the hon. Gentleman in his caution? Although the Minister made a good point about how one can hold an institution to account for services for which it is responsible, is it not the case that, for the youth service, good youth work in deprived communities is good at—we need it to be good at—helping reduce offending behaviour? Of course, offending behaviour and its impact has nothing to do with the youth service, but it will be measured by the police or the youth offending team in the local authority. Often, the youth service will be targeting those most at risk of offending behaviour anyway. Is it not the case, as the hon. Gentleman rightly says, that this is very complex? It would be quite dangerous to encourage an organisation like an individual youth club to be held too much to account for an issue such as offending behaviour.

[Mr Stuart]

I think I agree with the hon. Lady. One of the criticisms we have made of the sector is the need, collectively, to make a better case. When Ministers—we have one with us today, and the hon. Lady was one previously—go to the people in the Treasury, they need a strong case, especially when it is, “Give me money today and I will give you savings tomorrow.” There is a certain natural and understandable scepticism in the Treasury, and a strong evidence base is needed from which to make the point.

[Tim Loughton]

At the risk of holding a third-party debate through the Chair of the Select Committee, may I say that the hon. Member for Westminster North (Ms Buck) makes an interesting point? In the borough next to her own, Hammersmith and Fulham has pooled budgets between the youth service and the youth justice system, and there is a clear imperative to incentivise local youth services to work with legal services, to keep young people out of youth offender institutions and the youth justice system. If we are to hold local authorities to account for doing good stuff, positive stuff, proactive stuff and preventive stuff with young people, we want to penalise them if they do not do so—the result is that children end up in young offenders institutions—but reward them when they keep young people away from offending behaviour.

[John Robertson (in the Chair)]

Can we keep interventions to intervention length, rather than speech length?

[Mr Stuart]

The Minister’s point was well made. We need to get everybody—in my example, from Birmingham city council downwards—focused on outcomes. The danger—this happens in all Governments; it is not peculiar to the previous one—is that, despite talking about rewarding success and penalising failure, the tendency is to reward failure. For those who deliver services, the less they succeed, the more money they get and the bigger the budget that comes to them. To break out of that and ensure that everyone is focused on outcomes and that the bureaucracies that administer these things see it as in their interests to change the lives of the young people for whom they are responsible, would be a good thing, and I wish the Minister luck in delivering it.

Returning to the difficulty of services demonstrating their impact, the National Council for Voluntary Youth Services told us that although

“anecdotal evidence and young people’s stories”—

were available—

“what is really difficult is some sort of set of statistics whereby we could show the total amount of investment and the total amount of return”.

That conclusion was borne out in independent evaluations, including by Ofsted.

Although the impact of youth work encounters with young people can certainly be hard to quantify, the Committee said that local authorities needed some indicators on which to commission services. The Committee recommended that the Government commission NCVYS to develop an outcomes framework that could be used across the country. However, we said that it should be not just a question of counting the number of young people using a service or the number of encounters—in some ways, failure would be rewarded again by such an approach—but a measure of young people’s social and personal development and that they should be involved in its design.

In addition to those three earlier points, the national citizen service—the Government’s new volunteering programme for 16-year-olds—was a key area that witnesses felt strongly about. We addressed that service in our report, and although we liked the idea of a community volunteering project and a rite of passage for young people and found the scheme’s aims entirely laudable, as did almost all our witnesses, we questioned whether the Government could justify its expense.

We discovered that, based on the cost per head of the 2011 pilot, the NCS would cost £355 million each year to provide a universal offer of a national citizen service to 16-year-olds, assuming just a 50% take-up. Even allowing for economies of scale, we felt that there was a risk that the costs of the NCS—a six-week voluntary summer service for 16-year-olds—could outstrip the entire annual spending by local authorities on youth services, which totalled £350 million in 2009-10. Instead, we recommended that the core idea of the national citizen service be retained, including its laudable aims, but that it be significantly amended to become a form of accreditation for existing programmes that could prove that they met the Government’s aims of social mixing and personal and social development, with the component parts of NCS, such as a residential experience and a social action task.

The Government could have said, but did not—I often thought that if I were a Minister I would have said it, although the Minister did not—that the NCS was just being piloted and that the aim of the pilots was to help to identify ways to deliver more. The Government said that they wanted to secure and leverage in more funding and to ensure that they did not scale up the prices that the initial pilot suggested.

We received our initial response from the Government both directly—orally— and in writing from the Minister, who seemed less than entirely thrilled. We felt that the Government, in their initial response to our report, failed to address fully a number of issues, so we wrote a further report, calling on Ministers to clarify their intentions on how the Government intended to measure outcomes from youth services, which is pretty important, given everything that we have been talking about so far, and the grounds on which they would judge whether a local authority had made sufficient provision, because there is a statutory duty on local authorities.

Although the Government said that they were prepared to intervene, they would not tell us on what grounds they would do so, other than in the most general terms. The Government would not describe what services would, or would not, look like if they were likely to trigger intervention, thus leading to the likelihood that councils could continue to make cuts to youth services that the Government described as disproportionate.

We also asked the Government to clarify the total public spending on youth services before the early intervention grant. The Government said that they did not accept our figure—£350 million—so we asked them to tell us what their figure was. As they did not accept our figure, we thought that a reasonable request. We also asked them to tell us how they planned to fund the NCS after the two pilot years. What have the Government said in response to our two reports and, subsequently, in their Positive for Youth strategy?

The aspirations of Positive for Youth have been well received in the sector. The National Children’s Bureau said:

“we are pleased with Positive for Youth’s holistic approach to giving young people more opportunities and better support”.

The National Youth Agency and the NCVYS both welcomed the Government’s publication of a comprehensive strategy, drawn up in consultation with the sector and produced in less than two years after the creation of the Government. However, many youth organisations are concerned that the strategy is vague about how its aspirations will be implemented, so reflecting a worry of the Committee that was mentioned in its report.

Catch22, which works with particularly deprived youngsters, commented that the levers for change in the Government’s policy “lacked bite”. That view was echoed by the Children’s Commissioner, Dr Maggie Atkinson, who said:

“without action this strategy will amount to no more than words on a page”.

The NYA qualified its support for Positive for Youth, saying:

“no vision or policy is worth anything if it isn’t followed by clear and decisive action”.

The chief executive of YMCA England, Ian Green, went further:

“the Government’s vision will come to nothing if those responsible for the delivery of services on the ground are not prepared to implement it, and the Positive for Youth statement is very light on how it intends to address this fact”.

[Damian Hinds]

I suppose that we get used to such e-mails, but does not my hon. Friend accept that it is a statement of the blindingly obvious to say that things will not happen if people do not implement them?

[Mr Stuart]

I was reflecting on those words even as I read them, but their implications are clear. If there is no firm action plan, the criticism—to spell it out for my hon. Friend in case he, too, is missing the blindingly obvious—is that if the strategy produced by the Government after such a long period of preparation does not spell out exactly what they are going to do and how they will hold to account those responsible for delivering services, there is every danger that we will have fine words and no real delivery. That might be a statement of the obvious, but there is a serious risk, with a strategy that is light on content, in respect of whether there is confidence that it will deliver on the ground.

Positive for Youth has the right focus on fostering young people’s aspirations and on their personal and social development. It is good to hear the Government praise the potential of young people and extol the qualities and achievements of the vast majority, especially in light of the negativity towards young people generated by last summer’s riots. The Government and the Minister are right to emphasise the positive. If all we ever measure are provisions averting negative behaviour by young people, we suggest that their natural tendency is to behave negatively. In fact, the Minister wants to emphasise—the Government are right about this—that most young people are positive members of our society and that we should support and celebrate their positive behaviour.

[Ms Buck]

Mr Robertson, I wonder whether it is appropriate—I know it is not normally done—to welcome the young people who are listening to the debate, because it is to be appreciated. The message that the hon. Gentleman has just given about the majority of young people being positive and aspirational for themselves will be heard in this Chamber as well as outside it.

[Mr Stuart]

Yes. Having served as a Minister, the hon. Lady will know that we can be as positive as we like for as long as we like in as many speeches as we like, but as soon as we say something negative, that will appear in the newspaper. That is the nature of being in power and the nature of news.

It is right to call the paper “Positive for Youth” and immediately emphasise the positive and recognise that we regard young people not as a problem, but as an immense, positive force for good in our society. That is important and we cannot say it too often, although it will never appear in any form of press thereafter. But we have to live with that.

[Tim Loughton]

By the Committee Chair’s own token, does he therefore think that it was helpful, in trying to create a positive account of young people, that about three quarters of the press release accompanying his report—it is a good report and I will comment on it—about activities for young people, aged between 13 and 25, beyond the school or college day concentrated purely on the national citizen service, which deals only with young people aged 16?

[Mr Stuart]

Mr Robertson will recognise, even if the Minister does not, that it is relevant to mention that a proposal from the highest levels of the Government might, if scaled up to a 50% take-up, lead to spending greater than the entirety of spending on young people outside the classroom, as stated in Government figures. It is in the nature of issuing a press release that 29 points are not included if one wants it to become part of the press story. Although the Minister was upset that a project with such laudable aims was the subject of criticism, he has not been a Minister that long and will doubtless become thicker skinned and will get used to the fact that a more independent Select Committee system than we have had before and a more assertive legislature will be prepared to criticise even the most favoured schemes of the most powerful in the land, because it is our job to do so. If we emphasised that in our press releases, rather than all the other issues, I am sorry that it caused such upset and sorry that the hurt to the Minister continues to this day.

On a positive note, I welcome the commitment to publish annually national measures relating to young people’s positive outcomes, with an audit at the end of 2012 of overall progress towards creating a society that is more positive for youth. That is as a result of the work carried out by the Minister, which I am happy to celebrate and emphasise, even if it does not occupy more than three quarters of my speech. I am also pleased to see the Government emphasis on involving young people in developing policy and monitoring progress—for instance, the pledge of £850,000 to the British Youth Council for 2011 to 2013, to set up a new national scrutiny group of representative young people to advise Ministers on how policies affect young people and their families.

I pay tribute to the Minister for regularly meeting young people in care, to ensure that his understanding of the care system is not only theoretical but a personal, direct, linked understanding from young people affected by the policies that he and the rest of us make in Parliament. That, too, is a good thing—as well as having young people in the Public Gallery listening to me going on at such length today.

Positive for Youth does not fully address three outstanding areas, which the Committee was concerned about. First, we welcome the Government’s commitment to retain the statutory duty on councils to secure young people’s access to sufficient activities and services, including their duty to take account of young people’s views in decisions about such activities, which was a key recommendation of our report. We also welcome the commitment to intervene in response to

“well-founded concerns about long-standing failure to improve outcomes and services for young people”—

again, a key Committee recommendation.

Our second report, however, called on the Government to specify their minimum expectation for adequate provision of youth services. We asked how communities could know the grounds on which Ministers might be expected to intervene if they did not know what “adequate” looked like. Positive for Youth and the draft statutory guidance currently out for consultation decline to do that, instead stating that a local authority’s efforts to secure a sufficient local offer will be judged by whether it has considered guidance and by its relative performance in improving outcomes for young people. Although we agree that outcomes for young people, rather than inputs, are the right thing to measure, some consideration of what services, if any, are being provided locally must surely form part of the assessment. The duty calls on local authorities to secure

“so far as is reasonably practicable, a local offer”.

I am interested to hear why that caveat was considered necessary and how well received the draft guidance has been in the consultation responses so far.

Secondly, as I have already mentioned, we highlighted confusion about public spending on youth services that the Government have yet adequately to address. The Government continue to dismiss our estimate for public spending on youth services of £350 million a year, which was based on their own figures. When asked repeatedly for their own estimate, they did not provide one, instead challenging the spending figures that the Government have been using for years in answering questions on youth services spending.

I would be grateful to the Minister if he clarified today whether the Government intend to stop using the accounting line on youth service spend and, if so, what alternative instructions his Department has given to local authorities about collecting and reporting data on youth service provision. For instance, if reporting is to change under the early intervention grant, perhaps he can clarify how the Government intend to measure national spend on youth services in future under that grant.

Thirdly, the Committee felt that the Government remained vague about how the national citizen service was to be funded after the 2011 and 2012 pilots. Their response to our report remained ambiguous on that point, stating that they had

“no plans to cease funding for National Citizen Service beyond the pilot years”,

but that

“the Government does not expect to fund the full cost of delivering the programme”

in the long term. Perhaps the Minister could update us on the Government’s latest thinking with regard to what proportion they do expect to fund beyond 2012.

There is much to be welcomed in the Positive for Youth strategy, but significant anxiety clearly remains in the sector about the hard reality of funding on the ground locally. Even organisations that are signed up to the Government’s approach of restructuring services to deliver them for less are worried about the extent of cuts. The NCVYS, the Government’s newly appointed strategic partner, said in response to the consultation on Positive for Youth that

“the papers made little reference of how services would be funded to deliver support to young people. This is especially concerning given the implicit assumption that voluntary and community organisations will be expected to fill in gaps left by retreating services.”

Regular reports of the closures of local youth services bear out that fear.

If we are to provide adequately for the 80% of young people’s time spent outside school, we must retain the best youth services—in particular, those whose effectiveness has the confidence of local commissioners. The Government must be prepared to intervene when those are threatened, and they need to clarify precisely the grounds on which they will do so.

15:04

[Lisa Nandy (Wigan) (Lab)]

I am grateful that we are having the debate today and giving a bit more thought to youth services in the UK. I am glad to see young people in the Public Gallery, although I was watching them during the last speech and I am slightly concerned that they might not be nodding—I will looking for their reaction.

[John Robertson (in the Chair)]

Order. The hon. Lady is debating in the Chamber.

[Lisa Nandy]

I am acutely aware that in this place we often talk about young people, but we do not often talk to them. An important feature of our report was the fact that we heard a great deal from young people about the effect of youth services on them.

I spent nearly a decade in the voluntary sector before I came into the House of Commons, and I am a firm believer in the value of youth work and services, having seen for myself the dramatic transformation possible in many young people’s lives. In the Committee, we were glad to have the opportunity to give deeper thought to the value, structure and funding of youth work, and to how outcomes are measured. It has long struck me that the strength of the service is also a weakness—by its very nature, it is flexible, dynamic, youth led and localised, but that can create some of the problems discussed by the hon. Member for Beverley and Holderness (Mr Stuart) in his introductory speech. When we began to hear evidence, we had to consider what we meant by youth work, and it soon struck us that there was no definition of youth work or of the youth service, and no job description for youth workers. That is a strength, but it also creates problems.

Inevitably and unfortunately, we spent a great deal of time and energy during our inquiry looking at the effect of cuts, in particular to local authority budgets, and what that has meant for youth services. It emerged that the nature, scale and impact of the cuts have been dramatic and, in some areas, extremely stark. The 10.9% cut to the value of funds into the early intervention grant and the removal of ring-fencing for youth provision seem to have had dramatic effect. Local authorities understandably seem to be prioritising statutory and high-risk services such as child protection. It is easy to understand why, faced with such dramatic cuts, but it is extremely worrying when we consider the hon. Gentleman’s comments on early intervention and the need to prioritise particular groups of young people.

Concern and criticism were aired in evidence to our inquiry, from local authorities and charities. The chief executive of NCVYS—the National Council for Voluntary Youth Services—the former Children’s Commissioner, talked about what the cuts will mean for young people in the long term, if they fall through the net. What will that mean for their future life chances? The former commissioner, Al Aynsley-Green, called it “the end of hope”. I hope that that is not the case, but when the union Unite made a request under the Freedom of Information Act to a number of local authorities, it found that, on average, funding to youth services was down 12% in only one year. The reality of that for young people is stark indeed.

When the Minister gave evidence to the Select Committee, he said that although the Government would be prepared to intervene if local authorities were failing in their statutory duty to provide services, what local authorities spent their money on was largely a matter for them. Ministers, however, need to acknowledge the serious reality of what is happening out there throughout the country as a consequence of the huge cuts being made to local authority budgets. My own local authority, Wigan, has prioritised youth services. In the past three years—between 2008 and 2011—investment in youth work has gone up 4%, but the question is how long that high spend can be sustained, given that the local authority has suffered a £66 million cut and that many services are, therefore, inevitably disappearing, in particular because the cuts were front-loaded, giving us little time to prepare, plan or find alternatives or efficiencies.

Ministers told us that youth services should rely on different sources of funding and should not be overly reliant on the state. In reality, as the Committee’s report and the evidence we were given show, that was already the case. The vast majority of organisations we took evidence from got their funding from a variety of trusts, grants and charitable and public sources, as well as from statutory sources; indeed, one organisation—the Scout Association—was 100% non-funded by the state.

In my constituency, there is a good example of the partnership working that Ministers said they wanted to encourage. Wigan Youth Zone, which is opening in 2013, will provide a huge range of facilities for young people, including climbing walls, sports halls, cinemas, cafes, music rooms and training facilities. The focus is on helping young people to improve not only their softer skills, such as confidence and resilience, but the harder skills that they will need to find what work there is and do it.

The organisation will be 10% funded by the young people themselves, who will pay 50p a time to visit, although there will be additional help for those for whom that is too much. The organisation’s running costs will also be 40% funded by the local authority and 50% funded by the private sector and local fundraising initiatives, which the whole town has got behind. The board is chaired by Martin Ainscough, a local business man with a strong commitment to, and passion for, young people. He was inspired to contribute a significant proportion of the capital costs after visiting the Bolton lads and girls club and coming away feeling strongly that we should have similar provision in Wigan.

There are many such examples around the country, but there is a significant issue about the loss of statutory funding. In many places, alternative sources of funding are simply not available, because they are already being utilised. I strongly disagree with the Minister that spending £77 of statutory funding per young person is a large slug of public money, as he told us when he gave evidence to the Committee. This is really important, considering how much time young people spend outside the classroom and how few resources are spent on activities for young people outside the classroom.

It will be particularly hard for smaller charities to find alternative sources of funding. When I worked for the Children’s Society, we, like many other larger charities, had huge teams of fundraisers, whose job it was to look for sources of funding and to navigate complex regulations and processes to ensure that our funding applications were successful. Smaller charities will not be able to compete, and the Committee heard about many that had only one paid employee, who was trying to keep the whole thing going and whose real passion was working with young people, not filling in forms. It is not enough to say that organisations need to look for alternative sources of funding; they need help and, in particular, signposting from the Government if they are to do that.

[Mr Graham Stuart]

There are positives from having a more big-society approach to youth services. I was speaking to a youth worker from Hull the other day, and he said that he and his colleagues were working more closely with the voluntary sector, in a way he felt they should have been years ago. We should also not send out too negative a message about small charities. They can sometimes be vulnerable, and they are threatened, but they are resilient, and they have an ability to innovate and find ways through. One tends to overstate how desperate things will be, but small charities are good at levering in additional support.

[Lisa Nandy]

I take the point that those youth workers should have been working closely with the voluntary sector, but the point I am making is that such things are already happening up and down the country. People are innovative and they are seeking partnerships. In my constituency, people know each other, they work together and they have built relationships over a long period. I am saying not that those charities are not resourceful, energetic and passionate, but that we are stacking the odds against them, and we should give them more support.

Multiple funding streams can be a bureaucratic nightmare, even for large organisations. I say that as someone who, over 10 years in the voluntary sector, suffered the extreme pain of having to report regularly on such things and to demonstrate impacts and outcomes to funders. I filled in the forms, went to the meetings and prioritised that work, because it is important for funders to see what they are getting for their money, but what about smaller organisations with perhaps one member of staff? The Committee came across an organisation with one paid member of staff and 27 funders, which is not unusual, in my experience. What does that mean? It means 27 regular reports.

Such an arrangement also means that people never get the opportunity to catch their breath, because they constantly have to reinvent or repackage the service they offer. In my experience—I think it was shared by a lot of the organisations that gave evidence to us—funders are not keen to fund something that is not new; they generally want to fund something new, not the continuation of a service. As a result, charities are constantly repackaging and reinventing something they already know works. Removing statutory funding at an accelerated rate will therefore have a dramatic impact, which will be felt most by those organisations that are often closest to the ground and that are doing some dynamic and important work with young people.

In the light of all that, I very much welcome the national citizen service, but as an addition to existing youth services, not as an alternative. As we heard during our inquiry, youth services are a lifeline for some young people; they are a source of stability when there is no other source of stability. Many young people talked about the youth service or the youth club they accessed being a family or a home to them, and many had been accessing those services for years. I had a conversation with a young woman who had acted as a National Children’s Bureau mentor for a young man since he was nine years old—he is now 18. She said that, during all that time, she had been the only adult who had remained constant in his life. Everyone else—social workers, of whom there had been many, foster carers and parents—had come and gone, but she had been the one source of stability for that young man. We must not forget how important that is.

A girl called Chloe posted a comment on the inquiry site about her youth centre:

“It’s like a second home to some of us... I’ve been coming to this youth centre for two years now. I’d be lost without it”.

We heard that from so many young people. I am therefore concerned about the cost of the NCS—£37 million this year and £13 million the year before. It cannot be right to prioritise a six-week scheme for young people from different backgrounds, including more affluent ones, when youth services that are a lifeline to young people such as Chloe are disappearing up and down the country.

The hon. Member for Beverley and Holderness said the Committee was concerned by the cost of NCS, given what it is delivering, and I would associate myself with those remarks. The Committee visited Germany and saw some excellent youth services, but the cost of those services per person for 12 months was the same as the cost of the NCS per person for six weeks. I cannot understand why there is such a huge disparity, and I urge Ministers to look at the issue.

I want to question the Government’s vision on youth services. Over the past few years—this predates the coalition’s coming to power—we have seen the gradual prioritisation of targeted services over open-access services. What I am about to say might sound a little counter-intuitive, given that I have just made a strong case for ensuring that we reach young people from the most disadvantaged backgrounds and that we prioritise them above all others, but, as I have seen for myself, and as the Committee heard in a lot of evidence, open-access services work with many of the most vulnerable and disadvantaged young people, whom targeted services sometimes find it hard to get through their doors. They work precisely because there is no stigma around open-access services, and because a lot of young people who have been through various systems, including the care system and the criminal justice system, and who often have a deep distrust of services that label them and that are targeted at them, will go to open-access services when they will not go to targeted services. At a time when not enough funding is available, it concerns me that we will prioritise targeted services along with the NCS.

When young people from the backgrounds I described access open-access services, which do not necessarily have a label attached, staff can also identify the fact that those young people have problems, which goes back to the point about early intervention. The Committee heard strong evidence that such young people often go on a journey: they go to an open-access service, such as a youth club, and get talking to a member of staff. They build a relationship of trust, and it emerges that they have significant barriers to overcome. They are then referred to a targeted service and end up going full circle—coming back to the open-access service, having had the support they desperately needed. We need to be careful about prioritising targeted services, because the evidence that we heard shows that there is a need for open access and for targeted services that work.

The question of what works—the hon. Member for Beverley and Holderness referred to it earlier—exercised the Committee. A witness to the inquiry described the measuring of outcomes as the Holy Grail, and I could not agree more. That can be difficult to do, and it is necessary to be incredibly careful, think about what is being measured and avoid setting up perverse incentives. With the increase in payment by results and targets under the previous Government, organisations cherry-picked the easiest cases and left the remainder, so resources were directed precisely where they were needed least. Often, the targets set for us in the voluntary sector, and for others, completely ignored the reality that many young people face.

In the youth justice system at the moment, for example, the Government are rolling out a system of payment by results, which is about trying to get young offenders into work as soon as they leave an institution. I applaud the focus on getting young people into structured work and giving them a reason to carry on, but the way those targets are set will be important. I worked at Centrepoint, the youth homelessness charity, for several years, and there were some young people for whom just getting out of bed and having breakfast every morning was a significant achievement that constituted real progress; it took months of work, support and encouragement from the staff. That is something we need to be careful about.

I am also quite concerned about measuring outcomes and the focus on payment by results. Constructing intelligent frameworks for what is measured and how that is done involves more than skill. When I worked for the Children’s Society, it constructed a well-being index, which took several years to complete, and while such frameworks can usefully be shared with other organisations—the Government have commissioned work on that, which I welcome—I also urge them to pay attention to the fact that it also takes time to collect and record information in a meaningful way. Many of the young people I worked with in the voluntary sector were sick and tired of being part of the system and of being asked questions, quizzed and grilled. It is important to find useful, meaningful, non-harmful ways to engage young people in the framework, and to get the right information from them, so that the process does not turn into a tick-box exercise.

We heard a lot of evidence that measuring soft outcomes was important, and I completely agree with that; confidence and resilience are examples. Often, causal links are too complicated. It is difficult to say, “This young person came to us and has gone on to commit crime. That is because we failed.” That would be to ignore every other thing going on in the young person’s life at the time. There are so many influences on young people, and it is difficult to measure the direct impact. I was encouraged by the focus on positives in the plan that the Government have produced. If outcome measures are constructed in a negative way, the focus on positives, which is so valuable to youth work, and which we should value and prize above all else, is lost.

Having read the Government’s plan for young people, I thought it was long on policy, which I welcomed, but short on vision. It did not seem to consider the future impact on young people of many of the things in question. The creation of the Department for Children, Schools and Families, instead of an education Department, was a significant step forward for children. It meant that, for once, all Departments had to work together to deliver for young people. Things were brought under one umbrella, with a strong Secretary of State who drove through improvements for young people. I saw that for myself, particularly in areas where children had traditionally been left outside the system. For example, refugee and migrant children came under the umbrella of the Children Act 1989 and the UN convention on the rights of the child for the first time as a direct consequence of the fact that the Department brought things together. If the Minister wants to consider the long-term future of young people and what the decisions we take will mean for them, he needs to look at youth work and immediate support and intervention, but he also needs to look closely at what his colleagues are doing in housing, pensions and care for the elderly—a host of things. Our failure, as a country, to tackle those things will affect young people for the rest of their lives.

A generation is growing up who are losing youth services and support, particularly for the most disadvantaged, but who also face the prospect of high unemployment, with a million young people out of work. They face depressed wages for the rest of their lives, and interrupted work patterns. They also face high debt if they manage to get through university, difficulty getting on the housing ladder and having to fund care for their elderly parents while paying hefty funds into their pension schemes and bringing up their children. The Minister needs to consider what he does for young people now, but needs also to look carefully at his colleagues’ failure to act. Otherwise, young people will feel the results for many years to come.

15:26

[Neil Carmichael (Stroud) (Con)]

I apologise for arriving late for this debate [Interruption.] It was outrageous. We should always arrive on time, but I have a very good excuse: I was meeting a contingent of young people from Stroud high school in my constituency, who are involved in fundraising, and are doing a lot of thinking about the role of Oxfam. That, ironically, is a good example of the kind of thing that young people should be involved in. I applaud the girls from the high school for doing what they have got in mind. They have been raising a huge amount of money through cake stalls, footprint contests and so forth. They are doing so because they want to be part of the community and are endeavouring to become responsible individuals, and because they think carefully about the world beyond their habitat. That is fantastic, and their example and commitment to some extent underpin what I shall be saying in my brief remarks.

It is an honour to follow the hon. Member for Wigan (Lisa Nandy) who made a thoughtful exposition of the situation, coming from the huge experience she brings to the Education Committee. We all derive value from that, and it is great that so many members of the Committee are here. I think that half of us are present.

[Mr Graham Stuart]

More than half.

[Neil Carmichael]

More than half; that is fantastic. We work well as a team and are very effective, coming up with some useful reports. I have voted against only one report so far, which was on the English baccalaureate. We had a lengthy process to discuss whether we should support the Government’s proposals, and I disagreed with the whole thrust of the report. I noted that although the evidence we had in support of its conclusions was persuasive, we nevertheless should not stop thinking beyond its remit.

[Mr Stuart]

I just wanted to applaud my hon. Friend for his courage in acknowledging that the evidence was all one way, and his conclusion was entirely the other.

[Neil Carmichael]

I am grateful. I am not entirely sure whether I can describe that as a compliment to my position, but there is much more evidence out there that we should be mindful of. That is what I shall talk about. I referred to the E-bac report not because I wanted to ram home yet again the fact that the Government are absolutely right to introduce the E-bac—they know that, and most people are beginning to realise it—but because there is more to our thinking on youth services than is contained in our report.

My other more general point is that it is absolutely right that 80% or 90% of young people’s time is spent in activities other than schooling, but we must get our education system right. That must be the top priority, and public money must be allocated on the basis of priorities. I want to make it absolutely clear right now that my priority is to ensure that our children receive an education that will equip them to deal with the challenges facing them and the opportunities and lifestyles that they wish to pursue. That is a cornerstone of my contributions to the Education Committee.

A key theme of the evidence that the Committee received in our various meetings showed that the picture is extraordinarily mixed, and it was difficult to analyse outcomes, and to elicit clear messages. In broad terms, the range of providers, the complexity of provision, and the different priorities that many providers had, made it extraordinarily difficult to make a judgment about outcomes and processes. That must be properly understood in the context of expenditure levels and the way in which the Government have reacted to the challenge of the pressures on public expenditure.

My constituency has a huge number of youth providers, and not all of them would be recognised in the context of the Committee’s report. We must acknowledge and salute those organisations that provide a huge amount of good value for our young people, and which would not normally come within the remit of our discussion today. For example, the Door project in Stroud provides fantastic support for young people who have been let down by everyone, including in most cases their own parents. The project is supported powerfully by the local community, delivers outstanding outcomes, and is a strong and useful part of our community. It is a good example of the sort of things we need.

Nailsworth has a community workshop, which I visited not long ago, where young people can learn about crafts, and to be craftspeople. It is fantastic, and is growing up from our local community. Not far away in Nailsworth is a youth centre that is very well supported by the town mayor and many others. It has been the victim of cuts by Gloucestershire county council, but nevertheless continues to deliver fantastic services that are really worth having.

In Dursley, another key town in my constituency, the Lower King’s Hill management co-operative provides great opportunities for young people to do all sorts of things, including gardening and so on. It is also where I hold some of my surgeries, so I am connected with its work, and its aims and objectives. It is yet another example of the sort of structure that we should be supporting, but which might not be covered by our report.

With that degree of diversity, we have some great structures, and I have not even started talking about some of the others, such as Outreach, which provides support for young people in very difficult circumstances. The staff’s dedication to young people, and the opportunities that they gain because of the support, framework, comfort and succour that they receive is fantastic. I applaud that.

All the organisations that I have mentioned are well supported by local people in their local communities, because they recognise local needs and work extraordinarily hard to produce outcomes that are surprisingly easy to measure. As a Member of Parliament, I visit them all, and I see the outcomes and am impressed. What often worries me is the number of people who need those services, rather than the outcomes. We must not ignore the fact that many good things are happening in our constituencies. Mine is a good example, but I think all hon. Members can say the same.

[Tessa Munt (Wells) (LD)]

I agree broadly with my hon. Friend, but in my constituency in rural Somerset, one difficulty is acute travel problems. The complete lack of transport services after 6 o’clock in the evening means that only children with parents who have access to a car can access youth services. Not every village has a youth service. I have 172 communities in my constituency, and there are probably youth services in nine or 10. I accept what my hon. Friend says, but it is almost intolerably difficult for young people to access services in rural communities if other services are not in place, and my county council is cutting everything.

[Neil Carmichael]

I thank my hon. Friend for that comment. She is absolutely right that people must be able to get to facilities. In constituencies such as hers and mine, where there are many villages, transport is a factor. My son is a member of Rodborough Eagles, a football team that does extraordinarily well. He is a much better footballer than I ever could have been because he is not flat-footed and is a really good defender. The key point is that he visits many different parts of my constituency, and I join him as often as I can. That football club is a youth service, and an option for him and his friends to enjoy, and is part of youth service provision. A variety of different services can be tapped into.

[Mr Stuart]

My hon. Friend is right. It is important when considering statutory services, which have an important role to play, as I said during my speech, to remember that there is a vast range of other services, such as sports clubs—Beverley rugby club, Beverley cricket club, the Meridian gym, which my younger daughter attends, and the Eastside gym which serves more than 700 children at Hedon in my constituency. I pay tribute to people such as Andy Dickinson and Steve Crane who do such a good job of providing services on a voluntary basis.

[Neil Carmichael]

My hon. Friend the Member for East Hampshire (Damian Hinds) is wondering whether he can read out a list of places in his constituency.

[John Robertson (in the Chair)]

Order. Can we get rid of references to individual places?

[Neil Carmichael]

My hon. Friend the Member for Beverley and Holderness (Mr Stuart) is absolutely right, and his point is central to the matter. We should not think that youth services are just about statutory provision, because they are not. They are all part of the big society, which is encouraging many villages in my constituency to start thinking about providing the services that people need, including youth services.

I think that I have made my point about the rich variety of facilities, clubs, sports clubs and so on with which young people can get involved, and about the powerful role played by charities in providing facilities.

[Damian Hinds]

Before concluding his remarks, perhaps my hon. Friend will touch on the provision made by what these days we call faith communities and in the old days used to call Churches. There is an ongoing debate about the role of Christianity and other faiths and religions in public life, and a lot of churches provide important youth facilities that often are not restricted only to members of one particular denomination. The King’s Arms in Petersfield is one such example—

[John Robertson (in the Chair)]

Order. We are talking about the Select Committee report, and although it may be nice to mention every group in the hon. Gentleman’s constituency, I doubt that we have got time for them all.

[Neil Carmichael]

Thank you, Mr Robertson. Your point is absolutely right, but it shows that we can think of more examples than just the evidence provided by the Committee.

My hon. Friend the Member for East Hampshire is right about Churches. My father used to take me to Sunday school, and I thoroughly enjoyed the first bit. I have remained a member of the Church of England for some time, and I look forward to a life of such membership. My own children had a similar sort of arrangement. Church organisations play a part in providing great facilities for young people, and I have seen that in action.

We are in danger of labouring the point, although I think that it has been well made. I am therefore going to move on to the point raised by the hon. Member for Wigan about the national citizen service. As she said, we went to Germany and looked at the range of options that were available for young people. We noticed first that a huge number of young people were participating in Germany’s equivalent of our national citizen service, and that to a large extent the activities were work based. That is the essential reason why, broadly speaking, the programme costs just over £1,000 in Germany for the year, but about the same in this country for a number of weeks. That is the big difference between the German system and the fledgling system in Britain, and the German system has a number of noteworthy advantages.

First, the work-based nature of the programme chimes well with the emphasis that is put on training and education in Germany, and the relationship that has with employers and professional activities. We need to embed such an attitude to education and to what happens afterwards in our own culture. It was obvious to me that the schemes that we saw in Germany provided a strong continuity from education to employment, and we should learn from that.

The second interesting thing that I noticed in Germany was the consistency of the youth programmes. We visited a fire station just outside Berlin, and there was a continual throughput of young people. Young people had to make a choice, but they knew what those choices were before they had to make them. From that, I gleaned that young people were able to think about what they were going to be doing outside and immediately after school. I thought that that was really encouraging; the experience of working in that fire station meant being part of a large team with awards, presentations, pictures and so on. Such things demonstrated that people had been there and benefited from being there, before going on to do something else that was the right step in their career development. Those who were starting the programme could see the results and the beneficial outcomes.

Those are the differences that I saw between the German system and the national citizen service. That did not stop me, however, from writing to local secondary schools in my constituency to remind them of the value of the NCS, and to make sure that they informed their students about getting involved in the schemes provided by the NCS. I hope that students get involved in the programme, but if the NCS is to continue in the long term, we must learn one or two of the lessons that I have just mentioned. It is imperative to provide the schemes that we propose with a sense of continuity and worthiness.

Too often in this country we end up putting things into silos. We forget that most things are linked and that most policies are not dependent on the work or delivery of one Department, but that there are connections between Departments, agencies and other structures. The provision of youth services is a good example. What matters is not only the budget provided by the Department for Education, or wherever, but the overall Government approach and the links between various policies—including the Work programme, for example—as well as what we do in and expect from our schools, our objectives for social services, employment opportunities, and so forth. That is why it is dangerous to rely only on the evidence that we are given. At times, we have got to think slightly beyond that, and the provision of youth services is one such example. That is why the Government are sensible in encouraging other things to happen, rather than just the statutory provision.

15:48

[Pat Glass (North West Durham) (Lab)]

I am not entirely sure how to follow that last speech, but I will definitely get a copy of Hansard tomorrow and read it. I am sure that it will be even better the second time round.

I have never spoken in a Westminster Hall debate on a Select Committee report before, and I was not sure what to expect. So far, however, it is exceeding even my wildest imaginings. I am pleased to speak in this debate. Having seen what happens, it is now clear to me that the purpose of such a debate is not for members of the Committee to get together—in a sense, we could have had this debate in a bar—but for us to duff up the Minister verbally, and hopefully get a response from him that will satisfy some of the recommendations that came out of an incredibly well researched and evidence- based report.

It is difficult, particularly in my part of the country, to speak in a debate about youth services without seeing them in the wider context of, for example, youth employment and unemployment. The timing of this debate is particularly opportune, given that youth unemployment currently stands at more than 1 million.

In my constituency of North West Durham, unemployment has doubled in the past two years, and 13% of all jobseeker’s allowance claimants are aged between 18 and 24. In human terms, that is 1,290 young people aged between 18 and 24 in my constituency who are not receiving any form of education or training and are not in employment. That is a human tragedy for them, but from my point of view, it is a case of déjà vu. It is like a rerun of the 1980s. We are in danger of creating yet another lost generation, with all the costs that that has for society.

I know that the Government are concerned about the issue. They talk about families living in dependency and they launch initiatives to deal with the most complex and costly families, who collectively, across the country, are costing us billions of pounds in benefits and in terms of health. They take up the vast majority of the time and resources of housing services, the police and justice services. Much of that has its roots in mass youth unemployment—what we saw in the ’80s and ’90s.

I see families in my constituency who do not work, and my constituency is not so different from many others. It is a large rural constituency, with an urban population in one corner—

[Mr Graham Stuart]

The hon. Lady is very fair-minded and will want to recognise the fact that mass youth unemployment has been a reality for the entirety of the time that we are talking about. From the beginning, it was pretty solid. It did not move in the boom years of the previous Government. After the financial crisis, it went up. Although there was a temporary drop before the last election, the upward movement was there. It is a systemic issue, which we need to tackle. It is certainly not the result of any immediate policies of a Government who have been in power for 22 months.

[Pat Glass]

I take the hon. Gentleman’s point. Youth unemployment was not invented by the current Government, but it clearly has not been helped in the past two years.

[Lisa Nandy]

My hon. Friend is right to place the issue in the wider context. Does she agree that when youth unemployment rose in the mid-2000s, that was because there was an increase in labour supply—more young people were looking for the same number of jobs—whereas the skyrocketing of youth unemployment since the current Government came to power has been caused by a collapse in labour demand? The jobs simply are not there. The Minister needs to take that seriously.

[Pat Glass]

I agree. In my constituency at the moment, 12 young people are chasing every vacancy. However, I want to look back to what mass unemployment causes and to look at what we will face in the future. I see people in my constituency who do not work. Their parents did not work and in all probability their children will not work. They place no value on education. They see schools as convenient baby-sitting services when their children are younger, but have no interest in whether they attend school when they are older. They have no investment in the present and no hope in the future, and they certainly do not vote.

However, the situation was not always as I have described. In communities such as mine before the 1980s and the early ’90s, those people had work. They worked in steelworks, in mines and in all the industries surrounding those big beasts, but all that has gone and we have not put anything in place for them. The cycle of depression and waste is costing the country billions of pounds, and it starts with youth unemployment. Depressingly, I can see the cycle beginning again.

As a member of the Education Committee, I was therefore very keen that early on we should take a look at services for young people and particularly services targeted at vulnerable and challenging young people. As we have heard, the Select Committee examined those services, particularly in the context of rising 16-to-19 participation in education, and we found several issues that worried us greatly, not least the major cuts in youth services and careers services.

We made a number of sensible recommendations, based on the evidence that we heard. We did not think that the Government response was adequate. I hope that the Minister can make a better showing today. In response to the Government response, we highlighted our recommendations again. We are looking for an endorsement of the outcomes framework. I know how hard it is to focus Governments on outcomes. That is very difficult for Governments. I could entertain hon. Members all afternoon with accounts of the attempts that various Governments have made to focus on outcomes and that have gone wrong.

However, we think that it would be worth while for the Government to consider an endorsement of the outcomes framework. We have recommended that the Government set out the grounds on which they will judge a local authority to have failed to provide sufficient services for young people and the ways in which Ministers will act to secure improvement, so that it is clear across the piece, for local authorities and for young people, when local authorities have failed to deliver services and what Ministers will do to secure improvement.

We underlined our finding that some local authority youth services had already closed and urged Ministers to intervene before it was too late. We told the Government that it was not good enough to dismiss our estimate of public spending on youth services, which is based on their own figures, and demanded that they provide us with their own assessment of annual public spending on youth services for each of the 10 years before introduction of the early intervention grant, so that we and others can see clearly exactly what has been spent on young people’s services in the past, what is being spent now and what is being cut and where. We raised concerns—we have discussed this already—about the potential impact of charging for the national citizen service and the impact of the NCS on youth services generally.

Most of all, we highlighted the fact that services for young people—education funding, careers services, youth services and home to school and college transport services—were at risk. Indeed, some were disappearing before our eyes—some as a result of direct Government cuts and some indirectly, through cuts to local authority funding.

[Mr Clive Betts in the Chair]

Like the hon. Member for Grantham and Stamford (Nick Boles) and the Chair of the Select Committee, the hon. Member for Beverley and Holderness (Mr Stuart), I spent six weeks serving on the Committee considering the Bill that became the Education Act 2011. In fact, I think that we spent about eight weeks together; we entertained one another for eight weeks. The hon. Gentlemen will remember, as I do, that the Minister for Further Education, Skills and Lifelong Learning gave an undertaking when we made it clear to him that day that careers services were disappearing. He said that he would take action “imminently”. When we asked what “imminently” meant, he said that it would be when he left the room. However, despite his good intentions, what has happened on the ground is that careers services have disappeared.

I go into schools all the time. The responsibility has been transferred to schools, and when I ask schools what is happening with careers services, they tell me, “Oh, Miss So-and-so does it as part of PSHE”—personal, social, health and economic education—or that sixth formers have access to support when filling in UCAS forms. That is what careers services for young people in schools today have been reduced to. It is simply not good enough.

Youth services—both universal services and targeted services for vulnerable young people—have been cut or have disappeared. My hon. Friend the Member for Wigan (Lisa Nandy) gave a very good description of how that is happening. There have been job losses in these services, with specialist, experienced, difficult-to-replace staff leaving. I have some experience of having to replace specialist staff after a specialist service has closed down, and it is not easy. Those people do not hang on the backs of doors; they are highly qualified, flexible and often mobile. They are hard to train and incredibly hard to replace.

Doug Nicholls, of the union Unite, has estimated that some 3,000 specialist youth service staff face losing their jobs and 20% of youth centres in England and Wales are closing down. My hon. Friend the Member for Westminster North (Ms Buck), when she sums up the debate, will give more details on it, but she has made this estimate:

“A massive £200 million worth of cuts will have been made to youth services by April this year hitting young people and damaging chances of getting the economy back on track.”

All that has happened not just because of the cuts in services, but because the ring fencing around these services has been removed. That has hit young people living in Tory and Liberal Democrat-run council areas the hardest. Research shows that 60% of Tory and Lib Dem councils are making significant cuts to their youth services, whereas Labour local authorities, which are often those facing the greatest cuts in their funding, are at least targeting that funding at those whom they consider most vulnerable and are seeking to protect services for young people. That means cuts to youth service centre hours and sometimes closures. Less help is being given to young people through useful activities that lead to work and training and away from negative influences leading to crime, alcohol and drug abuse and gang involvement.

In my constituency, the local YMCA in Consett, which does tremendous work, often with the least able and most challenging young people, is struggling to find funding. Billy Robson, who has run the YMCA for as long as I can remember, tells me that two years ago, he was confident that the YMCA could improve the life of even the most difficult and challenging young person. Nobody knows more about supporting young people than he does.

However, he tells me that he now feels unusually gloomy, particularly about the dwindling opportunities available to the large numbers of young people who are not in education, employment or training. There are a few jobs, but they are usually short-term and sometimes part-time factory jobs. Even then, 12 young people are queuing up for every vacancy. Billy tells me that it is soul-destroying listening to young people who cannot get work. Their sense of despondency goes deeper and deeper. He says that it is the biggest struggle that he has faced since the closure of British Steel in 1980. He wants to be upbeat for the sake of the young people, but when he has to pay off his own staff, on whom those young people depend, it is hard to be positive.

Over the past year, he has applied for about £1 million in funding from organisations such as the Northern Rock Foundation, Greggs and the National Offender Management Service, but has not been successful in any of those applications. He says that because local authority funds have been cut, charities are competing for available private sector money. The Prince’s Trust runs numerous fantastic programmes from the YMCA in Consett that support young people into training and hopefully employment, but the Prince’s Trust seems to be one of the few organisations that have any funding left.

The Government, at a sweep, abolished the education maintenance allowance, which did more to improve 16-plus participation and narrow the gap between the richest and poorest students than any other scheme that I saw in my 25 years in education. To justify abolishing EMA, the Government relied for their evidence on one report, commissioned for a different purpose by a different Government, involving a group of young people, many of whom were ineligible for EMA on the ground of age. The author of that report, who gave evidence to our Committee, was clearly angry about how the Secretary of State had manipulated his figures and his report to justify abolishing EMA.

As a result, 16-to-19 participation has fallen back to levels not seen in this country since the early 1990s. When I asked the Secretary of State about it, he told me that participation had not fallen at all colleges, only at some. It would be good to hear from the Minister exactly where participation by 16 to 19-year-olds has increased. I am not a betting person, but I am happy to bet next month’s salary that participation is up in the south and down in the north, up in the wealthy shires and down in the inner cities and up among the highest earners and down among poor people.

I turn to the Liberal Democrats’ famous flagship policy, the pupil premium. There are probably a couple of dozen education funding geeks around the country, and I am one of them. It was actually quite exciting once I got into it. I know that pupil premium money is not new; it is recycled money. For all its good intentions, it has been recycled from schools with concentrations of the poorest children and young people and siphoned off to richer parts of the country with fewer poor children.

[Neil Carmichael]

rose—

[Pat Glass]

I am happy to give way and to challenge you afterwards on whatever you have to say.

[Neil Carmichael]

I was going to say what a great speech the hon. Lady was making. I was just wondering where EMA and the pupil premium fit in the context of youth services. They are associated more with the question of getting young people into education, keeping them there and supporting the people most in need in the most appropriate way when they are in education.

[Pat Glass]

Given the speech that you just made, I find it difficult that you are asking me to justify—

[Mr Clive Betts (in the Chair)]

Order. May I say to the hon. Lady that I am not asking for anything?

[Pat Glass]

Sorry, Mr Betts. I am discussing services for young people, and EMA and its abolition are as much a part of that as services through youth centres or careers services.

There is clear evidence that the pupil premium, for all its good intentions, recycles money from schools with concentrations of the poorest children and young people and siphons off resources to richer parts of the country with fewer poor children. That is because the pupil premium has largely replaced additional education needs funding, which, although it was called different things in different local authorities, was needs-based funding for schools to support their least able and most vulnerable pupils. The AEN formula in each local authority was made up of different factors, but was legally required to include a deprivation factor. Some local authorities used the index of multiple deprivation while others used free school meals, but the basis of AEN funding was a needs-based deprivation factor.

AEN also had an accumulator effect. Schools with fewer than 15% of children on free school meals got nothing in most local authorities, on the basis that that was the norm and that need could and should be met from existing school funding. Schools with between 15% and 24% had a basic level of AEN funding, but then the level escalated massively between 25% and 35% in acknowledgment of the need for additional resources to deal with more complex issues in driving improvement. Any school where more than 35% of children received free school meals was given a huge step in funding, in recognition that those schools were dealing with complex issues needing additional capacity.

The pupil premium gives a basic amount per pupil, drawing money from schools and areas with the highest concentration of free school meals and of poorer children and giving it to wealthier areas with fewer free school meals. If anybody wants evidence of what is happening in their local authority and whether they are winners or losers when it comes to the pupil premium, I can give them a breakdown, courtesy of my right hon. Friend the Member for Tottenham (Mr Lammy), who has researched the matter in detail.

[Tessa Munt]

Would the hon. Lady like to comment on the fact that a large number of schools are rural and very small? For example, I have a school in my constituency with 68 children. Surely, in that situation, if two families are not so well off, the school will quickly come to its 15% threshold. The pupil premium is directed precisely at those individual children suffering from deprivation, as opposed to thinking that it was fine to mash them in with everybody else if there were fewer than 15%. It only takes nine or 10 children—a few families with multiple children—for such a school to have a significant number of young people with difficulties, without being over the 15% threshold where something would step in under the old system.

[Pat Glass]

As an education funding geek, I have an answer for that. There was an element for small schools. For small rural schools, most local authorities had an element of funding for vulnerable and poor children that was separate from AEN funding. Those schools were already catered for by other parts of the funding formula.

[Mr Stuart]

The East Riding of Yorkshire was, for a long time, the fourth lowest funded authority in the country and is now the eighth lowest, despite the demonstrable increase in the cost of delivering education in a sparsely populated rural and coastal area. It is not obvious, however one looks at the complex formula, how to work out whether it properly recognises the needs of an area. The pupil premium has the elegant benefit of directly targeting an additional sum to help schools provide educational support for children on free school meals.

[Pat Glass]

The beauty of the education funding formula—it is complex and if we tweak one end of it we cause a huge tsunami at the other end—is that it was locally driven. Each local authority looked at its funding formula and had the opportunity to take into account things such as small schools, rural schools and small areas of deprivation. No one, I think, would accept that it is good to take money away from schools in which more than 50% of the kids are on free school meals and share it out among schools in which only 2% or 3% of the children are on free school meals; it does not make sense and it is certainly not what was intended. The scheme was well intentioned, but it is driving money from those schools that have high concentrations of poorer children and moving it to schools with small concentrations.

Everything that is happening in youth services and careers services, and everything that has happened with EMA, young people’s funding and higher education, where participation from poorer young people from the poorest regions has collapsed in parts of the country because of the tripling of tuition fees—when the Chairman of the Select Committee gave the audience in the Guildhall in York the benefit of the Government’s policy on this, it was clear that people had glazed over and were not listening—has a cumulative effect, and it will take a generation to replace and restore services for young people.

[Neil Carmichael]

rose—

[Mr Stuart]

rose—

[Pat Glass]

My greatest fear is that we are creating for ourselves and our young people a further legacy of long-term unemployment and what comes from that—welfare dependency and its massive cost to the country for generations to come.

16:09

[Tessa Munt (Wells) (LD)]

I have so much to say, but I will make just a few points. I want to clarify one or two things and draw the Minister’s attention to a number of issues. Will he explain, for example, the grounds on which the Government feel able to intervene when a local authority does not provide sufficient services for young people? As he probably knows, I represent a rural constituency in Somerset. I have already mentioned the difficulties with transport. There is very little transport after 6 pm and a reducing service before 6 pm. In fact, I have just received a text from my son, saying that he is stranded at school because there is no bus, which is absolutely no good as I am here. The difficulties for young people to move from one community to another are immense. It is almost impossible for them to access services in a town nearby, even if it is only three or four miles away.

The coalition’s stated No.1 social policy goal is to increase social mobility. One of the things that I want us to consider is the difference between targeting youth services, which is probably well intentioned but tends to make us think of young people in silos, and using an open-access provision. One of the advantages of youth clubs and youth services is that they give young people another chance to achieve in a different forum from their school, football club or wherever. They provide young people with another chance to max out on their potential.

If I consider my experience of youth work, I can see that there are people who might have been attracted into low-level crime, slightly antisocial behaviour or something a little more serious. There are young people who are absent from school with illness, who are truanting or who get caught up in alcohol and drug abuse. One of my particular concerns is the increasing number of young people who suffer from some sort of mental health problem that exhibits itself in the form of an eating disorder, self-harm and, in some cases, thoughts of suicide.

I am deeply concerned that young people in my constituency are unable to access child and adolescent mental health services. Just last week, a young person spoke to me about the fact that she had reported how she felt at school. The school was not allowed to give her any counselling, even though the person to whom she would have spoken is actually involved in the youth service and is trained to give such advice, so she had to be referred to CAMHS, which said that a representative would phone her on a certain day. They did not phone. They then sent her a text message, saying that she had been referred as an emergency, but as she had not been available to take the call—she had removed herself from her class to take that phone call—she was shovelled off the list. They sent her a text message, saying that they assumed that she was no longer a priority case because she had not been there to take the call that had never come.

When young people get to the point that they are actually reporting that they feel dreadful—it often takes them a very long time to get to that point—my sense is that they need help right then. They do not need help in three weeks’ time or in six months’ time; they need help now. My strong sense is that the youth service is often another outlet for young people. There is someone whom they can talk to and trust—not one of their teachers or parents, or a member of the family, but someone who is independent and has specialist knowledge of how to deal with young people. I am concerned that young people in my part of the world do not have access to that expertise, except through the youth service.

The other benefit of the youth service comes from the fact that it is a universal service. Young people have the opportunity to meet people who are different from themselves. That can help to expand their ambitions, expectations and their ability to explore. Certainly, things such as careers advice can come from a trained youth worker who can direct young people to other places, expand their horizons and make the world a much bigger place. That happens in rural Somerset. A young person might not go to university because they cannot anticipate how they will be able to afford to pay their accommodation and living costs in a university town or city. The likelihood is that they might do exactly what their parents, other members of the family, or previous generations have done and not look outside at what they might potentially want to do.

I have been asked to draw the Minister’s attention to the Hughes report of July 2011. Importantly, the whole business of careers help, advice and guidance can be done on a face-to-face basis by those people in the youth services and the youth clubs who may be in a position of authority but who are incredibly accessible to young people. They can give young people a bit of a lift and a shove in the right direction to do something different and to expand their horizons.

I worry that specialist staff in areas such as Somerset feel under threat and are leaving because the services are being withdrawn or significantly reduced. They cannot be re-employed easily. They are well trained and have loads of experience. When the county council invites volunteer groups, such as Church groups or the young farmers’ club, to take on the services in a village, they will not have the ability to employ someone with the expertise of a youth worker because they will be deemed to be expensive, even if it is for one night a week. So I worry that we will lose those skills and that experience in places such as Somerset.

We should look at some of the barriers that young people feel exist when accessing services that are run by certain organisations, including religious organisations. For some young people, there are some barriers to accessing any sort of service that has a faith heading. I must say that a strong exception to that is a service run by a Church-led organisation in one of the communities in my constituency. The service that is offered is absolutely superb and certainly not overtly religious in nature. There is little connection between the young people who use the service and the Church that runs it. So it is not always the case that there is a difficulty with religious organisations running youth services, but we must be very careful.

In summary, youth services are very important, particularly in rural areas. In places with no school sixth form and where a lot of people’s ambitions are limited by the situation in which they find themselves, I am very keen that we continue to provide youth services. We must always remember that for young people to blossom, we must help them to get past the survival basics and ensure that they have someone good, sound and solid to whom they can talk and with whom they can make friends, so that they can receive advice and help all the way through their youth.

16:21

[Ms Karen Buck (Westminster North) (Lab)]

Thank you very much, Mr Betts, for calling me to speak.

I congratulate the Education Committee on its report and its Chairman, the hon. Member for Beverley and Holderness (Mr Stuart), on his opening speech. There is much that is excellent in the report, which contains a powerful critique of the Government’s approach and other points that I hope the Minister will respond to.

There have also been some excellent speeches from my hon. Friends the Members for Wigan (Lisa Nandy) and for North West Durham (Pat Glass), which were drawn from their considerable personal expertise and knowledge, both in their local communities and more widely, in the area of youth work. I also found much to agree with in the contribution that we have just heard from the hon. Member for Wells (Tessa Munt).

What is clear from the Education Committee’s report and from the speeches that we have heard today is that we all agree that youth services matter, and they matter most to the most vulnerable and to the most challenged communities. As my hon. Friend the Member for North West Durham said, in the context of youth unemployment—with 250,000 young people who have been unemployed for more than a year and with 1.4 million under-25s who are not in education, employment or training—the value of youth services is even greater. Although it is completely correct that youth unemployment did not start in the spring of 2010, the fact that it has increased and is a major and consistent problem is all the more reason why greater care should have been taken, and should still be taken, to provide the funding and support for a youth service that is one strategy among a number of different strategies to help young people to cope with the tragic experience of unemployment.

As my hon. Friend also said, the context of youth unemployment also includes the removal of education maintenance allowance. The removal of EMA matters not only because of education—this is not a debate about EMA itself and its value—but because young people need to be able to provide for themselves. That ability means gaining access not only to education, but to enrichment and support, which includes the youth service and the valuable application of young people’s own leisure time. The fact that many young people are now being denied opportunities to attend enrichment activities in out-of-school programmes—for example, the opportunity to pay for the transport that the hon. Member for Wells referred to—is also relevant to the Select Committee’s report. Young people whom I have spoken to were furious about the removal of EMA. I would say that it was probably the one aspect of policy that they felt even more strongly about than the raising of tuition fees for higher education.

We have touched a little on the riots. It is absolutely right that we understand—we all do understand—that the riots did not occur because of cuts in youth services; no one is alleging that the riots occurred because of those cuts. However, the fact that youth services and the wide range of provision for young people have been under such pressure, particularly in some of our toughest urban communities, did not help. As two excellent reports—the London School of Economics report, “Reading the Riots”, and the Children’s Society report, “Reporting the Riots”—indicate, the riots should be a warning to us not to neglect youth services even further in our most challenged communities.

There are many important points in the Education Committee’s report that Opposition and Government Members can agree on. We can all agree that youth services, or services for young people, span a much wider range of activities than the statutory youth service framework. We have heard examples of excellent practice in a range of community, faith, sporting and, of course, privately-supported and business-supported activities, which form part of the life opportunities for many young people. Indeed, statutory youth work itself covers a variety of different activities, ranging from outreach to youth clubs and from school-based youth work to careers guidance. Of course, there is also the national citizenship service, which I will refer to later. It is right that we appreciate the range of those activities and that we look to have a different pattern of services and activities in different types of community. What will be effective in a constituency in inner London, such as my own, will not be the right mix for communities in rural areas, the north of England and so forth.

What we need to do—the Education Committee’s report certainly implies this if it does not explicitly state it—is do better at mapping the range of activities that are accessible and available to young people, so that we have a better understanding of the context within which our statutory youth services operate. That leads us to something that came out strongly in the speech by the Chairman of the Committee, the hon. Member for Beverley and Holderness—namely, that we have a real problem with the quality of data, both on inputs and outcomes. Better quality of data would enable us to make better judgments about the quality and value of youth services.

Data about inputs are of only limited value, but they are none the less important. My hon. Friend the Member for Wigan made a request for a better and more consistent data set, so that we can look at what has happened to the funding of statutory youth services over a decade, and she was absolutely right to do so. Within that context, however, the absorption of so many different youth services programmes into the early intervention grant has made it even harder to get a handle on what is happening to the funding of statutory youth services. The Minister should help us to address that problem.

It is a central point of the Education Committee’s report that we lack rigour in understanding what works. That is not a new problem for this Government, but we do not have the dataset to enable us to make better judgments about what works in terms of quality and outcome. The Minister has promised that he will respond to those points, and I hope he will. He needs to convince us that the Government have a strategy to ensure that services for young people are delivering and to monitor how they are delivering, so that we can make proper judgments about what works.

What we do have a good idea about is the scale of the cuts in youth services funding over the last couple of years. We know that there has been a real-terms 20% cut in the early intervention grant and that around half of local authorities have cut their youth services in the last two years, with Conservative and Liberal Democrat councils making the biggest cuts overall. We also know that those cuts are disproportionate to the local government average and that about £200 million worth of cuts will have been made to youth services by April this year. In some cases, that means that centres are closing, but it also means that youth workers have lost their jobs. Around 3,000 youth workers are at risk of losing their jobs, which means that even those centres that can remain open are providing a much lower level of service.

The House of Commons Library has analysed some of this information about the cuts for me. In some cases, local authorities have cut 100% of their youth provision. For example, Kingston upon Thames has cut 100% of its youth provision; Peterborough 89%; Westminster 70%; Bracknell Forest 48%; and so forth. There is a long list of local authorities that have cut their youth provision; they are not all Conservative or Liberal Democrat-controlled authorities, but there is a strong bias in that direction.

From the evidence that was given to the Select Committee and subsequently from the publication of Positive for Youth, the Government’s youth strategy, we know that the leading national organisations in the youth service field challenge the Minister’s claim that large slugs of money have been spent on youth services, and they question what that actually means. We have had the figures that support their concern.

We have heard today, and the Select Committee report draws out, a worry that the national citizenship service, the aspirations of and principle behind which no one is challenging, potentially eats up a disproportionate volume of such scarce resources as are available. My local authority is one of the pilots, and I have found out that last year just 60 young people participated in the programme and, most worryingly for the Minister, only a third of them were on free school meals. In an ideal world we would all be happy to support the scheme, but when resources are so tightly constrained it is extremely worrying that we provide so much money for a scheme for such a small number of young people—it will be a bigger number this summer, but still tiny proportionately—such a small proportion of whom are from lower-income backgrounds.

[Tim Loughton]

I am rather curious about what the hon. Lady says. She says that only a third of the participants in the NCS—it is national citizen, not citizenship, service—are on free school meals, but that is three times the proportion in the general population, so we are doing rather well. I wonder how many of the young people who went on the scheme in her Westminster constituency she has met, and what their testimonials were of the value of the scheme.

[Ms Buck]

I think that the Minister misses my point. I do not dispute that the scheme has the potential to be a good one. My argument is that in the four wards of my local authority that are in the highest two deciles of deprivation in the country, there are 6,000 teenagers, so, on the face of it, a scheme that concentrates, as it did last year, on just 60 of those young people, only a third of whom are on free school dinners, does not represent good value for money. He is absolutely right that the number of children on free school dinners is above the national average, but it is not above the average for Westminster. We have a great number of schools and a very deprived school population, and the last time I checked we had the ninth highest proportion of children on free school dinners in the country. As my hon. Friends have drawn out in the debate, we need to be alert to that issue—not because of the principle of the programme, but because we need to question whether, at this moment, it is the right one.

We have heard a number of important points about not just the amount of money, but how we get it to work effectively, the relationship between the statutory agencies and that between them and charities, including small ones, and the number of funding sources that some youth centres have to draw in to make the centres sustainable. A particular concern of mine is that we have seen in the youth service a reliance on short-term funding. Again, that did not start in 2010, but there is patchwork funding, with very short-term funding streams, which are around for a year or six months and then disappear.

A critical word that I do not think we heard from the Chairman of the Select Committee, or from anyone this afternoon, and which is absolutely at the heart of youth service delivery, is “relationships”. Young people, particularly those from the most challenged environments, value their relationships with statutory youth workers and others who work in the youth service. It is important to reflect on the fact that when such relationships are vulnerable and are disrupted, perhaps because there is high turnover, the impact disproportionately damages young people’s lives.

The cuts in the youth service will not be cost-free. We know that diversion and prevention is a central role of the youth service, and we all agree that we need to do better at building the data to demonstrate that. Where youth services are not available to provide the right range of activities, it is likely that at least some young people will find themselves caught up in antisocial, and sometimes criminal, behaviour.

We heard, importantly, about early intervention, and the hon. Member for Wells made a point about mental health and the worryingly high and increasing level of poor mental health among many young people. I think that we all agree that early intervention should not be something we discuss just in the context of the under-fives. It is a moving concept, and the changeover from primary to secondary school and into adolescence is a critical time for us to focus on early intervention. The youth service can, of course, contribute much to the enrichment and support of learning, and we need to do better at demonstrating that.

What should the Government do? We need them to do better at supporting the sector through change, and ensuring that when youth services draw, as they sometimes should, on private and voluntary funding, it is not necessarily a time of massive disruption and short-term funding. We need to hear young people’s voices, as the Select Committee did, and reflect those voices in policy, and we need greater honesty about what is happening out there and about the criteria for intervention. I hope that the Minister will respond on that point. He has been honest in telling the National Youth Agency that youth service cuts have been disproportionate compared to those to the total funding for local government, and he has promised us guidance on what the intervention would be when the cuts were disproportionate.

We have some figures, and I have a freedom of information request out at the moment and am looking forward to the reply. We understand what is going on out there, and we now need to know when the Minister will intervene, what his definition of disproportionate cuts is and how he will stop local authorities that are effectively withdrawing, or doing devastating damage to, their youth service.

The Children’s Society report on the riots, which has wider application, states that

“those in the transition to adulthood stage said that more government support is needed—two thirds (67%) of 17 year olds and six out of ten (60%) of young adults... This mirrors the response of young people in the focus groups, with… participants saying that more activities and support are needed to ‘occupy young people with something constructive’.”

Without such support, we are likely to face genuine costs in the failure to meet needs, particularly those of our most deprived young people. It is to its considerable credit that the Select Committee understands that, but the reality on the ground indicates that the Government do not yet do so.

16:36

[The Parliamentary Under-Secretary of State for Education (Tim Loughton)]

We have had an interesting and, indeed, rather different debate this afternoon, and I congratulate the Chairman of the Select Committee, my hon. Friend the Member for Beverley and Holderness (Mr Stuart), on ensuring that we have had time to debate youth issues. We do not do that enough in the House, and I absolutely welcome anything that Parliament—Select Committees, Ministers, Opposition Members and Back Benchers—can produce to highlight the panoply of issues and challenges that young people face. Young people and children are 20% of our population and 100% of our future, and they need to feel that their concerns are taken more seriously. This debate is just one opportunity to flag up a whole lot of issues that affect young people at the moment.

At times, I thought that I had strayed into the wrong debate. This is a debate about the youth service report, which covers 13 to 25-year-olds, but somehow we got on to the education maintenance allowance, the English baccalaureate and various other things. I thought that the Chairman of the Select Committee was restrained in not upbraiding his hon. Friend the Member for Stroud (Neil Carmichael), as I gather he was previously at pains to point out that, because of his own educational experience, he would have failed the E-bac. However, we did at times get on to the Select Committee report.

I have a speech, but I want to discard it and try to address some of the issues that have come up. Then at the end, if we have time, I will perhaps give the Chairman of the Select Committee a right of reply, as is traditional. I will perhaps also come on to some of the things that I had planned to say.

I think that we all share the same aims. I do not think that there is any difference between us in that we all feel a need to get a better deal for young people. There might be some concerns about the national citizen service, but I think that its aims are absolutely shared and that we all appreciate that everyone getting those sorts of life-changing experiences would be a good thing.

I absolutely welcome the fact that the Select Committee undertook the study and produced its report, but I have been critical of how the report was produced, because it dwelled disproportionately on the national citizen service, which covers only a small part of the age group that the Committee considered. I also have the criticism that, although the Committee was concerned to flag up some inadequacies of the national citizen service, it did not interview any young people who had been on national citizen service. There are many willing volunteers who would have given their testimonies.

It seems slightly odd that, in its critique of national citizen service, the Committee went to Germany to try to make a comparison with the Zivildienst scheme, which was the alternative to military service in that country, where, at the age of 19, young people could either do 11 months’ military service or 13 months’ civilian service. When compulsory military service was suspended in 2011, the Zivildienst was also suspended.

There are big differences between that scheme and national citizen service. Young people tended to volunteer in old people’s homes, hospitals or churches, for example. They would get a small salary for doing so and the organisation hosting the young person contributed to the cost. So it was a completely different sort of scheme that was born out of completely different circumstances with completely different funding arrangements. That is why I am concerned that the Committee appears to have been initiating criticisms about national citizen service based on something that happened in a different country.

Although I was very glad that many young people contributed online and in the discussion forums, which is absolutely right and is something I strongly encourage, I was concerned that few young people were called as witnesses in front of the Committee. I am also not aware that any young people worked on the report with the Committee’s special advisers and Clerks.

When we produced Positive for Youth, of which I am very proud—it was a long-standing piece of work that absolutely rightly took a while to produce—young people were involved at every stage. They were given drafts and various policy proposals to tear to bits and asked to come back with their responses. In considering one of the later drafts, 150 young people assembled at the O2 arena. They pulled various parts of the report apart and came back with their suggestions.

We had a big event at the Queen Elizabeth II centre that involved more than 300 people. More than 50 young people were there and, at every stage, they had their input and felt ownership of Positive for Youth. Whether or not someone agrees with the document’s contents, I do not think that many people are arguing about the fact that we exhaustively consulted a load of people in the youth sector, particularly young people themselves.

[Mr Graham Stuart]

The Minister is spending a disproportionately inordinate amount of time on something that is not central to the issue, but I would like to correct him. The process was that we took evidence from young people on panels in multiple oral evidence sessions, and we also conducted the student forum. As we are a parliamentary Committee, young people cannot form part of the team that puts the report together, but we had massive engagement with young people throughout the whole process—for example, by using the student forum and so on. I thought that I had written to the Minister to set him right on that issue because he was clearly so misinformed. If I failed to do so, I apologise for allowing him to continue in such a position of ignorance.

[Tim Loughton]

My point holds clear. The fact that there was the online forum and other people not on the Committee consulted young people does not mean that young people appeared in front of the Committee itself. The Committee visited no youth projects in the United Kingdom; it went to Germany. Indeed, the report contains an apology for the fact that the Committee did not get out and visit some of the projects that it was due to see. I think that I am correct in saying that young people were not involved in the compilation, road testing or critique of the final report. That is the point I am making. If the Chairman of the Select Committee wants to correct me on that, he can do so.

The contrast with Positive for Youth is that young people saw the drafts, wrote the words, changed the final results, were consulted around the country, came into my office and went to the O2. In addition, we went to lots of different projects around the country to get young people’s views and those of other people involved in youth services. That is why I think that Positive for Youth was a fantastic exercise in involving people, particularly young people. Select Committees could gain some experience from that.

I am particularly pleased—I was going to mention this in a moment—that we are funding the British Youth Council to set up a youth select committee, which will act as a shadow select committee and, I hope, meet in this place and take evidence from the Chairman of the Select Committee and others, particularly young people. That sends out a fantastic signal that we value young people’s input in the place where it matters—here—as well.

[Ms Buck]

I do not want to enter too much into a private quarrel, but surely the fact is that Positive for Youth is in most respects a perfectly good strategic document. The Select Committee report is extremely good in its analysis of some of the weaknesses of the Government’s approach to youth services, but the point is that wherever young people are brought together, the single message they give is: “We are not overly bothered about the reports you produce. We are bothered about the actual youth work that is available and the activities that are accessible to us in our communities.” That is what they tell us, and it is what they tell virtually every MP who is faced with closures and cuts in their youth services.

[Tim Loughton]

Young people would tell the hon. Lady—she did not answer my earlier question about whether she had met any young people from her constituency who had been on national citizen service—that they value being involved and having their views taken on board. Absolutely, they value having their questions and concerns answered. Whether or not young people get the answers that they want, they need to be taken seriously. Absolutely, we have tried to take on board young people’s views and give them ownership of this youth policy.

Positive for Youth is not a finished document that, as with so many other past Government reports, will go on a shelf and gather dust. It is an evolving, organic and living document that I want every young person in the country to wave in the face of the leader of their local council and the mayor at their town hall and say, “This is what Positive for Youth says should happen. We want it to happen here. How can we make it happen here? Why isn’t it happening here?” That is why a lot of things will evolve from it and why, in a year’s time, I will come back to Positive for Youth and do an audit of what has and has not been achieved. I will go back to those areas of weakness, and I will also flag up areas of strength where we can learn from best practice, which we are particularly bad at doing.

[Lisa Nandy]

Although the Minister is absolutely right not to be complacent about young people’s involvement, the Committee was very keen to ensure that we listened to young people, but that we did not take the young people to whom we spoke as necessarily representing others. They were representing themselves, and we found that incredibly valuable. If he is so keen to listen to young people, will he listen to the overwhelming anger and frustration that the abolition of education maintenance allowance caused and reinstate it with immediate effect?

[Tim Loughton]

We could have a debate about EMA—indeed, I have been part of such debates—but it is not part of the youth report. If the hon. Lady would like to talk about EMA, I will mention that, last night, I was with a group of young people who are in the care system and who have benefited disproportionately from the alternative to EMA—the higher education bursary. They will gain more under that bursary than they did under EMA. We could have that completely different argument, but I think you would rule us out of order, Mr Betts.

I want to try to address some of the points that the Select Committee Chairman raised, particularly the one about the statutory duty. We have published the consultation on what we will do about the statutory duty, and I have sent out very strong, clear signals regarding some of the disproportionate cuts that we have seen. As the hon. Member for Westminster North (Ms Buck) acknowledged, I have absolutely admitted that, in certain parts of the country, some councils are being short-sighted in treating youth services as soft targets. They are not taking a long-term view about the implications of such an approach.

We are consulting on what, practically, the statutory duty should mean. We have had it since 1996, but it has never been used. If we are to have such a duty, it must be meaningful and something that people will appreciate. However, a very important point comes out of Positive for Youth in relation to the fact that local authorities and others are part of the youth offer. To believe that youth services are provided by local authorities alone is a mistake. The youth offer includes, as several hon. Members have mentioned, a load of different organisations that involve local authorities, social enterprises, voluntary organisations, charities and private companies, yet we focus disproportionately on how much money local authorities invest in certain youth-orientated services. The bigger picture shows that the offer is much more mixed.

The best judges of whether or not young people get a good deal in their local area must surely be young people themselves. That is why a key part of the Positive for Youth strategy is the need for an effective and loud youth voice. I have asked every local authority in the country to identify a group of young people locally. They may be youth mayors, members of the UK Youth Parliament, youth cabinet members, none of those or even a combination of them. Such groups could be legitimately said to represent the voices and concerns of young people in their communities. They would be able to conduct an audit of the youth offer in their area and have it taken seriously, published on the local authority’s website or presented to a council meeting. We will collate those findings and flag up where certain local areas are doing well and where others are not. Surely, that is the best way to find out whether or not young people are getting a good deal and to do something about areas with a weakness.

The Committee Chairman also mentioned the outcomes framework. The further response that we gave to the Committee—we have done this in the past few months—stated that my Department is funding the Catalyst consortium

“to develop its outcomes framework with the ambition that it will become an ‘industry standard’ common language with which to measure and demonstrate the impact of provision.”

We have also been working with the Young Foundation, which is part of the Catalyst consortium, to develop the outcomes framework, which is a matrix of tools that will help youth organisations to demonstrate their impact on outcomes for young people.

The interesting problem with this work is how to prove a negative. This is something else that goes to the heart of what Positive for Youth is all about—it says it on the tin. Too often in the past, we have judged whether or not we are doing well for young people in terms of preventatives and negatives. We ask questions such as “How many young people have we prevented from going to youth offender institutions? How many teenage pregnancies have we prevented? How many young people are not in the youth justice system?” Those questions are all based on negatives and preventatives, so it is not surprising that they exacerbate the negative images of young people that the media too often present. I want to achieve—this is why we have asked the Catalyst consortium to consider the issue—an aspirational, positive measure of outcomes that assesses what we are doing for young people on the basis of what they achieve, their educational success and a version of the Prime Minister’s well-being index.

It is hugely difficult to put together something that is meaningful, measureable and practical, but I am determined to do that and to replace the negatives with something positive and aspirational. It will take a while to come up with something that does not just consist of words that are relatively meaningless.

The hon. Member for Wigan (Lisa Nandy) made a number of points on a wide range of issues. It is a shame that she was not present when I gave evidence to the Committee on the national citizen service and on Positive for Youth. Had she been present, she would have received answers to some of the questions that she has asked today.

The hon. Lady was right to say that part of the problem with youth work is that there is no real job description for it. I know that one of the Committee’s frustrations was the failure of often well-established youth organisations to make a positive, strong case for what constitutes good youth work and a good youth worker. The sector does not do itself any favours. I have seen some fantastic youth workers making a huge difference to young people—often from disadvantaged backgrounds—throughout the country. I wish that we could bottle that work, define it and replicate it more.

That is why Positive for Youth is littered with case studies of youth organisations, local authorities and young people themselves doing some really good stuff in different parts of the country. I want to disseminate best practice and we also need to find a way to disseminate good youth work. I know that the Select Committee Chairman is as frustrated as I am that the Committee’s report did not suggest a blueprint for how to promote good youth work practice. The sector has received that message, which is why Fiona Blacke and the National Youth Agency are working on whether we should have a professional body of youth workers and on how we can increase the standing, gravitas and perceptions of youth workers.

The hon. Lady mentioned reliance on different sources of funding. During my evidence to the Committee—she was not present—I referred to a heavy reliance on “slugs of public money”. My point was not that there is too much or too little public money going to youth services, but that those services have relied disproportionately on public money in the past. A degree of reform in a range of other public services has resulted in a mixed economy of provision based on different revenue sources, but youth services are too often heavily reliant on money from local government, whether it comes via central Government or elsewhere. There is a whole range of other providers, but there is still a heavy reliance on public money, so when public finances are tight, youth services get hit disproportionately. Frankly, the situation has not changed dramatically since the Albemarle report 50 years ago, which effectively established youth services.

The hon. Lady gave a good example from her own constituency of the upcoming Wigan youth zone and the contribution of Martin Ainscough, whom I have met several times. He is a fantastic philanthropist and has put together a fantastic case, as have other members of the OnSide charity, which is responsible for four Myplace centres in the north-west. The charity’s genesis was in the Bolton lads and girls club, which is one of the best—if not the best—youth centres in the country, if not the world. Martin works with Dave Whelan, who is another benefactor of the project. It did not qualify for Myplace funding, because it submitted its bid after the funding round had finished, unlike the other four Myplace centres, most of which have opened—I opened one in Carlisle—and are doing some fantastic work. The Wigan example did not, therefore, get any national public money, but it is going ahead because of some contribution from the local authority and generous contributions from Martin Ainscough, Dave Whelan and other businesses.

Martin runs a private business, which, as the hon. Lady knows, is a big employer in Wigan and has been there for many years. He rightly sees himself as part of the local community and as having a corporate, social responsibility to it. He has identified a mutual benefit of a Myplace-style youth centre—I am hugely supportive of such centres and will come on to them in a moment—whereby his employees spend time volunteering to help out there. His employees’ sons and daughters will benefit from the centre’s facilities, and he may well end up employing some of them. He will help to provide training facilities. It is not just a place for youth leisure activities, but a meeting place for training and education, personal and social development, and all sorts of other things. That is being achieved regardless of the availability of a big pot of money from central Government funds. The model is hugely successful. The Myplace centres—which are based on the OnSide model—that will thrive most of all are those that become self-sustaining and encourage a host of other providers that use social enterprises, businesses and the voluntary sector to become self-sustaining, too. Wigan is a fantastic example of where it can work.

I am particularly keen on other forms of funding for youth organisations—I have been encouraged and we have some brokerage work to help with this—through the social investment bank. We have put some money into a consortium led by NCB and Business in the Community to act as a brokerage to encourage new sources of funding for youth organisations that are looking to promote such projects.

The hon. Lady also mentioned the problem of having 27 different sources of funding and having to account for them all, which is, of course, complete nonsense. That needs to be streamlined and we are streamlining the accountability frameworks. However, those 27 sources of funding may be, as with many projects I have visited, all from different public sources of finance—Department of Health, Home Office or Department for Education projects. Even if they were 100% funded, they would not be from one pot of money that requires one report, one accountability framework and one inspection a year, but 27 funds with potentially 27 reports. That is nonsense that we need to streamline, but it happens in the public sector just as much as it will happen if we have multiple sources of funding from private voluntary and social enterprise sectors, too.

[Mr Stuart]

Will the Minister tell us how he would streamline that, because I am sure that if we talked to Ministers 10 years ago they would have said the same thing, and five years ago they would have said the same thing? Whoever was in government, they would have said the same thing. We need practical ways of making it happen. For example, will he speak to his colleagues in the Cabinet Office to try to ensure that we get streamlining?

[Tim Loughton]

The Parliamentary Secretary, Cabinet Office, my hon. Friend for Ruislip, Northwood and Pinner (Mr Hurd), who has responsibility for civil society, has been working with many voluntary organisations, charities and others to reduce bureaucracy. I have been working with the inspectorates. Many organisations in the youth and education sector in relation to children’s social care will be inspected by as many as six inspectorates. That is clearly nonsense, clearly overlapping, and clearly causes huge amounts of chaos for the outfit being inspected. I spent a morning with children’s services in Birmingham, which were about to have another inspection.

We are now making good progress. Indeed, the Chair of the Select Committee may wish to call me to give evidence on joint inspections in one of his inquiries. For the first time—I have had them all around the table in my office—we are making some real progress. That must be the way to go. We need to ensure that organisations that do good stuff for young people and children are able to get on with the job of providing those activities, rather than having to spend every other day being beholden to inspectors in a very bureaucratic manner.

[Mr Stuart]

I am grateful for that answer, which addressed inspection, but perhaps not accountability. I know that the Cabinet Office has considered how we can use digital platforms to deliver Government for less and more effectively. I wonder whether small charities and youth services could have one website where everyone comes together to say what they want—or at least are able to go to one place—which provides one set of accounting for themselves in a way that answers the questions that are collectively required by all those who fund them.

[Tim Loughton]

I think that the sum of the bureaucracy around small charities in particular is already being addressed. I just referenced the work that we are doing with Business in the Community, NCB and that consortium to provide a portal for organisations that need funding, advice on how to get leverage on the funds and resources available, and on how to partner up different organisations. That is what we are trying to create in that brokerage, and I think that that addresses the concern.

There have been quite a lot of myths about national citizen service. It has been covered disproportionately, at least in the press releases relating to the Committee’s report. I would be more than happy if the Committee produced a discrete report on national citizen service that was based on the evidence that we are amassing from people who have already been on it, and based on actually going on the projects and seeing the young people and the providers. The Chair of the Select Committee has met some of his local providers, and I think he was impressed by what he saw.

Let me first say what national citizen service is not. It is not just some six week summer camp—that is a fundamental misunderstanding of what it is all about. National citizen service is about a life-changing experience that starts with a two-and-a-half week window, mostly over the summer, with young people going on an outward bound type course and being thrown in at the deep end—quite literally in many cases. It gets people together from different sides of the tracks socially and ethnically—kids who have been in the youth justice system, kids from independent schools, kids with disabilities. It mixes them all up and they have to rely on each other and understand each other. It is about a rite of passage as well. Anybody who has been through the national citizen service course and graduated—it is not a walk in the park; it needs to be stretching and it needs to be challenging—has earned the right to be treated more as an adult. It is about engaging those young people with society in the longer term. It is about getting them embarked on volunteering activities. It is about getting them to develop their social action project, which they start up as part of the summer experience, and which will hopefully run for months, if not years, after that, in collaboration with other local youth organisations, the local council and local businesses.

I want thousands of signs around the country that read, “National citizen service project initiated by, run by, managed by, inspired by young people”, so that even some of the most cynical people in our society, who think that every teenager is a potential hoodie-wearing mugger, will have to say, “Wow, there is some really good stuff going on in my town, my village, my community, my city, and it is being led by young people.” That is what national citizen service is all about.

I do not recognise some of the figures in the report that have been attached to national citizen service, simply because they are not figures that we have calculated ourselves. We are in the middle of a pilot. We are evolving the scheme. We have made a number of changes since we started the pilots. We will be rolling out 30,000 places this summer, and there will be some variations. Some will be run over a series of extended weekends for those who cannot commit for the summer. There will be some pilots in Northern Ireland, because this will be a UK-wide exercise.

[Mr Stuart]

I am grateful to the Minister for resiling from his earlier remarks about the disproportionate attention the report paid to the NCS, because in six chapters I think that half a chapter deals with it. It is also worth noting that, at the time, it was the only youth policy the Government had, but none the less we looked more widely. The Minister says that he does not recognise the figures in our report—a statement consistently made by the Government about our figures. However, the Government have not provided us with their own. Will he please do so now?

[Tim Loughton]

We could not possibly come out with a total figure for complete roll-out because we have not remotely reached total roll-out. We are getting economies of scale. We spent approximately £13.5 million. In addition, some philanthropic and other money came in. We are being approached by people who want to add money, on top of the Government money. We are considering converting it into a contractual scheme. We will then start to have some long-term estimates of the amount of money involved. Simply to do an extrapolation of the costs in the first year, which are likely to be the highest and will gradually come down, and come up with a figure of 50%, and then come up with this figure is, I have to say, disingenuous. It is also slightly disingenuous and unfair of the Chair to say that I am dwelling disproportionately on NCS. The point I made earlier was that his press release, the headline, how this report, which contains some really good stuff, was launched, was all about NCS affecting one year out of the 13 to 25-year-old cohort.

It is also not fair to say that, at the time my hon. Friend mentioned, the Government had no other youth policies. Let me remind him that in the teeth of the toughest spending round that we have had, we secured for the Department for Education £141 million of capital to fund the remainder of the 63 Myplace projects, which is an excellent scheme started by the previous Government. We ensured that the outstanding projects had financial sustainability, which some earlier ones did not have. That important youth policy, again, did not feature greatly in the report, which is a shame, because it is doing some fantastic stuff.

Last week I was in Lincoln, speaking at the Myplace network conference, seeing some fantastic examples of how Myplace centres are being used as hubs of youth activity in local communities and, particularly, focusing on how we deal with what are commonly called NEETs, which is a derogatory term. I prefer the term GREETs: getting ready for education, employment and training. Those will be centres for the youth contract, for organisations to come in and do their training, and where we can get some of the more difficult-to-reach young people into some form of employment, education and training.

Myplace centres are key to the Government’s youth—and Positive for Youth—policy. I should have liked them to feature in this report. If the Chairman of the Select Committee would like to rectify that by doing a study into Myplace centres, I should be more than happy to co-operate and give him all the resources he needs.

[Pat Glass]

I am sure that the Minister would like to see those things, but he is misrepresenting the purpose of the Select Committee. I understand that its purpose is to scrutinise Government business, not publicise the things that the Government want us to publicise or even to report on things that the Minister would like us to.

[Tim Loughton]

I have said that I respect the Select Committee and that I encourage it to study youth services and anything to do with young people. In my opening remarks I said that, whatever I may like, or not, in the Committee’s report, I welcome it. However, the report was about out-of-school activities for 13 to 25-year-olds. Myplace centres cater for out-of-school activities for that cohort and more; they were in place in part under the previous Government and money was secured for their expansion under this Government when the report was being prepared. Why did they not feature in the report? That is my point. Whether the Committee wanted to criticise them or be positive about them, they should have featured as another example of what the Government are trying to do, then the Committee could have said whether the Government needed to do better or to do it differently. Are we wasting £141 million? Why just talk about wasting £13.5 million on the national citizen service when we are wasting more than 10 times that—if that is the Committee’s view—on Myplace?

[Mr Stuart]

The Minister is wrestling with his understanding of what the Select Committee is for. The purpose of the inquiry was to focus on youth services. Perhaps we could address what the report contains. Can the Minister share with hon. Members the numbers, which we know are far from definitive, on the national citizen service? This Government are committed to transparency and openness, not least on public expenditure. Could we have some of that today on the NCS as it stands to date—and the Minister’s best understanding?

[Tim Loughton]

The Committee conducted an inquiry into the provision of services beyond the school/college day for young people, primarily those aged 13 to 25. That takes in a whole host of things, of which I mentioned Myplace, which cost £141 million—substantially more than the amount that has been spent, or will be spent for some years, on the NCS. I have told my hon. Friend that last year it cost some £13.5 million. The budget for this year, if we provide 30,000 places as we are looking to do, will be roughly triple that, but hopefully it will a bit less because we will get some economies of scale.

Depending on how we evolve the pilot—we are genuinely learning from it and adapting it by reference to all our partners with expertise in this regard—it may become a shorter experience in the summer, which would reduce the costs, or there may be different ways of doing it. To say that it will cost £300 million, or whatever, in a few years is entirely illusory, because I do not know how many people will be doing it.

There is a fundamental misconception here. The money is not coming from the Department for Education or from a youth budget and would not otherwise be going into youth services. The money for the national citizen service is going into youth services. This money is not being used to fund some army of central Government people; it is being provided by a host of youth organisations—the Prince’s Trust, the Football League Trust, Catch22, Groundwork and the National Youth Agency—doing youth work now. If that money were not going into the NCS through a direct funding stream from the Treasury, it would not be going into youth work. That is why I cannot understand why the Committee is not welcoming these growing resources going into a youth activity. One only has to speak to the people who have done such activity, read the surveys that we have conducted, and look at the serious work that is being done, to see its efficacy and that it is having a positive impact.

[Lisa Nandy]

The list of names that the Minister read sounded strangely familiar, because those organisations gave evidence to the Committee for our report, saying that the network of support for young people, which already exists and is so highly valued, is disintegrating in front of our eyes. I have to say that the Minister is starting to sound somewhat delusional, because we were overwhelmed with evidence from those organisations and young people, saying that they are losing much valued, highly regarded services now. In the time that he has left, out of respect to the young people who use those services, will the Minister tell us what he is going to do to stop that happening?

[Tim Loughton]

The hon. Lady ignores the fact that a host of youth organisations has come forward to provide national citizen service places, because they think it is a good thing to do and think that they have the expertise. In particular, we are using a host of smaller providers with real expertise in engaging with more difficult-to-engage young people, including young people who have been in the youth justice system and young people from various black and minority ethnic communities, who are not necessarily easy to engage in some youth services. Those people value it.

I do not know whether the hon. Lady went to the NCS providers in her locality, but I ask her to speak to some of those young people and to come to some presentations, such as the ones we have done with them, and see the value that they place on it.

I cannot give hon. Members a figure for what NCS will ultimately cost when we go to full roll-out, and I do not know how soon roll-out will be or what it will be, but we will not compromise the quality of this service. An absolutely key point in that regard is the fact that it is a high-quality service that is, for the young people who go on it, a life-changing experience about personal and social development.

[Mr Stuart]

Will the Minister give way?

[Tim Loughton]

I will, but my hon. Friend is eating into his time for a right of reply, and I have not even started my speech yet.

[Mr Stuart]

The Minister is generous in giving way, but I am still at a slight loss as to why he is so hostile. Our job is to probe this. We did not say it would cost that much. We said that, if it was scaled up at the current cost, it would cost the amount we stated, and we did so precisely to invite—we hoped—a polite, respectful response from the Ministry about what it thought it might move towards.

Derek Twine, chief executive of the Scout Association, noted that

“for the same cost per head that the NCS is anticipating spending in the first tranche of pilots we could provide two or three years’ worth of the experience, week by week, for young people in the same age range”.

Evidence of that sort led us to probe the matter, hoping that we would get a proper, civil response from the Government in due course.

[Tim Loughton]

That is a strange thing for the chief executive of the Scout Association to say, because it relies on no public money at all, so why is he saying that he could use that money for something else? The Scout Association is completely different.

We want NCS to be the recruiting sergeant for the Scouts, the Air Training Corps, the Army cadets and all sorts of youth organisations. They are not there to recruit people for NCS; they are recruiting people for community-minded organisations that are doing great stuff in their local communities—and the Scouts and Guides just happen to be two such organisations.

I am not sure what to do, because I have not actually started the speech before me. I will try, however, to deal with some of the points made by members of the Select Committee. I ought to give my hon. Friend the Member for Wells (Tessa Munt) a look-in, because she has had the courtesy to stay throughout the proceedings. She made a number of points, in particular about transport and its availability to convey young people to certain facilities, notably in rural areas. That is exactly why I welcome the work of the United Kingdom Youth Parliament, which we are now helping to fund, in setting up a select committee on transport, this year’s favoured UKYP campaign. I have hosted some round-table meetings, one involving the Under-Secretary of State for Transport, my hon. Friend the Member for Lewes (Norman Baker), on transport to schools and other educational facilities and on transport for young people. I am particularly sympathetic when 16-year-olds complain, quite rightly, that they have to pay adult fares on buses and public transport. I want to find solutions to ensure that we are not laying on facilities that the very people whom we want to access them are prevented from doing so because of transport logistics.

My hon. Friend the Member for Wells also mentioned social mobility and mental disorders. Having seen some good examples, I can recognise a good youth organisation —a feeling of belonging, I think she said—which can give people confidence that they have a place in society, helping their health, and not least their mental health. The problem has been under-appreciated, with one school-age child in 10 suffering from some form of mental illness, so I welcome the Government’s paper “No health without mental health”, which has, for the first time, placed mental health on a level playing field with physical health. We need to ensure that they are getting the right interventions—early and appropriate—which in too many cases they are not. That is an important part of youth engagement as well.

[Tessa Munt]

Is the Minister also cognisant of the fact that people who have mental health problems when they are very young almost invariably go on to have significant mental health problems later on in life? That is at enormous cost to society and, eventually, to the state through the health services and every other way.

[Tim Loughton]

I entirely agree with my hon. Friend’s point.

I had better quickly mention the hon. Member for North West Durham (Pat Glass), who made some good and legitimate points, although she also said that she was present to “verbally duff up” the Minister. I am not entirely sure that that is why we hold our debates. We are having a full and frank exchange of views, and a constructive engagement on an important subject.

The hon. Lady mentioned the real problem of young people not in education, employment or training. Ensuring that our young people are engaged in some way is probably the single biggest challenge that we face as a society, which is why the youth contract—that £1 billion investment—is so important. An extra £123 million has been earmarked for 16 and 17-year-olds, for the 55,000 of that age group who do not have good GCSEs. They will now be engaged through that part of the youth contract that is about to be tendered.

Initial expressions of interest—by a whole range of voluntary organisations and others, in particular those with expertise in young people—have been exceedingly encouraging. It is not only, “Here’s a young person, get them into a job,” but getting a young person to know what a job is all about—giving help with, for example, personal presentation, writing a CV, doing interviews or turning up at 9 o’clock for the training exercise or whatever is required. That is why it is so important to use those organisations with expertise in dealing with young people, from whatever sector—using Myplace centres and other facilities—to ensure that we try to give those 16 and 17-year-olds a decent chance to go back into education properly, if they have dropped out earlier; get on a meaningful training scheme, or apprenticeship; or get into some sustainable employment. The organisations will be paid for that on a payment-by-results basis, so this is not just a short-term displacement scheme; it is about sustainability.

I will deal with one last point made by the hon. Lady before I sit down to give a right of response to my hon. Friend the Member for Beverley and Holderness, the Chairman of the Select Committee. Some of the payment for the national citizen service was mentioned in the report, and that is a legitimate area of debate, because fewer than half of the providers last year levied a charge, and half of those in turn made it a refundable charge when the young person turned up. What we have said, and what is part of the tendering process for those who come forward to offer such places, is that charging should be done in such a way that no young person is deterred from an NCS course by financial considerations. The course needs to have a value, however, and what some of the research shows is that for those providers that levied a charge, in particular if refundable, people turned up and valued the course more. That is purely about ensuring that people do not feel, “Oh, I can sign up, it doesn’t cost me anything,” and that they need not bother to turn up—so they turn up and value it, making the most of the experience. If it turns out that that is discouraging people, we have pilots to inform how we roll out NCS in future.

We could have discussed a range of issues and a range of related things that I hope the Select Committee will return to on youth services and youth affairs generally. They are among the most important things that we deal with in Parliament, because they are one of the best investments that we can make. Therefore, I have unashamedly named and shamed local authorities, and will continue to do so, if they are being short-sighted, cutting disproportionately or not seeing the bigger picture on youth services. Positive for Youth is about ensuring that young people are empowered to have a strong voice to point that out. They are the most important customers of youth services and they must have the loudest voice about where we are doing well and where we are not.

17:26

[Mr Graham Stuart]

With the leave of the House, it is a pleasure to serve—if one serves in this Chamber—and to debate under your chairmanship, Mr Betts. I am grateful to all those who have participated in the debate. More than half the members of the Select Committee were present today, and we had excellent speeches from the hon. Members for Wigan (Lisa Nandy) and for North West Durham (Pat Glass), from the shadow Minister, the hon. Member for Westminster North (Ms Buck), from my hon. Friends the Members for Stroud (Neil Carmichael) and for Wells (Tessa Munt) and from the Minister himself.

We have repeatedly put one question, so although the Minister might be breathing a sigh of relief on ending his speech, I ask him, if possible, to respond now or to write to me about how much is being spent on youth services. There was a line in the Government books that they used for years to say how much they were spending on youth services, but when we quoted it the Government and the Minister said, “That number is completely wrong.” What is the right number? Where do we look to find it?

[Tim Loughton]

Under the local authority returns, to which my hon. Friend is privy and which I thought he had used, the spending on combined youth services for 2009-10 came to a total of £1.104 billion—spent on services to young people, such as positive activities, information, advice and guidance, teen pregnancies, substance misuse and specific youth work.

[Mr Stuart]

I am grateful to the Minister. The figure that we used was provided by Select Committee staff from Government figures, which I understand had been used for many years. That sounds like a different figure. Is that because of the early intervention grant, and pooling it? Can the Minister throw any other light on the matter, because it does not seem to fit with our understanding?

[Tim Loughton]

I have quoted the figure for 2009-10, which was before the early intervention grant existed.

[Mr Stuart]

The Committee will look forward to pursuing that further with the Minister, but if it is a correction I am grateful for it.

The purpose of our inquiry was to recognise that so many youth services struggle to show their impact—we criticised them for that and also sympathised with them because of the impossibility of doing so—but we know anecdotally from young people that those services are important. We wanted to provide a platform for youth services to be heard to ensure that time was found to focus on them. We hoped that the process of conducting the inquiry would make it less likely that ill-thought-out and disproportionate cuts would be made by local authorities in a tough situation—caused by the profligate behaviour of the previous Government, to reinforce the Minister’s point and to make a tiny rebuttal of so many partisan remarks from Opposition Members.

Despite the Minister’s occasional tetchiness at our probing—

[Ms Buck]

Occasional?

[Mr Stuart]

I say “occasional”, but we are working together, and the Minister is committed. One of the best things that the Prime Minister is doing for the governance of this country is keeping Ministers in place for a decent period, at least so far. Notwithstanding the Minister’s tetchiness, I hope that Ministers remain in office for longer periods, because that will lead to better understanding of the issues with which they are wrestling. Select Committees, which probe and challenge, and write reports such as ours, do so because they care about the issues. I hope that any heat, as well as light, that we might generate will strengthen the Minister’s arm. I know that he is personally committed to the matter, and works tremendously hard to look after the interests of our young people.

17:30

Sitting adjourned without Question put (Standing Order No. 10(11)).

Written Ministerial Statements

Thursday 22nd March 2012 Written Statements

Thursday 22 March 2012

EU Foreign Affairs Council (Trade)

Thursday 22nd March 2012 Written Statements

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Norman Lamb)]

The EU Foreign Affairs Council (Trade) took place in Brussels on 16 March 2012. I represented the UK on all the issues discussed at the meeting. A summary of those discussions follows.

Two legislative items were discussed: the regulation on transitional arrangements for bilateral investment treaties (BITs) and the regulation on the application of generalised system of preferences (GSR).

On the investment regulation, member states endorsed the residency compromise proposal as the basis of a deal. I intervened to support the presidency’s approach, but emphasised the need to maintain investor certainty in the interim period by ensuring that BITs remain in force until replaced by EU agreements and that the final regulation should be competence neutral.

The discussion on the GSP regulation was more difficult, but several member states supported the presidency compromise proposal. Some, however, indicated they still had some concerns. In the run-up to the Council, the UK had secured a number of changes to the proposal. As a result of these changes we were able to join the consensus, and I intervened to support the presidency proposal. The presidency concluded there was a large majority in favour of its compromise, and it would therefore proceed on that basis, with the addition of a wider review of impacts at the UK’s request.

There were three substantive “non-legislative” items: the EU-Singapore FTA, the EU agreement with Colombia and Peru, and the Council conclusions on trade and development.

On the EU-Singapore FTA, there was a debate on the state of play in the negotiations, focusing on the outstanding issues, including non-tariff barriers, rules of origin, and services, especially retail banking.

The Council reached a political agreement on the signature and provisional application of the EU-Andean (Columbia and Peru) FTA and adopted the conclusions on trade and development without member state comment.

Under AOB, the Council discussed the work of the EU-US high-level working group (HLWG) established by the last EU-US summit. The Commission reported good progress to date. I intervened to underline the strategic and political importance of the HLWG and the significance of this opportunity for strengthening trade and economic relations between the EU and the US.

There was also an AOB point on the anti-counterfeiting trade agreement (ACTA). The Commission informed the Council that in the wake of violent protests and rising opposition from the European Parliament, it had referred the agreement to the European Court of Justice (ECJ). The last AOB point was on the Russian ban on EU agricultural products. The Commission said it was tackling the issue. I intervened to express the UK’s concern and support for the Commission’s actions.

Over lunch, there were discussions on the Japan and India FTAs. There was a significant resistance among several member states to entering negotiations for an FTA without decisive actions by Japan to demonstrate a willingness to give up their market. I intervened to argue strongly for the launch of an FTA negotiation as soon as possible. By contrast, there was a general desire to conclude the India FTA. I led the calls for progress, while acknowledging the difficulties.

Industrial Development Advisory Board

Thursday 22nd March 2012 Written Statements

[The Minister of State, Department for Business, Innovation and Skills (Mr Mark Prisk)]

We will shortly commence a “Triennial Review” of the Industrial Development Advisory Board, to Cabinet Office guidelines.

As part of the coalition agreement, all Government Departments are required to review all their non-departmental public bodies (NDPBs) at least every three years.

The Industrial Development Advisory Board has been selected by BIS as one of the NDPBs for which the review will commence during the first year of the programme (2011-12).

The review will be conducted as set out in Cabinet Office guidance, in two stages.

The first stage will

Identify and examine the key functions of the Industrial Development Advisory Board and assess how these functions contribute to the core business of BIS.

Assess the requirement for these to continue.

If continuing, then assess delivery options and where the conclusion is that a particular function is still needed examine how this function might best be delivered, including a cost and benefits analysis where appropriate.

If one of these options is continuing delivery through the Industrial Development Advisory Board, then make an assessment against the Government’s “three tests”: technical function; political impartiality; need for independence from Ministers.

If the outcome of stage 1 is that delivery should continue through the Industrial Development Advisory Board then the second stage of the project will be to ensure that it is operating in line with the recognised principles of good corporate governance, using the Cabinet Office “comply or explain” standard approach.

The report of the review will be placed in the Libraries of both Houses.

If you would like further information or wish to comment please e-mail [e-mail]

Advisory, Conciliation and Arbitration Service

Thursday 22nd March 2012 Written Statements

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Norman Lamb)]

As part of the coalition agreement, all Government Departments are required to review all their non-departmental public bodies (NDPBs) at least every three years. ACAS has been selected as one of the NDPBs for which the review will commence during the first year of the programme (2011-12).

The review will be conducted in two stages. The first stage will examine the key functions of ACAS. If the outcome of this stage is that delivery should continue, the second stage of the project will ensure that ACAS is operating in line with the recognised principles of good corporate governance.

The findings at both stages of the review will be examined by a challenge group with cross-Government representation.

Copies of the report of the review will be placed in the Libraries of both Houses.

Fire Service College

Thursday 22nd March 2012 Written Statements

[The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)]

The Government’s response to Fire Futures on 12 April 2011 said that the college can achieve its full potential only if there is greater involvement from other sectors (whether private, public or voluntary) in its ownership, operation and governance and that we would

“explore with the sector and other organisations options to secure the future of the Fire Service College”.

Using evidence gained from the pre-market engagement to better inform our view of market appetite and taking into account the review commissioned by the Local Government Association, we concluded disposal as a going concern to the private sector was the best option to secure the future of the college.

The Fire Service College is a trading fund and Executive agency of the Department. Since becoming a trading fund in 1992, it has never been able to pay a dividend out of operating profits. This situation cannot persist and the Government’s response to Fire Futures on 12 April 2011 concluded that the college could achieve its full potential only if there was greater involvement from other sectors in its ownership, operation and governance.

With the college freed from the constraints of Government ownership, a private sector owner can bring innovation and investment to the college, benefiting taxpayers, local residents, the fire and rescue service and, ultimately, strengthening national resilience.

The Future Options project considered four options for the future of the college:

The status quo—The college remains as a trading fund of the Department.

A Government owned contractor operated model—The assets remain under Government ownership but management of the college is taken over by a private sector company under a long-term contract, together with the staff.

Disposal as a going concern—The college is sold to a private sector company who would continue to operate the college as a training centre.

Closure—The college’s activities cease, staff are made redundant and the site is sold for an alternative use.

Analysis of the four options showed disposal as a going concern to be the best option. It is the only option which both fully removes from Government the ongoing financial risks of ownership of the college and preserves a national training college for the fire and rescue service.

Queen Elizabeth II Conference Centre (Performance Targets)

Thursday 22nd March 2012 Written Statements

[The Parliamentary Under-Secretary of State for Communities and Local Government (Robert Neill)]

My hon. Friend the Parliamentary Under-Secretary of State, Department for Communities and Local Government, Baroness Hanham, has made the following written ministerial statement:

I am today announcing that key performance targets have been agreed for the Queen Elizabeth II Conference Centre for the period 1 April 2012 to 31 March 2013.

The agency’s principal financial target for 2012-13 is to achieve a minimum dividend payment to the Department for Communities and Local Government of £2.25 million as proposed in the business plan for the year.

The agency also has the following targets to achieve:

A minimum 64% occupancy of its rooms based on a theoretical full occupancy revenue of £9,680,970;

Overall score for value for money satisfaction of greater than 90%;

The number of complaints received to be less than 2 per 100 events; and

An average response time when answering complaints of less than four working days.

EU Foreign Affairs Council (Defence)

Thursday 22nd March 2012 Written Statements

[The Parliamentary Under-Secretary of State for Defence (Mr Gerald Howarth)]

The EU Foreign Affairs Council will meet in defence formation on 22 March 2012 in Brussels. I will represent the UK.

We have yet to receive a detailed formal agenda. However, we expect current operations, military capability and partnerships to be discussed. In the morning session, the European Defence Agency will hold a steering board.

European Defence Agency Steering Board

Ministers will discuss pooling and sharing initiatives with a view to preparing deliverables for the NATO Chicago summit. The UK will continue to work with the agency and its member states to develop and improve the agency’s effectiveness and performance, but will urge the EDA to be realistic about its work programme and budgetary requirements. The steering board will be invited to agree the following action points:

Joint procurement initiative on common acquisition of EU battle group logistic support be established as a category B project;

Second joint investment programme on innovative concepts and emerging technologies (ICET 2);

Category B “Go Green” project; and

Mandate to establish negotiations for an administrative arrangement between the EDA and the Republic of Serbia.

While the UK is content that the agency develops work on EU battle group logistic support and ICET 2 and for other nations to participate, we will not be participating in these projects. We note the desire of the agency to move into the energy arena, as demonstrated by the “Go Green” proposal. However, the UK has no plans to participate in this project. The UK is fully supportive of an EU and NATO future for all western Balkan countries and therefore will support an administrative arrangement which enhances co-operation and opens dialogue between the EDA and the Republic of Serbia.

In addition to the action points, the steering board will be provided with an update of the pooling and sharing opportunities which have been developed by the EDA, which includes a request that Ministers agree to a political declaration on air-to-air refuelling (AAR) capabilities, and sign a declaration of intent for the establishment of multinational modular medical units (M3U).

Noting that there is a gap among other European nations in AAR capability and that the declaration on AAR is not for signature, is not legally binding, and carries no financial commitment, we are content to agree this agenda item. M3U has been identified as a critical shortfall in European nations capabilities, and it is the EDA’s intention to establish these units which should enhance and improve standards, procedures and inter-operability among member states. The UK does not wish to participate in the M3U project as the United Kingdom believes it duplicates activities currently being undertaken in NATO.

Foreign Affairs Council (Defence)

The three current EU operations, Operation Atalanta (counter-piracy). Operation Althea (Bosnia and Herzegovina) and EU training mission Somalia (military training mission) will be discussed in the Council with the respective Operation Commanders. I will be able to announce that the UK has cleared an extension to Operation Atalanta’s mandate through parliamentary scrutiny. Future common security and defence policy (CSDP) operations are also likely to be discussed, with a focus on the soon to be launched regional maritime capacity-building (RMCB) mission off the horn of Africa, but also including possible missions in the Sahel and Libya. Further to the Foreign Secretary’s agreement at the Foreign Affairs Council in December 2011 to the establishment of an operation centre specifically to co-ordinate the RCMB mission, a Council decision on the activation of the operations centre may be agreed. I also intend to indicate our support for ongoing operations. Finally, Ministers will discuss EU partnerships and how these can be enhanced during which I will emphasise the importance of improving EU-NATO relations.

Discussion on the US Strategic Defence Guidance

Discussions will focus on the changing strategic context, in particular the implications of US defence guidance and budget cuts for Europe and CSDP. The UK will continue to emphasise that European nations must invest their scarce resources in real military capability rather than wasteful institution building. It is also important to ensure that, wherever possible, military capability is inter-operable and coherent avoiding any duplication with NATO, which is and must remain the first and foremost pillar of European defence.

Secondary School Applications

Thursday 22nd March 2012 Written Statements

[The Minister of State, Department for Education (Mr Nick Gibb)]

Today we are publishing data, based on returns from 151 local authorities, showing that across the country 85.3% of families received an offer at their first preference secondary school—compared with 84.6% last year. A further 7.8% of families were offered a place at their second preference school and 95.9% were offered a place at one of their three preferred schools. In total, 97.6% of families were offered a place at one of their preferred schools. I am placing a copy of these data in the Library of the House.

There is considerable variation in these figures nationally. Outside London, nearly 88.5% of parents were offered a place at their first preference school. The north-east continues to have the highest percentage of first preference offers with 95.1% and west midlands continues to have the lowest with 81.3%. For Greater London, this figure is 67.5%.

Parents have the right of appeal against any application that has been turned down; and over the summer, admission authorities will be hearing those appeals as well as dealing with late applications. Our priority is to get every child into school as quickly as possible.

All parents should have the opportunity to send their child to a good local school of their choice. Our school reforms will raise standards and create more good schools. We are working to increase the supply of good school places by the rapid expansion of the academies programme, establishing more free schools and giving all schools more freedom to expand the number of places they offer. We are encouraging the best and brightest into teaching and we are turning around underperforming schools that are failing their pupils.

In the White Paper, “The Importance of Teaching”, we announced our intention to review the school admissions code and the appeals code, with a view to delivering a simpler, more streamlined admissions process. The new codes which came into force on 1 February have removed many of the unnecessary and costly burdens on schools and local authorities making the system simpler for parents and admission authorities to understand, and more transparent.

Further details of the statistical release of “Applications and offers for entry to secondary schools in England in the academic year 2012/2013” can be viewed on the DFE Research and Statistics Gateway.

Habitats and Wild Birds Directive

Thursday 22nd March 2012 Written Statements

[The Secretary of State for Environment, Food and Rural Affairs (Mrs Caroline Spelman)]

I am pleased to announce that the Government have published their report on the habitats and wild birds directives implementation review.

The review was launched at the autumn statement. At that time I underlined our strong support for the aims of these directives, and clearly explained how we want to ensure that they continue to be effective in protecting our vital network of wildlife sites and species, some of our most valuable environmental assets.

The review has provided a timely opportunity to take a fresh look at the way the habitats and wild birds directives are being implemented in England and to find out how we can do things better, more simply, and more efficiently without compromising their fundamental objectives.

Today’s report sets out the findings from this important piece of work. It includes a strong, practical set of measures designed to make it easier for people who need to work with the regulations to understand them and comply, thereby enhancing the reputation and environmental integrity of the directives. Designed to facilitate major infrastructure, improve guidance, data and the customer experience, key measures include:

Establishing a cross-Government major infrastructure and environment unit to start in April 2012 to improve pre-application identification and support resolution of issues associated with the directives for nationally significant infrastructure projects.

Publishing by November 2012 a draft of new simplified overarching guidance manual which will clarify key legal terms involved in the development authorisation process. This will ensure that guidance is more accessible and easily understandable by both large and small developers.

Action to tackle data gaps to reduce delays and higher costs, particularly for marine developments, by requiring statutory nature conservation bodies to agree an evidence plan with developers upfront for nationally significant infrastructure projects, and by new data collection and sharing arrangements—including a new habitats and wild birds directives marine evidence group.

Holding all relevant public bodies to account for a more customer-focused culture which will support sustainable development.

I am grateful for the strong contributions to the work of the review from a wide cross section of stakeholders. I look forward to continuing to work closely together with them as we deliver the important set of measures in today’s package.

The full response and terms of reference for the major infrastructure and environment unit are available on the DEFRA website www.defra.gov.uk.

Foreign Affairs Council and General Affairs Council

Thursday 22nd March 2012 Written Statements

[The Minister for Europe (Mr David Lidington)]

My right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs will attend the Foreign Affairs Council (FAC) on 23 March. I will attend the General Affairs Council (GAC) on 26 March.

Meeting with EU candidate countries

Ahead of the FAC, on the 22 March, EU Ministers are due to meet their counterparts from EU candidate countries: Macedonia, Iceland, Montenegro, Serbia and Turkey. They are scheduled to discuss Afghanistan, Pakistan and the southern neighbourhood.

On Afghanistan, we want the EU and its partners to send a strong message of the international community’s enduring commitment to Afghanistan’s security and economic viability beyond 2014 in build up to the forthcoming NATO Chicago summit and Tokyo development conference.

On Pakistan, we will want to stress the important role it has to play in bringing stability to Afghanistan as the importance of the EU’s relationship with Pakistan in its own right.

The discussion on the southern neighbourhood is likely to be broad. It comes soon after the UN Security Council debate of 12 March, “The Situation in the Middle East: Challenges and Opportunities”, where the Foreign Secretary sought to refocus efforts on transition and the Arab spring. The discussion may also cover Libya and the issue of mistreatment of detainees and Egypt where there are concerns about the pace of transition to civilian government.

Foreign Affairs Council (FAC)

The High Representative of the European Union for Foreign Affairs and Security Policy, Baroness Ashton of Upholland, will chair the Foreign Affairs Council on 23 March.

Belarus

We expect Ministers to consider further sanctions against Belarus in response to the continued detention of political prisoners. Formal conclusions may also be agreed, and Ministers may discuss the political and human rights situation in Belarus.

Syria

We are seeking a thirteenth-round of EU sanctions against Syria. Ministers may also consider conclusions reinforcing our messages on humanitarian assistance and on support to the UN Secretary-General’s special representative, Kofi Annan. Ministers are also likely to discuss the next Friends of Syria meeting in Istanbul, in the first week of April.

Sahel

Ministers are likely to be to be presented with draft conclusions on the Sahel and proposals for a Common Security and Defence Policy (CSDP) mission to be launched in Niger in 2012. Recent developments in the Sahel—including violence in northern Mali, proliferation of weapons, increasing terrorist activity and a deteriorating humanitarian situation—underline the scope and scale of the challenges faced by countries in the region and the importance of helping to build their institutional capacity.

Iran

Although Iran is not yet a formal agenda item, we expect Ashton to update Ministers on the E3 (UK, France and Germany) +3 (US, China and Russia) response to the latest Iranian letter on nuclear negotiations.

Ministers may also discuss the disturbing human rights situation in Iran following the 8 March report of the UN special rapporteur for human rights in Iran to the Human Rights Council. EU member states are expected to review and agree to new designations of human rights violators in Iran.

Lunch with Turkish Foreign Minister

The Turkish Foreign Minister is scheduled to attend the FAC lunch where we expect Ministers to discuss a range of regional issues, including Syria. Baroness Ashton may also provide an update on recent developments in the middle east peace process, including informal Quartet consultations. This discussion is not expected to lead to formal conclusions—which are instead expected at the subsequent FAC in April.

General Affairs Council (GAG)

The GAC will be chaired by the Danish EU presidency.

There are two main items on the GAC agenda in March. The first is follow-up to the March European Council.

The conclusions of the March European Council meeting can be found at: http://www.european-council. europa.eu/council-meetings/conclusions.aspx

The second substantive item is the multi-annual financial framework, where there will be a stock-take of progress made in technical working groups and a discussion on:

Heading One A: Competitiveness for growth and employment, consisting of research and innovation programmes, education, training, trans-European networks, social policy programmes economic integration and accompanying policies.

Heading Three: Citizenship, freedom, security and justice, which includes programmes such as training for legal professionals; strengthening networks, cross-border co-operation on enforcement; information and raising public awareness.

Heading Four: EU as a global player which helps to deliver on global poverty reduction, building stability and security beyond the borders of the EU, specifically in the European neighbourhood and fragile states, supporting the EU’s prosperity agenda with emerging economies and tackling global climate change.

Heading Five: Administration; which mostly constitutes staff salaries and the upkeep of the EU institutions’ estates.

This discussion will inform the drafting of the ‘negotiating box’ which will help to establish the ceilings for all of the headings in the multi-annual financial framework. The negotiating box is like a set of Council conclusions, and though this document is not binding it seeks to establish a set of parameters for the negotiation. My overriding objective will be to ensure that the negotiating box reflects restraint and leads to a final budget that reflects the fiscal consolidation that is being undertaken at home.

FCO Services (Performance Targets)

Thursday 22nd March 2012 Written Statements

[The Parliamentary Under-Secretary of State for Foreign and Commonwealth Affairs (Mr Henry Bellingham)]

FCO Services operates as a trading fund of the FCO. I have set the following performance targets for 2012-13:

1. An in-year surplus before interest and tax producing a net margin of between 1% and 5%

2. A return on capital employed of at least 3.5% (weighted average)

3. Cost of corporate functions as a % of revenue of no more than 10%

4. A utilisation rate for revenue earning staff of between 75-80%

5. Customer satisfaction rating to be within or above the 2nd quartile in the UK Customer Satisfaction Index, as produced by the Institute of Customer Service

6. Employee engagement in FCO Services using civil service survey of at least 56%

FCO Services will report to Parliament on its success against these targets through its annual report for 2012-13.

UN Convention on the Rights of People with Disabilities

Thursday 22nd March 2012 Written Statements

[The Minister for Immigration (Damian Green)]

I have reviewed the reservation for immigration functions which the UK lodged to the UN convention on the rights of people with disabilities when the UK ratified that convention in 2009, in line with a commitment provided by my predecessor.

After consideration of all relevant factors, and of the views expressed by corporate partners in response to the consultation that was a part of the review, I have decided the reservation should be retained. A summary of the responses to the consultation will be placed in the Libraries of both Houses.

This decision was made because it was considered that the reservation remains necessary to safeguard our ability to apply immigration policies in accordance with existing immigration and equality legislation. The Equality Act permits differential treatment for specified immigration decisions if it is necessary for the public good.

I am aware this will not be welcome to all parties, and so I would like to explain the reasons. The reservation has been kept in order to retain the right to apply immigration rules, to avoid creating an unnecessary new avenue to challenge immigration decisions due to the optional protocol, and to preserve the right to safeguard the public purse from excessive demands which may be placed on it.

Justice Programme

Thursday 22nd March 2012 Written Statements

[The Lord Chancellor and Secretary of State for Justice (Mr Kenneth Clarke)]

The Government on 16 March decided not to opt in to the European Commission’s proposed regulation establishing for the period 2014-20 the justice programme.

The stated objectives of the Commission’s proposal are to promote judicial co-operation in civil and criminal matters, to facilitate access to justice and to prevent and reduce drug supply and demand.

Funding schemes have been operated by the EU for many years, and are an established non-legislative mechanism to promote cross-border cooperation on specific issues. The Government support such instruments in principle, and particularly action which leads to more effective implementation and to effective evaluation of EU law, providing they add value and fill a gap which is not met either through other EU work or by the member states.

Although there are some aspects of the proposal that could be welcomed, the Government are not satisfied on the value for money of the programme as a whole.

The Government recognise that this decision will have an impact on organisations that have received funding under the predecessors of this scheme. They intend to participate in the negotiations so that a post-adoption opt-in could be considered if it transpired that the focus of the activities to be funded truly added value and was worthwhile.

If we do not opt in to a programme, the UK would make its contributions to the EU budget as a whole, including to the fund which is the subject of the opt-in decision, for the year in question in the normal way. Then, in the following year we would receive a refund based on the actual level of expenditure from that fund and our gross national income (GNI) share. There would also be an impact on the abatement, as we would not receive an abatement on funds where we had not opted in.

House of Lords

Thursday 22nd March 2012 Lords Chamber

Thursday, 22 March 2012.

11:00

Prayers—read by the Lord Bishop of Durham.

UN Convention on the Rights of the Child

Thursday 22nd March 2012 Lords Chamber

Question

11:07

Asked by

[Baroness Massey of Darwen]

To ask Her Majesty’s Government when they will implement the commitment made in December 2010 that new legislation and policy will be assessed against the Convention on the Rights of the Child.

[The Parliamentary Under-Secretary of State for Schools (Lord Hill of Oareford)]

My Lords, the Government take their obligations under the UN Convention on the Rights of the Child very seriously and are implementing the commitment made in December 2010. The Government have used the home affairs clearance process to consider the implications of their proposals for children’s rights. The Minister for Children has also written recently to all government departments to reinforce this commitment, and departments are being given further guidance and support on the UNCRC in preparation for the next legislative Session.

[Baroness Massey of Darwen]

I thank the Minister for that response. However, does he agree that, despite that commitment, since 2010 only one Bill out of 11 has been scrutinised and child-proofed? Could he say what the barriers to such scrutiny and child-proofing are, particularly in light of the progress made in Wales and Scotland?

[Lord Hill of Oareford]

I agree with the noble Baroness that we need to make sure that the commitment that my honourable friend made in December 2010 is fulfilled. As we prepare for the next legislative Session, part of the way in which we do that is through some of the processes that I outlined. Specific guidance is being prepared by the Cabinet Office, and will go to all departments, on making sure that they take specific account of the UNCRC requirement when considering legislation. There is also a very snappy guide called the Guide to Making Legislation. Therefore, I hope that we will be able to move in the direction in which the noble Baroness wants us to move.

[Baroness Walmsley]

Does the Minister agree that the convention gives children the right to protection from violence in all places of learning, both secular and religious? What is his department doing to ensure that?

[Lord Hill of Oareford]

The Government are working to ensure that children can be educated in an orderly way in all schools. As for making sure that they are safe from violence in those settings, the noble Baroness will know that we are keen to do that in a number of ways. We are taking new measures on behaviour, and guidance on them is going to schools. All schools will want to make sure that they deliver on that commitment.

[Lord Elystan-Morgan]

My Lords, on the Government’s intentions in relation to adoption and accelerating adoption, will the Minister confirm that, however laudable that objective might be, adoption should always be confined to cases where it is in the best interests of the child, taking into account the child’s anticipated life, and should never be regarded as a soft option for a local authority, which might otherwise be saddled with a care order for very many years?

[Lord Hill of Oareford]

I am sure all noble Lords would agree that we want to make sure that adoption processes are delivered in the best interests of the child. As the noble Lord says, the Government are keen to try to accelerate the process because we know that the average length of time it takes for a child to be placed in adoption is more than two and a half years. If it is the right thing for a child, we are very keen that that process should happen as quickly as possible in a sensible way, and to try to address the great disparity in practice between different local authority areas.

[Baroness McIntosh of Hudnall]

My Lords, would the Minister be so kind as to return to the question asked by the noble Baroness, Lady Massey? She specifically asked what the barriers were to the proper scrutiny of Bills that have already been passed into law. I am not sure that the Minister gave us an answer to that question.

[Lord Hill of Oareford]

Forgive me if I did not deal with that. I do not know that there are barriers in the sense in which the question was put. We need to make sure that post-legislative scrutiny takes these factors into account; and that, while legislation is being drawn up within departments, the requirement to take into account the UNCRC obligations is taken properly into account, and that Ministers and departments are aware of that. Another factor that will help is the new powers which we hope will be given to the Children’s Commissioner, if we can get a legislative slot to do so, which will make the Children’s Commissioner more independent of my department and accountable to Parliament rather than to the department. That will also have a role in shining a spotlight on this.

[Baroness Knight of Collingtree]

My Lords, has my noble friend noted the number of cases being reported of children being taken from their own parents on a very extraordinary basis of reasoning? Bearing in mind that it is always best if children can have a home with their parents, does he accept that this is a serious matter that worries many of us?

[Lord Hill of Oareford]

I am aware of the issue and of my noble friend’s concerns about it. Clearly if one can be certain that the parental home is the right place for a child to be, that is obviously where one would want them to be: in a loving family. I know that my honourable friend Mr Loughton, who is responsible for adoption, takes those concerns seriously.

[Lord Ramsbotham]

My Lords, can the Minister confirm whether the instructions from the Cabinet Office will also include impact assessments in the post-legislative study of the impact of Bills such as the Legal Aid, Sentencing and Punishment of Offenders Bill, which has been going through this House?

[Lord Hill of Oareford]

I will need to check to find out precisely what areas that guidance covers. When I have an answer, I will reply to the noble Lord and tell him what I am able to.

[Baroness Jones of Whitchurch]

My Lords, may I follow up the point made by my noble friend Lady McIntosh with a particular example? The Children’s Commissioner recently concluded that the Welfare Reform Bill contravened the UN convention in a number of ways. For example, she argued that the benefit cap risks children suffering unjustified discrimination. In those circumstances, will the Minister explain how the Government took that message on board and went about modifying the legislation to bring it back into line with the convention, because being a signatory does not seem to make much difference to the way in which the legislation eventually pans out?

[Lord Hill of Oareford]

My Lords, the Government believe that the Welfare Reform Bill is compliant with the UNCRC. We know that those issues were debated at length in this House and concerns were expressed about the effect of the benefit cap. The Government said that transitional arrangements would be put in place to deal with some of the concerns that noble Lords expressed, and they have committed to having a report a year on as to the effect of the benefit cap. However, our core position is that if we can help and encourage more people into work, that will be good for those families and for their children.

[Baroness Walmsley]

Will the Minister allow me to clarify my earlier question? I was referring not to bullying by other children but to violence and ill treatment by members of staff. I particularly had in mind certain madrassahs and Christian fundamentalist Sunday schools where the treatment of children is not up to the standard that we would expect in this country.

Maldives

Thursday 22nd March 2012 Lords Chamber

Question

11:15

Asked by

[Lord Risby]

To ask Her Majesty’s Government what is their assessment of the current political situation in the Maldives.

[The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)]

My Lords, we remain concerned about the situation in the Maldives. We agree with the Commonwealth Ministerial Action Group that early elections are required to establish confidence in the legitimacy of those who govern the country. We welcome the appointment of Sir Don McKinnon as the Commonwealth’s special envoy. We are pressing for all sides to show calm and restraint and to work towards a sustainable political solution.

[Lord Risby]

My Lords, the image of the Maldives as a tropical tourist paradise is indeed correct but it was not a democracy until 2008, when elections finally took place. The individual who was selected as president by the people of the Maldives, Mohamed Nasheed, had suffered personal abuse and imprisonment and had exile in this country—a terrible personal saga. A few weeks ago he resigned, clearly under duress, and the new Government are unwilling to hold elections. If democratic underpinnings and democratic consent are the basis of the Commonwealth, unless these elections take place quickly, should not suspension of the Maldives from the Commonwealth be considered?

[Lord Howell of Guildford]

My noble friend is very close to the situation and has followed it over the years. On the last part of his question, it is for the Commonwealth as a whole, not for an individual member, to decide about membership. That is a decision that the Commonwealth comes to when it judges it appropriate. That has not arisen so far in this case, but the rest of my noble friend’s analysis is exactly right. We must move to encourage democratic elections, and that is what is proposed in the India-brokered plan, which we welcome and support, for there to be early elections. So far a commission of inquiry has been established, a special envoy has been appointed, the Commonwealth Ministerial Action Group was there last month on a fact-finding mission and our own high commissioner was there last week. My noble friend is right that elections are what are needed to establish legitimacy.

[Lord Bilimoria]

My Lords, I was privileged to get to know President Nasheed very well and was impressed by that young, dynamic world leader. As a member of the Commonwealth, are the Government doing enough to ensure that there is a genuine independent international inquiry into what happened, which some say is tantamount to a coup? Do the Government agree with that and will they press for early elections? That has to be the best solution.

[Lord Howell of Guildford]

We do not recognise this as a coup, although obviously there has been a change. Mr Nasheed is known to many people and greatly admired. We still need to establish the full circumstances of what occurred and we hope that the commission of inquiry will do that. Yes, the pressure is on: the Commonwealth, through Don McKinnon and others, is pressing very hard that there should be early elections and that it should be established who the legitimate Government of the Maldives are. We can then proceed calmly to repair the damage and see that the situation is restored so that the Maldives, as my noble friend has said, remains the paradise and attractive tourist area that it has always been and continues to be, because at the moment we do not judge that there is any danger in the tourist areas.

[Lord Anderson of Swansea]

My Lords, is it not encouraging that the Commonwealth, true to its proper role, is playing such a positive and key part—just as, for example, Chief Emeka Anyaoku did as Commonwealth Secretary-General over South Africa? Is it not therefore disappointing that the Perth CHOGM failed to reach agreement on an enhanced role for both the secretary-general and the secretariat as a whole? Is there any positive progress regarding the role of the secretariat and the secretary-general, or might it emerge over the coming year?

[Lord Howell of Guildford]

Yes, but the position is not quite as the noble Lord described it. They did not fail at the Heads of Government meeting to reach agreement; in fact, they agreed on a whole range of reinforcement of the upholding of standards in the Commonwealth by the Commonwealth Ministerial Action Group and the new mandate for the secretary-general. The action in the Maldives is a welcome demonstration of what I hope is a much more active role to come. A whole range of other proposals put forward by the Eminent Persons Group is being discussed. The proposals have not been shelved. They are to be discussed by a ministerial task force and analysed further when Commonwealth Foreign Ministers meet in the autumn to take them forward. My hope is that a great many of them will be implemented. Some remain difficult, I fully agree, but generally, there is a huge surge in commitment throughout the Commonwealth to be a body that truly upholds its standards of democracy, human rights, good governance and the rule of law.

[Lord Avebury]

My Lords, has it now been agreed that the committee of national inquiry which has been formed to investigate the legality of the transfer of power in February should be reinforced by a person nominated by the United Nations? Secondly, will the CMAG at its meeting in April look into a plan B in the event of it being unable to persuade the parties that elections should be held before the end of the year?

[Lord Howell of Guildford]

Both those propositions are really up to Sir Don McKinnon, the special envoy. He has been in the islands, in Male, in the past few days; I think he leaves today. He will be looking at precisely those points. Our hope and determination must be that elections are brought about. If they are not, of course we would have a new and more difficult situation that would require further resolution and effort. For the moment, we concentrate on following the plan which the Indians have so helpfully brokered.

International Criminal Court: Rome Statute

Thursday 22nd March 2012 Lords Chamber

Question

11:22

Asked by

[Baroness Stern]

To ask Her Majesty’s Government what action they intend to take to raise awareness of the work undertaken by the International Criminal Court, and to provide support for it, in this 10th anniversary year of the coming into force of the Rome statute.

[The Minister of State, Foreign and Commonwealth Office (Lord Howell of Guildford)]

My Lords, the International Criminal Court is now a cornerstone of the international criminal justice system. Since 2002, it has opened seven investigations and 15 cases have been brought before the court. It delivered its first verdict last week in the case of the Congolese militia leader, Thomas Lubanga. We are currently discussing options on how to mark the 10th anniversary occasion. I shall write to the noble Baroness with details once they have been finalised.

[Baroness Stern]

I thank the Minister for the support that the Government give to the International Criminal Court, which I am sure is widely welcomed in this House. The Minister will know that 118 countries have ratified, representing all regions of the world, but there are some notable absentees from the list: the United States, China, Russia and India. Does he agree that the ICC would have much more global authority if those countries decided to ratify? Have the Government made representations to those four countries about ratifying? If so, what was the outcome of those representations?

[Lord Howell of Guildford]

I am grateful to the noble Baroness. My brief says 120 countries, not 118, but she may be right. She is quite right to say that some key countries are not signatories. She mentioned the United States, China, India and Russia; there are also Pakistan and Turkey and some others, including Syria. Obviously, the more signatories come on board, the more effective the ICC will be in future. Do we make representations? At all times. It is known in ICC circles and international circles that it would be good to get those countries to sign. The noble Baroness asks about the response. I have to say that, so far, in relation to the United States in particular, there is not a very encouraging response. There are real internal difficulties in those other countries and in the United States which prevent them signing at the moment, but we will keep pressing.

[Lord Marks of Henley-on-Thames]

Does my noble friend agree that future successful referrals to the court are imperilled by the absence of the countries that the noble Baroness mentioned and also those that he mentioned? By way of example, what steps have been taken to secure commissions of inquiry into crimes committed in Myanmar and in North Korea, with a view to UN Security Council referrals to the court in respect of crimes against humanity in those two countries?

[Lord Howell of Guildford]

My noble friend has mentioned two more countries that are not signatories: Burma and North Korea. In reality, the only way that the ICC can raise charges, commence prosecutions or anything similar with regard to non-signatories is through a resolution from the UN Security Council. That would have to be the way forward, as it was, for instance, with Libya, Sudan and Darfur. So if the UN Security Council could agree, there could be a reference to the ICC in relation to Burma and North Korea. However, my noble friend knows as well as I do that the UN Security Council has differing opinions within it; and on many issues, including the sort he has raised, there are problems.

[Lord Morris of Aberavon]

My Lords, one of the driving forces for the passing of the Rome statute and the setting up of the International Criminal Court was Labour’s Foreign Secretary, the late Robin Cook, whom I had the privilege to support as Attorney-General. Regrettably, as we have been reminded this morning, the United States has failed to ratify it. Given the recent emphasis placed on the special relationship during the Prime Minister’s visit, what specific steps have been taken by Her Majesty's Government to persuade our American friends to become members of the court so that there is a venue recognised by most major states for the trying of international wrongdoers?

[Lord Howell of Guildford]

The noble and learned Lord is quite right that Robin Cook was the driving force when we took the legislation through the House—with support from both sides; I was sitting on that side at the time—for setting up this remarkable body. The court is getting going but that takes time, so many of the crimes and horrors of the past are still being tried under previous legislation and therefore in separate courts. However, the ICC is making progress. What can we do about the non-signatories, particularly our allies and friends in the United States? They know perfectly well our views. For reasons that I have mentioned—or hinted at—to do with internal pressures in the United States, they have not signed; and frankly, I think that they are not very likely to. However, in terms of co-operation and help in making the operations of the ICC work, the United States has been extremely constructive and extremely helpful.

[Lord Alton of Liverpool]

My Lords, is the Minister aware that, two weeks ago in Parliament, Dr Mukesh Kapila, a former British and United Nations official, talking about South Kordofan, said that the second genocide of the 21st century is now unfolding, with more than 1 million people now affected? The area is being bombarded and people are being raped and being killed. Given that the International Criminal Court has indicted the head of state in Sudan, Omar al-Bashir, and also the governor of South Kordofan, Ahmed Mohammed Haroun, for war crimes and crimes against humanity, how can we continue to justify full diplomatic relations with mass murderers and fugitives from justice? What is being done to assist the ICC in enforcing arrest warrants in those cases?

[Lord Howell of Guildford]

Diplomatic relations, as the noble Lord knows from his great experience, are always a dilemma. If you break relations off completely that will be the end of contact and the opportunity to influence. Sometimes that is necessary, but we have to make a careful judgment; and that is the one that we have made so far on this matter. As for the International Criminal Court’s jurisdiction, it is quite right that the charges are outstanding against President Bashir. I think that there would have to be a further UN Security Council reference to the ICC for it to go ahead in examining these other alleged horrors and atrocities. I do not for a moment doubt what the noble Lord says about the horrors that have been going on—I think that they have been going on. It may be that the process will get under way. However, that is the only path through which we can get the ICC qualified. It cannot itself take an initiative without the support of the established procedures through the UN.

[Baroness Kinnock of Holyhead]

My Lords, we should of course welcome the conviction this week by the ICC of Thomas Lubanga, who was found guilty of terrible rapes and murders in Congo. Does the Minister agree that the conviction represents real progress for international justice and confirms that the judges of the ICC were scrupulously fair? Does it not also raise questions about the work of the court? Should it learn lessons from what the judges called a flawed investigation and prosecution? The pre-trial detention of the prisoner for seven years was one example of that inefficiency.

[Lord Howell of Guildford]

The noble Baroness is right; there are lessons to be learnt. Certainly when I looked at the briefing I, too, remarked that it was extraordinary that we had set up the court in 2002 and the first conviction had come almost 10 years later. There must be ways of speeding up these things. However, the cases are immensely complex; all sorts of political pressures are brought to bear before people can be indicted at The Hague; and there are great difficulties in getting some of these people located, charged and transferred to The Hague. Certainly there are lessons to be learnt, and improvements can be made to make this an even more effective organisation in future.

Police and Crime Commissioners

Thursday 22nd March 2012 Lords Chamber

Question

11:31

Asked by

[Lord Hunt of Kings Heath]

To ask Her Majesty’s Government what assessment they have made of the report issued by the Electoral Commission on 15 March on the election of police and crime commissioners.

[Baroness Stowell of Beeston]

My Lords, the Government recently completed a consultation with the Electoral Commission and others, which included consideration of how the public can receive information about police and crime commissioner candidates. We are looking at options, and in reaching a decision an important consideration will be ensuring that members of the public can gain access to information by a range of means.

[Lord Hunt of Kings Heath]

My Lords, the elections are in November. Will the noble Baroness say why so far the Home Secretary has turned down requests for the funding of election materials for distribution by candidates, which is directly contrary to the practice both for MPs and for elected mayors? Will the noble Baroness confirm that the Government’s intention is to see a low turnout in the elections?

[Baroness Stowell of Beeston]

My Lords, election addresses are an important and routine part of the election process. The Home Office proposes a cost-effective way of distributing election addresses for PCC candidates. As the noble Lord will know, election addresses are not the only form of communication that takes place during a campaign. The Electoral Commission is responsible for raising awareness of the election. The Government will make sure that the policy of the creation of PCCs is widely known—as it is already. The candidates must take responsibility for communicating their messages through their campaigns.

[Lord Condon]

My Lords, I declare my registered interests, which are police-related. Does the Minister share my concern that it seems increasingly likely that the only candidates who will succeed in November will be party-political nominees or personalities who are already household names, and that the flaws exposed by the Electoral Commission will deter talented, independent candidates from standing—or will ensure that, if they do stand, they will be frozen out by the process?

[Baroness Stowell of Beeston]

No, I do not agree with the noble Lord’s proposition. The system of election is open. Some high-profile candidates have come forward, including at least one Member of your Lordships’ House. There are also independent candidates who are expressing an interest in putting themselves forward for this important role. It is encouraging how many people are embracing what will be a new and very radical way of increasing public accountability and encouraging a relationship between people and the police.

[Baroness Browning]

Does my noble friend take some encouragement from the fact that people from both Houses of Parliament have expressed an interest in standing and that several independent candidates are now emerging? That is to be welcomed. Does she see that as a vindication, because although there was a lot of opposition to police and crime commissioners when the Bill went through, a great many people, including in this House, now believe that it is a job worth doing?

[Baroness Stowell of Beeston]

I agree. Indeed, I am delighted that, after such fierce opposition to elected police and crime commissioners, senior Labour politicians are now embracing this opportunity to increase public accountability. I think that the noble Lord, Lord Prescott, put it as clearly as I can when he said in some of his recent media interviews:

“The public should have much more of a say in determining the force’s priorities and responsibilities”,

and,

“That’s never been done before. That’s quite a radical reform”.

[Lord Prescott]

My Lords, this is a scandalous decision to deny 7 million people, according to the Electoral Commission, the right to vote simply because they do not have access to the website. In my area, Humberside, where I may well have an interest in the future that I perhaps should declare, that will mean 170,000 people, mostly elderly, will be denied their democratic right to information about the candidates. Will the Minister tell me why there appears to be two departmental positions? In the same elections, department for employment says that it will finance the mayor and exercise all democratic right to information, but then the Home Office comes along and says, “No, we will not fundamentally say that”. What is the Government’s position when there are two different departments in the same election denying democratic rights?

[Baroness Stowell of Beeston]

The Government are not denying anybody a democratic right. We are putting forward a proposal that will allow clear and effective communication by candidates via a website, together with a national helpline that will be well advertised and made available to people so that they can ring up and request the information on paper as well as being able to access it electronically. We think this is a cost-effective way. I am sure somebody as experienced as the noble Lord will know that election addresses, while important, are not what will secure success for any candidate. It is for the candidates themselves to ensure that they communicate very effectively to the electorate.

Arrangement of Business

Thursday 22nd March 2012 Lords Chamber

Announcement of Recess Dates

11:37

[Baroness Anelay of St Johns]

My Lords, with the leave of the House, I shall make a short statement about business. On the first of this month, my noble friend the Leader of House announced in the usual Written Statement that the Queen will be pleased to open a new Session of Parliament on Wednesday 9 May. As this is the first mid-Parliament spring opening for many years, I should now like to say a word or two about the end of the Session and Prorogation. My right honourable friend the Leader of the House of Commons has today announced that the other place will be considering the Finance Bill in the week of 16 April. Unlike Easter, the Finance Bill is an immovable feast which follows the Budget. While the other place is in Committee of the Whole House—the Chamber—on the Finance Bill, the two Houses cannot effectively deal with ping-pong. For that reason, I now propose to add a week to the Easter Recess. We will now return from Easter on Monday 23 April instead of on Monday 16 April.

It is my intention that our legislative business on this Session’s Bills should be concluded by the end of Thursday 26 April, or thereabouts. That may include a Bill to be introduced in this House to relax the Sunday trading laws for the period of the Olympics and Paralympics, for this summer only, of course. That will go forward only if fast-track legislation on that is agreed between the usual channels. I confirm that discussion is under way at the moment in the usual channels about whether fast-track legislation may be agreed to. In short, we will return from the Easter Recess on 23 April for the outstanding Bills and, potentially, the Olympics Sunday trading Bill. Parliament will then be prorogued in the usual way a few days before the start of the new Session.

[Lord Bassam of Brighton]

My Lords, I have no desire to strike a discordant note at the news of your Lordships’ House having an extra week’s holiday, but I will take a moment to reflect on how we have arrived at this point.

We had an 18-month legislative programme that was extended over two years. The House was brought back for a September sitting. We had a week added to our work in October, and we had a half-term Recess cancelled last November. We have had a rather chaotic approach to legislation in the past two years. With all the pressure that has been applied to our Front Bench to conform to late sittings and early starts, it seems deeply ironic that we have ended up in a bizarre situation where the Government forgot that they had to deal with their Finance Bill before they could deal with ping-pong.

Will the noble Baroness consider taking back to the Prime Minister a request from this House for a reconsideration of the timings of the parliamentary terms? Spring to spring just does not work. We have purdah, we have Budget debates and of course we have the moveable feast of Easter. There is a disconnect. On Monday we are going to be asked to consider extending the hours in which we deliberate in Grand Committee. We are being asked to do more work yet here we are, in April, being given an extra week off. This does not strike me as a sensible way of doing business.

[Baroness Anelay of St Johns]

My Lords, this House is indeed a very hard-working House. The noble Lord said that he thought the House was going to be asked to do more work. There will be a debate on the Procedure Committee before the House on Monday, if the House agrees to a Motion later today. Noble Lords will be able to make their points at that stage. The opposition Chief Whip is aware that it is the Government’s intention only to make proposals with regard to Grand Committee that will enable the House to have more opportunity to scrutinise legislation without having the late finishes or early starts that were only tabled at the express request of the Opposition.

We had a September sitting last year. It proved unpopular. I listened to the House and therefore there will not be a September sitting this year. Of course, I always listen to the views of the House. Indeed, on Monday the House spoke with such a loud voice on the Health and Social Care Bill that the Government found that we no longer needed to consider that Bill at further stages in the normal procedure of ping-pong. My overwhelming duty is to ensure that this House sits because it has pressing matters of business and to provide the circumstances in which the House can do so. I am the first to applaud the work this House does and I know it will continue to do it to the best.

[Baroness McIntosh of Hudnall]

My Lords, can the noble Baroness clarify one point she made in her initial statement? She said that she expected the business on current legislation to be concluded by the end of business on 26 April. Was she implying that that would be the last sitting day before the opening of the next Session? Perhaps I could also remind the noble Baroness that by extending the Easter vacation she may have done irreparable damage to the audience for the Parliament Choir on 18 April.

[Baroness Anelay of St Johns]

My Lords, I am told just the reverse: that there is great relief that there will not be the prospect of ping-pong on the legal aid Bill on that day, and there is huge welcome around the House that I have managed to ensure that the audience—and particularly the superb performers from this House—will be able to attend and not to disappoint their Chief Whips on that occasion.

The noble Baroness is right to want further elucidation of my comment about 26 April. It is of course never the case that the Government announce the precise date of prorogation until business can be secured. I notice the noble Lord, Lord Bach, looking eagerly forward, because of course he speaks for the Opposition on the legal aid Bill. I am also aware of the number of defeats that the Government have so far faced on that, so there will be time for that Bill. I carefully said, “26 April or thereabouts”. Of course, I will be meeting with the opposition Chief Whip later today to ensure that by the end of today there is a notice of forthcoming business reissued to the House to assist the House.

[Lord Cormack]

My Lords, will my noble friend confirm that if the Motions to which reference has already been made are approved on Monday, that will result in most Bills going into Grand Committee rather than being taken on the Floor of the House? There are real constitutional implications here. I should be grateful for clarification.

[Baroness Anelay of St Johns]

My Lords, I know that my noble friend the Leader of the House will clarify the situation to make clear that my noble friend Lord Cormack is labouring under a misapprehension. That matter will be debated on Monday.

[Lord Grocott]

My Lords, the Chief Whip, by her statement today, has made it clear that in her estimation there is plenty of time in terms of sitting days left before we need to prorogue to complete government business and to have any essential debates. She will know that the Joint Committee on House of Lords Reform will report immediately after the Recess. Can she assure the House that, with all this spare time available, there will definitely be a full day for this House to debate its future as determined or otherwise by the Joint Committee? She says she listens to the House, so “yes” will do.

[Baroness Anelay of St Johns]

My Lords, the assurance that I can give to the noble Lord is that when we have all had an opportunity to see that report there will be discussions about what time should be set aside for debate. Clearly, we have not seen the report yet and I know that the committee is hard at work on it.

[Lord Dubs]

My Lords, given that we understand the point about the Finance Bill even if we are not sympathetic to it, and given that we understand not wishing to have September sittings for this House, apart from that, will the Government accept that it is better that the two Houses should sit at the same time? A few weeks ago, we were out of synch: we sat for one week and the Commons sat on a different week. That makes Joint Committees and all-party groups very difficult, and is probably more costly. Could we synchronise where it is possible?

[Baroness Anelay of St Johns]

My Lords, I cannot agree with the noble Lord, Lord Dubs, which is rather unusual because I agree with him on many things. This House has its own rhythm of business. It does not slavishly follow the business in another place in the way that it has to be scheduled. We do not have matters as yet—I hope not ever—on timetabling and guillotine. Therefore, there has to be flexibility.

I know that cost was raised before and it is really a matter for the Chairman of Committees. I can repeat the assurances that he has given by Written Statement. There is no greater cost if the two Houses sit at different times. There is only a greater cost when this House sits for more days. As one will appreciate, that is simply because of the cost of Peers’ expenses, which for a week run at about £496,000.

[Baroness Taylor of Bolton]

Will the noble Baroness clarify a little what she was saying about a debate on the report from the Joint Committee on House of Lords Reform? Does she agree that it would be undesirable if the Joint Committee were to publish its report when just one House is sitting and not when both Houses are sitting? Does she also agree that if we have a debate on that proposal, it probably should be more than a one-day debate because of the amount of interest in this House?

[Baroness Anelay of St Johns]

My Lords, reports are often published when neither House is sitting. I have given the answer that at the moment we do not have sight of that report. It is keenly awaited and has not yet even reached the last committee stage. It would be premature for me even to consider giving any undertakings as to business management and I do not propose to do so.

[Lord Campbell-Savours]

On the question of the £490,000 to which the noble Baroness referred, where will that now go? Could it go back into our budgets and be spent on Select Committee work? As the noble Baroness knows, the Liaison Committee has been under considerable pressure on the matter of resources.

[Baroness Anelay of St Johns]

I am grateful to the noble Lord, Lord Campbell-Savours, for trying to assist the House in making savings. He is a valued member of the Administration and Works Committee, a job that I know he takes very seriously since I serve on that committee with him. However, I regret to say that there will not be any savings as such because of the hard-working nature of this House. I should explain that in the calendar year 2011, whereas another place sat for 149 days, this House sat for 156 days, so we actually cost another week. I can give an assurance that in the forthcoming Session, 2012-13, we will sit overall for the same number of weeks as the House of Commons. It is just that we have a slightly different pattern of sitting days.

[Lord Howarth of Newport]

My Lords, reverting to the matters raised by my noble friends Lord Grocott and Lady Taylor, if I did not misunderstand the Chief Whip I think she said that there would be discussion between the usual channels after the publication of the report on Lords reform by the Joint Committee to consider when a debate might take place, but she did not say that we would have the opportunity to debate that report before the conclusion of this Session. Is it not very important that this House should be able to express its views on the report of the Joint Committee before the Government finalise the content of the Queen’s Speech?

[Baroness Anelay of St Johns]

My Lords, I have said two things which I am happy to clarify again. The first is that the report has not even been concluded, let alone published, and we do not yet have confirmation of the publication date. Of course, as would anyone, I would prefer to wait until publication before making decisions on the programming of business. I would expect the programming of forthcoming business to be carried out in the normal way between the usual channels.

[Lord Hunt of Kings Heath]

My Lords, perhaps I may come back to the point raised by my noble friend about when the report of the Joint Committee is to be published. The noble Baroness will know that there have been extremely helpful discussions in the usual channels and there has been an understanding that the report would be published when both Houses are sitting. I wonder whether the Chief Whip would take that matter back. Surely it would be respectful of this House if the report were published when it is sitting.

[Baroness Anelay of St Johns]

My Lords, publication of the report is a matter for the Joint Committee and I would not ever seek to interfere with the Select Committees of this House.

[Baroness Farrington of Ribbleton]

My Lords, I thank the government Chief Whip for the information she has given to the House on the financial implications of the changes being proposed this morning. May I seek a total assurance that when we deliberate these issues on Tuesday afternoon, all the financial implications in detail on any possible changes in procedure will be available in advance to Members of the House?

[Baroness Anelay of St Johns]

My Lords, I am sure that those taking part in the debate will read what the noble Baroness has said.

[Lord Kennedy of Southwark]

My Lords, can the noble Baroness tell the House what is to happen to the Oral Questions that have been tabled for the week beginning 16 April? I have tabled one myself.

[Baroness Anelay of St Johns]

That is a very fair question. I understand that the clerks are going to talk urgently to those noble Lords who have been successful in tabling their Questions.

Business of the House

Thursday 22nd March 2012 Lords Chamber

Motion to Agree

11:52

Moved by

[Baroness Anelay of St Johns]

That leave be given to advance the Motions standing in the name of the Chairman of Committees from Tuesday 27 March to Monday 26 March.

Motion agreed.

Economy: Budget Statement

Thursday 22nd March 2012 Lords Chamber

Motion to Take Note

11:53

Moved by

[Lord Sassoon]

That this House takes note of the economy of the United Kingdom in the light of the Budget Statement.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords—

[Lord De Mauley]

My Lords, I wonder if noble Lords would kindly leave the Chamber quickly and quietly so that we can proceed with the debate.

[Lord Sassoon]

My Lords, yesterday’s Budget reinforces this Government’s determination to restore the UK to prosperity. It is because of the decisive action that the Government have taken, starting with the June 2010 Budget, that we have secured and maintained the stability of the UK economy. The private sector has already responded vigorously. Since the election, private sector employment has risen by more than 630,000 and the Office for Budget Responsibility forecasts that between the start of 2011 and the start of 2017, some 1.7 million jobs will be created in the UK’s private sector—an extra 1.7 million jobs creating wealth, leading innovation and driving our recovery across the nation. The dynamism of UK businesses is truly remarkable. As the Government, we have to continue to reduce the burden of the state. If we do that, the economy will flourish.

Yesterday’s Budget builds on a strong foundation, safeguarding our economic stability, creating a fairer, more efficient and simpler tax system, and driving through reforms to unleash the private sector enterprise and ambition that are critical to our recovery. As my right honourable friend the Chancellor said yesterday, Britain will earn its way in the world.

We can succeed in that goal only if we continue to safeguard our economic stability by tackling the record deficit and debt that we inherited from the previous Government. It is because of our determination to tackle that legacy that we have sheltered the UK economy from the turbulence that undermines our nearest neighbours. It is because of our commitment to stick the course that, in the past two years, the cyclically adjusted primary deficit has been halved, falling from 7 per cent of GDP in 2009-10 to 3.4 per cent in 2011-12 and approaching balance in line with our fiscal mandate. Indeed, borrowing over the forecast period will now be £11 billion lower than was predicted in the Autumn Statement last year.

Stability is the vital precondition for growth and will continue to be our key priority, but as the Office for Budget Responsibility said in its report yesterday,

“the situation in the euro area remains a major risk”

to the UK’s economic forecast. The OBR also identifies a risk of a,

“further spike in oil prices.”

Despite these headlines, however, there are positive signs for the UK economy. The OBR continues to forecast positive but subdued growth. Along with the Bank of England, it forecasts that the economy will avoid recession, with this year’s growth forecast broadly unchanged at 0.8 per cent, then 2 per cent for next year, 2.7 per cent in 2014, and 3 per cent in both 2015 and 2016.

Economic stability is the vital foundation for securing that growth and the Budget reaffirms our commitment to safeguarding that stability. That is why this year’s Budget has a neutral impact on the public finances, implementing fiscal consolidation as planned. It keeps us on course to achieve a balanced structural current budget by 2016-17, with debt falling as a percentage of national income by the end of this Parliament in 2015-16.

Restoring fiscal sustainability will remain this Government’s number one priority. Such is the scale of the challenge that we must remain vigilant on spending. In particular, it is vital that we maintain control over welfare spending. That is why my right honourable friend the Chancellor announced yesterday that the additional costs of universal credit will be capped at £2.5 billion. We will also address the rising costs of an ageing population and the burden which that places on future generations. That is why there will be an automatic renewal of the state pension age to ensure that it keeps pace with increases in longevity. However, as the director of the Institute for Fiscal Studies said this morning, when you look at all the Government’s measures, you see that pensioners have not been hit as hard as other taxpayer groups.

We have also taken the difficult decision to remove child benefit from high earners. It is right that we focus support on those who need it the most, but we have to do it in a way that is fair, without setting up a cumbersome tax credit system and avoiding a cliff-edge for millions of families. That is why, instead of withdrawing child benefit all at once when people earn more than the higher-rate threshold, the benefit will be withdrawn only when someone in the household has an income of more than £50,000. And the withdrawal will be gradual, so that only those on an income of more than £60,000 lose all their child benefit. Overall, child benefit will continue to benefit 90 per cent of families with children.

These are tough choices to make, but this Government will not shirk their responsibility to restore fiscal sustainability and economic stability. We have learnt, to all our costs, the consequences of unsustainable spending and ever increasing debt.

As my right honourable friend the Chancellor said in the Budget, if Britain is to earn its way in the world, then we need to build a recovery based on private sector enterprise, investment and export, and if we are to succeed in that ambition then we have to undertake far-reaching reform to ensure that our tax system is simple, predictable, fair and supports work.

First and foremost, we are committed to creating the most competitive tax system in the G20—a tax system that supports work, encourages growth and keeps our most successful businesses here in the UK. While the previous Government increased taxes on small businesses, we have cut the tax rate on small companies to 20 per cent. While the previous Government wanted to increase national insurance on jobs, we have cut it, and while the previous Government sat idly by as our competitiveness drained away, we have already committed to reduce the headline rate of corporation tax to 23 per cent by 2014 because it is necessary to cut one of the most growth-impeding taxes there is. As we announced yesterday, we are going even further, cutting the rate of corporation tax to 22 per cent by 2014. That is a headline rate of corporation tax dramatically lower than our competitors and a spur for prosperity and job creation across the economy.

That is why we are also cutting the 50p rate of income tax. That rate was higher not just than the US, but higher than France, Italy and Germany—the highest in the G20. It was a rate that damaged our competitiveness while raising next to nothing in additional revenue. From April next year, the top rate of tax will be 45 per cent, restoring our competitiveness and galvanising our entrepreneurs and hard-working families. But at the same time, we will continue to ensure that those with the broadest shoulders carry the heaviest burden. That is why the Chancellor has announced a new cap on income tax reliefs that are currently uncapped. From next year, for anyone seeking to claim more than £50,000 of these reliefs in any one year, a cap will be set at 25 per cent of their income.

While the Chancellor ruled out a mansion tax, it is right that those with considerable assets do pay a fair share. That is why we are also introducing a new stamp duty land tax rate of 7 per cent on properties worth more than £2 million, and why we are tackling the abuse whereby people avoid stamp duty on their homes. Taking the cumulative tax, tax credit and benefit changes in the Budget together, it is the top decile of the income distribution that sees the largest reductions in income and the top quintile that makes the greatest contribution to reducing the deficit. That is exactly how it should be.

At the same time, we are taking decisive action to support working people on the lowest incomes. The Government believe that the best way to support working people on low incomes is to take them out of tax altogether. Next month, the personal allowance will rise to £8,105. Taken with the previous increase, that is more than 1 million low-earners taken out of tax. But we are going further and sooner. Yesterday, my right honourable friend the Chancellor announced the largest ever increase in the amount that people can earn tax-free—an increase from next April of £1,100 to £9,205. That means that around 2 million low-income earners will have been taken out of tax altogether and there will be a tax cut of £3.5 billion for working families. These are substantial tax reforms that demonstrate our commitment to tackling the deficit in a fair way.

But tax is only one part of our ambition to restore competitiveness, promote business and encourage investment. As your Lordships are well aware, this Government have already set out ambitious infrastructure plans, setting the stage for some £250 billion of investment in the next decade and beyond. That investment is critical to enabling Britain to compete with emerging giants in the global market. Yesterday, the Chancellor provided further details on those ambitions, for example confirming that Network Rail will extend the Northern Hub and improve the Manchester to Preston and Blackpool and Manchester to Bradford lines. We will live up to our commitment to devolve power and responsibility to local authorities. That is why we concluded a groundbreaking deal with Manchester to support £1.2 billion of investment in infrastructure, will support £150 million of tax increment financing to help local authorities promote development and are providing an extra £270 million to the Growing Places Fund to help local authorities unblock stalled infrastructure projects.

Just as we invest in our physical infrastructure, we have to invest in our digital infrastructure. That is why we are funding ultrafast broadband and wi-fi in 10 of the UK’s largest cities, providing £50 million to increase urban broadband in our smaller cities as well, and helping build on our long and rich history of scientific and technological leadership. It is right that we capitalise on and commercialise that leadership, which is why we went even further in the Budget to commit £100 million of support, with the private sector, for investment in major new university research facilities, £125 million towards making UK advanced manufacturing supply chains more competitive, and £60 million to establishing a UK centre for aerodynamics, creating a springboard for innovative businesses and entrepreneurs to lead our economic recovery. Government, local authorities, universities, businesses and entrepreneurs are working together to catalyse private-sector growth and innovation.

All this is of particular interest to my noble friend Lord Heseltine. I look forward with particular anticipation to his maiden speech today. My noble friend’s extraordinary work in Liverpool has rightly been recognised by that great city. Now, my noble friend has kindly agreed to review how spending departments and other public-sector bodies can better work with the private sector to support economic development.

Of course, while we can provide the right conditions for a private sector recovery, we also have do all we can to remove barriers to those businesses attempting to seize new opportunities. That is why we are simplifying the administration of tax for our smallest firms, consulting on a new cash basis for calculating tax for firms with turnover up to £77,000, making tax returns dramatically simpler for up to 3 million firms. Of course, bureaucracy does not end with tax. If we want those businesses to lead our economic recovery, then we have to match their “can do” attitude. That is why the Budget endorsed a fundamental overhaul of the planning system, replacing 1,000 pages of guidance with just 50, and introducing a presumption in favour of sustainable development and a new planning guarantee so that no decision should take more than 12 months, including appeals.

Just as we encourage businesses to expand at home, we want to encourage British businesses to expand overseas. It is a damning statistic that, over the past decade, our share of world exports shrank as Germany’s grew. In the past three years, UK exports have risen almost 30 per cent, rising above their pre-crisis peak, with exports to India and China nearly doubling from five years ago. But we can and must go further. By 2014-15, UK Trade and Investment will be working with 50,000 small firms a year to expand their sales abroad—double the current number. We have set the ambition to more than double the UK’s annual exports to £1 trillion by 2020.

At the same time, we have to ensure that our businesses have the finance to feed their ambition. In particular, it is critical that we support the small businesses that provide more than 50 per cent of private sector jobs and 30 per cent of private sector investment and which have the potential to become the global leaders of tomorrow. That is why we launched the National Loan Guarantee Scheme earlier this week to give smaller businesses with a turnover of up to £50 million access to cheaper loans. We have provided up to £20 billion of guarantees under the scheme. This Government’s deficit reduction strategy has earned market credibility and low interest rates, and this Government are ensuring that the full benefits of those low interest rates are passed on to businesses across the UK.

In conclusion, this Government are committed to making Britain the best place to start, grow and finance a business. We are providing businesses with the most competitive tax environment; access to low-cost finance, capitalising on record low gilt yields; reduced bureaucracy and simplified tax rules; access to emerging economic giants; world-leading physical and digital infrastructure; and investment in our technology and innovation future. That is why the OBR forecasts that between the start of 2011 and the start of 2017, 1.7 million jobs will be created in the market sector. That is why Nissan has decided to move new production to the north-east, creating more than 2,000 jobs in the region; why Jaguar Land Rover has confirmed that it is creating 1,000 new jobs in its Halewood factory, on top of the 1,000 new jobs in Solihull; why Tesco has announced that it will create 20,000 new jobs in the UK over the next two years; and why GlaxoSmithKline, Britain’s biggest pharmaceutical company, has today confirmed plans to invest more than £500 million and create up to 1,000 new jobs because of the tax incentives in the Budget.

This Government are building a sustainable and prosperous economy, a recovery that builds on our strengths across all regions of the country and all the creativity and productivity of our private sector. Whereas under the previous Government, the country borrowed its way into trouble, under this Government, we will earn our way out of trouble.

12:12

[Lord Eatwell]

My Lords, a year ago the Chancellor of the Exchequer presented a Budget for “enduring growth and jobs” and published a plan for growth that would,

“put fuel in the tank of the British economy”.

That was some fuel. Growth collapsed and unemployment rose by 150,000, and more than 1 million young people are now unemployed. This year, once again, the Chancellor has presented a Budget that he claims,

“helps those looking for work”,

and supports growth.

The auguries are not good. The OBR’s forecast for the growth of business investment this year is down from 7.7 per cent in November to nearly 0.7 per cent now. The forecast for growth of exports and for house-building is down. As for unemployment, another 150,000 are on the dole in 2012. No wonder that the OBR states that it has made no,

“material adjustments to our economy forecast”,

as a result of the Budget 2012 policy measures. In other words, the policy impact of the Budget on the prospects for growth and jobs is nil.

Why is the Government’s growth strategy such a spectacular failure? Why did last year’s plan for growth vanish without trace? Why does the plethora of encouraging-sounding micro-measures on energy, exports and science not make a scintilla of difference to the OBR’s growth forecast? The answer is provided by the Institute of Directors in its response to the Budget:

“The key factor blocking implementation of these”—

investment—

“plans is not cash, but confidence”.

How right it is. The Government simply do not seem to understand that it matters not how cheap finance might be, or even what the corporate tax rate might be; if companies believe that investment will yield no return, they will not invest. What is the point of investing if you have no confidence in the prospect of sales? You are simply going to lose your money.

The source of the Government’s central policy failure is revealed in a chart published in the Budget Statement. Chart 1.5 on page 20 shows what has happened to public sector net borrowing—the deficit—since 2005. Those of your Lordships who have had to suffer the interminable repetition by the noble Lord, Lord Sassoon, of the record deficit—we heard again today that the Government inherited it—may be somewhat surprised by this chart, for it shows that from 2005 to 2008 the deficit was falling from £40 billion a year to around £32 billion a year. Then, following the failure of Lehman Brothers in September 2008, the financial crisis devastated the public finances. A veritable financial tsunami cut revenues and increased spending, driving net borrowing to the peak, which we hear so often from the noble Lord, of £157 billion in May 2010.

In fact, the Government inherited a composite position: a perfectly sound financial stance, overlain by the financial consequences of the crisis. They chose to treat a unique post-war event as if it were due to policy excess. They threw the economy into reverse, devastated business confidence and cut the growth they inherited from 2 per cent to zero. That is the growth rate they inherited, and that is the consequence of their policies.

As an illustration of the Government’s folly, let us suppose that instead of a financial tsunami Britain had been hit by a real tsunami that destroyed 6 per cent of productive capacity, resulting in a sharp fall in tax revenues and an equally sharp rise in government expenditure. Would they then have chosen the path of austerity to restore the public finances? Of course not; they would have set about funding reconstruction. A sinking fund would have been established to spread the cost of restoring the economy, and would in consequence have restored the public finances, over a lengthy period. No one would have recommended bearing all the cost in just a few years, and no one would have imagined that reconstruction could be guided by market forces alone. What is the difference between this hypothetical tsunami and the all too real financial tsunami that the country has suffered? There is none, other than the Government’s failure to distinguish between a unique shock and a normal policy stance.

However, perhaps my characterisation of coalition policy as folly is a little too harsh. After all, the supposed need for austerity has provided the Government with the opportunity to dismantle the welfare state with a zeal that would never have been tolerated in normal times. To assess the impact of this budget on the bottom 50 per cent of incomes, it is necessary to include all those measures that were announced over the past year, in the 2011 Budget and in the Autumn Statement, which will come into effect next month—measures that the Institute for Fiscal Studies estimates will cost families with children an average of £530 per year.

Now set that figure of £530 against next year’s increase in the personal tax allowance announced in the Budget. Taking people out of tax sounds like a laudable goal until you remember that the poorest do not pay tax. Then consider the consequences carefully. As a result of this measure, the poorest 10 per cent of households will gain £10. The richest 10 per cent of households will benefit to the tune of £111. Indeed, of the overall cost of this measure, 70 per cent goes to the top half of the income distribution. Yet that is what Liberal Democrats call “progressive”.

Compare these crumbs thrown to the poor to the £1.6 billion of cuts to the working tax credit about to hit them this April—cuts that are supposed to increase the incentive to work, when there are no jobs. Yesterday, in addition to what has been done already, the Chancellor announced, and the noble Lord confirmed, that the coalition is planning a further £10 billion of cuts to the welfare budget. I never cease to be amazed at the savage pleasure that Tories and Liberal Democrats take in attacking the living standards of the poor. However, my credulity has been stretched to breaking point by their naked pandering to their rich friends.

It is worth examining in some detail the coalition’s case for the pre-announced cut in the 50p tax rate. HMRC’s evaluation of the impact of the tax is based on one year’s data—a sample that no self-respecting economist would ever rely on. Moreover, the self-assessment figures are clearly distorted by income being brought forward in the preceding tax year—a predominantly one-off effect.

Next, let us consider the Chancellor’s claim that as a result of changes to stamp duty and capping unlimited tax reliefs, which will yield about £500 million in a full year,

“we will be getting five times more money each and every year from the wealthiest in our society”.—[Official Report, Commons, 21/3/12; col. 806.]

The origins of this claim can be found in Table A2 of the HMRC review. The table shows that the 50p tax without what is politely called “behavioural impact”—tax avoidance—would yield £3 billion in a full year. However, extraordinarily the 45p tax will result in revenues of £2.9 billion, as the 5p difference will be enough to reverse the behavioural impact. So, while 50p triggers almost complete avoidance, 45p is paid with equanimity. If you believe that, you’ll believe anything.

There is more to come. A Government who quite rightly declare tax avoidance to be “morally repugnant” have created the perfect tax avoidance scheme. Everyone knows that the top rate will fall from 50p to 45p next year, so all those who shifted their income back to avoid the 50p rate last year will shift their income forward to avoid the 50p tax this year. This is a stealth subsidy on a grand scale. To pay for the stealth subsidy, there is the stealth tax on pensioners. Never can a £1 billion a year tax grab have been explained as “simplification” that helps the poor old dears who find the forms too complicated.

Table 2.1 of the Budget Statement provides a helpful guide to the cumulative effect of the measures taken by the Chancellor since assuming office. As of today, 90 per cent of his planned benefit cuts are still to come, resulting in a cumulative 6 per cent taken out of aggregate demand over the next four years. That is the government headwind that business in this country has to battle against.

So what are the overall effects of the Government’s policies? With total output still 4 per cent below the peak achieved in 2008, we will not return to the level of 2008 for another three years. They have transformed a shock as large as that experienced in 1930 into a depression that will last two years longer than the 1930s depression. It is no excuse to argue that everyone else is adopting the same policy. There is only one prize for the quickest lemming.

This country needs policies for growth and jobs. The coalition believes that the rich must be made richer to encourage them to work and the poor must be made poorer to encourage them to work. In the mean time, the economy stagnates, the prospects of growth retreat before our very eyes and the pain of fiscal consolidation intensifies. The Government’s stance, echoed in this mean little Budget, is fundamentally misconceived. Without measures to boost confidence in the growth of demand, supply side reforms, however worthy, will have a negligible impact. A new approach is needed. This Budget illustrates that the coalition has neither the imagination nor the will to meet that challenge.

[Lord De Mauley]

My Lords, perhaps I may respectfully remind noble Lords that this is a time-limited debate and that contributions, other than that of my noble friend the Minister and the noble Lord, Lord Davies of Oldham, are limited to 10 minutes.

[Lord Eatwell]

The noble Lord is mistaken. The Opposition have 12 minutes to reply to the opening statement by the noble Lord, Lord Sassoon.

12:24

[Lord Newby]

My Lords, it is a welcome break with precedent for your Lordships’ House to debate the Budget so close to Budget day. We normally do it significantly later, so I welcome the fact that the usual channels have been able to agree this.

In my 10 minutes I will concentrate my remarks on tax and growth. The specific tax measure that has given most satisfaction to those on these Benches is, needless to say, the decision to raise the tax threshold to £9,205 next year. This is an important way of giving incentives to hard-working people and taking people on modest wages out of income tax altogether. Unlike every other change in the Budget, this one has been almost universally welcomed, although doing so was beyond the noble Lord, Lord Eatwell, who—in a typically bilious speech—was unable to mention a single specific thing that his party thought should now be done.

Moving on to other changes, on pensions, the Government have, as noble Lords will be aware, implemented a record increase in the level of the state pension this month. They have introduced a triple-lock for future rises in the state pension and are moving towards a universal pension of £140. That will mean a significant increase in income for many of those who have not had adequate pension provision in the past, particularly women. In the light of those changes, the change to the pension allowance seems a reasonable measure.

Equally, given our concern about the way that changes in tax and expenditure hit people at the lower end of the income scale, it seems perfectly reasonable that those at the top should cease to get child benefit. There is an argument about what it should be and exactly how it should be done. I accept that, even with the changes made, there is something of a cliff edge and an anomaly over single-income and two-income households. However, for many years, we, the Labour Party and others have argued for individual taxation, rather than household taxation, to benefit women in particular. It seems to us that that principle should remain. Therefore, the way in which the child benefit changes take effect is inevitable.

The 50p tax rate has generated arguably the most heat, if not the most light. I may be wrong about the Labour Party, but I think all parties saw it as a temporary measure from which would move away as the economy and the fiscal position improved. It will be no surprise to noble Lords that we on these Benches would not have made that move now. However, the reasons for doing so are primarily political, not economic. The noble Lord, Lord Eatwell, may not have read it but PWC and many others argue that the optimum higher rate for revenue maximisation is 45p. Therefore, in terms of income generated for the Exchequer, a rate of 45p has much to recommend it. That is the rate in France and Germany, and it clearly does not disincentivise entrepreneurialism there. Incidentally, I hope that the Government, having made this change now, will make no further changes to the higher rate in the lifetime of this Parliament.

I take with a pinch of salt all the estimates of how much the 50p rate would generate in the medium term and the cost of bringing it down to 45p. However, it is also deeply misleading to give precise figures about how much millionaires or billionaires will gain as a result of the reduction from 50p to 45p because we know that they are not paying the 50p rate. If they were paying the 50p rate in full, the income would be significantly greater and all the arguments would be different. Therefore, those who argue that millionaire X will now be paying Y extra, or getting Y a tax rebate, just fly in the face of the evidence about the behaviour of those individuals. The argument for maintaining the 50p rate was, therefore, political because the reduction in the rate looks as though the Government are simply favouring the wealthy. In many people’s eyes, that will remain the case even though some of the other measures in the Budget go quite a way to counter that assertion. I should like to deal with three of them.

First, the treatment of high-value properties—those worth over £2 million—goes some way towards what we have been arguing for in respect of a mansion tax in four respects. All those who keep such properties within a corporate wrapper will pay an annual amount. The 7 per cent stamp duty—15 per cent if you put it into a wrapper going forward—and the capital gains tax that will be payable on the sale of these properties if you are non-resident are also extremely welcome changes and will hit the wealth of the very wealthy. The general anti-avoidance rule, which was resisted doggedly by noble Lords opposite, is long overdue and will act a bit like an electric fence. No one wants to walk into an electric fence or get too close to it, so it will stop many abusive tax schemes occurring. The limit on the previously unlimited tax reliefs is also potentially of great significance. It is one of those things which is extraordinarily arcane but will make a significant difference to the behaviour of very wealthy individuals.

I hesitate to say anything about growth, given that we are going to hear from the noble Lord, Lord Heseltine, who has such experience in this area. I almost had to pinch myself when I noted that the noble Lord is to make his maiden speech today. He knows more about growth than probably the rest of the House put together, so we look forward to hearing from him.

When the noble Lord, Lord Eatwell, says that there is a problem about confidence and then implies that confidence will be restored by a combination of Messrs Balls and Miliband, frankly, I wonder what planet he is living on. As regards what the Government are doing on growth, the area where they can make a significant medium-term difference relates to infrastructure. There are a number of very important areas in the Budget in this regard where further movement is required in my view.

On the Pension Infrastructure Platform, the first £2 billion will be spent by early next year but I think we need to go much further than that and do so more quickly. The Government have said that £20 billion is available. We need to get more than £2 billion out of the door more quickly.

I am very pleased to see the plan to pilot a programme of enterprise loans for young people. I hope very much that the Government will look at the scheme which is already doing the rounds, under which young people who want to start a business are able to take out a loan on the same basis as young people going to university and repay the loan at the point when they have a significant income. That seems to me an extremely interesting idea.

I am very pleased to see the review of employee ownership. I am particularly pleased that that is moving forward quickly, with measures to be announced in the Autumn Statement. I am also pleased to note the other physical infrastructure proposals, not least the improvements that are planned for the transpennine rail route. On one area where, as a loyal Liberal Democrat, I disagree with party policy, I am pleased to see that the Government are pressing ahead with looking for new runway space in the south-east and London because without that in the medium term our growth prospects are jeopardised.

In the short term, this Budget will not transform the prospects for growth, nor would any Budget do so. However, promoting growth must remain a top priority. What is required now is a steely focus on delivering those programmes which the Government have already announced and which will really impact on growth. It is on their ability to deliver these programmes, in tandem with the continuing deficit reduction programme, that the Government’s economic record will ultimately be judged.

12:34

[The Lord Bishop of Chichester]

My Lords, the Chancellor has noble aims—a stable economy, a fairer, more efficient and simpler tax system and the encouragement of growth. From these Benches, I am pleased to endorse all three of those objectives. The debate is therefore not so much about the Government’s declared intentions as whether the Chancellor’s proposals are best calculated to achieve them.

A stable economy and sustainable growth are clearly in everybody’s interests. Rising prices and rising joblessness impact especially on the least well off, so the Chancellor is right to see maintaining confidence in our public finances, tackling inflation and creating the conditions for more job creation as priorities. Within this we therefore welcome the raising of the threshold of the basic rate of tax, given the benefit that will provide for lower-paid workers. Also welcome is the Chancellor’s belated rethink about the cut-off for child benefit payments. The higher figure removes the unfairness in the previous announcement, which would have created the perverse incentive for two parents on relatively low, modest salaries both to work outside the home rather than enabling one to be devoted to the care of very young children. It would also have hit a large number of middle-income families. We are very pleased to see that the Chancellor has had second thoughts about that. Other things to welcome include the anti-tax avoidance measures, the introduction of a new gift aid small donations scheme, more money for Armed Forces accommodation and some of the proposals designed to undergird the Prime Minister’s aspiration that those with the “broadest shoulders should bear the greatest load”.

In the present situation, it also seems sensible that the Budget should, overall, be fiscally neutral. “Overall”, however, is a slippery word. It inevitably implies losers as well as winners. We shall continue from these Benches to highlight concerns for the most vulnerable in our society. We therefore note with some concern the Chancellor’s suggestion that he will be looking for further reductions in the welfare budget in the next spending review period. Of course we accept that reform is necessary, but the question is: who pays the price?

When it comes to the proposal to freeze the tax allowances for the over-65s, I need to declare a double interest. First, I am about to become one of the “poor old dears” to whom the noble Lord, Lord Eatwell, referred, but secondly, and much more importantly, from my experience as the bishop of a diocese which contains a large number of pensioners who do not often have the benefit of occupational pension schemes and are struggling under the burden they are already bearing, I know of the fear which they experienced at hearing some of yesterday’s announcements.

My second concern is about the intention to change the law to relax the restrictions on Sunday trading. I am well aware that any attempt to question what the Government have proposed in this regard will sound either like party-pooping or special pleading. These will be the first Olympic Games in this country for 64 years and it is understandable that the Government want to maximise the commercial opportunities they will provide. Therefore, I do not wish to speak against the principle of a strictly time-limited and tightly drawn element of deregulation while the Games are in progress and in locations close to the main events. To remove all restrictions for an eight-week period, however, sounds suspiciously like a stalking horse for the wider deregulation for which some large retailers have been campaigning for a long time. Therefore, we will watch this space with a degree of scepticism. It is important that the regulations are drawn in such a way as to cover the Olympics and the Paralympics equally, but I remain to be persuaded that a Bill as widely drafted as the Government seem to intend is justified. I seek an assurance that there will be time for proper scrutiny of it in this House.

Thirdly, as part of the extension of VAT, the Chancellor is intending to remove zero rating from agreed alterations to listed buildings, so that, as is already the case with repairs and maintenance, the standard rate is payable. The Treasury document says that this is targeted mainly on listed dwellings but concedes that it will also affect listed places of worship and other buildings used for charitable purposes.

I need to remind your Lordships’ House that 45 per cent of all grade 1 listed buildings in England are places of worship. About 12,300 Church of England churches are listed out of 14,500 listed places of worship altogether, and 356 of those listed buildings are in my diocese. It is welcome that the Treasury has said that DCMS will extend the eligibility rules of the listed places of worship grant scheme so that alterations as well as repairs can qualify, and of course we are grateful for the extension announced in October 2010 of a further four years for a grant scheme.

However, the scheme is cash-limited, and I fail to see any reference to the amount of money available being increased. If so, does not the extension simply mean that the available money, which has already been reduced to £7 million this year, will have to be spread even more thinly? It rather blows any talk about the big society out of the water to make VAT non-refundable on agreed alterations by extending the VAT liability to improvements. Because the change will not affect places which charge for entry, it will increase the pressure on large churches and cathedrals to introduce admission charges. Of course, some already do that, but many, including my cathedral, as a matter of principle do not charge for admission and wish to remain in that position. The way in which the new rule will impact on them is particularly difficult.

Ordinary local people, members of local churches and communities, have been volunteers for years looking after our glorious heritage of listed buildings—and they pay for it as well. About £107 million is spent annually on Church of England churches, on the 2008 figures, and £70 million of that is raised by local people for their local parish churches. They did not choose to build those places; they inherited them. Now they are to have a 20 per cent tax on their efforts to improve them. They will be taxed for volunteering to support the nation’s built heritage in that way. They want to leave their building in an enhanced, improved state for the next generation, which has direct implications for introducing energy-saving and other improvements into medieval churches. Some joined-up thinking needs to be done here, or the impact of VAT on improvements will have a deleterious effect on some of the things that the Government think desirable.

All of that will be a bad blow for the churchwardens and parochial church council members of about 12,500 listed churches, many of whom strive tirelessly to raise money for basic improvements so that better facilities can be installed and churches are available for greater community use. I very much hope that the Government will be prepared to think again before the law is changed.

12:42

[Lord Higgins]

My Lords, this is an excellent and imaginative Budget and I strongly support all of what is in it, but it is singularly unfortunate that the presentation should have been spoilt by what seems to me to be a disregard for the convention that Parliament—that is to say, the House of Commons—should be the first to be told what is in the Budget and its details. It is a long time since Hugh Dalton resigned simply because he spoke to a journalist on his way into the Chamber to announce his Budget, but none the less, I believe that the convention remains extremely important—not least because of the dangers that arise with market-sensitive information in the Budget. In that context, I was worried by the front page of the Financial Times yesterday, which states:

“Mr Osborne will confirm that he is cutting the top rate of income tax from 50p to 45p, but the wealthy will be hit by a punitive array of higher levies on the purchase of expensive homes and a crackdown on avoidance schemes.

The chancellor will introduce a 7 per cent stamp duty rate on sales of property costing more than £2 million—according to officials involved in the Budget”.

That is a very worrying statement indeed. We must not allow this kind of thing to happen. I do not know whether my noble friend would care to comment on that.

The other thing is that clearly, in public relations terms, it was a disaster. Almost everything was released in advance, except for the proposals on pensions, so almost every front page this morning carries scathing remarks about pensions although, as my noble friend just said, pensioners have in fact been hit less than other taxpayers. Those headlines are misleading, but that is a worrying development.

On the specific proposals, I am very pleased to see the rise in the tax threshold which will take people completely out of tax, which is always a great advantage if it is possible. I believe that we must move more in that direction. Equally, I believe that the cut in corporation tax is very important if we are to get growth. It certainly makes us competitive with our European partners.

I am also pleased about what the Chancellor did not do. He did not, as the Labour Party had been suggesting, cut the basic rate of VAT. It is true that it has gone up, since I introduced VAT through the House of Commons at 10 per cent, to 20 per cent, but none the less, it seems to me that the present rate is necessary. I am particularly glad that the Chancellor went out of his way to reaffirm the present structure of VAT, which gives zero rating to those items most important in the household budget, something which no other VAT in Europe does. All of that is very good news.

We are debating the effect of the Budget on the economy. The reality is that the effect of the Budget on the economy will be virtually nil. It is a fiscal-neutral Budget. This is a micro tax-managing Budget—in many admirable ways—not in any way a major macroeconomic management Budget. Therefore, the reality is that the weight of economic management has been shifted from fiscal management, from the Budget, on to monetary policy. There has been a very big change in that.

I originally deplored the fact that what was called the Monetary Policy Committee was not a monetary policy committee at all, it was an interest rate committee. It went on for years and years fiddling around with one particular interest rate, rather than being concerned with the supply of money. One worry has been that monetary policy in the sense of control of supply has, until recently and the advent of quantitative easing, been virtually ignored. We now have quantitative easing. Throughout, I have come out strongly in favour of it. Given the other restraints, given the level of interest rates, it seems to me that that must be the right approach.

I was therefore delighted to see a beautifully written article—I could not possibly have written it anywhere near as well—by Mr Martin Wolf in the Financial Times of 15 March. It said absolutely everything which ought to be argued on quantitative easing. He poses two particular questions: first, is it effective and, secondly, is it dangerous? As the OBR report states, it remains to be seen whether this round of quantitative easing is as effective as the previous one, but it has certainly assisted in the growth of the economy. That is something which we should all welcome. The risks depend on inflation, but we have to take that in the context of the general state of the economy. The OBR report contains fascinating passages on that. In a section on monetary policy, it specifically points out that we must be very careful in that regard, but one has to take into account on the inflation risk the level of excess capacity in the economy. The OBR proposes, and I am sure it is right, that we should gradually increase the level of demand through monetary means until we have mopped up a large part of that excess capacity, particularly in terms of unemployment. It is none the less very important, to the point where it does become an inflation risk, that other action should be taken.

In that context, I have some queries about the way in which quantitative easing is being operated. It is undoubtedly having adverse effects, particularly on pension funds, as lower interest rates affect the pension funds’ ability to fund future pensions. Perhaps at some stage we should ask whether quantitative easing as currently operated is the right way of increasing the money supply. There might be other effective methods that do not have the adverse effects to which I referred. As we are, let us make no bones about it, printing money, dare I say that it might even be a good idea simply to print it and distribute it on an equitable basis across the population? We have, after all, an election coming up fairly soon.

Be that as it may, I think that there is some confusion about the way in which quantitative easing is operating. It is not in the least bit clear whether the Bank’s purchase of gilts from the market is the right way to do it. The tendency is for the banks to use the money to build up their balance sheets rather than to extend it in loans to small or other businesses. None the less, it is not at all clear what the Bank is going to do with these gilt-edged securities. Will it hold them in reserve until such time as the economy starts to overheat and it needs to take the opposite action from that which it is taking at present, or should it simply cancel the gilts in its portfolio? I have searched in vain throughout the mass of documentation to find out what, in pure book-keeping terms, is really happening with this operation in relation to the Debt Management Office and so on. Perhaps we should look at that in order to illuminate what is really going on.

Overall, this is an excellent Budget. I believe that it does as much as possible in the circumstances to help particular individuals and, on the economy, to increase our competitiveness abroad. Europe is still a terrible risk. At least it has dealt with the debt problem for the moment. However, it has totally failed so far to deal with the exchange rate problem in the European Union. That is certainly a big risk, which we face.

12:53

[Lord Wood of Anfield]

My Lords, yesterday we saw a Conservative Chancellor give a Budget at a time of stagnant growth, rising levels of unemployment not seen since the mid-1990s, youth unemployment at more than 1 million, with unemployment among certain groups such as young black males now around 50 per cent, and real living standards dropping—confirmed yesterday—for the second year in a row, which is the first time that that has happened for 36 years.

The Government would have us believe that all that is exogenous—the fault of the fallout of the economic crisis, or the previous Labour Government, or the eurozone, or spiking oil prices. Let us put aside the fact that the Government cite international factors to explain tough times on their watch but conveniently forget about them when it comes to their account of the previous Government. It would be reasonable, I think, for families, for small business and for pensioners to expect a Chancellor who finds himself in power in such an economic moment to use his Budget to respond to the squeeze and insecurities that they face. So what did we get? We got a Budget that was underpinned neither by an argument about how to counter economic stagnation nor by any measures to get growth and jobs going again. Instead we got a Budget that was focused on redistribution rather than growth—a venerable Labour tradition, you might think. However, the redistribution is in favour of the very wealthiest in our society—which, combined with the totality of decisions taken, is at the expense of pensioners and ordinary families.

I want to talk about two themes: growth and tax. I shall start with growth. Little was said about it yesterday, and I can understand why. Last year growth was expected to be 2.5 per cent this year. In his speech this year, the Chancellor sought to get credit from his own Back-Benchers because he now thinks that growth will be 0.8 per cent instead of the 0.7 per cent predicted at the time of the Autumn Statement. However, hidden in the forecasting is cause for continuing concern about the prospects for growth and the sources of growth. Despite some highly optimistic projections in the Budget documents for the growth of total investment in the next four years, the estimate of business investment growth was revised down considerably yesterday. As the National Institute of Economic and Social Research said, although some of the announcements will undoubtedly help the sectors to which they apply and should be welcomed,

“they do not address the major factor depressing business investment this year: a lack of demand”.

What about borrowing, control of which the Government have put at the heart of their economic strategy? As announced yesterday morning, net borrowing increased by £15.2 billion in February. That is a record for a monthly figure. The City had forecast that it would be half that amount. As my noble friend Lord Eatwell explained, after yesterday's Budget, the Government are still on course to borrow more than £150 billion more over the Parliament than they forecast in their spending review.

On tax, I want to look specifically at the decision to cut the 50p rate for the approximately 1 per cent of the population who earn above £150,000 a year. Assuming that there is no avoidance—I take the point—this income tax cut will give 14,000 people in Britain a windfall of, on average, £42,500 each. The justification for a higher rate of tax for those on very high incomes is that it reflects a distributional truth about our economy. Over the past 30 years, as we all know, the incomes of the very rich have taken off relative not simply to those at the very bottom but to the remaining 97 per cent of the population. Since 1979, nearly a quarter of every extra pound earned in the UK has gone into the pockets of the top 1 per cent. It is a higher rate for those whose salaries are not just higher but stratospherically higher than those of the vast majority.

What is the possible justification for prioritising, of all things, the reduction of the 50p tax rate? The advocates say, “You don’t understand. There are two effects of the 50p tax rate: first, it doesn’t bring any money in, because it is eminently avoidable; and secondly, it deters people, who will bring in wealth, from coming to this country”. You cannot have it both ways—either it is eminently avoidable, or it is an apocalyptic deterrent. If it is a deterrent that is avoidable, perhaps I may suggest that Her Majesty’s Revenue and Customs should focus resources on telling everyone how easy it is to avoid so as to bring the rich of other countries to our shores. Or perhaps we should adopt a more conventional measure—clamp down on avoidance, which makes our tax revenues less reliable, less predictable and produces greater unfairness.

What was striking yesterday was the discriminating approach that the Chancellor displayed towards tax avoidance. On stamp duty and general avoidance, George Osborne said that he will come down like a tonne of bricks on morally repugnant behaviour and sharp practices. At the same time, he was recommending the scrapping of the 50p tax rate for those earning more than £150,000 a year, on the grounds of a resignation to the unavoidability of avoidance of income tax. “But”, the defenders of the 50p tax rate continue, “you still don’t understand. The 50p rate stops people working”. Does the 50p tax rate stop people working? I have not seen any evidence of it. If it does, and if the productivity of the wealthiest in our society is dramatically on the wane, the fact that their incomes continue to rise way ahead of median and mean wages suggests that there is something deeply dysfunctional about the labour market at the very top. Perhaps that is something that a government inquiry might look at.

Even if there is evidence—although I cannot find any—that the abolition of the 50p rate will lead to people coming to Britain, there are two further questions that need to be answered. First, will the very wealthy who want to come to Britain pay income tax while they are here? Secondly, will they be wealth creators, as opposed to income gainers? On the first question, I would like to see evidence. In 2008, only 16 per cent of those who earned more than £10 million paid income tax. A policy based on worry about tax revenues that is aimed at bringing people who pay precious little income tax does not have the feel of evidence-based policy-making.

To the second question of whether they create wealth, we do not have the answer. We hear that it is important to signal that we are open for business—but is there any evidence that those who might be attracted to move here would use their wealth to create jobs and income for others? The Government had better hope so, because there was precious little in the rest of the Budget for those out of work.

The cut in the 50p rate was an ideological choice that has had its advocates scrambling around for a rationale. As the IFS said, the argument that 50p brings in no extra income is based on data for one year. This point was made by my noble friend Lord Eatwell. In the year on which the evidence was based there was a transition from 45p to 50p. The irony is that by scrapping 50p from April 2013 the Chancellor has thrown down the gauntlet to the accounting profession to meet another challenge. It has months to work out how to defer the income of its very wealthy clients for another year so that they may benefit from the 45p rate in 13 months’ time. The race is on. Perhaps the Minister will tell us whether the Treasury has factored in behavioural responses of the wealthy to this transition in its revenue calculations for the coming year.

The collection of courageous assumptions lying behind the Treasury's optimism about tax revenues made me want to applaud the Chancellor for his mathematical pyrotechnics. The Budget assumes that the ostensible cost to the Treasury of reducing the income tax rate will be only £100 million, because all those who avoided the tax at 50p will come flooding back into the tax system at 45p. This is an assumption about tax elasticity of heroic proportions. The Government are resigned to income tax avoidance but think that a 5p reduction will be sufficient to eliminate it completely. I wish them luck with that.

On the income that we will recoup from getting tough on stamp duty, the Government’s optimism continues. In contrast to their approach to income tax, they put their faith in a crackdown on corporate envelopes holding residential property. We should welcome the new stamp duty rates. However, my concern is not with them but with the idea that there is equivalence between a tax on the income or even the property of the very wealthy, and a tax on the very occasional and up until now eminently obscurable transactions on property worth more than £2 million. About 1 per cent of those earning more than £150,000 are likely to move to a house worth £2 million or more in the next year, so 99 per cent this group will enjoy a straightforward and sizeable tax cut.

I will end by focusing on two quick points. First, yet another Budget has passed without signs of a growth strategy. As a leading BBC economic journalist said on Tuesday, cutting taxes for a hedge fund manager and cutting taxes for his cleaner do not a growth strategy make. Even setting aside poor performance on growth and the escalating problems of unemployment—data were published today on consumer confidence and retail sales that should give us serious cause for concern—we will struggle to find in the Budget documents a growth strategy to meet the scale and urgency of these concerns.

Secondly, the Budget reveals something else. The Government talk constantly about tough choices. They are right that for all sorts of reasons they have to make them. However, yesterday saw the Chancellor make a decision that was big but not tough. It was a choice in straitened times to favour those who have the most. It was not the end of the Government's macroeconomic strategy—that remains in place, and we are the poorer for it—but it was the moment when their credibility as a Government who asked every section of society to bear its fair share of the pain was fatally undermined.

13:03

[Baroness Randerson]

My Lords, this was a highly intelligent Budget. At a time of economic austerity, it was highly intelligent to produce a Budget that has been received so positively. I have felt rather sorry for the Labour Party over the past 24 hours. It has been living in a parallel universe, responding to a Budget that it thought the Chancellor would make but which he did not. It has cast around for any stone to throw when, across the piece, there has been a very warm welcome for a very large part of the Budget.

I will concentrate my remarks on two key issues. The first is fairness and the second is economic growth. The concept of fairness is very complex. It is not just a question of tax rates. In our modern society, it has become an issue of the tax that is actually paid. The UK has a very complex tax system, which became even more complex under the Labour Government. With complexity you get a lack of transparency, inbuilt unfairness when one tax rate does not fit with another, and loopholes. Therefore, I welcome the variety of measures in the Budget to close loopholes, in order to establish the principle that the rich should not pay a lower rate of tax than the poor.

The vast majority of people regard aggressive tax avoidance as unfair if not downright immoral. I welcome the move from taxing income to taxing wealth, because it is much less likely to deter investment and entrepreneurship in this country. A property tax is ideal. Put simply, you can move your money to Belize but not your house. However, people have been moving their company to Belize—and their company, in essence, is their house. The Chancellor’s announcements on higher rates of stamp duty are therefore particularly welcome.

The exploitation of the loophole that allowed the richest people to buy properties in company names has meant that there are now thousands of companies, the majority offshore, which consist entirely of one house. I do not accept the noble Lord’s assertion that this is an unusual arrangement. Unfortunately, it has become all too common. I will give the example of One Hyde Park—not a building that I have ever visited—which is known as the world’s most expensive apartment block. It has 62 apartments. Only nine pay council tax—and five of those get a single-person discount as they are second homes. This is not a fair result from the financial arrangements of the people who own the apartments. It is the kind of tax avoidance that makes ordinary people on PAYE very angry; and it is being stopped as a result of the Budget.

The consultation on an annual charge on residences valued at more than £2 million that were purchased by companies, to begin in April next year, is also very good news—as is the extension of the capital gains tax regime, to capture gains on the sale of UK residential property, or the sale of shares in property, by non-UK companies. Finally on this issue, I welcome the proposals on the general anti-avoidance rule, following the Aaronson report, which proposed a moderate rule, targeted at abusive tax avoidance arrangements. This will enable us to tackle tax avoidance without damaging competitiveness.

I turn now to the second issue: economic growth. The Budget does not just help ordinary families, but ordinary businesses. The cut in corporation tax—24 per cent this year, going down to 22 per cent in 2014—means that we will have the lowest rate of corporation tax in the G7. The increase in the bank levy, which will raise £2.5 billion, will ensure that the banks continue to pay their share. That harks back to the public view of fairness. Measures on credit easing will help keep money flowing to businesses.

Although it is obvious that the biggest ever increase in the personal tax allowance will inevitably and rightly be seen as assistance for ordinary families, it is important to look at it also from the perspective of business, because £220 a year left in the pockets of 21 million working people will be a major stimulus to the economy. By definition, these are largely people who spend their money—and spend most of it in the UK.

We judge Budgets by how they deal with people, but this Budget should also be judged by how it dealt with the nations and regions of Britain. This coalition Government have consistently sought to rebalance the economy, which was left by Labour to rely much too heavily on the overheated financial sector concentrated in the City, with disastrous results when the bubble burst. This coalition Government have tailored their policies to assist those parts of the UK that got left behind in the scramble of the financial sector under Labour. My country of Wales gained significant benefits from this Budget, and it needs them because under the Labour Government the GDP of west Wales and the valleys declined from 79 per cent of EU average to 68 per cent of EU average, despite receiving £6 billion of EU aid. Most parts of Greece have been doing rather better than most parts of Wales, so Wales needs the economic stimulus that was in this Budget. As a low-pay economy, it will gain particularly from the increase in personal allowances—an additional 42,000 will pay no income tax at all as a result of this Budget, and there are specific measures, such as the £12 million confirmed for ultrafast broadband in Cardiff and the agreement to make 100 per cent capital allowances available for plant and machinery for designated areas in enterprise zones, most of them in Deeside, which will create 5,000 jobs. Wales’s economy has suffered, at least in part, as a result of infrastructure problems, so commitments on the consideration of the creation of an electrified valleys metro are also very welcome. I believe that the key thing in this respect is that the Budget has laid firm foundations.

Finally, I wish to refer very briefly to the creative industries, which have long been a particular interest of mine. I greatly welcome the measures in this Budget to assist them. The introduction of corporation tax reliefs for the video games, animation and high-end television industries is very welcome. It will incentivise investment, both from within the UK and from abroad. A number of competitor countries already have such incentives: France, Canada, some states of the United States, Ireland and Hungary. Those industries in Britain employ 15,000-plus people. They are mainly based in SMEs, and they have huge potential to offer our economy. These incentives go along with the Government’s policy of backing British success stories—car manufacturing and marine technology, to name but two—and they are part of laying the foundations for a successful, broadly based economy in future.

13:13

[Lord Heseltine]

My Lords, yesterday in another place, the Chancellor of the Exchequer announced that the Secretary of State for Business, Innovation and Skills had invited me to look at aspects of the Government’s industrial strategy and, particularly, at the interrelationships of that strategy with other parts of the economy. I thought it might be for the convenience of the House if I was to expand on this remit at rather greater length than would have been appropriate for the Budget speech itself. I am extremely grateful to have the chance to share my thoughts directly with your Lordships at the earliest opportunity.

The coverage of the Budget inevitably focuses on the economic forecasts and tax changes that represent the Government’s strategy. The tax, regulatory and spending decisions of the Budget are obviously of prime importance in the execution of that strategy, and it is well known that it is a strategy to restore the economy to growth and to enhance competitiveness. Competitiveness is measured against other economies’ performance. I have been asked to undertake a benchmarking exercise to compare our approach with that of our competitor countries and to look at the way in which those countries pursue the implementation of their industrial strategies.

I am the first to recognise that it is no easy task to define the concept of an industrial strategy. They may differ widely from country to country dependent on those country’s histories, their culture and the precise involvement of government. What cannot be denied is that one way or another all Governments play a crucial role in determining the effectiveness of their economic performance. In this exercise, we cannot, of course, look at every economy with which we compete, but I shall try to examine those that are our most formidable competitors.

There is one point I should make—although as a former Minister I was, I think, responsible for more individual acts of privatisation than any other Minister in British history—which is that wasteful subsidy or unnecessary lame duckery is not part of any thinking of mine. Competitiveness is not about headlines, and it is particularly not about headlines that imply that it is all somebody else’s fault. It is often about grinding detail over long periods of time. There are no quick wins and no easy options because all other countries are watching us, just as we watch them. Best practice is rapidly copied, so we have to look ahead. We have to determine to get ahead, and we have to have policies to keep us ahead.

I thought it might be helpful today if I simply asked some rather obvious questions that will preoccupy me in the months ahead. I do not need to be told, and nor do your Lordships, that we have some of the best companies in the world. They are out there winning every day, but is our average performance good enough and how can the underperforming tail be persuaded or encouraged to catch up? Do we set our industrial standards high enough in the modern world?

Of course, as many of your Lordships have reflected, we need to improve our infrastructure, invest in research and development and think long term, but our competitors are doing this all the time. All of us can list the new growth markets. We can put forward the exciting technologies of tomorrow. Of course, everybody is doing just that, so we have to do it just in order to keep up with where we are now, but if we want to get ahead, we have to do it better, and no matter how successful our companies may be in creating jobs in the industries of tomorrow, only a tiny proportion of our young generation now at school will actually find jobs in those exciting new industries.

There is a very proper focus on the quality of our education, and I have to say that I am one of those who is very critical of the past 100 years of government responsibility for education. Our industry depends on world-class results if it is to create and sustain first-class jobs. So can our industrialists expect to see the necessary improvements in our attainments quickly enough to meet the challenges that the markets thrust on them? As important is the need to attain standards in literary and numeracy simply to sustain jobs in the traditional industries, such as housing, retail, construction and logistics, where many more people will continue work than in the newer industries and the ones with fashionable titles. Is our training and skills agenda in line with our industrial expectation and is higher education playing a big enough role in converting the inventive genius of leading academics into jobs here in the UK?

At the heart of the growth strategy is increased priority for the private sector—quite rightly so. It is therefore important to recognise the potential for the LEPs—local enterprise partnerships—in their challenge to rebalance local decision-making towards the creation of wealth in the same way as that which underlay the rise of our cities 200 years or so ago. Over 200 years, the balance in local government has swung decisively towards social provision. There were very good political reasons for this, but it is has happened at the expense of local initiative, as more and more decisions are effectively taken by the functional departmental monopolies of Whitehall. We need to be confident that the LEPs are doing the job that the Government intended.

Every industry in this country is sponsored by a government department. What does that mean in practice? Do the government departments have the people with the skills and experience to sponsor industries effectively? Can our chambers of commerce and trade associations give their members the support that is commonplace in competing economies? Are those who claim to speak for industry and commerce prepared to tell the slowest ships in their industrial convoys that their failure may actually be their fault and not that of government or the economy?

There is much concern about what is called short-termism in our approach to industrial investment. Who owns British industry and do such owners see themselves as having any responsibility for anything other than the short-term valuations of the shares that they own? There has been a continuing debate about the destructive effect of regulation but it appears that those who express the greatest concern are reluctant to convert frequent generalised criticisms into detailed examples of the changes that they would support.

Everyone knows that we face huge challenges in this country in enhancing our competitiveness, but in practice, in everyday life, does the scale of the threat transmit itself into any sense of urgency to get decisions taken or results achieved? Your Lordships only have to think of our planning system to realise that that is a rhetorical question.

Many other issues will be raised as we seek to fulfil our remit, which, according to the letter of invitation, is to:

“undertake an independent review of how spending departments and other relevant public sector bodies interact with the private sector, and assess their capacity to deliver pro-growth policies”.

I have been asked to report by early autumn and such a timescale must act as a valuable discipline on the scale of our work. It will not be possible to visit every factory, meet every representative group or travel extensively. However, I am extremely grateful for the support not only of the Secretary of State and the Chancellor but of the Permanent Secretaries of the Whitehall departments for their co-operation in making available to me a formidable team of officials. We shall do our best to involve the private and relevant sectors extensively in the work that we undertake.

Finally, I should stress that this is not a government inquiry. I have been asked to give my views. It can therefore be only a very partial contribution to a debate about the quality of our national performance, in which we are all involved.

13:24

[Lord Bilimoria]

My Lords, when I found out yesterday that the noble Lord, Lord Heseltine, was going to be making his maiden speech today, luckily I was sitting down. I remember very clearly bumping into the noble Lord soon after I joined your Lordships’ House. I asked him whether it was true that he had not made his maiden speech, having already been in the House at that time for five years. He said it was absolutely true, and I asked why. He replied, in a very humble manner, “Who wants to hear from me?”

He was in the other place for 35 years; a Cabinet Minister for over 20 years; what a shame it is that we, as a House, were losing out on all that wonderful experience. Yesterday was the Chancellor’s day, as all Budget days are, but it was also the birthday of the noble Lord, Lord Heseltine. Yesterday was also a special day for me as a Zoroastrian Parsi, as it was our new year, the first day of spring. So it is an excellent new year’s resolution for the noble Lord finally to make his maiden speech, more than a decade after joining your Lordships’ House.

Look at what we have missed out on. I am sure that some of your Lordships would have wished for a decade’s silence from certain of our fellow Peers, but certainly not from the noble Lord, Lord Heseltine. We know the wonderful apocryphal story about Michael Heseltine, as a young undergraduate, jotting down his future on the back of an envelope: “Millionaire at 25, Cabinet Minister at 35, party leader at 45, Prime Minister at 55”. Of course, the noble Lord denies this, but the reality is that he has achieved so much, and he could have—and many would say should have—become Prime Minister.

The noble Lord might not have reached this final milestone, but there was never a dull moment in his career. He was in the unique position of being a truly successful entrepreneur in his own right, while also serving as a very successful politician. He was an impactful president of the Board of Trade in the early 1990s. There is no better person to have been selected by the Government to chair a review into the potential for links between the state and private sectors. How the Chancellor would have benefited from having that review before yesterday’s Budget. Thanks to this, we in this House have now had the benefit of hearing the fantastic contribution of the noble Lord, Lord Heseltine, today, and we hope that his famine of speaking will turn into a veritable feast for us in the years ahead.

[Noble Lords]

Hear, hear.

[Lord Bilimoria]

My Lords, our economy has been in recession, and thereafter bumping along the bottom, for coming up to four years now. There is no question that the Government’s tough stance and posturing with regard to austerity have sent out the message internationally that has enabled our borrowing rates to remain extremely low. It has also sent out a message to the country that we need to tighten our belts and make sacrifices. To that extent, the Chancellor has had to try his best to balance his books. Of course, a balanced budget is a very prudent thing indeed. However, we have to ask ourselves, what is the point of a zero-sum game? As Martin Wolf said in the Financial Times today, this is:

“A Budget without economic significance”.

On the one hand, as an entrepreneur I have been thrilled with so much of what the Chancellor announced yesterday. The reduction in corporation tax rates, which will give us one of the lowest rates in the G20, is an excellent decision. The removal of the 50p rate of tax, albeit not back to 40p where it should have gone, is at least a move in the right direction and makes a huge impression in attracting investment and the brightest talent to this country from abroad. Psychologically, the 50p rate was over the tipping point, and I am happy to see it removed.

On the other hand, this Budget has hurt a great many people. Our fuel taxes are the highest in Europe by far. Consumers have been squeezed with high inflation, and in many cases falling earnings, and higher taxes such as VAT. In my own industry, as chairman of the Cobra Beer Partnership, a joint venture with Molson Coors, I have seen the damage excessive taxes have done. While we are fortunate that our brand is growing, the beer industry in Britain has shrunk by nearly 30 per cent in 30 years.

As Mark Hunter, chief executive of Molson Coors UK, said in today’s Times:

“There are no winners from the beer duty escalator. Ordinary British drinkers are paying more tax to drink less beer, reducing overall government tax revenues and forcing British brewing into a deeper, duty-fuelled decline”.

Mark Hunter also happens to be the chairman of the British Beer & Pub Association. He said further:

“Beer drinkers in Britain already pay a whopping 40 per cent of all European beer tax and yet drink only 13 per cent of the beer—and we are disappointed that the Government has chosen not to end this crippling policy”.

Sadly, we are still seeing 15 pubs close each week—pubs that are at the hearts of our communities. When you hit beer, you do not just hit pubs and the brewing and manufacturing industries, you also hit our farmers. Our beer is brewed in Burton upon Trent and 100 per cent of our barley is British, and we are proud of it.

What we have lost in this country over the past decades is a balanced economy. As president of the UK India Business Council, the origins of which are the Indo British Partnership, which was launched by the noble Lord, Lord Heseltine, when he was President of the Board of Trade in 1993, I know that India aims to have manufacturing making up 25 per cent of its GDP. In our case, manufacturing is heading towards 10 per cent of GDP. Increasing manufacturing increases jobs, and manufacturing jobs lead to services jobs, both directly and indirectly, and to jobs in the supply chain. My big concern about this Budget is that I do not believe it is doing enough to generate growth and jobs. In fact, the growth forecast is 0.7 per cent to 0.8 per cent, and then to more than double to 2 per cent next year. When can we believe any of these forecasts? Will the Minister give us some reassurance on that?

The Minister talked about the £20 billion of credit easing for SMEs, which is fantastic news. But I was disappointed that, sadly, the media hardly covered this. Will the Government talk more about the scheme? Will it be like the Government’s small firms loans guarantee scheme? Will this money flow to the banks? Already I have heard that HSBC will not sign up to it. How will the Government ensure that banks lend this money to the entrepreneurs who need it? The Government urgently need to flesh out their plans and communicate this to business and to the country because it has the potential to have an enormous impact on SMEs, which are, after all, the engine of the growth of this country.

As the noble Lord, Lord Heseltine, has said, we need to invest far more in research and education if we are to make this country competitive and improve our productivity. This is, unfortunately, where the United States, time and again, is way ahead of us. While we are bumping along the bottom, the United States economy has been growing. One of the main reasons for that is that it invests far more in higher education and in research and development than we do. I do not think that this Budget has done enough to close this gap. Will the Minister respond to that please?

As regards our Armed Forces, we have been in Afghanistan longer than World War I and World War II put together. We have lost precious lives and have so many badly wounded soldiers, which has caused huge loss, pain and grief to friends and families, and to our whole nation. But the monetary cost has also been huge. I am happy to hear that the Government will be reinvesting the money saved from an early pull-out from Afghanistan by putting some of it into the accommodation which is desperately needed for our troops and their families. However, I am greatly concerned that the Government have chosen to freeze the raise of our soldiers’ salaries to only 1 per cent. The soldier’s basic salary is £7,000 lower than the national average. Is this the way for us to uphold the military covenant? Is this the way we show our gratitude to our brave Armed Forces?

The Government rushed through the SDSR, destroying Nimrod, getting rid of Harriers and getting rid of our carriers. We could have used those carriers, those Harriers and those Nimrods in Libya. Now we learn that the change to catapult-based aircraft carriers will have to be scrapped, which will result in billions of pounds wasted and in cutting our capability. We did not predict the Arab spring. We need to be prepared for what will happen in the future.

As has been said so often, this Budget has also hit our pensioners. They are currently being squeezed by low interest rates, which are necessary but are affecting their savings. They have also been hit by high inflation. As I have said, I support the reduction of the 50p rate of tax but the so-called “granny tax” that the Chancellor announced makes this look like a Budget that is helping the rich at the expense of poor pensioners. Is that the message that the Government want to send out? As we have heard, it has been a PR disaster.

I have heard that the Budget Committee of the House of Lords, of which I was a member last year, will no longer be convened this year. Hence, we will miss out on the wonderful expertise that we have in this House. Will the Minister confirm that that will be the case?

In conclusion, I am grateful to the Government for the many business-friendly measures in this Budget. It is reassuring to see further cuts in areas where cuts are required, such as in welfare, which is the largest area of spend—£10 billion. The infrastructure spend, broadband and looking at a third runway at Heathrow are all essential. But I am afraid that this Budget has not addressed enough the fundamentals of economic growth, job creation, research and education. A balanced Budget is not enough—it cannot be a zero-sum game. A good Budget balances the books, gives a more balanced economy for industry and innovation, and encourages a growing and competitive economy.

13:34

[Lord Sugar]

My Lords, I join the noble Lord, Lord Bilimoria, in welcoming the noble Lord, Lord Heseltine. I feel honoured to participate in a debate in which the noble Lord has made his maiden speech. I am sure that I will be joined by other noble Lords in saying that we look forward to hearing him speak a little more in the future. His maiden speech was interesting in the sense that there was no need for the normal preamble of him telling us who he is.

It is common knowledge that Governments across the world tend to spend far more money than they collect by way of taxes and hence create great piles of debt. Every so often there is a wake-up call where certain initiatives are put in place to try to reduce that debt. We are no different in this country. I understand, albeit that it is no consolation, that from 2014 we will receive itemised tax bills, which among other things will show how much each of us is paying by way of debt interest. Indeed, one may ask whether the current spending budgets of the Government are forecast to exceed income again. One thing for sure is that the debt is going to rise as we seem to be borrowing far more than was forecast since the last spending review.

The fact is that the economy of the country is supported by business. If one were to run a company in that manner—continually spending more than one’s income—we all know that that company would go bankrupt. If one of my companies did that and I started printing money, as mentioned by the noble Lord, Lord Higgins, to ease my situation, no doubt I would be put in prison for counterfeiting. We will not get this deficit down unless we have a plan for jobs and growth to get the economy moving. To do that, we need to encourage small and medium-sized businesses to invest, to be daring and to kick-start the economy and employ lots of people.

It amazes me that the Government’s Business Secretary announces a lot of hollow initiatives under the guise of helping small businesses, yet he has never been in business. He has never been on the coal face, never run a business and has never understood the needs of a small business. I am sure that if the noble Lord, Lord Sassoon, had a pain in his groin, he would not want me to remove his appendix since I am not a surgeon. That may be a stupid analogy, but I am sure that I am making my point.

Yesterday’s Budget contained the usual lip service of how the Government are going to help small business. They have continually made these statements but so far we see no evidence of it. As my noble friend Lord Eatwell mentioned, it is the same as the promise made to put fuel into the tank of the British economy. Instead, the economy has stalled and unemployment has risen, as has the aforementioned debt.

On the subject of lip service, I am concerned about politicians deflecting the real issues and placing blame elsewhere—for example, jumping on the bandwagon of bank bashing and singing the same old songs about the lack of money being lent to small to medium-sized enterprises, or bonuses being paid to bank executives. All this does nothing other than depress the business environment. It is not encouraging in any way, shape or form. It is sheer political capital. I urge all politicians to change the record and to start to instil confidence in the marketplace instead of depressing it.

One never hears outrage expressed at the bonuses payable to, say, Sir Terry Leahy, Sir Stuart Rose or Sir John Rose in their capacities as chief executives of Tesco, Marks & Spencer and Rolls-Royce. I say “quite rightly so” because that is business: you employ experienced top executives and set them targets to get things done—in other words, incentivise people. Yet when banks, some of which have a large public shareholdings, employ top executives whose sole purpose is to take over, clean up the mess, and improve the financial position and in turn the public’s investment, those executives are chastised for accepting bonuses. The reality is this: carry on doing that and those people will simply go and get a job in a different type of company where the culture of paying bonuses is not frowned upon. Replace them, pay peanuts, and you will get monkeys. There is no question about that. You will delay recovery of the billions that have been invested from the public purse.

Then there is the alleged issue of banks not lending to small and medium-sized enterprises. I had first-hand experience of this issue just under a couple of years ago when I was a government adviser. I investigated it in depth and discovered what I believe is still the position today, and that is that many companies out there are depressed by the messages of doom and gloom about the current economic situation. They are not investing, they do not wish to invest, and in fact they are tightening their belts. They do not want any money and are not asking for it because they are nervous due to the lack of confidence in the marketplace, and much of that is created by politicians jockeying for position or applause on BBC “Question Time” and a very mischievous media.

Then there are some companies that do want to borrow money. However, I regret to inform noble Lords that none of your Lordships would lend some of these businesses one brass farthing because they are simply not worthy and a bad risk. Yet it is those people who shout the loudest and make a lot of noise, which again attracts the newspaper headlines that are regretfully being used by certain politicians to popularise themselves. The noble Lord, Lord Bilimoria, mentioned the £20 billion credit-easing scheme. I am sorry to be so sceptical about this thing, which is designed to underwrite cash lent by banks to SMEs. I hope that it is not an open invitation to the banks to act in an irresponsible manner by dishing out loans that they would normally have rejected as high-risk. We must bear it in mind that they now have the Government underwriting those loans.

I have always stated that the last thing any businessperson wants is government interference. All that businesses require is an environment where enterprise can prosper, and that of course means allowing people to trade freely on a level playing field, and to work in an environment where taxation is reasonable and where there are no onerous regulations or obstacles. That is the sole job of the Government. They also need to create a more positive feeling in the marketplace to encourage small to medium-sized enterprises and indeed give people the confidence to start up their own businesses, become self-sufficient and in turn go on to employ other people.

Noble Lords have already talked about the Budget so I shall restrict my own comments. It should have contained some meaningful offerings to encourage investment and instil confidence. We need things that are tangible and can be touched, such as a reduction in VAT, a one-year national insurance holiday for small businesses taking on extra workers, a reduction in business rates and a reduction in duty on diesel. Those are just a few things that would make an immediate impact and be a genuine help to small businesses. Instead, regrettably, we have the hollow promises that we continue to hear.

13:43

[Lord Fink]

My Lords, it is my great pleasure to have the chance to speak in your Lordships’ House on the Budget, but perhaps I may start by joining the noble Lords, Lord Bilimoria and Lord Sugar, in congratulating my noble friend Lord Heseltine on a most thoughtful and elegant maiden speech. I should say that he is held in great esteem by businessmen and politicians across the political spectrum. Indeed, in my home town of Manchester, and in Liverpool where I have the privilege to sponsor an academy in Anfield, he is held in enormous esteem. Anyone who doubts the Government’s commitment to a growth agenda has only to look at my noble friend’s appointment to see the seriousness with which they take the issue of growth. I also agree with the comments of the noble Lord, Lord Sugar, about the mood music made by politicians in all categories, and how that mood music does not always help business. Sadly, that cuts across all parties.

I shall return to the Budget. In order to decide whether a Budget is good or bad, we have to look at it in the context of its time and the financial circumstances that the country is in. Given our straitened circumstances, in my view there are five questions to ask about a Budget to see if it is a good one, a bad one or, indeed, an excellent one. First, is the Budget consistent with the Government’s strategy of achieving medium-term fiscal goals? Secondly, does it help the country’s small businesses to grow and increase employment? Thirdly, does it help businesses to compete for talent and business in an increasingly competitive global marketplace? Fourthly, does it help the country’s citizens, particularly the less affluent, either by cutting their tax burden or by giving them the dignity to pay less tax and not have to claim back what is in effect their own money through benefits like working tax credit? Finally, we can add a new test that no Budget in living memory has achieved: does it provide a degree of financial transparency to taxpayers in terms of how much tax they are paying and where the money is going? These factors are much more important than the cheap populism of large giveaway Budgets, false claims of “prudence” or—dare I say?—“ending the cycle of boom and bust”.

If one takes these tests in turn one can see that, first, the Budget is clearly consistent with achieving the Government’s medium-term fiscal goals. As my noble friends Lord Higgins and Lord Sassoon have said, the Budget is fiscally neutral over a five-year period, but it does contain modest reductions in both taxation and spending. The economic forecasts agreed by the Office for Budget Responsibility agree that borrowing is on course to achieve a cyclically adjusted current balance over the next five years and debt will be falling as a percentage of national income by the end of the Parliament. That means that it is successful in this measure.

Secondly, I asked if the Budget will help small businesses to grow. As we know, growth in small businesses is key to reducing unemployment. The combination of continuing low market interest rates gained by prudent management of the deficit combined with a reduction in credit spreads, which credit easing should provide, will form a favourable backdrop for small businesses. The cuts in corporation tax rates and planning changes will also help small businesses. Finally, tax simplification, particularly cash accounting, will have a disproportionately beneficial effect on very small businesses.

The next factor to consider is how we can help larger businesses to compete. There is no doubt that the reduction in headline higher rate income tax will help to attract international talent to the UK as well as signalling, as others have said, that Britain is open for business. I know personally several ultra-high net worth individuals—and former large taxpayers, for that matter—who have moved overseas to escape the 50 per cent tax. Sadly, I do not believe that a small reduction of 5 per cent will bring them home just yet. I also know of many multinational firms which say that high-performing executives who they have wanted to poach into the UK will not come here unless they are offered income tax equalisations, something that, frankly, has not happened for 20 or 30 years.

As my noble friend the Minister said, the fact that international companies like GlaxoSmithKline are now creating hundreds of new jobs in Britain is very good news and an early sign of success in this area. Also the improvements being made to our infrastructure, particularly the expansion of northern train lines, should allow the economy, particularly in the north, to grow without too much traffic congestion. The accelerated reduction in corporation tax and support for ultra-fast broadband and wi-fi, which have become so important for many businesses, are also helping growth.

Many people say that research and development are absolutely key, but I think that most noble Lords have missed the development of The Francis Crick Institute close to St Pancras station. It is probably the most exciting biomedical development in a generation. It will employ over 1,500 scientists and is a joint venture between the Wellcome Trust, Cancer Research, the Medical Research Council and three London universities which between them are associated with five or six foundation hospitals. This is something which has not been achieved in any other country in the world, particularly not in the US. The head of the institute, Nobel scientist Paul Nurse, has said: “This project could never have been achieved in most countries around the world and is a first internationally”.

Fourthly, does the Budget help the country’s citizens, particularly the less affluent? The increase in personal allowances to £9,205 from April 2013 is a real achievement. It made no sense to tax families earning modest wages and to make them claim back similar sums in a variety of allowances. It created almost as great a dependency culture among those in work as those out of it. When income tax was originally introduced, it was designed as a temporary tax on the rich. I am proud that the Conservative-Liberal Democrat Government are stopping taxation for the less well-off and lifting many hundreds of thousands of people out of the income tax net.

Fifthly, offering taxpayers transparency on how much they pay and where it goes is an extremely good and innovative idea. It has always struck me that Governments around the world who operate PAYE-type systems seem to be able to charge and tax citizens more. I guess that it is a much less painful way of paying tax than finding a capital sum, as do people on schedule D, but perhaps the balance is wrong. If citizens knew how much they were paying and what it went towards, they might be more assertive in their views on expenditure.

Hence, on all the five measures that I have set out, this seems to be a good, possibly excellent, Budget given the financial constraints. However, lest I am seen as no more than a mere cheerleader for the Government, I will ask about the income tax reliefs of 25 per cent or £50,000. I have no problem with the principle of having limits on deductions, which could stop abuse in many areas, and I also believe that the rich should pay their fair share, but the one exception should be philanthropy. Although I was not sure whether it was normal to declare a potential conflict of interest in a general budgetary debate, I must declare it here. I chair several charities and I know that many philanthropists who support them give more than 25 per cent of their income to them. I also know that one or two of the charities that I support would not be able to operate without that generous support of the wealthy. Will my noble friend the Minister give me some assurance that he will try to intervene to help the plight of charities affected by the cap?

13:52

[Lord McFall of Alcluith]

My Lords, I am delighted to participate in this debate and particularly to follow the noble Lord, Lord Heseltine, whose civic award this week from Liverpool was richly deserved.

The power and influence of the social media in the form of Twitter were in evidence immediately after the Budget. Within minutes of the Chancellor sitting down after a carefully crafted and supposedly voter-friendly speech, it was labelled a “granny tax” Budget. The Chancellor’s tactical nous, for which he is supposedly famous, has let him down, and I suggest that there is a reason for that; every dot and comma of this Budget was publicly debated with his coalition partners. There were no surprises, save one.

As a keen observer of Chancellors and Budgets, I saw the Chancellor lose eye contact with his audience, bow his head to the Dispatch Box and say sotto voce that he was simplifying the system for age-related allowances for pensioners on the basis that they did not understand it. I along with others said, “Wow”. I suggest to your Lordships that pensioners certainly do understand the system now. Incidentally, the NAO last examined it on behalf of the Government in 2009, so the Government did not base their calculations on real-time information. This is a Budget that raises £4 billion, with £1.5 billion coming from pensioners. Almost half the revenue is coming from pensioners. I suggest that the “granny tax” storm will take some time to abate.

The Budget was big on politics but small on economics, being fiscally neutral. According to the Government, the extra £150 million of borrowing incurred on their watch left them with no room for manoeuvre: hence the Budget’s political emphasis, with the Chancellor eyeing the leadership and being the darling of the right wing of the Tory party at the expense of Nick Clegg—goodness knows why he went along with it.

Lords spiritual in this House regularly emphasise the concepts of faith, hope and charity. Let us look at those concepts in the context of the Budget. On faith, for all the emphasis on business innovation and investment, the OBR has drastically pruned its forecast for growth for 2012 following very weak figures for the last quarter of 2011. With recovery predicted at 0.8 per cent, the economy is not far from stagnation, so the Chancellor really is left on the sidelines, fingers crossed, and praying for sunny uplands in 2017. He has reduced corporation tax, which on the surface is a good initiative, but as Martin Wolf and others have described it in today’s Financial Times, this could be a zero-sum game, with global competition ensuring a race to the bottom. The interaction with personal income tax would encourage corporate retentions. We might therefore be exacerbating an investment black hole, with corporations hanging on to their money. The big issue is how we ensure confidence among those corporations to invest.

On hope, the issue of jobs and growth has been mentioned, but the Chancellor barely used the word “growth”, which I think was banned in his coverage of the Budget yesterday. However, what are we doing about the 1 million young people who are unemployed to give them any hope for the future? What are we doing about the north-south divide? I applaud the noble Lord, Lord Heseltine, for engaging in that, because instead of coherence between north and south, there is a divergence that will be to the detriment of the country. The prospects for the country will be diminished.

There is stronger case for fiscal stimulus this year than there was last year. Two members of the MPC, David Miles and Adam Posen, are calling for that—indeed, Adam Posen has long been on record as saying that the country needs a spare tyre for lending to small and medium-sized enterprises. I would have liked to see the Government ask in the Budget, “How can we create our own Mittelstand in this country, where we can support small businesses, rebalance our economy and take a renewed, fresh approach to manufacturing?”. I suggest to the Minister that it is not too late to consider the concept of a British investment bank, espoused by the noble Lord, Lord Skidelsky, and others, because banks do not lend to small and medium-sized enterprises because there is not much money in it for them. That is the basic issue that we must face. Therefore, the Government have a job to do to stimulate the economy in that area. We also have the tyranny of the PSBR, which I have cried out for Chancellors to sort out in the past. Why do we not do that, so that we could look at our economy afresh and ensure that it had a social dimension as well as a strict economic one?

On charity, the Budget will be judged on the fairness agenda. The esteemed philosopher, Amartya Sen, came to a Treasury Committee hearing quite a number of years ago and made the point that there is a connection between effort and reward, and that people judge fairness on the basis of that connection. I put it to this House that, while 14,000 people earning £1 million per annum will receive a tax cut of more than £40,000 each year, a family with children earning £20,000 will lose around £700 when the cuts and the VAT increase are taken into consideration. Undoubtedly, the winners from the Budget include the rich people, who can save lots of money, while the vast majority of taxpayers are given £14 a month as a result of the Liberal Democrat-inspired tax threshold initiative. The leader of the Liberal Democrats, Nick Clegg, has called this a Robin Hood Budget. However, far from the poor benefiting, the rich will benefit; it is the opposite way round. I suggest to noble Lords that we look at it as a Robbing Who? Budget. That will be the question reverberating around the country over the coming months.

Aspiring citizens have been hit as well. At a stroke, the Chancellor has just created an extra 300,000 new 40p higher-rate taxpayers, which has gone unnoticed, because he has reduced the tax threshold to £41,450. A family with a few children, having an income at that level, are now in the higher tax band. That will have a very serious effect on family finances. It will be the less well off, the middle-income and the aspiring and upwardly mobile citizens who in this Budget will be well and truly mugged.

There was reference in the past to Mondeo man and woman. What price Mondeo man and woman now? I suggest that with every passing day, the chances of Mondeo man and woman thumbing a lift rather than owning the vehicle will increase.

14:01

[Lord Marlesford]

My Lords, the toughest challenge that politicians have is to face reality. I know of no one who has in his career been better at facing reality, both in business and in politics, than my noble friend Lord Heseltine. That is why I am so glad that he will be facing, and I hope telling us how to deal with, the reality of our own competitiveness. That is a crucial issue, but facing reality is actually a challenge for all of us. It is a challenge that the financial world failed massively, especially in the United States in the years of unsound lending to unsound borrowers that led up to 2007, and the inevitable financial crisis that has created a continuing problem for the world economy.

The Chancellor started his speech by referring to two major risks to Britain’s economy—the situation in the euro area and a further spike in oil prices. I will say a brief word on both before making some comments on the tax changes and suggesting one or two further possibilities for progress.

On the euro area, everyone would now agree that the fundamental design of the euro is flawed—a single currency without a single fiscal and budgetary policy. It is a flaw that the designers must have been well aware of. Indeed, some cynics even think that the intention was to have it as a means of forcing a crisis that would result in the integration of the EU economy in a way that was, and probably still is, politically unacceptable. The real problem with the euro area is the refusal to face reality. The powers at the centre of the EU still deny that Greece is bust and has defaulted on its debt. It is assumed that the ECB backed by Germany can bail out any euro country that is threatened with default. Bailouts lead to bailouts until eventually there is a country that is too big to bail out.

Even today, the EU Commission is producing some really dangerous, ill thought-out proposals, and I will refer to one—the financial transaction tax. Were it to be introduced, it would do immense damage to the City of London, which is the world’s leading financial centre, followed by New York and Hong Kong. Financial services account for some 10 per cent of the UK’s national income and 11 per cent of government tax receipts. Perhaps more relevant is that, as it has been designed, the FTT is actually unworkable. I hope very much that when the moment comes, Her Majesty’s Government will veto it.

On oil, the price will, over the coming years, certainly fall steeply due to increasing competition from oil and gas from shale and from the revival of nuclear power. However, as the Chancellor said, there is now a risk of a sudden price hike, which of course is the equivalent of a tax increase and is therefore strongly deflationary. The risk is almost entirely political and was very well debated in your Lordships’ House last Friday. The overall conclusion of that debate was that the problems of the Middle East can now be met only by diplomatic and economic policies. Military action in that area could be catastrophic for the world economy.

I turn now to the Budget. What a change there has been in the political backdrop to Budgets in Britain. That is epitomised by an article by Chris Mullin in Monday’s Times. I do not disagree with the word of that article. Twenty-five years ago, Mr Mullin was editor of Tribune and 30 years ago he edited Tony Benn’s Arguments for Socialism. Now he writes:

“As for the Lib Dems and their ludicrous talk of mansion taxes and tycoon taxes, these are simply gimmicks”.

He ends his article by saying:

“Polls tell us that most people favour increased taxes for the rich, but that is because people tend to favour taxes they won’t have to pay. In any case, simply increasing taxes on top earners does not begin to raise the sums needed. That can only come from the middle classes. It is time politicians plucked up the courage to say so”.

That is another example of the need to face reality.

In four years, from 1975-76 to 1978-79, when the noble Lord, Lord Healey, was Chancellor, we had a top marginal rate tax of 98 per cent. That cut in at a threshold of £24,000. In today’s money, that would be £110,000. Those were the days when there was mass emigration of some of the most talented in Britain—the so-called brain drain. Had I qualified in any respect, I might well have been part of that. Yet today, the argument on all sides of the political spectrum is whether the top tax rate at £150,000 should be 50 per cent, 45 per cent or 40 per cent.

I remember very well sitting in the Press Gallery in the House of Commons in 1988 when the noble Lord, Lord Lawson, announced a top tax rate of 40 per cent. The opposition Benches exploded with anger. It is the only time in history when the House of Commons has had to be suspended in disorder during a Budget speech. However, that top rate of 40 per cent lasted more than 20 years, right through the Labour Government, and the 50 per cent rate was one of the bequests of Mr Gordon Brown to this Government.

As the excellent New Statesman, which I read every week, had on its cover last week, it is truly “the end of socialism”. Socialism was a casualty of reality—of the determination and energy of human beings, the recalcitrance of human behaviour and the inability of Governments to run business.

None of that means that further tax changes are not needed, and I have time to suggest only one. It is absurd that council tax—a well designed and efficient tax—should be allowed to get hopelessly out of date through administrative inertia. There are many houses, particularly in London, worth well over £1 million, which are not even in the existing top band, which comes in at a value of £320,000. We do not need extra bands, but the thresholds of the eight existing bands should be changed. At the moment, band A has a value of up to £40,000. That could become £100,000, with subsequent bands at £150,000, £200,000, £300,000, £500,000, £750,000, £1 million and £2 million. The differential in the rates of council tax could be changed as well if it was thought that owners of the more expensive houses should pay a reasonably non-proportionate tax. Yet the 1 per cent levy over £2 million suggested by Mr Cable is merely, to borrow from Mr Mullin, a “gimmick” to which I am afraid I would add the adjective “vindictive”.

The key to introducing such a system would be to do it only when a property changed hands. That would be administratively simple. Transfer prices have to be reported to the land registrar anyway, and stamp duty—I welcome the new rates—would continue to be payable. It would merely be a matter of reporting the change in ownership to the local authority that levies the council tax. Thus the buyer would know exactly what rate of council tax he or she would have to pay. There would be no hardship for existing occupiers. The two banding systems would exist side by side. Of course, it would take a generation before every house was in the new band. That might have some temporary depressing effect on the price of some houses, but that could be an added attraction.

Finally, I will add one other word on fairness. In my book, it is immoral to give state handouts to those who do not need them at the cost of not having enough money for those who do. For those at the bottom, a large part of their income has to be in the form of a social wage, but there are many benefits that could and should be taxed. The winter fuel allowance is an obvious one. Meanwhile, I am all in favour of getting more people at the bottom out of the tax range altogether. The Budget takes a major step in that direction.

14:11

[Baroness Worthington]

My Lords, I aim my comments towards the measures in the Budget that address green energy and the environment. The grouping of these topics within the Budget might imply that there is some overall cohesive vision linking our green future and energy together. Sadly, as the Budget shows, that is not the case. The Budget has been described by Greenpeace as a “polluter’s charter”. It is a ragbag of measures that appear to give great benefit to the fossil fuel industry at the expense of the green energy industry.

In opposition, the current Chancellor George Osborne made a great pretence of being green. He talked about how he would make the Treasury join DECC in championing action to tackle climate change. He said:

“The Treasury will no longer be the cuckoo in the Whitehall nest when it comes to climate change”.

He was right. It has become an albatross sitting round the neck of the low-carbon industry. We can be grateful that he seems to have dropped his more obviously outright hostility towards the UK leading on climate change but this is a long way from being a green Budget. He does not seem able to help himself. Even as he praises renewables, he then immediately undermines that by making a veiled reference to the fact that he obviously considers the renewables sector to be costing industry and consumers too much. He said:

“Renewable energy will play a crucial part in Britain’s energy mix, but I will always be alert to the costs that we are asking families and businesses to bear”.—[Official Report, Commons, 21/3/12; col. 798.]

Why single out renewables in that case? It is obviously clear that we need to subsidise low-carbon technologies but why single out renewables?

The policy that the Treasury introduced that supports investment in low-carbon technologies is the carbon floor price. It is quite a controversial policy. The announced level for 2014-15 in the Budget is now as high as £9.55 per tonne of CO₂—almost double what it was—because there has been a big falling-off in carbon prices in Europe. We have to pay more to meet our desired level. We are now paying more than double the traded price in Europe. This is having an impact on businesses and consumers, but to what end? Essentially, it does not guarantee investment and it rewards existing generators who already built their infrastructure many years ago. It is accruing large amounts of money to our nuclear generators. Why no mention of the costs that nuclear puts on the consumer and business?

The Chancellor also appears to have some strange logic. He says that, “Gas is cheap”. In what way is gas cheap? If it is cheap, why would he also then have to announce a call for evidence on the barriers to investment in gas? The answer is that gas is not cheap at all—quite the opposite. Increases in gas prices are what are putting pressure on energy bills, not renewables. I am not against the increased use of gas. What concerns me is the Chancellor’s blithe disregard for the facts. People cannot invest in gas because it is expensive. There is a real possibility that it will remain so in future. Instead of making sure that we have a sensible contingency plan by giving unqualified support for renewables—a sector that is delivering investment, jobs and growth now—he sets about undermining them.

Why is gas expensive? In part, that expense has been driven by record oil prices. A couple of weeks ago, the oil price hit £80 a barrel. No one really considers or seriously believes that that will come back down in a significant way. That then makes the Chancellor’s fair fuel stabiliser policy completely redundant since it only kicks in if oil returns to £45 a barrel. Could the Minister help us understand the logic of this policy and tell the House when he expects oil prices to return to that level? That would certainly help our economy. I guess that the answer is never, and that the oil majors must be delighted to have successfully negotiated a break on the taxation of their product.

It does not stop there. They have also received more help in the form of substantial tax breaks for offshore drilling and decommissioning. In these difficult times, the Budget rewards not just rich individuals but also the most profitable businesses. Why does an industry making such huge profits need to receive yet more help from government? The noble Lord, Lord Marlesford, said that,

“it is immoral to give … handouts to those who do not need them”.

The offshore oil and gas industry is not a poor one. We do not need to spend £3 billion of lost tax revenue helping it get more oil out of sensitive areas in our seas.

It is not just the oil and gas industry that the Treasury has seen fit to help out. There is also something in the Budget for the coal lobby: an exemption from the carbon floor price for the use of coal slurry to generate electricity. That does not sound at all green to me. I struggle to see how that can be justified. This is apparently a low-carbon policy yet we are giving an exemption for a high-carbon-emitting source of fuel used to make electricity. That makes no sense. Again, could the Minister explain that logic? We do not need to give tax breaks to the coal industry under the banner of an environmental policy.

We could talk about many other measures, such as the Government’s double-dealing with the combined heat and power sector. We have helped the industry by giving it an exemption from the carbon floor price but we are also removing its exemptions from the climate change levy. Overall, the industry is a net loser: £45 million is saved from the carbon floor price but £110 million is lost from the CCL exemption removal.

Then we come to the carbon reduction commitments. I admit that I am not a great fan of this policy but it addresses the important point of those people not currently caught by the EU Emissions Trading Scheme. I welcome the fact that we will look again at this and the potential for a different, simpler environmental tax. I suggest that one option is to think about the extension of the upstream Emissions Trading Scheme to the suppliers of heating fuels. Since they are outside the cap, any measure to price carbon there would definitely be additional. That would be a revenue-raiser for the Treasury and could replace the CRC in creating a price signal to encourage investment in energy efficiency.

There have been many other criticisms of the Budget on green issues. The Chancellor made great play of the terrible burden that the habitats directive placed on business. That has obviously been proved to be a complete red herring. There is also the concern about the deregulation of planning leading to urban sprawl and essentially a developer’s charter. There is now a presumption in favour of sustainable development but my fear is that, having seen the Budget, “sustainable development” includes absolutely everything from coal slurry to offshore oil and gas, and gas fracking. That could all be put in under this definition of sustainable development. I would like to hear some reassurance that that is not the case.

So many things could have been different. We could have seen a proper investment in the renewable sector. The engineering giant, Alsthom, has recently invested quite heavily in creating a wind turbine manufacturing plant in France for offshore wind turbines. That is despite the fact that the overall market for offshore wind in France is very small in comparison to that in the UK; the problem is a huge amount of policy uncertainty and a sense that the Government are not pulling together behind the renewables industry. The Chancellor has a lot of responsibility for giving that impression.

One policy could have been in there and would have given a sign that the Chancellor cares and understands what will help us to achieve our low-carbon economy: providing more help for energy efficiency measures. One example is the use of voltage optimisation technology, which is an excellent example of UK expertise and has come out of the University of Liverpool. We now have world-leading technology that helps householders to save electricity without doing anything; it simply optimises their use of electricity, taking around 10 per cent off their Bills. The Government have absolutely failed to be able to provide any support for that sector, which is currently excluded from the Green Deal for reasons of huge bureaucracy rather than it not being a good technology. It is a good technology and is already used in DECC and No. 10 to save money, yet it has not been supported for others to take up the policy. A lower reduced rate of VAT could have been given for that technology; it would have boosted jobs and helped to breed a very good UK sector in something that we excel at.

Overall, the Budget fails miserably to match up to the expectations that we might have from the greenest Government ever, and I am sorry that I cannot be more positive.

14:21

[Baroness Kramer]

My Lords, I find a great deal to welcome in this Budget, not the least of it being the clarity of the Red Book. It is the first time that I have not needed six hands and a book of Post-its to work out exactly what was going on. That has been extremely helpful.

Noble Lords will not be surprised that, like most Liberal Democrats, to me the most important measure in the whole Budget is the raising of the starting tax threshold, which is going up to £9,205, with 20 million basic-rate taxpayers being £220 better off. That consolidates one of my goals, shared by many of my colleagues, to see at the end of this long process—and it may have to go on into the next Government—an alignment between the minimum wage and the starting point of paying tax. The kind of impact that has on the incentive to work is utterly fundamental. It is a matter not just of the numbers but of capturing that principle.

Like many of my colleagues I would not particularly have chosen to take the 50p rate off at this point in time, but it has always been a temporary measure—and the Opposition have always signed up to it as a temporary measure. What interests me is that some of the offsetting measures are permanent; because they are important offsetting measures, that permanence is something that we have to applaud. I never understood why Labour so valiantly refused to put a cap on tax reliefs. That is absolutely critical—and now it has been done. That principle is one that will stay with us and fundamentally change things, building in a degree of fairness to our tax system that had not been there previously.

Noble Lords will exclude me if I find some personal pleasure in seeing a Government tackle the problem of stamp duty avoidance. It made so many people in my local area furious to see how easy it was for people to avoid paying stamp duty through the use of corporations or trusts based in offshore areas to own property and avoid in effect paying any capital gains. The 2010 general election campaign against me was effectively funded, you could say, by avoidance of stamp duty on a major purchase of a property. Local Conservatives argued that it was a tax break that all the rich definitely deserved. So I am very glad to see a change by the Chancellor on the grounds that a sinner who repenteth should be welcomed. I never understood why the Labour Party refused to go in and close that egregious loophole.

I welcome this Budget, although as in all Budgets there will be one or two issues that one would wish to raise—and I have a couple. As people know, I am a strong supporter of tax increment financing as a mechanism for local government to go around and tap new, private sources of financing for infrastructure and regeneration—and the need, as we all know, is huge right across the country. So I am rather disappointed by the announcement in the Budget that the Government will support only £150 million in TIF; that is quite a bitter disappointment. If you spread it around the country, it comes to very little. I am concerned that that has the potential to undermine some confidence in the new localism agenda. This is a time when the market for TIF-type financing should be built up and focused on; it is the time to go out and develop that marketplace. I am concerned that the Treasury’s desire always to hang on to the strings counters what could have been a very significant opportunity. Local authorities up and down the country will be disappointed.

On what the Government are doing to provide access to credit for small business, I would never for a moment argue against the national loan guarantee scheme, which is very welcome. Business has welcomed it, but with some reserve, because its effect is to reduce the cost of loans, which the four major banks plus Aldermore would have done anyway.

The underlying problem with credit for small business is captured again in the Breedon report, which was launched last week and which underscored again the fact that the UK has one of the highest SME loan rejection rates in Europe at about 33 per cent. The decrease in the supply of loans to SMEs has been much sharper in the UK than elsewhere. Our problem is that we have a banking group that is not on the whole interested in the SME market, and certainly not in the micro market that lies within that. Some have said that it is because of balance-sheet pressures on the banks but, if you look at banks’ behaviour, you can see that they long ago retired or fired the people who understood small business lending. When they lend to small businesses now, it is typically based on the value of commercial or residential real estate and very rarely against the capacity or potential of a business plan, which is the hallmark of lending to the small and micro sector.

In this country, we lack a whole layer of banking. The local savings banks that are the backbone of small business in Germany and Switzerland, and the community banks that play the same role in the United States are frankly only in their infancy here in the UK. The advantage of those banks is that they stick with small and micro businesses through thick and thin because only if those businesses thrive do the banks thrive too. I know that the community development finance institutions in the UK benefited from the regional growth fund to the tune of £30 million, but that really was small potatoes. I am so sad that in this Budget the Government lost the opportunity to boost the whole sector by bringing it into the credit easing arrangements. I hope very much that over the year there might be some attempt to look at that and to see how to wrap the CDFIs and possibly credit unions as well into credit easing. That is a strategy that has worked very successfully in the United States, where the Obama Administration pump money into small business through that route. Frankly, if the Government do not take by the scruff of the neck the problem of that missing layer of the banking sector, in 10 years’ time we will still be moaning that we cannot get credit into small and micro business.

Finally, I know that the Breedon report and the Government are looking with some enthusiasm at online innovative financing as an alternative to the banks. The idea is difficult to describe. I have said this before in the House and everyone broke out with laughter, but the umbrella term—although it is often not accurate—is peer-to-peer lending, and the text version is P2P, which leaves my five year-old granddaughter on the floor with laughter. This is a world where the online technology is now making it possible for players to set up a whole variety of different platforms, some of which let ordinary people become lenders to businesses, while others are invoice discounters. It is also a mechanism for social enterprise bonds. There are a whole lot of different areas. The Government have looked to participate and support this sector through the Business Finance Partnership, and are adding a welcome 20 per cent increase to the £1 billion that they originally committed in this Budget. However, the Government’s commitment to cofinancing will be only for mid-sized businesses with a turnover of £500 million or so. These platforms are perfect for microbusiness and small business, so this really is another lost opportunity and an area where, frankly, I hope that the Government will look again.

These are, in a sense, relatively small comments on what has been overall a fairly masterful budget. I remind the Labour Party, when it sits down with its criticism, that it oversaw an economy with tax revenues that were pumped up by the false profits of the banks; they were not real profits, and they collapsed. It was pumped up by an asset bubble in house prices, which again has collapsed, and it was pumped up, in a sense, by a consumer demand which was fuelled by absolutely excessive consumer credit, which was going to be unsustainable. I congratulate the Chancellor on recognising that sustainability has to be at the core of economic growth and fiscal sensibility.

14:31

[Lord Myners]

My Lords, I join other Members of the House in welcoming the maiden speech from the noble Lord, Lord Heseltine. I want also to mark the fact that it is a wonderful occasion that he is being given this important assignment to address the areas of the interface between government expenditure and the private sector, and that in his speech to your Lordships’ House he said that he would include examination of the roles of owners of public companies—an issue which I have come to describe as the ownerless corporation. I cannot think of anybody better suited to carrying out that review than the noble Lord, Lord Heseltine, and the Chancellor should be congratulated on that appointment.

I like digging around in the Red Book. That is where you find the real story on the Budget. If you go to paragraph 2.140, you find that herbal cigarettes are now to be taxed as tobacco cigarettes are. Paragraph 2.145 deals with non-residents playing bingo, while paragraph 2.54 tells us about a further and more favourable change to what is euphemistically known as,

“Resettlement payments to Members of Parliament”—

those who no longer hold their seats.

It is also in the Red Book that we see the dangers lingering in the undergrowth. We see in paragraph 2.71 that the Government are looking at taxation on interest. It does not say why they are looking at that issue, although one is reminded that the right honourable Chancellor of the Exchequer, when in opposition, raised the question about whether interest should be a deductible charge for taxation purposes. Is that what the Government are looking at under paragraph 2.71? At paragraph 2.40, we have a message that philanthropy is going to be a victim of the Budget. The Red Book says that it will not be impacted “significantly”, but a Government who are encouraging philanthropy for education, science and the arts appear to be contemplating a tax measure which will discourage philanthropy.

One also looks in the Budget for areas which one hopes will be addressed, but with great frustration one finds that they are not. The treatment of carried interest in private equity funds as a capital gain rather than an income is an issue on which the Minister has very kindly answered one or two Written Questions from me in the past. He is indicating two fives. It is not just the one multiple of five; the Minister’s hands are positively animated at this. I think that he overestimates, but I know that he struggles with the burden of his job and no doubt it seems that he has rather a lot of Questions to answer. If he gave me straight Answers to my Questions in the first place, he probably would not have quite as many supplementaries to answer.

I find my eye drawn to paragraph 2.179, where the Government have really caught on to something: the taxation of static caravans. This is an issue to which the Government have applied their attention, but they have not applied it to the issue of a static economy—one which is flatlining now, and has been ever since this Government came into power. I encourage noble Lords to read the contribution of the noble Lord, Lord Sassoon, in our debate this time last year, when noble Lords on this side of the House were saying that there were risks to economic growth and the Minister said that this was complete nonsense. What we have seen is barely any economic growth at all over the past 12 months and, importantly, the OBR tells us that the sum outcome of this budget will make no material difference to economic growth prospects over the forecasting period. There is no material change in its forecast.

In fact, we are looking at even more austerity. Looking at discounted cash flow, which the noble Lord is very familiar with, the way that you make the numbers come out all right on discounted cash flow is to put all the growth into infinity at the end of the process, while all of the cuts and further austerity are now being pushed beyond the date of the next election. That is the only way that the Government are able to say, “We are still achieving our targets of fiscal balance within the planning period”.

This, of course, is a Budget that will be remembered for the 45p tax and the raid on pensioners—and for the sleight of hand that we saw in a number of areas, including the treatment of the Royal Mail, where the assets of its pension fund are being brought in but the Government in national accounts are going to disregard the deficit. This is a Budget which will benefit 14,000 millionaires—14,000 people earning £1 million or more a year—by more than £40,000. How can that possibly be justified during a time of austerity? As my noble friend Lord McFall said, when the Chancellor told us yesterday about the “simplification” of pensioners’ allowances, his eyes dropped down to his papers and his voice lowered. It was quite evident to all who were watching that this was a sleight of hand, which had to be revealed when we turned to look at the Red Book.

Growth is still static. Unemployment is still rising. The OBR sees no reason to meaningfully change its forecast; that is to say that it will not be until 2014 that we achieve again the GDP output levels achieved in 2007. That is a shocking outcome for this Government to put before the nation. The OBR says, however, that the composition of growth is going to change quite dramatically. In November, it was expecting 12.5 per cent of growth to come from private consumption; it now expects that figure to be nearly 40 per cent. This will be a debt-led consumption, as again is clear in the OBR report. Business investment, according to the OBR, will now fall quite rapidly. It was expecting 7.7 per cent of economic growth in 2012 to come from business investment; that will now fall to only 0.7 per cent. In 2013, it now expects that figure to be 2.5 per cent lower than it originally forecast, and in 2014 to be 1 per cent lower. That is to say that the business community is not responding to the rosy outlook that the Chancellor is describing—nor, according to the OBR, will it respond positively to the incentives to business given in this Budget.

The noble Lord, Lord Bilimoria, asked about the National Loan Guarantee Scheme, a successor to the failed Merlin project. The OBR says that this will be too small to have much effect—too small, when it was an initiative that we waited six months for. The private sector and business investment is being squeezed, and the Government have no tangible and evident plans to address that. There are no major commitments to investment in infrastructure, just words. We continue to have to live with this odd fiscal contraction, which is meant to lead to economic expansion as the private sector steps in to the capacity being released by the public sector. There is no evidence that that is happening at all. Nothing in this Budget shows a clear, coherent and carefully articulated strategy for growth. In fact, it is a rather boring and meagre Budget, which will largely be remembered for its generosity to the paymasters of the Conservative Party—the super-rich—funded entirely, if we look at the OBR report, by the money which is being pickpocketed from the grannies. It is a poor Budget with little to offer any improved prospect for economic activity or employment.

14:40

[Lord Bates]

My Lords, it is a pleasure to speak in this debate and I congratulate the Minister on the way that he introduced it. It is always a pleasure to follow the noble Lord, Lord Myners, but his description of the Budget as boring would not necessarily be borne out by a cursory glance at the headlines in the newspapers this morning. It seems pretty exciting. By nature, people always tend to focus on the negatives rather than the positives. If the House will bear with me, I should like to focus on a bit of good news and on a few of the positives that are coming out of the Budget as far as I am concerned, as well as the positive stories that I hear in my native north-east England. I want to pass on a few of those thoughts.

Sometimes we need to get a balance in this country and I do not think that the media help us in doing that. We had the fantastic news yesterday that the state pension is to be increased by 5.2 per cent. That is a record in recent years. It is going up by about £5.30 a week, which is an extra £250 a year. It would be nice to hear some more news of that nature as well as, rightly, hearing comments about taxation. It would be nice to hear how pensioners are benefiting in other ways through the Government getting inflation down and keeping it down. I am referring to the big picture of retaining confidence in the British economy from international markets. That is hugely important for us.

The north-east is in many ways a good place to look at as a sort of case study or test bed for how this Government’s policies are working. We have heard about the attempt to rebalance the economy away from an overreliance on the public sector to a strengthening of the private sector, and that is a very good thing. I recall a few years ago hearing the devastating news of the closure of the Corus steelworks, the shelving of plans for the Hitachi train order and the huge lay-offs at Nissan. However, the mood music is changing up there. We have heard the announcement of another 2,000 jobs at Nissan and seen the reopening of the Corus steelworks, with the Government giving the go-ahead for the Hitachi train orders, meaning 800 jobs. That is a bit of good news to hear about in the area.

We always observe weaknesses rather than focus on strengths but we should play to our strengths. One strength of the north-east is that it is the only region in the United Kingdom that exports more than it imports. In the last quarter of 2011, its exports hit a new record level. What is more, that is evidence of a resurgence in manufacturing. Just this week, an exhibition was staged here by the energy company Northern Offshore, and I talked to Keith Hunter, who helped to found the organisation. He told me that he is now working with Siemens, which last year recruited 37 apprentices to work on wind turbines in the new developments offshore in the north-east of England. This year, he will recruit another 37 apprentices, and the company intends to create another 35 to 40 new apprenticeships each year for the foreseeable future. That is real evidence of what is happening on the ground.

Today, I had the opportunity to meet Allan Cook of Arlington Real Estate and Neil McMillan of Carillion Developments, who are creating a marvellous development at Durham Gate in Spennymoor. It will be the global research and development centre for Stanley Black & Decker, providing highly skilled jobs in Durham. They are talking about the number of jobs on that site going up from 200 to 2,000. In a sense, it does not matter what I as a politician say about these things; this is what real people creating real jobs are saying. To add to that, I was very interested to discover that half the chemicals in the United Kingdom are manufactured in the north-east of England. When Andrew Witty, chief executive of GlaxoSmithKline, speaks, we all tend to stand to attention and listen. Regarding the Budget, he said that the patent box and fall in corporation tax have,

“really changed the investment decision for us”.

He is referring to the above-line R&D tax credit and the fall in corporation tax. The UK was among the highest corporation tax chargers in the world and is now one of the lowest. That is a real change and it sends out a message. It sets the mood music for decisions to be made, and companies such as GlaxoSmithKline are listening to that. That is very welcome, as is the change to the higher rate of tax.

We need to get away from a politics which is perennially based around arguments of greed and envy, and we need to focus on recognising that wealth creation is a wonderful thing. The more wealth creation we get, the more jobs are created, the more tax revenues come to the Government, and the more we can invest in our public services and care for the poor at home and around the world. That, to me, is what a good society looks like. Therefore, bringing down the higher rate of tax is a very good thing. In fact, I have an endorsement of this. I was reading the report of the debate on the Budget in the other place and came across a quotation from Tony Blair’s latest book. He is quoted as having said:

“I wanted to preserve, in terms of competitive tax rates, the essential Thatcher/Howe/Lawson legacy. I wanted wealthy people to feel at home and welcomed in the UK so that they could bring more business, create jobs and spread some of that wealth around”.

I think that Tony Blair was right, and in essence this Government are trying to build on that.

One thing that the north-east has often suffered from is that it has had far too much faith in governments of all persuasions in Whitehall and far too little faith in itself. People need the self-confidence and belief to say, “We can get out there. We can make a difference”. I was interested in a survey undertaken by the BBC—so it must be 100 per cent accurate—looking at the best places for business champions. Lo and behold, it found that according to the latest research the north-east is ranked first in England in terms of business champions. It said:

“The criteria for these include young, small companies which are less than 10 years old and with fewer than 50 employees, with directors with entrepreneurial appetite and are part of a wider corporate network”.

It is great news to be given top ranking. It is nice to see the BBC give more of a headline to that type of declaration about the north-east rather than perpetually run the region down and tell us about all the problems. We are all too well aware of our problems but we do not talk enough about our successes either as a region or as a country, and I think that that is what this Budget does. It helps us to remember that we have some fantastic businesses and some great entrepreneurs who are creating wealth in this country. We are incredibly proud of them. What they need is not a Government who are on their back but a Government who are on their side.

14:49

[Viscount Hanworth]

My Lords, the Budget that we are discussing today has appalled many people on this side of the House. At a time of high unemployment, when fuels bills and food prices are rising, benefits are being cut and many families are feeling painful financial pressure, the Chancellor, George Osborne, has chosen to benefit the rich. This is bound to have dire consequences for the Conservative Party and its allies when they submit themselves to the judgment of the electorate.

We understand that, before deciding to cut the top rate of tax, the Chancellor asked for an assessment of how much revenue was being derived from top-income earners and how much would be lost in consequence of this largesse. He may have been encouraged to go ahead with his cuts on learning that the tax take was less than one might imagine. To use this as a justification for cutting taxes implies an inverted logic. The reason for the revenue being less than expected is well documented in the report of the Select Committee on Economic Affairs, which tells of an estimated tax gap of £42 billion, which is a substantial proportion of the current budget deficit. The gap is defined as the difference between tax collected and the tax that should have been collected. This enormous figure represents the total of tax evasion and tax avoidance. It is a testimony to the extent to which high-income earners, aided by tax consultants who operate on an industrial scale, have managed to avoid paying their taxes. It represents a huge fiscal resource.

It is difficult to understand what justification the measures of the Budget might have had in the minds of its proponents. Can it really be true that, by taking an emollient attitude towards high-income entrepreneurs, who represent only a small proportion of the beneficiaries, the Chancellor imagined that he might stimulate the economy? Are we witnessing a reprise of the grotesque and wholly discredited doctrine of the trickle-down effect?

Perhaps we should take stock of what the Government have been doing lately to encourage industry and enterprise. We can begin with George Osborne’s trip to China. This was ostensibly a trade mission in which the Chinese would be encouraged to purchase goods manufactured in Britain, and in which direct foreign investment in the UK would be encouraged. British exports to mainland China are valued at £7 billion, which could surely be increased. As it transpired, the Chancellor did very little to encourage the purchase of British goods. He did far more to encourage inward investment. Just 24 hours after his arrival, we learnt that a Chinese sovereign wealth fund was to acquire a 9 per cent stake in Thames Water. Much more of this sort was expected to follow.

It is curious that such inward investment should acquire the unquestioning approval of so many commentators. In effect, it ensures that foreign countries will profit from the labours of British workers by reaping the profits and dividends that would otherwise accrue to Britain. The malign effects of such investment differ from the often beneficial effects of direct foreign investment in industrial capital, albeit that the two categories of investment are often confused. However, one should not overlook the manner in which foreign enterprises, such as the Japanese motor manufacturers, are liable to displace native enterprises. They are also free to repatriate the profits and the dividends.

George Osborne’s principal objective during his visit to China was to turn London into the first non-Chinese trading hub for the renminbi, China’s national currency. Such a development would be a major benefit to the City of London, which is one of the most important parts of the UK economy in his opinion, and to which he has strong allegiances. As well as such benefits, we should consider the costs that are imposed on the rest of us by the City of London. Its costs are not only the episodic ones associated with the lengthy financial crisis that began in 2008. They have been borne by the rest of the economy over a much longer period.

The City of London can be likened to a diseased organ of the body. Its hypertrophy has pre-empted the life-blood that would otherwise sustain the other organs. As I have already indicated, the massive inward investment that the City has facilitated has found its way, in the main, not into physical capital but into financial assets. The City has facilitated the acquisition by foreign investors of large tracts of British industry and many of our essential utilities. In the process, the captains of finance have greatly enriched themselves and the pound sterling has maintained a high value against other national currencies.

The consequence of this overvaluation of the pound has been the inability of our manufacturing sector to export its products. This has led, over many years, to its atrophy and decline. These consequences are manifest in a comparison of the proportion of national product that originates in manufacturing in the UK with the proportions in other European Union countries. According to figures published by the OECD, the UK proportion is around 20 per cent. Among our European neighbours it is, on average, 25 per cent or 26 per cent. In view of the disadvantage of our overvalued currency, our industry needs to be fostered carefully and protected. The Government often seem to be doing the exact opposite.

They have failed to constrain the banks and the financial sector more generally to provide much needed investment funds to small and medium-sized enterprises. That is the point that the noble Baroness, Lady Kramer, made so forcefully. They have also failed to take steps to ensure that British manufacturers have an adequate chance to gain contracts for the supply of equipment to some of our major infrastructure projects. A recent example is provided by the Thameslink project. The contract to provide the rail fleet has been awarded to the German firm of Siemens.

One investment in infrastructure that is urgent, and will remain so for many years to come, is the renewal of our energy resources. Last year, investment in wind power fell by 40 per cent compared to the year before, and the Government have failed to support an industry that could have become a major exporter. Since 2009, our nuclear industry has been in the hands of an Anglo-Franco-American consortium, in which we are decidedly the junior partners. The Government have made little attempt to ensure that the promised renaissance of the nuclear power industry will be to the benefit of British manufacturers and technologists.

Their declared intention is to rely heavily on the private sector to achieve the necessary investments in infrastructure. We have already observed that private finance initiatives, mediated by the City, have been more costly to the taxpayer than the direct investments via the erstwhile nationalised industries. Those industries ought to have been allowed to raise funds in their own right but, in the main, they were prevented from doing so.

This Budget and the statements and pronouncements that have surrounded it seem to be the products of the ideological fantasies that were inculcated to young Conservatives in the era of Margaret Thatcher. This ideology has done great damage to our economy, both in the period of the previous Conservative incumbency and—dare I say?—in later years as well. It continues to wreak havoc.

14:56

[Lord Sheikh]

My Lords, there can be little doubt that the state of the economy is the most important issue facing the United Kingdom at the moment. The pressures facing individual households and businesses across the country are real and very difficult. I welcome the opportunity to speak on this Motion, not least since it has a wider focus than yesterday’s Budget Statement. However, that is not to diminish the importance of what the Chancellor of the Exchequer said yesterday.

We are wrestling with economic challenges on two main fronts: our own domestic budget deficit and the wider international concerns and potential threats in relation to the eurozone and oil prices. Growth in 2011 was lower than in 2010 and lower than the Office for Budget Responsibility’s forecast at the time of last year’s Budget. Prices have inflated more than previously predicted and, as a result, people have been able to afford less in their household spending. Our Prime Minister has been consistently clear that tough times call for tough measures, while some of those measures have not been politically convenient.

It has been refreshing to see decisions taken with a long-term view to nursing our economy back to good health. I was pleased to see that this disciplined approach allowed the Chancellor to make a number of positive announcements in yesterday’s Budget Statement. I welcome the raising of the personal tax allowance to £9,205 from next year. It is the largest increase in the personal allowance for the past 30 years. I am also highly supportive of the reduction in the top rate of income tax to 45p, which will help ensure that higher earners and businesses do not take their skills and practices elsewhere. I feel that this change in taxation will provide a fair deal for persons who help to create wealth in this country. The entrepreneurs, who include the high earners, provide employment for a considerable number of people.

The phasing out of child benefit for those earning more than £50,000 is also in my view a policy that is not only fiscally responsible but will have the support of the vast majority of hard-working taxpayers. We must be clear that giving people greater power and responsibility to manage their own budgets is a big step on the journey back to economic prosperity. Families and businesses across the country are living through these difficult times and it will be these families and businesses that help our economy to flourish once again with their spending power.

Thanks to this Government’s responsible fiscal policy, the OBR states that it now expects the economy to grow by 0.8 per cent this year, before rising to 2 per cent next year and higher in the medium to long term. Inflation has been a cause of concern and getting it under control is crucial. Therefore, I welcome the forecast that inflation will fall from 2.8 per cent this year to 1.9 per cent next year.

I have enjoyed a long career in business and have a strong connection with the City of London. As a chairman of companies and an employer I feel that I have an understanding and appreciation of how businesses and employers contribute to the economy, and the challenges they face in maintaining and increasing their productivity in such difficult times.

I have visited eight different countries in the past 18 months, where I have been privileged to meet various senior figures from politics and business and to speak at a number of conferences. Engaging with our overseas partners has reasserted my long-held belief that one of the best ways we can improve our financial position, both globally and domestically, is to place a much greater focus on trade. We are the world’s seventh largest economy and, as such, Britain’s economic health is closely intertwined with wider global stability. Our trade surplus and global market share in key industries such as aerospace and pharmaceuticals provide us with a solid base in manufacturing and research, and the City of London maintains its position as a major investment powerhouse. However, we must do more. I want to see more of our goods and services exported overseas. I was very pleased to hear our Chancellor make reference to the key role of trade in yesterday’s Budget. In addition to continuing cuts in the rate of corporation tax, he stated that we must help British businesses to expand and innovate, and that we want to double British exports to £1 trillion by the end of this decade. I believe that this will play an important role in helping our immediate economic recovery and ensuring that Britain remains a strong economic force for decades to come.

I applaud the work of UK trade and industry in encouraging more of our small and medium-sized businesses to focus on exports, and particularly in shifting focus to emerging markets. In regard to overseas trade, we should, of course, maintain our connection with America and Europe but we need to look for opportunities in India, China, Brazil and the Middle East; in fact, in every part of the world. We could do more to trade with the Commonwealth countries. We, of course, have a historic connection with the Commonwealth, which is indeed an advantage. The Chancellor announced yesterday that UK Export Finance will be expanded. This is all extremely welcome.

It is important that we clamp down on tax avoidance and tax evasion. No one can fail to have been impressed by the energy with which the Government have taken forward this effort since May 2010. It is to be welcomed that the Chancellor has given additional impetus to this effort in the Budget. People have a right to know how their money is collected and spent. The concept of personal tax statements seems very simple, and might beg the question why we have not made them available sooner. However, if we are truly to engage effectively with the public on public spending choices, these statements are a useful tool.

It is also good to see both the Foreign Secretary and the Business Secretary working with UK Trade & Industry. I hope that this paves the way for greater co-operation between these and other government departments. I believe that if we are truly to realise our potential in identifying key markets and developing and promoting our products overseas, we must consider even more long-term joined-up thinking between those in the Foreign Office, the Department for Business and the Department for International Development. I, of course, welcome the fact that the Government have made headway on this. One of the most effective means of promotion will come from the networking and coverage provided by international trade missions. We should organise more trade missions to overseas countries. I am pleased that recently I was able to assist in arranging a trade mission. We provide aid to foreign countries but we must consider giving more financial assistance to properly organised trade missions. Aid and trade can go hand in hand. In addition, our ambassadors and high commissioners overseas could play a more significant role in this respect.

Two years ago, this Government inherited one of the biggest budget deficits in the G20. Times since then have been turbulent and have involved taking a number of difficult and sometimes controversial decisions. Let us be under no impression that there are any quick fixes, but yesterday our Chancellor delivered a Budget Statement that will ensure we continue on our road to recovery and uphold the United Kingdom as a fair, attractive and prosperous place in which to invest. We have already had a positive reaction from GlaxoSmithKline, which has announced that the company will invest £500 million in new manufacturing facilities, creating 1,000 new jobs. I would like to conclude by saying that we are indeed on a road to recovery.

15:08

[Lord Davies of Stamford]

My Lords, I endorse the remarks of the noble Lord, Lord Higgins, about the extraordinary leaks of this Budget, which was more or less published verbatim before the Budget Statement. I do not need to repeat those remarks because everyone heard them, but I thoroughly agree with them. If the Minister would be so kind, would he tell the House clearly whether the leaks by the official referred to by the Financial Times and other papers were authorised by Ministers or, if not, whether the Treasury is undertaking an inquiry into them with a view to stopping such scandalous behaviour in future?

I was shocked, as I think was the whole country, by the extraordinary decision of this Government, when for the first time they had an opportunity to give away some tax breaks, to make the major priority those people earning over £150,000 a year and paying tax at 50 per cent. It is widely regarded as extraordinary, at a time when people on modest incomes and on working families tax credit are finding that that tax credit and people’s benefits are being reduced and people are being made redundant wholesale by the public sector—I think of so many sailors, soldiers and airmen whom I knew in the MoD and whom the Government are now making redundant—that the Government should want to give a present of roughly £40,000 to someone who is earning £1 million a year. That is quite obscene and extraordinarily insensitive.

It was almost as obnoxious that the Government should abolish the higher personal tax allowances for older people, which apply only to those whose total income is less than about £25,000—I cannot remember the exact cut-off figure. Surely they are some of the most deserving people in this country; they are retired and have incomes at a modest level that can have been accumulated only through quite brave and self-sacrificial efforts at saving during their careers or small occupational pensions, and now they are being denied their benefit. Again, that is an extraordinary decision, reflecting an extraordinary set of priorities and values.

The Government have got themselves into the most frightful mess about child benefit. They have introduced a taper, which admittedly is slightly better than the previous system where the benefit was simply removed at the point of earning a £40,000 income. Nevertheless, what they have done introduces serious anomalies. Between incomes of £50,000 and £60,000 there will be a high rate of withdrawal of child benefit. I do not know what that rate will be—perhaps the Government can tell me—but it will be a very high effective marginal tax rate. I remind the Government, as they appear to have forgotten, that marginal tax rates are essential in determining incentives to save, to work, to take risks, to start businesses, to work harder, to get promoted or whatever. It is most undesirable for the Government suddenly to introduce a high effective marginal tax rate for this category of earnings.

What is more, the measure leaves the distortion and the great unfairness that if two parents are both working, they can enjoy an income much greater than in the case of a single parent who is working and continue to have the full child benefit. That runs quite counter to all the rhetoric that we heard from the Government about supporting the family and so forth. Perhaps that rhetoric was nothing more than rather insincere PR, which I think is rather a sad position.

I am concerned about the consequence of putting a ceiling on all reliefs. I support the principle quite strongly but I am concerned about the impact on charities. I would be grateful if the Minister could make clear whether in some way this would limit people’s ability to offset their charitable giving against tax; it would be a very unfortunate development if that were the case. There is a complete distinction between individuals who give away their money—they no longer have it and therefore should not be taxed on it—and those taxpayers who invest their money in tax-efficient savings schemes such as SIPPs and EISs. They still continue to own those assets and have the benefit of them, so the position is completely different and in that case it is quite right to impose a ceiling. It is quite wrong to do so if it affects the income of charities and the propensity of people in this country to contribute to them.

On the detailed tax measures, I support in principle the introduction of a general anti-avoidance rule but with an important condition, and I would be greatly reassured if the Minister could assure me that that condition will be applied: that there will be a right for taxpayers to receive timely pre-transaction rulings from HMRC when it wishes to remove the uncertainty that will otherwise be created by this GAAR. The point is that, under present arrangements, if you want to know what your tax liability is, it is sufficient to read the taxes Acts and look at the jurisprudence, or pay someone else a large amount of money to do that for you. Then you know exactly where you stand. Under a general anti-avoidance rule, that will no longer be the case. You might be completely in line with the texts available, which might tell you quite correctly that a certain rate of tax should be applied, but it is then open to HMRC to challenge you and say that actually you should pay a vast increase on that, a penal rate, because the only or substantial reason that you have arranged your affairs in that way was to avoid tax.

In many cases, there may be respectable reasons for a particular structure being adopted. The structure may happen to be tax efficient as well, but there may be other reasons, market reasons, strategic reasons or risk-management reasons—foreign exchange exposure management, for example—which lead you to adopt that course. Complete uncertainty is created as to whether those reasons will prevail and be accepted by HMRC. The disincentive to invest in this country which will be introduced if that uncertainty is allowed to exist will be much greater than the value of several points off corporation tax, desirable as that is in itself.

That uncertainty must be removed. The only way to remove it is to give people a guarantee that they can get a pre-transaction ruling from HMRC, that they can clear with HMRC a particular structure or arrangement in advance in a timely fashion. There should be a limit of 30 days within which HMRC must respond. I do not know whether the Government have in mind such a provision. If they do not, they should look at that urgently. If they do, I hope that they will reassure me that they are already working along those lines. It is not easy, because I am sure that HMRC will find all sorts of arguments why it cannot or should not be done: it does not want the risk or the responsibility; it is afraid of being taken to court; it does not have the people or the time; all the usual bureaucratic reasons. I am convinced that it will have to be forced to do that, but it is important that it is if the GAAR is to come into effect.

Finally, I make some remarks on the macroeconomic management of the Government. It seems to me that their fiscal policy has been far too tight. The fact that they have successively had to revise down their growth rates proves that. The excuse of the sovereign debt crisis in the eurozone is of no use, because that did not begin to affect the markets and confidence until last autumn. It is clear that they got their judgment wrong. It would have been much better to have continued on the general curve of reduction of public expenditure and the deficit which they inherited from the previous Labour Government.

That said, clearly the Monetary Policy Committee takes the same view and thought that it was necessary to do something by way of a monetary boost. Because, at the present rates of interest, it cannot use the traditional interest rate instrument, it has gone for the quantitative easing instrument. I have nothing against that in principle, but it raises two problems: a short-term and a longer-term problem. The short-term problem is that it is not very efficient. You need an awful lot of quantitative easing to get a given amount of credit creation—£200 billion or £300 billion each time. Part of the reason for that is that we are in a deleveraging recession or near recession in which there is not a great propensity on the part of households to take on more debt; they are trying to get rid of their existing debt. Part of the problem is the confidence in the economy at the present time, and part of the problem is that the Government are in contradiction with themselves, because they are trying to impose on banks the new Basel rules for high capital ratios, and that runs against the idea of the banks using that money to leverage a large amount of lending. That is the short-term problem.

Then there is the longer-term problem of what the Government do with all the instruments that they are buying—or the Bank of England, on their behalf, is buying. If they are cancelled, that represents a substantial increase in the money supply, which could be extremely dangerous once the output gap is reduced, narrowed. On the other hand, if the intention is to reverse the transaction, there will be great pressure on the markets, which will of course compete with the gilt issue and the need to renew the considerable amount of government debt in future. It will mean that interest rates are likely to be higher at that stage in the cycle than they otherwise would be, because of the need to reverse the transaction.

I agree with the noble Lord, Lord Higgins, on that. There has been nothing like enough discussion in this House or among the public about the monetary easing by means of quantitative easing. There is all too great a temptation to see this as a free lunch, a cost-free exercise with only benefits attached to it. I should be grateful if the Minister would address those problems in his summing up.

15:18

[The Earl of Listowel]

My Lords, I shall address the issue of childcare and related issues. Professor Melhuish, in his presentation to the OECD in 2011, highlighted that China had invested more than any other nation as a percentage of its GDP in childcare in the past 15 years. The PISA organisation, which looks across the globe at educational performance, finds a very close connection between good-quality early years care and long-term educational outcomes. Although, in the past, Finland has been at the top of the PISA tables for numeracy, literacy and science, Shanghai is now at the top of those tables of achievement.

I thank the Minister for introducing the debate. I am grateful to him for reminding us of the investment by GlaxoSmithKline in Cumbria, and in the creation of jobs. The noble Lord, Lord Sheikh, also mentioned that. A number of other companies are also investing in this country and that is very good news. I noted what the Minister said about our infrastructure plans and the emerging economic giants, such as China. I shall return to that subject. I also noted what the noble Baroness, Lady Kramer, said about credit for small and medium-sized businesses. That is a recurring theme whenever I speak to owners of smaller and medium-sized enterprises. I welcome what the Government are doing in this direction although I wonder whether they might not go further still. I particularly welcome what might be seen as a small thing—the 5 per cent rise, or 37p increase, in the cost of a packet of cigarettes. Cigarettes are the bane of the nation’s health and that increase should be highlighted.

I am sure that all noble Lords are very concerned about the exceedingly high rate of youth unemployment, which stands at more than 1 million. I hope that the Minister will say something about the long or medium-term forecast on youth employment and that he will be able to offer some encouragement in that regard.

As I am a trustee of a child welfare organisation, the Michael Sieff Foundation, I would like to address three key points: childcare, strong family attachments and getting the professionals in place who can support families to be strong. I have already mentioned the importance of childcare. Recently, however, when speaking with Save the Children, I was reminded that the United Kingdom is among the three most expensive nations for childcare. Although I welcome the steps which this and the previous Government have taken to make childcare much more widely available, its provision is still very expensive. I hope that we might move towards the situation in many other nations where childcare is as freely available as school and health provision. If we want to compete in the future, we need to have easy access to good-quality childcare.

The noble Lord has referred to investing in the physical infrastructure, in roads, in universities and in academic research. I would like to say something about investing in the social infrastructure. If we want young educated people who do well, we have to acknowledge the importance of schools. It was interesting to listen to the comments this week of the Chief Inspector of Schools about the importance of school leadership and excellent teachers. In his view, we have the best cadre of new teachers, which is wonderful news. We are grateful to the previous Government as well as to the current one for their commitment to teachers and to education.

Academics say, however, that schools can make only a 10 or 20 per cent difference to the educational outcome for children, and that the biggest difference is determined by what happens at home. The principal indicator of whether a child will succeed in education is how successful their parents were in education. So we need to support families better. If a family experiences domestic violence in the home, if the parents are alcoholic, or if they are simply at loggerheads all the time, even the most enthusiastic and able teacher will find it difficult to get the child in that family to concentrate and do well in school.

We have a real issue with so many young men growing up without contact with their fathers. That issue again came to the surface in a recent report from the Children’s Commissioner on school exclusions. This report highlighted the large number of Afro-Caribbean boys being excluded from schools. A documentary that I saw a few years ago about a young Caribbean boy in a children’s home reminded me of the greater number of Afro-Caribbean boys in local authority care. We saw this boy at Christmas and on his birthday. His father had told him that he would visit but never turned up. The educational and life outcomes of so many young men are being seriously diminished because they do not have a father or steady male role model who will take a continuing interest in their education, and support and encourage them. I only have to think back to my own father to recognise how important he was to me and to my education. We must address this as a nation if we are to be as productive as we can be in future.

To do that, we need the right professionals in place. I spoke of the welcome recruitment of excellent teachers to the profession. The previous and present Governments have done good work with health visitors, and with child and family social workers. It was very encouraging to hear from Tim Loughton MP, the Minister in the Department for Education responsible for child protection. He took the trouble to spend a month last year in a social services department, shadowing social workers. He has a long-standing commitment to raising the status of social work. The Government, under David Willetts and Michael Gove, have raised the threshold of entry to social work. Many agree that the new generation of social workers is of the best quality that has been seen for a very long time. This is extremely good news.

We need to invest in these people. If we invest in accountants and lawyers, we pay the best money for the best people because our capital investment is so important. We need to take the same view with vulnerable children and families. If we fail them and they grow up without an education, dependent on the state and entering the criminal justice system, there will be huge costs to us. We have an ageing population and we need to make the most of every young person in the country. We cannot afford to depend on immigrant labour. Many other nations are competing for it. We must make the best of the resources available to us.

I am very grateful for the work of the right honourable Iain Duncan Smith, Secretary of State for Work and Pensions. He has worked for a long time with the Centre for Social Justice, which he set up to look at what he called broken Britain, and the families that are not functioning as they need to, and to support early intervention. It was encouraging last week to hear about his social justice strategy, and the mooting of an early intervention foundation funded by business to intervene early and effectively with families. The Labour MP for Nottingham North, Graham Allen, has worked with Iain Duncan Smith on these important developments.

I mentioned the costs of failing to intervene early, so I will wind up. We are of course in a terrible recession. Difficult decisions have been made about cuts, particularly to local authority budgets. Authorities have had to make tough choices and have chosen in particular to cut funding to charities that support families. One hears that many charities that supported struggling families are no longer there to do so. As soon as we can, we should start reinvesting in supporting those vulnerable families. We need to recruit social workers who will develop a network of foster carers, because they depend for support on good-quality social workers. We need teachers and early-years workers. In general, we need to think about the familial infrastructure of the country as well as the concrete infrastructure if we are to compete in future with countries such as China. We must think about how to make good-quality childcare more affordable and available. I look forward to the Minister’s response.

15:29

[Lord Desai]

My Lords, it is a great pleasure to take part in this debate on the Budget. When I came into the House 21 years ago, I was able to extract a concession from the then Government that the Budget would be discussed. I was proud to open the debate on the Budget from the Back Benches. That practice was discontinued in 1997, when my party came to power. I am glad that after a few years we have resumed this practice, and I hope it continues. Of course, I should add that we have had an excellent maiden speech from the noble Lord, Lord Heseltine. It was a treat to be able to listen to what I can only call a class act. We look forward to many more interventions from him.

I have been known to be partisan about the policy of a rapid elimination of the deficit. Indeed, before the election, I was one of the people who wrote the letter to the Sunday Times saying that a total elimination of the deficit within a Parliament was absolutely essential, so I make no question about the overall strategy that the Chancellor has adopted. Unlike many previous Chancellors who in two or three years attempted to deviate from the path they set for themselves, the present Chancellor has kept to that path at considerable cost to his popularity.

I am not going to dwell on matters of tax policy and so on as other people have spoken about that. I do not find it shocking that the Conservative Party benefits the rich and taxes the poor. What else is it for? That is what economists call rational expectations. That is what we expect to happen, so I regret that none of that shocks me. However, what does shock me—and I think nobody else has mentioned this so far—is that the Chancellor had an excellent opportunity to revive growth and has made a tactical blunder in not taking it.

So far, when we have mentioned plan B, or something like that, the Chancellor has correctly said that he cannot hatch a plan B or give more money to the green bank because if he does that the debt numbers will go up. I quite agree that he has set a path for five or six years, whatever it is, and has to stick to it. However, he earned himself a windfall of £28 billion from the Royal Mail pension transaction. I take the view that he should have spent this windfall in reviving the economy rather than salted it away repaying the debt. People may consider that that contradicts what I said before, but once the Chancellor has set a timescale of five or six years, and it has been approved by the market, he does not need to overegg the pudding. On the other hand, as the OBR points out, there is a one-in-four chance that 2012 will see a recession, a drop in growth. The OBR predictions of 0.8 per cent this year, 2 per cent next year and so on are all right, but they are not very exciting. If he had had the courage to take this £28 billion and put it into the economy—and I shall come to how I would put it into the economy—put it into the green bank, done an infrastructure project or whatever, he could have shown that he is doing something to get growth in the economy without affecting his long-run strategic plan to eliminate the deficit. This is a matter of choice. I would do it, he would not do it, but he is the Chancellor and I am not. However, he is missing a good opportunity that will not come again in the next three or four years.

Now £28 billion is okay, but it is not a large sum of money. One of the frustrating things about reading the Red Book and so on is that nowhere do you find the figure for the total GDP of the country. You have proportions and percentages and you have to divide one by the other to find out. I think it is roughly £1.7 trillion, give or take a few hundred billion, so £28 billion is around 1.5 per cent of GDP. It would be a good spending boost to give the economy—maybe in one year, maybe over two years—and if you admit that the multiplier is, I do not know, one and a half, you will be able to revive the economy to the extent of, say, £2 billion to £3 billion. That would be a high growth rate. If that came on top of the 0.8 per cent, you would have a 2 per cent-plus growth rate.

There was a choice for the Chancellor to make here. He has deliberately not made it. He mentioned in his Budget speech that he was not going to spend the £28 billion but he is going to repay the debt. If you look at the debt numbers given in the Budget, it gives him a slight advantage this year, but there is really not that much difference in the path to debt repayment. I would have liked the OBR, which has done an excellent job, to have tried out the stimulation effect on the economy if the Chancellor had taken the liberty of spending £28 billion this year.

Of course, some people may prefer to give it to the green bank. If the noble Lord, Lord Skidelsky, had been here, he would have argued once again for his investment bank. I would prefer something much quicker. Twenty-eight billion pounds is roughly £1,000 per household. Give every household a £1,000 Diamond Jubilee voucher on the condition that it cannot be saved; it has to be spent. If the Chancellor had done that, it would not only have tremendously lifted the doom and gloom from the economy and been a good celebration for the Diamond Jubilee, it would have been an excellent boost to growth. This would have been a win-win situation, instead of which the repayment of debt disappears somewhere in the footnotes of a table.

As the OBR has said, the Budget does not alter the growth path of the economy one tiny bit, so the repayment has brought no advantage to the Chancellor. He did not ask me, but had he guessed what I might say and done it before I said it, it would have been a tremendous boost to the economy. If there is any chance even now to recook the books and go back and forth, that would be a very good idea. It is desperately needed if we are to avoid what is very likely to be an output drop this year. There is sufficient excess capacity in the economy not to worry about inflation. A £28 billion boost would have been a good thing.

Finally, I welcome the idea that the Chancellor wants to float perpetual bonds, taking advantage of the lower interest rates. I only have one suggestion: they should be called Gideons.

15:37

[Lord Northbrook]

My Lords, it is always a pleasure to follow the noble Lord, Lord Desai. I welcome the opportunity to take note of the UK economy in light of the Budget. First, I will look at the general UK economic background and then I will move on to look at specific measures in the Budget.

Initial comments on the Budget forecasts have in general endorsed the OBR inflation forecasts, which state that it will fall back sharply though the remainder of 2012 and ease further to be close to the 2 per cent target from early 2013, as the upward pressure from commodity prices eases and spare capacity weighs upon inflation. Growth forecasts have given rise to more criticism. It is good news that the OBR has revised upward slightly the forecast for this year to 0.8 per cent, although commentators feel that the 2013, 2014 and 2015 forecasts could be a little optimistic. However, the forecasts are supported by the Bank of England, which says that the UK will avoid recession.

The Chancellor and the Minister are quite right to draw attention to two jokers in the pack, which could significantly affect the forecasts. First, there is the OBR euro area growth downgrade by 0.8 per cent. Secondly, there is the problem of a further spike in the oil price due to the Iranian situation but I hope that this might be lessened by further Saudi release of oil production on to the markets.

The budget deficit too is forecast to decrease. The Chancellor must be given credit for sticking to his guns and bringing this down. His forecast of £126 billion is £1 billion better than at the time of the Autumn Statement. Yesterday’s borrowing figures, however, although covering only a month, show that there can be no cause for complacency going forward. The Chancellor will need to continue with his fine determination to get this figure down to £21 billion, as forecast, by 2016-17 when the structural deficit, he states, will be eliminated.

Here, I should like to take issue with the noble Lord, Lord Eatwell, in his opening remarks. He stated that there was not a particular crisis in the finances before the banking crisis. However, I think that the debt figure of £36 billion was already breaking the Government’s own rules. I should also like to draw his attention to a speech made by the noble Lord, Lord Myners, when he said:

“There is nothing progressive about a Government who consistently spend more than they can raise in taxation, and certainly nothing progressive that endows generations to come with the liabilities incurred by the current generation. There will need to be significant cuts in public expenditure, but there is considerable waste in public expenditure”.—[Official Report, 8/6/10; col. 625.]

The shadow Chancellor, Ed Balls, has stated that there can be no let-up or any reversal of the cuts of the Government.

How does the overall Budget help the Chancellor’s plans? According to table 1 in the OBR fiscal and economic outlook, the total fiscal impact to 2016-17, as a result of the policy decisions, will be about broadly neutral. As a result, much on the expenditure front needs to be done to get the deficit down. The Chancellor has said that if, in the next spending review, the Government maintain the same rate of reductions in departmental spending as they have done in this review, a further £10 billion of savings would have to be made to welfare by 2016. That is a challenging task.

The IFS green budget states that,

“the spending cuts are still to come”,

and that only 12 per cent of the planned total cuts to public service spending, and just 6 per cent of the cuts in current spending, will have been implemented by the end of this financial year. Page 67 of its report compares the size of the cuts planned to those of other economies. Over the next few years, the UK currently has the fifth-largest planned reduction in public expenditure as a share of national income. Only Iceland, Greece, Estonia and Ireland are planning larger cuts. They are large by historic standards. The Government’s plans will be the tightest seven-year period for spending on public services since the Second World War. Over the period April 2010 to March 2017, there will be a cumulative real-terms cut of 16 per cent, which is considerably greater than the nearly 9 per cent cut achieved from 1975 to 1982. The challenge is great but I am sure that the Chancellor will make every endeavour to achieve it.

There is much to praise about this year’s Budget. First, I would highlight the decision to cut the top rate of income tax from 50 per cent to 45 per cent. This sends a good signal to business and wealth creators. Secondly, I fully endorse the planned lowering of corporation tax. Again, this sends out a good message to entrepreneurs who should also benefit from the £20 billion national loan guarantee scheme. I also applaud the move to consult on a new cash basis for calculating tax for firms with a turnover of up to £77,000. Any move like that will make filling in tax returns dramatically simpler for up to 3 million firms, which must be a good thing and helpful to business.

For individuals I shall highlight two areas. First, the adjustment to the cliff edge withdrawal of child benefit was long overdue. The second area is the increase in personal allowances to £9,205 from next year. That is a positive step. Other measures in the Budget may not have an immediate effect, but could be a useful long-term help to the UK economy. The decision to relax the planning laws to encourage sustainable development should help business. In addition, moves to encourage the life sciences, aerospace and technology sectors are helpful. There are a few measures that I am less certain about. The abolition of the additional age-related allowance seems to have caused quite a stir, even though, as the noble Lord, Lord Newby, stated, it is made up for by the increase in the pension.

On a separate theme, could I ask my noble friend about the figures in table A1 for oil companies over the next five years with the change to North Sea oil and gas decommissioning? I see that it is going to cost the industry a net £1,145 billion over the next five years, which is a substantial figure. Are those figures due to last year’s Budget? Also, where does the most welcome £3 billion new field allowance for large and deep fields west of Shetland come in table A1? I can only see figures for the first two years.

While some commentators have criticised the increase in stamp duty, I find myself less concerned about it, particularly with the plan to clamp down on offshore companies avoiding the duty. Clearly this hits central London hard, so as long as the knock-on effects have been thought through, such as the effect on building work in London, I see no problem with it. Likewise, on the introduction of the general anti-avoidance rule, I take on board the comments of the noble Lord, Lord Davies of Stamford, on this. It is right to press ahead with a narrowly targeted GAAR aimed at truly artificial schemes, but supporting guidance must be practical for taxpayers as well as HMRC.

Two other areas give me cause for concern, the first of which is the 3p rise in fuel duty that is due later in the summer. This will not help the beleaguered motorist as prices are at record highs. The Government may correctly say that the price of oil is beyond their control, but I do not see why the increases cannot be delayed. Can the Minister say how much this will raise in tax? The other issue I am not happy with is the extra 300,000 people who will be dragged into the top rate of tax as the threshold for the higher rate is reduced to counteract the effect of higher personal allowances. In addition, there are still anomalies of high marginal rates for taxpayers with children and an income of between £50,000 and £60,000 and between £100,000 and £118,000, according to today’s Financial Times.

Overall, I commend the Chancellor on his Budget and for sticking to his last in cutting the budget deficit, offering sensible tax rates to individuals and companies, and setting in place longer-term projects to encourage the return of growth.

15:47

[Lord Haskel]

My Lords, last month I was in the United States, another country with a very large deficit. But I could not help noticing that its policy for tackling its deficit is much closer to Labour’s policies than to the Government’s measures. I also could not help noticing that its policy seems to be working, so I hope that the Prime Minister took note of that during his visit, because a lesson is there for all of us to learn.

The Minister spoke of the Government’s intention to support business and to get more balance into the economy. He pointed to some of the successes. He mentioned Nissan and Jaguar cars, and in pharmaceuticals a decision that was made within 24 hours of the Budget. They work fast at GSK, or was it just a PR stunt? But even so, the economy is forecast hardly to move. My noble friend Lord Myners reminded us that we are still producing less than we did four years ago and that the job situation is getting worse. Indeed, unless we get the economy growing faster, it looks as if our children and grandchildren are going to have a lower standard of living than ours, in spite of the granny tax. What is the Government’s Budget going to do about it? Apparently, very little.

We all know that the way to cut the deficit is through growth, and growth needs investment. Yet as a result of what has been proposed in this Budget, as my noble friends Lord Eatwell, Lord Wood and Lord Myners told us, the OBR has reduced its forecast for investment this year and next year, partly because we all know that reducing corporation tax does little for investment but encourages retention.

There have been all kinds of policies to provide business with finance. Quite rightly, my noble friend Lord Sugar and the noble Lord, Lord Bilimoria, expressed their doubts about their validity. They are doubtful because the schemes do not seem to be working. Project Merlin had hardly any impact. Why will this one work? Funds intended for business development are being used by the banks to strengthen their balance sheets. They have borrowed €8 billion from the European Central Bank at 1 per cent interest for three years, yet business is still being starved of funds. It is no wonder that a frustrated Vince Cable wrote to the Prime Minister drawing his attention to the piecemeal policies to help business. I agree with Mr Cable. Let us unite behind an objective which has relevance to every part of the economy and every part of government, and can create jobs and encourage innovation. It should be familiar to us all and not necessarily just in terms of money.

Without this kind of objective, the outlook will feel bleak. We need something which gives people hope and business confidence—the confidence that the Institute of Directors is calling for. The noble Baroness, Lady Randerson, accused me and others on this side of the House of living in a parallel universe. Perhaps we are, but we are living in the real universe. So let us try a different approach in the real world and ask: what is it that has brought growth, progress and jobs to our economy? What is it that has helped us raise productivity and use intelligent machines to make the Jaguar and Nissan cars that we have heard about? What is it that enables us to invest in modern systems of additive and high-speed manufacturing? What is it that has enabled us to create lots of new small businesses with products and services which are exported all over the world? What is it that has enabled us to use the discoveries of genomic science to create all kinds of new health products? What is it that has enabled us to build the creative economy and the knowledge economy? The answer, in a word, is digitalisation.

Where have many of the well paying jobs come from in the past 10 years? It is the digital economy. Where have many of the improvements in productivity, in processes and services that we have seen in the past ten years come from? They have come through innovation using clever software, microelectronics and clever design. In manufacturing, in services, in communications, in health and in entertainment, digitalisation in its broadest sense has been the key to growth and progress. Before the Minister says to me, “Well, you're 10 years too late. Digitalisation is too mature. We need the next thing”, let me say that he is wrong and that it is only just starting. We are only just beginning to feel its impact and to learn what it can do. There is a long way to go.

So here is a strategy for the noble Lord, Lord Heseltine, who is searching for competitiveness, as he explained in his excellent maiden speech. Digitalisation can be the theme that unites and joins us together in our plan for growth and competitiveness. It is everywhere. Let programming be taught as a language in every school. Digitalisation is familiar to every one of the young unemployed people who concern the noble Earl, Lord Listowel. Let us use it to encourage them to get involved and to seek the training and skills which they and the economy need. The Technology Strategy Board and the technology centres of excellence are all aware of what digitalisation can do for industry. Let this be a theme for their valuable work. The same goes for healthcare and medicine. Instead of selecting industries which the Government think have a future, let us support the introduction of digitalisation in every industry. We know that it will make them more competitive. It is essential at this time when the rising cost of energy and materials affects every business. We have become very good at the innovative and clever stuff of using microprocessors, of writing clever software and of miniaturisation, and selling it. So let us use it to grow our economy faster. As other noble Lords indicated, there are a couple of pointers towards this in the Budget, such as a tax break for digital entertainment and less tax if you manufacture your patented inventions here. But that hardly scratches the surface. The Minister spoke about providing better broadband facilities in some parts of the country. The noble Lord, Lord Fink, welcomed that. But, as your Lordships’ Communications Committee was told only this week, the plans are completely inadequate and leave us far behind our competitors.

Digitalisation can have an impact even on those industries that we have all but written off. Is the Minister aware that the first new yarn dyeing plant for 20 years was opened in Yorkshire recently? It is competitive thanks to digitalisation.

The Prime Minister must be in favour of this because recently he signed a letter together with 11 other EU Prime Ministers calling for the creation of a truly digital single market by 2015. That is not central planning: it is a way of encouraging everybody to pull in the same direction—a co-ordinated, cohesive strategy accountable to Parliament, to industry and the public, designed to create growth.

In the Budget, I would have liked to have seen digitalisation become a crusade which unites the piecemeal efforts that Mr Cable is so unhappy about. It will help us to create jobs, find investment and find the growth that we all seek. It could be the start of something that is not only made in Britain but imagined in Britain.

15:56

[Lord Flight]

My Lords, I congratulate the Chancellor on his Budget which, by and large, makes the best scope of the limited manoeuvre that he has and one understands the political constraints that are upon him.

The first obvious point, that many other noble Lords have made, is not backtracking from the programme to phase out the deficit in the public finances. In overall terms, what we have is modest cuts in spending that have been able to pay for welcome increases in personal allowances.

I support the comments made earlier in this debate by my noble friend Lord Higgins about leaks and the point that they have led to unfair and wrong publicity over the abolition of additional personal allowances for older people. It is fairly clear that if you take together the increase in state pensions, the new £140 pension and the increase that is on its way in personal allowances, overall, those pensioners will be better off. I hope that that message will be put across successfully.

I welcome especially the supply-side reforms, such as the corporation tax cuts. We do not have that much to offer but it is crucial for us to be competitive on that front. I welcome the enhancement of incentives in EIS, VCT and with EMI schemes for investment in small cap business. I declare an interest as chairman of the EIS Association. I welcome the increase in personal allowances and moreover the reduction next year in the top rate of income tax.

It seems to me that the Opposition are engaging in crocodile tears and playing politics. It was quite clear for most of the period of the Labour Government from 1997 onwards that Prime Minister Blair, his advisers and his Cabinet considered that a 40 per cent tax rate was the highest tax rate compatible with a successful economy.

I also accept some of the pragmatic measures taken to stimulate growth, although I am somewhat uncomfortable with the belief that government know best on where and what to do. I certainly hope that the changed measures for North Sea oil will result in reviving production and correct what I think were mistakes made last year. Certainly, support is needed for the life-science industries and I hope that the Government will address the issues raised in the House by my noble friend Lord Ryder on the Government’s problems with EU regulations.

I support what are bluntly Keynesian initiatives to invest in infrastructure and on a public/private basis. The increase in export credit is particularly necessary. The facilities that this country has been able to offer have been very poor in comparison with, say, France or the USA. I am sceptical of some of the other particular public-sector initiatives. To me, they smack a little too much of the sort of tinkering that we saw from Gordon Brown.

The Budget has a coherent growth strategy and there is a shift from public to private-sector investment. I am also pleased that the Budget did not tinker further with tax incentives for pension savings. It seems that, by constant tinkering, this country has substantially wrecked what was a very successful pension-saving situation up until 1997. I would like to have seen a more philosophical base and framework behind the tax reform in some of the supply-side growth policies. Although I understand the political reasons for bashing the rich, my own view is that taking that line is inappropriate and unwise, particularly for a Conservative Chancellor.

The Budget includes some items on which I have concerns. First, it would have been better to leave child benefit alone and found the cuts elsewhere. Child benefit was a substitute for a very rational income tax allowance for those who had the substantial burdens of bringing up children, whether rich or poor. Even though the measures announced yesterday improve upon the initial proposals, there is a still a steep rate of tax on individuals with between £50,000 and £60,000 per annum. To me, it is fair that those with the costs of raising children should enjoy a tax benefit. The economy could not go forward unless children were raised and there to do the work for those of us as we get old.

I personally think that the 7 per cent stamp duty tax was somewhat less than wise. It is yet another burden on London and the south-east, which already subsidises the rest of the country by over £50 billion per annum. It will be counterproductive in that it will simply reduce the rate of turnover as it is reduction tax. It is also another attack on aspirants. London has the problem that house prices are far too high because of the many wealthy foreigners who come here—more than 50 per cent of the market. For those wanting to buy a house in London, it is already bad enough and too expensive. This is just putting the cost up further.

I am also extremely concerned at the proposed measures to limit tax relief to 25 per cent of people’s incomes. As it stands, that would appear to apply to charitable giving, which seems a complete madness and contrary to the whole big society concept. I am not clear, but there could be elements of retrospective taxation here. The whole EIS situation rested on the fact that venture capital investment has not been very successful in this country, largely because the public sector is far too large. A lot of these investments fail but there has been the known ability, where they fail and you lose all your money, to offset that against income. If that is removed, there is an element of retrospection to it in that people have made investments on the basis that that was there. No matter how politically justified, I am uncomfortable with all forms of retrospection in the tax area.

My main point is that the Chancellor spoke of Britain not getting left behind compared with the growing economies of Asia and South America. It is correct that this Budget has done something towards addressing that, but we have a long way to go. Being 10th in the league table of the most attractive economies is nothing to boast about. In fact, we are not a particularly attractive economy in which to do business. Many will have seen Willie Walsh’s article, and the Chinese find this a very difficult and unattractive place to do business.

We have a long way to go. In my book, we are above all dragged down by a public sector that is too large and which has negative productivity, so that the private sector has to run even faster both to offset the negative productivity in the public sector and to achieve some growth. With a 50 per cent public sector you are never going to be a successful economy; you need to get below 40 per cent and towards 35 per cent. I hope that the Government’s objectives to achieve that by 2017 will come about. But the truth is that there is still masses of waste in the public sector, with duplication of activities, quangos doing things that add nothing of any value and, basically, excess regulation. It is a pity not to see a slightly more radical approach on those fronts.

I conclude by wishing the noble Lord, Lord Heseltine, every success in the challenge that he faces. There is no one better to do that job, and I think that individuals can achieve things even in the face of difficulties. If this country is going to succeed and prosper in comparison with Asia over the next 20 years, we will not be able to continue with welfare and NHS expenditure representing over half of public expenditure, with some 25 per cent of GDP through that route. We will have to make ourselves enormously more competitive, get rid of a lot of regulation that damages this economy and address the issue of regulation that damages our economy and comes from the EU. In the 1980s and 1990s, we were focused on not wanting our economy to become sclerotic, as the economies of most of continental Europe had become. That is what has happened to us, and we need to be a lot more radical in order again to become a vibrant economy.

16:07

[Lord Liddle]

My Lords, this has been a very good debate about what I found the profoundly depressing event that was yesterday’s Budget. The only bright spark in that Budget was the announcement that the noble Lord, Lord Heseltine, was going to take a thorough, long-term look at the competitive challenges facing the country. He spoke about that with sharpness and authority today. However, much of the rest of the Budget—its main themes—was about politics and about holding together an increasingly fractious coalition, with the Chancellor positioning himself for the future leadership of a rightward-trending Conservative Party. That is what the Budget was about; it was not about achieving the necessary national unity and consensus that we need to address the long-term challenges.

Some of these challenges, as the noble Lord, Lord Heseltine, said in his remarkable speech, have been with us for a century. But we have also been hit, as my noble friend Lord Eatwell described in a wonderful metaphor, by a tsunami of a banking crisis. It was a global banking crisis that has led to the deepest slump that we have experienced since the 19th century; it is the gravest banking crisis since 1825, as some economic historian friend of mine was telling me. The likelihood is that we will not recover the level of output that we achieved in the UK in 2007 until 2013 or 2014 at the earliest.

This was a crisis that few anticipated. The occasional economist did so; Mr Vince Cable claims to have anticipated it as well. But certainly the majority of the political establishment, such as the Governor of the Bank of England and the Treasury mandarins, never saw it coming for a moment. It was a global crisis; not a crisis of public debt in Britain, but in origin a crisis of the total debt of a banking system and private debt bubble which has reached more than 500 per cent of British GDP. As a result of the explosion of that private debt bubble, we have had our tax revenues in this country decimated. That explains the rising deficit, not the Labour Government’s irresponsibility. We have had a banking system which is now completely dysfunctional, and is still unreformed and not lending to the economy in a proper way. We have had an economy which is badly out of balance, a trading sector that is too small and manufacturing that has shrunk.

Here, I accept that Labour was slow on its watch in seeing what was happening to manufacturing during its period of office. British manufacturing was, to a large extent, crucified by an artificially high exchange rate, which rose far too high in the past decade as a result of the banking system pulling in capital from overseas, with its assets rising from 200 per cent to 500 per cent of GDP. In other words, there was a repetition of a problem we have been familiar with in Britain: of the interests of the City of London being different from the interests of the manufacturing sector of the economy. In the essence of a policy for manufacturing, one key element has to be a policy for the exchange rate. Yet this is still something we do not talk about in polite company in this country, and we have to change that.

As a result of this crisis, we face very tough times, and on this side of the House we, of course, accept that. There is no alternative to spending cuts and tax rises, or to many difficult decisions. For my part, I certainly accept that there are severe, practical limits to the scope for Keynesianism in one country. However, there is more room for manoeuvre on the deficit than the Government have so far been willing to exploit. On youth unemployment, the Government are doing less than the Thatcher Government did with the Manpower Services Commission in the 1980s. On mobilising investment, we are still short of the action necessary to get the huge investments in energy and housing that we need. There is still scope for prioritising within public expenditure social investments such as training, research and higher education, which will strengthen our position in the knowledge economy—exactly the sort of thing that the Swedes did in response to their banking crisis in the 1990s. On a prudent view of public finance, those kinds of expenditures on youth unemployment and social investments would pay for themselves within a very short period. We ought to be doing more to put money into these areas as part of our growth strategy.

Most of all, we need a more coherent industrial strategy for Britain. It is a great pity that when it was first elected the coalition, instead of building on my noble friend Lord Mandelson’s industrial activism, chose to distance itself from it. Instead of reforming the regional development agencies and using them as an instrument for the Regional Jobs Fund which the noble Lord, Lord Heseltine, chairs, it chose to abolish this means of getting money out into the productive economy. There has been, as Vince Cable said in his leaked letter to the Prime Minister, no “compelling vision” of our future. That is why we look with great expectation to the work that the noble Lord, Lord Heseltine, is now undertaking. In my view, the noble Lord has to think very radically. We have to look again at the proposals that the noble Lord, Lord Skidelsky, has put forward for a state investment bank or national investment bank of some kind to resolve the relationship between finance and industry. None of the schemes being promoted at the moment is really effective. We have to do something more radical.

The Kay review looks very carefully at the shareholder relationship and how the relationship between shareholders and the managers of companies needs to improve. In terms of local business engagement and local initiatives, the new enterprise partnerships can, in my view, work only if they are accompanied by much more radical decentralisation within Whitehall so that questions such as how training budgets are spent are not decided by some central bureaucracy but are effectively devolved to the cities and regions that are in a position to know what best suits their local economy.

We have to change the Treasury mindset. The noble Lord, Lord Heseltine, said that he was not in favour of wasteful spending. When I advised the noble Lord, Lord Mandelson, my experience was that the Treasury appeared to think that any kind of industrial spending was wasteful. We also have to break what I fear has become a Whitehall mindset that Ministers and markets do not mix. I believe that in the right circumstances public policy and markets can mix and that you can promote an active industrial policy more successfully than we have done.

The Budget does nothing in those areas. Instead, it cuts the top rate of tax. The noble Lord, Lord Flight, talked about Blair and Brown advisers. I was one of them, and I was in favour of sticking with the 40p rate. However, in the circumstances of the 2008 crisis, when sacrifices were going to be required all round, there is no doubt in my mind that the increase in the top rate was justified, and I cannot see what has caused the Chancellor to change that judgment.

This is a fiscal consolidation that is to last seven years and we are at the end of only the first two. Even if the amount of money to be raised from these taxes were not substantial, the fact is that we have been debating in this House scandalous cuts in welfare spending, such as depriving disabled people of an extra bedroom in their rented home. We have been saying that that kind of expenditure cannot be afforded and, at the same time, are cutting the 50p rate of tax.

I feel sorriest for my friends in the Liberal Democrats. They have thrown away the 50p rate for nothing. There is no progress whatever towards the taxation of wealth in this Budget. They have shown themselves to be weak and irrelevant in this coalition. They are like the National Liberals in the 1930s and they should draw the lessons from this Budget: they have no power to influence anything.

16:18

[Lord Davies of Oldham]

My Lords, this has been an excellent and wide-ranging debate, and therefore it is all the more difficult to wind up the issues from this side. Before we came into the Chamber, the Minister was kind enough to indicate that it is always the senior figure, in the Commons and here, who introduces the debate and the poor junior who has to cope with winding up. Of course, the Minister is playing both roles, so he has my greatest sympathy.

I hope that in responding to the debate the Minister will find time to address himself, in particular, to specific points that Members of the House have raised. They are difficult for me to develop in the limited time available but I think they are well worthy of consideration. My noble friend Lady Worthington drew attention to the extent to which this Budget challenges the Government’s green credentials, and the noble Lord, Lord Marlesford, indicated that property taxes are a pressing issue that we ought to address. My noble friend Lord Desai said that the Minister ought to consider what should have been done with the windfall of Royal Mail resources. The noble Lord, Lord Northbrook, indicated something that is of great concern to the nation—the imposition of an extra 3p on fuel duty later this year unless the Chancellor takes action.

In the limited time that I have, I will concentrate on the main themes of this debate. The main theme is obvious: this is a Budget presented in an age of austerity. That is why the country sought to respond to the concept that was presented a year or so ago—we are all in this together. The Government said that they were concerned about fairness in the necessary privations that would be visited on the nation as it emerged from these great difficulties. We were somewhat reassured last year when the Chancellor said that it was not the right time to remove the 50p tax rate, when others in society on much lower incomes were being asked to make sacrifices. Exactly, but what has changed? Only that the least well-off in our society—the poor; those who are losing their jobs as mass unemployment begins to emerge across the nation; those who are losing their benefits; those who are finding their pay frozen; and those who are threatened with regional pay rates at a lower level than they enjoyed in the past—are making sacrifices while the Government reduces the 50p rate of tax. It is payoff time for the Government’s supporters but payback time when the nation regards this issue as appallingly unfair.

Of course, the Budget did not come as a shock. As the noble Lord, Lord Higgins, indicated, there was very little left in the Budget that could cause any surprise because the press had been well briefed. My noble friend Lord Davies of Stamford asked whether Ministers knew that this briefing was going on. Is it conceivable that even the challenging folk in the Treasury would have been so brave as to give these leaks without sanction? Of course not; this was a carefully prepared position.

What was not revealed in the leaks beforehand was the granny tax. That emerged from the finer print of the Budget. As my noble friends Lord Wood and Lord Myners, who both demolished the totally contradictory defences that the Government have erected for the reduction in the higher rate of income tax, pointed out, everyone is scandalised by the Government attacking pensioners in such an obscure way. The reason for doing so is straightforward and has nothing to do with the Government’s defence of, “We haven’t hit pensioners hard enough yet so it’s their turn”, which seems an odd idea of fairness. Pensioners are on fixed incomes, with fixed expectations; that is why the change to the terms of trade in pensions is so acute and causes such anxiety. Members of the Government ought to appreciate just how significant that is in the response to the Budget.

However, even then, we are still discussing minor matters in relation to the economy. I think the noble Lord, Lord Higgins, first voiced the opinion, which was subsequently reinforced by a number of noble Lords, that the Budget did not have a great deal to do with the real economy. Given its neutral stance, it will have a marginal impact on the real economy. However, this debate is about the real economy and some of the interesting contributions have addressed that.

In a central part of an extremely challenging speech, my noble friend Lord Eatwell indicated that one of the crucial figures is that business investment, which was anticipated to be 7.7 per cent, is down to 0.8 per cent at present. That ought to be a source of real anxiety for us all. Is it because businesses lack cash? That is not what the Institute of Directors says. Its director-general says that we do not lack cash but we do lack consumers. Certainly, many of our major companies are cash-rich at present. However, they do not have confidence in the market. They are not confident that they will get a return on their investment. This is not the case to the same extent with the SMEs, which may not be so cash-rich. As my noble friend Lord Sugar pointed out, there ought to be a role for government. He was not the only speaker to voice this point but he was probably the first to do so. We need an investment bank that directs itself to provide resources for what would be the rapid growth areas of the economy, if we can only prime them successfully.

The problem is that the Government are massively reducing demand. They are reducing the resources available to people to spend. I am not, of course, talking about those who will benefit from the reduced rate of taxation and can afford to buy sports cars costing £40,000 to £60,000. The only tragedy about that is that those cars are almost certain to be German and therefore British industry gains little from those transactions. However, the vast majority of the population are exhorted not to spend what they do not have. The problem is that they have less, or they are anticipating that they are about to have less.

We are used to a Conservative Party which in times of austerity has a history of being quite prepared to run the country with high levels of unemployment. Reference has been made to the lessons of the 1930s, but there was high unemployment in the 1980s and we are now approaching similar levels of unemployment. That is a tragedy for all those who are unemployed. Those who think that the 1 million young people who are unemployed are unemployed because they prefer to hang around on generous benefits know nothing about the young people of this country. No young man or woman wants to be in a position where there is no possibility of getting a job or career. The reason why they are unemployed is because the jobs do not exist. The Government ought to address those issues a great deal more intensively than they do. Encouraging higher growth would give people a chance to get jobs.

The noble Lord, Lord Bates, and the noble Baroness, Lady Randerson, referred to the north-east and Wales respectively. Those areas, which have relatively low levels of income, are now being threatened by cuts in public sector employment, which will result in even lower levels of income. I heard what the noble Baroness, Lady Randerson, said about the Welsh economy. However, I have also heard representatives of the other place speak of their great concern for the Principality.

The great highlight of this debate was of course the presence and contribution of the noble Lord, Lord Heseltine. We all congratulate him on his maiden speech, although that phrase sits ill with me due to his contributions at Westminster over the years. We wish him well in the role that he is to play, particularly because, despite all the trials and tribulations of the immediate future, it is important that we have a longer-term perspective.

International comparisons can be of great benefit to us. We can learn from the way in which others tackle their business, not least because—let me make the obvious point—the US economy grew by 2 per cent last year. When the US car giants threatened to collapse, the US Government moved in. It might be that this Government should have a bit more confidence in doing so.

16:30

[Lord Sassoon]

My Lords, I welcome the debate that we have had today and the valuable contributions that have been made, including particularly those from noble Lords in all parts of the House who have drawn attention to the many initiatives in the Budget that I did not have time to highlight in my opening speech. I am grateful for the opportunity to reply to as many of the points raised as I can, but I will not have the time to reply to everything—there have been a lot of questions.

I reiterate this Government’s number one economic priority: tackling the record peacetime deficit that we inherited from the previous Government and restoring economic stability. We will stick to our deficit reduction plans; I assure my noble friend Lord Flight of that. I noted the contributions from a number of Peers—the first was probably from the right reverend Prelate the Bishop of Chichester—acknowledging the need for a fiscally neutral Budget at this time. As my noble friend Lord Higgins pointed out, a combination of tight fiscal policy and loose monetary policy is the balance that we are taking forward. I assure my noble friend that the Bank’s holding of gilts under quantitative easing is completely transparent; it is updated day by day on the Bank’s website and the position will be unwound in due course.

Nevertheless, we have a steady stream of noble Lords from the Benches opposite who still preach the idea of free spending with as much money as is out there, with no fiscal discipline. They do not seem to have learnt lessons. I am not surprised by the noble Lord, Lord Liddle, espousing that but I am a little surprised at the noble Lord, Lord Desai, saying that we should spend this £28 billion from the Royal Mail pension plan. We inherit £28 billion of assets but we inherit liabilities to the pensioners that are considerably higher than that. Is it really right that we should spend that money? No, we will not. As for suggestions that we might like to recook the books, I think that we had enough of cooking the books under the previous Government. We will not go there. As it happens, the noble Lord, Lord Desai, was doing what I had been doing a little earlier to look for the GDP number. I assure him that it is there in table D2 of the Red Book, but I agree that you have to look some way into the document.

We will stick to fiscal rectitude. Even if we were to decide to hand out vouchers, which we will not, I do not know how we would be assured about where they would be spent—we could not be sure that they would all be spent on goods produced in this country.

I was rather hoping to keep away from too much historical analysis of how we got to where we are, but perhaps I should be grateful to the noble Lord, Lord Eatwell, for drawing our attention to chart 1.5 of the Red Book. He seemed to suggest that it showed what a good job the previous Government did to keep the deficit under control. Perhaps he would like to look closer at that chart. It exposes to the full glare of daylight exactly what the previous Government were doing. It shows that the Labour Government continued to borrow £30 billion to £40 billion a year while the sun was shining. That illustrates precisely the nature of the structural problem that we inherited: running budget deficits year after year to create the illusion of growth until the credit card finally ran out. We will not go back to that.

Having talked about the basic stance of the Government, let me deal with the question of leaks, because it relates directly to the way that the previous Government used to conduct their business. As the Chancellor said in the Budget Statement, a Budget produced within a coalition is different. The days of the Chancellor coming up with a Budget in secret are—whatever we think about the rights and wrongs—gone. This was not a Conservative or a Liberal Democrat Budget, it was a coalition Budget, as we have heard from the broad agreement from coalition Peers this afternoon. As the noble Lord, Lord McFall of Alcluith, recognised, that makes this Budget different.

In the course of coalition Budget negotiations, various proposals were raised, discussed and debated. I come back to what we have been used to in previous years. It has been more widely debated than in previous years, when the Chancellor briefed the Prime Minister on what was in the Budget the day before, if the Prime Minister was lucky, and even more than in the dying days of the previous Government, when the Prime Minister told the Chancellor what should be in the Budget the night before. We do not need lessons from Members opposite on how to conduct ourselves in the run-up to a Budget.

[Lord Higgins]

That was not quite the point I was making. I understand about negotiations within the coalition, but it appears—for example, from the front page of the Financial Times—that officials told the Financial Times before the Budget was announced what was going to be in it. I believe that the House of Commons has the right to hear first.

[Lord Sassoon]

That issue has been the subject of an Urgent Question in another place this afternoon, and the Government have explained their position in an answer there.

I have said that we will stick to our fiscal position. That means that there continue to be tough choices to be made. Some of those tough choices have been highlighted this afternoon. I start with my noble friend Lord Newby, who gave a fair and good analysis of the issues about pensioners and the fair deal that they are getting. However, because the noble Lords, Lord McFall, Lord Myners and Lord Davies of Oldham, and others raised the issue, let me underline it again. The Government are committed to supporting pensioners. The IFS confirmed today that that is indeed the case. Pensioners will get the largest ever rise in the basic state pension this April to £107.45 a week. The Government are protecting pension benefits, including winter fuel payments, free prescriptions and eye tests, free bus travel, free TV licences and, of course, the triple lock on the basic state pension is being introduced. The single-tier state pension will be introduced and has been estimated to be likely to be £140 in current terms. I refute the suggestions that pensioners have been poorly treated. We are all in this together.

My noble friends Lord Fink and Lord Sheikh have quite properly raised the issue of tax transparency. I agree with them on the importance of the new annual statements, which will show everyone who pays tax what they are paying and where the money will be spent across the different categories of expenditure. I am sure that will raise a healthy debate.

On tax reform, I am very confused about where the Opposition stand on the 50p tax rate. Are they really still saying that the Chancellor of the Exchequer should justify the continuation of a tax that is shown to produce next to no revenue for the country and which materially affects our global competitiveness? The noble Lord, Lord Eatwell, quotes approvingly the Institute of Directors, but the main part of the institute’s statement after the Budget called for the tax rate to be reduced to 40p. Is that what the noble Lord, Lord Eatwell, wants? The noble Lord, Lord Wood of Anfield, who is not in his place at the moment, questioned whether the Government had been fully transparent on this. The forestalling number that he was looking for is set out in bold type on page 51 of the Red Book, a complete contrast to what the previous Government did in not even recognising that there was a forestalling problem. The tax raised less than a third of the estimates that they put out. I believe that they are in no position to question the basis on which we have looked at the evidence in coming forward with a 45p rate.

[Lord Davies of Stamford]

How can a 50p tax rate possibly be devastating to our competiveness and at the same time raise no money? If people do not pay it, it will not have any effect on their behaviour.

[Lord Sassoon]

My Lords, the simple fact is that if you talk to businesses around the world about why they are not moving business into this country and are not moving high-earning individuals back to this country, you will find that it is simply because of the disincentive effect of the 50p tax rate. It is entirely consistent that there is a disincentive effect on business decisions, even though the net take is nothing. I listened to what the real businesspeople in this House—the noble Lord, Lord Bilimoria, and my noble friend Lord Fink—said about the damaging effect of high rates of tax. Their voices present the true position.

[Lord Haskel]

We have some real businesspeople on this side of the House as well.

[Lord Sassoon]

Indeed, there are distinguished businesspeople, including the noble Lord, Lord Haskel, on the other Benches, but I do not think that the noble Lord, Lord Haskel, made this particular point. He made other points which, if I do not have more interruptions, I might be able to turn to. There is also the noble Lord, Lord Sugar. I shall refer to as many speakers as I can, if noble Lords want to hear me rather than make additional points themselves.

My noble friends Lady Randerson and Lady Kramer importantly referred to the significance of our new anti-avoidance regime, particularly in relation to homes with a value of more than £2 million. Some issues have been raised on the measures that will claw back five times the amount of the cost of a 5p drop in the top rate of tax. My noble friend Lord Fink, and the noble Lord, Lord Davies of Stamford, in particular, raised the question of the capping of tax reliefs and the effect on philanthropists and charities. The Government will explore with philanthropists ways to ensure that the new limit will not significantly impact on charities that depend on large donations. It is an important restriction, but we will make sure that charities are protected.

On other areas of tax and tax avoidance, the noble Lord, Lord Davies of Stamford, asked about the general anti-avoidance rule. Under the new structure, a pre-clearance system will no longer be warranted. GAAR’s focus will be on artificial and abusive tax avoidance schemes. We will have a completely different construct from the present one, and it is not proposed that there should be a clearance system.

A certain amount was said in different ways on the question of distributional impact by the noble Lords, Lord Liddle and Lord Myners, the noble Viscount, Lord Hanworth, and others. Again, since the Government came to power, we have in the Red Book done the transparent thing and made it absolutely clear what the distributional effect is of Budget after Budget—something that the previous Government never did. I set out the figures in my opening speech. In cash terms, losses for the households in the top 10 per cent will be almost five times the average, and more than eight times those of the bottom 10 per cent by income. We have real and deep concern for the distributional effects of our tax and spending policies.

My noble friend Lord Northbrook, and the noble Lord, Lord McFall of Alcluith, asked about the lowering of the starting point of the 40p band. There is nothing untoward about this; it is simply a partial offset of the effect of the increase in the personal allowance, so that higher-rate taxpayers will receive only a partial benefit rather than the full one, which is targeted principally and rightly at lower earners.

[Lord Myners]

My Lords, the Chancellor used the term “simple” yesterday to describe the pickpocketing of pensioners. The Minister has now used the same term. The IFS today stated that the reduction in the allowance for the starting point of top-rate tax will take 1.5 million taxpayers into the highest tax bracket for the first time. The measure is not simple; it will expose more people to 40 per cent tax than was previously the case.

[Lord Sassoon]

My Lords, I will not repeat myself. I explained the rationale for doing this, which is to make sure that the benefit is targeted correctly. The position is completely clear.

I will address one or two issues that were raised on business taxes. The noble Lord, Lord Haskel, made the point about there being other businessmen in the Chamber. I listened hard to what he said about his recent visit to the US. I, too, was in the US recently. One place I visited was Chicago, which at the moment is the headquarters of Aon, the world’s largest risk management company. It is moving its global headquarters to the UK for a number of reasons, including our lower and more competitive tax regime. I do not remotely believe that we should follow US policies in a slavish way if we want to see a growing business base in this country.

[Lord Eatwell]

As the noble Lord brought up the point, does he agree that Aon announced its decision to move here before there was any intimation that top-rate tax would be reduced?

[Lord Sassoon]

My Lords, as I understand it, Aon based its decision principally on the very clear road map on corporation tax. However, I believe that the change in top-rate tax will see many other companies reconsider their location.

On oil taxation, my noble friend Lord Northbrook asked about the apparent position in the Red Book that shows that receipts are rising. Indeed, that is the case, but it is because decommissioning certainty and the new field allowances will lead to new investment that will in turn give rise to additional tax receipts, so it is a clear win-win situation.

Turning to one or two of the pro-growth policy questions that were raised, infrastructure remains very important, but I would say to my noble friend Lord Newby, who presses, quite rightly, on this important point, that the initial commitment to £2 billion of investment by the pension funds is good news, as he recognises. It is for the pension funds to decide how much further and faster they want to go. From my experience, I observe that rapid investment decisions sometimes lead to poor investments, but that is for the pension funds. The other thing is that there is only a limited pipeline of shovel-ready projects, but as projects come through, the appetite is there.

The right reverend Prelate the Bishop of Chichester asked about Sunday trading and the Olympics. I can assure him that there will be proper time for debate in this House. I know that the right reverend Prelate the Bishop of London has written to the Chancellor today and the Chancellor will be responding shortly. I will make sure that the right reverend Prelate gets a copy of that response.

Outstanding in the contributions on the Government’s pro-business policies was, of course, the maiden speech of my noble friend Lord Heseltine. It was a one-of-a-kind maiden speech in my experience and, I am sure, the experience of all of us. He set out in a very measured and realistic way the scope of the challenge that he is taking on in the benchmarking exercise, as he characterised it. We all very much look forward to the early autumn when, I think, we will get the fruits of his deliberations.

Turning to other pro-business areas, there were a number of questions from the noble Lords, Lord Bilimoria and Lord Sugar, and other noble Lords about the National Loan Guarantee Scheme. Let me assure your Lordships that there is now lots of publicity on the participating banks’ websites and in their branches. There is clear branding of the scheme. HSBC is not in it because its funding structure is different. There is nothing about it other than its funding structure. As to where the risk falls, it falls on the banks that make the loans. The credit risk remains there.

As to our progress on the rest of our plan for growth, I draw the attention of the noble Lord, Lord Eatwell, to the progress report that was put up on the HM Treasury website yesterday.

I come back to what I heard from my noble friend Lord Bates and others who reminded us of the very positive things that are happening in business and particularly in challenged areas, such as the north-east. That is an important reminder to us of what is really going on in the economy.

Lastly on areas of business policy, I say to the noble Baroness, Lady Worthington, that we took an important step forward in our energy policy in a joined-up way between DECC and HM Treasury yesterday when the Chancellor confirmed the important look at a gas strategy as part of our overall energy mix going forward. The picture I got from talking this morning to the chief executive of one of our largest companies invested in renewable energy in this country was that the company is very supportive of the Budget, while noting, quite rightly, that there are many policy areas in this area that we have to consider.

In conclusion, we will build a recovery in this country through the ambition of those who aspire to do better for themselves and their families. I am particularly encouraged by what I have heard from noble Lords with business experience on all sides of the House.

This Government are building a sustainable and prosperous economy and a recovery that builds on our strengths across all regions of the country and all the creativity and productivity of our private sector.

Motion agreed.

EUC Report: Healthcare Professionals

Thursday 22nd March 2012 Lords Chamber

Motion to Take Note

16:54

Moved by

[Baroness Young of Hornsey]

That this House takes note of the report of the European Union Committee, Safety First: Mobility of Healthcare Professionals in the EU (22nd Report, HL Paper 201).

[Baroness Young of Hornsey]

My Lords, domestic healthcare has been high on the agenda of this House for the last six months or so. As with most other policies, there is a European dimension. This afternoon I would like to draw the House’s attention to the mobility of healthcare professionals within the EU.

I am sure that noble Lords will be aware of the debate that took place in the House on 8 September 2011 concerning the disparities between EEA and non-EEA healthcare professionals, as moved by the noble Viscount, Lord Bridgeman—who subsequently joined my committee, I am very pleased to say. On 11 January 2012, a Question for Short Debate asked by the noble Lord, Lord Kakkar, touched on the mobility issues but also considered other EU measures such as the working time and clinical trials directives.

Since its inception in 1948, the NHS has relied heavily on overseas-trained nurses and doctors to bolster its workforce. Their contribution has been significant and, since our accession to the European Union, what began with legal migration under the Commonwealth has been superseded by legal migration from other European countries.

We launched our inquiry into the mobility of healthcare professionals in May, shortly before the Commission published its Green Paper on revising the professional qualifications directive. Our report was published last October and considered the operation of the directive as it relates to the healthcare professions that are covered by its system of automatic recognition. The report not only made a number of recommendations to the Government but acted as our response to the Commission’s Green Paper consultation.

From the outset, we supported the principle that the mobility of healthcare professionals can bring significant benefits to patients, professionals and the EU in general. None of our witnesses challenged this assumption. However, we also recognised that the current directive failed to command the confidence of patients and professionals. Major UK regulators including the General Medical Council and the Nursing and Midwifery Council expressed strong concerns in their evidence to us that discrepancies in the current system forced them to admit individuals who did not meet the standards otherwise required of UK or non-EEA professionals, thereby putting patients at potentially serious risk. Incidents related to the failures of the directive have been statistically low. However, high-profile examples have had fatal results. This has undermined confidence in the directive and led to fears in some quarters that mobility has been prioritised over patient safety.

We examined the minimum training requirements contained in the current directive and concluded that they were out of date and badly in need of updating in order to reflect modern practice. We also considered whether there should be more stringent requirements for professionals to undertake continuing professional development, and whether a more competency- based approach to training and professional development should be adopted. We examined how fitness-to- practise information was shared between competent authorities in each member state, and we were alarmed to hear that competent authorities often fail to share information and that in some member states there are a plethora of different competent authorities, causing added confusion.

We concluded that the use of existing mechanisms such as the internal market information system needed to be enhanced and become more routine, representing a simpler and more cost-effective way of improving information-sharing than the Commission’s favoured option of introducing a European professional card.

Communication between patients and healthcare professionals is vital, and everybody agreed that professionals must be able to communicate effectively in the language of the host member state. We believe that the directive fails to ensure this and needs to be clarified so that language testing is permitted at the point of registration if deemed necessary for patient safety by the relevant regulator.

In the report’s conclusion we reached the view that encouraging mobility should never be at the expense of patient safety and that this must be the overriding concern in all circumstances. We believe that the current directive strikes the wrong balance and therefore welcome the Commission’s review, and we call on all parties, including the Government, to act quickly to ensure that serious failings in the current regime, which places patients at unacceptable risk, are remedied. Such changes would not represent a barrier to free movement but would instead strengthen it by rebuilding confidence.

The Government’s response was published on 19 December 2011, the same day as the Commission’s proposal for a revised directive. There is clearly a lot of common ground between our views and the Government’s views on the issues that we dealt with in our report. The Commission’s proposal to revise the directive goes some way to remedying the shortcomings in the original directive that we identified in our report. An alert mechanism will be introduced so that regulatory bodies must warn each other if, for example, a doctor or nurse has been struck off or suspended from a register and attempts to register in another member state.

The minimum training requirements for healthcare professionals will also be updated to reflect modern practices, and regulatory bodies will be able to check the language skills of health professionals. However, there is some confusion here. On the one hand, the GMC says that it is not currently allowed to systematically test language skills. On the other hand, the Commission says that it is. The situation is clearly ambiguous and we call on the Government and the Commission to work together to achieve what seems to be a common goal: to achieve clarity on this crucial issue. The Government’s proposed amendments to the Medical Act should happen in accord with any changes agreed to the EU directive in this area.

We also welcome the proposed exemption of healthcare professionals from the partial access provisions, in the interests of patient safety. We note that with the support of the relevant professional bodies, the Government are intending to push for veterinary surgeons and architects to be exempted. However, we also note that the Commission’s proposal contains no reference to the importance of continuing professional development. We reiterate our report’s recommendation that it should include an obligation on member states to require healthcare professionals to undertake CPD, but without being too prescriptive, and leaving the detail to each member state’s competent authorities. Although we remain to be convinced of the merits of the professional card, we note that the proposal seems to suggest that the introduction of professional cards for different professions will not be mandatory.

Although UK regulators have welcomed the introduction of an alert mechanism, they have questioned why it should apply only to the automatically recognised professions and not to the general professions. They also stress that the mechanism should flag up any conditions, restrictions or limitations placed on an individual’s right to practise, rather than just removals from registers. We share their concerns in this regard.

Data protection concerns have been raised in regard to the proposed alert mechanism, including by the European data protection supervisor. We touched on that in our report and note that the Government are already alive to this issue. We hope that they can successfully address these concerns during the negotiations, particularly in the context of the separate proposals for a revised data protection directive.

We have not yet received the Commission’s response. However, since the publication of our report I have participated in two conferences in Brussels which have included health regulators from across Europe who are working closely together on the proposals for a revised directive. During each event, interest in and awareness of our report was high. It therefore provided an excellent opportunity to reinforce the EU Committee’s views on this matter. I would also say that there was a good deal of consensus around the table among healthcare professionals from across the EU.

I also had the pleasure of hosting a roundtable meeting with senior representatives of all the automatically recognised professionals in the UK—that is, doctors, nurses, midwives, dentists, pharmacists, vets and architects. I hosted this event on 26 January and their views have helped to inform the committee’s ongoing scrutiny of the Commission’s proposal. We know that the Government have already worked closely with UK regulators in an effort to reflect their concerns during the negotiations on the proposal, which we commend.

In conclusion, I hope that my remarks demonstrate that the impact of the committee’s work in this area, as well as its proactive stakeholder engagement, has been successful and resulted in an ongoing scrutiny rather than, as it were, writing a report and leaving it on the shelf. The committee hopes that all parties to the negotiations on the revised directive, which are likely to continue until the end of this year, will strive to achieve real and practical improvements to the draft provisions. I look forward to hearing from other noble Lords, and of course from the noble Earl, Lord Howe, on behalf of the Government regarding this important matter. I beg to move.

17:05

[Viscount Bridgeman]

My Lords, I thank the noble Baroness, Lady Young of Hornsey, for initiating this debate and I congratulate her on the excellence of the report. I am in a position to say that as I only joined the committee after it had been published. The noble Baroness has set out the timetable for the various consultation papers which have appeared, possibly inconveniently, at the same time as the report. It has to be said that the Commission’s draft on the amendments to the 2006 directive, on which many had pinned high hopes, at first glance is disappointing on the matter of language testing. However I am assured by a number of competent authorities—regulators—I have spoken to that, in reality, slow but sure progress is being made. Again, the noble Baroness has confirmed this.

Let me take one or two specific points relating to language testing. Proportionality, a basic concept of the European Union, has been replaced in the amending document with “when strictly necessary”. I am assured that either of these expressions, each of them as long as a piece of string, is fundamental to the EU principles and that this concept has been upheld in several cases before the European Court. I simply ask the Minister whether, in his negotiations with the Commission together with BIS, the Commission has fully taken on board that healthcare is the most prominent among a small group of professions where patient safety is a vital consideration, in addition to but quite discrete from other factors such as a mutual recognition of qualifications that goes right across the group. In talking to some of the UK bodies, I wonder if the Commission has fully taken this on board. I remain suspicious that patient safety remains as it has been to date; that is, sidelined in favour of single market dogma. Is there not a fundamental complacency about this?

I note that at paragraph 73 of the report, Emma McClarkin MEP is reported as saying in evidence that there have only been “occasional problems” with competent authorities over the issue of language testing. One death that is attributable to language misunderstanding is one death too many. As I have read somewhere, the difference between a milligram and a microgram in dosage can be a coffin—a smart bit of journalism, but surely that says it all. So there is almost universal agreement that the draft amending regulations as they apply to language testing are not sufficiently specific. I hope that both departments will take on board the message from this debate that they should aim towards unequivocal drafting which ensures that, in this matter, patient safety transcends any other consideration.

The committee’s report makes the point with elegant moderation:

“We consider that the Directive currently strikes the wrong balance between facilitating mobility and ensuring patient safety, which must be the overriding concern. Furthermore the current system undermines public and professional confidence in the mobility of healthcare professionals within the EU”.

I would take this point further. The regulations as they stand inhibit the status of the regulators within their own respective disciplines. After all, what is the raison d’être of a regulating body if it cannot adequately monitor its membership?

Perhaps I may make my own position quite clear. In my view, our aim must be that Article 53 is amended so that healthcare authorities in each member state have the power to impose whatever language testing they think fit. In some cases this may amount to blanket language testing, something the Commission has set its heart against. In other cases, the regulators may consider that some lower level of testing is adequate.

The sub-committee’s report covers the matter of language testing with clarity and common sense, and its proposals are admirably set out in paragraphs 82 to 85. These include provisions for monitoring the language skills of self-employed professionals, an area which in the Commission’s own admission is inadequately covered. There is also the very practical suggestion that, in view of the length of time required to effect legislative change, a code of conduct is an effective and relatively speedy route for clarifying with competent authorities what the directive currently permits with regard to language testing. Finally, the committee is not in favour of restricting language testing to those professionals who come into contact with patients.

In talks with various regulators, I am reassured that slow but steady progress is being made by the Department of Health and BIS in their negotiations with the Commission. I feel that we are all talking to the same purpose and this is very welcome. But perhaps I may ask the Minister whether he will continue to make the point that, whereas proportionality is a fundamental principle going back to the treaty of Rome, the matter of patient safety is quite frankly even more fundamental than that, and that it is patient safety which must in the end prevail.

17:11

[Lord Dykes]

My Lords, from these Benches, I thank most warmly the noble Baroness, Lady Young of Hornsey, and her sub-committee’s members for this excellent report in what is an incredibly complicated area. A good deal of thought has gone into its construction. I think that the evidence taken from a large number of very impressive people helped the sub-committee’s deliberations. It is good also to see, as usual, the chairman of the European Union Select Committee in his place listening to this debate.

As noble Lords have said, what is striking about the report is that it is not just to be put on a shelf and then forgotten; this is a matter of crucial importance where the report has breathed life into the Government’s own deliberations and conclusions, some of which I am sure we will hear from the Minister today. We will then await the European directive.

I also thank from these Benches the noble Viscount, Lord Bridgeman, for his comments, partly because of his very close connections with and experience of the medical profession and well known hospitals. He has acquired great knowledge over many years. I hope that we can perhaps use instead of “single market dogma” the more congenial “single market objective”, because that is a legitimate objective of the European Union—indeed, it is set down in European Union law and applies to us as well because we obey European Union law, I hope, in all respects. When all the complexities have been ironed out, the mobility of healthcare professionals will be an important part of the growing single market not only in the European Union but in the EEA as well. Therefore, we await the terms and contents of the directive.

I commend the way in which the Commission has very patiently and carefully conducted its hearings and produced its Green Paper. It has consulted and listened to all sorts of advice in a way that happens more often in Brussels than in member states, where Governments sometimes legislate too quickly depending on the individual characteristics of the parliamentary system that they enjoy or suffer from, as the case may be.

This process will lead to a directive and member states will then bring in their own national legislation. That will be the crucial moment for HMG to implant into it those important requirements that we have heard about at the beginning of this debate and the primary considerations of the committee as described by the noble Baroness, Lady Young of Hornsey.

I again thank the chairman of the European Union Select Committee. I think that it is now in order to quote a letter from him to the members of the committee because it is in the public and parliamentary domain. The last but one paragraph of his letter of 16 March, referring to the report from the committee of the noble Baroness, Lady Young, states:

“The Committee considered that to ensure that professionals’ qualifications and skills were adequate and reflected modern practice, the training requirements of the Directive needed updating”.

That will surely be one of the most important components of the directive that we await. The letter continues:

“The Committee proposed that mandatory use of the Internal Market Information System by competent authorities in Member States to exchange information about healthcare professionals would be simpler and more cost-effective than the European professional card”.

From these Benches, I agree with that very much indeed. In the longer-term future there may be a European-wide single market healthcare professional electronic identity card that can be used, but that is further down the track.

Public confidence is important, not only in this country. There are individual medical stories in the dramatic press in other member states too about things that go wrong with a doctor, healthcare professional or nurse practitioner where something tragic happens—or if someone suffers prolonged illness rather than the tragedy of death. Those people have come with inadequate language qualifications, or other details of their training were substandard, and therefore they were not able to perform as the public would want.

But there are very small numbers of those cases. The press with its lurid headlines is bound to highlight them. In this case it does a good service. We often grumble about the press and its dramatic headlines, but in this case it is good to make sure that patients’ safety is the real priority. But it is a small number, so we should not go too far down the other path. That is something to which we are prone in this country, with our excessively nationalistic press: saying that in all respects British standards are higher and better than in other member states, including large member states in the European Union where more and more now the standards are getting very similar. There is a high level of quality and of protection. It is easy and tempting to go down that path, but it is a flawed path and misleading and one that I think the Government would be wise to discourage as much as possible and explain the realities behind these matters.

We wish the report well. We look forward to the final judgment of the Commission, the publication of the proposed new European directive and the Government's conclusions pro tem today. I also thank the noble Earl, Lord Howe, for coming here only three days after the end of his herculean efforts on the Health and Social Care Bill to deal with this important matter. We thank him for that and support the conclusions that he may lead us to this afternoon.

17:17

[Baroness Thornton]

My Lords, it does indeed feel that normal service has been resumed in the Chamber. I thank the noble Baroness, Lady Young, for the report and for the coherent way that she introduced it. I congratulate her and her committee on a brilliant job.

It is true that in September we had a preview of the report. We even saw some of it circulated during the debate initiated by the noble Viscount, Lord Bridgeman. During that debate in September, the Minister said:

“This summer we have been working constructively with other government departments and the health regulators themselves to formulate our response to the European Commission’s Green Paper on reforms to the directive. On that Green Paper there is very little on which the department and our partners disagree regarding areas of the directive that need strengthening. We agree that the harmonised training standards underpinning automatic recognition need updating and that a mechanism for regular updates is required. We would also like to see a focus over time on competencies in training rather than particular length of training”.—[Official Report, 8/9/11; col. 457.]

The Minister then goes on to talk about those negotiations. Those remarks were very important because they showed that we were making progress and moving forward together in the UK. What further progress is being made on that? I ask because it is not completely clear from the Government’s response to the report what the scale of progress is in the different areas that are covered by this report.

It seems to me that government policy, the report and the response are all broadly in the right place and there has been agreement in the House many times, not least because the noble Viscount has championed this issue for some time.

As well as being grateful for the report from the noble Baroness’s committee, we also need a report back on how the Government are progressing with these negotiations, what they expect the outcomes will be and at what times. This is indeed an issue of patient safety but, as the noble Lord, Lord Dykes, said, we also have to recognise that it is an issue from our NHS benefiting from the free movement of health professionals across Europe. Which one of us has not been treated by a nurse, doctor or health professional from some part of the European Union? That will absolutely be the case and is quite right. In the vast majority of cases, we do not even think about the fact that we may be treated by a German doctor, a Scandinavian nurse or whatever because we assume that they will be competent. In the vast majority of cases, they will be.

I hope that the unanimity in this House will help to inform the Government’s position on this review and indeed strengthen the Minister’s arm in these negotiations. However, I have a question about what and how much impact the Government’s position on light-touch regulation will have on these negotiations. That is slightly going back to the Health and Social Care Bill, where we had a discussion about that. I would like to know what impact that might have. It seems clear that the language skills clarity and the continuing professional development are still very important issues that need to be resolved. However, finally, there is no question that the EU Committee has done a great favour for patient safety not only in the UK but also across the whole of the European Union.

17:21

[The Parliamentary Under-Secretary of State, Department of Health (Earl Howe)]

My Lords, I echo the comments just made by the noble Baroness, Lady Thornton. I, too, am extremely grateful to the noble Baroness, Lady Young, for her work and the work of her sub-committee in undertaking the inquiry that it did and for producing the report which has proved extremely valuable to us. Like the noble Baroness, Lady Young, I welcome the European Commission’s review of the directive on the mutual recognition of professional qualifications. It is a priority for the Government to ensure an appropriate balance between free movement and patient safety in the new directive. I will come on to say something more about that.

To start with, I broadly agree with the findings of the sub-committee’s report. As the Committee’s report highlighted, there have been significant concerns expressed by partners and stakeholders as to the applicability of aspects of the directive and its provisions to health professionals. The proposal published by the European Commission in December contains some welcome amendments that should, if introduced effectively, contribute significantly to tightening the European regulatory framework and improving patient and public safety. The Government’s negotiating position on the new directive has been informed by the sub-committee’s recommendations as well as the views of the devolved Administrations and our partners within the healthcare sector. There are a number of aspects in the proposals where we will seek clarification. I shall come on to those one by one.

First, the noble Baroness referred to information sharing. A key consideration for the Government is supporting the proposed new alert mechanism. As she mentioned, there is a proposal for a proactive alert mechanism for healthcare professionals falling within the sectoral professions—that is, those subject to automatic recognition of their qualification—in Article 56a(1). This looks positive. A different system will apply to healthcare professionals that fall within the general system under Article 56a(2)—the regime applicable for professionals under the general system that do not fall within the scope of the services directive. While this difference is not ideal, it arises from the different legislative bases across the European Union. However, the system should be workable if there is clear guidance from the Commission as to what can be shared and when, and if competent authorities under the general system comply with and take their responsibilities seriously and notify member states as appropriate. Having said that, I believe that there are points of detail we still need to clarify regarding the practicalities of administering the system. Ensuring proactive sharing of information when concerns arise about a healthcare professional is one of our top priorities, and we welcome the proposals in the new directive for the alert mechanism.

The legislative formulation of the proposals for alert mechanisms is complex, because the provisions differ for the sectoral professions. The Commission needs to ensure that all European competent authorities fully understand their obligations. At this point, we require further clarity on the application of the alert mechanisms for the general system and the implications of data protection overall.

We share some of the concerns of our partners about the proposal for a European professional card, an electronic card that links to the internal market information system, or IMI, and can be used by individual professionals for identification purposes. The new proposal, underpinned by the use of IMI, is a positive development, but the time limits proposed for decision-making when an application is made are potentially problematic and may prove to be counterproductive. In cases where satisfactory information has not been provided to the host member state competent authority within the time limit, it would be likely to have to reject an application. More generally, our view is that the whole concept needs to be properly piloted. While there may be some benefits in a professional card, proposals for it need more work—and I agreed with the remarks of my noble friend Lord Dykes on this issue. We need to ensure that the impact on competent authorities and professionals is properly considered so that patient safety is protected. We await with interest the results of the pilots. Our overriding concern in this area is to protect UK patients from healthcare professionals who may not be properly skilled to do the job.

The proposed move to a minimum duration of medical training from six to five years is also welcomed, as it provides greater flexibility to adapt medical training to meet the UK’s needs. We would eventually like to see a competence-based system of training standards, but we recognise the scale of such an undertaking in the short term. The move to modernise training over time, through a process for updating the core subjects that must be covered by training for the sectoral professions and by providing the Commission with delegated powers in this area, is a move in the right direction.

My noble friend Lord Bridgeman focused on an issue that he has consistently championed—that of language testing. This Government have made it clear that we want to stop foreign healthcare professionals working in the NHS unless they have passed robust language and competence tests. While the proposed new directive would not allow language checks by a competent authority before recognition of the qualification of a professional, it makes it clear that controls on language checks are permissible and can be undertaken before a professional is able to practise. The proposals in respect of language checks do not go as far as the GMC would like, as they do not enable checks at the point of registration, but would permit healthcare competent authorities to undertake language controls following registration when there are serious or concrete doubts about a doctor’s language ability, or following a request by the NHS or patient organisation. There is evidence of the Commission having considered the views of the UK Government in its proposals, and there have been positive developments in the proposals in relation to patient safety overall.

As I said, the Commission’s proposed draft would not appear to allow the GMC to undertake systematic language testing at the point of registration. The GMC would be required, as it is now, to consider the recognition of the qualification and, if accepted, to register the EEA migrant. However, the proposals appear to give greater scope for the GMC to be able to apply language checks after registration where serious concerns are identified, which is a positive development. We believe that what the Commission is proposing would be consistent with the proposed model for a strengthened system of checks, overseen by responsible officers, that we are working up in conjunction with the GMC. I will now come on to that.

In the UK, we have implemented a system of checks at a local level through duties on primary care trusts and guidelines to local NHS employers. We have already taken steps to strengthen the system and, since 2011, all designated bodies have been required to nominate or appoint a responsible officer—for example, a medical director in an NHS trust. In England, the responsible officer’s duties include ensuring that medical practitioners have the qualifications and experience they need for their area of work, and that references are checked, but we think that we can and should do more. We expect to consult shortly on new guidelines for responsible officers, which will build on the existing role of responsible officers in England to explicitly check for language ability.

We are also working with the GMC to develop further proposals and amend the Medical Act. This will mean the GMC is better able to take action where language concerns arise as part of the registration process and when a licence to practise has already been issued. The proposed changes to the directive would appear to facilitate the implementation of our preferred approach to language controls, which I have described.

In common with the sub-committee, the Government are disappointed that the proposals do not include a clearer requirement for all member states to have continuous professional development for their healthcare professionals. We think that all member states should be required to have a system of CPD in place for the healthcare professions within their territories, since out-of-date training presents a much greater risk for healthcare workers than for other non-health professions covered by the directive. We would not be prescriptive on the CPD system used by the member states. However, migrant professionals should be expected to demonstrate that they have kept up with latest developments in practice, and that recognition should be linked to them being able to do so. Overall, the key issue is that health professions should be able to demonstrate relevant recent practice.

The noble Baroness, Lady Thornton, referred to training. Negotiations on the directive commenced in January, with the aim of reaching agreement by the end of 2012. However, training has not yet been discussed in any detail at European level. We will continue to work with stakeholders on that important topic. As regards the use of delegated and implementing acts by the Commission, the Government recognise the need for those acts to facilitate the effective functioning of the European Union and the freedom of movement of professionals. However, we seek further clarity on the appropriateness of some of the proposed changes to the use of delegated and implementing acts and the surrounding processes.

We are pleased that the European Commission has proposed a “transparency” process under Article 59, which is likely to bring significant benefits in terms of increased trade and ease of doing business across Europe. Member states are obliged to check that their regulation of professionals is necessary and proportionate, while allowing member states ultimately to decide whether to regulate professions, which is of particular significance for health and caring sectors, to ensure patient safety. Inherently, in the context of European law, there is a balance to be struck here.

That balance was something to which the noble Baroness, Lady Young, and my noble friend Lord Bridgeman referred. I very much take the points that they made. Naturally, we believe in proportionality in regulation, but the Government have previously made their view absolutely clear that in places there needs to be a stronger focus on patient safety in the directive. Some of what is proposed in the draft new directive will help to achieve a better balance, and that is to be welcomed. Our approach to the negotiations over the coming months will be to ensure an appropriate and improved balance between freedom of movement and patient safety.

I listened with care to my noble friend Lord Dykes and agreed with much of what he said. We should not assume that our standards in this country are necessarily higher than those in other countries. Having said that, I think that there is one issue here of which we should not lose sight. As highlighted in evidence given by the General Pharmaceutical Council and the Nursing and Midwifery Council to the House of Lords inquiry last year, a small but significant risk is posed by professionals who are entitled to automatic recognition and seek establishment in the UK but who have not practised their profession for some years. As a result, in the Government’s Green Paper response to the Commission, we asked for the addition of a requirement of two years’ experience in the last five years, unless the applicant graduated in the last three years. However, this suggestion was not included in the Commission’s recent legislative proposals.

The Government will continue to work with the Commission to ensure that safeguards are in place. However, we come back in the end, I think, to the role of employers and commissioners in this context, because that is clearly vital in ensuring the suitability of the individuals they seek to contract with for the specific role they intend them to undertake, including acceptable relevant experience.

There is no question that overall the UK healthcare system benefits from the free movement of professionals. I think we all agree about that. However, the Government will continue to prioritise and promote satisfactory safeguards for the health professions and to ensure that the principles of free movement are balanced with the need for adequate safeguards for patients.

17:36

[Baroness Young of Hornsey]

My Lords, I thank all noble Lords who have taken part in today’s debate. It was heartening to hear so much consensus across the House on the issues that have been raised by the inquiry and in our subsequent report. As I said earlier, I was pleased that the noble Viscount, Lord Bridgeman, joined the committee after having initiated a debate about language. I am very grateful to him for his diligence in pursuing that issue. It has to be said that he also has a very well rounded view of the whole set of issues involved in this report, although his focus has been on language-testing and so on. I think we all want to see something unequivocal and unambiguous in relation to language-testing to which we can subscribe.

I am grateful, too, to the noble Lord, Lord Dykes, for helping to put the report in a wider context. That is important, as is flagging up the fact that we feel that mobility is a good thing. We benefit from it, as we have done for many years and will continue to do. The question is really how we make the balance between the desirability of mobility and patient safety work. Of course, the noble Lord is correct to point out that we are talking about a very low incidence of fatal and serious impacts arising from the mobility of inappropriate practitioners. By the same token, as I think the noble Viscount, Lord Bridgeman, said, one is one too many, and that is what we have to tackle. In fact, somebody brought to my attention another very worrying incident concerning a doctor who has left a trail behind him on mainland Europe. Therefore, we have to be vigilant on those issues.

The noble Baroness, Lady Thornton, again emphasised the issue of benefiting from free movement. It can sometimes be easy to lose sight of that when we discuss and focus on what are, essentially, problems. I am glad that she raised continuing professional development, which the Minister picked up and went into in some depth. Again, many of us would agree that it is an absolutely crucial area.

During our evidence-taking, we heard the example of someone from outside the UK who had trained as a midwife 20 years ago and had no professional development subsequent to that. That is an area in which there have been lots of advances in many different ways. The idea that someone who first trained 20 years ago and has not practised since could come into midwifery here is quite disturbing. Therefore, CPD is very important.

I will not pick up on everything; it has been a long day. I will just deal with the professional card, which is another area on which we agree. It is interesting to note that at the conference called by Healthcare Professionals Crossing Borders in Brussels a couple of weeks ago, that was something of which some people were in favour while others had deep concerns about it.

I should also say that most people at that gathering had deep concerns about language. It is not only us who have these anxieties about how and at what point we test language. Part of the problem is that the complexity is there anyway but there are other layers of complexity to do with all the different systems that are in place in different member states. There are even different ways of thinking about registration. Some member states separate registration from licensing, which we do not. Therefore, if we say that something can come into play at the point of registration, it will mean something different in different places. All that complexity means that it is even more crucial that we have absolute clarity and push forward.

I reiterate how pleased I am that there is so much consensus on the areas in which we need to make progress, and that the Government are taking up those areas and working with organisations such as the GMC to ensure that we maintain and enhance a balance between mobility and patient safety.

In conclusion, it is absolutely right for me to acknowledge the unequivocal pleasure and delight of working with Sub-Committee G and my colleagues on it, who are represented today by the noble Viscount, Lord Bridgeman. We worked very hard on the report, as noble Lords can see. We did a lot of questioning and reflecting, which paid off in producing a report that many people have referred to. When I go to meetings in Brussels and elsewhere, people brandish copies of the report, which is heartening to see. I also thank the staff, particularly Talitha Rowland and Alistair Dillon, for their work on the report.

The debate today has, typically, been very informative and well informed. It points to the ways in which different parts of the House and our society can work together to ensure that we achieve the balance that we all seek. I beg to move.

Motion agreed.

House adjourned at 5.43 pm.