House of Commons

Wednesday 19th March 2014 Commons Chamber

Wednesday 19 March 2014

The House met at half-past Eleven o’clock

Prayers

Wednesday 19th March 2014 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Wednesday 19th March 2014 Commons Chamber

The Secretary of State was asked—

[Mr Ian Davidson (Glasgow South West) (Lab/Co-op)]

1. When he plans to respond to the fifth report from the Scottish Affairs Committee on the Crown Estate, HC 889.

[The Secretary of State for Scotland (Mr Alistair Carmichael)]

I welcome the Committee’s continued interest in the Crown Estate’s activities in Scotland and the publication of its latest report. I am working on the UK Government response with colleagues in HM Treasury and we will publish it as soon as possible.

[Mr Davidson]

Does the Secretary of State agree that this is indeed a fine report, which should be accepted in full by the Government? In particular, does he accept the proposal that the devolution of powers from London should be not simply to the black hole that is Edinburgh, but to the local communities and authorities of the highlands and islands of Scotland?

[Mr Carmichael]

I pay tribute to the hon. Gentleman because, under his stewardship, the Scottish Affairs Committee has become one of the most productive Committees in the House. He knows that I have a particular interest in this issue. He highlights one of the real challenges facing us. People in our island and coastal communities have seen power and influence systematically stripped away by the Scottish Government since they took power in 2007. I do not see any particular attraction in replacing a centralised system from London with a centralised system in Edinburgh.

[Mr Alan Reid (Argyll and Bute) (LD)]

A social enterprise has bought the Ardroy outdoor education centre in my constituency, but it needs to acquire from the Crown Estate the rights to a sewage pipe over the foreshore. After months of legal correspondence and thousands of pounds of legal bills, the matter is still not sorted out. Will my right hon. Friend meet me to help resolve the problem?

[Mr Carmichael]

Unfortunately, my hon. Friend highlights a constituency case of the sort that has been all too familiar to me over the years. In fact, in many ways, it makes the case for the need for reform. I would be more than happy to meet him and his constituents and assist them in any way that is open to me.

[Angus Robertson (Moray) (SNP)]

It is now nearly three years since all three UK parties were resoundingly defeated by the Scottish National party. In those three years, there was plenty of time for the coalition Government and indeed the official Opposition to consider further devolution, including that advocated by the Scottish Affairs Committee. Will the Minister confirm whether they will or will not publish a comprehensive joint devolution proposal?

[Mr Carmichael]

The hon. Gentleman will get the Government’s response at the same time as everyone else, but he cannot get away from the fact that his Government in Edinburgh have systematically stripped power, influence and accountability away from island and coastal communities. They are not to be trusted with this.

[Angus Robertson]

The coalition parties and the official Opposition have spent the past three years expressing nothing but groundless, relentless negativity about the future of Scotland. They have dubbed it “project fear”. The Conservative party said that it had a line in the sand and that there would be no further devolution. The Labour party is proposing even less than a few years ago, and the Liberal Democrats are in favour of federalism in a lopsided model that will never ever work. Why should the electorate believe a single word of any of the three parties on the issue of devolution—

[Mr Speaker]

We are grateful, but too long.

[Mr Carmichael]

It is not lost on the House that the hon. Gentleman’s question has absolutely nothing to do with the Crown Estate. My constituents and those of other hon. Members representing coastal and island communities will no doubt conclude that that is simply because his Government do not care about them.

[Alison McGovern (Wirral South) (Lab)]

2. What assessment he has made of the extent of the use of zero-hours contracts in Scotland.

[The Parliamentary Under-Secretary of State for Scotland (David Mundell)]

The Secretary of State for Business, Innovation and Skills recently concluded a consultation on zero-hours contracts with proposals on exclusivity clauses, transparency and guidance. A summary of consultation responses will be published in due course.

[Alison McGovern]

The Office for National Statistics has recently had to uprate massively the number of people it estimates are on zero-hours contracts right across the UK. Does the Minister agree that this is the wrong time to see a race to the bottom between UK nations on working standards for ordinary people, whether they live in Scotland, England, Wales or anywhere else?

[David Mundell]

I agree with the hon. Lady. She will know that a 670-page White Paper was produced by the SNP Scottish Government. On zero-hours contracts, as on everything else, it is very short on detail.

[Ann McKechin (Glasgow North) (Lab)]

Will the Minister explain what assessment has been made of Government procurement contracts in relation to zero-hours contracts and how we can encourage best practice?

[David Mundell]

The hon. Lady makes an important point. I will take that up with my colleagues in the Cabinet Office and write to her.

[Margaret Curran (Glasgow East) (Lab)]

Can the Minister tell the House how many people are employed on zero-hours contracts in Scotland?

[David Mundell]

The answer to that question has not changed since the hon. Lady asked it previously. She knows that there is no legal definition of zero-hours contracts.

[Margaret Curran]

Well, the House of Commons Library might take issue with that, because according to the Library, 46,000 people in Scotland are on zero-hours contracts and, in fact, it believes that that is an underestimate. Will the Minister join Labour in calling for an end to exploitative zero-hours contracts? Does he agree that, despite all the talk of recovery, there are still thousands and thousands of Scots on very low and insecure incomes? During the Budget process, has he been fighting in the interests of those Scots or, like the rest of the Tories, is he concerned only with those at the top?

[David Mundell]

It does not surprise me that the hon. Lady does not draw attention to the fact that, on the basis of statistics announced today, employment in Scotland increased by 15,000 over the quarter, and has increased by 79,000 over the year. The Scottish employment rate rose by 0.3%. The way out of poverty is work, and this Government are delivering jobs.

[Dr Eilidh Whiteford (Banff and Buchan) (SNP)]

3. What assessment he has made of the effect of the Government’s welfare reforms on levels of child poverty in Scotland.

[The Parliamentary Under-Secretary of State for Scotland (David Mundell)]

The Scottish Government child poverty strategy report was published in September 2013 and states that child poverty in Scotland is at its lowest level since 1994. Welfare reform will be subject to the normal policy review process in due course.

[Dr Whiteford]

I am appalled by the Minister’s complacency. He should be aware that more than half the children in poverty in Scotland have working parents, and that the Child Poverty Action Group estimates that 100,000 more children will be pushed into poverty as a consequence of welfare reform. Why do his Government think that it is okay to make children pay the price of austerity, and does he think that it is a price worth paying?

[David Mundell]

Each month, the hon. Lady raises welfare issues and plumbs new depths of hypocrisy. The Scottish Government produced a 670-page—[Interruption.]

[Mr Speaker]

Order. I am quite clear that the context in which the hon. Gentleman is using that term is not collective but individual and personal. [Interruption.] Order. I can handle the matter. The Minister will withdraw that term: it was directed at an individual, and it is inappropriate.

[David Mundell]

I withdraw unreservedly, Mr Speaker. The point I want to make is that the Scottish National party produced a 670-page White Paper on Scottish independence. How many mentions does it make of child poverty? One, on page 41.

[Iain Stewart (Milton Keynes South) (Con)]

Does my right hon. Friend agree that a good way of tackling child poverty in Scotland and England is to raise the personal tax allowance, which would target low earners? That is an effective way of increasing the household incomes of families at the bottom end of the income scale.

[David Mundell]

I absolutely agree with my hon. Friend. Since the coalition Government came to office, 2.2 million people in Scotland have seen their income tax bills reduced.

[Lindsay Roy (Glenrothes) (Lab)]

Will the Minister confirm what impact the imposition of the bedroom tax has had on child poverty in Scotland?

[David Mundell]

On the spare room subsidy, the hon. Gentleman is aware that the Government have introduced significant contributions in relation to discretionary housing payment. He knows as well that the Scottish Government have significant powers to contribute to any mitigation that they think is necessary.

[Guy Opperman (Hexham) (Con)]

Surely the best way to address child poverty is by increasing employment and changing education and skills so that young people in Scotland and England have the skills and aspirations to work their way out of child poverty.

[David Mundell]

My hon. Friend is exactly right, which is why I would have thought that even Opposition Members would welcome the fact that employment in Scotland has increased by 15,000 over the quarter, and that the Scots employment rate rose by 0.3%.

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

Child poverty has long-lasting effects. By the age of 16, children receiving free school meals achieve significantly lower exam grades than their wealthier peers, and they leave school with fewer qualifications, which translates into lower earnings over the course of their working lives. Will the Minister speak with the Secretary of State for Work and Pensions and demand a proper start in life for all children, something that is threatened by this Government’s welfare reform programme?

[David Mundell]

I do not accept the claim that this Government are responsible for child poverty. I agree with the hon. Gentleman’s Dumfries and Galloway council colleague, Marion McCutcheon, who said that the only solution to child poverty is work. That is what this Government are delivering, with 15,000 more people in employment over the past quarter.

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

4. What assessment he has made of the financial benefits for Scotland of being part of the UK.

[The Secretary of State for Scotland (Mr Alistair Carmichael)]

As part of the United Kingdom, Scotland’s economy is doing well. We benefit from being part of the large, integrated UK domestic market.

[Dr Coffey]

I thank my right hon. Friend for that answer. He illustrates very clearly the benefits of Scotland staying in the United Kingdom, which will be good for everybody in this country. Having already mentioned the private sector recovery and jobs, does he agree that the Barnett formula provides a generous amount of public sector funding?

[Mr Carmichael]

Indeed. The Barnett formula has been part of Scotland’s political landscape for almost 40 years and delivers a good level of public spending for people in Scotland—in the region of £1,000 per head each year over the figure for the rest of the United Kingdom. That reflects Scotland’s distinctive needs. That is why it is here to stay.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

There is huge and growing inequality. Staggeringly, according to Oxfam, five families in the UK own as much as 20% of the population do. The Financial Times stated on Monday that the burden of austerity has fallen most heavily on the least well-off. Can the Secretary of State explain to the growing number of people using food banks in Scotland the benefits of being in the UK? They are not better together; they are at the food bank.

[Mr Carmichael]

No subject, apparently, is so complex or involved that it cannot be trivialised by the Scottish nationalists. The reasons people have to resort to using food banks are complex, and many of them have more to do with the difficulties they face in work than with being on benefits. I am quite prepared to listen to representations from every part of the House about what the Government can do, but frankly I do not expect to hear anything constructive from the hon. Gentleman.

[Mr Charles Kennedy (Ross, Skye and Lochaber) (LD)]

Does my right hon. Friend agree that there is more than a sense of irony about the fact that the devolution cause—to maintain but reform the United Kingdom—was based largely on the correct analysis that too many economic decisions were being concentrated here in London. Yet, now in Scotland, if we look at Highlands and Islands Enterprise and the Crofting Commission, to take just two examples, we see that too many economic decisions are being centred politically in Edinburgh? Does he agree that Scotland’s long-term financial benefit is in the UK, but that we also need a more devolved Scotland?

[Mr Carmichael]

Indeed. We see Scotland’s constitutional position as an evolving one. The experience to which my right hon. Friend points is exactly the same as that which I and my constituents see. Week in, week out, the Scottish Government take power and influence away from constituencies and communities such as ours, which know best what will work in growing their economies, and what we get is what people in Edinburgh think we need, rather than what we want.

[Mr Speaker]

I ask the Secretary of State to face the House so that we get the full benefit of his mellifluous tones.

[Ian Murray (Edinburgh South) (Lab)]

There are tens of thousands of financial services jobs in my constituency, and my constituents are getting increasingly upset by the uncertainty around the independence referendum and the fact that many financial institutions might leave Scotland. What can the Secretary of State say to my constituents to ensure them that those jobs will not only stay, but increase in the future?

[Mr Carmichael]

The best way to ensure that those jobs stay is to vote no on 18 September and ensure that Scotland remains part of the United Kingdom. In recent weeks we have seen a growing number of companies—Standard Life, Royal Bank of Scotland and Alliance Trust Ltd—explaining that, if Scotland was to become a foreign country, as good Scottish companies operating through the whole of the United Kingdom, they would be required to remove their headquarters from Scotland to the rest of the United Kingdom. That would not be good for Scotland’s economy.

[Mel Stride (Central Devon) (Con)]

5. What recent discussions he has had with the Scottish Government on the prospect of a currency union with an independent Scotland.

[Andrew Bridgen (North West Leicestershire) (Con)]

6. What recent discussions he has had with the Scottish Government on the prospect of a currency union with an independent Scotland.

[Mark Menzies (Fylde) (Con)]

8. What recent discussions he has had with the Scottish Government on the prospect of a currency union with an independent Scotland.

[The Secretary of State for Scotland (Mr Alistair Carmichael)]

I have not had any discussions with the Scottish Government about the prospect of a currency union. The Chancellor, the Chief Secretary to the Treasury and the shadow Chancellor have all said that there will not be a currency union. The only way to keep the pound is to stay in the United Kingdom.

[Mel Stride]

Alex Salmond claims that an independent Scotland will still use the pound. Given that there is no likelihood of a currency union between the remainder of the United Kingdom and any future independent Scotland and that Scotland would therefore not have the backing of the lender-of-last-resort facility of the Bank of England, does my right hon. Friend agree that such a path is disastrous for Scotland—particularly its financial and banking sector?

[Mr Carmichael]

Indeed. If Scotland made herself a foreign country to the rest of the United Kingdom, there would be no question of the Bank of England and the taxpayers who underpin it continuing to stand behind banks headquartered in that foreign country. That simply does not happen. As we have already explained, a number of financial services and banking companies north of the border have rightly identified that as a risk to their continued future governance.

[Andrew Bridgen]

Following the First Minister’s admission at the weekend that his own fiscal commission working group is looking at not only a plan B but a plan C, D, E and F, is it not the truth that the Scottish National party can offer no certainty for the people of Scotland about currency provision for an independent Scotland? They cannot keep the pound, because—

[Mr Speaker]

Order. The hon. Gentleman has had his say, but it did not remotely resemble a question.

[Mr Carmichael]

On currency, we started with a White Paper and we have now been given an alphabet soup. I cannot believe that the First Minister does not have a plan B; I cannot believe that, six months from an independence referendum about which he appears to be serious, he has not actually decided what that is going to be. What worries me is that he seems so reluctant to tell the people of Scotland.

[Mark Menzies]

The First Minister, Alex Salmond, has previously described the pound as a millstone around Scotland’s neck and insisted that it was sinking like a stone. Does my right hon. Friend know what has changed?

[Mr Carmichael]

My hon. Friend invites me to look into the workings of the First Minister’s mind—not a particularly edifying enterprise, and one that goes beyond even my ambition. My recollection is that when the First Minister made that remark, he wanted us to be independent in Europe. I cannot remember whether that was the time when we were going to be part of the arc of prosperity, but it seems to be all change these days. The truth of the matter is that the First Minister does not care about the pound or anything other than independence.

[Stewart Hosie (Dundee East) (SNP)]

On 29 January, the Financial Times reported that on independence, with £100 billion of sales, Scotland would be one of the top 35 exporting countries in the world. If the Secretary of State has his way—I am sure that he will not—when does he intend to run around to the good people of England explaining the impact on their currency when £100 billion of Scottish export sales are no longer receipted in sterling?

[Mr Carmichael]

The hon. Gentleman should listen to some of the experts. The Institute of Directors, for example, has said in terms, that the well rehearsed risks of a currency union far outweigh the problems of the sort of transaction costs that the hon. Gentleman is talking about. He needs to listen to the experts and tell us what he is going to do instead.

[Sir Menzies Campbell (North East Fife) (LD)]

Does it not tell us all we need to know about those arguing for independence that when the Governor of the Bank of England, in an impartial and carefully produced speech, draws attention to the reservations he has about a currency union, he is dismissed out of hand by the Scottish National party?

[Mr Carmichael]

In that respect, the Governor of the Bank of England is in very good company—he is with the President of the European Commission, the Prime Minister of Spain and the permanent secretary to the Treasury. The truth of the matter is that, day by day, bad news comes to those who want to remove us from the United Kingdom, and they are just not prepared to listen to it.

[Mr William Bain (Glasgow North East) (Lab)]

If and when the Secretary of State does speak to the First Minister, will he remind him that any attempt to use sterling informally without a central bank would mean that an independent Scotland would not meet the terms of entry to the European Union? What could be more damaging for jobs and growth in Scotland than that?

[Mr Carmichael]

The nationalists are always very keen on telling us about their vision. In fact, if we were to use sterling without the central bank in the Bank of England, the relationship between Scotland and the rest of the United Kingdom would be like that between Panama and the United States of America. That is not a vision; it is a nightmare.

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

The Minister will be aware that there is nothing more important in a pensions system than—[Interruption.]

[Mr Speaker]

Order. Perhaps the House can calm down and the hon. Gentleman can actually have the advantage of free speech, which is what this House is about.

[Gregg McClymont]

I am delighted by such a reception, Mr Speaker.

The Minister will be aware that nothing is more important as regards the certainty of a pensions system than clarity about the currency in which pensions are paid out and saved. Does he therefore agree that the lack of clarity from the Scottish nationalists about the currency that an independent Scotland would use is very damaging for Scots and their pensions?

[Mr Carmichael]

Indeed. The future of the pensions industry and the security of pensions for Scots post-independence is one of the biggest risks that comes from that lack of clarity. It is quite remarkable that six months out from the independence referendum date, we still do not know what the nationalists are offering us by way of a currency.

[Mr Graham Allen (Nottingham North) (Lab)]

7. What discussions he has had on the potential benefits of replicating aspects of the Scottish devolution model in England; and if he will make a statement.

[The Parliamentary Under-Secretary of State for Scotland (David Mundell)]

The devolution settlement is designed to meet the needs and wishes of the people of Scotland. This Government are committed to devolving power across the United Kingdom to the most appropriate level, taking account of local need. In England, we are achieving this in many ways, including the city deals programme in which Nottingham is a participant.

[Mr Allen]

A lasting democratic settlement in the UK must be based on the twin principles of union and devolution. Does the Minister share my view that separatism will be weaker and devolution will be stronger and more believable, not least to the Scottish people, if its benefits are spread to England too?

[David Mundell]

This Government are committed to devolution within England, and the hon. Gentleman is a prominent advocate of that. He recognises, as I do, that independence in Scotland is the end of devolution there.

[Tim Farron (Westmorland and Lonsdale) (LD)]

Does my right hon. Friend agree that devolution should absolutely take place in England, but it should be chosen by the people of its regions and not imposed by central Government as it was by the previous Labour Deputy Prime Minister?

[David Mundell]

I agree that the form that devolution takes within England—and, indeed, within the rest of the United Kingdom outwith Scotland—is a matter for the people of the rest of the United Kingdom.

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

There are, of course, new proposed models of devolution on offer. Yesterday we had Labour’s devo-dog’s breakfast as an offer to the Scottish people. Does the Minister find anything attractive in Labour’s chaotic plans? Will they form the basis of the joint proposition, and if not, why not?

[David Mundell]

What we know about the SNP’s position is that it opposes devolution to Scotland and devolution within Scotland with its centralist agenda.

[Graeme Morrice (Livingston) (Lab)]

9. What assessment he has made of the potential effect of Scottish independence on investment in the North sea oil industry.

[The Secretary of State for Scotland (Mr Alistair Carmichael)]

We have already heard from senior business figures that independence presents risk for investment in the North sea oil industry. The sector is facing new challenges, and the United Kingdom offers the strongest basis to unlock the investment needed and ensure that we maximise its potential in future.

[Graeme Morrice]

The Secretary of State will be aware that the Scottish Government’s own figures show that oil revenues dropped by £4.4 billion last year. Does he agree, therefore, that the figures serve to demonstrate the weakness of basing the economic argument for a separate Scotland on unstable oil revenues?

[Mr Carmichael]

The figures illustrate perfectly the opportunities that come to Scotland from being part of the United Kingdom. For an economy that is highly dependent on offshore oil and gas, the size of the UK economy offers us the opportunity to absorb the peaks and troughs that are inevitably part of that commodity.

The Prime Minister was asked—

[Mrs Cheryl Gillan (Chesham and Amersham) (Con)]

Q1. If he will list his official engagements for Wednesday 19 March.

[The Prime Minister (Mr David Cameron)]

I am sure that the whole House will wish to join me in paying tribute to Tony Benn, who died last week. He made many memorable speeches in this House, and alongside a record of ministerial, parliamentary and public service, he was also a great writer, a great diarist and a great campaigner, no matter whether one agreed with his views or not. He will be missed by both sides of the House, and our thoughts are with the right hon. Member for Leeds Central (Hilary Benn) and other members of his family at this time.

I am sure that the House will also join me in paying tribute to the fantastic Team GB winter Paralympics team, following its great success at the Sochi games. Special congratulations must go to Kelly Gallagher, who won our first ever gold medal at the winter Paralympics, and Jade Etherington, who is now our most successful winter Paralympian, with four medals.

This morning, I had meetings with ministerial colleagues and others. In addition to my duties in this House, I shall have further such meetings later today.

[Mrs Gillan]

I am sure that the whole House will want to be associated with the remarks made by the Prime Minister today about Tony Benn, and his congratulations to the Paralympics team. The Paralympics started, of course, in Buckinghamshire.

Today, unemployment has fallen by 63,000, with youth and long-term unemployment also falling, and that has been evident in Chesham and Amersham, where we have seen growth in the private sector continue. Does my right hon. Friend agree that we must sustain this growth by continuing to tackle the deficit and support industry, and continue with our long-term economic plan?

[The Prime Minister]

My right hon. Friend is absolutely right about Buckinghamshire’s link with the Paralympic games. The flame from Stoke Mandeville came to No. 10 Downing street recently. She is also absolutely right about the unemployment figures, which show employment going up and unemployment coming down, a record number of people in work in our country, a record number of women in work in our country, and youth unemployment coming down too. What is particularly remarkable over the last quarter is that private sector employment has gone up by 118,000 and public sector employment has gone down by just 13,000, so 10 times more jobs have been created in the private sector. The important thing is what that means for Britain’s families. For millions of people, it means a pay packet, the chance of work, the chance of dignity, the chance of stability and security, and I hope it will be welcomed across the House.

[Edward Miliband (Doncaster North) (Lab)]

Let me begin by joining the Prime Minister in paying tribute to Tony Benn. The death of Tony Benn represents the loss of an iconic figure of our age. He will be remembered as a champion of the powerless and a great parliamentarian who defended the rights of Back Benchers in this House against the Executive, whichever Government they came from. He spoke his mind and he spoke up for his values. Everyone knew where he stood and what he stood for, and that is why he won respect from all Members of the House. All our condolences go to his children, Stephen, Hilary, Melissa and Joshua, and to his wider family. In their different ways, they take forward what he taught as a father, a socialist and as someone of great decency.

I also want to join the Prime Minister in paying tribute to the fantastic Team GB winter Paralympics team, following its great success in Sochi. In particular, special congratulations go to Kelly Gallagher and Jade Etherington.

This weekend we saw a referendum in Crimea take place in the shadow of Russian military intervention in Ukraine. Does the Prime Minister agree that the referendum was illegal, illegitimate and in direct violation of the terms of the Ukrainian constitution? Does he also share my deep concern following the news that a Ukrainian serviceman was shot and killed at a military base in Crimea yesterday?

[The Prime Minister]

The right hon. Gentleman is absolutely correct to say that the referendum in Crimea is illegitimate and illegal. It was spatchcocked together in 10 days and held at the point of a Russian Kalashnikov. This cannot be accepted or legitimised by the international community.

We should be absolutely clear about what has happened: it is the annexation, effectively, of one country’s territory by another country. We must also be absolutely clear about our interest, which is to see a rules-based international system where countries obey the rules. If we turn away from this crisis and do not act, we will pay a very high price in the longer term. We should be clear that this referendum is illegitimate, we must be clear that consequences must follow and we should work with our European partners and the United States for a strong, consistent and robust response.

[Edward Miliband]

I thank the Prime Minister for that answer and would like to ask him about the meetings that are coming up. The White House has indicated that its sanctions will be expanded, and I am sure the whole House will support the idea that the list of Ukrainian and Russian officials targeted by asset freezes and travel bans will also be extended at the EU Council meeting tomorrow. Will the Prime Minister tell the House the circumstances in which he would also support additional, wider economic and trade sanctions on the Russian Federation?

[The Prime Minister]

As we discussed previously in the House, the European Union set out some very clear triggers. We said that if the Russians did not take part in a contact group with the Ukrainian Government to take forward discussions, asset freezes and travel bans should follow. Those were put in place at the Foreign Affairs Council on Monday, and I believe further action on that front should be taken at the European Council of Ministers, which I will take part in on Thursday.

I also think we should be responding to the fact of this annexation. We said that if there is further action to destabilise Ukraine—and this annexation is that action—further consequences need to follow. We need to set that out on Thursday, in concert with our European partners. At the same time, we need to put down a very clear warning that if there is further destabilisation—for instance, going into eastern Ukraine in any way—we will move to a position of the sorts of economic sanctions we discussed in the House last week.

[Edward Miliband]

The Prime Minister should know that he will have the support of Members on this side of the House for the toughest possible diplomatic and economic measures against the Russian Federation, given the totally illegitimate action it has taken.

I also welcome yesterday’s announcement that the G7 allies will gather next week at The Hague. Given Russia’s actions, it seems inconceivable that it can remain in the G8, so does the Prime Minister now agree that a meeting of the G8 should go further and explicitly decide to suspend Russia from the group of G8 advanced economies?

[The Prime Minister]

I was one of the first people to say that I thought it was unthinkable for the G8 to go ahead as planned. We were one of the first countries to suspend all preparations for that G8 and I strongly support the meeting of G7 countries that will take place on Monday. It is important that we move together with our allies and partners, and we should be discussing whether or not to expel Russia permanently from the G8 if further steps are taken. That is the meeting we will have on Monday and I think that is the right way to proceed.

[Dr Julian Huppert (Cambridge) (LD)]

Q2. May I add a few words about Tony Benn? He was a great man and it was my pleasure to work with one of his sons, Stephen, for a number of years on science policy.Lifting the income tax threshold to £10,000 so far has lifted 2.7 million poorly paid people out of paying any income tax, making a difference to them. Is the Prime Minister pleased that he abandoned his pre-election objection to that and that he is implementing an excellent Lib Dem policy?

[The Prime Minister]

The hon. Gentleman brings the House together in his usual way. What I am sure we can agree on is that it has been an excellent move by a Conservative Chancellor in a coalition Government to make sure that you do not pay tax on the first £10,000 of income you earn. That benefits people earning all the way up to £100,000. It is worth, so far, more than £700 to a typical income tax payer and it is highly worth while, and I look forward to hearing what the Chancellor has to say.

[Sir Gerald Kaufman (Manchester, Gorton) (Lab)]

Is the right hon. Gentleman aware that this week I received from a Palestinian friend an e-mail telling me that the Israelis assassinated a friend in his house and that

“another brother of a friend has been shot dead by the army. So we spent our time from one funeral to another”?

When the right hon. Gentleman was in Israel last week, did he raise with Netanyahu this constant stream of killing of innocent Palestinians by the Israelis, and what is he going to do about it?

[The Prime Minister]

I did not raise that specific case, which the right hon. Gentleman quite rightly raises in the House today, but I did raise with the Israeli Prime Minister the importance of how the Israelis behave in the west bank and elsewhere, and I raised the issue of settlements, which I believe are unacceptable and need to stop.

I also strongly supported both the Israeli Prime Minister and the Palestinian President in their efforts to find a peace. There is a prospect and an opportunity now, because the Americans are leading a set of talks that could lead to a framework document being agreed, and it is in everyone’s interest to put all the pressure we can on both the participants to take part and to get on with these negotiations, which I believe would mean so much to ordinary Israelis, ordinary Palestinians and, indeed, the rest of us.

[Andrew Stephenson (Pendle) (Con)]

Q3. Unemployment in Pendle has now fallen over the past 12 months from 4.9% down to 3.8%, helped by a resurgence in British manufacturing. Compared with the 1.8 million manufacturing jobs lost under the previous Labour Government, would our Prime Minister agree that our long-term economic plan is delivering for the north of England?

[The Prime Minister]

My hon. Friend makes an important point, which is that we want to have a balanced recovery: we want to see growth and employment right across the country. It is worth noting that since 2010, 80% of the rise in private sector employment has taken place outside London. The unemployment rate in the north-west, where my hon. Friend has his seat, is lower than it is in London. We are beginning to see a balanced recovery, but we have got to do everything we can—backing apprenticeships, backing industry—to make sure that continues.

[Yasmin Qureshi (Bolton South East) (Lab)]

Primodos was a drug given to women to determine pregnancy in the 1960s and 1970s. Its potency is 18 times that of morning after pills. As a result, thousands and thousands of babies were born with deformities. Up to now, there has never been a public inquiry or compensation for the victims. Will the Prime Minister meet me, my constituent Nicola Williams and a representative of the victims’ association to discuss this?

[The Prime Minister]

I am very happy to look at the case that the hon. Lady mentions. Clearly, this is an important issue. Anyone who has had a disabled child knows the enormous challenges that that brings. I am very happy to look at the case that she raises, and get back to her about it.

[Sir Alan Haselhurst (Saffron Walden) (Con)]

Q4. Will my right hon. Friend acknowledge that the benefits of economic recovery in my constituency are somewhat tempered by uncomfortable pressures on housing development and inadequate rail infra-structure? Notwithstanding the need for these matters to be dealt with quickly, is it not increasingly clear that there is a need to do more to stem the continuing flow of population to the south-east, by imaginative measures that will spread the benefits of recovery throughout all regions of the country?

[The Prime Minister]

My right hon. Friend makes an important point. As I said, we want a balanced recovery. Our long-term economic plan is working. An important part of that long-term economic plan is the infrastructure investment that we are making. Obviously, HS2 is important in rebalancing between north and south, but let us be clear: we are spending three times more on other transport schemes in the next Parliament as we are on HS2, and that includes projects such as rail electrification to Bristol, Nottingham and Sheffield, and between Liverpool and Manchester. All of these things can make a difference, and they are all part of our plan.

[Edward Miliband]

In recent days, the country’s leading mental health charities have joined together to warn of deep concerns about mental health services. Members from across this House have spoken out bravely on this subject, including about the impact on those who experience mental heath problems, their families and our country. Does the Prime Minister agree that mental health should have equal priority with physical health in our heath care systems?

[The Prime Minister]

First, let me agree with what the right hon. Gentleman said about the debate that took place in this House about mental health. I read the debate carefully and thought that a number of hon. Members took some very brave and bold steps to talk about issues and problems in their own lives. I thought that was an incredibly brave and right thing to do. In terms of whether mental health should have parity of esteem with other forms of health care, yes it should, and we have legislated to make that the case.

[Edward Miliband]

I thank the Prime Minister for that answer. Let me ask him about some specifics that suggest that we are moving away from the equal footing that we both want to see. The mental health share of the NHS budget is falling, services for children and young people are being squeezed, there are fewer mental health beds, and more young people are being treated on adult psychiatric wards. We know that those things are not just bad for the individuals concerned, but can store up bigger costs for the future. Does the Prime Minister agree that they really should not be happening?

[The Prime Minister]

First, taking the big picture on health spending, we have decided to increase health spending, rather than reduce it. Health spending is up by £12.7 billion across this Parliament. We have legislated for parity of esteem, as I have said, and we have put in place proper waiting times and disciplines for things such as mental health therapies, which were not there before. Of course, there is still further to go. We need commissioners to really focus on the importance of mental health services—but the money is there, the legal priority is there; we need the health service to respond.

[Edward Miliband]

The problem is that the mental health budget has fallen for the first time in a decade. It is not getting the share of health spending that it needs. I urge the Prime Minister to look at the specifics that I have raised. We need to ensure that the consensus that clearly exists in this House is reflected in the daily decisions that are made up and down the country about mental health in the health service. Will the Prime Minister agree to enshrine equality for mental health in the NHS constitution in order to send a message to decision makers about the priority that mental health deserves and to ensure that those who are affected by mental health problems get better access to the treatment and care that they need?

[The Prime Minister]

The right hon. Gentleman raises an important point not just about parity of esteem for mental health in law, but about what we see on the ground. We have put £400 million into talking therapies, which are a very important part of mental health provision. Mental health provision is referenced very clearly in the mandate that is given to NHS England, which in many ways is the absolutely key document for the health service. He is absolutely right that a culture change in favour of mental health and helping with mental health problems is still needed in the way the health service works. On that, there can be all-party support.

[Gordon Henderson (Sittingbourne and Sheppey) (Con)]

Q15. Many small business entrepreneurs in Sittingbourne and Sheppey have personal incomes below the current welfare cap. With that in mind, will my right hon. Friend consider doing more for small businesses by reducing the burden of regulation, lowering tax and increasing thresholds, as well as by offering them extra assistance in taking on more apprentices?

[The Prime Minister]

My hon. Friend makes an important point, which is that a key part of our long-term economic plan is to help small businesses take more people on. Absolutely key to that is the employment allowance—the cut in national insurance contributions of £2,000—that will come in this April. It is very important that we all encourage all small businesses to take up that money and therefore to take on more people. At the same time, we are abolishing employer’s national insurance contributions for the under-21s from April 2015. Companies, including those in his constituency, can therefore start planning to take on more people.

[Albert Owen (Ynys Môn) (Lab)]

Q5. Last week, the Deputy Prime Minister wrongly told the House that child care costs were coming down in England, while they continued to go up in Wales. The House of Commons Library says that that is not the case. This week, the Deputy Prime Minister is offering a pre-election bribe on child care, which will not come into effect until September 2015. Will the Prime Minister get a grip on this policy and help hard-working families with their child care costs now, in this Parliament, because of the cost of living crisis that they are facing today?

[The Prime Minister]

I am afraid that the hon. Gentleman is wrong on both counts. We are seeing some easing in cost pressures in England on child care costs, but I am afraid in Wales they are still going up. He might want to talk to the Welsh Assembly Government about that.

The point that the Deputy Prime Minister and I were making yesterday was that we want to help hard-working families with their child care costs. Therefore, from 2015, £2,000 on child care costs can be saved for every child. Is it not interesting, Mr Speaker, that we can now hear that the Labour party opposes that move? Clearly, it does not welcome it, so there will be a very clear choice at the election: if you vote for parties on this side of the House, you get help with child care, and if you vote Labour, you get nothing.

[Nigel Mills (Amber Valley) (Con)]

Q6. Will the Prime Minister join me in praising Conservative-run Amber Valley borough council, which has frozen its council tax for a fifth straight year, providing real help to hard-working people, in stark contrast to the three Labour parts of the area, where it is going up this year?

[The Prime Minister]

My hon. Friend is absolutely right. We should do everything we can to help hard-working people meet their budgets and meet their needs. That is why councils’ freezing council tax provides a huge amount of help. The Government are doing their part by freezing fuel duty, by raising the personal allowance and by doing everything we can to help hard-working people get on with their lives.

[Mike Kane (Wythenshawe and Sale East) (Lab)]

The Prime Minister assured the House on 27 November that the Government had exempted disabled people who need an extra bedroom from the bedroom tax. Does he think it is right that my constituent Mr Gunning has to pay the tax with his disability living allowance because he lives in Tory Trafford?

[The Prime Minister]

What I said to the House was absolutely correct, and I am happy to repeat that today, but there are obviously also the discretionary housing payments, which are there for local councils to deal with difficult cases. I would recommend that the hon. Gentleman takes that up with the council.

[Bob Stewart (Beckenham) (Con)]

Q7. Russia is not just expanding into the Crimea, but its ships, submarines and aircraft are increasingly appearing off our shores. Bearing in mind that we have great news on the economy and that the Ministry of Defence sent back an underspend last year, is it possible, as suggested by the House of Commons Defence Committee, that we could have a new maritime patrol aircraft before the next strategic defence and security review?

[The Prime Minister]

I say to my hon. Friend, first, that we are able to have these sorts of discussions and considerations only because we have sorted out the defence budget and got rid of the enormous deficit in it, and we have a successful and growing economy. In terms of maritime patrol, we are currently using the airborne warning and control system aircraft, and of course the Sea King, Merlin and Lynx helicopters, as well as Royal Navy ships and submarines. We work in very close partnership with our NATO allies, but I am sure the Ministry of Defence will be listening to my hon. Friend’s representations for the forthcoming SDSR.

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

Are the 24 Tory tax rises evidence of the Prime Minister’s tax-cutting instincts?

[The Prime Minister]

This is a great Labour campaign—I spotted it this morning. They have enumerated a number of tax increases that we had to put in place in order to deal with the deficit. Just to remind people, we said it was right to deal with the deficit with 80% spending reductions and 20% tax increases. There is a problem, though, with this Labour campaign. When the spokesman was asked, “Would you change any of these tax increases?” the answer was no. I am not the world’s biggest expert in campaigns, but I would say that was a bit of a turkey.

[Ian Swales (Redcar) (LD)]

Q8. I welcome the Prime Minister’s help for those hit by flooding, but I am told that it applies only to areas affected since December. My constituency had its worst ever flooding last September. Will he visit the area, and will he extend his help to the homes and businesses that are still suffering?

[The Prime Minister]

I absolutely understand the hon. Gentleman’s concern, because the sea surge that took place at Redcar and across Teesside last September led to some of the worst floods that have been seen in the area for a long time. What is absolutely key is that we improve the sea wall to protect properties in Redcar from future flooding. My understanding is that, working with partners, there is a £30 million investment going ahead across 3 km of coast, which will protect something like 1,000 homes. Obviously there may well be more that we need to do, and I am very happy to discuss that with him.

[Mrs Mary Glindon (North Tyneside) (Lab)]

In 2010, the Chancellor said that the budget deficit would be eliminated by 2015. What went wrong?

[The Prime Minister]

What we said we would do was cut the deficit, and we have cut the deficit. We said we would get Britain back to work, and we are getting Britain back to work. We said we wanted a private sector-led recovery; we have got a private sector-led recovery. The hon. Lady asks what went wrong. I can give it to her in one word: Labour.

[Christopher Pincher (Tamworth) (Con)]

Q9. This week, BMW announced that it is coming to Tamworth and bringing with it 100 skilled new jobs. That is on top of the hundreds of new jobs that are already in the pipeline. When my right hon. Friend is next in the midlands, which is the manufacturing heart of our country, will he drop into Tamworth and commend our local enterprise partnership and Tamworth borough council for helping to deliver our long-term economic plan and make Tamworth the place in the midlands to do business?

[The Prime Minister]

I am always delighted to visit Tamworth, not least to pay homage to the statue of Sir Robert Peel. I would be happy to go back and do that. What my hon. Friend says about the manufacturing revival is important, because we really can see it now in the west midlands, with the news from Jaguar Land Rover, the new engine plant that is opening up, and also what he says about BMW. One in four BMWs, I think, now has a British-made engine. That is great news for what we want to see: more jobs making things, more jobs exporting things, and a manufacturing revival in the UK.

[Kerry McCarthy (Bristol East) (Lab)]

Q10. Speaking for myself, my right hon. Friend the Member for Bristol South (Dawn Primarolo) and the people of Bristol, whom Tony Benn served so well for 30 years, may I join in paying tribute to him and expressing condolences to his family? Tony Benn was from a very privileged background, yet he spent his political life fighting for the working people. With a cost of living crisis, wages falling by £1,600 a year, people queuing at food banks and so much that requires the Prime Minister’s attention, why does he seem so obsessed with plans to bring back fox hunting by the back door for the benefit of a privileged few?

[The Prime Minister]

I join the hon. Lady in paying tribute to Tony Benn as a constituency MP. He was always an incredibly busy Back Bencher and Minister, but he never forgot about his constituents. He was also very good with a friendly, helpful word for new Back Benchers, whatever side of the House they happened to be on. I am sure that, like me, many Members experienced that from him.

In terms of what we are doing to help the poorest in our country, the most important thing is getting people back to work. We have now seen 1.7 million new private sector jobs under this Government, and that is the best way of helping people sustainably out of poverty. As they come out of poverty, they will see a higher minimum wage, and also the ability to earn more money before they pay any taxes at all. Those are the Government’s priorities, that is our long-term plan, and that is what people are going to hear about.

[Mr John Whittingdale (Maldon) (Con)]

Q11. May I join my right hon. Friend in paying tribute to Tony Benn, whose ancestral seat of Stansgate is in my constituency? He was held in high regard by my constituents, even though they may not have agreed with his views.Is my right hon. Friend aware that today’s figures show that unemployment in Maldon has fallen by 27% since the last election, and does he agree that that is further proof that the Chancellor was absolutely right to ignore his critics on the Opposition Benches and stick to his guns?

[The Prime Minister]

I thank my hon. Friend for what he has said. As I said, there is good news in the unemployment figures about getting women and young people into work and about falls in long-term unemployment, but there has also been the largest annual fall in the claimant count—the number of people claiming unemployment benefit—since February 1998. Getting people back to work and giving them the chance of a job, dignity and security in their lives is really important. That is what our economic plan is all about.

[Alison McGovern (Wirral South) (Lab)]

At the weekend a young woman from Eastham in my constituency, Sophie Jones, died of cervical cancer, leaving her family and friends bereft and unable to understand why she did not get the smear test that she asked for. Will the Prime Minister send his sympathies to her friends and family, and will he work with me to ensure that once we understand what went wrong, we have the right policies in place to ensure that that does not happen to anyone else?

[The Prime Minister]

The hon. Lady is absolutely right to raise that case. Many of us will have read about it in the papers at the weekend, and it seems an absolutely tragic case. We have made huge breakthroughs in this country, under Governments of both parties, in the screening programmes and public health information that is available, but something seems to have gone wrong in this case. I am very happy to look into it, and to write to the hon. Lady and seek any views that she has about it too.

[Mr David Ward (Bradford East) (LD)]

Q12. Today’s unemployment figures show a reduction in Bradford East of 14, which—I concede—is better than an increase of 14, but is very disappointing nevertheless and leaves us ninth highest for unemployment in the country. I recently visited a training provider in Bradford, who said that there were 600 apprenticeship vacancies in Bradford. Is the Prime Minister confident that we are doing enough to ensure that young people in particular are aware of apprenticeships, but also prepared to take them on?

[The Prime Minister]

My hon. Friend makes a very important point; pockets of quite high unemployment are often found right next to areas that have a lot of apprenticeships or jobs available. There are two things that we have to get right. One is that we have to make sure that more of our young people are leaving school with the key qualifications, including English and maths, which are absolutely vital to taking on an apprenticeship—we need to stress that those subjects are vocational subjects and must be at the heart of education. Secondly, we need to do more to explain to young people in school what is available in terms of apprenticeships and training, and that is exactly what our National Careers Service is going to do.

[Ian Murray (Edinburgh South) (Lab)]

Q13. Are we really all in this together when the Prime Minister thinks that some public sector workers do not even deserve a 1% pay rise while he signs off on bumper pay rises of up to 40% for his own Government’s special advisers? Does that alone not show that not only is the Prime Minister out of touch, but he only stands up for his own privileged few?

[The Prime Minister]

Well, it is interesting: it is 12.30 pm and 29 seconds and not a single Labour MP has mentioned the unemployment figures today. Let me answer the hon. Gentleman very directly: under our plans, everyone in the NHS will get at least a 1% pay rise, and this is something I was told was supported by the Labour party. This is what the leader of the Labour party said:

“we’re talking, actually about a pay increase limited to 1%...as I say, this Labour party is going to face up to those difficult choices we have to make.”

How long did that one last? Confronted by a trade union campaign, he demonstrates once again his complete weakness and unfitness for office.

[Paul Uppal (Wolverhampton South West) (Con)]

Q14. A recent report into female foeticide suggests that the female population has been reduced in the UK by 4,500 and worldwide by 200 million. As a proud British-Asian father of two daughters, may I ask my right hon. Friend to call for an end to this most appalling practice? This once taboo subject clearly must end, not just in the UK, but in the world as a whole.

[The Prime Minister]

My hon. Friend is absolutely right. It is a simply appalling practice, and in areas such as that, and female genital mutilation and forced marriage, we need to be absolutely clear about our values and the messages we send and about these practices being unacceptable. The Government have made clear that abortion on the grounds of gender alone is illegal. The chief medical officer wrote to all doctors on 22 November last year reminding them of their responsibilities. I am meeting the chief medical officer this afternoon and I will raise this issue with her, and I think it is absolutely right of my hon. Friend to run this campaign.

Ways and Means

Wednesday 19th March 2014 Commons Chamber

Financial Statement

Wednesday 19th March 2014 Commons Chamber

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Before I call the Chancellor of the Exchequer, it is convenient to remind hon. Members that copies of the Budget resolutions will be available in the Vote Office at the end of the Chancellor’s speech. It may also be appropriate to remind hon. Members that it is not the norm to intervene on the Chancellor of the Exchequer or the Leader of the Opposition.

12:32

[The Chancellor of the Exchequer (Mr George Osborne)]

I can report today that the economy is continuing to recover, and recovering faster than forecast. We set out our plan, and together with the British people we held our nerve. After the mess we were left, we are putting Britain right, but the job is far from done. Our country still borrows too much; we still do not invest enough, export enough or save enough, so today we do more to put that right.

This is a Budget for building a resilient economy. If you are a maker, a doer or a saver, this Budget is for you. It is all part of a long-term economic plan—a plan that is delivering security for the people of this country. I have never shied away from telling the British people about the difficult decisions we face, and just because things are getting better, I do not intend to do so today. Yes, the deficit is down by a third, and now in the coming year it will be down by a half, but it is still one of the highest in Europe, so today we take further action to bring it down.

Yes, investment and exports are up, but Britain has 20 years of catching up to do, so today we back businesses who invest and export. Yes, manufacturing is growing again, as my hon. Friend the Member for Pendle (Andrew Stephenson) just reminded us, and jobs are being created across the country, but manufacturing halved under the last Government, with all bets on the City of London. So today, we support manufacturers and back all regions of our country. While as a nation we are getting on top of our debts, for many decades Britain has borrowed too much and saved too little, so in this Budget we make sure hard-working people keep more of what they earn and more of what they save.

Yesterday we set out our support for parents with tax-free child care. Today support for savers is at the centre of this Budget, as we take another step towards our central mission: economic security for the people of Britain.

Let me turn to today’s forecasts from the Office for Budget Responsibility. I am grateful to Robert Chote, Steve Nickell and their team, and thank Graham Parker for agreeing to serve with them for another term. It is a credit to the OBR that we now take it for granted that the figures presented at this Dispatch Box are not fiddled but fair and independent. A year ago at the Budget, the OBR forecast the economy to grow by just 0.6% in 2013. It now confirms that it grew by three times as much. At the autumn statement, it significantly revised up its expectations for future growth. Today I can tell the House it is revising up its forecast again. A year ago, it predicted that growth in 2014 would be 1.8%; at the autumn statement, 2.4%; today, the OBR forecasts growth in 2014 of 2.7%. That is the biggest upward revision to growth between Budgets for at least 30 years. Growth next year is also revised up, to 2.3%; then, it is 2.6% in 2016 and 2017; and with the output gap closed around a year earlier than previously predicted, growth returns to around its long-term trend, at 2.5%, in 2018. Taken together, these growth figures mean our economy will be £16 billion larger than was forecast just four months ago.

There is another prediction the OBR makes today that the House will want to know about. Six years ago, Britain suffered a great recession. We had the biggest bank bail-out in the world. We had the biggest deficit since the war. We suffered the deepest recession in modern times—or as the shadow Chancellor put it, some mistakes were made. But later this year the OBR expects Britain to reach the point when our economy is finally larger than before it collapsed six years ago. That is because we are now growing faster than Germany, faster than Japan, faster than the United States—in fact, there is no major advanced economy in the world growing faster than Britain today.

But we should be alert to the risks. The euro area is slowly recovering, but as the OBR cautions today,

“further damaging instability remains possible”.

There is volatility in emerging markets, and while for now the OBR does not expect the situation in Ukraine to have a “large impact” on us, it does warn that an escalation risks higher commodity prices, higher inflation and lower growth. It is a reminder of why we need to build our economy’s resilience.

At home, the biggest risk is clear: abandoning the economic plan that is working. And nowhere is the success of that plan more evident than in job creation. Today again we are reminded that the most important consequence of our plan is more people in work, with each job meaning a family more secure. Some in this House predicted that our plan meant a million jobs would be lost. They were spectacularly wrong. The pace of net job creation under this Government has been three times faster than in any other recovery on record: 1.3 million more people in work. The latest figures today show a staggering 24% fall in the claimant count in just one year, and the fastest fall in the youth claimant count since 1997. The OBR now forecasts one and a half million more jobs over the next five years and unemployment down from the 8% we inherited to just over 5%., and the OBR predicts earnings will grow faster than inflation this year and in every year of the forecast. That is why the country can afford a real-terms increase in the national minimum wage. This is a Government whose plan is delivering jobs. We now have a record number in work; a record number of women in work; and for the first time in 35 years, a higher employment rate than the United States of America. That is what we mean when we say we are getting Britain working.

There can be no economic security if there is no control of the public finances. Before I presented my first Budget to this House, the Government were borrowing £1 in every £4 they spent, and we were faced with the threat of a sovereign debt crisis. We have taken difficult decisions, each and every one of which was opposed. But thanks to those decisions, the IMF now says that we are achieving the largest reduction in both the headline and the structural deficits of any major advanced economy in the world. There were those who said repeatedly that the deficit was going to go up. Instead, I can tell the House that the OBR has revised down the underlying deficit in every year of its forecast. Before we came to office the deficit was 11%. This year it says it will be 6.6%—lower than forecast and down a third; next year, 5.5%—down a half; then it will fall to 4.2%, 2.4% and reach 0.8% in 2017-18. In 2018-19, it is forecasting no deficit at all; instead, at plus 0.2%, a small surplus. But only if we work through the plan.

The Government’s fiscal mandate is met, and continues to be met a year early, yet while the underlying structural deficit falls, it falls no faster than was previously forecast, despite higher growth. This goes to the heart of the argument this Government have made: faster growth alone will not balance the books. Securing Britain’s economic future means there will have to be more hard decisions—more cuts. The question for the British people is: who has the credibility to deliver them?

Let me turn to the underlying cash borrowing numbers. Britain was borrowing £157 billion a year before we came to office. This year we expect to borrow £108 billion. That is £12 billion less than forecast a year ago. Indeed, even since the autumn statement the OBR has revised down borrowing in every single year. In 2014-15 it says it will fall to £95 billion. Then it falls again to £75 billion in 2015-16, then £44 billion, and then down to £17 billion. In 2018-19 we will not be borrowing at all—we will have a small surplus of £5 billion.

Taken together, these new figures mean Britain will be borrowing £24 billion less than was forecast. That is more than we spend in an entire year on the police and criminal justice system. Lower borrowing and a smaller deficit mean less debt. While we meet the debt target one year late as before, the OBR has revised down national debt in every single year of the forecast. It expects it to be 74.5% of GDP this year, 77.3% next year, peaking at 78.7% in 2015-16—lower than the 80% previously forecast—before falling to 78.3% in 2016-17, then falling to 76.5% and then 74.2% in 2018-19.

So, growth is up, the deficit is set to halve, debt is lower. and the biggest single saving of all is a £42 billion reduction in the interest payments we will have to make on that debt, saving every family in the nation the equivalent of almost £2,000, money that was going to creditors around the world, now going to pay for the NHS and other public services.

It is because we have a credible fiscal plan that the Bank of England can provide the support needed to businesses and families. Yesterday I confirmed the appointments of Anthony Habgood to chair the court and Ben Broadbent and Minouche Shafik to be the new deputy governors for monetary policy and for markets and banking respectively. All three make a strong team at the Bank stronger still.

I today reconfirm my remit for the Monetary Policy Committee, including the target of 2% CPI inflation, which the OBR expects will be met this year, next year and in the years ahead. I also set out the remit for the Financial Policy Committee, the body created by us to avoid the mistakes of the past. Although the OBR forecast that house prices will remain below their real-terms peak until at least 2018, I have asked the committee to be particularly vigilant against the emergence of potential risks in the housing market. To enhance our resilience and protect us from economic shocks, we will also continue rebuilding our foreign exchange reserves. Those reserves are now 50% higher than when we came to office.

Of course, the prerequisite of sound money is a sound currency, and the £1 coin has become increasingly vulnerable to forgery. It is now among the oldest coins in circulation, and one in 30 £1 coins is counterfeit. That costs businesses and the taxpayer millions each year, so I can tell the House that we will move to a new, highly secure £1 coin. It will take three years. We will consult industry. Our new £1 coin will blend the security features of the future with inspiration from our past. In honour of our Queen, the coin will take the shape of one of the first coins she appeared on: the threepenny bit. A more resilient pound for a more resilient economy.

Sound money depends, too, on sound public finances. We are entering a critical phase and we must learn from the past. Every time a post-war Government have embarked on public spending cuts, real spending has risen back to its previous heights within three years. Sure enough, there are those today who say: “Ease up, spend more, borrow more.” That would mean debt rising towards 100% of GDP, undermining growth. It would be a huge mistake, and we are not going to let that happen.

Many Chancellors faced with a recovering economy and improved borrowing forecasts before an election would be tempted to squander the gains. I will not do that today. These gains were hard won by the British people, and we are not going to jeopardise their economic security. Britain is not going back to square one, so in this Budget all decisions are paid for. Taxes are lower but so, too, is spending, for we must bring our national debt substantially down. Analysis published today shows that just running a balanced current budget does not secure that. Instead, Britain needs to run an absolute surplus in good years. We will fix the roof when the sun is shining, to protect Britain from future storms.

So I can confirm that, in addition to the cuts this year and next, there will be cuts in the next Parliament too. To lock in our country’s commitment to this path of deficit reduction, we will seek the support of Parliament in a vote, and I will bring forward a new charter for budget responsibility this autumn. We are taking further difficult decisions now so we can reduce the deficit and protect our NHS and schools and meet our obligations to the world’s poorest by contributing 0.7% of our national income to help them. I am proud that we are doing that.

On public service pensions, we implemented the reforms proposed by John Hutton. Once again the House will want to thank him for his work. We will ensure that schemes are properly valued, saving the taxpayer over £1 billion a year. We are continuing with pay restraint in the public sector—an essential part of maintaining sound finances and economic stability. We will also insist on the prudent management of departmental finances. Thanks to the efforts of my colleagues in Cabinet, these now regularly come in under budget. In order to lock in these underspends, I said in December that we would reduce spending by £1 billion in 2015-16. Today, I am making that overall billion-pound reduction permanent.

I look forward to the work my excellent colleague the Chief Secretary is now doing, with the Cabinet Office, to find further efficiencies. Difficult decisions on public service pay and pensions, further savings in Departments, a cap on welfare bills—none of these decisions is easy, but they are the right thing to ensure that Britain lives within her means.

We set out today the details of that welfare cap, and we will seek the support of Parliament for it in a vote next week. From housing benefit to tax credits, the full list of benefits included in the cap is published in the Budget document today. Only the state pension and the cyclical unemployment benefits are excluded. I am setting it at £119 billion in 2015-16. It will rise, but only in line with forecast inflation, to £127 billion in 2018-19.

Britain should always be proud of having a welfare system that helps those most in need, but never again should we allow its costs to spiral out of control and its incentives to become so distorted that it pays not to work. In future, any Government who want to spend more on benefits will have to be honest with the public about the costs, will need the approval of Parliament, and will be held to account by this permanent cap on welfare.

The distributional analysis published today shows that the Budget decisions, and the decisions across this Parliament, mean that the rich are making the biggest contribution to the reduction of the deficit, because we are all in this together. [Interruption.]

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. The right hon. Gentleman needs to get to the end of the speech without anybody having to intervene.

[Mr Osborne]

The independent statistics show that under this Government income inequality is at its lowest level for 28 years, lower than at any single moment under Labour. Thanks to my right hon. Friend the Prime Minister’s leadership we have driven the international efforts to develop tough new global tax rules that stop rich individuals hiding their tax and companies shifting their profits offshore. Here at home we are collecting twice as much as before through compliance—collecting the taxes that are due—and the number of registered tax avoidance schemes has fallen by half.

While the vast majority of wealthy people pay their taxes, there is still a small minority who do not. We will now require that those who have signed up to disclosed tax avoidance schemes pay their taxes, like everyone else, up front. This will apply in future to schemes covered by our general anti-abuse rule too. If people feel they have been wronged, they can of course go to court. If they win, they get their money back with interest. We have already consulted on this idea; now we will implement it. The OBR confirms that this will bring forward £4 billion of tax receipts and it will fundamentally reduce the incentive to engage in tax avoidance in the future.

Public tolerance for those who do not pay their fair share evaporated long ago, but we had to wait for this Government before there was proper action. Today we go further still. I am increasing the budget of Her Majesty’s Revenue and Customs to tackle non-compliance. We will block transfers of profits between companies within groups to avoid tax. We will increase tax credit debt recovery rates for those with sufficient earnings. We will give HMRC modern powers to collect debts from bank accounts of people who can afford to pay but have repeatedly refused to do so, like most other western countries. We will increase compliance checks to catch migrants who claim benefits that they are not entitled to, saving the taxpayer almost £100 million. We will take action to curb potential misuse of the enterprise investment and venture capital trust schemes, and we are expanding the new tax that we introduced to stop people avoiding stamp duty by owning homes through a company.

We will expand the tax on residential properties worth over £2 million to those worth more than £500,000, and from midnight tonight anyone purchasing residential property worth more than £500,000 through a corporate envelope will be required to pay 15% stamp duty. None of this applies to homes that are rented out. Many of these are empty properties held in corporate envelopes to avoid stamp duty. This abuse will end.

Another abuse has been the manipulation of the LIBOR rate. Our regulators are broadening their investigation to the foreign exchange markets and I will keep the House informed. Financial services are a hugely important industry to this country which I want to promote around the world. But I also want the fines paid by those who have demonstrated the worst values to support those who demonstrate the best of British values. I am talking about the men and women in our armed forces who risk their lives to keep us free. So I will continue to direct the use of the LIBOR fines to our military charities and our emergency service charities too. Because the sums continue to grow through the fines, I can today extend that support to our search and rescue and lifeboat services, and provide £10 million of support to our scouts, guides, cadets and St John Ambulance. I am today waiving inheritance tax for those in our emergency services who give their lives protecting us.

I will also relieve VAT on fuel for our air ambulances and inshore rescue boat services across Britain, and provide a new air ambulance for London, all in response to huge and heartfelt public demand and the campaigns of my hon. Friends the Members for Hexham (Guy Opperman), for Brentford and Isleworth (Mary Macleod) and for Argyll and Bute (Mr Reid).

Tomorrow is the 21st anniversary of the IRA bomb that killed young Tim Parry and Johnathan Ball. Survivors for Peace was set up by Tim’s parents, Colin and Wendy, and it no longer receives lottery funding. My hon. Friend the Member for Warrington South (David Mowat) and the right hon. Member for Dulwich and West Norwood (Dame Tessa Jowell) have both raised this issue, and I know myself what incredible work they do. To honour the memory of all victims of terrorism, we will provide the funding that this programme needs. Last month with the Under-Secretary of State for Scotland, my right hon. Friend the Member for Dumfriesshire, Clydesdale and Tweeddale (David Mundell), I visited Lockerbie to pay my respects on the 25th anniversary of that tragedy. We will support the scholarships created for local people there to study in the United States.

Further, this summer, many services of remembrance will be held in our cathedrals to mark the great war, so we are providing £20 million to support the repairs that these historic buildings need. We will also support the celebration of the 800th anniversary of the signing of the Magna Carta next year. King John’s humbling defeat centuries ago seems unimaginably distant—a weak leader who had risen to the top after betraying his brother, compelled by a gang of unruly barons to sign on the dotted line. I will provide a grant to the Magna Carta Trust to ensure that today’s generation learns the lessons of the past.

We will not have a secure economic future if Britain does not earn its way in the world. We need our businesses to export more, build more, invest more and manufacture more. Our exports have grown each year and the OBR today forecasts rising export growth in the future. Our combined goods exports to Brazil, India and China have risen faster than those of our competitors, but we are starting from a low base and we have many lost years to catch up. Britain has to up its game on exports, and today we do. With Stephen Green, and now Ian Livingston, we are expanding the reach and support that UK Trade & Investment offers British businesses. For many firms the truth is that they can win the contract only if they are backed by competitive export finance. For decades the British Government have been the last port of call, when we should be backing British businesses wanting to sell abroad. Today, we fundamentally change that, and we are going to start with the finance we provide our exporters. We will double the amount of lending available to £3 billion, and I can announce that from today the interest rates we charge on that lending will be cut by a third. Instead of having the least competitive export finance in Europe, we will have the most competitive.

We will also reform air passenger duty to end the crazy system where you pay less tax travelling to Hawaii than you do travelling to China or India. It hits exports, puts off tourists and creates a great sense of injustice among our Caribbean and south Asian communities here in Britain. From next year, all long-haul flights will carry the same, lower, band B tax rate that you now pay to fly to the United States. Private jets were not taxed at all under the previous Government. Today they are, and I am increasing the charge so they pay more. And because we want all parts of our country to see better links with the markets of the future, we are going to provide start-up support for new routes from regional airports, such as Liverpool, Leeds or, indeed, Inverness. More support for businesses; competitive finance; cheaper global flights—I want the message to go out that we are backing our exporters, so that wherever you are around the world you cannot fail to see “Made in Britain”.

One key British export is the North sea’s oil and gas. We will take forward all recommendations of the Wood report, and we will review the whole tax regime to make sure it is fit for the purpose of extracting every drop of oil we can. We will introduce now a new allowance for ultra-high pressure, high temperature fields to support billions of pounds of investment, thousands of jobs and a significant proportion of our country’s energy needs. Even with these measures, the North sea is a mature basin, and the OBR has today revised down the forecast tax receipts by a further £3 billion over the period. The Scottish economy is doing well and jobs are being created, but this is a reminder of how precarious the budget of an independent Scotland would be. These further downgrades in the tax receipts would leave independent Scots with a shortfall of £1,000 per person—Britain is better together.

Our country needs to export more and it also needs to build more. House building is up 23%, but that is not enough. That is why we are making further reforms to our planning system and offering half a billion pounds of finance to small house building firms; it is why we are signing city deals across the country to get more built, with a new funding deal this week for Cambridge; it is why we are giving people a new right to build their own homes and providing £150 million of finance today to support that; it is why we are funding regeneration of some of the worst conditions in urban housing estates that we have in this country, and we are extending the current support for mortgage interest scheme to 2016; and it is why we have got Help to Buy.

We are extending the Help to Buy equity loan scheme for the rest of the decade, so that we get 120,000 new homes built. In the south-east, where the pressure is greatest, we are going to build new homes in Barking Riverside, regenerate Brent Cross and build the first new garden city in almost 100 years at Ebbsfleet. The Opposition have said they already announced the homes in Ebbsfleet a decade ago, and they did make the announcement. Do you know how many homes have been built since then? It is less than 300; it was more “ebb” than “fleet”. Instead, we are going to build 15,000 homes there, put in the infrastructure, set up the development corporation and make it happen. I thank my hon. Friends the Members for Dartford (Gareth Johnson) and for Gravesham (Mr Holloway) for their tremendous support. And we will be publishing a prospectus on the future of garden cities. Taken all together, the housing policies I announce today will support over 200,000 new homes for families—we are getting Britain building.

We are also going to get Britain investing. Britain has under-invested for decades. We are the first Government to have committed to long-term and rising capital budgets, and this autumn I will set out the detailed plans for the projects that will be supported for the rest of the decade. We have been reminded again this week of the benefits of high-speed rail and what that will bring to the north of our country, and I am determined that it goes further north faster. Today, I have approved a £270 million guarantee for the Mersey gateway bridge, thanks to the hard work of my hon. Friend the Member for Weaver Vale (Graham Evans). And, tomorrow we introduce legislation to give new tax and borrowing powers to the Welsh Government to fund their infrastructure needs, and they can start now on work to improve the M4 in south Wales.

Because of the exceptionally poor weather this winter, I am making an additional £140 million available, on top of what has already been provided, for immediate repairs and maintenance to damaged flood defences across Britain. Our roads have taken a battering, too. My hon. Friend the Member for Northampton North (Michael Ellis) has been a very persistent campaigner for resources to repair the potholes in his constituency and across the country. His persistence has paid off and I am making £200 million available, which local authorities can bid for—I trust Northampton will be making an application.

Modern infrastructure is part of a successful economy. So, too, is a modern industrial strategy. If Britain is not leading the world in science and technology and engineering, we are condemning our country to fall behind. So we will establish new centres for doctoral training, for cell therapy and for graphene—a great British discovery that we should break the habit of a lifetime with and commercially develop in Britain. To make sure we give young people the skills they need to get good jobs in this modern world, we have doubled the number of apprenticeships, and I will extend the grants for smaller businesses to support over 100,000 more apprentices. And we will now develop new degree-level apprenticeships, too.

In my maiden speech here in this House I spoke of Alan Turing, the code breaker who lived in my constituency, who did more than anyone else—almost—to win the war and who was persecuted for his sexuality by the country he helped to save. I am delighted that he has finally received a posthumous royal pardon. Now, in his honour, we will found the Alan Turing Institute to ensure that Britain leads the way again in the use of big data and algorithm research. I am determined that our country is going to out-compete, out-smart and out-do the rest of the world.

Government investment is part of the story, but we need business investment, too. When we came to office, Britain had one of the least competitive business tax regimes in Europe—now we have the most competitive. Thanks to the Office of Tax Simplification, we have already cut burdens on administration, and I am grateful to Michael Jack, John Whiting and their team for their hard work. Today, we accept their recommendation to move the collection of class 2 national insurance contributions into self-assessment, abolishing for 5 million people this wholly unnecessary bureaucracy. And we have cut business tax rates, too. Corporation tax was 28% when we came to office. In just two weeks, corporation tax will be down to 21%, high street stores will get £1,000 off their rates and every business in the country will get the employment allowance—a £2,000 cash-back on jobs. Next year, corporation tax will reach 20% and we take under-21s out of the jobs tax altogether.

So businesses are keeping more of their money to create jobs and invest in the future—today, I want to go further. Many of the enterprise zones we created are now flourishing, so the business rates discounts and enhanced capital allowances will be extended for another three years. And I can confirm that, with the Northern Ireland Executive, we will establish the first enterprise zone there near Coleraine. I am raising the rate of the research and development tax credit for loss-making small businesses from 11% to 14.5%. Two years ago, I launched the seed enterprise investment scheme to help finance start-ups. It has been a great success and I am making it permanent. We are backing investment into social enterprises with a social investment tax relief at a rate of 30%. And we are supporting our creative industries, too. The European Commission has today approved the extension of our film tax credit, and I will apply the same successful approach to theatre, especially regional theatre. From this September, there will be a 20% tax relief for qualifying productions—and 25% for regional touring. And we are expanding by a third the size of the cultural gift scheme.

But I want to do something today that helps all businesses to invest. In 2012, I increased the annual investment allowance tenfold to £250,000. This generous allowance was due to expire at the end of this year, but all the business groups urged me to extend it. So we will, but we will do more. We will double the investment allowance to £500,000, extend it to the end of 2015 and start it next month—99.8% of businesses will get a 100% investment allowance. Almost every business across Britain will pay no up-front tax when they invest in the future. It costs £2 billion in the short term, so when we say that we are going to get Britain investing and to back growth around the country, we mean it.

A resilient economy is a more balanced economy, with more exports, more building, more investment and more manufacturing too. We have got to support our manufacturers if we want to see more growth in our regions. To those who say that manufacturing is finished in the west, I say look at America, which will see up to 5 million new manufacturing jobs by the end of this decade, and I will tell you why. US industrial energy prices are half those in Britain. We need to cut our energy costs. We are going to do this by investing in new sources of energy, new nuclear power, renewables, and a shale gas revolution. We are going to do this by promoting energy efficiency. Today, we are tilting the playing field—extending the 2% increase in company car tax in 2017-18 and 2018-19 while increasing the discount for ultra low emission vehicles, and reducing the rate of fuel duty on methanol. But above all, we are going to have a £7 billion package to cut energy bills for British manufacturers, with benefits for families and other businesses too.

First, I am capping the carbon price support rate at £18 per tonne of carbon dioxide from 2016-17 for the rest of the decade. This will save a mid-sized manufacturer almost £50,000 on its annual energy bill, and it will save families £15 a year on their bills too, over and above the £50 we have already taken off.

Secondly, I am extending the existing compensation scheme for energy-intensive industries for a further four years to 2019-20. Our steelmakers, chemical plants, paper mills and other heavy energy users make up 35% of our manufacturing exports and employ half a million people. This scheme helps the companies most at risk of leaving to remain in the UK.

Thirdly, I am introducing new compensation worth almost £1 billion to protect these energy-intensive manufacturers from the rising costs of the renewables obligation and the feed-in tariffs, otherwise green levies and taxes will make up over a third of their energy bills by the end of the decade.

Fourthly, I am exempting from the carbon price floor the electricity from combined heat and power plants, which hundreds of manufacturers use. This entire package will be delivered without any reduction in the investment in renewable energy.

Today, I have cut the cost of manufacturing in Britain. Half of the firms that will benefit most are in the north of England, and a third are in Scotland and Wales. Thousands of good jobs are protected. We have a more resilient economy, a Government on the side of manufacturers and a Britain that makes things again.

We are backing exports, backing manufacturing and backing a Britain that builds. We also want to help hard-working people keep more of what they earn and of what they save. That is what we have done by freezing council tax, freezing fuel duty and raising the personal allowance to £10,000. From next year, there will be tax-free child care—20% off for up to £10,000 of child care costs for parents, and an early years pupil premium to help the most disadvantaged.

Today we can do more to help. Let me start with duties. I can confirm that the fuel duty rise planned for September will not take place. Petrol will be 20p lower per litre than it would have been under the plans of the previous Government.

Turning to gambling duties, fixed odds betting terminals have proliferated since gambling laws were liberalised a decade ago. These machines are highly lucrative, and therefore it is right that we now raise the duty on them to 25%. We will also extend the horserace betting levy to bookmakers who are based offshore, and we will look at wider levy reform and at introducing a “racing right” to support the sport.

While the number of betting machines have grown, the number of bingo halls has plummeted by three quarters over the last 30 years, yet bingo duty has been set at the high rate of 20%. Now that fuel duty is frozen, my hon. Friend the Member for Harlow (Robert Halfon) has turned his energy and talent into a vigorous campaign to cut bingo duty, ably assisted by my hon. Friend the Member for Waveney (Peter Aldous). They want the rate cut to 15%. I can go further. Bingo duty will be halved to 10% to protect jobs and to protect communities.

Let me turn now to tobacco and alcohol duties. Tobacco duty has been rising by 2% above inflation and will do so again today, as previously confirmed. This escalator was due to end next year, but there are no sound health reasons to end it, so it will be extended for the rest of the next Parliament.

We have introduced new laws to prevent alcohol from being sold below minimum tax rates, and this helps to prevent supermarkets from undercutting pubs and it helps to stop problem drinking. It is a far more targeted approach than the alcohol duty escalator, which was introduced by the previous Government and hated by so many responsible drinkers. Today, I am scrapping that escalator for all alcohol duties. They will rise with inflation, with these exceptions: Scottish whisky is a huge British success story. [Hon. Members: “Scotch whisky.”] To support that industry, instead of raising duties on Scotch whisky and other spirits, I am today going to freeze them, and with some cider makers in the west country, who have been hit hard by the recent weather, I am going to help them by freezing the duty on ordinary cider too.

Then there is beer. I know the industry, led so ably by my hon. Friend the Member for Burton (Andrew Griffiths), has been campaigning for a freeze, but beer duty next week will not be frozen; it will be cut again by 1p—pubs saved, jobs created and a penny off a pint for the second year running.

It is a central part of our long-term economic plan that people keep more of the money they have earned. When we came to office, the personal tax allowance was just £6,500. In less than three weeks time, it will reach £10,000. That is an income tax cut for 25 million people. Today, because we are working through our plan, we can afford to go further. Next year, there will be no income tax at all on the first £10,500 of your salary—£10,500 tax free and £800 less in tax every year for the typical taxpayer. Our increases in the personal allowance will have lifted over 3 million of the lowest paid out of income tax altogether, and I am incredibly proud of what we have achieved.

I can also confirm today that the higher rate threshold will rise for the first time this Parliament, from £41,450 to £41,865 next month, and then by a further 1% to £42,285 next year. Because I am passing the full benefit of today’s personal allowance increase on to higher rate taxpayers, people earning £42,000, £43,000, £50,000, £60,000—all the way up to £100,000—will be paying less income tax because of this Budget. We have tax cuts for those on low incomes, and those on middle incomes too—help for hard-working people as part of a long-term economic plan delivered by a coalition Government and a Conservative Chancellor. I am linking the rate of the transferable tax allowance for married couples to the personal allowance, so it will also rise to £1,050—help for 4 million families that they will take away and that we are proud to provide.

Our tax changes will help people in work, but there is a large group who have had a particularly hard time in recent years, and that is savers. This matters not just because they are people who have made sacrifices to provide for their own economic security in retirement. It matters too because one of the biggest weaknesses of the British economy is that it borrows too much and saves too little. This has been a problem for decades and we cannot fix it overnight. It is no surprise that the OBR forecasts the savings ratio falling, so today we put in place policies for savers that stand alongside deficit reduction as a centrepiece of our long-term economic plan.

The reforms I am about to announce are only possible because, thanks to this Government, we have a triple lock on the state pension; more people are saving through auto-enrolment; and we are introducing a single-tier pension that will lift most people above the means test. That secure basic income for pensioners means that we can make far-reaching changes to the tax regime to reward those who save. Here is how. First, I want to help savers by dramatically increasing the simplicity, flexibility and generosity of individual savings accounts. Twenty-four million people in this country have an ISA, and yet millions of them would like to save more than the annual limits of around £5,500 on cash ISAs, and £11,500 on stocks and shares ISAs. Three quarters of those who hit the cash ISA limit are basic rate taxpayers. So we will make ISAs simpler by merging the cash and stocks ISAs to create a single new ISA. We will make them more flexible by allowing savers to transfer all of the ISAs they already have from stocks and shares into cash, or the other way round, and we are going to make the new ISA more generous by increasing the annual limit to £15,000—that is £15,000 of savings a year tax free, available from 1 July. I am raising the limits for junior ISAs to £4,000 a year too.

But the £15,000 new ISA is just the first thing we are doing for savers today. Secondly, many pensioners have seen their incomes fall as a consequence of the low interest rates that Britain has deliberately pursued to support the economy. It is time Britain helped them out in return, so we will launch the new pensioner bond, paying market leading rates. It will be issued by National Savings & Investments, open to everyone aged 65 and over, and available from January next year. The exact rates will be set in the autumn, to ensure the best possible offer, but our assumption is 2.8% for a one-year bond and 4% on a three-year bond. That is much better than anything equivalent in the market today. Up to £10 billion of these bonds will be issued. A maximum of £10,000 can be saved in each bond. That is at least a million pensioner bonds. Because 21 million people also invest in premium bonds, I am lifting the cap for the first time in a decade from £30,000 to £40,000 this June, and to £50,000 next year, and I will double the number of million-pound winners.

I still want to do more to support saving, so, thirdly, we will completely change the tax treatment of defined contribution pensions to bring it into line with the modern world. There will be consequential implications for defined benefit pensions upon which we will consult and proceed cautiously, so the changes we announce today will not apply to them. But 13 million people have defined contribution schemes, and the number continues to grow. We have introduced flexibilities, but most people still have little option but to take out an annuity, even though annuity rates have fallen by half over the last 15 years. The tax rules around these pensions are a manifestation of a patronising view that pensioners cannot be trusted with their own pension pots. I reject that. People who have worked hard and saved hard all their lives, and done the right thing, should be trusted with their own finances, and that is precisely what we will now do: trust the people. Some changes will take effect from next week. We will cut the income requirement for flexible draw-down from £20,000 to £12,000; raise the capped draw-down limit from 120% to 150%; increase the size of the lump sum small pot fivefold to £10,000; and almost double the total pension savings someone can take as a lump sum to £30,000. All of these changes will come into effect on 27 March.

These measures alone would amount to a radical change, but they are only a step in the fundamental reform of the taxation of defined contribution pensions I want to see.

I am announcing today that we will legislate to remove all remaining tax restrictions on how pensioners have access to their pension pots. Pensioners will have complete freedom to draw down as much or as little of their pension pot as they want, anytime they want: no caps; no draw-down limits. Let me be clear: no one will have to buy an annuity.

We are going to introduce a new guarantee, enforced by law, that everyone who retires on these defined contribution schemes will be offered free, impartial, face-to-face advice on how to get the most from the choices they will now have. Those who still want the certainty of an annuity, as many will, will be able to shop around for the best deal. I am providing £20 million over the next two years to work with consumer groups and industry to develop this new right to advice. When it comes to tax charges, it will be possible to take a quarter of your pension pot tax-free on retirement, as today, but instead of the punitive 55% tax that exists now if you try to take the rest, anything else you take out of your pension will simply be taxed at normal marginal tax rates, as with any other income—so not a 55% tax, but a 20% tax for most pensioners.

The OBR confirms that in the next 15 years, as some people use these new freedoms to draw down their pensions, this tax cut will lead to an increase in tax receipts. Government Members understand that when you cut a tax rate that is punitively high, that can increase revenues. These major changes to the tax regime require a separate Act of Parliament, and we will have them in place for April next year. What I am proposing is the most far-reaching reform to the taxation of pensions since the regime was introduced in 1921.

There is one final reform to support savings that I would like to make. There is a 10p starting rate for income from savings. It is complex to levy and it penalises low- income savers. Today, I am abolishing the 10p rate for savers altogether. When I abolish a 10p rate, I do not sneakily turn it into a 20% rate like the last lot: I am turning it into a 0% rate: no tax on these savings whatsoever. We will almost double this zero-pence band to cover £5,000 of saving income. One and a half million low-income savers of all ages will benefit. Two thirds of a million pensioners will be helped.

The £15,000 new ISA; the pensioner bond; people given access to their own pension pots; a right to impartial advice; the 10p rate for savers abolished to zero—the message from this Budget is this: you have earned it; you have saved it; and this Government are on your side. Whether you are on a low or middle income, whether you are saving for your home, for your family or for your retirement, we are backing a Britain that saves. The central mission of this Government is to deliver economic security. We are not promising quick fixes. Instead we are taking the next steps in our long-term plan. The forecasts I have presented show growth up; jobs up; and the deficit down. Now we are securing Britain’s economic future with: manufacturing promoted; working rewarded; saving supported. With the help of the British people, we are turning our country around. We are building a resilient economy. This is a Budget for the makers, the doers, and the savers, and I commend it to the House.

[Hon. Members]

More!

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. If you like the Budget, I need to put the Question.

Provisional Collection of Taxes

Motion made, and Question put forthwith (Standing Order No. 51(2)),

That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motions:—

Pension schemes (registration of pension schemes etc) (Motion No. 29.)

Alcoholic liquor duties (rates) (Motion No. 45.)

Tobacco products duty (rates) (Motion No. 46.)

Stamp duty land tax (threshold for higher rate applying to certain transactions) (Motion No. 73.)—(Mr George Osborne.)

Question agreed to.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

I now call upon the Chancellor of the Exchequer to move the motion entitled “Amendment of the Law”. It is on this motion that the debate will take place today and on the succeeding days. The remaining motions will be put at the end of the Budget debate on Tuesday 25 March.

Budget Resolutions and Economic Situation

Wednesday 19th March 2014 Commons Chamber

Amendment of the Law

Motion made, and Question proposed,

That,—

(1) It is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance.

(2) This Resolution does not extend to the making of any amendment with respect to value added tax so as to provide—

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

(b) for refunding an amount of tax;

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

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

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

13:30

[Edward Miliband (Doncaster North) (Lab)]

The Chancellor spoke for nearly an hour, but he did not mention one central fact—[Interruption.]

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I think that the deputy Chief Whip knows better. We have not even got started. I hope that he will calm down.

[Edward Miliband]

The Chancellor spoke for nearly an hour, but he did not mention one central fact: the working people of Britain are worse off under the Tories. Living standards are down, month after month, year after year. In 2011, living standards, down; 2012, living standards, down; 2013, living standards, down. Since the election, working people’s living standards are £1,600 a year down. You are worse off under the Tories—[Interruption.]

[Mr Deputy Speaker]

Order. To be quite honest, I thought that the House was doing really well today. Courtesy was quite rightly shown to the Chancellor of the Exchequer. I expect the same courtesy to be shown to the Leader of the Opposition. I want to hear it, and your constituents want to hear it.

[Edward Miliband]

They do not want to talk about the falling living standards of people across this country, Mr Deputy Speaker.

The 2010 Tory manifesto promised an economy where people’s

“standard of living… rises steadily and sustainably”

but they have delivered exactly the opposite: standards of living falling sharply and steeply. Today the Chancellor simply reminded people of the gap between his rhetoric and the reality of people’s lives. Living standards have been falling for 44 out of 45 months under this Prime Minister, unmatched since records began. No amount of smoke and mirrors today can hide it. We already know the answer to the question that millions of people will be asking in 2015: “Are we better off now than we were five years ago?” The answer is no. They are worse off, much worse off—worse off under the Tories.

The Chancellor trumpeted the tax allowance today, but what he did not tell us is that it is the same old Tory trick. He did not tell us the rest of the story. He did not mention the 24 tax rises introduced since he became Chancellor. He forgot to mention that he put up VAT, taxed away child benefit, raised insurance tax and gave us the granny tax. It is a classic Tory con: give with one hand and take away far more with the other—same old Tories.

The Chancellor painted a picture of the country today that millions of people will simply not recognise. This is Cameron’s Britain 2014, with 350,000 people going to food banks, 400,000 disabled people paying the bedroom tax, 1 million more people paying 40p tax and 4.6 million families facing cuts to tax credits. But there is one group that is better off—much better off. We all know who they are: the Chancellor’s chums, the Prime Minister’s friends—[Interruption.] The Prime Minister rolls his eyes, because he does not want to talk about the millionaires’ tax cut. There was no mention of it in the Budget speech. They are the beneficiaries of this year’s millionaires’ tax cut.

If you are a City banker earning £5 million and feeling the squeeze, do not worry, because they feel your pain. This year that City banker was given a tax cut, and not just any tax cut. It is a tax cut worth £664 a day, £20,000 a month and more than £200,000 a year. So the Prime Minister chooses to afford a tax cut worth more than £200,000 a year for that banker, but he cannot afford a pay rise of £250 a year for a nurse. And these are the people who have the nerve to tell us that we are all in this together. It is Tory values and Tory choices—same old Tories. Of course, the leader of the Liberal Democrats is with them every step of the way. Day after day he claims that he does not support Tory policy, but day after day he votes for Tory policy.

Now, to listen to the Chancellor today, for a recovery that arrived three years later than he promised, he expects the country to be grateful. Back in 2010 he told us that by the end of 2014 the economy would have grown by nearly 12%. Today the figures show that it has been barely half that, and he wants the country to be grateful. Back in 2010 he said that the Government would clear the deficit in this Parliament, by 2014-15. Today he wants the country to be grateful because he says that he can do it by 2018-19. Three years ago he told us, in his 2011 Budget speech, that he would deliver an economy

“carried aloft by the march of the makers.”—[Official Report, 23 March 2011; Vol. 525, c. 966.]

But what has actually happened since then to the rebalancing he promised? Manufacturing output has fallen by 1.3%, construction output has fallen by 4.2% and infrastructure investment is down by 11.3%. Every time he comes to this House he promises a rebalancing, and every time he fails. The Chancellor talked about housing today, but what has he actually delivered? The Government have overseen the lowest level of house building since the 1920s and rents have risen twice as fast as wages.

At the heart of the argument we will have over the next 14 months is this question: whose recovery is it under the Tories? Under them, it is a recovery for the few, not the many. Bankers’ pay in London is rising five times faster than that of the average worker. This recovery is not working for working people whose living standards are falling. It is not working for the millions of women who see the gap between men and women’s pay rising. It is not working for the low-paid people promised by the Chancellor—[Interruption.]

[Mr Deputy Speaker]

Order. Mr Williamson, you are in danger of exploding, which would be good neither for you, nor for the Chamber. Come on. Let us listen.

[Edward Miliband]

They do not want to talk about the low-paid workers promised a £7 minimum wage by the Chancellor but given just 19p more an hour. Under this Government it is an economy of the privileged, by the privileged and for the privileged.

Instead of admitting the truth about what is happening in most people’s lives today, the Government want to tell them the opposite. They tell people that their wages are rising when they are falling, just like they tell people that their energy bills are falling when they are rising. They tell people that they are better off, but everyone knows the truth. They can change the shape of the pound—it does not matter if it is square, round or oval—but if you are £1,600 a year worse off, you are still £1,600 a year worse off. You are worse off under the Tories.

They cannot deliver because of what they believe. His global race is a race to the bottom. It means people being forced to do two or even three jobs to make ends meet, not knowing how many hours they will get from one week to the next, and with no idea what the future holds for their kids. Low wages, low skills, insecure work—that is how they think Britain succeeds. That is why they are not the solution to the cost of living crisis. They are the problem.

We needed a Budget today that would have made the long-term changes that our economy needs, in housing, banking and energy. But they cannot do it. They will not stand up to the vested interests. They will not tackle developers sitting on land, even though they cannot solve the housing crisis without that. They will not force the banks to improve competition even though small businesses say they need it. They will not stand up to the energy companies and freeze energy bills, even though the public support it. Same old Tories. We know what their long-term plan is: more tax cuts for the richest, while everyone else gets squeezed. [Interruption.]

[Mr Deputy Speaker]

Order. This is getting totally out of hand and we certainly do not want any more pointing. I am worrying about the danger to Anne Milton’s hearing; the way she is shouting is not good for her or the Chamber. I want to hear the rest of the speech in peace. I certainly do not want all the muttering and challenges that have been running along the Benches. I will take it more seriously if I have to get up next time.

[Edward Miliband]

We know what their long-term plan is: more tax cuts for the richest while everyone else gets squeezed. What does the Chancellor say about the people dragged into paying 40p tax? He says that they should be happy and that it is good news for them. So this is the new Osborne tax theory: if you are in the middle, paying 40p, you should be pleased to pay more, but if you are at the top, paying 50p, you should be helped to pay less. Same old Tories.

It is no wonder that even their own side think they are totally out of touch. Even now, after all the embarrassment of the millionaires’ tax cut, they will not rule out going further. Maybe today we can get the straight answer that we have not had so far. Will the Chancellor rule out a further tax cut for millionaires to 40p? Just nod your head if you will rule it out. Come on, come on. Just nod your head. Maybe the Prime Minister would like to. Just nod your head. [Interruption.]

[Mr Deputy Speaker]

Order. There may be an influence of the wolves and the pack running around. That can be used in the zoo, but it will not be used in this Chamber.

[Edward Miliband]

It is very simple—all the Prime Minister needs to do is to nod his head if he is going to rule out cutting the 45p tax to 40p in the next Parliament. Just nod your head. Come on. There we have it. There they go again—they will not rule it out. Does that not say it all about them? They really do believe that the way you make the rich work harder is to make them richer and the way you make everyone else work harder is by making them poorer.

Just as they paint a picture of the country that working people will not recognise, so, too, themselves. The Prime Minister is an expert in rebranding. Remember the huskies, the bike and the tree? That was before they said, “Cut the green crap.” What is the latest rebranding from the Bullingdon club? It is beyond parody. What do this lot now call themselves? [Interruption.]

[Mr Deputy Speaker]

Order. Mr Williamson, I will not tell you again. I am sure your roast beef is ready for you—you might be better off eating a little raw meat than giving us the noise that we are getting in here.

[Edward Miliband]

What do this lot now call themselves? They call themselves the workers’ party. Who is writing the manifesto for this workers’ party? We have a helpful answer from one Conservative MP:

“There are six people writing the manifesto…five…went to Eton”.

By my count, more Etonians are writing the manifesto than there are women in the Cabinet—no girls allowed. This week, we have heard it right from the top. Here is what the Prime Minister’s former best friend—[Interruption.] They do not like to hear it do they, Mr Deputy Speaker? Here is what his best friend—[Interruption.]

[Mr Deputy Speaker]

Order. If Members wish to go outside and show people, they can do so by all means. I certainly do not need you to hold up papers all the way through. Quite seriously, respect is due to the Leader of the Opposition the same way it was given to the Chancellor. I want to hear him; if you do not, there is the door—please leave.

[Edward Miliband]

Here is what the Prime Minister’s former best friend, his closest ally, the Education Secretary, had to say about the Prime Minister’s inner circle. He said it was ridiculous, preposterous, unlike anywhere else in the world. They know they are in trouble when even the Education Secretary calls them a bunch of out-of-touch elitists. Where is the Education Secretary? I think he has been banished. Ah—he is hiding! He has been consigned to the naughty step by the Prime Minister. It is time we listened to Baroness Warsi and took the whole Eton mess out of Downing street.

We do not need a party for the privileged few; we need a party for the many. That is why a Labour Government will freeze energy bills, guarantee jobs for unemployed young people, cut business rates, reform the banks, get 200,000 homes built a year and abolish the bedroom tax. This is the Budget that confirms that people are worse off under the Tories—a worse-off Budget from an out-of-touch Chancellor. Britain can do better than them. Britain needs a Labour Government.

[Several hon. Members]

rose—

[Mr Deputy Speaker]

Order. Before I bring in the next speaker, I announce an eight-minute limit.

13:46

[Mr Andrew Tyrie (Chichester) (Con)]

It is my job to take away the political punchbowl, just as the party was just getting going. What we have just heard is the most difficult speech that anybody has to make in the House of Commons, and I am sure we will all read it with interest.

First, I should like to say a few words in a personal capacity about what has been announced on savings. They look extremely interesting and long-term reforms. For a start, the ISA reform is resonant of PEPs; that goes right back to the beginning, as those introduced the savings allowance. It was a tremendous idea. I am really pleased that the cash and equity ISAs have been merged and that we have raised the cap. The Treasury Committee will have to look at the provisions. I hope I will not have to come to the House and say that it has a different view.

Getting rid of the defined contribution rules that force people into annuities is a tremendous achievement—a very far-sighted announcement. The last Labour Government were also looking at that for a while, but they could not find a way to do it. This Chancellor has found a way to do it, and we should commend him for that.

Before I say a few words about some of the other measures in the light of past Treasury Committee recommendations, I should like to say a few personal words about the deficit. When the Chancellor set out his initial Budget judgment on behalf of the new coalition, many thought that the coalition would collapse—that the political strains of implementing spending cuts would be too great and shake the coalition Government apart. Well, the opposite has been the case. The coalition has stuck with it and the deficit reduction plan has become the cement of the coalition.

Both sides deserve credit for the fact that the coalition is still going and dealing with the deficit. Particular credit goes to the Liberal Democrats. If I may say so—I hope they do not mind—I never thought they had it in ’em. But they have, and they have stuck with it.

[Mr John Redwood (Wokingham) (Con)]

Will my hon. Friend give way?

[Mr Tyrie]

May I make a bit of progress?

The deficit is down from the stratospherically high figure of 11% of gross domestic product to just below 7%, and next year it is forecast to fall to 5%, as we have just heard announced by the Office for Budget Responsibility. The consolidation is already significant. It has been achieved despite a massive external shock which was not built into the forecast four years ago and which I do not think the Chancellor mentioned—the eurozone crisis and the economic stagnation in our largest export markets. It was primarily that crisis that forced the deficit reduction plan to fall behind schedule. The key question for the Government a couple of years ago was whether to relax fiscal policy sharply in response to the almost 4% loss of forecast GDP, most of which was a consequence of the eurozone crisis.

Rightly, in my view, the Government showed considerable flexibility within the overall framework, in two important ways. First, they authorised the Bank of England broadly to double the quantitative easing programme; and secondly, equally importantly, the so-called economic stabilisers—the falls in tax receipts and rises in public expenditure that come with lower growth—were allowed to kick in.

To give an idea of the importance of the stabilisers and QE on policy, it is worth reminding ourselves of the numbers. Since the election, an additional £175 billion has been put into the economy through QE and £140 billion has been put in through the automatic stabilisers. The latter figure is based on Institute for Fiscal Studies estimates; no one knows exactly, but it is of that order of magnitude. These are very large numbers. That showed flexibility by the Government.

[Mr Redwood]

Does my hon. Friend agree that the Government’s flexibility included putting public spending up every year in cash terms over the period and relying on higher tax receipts to get the deficit down, which is how they maintained political agreement to the policy?

[Mr Tyrie]

I do not know about the political agreement point, but of course the effects of the stabilisers operate on both the tax and the spending sides. I think the Government were right to do what they did.

The Government have also been right to see off calls fundamentally to alter fiscal policy by sharply relaxing deficit reduction and increasing public spending. One of the main reasons it was important that they did not listen to those calls is that credibility in fiscal policy is hard won. It is built up over time—over many years—and it can easily be squandered. The Government resisted that temptation.

I will say a few words about the historical context. Looking to the 1930s, when stagnation set in and the agony was prolonged, partly because automatic stabilisers were suppressed and partly because far from engaging in QE, the then coalition Government did exactly the opposite: they lengthened the maturity of the debt and sucked money out of the economy. That is why the 1930s were so painful.

Now that we have a recovery, some are complaining that it is not the one we ordered. They complain that the recovery is consumer-led or uneven across sectors, regions and income groups. Well, of course it is. All recoveries of any value trigger a reallocation of resources, and therefore all recoveries change the shape of the economy. A recovery rarely takes root where the jobs were lost or the firms failed; it was ever thus and it will be the same this time. As the Chancellor stressed in his speech, jobs are being created at a record rate, but we cannot expect those jobs to be in exactly the same places as the jobs lost in the downswing. I am confident that, as in all previous recoveries, if we can sustain this recovery—and even if it is uneven, as it will be—it will, in time, deepen and spread through the whole economy. The figures for previous upswings support that.

The crucial question now, though, will be whether we can sustain the deficit reduction plan. A threat to deficit reduction will come from siren voices who say, “With the recovery under way, we can go back to spending money we haven’t got.” We are already hearing that. We need to remind ourselves that we are still spending about £7 for every £6 we collect in tax. It is true that we are in better shape, but with a deficit of about 6.6% of GDP, as the Chancellor announced today, we will remain vulnerable to economic shocks unless we do more to tackle it.

Another risk to deficit reduction is one of simple arithmetic caused by ring-fencing—something that the Treasury Committee has flagged up on several occasions. It will become increasingly difficult to find cuts to an ever-shrinking share of non-ring-fenced departmental spending. In other words, with ring-fencing of nearly half departmental expenditure, finding these savings will get tougher year by year. The Chancellor has argued, rightly, that polling evidence shows that that ring-fencing reflects public preferences. I think that is true for health and education, but it is not supported in the area of overseas aid. Spending on aid has risen by over a third in real terms and will rise even more because it is linked to GDP. Politics always points to ever-more ring-fencing; economics to less. Eventually, ring-fencing will have to be revisited, however difficult it is for all political parties.

Perhaps I should say a little about the risks—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order.

13:56

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

It is a pleasure to follow the hon. Member for Chichester (Mr Tyrie) in this debate. I acknowledge the work that he and his Select Committee do on behalf of us all.

Some of the measures in today’s Budget will be welcome in the north-east of England, including the emphasis on manufacturing, the apprenticeships scheme, and the extension of the capital tax regime in enterprise zones. It would not be fair to say that the new leader of the worker’s party does not understand us; the statement on bingo duty shows that he has got to the very heart of our concerns. In my short contribution, I would like to address a number of the structural questions that form the context of today’s Budget, both nationally and internationally.

Income disparity in the United Kingdom has become starker over the past 25 years, with the growth of a class of people the noble Lord Lamont used to describe as the “internationally mobile”. In 1978-79, the top 1% paid 11% of all income tax, while in 2012-13 they paid 24%. The Chancellor made much of this in his address, saying that it proved that the wealthy were making their contribution. However, it is happening not because the very rich are being taxed more but because the top 1% of today are much richer than they were 30 years ago. They are also much richer relative to the rest of the population. For the rest of the population, real wages growth has steadily declined from 2.9% in the 1970s and ’80s to 1.5% in the 1990s, with a decline of 2.2% so far this decade. Of course, regular below-inflation pay rises in the public sector have a cumulative effect, and that is why such a policy cannot endure indefinitely. I was disappointed to hear what the Chancellor had to say about that today.

It is a fundamental truth that the gap between the richest and the poorest, in income terms, has increased substantially over the past 40 years. In 1979, the gap in weekly earnings between the richest and poorest 5% was £445; today it is £938. The richest 5% have seen weekly earnings increase by £531 since 1979, while the poorest 5% saw an increase of just £38. We are certainly not all in this together.

Our economy is largely a service-based economy. Services account for 79% of our economy and 83% of jobs. However, we should not forget the importance of manufacturing which, while accounting for 15% of the economy and only 8% of jobs, contributes a greater gross value added to the economy than financial services—£136 billion as against £115 billion. Manufacturing also accounts for over half of all our exports and three quarters of all research and development investment. While the UK economy remains at 1.4% below its pre-recession peak, manufacturing is at 10% below its 2008-09 peak. I am therefore not surprised that the Chancellor felt it necessary to pay some attention to that area.

As a country, we have a long-term productivity problem, which contributes to declining real wage growth and squeezes people’s living standards. Productivity fell by 0.3% on the previous quarter, following declines in 2012 and 2013. Despite improvements in the 1990s and the 2000s, the United Kingdom remained 10% behind the other G7 nations. The gap today is more marked, at 21%. The Government will say that they anticipate improvements as employers seek more from their work forces. I say we should be looking at some of the deeper structural problems that lead to poor productivity, such as education, skills development and training for both employees and employers.

For the north-east, these issues are of vital importance. Despite this morning’s welcome fall in unemployment of 2,000 people in the region and 38 in my constituency, we still have the highest unemployment rate of any United Kingdom region—9.5% compared with the national average of 7.2%. During recent months, the region has not seen consistent progress in reducing unemployment and it is still estimated that a further 60,000 private sector jobs are needed to make up for the gap with the other regions.

The shadow banking system, as a system operated through non-bank financial intermediaries and often beyond the scope of national regulations, requires much greater attention and understanding. The Financial Stability Board has estimated that the size of the shadow banking sector was €51 trillion in 2011, up from €21 trillion in 2002. That accounts for up to 30% of the total financial system, which is not properly scrutinised and, in my view, not even properly understood. Add a large amount of leverage into the equation and it is clear that the shadow banking system presents a clear risk to the global financial system. It was razor-thin capitalisation ratios held by financial institutions, created by unsustainable leverage, that contributed to the previous crash. The United Kingdom accounts for 12% of all shadow banking assets held through non-bank financial intermediaries, the third highest following the United States and the euro area.

There is a key question as to whether the state, or even nation states collectively, could once again step in to save financial institutions so soon after taking on the burden from 2008. Many financial institutions’ recorded asset values are close to, or even exceed, that of their host country’s GDP, including France, Belgium, Italy and Germany. The United Kingdom has one of the largest disparities, with the combined asset value of the Royal Bank of Scotland, Barclays and HSBC at 337% of UK GDP. That is a sobering thought.

Following the effect of the financial crisis, the combination of cuts in corporation tax and a weaker growth in taxable profits are contributing to what appears to be a longer-term decline in corporate revenues. Despite the United Kingdom historically receiving a higher proportion of revenues from corporate taxes than comparable countries, the Institute for Fiscal Studies confirms that the UK is seeing a downward trend in corporate tax revenues, which is likely to continue for the best part of the decade.

Corporate tax receipts will be at their lowest share of revenue by 2017-18—the level they were in the mid-1980s. Financial services receipts have declined from over 25% of corporate tax revenues before the crisis, to 11% in 2011-12. With corporate tax revenues declining and the rate being cut, there is concern over the extent of tax avoidance, evasion and non-payment by large corporations in the UK. Estimates of the losses vary. HMRC puts them at £35 billion, while Tax Research UK puts them at £70 billion. Whichever figure one takes, these are big figures.

There are remedies. The international dimension to these issues and the world trading environment is clear. Our country has an important role to play as part of the transnational attempts to deal with transnational offenders. The House should also play an enhanced role in scrutinising the progress that the Government are making on these great strategic issues. It is much to the credit of the Public Accounts Committee and the Treasury Committee that they have become two of the most influential Committees in the House, but we should look further and do more ourselves as a House.

14:05

[Mr Mark Hoban (Fareham) (Con)]

It is a pleasure to follow the right hon. Member for Newcastle upon Tyne East (Mr Brown). As someone who was born and brought up in the north-east, I too understand the deep-seated challenges that the region faces, and I hope that the emphasis in the Budget on rebuilding the manufacturing sector and investing in high levels of skills will make some progress towards tackling those problems.

The Chancellor is absolutely right to highlight the progress that has been made since we came to office in 2010, but also the further progress that we need to make. Our job is not done, and that is why the reforms announced by the Chancellor today, which refer to the need to strengthen the roles of the makers, the doers and the savers, are vital if we are to secure the future of our economy in a competitive world.

I want to highlight some of the progress that we have made. Not much has been said about the unemployment figures that have been published today. We have seen a fall in the unemployment numbers, according to both the claimant count and the labour force survey. We have also seen a big increase in the number of people in work. Record numbers of women are in work. Often the Opposition’s criticism is that these jobs are temporary or part time, but the reality is that employment increased by nearly 460,000 last year, and 430,000 of those jobs are full time. During the last year, we have seen a contraction in the number of temporary jobs in the economy, and therefore a significant increase in the number of permanent jobs in the economy.

[David Rutley (Macclesfield) (Con)]

It is appropriate to recognise the important work that my hon. Friend made as a Minister in helping to move this agenda forward, which was a real contribution. On the important point that he has raised, does he recognise that there is also an increase in the number of full-time self-employed people, who have made a conscious decision that they want to have a real say in the future of their own employment?

[Mr Hoban]

My hon. Friend is absolutely right. The number of people who want to take control over their own lives and employment, and who want the security that comes from self-employment, is significant, and the number of schemes that we have introduced to help young people find self-employment as a route out of poverty and unemployment have been a huge benefit to those who want to set up their own businesses.

The dynamism that we have seen in the private sector, which has led to this increase in employment, has been coupled with welfare reform—a key part of our long-term economic plan. Welfare reform has sharpened the incentive to work, and we expect more of those who are out of work, too. We have brought forward the point when we work with lone parents before their youngest child starts school, so that they are better prepared to start work rather than remain on benefit. For far too long, people who have been out of work through illness have been written off by the system and expected to live on benefits for the rest of their working life. We have been working with them to ensure that they get into employment so that they can look after themselves and their families, and achieve the dignity that we so often take for granted.

The recovery in employment is a product of a strong and dynamic private sector. I welcome the measures that the Chancellor has announced today to encourage business investment and to double the annual investment allowance to £500,000. That will encourage businesses in my constituency that are strong, growing, dynamic manufacturing businesses to invest more in capital equipment. They are aided by the reduction in corporation tax. We should not forget the importance that that has in sending a signal to businesses overseas that the UK is open for business and a place where they should do business. The reduction in corporation tax is mirrored by measures around the employment allowance and scrapping national insurance for young workers under the age of 21. These tax changes, along with cuts to red tape, the investment in skills and the reform of training, are part of our long-term plan to sustain the economy and job creation.

I want to spend a few minutes on the savings measures announced in the Budget. Since they took office, this Government have made radical reforms to pensions and savings. They ended compulsory annuitisation and we are seeing the successful roll-out of auto-enrolment, which will give many people their first chance to build up a pension pot for their retirement. In the next Parliament, we will be launching a single-tier pension, which will mean that people will retire on a pension above the level of means-tested benefits. We have seen the launch of the Money Advice Service and strengthened consumer protection through greater powers for the Financial Conduct Authority. They are important steps that will help reform the savings landscape, and as the Chancellor said they also create a fresh platform for radical reform of pension savings.

When compulsory annuitisation was scrapped, people could take full advantage of the flexibility of income drawdown products only if they could demonstrate that they would not be entitled to means-tested benefits. That meant they had to have a guaranteed income of £20,000 a year. That of course predated the introduction of a single-tier pension, and the limit was set at an amount that ensured that people would not fall back on those means-tested benefits. Now that the single-tier pension is in place, it is right to reduce that amount to £12,000 this year.

We also know that for many consumers it is difficult to shop around to buy an annuity. They are bewildered by the choice in the market, and annuities are often the only product that many of them can buy. Recent surveys have shown just how badly off consumers are as a consequence of not shopping around. I think that the Chancellor’s announcement today about the simplification of the way people can use their defined contribution pension pot will radically transform the insurance and savings market. It will force insurance companies to demonstrate that their products are good value, and create room for innovation for others to come up with products that will help people maximise their income in retirement.

[George Freeman (Mid Norfolk) (Con)]

Does my hon. Friend agree that the historic reforms announced today on the pensioner bond, the tax simplification for annuities and the scrapping of the 10p rate will begin the process of rebuilding a savings culture in this country? We last did that in the 1980s, but it was shamelessly attacked by the former Prime Minister through a series of stealth taxes on savings and pensions.

[Mr Hoban]

My hon. Friend is absolutely right. I think this should be seen as the first stage in a series of reforms, because as the Chancellor also said in his statement, the Office for Budget Responsibility predicts that the savings ratio will continue to fall. As well as ensuring that we can provide a better deal for those in retirement, a better way for them to spend their pension pot and encouragement for them to build up more through individual savings accounts, we need to do more. I will come back to that in a moment.

These are radical reforms. I welcome another part of the package that goes hand in hand with the increased flexibility. The challenge that many pensioners face is finding advice and someone to help them through complex decisions about what they should do in retirement. Recent surveys have shown just what a bad job some of the comparison websites do for people trying to buy an annuity.

The right to advice is an important part of the package of reform, but I suggest to those on the Treasury Bench that we need to go further. The auto-enrolment savings system assumes that people do not think too hard about saving but save automatically. We then expect them at the point of retirement to engage in saving. We need to make sure that there is more advice and guidance available before they retire, to help them think about what age they want to retire at and what sort of income they want to retire on. I think that a key part of the next stage of reform should be to take that right to advice and see how we can provide better advice for people in the run-up to retirement in order to help them provide more for their retirement.

[Mr Redwood]

Is there not also a very cruel dilemma in public policy, in that savers want a better rate of interest but we need low interest rates to promote economic growth and to service the Government debt? There is a trade-off, and that is why tax breaks are particularly welcome at a time of low interest rates.

[Mr Hoban]

Absolutely. My right hon. Friend provides me with the opportunity to praise the Chancellor for introducing the pensioner bond. Those higher rates of interest will provide not only an attractive way of enabling people to save, but some support to the Treasury.

My hon. Friend the Member for Mid Norfolk (George Freeman) made a point about the savings culture. We must recognise that we need to help people on low incomes to improve their savings, too. Although the minimum contributions under auto-enrolment help people get on the savings ladder, they are not high enough to provide them with a reasonable replacement income in retirement that is proportionate to their income in work. Those higher up the income scale tend to do better. Not only do they qualify for higher tax relief, but their pension contribution rates need to be higher, too. They also tend to have additional sources of income and savings in retirement.

I encourage my right hon. Friend the Chancellor to look carefully at this area. I welcome the fact that we have increased personal allowances for those on low incomes. In a constituency like mine, where the average wage is £24,000 a year, increases to the personal allowance are valuable. However, as well as helping the low paid while they are in work, we should think about how we help them prepare for retirement. That would help provide a rounded package of measures to help people build up savings for their retirement and then, once they are in retirement, think about how they will get best value for money from those savings.

In conclusion, it is not possible simply to repair 13 years of damage in just a few years of this first term of Government. The problems we inherited were deep-seated and challenging: an economy that was unbalanced—it was too dependent on the south and on financial services—and a Government addicted to spending, taxing and borrowing. Tackling those problems against the backdrop of economic uncertainty abroad was not easy. Plenty of commentators, including from the Labour party, said that it could not be done. They prophesised huge increases in unemployment as we cut back the public sector, and they said we were cutting too far and too fast.

They have been proved wrong: the economy is recovering, growth in the UK is expected to outstrip that of our main competitors and more people are in work than ever before. Now is not the time for complacency. We need to continue with our reforms and drive the recovery forward.

14:15

[Derek Twigg (Halton) (Lab)]

The Chancellor’s Budget demonstrated clearly just how out of touch this Government are with ordinary people. This Government stand only for the privileged few, not for the millions of people on middle or low incomes who are not feeling any recovery benefit, certainly not in their incomes and standard of living. The cost of living crisis continues, leaving people £1,600 a year worse off under this Tory-led coalition. Of course, from what we have heard today, the Chancellor does not care about that. He does not care that the standard of living has fallen for most people in this country.

The real story—not the story the Chancellor wants to tell—is that of constituencies like mine, where this Government have failed and where many people are struggling to pay their bills and have to choose whether to heat their homes or to eat, while bankers get big bonuses and the richest people earning more than £150,000 get a tax cut. I am pleased that Labour will reverse that cut. We should not forget the 24 Tory tax rises, with the VAT rise alone costing families with children an average of £1,350 over the past three years.

This Government are out of touch with the lives of ordinary working people. No. 10 is being run by old Etonians and a public school cabal. They are not in touch with the lives of people in this country. The Government have never stood up to the energy companies. My party is absolutely right to pledge to freeze energy bills until 2017 and reform the energy market to stop the customer being ripped off. Today’s response to the problem of energy bills was pitiful. I shall return to that issue and the industry shortly.

The real story is that of hundreds of my constituents having to rely on food banks as their source of food on a weekly basis. The number of users has grown massively since this Government came into being. The story is also about many in my constituency having to use payday lenders: Halton has the third highest concentration of payday lenders in the UK. Loan sharks have also been a plague in my constituency, preying on poor and vulnerable people on a regular basis.

The story is also one of still high unemployment in Halton, which has one of the highest levels of long-term youth unemployment in England. My surgery is visited regularly by individual claimants and by the families and parents of individual young people who are desperate for help to find their youngsters some work because they cannot get a job. That is why I support our compulsory jobs guarantee, paid for by a tax on bank bonuses.

Under this Government, despite what the hon. Member for Fareham (Mr Hoban) has said, many of the jobs that have become available are part time and low paid, and many are on zero-hours contracts. One of the things that people want is continuity of employment, but one of the big problems under this Government is that people cannot rely on having a job for a very long time, so they cannot plan their income or expenditure properly or save up to buy a house or do things that most families do. It is just not possible with the type of employment available today.

I have been particularly vocal in this House about support for small and medium-sized enterprises, which I believe are the lifeblood of our future economic growth. Many are still finding it a struggle to get money from the banks, but the Government have not done a lot about it. I support my party’s proposal to cut business rates for small firms.

The Chancellor mentioned support for the energy-intensive manufacturing industry. To date, this has been a major failure. I have been lobbied rigorously by companies in my constituency about the Government’s failure, and I have also lobbied the Government regularly. I will look at the detail of what the Government have announced today, but the fact is that until today they have failed this industry. The chemical industry is a particularly important one in my constituency, providing many people with well-paid jobs. The Government need to do more.

The Chancellor referred to housing. Of course we all want people to be able to afford to buy a house if they want to or to have access to social housing, but the recovery is relying heavily on housing—there is a housing boom—and on lending. That is a real concern, which was mentioned today by the Governor of the Bank of England in, I think, the Financial Times. The issue is that the boom cannot be unsustainable, so we have to be very careful. I am really concerned about the unsustainability of the recovery. We can and should of course help more people to get on the housing ladder, but a housing boom will make that even more difficult, particularly for young first-time buyers.

What are the Government doing about social housing? Many constituents come to see me because they need access to social housing, but there is a real shortage. The Government do not have any real proposals to get people social housing, which is what people in my constituency want. That important matter was omitted from the Budget .

The Chancellor’s policy of cuts is destroying local government. In Halton, total revenue grant funding has been cut by £28 million, or 28%, since 2010, and its capital grant funding has been cut by £14 million. Local government is suffering badly, and that is affecting services for local people.

The Chancellor commented on the Mersey gateway, a project which started under Labour and which has received all-party support. Some colleagues and I have had a meeting with him on a cross-party basis, but he did not say what he would do to ensure that people who live in Halton—they currently do not have to pay to use their local road across the existing bridge, the A533—will not have to pay a toll in future. The plan is for them to pay a toll on the existing bridge and the new one. The Chancellor has said that he will look at that and see what he can do, but I have not heard back from him, even though he referred to the Mersey gateway today. Given that he announced that the A14 in affluent Cambridgeshire will not be tolled, it is wrong for people who currently use their local road for free in Halton—the 27th most deprived borough in the country—to have to pay for it in future. I do not know of any other such example in this country.

The Chancellor said little about the NHS, but there has of course been a real-terms cut. What about the number of hospital trusts that are running a deficit? Even my own has a £2.9 million deficit. He said nothing about that, although the NHS is in crisis and £3 billion has been wasted on a reorganisation.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

In view of the income given to earners on higher tax rates, does my hon. Friend not think it is absolutely shocking that nurses have been devastated by the fact that many will not receive the 1% pay rise?

[Derek Twigg]

My hon. Friend makes a very important point. Whose side are this Government on? They are on the side of the rich, not the people who actually run our health service—the nurses, care workers and so on—

[Andrea Leadsom (South Northamptonshire) (Con)]

Will the hon. Gentleman give way?

[Derek Twigg]

I will not, if the hon. Lady does not mind, because I have given way once and I know that other hon. Members want to speak.

The Government are not on the side of the nurses, as nurses know and understand; they are returning to true form in cutting the NHS, as they did the last time they were in power, while doing nothing about the deficits that hospitals in this country have to carry as a result of their policies and their poor funding of our hospital services.

I want to turn to the important area of defence, which rarely gets mentioned during Budget debates. Under all Governments, the Treasury has always had a vital role in the amount of money provided for defence, but the whole of our defence policy now seems to be run by the Treasury, which is not taking account of our present and future security needs. The massive cuts in the Army, the Navy and the Air Force will create real problems in future years, and we will come to regret those cuts. This Government’s defence policy is all over the place, and we heard nothing today about what they are doing to fund defence in future. That is storing up serious problems for this country’s influence in the world and its ability to respond to threats, such as what is happening in Ukraine and Russia.

At my surgery, I see many people on benefits who deserve and need them but who are now waiting even for their personal independence payment to be assessed—it is taking months and months. The system is in absolute chaos, with people being kicked off benefits for trivial reasons. We are also seeing the impact of the bedroom tax. What is happening to some of the most vulnerable low-income people in this country is an absolute scandal. It is okay for the Chancellor to say that there should be a benefits cap, but we do not know what it actually means for those deserving people who need benefits to be able to survive and continue with their lives. We do not know the details of what it will mean, and the Chancellor said nothing about it today.

The Government are clearly out of touch with ordinary people. They are run by a bunch of public schoolboys, and their first priority is to look after the rich and to ignore the rest.

14:19

[Ian Swales (Redcar) (LD)]

This Budget represents another step in dealing with the economic mess left by the Labour party. Everybody at home knows that if they live on borrowings and max out their credit card, they will one day have to cut their standard of living. It is completely disingenuous of the Labour party to pretend otherwise. The Liberal Democrats want a stronger economy and a fairer society. We are proud that our No. 1 manifesto commitment to cut income tax for 25 million people by raising the threshold to £10,000 will be met next month, and that the Chancellor has gone further in this Budget by raising the figure to £10,500.

We hear a lot from the Opposition about tax cuts for millionaires, and they are now complaining about tax rises. Since April 2010, millionaires have paid higher taxes on their income, on their capital gains, on their pension contributions, on their spending and on their private jets, and they have had to engage in less tax avoidance. We know that the Chancellor in the previous Labour Government, the right hon. Member for Edinburgh South West (Mr Darling), put the higher rate of income tax up from 40%—they kept it at that level throughout their time—to 50% on 6 April 2010. That was an important day for two reasons: first, the higher rate went up to 50%; and secondly, Parliament was dissolved. Labour Members were on the Government Benches only for a few hours while the top rate was 50%, so we should not take any lessons from them.

All the Budget documents show that the rich are paying a lot more. [Interruption.] The hon. Member for Wrexham (Ian Lucas) shouts from a sedentary position about VAT, but VAT is on spending, and I have news for him: millionaires spend the most, and they therefore pay the most VAT.

[Ian Lucas (Wrexham) (Lab)]

When the hon. Gentleman sought the votes of the people of Redcar, he assured them that he would not support a rise in VAT, so why did he do so when he went in with the Tories?

[Ian Swales]

When I stood in Redcar, I had not seen the note left by the then Chief Secretary to the Treasury, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), saying that there was no money left.

I am pleased that the Government will give further support to apprenticeships. There have been 1.5 million of them in the country, with more than 4,000 in my constituency, and I welcome today’s news about an extra 100,000 apprenticeships. I welcome the cut in beer duty, and I pay tribute to my hon.—he ought to be right hon. one day—Friend the Member for Leeds North West (Greg Mulholland) for his relentless campaigning on the issue. I also welcome the cut in fuel duty, which will help hard-working people all over the country. We would certainly have paid a lot more under the Labour party’s plans.

[Lorely Burt (Solihull) (LD)]

Will my hon. Friend also welcome the scrapping of the duty escalator for wine? Certain Liberal Democrat Members like a glass of wine, but that is beside the point. The wine industry has suffered, but it will be much better off under the new move.

[Ian Swales]

I am well aware that my hon. Friend enjoys a glass of wine. It is clearly good news for the wine industry that taxes will be frozen.

Players at Beacon Bingo in Redcar—they had to endure my calling the numbers a few weeks ago as part of the Boost Bingo campaign—will be delighted not only that their campaign to cut the duty from 20% to 15% has been successful, but that the Chancellor has gone further by cutting it to 10%. Bingo is a harmless social form of gambling and, from having talked to many players that day, it seems to me exactly the kind of thing that we should not penalise too heavily, as opposed to the high-stakes fixed odds betting terminals visited on us by the Labour party. I totally support the rise in taxes on those machines, of which we would like to see less.

I have a race course in my constituency and have campaigned in this House for the past three years for offshore bookmakers to be charged the betting levy. I am delighted to see that that is in today’s Budget. It will be a huge boost to the racing industry.

Other speakers have mentioned the measures on savings and annuities. I will not say much on those, except that the measures on annuities will be warmly welcomed. I receive a lot of correspondence from constituents who feel locked into products that have a very poor return. In some cases, they are not able to draw down the amounts that they want. Loosening all that is the right thing to do. As the Chancellor said, people should be able to access their own money. I welcome the safeguards in the small print to avoid people spending all their money and becoming dependent on the state. There is a threshold in the detail.

There is a lot of manufacturing in my constituency. We must remember that manufacturing supports many of the service industries. If one looks at the classification of industries, one will see that industries such as logistics exist mainly because of manufacturing. Those who say that the manufacturing industry is only a small part of the economy forget all the service industries that depend on it. The previous Government had a shameful record on manufacturing. It halved as a proportion of the economy and my constituency felt that particularly badly. I am pleased to see the growth that is happening.

I am pleased about the measures on energy-intensive industries. My constituency has not only a steel industry, but a large chemical complex. The employers will welcome those moves. I also welcome the moves on combined heat and power plants, which are relevant to my constituency. All those measures will help Britain to be more competitive and they are certainly needed.

We worry about the amount of money that sits on companies’ balance sheets and is not invested, so we should all welcome the increase in capital allowances. They were raised from £25,000 two years ago to £250,000 and are now being increased to £500,000. That is a huge incentive for people to invest in new equipment, plant and facilities. I have a special reason for welcoming the £60 million for new technology to support carbon capture, which is mentioned in the Red Book, because it is extremely relevant to my constituency.

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

The Lib Dems used to pride themselves on their green policies, so I wonder whether the hon. Gentleman is equally happy that the Government are hell-bent on getting every last drop of oil out of the ground, as the Chancellor said? While I am at it, does he agree that, although the £140 million for repairing flood defences is welcome, it is well short of the £500 million that we need?

[Ian Swales]

I am disappointed that, having given way to the hon. Lady, she took quite a lot of my time. I will see her outside the Chamber with the answers to those questions.

There are many further measures in the Red Book on corporate tax avoidance, about which the Chancellor did not go into detail. It is good to see that further steps are being taken on electronic services and the shifting of profits. There is more to do, but there are some good things in the Red Book about that.

I was interested to hear what the Labour party had to say. I must say that I was hoping for a lot more. We heard about the bankers bonus tax—the gift that keeps on giving. I was thinking about this the other day. If the Labour party wants to put income tax up to 50% and to tax bank bonuses at 50%, I have news for it: 50 plus 50 is 100. How many banks will keep on paying bonuses if the entire amount goes to a future Labour Government? They will find different ways to reward their staff, as they already are doing.

That policy does not hang together at all, and neither does the electricity price freeze, which is criticised by everybody, from large energy companies down to organisations such as uSwitch and Age Concern, for being completely impractical. I was at an event last week about the price freeze, where even a Labour shadow Energy Minister failed to defend it. I think that we will hear the end of that one quite soon.

The hon. Member for Halton (Derek Twigg) spoke about social housing, but made no apology for the fall of 421,000 homes under the Labour Government—a truly shocking record.

The right hon. Member for Newcastle upon Tyne East (Mr Brown), who is not in his place, made some powerful points about inequality. I was listening very carefully. I do not necessarily understand how it is calculated, but the Red Book states that

“inequality is at its lowest level since 1986.”

That is because we are taxing people with the broadest shoulders, despite what the Opposition claim. I know that we have a long way to go, particularly in my area in the north-east, which has stubbornly high unemployment and many social issues.

I welcome the child care credit and, in particular, the 85% for people who are on universal credit. That will certainly help people get into work.

Overall, this is a Budget for a stronger economy and a fairer society, and I commend it to the House.

14:35

[Sammy Wilson (East Antrim) (DUP)]

I welcome the announcement that the Chancellor made about the growth figures. In my constituency in Northern Ireland, there has been a 19% fall in unemployment as a result of the increased growth over the past year. That means that 550 individuals are earning money who were not earning money this time last year. That is to be welcomed.

I do not want to take a partisan view of the Budget. Fortunately, we in Northern Ireland do not have to be involved in the competition between the Government parties and the Opposition party here. I want to look objectively at what was said in the Budget.

My first concern is about growth. The Chancellor gave the growth figures, but we must remember that the figures have been revised time and again. Even though it has the imprimatur of the Office for Budget Responsibility, one has to ask what that growth is predicated on and whether it is sustainable. The growth up until now has been determined by consumer expenditure. According to the figures in the Budget, consumer expenditure will not jump dramatically, but, compared with the last two years, we will see a 48-times jump in private investment and a three-times jump in exports. If all the measures that the Government have taken to improve investment, such as the reduction of corporation tax and the enhanced capital allowances that were announced last year, and all the measures that they have taken to improve exports have not worked in the past two years, on what is the Chancellor basing the massive jump in private investment and exports that he is predicting will sustain growth for the next year?

[Mr Brooks Newmark (Braintree) (Con)]

The hon. Gentleman makes a good point, but from a business man’s standpoint, the decision to invest is based on business confidence. When there is growth, they feel confident about investing in their businesses, which, in turn, creates jobs and more growth.

[Sammy Wilson]

I would accept that point if I had not heard Government Members saying for the past three years that businesses are now more confident because there is a firm hand at the helm. We have not seen that come through in the figures to date. That is my first concern. I want growth to be sustained. I want the Chancellor to succeed. It does not matter to me electorally whether he succeeds or fails, but it matters to my constituents.

My second point is about the distribution of growth. Most of the growth has been in the south-east of England. Regions such as Northern Ireland, where there has been growth of 0.3%, have not benefited.

[Mr Nigel Dodds (Belfast North) (DUP)]

My hon. Friend has picked up on a point that I was going to raise, which is the unevenness of growth across the UK. Northern Ireland has a relatively low level of growth, which is having an impact on jobs and investment. Given his expertise in, and experience of, Northern Ireland’s finances, I would be grateful if he indicated what more the Government could do to help regions such as Northern Ireland.

[Sammy Wilson]

I listened intently to the Chancellor, and I was pleased when he made the point that he wanted to ensure that growth occurred in all the regions of the United Kingdom. However, I was disappointed to listen to the rest of the speech, because I wanted to know what policies would be introduced to effect that more even distribution of growth. I welcome the setting up of the enterprise zone in Coleraine, but one has to bear in mind that that will just balance out the 350 jobs that have been lost in that town, where severe unemployment had already been caused by the closure of some companies. It is intended to balance out the impact that the central Government’s decisions have had on my constituents in Northern Ireland.

[Mr Redwood]

I would just like to correct the record. The forecast is for only a 4.7% increase in exports next year and an 8% increase in investment, which I think is achievable.

[Sammy Wilson]

The percentage growth in exports was 0.8% last year, and in the next year it is forecast to be 2.6%. By any calculation, that is more than a three times increase in the rate of growth. The Government have talked about the reduction in the cost of finance for exporters, but measures that were introduced in previous years did not have the intended effect. Of course, that is against the background of a strengthening pound, so there will be a difficulty there. On what is the Government’s optimism based? If it is on export and investment-led growth, past patterns do not show that happening.

My second point is about the Chancellor’s throwaway lines saying, “I am not in the job of easing up just because things are getting better”, and “We don’t want to spend more.” I am not asking the Government to spend more; I am asking them to spend differently and better. Of course we have to get the deficit under control, but what is the increase in that deficit at the moment? Of the percentage of our GDP that is debt, what is most of it made up of? It is made up of paying people to sit on their backsides doing nothing, instead of spending on investment in infrastructure projects, which would have a return. It would put people back to work, increase tax revenues and stimulate growth. We can examine the infrastructure projects in Northern Ireland, such as in tourism. For modest amounts of money, the Titanic signature project is now bringing in millions of pounds and half a million visitors a year, mostly from outside the state. There has also been the extension of the gas pipeline. Many Members have talked today about the cost of living, and one way of bringing fuel prices down is to give people alternatives. For modest public investment, we have been able to increase the coverage of gas pipelines in Northern Ireland, bringing people cheaper fuel and helping to bring down their cost of living.

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

Will the hon. Gentleman give way?

[Sammy Wilson]

I do not have much time; otherwise I would be happy to give way.

Help has been given to industry in Northern Ireland for research and development, machinery and so on. I welcome the increase in capital allowances. In fact, one thing that we suggested was that if corporation tax could not be devolved to Northern Ireland, capital allowances should be increased so that companies were more able to invest using that mechanism. Such measures could stimulate growth and add to the productive potential of the economy. That is not about spending more; it is about spending differently. If we are finding it difficult to get private investment in the economy, it can be pump-primed with public investment, which can have an important impact.

I welcome some of the specific spending proposals in the Budget, such as the extra spending on infrastructure, filling in potholes and so on, all of which has Barnett consequences. I hope that in spending money to fill in potholes, the Government will not find themselves having to look for money to fill the financial holes in this Budget in a couple of years.

I also welcome the changes to pensioners’ savings. They will not have an impact on all pensioners, because many pensioners in my constituency have never earned enough to accumulate huge savings. Nevertheless, those who have saved should be able to experience the rewards.

The Chancellor has made a lot of helping industries with their energy costs. It is one thing to make temporary changes and give big energy users temporary help, but it is another thing to continue the mad policy of increasing reliance on renewables, which have pushed up energy bills. Once the temporary measures are over, firms will still have to face that problem. This country will have to reconsider its energy policy. I welcome the fact that the Chancellor wants to improve the extraction of oil from the North sea, despite what the hon. Member for Brighton, Pavilion (Caroline Lucas) said, and frack gas, which is a natural resource that will give us cheap energy. If we stick to a policy of dear energy, we will pay the consequences.

14:46

[Mr Andrew Mitchell (Sutton Coldfield) (Con)]

It is a pleasure to follow the hon. Member for East Antrim (Sammy Wilson), who speaks with passion for his constituents. Towards the end of his speech, he focused on the changes that the Chancellor has made to savings policy today. Those are significant reforms. We will obviously need to have a look at the details of them, but I suspect that although this Budget will be remembered for many things, it will be remembered above all for those important reforms to savings.

Fair’s fair; the Chancellor deserves considerable credit for today’s Budget. The facts seem to me to speak for themselves. He set a course some time ago, and he has stuck to it. He has taken an immense amount of incoming fire from his detractors for many of the decisions that he has made in the past four years, but the United Kingdom is in a far better position today than most other countries. He deserves credit for his constancy and the decisions that he has made.

I want to pick up on a number of things that the Chancellor mentioned. First, it is a small point, but he mentioned that Minouche Shafik was returning to be a deputy governor of the Bank of England. She was my first permanent secretary at the Department for International Development, and it is a wonderful piece of good news that she is returning and that the Chancellor has managed to onshore her. Many of us were extremely sorry when she went off to the International Monetary Fund and will be glad that she is coming back to take up her new position.

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

The right hon. Gentleman pays tribute to the woman who, as I understand it, has been appointed to the Monetary Policy Committee. Does he agree that that appointment was purely on merit?

[Mr Mitchell]

I believe that Minouche Shafik is an absolutely outstanding public servant, and she has been appointed as a deputy governor of the Bank. I am sure the whole House will agree that it is an outstanding appointment.

The economic plan that has been introduced is right. We had to make those decisions, because the United Kingdom has racked up far too much debt. Siren voices effectively urge us to head back in the direction from which we have come, but it does not seem likely to me that the public will accept that. Today’s Budget enhances and underlines the difference between the Government and the Opposition, and in my view it will stand the test of time.

[Mr Redwood]

Has my right hon. Friend noticed that despite all the efforts to control the debt, which we need to do, debt interest will still be £60 billion next year, which is more than the education budget?

[Mr Mitchell]

My right hon. Friend is absolutely right, but can he imagine what it would be like today if the Opposition’s policies were being pursued?

I wish to make a point that the Chairman of the Treasury Committee, my hon. Friend the Member for Chichester (Mr Tyrie), will not agree with, although I thought his speech was excellent in every other respect. The Government deserve huge praise for sticking to their plans on international development. The House will be aware that as a result of the all-party support for that policy, countless lives have been saved. Hundreds of thousands of children are alive today in the horn of Africa who would not have been but for British leadership on the issue.

Through the House strongly supporting the Government’s policy to vaccinate, the British contribution means that we will vaccinate a child every two seconds in the poor world, and every two minutes it will save a child’s life from the effects of diseases that none of our children die from today. As a result of reforms introduced by the Government, such as building up governance structure and ensuring that poor countries have the benefit of effective taxation, independent media and so forth, we should all be incredibly proud of the success of that policy. I am enormously proud to have served in a Government who stuck to their promises to the poorest people in the world, and who did not seek to balance the books on the backs of the poorest, either in Britain or overseas. That is also hugely in British interests—this is not just soft-hearted altruism—because it is not only aid from Britain, but aid and development for the benefit of Britain. It enhances the security and stability of our generation and of future generations, and it builds on the prosperity that our generation enjoys, and that future generations will enjoy to a greater degree as a result of those successful international development policies.

I also believe that the Chancellor was right to raise the threshold at which tax becomes payable, and—at a time of great austerity—to target help on those who earn the least. Of course the 40% level bites much earlier than we intended, but the austerity we have faced was harder and deeper, and inevitably those with a little more have had to pay a little more in those circumstances. I am clear, however, that the 40% band needs to be raised as soon as we can, and the drag of people into that band should be reversed once the economy can withstand it.

[Mr Newmark]

Most importantly, does my right hon. Friend agree that raising the personal allowance from £10,000 to £10,500 will save up to 3 million individuals up to £800 extra a year, which is good news for their pockets?

[Mr Mitchell]

My hon. Friend, as always, is absolutely right, and bearing in mind the speech by the right hon. Member for Newcastle upon Tyne East (Mr Brown), it is important to remember that in 2010 the richest 1% in Britain paid a quarter of all income taxes. Today the richest 1% are paying a third, and everyone in the House would agree that under these circumstances, that is correct.

The focus on getting younger people in particular into work is enormously important, and the raised thresholds clearly provide some help to that group. Reducing and ending employer’s national insurance contributions for those under 21 was an important measure made last year that I strongly support, just as I support the emphasis from across the House on increasing the minimum wage. All those things are extremely important.

We have also seen other ways of improving the situation for those entering the world of work. Last year, 510,000 apprenticeships started, while in 2010 there were only 230,000. That is enormously important in the part of the world I represent in the west midlands. Money has also been announced for new locally generated policies in eight core cities in Britain, which is right. However, we still have 1 million people in this country—children who have left school or students who have left university—who are not in education, employment or training, and we need an unremitting attack on that. It is quite wrong that young people who have left school or university should find themselves doing anything other than earning or learning. Although we have seen a significant decrease in the JSA claimant count, unemployment—particularly among young people—remains far too high in the west midlands, and we must continue that unremitting attack.

My final point was touched on in an excellent speech by my hon. Friend the Member for Fareham (Mr Hoban) and concerns the changes that the Government are making to welfare. I believe there are aspects of those changes that Members across the House can, and should, support. Many right hon. and hon. Members will have seen “Benefits Street” on Channel 4, which I think did a huge service to public broadcasting. Benefits Street is six miles from my constituency of Sutton Coldfield as the crow flies, but light years away in most other respects. What that programme showed in connection with welfare was the effect over many years of a very non-interventionist policy. It was almost as if benefits were paid, and once paid the recipients were forgotten.

The Government deserve considerable credit for helping those who cannot help themselves—for example by maintaining disability benefits throughout the stage of austerity—while also ensuring that we give help to those who can work and should do so. It is tough, difficult and hard to re-craft welfare policy, but in that Channel 4 programme we saw why it is essential to tackle the issue.

In conclusion, I believe that the welfare reforms, aspects of which command support throughout the country, could be one of the coalition Government’s finest achievements during their term in office. I shall end where I started by saying that the Chancellor and his colleagues on the Treasury Bench deserve considerable credit for crafting this Budget, which tackles needs at this stage of the economic cycle. I have no doubt whatsoever that his own share price will be rising, and rightly so.

14:56

[Mr Tom Harris (Glasgow South) (Lab)]

May I say how glad I am that the hon. Member for Fareham (Mr Hoban) is still in his seat? I enjoyed his contribution and it had passed me by that he had left the Government and returned to the Back Benches—the curse of Harris strikes again; just about every Conservative Minister that I have any time for, like, or respect has somehow found their way back on to the Back Benches—[Interruption.] You’re welcome.

I begin by welcoming the good news not only in today’s Budget, but the wider economic news against which speeches are being made. Unemployment in my constituency has fallen to 4.8%—a total of 2,187 jobseeker’s allowance claimants—and it is important that Labour Members welcome good news when it arrives. It is good news for my constituents, and good news for the whole of Scotland and the UK that unemployment has taken such a large dip in the latest published figures, and we welcome that without a “but” at the end.

The Lib Dems are like a broken clock—they are right at least twice a day. [Interruption.] Yes, they are clearly keen to attend the debate; perhaps they scarpered when they saw me standing up. I know that raising the tax threshold to £10,500 is not a policy supported by those on the Labour Front Bench. That is a matter of some regret for me as it is a policy I have supported for some time, and fundamentally I think that the lowest paid should be taken out of tax altogether. One argument against raising the threshold is that it also benefits people higher up the income scale, but I support the policy not despite its tax-cutting effect on the better-off, but because of it. I do not think there is anything wrong with reducing the tax take of people further up the income scale, and I do not regard tax as an unalloyed good thing. I see tax as a necessary evil, and where we can reduce the tax burden, we should do so.

The Labour party introduced the national minimum wage—that is often forgotten in these enlightened days when we see the right hon. Member for Sutton Coldfield (Mr Mitchell), and even the Liberal Democrats, welcoming a big increase in the minimum wage. It is often forgotten that when it was introduced, only the Labour party supported it, and it was opposed by the Conservative party and the Liberal Democrats—[Interruption.] I wondered whether Scottish National party Members were going to say something, because there would be a riposte to any claims that the SNP supported the national minimum wage.

I believe that the national minimum wage must be entrenched in some way, and what better way of doing that than by instituting a change that means that someone who earns the minimum wage will not pay a penny in tax? That is the situation the Labour party should be pursuing, and such a policy would be welcomed throughout the country.

[Mr Mark Prisk (Hertford and Stortford) (Con)]

I was one of those who opposed the national minimum wage, and I was wrong. It was introduced sensibly and modestly by the last Labour Government, to my surprise. The challenge for us all, however, is that those on the edge of the labour market can be priced out if future Governments are too ambitious about where it stands. That is the fear about entrenching it. Does the hon. Gentleman respect that point?

[Mr Harris]

Yes. I absolutely believe that when the minimum wage was introduced, it was set at the right level. It disappointed a lot of people who wanted it to be higher. There will always be those who want the minimum wage increased beyond what the market can sustain. The hon. Gentleman is absolutely right: it has to be generous, but it has to be moderate so that we do not have the negative effect of losing workers.

But what about help for ordinary working families? I am loth to use some of the more overused phrases that we are encouraged to use like “cost of living crisis”—trademark patent pending—but the fact is there is such a crisis. If average wages in real terms have dropped by £1,600—and I have yet to hear any Minister saying that is not the case—that is something of a crisis if not for people in this House then certainly for families and workers in my constituency. Yet despite the high number of headline-grabbing announcements, many of which I would support, there is absolutely nothing in what the Chancellor said that will address this urgent issue that faces the whole nation.

[Mr Redwood]

The hon. Gentleman is right that there has been quite a big fall in real wages, but will he accept that the biggest part of the fall occurred in 2008-10?

[Mr Harris]

I am, as always, very grateful to the right hon. Gentleman for intervening as I was just about to get on to the events of 2008-09. I want to address the deficit, because so many Government Members have raised it in the House whenever they have got the chance in a way that I find completely disingenuous, not worthy of an adult debate and not related to what actually happened in 2008-09.

An observer from Mars who tuned into what the Chancellor said today might have come to the wrong conclusion that when the right hon. Gentleman was in opposition he somehow opposed the last Labour Government’s spending plans. That is not the case: right up to November 2008 the official Conservative party policy was to support our spending plans. That either means that the Conservatives believe the deficit was created in the 18 months from that point until the general election, which frankly none of us believes, or that they are now saying something that is completely the opposite of what they were saying in opposition. I remember sitting on those Government Benches—in a couple of years’ time I hope to be back there—and I do not recall any Conservative Member, or indeed Liberal Democrat Member, calling for an end to spending on their local schools, their local hospitals, their local roads. The fact is that the deficit was almost entirely caused not by profligate spending by the Labour Government, but by a disastrous fall in tax revenue caused by an international recession—the deepest any of us have seen in our lives. That is the truth of the matter.

Conservatives and Liberal Democrats—and I have to say especially Liberal Democrats, who seem to get more incensed about this than anyone, even though they said not a word about it in opposition—stand up and demand all this nonsense about apologies for the deficit and for mistakes that were made. Of course all Governments make mistakes, but let us be honest with the British public about how the deficit was created. It was not created because new schools were built. It was created because of a recession that put a lot of people out of work and that cut off revenue to the Treasury. That is why we are where we are. It is not because of Labour’s spending plans.

There are some items in this Budget that I welcome, but I fear it will be most notable not for the issues it addresses, but for those issues it needs to address and, sadly, ignores.

14:59

[Mr John Redwood (Wokingham) (Con)]

I would like to remind the House of my declaration of interests: I provide some advice on global economies and investments to an industrial company and an investment company.

I greatly welcome this Budget, because I think it is right that we need to do more to help the promotion of exports, industrial investment, the rebalancing of our economy and continuing the long process of getting the deficit under control. In our exchanges already I have highlighted the fact that debt interest will be higher than the education programme next year, despite the Government’s best endeavours, and that unless we carry on to make good and rapid progress to get the deficit down and eliminate it, that debt burden will build up and future Governments, whoever they may be, will find they are spending more and more money on debt interest and have less and less for the public services that our electorates expect us to provide.

I would like to clear up a common misunderstanding about how that is being done that I think has occurred because of the use of jargon and economists’ language in describing the process. The reduction in the deficit has been described as 80% by spending cuts and 20% by tax rises. That is true if the programme is successfully completed by 2018 and if we measure it as a percentage of GDP at that point, but that is not how most people think about how an excessive deficit is curbed. If we have a large deficit in our own accounts, we have either to find a way of earning more money or to make immediate cuts in the amount of cash that we spend. I think a lot of people outside the House think that, because we inherited a deficit of £160 billion, 80% by spending cuts meant £132 billion-worth of cash cuts in public spending. Of course it does not, and I am very glad that it does not, because that would have done huge damage to important public services.

What the Government have decided to do is limit the rate of increase in public spending and promote a more active economy so that tax revenues eventually catch up, and we are in that long process. The first three years of this Government saw very little growth in the economy, which delayed the reduction in the deficit because we did not get the surge in tax revenues we were hoping for. Now it looks as if there is better news, with faster growth coming through, and so the process can be completed, assuming the economy still recovers.

I had thought we might cut public spending in real terms in the first two or three years, but it appears from the latest figures that there was a small real increase in public spending. In the first three years, current public spending went up by more than inflation, and if we look at the impact on the economy as a whole, it gives the lie to all those who suggest too much was cut too soon, and that that reduced output and was the cause of the delay in growth. If we look at the attribution of growth and decline in activity and incomes, we see that the public sector made a small positive contribution to the economy in every one of the first three years of the coalition Government. I hope that reassures some of those on the Opposition Benches who felt too much was being cut and damage was being done. The good news is that it was not. There will have to be some reductions in some programmes in the years ahead in order to hit the targets, however, because although public spending will continue to rise in cash terms, there will need to be a little bit of a real reduction in the next Parliament; and because some of the programmes need to go up quite a lot—debt interest will go up quite a bit anyway—we will have to make reductions in other programmes, whoever is in office.

[Mr Newmark]

My right hon. Friend is making an excellent point. Does he agree that, notwithstanding the austerity he is talking about and the fact that more than 500,000 jobs were lost in the public sector, what is particularly remarkable about these tough times was that 1.7 million jobs were created in the private sector?

[Mr Redwood]

Yes, that was magnificent news and it shows that the private sector is remarkably resilient despite all that has been thrown at it. That is why we can now look forward to both better living standards and a better public sector: we need all those people to be in work and paying more tax in order to pay for those public services that are much-wanted by our constituents.

I would also like to deal with the argument from the Opposition, which I thought was put in a very exaggerated form by the Labour leader in his response to the Budget, in what was a rather partisan appearance which was out of sympathy with his new style at Prime Minister’s questions. I am not one to condemn partisan debate, as I think sometimes it livens the place up, but it was a very partisan speech by the Leader of the Opposition.

[Charlie Elphicke (Dover) (Con)]

It was a rant.

[Mr Redwood]

The Leader of the Opposition’s rant, as my hon. Friend says, had just one basic message: the wrong belief that the Conservatives want tax cuts for the rich and misery for everybody else. What we want is tax cuts for everyone, and what this and the previous Budget offer is tax cuts for everyone.

Let me explain how we have different types of tax cut for people at different levels of income. We take those on the lowest incomes out of tax altogether, so they get a genuine tax cut: they go from paying something to paying no income tax at all. The House is, I think, united on the wisdom of that. At the top end, we cut the rate, and what happens is that the rich and successful people actually pay more tax, not less. That seems to me to be magic, because then everybody is happy—or they should be. Only the very jealous should be miserable, because what we then have is the rich staying here, investing here, creating jobs here, creating more money here and paying more tax because the rate is lower. What is not to like about that proposition?

What is odd is that the Labour party in office, until the last couple of days, knew that and kept the top rate of tax below the level that we inherited and below the level we have now fixed. It is a bit rich that Labour is now complaining that we are light on the rich, given that our tax rates are collecting a lot more tax from the rich and are higher than the rates that Labour imposed. Indeed, we could collect even more tax from the rich if we brought the rates down a bit more, which I hope, come a Conservative Government, we might be able to do. Surely what we want is to maximise the revenue from such people, not to make a political point and drive them abroad, so that we have a society with less money, fewer jobs and less creativity.

I am pleased that the Chancellor made some moves on energy. We need a much bigger and stronger industrial recovery than we have generated so far. The first thing we need to do to have such a recovery is to ignore the advice of the Green MP, and to go for cheap energy. America is going for cheap energy, and it is re-industrialising very quickly. America is now super-competitive against companies in the European Union. A leading chemical major in Germany has recently said that it will put more of its investment abroad, outside the EU altogether, because, in the light of the energy crisis, the gas feed stock is uncompetitive. We need to find that gas and to get it out as quickly as possible. We need to match the United States’ shale revolution if we wish to save our high-energy-using industries and to re-industrialise and give some hope to the northern cities in particular, with their long tradition of industrial activity, because they need much cheaper energy.

We need to do more for savers, and I am delighted by an elaborate and interesting set of measures from the Chancellor on saving. Savers have had a miserable time after the collapse. Rightly, successive Governments and Governors of the Bank of England have kept interest rates on the floor, as they had to do, to try to stimulate activity and to prevent a worse collapse than we experienced in 2008, at the height of the crisis. That has been very bad news for savers. The tax changes will help savers, and the pensioner bond offer, if the rates are around the level we are now looking at, makes sense and would be a bit more attractive and something for pensioner savers to look forward to. I also welcome more flexibility for pensioners generally. Annuities are not good news at the moment, and if people can put that off or have a better choice, that may well be an excellent answer.

This Budget needs to be good for savers, for industry and for exports, and we are going in the right direction. It will help to promote a bit more growth, and only if we get a lot of growth will we get out of this debt bind.

15:13

[Stewart Hosie (Dundee East) (SNP)]

I start by welcoming a number of the measures that the Government announced, such as the increase in the revenue non-compliance budget, increased export funding and the further doubling of the annual investment allowance. If the Government carry on like this, we will be back to having an industrial buildings allowance policy, which should never have been scrapped in the first place. There is also the halving, at last, of bingo duty—my favourite cause. All these one-off measures are very sensible, could be implemented by any Government and ought to be welcomed by everybody.

However, that does not change this Government’s underlying direction of travel or the underlying shape of the economy as described to us in the Red Book. Scotland has suffered an 11% cut in the fiscal departmental expenditure limit, a 27% cut in capital and a real-terms 9.9% cut in the overall budget. The numbers announced today imply a further real-terms cut in the budget. I do not want to speak too much about Scotland, but it is important that we get on the record just how damaging this Government continue to be.

What the Budget speech and the Red Book tell us is that, by every measure the Chancellor has set for himself, he has failed. In his first Budget, he told us that in 2013-14 the current account deficit would be 2.3% of GDP, borrowing would be reduced to £60 billion and the net debt would be 70% of GDP. Today, he told us that for the same year, the current account deficit is higher, borrowing is actually at £95.6 billion and the net debt is around 75% of GDP.

Let me be generous: any Government can make a mistake for one year, so what about the big targets the Chancellor set for himself? They were: that debt would begin to fall as a share of GDP by 2014-15; that the current account would be in balance the following year; and that in the same year, public sector net borrowing would fall to £20 billion. Debt will not begin to fall until 2016-17—two years late. The current account will not be back in the black until 2017-18—two years late. Public sector net borrowing in 2015-16 will not be £20 billion; rather, the forecast figure—£68 billion—is more than three times that. Not a single one of the Chancellor’s key targets has been met.

[Mr Redwood]

Has the hon. Gentleman noticed the forecasted very sharp fall-off in petroleum revenue tax, and is that reflected in SNP plans?

[Stewart Hosie]

It is extremely convenient that, once again, we have a “North sea oil price crash” story on Budget day, some six months before the referendum. If the right hon. Gentleman keeps saying it, I am sure someone somewhere will finally believe him. I am not dreadfully convinced.

The bottom line is that—just like the right hon. Gentleman’s intervention—the Chancellor’s speech was hugely political. He did not tell us about recovery; he did not tell us that he is trying to lift the burden from hard-working families; he did not apologise for trying to rebalance the economy on the backs of the poor. This Budget speech was a political platform for the next election, and if it was supposed to be a vindication of his policies, then it failed, because the policies have failed.

The Chancellor did of course have a deal to say about tax. He is right to increase the basic rate threshold to £10,000, and then to £10,500. Raising the threshold from £6,500 to £10,000, resulting in savings this year of £700 for the average person, is sensible, but of course, that is only part of the personal tax story. This Government have pushed ahead with a tax cut for millionaires and have continued to squeeze the middle—the genuine middle class. The threshold for those paying the 40% rate of tax has come down from £37,500 to under £32,000, so for every penny saved at the bottom, they have had to pay more than a penny at 40%. I therefore welcome the fact that the 40% threshold is going to be increased, but that is not until 2014-15. It will not change the fact that the proportion of people paying the 40% tax rate has doubled over the past two decades, and there are now 2.1 million more people paying a rate of tax that was previously only for the rich.

It is not just the middle: it is the poorest in society who have been hit hardest. We know—the right hon. Member for Wokingham (Mr Redwood) told us—that the proportion of tax cuts to tax rises is 4:1. We knew from previous Budgets that the impact of the discretionary consolidation would be £155 billion. Interestingly, the Government have removed that figure from the Red Book: they have removed the year 2016-17 from the forecast, and are now telling us that the discretionary consolidation will be only £126 billion. However, that forecast goes only to 2015-16, and I am concerned that they are not making a longer forecast, so we can see the real scale of the damage they are trying to do.

We in the SNP know where the pain of this Budget and of this Government’s policy direction will be felt. It will be the 144,000 households in Scotland who are losing some £3,500 each through changes to incapacity benefit. It will be the 372,000 Scottish households who have seen tax credits reduced to the tune of £800 a year. It will be the 620,000 families hit by changes to child benefit, who have lost an average of £360 a year. It will be felt by the 55,000 people who are losing an average of £3,000 a year as disability living allowance is removed. Those are the people whom we should be thinking about and who should be helped. Instead, the Government continue to try to balance the books on the back of the poor.

I welcome the fact that the Budget forecast at least says that there will be some growth, but it is once again heavily predicated on business investment growth. In Budget after Budget, the Government have produced five-year growth forecasts. In 2010, growth was predicted to be between 8% and 10% a year, but by the time we got to 2011 it had turned negative and they had to set yet more ambitious targets for the next five years. So it went on, and we find in the Red Book that the forecast business investment growth for last year turned negative again. I am desperate to see positive business investment growth, and the jobs that come with it, but we keep seeing the same story from the Government. They keep failing.

What should the Government have done? There are any number of policies that they might have adopted. Instead of tinkering with air passenger duty, they might have cut it properly or acted sensibly to boost international connectivity. Instead of simply freezing fuel duty, they might have introduced a real fuel duty regulator to smooth out future spikes. They might have cancelled some of their austerity measures, or at least removed the cap on discretionary housing payments to help the poorest. There are so many things that they might have done.

In the North sea, the Government announced that they would implement the Wood review in full. That will save the industry some £45 million, and it is to be welcomed. However, they are keeping the offshore chartering regime that they announced last year, which will cost the industry £600 million. They keep getting it wrong every single time.

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

Should the Government not acknowledge that the North sea is booming, and that the drop in revenues is due to investment being tax deductible? What we are seeing is a healthy North sea for the years to come.

[Stewart Hosie]

I am sure that we all support £14 billion-worth of investment this year and £100 billion in the plans, and the drilling of 133 oil and gas wells to invest for the future. We would all be far less happy if that investment was not taking place. The problem is that all the good things that the Government could and should have done would have required them to change their policy fundamentally, away from billions more in austerity cuts and away from the policies that have stifled growth and recovery over the past few years.

I am not at all convinced that this was a Budget for recovery. It was a political Budget from an all-too-political Chancellor. I saw Tory Back Benchers waving their Order Papers not only after the Budget statement but before it was even made, and I suspect that such hubris will come back to haunt them. I hope that with a yes vote in this year’s referendum, this will be the last Tory Budget ever to affect Scotland.

15:23

[Mrs Cheryl Gillan (Chesham and Amersham) (Con)]

It is a pleasure to follow the hon. Member for Dundee East (Stewart Hosie), although my Scottish father would be turning in his grave if he thought that Scotland would ever go down the independence route. With your Scottish ancestry, Mrs Laing—although, sitting in the Chair, you could not possibly acknowledge this—you probably agree with me. I heard what the hon. Gentleman said, and I hope that there are many more Budgets to come for the whole United Kingdom. Scotland remains better off with the rest of the United Kingdom.

In the brief time available, I welcome the provisions in the Budget. The Chancellor has held firm despite the many voices that have tried to steer him off his course. Today he is beginning to reap the rewards of his courage in sticking to a path, however difficult, and making sure that he was not diverted from it. I was particularly pleased to see the help for savers, because we must rebuild our savings culture in this country. The simplification of ISAs, the extension of the annual limit and the introduction of the pensioner bond will make a great deal of difference to many of my constituents. I am also pleased to see the new pension flexibility. Treating pensioners like grown-ups by not forcing them to buy annuities will be welcomed across the board, and it is long overdue. I am glad that a Conservative Chancellor has seen sense on that.

I am particularly proud that a Conservative Chancellor is pursuing our natural Conservative tax-cutting instincts. It has to be right to take more and more people out of paying income tax. Equally, it is right to make the other changes that make a difference to people’s lives, and which the Opposition welcomed. Even the halving of the bingo tax from 20% to 10% is something that nobody, on either side of the House, could quibble with.

I was pleased to see the support for manufacturing and businesses. Having been Secretary of State for Wales, I was particularly pleased to see the continuation of support to energy-intensive industries through compensation for green levies. That has been an enormous problem in Wales for companies such as Tata Steel, and the measures will make a great deal of difference to our manufacturing base and its recovery. It is good that we are doubling the annual investment allowance. Giving our companies the most competitive export finance in Europe will certainly help. In the official EUROSTAT figures announced yesterday, I was pleased to see that the UK recorded the strongest export growth in the European Union last year and outstripped every other large economy by a large margin. I want that to continue, and the Budget will help to keep our businesses on track.

I would like to thank the Chancellor for the attention that he has given to the fuel duty incentives for cleaner fuels. In the autumn financial statement, it was noted that the fuel duty differential between the main rate of fuel duty and the rate for road fuel gases such as compressed natural gas would be maintained until March 2024. That, together with the differential on liquefied petroleum gas reducing year on year by 1p a litre, remained to be reviewed on vehicle uptake and public finance grounds at Budget 2018. In Zero-m, a company in my constituency, Mr Peter Dodd has been pursuing that relentlessly with his team, and I think it will make a great deal of difference in future. Methanol is a clean fuel, which pollutes less than other fuels. It produces virtually no particulates or oxides of nitrogen, and a reduced amount of CO₂. It is less explosive than petrol, and therefore even safer. Those measures are most welcome.

I want to make a point on my pet project, High Speed 2. I notice that HS2 is again included in the infrastructure pipeline. In the words of Sir Rod Eddington in his 2006 transport study:

“The risk is that transport policy can become the pursuit of icons. Almost invariably such projects—‘grands projets’—develop real momentum, driven by strong lobbying. The momentum can make such projects difficult—and unpopular—to stop, even when the benefit:cost equation does not stack up…The resources absorbed by such projects could often be much better used elsewhere.”

Public sector overspend is certainly the trend. Two recent projects—HS1 and the channel tunnel—went 36% and 99% over budget respectively, and the average overspend on 11 recent major public sector building projects has been 158%. If HS2 continues, that trend will cost around £72 billion, and the Institute of Economic Affairs has estimated that it could go up to £80 billion.

We do not even know what the HS2 compensation packages will add up to. There are nearly 500,000 properties within 1 km of the proposed line, but the Government have not yet been able to give us details of the compensation package. I hope that when the Financial Secretary to the Treasury responds to the debate, he will be able to provide a light at the end of that particular tunnel, although I hope that it will not be in the form of a train coming towards me. Those people need to know what the compensation package will be, and when it will become available. Constituents of mine are losing their houses and their livelihoods. They are being evicted from their properties without proper compensation, and they need to know that the Government are listening and paying attention to this matter.

This project has to be queried at every step along the way. We are still paying down a large debt, and to pay down the money that will be spent on HS2 will involve us in untold interest and expenditure. Even business and industry do not want HS2. The Institute of Directors recently surveyed more than 1,300 directors to gather their views. The results revealed that the IOD’s members would rather see £50 billion spent on bringing Britain’s existing transport infrastructure into the 21st century. Over the past two years, the importance of high-speed rail to IOD members’ businesses has fallen significantly. HS2 is not the infrastructure project that Britain needs; nor is it the one that British business wants. Not enough businesses stand to benefit from it. It will benefit the few businesses, rather than the many.

I ask the Treasury to take the opportunity of this 2014-15 Budget, which is excellent in many ways, to re-evaluate the value for money on this project. If it cannot cancel it, will it at least look at how the benefits could be spread more widely and people’s interests could be protected, and announce proper compensation as soon as possible?

15:31

[Ian Lucas (Wrexham) (Lab)]

It is a real pleasure to follow the right hon. Member for Chesham and Amersham (Mrs Gillan). As always, she has made a powerful case on behalf of her constituents.

In 2010, the Chancellor had what he called an emergency Budget. There was in fact no emergency. His predecessor’s Budget had already set out the deficit reduction strategy, and that policy was largely supported at the time by the Liberal Democrats. However, the present Chancellor—supported by the Liberal Democrats, who preferred Government to consistency of policy—made a choice and promised in 2010 that he would eliminate the deficit by 2015. On his own terms, he has failed. Today’s Budget is a confirmation of that central fact.

In 2010, when the economy needed stimulus and support, this Government provided neither. Instead, we and our constituents have endured four years of mistaken economic policy, which has resulted in most of the people I represent being £1,600 a year worse off than they were in 2010. Yet the Chancellor stood at the Dispatch Box today and expected plaudits. Following the delayed return of growth in the economy, the Government parties exude an air of complacency, but that is at variance with the views of most of the country and certainly of most of the people I represent in Wrexham.

The Government imposed substantial increases in VAT in 2010, contrary to the assurances given before the general election by both parties. The immediate result was that money was taken out of local economies and paid directly to the Government, suppressing demand in the retail and construction sectors. The long-term result has been a reduction in business activity. Lack of demand locally has been exacerbated by the failure of investment in local business. This Government’s failure to tackle the issue of business investment endures to this day, and is a consequence of their fundamental failure to implement meaningful reform of the banking sector. We heard nothing about that today.

In the early months of this Government, they talked a good game. They even set up an inquiry into high pay, although only in the public sector, not in the private sector. They have done nothing about the issue, however. We hear the occasional bleat from the Secretary of State for Business, Innovation and Skills, but the coalition Government have done nothing.

Again and again, Wrexham businesses tell me about the failure of the banks to provide adequate investment. Based as the banks are in the square mile, and focused as they are on financial services, that is not surprising. Why should those institutions understand the modern manufacturing and retail economy that is Wrexham, when none of their meaningful decisions is made by those who live in our community or have any knowledge of it?

[Guy Opperman (Hexham) (Con)]

rose—

[Ian Lucas]

I will give way to the hon. Gentleman; I know that he takes an interest in this subject.

[Guy Opperman]

The hon. Gentleman must surely accept that it was a mistake for Labour to vote against the provisions in the Financial Services Bill on 23 April 2012. Those provisions would have introduced greater competition, greater choice and a greater degree of local banking.

[Ian Lucas]

The fundamental mistake was the demutualisation of organisations such as Northern Rock by the Conservative Government in 1986 and the years thereafter. The hon. Gentleman should be arguing against such decisions, so that we can start creating institutions like local building societies again.

Our current banking system is not the only model of banking. In Germany, the Sparkassen model was affected much less than most economies by the 2007 recession. Local banks known as Sparkassen operate within geographically restricted areas and provide both retail and business banking there. Notwithstanding the existence of ordinary multinational banks, over 20% of ordinary local residents choose to invest in their local Sparkassen.

I welcome what the Chancellor said today about ISAs, but I believe that people would invest in local banks and institutions that supported the local economy and created jobs for young people. We want to see that happening, which is why we support the development of regional banks. Ever since the Conservative Government started to demutualise in the 1980s, destroying institutions such as Northern Rock, the Leeds Permanent building society and the Halifax building society, the move has been ever more towards centralising investment by the banks in this country. Local economies have suffered as a result.

Business investment has not recovered since 2007, and the City still dominates the economy. The growth that we are seeing in the UK is growth of the kind that led to the problem in the first place. We can all see the train coming down the track. We know what kind of a recovery this is, and we need to do something about it. The people I represent are not benefiting from the recovery at all. Women in my constituency are still earning less than they were in 2010, and men there have also seen a reduction in their incomes since that time.

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

Will the hon. Gentleman give way?

[Ian Lucas]

I must make some progress; I have a particular point that I want to make.

This Government are not even addressing those issues. They do not seem to understand that they exist. Nothing that the Chancellor said today will help the people I represent. They are fed up with inequality in this country, and with the massive support that is given to those in the City and those who earn millions of pounds a year, who are so remote from the lives of my constituents that they can have no understanding of how the rest of the country works.

Believe it or not, there was a time when the Prime Minister supported a move towards greater equality. He quoted “The Spirit Level” in 2009, before he was elected, when he was trying to present a positive face for the Conservative party for the election. Those days are long gone.

We need to take responsibility ourselves. Inequality is the issue of the time. I am a member of the Nationwide building society.

[Alun Cairns]

Will the hon. Gentleman give way?

[Ian Lucas]

I will not give way; I have a particular point to make.

The chief executive of the Nationwide building society was paid £2.3 million last year. I have written to him asking him to support a motion within the society that his salary should be no more than 75 times the rate of the lowest paid employee in the organisation. This is a mutual society that we should all support. He has refused, and I as a member, acting as an individual, intend to present a resolution to the annual conference of the Nationwide building society. A mutual organisation should respect the principles of mutuality and should accept that it is not appropriate for investors’ money to be used for that level of executive pay. If people want executives paid at that level, they can go and bank with Barclays. When I shifted my account to the Nationwide building society, I did so because I believed in mutuals. I want my chief executive’s pay, like that of the chief executive of the John Lewis Partnership, who operates precisely on those terms and has been in his position for many years, to be linked to that of other employees in the organisation.

I am looking for support. Members in all parts of the House can join my campaign. I need 500 signatures by 4 April, and I hope the Chancellor of the Exchequer will consider joining it, if he is a member of the Nationwide building society. We need to ensure that the people we represent know that we understand that this country faces a cost of living crisis and that individuals are worse off now, and that we will not put up with increased executive pay of millions of pounds for people who are not supporting the local economies in our constituencies.

15:40

[David Mowat (Warrington South) (Con)]

It is a pleasure to follow the hon. Member for Wrexham (Ian Lucas).

There are four tests of a Budget that we could reasonably apply. First, is the cake growing? Secondly, are we distributing it fairly? We will come to that. Thirdly, did the Budget get tempted by short-term electoral considerations or was it long-term and structural? Fourthly, when the Chancellor had an opportunity, was he radical and reforming? On all four measures, this Budget is a success.

First, on growth, as we have heard, we are the fastest-growing country in the OECD—that is a tremendous statistic—and growing faster now than even the United States and Canada. In particular, we are growing faster than France, the country on which I believe the Opposition base their policies. Secondly, are we distributing the results of that growth fairly? We just heard a speech about fairness from the hon. Member for Wrexham. Income inequality in our society is at its lowest level for 28 years. Why is that? Because this Government increased capital gains tax by around 40% when they came in and have increased stamp duty by more than that. Both measures are bringing in significant amounts of revenue.

The Opposition are caught up in the debate on the 45% and 40% income tax rates. That is not how to achieve more equality in society. People are getting rich because of capital gains. Five years ago I knew people who were paying 10% capital gains tax under the previous Government when they sold their businesses. We have fixed that, which is why income inequality is much lower now. A further reason is that we are getting a great deal more in revenue from sorting out tax avoidance.

The third test is whether the Budget was designed for short-term electoral gain or whether it introduced long-term structural change. Some measures will kick in fast. The £500 extra on the personal allowance will come in quickly, but the Chancellor has spent just as much money as he spent on that on the carbon price floor, support for energy-intensive industries and the investment allowance. None of those things will take effect in the short term and all of them are important to the structural rebalancing of the economy.

[Sheila Gilmore (Edinburgh East) (Lab)]

I do not know whether the hon. Gentleman has had time yet to look at the OBR report. The comment on the investment allowance in that report is that it will make very little difference to economic growth.

[David Mowat]

I have not had a chance to read the report. According to the Red Book, the cost of that allowance will be £1.2 billion next year, an awful lot of money. I will not respond to the hon. Lady’s point about growth, because my point was that the Chancellor has introduced medium-term structural measures into the economy, which is a responsible approach.

The fourth test is whether this is a radical and reforming Budget. The measures on pensions, ISAs and particularly annuities are genuinely reforming, genuinely radical and potentially genuinely transformative.

I want to talk a bit about all those things, but first I want to say something about the support the Chancellor has been able to give the Foundation for Peace—the peace centre in Warrington. There was an issue to address, as it was funded from the lottery and that funding will run out in April. The work the centre does for victims, both of the troubles in Northern Ireland and of 7/7, was under threat, and the support that has now been given will fix that. It is also true—I know Colin and Wendy Parry agree with this—that the funding must be put on a sustainable basis, as the centre needs to do more projects over time with the Home Office and the Foreign Office and all that goes with that.

[Guy Opperman]

I totally endorse what my hon. Friend said. Does he also welcome the use of the LIBOR funds to support the scouts, girl guides and emergency services, and the waiving of the VAT for air ambulances, which is much welcomed after a long campaign in this House?

[David Mowat]

I support that, and I just reiterate the words the Chancellor used: those who have the worst values in our society are being used to fund those who have the best values in our society. That just about sums it up.

[Jim Shannon (Strangford) (DUP)]

rose—

[David Mowat]

I have given way twice already, so I am sorry but I am not going to do so now.

I wish to say a little about the carbon price floor, because I was delighted that the Chancellor has acted on it. The action makes no difference to our commitments on the overall carbon reduction profile that this country has made, but it makes a great difference to the potential carbon leakage we are facing in our great energy-intensive industries, particularly in the north-west and north-east. Some 900,000 people work in energy-intensive industries in our country, and I sometimes think they are forgotten in our dialogue about energy prices. It is worth understanding that what the Chancellor has done is remove the straitjacket on costs, which would have put a great deal of those jobs at risk. For example, we have already lost primary aluminium smelting in this country—it has moved out of the UK—and we are losing marginal chemicals capacity from this country. I am surprised that a number of Opposition Members are not more exercised about this issue in general, given that they represent parts of the north-east, where there is heavy chemical manufacturing, and there are a lot of energy-intensive industries and a lot of jobs, because we cannot rebalance our economy back towards manufacturing if we have differentially high energy prices in this country. We just will not be able to do that—it will not happen.

This issue is not just about what is happening in the United States on shale gas and shale prices; it is also about what is happening on mainland Europe. It is an inconvenient truth—to use a known phrase—in this whole issue of carbonisation that we produce not only considerably less carbon per head than the EU average, but less carbon per capita. We produce 30% less carbon per head and carbon per capita than Germany, yet Germany is pursuing a policy of building unabated coal power stations at scale. We are being left behind in all that, and what the Chancellor has done on the framework is absolutely spot on and will make a difference to those 900,000 jobs. I predict that we will be revisiting this issue at the next Budget and certainly into the next Parliament, because there is a great deal of unfinished business in this area.

Before I leave the field of energy, may I say in passing that the infrastructure plan is very welcome? Two big parts of the national infrastructure plan are Hinkley Point C and Wylfa—together they make up about a quarter of it. They are both vital to our country and our economy. Both are currently under EU state aid investigation, which is holding up the projects. I have heard Ministers saying that they are confident that they will have that agreed, and I very much hope that is the case, because it would be a great paradox if those low-carbon projects, which are essential to our energy security and to our decarbonisation efforts, are held up within the EU at the same time as our EU partners are building unabated coal power stations at scale in countries such as Holland, Germany and Belgium.

I want to move on now to tax avoidance and tax evasion. The Red Book shows incremental revenue of £2 billion over the next two years from the anti-abuse legislation that we introduced. I very much welcome the Chancellor reducing the level of corporate avoidance of stamp duty from £2 million to £500,000. The closure of that tax loophole has brought in hundreds of millions of pounds. It is an example, as I said at the start of my remarks, of why income equality is so much better now than it was under the previous Government.

I also welcome the up-front taxation of tax schemes, which means that if people get involved in controversial schemes, they will not be saving tax and cash flow as they wait to go to tribunal. Her Majesty’s Revenue and Customs is also able to act more quickly than it has hitherto been able to do.

There were four tests today, and the Chancellor has passed them and any reasonable expectation of this Budget. I am happy to support it.

15:51

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

The Budget mentioned two of the biggest issues in my constituency, which are housing and child care. However, the Help to Buy provisions solve the problems for only some people, but not for those who rent. That is a real issue in my constituency, and I will touch on it in a minute.

On child care, another initiative has been announced, but the practicalities of it have not been addressed. We still have a Government who are looking to threaten the quality of child care, which, for parents in my constituency, is a real concern.

One of the key things that is missing from the Budget statement today is a Treasury commitment to freeing up public land for housing. Under Treasury rules, public land needs to be sold at the highest price. Years ago, when I was a councillor in Upper Holloway in Islington, I had to fight over the then Royal Northern hospital site to ensure that it was sold to improve housing in the area. Most of the housing there ended up being privately owned because of that very Treasury rule. Some 20 years later, we still have that same rule.

The Budget provided a great opportunity for the Chancellor to allow land to be sold at slightly lower than market rates so that more affordable homes could be built, thus improving public health and the general and economic well-being of people in my constituency. The St Leonard’s hospital site in my constituency is a worry as it is now owned by NHS Property Services and will have to be sold—if it is sold—for the highest rate.

Support for affordable housing in areas such as mine is very important. There are now more private renters than home owners. However, both private renting and ownership are out of the reach of people who live in social housing, and the waiting list for social housing is immense.

This Government treat the country as two halves. Over the past six months, a home owner in Hackney will have seen property prices increase by 3.58%. Someone could earn £15,060 in six months on an average property. The average price of a property in Hackney is now more than half a million pounds—£554,306. A flat would cost £347,000. Someone owning a property could earn £45,000 in a year—nearly double the national average wage. It is fine for those people who own properties, but for those who do not, ownership is a long-distant dream.

Let me quote from a letter from my constituent, Tommy. He said:

“I have been looking to purchase my first home. I am 35, and in full time work since I left university in 2001. I have worked hard my whole life but I still require assistance from my parents to purchase my first home.”

In some ways, Tommy is one of the lucky ones. Although he has not found a home, he has parents who may be able to provide him with some help. Many of my constituents are not in that situation.

[Tim Loughton (East Worthing and Shoreham) (Con)]

The hon. Lady is making some good points about the shortage of affordable housing. Does she support an increase in the threshold of £4,250 for the rent a room scheme, in which landlords can rent out a room or floor of their house tax-free, which has not changed for many years, and does not reflect current rental values? I do not see such a measure in the Budget, but would she support an increase?

[Meg Hillier]

I completely support that. Only last night, I was talking to tenants in Haggerston about rent a room and the ability to take in a lodger. They worried about getting into tax and so on, and they were worried about the threshold. That is exactly the concern. In my constituency, someone could legitimately rent out a room in their home for £200 or even £250 a week, so they would quickly reach the threshold. That is a real issue: it is one small way in which we could help some people to find a home, but it does not solve the major problem.

New home starts in the UK have gone down by 10% from February 2013 to just under 9,500, according to figures from the National House Building Council. Completed homes were just over 8,000, so we are a long way short of the target for the new homes that need to be built, and certainly for those that are genuinely affordable. I commend to the House the Co-Operative Housing Tenure Bill introduced by my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds). It is a great shame that the Chancellor did not take the opportunity to look at co-operative solutions that enable people to be much more in control of their own destiny.

I mentioned at the outset that child care is a huge issue in my constituency. I represent a very young borough, and parents want quality. It is a great shame that the Government took a “pile them high, teach them cheap” approach, although that was eventually dropped after their surprise at the backlash from parents. The tax break is welcome for those it helps, but there is confusion about how it will work. It is really important in child care policy that these things are simple, clear and do not change too often, as that makes it confusing for parents to navigate their way through.

[Sarah Newton (Truro and Falmouth) (Con)]

Child care is really important to enable women to participate fully in the work force. Will the hon. Lady join me in celebrating the fact that the figures show record numbers of women in employment and setting up businesses? Does it not sadden her that today the Leader of the Opposition denigrated the achievements of women by attacking Conservative women, calling us “girls”. How would she like it if he called her a girl?

[Meg Hillier]

I do not need to be told by the hon. Lady about the leader of my party. He is an enormous champion of women. There are a lot of women, as we can see, in the shadow Cabinet and in his ministerial team. I do not doubt his commitment to women who work, and to women who do not work, in this country. The record of the Labour Government stands for itself.

On the issue of women’s employment, many women in work are in part-time jobs or on zero-hours contracts. The women I meet from day to day in my constituency are often keen to work more hours, but they cannot find them. Child care is often part of the problem. The figures from the Family and Childcare Trust show that the average cost of a nursery place for a child under two is £5.60 an hour in London. That is 28% more than the national average. The cost of child care in London is a big concern, especially as my constituents increasingly live in expensive private rented accommodation, which squeezes their budget. The cost of living is a big issue.

In London, the average cost of a childminder looking after children under two is £5.46 an hour, but in Hackney, it is much more, ranging from £6.50 an hour to £10 or even more. The supply and cost of child care are a real challenge. Providing support for the cost is one thing, but it does not deal with the question of supply. Cross-party work needs to be done on the issue. My party supports the right initiatives on child care, because we support women who want to work and have their children looked after properly, but we need to make sure that there are policies that we can support in the first place. Sadly, although there is much noise and talk about this, there has not been action at the right level.

I have mentioned my view that the Government treat this country as two halves: the very wealthy, and then there are my constituents, who work on zero-hours contracts, are in part-time jobs, and are on the minimum wage, which has risen, but it is still tough to live in London on £6.50 an hour. A man came to see me. He was a kitchen porter and, although he was out of work, he was seeking a job. The distances he was being asked to travel to work, plus the extra hours of travel, meant that child care and travel costs made those jobs uneconomical, even though he was living in social housing. Those are real concerns for London, and we need to look at London weighting on some of the issues.

The increase in VAT has had a regressive impact on my poorer constituents. I was surprised to hear the hon. Member for Redcar (Ian Swales) defend the increase. I thought that as a Liberal Democrat he would not defend such a regressive measure.

For those people not in work, there is the whammy of the bedroom tax. Last night I met tenants in Haggerston who are very concerned about it. Those who are hit are having to pay £767 a year if they have one so-called spare bedroom, or £1,370 a year if they have two. Many of them will not leave their homes of many years, as one woman told me only last week. They will find the money somewhere or get into debt. The Government are contributing to indebtedness for people who do not have places to move to, even if they wanted to, and they do not have the money out of their benefits. The women I spoke with said, “I am temporarily not working. I want to work again, but I’m not going to leave my home, where I have lived for 32 years.” She was adamant about that and will go to great lengths, possibly getting into debt, to avoid moving.

Another opportunity has been missed. The housing benefit disregard in tax credit will be abolished when universal credit comes into place, which means that 100,000 people will see their child care support drop from 96% to 70% of costs. As my right hon. Friend the Leader of the Opposition said from the Front Bench, this Government give with one hand and take with the other. That will have a particular impact in my constituency because of the high private rents.

There are some things in the Budget that I welcome, such as the export loan changes, which will help many of the businesses in my constituency, particularly in Shoreditch. However, there was no move to make banks more locally accountable, as my hon. Friend the Member for Wrexham (Ian Lucas) highlighted. Although more data are now published on where banks lend, there could have been an opportunity for the Chancellor to look at a US-style community reinvestment Act. I hope that the Government will still consider that.

The tax avoidance measures, following up on the work of the Public Accounts Committee, are also very welcome. I hope that they will do something to stop big companies trying to dodge their bill to the British taxpayer. The stamp duty increase for companies purchasing properties worth over £500,000 might do something to stop overseas purchasers. The changes for air ambulance services will be of great benefit not only to my constituents—the Royal London hospital is just on the edge of my constituency—but to many people up and down the country.

Finally, I am delighted that my constituents of Caribbean origin will now see a fairer deal on air passenger duty. It is about time that the people who broke their backs for Britain when they arrived in the ’50s and ’60s got a fair deal. It is an injustice that has now been righted. I also welcome the bingo tax changes. I support my local Mecca bingo hall, where I have called out the numbers, to my embarrassment and that of regular bingo-goers. It really is an important provision for many people, so it is good that that wrong has now been righted.

16:02

[Andrea Leadsom (South Northamptonshire) (Con)]

This Budget has been billed as a resilient Budget for a resilient economy. I say that it is a robustly, and indeed resolutely, resilient Budget for a really strong future economy. I completely agree with my hon. Friend the Member for Warrington South (David Mowat) that it passes all the tests of looking to the long term, rather than at short-term give-aways, which is so important in any Budget.

The first thing I would like to say is a huge thank you to the Chancellor on behalf of Northamptonshire for the contribution to a pothole fund, which Northamptonshire will be universally delighted about—[Interruption.]

[Andrew Selous (South West Bedfordshire) (Con)]

It is not just for you.

[Andrea Leadsom]

That is a great shame. The Chancellor mentioned my hon. Friend the Member for Northampton North (Michael Ellis), so I was rather hoping that we would get to keep it all, but perhaps not.

I would like to mention the efforts that the Chancellor has made for business, which is the source of our country’s long-term recovery. Doubling the annual investment allowance to £500,000 per annum is superb for businesses and will allow manufacturing companies in my constituency, for example in motorsport valley—the area around Silverstone—to invest in plant and equipment. Doubling the UK’s direct export lending programme will enable us to create the export-led recovery for the long term that we so much want to see. Capping the carbon price support rate will save costs for manufacturers in the medium and long term. That is great news for the east midlands, the west midland, the north of England and the entire UK. I hope that Opposition Members will be honest enough to welcome those measures.

I commend the Chancellor on his work for savers and pensioners, which is truly groundbreaking. I also want to pay tribute to Dr Ros Altmann, who has long campaigned for changes to annuity rates. She has been pointing out the weakness in the annuity construction of pensions for many years. I understand that she was in fact an adviser to Opposition Members when they were in government. She has been trying to persuade Governments of all colours to lift the unfair obligation to buy an annuity on reaching retirement age. I am delighted about the news, which will really change the fate of future pensioners.

The annual ISA cap has been lifted to £15,000, but much more important is the allowing of investors to choose whether they want to invest in cash or stocks to meet their savings needs. These things are incredibly important. When it was introduced, quantitative easing was essential to try to prevent further harm to our economy. However, there can be no doubt that the historically low interest rates that have resulted from the QE programme have very badly harmed savers and pensioners—those on fixed incomes. The structural change that the Chancellor has made is really important and will be welcomed not just in my constituency but across the UK.

I have paid tribute to Dr Ros Altmann, who I feel sure is a woman of absolutely high enough calibre to be considered for the next post available on the Monetary Policy Committee, the Financial Conduct Authority or the Financial Policy Committee. I defy any Member to disabuse me of that notion. I also welcome the appointment, announced yesterday, of Dr Shafik to the Monetary Policy Committee.

[Diana Johnson]

On merit.

[Andrea Leadsom]

Absolutely on merit, as is the case for all high-calibre women. The Governor of the Bank of England is showing real foresight in recognising that he needs committees of a diverse range of talents—not just the white middle-class theoretical economists whom he has tended to inherit from the previous Governor. The appointment is incredibly important. Dr Shafik will be leading the Bank’s review of its market intelligence following the fixing of foreign exchange rates. The Treasury Committee will follow that with great interest. Sadly, there may be many more fines as a result of the appalling behaviour that we continue to see among the banks. Those fines will be put to good use.

I want to use the last few moments of my contribution to talk about a real game-changer for the banks. I commend to all Members something in page 84 of the Red Book. It is perhaps the most ground-breaking, profound proposal of the Government’s in this Budget:

“The government has today announced that it will switch on the Market Investigation Reference powers of the Payment Systems Regulator a year ahead of schedule.”

That means that there will be a regulator of payment systems. Until now, there has been a small group of powerful banks that are, yes, too big to fail, as we have discovered only recently to our enormous cost. They have also been determined to put up barriers to prevent the entry of second-tier, smaller banks and shut out new competitors. A regulator of payment systems will surely reduce those barriers and enable the new banking competition that Members across the House want.

Specifically, the really important measure in the Budget is the requirement on the payments regulator to review the effectiveness of the current account switching service and look at instant account portability before the next Budget. If someone wants to switch bank account now, they have to move their account number, cheque book, bank cards and so on. People get to keep their mobile phone numbers when changing mobile phone provider; it would be so much easier for people if they got to keep their bank account numbers when switching bank accounts. It would also be so much easier for new challenger banks to persuade us to switch—“Just give us a try. If you don’t like us, you can go back to your old bank tomorrow.”

People could literally switch bank once a week or fortnight. That would significantly encourage new competition, but most importantly it would persuade the big banks that they needed to enter into customer retention strategies, which they have not had to do for years. Such a change would significantly improve the fate of small and medium-sized enterprises, which desperately need to be able to access new sources of financing. It would also mean that the Bank of England could easily step in to move accounts from a failed bank to a survivor bank, thereby ensuring that the awful situation of people queuing down the street to take their money out, as happened with Northern Rock, would never happen again.

In summary, this is a resolutely resilient Budget which I believe contains some seriously game-changing proposals that will have a significantly positive impact on the future of our economy for many years to come.

16:09

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

It is a pleasure to follow the hon. Member for South Northamptonshire (Andrea Leadsom). She concentrated on banking, but my contribution will be somewhat more mundane, because I regret to say that far too many of my constituents have probably never even seen the inside of a bank, let alone know about the workings of a bank.

We again heard today about a drop in unemployment figures. That really has to be welcomed, but I remind the House, as I have done over a period of time, that some parts of the country are not seeing the recovery that others are experiencing. I listened intently to the Chancellor’s fantasy figures and tried to picture in my mind his portrayal of this rapidly improving economic situation across the country. I tried desperately to engage with that, and probably to be as imaginative as the Chancellor himself in entering his world, but I can tell him that far too many individuals and their families, many of them hard-working indeed, have simply not been given a chance to enter that imaginary world.

There can be no doubt—I would be the first to admit it—that thankfully, after some three years, there is a return to growth. However, the Chancellor needs to recognise that in my local authority area an increasing number of people are claiming jobseeker’s allowance. This month, yet again, we saw a further rise in unemployment on the back of last month’s rise. The figure now stands at 2,740—an increase of a further 0.1%. In May 2010, 75 young people were claiming jobseeker’s allowance for more than 12 months; that figure has almost doubled to 145. In February, youth unemployment rose to 740—an increase of 0.3% on the previous of month to 6.7%, which is 1% above the Scottish average and 1.5% above the UK average. In May 2010, the number of adults claiming jobseeker’s allowance for more than 12 months stood at 460; last month, the figure rose to over 800.

That is a tragedy for each and every one of those people. If they took time today to listen to the Budget statement, it will only have confirmed what they have probably suspected for a very long time—that the Chancellor has lost touch with those at the bottom end and does not understand the battle and the sheer struggle that still goes on for many people right across the country.

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

My hon. Friend might be interested to know that in Swansea, 65% of people on JSA have been sanctioned. These are people on less than £72 a week. It is not that the Chancellor has lost touch with them; he is crushing them under his boot.

[Mr Brown]

My hon. Friend is right. If I have time, I want to mention an experience I had with a young couple who came to my surgery last Friday.

Earlier today, I met a representative of the Prison Officers Association from my area who was down in London taking part in a rally that had been timed to coincide with the Chancellor’s Budget speech. He explained to me that morale in the prison service is at an all-time low because of increases in serious violent attacks on prison staff, a five-year pay freeze and continuing demand for front-line staffing cuts, and an increase in pension contributions that is driving down the take-home pay of hard-working public servants. I suspect that it is not a job that many of us would relish doing. That driving down of take-home pay is coupled with working in an environment that is physical and, all too often, dangerous. These public servants are now being asked to work up to the age of 68. It is little wonder that they are angry and have taken to the streets today.

The Resolution Foundation’s report “Low Pay Britain 2013” shows that 4.8 million workers—20% of all employees—earn below the living wage, which is a massive leap from the 3.4 million in 2009 at the height of the recession. The growth of poverty has an uneven impact on particular sections of the population, and the tragedy is that young workers have been hit particularly hard: one in three 16 to 30-year-olds—2.4 million—are on low pay and are low skilled. These young people deserve better than this. Decent adults they are and will be, but they need greater chances in life. Living standards are down for far too many people, and as colleagues have said, that has been compounded by the 24 tax rises, households £1,600 a year worse off, and a reduction in tax credits.

On the positive side, I applaud the decision to reduce bingo duty to 10%. I am sure that the industry will be very much relieved at that. Like hon. Members on both sides of the House, I have visited my local bingo club, but there were fewer customers than I had ever seen before. The simple reason behind that is that people’s incomes have reduced so significantly that they simply do not have the wherewithal to spend time at the bingo hall in the way that they did for many years.

I also applaud the steps being taken to support pensioners through the relief measures in respect of savings, but again I have to say that many pensioners have no savings at all, and struggle to get by from week to week or month to month. These may be pensioner couples where one of them has been a carer for a son, daughter or elderly parent. They have struggled to get through their working life and they are now struggling in their old age.

I suspect that many energy-intensive industries will be delighted to hear of the extension of the existing compensation scheme. I have one in my constituency that has been pursuing me for answers to various questions that it had. Perhaps now that the Budget is over, I will be able to get those answers without any pre-Budget leak.

I am critical of the youth unemployment levels in my local authority area, and with some justification, but I welcome today’s announcement on apprenticeships, providing that genuine opportunities will be there for young people. I came across a young woman on a Government employment scheme working 32 hours in a retail business. When the scheme ended, the company said that she could remain with them, but that did not mean 32 hours’ work, but eight hours spread over a Saturday and Sunday. She is now out looking for a second job, and—who can tell?—perhaps a third job. It is a throwback to where we were in the early and mid-’90s.

I welcome the decision not to increase fuel duty, but as I have said on many occasions in the House, under the previous Government we saw nine years and 11 potential increases that were either suspended or not introduced at all.

The decision on the personal tax allowance will be welcome, but—here I disagree with my hon. Friend the Member for Glasgow South (Mr Harris)—many people are not even in the tax bracket, so they will see no benefit from the increase from £10,000 to £10,500.

16:19

[Charlie Elphicke (Dover) (Con)]

It is a pleasure to follow the hon. Member for Dumfries and Galloway (Mr Brown). I want to start by welcoming the Budget and reflecting on the legacy the Chancellor inherited before bringing us to where we are today. Let us not forget that we had a deficit of £156 billion a year, which has now gone down by a third to £109 billion a year. There was a structural deficit from 2002 onwards, and throughout the Labour years there was a total failure to regulate the banks and our banking system, which left it massively exposed, and unemployment rocketed.

The Chancellor had the most difficult inheritance in this country’s history in many ways. He has turned things around these past four years so that this country is now on the path to recovery. The economy is growing, jobs are up and the future looks promising for Britain. In the past, the roof was not fixed while the sun was shining, but while it has been raining we have been furiously fixing the roof and doing so with some success.

Areas such as my constituency of Dover and Deal do not have enormous amounts of money and there is a lot of deprivation. The rise in the personal allowance to £10,500—it was £6,475 when I was elected—will make a real difference to those constituents of mine who are not well paid. It will make an enormous difference for people without a lot of money.

The freeze in fuel duty will make a massive difference for the many people in my constituency who have to travel by car. It is now 20p lower than it would have been under the previous Government’s plans. A freeze in council tax year after year makes a massive difference to my constituents, after it had doubled in previous times. Moreover, given that unemployment in Dover and Deal rose by 50% in the previous Parliament, it makes a massive difference to my constituents that it has fallen by 20% in the past year alone: more jobs, more money, more aspiration and more success. Aspiration matters, too: the number of apprenticeships has risen from 440 when I was elected to 880 today, so there are more chances for our young people.

Not everyone in my constituency is extremely badly off; there are areas where people have more money and are trying to find somewhere to save it in order to get a return. I greatly welcome the fact that we are incentivising ISA saving with a £15,000 limit. It is really important that we encourage a savings culture in this country. Let’s face it: it was destroyed by the pensions tax and everything that followed in previous times. We have to rebuild that savings culture, the idea of a rainy day fund and the ability of our constituents to take more responsibility.

What this Government have done is not just about practical help in terms of more jobs, more money, more prosperity and fewer taxes. In my constituency they have made a much bigger difference in terms of infrastructure and investment. When I was elected, the port of Dover was about to be sold off, having been stuffed in a car boot sale by the previous Prime Minister in a desperate bid to raise some cash. It was going to be sold off to the French or whoever—we did not know who. Our hospital had been decimated over the past decade and was not fit for purpose. A new hospital was needed and had been talked about for years. There were stalled construction sites all over Dover and Deal. I ran a campaign against “coming soon” signs, because they had said “coming soon” for so long—for the past decade—that one of them had rotted away and had to be replaced.

Fast-forward to 2014 and the port has been saved: we are now talking about a community-led port that can get the investment that the port of Dover has needed for so many years. A new hospital is being built, which will make a practical difference to people in their daily lives and will open its doors next year. More jobs have made an enormous difference to people. A compulsory purchase order has been served on Burlington house, which scars the seafront of Dover. That is making a difference and giving people more confidence and hope and a greater sense of belief in the town’s future. A fast train now rolls up at Deal—which was previously considered a village—and shortly will do so all day long. That kind of infrastructure makes a massive difference to people’s prosperity, success and aspiration.

Whereas in previous times the regional South East England Development Agency spent £20 million building a business park near Deal without anything on it—there were not even any buildings—now the coastal communities fund and the Homes and Communities Agency are supporting the Hadlow college project at the former pit site of Betteshanger, which promises to create 1,000 new jobs. That sort of practical help on the ground, which goes beyond high-level policy discussions, makes such a very big difference to people in their daily lives.

That is why I regret hearing the Leader of the Opposition’s speech. He reminded me of Marshal Foch saying, “My centre is collapsing, my left is in retreat and my right has gone altogether”—because all the Blairites have been chased away, sacked and discredited or have resigned. The Labour party’s lurch to the left has done it no good whatever. In its centre, Labour Members have no economic policy, except for more spending, more welfare, more debt and more taxes. Those discredited policies of the past will not take this country forward. To try by sleight of hand to say that they will have a current surplus—thinking that people will not notice a 25 billion quid bit of wriggle room and that he will get away with it—is not the right way to do it. The Leader of the Opposition should have come to the Dispatch Box today with a plan and a positive case, but all he did was rage against iniquities largely created by his party in past times or during the previous Parliament.

[Mark Garnier (Wyre Forest) (Con)]

My hon. Friend will also have noticed that the Leader of the Opposition referred to nothing having been done to reform the banks. He seems to have been asleep for the past four years, during which banking reform and financial services legislation has gone through and a huge amount has been done to reform the banks. Does my hon. Friend think that the Leader of the Opposition has been asleep or has just ignored what has happened?

[Charlie Elphicke]

My hon. Friend asks a very important question about what the Leader of the Opposition has been doing for the past four years. He has certainly not been preparing a high-quality response to this Budget, that is for sure.

Even though the Leader of the Opposition wants to say, “Situation excellent; I am advancing”, not only is there a complete hole or collapse in the centre of the Labour party, with the Opposition having no long-term economic plans, but on its left flank, which is in retreat, Labour Members are talking about the cost of living. What will they say if wages rise above inflation in a few months’ time? It little behoves them to talk in that way, because people will start to see through everything they say. They are now saying that long-term unemployment is terribly high and all that sort of thing. However, when they talked about high unemployment, it started falling, and when they then talked about the lack of full-time jobs, people started getting such jobs. The risk is that the number of long-term unemployed will start to fall in a few months’ time, and they will have to look for another selective statistic to cite. Such talk will not do them any good, because people will see through it.

It is therefore time for the Labour party to think more carefully and more long-term about what it can offer this country, because right now it can offer very little indeed. This Government can and rightly do now say that we cannot give back the keys to the people who crashed the car, particularly when they are still drunk, still will not listen and still have not learned anything, but will carry on and do it all again.

16:27

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

For one hour, I listened very closely to the Chancellor of the Exchequer—during the past few hours, I have had a chance to look through the Red Book to check that I did not miss anything—and I desperately waited for any acknowledgment that millions of people up and down our country are really struggling to get by.

Despite the Chancellor not wanting to hear it and Government Members laughing at my right hon. Friend the Leader of the Opposition when he suggested it, there is a cost of living crisis. We know that working people are £1,600 a year worse off under this Government. Real average earnings are more than £1,600 a year lower today than in May 2010. Prices are going up faster than wages, and the OBR has confirmed that people will be worse off in 2015 than they were in 2010.

Not a week goes by when, at my surgery or on the doorstep, I do not meet a constituent who is really finding it tough. As my hon. Friends have said, such constituents have to make very real choices about having a hot bath or putting food on the table, with mums having to decide whether to go without food in order to feed their kids. A constituent at my surgery last week said that he was reduced to brushing his teeth with salt water and growing a beard because he could not afford toothpaste or razors; not very long ago, he did not have such challenges. Every week, numerous constituents come to my surgery because they cannot pay utility bills and have no answers for the people who come knocking on their door, which is the reality for too many people.

My local food bank will be celebrating—if we can call it a celebration, which it is not—its third year in a few weeks’ time. The number of people in my constituency who have to access emergency food aid has gone up from 2,126 in 2011 to 8,600 in this financial year, and that is not even the final figure. Nationally, more than 500,000 people are having to access emergency food aid, and that is a very conservative estimate.

I raised that point at Prime Minister’s questions the other week after I visited Ilkeston. I raised the case of a young person I met who was called Billy. Billy had been in employment since he left school, but was made redundant at the age of 23. He was making 70 job applications a month on average and could not feed himself. I learned the term “skipping”, which I had not heard before, and raised it at PMQs. Skipping is when people wait for supermarkets to throw food out at the end of the day in order to feed themselves, because they cannot afford to buy food. People wait to forage in the bins of Iceland to feed themselves and their families. The fact that people cannot afford to feed themselves in the seventh richest nation in the world is a national disgrace. I am ashamed that we have a Government who will not acknowledge the impact of their policies, such as people having to turn to food banks.

It is not just families and pensioners on low incomes who are being affected. I held a “what women want” session the other week to celebrate international women’s day. I had a discussion with mums from all different backgrounds at one of my local children’s centres. One of them told me that although both her and her husband have what she described as good jobs—management jobs—they can no longer afford a holiday. Every month, they struggle to make ends meet. That experience was repeated by many people during the discussion. Where is the help for the millions of people on middle and lower incomes who are not feeling any recovery at all? Those people are angry that the Government have given a £3 billion tax cut to people earning more than £150,000, while they and everyone else are worse off.

In the same discussion with women, another concern that was raised was the cost of child care. I echo the concerns raised by my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier). Many of the women said that the cost of child care was making the move into work impossible. The Chancellor’s announcement today does nothing for parents who are suffering eye-watering increases in the cost of nursery places, which has gone up by 30% since 2010. That is compounded by the fact that there are 35,000 fewer child care places. That is unsurprising from a Government who will have taken £15 billion out of support for children by the next election. Parents need support with child care now.

[Ian Swales]

Will the hon. Lady give way?

[Luciana Berger]

I will.

[Mr David Lammy (Tottenham) (Lab)]

That is generous.

[Ian Swales]

I am listening carefully to what the hon. Lady is saying about child care. I wonder whether she is going to mention the 85% of child care costs that will be paid for people who are on universal credit.

[Luciana Berger]

Oh, goodness! As my right hon. Friend the Member for Tottenham (Mr Lammy) said, I was very generous in giving way. I come back to the point that one in three councils do not have enough places to deliver the Government’s promised child care for disadvantaged two-year-olds. Today’s announcement will not come into effect until next year. I reiterate that parents need help now, because child care costs are putting parents off going back into work. I am very disappointed as a result of what we did not hear from the Chancellor today.

I listened closely to the Chancellor’s announcements on energy bills, but the best deal in a broken market is not a good deal. Energy bills have gone up by about £300 since 2010. As I said before, my constituents are facing the choice between heating their homes and eating. The Liverpool Echo, my local newspaper, carried out a special investigation last week that highlighted the experience of Merseyside pensioners, who are being plunged into fuel poverty by rocketing energy bills. Under the Government’s new definition of fuel poverty, my constituency is among the top three in the country for that challenge. Where was the help for those people with their energy bills in the Chancellor’s Budget? There was none.

We need proper reform of the energy market. We need to freeze bills so that we can do what needs to be done to ensure that we know the cost of the energy that is generated by the six companies that generate 70% of the energy in the UK. At the moment, we have no idea of the true cost of that energy. We need to create a transparent pool, so that we are all fully aware of what the companies are generating and the cost of that energy. We also need a regulator with teeth, which we do not have at the moment. There needs to be a means by which people can properly compare and contrast prices, as they can for mobile phone bills. That is not possible at the moment because we do not have single standing charges and unit prices that can be compared. Again, there was nothing from the Chancellor to help not only households and individuals but businesses that are struggling to pay their energy bills.

On the day of the Budget, we have also heard the unemployment figures. The hon. Member for Dover (Charlie Elphicke) just talked about the statistics, but when we talk about long-term youth unemployment, we are talking about young people in my constituency who do not have employment, which will have long-term effects—[Interruption.] The hon. Gentleman gesticulates that the number has come down. In my constituency, the number of long-term unemployed young people—those who have been out of work for more than a year—has gone up by more than 60% since 2010. That is a waste of the talent of our young people and has long-term implications not only for them but for the wider economy. The young people who are not employed at the moment bring a cost to our economy of £3.2 billion over their lifetime. In my constituency, 835 young people are out of work, and I wanted more from the Chancellor to address that situation properly. We know that the current schemes are not working, and that less than 20% of young people locally are getting into work. We need to do everything we can.

[Charlie Elphicke]

Will the hon. Lady give way?

[Luciana Berger]

I will not, because I have less than a minute left.

Labour’s policy is to provide a jobs guarantee by repeating the bankers’ bonus tax. I listened to the Chancellor to hear whether he might do that, but there was nothing on that front, even though Barclays alone has increased bankers’ bonuses by 10% to more than £2.5 billion. Would not some of that money be well invested in the young people of our country, to ensure that they are in work and have a chance throughout their lifetime? We need to get the long-term unemployed, including the young long-term unemployed, off benefits and back into work. A jobs guarantee through repeating the bankers’ bonus tax would have achieved just that.

My constituents will be dismayed by the Chancellor’s Budget. I am sad that he could not find it in himself to acknowledge the cost of living crisis that millions of people are experiencing every day, including in my constituency. The Government are so out of touch, and today’s Budget has reinforced that.

16:37

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

I would like to say that it is a pleasure to follow the hon. Member for Liverpool, Wavertree (Luciana Berger), but I do not recognise the biased and party political points that she made. Her speech was loaded against the positive news, which should be welcomed, about measures to help people in her constituency and others who need the Government’s help and support. I hate to think of the contributions that she and many other Opposition Members would have made if we had not been able to look forward optimistically to the sustainable growth that the Government have helped craft through their difficult decisions over recent years.

As we look optimistically at that growth, it is hard to believe the predictions that the Opposition have presented to us over recent years. We all remember the “too far, too fast” line, and then there was “flatlining”. We then had predictions about a double dip and even a triple dip; then they predicted that there would be a million jobs lost. That shows the Opposition’s lack of credibility, following their previous prediction about having ended boom and bust. They simply have no economic credibility, so their criticisms of an important building block in delivering sustainable economic recovery and growth show them for what they really are.

Of course the growth is welcome, but I am also extremely impressed by the nature of the recovery. Deficit reduction is important in itself—after all, it is the fundamental building block in creating confidence. The deficit has already been reduced by a third, and the Office for Budget Responsibility predicts that it will have been reduced by half by later this year. Of course, that in itself will not deliver sustainable economic growth, so we need to examine the data that are available beneath the deficit reduction figures.

The growth that we are experiencing is quite remarkable, and, again, it undermines the arguments that Opposition Members have made in recent years, and particularly today. The UK is now the fastest growing major economy in the world, and the fastest growing of the OECD nations. Even more than that, all sectors of the economy grew last year. We have to go back to 2007 to find the last time that happened, which demonstrates the balance of the economic recovery we are experiencing, be it in services, construction or manufacturing. Those are important sectors that demonstrate how growth in the economy is serving all parts and sectors of the UK, including those who are employed and those who seek employment. We are all sharing in the success.

All those who spoke from the Opposition Benches mentioned inequality and tried to highlight the differences between those who have and those who have not. However, they missed a really important line from data provided by the OBR and the Office for National Statistics, which is that we now have the least inequality in the United Kingdom for 28 years. That completely exposes all the anecdotal and selective evidence that has been presented. We have the lowest rate of inequality for 28 years, which is something Labour Members should be glad about.

If we examine the data further, we realise that the unemployment figures presented today were remarkable. Unemployment stands at 7.2% across the United Kingdom. It is unheard of for the rate of unemployment in Wales to be lower than the national average. In all my life I cannot remember unemployment in Wales being lower than across the rest of the United Kingdom, yet it now stands at 6.7%, so the gap between unemployment in Wales—my nation—and the rest of the United Kingdom is not just 0.1% as it was last month. I am absolutely delighted, and I hope that Labour Members from the Principality will join me in welcoming that success. It demonstrates that growth is serving every nation of the United Kingdom, and every sector in our country.

If we look at growth figures from the north-west, Wales or anywhere over the past two years, we see that all regions and nations of the United Kingdom have experienced levels of growth. Again, that shows that growth is not dependent on the dominance of London and the south-east, as was the case during the 13 years of the Labour Government.

[Geraint Davies]

As has been said, Wales has the highest level of poverty in the UK, with more in-work poverty than out-of-work poverty, and it is the most affected by the horrendous bedroom tax. The Tories are putting the boot into Wales, which is why we will kick the hon. Gentleman and the Government out next time.

[Alun Cairns]

I am grateful to the hon. Gentleman for making such an important point about poverty in Wales, because it needs to be recognised. However, even in the darkest, most difficult days, when coal mines and steel plants were being closed and things were extremely difficult for those communities, Wales was not the poorest part of the United Kingdom. After 13 years of Labour control, Wales is sadly the poorest part of the United Kingdom, but it is now experiencing higher and faster growth than most other parts of the UK. That goes to show that the UK Government are playing their full part in our turning the corner and getting out of the cul-de-sac that the Labour party left us in. That was what Labour left us.

We talk about balance across the economy, but more needs to be done to strike that balance in every way, and the Budget has taken a significant step in that direction. There has been significant support for manufacturing, including a £7 billion package that provides elements for capping the carbon price support scheme. One benefit of that £7 billion will be the £50,000 cut in energy prices or costs for a mid-size manufacturing plant. There are hundreds of those in Wales, including several in my constituency, and as a result of the Budget they will get a £50,000 cut in energy costs.

[Mark Field (Cities of London and Westminster) (Con)]

Does my hon. Friend also recognise today’s important initiative in relation to export credit guarantees, which will encourage particularly small and medium-sized enterprises looking to export beyond the shores of the United Kingdom? That will make a significant difference in the high-resolution manufacturing industry, which is so well catered for in the part of the UK he represents.

[Alun Cairns]

I am grateful to my hon. Friend for underlining that point. I was going to come on to it, but his intervention presents me with an opportunity to highlight again the balance that the Chancellor is determined to restore to the economy to ensure that every part of the country and every sector within every part of the country is playing a part in promoting the economic growth and is sharing in and generating the prosperity.

The other point I wanted to make on energy related to the support for the energy-intensive industries. Dow Corning in my constituency exports 90% of its output. It is a true success story in the Vale of Glamorgan. The high energy prices really did raise some serious questions for the management of the organisation, but this support will be welcomed far and wide within the group and particularly in Barry, where it is the largest employer.

We need to acknowledge that as this recovery has been built, some people have had to pay quite a significant price, including savers, many of whom are pensioners. Of course, low interest rates were essential to deliver the economic growth we all need and on which public services are built. I am particularly pleased that the Chancellor has recognised that it is time for the growth to be shared with our savers and pensioners. Today’s announcements on encouraging saving, and especially the pensioner bond, is significant. A 2.8% return predicted for one year and a 4% return for three years is really quite important for people who want to be able to plan their future and for those who have done the right thing in that they have worked hard and saved hard.

The changes to the ISA are extremely important and very welcome. They will simplify the process, again providing certainty and security: if people work hard, save hard and do the right thing, this Government are on their side.

Finally, I just want to say this: “If you’re a pensioner or about to retire, there is significant help; if you’re employed, the tax allowance will make a big difference; if you’re a saver, there is extra support; if you want to export, there is help available; and if you’re involved in manufacturing, there are significant energy cost reductions.” This is a Chancellor who is building sustainable economic growth as part of our long-term economic plan.

16:46

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

Following on from the comments of the hon. Member for Vale of Glamorgan (Alun Cairns), may I gently remind him that we have had three wasted years before the recovery kicked in? I am sorry if he thinks that is a partisan or a party political point, but it is factually correct. The majority of my constituents in Hull North are certainly not feeling better off under this recovery, and I think the Budget will do very little to make them feel that things are going to get better for them and their families.

Few people in Hull will be taken in by the Tories rebranding themselves as the “workers’ party.” Some changes, such as the cut to bingo tax, are very welcome after some of the shambolic proposals we had in previous Budgets, like the caravan tax and the pasty tax in the infamous omnishambles Budget.

I listened very carefully to what the Chancellor said about building a resilient economy and delivering security for people in this country. Hull and the Humber should be at the forefront of fighting many of the challenges facing this country, such as climate change, generating green energy and developing the science of flood prevention. I believe we could turn issues that are seen as problems and costs into a positive opportunity for growth in the economy, but looking at this Budget in relation to Hull and the Humber, my constituents will be asking the following questions. Does this Budget help the real wealth creators and invest in the modern public services an efficient, growing economy needs? Does it help, for example, the part-time women workers I recently met in a Tesco in Hull who told me about the problems they were having in getting extra hours to make ends meet and pay their bills?

Hull has the 19th highest unemployment level in the country. Will this Budget help the 4,265 people still out of work in Hull North, according to today’s figures? Will it do anything for the long-term young unemployed in particular? Will it deal with the problem of those not in education, employment or training? It will not do any of those things. As the TUC said today, this is a

“short-term Budget…to shrink the state and help the rich.”

Thanks to the coalition’s confusion over energy policy, we are still awaiting good news from Siemens. If Siemens does not come to Hull, the jobs building wind turbines will in effect be exported out of the UK. Climate change deniers in UKIP might welcome that, but it would be a disaster for the economic regeneration of my city. The Budget also failed to announce rail electrification to Hull, but I hope that the Government will have some good news for us shortly.

We heard in the autumn statement that London is to get two new tube stations and a garden bridge, and there is talk of rebuilding Euston station. However, some bright civil servant thought it a good idea, when announcing the electrification of the trans-Pennine route, to stop in Selby, 20 miles short of the end of the line, which is Hull. Yet again, the people of Hull have said, “If the Government aren’t going to help us, we will help ourselves.” A proposal has been put together to bring in private sector money to electrify the line. If the Government put in some £2 million of public money, it will unlock approximately £96 million of private investment. I hope they will make that announcement shortly, and certainly in time for 2017, when Hull will be the city of culture.

[Ian Mearns (Gateshead) (Lab)]

My hon. Friend is highlighting a very important point about Government investment in electrification programmes in the north of England. I recently attended a meeting of the all-party group on rail in the north, and the map of the investment programme we were looking at had a line heading north-east that said “York”, and then an arrow saying “to Scotland”. The north-east of England was not mentioned at all.

[Diana Johnson]

My hon. Friend makes his point very well. If the Government are serious about rebalancing the economy, they need to invest in northern rail.

It is interesting to note that, because of recent events, the coalition has now realised that flooding is a major economic problem. Perhaps that had something to do with the fact that the Thames valley was affected and the playing fields of Eton were flooded. I am pleased that the Chancellor announced additional money for flood defence work, but of course that should be seen in the context of the Government’s slashing the flood defence budget in previous years. As those in any area that has been flooded know, spending £1 on flood defences saves £8 in the cost of clearing up after a flood, so such investment makes sense.

On flood insurance, I note that the Chancellor is extending the Help to Buy scheme. Advertisements encouraging people to buy are plastered everywhere in places like Kingswood, in Hull North. However, it is a shame that other parts of the Government do not seem to think that houses should be built in areas like Kingswood, because they will not be able to participate in the flood insurance scheme that the Government have negotiated with the insurance industry. I should also point out that the new garden city at Ebbsfleet will be in a flood-risk area, and the owners of the houses built there will not get flood insurance under the Government’s scheme. It seems that one part of the Government does not know what the other part is doing. Small businesses are guaranteed access to flood insurance under the Government’s current scheme, but they will be excluded from the new scheme. The Government need to look at that problem.

On the cost of living crisis, which many people in my constituency face, there has been much fanfare about raising the personal allowance, but we know that 5 million of the poorest workers gain nothing from that increase. Many of those will be women. We know that the Government wanted to give the 8,000 millionaires their £40,000 windfall from the cut in the 50p rate of tax, but it is interesting to note who is bearing the brunt of the coalition’s austerity. The majority of those now falling into poverty and ending up at food banks are actually in work. That shows that the Government are not making work pay: being in work is no longer a guarantee of escaping poverty. FareShare in Hull said this week that demand for its help is up 53%, and the Trussell Trust reported a trebling of food bank use in a year.

[The Economic Secretary to the Treasury (Nicky Morgan)]

Does the hon. Lady accept that with the increase in the personal allowance announced today, particularly from next April, 3.2 million people will be taken out of income tax completely, 56% of whom will be women?

[Diana Johnson]

I do not think the Minister was listening to what I said: 5 million workers earn much less than the personal allowance, so they are not affected by the increase. The analysis that has been done shows that the better off benefit far more from that increase. It is not a way of targeting the poorest in our society.

We are seeing the shocking growth of charity dependency in 21st-century Britain, which, as many hon. Members have said, is the seventh-richest nation. That is Dickensian in a digital age. It is tragic for the life chances of millions of people that after the coalition inherited an economy that had returned to growth in 2010, we have had three years of flatlining. Places such as Hull and the north have suffered the most from, for example, the savage cuts to council funding, despite the coalition Government’s rhetoric about rebalancing the economy.

[Geraint Davies]

Does my hon. Friend agree that the raising of the tax allowance, which will cost £1.4 billion to begin with and rise to £1.8 billion, compared with the bedroom tax, which will save about £500 million, shows us everything we need to know about the Government’s priorities? They are giving three times as much to people who have got some money, and the very poorest are being crushed.

[Diana Johnson]

My hon. Friend makes that point well. There have been 24 tax changes under the Government, and average families will be £1,600 worse off at the end of the Parliament. The recovery is too much based on the south, financial services, private consumer debt and an unsustainable property bubble. More women are now in work than ever before but many of them are in part-time work, on zero-hour contracts or on short-term contracts.

The poorest people in the most deprived areas have been hit hardest by the coalition Government. We have a bedroom tax, but we have no mansion tax. We have bank bonuses for some, but we have food banks for many. The new £1 coin neatly sums up Lib Dem involvement in the coalition. It is not the 12 sides that we need to worry about; it is the two faces. This is another Bullingdon Budget from a coalition of two parties representing one privileged class and creating two nations.

[Several hon. Members]

rose—

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. The enthusiasm for interventions has meant that most Members have spoken for considerably in excess of the eight minutes allotted. Therefore, I have to reduce the time limit to seven minutes.

16:58

[James Duddridge (Rochford and Southend East) (Con)]

I will not break with tradition and agree with everything that thehon. Member for Kingston upon Hull North (Diana Johnson) has said, but I wish her well with getting the Siemens plant. I saw some Siemens wind farms onshore in Morocco in the western Sahara recently, and they are very effective.

Reflecting on the hon. Lady’s quip about our coalition partners, which was somewhat unfair but slightly amusing, I noticed that the Chancellor is announcing a competition to determine what will be on the tails side of the coin. Heads you win; tails you lose, and I hope that at the general election, the Opposition will lose. Perhaps it would be appropriate to commemorate a failed Labour politician on the coin.

The hon. Lady talked about unemployment. I have looked forward, particularly during the past year and a half, to receiving the excellent House of Commons Library brief on unemployment by constituency, which is rich in information on what is happening. Time and again over the past 12 months, the unemployment rate in my constituency has fallen significantly.

I was pleased to hear that the number of 16 to 24-year-olds who are not in education, employment or training—NEETs—had declined to its lowest level UK-wide since 2008. I appreciate, however, that there are unacceptable differences across the country and that some constituencies have yet to feel the benefit. I am sure we all hope that it will be felt in the near future. The extension of the apprenticeship grant for employers to 2015-16 will certainly help, not only in places such as Prospects college in my constituency but in other constituencies where the unemployment situation is even more acute.

The people of Rochford and Southend East will be delighted by this Budget. It will mean more money in the pockets of hard-working people, homeowners and motorists. As the Chancellor put it, it is a Budget for the makers, the doers and particularly the savers. I will focus on the savings element of the Budget later. From an Essex perspective, people in my constituency will be pleased to hear that fuel duty has been frozen once again, providing a saving of 20%, given the rise that would have taken place had it not been blocked. I congratulate my hon. Friend the Member for Harlow (Robert Halfon) on campaigning for that change, and I commend the Chancellor for implementing it.

There was also good news on bingo. We did not get the 15% tax cut that had been requested, but one of 10%. The good people at the Mecca bingo hall in the Victoria ward in Southend might now invite me back. They told me last time that I would not really be welcomed back—[Hon. Members: “Aah!] Yes, I was somewhat surprised, but they were kind to me and said that they had voted for me. However, they made the mistake of allowing me to be the bingo caller, and I got it all wrong. I did not know my fat ladies from my two little ducks, or whatever it is. They told me: “Stick to the day job. Stick to politics.” I will do that, but I might go back and play bingo with them to celebrate the tax cut.

Thanks to this Government and to the Chancellor’s resilience, we will be able to keep interest rates low. This is critical; not enough has been said about interest rates, but they form the backdrop to the economy. The income tax personal allowance is to be increased again, to £10,500. This will really help working families and, in particular, it will help women who have had children to get back into work, perhaps working part time. It is crucial that they should be able to do that relatively early, to maintain a good employment history.

As a cider drinker and a beer drinker—not at the same time—I very much appreciate the Chancellor’s 1p cut in duty. It is a small amount, but it is a nod in the right direction. Based on the average price of a pint in a pub or a club, it means that for every 200 pints hon. Members drink, they will effectively get one free. It is a step in the right direction, and I think a few people in the House and in our constituencies will have a drink to say thanks to the Chancellor of the Exchequer tonight.

The export package is fantastic. It will help companies such as Ipeco, which makes the pilots’ seats for every single Boeing. Hon. Members will not be surprised to hear that it is based in my constituency. The package will also help KeyMed, a big medical supplier in Southend that employs more than 600 people.

Using the LIBOR fine for charities and good works is really nifty, in that it focuses on what we should be focusing on. Most people will not even know what LIBOR stands for—why should they?—but when excesses in the City are identified, they should be punished. It is great that the LIBOR fine will be paid to charities and to organisations such as the Royal National Lifeboat Institution, which operates on the foreshore in Southend as well as at the end of the longest pleasure pier in the world. The scouting movement will also receive some of that money, which is to be welcomed.

The companies around London Southend airport will welcome the Budget, and I look forward to reviewing it with them in the next few weeks when the Secretary of State for Transport comes to launch the new, improved terminal. The change to air passenger duty for flights to the Caribbean has long been called for and an inequity has now been resolved. Hats off to the Chancellor for finally sorting that one out.

The Chancellor talked of the city deal, from which Southend has benefited. On savers, it is wonderful that we are now able to trust people on annuities. The ISA merger is superb as it will allow people to save more and to move from equities to cash in later life, not just with new ISAs, but with the old ones. I noticed that on the Treasury website it is referred to as NISA rather than ISA. I hope we are not trying to rebrand for the sake of it, as natty as NISA sounds. The savings tax for people on low incomes, taking them out at £5,000 is excellent. Overall, there is something for everyone in this Budget and I am sure the good people of Rochford and Southend East will be very happy with it.

17:05

[Ms Margaret Ritchie (South Down) (SDLP)]

Following convention I shall refer to the hon. Member for Rochford and Southend East (James Duddridge) and say I agree with some of what he said, but I disagree with the vast proportion of his speech because it deals with the general principles of the Chancellor’s Budget.

From the Chancellor’s speech one would think that everything was rosy with the economy, but that is not the case. Many people, including those in Northern Ireland, are experiencing a very different reality—a reality that the current Government are almost completely out of touch with. Families are faced with rising food bills, sky-rocketing energy costs and stagnant wages. This is pushing more and more people into personal debt and we could be faced with a personal credit crisis as people over-extend credit cards and use payday loan companies to cover rising bills. The Governor of the Bank of England, Mark Carney, warned just yesterday that excessive borrowing was again posing a grave danger to the economy.

The employment figures announced today do not tell the full story, with a vast proportion of these new jobs coming from self-employment, temporary positions and zero-hours contracts. Many of these jobs are unstable and reflect not a true recovery, but a permanent low-wage economy. The figures are not geographically consistent. According to the Department of Enterprise, Trade and Investment in Northern Ireland, the local employment rate of 72% is the lowest of any region, and unemployment remains stubbornly high at 7.5%, compared with the UK average of 7.2%.

This is to say nothing of the tragedy of joblessness faced by our young people. Youth unemployment stands at nearly a million in the UK and more than 20,000 in Northern Ireland. About one in four of our young people cannot find a job, which will have a devastating impact on our economy and on their own lives in the coming years. Many have emigrated and many more face emigration. PricewaterhouseCoopers has said that this will cost the Northern Ireland economy £l billion by 2016. The Chancellor said nothing new today that makes me think he grasps the scale of the problem or is seeking the necessary remedies.

[Jim Shannon]

The Government have made concessions on the transferable tax allowance and on child care provision, but they have omitted to make any allowance for single-earner families where one of the parents goes to work and they forgo a second salary so that they can invest in the life of their children. There is provision for those at the higher level of taxation and provision for those at the lower level of taxation in respect of child care, but for those in between there is none. Does the hon. Lady agree that there is a shortfall in the Government’s child care provision for that section of the community?

[Ms Ritchie]

Yes, I agree. The Government need to make provision for that section of the population.

With respect to welfare, the supposed recovery is not a balanced one, as this Government continue to attack the most vulnerable and worst-off while giving handouts to those at the top. This political sleight of hand, blaming the poorest in society for the economic woes caused by the banking collapse, which has been repeated by the Chancellor in Budget after Budget, is deeply cynical and should not go unchallenged. The Government’s divisive rhetoric and continued draconian approach to welfare reform is of great concern. The current roll-out of universal credit is unravelling at an alarming rate, yet we are expected to accept even more of this misery for the worst-off in society. We have valid concerns about these measures in Northern Ireland, yet the British Government and the Department for Work and Pensions continue to try to force this issue through with threats and grandstanding.

Today, we hear of further attacks on the most vulnerable, with the introduction of a cap on welfare spending. I have great fears that this proposed cap will be used in an entirely pernicious manner, with little consideration given to need. As always with the Budget, the devil will be in the detail, and I will be fully pursuing this in subsequent weeks. In particular, concerns have been raised as to exactly what benefits will and will not be included in such a cap. I have since been informed that benefits such as disability living allowance, carer’s allowance and bereavement benefits—the very benefits that affect some of the most vulnerable in our society—will be impacted upon.

Although some elements of the Budget are to be welcomed, I have a concern in respect of one sector. The tourism sector is absolutely vital for our economy in Northern Ireland. The measure announced in relation to air passenger duty is extremely limited and will do nothing to lower the excessive rate of duty on flights within the UK and to Europe—such flights form the vast majority of those to and from Northern Ireland. We are still faced with the highest rates of APD and VAT on tourism products in the EU. Almost every EU state has some form of reduction in VAT for the tourism industry, and just last month I held a debate asking for the Treasury to consider introducing a similar scheme in the UK, which would provide an instant boost for the tourism industry and our tourism sector in Northern Ireland. It was notable during that debate that MPs from across the House supported my proposal, including many of the Chancellor’s own Back Benchers. The lack of movement on either of those issues was a glaring omission from today’s Budget.

We see Ireland as an island tourist market, but businesses in the north face a 20% rate of VAT, whereas the Irish Government have taken the sensible step of keeping their rate at 9% for tourism products. Regrettably, the only border for tourists moving between the south and the north is an economic one, brought about by the decisions of the UK Treasury. I ask the Chancellor again to take a hard look at a cut in the rate of VAT for tourism products, which would become budget-neutral after the first year, according to Professor Blake, who used the Treasury’s own economic model.

[Jim Shannon]

Will the hon. Lady give way?

[Ms Ritchie]

I am sorry, but I cannot give way again, as I am conscious that other Members wish to speak.

We are also seeking clarification on the aggregates credit levy scheme. I have had much correspondence with the Chancellor and Treasury Ministers on that issue, and I understand that we may be nearing a positive conclusion with the European Commission. So it would be helpful if we could get clarification on that issue, and on the whole area of the Barnett consequentials for flood defences, because I represent a coastal constituency whose coast has been undermined by the impact of climate change.

This was a political Budget from a political Chancellor, and it comes at the cost of the real economy. It will give little comfort to people who will continue to face low wages and high costs.

17:13

[Gordon Birtwistle (Burnley) (LD)]

I have sat through this debate for the past four hours, listening to the doom merchants from the Labour party, so I would just like to advise them of the position in my constituency, not what people would class as a high-wage, high-cost constituency. In 2010, we had unemployment in excess of 10% and we were in the top 10 of the worst unemployment blackspots in the country. This morning I got the figures for my constituency, and unemployment has now dropped to 5% and the town is listed 173rd for unemployment. That is a dramatic recovery.

The increase in personal allowances was the major issue for me in the Budget. It was something that I had campaigned for and that was on the front page of the Liberal Democrat manifesto at the last election—[Interruption.]

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

rose—

[Gordon Birtwistle]

I will give way to my hon. Friend and leave out the shouters on the Opposition Benches.

[Jake Berry]

Let me touch on the unemployment figures in east Lancashire. Like me, my hon. Friend will want to congratulate Rossendale and Darwen as well as Burnley on their reducing figures. Does he not accept, though, that the fact that the three-month claimant count in the north-west has gone up shows just how fragile the recovery is and how dangerous it would be to go back to the Opposition party’s policies of more borrowing, more debt and higher unemployment for east Lancashire?

[Gordon Birtwistle]

I thank my hon. Friend for that remark. When it comes to the north-west, I can only speak about my constituency of Burnley, which is a prosperous manufacturing town. We have invested heavily in manufacturing over the years, and I am pleased to say that we are not one of the problems in the north-west.

I am delighted to hear about the continuation of the triple lock on pensions, which is great for pensioners. I have to declare an interest as I am a pensioner and I understand how it all works. I welcome the end to the hideous 75p rise that was awarded to pensioners under the previous Government.

I am also delighted that we still have the excellent pupil premium, as I have a number of junior schools in my constituency. One school alone receives more than £100,000 a year to help children from really poor backgrounds.

My main interests are manufacturing and apprenticeships. The Chancellor’s decision two Budgets ago to introduce capital allowances was something that I had argued for and that he had agreed were a great idea, but as the scheme had run for two years, I fully expected him to cancel it in this Budget. However, he did not cancel it; he doubled it to half a million pounds a year. An Opposition Member said that she could not understand the reason for capital allowances. She asked what they could do for manufacturing. Obviously, she has never been involved in manufacturing, and probably has never been in business. She is probably one of the few Members who do not understand what is going on.

I also want to comment on the amazing rise in apprenticeships. In my role as apprenticeships ambassador, I have been able to visit apprentices in different industries across the country. I have seen apprentices build Typhoon fighter jets at BAE Systems in Preston, missile systems in Bolton and Airbus aircraft wings in Chester. I have also seen the other side of manufacturing. Only yesterday, I went to see apprentices at Starbucks in the Westfield shopping centre in White City and they showed me how to make a proper latte with a fancy topping. I met some amazing young people.

I have also met apprentices at Next—one would not expect that such industries would have apprentices. The young apprentices at Next were absolutely amazing and a credit to the young people of this country. I did not realise that Next ran such an excellent apprenticeship scheme, which rivals the one run by Rolls-Royce. Next is committed to its young people, and it sees apprentices as its assets for the future. It is fantastic to see the massive rise in apprenticeships. Apprentices are the future—[Interruption.] If the hon. Member for Swansea West (Geraint Davies) wants to intervene, I am happy to give way.

[Geraint Davies]

I am amazed that the hon. Gentleman compares the apprenticeships at Next with those at Rolls-Royce. What a disgraceful thing to say about one of our foremost companies. Picking socks is not the same as fixing engines.

[Gordon Birtwistle]

If the hon. Gentleman had listened rather than talked to his friends, he would have realised that I was talking about the apprenticeship scheme, and not the apprentices themselves. Next treats apprentices properly, and they go through a proper three-year training programme, as do the Rolls-Royce apprentices. It is a different industry, but those young people are as keen as the apprentices at Rolls-Royce to have a proper career—rather than the career that the Labour party offered them when they were in government—and one of which they can be proud.

The hon. Gentleman might not think that is a good idea, and perhaps in his constituency he would like young people to go on Government training schemes that deliver nothing. These schemes are delivered by proper companies for young people.

[Simon Danczuk (Rochdale) (Lab)]

Youth contracts.

[Gordon Birtwistle]

They are not youth contracts. They are proper training schemes, and young people are absolutely delighted to be on them. I am appalled that the hon. Member for Swansea West should try to decry them. It is absolutely disgraceful, and he should withdraw his comments.

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

rose—

[Gordon Birtwistle]

Unfortunately, I cannot give way, as I have done so twice, and I regret giving way the second time.

I welcome the new pension scheme. It is a fantastic scheme, but I would like—and this is something a number of my constituents have asked for—an end to the problems with Equitable Life. It is time that the Government looked at how we can finally wind up the problems with Equitable Life. Many Equitable Life members are now very elderly, and they would like a conclusion to the problems, which should have been sorted out by the previous Government. I believe that we should step in and sort them out. It is not a lot of money, so we should do that.

I welcome the Budget. The Government are working towards delivering a strong economy. They are delivering a fairer economy, they are creating jobs for our young people, and they are creating security for our industries. The previous Government had one major success: they managed to reduce manufacturing from 22% to 9% without trying. That was an absolute scandal of their 13 years in office. Fortunately, we are now bringing manufacturing back, and we are bringing apprentices back. Manufacturing is climbing again, and it is saving this country from the mess it was left in.

17:22

[Yasmin Qureshi (Bolton South East) (Lab)]

There was much in the Chancellor’s speech with which I disagreed, but at least I gave him the courtesy of listening, unlike Government Members, who gave no such courtesy to the Leader of the Opposition. In fact, when my right hon. Friend was talking about the crisis of living standards, there was a great deal of laughter among Government Members. The country will have seen exactly what they stand for.

The Chancellor began his speech—and Government Members have repeated this—with the mantra, “Oh, the recession was caused by the Opposition.” Somehow, it was financial mismanagement by the Labour Government that caused the economic crisis. That is not true, because there was a worldwide recession. Perhaps I can help Government Members with some facts and figures. When Labour came to power in 1997, the ratio of gross domestic product to national debt was about 47%, but by 2001, after four years of Labour government, that percentage was in the low 30s. [Interruption.] It came down to 33%, so it was 10% less than it was when the Conservative party was in power. It was not until 2008-09 that the ratio of GDP to national debt went up. Everybody knew why it did—there was a global recession. At the end of the day, the Labour party was not in power in the USA, Japan, Germany or other countries. To claim that the financial crisis was somehow caused by the Labour party’s mismanagement is complete and utter nonsense. Government Members should really stop peddling these myths and lies.

[Damian Collins]

The hon. Lady has missed out the fact that the Labour party was running a deficit before the recession, when the economy was growing. That is why we were in the mess we were in.

[Yasmin Qureshi]

That is absolutely wrong. A few years after we came into office, the amount of the receipts coming in was more than the national debt, the GDP net. After the debate I can certainly give the hon. Gentleman the facts and figures from the Institute for Fiscal Studies, which show how prudently we looked after the economy. Yes, we spent, but guess what? We spent on hospitals and schools. We took millions of children out of poverty. We provided working tax credits for poor families. I do not remember Opposition Members at the time complaining when new schools and hospitals were being built or refurbished in their constituencies. I do not remember any Members complaining about that. That was real investment. The suggestion that the previous Labour Government spent money on throwing parties or something is ridiculous. It was real investment in our country’s infrastructure, which created jobs and made ordinary people’s lives better.

[Mr MacNeil]

The hon. Lady says that no Members complained when schools were built in their constituencies, but they did. I remember writing long letters about the private finance initiative and the false comparison with the public sector, which was based on a false equation. I think they were built expensively under the Labour Government. I am sorry to have to bring that up after she was so generous in giving way.

[Yasmin Qureshi]

I agree that there were some problems with PFI. I am not one of those who say that everything was perfect. However, to suggest that spending on our country’s infrastructure, which created jobs, made people better off and led to between £80 billion and £90 billion being spent on the national health service, was somehow a waste of money is, I think, a real insult to the people of this country.

If my memory serves me correctly, the Opposition at the time agreed fully with the Government’s spending analysis. They did not object to any of it and said that they would carry on spending at the same rate. Therefore, to try to suggest that somehow money was spent recklessly is absolute rubbish. The myths that Government Members have been peddling for the past four years should stop. The Government parties should recognise that they have been in power for four years and should start thinking about what they have done.

We know that on average families are £1,600 worse off. Energy prices have gone up and up. We have said that there should be an energy price freeze until 2017. If the Government really want to help ordinary people, why do they not do that and reform the energy sector? The education maintenance allowance, which helped 16 to 18-year-olds from poor families to stay in school, was abolished, which again hit the poorest in our society the hardest. The Chancellor today announced a new garden city, but it has taken him four years. We have been arguing for four years that more house building projects are needed. It is great that something is now happening, but we have had to wait too long for it.

I would like the Chancellor to have frozen energy bills until 2017, which would have been really helpful. Young people should have been put back to work with a jobs guarantee scheme, which we have said would be funded by a tax on bankers’ bonuses. Free child care should be extended to 24 hours for three to four-year-olds, and we should also cut taxes for 24 million people on lower incomes, with a lower 10p starting rate of income tax. That would help a lot of ordinary working people. The Government should also cut business rates for small firms so that we can create more jobs. That, too, would help ordinary people and small businesses.

Finally, we should consider the issue of equality, pay gaps and wealth distribution. It is said that things are better now than 28 years ago, but recently there have been various articles and a lot of discussion about the fact that the pay gap is too large. Even the International Monetary Fund, hardly a hotbed of communism, has said that countries with a great deal of inequality have economic as well as social problems as a result. Steps should be taken to narrow the gap even more. There should have been real measures to tax the really wealthy in our society, especially their homes, so that we can reduce the gap.

Even Her Majesty, who is not known for getting involved in the political issues of the day, has expressed concern about the level of poverty and the situation of the poor. If the Queen starts getting involved in these issues, that is a wake-up call for everybody—not just for the Government, but for my party. However, the coalition is in power and it should be looking at the issue of inequality.

Apart from the fact that it is only right that society should be more equal and fair, addressing inequality makes economic sense. Problems with mental and physical health often arise from financial difficulties and cost the economy about £40 billion. Addressing inequality makes sense, but there was nothing in the Chancellor’s speech that helps the ordinary working poor person.

[Several hon. Members]

rose—

[Mr Speaker]

Order. I am sorry to have to tell the House that, to get more colleagues in, I must reduce the time limit, with immediate effect, to six minutes—a reduction of one minute.

17:32

[George Freeman (Mid Norfolk) (Con)]

It is a pleasure to follow the hon. Member for Bolton South East (Yasmin Qureshi).

I suggest that today’s Budget was a significant and historic one for this country. Twelve months before a crucial general election, it gave the British people a clear choice. It showed through the Office for Budget Responsibility report the success of the last four years’ work of rebalancing and laying the foundations for long-term growth. It showed us a Chancellor and a Government committed to the long-term programme of recovery on which we had embarked. It was a Budget for resilience, responsibility and the real economy.

I particularly want to highlight three elements: first, the extent to which we have finally begun to get on top of the appalling historic legacy of debt that we inherited from the Labour party; secondly, the significant steps that we set out to support science, innovation and export-led growth; and thirdly, the historic package of support for savers and pensioners.

[Dr Julian Huppert (Cambridge) (LD)]

Will the hon. Gentleman add the Cambridge city deal as a fourth point? That will contribute so much to what will help his constituents, as well as mine.

[George Freeman]

I am delighted that the Chancellor has been able to support the Cambridge city deal, which will play a key part in our innovation economy.

We should take time to remember the mess that we inherited four years ago, and the causes of it. The truth is that between 1997 and 2010, we saw the largest increase in public spending as a percentage of national income of any industrialised country. During that period, we rose from 22nd to sixth in the world league table for public spending as a percentage of national income. Before Opposition Members try to argue that that was a result of the global crash—indeed, after they have tried to do that—I should say that if we take the date of 2007, before the crash, we see that our position on the table had risen from 22nd to 10th. That is the second largest increase in history.

That legacy was created by a wilful overspend by the Labour party. It left us, in 2010, with the biggest peacetime budget deficit in our history—a £157 billion deficit and a £1 trillion debt. If we pay off that debt at £1 million a minute, it will take us 30 years. The truth is that everybody in this country is now paying for that. We inherited a situation in which debt interest alone was set to rise to £70 billion a year. When we started, debt interest alone was, in effect, the fourth biggest Department of State, and we were borrowing £1 for every £4 spent. It was an absolute disgrace for the outgoing Labour Government’s Chief Secretary to have left a note with an exclamation mark saying that he thought it was funny that there was no money left. We should remember that. I do not think it is a joke, because we are all paying the price.

That is why I welcome the Chancellor’s announcement of the OBR’s reporting on the progress that we are making in our deficit reduction plan through the 80:20 rule—80% from spending and 20% from tax. These were tough decisions—all of which, we should remember, were opposed by Labour—and they are now beginning to lead to sustained long-term growth. Growth is up to its highest level for 30 years, and we are now the fastest growing economy in the G8. Some 1.5 million private sector jobs have been created—three for every one regrettably lost in the public sector. There has been a 24% fall in unemployment, with the fastest fall in youth unemployment for 20 years. As a result, we are now on track to eradicate the deficit by 2018 and we are paying off debt quicker than any other western economy. That is a record of which we should be proud and a record to which this Budget stands testament.

I want to highlight the important work that the Government are doing from that platform to support our innovation economy. Today’s announcements on science and technology and the knowledge economy included £42 million for a new Alan Turing institute of big data, in which Britain is leading the world; £74 million for the cell therapy manufacturing centre and the graphene innovation centre, putting Britain at the cutting edge of new technologies that will turbo-charge new industries and new business creation; and £106 million for 20 doctoral training centres across the country.

We have an enormous opportunity to trade our way out of the debt crisis by plugging into the fastest growing emerging markets around the world, particularly in the life sciences, in food, in medicine, and in energy. In 30 years, those economies will go through the same industrial and agricultural revolution that we started and went through in 300 years. They represent vast markets for our knowledge economy. That is why I particularly welcome the support for export finance. As a trade envoy and a former business man myself, I know how important it is to support our small companies. We are starting from a woefully and shamefully low base. After 13 years, Labour left us very weakly linked into those emerging markets. We still export more to Luxembourg and Belgium than we do to China. I am delighted that the Government are making such progress.

You do not need to take this from me, Mr Speaker—take it from the business community. The Institute of Directors has said:

“This is a responsible and imaginative budget which should promote growth, exports and investment. It will be widely welcomed.”

The British Chambers of Commerce said this afternoon that the Budget was

“disciplined, focused, and geared toward the creation of wealth and jobs”

and that it “passes the business test”. The CBI has said:

“The Budget will put wind in the sails of business investment, especially for manufacturers.”

I turn to the historic announcements on savings and pensions, with the pensioner bond, the new ISA, the abolition of the 10p rate on savings, the child trust fund, and the increase in the amount that can be invested in the junior ISA.

[Mr MacNeil]

There is often a problem with the governance of ISAs when the banks attract savers into ISAs and then change their rules and boundaries so that within a year they are no longer selling that ISA but have moved on to the next ISA pot. Sometimes savers may be ripped off by banks that have not been responsible in managing their ISAs properly in moving the vehicle that the money is in and lowering the interest rate after a year or two.

[George Freeman]

The hon. Gentleman makes an interesting point. The bigger point is that in the 1980s the Conservative party launched a historic renaissance of saving and wealth creation whereby more and more people, through ISAs and PEPs, were able to own shares and save. That was wilfully destroyed by the former Labour Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), through his stealth taxes. It has long been necessary for us to restore a culture and a set of incentives for a genuine renaissance in savings, and that is key to the resilience that the Chancellor set out today. That was the most important set of measures in today’s Budget, and it will stand the test of time.

What did we hear from Labour Members? I came here genuinely wanting to hear the Opposition’s response to this package. I wanted to hear the alternative economic policy that Labour is going to put to the British people next spring. For all the noise we hear on the Government side of the House, the real test, as we know, is the silence from the Opposition Benches. What we heard today was an embarrassing descent into business bashing and class war. If that is what the Leader of the Opposition defines as his “new socialism”, I wish him luck. I will be sending a copy of his speech to all the businesses in my constituency, because it fails the business test in spades, and it is the business test that will drive the growth and investment on which the public sector always depends.

[Ian Mearns]

Will the hon. Gentleman also be sending them a copy of the noise that was being generated by Government Members during the speech of the Leader of the Opposition today?

[George Freeman]

I will have a chance to read Hansard. I am not surprised there was noise. It was a shameful performance. When, 12 months from the election, this country needs a choice, and Her Majesty’s Opposition are supposed to set out an alternative economic policy, it was woeful. It gives me no pleasure to say it. The result is that the choice is now clear: a Chancellor, a Government and a Prime Minister with a long-term plan for resilience and recovery, led by the real economy and investment, and a Leader of the Opposition who seems now committed simply to going into the election on a ticket of partisan politics and gesturing to his trade union funders. It was not a Budget response that merited his title. It did not set out a serious economic programme for recovery, and I am afraid that it deserves the response that I think it will get at next year’s general election.

17:40

[Mr David Lammy (Tottenham) (Lab)]

I am grateful for the opportunity to speak in this Budget debate. I begin by welcoming the Chancellor’s announcement on new housing developments at Brent Cross and Barking-Riverside, and the overground extension at Barking. Those are much needed in London. There were also important announcements for the air ambulance service in London, particularly a reduction in VAT on fuel, which I know will be welcomed by the London ambulance service. For those who have campaigned for many years on air passenger duty—the Minister will recognise that that has been a real sore in the Caribbean community throughout this country and I know that Northern Ireland Members have also raised the issue—the announcements were surprising but very welcome.

I had hoped that the Chancellor would deal with one of the central challenges in our economy, which The Spectator described as one of the biggest and most disturbing social changes of our age: the polarisation in the unemployment market, referred to in a BIS report last year. Britain now has an hourglass economy, with a significant chunk of jobs at the top end—those on huge salaries in the banking industry or those who are part of the global industrial nature of our world—and a shrinking of jobs for those in the middle level and those who are working up and hoping to take part in our economy. It is why there is such a debate about the living wage and the minimum wage. We heard nothing in this debate about how we are to deal with this hourglass economy.

Our economy has lost 1.2 million semi-skilled jobs that so many hon. Members would have recognised just a few decades ago. I am talking about the manual operators, the secretarial and administrative jobs that existed in our economy. People are being squeezed as a result. Of the newly created jobs, 300,000 are in customer services. The number of men working in customer services has risen by 46%. There is a real issue about the quality of jobs in this economy, and how working people can provide for their families. Some 88% of Londoners are now reliant on the service economy. The fundamental question for any Chancellor is whether that is satisfactory when the bulk of those services are in the retail economy. We say that the economy is looking better and consumers are spending a bit more, but can we not learn from the economic crash in the first place and ask for an economy based on creativity and innovation, and not one based on consumption and predatory practices, as the Government seem to applaud without dealing with the structural problems in our economy?

I want to see more manufacturing in our capital city. If New York can do it, so can we. Advanced manufacturing means that people are paid more. We ought to be setting that as our aim, but the Budget did not seem to deal with those issues. Of course one welcomes the extra 15,000 homes in Ebbsfleet, but the vision is poor. Eleven new towns were set up in the Abercrombie plan—look to Stevenage, Crawley and Peterborough, where I went to school. The idea that we will solve our housing crisis with 15,000 homes is, frankly, pathetic.

In London, people’s rents have increased eight times faster than their salary and an average property costs 16 times the salary of those who want to buy their own home. The average age of a first-time buyer in London is 38 and they are doing it with the help of the bank of mum and dad: 70% of them are borrowing from their parents in order to get a deposit and get on the ladder. I did not hear enough about how this Budget will deal with the big housing challenge this country faces.

I welcome the decisions on energy in particular, but if we are really going to be a creative economy and the innovation nation that we have to be in order to compete with so many other countries, research and development is critical, but spending on it in Britain dropped again last year by 8%. What was in this Budget to support R and D and ensure that we will be the innovation nation that we have to be? Not enough.

The Budget felt complacent. It gave the impression that all is good. Apparently we are all in it together, but in fact, when this House votes on the Budget, we will be voting, in effect, for an increase in our pay, because the thresholds have changed and we will benefit. My concern is for the many out there who will not benefit from this Budget—the many who are dependent on an economy with structural problems that are not being addressed, on housing and on those jobs that that this country needs. We should see more from this Government.

17:46

[Andrew Selous (South West Bedfordshire) (Con)]

It is a pleasure to follow the right hon. Member for Tottenham (Mr Lammy), who understands the need for strong families.

I want to deal head-on with many of the points that have been made about the financial challenges that people face. The facts are that the recession this country faced was much deeper than we thought; at the same time, this country faced a huge commodity price shock, with energy and food prices going up significantly; and our major market in the eurozone, where half our exports go, was flat on its back. Those were significant challenges.

The Chief Secretary in the previous Government, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), pointed out that wages for lower-paid workers had been rising very slowly since 2003. On top of that, there was a huge wave of immigration under the previous Government. Between 2005 and 2010, there were 413,000 fewer British people and 736,000 more foreigners in employment. Those are official figures from the Office for National Statistics. That had an impact on driving down wages, which has been at the root of many of the concerns we have heard from the Labour party.

How do we deal with low wages and create a high-wealth economy so that we can deal with the issues of poverty we have been discussing this afternoon? We do it by having world-class schools. This is a Government who are not content with British children getting better educational results than the previous year—they want them to match the results of those in the highest performing countries. We do it through highly skilled apprenticeships: the number of people going into apprenticeships has doubled, and some 2 million apprenticeships have been launched under this Government. We do it by setting up university technical colleges nationally—my constituency has Central Bedfordshire UTC—to make sure that our young people have the skills to go on to earn decent wages in productive industries. That is how we will deal with productivity, because the money is there to be earned.

Government Members think it is morally unacceptable to pass this generation’s unpaid debts on to our children and grandchildren. It is frankly shameful that this country has not lived within its means since 2001. The fact is that every four days we are still spending £1 billion more than our income. That is why we have further work to do on getting the budget back in balance. As the Chancellor reminded us at the start of his speech, we still have one of the highest deficits in the world.

In their first term, the Labour Government brought down debt as a proportion of GDP from, roughly, 40% to 30% when they followed Conservative financial plans, and I commend them for that. To be fair, they were right to do it.

We have created 1.7 million new private sector jobs, with 400,000 new businesses set up, and we are looking at a real-terms increase in the minimum wage to £6.50. I may add that cleaners at the Department for Work and Pensions are now on the living wage, which was not the case under the previous Government. For the first time in 35 years, the United Kingdom has a higher employment rate than the USA.

For pensioners and savers, the Chancellor has today announced fantastic and really significant changes. I remember saying in opposition, in one of my first speeches in this House, that I wanted people to have the same sense of ownership in relation to their pension as they have in relation to their house or their car, and we have moved significantly towards that today. People will feel that they own this money and have much greater control over it and much greater flexibility, which is all hugely welcome.

The tax cuts coming in are hugely significant. The investment allowance is going up to £500,000. Fuel duty has been frozen. Council tax has again been frozen. The personal allowance will increase to £10,500. Corporation tax has been cut from 28% to 21%. Business rates for smaller businesses will be cut next month by £1,000, which is brilliant for our small shops and businesses. Employers national insurance contributions will also be cut from next month by £2,000. A penny is being taken off a pint of beer. From next April, national insurance will not have to be paid for everyone under 22. All those measures will help enormously, as will the cuts in energy costs, which I was delighted to hear about because they are absolutely necessary. I very much welcome the fact that families will get a further £15 off their energy bills, while mid-sized manufacturers will get £50,000 off their bills.

What the Chancellor said about exports was fantastically significant. Going from the least competitive to the most competitive export finance regime in Europe is fantastic. I am the son of a small manufacturer who exported all over the world, so this is in my blood. I get hugely excited when I see businesses in my constituency—BE Aerospace, Honeytop Speciality Foods, Strongbox Marine Furniture—exporting all around the world. We need to give them more help, and we need more exports.

The Chancellor said that this is a Budget for resilience, and it is good that this Government are trying to encourage resilient families. The number of children living with both parents has increased by 250,000, going up from 67% to 69%; and it is particularly welcome that the figure has gone up from 45% to 48% for low-income families.

Finally, I hugely welcome the cut in VAT on air ambulances. Many mayors in my constituency have raised money for the air ambulance in the east of England.

17:52

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

It is a great pleasure to follow the hon. Member for South West Bedfordshire (Andrew Selous), who seems to have been spellbound by the Wizard of Osborne’s Wonga economics.

I say that because since the arrival of this Government, debt as a share of GDP has risen from 55% to 75%, and it will rise to 80% when they leave office next year. [Interruption.] Contrary to the mutterings by Government Front Benchers, the reality is that the previous Government did a very good job in increasing GDP by 40% in the 10 years to 2008 and, when they faced an international crisis, by engaging in fiscal stimulus—with President Obama—to avoid a deep depression and give us a shallow recession, so that by 2010 we had the modest growth that was then destroyed by the current Chancellor. He announced 500,000 job cuts in the public sector, which basically stopped consumption and flatlined the economy, which is why the debt has grown and why this Government have borrowed more in three and a half years than the previous Government did in 13 years.

The Chancellor says that there is now growth, with a new recovery, but if we analyse that growth, we can see that lending by banks in the form of mortgages and consumer debt is at the same level as in 2008, while lending to business is down by 30%. That is why productivity has fallen—down 5% in Britain, compared with an 8% rise in America—and why this is not sustainable growth rooted in the real economy, but just a bubble in the housing market that will burst once interest rates go up, as they will when unemployment goes below 7%. After the next election, the bubble will blow up in people’s faces, as happened with sub-prime debt, because people do not have the income to pay the higher mortgage costs that will follow a rise in interest rates.

Government Members say that everything is rosy and that incomes are going up, but the people who are worst off are those on jobseeker’s allowance who are desperately looking for jobs. As I mentioned in an intervention, in Swansea 65% of people who are on JSA have been sanctioned. They have less than £72 a week to live on, but they are having money taken away for not turning up to Work programme appointments that they were only notified of the day after the appointment should have happened. That is a dreadful situation.

I met somebody last week who has chronic disabilities. He has a major heart condition. Although he is 28 years old, he was judged to have the physique of somebody of 98 by his consultant. He went to Atos and got zero points. He is now in a state of malnutrition, along with his other problems. He is unfit to work.

We all welcome the increase in the tax allowance. That will cost about £1.8 billion. There was choice about that this year.

There has been some talk of inequality being at a 25-year low. However, the changes in benefits will increase inequality. The poorest spend a greater proportion of their money on indirect taxes—some 30% for the poorest fifth compared with 14% for the richest fifth—but the Tories have decided to give money away through direct taxes, because that helps people who are better off. That is only what we would expect.

The major initiatives on exports, such as credits for exports and support for UKTI, are to be welcomed, but let us not forget that the trade deficit has grown by 15% from £100 billion to £115 billion since 2010. We welcome the increase in building, but let us not forget that the target is lower than the increase required by population growth alone. Companies such as Taylor Wimpey and Barratt are saying that they will build a maximum of only 15,000 homes a year each. All the money is being funnelled by the banking system into mortgages, which is lifting the price of existing houses, rather than into building new houses, so Help to Buy is obviously a political ploy that will blow up in our faces.

There have been cuts in infrastructure over the past two years, and they are beginning to pick up. High Speed 2 will not arrive until 2030. The Prime Minister said that he would electrify the railways in the valleys, but now he is saying that the Welsh Government should do it. The Government have given borrowing powers to the Welsh Government and so have said they have to pay for it. That was a clever bit of footwork. There was a 49% cut in road building between 2010 and 2012, and there are no new motorways or highways.

I welcome the cuts in energy prices for companies such as Tata, which is local to me. However, much of the problem was created by the Chancellor’s carbon pricing in previous Budgets.

Obviously bingo is great. If people go down the pub and buy 200 pints of beer, they will now get one pint free. That is great as well.

Overall, this is a political Budget that is focused on the better-off and the south-east, and that cuts the public services that people rely on. It could have been better for businesses and for people. We want a one nation economy, not two nations in Britain being pulled apart. We want fairness and strength, but we will not get them with this lousy Budget.

17:58

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

Mr Speaker,

“By making a better business environment his top priority, the Chancellor has recognised that successful and confident companies are the key to transforming Britain’s growing economic recovery into one that is felt in homes and on high streets.”

That was the response this afternoon of the director general of the British Chambers of Commerce. It reflects the fact that the Budget takes place in an economy where growth is established—it is set to grow faster than any other developed economy in the world—and where unemployment has been falling consistently and steadily. More than 1 million jobs have been created in the private sector across the country. Today’s unemployment figures provided further good news. In my constituency, unemployment fell again. Unemployment is 20% lower than it was at the time of the last general election and I hope that it will continue to fall. That is making a difference to people’s lives and circumstances.

I am sometimes dismayed to hear Opposition Members decrying the number of jobs that have been created and pretending that they are not worth anything. The best thing that we can do in the economy is get people back into work, and there are a variety of jobs that people want to do. In an intervention earlier, the hon. Member for Swansea West (Geraint Davies) seemed to dismiss a job for a young person as an apprentice in the retail sector as one that was not worth having, particularly in the fashion and textile industry. I find that absolutely staggering, because it is an important industry that people want to go into.

I welcome the extra investment in the apprenticeship programme announced today. The programme has helped a lot of young people get into work, and I have seen it work to great effect in my constituency. At an event that I attended with the Federation of Small Businesses last week, I was pleased when it said that because of growth and falling unemployment, one of the big demands from employers is to have more skilled people to recruit from. Investing money in apprenticeships, further education and skills training is important in meeting that demand.

The Chancellor reminded us today of the cuts in business taxes that the Government have put in place, particularly the headline cut in corporation tax from 28p to 20p in the pound next year, which will make a big difference, including to smaller businesses on the high street. One of the great tests that I apply in Folkestone and Hythe to see how well the local economy is doing is what the high street looks like. Is it busy? Are people out shopping? Are businesses trading? I am pleased to see more new independent businesses opening and taking shape, and more entrepreneurs setting up their businesses in incubator spaces such as the Workshop in Tontine street in Folkestone. Town centre businesses will benefit from the £1,000 cut in business rates that the Chancellor announced in the autumn statement and the £2,000 employment allowance, which will go to smaller businesses.

The cuts in income tax will benefit a huge number of people across the country. More than 3 million people will benefit from the lifting of the personal allowance to £10,500, and 45,000 people in my constituency will be better off as a result of the changes in income tax that the Chancellor has announced.

I also particularly welcome the Chancellor’s focus on what he called “the makers”, who are an important part of our economy. The right hon. Member for Tottenham (Mr Lammy) said that we should do more to support and stimulate the creative economy, but we have done a huge amount. The Chancellor confirmed today that the European Commission has approved the production tax credits that were announced in the previous Budget for the video games industry, high-end TV production and drama and the animation sector. Those policies are now bringing investment into this country and into a rapidly growing industry. The film and television sector in this country is booming and sustains a large number of jobs across the creative sector, not just those employed in it directly. The Chancellor was absolutely right to say that he wanted to extend those production tax credits to theatre, including regional and touring theatre.

I know that many people in the drinks industry, as well as drinkers, will welcome the cut in beer duty and the freeze on whisky duty. Last week, I met some winemakers at Chapel Down in Kent, who work in an important and growing area of the UK drinks industry. I am sure that they will welcome the scrapping of the duty escalator, but what was more important to them in today’s Budget were the incentives to invest in the growth and development of their business. They are much more concerned about growing and expanding their market overseas, so they will hugely welcome the increase in export finance from the Government to £3 billion and the £500,000 annual investment allowance for businesses, as they invest in the future success of their business.

I wish briefly to mention savers. Many people in my constituency will have been delighted to hear what the Chancellor said today. For a long time, it has been a bugbear of many people approaching retirement that annuities have been poor value, and they have resented being forced into taking out a poor product that they did not want. They now have more freedom. I know that many older people who rely on savings income have been concerned that they have not been able to get the returns that they would like, because banks’ interest rates have been low and the range of products has been limited. The creation of new bonds that will be available to pensioners, with returns of up to 4%, will lead to a revolution in the savings market in this country, as will the reforms to ISAs. Somebody said earlier that they should now be known as NISAs—new ISAs—which is a nice touch. They will be simpler, and people will be able to save more, which will be—

[George Freeman]

Nicer.

[Damian Collins]

Exactly.

Like other Members, I greatly welcome the removal of VAT on fuel for air ambulances. Kent, Surrey and Sussex Air Ambulance is a fantastic organisation and has been calling for that change, and it and people across Kent will welcome it.

18:04

[Sarah Champion (Rotherham) (Lab)]

In the lead-up to the Budget, I argued that the Chancellor should use this opportunity to demonstrate a clear Government strategy to support young people and, in particular, I hoped to see him signal a strong commitment to apprenticeships. I therefore welcome the Chancellor saying that he will double the number of apprenticeships, but unfortunately that is not enough to bridge the skills gap.

The fact that youth unemployment remains so high is of concern to us all, and I was heartened to hear hon. Members speaking about schemes in their areas and saying that unemployment is going down. Unfortunately, however, in Rotherham and many other constituencies that is not the case. The current figures paint a grim picture: almost 1 million young people are still not in education, employment or training, and today more than 730,000 more young people are out of work or underemployed than in 2005. We are seeing the beginnings of a generational crisis that will not only cause problems for young people today, but create a skills gap that will follow them into the future. If we do not give our young people the training they need to work now, the future of our long-term economy will be at stake.

The impact of the Government’s choices does not end with the economy, because the quality of life enjoyed by our children, and our children’s children, will also be affected. I do not want future generations to worry about where their next meal is coming from, or whether they can afford to heat their house, because they were not given the chance to develop vital career skills when they were young. That is why I felt it so important for the Chancellor to use this Budget to invest more in young people’s skills and training.

Young people want to work. We know that, but there is still a lot more we can do to invest in their future. Regardless of the Chancellor saying today that he will add 100,000 apprenticeships, the number of new apprentices fell by more than 25,000 in the past year. In addition, there are now more than 5,000 fewer under-19s starting apprenticeships than there were in 2009. Supply of apprenticeship opportunities is simply not keeping up with rising demand, with many young people missing out as a result. Added to that are concerns that many apprentices are not receiving the legal minimum wage, and a recent survey showed that 29% of apprentices are not being paid enough. What does the Budget do for apprentices who are not getting the minimum wage? What does it do for young people who want a job but cannot find one?

I still believe that apprenticeships are not being taken seriously enough by this Government as a credible alternative for our young people. The level of apprenticeship applications outstrips the number of available places by 12:1, and the Chancellor’s announcements today will do little to address that. Nationally, think-tanks have reported that England currently has only 11 apprentices in place for every 1,000 jobs. Now is the time for us to turn the tables and invest in young people by creating more apprenticeships of greater quality. The Chancellor says that his plan is working, but if he really had a convincing plan, he would have built into the Budget serious and credible measures to support young people, safeguarding the economy for the future.

Allow me to paint a picture of the crisis in my constituency. The census showed that more than 50% of young people in Rotherham are either unemployed or economically inactive. Let me say that again: more than half of Rotherham’s young people are without a job. They want to work but they have nowhere to turn. Scandalously, that is not even the worst of it. If we compare the number of young people in my constituency who have claimed jobseeker’s allowance for a year under this Government with the equivalent in the last four years of the Labour Government, we see that the figure has increased dramatically. Indeed, I was flabbergasted to find out that that figure had increased not by 20% or even 50%, but by an incredible 760%. That is a 760% increase in young people in Rotherham claiming jobseeker’s allowance for a year under this Government—you couldn’t make it up! That figure alone is enough to make me ask what the Chancellor has been doing to support unemployed young people in Rotherham in the past four years. What hope has he offered them in this Budget? The answer is clear: he has done very little indeed, and he is offering them very little hope.

I wish to make a plea to the Chancellor: it is time to start taking the youth unemployment crisis seriously, and it is time to invest the Government’s Budget in young people because they are our future business leaders, construction workers, engineers, and scientists. If we do not act today, we risk creating a generational skills gap. Our society needs a strong, motivated and skilled young work force who will serve Britain not just now, but for long into the future. Young people need serious Budget commitments to support them, not the Budget we were given today that clearly supports the richest few at the expense of all others.

18:09

[Toby Perkins (Chesterfield) (Lab)]

At a time when people are facing a choice between heating and eating, the sight of those ignorant, braying public school boys on the Tory Benches during the response by the Leader of the Opposition showed the contempt that they have for the serious issues that people in my constituency are facing. The speech by my right hon. Friend the Member for Doncaster North (Edward Miliband) spoke far more to the real issues faced by my constituents than did the hour-long lecture that we heard from the Chancellor today.

This is the Chancellor’s fourth Budget and people in Chesterfield know what to expect: a recovery for the few, not the many; a denial that the cost of living crisis is engulfing British families under his watch; and a steadfast refusal to take action on the key issues facing our economy. He said today his core purpose was the economic security of people in Britain; well, he has a funny way of showing it. He should know that despite the increase in the tax threshold, the combination of the VAT increase, the failure to take action on uncompetitive markets, the low wage, low security economy he is creating, and the slowest recovery in history mean that people are poorer under the Tories.

For those feeling the pinch, as families are £1,600 worse off under this Government, there was precious little here. For families struggling with the cost of child care, there was a promise that after five years of rising prices things will get better if only people are fool enough to vote for the Tories a second time. For those who cannot afford a deposit as house prices spiral, there is nothing about tackling the lack of supply but further measures that could increase the prices. For the small business owner desperate to grow and branch out but who has been refused loans by all the major high street banks, there is nothing about the access to finance crisis.

These stories are all too familiar to people in Chesterfield, but their plight is not a by-product of the Chancellor’s plan; it is the Chancellor’s plan. He thinks that Britain’s economy can grow only by winning a race to the bottom, but an economy built on insecure work, zero-hours contracts, and fewer rights in the workplace is a castle built on sand, trapping people between an insecure workplace that seems to say that working people should just be grateful for any work they can get and a benefits system that shatters their dignity and crushes their spirit.

The Chancellor said that each job makes a family more secure. Well, not under this Government it doesn’t, because many of the 5,000 people who rely on food banks to feed them are in work. The increase in the number of people in work and in poverty is a national disgrace. Under this Government work is not the route out of poverty it once was.

The Chancellor promised us the pain he inflicted on our families would be worth it because two parties had come together to eradicate the deficit, but today we learn that his central purpose—the reason we put up with this Government—which is deficit eradication is still £90 billion away. We should remember what the Office for Budget Responsibility told us back in 2010. It told us that by the end of this Parliament we would have seen growth of 14.6%. Well, from quarter four of 2010 until now growth has been just 3.5%. The deficit will still be £75 billion by 2015-16. The Chancellor’s failure means he has increased the national debt more in three years than Labour did in 13 and he has failed in respect of the cost of living for working families and he has failed to take action on the energy companies.

We know from a ComRes survey released just this Sunday that a pitiful 9% of the public say their ability to pay their monthly bills has improved since the Chancellor entered No. 11 Downing street, and what about yesterday’s Survation poll showing that, when the poll was restricted to people in work, Labour held a 17% lead? Let there be no doubt which is the party for workers. The Chancellor’s priorities could not be clearer: take food from the mouths of families living in poverty to fund a £100,000 cut for his friends in the City earning over £1 million a year.

As shadow pubs Minister it would be churlish of me not to welcome the Chancellor’s temperance when it came to alcohol duty this year, although we should remember both that he is the Chancellor who raised most from the beer duty escalator that he kept for three Budgets, and that his increase in VAT added more to the cost of a pint than the increase in beer duty has done.

On business rates, what we have seen is a Conservative con trick: a £1,000 discount while the underlying rate of business rates is going up—a bomb waiting to go off under the high street recovery. In two years’ time those levels of business rates will have continued to go up and the discount will just disappear if anyone is foolish enough to vote for this Government again. Businesses’ key concerns in respect of the Budget were crystal clear: all the major business groups’ Budget submissions said there must be action on access to finance, yet we have seen absolutely nothing.

This Government are in denial. They cannot understand why people are not thanking them for the recovery they are delivering, but the truth is people know that evidence of the recovery is not appearing in their pockets. We desperately need a jobs guarantee, and Labour’s jobs guarantee will not only take young people off the scrapheap, but it will end the cycle of hopelessness that sees young people trapped in life on the dole. They will not be further impoverished by benefits sanctions, but will have a positive role that says to the young, “You should be at work. We’ll fund the job, you’ve got to take it.”

This was the Chancellor’s last chance, but, again, when the moment arrived he flunked it. Trapped in an analysis of Britain’s problems that is fundamentally wrong, it is hardly surprising he came up with the wrong answers. People struggling with the cost of living yesterday will still be struggling tomorrow. Parents kept out of the jobs market by the cost of child care have been told to hang on until 2015. For big business struggling with access to finance, absolutely nothing. This Government have run out of ideas; let’s have an election.

[Several hon. Members]

rose—

[Mr Speaker]

Order. As a result of a slew of brief speeches delivered without interventions over the last half an hour or so, I am now in a happy position to be able to raise the time limit on Back-Bench contributions, with immediate effect, to eight minutes.

18:15

[Alison McGovern (Wirral South) (Lab)]

It is an honour and a pleasure to follow my hon. Friends the Members for Rotherham (Sarah Champion) and for Chesterfield (Toby Perkins), both of whom made thoughtful contributions. Those of my constituents who watch Parliament Live TV—some of them do—will have heard their speeches and know that Labour Members are standing up for their concerns. My Merseyside constituents have had three really tough years, and listening to the Chancellor today, I have to ask myself what his message was to them. It is hard to know what he thought he was offering the people of this country. Economic growth is still behind the projections made by the Office for Budget Responsibility in 2010.

I know that economic forecasting is a somewhat interesting art, shall we say—it is not always the easiest thing to do—but it is a little tough to take from a Chancellor who has set great store by his intervention in the world of forecasting that he has effectively not met the test he set himself. He has failed on growth, failed on the deficit, is still behind where he said he would be, and is now trying to rewrite the record ahead of an election. The British people are not so foolish: they will not buy it. They know that the Chancellor said he would cut and cut and cut to protect the credit rating—and, lo and behold, lost the credit rating in any event.

Today’s macro-economic picture shows that the Chancellor is failing the tests he set himself and reheating and re-announcing a whole bundle of things, many of which were actually initiatives of the last Labour Government. Nobody is going to be fooled. Worse than that, he has totally missed the genuine problems in our economy. There is fragility at the lower end of the income distribution scale, and I have real concerns about what is happening at the top. Meanwhile, people in the middle are being squeezed yet again.

I say to those Members who are considering crowing about this Government’s record on unemployment that they seem not to have learned the lesson of the 1980s on the claimant count. It is perfectly possible to reduce the claimant count just by getting people not to claim what they are entitled to, and not to turn up at the jobcentre. If anyone wanted to solve the unemployment problem by getting people not to claim benefits, the DWP’s current strategy would be an excellent way of going about it. The culture there is not about helping people to find a job, but making them feel as though they are there to be judged, dictated to and sanctioned. As everybody knows, the Work programme is failing.

Thanks to you, Mr Speaker, in Westminster Hall this afternoon I was able to raise an issue that I have raised time and again: the iniquitous zero-hours contracts and the massive increase in part-time and self-employment, all of which is clouding the true picture of what is going on in our labour market. In speaking up for my Merseyside constituents, I should point out that we have not seen a rebalancing. It was interesting to hear what was said about the Cambridge city deal, which I am sure is wonderful for the people of Cambridge—but Cambridge was doing pretty well anyway. I really do not understand how investing in Cambridge was supposed to amount to rebalancing.

Meanwhile, the north-west is doing pretty well and I am really proud of it, but much of the credit for that goes to the leadership of the cities of the north-west rather than to the Chancellor. Where is the north-east—[Interruption]—and Yorkshire in all this? No effort is being made to address the economic problems there. I urge Conservative Members to look at their history: they will not reconnect with the people of the north of England by ignoring us and pandering to those who view us as unreconstructed, or to the Tory think-tanks that believe we should have a managed decline. But that is not what is happening, and the reality is that the Treasury seems to be straightforwardly ignoring the people of the north of England.

For those in the middle, it is deeply unfair that even skilled people such as nurses are not getting pay rises. Many small business owners raise with me the question of business rates, which my hon. Friend the Member for Chesterfield mentioned, but again that issue seems to have been totally left to one side. Action must be taken on business rates, on energy prices and on the other problems that trouble families in my constituency, who still need to have conversations around the dinner table about how to manage the family finances and who still worry about getting to the end of the month.

At the top end of the income distribution scale, the Chancellor clearly has not learned the lessons of the 1980s, and certainly not of the big bang in 1986 and its legacy of exposing our country to risk in the City of London. I am afraid that is not good enough. Because the Help to Buy scheme covers properties worth as much as £600,000, it risks creating a similar bubble, and many commentators are fearful about what is going on in the housing market. The Bank of England now says that the City might reinflate itself to between nine and 15 times the size of our economy. If that does not look and sound like a genuine risk to the stability of our economy, I am not sure what does.

The Chancellor mentioned broadening the LIBOR investigation, which is a real worry to me, because we have not yet got a handle on the culture in financial services. Plenty of people work in ordinary jobs in financial services, and I am not criticising the sector as a whole. However, the high levels of inequality and the poor culture at the top do not benefit the ordinary people who work in bank branches and call centres, helping people with their banking every day. They, like everyone else, want the sector to be controlled. There are real problems with people on low wages.

It would be nice to have some recognition for the reinvention of the modern apprenticeship in 2003. My hon. Friend the Member for Rotherham is absolutely right that we need to do much better when it comes to the number of apprenticeships.

We have problems at the bottom; we have a squeezed middle, and no answer has been proposed to their problems; and I have genuine concerns about the long-term stability of our economy.

18:23

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

There is little in the Budget for families with children. It follows a series of Budgets and spending reviews that have been difficult and disappointing for children and which, the Institute for Fiscal Studies has predicted, will lead to a substantial rise in poverty over this decade.

I recognise why the Chancellor wants to incentivise saving, and of course we want to ensure that pensioners are protected from poverty, but I am concerned that the Budget exacerbates an increasingly unbalanced approach to support between the generations. The first thing that constituents of all ages say to me on the doorstep is how worried they are about the prospects for the next generation.

I am proud that Labour took more than 1 million children out of poverty. The Budget and the Government’s depressingly weak child poverty strategy that was announced the other day represent missed opportunities, and as a result, the gains made under Labour will be all but wiped out. That is not because there was no option: different choices could have been made. The burden of austerity has been predominantly borne by spending cuts rather than by tax increases for the wealthiest, and that has had a disproportionate effect on low-income families.

We know that family benefits have been an important plank in reducing child poverty. According to the Institute for Social and Economic Research, the UK has the second highest child poverty rate, before taxes and transfers, in the 27 EU countries, yet, by the 2014-15 financial year, working age benefits spend will be £22 billion less than in 2010-11 as result of uprating policies, cuts and freezes. That is having an especially harsh impact in households with a disabled family member. One third of people in poverty live in a household with a disabled member, and a quarter of children in poverty live with a disabled adult.

Localising benefits also makes the situation worse. Council tax assistance and local assistance schemes have been criticised by the Public Accounts Committee and the Work and Pensions Committee respectively. The Committees have expressed concern about their impact on vulnerable families. In the meantime, the cost of living is rising—the impact on families with children is especially harsh—yet for first time since the 1930s, the uprating policy for payments for children is now entirely detached from the price rises that affect them. Uprating at 1% bears no relation to RPI or to CPI; the cost of goods and services has risen 15% in past three years. Indirect taxes have hit the poorest families hardest, as a higher proportion of their income is hit.

The living costs that particularly affect families with children have been rising fastest. They include food, energy, rent and child care. This week’s announcement on child care will still leave families without the help that they need. The Institute for Fiscal Studies has confirmed there is no new money to fund the announcement, and the number of families benefiting from the scheme is around half what the Government said it would be. Figures revealed in the Government’s latest consultation document show that around 1.26 million families will benefit from tax-free child care, not the 2.5 million claimed in the original consultation document. Also, there is no new support for those on tax credits, who will not be able to access the tax-free child care.

I welcome the increase in support for child care costs under universal credit to 85%, but it is a matter of concern that that will be met from within the universal credit budget. It is therefore unclear where the money will really come from. Universal credit is already running late and over budget, so how can this extra sum be afforded? We also have no firm timetable for all parents being migrated on to universal credit; we know that the programme is experiencing significant delays.

The Government say that work is the best route out of poverty, but the majority of children in poverty live in a household in which at least one adult is working. Tax breaks do not do enough to compensate those families. The Resolution Foundation has found that 75% of the benefit of the increase in personal tax threshold goes to the top half of the income distribution. The Chancellor himself confirmed this afternoon that higher rate taxpayers—those earning up to £100,000—will benefit from the increase in the threshold. Only a tiny element of the cost of the initiative will go towards lifting people out of tax altogether. I understand why the policy is popular, and why it has been effective for some low-paid workers, but Ministers need to look carefully at whether this is now becoming a game of diminishing returns. Meanwhile, there is no other effective labour market strategy. There is no strategy on progression, for example, and there has been insufficient action on low pay, zero-hours contracts and part-time work.

The gender pay gap is also widening. The element that is totally missing from this Budget—and all previous Budgets and spending announcements from this Government—is a gender analysis. Their policies fail to recognise that child poverty is a product of maternal poverty. Mothers are usually the main carers of children, yet this Government’s policies are positively inimical to women. Universal credit is to be paid to one member of a household, which provides poor incentives for second earners to increase their pay. The marriage tax break will help only one in six families with children, with 84% of that benefit going to men. Meanwhile, child benefit, which is usually paid to women, has been frozen or removed, and the child tax credit uprating has been held back at 1%. Marriage tax breaks are no help whatever to lone parents, the majority of whom are women, and whose children face greatest risk of poverty. Lone parents are also now having to pay for the child maintenance to help to support their children.

Overall, the value of financial support for families with children is being eroded, compared with the minimum income needed for families to raise their children. This is beginning to create real desperation among those families. More and more parents are going without, in order to provide the basics for their kids.

I was disappointed when I looked to the Budget today for a new approach. But a new approach is affordable and it can be done: we could redirect the ill-chosen marriage tax break to benefit low-paid families; we could do more to attack the basic living costs faced by families, and more to freeze energy prices and support low-income families with the cost of child care; we could rebalance the system to recognise the role of mothers as main carers of children, putting an emphasis on money paid to women in the tax and benefits system, and money paid to mothers which will be spent on their kids; we should look again at the structure of universal credit, and at its disincentives for lone parents and second earners to maximise their income from work; and we should look back to the helpful recommendations the previous Government received from Lisa Harker, which I believe were welcomed by all parties, to design employment support in Jobcentre Plus more effectively to recognise the particular parenting and caring needs of parents—that should also be done in the Work programme.

If those measures were undertaken, we would be on track to eradicate child poverty, to boost parental—especially maternal—employment and to end inequality gaps. I hope that Ministers will begin to re-examine the way in which they achieve a balance of measures that properly reach out to all families, particularly families with children. That has been sadly lacking from the Budget today.

18:31

[Simon Danczuk (Rochdale) (Lab)]

I am pleased to follow my hon. Friend the Member for Stretford and Urmston (Kate Green), who made an extremely good speech about how the Budget and the Chancellor’s actions have a direct impact on people—she discussed the social dimensions to this Government’s actions. I wish to concentrate on the economic aspects.

On Sunday, the Chancellor said that we need to tackle the long-term economic challenges facing the country, and I could not agree more. The problem is that he also said that we have “a balanced recovery”—I could not agree less. If we are serious about tackling the big problems in our economy, it is best to start by admitting what they are. The simple truth is that there is a huge imbalance in our economy between the north and the south, and that is one of the biggest challenges our country faces. The Chancellor came into office talking about rebalancing the economy, driven by what he called the “march of the makers”. But this Budget shows that this Chancellor is incapable of matching words with actions. Instead of the march of the makers, we have yet another championing of the capital; we have an economic policy that suits London but that does not suit the north of England.

To see that, we need look no further than tonight’s London Evening Standard, whose front page says it all: “Osborne’s Budget boost for London”. It talks about Barking Riverside housing, Brent Cross regeneration, the Ebbsfleet garden city and the air ambulance for London. I am not saying those things are not needed, but all that was in the Budget speech and it is all about the south-east and about London; there is nothing about the north—about Greater Manchester, Merseyside, Yorkshire or the north-east. That is the reality of it; there is no rebalancing of the economy.

Let us just look at this Government’s record on rebalancing the economy. All of this Government’s major infrastructure projects have been based in London and the south-east. Weeks ago we even had trains from the Pennines being hauled down to Oxfordshire—that is the reality of it.

[Neil Parish (Tiverton and Honiton) (Con)]

rose—

[Simon Danczuk]

I will not give way. These trains were needed in the north to provide vital links between our cities. There is no better example to show where this Government stand and what their priorities are.

Let me give the House another example: the new homes bonus. According to the National Housing Federation, it has taken £104 million from councils in the north and given £342 million to councils in the south, stuffing money into the back pockets of well-off local authorities—that is the reality of it. The regional development fund was supposed to counter many of these issues by pumping regeneration money into the north of England, but even that has been a failure under this Government, with more than £2 billion of the £2.6 billion budget still lying in Government coffers—it has not even reached the targets it was supposed to reach.

Perhaps the worst example of this Government’s southern bias is the way that they have treated business rates. Delaying the revaluation of business rates was a cynical and calculated move designed only to insulate southern businesses from paying fair rates. That is the reality. We now have the ridiculous situation in which struggling retail centres, such as Rochdale high street, are effectively subsidising places such as Regent street in London where business is booming. It is outrageous, and business people in the north of England are quite rightly furious about it.

[Yasmin Qureshi]

Does my hon. Friend think that the reason for this unequal distribution of resources is that there are hardly any Conservative MPs in the north-east and the north-west?

[Simon Danczuk]

I appreciate the intervention. The reality is that the Government are writing off the north of England, because they know they will not have any success there in the forthcoming general election.

[Neil Parish]

rose—

[Simon Danczuk]

Let me make a little progress. Out of the 25 worst performing retail centres in the country, 21 are in the north. Those are businesses desperately in need of help from the Government, but they are not getting it. The Chancellor did not even mention business rates in his Budget, except in relation to enterprise zones. The Government collect £26 billion in business rates, and nearly every business in the constituencies of Government Members raise them as an issue and yet the Chancellor could not be bothered to mention them. The impact of those rates on businesses in the north of England is even bigger. The simple truth is that the Chancellor has not got the will to reform business rates because he knows that powerful interests in the south will lose out. Instead, what we get are quick fixes, as my hon. Friend the Member for Chesterfield (Toby Perkins) pointed out, and some tinkering around the edges. That is typical of the Government’s approach to the economy. They talk about their long-term economic plan, but the reality is that they shy away from every major challenge.

The Chancellor is very proud of raising the income tax threshold, and it is something that I welcome, but when it comes to addressing the causes of low pay and investing in the vocational skills we need, he has nothing to offer. When it comes to energy, he would rather tinker with the carbon tax than show real leadership and reform the energy market. The Chancellor talks of tough decisions, but he only takes the tough decisions that hit the poor and voiceless, not the rich and powerful. For all the talk of a long-term economic plan, it is becoming increasingly apparent that the only date that concerns this Government is May 2015.

It is clear that this Budget fails to address the fundamental challenge of our unbalanced economy. This London-centric Government cannot be trusted to make the big decisions about the economy of the north. The time has come for more fiscal devolution for our northern cities, such as Greater Manchester, so that they can keep more of their own money and use it to unlock the economic potential that is being wasted by this Government. More than that, we need a Labour Government committed to rebalancing our economy and securing the long-term economic future of the country.

18:38

[Mr William Bain (Glasgow North East) (Lab)]

This is the Chancellor’s fifth Budget, the aim of which is to turn the focus of the Government towards the election, and given the events of recent days, that election must be the leadership election, which is drawing ever closer within the Conservative party. As Government Members return to their constituencies to prepare for Opposition next May, they will have many weeks and months to decide how they can explain to voters why this Government is the first since the 1870s to leave households worse off at the end of a Parliament than at the beginning. Rather than their taking to the airwaves to produce ideas to tackle the country’s growing trade deficit, or our deep problems with productivity, the principal topic of debate among Conservative Ministers is the surfeit of Etonians around the Cabinet table. Nothing demonstrates how out of touch and ill-equipped they are to comprehend, much less end, the historic cost of living crisis that has enveloped the country. We should make no mistake: this was a Budget by the few, of the few, and for the few.

Like a stage magician asking his audience to suspend their disbelief at his latest rope trick, the Chancellor attempted to persuade the country that the money that has disappeared from people’s bank accounts and pockets over the past four years was all an illusion, and it is still there after all. The partial use of information cannot conceal the real-life experiences of millions of ordinary people across the country. In my constituency, the median wage fell in real terms by 5% in the year to last April, and median incomes across the United Kingdom will not reach pre-crisis levels until 2018, according to the Resolution Foundation.

[Neil Parish]

It is the hon. Gentleman who is under an illusion, because he does not seem to remember the £150 billion deficit that we have managed to halve. Is it morally right that our children and grandchildren should labour under more and more debt? Do we not have to deal with that, as this Government have done?

[Mr Bain]

I am grateful for the hon. Gentleman’s intervention, but I recall—it clearly was not an illusion—the promises made by the Chancellor and the Prime Minister that the deficit would be cleared under their successful economic plan in five years of this Parliament. The Chancellor told us today that we had to wait an extra four years to achieve that. The illusion is that the Chancellor and the Prime Minister should ever think that they could clear the deficit, given the fiscal policies that they have followed since 2010 and all the harm that that has caused to living standards.

According to OBR forecasts in June 2010, we should have had growth of 9.1% between then and the end of last year, but we have seen less than half of that—a paltry 3.8%. The Budget, like its four predecessors, has failed properly to address the key factors driving the longest slump in real wages since the 1870s. First, there has been a failure by the banking system to provide liquidity to businesses on the scale required to boost growth in the real economy. Secondly, there has been extraordinarily weak business investment by the standards of previous recoveries. Thirdly, there has been poor export performance, with continuing balance of payments deficits, despite sterling having devalued by a quarter since 2008. Fourthly, there has been declining productivity in seven of the past nine quarters, and fifthly, connected to that, there has been a surge in under-employment, affecting more than 1 million people, who cannot get the hours at work they need to compensate for the collapse in wages in real terms.

The Budget should have begun the work of shaping an economy in which we permanently earn our way to higher living standards. Instead, ordinary people are forced to dip deeper into their savings to pay the bills, or depend on house price inflation, which is set to rise to 9% by next year, to fuel rises in consumer spending.

[Alison Seabeck (Plymouth, Moor View) (Lab)]

I apologise for arriving rather late for this debate. Does my hon. Friend share my concern that the figures used by the Chancellor to highlight what he described as a narrowing of inequalities were based around 2011, before all these dramatic changes, particularly to people’s benefits, had been made? I think that “disingenuous” is a permitted parliamentary word, so does he agree that that was disingenuous?

[Mr Bain]

My hon. Friend makes an important point, because there is no data available to the Government post-2012. To argue that the policies that they have followed over the whole four years have reduced inequality is not a fair comparison for the Chancellor to make.

Last year Britain had the fifth lowest level of investment as a proportion of GDP anywhere in the EU. Between 2010 and 2012, business investment was a meagre 3.7%, compared with the nearly 20% forecast by the OBR in June 2010. While investment lags at nearly a fifth below pre-crisis levels, by contrast, surpluses accumulated by large corporations are up by a staggering 7% over that period. The Government have failed to get investment into the real economy to promote the kinds of jobs that are needed to increase living standards.

It is also worth touching on the OBR’s verdict at this stage in the debate. The Chancellor said that the Budget would rebalance the economy, but the OBR says that net trade will contribute nothing to growth over the next five years. Our export share is to fall in each successive year to 2018. Despite the Chancellor’s welcome doubling of the investment allowance today, the OBR has said that that will not raise levels of investment in the economy and will have a negligible impact on growth. It is a damning verdict on the entirety of the Chancellor’s Budget.

The Budget should have begun to meet the challenge of the changes we need to see in the banks to make them serve society, not the other way around—a challenge left unmet by the Chancellor today. It contains no plans to create a further two challenger banks to break the monopoly of existing players in the retail banking sector; no intention to create a proper infrastructure bank to boost finance to businesses engaged in large capital investment projects; and no plans to create a system of regional lending banks to supply credit on a long-term basis to viable small companies in the way that the Sparkassen have done to great effect, in good times and in bad, in the post-war era in Germany.

Today’s Budget fails the test of fairness on many counts. We know that one of the biggest causes of the rise in family incomes over the past four decades has been the rising employment rate among women. Key to that is increasing the supply of affordable child care. The Budget does nothing to increase the supply of child care places. According to the Family and Childcare Trust, the costs of a nursery place for 25 hours a week for a child under the age of two has risen in Scotland by 26% since 2010, and for a child over the age of two it has risen by 31%. Where were the policies today to increase the supply of child care places? They were entirely absent from the Chancellor’s speech. Most of the benefits of the tax relief he proposed will go to couples in the top half of the income scale, while families with average incomes, such as those in my constituency, will get less than £10 extra a week. Barriers to work will remain for many women, and the long-term potential for economic growth and higher living standards will be left unrealised by the Budget.

The Budget also fails the tests of increasing supply in new housing and beginning the task of rebalancing our jobs market by creating new construction jobs to replace the 214,000 that have been lost during the downturn. It fails the test of justice for our young people by not having a jobs guarantee to remove the scourge of long-term unemployment. I met a young constituent in Stobhill in my constituency last Saturday night. His whole family—parents and grandparents—told me of the hurt they felt about his 18-month search for a job, which has been in vain. It is a moral scourge that affects not only the young person involved, but their family and the wider community. In my constituency there are 179 other young people like him, and there are tens of thousands more across the country. The Budget fails to improve work incentives for the lowest paid by reintroducing a 10p starting rate of tax. It fails to reveal how the Chancellor will make good his promise to reach a minimum wage of £7 an hour for the working poor by next October.

In conclusion, this should have been a Budget that reduced inequality, invested in new child care places, invested in science and innovation, dealt with our rising skills gap and reshaped our jobs market. It is clear that if Britain wants such a Budget, it cannot come from this coalition; it can come only from a change of Government, which is long overdue and set for next May.

18:49

[Sheila Gilmore (Edinburgh East) (Lab)]

In June 2010, the Chancellor led his band of merry men, straw men and tin men on the yellow brick road towards his emerald city: the elimination of the deficit by 2015, the cutting of public sector net borrowing to £60 billion in this financial year—in fact, it will be £108 billion—and growth of about 2.5% every year during this Parliament. The trouble was that he fell off his yellow brick road fairly quickly and started wandering around in the wilderness of low growth and higher borrowing. Suddenly, after four years, he seems to have found himself back on his road, albeit not as far down it as he expected. Like all expeditionary leaders, he is quick to tell us that he always knew where he was, and where he was going, and that it was all part of his long-term plan, despite the fact that he has not gone as far as he expected.

Does all that matter? It does, for a number of reasons. We are being asked to believe that someone who gave us that fantasy journey can still give us something credible. It also matters very much to the people who had to accept the austerity measures that we were told were essential to get us down the road as quickly as possible. People have suffered, and to find out four years on that we have not actually made much progress is bitter gall for many.

What about the people left behind? The cost of living crisis is real. People’s real earnings have fallen. All the Treasury and Institute for Fiscal Studies figures show, slightly differently, that the people who have lost out most are those at the bottom and the top of the earnings scale. However, for someone to lose 5% when they are earning £3,000 or £4,000 a week is very different from losing 5% when earnings are £150 or £200 a week. The impact on everyday life in the latter case is far greater, because the issue is not about having to cut out a few little extra luxuries—perhaps not go out for a meal as often as one might otherwise have done—but about basic foodstuffs, heating the house and buying clothes for the children. It is not good enough to say that the situation is all right because the people at the very top have also seen an income drop, which makes it fair; in the real world, that is not fair.

The other group that the Budget has rather lost sight of is the unemployed. People often say that unemployment has dropped by such and such a percentage, but the number is still very high. In April to June 2010, 2.46 million people were unemployed; according to today’s figures, the number is 2.33 million. I make that only 130,000 fewer than in 2010. Unemployment, of course, went up between 2010 and now and has come down again, and that doubtless explains some of the percentage drops that people are talking about. However, 130,000 fewer unemployed people, although better than before, is quite marginal.

What are we doing for the 2.3 million unemployed people? There are still 700,000 more people unemployed than before the recession. Where are the measures to get those people into work and to help the young people about whom my hon. Friend the Member for Rotherham (Sarah Champion) spoke so eloquently? There are very few such measures. Talking about percentages going up and down as if we have solved the problem is no answer to people struggling on very low incomes who, in many areas, cannot find jobs no matter how hard they try.

On the child care proposals, at least one Government Member made a lot of the fact that child care costs for those on universal credit are now to be met by up to 85%. We have now had, or will have had, at least five years of this Government cutting help with child care costs from 80% to 70% for people on tax credits—the predecessor of universal credit. So for each of these five years, those people will have found things much more difficult. It is not clear when families in this situation will even be on universal credit, given how that is going at the moment. Will this provision start when the tax relief starts, or will it start only when these families finally get on to universal credit, if that happens? We have not been told.

Moreover, the proposal is to be paid for not by people who are better-off but by another group of people on universal credit. We do not know which group of people because we have not yet been told; apparently, we will know in the autumn. The change will be financed entirely out of the universal credit budget, so some families with children on universal credit will get a little bit more, but somebody else is going to get a certain amount less.

We always make choices in policies, and that is why debates about matters such as raising the tax threshold are exceptionally important for all of us. The 5 million people who are already below the tax threshold will get nothing out of this move. Some 10% of the total cost, which has already been about £10 billion, goes towards lifting people out of tax; 15% of it goes to people on median earnings of up to £26,000; and three quarters of it goes to people earning above the median. That choice has been made, but it could have been made differently. The money could have been used, and could still be used, to help people on lower earnings. If we want to help low-earning families, there are a number of other measures that we might want to use, but we are not using them. This is a choice that the Government are making. Constantly portraying it as something that is there only to help low-earning families does a disservice to those families. They know the situation; they know that they do indeed have a cost of living crisis that is not being resolved by today’s Budget.

Ordered, That the debate be now adjourned.—(Mr Gyimah.)

Debate to be resumed tomorrow.

Health Care (Gloucestershire)

Wednesday 19th March 2014 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Mr Gyimah.)

18:57

[Chris Skidmore (Kingswood) (Con)]

My hon. Friend the Member for Filton and Bradley Stoke (Jack Lopresti) and I have been calling for this debate for some time, so we are grateful for the opportunity to discuss health care provision in south Gloucestershire.

In 70 days’ time, the accident and emergency department at Frenchay hospital in south Gloucestershire will close its doors. The decision on this is not recent, as it was taken in 2005 under the Labour Government, who then refused to allow it to be referred to the independent reconfiguration panel, despite a 50,000-signature petition from local people. The decision to close the A and E was also voted through locally by Labour councillors against Conservative opposition. When my hon. Friend and I were elected to this place in 2010, we called a debate on the future of Frenchay hospital in which it was confirmed that contracts had already been signed under the Labour Government to close Frenchay’s A and E, making the decision irreversible. The downgrading of Frenchay will forever be Labour’s legacy to the people of south Gloucestershire. My hon. Friend will speak later about the hospital and the continuing uncertainty over the health care provision that will be based there.

For the first time, this Government allowed South Gloucestershire council’s health scrutiny panel to refer recent decisions by health care managers temporarily to relocate beds to Southmead hospital while the final provision of beds at Frenchay was investigated by the independent reconfiguration panel—something that the previous Government resolutely refused to do. As local MPs, we submitted our own statements in support of Frenchay to the IRP along with local campaigners, and they are listed in the report’s appendix, yet we were surprised to see that no statements of support were made by the local Labour party or by its candidates.

The publication of the IRP report on Frenchay this week highlights—

19:00

Motion lapsed (Standing Order No. 9 (3)).

Motion made, and Question proposed, That this House do now adjourn.—(Mr Gyimah.)

[Chris Skidmore]

The publication of the IRP report on Frenchay this week highlights for the first time real concerns about the reconfiguration of health care provision in south Gloucestershire. These concerns are so damning that it is right that we as local MPs raise them now on the Floor of the House. The IRP rightly observed not only that health care provision had been subject to continual alteration since 2005, but that

“there is considerable public disquiet with the process to date”,

that

“residents of the area should feel exasperated by the years of delay”,

that

“the overall process to date has shown a marked lack of empathy for patients and the public who have a right to expect better”,

and that

“progress to date has suffered from a lack of trust from the public”.

The IRP goes on to recommend that

“a new approach to pubic engagement and involvement is required that demonstrates mutual co-operation and ensures that the public can have confidence in a quality service”.

Importantly, the IRP also notes that

“concerns remain about access to outpatients and diagnostics, capacity for rehabilitation services particularly in light of housing developments, and the absence of external clinical assurance”.

The IRP has finally put on record what local people and groups such as the Save Frenchay Hospital group have long been saying. North Bristol NHS Trust and health care bosses must now listen to them, and to the IRP in the light of its damning conclusions.

I am concerned, however, that history is about to repeat itself at nearby Cossham hospital. As a member of the league of friends at Cossham hospital, and someone who volunteers at the café there—I hope that that will suffice as a declaration of interest—I know at first hand how cherished Cossham hospital is within the Kingswood community. In 2004, the hospital was threatened with closure. Then—a story all too familiar—the health care bosses said that they knew best and that there were strong clinical reasons for shutting the hospital, yet they underestimated the determination and resolve of the Save Cossham Hospital campaign group, which mounted a remarkable cross-party campaign to save the hospital from closure.

In the end, the decision to close Cossham was reversed, and the hospital underwent a £19 million refurbishment. So far, this has included a new renal dialysis unit, an X-ray and scanning department, physiotherapy and out-patient appointments, and Bristol's first free-standing, midwife-led birth centre, which has already delivered hundreds of babies. But the minor injuries unit at Cossham hospital, which was promised as part of the Bristol health services plan, and reaffirmed by the 2009 business plan for the hospital—signed and sealed, as it were—has not been delivered. Instead, the commissioning group is now considering installing a rapid assessment centre for the elderly in its place. Obviously we must consider an ageing population, but in this particular case we should be considering the needs of the entire health care community in south Gloucestershire.

As the local MP for Kingswood, I feel that not to have a minor injuries unit for Cossham is unacceptable. With Frenchay A & E closing in just 70 days, if local people are in need of treatment for an injury, they will have to travel 11 miles to Yate, or have to travel across Bristol to Southmead hospital or to the Bristol royal infirmary. As many local people know, public transport to Yate and Southmead is woeful, with the bus often taking several hours. Without a minor injuries unit at Cossham, I remain concerned about health care provision for the east side of the Bristol region. I set out the case for a minor injuries unit in my letter to the Health Secretary on 26 February, and I would welcome the opportunity for the reformed Save Cossham Hospital group to meet the Minister to present the case in detail. There is a clear and present need for a minor injuries unit at Cossham, and a clear and present danger to our local community if it is not delivered.

I cannot impress enough on the Minister that I believe that, just as in the case of Frenchay hospital, and in the light of the highly critical IRP report on its changing services, the ability of health care bosses continually to chop and change health care services at Cossham and in the south Gloucestershire area without regard to public opinion and confidence is extremely damaging. Above all, it raises questions about why local people, who pay for their health service through their own taxes, should feel, as the IRP report states, “exasperated” by the uncertainty surrounding the health care for which they have paid.

The people of Kingswood and south Gloucestershire, as the IRP has firmly stated, “deserve better”. We also deserve better when it comes to the provision of a minor injuries unit at Cossham. We were promised a minor injuries unit, we want a minor injuries unit, and for the sake of the health and safety of local people in my community, we need a minor injuries unit at Cossham hospital.

19:04

[Jack Lopresti (Filton and Bradley Stoke) (Con)]

First, I pay tribute to my hon. Friend the Member for Kingswood (Chris Skidmore) and congratulate him on securing this debate, and thank him for working closely with me on this matter, which is extremely important to our constituents. My remarks will focus on my local hospital, Frenchay.

Before I begin, I would like to declare a personal interest of sorts. I have had a lot of serious health issues over the past year and have spent a lot of time in and out of Frenchay hospital. I want to place on the record my huge thanks and appreciation to all the doctors, nurses and staff who looked after me and made me better while I was there. [Hon. Members: “Hear, hear.”] Thank you. I am pleased to say that I have now been given the all-clear and can get on with the rest my life. I do not think it is an exaggeration to say that I probably would not be here without all the care and treatment I have had over the past year, for which I will always be grateful.

Sadly, health care provision at Frenchay hospital is to be fundamentally reduced in May, when the main part of the hospital will close until 2016. Its out-patient and diagnostic services, and probably beds, will be relocated. The Independent Reconfiguration Panel has given advice to the Secretary of State and I fully understand that it would be unprecedented for him not to accept it. I am of course disappointed with the IRP’s decision, but it has made some extremely important points.

I am particularly concerned about which health services will be provided when and if Frenchay hospital fully reopens in 2016. The future health care provision in south Gloucestershire and the future of Frenchay hospital have gone through a terribly long, drawn-out process. There have been about 10 years of discussion and it is still not clear what will happen in the future.

The previous Labour Government made the changes in 2005, when a vision was set out for health services in the Greater Bristol area, which included plans for a community hospital at Frenchay. Five years later, in 2010, the “emerging themes” proposals for health care in the area again promised a community hospital at Frenchay and we were told that the acute care services would move to the new acute hospital at Southmead.

We were told that the community hospital at Frenchay would have step-down and step-up services. The step-down service would be for patients who received surgery at the new Southmead hospital and were moved to their local community hospital prior to going home. That was in order to reduce the number of beds required at Southmead and to enable family and friends to visit patients more easily during their convalescence. Step-up patients are those who require hospitalisation for more minor matters but who do not require the full services of an acute hospital. The bed numbers for the new Southmead hospital were planned on the basis of community hospitals such as Frenchay being available for more minor matters.

In total, it was recommended that there would be 68 beds at Frenchay. There was also going to be a range of out-patient services and diagnostics and an enhanced community health service in order for care to be provided at home. On top of that, there was going to be space left on the site for a doctors’ surgery, extra care housing and possibly even a nursing home.

That was fine: it was not what local people wanted, but at least it was a clear plan with clear objectives. However, in July 2012 the primary care trust and the clinical commissioning group began to change their minds, but they did not fully update the South Gloucestershire council public health and health scrutiny committee until April 2013. At this point, they also confirmed that a stocktake was being taken of out-patient and diagnostic capacity at Frenchay. In September 2013, the council’s health committee received confirmation that it proposed no longer to have out-patients and diagnostics on the Frenchay site, while the CCG met and decided in August that, for the interim, rehabilitation beds at Frenchay would be moved to Southmead for two years.

Conservative councillors on the health committee came up with a plan, and identified funds in the council’s budget to keep the in-patient rehabilitation beds at Frenchay for two years until the new Frenchay health and social care centre opens in 2016. They proposed the plans to the health committee in September last year, but to my utter amazement, Liberal and Labour councillors on the committee joined together to vote against the plan to keep Frenchay fully open. I felt that that was purely and cynically party political, and not at all in the interests of the people of South Gloucestershire.

In the end, all the council’s health committee as a whole could agree was to ask the Secretary of State for Health to refer the decision to the IRP. My right hon. Friend made the referral which, I must say, is more than the previous Government did; had they done so, we might not be in quite this situation now. My constituent Barbara Harris wrote to me this morning that the IRP has made “scathing comments” on the way in which local health care providers have handled the issue of Frenchay hospital. As my hon. Friend the Member for Kingswood has said, the IRP has said that it is understandable that residents

“should feel exasperated by the years of delay”

and by the “amendments to plans”. The IRP has concluded that the whole process shows a “marked lack of empathy” by local health care providers

“for patients and public who have the right to expect better”.

The North Bristol NHS Trust should now publish in full its findings on population growth and its stocktake of the diagnostic and out-patient capacity in south Gloucestershire, as the IRP suggested. That should be the local health care provider’s first step in fulfilling the IRP’s other recommendation on how hard it must work to regain the public’s trust. I fully agree with the IRP’s point that patient and public engagement must now be a core element in the design and delivery of how diagnostic and out-patient services are delivered in south Gloucestershire. I have said for a long time that health care providers should not feel that they can go back on their word as and when they wish.

South Gloucestershire council, our local residents and I need clarity about the plans for health care services in our area. Ten years down the line, my constituents deserve more than the ongoing confusion, broken promises and moved goalposts. I can understand why many of my constituents are not convinced that any health care provision, except perhaps a care home, will be left at Frenchay. I want a guarantee that health services are going to be provided at the Frenchay site in future. My constituents and I also want to know and to be reassured about the basis on which services will be provided.

19:12

[The Parliamentary Under-Secretary of State for Health (Jane Ellison)]

I congratulate my hon. Friend the Member for Kingswood (Chris Skidmore) on securing this debate, as well as my hon. Friend the Member for Filton and Bradley Stoke (Jack Lopresti), on his speech. It is good that all three of south Gloucestershire’s MPs are in the Chamber, including the hon. Member for Thornbury and Yate (Steve Webb), who I know is listening to the debate with great interest, because it also affects his constituents.

Before I respond to some of the points that have been made, may I, as I always like to do, take the opportunity to highlight the wonderful work carried out every day by those who work in the NHS, particularly those in my hon. Friends’ constituencies? Carrying on great work and serving the public against a backdrop of uncertainty, as we have heard about this evening, is sometimes quite difficult, but I pay tribute to the staff there and right across the country.

As my hon. Friend the Member for Kingswood will be aware, the South Gloucestershire CCG is leading proposals for the future provision of health care services provided in the area, under the auspices of the Bristol health services plan. I hope that he will forgive me if, for the benefit of the House, I put on the record some of the twists and turns of the past 10 years. I recognise the frustration that has been expressed today. I felt some sense of it just on being briefed about the situation, so I can understand how it must feel from a local MP’s point of view.

The 10-year strategic plan, which began in September 2004 with an extensive public consultation, aims to improve the quality of care provided in the region; to move services closer to people’s homes and reduce travelling time for patients and carers; to bring together specialist hospital services; and to improve the quality of old hospital buildings. Under the plans, Southmead was selected as the location for a new acute hospital to replace acute services at the existing hospital in Southmead and the Frenchay hospital in south Gloucestershire. The new acute hospital at Southmead is due to open this spring. The West Gate centre in Yate and Cossham hospital will continue to play a role by providing medical and surgical out-patient services, hosting therapy out-patient services and providing X-ray, ultrasound and echocardiogram services.

I will turn first to the proposals for Frenchay. As my hon. Friends are aware, the 2010 proposals called for a new community hospital at the Frenchay site to provide up to 68 in-patient rehabilitation beds, out-patient therapy and diagnostic services. However, a 2012 review by the primary care trust concluded that the proposals for out-patient and diagnostic services were unaffordable and inflexible, and duplicated other services.

I understand that that was disappointing, but CCGs are charged with using their resources in the most effective way for the benefit of all residents. I am assured that the local NHS is committed to finding a long-term solution for the provision of in-patient beds at Frenchay. Although the CCG is commissioning 68 beds at Southmead for May 2014, that is a temporary measure while the Frenchay site is being improved to accommodate them after April 2016.

I will turn to the questions about the recent council referrals. My hon. Friend the Member for Filton and Bradley Stoke said that my right hon. Friend the Secretary of State had seized the challenge to refer the matter, and he mentioned some of the comments of the Independent Reconfiguration Panel. As he said, South Gloucestershire council’s public health and health scrutiny committee has the power to examine the proposals for service change and refer them to the Secretary of State if it considers that there are grounds to do so. The committee made two referrals to the Secretary of State. The first, which was made in October 2013, concerned the temporary provision of rehabilitation beds at Southmead hospital. The Secretary of State asked the IRP for initial advice on that referral on 2 November 2013.

Before that advice was completed, a second referral was received in December 2013 regarding the wider set of proposals under the plan, including the decision no longer to provide out-patient, therapy and diagnostic services at the Frenchay site. Specifically, the committee cited concerns that the new proposals for diagnostics and out-patient services would not be as convenient for patients as the option of maintaining three sites at Frenchay, Yate and Cossham. Additionally, the committee raised concerns about rehabilitation capacity in the light of population growth and financial sustainability.

In January 2014, the Secretary of State asked the IRP for further advice to take into account both referrals. That has now been received, as we have heard. After careful consideration, the panel does not believe that the referral warrants a full review. Acting on the advice of the IRP, the Secretary of State has decided that there should be no barrier to the local NHS continuing the implementation of the proposals in their current state. The Secretary of State wrote to South Gloucestershire council on Monday to confirm that he accepts the IRP’s advice and to agree that the implementation programme should be allowed to proceed. Both sets of initial advice are available on the IRP’s website.

The panel acknowledged, and I acknowledge from the Dispatch Box tonight, that the debate about the provision of health services in the area has been long and difficult. Delays, changes, pauses and amendments to the plans have all played a role, and the progress to date has suffered from a lack of trust and from poor communication. As I have said, I can only imagine the frustration that is felt by the local community at seeing that stop-start approach to commissioning and the reconfiguration of its local health services. My hon. Friends are right to raise these issues on the Floor of the House. Their constituents are fortunate that they have done so with such tenacity.

I will turn briefly to Cossham. As my hon. Friend the Member for Kingswood will be aware, the 2009 business case for Cossham hospital highlighted the fact that it serves a fast-growing population in the Kingswood catchment that has more older people and people suffering from long-term health conditions than other parts of south Gloucestershire. I understand that the growth in the number of older people has put increased pressure on local urgent and emergency care services, posing a significant challenge for commissioners.

My hon. Friends will be aware that in 2013, NHS England commissioned Sir Bruce Keogh to undertake a comprehensive review of how urgent and emergency care services are organised and provided in England. The report from the first phase of the review was published in November 2013. I think it is fair to say that it has transformed our national debate about the future of such services, and that all parts of the NHS in England are having to judge themselves against Sir Bruce’s recommendations and his road map for future excellence in urgent and emergency care. The subsequent phases of that review could have implications for how those services are organised for the benefit of local communities in future.

In parallel with that, the CCG decided to revisit the plans for a minor injuries unit at Cossham, in order to take account of local evidence and the themes emerging from the national review. It is clear that many local people want to see the MIU that was originally planned, which has been so ably argued for this evening, open as soon as possible and are frustrated about the decision to revisit previously agreed plans. For urgent care as for all services, the CCG’s priority has to be to ensure that the best possible combination of services is provided to meet the needs of the whole population, and that those services are sustainable and excellent for the long term. Achieving the right mix of services at Cossham will be an important part of the solution.

My hon. Friends the Members for Kingswood and for Filton and Bradley Stoke have made powerful cases. Although the task of getting the right mix of local health services is ultimately a decision for local clinicians, I would of course be happy to meet them to discuss the matter and hear their case, so that I can ensure that I have the clearest possible understanding of the issues that affect their area.

Once again, I pay tribute to my hon. Friends for their work on behalf of their constituents on the proposals. They have ensured that they have explored every possibility to ensure that they are part of an engaged process that will ultimately deliver what we all want for our constituents—excellent local health care. I congratulate them on that and look forward to continuing to engage with them on the issue.

Question put and agreed to.

19:21

House adjourned.

Ministerial Correction

Wednesday 19th March 2014 Ministerial Corrections

Wednesday 19 March 2014

Prisoner Escapes

Wednesday 19th March 2014 Ministerial Corrections

[Philip Davies]

To ask the Secretary of State for Justice whether any prisoners serving a sentence for murder are still unlawfully at large following an escape or abscond since 1 April 2004.

[Official Report, 10 March 2014, Vol. 577, c. 116W.]

Letter of correction from Jeremy Wright:

An error has been identified in the written answer given to the hon. Member for Shipley (Philip Davies) on 10 March 2014.

The full answer given was as follows:

[Jeremy Wright]

Escapes have been falling for over a decade with the current low levels having been sustained for some years now. This is despite considerable increases in population over the same period. Despite a slight increase in 2012-13, absconds have been falling for nearly two decades.

The following table shows the number of absconders still unlawfully at large who have an index offence of murder. There are currently no prisoners unlawfully at large with an index offence of murder who have escaped from prison or prison escort. This information was correct as of 3 March 2014.

[Jeremy Wright]

Escapes have been falling for over a decade with the current low levels having been sustained for some years now. This is despite considerable increases in population over the same period. Despite a slight increase in 2012-13, absconds have been falling for nearly two decades.

The following table shows the number of absconders still unlawfully at large who have an index offence of murder. There are currently no prisoners unlawfully at large with an index offence of murder who have escaped from prison or prison escort. This information was correct as of 3 March 2014.

Petition

Wednesday 19th March 2014 Petitions

Wednesday 19 March 2014

Freezing of Bank Accounts

Wednesday 19th March 2014 Petitions

The Petition of Miss Enid L. Gibson, living in England a woman of 94 years of age who worked as a midwife and every branch of nursing,

Declares that her bank accounts have been frozen and money taken by Redbridge London Borough and she is not being allowed to publicly complain. Furthermore she has not been allowed to address the court and local authority are trying to stop her visiting Parliament.

The Petitioner therefore requests that the House of Commons Justice Committee and the government change the law to stop this happening.

And the Petitioner remains, etc.

[P001335]

Westminster Hall

Wednesday 19th March 2014 Westminster Hall

Wednesday 19 March 2014

[Dr William McCrea in the Chair]

Metropolitan Police

Wednesday 19th March 2014 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(Mr Gyimah.)

09:29

[Tessa Munt (Wells) (LD)]

It is a pleasure to speak under your chairmanship, Dr McCrea.

I beg hon. Members’ patience while I set out what I want to talk about, which is of a complicated nature. It concerns six territorial support group officers who were based at Paddington Green police station in June 2007: Police Constable Mark Jones, who was my constituent; PC Neil Brown, whose MP is my right hon. Friend the Member for Bermondsey and Old Southwark (Simon Hughes); PC Steven White, whose MP is the hon. Member for Spelthorne (Kwasi Kwarteng); PC Simon Prout, whose MP is the hon. Member for Watford (Richard Harrington); PC Giles Kitchener, whose MP is the right hon. Member for Maidenhead (Mrs May); and Police Sergeant William—known as Bill—Wilson.

My constituent, Mark Jones, first contacted me in April 2012. He told me what had happened to him and his colleagues. I consider every case on the basis of whether or not the person has been treated fairly, so I decided that the only thing to do was to take this matter up.

This whole sorry saga commenced on Friday 1 June 2007, following the arrest of two Arab youths, Basil Khan and Ahmed Hegazy, and the apprehension and eventual release of a third youth, Omar Mohidin, by seven Metropolitan Police Service territorial support group officers who were in a carrier on the Edgware road in London W2. I shall use the abbreviations MPS and TSG from now on.

A complaint was made by the one black officer on the carrier, PC Amechi Onwugbonu, about the treatment of the youths by the six white police officers. PC Onwugbonu had challenged the six officers about their behaviour on many previous occasions. By the nature of the work that these officers did, sometimes some force was necessarily used. When he challenged the officers, they clearly advised him that if he had a problem with the way that they had behaved, with which they saw no problem, he should take his allegations to a senior officer. It is important to note that the youths who were arrested did not make any complaint about their treatment until the following day, and only after they had been made aware of the details of PC Onwugbonu’s complaint via the directorate of professional standards.

During the evening of 1 June, the six officers were made aware that a serious complaint had been made about their conduct, but they were not given details. By that time, the six officers had completed their handover of the youths and their case notes, and the officers had been examined by an independent forensic medical examiner, who checked them for injuries, primarily on their knuckles. The six officers were informed in the early hours of Saturday 2 June 2007 that they were on gardening leave. About five days later, all the officers were recalled to Paddington Green police station. Mark Jones and Bill Wilson were suspended immediately and escorted from the station. Neil Brown, Steven White, Simon Prout and Giles Kitchener were dispersed and placed in separate teams across the MPS.

In about September 2007, the six TSG officers—regardless of their employment status at any particular time, I will refer to them as TSG officers—became aware that a civil claim against the Metropolitan Police Commissioner had been made by Basil Khan, Ahmed Hegazy and Omar Mohidin for false imprisonment, assault and battery, damages for anxiety, distress, inconvenience, stress, pain, humiliation, discomfort and loss of liberty, breach of the Equality Act 2006, and breach of the Human Rights Act 1998.

In October 2008, the Crown Prosecution Service authorised charges against all the officers. Neil Brown was suspended and Steven White, Simon Prout and Giles Kitchener were put on restricted duties. Mark Jones was charged with racially aggravated common assault and a racially aggravated section 4 public order offence, as well as two charges of misconduct in public office; Neil Brown, having been suspended, was charged with a racially aggravated section 4 public order offence, using threatening words and behaviour, and two charges of misconduct in public office; and Bill Wilson, Steven White, Simon Prout and Giles Kitchener were charged with a single count of misconduct in public office. All those charges were hugely damaging to the officers’ careers and reputations.

A plea and case-management hearing was set for 6 April 2009, and a full criminal trial was scheduled for 5 October 2009 at Kingston-upon-Thames Crown court. For 28 months, these officers—and their families—lived with the knowledge that if they, as police officers, were found guilty of racist crimes, they would face prison sentences of three years, minimum. In November 2009, after a four-week trial, the six TSG officers were all unanimously acquitted of all charges at Kingston Crown court.

I should like to return to some of the events that occurred during the 28 months between the charges being laid and the criminal trial taking place. The Metropolitan Police Service concealed and withheld material and substantial closed circuit television evidence from the officers and their lawyers. There were numerous formal requests from solicitors and orders from the court to reveal any CCTV evidence held by the police. The defence team was checking a dusty property store log two days before the criminal trial began. The six TSG officers discovered that directorate of professional standards officers—the police who investigate the police—had seized vital CCTV tapes 28 months earlier, just two days after the incident, and had hidden the evidence. Had the TSG officers not found this log and presented it to the Crown Prosecution Service, the DPS officers would not have admitted their seizure of the CCTV tapes and would never have handed them over.

It was not until the night before the Crown court trial that the DPS handed over 13 CCTV tapes, which held 2,000 hours’ worth of footage, that it had seized about two years before. This evidence was critical in proving the officers’ innocence. The CCTV footage at Paddington Green police station originated from 29 different cameras that covered the relevant time, from 5.30 pm on 1 June 2007 through to 12 noon or thereabouts on the following day.

The DPS officers had seized and viewed those 13 CCTV tapes, as proved by the entry in the DPS log. It is believed that the log was disclosed by mistake. Additionally, there was a CCTV tape from the Boots chemist on Edgware road—the arrests took place directly outside. The DPS officers seized and viewed that tape. The entry in the DPS log states: “viewed, not helpful”. That CCTV tape has not been provided, despite numerous requests, and those present at Kingston Crown court were not told of its existence. The MPS has refused to provide any account of the tape’s whereabouts.

The MPS compounded the problems by producing for the court a false and grossly misleading engineer’s report, which stated that the CCTV cameras were not working and were broken on the evening of 1 June 2007. In fact, the engineer concerned was reporting on a completely different system, rather than the system relating to the officers’ case. The MPS knew that its so-called evidence was false, as officers had already viewed the relevant CCTV footage at that point.

PC Onwugbonu’s initial allegations were numerous and very serious. He told the court that he had not visited the cells of the two claimants, Khan and Hegazy. He was asked about that in court on two separate occasions. He was then shown CCTV evidence that, of course, had only just been disclosed. The officers were watching CCTV tapes at night, once the court case had finished for the day; they were trying to catch up throughout the four weeks of the court trial. The evidence shows him visiting the cells and photocopying custody records. Clearly, there is a data protection issue there, because custody records hold data about people being held in the police station, including their address, phone numbers and other personal information.

PC Onwugbonu told the court that PC Mark Jones had been walking on Hegazy’s back, that he saw Neil Brown offering to fight Hegazy, and that Basil Khan was beaten by Mark Jones in the carrier while it was in the station yard. A specific allegation, later supported by Basil Khan, was made that Mark Jones had attacked Basil Khan with

“in excess of 40 full blown punches and kicks”.

Mark Jones is a muscular man, and one would expect Basil Khan to have been seriously injured; the only injury Basil Khan had was a 4 mm bruise behind his left ear, which may or may not have been a result of his arrest. It defies logic that those allegations were accepted without corroborating medical evidence. The CCTV shows Mark Jones exiting the carrier and entering the police station, rather than remaining in the carrier and beating Basil Khan.

The MPS has chosen to rely on the youths’ complaints because they are similar to those made by PC Onwugbonu. It should be noted, however, that the youths concerned made no complaints until at least six hours after arriving in custody on 1 June 2007. Additionally, they were asked about their welfare by a police doctor, two police sergeants, a police inspector and two independent charity lay visitors. The claimants made allegations only after Detective Inspector Belej from the DPS telephoned custody and spoke to their solicitor at approximately midnight. That call was never logged. DI Belej had received PC Onwugbonu’s allegations by that time. The six TSG officers only discovered that that highly suspicious call had taken place because of the CCTV. The youths’ solicitor was cross-examined at the Crown court trial and told the court that DI Belej

“told me what the case was about”.

After the call, the solicitor was seen to return to Mr Hegazy and spend 90 minutes in consultation. It was after that consultation that the youths’ allegations were first raised.

I now return to the general course of events. In early 2010, Bill Wilson retired from the MPS. It is standard practice for the police to investigate after any officer has been involved in a criminal trial. That investigation involved the DPS. Following the DPS investigation, the six officers were informed in March 2010 that no disciplinary action would be taken against them. In early 2010, however, the six TSG officers made a formal complaint to the MPS about the conduct of the investigation and PC Onwugbonu’s statements, which had been disproven during the trial. Simultaneously, the friends and families of the six TSG officers complained to the Independent Police Complaints Commission, as is their right.

The officers were told that there would be an internal review of the case. In March 2010, Mick Johnson, the chief superintendent of the TSG, told the six officers individually that they were being removed from the TSG and forcibly returned to front-line borough policing, despite their skills and qualifications. The six TSG officers appealed against the decision to remove them. Commander Bob Broadhurst, who headed territorial policing at the MPS, ruled that the officers were to be removed before the appeal was even heard, so that is what happened.

After Bill Wilson retired, the five remaining TSG officers invoked the “fairness at work” process and completed the necessary paperwork. The officers filed their application with the employment tribunal on the grounds of race discrimination in March 2010. Mark Jones and Neil Brown went on sick leave from April 2010. To comply with the MPS employment dispute process, a fairness at work adviser-investigator—a senior civilian member of staff who headed the “fairness at work” department—was appointed. The first adviser-investigator reported that the decision to remove the officers from the TSG would stand but offered some recognition that the process had been handled poorly. The TSG officers appealed on the basis that the finding was unsound because they had evidence that the decision to remove them from the TSG predated their appeal.



A new adviser-investigator, Superintendent Victor Olisa, was appointed. In late 2010 he provided a draft of his final report, which referred to the fact that he could not rule out racism, but the final report did not contain that reference. During the final meeting, he told Neil Brown, Simon Prout and Giles Kitchener that he had had meetings a short while previously with his mentor, Deputy Assistant Commissioner Mark Simmons, and the directorate of legal services, during which he was informed—and he was just passing on the information—that if the officers did not drop their employment tribunal proceedings, the MPS would look to join the defendants into the civil proceedings being taken by the youths. This is known as making the officers part 20 defendants, which makes each individual liable for his actions as a police officer while under the direction of his employer, the MPS. Normally, a police officer acting within the remit of police duties would expect the commissioner to cover the liability for those actions. It is effectively their insurance at work. I understand that this is the first time officers have been joined in as part 20 defendants. MPS officers will be required to defend their actions while on duty and under the direction of their superiors in court. Should that situation continue, there is probably a case for ensuring that every police officer in the UK is made aware that his or her actions might need individual personal insurance cover. It also has implications for discipline. Police officers are required to carry out commands, not negotiate the risks of future court action as a result of any ordered action by a superior officer.

What happened to the complaints of the friends and families of the TSG officers? Following the discovery the day before the criminal trial was due to start on 1 October 2009 that substantial evidence had been withheld by the MPS for two years and four months, the families of all six TSG officers raised complaints about the handling of the investigation by the DPS. Complaints were made that evidence had been withheld from the Crown Prosecution Service, the lawyers, the prosecution and the defence teams. Complaints were also made about the racially biased investigation by the DPS officers in favour of the prosecution team and about the evidence of PC Onwugbonu. The complaints were dealt with in two parts: the IPCC in Cardiff handled the discrete issue of failure to disclose CCTV evidence to the CPS and others, and the DPS handled its own internal investigation into the remainder of the complaints about the investigation, particularly, for example, the contamination of witness statements.

The terms of reference for the IPCC Cardiff investigation were that DPS officers had failed to review crucial CCTV evidence and had subsequently withheld a number of CCTV tapes from the Crown court, the CPS and the defence and prosecution teams. The DPS officers involved were Detective Inspector Belej, Detective Sergeant McQueen and Detective Sergeant Fraser, who is now retired. The IPCC specifically looked at whether the officers failed—and, if so, whether that failure was deliberate—to disclose the internal CCTV evidence of the custody suite and the external view and whether the prosecution and, subsequently, the defence counsel might have been misled by any failure to include the evidence on the used and unused schedules. It also looked at who obtained the CCTV evidence around the Paddington Green police station and when, as well as the subsequent continuity of that evidence. It also looked at any policy decisions, lines of inquiry or communication on the recovery of CCTV evidence and the review, use and disclosure of potential evidence. It considered and reported on whether any criminal or disciplinary offences were committed by any police officer or member of the police staff involved in the incident.

In September 2011, the IPCC in Cardiff concluded that the conduct of the DPS officers in this case gave such serious cause for concern that

“DI Belej and DS McQueen should both have a case to answer for Gross Misconduct in respect of their conduct set out in the Report”.

The IPCC has no remit to rule on the conduct of a retired officer. DS Fraser retired from the MPS during the process and before the IPCC published its report. The MPS initially refused to hold a discipline board, but MPS Commander Julian Bennett put pressure on the IPCC not to go ahead with the hearing and to allow the DPS officers to plead guilty to misconduct only. He said that the view of the panel was that the events in question were misconduct “at best”. If the hearing proceeded, he said that there might be a finding of no misconduct at all. In March 2013, a disciplinary board scheduled to last two weeks was deemed to be over after two days. The IPCC, despite its statutory direction to hold the gross misconduct board, is powerless to insist that the board proceeds to hear the case. A disciplinary board can be organised and listed at the direction of the IPCC, but can be dismissed by the MPS at any stage.

The IPCC directed the MPS to comply. Statute requires the MPS to comply with IPCC directions, but that statute is powerless once the gross misconduct board begins. In this case, Commander Julian Bennett allowed the DPS officers to plead guilty to plain misconduct on day two and passed down a written warning as a sanction for hiding and denying the existence of 13 CCTV tapes and producing a false engineer’s report to the Crown, the prosecution and the defence. The six TSG officers’ solicitor, Lynne Burns, wrote to the Metropolitan Police Service on 30 April 2013, claiming that the decision to allow the DPS officers to plead guilty to misconduct only was irrational and unfair. She stated:

“Just to put this into context, the failure to disclose and knowing concealment of CCTV evidence does not represent one or two requests but numerous letters where questions relating to CCTV were ignored or answered falsely, Advocates Questionnaires, Joint Requests for Disclosure, Orders of the court ordering disclosure all either ignored or responded to in a knowingly false or misleading manner”.

On the DPS investigation, the six TSG officers accused in 2007 were investigated by three officers from the DPS. From that point onwards, the six officers were subjected to a racially biased, dishonest investigation, involving blatant, deliberately withheld and concealed material evidence, lies, cover-ups and falsified evidence submitted to the Crown court as the MPS attempted to secure a conviction against the officers at all costs, even though the legitimate evidence did not support its case. In 2012, the DPS investigated the matter. Officers Detective Chief Inspector Neligan and Detective Sergeant Morley returned a report that indicated that there was no case for the officers—DI Belej and DS McQueen—to answer.

The DPS report was appealed by the six TSG officers to the IPCC in Manchester. In May 2013, that appeal was upheld. The IPCC’s appeal report was damning and highly critical of how the DPS investigation had been conducted. It held that, among many other points, the original investigation by the DPS officers was conducted in a biased manner in favour of the prosecution and in favour of one black police officer over six white police officers, stating:

“On balance the significant catalogue of errors made by the DPS Officers shows a bias in the investigation often dismissing evidence which would have supported the Defence”.

The IPCC indicated that consideration must be given to further disciplinary action against the DPS officers and PC Onwugbuno, and that consideration must be given to potential criminal prosecutions. The IPCC held that the investigation showed bias against the six TSG officers and that the black police officer’s failure to tell the truth on 25 occasions at Kingston Crown court could not be put down to “stress”, as accepted by the original investigating officers. The IPCC referred the case back to the Metropolitan Police Service for re-investigation.

I will now move on to the second investigation. The Metropolitan Police Service referred the investigation back to the same DPS officers—DCI Neligan and DS Morley—who carried out the original, flawed investigation into DI Belej and DS McQueen, who were their own DPS colleagues. The investigation is ongoing. It is worth noting that the DPS officers concerned have, as I understand it, remained in operational posts. DI Belej is a supervising inspector in counter-terrorism and border control at Heathrow, and DS McQueen remains in the DPS, investigating misconduct.

The six TSG officers have been threatened on two occasions that they should withdraw their employment tribunal proceedings or face being joined into the civil action. I have already mentioned one occasion, namely when Superintendent Victor Olisa passed on the message, but in January 2011 the now-retired MPS Police Federation general secretary, Dave Bennett, passed on the same threat allegedly from the DPS commander Peter Spindler.

On the civil, or part 20 proceedings, when the six TSG officers did not withdraw their employment tribunal proceedings against the MPS, the MPS joined four of the six TSG officers—Mark Jones, Neil Brown, Steve White and Bill Wilson—into civil proceedings brought against the commander of the MPS by Basil Khan, Ahmed Hegazy and Omar Mahidin. Such a move might suggest that the TSG officers were being victimised for having the temerity to challenge the MPS’s decisions and to issue proceedings against it. The youths brought their civil claim with the assistance of Bhatt Murphy, a firm of solicitors that specialises in actions against the police. The youths submitted their claims in 2007 and all are funded by the taxpayer through legal aid.

The MPS has presented its civil defence so as to justify joining the officers in part 20 proceedings. The MPS has told the High Court that this civil case is highly unusual, because, in the opinion of the six TSG officers, the black officer—PC Onwugbonu—contradicts the white officers’ evidence. The MPS has effectively delegated responsibility for proving innocence a second time to those six TSG officers—bearing in mind that they already won their case in the Kingston Crown court—rather than acting on the court’s findings and defending them. That was DAC Mark Simmons’s justification for his decision to bring the officers in as part 20 defendants. The MPS, through the director of legal services, has suggested that it should not disclose the IPCC report, which is highly critical of the original DPS investigation, to the youths in the civil proceedings. There is, however, a legal obligation to comply with the disclosure rules and it must be of concern that the MPS has suggested that such a crucial document should not be disclosed.

DAC Mark Simmons, who was commander of the DPS at the time, is the senior client and has instructed the MPS legal team to use statements to the High Court that they know to be incorrect. Two examples are as follows. Statement one says:

“The Defendants’ (the MPS’) DPS investigation was carried out appropriately and in good faith in the circumstances.”

The MPS, and DAC Mark Simmons in particular—he was the DPS commander at the time—knew that the DPS officers did not act appropriately or in good faith. DI Belej and DS McQueen had concealed and withheld over 2,000 hours of CCTV footage, a fact which was established at the trial at Kingston Crown court and by two independent IPCC investigations. Furthermore, the officers had pleaded guilty at the misconduct hearing in March 2013.

False statement two reads:

“PC Onwugbonu has, since the day in question, supported the allegations made about officers by the claimant”—

the claimant being the youths. That is untrue. The MPS heard PC Onwugbonu admitting that he had been mistaken or had lied on at least 25 occasions during his evidence to the Kingston Crown court trial, and his evidence was totally discredited. Judge Southwell’s direction to the jury before summing up said:

“My direction is that you will have to be careful in examining PC Onwugbonu’s evidence, important as it plainly is to the issues which you have to decide in the case of each of these five men, before you declare yourself sure that he was honest and reliable in respect of what he said.”

There is therefore no justification for the MPS to make such a statement in its defence to the High Court.

The MPS also tampered with personnel or staff records to produce false records for the six TSG officers. In 2013, as part of disclosure in part 20 proceedings, it came to the six TSG officers’ attention that their staff records had been tampered with. In March 2010, following their acquittal by unanimous verdict at the trial at Kingston Crown court, they were told that no internal disciplinary sanctions or actions were to be brought against any of them. They have discovered, some six years later, that a false account has been created for each of them on their personnel records, illustrating that a finding of guilt was made against each of them, that “words of advice” were given to each of them in 2009 and that the complaint was substantiated. Someone within the MPS or the DPS has manufactured a totally false set of personnel records for each of the officers. It is deeply concerning that formal records have been tampered with just in order to support the MPS’s case. The six TSG officers have tried to discover who was responsible, but the MPS alleges that it is unable to find out.

Such are the extreme lengths that the MPS and the DPS will go to demonstrate how tough and politically correct they are on alleged racism within the ranks that they will accept the word of one black officer over six white officers and then conceal material evidence that contradicts the black officer. The officers strongly believe that this is a case of reverse race discrimination and political correctness gone completely mad. To use layman’s terms, the DPS had tried to fit them up for crimes that they did not commit and knew that everything it had massively undermined the prosecution case. The decisions by the IPCC in Cardiff and the IPCC in Manchester should have triggered a response from the Metropolitan Police Service to admit finally that their DPS officers had acted in an inappropriate and racially biased manner.

Finally, I want to touch on what the officers—and I, having got enraged about this situation—might want. They want some sort of admission of wrongdoing, including an open acknowledgement of how the officers were treated, an acknowledgment that the investigation and referral to Kingston Crown court was seriously flawed and racially biased, and an acknowledgement that the three DPS officers—McQueen, Belej and Fraser— acted dishonestly in their handling of the investigation. They want an acceptance of blame that personnel records have been tampered with, an acknowledgement of further victimisation and an apology for these actions. They want some sort of compensation and settlement of the employment tribunal proceedings, which are still ongoing, for the loss of earnings, damage to reputation by substantive adverse press coverage, and damage to career and stress since 2007—seven years ago. They want the MPS to support its officers fully in the civil actions brought by Hegazy, Khan and Mohidin, and not to insist that they be separate defendants under part 20. In those proceedings, they want the MPS to make the court aware of the serious independent rulings against the DPS officers and PC Onwugbonu. That will help to create a level playing field.

I have written to Commissioner Hogan-Howe. I had a reply from Commander Allan Gibson, which was pretty dismissive. I wrote again to Commander Gibson and I do not think that anything is moving forward particularly. I know that one of my colleagues in the other place has raised the matter and his concerns. He was assured that the whole business would be looked into, but as of the end of January the investigation had not been carried out by a senior officer.

The Metropolitan Police Service must have spent between £2 million and £3 million defending itself in the situations I have recounted. It was trying to secure a conviction against the six TSG officers, but it wasted public funds defending its actions. It refuses to admit any wrongdoing. The MPS refuses to settle the case, preferring to spend substantial amounts of public money defending the actions of those whom the IPCC has found guilty of bias, and whom it has also directed should face gross misconduct proceedings and possible criminal proceedings.

I should be grateful if the Minister would apply herself to the question whether it is sensible and advisable to take police officers into part 20 proceedings when they are acting as police officers under the direction of their superior officers. It seems mad that we must then move to something pretty similar to the American system, where police officers may well have to take out personal insurance for anything they may do on duty, as well as off duty. It would be helpful if the Minister would consider at some point—not today—how the IPCC can have no remit to rule on the conduct of a retired officer. Retirement does not absolve a person from blame, but the IPCC cannot take any action in that case. Will she also comment on the whole charade over disciplinary boards, and the fact that the IPCC can organise, list and give direction on what should happen, but that can be dismissed by the MPS at any stage?

I know that several colleagues want to join in the discussion, but I reserve the right to rise and say something else.

[Dr William McCrea (in the Chair)]

Order. I commend the hon. Lady for bringing such a serious matter before the House. We must give time for the Front-Bench spokesmen to respond, and their speeches will start at 10.40 am. I remind hon. Members that we cannot debate matters in which there are active criminal proceedings.

10:13

[Mark Field (Cities of London and Westminster) (Con)]

I congratulate the hon. Member for Wells (Tessa Munt) on bringing up this difficult, complicated case; it is greatly to her credit that she has done so. It would be easy for all of us, in this age of political correctness and in the light of some of the allegations, to sweep it under the carpet. That is not to say that there are not fundamental, general problems with the Metropolitan Police Service, which I want to deal with more generally, having been a Member of Parliament in London for 13 years. It is perhaps ironic that the MPS has, with good cause, great sensitivity about race-related incidents—I shall talk a little about the Stephen Lawrence affair in a moment or two—but that in spite of that sensitivity it seems to be engulfed in controversies, such as the one that has been outlined in detail this morning. The hon. Lady described an appalling state of affairs, and I hope that the Home Office will pay considerable attention to what happened.

It would be an understatement to observe that the Metropolitan Police Service did not enjoy its happiest decade or so in the noughties and beyond. It is still deeply damaged by revelations over the Stephen Lawrence case, which, distressingly, continue to this day. The organisation was of course brought into fresh disrepute following the controversial shooting of Jean Charles de Menezes in Stockwell in July 2005, and the manslaughter in my constituency of the newspaper vendor Ian Tomlinson some three or four years ago. I am sorry to say it, because like many people from the right of the political divide, my instincts are to favour authority, including the police service, but I have been worried; I have spoken many times in the House and written articles on my grave concerns about the way the Metropolitan Police Service has operated, and about failings by its leadership. Frankly, there have been mendacious and at times calculated attempts by senior figures in the Met to disguise what happened during various events, including those we have heard about today, and to influence public opinion in its favour.

In the case of Jean Charles de Menezes, we were told at the outset that he was an illegal immigrant who bore resemblance to a terror suspect; that he had vaulted a ticket barrier; and that traces of cocaine were found in his urine. The picture was not entirely dissimilar in the less well-known case of Ian Tomlinson. When the newspaper vendor died of a heart attack on the streets of the City of London in April 2009 during the G20 protests, most people probably instinctively had faith that the police were doing their best in difficult circumstances—and the police do operate in difficult circumstances, as we all know. After people had witnessed sanctimonious street warriors antagonising police officers, a sharp shove to an obnoxious protester would not have made headlines, had the victim in question not died. The official line would be that a stressed officer in a tense situation lashed out, hitting an innocent person in the mêlée. Following the clash, the man walked off, and died only later of a heart attack, as the riotous crowd prevented him from getting medical attention.

The problem, of course, with that version of events, as put out by the Metropolitan Police Service at the time, was that it was plainly untrue. Fortunately—in contrast to the position in the case set out by the hon. Lady—there was a substantial amount of CCTV footage, which was not indiscriminately destroyed by the police. Therefore video clips of the incident appeared later, revealing that the victim had been hit across the legs with a baton by a masked police officer in what was clearly an unprovoked attack. A subtle shift in message followed, through the selective leaking of information about Tomlinson’s background and behaviour. I am very sorry to say that was clearly not an isolated incident for the Metropolitan Police Service. Its apparent relationship with the media continues, and it seems to think it needs to be able to put out its own line on stories, as has been shown in various incidents that I shall refer to.

The Tomlinson matter was of course of some concern to me. I was reassured within days of the incident in a private meeting with the Independent Police Complaints Commission that a thorough investigation of the background to the incident was under way, yet the IPCC’s handling of the case came into question, as did its handling of the case that we heard about this morning, particularly in relation to its cosiness with the police in the capital.

Appalling as both the de Menezes and Tomlinson incidents were, I believe that it was the subsequent public relations management of the events, and the police culture that that revealed, that so harmed confidence, trust and faith in our law enforcers. In the case of de Menezes, I have always suspected that the public would have forgiven the Met had it immediately admitted that a terrible mistake had been made. Similarly, in the Tomlinson case, where media hyped the prospect of attacks by rent-a-mob anarchists, we had a situation not entirely removed from the frenzied situation on the streets of London in July 2005, when the fear of Islamic terrorism loomed large. Once again, I believe that the decent majority of the public would have been happy to accept that the Metropolitan Police are unable to micro-manage the conduct of all their officers at all times. It was the spectacle of coppers deliberately closing ranks and trying to distort the truth that utterly undermined the police force.

After both incidents, we were assured that lessons had been learned, so it has been incredibly disheartening to see controversial events in the current decade handled in a similarly opaque, if not outright deceptive, way. I refer, of course, to the shooting of Mark Duggan on the streets of Tottenham in August 2011 and the so-called plebgate incident a year or so later, which led to the political demise of a Cabinet Minister, my right hon. Friend the Member for Sutton Coldfield (Mr Mitchell), after his fateful encounter at the gates of Downing street with a dishonest police officer.

On the Mitchell affair, although similar minor tussles occur between police and members of the public each and every day in our city, the damaging aspect of the encounter was that it reinforced the view that the Met goes to great efforts to protect its own, even if that is at the expense of the truth coming out. This makes it difficult for the public to trust that the organisation and its members are bastions of justice for the ordinary man and woman. In addition, when the Met’s top team is embroiled in such squabbles, focus inevitably rests on handling the media and careful construction of a PR narrative, rather than on fighting crime. Londoners can be forgiven for not seeing the plebgate row as especially critical to dealing with the problems on the streets, but none the less, it reflects a deep-seated mendacity in the police’s approach.

Even if Londoners are unconcerned about the fates of Messrs Duggan, Mitchell, de Menezes and Tomlinson, or of the territorial support group officers to whom the hon. Member for Wells referred, such incidents make even middle-class, Tory-voting residents in my constituency doubt the word of the Metropolitan police in a way that would have been unimaginable only 15 or so years ago. Londoners are, I am afraid, finding it increasingly difficult to trust that our law enforcers are law-abiders. Indeed, it is remarkable that many middle-class Londoners who would never previously have questioned the police are now inclined to think again.

At the time of the Tomlinson investigation, The Daily Telegraph advised:

“As a newspaper, we have a long record of defending the police even in the most difficult circumstances...Yet it is becoming increasingly difficult to do so, especially when the police themselves seek to cover up the failings that inevitably beset any organisation.”

Those words could have come from the mouths of many dozens of my Conservative colleagues, and they have certainly come from mine. That whole culture has to stop. For sure, there will always be mistakes, and it would be completely wrong for the errors of a few to undermine the elements of excellent police work done by the many. There is no excuse, however, for the mendacity apparent in the attempts at manipulation of public opinion that follow too many high-profile, controversial Metropolitan police slip-ups.

The immediate reaction of the Met’s leadership should always be transparently and without favour to seek out the truth, to isolate problems and to apply the rule of law to its own officers when necessary. It is understandable and inevitable that the initial police instinct is to close ranks when confronted by public aggression. The leadership, however, should recognise that the majority of those whom they police by consent—thankfully in this country we still have a passion for the notion that policing is by consent—are reasonable and understand some of the real pressures that the police find themselves under, in particular here in the capital city. Only by being honest and transparent with the public when mistakes have been made can trust be restored in the Metropolitan Police Service.

10:23

[Richard Harrington (Watford) (Con)]

Rather like the hon. Member for Wells (Tessa Munt), I came here because of what was originally a constituency inquiry. I commend her for securing the debate and for the eloquent way in which she went through everything that she has found in her research and been told by constituents. We have had meetings to discuss the subject.

I am not making an attack on the Metropolitan police or the police service generally, and I do not wish to discuss other cases or any of the points ably covered by my hon. Friend the Member for Cities of London and Westminster (Mark Field). I am talking about my constituent, Mr Simon Prout, and his colleagues who were on the TSG detail that night. They have been treated badly by the system, and they were not given any of the rights that we expect for people generally in employment, in public or private service, or as citizens. That is the scandal that I see.

I do not expect the Under-Secretary of State for the Home Department, the hon. Member for Staffordshire Moorlands (Karen Bradley), to comment on that particular case. I thank her for being present today, because the Minister for Policing, Criminal Justice and Victims has been taken ill. I am sure that everyone joins me in hoping that he has a speedy recovery. I am sure that the Under-Secretary will deal with the matter in an extremely competent and professional manner, but I understand that she may not comment on the particular case. There are serious points at stake to do with justice, fairness, authority, transparency and, above all, accountability in the DPS, the IPCC and the system generally. Serving police officers have to rely on those things if they are to have justice for themselves.

Even now, despite all the clear and obvious failings, the Metropolitan police refuse to be held accountable or to take proper action. I, too, have corresponded with the Metropolitan Police Commissioner and received a reply similar to that of the hon. Member for Wells. The case has ruined the life of my constituent, Mr Simon Prout, and his colleagues. He has done nothing wrong, but he has lost eight years of service, suffered ill health and lost prospects and promotion. It has ruined his whole career. That is not an exaggeration; I have discussed it at length with him, and his colleagues feel exactly the same. Had they been found guilty of misconduct or done things that were wrong, they would have fully expected the consequences—not only losing their job, but facing proper proceedings with ultimately serious effects. Going into their job, they were fully aware of that, but they did none of those things.

What I found so unbelievable about the case when I heard the details from my constituent, and what I will focus on today, is the ability for the IPCC recommendations to be completely ignored and dismissed. What is the organisation there for, if it can be completely ignored and dismissed? The case highlights the serious need to improve accountability within the Metropolitan police. At the moment, there is little procedure to ensure that justice is secured. That is all the more troubling when we consider that in this case the victims of police misconduct were the police officers themselves. Serious issues were swept aside and ignored. If that was the case for serving police officers, what hope is there for the rest of us?

Furthermore, there can be no doubt that there was clear evidence of gross misconduct, and that the two DPS officers, Detective Inspector Bellej and Detective Sergeant McQueen, should have faced such charges and dismissal. The IPCC even recommended dismissal. What happened, however, was that the case was passed around the Met; the two officers were given a first warning on their personnel file, which disappeared quite quickly, because the whole process took so long. In a normal employment matter, such things go off the file anyway. The officers should have been dismissed, but in actual fact they faced no action and got away scot-free. How can that happen? Despite the IPCC’s recommendations, the Metropolitan Police Service held its own hearings and allowed the officers to face only minor misconduct proceedings. They were allowed to continue their work for the Met, as the hon. Member for Wells explained. That is the crux of the matter.

First, why do we have a complaints and investigation body that can be ignored, at such cost to individuals? Secondly, why is there no recourse against that? Thirdly, why are people such as Simon Prout and his colleagues forced to battle to secure justice for themselves, only to be told, even when they are proved right, that nothing will happen and no punishment will be handed down?

I am conscious of the fact that the Minister may not comment on the details of the case but, in summary, I want her to take action. First, the failures of the two DPS officers were put down to lack of experience, despite one having 18 and the other seven years of service. They made basic errors in what I imagine are standard policing steps, such as following up lines of inquiry, taking proper notes and so on. I ask the Minister to write to the Metropolitan Police Commissioner to reconsider the case with much more seriousness, and to think about what action should be taken against the two DPS officers. Secondly, does the Minister agree that the case shows a problem with the system, even if she cannot comment on the circumstances? Can the case, and the systemic problems in the justice system that it highlights, be reviewed for all serving police officers?

10:29

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

It is a pleasure to serve under your chairmanship, Dr McCrea. I congratulate the hon. Member for Wells (Tessa Munt) on bringing these serious allegations to the attention of the House. I will not comment on the substantive allegations, but will focus on wider issues that arise from her powerful speech. I make one other preliminary point: like all hon. Members present, I have seen at first hand some of the outstanding work done by the Metropolitan police, often in the most difficult circumstances. My experience of the Metropolitan police is that overwhelmingly they are honest, decent men and women trying to do a good job for Londoners. Having said that, there are clearly profound problems that need to be dealt with properly.

Turning to some of the wider lessons in this case, first, it is of course right that we hold the police to account. They must be accountable politically, and in the event of wrongdoing, that wrongdoing must be investigated properly. Secondly, it is important that police officers enjoy fair treatment and due process, including full, proper and prompt disclosure of any evidence relating to allegations against them. Thirdly, with regard to its internal procedures, and the role of the DPS in particular, it is of the highest importance that the Met conducts itself in a way that engenders public confidence, handling allegations of misconduct properly and, where appropriate, initiating disciplinary procedures. Fourthly, as the hon. Member for Cities of London and Westminster (Mark Field) said, if the police are to command public confidence, it is of the highest importance that there is effective, independent police complaints machinery that is able to get to the heart of things that go wrong.

Turning to the next stages of action, first, I support those hon. Members who have said that serious allegations have clearly been made that require proper investigation. I hope that the Home Office will play its role, as appropriate, in ensuring that that takes place. Secondly, what we have heard today is proof positive of the need for new and much more effective independent complaints machinery. It needs to have the powers necessary to investigate, to hold to account, and to prevent obstruction from the police at any stage in the effective investigation of wrongdoing.

Thirdly, the hon. Member for Cities of London and Westminster was absolutely right: what we have heard today, not just in relation to the allegations made by the hon. Members for Wells, and for Watford (Richard Harrington), but more generally, is a sorry litany that demands a fundamental culture change in the Metropolitan police. If we have heard profoundly disturbing allegations today, what has been revealed by the Ellison process is also profoundly disturbing, as are the subsequent revelations about the destruction of evidence. To be frank, although the Met has much to be proud of, it has a lot to answer for.

The hon. Member for Cities of London and Westminster was right to say that it is of the highest importance that there be confidence in the police. From the Peelian tradition onwards, in our country we have had a system of policing by consent. Confidence is key for co-operation, to divert people from crime and prevent it, and to identify wrongdoers when crimes are committed. That confidence is damaged at our peril. The case has been made powerfully today for changes in internal and external investigation, for the Met to reflect seriously on these issues, and for the Home Office to take whatever action is appropriate. Fundamental culture change is clearly necessary.

[Dr William McCrea (in the Chair)]

The Minister is standing in at the last moment for a colleague, who I trust will have a speedy recovery. I call Karen Bradley.

10:35

[The Parliamentary Under-Secretary of State for the Home Department (Karen Bradley)]

It is a pleasure to serve under your chairmanship, Dr McCrea. I apologise on behalf of the Minister for Policing, Criminal Justice and Victims, my right hon. Friend the Member for Ashford (Damian Green), who is unfortunately unwell. If he could possibly be here, he would be, as I am sure you know.

I also congratulate my hon. Friend the Member for Wells (Tessa Munt) on securing this debate and on setting out the facts of the case so clearly and comprehensively. She is a determined champion for her constituents, and she and my hon. Friend the Member for Watford (Richard Harrington) have set out in their remarks the particular issues faced by their constituents. They have been the subject of a number of investigations and legal proceedings, some of which are not complete. Although I cannot comment on the facts of an individual case while proceedings are outstanding, this case, along with others recently disclosed—some going back many years—will undermine the public’s trust and confidence in policing in general and in the Met in particular.

I will ask my right hon. Friend the Minister for Policing, Criminal Justice and Victims to meet the three Members here today who represent the officers involved in the case, as their constituency MPs, and I know he will speak to them in more detail. My hon. Friend the Member for Wells raised three specific points that I will answer now. First, she asked about officers taking part in part 20 proceedings. That is an unusual step for the Met to take. Although I am unable to comment on the details of the case I will look into that matter with the Met. I agree with her that that should not become normal practice. We clearly do not want to require officers to insure themselves.

My hon. Friend raised the issue of the IPCC dealing with retired officers. She will be aware that on 6 March the Home Secretary announced that she would look at the disciplinary system. That matter is part of that work, along with the struck-off list already being compiled by the College of Policing to ensure that officers cannot retire to avoid justice.

My hon. Friend also asked about the IPCC power to direct misconduct proceedings. I understand her concerns about the outcome of the gross misconduct hearing for the DPS officers. The disciplinary system is also being reviewed as part of the work that the Home Secretary announced on 6 March, and this case provides evidence to support changes in that area.

[Tessa Munt]

Briefly, my other criticism, which was implied, is of the situation that an organisation can be responsible for investigating itself. When a case goes back out to the IPCC and an order comes for reinvestigation, it cannot be the same department investigating itself, never mind the very same officers. That clearly needs to be sorted out. It is completely ludicrous.

[Karen Bradley]

I thank my hon. Friend for that observation. That issue will be included as part of the work being done.

My hon. Friend the Member for Cities of London and Westminster (Mark Field), whose constituency is at the centre of so many high-profile cases concerning the Met, made an interesting and thoughtful contribution regarding this case and others, for which I thank him. The issues he and my other hon. Friends have outlined today only add to the list that the Met and its senior leadership team need to address.

The Metropolitan Police Service polices the country’s most populous and ethnically diverse area, as well as having a number of functions that extend across the UK, in particular the national lead for counter-terrorism policing. Although we all know the Met to be the biggest police force in the country, we may not realise quite how big it is. In fact, Met officers comprise almost one in four—23.5%—of the total number of police officers in the whole of England and Wales. What happens in the Met is relevant to the way our whole country is policed, both because of its size and because, in the course of their careers, many of our most senior police officers will spend one or more periods working in the Met.

At this point, I must recognise, along with the hon. Member for Birmingham, Erdington (Jack Dromey), that the overwhelming majority of Met officers do their jobs well, serving the people of London with dedication and professionalism. But, as the Home Secretary said on 6 March:

“In policing, as in other areas, the problems of the past have a danger of infecting the present and can lay traps for the future…Trust and confidence in the Metropolitan police and in policing more generally are vital and a public inquiry and the other work I have set out are part of the process of repairing the damage.”—[Official Report, 6 March 2014; Vol. 576, c. 1065.]

In 2012 the Government abolished the Metropolitan Police Authority, which was only partly and indirectly elected. For the first time, the Met is truly accountable to Londoners; the commissioner is accountable to the Mayor of London, who is elected by all Londoners, and the Mayor and his deputy for policing are scrutinised by the policing and crime committee of the London Assembly.

I have already mentioned that the Met is responsible for policing the most ethnically diverse area in the UK. While it is the most diverse force in the country, with 10.5% of officers from minority ethnic backgrounds, that proportion falls well short of the proportion of the population; the 2011 census figures show that just over 40% of Londoners are from non-white ethnic groups. As the Minister for Policing, Criminal Justice and Victims said to the hon. Member for Walthamstow (Stella Creasy) at Home Affairs questions last Monday,

“While the police work force is more representative in terms of gender and ethnicity than it has ever been, there is still much more to be done by forces.”

He also said:

“The Metropolitan police plan to recruit 5,000 new constables between now and 2015, and their aim is that 40% of them should be from a minority background, to reflect the population of London as a whole. This indeed is a serious issue, which the Metropolitan police are addressing.”—[Official Report, 10 March 2014; Vol. 577, c. 15.]

My hon. Friend the Member for Wells has set out the issues of race and diversity that are at the centre of her constituent’s claim against the Metropolitan police. I want to be very clear on this matter: treating anyone differently on the basis of the colour of their skin—whether they be black or white; police officer or member of the public—is always unacceptable.

As well as the work the Home Secretary has announced, the increased accountability of the Met through the Mayor and the increasingly representative ethnic mix of its officers are a good start in rebuilding the public’s trust in the Met. However, other issues have been identified that the Met needs to address.

There has been criticism of the culture of the Metropolitan police, in particular that it is an obstacle to changing how the Met works and how it deals with members of the public. That is one reason why, as the Home Secretary made clear in her statement on 6 March, we need to continue our work to reform the police and its culture.

From this autumn, all police forces will, for the first time, have the opportunity to bring in talented and experienced leaders from other walks of life to the ranks of inspector and superintendent. Those coming in will receive world-class training and bring fresh perspectives, opening up policing culture. A significant number of those officers will be joining the Met, and I know that they will have the support of the commissioner and his senior leadership team as they get to grips with the issues the Met faces. The Home Secretary was clear in her statement to the House on the significance of those changes, particularly of bringing high achievers from other fields into policing. The public need to know that policing is not a closed shop and that they can challenge the way in which things are done.

Where the police fall short of our expectations, the IPCC has a key role to play in ensuring that complaints and misconduct are dealt with as fairly and as transparently as possible. Hon. Members may have seen the publication on Monday of its “Review of the IPCC’s work in investigating deaths”, in which it recognises that it, too, needs to increase the diversity of its staff and to improve its engagement with families. The IPCC will ensure that, in future, families are involved in developing the terms of reference for investigations and are provided with meaningful and regular updates.

As the House will be aware, we are already moving £18 million this year into the IPCC to enable it to deal with all serious and sensitive cases, avoiding the issue of the police investigating themselves when things go seriously wrong. The IPCC will also receive £10 million of capital funding, so that it can establish further regional bases, enabling it to respond quickly to incidents wherever they occur. In conjunction with the Home Secretary’s announcement of a review of the misconduct system and of additional protection for whistleblowers, that will enable the IPCC to demonstrate clearly that it is truly the guardian of the police complaints system, and that the public can have trust in its ability to investigate allegations of police misconduct effectively.

However, police forces also need to play their part in stamping out inappropriate conduct. Misconduct and gross misconduct hearings, even where there has been an independent investigation, remain for forces to convene. Here, the Met has a good story to tell. Comparing 2012 with 2013, the total number of complaints decreased by 14%, from more than 16,500 to just more than 14,000. Meanwhile, the number of gross misconduct hearings rose from 49 in 2011-12 to 70 in 2012-13, and there have already been 70 hearings in the first nine months of this financial year. The number of police officers dismissed without notice has increased from 30 in 2011-12 to 47 in 2012-13.

[Tessa Munt]

Will the Minister look into the IPCC’s recommendations and reports over the past five or so years and see how many of them have resulted in action that is appropriate as recommended by the IPCC? Will she write to me?

[Karen Bradley]

I am sure that my hon. Friend understands that I do not have that information at my fingertips, but I will ask officials to look into that and see what information we can provide her with.

Some 42 officers were dismissed between April and December last year. While there has been no scientific analysis of the figures, if the number of complaints is falling, but the number of officers dismissed is rising, that tells us at least that the efficiency of the Met’s disciplinary system is improving. While work remains to be done in the area by the Met and other forces, we can see that the work that has been done is already having a positive outcome.

Clearly, issues of trust and confidence in the Metropolitan police remain for both the public and some of their own officers and staff. While it will take some time to work through the historical issues that have been the subject of so much attention of late, I know that the commissioner is determined to ensure that the Met is fit for the purpose of policing one of the great cities of the world in the 21st century. The Home Secretary and Ministers have trust in Sir Bernard to make those changes and to lead the Met through those challenges, and the residents of and visitors to London can have trust in the Met too.

10:47

Sitting suspended.

Illegal Wildlife Trade

Wednesday 19th March 2014 Westminster Hall

11:00

[Mr Simon Burns (Chelmsford) (Con)]

It is a pleasure to attend yet again a debate in this Chamber that you are chairing, Dr McCrea. I am extremely grateful to have the opportunity to raise this important issue. As Mr Speaker rightly said during Foreign Office questions on 4 March, the issue is of considerable concern not only to right hon. and hon. Members, but to many people beyond this Chamber among the general public. We have a critical situation, because the illegal trade in wildlife is posing a significant threat to a number of species. There are primarily two reasons for that. Encroachment on natural habitats is causing considerable problems for a range of species, but even worse is the illegal trade that goes on around the world, which is posing a significant threat to many species.

After decades of conservation gains, the world is now dealing with what I believe is an unprecedented spike in the illegal wildlife trade, threatening all the gains of recent years. The situation is, to put it starkly, devastating. Let us take the question of ivory. It is estimated that 23 tonnes, representing 2,500 elephants, was seized in 2011, and I suspect that that is just the tip of the iceberg, because by definition, given that it is an illegal trade, one will never be able to get the whole picture. It will inevitably be worse than is shown by the statistics on what has actually been found by the authorities.

Poaching threatens the last of the wild tigers in the world. It is estimated that only 3,200 are left in the wild. That is as opposed to those that are in captivity. The use of tiger parts in traditional medicines is thought to have contributed to at least a 95% drop in the wild tiger population in the last century.

Let us look at the horrendous situation for rhinos. In 2010, an estimated 333 rhinos were poached for their horns in South Africa alone. That is one rhino every 30 hours. But ironically, the world’s largest seizure of rhino horn, which included 129 horns, occurred in Kensington in central London—not somewhere normally associated with rhinoceroses. It is thought that rhino poaching increased by 5,000% between 2007 and 2012, with one killed by a poacher every 10 hours. Last year, the western black rhino was declared extinct, sadly.

Since 2004, the central Africa region has lost 66% of its elephant population. That shows the sheer scale of the problem, notwithstanding the tremendous efforts that many countries in Africa are making to combat the illegal activities of poachers and others.

The problem is not restricted to wild animals. According to an excellent brief provided by the Royal Society for the Protection of Birds, there is, sadly, a decimation of African vultures going on at the moment. In southern Africa, eight out of nine vulture species are red-listed, with most in the high-threat categories of endangered and vulnerable. Recently, they have been facing the new threat of being poisoned en masse by elephant poachers, who believe that the vultures are exposing their illegal activities to the anti-poaching authorities. The massacre of 600 vultures by poachers in Namibia was preceded by the killing of 300 birds in early 2013 and 250 in Botswana in mid-2012. All those incidents took place during the peak vulture breeding season, so overall mortalities are much higher and there is an even more devastating impact on the future survival of the vulture population.

After the break-up of the Soviet Union, the poaching of saiga antelope for the saiga horn trade became a significant and major problem as well. Uncontrolled hunting of the antelope was driven by poor economic conditions and the possibility of selling horns for traditional Chinese medicine through the less controlled borders to Asia. After the ban on trade in rhinoceros horn in 1993, saiga horn was used as a substitute, leading to a decline in saiga numbers of more than 95% by the year 2000. As only the males grow horns, the selective poaching led to massive skewing in the sex ratio of the species, with the inevitable impact that that has on its survival rates for the future.

I am sure that you would agree, Dr McCrea, that there is a significant problem and, although a considerable amount is being done by the international community, we seem to be, in many respects, on a losing wicket, because of the increased activity in different parts of the world by those who are prepared to engage in this illegal trade. As I said earlier, because of the illegal nature of the trade, it is very difficult to get accurate figures for exactly what is going on, but the best estimate is that the global illegal wildlife trade is worth somewhere between £6 billion and £12 billion a year. That puts into perspective the pressures that there are on people to engage in this illegal activity, and the sheer scale of the problem that faces the world in seeking to challenge and reduce it.

Between 1970 and 2000, the population of species declined by an average of 40%, and the second-largest threat to species survival after habitat destruction is the illegal wildlife trade. Worryingly, London is a major hub for Europe’s illegal trade in endangered species. I congratulate the authorities on what they are doing to combat that. Operation Charm, led by the Metropolitan police, has resulted in the seizure of more than 30,000 endangered species items since 1995, but again that highlights the scale of the problem just here in London, and the challenge facing the authorities to maintain the momentum and ensure that they continue to be able to meet the challenges of reducing this crime. I ask my hon. Friend the Minister what more is being done by the law enforcement authorities and the international community to combat the illegal trade in the UK.

I pay tribute to the many dedicated and hard-working people around the world who are working to protect endangered species. At least 1,000 park rangers have been killed in the last decade. What action is being taken to give extra protection to such people? Significant attacks on, and the unlawful killing of, people who are working to reduce and minimise this crime will have an impact on others and discourage them from working in this field, because of the dangers that they and their families would face as a result of the ruthlessness of those engaged in what is essentially an extremely big business—that is what it is for those who sadly are successful in pursuing their illegal trade.

The recent London conference was a significant step towards reaching an international consensus, and towards getting co-operation to increase and enhance our ability to tackle this growing crime. As the Minister is aware, the countries that attended the conference signed the London declaration, which included a number of actions that will hopefully help to eradicate the demand for wildlife products, strengthen law enforcement and support the development of sustainable livelihoods for communities affected by wildlife crime. The international community signed up to a number of actions within the declaration, including support for continuing the existing international ban on commercial trade in elephant ivory; renouncing the use within Governments of products from species threatened with extinction; amending legislation to make poaching and wildlife trafficking serious crimes under the terms of the UN convention against transnational organised crime; strengthening cross-border co-operation and support for regional wildlife law enforcement networks; and further analysis to better understand the links between wildlife crime and other organised crime and corruption, and to explore links to terrorism. The plan includes a commitment to an extended moratorium on ivory sales, and to put ivory stocks beyond economic use.

I am pleased that the UK Government announced that they will provide support to help the initiative get up and running. The London declaration and the elephant poaching initiative come at a critical time. Demand for illegal wildlife products has risen sharply in the past decade. It is laudable that countries attend such international conferences and sign up to initiatives and proposals that are seen as a positive step towards combating such crime, but we must do more than simply sign up to declarations and initiatives. We can talk the talk, but we must also walk the walk. I want to know from the Minister what will be done between now and next year’s meeting in Botswana to ensure that the declaration does not simply pay lip service to a range of laudable and badly needed initiatives, but is translated into real and proper action. What will the British Government do to ensure that countries that do not have a great ability to implement the declaration get assistance from the other countries that attended the conference? We must ensure that they play their full part in tackling the problem. They must roll back the increase in the illegal trade. Conservation and law enforcement measures must once again have a positive effect on crime.

11:14

[The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (George Eustice)]

I congratulate my right hon. Friend the Member for Chelmsford (Mr Burns) on securing this timely debate on a subject that is of great concern to the Government and the international community. I know from looking through the record that my right hon. Friend championed it consistently at the Foreign and Commonwealth Office, the Department for Environment, Food and Rural Affairs and other Departments.

As my right hon. Friend said, the rapid increase in the illegal wildlife trade and the poaching that feeds it is creating a crisis. Tens of thousands of elephants were killed last year, more than 1,000 rhinos lost their lives to poaching and trafficking, and tigers and many other species are under ever greater threat. In a debate organised by the Backbench Business Committee, my hon. Friend the Member for Richmond Park (Zac Goldsmith) characteristically painted a touching and vivid picture about the intelligence and thoughtfulness of elephants. He told the story of two elephants, Jenny and Shirley, who had been in captivity together. They were put in a zoo in early life—one was a calf at the time—and spent a year or so together, but they were then put in separate zoos, where they remained for 20 years. They were unexpectedly reunited at the end of their lives in a sanctuary in Tennessee. As my hon. Friend described it, the love and commitment that those two elephants still felt for each other after 20 years was absolutely touching. It is a disaster that so many of those wonderful creatures are being slaughtered for their ivory. As my right hon. Friend the Member for Chelmsford said, it is not only charismatic animals such as the African elephant that are threatened, but lots of other species such as the African vulture.

The illegal wildlife trade is not only an environmental crisis but a serious global criminal industry. It is worth billions every year, and it is ranked alongside drugs, arms and people trafficking. There is increasing evidence of involvement by organised criminal gangs using ever more sophisticated weapons and equipment and exploiting political instability.

The lives of those working hard to protect endangered wildlife are at risk. At least 1,000 park rangers have been killed over the past decade alone. My right hon. Friend rightly highlighted that concern and asked what we can do to protect the rangers who do that difficult and dangerous task. Although it is the responsibility of individual countries to enforce the law, several actions in the declaration adopted by the London conference are about strengthening law enforcement. We have announced a £10 million fund, and I can confirm that we are looking at one or two projects to support that type of work and improve countries’ ability to enforce the law and protect park rangers carrying out that difficult task.

Tackling this organised criminality would help enhance the rule of law and improve stability and good governance. Those are the conditions that allow for the development of sustainable economic opportunities. My right hon. Friend the Secretary of State for Environment, Food and Rural Affairs saw for himself in Kenya last year the benefits that can come from concerted efforts to tackle the trade by working with local communities.

I want to say a little about the London conference, about which my right hon. Friend spoke. We recognise that the illegal wildlife trade is a global problem that needs a global solution. The UK has always been determined to play its part, which is why we were pleased to host the London conference on the illegal wildlife trade on 13 February. The conference was based on three key themes: first, improving law enforcement; secondly; reducing demand; and thirdly, creating alternative sustainable livelihoods for communities that have a problem with poaching.

My right hon. Friend the Foreign Secretary and my DEFRA colleague Lord de Mauley chaired the conference. His Royal Highness the Prince of Wales, the Duke of Cambridge and Prince Harry attended the morning plenary session. More than 40 countries attended and 10 international organisations were present. I am pleased to report that the conference was a great success. The ambitious political declaration that was endorsed by the 42 participating countries contained 25 specific commitments, including a requirement for Governments to renounce the use of any products from species threatened with extinction. Countries also committed to support the CITES—the convention on international trade in endangered species—commercial prohibition on international trade in elephant ivory until the survival of elephants in the wild is no longer threatened by poaching.

The declaration also contains a commitment to treat poaching and trafficking as serious organised crimes, in the same category as drugs, arms and people trafficking. Together, the 25 actions, with high-level political support, represent a turning point in the effort to halt and reverse the current poaching crisis that my right hon. Friend so eloquently explained.

The conference heard first hand from the Presidents of Botswana, Chad, Gabon and Tanzania, and from the Foreign Minister of Ethiopia, who announced the elephant protection initiative, which aims to secure new funding from private and public sources for the implementation of the African elephant action plan. The elephant protection initiative includes a commitment to an extended moratorium on ivory sales, as well as plans to put ivory stocks beyond economic use.

As I said, one of the aims of the elephant protection initiative is to generate additional private funding, and we understand that around $2 million has already been identified. The Foreign Secretary has said that, in principle, he is open to looking at whether some of the £10 million fund we have set aside could be used to support that initiative. As my right hon. Friend the Member for Chelmsford said, it is important that action does not end with the conference and the declaration—we need the follow-through. We must ensure that commitments are translated into urgent, concrete actions on the ground in the weeks and months to come.

I would like to say a little about the next steps, the first of which is to ensure that we in the UK are meeting our commitments as effectively as possible. The London conference was the result of close working between four Government Departments—DEFRA, the Foreign Office, the Department for International Development and the Home Office. It was a good example of Departments coming together in a coherent, joined-up way, and that is the approach we want to promote going forward. The issue should not be left to any one Department because it crosses many different briefs. The fact that so many Ministers attended the conference underlined our commitment to such an approach.

My right hon. Friend asked what we in the UK are doing, particularly on law enforcement and the interception of illegal trade. In February, we published the document “UK Commitment to Action on the Illegal Wildlife Trade”, which set out what we are doing across Government. We are committed to reporting against that commitment in a year’s time. Action is already under way. For example, as part of our commitment to fighting the illegal wildlife trade, the UK recently formally extended the convention on international trade in endangered species to the British territory of Anguilla. We have already announced that we will use a £10 million DFID funding package to support our partners in their efforts to tackle the trade, and we will soon announce how to apply for that fund.

The momentum generated by the London conference is also continuing internationally. It is important to note that several countries made announcements at the conference that demonstrated their commitment. For example, Canada announced an additional $2 million in emergency funding to combat the illegal wildlife trade in east and central Africa; Cameroon announced that its ongoing five-year emergency action plan to combat international wildlife crime, worth £120 million, will continue; the US announced its national strategy for combating wildlife trafficking; Gabon announced plans to impose new penalties for poachers and traffickers; and Ethiopia committed to destroying its ivory stockpiles. In addition to all that, of course, was the commitment I mentioned earlier to the elephant protection initiative, which a number of African countries are taking forward.

Those announcements were made at the conference, but it is worth pointing out that momentum has continued afterwards—Chad recently burned its 1.1 tonne ivory stockpile and Vietnam has strengthened its protection of endangered species. The challenge now is to build on and harness that momentum and ensure that the commitments in the London declaration are delivered. As my right hon. Friend mentioned, Botswana will host a follow-up conference in 2015 to review progress against the commitments made in the London declaration. The UK will support Botswana in its preparations for that.

In conclusion, I am pleased to have had the opportunity to highlight the success story of the recent London conference. It agreed ambitious measures, showed new political commitment, and marked a turning point in the effort to halt and reverse the current poaching crisis. The examples I have described of actions that we and our international partners are taking demonstrate the real international commitment to tackling the illegal wildlife trade.

I will emphasise again, however, that I completely understand my right hon. Friend’s point: we must sustain our action. We must not discuss the issue once a year but see little happening in between. The international community must work together to ensure that the 25 commitments made in the London declaration are translated into urgent, concrete actions on the ground. The UK has played a leading role, and we will continue to work with our international partners to maintain the high level of political attention and deliver outcomes on the ground.

We do not underestimate the challenge. Much work remains to be done, but through the London conference we have achieved a solid base for tackling and ending the appalling illegal wildlife trade.

11:26

Sitting suspended.

Child Care (London)

Wednesday 19th March 2014 Westminster Hall

[Jim Dobbin in the Chair]

14:29

[Heidi Alexander (Lewisham East) (Lab)]

I am grateful for the opportunity for this debate. I should say at the outset that I feel somewhat unqualified to lead a debate on child care. I am not a mum and, on the rare occasions that I am entrusted with the care of my niece, my brother often wonders whether she will come back in one piece. I am delighted that the very prospect of the debate led to a flurry of Government announcements on child care in the past few days. Clearly the power of Westminster Hall debates should never be underestimated, especially when they coincide with Budget day.

I called for this debate because the simple truth is that the cost and availability of high-quality child care in the capital is a real problem for hundreds of thousands of families. The lack of affordable nursery places, after-school clubs and childminders puts a huge financial strain on parents. It stops many women who want to go back to work from doing so, and in some cases means that children miss out on the start in life that they deserve. I welcome the signs that, after four years, the Government may be slowly waking up to the scale of the problem. They are, however, still spending less on child care than the previous Government, and there are questions about who benefits most from their over-hyped voucher scheme.

Help for families who struggle with child care costs cannot come soon enough, but the Government will not be thanked if their schemes hike up already high prices even further. I also cannot help but think that assisting families who earn up to £300,000 with the cost of their nanny, for example, is a step too far. Support is undoubtedly required across the spectrum of low and moderate-income families, but the idea that the Prime Minister struggles with his child care costs will strike most people as somewhat bizarre.

In past few days, Ministers have taken to the airwaves to talk about child care, but the problems experienced by parents have not come about overnight. Although the debate focuses on the problems in London, such problems are, of course, not confined to the capital. Rocketing fees in London in recent years, the comparatively longer journey times to work, and a growing and relatively young population, mean that the child care crunch is more severe in the capital than elsewhere. That proportionately fewer people in London than in other regions have grandparents close at hand and that many people do not work nine-to-five adds a further layer of complexity. In the past year alone, child care costs in London have increased by 19%, which is five times faster than average earnings. Nationally, since the election child care costs have increased by 30%. Add to that spiralling energy bills, sky-high rents and the increasing cost of the weekly shop, it is no wonder that Londoners feel that they are experiencing a crisis in their cost of living.

London is by far the most expensive part of the country for child care. Childminders for over-fives, for example, cost 44% more than the British average, and nursery costs for under-twos are 28% more than average— 25 hours a week of nursery care now comes in at more than £140. That sounds bad, but it gets worse. The 2014 child care costs survey, carried out by the Family and Childcare Trust, found that the most expensive nursery in London costs £494 a week for 25 hours. Over a year, a full-time place, which equates to 50 hours, would cost £25,700. Given that the average salary in London is not a great deal more than that, it does not take a genius to see the problem.

When I found out last week that I had secured this debate, I took to Twitter and e-mail to ask people for their experiences and views on child care in London. Suffice to say, I got interesting responses immediately. Barbara Mercer on Twitter simply said,

“need to do something—it’s hitting our pockets really hard.”

Bex Tweets told me:

“I just gave up my job because, had I gone back, I would have been out of pocket by £200 a week.”

Julia, a civil servant, decided in effect to work for less than nothing because of her desire to get back to her job. Her short e-mail is worth sharing with hon. Members, as it sums up the problem for many. She said:

“I have two small children—aged two and one. I work part time and take home £1,100 a month after tax and pay £1,950 to my local nursery. Obviously this is ridiculous but luckily my husband and I can just about scrape by and it is worth losing money to go to work because being at home full time with the babies drove me crazy! I earn a decent salary and can’t find cheaper child care in Surbiton where I live so you can see there is a problem. I am very lucky my husband can subsidise me working—many of my friends simply can’t afford to work so are losing their career.”

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

On that final point about women losing their careers, is that not one reason why they are held back in promotions and cannot get to the top? If they have very large gaps in their working life, the rest of their working life is affected. Women who want to take up the option of going back into work but not full time should be able to do that, but child care prevents that.

[Heidi Alexander]

I agree entirely with my right hon. Friend. It affects not only their working life, but their home life. If parents are happy and fulfilled in their work life, hopefully their home life will be happy and more fulfilled, too.

I was talking about Julia’s child care experience in Surbiton, which is typical of many women, and indeed men, throughout London. Three quarters of parents in the capital say that child care costs affect how many hours they work. A quarter say that they are unable to work simply because of that cost. Despite being the UK’s richest city, London has the lowest maternal employment rate in the country. The economy loses out because of that: employers lose the benefit of skilled staff and the Government pay benefits when they could be collecting taxes.

Many parents decide that they do not wish to work after having children, or that they want to return on a part-time basis. I do not stand here today to tell mums and dads what they should or should not do. If families can get by and are happy on one parental income and the other parent wants to look after the child or children full time, all power to them, but I want families to be able to make a genuine choice about what is right for them and their children, and not to be boxed into a corner because of soaring child care costs.

For some parents, the double-edged luxury of having to make that sort of decision is taken away right at the start. In some parts of London, the supply—let alone cost—of suitable child care provision that matches families’ needs is a real problem. According to analysis done by the then Daycare Trust of the 2011 child care sufficiency assessments, 15 councils in London—nearly half of all London local authorities—did not have enough breakfast and after-school provision to meet demand. Another 16 councils did not have sufficient school holiday child care and 13 identified that they did not have enough suitable child care for disabled children.

For Londoners who work shifts or those on zero-hours contracts, it can be nigh on impossible to find appropriate, flexible child care. As many as 1.4 million jobs in London are in sectors in which employment regularly falls outside of normal office hours and, as mums and dads know, if a job’s working hours are outside of nine-to-five, they also fall outside normal nursery hours.

The lack of suitable provision may be one of the factors that explains why only 51% of parents in London whose two-year-olds are eligible for the Government’s free 15 hours of child care have actually made use of the scheme. That level of take-up is significantly lower than elsewhere in the country, and it does not really make sense in the context of the relative strength of the London economy. I suspect that there is a range of factors at play to explain why take-up is lower in London than elsewhere. However, I cannot help but think that the serious gaps in child care provision may be part of the problem.

[Dame Joan Ruddock]

My hon. Friend is making a most excellent speech. Does she agree that the current shortage of primary school places is exacerbating the situation, with parents having to take their children much further than before to get to a local school, which again is because of Government policies that prevent councils from providing more primary school places?

[Heidi Alexander]

I entirely agree with my right hon. Friend, whose constituency neighbours mine in London. She will know the significant problems that exist for families, particularly for parents in work, when they have to take children to different locations, whether it is for primary school or child care. Despite having met the Minister for Schools at the Department for Education last year to discuss this issue, I am not convinced that enough funding is being made available to London to meet the rising demand for school places, not only at primary but at secondary level, where the demand for places will soon feed through.

In December, the Government announced extra money to help to stimulate the supply of flexible child care in London, but I am simply not convinced that that money will go far enough to deal with the problem. I am also not convinced that this week’s announcements make up for the reductions in support to parents that the Government pushed through earlier in their term of office. We know that in April 2011, changes to the child care element of working tax credit led to a reduction in the amount of help that parents get with child care costs. For example, in December 2013, average weekly payments for those benefiting from that element of working tax credit were around £11 less than they were in April 2011. The Government’s changes also led to a drop in the overall number of families receiving such support. In April 2011, 455,000 families were benefiting from that support, but that dropped by 71,000, and in December 2013 only 422,000 families were benefiting. Given those clear figures, it is not unreasonable to suggest that the Government are guilty of giving with one hand while taking away with the other.

Many of those who struggle most with the cost of child care in London are lone parents on low incomes. My constituency in Lewisham has approximately 9,000 single-parent families, and it is estimated that in London as a whole there are more than 325,000 single mums or dads. Contrary to media stereotypes, the single mums I meet are often desperate to find work, but they find it hard to organise their life in a way to make it possible for them to work. Child care is central to their difficulties.

The need to make work pay for those single mums and dads cannot be overstated. One of my big concerns, before yesterday’s announcement, was that the Government were set on a course with universal credit that would have made work not pay but hurt for some of the poorest single parents, who are struggling to get back into low-paid, part-time work. The Government’s U-turn on the amount of child care costs to be covered by universal credit is welcome, but it is fair to ask whether they instinctively understand the issue when their flagship welfare policy was initially designed with such flaws.

The truth of the matter is that the Government have been forced to promise action on child care costs because they know that Labour’s commitment to increase the amount of free child care available to the parents of three and four-year-olds makes complete sense to increasingly hard-pressed families.

[Fiona Mactaggart (Slough) (Lab)]

Slough is very like London and our child care market is very similar to London’s. Recently, I have been out talking to mums about child care. The demand that I regularly hear from mothers who want to get back into work is that they need access to training and upskilling with child care. What if they cannot find that either at their original workplace or in a new job if they need to change their career, as was the case with a flight crew member I recently spoke to? Does my hon. Friend agree that we should be trying to ensure that training opportunities for those mums enable them to have their children looked after and to get qualifications and skills?

[Heidi Alexander]

My hon. Friend makes an important point and I agree with her remarks entirely.

Before I bring my remarks to a close, I shall press the Minister on two further policy areas. First, what specific plans do the Government have to ensure that there is greater flexibility in the provision of child care? Ministers have stated that they would like children’s centres and schools to be open for longer, but it is not clear what direct support those centres and schools would receive to help them to achieve that aim. Would the Government consider, for example, giving greater powers to local authorities to influence the decisions of individual schools with regard to extending opening hours? We know that academies and free schools fall outside the control of local authorities, and if we are to give parents the ability to work it seems to me that they need a guarantee of wraparound care, at least in primary schools. It is right that the Labour party has committed to legislate for that, but it is sad that the Government do not seem to see it as a priority.

Secondly, while there is an urgent need for more flexible child care, there is also a need for the Government to encourage employers to offer better paid and more flexible work opportunities. As someone who regularly fights to get a seat on a train into London Bridge in the morning, I know that a move to more flexible working hours could also benefit London’s creaking public transport system.

I acknowledge that some steps have been taken to encourage employers to offer more flexibility to staff who are parents, but as I understand it such flexibility is still heavily biased towards existing employees and comes with the caveat of a six-month waiting period after starting a job—parents must wait six months before they can make a request for flexible work. Does the Minister have any plans to extend rights for flexible working? I would be interested to hear about the discussions that she has had with her colleagues in the Department for Business, Innovation and Skills on that.

In conclusion, I simply say that London is the wealthiest city in the UK and yet 25% of its children live in poverty. Currently, parents in London face exorbitant child care costs, which drain household finances and leave some of them unable to work when they want to. This is clearly a cost of living problem, but it is also about people’s quality of life and opportunities for their children. Ultimately, what we should all be striving for are children who are well provided for and happy, and more productive parents who enjoy more freedom of choice. As I have said, I am not a parent myself, but it has always struck me that happy and fulfilled parents are more likely to have happy and fulfilled children. Tackling the cost and supply of child care in London is undoubtedly a big task, but it would have equally large rewards. I am not sure whether the recent spate of Government announcements provides the radical solution that they claim. What I do know is that Londoners are impatient for action, and that neither parents nor the Government can afford to allow the current situation to continue.

14:48

[Nick de Bois (Enfield North) (Con)]

It is a pleasure to serve under you, Mr Dobbin.

I congratulate the hon. Member for Lewisham East (Heidi Alexander) on securing this debate. Recently, I have found myself on the same side as her on certain issues; that probably comes as a disappointment to her and it certainly comes as a surprise to me. However, in common with her in this debate, I also profess a limited knowledge of this issue, although at one point my wife and I had four children under the age of five. I rightly stand charged of perhaps not doing enough at that time to learn about this subject; I should know more. However, I am pleased that we are having this debate, not just because it is in the context of London, but because it gives us time to reflect on the challenge and on what the Government are trying to do. It also gives us a chance to reflect on the supply side, which is behind many of the challenges we face. I think that hon. Members would agree that, for too long, it has been difficult for many families to find good, affordable child care.

Without going into detail, I shall touch on why child care services and facilities are so important. They help to nurture the child, enhance their education prospects and support families that want to return to work. Given what I have seen in some parts of my constituency, they also help to support the provision of a safe social environment, including the boundaries that children are sometimes, sadly, missing in an increasing number of dysfunctional family situations. Child care can make a massive contribution.

Particularly in relation to my latter point, I am pleased that the Government are seeking to address the welfare of children from less advantaged families, through a cross-Department—almost holistic—response. Part of that, of course, is access to child care facilities, which is an important part of the jigsaw that I have just put together. Having said that, it is inevitable that as the cost of child care increases, the Government’s response has to focus both on supporting and widening the supply side and on mitigating the costs that we face. Whatever we call the policy, I suspect that all hon. Members can agree that Government financial interventions will be mitigating something. The supply side will be fundamental, long-lasting and will hopefully achieve more.

In fairness, I should say that I am struck by the rather candid comments of Labour’s former Minister for Children, Beverley Hughes, who admitted that they got it wrong, saying that Labour’s approach of pouring money into tax credits

“was probably wrong. We were so keen to stimulate demand from parents”

with fiscal interventions,

“but in retrospect that was such a mammoth task. We ought to have focused on the supply side…then we could have done more and quicker.”

[Lucy Powell (Manchester Central) (Lab/Co-op)]

The hon. Gentleman makes a good point. The former Minister for Children was making the point that we should have put more emphasis on supply-side funding and less on the demand side. Can he explain why the Government are not learning those lessons and are instead focusing much more on the demand side with their tax-free child care announcement yesterday?

[Nick de Bois]

I think the hon. Lady will find that we are learning those lessons. I am dealing with that point: my two themes are the supply side and fiscal interventions. However, I will concede that the supply-side challenge in London is particularly difficult. I will also bring to the Minister’s attention some weaknesses in the fiscal interventions that I am experiencing in my constituency now.

It is a current problem. In the interests of fairness, Opposition Members would recognise that the number of child minders halved under their Government, reducing choice and flexibility for parents. There were 98,000 child minders in 1997 and the number fell to 58,000 in 2010. Westminster Hall is generally a constructive environment for debates, but my main point is that this is not a new problem. Costs have been rising above inflation, consistently, since 2003, and since 2009 they have been rising above wages.

[Emily Thornberry (Islington South and Finsbury) (Lab)]

As the hon. Gentleman is comparing Labour’s policies with the current Government’s, can he say whether any child care centres in his constituency have closed since this Government came in?

[Nick de Bois]

I will, as I said, come on to the issues that we are facing in my constituency. However, the work force, on the supply side, is equally as important as the facilities. If the numbers halve, the problem of servicing good quality child care provision will be increased.

I suspect that we would also agree that the quality of the work force is important. That is unquestionable. We do not want to create places just to dump a child in, so that people can go off and have some free hours; no one is into that. We need good quality care. I am sure that the Government’s aims and attentions in this regard would draw cross-party support, because Opposition Members would have said, and tried to do, the same.

We can do things to open up the supply side. I do not generally like to intervene in markets, but we should try to work up constructive ways for the Government to apply leverage to encourage schools to admit younger children. We have to deregulate the process of allowing schools to admit younger children. We made it easier for schools to teach children under three by removing requirements to register separately with Ofsted, a move that was well intentioned, but we do not want to make it difficult. So often, by liberating certain elements of the market, we can free it up and increase the supply side.

On helping schools to offer affordable after school and holiday care, I want primary schools to be open for more hours each day—so does the hon. Member for Lewisham East—and for more weeks a year, to better match the working family’s time table. That can be done locally and I am all for empowering people locally to take those decisions—and, boy, are they needed in my constituency.

We should also be helping good nurseries expand, not stopping them. I would be interested to know whether the Minister is working with councils to explore ways that we can expand the supply side in the boroughs, particularly those that are challenged.

[Heidi Alexander]

The hon. Gentleman is talking about the need to expand nurseries, some of which will, of course, be co-located with schools. Does he recognise that the crisis in primary school places in London, which we discussed earlier, means that the physical expansion of nurseries is even more difficult now than it may have been in the past, because sites are taken up with temporary classrooms and the space does not exist?

[Nick de Bois]

The hon. Lady takes me down a path that I am quite interested in, because we have faced an expansion in primary schools, which unfortunately was not planned in advance. I know that London has transition problems, so it is more difficult to plan in London than elsewhere, but some of the planning that we have done has been to meet an urgent, immediate need for the next year, and we could have used the space much better in some primary schools in my area. We need to free up the planning regulations to make sustainable expansion that much easier. We have seen that done actively in schools. The hon. Lady may have encountered the same problem that I have—that temporary expansion encourages complaints from residents—when we try to meet extra demand in our area.

I often feel that we have missed out on long-term planning. If we could free up planning regulations and look ahead, a strategic plan would allow us to expand provision for both the younger child and the schoolchild. I should add that the problem is not just with primary; we are now passing it on to secondary, and that will be the next challenge.

[Dame Joan Ruddock]

We might all support the hon. Gentleman and think this is a great way forward, but somebody has to provide the finance. It is impossible to build a new school and employ new teachers, in whatever way that is done, if the finance is not available from his Government.

[Nick de Bois]

If we expanded schools to take more students—putting in temporary accommodation--we could have more longer term planning, instead of what I call knee-jerk planning, and get better value, as well as the physical premises. We are providing the money to increase demand. Money is much less the issue when schools are being expanded—and we are expanding them—but I want that to be done more cleverly.

On fiscal intervention, the Government’s changes are designed to ease the burden on parents and those from the most vulnerable areas. Of course, that will help to sort out the immediate problems that people are facing now, but that should go hand in hand with a massive improvement in the supply side locally. I really welcome—I am not going to be shy about it—yesterday’s policy announcement. The Government’s new tax-free child care scheme will have a significant impact on child care costs, potentially providing support to up to 400,000 families in London. We should be proud of that, because it will help to ease the financial challenges parents face even in outer-London suburbs, where the costs are not as high as in some inner-London areas. Parents who want to go back to work will start to breathe a sigh of relief because they will feel that the measure is helping them to do so.

[Dame Joan Ruddock]

The hon. Gentleman is generous in giving way again—

[Nick de Bois]

Save some time for the Minister.

[Dame Joan Ruddock]

I have a brief question. Does he not appreciate what a difference it would make if that money was allocated to those who earn much less? Helping families with an income of £300,000 a year is one thing, but the benefit for families on average incomes is so much more significant. The measure would make a much greater difference to those who are less able to provide for themselves.

[Nick de Bois]

Few people in my constituency are on an income of £300,000. I ask the right hon. Lady to wait for the end of my speech, because I will point to how the specific targeting of those on very low incomes has had an unforeseen consequence for those on slightly higher, edging towards middle incomes. We need to be careful of the outcome of any intervention and I will address that shortly.

The hon. Member for Lewisham East touched on this point, but I think the most significant part of yesterday’s announcement was that more families will be helped to move off benefits and into employment. As part of that strategy, the Government announced that they will cover 85% of child care costs for some 300,000 families in receipt of universal credit. I would have expected that to be talked about more widely yesterday because it is a fine example of excellent joined-up thinking. In some ways, it answers the question that the right hon. Member for Lewisham, Deptford (Dame Joan Ruddock) has just asked.

We have made money available to help child care providers to support disadvantaged children. Some £50 million will be invested in 2015-16 to offer 15 hours a week of free child care to all three and four-year-olds. That is another welcome intervention. We are helping schools to offer affordable after-school and holiday care. I want to see primary schools open for more hours each day and more weeks each year—I think that will work.

We are also extending free child care to just over 250,000 two-year-olds from low-income families, which kicks in this September, but I want to address the unintended consequences in my constituency. The extension of the scheme to two-year-olds is the pet project of the Deputy Prime Minister, and I would dearly love him to explain the scheme to my constituents who have children at Carterhatch children’s centre in Enfield. About a month ago, parents who have been doing the right thing by working and paying, in some cases for a number of years, for their children to be at Carterhatch children’s centre were, to be frank, brutally informed that their children are no longer welcome because they are fee-paying and the centre’s priority will be those who now qualify for the extended free places for two-year-olds, which from memory includes people on working tax credits of up to £16,900. The centre has said, “We don’t want you because you are paying your way. We are going to focus entirely on those individuals who are now covered by the new Government intervention.” I put it to Members that that is a perverse unintended consequence. People who are working, doing the right thing and paying to get their children into the centre have basically been told that their child can longer attend.

That brings me to the supply side, because being told to find somewhere else is not helpful as there is not much choice in our area. I tackled Enfield council on that, saying, “Look, this is your policy. Have you directed schools on how to implement the Government’s policy?” The council frankly admitted that what happened at Carterhatch is what it would like to see, but says that it is not directing any headmaster to do it; it is entirely the school’s free will. Schools are not working to Government directives, or so I was told by the council an hour ago, but the consequence of intervening in the marketplace is that we have distorted it at the expense of parents who are doing the right thing.

[Lucy Powell]

Does the hon. Gentleman realise that it is his Government who have taken away the local authority’s role in planning for places? The strategic local commissioning responsibility no longer exists. It is a free-for-all, and it is the Government who took it away.

[Nick de Bois]

The hon. Lady is keen to apportion political blame.

[Lucy Powell]

I am not doing that.

[Nick de Bois]

Saying, “It’s your Government’s fault” is making a political point when, with all due respect, it is not the Government’s fault.

[Lucy Powell]

I am not saying that, either.

[Nick de Bois]

I will tackle the point. The choice has been made by the head of the school. He is not responding to a central directive from Whitehall or, it appears, from the local education authority. Although the LEA has expressed a preference, it is not a direction. I am highlighting that we now have a situation in which a head teacher finds it more attractive to follow the direction of the Deputy Prime Minister by disregarding parents, many of whom have used the child care centre for a considerable period of time.

Central direction is not the solution, because it is close to the market intervention that we are talking about and will create another dysfunctional consequence somewhere else. Even if we intervene with the best of intentions, it strikes me as odd that the education establishment thinks it is perfectly acceptable to remove some parents in favour of others. That touches on my supply-side argument: if I was a parent who was told that that was what the school had chosen to do, I would look for somewhere else to go because I would not value the school that had made that decision. We therefore have to accept that the weakness on the supply side, which goes back as far as 2003, is at the heart of our problems. That is what we should address, instead of making the wider interventions with which we seem to be obsessed. That is the ultimate solution to the problem.

I apologise for going on for far too long, but I think I have initiated a lively discussion.

Several hon. Members rose—

[Jim Dobbin (in the Chair)]

Order. I give notice that I intend to call the shadow Minister at 20 minutes to 4.

15:08

[Mr David Lammy (Tottenham) (Lab)]

I will try to be quick. I am grateful for your indulgence, Mr Dobbin, because I am due to speak in the Budget debate in the House. Will the Minister forgive me for not being here for her conclusion?

I congratulate my hon. and very good Friend the Member for Lewisham East (Heidi Alexander) on securing this debate. I am also grateful for the work of my right hon. Friend the Member for Tooting (Sadiq Khan) to ensure that the issue of child care is to the fore here in London. My right hon. Friend the Member for Dulwich and West Norwood (Dame Tessa Jowell) is here, and we should remember the work that she did when she was Minister with responsibility for public health to get child care on the agenda and to set up the children’s centres. I suspect that many of us are concerned that the children’s centres are disappearing and are not quite what we envisaged all those years ago. That is the context of this debate.

I reflect, too, on a mother who came to see me last Friday. She is a nurse working in a major London hospital. She is meant to be at that hospital for 7.30 am, and she is a single mum with two kids who have to get to primary school. She is one of the many Londoners in temporary accommodation, and she has been housed by the local authority miles away from the school that her children attend. She is actually housed at the other end of the London borough; I know hon. Members will be familiar with that situation. She also now lives further away from her job. She came to speak to me in tears, asking where the balance was between getting to school for the newly begun breakfast club and getting to work. She faced losing her job. She asked simply whether I, as a local MP, could visit the hospital to ask whether she could have the flexibility to get her kids to the breakfast club and then go to hospital to start work. She is an average Londoner and my heart goes out to her, because I remember my mother juggling the priorities of raising kids on her own and getting to work. The truth is that in the economy we have created—both major political parties have to take some responsibility for it—it is virtually impossible successfully to raise a family on one income in London, particularly if that is one average income.

Child care is a fundamental issue. It takes 31% of the disposable income of London families; that will be 40% in 10 years’ time, and in 50 years’ time, it will be the entirety of their disposable income. We should take the issue seriously. It is not just about child care, however. Local authorities, with their budgets squeezed—we heard in the Budget today that further squeezes are to come in the years ahead—have withdrawn from subsidising breakfast clubs and after-school clubs. Families are having to make difficult choices about how they provide for their children. We should not forget that many working families, when making those decisions, leave younger children in the care of slightly older children; that is what is going on. Those older siblings have to feed younger siblings and marshal the dangers of the internet. They are raising many young Londoners, because of the cost of child care.

To some extent, I welcome the raising of the worth of what is effectively a voucher scheme to £2,000. I suspect that the shadow Minister will raise the issue of who receives that money. It causes me great concern that so much of it will be received by Londoners who can afford child care. Why are we giving subsidies to those earning £300,000? Are bankers, barristers, accountants or senior consultants really complaining about the cost of child care in London? Should we be prioritising them? Child care costs on average £15,000 a year in this city, so let us be honest: £2,000 is a drop in the ocean, and shame on this House if we Members are not very clear about that. It is a drop in the ocean in relation to the demand and the problems that we have in this city.

We should also be clear that the demand among many Londoners and right across the country is for support not just for children aged nought to five, but for those aged nought to 14. People do not want their 11-year-old or 12-year-old in the house on their own, and being expected to make their own breakfast. I am pleased that the Government are shifting the cut-off age for the scheme to 12-year-olds, but I put on the table that the issue is for young Londoners, full stop. The spectrum certainly has to go beyond five-year-olds.

I do not want to get lost in the central discussion on cost and lose sight of quality. Most Londoners are making child care decisions based first on cost and then on location. The real challenge for us in London is to get Londoners making decisions fundamentally based on quality. There are real concerns that a diminution or a stepping back on some of the nursery standards that were in place has led to a drop in quality at nursery level. I have real concerns about our youngest children in London—babies aged nought to 18 months—and the recent changes in regulation regarding the number of child care attendants that should be there for babies.

There is quite a lot of evidence that our youngest children in nurseries should have the one-to-one support that mothers want. It is not just about cost; it is about mum and dad—I should mention dads, as chair of the all-party group on fatherhood—having confidence that the quality and support is there while they go out to work. There is a supply-side issue. We have to drive up standards and ensure that suppliers can flourish and provide the child care that we want. I welcome the debate, but in the end we need a proper 10-year plan. We need to be clear that child care is for those between nought and 14 years old. We need a road map to the universal provision that is required in our capital city.

We must build on the successes that we saw withthe children’s centres, although there were problems. The policy began in the Department of Health under the previous Government with my right hon. Friend the Member for Dulwich and West Norwood, when she was responsible for public health. While we were in government, that policy shifted to the Department for Children, Schools and Families. As has been said by academics and others, that shift meant that the policy became more about the Treasury, gross domestic product and getting women out to work, when it should have been about a holistic vision of well-being, as it was when it sat in the Department of Health. Things have slid even further recently. Yes, the debate is about cost, but it is also about quality provision. We should be ashamed that so many of our continental partners are making huge strides forward on child care, while here in Britain the debate stagnates.

Several hon. Members rose—

[Jim Dobbin (in the Chair)]

Order. Three Members still wish to speak, and we have 25 minutes until I call the shadow Minister.

15:17

[Ms Karen Buck (Westminster North) (Lab)]

I congratulate my hon. Friend the Member for Lewisham East (Heidi Alexander) on securing this important debate, and on laying out so clearly, as other Members have done, some of the issues to do with the high cost of child care in London. I am pleased with anything that secures additional resources for child care in London and goes towards meeting that child care gap, and one thing that can be said about the additional money going into the child care tax relief is that it will, to some extent, help those middle-to-higher earners facing extraordinary costs at the sharp end, particularly in such places as my constituency in central London.

That money is welcome, as is the Government’s recognition of the need to improve the child care offer within universal credit. The organisations campaigning on behalf of low earners were enthusiastic about that recognition. Will the Minister let us know the extent to which that welcome additional assistance for low earners will benefit Londoners proportionately? Historically, the child care tax credit—I am obviously a fan of that investment in tackling working poverty—never benefited London to anything like the same degree as it did other regions of the country. I need to be sure that the universal credit child care offer will benefit London as much as it should.

That speaks to the central point, which is that the investment in child care announced yesterday—welcome as every penny put into child care is—raises a question about whether that marginal pound is best spent in the way that the Government propose. As we know, £750 million of that offer is likely to go to higher earners, with only £200 million going to lower earners. I suggest that the balance of that investment probably does not meet the level of need. We have heard about the cost of child care in London, but it is also important to recognise that not only do we have a supply-side problem, but Londoners are disproportionately likely not to have networks of informal care, so they will need formal child care more than people outside London. Obviously, lower earners are disproportionately more likely than higher earners to rely on informal care. That needs to be addressed if we are to help parents into work, as well as provide an important child development experience, which is what investment in child care should always be about.

One thing that alarmed me—and, I think, a number of organisations—about the universal credit investment is that the money has been identified as coming from elsewhere in the universal credit budget, although as yet we do not know where. I am anxious to know the answer to that, because the one thing we do not want is for support for working parents within universal credit to be taken from the other ways of supporting low-income families. Universal credit is already likely to disadvantage London as the child care tax credit once did, because it does not properly reflect higher costs there, particularly the higher cost of housing. I think that Londoners will lose, proportionately, under universal credit, or will not gain to the same extent as people elsewhere. We need to ensure that the resources do not come from the individuals who are affected by that.

In the couple of minutes that I have left, I want to talk about the extent to which the investment that the Government announced yesterday will help with supply. There is a risk that there will be the child care equivalent of Help to Buy, which helps with buying, not building. The risk is that the announcement will help to increase demand for child care, but do relatively little to increase supply, particularly because major child care providers’ costs are already squeezed. I know that the Minister is familiar with the London Early Years Foundation, which started as the Westminster Children’s Society, and which I hold in high regard. It tweeted about the child care offer for two-year-olds, which is a critical way of increasing supply:

“The challenge of expanding the two year old programme…is whether we can do this for £5.09 in London? How?”

It is a social entrepreneur project, providing child care at the lowest possible cost, yet it wants to know how it can provide that quality offer within the envelope.

[The Parliamentary Under-Secretary of State for Education (Elizabeth Truss)]

I wanted to point out that £5.09 is a national average. The average London rate is higher, because the offer for two-year-olds is adjusted for salaries in each area. It is more like £6 for London.

[Ms Buck]

I am grateful for that clarification. I shall be interested to know why the London Early Years Foundation, probably the major child care provider in London, does not know that. I shall have to have that conversation. Even allowing for what the Minister said, which I accept in good faith, the principal point still applies: as we know, child care workers are disproportionately employed on the minimum wage, and there is cost pressure in the sector because of the cost of providing premises and so forth.

I am concerned, also, about the interaction between the investment and the expansion of the offer for two-year-olds. Councils are being given nursery education grants to expand their places, but the interaction between that investment in expanding places and the money that the Government are putting into increasing supply is leading to interesting anomalies. In my local authority, the child care plan for the coming years states that 400 new places for two-year-olds are needed; 886 families have been identified as entitled, leaving a shortfall of 384. Those places must be provided, and the Government want them to be provided.

What is happening within the cost envelope that we have been given? Guess what: the nurseries in my area have just sent a letter—I saw it today—to all Westminster councillors. It says that Westminster has just announced that it is cutting full-time provision in all its nursery classes and nursery schools in September 2015, so that it can meet the entitlement. It is an extraordinary situation: the day after the Government’s announcement of a boost for child care, Westminster city council is happily telling parents that they will lose their full-time places, on which many people rely to be able to work, so that it can expand the offer. My constituents, and parents looking for provision, will be asking themselves tough questions about the Government giving with one hand and taking with the other. There is much more to say, but I know that other hon. Members want to speak.

15:25

[Emily Thornberry (Islington South and Finsbury) (Lab)]

All politicians hope we learn from our constituents, and align our priorities with those of the people we listen to and learn from. However, we also come here as people with our own experiences of life. If I am truly honest with myself, probably what provoked my interest in politics and has always been a guiding light is the fact that, from the age of seven, I was brought up by a single parent. For many years, she found it impossible to work, because I was the oldest of three, my youngest brother being three, and my middle brother five. She tried to find child care, but our nan was not around the corner, and she could not find anywhere for us to be looked after to make it possible to work. I remember sitting in a pub back room while she worked in a bar while I was still at primary school. For me, it has always been a matter of huge importance that politicians understand that, for women to be able to play a full role in society and for children to be given a proper chance in the world, politicians must prioritise child care.

I am proud that the previous Labour Government did the amount of work they did to help women, including the fact that we could get nursery education free, as an entitlement, for pretty much the first time. That was something that my grandmother campaigned for and my mother needed. I was pleased to be a Back-Bench member of the party in government that was providing it. However, let us be honest: that was not enough. I agree with my hon. Friend the Member for Westminster North (Ms Buck) that any penny spent on child care is completely welcome, so we welcome the assistance that the Government announced yesterday. We wonder how effective it can be, whether it could be more effective if used differently, and whether it completely fulfils the priorities we would set. Nevertheless, given that conditions for working parents are almost desert-like, any additional assistance must be welcomed.

The difficulty in London, of course, and the reason the debate is important for Londoners in the context of cost of living, is the fact that child care in London is so expensive. It is 25% higher than in the rest of the country. We live in societies where our nans are not around the corner, and we do not have the extended support that other communities do. People who have moved to London tend to have families elsewhere. People move around. We do not have support networks and rely on professional support.

I am now a privileged woman, but I struggled with child care when I was at the Bar. I give advice to young women and tell them that if they want to go into the world and have a job, and if they want to have children, as so many women do, they must be realistic: unless things fundamentally change, their career prospects will be compromised by not finding sufficient child care. That affects everyone, but statistics for my constituency show, I believe, that 40% of children are under the poverty line. My constituency also has the highest proportion of single parents. Time and again people come to see me and say they cannot afford to go to work because they cannot afford the child care. The statistics bear that out. If a constituent of mine were to get a full-time, minimum-wage job at Kentucky Fried Chicken—I have a constituent with two children in such a position—she would earn £210 a week. If she did not have the assistance of a friend to look after her child and had to send them to the most heavily subsidised nursery place for under-twos in Islington, she would be spending £167.28 of her £210 a week salary on child care. If she was lucky enough to receive a London living wage, she would be earning £293 a week. How on earth can she send her child to full-time child care under such circumstances? There are further problems when children reach school age, such as before and after-school care and care during the holidays. What happens if the child gets ill? The problems continue.

Politicians still have a long way to go in terms of understanding, prioritising and putting our money where our mouth is. We talk about hard-working families, but we do not consider enough how families can work hard and still best look after their children’s interests. It is not right that wages have been frozen and that in-work benefits and tax credits have gone up by only 1% when nursery school costs increased by 11% in 2012. Life is being made harder and harder. It is not right that the London child care strategy, which developed affordable and flexible child care, was closed when Boris Johnson was elected. It is right that we have extended schools and that we increase the number of free hours of child care for three and four-year-olds, but I agree with those who have asked, “What about the 13-year-olds?” A 13-year-old should not have to go home to an empty house and make their own supper and look after their younger siblings. We need to think again about our political priorities, and I hope that Labour will more than match any promise that any Conservative Government ever make.

15:31

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

You will have had my apologies for arriving late at this debate, Mr Dobbin—I was detained at a Delegated Legislation Committee. It is a great pleasure to be here to support the initiative of my hon. Friend the Member for Lewisham East (Heidi Alexander). She and other Opposition Members present have given much of their political lives to identifying, recognising and campaigning for improved standards in child care, but I do not want this to become a competition about the monopoly of good intention. I also welcome yesterday’s announcement, in particular because it is in London that children from a range of backgrounds are more likely to grow up together. It is a function of gentrification and of the mixed nature of the communities we represent. It is a good thing that young children grow up understanding the differences in life and family circumstances between them and other children.

Has the Minister studied the experience in Australia in the 1990s? A similar way of funding child care led, as is often the risk in such circumstances, to a multiple increase in the costs of supply. An intervention in the market on cost tends to rig things in the suppliers’ favour and against the interests of parents. I am happy to supply her with the information if she has not yet had the chance to see it.

Different solutions, fiscal or otherwise, are right for different situations. Child tax credits, with the element that recognised the cost of child care, were just that. In the financial life of a family, the period when children are small and when both parents may be working is one of exceptional call on family resources, to which tax credits are a response. I agree that we might come up with different solutions now, but it is important to understand the response in the context of the time.

I will not repeat the point about the extraordinary financial burden that good child care places on family finances, particularly in London, but let us remember that, on average, £1 in every £3 of disposable income in London is spent on child care and that the cost is rising exponentially. I am sure that all Members present have received letters from mothers who doubt whether it is worth going back to work. I recently received such a letter from a mother who took home £2,000 a month when she was working. She wanted to return to work after maternity leave and found that child care for her two-and-a-half-year-old and her relatively small baby was going to cost her £1,870 a month, so she wondered whether it was worth going back. Mothers care most of all about the quality of care that their babies receive, but let us remember that the under-employment of women who wish to work, or who wish to work more, has a substantial economic cost.

Quality is important, and for most mothers quality is assured by their children being looked after by a member of their family, for which they are then rewarded, whether by tax credit or some other means. We must consider family care and remunerated family care, particularly since grandparents are becoming so fundamentally important to the care of small children. I will always remember the horror I felt when, while visiting an extremely prestigious nursery a couple of years ago, I greeted a nursery nurse who had two one-year-olds, one on each knee, and asked what their names were. She replied, “I don’t know.” I would not leave a child with somebody who did not know their name or their little habits and ways. That is the pretty basic thing that we mean when we speak of quality.

My right hon. Friend the Member for Tottenham (Mr Lammy) referred to Sure Start, and I want to make two points. First, when I, with my right hon. Friend the Member for Sheffield, Brightside and Hillsborough (Mr Blunkett), designed the Sure Start programme, it was as a nurture programme, not a welfare to work programme. We now know so much more about the critical 1,000 days that shape a child’s long-term development, and the design of nursery care must take account of that. Secondly, it is just not good for children to be woken up too early when their mothers are doing sequential jobs in order to meet the cost of child care. We need to consider having more flexibility in how nursery staff are deployed. As the economy becomes 24-hour, so must child care.

It is important that we learn from mothers. Last week, I visited an excellent nursery in Croydon and spent the afternoon talking to mothers. I met one group, a number of whom were poorly educated but wanted to be good mothers, and the greatest benefit for them had been the combination of education and child care. One mother, who had four little girls, said that being able to read to her three-year-old was the most important thing that she had ever done, and that she had never thought she would be able to do it.

My final point is on flexibility in pricing sessions of child care, so that people who do not want their child looked after for a whole session might have the possibility of buying part of a session. We should therefore listen to mothers in the grand design, to ensure that child care is as important for the healthy, safe development of children and support of families as it is for our economy.

15:39

[Lucy Powell (Manchester Central) (Lab/Co-op)]

I congratulate my hon. Friend the Member for Lewisham East (Heidi Alexander) on securing this important debate and on its timely nature. It is slightly humbling to have such a wealth of experience on these matters on the Benches behind me. I cannot possibly make a contribution on this important topic that will match those made by so many hon. Members over the years, but I will attempt to do so in my winding-up remarks.

The issues facing families in London are the exacerbated version of what families around the country face. Child care costs in London, as we have heard, are much greater than in the rest of the country. For example, a full-time under-twos’ place in London is on average £2,500 a year more expensive than it is in the rest of the UK. We have also heard that the supply of places in London is much more difficult than in the rest of the country. London has the lowest take-up of child care in the country. Given the extent of the growing economy in London, and the vibrant economy that we have always had here, it surprises me that take-up of child care should be that much lower here.

That has a direct impact on London’s maternal employment rates, which I was surprised to see are the lowest in the UK—there is a big gap in the rates—especially given the number of lone parents and other factors in London. That low rate has an impact on individuals, who are not able to fulfil their lives or provide for their families as they would like, and on the London economy, because so many women are out of the labour market. That has an immediate effect on gender pay gaps. It is shameful, or should be, that last year the gender pay gap increased for the first time in 15 years. Women suffer the pay and status penalty for taking time out from work. That should drive us all forward continuously to address fundamental issues to do with child care costs and provision, especially here in London.

The issues are not new. I will not lay all this at the door of the Government. These are long-standing problems that we have tried to address over many years. We have to recognise, however, that some of them have got more difficult over the past few years than they needed to, or than they were. If I may, I will use some of my time simply to ask the Minister questions about Government policy, since we have the opportunity to do so.

Many Members have talked about the two-year-olds offer and its impact, but the take-up of the offer in London is the worst in the country—only 51% of eligible children take up the offer, compared with 75% of eligible children in the country as a whole. What is the Minister doing about that? She has earmarked some new money— £8 million was announced last year—but what will it be used for, and how does she envisage that that will increase places and capacity in the system? Does she feel that the money is enough?

We heard about some unintended consequences of the two-year-olds offer from the hon. Member for Enfield North (Nick de Bois). We strongly feel that provision and planning of nursery and early years places should be decided locally, and put in place in the context of a longer-term strategy. His Government made a mistake in taking those responsibilities away from local authorities.

The new scheme was announced a year ago, but was revitalised yesterday and in today’s Budget. As others have said, Labour Members welcome any new money or investment in child care, because families are desperate for that help, but we must see this in context. On average, families have lost more than £1,500 a year in child care support over the term of the Government, through loss of tax credits and child benefit. Over the same period, nursery and child care costs have gone up by 30%. Taking those two figures together, families are more than £2,000 a year worse off when it comes to meeting their child care costs than they were in 2010. The scheme and the money are welcome, but they will only get parents back to where they were in 2010.

The issue raised by my right hon. Friend the Member for Dulwich and West Norwood (Dame Tessa Jowell) about the Australian model is critical. Will the Minister tell us today what assessment she or her colleagues in the Treasury or other Departments have made of the scheme and whether it will affect price inflation? Will parents feel the benefit of the scheme in the amount that they have to pay?

It would also be fairer of the Government to be absolutely clear about who will benefit from the full amount of the scheme. An average parent tuning in and out of yesterday’s news coverage might be forgiven for thinking that they were going to get £2,000 a year per child for help with child care costs. In fact, the figure is nothing like that. The Government have allocated £750 million a year to the scheme; they say that 1.9 million families will benefit, although in the small print they estimate that the figure will be nearer 1.3 million. Whatever way we do the maths, even the Government’s own figures suggest that the average amount per family on the scheme is somewhere between £400 and £500 a year, which is a far cry from the £2,000 per child that the broadcasters and newspapers were reporting yesterday. Will the Minister confirm that there is no new money for the scheme since what was announced a year ago, which was £750 million, even though the scheme is being extended? Those are the main points that I ask her to cover today.

On the universal credit announcement, as other colleagues have said, we absolutely welcome the plugging of that major gap in the scheme. We have been calling for that for many months. We have to be realistic, however: families on tax credits have seen a huge reduction in their child care support, from 80% to 70% under this Government, and the increase to 85% will not come in until universal credit comes in. We do not even know when universal credit will come on stream for families; it could be 2017 or 2018, and families will have faced a seven or eight-year gap with significant reductions. Will the Minister tell us what steps are being taken to help those families who are struggling with their costs now? Does she recognise that it was a mistake to reduce the rate from 80% to 70% in the first place?

[Ms Buck]

We have not talked about the early intervention grant and children’s centres. On take-up and participation in the offer, certainly in my constituency, a number of parents come through the experience of children’s centres, where they learn to deal with child care, build confidence, and develop their labour market skills. The early intervention grant, however, has been cut by 49% in Westminster. The lights are on in our children’s centres, but no one is home—the tumbleweed is blowing through them, and the services have all been closed—and that is unfortunately impacting on other areas of child care.

[Lucy Powell]

My hon. Friend makes a good point, and I suggest that she tries to secure a separate debate on that issue because of its importance. We welcome yesterday’s announcement, but it needs to be set in context. A remaining real challenge for families is to face these critical issues, which have a real impact on maternal employment rates and the gender pay gap, and that is something the Government should be worried about.

15:49

[The Parliamentary Under-Secretary of State for Education (Elizabeth Truss)]

I congratulate the hon. Member for Lewisham East (Heidi Alexander) on securing this debate on an extremely important topic. The Government’s various announcements this week, from three different Departments—the Treasury, the Department for Education and the Department for Work and Pensions—show how seriously we take this issue. We have announced that parents will get up to £2,000 per child towards their child care costs. Parents on low incomes will get 85% of those costs paid.

I want to challenge some of the things that have been said in the debate. Under this Government, spending on child care and early intervention has gone from £4 billion to £4.5 billion. I am happy to supply hon. Members with statistics for their local authorities. It is worth making the point that we spend as much money on this, as a proportion of GDP, as countries such as France and Germany. We have to try to get better value from the money we spend. That is the intention of a lot of the Government’s work.

Many Members have pointed out that the problem has not arisen overnight. Child care costs have been rising steadily for the past 15 years. However, this year’s Family and Childcare Trust survey showed that costs in England are starting to come down for the first time in 12 years. In England, costs of nursery care are frozen in nominal terms and have fallen once inflation is taken into account. In Wales, the cost of equivalent nursery care has gone up by 13%, and in Scotland, by 8%.

The use of child care in deprived areas has gone up by 16% in the past year. We have also seen an increase in maternal employment rates and the number of women in work. That is because the Government have made an effort to streamline the complicated child care system we inherited. Whereas there were multiple bodies inspecting child care providers, Ofsted is now the sole arbiter of quality. We have also announced a single child care register that all child care providers should be on.

The right hon. Member for Tottenham (Mr Lammy), who is not in his place, made an important point about older children. The Secretary of State has recently announced that for our next manifesto the Conservatives are looking at the idea of enabling and funding schools to open for longer hours to give an integrated offer to parents. The issue is not just about child care but about education.

[Ms Buck]

I raised the fact that councillors are being asked to support our local nurseries and nursery classes, but are being told that they have to cut places from full time to part time because of the funding pressures of the offer. Does that meet the Minister’s objective of providing longer hours of care?

[Elizabeth Truss]

I am about to come on to the issues that are specific to London, and will address that point then.

We are absolutely passionate about quality and improving outcomes, which we know have previously been issues. There is an 18-month vocabulary gap between children from low-income and high-income backgrounds. That is a problem for all of us, because it means that children start school in different positions. We have improved the standards for early years teachers, so that they now have to meet the same standards as primary school teachers. We have seen a 25% increase in the number of early years teachers enrolling on courses in the past year. We are also raising the standards for early years educators. This week, we announced an early years pupil premium for three and four-year-olds, which means that there will be extra money for the most disadvantaged children aged three and four.

We have improved the Ofsted framework, so it now looks at the qualifications of staff in nurseries and is much more focused on outcomes. We have introduced Teach First for early years teaching, to make sure that we are getting the best and brightest graduates into that vital sector. Most importantly, we are working on a coherent framework for the teaching structure from the ages of two to 18, so that early years provision is not seen as an afterthought but as a core part of our education system.

I recognise that there is a greater challenge in London. That is why I launched an £8 million fund with the Mayor of London at the end of last year. That aims to unlock the £1 billion that the Department for Education spends on early years provision in London.

I very much agree with the comments on increasing flexibility. A lot of school nurseries offer parents three hours, five days a week. That does not fit with many people’s working patterns. It also does not use our school nursery resources very well. In London, 45% of early years places are in school nurseries, which are generally open only between 9 am and 3 pm. If those school nurseries were all open between 8 am and 6 pm, that would give 66% extra child care hours. It is not a question of building more facilities but of using our facilities better. Those nurseries could open for two five-hour sessions a day, offering multiple hours.

[Heidi Alexander]

Will the Minister give way?

[Elizabeth Truss]

Forgive me, but I have to keep an eye on the time to make sure that I cover all the points that hon. Members have raised. I wanted to say specifically to the hon. Lady that the figure is even higher in Lewisham—half of all early years places there are in school nurseries. In Enfield, the figure is 42%. Think of the extra places we could provide if all those school nurseries opened for the longer hours I mentioned. It is not that the children should have full-time places; it is a question of parents being able to access places flexibly. Nurseries are entirely able to charge for the extra hours parents take, so they can open to suit the timetables of working parents.

That is why we launched the scheme with the Mayor of London and are working with different London boroughs. I would welcome the support of local MPs. Our officials have been discussing the matter with officials from Enfield and Lewisham in particular, as well as with officials from the three boroughs concerned. I hope that those discussions will help to address some of the issues. At the moment, we have fantastic resources, particularly in London, but we are not using them to full effect. That is a microcosm of the overall problem in child care and early years education: are we getting the best out of the facilities that we have?

If we look at the proportion of places that are in school nurseries, which is up 50% in some boroughs, and the fact that children’s centres provide 4% of child care, there is a much bigger issue to explore with regard to how we best use our school nurseries. In the Children and Families Act 2014, we have legislated for school nurseries to be able to take two-year-olds without having to register separately.

[Heidi Alexander]

We probably share the same aspirations, but the Minister talks about enabling schools to do things, whereas I am interested in how she is going to make them happen. Some of the time, schools do not want to do those kinds of things, and neither the Government nor local authorities have the power to get us to the position that we all want to get to.

[Elizabeth Truss]

We are instituting a school-led system, and it is important that head teachers and other teachers buy into that. We are making things easier by removing a lot of bureaucratic hurdles for schools. It is in a school’s interest to have high-quality nursery education and child care in the school, to help children start school ready to learn, able to communicate and with the right vocabulary. We need to change the culture in education to embrace early years provision more, and move away from having rigid barriers.

We are looking at how admissions policy can affect these issues, particularly for the most deprived children, so that schools have an incentive to take children on. There is a massive opportunity in that area. Some school nurseries across the country have made those changes. They offer very affordable places for children and help their school to do better. That is why we are working with boroughs such as Lewisham and Enfield. We are producing case studies, getting the data together and encouraging schools. The right first step is to make things simpler and easier for schools. I welcome the support of hon. Members in championing this issue in various areas. We can get much better value for money from what we are doing.

I want the overall child care landscape to be understood, as there is a lot of confusion about exactly what proportion of children are in which type of place. In London, a high proportion of children are in school nurseries at age three and four. We are piloting more places for two-year-olds in schools. A high proportion of children are in private and voluntary sector nurseries. I am working with organisations such as the National Day Nurseries Association so that non-school nurseries can link better to schools, the private sector can learn from the public sector and vice versa, and there is less of a divide between them. That is how we will get positive professional practice in the early years sector—by encouraging more inter-working.

On the use of money and the example of Australia, the key point is that we need to make sure that we expand supply. I agree with the hon. Member for Westminster North (Ms Buck) that if we do not, but simply push more cash in, there will be inflation. That is why the Government are making it easier to expand.

Zero-hours Contracts

Wednesday 19th March 2014 Westminster Hall

16:00

[Alison McGovern (Wirral South) (Lab)]

It is a pleasure to open this debate under your chairmanship, Mr Dobbin. My contribution will not be terribly lengthy, which will enable other hon. Members to intervene or contribute, and to hear the Minister. I would like to start by referring to an e-mail that was sent to me recently. Knowing that I had secured this debate, quite a number of people got in touch with and wrote to me, as they feel so strongly about zero-hours contracts.

One gentleman who got in touch explained his life, saying that he lives to work and enjoys work, and wants to feel good about himself and perhaps own a house one day. He is signed up with an agency and has had various problems. Anyway, the agency felt that it could get him a job as a refuse collector. He has written me a long e-mail, explaining how he has turned up for work only to be turned away. He has had the odd day here and there, and he feels that the situation is like something from many years ago, where someone turns up not knowing whether he will be given work. He said that, when it started, he was “a little annoyed”, but “confused more than anything”. He said there were

“about 50 lads in that day and only 40 had work.”

He continued:

“It just carries on like this. I have been here two months now, and only ever had one full week; to cover a holiday, it looks like. And you daren’t take a sick day; not like I would anyway if it could be helped…you would just lose your place and start at the bottom of the pile.”

Reading that, as I did last night, brought it all back to me as to why my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger), my right hon. Friend the Member for Knowsley (Mr Howarth) and I started a campaign and a discussion on zero-hours contracts last summer. I will go on to talk about the numbers of people whom we do not know are on zero-hours contracts.

The issue is about people who are facing a difficulty in the workplace. It is about how that makes them feel. The indignity of feeling useless through unemployment is very bad, and we must never let up on our passion to get people into work and see the difference. However, it is no better to feel the indignity of turning up for work and being turned away. Zero-hours contracts can be used to make people feel as if their efforts are for no good at all and that they are not wanted. The issue is not just a fact of economics, but a moral question about how people are made to feel by certain features of our labour market. That is why we need real action. I want to say a couple of things about understanding the phenomenon of zero-hours contracts; about what the Government are or are not doing, and what they might be doing; and about such contracts as a symptom of other developments in the labour market.

Regarding counting, the Office for National Statistics said that the most recent labour force survey suggests that there are close to 600,000 people—I think the exact figure is 582,000—on zero-hours contracts in the United Kingdom. That is up from its previous estimate earlier this year of around 250,000. We knew that there was a problem with the survey’s counting of zero-hours contracts, because in a parliamentary response to me, the Minister of State, Department of Health, who has responsibility for care, explained that a national survey of care workers estimated that more than 300,000 people working in social care were on zero-hours contracts. There cannot be 300,000 people on zero-hours contracts in the care sector when there are only 250,000 nationally across all sectors. Therefore we knew that there was a problem, and now the ONS has said that there is.

[Ian Lavery (Wansbeck) (Lab)]

I congratulate my hon. Friend on bringing this important issue to Westminster Hall. Does she agree that the recent figure of 500,000 zero-hours contracts is quite conservative? Other analysis suggests that there are more than 1 million people on such contracts. For those 1 million people, there is no production or wages, and they have no economic input whatever. If we have 1 million-plus people on zero-hours contracts, is that not a way of fiddling the employment or unemployment statistics that we are currently being fed by the Government?

[Alison McGovern]

My hon. Friend has pre-empted exactly what I am going to say. It is interesting that a Department for Business, Innovation and Skills Minister will respond to the debate, but we could do with having the Health Minister here, given how rampant zero-hours contracts are in the care sector. We could also do with the Minister of State, Department for Work and Pensions, the right hon. Member for Wirral West (Esther McVey), who has responsibility for employment, because I want to know exactly how many people we have forced to take jobs with zero-hours contracts to get them off the claimant count.

[Mr Andrew Smith (Oxford East) (Lab)]

I join the congratulations to my hon. Friend on securing this enormously important debate. On the care sector, does she agree that such vulnerable contracts are exactly the opposite of what we need to build the status, training and career structure of care workers? Is it not a scandal that care workers are often not paid for travelling between one job and another, and are therefore being paid below the minimum wage for the hours they are working? Does Her Majesty’s Revenue and Customs not need to start enforcing that?

[Alison McGovern]

My right hon. Friend has hit the nail right on the head. There is no better word for that than “scandal”. I will come on to say a few things about the care sector. He and I are as one in thinking that we need to develop the skills of our care work force.

[Mr Jim Cunningham (Coventry South) (Lab)]

I congratulate my hon. Friend on securing the debate. It strikes me that we are going back to a 19th century approach with zero-hours contracts. Going back to the ’30s, or even before the first world war, dockers or miners would turn up at the gates of a factory or the docks, a tallyman would throw something in the middle of them, and whoever was lucky enough to pick it up got a job. Whoever did not get it did not get a job. Zero-hours contracts are a 19th century approach. I was disappointed that nothing was said in today’s Budget to address zero-hours contracts and the cost of living. People on zero-hours contracts are badly affected by the cost of living.

[Alison McGovern]

I agree with my hon. Friend. Given the plethora of things that found attention in today’s Budget, it was a surprise that the Chancellor did not want to talk about zero-hours contracts, which seem to be at the heart of the Government’s approach to economic recovery.

I want to return briefly to the numbers. If the Minister has not yet clocked the problem, she ought to. The ONS has effectively said that previously it was undercounting due to the definitions in the labour force survey and/or a problem with people’s awareness that they are on zero-hours contracts. We now cannot tell what the trend is. The latest statistics may or may not represent a massive spike in the use of zero-hours contracts—I do not know. We cannot tell whether the statistics show a rise or a fall, because it is clear that the ONS has been undercounting previously. I would therefore like to know what further research DBIS has commissioned. As policy makers, we are in an awful situation—there is a phenomenon in the labour market, but we do not know what is happening. What further research has been or will be commissioned by DBIS, because unless we know whether the phenomenon is radically and exponentially increasing, how can we know what measures should be taken to tackle it?

Secondly, I would like to know what the Government are doing. The Minister will probably stand up and say that they have talked about preventing exclusivity clauses, which is okay and fine, but there is a raft of other ways in which the Government need to tackle the phenomenon, not least the one mentioned by one of my hon. Friends in relation to the Work programme and jobcentres. For example, are jobs on zero-hours contracts routinely being advertised through Jobcentre Plus and are claimants then sanctioned if they do not take them? I am afraid that it will not be enough for me to know whether a policy document exists. I would like to know whether the Minister believes that people are routinely being sanctioned for not taking jobs on zero-hours contracts, because it would be terribly serious if that were the case.

I have always said that if a small business offers opportunities on a zero-hours basis, as and when, and the person taking that job is in no way penalised if they turn down the hours—either they are a student or they just want to keep their hand in with a job but do not want lots of hours—that would be okay in my book. However, the problem is that we are in a world in which Jobcentre Plus is being directed to get the claimant count down, and we know that there are significant problems in the DWP and in that organisation. I am very worried about the idea that my constituents and others are being forced into employment on a basis that they do not really want or feel comfortable with because of current policy decisions.

I stand in this Westminster Hall debate today, proud of Wirral council, the local authority in which I am a Member of Parliament, because it has tried to adopt Unison’s ethical care charter. The council has said—to respond to the points made by my right hon. Friend the Member for Oxford East (Mr Smith)—that in its commissioning, it wants to adhere to standards to ensure that, in the very important work of looking after older people or those who are vulnerable and need a bit of help, it is not participating in a race to the bottom. That involves moving away from zero-hours contracts, paying properly for travel time, trying to get to the living wage and ending 15-minute appointments.

Without going deeply into the care sector, we need to look at the role of central and local Government in preventing zero-hours contracts, in both their commissioning and procuring roles. We can try to lead from the front. I would like to know what conversations the Minister has had across DBIS on procurement and commissioning, and across the Government on moving away from zero-hours contracts and saying, “In general terms in our economy, it is not a hugely helpful phenomenon to have people with unpredictable levels of income at the end of each month.” Will the Government lead the way in trying to set the standard in the labour market? What conversations has the Minister had about that?

This issue has been mentioned, but I would also like to know what the Government are doing to enforce the minimum wage properly. It seems to me that there is a group of—not universally, but broadly—women in society who are at risk of not being paid the minimum wage. They are in a workplace in which they are not necessarily powerful, and they often have child care or other caring responsibilities alongside their job, and cannot be expected to expend the time and effort to take their cases forward. It falls as a duty on us in this House and on the Government to ensure that we stand up for those people and ensure that they get the minimum wage.

Without focusing universally on the care sector, there was further new evidence this week that it is becoming more difficult to have a predictable or the same carer all the time. Part of that is about the use of zero-hours contracts and their unpredictability. I repeat my question to the Minister: what cross-Government conversations has she had to find out what actions DBIS needs to take to lead in response to the phenomenon?

I do not know whether the Minister is aware, but zero-hours contracts are not the only problem in this sphere. Often, they go alongside the use of agencies and other ways in which people find loopholes to get around their responsibilities. I would not want us to bear down on the use of zero-hours contracts only to see the problem pop up in another guise. The Minister should be aware of that problem as we move forward. It should not be about closing down one way of getting around employers’ responsibilities, only for the problem to raise its head under another definition. The Minister needs to think carefully about that.

[John McDonnell (Hayes and Harlington) (Lab)]

Before my hon. Friend concludes, I want to congratulate her not only on today’s debate, but on the significant work she has done over the past two years. She has concentrated to a certain extent on the care sector, but may I point her towards the fast food industry? With the bakers’ union, we have just launched a campaign in the fast food sector not only for the living wage, but to oppose the imposition of zero-hours contracts, because they are used by managers to intimidate workers. For example, if a worker seeks to join the union or seeks to exercise or make representations about their rights, they will be denied work under zero-hours contracts for the following week. We are seeing them being used as an intimidatory tool, as well as one of exploitation.

[Alison McGovern]

My hon. Friend is right. One of the worst things about zero-hours contracts is what I call “zero-hours contracts as a management tool”. People have brought cases to me where, for whatever reason, somebody’s face did not fit and they did not end up getting any hours. That is no replacement for the usual practices of good management and all the rest of it, so it is something that we absolutely need to be aware of.

Another thing that employers can practically do to help us to deal with the situation is encourage people to join a trade union—I would say that, being a Labour MP. People will not always have the capacity to raise such issues themselves, but with workplace representation, they can, and we can help on low-paid work issues, such as getting people skills and boosting their abilities. I am sorry to be so predictable—being a Labour MP and supporting people joining a trade union—but there is a reason for joining a union. A union is a practical bit of infrastructure that can help businesses to give their workers a sense of being involved in the leadership, and help to tackle some of these problems. I think good employers would agree with me on that.

I want to take the opportunity to thank parliamentary colleagues who have taken the time to come along to today’s debate. Most importantly, however, I thank every single person who has been in touch with me over the past week or so since I was awarded the debate. I also thank all the people who have been in touch with me over the past six months to share their experience. I felt the experiences of people working on that basis were totally hidden. They are not hidden now. The question is: what can we do about it?

16:18

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jenny Willott)]

I thank the hon. Member for Wirral South (Alison McGovern) for securing this debate. It is a very important issue, which has been widely discussed in the media, online and in both Houses of Parliament. She raised some important points.

The term “zero-hours contract” encompasses many different forms of employment relationship, in which the employer does not guarantee any work and the individual does not have to accept it when offered. Such contracts can be direct contracts of employment or can cover people working for agencies and so on, so they include a wide variety of different models of employment. The Government, and indeed most people now, believe that zero-hours contracts have a place in today’s labour market, but we need to make sure that people get a fair deal when they are employed on such a contract. The Government have always been clear that we will crack down on any exploitation of individuals in the workplace and the zero-hours contract consultation that has just closed is an important part of the process.

As the hon. Lady highlighted, there has been some inconsistency in the statistics on zero-hours contracts. The picture has been very mixed. That is primarily because there is no legal definition of a zero-hours contract, so it has been difficult to gather good statistics. The labour force survey, as a survey of individuals, provides an estimate of the number of people who identify as being on zero-hours contracts. The greater media coverage in 2013 is likely to have increased awareness of zero-hours contracts. The Office for National Statistics believes that that has led to the estimate rising from 250,000 people in the final quarter of 2012 to more than 500,000 people in the final quarter of 2013; in other words, it more than doubled. We do need to gather information and analyse it sensibly if we are to know exactly what is going on and to achieve the right balance between the opportunities and the risks that zero-hours contracts provide. The hon. Member for Wirral South asked what is being done on that. The Office for National Statistics has been looking at the issue and will release the results of its new survey in April. That will, I hope, give us more clarity about the current figures and the number of people working in this way.

Let me put the issue in a little bit of context. Zero-hours contracts can give growing companies the opportunity to grow in a relatively safe way and can be used to increase flexibility in the range of services that businesses are able to give their customers or clients—for example, by employing people in specialist roles and in different geographical locations that a permanent staffing model could not provide for.

The contracts are sometimes portrayed as simply a way for businesses to try to reduce labour costs, to the detriment of the people who work for them, but we have also heard in evidence that we have received that the contracts sometimes offer positive work opportunities to people who would find it difficult to take regular work at fixed times. For example, one quarter of all zero-hours contracts are taken up by students, who cannot necessarily commit to a fixed working pattern, as their timetables change. The contracts can allow them, for example, to be more flexible around exams and so on. Zero-hours contracts offer them an opportunity to gain useful work experience and to progress on to other forms of employment when they wish to do so. That is also true of many other people with responsibilities outside work—in particular, caring responsibilities. The additional flexibility that zero-hours contracts can provide can be greatly valued.

Having said that, we must be clear that although zero-hours contracts suit some people, they do not suit everyone and there are people on zero-hours contracts who would prefer to be in full-time, permanent work. I am sure that, as constituency MPs, we have all seen people in that situation.

[Ian Lavery]

Does the Minister agree with the comments from Lord Oakeshott, the Liberal Democrat peer, who said:

“A zero-hours Britain is a zero-rights Britain in the workplace—Beecroft by the back door. Being at the boss’s beck and call is no way to build a skilled, committed, loyal labour force”?

[Jenny Willott]

As I said, zero-hours contracts can have a place in the labour market. They can suit some people—students, people with caring responsibilities and others—but clearly they are not appropriate for everyone. Anecdotal evidence, including that highlighted by the hon. Member for Wirral South and by the hon. Member for Hayes and Harlington (John McDonnell), suggests that some individuals are being pressured into working when it does not suit them and have the implied threat hanging over them of being denied future work, which removes the flexibility for those individuals.

[John McDonnell]

I will give hon. Members just one example. The bakers’ union convened a meeting of fast-food workers a month ago, and a Costa worker turned up. Because he had not smiled enough that day, he was not going to get any work for the following week. These contracts are used as an intimidatory tool by managers, and we all have to condemn that, do we not?

[Jenny Willott]

I completely agree. The behaviour that the hon. Gentleman describes is not right and is not appropriate for a responsible employer. I am sure that hon. Members on both sides of the House completely agree with that.

Some individuals have been working regular hours for long periods only to find that they are “zeroed-down”—their hours are brought down—when demand falls, perhaps due to the loss of an order. Clearly, that dramatic change in working hours and the resultant income loss will have a significant impact on the individual, especially if they are the only person working in the household. When individuals have their income supplemented by benefits, an increase or decrease in hours and income can have quite a significant impact on their benefits, which can be very difficult to manage in terms of household income.

Hon. Members raised issues about the link between jobseeker’s allowance and zero-hours contracts. Clearly, the Government’s priority is to help people on benefits to move off them and into work as soon as possible. However, as the hon. Member for Wirral South highlighted, some media reports suggest that people claiming jobseeker’s allowance are being told that they must apply for vacancies that are advertised as zero-hours contracts. I must stress that that is not the case. In such cases, someone’s benefit would not be sanctioned. DWP decision makers cannot mandate claimants to apply for zero-hours contracts, although they are obviously free to apply for such a job if it would suit them. The uncertainty about the hours of work offered by the employer and about the amount earned and so on can present difficulties for individuals, so someone would not be sanctioned for not applying for one of those jobs.

It is very important that individuals make informed choices when applying for or accepting work, and employers must ensure that both job adverts and employment contracts are transparent. People have the right to know up front that a contract does not guarantee work, if it is a zero-hours contract, so that they know what they are signing up to. The evidence that we have received in the Department is that that certainly is not the case for everyone on a zero-hours contract, and that needs to be resolved.

Hon. Members have also raised issues about the care sector and the entitlement to payment for the time spent travelling between jobs. I want to be clear that employers must ensure that their workers are paid at least the national minimum wage for the hours that they work. Time spent travelling on business, including between house calls, counts as time worked for minimum wage purposes. Where the travelling time is time for which the minimum wage should be paid, any associated expenditure incurred by the worker in respect of that travelling is classified as being in connection with the employment. A worker who is paid at minimum wage rates would therefore need to be reimbursed the expenses for the travelling in order for the employer to be in compliance with minimum wage legislation.

[Mr Andrew Smith]

What will the Government do to ensure that HMRC’s enforcement unit steps up enforcement in this area of the minimum wage, because it is being abused?

[Jenny Willott]

I was about to come to exactly that point. We are aware that low pay is an issue for workers, particularly in the care sector, as hon. Members have highlighted. As the right hon. Gentleman just pointed out, HMRC enforces the minimum wage on behalf of the Department for Business, Innovation and Skills, and it has been conducting enforcement activity in that sector. In November, it published a social care evaluation, which highlighted a very worrying level of non-compliance. In 51% of the cases that it inquired into, the minimum wage was not complied with, and it identified more than £400,000 of pay arrears.

The Government are trying to improve compliance partly by significantly increasing the penalties so that they act as a more effective deterrent, and HMRC is currently targeting enforcement activity on the care sector in particular. We have also revised the naming-and-shaming scheme—the most recent batch of names was published a couple of weeks ago—and it is now much simpler to name and shame employers that break national minimum wage law. We are trying to ensure that we are taking more targeted action, but also that the penalties are greater, both financially and in terms of naming and shaming, so that they will act as a more effective deterrent.

The hon. Member for Wirral South asked about working across Government on the issue of zero-hours contracts and procurement. Officials have spoken with the Cabinet Office in relation to Government contracts, procurement and zero-hours contracts. We are also working with the Department of Health regarding the use of zero-hours contracts in social care. The discussions are ongoing, and the information gathered during them is also being fed into our consultation response. This is a very complicated issue and, as hon. Members have highlighted, it is of great importance to tens of thousands of people throughout the country. We had more than 36,000 responses to the zero-hours contracts consultation, which closed last week, so people clearly feel very strongly about the issue. We are looking at the responses to the consultation and will publish our response very shortly. I hope that that will respond more broadly to some of the issues highlighted by hon. Members today. I congratulate the hon. Member for Wirral South on securing the debate, because it is a very important issue. We all have constituents who have it right at the top of their agenda, and the Government are working on it.

Newspaper Supply Chain

Wednesday 19th March 2014 Westminster Hall

16:29

[Priti Patel (Witham) (Con)]

It is an honour to serve under your chairmanship, Mr Dobbin. I am grateful to Mr Speaker for granting this debate. I commend the Minister because this is her second debate in a row.

The issue of the newspaper supply chain and independent newsagents is covered by two Government Departments, so it is important that independent newsagents know which Minister and Department they can go to. I am delighted that my hon. Friend the Minister is responding this afternoon. I would be grateful if, in her response, she told us whether there are plans for one Minister to take the lead on this issue and oversee the policies that affect independent retailers.

Independent newspapers have been an integral part of many communities for decades. I am the daughter of former shopkeepers, and I spent more than 35 years living above a shop. My parents would go downstairs at the crack of dawn to open the shop, mark up newspapers and deal with the many challenges of the newspaper supply chain, so I have first-hand experience of the benefits to local communities of independent newsagents and the challenges of the newspaper supply chain.

Today is Budget day, so we should remember that our economy benefits from having prosperous, dynamic, independent newsagents; it is an important sector. Whether it is a friendly face at the counter who knows exactly what each customer comes in to buy, or a paper boy earning money for the first time and getting work experience—I have plenty of experience of delivering newspapers—independent newsagents offer high-quality, personalised services. As much as we welcome choice in where we shop, we all recognise that large supermarkets and online platforms do not do that.

Conservative Ministers deserve credit for taking action to support the sector. In particular, they have cut the small profits rate of corporation tax, increased the cap on business rates—that is an important step—cut fuel duty by more than Labour planned, reduced the burden on employers of national insurance contributions, and cut red tape, which has made a significant difference. The announcements in today’s Budget, apart from the usual increase in tobacco duty, with which we would not argue, also give independent newsagents a helping hand.

However, it is clear that over a number of years independent newsagents have faced difficult challenges that have forced many out of business. New tobacco controls have harmed responsible independent retailers. They have also driven many customers into the arms of illicit traders and smugglers, but that is a subject for another debate. The expansion of supermarkets brought more challenges. Changes to the newspaper and magazine market, including the expansion of existing newspapers’ online media platforms, new entrants to the market and the growth of free newspapers, have led to a decline in newspaper sales. The terms and conditions imposed on independent retailers by wholesalers are a part of the challenge they face.

I want to concentrate on the relationship between newspaper and magazine wholesalers and independent newspapers. The underlying trends and changes in how consumers digest newspapers and the news is highly relevant, because it has led to change in the marketplace.

Since the turn of the millennium, independent newsagents have suffered a fall in sales caused by the emergence of free newspapers—we all pick them up—that target the commuter market. The Metro and the Evening Standard, which are available in railway and underground stations, are two prominent examples. However, newsagents have also felt the impact of technological changes; more and more content is available online. All the main newspapers now invest heavily in their online platforms, which are updated minute by minute, particularly on Budget day. The growth in the use of smartphones and tablets has enabled news groups to provide news in a much more user-friendly way. Consumers are able to seek out and read news stories on other platforms, such as blogs. As a result, hard copy sales are falling. In the past two years alone—between March 2012 and February 2014—sales declined by 16% from 18.3 million to 15.4 million.

Despite the challenges that those changes pose to the traditional ways of selling newspapers, there are still some positive features for independent newsagents. Many people still go to their newsagent on the way to work and value the service they receive, and national news groups still see a role for print editions, which is important for independent newsagents. Few of us would find fault in news groups’ entrepreneurial and commercial decisions to use new technologies—we have all got to embrace new technology—or the cost-effective ways in which consumers digest news.

However, an issue that needs to be addressed, which places independent newsagents at a disadvantage and hampers their ability to compete and respond, is the wholesalers’ control of the newspaper supply chain and their vice-like grip on independent newsagents. The Minister is aware of the campaign that the National Federation of Retail Newsagents, the Association of Convenience Stores and many others in the sector ran to raise awareness about the lack of competition in the wholesale market. The are only two main wholesalers that operate in Great Britain: Smiths News and Menzies Distribution. They operate in what can be described only as a near monopoly, or near duopoly. National publishers of newspapers and magazines sign exclusive distribution rights deals with those wholesalers. Prices are set and there is no scope for independent newsagents to get involved in the negotiations, so their voices are not heard. A third wholesaler, Dawson Holdings, ended its magazine and newspaper distribution activities in 2009 after losing out on contracts with publishers.

Smaller independent wholesalers that traditionally operate at a local or regional level have been squeezed out as publishers have concentrated their contracts with Smiths and Menzies. As a result, if a newsagent wishes to trade in newspapers, they are effectively at the mercy of the wholesaler when it comes to terms and conditions, the quality of service—which many newsagents would question—and charges.

[Jim Shannon (Strangford) (DUP)]

I commend the hon. Lady for raising this issue. Like her, I have been contacted by constituents and small newsagents who are penalised by Menzies and other wholesalers, and have had their contract conditions changed without negotiation or consultation. Will the Minister respond to that issue? If an independent newsagent has a contract, how can they be charged extra money without consultation? There is no thought for the independent newsagent, who makes little money as it is.

[Priti Patel]

I completely agree. That is the reality of what we are dealing with. It is not a new problem; it has been going on for decades. There is a lack of negotiation, and newsagents are just a second thought. Any newsagent will be able to wax lyrical about the poor service they receive. From my experience in my parents’ shop, I have seen the supermarket down the road getting its newspapers first. When the newspapers are taken off the lorry, the independent newsagent is bypassed completely. That is simply not acceptable, but the wholesalers operate a virtual monopoly.

It is astounding that despite the monopoly conditions to which independent retailers are subjected, the Office of Fair Trading decided in 2009 and 2012 against referring the matter to the Competition Commission for further investigation. There is a strong case for opening up the sector and looking at the way those organisations are governed. That outcome is grossly unfair to the tens of thousands of independent newsagents who, as I know, are up at 4 am—before dawn—to serve the public. They work long hours to deliver a service for their customers, but they are forced to accept declining margins, higher charges and appalling service.

In my capacity as chair of the all-party small shops group, I am frequently contacted about this issue. I receive regular communications from newsagents across the country about the problems they encounter as a result of the lack of competition in the wholesale market. If a newsagent is dissatisfied with the products they sell and the terms and conditions they receive, they are hemmed in, because there are not many places for them to go. When it comes to general products, an independent newsagent can go to many cash and carries—of course they can, because there is competition in the marketplace—but they are limited as to where they can go for newspapers and magazines. There is simply no other avenue, which is why so many newsagents feel aggrieved. The market is stacked, rigged against them, and the Minister must review that.

The consequences of a lack of competition in the wholesale market and the dominance of the relationship between the publishers and wholesalers over independent retailers are profound. Notably, the margins that newsagents receive on newspapers are declining, and fast. Just as the cover prices of newspapers are set by the publishers, so too are the margins that retailers receive. When prices increase, the share that the retailer receives does not always follow. Some newspapers, such as The Telegraph and the Express, have accompanied their recent price increases with a pro rata rise in the amount received by the retailer, so that the margin remains the same. Many others, however, have not done so. The Mirror, for example, did not pass on a pro rata rate when prices increased from 70p to 80p in January, with the percentage received by retailers being slashed from 22% to 21%. In Scotland, the equivalent margin fell from 23% to 21%. Since January, it has been reported that one particular publisher has cut the margins received by retailers for 65 out of 138 titles.

It is understandable that publishers and wholesalers are looking for savings and efficiencies; I understand that the marketplace is changing. However, the arbitrary nature of decisions to cut retailers’ margins seems harsh—it is a blunt instrument—and the effect on profitability is pretty stark for independent retailers. I hope that the Minister will look into that aspect of the relationship between wholesalers and publishers.

On top of the fact that margins are being eroded, newsagents face higher costs from what are known as carriage charges, imposed by wholesalers. Originally introduced after the first world war to protect the universal availability of newspapers and their distribution to remote areas, carriage charges have soared over the past 20 to 25 years. I know that because my dad always used to complain about them. Despite the falling volume of newspapers and magazines being sold and distributed, carriage charges are rising and now represent the primary source of profit for wholesalers.

It says something about the effect of carriage charges in recent years when an increase of 2% announced by Smiths last summer was welcomed by some newsagents. That puts the figures into context. The fact that the steep rise in carriage charges has coincided with the signing of exclusive distribution deals between publishers and wholesalers, and with the collapse of competition among wholesalers, adds to the injustice that independent retailers feel—it is the icing on the cake—with a duopoly in place and the OFT failing to take action.

[John McDonnell (Hayes and Harlington) (Lab)]

I think the hon. Lady’s dad was right. We debated this issue in this Chamber 10 years ago, when there were more wholesale distributors. We are now down to two, but they have cut their nose off to spite their face; they have forced the costs on to retailers, and now corner shops are going out of business and circulation is declining. Short-term profit-making is significantly undermining the entire industry in the long term.

[Priti Patel]

I completely agree with the hon. Gentleman. The shops that we are talking about are the lifeblood of many communities. I have seen, over 35 years, a massive change; there is no doubt that we have seen many big changes. Increases in carriage charges are relevant not only to Great Britain but to Northern Ireland. Newsagents there have faced huge increases in the past 12 months alone. I would be interested to hear from the Minister about where there is scope to review the changes to carriage charges.

[Jim Shannon]

On that subject, the costs in Northern Ireland are exorbitant—I believe they are greater than here on the UK mainland. Independent newsagents have informed me and other elected representatives that it is getting to the point where they will have to decide whether to carry newspapers at all, because the margins are so tight. At the end of the day, it does not add up. Let us be honest: small shops are selling perhaps 100 newspapers, or 200 at the very most—there is no profit in that.

[Priti Patel]

The hon. Gentleman makes a really interesting point. I make it my business to visit many independent shops, particularly newsagents, and I always ask about the number of newspapers they are selling. The figures are staggering, because they are declining at such a rate. I remember, when I was a child, the bundles of our Sunday newspapers being enormous—we were dealing with hundreds and hundreds of newspapers on a weekend alone. That landscape really has changed completely.

Along with all the additional costs, independent retailers are frustrated by the appalling service that they receive from wholesalers. Of course, that has a knock-on effect on their business and the quality of service that they can offer to their customers. When their newspapers are delivered late, people stop going to those shops. I hear many reports from newsagents about late paper deliveries. Other newsagents find that the wholesaler has given them the wrong order or the wrong number of newspapers, or that the supplier has gone to the supermarket down the road, and not to their shop.

Although there is a process by which a newsagent can complain, it does not change a thing. It just adds to the stress and frustration of running a business. Newsagents feel increasingly powerless to get redress for their situation. With the latest promotion by one supermarket chain—it gives away free newspapers to customers spending more than £5—the squeeze is being felt even more. Will the Minister update us on what action the Government are taking to investigate possible abuses in the supply chain and to ensure that independent retailers are not unfairly disadvantaged?

In conclusion, independent newsagents, some of which are dependent for 75% of their business on newspaper sales, deserve to be treated with fairness—the debate is all about fairness in the supply chain. Unless changes are made to boost competition and give them a fair deal, including involvement in negotiations and decision making, more and more newsagents will struggle to compete. We will see more withdraw from the marketplace because they will not be able to survive, and our communities will be much poorer as a result. One newsagent put it clearly:

“the big point that needs to be made is that falling sales, shrinking margins and disproportionately high carriage charges will before long drive many smaller news retailers out of the market, to the detriment of consumers—notably the elderly who may not be tech-savvy and digitally aware of the alternatives to print editions.”

I hope that the Minister will give due consideration to the points I have made, and will help us to see what can be done to support the future of independent newsagents. These are small and micro-businesses, and the Government are doing great things for similarly sized companies. The issue should be reviewed by the Competition and Markets Authority, and the Government should work with newsagents to assess the reforms that are long overdue. I look forward to hearing what the Minister has to say.

[Jim Dobbin (in the Chair)]

I call the Minister to speak in her second debate this afternoon.

16:48

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jenny Willott)]

Thank you very much, Mr Dobbin—from one subject to another.

I commend my hon. Friend the Member for Witham (Priti Patel) for securing this debate on such an important issue, albeit one that is not raised as often in the House as the subject of the previous debate. I am present to address my hon. Friend’s concerns as the Minister with responsibility for competition, but I will ensure that the Under-Secretary of State for Communities and Local Government, my hon. Friend the Member for Great Yarmouth (Brandon Lewis), who has responsibility for retail and small shops—indeed, shops of any size—is aware of the debate as well, because it is an important issue.

My hon. Friend rightly pointed out that independent newsagents are an important part of local communities—they can be crucial—and of the UK economy more generally. I was therefore delighted to see figures from the Office for National Statistics—I have said that about five times today—that show that small stores are seeing annual growth of 8%, whereas larger stores are seeing growth of 2.6%. That shows that small stores have an important place in communities, and that their position is quite resilient.

The public’s ability to access a wide range of news, views and information about the world in which we live is absolutely central to the health of our democracy and society. Even in an increasingly digital world, access to a range of newspapers is a critical part of ensuring a healthy and vibrant democracy. It is important, therefore, that the market in the supply and retail of newspapers continues to operate in the best interests of consumers.

Newspaper publishers in the UK operate in a two-sided market, generating income from both advertising and sales. Publishers therefore take into account how circulation affects the revenue generated from both the cover price and advertising. On the other hand, wholesalers and retailers exist in a more traditional, one-sided market, so they are more likely to be interested in how changes to cover prices or delivery charges affect their sales volumes and profit margins. Although different elements of the supply chain clearly have different objectives, it is in their best interests to co-operate to promote effective newspaper sales, particularly in the face of changing consumer behaviour. As part of that, ensuring an efficient, cost-effective method of providing retailers and consumers with newspapers is important.

My hon. Friend raised concerns about competition in the market. Whenever the Government look at competition issues in sectors, they take into account assessments made by the UK’s independent competition authorities. In the case of newspaper supply, the Office of Fair Trading considered the market in a broad and detailed way over several years and, as part of those investigations, consulted widely and collected much evidence. In 2008, the OFT published competition guidance to the newspaper wholesale sector. It did not give the sector a clean bill of health on competition, but said that the industry should assess its distribution agreements against that guidance and make any necessary changes.

In 2012, the OFT looked at whether it needed to carry out a follow-up review, but decided it was unnecessary. As my hon. Friend said, the Association of Convenience Stores and the National Federation of Retail Newsagents appealed that decision to the Competition Appeal Tribunal, but the tribunal supported the OFT’s decision and said that it was right to consider that the likely consumer benefit did not justify undertaking a review.

That does not mean, however, that the UK competition authorities will not consider the issue again in the future. The new Competition and Markets Authority will launch on 1 April and take on the OFT’s and Competition Commission’s competition responsibilities. In the strategic steer to the CMA issued by the Government last October, we asked it to

“consider potential competition concerns in business-to-business markets, including the effects of differences in bargaining power between firms in a supply chain.”

This issue is therefore quite clearly in its remit.

The CMA’s draft annual plan showed that it is aware of the risks posed in particular by the current economic climate. If my hon. Friend has new evidence that anti-competitive practices in newspaper supply are causing detriment either to consumers or to businesses in the supply chain, I encourage her to submit that to the CMA for consideration.

The hon. Member for Strangford (Jim Shannon) raised concerns about contracts being changed without consultation and negotiation. That is clearly wrong: contracts should not be able to be changed unilaterally. If he is aware of evidence of such behaviour, I encourage him to provide that to the CMA because it will have strong powers to take action against anti-competitive behaviour by businesses.

My hon. Friend also raised concerns about the impact on small retailers of supermarket chains offering discounted or free newspapers. I know that that issue has been raised with several Members by their constituents; it is a concern. Large stores can benefit from economies of scale and in this very competitive marketplace they look for inventive ways to increase their market share. That can make it extremely difficult for smaller shops to compete with them; smaller shops simply do not have the same capacity to provide such offers. I have already said this to some Members, but if small retailers believe that local supermarkets are behaving anti-competitively, I encourage them to raise their concerns with the CMA, because it is within its powers to look at this area. The CMA will have wide-ranging powers from 1 April to tackle such behaviour, and I will write to it with a transcript of this debate to highlight the concerns that have been raised today and to make sure that they are on its radar.

Looking more broadly than at the supply of newspapers, the Government are aware of the need to support small retailers, to help to drive sustained growth. My hon. Friend highlighted some of the things that the Government have done. For example, the autumn statement announced the biggest business rate support package for 20 years, to try to support small businesses, with measures including extending the doubling of the small business rate relief; giving a discount of £1,000 for smaller retail premises; and introducing the option to pay bills over 12 months rather than 10. We are keen to support small businesses, particularly as we come out of the difficult financial circumstances that we have been in recently.

Alongside that, in December last year the Government announced the town centre support package, which builds on a range of other measures that have been taken to help high streets. That package could be particularly helpful to independent retailers, many of which are in high streets. They are not out-of-town businesses—I have not seen a small, independent out-of-town newsagent—so that sort of policy can benefit small retailers as well.

In addition, the Government published, “Small business: GREAT ambition”, in December last year, which sets out our commitment to make it easier for small businesses to grow. It was published on small business Saturday, which I know a number of Members across the House took part in. That event gave everyone the opportunity to celebrate small firms and it is important that we do so; often, small firms get crowded out and it is difficult for them to have the opportunity to raise awareness of what they do and the part they play in our communities. One of the businesses that I visited in my constituency on that day is a fabulous newsagent and sweet shop. It is called the Royal sweet shop and it has now been in existence in Cardiff in the same place in the Royal Arcade for—I think—103 years. It has the most amazing display of sweets that I have ever seen—I think people’s teeth practically rot as they walk in. It was very nice to have the opportunity to support the important small businesses that add vibrancy to our town centres and our communities. They have an important role to play, not only at an economic level but in supporting our communities.

I repeat my thanks to my hon. Friend for the opportunity to debate this issue today. I hope that I have managed to make it clear that the Government and the competition authorities are concerned about this issue; it is an important issue that we take seriously. I appreciate the difficulties currently being faced by independent retailers; it is not an easy time for them. I hope that, as the economy slowly starts to return to health, small retailers will be able to take advantage of the opportunities that exist for them, and I encourage hon. Members to raise their concerns with the CMA. As I said, I will write to the CMA myself, to ensure that it takes on board the concerns that have been raised today.

Question put and agreed to.

16:57

Sitting adjourned.