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(12 years, 8 months ago)
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The Secretary of State for Transport (Justine Greening)
It is a great pleasure to be able to resume the debate on the Budget today. This is the coalition Government’s third Budget. It is a Budget that helps Britain to earn its way in the world, rewards working families, backs business, and sticks to our course of clearing up the economic mess that the previous Government left us. This Budget, like the last two, cannot be divorced from the urgent need to deal with Labour’s debts. Let us remember the crisis that we inherited less than two years ago. The state was borrowing one in every four pounds it spent and spending £120 million a day on debt interest alone. The country was taken to the brink of bankruptcy by a profligate Labour Government, leaving our people with the biggest deficit in the developed world.
This Budget marks another step on the road to a strong and stable economy, and that is why we are sticking to our deficit reduction plan, winning credibility in the markets and keeping interest rates low.
Mike Gapes (Ilford South) (Lab/Co-op)
Will the right hon. Lady explain why this Government are going to add £150 billion to total borrowing? Is that a sign of success?
Justine Greening
Many people who see that the hon. Gentleman’s party’s strategy is to borrow in the middle of a debt crisis will wonder why he is asking that question. I presume it is because he thinks that borrowing is not high enough.
This Government ultimately have a laser focus on making Britain the best place in the world to start, finance and grow a business.
Mr Stewart Jackson (Peterborough) (Con)
On the subject of Labour waste and profligacy, is my right hon. Friend aware that the Institute for Fiscal Studies says that had Labour been re-elected, it would have borrowed an extra £200 billion, which would have had a huge impact on interest rates, in particular, and, given the debt legacy in households, a calamitous impact on the economy generally?
Justine Greening
My hon. Friend is absolutely right. Labour Members have learned nothing from the mess they handed over to us. They see us in a debt crisis and their solution is to keep on borrowing—keep on digging—and we all know who would pick up that bill.
Justine Greening
I will not give way; I am still replying to an intervention. The worst thing that Britain could do right now is to listen to the siren voices of the Opposition. They are very good at criticising, but they have absolutely no credible alternative, and that is probably the key message that will come across to the public who are watching this debate.
From easing access to credit and bringing down the cost of borrowing for small businesses, to cutting corporation tax and reforming the planning system, the measures set out in this Budget will help to get growth back into our economy. They will also help to rebalance the economy by supporting our companies—wealth creators shifting UK plc from a spend-and-borrow path under the previous Government to a make-and-sell future under this one.
Owen Smith
Will the Minister confirm that the Office for Budget Responsibility tells us that next year the volume of investment by British companies in the UK will go down by 0.7%—that is, 7% down on the previous year’s estimate? Is that right?
Justine Greening
If the hon. Gentleman reads the whole OBR report, he will realise that Britain is an economy that operates in a global marketplace. Of course, his solution to the challenges faced in that global marketplace is to go and join all the countries that are facing problems, not to tackle our own economic crisis that his party left us. I assume that most, if not all the interventions that I get from Labour Members will be cherry-picked statistics that offer no alternative solutions to the challenges facing Britain.
Mr Brown
I am not about to cherry-pick a statistic, but let me give the Secretary of State some facts. I appreciate that she was not here at the time, but when the Labour Government came into power in 1997, the servicing of the debt that was left behind amounted to more than was being spent on transport and defence combined. That was a major task to be handled by the incoming Labour Government, so everything was not rosy in the garden.
Justine Greening
The previous Conservative Government handed over a golden economic legacy. It was the Labour party that handed over a Britain loaded up with debt, costing us £120 million a day in debt interest, and that left unemployment higher than when it came to office, like every single Labour Government we have ever had. I will take no lectures from the party opposite on economic management, and neither will the British people.
Matthew Hancock (West Suffolk) (Con)
On the question of investment from overseas, is my right hon. Friend aware that some Labour shadow Cabinet Ministers have said that they would reverse the corporation tax cut, which was cited by GlaxoSmithKline yesterday when it announced 1,000 new jobs in this country?
Justine Greening
Ultimately, Labour Members seem to know nothing about how business runs. It may be that none of them has ever worked in business. Keeping our corporation tax rate low is critical in re-establishing our economic credibility and our tax competitiveness. Those are fundamental building blocks in getting the investment that we are seeing. I wholeheartedly welcome the steps that the Chancellor has taken.
As my right hon. Friend the Prime Minister has said, the infrastructure deficit that we inherited is just as serious as the budget deficit for our future productivity and the country’s ability to be successful. Infrastructure matters because it makes possible our journeys to work, delivers light when we flick on the switch and provides the connections that have created the communications revolution. Whether it is the congestion on our roads, our ageing power stations or the slow speed of our broadband connections, we face massive challenges to ensure that we have the infrastructure that we need to put Britain at the head of the competitiveness curve, not just in the next four to five years, but in the next four to five decades.
My remarks will focus on transport, because the Budget sends a clear message about how crucial the Government and I believe our transport infrastructure is to our economic future. That reflects what business is telling us. The CBI states:
“There are large amounts of business capital waiting to be unlocked if the Government achieves a step-change on transport”.
The Institute of Directors says that it is
“essential to provide more and better transport infrastructure in order to sustain the UK’s competitiveness.”
The British Chambers of Commerce rightly states:
“Infrastructure is the lifeblood of British business.”
I could not agree more. The last Government delivered the biggest boom and the biggest bust. As we chart our way back to economic recovery, what companies and firms up and down the country rightly want to see is a Government taking action.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
I find the Secretary of State’s emphasis on infrastructure appealing, because infrastructure is needed. Unfortunately, the Office for Budget Responsibility has put the majority of growth for the foreseeable future down to personal consumption. Last Budget, it said that 12.5% of growth would come from private consumption. It now says that the figure is 37.5%. That is the very growth that the Government have now condemned.
Justine Greening
I am not sure that the hon. Gentleman’s intervention made much sense. I agree that infrastructure is critical. The key part of the OBR report, which he ought to focus on, states that we are on course to meet our fiscal mandate and to get our public finances back in order. I am sure that he welcomes the OBR’s assessment that we will see the net creation of 1 million jobs in this country over the coming year.
Helen Goodman (Bishop Auckland) (Lab)
To explain further the point made by my hon. Friend the Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), if the Secretary of State turns to table D.1 in the Red Book, which shows the detailed summary of the OBR’s central forecast, and looks along the line for “Fixed investment” by “General government”, she will see that it falls in 2011, falls in 2012 and falls in 2013. That is the point that my hon. Friend was making. The right hon. Lady clearly has not looked at the Red Book.
Justine Greening
This Government are investing more money in capital spend than was planned by the previous Government. If the hon. Lady is complaining about those numbers, she would be complaining even more if we had the misfortune of having her party in office. This Government are investing in infrastructure and putting unprecedented levels of investment into the railways, as I am sure she is well aware, even though she prefers to score a political point.
The Government are rightly taking action to make it easier for people and businesses to go about their daily business. We are cutting commuting times and speeding up journeys; getting people and products moving faster and more reliably; and ensuring that Britain is plugged into the global marketplace. Of course, the easy choice, faced with Labour’s debt and deficit, would have been to cut capital spending and major infrastructure projects. We are not doing that. Instead, we have taken a deliberate decision to invest in our transport infrastructure, from relatively small interventions that make a big difference such as hard-shoulder running on motorways, to huge projects such as Thameslink and Crossrail.
I am delighted that we have a London Mayor who is committed, alongside the Government, to driving forward projects such as Crossrail, which are vital to our capital’s future prosperity. It is vital that we continue to have a Mayor who is passionate and successful in campaigning on London’s behalf at the heart of the Government; a Mayor who refuses, unlike his opponent, to make empty spending promises based on imaginary pots of money; and a Mayor who will be the best possible advocate for London’s economic success when he welcomes the Olympic tourists and athletes in the summer.
Gavin Shuker (Luton South) (Lab/Co-op)
I am extremely grateful to the Secretary of State for giving way after that party political broadcast to re-endorse the London Mayor. Turning to a point of substance, may I ask her what her policy is on airport expansion in the south-east? The Government were keen to show a bit of leg in that regard, but have ruled out a third runway at Heathrow.
Justine Greening
The hon. Gentleman will be delighted to know that I will come on to that matter shortly. After all, this is a speech on infrastructure. I hope that when the Opposition spokesman responds, he will take the time to set out some kind of alternative plan. That would be of real interest to us all.
Five months into this job, I could reel off a long list of the transport investments that we are making. We are electrifying the trans-Pennine railway and the Great Western line from London to Cardiff, far surpassing the 39 miles of electrification that happened under the previous Government. That would not even stretch from Cardiff to Swansea, let alone from London to Cardiff. We are upgrading the Tyne and Wear metro. There are 45 local authority major schemes to improve connectivity across the country. We are finally progressing with the first parts of the northern hub project, which is so important to many Members.
I could continue, Mr Speaker, but we are investing in so many projects that you would probably call me out of order for speaking for too long. Therefore, let me summarise. The spending review set out more than £30 billion of investment for road, rail and local transport projects across the country. On our roads, we are investing billions to unlock extra capacity and ease congestion. We have set up the £560 million local sustainable transport fund, which gives local communities more power to design and deliver local transport systems. We have put in place the Growing Places fund to kick-start infrastructure projects.
We have given the green light to High Speed 2, a national high-speed rail network that will radically improve the connections between our great cities and, by doing so, help to create jobs and generate growth and prosperity. That sits alongside our unprecedented investment in the existing railway network, from new stations and rolling stock to line electrification, which will help to decarbonise the industry. That amounts to the biggest modernisation programme since Victorian times.
Hand in hand with additional resources for our railways goes the reform of our railways. The rail Command Paper sets out our vision for an efficient, effective and value-for-money rail industry. Our reforms will put the customer first and allow us to end the era of inflation-busting regulated fares increases once the vital savings are made.
Building on all those investments, the Chancellor announced further measures on Wednesday to improve our country’s transport links. He announced a £323 million package that includes a range of projects. There is an extra £150 million contribution towards the Growing Places fund, which will facilitate the economic growth, jobs and house building that our country needs so badly. There is £15 million for cycle safety in London, which will enable the innovative redesign of some of the capital’s most dangerous junctions for cyclists. There is £11 million more for low-carbon buses, which is part of the £101 million bus investment package that the Under-Secretary of State for Transport, my hon. Friend the Member for Lewes (Norman Baker) is announcing today.
In addition, the Chancellor has announced that the rail industry will benefit from £130 million of funding from Network Rail to improve rail connectivity in the north of England by giving the go-ahead to further parts of the northern hub project. That will include increasing line speed and capacity on the Sheffield to Manchester Hope Valley line, and reducing journey times on the Manchester to Bradford via Rochdale and Halifax line and the Manchester to Preston via Bolton line. We are linking up the great counties of Yorkshire and Lancashire in the way that they have always wanted to be linked. That all adds up to passengers enjoying better connections, faster services and more seats.
Our national road network is also a key part of our national infrastructure. The strategic road network carries two thirds of all the freight on Britain’s roads, and it is vital for all types of business from mail order retailers to industrial parks and shopping centres. We have already announced, in last year’s growth review, £1 billion of additional investment in the nation’s strategic roads, on top of the £2.3 billion planned investment in major improvements announced in the spending review. However, as the Budget makes clear, we want to go further and examine the opportunities for more private investment in the road network in future. We want to consider where we can learn lessons from other industries, and we want to build on the proposals in Alan Cook’s report on the Highways Agency.
John Woodcock (Barrow and Furness) (Lab/Co-op)
Will the Secretary of State spell out what will constitute a capacity improvement that could lead to extra tolling on existing roads? That is unclear.
Justine Greening
The hon. Gentleman will be aware of the work on how we can improve the A14, for example, and some of the options being considered could include tolling. If he is interested in finding out more about how the Government are approaching the issue, he can meet up with people who are involved in the A14 challenge. That programme of improvements will deliver for the community in that region in a way that his party’s Government failed to in 13 years.
The hon. Gentleman is looking at the sky and shaking his head, but I have a very, very long list of investments that the Government are making, whereas the Labour party delivered precious little. The biggest irony, of course, is that we ended up with all this debt, but what did it get spent on? Not the things that would have made a real difference to Britain—not roads, not trains. Labour frittered it away and wasted it on an unprecedented scale.
This Government understand that Britain is not just an island nation but a trading nation, so our ports must be world-class global gateways. That is why we are backing major container port developments such as Liverpool, Bathside Bay, Felixstowe South, London Gateway, Teesport and the port of Bristol. It is also why we want to see a successful and sustainable future for that other crucial global gateway, our aviation industry.
We should remember that our country and our capital are right up there with the very best when it comes to international connections. Only China and the USA have aviation networks more extensive than ours. We are directly connected to 356 international destinations, and no European country can match our connections to the world’s great commercial centres. There are more than 9,000 flights every year to New York, 3,000 to Hong Kong, 2,500 to Singapore—I could go on. To each of those important destinations and many others, Britain is the world leader.
Nevertheless, if we are to maintain that status, we have to take on the tough challenges facing the industry, whether it is improving the passenger experience or enhancing capacity and connectivity, while tackling the industry’s impact on climate change and the local environment. We are determined to look at those difficult issues. As the Budget makes clear, we will set out our thinking on aviation capacity and a sustainable aviation framework this summer. We are determined to ensure that we retain our aviation competitiveness and hub status in the decades to come.
An economy built on success requires investment in infrastructure that is built to last. That is why we need to invest in, reform and modernise our transport networks to make them the very best that they can be at not just national but local level. This Budget helps to lay those foundations for Britain’s future economic success.
We will not follow the Labour party’s advice to spend more, borrow more and put our economic credibility at risk. We will hold our course to cut Labour’s deficit, rebalance our economy and forge a path to sustainable growth. We will make the investment decisions needed to ensure that our economy is well placed to compete in the decades ahead. Tackling today’s challenges and investing in tomorrow’s future—that is what this Budget is about and what this Government are about, and we will build a country that we can be proud of again.
Mr Speaker
Order. I must thank the Secretary of State for such a succinct speech. A lot of colleagues want to contribute, and it was helpful to the House.
John Woodcock (Barrow and Furness) (Lab/Co-op)
I begin by passing on the apologies of my hon. Friend the Member for Garston and Halewood (Maria Eagle), the shadow Secretary of State for Transport, for not being present today. It turns out that Ministers were on to something when they refused the offer to speak at the TUC’s railway event earlier this week. Conservative Members often seem to think that our brothers and sisters in the trade unions must be contagious, but on this occasion there is no getting around it—I am afraid they made my hon. Friend ill.
It therefore falls to me to point out what the Secretary of State already knows—that over the past 48 hours, the Chancellor’s Budget has unravelled at astonishing speed. We now know that it will inflict pain on the millions, so that millionaires can be spared. On the subject of transport, the Secretary of State has shown that she and the Chancellor are wedded to a platform of pain today and more pain in the future, with woefully little to return to the country the jobs and growth that we so desperately need.
We must not be unfair, for action has been taken to ease transport costs in at least one area. Fares on cable-based transportation systems carrying fewer than 10 people will now be subject to 5% VAT. That is unalloyed good news, and I am sure Government Members will think it is a clear sign of a Chancellor with his finger on the pulse of the lives of hard-working families up and down the country. If people travel to work by cable car, they are laughing, but if they are among the millions of motorists and train passengers squeezed as never before, facing the prospect of whole new charges in future, they are definitely not laughing.
Gavin Shuker
My hon. Friend is extremely well informed on cable-based transportation systems. Are any cable-based transportation systems proposed in Luton South, where families are feeling the squeeze of the Budget?
John Woodcock
I am not aware of any, but my hon. Friend might make proposals as a result of that excellent tax cut.
Yes, there are tough choices to be made, and the Opposition have set out the choices that we would have made. Of the £9 billion of cuts and efficiencies being made by the Department for Transport, we have accepted more than £6 billion.
Helen Goodman
I am sorry to take my hon. Friend back to the issue of cable transport, but I have a cable lift in my constituency on Mickle fell. I wonder whether people who use it will benefit from the Chancellor’s generosity.
John Woodcock
I am sure that businesses will now see a great opportunity to set up offices at the top of Mickle fell as a result of this great tax cut.
Ministers are making decisions that will make our economy more fragile and that expose where their true priorities lie.
Justine Greening
The hon. Gentleman said that he supported £6 billion of the £9 billion of spending cuts in the Department. Which £6 billion does he support? Will he give us a summary?
John Woodcock
I will be happy to, within the constraints of time, but I want to try to keep to the same time as the Secretary of State took. If you will allow me to go slightly over that time, Mr Speaker, I can do so.
We have not opposed £3.36 billion being taken from the Highways Agency’s budget, out of the total reduction of £3.86 billion. We have not opposed £1.73 billion being taken from the Transport for London budget, which represents the full reduction. [Interruption.] The Secretary of State looks surprised. If she had paid a little more attention to what we have been saying over the past several months, she might not have had to ask the question now.
We have not opposed £794 million of the road maintenance budget out of total reductions of £1.23 billion or £528 million of cuts from the Network Rail passenger budget out of total reductions of £1.29 billion. We have not opposed the efficiencies that are being made to the Crossrail budget, or the £231 million from the local authority major transport teams out of a total reduction of £731 million. The Secretary of State asked for the list and has got it. I hope she is happy.
John Woodcock
I will not give way on that point, because I want to make progress.
I am afraid that the priorities the Government and Secretary of State have set out are not—
John Woodcock
As the right hon. Lady is the Secretary of State, I will give way once more, but I want to make a little more progress.
John Woodcock
I am glad the Secretary of State asks me that. I would expect a little more humility from the Government given that on their own plans they are set to borrow £150 billion more. We strongly believe that the cuts we do not accept represent a false economy that will act as a drag on the nation’s growth and stop us returning to the prosperity that this country desperately needs.
The Government’s priorities are not with the family who are struggling to make ends meet, with the small business that wants to create more jobs or with the employee who wants to be able to afford to turn up to work in the morning.
John Woodcock
I am not going to give way at the moment because the Secretary of State has taken up the hon. Gentleman’s time.
On all those counts, Wednesday’s Budget was a great disappointment. I will give the Secretary of State one thing: at least she is consistent. When we dig beneath her unrealistic claims that everything will be peachy, we see that she is not gearing up to deliver jam tomorrow after the pain today. Instead, with the Budget the Government set out this week, motorists, train passengers and bus users will be squeezed today, tomorrow and for years into the future. The effect will be a decade-long drag on jobs and growth, with the prospect of drivers and commuters being priced out of getting to work, or left stranded at a bus stop wondering why the service has been axed.
The Chancellor offered nothing to hard-pressed motorists this week. In fact, he has made things worse. He has raised the prospect of finding new ways to make things harder in future. Even from the comfort of No. 11 Downing street, the Chancellor cannot have failed to hear the growing calls for some relief on fuel taxation. If he refused to listen, it was the Secretary of State’s job to prise open his ears and tell him just how hard it is for Britain’s motorists. In the Budget negotiations, however, she secured diddly squat—[Interruption.] Instead, faced with rising and record petrol prices, she set her face against calls for relief in fuel tax, including the call for a temporary—[Interruption.]
Mr Speaker
Order. In response to the Minister, who inquired whether the use of the term “diddly squat” was parliamentary, I would say to the hon. Lady and the House that it is matter of taste rather than of order.
John Woodcock
Thank you, Mr Speaker. I shall take that as a lesson.
Faced with record and rising fuel prices, the Secretary of State set her face against all calls for relief, including the Opposition call for a temporary VAT cut.
Charlie Elphicke
I remind the hon. Gentleman that this April petrol duty will be a full 10p lower than it would have been under the previous Government’s plans. That will save the average family £144 and be a massive benefit—a far greater benefit than if Labour had remained in office.
John Woodcock
That shows just how out of touch the hon. Gentleman and Government Members are. I would like to see him go to the forecourt in his constituency, or any forecourt around the country, and say, “Let’s welcome the further rise in fuel taxation that you’re getting this week. What a great job the Government are doing in keeping fuel prices down!”
Families in Britain, worried by energy bills, clobbered by spiralling rail fares and made poorer by cuts to tax credits, are, thanks to this Secretary of State’s inaction, once again being squeezed even harder at the fuel pump. There is pain today and pain tomorrow. The ultimate victims are jobs and growth, and the nation’s return to prosperity. What is the Chancellor offering motorists in return for their growing fuel bills? He is offering only vague promises, which might well turn out to be yet another ratchet with precious little reward.
The National Audit Office has warned the Government that they are creating a vicious cycle of deteriorating roads and higher long-term costs. A plague of potholes is making our road network less safe for all users, less green and more congested. The road network is a brake on, and not an agent of, jobs and growth. There is no movement on the cuts already set for local roads—that is good news on potholes but bad news for everyone else—but what about our trunk roads, which the Secretary of State mentioned? We need long-term strategic investment in the road network, and we also need to look at how we lever in that investment, but Britain’s drivers and cyclists will have little confidence after seeing Ministers tying themselves in knots in recent days.
Before the Prime Minister’s speech on infrastructure on Monday, those pesky anonymous briefers, who seem to be everywhere in this Government—good luck in trying to catch them, Mr Speaker—said that tolling would be considered only for brand new roads. However, in the speech, “new roads” became “new capacity”. We now know for certain that charging is being considered when improvements take place on existing roads because the Budget document confirms it. We are told that the shortlist of options include “widening some sections” of the A14,
“rationalising access to the route, and improving the route of the southern bypass for Huntingdon.”
In other words, the A14 will be not a new road, but the existing one with added tolling.
Britain’s motorists, already squeezed to breaking point, demand plain speaking from the Government, so I will give the Secretary of State another opportunity. Will she tell us what will constitute a capacity improvement on an existing road that could lead to tolling? Will that include an extra lane, a contra flow, a new slip road, a roundabout or a bollard? Motorists deserve to know what the Government have in mind.
Matthew Hancock
As the A14 runs through my constituency and is rather a long way from Barrow, may I point out to the hon. Gentleman that adding extra capacity, even if it is tolled, will help all those who go on the free bit of the road, because they will be able to get home faster? That is why the proposal is supported locally, even if there is opportunistic opposition from Labour.
John Woodcock
The hon. Gentleman seems to have more information about how the scheme will work than either me or the Secretary of State, who does not seem to know how exactly motorists will be clobbered with tolls.
Who, if anyone, will police tolls? Will contracts stipulate that tolls must be removed when improvements have been paid for? How will we avoid people being driven off the motorways and dual carriageways and back into the communities and road networks that the toll roads were built to relieve?
In addition to the fear of massively increased tolling, there could be a further, lasting sting in the tail for motorists from this Budget. Buried on page 70 of the Red Book are plans for what can be described only as a new stealth tax hike on motorists. The Government say they will consider reforming—by which they clearly mean “increasing”—vehicle excise duty. Ministers need to come clean on how much extra they plan to squeeze out of motorists through that new stealth tax increase. They also need to say what it will mean for motorists who behave responsibly and opt for fuel-efficient vehicles.
On a less testing note on the subject of sustainable road travel, let me say that the Opposition welcome the £15 million the Chancellor has found to help to make London’s roads safer for cyclists. The spate of injuries and deaths in the capital has been truly appalling, and the Opposition fully support the campaign, led by The Times, for significant change. As the Secretary of State will know, however, the Budget contained only this one-off grant for London—the fact that there is an upcoming mayoral election is a complete coincidence, I am sure. Labour has committed to reserving a portion of the roads budget to dedicated cycle facilities on roads across the country, not just in the capital. Will she make a similar commitment?
If transport on the ground is up in the air with the uncertainties created by the Government, transport in the air, aviation, remains at serious risk of being grounded—if Members follow me. On aviation capacity, the Government still do not know—and we still do not know after the Secretary of State’s speech—whether she is taking off or landing.
John Woodcock
Well, you know. [Laughter.] I am here all week.
The Chancellor told us on Wednesday that the country must confront the lack of airport capacity in the south-east. He is right, but his words would carry more weight had the Government not spent the past two years dithering and delaying on producing any sort of aviation strategy. What did we actually get this week? We got not one but two further delays. First, the Chancellor announced that the strategy that the Department for Transport’s business plan told us to expect in March will now appear late this summer; and now the Secretary of State seems to have put back the date even further to this winter or next spring—more dithering, more delay, while competitor hubs in continental Europe get on with providing new capacity that could transform their economies.
John Woodcock
I will not give way any more because I am running on and I want to give other Members time to speak.
The Government came to power with just one policy on aviation capacity—to abandon the Heathrow third runway. Since the election, the Government have come up with no practical thinking on alternatives. Instead, they seem to have outsourced their aviation strategy down the river to a Mayor who is more interested in trying to grab attention than in finding a plan that will work. That is no way to treat a vital economic driver that is critical to the country’s future growth.
As the Secretary of State is well aware, the plans for an airport in the Thames estuary are being met with a barrage of opposition from the area, including from her own party’s MPs and councillors. She would be even clearer on that if, like my hon. Friend the shadow Secretary of State, she had been to north Kent and talked to local people in the areas affected. The idea of building a new airport from scratch in the Thames estuary is a huge distraction from the real need for airport capacity here and now. It is obvious why so many people, but apparently not the Secretary of State, see an estuary airport as a complete non-starter—there is the impact on local communities, the destruction of internationally important habitats, the safety threat from explosive-laden wrecks, a liquefied petroleum gas terminal and a huge offshore wind farm.
Mike Gapes
Does my hon. Friend agree that the reason the Government have not yet come out explicitly on these issues is that they do not want to damage Boris’s chances in the mayoral election and undermine his fantasy island proposal? The reality is that this proposal is completely opposed by whole sectors not just in Kent but north of the River Thames, including in my constituency.
John Woodcock
My hon. Friend makes a good point. Frankly, Britain deserves better.
The overwhelming majority of the aviation industry agrees that Heathrow would struggle to continue in its current form alongside an estuary airport, placing at least 140,000 jobs in west London and the M4 corridor under threat. I hope, then, that when the Secretary of State finally publishes her thinking, she will choose a sensible course based on providing additional capacity at existing airports, not a strategy based on a pie-in-the-sky estuary airport.
Mr Tobias Ellwood (Bournemouth East) (Con)
Will the hon. Gentleman give way?
John Woodcock
I will not at this stage, if the hon. Gentleman does not mind.
My hon. Friend the shadow Secretary of State is still waiting for a response to her letter offering cross-party talks on tackling capacity at existing airports. Perhaps the Secretary of State could pop her reply in a “get well soon” card and send it over with a nice bunch of grapes. I am running out of suggestions to make her agree to this proposal, which seems eminently sensible to Opposition Members. The aviation industry, businesses and passengers need certainty to guarantee investment, and we are offering to help her achieve that.
On the railways, we strongly welcome a number of the investment decisions made in the Budget, particularly the Secretary of State’s support for the vital northern hub project. I pay tribute to the hard work put in by colleagues on both sides of the House from across the north of England on ensuring that support for the hub transferred from the last Government to this one. We need clarity, however. In the Budget, the Chancellor announced £130 million of support for a £500 million project, but we need details of what remains to be funded.
Although that infrastructure investment, when it arrives, will be welcome, the Secretary of State knows that with no help on Wednesday for rail passengers struggling with fares that for some have already risen by up to 11% this year, there was nothing to reassure commuters that the next two years of RPI-plus-three increases will not be going ahead, and nothing to change the franchises about to be awarded by her Department that will allow for 15 years of fares increasing by up to 8% every year. All over the country, families are finding themselves paying more for their journey to work than for their rent or their mortgage. They will not welcome this inaction on fares. These sky-high increases price people out of jobs, stunt growth and discourage sustainable travel choices.
Britain’s bus users, too, who are already being hit by reduced services and rising fares, will have noticed that they warranted no mention at all in the Budget, and there was only a passing reference in the Secretary of State’s speech today to a paper to be produced later today. From next month, bus operators are being hit by a 20% cut in the bus service operators grant. In my constituency, like those of many hon. Members, that is threatening to lead to more services being taken off the road and a hike in fares for those who remain.
Buses are the backbone of our transport network and essential to ensuring that many people—especially young people—can access jobs and training. Labour is calling on bus companies to set up a free travel scheme for 16 to 18-year-olds in return for the financial support they receive. Let us compare that to the approach by Ministers, who seem content to wash their hands of the entire sector. When they could be helping tackle youth unemployment, they risk making a bad situation even worse.
At the end of his statement on Wednesday, the Chancellor boasted that he had
“not settled for a do-nothing Budget.”—[Official Report, 21 March 2012; Vol. 542, c. 807.]
But to motorists, businesses, and the millions who rely on public transport across the country, that is exactly what he has done. On rail fares, he has done nothing; on the crisis facing our buses, nothing; on aviation capacity, nothing; and on fuel costs, well, he has done something—he has made them even higher. In defending the Budget, the Secretary of State and her Ministers need to explain whether they do not understand or simply are not bothered about the damage they are doing to family budgets and the impact it is having on Britain’s ability to get moving again.
Mr Speaker
Order. Colleagues will be conscious of the fact that there is a seven-minute limit on Back-Bench speeches, reflecting the level of interest. That limit applies with immediate effect.
Mark Garnier (Wyre Forest) (Con)
Like all Members, I am frequently visited by members of my community asking for many things that the Government can do to help their businesses or special interest groups. I have recently taken to asking them what they would do if they were Chancellor of the Exchequer for the day. I ask them to come up with three ideas, and invariably they come up with a whole load of ideas, and after a few minutes I have to say to them, “I’m terribly sorry, but you’re Chancellor for the day, not Father Christmas.” Once they have been told, people realise that when our back is against the wall, it is vital that any budget has to be balanced. Anybody who knows how to run a business knows that they simply cannot carry on borrowing to stimulate that business. Cuts have to happen, and it is important that we all share the burden of those cuts. Labour is keen to ask those on this side of the House how we will be affected by them and what our interest in them is.
Kelvin Hopkins (Luton North) (Lab)
The hon. Gentleman says that businesses cannot live on borrowing, but they have to borrow in the short term, and surely part of the problem is that the banks will not lend to them.
Mark Garnier
That is a slightly wider point, but the fact is that when someone has run out of credit on their credit card, they can use the debt that they already have, but they cannot increase it.
Many of us on this side of the House have a vested interest in the cuts. I declare an interest, in that I shall be £2,450 a year worse off as a result of child tax credit cuts, but the other side of the coin has to involve stimulating economic growth. The problem is that the Chancellor does not have a volume knob on the economy that he can easily turn up. He has to use a number of different measures. There is no simpler way to generate quick economic growth than to import investment from overseas, but to do that we need to demonstrate that we are open for business and competitive. We need a tax regime that attracts inward investment. That is why I see the combination of the accelerated fall in corporation tax to 22% by April 2014 and the cut in the top rate of income tax to 45p as crucial to the opportunity that we offer to international companies and entrepreneurs looking to set up their businesses in the UK.
I cannot overstate the importance of that international competitiveness. Brintons carpets in my constituency has recently been reviewing its operations. It is absolutely committed to Kidderminster, but it has received overtures from the Portuguese Government, who are offering free loans and grants for it to move its carpet looms to Portugal to increase manufacturing there. This is a real threat to UK manufacturing and to my constituency, but that threat is significantly diminished when the corporation tax differential is increased to 7 percentage points. The top rate of income tax in Portugal is 46.5%. In other words, Brintons would have a 33% higher corporation tax bill by moving to Portugal. The managing director of Brintons assured me last night that this was absolutely a pro-business Budget.
Those two tax measures represent an important step towards achieving the relatively quick fix of attracting inward investment, and making it harder to justify leaving the country, but it is incredibly important that we support this with home-grown prosperity that will provide opportunities for local entrepreneurs. The Government have already introduced measures to help small and medium-sized enterprises, as well as announcing the business enterprise zones.
I must confess to being disappointed that my constituency was not granted such a zone, but it is a credit to the local enterprise partnership and Wyre Forest district council that the South Kidderminster business park continues to be a reality. We have just had a planning application submitted for a new development of 27 hectares of mixed use, including a 4 hectare employment development, retail, hotels, a restaurant and a café, care and crèche facilities, a railway halt for the Severn valley heritage railway, and up to 250 new homes. That planning application demonstrates a strong commitment to my constituency by a far-sighted investor, and follows on from two significant investments in local businesses— £36 million in Brintons carpets and £15 million in Sealine yachts—and precedes a further planning application to create a 250-room conference facility at the West Midlands Safari Park that will be the premier facility in the county. In addition, a brand new Premier Inn hotel is opening today in Kidderminster.
I am not trying to pretend that everything is entirely rosy, but it is important to balance negative news with all the positives, and there is a lot of positive news about. It is also worth remembering that unemployment, although too high in Wyre Forest, has remained flat since 2010, having doubled in the years between 2005 and 2010. A strong local will to make a difference is incredibly important and, if I may, I will use this opportunity to plug my jobs fair, which is being held in Kidderminster next Thursday. It will try to match those who are looking for jobs with businesses that are hoping to expand.
The key point, however, is that an enthusiasm to do well locally and to run with initiatives—from something as simple as a jobs fair to something as strategic as significant local investment—has to be balanced by support from the top. That can be illustrated by the fact that the recently announced Kidderminster college tie-up with Birmingham Metropolitan college to provide high-tech courses in the video, animation and gaming arena will benefit hugely from the announcement yesterday of tax reliefs in that industry. I should declare an interest as I am a governor of Kidderminster college. Cutting red tape for micro-businesses, giving research and development credits above the line, introducing measures to make the UK a centre for technology for Europe, and other measures will help to create opportunities for a whole raft of small businesses to start up and develop.
Mr Speaker, you will note that I am an enthusiast for this Budget. I am absolutely convinced of its pro-business credentials and I broadly welcome them, but I have one or two points that I would like to raise. I am pleased to see the Secretary of State for Transport in her place. The High Speed 2 project will certainly bring benefits to Birmingham, the main city of the west midlands and the second city of this country. I urge the Secretary of State to look into the possibility of building a new regional hub airport in Birmingham to reinforce the important link that HS2 will provide between Birmingham and London. A hub airport would certainly be of huge benefit to the economy of the west midlands, and indeed of the midlands as a whole.
I also want to sound a note of caution about the regionalisation of pay scales. I completely agree with the logic that the private sector will be unable to compete with the public sector on pay when the public sector pays as much as 18% more for equivalent jobs in the regions.
Sheila Gilmore (Edinburgh East) (Lab)
The areas in which public sector pay tends to be higher than that in the private sector also have extremely high unemployment. I am therefore puzzled by the idea that high public sector pay is preventing job vacancies from being filled, or that there are any such vacancies as a result of this so-called problem. That does not appear to be the case, given that there are so many people chasing each job.
Mark Garnier
If I may, I shall develop my point. I am not entirely unsympathetic to the hon. Lady’s point, but the important point is that private sector pay is not set on a national basis—
Mark Garnier
Not all of it. Small businesses do not set their pay on a national basis. It makes complete sense that public sector pay should be treated likewise, and in the broadest sense I welcome the freeze on regional public sector pay awards, but I have one caveat. Moving public sector jobs around the country—especially in Government Departments such as vehicle licensing, which went to Swansea—brings cash to a local economy. That cash can provide economic activity and liquidity that supports jobs in the local private sector that might otherwise struggle. While the public sector regional pay adjustment is going on, I urge the Government to take careful note of what is going on locally, to ensure that the proper efforts to reduce the crowding-out of the private sector by the public sector do not unwittingly starve the private sector of much-needed local liquidity.
I also worry about the rising cost of fuel for our constituents. This is a huge burden on families and although the increase in tax-free allowances is welcome, the rising cost of fuel is an issue for rural and semi-rural constituencies such as mine. I welcome the help that the Government have given—we are 10p better off than we would otherwise have been—but there are two further issues to consider. The first is that fuel companies charge consumers what they can get away with locally. Prices in Kidderminster are around 5p dearer than they are in the constituency of my hon. Friend the Member for Bromsgrove (Sajid Javid), for example. On writing to the chief executives of Tesco, Sainsbury and Texaco, I was told that prices were set locally. When I contacted the local managers, they told me that the prices were set regionally. Whatever the method of price setting, the fuel companies are ripping off my constituents in Wyre Forest and I want them to stop.
When we compare the price of oil to pre-tax profits over the years, we see that the oil companies are simply not passing on extra profits to consumers. Indeed, they are making extra profits from consumers. Of course duty and VAT are part of the price of oil, as is the dollar-sterling exchange rate, but the underlying commodity price at the pump is the key component, and any means by which the Government could persuade the oil companies to pass on their profits to consumers would be gratefully received.
Susan Elan Jones (Clwyd South) (Lab)
I am most grateful to you for calling me to speak in the Budget debate, Mr Speaker. I do not propose to retread old ground, and I shall confine my remarks to how the Budget will affect my constituents. The backdrop to my observations is the fact that unemployment has gone up by 12% since May 2010, according to the claimant count figures from the Office for National Statistics. The latest figures show that 1,811 people in my constituency were unemployed in February 2012. Those same statistics show that unemployment has risen for 15 of the past 21 months, and job losses have included 150 highly skilled jobs at Tetrapak.
A major supermarket is opening in Cefn Mawr in my constituency next Monday, and I welcome that. I welcome the fact that about 100 new jobs will be created, although most will be part time. What I do not welcome is the news that 11 people were chasing every single one of those job vacancies. That is the sort of economic climate people in my home area are facing. It is why it is living in cloud cuckoo land to think that our 41 local Remploy staff will wander straight out of the factory that the Government want to shut into a land of milk, honey and stable new jobs. That is deeply wrong, unjust and immoral, and if the Tory-Lib Dem double act in Westminster will not do anything to put it right, it is vital that they play ball and devolve it to a Labour Government in Wales who will.
What people in my home area know all too well is that we need more of the wealth that private sector jobs create. There is a strong work ethic in our area, which runs deep in our twin industrial and agricultural heritage. We do not expect something for nothing, and these strong cohesive communities are very cross—rightly so—when anyone says we do. This is why we are so concerned about unemployment, and why we know that however many courses people take, however much work experience they get and however many boxes are ticked, what really matters is how many real jobs are out there—jobs that create prosperity and purchasing power, jobs that are for personal fulfilment and challenge, jobs to promote well-being and cohesion in our communities.
Yes, purchasing power is vital in all this. What did construction companies think when the Government swooped up the VAT rates? Let us remember the VAT tax bombshell—I mean the real one that happened on 4 January 2011. The builders and tradesmen in small and medium-sized enterprises certainly remember it because it had a major effect on their businesses.
The Minister spoke about people with business experience, so I will provide her with an example. Mike Learmond, regional organiser for the North Wales and Chester Federation of Small Businesses, put it like this at the time:
“Small firms will be hit hard by the rise in VAT, as unlike big businesses they can’t absorb the increase. Thus small firms will have to pass the full cost on to customers, reduce stock levels or find cost savings elsewhere—potentially costing jobs and undermining the Government’s private sector led recovery.”
Well, 1,811 people in my constituency know exactly what he meant by that.
In a Westminster Hall debate on micro-businesses in January this year, I was most interested when a Conservative Member with clear expertise in this area, the hon. Member for Newton Abbot (Anne Marie Morris), made this very thoughtful point about VAT:
“We have on a number of occasions talked about the possibility of reducing rates for restoration and repair of houses, bringing the rate down to 5% rather than the full 20%. It seems to me that, given the pressure on the Government to increase the available housing stock, now is the time to look at that again.”—[Official Report, 25 January 2012; Vol. 539, c. 137WH.]
I agree with her totally and am heartened that my own party has pledged itself to a one-year VAT cut to 5% on home improvements, repairs and maintenance to help home owners and small businesses. In the interests of small and medium-sized businesses, enterprise and support for the work ethic, I am bitterly disappointed that the Chancellor has not used the opportunity of the Budget to do that, as he could have done.
On purchasing power, I am at a loss to understand quite how this Government’s apparent embrace of regional pay, which means pay cuts to my constituents and the people of Wales more widely, is supposed to create an environment in which private sector businesses will flourish. There is also, of course, a deeply moral issue. If a policeman or woman in my constituency is serving the public—whether it be in my constituency or elsewhere, as when they travelled down to London in vans to support the Met police during last summer’s riots—it is right that those servants of the public be paid the same rates. [Interruption.] I wonder whether there will be a real intervention. Perhaps not. In many ways, there will be rightful anger and disappointment at the missed opportunities of this Budget.
Susan Elan Jones
Oh, it looks as though there is going to be an intervention. No? Yes, please. No, okay. [Interruption.] I thought we were going to have an intervention, but—[Interruption.]
Dr Coffey
I had assumed that the hon. Lady would resume her seat if she had accepted my intervention. She might want to consider the fact that London police officers already receive London weighting, as do other public officials. I remind her, too, that it was her Government who introduced regionalised pay for the Court Service; the last Labour Government started it.
Susan Elan Jones
It is a great pity that the hon. Lady has been so interested in following the Conservative party’s crib sheet that she has not read about what happened. The circumstances were very different with the court system, and 50 local rates were reduced to five—it was totally different and it standardised the pay far more. [Interruption.] Oh dear, I fear that the hon. Lady will have to wait a little longer to be promoted to a Parliamentary Private Secretary.
As I was saying, I believe that there will be rightful anger and disappointment at the missed opportunities of this Budget. About 14,000 millionaires—we saw some of them on the Front Bench the other day; it looks as though the servants are on duty today—will be rubbing their hands with glee at the £40,000 tax cuts they are receiving, while small and medium-sized entrepreneurs, teachers, nurses, police, families and pensioners are collectively faced with a £3 billion stealth tax, and are adversely affected. The 1,811 unemployed people in Clwyd South will rightly feel let down this week by a Tory Government, aided and abetted by those spectacularly useless Orange Book Lib Dems. Let us hope that, even at this late hour, this Government will put working families and those who want to work ahead of their ultra-rich cronies.
Mr Stewart Jackson (Peterborough) (Con)
I believe that this is a courageous Budget. It is innovative and ingenious, notable for the steady stewardship of the Chancellor of the Exchequer. We need to take a strategic overview. The recession from which we have emerged is a deleveraging recession, a paying down debt rather than a destocking recession, so some of the normal policy prescriptions on fiscal and monetary policy have proved useless in the face of that. That makes the imperatives of long-term reform of the public services, particularly education and welfare, tax cuts and supply-side reforms, including the reduction in taxes and the regulatory burden, even more important.
Dr Coffey
My hon. Friend is making a strong point about deregulation. I would point to paragraph 2.238 of the Red Book, which shows that the Government are committed to scrapping or improving 84% of health and safety regulation. Does my hon. Friend agree that this is the right approach—focusing on what is most risky as opposed to applying all sorts of regulations that are no longer necessary, valid or helpful?
Mr Jackson
My hon. Friend makes a very good point, which explains why this Budget has had consensus support and been viewed from a positive perspective by business organisations across the country.
We should be talking a paradigm that involves tax and spending, not just tax. There has been too much focus in the last few months on cutting or increasing taxes, when we should be talking about expenditure. Are we really asking the public to believe that a net 6.8% reduction in public expenditure over the comprehensive spending review period is enough to rebalance the economy when we saw a 53% real-terms growth in public expenditure between 2000 and 2010? We were spending £450 billion just 10 years ago on public services, and we are now spending £702 billion. Are we getting value for money for our constituents and our taxpayers?
Of course, Conservative Members will not let the electorate forget the disastrous and poisonous economic legacy left to us by the Labour party—to the extent that we have to pay £120 million a day in debt interest and are £47.6 billion a year in debt this year. As I said earlier to my right hon. Friend the Transport Secretary, had Labour remained in office, they would have had to borrow another £200 billion. They left us a structural debt in a period of economic growth. They left us a situation in which individual net borrowing doubled in just six years, while we have massive sectoral imbalances and a systemic dependency on debt. That was Labour’s legacy.
Labour Members still have no economic credibility; if they were a party with a cogent and coherent narrative on the economy, they would pledge to reinstate the 50p tax rate and reverse the policy on freezing age-related allowances. They do neither because they are opportunistic and they know that if they were elected to government, they would need the money.
Charlie Elphicke
My hon. Friend is being far too generous in saying the Opposition are being opportunistic. They are going back to the 1970s class warfare old Labour that they used to be, and they have forgotten all the modernisation they achieved in 1997.
Mr Jackson
My hon. Friend is absolutely right. The Labour party will not make progress with the electorate until it does two things: apologise for the debt millstone they left to our children and grandchildren, and develop a policy that is not written on the back of a fag packet.
I welcome the cut in corporation tax, which gives us the fourth lowest such tax rate in the G20. I welcome the reduction in the top rate of income tax from 50p to 45p, too, as the 50p rate was damaging competitiveness and not collecting the sums it should have collected, and was an impediment to entrepreneurial activity and business growth in our country.
Let us nail the myth about taking poorer working people out of tax. It is a Conservative policy, enunciated by Lord Forsyth in the tax commission in 2005, and restated by Lords Saatchi and Tebbit. It is a Conservative policy to boost people’s incomes because we trust them to spend their money wisely.
I also support the policy on age-related allowances. There is consensus on the issue of generational fairness—even the hon. Member for Pontypridd (Owen Smith) will agree with me about that—and this Government have a very good record on provision for pensioners, including the largest ever cash rise in the basic state pension from April this year, the uprating of the pension credit guarantee, and the help with fuel bills for poorer pensioners. We have a much better story to tell on that than the last Labour Government had, with their ridiculous and insulting 75p pension rise in 2000.
Owen Smith
Does the hon. Gentleman agree, however, that the 4.7 million pensioners who will be impacted by the age-related allowances policy will not be pleased to learn that the House of Commons Library note on the Budget concludes that they will be between £80 and £280 worse off in real terms as a result of its provisions?
Mr Jackson
The independent Institute for Fiscal Studies disagrees profoundly with the hon. Gentleman, and believes that the proposals are both morally and financially right and progressive. The hon. Gentleman will therefore have to try again later.
I support the planning regime reforms and the liberalisation of the national planning policy framework. I was delighted to hear about the regional policy and the expansion of airports in the south-east as well. We are currently losing our competitive advantage to Schiphol, Frankfurt and Charles de Gaulle. I am delighted, too, that the Chancellor resisted the temptation to limit further tax relief on higher-rate pension contributions. That would have been an attack on thrift and prudence. We in Cambridgeshire are very pleased with the news about the A14 and the Get Britain Building and Growing Places funding. Moreover, I have been campaigning for quite some time for residential estate investment trusts for social housing, and the previous Government did nothing about that in 13 years.
It would be wrong to say that I am happy with every measure in the Budget. There were some missed opportunities and missed steps. Fuel duty is an issue that will return—as it would do for any Chancellor and Government. I understand why changes were not made this time, but my constituents’ petrol bills are hurting, and using a car is a necessity, not a luxury. Air passenger duty must be looked at again, too. It has increased 360% in the last seven years. Because of the major impact on transportation and tourism, I hope that the Chancellor will revisit that issue. I should declare an interest: Thomas Cook has a headquarters in my constituency.
The House will know that I had very serious concerns about the child benefit policy, but the Chancellor has listened and taken them on board. We have addressed the cliff-edge issue, although there is still the anomaly of the two earners as opposed to the one earner; we should regard that as a work in progress. My constituents are also asking why our European Union contribution has increased between the pre-Budget report and this Budget. It may be a function of reduced co-payment of funds for EU projects. If we are all in this together, however, that should include the European Union, so we must look at that issue.
I was very disappointed that, once again, the Budget did not contain a policy to recognise marriage in the tax system. For probably as little as £800 million—less than a third of the £3 billion we spent on taking people out of lower rate tax, in order to appease, as it were, our Liberal Democrat friends—we could have given a tax break to married couples with children under 3. I am sorry that that did not happen.
Things will be tough over the next few years. Restoring economic health after the 13 years of the last Labour Government—years of waste, profligacy and creating a client state—was never going to be easy. Once again, the job of getting the finances of this country straight and of building a great Britain and a strong economy falls to a Conservative Government, and I believe that this Chancellor has proved he is up to the task.
Helen Goodman (Bishop Auckland) (Lab)
It is always a pleasure to follow the hon. Member for Peterborough (Mr Jackson), who has a particular perspective on things.
I want to focus on two themes: jobs and justice. The overall state of the economy is as follows: the Budget deficit is £121 billion; interest rates are 0.5%; and the Bank of England has undertaken £325 billion in quantitative easing. Yet the economy is in a depressed state, with GDP below its peak and its potential. The worst consequence of that is that 2.67 million people are unemployed, including 1,000 young people in my constituency.
What are the Government doing to tackle that? Given the fiscal squeeze on households, it is clear that what is needed is an increase in business investment and exports, but that is not what we are getting. According to the Office for Budget Responsibility forecasts, the increase in business investment has been pushed back from 2012 to 2013, and the unemployment peak has also been pushed back. In the north-east, the chamber of commerce says that investment is particularly weak. Shockingly, it has been negative since 2008, and the figure currently stands at minus 6.3. That means that, in contrast to what the hon. Member for Peterborough said, the capital stock is shrinking.
Why is investment so low, given that The Daily Telegraph tells us that corporate balance sheets are “brimming with cash” and the Bank of England reports that dividends are at record levels? It is because there is a lack of confidence. Have the Government done anything to strengthen business confidence? What little growth that is forecast will be fuelled by consumer borrowing. Although Government Members inveigh against household indebtedness, over the forecast period, that is predicted to rise from £1.5 trillion to £2 trillion.
Richard Harrington (Watford) (Con)
The hon. Lady is an expert in Treasury and economic matters, so I was surprised that she stressed that confidence was so important, because does she truly think that the Labour alternative policy of borrowing more money would give businesses more confidence to invest?
Helen Goodman
The fact of the matter is that Ministers have overshot on their borrowing. Their borrowing is £147 billion higher than they were planning a year ago, and the credit rating agencies have put a watch on our creditworthiness. Government Members should not be quite so confident about where their Ministers are taking the British economy.
Turning to growth in the enterprise sector, there is to be a measly £25 million for aerodynamics and another measly £25 million for science, which is crucial to modernising our manufacturing. Under the last Labour Government, science spending rose by £1 billion; a £25-million investment will not get us anywhere.
Let us discuss what the Government are doing on corporation tax. They have trumpeted a cut in the main rate, but the reductions in the allowances mean that the net support to industry overall is £200 million. No wonder investment at home is so flat. Government Members claim that GlaxoSmithKline took its investment decisions in response to the Budget, but that is patently ridiculous. GSK has been planning its investments for the past two years, in response to the patent box changes announced by the previous Government before the general election. Everything this Government have done this time has been swamped by the cuts to capital allowances that they made in their first Budget, which took £1.5 billion from the private sector.
Tom Blenkinsop
Government Members are keen to take the credit on GSK, but they do not want to take the credit for what has happened at Rio Tinto Alcan or the 3,000 job losses at BAE Systems. Does my hon. Friend find the juxtaposition interesting?
Helen Goodman
My hon. Friend is absolutely right. Government Members are completely unrealistic about what business needs and simply do not understand that what is needed is a co-operative approach between the public and the private sectors, and long-term investment. The North East Chamber of Commerce told us that its checklist for the Budget was an increase in capital allowances and the industrial buildings allowance; a reduction in employer national insurance contributions for young people; and more support for apprenticeships. None of that appeared in the Budget this week. The Government simply have no strategy for jobs or growth.
We have heard a lot from Government Members about the benefits of cutting the 50p rate, but even the Chancellor of the Exchequer does not have the gall to put cutting the top rate of tax into the “enterprise and growth” section of his Budget. The distribution effects of this Budget are shocking. It is grotesque to give a millionaire an extra £40,000 while cutting the tax credits of those on the minimum wage who work 16 hours a week by £4,000. That is a complete disgrace. As the Leader of the Opposition pointed out on Wednesday afternoon, 300,000 people will benefit from the cut in the 50p rate, by an average of £10,000, whereas only 4,000 people will pay the higher stamp duty on properties worth more than £25 million. The Chancellor’s estimate that the loss in revenue from cutting the 50p rate is £100 million is risible. It is absurd to suggest that £2.9 billion more tax will be collected because of behavioural changes—that would be an unprecedented impact on people’s behaviour.
Before I leave the issue of tax avoidance, I wish to discuss the great contribution to the Budget made by the Liberal Democrats. They seem pleased with securing a crackdown on tax avoidance in return for succumbing to the Tory desire for a cut in the 50p rate. In fact, the Institute for Fiscal Studies says this morning that there is less action on tackling tax avoidance in this Budget than there has been in previous years.
Helen Goodman
I am sorry, but I will not give way, as I have used up my intervention time.
If the Liberal Democrats look at the measures in the Red Book to combat tax avoidance, they will see that six of them will be legislated for in the 2013 Finance Bill instead of the 2012 Finance Bill. If they look at table 2.1 in the Red Book, they will see that the forestalling of the additional rate reduction and the cap on unlimited tax reliefs—that is the new phraseology for the tycoon tax—adds up to £2.4 billion this year. In other words, this coalition Government have given their wealthy friends one last chance to avoid tax, and that avoidance will be worth £2.4 billion. That is equivalent to all the cuts imposed in the June 2010 Budget on lone parents, on working parents and on the disabled.
Richard Harrington (Watford) (Con)
I am conscious of the fact that our speeches are limited to seven minutes. I have so much to say in the Budget debate but, first, I shall just answer something that the hon. Member for Bishop Auckland (Helen Goodman) said. One moment she was talking about the importance, in her experience, of confidence in business and among those who do business, and I perfectly understand that, but the next moment she was pouring scorn on attempts to reduce the taxation for those people. I must ask her something, which she does not need to answer now but perhaps she will consider: what gives people confidence? They need lower interest rates, which they have got because of the prudent things that this coalition Government have done to reduce debt; they need stability and the possibility of obtaining funds for investment, and the Government have done such a lot on that; and, above all, they need to know that if they work hard to set up a business, with all the hassle and aggravation that mortgaging their house and creating jobs involves, and they are successful, they will keep the majority of what they earn. We must not forget that that is what growth is about and what confidence is about. We cannot therefore pour scorn on reducing this top rate of tax, which does not work, as has been empirically proven in the figures that have come out. People in business do all this grafting and striving to do what they do, and nothing knocks their confidence more than the fear that the majority—more than 50%, if employers’ national insurance is included—of what they earn will be taken away.
Helen Goodman
I am interested in the hon. Gentleman’s description of setting up a business. When my husband set up a business, he took a salary cut. I do not believe that what motivates people is just what they are going to earn and how much money they are going to put in their back pocket; it is about being confident that they can sell whatever it is they are selling and that there is a long-term market for what they are doing. The cuts in domestic consumption are what is killing business confidence in this country.
Richard Harrington
I thank the hon. Lady for those comments. I remind her that I said that the rate of taxation was one of a package of things that gives confidence. I have started and owned a business, and I did not draw a salary for two or three years as a result. I drove minicabs and ran a market stall at weekends in order to pay my way, so I know what it is like, as I have experience in that field. I do not feel it is appropriate to take lectures from people who perhaps have not done that themselves. I am talking not about the hon. Lady, but about many other people who have mentioned these things.
Matthew Hancock
Should we not base our approach on evidence? Given that the evidence, supported by the Office for Budget Responsibility, shows that there are behavioural effects that lose revenue, does this not show why the Labour party got us into such a mess? That party ignores and is positively disdainful of the impact of taxes on people’s behaviour.
Richard Harrington
I absolutely agree with my hon. Friend. I hear a lot from people from all parts of the spectrum in my constituency, as other hon. Members do in theirs. In my judgment, people are very realistic, because they realise that the mess we got into was caused by chronic overspending and a budget that was completely out of control under the previous Administration. I believe that the polling on who got us into this mess is consistent on that point. So it is clear that no matter which party people are going to vote for in the future, they do not want this to happen again; they do not want overspending to take place and they do not believe that spending more money and borrowing more money is the solution to this country’s economic problems. This is the first time in my adult life, from reading the papers and taking part in politics, that I can recall this important lesson having got into the public’s consciousness. That is sensible, because people can relate to it in their own household earnings and the budgets that they make for themselves.
Let me move on to the growth area of the Budget. The focus is on economic growth and infrastructure and that is important because the future growth of this country is the most significant thing that the Budget is about. Rather than talking about—
Proceedings interrupted (Standing Order No. 11(4)).
Alcohol Strategy
(12 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Secretary of State for the Home Department (Mrs Theresa May)
With permission, Mr. Speaker, I would like to make a statement on the new cross-Government alcohol strategy. Most people have no problem with alcohol. They enjoy a drink and it is one of life’s pleasures, but we all know there is a significant minority in this country who drink dangerously and who cause disproportionate harm. Almost 1 million violent crimes and 1.2 million hospital admissions each year are alcohol-related. Just under half of all violent crime is connected to alcohol, and drunken brawls and disorder have made many town centres no-go areas for law-abiding citizens.
The effects of such dangerous drinking on crime, communities, children and families are clear, but it need not be like this. Alcohol can be consumed responsibly, a drink can be enjoyable, not dangerous, and a thriving night-time economy can be built on the basis of a sensible drinking culture. In Durham, a Best Bar None accreditation scheme promotes responsible pub management. Licensed premises must meet minimum standards, for example on the skills and knowledge of their bar staff, to gain approval. They are encouraged not to serve beer to drunks and to build a good relationship with the police and local agencies. After three years, licensees reported a 75% increase in trade, a 50% increase in city centre footfall and an 87% reduction in violent crime. Experiences like that show that city centres can become more attractive places to visit at night if they allow sensible drinking rather than a licensing free-for-all.
Such schemes should be encouraged, but any progress will for ever be overshadowed unless we stop the flow of cheap alcohol. In some shops and supermarkets, drinks are now so heavily discounted that it is possible to buy a can of lager for as little as 20p or a two-litre bottle of cider for just £1.69. That means that many people now drink excessively at home and that many pre-load before they go out. Two thirds of 17 to 30-year-olds recently arrested in one city said they had pre-loaded before going out, and pre-loaders are estimated to be two-and-a-half times more likely to be involved in violence than other drinkers. So we need to deal with the dangerous drinkers, crack down on the irresponsible businesses and stem the tide of cheap alcohol. That means providing punishment and treatment for those who have shown that they cannot drink sensibly, tightening our licensing laws and cracking down on those who sell alcohol to children or drunks. It also means, for the first time, putting a sensible price on alcohol.
Those who have a particular problem with alcohol need specialist help to change their behaviour, so we will provide better treatment for dependent drinkers. We will develop alcohol interventions in prisons and will make alcohol treatment requirements imposed by the courts more effective. Dangerous drinkers who are convicted of alcohol-related crimes will have their unqualified right to drink removed through piloted sobriety schemes. These schemes will involve breathalysers and specialist electronic tags to monitor offenders’ alcohol levels and ensure they remain sober. From April, pilots using conditional cautions will launch in five areas—Westminster, St Helens, Hull, Plymouth and Cardiff. Further pilots will be launched shortly to tackle more serious offenders using community orders. We will legislate to support the roll-out of these schemes nationwide should they prove successful.
As well as tackling irresponsible drinkers, we must also help local areas to tackle irresponsible businesses by giving them greater powers over licensing. The Government’s reforms to policing, health and the criminal justice system will help to put power in the hands of local people, but we also want to give local areas specific powers to deal with alcohol-related problems. New powers in the Police Reform and Social Responsibility Act 2011 will come into force on 25 April. They include powers to make it easier for local agencies to refuse, revoke or impose conditions on a licence and to close down premises that sell alcohol to children or contribute to crime and disorder. They will double to £20,000 the maximum fine for persistently selling alcohol to children, and anyone with an interest will be able to object to new licensing applications no matter where they live. Later this year, new early morning alcohol restriction orders will give local areas the power to stop alcohol sales late at night if they are causing problems by restricting opening and closing hours, and we will introduce powers for local areas to control the density of licensed premises. We will also bring in powers to allow local areas to place a new late-night levy on businesses that sell alcohol late into the night so that businesses that benefit from late-night drinking will contribute towards the cost of late-night policing.
The alcohol industry also has an important role to play. This strategy promises to support and free up businesses that are acting responsibly. Most British pubs promote a good drinking environment and are the safest and friendliest places to have a drink, so we will build on the existing responsibility deal to drive greater industry action to prevent alcohol misuse. For example, 35 leading drinks companies are today launching a pledge to give consumers a wider choice of lower-strength products and smaller servings with the aim of taking 1 billion units of alcohol out of the market by 2015.
Individual, local and industry actions are all important to deal with problem drinkers and problem pubs, but dealing with problem pricing can be done only by central Government. We know that the availability of cheap alcohol helps to fuel binge drinking. Strong evidence from a number of studies conducted in the UK, Europe, America, Canada, New Zealand and elsewhere shows that alcohol consumption is closely linked to the price of alcohol. Those studies also showed that increasing the price of the very cheapest alcohol does the most to reduce heavy drinking. There is also evidence that young people are particularly sensitive to changes in price. Increasing alcohol prices lowers their alcohol consumption. That is why we have already taken action to tackle the availability of cheap alcohol. We have stopped high-strength white ciders from qualifying for lower rates of duty, we have introduced a new higher rate of duty for high-strength beers and we have brought in a new lower rate for lower-strength beers.
Those significant steps forward will help better to match prices to alcoholic strength, but the problem is now so acute that we need to go further. We will therefore introduce a minimum unit price for alcohol. This will ensure for the first time that alcohol can be sold only at a sensible and responsible price, stopping the deep discounting and bargain basement sales that drive binge drinking. We will consult over the coming months on the level of the minimum unit price and will seek to introduce legislation as soon as possible. We do not now intend to go ahead with the proposed ban on the sale of alcohol below the cost of duty and VAT. Most drinks will not be affected by minimum unit pricing, but the cheap vodka, super-strength cider and special brew lagers will go up in price. The dangerous drinks will become more expensive but the price of a normal pint in the local pub will not increase by a single penny. We will also consult on introducing a ban on multi-buy promotions in shops, such as “buy one, get one free” deals that push people to buy more alcohol than they want. We do not intend to apply this ban to pubs, bars and restaurants, which, as I have already said, offer a more controlled drinking environment. We want to encourage these premises to survive and thrive.
This strategy is targeted explicitly at dangerous drinkers, problem pubs, irresponsible shops and harmful drinks. Those who enjoy a quiet drink or two have nothing to fear from our proposals. The local pub has nothing to fear and the responsible off-licence has nothing to fear. We will help to tackle problem drinkers, we will help local areas to deal with local licensing problems, we will encourage the alcohol industry to act responsibly and we will put a stop to the easy availability of cheap booze that has blighted Britain for too long. This is a comprehensive strategy to take back our town centres from the drunken thugs and restore them to the law-abiding majority. I commend this statement to the House.
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)
This announcement about the alcohol strategy is extremely important, but the way in which it has been done is a complete shambles. It has been rushed out on a Friday morning when many of our colleagues have engagements in their constituencies and without notifying the Select Committee on Home Affairs. So, despite the many pieces of work the Committee has done on this issue, its members do not have the chance to be here in Parliament to scrutinise the strategy.
Why are we debating it today rather than on Monday, as was previously planned? It cannot be to ensure that Parliament hears the details first, because we have had the chance to read them in the Daily Mail, The Guardian and The Daily Telegraph, and all the other newspapers that were given the details yesterday. I even have the press pack, complete with questions and answers, which was given to the media yesterday and not to the House. It includes considerable additional information that has not been given to the House as part of the Home Secretary’s statement today. Nor can the reason be for Parliament to debate the statement, when only two hours’ notice has been given of a statement on a Friday. I take this opportunity, Mr Speaker, to apologise to the students I was due to meet in Pontefract at lunch time and have had to let down. Many of our colleagues will be in the same position.
The only reason we are sitting on Friday is so that the Budget debate could take place today rather than next week, Parliament could finish 10 days early and the Prime Minister would not have to answer Prime Minister’s questions next week. There is no precedent for handling a long-awaited consultation document in this way, on a Friday morning, with no notice. Over the past 10 years, there have been only three Government statements on a Friday: on the Iraq war, on swine flu and on Libya—all of them involving serious issues around national emergencies. What is the national emergency today?
What is the national emergency that prompted a decision to be made late yesterday afternoon to brief an important and serious strategy to the newspapers which meant that a decision was made this morning to interrupt the debate and make an oral statement? The only emergency is that the Prime Minister and the Chancellor have gone wobbly over the coverage of their Budget. Their Budget has gone wrong because pensioners are furious about the granny tax, middle earners are shocked to discover they will be paying the higher rate and everyone else is furious that the Government are bringing in a £10,000 tax break for the highest earners in the country, including, we discover, half the Cabinet. This is not about a 40p minimum price; it is about their failings on the 40p tax. The Home Secretary is being used as a human shield for the Chancellor and the Prime Minister, and she should have said no.
The issue is extremely serious. The Home Secretary is right: 1 million violent crimes each year are linked to alcohol. Nearly 9,000 people die each year as a result of alcohol abuse. Many people—indeed, most people—drink moderately and responsibly, and we enjoy it. The Home Secretary is right to say that responsible drinkers should not be penalised, but we cannot stand by and ignore the serious problem of dangerous alcohol abuse. Many policies have been tried already, including linking duty to strength and giving the police stronger powers to clamp down on alcohol-related antisocial behaviour, but she is right: they have not solved the problem.
The Home Secretary is also right to say that more now needs to be done. Many of her policies are sensible and we will support them. I agree that this is the right time to try minimum pricing. There are serious questions that she should answer—and the House should have the opportunity to debate—about how we ensure that supermarkets do not simply get a huge windfall, and what safeguards there should be for pubs. I agree, too, that we should explore the issue of sobriety orders, but these are serious questions that the House should have the chance to debate, to make sure they are not used wrongly for domestic violence cases and do not tackle the seriousness of the abuse.
I agree too that licensing is important. I hope the Home Secretary will now support our proposals to put public health in the terms for licensing decisions. More needs to be done on prevention, which had little mention in the statement—little wonder perhaps, when alcohol education is being watered down in schools. These are all extremely serious issues and we should have the opportunity to debate them properly in Parliament; but we do not have the opportunity for many MPs to ask questions today and to intervene and discuss the issues with the Home Secretary.
Will the Home Secretary tell us when the decision was taken to make the statement today? Will she agree to come back to the House and properly debate the strategy, giving the Home Affairs Committee and others the proper chance to ask questions? Does she agree that she is wrong to treat something so serious in such a cavalier fashion in the announcements made to the House? Does she agree that the Government are wrong to use a serious alcohol strategy as a cover for their chaotic confusion over their dreadful Budget? Will she treat the issue with the seriousness it deserves? We will give it proper support, if she will do so for the future.
Mrs May
That was the usual response from the right hon. Lady—bluster and political point scoring. One thing was missing. After the disaster of Labour’s Licensing Act 2003, after election text messages saying, “Couldn’t give a XXXX for closing time,” and after all that drink-fuelled violence and disorder, there was not even a hint of apology from the right hon. Lady.
I suggest that the right hon. Lady speaks to the previous Home Secretary, the right hon. Member for Kingston upon Hull West and Hessle (Alan Johnson), who said that he regrets not doing more during his time in office to tackle the problems caused by binge drinking. It is a shame that she cannot bring herself to be as frank about her party’s record in office.
It was difficult to decipher the right hon. Lady’s questions about the actual statement on alcohol strategy. I think she raised two points. She asked about ensuring that the minimum unit price did not lead to a cash windfall for supermarkets. I do not believe it will, because the supermarket industry is highly competitive; it has small margins on its goods and I expect money made through higher alcohol prices to be passed on through lower prices for other goods. When the cost of living is an issue, I should have thought that the right hon. Lady would welcome that.
The right hon. Lady asked about health bodies. They will of course be in a position to contribute to local licensing decisions; indeed, the new public health and wellbeing bodies will be able to participate, alongside the police and local authorities, in setting strategies to deal with alcohol in their local area. The right hon. Lady now takes an interest in health bodies having a role, although sadly she and her party opposed the Bill that enabled them to be set up.
I recognise that the right hon. Member for Leicester East (Keith Vaz), the Chairman of the Home Affairs Committee, is not in the Chamber, but last year he said:
“May I welcome the Government’s proposals for a minimum price for alcohol? They are of course in keeping with the recommendations that the Home Affairs Committee made last year.”—[Official Report, 24 January 2011; Vol. 522, c. 3.]
In 2008, the Home Affairs Committee talked about the cheap availability of alcohol, recommending that
“the Government establish as soon as possible a legal basis for banning the use of loss-leading by supermarkets and setting a minimum price for the sale of alcohol.”
What I think I deciphered from the right hon. Lady’s bluster is that the Opposition actually support the idea of an alcohol strategy and what the Government are doing. If I am correct, I welcome that.
Nigel Mills (Amber Valley) (Con)
I think the whole House welcomes what the Home Secretary is trying to achieve with the policy, and we certainly wish it every success. Could she comment on how we can tackle a possible increase in the black market—the smuggling of cheap booze from abroad? We do not want the reinstatement of the booze cruise to France.
Mrs May
My hon. Friend raises an important point. There are still issues about alcohol and other goods, such as cigarettes, being imported in ways that avoid paying tax to the Government. Much of that involves organised crime groups. One of the things the Government are doing is creating the new National Crime Agency, which will strengthen our ability to deal with organised crime, and the specific border police command will strengthen our border security to enable us to fight those problems even better than we are able to do today.
Lyn Brown (West Ham) (Lab)
Clearly, the Home Secretary has been sent to the House today in a shameful attempt to divert attention from the disastrous Budget, but can she tell me why if somebody is prepared to spend £60 a night in sunny Stratford, they will be diverted from spending an extra pound in the supermarket to load up before they go out?
Mrs May
Does the hon. Lady want an answer to her question or not? By setting a minimum unit price, we are tackling the cheap alcohol that is sold and the bulk discount sales of alcohol, which mean that people pre-load at home. They are often drunk when they leave home. They go to their town centres and sadly, they create the drunkenness, the brawls, the fighting in the streets, the mayhem that mean several things. It means that the police have to spend money and deal with those issues. It means that accident and emergency departments in our hospitals are having to deal with people in drunkenness; every year, 1.2 million admissions to accident and emergency units are alcohol-fuelled. It also means that many law-abiding citizens just do not feel able to go into their town centres at night, particularly on Fridays and Saturdays, and I think it is time we did something about it, and that is what this Government are doing.
Tessa Munt (Wells) (LD)
I welcome this consultation as an opportunity to tighten up on irresponsible sales. Does the Secretary of State agree with landlords such as Juliet Watchman of The Bell Inn in Shepton Mallet, who makes the point that if she behaved as local supermarkets did and sold lager for 34 pence per pint and cider at 48 pence per pint—pocket-money prices—or sold to those who are already heavily under the influence of alcohol, she would have her licence revoked by the local authority, and that this is a massive opportunity for landlords, the police and hospitals to contribute to the consultation?
Mrs May
I thank my hon. Friend. I commend the landlady of The Bell Inn in Shepton Mallet for taking that responsible approach to the issue of alcohol. We certainly look forward to receiving responses to the consultation from people such as her constituent and others. There are responsible landlords out there who are running pubs in difficult circumstances. We know; we have all seen many pubs in communities closing. We want to ensure that those who drink responsibly and those who deal responsibly with their clients, as many landlords and landladies do, are able to carry on doing so, and that we hit that end of the market that is being fuelled by this very cheap alcohol, often sold by supermarkets.
Helen Goodman (Bishop Auckland) (Lab)
I went to talk to young people in the youth club in Spennymoor about exactly this issue. I believe that price does influence young people’s behaviour. What I do not understand is why the Government are having a consultation on this issue but did not have a consultation on the granny tax.
Sarah Newton (Truro and Falmouth) (Con)
I very much welcome the contents of the statement, especially as it will spell the end of the dreadful legacy of the Labour party’s so-called café culture of licensing, which has blighted town centres up and down the country and done so much harm to people’s health. I particularly welcome the licensing changes. Could the Secretary of State inform the House a bit more about how the licensing changes could also be applied to supermarkets?
Mrs May
I thank my hon. Friend for that question. She is absolutely right. We were promised, under Labour’s Licensing Act, a European-style café culture. Nothing could be further from the truth in many of our town centres on a Friday and a Saturday night, and law-abiding citizens are suffering as a result. We are looking at ensuring—in some of the legislation that we have already passed, such as the Police Reform and Social Responsibility Act 2011, we are ensuring it—that it is easier for local authorities to clamp down on those outlets that are selling alcohol particularly to children. The fine has been increased. We are also making it easier to revoke licences where people are persistently caught selling alcohol to children.
Caroline Lucas (Brighton, Pavilion) (Green)
A minimum price for alcohol is something that I have campaigned on, and I am delighted that, on this issue at least, the Government are listening to the health professionals, who warn that we are losing nearly £3 billion a year on alcohol-related disease. Without pre-judging the outcome of the consultation, will the Home Secretary acknowledge that the university of Sheffield suggests that a unit price of 50p is more effective? Why has her strategy not included the really important issue of alcohol advertising?
Mrs May
I welcome the support that the hon. Lady is giving to the thrust of the alcohol strategy. We have based the assumptions that are in the strategy on a minimum unit price of 40p. I am aware that there are those out there who say that it should be higher. We will be consulting, and obviously we will look at the results of that consultation when we make a final decision on the unit price.
Sajid Javid (Bromsgrove) (Con)
I warmly welcome the statement by my right hon. Friend. She has talked about the changes in licensing laws made by the previous Government, which incidentally I think were well reported in the press before they were reported to this House. Can she perhaps expand on the impact that those licensing changes had on the binge-drinking culture?
Mrs May
I thank my hon. Friend for that. He is absolutely right. We were promised that the legislation would suddenly open an era in which people would sit casually in the streets, drinking responsibly. In fact, what we saw was an enormously increased burden on the police, who had to deal with the late-night and early-hours licences that were allowed as a result of Labour’s Licensing Act—that is why the police welcome the steps that we are taking today—and of course that just helped to fuel that binge-drinking culture which has caused so many problems in our town centres and high streets.
I apologise; the hon. Member for Brighton, Pavilion (Caroline Lucas) previously mentioned advertising. In fact, we are looking at the issue of advertising and display of alcohol as part of the responsibility deal.
Owen Smith (Pontypridd) (Lab)
I agree that it is a very important statement that we have before us today, but it is a shame that it has been snuck out as a diversionary tactic on a Friday. As the Home Secretary failed to answer the question asked by my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper), can she now tell us when exactly she was instructed to make today's statement?
Mr Stewart Jackson (Peterborough) (Con)
I strongly support my right hon. Friend’s statement. It is important to make the point that a Conservative-led Government should be about not just laissez-faire liberalism but social responsibility and civic duty. How will my right hon. Friend ensure—if necessary, by sanction—that local authorities properly use the power that she gives them, given that they have not chosen to be very prescriptive in their powers under the Licensing Act 2003?
Mrs May
We obviously had a lot of consultation with local authorities when we were putting through the changes in the Police Reform and Social Responsibility Act 2011, and we saw that they welcomed what we were doing, which will give them more freedom to be able to exercise powers. One problem was that in some areas the Licensing Act was drawn quite rigidly, in terms of what authorities were able to do and how they were able to interpret it. They will welcome the extra freedom that we are giving them, particularly the late-night levy which, as I said in my statement, will defray the costs of late-night policing.
Sheila Gilmore (Edinburgh East) (Lab)
The Home Secretary’s statement repeats an awful lot of things that have already happened, which illustrates that it has been cobbled together—announcing new powers from an Act that this Parliament has already passed. Further powers such as heavier fines for those serving under-age people, which I think is very valuable, will work only if they are properly enforced. How does the Home Secretary square that with her reductions in policing budgets?
Mrs May
It ill behoves an Opposition Member, given the extra burden that the police felt as a result of the Licensing Act 2003, to stand up and refer to policing. The hon. Lady talked about the strategy being only about what has already been passed. No, it is not. Of course, we have brought together a number of issues, some of which we have already legislated for, such as changing local authorities’ powers in relation to the 2003 Act, and some of which we have not yet introduced, such as minimum unit pricing. Also, we have included more action with industry and on public health, dealing with health issues related to the harm that can be caused by excessive drinking. This is the first time that the Government have produced a cross-Government strategy across the board, addressing every way in which this Government can deal with the problems of alcohol which, sadly, we see in too many people in this country.
Matthew Hancock (West Suffolk) (Con)
Pubs in West Suffolk and across the country are not only economically important but often vital hubs of the local community. Can my right hon. Friend tell me a bit more about what impact this statement will have on pubs, where so much, in many cases mostly, responsible drinking happens?
Mrs May
I am grateful to my hon. Friend for making the point that pubs play a very important role in our communities. Pubs have nothing to fear from the minimum unit price that is being introduced today. That will not have an impact on them. I hope that we will see more people feeling able to go to pubs, particularly those in town centres which until now people have often felt unable to visit because of the brawling that they see in the streets. However, we will be looking very carefully in a number of areas to ensure that what we are doing is very clearly focused on those outlets that are bulk-discounting cheap alcohol, which enables people to get drunk before they go out, not affecting the pubs.
Mrs Mary Glindon (North Tyneside) (Lab)
Why has the voluntary agreement that the Government said they had with the supermarkets failed?
The Secretary of State for Health (Mr Andrew Lansley)
A billion units a year.
Mr Speaker
Order. I apologise for interrupting the Home Secretary. I am a little concerned about the hon. Member for Rhondda (Chris Bryant), who I fear is suffering from compulsive chuntering disorder. I know that he will now calm himself, and we look forward to hearing from him eloquently and possibly at length on other occasions.
Mrs May
Thank you, Mr Speaker. As I was saying to the hon. Member for North Tyneside (Mrs Glindon), we have already been working with the industry to ensure that changes can take place. My right hon. Friend the Secretary of State for Health has done a lot of work on that. It will lead to 1 billion units of alcohol being taken out by 2015, and 35 companies have signed up to that deal.
Mr Tobias Ellwood (Bournemouth East) (Con)
This is an important issue for Bournemouth. We have a vibrant and popular town centre as part of the local economy, but it has suffered because of the previous Government and their reckless Licensing Act, which has been very costly to the town centre. The residents are concerned that there are simply too many pubs and clubs there. Will my right hon. Friend expand on her comments on density and powers that might be given to local authorities?
Mrs May
My hon. Friend is absolutely right. Sadly, many towns and cities across the country have felt the impact of Labour’s Licensing Act in the same way as Bournemouth. We will enable local authorities to take into account the density of licensed premises in a town centre when they are determining applications. One of the problems in Maidenhead in my constituency was that application after application was given permission. Many residents felt that things started to go wrong through that. All too often, the sort of bars to which problem drinkers went were in our town centres.
Kelvin Hopkins (Luton North) (Lab)
As a former chair of the all-party group on alcohol misuse, I think that I was the first Member to table an early-day motion raising the problem of cheap alcohol and its impact on our society. However, the Home Secretary has not mentioned the more than 6,000 babies every year who are born damaged by alcohol consumed by their mothers during pregnancy. In America, every drink canister and bottle has a label warning pregnant women about drinking. Will the Home Secretary take that into account in her consultation?
Mrs May
We do indeed. The hon. Gentleman will find that we refer in the alcohol strategy to the issue of pregnant women drinking and the impact on the foetus and therefore on the babies when they are born. The drinks industry—for example, Diageo—has taken several initiatives on research and other aspects of the problem. The hon. Gentleman and I do not often agree on issues, but I am very happy to agree with him on the importance of the matter that he raised.
Mr Speaker
Order. I am happy to take a few more questions but extreme brevity is required because there is extensive interest in the Budget debate, to which I know the House will wish shortly to return.
Charlie Elphicke (Dover) (Con)
In the town of Deal that I represent, residents are beset in the early hours of the morning by drunks returning home and smashing up property and fights breaking out. The district council says that there is nothing it can do because of the rules brought in by Labour’s 24-hour drinking culture. In changing the rules, will the Home Secretary give real power and discretion to the district councils?
Mrs May
My hon. Friend is right. We are changing the law on the powers of the licensing authorities, and I am sure that Deal and other towns and cities will find very helpful the early morning restriction orders, which will be introduced later this year and will enable local authorities to restrict licensed premises’ ability to open between midnight and 6 am.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
Does the Health Secretary agree with the policy?
George Eustice (Camborne and Redruth) (Con)
Police in Camborne in my constituency have recently dusted off the Inebriates Act 1898, which contains a comprehensive package of measures to deal with habitual drunks. As well as the new measures that the Home Secretary has introduced today, will she ensure that the police are making proper use of existing powers?
Mrs May
My hon. Friend makes a fair point. We want to ensure that existing powers that should be used, particularly on dealing with premises that continue to sell alcohol to people who are drunk, are exercised. However, I am sure that responsible landlords will welcome the statement. Indeed, the chief executive of Greene King said today that he strongly believes that the Government’s intention to introduce a minimum unit price for alcohol is an important step.
Mr Russell Brown (Dumfries and Galloway) (Lab)
This is undoubtedly a problem, but it is disappointing that the Home Secretary makes some of our town and city centres at weekends sound like the wild west. Alcohol is a health issue, and the figures clearly show that. Earlier this week, figures published on liver disease were extremely worrying. The Home Secretary says that there is a consultation, yet she is determined to introduce a minimum price, even if the results of the consultation go against that. Pricing is only one tool in the box that needs to be considered. Young people may laugh at the Home Secretary’s comment this morning that they are particularly sensitive to changes in price—many are not.
Mrs May
The hon. Gentleman makes a valid point about the health aspect. There has been a 25% increase in liver disease between 2001 and 2009. As he said, figures on that came out earlier this week. That is why the document is a comprehensive strategy. It deals with alcohol pricing, health, relationship with the industry and the powers for licensing authorities. It is a cross-Government strategy, which brings all those issues together, to deal with what I hope Members of all parties recognise as a problem that has not been tackled for too long.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
Many nurses, doctors and other hospital staff will welcome the moves to improve zero tolerance towards drunks being abusive. However, will my right hon. Friend be careful that she is not, with the multi-buy option, harming families that budget carefully during the week when they purchase alcohol?
Mrs May
My hon. Friend is right to say that we need to implement the strategy so that it has the impact that we want on the cheap alcohol and bulk discounts that lead to the sort of behaviours that I described earlier. When we consult about dealing with bulk discounts, I am sure that the very point that she makes will be raised. Obviously, we will consider that carefully.
Roberta Blackman-Woods (City of Durham) (Lab)
I point out to the Home Secretary that part of the success of the Durham Best Bar None scheme was effective policing, which is now being put at risk because of cuts to Durham constabulary’s budget. We all want responsible pricing of alcohol, and there is much that I welcome in the statement. However, the right hon. Lady has not explained why it was necessary to interrupt the Budget debate today to make the statement. Many of us are here to speak for our constituencies and outline how the Budget has had a negative impact on them. I have a specific question. A real problem in Durham is special promotions by pubs aimed at students and young people. Will they be able to continue?
Mrs May
The hon. Lady made several points. I fully recognise the role that the Durham police played in the work that is being done there. It was a collective operation through licensees, the police and others. I am very pleased that Chief Constable Jon Stoddart of Durham, who is the ACPO lead on the matter, has said that he greatly supports the policy. He said that he welcomed any new approach
“that will help reduce the availability of cheap alcohol… and reduce pressure on the police.”
That is exactly what the strategy will do.
Mr Speaker
Order. The two remaining Members who wish to ask a question could compete with each other to see which is the briefer.
Martin Vickers
The people of Cleethorpes will broadly support the announcement. However, there will be concerns that, once again, the law-abiding majority are being penalised. Will the Home Secretary assure me that the police will use existing and new powers to the maximum, and that courts will ensure a robust approach?
Pat Glass (North West Durham) (Lab)
I thank the Home Secretary for the positive remarks that have been made this morning about Durham constabulary and about the Best Bar None scheme. I recently spent some time with Durham constabulary on a Friday night, targeting under-age drinking, and I personally poured out 11 litres of cheap vodka that was taken from 13 and 14-year-olds, having been purchased by older young people and by parents, not necessarily from off-licences, but from supermarkets. This is an extremely serious issue, but I am disappointed by the way the statement has been rushed out this morning. If it was so important, why was it not brought out properly in the Budget on Wednesday?
Mrs May
This would never have been brought out in the Budget because this is a cross-Government strategy which deals with a variety of issues that are not matters for the Budget. The hon. Lady is right to say what an important issue this is. That is why the Government have been working across Departments to produce for the first time a comprehensive strategy which, I hope—it is the intention—will deal with the sort of problem that she has rightly raised and recognised.
Mr Speaker
Order. I am grateful to the Home Secretary and colleagues. We return to the Budget debate.
Budget Resolutions and Economic Situation
(12 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Richard Harrington
This has been like the show, “Who Wants To Be A Millionaire?”—a question is asked, there is an advert break, and everybody is waiting for the answer. My quiz show might be called, “Who used to want to be a millionaire but now is a Member of Parliament?” I shall endeavour to continue after the commercial break in the spirit in which I started, by asking hon. Members to consider what growth in the economy means.
As a Johnny-come-lately to professional politics and prior to that having been in business for 30 years in various ways, successfully and, I have to say, unsuccessfully, it seems to me that growth often means something different to politicians, people who work in think-tanks, journalists and people who work in public affairs. For economists it is easy to consider growth as a statistic—0.5%, 0.8% or negative growth, on which Opposition Members and Government Members take different views.
For me, growth is a collective decision by individuals, whether they are business owners, people who want to start a business, or the management of a large company. In a capitalist society—there is a general consensus that the profit motive is what drives private enterprise—business people must make the decision to start or expand their business. Growth in the economy is the collection of such decisions. It is Government’s role and the role of this Budget to facilitate that.
Richard Harrington
Now. Unfortunately that was not the case with the situation we inherited, with a huge deficit and the economy plummeting. Opposition Members should remember what I said—that growth is not a statistic. If we are to get growth, it requires a collective series of decisions by people to expand their businesses and start other businesses.
The predecessors of the current Opposition believed in a different type of economy. They believed in a socialist economy. They believed that Governments, by nationalising businesses or taking investment decisions themselves, could make a fundamental decision, people would do things because they were told to do so by Government and the result would be a growing economy. Society has taken the decision—and this is the general consensus among nearly everyone in the House—that growth will come from private enterprise.
If growth comes from private enterprise, we must accept that that comes from people accepting all the aggravation, mortgaging their houses, setting up businesses, employing people and taking very little money out during much of the growth period of the business. What makes them want to do that is the fact that they want to get rich themselves. I am fine with that. If they pay their taxes—I am certainly against tax avoidance and all the legal and illegal schemes to do that—and if they employ people who pay their taxes, it is right that they should keep the majority of what they earn. I hope that when criticising the reduction from 50% to 45%, hon. Members on both sides of the House will bear that in mind. I believe that that ambition is the core of growth in this country and I commend the Chancellor for progress in this respect.
Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)
We have heard quite a lot already about the economic situation. The context for the Budget is one of economic stagnation. The growth forecast produced last year for this year was for growth of 2.5% in 2012. The OBR’s estimate now of growth in 2012 is just 0.8%. The growth forecast for 2013 is also 0.8%. That is close to stagnation.
Unemployment is rising, the cost of living is rising, and it is particularly worrying that business investment appears to be collapsing. The OBR forecasts that business investment this year will drop 7%, from an estimate of 7.7% to 0.7%. That is connected with the OBR’s forecast for such meagre growth as there is to be, according to its estimate. A much larger share of this growth—three times larger—is to come from private consumption rather than from export-led growth. We have a demand crisis in the economy. I worry that the Chancellor is putting all his eggs in one basket, rather like Japan did in the 1990s, gambling everything on low interest rates as a way to stimulate the economy.
Richard Fuller (Bedford) (Con)
The hon. Gentleman talks about a demand crisis, but does he accept that some of the responsibility for that comes from the policies of the previous Government, which so substantially over-leveraged not just the Government, but the entire economy?
Gregg McClymont
There is no doubt, and the hon. Gentleman is right to say, that not everything in the garden was rosy by 2010. That does not take away from the current Government their responsibility to stimulate the economy. On any metric, growth of 0.8% this year and next year is only very limited growth. On current estimates we will not return to 2007 GPD levels till 2013. That slump will be the longest since the 19th century—six years to get back to a previous level of GDP. That is indeed a slump, and this is a stagnation Budget.
Mark Garnier
Does that not illustrate the fact that such an appalling mess was made by the previous Government that it resulted in such a long and deep recession?
Gregg McClymont
As the hon. Gentleman knows, whatever the situation when this Government took office, they are now, by their own estimates, going to borrow £150 billion more than they estimated, so they are adding debt upon debt, with no growth to show for it.
Tom Blenkinsop
If it was such a bad period, why are corporates storing £750 billion under the mattress and not investing? Is that not a demand issue?
Gregg McClymont
As usual, my hon. Friend hits on the apposite point. Corporates do have an enormous cash pile, and we have to ask, why are they not investing? It is because they do not think there is anyone to buy their products; it is as simple as that.
Of course, no one is suggesting that this issue is all about one side, because it is not all about stimulating demand at the expense of cutting the deficit, but my and the Opposition’s view is that the Government have got the balance wrong. Confidence will not be restored if there is no growth in the economy.
Richard Harrington
I appreciate the hon. Gentleman giving way, but does he not agree that, actually, it is hard to say which comes first? He says that confidence comes from growth, but I say that growth comes from confidence. I think he has got it the wrong way around.
Gregg McClymont
I thank the hon. Gentleman for his intervention, which will be the last one I take, given the time constraints. The lessons of history are that, unless we can make people feel that they have money in their pockets to spend and to stimulate growth and the economy, the chances are—the Japanese example is a perfect illustration of this—that we are unlikely to recover to pre-trend levels.
At this time of stagnation and austerity, what is the Government’s priority? Is it growth, jobs and helping the hard-pressed squeezed middle? No, it is a tax cut for millionaires. Some 14,000 millionaires will get a tax cut of £40,000 per year. The 300,000 payers of the 50%—[Interruption.]
Madam Deputy Speaker (Dawn Primarolo)
Order. Hon. Gentlemen will not shout across the Chamber. The point being made is a matter for debate, and that is what is happening now. They can intervene if the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont) wants to give way.
Gregg McClymont
Thank you, Madam Deputy Speaker. Hon. Gentlemen on the Conservative Benches are becoming rather vexed, and one does not have to wonder why, given the message that they are sending out to the electorate with this tax cut, which will cost more than £3 billion at a time, as the Government emphasise, of austerity.
The hon. Member for Watford (Richard Harrington) suggests that empirical evidence shows that the 50p tax does not raise any money, but there is no empirical evidence in the document presented by the Government. There is a series of estimates, based on a view of behavioural change, itself based on a view of human behaviour, which one would have thought would have at least been challenged by the financial crisis and all that it brought.
This Government are taking a gamble that the £3 billion that they would have had in the bank—in their coffers—will be almost cancelled out by millionaires from Monte Carlo and Caribbean boltholes rushing back to show their patriotism to this country by paying a slightly lower rate of tax. Those are not my words, but the words of the Business Secretary in a previous incarnation. This tax cut for millionaires is the wrong priority for this country at this time.
We have a crisis of employment—a crisis of youth unemployment, with 1 million in the UK and one in four in Scotland now unemployed. What we need are measures to get young people back into work, but how long are they meant to wait, to take the argument of Government Members? A national insurance holiday for small and medium-sized enterprises—that is what we need. A bank bonus tax to create 150,000 jobs for young people—that is what we need. A temporary VAT cut to stimulate the economy and help out hard-pressed motorists—that is what we need. And a VAT cut for home repairs and maintenance to stimulate that important sector of the economy—that is what we need.
Then we have the granny tax. Under the guise of simplification the Government have brought in a stealth tax on more than 4 million pensioners. Some 700,000 people turning 65 years old will lose more than £300 per year—[Interruption.] Someone shouts, “No one will pay more,” and there is a debate to be had about sharing burdens.
Gregg McClymont
I am afraid that I have no more time to do so.
There is a debate to be had about sharing burdens across the generations, but to begin it with a stealth tax described as a “simplification” is surely not the way to encourage a healthy, long-term debate about that kind of distribution.
I finish on this point: wrong priorities, wrong values, wrong Government.
George Eustice (Camborne and Redruth) (Con)
I welcome in particular the Budget’s emphasis on business and enterprise, because we have to be clear that there are no short cuts out of the financial mess left by the previous Government. We need new businesses to set up, and existing businesses to expand and export more products, in order to create the jobs of the future.
The hon. Member for Clwyd South (Susan Elan Jones) said that there are no jobs for public sector people to go to, and that those who have been in the public sector cannot get jobs in the private sector, but we need those public sector employees to set up their own businesses, because I see a lot of talent in the public sector workers whom I meet in Cornwall. Many have experience of managing large projects, managing large teams of people, planning ahead and dealing with the public. They have many of the skills that they need to set up their own business and to create jobs for other people if they only had the confidence to do so.
I should also like to discuss the importance of supporting young people in setting up in business. I remember talking about 10 years ago to a businessman who said, “There is never a better time to start to run your own business than when you are young, when you have just left university. You should never put it off and think, ‘Well I will start up my own business later in life’; you should get on with it early.” It is therefore particularly important that we encourage enterprise at schools and get schools to engage in the various existing entrepreneurship schemes.
The announcement in the Budget to develop the idea of enterprise loans was particularly welcome, as it builds on the good work that the Government have already started with the enterprise allowances to help small businesses to set up.
Before the Budget I visited a large manufacturer in my constituency, or as large as they come in my constituency, called Teagle Machinery, based just outside Redruth. It is a fantastic success story in Cornwall: more than half of everything it produces is exported; the number of its employees has more than doubled over the past 10 years; it is winning orders in markets from Japan through to eastern Europe; and it is even now attempting to break into the market in Russia. It is an extraordinary success story, almost like Cornwall’s answer to JCB and proof that this country can still do traditional, high-quality manufacturing and engineering, and that we can be world beaters in that sector.
There are several measures in the Budget that companies such as Teagle in my constituency will welcome. There is the reduction in corporation tax, which my hon. Friend the Member for Wyre Forest (Mark Garnier) touched on. It is important that we have a business-friendly tax system here and encourage businesses that want to invest in Europe to choose the UK, and the reduction to 24% and the further planned reductions to 22% by 2014 will be incredibly welcome.
The planned national loan guarantee scheme will be a major support for smaller businesses. We all have many businesses coming to us saying that they have difficulty accessing finance at the moment, and that scheme will bring into the market £20 billion of funding that will be affordable for small businesses and give lenders the safeguards they need to make the money available. That, too, is going to be incredibly welcome.
I particularly welcome also the efforts being made to increase export finance and the funding available for it, because Teagle specifically raised that issue with me. It gets some support from UK Trade and Investment to take part in trade fairs, but it would like to do more, and this country is quite successful with exports at the moment. In the past year, our exports to India have risen by 30% and to China by 15%, and our overall exports during the past couple of years have risen by 30%. We have to build on that, because it is through exports, manufacturing and creating wealth that we will get our economy back on its feet.
The Secretary of State for Transport touched on many transport issues, and the Government’s decision to maintain investment in infrastructure is especially welcome. In my area, in particular, there is a new link between Camborne and Redruth, which will unlock the potential of derelict mining land and create 6,000 new jobs over the next 20 years, half of them in the next five years. Projects like that will also help to get our businesses back on their feet and moving forward again.
A speech about Cornwall would be incomplete if it did not touch on fuel tax. I have argued consistently, and continue to do so, that fuel tax can be a regressive tax and that it hits peripheral areas particularly hard because their products have to be transported much further. What the Government have done so far on that is particularly welcome. We must remember, as my hon. Friend the Member for Dover (Charlie Elphicke) pointed out, that fuel tax is currently 10p lower than it would have been under the Labour party’s plans, which is very welcome. I am particularly encouraged to see what has been done to take forward the idea of a fuel price stabiliser and the pilots that have continued to be rolled out in rural areas with the rural rebate, which is particularly important to areas like Cornwall.
Finally, I want to talk a little about the tax thresholds, because the increase in the threshold to £9,200 a year is a major boost to areas such as Cornwall where a large number of people are on low incomes. It will take more than 20,000 people in Cornwall out of tax altogether and 24 million people across the country will benefit. There has been some discussion about the genesis of the proposal and which party came up with the idea first. My hon. Friend the Member for Peterborough (Mr Jackson) touched on that, but I can vouch for the fact that in 2004, when I was working on policy ideas in the Conservative party, it was in fact Lord Saatchi who strongly pushed the idea of having a £10,000 threshold and taking people out of tax altogether. It is a Conservative proposal and always has been, and I am delighted that our Liberal Democrat colleagues have come around to our way of thinking.
Phil Wilson (Sedgefield) (Lab)
This is a landmark Budget, because it has redefined the meaning of complacency. The Budget speech, in essence, was nothing more than a review of the previous week’s press, rather than a strategy for growth, although we did learn one thing: the Conservative party is a one-region party, not a one-nation party. The Lib Dems—I notice none of them is here at the moment—have followed such a crooked path since the general election that I am surprised they can now lie straight in bed.
Transport is a very important issue in Sedgefield. In the south-east corner of the constituency, Durham Tees Valley airport is doing its best to continue to serve the Tees valley, even though it has faced difficult times recently. I am pleased that the Minister responsible for aviation has agreed to meet MPs from the area to discuss the airport’s future, and I will be pleased to hear the Government’s plans for expanding runway capacity in the south-east, which would greatly help regional airports.
The Hitachi train building facility is due to start construction in my constituency at the back end of this year or the beginning of next year, and I hope that one day in years to come it will compare with Nissan for the number of private sector jobs it creates. I would like to record once again my thanks to the people of Newton Aycliffe, Sedgefield and the north-east who campaigned to ensure that this Government went ahead with the Labour Government’s plans for investing in new rolling stock to guarantee the Hitachi investment.
Beside the concerns about the future of the airport, the other great concern is the state of public transport in County Durham, especially local bus services. The lack of a credible bus service in the area, which has been restricted because of the cuts in central Government grant, is counter-productive. The local Jobcentre Plus has informed me that it knows that poor transport in the area is making it difficult for people to get to work, and it is such a problem that it is thinking about buying bicycles so that people can make the journey to work. At present, nine jobseekers in Sedgefield are chasing every vacancy, and there are fewer public sector workers in Sedgefield than in the Prime Minister’s constituency.
Although the north-east has the highest proportion of public sector workers of any region in England—just under 26%—private sector jobs increased in the north-east between 2003 and 2008 by 9.2%, while public sector employment grew by 4.1%. In other words, private sector employment in the region was accelerating faster than public sector employment was before the international financial crisis. Therefore, public sector jobs were not crowding out private sector jobs.
As in other parts of the country, in the north-east 40% of households with dual incomes include someone who works in the public sector. The loss of significant public sector jobs and a public sector pay freeze can only exacerbate the loss of spending power in the region if those factors are joined by the localisation of public sector pay. I believe that the move in the direction of localised public sector pay is driven by ideology, rather than economic facts. It belies the fact that we can have national pay bargaining and still have flexibility within pay structures without hitting regions such as the north-east.
Concern about the localisation of public sector pay is not restricted to people in the public sector and trade unionists. The chairman of the Leighton Group, a technology company in the north-east, Mr Paul Callaghan, has warned:
“I’m very concerned about the negative impact on the North East economy of regional pay rates. Clearly we do not have regional pricing on gas, electricity, petrol and most other goods, so freezing of regional public sector pay must reduce demand for local goods and services, further dampening an already depressed economy. I have seen no credible research to show that this move will have anything but a negative impact on both the region’s private and public sector.”
Roberta Blackman-Woods (City of Durham) (Lab)
Does my hon. Friend agree that taking £78 million out of the economy in a time of recession, which is what the TUC estimates regional pay would mean for the north east, is simply economic madness?
Phil Wilson
As I have said, I think that it is ideologically driven. The facts of the matter have been thought through, so my hon. Friend is quite right.
The previous Government turned their back on the wholesale devolution of pay determination at local level in 2003. A Treasury guidance note published in the autumn of 2003 stated:
“At the extreme, local pay in theory could mean devolved pay...to local bodies. In practice, extremely devolved arrangements are not desirable. There are risks of workers being treated differently for no good reason. There could be dangers of leapfrogging and parts of the public sector competing against each other for the best staff.”
Gavin Shuker
Does my hon. Friend also agree that one of the risks of this approach is that it will have a further deflationary effect in areas where money being spent in the local economy is vital to ensuring proper growth?
Phil Wilson
It will end up increasing the division between the north and the south in this country. If the Government go forward with this proposal, I believe that it will prove the point that the Conservative party is no longer a one-nation party, but a one-region party.
I believe that the proposal would mean that poorer regions would be starved of talent. Social mobility would be restricted because of too much variance in pay rates, especially between the north and the south. There are many myths about local pay determination. For example, last year’s autumn statement said:
“While private sector pay is set in accordance with local labour markets, public sector pay is usually set on a national basis.”
The fact is that most large, multi-site private sector companies have national pay structures, among them retailers, banks and telecom companies. The Government give the impression that private sector pay is set by myriad individual-level decisions based on specific local labour market variations. In reality, large, multi-site, private sector companies operate with up to four or five bands or zones within a national framework.
The Government have put across the idea that there is significant regional pay variation outside the south-east and London, but there is much more similarity than difference. In practice, most retailers and banks that operate zonal-type pay systems have national pay structures outside the south-east and London without having to set different rates for sites in Durham, Doncaster or Daventry.
There is a myth that local labour market and cost-of-living factors have displaced skill-level qualifications in setting pay in the private sector. Even in small private sector organisations, skills and qualifications will be key factors, and there is plenty of evidence, according to Incomes Data Services, that international engineering companies with regional bases are using international salary data on skills and qualifications rather than local data for recruitment purposes. Human resources professionals in the private sector who work for companies with multiple sites around the country would say that national pay structures are important because they provide simplicity, avoid the costs of duplication, allow better payroll control, create consistency, and avoid poaching and leapfrogging.
Another myth states that geography is a key factor for determining pay, yet in fact the industrial sector is the key determinant. In the car industry, with different companies working in different locations such as Sunderland, east London, the west midlands, Merseyside, Oxford, Derbyshire, north Wales and Swindon, there is a great deal of similarity in pay levels. These manufacturers benchmark pay against each other and other successful manufacturing companies. Geographical pay differentiation within the UK is not a major factor for them, although global pay differentials can be a factor. Localisation of public sector pay will also open the way to greater cost in the public sector, as local management will need to expand to handle negotiations and to collate and analyse local labour market data. There could be more challenges over equal pay.
Complex localised pay systems are rare because of the resources involved. Official earnings data show that there is very little difference in earnings outside London and the south-east. There are two labour markets in the UK: the south-east and London, and the rest of the country. Even zonal pay systems, which may cross regional boundaries, usually equate to the boundaries that I have mentioned and extend no further.
I do not believe that public sector jobs are squeezing out the private sector. Unemployment is highest in the north-east, with nine jobseekers chasing every vacancy. Thousands of jobs have been lost in the public sector, so why is not the private sector growing in the way anticipated? It is because there is a lack of growth and demand in the local economy. The Government’s plans for excessive localisation of public sector pay are misguided and ideologically driven, and they should not be implemented.
Richard Fuller (Bedford) (Con)
It is a great pleasure to follow the hon. Member for Sedgefield (Phil Wilson), who already outshines his predecessor in his integrity and sincerity, if not in his fame.
I apologise, Madam Deputy Speaker, to you and the House for the fact that unfortunately, owing to a constituency commitment, I will not be able to be here for the closing speeches. That is a great shame, because we have had a very stimulating debate across both sides of the House, with the opening speeches by my right hon. Friend the Secretary of State for Transport and by the shadow Minister, the hon. Member for Barrow and Furness (John Woodcock). The hon. Gentleman is standing in for the shadow Secretary of State, the hon. Member for Garston and Halewood (Maria Eagle), who became sick at a TUC conference. I think that this is the first time that a Labour Front Bencher has issued a health warning on their union paymasters. Let us hope that those health warnings will continue.
I will be going back to the great towns of Bedford and Kempston, whose people know that these are tough times but wanted to have a Budget that rewarded work, and the Chancellor of the Exchequer has delivered precisely that. The single most valuable part of this Budget for the people of my constituency is the raising of the personal allowance by over £1,000 so that the first £9,000 of a person’s income will not be liable for tax. That is a fantastic encouragement for people who are finding that their budgets are very tight.
Members on both sides of the House have expressed concerns about fuel duty, and I echo those concerns, because the duty does have a significant impact on personal budgets and on business. I would have liked the Government to do more, but I understand that they were unable to do so. I draw my hon. Friend the Economic Secretary’s attention to the campaign by my local newspaper, the Times and Citizen, which echoes what my hon. Friend the Member for Wyre Forest (Mark Garnier) said about how petrol prices can vary significantly between different regions. The Times and Citizen found that in Bedford and Kempston, our fuel prices were 4p to 5p per litre higher than in other areas. If we cannot do anything about fuel duty, will my hon. Friend consider ways in which the Government can ensure that we do not face monopolistic positions on fuel duty in very localised situations? The Times and Citizen’s campaign has shown that the people of Bedford and Kempston care very much about that, and it can, in itself, have as much impact as a cut in fuel duty overall.
I should like to spend a couple of minutes on the deficit crisis, inter-generational debt and competitiveness. On the deficit crisis, it is excellent that the Government are looking for fiscal neutrality, but that is different from considering the overall level of public expenditure and public debt. Public expenditure is still going up, in cash terms and in real terms, and tax receipts are going up—from 35.8% of GDP in 2010-11 to 36.4% of GDP in 2014-15. We continue to be a high-public-spending, high-tax economy. I hope that the Government and the Chancellor will look at ways in which the overall balance can be brought down so that resources can be moved from the Government sector to the more productive private sector.
May I also urge caution on Ministers in the use of quantitative easing? Quantitative easing is a policy to overcome a credit-driven recession. It should not be a policy to support excessive public expenditure or the long-term erosion of the value of savings. It is pertinent to look at the “Debt and reserves management report 2011-12”, which shows that the Bank of England’s asset purchase facility holds more than 18% of Government gilts. That holding has, at some point, to be unwound, which will have inflationary consequences.
Mike Gapes
Can I take it that the hon. Gentleman is calling for an increase in interest rates?
Richard Fuller
No, I am not calling for an increase in interest rates. I am calling for the Government to be clear, which I think they are, about the use of the quantitative easing policy. The results of that policy will, in a few years, have to be unwound. The level of their own gilts that the Government hold will have to be reduced. When that happens, interest rates will go up. We need to caution the Government to be aware, in setting the level of public expenditure, of what that level will mean. People will need an increase in pay owing to the increase in the Government’s cost of borrowing. Foreign holdings have also increased, and are now at 31%. We now have the highest spread between five-year and 30-year gilts in terms of the risk premium. All those points should caution us about our deficit.
Those facts come on the back of a significant level of debt in our economy. Opposition Members fail to realise that ours is the most indebted major economy in the world. That is the legacy of the previous Government and the previous Chancellor. Those who were here yesterday would have seen the shadow Chancellor give an uncharacteristically short speech. He sat down and people were surprised, because there was more that he could have said. However, I think that his speech could have been shorter. It could have gone thus: “I am sorry. I am really sorry. I am sorry for my hubris in thinking that I could end boom and bust. I know now that that was achievable only by leveraging up the entire British economy and dumping the debts on our children and grandchildren.” That is the speech that the shadow Chancellor could have given yesterday. He could then have sat down, because that sums up what he left us to sort out.
The shadow Chancellor did not give that speech yesterday, so perhaps I can give him some advice. The next time he goes to a school, instead of looking for a photo opportunity of him playing football, he could go up to one of the schoolchildren and say, “Hey, I’m sorry. I’m sorry that I shackled your potential with the debts that my monumentally short-sighted economic strategy created.” That is the truth of what he left behind.
Gregg McClymont
Does the hon. Gentleman accept that that is rather a caricature of what happened during the global financial crisis? It was a global crisis. Surely the financial sector, and the banks in particular, have to take some responsibility for the debt that we face.
Richard Fuller
As always, I have a lot in common with the hon. Gentleman, but that is not the point. The point is that the damage was already being done in our national economy. It was the strategy of the previous Government not to be content with leveraging up their own debt; they required the leveraging up of household debt and corporate debt, as well as financial sector debt and Government debt. Debt was the answer in the period when they came up with the statement that they had ended boom and bust. That debt has to be paid for. It is two years since the Labour Government left office and there is not enough time to pay for the 10 years of the growth of debt in our economy. It will take a significant amount of time for us to de-leverage the economy in every sector. This Budget is part of that process.
Phil Wilson
If that is true, why did the Tory Opposition go along with our spending plans right up until 2008?
Richard Fuller
That is a good question, which the hon. Gentleman should address to the Chancellor. I was not in Parliament at that time and I am not sure that that is what I would have said.
Much has been said about the granny tax. The one thing that grandparents want is what is best for their grandchildren. They understand that in tough times—this is because many of them have been through tough times—they have to give something to ensure that we will be stronger in future. That is what this Budget will deliver, and it is part of getting our economy balanced and back on the right track.
Gavin Shuker
The hon. Gentleman mentioned personal debt, about which I share a great deal of concern. Is he aware that under the Government’s plans personal debt will rise, not fall, over the coming period?
Richard Fuller
I think the hon. Gentleman is referring to unsecured personal debt rather than overall levels of personal and household debt. There is much for the Government to do, such as examining excessive rises in credit card terms and penalties for people who have to take on unsecured debt, and I believe they intend to do it.
We need to do more about our deficit, and I suggest again that one thing we can do for the sake of general fairness is consider creating a future fund that takes the pension obligations of our public sector workers and puts them into a fully funded scheme. It would take 20 to 25 years to accomplish that, but Australia, New Zealand, France and Norway are doing it, and it would show that this generation in Parliament understands its responsibility to the next generation of Britons. If we added that to our fiscal responsibility, we would be doing the next generation a great favour.
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
Investment in transport is absolutely essential for the future of our economy, which means that we need support for transport now and for future projects. I regret that no support was announced in the Budget statement for the maintenance of bus services, which are often important in getting people to work. Rising bus fares are a great burden, and in many cases essential bus services are simply being stopped. Nor was there any short-term relief from ever-rising train fares. I regret the absence of any measures in those areas, which are so vital to people today.
There were some encouraging statements about future transport investment. In the short time that I have available, I want to ask some questions about the meaning behind some of those headline statements. They are encouraging, but a lot lies behind them.
I first wish to refer to rail. I very much welcome the increased commitment to rail electrification. I listened carefully to what was said about Wales, and we would like to know exactly when rail electrification will come to Swansea, which was not very clear. I also welcome the commitment to more electrification across the north of England, and particularly the statement that part of the northern hub had now been agreed to.
Will the Government give a firm commitment to investing half a billion pounds in the northern hub, which is a major scheme to improve rail services right across the north, including places such as Liverpool, Manchester, Leeds, Sheffield and Newcastle. That £0.5 billion investment would produce a £4 billion boost to northern economies. We are still being told that the value-for-money studies are continuing, to assess whether the whole scheme can be made available. I remind the Minister that the Government are quite rightly investing £15 billion in Crossrail and £5 billion in Thameslink, yet the proposed £0.5 billion for rail right across the north is subject to scrutiny that has not yet come to a conclusion. I should like to hear a firm commitment to the northern hub today.
Major questions have been raised about the disparities in transport investment in different parts of the country. The passenger transport executive found figures showing that three times as much per head was invested in transport in London and the south-east as in the rest of the country. The Institute for Public Policy Research North, examining the implications for transport investment of the autumn statement, in which welcome new investment was announced, found that £2,700 per head was being invested in London and only £5 a head in the north-east. I accept that our capital city needs continuing major investment in transport, but given the needs of the country as a whole it cannot be right to have such wide disparities.
Will the Economic Secretary consider publishing the impact of spending decisions on transport across the country and in the different regions? All parts of the country need investment, but it is simply not right for the interests of the country overall that we continue to have an overheated south-east, while other parts are without essential transport investment.
The Budget contained announcements on road investment. More investment in roads—appropriate roads—is required. We are told that there will be a feasibility study on bringing private investment into our road system, but we need to know a great deal more about what that actually means. We are told that there will not be charges for existing roads, but would the widening of existing roads lead to charges? Is the policy not road charging through the back door, without the safeguards that were considered in the past when road charging as a national policy was under national discussion?
In previous discussions on road charging, it was always assumed—and indeed stated—that if road charges were levied, there would be a compensatory reduction in road taxation paid by the motorists, but it appears that under the Government’s new plans, that reduction in taxation will go to the private sector investors as an incentive to them, and will not accrue to the motorist. This is a major issue. It has been suggested that bringing more private sector investment into roads by leasing or selling our road system would be similar to privatisation of the water utilities—that is what the Prime Minister stated. If it is, it could well lead to a great hike in charges. However, the leasing or selling could be more akin to the Railtrack situation, when maintenance in infrastructure was severely reduced, with tragic consequences.
Gavin Shuker
My hon. Friend mentions parallels with the water industry. Is she aware—many hon. Members may not be—that currently one third of household bills go, in perpetuity, on debt repayments for investment in the water sector?
Mrs Ellman
I thank my hon. Friend for his comment—he makes an very important point and underlines the importance of looking at the policy in great detail. We are told that there will be a feasibility study, but we do not know exactly when that will take place, what it will include, or what kind of consultation there will be. Asking the private sector to own, run and lease our road system is a major step, and detailed scrutiny of exactly what it means for the future as well as the present is essential.
I am pleased that the Government have made statements on their renewed commitment to aviation. If we are to succeed as a country, it is vital that we maintain a successful hub airport. We cannot continue to lose out to our European rivals. It is essential that we build on the hub and do not allow it to decay. Investment in our regional airports is also important. They are important to local areas, but many of them are suffering economically because of the general economic situation. If the Government are interested in aviation for the future, they must look at our regional airports as well as maintaining that essential hub airport.
Hon. Members have been told in the past that there would be a Government aviation strategy that we could debate and consider. That is mentioned in the statement, but the situation is exceedingly vague. I ask the Minister please to tell us this: when will the Government publish their sustainable framework on aviation so that those very important issues can be considered and debated?
In the short time available to me today, I have raised a number of important issues that need proper consideration. I hope the Select Committee on Transport will look at those matters in detail. The whole House will want to know exactly what those headline statements mean. Investment in transport infrastructure is essential for the economic future of the country, but that means the whole country. I hope the Government are committed to doing just that.
Martin Vickers (Cleethorpes) (Con)
In my speech, I should like to give overall support to the general thrust and direction of my right hon. Friend the Chancellor’s Budget. In extremely difficult circumstances, he has produced a package that I believe will stand the test of time. Budgets too often unravel in a matter of days. Before I continue, I must apologise to the House and the Minister for not being able to be here for the winding-up speeches, but I have constituency appointments that I must honour.
This is the third day of the debate, and many of the points that are made will have been made many times over, so I should like, in the main, to look at the proposals from my constituency perspective.
Madam Deputy Speaker (Dawn Primarolo)
Order. A lot of Members have apologised for not being present to hear the Minister. That is the convention of the House. I sincerely hope that the Minister will be here, however, because it does not look like any other Members will.
Martin Vickers
The local economy of my constituency is generally a low-paid one, with an average annual salary hovering around the £20,000 mark, so it would be wrong to say that I have been overwhelmed with demands for a reduction in the 50p tax rate. To be perfectly honest, no one has canvassed me on that, and that includes two millionaires—but that is an aside. We recognise the desirability of expanding an entrepreneurial economy, however, and on balance I think it is the right decision.
Most of my constituents are far more concerned about the cost of living—most notably petrol and energy costs—so as an officer of the all-party group on fair fuel for motorists and hauliers, I am disappointed that our recent efforts to persuade the Chancellor to postpone the next scheduled increase in petrol duty have not borne fruit. I acknowledge that much has been done on this since the election, but household budgets are being severely squeezed by the cost of motoring. Lincolnshire is a predominantly rural county with limited public transport, so people have little choice but to use their own cars. The FairFuelUK campaign has done much work to highlight this, and the recent report it commissioned from the Centre for Economics and Business Research provided considerable and compelling evidence of the benefits of lowering the burden not just to individuals but to the economy. Our campaign will continue.
Before raising another couple of concerns, I want to welcome the increase in the personal allowance to £9,205. This is a major step towards achieving the £10,000 target and has been warmly welcomed in my constituency, which, as I said, is a low-wage area. I also welcome the moves to lighten the burden regarding child benefit. It is a step in the right direction. It is not entirely what I had hoped for, but, again, I recognise the pressures on the Chancellor. It was interesting to note, in the debate a day or two ago, the suggestion made by my hon. Friend the Member for Gainsborough (Mr Leigh) about a possible way forward.
It is notable that when the reporter from the local Grimsby Telegraph contacted me just after the Budget speech, their first question was not about the 50p tax rate or the impact on pensioners. Instead, it was, “What’s in it for regeneration?” Northern Lincolnshire urgently needs improvements to its infrastructure and public realm, and the Government have recognised the area’s bright future with an additional allocation of £6 million to the pan-Humber and Greater Lincolnshire enterprise partnerships.
I particularly welcome the forthcoming publication of the national planning policy framework speeding up the procedure for major applications, and note that the Red Book makes specific mention of the Able marine energy park in my constituency, which has been plagued by delay after delay from wildlife directives and a less than positive approach from some Government agencies. The specific commitment in the Red Book to change the culture of statutory bodies is therefore much needed. I also welcome the commitment to changing use class orders and the associated permitted development rights that will make it easier to change the use of buildings.
Enterprise loans are also a welcome development, particularly those aimed at young people. I was recently involved in the small business all-party group’s inquiry into entrepreneurship. It was notable that every witness pointed out the need to encourage the entrepreneurship in our young people that the economy so urgently needs. It is also notable that the Federation of Small Businesses is broadly supportive of the Budget proposals. As we all know, to a great extent it is small businesses that will be the engine of growth.
I want to comment briefly on the Opposition’s response to the Budget. Despite their playground attitude of pointing and calling us “the same old Tories”, it is notable that it was those same old Tories who have guided the country through most of its difficult periods. We also provided the opportunities for working-class people to buy their council homes. We have provided the economic conditions for some of the most notable periods of growth throughout our history. The Labour party’s renewed class warfare just does not wash, especially with people like me who come from a working-class background. The fact is that all people, whatever their station in life, benefit from a growing economy, and I believe that this Budget will do a great deal to bring that about.
Mark Hendrick (Preston) (Lab/Co-op)
The Budget was an opportunity to give hope to those who have seen their household budgets squeezed and their livelihoods destroyed by the Government’s economic policies. On Wednesday, however, we saw the Government’s priorities. They were to help the few, not the many; to help the millionaires, not the millions. The Government chose ideology, not fairness. The impact of the Tory-led Government’s austerity measures is plain to see: with rising prices, squeezed living standards and soaring unemployment, this is a return to the Thatcher years of the 1980s.
In Preston, unemployment has risen month by month. In February 2012, 3,733 people were claiming jobseeker’s allowance, which is double the figure under the Labour Government. We have seen an increase of 439 from February 2011—a 13% increase in a year—and an increase of 169 since January 2012, which represents a 5% increase in just one month. The most striking figure is the increase in long-term youth unemployment, and I fear that that will be the hallmark of this Government. Long-term youth unemployment in Preston has tripled in the last year.
This problem is not unique to my constituency; it is endemic across the country. Young people and families are the victims of the Government’s reckless austerity measures, which I fear will lead to a lost generation of young people. I ask the Minister and other Government Members how it can be fair that 14,000 people earning £1 million or more are getting a tax cut of over £40,000 a year when a family with children earning just £20,000 will lose £253 a year from this April. That is on top of the VAT rise, which is costing families an average of £450 per year. The Government’s priorities are clear: tax cuts for the few while others wallow in the mess created by the Government. To repeat a comment picked up on by the hon. Member for Cleethorpes (Martin Vickers): these are the same old Tories.
This Budget is a tax raid on pensioners. In Preston, there are 5,894 people aged between 60 and 64. A large proportion of them will be the victims of the Chancellor’s decision to freeze personal allowance for pensioners, with those turning 65 next year set to lose up to £322. There are currently 16,622 pensioners in Preston, and a considerable percentage of them will have to pay this granny tax, along with 480,000 other income tax paying pensioners in the north-west of England. The economy in the north-west is already suffering.
The Budget also does nothing to help manufacturing. The Prime Minister and the Chancellor have made it clear that they envisage the rebalancing of our economy through manufacturing. For Preston and Lancashire, manufacturing is not only our heritage but our future. As a Lancashire MP, I am proud of the work that BAE Systems and the BAE work force have done over the generations. As we know, however, BAE has lost the contest for preferred partner with the Indian Government owing to the lack of activism on the part of this Government. In January, it was announced that French defence firm Dassault would be the Indian Government’s preferred partner for the building of their fighter jets, instead of BAE Systems with its Typhoon. In the White Paper “National Security Through Technology”, the Government have made it clear that they will no longer give British companies preferred status. If the British Government will not give that preferred status, why should the Indian Government give it to companies such as BAE? It beggars belief that the Government do not support British industry, but the Budget illustrates that fact.
The Budget shows no plans to support the nuclear industry. I hope the Government will look again at providing support to ensure that the Westinghouse AP1000 nuclear reactor is secured at Wylfa in Anglesey. This project would not only generate jobs in Anglesey, but create a Westinghouse service-based business with more than 200 jobs located in central Lancashire. This should have been the Budget for jobs and growth. Instead, it was a battle of pure politics between the coalition partners, with the winners being the millionaires and the victims the ordinary hard-working people. If this Government were to have any credibility on jobs and growth, they should have used the Budget to support companies such as BAE Systems and Westinghouse at the Springfields plant near my constituency.
The Budget included announcements on transport. Preston is a major hub for Lancashire, connecting Lancashire to Scotland, London, Liverpool and Manchester. I welcome the fact that the Government are looking to add to the trans-Pennine rail route by upgrading and electrifying the Manchester to Preston line. Why, however, are the HS2 plans so timid? The Transport Secretary and her team should not be so timid in pushing forward HS2, which would provide greater capacity and reduce journey times between major cities. Instead of legislating for the first phase of the new high-speed line from London to Birmingham, taking forward HS2 as one project, beginning construction in the north as well as the south, would have been the answer to solving the nation’s rail problems—instead of just looking after the south.
Labour Members remember the famous phrase, “We’re all in this together.” With youth unemployment at record highs and pensioners having had their money snatched by the Chancellor, there is nothing to excuse the callous and scandalous closure of the Remploy factory in Preston and others across the country. Where were the measures in this Budget to help the disabled? The systematic attacks on disabled people—whether it be through the removal of benefits or the closure of the Remploy factories—show that this Government have no shame about victimising the most vulnerable in our society.
This Budget provided a chance for a stimulus to jobs and growth in our country, and a chance to show the British people that the Government were on the side of ordinary hard-working families. Yet again, the country has been let down. This Budget will be celebrated by the few, but it will hurt the many.
Matthew Hancock (West Suffolk) (Con)
It is a great pleasure to serve under your enlightened chairmanship of this debate, Mr Deputy Speaker.
The debate has focused much on the immediate challenges and some specific measures, but I want to focus on the big picture. This Budget has seen a tax cut for 24 million working people and a wide range of measures to help Britain earn its way in the world. After all, this Budget was part of a series of Budgets to tackle the challenge of how to turn this country around after years of economic mismanagement. Some of that requires difficult and controversial decisions to be taken, but the fruits of these labours are not in the next day’s headlines, but in preparing our country for the world we live in.
My generation does not have the certainties of an economic world in which our main competitors were in the west—indeed, in the north-west of the globe and centred around the north Atlantic. We must compete against the growing tigers of the east and the growing and rapidly developing economies of the south, yet our economy was left unprepared for that. We all know that the fiscal situation was dire. Action has been taken over the past two years to deal with our debts, but we also need to ensure that we can earn our way in the world.
Understanding the international context might be helped by a few facts and figures, showing that we cannot any longer rely simply on trading with the old world to earn our living. Over the latest period, demand for UK exports by the European Union has been falling. Compared with January last year, the value of our trade with the EU is down £300 million, while exports to France fell by 14% and by 3.5% to Ireland. Those falls were more than offset by increases in exports to the rest of the world, however. Exports to the rest of the world are up 16% since January last year. Trade with China is up 30%, and trade to India is up 15%. There have also been rises in respect of economies with which we do not have much of a history of trade; our trade with South Korea, for instance, is up 145%. Our trade with our Commonwealth partner, South Africa, is up 57%, too. It is clear that our international trade patterns are changing rapidly, and we can no longer simply rely on Europe and north America to pull us through.
Mr Ellwood
My hon. Friend is making a powerful speech. Will he join me in congratulating both UK Trade and Investment on its work in promoting British industry and the Foreign Office on expanding our embassy empire, which had shrunk under the last Government?
Matthew Hancock
I compliment UKTI on the turnaround it is undergoing under Lord Green, the exceptional new trade Minister, who has vast experience and extensive contacts across the world. I commend the work he is doing both in the Department for Business, Innovation and Skills and with the Foreign Office, which is putting resources into the effort to increase our trade with the rest of the world, which has languished for so long.
I shall focus now on certain measures that I believe should be taken. Some of them might be controversial in the short term, but in the long term they will all prove to be beneficial and will change views. We must better inform people about the taxes they pay and the effects of those taxes. We also need a simpler and more attractive tax regime, to ensure that people want to create jobs in our country and international companies want to expand here.
We also need an active industrial policy. That is considered a controversial proposal by some of my party colleagues, but my argument is that the Government already put their imprint on the different sectors of the economy. Our financial services regulations are different from our pharmaceutical regulations, for instance. Also, Government decisions on where to put the roads that Opposition Members are happy to welcome has an impact on the rates of development in different parts of our country, and the development of High Speed 2 will, we hope, reduce the north-south divide. The Government have a sector-by-sector stamp, therefore, so we should use the power of Government where it can be a positive force, rather than simply say, “Government must get out of the way.”
Mark Hendrick
The last Labour Government produced a defence industrial strategy, drafted by Lord Drayson, which included a development strategy for the industry. The current “National Security through Technology” paper says British companies should not necessarily be given priority in defence procurement, however. What does the hon. Gentleman think about that?
Matthew Hancock
Lord Drayson was an unusually good Labour Minister—I would favourably compare him with almost all the others. The defence strategy does, indeed, recognise the need to take into account the interests of our defence industries. That is an important part of the strategy, but not necessarily always the decisive factor.
Returning to the issue of tax, the Government should give a receipt to taxpayers. My hon. Friend the Member for Ipswich (Ben Gummer)—another great Suffolk man—has pioneered that approach. We as individuals would not spend much money without asking for a receipt in return. For most people, their tax bill is the biggest item of expenditure, so such a receipt would be very important. It would also educate the public on the impact of their taxes.
We also need to know the impact of our taxes for policy making. It is extraordinary that the Labour party ignores the behavioural impact of high taxes. It is hardly surprising that it managed to mess up the public finances so comprehensively if it denies, as the shadow Chancellor does, the impact of high taxes on incentives and the amount of future tax money the Exchequer receives.
Secondly, we need a simple and attractive tax system, especially on corporation tax. All taxes are, eventually, paid by individuals, but it is companies that make so many decisions about where to locate jobs. So although a high corporation tax still falls on individuals, it puts companies off expanding or coming to Britain. By having an attractive corporation tax rate, we can attract companies to this country. Ultimately, the corporation tax would still be paid by UK residents, whether it was paid indirectly involving the companies or in any other way the tax is raised.
Owen Smith
If the corporation tax rate has been so effective, will the hon. Gentleman explain why, according to the OBR, the volume of business investment in Britain is set to decrease by 0.7% this year and is down 7% over the past year?
Matthew Hancock
I shall give a direct answer to that. When GlaxoSmithKline announced 1,000 jobs and half a billion pounds of investment the day after the Budget, it cited the lower corporation tax rates as a reason for doing so.
Matthew Hancock
I cannot give way, as I have only a minute left. This denial of the impact of the 45p rate is surprising, given that the Labour party is not pledged to implement the old rate again.
The third point I shall make is the importance of an industrial policy. Whether we like it or not, the Government have a stamp in this area, so I am very supportive of the following: the announcement on help for our creative industries, which was warmly welcomed, as Britain’s creative industries are the biggest in the world; the enterprise zones; the research and development tax credits; the moves on transport infrastructure, which has been talked about many times, where the start date for the work on the A11 has been announced and brought forward, and there is to be more road infrastructure, paid for both by the taxpayer and through innovative other means; and more for university research facilities. Let us contrast all that with what was called a “backwater”—the previous Government’s business Department. It all shows that the results of this Budget will be growth in the future, business confidence and a great deal of support in the months and years to come.
Gavin Shuker (Luton South) (Lab/Co-op)
I am extremely grateful to you for calling me to speak on this auspicious day, a Friday sitting, to discuss the Budget, Mr Deputy Speaker. I am also grateful to follow the right hon. Gentleman—[Interruption.] Sorry, the hon. Member for West Suffolk (Matthew Hancock)—
The Lord Commissioner of Her Majesty's Treasury (James Duddridge)
It is only a matter of time.
Gavin Shuker
It is only a matter of time, as the Whip says, so there is a top tip.
The reason I am pleased to follow the hon. Member for West Suffolk is that he promised to talk about some of the long-term reforms required in the economy. If we are to talk about the Budget, we need to talk not only about the long term, but about the capacity in the economy right now, and that is where I will briefly focus my remarks.
Labour Members have examined the Budget in detail and we see a wasted opportunity. We required a Budget for jobs and for growth in the short term that would lead to our prosperity in the long term. Instead, we got a Budget that has fought over the spoils. Two years into this Tory-led Government, we can see the effect that the coalition Government are having on our economic policy. Various Ministers and, indeed, Back Benchers, are fighting over, and leaking in the press, the measures in the Budget. They are fighting not over the scale of the fiscal challenge we face, but over what measures could be assigned to each individual party. It is almost as though, having slashed and burned, they are fighting over who wants to win the spoils for having scorched the earth.
The OBR has said:
“We have made no…material adjustments to the economy forecast as a result Budget 2012 policy announcements.”
The independent OBR accepts that growth will not be changed by this Budget. We all remember last year’s so-called “Budget for growth”, but we have still yet to see a strategy for getting growth in the economy, as the numbers clearly show: over this coming period, borrowing is to be more than £150 billion more than the Government announced just a year ago; the deficit reduction plan has gone from four years to seven; and the Government are trying conveniently to lay by the wayside promises that unemployment numbers would decrease in each and every year of this Parliament. What about the lie that the private sector will pick up where the public sector is being slashed away? We are being given a full body of evidence to prove that that is untrue. It is clear that in both policy and ideology the Government are struggling to get growth going because they are ignoring the lessons of history, particularly the lesson that when the public sector is cut back too far and too fast, fiscal policy has a deflationary effect on the economy. There is a real problem, but unfortunately we have been trapped in a paradigm by this coalition Administration which they cannot get out of.
What are we seeing? A number of tiny interventions, programmes and schemes. Let me go through some of the most eye-catching ones. I was on the Public Bill Committee that considered the legislation introducing the national insurance holiday regime, but only 3.3% of the businesses that the Government said would be helped have been helped under that scheme, so it clearly is not working. We have a much better plan to recycle that money to make sure there is a proper cut in national insurance across the country. Credit easing has yet to help a single business. The business growth fund has six regional offices, with 50 jobs having been created, but there have been just six investments in businesses to get business moving. The export enterprise finance guarantee has helped just six exporters since it was introduced.
In the absence of a clear ideology to get growth growing in our economy what we see are hundreds of tiny measures, none of which is actually giving confidence to business to invest. Roosevelt talked about the alphabet laws when he came to power and about the scale of the challenge that he faced in the States in the 1930s. What we have from this Government is alphabet soup: a series of initiatives, all with long and good-sounding titles, but no actual significant movement in the economy to get growth going. What we are left with are just words, and now they take money out of the pockets of those who are most likely to spend and instead choose to put it in the pockets of millionaires and of people who are already very good at avoiding paying tax in the first place—people who are likely to save it, spend it abroad or spend it in areas that are not going to stimulate the economy. Even those people are calling for action in the economy to get growth growing and not necessarily to reward themselves when growth is not there currently.
Let us consider the situation in the US, where its leader has explicitly talked about the dangers of the austerity narrative and has specifically said that to cut too far, too fast would be detrimental to the US economy over time. And what do we see there? Unemployment falling month by month and significant growth in the economy, just as, funnily enough, there was in this country in this Government’s first few months because they inherited that from the previous Government. Most crucially, capacity in the US economy is being protected. Look at its auto business: many Republicans said it should be let go to the wall but the Democrats stepped up and said, “We will protect it.” Why? Because if capacity is protected in the economy, the ability to keep growth going is retained throughout. We have seen a big turnaround there.
When we go into periods of recession or depression, businesses try to hold on to their ability to manufacture or to keep going for as long as possible—perhaps for six, 12 or 18 months—without laying people off. After a while, however, when it is clear that no lifebelt is coming from the Government, businesses start to lay people off, so a 2,000-employee business becomes a 1,500-employee business. That means that when the growth comes back, it is much harder to manufacture to the previous level. That is the legacy that the Government will leave us to pick up the pieces of—an economy with much less capacity to manufacture and grow to meet the long-term challenges we face. For all the talk of clearing up or picking up the pieces from the global financial crisis and the reforms that are required, we must remember that if our economy does not survive this period, we will not have the foundations for growth in the future.
Nigel Mills (Amber Valley) (Con)
It is a pleasure to follow the hon. Member for Luton South (Gavin Shuker); we have heard each other speak many times over the past few weeks.
When I was asked what I wanted to see in the Budget, my general response was “Not a lot.” The key thing is to keep a steady course and not scare the horses with a sharp change of direction, and that, as we can see from the Red Book, is the Chancellor’s main strategy. In the current financial year, the deficit is still about £126 billion, so there is no real scope for the Chancellor to take major expensive action. Looking forward to next year, we still see a deficit of about £90 billion, with public spending of £683 billion, which is nearly £2 billion a day. The most significant Budget measure for the coming financial year is the corporation tax cut, which is highly welcome. It is worth just under £400 million, which is about four hours’ worth of public spending. There has not been scope, and there is no scope, for major changes in that situation.
What most investors want from the British tax regime is stability and predictability. That is the strategy the Government set out at the start of this Parliament, and I am glad they have stuck to it, and that when we hit the start of the new financial year in a couple of weeks’ time, there will be no major changes for everyone to understand over the next fortnight. Most of what will apply was well signalled and we all knew about it months ago. There has been detailed consultation on many of the major measures; others are to do with anti-avoidance, which clearly we cannot consult on, but they are more than welcome.
As the debate today was opened by the Secretary of State for Transport, it would be rude not to touch on a few transport issues. Like other Members, I welcome the investment in transport infrastructure. One thing that has not had much attention in this debate is the decision to set up the transport innovation centre. I am sure the Government will recognise the overwhelming case for it to be based in Derby, where we have Rolls-Royce, Toyota and Bombardier. I can think of nowhere else in the country where transport plays a greater role in the economy and where there are more people with the skills to make the centre work effectively.
In all the Government’s recent announcements about the electrification of rail lines, it is a pity that they missed out the east midlands main line. It serves a large part of the country and a number of deprived areas. We suffer from a much slower train service than the east coast or the west coast, which must have an effect on economic activity. In fact, to get to London for 9.30 this morning, it was quicker for me to catch a train to Tamworth and change to the west coast main line than to stay on the east midlands line. There is an overwhelming economic case for electrifying the line and I hope that that will be brought forward.
As my hon. Friend the Member for Cleethorpes (Martin Vickers) said, after three days of Budget debates most of the good points have been made. Obviously, I warmly welcome the increase in personal tax allowance for the lowest paid; it will affect 23 million people, which is a strong signal of where we think our values should be. Of all the money the Chancellor has at his disposal, the £3.3 billion annual cost when that measure takes effect shows where his focus and priorities lie.
I welcome the measures announced previously to try to get more finance to small and medium-sized businesses—the loan guarantee and credit-easing schemes. We hope the banks will take them on so that businesses around the country have access to the finance they need to grow and create jobs.
I shall spend the last few minutes of my speech talking about the importance of tax simplification, which was front and centre in the Budget. I especially commend the valuable work of the Office of Tax Simplification on this Budget and the previous one. I only hope that the Government, having seen the value of the work of the OTS, will commission it to do something more ambitious and look at how we can radically reform business taxation and corporation tax to make them simpler and to make the country even more attractive to investors.
The OTS recently produced a report on the taxation of the smallest businesses. I welcome the fact that the Chancellor went further than it recommended, in effect allowing businesses with turnover of up to £77,000 not to prepare detailed accounts, but just to pay tax on their cash surplus each year. If that coincides with VAT thresholds, businesses will know that if their turnover is less than about £77,000 they will not have to prepare detailed accounts for tax purposes or deal with VAT. That is a powerful message to send to the smallest businesses. I look forward to the consultation to see how that measure can be made to work. However, there is just one issue I want to raise. We all want the guy who is making a nice living for himself—perhaps a successful plumber—to be able to grow his business, and to take on someone to train. The risk is that if he does so, and takes his turnover beyond £77,000, he will suddenly be clobbered by having to register for VAT and going through the accounts process. We need to think about how we transition successful people who take on extra staff, which would tackle unemployment, and bring down the compliance level for them, but that is not to take away from what is a welcome measure.
A slightly less welcome review from the Office of Tax Simplification was the review on taxation of pensioners, which is where the Budget measure that has been most controversial—the changes to the personal allowances for people over a certain age—may have originated. Those of us that have argued for tax simplification have had to accept that whatever we try to change there will be some winners, who will be very grateful but probably very quiet, and some losers, who will be somewhat less grateful and no doubt quite a lot louder. Understandably, that is what has happened. When there is no fiscal room, there is no way of easing the burden on those that lose in the short term or of trying to spread that pain, although the increase in the state pension tackles some of that. But the change is a year away and there is scope to have a look at it.
I welcome the Budget. It sticks to the course that we need and takes our finances in the right direction, heading back towards stability. I think it will be a successful Budget for growth in this country.
Roberta Blackman-Woods (City of Durham) (Lab)
It is a pleasure to follow the hon. Member for Amber Valley (Nigel Mills), not least because he aptly demonstrated the huge complacency that exists on the coalition Benches about the need for economic growth. However, I am sorry that the Secretary of State is not in her place, because I am extremely worried about her, on two counts. The first is that she seems to be inhabiting a fantasy land where we are actually experiencing economic growth, and the second is that she seems completely unaware of the fact that we have had a global economic crisis in the past few years, so we need a growth plan to recover from it.
I would have liked to contribute something to the debate about transport, but alas I cannot, because I am afraid the Budget delivered absolutely nothing to meet the transport needs of my constituents. There was no support at all for buses, despite the fact that our bus network is in crisis. I know from my constituents that despite the fact that we have precious few jobs in the area, with 10 people chasing every job vacancy, people are losing jobs because they cannot get buses to work. Care workers—
Gavin Shuker
Is my hon. Friend seriously trying to convince the House that she does not have a cable car in her constituency?
Roberta Blackman-Woods
Alas, I do not have a cable car, but that is a great idea for a new business in my constituency, although where it would take people from and to, I am not exactly sure.
There is no support for transport, despite the fact that business leaders in the north-east have expressed concern that a failure to invest in the region’s transport network could stifle long-term growth. They have made a point that without the right transport and energy supply infrastructure, the region could struggle to realise its full potential. I hope the Minister will take on board these matters in her comments.
What do we know from the analysis of the Budget so far? I have with me an extract from the Financial Times, which concludes that that it is a Budget “without economic significance”. It also says that the Government have absolutely no plans in place to change the unhappy outcome of the slump, and that includes, critically, no plans for the north-east of England. What we do know is that the unemployment figures for the north-east are much higher than those for the south-east: 10.6% in the north-east, compared with 6.6% in the south-east. IPPR North has said that it is the largest gap since the labour force survey began. One might have expected the Red Book reforms to prioritise the north-east in support of economic growth, but in fact there is only one mention of the north-east in its many pages dealing with growth, compared with seven mentions for London. I want to see economic growth in London. It is our capital city and it is important that it is supported. However, that does not excuse giving no attention to the north-east apart from one mention of Newcastle. County Durham is not mentioned at all.
Dr Thérèse Coffey
Does the hon. Lady accept that from the growing places fund, the north-east has been allocated more than £10 million, which is far more than is going into my region?
Roberta Blackman-Woods
I will deal shortly with some of the measures that have been made available for the north-east.
Many measures in the Budget will have a negative impact on people’s income, including that of 8,000 families in County Durham, who will lose out from the changes in tax credits. There is no action to tackle youth unemployment, despite the fact that it is much higher by several percentage points in the north-east than elsewhere in the country. The Government should have set out a coherent strategy in the Budget to get the north-east economy back on track. Instead we have a measure to reduce regional pay, taking £78 million out of the north-east’s economy. There is no evidence to support the contention that the current position inflates public sector salaries or acts as a disincentive to the private sector.
Business leaders have been calling for some sort of holistic strategy, which we simply do not have. I say to the hon. Member for Suffolk Coastal (Dr Coffey) that there have been several small measures, but they are outside any coherent framework. Seventy-three per cent. of successful bids from the first two rounds of the regional growth fund, including 40% from the first round, have not yet been signed off. They are therefore not delivering anything for the north-east, and £14.25 million of the regional growth fund supports only 91 jobs. I emphasise to the hon. Lady and her colleagues that that is a drop in the ocean compared with what is needed.
We also have enterprise zones and local enterprise partnerships. In doing research for my speech today, I had to try to determine what was happening through two enterprise zones, two LEPs, two regional growth fund allocations, the business enterprise network in the north-east and the chamber of commerce. It is difficult to get a flavour of what is happening in the region, in great contrast with the position under the regional development agency, when it was easy to monitor the impact of what was happening with investment and jobs in the north-east. It is now extremely difficult to get that information.
Without a coherent framework and an overall strategy, the economy of the region is simply not growing and not enough investment is going into key sectors for economic growth, including those that had been identified under the RDA. It is not only me making that point; our business leaders say that, of all the policies the Chancellor could have introduced in the Budget that would have had an impact on the north-east, measures on investment allowance and employment taxes would have been the most important. They say also that, although the target to double UK exports is commendable, there is absolutely no detail on how it will be achieved. Rather, Government Members have today given us a complete fantasy land, where they somehow think that the measures in the Budget are going to deliver growth for the north-east. But there is simply no plan.
We want instead to see measures to create jobs for young people, a tax on bankers’ bonuses which would create 5,500 jobs for 16 to 24-year-olds in the north-east and a temporary reversal of the Government’s VAT increase which would put £450 back into family budgets. Labour would give 58,000 small businesses in the region a tax break if they took on extra workers. That is the challenge I throw down to the Government today.
Sarah Newton (Truro and Falmouth) (Con)
When I talk to businesses in my constituency in Cornwall—this goes for families as well; a party from Shortlanesend community primary in my constituency were just in the Gallery, so some young people from Cornwall have been here today—they tell me that, in such a part of the world where we are so far away from major markets, transport infrastructure is absolutely essential and vitally important.
I very much welcome, therefore, the Secretary of State’s introduction to the debate this morning, as it underlined the Government’s commitment to ensure that we invest in our vital transport infrastructure, which is important not only for individuals but for businesses—businesses that need to get their goods and services to market.
One area of transport, which we have not touched on today but that is very important to the nation, is shipping and ports. More than 90% of the value of goods entering this country enters on ships, as does 95% of everything that we consume in this country. Of course, it has to go through a port, or we would not be able to export. My hon. Friend the Member for West Suffolk (Matthew Hancock) quite rightly reminded us of the huge importance of international trade to our great country. Growth will come from exporting more of our goods and services, and they will be exported by and large on ships. Therefore, ensuring that we have the right port infrastructure to support the growth of trade—and foreign trade—in and out of our country is vital.
I therefore welcome in particular as part of the Budget—a small but important part in this context—the Chancellor’s report back on his commitment in the autumn statement to look at the planning issues surrounding ports development. I see nodding those colleagues who represent ports, because whether one represents a small port, a relatively small port in terms of shipping turnover, as I do in Falmouth, or one of our great container ports, one realises that how port operators develop those businesses is a real issue.
Charlie Elphicke
My hon. Friend will be aware that the national ports planning policy framework was recently put before the House. Does she agree that it is a positive step forward, although we should perhaps support mankind a little more vigorously and the humble shellfish a little less?
Sarah Newton
I definitely agree that the framework is a big step forward, and protecting our precious marine environment, which supports the whole fishing industry and ecosystem of parts of the UK, is important, but we need to balance that with our economic growth, stability and jobs, which is really important too.
The Budget reports on the review that was set in train in the autumn statement in order to analyse the implementation in the UK of the EU habitats directive, to which I think my hon. Friend was referring, and which can create so many problems for our port operators. In reading through that review, I think there is a great deal to be welcomed. It has engaged with a range of stakeholders, all of whom acknowledged that the implementation of the habitats directive caused considerable problems for our ports operators, and many positive measures have been put in place in terms of collecting data.
Many disputes about planning applications arise because there are no accurate data, and a lot of work is going to be put into that area, and into ensuring that the various regulatory bodies—ultimately, the Marine Management Organisation will make the licensing decisions for our ports, but many are involved—engage earlier and more constructively with ports operators, which should make them more confident that proposals for development can go forward.
Dr Thérèse Coffey
My hon. Friend and I have made common cause in trying to help those matters along, as we share similar issues. I understand that she welcomes much that was in the review, but does she share my concern that it missed the opportunity to look at certain regulations and determine whether we should have them at all? Indeed, the review’s terms of reference included looking through that and making appropriate representations to the Commission.
Sarah Newton
My hon. Friend makes a good point. I think that the review is a work in progress. The review team did not have much time, but I think they managed to cover a lot of ground. Certainly, if we look at the terms of reference the Chancellor gave them, we will see that there are things that subsequently have been passed over to the Law Commission for its consideration. I was somewhat perturbed to read in a footnote in the review document that the Government would consider the Law Commission’s recommendations “in due course”. I would like reassurance from the Chancellor that he will ensure, through the all-departmental working group he set up, that regulations are not standing in the way of economic growth and development of our ports, that this “in due course” is acted on speedily, because in due course without reform we will not have the ports to enable us to import our energy or the food and other vital materials we need. I would like to see that “in due course” in the footnote turned into something a little more urgent.
I think that eventually representations will have to be made at an EU level. Interestingly, the review showed that other European countries with ports have had experiences similar to ours when interpreting and implementing the habitats review. I am sure that all Members with ports in their constituencies or an interest in ensuring that Britain returns to being the great trading nation it always has been will want to watch these things and help the Government constructively to tackle these issues.
With regard to other vital infrastructure, a number of colleagues, including my hon. Friends the Members for Bedford (Richard Fuller) and for Camborne and Redruth (George Eustice), mentioned that for those of us living in the more remote parts of the UK a lot of transport is by road, so fuel prices and levies on fuel are of great significance to us. All the goods and services and the great things that are manufactured in Cornwall need to be able to get to market in the rest of the country. Although I was disappointed that fuel levies will go up in August by 3p, I understand why, given the huge mess that the Government are trying to sort out and the economic legacy they were left. That is something we have to bear.
One thing I would like the Minister to consider is a recent precedent. We have heard from colleagues today about the extent to which we believe fuel companies are profiteering from customers in our parts of the world, where the price at the pump is 3p, 4p, or 5p more than it is in other parts of the country. The Office of Fair Trading has the task of looking at whether there is a proper competitive market working in the region. The Department for Energy and Climate Change recently referred the fuel oil market to the OFT, because the winter before last many of us experienced the most appalling hikes in the price of fuel oil, which many people in remote, rural areas use to heat their homes. After the referral to the OFT, some very good work it did and the implementation of measures, we saw no repeat of such hikes last winter. With that recent precedent in mind, I think that the OFT could play a useful role in ensuring that our regional fuel markets are working efficiently. Based on that, hopefully we could see real pressure to reduce the profiteering that I believe is going on at the pump so that people in constituencies further away from the south-east of England will not feel the full impact of the 3p rise.
I welcome the measures in the Budget to support infrastructure. The investment in rail will affect not only HS2 but places such as Cornwall, and the connectedness of the remoter regions of the UK is vital to our economic future. I very much support and commend the Government’s single-minded focus on making sure that we have an infrastructure that is fit to get Britain working and Britain back to work.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Before I call the next speaker, I should say that the Front-Bench speeches will start at five past 2, and I want to make sure that everyone gets in, so I am dropping the time limit to six minutes. Interventions have been taking speeches up to nine minutes, so please think about whether it is really important to intervene.
Mike Gapes (Ilford South) (Lab/Co-op)
It is a pleasure to follow the hon. Member for Truro and Falmouth (Sarah Newton). She said that the Government are “single-minded”, but it is difficult to judge whether that is the case. I have been looking around and listening for contributions from the Liberal Democrats, but clearly they would rather not be here to explain to the ghosts of Beveridge and Keynes the reactionary, failing austerity policies that they are signed up to.
In my constituency, we have had a very significant increase in unemployment in the past year. The number of jobseeker’s allowance claimants went up to 4,119 in February; that is 297 more than a year ago and a 7.8% increase in one year. According to the House of Commons Library, 7.6% of my constituents are unemployed, and the number of those claiming JSA for more than 12 months is up by 395, from 480 to 875—a huge increase. That is not unique in this country, but it is important that people understand the situation. I represent a London—an outer-London—constituency where 11.6 people are chasing every single job. Many of my constituents commute into central London to work, as they always have done, but the number of jobs available to them there is going down, whether they are public sector jobs or jobs in the financial services industry in sectors such as banking and insurance, which have not been taking people on.
We have particular problems that affect constituencies in London, and those problems should not be ignored by those who are suffering in a similar way in other parts of the country. Yes, there are a lot of millionaires in London. There are lots of people with £2 million, £3 million or £5 million houses, but there are also many poor people living in bed and breakfast accommodation or short-term rented accommodation. One of the real tragedies in London is that tens of thousands of people are in housing need. There was nothing in this Budget about helping to get people into work so as to get the economy moving again and deal with the chronic homelessness and housing problems that we experience in London and in other cities.
Only 56.3% of my constituents are in employment. That reflects demographic and other issues; for example, a large number of people are in education. Nevertheless, the figure is very low compared with other areas that have 70% or 75% employment. We need targeted measures to deal with those whose first language is not English, or women who have not previously been in the work force, in order to try to change the situation. Nothing in this Budget will deal with those problems; all we have instead is a policy of imposed austerity.
I came to the House today, as I always do, by public transport. I travelled from Ilford to Stratford on a very overcrowded train, on which it was impossible to get a seat. That is the normal routine for tens of thousands of my constituents every morning. When we get Crossrail in five, six or seven years’ time, it will make a huge difference. I welcome this Government’s commitment to carry on with the Crossrail project, which was started by the previous Government. As the chairman of the all-party Crossrail group, I have been involved in the campaign for many years. I believe that Crossrail is vital for the future not just of London, but of the whole country. I hope that the Government will take action to ensure that the Crossrail trains are built in this country, unlike the recent disaster over the Thameslink trains. I also support High Speed 2, which is vital for the prosperity of the whole country.
It is time for the Government to get off the fence— I made an intervention about this—on extra airport capacity for our capital city; otherwise we will lose out to other countries in Europe on the transit opportunities of people flying across the Atlantic or flying in from Asia or the southern hemisphere. We need that capacity soon, and not through some fantasy island that will lead to the destruction of habitats and the killing of bird life. In my opinion, the additional capacity needs to be at Heathrow and possibly at other existing airports, rather than at the Mayor of London’s fantasy island.
Mr Tobias Ellwood (Bournemouth East) (Con)
I am grateful that I was able to catch your eye, Mr Deputy Speaker, in this Hopperesque corner of the Chamber. It is a pleasure to speak in this debate on the Budget and the economy.
During the general election, I made a speech on the economy in which I said that if three MPs were asked the same question on the economy, they would give three different answers. I should confess that I added that if one of the three was a Lib Dem, there might be four different answers. Of course, we are now in coalition, so that joke is probably politically incorrect.
It is day three of the Budget debate and we are beginning to understand the detail of the statement and the impact that the component policy changes will have. Labour is starting to cherry-pick aspects of the Budget, probably to create a distraction from its contribution to the state of the nation’s economy and the inheritance that we received. I can retort by praising the tax breaks for the digital economy, which will help Bournemouth especially because it is thriving in that area; the funds for the Dorset local enterprise partnership; and the raising of the personal tax allowance, which will remove many low-paid workers in Bournemouth from the tax system altogether.
As important as those points are, we should not lose sight of the implication in the Office for Budget Responsibility report that the shadow of the recession that Labour took us into still looms. The eurozone crisis is not over. Oil prices remain high, and could climb higher. Although it has been about four years since the collapse of Lehman Brothers and the run on Northern Rock, we are certainly not out of the woods. We must not forget the scale of the financial mess that we inherited.
Labour’s approach for a decade was to borrow money that the Government did not have. It allowed the banks to do the same by over-leveraging and lending to people who could not afford it. It is all very well for Labour to blame the rest of the world and the state of the global economy, citing Fannie Mae and Freddie Mac, but there were issues here in the UK for which the Labour Government were responsible. Bradford and Bingley was offering 150% mortgages. That was a UK responsibility. It was happening over here. We cannot blame that on the Americans or on the state of the global economy. Even with the knowledge that the recession was under way and was likely to get worse, Labour kept on spending.
Mike Gapes
Is it not the case that, in opposition, the Chancellor of the Exchequer said that there was too much regulation by the last Labour Government?
Mr Ellwood
I do not agree with that statement at all. It happened under the Labour Government’s watch, and they were responsible. Their Chancellor, who later became the Prime Minister, inherited a stable economy. Indeed, in the first three years of the Labour Government, they actually balanced the books. Then in 2002, they overspent by £19 billion. By 2008 they had overspent by £68 billion, and by the following year they had ratcheted up a £152 billion deficit. That was after Lehman Brothers and Northern Rock. In their final year, they were still spending like there was no tomorrow, ratcheting up a decifit of £145 billion, taking us to an overall debt of close to £1 trillion. That is not good Government responsibility for the economy.
Not until we had a general election and an emergency Budget from our Chancellor, back in June 2010, was there some slowing down in Government spending. He introduced measures to protect the economy and set out a comprehensive strategy, including measures to control public finances and stimulate growth and tax reforms to increase our global competitiveness. Those measures were lacking under Labour, and the hon. Member for Ilford South (Mike Gapes) should ponder them.
I do not have time to go into the detail, but it would be helpful to break the Budget measures down into fiscal and monetary policy. Fiscal policy means the Government expenditure and taxation measures that have a direct effect on the distribution of income, demand and the level of economic activity. Two prime examples are the corporation tax cut, which will make us far more competitive, and the reduction in the top rate of tax to 45p so that Britain no longer has the highest rate in the G20.
By contrast, Labour introduced the 50p rate just before it left office, and it failed to raise the predicted revenues and undermined our competitiveness. Looking back in history, Labour seems to have had a love affair with high income tax rates over the past four decades. It was Wilson who put the top rate up to 83%, and Margaret Thatcher then reduced it to 60% in 1979 and 40% in 1989. What did Labour do when it came into office? It did not put the rate back up again; it kept it as it was. It recognised—certainly Tony Blair recognised—that to remain competitive, we had to have sensible tax rates.
I do not have time to dwell on monetary policy—the supply of money, the cost of money, the rate at which it is controlled, the price that the Government pay to borrow it and the total supply of money into the economy—but it has an impact on matters such as controlling our triple A rating and the price of borrowing. The Government have kept interest rates low and used selective quantitative easing, and that sound monetary policy is moving Britain forward.
This is a radical and reforming Budget that will help Britain earn its way in the world in continuing difficult times. Labour gave us a disastrous economic legacy, for which it is only now, sheepishly, apologising. It led to record debts and a halving of our manufacturing base, resulting in our coming within a whisker of losing our important triple A rating. The Government are at last balancing the books, reforming our tax system, supporting British business and staying on a course towards economic recovery. The OBR has revised upwards its growth forecast for this year. It is low, but nevertheless improving, and the OBR predicts that it will reach 2% in 2013. Labour has proved that we cannot borrow our way out of trouble. This Government are proving that we have to earn our way out.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. We have six speakers left, and I want to bring the Front Benchers in early, so I have to drop the time limit to five minutes. I also ask Members to try to ease up on the interventions, or somebody will have to drop off the end of the speaking list.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
This Budget plans for £155 billion of deficit reduction by 2016-17, including £126 billion of spending cuts. The amount of cuts being pushed up into the next Parliament has grown, so the Conservatives and Liberal Democrats are currently planning to go to the next election promising to cut spending by at least £47 billion in the first two years of the next Parliament, on top of the cuts continuing throughout this Parliament, while giving top earners a tax break.
The OBR has again downgraded its estimate of the economy’s sustainable growth rate. As of June 2010, it thought the rate over this Parliament would be 2.1% to 2.35%. The OBR still expects the sustainable growth rate to pick up over the next couple of years. It believes that 2.3% is doable with the Budget measures; I do not think so. Even if it is right, which it consistently has not been, the growth will be jobless growth, with a high dole bill to pay. The Chancellor, therefore, should be trying everything in his power to get the sustainable growth rate up, but he is not. At the moment, cutting spending is almost the only thing he is doing.
Although the OBR has made few changes to its headline growth forecast, it has changed the expected composition of that growth. The Government are keen on talking up exports and investment, but the OBR’s estimate is that the UK’s recovery will be dependent on the consumer. The OBR’s growth forecast for 2012 to 2016 is spilt into two categories only: private consumption and everything else. Quietly, private consumption is expected to be a crucial driver of Britain’s growth in the years ahead. In November, the OBR expected 12.5% of all growth in 2012 to come from private consumption. It has now revised that up to 37.5%. That is a massive change in just five months. Indeed, over the next five years to 2016, the OBR now expects more than half of all growth to come from private consumption. Hon. Members will remember that that is the “wrong” sort of growth, according to Government Members previously. The OBR believes that in four of the next five years, consumption will add more to gross domestic product than net trade, and consumption is expected to be a more important driver of growth and business investment in every year of the forecast.
For all the Government’s talk of exports and business investment-led recoveries, the forecast now suggests that they are banking on a return to consumer-led growth while simultaneously condemning it and laying absolutely no foundation for it. They privately count on consumer growth, yet politically condemn it. What tells us that consumer-led growth is not coming from current Government policy? According to the Office for National Statistics, hopes for growth from the wider UK economy in the first quarter of the year were dealt a further blow as retail sales volumes were revised down to 0.3% growth from an initial estimate of 0.9%.
The Chancellor also said the Budget is about business, but the real policy should have been getting UK businesses to part with their hoarded billions of pounds in cash, and getting banks to lend. The Chancellor has not addressed that hoarding. Today, BT paid off a considerable deficit regarding its pension scheme—£3 billion by the end of the month and nine annual payments of £325 million. BAE Systems has a £2.1 billion cash pile, but in the past two years has cut 22,000 jobs, including 3,000 in the UK, while returning £2.2 billion to shareholders. The story is similar at Apple and AMEC, which ended 2011 with £521 million of cash and unveiled a £400 million share buy-back programme.
It is a familiar tale across the country. Last year, shareholder dividends from listed companies jumped 19% to a record £67.8 billion, according to Capita Registrars, and are expected to hit a new high of £75 billion this year. After nearly two years of this Government, something has clearly gone wrong. The last 15 months saw the UK economy contract. Business investment is shrinking. In the final three months of 2011, it fell by 5.6%—the single biggest drag on growth, pulling the economy down by 0.5 percentage points. Business investment is still more than 15% below its pre-recession peak. Last year, the OBR forecast business investment to deliver 6.7% growth. It did not; it shrank by 2%.
According to the Bank of England, 2012 is not looking encouraging either, despite the OBR’s hopes. The Bank’s most recent agents’ survey from February found:
“Investment intentions continued to weaken, suggesting little growth in spending on capital over the next twelve months”.
John Hawksworth, of PricewaterhouseCoopers, says that he cannot see a recovery in business investment until 2013. Simon Hayes, of Barclays Capital, says that the OBR’s projections require a level of spending not seen in 30 years. Most pointedly of all, BAE has made it clear that business will not invest if it cannot make the returns. At the moment, the numbers simply do not add up.
Corporate balance sheets are brimming with cash. According to official data, UK companies are tucking away about £70 billion a year, which is twice as much as before the crisis. Some analysts have estimated the total stash of cash under the corporate mattress at £750 billion. Investing just £20 billion of that in the UK would deliver 1% of growth.
We need a Budget for households, but unfortunately the Government are wedded to supply-side economics. Until we have demand policies, that money simply will not be spent.
Bob Blackman (Harrow East) (Con)
It is a pleasure to follow the hon. Member for Middlesbrough South and East Cleveland (Tom Blenkinsop), although he seems to have forgotten that a former Labour Chancellor made the greatest raid on pension funds ever, for which we are still paying the price.
I thoroughly approve of the Budget. Raising tax thresholds to take people out of taxation is a thoroughly Conservative way of doing things, as people have more money in their pockets to spend as they choose. One thing I would, however, like the Chancellor to consider for next year’s Budget is radically to increase the tax threshold at which people pay 40%, so that those on reasonably well-paid jobs can gain substantially as the economy improves.
I want to concentrate on the benefits of the Budget to London. The myth is often put about by people from outside London that everyone is paid huge amounts of money in London. That is not so. With the increase in the personal allowance to £9,205, an additional 97,000 people in London will be taken out of income tax altogether, and overall 3 million taxpayers in London will benefit—more than half the working population of London will get a tax cut as a result of the Budget.
The increase in the Growing Places fund, to which I referred at business questions yesterday—the additional £70 million being put in the hands of the Mayor of London—will enable Boris Johnson, over the next four years, to create 200,000 new jobs for people not currently in employment. Even more importantly, the money will enable more and more young people to get and retain work. Furthermore, an extra 7,500 new jobs will be created as a direct result of the enhanced capital allowance for the Royal Docks enterprise zone. Even better, 1,600 of the jobs will be in high-value manufacturing, which is good news for Londoners all round.
The Secretary of State for Transport has told us about the improvement to railways and suburban journeys within London. The investment plan announced in the Budget will benefit Londoners overall. Already, every London local authority has frozen council tax, which is good news for hard-pressed families, and the Mayor of London has reduced his share of the council tax. Effectively, then, every family in London has had a council tax reduction overall. That was good news when the bills were released.
There is more. London will be one of the super-connected cities. The £25 million to deliver ultra-fast broadband will benefit 774,000 residents and 121,000 businesses. That will put London at the forefront and enable it to compete with the rest of the world’s greatest cities. It means that 318,000 people will benefit directly from ultra-fast broadband and wireless connectivity, and that we will be at the very heart of generating new jobs and new prosperity for this country.
I am grateful for the £15 million that will be spent on improving safety for cyclists in London. The increase in cycling in London is welcome, but the fact that people are in danger when they cycle has to be addressed. That is a key part of the Budget.
Finally, on the benefits to London, money has been set aside for the new east London crossings—a ferry, a tunnel and possibly a bridge. I have the honour of pushing the next Transport for London Bill through the House. The Bill will enable tolls to be collected for using the ferries and tunnels. I look forward to that and to the investment that is to be made.
All in all, then, the Budget benefits London and Londoners, and brings home to everyone the importance of the choice they make on 3 May. Do they go back to the bad old days of Ken Livingstone, or do they look to the future with Boris Johnson?
Julie Hilling (Bolton West) (Lab)
Well, what a Budget! People were hoping for a Robin Hood tax, but instead they got a Sheriff of Nottingham Budget—a Budget where the poor pay for tax cuts for the rich, and people at the bottom in terms of income, opportunity and aspiration pay the price for something that was not their fault.
Despite the claims of the Government parties, this is not the mess of the last Labour Government, either. When the banks imploded and affected the whole globe, the last Prime Minister had a choice: did he allow us to lose our homes, jobs and pensions, and the country to go into depression, or did he invest in infrastructure and ensure that our economy did not disintegrate? He rightly did the latter. Of course we must now pay down the deficit, but not at the expense of low and middle earners, not so deep and fast that we choke off growth, and not in a way that is totally unfair. The Budget has benefited people who got us into this mess and made the innocent pay. It is a Budget that has cut taxes for the richest. It has increased stamp duty on houses selling for more than £2 million, even though only 4,000 are sold each year. I wonder how many of those will now be sold for £1,999,999.
On transport, I welcome the further £130 million for the northern hub, but I will be even happier when the Secretary of State confirms that we will get the whole of the hub. Will she tell us today whether we will get the other £330 million that we need to complete the project? Will she also tell us whether there is to be any new rolling stock? Electrification and improvements to lines are more than welcome, but they are not much use without the right trains. We need an end to the nonsense of diesels running under wires.
The announcement of investment in rail was the only good news on transport for my constituents. The Government say that people should travel to get to work, but how? Train fares have gone up by 11%. Bus fares have also gone up and, according to the Campaign for Better Transport, one in five services have been cut. Fuel costs are at an all-time high. There was a moment of optimism during the Chancellor’s weasel words when he said that he did not propose any further changes to fuel duty, but he forgot to say that the duty would go up by 3% in August, and hard-pressed motorists might now have to pay for road tolling as well.
My surgery is already full of people who have nowhere else to turn—people who are losing their homes because they have lost their jobs or been off work because of illness, who are desperate because their long-saved-for pension funds have collapsed, who are losing their tax credits, and who are waiting weeks for their benefit when they lose their jobs and have no money for food.
I was told of a young man who was eating dog biscuits because that was the only food in the house. I was told of a 25-year-old lone parent with a young baby, who had no income whatever and had been relying on handouts from friends who could no longer support her. I heard about another lone parent with three young children being paid £47.50 a week in benefits. She was unable to survive on that and was about to lose her home. I also heard about a recently separated mother of three who was trying to set up a new home. She had claimed benefits but, two months later, her claim had still not been processed. There are so many ordinary people, and so many stories of suffering and desperation. Ordinary people were already suffering before the Budget, but life is now going to get a whole lot worse, especially for the 270 working couples in Bolton West who are about to lose £3,870 a year.
I shall finish by reading an e-mail that I received yesterday from Nicola. She said:
“I’m currently living with my partner and two children. I work 16 hours a week and I’m currently receiving maternity pay. I’m aware that when the tax credit changes in April, we’ll need to be doing 24 hours between us. My partner has completed all the relevant work programmes but still can’t get a job, which leaves me to try and get the extra hours, but because I’m on maternity leave, even if I got the hours, they wouldn’t start till August. Surely I don’t have to give up my job, which would mean losing my maternity benefit, but how else can we survive?”
I hope that the Government are proud of themselves. It will no longer be “Love thy neighbour”; it will be, “Can you feed thy neighbour?” Actually, I do not hope that the Government are proud; I hope that they are ashamed that they have put money in the hands of the rich and taken food out of the mouths of the poor.
Charlie Elphicke (Dover) (Con)
I welcome the Budget. I particularly welcome the reduction in the rate of corporation tax. By April 2014, it will be 22%, the lowest rate in the G7. As I have previously argued, I would like us to go further and reduce business taxes, in time, to 15%. With lower taxes comes greater corporate social responsibility, however. We need a new social compact: low taxes and low rates, but business must pay up.
We need a sense of social justice and of corporate social responsibility in the tax system, especially for multinationals that are quartered overseas. Let us take the case of Google. We can examine that example because Google’s numbers are publicly available, unlike those of many other companies, and it is unfair to single out Google, as the practice that I am about to describe is widespread. It took about £2.15 billion in revenue from the UK in 2010, making an estimated £700 million profit, yet it did not pay any tax. In fact, it declared a loss of £22 million. I am all for the silicon roundabout, but it should not be a magic roundabout, in which going around it twice means not paying any tax or going round it three times, like Google, means turning a massive profit into a tax loss. Even with this routing through Ireland, it is not as if the company is paying in America either, as the effective tax rate in the United States is 2.4%. As I say, we need to take much further action. We need to know more about what other companies are doing and how much they are paying to the UK.
I thus propose a tax compact. The first element is that business tax rates should be low, simple and attractive. Secondly, however, business should have a social responsibility to pay a fair share of taxes. Thirdly, tax avoidance must be dealt with firmly and rules changed to ensure that a fair share of tax is paid. Fourthly, the European Union should support member states in protecting their tax revenues rather than undermining them at every turn, with discrimination rules gone mad, as it does at the moment. Fifthly, every multinational should publish the effective rate of tax paid on UK revenues, and no Government contract should be awarded unless a fair share of tax is paid in the UK.
These are my specific proposals. Tax is avoided by use of branch tax rules and by claiming to have a representative office and no tax presence. Used and abused are deductions of interest, royalties and management charges. We need to consider tightening the representative office rules so that people have a branch and pay a fair share of tax in the UK. We should consider tightening up on the abuse of the rules of deductions. We should consider tightening up on individuals who abuse personal service companies—and I do not mean only Ken Livingstone and a load of former Ministers, as there are many people up and down the country who have been abusing the tax system and avoiding paying tax in entirely unacceptable ways. Finally, we need reform in the European Union—first of the procurement rules and secondly of the tax rules—so that we can ensure that our tax base is protected and that people who work for the Government pay a fair share of tax to the Government on their fair profits.
Finally, on stamp duty avoidance, we need to consider an annual levy on all properties owned in a corporate wrapper—not just residential, but commercial properties should pay their fair share. I do not think that any stamp duty land tax or stamp duty predecessor was paid in relation to Canary Wharf. I think it is wrong that large commercial property companies do not pay their fair share as everyone else does. Everyone should pay a fair share of tax; that is what corporate social responsibility should be about. That is social justice. That is the deal in the tax compact: a lower rate of corporation tax, lower business taxes—but no playing the system.
Jeremy Corbyn (Islington North) (Lab)
This was presented as some kind of intelligent Budget that was taking the country forward and improving economic growth and opportunities. The whole narrative, however, unravelled within half an hour, when it became obvious that the Budget involved an attack on pensioners with the reduction in their tax-free allowances. We saw that the cut in the highest rate of taxation to 45% meant 14,000 people getting another £40,000 a year, while a great friend of the Government, Bob Diamond of Barclays bank, will alone receive £300,000 a year out of this Budget.
In a couple of weeks’ time, the benefit cuts will kick in—the housing benefit cap will have a big effect in my constituency—and the cuts in tax credits will kick in at the same time. Hidden away on page 87 of the Red Book is the revelation of a further £10.6 billion cut in welfare to be taken at some point over the next four years—yet it is utterly unspecific about where it is coming from, and utterly specific about what is going to be hit—on top of the £40 billion taken out of welfare budgets in the 2010 Budget, and all the cuts that have gone on since.
My hon. Friend the Member for Sedgefield (Phil Wilson) eloquently criticised and attacked the Government’s proposals on regional pay—and I absolutely agree with him. This will lead to a free-for-all in public sector pay and will undermine the whole concept of national pay bargaining—something that has brought stability to the public sector over a long period.
The Secretary of State for Transport spoke about transport infrastructure in her opening speech. The hon. Member for Harrow East (Bob Blackman) would have us believe that everything is absolutely perfect in London. Under Mayor Johnson, however, fares have risen and continue to rise. As he is presiding over very high fares, he is storing up problems for the future. He is also trailing the idea of the fantasy island airport in the Thames. The Government seem to be embarrassed by that, so have delayed any rational discussion of airport policy in order not to embarrass Johnson ahead of the May mayoral election.
I suspect that at some point the Secretary of State will come to the House and announce that she needs a third runway at Heathrow after all. The airport’s policy requires that, and its massive recent advertising campaign will bring it about. I look forward to the somersaulting that will take place, and to the massive opposition that there will be to the proposal.
Johnson has spoken much about transport, but one of his first actions as Mayor was to cancel many of the step-free access programmes to stations in London, including three in my constituency: Finsbury Park, Highbury and Islington, and Archway. That has been copied in many other parts of London. To raise the fares on the buses and the underground, to reduce the opportunity for young people to travel, and to end former Mayor Livingstone’s good and progressive programme of improving step-free access to all our stations and of making all our transport system fully accessible is a very strange set of priorities. It was strange, too, that Mayor Johnson churlishly turned down the previous Labour Government’s offer to part-fund the electrification of the Barking to Gospel Oak section of the London overground, which would have assisted in creating a bypass route for freight in London and would have improved the service generally.
My constituency is in inner London, and the local situation is as follows. Unemployment is rising, and currently stands at 8% for adults and about 25% for youth. Today’s Islington Tribune picks up on a report cited in The Guardian that showed that the rate of unemployment among black young people has doubled since 2008 and is rising faster than for the rest of the community. The housing benefit cap is forcing many people in my constituency out of private rented accommodation—and there are still no controls whatever on the rents of those living in private rented accommodation.
I want a Budget that helps the poorest in this country, that creates jobs, that encourages local authorities to build council housing, and that shows that there is a sense of the reality experienced by those living in inner urban areas. If we do not provide jobs for young people, we will reap the whirlwind.
Priti Patel (Witham) (Con)
Over the years, Conservative Chancellors have stood at the Dispatch Box on Budget day and outlined great programmes of reform to transform the economy, modernise the country, improve lives and restore Britain’s standing in the world. That is exactly what our current Chancellor of the Exchequer did in his Budget on Wednesday. He has had to reverse the socialist doctrine of an over-bloated state fuelled by the last Labour Government’s binge-spending, which resulted in an unprecedented economic crisis.
I fully support this Government’s aim to earn our way out of the economic crisis. I support the Budget principle of rewarding work, backing business, and being on the side of those who aspire to do better for themselves. I also support the introduction of the new enterprise allowance, which will help young people not just get into work, but start up enterprises. Importantly, I also support the principle of sticking to the plan to deal with Labour’s debts.
This will also be seen as a historic Budget, with the largest increase in the personal tax allowance ever, which will benefit 24 million ordinary families throughout the country. Most basic rate taxpayers will gain £220 every year. This Government will have taken 2 million low-paid people out of tax entirely.
The foundations of our economic strength were left to crumble by Labour, but this Chancellor has put forward strong and credible plans to rebuild our economy. Just as the reduction in the main rate of corporation tax to 22p sends a resounding signal to the rest of the world that would-be foreign investors are welcome in Britain, so this country needs a Government who are committed to reducing the overall tax burden and letting low, middle and high earners keep more of what they earn in their pockets. The Labour party may not, for all we know, like the idea that people should be free to spend their money as they like, but my constituents want to be able to control more of their money—the money that they earn—rather than have the state raid their pockets and waste their money on an over-bloated public sector.
In addition to the scandal of leaving the country with the biggest ever national deficit, the Labour party failed to serve the country well, and certainly failed to serve Essex well, on infrastructure investment. In Essex, our infrastructure desperately needs investment, with the A120 being a case in point. It is the 10th most dangerous road in the country, and I am sorry to report that last week a young constituent of mine was very badly injured in an accident on this dreadful road. Despite being one of the largest large net contributors to the Treasury, Essex was left behind under the previous Government. The Labour Government were prepared to profit from the labours and endeavours of hard-working Essex families and businesses, but were never prepared to put anything back. With a record like that, is it any wonder that voters there refused to return a single Labour MP to the House of Commons and have made Essex a Labour-free zone? I hope that the Government will look to fast-track and implement mechanisms to bring inward investment in our infrastructure. In particular, I would welcome the opportunity to work alongside government to examine the financing models for roads such as the A120.
Whether through supporting small and medium-sized enterprises, attracting foreign investment or helping hard-working families by providing the largest increase in the personal allowances in 30 years, this Budget is giving this country’s economy the strong foundations it needs for future growth and economic prosperity.
Owen Smith (Pontypridd) (Lab)
This has been an interesting debate, although we have not heard too much about transport, despite that being the theme for today. I suppose that that is a feature of Budget debates, but I suspect that it is also down to the fact that the Budget did not contain that much about transport. I am therefore not going to delay the House too much by talking about transport but will talk about the broader measures and about the Chancellor in the broader context.
People say that the Chancellor is a man who already worries a lot about his legacy, despite it being very early in his Chancellorship. I suspect that explains the volume of leaks, which reported that he wanted this to be remembered very much as a watershed Budget. The word used in the press quite a bit was “Lawsonian”, which I understand is a compliment where he comes from. Well, it was a watershed Budget and it will be remembered—there is no doubt about that—but perhaps not for the reasons he wanted and not in the manner he anticipated.
It was a watershed Budget for two key reasons. First, it shattered, once and for all, the illusion that this Chancellor is a master of political tactics or economic strategy. The only masters are the masters of the universe, down the road in the City, who will be thanking him for this Budget. They might be the people who think he is still smart about economic theory. I hate to tell him, but the only vanity that is burning right now is his own, on the front pages of the Daily Mail, The Daily Telegraph and all the other newspapers in which I read this morning that one Tory Back Bencher, who remained nameless—I cannot think why he wanted to remain anonymous—said:
“Everybody was saying George is a great economic strategist and political strategist and how unique he is to have both skills: that is going to be questioned. In fact, colleagues already are.”
More important, this Budget was a watershed because it gave the lie, once and for all—[Laughter.] The laughter indicates that Government Members are not worried about this in any way, shape or form. However, the Budget gave the lie to the notion that we are all in it together in this country in a period of austerity, because after this Budget we clearly are not. Clearly after this Budget, the old Tory order is restored and some people in our society are, in their view, more equal than others.
The themes the Chancellor sought to pursue in his speech were that his Budget would be simple, predictable and fair—that was how he described it just a couple of days ago. This morning, the Institute for Fiscal Studies described it as a “hotch-potch” of reforms that
“may turn out to be less fiscally neutral than intended”.
It is hard to disagree with that conclusion from the independent IFS, because everywhere one looks in the Budget one finds measures that are mis-described, such as the tax increase on pensioners that is described as a simplification, and outcomes that are overstated. We have heard a lot today about this being a Budget for business, but according to the OBR, it is resulting in a 0.7% reduction in business investment this year, which is down 7% on the anticipated volume of business investment over the past year.
Crucially, numbers have been massaged throughout the Budget or just plain made up—guessed at—on the basis of Arthur Laffer’s famous cocktail napkin curve. I am afraid that the hon. Member for West Suffolk (Matthew Hancock) will find that numbers in the Budget will fall apart.
Owen Smith
In a moment.
Those numbers are absolutely crucial to the debate because they are crucial to the claims of fairness and fiscal neutrality. The key number is that relating to the 50p rate costing only £100 million, because the OBR endorses HMRC’s findings. That is what the Government estimate will be the long-run annual cost to the Treasury of cutting the 50p rate. The Chancellor swept the number aside the other day as though it were nothing, just as he swept aside with an imperious flourish of his hand the £1 billion that we actually saw going into the Exchequer in the first year of the 50p rate.
Matthew Hancock
Is it any wonder that Labour left everything in such a mess given that it does not accept that higher taxes have behavioural consequences? Is the hon. Gentleman saying that Labour will never again look at the impact of tax rises on people’s behaviour?
Owen Smith
We absolutely agree that taxes and changes in the income tax rate have an impact on “behavioural yield”, to use the Treasury’s phrase. That is why, when we calculated in March 2010 the revenues that would be realised—
Owen Smith
It is interesting that the hon. Gentleman says that; I am going to explain why it is not wrong and why we are right. At first glance, it looks very simple. Page 51 of the HMRC report shows the cost of cutting the 50p rate—the money that will be forgone by the Exchequer—as £3 billion, not £100 million. The next line covers the behavioural impact to which the hon. Gentleman has referred—the one based on the Laffer curve and a bit of undergraduate economic text in the previous 50 pages—and says that the Exchequer will get back £2.9 billion rising to £3.9 billion over the spending period. The key point is that all that is entirely based on a taxable income elasticity measure of 0.45. If we plug that into the equation we get this £100 million gap. Of course, the previous Treasury figures were predicated on a 0.35 number—a more conservative estimate— and that would have given £2.7 billion in revenues each year.
Owen Smith
I would be intrigued to get the Secretary of State to explain why it was wrong. If she looks at page 50 of the document she will see that it says simply that the Government decided that 0.45 was a better estimate. That was predicated on a single academic study produced in the Mirrlees report and there is no other evidence for drawing that conclusion. That is why the Government are guessing at the £100 million. Sensible economists would think a different sort of sensitivity range would have given them a far better estimate.
Justine Greening
The OBR is very clear that the £100 million represents a reasonable and central estimate. In fact, I would suggest that the previous Government’s assessment of elasticity in one of their final Budgets was designed entirely to manufacture tax receipts that were never going to materialise. If it was such a good idea, why did it take them 13 years to think of it?
Owen Smith
The principal reason why we did not introduce it was because the economy was growing through most of our period in government, unlike the economy under her Government.
Let us return to the taxable income elasticity measure. The OBR says that it might be reasonable, but it also says on no fewer than seven occasions throughout the document that there is “huge uncertainty” around the assumptions—not small uncertainty, but huge uncertainty. The Treasury itself, in its document—albeit buried on page 68 of 69—says:
“The results of this evaluation are highly uncertain.”
The reality is that, based on the Laffer curve, the Government have made up that £100 million number, but over the last year we got £1 billion from the 50p rate.
Charlie Elphicke
There is more evidence that reducing the rate ups the take. Each time there was a reduction, from 80% to 60% in the ’80s, and then to 40%, revenues went up hugely. We know that it works, from the evidence.
Owen Smith
What we know is that last year we got £1 billion from the rate—not £100 million, but £1 billion. What we also know is that the OBR thinks the estimate of £100 million is highly dubious. That is the reality. If we had waited two or three years—a reasonable period—to make the estimate, when people would not be able to pull the money into an earlier year, which is increasingly difficult as the years go by, we should have seen a reasonable number.
The real issue is not the estimate, but what will actually happen as a result of the Government’s cooking the books in that fashion. Ordinary people will pay the price. In this country, 4.77 million pensioners will pay between £80 and £280 extra as a result of the changes to the personal allowance. That is the reality of the Budget, not what the hon. Gentleman describes.
What about the 1.3 million ordinary working people earning about £41,000 who have been sucked into the 40p rate? We have not heard a lot about them in the Budget. We have not heard about the teachers, policemen and middle managers who will be paying more, or indeed about the 1.3 million who will be affected by the big cut in their child benefit—£1,300 for most of them. That is the reality of the Budget for ordinary working people.
Many Members talked about business and growth. We heard a fascinating contribution from the hon. Member for West Suffolk about the need for an interventionist business and industrial strategy. I completely agree. There were two measures in the Budget along those lines: one was for video games and the other was the patent box that is said to be benefiting GSK. I know a bit about the patent box, because I was one of the industry side negotiators with the Labour Government back in 2009 when we struck the deal on the patent box. It was not a Tory policy—an industrial strategy made not by the Tories, but by Labour, and we are now reaping the benefits.
What about the video games measure? The hon. Gentleman thinks of himself as a bit of a historian of economic facts, so he should look back to the first Budget of his great friend the Chancellor, when the right hon. Gentleman got rid of tax relief for video games. Two years later, with the video games industry pointing out that it was a really duff move, the Government have reinstated the relief: not a policy made on the Tory side, but on the Labour side.
What is the reality? It is 0.1% extra growth, 4.77 million pensioners paying the price, inflation still at 3.2% and wages only up 1.4%. The reality is that the Government are ill serving our economy and ill serving Britain. They do not know what they are doing. They are making a mess and the time has come for us to think again.
The Economic Secretary to the Treasury (Miss Chloe Smith)
I am grateful for the opportunity to respond to the debate and to reinforce, at the end of the first few days of Budget discussions, the Government’s determination to restore the UK to prosperity.
I regret that you have not been here for the whole debate, Mr Deputy Speaker. During the day, we have heard from the Opposition, in general terms, vacuousness, hypocrisy and a lack of ideas. Specifically, the efforts from the Front Bench of the hon. Member for Pontypridd (Owen Smith) show no grasp of the situation. I note he continued to put forward the view that child benefit should continue for millionaires. That is not something that the Government support.
As the House is already aware, it is because of 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. This year’s Budget builds on that strong foundation; it safeguards our economic stability; it creates a fairer, more efficient and simpler tax system; and it drives through reforms to unleash the private sector enterprise and ambition that is critical to our recovery.
Mr Stewart Jackson
Does my hon. Friend share my concern that the hon. Member for Barrow and Furness (John Woodcock) is being rather shy about sharing the good news this week? Because of this Government’s decisions on the tax and regulatory reform and regime, GlaxoSmithKline is going to provide £0.5 billion and 1,000 jobs to his constituency.
Miss Smith
That is right, and the word I would use is “churlish.” Perhaps the hon. Member for Barrow and Furness (John Woodcock) will justify now why he does not welcome that type of investment.
John Woodcock
I am delighted to get the chance to address the Minister on this, as I was delighted to welcome the Prime Minister to our patch. But will the Minister agree with Opposition Members, and in fact with GlaxoSmithKline, that it was the patent box legislation that Labour put forward that, as Andrew Witty said before the last election, would transform the life sciences sector? Will the Minister say thank you to us for putting that forward? We are glad that she has taken it on.
Miss Smith
If only they had been so full of good ideas in the last 13 years. It is absolutely clear from the timing of GSK’s announcement, the day after the Budget, that it is responding to the actions that we took to put this economy back on track. We will not return to growth through unsustainable debt, irresponsible spending and over-reliance on any one sector or any one region. Nor will we jeopardise the progress that we have made in tackling our debts. That is why, as the Chancellor said, this Budget will have a neutral impact on public finances and implements fiscal consolidation as planned. I could refer here to the CBI, for example, which says that there were many calls on the Chancellor to spend money he did not have.
Opposition Members have made interesting contributions to today’s debate. The hon. Member for City of Durham (Roberta Blackman-Woods) suggests that the coalition is unaware of the global crisis around us. I think the IMF knows that Britain is no longer in the fantasy land of Europe, and I think householders also know that we are in the very real land of securing the future for our children—of spending what we have and of taking this country away from the turmoil in the euro area and back to a strong foundation for private sector growth.
This Budget is
“one of the best ever for UK GDP growth”,
says the Centre for Economics and Business Research, but perhaps the hon. Lady disagrees.
Roberta Blackman-Woods
I wonder whether the Minister will answer my question about why, given the need for economic growth in the north-east, there is no mention whatsoever of County Durham in the Red Book.
Miss Smith
Mr Deputy Speaker, it may take more time than I have to list all the counties of the UK, although I would be happy to try if you were to be charitable with me. I think the point about the Budget is that it lays out what the Government are doing across the country, and it lays out what the reality is. I will explain the reality, and that is that 226,000 new jobs were created in the private sector last year. That makes over 600,000 since we came into government. The Office for Budget Responsibility forecasts that from the start of 2011 to 2017, a total of 1.7 million jobs will be created in the market sector. That is private sector growth built on a foundation of economic stability.
I will explain how we have gone even further to encourage greater growth—unless the hon. Member for Luton South (Gavin Shuker) would like to do that job for me.
Gavin Shuker
I am delighted to raise a very important point, and I hope a non-combative one. What is the Government’s position on the child poverty targets, enshrined in law, by 2020?
Miss Smith
This Government take child poverty extremely seriously, and this Government of course— [Interruption.] I beg your pardon. Is the hon. Gentleman still chuntering? Would he like to clarify his question?
Gavin Shuker
I will help the Minister. There is a legal framework in place, under laws passed by the previous Government, to hit child poverty targets by 2020. Will she give Her Majesty’s Government’s position on that target?
Miss Smith
I certainly join the hon. Gentleman in seeking to combat and take out child poverty, but it is this Government who will do that on the basis of our work through the Budget to put private sector growth at the heart of the recovery. The Government will consider all the matters that feed into poverty and not simply transfer income from one side of a line to another.
Let me outline the other key things that we are doing in the Budget. We are overhauling the planning rules, cutting corporation tax, restoring our international competitiveness and creating an invitation for investment in the UK’s economic future. As the House knows, the Government have already set out plans for some £250 billion of infrastructure investment in the next decade and beyond. That is critical to renewing our infrastructure network, which enables Britain to compete with emerging giants in the global market.
The Chancellor provided further details on those ambitions. They include taking forward a feasibility study into ownership and financing models for the road network; supporting Network Rail to invest a further £130 million in the northern hub rail scheme, and providing up to £150 million to projects in core cities, as well as Growing Places funding to empower communities and businesses to lead development in their areas.
Various hon. Members asked questions. I single out those of the hon. Member for Liverpool, Riverside (Mrs Ellman), the Chairman of the Select Committee on Transport, to whom my right hon. Friends will be happy to write to answer her specific questions. I thank other colleagues for their contributions. They will appreciate that I am now rather short of time owing to the pressing matters that Opposition Members raised.
As we invest in our physical infrastructure, it is also important that we invest in our digital infrastructure. That covers matters such as mobile coverage and broadband. It also means pushing such investment into cities; some cities will come forward for the super-connected cities initiative.
We want to help build on our long and very rich history of scientific and technological leadership. It is essential to sustain that and capitalise on our strength. It is also essential that we make the UK manufacturing supply chain more competitive. That sort of investment provides a springboard for entrepreneurs and manufacturers to lead a private sector recovery across all sectors and all parts of the country.
Just as we encourage businesses to expand at home, we must also focus on helping British businesses to expand overseas in ways in which my right hon. Friend the Chancellor set out last week. We can go further on exports—we aim to double our nation’s exports to £1 trillion by the end of the decade. We will not sit idly by while China, India and Brazil forge ahead.
Of course, if we want our businesses to take those risks to invest and hire new workers, we must ensure that they have access to finance. That is why the Budget contains the national loan guarantee scheme, on top of our deficit reduction strategy, which has earned market credibility and low interest rates. We are ensuring that the full benefits of those low interest rates are passed on to businesses throughout the UK.
It is this Government who are taking the decisive action needed to make Britain the best place to start, grow and finance a business; who are putting ingenuity, innovation and the enterprise of people in businesses at the heart of our recovery, and who are restoring our competitiveness and putting the UK at the heart of the global market. We are unashamedly backing business in the Budget by creating the most competitive tax system in the world, removing the bureaucratic burdens on businesses and investing in infrastructure.
My hon. Friends have already mentioned GlaxoSmithKline. I could add Nissan, Jaguar Land Rover and Tesco, which have announced that they are creating thousands of new jobs in the UK.
The Government are building a sustainable and prosperous economy in a recovery that builds on our strengths across all regions of the country and all the creativity and productivity of our private sector. We are also putting money in the pockets of low-paid workers. As the Chancellor said in his Budget speech, the Opposition borrowed us into trouble, we will earn our way out.
Ordered, That the debate be now adjourned.— (Mr Dunne.)
Debate to be resumed on Monday 26 March.
Diabetes
(12 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Keith Vaz (Leicester East) (Lab)
As always, I begin by declaring my interest as someone who has type 2 diabetes, and also as vice-chairman of the all-party group on diabetes. I have known that I have this illness since a chance testing in 2004. It has given me first-hand experience of the importance of early detection and careful management of the disease. I am delighted to see the Minister of State on the Front Bench, and I am very pleased to see my hon. Friend the Member for Sedgefield (Phil Wilson), who also has type 2 diabetes.
Failure to properly identify and care for sufferers comes at a high price. The most devastating costs are human. There are 2.8 million people with diabetes in the United Kingdom. This number is set to more than double by 2032. That means that 10% of the population will be susceptible to devastating complications, which include amputation, blindness, heart problems and strokes. There are also the financial costs of the illness. Diabetes costs the NHS £9 billion per year—about £1 million an hour. With the NHS expected to make savings of £20 billion by 2015, this is an expense that we can ill afford and which is only set to increase if drastic action is not taken.
The excellent NHS atlas of variations and the national diabetes audit have shown that there are shocking regional variations in diabetes care. Some 80% of amputations due to diabetes can be prevented with the right checks. The incidence of amputations in a primary care trust is indicative of the quality of diabetes management there. In Leicester East, for example, the annual number of amputations per 1,000 adults with diabetes is 1.4, significantly below the national average of 2.7. However, a sufferer who lives in Swindon is more than twice as likely to have an amputation. The rate there is 4.0 amputations per 1,000 adults with diabetes in the population. That is significantly above the national average.
Changes under the Health and Social Care Bill will mean that more power is devolved to a local level. I am very concerned that this may worsen regional inequalities and I look forward to reassurances from the Minister. We need rigorous checks and balances in place to ensure that there is high-quality diabetes care which meets National Institute for Health and Clinical Excellence guidelines across the country.
So how can we minimise the human and financial cost of diabetes? There is no great mystery in how to treat and prevent type 2 diabetes. We do not need to spend millions searching for a cure: 80% of type 2 diabetes is preventable with the right care and management, including lifestyle and exercise. This means that with the right prevention, the NHS could save up to £720,000 per hour. The NHS health check programme is a positive step towards identifying the “missing million” who it is estimated have diabetes but simply do not know it. However, 90.48% of those eligible did not receive a health check between April and December 2011. Moreover, the health check is only for those between the ages of 40 and 70 years. The south Asian population becomes at risk much earlier, from their mid-20s. Screening must therefore be targeted.
It takes something as simple as a regular check to prevent many of diabetes’ most serious complications. An eye test can prevent blindness, a foot check can prevent amputation, and blood pressure tests can prevent a stroke and heart disease, yet diabetics are not receiving the nine health checks that NICE guidelines recommend they require. It is estimated that 1.3 million sufferers across the country are failing to receive them.
Type 2 diabetes often goes hand in hand with obesity. Some 31% of UK children are now classified as overweight. If current trends continue, 60% of men and 50% of women will be clinically obese by 2050. Over the past decade, Governments have spent £2 billion tackling obesity levels, but they have failed to fall. Urgent Government action is required, and it should consider seriously the possibility of a fat tax, which has been introduced in Denmark, and a soda tax, which is being introduced in France, and make compulsory the introduction of sugar and fat reduction measures by the food and drinks industry.
I have before the House next month a ten-minute rule Bill, calling for soft drinks companies to reduce the amount of sugar that they put into their products, and to bear some of the responsibility for the obesity and diabetes crisis by putting some of their profits back into prevention and research programmes. That is the sort of action the Government should be taking.
As we have seen today with the Government’s alcohol strategy, prevention is better than cure. The Home Affairs Committee in 2008 recommended the introduction of a minimum price per unit of alcohol—an end to the pile-it-high and sell-it-cheap drink deals. In 2011, there were 1.2 million alcohol-related hospital admissions, so I welcome what the Government announced this morning and am sorry that I could not be in the Chamber, but the Home Secretary decided to give the House 30 minutes’ notice of her statement and I had a prior engagement at Hertfordshire university. I welcome what the Government have done, however. It is an example of a Government taking action to deal with prevention.
Research has shown that investment in first-class diabetes services now will lead to huge savings in the future. Southampton university hospital’s investment in a multi-disciplinary specialist diabetes team saved it an estimated £2.2 million over 22 months, but there is not only a cost imperative to ensure that such facilities are available to all diabetics. Last year 24,000 people with the illness died earlier from causes that could have been avoided through better management of their condition. Those measures are required to save lives.
I am delighted that the European Parliament is taking strong action to tackle diabetes, and I hope that the resolution passed there last week will do much to get Europe moving on the issue. Some of the action that it calls for, such as an EU-wide diabetes strategy, will be taken up by the European Commission, but much of the responsibility, particularly for the obesity and diabetes prevention and diabetes management programmes, will fall on member states, including our own. I should be very interested to hear what the Minister has to say about what this Government are going to do as a result of that European Union resolution.
Next month in Copenhagen, for the first time in the history of the EU, the EU diabetes leadership forum will take place during the EU Council presidency of the host country. I was delighted to hear that the Minister will be speaking at that convention, sharing good practice and, I hope, encouraging others to act with Britain to halt the diabetes tsunami.
Diabetics, in order to manage their condition effectively and to prevent many of the costly and damaging complications that I have discussed, must have access to the right drugs at the right time, and I have been contacted by pharmacists, patients and many others in the industry who are extremely concerned about widespread shortages of prescription drugs. The number of prescription medicines officially listed as in shortage on the Pharmaceutical Services Negotiating Committee website is only 30, but an investigation by The Times found that pharmacists were reporting shortages of up to 350 drugs per day.
Eucreas, a diabetes drug, and Travatan, which is used to treat ocular hypertension and glaucoma, one of its complications, are just two examples of many drugs that pharmacists report as being in short supply. A survey of 400 pharmacists for the magazine Chemist and Druggist found that 67% of pharmacists have to wait for up to three days or more for an emergency stock delivery, and that 84% are very concerned about patients being adversely affected by shortages. Some 18% said that they spend over five hours a week trying to get hold of stocks of drugs. The estimated cost for pharmacies across England, according to Lloyds pharmacies, is approximately £39 million lost in staff time, which could be better spent on patient care and public health interventions. Most worryingly, nearly 60% of pharmacists think that the situation will worsen over the next year, and 45% know a patient whose health has suffered owing to shortages, sometimes so badly that they have had to be hospitalised.
The consensus is that the problem lies not with the amount of drugs being manufactured in the United Kingdom, but the fact that some of the drugs intended for the United Kingdom are being exported for profit. Medicines in countries such as Germany can fetch up to four times as much as they do in the United Kingdom. There are other reported problems in the supply chain, including inaccurate quotas and manufacturers trading only with a limited number of wholesalers.
It is imperative that the Minister ensures that there is a full and frank exchange of information between chemists, pharmaceutical companies and wholesalers. Pharmaceutical companies are making enough medicines to supply demand in the United Kingdom. We need to ensure that they reach those who need them. We need the Government to set out a clear timetable for action to show that they are tackling the issue. It is clear that the guidance published last year was not sufficient to end the shortages. I hope that it will not take the death of a patient to lead to some change.
Before concluding, I want to highlight the important work being done in the city of Leicester. I want to thank my local GP, who initially diagnosed my diabetes, as I have said, in a chance test in his diabetes awareness surgery. He now heads the clinical commissioning group for Leicester. Professor Azhar Farooqi has provided real leadership on this issue. There is also a clutch of local distinguished academics, including Professor Khamlesh Khunti and Professor Melanie Davies from the university of Leicester. There is also Professor Joan Davies from De Montfort University, which, under the dynamic leadership of Professor Dominic Shellard, the vice chancellor, has designed the first artificial pancreas, which was viewed only two weeks ago by Her Majesty the Queen. Leicester will soon have its own centre of excellence for diabetes—the first.
In recent months diabetes campaigns have achieved much success in raising awareness of the issue. I would like to commend the work of Diabetes UK, led by its chief executive, the noble Baroness Young, and particularly her Feet First campaign, in co-operation with the Society of Chiropodists and Podiatrists. The all-party group on diabetes, led ably by my friend, the hon. Member for Torbay (Mr Sanders), has done excellent work, especially on regional variations in care. I would also like to congratulate the International Diabetes Federation and its president, a Brit, Sir Michael Hurst, and vice-president, Anne-Marie Felton, on their tireless efforts to raise the profile of the illness globally and whom we have partly to thank for international successes such as the recent EU diabetes resolution.
In my constituency, I want to pay tribute to Silver Star, a registered diabetes charity that, through its mobile units—Merlin, Dorothy and Amanda—in the United Kingdom and in Goa in India, has been able to raise the awareness of diabetes among the south Asian communities. I also want to thank the Minister for the work he has done on diabetes. I think that he has done more than any other Minister in the 25 years I have been in the House in trying to raise this issue and deal with the problem. I thank him most sincerely for what he has done.
Diabetes is an epidemic that can have devastating consequences, and it is on the rise, but we are not powerless in the face of it. With the right care and proper management, diabetes can be controlled and often prevented. Complications and expense can be minimised. Having the right drugs is as important as the Government acting quickly to deal with shortages. We need investment in prevention and in specialist multi-disciplinary teams. We also need firm action to tackle the unhealthy food and drink industries. We must ensure that regional inequalities improve, not worsen, under the changes that are being made. If we do that, it will not only save the NHS billions of pounds but, much more importantly, save thousands of lives.
The Minister of State, Department of Health (Paul Burstow)
I congratulate the right hon. Member for Leicester East (Keith Vaz) on securing this debate and on making such an effective and compelling case for raising awareness of diabetes and preventing, postponing and better managing the condition. I know of his personal experience and the leadership that he has shown in his constituency and in the House on these issues over many years. The centre of excellence that he talked about is there as a testament to his determination to make this happen, and I pay tribute to him for that. He rightly paid tribute to the work of the all-party parliamentary group and, in particular, my hon. Friend the Member for Torbay (Mr Sanders), who has proved an excellent chair of the group and has done some excellent work, as the right hon. Gentleman described.
The case for action is absolutely compelling. As the right hon. Gentleman said, the number of people with diabetes is rising, with profound effects on their quality of life. As he rightly said, there are huge health inequalities, for which some of the most deprived and excluded pay the highest price. It is therefore a big responsibility for any Government to tackle these issues. The costs to our society and to the NHS are substantial.
We currently have the most accurate picture ever of the state of diabetes care in England, with the national diabetes audit, the detailed analysis by the national diabetes information service and the atlas of variation, all serving to expose an unjustifiable variation in the levels of care and treatment from one postcode to another—the classic postcode lottery. We now plan to go further in providing more information than ever before by publishing a specific themed atlas on diabetes, which will prove to be an invaluable tool for commissioners and campaigners, and patients and carers, to use to make sure that we get the very best diabetes care in every part of England.
The data show that there has been significant progress, but, as the right hon. Gentleman says, there are still shocking, inexplicable and unjustifiable variations that we have to bear down on. We know what works at three levels—population-level interventions, targeted interventions, and what can be done better to manage the condition. Let me go through what we are doing in those contexts. First, it is vital to raise awareness among the population. The right hon. Gentleman and other hon. Members, the NHS, and other organisations—including, in future, Public Health England—have an important role in raising overall awareness. Supporting healthy behaviours that improve the population’s health is absolutely key to successful prevention. We need to tackle the main risk factors that are particularly relevant to type 2 diabetes.
One of the key strands from the Government’s point of view is the work done through Change4Life, which has a clear focus on maintaining healthy weight and increasing levels of physical activity, as that is very important in addressing obesity. That also requires much more effective collaborative working between local authorities and the NHS to ensure that we exploit the full range of levers that local authorities have in making a real difference in those two areas. Our planned health and wellbeing boards will provide a new and important lever for driving improvement on the public health side.
The right hon. Gentleman talked about other interventions. We are addressing this through our public health responsibility deal. Some of these issues are not about regulation but getting the relevant industries to move further and go faster, and that has already borne fruit, not least in reducing trans-fats in products. I appreciate his welcome for the comprehensive approach that the Home Secretary outlined today with regard to reducing alcohol harm—the harm that it does to the individual and the harm that its effects can have on others on our streets—and the decision to move, after consultation on the details, towards minimum unit pricing. The right hon. Gentleman is right that that can have a profound effect, not just on liver disease, but on many of the other aspects that we are discussing.
The second area is targeted interventions. The right hon. Gentleman rightly raised the importance of NHS health check and of targeted interventions for high-risk people. We can reduce and even reverse the worst effects of diabetes if we are effective in identifying at an earlier stage those who are at risk. That is why risk assessment and diagnosis are essential to the strategy that has been in place for some time. It is important to identify more people at an earlier stage and to give them the messages and support that can enable them to mitigate the worst effects of diabetes. The national roll-out of NHS health check is a key component in that. We have signalled our determination, through the NHS operating framework, to ensure that that continues.
The proactive identification of people who are at risk of vascular diseases, including diabetes, is key. The right hon. Gentleman mentioned that that covers a population of people from 40 to 75 years of age. I can tell him that in some parts of the country, high-risk individuals are being targeted specifically—for example, those in the south Asian population, where there is a greater risk of type 2 diabetes. We know that the risk in that population is four or five times greater than that in the European population. That will be reinforced shortly by the guidance that the National Institute for Health and Clinical Excellence is finalising on the detection and prevention of diabetes in high-risk individuals.
Paul Burstow
I will gladly do that.
Accurate and timely diagnosis is key, but diabetes can be hard to spot and some of its symptoms, such as extreme tiredness and weight loss, can be attributed to other diseases. Again, NICE has produced advice on preventing adult pre-diabetes and on early detection. It is key for GPs and others to be more effective at early diagnosis. The national clinical director for diabetes, Rowan Hillson, has been supporting that work to raise professional awareness, which is critical.
The third area is long-term management and self-care. There has to be a team effort across primary and secondary care, and the patient has to be at its centre. A person with diabetes must know how to spot and report changes in their health that might result in serious complications with life-changing or even life-shortening consequences. Integrated multi-disciplinary care is crucial to delivering the best outcomes in diabetes.
I will give a couple of examples that pick up on the right hon. Gentleman’s references to the scandalous picture in respect of amputations in England. He rightly rehearsed the variations from one part of the country to another, which are inexplicable and shocking. On average, 73 amputations take place every week, but eight out of 10 of those operations are unnecessary because they could be prevented simply by following what we know works. It is critical that we get that message out and translate it into practice by clinicians. For example, we know that when a foot care team is established, which is a relatively modest investment, it can cause as much as a 50% drop in the rate of amputations. Such investments can release resources. That is why they are part of the quality, innovation, productivity and prevention work and the Nicholson challenge, which the right hon. Gentleman talked about.
There is also room for further progress in the use of insulin pumps, which are particularly relevant to type 1 diabetes. They provide for the slow release of insulin. The NICE guidance clearly recommends the use of insulin pumps for type 1 diabetes when daily injections are not working, and yet many primary care trusts are dragging their feet and not making pumps available. That is why we have established the NHS Diabetes insulin pump network and why it is oversubscribed for its first meetings, with more than 270 members. I think that it will prove an invaluable way of beginning to drive out unacceptable practices. We are also auditing the availability of insulin pumps so that we can identify where use is not adopted properly.
Paul Burstow
I am coming to that almost straight away.
I welcome the fact that there will be a type 1 diabetes parliamentary lobby by the Juvenile Diabetes Research Foundation in the next month or so to highlight some of the relevant issues.
Population levels, targeting, and management and self-care are all critical, and I want to say a bit about what we are going to make happen. First and foremost, NHS Diabetes leads on improvements, spreads best practice, supports professionals and develops professional networks of the type that I have described. The national service framework for diabetes is reaching the end of its life, and we now need to set new ambitions and new directions towards making the further progress that the debate is highlighting the need for. That will be reflected in both the new cardiovascular strategy and the long-term conditions strategy, which the Department is working on in collaboration with many other stakeholders.
We also need the system to be supported by incentives such as payment by results. That was why we rolled out new tariffs last April to recognise paediatric diabetes care as a discrete specialism, and why we will continue to develop tariffs to support best practice.
The right hon. Gentleman asked about Eucreas, which is a glucose-lowering drug. It is composed of two drugs, metformin and vildagliptin, and I understand that although there may well be supply problems with the combined drug, the industry is not aware of any supply problem with the two separate tablets. I will gladly write to him about that in further detail, but that is what I have learned about that drug so far.
More generally, the Department is working to address the issue of parallel exporting of UK medicines in conjunction with the Medicines and Healthcare products Regulatory Agency and the pharmaceutical supply chain, to ensure that medicine supplies are not compromised and we do not have the tragedies to which the right hon. Gentleman referred. I will write to him about the progress of that work.
The right hon. Gentleman also asked about Copenhagen. I look forward to the opportunity to meet colleagues to share best practice and learn about it from others.
As the right hon. Gentleman says, diabetes is a complex, lifelong, progressive condition. When it is well managed, with the right education and support, it is possible to prevent the most severe, sometimes fatal complications. We have the data to guide us and the evidence of what works, and we have the economic case. We are setting our strategy with the ambition of making even more progress. Now, we need commissioners and clinicians to act so that the best is not the exception but the norm across the national health service.
Question put and agreed to.