House of Commons

Tuesday 1st April 2014 Commons Chamber

Tuesday 1 April 2014

The House met at half-past Eleven o’clock

Prayers

Tuesday 1st April 2014 Commons Chamber

[Mr Speaker in the Chair]

business before questions

Transport for London Bill [Lords]

Second Reading opposed and deferred until Tuesday 8 April (Standing Order No. 20).

Oral Answers to Questions

Tuesday 1st April 2014 Commons Chamber

The Secretary of State was asked—

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

1. What steps he is taking to improve compassionate care in the NHS.

[The Secretary of State for Health (Mr Jeremy Hunt)]

The Government have made it a key priority to restore a culture of compassionate care throughout our NHS. Ten thousand nurses and midwives will have taken part in a new leadership programme that champions patient-focused compassionate care. Pilots are testing whether all nurses should spend time on the wards prior to a nursing degree.

[Andrew Selous]

Will the Secretary of State join me in congratulating NHS staff, who are shifting the priorities of the NHS culture towards compassionate care and away from a tick-box culture? Does he agree with Robert Francis, who says that compassionate care very often saves money?

[Mr Hunt]

My hon. Friend is absolutely right. Last week I was in one of the safest hospitals in the world, Virginia Mason hospital in Seattle, which has cut litigation claims by three quarters since it introduced safer care. We have fantastic hospitals in this country too, such as Salford Royal. The truth is that safer care is better value for money: it means that more money can be spent on the front line, not on litigation.

[Grahame M. Morris (Easington) (Lab)]

The Secretary of State is not showing much compassion towards hard-working NHS staff, who have a 1% pay rise. One year on from the top-down reforms, what does he think of the survey showing that 69% of front-line staff think his reforms are damaging patient care?

[Mr Hunt]

The most damaging thing for patient care would be a pay award, which the hon. Gentleman sounds like his is supporting, that would mean the potential loss of 6,000 nursing jobs from our front line. That would be incredibly bad for patients and incredibly bad for nurses. All nurses are getting a minimum 1% rise. That is the right thing to do. That is supported by the shadow Chancellor but not, apparently, by the shadow Health Secretary.

[Nadhim Zahawi (Stratford-on-Avon) (Con)]

20. In a report published by the King’s Fund last month, South Warwickshire NHS Foundation Trust was highlighted as a leading example of compassionate care for the frail elderly. Will the Secretary of State join me in congratulating the trust’s staff on the move away from tick-box targets, and visit the trust to see this new emergency care model in practice?

[Mr Hunt]

I much enjoyed a recent dinner where I had the chance to meet a consultant from South Warwickshire NHS Foundation Trust. One of the discussions I remember having with him was how inside the NHS the definition of success for a hospital was in the past too narrowly focused on targets and financial balance, and not enough on patient safety, compassionate care and clinical outcomes. He, and many other people in the NHS, welcome the change that this Government have made in the past year to change that balance.

[Helen Jones (Warrington North) (Lab)]

Does the Secretary of State agree that compassionate care begins with being able to see a GP? In areas such as mine, GP appointments are increasingly hard to get. In fact, one practice has had its contract rescinded because of its failures. Does he now regret scrapping the target allowing patients to see a GP within 48 hours?

[Mr Hunt]

I am interested and rather astonished that the hon. Lady dares to mention the words “GP” and “contract” in the same sentence. It was Labour’s GP contract changes in 2004 that made it disastrously more difficult for people to see their GP and destroyed the link between patients and doctors by getting rid of named GPs. She will be pleased to know that from today we are reintroducing named GPs for the over-75s, which is big step forward in making it easier for people to see their GP.

[Andrew George (St Ives) (LD)]

Although the Secretary of State says that he is getting rid of tick-box targets, new targets are being introduced, including hourly ward rounding for nurses and the introduction of a requirement for nurses to undertake a year as a care assistant. Would it not be better to depend on the professionalism of the nursing profession?

[Mr Hunt]

That is exactly what we are doing. There is no target to introduce hourly rounding, but there is very good evidence from the hospitals that have it, such as Salford Royal, that it results in the buzzer going off less often, calmer wards and problems being nipped in the bud. People are given food and water before they feel the need to ask for it and we end up with much better and safer care. That is something the hon. Gentleman should welcome. We certainly want to work with the nursing profession to ensure we deliver that.

[Mr David Crausby (Bolton North East) (Lab)]

2. What his most recent estimate is of the cost to the public purse of reorganisation in the NHS.

[The Secretary of State for Health (Mr Jeremy Hunt)]

According to official figures, the new structure set up by the Health and Social Care Act 2012 will save £5.5 billion in this Parliament and £1.5 billion every year after that, all of which will be reinvested in front-line care.

[Mr Crausby]

Given that he promised in 2010 that there would be no top-down reorganisation of the NHS, how can the Secretary of State justify spending billions of pounds on top-down reorganisation on the day on which Simon Stevens, the new chief executive of NHS England, has warned that the NHS is facing the biggest

“budget crunch in its 66-year history”?

[Mr Hunt]

As Simon Stevens is starting today, I think that this is a good moment to welcome him to his post. He is an outstanding individual, and I know that we all wish him well in what will be a challenging but incredibly important job.

As for the reorganisation, the official figures make it clear that it is saving more than £1 billion every year during the present Parliament—money that is being reinvested in the provision of 1,600 more nurses, 1,700 more midwives, 1,800 more health visitors and nearly 8,000 more doctors than we had under Labour. I am afraid that that shows that Labour has not learned the lessons of Mid Staffs. Labour Members still want to turn the clock back and spend all that money on administration.

[Mr Simon Burns (Chelmsford) (Con)]

Does my right hon. Friend agree that savings that have been made through greater effectiveness and efficiency, and that can be ploughed back into patient care, should be warmly welcomed? Does he not think that such action is far preferable to the bizarre suggestion by a former Labour Health Minister that people should be charged £10 a month to visit their GPs, which would compromise Nye Bevan’s founding principle of a free health service?

[Mr Hunt]

I do think that that is a bizarre suggestion. Given our ageing population, we need to make it easier rather than harder for people to see their GPs. I also think it bizarre of the Opposition to set their face against the reforms that my right hon. Friend helped to pilot through the House. Because money has gone to the front line, 800,000 more operations are being performed in the NHS year in, year out than were performed under Labour. We are putting money where it is needed, with doctors and nurses.

[David Wright (Telford) (Lab)]

Will the Secretary of State give us more details about the amount of money that was spent on consultants during the top-down reorganisation? Would that money not have been better spent on nursing?

[Mr Hunt]

I will happily give the hon. Gentleman the figures, but if he is shocked by the amount that was spent on consultancy, he will be even more horrified to learn that it was vastly greater under the last Labour Government. We are paring that down precisely because we want money to be spent on the front line.

[Caroline Dinenage (Gosport) (Con)]

Does the Secretary of State share my hope that the Government’s joint commitment to increasing NHS spending and dealing with the legacy of private finance initiative debt will help areas such as Gosport, which is living under the umbrella of a huge PFI hospital that was approved under the last Government and is sucking up most of the NHS budget?

[Mr Hunt]

PFI debt is costing the NHS more than £1 billion every year. In some cases that money was well spent, but it was often very poorly spent. My hon. Friend is absolutely right: we want the money to be spent on front-line care, which is why we have drawn a line under the appalling deals negotiated by the last Government. We are spending money where it should be spent, in order to help patients.

[Andy Burnham (Leigh) (Lab)]

It is a year to the day since the Government’s reorganisation took effect, and now that the dust has settled, we can see the full scale of its folly. There are 163 more NHS organisations than there were before, four times more managers are being paid the very highest salaries than the Government planned for, and 4,000 staff received redundancy payments only to be rehired by the new organisations that the Government had created. Is not the reason why the NHS is the only public service that cannot honour a 1% pay increase for its hard-working staff the fact that these Ministers lost control of their own reorganisation, and it has now wasted billions of pounds?

[Mr Hunt]

I think that the right hon. Gentleman needs to look at the figures. The reorganisation, which he opposed through thick and thin, means that the NHS is spending less on administration and bureaucracy. If he questions that, may I ask how he thinks we found the money to pay for 8,000 more doctors and 15,000 more clinicians, if it was not by getting rid of primary care trusts and strategic health authorities? That is why there are now 2.5 million more diagnostic tests and 4 million more out-patient appointments every year. We are doing more for patients than was ever done when the right hon. Gentleman was Secretary of State.

[Andy Burnham]

I know that it is April fool’s day, and the Secretary of State certainly seems to be getting into the spirit of it with that answer, but his fantasy figures will be laughed at by anyone who works in the NHS. It is not just in relation to bureaucracy that the Government have broken promises. They said that the reorganisation would improve patient care, but 70% of NHS staff say that it has got worse. The first full year of the reorganised NHS has been the worst year for a decade in A and E. It is harder to get a GP appointment than it was before, and cancer patients are waiting longer to start treatment. Is it not now clear that the Government’s reorganisation has been a disaster on every level for patients and taxpayers who never voted for it, and who were promised that it would never happen?

[Mr Hunt]

I will tell the right hon. Gentleman what is not an April fool—the appalling care at Mid Staffs on his watch. If he is talking about how the NHS is doing, perhaps, for once, Labour Members should look at what patients are saying. I know that it is difficult, but if we look at what patients say, we see that since the election, there has been a 5% increase in those who think that their NHS care is safe, and a 10% increase in those who think that they will be treated with dignity and respect in the NHS under the coalition. We are proud of that, because we are putting patients before politics, which the right hon. Gentleman never does.

[Mr John Spellar (Warley) (Lab)]

3. How many staff have been made redundant and subsequently re-employed by NHS organisations since May 2010.

[Pat Glass (North West Durham) (Lab)]

10. How many staff have been made redundant and subsequently re-employed by NHS organisations since May 2010.

[The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)]

Since May 2010 and up to December 2013, 4,050 staff across the whole NHS have been re-employed in the NHS following redundancy. This covers all staff grades, not just managers, and is a tiny proportion of the total NHS work force of currently around 1.2 million.

[Mr Spellar]

May I thank the Minister for that utterly complacent answer? Is it not outrageous that, while front-line health service staff are having their salaries frozen, the fat cats at the top are getting monstrous pay-outs and then being re-employed straight away elsewhere in the NHS?

[Dr Poulter]

The Opposition will have to do better than these prepared questions. We have been lumbered with their redundancy terms, which were negotiated when the right hon. Member for Leigh (Andy Burnham) was a Minister in the Department of Health.

On NHS pay, we believe in having enough front-line staff to care for patients. That is the lesson of Mid Staffs. What the previous Government would have done—and the Opposition would have us do—is give some staff in the NHS two pay rises, not just one. That is unacceptable. We need to have enough staff to ensure that we can look after patients. All staff in the NHS will receive a pay rise of at least 1%, but unfortunately, because of the terms that the previous Government set, some managers are still treated better than patients. We will change that.

[Pat Glass]

Some time ago, the Prime Minister promised to stop the revolving door in the NHS and recover payments from those staff who had got huge payments and come back, sometimes to the same job. How is that going? How many people and how much money?

[Dr Poulter]

I think this is an own goal from the Opposition. They set the redundancy terms in 2006, when the shadow Secretary of State was a Minister in the Department, which have allowed extraordinary, eye-watering redundancy payments to be made, particularly to managers. That is to the disadvantage of front-line staff and patients. It is why we are currently in negotiations with the unions to ensure that we improve redundancy terms, stop those eye-watering payments and have more money to care for front-line patients.

[Barbara Keeley (Worsley and Eccles South) (Lab)]

21. Talking of eye-watering payments, may I refer to the six-figure pay-off of £300,000 reportedly paid to Jo-Anne Wass, one of the 10 highest earners in the NHS? Despite the fact that she is leaving this month, the NHS is said to be paying for a two-year secondment for her, even though she will not return. How many 1% pay rises for nurses could be found out of that £300,000?

[Dr Poulter]

These are questions that the Opposition should have thought about—the hon. Lady was a Minister in the previous Government—when they negotiated the redundancy terms. They are Labour’s redundancy terms, which we are changing. When we look at the figures, under the previous Government’s NHS reorganisation in 2006 to 2008, we see that the NHS spent more than £360 million on redundancy and early retirement alone, which compares with only half that—£178 million from 2011 to 2013—under the current Government. How much more money would have been available for staff pay had the previous Government got that right?

[Ann Coffey (Stockport) (Lab)]

4. What representations he has received on community pharmacies.

[The Parliamentary Under-Secretary of State for Health (Jane Ellison)]

We receive a number of representations about community pharmacies over any period. Of course, they play a vital role in their local area, providing high-quality care and support and improving people’s health, especially in hard-to-reach communities. For example, more than 5,000 pharmacies assist with smoking cessation work.

[Ann Coffey]

I thank the Minister for her reply. With GPs managing demands on their time by operating longer waiting lists for appointments, to the increasing frustration of my constituents, is it not time for a more radical change in the role of community pharmacists in primary care? Does the Minister agree that any proposals to reorganise health services in Greater Manchester should fully explore the contribution that pharmacists can make—for example, in supporting people with long-term conditions or prescribing for minor conditions?

[Jane Ellison]

The hon. Lady is right to say that pharmacists have a great role to play, and she has given a good example of their helping people to manage long-term conditions and helping people with their medication. NHS England’s community pharmacy call to action has stimulated the debate about where community pharmacies should sit. We see them as a vital part of front-line services, and I am glad that the NHS is looking at their role in the round, because it is a really important one.

[Bob Blackman (Harrow East) (Con)]

What representations has my hon. Friend received in relation to the sale of e-cigarettes in community pharmacies, given that they form part of the smoking cessation process?

[Jane Ellison]

I have received no specific representations on that matter, but my hon. Friend will know that we have taken measures to ban the sale of e-cigarettes to under-18s. He will also know that, as we transpose the new tobacco directive into our country’s law, there will be opportunities to bear down on some of the advertising and on the ways in which e-cigarettes are placed, about which we have some concerns. We recognise that e-cigs can be a way for some people to quit smoking, but we also recognise the concern that they could be a gateway into smoking for young people.

[Keith Vaz (Leicester East) (Lab)]

Does the Minister agree that one way in which community pharmacies can play a larger role in the NHS is in the provision of testing for, and raising awareness of, diabetes? Has she received any representations on that matter? Let us get diabetes testing on to the high street.

[Jane Ellison]

I think that I received a representation from the right hon. Gentleman in person when he was kind enough to visit my constituency with the Silver Star diabetes charity that he founded. That visit perfectly demonstrated the role of testing in the community; it was fantastic to see people queuing up to be tested in a day-to-day setting outside a supermarket. He is quite right to say that community pharmacies have a big role to play. I recently visited Tesco to learn about its work with Diabetes UK, and about the many tens of thousands of people that those two organisations, working together, have tested.

[Mr David Heath (Somerton and Frome) (LD)]

Does the Minister recognise that not only pharmacists but—here I declare a professional interest—optometrists represent a huge reservoir of underused professional skill and expertise in an unrivalled network of premises? Can we not find ways of using that expertise more effectively in primary care, diagnostics and—as the right hon. Member for Leicester East (Keith Vaz) suggests—screening?

[Jane Ellison]

I echo my previous point that all our front-line health care services have a role to play in the community in helping people to keep well, to stay out of acute care and to manage their medicine. Indeed, the NHS is looking at this question more widely, and I understand that the central message of Simon Stevens’s speech today is that we need to look in the round at the way in which all our front-line services work together to deliver great care in the community.

[Karen Lumley (Redditch) (Con)]

5. What progress he has made on improving out-of-hospital care for frail elderly people.

[The Secretary of State for Health (Mr Jeremy Hunt)]

Under the new GP contract, which starts today, we will ensure progressively that everyone over the age of 75 has a named GP responsible for delivering proactive care for our most vulnerable older citizens. The new contract will help to restore the personal relationship between doctor and patient that was destroyed in 2004 when named GPs were abolished.

[Karen Lumley]

Will my right hon. Friend congratulate Worcestershire Acute Hospitals NHS Trust, which has used some of its winter pressure money this year to buy beds in a nursing home in order to free up much-needed hospital beds? Does he agree that that model enables elderly people to be cared for in their community when they no longer need urgent treatment?

[Mr Hunt]

I am happy to congratulate the trust on its excellent work. It is worth reflecting on how well the NHS did this winter. Despite constant attempts by the Opposition to talk up a crisis, we hit the target for A and E in more weeks than was the case when the right hon. Member for Leigh (Andy Burnham) was in office, and 2,000 additional people were seen within four hours every single day.

[Derek Twigg (Halton) (Lab)]

Part of the problem with people being admitted and readmitted to hospitals involves access to their GPs. What is the Secretary of State doing to ensure that elderly people across the board have access to their GP, so as to prevent their admission or readmission to hospital?

[Mr Hunt]

The hon. Gentleman is absolutely right. If we are going to deal with the pressures in A and E, we need to have a massive improvement in primary care access. There has been historical under-investment in primary care, going back over many years, and we need to change that. One of the ways in which we want to do that is to reintroduce GPs taking personal responsibility for the most vulnerable older people, and today’s changes will help us to move towards that.

[Lorely Burt (Solihull) (LD)]

In my constituency the success of virtual wards has decreased the need for hospital beds. That is welcome, but dementia sufferers, who sometimes need hospital treatment and specialist care to mitigate the additional confusion and anxiety that they experience, do need specialist care within a hospital. Our local dementia unit is under threat of closure. Does the Secretary of State agree that it should not be closed and that that is a wrong decision?

[Mr Hunt]

I do not know the details of that particular case, but I am happy to look into it. I would say that a quarter of our hospital in-patients have dementia, and it is incredibly important that hospitals continue with a revolution in the way they look after people with dementia. There are some fantastic examples of that around the country, and I want to give them every support and encouragement.

[Mr Jamie Reed (Copeland) (Lab)]

GP access is a crucial element of out-of-hospital care, and the British Medical Association today said that the damage caused by this Government to the NHS has been “profound and intense”. Last week, the Royal College of General Practitioners said that more than a quarter of us now wait more than a week for an appointment with our family doctor. Within days of taking office, Ministers axed Labour’s guarantee of an appointment within 48 hours and took away the funding for evening and weekend opening. Under this Government, has it not got harder and harder to get an appointment with a GP? Let us have an honest, grown-up answer.

[Mr Hunt]

The honest factual answer is that we got rid of that target because when it was in place the number of people actually being able to see their GP within 48 hours was falling, so it was not working. I am afraid that this is the same old Labour problem: thinking that the solution to every problem in the NHS is another target. That is exactly what led to Mid Staffs and exactly what we will not allow to happen.

[Mr Dominic Raab (Esher and Walton) (Con)]

6. What steps he is taking to reduce the time taken to diagnose brain tumours in children.

[The Parliamentary Under-Secretary of State for Health (Jane Ellison)]

We have committed £450 million to enable earlier diagnosis of cancer, including direct GP access to MRI scans for suspected brain tumours. We have also funded a BMJ learning module for GPs on diagnosing brain tumours in children. Of course, I have also met my hon. Friend to discuss this issue, and I am planning to attend the all-party group on brain tumours very shortly.

[Mr Raab]

May I thank the Minister for her answer, and welcome her decision to write to local health boards, and Public Health England’s decision to write to heads of public health, to promote the delivery of the HeadSmart campaign’s brain tumour symptom awareness cards via schools? That gives us a shot of cutting the diagnosis delay in children to five weeks. Will she join me in urging councils to deliver the cards? This will not cost the taxpayer a penny, but it will save hundreds of lives.

[Jane Ellison]

I would like to thank all the organisations behind the excellent HeadSmart campaign for their amazing work. To mark the first anniversary of the new public health arrangements, I am planning to write to local health and wellbeing boards to make them aware of the issues of particular interest to Parliament, and this is one that I intend to highlight. Public Health England has also agreed to contact all directors of public health. We fully support the HeadSmart campaign’s aims and encourage local bodies to help drive improvements in this crucial area of care.

[Fiona Mactaggart (Slough) (Lab)]

My constituent Raj Rana, who is now four, is a survivor of a brain tumour. One group that really can assist in this area is schools. Will the Minister talk to the Department for Education about how they can become alert to early symptoms of brain tumours?

[Jane Ellison]

That is one of the points people from the HeadSmart campaign raised when I met them, and of course I am happy to draw the attention of colleagues in the Department for Education to the hon. Lady’s concerns and make them aware of this exchange.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

7. What estimate he has made of the number of patients who have waited for more than four hours in accident and emergency departments in 2013-14 to date

[The Parliamentary Under-Secretary of State for Health (Jane Ellison)]

Despite 1.2 million more A and E attendances in England, nearly 96% of patients have been seen, treated, transferred and discharged within four hours of arrival at A and E. That excellent level of service is a credit to the hard work of front-line NHS staff across the whole NHS, and I am sure the whole House would want to thank them for that.

[Rushanara Ali]

I am disappointed that the Minister has not bothered to answer the question. I will answer it for her: nearly 1 million patients have had to wait for longer than four hours in A and E over the past 12 months —it is one of the worst figures in a decade. Will she and her Government get a grip and sort this out?

[Jane Ellison]

I did answer the question—I told the hon. Lady exactly how the NHS was performing. I have to say that Government Members slightly despair at the constant churlishness of Opposition Members who try to talk down the NHS and talk up a crisis. They are trying to talk the situation into fitting the rhetoric, but the NHS has performed really well this winter and many more people have been seen within the target. The average waiting time for someone to be seen is actually 30 minutes. The NHS has done well and she should join us in congratulating it on that.

[Sir Tony Baldry (Banbury) (Con)]

Does my hon. Friend agree that one of the ways to reduce pressures on A and E is to ensure that people do not go to A and E if they do not need to? Will she compliment the Oxford clinical commissioning group for the work that it is doing in Abingdon and is about to do in Banbury in setting up a primary triage unit at the entrance of A and E to ensure that those who need primary care get it, and that those who do not require A and E care get the proper and appropriate care?

[Jane Ellison]

I congratulate my right hon. Friend’s local CCG. Increasingly, I am seeing, right across the country, imaginative and innovative ways in which people, local clinicians, public health professionals and people in wider health services are looking at how we keep people who do not need to go to A and E out of A and E. Some of them are doing remarkable work. We will be celebrating that this week by recognising some of those unsung heroes who are doing that great public health work in our communities.

[Mrs Linda Riordan (Halifax) (Lab/Co-op)]

Calderdale Royal hospital’s A and E is well run and very busy at times. Why does the Minister think that the proposed closure of it will improve the health care of my constituents?

[Jane Ellison]

I responded to a debate on that issue a few months ago. As the hon. Lady knows, there are no plans for what she suggests, but the local trust has begun a process, in which she and other local politicians are engaged. At the heart of that process is care for local people, looking at what is clinically best for them and what the best outcomes are for them in the long term. That will have regard to Sir Bruce Keogh’s review of urgent care. What we want are the best outcomes for people, and I am sure that that is what she wants too.

[Andrew Percy (Brigg and Goole) (Con)]

Every weekend, as a first responder volunteer in the NHS, I see too many people taken off to hospital unnecessarily. One way of addressing that is to have a proper strategy for community paramedicine. We have had a trial running in Goole, which the Secretary of State has seen, where an emergency care practitioner delivers care in people’s homes, thereby reducing visits to hospital. Do we not need a national strategy on community paramedicine?

[Jane Ellison]

I know of my hon. Friend’s extraordinary work as a first responder, and we all greatly admire it. He makes another great point about how we tackle this long-term challenge of the sustainability of our acute services. I am happy to draw his comments to the attention of NHS England. I am sure that it is one part of all the things it is looking at as it addresses this issue.

[Andrew Gwynne (Denton and Reddish) (Lab)]

The complacency of this Minister knows no bounds. In 2011, the Prime Minister said:

“I refuse to go back to the days when people had to wait for hours on end to be seen in A and E.”

In 2013-14, the first year after the Government’s reorganisation, we saw the worst year in A and E for a decade, with almost 1 million people waiting longer than four hours to be seen in accident and emergency. As A and E is the barometer of the whole health and care system, is this not the clearest sign that the NHS is getting worse on their watch?

[Jane Ellison]

So desperate are the Opposition, I think the shadow Minister actually used the same opening line that he used at the last Health orals. It really is time to change the script. The NHS has seen more people in A and E than ever before. Waiting times have halved since the last Government left office. If he wants to come to the Dispatch Box and highlight problems in A and E, why does he not try the 86.6% of people being seen in Wales, which is a truly shocking performance statistic.

[Andy McDonald (Middlesbrough) (Lab)]

8. What progress has been made on achieving parity of esteem between physical and mental health.

[Paul Blomfield (Sheffield Central) (Lab)]

12. What progress has been made on achieving parity of esteem between physical and mental health.

[Mr Andy Slaughter (Hammersmith) (Lab)]

15. What progress has been made on achieving parity of esteem between physical and mental health.

[The Minister of State, Department of Health (Norman Lamb)]

The mandate to NHS England requires measurable progress in achieving parity of esteem by March 2015. “Closing the Gap”, which was published in January 2014, contains a reinvigorated system-wide drive to deliver parity of esteem and to hold services to account. That includes programmes in NHS England, Public Health England and Health Education England.

[Andy McDonald]

If the Minister really believes in parity of esteem, how can he possibly justify cutting the funding for mental health trusts by 20% more than has been the case for other hospitals? Six leading mental health organisations warned that that decision will put lives at risk. Will the Minister now rethink the matter?

[Norman Lamb]

It is because I really care about parity of esteem that I described the decision by NHS England as flawed. It cannot be justified. It is not based on evidence. I am pleased to say that since then the former chief executive, David Nicholson, has written to all his area teams to make it very clear that in their commissioning plans and clinical commissioning groups, and in determining contracts with mental health providers, they must apply the principle of parity of esteem. Let us wait to see what emerges from that, but any reduction in funding for mental health this year would be unacceptable.

[Paul Blomfield]

We know that spending on mental health fell for the first time in a decade in the first year in which this Government were in power. Unfortunately, the Department no longer collects or publishes that data, but Sheffield Mind has expressed its concerns about cuts in the two subsequent years despite referrals rising dramatically. Will the Minister assure the House that he will in future publish figures on spending levels and that mental health services will not be subject to a fourth year of cuts?

[Norman Lamb]

We want to make sure that there is complete transparency in the availability of data and to ensure that in future it will be possible to draw those comparisons. I suspect that there is agreement across the House that mental health must not lose out. In the last decade, when the NHS was financially squeezed mental health lost out, as the Health Committee confirmed. It has happened again this time, but I am absolutely determined that we will change the levers to ensure that mental health gets its fair deal. I am delighted to confirm today that we are ending the exclusion of mental health patients from the legal right of choice. It is extraordinary to me that when the Labour Government introduced a legal right of choice in the NHS, they inexplicably left out mental health patients. We are ending that today.

[Mr Slaughter]

Last week, I hosted a reception in Parliament to celebrate the outstanding work of the West London Centre for Counselling and its tireless support for my constituents with mental health issues, and I thank my hon. Friends the Members for Liverpool, Wavertree (Luciana Berger) and for Copeland (Mr Reed) for attending. Organisations such as the centre are, in the words of Mind, “straining at the seams” because demand so far outstrips resources. Why does not this Minister take responsibility for being in government and do something about mental health being a Cinderella service?

[Norman Lamb]

That is precisely what I am seeking to do, but we have to address what I have often described as an institutional bias against mental health in the NHS. For example, when the previous Labour Government introduced a maximum waiting time of 18 weeks, inexplicably, they left out mental health again. What possible justification can there be for that? We are ending that and ensuring that when commissioners determine where funding goes they will have to take into account waiting time standards in mental health for the first time.

[Dr Sarah Wollaston (Totnes) (Con)]

I am proud to be a patron of Cool Recovery, a mental health charity in my constituency that provides vital support and information for sufferers and their families. Will the Minister confirm that as we welcome Simon Stevens to his new role, he will not only discuss how parity of esteem is reflected in the overall funding share but make sure that some of that funding can go to the charities that provide that parity?

[Norman Lamb]

I will absolutely discuss parity of esteem with Simon Stevens when I meet him very soon and I will ensure that the case for third sector organisations is taken into account, as they play an incredibly important role. I was delighted, incidentally, to be down in the south-west at the signing of the crisis care concordat to ensure that people who are suffering a mental health crisis are treated in the same way as people who are suffering a physical health crisis.

[Paul Burstow (Sutton and Cheam) (LD)]

The Minister is absolutely right to talk about the institutional bias and that is why it is absolutely right to introduce choice today and to set access standards for mental health for the first time. Will he go one step further and do something else that the previous Labour Government did not do by introducing the standards that the National Institute for Health and Care Excellence sets for mental health and ensuring that they are must-dos as well?

[Norman Lamb]

I very much share my right hon. Friend’s frustration that when a medicine is determined by the National Institute for Care Excellence as an evidence-based intervention, the system has to allow it, but when NICE determines that a procedure should be followed, it is discretionary. We must address that to ensure that we use the money in the most effective, evidence-based way.

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

Will the Minister have a discussion with his colleagues in the Department for Work and Pensions and the Department for Business, Innovation and Skills to see what more can be done to help patients with mental health issues to get into the workplace and find employment?

[Norman Lamb]

My hon. Friend raises an incredibly important point. One thing that I am very proud of is that under this Government 80,000 more people a year are getting access to psychological therapies through the improving access to psychological therapies programme—something we that should be very proud of. We have also done some joint work with the Department for Work and Pensions on how we can link up IAPT much more effectively with Jobcentre Plus to get people back to work, rather than paying them benefits.

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

The Minister was right to point out that from today people who use mental health services are supposed to be able to choose where they get their treatment. However, the payment mechanisms still are not in place and the guidance has not been issued. Is it not the case that the only choice for many teenagers is whether to be treated on an adult ward or travel hours to the nearest bed? The Health and Social Care Act 2012 was meant to deliver parity of esteem. The Minister is not a commentator or a bystander. I listened to his answers a moment ago. Can he explain what has gone so wrong and how he intends to fix it?

[Norman Lamb]

I agree that I am not a bystander. That is why I have acted to introduce choice for mental health patients for the first time—something that the Labour Government completely failed to do. Perhaps the hon. Lady could explain to the House why on earth they would leave out mental health patients from the legal right of choice. It is extraordinary. This Government are taking decisive action to ensure that there is real parity—real equality—in the way that mental health patients are treated.

[Stephen McPartland (Stevenage) (Con)]

9. What recent steps he has taken to improve maternity care.

[Henry Smith (Crawley) (Con)]

11. What recent steps he has taken to improve maternity care.

[John Howell (Henley) (Con)]

14. What recent steps he has taken to improve maternity care.

[The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)]

We have made improving maternity services so that women have a named midwife responsible for ensuring personalised maternity care the key objective in our mandate to NHS England. Since May 2010 the number of full-time equivalent midwives increased by more than 1,500, and over the past two years I have set up a £35 million capital investment fund, which has already seen improvements to more than 100 maternity units.

[Stephen McPartland]

The Diamond Jubilee maternity unit at the Lister hospital in Stevenage is doing an amazing job for young mums, and the neonatal unit has just won a national award. I will be visiting the staff on Friday to thank them for their hard work. Would the Minister like to record his support for the staff who do such a great job?

[Dr Poulter]

I would be happy to do so. I am aware of the positive difference that the Diamond Jubilee unit has made to local maternity services. My hon. Friend will be aware that the East and North Hertfordshire NHS Trust and the unit have received £314,000 of this Government’s capital funding to support the hard-working staff on that unit delivering high-quality care to women.

[Henry Smith]

In 2001 the then Labour Government closed the maternity unit at Crawley hospital, despite a growing birth rate since then in my constituency. The local clinical commissioning group proposes to reintroduce a midwife-led maternity unit. Will my hon. Friend meet me and the CCG to discuss those plans further?

[Dr Poulter]

I would be delighted to do so. As my hon. Friend knows, I have a particular knowledge of his local hospital trust. It was a very short-sighted decision by the previous Government to downgrade and effectively close Crawley hospital, given the demographic pressures there. There is a good case for a midwifery-led maternity unit. Under this Government we are seeing the numbers of those increase. I would be happy to meet him to discuss these matters further.

[John Howell]

I welcome the increased number of midwives, but what are the Government doing to support women who suffer from post-natal depression?

[Dr Poulter]

My hon. Friend makes an important point. We were talking earlier about improving parity of esteem between mental and physical health. When we came to power, only 50% of maternity units had specialist perinatal mental health support, and we will make sure, through the mandate to Health Education England, that by 2017 all maternity units have specialist perinatal mental health support. That is something that this Government will be very proud of.

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

Last December the UK national screening committee advised against offering all pregnant women a routine test for group B streptococcus. The Minister will recall that I asked about this matter in Health questions last time. The issue is not to screen in all cases, but to ensure that the enriched culture medium test is available where clinicians deem it appropriate. Will the Minister look at how that test can be made available whenever it is clinically necessary?

[Dr Poulter]

That is a good point. On screening, we have to listen to the advice of the national screening committee, as I am sure hon. Members on both sides of the House would agree, but on the enriched culture medium test, I have had further meetings with Group B Strep Support and with the former editor of the obstetricians and gynaecologists journal, the BJOG. On the back of that meeting I have written to the Royal College of Obstetricians and Gynaecologists to ask it to look at the clinical evidence on that test, and it will take the matter forward.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

I thought that answers to questions were improving after 12 noon, but the last answer on post-natal depression was not as good as I expected. We have a campaign on post-natal depression, which is the biggest killer of healthy young women through suicide. The Minister is being complacent. Early diagnosis and good GPs are essential. What is he really doing about that?

[Dr Poulter]

The hon. Gentleman is absolutely right. I thought it was disgraceful, when we came to power and inherited the legacy of the previous Government on post-natal depression, that only 50% of maternity units had perinatal mental health support. That was not good enough, and that is why I have ensured that in the mandate to Health Education England, and working with NHS commissioners, all maternity units will have specialist perinatal support by 2017. There is more training going in for the work of the Royal College of General Practitioners on mental health support for GPs in helping women, and we are now increasing the number of health visitors by almost 2,000, and health visitors do a fantastic job in providing perinatal mental health support to so many women.

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

17. Following the closure of the special care baby unit at Fairfield general hospital in my constituency, new mothers and families are now faced with travelling to either Bolton or north Manchester. In the light of the recent report from the charity Bliss on the costs of having a premature or sick baby, will my hon. Friend ensure that appropriate support is in place for Bury families who are struggling with a baby who needs specialist hospital care?

[Dr Poulter]

My hon. Friend makes an important point, and he has been a strong advocate for local mothers and families in his constituency. But he will also be aware that there was a review of maternity services in the Greater Manchester area that recognised that, by changing the way in which services were delivered, there could be improvements and 25 young children’s and babies’ lives could be saved each year. There has been a review, and that review is saving lives, so I commend any similar service reconfiguration that delivers similar benefits to women and patients.

[Nick Smith (Blaenau Gwent) (Lab)]

13. What steps the Government is taking to reduce the amount of sugar in children’s diet.

[The Parliamentary Under-Secretary of State for Health (Jane Ellison)]

The Government’s focus is on reducing calories overall rather than focusing solely on sugar, and informing consumers so that they eat fewer calories, including sugar, is key to the responsibility deal. We have 36 companies cutting calories under the calorie reduction pledge, which is often through the reformulation of popular products, and our Change4Life campaign informs families how they can improve their diet and health. Some of the early evidence from Public Health England’s January smart swaps campaign is really encouraging.

[Nick Smith]

Blimey, what a cop-out! With a third of children under 18 either obese or overweight, what action has been agreed with the Secretary of State for Education to stop the consumption of sugary drinks in schools?

[Jane Ellison]

My understanding is that the consumption of sugary drinks is banned in schools. I have discussed that with the Department for Education, but I am happy to take up the point.

I must correct the hon. Gentleman on his point about childhood obesity. Let us give credit where it is due. Childhood obesity levels are for the first time levelling off and we are beginning to see some progress, although there is much further to go. We have a straightforward disagreement. The Government believe we need to give people information. The Opposition believe in a top-down, state-driven approach.

[Mr Ben Bradshaw (Exeter) (Lab)]

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

[The Secretary of State for Health (Mr Jeremy Hunt)]

Last week, I launched a campaign to save up to 6,000 lives by halving avoidable harm and avoidable death in the NHS. I am inviting all NHS trusts to sign up to safety, by putting together their own plans, with support provided by NHS England, Monitor, the NHS Trust Development Authority and the NHS Litigation Authority. Learning from hospitals with the best safety records anywhere in the world, such as Virginia Mason in Seattle and Salford Royal here in England, we have a once-in-a-generation opportunity to put behind us the tragedy of Mid Staffs and make the NHS the safest health care system in the world.

[Mr Bradshaw]

People in Exeter and Devon with mental illness are now waiting more than two years for treatment. This is totally unacceptable and will, if it has not already, lead to the loss of lives. The Minister has repeated today his criticism of NHS England’s decision to cut funding for mental health, but as the shadow Minister reminded him, he is not a passive observer; he is the Minister responsible. What will he do about it?

[Mr Hunt]

The reason we are not passive observers is that we have made some substantial improvements in mental health provision since coming to office, including legislating for parity of esteem, which is precisely why the right hon. Gentleman feels able to ask that question. There are 55,000 more people every year getting a dementia diagnosis and nearly 80,000 people going on to psychological therapies. Lots has been done, but there is lots more to do, and we will continue to do everything we need to until we get that parity of esteem.

[Mr David Heath (Somerton and Frome) (LD)]

T3. The whole House will have been appalled by evidence from the Winterbourne View case and others of inappropriate methods of controlling patients. Will the Minister now take action to ensure that restraint is only ever used as a last resort, whether in care homes, hospitals or mental health units?

[The Minister of State, Department of Health (Norman Lamb)]

The evidence from Winterbourne View was utterly shocking. The Mind survey subsequently revealed that restraint is used far too much across the health system. We committed to reviewing the guidance, and I am pleased to say that we will publish new guidance later this week to address the very point my hon. Friend raises.

[Liz Kendall (Leicester West) (Lab)]

The Government’s damaging reorganisation has weakened the grip on NHS finances. Figures slipped out the day after the Budget show that NHS hospitals are in deficit for the first time in eight years, hospital trust deficits are three times higher than they were a year ago and twice as many foundation trusts are in the red. Will the Secretary of State now commit to publishing the final year-end figures for all hospitals in one annual account so that the House can hold him to account for his mismanagement of public money?

[Mr Jeremy Hunt]

It is financially challenging for the NHS, but we will not lose control of NHS finances, as happened under Patricia Hewitt. I remind the hon. Lady that for nine of Labour’s 13 years in office the NHS trusts sector as a whole was in deficit. We are getting a grip of those problems. We will publish the figures she wants, but the reason it has been particularly challenging this year is that hospitals have responded to the Francis report and hired 3,500 additional nurses to ensure that we have proper care on our wards.

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

T5. What progress is being made on ensuring that selective dorsal rhizotomy is available to children with cerebral palsy who need that life-changing operation?

[Norman Lamb]

I remember well the meeting I had with my hon. Friend, other hon. Members and some families, and indeed I remember the testimonies those families gave. I will write to NHS England about his question and report back to him on the progress it is making.

[Grahame M. Morris (Easington) (Lab)]

T2. How does the Minister respond to a warning from the UK’s top cancer doctors that the planned closure of 18 specialist centres for treating the victims of brain cancer is putting patients’ lives at risk by delaying treatment? It is clearly at odds with the Prime Minister’s assurance about improving access. Those top brain surgeons say that it is appalling. Will the Secretary of State stop it and engage in a proper and meaningful review?

[Mr Jeremy Hunt]

The review the hon. Gentleman refers to is a consultation by NHS England to ensure that we commission specialist services better. There has been a 23% increase in the number of cancer sufferers getting treatment under this Government. We want to improve on that record even more, which means having sensible discussions on how to improve specialised commissioning, and that is what is going on.

[Bob Blackman (Harrow East) (Con)]

T6. In 2010 the Chancellor specifically set aside funding for the rebuilding of the Royal National Orthopaedic hospital in my constituency. The site has planning permission. Will my hon. Friend update the House on progress so that we see work on the ground before 2015?

[The Parliamentary Under-Secretary of State for Health (Jane Ellison)]

My hon. Friend will be interested to know that the NHS Trust Development Authority is reviewing the trust’s business case and is working with the trust to ensure that its plans are affordable. I know that my right hon. Friend the Secretary of State has visited the hospital and is a great champion of it. I will ask the TDA to keep my hon. Friend fully up to speed.

[Lucy Powell (Manchester Central) (Lab/Co-op)]

T4. I have a question for the Secretary of State on performance-related pay. He will know that a year ago part of the Greater Manchester ambulance service was privatised to Arriva. For the first nine months of its contract, every single month it missed its targets for getting patients to hospital on time and for collecting patients within a scheduled time frame, yet over the same period it was awarded £400,000 in performance-related pay. Is that good use of public money?

[The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)]

The hon. Lady will be aware, of course, that it was the right hon. Member for Leigh (Andy Burnham) who had the most to do with introducing the private sector and agreeing ambulance service contracts in the Greater Manchester area. I think that Opposition Members need to remember their record on private sector involvement. If she has concerns, we will of course look into them.

[Mr Speaker]

The Minister’s answers are too long. He really has to get that into his head. I do not know how hard I have to try. I try to help the hon. Gentleman, but he is not very good at helping himself.

[David Tredinnick (Bosworth) (Con)]

In his travels to the People’s Republic of China, what has my right hon. Friend the Secretary of State learned about the integration of western medicine with traditional Chinese medicine?

[Mr Jeremy Hunt]

What I have learned is that the most important thing is to follow the scientific evidence. Where there is good evidence for the impact of Chinese medicine, we should look at that, but where there is not, we should not spend NHS money on it.

[Mr Dave Watts (St Helens North) (Lab)]

T7. How is the Government’s pledge to get hospitals operating on a seven-day basis going? Many GP commissioners are refusing to provide the funding for hospitals to provide that service.

[Dr Poulter]

As the hon. Gentleman will be aware, we are in negotiations with the British Medical Association and other health care unions about the future shape of the NHS consultant contract and junior doctors contract. We are determined to have a contract that remains fit for purpose in future and to reform the contract that we inherited from the previous Government, which was not fit for purpose. We will continue to work with the BMA to make sure that we protect the interests of patients and deliver better care.

[Charlotte Leslie (Bristol North West) (Con)]

I very much welcome the taskforce reviewing the effects of the working time directive; as my hon. Friend knows, I have campaigned long on the issue. Given the severity of the evidence, which shows that more than a quarter of a million hours of surgical time are lost per month because of the directive, will my hon. Friend assure me that he will not only listen to, but act bravely and robustly on, any recommendations to rid the NHS of this very dangerous directive?

[Dr Poulter]

My hon. Friend has campaigned with great vigour on the issue, and rightly so. The European working time directive, to which the previous Government signed up in a headlong and reckless way, has damaged continuity of patient care and the training of the consultants of tomorrow. That is why we set up the independent review. We look forward to its recommendations and we will make sure that we respond to those appropriately in due course.

[Andy McDonald (Middlesbrough) (Lab)]

T8. The Health Secretary talks about Welsh patients flocking to the English NHS, but is he aware that the number of English patients going to Welsh hospitals has increased by more than 10% since 2010? Does that mean that the English NHS is in crisis?

[Mr Jeremy Hunt]

Unfortunately, a third of Welsh patients do not get things such as urgent scans within six weeks, compared with just 1% of patients in England. The Welsh NHS is struggling badly. I urge Labour, if it is to be consistent, to work closely with its colleagues in Cardiff to give a better standard of care to people in Wales, because they deserve a good NHS as well.

[Mr Douglas Carswell (Clacton) (Con)]

There is due to be a consultation on the future of maternity units at Clacton and Harwich hospitals. Last week, however, the management team at the already troubled Colchester trust decided to shut the units anyway. That has caused great anger and concern locally. Will my hon. Friend write to the board to ensure that it does not prejudice the outcome of the consultation and that decisions are made on the basis of fact, not muddled management?

[Dr Poulter]

I will certainly be happy to look into the issue. My hon. Friend will be aware that the closure decisions were made on clinical safety grounds, for the safety of women. It is a temporary issue. One of the outstanding problems in my hon. Friend’s part of the world and elsewhere when we came into government was a historical shortage of midwives. That is why we are investing in more midwives. There are already 1,500 more in the NHS and I believe that six more will be recruited to the local NHS in his area.

[David Wright (Telford) (Lab)]

T9. Mental health services in Telford are under review and the Castle Lodge facility has been closed for a considerable time. It has been heavily used by people in the community who do not have to be admitted into Shrewsbury. Will the Minister confirm that if local people want to retain Castle Lodge, as I believe they do, it will be retained?

[Norman Lamb]

I understand the issue that the hon. Gentleman is raising. If he wants to discuss it further with me, I shall be happy to meet him. Clearly, local opinion and the making of decisions locally are what our reforms are all about.

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

Rural surgeries such as Ambleside, Coniston and Hawkshead in my constituency are under threat because of a combination of historical funding difficulties and the removal of the minimum practice income guarantee. Will the Minister agree to look into the setting up of a strategic small surgeries fund, so that rural surgeries have a confident future?

[Dr Poulter]

My hon. Friend and I have discussed the issue before. As he is aware, price premiums are already built into the funding formula to support rural practices. NHS England has already identified about 100 practices that may need additional and special support. Commissioners will be looking to provide that and work with those rural practices and others that may have challenges.

[Jenny Chapman (Darlington) (Lab)]

Who is responsible for the disgraceful increase in the numbers of people across the country waiting hours in pain and indignity for an ambulance?

[Mr Jeremy Hunt]

We have 1.2 million more people going to A and Es every year. The ambulance service has, on the whole, been doing a good job, but there have been areas where there are problems. We need to change our attitude towards the capabilities of ambulance services, particularly the ability of paramedics to treat people on the spot, and we are driving through that change.

[Mr Stewart Jackson (Peterborough) (Con)]

In the absence of a definitive policy decision on the fortification of basic foodstuffs with folic acid, what steps are Ministers taking to encourage women of child-bearing age to take folic acid to reduce the incidence of neural tube defects such as spina bifida and hydrocephalus?

[Jane Ellison]

My hon. Friend is right to highlight this important nutritional need for women who are planning to get pregnant or are pregnant. He and I are meeting soon to discuss fortification as a policy area. I urge all GPs and health services to take every opportunity to highlight to women this important nutritional requirement.

[Jim Shannon (Strangford) (DUP)]

Last week at Queen’s university in Belfast, a significant breakthrough for ovarian and breast cancer means that women who might otherwise opt for an oophorectomy can still have children. Does the Minister agree that money spent on cancer research can increase quality of life and life expectancy? What help will Government give to cancer research at Queen’s university in Belfast?

[Jane Ellison]

The hon. Gentleman is right that research is vital, and a great deal of it is going on in this area. I recently met the all-party group on ovarian cancer to update it on that research, and I will be happy to update him after questions. He has mentioned before how research applies across our United Kingdom. As he knows, whatever we learn through research in England is always shared across the different countries.

[Dr Julian Huppert (Cambridge) (LD)]

Health care in Cambridgeshire has been underfunded for years, and mental health care particularly so. This is getting worse as a result of the private finance initiative contracts that were signed, the differential deflator for mental health and physical health, and the simple fact that mental health demand is up. Will the Secretary of State meet me and the mental health trust to work out a way out of these problems that will not harm patients?

[Norman Lamb]

I would be very happy to meet my hon. Friend if that is acceptable to him.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

The Francis report highlighted the importance of ward sisters in properly managing wards, so why has the number of band 8 nurses in the north-east fallen by 87 since the general election?

[Mr Jeremy Hunt]

The number of nurses overall is up by 1,600 since the general election. Let me be absolutely clear that I do not believe in a system where the Secretary of State is micro-managing precisely how many nurses there are in every ward in every hospital in the country. Because we have protected funding that Labour wanted to cut, there are more doctors and more nurses than there were when it was in government.

[Mr Philip Hollobone (Kettering) (Con)]

Ten babies a day are born at Kettering general hospital. May I welcome the recent award of £400,000 of NHS modernisation funds to the hospital’s 33-bed maternity unit and urge the Minister to encourage NHS England to prioritise areas of high population growth such as Kettering for future funding?

[Dr Poulter]

I know that the staff at my hon. Friend’s maternity unit work tremendously hard to look after patients, and it is important that we gave them the right facilities in order to do so. I am delighted that, like over 100 other birthing units in the country, they have received money to make sure that women are treated with greater dignity and that the quality of care is as high as it can be.

[Bill Esterson (Sefton Central) (Lab)]

I cannot speak highly enough of the staff at Southport hospital who cared for me when I spent three days there as a patient last month. They told me that GPs now routinely send older patients straight to A and E because their funding has been cut and that community services are no longer in place to support people in their own homes, which is all leading to a crisis at A and E. Is not the sad reality that what is happening at Southport is being repeated up and down the country as a result of the Government’s disastrous reorganisation and cuts to front-line services?

[Mr Jeremy Hunt]

I am very pleased about the excellent treatment that the hon. Gentleman received. The problems that the nurses talked about are exactly why, from today, we are reintroducing named GPs for everyone aged 75 or over to bring back the kind of personal care and personal responsibility for patients that I am afraid was so sadly abolished previously.

[Several hon. Members]

rose—

[Mr Speaker]

Order. As usual, demand exceeds supply.

Royal Mail

Tuesday 1st April 2014 Commons Chamber

12:34

[Mr Chuka Umunna (Streatham) (Lab)]

(Urgent Question): To ask the Secretary of State for Business, Innovation and Skills to make a statement on the price at which Royal Mail was privatised last year, in the light of the National Audit Office’s report, out today.

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

The National Audit Office has today published its report on the Royal Mail sale of shares. The report confirms that we achieved our primary objective of securing a sale of shares, allowing Royal Mail to access the private capital it needs to invest and thrive. As a result the taxpayer now faces reduced risk of having to provide financial support to the universal postal service.

It was right that we took a cautious and measured approach to the sale. That approach was taken in the light of our primary objective, and reflects the considerable risks we faced due to industrial relations and challenging market conditions.

The price range for the shares was set following a comprehensive programme of engagement with over 500 potential investors and was benchmarked against valuations of comparable postal companies. I am clear that this was the correct approach to secure a successful transaction.

A more aggressive approach to pricing would have introduced significantly greater risk. The advice that we received in this respect was unambiguous. There was no confidence that a sufficient number of buyers would offer a significantly higher price. A failed transaction and the retention of Royal Mail in public ownership would have been a very poor outcome for the taxpayer, as the NAO report confirms.

Achieving taxpayer value is about securing both short-term and long-term benefits. In the short term, we have delivered a successful transaction, which raised £2 billion for the Exchequer, enabled over 690,000 members of the public to buy Royal Mail shares and put in place the largest employee share scheme of any privatisation in nearly 30 years. In the long term, we have reduced the ongoing risks to the taxpayer by putting Royal Mail in a position where it can operate commercially and finance its own funds if needed. In doing so, as the NAO confirms, we have achieved our key objectives.

The sale of shares in Royal Mail has delivered on our commitment to protect the universal postal service and safeguard vital services for the taxpayer.

[Mr Umunna]

Mr Speaker, you know it is April fool’s day when a report is published by the National Audit Office saying that

“the Department…could have achieved better value for the taxpayer”

but Ministers go out to the media, and come to this House, to declare their privatisation a success. They must think we are all fools. What planet are they living on?

There are no two ways about this: the report delivers a damning verdict on the Government’s botched privatisation, which has left the taxpayer disgracefully short-changed to the tune of hundreds of millions of pounds. Let us be clear: the issue was not whether they would be able to sell all the shares—one can usually flog off something for a knock-down price—but whether, in so doing, they secured best value for the taxpayer. They have sought to hide behind the advice they received from the bankers, who made millions out of the deal. Will the Secretary of State confirm that those advisers acted within “inflexible” constraints set by Ministers to achieve a sale as soon as possible in this Parliament? Had they waited for the markets to settle and for further years’ profits to be delivered, they could have achieved a better price. Secondly, is it not the case that having judged that Royal Mail’s profits were doomed to decline, far from making an objective judgment, they simply refused to entertain the notion that it could succeed in public hands, although the financial results for the last financial year showed a trebling of profits?

Finally, we were promised that the Secretary of State would secure a long-term and supportive shareholder base, but the opposite has turned out to be true. Will he confirm that the 17 supposed long-term investors he prioritised had sold almost half the shares allocated to them within weeks and that hedge funds now make up a large number of the shareholder list?

The Secretary of State dismissed claims that a cherished national institution was being sold off on the cheap as “froth”. The truth is that this has been a first-class disaster for the taxpayer and those he once referred to as “spivs and gamblers” are laughing all the way to the bank. The very least he can do today is apologise.

[Vince Cable]

The last thing I intend to do is apologise. What I do intend to do is refer to what the report actually said, as opposed to the spinning and froth that is being generated around it. Let me read again the report’s initial conclusion on value for money:

“By floating Royal Mail on the Stock Exchange the Department achieved its key objectives of introducing private capital and commercial disciplines. Given Royal Mail’s prospects and prudent initial capital structure it is now less likely that the taxpayer will have to provide public support for the universal postal service.”

That is what it actually said.

Let me address the criticisms, if that is what they were. The first was that the Department was cautious, but I would have thought that caution in this context had a lot to commend it. The reason the Department was cautious was the very real risk that the floatation could fail. The choice we faced was: had the floatation failed, it would have remained in public ownership and, despite the hon. Gentleman’s preference for keeping it in public ownership, the valuation placed on it continuing in public ownership was about £1 billion. That was not disputed by the National Audit Office. The alternative—the floatation which happened—resulted in a value for the taxpayer of £2 billion in cash and £1.5 billion in continued value of the retained sale. There was a choice between the £3.5 billion that resulted from the privatisation and the £1 billion had it failed, so it is absolutely right and sensible that we were cautious.

The hon. Gentleman made the point that there was a lack of flexibility in the initial public offering system. Indeed, the National Audit Office makes that point: there was a lack of flexibility. The question, therefore, is: were there any alternatives? Could this have been done in a different way? The Government could have eliminated the retail investors and had more flexibility over price at the time of sale, but as it happens one of the successes of the privatisation is the fact that 670,000 investors now have shares.

The other way of selling Royal Mail would have been through a trade sale, and of course we looked at that as an option. One of the reasons we did not pursue it was that we looked at the history of privatisation under the Labour Government. and there was one very good example of what happens when a trade sale is pursued: I refer the hon. Gentleman to the NAO report on the privatisation of QinetiQ. What happens with the supposed flexibility of a trade sale—[Interruption.]

[Mr Speaker]

Order. Mr Blenkinsop, before Christmas I specifically advised you to take up yoga or some other similarly therapeutic and calming activity. Moreover, your brother very wisely purchased you a book on the subject. It is evident to me that you have not yet read it.

[Vince Cable]

What happened in that trade sale was that a company with an equity value at sale of £125 million was eventually valued at £1.3 billion—10 times what the Labour Government sold it for. That is the alternative model with which we were confronted.

Let me address specifically the issue of the long-term institutional investors. The hon. Gentleman is absolutely right to say that one of the key objectives, to which I attach particular importance, was ensuring that the long-term institutional investor base was strong, and indeed it is. When the hon. Gentleman looks at the breakdown of share ownership, he will see that between two thirds and 70% of the shares held as a result of the IPO are held by those long-term institutional investors. When we put that with the Government’s retained shares and those of the workers, we see a very large majority of investors who are committed to the long-term strength of the company. One does have to ask the question: why did some of the long-term institutional investors sell? Some bought, some sold. The reason they sold was that they considered the share price after sale was overvalued. It was an obvious market reaction, and that was the consequence. None the less, having a long-term investor base remains a basic objective, and we have achieved that fundamental objective.

Let me turn to the issue of the valuation, to which so much importance is attached. It should be blindingly obvious, although I do not think it is to the Opposition, that trying to sell 600 million shares at one go is a fundamentally different proposition from the 2 million to 3 million sold in daily trading, which explains why the price has varied since the flotation.

I have said and I continue to say that there is a great deal of froth in the valuation of this and other shares—that is how equity markets operate—and this particular share is surrounded by a great deal of volatility. There are two main reasons for that. The first is a great deal of uncertainty over industrial relations in a company that has had a very troubled industrial relations history. It is worth pointing out—I do not know whether the hon. Gentleman noticed—that the mere mention last week of a Unite strike took the stock price down by 20p. That was the context in which we had to make the sale. The second key point—[Interruption.] I am trying to respond to the hon. Gentleman’s points. [Interruption.]

[Mr Speaker]

Order. The Secretary of State must be heard. This is very important. [Interruption.] Well, people must make their own assessment on both sides of the House—such is the nature of political debate—but the Secretary of State must be heard.

[Vince Cable]

Looking at the volatility of shares, this company is exposed to a considerable level of competition, as a result of actions of regulators beyond the Government’s control. The estimate has been made—I think that I cited this to the Business, Innovation and Skills Committee —that a 1% fall in sales is the equivalent of a 17% fall in profits for this company. We hope, and we have every reason to be optimistic, that with the very good management of the company, the co-operation of the work force and the investment that privatisation now makes possible we shall have a positive outcome in terms of competitiveness, but there is a great deal of uncertainty, which lies behind the volatility of the shares.

We in the Government have been criticised, not least by the Select Committee, over the past few months because we failed to take account of the estimates made by the banks that were bidding for business. One section of the NAO report—the hon. Gentleman has clearly not read it—completely vindicates the Government’s decision to ignore those estimates as completely worthless. They were touting for business, the estimates had no value whatever and we were quite correct to ignore them. Much of the propaganda that he and his colleagues have developed over the past few years has proved to be completely beside the point.

Let me make a final point on valuation. The hon. Gentleman gave us a lecture on the dangers of undervaluing public assets, but let me just quote to him his Government’s experience of the difficult art of valuing assets. The former Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), sold large quantities of gold at between $250 and $300 an ounce, but the price subsequently increased to more than $1,500—five times the original value. That is the nature of the highly volatile markets in which we have to operate.

The NAO report reached the important conclusion that we had successfully achieved our objectives. Under this Government, we have taken a loss-making public enterprise and turned it into a highly successful, respected public company.

[Several hon. Members]

rose—

[Mr Speaker]

Order. There is much interest in this subject that I am keen to accommodate, but some pithiness from Back and Front Benchers alike would be appreciated. [Interruption.] Order. The Secretary of State was sorely tested by a lot of very noisy heckling. It is always a pleasure to listen to the right hon. Gentleman, and I know that he will take it in the right spirit if I gently point out to him that his response to the shadow Secretary of State was four times longer than his original statement. A degree of economy would help us all, and I feel certain that this exercise will be led by the illustrious figure of Mr Brian Binley.

[Mr Brian Binley (Northampton South) (Con)]

The evidence that the Select Committee heard on this issue showed that the prime movers in the bid, as contracted by the Department, had a range of up to £3.30. They confirmed to the Secretary of the State that no bidders would go above that level. That proved to be totally untrue. Their colleagues who helped build the book made a killing at the expense of the taxpayer. Can we be assured that such a debacle will not happen again, that the system will be changed, and that there will be a fairer deal for the taxpayer than we have got from this unethical and, quite frankly, immoral procedure?

[Vince Cable]

I think that the hon. Gentleman misunderstands the basis on which the valuation was made. It was based on a sampling of 5,000 potential buyers among institutional investors and on a comparison with similar privatisations, such as that of the Belgian post office. The process was rigorous and it had nothing whatever to do with the undue influence he describes.

[Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)]

The fact remains that the key determinants of the pricing were a select group of banks, acting as advisers to the Government or in the book-building process. From the perspective of the taxpayer, the sight of banks advising the Government on a price and then buying shares at that price and selling them at a profit or, in some cases, subsequently buying them at higher prices absolutely stinks. Will the Secretary of State assure us that, in any future privatisation, no bank that is involved in advising the Government on the price level will be allowed to buy shares?

[Vince Cable]

The Government’s advisers were from Lazard, which had no financial incentive whatever in the sale.

[Lorely Burt (Solihull) (LD)]

Does my right hon. Friend agree that, despite the great hindsight shown by the Labour party, the decision was taken on the basis of the risks that we faced at the time? We should not have taken risks at any cost. If we had, the Labour party would be criticising us for a failed privatisation instead of a successful one.

[Vince Cable]

My hon. Friend is absolutely right. I strongly suggest that the Opposition Members who are getting excited read the NAO report carefully, because it spells out what would have been the costs to the taxpayer had the IPO failed.

[Mr Dennis Skinner (Bolsover) (Lab)]

Is the Secretary of State aware that what he has said will reverberate every single day until the general election, including in Twickenham, as those postmen and women who have been slagged off by him from the Dispatch Box today talk on every single doorstep? What they all want to know is that not one single penny from those priority bidders will finish up in the pockets of the Tory party or the Liberal party.

[Vince Cable]

Most of the Communication Workers Union members I meet acknowledge the considerable value of the shareholdings that they now have—they own the company.

[Sir Tony Baldry (Banbury) (Con)]

Not even Michael Heseltine at the zenith of his ministerial powers and capacity felt that he would be able successfully to privatise Royal Mail. Are not ministerial colleagues much to be congratulated on having privatised Royal Mail so successfully? Does my right hon. Friend agree that it does not lie in the mouths of those who left this country with an eye-watering public deficit to talk about concern for the taxpayer’s interests?

[Vince Cable]

The right hon. Gentleman’s initial remarks are apposite. Successive Governments have tried to privatise the Royal Mail for a long period. I would understand it if the Opposition had taken a principled stand on public ownership, but they have not. Indeed, I inherited a failed privatisation from the Labour Government and we made a success of it.

[Lyn Brown (West Ham) (Lab)]

We now know that the Royal Mail trebled its profits while in public ownership. Does that not undermine the Government’s case for flogging it off in the first place?

[Vince Cable]

It does not at all. The fact that the Royal Mail was improving its commercial performance is very good news, but it was over one year and it had to be sustained. The only way in which its profitability could be maintained was through large-scale investment, and the only way in which it could entertain making large-scale investment was by using capital markets under private ownership.

[Stephen McPartland (Stevenage) (Con)]

Does the Secretary of State agree that by providing access to capital, rewarding workers with 10% of the shares for free and maintaining the universal service obligation, we are providing long-term value for the taxpayer?

[Vince Cable]

Yes, I do. We need to go back to the fundamental reason why not just this Government but the Labour Government accepted that the company had to go into private ownership: it was about mobilising a large amount of investment without it falling on the public accounts. That is what we have achieved.

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

Seventy-seven per cent. of Scottish people opposed the Royal Mail privatisation and 78% of Scottish MPs voted against it, but Scotland got it. After this travesty, what should the Scottish people do this year to ensure that we get the postal services that we want and require?

[Vince Cable]

I am aware that the Scottish National party has said that it will renationalise the Scottish bits of Royal Mail if it gets independence. It has not explained how it will pay for that, nor has it explained how it will pay for the extra cost of the universal service obligation in an independent Scotland.

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

Did my right hon. Friend receive any representations from the advisers on the IPO price in relation to the damaging industrial action that was proposed by the trade unions to coincide with the privatisation?

[Vince Cable]

Certainly, one of the significant factors hanging over the privatisation was the threat of industrial action. There was no point in postponing it, because the industrial action would have been rolled over. It certainly had a depressive effect on the market.

[Mr Ben Bradshaw (Exeter) (Lab)]

Most people who are responsible for such ruinous incompetence at least consider their position. Has he?

[Vince Cable]

Absolutely not. It was a successful operation and the National Audit Office confirms that.

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

Despite the accusations that the Government undervalued the property assets of Royal Mail, will my right hon. Friend confirm that the public prospectus provided a complete picture of their value?

[Vince Cable]

Yes, indeed. That is one of the specific points that was raised by the Business, Innovation and Skills Committee. An independent evaluation of the property assets was carried out and that was disclosed properly in the prospectus.

[Julie Elliott (Sunderland Central) (Lab)]

When the Secretary of State gave evidence to the Business, Innovation and Skills Committee about this issue in October, when I was still a member of the Committee, we questioned him about what we perceived to be an undervaluation. He said that rather than looking at the value a few days after flotation, it would be more realistic to look at it after three or six months. We are now there and it was clearly undervalued. What does he say to the British people about giving away one of our national assets?

[Vince Cable]

I think that what I actually said was between three and six months on the one hand and a year on the other. I have subsequently been criticised by people in the market, who feel that that is too short a term and that two years would be a better perspective.

[Mr Ben Wallace (Wyre and Preston North) (Con)]

May I declare my interest as a former employee of QinetiQ? Will my right hon. Friend reflect on the National Audit Office report on the privatisation of that company under the last Government, which not only concluded that they undervalued QinetiQ, but strongly criticised the management incentive scheme, which rewarded the top 10 managers with £107 million of taxpayers’ money? Does he agree that the best thing the Opposition could do to learn from the privatisation of the Post Office would be to digest that report and come here to apologise?

[Vince Cable]

Indeed, that was an utter scandal and it provided a salutary warning about choosing that approach to privatisation.

[Mr Jim Cunningham (Coventry South) (Lab)]

This Government, like the previous Conservative Government, have form. One need only look at the denationalisation of the energy industry and the railways, which were sold off cheap. What will the Secretary of State do about the increase in the price of stamps and the redundancies at Royal Mail?

[Vince Cable]

The hon. Gentleman will know that the first-class stamp is subject to regulation. He assumes that the commitment to sell off Royal Mail was simply a product of this Government and previous Conservative Governments. He seems to have forgotten that the last Labour Government tried to privatise Royal Mail.

[Paul Burstow (Sutton and Cheam) (LD)]

The NAO report shows that about 167,000 employees of Royal Mail —nearly 100%—have taken up the option of the free shares, which has given them a stake in its future. When a sale delivers nearly £2 billion to the taxpayer, creates nearly 700,000 retail investors and gives so many people a stake in the future of their business, is it not something that we should celebrate?

[Vince Cable]

Our party has always been a strong believer in worker share ownership, and we have taken one of the biggest steps forward in recent years as a result of that process.

[Jeremy Corbyn (Islington North) (Lab)]

The Secretary of State has given an estimate of what profits the public will make from their 30% share ownership in the company. Will he say what the loss of profits would be to the public over the next five years had we done the correct thing and kept Royal Mail in public ownership?

[Vince Cable]

The National Audit Office assessment is the exact opposite and it accepts a valuation of Royal Mail under continued public ownership as being considerably less than the value that has been realised.

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

Does my right hon. Friend agree that almost all initial public offerings are put forward at a discount—indeed, at a larger discount than secondary public offerings because there is no market in the shares until the offering has been made? Does he also agree that because of the large supply that comes on at the point of an IPO the discount has to be considerable, and that the stock price having done so well is a sign of enormous confidence in the economic policies of Her Majesty’s Government?

[Vince Cable]

My hon. Friend has given me a wholly new argument to deploy, and I will do so in future.

[Ann McKechin (Glasgow North) (Lab)]

The Government’s advisers, Goldman Sachs, made more than £12 million profit from the sale of Royal Mail shares —a gross conflict of interest by any standards. Will the Secretary of State rule out completely the payment of any bonuses to those advisers, and put the money back into the public purse?

[Vince Cable]

No bonuses have been paid and there is no pressure on the Government to make a decision on that at the moment.

[Stephen Mosley (City of Chester) (Con)]

We are having this urgent question because the flotation of Royal Mail was more successful than anybody thought possible up front. Almost 100% of employees took up their shares, 700,000 retail investors bought shares, and institutions invested massively. The Government are now a 30% shareholder. What plans do they have for the long-term future of their shareholding?

[Vince Cable]

That is an option we wish to keep open and we have no immediate plans to dispose of it.

[Kevin Brennan (Cardiff West) (Lab)]

Seventy per cent. of the issue was reserved for financial institutions, including hedge funds. This morning on the “Today” programme, the Minister of State, Department for Business, Innovation and Skills (Michael Fallon) repeatedly said, “We got it away”. Would it have been more accurate for him to say, “We gave it away to our hedge fund friends who have given £38 million to the Conservative party”?

[Vince Cable]

That series of connections does not appear very logical. The only significant hedge fund at the time of the offering was TCI, which has since sold most of its shares.

[David Mowat (Warrington South) (Con)]

In his remarks the shadow Secretary of State referred to profiteering by spivs and gamblers. Will the Secretary of State confirm that the rate at which bankers were paid for this offering was approximately half the rate paid for QinetiQ?

[Vince Cable]

That is a helpful point and the NAO report draws attention to the competitive rates paid on fees.

[Pat Glass (North West Durham) (Lab)]

Despite hedge funds and shareholders making a killing from Royal Mail, it seems that is not enough. Yesterday, the price of a first-class stamp went up by more than 6%—more than twice the rate of inflation. Having failed to protect the taxpayer, what will the Government do to protect the consumer, particularly in the monopoly areas of this now private company?

[Vince Cable]

As I said in response to an earlier question, the price of a first-class stamp is regulated and subject to the approval of Postcomm.

[Henry Smith (Crawley) (Con)]

I spoke with Royal Mail employees when I visited their sorting office in Crawley a few months ago, and they were pleased with the free shares they were given. Will my right hon. Friend say how important that is in terms of employees having a stake in their future business?

[Vince Cable]

Yes, and I think that 140,000 employees now have shares valued at about £4,000 each. More important than the face value of the shares is the fact that employees have a direct and personal stake in the success of the company. That is why we did it.

[Huw Irranca-Davies (Ogmore) (Lab)]

Royal Mail has something like 2,000 properties in high-value areas of real estate round the country. It was valued at approximately £1 billion, when one of those sites in London is itself equal to £1 billion in real value. How come it was sold off so cheaply to the detriment of taxpayers and my constituents?

[Vince Cable]

I do not think the hon. Gentleman was listening to one of my earlier replies in which I made it clear that an independent valuation of those sites confirmed the authenticity of what was proposed. It was in the prospectus, and nobody has subsequently challenged that.

[Sir Peter Luff (Mid Worcestershire) (Con)]

I have been listening with amazement to the crocodile tears from Opposition Members. Should we not celebrate the successful privatisation of Royal Mail, which enables it to compete more successfully in a challenging environment and give its employees a much more secure future?

[Vince Cable]

Yes indeed, and as I pointed out there were some extremely embarrassing episodes of asset sales under the previous Government and we have learned from their experience.

[Mr David Hanson (Delyn) (Lab)]

Given that the Secretary of State has confirmed that fewer than 700,000 people now own shares in Royal Mail, at a vastly inflated price, does he at least understand why the other 69 million of us in Britain feel a bit ripped off?

[Vince Cable]

Many of the other 69 million have policies with the leading pension funds and insurance companies, which were the long-term institutional investors in which these companies are now invested, so there is actually a much wider benefit. We have repeatedly made the point that had the flotation failed, the rest of the population would have been up for the losses.

[Bob Blackman (Harrow East) (Con)]

In the past three months in my constituency 25% of mail was delivered by companies other than Royal Mail. Does my right hon. Friend agree that that represents a direct challenge to Royal Mail, and that it is vital that the work force and private investors put in capital so that it can successfully compete against other competitors?

[Vince Cable]

My hon. Friend is right. That is why a do nothing option was not viable, and why the alternative that the shadow Business Secretary promotes of just letting this drift was not sensible. Royal Mail is subject to severe competitive pressure, and ultimately it is subject to regulation at UK and European level—that is not something the Government can stop. All we can do is help equip Royal Mail to face that competition, and that is what we have done by putting it under private ownership with access to capital markets.

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

If the Minister will not accept responsibility and consider his position, will he at least admit what a disaster this has been for the taxpayer, commit himself to a review of what happened, and reassure the House that it will not happen again?

[Vince Cable]

There is no disaster or reason to apologise for what has taken place. There are many positive aspects of this privatisation, which I have already set out. Of course there are lessons to be learned regarding more technical criticisms that the NAO has made about the flexibility of the process, and we will listen to those should such a situation arise again.

[Richard Fuller (Bedford) (Con)]

The comparison of this privatisation with QinetiQ is relevant because, subsequent to that privatisation, many employees in Bedfordshire were thrown out of work while the bosses ran off with 107 million quid. Can my right hon. Friend advise me how much money the bosses of Royal Mail made from this privatisation, and say what has happened to the employees in terms of their security of employment and pensions?

[Vince Cable]

There is no absolute security of employment, but the Communication Workers Union reached what I think in retrospect was regarded as a good deal with Royal Mail. There were enormous jobs losses while Royal Mail was under public ownership.

[Ian Lucas (Wrexham) (Lab)]

Hedge fund chiefs donated £1.32 million to the Conservative party between September and December 2013. Will the Secretary of State report how much each individual donor made from buying Royal Mail shares and subsequently selling them?

[Vince Cable]

I do not think that is a matter for me.

[Mr Philip Hollobone (Kettering) (Con)]

One of the most attractive features of Royal Mail privatisation has been the increase in employee share ownership. I am particularly pleased that free shares were issued to postmen and postwomen, especially the hard-working posties in Kettering. Will the Business Secretary tell the House how much the average stake that Kettering posties have in Royal Mail is now worth?

[Vince Cable]

As I said a few moments ago, the average stake is estimated to be roughly £4,000.

[Emily Thornberry (Islington South and Finsbury) (Lab)]

Never mind what the independent report says, Mount Pleasant was sold off for two acorns and a button. It is a large development site right in the centre of my constituency. An independent viability report says that 50% of the site could be used for affordable social housing, but what are the developers saying? They are saying that they can afford only 12%. Boris has stepped in and will presumably come down in favour of the developers. If the Secretary of State is not prepared to apologise, will he at least condemn these greedy spivs?

[Vince Cable]

I am not sure why I am expected to apologise for a planning decision in the hon. Lady’s constituency that relates to an application made when the enterprise was under public ownership.

[Jim Shannon (Strangford) (DUP)]

Does the Secretary of State agree that the loss of £750 million in one day warrants closer examination or an inquiry? At the time of the sale, he indicated that no jobs would be lost and that jobs would be retained. The suggestion in the press today, and from the unions, is that jobs will be lost. Will the Secretary of State say what discussions he has had with the new owners of Royal Mail and those in a position to indicate whether jobs will be retained?

[Vince Cable]

Because we no longer own Royal Mail—we are a substantial minority shareholder—we do not dictate to it what its manpower policy should be. Many jobs were of course lost under public ownership. As I understand it, the proposal currently being put forward, and which is being contested by Unite, relates primarily to white collar executives rather than members of the Communication Workers Union, but that is a matter for them to resolve.

[Nick Smith (Blaenau Gwent) (Lab)]

Is not Royal Mail’s property portfolio turning into a property speculators’ goldmine?

[Vince Cable]

I think the hon. Gentleman is the third person who has asked the same question. I will give him the same answer: an independent valuation has been made of those assets and it was published in the prospectus.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

Sadly for the British taxpayer, the NAO report is no April fool. The Secretary of State claims that the sale met all the Government’s objectives. Will he now confirm which hedge funds that donate to the Conservative party benefited from the sale? If he cannot confirm that now, will he write to me and do so? Will he confirm whether that was one of the Government’s objectives?

[Vince Cable]

I can assure the hon. Lady that I have no responsibilities for the Conservative party, and I have no wish to have any.

[Nia Griffith (Llanelli) (Lab)]

The Secretary of State seems to be trying to talk about anything except why he allowed the British taxpayer to be ripped off by the underpriced sale of the profitable Royal Mail. Will he give us assurances that his Government will not privatise another national treasure, namely the Land Registry, which makes £100 million of profit per year,?

[Vince Cable]

We are looking at the future of the Land Registry at the moment. It is a respected institution, but it is having to cope with the challenges of digitisation. There are arguments for and against having private partners. We are looking at what is the best outcome for the taxpayer and the consumer.

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

Does the Secretary of State regard this sale as a personal political triumph?

[Vince Cable]

Sorry, I did not hear the hon. Gentleman.

[Mr Speaker]

Order. The Secretary of State did not hear the hon. Gentleman. I did, but perhaps he can put his question again.

[Steve McCabe]

I will try to say it louder, Mr Speaker. I asked if the Secretary of State regarded the sale as a personal political triumph.

[Vince Cable]

Yes, it was certainly a success.

[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

Will the Secretary of State comment on what many of my very commonsensical constituents are saying? They are saying that they used to own Royal Mail and now only a very few people own it. Many of these voters are former Liberal Democrat voters. They are asking: when did the Liberal Democrats become so converted to this cause, and, if Goldman Sachs and others made such a hash of the advice, can they get their money back?

[Vince Cable]

Actually, I made the argument for bringing private capital into Royal Mail about 10 years ago.

[Bill Esterson (Sefton Central) (Lab)]

The Secretary of State was warned beforehand that he had undervalued the sell-off. He did not achieve value for money, and priority investors stand accused of profiteering. The public feel ripped off and will wonder why he is still in his job. How can this possibly be a success?

[Vince Cable]

The hon. Gentleman is just inviting me to repeat the statement that Mr Speaker has already told me was too long, but, yes, it was a success.

[Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)]

I fear a lifetime of yoga would never allow me to perform the contortions the Secretary of State has performed at the Dispatch Box today. I, like my constituents, am very angry that figure 20 on page 48 of the NAO report shows that one priority investor was allocated just shy of 20 million shares and has since sold 97% of them. Another, who was allocated about 18 million shares, has sold 89% of them. Were they given priority because they are mates of the Government?

[Vince Cable]

The hon. Gentleman seems to be one of the few Opposition Members to have actually read the report, and I commend him for that. There were, of course, other companies and priority investors who invested considerably more. Indeed, I think that one has increased its stake by well over 100%.

While I am on my feet—I think this is the last question —may I just correct a slip of the tongue where I referred to the regulation applying to the first class stamp? Obviously, it applies to the second class stamp.

[Mr Speaker]

I am pleased to say to the Secretary of State that the pace quickened and we got through 40 Members in 37 minutes of exclusively Back-Bench time, so I am deeply grateful to the right hon. Gentleman and to colleagues.

Bill Presented

National Parks (Governance)

Presentation and First Reading (Standing Order No. 57)

Tim Farron, supported by Roger Williams, Dr Julian Lewis and John Woodcock, presented a Bill to give powers to the Secretary of State to provide for elections to be held to the governing boards of National Parks on a pilot basis; and for connected purposes.

Bill read the First time; to be read a Second time on Friday 6 June, and to be printed (Bill 194).

Regulation of Gambling Advertising

Tuesday 1st April 2014 Commons Chamber

Motion for leave to bring in a Bill (Standing Order No. 23)

13:16

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

I beg to move,

That leave be given to bring in a Bill to prohibit the advertising of gambling on broadcast media before the watershed; and for connected purposes.

Opportunities to gamble have increased significantly in the United Kingdom in the past decade, both offline and online. Young people today are the first generation to grow up with gambling being seen by society as an acceptable form of entertainment or leisure activity. The proliferation of online gambling in particular, backed through blanket advertising, has brought into the home what was traditionally a male-dominated activity that took place in bookmakers. It is my concern about these changes in attitude to gambling, particularly in the young, that has prompted me to make this proposal that the law be changed to prohibit all forms of gambling adverts from television screens before the traditional watershed at 9 pm.

The number of TV gambling adverts has risen by a staggering 600% since the law was changed in 2007, when the sector was deregulated. These adverts now equate to one in 24 adverts on television. Ofcom research shows that gambling commercials have rocketed from just 234,000 in 2007 to 1.4 million last year. Under-16s are on average exposed to 211 adverts a year. This figure includes children as young as four who have seen and acknowledged the adverts. Bingo, the lottery and football pools have always been able to advertise on television. However, the Gambling Act 2005 made a specific exemption from the more general ban on advertising before the watershed for sports betting, largely because most matches take place before the 9 pm watershed. Most sporting events attract younger viewers and recent events that I have watched have been saturated with adverts for sports betting.

The rising number of young people who report themselves as gambling is stark. A report for the National Lottery Commission by Ipsos MORI in 2013, surveying more than 2,000 11 to 15-year-olds from 100 state-maintained schools, showed that no fewer than 15% of young teenagers had engaged in some form of gambling in the previous week. Some 2% of 11 to 12-year-olds and 1% of those aged 16 to 24 are estimated to have a gambling problem. That equates to approximately 127,500 young people who report themselves as having a gambling problem or addiction in the UK today.

It is not just the young people themselves who pay the price for their addiction; it is often society in general. Problem gambling is connected with a number of negative outcomes for young people. It has been linked to poor mental health, including major depression, attention deficit hyperactivity disorder, and anxiety. It is also linked to crime—to feed the desire to gamble—and often, unfortunately, to substance abuse among the same group of young people. Many adults who present themselves for treatment for a gambling addiction or other problem say that their gambling started during childhood. Those facts make the worrying increase in the number of under-16s who are gambling not just a problem for today, but one that will have serious consequences for years to come.

GamCare, the industry-funded helpline and help centre for those who have a problem with gambling, said recently that 60% of its calls had come from those aged between 18 and 35. The most recent evidence shows that the number of people who are in danger of becoming problem gamblers in this country is nearly 1 million, and that the number of hardcore addicts has doubled to 500,000 in the six years since deregulation. It could not easily have been predicted when the law changed in 2007, following the Gambling Act 2005, that the growth in smartphone technology would cause such an expansion in the gambling industry, but it is now irrefutable that the number of opportunities to gamble have proliferated, and that the law has simply failed to keep up with technology. I believe that there is a direct causal link between the deregulation of gambling, coupled with a massive increase in advertising, and the increase in the number of young people who are gambling today.

I do not wish to prevent any adult from having access to gambling, or from receiving information about it. However, it is an age-related activity, and it seems only right and proper for us to protect young people from being exposed to advertisements for what is for some, albeit a small number, an addictive and harmful activity. Advertisements on television have great power. Young people, and indeed some adults, believe that if something is advertised on TV, it is bound to be harmless. Constant advertisements for gambling condition young people to believe that it is a fun or glamorous activity; indeed, some advertisements are endorsed by celebrities. We must restrict such advertisements to adults, who are better able to weigh the odds, to understand the risks and, crucially, to deal with the consequences of any gambling losses. Tobacco advertisements were banned from television in 1991, and we must act similarly now to ban gambling advertisements before the watershed.

Before proposing the Bill, I spent some time visiting an NHS clinic in Soho that treats those suffering from gambling addiction, and heard at first hand about the impact of advertisements on recovering addicts. I have also been in touch with parents and grandparents throughout my constituency, all of whom have spoken to me of their deep concern about the way in which their experience of watching television with their children and grandchildren is changing. Gambling advertisements now seem to dominate their screens, and children ask them about gambling and about how they can gamble during sports matches. I have also worked with local churches, which have given me fantastic support, and are advocating and praying for a change in the law. I thank them all for the work that they have done.

I recently launched the website BackBerrysBill.tk to give people an opportunity to sponsor the Bill. In just two weeks, it has been signed by nearly 1,000 residents of Rossendale and Darwen, along with other people throughout the country. This is a public lobby asking for change, and I hope that the Government will act. I am delighted to have the support of Members on both sides of the House who are helping to prepare and bring in the Bill, but while I welcome the Government’s announcement that they are working with the Advertising Standards Authority to review the law, I urge them to act now.

Let me end by saying that I hope that, in years to come, we shall look back at gambling advertisements on television before the watershed with the same incredulity with which we now view tobacco advertising, smoking in restaurants, and people not wearing seat belts in cars. We must act now: it is time to stop gambling with the future of our young people.

13:25

[Philip Davies (Shipley) (Con)]

My hon. Friend the Member for Rossendale and Darwen (Jake Berry) is a good man, but in this instance he is badly misguided. During the last Parliament, under a Labour Government, I came to expect an assault on freedom and a triumph for the nanny state. That is what we expect from the Labour party, because that is what it is in business to do. It is always incredibly sad when the march of the nanny state and the illiberal side of the argument are to be observed on the Conservative Benches, and I therefore take no pleasure in having to respond to a move of this kind from our side.

It is interesting that my hon. Friend should have talked about the watershed. The watershed is, of course, becoming an increasingly redundant method of dealing with advertising, because people can play programmes back and view them at any time of day. I am not sure that the watershed is a forward-looking mechanism that my hon. Friend would wish to use even if anyone were to support his line of argument.

The point that my hon. Friend forgot to make when he was talking about children gambling is that it is illegal for anyone under the age of 18 to enter a betting shop or place a bet there, or to place a bet online. If his contention is that people are breaking the law, he should surely introduce a measure to try to ensure that the law as it stands is enforced. That, rather than nanny-state measures such as this, is the way to solve the problem.

Some people have argued that gambling companies are making advertisements in order to groom a future generation of gamblers. Anyone who thinks that any company puts out advertisements in the hope that in about five years someone might place a bet or take out a contract with it is living in cloud cuckoo land. Long-term thinking for most businesses tends to relate to the end of the current financial year. The idea that the purpose of these advertisements is to store up future generations of customers is absolute nonsense.

I was also interested to hear what my hon. Friend envisaged being covered by the Bill. He seemed to be against the advertising of gambling if it involved horse racing or sports betting, including online betting, but to think that all other forms of gambling were fine. Bingo would presumably be fine; poker might be fine; perhaps financial products, whose the value can go up or down—which is certainly a gamble—would be fine, or perhaps the Bill would ban advertisements for them. I am not entirely sure what my hon. Friend’s definition of gambling is, but if it involves getting rid of advertisements for the Sun Life Over 50 Plan on the basis that its value can go down as well as up, that will probably be welcomed by many people who currently have to suffer those advertisements.

I should certainly like to know whether bingo would be involved, because only last week the Government were lauding the fact that they were encouraging more people to play bingo and gamble on it. My hon. Friend’s boss, the party chairman, even put up a poster to that effect. Perhaps my hon. Friend has presented this Bill only a week later because of the response to that advertisement. Perhaps he wants to prevent his boss from producing another advertisement for bingo in the future. Let me say as an aside that I thought that the party chairman’s poster should have read “The Conservatives, cutting taxes on bingo—the only person sweating is Ed Miliband”, but then I realised that the idea of anybody sweating might well be an alien concept to people down south, and would probably have been lost on the leadership of the Conservative party.

I am not sure why my hon. Friend seeks to have a go at certain forms of gambling but not others. I am not sure why losing £5 in a game of bingo is very much better than losing £5 on a bet on the Grand National; it seems to me that if you lose £5, you lose £5, and the form of gambling does not really matter.

Of course, children do not just watch TV, they look at lots of other media—for example, they read the newspapers. Does my hon. Friend want to ban advertising by gambling companies in newspapers lest a child see it? That seems a rather ridiculous extension of the Bill, but I cannot understand why, logically, he would allow advertising in newspapers but not on TV. That makes no sense.

The Bill’s other unintended consequence is that it would deny betting companies the opportunity to promote responsible gambling. I would have thought that we should encourage bookmakers to use their advertising space to encourage people to bet responsibly and set financial and time limits—that is a noble thing to do —but the Bill would prevent bookmakers from promoting responsible gambling to their customers.

Of course, most daytime programmes that would be affected by the Bill are targeted at older people. During term time, we would like to think that most children are at school. If people want to advertise on TV at a time when children cannot see it, during the day in term time is probably the best time. Yet my hon. Friend wants to ban adverts on TV at that particular time, which seems to defeat his object.

Problem gambling is declining in this country, despite the increase in gambling advertising. The Minister knows that the latest health survey for England records overall problem gambling at between 0.4% and 0.5%. That is a reduction from the 0.6% to 0.9% range in the previous gambling prevalence survey. The number of children gambling is the lowest ever. The survey to which my hon. Friend referred concluded that the overall rate of gambling is the lowest in the data series. That research also shows that the number of children who reported gambling online in the previous week had fallen from 3% to 1% since the liberalisation of gambling advertising.

My hon. Friend talked about the people aged between 16 and 24 who had a gambling problem. He would be better advised to seek a change in the law to stop 16 and 17-year-olds being able to gamble legally on the national lottery. It would be much more helpful if we allowed all gambling only at the age of 18. If he introduced a Bill to increase the age at which people can gamble on the lottery from 16 to 18, he would have my wholehearted support. I hope that he will consider that.

All the available academic research indicates that the impact of gambling advertising on young people and problem gambling is relatively small. The Government are already reviewing all the advertising rules and codes that apply to gambling. That review will report in the autumn.

Gambling advertising is important to the gambling industry but also to the advertising industry and the broadcasters. It is a huge revenue stream for companies such as ITV and Channel 4 that helps them make the high-quality programmes that we all wish them to make. I do not see the need to deprive them of that income.

Time has defeated me, but let me say that, of gambling adverts on TV in 2012, there were 532,000 for bingo—the gambling that the Government appear to want to promote to all and sundry—which is 38% of all the advertising. There were 411,000 adverts for online casinos and poker; 355,000 for lotteries and scratchcards; and just 91,000 for sports betting, which is the focus of the Bill.

The measure is an extension of the nanny state. It is illiberal and not backed up by any available evidence. I therefore hope that colleagues will reject it. I do not intend to try to deny my hon. Friend his opportunity today by seeking a Division. However, I hope that, in the fullness of time, the Minister will reject the Bill because it is just an extension of what we would have expected from the last Labour Government.

Question put and agreed to.

Ordered,

That Jake Berry, Mr Stewart Jackson, Mr David Lammy, Gordon Birtwistle, John Woodcock, Pauline Latham, Fiona Bruce, Jim Shannon, Alistair Burt and Sir Tony Baldry present the Bill.

Jake Berry accordingly presented the Bill.

Bill read the First time; to be read the Second time on Friday 16 May, and to be printed (Bill 195).

Finance (No. 2) Bill

Tuesday 1st April 2014 Commons Chamber

Second Reading

[Mr Speaker]

I inform the House that I have selected the reasoned amendment in the name of the Leader of the Opposition.

13:36

[The Chief Secretary to the Treasury (Danny Alexander)]

I beg to move, That the Bill be now read a Second time.

The Bill is certainly substantial—602 pages, 295 clauses and 34 schedules—but it is packed with measures that will help British businesses invest and create jobs, help British households work and save, and help ensure that everyone in Britain pays their fair share of tax. It takes forward the Government’s long-term plan to create a fair, competitive and transparent tax system that is enforced effectively, in stark contrast to the uncompetitive and leaky regime that we inherited from the Labour party.

I will begin by talking about the measures that boost growth and investment, deal with those that cover avoidance and aggressive tax planning, consider those that help working people and savers, and finally come to pensioners.

[Mr Kevan Jones (North Durham) (Lab)]

Will the Chief Secretary tell the House at what point in the last Parliament he, as a Liberal Democrat, objected to the Labour Government’s spending targets?

[Danny Alexander]

I cannot put a time and date to it, but I recall several occasions when I and my Front-Bench colleagues, particularly my right hon. Friend the Member for Twickenham (Vince Cable), objected to the Labour party’s plans. Labour Front Benchers, when they were in government, ignored warnings from the Liberal Democrat Benches for a number of years before the financial crisis, and that led, to a considerable extent, to the mess that was made of the economy when the Labour Government finally saw what was coming.

[Mr Jones]

The right hon. Gentleman obviously has a problem with his memory. Let me help him. Will he name a policy area—for example, health or local government —on which the Liberal Democrats said we should spend less money?

[Danny Alexander]

I am tempted to say that we are wandering slightly from the Bill. I can draw the hon. Gentleman’s attention to several measures in the 2010 Liberal Democrat manifesto that proposed reining in excessive expenditure by the Labour Government.

I note that Labour Members have tabled a so-called reasoned amendment. I point out that we are investing in new technology and new energy sources because of the Labour Government’s failure to tackle rising energy bills; because of their failure to get young people into work, we have created the conditions for more than 1.5 million new jobs in the private sector; because of their failure to boost housing supply, we have had to cut back hundreds of pages of planning laws, and because of their failure to help families with child care costs, we have taken bold steps to introduce tax-free child care. In short, because of Labour’s failure to create jobs and growth and build homes, the British public asked the coalition to clear up the mess. The Bill takes further steps to do that. A Labour party that stands in its way is a blockage on the road to recovery.

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

The Chief Secretary to the Treasury will of course be grateful to Labour for voting with his Government on the welfare cap. Was he as surprised at that as I was, however, given that he will have observed what happened in Perth, with all those weekend socialists proclaiming their commitment to the left-wing cause, only to come down here and vote with the Tories?

[Danny Alexander]

The hon. Gentleman is wilfully misinterpreting what the welfare cap is about. If he had listened to my speech summing up the debate on the welfare cap last week, he would have discovered that the cap was a means of ensuring transparency and accountability to the House in relation to increases in welfare expenditure. In the past, welfare increases were smuggled through the forecasts without proper transparency and scrutiny. The reforms will ensure that, when expenditure is forecast to breach the cap, the Minister responsible will have to come to the House and explain why the breach is happening and what he or she intends to do about it. That could include introducing measures to reduce expenditure; it could also include an increase in the cap, if that is regarded desirable. Given that the hon. Gentleman’s party seems to believe that, under independence, it would be possible for taxes to fall and for expenditure to rise without the chickens coming home to roost, it is not surprising that it should oppose measures to increase accountability to this House on expenditure. The result of the vote last week showed, however, that the House as a whole welcomes the opportunity to hold the Government to greater account for expenditure increases in that area.

[Guy Opperman (Hexham) (Con)]

My right hon. Friend has set out some of the policies in the Budget, but he has not yet mentioned the school funding reform that was introduced before the Budget by the Minister for Schools, my right hon. Friend the Member for Yeovil (Mr Laws) and which will be implemented by the Finance Bill. Does the Chief Secretary to the Treasury agree that those changes, brought about as a result of the F40 fairer funding campaign, will have a seismic effect in many counties up and down the country?

[Danny Alexander]

The measures that my right hon. Friend the Schools Minister has introduced are not actually in the Finance Bill, and I hope that their impact will not be seismic in the literal sense, but I agree with my hon. Friend that they will make a serious difference to schools in his area and in other historically underfunded areas of England that have been campaigning for a long time for a fairer level of funding in their schools. I am glad to hear that my hon. Friend welcomes those measures.

[Charlie Elphicke (Dover) (Con)]

Are not the most important aspects of the Bill the things that it will do for the least well-off? The previous Government abolished the 10p tax rate, resulting in the least well-off paying higher taxes. Is it not right that this Government are helping those people?

[Danny Alexander]

I could not agree more with my hon. Friend, and I shall come to those points later. He is absolutely right to say that measures in the Bill will ensure a degree of fairness.

Let me begin by describing the measures that will aid growth and investment. Hon. Members will be well aware that the economic recovery is taking hold. Jobs are up, the deficit is down, the economy is growing and, as we have seen from this morning’s figures, productivity is improving. This growth has come about because of the nous and the hard work of businesses and individuals in every part of the United Kingdom. We have done our best, over our four years in office, to create the right tax environment to support their work by reducing the level of corporation tax, bringing rates for large and small firms down to 20%, and at the same time offering generous reliefs for R and D-intensive firms and the creative sector. Our reliefs for the film, high-end television and video games sectors are among the most generous in the world, and the critical and commercial success this year of movies such as “Gravity” shows that these reliefs really have taken off.

We know that all the changes we have made across our tax system have been responsible for companies locating their operations here, and for companies expanding their operations here, but we also know that there is still a long way to go. The Bill tackles some of the challenges facing our business community and our economy. We recognise that British businesses are still not investing enough, and that it is only by increasing business investment and productivity that we can embed a long-term recovery that benefits everyone. Let me put that point into perspective. If businesses had increased investment by just 10% in 2012, the level of GDP in this country would be £12 billion higher today. That is why we need to use our tax system to encourage further investment now. The Bill will therefore raise the annual investment allowance to £500,000, with effect from this month.

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

Will not the doubling of the investment allowance have a specific benefit for manufacturing companies outside London and the south-east, particularly in areas such as the west midlands and the black country, where manufacturers’ order books are full and those companies are seeking to invest in new plant and machinery?

[Danny Alexander]

As usual, my hon. Friend is absolutely right. In particular, the measure will help small and medium-sized manufacturers outside London; they are the backbone of our economy.

[Jonathan Edwards (Carmarthen East and Dinefwr) (PC)]

Will the Chief Secretary to the Treasury tell the House where the UK lies in the global league of business investment as a percentage of GDP?

[Danny Alexander]

I do not have those figures immediately to hand, but I can tell the hon. Gentleman that, according to recent indices from major international firms, the UK is seen to be in the top two or three countries in the world for companies to invest in. One of the accountancy firms recently published an index showing that the environment for investment in the UK was now among the top half dozen in the world. Our position has improved significantly in recent years.

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

rose—

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

rose—

[Sheila Gilmore (Edinburgh East) (Lab)]

rose—

[Danny Alexander]

I am going to make some progress. I will give way again later.

The measures relating to the annual investment allowance will mean that 99.8% of firms—almost 5 million businesses —will receive 100% relief on their qualifying investments. The Bill also provides a much-needed boost for our manufacturing sector by placing a cap on the carbon price support rate. That measure will cut energy bills for businesses and deliver around £4 billion in savings by 2018-19 without undermining investment in renewables in any way.

However, if we want to build a resilient economy with a broad base of industries that is fit to withstand isolated shocks, we have to provide support across our sectors. That includes supporting those innovative small businesses that could be the big global brands of the future. That is why the Bill further increases the generosity of the R and D tax relief for small businesses. From today, the payable credit for loss-making SMEs will rise from 11% to 14.5%. The Bill will also support investment in the high-growth-potential companies that need it most. The seed enterprise investment scheme, which has already helped more than 1,600 companies to raise over £135 million of investment, will be made permanent. The capital gains tax reinvestment relief will also be made a permanent feature of the scheme.

[Sheila Gilmore]

Will the Chief Secretary to the Treasury explain why his Government and his Chancellor decided, on first coming into office, to cut investment allowances, saying that they were not a good way of encouraging investment?

[Danny Alexander]

It was because our first priority in business taxation was to bring down the very high, internationally uncompetitive headline rate of corporation tax. It was 28% when we came to office, and it will come down to 21% this year and 20% next year. We also chose to reverse the Labour Government’s planned increase in the small firms rate of corporation tax from 21% to 22%. Instead, we took it down to 20%. Those were the right priorities at the start of this Parliament, but given the present encouraging environment for investment, it is now important for the Government to put in place incentives to bring some of that investment forward.

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

My hon. Friend the Member for Edinburgh East (Sheila Gilmore) has made a pertinent point. The Government brought down investment allowances from, I think, £100,000 to £25,000—a significant reduction, which kicked in from April 2012. With hindsight, will the Chief Secretary to the Treasury admit that that was a mistake?

[Danny Alexander]

No.

The Bill also recognises that social enterprises have a role to play not only in growing the economy but in rebalancing the economy and in reforming public services. At present, public services are often ineligible for existing reliefs. The Bill introduces a new tax relief for investment in social enterprises at a rate of 30%, the same as for existing venture capital schemes. I believe that this will unlock up to £500 million of additional investment in social enterprises over the next five years. I hope that Members on both sides of the House will welcome that.

[Mr Don Foster (Bath) (LD)]

They voted against it.

[Danny Alexander]

I am told from a sedentary position that the Opposition voted against that measure. They voted against the whole Finance Bill, of course.

The Bill also introduces three new tax reliefs to support employee ownership. The Deputy Prime Minister has rightly given a high priority to employee ownership, and the measures in clause 238 will introduce a capital gains tax relief, an inheritance tax relief and an income tax exemption for employee-owned companies. This will make the sale of a business into an employee ownership structure much more attractive. It will give employees of indirectly employee-owned companies an income tax relief of £3,600 a year on their bonuses. That will help to encourage more firms to become employee-owned in the years to come and, therefore, to improve the structure of our economy.

It is also worth reminding hon. Members of some of the other measures this Bill introduces that will support specific UK industries: it legislates to reform the banding of air passenger duty; and it includes a measure that will help make the Glasgow athletics grand prix a success this summer, putting in place a tax relief for athletes competing in that competition, which is an immediate predecessor to the Commonwealth games. Having tax reliefs for both the Glasgow grand prix and the Commonwealth games will help to ensure, as the UK Government rightly should be ensuring, that the world’s best athletes are encouraged to come to compete in the Glasgow 2014 Commonwealth games. Everyone, in all parts of this House, hopes they will be an enormous success for Scotland and for the whole UK.

The Bill also includes a package of measures to support oil and gas exploration in the UK continental shelf; it introduces a new allowance to support early-stage investment in shale gas; and it reduces the tax on beer by a penny a pint and freezes the duty on spirits, rightly offering particular support to the Scotch whisky industry, as Scotch is one of this country’s most successful exports. Those measures will support not only our pubs, but brewers and so on. All those measures, taken together, cut the costs for business, support innovation, boost exports and show that this Bill will help British businesses to help the British economy grow.

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

I wish to congratulate my right hon. Friend on including in the Budget a measure that will help voluntary groups that support the rescue boats on Loch Lomond and Loch Awe. Removing the VAT that such groups have to pay on fuel is a big help to them.

[Danny Alexander]

I am grateful to my hon. Friend for his comments. The House should note that he drew these matters to my attention in the preparation of the Budget, and he has campaigned assiduously to ensure that those important bodies are treated similarly to other emergency services in that respect.

Having set such competitive tax rates—rates designed specifically to support businesses—everyone in this House rightly expects those taxes to be paid, and this Bill continues the Government’s firm action against the persistent minority who continue to seek out unacceptable ways to reduce or delay paying the taxes they owe. We are tackling avoidance by large businesses by taking action in this Bill to close down avoidance schemes involving the transfer of profits among group companies and closing a number of other loopholes.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

I am interested to hear the right hon. Gentleman talking about tax avoidance. How much of the amount the Chancellor claimed would be raised from the deal with Switzerland was actually recovered by the UK?

[Danny Alexander]

We anticipate that that deal will bring in about £1.7 billion. That is less than was originally forecast but it is a great deal more than would have happened had we continued the previous Government’s position of not having any such deal in place. I draw the hon. Gentleman’s attention to the many other Labour tax loopholes this Government have closed. I particularly draw his attention to measures on partnerships, where the revenues expected now far exceed those originally forecast. I draw his attention to the measures on disguised remuneration, which his party voted against in this House, disgracefully trying to allow people to continue to disguise loans as remuneration—his party should be ashamed of that. I draw his attention to the annual tax on envelope dwellings, a measure this Government have introduced to ensure that people who seek to own properties through companies pay a proper amount of tax. That measure is raising five times more than was originally forecast. So I will take no lessons from him or any other Labour Member on tackling avoidance and evasion.

[Mr John Leech (Manchester, Withington) (LD)]

I am glad my right hon. Friend is dispelling the myths perpetuated by the Labour party on tax avoidance. This Government have done more in their four years than was done in the 13 years of the previous Labour Government to tackle tax avoidance, and I encourage him to go further.

[Danny Alexander]

I am grateful to my hon. Friend for his comments, and he is absolutely right. The tax system we inherited was, as with so many other parts of the previous Government’s economic strategy, full of holes and leaking revenues all over the place. The Labour party had spent all its time on a prawn cocktail offensive in the City, sucking up to the banks, rather than concentrating on making sure that everyone in this country paid the proper amount of tax. As a result of action we are taking, we are raising—so far—an extra £60 billion in this Parliament, and before the election we expect tens of billions more to be raised in revenue that would not have been raised had we accepted the Swiss cheese that Labour left us.

[Charlie Elphicke]

May I support my right hon. Friend in taking no lessons from the Labour party, which, when in government, was too often the tax avoider’s friend? It allowed a culture of industrial-scale tax avoidance to come into existence, and tax revenues were depleted by its neglect of the system.

[Danny Alexander]

My hon. Friend makes his point eloquently and accurately. I do not wish to add anything to it, but neither would I subtract a single word, as he is absolutely right.

[Julie Hilling (Bolton West) (Lab)]

rose—

[Danny Alexander]

I will give way one more time and then I will set out some of the measures we are taking, which the previous Government had 13 years to introduce but failed to do so.

[Julie Hilling]

Why were there fewer confiscation orders—raising less money—in 2013 than in 2012? Why did the Government have to reduce the top rate of tax because people were avoiding paying it if they had been so wonderful at closing all these loopholes?

[Danny Alexander]

The hon. Lady might well ask her own Front-Bench team why they increased the top rate of tax for their last few days in office, given that it was clear that it was not going to raise the money it supposedly would have raised. We have made sure that the wealthiest in this country are paying a far greater share of income tax than they did in any year under the previous Government—[Interruption.] Let me respond to her point before she seeks to come back on it; I listened to what she said, so she can listen to what I have to say. Measures in that Budget raised five times more from the same group of people. The analysis from Her Majesty’s Revenue and Customs showed that this tax was not raising any money, and I would prefer to have the substance of actually raising revenue from people than the pretence of measures that do not raise any money.

[Julie Hilling]

Not only has the right hon. Gentleman not answered the question about loopholes, but the truth is that during that short period when the full tax was in place it raised, and was raising, much more money than has been the case since it was reduced. The Government do not like to look at what happened during that one full year of the tax being in place.

[Danny Alexander]

I encourage the hon. Lady to read the detailed analysis published by HMRC more than a year ago.

Let me deal with some of the measures to tackle—

[Stephen Doughty]

rose—

[Danny Alexander]

I have given way to the hon. Gentleman previously, so I am going to make some progress.

This Finance Bill also tackles avoidance by wealthy individuals by preventing high-earning, non-domiciled individuals from using dual employment contracts artificially to reduce their UK tax liability. We are tackling the avoidance of employment taxes by taking action to prevent offshore and onshore employment intermediaries from avoiding their obligations. We are tackling the avoidance of taxes on residential property through the use of corporate envelopes by creating new bands for the annual tax on enveloped dwellings and extending the related stamp duty land tax and capital gains tax charges. In addition, the Bill also creates a new requirement that users of avoidance schemes which have been defeated in another party’s litigation, or which fall within the scope of the disclosure of tax avoidance scheme rules or the general anti-abuse rule, which this Government have introduced, should pay the disputed tax up front. That will bring forward almost £5 billion of revenue over the next five years and will ensure that those who knowingly enter avoidance schemes cannot hold on to the disputed tax but have to pay up front, like all other taxpayers. Those actions will radically reduce both the incentives and the opportunity for individuals and businesses to engage in abusive behaviour.

Let me now deal with the ways in which this Finance Bill will help people in work. This Government have an incredibly proud record of reducing tax for the lowest paid. Not only are we delivering our coalition commitment to raise the income tax personal allowance to £10,000 this week, but we are going further. This Finance Bill legislates to set the personal allowance at £10,500 in 2015-16. I never tire of telling the House that that policy has travelled from the front page of the Liberal Democrat election manifesto to the pockets of tens of millions of people, in all parts of the UK.

[Mr Love]

Some 17% of taxpayers earn less than the minimum £10,500 that the Minister mentioned. What are the Government doing about them? If we really are all in this together, do they not need to focus some attention on the least well-paid?

[Danny Alexander]

That is an important question. The measures to lift the personal allowance, from a little over £6,500 when we came into office to £10,500 as it will be in April next year, will mean that about 3 million people in this country—most of the people to whom he refers—are lifted out of paying income tax altogether. That is a serious benefit to those individuals. It also helps to improve incentives to work and to progress in work in this country and bears some responsibility for the stronger employment performance that we have seen in recent years.

[Mr Bain]

On that point, the Chief Secretary to the Treasury has omitted to mention thus far that the Government will freeze the work allowance in universal credit for the next three years. That means that a person on a low income will not benefit in full from the rise in the personal allowance. Is it not the case that he is giving with one hand and taking with the other?

[Danny Alexander]

The way that universal credit is structured means not only that we have a much simpler system, but that most people in the benefits and tax credits system will keep more of their additional earnings as they progress in work than they would have done under the extremely complicated, confusing system that we inherited from the hon. Gentleman’s party. The work incentive clearly has a positive effect overall.

[Mr Kevan Jones]

rose—

[Danny Alexander]

I will give way one more time, and then I will make some progress.

[Mr Jones]

The Chief Secretary to the Treasury says that he is proud that the idea of an increase in personal allowance came from the front page of the Liberal Democrat manifesto. Will he explain why his party, which campaigned on not increasing VAT, increased VAT when it entered the coalition, affecting some of the lowest and most poorly paid people in this country?

[Danny Alexander]

I am glad that the hon. Gentleman gives me an opportunity to repeat the fact that this policy came from the front page of the Liberal Democrat election manifesto, and I welcome his confirmation of that point. He should recognise that the coalition Government came together to sort out the catastrophic economic mess that was made by his party in the previous few years. When we came into office, we were borrowing £150 billion a year—for every £4 we were spending under his party, £1 had to be borrowed—[Interruption.] I draw his attention, if he is interested, to the distributional analysis of fiscal consolidation that was published alongside the Budget this year, which shows that the wealthiest in this country have made the largest contribution to the fiscal consolidation.

[Mr Jones]

rose—

[Danny Alexander]

I will not give way, because I want to make progress. The increase in the personal allowance will mean that a typical basic rate taxpayer will pay more than £800 less income tax per year than in 2010-11. That is real action to support the millions of people on low and middle incomes. It helps them to keep more of what they earn and rewards those who want to work hard. This Government and this Bill also recognise that people who rely on their savings income have been hit particularly hard by low returns in recent years. It is for that reason that we are cutting tax on savings for the lowest earners. From April 2015, the 10p starting rate of tax on savings will be abolished and a 0% rate will be extended to the first £5,000 of savings income above the personal allowance. That will benefit 1.5 million people with low earnings from some savings, and more than 1 million people will no longer pay any tax on their savings income at all.

It is no exaggeration to say that this Government have achieved sweeping reforms on pensions. Under the excellent leadership of my Liberal Democrat colleague, the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb), our simplifications and reforms of the pensions sector will be one of this Government’s most enduring legacies. Automatic enrolment will see nearly 6 million people enrolled in workplace pension schemes by the end of this Parliament. The single-tier pension will provide millions of individuals with a firm foundation to support their saving, and it will particularly benefit those groups that, under the current system, have tended to build up low amounts of savings. I am talking about women with broken work records, the low paid and the self-employed. The triple lock has helped to protect the most vulnerable members of our society, and the recent Budget announcements provide us with the final thread of this coalition’s web of pension reforms.

From April 2015 we will allow individuals much greater choice about how they access their defined contribution pension savings. Individuals will be able to access their defined contribution as they wish, subject to their marginal tax rate, and no one will be forced to take out an annuity if they do not want to. We are well aware that this is the biggest shake-up of pensions in almost a century—since Lloyd George was the Liberal Minister in the Treasury. As such, we recognise that it is absolutely crucial that we get it right. We are consulting on the detail before making further announcements later this year.

In the meantime, the Finance Bill will make some initial changes to deliver greater flexibility with immediate effect. We are reducing the minimum income requirement for accessing pension savings flexibly from £20,000 to £12,000. We are increasing the annual withdrawal limit for individuals in a capped drawdown arrangement from 120% to 150% of an equivalent annuity. We are increasing the total pension wealth that can be taken as a lump sum from £18,000 to £30,000, and we are increasing the size of a pension pot that can be taken as a lump sum—regardless of other pension wealth—from £2,000 to £10,000. Taken together, these changes mean that more than 400,000 people will be able to access their pension more flexibly in the financial year 2014-15.

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

My right hon. Friend is being very liberal with his praise for various coalition colleagues. This has been a tremendous Second Reading so far in that we are liberating pensioners to make the best decisions for them. That, combined with the single-tier pension, means that we are putting people back in charge of their future.

[Danny Alexander]

I am grateful to my hon. Friend for her contribution on these matters and for those specific comments. She is right that these are very liberal reforms. They are something of which we as a coalition can be proud. We have swept away the morass of means-testing of pensioners that built up under the previous Government and have ensured that every pensioner has a firm foundation from the state. They have a better basic state pension paid at the level of the single-tier pension. There is much greater flexibility for people to choose how to use additional savings in defined contribution schemes; after all, it is their money. I would go even further and say that this Government and this Finance Bill are about not only freeing up pensioners but providing additional freedom both for working people to keep more of the money that they have earned for themselves and for businesses that wish to invest.

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

I welcome the simplification of the pension arrangements, which predates this Budget. As the Chief Secretary rightly says, these flat-rate pension arrangements have gone on throughout this Government. Is he concerned that there will be increasingly strong pressure from the Opposition and others, who will say that the very generous tax benefits on pensions will be more difficult to justify if the annuity arrangements—in other words, the guarantee that this money will be used in retirement—are no longer in place?

[Danny Alexander]

It is a long-established principle that there should be tax relief on pension contributions. This Government have sought to restrict that tax relief. We have lowered both the lifetime limit and the annual limit. I am not sure whether the Opposition’s proposal has taken into account the changes that we have made. I am not convinced that changing the rate of relief would alter very much the amount of money spent, because of the lower limits that we have already imposed. Speaking for myself—this is a matter that my party will be putting forward at the next election—the fact that we offer about £35 billion of relief on pension contributions every year and that more than half of that tax relief goes to the top 10% of earners is something that is worth further examination. As we continue with fiscal consolidation, which is necessary for our economy, we need to make absolutely sure that we are handling our tax system in as fair a way as possible, and not offering unnecessary tax relief to the very wealthiest in society.

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

In any reform that my right hon. Friend proposes to make to the reliefs that are given on people investing in pension funds, will he remember that the money is taxed when it is withdrawn? It would be extremely unfair to tax people twice, both on putting money in and then taking it out.

[Danny Alexander]

I certainly do bear that in mind. No party in this House—certainly not mine—is proposing any change to, for example, the tax-free lump sum arrangements, which is an important part of how the policy that my hon. Friend describes is delivered. Some people would equally well say that it would be unfair for someone to receive tax relief at 40% on the way in, but only pay tax at 20% on the way out. There are a whole range of issues that require a wider debate. In this Parliament, the coalition Government have set out some reforms for pensions tax relief. We have no intention of going further than the reforms that we have already made and I think that the annual and lifetime limits are the right ways to address this.

[Guy Opperman]

I am most grateful to my right hon. Friend for giving way a second time. He has not touched on the regions yet, so I wanted to ask him whether he is aware that the Budget was welcomed by the North East chamber of commerce at a time when job numbers are improving, apprenticeships have almost doubled and the rise in the personal allowance, which is going through this week, will see a further 14,000 people taken out of income tax.

[Danny Alexander]

I had not intended to mention the regions, but I am glad that my hon. Friend has given me the opportunity to do so. His point is absolutely right: the action we have taken and the economic plan the coalition has seen through, through thick and thin—the tax reductions for individuals, motorists and so on, the measures to support investment in important sectors, such as energy and offshore renewables, and the support for exporters—are creating jobs and prosperity up and down the country including, I am delighted to hear, in his area.

I was outlining the immediate changes to pensions flexibility that we are legislating for in the Bill. Taken together, the reforms that I listed mean that more than 400,000 people will be able to access their pension more flexibly in 2014-15. We are making these changes because this Government believe that those who have worked hard and saved sensibly are in the best position to decide for themselves how to provide for their own retirement.

In conclusion, as I am conscious that many Members wish to speak in the debate, the Finance Bill is ambitious, fair, liberal and deals with the biggest issues facing the finances of British people. It takes further steps to deliver long-term sustainable economic growth and to complete the biggest liberalisation of our pension system in nearly a century. It takes the first £10,000 of people’s earnings out of tax altogether and, as such, is a Bill that echoes my objective, and that of my party, of building a stronger economy in a fairer society in which every person has the best chance to get on in life. I commend the Bill to the House.

14:12

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

I beg to move,

That this House declines to give the Finance (No. 2) Bill a Second Reading because it fails to address the cost-of-living crisis which will see working people worse off at the end of this Parliament than at the beginning; because while working people are £1,600 a year worse off it prioritises a tax cut for millionaires of on average £100,000; because it offers a marriage tax allowance which will help only a third of married couples, rather than a 10 pence starting rate of tax which would help millions more families; and because it fails to set out measures to tackle rising energy bills, get young people into work, boost housing supply and help families with childcare costs within this Parliament.

You would not know it from hearing the Chief Secretary, Madam Deputy Speaker, but this Finance Bill is a massive missed opportunity when much more is needed. It has so many pages—the document I have in my hands is only half of it—yet it is a minor Bill when we need major reforms to address public concerns. The annuities changes diverted attention from the shortcomings of the rest of the Budget, and that short-term approach reflects the short-term ambitions of the Chancellor and the Government at large.

We will seek to improve the Bill in Committee, but it is important that we reflect on its contents and on those things that ought to have been in it but were not. That is why we propose that the House declines to give the Finance Bill a Second Reading this evening: it fails to address the cost of living crisis that, as my hon. Friends recognise, will leave working people worse off at the end of this Parliament than they were at the beginning, as the Office for Budget Responsibility has predicted. While working people are £1,600 a year worse off, it prioritises a tax cut for millionaires of typically about £100,000 and offers a marriage tax allowance that helps only a third of married couples rather than, for example, a 10p starting rate of income tax that would genuinely help millions more families. It also fails to set out measures to tackle rising energy bills, get young people into work, boost housing supply and help families with child care costs. Those are the priorities that we believe ought to be in the Bill but are not.

[Mr Reid]

The hon. Gentleman refers to the cost of living. Does he not understand that by next year, under his party’s policy, my constituents would have been paying 20p a litre more and those on the islands would have been paying 25p a litre more for their fuel than they are under this Government? That would have been a disaster for the cost of living of my constituents. Will he apologise to them for wanting to make the cost of fuel 25p a litre higher in their area?

[Chris Leslie]

We are not opposed to the measure that the hon. Gentleman mentions, but he ought to be straight with his constituents. That is only one aspect of the tax burden that they face. Of course, his constituents have suffered many other tax rises and cuts in benefits since the general election, and as we start to walk ourselves through the Bill we can explore some of his priorities. We just need to consider the first set of clauses, under which he will be voting to give millionaires—the richest in society—and those who are fortunate enough to earn £150,000 and above, which can of course involve significant amounts of money, a tax cut to 45p from the 50p rate that his Government abolished. He willingly went along with that.

As well as the personal allowance change that Government Members often trumpet, we should have a 10p starting rate of tax. Government Members have supported at least 24 tax rises and principally the change to VAT, which has taken hundreds of pounds from the constituents of the hon. Member for Argyll and Bute (Mr Reid), perhaps by stealth. Perhaps they have not petitioned his constituency office and perhaps, with that little wry smile on his face, he has been counting the coins that he has been taking by stealth from the wallets and purses of his constituents, but that is a significant amount of money and he should be honest with his constituents about the VAT increase, the so-called granny tax, the child benefit reductions, the tax credit cuts and all the other changes.

[Mr Reid]

rose—

[Chris Leslie]

Perhaps the hon. Gentleman would like to take the opportunity to tell the full story.

[Mr Reid]

I am grateful to the hon. Gentleman for giving way again. What is Labour’s policy on VAT? If Labour is elected, is the plan to keep it at 20p or will his party promise to reduce it?

[Chris Leslie]

I love it when Liberal Democrats start talking about VAT. Of course, the hon. Gentleman promised to oppose the VAT bombshell, and my hon. Friends will remember the picture. I do not know whether he was driving the van that went round Parliament square at the time; perhaps the Chief Secretary was in the driving seat. Yet the hon. Gentleman has the temerity to ask what our position is on VAT. I cannot promise to get rid of the VAT increase that they have put in place, contrary to the manifesto on which he stood—yet another Liberal Democrat broken promise. When Labour makes promises in our manifesto at the next general election, we will make sure that they are fully funded and that the sums add up. If we do make promises, everybody will be clear where the money will come from—[Laughter.] Government Members do not like that idea, because it is so foreign to them. They are so used to making promises that they do not recognise the concept of trying to be honest and straight with the electorate.

[Charlie Elphicke]

Will the hon. Gentleman give way?

[Chris Leslie]

I will give way to the hon. Gentleman in a moment, but I ask him to bear it in mind that it is important to be open with his constituents about the full picture of what has been happening with tax and benefit changes. He needs to answer a question prompted by the independent Institute for Fiscal Studies, which has calculated the impact of all the tax and benefit changes since 2010 on his constituents. Its conclusion is that the typical household is £900 worse off after those tax rises and cuts to benefits and tax credits. Does he disagree with the analysis of the independent IFS?

[Charlie Elphicke]

The hon. Gentleman says that his pledges will be fully funded come the manifesto, but does he not accept that the fact that the Opposition have so far spent the bankers bonus tax more than 10 times does not give this House or the people of this country much confidence that they will be able to add up when we get to manifesto time?

[Chris Leslie]

I shall have to send some details to the hon. Gentleman, because he is obviously not fully aware of the situation. I would never accuse him of misleading the House, as that would be unparliamentary, but perhaps he is unintentionally giving an impression that is not correct. We have said that we would repeat the bank bonus tax, which was very successful in 2009 and raised a significant amount of money, and spend it on starter jobs for the long-term unemployed. He should know about long-term youth unemployment because in Dover it has rocketed since he was elected.

[Ian Austin (Dudley North) (Lab)]

The jobs going to young people will be particularly welcome in the black country, where long-term youth unemployment is twice as high as it is across the country as a whole. To tackle the issue of plans adding up at the next election, would it not be simple for the Government to follow our proposal to subject our plans to independent scrutiny by the Office for Budget Responsibility? Why does my hon. Friend think they will not agree to that? Does he think that perhaps the Liberal Democrats in the coalition do not want to do that because it would show that their plans do not add up, as they did not at the last election, when they made a series of promises that they were unable to keep?

[Chris Leslie]

I am grateful to my hon. Friend for addressing that point. Yes, such transparency would help a great deal. Let us elevate the level of public debate and allow an independent assessment of those policy costings. The public can then decide for themselves and make a judgment about the relative merits of the various policies in the manifestos of the major political parties. I know that in his heart the Chief Secretary to the Treasury agrees. I know that he realises that the Chancellor is standing in the way because the Chancellor wants to run the general election campaign by means of smears and falsehoods, giving a false impression of the policies of the other political parties. We must grow up and raise the standard of debate. Let the OBR be the judge of these things. Ministers can talk among themselves and perhaps negotiate concessions so that when we come to the Committee stage of the Bill, we may be able to reach cross-party agreement on that point.

[Charlie Elphicke]

rose—

[Chris Leslie]

I forgot to give way to the hon. Gentleman. Long-term youth unemployment has gone up in Dover by 125% since he has been its Member of Parliament.

[Charlie Elphicke]

Long-term youth unemployment did go up in my constituency by 300%, and in the hon. Gentleman’s constituency by 400%—in the previous Parliament. Will he welcome the fact that long-term youth unemployment in my constituency has fallen by 22% in the past year and in his constituency by 15%?

[Chris Leslie]

If the hon. Gentleman wants to trade statistics, I am more than happy to do so. In my constituency there is a significant problem with unemployment, long-term youth unemployment and youth unemployment generally, and it has worsened significantly since the general election. He talks about the past 12 months. Let us hope we are turning a corner in aggregate levels of unemployment because it is about time that happened. The tax and benefit changes and their impact on our constituents are very significant indeed. I hope to have an opportunity to focus on a few of them.

[Mr Kevan Jones]

I asked the Chief Secretary to the Treasury whether he could remember any time when the Liberal Democrats opposed the Labour Government’s spending commitments. Does my hon. Friend agree that Conservative Members have amnesia, in that they agreed to our spending targets right up until the banking crash in late 2008? If at that time we had followed the proposals of the present Chancellor of the Exchequer and the present Prime Minister in relation to things such as Northern Rock, that crisis would have been a lot worse.

[Chris Leslie]

Trying to get inside the heads of the Liberal Democrats could take quite a long time. The Chief Secretary is enjoying being at close quarters with the Conservative party a little bit too much. The Conservatives have captured him—it is called capture bonding. Sometimes he even starts to view the abuse or the lack of it as rewarding. That is not coalition; that is Stockholm syndrome.

[Guy Opperman]

May I return to the issue of the regions? Does the hon. Gentleman agree or disagree with the interpretation of the north-east chamber of commerce and the Trinity Mirror-owned Newcastle Journal, which welcomed the broad thrust of the Budget’s job-creating policies, its help for small and medium-sized firms and apprenticeships, reform of air passenger duty and general relief for energy-intensive industries?

[Chris Leslie]

We should be cutting business rates for small and medium-sized enterprises. I am very surprised that the Government are focusing their help predominantly on the 2% of the largest multinationals—the big firms—and not doing, in my view, sufficient for that 98% of British business, the small and medium-sized enterprises. They will be the backbone of a recovery and we have to do much more to support them.

It is a shame that in the Bill the Government are choosing to go to that 20% rate in April 2015. We could instead use that resource and focus it on the multiplicity of small firms. They should be getting a cut in business rates. We calculate that it would deliver an average tax cut of at least £400 for 1.5 million properties through the business rates system, benefiting small and medium-sized enterprises, which after all are the backbone of the economy. They provide the dynamism to get the growth going, which we so desperately need.

[Richard Benyon (Newbury) (Con)]

I know it is the Opposition’s job to oppose, but does the hon. Gentleman wonder whether sometimes this is not good politics? He will be getting the same message from his chamber of commerce as I am getting from mine, as well as from hard-working families who are benefiting from the Budget, pensioners and people on low incomes? Instead of the reasoned amendment, surely there is something that he can welcome in this remarkably popular Budget—go on, have a go.

[Chris Leslie]

It is simple. It is easy to do a Budget in which the Chancellor gives a few little things back, such as that penny off a pint of beer—buy 300 pints, get one free—and we are supposed to be grateful for such generosity. The hon. Gentleman should be advising his constituents to check their wallets. The thing about this Chancellor is that he takes far more with the other hand than he gives in the first place. That is his fundamental problem.

[Several hon. Members]

rose—

[Chris Leslie]

Before I give way, let us look at what is happening in the new tax year that is about to begin. I urge my hon. Friends to think, for example, about the change hitting some of the poorest households in our constituencies, homes on the lowest incomes, which will see council tax support withdrawn at a significant level in the new financial year. Some have called this poll tax mark 2, with the poorest and most vulnerable households, carers, single parents and the disabled seeing their bills go up by 120%. The Government impose these tax rises in a stealthy way by saying, “Local government, we will devolve it down to you. It’s your responsibility”, but nobody is fooled by their techniques. Look at the squeezed middle and the extra tax those people are paying.

[Mark Field]

rose—

[Chris Leslie]

Before I give way to the hon. Gentleman, he can tell me this: I think about 2 million more people are being sucked into the 40p rate of income tax. I heard that that caused consternation among Members on the Government Benches. From this April, at a number of levels, people will lose out significantly.

[Mark Field]

I will ask the questions rather than answer them, if the shadow Minister does not mind. He implores us to look at the Bill in a balanced way. We have heard statements about tax cuts for millionaires time and again over the past year and again today in the House. Does he recognise that the top 1% of British citizens are now paying the highest share of income tax that they have ever paid in the history of that tax—some 30%? Purists such as me have at times been mildly critical of the inconsistency of elements of the welfare and tax changes that have been made even during this coalition Government, but we have gained a hell of a lot of social cohesion in this country—

[Madam Deputy Speaker (Dawn Primarolo)]

Briefly.

[Mark Field]

—in marked contrast to many other European nations, and the Government should be congratulated on that.

[Chris Leslie]

I do not think it helps with social cohesion to move from the 50p to the 45p rate. That sends a very bad signal, and I know that Members on the Government Benches will feel that in their constituencies, especially when the Government are jacking up taxes and reducing tax credits and other help for some of the poorest in society, while giving that very generous tax cut—typically £107,000—to the average millionaire at the top of the scale. I do not think a 50p rate is unreasonable.

It is unreasonable for Government Members to say that a 50p rate does not raise any money—“we cannot possibly do it”. If it is telegraphed to that set of high earners at the point at which a 50p rate comes into effect that it will be going in a year or two anyway, of course they can stave off the point at which they draw down their dividend from their personal service company. Everybody knows how they managed to avoid paying that 50p rate. They waited until the new tax year ticked over, then they paid the lower rate. It was very simple, which is why in the statistics we suddenly saw bonus payments go through the roof, sky high, at the point when the 50p rate fell to the 45p rate. We should have been allowed a proper assessment of what happened at that point.

[Jonathan Edwards]

I am listening intently to what the hon. Gentleman says and I agree with the point he makes, but will he explain why the Labour party proposes only a temporary return to the 50p rate, rather than a permanent return?

[Chris Leslie]

We have said that a 50p rate needs to be the policy for the next Parliament. We make judgments in manifestos from one Parliament to the next. Tax policy should never be written in perpetuity. We have said that while the deficit is likely to be as high as it is, the 50p rate is justified. The hon. Member for Cities of London and Westminster (Mark Field) talked about social cohesion. While the process of deficit reduction will now have to continue well into the next Parliament, when it was not expected, the 50p rate is perfectly justified for good social cohesion reasons.

[Jacob Rees-Mogg]

Will the hon. Gentleman give way?

[Chris Leslie]

How could I resist the hon. Member for North East Somerset (Jacob Rees-Mogg)?

[Jacob Rees-Mogg]

I am extremely grateful on behalf of North East Somerset to the hon. Gentleman for giving way to me. Is he therefore saying that he believes that the 50p rate is a good thing in and of itself for the symbolism that it brings to bear, even if it does not raise any money?

[Chris Leslie]

I think it will raise a significant sum to help to alleviate the burden on lower and middle earners, and that is why it is important to have it. If it is there for not just a temporary period, but for a significant period, it would settle and be an important part of the tax system. But generally speaking, of course we all want all taxes to come to a lower level. I do not want to see taxes higher than they need be, but the hon. Gentleman has to understand that the context will be, I am told, a potential £75 billion deficit to be inherited by the next Government—I hope the next Labour Government—a significant amount of borrowing, hanging around the necks of whoever wins the general election, made worse by the fact that the Government promised that it would have been eradicated altogether.

[Richard Harrington (Watford) (Con)]

I want to probe the hon. Gentleman further on his answer to my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg). Does it mean that he believes that the last Labour Government made a mistake by not raising the top tax rate to 50% for most of the 13 years that they were in power, and that they should indeed have done so?

[Chris Leslie]

I know that Government Members like to expunge history from their memory banks, but there was a global banking crisis—I know this is a shock to some of them—which, from 2008 onwards, caused significant fiscal impact, which reduced revenues into the Exchequer and meant that tax rates had to be reappraised. It was at that point that the 50p rate was felt necessary, as one of the measures of fairness that we needed to put in place. I am proud that that Government took that step. It was not universally popular, as I know from Government Members, but necessary in order to help to reduce the deficit, whereas the Government chose to raise VAT and pull the rug from underneath growth that was beginning to come through in 2010.

I want to continue to scrutinise some of the details in the Finance Bill, because it contains a number of troubling changes. On capital allowances, my hon. Friends intervened on the Chief Secretary, and I also asked whether he thought it was a mistake that when taking office the Government reduced capital allowances—investment allowances—for businesses from £100,000 to £25,000. Yes, they are going back up again, but yet again we see more chopping and changing, more inconsistency; temporary measures, not giving the stability to business that it needs to plan for the long term. The Chief Secretary says that it was not a mistake that they should go down and now they are going up, but that, I am afraid, is typical of Liberal Democrats who like to face both ways on these matters.

In chapter 2 we have the married couple’s tax allowance. The Chief Secretary is deep in conversation, but I want to give way to him in a moment specifically on the issue of the married couple’s tax allowance. [Interruption.] From a sedentary position, he says that he will not intervene, but this is a critical point because I am not quite clear on his view of the married couple’s tax allowance. The Chancellor was apparently in a little bit of doubt about it, but the pressures from Conservative Back Benchers were such that they needed this transferrable allowance, which will help only about a third of married couples because it is available only to couples where one person is in work but the other does not use all their tax-free allowance. There are a number of other ways in which that amount of money could have been allocated. He could have decided to do it through the personal allowance—I know he is keen on that policy—perhaps a 10p starting rate of tax. Does the Chief Secretary agree with the implementation of the married couple’s tax allowance? This is his opportunity to set out the Liberal Democrat attitude to these things. I will give way to him. The record will have to show that, for whatever reason, the Chief Secretary does not want to stand up and sing the praises of the married couple’s tax allowance in this particular agenda. Yet again, he is stifled by his capture by the Conservative party, unwilling to speak his true mind on these issues.

On the employment measures in the Bill, such as they are, yesterday the Chancellor was full of rhetoric about full employment, yet the Government have come forward with no new policies to deliver this. The number of young people out of work for 12 months or more has nearly doubled since the Chancellor and Chief Secretary came to office, and we have a record number of people who want to work full time but are being forced to work part time, a Work programme that is so spectacularly unsuccessful that people are more likely to go back to the jobcentre than find work, and only 5% of disabled people on the Work programme have found work through that programme. We clearly need compulsory starter jobs for the long-term unemployed to help them to repair their CVs and to get back into work and on to the ladder to a long, sustainable career.

[Stephen Doughty]

I agree with my hon. Friend on the compulsory jobs guarantee, and it is a great shame that we do not see such a measure in the Bill. Does he agree that there is a massive contrast between this Government when they took office and cancelled the future jobs fund, and the Welsh Labour Government in Cardiff who introduced the Jobs Growth Wales scheme, which has now seen nearly 12,000 people across Wales benefiting, and one of the lower rates of unemployment in the UK because of that measure?

[Chris Leslie]

Conservative Members love to bash what is going on in Wales. They have an anti-Welsh attitude to these things, but it is one of the great success stories of devolution, making sure that they focus on a meaningful back-to-work scheme, particularly for those who have been out of work for a prolonged period. That is what we need to have, and I wish Ministers would learn from that.

Chapter 4 deals with annuities and pensions. Obviously, as we have said, in general those annuity changes are to be welcomed. Annuities are an outdated product and they failed too many pensioners, but it is important to reiterate the tests that we have. What sort of advice or comprehensive guidance will be put in place for those reaching retirement and potentially having to make calculations of income perhaps over a third of their lifetime to come, and what will happen to the annuities market for those who do wish to purchase such a product to have a steady stream of income in perpetuity?

[Mr Kevan Jones]

Does my hon. Friend also think that the Government should publish their modelling on the proposal to see what effect it will have, not only on the annuities market but on the cost to the taxpayer in the long term, in terms of matters such as housing benefit and future care costs? Producing that modelling and making it transparent for all would allow people to see whether the policy will have a long-term implication for the taxpayer.

[Chris Leslie]

It is vital that we have serious consultation on those measures. We support flexibility in principle, but the changes cannot be made without taking into account the wider implications, so it is important that we have that level of information and analysis in the Treasury projections. I do not know whether the Government were motivated by the desire to benefit the population more broadly or by the short-term opportunity, following the annuities changes, to bring in a vast amount of tax revenue from pensioners much earlier than would otherwise have been the case. All I know is that the Chancellor used the annuities issue to provide a veneer of long-termism over what was otherwise an exceptionally short-term Budget and what is an exceptionally short-term Finance Bill.

Clauses 112 and 113 deal with the old question of the bank levy. My hon. Friends will be familiar with the Government’s track record on the bank levy. We will scrutinise those clauses very closely indeed, because The Daily Telegraph, among others, has reported that they could mean a secret tax cut for the banks. Last year Barclays paid £504 million in levy charges and HSBC paid £544 million—the most of any bank. But under the draft proposals the Chief Secretary is bringing forward in the Bill, Barclays’s bill would have been £129 million lower and HSBC’s would have been £169 million lower. What is going on? Given that the levy was supposed to catch up with the lack of collection in previous years—it was supposed to increase by 20% this year—it seems very strange that these clauses might give the banks a very significant saving indeed.

The purpose of the bank levy, of course, was to allow the Government to take £2.5 billion every tax year. It was an unusual tax because they set the amount of revenue to be raised and the methodology revolved around that. In its first year, the levy brought in £1.8 billion, which was a significant shortfall. Things got worse the next year, because in 2012-13 it raised just £1.6 billion. My hon. Friends know the attitude Her Majesty’s Revenue and Customs takes to our constituents if an amount of tax they are asked to pay is not forthcoming, but that is not the case when it comes to the banks. It has gone soft in collecting the money the levy was supposed to raise.

We read in the small print of the Office for Budget Responsibility’s report that accompanied the Budget that in 2013-14, for the third year running, the bank levy is projected to raise only £2.3 billion, which falls short yet again. The combined shortfall from the past three years is now a very significant £1.8 billion. We could pay the salaries of 60,000 nurses with that sum.

[Mark Field]

rose—

[Chris Leslie]

It is a very significant sum of money, and I am sure that the hon. Gentleman will have something to say about that.

[Mark Field]

I certainly do. The hon. Gentleman must also recognise the importance of banks lending into the real economy, particularly as the recovery takes hold. Does he not recognise that if we are to ensure that banks are properly capitalised again, repeated demands for an ever-larger banking levy—it is already the largest it has ever been, even before 2010—could be diametrically opposed to the long-term interests of the British economy? In other words, it could hinder efforts to get the banks lending again.

[Chris Leslie]

Of course the banking sector is very important. It has been dysfunctional for a prolonged period. Net lending to business has fallen consistently throughout this Government’s time in office. But I have to tell the hon. Gentleman that when the Treasury said that the levy would raise £2.5 billion, it should have got that money in. All our constituents are paying more in tax and have lost out significantly because that money has not been forthcoming from the banks, which after all owe a little bit back to the taxpayer for the bail-out that followed their reckless lending decisions in previous years.

The very least we should do is ensure that we have a functioning bank levy that brings in the expected sums. We would ensure that it raises a further £800 million. We would use that money to expand free child care places for working parents of three and four-years olds by extending free nursery care from 15 to 25 hours a week. That would also be a good way of helping parents to get back into the labour market and to get the jobs they need. A 15-hour arrangement—three hours a day—for child care does not give a parent looking after a youngster the opportunity to get into work, but 25 hours a week would make a significant difference. We could do that through a reasonable and modest change to the bank levy.

[Jacob Rees-Mogg]

Following the point made by my hon. Friend the Member for Cities of London and Westminster (Mark Field), does the hon. Gentleman recognise that an £800 million additional bank levy would reduce the ability of the banks to lend into the real economy by between £8 billion and £12 billion?

[Chris Leslie]

I disagree with the hon. Gentleman on that point, not least because the shortfall in the amount the Treasury said it would raise from the levy has been so much larger than £800 million. I think he needs to speak with Ministers. If he disagrees with £2.5 billion, he needs to tell them now. The Exchequer Secretary is in the Chamber, because he is the one—unbelievably—who was responsible for designing the bank levy. He must be massively embarrassed by its total failure. Why has it raised so little? How does he explain the shortfall? I will give way to him if he wishes to offer an explanation.

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

indicated dissent.

[Charlie Elphicke]

rose—

[Chris Leslie]

No, nothing is forthcoming. Perhaps the hon. Member for Dover (Charlie Elphicke) can help us on that.

[Charlie Elphicke]

The hon. Gentleman referred to the article in The Daily Telegraph but did not explain it fully to the House. It shows that the Chancellor is keen to see foreign banks paying a fair share of the levy. It is not about letting off the major clearers; it is about ensuring that all banks in the UK pay a fair share. Surely that is right.

[Chris Leslie]

That is a very interesting explanation. There is a shift in policy, which is to let certain banks off the hook when it comes to the bank levy. Perhaps the hon. Gentleman is right and that is a strategy. I have given the Minister an opportunity to explain what exactly the Government’s plan is, but he will not put it on the record. We will have to explore that in more depth in Committee.

While we are on the financial services sector, let us look at what the Government are doing in clause 107, which relates to stamp duty reserve tax. My hon. Friends might begin to wonder what that is all about, especially when we say that it is known as the schedule 19 charge, which refers to the 1999 Finance Bill. Many people think, “Oh well, we’ll see what comes of these taxes.” But the schedule 19 charge, set out in clause 107 of this Bill, seeks—this is the priority of these Conservative and crypto-Conservative Members—to give a tax cut of £145 million to the investment management industry by abolishing stamp duty reserve tax. At the same time, my hon. Friends’ constituents are having to cope with the bedroom tax, extra council tax charges and the VAT increase. Despite the hardships they are facing, the priority of the Chief Secretary and the Exchequer Secretary is to give away £145 million by abolishing stamp duty reserve tax. I know that they have been lobbied heavily on that.

We will oppose that change, because we think that the Government should be using that resource to help scrap the bedroom tax, if indeed it is raising any money—I have my doubts about that. The National Housing Federation states that it might well be costing more than the Government planned. We certainly should not be giving away that money, especially at a time when the investment management industry, which holds £5.4 trillion in collective funds, increased its holdings by about 7% in 2013. I do not think that £145 million is an unreasonable sum to ask from a sector that has been doing very well in recent years. We should be making sure that we pursue a fair policy and so will oppose that clause.

We then come to the Bill’s tax avoidance measures. We know that the Government have a bad record on that—[Interruption.] Well, they do. The oh-so-successful Exchequer Secretary, who cannot even manage to get the amounts of money he promised from the banks, cannot manage to get from the Swiss the £5 billion he promises through the Swiss tax deal. The Chief Secretary stood up a moment ago and said that he would get only £1.7 billion. We had a deal with the Liechtenstein Government, which we projected would bring in £2 billion; in fact, it has brought in £2.5 billion. When we have tax deals with tax havens, they work. However, when the Exchequer Secretary gets his fingers on these things, it is amazing how it all goes wrong—it is his reverse Midas touch.

The Government have fallen into bad habits in pencilling into the Red Book projections of revenues from the avoidance measures that involve what the OBR calls particularly uncertain assumptions. The Government are, of course, quick to spend the projected money; Paul Johnson from the Institute for Fiscal Studies calls such moves the Chancellor’s manoeuvres, always relying on revenues that are by nature uncertain. It is important that we scrutinise whether the supposed tax avoidance deals will deliver what the Government say.

Rather than the measures in the Bill, we need action to deliver starter jobs, guaranteed for the long-term unemployed. The number of young people out of work for a year or more has doubled and we need compulsory starter jobs for those who have suffered unemployment, which is a scourge not just on society but on their career prospects. We need action on child care. Free child care should be extended from 15 to 25 hours, paid for through a proper collection of the bank levy.

We need a help to build scheme to counter-balance the Help to Buy scheme. There is a serious risk—as the Chief Secretary knows, even the Governor of the Bank of England has concerns about these things—of a lop-sided recovery unless we match the boosting of demand with the boosting of supply. A help to build scheme particularly focused on ensuring that small and medium-sized construction companies can do better is one way to make a big difference.

[Guy Opperman]

Is the hon. Gentleman aware that in the north-east, the Help to Buy scheme is absolutely transforming the housing market? In Humbles Wood in Prudhoe, a housing development in my area, 90% of new purchases have been through Help to Buy. That must be good news that the hon. Gentleman wants to welcome.

[Chris Leslie]

We do not oppose the Help to Buy scheme unless it is not accompanied by a help to build scheme. The supply of housing is key. Housing policy must revolve around affordability. We now have the lowest level of house building since the 1920s; the Government cannot just turn a blind eye to that problem. Affordability has to be at the heart of our approach. It is all very well helping people on to ever-higher mortgages chasing ever higher prices, but unless something is done to supply new buildings, we will not deal with the problem of affordability.

[Mr Kevan Jones]

I am not sure what nirvana the hon. Member for Hexham (Guy Opperman) lives in if he thinks that the housing market in the north-east is booming. Average house prices in the north-east are still £5,000 lower than in 2008; that compares with an increase of about £77,000 in London. The hon. Gentleman also fails to recognise that 16% of people in the north-east are still in negative equity. The idea that somehow the housing market in the north-east is booming is wrong. We have a two-speed Britain—a booming south-east and London, and a stagnating north.

[Chris Leslie]

For all the Government’s talk of a balanced, sustainable recovery, we see no action. Most of our constituents and most businesses would recognise that supply and demand have to be part of the picture. Everybody recognises that except, it seems, for the Chancellor and Chief Secretary, who do not recognise the fundamental problem in their approach.

There needed to be tough decisions, such as the 50p rate, in the Bill to make sure that there was fairness in dealing with the deficit and that we tackled the Government’s failure to keep their promise about balancing the books. That has not come to fruition. We need to help with business rates; we should be cutting them rather than simply focusing help on 2% of companies.

The Government are not ensuring a sustainable and balanced recovery. Consumers are having to dip into their savings at an alarming and increasing rate. The OBR even predicts that growth may well slow in future, when those savings run out. Exports are not predicted to contribute a thing to the economy for the next five years and nothing in the Budget tackles the country’s productivity crisis that has emerged in recent years.

Instead, the Exchequer Secretary and Chief Secretary have convinced themselves that cutting public services and raising taxes have helped economic growth. They believe their own propaganda about expansionary fiscal contraction, which was the philosophy of the right in British politics. It used to be the opposite of the Liberal Democrats’ view, but of course they have now bought into the concept.

[David Rutley (Macclesfield) (Con)]

The hon. Gentleman does not want to take this point from Government Front Benchers, but I have just been to the annual conference of the British Chambers of Commerce and it is absolutely delighted by the Bill and the Budget, which will help its businesses across the country. Will the hon. Gentleman join it in welcoming the Bill?

[Chris Leslie]

No, because the Bill could be significantly improved. I have given a number of ways in which it should be doing more for small businesses, for fairness in society and for the hon. Gentleman’s constituents. I think he will pay the price when the election arrives. He is under the impression that fiscal contraction is how growth materialises, but he needs to realise that growth is coming despite, not because of, the Government. I am afraid that they have still not learned that lesson.

The Conservatives and Liberal Democrats are desperate for people not to spot their broken promise on borrowing and the deficit. Three years of economic stagnation will leave the next Government with a budget deficit of £75 billion. It is astonishing that in his Budget speech, the Chancellor had the nerve to stand there and say:

“as a nation we are getting on top of our debts”—[Official Report, 19 March 2014; Vol. 577, c. 781.]

The Government have added a third to the national debt, which now stands at £1.2 trillion. What a nerve the Chancellor showed! He promised to stop adding to the national debt, but has borrowed more in the past four years than the last Government did in 13 years.

The Bill is bereft of the measures that we need to make sure that the recovery is sustained and shared by all. It has nothing new to tackle long-term youth unemployment, nothing to secure an energy price freeze and nothing to bring forward real help now for working parents who need extended child care. It has nothing new on infrastructure investment, which is still lagging behind, and nothing to address the wages crisis that leaves the typical person £1,600 worse off than in 2010. The Bill is not just a missed opportunity; it is so wide of the mark that it misses the point altogether. It is designed to help Ministers limp from here to election day. It falls short and is not good enough.

We would urge Ministers to go back to the drawing board, but it is increasingly clear that they do not even have a drawing board. I urge my hon. Friends to support the reasoned amendment. We will try our hardest to secure improvements to the Bill in Committee. This is a minor Finance Bill from a Government out of ideas. They delayed the Queen’s Speech because they do not have enough to put in it. The Bill should address the cost of living pressures faced by the majority and it should set a long-term ambition for a recovery built to last and felt by all. The country deserves a better Finance Bill than this.

14:58

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

It is usually a pleasure to joust with the hon. Member for Nottingham East (Chris Leslie), but his comments were unremittingly negative. It is amazing that he contrived a speech lasting no fewer than 46 minutes about a Finance Bill that supposedly had so little in it.

For almost the past four years, the British electorate have, perhaps grudgingly at times, recognised that the coalition’s avowed economic plan—the elimination of the structural deficit in the course of this Parliament—has been the right path in response to our grisly economic inheritance.

Key to the plan was consistent growth. The Office for Budget Responsibility’s predicted compound growth of 2.7% to 2.9% for the duration of the Parliament accounted for more than half the deficit reduction programme. As the hon. Gentleman rightly pointed out, that has not been achieved, but the international capital markets have maintained their confidence in the coalition despite its first three years having being characterised by somewhat sluggish growth. Fears that excessive borrowing on the scale that became necessary between 2010 and 2013 would lead to higher interest rates have proved entirely unfounded.

[Mr Kevan Jones]

I know that 2010 seems a long time ago, but does the hon. Gentleman remember that when this Government came to office the economy was growing and we went into decline only because of the sucking out of demand and investment in the economy during their first two years?

[Mark Field]

The hon. Gentleman will be well aware that it is in the power of any Chancellor to orchestrate something of a pre-election boom. The VAT reduction certainly assisted in that, such that there were two or three quarters of unsustainable growth in the period from the end of 2009 to 2010, as became apparent fairly quickly.

We have seen some very significant growth. The first glimpses that came a little over a year ago in spring 2013 have turned into healthy, consistent growth that has in many ways surprised even economic experts. This has been maintained, alongside a very strong performance in employment, and barring unforeseen economic shocks it should continue for the rest of this year and beyond.

After the frenzy of Labour’s energy price freeze promise, the early new year period has allowed the Government to regain their footing and reset the important message that we are following a long-term economic plan that will benefit hard-working people. If, in the coming months, we can overlay this sober foundation with a sense of upbeat optimism and positivity about our nation, we will have a solid base from which to bat away unremittingly negative political attacks of the kind that we heard earlier. To complement consistent messaging on the deficit, we must also give the electorate a feeling of hope about life under a future Conservative Government. Nevertheless, the Treasury has been right to be wary. A giveaway Budget implemented by this Finance Bill would have sent out entirely the wrong signals. If money were found for substantial tax cuts, our opponents would question the need for further reductions in the welfare budget, and this at a time when the Institute for Fiscal Studies calculates that we are only two fifths of the way through the total planned spending cuts.

In the months ahead, the Chancellor might perhaps borrow some tricks from the Bank of England. While the notion of forward guidance has hitherto proved something of a mixed success for the Governor of the Bank of England, Mark Carney, it might prove a useful tool for the Treasury. Unlike some of my hon. Friends, I have always doubted the wisdom of promising instant and substantial tax cuts, as that puts in jeopardy our central mission of restoring order to the public finances. However, there is no doubt that reducing the tax burden should always be part of a Conservative offering, not least as we approach a general election. I hope that in a future autumn statement the Chancellor will offer his own brand of forward guidance, giving a clear signal that when progress has been made on reducing the deficit, and that progress breaks past a certain point, a series of tax cuts will kick in. In that way, the electorate will know full well that while our priority is, and must remain, stability, our ultimate aim will be a low-tax, competitive economy.

The Opposition’s messaging over the past six months, as in the course of this debate, has blended naive populism with flagrant opportunism. Their appeal has rested not on their practicality but on their exploitation of a deep sense of unease among many in the electorate that the current system does not deliver for them. The Government’s response has at times been too erratic and confusing, and has lent greater weight to policies that should rightly be dismissed as dangerous and unworkable. What voters need from us, and what this Finance Bill offers, is a sense of consistency and simplicity.

Rather than blowing us off course, the Bill implements a Budget that has been designed to cement our position as a calm and rational team slowly and patiently getting the UK economy back on track and the public finances under control. Substantial or radical reductions in tax should sensibly come only when that mission has been accomplished. Perhaps understandably, this sober message was not the headline-grabbing element of the Budget. Rightly, the proposed liberation of pensions will now be subject to extensive consultation. These ground-breaking reforms will need to be assessed to ensure that any potential unintended consequences are properly analysed before any new pensions regime is put in place.

I want to put on record some specific concerns about the tax avoidance regime that may differ from those raised by the hon. Member for Nottingham East. I addressed these last Friday in an article in The Daily Telegraph about the operation of Her Majesty’s Revenue and Customs’ disclosure of tax avoidance schemes—DOTAS—regime. I have been struck by the number of financial advisers and investors, large and small, from across the country who read my piece and have responded over the past few days by outlining their own cases of particular concern.

Last year, for the first time, aggregate investment in UK-based film production topped £1 billion. This has been aided by a crucial tax break that has attracted huge sums of private cash into the British film industry, which we can be proud of and which is recognised on the global stage with the success of many British films at the Oscars. In last month’s Budget, the Chancellor introduced a theatre tax break to match similar provisions for high-end TV, film, and televised animation. I warmly welcome this energy from the Government on behalf of our crucial creative industries. As well as being home to the much-maligned banking industry, my constituency is also the traditional home of many of our great, globally competitive creative sectors in Soho and Covent Garden. I campaigned for some three years to get the animation tax credit that was successfully announced in the 2012 Budget and agreed on in all parts of the House.

Last month, however, I heard a tale of woe from a group of experienced private investors who have found themselves squeezed awkwardly between the coalition’s ambitions for the creative industries and its other understandable priority—a clampdown on tax avoidance. Their experience should be a warning sign to any investor who has sought to engage in an open and transparent relationship with HMRC. It should also give Treasury Ministers pause for thought—not least the Exchequer Secretary, who is in his place, as he aggressively pursues the Government’s anti-avoidance agenda in the months ahead. Some years ago, the group who came to see me had approached HMRC with their model for private investment in the UK creative industries. After extensive discussion on its structure, they were not only given the green light but told that their vehicle was exactly the sort of thing that the Government were envisaging. On the basis of this understanding, the group proceeded to invest more than £1 billion of risk capital into the British film industry, leading to the production of more than 60 home-grown films.

Given the discussions they had had, HMRC considered these legitimate investors to be firmly “inside the tent”, but as a precautionary measure they elected to place themselves on the DOTAS register. Because tax avoidance measures are now so widely drawn, it has been common practice to err on the side of caution by signing up to HMRC initiatives of this sort. The investors thought nothing more of the DOTAS registration until a flurry of high-profile scandals, or so-called scandals, came to light whereby film investment vehicles had been used by celebrities to slash their tax bills. Rather than sifting through the egregious examples of so-called aggressive avoidance through legitimate investment vehicles, HMRC threw a blanket of suspicion on to any DOTAS-registered scheme. Keen to establish their vehicle’s legitimacy as swiftly as possible, and exhausted by HMRC’s consistent mismanagement of their case, as they see it, the investors elected to put their scheme before an independent tax tribunal.

Currently, if the UK tax authorities wish to challenge the legitimacy of a DOTAS-registered scheme in court, the taxpayer is permitted to hold on to the disputed tax while the case is being resolved. This was discussed earlier by the Chief Secretary. Because the Government believe that this incentivises scheme promoters to sit back and delay resolution, they now propose to extend the accelerated payments measures to existing DOTAS-registered schemes. This means that disputed tax will be paid up front to HMRC and returned only if a scheme is subsequently found to be legitimate. However—this is where the Government need to rethink their understandable enthusiasm for clamping down on tax avoidance—no exception is proposed in cases where taxpayers have demonstrably not sat back and delayed as long as possible. My investor constituents are desperate to get their dispute settled by an independent arbiter as a matter of urgency. In their case, it is HMRC that is stalling progress. Legitimate investors understand the need to deal quickly with the tens of thousands of outstanding mass-marketed avoidance cases currently clogging up the courts. They simply propose an exception in the case of existing DOTAS-registered schemes whose promoters have taken all reasonable measures to enable a dispute to be brought before the statutory appeals tribunal.

It strikes me as a shocking breach of faith that the Government are now attempting to impose a requirement on such individuals to pay a disputed up-front sum when it is an agent of the state—in this case, HMRC—that is deliberately and actively delaying the sitting of the tribunal. Worse still, I fear, is the general message being sent to other private investors, who stand to be deterred from any future investment in the UK film industry.

DOTAS was designed with the best will in mind—something you may well remember, Madam Deputy Speaker, as the system came into play under a previous Administration. It was designed, rightly, to promote openness and transparency in investors’ relationships with HMRC—in principle, a welcome step. However, DOTAS is now in effect helping to produce retrospective legislation, with DOTAS declarations being used as a stick with which to beat legitimate investors who never planned on having liquid assets to meet disputed liabilities. I fear that augurs ill for the Government’s broader, much vaunted anti-avoidance plans, as set out in the Bill, and their overarching plan to make Britain entirely open for business.

It is useful at this juncture to highlight some of the letters I have received in response to my article of last Friday. One constituent, a small-scale investor in the scheme, advised me:

“HMRC has previously offered us full relief on our cash contributions if we forgo relief on the loan element. We haven’t agreed to this. Now they plan to make us pay all the tax in the autumn. Many will feel pressured to settle on the basis of HMRC’s earlier offer as that will reduce the cash to be found by some 37%. This is harassment, which if conducted by a loan shark would rightly have you and your colleagues legislating. HMRC has no case and is relying on intimidation and extortion instead.”

A correspondent from further afield wrote:

“I am an ordinary, law abiding person who has never knowingly cheated anyone, least of all HMRC! But their endless delays and apparent moving of the goal posts make me feel almost like a criminal.”

Another wrote:

“The cries of protest highlighting this radical shift in power seem to have fallen on deaf ears of government officials. I represent hundreds, if not thousands of similar professionals that are on the brink of ruin as a result of the changing of the goal posts by HMRC whose unchecked powers seem to be morphing.”

That concern was shared by many others. There is concern that the decision process lies solely in the hands of a designated officer—some relatively anonymous HMRC official, acting as judge and jury, with no independent or proper safeguards. That does not seem right, as pressures on individuals to act in the best interests of a Department that is failing to collect taxes as quickly as it would like will be immense.

I know we discussed this matter in the House in the context of retrospective legislation last year, but we need to give serious thought to how Parliament can properly control such Executive power. There seem to be no checks or balances on a Government Department, and that does not seem the right way to address our tax policy.

In my view, if the Treasury wishes actively to encourage investment via additional tax credits, we must be assured that legitimate investors’ previously agreed, transparent vehicles are not at some point going to be subject to unplanned for, up-front tax liabilities in the event of a sudden change to the rules by HMRC. As the Exchequer Secretary will know, I have consistently pressed for Government efforts on tax evasion to go hand in glove with the creation of a comprehensive pre-clearance regime. That would allow firms and their tax advisers to road-test proposed taxation schemes with HMRC officials. Ideally, if that were to work efficiently, no new scheme would be permitted to be marketed until such time as approval had been given.

I am sorry to speak on a slightly negative note, because as I have said I support much of the Bill, but it is important to put on record some of the concerns about how the anti-avoidance process is working. Alarm bells should be ringing throughout Parliament as we preside over this unprecedented transfer of power to HMRC. This agency of the state is being empowered not only to apply the law but to a large extent to rewrite it. In summing up, will the Minister provide assurances on the steps that he is putting in place to ensure that incorrect seizures are avoided and that hardship will not follow as a consequence?

The Government’s aims to encourage investment in British industry and to clamp down on aggressive tax avoidance and evasion should not be incompatible. I trust that during the full consideration of the Bill we will further highlight some of those unprecedented powers to rewrite the laws and ensure that Parliament and, above all, the Treasury take a step back, so that we have a system that, as far as possible, promotes the sort of investment that all of us crave, not just in the creative industries but throughout the UK economy.

15:15

[Bridget Phillipson (Houghton and Sunderland South) (Lab)]

I am grateful for the opportunity to speak in this debate. I want to begin by focusing my remarks on the north-east economy: the challenges that we face and why my constituents will struggle to recognise the picture presented earlier by the Chief Secretary to the Treasury as he set out the measures in the Finance Bill.

The need to secure a stronger, more balanced economic recovery is pressing. My continued concern is that, unless the Government are willing to act to address the imbalance, the north-east will continue to be left behind. The north-east economy has many strengths and is an asset for the United Kingdom. We are one of the leading export regions in the UK, and in 2011, 2012 and 2013 we were the only English region to achieve a positive balance of trade.

A large contributor to that surplus is Nissan. Its plant on Wearside is one of the world’s most productive, producing a car every 60 seconds. Nissan’s continued success and the skill and determination of the work force are sources of immense pride to us all. We have long been a region with an identity rooted in manufacturing and engineering, and with Nissan, Hitachi and many others we will show just what we can achieve. For that reason, I welcome the measures on investment allowances in the Bill. However, it is a U-turn from previous cuts to allowances and, for all his refusal to acknowledge it, the Chief Secretary must accept that it was a mistake to have made those cuts in the first place. None the less, the measures are to be welcomed.

The automotive industry continues to show great strength, providing high-skilled jobs and investment. However, it is important to acknowledge that, particularly over the past decade, growth has come about through active Government involvement, by working with Nissan and the work force there. Over the past decade Nissan has rightly enjoyed many accolades. At times, sadly, jobs were lost at the plant, but we now enjoy the largest work force there on record, which is of course to be welcomed.

[Mr Jim Cunningham (Coventry South) (Lab)]

My hon. Friend mentions the automobile industry. I am sure she would appreciate that the previous Labour Government did a lot to encourage Tata to invest in Jaguar Land Rover, which is one reason why we are starting to get great success in the manufacturing industries, including in her region.

[Bridget Phillipson]

I agree entirely with my hon. Friend’s point. I was about to come on to look at the Labour Government’s record on the automotive industry and on industrial strategy. It is simply not right to begin looking at the sector only from 2010. A lot of work went in, over a long period of time, with the work force and the trade unions as well as through Government, to make sure there were the right skills and the investment needed for the industry to compete in the future. The Labour Government took that seriously; I hope this Government will take that forward.

[Mr Kevan Jones]

I agree with my hon. Friend about the long-term strategy that was put in place. Also, when help was needed at a crucial time in the downturn, the vehicle scrappage scheme helped work forces not only at Nissan but in the constituency of my hon. Friend the Member for Coventry South (Mr Cunningham). It may have been a short-term stimulus, as the hon. Member for Cities of London and Westminster (Mark Field) said, but it certainly helped at that time.

[Bridget Phillipson]

My hon. Friend makes the point that I was just about to come to, about the car scrappage scheme. There was also the enterprise finance guarantee. During the downturn that was crucial in keeping people in work and keeping the plant productive. My hon. Friend has no doubt visited Nissan and will know that it is crucial for a plant to keep staff numbers up, to be able to compete and to attract contracts. Nissan is very competitive internally, and Nissan in Sunderland continues to have to compete with plants in Europe and across the world. It is crucial to maintain core staffing levels so that when contracts come up internally, we can bid for them in Sunderland. The car scrappage scheme was crucial in making sure that we kept people in work at the plant and in the supply chain.

Ministers cannot afford to be complacent about the degree of success we have been enjoying and about ensuring that it is maintained. Continued success is not inevitable. A constant concern that is raised with me is that talk of Britain leaving the European Union and all that would follow from it creates massive risk and uncertainty about investment in Nissan. Nissan has rightly warned against that and Government Members should be mindful of the fact that continuing to engage in a Back-Bench debate about the future of Britain in the EU could have damaging consequences for areas such as mine, which rely so heavily on our ability to export to Europe.

A report published just yesterday outlined that the north-east and the midlands would be hardest hit by Britain leaving the European Union. That is no doubt linked to the automotive industry in both regions and our ability to export to that single market.

[Mr Jones]

I concur with my hon. Friend, but it is not just the automotive industry in the north-east that would be affected. Investment in Komatsu, which employs a lot of people in my constituency, and the new, welcome investment in Hitachi would also be affected. The chemical industry on the Tees also relies heavily on European markets.

[Bridget Phillipson]

That is absolutely the case. One of the ways in which Sunderland has diversified its economy has been to move towards software. The number of new small software firm start-ups is among the highest in the UK. Many of them are looking to expand into and open offices in Europe and I have no doubt that they do not find helpful the constant discussion we are having about Britain’s role in Europe. They want to expand what they export and their role in Europe by opening offices there. They do not want to have a pointless debate about Britain’s role; they just want to get on, create jobs, invest in our region and continue to diversify our economy. I have no doubt that my hon. Friend, like me, will recognise the fact that there was a big shift in the north-east economy in the 1980s and ’90s. We have transformed our industries, although that has not been entirely of our own choosing—we had to transform them. In fact, given the transition that had to take place, we have been remarkably successful. The fact that the software sector in Sunderland continues to grow, including in Rainton Bridge in my constituency, shows what we are capable of in the north-east, but we need the Government to work with us to achieve it.

[Mr Jim Cunningham]

On the point about companies investing in this country, I am sure my hon. Friend will agree that a lot of companies, such as Nissan and Jaguar Land Rover, initially invested in this country because we are in Europe. If the Government continue to undermine that confidence, they will create some major problems in the west midlands and, as she has indicated, in the north-east.

[Bridget Phillipson]

We should not underestimate the scale of the challenge that companies such as Nissan face. It is incredibly productive and has a wonderful work force, and the Qashqai, which is produced on Wearside, was recently voted car of the year. There is so much good news in terms of Nissan and other big companies in the north-east. However, companies such as Nissan require long-term stability and the ability to make decisions about where investment will come from in the years ahead. The prospect of an in/out referendum hanging over our heads until 2017 and the constant discussion about it are simply not helpful when it comes to jobs and investment in the north-east.

The most recent unemployment figures reveal that the north-east still has the highest unemployment rate in the country, standing at 9.5%. It is clear that the recovery has yet to deliver fully for my area. The picture of youth unemployment is even more troubling. Across the three parliamentary constituencies covering Sunderland, nearly 2,500 young people aged 18 to 24 have been out of work for more than 12 months. In my constituency, that represents an increase of 1,650% in four years.

Our region has seen in the past the economic and social damage caused by long-term unemployment, destroying communities and draining hope from countless good people and their families. Ministers, however, appear to be complacent about the scale of the problem. They should act now and implement Labour’s plan for a jobs guarantee for all young people who have been out of work for more than a year, because it is clear that the Youth Contract and the Work programme are failing. This Bill is another missed opportunity to tackle the scourge of youth unemployment and long-term unemployment in constituencies such as mine.

I speak to many people in my constituency who are desperate to work and who are applying for job after job and getting nowhere. They do not even hear anything or get an interview—they make no progress. It is hard to underestimate the despair that that causes among young people who are without hope for the future and not sure where things will take them. One man who came to my constituency surgery last week told me that he faces the prospect of getting up and looking for work every day, but he has been doing it for too many years now. He is desperate to work and has a lot to offer, but it is a highly competitive jobs market in which lots of highly skilled people who have lost their jobs in the public sector are able to compete and are chasing too few jobs. The Government must address the matter urgently.

[Sheila Gilmore]

Does my hon. Friend recall, like I do, that when the Government introduced their Work programme, they said that it would be the best ever employment service and that it was meant to help long-term unemployed people? Does she agree that that group does not seem to have received the necessary help?

[Bridget Phillipson]

Like my hon. Friend, a lot of the correspondence I receive and what people who visit my surgery tell me is that the Work programme is not delivering. They are not getting the help they need from it and they are not getting back to work. In an area such as mine, where long-term unemployment and youth unemployment remain a major concern, it is simply scandalous that the Government are not taking the action necessary to get people back to work. These people are desperate to work and they want to work.

The situation is not a great deal better for those in work. They are struggling to make ends meet with the rising cost of child care, ever-increasing energy bills and falling wages. Parliamentary questions have revealed that, since 2010, men living and working in my area have suffered a 10% cut in real-terms pay—in other words, a cut of £49 a week. Women have seen a drop in their wages, too—they now receive £26 less a week.

I recently visited the Loaves and Fishes food and bank in Easington lane in my constituency. It opened last September and is one of many new food banks that have, unfortunately, opened in Sunderland. Of course, I pay tribute to the volunteers and local community who are coming together to take action. We have always been an area that comes together and responds to need. The compassion and drive of the volunteers is evident, but so too is their sadness—sadness that these food banks need to exist at all. I am proud of their dedicated service, but it is a source of immense regret that local people are increasingly being forced to turn to food banks to survive, including many people in work, as the volunteers told me.

One of the biggest barriers that parents—particularly mothers—face is accessing child care when returning to work. Affordable and accessible child care will support our economy to grow, allow parents to work and give many children the best start in life, particularly those from the most disadvantaged backgrounds. The Bill’s measures, however, will not even kick in until the next Parliament. They do nothing to help parents now. They also help fewer people than previously announced and come after £15 billion-worth of cuts to support for children and families.

When in government, we did much to address that problem. In fact, we were the first Government to accept that, rather than child care being a private family matter, the Government had a role to play in ensuring that places were available. We devoted particular attention to supporting single parents back to work, which was welcomed in my constituency and did much to encourage people back into work.

Just like then, we now also have clear plans to help parents with 25 hours a week free child care for working parents of three and four-year-olds. That will be of real help to parents, who need action now. It is disappointing that the Government measures offer no help to parents struggling to work and pay for child care.

In the north-east, we need a Government who work with us, recognising both the potential and the opportunities that exist, as well as the challenges we face. My constituents, like so many working people across the country, need a Government who are on their side, tackling the issues of falling wages, getting our young people back to work and taking action now to help parents struggling with child care costs.

Economic recovery must be sustained and balanced, benefiting all regions of the country with economic recovery for all, but this Bill simply does not do enough to address that.

15:28

[Richard Harrington (Watford) (Con)]

Rather than try to compete with the shadow Chief Secretary’s negative attitude towards the Bill and his extended romp through it, I feel it is my role—my position is somewhat more humble than his—to stick to two or three brief points and ask the Government and him to think about them.

Although I applaud the Bill’s pension clauses, I think that two particular issues should be addressed in addition to what was said in the Budget statement. The first relates to the provision of advice and information to people who choose an alternative to the previous system whereby, for good and bad, the decision was handled by an insurance company through the annuity system. Something has been published about Government money being spent on helping to provide advice or information, but my fear is that that will turn out to be a call centre somewhere, with people who may be trained only in a limited way having to advise people on the biggest decision of their lives and finding it very difficult to do so.

Regulations were brought in by the Financial Services Authority for the smaller independent financial advisers who, for better or for worse, provided such a function for people retiring with small pension pots. A very open policy by Adair Turner and Hector Sants, part of the previous administration at the FSA, in the form of new regulations relating to the retail distribution review and the disclosure fees, has effectively eradicated the very low-level IFAs—those dealing with very small pension pots—simply because it was impossible for them to charge enough money to be able to give proper advice. I understand that, because it is just economics, but my fear is that no one or no company has adequately replaced that kind of advice, let alone in relation to what the Government are about to do.

I hope that the Exchequer Secretary and his colleagues will give that some attention. I know some money has been allocated, but for most people it is the most serious decision they will ever take, except possibly when buying a house. There must be a mechanism, whether private or Government-funded, to provide good advice. For wealthier people, there is a very sophisticated wealth management business—IFAs are very good, and I am sure that different firms around the country do an excellent job—but given that the average pension pot is probably about £20,000 to £25,000, it is a very important decision for people who have saved into it all their lives. A lot of thought must go into how such people are informed, although I accept that, for regulatory reasons, there is a big difference between information and advice.

[Mark Field]

My hon. Friend makes a very important point that is worth stressing. In the midst of more and more regulation, standardisation and almost a utilisation of all facets of the financial services industry, we are moving away from the very personalised advice that the sort of clients to whom he refers so desperately require.

[Richard Harrington]

I thank my hon. Friend, who characteristically makes a very good point. The problem is that to give the kind of detailed personalised advice that people want, the fee has to be at a certain level to reward professionals for doing the job, but smaller pension pots make that very difficult. That is nothing to do with regulation; it is simply about being able to charge the correct amount for their time. I hope that there will be alternative systems, although they may not perhaps give quite the bespoke advice that is available for people with larger pots. In other fields, such as accountancy, there are ways in which people can get good advice without having to spend the vast amounts of money available to those with larger pots.

My second point about changes in pensions legislation is just a thought. Many billions of pounds will become available that would have been dealt with directly in the insurance market through the annuity system. Have the Government given any thought to providing a facility involving national savings in which the Government or an organisation acting on their behalf deal with it on a managed fund basis? There is a similar system in Australia and New Zealand, where there is a kind of sovereign wealth fund that comes from people’s pensions pot, accrued together, with the necessary caveats about risk, a portfolio approach and all such matters. The Government thereby take advantage of the savings system, so that people can retire with a very good, solid and Government-guaranteed choice—of different types of products and risks—about what to do with their money. It would be very simple, with perhaps one or two choices; it obviously could not compete with the great panoply of schemes of the large fund management companies. It would be simple so that people could understand it, and I hope that it would provide a vehicle for funds that are safe and give a good return for the public, while also providing the Government with extra funds, as happens with National Savings & Investments.

On the Budget generally, which I support fully, my fear is that this country still lacks a business culture. Both this Government and the previous one quite rightly focused on small and medium-sized enterprises, businesses and apprenticeships, with different schemes and systems to try to help them. When I speak at schools in my constituency—as for all hon. Members, they are a regular feature in my diary—it is interesting to talk to young people about what they want in life, yet very few of the brighter ones seem to desire to go into a business environment. Those who do have such a desire tend to be interested in graduate schemes with larger multinational companies or the professions. There is nothing wrong with that—some of them, heaven forbid, want to be politicians—but these are the very people whose families often have small businesses in my constituency, and there are 1,600 businesses in Watford that employ between two and seven people. It seems to me that the establishment—schools, parents and everyone else—very much look for brighter young people to go into the professions and find alternatives to self-employment.

It is very hard to change that culture, but I want to commend the Government for what they have done to help small businesses and to help people to start up businesses. Wenta in Watford—the Exchequer Secretary may be familiar with it, because it is near his constituency —is an incubator for many start-up businesses. I saw several of them when I was there only a couple of weeks ago, including a small business started by James Morgenstern in which, in arrangement with Google, people who find an image of a building on Google Earth can then see a video of its interior. He started it in his bedroom and has now moved to an office at Wenta, and the business will expand.

To use James Morgenstern’s business as an example, his next big step is to have a first employee. I can speak with a little authority, because many years ago—I am probably about the same age as his parents or, depressingly, his grandparents—I was in that position. One starts a business and it is all great: one does everything oneself, being up 20 hours a day, and all that—it is a great pity that the shadow Chief Secretary is not in his seat at the moment, because he would be very interested in this, so perhaps I should brief him fully outside the Chamber—and the next step is to have a first employee.

I am very pleased that the measures taken by this Government have helped somebody to take that step. There have been different schemes relating to national insurance, and in particular schemes that have made it very reasonable for small companies to take on apprentices, who are given a tailor-made programme. To get to employees Nos. 1, 2 and 3—after employing only oneself—is the biggest step for a small business. From the point of view of the economy, in reducing expenditure on welfare, while people benefit from earning money themselves and eventually pay tax, that step is most critical. Many of the measures in this Budget and in previous Budgets will help with that.

In the end, most people set up businesses for one reason. It may be a noble reason or a selfish reason, depending on one’s perspective, but people set up businesses to make money for themselves and their family. When I speak to students in my constituency, I always commend those who want to be teachers, social workers and doctors because when they graduate, they will give their lives to help other people in society. However, to those people who put their hands up and say that they want to become rich, live in a big house and get a Ferrari—there are a few of them—I say that, provided that they pay their taxes and employ people, they will benefit society just as much as the first group of people. I really believe that. I believe in everything that the Government have done in the Budget and in the Finance Bill to help people to do that.

The tax cut for millionaires is a mantra for the shadow Chief Secretary. I am sure he is having his cup of tea and saying the same thing to anyone around the table who cares to ask. However, I do not believe that what he says holds water, because we want people to become millionaires. I want my constituents to want to become millionaires. By the way, on the first million, they will pay about half a million in tax and will hopefully spend another 200 grand on the Ferrari. Can we please let people become millionaires? The Government should help people to generate wealth and a lot of tax to support the people in this country who really need help.

[Mr John Redwood (Wokingham) (Con)]

Are not people who set up businesses performing a public service in their own right? They are not just given a million pounds because they want a million pounds. They have to open a chemist shop and provide pharmaceuticals to people or whatever. Is that not as much of a public service as anything else?

[Richard Harrington]

My right hon. Friend makes a valid point. That is another benefit. That is another way in which setting up a business is a public service.

Many of the things that the Government are doing involve not only the Treasury, but other Departments. I mentioned the pension changes, which relate to the Department for Work and Pensions. There are also changes in skills and education. The new university technical college in Watford completed on its property in Colonial way today. That has been put together by David Meller of the Meller Education Trust, who has several projects in the area, and myself. It will provide pre-apprenticeship education for businesses in the area that have jobs and that want trained people.

The UTC is sponsored by the Hilton hotel group, which is based in Watford. In fact, it runs the world from Watford. Everyone in Watford thinks that they run the world from there, but Hilton actually does. For the sake of clarity, people should understand that that excludes the United States, the rest of the world being a region of the United States in many people’s perception. The important point is that such firms are thinking, “If we want skilled employees to build up our business, we need them to be trained from quite an early age.” Hilton and Twin Technology, which is an IT company, are the two main sponsors of the UTC. They helping to design the courses because they are prepared to guarantee that there will be work experience and apprenticeships for people who come through the college. The Government have helped to facilitate that through the Budget and the Finance Bill.

In the dream world of the Opposition, they say, “Hey, everybody should get a job and it is guaranteed for a year.” No one has explained to me where those jobs will come from. I saw people working in the park as a result of the last Government’s attempt at that. People were taken on for a year to help the park keeper, but the job disappeared because it was not really a job. I am pleased that this Government have done their best to avoid that trap.

[Stephen Doughty]

The hon. Gentleman is giving a slightly confusing impression of such schemes. I have met small businesses in my constituency that have benefited from taking on workers through the Jobs Growth Wales scheme, which they would not otherwise have done. The scheme therefore benefits the business and the person who is in a job, getting experience and developing themselves. There would otherwise have been a lost opportunity.

[Richard Harrington]

I respect the hon. Gentleman’s view. I described my experience of the last scheme and he has spoken of his personal experience. I am in favour of that kind of scheme. When I was very young and starting out in business, I was able to take on one person under the old youth training scheme, which was much maligned by the Labour Government afterwards. I paid her £30 a week and the Government made up the balance. It was a very simple scheme and not as sophisticated as the schemes that we have today. That person is still in employment, although I am no longer anything to do with the company. She was 17 at the time and is now 40. That shows how old I am, but it also shows that such schemes can work for people. In my experience, the jobs that were provided under the last scheme would not otherwise have existed. It did not subsidise a job that would have been there anyway. However, I am perfectly happy to accept his point and his experience.

[Mr Kevan Jones]

I do not think that the hon. Gentleman has looked very closely at what we did in government. The scheme that my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) referred to is more akin to the scheme that the last Labour Government had. The alternative is that people are sat at home doing nothing. I agree with the hon. Gentleman that if people do not get a work ethic early on, but have two or three years sat on the dole, it is even harder for them ever to get into work.

[Richard Harrington]

The hon. Gentleman is absolutely right. There is a consensus that it is not acceptable if people who are on jobseeker’s allowance do not have to do anything towards getting a job. We can deal with that either by the Government providing a job through a direct subsidy, as the Opposition suggest, or through the current system.

[Mr Jones]

Will the hon. Gentleman give way?

[Richard Harrington]

If the hon. Gentleman will bear with me, I will make a bit of progress first.

The system means that people are effectively signing an employment contract when they sign on—I have seen such contracts, and the purpose is to get people looking for work. It is a programme of looking for work and taking up initiatives that have been derided by the Opposition, such as the work experience programme, the Work programme and other things. But I have seen the system work. It provides a lot of jobs in my constituency. However, the principle of what the hon. Gentleman says, which is that people should not be allowed to rot and do nothing while on jobseeker’s allowance, is right.

The hon. Member for Houghton and Sunderland South (Bridget Phillipson) made a good point that was pertinent to her constituency, and she has met people who have applied for hundreds of jobs and been unsuccessful. I accept that and have heard of similar cases. I cannot compare my constituency with that of my hon. Friend the Member for Cities of London and Westminster (Mark Field), or with Kensington and Chelsea, but in Watford—as the shadow Chief Secretary to the Treasury, who is not here, would know as he is a frequent visitor, for which I am grateful—jobs are available. I am not saying there are jobs everywhere, and it is difficult for anyone to get a job, but I accept that in the hon. Lady’s constituency things are completely different.

[Sheila Gilmore]

Is the hon. Gentleman concerned that the number of unemployed people remains relentlessly high, despite the talk about there being lots of jobs? Surely we must try to address that because 2.3 million people are still unemployed. That is a serious situation for all those people.

[Richard Harrington]

I agree with the hon. Lady, but in my constituency the number of those on jobseeker’s allowance has come down from about 3,600 to, I think, 1,700. I have met a lot of those 1,700 people and chatted to them.

[Sheila Gilmore]

Over the past couple of years in particular the number of people on jobseeker’s allowance has dropped, but the number of unemployed people has not. Only 58% of those who are unemployed are now in receipt of jobseeker’s allowance. The two figures are considerably out of synch.

[Richard Harrington]

I spend a lot of time at Jobcentre Plus—if the hon. Lady and her colleagues have their way, I am sure I will be spending a lot more time there after May next year—but I do that for a serious reason, which is to talk to people on jobseeker’s allowance. I have heard the Opposition speak about these matters, and one cannot argue with the Office for National Statistics and statistics such as that. However, I wanted to try to get to the bottom of the issue and—I am genuinely not trying to make a party-political point—that has not been my experience in my constituency.

[Bridget Phillipson]

rose—

[Richard Harrington]

If the hon. Lady will excuse me, I have taken enough of Madam Deputy Speaker’s time.

I conclude by referring again to the shadow Chief Secretary to the Treasury, who is not here. He painted a picture of the problem with millionaires getting pay rises and everybody else being increasingly impoverished. Next time he is in my constituency—as I said, he is a regular visitor to Watford—I would very much like to meet him and show him around because real unemployment has halved. Youth unemployment has dropped to pre-recession levels and is falling, and more than 400 new businesses have opened in the past year. I would like him to come with me to Watford high street and meet Alex and Isabella, whom I met last week. They have just opened an independent coffee shop there. Neither of them has any experience in business, but they are operating on the high street, along with other businesses. Those businesses are real, those jobs are real, and with the Budget and the Finance Bill I believe the Government have done everything possible to help the economy so that the experience of Watford high street becomes not the exception but the reality for many people.

15:49

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

I listened with care and interest to the hon. Member for Watford (Richard Harrington), and I challenge the idea sometimes portrayed by Conservative Members that the Labour party is somehow against business and does not understand it or the value it creates for the economy. We all do. I meet many small and large businesses in my community every week. Of course I want to see them grow and employ more people. I want them to employ people on better wages with better conditions and add that value. The hon. Gentleman’s comments about people being able to buy Ferraris are revealing and go to the heart of the Government’s problem, which is that they have done so much to help big businesses and bigger earners but done so little—or indeed have targeted—those who have less, be they small businesses or individuals on low incomes. That is the fundamental difference between those on the Government Benches and those on the Opposition Benches.

I am delighted to have the opportunity to speak on the Finance Bill and to support the reasoned amendment. As my hon. Friend the Member for Nottingham East (Chris Leslie) made clear, the Bill is long and weighty but will do remarkably little, if anything, to tackle the cost of living crisis facing many of my constituents. It will do much to support bigger earners and bigger businesses at the expense of small and medium-sized enterprises and businesses, and small and medium income earners in constituencies such as mine. It will do very little for the bank clerk or the call centre operator working for the banks and the financial industry in my constituency. It will do very little for the cleaner taking on a second or third job to make ends meet to be able to pay basic bills. The basic costs of living, whether energy, food or heating, are rising for them. It will do very little for the shift workers working in supermarkets in my constituency.

[Jacob Rees-Mogg]

This is a completely different Finance Bill from the one we have before us. The only decile of income that will actually be worse off in the next year is the top decile. In this Budget, there is £15 off fuel bills, a rise to £10,500 in the personal allowance, which helps the lowest paid most of all, and the freeze in fuel duty. All that helps the worst-off in society.

[Stephen Doughty]

The hon. Gentleman fails to note that the average worker has become £1,600 worse off since his Government came to power. I am sure that he is doing relatively well, but many people in his constituency, and certainly in mine, are not. Small businesses in my constituency are struggling with energy bills and business rates.

Hard-working people across my constituency are £1,600 worse off since the Government came to power. The increase in the personal allowance is often paraded by Government Members, but that is dwarfed by the 24 tax rises that have hit hard-working people. At the same time, the Chancellor has given a tax cut to millionaires. The hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) is not in his place, but he spoke on that earlier. The economic adviser to the leader of Plaid Cymru has apparently also supported that recently.

[Mr Kevan Jones]

Does my hon. Friend agree that there is the problem of insecurity, even for those who are in employment? Zero-hours contracts and a lot more part-time work make it difficult for many people to get credit, or even to dream of getting on the housing ladder.

[Stephen Doughty]

My hon. Friend makes an excellent point. Indeed, I will come on to the value of high-paid and well-paid work later in my remarks. That is one of the reasons I am such a strong supporter of the living wage. I am not surprised that Government Members will not give us an answer, when asked about the job figures, on how many of them are part-time, zero-hours contracts and minimum wage jobs. That is deeply revealing.

Businesses across my constituency are still struggling to get competitive financing to grow, yet bank bonuses are rising again. The Chancellor is using his time in Europe to fight on the bankers’ behalf, rather than looking at how we regulate our banks and financial sector in a sustainable and fair way that will drive real investment and real jobs in our economy.

What affect businesses in my constituency just as strongly, and 2.4 million businesses across the country, are energy price rises. They have hit the cafes I visit in Grangetown as much as they have hit the hard-working nurse or police officer who is struggling to pay their energy bills in places such as St Mellons and Penarth in my constituency. Energy bills have risen by £300 a year since the election. The Government constantly try to con us into believing that they are cutting bills, but the bills continue to rise. The Government remain unwilling to agree to an energy price freeze, although this week one of the major energy companies agreed to freeze its prices.

Earlier, my hon. Friend the Member for Houghton and Sunderland South (Bridget Phillipson) spoke passionately about visiting food banks in her constituency. I meet people who are struggling to get by: people who have been in work and have been looking for work, but who are now experiencing the indignity of having to go to food banks for emergency help.

[Mark Tami (Alyn and Deeside) (Lab)]

Many people who are in work have to go to food banks as well, because they are receiving very poor wages or are on very poor zero-hours contracts.

[Stephen Doughty]

My hon. Friend is exactly right. I have met many such individuals in my constituency. Two of the main food banks in my constituency are Cardiff Foodbank and the Tabernacle food bank, which is run independently by a church in Penarth. During the festive period in the run-up to last Christmas, demand for the Tabernacle’s services was eight times higher than it had been over the previous festive period, and demand in Cardiff overall doubled. I found that information very revealing. If it does not give an impression of what is really going on—of the hardship that people are facing, and the number of people who are on the edge as a result of the cost of living crisis—I do not know what else does.

[Mr Redwood]

Since devolution and the advent of a Labour Government in Wales, there has been more public spending per head in Wales than in London and the south-east, yet the economy of London and the south-east has greatly outgrown that of Wales. Why should that be?

[Stephen Doughty]

I am interested that the former Secretary of State for Wales should want to make comparisons between the economic performance of Wales and that of the rest of the United Kingdom. As I said earlier, the Jobs Growth Wales scheme has secured work for 12,000 people who would not otherwise have obtained it. In fact, Welsh unemployment is now lower than unemployment elsewhere in the UK. I think that the Welsh Labour Government are doing a very good job, notwithstanding the constant war on Wales being waged by the Conservatives, which the right hon. Gentleman appears to want to continue.

What I have described is the reality of life in Britain today for the constituents I have met at food banks, because of the cost of living crisis. We want the Government to take the steps we have recommended. We would like to see a Finance Bill that froze energy bills, reformed the broken market, returned people to work—not just in Wales, but throughout the UK—with a compulsory jobs guarantee, cut taxes for 24 million people on middle and low incomes by introducing a 10p rate, and cut business rates for small firms rather than cutting corporation tax for the biggest. A moment ago, we were talking about the Welsh Labour Government. It was only yesterday that their Economy Minister announced a new business rates relief scheme for retail companies. That is another example of the way in which they are prioritising small businesses, whereas this Government are prioritising those at the top. Of course, we would also reverse the £3 billion tax cut for people earning more than £150,000 a year.

[Mr Kevan Jones]

Such as the right hon. Member for Wokingham (Mr Redwood)?

[Stephen Doughty]

Indeed, indeed.

As my right hon. Friend the shadow Chancellor pointed out today, it was Labour that supported, and indeed beat down, successive cuts in the main rate of corporation tax, which fell from 33% in 1997 to 28% in 2010. Given that the rate today is 21%, however, we cannot justify another cut for bigger businesses when so many small and medium-sized businesses are under pressure. We want to see a cut that would benefit 1.5 million businesses throughout the UK, and in Wales we are already leading the way in that regard.

A moment ago, I mentioned the success of the Jobs Growth Wales scheme. I want to highlight that success, because there is a big contrast between it and, say, the failures of the Work programme introduced by this Government. As I said earlier, the Government cut the future jobs fund when they came to office. We in Wales, under a Labour Government, chose a different way, without which far too many young people would otherwise be missing out on opportunities for growth, development and experience. They would be sitting idly at home, rather than being out there developing skills and contributing to the economy.

My hon. Friend the Member for Airdrie and Shotts (Pamela Nash) has recently done some excellent work on youth unemployment and highlighted that 900,000 young people throughout the country receive unemployment benefits for more than a year—a figure that has doubled under the Government. Again, it is a tale of two approaches. Obviously, we want the jobs guarantee to be funded by a bankers bonus tax, learning from the example of schemes in Wales.

I have strongly supported a living wage for some time. I congratulate Cardiff council, which has introduced a living wage and Cardiff university, which took the bold step of introducing the living wage following campaigning by many organisations such as Citizens UK to bring people’s wages up so that they can earn more and cope with the cost of living, and ultimately contribute more to the taxation system and the economy. I am disappointed that the Bill does not make any plans to boost wages such as the Opposition’s proposals to incentivise firms to pay the living wage by giving a 12-month tax rebate of up to £1,000 for every low-paid worker who gets a rise. Increased tax and national insurance contributions raised from employees receiving higher wages would fund that scheme. That is about a race to the top. It is about building people up and getting them off social security and into better paid jobs, rather than the Government’s race to the bottom.

Tax avoidance generated some strong remarks from the Chief Secretary when I mentioned it. This morning, we heard that the Business Secretary has lost taxpayers billions in the Royal Mail fiasco. We need to look increasingly carefully at the Government’s great claims about tax avoidance and how much they will get back in various deals and schemes. I only wish that they had spent as much time in the past three years on measures to stop people avoiding tax as they have on cutting taxes for the richest.

I want to respond to the Chief Secretary’s comments. Despite the Bill’s numerous clauses and instruments on tax avoidance, which, I am sure, will be interesting to debate, the amount of uncollected tax rose last year. The Swiss tax deal will raise only a quarter of what the Chancellor claimed when he added it to his autumn statement. Many Opposition Members will treat with scepticism any future big claims about billions that will come from such deals when they are not delivered.

Tax avoidance is significant for the country’s finances and is also regularly raised with me locally. Ordinary taxpayers and businesses throughout the country are concerned about companies and individuals engaging in aggressive tax avoidance and tax avoidance schemes, and about individuals who fritter away this economy’s wealth in tax havens and through other loopholes, rather than contributing.

I will examine the provisions closely and follow the debates with interest. I am unlikely to serve on the Finance Bill Committee this year, although I enjoyed it greatly last year. [Hon. Members: “Shame!”] Indeed, it is a shame. We need to continue to hold the Government’s feet to the fire on tax avoidance. Many of our constituents would want us to do that.

The general anti-avoidance rule has been introduced and there are new schemes about accelerating receipts, but will they generate more money for the Exchequer? It is all well and good to introduce them faster—we all want that—but will more money be raised? A recent report in the Financial Times stated that the Office for Budget Responsibility originally hoped that the tax system would collect revenues worth 38.8% of national income in 2014-15, but that figure has been progressively revised down to 37%. We have to treat some of the Government’s claims about tax revenues and receipts with great caution.

This Finance Bill does nothing to tackle the cost of living crisis that many of my constituents are facing. It does very little to support the small and medium-sized businesses that are crying out for help, and it is continuing with out-of-touch policies such as millionaires tax cuts. Instead of learning from the economic and employment successes of the Labour Government in Wales, this Government are continuing to attack and to smear that Government. They would do far better to learn from them.

16:05

[Ian Swales (Redcar) (LD)]

This Finance Bill represents another step in clearing up the mess left by the previous Government. Most of my constituents know that a standard of living that depends on borrowing from the bank and running up credit card bills will eventually be reduced when people have to start paying off the debts. That is what we had under the previous Government. The Opposition are trying to con the public—

[Mr Kevan Jones]

Will the hon. Gentleman give way?

[Ian Swales]

Just a moment; I have only managed a couple of sentences. The Opposition are trying to con the public into believing that the cost of living can remain the same, regardless of the history and of the amount of money that was left behind.

[Mr Jones]

I put this question to the Chief Secretary to the Treasury earlier. Can the hon. Gentleman tell us whether the Liberal Democrats ever opposed the previous Government’s spending plans? Did they ever say that we should have been spending less?

[Ian Swales]

Unfortunately, I was not here during the last Parliament, but I have read a great deal of what my right hon. Friend the Member for Twickenham (Vince Cable), now the Business Secretary, said at the time. He was warning of the difficulties many years before they actually arose. I am quite certain that our party was watching the situation carefully, and that it could see what was happening.

There is a growing myth, which was repeated by the hon. Member for Cardiff South and Penarth (Stephen Doughty), who is no longer in his place—[Hon. Members: “He is here.”] My apologies; he is in a different place. That myth has also been repeated in the Opposition’s reasoned amendment, which states that

“working people are £1,600 a year worse off”.

Even the Institute for Fiscal Studies would admit that that is to do with gross income; it is not to do with net income, and it is not the amount by which people are worse off. Even the shadow Chief Secretary to the Treasury, the hon. Member for Nottingham East (Chris Leslie) pointed that out in his speech. One reason why people are not worse off by that amount is that there has been a large cut in income tax. That was a high priority for the Liberal Democrats, and I am delighted that in a few days’ time people will have experienced a £700 tax cut since the general election. The Bill includes another £100 for basic rate taxpayers.

[Julie Hilling]

Would the hon. Gentleman like to mention the 24 tax rises that his Government have introduced, including the massive hike in VAT?

[Ian Swales]

I will come on to some of those tax rises in a moment. I am just saying that working people are not £1,600 worse off, as the Labour amendment suggests. There is no expert who says that they are.

This Government’s tax cut has reduced inequality. It has been praised by the Living Wage Foundation as reducing the gap between the minimum wage and the living wage, and I am proud that my party has driven it through in this Parliament. It is also good that the Budget shows that there will be real growth in household disposable income from now on.

[Sheila Gilmore]

Would the hon. Gentleman admit that, for many low-paid workers, the increase in the tax threshold over the past few years has been more than cancelled out by the cuts in tax credits, the freezing of child benefit and other changes? In fact, the Government have given with one hand and taken away with the other.

[Ian Swales]

Everyone is in a different situation, but it is certainly not true to say that, for more people, the Government have given with one hand and taken away with the other. The hon. Lady should know that.

The Opposition’s reasoned amendment also mentions a “tax cut for millionaires”. This is from a party whose former Business Secretary said that he was

“intensely relaxed about people getting filthy rich”.

And it showed in what the Labour Government did for 13 years: the top rate of income tax was 5% lower than it is now until 6 April 2010, the very last day Labour Members sat on the Government Benches—until then they cut taxes for millionaires every year they were in power; capital gains tax was 10% lower, meaning that hedge fund managers in the City had a lower tax rate than those cleaning their offices; tax relief was available on pension contributions of £250,000 a year, whereas the current figure is £40,000—the difference is £100,000 in tax; and VAT was 2.5% lower, making a top Ferrari £5,000 cheaper—that is what was actually happening for millionaires.

[Mr Kevan Jones]

What about Lamborghinis?

[Ian Swales]

It was the same for Lamborghinis.

[Mark Tami]

The hon. Gentleman said that he was not here when the previous Government were in office and indeed he was not, but does he recall standing for election when the Liberal Democrats had a poster talking about the “VAT bombshell”? Does he actually remember that?

[Ian Swales]

I do remember that, but I would make some comments about it. First, at that time we had not seen the note left by the previous Chief Secretary to the Treasury saying that there was no money left. Secondly, and unfortunately, the Liberal Democrats were 269 short of an overall majority at the last election, so we did not have the power to implement our manifesto. Thirdly, VAT is a good, progressive way of raising money from the wealthy. [Hon. Members: “No it is not.”] I suggest hon. Members do the maths and have a look. I suggest that those who doubt that talk to someone on the minimum wage and ask them how much standard rate VAT they think they are paying, given that there is no standard rate VAT on their housing costs, food, energy and utility bills, children’s clothing, public transport, TV licence and insurance. Standard rate VAT is not paid on any of those items.

After the number of enforcement and compliance staff in HMRC was slashed by 10,000 by the previous Government there was such a culture of tax avoidance that six years ago a Radio 1 DJ thought it was fine to pretend to be a second-hand car dealer in order to avoid paying £1 million in tax. I am pleased that this Government are doing something about such avoidance, including in that particular case, and overall it is clear that millionaires had a much better time under the Labour Government.

I now wish to discuss some other items in the Bill, the first of which is the marriage tax allowance. That is the only area where I have sympathy with the Opposition amendment, as the measure was not a Lib Dem priority and it does affect only one part of the community. For example, it gives no benefit to a couple who are both on the minimum wage. We did not win the argument there and it is one area where we might have done things differently. The Opposition amendment then makes a comparison with a 10p tax rate—I would have thought they would not have wanted to remind people about the 10p tax rate and the fact that they doubled taxes on the lowest paid in this country, but by reviving it, they revive those memories. It is pretty irrelevant, as the Institute for Fiscal Studies says, because we can simply raise the minimum threshold by half as much and achieve the same effect, or a very similar one. So that proposal is something of a red herring and a grim reminder of how Labour ignored the low paid in the previous Parliament.

The amendment also refers to energy bills, and that reminds me of what we often see from the Opposition: writing the headline first and then filling in the detail afterwards—at least that is how it appears. They say that they want to freeze energy prices and they must be pleased at the recent Scottish and Southern Energy announcement, but they should examine the small print, because they would see that it involves the company cancelling investment. Of course, that was highly predictable when the price freeze was first announced. Everyone from the OECD to uSwitch has rubbished the policy, because the price freeze will also freeze investment and freeze the position of the big six. The idea that it will somehow damage the big six is nonsense because, as all observers say, it will freeze out investment by new players. I have six power station projects live in my constituency right now and I can tell hon. Members that this price freeze announcement is totally spooking the financial investors for those projects. Labour’s policy will lead to lower investment, less competition, more risk to supplies, and, ironically, higher prices. If it wishes to persist with this policy, it needs to produce some independent experts who think it is sensible, but I have not yet found one who does.

Despite the fact that the shadow Business Secretary has put his name to the motion, it does not contain a single word about business, which tells us something about Labour’s stance. It also cements its reputation as an anti-business party and shows that it has learned nothing from the fact that, on its watch, manufacturing halved as a proportion of the national economy.

The Budget is good for business. It has been welcomed by the North East chamber of commerce, the Chemical Industries Association, the Federation of Small Businesses and many others. As a north-east MP, I had a lot of sympathy and empathy with what the hon. Member for Houghton and Sunderland South (Bridget Phillipson) said.

I welcome the £100 million extra for apprenticeships—the number of which has doubled in my constituency. Despite the unemployment position in the north-east, we have, believe it or not, a skills shortage, so those amounts are especially welcome.

I welcome the support for manufacturing. The doubling of capital allowance to £500,000 will help those who wish to invest. As a joint founder of the all-party group on energy-intensive industries, I especially welcome measures to support those industries. We have been congratulated on them by the steel industry, although it would like to see the measures implemented more quickly. I also welcome the support for low-carbon technology in the Budget.

In the end, we must generate jobs, particularly in areas such as the north-east. Over the past year, unemployment in my constituency has come down 22%, youth unemployment by 31% and long-term unemployment by 14%, and they are all significantly lower than they were in May 2010.

I share the concern of the hon. Member for Houghton and Sunderland South about the EU. There was a large inward investment project heading to my constituency last year. We expected it to be signed, but suddenly, on 18 September, it was switched to France. I am certain that the uncertainty over our position in the EU was a factor. That was disappointing, but it just shows that all this talk is damaging the economy now and not just in the future.

I am pleased that the Finance Bill includes another round of tax-avoidance measures. The Government have taken many steps in that regard, but there are many more still to take. I welcome the publication a couple of weeks ago of the base erosion and profit shifting paper. I hope the Government will act on that, and look in particular at the shifting of profit through interest payments. Of concern was the fact that the paper mentioned the possible exemption of infrastructure industries from any measures in that regard. In particular, there was a mention of the private finance initiative industry, which ballooned under the previous Government. For example, junctions 1A to 3 of the M4 is 50% owned in Guernsey, 50% of schools in Redcar are owned in Jersey and, most absurdly, the whole of Her Majesty’s Revenue and Customs offices are owned in Bermuda. The exemption of those companies that have put in place those structures and the suggestion that they are not shifting profits out of the UK needs to be looked at again. At the very least, we should consider how PFI business cases are assessed, as it seems to be the norm to move the profits out of the country.

Labour has very little to say about this Budget. In fact, the Leader of the Opposition had nothing to say. The Opposition do not seem to have a coherent plan, although some of their measures are at least interesting. They appear to be using the same statistician as the leader of the UK Independence party for some of what they do. Although there is a long way to go, this Finance Bill will produce a stronger economy and a fairer society, which is what my party wants to see.

16:19

[Julie Hilling (Bolton West) (Lab)]

Mr Deputy Speaker, I find these financial debates deeply frustrating and often very bad for my blood pressure, particularly when I follow—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

We do not want you to collapse—the hon. Lady does not have to speak if it has such a great effect.

[Julie Hilling]

I assure you, Mr Deputy Speaker, that I will not collapse. I might just get a little excited.

I find speeches such as that just made by the hon. Member for Redcar (Ian Swales) exceedingly frustrating. The Government say that they want to build a fairer society, but fairer for who? Their actions certainly are not fair for the 2.5 million people seeking work and the nearly 1 million young people still being left on the scrapheap. The Chancellor says that this is a Budget for makers, doers and savers, but it does nothing for those who are making do and who, far from saving, find themselves deeper and deeper in debt.

The worst thing is the continual ridiculous comment that the global financial crash was caused by my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown). Powerful though he is, he did not bring down the world economy. Labour’s public investment did not cause the global credit crunch. Building new hospitals and schools and recruiting tens of thousands of extra nurses, doctors, teachers and police officers in Britain did not cause the sub-prime mortgage defaults in the USA that started the collapse of financial institutions throughout the world. It was not Labour’s public spending that triggered the world’s economic crisis but the global interdependency of reckless banking that triggered an economic meltdown in Britain and across the globe.

[David Rutley]

Was not a record structural deficit a major contributing factor as well? The hon. Lady seems to airbrush that out of the equation.

[Julie Hilling]

The hon. Gentleman should continue to listen to what I have to say, because before the crash we did not have the structural deficit that he is talking about.

[Mr Kevan Jones]

The hon. Gentleman just referred to a “record structural deficit”, but according to the OBR in 2010 it was 7.7%. In 1998, it was more than 8%.

[Julie Hilling]

I thank my hon. Friend for that intervention. I will come on to some of the details in just a moment.

Before they say that Labour should have done more to regulate the banks, Government Members must show some humility. The Conservatives wanted less regulation. Yes, Labour responded by boosting public spending and borrowing to offset the catastrophic collapse in private sector spending, and the £90 billion spent on the bank bailout plunged the public sector into record annual deficit, but what would they have done? Would they have allowed the banks to collapse and allowed us to go into a depression worse than that in the 1930s? Would they have allowed thousands, if not millions, to lose their houses, their pensions and their jobs? Yes, we bailed out the banks, we cut VAT and income tax and we gave 150,000 businesses more time to pay their tax bills. We put in place measures that helped 300,000 people stay in their homes and we set out how we would halve the deficit over four years once the recovery was in place.

Do Conservative Members agree with those who were on their Front Bench at that time? They opposed the fiscal stimulus and the measures to support the economy and families. They pushed for the deregulation of the mortgage market even as the crisis began and they voted against the Bill that became the Banking (Special Provisions) Act 2008, which would have let Northern Rock fail. Where would families and businesses be now if the Tories had got their way then?

[Jacob Rees-Mogg]

It is highly questionable that Northern Rock needed to fail if the Bank of England had been willing to act as a classic lender of last resort when there was a liquidity problem rather than a solvency problem.

[Julie Hilling]

I thank the hon. Gentleman for his intervention. At that time our Government needed to act to bail out those banks. He says that the Government need not have acted if the Bank of England had, but the reality is that the Government acted and needed to do so.

It has been claimed that before the global collapse we were spending too much, so why did the right hon. Member for Witney (Mr Cameron) pledge in 2007 to match Labour’s spending plan for further three years—to match our spending on investment, jobs and growth?

The level of debt under the Labour Government before the banking crisis was lower than that we inherited from the Tories in 1997. We brought the deficit down, we brought borrowing down and, far from failing to fix the roof when the sun was shining, we invested in repairing the terrible state of our public services. People were dying on hospital trolleys before they were seen, others were waiting a year to get on the waiting list before waiting another year to have their operations, schools were crumbling, the railways were decaying and youth services were disappearing. We repaired all that, and then the bankers behaved totally irresponsibly and brought down the world economy.

Yes, there was a failure by every Government right across the world to recognise the seeds of the banking crisis, but it was not caused by Labour’s overspending, and it was not caused by Labour’s high borrowing or high debt, because none of those things was going on before the banking crisis. If we had not dealt with the crisis as we did, the whole economic and banking system in Britain would have collapsed. If our Prime Minister at the time had not worked with other world leaders to bail out banks and bring forward investment, the world would have been plunged into a depression beyond belief.

We need honesty from Government Members to acknowledge the truth. The Government should acknowledge that the national debt has doubled on their watch to £1,400 billion. They should accept that wages are down by £1,600 a year since May 2010, and that people will be worse off in 2015 than they were in 2010. The Government should acknowledge that they have introduced 24 tax rises, that energy bills are up by almost £300 since the election, and that even though they inherited a growing economy, they squashed that growth, had three years of flatlining and have overseen the slowest recovery for 100 years.

The Government like to talk proudly about the number of jobs that they claim have been created in the private sector, so I asked them some questions about those jobs. I asked how many of the new jobs created lasted more than 12 months, but they could not tell me because they do not collect those statistics. So I asked them

“how many new jobs created in the private sector in the last 12 months were (a) unpaid workfare or internships, (b) through zero-hour contracts, (c) part-time, (d) part-time working 16 hours or less per week, (e) part-time working eight hours or less per week, (g) paid at the level of the minimum wage and (h) jobs transferred from public sector organisations.”

What a surprise. I was told:

“Information regarding the number of jobs created is not available. As an alternative, estimates relating to the net change in the number of people in employment in the private sector have been provided from the Labour Force Survey (LFS).”—[Official Report, 11 November 2013; Vol. 570, c. 460-61W.]

Estimates showed that more than a third of the new jobs that have been created are part-time, and that a third of those are under 16 hours. However, the Government do not collect the figures for those people who are on unpaid Government schemes or internships, even though those are included in the number of new jobs created. They cannot tell with any accuracy the number of people on zero-hours contracts or the number on the minimum wage. They also cannot tell me how many of the jobs now designated as being in the private sector are simply jobs transferred from the public sector, even though we know there are a large number of such jobs. The proud boast that over a million new jobs have been created is based on sand. We do not know how many are really new jobs, how many are unpaid, how many are low-paid, how many are zero-hours or how many are temporary. The Government like to think that any job is better than unemployment—a job at any price—but that is causing untold misery to many.

Let me tell the House a story of a man who went to the Allerton food bank. He was absolutely made up that he had got a job in Poundland. In week one, no work was offered; in week two, still no work offered; in week three, still no work offered. At this point he and his family were existing on boiled pasta because that was all they had in their household. Fortunately, somebody directed him to the food bank. People at the food bank helped him and spoke to Poundland, who said, “Well, we can’t finish him because he may get hours next week.” In the end he had to resign from his job and take the hit from the Department for Work and Pensions because he had resigned from a job—a job in which he was never given any hours to work. He had to resign so that he could feed his family.

Zero-hours contracts are a scourge on the unemployed, but instead of cracking down on them, the Government fail to collect statistics. Other sources estimate that a million people are on zero-hours contracts; a million people who do not know whether they can feed their families or pay their rents each week; a million people who cannot get a mortgage or a loan to buy a car; a million people who can make no plans for their future. It is like the bad old days when people had to queue up at the dock gates just to be picked for a day’s work. These workers are paid 40% less than those on permanent contracts, and 20% of them have said that they have had money docked or been penalised in some other way if they were unable to work when they were called for at a moment’s notice. Half the people have said that they have had shifts cancelled at the last minute. The Government should take Labour’s lead and regulate zero-hours contracts, not allow the exponential growth that has occurred under their watch.

[Jonathan Edwards]

The Social Services and Well-being (Wales) Bill was recently passed in the Welsh Parliament and my party put forward an amendment to prohibit the use of zero-hours contracts in that sector, yet the hon. Lady’s party, the governing party in Wales, voted down that amendment. What is her message to her colleagues in Wales?

[Julie Hilling]

With the greatest respect to the hon. Gentleman, I am not a Welsh Member and I am not a Member of the Welsh Assembly, so I do not feel able to comment. However, I wholly believe that what the Labour party says it will do in government is the action that should be taken, and that we need to crack down on zero-hours contracts.

The Government have presided over the destruction of permanent appropriately remunerated jobs with decent terms and conditions, with the creation of insecure, poorly paid private sector jobs.

At least we have not had the omnishambles of a Budget that we had a few years ago. I am pleased that the Chancellor, albeit secretly, has turned to plan B and is investing in infrastructure. But he is still doing nothing to tackle the cost of living crisis, and he is still ploughing ahead with further unnamed cuts. But we know where some of those cuts are being made. We already know that northern local authorities are bearing the brunt of the cuts in local government spending. Bolton will have lost £100 million from its budget, cutting services to the most vulnerable. Will the Government ever accept that they cannot cut their way to growth; that holding down wages means that more people are reliant on tax credits and many are in poverty?

The proposals on pensions appear to be welcome, but the Budget has done nothing for the 1.6 million pensioners living in poverty. Nor will it do anything for the crisis in social care, which has seen the number of older people receiving support falling by more than a quarter since 2005. Proposals on child care are welcome, but we need action now not in 18 months’ time. I met a woman on Friday in Horwich when I was campaigning for an energy price freeze who told me that she used to work in a nursery, but had to give up her job because she could not afford the child care costs for her own two children.

How on earth can the Government justify sacking tax collectors when the tax gap is somewhere between £35 billion and £120 billion? In 2011-12, before the last round of cuts, 20 million calls to HMRC were not answered. The estimated cost of those calls was £33 million, and the value of customers’ time was estimated at £103 million. Since then, the number of staff has been further reduced. Recent figures show that there were fewer confiscation orders in 2013 than in 2012 and less money was recovered, and only four officials are hunting 124 of the worst tax dodgers. The biggest scandal of all is that the Government say that they reduced the top rate of tax from 50% to 45% because people were avoiding paying their tax. They think that if people are poor they will work harder if their pay is cut. They think that people should pay all their tax, and that will make them better people, getting jobs and working harder. But the rich just have to pay less. They just have to say they will find other means so that they do not have to pay their taxes.

What nonsense. If the poor do not pay their taxes, they are prosecuted. If the rich do not pay their taxes, they get a tax cut. Even sadder, is that in the only full year that people had to pay the 50% tax, when they could not pre-pay or post-pay their tax bills, it brought in £1.1 billion extra. Perhaps I am a little strange, but I think that £1.1 billion is quite a lot of money. It could go some way towards solving some of the problems in our economy and some of the desperate situations my constituents face.

Until the Government deal with the cost of living crisis facing so many people in Britain today, they cannot possibly claim to be building a fairer society. It is an utter disgrace that in the sixth richest country in the world people are dependent on food banks and children are going to bed hungry. It is a disgrace that people are living in houses with no heat because they cannot afford the bills. It is a disgrace that long-term unemployment is going up. Yet again the Government seem to miss the point. They leave the poor and the vulnerable to suffer.

16:35

[Charlie Elphicke (Dover) (Con)]

It is a real pleasure, as always, to follow the hon. Member for Bolton West (Julie Hilling). Listening to her speech, and indeed that of the shadow Chief Secretary to the Treasury, the hon. Member for Nottingham East (Chris Leslie), I was reminded, given recent events in Ukraine, of the charge of the Light Brigade in the first Crimean war, which we fought some years ago. They were very game, very determined and, in complete denial of the situation in which they found themselves, carried on regardless. It was fascinating to listen to the shadow Chief Secretary’s amazing negativity about the changes the Government have made. The Government have turned around the very difficult situation that they inherited.

The hon. Member for Bolton West seems to have a somewhat short memory, to put it gently. She was quick to blame the problems on everyone else, but slow to acknowledge any responsibility on the part of the previous Government. It is important to remember that there were problems in the UK’s banks due to the extremely poor and dislocated regulatory system put in place by the previous Prime Minister. There were problems with this country’s finances, and not just since the 2008 recession, because the previous Government ran a structural deficit from 2002 onwards, which left this country massively exposed. They said that they managed the crisis so well, but the UK, as some of us recall, had one of the largest budget deficits in the developed world. They spent the good years introducing more welfare and more spending, rather than controlling welfare and spending and making sure the UK’s finances were in a good state while the sun shone.

[Mr Kevan Jones]

The hon. Gentleman, who was not a Member in the House at that time, belongs to a party that throughout that whole period was calling for less banking regulation, not more. I know that he is one of the new Members who have been programmed to think that way by Tory central office, but the facts are that the GDP debt in 1997 was 42% and by 2008 it was down to 35%. Those are the facts, irrespective of what Tory central office tells him. He cannot deny the facts.

[Charlie Elphicke]

The hon. Gentleman knows perfectly well that his Government ran a budget deficit for a very long time. Running a budget deficit is understandable when coming out of recession, but not in a time of economic success. The previous Labour Government’s irresponsibility left this country badly exposed.

[Mr Jones]

I am sorry, but the hon. Gentleman must look at history. The previous Conservative Government ran a budget deficit for about 16 of their 18 years in office. In 1997 the deficit was nearly 8%. He has to look at the facts. The previous Tory Government ran a deficit even in good times.

[Charlie Elphicke]

Let us talk about those good times. Before the downturn in the ’90s, the national debt was at least 10 points lower than before the latest crisis.

[Jacob Rees-Mogg]

Surely the hon. Member for North Durham (Mr Jones) is forgetting that the success of the Labour party in the first two years came because it followed Conservative spending plans.

[Charlie Elphicke]

Indeed.

There was Labour’s crash. We hit the wall in 2008 and were left overexposed in a bad place with an economy that had been run very badly for a long time. Then the Labour party has the cheek—

[Mr Kevan Jones]

rose—

[Charlie Elphicke]

I have given way quite a lot. I think we have heard enough from the hon. Gentleman for a minute. Will he allow me to develop my points?

The Labour party, having learned nothing and forgotten nothing, has the gall to say that when we woke up in spring 2010, with a new Government, everything should immediately have been fine. Recessions are not like that; they continue for some time. It takes time to fix the car after it has been driven into the ditch. The absence of any sense of responsibility from the Labour party for the difficulties that it left and the toxic legacy that the Government inherited is, frankly, extraordinary. Government Ministers have done great work to turn things around and fix things. We cannot hand back the keys to the people who crashed the car when they remain in denial as the Labour party does today.

[David Rutley]

Was not the real crime of the previous Government that they became completely absorbed in what Lord Turnbull—not Conservative central office—said was complete wishful thinking? Through successive periods of economic growth, the Labour Government lost sight of the fact that there would inevitably be a bust after a boom, and that they would have to prepare for it. They missed that obvious challenge, and we are having to clean up the mess.

[Charlie Elphicke]

The Labour Government were delusional. I recall them saying for a long time that they had abolished boom and bust. It is great shame that the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), the former Prime Minister, is seen so rarely in these parts these days; it would be interesting to hear his take.

[Dr Thérèse Coffey]

Where is he?

[Charlie Elphicke]

Since he was bundled out of Downing street, he has been in the attic of Portcullis House but has been in the Chamber very rarely indeed. That is a shame.

One might think that the Labour party, having had four years to reflect, might not only accept full responsibility but try to develop its own economic plan. Saying how dreadful everything is but having no plan to take things forward is no plan to take to the country in a general election.

As I listened to the comments of the shadow Chief Secretary to the Treasury, a question struck me: what does the Labour party have to say to the person who worries about their job, wants their business to succeed and would like their kids to do well? The party is adopting policies that are so anti-business and so unimaginative about any kind of job creation—other than spending the same money 10 times over and claiming that as a new pledge. It has so little to say to the country and about the future; all it can do is sink into a sea of negativity.

[Julie Hilling]

This is the sort of speech that raises my blood pressure. Where does the hon. Gentleman believe the recession started? Does he agree that the global economic crash started in America? Does he accept that his party in opposition argued for less financial regulation? What would he have done when the crash came—let the banks go and leave everything else to go into a depression?

[Charlie Elphicke]

I apologise to the hon. Lady if I have raised her blood pressure. In England, the NHS will look after her very well; it has an increasingly good record.

I turn to where the Labour party has managed to get to. We have set out a clear economic plan, through which we have successfully cut the deficit by a third and cut taxes on average by £705 for hard-working people. We have managed to support business and cut business taxes, which the anti-business Labour party has taken to opposing of late. It says it supports the welfare cap, but in media interviews it wants to exempt this and that benefit from it. We have managed to take firm action to control immigration and we have plans for better skills for our young people, to give them a better future.

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

Is it not true that we have not only a plan but a long-term plan that is credible and believable and is beginning to show some success? If Labour Members have a plan, perhaps they might tell us about it.

[Charlie Elphicke]

I completely agree. It is a major problem for Labour Members that they are unable to welcome any positive move. They look around and must surely see that a recovery has been building and the situation is improving, but all they can do is stick their heads in the sand and issue a cry of complete and utter denial.

Some years ago, the Leader of the Opposition said that the Conservative plans would mean the loss of 1 million jobs. Far from that, 30.19 million people are in employment, up by 1.3 million since the election. There are 1.7 million new jobs in business. We have an employment rate that is up since the election and an unemployment rate that is down since the election.

Then Labour Members moved on and sought other ground on which to go around stirring up negativity and spreading apathy, as they do, up and down the land. They thought they might find a more profitable situation in drawing a distinction between full-time and part-time jobs. For a while, as we repaired their damage, that rather seemed to work for them, and they thought there was some profit in it. They glossed over the fact that during the previous Parliament the number of full-time jobs fell by 320,000, because they found that inconvenient and wanted to seize on the problems of people in full-time jobs as the economy recovered. Unfortunately for them, the number of people in full-time employment has been rising. In the past year it increased by 430,000, and there are now more people in full-time employment than there were at the time of the general election. Then, there were 21 million people in full-time employment; today, there are 22.1 million people in full-time employment. This Government have done well not only on jobs but on full-time jobs.

Seeing that that line of attack did not render profit to them, Labour Members then thought they would start talking about long-term unemployment and seize on the long-term unemployment figures for young people, which the hon. Member for Bolton West, who would have made a very good cornet at the charge of the Light Brigade, said were going up. Unfortunately for her, that is not the case. During the previous Parliament they did go up, across the country, by 311%, but in the past year they have gone down by 30%. Their whole theory about long-term unemployment does not work.

I congratulate the hard-working people of Birmingham, Ladywood, who saw their long-term unemployment among young people rise by 103% under the previous Labour Government but have seen it fall by 4% since this Government were elected and by 31% in the past year. In my constituency of Dover, the figure went up by 700% under the previous Labour Government. That was a very sad, despairing thing. So much hope was taken away from so many of the young people I represent. I welcome the fact that the figure has fallen by 22% in the past year.

Bit by bit, the Opposition’s case disintegrates—nowhere more so, hon. Members may be interested to learn, than in the constituency of the Leader of the Opposition, who gave such a fascinating response to the Budget the other day. In his constituency, long-term unemployment among young people rose by 1,600%—not under this Government but under the previous Government in which he served as a Cabinet Minister. Since the general election, that figure has fallen by 9%, and it is down by 31% in the past year alone.

The Opposition have no long-term economic plan, just pure negativity. In each negative case they raise, every figure or statistic they snatch at seems to disintegrate in their hands. They would have better spent their time putting forward a true alternative economic vision for this country than seeking to attack a Government who have been trying to fix the problems that this country has had and repair the toxic legacy that they inherited.

I turn now to the cost of living—after all, that is the latest part of the Opposition’s case. They are keen to point out that wage inflation has not kept up with real prices. That has been the case after every single recession, which is why I made the point that in 2010 we were not simply going to get an immediate, overnight repair after Labour’s crash—it was going to take some time. We now stand on the threshold, as the time is fast approaching when wages are likely to outstrip inflation. We have seen the latest figures: inflation is now at 1.7%, down from 2.8% a year ago. Wages have grown 1.4% in the three months to January when compared with a year ago. The moment is therefore approaching when the cost of living argument will face a challenge of its own. What will the Labour party say then? What case will it take to the country, as people see that the Conservatives’ work to repair the country’s finances and the value of work is taking hold?

Of course, Labour has also latched on to the issue of energy prices, but we have seen the Government’s action to undo the hard work done by the Leader of the Opposition when he was Secretary of State for Energy and Climate Change in putting green levies on to our electricity bills. Those have been rolled back and we have seen a positive impact and a positive announcement from SSE, which has pledged a freeze until 2016. Again, that is positive action from the Government, who understand the challenges that people have faced because of the legacy we were left.

We have seen council tax frozen. We have seen the fuel duty rises planned by the previous Government held back. In this Finance Bill we have seen particular help for the least well-off, with the increased personal allowance. I have long been an advocate for increasing the personal allowance, to take the least well-off out of tax all together. The allowance is rising to £10,500, which is welcome.

It is not just about hard-working people, however. We also need to be concerned about people who are retiring. The work we are seeing on pensions—with a higher flat-rate pension and a move to get people out of the annuity requirement, to give them greater choices about what to do with their hard-earned, hard-saved money—is really attractive as well.

This Finance Bill does a great job in extending the Government’s work on recovery and ensuring that we are set fair for the future. Thankfully, it was not a give away Budget and it is not a give away Finance Bill. It should be, and is, steady as she goes: the work is not yet done. This Government recognise that much has been done but there is much yet to do. This Bill is a key part of the way back for Britain and of the kind of future that we can build, for people who work and for businesses that are growing today, and also for our young people tomorrow.

16:53

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

It is always a pleasure to follow the hon. Member for Dover (Charlie Elphicke), who offers such insight and entertainment value to the House. He called for optimism, and I hope to paint him a picture of the sunlit uplands of a Britain changing under the next Labour Government, elected next year.

Today is a day of anniversaries that demonstrate the difference in values between this coalition Government and the previous Labour Government—and, indeed, the different values of the next Labour Government. Fifteen years ago today, the national minimum wage came into effect. We had seen people in this country paid less than £1 an hour, with some of the most disgraceful poverty pay to be found in a large developed European country. But of course, last year, this day was the day on which the iniquitous and vile bedroom tax came into force. Anyone who has dealt with constituents—anyone who, as I did last year, has held the hand of a disabled lady with tears in her eyes, who was wondering how any Government could visit such an iniquitous tax on people like her—will recognise the differences in those values and the significance of those two anniversaries.

Those different values are written throughout this Finance Bill. This is not the Finance Bill that this country needed or with which it should have been presented. It is a damp squib of a Finance Bill—a no-change Finance Bill from a bedraggled Government who are increasingly all at sea.

[Ian Mearns (Gateshead) (Lab)]

It is appropriate to remember the anniversary of the minimum wage today of all days, because let us not forget that its introduction was opposed absolutely by the Conservative party. Some people were being paid less than £1 an hour—people living on my street were being paid 70p an hour for doing jobs in the security industry 15 years ago.

[Mr Bain]

We remember the tooth-and-nail opposition of the Conservative party to the minimum wage and the lack of support for it from Scottish nationalists—none of whom are present—when the previous Labour Government legislated on it.

The Government are all at sea as to how to reverse the decline in living standards over which they have presided. Under this Prime Minister, living standards have fallen more sharply and for longer than under any Prime Minister since the second world war, including Heath, Thatcher, Wilson, Callaghan, Eden, Macmillan, Douglas-Home and Churchill. If this Government were a football club, the team would be at the bottom of the league, facing relegation at the end of the season, with rising clamours for the manager to be given the sack. Some have even called for the return of the special one to come and lead the blues—no, not José Mourinho, but Boris Johnson—and speculation is rife as to which Government Member will be sent to the subs bench in order to let him get back in the team after the next general election.

[Ian Swales]

I agree that the minimum wage was one of the great achievements of the previous Government and I think that more should be done to police its implementation even today. However, does the hon. Gentleman share my regret that his Government took more than £1,000 a year in tax and national insurance away from people on the minimum wage? The reduction of £700 a year in their tax bill has given them a real-terms net increase.

[Mr Bain]

I hope the hon. Gentleman will use his undoubted influence to speak to the Business Secretary, whose Department has presided over a 10% drop in the real value of the minimum wage since 2010. Indeed, if the hon. Gentleman wants to build on the success of the minimum wage, he ought to speak to the Secretary of State about how he is going to reverse that trend, because the small rise announced by the Low Pay Commission simply will not do the job. How on earth will there be a £7-an-hour minimum wage by next October? That was the Chancellor’s pledge at the beginning of the year, but it is hard to see it happening, given the remit involved and without this Government taking firm action on enforcing and improving the national minimum wage.

I welcome some aspects of the Bill, such as the tax concessions for participants in the Glasgow grand prix. I believe they will attract a world-class field for that athletics meeting and ensure that those athletes stay on for the Commonwealth games. That will add to the economic growth of my city, Scotland and, indeed, all of the United Kingdom.

I am sure that any hon. Member who has witnessed the scourge of the rise of fixed odds betting terminals on high streets up and down the country will support the increase in machine games duty. Anything that discourages people from spending their hard-earned wages on those machines—I am sure that every hon. Member is aware of this issue—should be welcomed. The Government should be going much further, of course, in regulating the way in which those machines operate. They take a terrible toll on some of the poorest communities in the country, including in my constituency.

Ultimately, this Finance Bill is soft on the banks and hard on ordinary working families. It fails the national economic interest in three main ways. First, it does nothing to boost growth. According to the OBR, its measures and the Budget that it will enact contribute nothing in terms of an uplift in growth and, in relation to trade and exports, there will be no contribution to growth from net trade over the next five years. The Budget also fails to raise levels of business investment, which are currently among the worst in the EU and the G20.

Secondly, this Finance Bill does not meet the challenge of our times in that it fails to tackle our growing crisis of long-term youth unemployment—up by 50% since 2010—and it takes no measures to deal with under-employment. The Institute for Public Policy Research has today identified that as a growing crisis for our country, with more than 1 million people going to work for low wages and seeking more hours, but unable to get them in this weak economy.

Thirdly, this Finance Bill entrenches the inequities of its predecessors in this Parliament by failing to repeal the hated bedroom tax, which has devastated 2,500 people in my constituency and 600,000 people across the whole country. It fails to reintroduce a 50p rate of income tax for those earning more than £150,000 a year, or to introduce a 10p starting rate of income tax, which would benefit 24 million taxpayers.

All that at a time when the Bill offers banks a further tax concession in the bank levy and when the Government are failing to get to grips with the skills revolution that is needed if we are permanently to earn our way to higher living standards. At an event in London only today, the IPPR has said that Britain’s performance on skills has been worse than that of our leading competitors since the beginning of the economic crisis. If we are to get people into better-paying jobs, fill in our hollowed-out jobs market and repair the losses of jobs in construction and manufacturing, this Government and their Labour successors next year will clearly have to do much more on skills. The lack of any incentives in the Bill to improve skills in the workplace or to improve apprenticeships is a serious omission that does not serve the national interest well.

The conclusion one has to reach on examining the entirety of the Bill—all 295 clauses and 34 schedules—is that it is long on detail, but short on real action. It does nothing to raise the incomes of people in the rest of the country, while it perpetrates a recovery simply for those at the very top of society. If the International Monetary Fund—those well-known crypto-leftists—and President Obama get the point that cutting the gap between rich and poor is vital to having a recovery for every one of us, it is a matter of regret that this Government do not seem to get it.

[Ian Swales]

The hon. Gentleman is making a point about inequality, but does he not welcome the fact that the Red Book states that

“inequality is at its lowest level since 1986”?

Does he regret that inequality widened under the 13 years of a Labour Government, which is a truly shameful record?

[Mr Bain]

I hope that when the hon. Gentleman speaks to his constituents in Redcar, he will remind them of the entirety of the record of the previous Government, who of course oversaw a dramatic decline in pensioner poverty and a huge fall in child poverty. Those policies did work. The inheritance we were left on both counts in 1997 was a disgrace that should have shamed Conservatives who were Members of that Parliament.

[Charlie Elphicke]

Will the hon. Gentleman give way?

[Mr Bain]

I cannot resist giving way to the hon. Gentleman.

[Charlie Elphicke]

In fact, in the previous Parliament the relative figures for child poverty rose and the gap between rich and poor rose, but those numbers have reduced since this Government have been in power.

[Mr Bain]

Over the entire period of the Labour Government, pensioner and child poverty were lower than they were in 1997. If the hon. Gentleman examines the records from the Institute for Fiscal Studies, he will see that that is clearly the case.

[Jacob Rees-Mogg]

Will the hon. Gentleman give way?

[Mr Bain]

I simply cannot resist giving way to the hon. Gentleman, whose constituency shares part of its name with mine.

[Jacob Rees-Mogg]

There is a union between those of us who have “North East” in the title of our constituencies, and we always give way to each other politely and gracefully.

We need to be very careful on the issue of inequality, because it turns out that it can be narrowed by having a deep recession. That surely cannot be the object of any Government’s policy. We should therefore look at the figures with care. The same is true of relative poverty—it can be reduced through a recession.

[Mr Bain]

There is a degree of wisdom in what the hon. Gentleman says. I encourage him to look at the work of the social mobility and child poverty commission, which has come up with some interesting conclusions. It is critical that there is better investment in skills. My constituency was once powered by the railway industry. The economic heart of my constituency is now the college that is across from my constituency office. That is the means by which children in a ward with one of the highest levels of child poverty in Scotland will get the skills that they need to succeed in the jobs that we want to create in a modern economy.

[Julie Hilling]

Before my hon. Friend moves on from statistics, does he agree that one of the cunning ploys of the Government is to change the way in which they measure things? There are fewer people in poverty because they have shifted the point at which they declare that people are in poverty, and fewer people are waiting in A and E because the measure for waiting times has been shifted.

[Mr Bain]

My hon. Friend is entirely correct. It is shameful that the Secretary of State for Work and Pensions has abandoned the child poverty targets of the previous Government and is instead trying to finesse them with some unspecified alternatives. Yesterday, he disgracefully called the bedroom tax a success. That will be long remembered by the 600,000 people across the country and their families and friends who see it not as a success, but as an abhorrence that should be scrapped without delay.

Let me deal with some of the specific measures that are set out in the Bill. On the personal income tax allowance, it has been established by the IFS and the Resolution Foundation that four fifths of the benefit go to people in the top half of the income distribution. As I said to the Deputy Prime Minister in questions last week, the sneaky freezing of the work allowance by this Government, which was announced in the autumn statement and confirmed in the Budget and the Finance Bill, means that £600 million will be removed from the post-tax incomes of hundreds of thousands of people on low incomes. That is another example of the Government giving with one hand through the personal tax allowance, but taking two thirds of it away with the other.

The Government have not taken the steps that are needed to enforce the minimum wage and ensure that there is a real wages recovery for people in the lower half of the income scale. Liberal Democrat Members have spoken in this debate about taking people out of tax, but in the next financial year, 1.6 million low-paid people will still pay national insurance contributions and higher VAT. People will not forget that they have not been made better off by this Government’s fiscal policies, but have been made worse off. This is the first Government in over a century who will have to go back to the electorate with that record.

Despite the changes on individual savings accounts, people have seen the savings ratio in this country fall over the past few years by 3%. People have been forced to draw down their savings to make ends meet. The collapse in real wages has been compensated for by the reduction in the savings ratio.

The measures in the Bill will not be enough for an increase in savings. That is not surprising because people would need to earn more than £125,000 a year to get full benefit from the changes to ISAs. The Government should have come forward with more radical measures to increase saving, particularly for low earners—policies such as the Saving Gateway that was introduced by the previous Government and scrapped almost immediately by this Government in 2010.

The Chief Secretary was quick to boast of the effects the Bill will have on income from tax avoidance schemes, but as the Office for Budget Responsibility and the Institute for Fiscal Studies confirmed after the Budget, there are higher up-front taxes payments, although in a sense they are over-balanced by reduced revenues from 2019-20 onwards. The average benefit of the policy is a mere £90 million a year.

The Government should have been far bolder in the Bill in bringing forward more ambitious provisions to tackle avoidance and evasion. Where are the clauses that would have introduced mandatory company-by-company reporting of taxes paid and profits made? Where are the provisions on beneficial ownership of companies? They were promised by the Prime Minister at the G8 summit, but we have seen nothing of their delivery.

For some of these policies, the IFS has noticed a worrying trend. Yes, the Government have provided extra child care assistance for people through universal credit, but how is that paid for? By £200 million a year cuts to other, unspecified, parts of universal credit. The IFS has said that that is happening across a range of policy areas: permanent giveaways are funded by temporary increases in revenue, but there is no long-term plan about where the money is coming from. With that kind of financial planning, it is unsurprising that the Government are borrowing £190 billion more over this Parliament than they predicted at its beginning.

For business, we welcome the reverse in cuts to capital and investment allowances, but it is stark to consider that the Government’s policy goes up only to 2016. Business needs certainty and does not know what the Government’s plans will be after 2016 for capital and investment allowances. Imagine if we are back in the same position as in 2011 when this Government cut those allowances? I hope that when he responds to the debate, the Exchequer Secretary will offer assurances to business that there will be certainty in investment and capital allowances for the rest of the OBR’s forecast period, because that is certainly not in the Bill.

If we consider the effect of these policies on business investment, the OBR finds that there will be no appreciable increase in investment in the economy as a whole, or by businesses in particular, until 2018. The recovery was supposed to be fuelled by business investment; instead, it is fuelled by consumption, and led by people getting into debt or running down their savings as wages have slumped. That cannot be a balanced recovery in the economic well-being of our country. I also welcome some of the changes made to research and development tax credits, but even after those, this country will have one of the lowest levels of investment in innovation and science, in both public and private terms, of any major developed country. The Bill should have done far more to tackle that record.

Another omission from the Bill is—oddly—the provisions on tax-free child care. They have been much trumpeted by the Government but we do not see them reflected in the Bill, and one can only presume that the Government intend to make them the centrepiece of what will otherwise be a threadbare Queen’s Speech in June. If we consider the details of that policy there are worrying issues. I am pleased that the Government at least did not continue with their stated policy of leaving up to 1 million working poor people on universal credit without any assistance through the tax and benefit system to deal with their child care costs, particular as the child care tax credit was decimated by the Government in 2011.

What about the sustainability of this policy? Where is the provision in the Bill to increase the supply of child care places? As we see child care costs go up for families across the United Kingdom, the cry we hear from constituents is about the lack of affordable places. The Bill could have made progress on that, but the Government simply did not meet the challenge.

I believe that a Finance Bill that concentrated on jobs, child care, a lower starting rate of tax and bringing fairness to our tax system again by introducing a higher 50p rate would have begun the job of securing a recovery for everyone, not just a few at the top. National debt is rising, long-term youth unemployment is doubling, exports and productivity are stagnating, and investment is slumping. This is the damp squib Finance Bill of a failing and lethargic coalition slithering its the way out of office. Our country deserves better. Next May, it will get it with a Labour Government.

17:16

[David Rutley (Macclesfield) (Con)]

It is an honour to follow the speech of the hon. Member for Glasgow North East (Mr Bain). I anticipate hearing the words of my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) and I, as the Member for Macclesfield, represent north-east Cheshire.

It is good to see you smiling in your place, Mr Deputy Speaker, because the sea of gloom on the Opposition Benches reminds me of one of Eeyore’s greatest quotes:

“‘It is snowing still,’ said Eeyore gloomily…‘And freezing …However,’ he said, brightening up a little, ‘we haven’t had an earthquake lately.’”

That is the spirit on the Opposition Benches: gloom and despondency. This morning I went to the annual conference of the British Chambers of Commerce. Opposition Members are out of touch with the mood of the business community and the progress that is being made in the real economy. I ask Opposition Members to get out of the Chamber from time to time, speak to local businesses and get a sense of what is going on and the opportunities out in the real marketplace.

[Julie Hilling]

I do go and talk to businesses, but I wonder whether the hon. Gentleman talks to his ordinary constituents: the people seeking work or who are in low-paid work, and those using food banks or those who cannot afford to heat their houses. The Budget is not just about business, but about stopping people living a dreadful life.

[David Rutley]

That is a good question and I thank the hon. Lady for giving me the opportunity to respond. Of course I speak to members of the public in Macclesfield and outside my constituency, too.

[Bob Stewart (Beckenham) (Con)]

It’s a great place.

[David Rutley]

My hon. Friend says, from a sedentary position, that it is a great place.

These are, of course, challenging times, but things are improving. The reason for having a Budget that is useful and important for business is that it is through business and the private sector that we create jobs to enable people to take care of their needs and those of their families. The hon. Lady will know—as will, no doubt, Mr Deputy Speaker, although he cannot comment—that under the Labour Government 100,000 public sector jobs were created in the north-west over a period when net new jobs in the private sector came to approximately 18,000. Surely, that is completely unsustainable.

[Mr Kevan Jones]

The neo-cons of the Conservative party think that public service jobs—nurses or cleaners in hospitals—are somehow worth less than private sector jobs. I do not subscribe to that. I put it to the hon. Gentleman that the growth in jobs he refers to was achieved through spending that his party agreed to throughout all that time.

[David Rutley]

Public sector jobs are vital, but I am talking about the need to get the balance right between private sector jobs and the size of the state. That is what we are seeking to balance. On the comment that he has made repeatedly throughout the course of the debate, I was not in this Chamber prior to the general election.

[Mr Jones]

The Chancellor was.

[David Rutley]

That is true, and so were the Prime Minister and others, but I was not. I was working in the world of commerce and had severe reservations, like other Members no doubt, about the policies of the Labour Government. Let us look at the results: the bust that was created after the boom. We are clearing up that mess.

It is a pleasure to speak about the Bill, and a pleasure to speak about the way in which it builds on the Budget. Not only does it make Britain more competitive on the world stage, but, crucially, it reduces the barriers to competition and consumer choice here at home. It is vital to our residents as well as to our businesses. It is a sensible, responsible Bill from a sensible and very responsive Government. It is a Bill for enterprise, intended to rebuild trust in our economy and in our public finances, and also to rebuild the trust that this Government are on the side of the consumer, taxpayer, the saver and, of course, the entrepreneur. That is necessary, because confidence in the economy and in the free-market system can be regained only by increasing the power of choice and market knowledge among consumers. The crisis of confidence—the trauma of trust—that we inherited was a natural reaction to the failures of the Labour Government, and threatened to damage wider belief in prospects throughout the market economy itself.

It was not just a market problem that we faced; it was the problems of yet another Labour Government that we were having to clean up. A great deal of good has already come from the reversal of Labour’s policies on tax, and their disposition to micro-manage and, of course, to mis-spend. This Government have been opening up the economy to transparency and to competition—not least in banking—and putting the consumer and opportunities for new entrants to markets first. It has been a long, hard road, and there is more to follow. The global race is a marathon, not a sprint. We inherited the extraordinary deficit that many Labour Members want to deny, which amounted to 11% of GDP between 2009 and 2010, but will be halved to 5.5% of GDP next year.

[Mr Kevan Jones]

Will the hon. Gentleman give way?

[David Rutley]

Of course, if the hon. Gentleman will agree that it is a good thing that we have been able to reduce the deficit to 5.5% of GDP.

[Mr Jones]

If the hon. Gentleman reads the OBR report published in, I think, March 2012, he will see that the figure was 7.7%, not 11%. I think that he should get his facts right rather than constantly regurgitating figures as if they were fact when they are clearly not.

[Jacob Rees-Mogg]

I think that the hon. Member for North Durham (Mr Jones)—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. The hon. Member for Macclesfield (David Rutley) should answer the first intervention before we start on the next. I am sure that we can allow the hon. Member for North East Somerset (Jacob Rees-Mogg) to intervene after that.

[David Rutley]

Thank you, Mr Deputy Speaker, but I hear a noise coming from North East Somerset, so I will give way at this point.

[Mr Deputy Speaker]

Order. The problem is this. I think that the hon. Member for Macclesfield rather than his hon. Friend the Member for North East Somerset is meant to answer the intervention from the hon. Member for North Durham (Mr Jones).

[David Rutley]

I will gladly do that. Throughout the debate, the hon. Member for North Durham has persistently made points that have been answered by Government Members, and many of them have been incorrect. He needs to focus on the work that we have done to reduce the deficit, which he clearly has not welcomed.

[Jacob Rees-Mogg]

I am grateful to my hon. Friend for giving way, and grateful, as always, for your splendid ruling, Mr Deputy Speaker. I think that the hon. Member for North Durham (Mr Jones) is confusing the structural deficit with the actual deficit. The actual deficit was 11%, although the structural deficit may well have been 7%.

[David Rutley]

I thank my hon. Friend for that clarification.

[Mr Kevan Jones]

You said “the deficit”.

[David Rutley]

I did: absolutely. In fact, as Hansard will record, I referred to “the extraordinary deficit” that had been created by the Labour Government.

A budget surplus is now in our sights. We are likely to see it in 2018-19. According to the International Monetary Fund—which is often quoted by Labour Members—the UK is achieving a larger reduction in both the headline and the structural deficits than any other major advanced economy in the world. Unemployment is falling, growth is up, and we have a record number of businesses and a strengthening culture of entrepreneurialism and self-employment. Those are clear results from a Government with a clear sense of direction.

This Bill will doubtless be remembered for years to come for the great work that it is doing to help to promote the interests of savers and pensioners through the reforms that it introduces in clauses 39 to 43, which we will debate in Committee.

[Bob Stewart]

I think my hon. Friend will agree with me that the Bill will also be remembered because, apparently, it gives £700 more to everyone in the country.

[David Rutley]

Certainly, very important steps are being taken, such as raising personal allowances, which will help all our constituents who are facing challenging times. However, there are also measures in the Bill that will help businesses to create more work and more wealth, and help us to achieve greater growth and prosperity.

Returning to clauses 39 to 43, the Chancellor has championed the consumer’s right to take decisions in accordance with their own life circumstances, over and above the procrustean desires of the state. Much has been said about these reforms, and no doubt plenty more will be said in the days and years ahead, but I want to focus today on how other clauses in the Bill are equally supportive of consumers by bolstering competition and lowering barriers to entry for British enterprise—clause 10, on capital allowances, clause 6, on corporation tax, and clause 73, on air passenger duty, to name but a few. Encouraging new entrants—those first-time entrepreneurs, employers and exporters—is vital in increasing choice for consumers and in keeping established businesses on their toes and responsive to their customers. This Government have slashed barriers to entry through deregulation initiatives—an ongoing process that I have been involved with on the Deregulation Bill Committee—and there is also the red tape challenge and the one-in, two-out regulatory arrangements. These are important steps in creating much-needed supply-side reforms.

I hope to contribute further on the Finance Bill Committee—if I can catch the Whip’s eye—because the barriers to small new businesses, new employers and new exporters have been kept far too high in the previous decade or more. We need to get on and finish the job and create a real enterprise pathway. There is little point in trying to address the problem of firms that are too big to fail if we do not also seek to address that of new businesses that are too small to succeed against barriers to entry that have been in place for far too long. This Bill helps us to take significant strides forward. In the words of the British Chambers of Commerce:

“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.”

It is the economics of strong, long-term measures for long-term growth.

[Ian Swales]

The hon. Gentleman is making a very good speech. As somebody who represents the north-east corner of north Yorkshire, which is part of the north-east region, I am sure I can join in the north-east theme this afternoon. He talks about the drive to improve businesses. Does he agree that it is only through successful wealth creation that we can provide the public services that Opposition Members—and all of us—want to see?

[David Rutley]

Absolutely. Real growth and true wealth creation have to come from the private sector: that is how we generate the wealth needed to provide the public services that Members on both sides of the House welcome and want to help our constituents.

The Institute of Directors has described the Budget measures in the Bill as “responsible and imaginative” ones that will

“promote growth, exports and investment”.

It says that

“doubling the annual investment allowance…will bring forward a significant amount of investment…with knock-on effects across the economy”,

while

“increasing the cash value of Research and Development credits…will benefit many new businesses immediately”.

That will create the jobs we want to see and tackle the challenges of youth unemployment that Opposition Members have mentioned. Yes, we have had to consolidate the nation’s finances, but we have also signposted clearly the future direction of lower taxes. Although cutting air passenger duty, for example, has not been affordable in recent years, the Bill will very generously cut the two highest rates from 2015. This Government do not shirk from the difficult decisions that need to be taken to restore order to the national balance sheet. It is precisely this approach of taking long-term decisions that has allowed us to double investment allowances to £500,000 and to cut APD, which we have been able to do responsibly and affordably. I hope that business will respond by investing in export potential and taking advantage of lower flight taxes to get out and sell to the world. The barriers are down, and the pathways to achieving export potential are getting clearer. That is a clear priority of Members on this side of the House.

We are moving forward with corporation tax, too. Cutting it to the lowest level in the G20, the Bill will further improve our competitiveness in the international market. The new employment allowance will slash the cost of taking on a first-time employee. These are pro-enterprise, pro-competition measures that will create long-lasting benefits for the economy, for jobseekers and for our consumers. By making it easier and less expensive to deal with the state and to pay its taxes, the Bill also makes it easier for first-time entrepreneurs to become first-time employers and first-time exporters.

The Chancellor has promised to do all he can to boost our export performance. The CBI has noted that the increasing export finance stream announced in the Budget should “strengthen our armoury”, although it also agreed with something that Lord Young and Lord Green have already acknowledged, when it stated:

“The Government must now work much harder to promote these schemes, since many fast-growing firms are unaware of the support available.”

I know that the Government are acutely aware of that fact, but it is critical, now that we have the plans in place, that we do a better job of communicating with SMEs and telling them what support is available.

When customers are free to choose, businesses are required to innovate, to offer better service and to control their prices. When the state stands in the way of that market competition, prices are skewed and, in the longer term, the economy deteriorates. We have only to look across the channel to see where that path could lead—to plan B, as we might say—and to see what that strategy has delivered for France: rising unemployment and a budget deficit higher than had been predicted. We do not need to look across the channel to learn who would bring similar economic woes to Britain; we need only to look across to the other side of the House. Thank goodness that we on this side of the House chose to stick with the right plan. We now want to finish the job.

I was fortunate to attend the British Chambers of Commerce annual conference this morning. It was a positive start to what I am sure has been an excellent day for chambers of commerce across the country. The theme was “State of the nation—good to great”, highlighting the need for what was called “great growth”— growth that is sustainable and for the long term. It was a timely reminder of the most pressing economic priority facing the country. I am proud that this Government are firmly committed to meeting that challenge head on. The Budget and the Finance Bill are both further evidence of that commitment, and that is why I will support the Bill tonight.

17:32

[Mr Kevan Jones (North Durham) (Lab)]

The hon. Member for Cities of London and Westminster (Mark Field), who is unfortunately no longer in his place, said that the Budget gave him a feeling of “upbeat optimism”. We have also just heard the hon. Member for Macclesfield (David Rutley) say that we should all be smiling, as though the Budget were to be the salvation of our nation. The Conservative party will clearly go into the next election using “Happy Days Are Here Again” as its theme tune.

[Jacob Rees-Mogg]

The hon. Gentleman will recall that “Happy Days Are Here Again” is traditionally a Democrat theme tune. I think it unlikely that the Conservatives would borrow from the left in America.

[Mr Jones]

I would not put anything past the new Conservative party, although I know that the hon. Gentleman is part of the ancient—even prehistoric—Conservative party. It is clearly part of the Conservative party’s strategy to try to give the impression that we have turned the corner and that the sunlit uplands are now before us. The public are neither so stupid nor so naive as to believe that, however, because they are living the reality of what this Government are doing to this great nation of ours.

[Ian Swales]

rose—

[Mr Jones]

I will give way to the “Conservative” Member for Redcar (Ian Swales).

[Ian Swales]

I thank the hon. Gentleman for giving way. The North East chamber of commerce said recently that its members’ business outlook was the most positive since 1995. Does he disagree with that? I accept that business is not everything, but surely he can welcome that.

[Mr Jones]

I have great respect for the North East chamber of commerce, but it represents only a certain section of the business community—it does not represent all the business community—and I have never seen it disagree with any Budget, because, understandably, it likes to keep in with the Government of the day. The “Conservative” Member for Redcar is clear in giving an upbeat assessment of his own constituency, but it is not one that I recognise and neither do many Members representing north-east constituencies.

The hon. Member for Macclesfield said that the Government had a clear sense of direction and the hon. Member for Dover (Charlie Elphicke) said that they had a clear plan, unlike the Opposition. Let us look at this clear plan and sense of direction. The narrative goes as follows, and before any Government Member says differently, these things are not invented by the Opposition; they are what this Government did when they came to power. We should recall that in 2010 our economy was actually growing. Why did it go into recession? It did so because of what happened during their first few days, including the measures on investment, which my hon. Friend the Member for Nottingham East (Chris Leslie) mentioned. What the Government did sucked money straight out of the economy, so demand went down. We have had the longest recession and recovery in history. On the Conservative party’s and the Chancellor’s own figures—these are not my figures or the Labour party’s—by now we should have seen 8.4% growth, whereas we have actually seen 3.8% growth. We were supposed to have got rid of the deficit by 2015, but we are actually borrowing another £190 billion more than we were planning to borrow.

That is the Chancellor’s supposedly successful plan. People would think that he would apologise for that, but that is about as likely as the hon. Member for North East Somerset (Jacob Rees-Mogg) walking into the Chamber wearing a pair of Wrangler jeans. The fact is that the Chancellor’s plan has not been working, with the root cause—the Liberal Democrats have been going along with this—being an ideological Conservative party, which is not just about deficit reduction, but is actually about small state Conservatism. The headlines in last week’s Budget were clearly designed around things such as the pension measure, which I will discuss in a moment, but tucked away were another £1 billion of cuts, which the Chancellor made permanent for future years. So that is more pain for Departments across Whitehall and communities across our country.

The Budget headline was clearly on pensions, and much has been said about the freedoms that the measure is going to give. I do not usually agree with the hon. Member for Watford (Richard Harrington), but he made some interesting points in his contribution and I share his fear about people’s ability to get proper financial advice about what to do with their pensions. I take his point that we are dealing with relatively small sums in terms of pension pots of £20,000 to £25,000 and the costs of giving that advice would be astronomical. Are we, however, going to avoid the chaos we had—many of us remember seeing it in the 1990s—when the vultures descended on workplace pension schemes, advising people to take money out and put it into all sorts of products, which led to people making bad investment decisions?

The Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), who is responsible for pensions, says that he is not really bothered if someone wants to go and blow it all on a Lamborghini. Hon. Members might not be surprised to learn that I do not know a great deal about Lamborghinis, but I was a bit disappointed that he did not use an example of a British car, because it would have been a good idea to boost the British economy if he really wanted to give an example of an expensive car. Today, I looked up the cost of the cheapest Lamborghini and found that it is £300,000—that represents quite a big pension pot. The problem arising out of that policy is that the Government have not published the modelling on what the effects will be on the public purse. They need to do that because hidden issues need addressing. It is right to give people choice and freedoms, but the Chancellor did nothing at all to affect the charges, fees and so on that small pension pots are attracting, which can be substantial, not only at the time of buying an annuity, but over the lifetime of the pension. That would be a thing to do.

I have serious concerns. For example, if a pensioner uses their £300,000 plus to buy a Lamborghini—or possibly a Bentley, which would at least boost jobs in this country rather than in Italy—what do they do when they have no money left? The Pensions Minister says, “Well, that’s fine because it has all been taken care of by the new generous state pension.” He forgets that there are other things. There is no mention, for example, of care costs or of housing benefit. Those things need to be explained. It helps the Chancellor; he has a figure in the Red Book for the amount of tax he will raid out of pensions in the short term. There will clearly be a boost if people spend their money in the economy. I am not usually a great fan of the Association of British Insurers, but a serious issue has been raised about the future of the annuities market. Insurers do not just get in money and sit on it; they invest it, so we are talking about long- term investment that is being taken out of projects and businesses. To make a full assessment of the effects of this move, we need to understand the modelling of the scheme, and that has not been forthcoming. It will be interesting to see whether the Government will produce it.

The other issue is the increase to £15,000 a year in the allowance for individual savings accounts. Like the hon. Member for Macclesfield, I speak to my constituents. It is laughable to suggest that they may have £15,000 lying around to invest each year. I think that most people are in the same position. As my hon. Friend the Member for Glasgow North East (Mr Bain) said, people are not investing the money; they are actually spending it to live in their old age. Some 8 million people in this country have no savings whatever, and another 32% have less than £1,000 in savings, so the proposal will not help anyone. It may help some who have £15,000 to invest. Should we welcome that? Possibly, but the idea that it will help most of my constituents, or most of the constituents of my hon. Friends, is frankly not right. On Saturday, when I was out at an event in Chester-le-Street in my constituency, someone said to me, “Who’s got £15,000 lying around to invest in that type of savings plan each year?”

When the Chief Secretary to the Treasury opened the debate, my hon. Friend the Member for Nottingham East said that he was suffering from Stockholm syndrome, because he has actually become part of the Conservative party. Indeed, having heard the speech and the comments of the hon. Member for Redcar, I think that he also has a very bad dose of the syndrome.

I asked the Chief Secretary at what point in the previous Labour Government did his party say that spending was too high. I then gave him another chance and asked him whether the Liberal Democrats had called for reduced expenditure in any area—whether it be in the NHS or anywhere else. There was not one single area. At least the Conservatives could say that they ditched the pledge around 2008-09. The Liberal Democrats kept going right into the last general election. To hear the hon. Member for Redcar now, we might think that he had long been there calling for fiscal responsibility and less expenditure. The Liberal Democrats may trumpet it now, but that was not the case back then.

The Chief Secretary to the Treasury said that he was proud that the increase in allowances was straight from the last Liberal Democrat manifesto. It might have been, but the commitment on VAT—he was challenged about what happened to that—went the same way as the commitment on tuition fees. Remember the VAT bombshell? It was the first thing they did and the Liberal Democrats could not even claim at that stage that they had been affected by Stockholm syndrome, as they were only in the early days of captivity. And what did they do? They increased VAT. The hon. Member for Redcar says that the increase in VAT is a progressive form of taxation. I am sorry, but it is not. All the indications show that it is a regressive form of tax that hits some of the poorest in our communities, including in Redcar.

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

Is my hon. Friend aware that in Northern Ireland we have a particular problem with VAT and our land border with the Republic of Ireland? Our VAT is levied at 20% for tourism products and in the Republic of Ireland they have been able to retain it at 9% as of today. They also have air passenger duty at 0% from today.

[Mr Jones]

I agree. Some particular issues that appertain to Northern Ireland need to reflect the common land border with the Republic of Ireland.

As we have heard several times this afternoon, the Liberal Democrats are trumpeting as a great thing the fact that we have increased the personal allowance. The people who gain from it most are not the poor but those on middle incomes. MPs—quite apart from some Government Members who earn a lot more than their parliamentary salaries and who will gain even more—will gain more than the low paid.

[Jacob Rees-Mogg]

The hon. Gentleman must bear it in mind that nobody gains more than the £700 and that in the early stages the higher rate taxpayers were not included in the increase in the lower rate threshold. It was clawed back from them, so what he says about MPs is actually not correct.

[Mr Jones]

I was referring to some of the hon. Gentleman’s colleagues and I do not know whether he is included, as I did not look up his figures. The right hon. Member for Wokingham (Mr Redwood), who was in the Chamber earlier, earned £213,000 last year on top of his salary. He will therefore gain from the tax cut that the Government have given him. The Conservative Member with the highest figure earned something like £800,000 a year.

VAT, the cuts to housing benefit, the bedroom tax and the changes to tax credit have all affected those individuals. My hon. Friend the Member for Glasgow North East also mentioned national insurance, which affects those who are on very low pay. As for the idea that the increase in the personal allowance is somehow a great gift to the low paid, it is, as somebody said earlier, simply about giving with one hand while taking away with the other.

One missed opportunity in this Budget is that of putting investment into our economy. Clearly, the narrative is about a small state and the Conservative party wants as small a state as possible. The view expressed by the hon. Member for Macclesfield gave the game away and that is, basically, that the only people who create wealth in this country are entrepreneurs and business, that somehow public expenditure is a bad thing and that spending money on services does not create any wealth at all. In the early days of this Government, the one thing that sucked more money out of the economy than anything was the cuts to public services and local councils. Councils do not sit on money, they spend it in their local communities. I know that many small businesses, including one small building company in Chester-le-Street, nearly went to the wall because their main contracts were with the local authority.

The hon. Member for Redcar used a comparison with maxing out credit cards, but the idea that the state is like an individual’s personal bank account is complete nonsense. Clearly, if the state invests in infrastructure and other things, we get growth in the economy.

[Philip Davies (Shipley) (Con)]

On a point of order, Mr Speaker. I hope the hon. Gentleman will accept my apology for interrupting his flow. When I opposed the ten-minute rule Bill earlier today, I had intended to start by referring Members to my entry in the Register of Members’ Financial Interests. Having read Hansard, it appears that I failed to do so, so I wanted to come to the House at the first opportunity to correct the record and refer Members to my entry in the Register of Members’ Financial Interests. That is my purpose in doing so now; it was not intended to interrupt the hon. Gentleman’s flow.

[Mr Speaker]

I am grateful to the hon. Gentleman for that point of order. His courtesy in the House is well known, as in general terms is his interest in the sector concerned. His omission was inadvertent and he has put the record straight at the first opportunity, and I thank him for doing so.

[Mr Jones]

The hon. Gentleman has not broken my flow, but I thank him for the little breather to give my larynx a rest.

If one follows the logic of the hon. Member for Macclesfield, business should not get any subsidies whatever. But we all know that that is complete nonsense. The Government are now increasing investment allowances, but they cut them in 2012. We are now told that this is a great achievement of the Budget, but we are only back to where we were in 2012.

I am seriously concerned that we have a two-speed Britain. We have a housing market that has clearly been stoked in London and the south-east, and we have a stagnant north. The hon. Member for Hexham (Guy Opperman) described Hexham, which is a nice constituency, and in the north-east, but he is living in some type of parallel universe if he thinks that the north-east economy is booming. Well-paid jobs in the public and private sectors have been replaced by low-paid zero-hours contracts. Four out of five of the new jobs that have been created are low paid and in the service sector, not in the long-term sectors. Added to that—as a north-east Member the hon. Member for Redcar is voting for this—is a movement of the limited public finance that there is from the north-east and other areas to the south. For example, we have already seen the record level of cuts in public expenditure for councils in the north-east. Durham county council has lost 40% of its budget. Contrary to what the Secretary of State for Communities and Local Government says about 40% of a budget somehow being saved by cutting down on pot plants or the fripperies, that is not possible. It has to be done by cutting back on services and people.

As if that was not bad enough, there is more to come. In the Budget and as part of the process, Durham county council will now lose another £13 million. Gateshead council will lose nearly £8 million. Newcastle city council will lose a further £14 million. South Tyneside will lose £7 million and Northumberland nearly £4.2 million. That will take money out of the economy and redistribute it to those in the south. The cut per dwelling in South Tyneside is £101.50. In Sunderland, it is £90.45. Meanwhile, Wokingham—people will think I have a thing about Wokingham—has an increase of £55, and Surrey an increase of £51. The hon. Member for Redcar, the great champion of the north-east, is voting for these things, redistributing money from the north and north-east to the south of England. That is having an effect on jobs.

The hon. Member for Macclesfield might think that public sector jobs are not important, but I tend to think that they are. When one needs the NHS, people must be there. When home care is needed from a local authority, people must be there. If there is no money and deprivation indices have been removed, not only are those services being removed, but money is being taken from the local economy. That will have an impact on exactly the businesses that the hon. Gentleman argued earlier we should be supporting and growing.

[David Rutley]

The record will show that I did not say that public servants do not do a useful job, because I think that they do. Where do the interests of the taxpayer fit into the hon. Gentleman’s world, because I have not heard that mentioned in anything he has said? He seems to think that money grows on trees, rather than coming from taxpayers.

[Mr Jones]

The hon. Gentleman’s naive and simplistic approach is that the only way to grow the country’s economy is to sit back and wait for the great entrepreneurial spirits he talks about to grow up, as if by magic, and rescue the economy. Governments have a role to play in generating economies and delivering good, local public services. The idea that Durham county council, or any council, sits on that money is ridiculous; it spends the money in the local community, as do the people who work for it. It should come as no surprise to anyone—it might to him—that taking money out of an area, including the spending power of local authorities, public services and local people, will have an effect on private businesses, whether shops or services, because people do not sit on their money at home; they spend it in their local communities.

[David Rutley]

Whose money is it? It is not the state’s or the council’s. It is the taxpayers’ money, and there is a responsibility to spend it wisely.

[Mr Jones]

I totally agree. The hon. Gentleman should look at my record on Newcastle city council, because I always ensured that we got value for money. But there is a big difference between getting good value for money for the taxpayer and his suggestion that local authorities and public services spending money will somehow not have an effect on local economies. It should come as no surprise to anyone that taking money out of people’s pay packets, whether in local councils or public services, will have an impact on private sector jobs in local communities.

[Jacob Rees-Mogg]

The point that the hon. Gentleman is missing is that the money that is taken out of the taxpayer’s pay packet is tax in the first place, so this is merely changing the money from being spent in one part of the country to being spent in another; it is not creating new money.

[Mr Jones]

I disagree. Were we to build a new motorway or railway line, such as HS2—I am sure that the hon. Gentleman is a great advocate of that vanity project—the increased speed with which people would be able to move around and do business would have an impact, so it cannot be said that that will not have an effect. We come back to the idea that somehow Governments cannot have an impact on what is happening.

Last week my hon. Friend the Member for Middlesbrough (Andy McDonald) raised with the Prime Minister the disproportionate amount of money spent on transport in London, compared with the north-east. Interestingly, the Prime Minister rattled off four transport projects that he claimed this Government had delivered for the north-east. He was very confident about his facts, which did not surprise me, because his public school background means that he can be very confident even when talking complete nonsense—it does not really bother him, because that is the way he has been brought up. He mentioned the Tyne and Wear Metro and the Tyne tunnel—I cannot remember what the third and fourth projects were. They were all agreed by the previous Labour Government. In fact, the Tyne tunnel was finished before this Government came to office. The idea that this Government are somehow leading on those big infrastructure projects, which are desperately needed in the north-east, is ridiculous, because clearly they are not.

Housing is an issue that could be completely missed in the Budget. The way forward is clearly to encourage people to buy their own homes, and I have no problem with that, but if someone is in low-paid work on a zero-hours contract, and possibly having to work two part-time jobs, as many people do, the idea that they will ever get the credit worthiness to own their own home is complete nonsense. What we need, certainly in the north-east and in my constituency, is affordable housing for rent. The easy thing that the Government could do—it would not cost them any money—is give housing associations the borrowing requirements they need against their assets to build houses. The Government could do that, but they are not. Instead, they are creating an artificial bubble in the housing market. Look at the difference between the north-east and the south. Prices in the north-east are still £5,000 lower than in 2008; in London and the south-east, they are 77% higher. Ridiculously, housing is completely unaffordable for most people in London and parts of the south-east, with average house prices of £400,000. Even people with reasonable standards of living find it hard to buy a house.

I turn to youth unemployment, one of the great tragedies of the Government. I fear that there will be a repeat of what we saw in the 1980s—a completely lost generation of young people. They have no opportunity for a job, not only in the short term but in the longer term. Why is that important? If someone meets us for the first time, they usually ask us two things: our name and what we do for a living. Some people cannot answer the second question about a fundamental part of who they are. Some say that there are lazy people, but I am sorry—there are hard-working people struggling to make ends meet.

I will give two examples from my constituency. I met someone on a zero-hours contract working in a store, which I will not name, in the Metrocentre—that great cathedral to Thatcherite free market enterprise.

[Ian Mearns]

In Gateshead.

[Mr Jones]

In Gateshead. This 17-year-old on a zero-hours contract, who lives in Stanley, told me that he turned up at the Metrocentre one morning only to be told that there was no work and he should go away. He had paid his bus fare to get there, went back home and was then rung up to be asked back for two hours that afternoon. If he said that he could not do that, he would be sanctioned as one who was not trying hard enough. As was said eloquently earlier, for the Government the issue is a job at any cost. That man was getting out of bed every morning to try to work.

I met another young lad in Stanley last week. He had applied for well over 150 jobs and been on umpteen courses. The scandal about the Work programme is that the Government are lining the pockets of private sector suppliers. This lad was desperate. He said he wanted to set up his own business. I am sure that Government Members would think, “Brilliant! This great entrepreneur needs to go forward.” He went to the jobcentre to ask for assistance in getting his driving licence. They told him no, although they could send him on a course to do everything else. That is the trap for some of these young people. There is no hope for them and they feel neglected.

The issue goes further than that. The older generation look at their grandsons and granddaughters and see no hope. We needed hope in the Budget for those young people, but there was none. We need to give them hope. Labour has a commitment to get people into work. The hon. Member for Dover was disparaging about the previous Government’s attempts to do that, but it is important to get people into the ethos of work, because not having that place in the world is difficult. People can get into a cycle and give up hope.

The young people I meet in my constituency are working hard and trying. As I said, some are treated like hired help—paying out of their own pockets to get to work and being told to come back later when there might be hours. That may be the type of society that the Liberal Democrats and Conservatives want, but I do not. The next election must be about a very clear message not only about standards of living but what type of society we want to live in. Do we want to live in a society where people are on zero-hours contracts with uncertainty about whether they are going to get work, and youngsters are not going to improve their life chances as others did? The hon. Member for Macclesfield talked about a global race—well, it is. This Government have a clear policy: a global race to the bottom. This is not the high-skilled and forward-looking country that I want to live in.

As my hon. Friend the Member for Bolton West (Julie Hilling) said, if we are the sixth richest country in the world, it is a scandal that people who are not sat idle but going out to work are reliant on charity to live and put food on the table for their children. That makes me very angry. This is not the society I want to live in. The Budget does nothing for those people. In areas such as the north-east—my hon. Friend the Member for South Down (Ms Ritchie) mentioned Northern Ireland—there needs to be a clear plan for getting those regions working again: a new deal that has real investment behind it as regards infrastructure and making sure that young people have the opportunities they need.

Next May, I will make sure that I always remind people of one thing: that not a single one of this coalition Government’s horrendous, horrible policies, with the torture they have inflicted on many thousands of our citizens, as we expect from Tories, could have been introduced without individuals such as the hon. Member for Redcar and other Liberal Democrats who have voted for them all.

18:06

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

It is an enormous pleasure to follow the hon. Member for North Durham (Mr Jones), who always entertains the House with his eloquence. I am sorry that he has been relatively brief today. On previous Finance Bills, he has held forth for over an hour, and I was hoping for something similar.

The hon. Member for Glasgow North East (Mr Bain) started with a list of anniversaries, but he was remiss in not mentioning that today is the anniversary of the death of Eleanor of Aquitaine, which I happen to think is rather more interesting than the anniversaries he was able to provide us with.

It is a great pleasure to support the Government on this Finance Bill. It is worth looking at some of the figures that have been batted back and forth during the debate, some of which seem, to some degree, to have been invented by the Opposition. The real figures show that the Government can be proud of their record. Let me run through them, if I may. They are a mixture from the World Bank and the Red Book. GDP declined by 0.8% in 2008 and by 5.2% in 2009. I think that some people may have missed that downwards revision by the Office for National Statistics. GDP rose by 1.7% in 2010, by 1.1% in 2011, by 0.1% in 2012, and by 1.8% in 2013. The key to those figures is that since this Government have been in office, there has been no triple-dip or double-dip, as was predicted; in fact, the economy has grown because the Government have followed the right policies.

[Sheila Gilmore]

Did the hon. Gentleman feel that the predictions that the Chancellor gave to this House and the public in 2010 and 2011 were over-optimistic, or did he think they were okay? I seem to recall that the Chancellor was not predicting that level of growth.

[Jacob Rees-Mogg]

The hon. Lady is aiming at the wrong target. The Chancellor, in his considerable wisdom, decided to make these forecasts independent and therefore set up the Office for Budget Responsibility. That is how we know that we are competent. Indeed, Labour is desperate that the OBR should view its own figures. An independent body was set up to give these forecasts so that there was no legerdemain in what the Chancellor was doing.

[Sheila Gilmore]

If those were the forecasts of the OBR, based on the position as it saw it in 2010, does the hon. Gentleman agree that it must be the Government’s policies thereafter that have meant that those forecasts have not translated into reality?

[Jacob Rees-Mogg]

That does not follow. It is like looking at the weather forecast on the BBC and saying that it is the fault of the newsreader if the weather then turns out to be different. The two are not the same. The forecasts were made in good faith, based on what was known of the global economy at the time. But of course, things change and responses are different. The global economy continued to be relatively sluggish, but the figures that have been achieved by the Government are enormously respectable. There has been economic growth pretty much since 2010 and, most importantly, in the past couple of years. Everyone knows that economic policies have a long-term impact. If a Government come to office in May 2010, we cannot expect the figures in June 2010 to be the result of that Government’s policies—there is inevitably a lag. The effects, as we have seen, have been positive; the economy is now growing, and growing increasingly strongly.

The problem that the Government faced when they came to office was severe. The deficit in 2009-10 was 11.2% of GDP, falling to 10% of GDP in 2010-11. That is not the structural deficit but the actual real money deficit. I happen to think that is a much better figure than the structural deficit, which is to some extent speculative, as economists try to work out what is structural and what is not. If we deal with actual fact, the figure was minus 11.2% in the last year of the socialists, falling very slightly to minus 10% in the first year of the coalition.

The reason the deficit was so high was of course in part the global financial crisis, but it was also because Government spending was simply too high. It had reached 47.4% of GDP in 2009-10, when revenue was only 36.2% of GDP. That latter figure for tax revenue ought not to be any surprise. One of the most remarkable things about this series of figures, going right the way back to Harold Wilson’s prime ministership, is that Governments find it incredibly difficult to get much more than 37% of GDP in taxation. It is interesting that, since 2010, although the Government have increased taxation and the tax take has gone up from 36.2% to 37.4%, the amount has not risen as much as was anticipated. The reason is that it is actually very hard to tax much more than 37% from an economy.

[Kelvin Hopkins (Luton North) (Lab)]

In Scandinavia, tax receipts in previous years have been much higher than 37%.

[Jacob Rees-Mogg]

Indeed they are in France as well, but in our economy there seems to be a resistance at about that level. It is almost unprecedented to get much over 38%. That has been managed in two years out of the past 40. That may tell us something about our society, about the willingness to pay tax and the incentives when tax rates are set. A realistic Government therefore need to think of public spending levels of around 37%, which is the level that can actually be afforded through ordinary taxation.

[Kelvin Hopkins]

Does the hon. Gentleman know how much of that situation is due to the abolition of exchange controls when Mrs Thatcher first came to office, and the fact that we now have an enormous tax gap because of tax avoidance and tax evasion, much of it overseas?

[Jacob Rees-Mogg]

The calculation from the removal of exchange controls is not one that I know or would be able to make. The effect of their removal has been to create a much larger economy for the United Kingdom, so we are talking about 37% of a larger pie rather than getting a higher rate in a closed economy. However, it is worth bearing in mind that in the years before exchange controls were lifted in 1979 we still were not getting a tax take of more than 38% of the economy. The series goes back longer than the abolition of exchange controls.

I part company from the Government to some degree on the question of tax avoidance and tax evasion. It is measurably important not to elide the two. Tax avoidance is perfectly legal—indeed, the Government come up with schemes in every Budget to encourage it. One example is saving for pensions—that is tax avoidance on people’s income. ISAs are a form of tax avoidance, as is duty free. In the Budget and the Finance Bill there are schemes for investing in films and television programmes that actively encourage tax avoidance. Such schemes become part of Government policy for growing the economy.

Governments then get very upset when people use the tax avoidance schemes, which the Government themselves have put into legislation, for purposes that the Government had not thought of. That strikes me as a fault of the legislative process and an incompetence of the legislators—I am sorry to say, Mr Deputy Speaker, that it is our fault—for allowing such loopholes. It is not the fault of the taxpayer for using them. Any sensible, intelligent taxpayer will pay the minimum amount of tax that is legally required. To elide avoidance and evasion is, I think, against the rule of law: it undermines the rule of law by pretending that something that is innocent is nefarious.

It is important to crack down on tax evasion, which is rank criminality, but the Government should not take excessive measures against that which is legal. Instead, they should write simple tax law because, to go back to the point I was making, Governments manage regularly to raise 37% of GDP in taxation almost regardless of the taxes they levy—they change a tax here and a tax there, but still get roughly 37% of GDP. Simple tax laws can probably get us to that level without the need for complex anti-avoidance legislation that undermines the rule of law. That is the one part of the Bill about which I have my doubts.

[Ian Swales]

The hon. Gentleman is making a characteristically fascinating speech. Does he agree that the difference between tax evasion and tax avoidance needs to be made very clear? For example, those who pretend to be second-hand car dealers in order to avoid tax are actually evading tax.

[Jacob Rees-Mogg]

Without being too hard on that specific case, I am clear that some of the cases reported as tax avoidance were tax evasion, and HMRC has taken on some of them successfully. I absolutely agree that it is right for HMRC to challenge schemes to see whether they are, in fact, evasion. Most of the schemes that gave extraordinary results seemed to be evasion rather than avoidance, but we must remember that, day by day, honest people avoid tax that they are not required by law to pay.

[Kelvin Hopkins]

I thank the hon. Gentleman for giving way yet again. The big losses from tax avoidance and evasion are to do with the corporates. The cosy relationship in recent years between HMRC and some of the corporates, particularly Vodafone, is appalling. I am sure the hon. Gentleman would like to talk about that.

[Jacob Rees-Mogg]

I am grateful to the hon. Gentleman for that intervention. The thing about corporation tax is that a lot of corporations can be taxed almost anywhere in the world. That is why I think the Government are absolutely right to bring down the rate of corporation tax. It will help businesses to be headquartered in the United Kingdom, which is good for the UK in terms of employment and, indeed, tax revenues, by which I mean not just corporation tax revenues, but the other tax revenues paid by companies, namely business rates and employer national insurance contributions, as well as the taxes paid by their employees. We get a larger, more successful economy if we are relatively generous to corporates.

Northern Ireland Members have spoken of the particular circumstances there and the competition Northern Ireland faces from the Republic of Ireland. That is a very good case of tax competition between neighbours and it can be seen very bluntly in Northern Ireland because of the land border. We see less of it on the mainland of the United Kingdom because we do not cross borders quite so easily and we do not necessarily focus on it as much as we should. I think that the Government are absolutely right on corporation tax and that they should continue down that line.

The Government have also been right on the raising of thresholds and I hope they will continue with it. It makes sense, as my hon. Friend the Member for Redcar (Ian Swales) has said, because it is not logical for people on the minimum wage to be paying taxes. There is no point in taxing people who are low earners merely to pay them benefits with their own money. Although it was a Lib Dem policy in the last election and they deserve credit for that, it was suggested earlier by Lord Saatchi and Peter Warburton in a booklet they produced for the Centre for Policy Studies. The Conservative antecedents of the policy are pretty good and solid. It is a Tory policy in origin and it ought to continue.

The aim of the Government in the long run should be that people on the minimum wage should pay neither tax nor national insurance. In that way, the amount of benefits that needs to be paid to them will be very significantly reduced, as will the administrative burden. Roughly speaking, tax collection costs 1% of the amount collected, and benefit payments cost about 2% of the benefits paid out, so if we tax people to pay them benefits, the overall cost will probably be about 1.5% of the total amount paid and received. The policy is very good and welcome.

Another policy that must be welcomed is the change to pensions. Questions about pension funds came up when my right hon. Friend Chief Secretary to the Treasury spoke. What the Government are doing is very simple: they are allowing people to keep their own money. That is not very popular among Labour Members, who seem to have the view that it is the Government’s money and should be distributed as they, rather than individuals, wish. Conservative Members and, indeed, Liberal Democrats who still have some residual liberal attachment believe that the money belongs to the individual taxpayer.

The policy has a very clear advantage for the tax authorities, because it clarifies the idea that pension saving is nothing but a tax avoidance boondoggle. It is about taxing people once, rather than twice. People are taxed when they withdraw the money from their pension fund, with a 25% exemption, rather than taxed when they put it in. It is worth bearing in mind that if that was at any point reversed, the withdrawal would be taxed as a capital gain rather than as income, and the rates that applied might be very different from those that currently apply to withdrawals from pension funds. Any Government who intend at any point—whether at the higher or the lower rate—to withdraw the benefits of saving through a pension fund should consider the ultimate pay-out, and how the policy is a fair means of taxing people and ensuring that they are not taxed more than once.

As my hon. Friend the Member for Dover (Charlie Elphicke) said, this was a “steady as she goes” Budget. It is very impressive. The Government have not gone for cheap gimmicks, as parties sometimes do before elections; they have gone for continuing the work, which they started in 2010, of getting the country back on track. They are doing so in a way that benefits the least well-off in society the most. It is absolutely striking that the real incomes of every decile other than the highest-paid decile will rise by more than prices this year, as they did last year.

That Government achievement is helping where help is most needed: it is helping business to allow it to invest; doing more to help exporters; helping to rebalance the economy for the long term; and—gloriously, splendidly and rejoicingly—it is doing something to ensure that people have their own money. What a fine Conservative principle that is. We believe that the individuals and their families who build up society have the greatest wisdom about how they spend their money, not the tax authorities that dish it out. What is being done with pensions is the clearest statement of that. Yes, if people buy Lamborghinis, Bentleys or Porsches, they will spend it unwisely—

[Mr Kevan Jones]

Buy British.

[Jacob Rees-Mogg]

None of them is British, unless people buy Aston Martins. We could say, “Let us all buy Aston Martins with our pension funds to save the British car industry.” If we decided to do so, we would at least be spending our own money to support Britain. If we ended up sleeping in the Aston Martin, we would have nobody but ourselves to blame; it would not be the nanny state, the socialist state or the “Let’s tell you what to do” state that had taken charge. For that, we should rejoice at the Budget and the Bill.

18:23

[Sheila Gilmore (Edinburgh East) (Lab)]

I cannot help but feel that the speech by the hon. Member for North East Somerset (Jacob Rees-Mogg) was very much in the vein of Marie Antoinette—“Let them eat cake.” Many people find it positive that we redistribute money and help those who need assistance in our society, but the logic of his argument is that we should revert to a position in which it does not matter if some people cannot afford education or to have a decent roof over their head, because they are still looking after their own money, even if the amount is very limited. That might be because of their health, because of their disability or because the opportunities that they have grown up with are not as great as those of others. In his view, that is fine and we should go back to that kind of society. I, for one, do not want to do so.

We were told that this was a Budget for savers. The problem is that, for many people in this country, the figures that were talked about are fantasy. They will never be in a position to benefit. We have to care about that. A study by HSBC in October 2013 stated that 25% of households had no savings. That was up from 19% in a similar survey that it carried out 2012. It also stated that 10% of households had less than £250. That means that 8.8 million households—not individuals, but households—to all intents and purposes have no savings.

One of the first things that the Government did on coming to office was to abolish plans for the Saving Gateway, which had been put in place by the previous Government, and abolish child trust funds. One of the first Public Bill Committees that I served on took away those things, which were there to encourage and assist people who did not have a great deal of disposable income to save. Clearly, those savers are of no interest to the Government. The people who will benefit from the increase in tax-free saving through ISAs are in a minority in this country.

I listened to what the hon. Gentleman said about the tax threshold. There is an illogicality in taxing people who are on the minimum wage. The problem is that the increase in the tax threshold has not benefited people in that situation. It has gone right past many taxpayers and it has cost a great deal. We are lectured endlessly about there not being enough money and about tough choices having to be made, but £10 billion has been spent to date—not including the further increase in this Budget—on raising the tax threshold. That is tax that is forgone. Three quarters of the benefit has gone to people with above-average earnings, not those on low earnings.

The 17% of the population who are already beneath the tax threshold are gaining nothing. Government Members have said that everyone is gaining £700 from this Budget. Obviously, that does not include the 4.5 million people who make up that 17%. Clearly, those people do not count. Far from gaining from the Budget, those people will be losing.

There are alternatives to raising the tax threshold. If the Government’s aim is to help low-paid workers, which is what Government Members say, why did they decide to cut tax credits by so much? My hon. Friend the Member for Glasgow North East (Mr Bain) spoke about universal credit work allowances. It has been suggested that one way to help low-paid workers would be to increase the taper on the replacement for tax credits for people on universal credit who are in work. However, the Government decided when they first invented universal credit that the work allowances would be cut back. That means that people will lose their credits much more quickly than would otherwise have been the case. That will happen without the further changes to the universal credit rates and tapers that are clearly intended by the Government, who want to fund the extra help with child care for low-paid families from other low-paid people. We are told that that will be funded out of universal credit.

The problem with universal credit is that we are not sure that we will ever see it. We certainly will not see it for a considerable time. Universal credit, which was meant to make work pay for everyone and was the answer to so many problems, currently covers about 3,500 individuals in the whole country. It was supposed to roll out to all new applicants for all sorts of benefits in October last year, but the event horizon keeps moving away. Given that, perhaps the Government would like to rethink some of their thinking on credits. To say to low-paid parents that at some point 85% of their child care costs will be met “under universal credit”—those are the words that are always said—is not a great help if we do not know when it will come in. For those people it will certainly not be 2014, 2015 or 2016, and for many probably not even 2017. In the last timetable we were told that some people would not be included even by 2017, and given that no timetable from the DWP has come anywhere near being introduced, it is perhaps not surprising if I am somewhat sceptical. Perhaps help with 85% of child care costs for low-paid families could be introduced now, rather than wait for universal credit.

We hear a lot about jobs and how many more there are, but I wish to raise a point that I have made several times recently: despite those jobs, the level of unemployment remains stubbornly high in this country and it is time the Government did something about it. Some 2.3 million people are still unemployed, and in the Chancellor’s speech last week he said that 169,000 was the reduction over 2010. When I said, “Only 169,000?” there was a kind of outcry from the Conservative Benches: “Only? Isn’t that important?” Of course it is important, but it is not anywhere near the number of new jobs that we are constantly told have been created.

What exactly is going on? Are we not worried about the 2.3 million people who remain unemployed, many of whom do not appear to be on benefits? The argument that benefits are so comfortable and that is why people are not working does not appear to apply because 58% of those unemployed people are not on the JSA count. Every time some of us ask questions, Government Members—particularly Ministers—produce figures and say, “Unemployment in your constituency has gone down by this, that or the other”, but they are giving the claimant count not full unemployment figures. It is important to have policies in place to help with unemployment.

I am tired of things being thrown at the Labour party that are simply not true. One of the favourites is, “Unemployment always rises under a Labour Government.” It is not true. It was not true of the Labour Government between 1945 and 1951, and the extent of the increase during some of the other Labour Governments was very small indeed, and similar to that of Tory Governments. In only one of the three periods of Tory Government—1951 to 1964, 1970 to 1974, and 1979 to 1997—did unemployment stay the same. In both the others it went up. Between 1979 and 1997, unemployment rose. It was only 5.6% at the beginning, and more than 7% afterwards. In 13 of those 18 years, unemployment was more than 10%. It is not true that unemployment rises only under Labour Governments or that it has been higher at the end of every Labour Government than at the beginning. The record of a party that put the country through 18 years of government, in which unemployment was more than 10% in 13 of them, is not one to be proud of or boast about. Perhaps we could hear a little less of those soundbites that are not accurate before Members come to debate in this House.

For the low paid and people who are struggling in this economy, the Budget will not offer much help. On pensions, do we remember the 1980s or do we not? The 1980s pension reforms, which tore apart the state earnings-related pension scheme, were boasted about as freeing people up from the dead hand of the state to have personal pensions that they could make choices about, and it would be fine. It turned out that for many people it was an extremely bad choice. That has led to the decline in the level of pension saving. People did not build up pensions over those years. If the state earnings-related pension scheme had been left alone, an awful lot of people would have been much better off in their retirement, and perhaps the Labour Government, when we came to power in 1997, would not have needed to introduce pension credits to lift pensioners out of the high level of poverty many were then suffering.

Some of us are sceptical about a pensions policy that appears to have been written on the back of an envelope. The boast is that it will give freedom to everybody. That sounds good and it is very hard to argue against—people have the right to use their own money—but remember the result of the 1980s. We are still picking up the pieces from that. To change something as big as pension policy, we need to sit down and work it out first, not announce it in the Budget and then work it out. Within a week, the Government have had to announce tweaks to help people now. Suddenly, people were saying, “Have I got to buy an annuity now, when if I just wait till next year I will not have to?” Another change had to be put in to allow people within that period to draw down now, rather than buy an annuity. That suggests there was not much planning, because clearly nobody had thought that that would happen. That is not the way to make pension policy. It is not giving people a wonderful freedom if they find out some years later, as happened in the 1980s, that there will be catastrophic results. At least model it and work it out properly. It might have made headlines, but it may come back to bite later.

18:37

[Guy Opperman (Hexham) (Con)]

Growth up, unemployment down, inflation down and, certainly in my region and constituency, a very positive response to the Budget. The North East chamber of commerce held an event, to which I went with the hon. Member for Newcastle upon Tyne North (Catherine McKinnell) 10 days ago, to assess and review the Budget. The response was overwhelmingly positive. I accept that it is only a chamber of commerce, as some Members have said—the hon. Member for North Durham (Mr Jones) was rather disparaging about the North East chamber of commerce—but it has 3,000 members, all of whom are SMEs and businesses in the north-east. They said:

“The NECC is pleased to see recognition of some of its key priorities in the Budget and that these figures demonstrate that increased business confidence, as reflected by the NECC quarterly economic survey, is manifesting into real growth and jobs.”

I welcome the fact that the jobs situation is improving in the north-east. [Interruption.] As always, it is good to hear the hon. Member for North Durham chuntering from a sedentary position. His speech was one of those where the glass was either half full or half empty. From HS2, Adonis and the job situation, the glass was evidently definitely half empty, but the figures—these are not my figures, I hasten to add, but the House of Commons unemployment by constituency JSA figures—indicate that in North Durham the number of JSA claimants is down 21.8%. The 18 to 24 claimants are down 22.4%, the 50 and over claimants are down 14.8% and the claims of 12 months duration are down 13.3%.

[Mr Kevan Jones]

The hon. Gentleman is looking at claims rather than unemployment, which is the important thing. That is the point my hon. Friend the Member for Edinburgh East (Sheila Gilmore) made. He should talk to people who are not on the claimant count and people who are being sanctioned by the Government. The idea that claimant count is a reflection of economic activity in North Durham is complete nonsense.

[Guy Opperman]

Let us try to be nuanced about this. We all accept that there are isolated examples of genuine distress and difficulties of the kind that the hon. Gentleman describes. No one disputes that; such circumstances exist in all our constituencies. However, as the hon. Gentleman knows, I spend more of my time in Newcastle than in Hexham—

[Mr Jones]

I am sure that they are pleased in Hexham.

[Guy Opperman]

The claimant counts in Newcastle are down as well, as are the claimant counts in virtually every constituency in the north-east. Suggesting that individual examples take care of all 21% is fatuous.

[Mr Jones]

Will the hon. Gentleman give way?

[Guy Opperman]

Not at this stage. I want to make some progress. I had the great pleasure of listening to the hon. Gentleman for 42 minutes—

[Mr Jones]

Good!

[Guy Opperman]

And, sadly, I shall not be burdening him with 42 minutes myself.

[The Lord Commissioner of Her Majesty's Treasury (Mr David Evennett)]

Hear, hear.

[Guy Opperman]

It is great to be applauded by one’s Whip.

Let us look at the bottom line. Corporation tax is down from 28% to 21%, and employment allowance will reduce employers’ national insurance bills by up to £2,000. Anyone who visits any high street in any town or village in the country will find that that is a massively popular policy, and anyone who wanders into the premises of any small and medium-sized enterprise will find that everyone there is talking about it. Larger businesses will benefit particularly from the doubling of the annual investment allowance, and nearly every business will pay no tax up front when it invests in the future. That is fantastic.

The north-east is the only region in the country with a positive balance of payments. We export more than we import. I welcome the fact that manufacturing is being turned around and being supported by this Government, after struggling under the last Government. The number of apprenticeships is doubling in our area, and the number of traineeships is also increasing. I cannot stress strongly enough the difference that traineeships are making in the brave new world in which we are living.

I visited a company called Release Potential, which is in Stocksfield, in my constituency, and which is giving young people the opportunity of becoming trainees. Once they have done that, they have a much better chance of securing apprenticeships and jobs. We should be supporting that, and, as always, encouraging employers to take on apprentices and trainees. I should make a declaration at this point: I am the first Member of Parliament to hire, train, retain and, now, employ an MP’s apprentice. She is not an apprentice MP; she is an office manager, although some people often say that she would do a better job as an MP. The honest truth is that if I can do that when running a small business with a relatively low budget and very few staff—as all MPs do—I see no reason why other SMEs cannot do the same.

What else is there to welcome in this outstanding Budget? [Laughter.] Labour Members laugh from a sedentary position, as they always do, but Newcastle airport has sought a change in the air passenger duty rules for ages. When I went to see the Chancellor, he listened to my representations and to those of Members from Manchester and Bristol, and I am grateful to him for that. The changes in APD rates, including the abolition of the two highest rates, will be fantastically helpful, and—again—will be welcomed by the chambers of commerce, not just in my constituency but throughout the country. Anyone who travels on an international route to try to promote trade overseas will welcome it.

As chair of the all-party parliamentary group for air ambulances, I should declare an interest in the subject. I also made use of one or two air ambulances when I was a very bad jockey and required their assistance. For many years, since the presentation of a petition signed by 155,000 people—and the Hexham Courant’s small but very weighty petition—we have been trying to get rid of VAT on the fuel used by air ambulances. In the north-east, the Great North air ambulance service led the campaign, and is a massive beneficiary of it. The cut announced in the Budget will save air ambulances a huge amount. It will allow more missions to be flown, and there is no doubt that lives will be saved. There is immense support for the measure in all the air ambulance services in the country,

The Chancellor said in his Budget statement:

“I will continue to direct the use of the LIBOR fines to our military charities and our emergency service charities”,

but added that he would also

“extend that support to our search and rescue…and provide £10 million of support to our scouts, guides, cadets and St John Ambulance.”

His intention was best expressed by this simple expression:

“1…want the fines paid by those who have demonstrated the worst values to support those who demonstrate the best of British values.” —[Official Report, 19 March 2014; Vol. 577, c. 786.]

That is absolutely outstanding, and offers support to all the individual charitable and voluntary organisations that are the bedrock of our communities.

There were also announcements on school funding. Anyone who, like me, has taken part in the F40 fair funding campaign will greatly welcome the announcement from the Minister for Schools, and the support from the Treasury. F40 budgets will be increased, be it in Northumberland, Durham or in other rural areas. The consultation going forward is an outstanding and important contribution. If we can change the way our schools are funded, they will have a genuine possibility of surviving.

I could talk about fuel duty, which, as we all know, the previous Government raised remorselessly—well over a dozen times. I am pleased to say that the Chancellor, with great difficulty and in very difficult times, has managed to cancel the fuel duty escalator that the previous Government sought to include in future Budgets.

I have some outstanding breweries in my constituency, such as the Hadrian Border Brewery, Allendale and Matfen. I can assure you, Madam Deputy Speaker, that when you holiday in God’s own county of Northumberland, you will want to visit the various beer festivals that will take place there this summer, where the further reduction in beer duty will be welcomed. That reduction supports not just the person who wants a pint of bitter, but the brewers, because it allows them to invest and to create jobs. It provides genuine support for businesses that struggled desperately under the previous Government, and they are extremely grateful.

On housing—unlike the hon. Member for North Durham, I am having to condense my 42-minute speech into approximately 10 minutes—those who visit Humbles Wood, in Prudhoe, in my constituency, which is a new-build housing estate, will find that 85% to 90% of all purchases there are made with Help to Buy. It has utterly transformed the ability of a relatively low-paid local community in one of the smallest towns in my constituency to access housing. It is a massive help, and not just there. To answer the point made earlier by the hon. Gentleman, when I spoke to the various estate agents in West road, Newcastle, they too reported the massive difference that Help to Buy has made in what is—

[Mr Kevan Jones]

Will the hon. Gentleman give way?

[Guy Opperman]

One last time, just to give the hon. Gentleman an extra minute or so.

[Mr Jones]

I am sorry that the hon. Gentleman spends so much time in Newcastle, rather than Hexham, which I agree is a beautiful constituency. The figures for average house prices in the north-east show that they are still worth £5,000 less than they were in 2008.

[Guy Opperman]

Surely the hon. Gentleman must acknowledge that it was because of all the difficulties created by the crash engineered by his beloved former Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), and it was not possible to get bank and mortgage finance. Help to Buy has massively changed that.

I turn briefly to pensions. While I was canvassing last weekend, a gentleman on the doorstep said:

“It’s my money. I saved it. Why do I have to give it away in tax and charges for low returns?”

There is no question but that annuities have been a source of criticism for a very long time.

The reality is that the public do not believe that Labour has any credibility when it comes to maintaining the welfare cap, which I debated last weekend with the hon. Member for Easington (Grahame M. Morris), who is not in his place. They simply do not believe Labour on welfare, which wants to keep spending in any way it can, regardless of the ability to pay the bills.

Much has been said about poverty and the low paid. Last Friday, I was pleased and proud to hold the first living wage summit, with the Living Wage Foundation, in Newcastle. It was attended by a large number of local businesses, including the Rowntree Foundation, Traidcraft, KPMG, Northern Doctors and Mike Joslin, all of whom came together as accredited living wage employers. There are only 20 such employers in the north-east, whereas there are approximately 600 around the rest of the country. The representative of the Northern TUC was there, as were representatives of individual businesses and of the North East chamber of commerce. Anyone who came to the event last Friday would have been satisfied that we were taking real action, and that companies that are voluntarily committing to paying the living wage are supporting their employees. Many people at that event told me that this was a Budget we should be proud of. They said that it was a Budget for growth, for jobs and for the north-east. It is a Budget that will be widely welcomed across the country.

18:50

[Ian Mearns (Gateshead) (Lab)]

It is a pleasure to follow my near neighbour, the hon. Member for Hexham (Guy Opperman). There has been a north-east persuasion to the debate today: we have heard from North East Somerset and Glasgow North East—as well as Edinburgh East—and I represent the central, northern and eastern parts of Gateshead, which is in the heart of the north-east of England. I have to say, however, that my part of the north-east of England is quite different from that of the hon. Member for Hexham. From my perspective, he is way out west.

From the perspective of many of my constituents, the Budget and the Finance Bill come across as complacent, smug and somewhat self-serving. The Chancellor painted a rosy picture of recovery in his Budget statement, but for those who represent many of the constituencies outside London and the south-east, the picture is very different. I have to defend my region and my constituency, where real incomes for most are falling not rising, where living standards for most will be lower in 2015 than in 2010, and where the number of working poor is rising, with many in insecure work now being paid a low hourly rate for part-time or combinations of part-time jobs. There has also been slower growth and a higher continuing deficit than expected, and the overall debt has grown dramatically.

We are a diverse country. We have regions of relative prosperity with pockets of poverty, but we also have regions of relative poverty with pockets of prosperity. The north-east of England is a region of relative poverty with pockets of prosperity, and the north-east economy is still in recession. In my own constituency of Gateshead, the pace of economic recovery is painfully slow, if not non-existent. The negative impact of welfare reforms, the lack of central Government investment and the cuts to local government are having a profound and damaging impact on our economy and on people’s lives. They are also having a profoundly negative impact on the business community in parts of the north-east. The policies and priorities of this Government show a total disregard for the people and the region of the north-east.

This Finance Bill is another missed opportunity. The Chancellor has made it clear that public sector cuts and austerity will continue for the foreseeable future, but local government budget cuts are sucking the spending power from local economies. Since 2010, my local authority in Gateshead has suffered cuts of £75 million, with the loss of over 1,200 employees. That is 1,200 people who no longer have the wherewithal to spend money in their local shops and communities or to support local businesses. In 2014-15, we will suffer a further reduction of over £15 million, with a reduction of a further £24 million in 2015-16. In total, by the end of 2015-16, Gateshead will have suffered a 37% reduction in its grant from central Government. That figure is in line with that for all 12 local authorities in the north-east, all of which have suffered cuts of more than 30%.

Such cuts are 10 times the figure suffered by authorities serving affluent areas in the south-east and the south, where average cuts in grant support have been less than 3%. Needless to say, we top the league not only in cuts for local government, but in cuts for welfare benefits—it is a shame our football teams are not topping the league. When the current welfare reforms have come into full effect, they will have taken nearly £19 billion a year out of local economies, which is equivalent to about £470 a year for every adult of working age in the country. Of course the impact on the poorest—on those in most need—will be greatest, and the impact varies greatly across the country. At the extremes, the worst-hit local authority areas lose about four times as much per adult of working age—as much as £910 per working adult—as the authorities least affected. The three regions of the north of England alone can be expected to lose about £5.2 billion in welfare benefit income. That money is being sucked out of the spending power in local economies.

[Mr Kevan Jones]

Does my hon. Friend agree that this is about not just cuts in local authorities, but cuts in welfare? For example, in Wokingham the number of people affected by the bedroom tax is only 237, whereas I am sure the figure for his constituency is much higher.

[Ian Mearns]

I could not agree more.

Again, on employment, we have to wonder whether the Prime Minister and Chancellor are on the same planet as we inhabit in the north-east of England. Whereas unemployment figures for the UK are hovering around the 7% mark, unemployment in the north-east has only just dipped below 10%. That is the claimant count figure; it is not the count of people who are economically inactive, which is a much greater figure for a region such as the north-east of England. I baulk at the complacency from Government Members in the face of that, because it is having a dramatic impact on people’s lives.

[Guy Opperman]

I accept that there is a difference between the two types of job measurement, but let me give the hon. Gentleman the figures for Gateshead: the number of jobseeker’s allowance claimants is down by 21%, the total change over 12 months in the number of claimants aged 50 and over is a reduction of 13.5%; and the 12-month change in the number of claimants aged 18 to 24 is a decrease of 26.8%.

[Ian Mearns]

Those figures are interesting. It has to be said that economies such as the north-east of England look at the JSA figures and see that they have removed from them people sanctioned because of their benefits. The last estimate I saw was that almost 1 million people on JSA were in receipt of a sanction in the last counting period. In addition, some 600,000 people, on a conservative estimate, are now employed on zero-hours contracts. Our regional economy suffers from not only unemployment, but significant amounts of under-employment.

Despite the Government pledge to ensure that it is always worth working, it will be those in work who will most feel the squeeze of this Government’s policies. Average weekly earnings and gross disposable income in the north-east are the lowest of any English region. According to the latest Real Life Reform report, which has been conducted by the Northern Housing Consortium, the average spend on fuel among the study subjects has risen by 8.5% since only December and by more than 30% just since last September, and is now at an average of £32.62 per household per week in that study, which is of people on very low and modest incomes.

The Chancellor has made much of his personal allowance increase, but the Government continue to ignore the negative impact of their 24 tax rises between 2010 and 2015. I am not a natural bedfellow of the TaxPayers Alliance, but it believes that there have been 254 tax rises, particularly the hike in VAT in January 2011 from 17.5% to 20%. Even the Prime Minister accepts that VAT rises impact on the poorest, and he always knew that they would. On 5 January 2011, he said:

“If you look at the effect”—

of VAT—

“as compared with people’s income then, yes, it is regressive.”

In Exeter in 2009, the right hon. Gentleman, as the then leader of the Opposition, said of VAT:

“You could try, as you say, to put it on VAT, sales tax, but again if you look at the effect of sales tax, it's very regressive, it hits the poorest the hardest. It does, I absolutely promise you.”

[Mr Kevan Jones]

Like me, was my hon. Friend shocked when the “Conservative” Member for Redcar (Ian Swales) said that VAT was not a regressive tax?

[Ian Mearns]

Given the statements that I have just read out, which are attributed to the current Prime Minister, I am flabbergasted by the attitude of the “Conservative” Member for Redcar.

In his Budget statement, the Chancellor proudly championed the rise in the minimum wage to £6.50. However, given that his entire experience revolves around his coterie of millionaires—including the majority of his Cabinet colleagues—it is little wonder that he has absolutely no idea how difficult it is to raise a family on £6.50 an hour. How can one invest £15,000 a year in an ISA on a salary of £6.50 per hour? The Finance Bill does nothing to help my region and nothing to reverse any of the damage inflicted by this Government over the past four years.

The Government’s proposed cuts to the public sector—the Institute for Fiscal Studies estimates that, outside of the NHS and schools, they could result in a 40% cut in the public sector workforce—will disproportionately affect my region. Cuts to local government expenditure will also have the heaviest impact on the most vulnerable who rely on the provision of services by their local councils. We are letting down the most vulnerable in our society.

The Chancellor’s much-heralded recovery is, to be honest, little more than a rise in consumer spending, fuelled by a false confidence based on rising house prices in the south-east of England, which have been stoked by the Government’s Help to Buy scheme.

When the Chancellor of the Exchequer announced the pension pot release scheme, I am sure that he was not actually expecting the vast majority of recipients to buy a Lamborghini, but I am pretty sure that he was hoping that enough pensioners would spend their lump sums—even if it is only 10% or 15% of it—on things such as cars and home improvements, and thus help fuel a consumer-led recovery.

The Government’s stated aim was to “rebalance the economy”. So far, I see little evidence that the massive losses to public sector jobs in the north-east are being offset by private sector job creation. That needs to be addressed urgently.

A representative of the Federation of Small Businesses told me that the north-east has some 136,000 private sector businesses, which sounds very positive, but he went on to say that only 1,000 of them had more than 50 employees, and 100,000 of those businesses are sole traders. When we are sucking out money from people’s pockets and from their spending power, we are bound to impact on the private sector in an economy that has so many small businesses.

The north-east is very different from London and the south-east. Having suffered savage and disproportionate cuts, the region has experienced severe impacts on its small business sector as the Government have deliberately gone about the business of shedding jobs and sucking out spending power and disposable income from the region’s economy.

Let me highlight the difference in investment in different parts of the country. I do not understand how Government Members who represent our region can be so complacent about this matter. We all know the facts about how much has been invested on transport infrastructure in London and the south-east per head of population in comparison with the north-east. It is in the order of magnitude of 500:1—£500 more spent in London and the south-east per head of population than in the north-east. That is severely affecting travel to work mobility in the north-east. According to the Institute for Public Policy Research, it is quite unsustainable from a regional economic perspective.

High Speed 2 will not help us in the short to medium term. It will take until 2033 for HS2 to reach the north-east, seven years after it reaches the west midlands. As I have said on several occasions, 20 years ago I could travel from Newcastle to London in two hours and 38 minutes. After £50 billion of investment and 40 years, our journey time will have reduced by 20 minutes. From the perspective of the people of the north-east of England, is that a good and sound investment? Even the chairman of HS2 believes that it is a bad deal for the north-east and has said in the press today that if people in the south-east of England had the transport infrastructure and trains that we have in the north-east, there would be riots in the streets. That is the chairman of HS2.

This is a complacent Budget that does nothing to rebalance the economy. I urge Members on the Government Benches to think again, because I can tell them that the hon. Members for Redcar and for Hexham will be severely tested come the next general election.

19:05

[Jim Shannon (Strangford) (DUP)]

I am pleased to be called to make a small contribution to the debate, Madam Deputy Speaker. I wish to be respectful to all parties and individuals in my speech, and I want to speak about the reasoned amendment. It refers to the cost of living crisis, and no one who represents a constituency in this Chamber can ignore the cost of living. Yes, things are better. I acknowledge that and it is good that they are better. It is good that unemployment is down and that there are opportunities, but the money is just not in the pockets of the people I see on the high streets of the towns that I represent. The cost of living is still an issue that we need to address and I want to be respectful in that regard.

The amendment also refers to tackling rising energy bills. I know that the Government have given a commitment to doing that through the Budget and the debate over the past couple of days has tried to address that, too.

Today at Lambeth house, the all-party group on hunger and food poverty launched an inquiry to address poverty in the United Kingdom of Great Britain and Northern Ireland and to take into consideration other parts of Europe where food banks are part of life. I see food banks as a positive, not a negative, as they bring communities together and energise people’s focus on those who are less well off, and people are very kind. Those are the benefits, but the all-party group will focus on poverty as well.

The hon. Member for North Durham (Mr Jones) mentioned young people and work. If there were ever an issue to which hon. Members should draw attention, it is the young people we represent in our constituencies. We want to see them getting courses at their local colleges and employment opportunities at the end of them. In his response, will the Minister gives some indication of the specific provision in this Budget to help young people to get job opportunities?

I also want to highlight the issue of unemployment and those over 50. Those who lose their jobs at the age of 50-plus find it very hard to get back into employment. Although they might have opportunities for courses, re-employment and retraining, the critical factor will be job opportunities. Perhaps the Minister could also consider that.

The Government have clearly made a commitment on child care costs. That will enable people to work. The Chancellor has stated his commitment—the Economic Secretary to the Treasury did so again on TV last night —to create 1 million more jobs. That is good news, if the commitment can be delivered in reality.

Housing supply is an issue in my constituency. One of the biggest issues is the need for affordable rental accommodation. Although housing is a devolved matter in Northern Ireland, it is still a critical issue and I look forward to seeing some changes in that regard.

I commend the Government for their pension changes. The hon. Member for North East Somerset (Jacob Rees-Mogg) mentioned corporation tax. Although there is a commitment on air passenger duty, it is not enough and does not address the considerable difficulties we have in Northern Ireland because of the land border that people can drive across. Air passenger duty in the Republic is 0% and tourism VAT is at 9% whereas it is 20% in Northern Ireland. Those are critical factors that affect the Northern Ireland economy. We also have the highest fuel costs in the United Kingdom, and we would have been happier to have seen a specific scheme for Northern Ireland on that. Those are key issues.

I want to put on the record my disagreement with the Opposition’s view on the marriage tax allowance. I am glad that there is a married tax allowance for the third of married couples who are at present disadvantaged and who will, through clause 11, be better off. It is a Government commitment and it is good news. It is also a Democratic Unionist party commitment. We are pleased to see the married tax allowance coming through for married couples because it is an issue that we have supported. It is a pledge in our manifesto. We support married couples and we have sought provision for them through the Treasury. It is good news to see that delivered through clause 11.

May I put on record my strong support for the provision in the Budget of transferrable allowances for married couples? This has been a long time coming and is very welcome. It is a shame that at exactly the same time the Chancellor should announce a provision that discriminates against one-earner couples. A Government committed to fixing broken Britain should value those families where the decision is made to sacrifice a second salary so that one parent can remain at home to invest in the children. Sadly, the Chancellor’s child care announcement offers them no support at all and leaves them feeling like second-class citizens. There is provision for those on higher incomes and there is provision for those on lower incomes, but those who are often referred to as the squeezed middle do not receive the child care provision that they should have. It is also vital for the provision to be widened, especially with the news that the child care provisions are to remain available to the very rich, so transferrable measures also pertain for higher rate taxpayers.

Since 2000, we have been very unusual in having a tax system that does not recognise family responsibility in any way. All manner of injustices have followed from this fiscal individualism, such as the fact that the tax burden on one-earner married couples on an average wage with two children is 45% greater than the OECD average—up from 42% last year. To really see the problem we have with individualism, we have to consider this burden as a proportion of that placed on a single person on the same wage. In the UK, such a family pays more than 80% of what a single person on the same wage pays while the OECD average is just 55%. Such individualism will not fix broken Britain.

That Chancellor has today taken an important step in re-inserting recognition of family responsibility into the tax system. We welcome that and we are pleased that it has happened. This is a seminal development, and one on which we must now build for the future.

19:13

[Shabana Mahmood (Birmingham, Ladywood) (Lab)]

We have had an interesting debate today, which has made stark the difference between the Opposition’s priorities and those of Government Members. The Finance Bill is thick and heavy, but it is pretty light on content that is relevant to the working person on a modest income.

My hon. Friends have made some powerful and persuasive speeches highlighting precisely that point. My hon. Friend the Member for Houghton and Sunderland South (Bridget Phillipson) spoke with passion about how her region was suffering as a result of the Government’s polices, and drew attention to the imbalance in the recovery that they have delivered. My hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty) spoke in particular about business rates and the success of the jobs growth programme being run by the Welsh Labour Government, whom this Government like to bash at any opportunity, but who are having some real success on jobs in Wales.

My hon. Friend the Member for Bolton West (Julie Hilling) made a particularly powerful point. She reminded the House that the Chancellor said that this is a Budget for makers, doers and savers, but she said that it has nothing in it for those who are making do.

My hon. Friend also reminded us of the tragedy of zero-hours contracts. She gave a powerful example of a constituent who was sanctioned under DWP rules for leaving a job that gave him zero hours of work. It was a tragedy for the individual concerned, but it also shows how iniquitous the rules are in practice.

[Guy Opperman]

Is there anything the hon. Lady welcomes in the Budget, whether the raising of the income tax threshold, the extension of apprenticeships, the support for the high street or the work done to support manufacturing? Does she not welcome any of those things amidst this sea of opposition?

[Shabana Mahmood]

I very much welcome the Government’s U-turn on investment allowances, which we warned were a mistake in 2010. It is really good that the Chancellor has finally decided at the tail end of this Parliament to put right that bad decision.

My hon. Friend the Member for Glasgow North East (Mr Bain) reminded the House of two anniversaries: 15 years ago today the national minimum wage came into effect; and a year ago today the Government introduced the bedroom tax. That is a clear example of the big differences in the values and priorities of those on the Opposition and on the Government side. My hon. Friend the Member for North Durham (Mr Jones) spoke for some time, although not at his usual length, about the things that are missing from the Bill. He focused on the detail of the pension changes, which we will scrutinise, especially in relation to social care costs, which he was right to highlight.

My hon. Friend the Member for Edinburgh East (Sheila Gilmore) spoke of how some savers will benefit as a result of the Government’s measures, but for many people saving is a luxury that is far out of reach. My hon. Friend the Member for Gateshead (Ian Mearns) reminded the House of the imbalance of the recovery and how the north-east continues to suffer. He also made a point that no one made today in relation to the local government cuts, which are only just starting to bite and will further embed the regional imbalance in our country.

People are looking to this Government to take action to help them in the here and now. I am talking about the people who elected us to make decisions on their behalf. Those people are, on average, £1,600 a year worse off since this Government came to power. They will be worse off in 2015 than they were in 2010. Even if we take into account the combined effect of tax and benefit changes, they will still be £900 a year worse off. For those Government Members who are not sure what that really means, I will explain that £1,600 is about half the cost of the uniform required for membership of the Bullingdon club. For residents of inner-city Birmingham, which I represent, it is about three months’ rent.

Those people are working harder and harder for less and less, and they are looking for help in the here and now to make sure that at the end of the working week or month they have earned enough money to pay the rent, put food on the table and clothe their family. But this Finance Bill contains no such help. The fact that people are worse off and have to spend more on everyday essentials seems not to exist, according to the Bill. It is as if all Government Front Benchers have been caught in some kind of existential trance: if they cannot see or feel the cost of living crisis, it cannot exist; even if it exists, it cannot be communicated to others; and even if it can be communicated, it simply cannot be understood.

The people who are £1,600 a year a worse off need help in the here and now. This Bill could have done that; it does not. This Government could have done that; they did not. Where was the action to help working parents and families? We know that nursery costs have gone up by 30% since 2010. A parent working full time on the living wage with one child in nursery care will not see a penny of income until the beginning of the third week of the month. That is truly shocking. What do the Government offer? They offer help after the next general election, but nothing in this Bill. Why did they not take the opportunity in part 2 of the Bill to raise more money from the bank levy to fund an expansion of free child care for working parents of three and four-year olds from the current 15 hours to 25 hours? That would be real help. We will scrutinise the detail of the relevant clauses in Committee.

In opening, my hon. Friend the shadow Chief Secretary to the Treasury referred to an article from The Daily Telegraph, which is not often helpful to the Opposition. However, it has recently reported concerns that the Government’s planned changes to the bank levy might amount to a tax cut for the banks. The Government are not shouting that from the rooftops, but there are suggestions that some banks will pay £300 million less. We will need to see the detail and to press the Minister on that point in Committee.

It is a real embarrassment for the Exchequer Secretary that his projections on how much the bank levy would raise were so far off. Earlier, he ducked the opportunity to explain that; I would happily give way to him now if he were willing to explain, but he does not want to. No matter—we will return to the matter at length when we are locked together in a Committee room debating these issues.

On Government changes that might end up helping the banks pay less, I should also mention the small matter of the schedule 19 charge. In fairly impenetrable and hidden-away language, the Government seem to have given a £145 million tax cut for investment managers, whose industry is, frankly, doing rather well at the moment. It could have been asked to forgo that tax cut, given that the poorest and most vulnerable in our society continue to suffer. That shows the Government’s priorities.

[Mr Brooks Newmark (Braintree) (Con)]

Will the hon. Lady give way?

[Shabana Mahmood]

I will not for the moment. I will make some more progress—[Interruption.]

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. Too many conversations are going on around the Chamber that have nothing to do with the speech being made by the shadow Minister. Members ought to have the courtesy to listen to the hon. Lady.

[Shabana Mahmood]

Thank you, Madam Deputy Speaker. I am not surprised that Government Members do not want to hear about their secret £145 million tax cut for investment managers.

[Mr Newmark]

rose—

[Shabana Mahmood]

I will not give way for now.

Instead, the Government’s priority has been the married couple’s tax allowance—hardly the here and now help clamoured for outside the Westminster village. What does it amount to in practice? It totals £3.80 for the couples who qualify, at a cost to the Exchequer of £500 million. I note that earlier the Chief Secretary to the Treasury turned down an opportunity to stand at the Dispatch Box and confirm his support for the measure. It does not look as if he wants to do that now. His silence says all that needs to be said.

The policy is slightly random; it excludes widows, widowers and people living on their own, for the sake of outcomes that are far from clear. It will help just one third of married couples, 84% of the gainers will be men, and just one in six families with children will benefit. What about the rest? There is nothing in the here and now for them either. What could the Government have done? For starters, they could have scrapped the married couple’s tax allowance and brought in a lower 10p starting rate of tax, which we have called for and which would help 24 million taxpayers, including 12 million people who are married, and almost half of whom—46%—would be women.

[Mr Newmark]

rose—

[Shabana Mahmood]

I will give way to the hon. Gentleman if he will confirm that a 10p starting rate of tax, 46% of whose beneficiaries would be women, is better than a policy 84% of whose beneficiaries would be men.

[Mr Newmark]

It is worth reminding the House that the Labour party abolished the 10p rate and that this Government abolished a 10% rate on savings. We will not take lectures from the hon. Lady. Furthermore, as a result of the raising of the personal allowance to £10,500, 3.2 million people have now been taken out of taxation altogether. That is helping the less well-off.

[Shabana Mahmood]

Yet after all that action, this Chancellor and this Government have given with one hand and taken away a hell of a lot more with the other. The hon. Gentleman knows that is true. He also knows that people will be worse off in 2015 than they were in 2010, which says everything we need to know about this Government’s priorities.

What is there for young people? Long-term youth unemployment has doubled under this Government, and 900,000 young people are out of work. What is there in the here and now, in this Bill, to help them? Not much. The Chancellor spoke yesterday of full employment, but where are the policies that would make that happen? The number of young people out of work for one year or more has almost doubled under this Chancellor, and what this Government have delivered—the Work programme—has returned more people to the jobcentre than have been found new work, while only 5% of disabled people have been helped to find a job.

The hon. Member for Dover (Charlie Elphicke), who is not in his place, cited the welcome decrease in long-term youth unemployment in Birmingham, Ladywood. He is not aware, though, that Birmingham’s Labour-run council administration has introduced a scheme called the Birmingham jobs fund, based on the Labour Government’s future jobs fund, specifically to tackle youth unemployment. That is why we have seen a decrease in long-term youth unemployment in my constituency and in other Birmingham constituencies. Although he might not have meant to congratulate my colleagues at Birmingham city council, I shall certainly pass his congratulations on to them.

Where was the help for small businesses—the backbone of economic growth in this country—who are crying out for extra support? We have said that instead of going ahead with the additional 1% cut in corporation tax, the Government should use that money to cut and then freeze business rates so that small and medium-sized enterprises can get some real help now. During last week’s debate on the Charter for Budget Responsibility, the Government tried to portray Labour’s policy as an anti-business proposal that would increase business taxes, but when it was pointed out to them that that argument flies only if one considers small businesses not to be real businesses, they seemed to change tack. Today, the Secretary of State for Education tried to posit it as setting one set of businesses against the other, but that totally and utterly misses the point.

Our proposal would use all the money saved by not going ahead with the corporation tax cut for the largest companies to support small businesses. At 21%, the corporation tax rate would remain competitive, but that switch in spending would strike a better and fairer balance. Business rates have already gone up by an average of £1,500 under this Government, and many businesses, including more than one in 10 small businesses, are now paying more in business rates than in rent. Unless things change, business rates will have risen by an average of nearly £2,000 by the end of this Parliament.

This Government have failed to help small businesses, and so the next Labour Government would cut business rates in 2015 and freeze them in 2016.

[Stephen Doughty]

I wonder whether my hon. Friend has had the same experience when talking to small businesses in her constituency as I have had in mine. The top two concerns that they have raised with me up and down the streets of Cardiff and Penarth are business rates and energy prices—two things that this Bill does nothing about.

[Shabana Mahmood]

My hon. Friend makes a powerful point. His experience as a constituency MP is exactly the same as mine. Almost every business that comes to see me at my surgery is struggling with its business rates and energy costs.

What does the Bill say about the top rate of income tax? Well, it remains at 45p. This Government have given an average tax cut of more than £107,000 to the 8,000 millionaires in our country. They seem to think that if they keep talking about the increase in the personal allowance, they will make people forget that the combined impact of the tax and benefit changes is that a typical household is £900 a year worse off, and that the richest in our country are getting an absolutely huge tax cut. The Government are desperate to be able to claim that the 50p rate raised as little money as possible because they want to make it easier for themselves to justify their decision to give a tax cut to the wealthiest at a time when ordinary families are really struggling.

The Government’s own assessment claims that the cost of cutting the rate to 45p, excluding all behavioural changes, was over £3 billion. To justify the tax cut, they argued that most of the potential revenue would be lost as a result of tax avoidance. Government Members were very excitable about the Government’s record on tax avoidance, which I will come to in a moment. But surely a Government as proud as they are of that record would have taken some targeted anti-avoidance measures to stop people avoiding the 50p rate. Instead, they ducked the opportunity.

The Government also claim that tax revenues rose after they cut the top rate of tax, but both the Office for National Statistics and the OBR have said that many of the highest earners moved their income and delayed their bonuses by a year after the 2012 Budget to benefit from the lower top rate of tax. That shifting of income will have cost the Treasury millions of pounds in lost revenue. When the deficit is high it cannot be right to cut the top rate of tax. The next Labour Government will put that rate back to 50p while we get the deficit down.

There was some excitement on the Government Benches about the Government’s record on tax avoidance. Although they like to pretend that that record is strong, it is nothing to write home about. The DOTAS—disclosure of tax avoidance schemes—measures were introduced by a Labour Government in 2004. Every time Government Members stand up and take credit for those measures, I shall pass on their thanks to the previous Labour Administration, who introduced them.

The Government have made a number of assumptions in their calculations of the value to the Exchequer of extending the accelerated payment scheme to both DOTAS and the general anti-abuse rule. Although HMRC is successful in about 80% of the cases it litigates, I find it hard to see why the same 80% success rate has been applied to potential cases under the GAAR when a case on the GAAR has yet to go to court. We will scrutinise the Government’s numbers in Committee: they have a history of overestimating the impact of their avoidance measures. We have spoken a lot today about the Swiss deal, which raised £2.3 billion less than expected. I am sure that the Exchequer Secretary will not—[Interruption.]

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. The House is too noisy. If hon. Members listen quietly, perhaps the hon. Lady will be able to come swiftly to the end of her speech.

[Shabana Mahmood]

Thank you, Madam Deputy Speaker. I will bring my remarks to a conclusion, but I want to give the Exchequer Secretary an opportunity to intervene and explain to the House why he got the numbers so wrong on the Swiss tax deal. He is shaking his head, which implies to me that he is not prepared to stand up for his own record or admit that he has a history of overestimating his numbers. We will look at the numbers closely in Committee.

The Government had an opportunity with the Bill to provide help in the here and now. That is an opportunity they have failed to take. We will be voting against the Bill and in favour of our reasoned amendment, which lists the measures that we believe are necessary to tackle the cost of living crisis and make sure that people on lower and middle incomes start to see the benefits of recovery. We will seek to improve the Bill in Committee and try to persuade the Government to change course, but from what we have heard today and what we are no doubt about to hear from the Exchequer Secretary, I fear that the Government are so blind to the lives of ordinary working people that they will refuse to take the opportunity to do so.

19:33

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

It is a great pleasure finally to be able to wind up this debate, Madam Deputy Speaker. We have had an interesting debate and I thank all right hon. and hon. Members for their contributions.

My hon. Friend the Member for Cities of London and Westminster (Mark Field) referred to the naive populism and flagrant opportunism of the Opposition, and we have seen further evidence of that during the debate. He welcomed the fact that this was not a giveaway Budget but one of a Government who are sticking to the plan.

My hon. Friend raised concerns about the DOTAS policy and the way in which those in disputes are being asked to pay their tax before the matter is finally determined. It is worth pointing out that that will apply only when a DOTAS notification has been made or, in future, when the case relates to a general anti-abuse rule and HMRC believes there to be a dispute. None the less, final rights will be determined by the courts.

My hon. Friend also raised a concern about film finance. It is worth pointing out that the problems are a result of the first scheme introduced by the previous Government. The current film finance regime does not have the same difficulties as its predecessor.

The hon. Member for Houghton and Sunderland South (Bridget Phillipson) welcomed the policy on the annual investment allowance. It is often observed that Opposition Members run down the state of the economy and what is happening in their location, but I make no such complaint about the hon. Lady. She pointed out that more people are employed by Nissan than ever before and that there is much good news about Nissan and other companies in the north-east. I welcome her positive comments.

My hon. Friend the Member for Watford (Richard Harrington) raised a number of points. He highlighted the need for those who access their pensions to be able to receive appropriate advice. I reassure him that there will be free, impartial and, where wanted, face-to-face advice. He talked about wanting to create a business culture, and I agree with him about that. He also mentioned the new universal technical college in Watford, which I particularly welcome: it will help his constituents and, indeed, mine.

The hon. Member for Cardiff South and Penarth (Stephen Doughty) raised a number of points, including the issue of energy prices. In one sentence he said that prices are continuing to rise, but he then said that an energy provider has announced a price freeze. He claimed credit on behalf of the previous Government for cutting corporation tax, but now thinks we should increase corporation tax. He also disappointed the House by saying that he will not be serving on the Finance Bill Committee this year. Only now am I overcoming my dismay at that news.

My hon. Friend the Member for Redcar (Ian Swales) said that this Budget was another step in clearing up the mess we inherited. He highlighted this Government’s efforts and successes on tax avoidance. He raised concerns about how Labour’s policies on energy prices are spooking investors. He said that Labour is the anti-business party and highlighted the help in the Budget and this Bill for the manufacturing industry.

The hon. Member for Bolton West (Julie Hilling) made a speech in which, essentially, she tried to refight the 2010 general election. We certainly welcome that approach, because the Labour party got less than 30% of the vote. My hon. Friend the Member for Dover (Charlie Elphicke) took up that battle and made the case against the previous Labour Government. He also highlighted the vacuity of Labour’s current policies. At one point, he sounded very much like Len McCluskey.

I apologise for missing the speech of the hon. Member for Glasgow North East (Mr Bain), but I understand that he referred to the sunlit uplands of a Labour Government next year. I do not know whether that was an April fool’s joke. My hon. Friend the Member for Macclesfield (David Rutley) highlighted the positive mood among businesses in his constituency and welcomed the changes to air passenger duty. The hon. Member for North Durham (Mr Jones) had concerns about pensioners being able to spend their money wisely and was against raising the personal allowance. He will have the opportunity to vote against both policies this evening.

My hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) delivered a characteristically erudite speech. He highlighted the fact that today is the anniversary of the death of Eleanor of Aquitaine, a mother of two sons who were deadly political rivals—the Marion Miliband of her age. My hon. Friend concluded his speech by saying that we should rejoice at the Budget. The hon. Member for Edinburgh East (Sheila Gilmore) then spoke and I think the best summary of her speech would be to say that she did not rejoice at the Budget—I think I will leave it at that.

My hon. Friend the Member for Hexham (Guy Opperman) highlighted the very supportive feedback about the Budget measures that he has received from chambers of commerce in the north-east of England. He also highlighted the benefits of our reforms of APD.

The hon. Member for Gateshead (Ian Mearns) set out his opposition to spending cuts, although he did not provide any suggestions about how the deficit could be reduced. I hope that he will serve on the Bill Committee this year—he nods his head—which to some extent makes up for the disappointing news about the hon. Member for Cardiff South and Penarth.

The hon. Member for Strangford (Jim Shannon) supported our policy on pensions and the recognition, through transferable allowances, of marriage in the tax system. He raised the issue of ensuring that employment is high, particularly to help young people. Although this was announced in a previous financial statement, it is worth pointing out that employer’s national insurance contributions will no longer be paid for employing under-21s from 2015, which will help to deal with youth unemployment. We are of course introducing the employment allowance—the £2,000 cash-back—for businesses, which will also help.

[Shabana Mahmood]

Will the Exchequer Secretary take the opportunity to do what none of his colleagues in the Treasury team has done? In particular, the Chief Secretary refused to answer this question in debates on the Budget. When all is said and done, will people be better off or worse off in 2015 than they were in 2010? It is a straight question—a straight answer, please.

[Mr Gauke]

The Labour party presided over the greatest recession that this country has seen for more than a century, which had an impact on people’s living standards. It is now up to this party and this coalition Government—[Interruption.]

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. Surely the House wants to listen to the Minister. A little quieter.

[Mr Gauke]

After the mess we inherited, how do we ensure that we build up the economy and get the sustainable growth that will increase living standards? The answer is set out in this Finance Bill.

It is worth pointing out the measures in the Bill that the Labour party will vote against this evening. There is the annual investment allowance, which will help manufacturing and other businesses up and down the country. It means that nearly 5 million businesses will get 100% relief on capital expenditure. That was welcomed by the hon. Member for Houghton and Sunderland South. Labour Members will vote against that. There are the reforms to R and D tax credits, which will help businesses to start up. [Interruption.]

[Madam Deputy Speaker]

Order. I am not going to ask any more polite questions. The House must listen to the Minister. Stop talking among yourselves.

[Mr Gauke]

Thank you, Madam Deputy Speaker.

Labour Members will oppose the R and D tax credit. There are the reforms to the carbon price floor, which will help manufacturing industry and ensure that the UK is not uncompetitive. They will vote against that, against the interests of businesses in their constituencies.

On the issue of pensions flexibility, the shadow Chief Secretary to the Treasury, the hon. Member for Nottingham East (Chris Leslie), said that the debate following the Budget was diverted by the attention on annuities, but it is fair to say that the Leader of the Opposition was not diverted by annuities in his response to the Budget. Since then, we have seen confusion from the Labour party. Labour Members have said that they are worried that people will spend recklessly and that that will create a burden on the public finances. They should know something about that, but they should not judge other people by their standards. The truth is that the Labour party does not trust the public with their money and that that feeling is mutual.

On the subject of avoidance, the Bill’s measures mean that £9 billion in additional revenue will be collected over the next five years. Avoidance will be tackled as a consequence of the Bill. It is also worth pointing out that HMRC’s yield over the course of this Parliament will be almost double its yield over the course of the previous Parliament. That is the progress that we have made on tax avoidance and evasion.

We are helping with the cost of living. There are hon. Members, including on the Opposition Benches, who have long campaigned for their constituents who have relatives in the Caribbean or south Asia. We are helping with air passenger duty, but Opposition Members will be voting against that measure.

On the starting rate of income tax for savers, we are cutting a 10p rate, not doubling a 10p rate. That will mean that 1 million more people will no longer pay tax on their savings. Opposition Members will be voting against that.

The personal allowance will increase to £10,000 this year and £10,500 next year. Opposition Members will be voting against that. Were they to succeed, the personal allowance in 2015-16 would be not £10,500, but £9,880. That would mean that millions of people would pay £124 a year more in tax as a consequence of the way that Labour votes.

[Mr Newmark]

Does my hon. Friend agree that raising the personal allowance to £10,500 will take 3.2 million people out of tax altogether and help 26 million families with an extra £800 per annum?

[Mr Gauke]

My hon. Friend is absolutely right. If the Labour party succeeds tonight, those 26 million people will pay £124 more in income tax next year.

This is a Finance Bill that gives people more power over their own lives, a Finance Bill that helps businesses to invest and create jobs, and a Finance Bill that reduces the burden of taxation on millions of income tax payers. In addition to our progress in improving skills, reforming welfare and strengthening our infrastructure, this Bill will help us to build a more resilient economy. This Bill is a further example of the Government working through our long-term economic plan and I commend it to the House.

Question put, That the amendment be made.

19:47

Division 241

Ayes: 241

---

Labour: 228
Scottish National Party: 5
Democratic Unionist Party: 3
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Green Party: 1

Noes: 291

---

Conservative: 247
Liberal Democrat: 43

Question put forthwith (Standing Order No. 62(2), That the Bill be now read a Second time.

19:59

Division 242

Ayes: 292

---

Conservative: 245
Liberal Democrat: 43
Democratic Unionist Party: 3

Noes: 235

---

Labour: 225
Scottish National Party: 5
Plaid Cymru: 3
Social Democratic & Labour Party: 2
Green Party: 1

Bill read a Second time.

Finance (No. 2) Bill (Programme)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the Finance (No. 2) Bill:

Committal

1. The following shall be committed to a Committee of the whole House:

(a) Clauses 1, 5 to 7, 11, 72 to 74 and 112;

(b) Schedule 1;

(c) any new Clauses, and any new Schedules, relating to:

(i) tax relief in connection with the costs of childcare, or

(ii) income tax allowances for parties to a marriage or civil partnership, or

(iii) air passenger duty, or

(iv) the rate of the bank levy, or

(v) the subject matter of Clause 1, or

(vi) the subject matter of Clauses 5 to 7 and Schedule 1.

2. The remainder of the Bill shall be committed to a Public Bill Committee.

Proceedings in Committee

3. (1) Proceedings in Committee of the whole House shall be completed in two days.

(2) Those proceedings shall be taken on each of those days as shown in the first column of the following table and in the order so shown.

(3) Each part of the proceedings shall (so far as not previously concluded) be brought to a conclusion at the time specified in relation to it in the second column of the Table.

(4) Standing Order No. 83B (programming committees) shall not apply to proceedings in Committee of the whole House.

Table
Proceedings	Time for conclusion of proceedings
First day
New Clauses and new Schedules relating to the subject matter of Clauses 5 to 7 and Schedule 1; Clauses 5 to 7; Schedule 1	3.30 pm on the first day
New Clauses and new Schedules relating to the subject matter of Clause1; Clause 1	5.30 pm on the first day
New Clauses and new Schedules relating to tax relief in connection with the costs of childcare	7.30 pm on the first day
Second day
New Clauses and new Schedules relating to income tax allowances for parties to a marriage or civil partnership; Clause 11	4.00 pm on the second day
New Clauses and new Schedules relating to the rate of the bank levy; Clause 112	6.00 pm on the second day
New Clauses and new Schedules relating to air passenger duty; Clauses 72 to 74	8.00 pm on the second day

4. Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Tuesday 17 June 2014.

5. The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

6. When the provisions of the Bill considered respectively by the Committee of the whole House and by the Public Bill Committee have been reported to the House, the Bill shall be proceeded with as if it had been reported as a whole to the House from the Public Bill Committee.

Consideration and Third Reading

7. Proceedings on consideration and on Third Reading shall be completed in two days.

8. Standing Order No. 83B (programming committees) shall not apply to proceedings on Consideration and Third Reading.—(Mr Evennett.)

Question agreed to.

Deferred Divisions

Motion made, and Question put forthwith (Standing Order No. 41A(3)),

That, at this day’s sitting, Standing Order No. 41A (Deferred divisions) shall not apply to the motion in the name of Mr Chancellor of the Exchequer relating to the Finance (No. 2) Bill (Carry-over).—(Mr Evennett.)

Question agreed to.

Finance (no. 2) Bill (Carry-over)

Motion made, and Question put forthwith (Standing Order No. 80B(1)(a)),

That if, at the conclusion of this Session of Parliament, proceedings on the Finance (No. 2) Bill have not been completed, they shall be resumed in the next Session.—(Mr Evennett.)

20:12

Division 243

Ayes: 273

---

Conservative: 229
Liberal Democrat: 41
Democratic Unionist Party: 3

Noes: 223

---

Labour: 214
Scottish National Party: 5
Social Democratic & Labour Party: 2
Plaid Cymru: 2
Green Party: 1

Business without Debate

Tuesday 1st April 2014 Commons Chamber

Delegated Legislation

Tuesday 1st April 2014 Commons Chamber

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Dangerous Drugs

That the Misuse of Drugs Act 1971 (Amendment) (No. 2) Order 2014, which was laid before this House on 5 March, be approved.—(Mr Evennett.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Criminal Law

That the draft Criminal Justice and Police Act 2001 (Amendment) Order 2013, which was laid before this House on 4 November 2013, be approved.—(Mr Evennett.)

Question agreed to.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Public Bodies

That the draft Public Bodies (Abolition of the Committee on Agricultural Valuation) Order 2014, which was laid before this House on 6 February, be approved. (Mr Evennett.)

Question agreed to.

Sir Robert Peel Hospital

Tuesday 1st April 2014 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Mr Evennett.)

20:24

[Christopher Pincher (Tamworth) (Con)]

As our colleagues rush to watch the second half of the Manchester United match, I should like to raise an issue of somewhat greater importance to my constituents. Although the title of the debate is narrow and focuses on the effect on my Tamworth constituency, the wider implications for users of Burton Hospitals NHS Foundation Trust also affect the constituents of my hon. Friends the Members for Lichfield (Michael Fabricant), for North West Leicestershire (Andrew Bridgen), for South Derbyshire (Heather Wheeler) and for Burton (Andrew Griffiths)—I see that my hon. Friend the Member for Burton is in his place.

[Andrew Griffiths (Burton) (Con)]

I thank my hon. Friend for giving way and congratulate him on securing this debate and for being a doughty fighter on behalf of his constituents in the provision of health care. He will know that Queen’s hospital has a deficit of some £3.1 million. It has already saved £9.8 million but needs to save a further £10 million in 2013-14. Given that my own east Staffordshire clinical commissioning group inherited a deficit of £8 million—

[Madam Deputy Speaker (Mrs Eleanor Laing)]

Order. If the hon. Gentleman is making an intervention, I am sure he will wish to be brief. If he wishes to make a speech, he will have to have permission to do so.

[Andrew Griffiths]

I am grateful to you for that advice, Madam Deputy Speaker. I was just about to get to the crux of the matter. Given that the area is £12 million away from fairer funding, does my hon. Friend agree that the health care economy is incredibly fragile locally and that something needs to be done to help us bridge that gap in the short term?

[Christopher Pincher]

I quite agree with my hon. Friend and suggest that we find that way forward, in the first case by seeking a meeting with the Secretary of State to discuss our concerns about the trust.

In nearly four years as a Member of Parliament, this is the first Adjournment debate I have applied for in the Chamber. I hope that gives you, Madam Deputy Speaker, and those on the Treasury Bench some indication of the importance that I and my constituents attach to the subject.

The Sir Robert Peel community hospital at Mile Oak in my constituency provides services for people living in and around Tamworth including a round-the-clock minor injuries unit, an X-ray and ultrasound department, an endoscopy unit and out-patient and day surgery. It also provides award-winning rehabilitation services, care of older people and palliative care services. Indeed, the award to staff for their innovative work on rehabilitation was received only two weeks ago.

The hospital is an important and valued service in our community. Local residents are very attached to it and the medical support it offers to a growing town. They want to be a part of its future, yet as a result of a review that many feel was conducted behind closed doors, Burton Hospitals NHS Foundation Trust, which runs the Peel, has decided to close its day case theatre and surgical ward and is considering withdrawing its endoscopy service. A decision on that service will be made next month. The closure of the day case theatre alone will affect about 1,400 patients each year.

Although no institution, including the NHS, can be set in aspic and although hospitals can and must be prepared to adapt to meet the changing demands of NHS users—for example, the growth in the number of elderly patient means that hospitals need to make more provision for dementia and palliative care—I am concerned that the proposals for the Robert Peel are being hurried through without the fullest consultation and certainly without the fullest involvement of the local community in Tamworth and Fazeley. Although local people are now being invited to so-called listening events, they are about the options for future service provision and not the decisions that have already been made. It appears that the Burton trust has closed its ears to concerns about its plans for day surgery.

The trust has form. A year ago, it introduced parking charges at the Peel hospital with no public consultation and with very little notice. The system it introduced was ill-conceived and badly signed, resulting in a large number of unwarranted fines being levied on some of the most vulnerable people: the old and frail, concerned relatives and the lowest paid. Many of those fines have been overturned. More than 3,000 people signed my petition calling on the trust to rethink its parking proposals and the trust, to its credit, recognised public concern and is now in the process of developing a revised parking system, yet, like the Bourbons, it seems to have learned nothing and forgotten nothing from that experience.

On 5 February, staff at the Peel hospital were called to a meeting to be told that, following what was described as an “extensive review”, the surgical ward would be closed in as little as 12 weeks. They knew nothing of that review, and neither did anyone else—not me, not the local health scrutiny committee, and certainly not the wider community. The review took place between October and January behind closed doors and no one was told. The first the wider community knew was when the story was broken in the Tamworth Herald on 13 February. Yet it was not until 25 March that the trust answered detailed public questions at the Healthy Staffordshire scrutiny meeting, which took place not in Tamworth, but in Stafford. The impression left is that the trust has talked to itself, but not to anyone else.

I have met the chief executive and the operations manager at the Burton Hospitals NHS Foundation Trust and they have assured me that the Robert Peel will not close, that minor injury services will be unaffected, and indeed that new services, such as pressure ulcer clinics, may be run out of the hospital. However, I am concerned that the very thing my hon. Friend the Minister was at pains to stress during the debate on amendments to the Care Bill on 11 March—indeed, he made the point directly to me during my intervention—that proper patient and community consultation must take place before decisions are made, is just not happening at the Peel hospital. As a result, patients, staff, hospital users, local councillors and the local community feel that changes are being done to them rather than along with them after recognising their concerns and their advice.

Burton Hospitals NHS Foundation Trust says that demand for the day case theatre has dropped by 30% in the last five years and that 40% of current capacity can be dealt with in GP surgeries. That may well be true. It may also be true that commissioning services in GP surgeries is cheaper and more convenient for my local clinical commissioning group. However, I remain concerned that if this decision is hurried through without proper consideration and consultation, the problems the hospital discovered with its car parking arrangements could be replicated on a far more serious level—that of patient care. We cannot be sure that all local GPs have the necessary equipment, experience and time to undertake all the new procedures they may be called upon to deliver. We need to be sure that Queen's hospital in Burton and the Good Hope in Birmingham have the scope to add to their already demanding schedules without affecting patient waiting times. At the very least it means some people may need to travel further, and spend more on their journey, for their scheduled minor surgery. For an operation at Queen's hospital in Burton, that means travelling some 18 miles along the A38, which, when it is blocked, tends to stay blocked.

I hope my hon. Friend will agree with me that if Burton Hospitals NHS Foundation Trust believes that services at the Robert Peel must be adapted to meet changing needs in the community it serves, it must make those changes having first clearly and openly discussed its proposals with the wider community. A handful of local councillors, important as they undoubtedly are, simply is not good enough, and it must be careful to analyse and accept the sensible advice of the community, including the friends of the local hospital who do so much good work with it. Making its decision at the start of the consultation process, rather than at its end, does nothing to engage public confidence; indeed, it makes a mockery of any consultation.

I hope that my hon. Friend is prepared to send a clear message to Burton Hospitals NHS Foundation Trust, and to others, that while they must continually monitor their services so that they remain relevant to and focused on need and so that they deliver the very best patient care, decisions made behind closed doors long before anyone is asked their view are not acceptable. The trust board must agree to the widest local consultation, must collate and publish feedback from its consultation and must be prepared to act on the considered advice of all local stakeholders. Only then will people believe that their local hospital is truly their own.

20:35

[The Parliamentary Under-Secretary of State for Health (Dr Daniel Poulter)]

I congratulate my hon. Friend the Member for Tamworth (Christopher Pincher) on securing the debate. I am well aware of his long-standing interest in matters affecting his constituency, including his well-documented support for the Sharon Fox cancer centre. I fully understand why he has raised the matter of the Sir Robert Peel hospital today. I hope that the discussion about the future of services in Tamworth and the surrounding area will move forward constructively following this debate—certainly more constructively than it might have done recently.

Before looking at the local situation in detail, it is important to say a few words about the importance of high-quality engagement between the NHS—in this case the trust—and local patients and commissioners. Decisions about patient care and NHS services should, where possible, be taken in as open and transparent a way as possible. It is important that patient groups and the wider public are properly consulted in decisions about local NHS services. That is clearly outlined in the tests for reconfiguration laid down by my right hon. Friend the Member for South Cambridgeshire (Mr Lansley) when he was Health Secretary earlier in this Parliament. My hon. Friend was right to highlight the importance of public and patient engagement in the design of local NHS services, in this case for the benefit of his constituents in Tamworth.

The situation at the Sir Robert Peel hospital is of course complicated by events that have taken place with the Keogh review, to which I will return in a moment. The hospital is part of the Burton Hospitals NHS Foundation Trust. It might help the House to understand the situation better if I briefly describe the foundation trust and some of the issues relating to the way the Keogh review is affecting services. The foundation trust provides hospital-based services from four main sites: Burton Hospitals NHS Foundation Trust in Burton-on-Trent, with acute hospital services including an emergency department; the treatment centre on the Burton Hospitals site, a dedicated centre for day case surgery and treatments; the Samuel Johnson community hospital in Lichfield, with local services, including a midwifery-led maternity unit and a 24/7 minor injuries unit; and the Sir Robert Peel community hospital in Tamworth. I will say a little more about those services in a moment.

The foundation trust provides a wide range of services to a population of around 360,000 across south Staffordshire, south Derbyshire and north-west Leicestershire. Over 47,000 planned and emergency admissions, more than 70,000 A and E attendances and around 13,000 day case procedures take place each year in the foundation trust hospitals across all the hospital sites. The Samuel Johnson hospital in Lichfield, as a community hospital, provides services that are similar to those provided by the Sir Robert Peel hospital in Tamworth. Both community hospitals had previously been run by the South Staffordshire primary care trust. The issue for the foundation trust is therefore much wider than the Sir Robert Peel hospital, because it is required to look across the entire population it serves and, on the basis of the services commissioned, provide a safe and high-quality service for the benefit of patients. The trust has only comparatively recently become responsible for the two community hospitals it operates, both of which it took over in 2011.

[Andrew Griffiths]

The Minister mentioned that Queen’s hospital is a Keogh hospital. The staff there are working incredibly hard to improve standards and are taking big strides forward. The Minister will have heard about the precarious situation in relation to Queen’s and the East Staffordshire clinical commissioning group. My hon. Friend the Member for Tamworth (Christopher Pincher) requested a meeting. Will the Minister agree to meet me, other colleagues and the team from Queen’s hospital and the CCG in order to discuss our concerns and find a solution that improves services locally.

[Dr Poulter]

I will be delighted to meet my hon. Friends to talk further about local issues. There are long-standing concerns, not least the processes triggered by the Keogh review in the trust and the wider health economy.

I turn to the local reconfiguration process. To ensure that the foundation trust would continue to provide the best level of service to the local population, the trust commissioned a report from Deloitte in December 2012. The intention was to address the long-term challenges faced by the trust by refocusing community services, such as those provided at the Sir Robert Peel community hospital, and concentrating on the most vulnerable patient groups.

The Deloitte report set out a number of options. However, as we are all aware, in 2013 the trust was inspected under the Keogh review, which we took forward following the Francis report on Mid Staffordshire foundation trust. Burton was inspected because it had higher than expected mortality rates. The Keogh review was not reassured by what it found. As a result of the inspection, the foundation trust was placed in special measures by Monitor, the regulator of foundation trusts. Monitor continues to work with foundation trusts in special measures to ensure that they return to safe and efficient services as soon as possible. The Keogh review made six urgent recommendations for Burton. Those recommendations have been the drivers for the changes at Burton and at the Sir Robert Peel community hospital.

Sir Bruce Keogh challenged the foundation trust on what its long-term plans would be for the community hospitals. For example, patient activity at both sites in Lichfield and Tamworth has been decreasing across minor injuries, in-patient and out-patient services for a number of years, and is, I understand, on a steadily decreasing trend. There is a need to make changes because, as well as the higher than expected mortality rates, the trust and its local commissioners believe that the health needs of the population they serve are changing.

As a nation, we face changing challenges in health care—for example, the demographic pressures imposed by an ageing population. As the health needs of the population change, it is right that the services provided at local hospitals and in the local health economy also change and that a more integrated approach is taken between local authorities and the NHS in delivering more personalised care, particularly for the frail elderly, and more care in people’s homes and communities.

The foundation trust has already responded to the Keogh review challenge, although much is still to be done. I understand that the reconfiguration to which my hon. Friend the Member for Tamworth refers follows on from and continues the response to the Keogh review. Certainly, the aims are the same—to ensure that health care services are of high quality and meet the needs of local patients.

The Keogh review has affected the Sir Robert Peel community hospital, which currently offers local services for people living in and around Tamworth—including, for example, a 24/7 minor injuries unit, in-patient, X-ray and ultrasound department, and an out-patient service. There is one ward providing rehabilitation, care of older people, general medical care and palliative care. Consultant and nurse-led clinics accommodate consultations, investigations, minor procedures, post-treatment follow-up and health promotion.

That is not the full range of services that one would expect at larger NHS hospitals. However, having close-to-home community-based facilities is an important part of meeting the challenge of looking after older people in their own homes. Some such facilities are found at Sir Robert Peel community hospital. I am sure that the local population welcome that and believe it important in delivering high-quality health care in the months and years ahead.

There are currently discussions about the relocation of day case surgery and there is a review of endoscopy. I understand that that would affect about 30 patients a week, with services moving to local GP surgeries, Good Hope hospital at Sutton Coldfield about eight miles away, or the main trust site at Burton.

I understand that further changes are being considered in response to Keogh. However, planning is at a very early stage. I understand that the trust board will be receiving an outline paper this coming Thursday and that no decisions have yet been taken. I am sure that my hon. Friend will agree that it would be highly inappropriate for me to speculate about what option or options might be considered or chosen by the local NHS. I would certainly not want to suggest that there is a Government-preferred option that should be followed; I am not in a position to do that. Whitehall micro-management of the local NHS invariably leads to bad things happening; that is what we have tried to avoid through the health reforms that we instigated in 2012. As I said a few minutes ago, such decisions are local decisions and must be seen to be taken by the local NHS and local commissioners, in consultation with local patients.

[Christopher Pincher]

Of course my hon. Friend is absolutely right. These are local decisions for local communities and their local NHS. It is not for Ministers to dictate what services should or should not be provided for any particular hospital; it is for the local community to determine that, based on need. Does he agree, however, that when the local community decides, it should be based on proper consultation, and that listening exercises should be based on what people want and not what the clinical professionals and managers want?

[Dr Poulter]

My hon. Friend makes an important point. Of course clinical leadership in the NHS is important in designing services, but he is absolutely right that it is important that patients and the public locally are properly consulted in decisions about health care services. That is something that we believe in. Far too often in the past, patients have felt that decision making is done to them rather than their being involved in it. That is exactly why we introduced new tests for the reconfiguration of services that put patient and public consultation at the very heart of designing how medical and health care needs are addressed in the future.

As I am sure my hon. Friend agrees, the heart of the matter—this is certainly my reading of the situation from what he has said—is that there is a need for good communication from the foundation trust. That means proper engagement by the trust with local communities, patients and the public and local commissioners in all decisions. It is understandable that people will respond negatively to speculation in the media, and sometimes by word of mouth, about any change or improvement to services unless there is proper communication. It seems that in this case that communication has not been of the highest standard, and that has led to some of the concerns raised by my hon. Friend. I know that he has recently met the chair and chief executive of the trust, and I encourage him to build on that contact. I am sure that the local NHS would welcome the opportunity further to share its thinking with him. That would be very desirable for all hon. Members, including my hon. Friend the Member for Burton (Andrew Griffiths).

I hope that the trust and local GP commissioners will continue to work together to explain clearly what they are doing and why. Elected representatives also play a strong leadership role in helping to work with trusts. It is in the interests of trusts to work with local MPs to ensure that there is a proper understanding of what they are trying to achieve in the way that they deliver health care to the local community.

I was pleased to hear that my hon. Friend has received reassurances from the trust about a strong future for Sir Robert Peel hospital; that is good news. However, there is clearly a need for the trust to focus on improving its communications in future to ensure that the people of Tamworth and surrounding areas fully understand that delivering high-quality health care is about listening to the public. The public must feel that their views are being listened to and properly responded to when health care services are designed. To be absolutely clear, as my hon. Friend said, this is about making sure that patients and public in Tamworth do not feel that decisions are being done to them but that they are making decisions on their own behalf and are fully engaged in the process with local commissioners in deciding on the future health care needs of the local area. Hospital reconfiguration and good health care means listening to patients and the public and making sure that hospital services are improved and delivered in a better way.

That is all the more important in this case because of the consequences of the Keogh review. I know that my hon. Friend will go back from this debate and further engage with the local trust. As I said, I am very happy to meet him and my hon. Friend the Member for Burton to ensure that we can help to achieve better engagement with local health care commissioners and the trust.

I am glad to have had the opportunity to place on record this Government’s support for the local NHS in taking forward the difficult challenge of responding to the Keogh review. We would also like to put on record our gratitude to the local front-line staff who work very hard at the Burton trust. I am sure that as a result of their work and this debate, we will be in a much better position to make sure that the trust engages more fully with the public in Tamworth and surrounding areas when it comes to making decisions about future health care services.

Question put and agreed to.

20:49

House adjourned.

Ministerial Corrections

Tuesday 1st April 2014 Ministerial Corrections

Tuesday 1 April 2014

Home Department

Tuesday 1st April 2014 Ministerial Corrections

Arrest Warrants

[Mr Raab]

To ask the Secretary of State for the Home Department how many requests for the surrender of an individual under a European Arrest Warrant were received by the Serious Organised Crime Agency in 2010-11.

[Official Report, 1 December 2011, Vol. 536, c. 1063W.]

Letter of correction from Damian Green:

An error has been identified in the written answer given to the hon. Member for Esher and Walton (Mr Raab) on 1 December 2011.

The full answer given was as follows:

[Damian Green]

[holding answer 7 November 2011]: In 2010-11, SOCA received 6,032 Part 1 European Arrest Warrant requests (relating to individuals who are in the UK) and 256 Part 3 warrants (relating to individuals wanted by the UK).

Member states will often issue an EAW to all other member states when the location of the individual sought is not known. The number of requests received, therefore, is not necessarily an indicator of those individuals being in the UK.

The correct answer should have been:

[Damian Green]

[holding answer 7 November 2011]: In 2010-11, SOCA received 5,770 Part 1 European Arrest Warrant requests (relating to individuals who are in the UK) and 256 Part 3 warrants (relating to individuals wanted by the UK).

Member states will often issue an EAW to all other member states when the location of the individual sought is not known. The number of requests received, therefore, is not necessarily an indicator of those individuals being in the UK.

[Mr Raab]

To ask the Secretary of State for the Home Department how many requests for the surrender of an individual under a European arrest warrant were received by the Serious and Organised Crime Agency in 2011-12.

[Official Report, 20 June 2012, Vol. 546, c. 1058-60W.]

Letter of correction from Damian Green:

An error has been identified in the written answer given to the hon. Member for Esher and Walton (Mr Raab) on 20 June 2012.

The full answer given was as follows:

[Damian Green]

[holding answer 18 June 2012]: During the business year 2011-12, the Serious Organised Crime Agency received 5,832 European arrest warrants issued by EU member states—this figure includes four issued by Gibraltar. The following table breaks this figure down by issuing state.

[Damian Green]

[holding answer 18 June 2012]: During the business year 2011-12, the Serious Organised Crime Agency received 5,641 European arrest warrants issued by EU member states—this figure includes four issued by Gibraltar. The following table breaks this figure down by issuing state.

Petition

Tuesday 1st April 2014 Petitions

Tuesday 1 April 2014

Fire Services in the Cleveland Fire Authority area (Middlesbrough South and East Cleveland)

Tuesday 1st April 2014 Petitions

The Petition of residents of the UK,

Declares that the Petitioners believe that it is unfair that the Department for Communities and Local Government have imposed large funding reductions on a high-risk area like Cleveland when lower-risk areas in the South of England have had their central funding increased; further that the Petitioners believe that funding reductions have contributed to the 54.1% increase in total fire calls in Cleveland between 2012-13 and 2013-14; further that the Petitioners believe that it is unacceptable that the Authority’s proposed Integrated Risk Management Plan recommends the closure of Marine Fire Station and the reduction by approximately 25% of the number of the whole-time firefighters; further that the Authority and Government should take steps to protect frontline services and further that a local Petition on this issue has received over 6,000 signatures across Redcar and Cleveland, Middlesbrough, Stockton-on-Tees and Hartlepool.

The Petitioners therefore request that the House of Commons urges the Department for Communities and Local Government to provide a fairer funding settlement that gives due consideration to deprivation and risk, further that the House of Commons urges the Government to encourage Cleveland Fire Authority to reallocate planned capital expenditure to the preservation of frontline services, and further that the House of Commons urges the Cabinet Office, Department for Communities and Local Government and Cleveland Fire Authority not to further expend on unwanted and high-risk proposals to spin out fire brigades as public service mutuals.

And the Petitioners remain, etc.—[Presented by Tom Blenkinsop, Official Report, 26 February 2014; Vol. 576, c. 378.]

[P001321]

Observations from the Secretary of State for Communities and Local Government:

Fire and rescue authorities deliver an incredibly important service for local communities and are continuing to play their part, along with other parts of local government, in cutting the deficit. Single-purpose fire and rescue authorities (outside London) will receive £1.46 billion of revenue spending power under the 2014-15 settlement, of which approximately £0.74 billion is revenue support grant and business rates baseline, with further substantive funding to be supplied through council tax. Cleveland Fire and Rescue Authority’s Spending Power for 2014-15 is £28.6 million. They will also receive £193,000 to support national resilience and £2.74 million of capital grant. Cleveland Fire’s reserves out-turn at the end of 2012-13 was £10.8 million—their reserves have more than doubled since 2009 (CIPFA data).

The Secretary of State for the Department for Communities and Local Government is aware that Cleveland had a 2.2% spending power reduction in 2012-13 and a 5.% spending power reduction in 2013/14 —both low in the current fiscal climate and given the need to pay off the deficit left by the last Administration. Data on fires and false alarms (rather than “fire calls”) in Cleveland are only available for the first six months of 2013-14. Cleveland Fire and Rescue Authority recorded 3,932 fires and false alarms during this period, an increase of 34% from the same period in 2012-13 (2,936). There were, however, fewer fires and false alarms recorded in 2013-14 than in the same period in each of three years prior to 2012-13. The significantly lower number in 2012-13 is likely to be due to the wet summer of 2012.

Fire and rescue authorities are best placed to assess and manage their services and do this through the integrated risk management planning process. Fire and rescue authorities now attend 46% fewer incidents than 10 years ago and they allocate their resources according to local risk. Fire safety is at an all-time high, but overall fire fighter strength over the same period has only dropped by 9%. Decisions on allocation of their resources are taken by fire and rescue authorities like Cleveland through the integrated risk management planning process after effective consultation with the local community—there is no role for central Government to intervene in such decision-making. Decisions on operational matters such as station closures and firefighter numbers are, therefore, for Cleveland fire and rescue authority.

Overall the 2014-15 finance settlement provides fair funding for all authorities whether rural or urban, north or south. In 2013-14 protections were built in for the most grant dependent authorities taking account of risk and deprivation through the relative needs element, so that authorities facing the highest demand for services continue to receive substantially more funding through the settlement (i.e. in their allocation of revenue support grant and the baseline for retained business rates, which is known as the settlement funding assessment).

Spending power of authorities in the most deprived areas is much higher—in 2014-15 up to around £4200 per dwelling in the 10% most deprived authority areas compared to up around £2100 per dwelling in the 10% least deprived authority areas. Cleveland’s Spending Power per dwelling is the highest amongst single-tier fire authorities at £115, compared to, for example, Berkshire at £95, Hampshire at £89 or Kent at £94.

We are giving fire and rescue authorities the stability to reform local services for their communities and to make long-term savings. The Knight Review “Facing the Future”, found huge variations in the way fire and rescue authorities operated and concluded that there were significant opportunities for savings. This is why Government are making available a £75 million transformation fund for fire and rescue authorities in 2015-16.

There is still scope for fire and rescue authorities to make sensible savings, such as through reforms to flexible staffing and crewing arrangements, better procurement; shared services, collaboration with emergency services and other organisations on service delivery and estates, sickness management; sharing of senior staff, locally-led mergers and operational collaborations, new fire-fighting technology, preventive approaches and working with local businesses.

The Government will make no moves on mutualisation that would lead to privatisation. We continue to support fire and rescue authorities in exploring new and innovative ways of delivering their services to their communities, such as through locally-led mutuals, and we keep under consideration the best way to do this within the legal framework.

Westminster Hall

Tuesday 1st April 2014 Westminster Hall

Tuesday 1 April 2014

[Mr Philip Hollobone in the Chair]

North Wales Economy

Tuesday 1st April 2014 Westminster Hall

Motion made, and Question proposed, That the sitting be now adjourned.—(Stephen Crabb.)

09:29

[Mr Philip Hollobone (in the Chair)]

I suspect that for many Members it is a bit like “Groundhog Day”, as everyone here was in the Chamber yesterday discussing the Wales Bill.

[Mr David Hanson (Delyn) (Lab)]

Good morning, Mr Hollobone, and welcome to the Chair. It is a great honour for you to be here to share our Welsh discussions. I am pleased both to have had the luck to secure this debate, and that we have a strong showing from Members representing north Wales constituencies. We also have my hon. Friend the Member for Caerphilly (Wayne David) and my hon. Friend the Member for Llanelli (Nia Griffith), who is on the Front Bench.

This debate offers us an important opportunity to discuss the north Wales economy, for my colleagues and me to promote what is good and strong about north Wales to the rest of the United Kingdom, and for us to look at some of the key issues that can help our economy grow even faster and stronger and improve the living standards of our north Wales constituents. It is also an opportunity for us to press the UK Government to be an active Government who are engaged in promoting the economy and are not standing back. They should work closely with our colleagues in the Welsh Assembly to achieve economic growth and be active as a part of a wider Europe. In the run-up to the European elections, we need to emphasise strongly how important Europe is to the north Wales economy. I will emphasise our economy’s cross-border nature. The Deeside hub is a key economic driver for north Wales and for north-west England, the Wirral, Liverpool and Cheshire. Many of my constituents work in England and many people in England work in north Wales, and that cross-border working is extremely important to our economy.

The economy of north Wales was worth a staggering £10.6 billion last year, which represents £15,500 per person. That is 72% of the UK average, but that is because constituencies such as that of the hon. Member for Aberconwy (Guto Bebb) have a high retirement population that drags down the figure. Our economy is still growing, leading the charge for the UK economy as a whole. In north Wales, we have a number of economic success stories in renewable energy, such as West Coast Energy in my constituency, Mostyn docks and the wind farms off the north Wales coast, such as Gwynt y Môr.

[Chris Ruane (Vale of Clwyd) (Lab)]

What does my right hon. Friend think of the Prime Minister’s comments when he visited Llandudno in 2006? He described the turbines off the north Wales coast that I switched on as “giant bird blenders”.

[Mr Hanson]

I would rather see them as giant economic growth drivers. Only last week, we had a great announcement for Hull, with Siemens bringing manufacturing to the United Kingdom. In north Wales, we have a strong renewable energy offer and lots of expertise. We have wind farms and the potential for more wind farms offshore, and a good opportunity to build on our economic success in that area. We also have strong manufacturing in the paper sector, with Kimberly-Clark and SCA in my constituency. We still have, despite many years of contraction, a strong steel-making industry with Tata Steel in the constituency of my hon. Friend the Member for Alyn and Deeside (Mark Tami).

[Mark Tami (Alyn and Deeside) (Lab)]

Would my right hon. Friend join me in welcoming the fact that Tata has taken on a number of apprentices this year? It is seeking to invest for the future, which is good news for the plant.

[Mr Hanson]

It is good news, and I welcome the investment in apprenticeships. Other companies, such as Airbus, do the same in our area. We also have a strong automotive industry, and this week Toyota made a strong case for engagement with Europe to ensure that we can export models from the United Kingdom to Europe.

North Wales has the strongest manufacturing base in the UK, and I shall focus on Airbus, which employs between 1,500 and 2,000 people in my constituency, with more employees coming from across north Wales. It is a vital manufacturing industry for UK economic growth. A potential 30,000 new aircraft will be built between now and 2032, representing a staggering $4.4 trillion-worth of business. Airbus has the opportunity, with active Government support, to secure a key part of that market. That is important, not just for the 7,000 people who work at Airbus, but also for many others, including those who are part of the UK supply chain. Airbus has spent £180 million on that supply chain in north Wales. The strong site at Broughton was developed with active support from the Labour Welsh Assembly and the previous Labour UK Government, and with the new wing development we have the potential to grow the site further.

We also have strong sectors in other areas. Tourism is a key activity for north Wales. We have a great tourist offer, which we can grow still further. Millions of people are within a two-hour drive or train journey of our tourism economy. We have a strong agricultural sector with sheep and cattle farming, as well as milk production. Food production and distribution are growing in importance. For example, we have food festivals in Mold in my constituency. That industry has a £3 billion value to Wales as a whole, according to a briefing I obtained yesterday from NFU Cymru. We have strong local and national Government, with many people putting their wage packets, through employment in the health service and the county council, into the economy. We have a particularly vibrant small business sector, which is extremely important in growing our economy. Many wage packets come into north Wales via the car manufacturers, such as Vauxhall at Ellesmere Port, the banking sector in Cheshire and the Deeside north Wales hub, which is one of the strongest areas in the United Kingdom.

The lesson that we must learn is that we need active Government engaged in all those issues, particularly the Deeside enterprise zone in the constituency of my hon. Friend the Member for Alyn and Deeside, which has the active support of the Welsh Assembly and has invested through a capital programme in schools and colleges in our constituencies. In my own county, £64.2 million of that programme is going into four facilities in my county of Flintshire, one of which is the community learning campus at Holywell high school. The theme I am developing is active Government. That investment is finding its way into construction and supply in the private sector, which is building and developing those facilities.

North Wales continues to benefit from EU funds. It is important, in the run-up to the European elections, that we do not allow people to take the stance that the EU is bad for Wales, because more than 8,000 new businesses have been created, and £665 million of contracts have been won. Some 13,000 businesses are supported in Wales, and north Wales has a considerable number of those businesses.

We face some key challenges, however. In Flintshire, wages have fallen in real terms by £3,000 per family on average since the economic crisis in 2007. A TUC study has shown that north Wales has suffered the biggest wage cut in Wales, with an average drop of £57 a week. The latest figures show that the number of unemployed people in my constituency has increased in the past year and that the number of unemployed young people is still rising. In my county, 1,567 people are each losing £880 because of the changes to the Government’s spare room subsidy—the so-called bedroom tax.

The cost of energy bills is also hitting the north Wales economy hard, with the cost of energy rising by some £300 over the past three years, meaning that money is taken out of the economy instead of being spent on creating jobs and services for the future. Although we do have strong sectors, such is the lack of recovery in the area that only yesterday Creative Foods, which is operated by Brakes, announced that it would consult on the loss of some 150 jobs and the closure of its food manufacturing plant in Flint. The consultation will end in late May. Will the Minister contact the Welsh Assembly and the company to see whether the factory can remain viable or whether an alternative buyer can be found? Brakes has operated in Flint for the 20 years in which I have been a Member of Parliament, and it is a vibrant factory. Aaron Shotton, leader of Flintshire county council, has arranged for the council’s enterprise department to meet Brakes to examine the situation.

In addition, this week I received a notification from Aviva as part of the Budget submissions. The letter states:

“Wales had one of the lowest levels of confidence in general economic conditions over 2013”.

Although our manufacturing, tourism, renewables, businesses and agriculture are strong, both the Welsh Assembly and the UK Government should use business policy to develop our offer and improve and grow our economy still further.

[Chris Ruane]

I thank my right hon. Friend for giving way a second time. Does he agree that the lack of business confidence may be due to the Conservative coalition Government always running down Wales, the Welsh economy, the Welsh health service and Welsh education, using that as a political tool for their election strategy?

[Mr Hanson]

It does not help. I hope that the Minister will not only focus on the positives but listen to the Members here today who represent north Wales. Every Labour Member from north Wales is present, along with the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd) and the hon. Member for Aberconwy—the hon. Member for Arfon (Hywel Williams) is not present—so we have a strong cross-party group that is trying to back north Wales.

I want to discuss four or five areas where the Government can help to grow the economy. We have discussed transport infrastructure with the Minister before, but real opportunities exist for us to improve connectivity between north-west England and north Wales and between north Wales and the economic driver that is London. I want to put on the record my support for High Speed 2 and for Sir David Higgins’s decision to draw the Government’s attention to fast development at Crewe. I also support attempts by the Government and the Assembly to develop electrification between Crewe and the north Wales coast. I do so not for the sake of speed—an extra 10 or 15 minutes off journey times would be nice—but for the sake of capacity, which is crucial to our economy. HS2 will bring vital extra capacity to the area for tourists, for freight and for businesses.

[Albert Owen (Ynys Môn) (Lab)]

My right hon. Friend highlights the importance of the European Union and of transport infrastructure, but the two are combined. North Wales lies on the trans-European network as a link between Dublin and London, so there is a strong business case for Ireland, Britain and the rest of Europe to work together to ensure that north Wales gets the best connectivity.

[Mr Hanson]

That is an extremely valid point. The link from Holyhead in my hon. Friend’s constituency along the north Wales coast and down through my constituency into north-west England, and even the links across to Humberside, down to London and to mainland Europe, are extremely valuable. I know that the Minister supports that, but I think that he wants to be sure that he has the support of Opposition Members who represent north Wales to go forward with HS2 and to try to make those links in a positive way.

This is not only about electrification and links to HS2 and the south, but about the links between north Wales and Merseyside and Manchester. My hon. Friend the Member for Halton (Derek Twigg) and I are meeting the Secretary of State for Transport regarding the Halton curve, which is a link to Merseyside and Liverpool airport that will provide access for business. A direct link to Manchester airport should also be considered. Two great airports lie within 40 miles of my part of Wales and while Assembly investment at Cardiff is fine, it does not serve the needs of the north. I hope that the Minister will be able to liaise with others on that.

Transport and rail infrastructure are key, but I also want to stress the importance of Europe. My part of north Wales does not benefit from European structural funds, but much of north Wales does. My hon. Friend the Member for Vale of Clwyd (Chris Ruane) played an active role over many years in developing that funding with two former Secretaries of State for Wales, my right hon. Friends the Members for Torfaen (Paul Murphy) and for Neath (Mr Hain).

[Mark Tami]

Even though we do not get that level of funding, we gain through what Europe gives us, which allows big companies such as Airbus and smaller ones to invest, because they know that the market is important.

[Mr Hanson]

My hon. Friend predicts my thoughts, because I was going to say that although my constituency does not depend on European objective 1 funding, the fact that many businesses in Flintshire such as Toyota and Airbus, and Vauxhall, which is nearby, are able to sell goods to the European market without tariffs is vital to the area’s economic growth. I want the Minister to commit to supporting a strong European Union.

[Ian Lucas (Wrexham) (Lab)]

Does my right hon. Friend agree that uncertainty is the enemy of investment? Even now, the Conservative party’s commitment, for internal party political reasons, to a referendum on EU membership in 2017 is negatively impacting on investment in our communities.

[Mr Hanson]

I absolutely agree with my hon. Friend. We may plan for five-year electoral cycles, but businesses plan investment over longer periods of time. Important business decisions on increasing investment will depend on whether companies see the UK, and north Wales in particular, as part of a vibrant wider Europe. I hope that the Minister can comment on that.

I have mentioned transport and Europe, and I want to touch on the cross-border nature of investment. I sadly could not participate in the Wales Bill’s Second Reading debate yesterday, but I hope that in taking forward the Bill’s proposals, the Minister is cognisant of the fact that the economy of my part of north-east Wales is linked directly to that of north-west England. Development agencies, infrastructure stakeholders, businesses and local councils on the English side of the border should be consulted on the Bill’s measures just as much as those on the Welsh side. The Welsh Assembly and the UK Government should work in tandem to develop both sides of the border. Some 400 of my constituents work for Vauxhall at Ellesmere Port, and it is sometimes quicker to get there than it is to get to places on the Welsh side of the border. We must accept and understand how integrated the United Kingdom is, and its cross-border issues.

The active issue for the Government relates to construction. My hon. Friend the Member for Wrexham (Ian Lucas) will talk about investment in the prison shortly, but there are a couple of other key issues that we should examine. We need a regional plan for north Wales and north-west England, with connectivity across the board; but we also need to think about three other issues that are particularly important. To raise the level of investment and economic activity in north Wales, we should seriously consider working towards a living wage. Local authorities should be involved in that, and we need an active Government to promote it. Money spent locally by people who earn a living wage will help to regenerate high street small businesses in places such as Holywell, Flint and Mold in my constituency. The money will not be lost to north-east Wales but reinvested in local small businesses and shops, and the community. I should welcome a commitment to a living wage; I know that my hon. Friends would give that commitment.

There is also a need for apprenticeships and training. Airbus in north Wales is key to that issue. Tomorrow other hon. Members and I will meet Airbus apprentices in the House of Commons. Capital-led investment by an active Government in colleges, schools and infrastructure will generate business in the economy. That is why I particularly welcome the Labour commitment to invest in new homes and try to build 200,000 of them by 2020. I hope that a future Labour Government will keep to that pledge and invest in public sector homes, and consequentially enable the Welsh Assembly Government to do so too. That will kick-start the construction industry and help people who are not now on the housing ladder.

Labour’s commitment to cut business rates for small firms, for the first two years of a Labour Government if we are elected in May 2015, is also welcome. That would also kick-start the local economy. The Labour party leader, my right hon. Friend the Member for Doncaster North (Edward Miliband), has taken key action on energy prices, which are vital to the cost base of many industries, particularly paper, steel and renewables. The ability to reduce and freeze energy bills will be a great help to the economy of north Wales.

I am pleased to have started the debate. I have tried to talk about some of the many positive aspects of our economy, but we must never be complacent. There are challenges, even with respect to big companies such as Airbus. There is a world out there trying to steal our markets and take our customers. Other parts of the world want to grow their economies, and we must be ever vigilant. There are things that the Government can do—I hope that a future Labour Government will do them—to strengthen transport links, improve infrastructure investment, provide a living wage, and help to secure the continual growth of an economy that is strong and diverse in several key sectors. That economy is of central importance not just to north Wales and the north-west, but to the whole UK.

[Several hon. Members]

rose—

[Mr Philip Hollobone (in the Chair)]

Order. I do not want to call the Front-Bench spokesmen later than 10.40 am. Six hon. Members want to catch my eye and I do not want to impose a time limit, because I know you are a well-behaved lot with huge respect for one another. If you each speak for no more than seven minutes there will be time for the odd intervention and everyone will get in.

09:54

[Guto Bebb (Aberconwy) (Con)]

It is a pleasure to serve under your chairmanship this morning, Mr Hollobone. I shall try to keep my remarks to seven minutes.

It is a pleasure to follow the right hon. Member for Delyn (Mr Hanson). I agreed with many of the points he made in his positive speech. As to transport, I fully accept that we need to push for upgrades to the north Wales main line. I would like electrification of the line; slight upgrading of train speed is certainly needed, because that will result in greater capacity. I use the A55 regularly, as do my constituents, to get to work. We should recognise that it is on a Euroroute, and apparently it is the only Euroroute that still has a roundabout on it. There are two, and they are both in my constituency, at Llanfairfechan and Penmaenmawr, so in due course I would welcome any upgrades to the A55, especially in my constituency.

The big picture is that north Wales can expect exciting times. There has been concern about economic figures, in relation to employment, but in Aberconwy unemployment figures have fallen by 13%. Most importantly, the youth unemployment figures have fallen. I am sure that every right hon. and hon. Member in the Chamber would welcome 18 to 24-year-olds finding jobs. It is positive for those individuals, and for the economy of north Wales.

The opportunities presented by Wylfa Newydd are also part of the big picture. We cannot overestimate the potential of a new nuclear power station to transform the economy of north-west Wales. I am delighted about the partnership between Gwynedd council, Isle of Anglesey county council and Conwy county borough council, to work to ensure that young people in north-west Wales will have the relevant skills for that exciting industry. Those who have the skills relevant to Wylfa Newydd will also have the skills relevant to the wind farm developments that are happening, and to other forms of energy generation.

[Albert Owen]

The hon. Gentleman is right; will he join me in congratulating the Welsh Government on investing £2.5 million only last week in skills training in the energy sector?

[Guto Bebb]

I will. I will not allow any party politics to stand in the way of the fact that that was a welcome decision. I also welcome the commitment by further education colleges, local authorities and the business sector to making that happen. It will provide young people with an opportunity to plan for a career in north Wales. I also welcome yesterday’s decision by the green investment bank to invest £220 million in the Gwynt y Mor facility. Every councillor in Conwy, including every Labour councillor, voted against that development, but the key thing is that the decision was made, and we need as much local value to be drawn from the development as possible.

[Chris Ruane]

Will the hon. Gentleman pay tribute to the more positive attitude of Denbighshire county councillors, including Conservatives, in Prestatyn and Rhyl, who voted for the wind farms of North Hoyle?

[Guto Bebb]

To be fair, it is important that we should reflect on the concerns of the tourism sector in Aberconwy, and Conwy in general, in relation to the wind farm development. The concern was reflected strongly by local representatives of all political parties in Conwy. Denbighshire councillors saw things differently, but the key thing now is to build on those successes.

The successes of north-east Wales are not for north-east Wales alone. Constituents of mine work in the Airbus factories, and people travel from my constituency to Deeside in 30 or 35 minutes on the A55, if there has not been a crash or an overturned caravan. The economies of north-east and north-west Wales are linked, and things work both ways because a significant number of people from north-east Wales are more than happy to spend their weekends in my constituency, and further west in that of the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd).

I think things are moving in a positive direction. My constituency has the highest dependency on small businesses of any constituency in north Wales. If it were not for the small business community, the economic situation there would be dire indeed. We are experiencing confidence, investment, and the willingness of people to invest in their businesses, whether those businesses are new or are being refurbished. There are recent successes that we should all welcome. The one I am most pleased about is a small coffee shop in Llandudno Junction. In terms of economic change, it is not a big issue—four new employees in a small coffee shop in Llandudno Junction—but that business was funded through crowdfunding. It is the first business that I have seen in my constituency that sought crowdfunding because of the reluctance of banks to lend, which continues to be a big problem. That resulted in a brand-new coffee shop employing people in the Junction. That is the type of innovation from young people that will be key to the success of the north Wales economy.

[Ian Lucas]

Will the hon. Gentleman give way?

[Guto Bebb]

I will take one final intervention, because I am aware of the time.

[Ian Lucas]

My interest, which I share with the hon. Gentleman, is in finance for business. Would he support a regional bank for north Wales that was much more attuned to the regional economy, able to understand our local business community and therefore able to make the right decisions on investment?

[Guto Bebb]

There is certainly an argument for that, but let us be fair: our big problem in Wales is the fact that Finance Wales has been such a disastrous failure. Had it stepped into the breach as a lender of last resort supporting businesses, perhaps we would not need a regional bank. Businesses in my constituency, such as those in the Church Walks enterprise hub, which has 40 employees in the high-technology industries, were being charged 7% above base by Finance Wales. That is the type of lending that HSBC and other high street banks have been guilty of charging. When we see a publicly supported bank doing that, I have real concerns.

We are certainly seeing real signs of investment in my constituency. A vital investment has been the refurbishment of the Eagles hotel in Llanrwst. No small town can do without a key hotel, and the closure of the Eagles hotel caused concern about the future of Llanrwst. I welcome its reopening with significant new investment. Furthermore, on Friday, I was in Betwys-y-Coed, reopening the Pont y Pair inn—seven new employees, a significant £150,000 investment and, from what I saw, a guaranteed success. Even better, that investment means that we are selling the local brew, the Conwy Brewery beer; that shows how tourism can interlink with the food and agricultural community. That is the other issue that I want to touch on.

We sometimes forget when talking about the economy of north Wales how important agriculture and the food sector are. In my constituency, we see the links, because there is significant investment in the Bodnant food centre, which is supported by European regional funding; indeed, it is one of the 0.5% of European-funded projects led by the private sector. It is a success; European regional funding might have even greater success if more such projects were led by the private sector, rather than by the dead hand of bureaucracy. The food sector in my constituency is going from strength to strength. The Bodnant food centre is a fantastic success story, but it is building on top of the success of companies such as Blas ar Fwyd and Siwgr a Sbeis. Those companies are delivering for and serving the tourism sector—cafés, restaurants and hotels—and it is as if all the sectors of the economy in my constituency are coming together to give tourists and visitors a distinctly Welsh feel when they come to north Wales.

There is real, large investment in Llandudno, the queen of Welsh resorts, which gave a warm welcome to the Welsh Labour party over the weekend—we were delighted to see them, obviously. For a long time, it has had two large derelict hotels, which have been a stain on the town: the Clarence on Gloddaeth street and the St Tudno hotel, which can link the high street to Parc Llandudno. The good news is that both are being refurbished in multi-million pound investments, and there will be hotels, shops, other retail outlets and cafés in both locations, one at the top end of the high street and the other at the bottom end. They are significant, multi-million pound votes of confidence in the economy of Llandudno. Clearly, we are turning the corner. There will be employment growth and, more importantly, the slight decay that we saw on both sides of the town will be dealt with positively. I pay tribute to Mostyn Estates, to the investors and to the local authority for ensuring that we are dealing with those problems quickly.

The Government are also doing things. They are giving a huge vote of confidence to small businesses. In my constituency, a small partnership business, such as a husband and wife running a guest house, will be able to post a £20,000 profit without paying tax. That money will go back into the business, because running a guest house is like running the Forth bridge—people must keep investing to keep up standards. That tax break of the personal allowance increase is a tax break for businesses, and it makes a big difference in my constituency. The £2,000 rebate on national insurance is another vote of confidence in small businesses that want to employ staff; they will have a tax rebate if they do. Finally, the Welsh Government have seen sense on the small business rate subsidy of £1,000; that was announced by the Chancellor in his autumn statement. It took the Welsh Government four months, but I will not carp about that; I would rather see a correct decision made late in the day than a wrong decision. I welcome the fact that the Welsh Government are following in the footsteps of the Chancellor by ensuring rates relief for small businesses in my constituency.

I will curtail my remarks, having given, I hope, a positive view of how things are developing in my constituency. Of course, Aberconwy is not isolated; it is part of the wider north Wales economy. There are clearly concerns if unemployment figures in some parts of north Wales are increasing. That is not the case in Aberconwy, but we need a successful economy throughout north Wales. We benefit from investment in north-east Wales, just as I am sure that it will benefit from investment in the north-west. The prognosis for the north Wales economy is positive, as long as we have a Government who understand that their responsibility is to support businesses where they can and, most of the time, simply get out of the way.

10:05

[Mr Elfyn Llwyd (Dwyfor Meirionnydd) (PC)]

It is a great pleasure to take part in the debate. I congratulate the right hon. Member for Delyn (Mr Hanson). As I recall, he and I were elected back in 1992 on the very same day.

In November last year, I wrote an article in The Independent, sparked by the disturbing news about wage levels in Dwyfor Meirionnydd: 40% of people in full-time work were earning less than the living wage, which is considered unacceptable where there is no help from tax credits and so on. In the article, I noted that rural poverty is just as grinding as urban poverty. What is most disappointing is that the area that I have the honour to represent was once an industrial area central to the cementing of Wales’s position as the birthplace of the industrial revolution. The question is about not the quantity of jobs, but their quality, and our problem is the low-wage economy that we all struggle with in north Wales. That is not a political point; it is something that we all need to aspire to get rid of. There are disparities within the UK, which is probably the state with the greatest disparities in the European sector.

There is hope and no lack of ambition, however, as the right hon. Member for Delyn said. Last October, I hosted a parliamentary day for Meirionnydd, alongside the Farmers Union of Wales, showcasing the constituency’s small businesses, which are thriving in a time of austerity. Cutting business rates, lending to businesses, and apprenticeships for young people lie at the heart of my party’s plan for the north Wales economic recovery. Indeed, that will benefit the whole of the Welsh economy, as the hon. Member for Aberconwy (Guto Bebb) said. We have long called for a living wage to ease the squeeze on people’s pockets. It would make a substantial difference to living standards in constituencies such as mine, and across the whole of north Wales. Fair pay is essential. We need to put an end to exploitative, zero-hours contracts. I will not enter the political arena on this issue, because I am not sure where my friends in the Labour party stand on it—there is one view in Cardiff and one here—but in any event, such contracts should have no place in a modern economy.

Transport links, as the right hon. Member for Delyn said, are essential for any development of the north Wales economy. We still await notification from the UK Government of the electrification of the north Wales main line. The Secretary of State has indicated that he is in favour of it, but has had remarkably little success so far in persuading his Cabinet colleagues. Wales still does not have a single mile of electrified track; it is comparable with Albania, in European terms. The trans-European network, as the hon. Member for Ynys Môn (Albert Owen) said, is another area where the UK Government, as well as the Welsh Government, have to get moving. The rail line to Holyhead has been left off the European top-tier corridor projects, thanks, unfortunately, to the UK Government illogically guiding the route to Liverpool for the ferry to Dublin, rather than along to Holyhead, which is the most obvious route. That decision needs to be looked at again.

Away from transport links, we in Plaid Cymru have been focusing on the need to develop the small and medium-sized enterprises sector in Wales. SMEs are the backbone of the Welsh economy. It is often said, and I believe it is true, that about 90% of employment in Wales is in the SME sector. Gone are the days of inviting large international companies to bring in a massive factory and showering them with cash, only to see them leave a few years later. We must build from within. Plaid Cymru has put forward a range of proposals on business rates and financial support for SMEs. Discussions are ongoing in the National Assembly on that issue, and Plaid Cymru and others are playing our part.

The right hon. Member for Delyn rightly referred to tourism, which is a vital part of north Wales’s economy. We have many things to brag about, such as the iconic Snowdon and the Snowdon railway, our lakes and the unique charm of Portmeirion. Last week, Antur Stiniog in Blaenau Ffestiniog opened a mountain bike circuit, and the following day there was a UK championship with 2,000 competitors. Coed-y-Brenin is another of the premier mountain bike venues in Wales and beyond.

[Guto Bebb]

The right hon. Gentleman is making a significant point about the adventure tourism sector in north Wales. Will he join me in congratulating my constituent, Mr Sean Taylor, who has opened the largest zip wire in Europe in Bethesda?

[Mr Llwyd]

Yes. When I represented the valley, I used to help him as well. I got him started, so I can take part of the credit. I am pleased to join the hon. Gentleman in congratulating his constituent. It is a great pleasure to see a business such as his succeed. We have fishing, climbing, sailing, hiking—the whole lot. Of course we need to increase footfall, but the main thing we need to address is the need to increase the visitor spend. We need to up our game, but it is not beyond our knowledge and ken to do that.

Other measures that can improve the north Wales economy include a private sector-led industrial development authority to leverage investment into the Welsh economy. That is not dissimilar from the suggestion that the hon. Member for Wrexham (Ian Lucas) made. I still believe it was a mistake to do away with the Welsh Development Agency. Yes, it was a quango, but it did a good job and it was a brand that was known worldwide. But it went, and with it went the Development Board for Rural Wales, and nothing has been put in its place. The small business sector in rural Wales has lost that important arm of assistance, which was always there and was effective.

We believe that we need a public development bank to lend to SMEs and help develop local industries. Five years on from the crisis, SMEs are still being squeezed and the banks are still not giving them fair play. We should focus on the productive economy, rather than using funding for lending to asset-lend in the form of mortgages and pumping up another house price bubble.

[Mark Tami]

The banks are still telling us that they are lending far more money to SMEs. However, as hon. Members know, SMEs that come to see us tell a very different story—in particular, about their overdraft limits being cut and the problems associated with that.

[Mr Llwyd]

The hon. Gentleman is absolutely right. Not only that, but the four major clearing banks have an understanding that they will not support tourism enterprises unless they are heavily persuaded. Think of the effect that has on the Welsh economy.

We need a Welsh public development bank, which could be geographically tied to Wales, similar to the Sparkassen and Landesbanken in Germany. Plaid Cymru has been calling for that for years. I am pleased that the Minister, Edwina Hart, has moved on that issue and has called for another review. I hope the Welsh Government in Cardiff will give priority to it, because it is vital to enable the SME sector to trade out of the recession. It could assist us all, and give a massive boost to the Welsh economy. It is the main sector that we need to concentrate on.

Finally, although I have a high regard for the right hon. Member for Delyn, I disagree with him on having ever closer links with the Chester-Liverpool region—although my legal chambers are in Chester, so who am I to say that? The problem with the Wrexham-Chester-Liverpool city region is that Welsh interests may be drowned out and become subservient to those of the north-west. That is the likelihood, if the numbers living on both sides of the border are compared. The super-prison in Wrexham—we will hear from the hon. Member for Wrexham shortly—demonstrates that point. It is a priority for an England-centred justice system: a gigantic Tory-style, “lock ’em up and throw away the key”-type prison to house offenders from all over the north-west of England. There will be 500 prisoners from Wales, and 1,500 unfortunate people imported in. Strategically, it answers the needs of the north-west, not those of north Wales. I agree with much of what the right hon. Member for Delyn said about transport links, the living wage and many other things. However, when I hear talk about that sort of axis, I fear the likelihood is that we will come off second best.

10:15

[Albert Owen (Ynys Môn) (Lab)]

It is a pleasure to follow the hon. Member for Aberconwy (Guto Bebb) and the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd). On a lighter note, both mentioned the zip-wire project. Would it not be a great opportunity for both to have a go on it, as Boris Johnson did?

[Mr Llwyd]

It would turn into an adult movie, I am afraid.

[Albert Owen]

I could not possibly comment.

This is an important issue. I pay tribute to my right hon. Friend the Member for Delyn (Mr Hanson), who has been a great advocate for his constituency, for north Wales, and, when he was a Wales Office Minister, for the whole of Wales. I give credit to him and his team for the dualling of the A55 across Anglesey, which was unfinished business. He and his team did much good for the north-west of Wales and, in particular, my constituency.

I welcome the fall in unemployment in Wales. For the first time in my political career as an activist and a Member of Parliament, average unemployment is lower in Wales than in the rest of the United Kingdom. When I first became a political activist in the ’80s, my constituency was top of the wrong leagues. It had double the average unemployment of the United Kingdom, but that has been transformed. According to the House of Commons Library, between 1997 and 2007, my constituency created an extra 7,000 jobs. My area has gone from the top of the unemployment league to below the average figure. That is a good news story, but it did not happen by accident. There was a lot of direct Government intervention, and I pay tribute to the Welsh Government for their intervention in job creation.

The hon. Member for Aberconwy is absolutely right that it is essential for our economy and our future that we get young people into training and work. That has been happening in Wales at a greater rate because of the jobs growth fund in which the Welsh Government are directly involved. It is due to that fund that we are seeing historically lower average unemployment in Wales than the rest of the United Kingdom.

We need such schemes and direct intervention. As the right hon. Member for Dwyfor Meirionnydd said, we need to change the fact that there is a low-wage economy in many areas, but I am confident we can do that. There are new schemes on the horizon—excuse the pun—such as Horizon, which in 2009 was established to build a new nuclear power station in my constituency. It was an investment of £6 billion to £8 billion—one of the biggest single investments in Wales, and as big an investment in north-west Wales as the Olympics were in London. It will have huge benefits not only for my constituency but for the whole of north-west Wales. It raises the bar for skills in the whole of north Wales, making it an attractive place for businesses to invest and for people with high skills to work. I welcome that investment.

I also welcome the £2.5 million fund announced by the Welsh Government for nuclear and energy skills training. We can become the centre of excellence for energy development in research and development, generation and other parts of the sector. It is hugely important for our energy security as a nation, and we want north Wales to be a big part of that. I welcome initiatives in offshore wind, nuclear and solar power. I also welcome the research and development that is being done in colleges and universities across north Wales. Coleg Menai in my constituency is central to that work. Decommissioning projects have gone ahead, with money set aside to train people for the future. As one wave of energy regeneration closes down, investment in skills as a result of money from decommissioning has gone into jobs for the future.

I have previously raised the matter with the Minister because I feel strongly about it. My right hon. Friend the Member for Delyn was right to highlight the importance of the Siemens investment in Hull. As I have said many times, Welsh ports are losing out. Other people and I lobbied the previous Chancellor of the Exchequer for money from the £60 million fund to release that blockage and to get money into the ports, but the present Government decided that Wales would not benefit, other than consequentially. Ports are a reserved matter and the United Kingdom should look at all its ports equally. We are losing out because there is lack of investment in Welsh ports. Hull is developing and that is good for the United Kingdom, but I want Holyhead in the west to develop too. That would be good for Wales, for north Wales and for the United Kingdom.

Previous speakers have rightly talked about the balance between industrial development and food, farming and tourism. That balance is extremely important, because those sectors are major contributors to the north Wales economy. I recently opened a £7 million upgrade at the Glanbia cheese factory at Llangefni in my constituency. Hon. Members may eat Domino pizzas, and the toppings are likely to have been produced in my constituency. High-tech, well-paid jobs use locally sourced resources. The cheese factory uses locally sourced milk, it is a good employer and it helps to produce a UK and international brand. Those jobs are worth while.

Last Friday, I visited Llandudno to attend the Welsh Labour party’s successful conference. More importantly, my mother-in-law lives there. She has worked in the hotel and leisure industry throughout her working life. She has contributed as a self-trader and business woman for many years. It is always good to go back to Llandudno to see her. I wanted to put that on the record because mother’s day has passed and I should probably have been there on Sunday, but I was there over the weekend.

I held a round-table discussion with hoteliers at Dylan’s restaurant, which is a fantastic new facility on Anglesey employing some 40 people. It brought together farmers, hoteliers, restaurateurs and people involved in tourism alongside my hon. Friend the Member for Ogmore (Huw Irranca-Davies), the shadow Minister for Environment, Food and Rural Affairs. We understand the importance to the region of the rural economy and jobs. Talking specifically about the tourism industry, I believe that there is an opportunity for the UK Government to consider reducing VAT in the hospitality and tourism sector. That call comes not just from politicians but from the business sector. Someone contacted me about the importance of doing so. They wanted to upgrade and to invest in their business.

[Chris Ruane]

Will my hon. Friend give way?

[Albert Owen]

I am happy to take an intervention if my hon. Friend wants to make one, but other hon. Members want to speak, and some hon. Members have spoken for a long time. We need to make the case for the tourism sector in north-west Wales.

The Governments in the Republic of Ireland and in France, our near neighbours, have reduced VAT to stimulate the economy. A campaigning group has carried out a study which shows that a cut in VAT in the first year would result in a loss to the Treasury, but would be cost-neutral in the second year, and result in profit thereafter.

[The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)]

Labour Members, particularly the hon. Gentleman, continue to use the example of France, where 1 million jobs have been destroyed. Here in the UK, more than 1 million jobs have been created, so he should be wary of harking back to the French example.

[Albert Owen]

The Minister is being selective, because the majority of European countries have cut VAT. We are out of sync with many of our competitors. The Republic of Ireland is a great example of a country that is coming out of recession because it has provided a stimulus for small businesses. The Government should take that on board as we come out of recession.

My final comments are about borrowing. Yesterday, we had a long debate on the Wales Bill. It is important to have borrowing powers, and not just for the M4 relief road. We need relief roadworks in north Wales, particularly in my constituency around the Menai bridges, where there is a huge problem that delays traffic on both sides. That affects not just local traffic but visitors. I want Anglesey, north Wales and Wales to be a centre of attraction for high-quality jobs in rural and urban areas. I want that centre to be a place where people want to work, live and invest. Do not take my word for the fact that it is a beautiful place, Mr Hollobone—come and visit. Come and join the people who want to come to north Wales. It is a unique corridor between England and the Republic of Ireland and a place to do business. I want Governments to work together at all levels as we, the politicians in this debate, want to work together for the benefit of our constituents.

[Several hon. Members]

rose—

[Mr Philip Hollobone (in the Chair)]

There are 15 minutes left, and three hon. Members want to speak.

10:25

[Ian Lucas (Wrexham) (Lab)]

It is a pleasure to follow the poetic rhetoric of my hon. Friend the Member for Ynys Môn (Albert Owen) and it is a pleasure, Mr Hollobone, to serve under your chairmanship. I congratulate my right hon. Friend the Member for Delyn (Mr Hanson) on his speech. I will not repeat many of the things he said because he gave an excellent exposition on north Wales and I accept his speech in its entirety.

Mr Hollobone, you should visit the Pontcysyllte and Chirk aqueducts in the constituency of my good friend—

[Mr Philip Hollobone (in the Chair)]

Order. Several references have been made to the question of whether I have been to north Wales. I have been there many times, and on a Territorial Army exercise I swam across the reservoir at Pontcysyllte and camped on the beach at Penmaenmawr. I know the area extremely well and I recommend that tourists visit it.

[Ian Lucas]

We have an endorsement at the highest level. I will say no more about tourism, except that north Wales is a beautiful part of the world and tourism is an important part of its economy.

Although I promote north Wales as much as any hon. Member, I want to speak about job losses in Wrexham. We have had a difficult six months. We lost more than 500 jobs at Sharp Manufacturing UK in February, only two months ago. We lost 140 jobs at Kellogg’s in Wrexham, and just outside, in south Clwyd, more than 200 jobs were lost at First Milk. This is a positive part of the world and I will talk about the positives, but we must bear in mind the fact that substantial, well-paid and valued jobs that have been there for many years are going in our local economy. We must realise that the type of grant aid that was available in Wrexham, for example, in the 1980s and 1990s and which sometimes led to investment from outside the UK and to inward investment is no longer available.

A strong theme in all parties is that we must grow the economy in north Wales from within and develop local investment—I was interested in what the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd) said about banking—and mechanisms to support local businesses. We have excellent local businesses.

Only last week, I visited Magellan Aerospace in Wrexham, which is an important part of the supply chain for Airbus: a positive picture was presented and apprentices are being taken on. I was delighted to meet Mr Darryl Wright, a governor at a local school that encourages apprenticeships in the aerospace industry. We will meet some of those apprentices later this week. I am delighted that in Wales we are doing better with apprentices than anywhere in Europe, including England, with the help of the excellent Minister, Ken Skates—he formerly worked for my good and hon. Friend the Member for Alyn and Deeside (Mark Tami)—whose commitment is showing through and creating an enormous number of apprenticeships.

In our local economy, we must focus on the development not just of physical infrastructure but of colleges such as Coleg Cambria, to support apprenticeships, and Glyndwr university, to develop education within our region. In that way, we can support our local economy and make not just the physical infrastructure but the intellectual infrastructure world beating. The companies that I am talking about—for example, Magellan, which is a Canadian company—do not need to be based in our region and will go there only if it is a world-competitive economy and we provide the infrastructure that enables us to compete.

My right hon. Friend the Member for Delyn made points about the development of the road and rail networks. We absolutely must argue the case for our region at Welsh Government, UK Government and European levels. Unless we do so, we will lose the benefits of those majestic companies that we have in our area. The work being done by the Welsh Government is very positive. One scheme we have not mentioned is Jobs Growth Wales, which is very important. It has been mentioned on many occasions in my constituency by employers. I visited a business the week before last called Fotofire Ltd—I visit businesses a lot in Wrexham and liaise with them closely—and I was told that the scheme had led to the employment of a number of individuals in the business. They had been assessed by the employer, which had then made judgments that they were the right people for the business. That company works in media, in the web industry, and is a home-grown business in Wrexham. It is tremendous to see that sort of business developing. I am pleased that Jobs Growth Wales is making such a positive contribution. If the Minister was to take something on board, he would look at that scheme and consider whether it could be applied across the rest of the UK.

I also want to say a word on finance. A key issue for us is financing the local economy. It is not only about the past five years; it is now seven years since the great economic crash. I attended a meeting last Friday morning of Wrexham business professionals where, again, the issue of access to finance was raised by businesses that are still having problems with our uncompetitive banking system. I have argued over a long period for the development of a model based on the German Sparkassen method, with a banking economy linked to our local industrial economy. Our economy provides 30% of the manufacturing output of Wales. A lot of money and wages is being earned in our local economy, and I believe that the people of north Wales would like to invest in their local economy through models and through a local bank. The Sparkassen method is resilient; it has worked in Germany over many years.

I am delighted that the Labour party has committed itself to regional banking. If we are to have a competitive market that provides finance for local business, I believe that that type of investment needs to come through local banking, with individuals who know the local economy. I wish that the Government would see that current banking methods are not working, that we need to create a more competitive banking system, and that they would look at alternatives that have worked in other places. That would be very welcome for businesses in my constituency and is something I would be keen to promote.

We have a positive picture in north Wales, with some of the caveats that I have indicated. There is an issue relating to wages. I would say that this Government increased VAT—they did not decrease it—taking money out of the pockets of my constituents and putting it straight into the pockets of the Chancellor of the Exchequer, at a centralised level. That had a damaging effect on Wrexham and, I am certain, on other communities in Wales. Increasing VAT is a really bad policy, because it takes money out of local economies, and I hope that such a mistake will not be made again.

[Several hon. Members]

rose—

[Mr Philip Hollobone (in the Chair)]

We have six and a half minutes for two speakers. First, I call Susan Elan Jones.

10:33

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

Thank you, Mr Hollobone. I could probably speak on this subject for about an hour—obviously my remarks will have to be rather shorter than that—especially as I have in my constituency the one world heritage site in north Wales, the Pontcysyllte aqueduct, but we will not boast about such things.

I would like to concentrate briefly on two things that specifically relate to my constituency, but that have close bearings to the north Wales economy. The first is the tragic closure—the final shift was yesterday—of First Milk in Marchwiel. There were 231 job losses at that plant. Many of the staff who spoke on the matter were extremely gracious in view of the circumstances; they thanked Wrexham county borough council, Careers Wales, the Department for Work and Pensions and other bodies that tried to help them get jobs.

However, my contention is that the original redundancies at the plant should never have happened in the first place. What we saw was a cursory lesson for those who seem to welcome supermarkets as a universal good. I know that the Minister and I, coincidentally, lived in the same London borough at one stage. He may remember that in parts of London there would be large anti-supermarket campaigns whenever a new supermarket was proposed. I am not suggesting that sort of approach, but sometimes in north Wales, I think we go a little too far the other way. With First Milk, we saw the board of Asda ditching an excellent supplier and causing those redundancies. I also think that a lesson can be learnt from that about the existing TUPE arrangements. There is a case to say that even if the plant had to go in the final analysis, the jobs should not have. I leave those thoughts at that.

More positively, I want to discuss Kronospan. My right hon. Friend the Member for Delyn (Mr Hanson) spoke fantastically at the beginning of the debate about real economic success stories in north Wales. Kronospan is one of those; it is in Chirk and opened in 1970. Its creation came after most of the coal mining tradition in that area had finished. Kronospan is a wood panelling plant and is one of the top 10 manufacturing companies in Wales. It is the largest manufacturer of wood panelling products and laminate flooring in the world and the entire production of wood-based panel products is controlled from Kronospan’s site in my constituency. It employs just under 600 people, 90% of whom live in a 10-mile radius of the site itself.

Kronospan is massively important. It has a thriving apprenticeship programme supported by the Welsh Government, teaching young people real-life employment skills. It works exceptionally well with the local community and works closely with Chirk town council, with which it has a liaison committee. Their joint work has led to fewer lorries and more logs carried by train, among their many other successes.

However, it is not just a good story, and this is where I want the Minister’s help. Kronospan and I are concerned by various incentives in the Government’s renewables obligations and the new Energy Act 2013 to purchase wood for energy generation. I assure him that this is not an anti-biomass move, but we are concerned about some unintended consequences of the Act. We are asking not for special treatment but for a level playing field. We do not want to lose our Welsh Kronospan to another country. I ask the Minister whether he will meet me and representatives from Kronospan to discuss the matter, which is most important to the economy in my constituency and in north Wales.

10:37

[Chris Ruane (Vale of Clwyd) (Lab)]

I start with a few key facts that we may not hear from Conservative Front Benchers, because their election team are too busy running down Wales. They have declared a war on Wales in the run-up to the election.

Welsh unemployment is 6.7%—better than England. Inward investment last year went up 191%, compared with 10% in England. Jobs Growth Wales, which puts young people into training and then employment, only has a 10% dropout rate. In England, the Work programme has a 50% dropout rate. The Prime Minister was caught with his waders down in the recent floods, because in Wales, we have been investing £81 per person in flood defences as opposed to £47 per person in England.

The Prime Minister said that my town of Rhyl is neglected. Let me tell him what neglect means in my town: it means Welsh Government investment of £28 million in housing; £10 million in a new harbour; £22 million in a college; £22 million in a hospital; £12 million in putting people back to work through Rhyl city strategy; and £11 million in flood defences. Let me tell him about neglect: neglect is when his Government are closing the tax office in Rhyl; the Crown courts in Rhyl; the Crown post office in Rhyl; and the army recruitment centre in Rhyl.

I pay tribute to the work that the Welsh Government have done. They have invested £1.4 billion in education, helping the Welsh economy get back on its feet and helping Welsh children to get a decent education. That includes £159 million in the Minister’s county of Pembrokeshire. I pay tribute to the work that Huw Lewis, as Education Minister, is doing in masterminding that, and to the work of Jane Hutt, who has had a positive engagement with Europe—£1.86 billion will be drawn down over the next five years. I also pay tribute to Alun Davies, the floods Minister, who is helping so much to put £240 million of anti-flood investment into the Welsh economy, protecting Welsh homes and Welsh families.

10:40

[Nia Griffith (Llanelli) (Lab)]

I congratulate my right hon. Friend the Member for Delyn (Mr Hanson) on securing the debate, which has been excellent, and on making a very good and full opening speech. I do not wish to repeat all of that; nor do I wish to dwell too long on the issue of transport infrastructure, as we had a debate about it last November, but it is crucial that we have joined-up thinking UK-wide whenever we talk about transport infrastructure. We have to be certain that north Wales is fully connected not just to Crewe but to the north-west of England more generally—to the Liverpool and Manchester airports, and then across the trans-Pennine route to the north-east. It is also vital that we are part of joined-up thinking across Europe and that people can go right through to Holyhead and across to Ireland. Transport infrastructure remains extremely important, and I hope that the Minister will continue to stress both that and the need for investment and careful thought about how we can link the north Wales economy to the rest of the economy of the UK.

The hon. Member for Aberconwy (Guto Bebb) mentioned the skills sector. The point was reiterated by my hon. Friend the Member for Ynys Môn (Albert Owen), who spoke about the recent investment by the Welsh Government in that sector, particularly with respect to the energy sector. The hon. Member for Aberconwy also mentioned the reluctance of the banks to lend. That point was picked up by my hon. Friend the Member for Wrexham (Ian Lucas), who explained the important way in which we could use a regional banking system, which would take money from the local economy and put it back into the local economy. It would make money available for local businesses to grow organically in their home towns, thereby securing that investment for many years to come. That point was broadly echoed in the call by the right hon. Member for Dwyfor Meirionnydd (Mr Llwyd) for a return to something like the Welsh Development Agency, the demise of which he much regretted. Those were important points about growing the local economy.

The hon. Member for Aberconwy also referred to the modern crowdfunding for a local coffee shop and stressed the importance of the food sector.

The right hon. Member for Dwyfor Meirionnydd talked about small businesses, and I certainly enjoyed meeting people from small businesses when they came to this place. He also mentioned the issue of the low-wage economy and asked what the Labour party policy was. Our policy is clearly that we very much want to incentivise employers to move up to paying the living wage by giving them a tax break to do so. While they were getting that tax break, we would obviously be saving on the additional tax credits that would have to be paid if people were paid less than the living wage.

The right hon. Gentleman mentioned zero-hours contracts. He knows full well that zero-hours contracts are zero-rights contracts. One of the key issues is that if people do not have a proper contract, they have no rights at all. We have said clearly that where there is abuse of zero-hours contracts when people are working on a regular basis, they need to be issued with proper contracts rather than being kept in that awful situation of having insecurity not only from week to week but about whether they will even keep their job. He also mentioned the need to increase the spend on tourism—in other words, to try to attract in more money per person than we have in the past.

My hon. Friend the Member for Ynys Môn talked about the huge investment in the nuclear sector on his island and the importance of that to the north Wales economy, but also about the importance of wind and solar investment. Again, he mentioned the importance of skills for the energy sector. He also made a key point about ports. I know that the Minister would not like to appear partisan; he would not like to appear to be looking for money just for his own constituency port. I ask him to take up my hon. Friend’s point that we did have money secured for ports that is now not coming to the Welsh ports. If the Minister could take the point up with the Treasury and see whether he can do something for investment in the ports in Wales, that would be a welcome outcome of the debate.

My hon. Friend the Member for Clwyd South (Susan Elan Jones) mentioned job losses. That point was emphasised strongly by my hon. Friend the Member for Wrexham—we have seen significant job losses in Wrexham. That brings me to the two major points that I want to make today. One is about the importance of giving a strong and clear message that we are fully committed to staying in the EU. I serve on the European Scrutiny Committee, and believe you me, Mr Hollobone, there are members of that Committee who wish not only to renegotiate the Lisbon treaty and go back to the Maastricht treaty, but to renegotiate the 1972 accession treaty. Those are the sorts of messages that people in Asia are getting, which is extremely damaging. If we look at the Welsh economy, we see that 150,000 jobs in Wales depend on our membership of the EU.

The uncertainty is worrying for existing firms that want to invest. They are thinking, “Shall we invest further in the UK, or play safe and invest in the Netherlands, Germany or France—in mainland Europe, where we know we will be okay and will not suddenly find ourselves outside the EU?” The uncertainty also deters new investors, particularly from outside the EU, who want access to that market. They do not want to invest in a part of the EU that might suddenly not be there any more. They do not want to think that they might face tariffs of anything from 5% to 200%. Nor do new investors want to be left out of the negotiations on the EU-US treaty. They do not want to be in a country if the head of that country is not at the negotiating table and is not at the centre of the negotiations on what will happen in the EU in future.

It is concerning that we hear all these noises and that there is talk of uncertainty right up until 2017, with the issue of a referendum hanging over people. There is a real worry about whether we will get investment in jobs in Wales, and whether there will be certainty for the companies that are currently there and for new companies to come in. Of course, that is not to mention the huge support for the agricultural sector in north Wales through the common agricultural policy, or the European structural funds, which help north-west Wales. That uncertainty is one of the key factors in this debate, and I hope that the Minister will take back that message to his party.

The other point on which we want certainty is industrial policy on energy prices and on what is happening to things such as the carbon price floor. The Chancellor has now put in a freeze, but it is rather late in the day. Manufacturers are still concerned, because they see that a unilateral tax was imposed by the UK Government and they then had to go to the EU to try to get some state aid funding to mitigate it.

[Stephen Crabb]

You backed it; you supported it.

[Nia Griffith]

The Minister says from a sedentary position that we supported it. We did not support it at the level at which the Government set it. What is important is that we try to get some help in as soon as possible, rather than having to wait another two or three years, because that will be vital for investment in some of our industries and for whether they will be able to stay in north Wales.

We have mentioned on a number of occasions the failure of the banks—the way they change their terms and conditions and do no service to many of the small businesses in our region—and the work that needs to be done to increase bank lending and foster a much more positive attitude towards local businesses.

I would like to finish by mentioning the importance of borrowing. Borrowing is important to the Welsh Government and it is important for investment in north Wales. We very much support the measures in the Wales Bill, which is currently going through Parliament, on the issue of borrowing. We hope that the Minister will not only facilitate the interim funding that is supposed to come to south Wales, but ensure that the mechanisms are in place for borrowing by the Welsh Government to improve the economy of north Wales. That will mean that we can have a vibrant economy that is supported by investment on the English side in transport infrastructure and mechanisms that will help north Wales, and on the Welsh Government’s side by investment in transport and broadband infrastructure. In that way, we can have a flourishing north Wales economy.

10:49

[The Parliamentary Under-Secretary of State for Wales (Stephen Crabb)]

It is a pleasure to serve under your chairmanship, Mr Hollobone, and to follow the hon. Member for Llanelli (Nia Griffith). I congratulate the right hon. Member for Delyn (Mr Hanson) on securing this important debate, and for the positive, constructive and intelligent way in which he set out his case. He emphasised the positive aspects of what is going on in Wales and the need to do more to secure the future of the excellent developments and facilities that he talked about so eloquently.

This morning, more people than ever before in north Wales went out to work. When we came into office in 2010, the overall employment level in north Wales was at a nine-year low. Over the past four years, notwithstanding the remarks of some Opposition Members, we have seen some really healthy growth in the labour market across Wales, but particularly in north Wales. Unemployment across north Wales is 6.3%, which is lower than the Welsh average and lower than the UK average.

One of the pleasures and privileges of my job at the Wales Office is that I get the opportunity to go out across Wales. Some of the most exciting, interesting and encouraging things that I see in the economy in Wales are happening in north Wales, so I concur with all the positive remarks made by Opposition Members about what is happening in the north Wales economy. I underline that we are seeing a sustained fall in unemployment. During the previous Parliament, unemployment in the constituency of the hon. Member for Wrexham (Ian Lucas) increased by 50%, but it has fallen by 10% since 2010. In Delyn, unemployment increased by 110% over the five years of the previous Parliament, but since 2010 it has come down by 17%. Of course, we want that to progress and go further, but the trend is positive. I will say a little more about that in a moment.

The right hon. Member for Delyn made an urgent point about Creative Foods. We are aware of that situation and have had a discussion about it at the Wales Office. In that case, as in the case of First Milk, in the constituency of the hon. Member for Clwyd South (Susan Elan Jones), and of the recent announcement by Avana bakeries in Newport, the Wales Office engaged closely with the companies to see what we could do, in conjunction with Welsh Government colleagues. It is no accident that all three of those companies, which announced significant job losses, are in the food sector. The hon. Member for Clwyd South raised an important question about supermarkets creating vulnerabilities for the food sector in Wales, and that is something that we should explore on another occasion. I reassure the right hon. Member for Delyn that we are certainly engaged on that matter.

Returning to the subject of jobs growth, there is positive growth across Wales, and particularly in north Wales. The right hon. Member for Dwyfor Meirionnydd (Mr Llwyd) said that the important thing was the quality of jobs, not the quantity. In fact, the quantity of jobs is important, because one of the ways in which we can drive up wage levels is by creating more job competition. More competition for job opportunities drives up the wages that employers will offer.

It is worth pointing out that over the past three years, average wage levels in north Wales have increased by more than 6%. They are not back to where we want them to be. There was a huge destruction of value in the economy following the crash of 2008, which happened on the watch of the Labour Government, and that fed through to wage levels. Real wage levels fell for people right across the country. With the recovery, wage levels are starting to creep back up. Of course they are not where we want them to be, but there is progress. Average wage levels in Wales are increasing at twice the rate of inflation, which also happens to be at a four-year low. There is positive growth.

[Ian Lucas]

Since April 2010, real wages for women in Wrexham have fallen by 4.6%. That is on this Government’s watch, and it is having a real effect on our local economy.

[Stephen Crabb]

I am not disputing the fact that the situation as regards wages and jobs across Wales is patchy. Of course it will be, during the early stages of a recovery, but the trend is positive and will continue, bringing in new investment and creating more jobs.

As Members in all parts of the Chamber have highlighted, manufacturing is one of the bright points of the Welsh economy; there is the involvement of companies such as Airbus, Kimberly Clark—in the constituency of the right hon. Member for Delyn—and Kronospan. Growth has not simply been generated by a housing bubble in the south-east, as the hon. Member for Swansea West (Geraint Davies) argued in debate last night. There is real, balanced growth across all sectors in Wales.

On energy costs for manufacturers, the package of measures announced in the Budget by my right hon. Friend the Chancellor of the Exchequer was welcomed widely across the manufacturing sector in Wales, particularly by the energy-intensive industries that are so heavily represented in the Welsh economy. The measures directly address the concerns that the industry has raised with us. Companies such as Kronospan and Kimberly Clark are classified as energy-intensive industries and will benefit directly from that package.

[Nia Griffith]

Will the Minister do everything he can to bring forward those measures? The message from the industry is that it does not want to have to wait one or two years; it would like help sooner. We would be most grateful for anything that he could do in that respect.

[Stephen Crabb]

We are taking action. We are making available £240 million. We can make those substantial resources available only because of difficult decisions that we have taken to cut the deficit and to put the national finances back in order—measures that the hon. Lady opposed on every single opportunity over the past three or four years. We are taking action where we can, and those measures have been welcomed by industry across Wales.

I move on to transport, which quite a few Members have mentioned. We at the Wales Office totally understand the concerns and the desire for electrification of the north Wales main line. That is something that the Secretary of State for Wales, my right hon. Friend the Member for Clwyd West (Mr Jones), is personally very engaged in, and on which we are in close dialogue and discussion with the Welsh Government and the Department for Transport. The right hon. Member for Delyn is quite right, because electrification of the north Wales main line and the development of the High Speed 2 hub at Crewe will open a hugely expanded range of opportunities for travel and for the economy of north Wales. That is something that we very much support.

I cannot offer any immediate good news on the Halton curve, which has been mentioned more than once this morning. The UK Government have no immediate plans to reopen that section of line, but we want to hear the arguments. If the right hon. Gentleman is engaged in work on the business case for reopening the Halton curve, I would like to see that, and I am happy to facilitate discussions with the Department for Transport where possible.

On the point about ports, we have discussed before the £60 million fund that the hon. Member for Ynys Môn (Albert Owen) raised. I salute him for the work that he does in championing not only his local port, but the port sector across Wales. The fund that was announced was an economic development fund designed to attract wind turbine manufacturing to port areas. He will be aware that economic development is devolved to the Welsh Government, so the Welsh Government received the Barnett consequentials of that £60 million fund. They received the resources, so if it had been a priority for them, they could have initiated something similar for Wales.

[Albert Owen]

The Minister is trying to say that that is an economic issue, but the Government changed the rules because they were worried about the impact of state aid rules. On port development, will he join me in condemning Stena Line, which is talking about changing wages and conditions instead of investing in the ports of west Wales—something that I know he is greatly concerned about? Stena Line wants to cut wages and conditions and race to the bottom, rather than investing for the future.

[Stephen Crabb]

No, I will not join in criticising Stena. I met with the company recently, and it faces a really tough battle to stay competitive and keep those services. It is a good company that has invested in the hon. Gentleman’s constituency and in mine. We have to work with it to see that it continues to make that investment.

The question of Europe was raised by several Opposition Members, and I repeat what I said at Wales Office questions last week: the vast majority of businesses across the UK and in Wales strongly support our desire for a change in our relationship with Europe regarding the level of regulation and the burden of cost that our membership places on the private sector. Businesses do not want to rush headlong to the exit and leave the European Union, but they want change. That is backed up by comments made by those who run the Institute of Directors, the British Chambers of Commerce and the CBI.

The point about multinationals being based in Wales and using it as a springboard into the European Union is important. I received a letter this morning from one of those multinationals, in which it welcomes the action that we have taken on energy costs but raises concerns about a regulation at the European level. Small and large businesses in Wales understand our issue with the European Union, and they support the action that the Prime Minister is taking to reduce costs and the burden of regulation for Wales.

In the few seconds that I have remaining, I again thank the right hon. Member for Delyn for securing the debate. I look forward to discussing the issues again in future.

[Mr Philip Hollobone (in the Chair)]

Order. I thank all Members who took part in that very interesting debate. Will those who are not staying for the next debate please leave quickly and quietly? We now move on to the important subject of Government support for grassroots football. I call Mr David Crausby.

Grassroots Football

Tuesday 1st April 2014 Westminster Hall

11:00

[Mr David Crausby (Bolton North East) (Lab)]

It is a great pleasure to serve under your chairmanship, Mr Hollobone. I thank the Speaker for granting this important debate, because grassroots football is in crisis.

The Football Association is about to lose £1.6 million of public funding for the amateur game in England, after it failed to reverse a sharp decline in the number of people regularly playing football. Sport England says that that is a clear message that football must change its grassroots strategy. The FA has called the funding reduction disappointing. Frankly, it should be more than disappointed; it should feel ashamed, because if it is failing the grassroots game, it is failing the game itself and everything that the FA should stand for.

Of course, it is not all the fault of the FA. Local authorities own 80% of pitches, and local government funding has been cut by 40% over this Parliament, with councils having to reduce their budgets by £20 billion by 2015-16. Local councils have tough decisions to make, and when faced with sacrificing investment in sport in order to protect vulnerable children and adults, they will inevitably—albeit reluctantly—opt for what they see as shielding the weak and defenceless.

The lack of local authority investment in football is bad enough, but many authorities feel that they will have to increase fees dramatically, which will inevitably discourage participation in the game. One midlands council has proposed increasing the price of pitch hire for junior football next season from £382 to £1,613—that is a 323% rise. What with poor pitches, weeks of play lost to bad weather, no changing facilities, no showers, increasing pitch fees, poor families priced out and other families deterred by the shoddy conditions, participation is unsurprisingly falling.

According to Sport England, 1.84 million people play football regularly—a fall of 100,000 since April last year. More than 2 million people played regularly in 200. We are witnessing a long-term decline. What was once a working-class game is steadily becoming a game that can be afforded only by those children with better-off parents. It is already difficult enough to drag our kids off the couch, away from the Xbox and into the car in order to play proper football in the open air, but for a child with poor parents who cannot afford the fees, let alone the kit and the football boots, and who do not have a car, the prospect looks even bleaker. Often, such children will be denied the opportunity to play.

I met a married couple in Horwich in the constituency of my hon. Friend the Member for Bolton West (Julie Hilling) who do a fantastic job running a league and a team of their own. Those people are the absolute salt of the British earth, because without them the game would flounder and die. They are not unusual in being expected to pay for their training courses, and they frequently put their own money into the sport because they know in their hearts how much good they do. They told me that they had started a boot club, because one of their players turned up in wellingtons as his football boots had become too small. They now collect boots from children who have grown out of them and pass them on to others.

I do not know about other Members present, but I hate the idea of wearing other people’s footwear, even in new socks. It takes me back to my days as a poverty-stricken child in the 1950s, but this is 2014. The fact is, we really should be doing much better. I know that these are difficult, austere times for the country’s economy, and no one really expects the Government to find the millions and millions of pounds needed to fund the game properly. However, while local authorities have lost income, the Premier League has been handed an even greater windfall. Domestic broadcasting rights for 2012-13, 2013-14 and 2014-15 were sold for £3 billion, with an estimated £2 billion expected from international rights. That is £5 billion in total—nearly as much as the value of Royal Mail. We need a new settlement for grassroots football. After all, it is the national game, not the Premier League’s game.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Gentleman on bringing such an important issue to Westminster Hall for debate. Sport in Northern Ireland is a devolved matter. The Department of Culture, Arts and Leisure not only gives to teams in the premier league, but filters moneys down to the intermediate and lower leagues. Each level gets some of the money. Would the hon. Gentleman like to see that happen in England as well?

[Mr Crausby]

I will come on to that later in my speech. We must have a bigger commitment from the Premier League in order to keep the game healthy and alive.

[Andrew Bingham (High Peak) (Con)]

I congratulate the hon. Gentleman on securing this debate. I spotted that it was taking place only this morning, but I am a great fan of local and non-league football. Does he agree that such football is why people progress to watching premier league football? As a small boy I watched teams such as Buxton, and that fostered an interest that attracted me to top-tier football.

[Mr Crausby]

Absolutely. It is very much in the premier league’s interest that grassroots football survives. That is why I started an online petition that called for a new arrangement, whereby 7.5% of the proceeds from broadcasting rights is used to fund grassroots football. It called on the Government to ensure that grassroots football receives financial support from the Premier League, a call I repeat today. By the time it closed, the petition had received 30,599 signatures, and I did not receive one message, by any means, of principled disagreement from anyone.

Of course, the Government responded when the number of signatories to the petition passed 10,000—well, they did not actually respond right away, even though I wrote to the Leader of the House twice. I am sure that it was a coincidence, but they responded just after midnight on the day that I was listed on the Order Paper to put an oral question to the Minister, asking for a reply. Although the response was welcome, I am afraid to say that it was an apology for the football authorities, which even Sport England says have failed.

The resolution of the grassroots crisis will, of course, take a lot more money than the £1.6 million that has been cut by Sport England. In the football world of billionaires, £1.6 million is not exactly a fortune. It is probably about six weeks’ pay for a top premiership player. Now, do not get me wrong: I do not blame young footballers for accepting £300,000 a week for playing a game that they would probably play for the minimum wage. What do we expect them to do? Say to the multi-millionaire owner of the club—the Russian oligarch, American billionaire, or Arab oil sheik—“No thanks; keep the money and buy yourself another ocean-going yacht”? Of course not! Nor do I blame clubs in the premier league for offering the money, because they are caught in a trap, knowing that if they do not pay players ridiculous wages, one of their rivals will.

The fact is that the market is broken. There are clearly not enough talented young footballers, and, at the same time, billions of pounds are slushing around from TV rights. So what do we do? Well, it is not really that complicated. We should invest much more in grassroots talent, and we should do it by using much more of the money from rights.

[Jim Shannon]

I thank the hon. Gentleman for being gracious in allowing interventions. Ards football club in my constituency is in the Irish premier league. It is a locally focused, community-based club, and its relationships within Ards borough are the envy of many football clubs across Northern Ireland. It is focused on the community, which endears the club to the community. Does he feel that the Government should encourage more of that community-based spirit?

[Mr Crausby]

I very much think so. I am sure that the Government do encourage the community to participate in grassroots football; my argument is that more money must be made available to the volunteers who run the game, and that the place to take the money from is the lucrative professional game. Committing 7.5% of the £5 billion from television rights would deliver £375 million over three years. That would not exactly break the premier league, and I do not envisage any starving players, either.

The harsh truth is that the Government should top-slice the TV money before it gets into the hands of the professional game. The professional game is a hugely competitive business, and we cannot expect one professional football club to support the amateur game sufficiently if its neighbouring clubs do not. The premier league is the envy of the football world, with huge amounts of money pouring in and endless stories of enormous wages and excessive lifestyles. If English football is doing so well, why do we allow all the money to stay at the top of the game and not filter down to the grassroots? Why are our international teams so unsuccessful? The fact is that there is a short-term obsession with the premier league in British football. If we are to succeed as a footballing nation, we must broaden our horizons.

Every Saturday morning, premier league scouts tour children’s football grounds scouring for talent. When they find it, they tempt the child and his parents away, delivering the best of coaching and facilities, not to mention various other goodies, but leave all the other children in the team behind, with no changing facilities and no showers, stripping off at the side of the pitch in the depths of winter. Talented young footballers are obviously important, but so are the rest. I want to live in a country where all of our children who want to play football get the opportunity to do so. If we do not pay urgent attention to the grassroots game, there will be no one left in the UK for the professional football club scouts to recruit, leaving the leagues to ever younger foreign players recruited from around the world, some of whom are, frankly, too young to be away from their parents.

My concerns do not just include children. Football can make an enormously positive difference to the lives of developing young people. I talked to a mother who told me that her two sons had been picked up by a premier league club and were very well supported, but when they got to 15 and 16 years old, the club decided that they were not strong enough and let them go. The boys inevitably found that difficult to take, but what made it much worse was that once they were dropped from the club, they had nowhere to play the game that they loved so much.

In 1999, the football taskforce report committed the Premier League to a 5% contribution of its broadcasting income to grassroots projects, which was agreed, but the Premier League never fulfilled that commitment, and anyway much of the money has gone to professional football clubs lower down the leagues. Less prosperous professional clubs are important, of course, and I want them to survive as much as anybody does, but the grassroots game, especially children’s grassroots football, is even more important to me, and it should be more important to the country.

The present arrangement is just not good enough. The Football Association, the Premier League and Sport England work closely together to invest in facilities through the Football Foundation, but between 2007 and 2013, only 6% of football facilities were redeveloped. We clearly need many more artificial pitches. Grass pitches can sustain only five or six hours of football a week, but artificial pitches can take up to 80. In the present economic circumstances, we will not have the number of pitches that we need for at least another generation.

[Andrew Bingham]

The hon. Gentleman is being generous in giving way so often in a 30-minute debate. I concur. We have an artificial pitch in my constituency at Glossopdale school; it can be seen as one comes over the hill into Glossop. Every evening it is floodlit, and kids play on it night after night. To mention something that we have not discussed, on Sundays there is football for elderly gentlemen—I actually qualify—which gets people of my greying years out playing football as well. That must be good for the health agenda.

[Mr Crausby]

Those pitches cost money, and the only source of honestly available money is the Premier League’s billions. If we do not deliver the number of artificial pitches necessary, we may well destroy our seedcorn for the premier league.

I end by quoting Bill Shankly, who once famously said:

“Some people believe football is a matter of life and death. I am very disappointed with that attitude. I can assure you it is much, much more important than that.”

I think Bill Shankly only applied it to Liverpool FC, to be honest, but I apply it, as we all should, to the grassroots game.

[Mr Philip Hollobone (in the Chair)]

I blow the whistle for half-time and call the Minister to respond.

11:16

[The Parliamentary Under-Secretary of State for Culture, Media and Sport (Mrs Helen Grant)]

It is a great pleasure to serve under your chairmanship, Mr Hollobone. I am grateful to the hon. Member for Bolton North East (Mr Crausby) for securing this important debate, and to the hon. Member for Strangford (Jim Shannon) and my hon. Friend the Member for High Peak (Andrew Bingham) for their important contributions. Along with many parliamentary colleagues, the hon. Member for Bolton North East has been a vocal advocate for grassroots football for a considerable time. I reassure him that I, too, want a vibrant sports sector that encourages participation and provides opportunities up and down the country.

Apart from the health and social benefits of sport participation, sport is vital to raising aspirations in young people, and it has the ability to transform lives. Through Sport England, we are committed to delivering community sport, including football, and the many programmes tackling barriers to participation in sport. The youth and community sports strategy, announced in January 2012, committed £1 billion of investment to community sport to 2017. The strategy is led by the national governing bodies of sport, which will receive nearly £500 million of investment for 2013 to 2017 to deliver year-on-year increases in the number of people playing sport.

The latest active people survey figures from December 2013 show a long-term trend of sport participation increasing, which is very good and is what we want. There are now 1.5 million more people playing sport once a week than when we bid for the Olympic games in 2005, participation among disabled people is at an all-time high and more women are getting involved, which is beneficial in closing the gender gap. I am absolutely determined to see that progress continue.

Football is, of course, an important part of that picture, and the Government’s support for grassroots football is strong. Sport England is directing significant levels of funding at the sport to boost participation via the national governing body and through other direct investments in programmes and facilities. Between 2013 and 2017, the FA will receive £28.4 million from Sport England for delivering against its whole sport plan.

Football remains one of the biggest participation sports in the UK, with more than 1.8 million people playing the game on a regular basis. However, there has been a sharp fall of more than a quarter of a million participants in the last year, so clearly something has to be done. Several hon. Members have noted today the £1.6 million of lottery funding that Sport England has withdrawn from the FA’s whole sport plan funding, as a result of the decrease in participation. I want more people to get involved in all sport, and I am pleased that Sport England is committed to working closely with sports governing bodies to make that happen. However, we have to get results from the £500 million of public money that is invested through those bodies. If their plans are not working, it has to be right that Sport England invests some of the funding in other ways.

However, there will certainly not be a financial loss for grassroots football. Instead, Sport England will reinvest that £1.6 million to create a grassroots “city of football”, working in one place to create a range of new opportunities to encourage more people to play football regularly. Sport England will also share with the FA the insights that are gained, to help the FA continue to grow the game across the country. To date, that model has proved successful in an intensive year-long pilot in Bury, which has looked at ways to break down barriers and to get the town’s women and girls more active and involved in sport. I look forward to there being similar exciting innovation in developing the football city.

Although innovative opportunities can increase the appeal of, and participation in, all sports, high-quality facilities for community sport remain absolutely essential in supporting football. The hon. Member for Bolton North East referred to the importance of such facilities. I am very pleased indeed that Sport England has invested more than £80 million of Exchequer and lottery funding in facilities for football during the past three years. It has also been working very hard to protect playing fields, to fund the Inspired Facilities programme, to fund iconic facilities and to improve existing sites.

The hon. Gentleman also mentioned the undeniable impact that the winter’s floods have had on sports facilities in affected areas. I am sure that he has already read about this in newspapers and various statements, but I am pleased that we have been able to respond to the flooding with a £5 million Sport England fund to support affected sports facilities.

We also invest in the Football Foundation, which the hon. Gentleman referred to, along with the Premier League and the FA. The new grassroots fund will improve existing facilities and create new pitches across the country, including the invaluable astroturf pitches that the hon. Gentleman referred to. I absolutely agree with him that such pitches are brilliant at maximising the capacity of various grounds, and the contribution made by the Premier League, the FA and ourselves amounts to more than £100 million during the next three years. I hope to see many more 3G pitches constructed.

Of course, that shows that it is not only the Government who are investing in and funding expertise in grassroots football. The FA invests approximately £40 million a year to support its national game programme, most recently implementing the outputs of its youth development review. Typically, the FA spends a further £15 million a year on projects that benefit every tier of football, such as the FA’s Respect programme, which aims to improve the conduct of participants and spectators right across the game.

The hon. Gentleman also referred to the contribution that is made by the Premier League. The Premier League is investing £56 million a season between 2013 and 2016 on community-focused projects and facilities, and as he will know, the constituent Premier League clubs often deliver significant programmes in their own local communities, independently of the FA’s collective action.

I will make a further point about the contribution that is made by the Premier League. I just want to clarify to the hon. Gentleman that during the next three seasons, it will redistribute more than £850 million in total to help to strengthen football below the top tier, which includes solidarity payments to support the 72 clubs in the Football League and the 68 clubs in the three divisions of the Football Conference. Those payments are partly ring-fenced to support the work of those clubs in their local communities. I know that such work is very important to the hon. Gentleman.

With regard to the question of whether any more can be done, let us see what can happen. I am open to discussing new ventures with the FA and the Premier League. However, I believe that they are already making significant contributions of their own accord, which should not be underestimated.

The hon. Gentleman also rightly referred to the fact that some local teams cannot afford the fees that local authorities are charging to use various facilities. That issue is of concern to me; I am aware of it and I am investigating it. I had a meeting with the FA this morning and raised the matter again. I know that the FA and Sport England are working hard on that issue, which has to be dealt with. All sorts of ideas are being considered, one of which is encouraging the county football associations to work much more closely with local authorities to manage community sports budgets. Ultimately, however, that arrangement sounds perhaps a little ad hoc, so some new model of ownership of sports facilities may need to be looked at. However, I reassure the hon. Gentleman that I will work closely with others to establish what can be done to deal with that important issue.

I hope that hon. Members will see the considerable sums of money that the Government and the football authorities are ploughing into football right across the country. In my opinion, the outlook remains very bright indeed for opportunities to participate in football, and I am pleased that the Government play a big part in that process.

[Mr Philip Hollobone (in the Chair)]

I am afraid that there is no injury time in Adjournment debates, so I will have to suspend the sitting until 2.30 pm.

11:26

Sitting suspended.

UK Automotive Industry

Tuesday 1st April 2014 Westminster Hall

[Sir Alan Meale in the Chair]

14:30

[Gavin Williamson (South Staffordshire) (Con)]

It is a great privilege to have secured this debate about the United Kingdom’s automotive industry. I hope that we will approach it in a consensual manner, discussing some of the successes we have had and how we move the industry forward. I think hon. Members are here not just because we understand how important the UK automotive industry is to our whole economy, but because we have a passion for the automotive sector itself.

I am a great fan of the BBC’s “Top Gear”. It is one of those programmes that is on every Sunday, and I dedicate myself to watching it. I am not sure whether you, Sir Alan, have the same enthusiasm for the programme, but I certainly do. One of the finest episodes I ever saw was in the most recent series, where the last part of the episode was dedicated to celebrating the UK’s automotive industry and everything we produce here, whether it was a Dennis or Leyland truck; a product from JCB or Caterpillar; a Norton or a Triumph motorcycle; one of many family cars that are produced in the UK by Toyota, Nissan or Honda; or some of the luxury cars that are envied the world over—Bentley, Rolls-Royce, Aston Martin, Jaguar and Land Rover.

The episode also celebrated our success in Formula 1, for which we are producing the finest racing cars in the world—from Petronas, Red Bull and McLaren to Williams and Lotus. The Italians hold nothing on us, as we beat them consistently. Quite simply, we produce the best in Britain, and a lot better than what is produced in Italy.

I do not want this debate to be about how we produce better things than the Italians, the French or the Germans, as it could go on for many more hours than the hour and a half that we have been allotted. Many people have a livelihood in the automotive sector. Some 731,000 people are involved in the wider automotive sector, while 146,000 are directly employed in automotive manufacturing. The industry expects the sector to grow, not by 5,000 or 10,000 jobs, but in the region of 100,000 extra jobs by 2020.

We are producing more and more. Often we look back to the ’50s and ’60s as the heyday of automotive production, but we are rapidly gaining ground. Last year, 1.5 million cars were produced in the UK. Production is forecast to be up to 2 million by 2017—more cars produced in Great Britain than ever before. Those are high-value cars, which make a difference to our balance of trade. Some 10% of all the things that we export from this country are automotive products.

We are the second largest exporter of construction equipment in the world. We are leading the field—for example, with JCB, which is based in Staffordshire—in developing technology and world-leading products. If we go to building sites in China, Russia, India and Brazil, we can see British products digging the foundations for their economies.

[Dan Byles (North Warwickshire) (Con)]

Does my hon. Friend agree that it is not just about British products going abroad, but about overseas companies seeking to come to Britain to make use of our expertise? For example, Nissan recently announced its largest investment outside Sunderland—a new £6 million investment with ADV in my constituency. That sort of confidence from overseas companies coming to the UK is vital.

[Gavin Williamson]

My hon. Friend is absolutely correct. Much of our success has depended on learning from foreign businesses. They invest in the UK because they see that we have the right environment and structures to succeed.

Since 2010, £7 billion has been invested in the automotive sector, growing success and bringing jobs to the UK. My constituency of South Staffordshire has been incredibly fortunate to benefit from that investment; Jaguar Land Rover has announced a £500 million investment to build a new engine manufacturing facility on the i54 South Staffordshire site, creating 1,400 jobs directly and another 3,500 jobs across the UK in our supply chain.

[Mr Jim Cunningham (Coventry South) (Lab)]

I am sure that the hon. Gentleman recalls that one of the starting points for the turnaround of the motor car industry was when Tata took over Jaguar—before the 2010 election, by the way. I remember meeting Tata at the time, along with the trade unions.

We once tried to get Nissan to invest in Coventry airport and turn it around for car production. We did not get the grants at the time, which is why Nissan went to Sunderland instead. Nevertheless, we welcome any increase in production and manufacturing generally, but most importantly in Coventry and the midlands. The motor car is a big thing; Coventry was once known as the motor car city.

[Gavin Williamson]

The hon. Gentleman is absolutely right. Let us not forget that the west midlands are the beating heart of the automotive industry in this country. The west midlands are what drive the automotive industry and have the most to gain from an expanding automotive industry. Almost one third of those employed in the industry live and work in the west midlands. That is why many hon. Members from the west midlands are present for today’s debate. We know that it is important to our constituencies and our region to drive economic growth and success. We have to be committed, both as a Government and as constituency Members of Parliament, in order to support businesses, whether foreign or domestic, to invest.

While much has been done, there is much more to do. The hon. Member for Coventry South (Mr Cunningham) pointed to the success of Jaguar Land Rover, much of which is down to research and development and which, importantly, leads to excellent products that people want to buy.

[Jeremy Lefroy (Stafford) (Con)]

I congratulate my hon. Friend on securing this debate and on all the work that he has put in to ensure that JLR’s move to South Staffordshire will be a great success.

Does my hon. Friend agree that one of the areas in which the UK has a tremendous competitive advantage, based on excellent, top-quality R and D, is the development of engines? We have engine plants all over the country, including in my constituency—although not for the automotive industry—Perkins Engines, which makes the largest engines. It is vital that long-term investment in research and development in an area in which we have such a competitive advantage continues to grow.

[Gavin Williamson]

My hon. Friend is absolutely right. He is right to point out the valuable work that Perkins Engines does to supply the heavy construction sector. We are seeing a build-up of expertise in engine design and manufacture, not just in the west midlands but right across the UK. That can be seen not just in JLR’s investment in its new plant or in Perkins’s work, but in BMW, which produces many of its engines in Hams Hall, and in Ford, as a third of its cars, which are produced across the globe, have engines manufactured in the UK. That is why it is vital that the Government keep their commitment to invest in research and development, whether through the Technology Strategy Board or the regional growth fund.

I am pushing for the Government to support and commit to the regional growth fund, and I hope the Minister will reassure us on that. I seek real Government commitment to help British industry and automotive production so that the technology and research and development bases may grow and develop. It is vital that R and D is based here in the United Kingdom, because if we can get businesses to invest in R and D in the UK, they will often base their manufacturing here, too.

[Mr Jim Cunningham]

I congratulate the hon. Gentleman on securing this debate. An important driver in the west midlands, and certainly in Coventry and Warwickshire, is the university of Warwick, where a lot of research and development and business innovation take place. Many companies, including companies from Germany, are investing because of that research and development, which helps the economy not only of Coventry and Warwickshire but of the west midlands. That is vital.

[Gavin Williamson]

The hon. Gentleman is correct. The finest engine ever produced is being designed and engineered at Whitley in his constituency and will be built in my constituency by Jaguar Land Rover. Having that research and development based here in the United Kingdom is vital when businesses decide whether to invest in manufacturing in this country. Sadly, we do not have enough manufacturing, and we need more, which is why I urge the Minister to do all he can to start a dialogue with manufacturing companies, whether it is Nissan, Toyota, Honda or any of the many others, to carry out more research and development here in the UK. Some of the greatest automotive designers have come out of British design schools, and some of the best technical expertise comes out of British universities, but we have to leverage that much more.

One of the UK automotive industry’s great weaknesses is our supply chain. Although we have a very developed assembly sector, the supply chain is incredibly weak. The industry runs a trade deficit of close to £7 billion in components that have to be imported, which is not good enough. We need to make progress by encouraging businesses to invest in the UK from abroad, but we also need to strengthen our supply chain’s domestic infrastructure. We need to help small businesses to grow so that they can become medium-sized businesses. We need medium-sized businesses that are already supplying the automotive industry to grow into large businesses, and we need to support them as they take their first steps towards investing in research and development. If our automotive sector does not have a developed supply chain, it will become much more difficult for the sector to develop the new products that it needs to succeed. Let us not be so naive as to think that large automotive companies do all their product development purely by themselves; they do it hand in glove with their supply chain, working incredibly closely to ensure that the components, parts and products are in place for them to deliver new models.

[Mr Jim Cunningham]

The hon. Gentleman raises some interesting points. Talking about the supply chain—I will leave the automobile industry aside for a moment—unless companies such as Rolls-Royce get their spare parts on time, they cannot finish their engines on time, which often results in a financial penalty. That illustrates the point that it is vital that we get the supply chain right, whether we are talking about the automobile industry, manufacturing in general or companies such as Rolls-Royce.

[Gavin Williamson]

The hon. Gentleman makes another strong point. When the disaster happened in Japan, many Japanese companies that produce large numbers of automobiles here in the UK were badly hit by disruption to their supply chain. There is a real benefit, not just to the British people but to companies based here in the UK, in having more of the supply chain on our doorstep. We need to do all we can not just to encourage small and medium-sized businesses but to encourage foreign businesses to invest in the UK.

I would like the Government to consider more closely how to give foreign investors greater reassurance that, if they invest here in the UK, they will have the support they need, whether through the regional growth fund or some other mechanism. That would help the UK to attract such investment. The Government must consider how we can reassure companies that we will give them training and skills support so that they have the right work force to deliver and manufacture their goods here in the United Kingdom. Education and skills are vital to this high-tech industry. Although we are making up ground, we still lag a little behind other countries. Every automobile manufacturer always says that its area of greatest concern is whether the skills will be in place for the next generation of workers.

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

I congratulate my hon. Friend on securing this debate. Will he join me in congratulating automobile companies such as Ford, which already has 68 advanced apprentices in engineering and 15 higher apprentices in engineering? Ford is going further this year and has committed to an additional 50 apprentices in both engineering and craft at the higher level.

[Gavin Williamson]

I congratulate companies such as Ford on their work. In the run-up to 2018, the automotive sector hopes to take on 7,600 new apprentices and 1,700 new graduates. The sector is a growth area for young people, which is one reason why I am championing a £5 million investment in an engineering studio at my local high school in Codsall. Such a studio will concentrate on training the engineers and designers of the future so that South Staffordshire can provide the very best work force to Jaguar Land Rover and the aerospace sector and companies can grow with the best talent.

[Jeremy Lefroy]

Does my hon. Friend agree that we also need electronic engineers and software engineers? So much of the inside of a car these days is made up of electronics and software.

[Gavin Williamson]

My hon. Friend makes a valid point. At the weekend, I took my two daughters to the Enginuity museum at Ironbridge near Telford. We saw a cross-section of a Mini. Although the design is amazing and out of this world, it is all pulleys and levers. Now, much of a Mini’s design is down to electronics. We must not forget how high tech or capital-intensive the automotive industry is, but it is about getting the skills and technology in line, and the Government have an important role in ensuring that that happens. Let us not forget that if youngsters and people of all ages do not have the skills, and if we do not support companies constantly to skill up and improve their work force so that they can move forward, we will lag behind.

I am conscious that other people want to take part in this debate. In summary, I seek assurance from the Minister that the Government are committed to ensuring that the regional growth fund continues to deliver jobs and investment not just for the west midlands but for the whole country. The fund has already achieved a great deal, but it can do more. Let us not kid ourselves, because the automotive sector is one of the most international industries in the world. The sector can move to virtually any country. We would be very naive to think that countries such as Germany, Italy, France, Spain, Portugal, India, China, Russia, Brazil and the United States are sitting back and not being proactive in attracting investment, because those Governments are going out to seek and deliver investment. I want to see the Government continuing to do that, ensuring that it is clear to everyone not only that we have the most skilled work force and the best designers in the world and produce the best cars, but that we are the best place to produce them.

[Sir Alan Meale (in the Chair)]

Order. Before we continue, I have permission from the Speaker to impose time limits on speeches if necessary. Seven Members have indicated that they want to speak, and we need to give a proper opportunity for the Minister and the shadow Minister to respond. I will impose a five-minute limit on speeches, which includes any interventions. It is up to individual Members to decide if they want to give way.

14:50

[Mr Andrew Smith (Oxford East) (Lab)]

I congratulate the hon. Member for South Staffordshire (Gavin Williamson) on securing this debate, and I join him in his paean of praise for all sectors of the UK automotive industry and his ambition for its future. He referred to Jaguar Land Rover; its success is great news. I am pleased about the part that Unipart, which is based in my constituency, has played in that success. On the important point he made about the supply chain, he might be aware that Unipart’s after-market logistics were, with Jaguar Land Rover, the overall winner at the independently assessed European supply chain excellence awards last year, reflecting innovation, delivery and collaborative commercial success over many years. We have examples of excellence in this country that can be built on and emulated.

I take this opportunity to praise the achievement of the 4,000-strong work force at Cowley and BMW’s investment of £1.75 billion in the UK, which has made possible the continuing stunning success of the Mini. It is a very good example of what can be achieved by British manufacturing in the most competitive markets, so long as there is the right investment, the best design and engineering, a skilled and committed work force and a management adept at securing continuous improvement in product quality and responsiveness to customers. Whenever I visit the plant, I am struck by just what a staggering logistical accomplishment it is to manufacture a car these days. The Mini has 3,600 parts, arriving from several suppliers in different parts of the UK and abroad, with countless variations per model, five different models going down the line at the same time and the right parts arriving in the right place in the right order at the right time. I cannot help thinking that if Government policy, and IT projects in particular, were delivered as well as car production, we would all be a lot better off.

Partnership with trade unions is important. Industrial relations at Cowley have been transformed since BMW took over. That is not because the union is weak or has caved in—it has not—nor just because BMW’s ownership and management are so much better than what went before, although they certainly are. That transformation has happened because there is a constructive partnership, with real commitment to and a mutual interest in success. Negotiations are sometimes hard, but the outcomes are good. A recent example was Unite’s success in securing agreement that 1,000 agency workers on temporary contracts would become eligible for permanent contracts, giving a massive boost to security and well-being for the workers concerned and their families. The Mini plant is not only a premium employer locally, but is leading the way in training, with £1 million invested in its Oxford training school and 95 apprentices. It is important for the future of the plant that we nurture the skills and application needed to sustain advanced manufacturing success.

Across the industry, the quality of apprenticeship training remains too variable. The Minister should look, through the Automotive Council, at how we can achieve a standard automotive framework with high levels of quality assurance. We also need to sustain a competitive business environment, simplify energy efficiency regimes and keep business rates down. Through that, we can build on the Mini’s fantastic success, with 2.4 million models produced and 80% of production exported to 108 different markets. That represents a massive contribution to the UK balance of payments, exemplifying UK manufactured export achievement at its best, and is a performance the country needs to emulate more generally.

The new model of the new Mini went on sale last month and is showing every sign of carrying that success forwards, with more than 4,000 UK orders taken even before it was in showrooms. Obviously, as with every other car Britain is looking to export, what we most want is sustained world economic growth in demand, but through this recent difficult period, the Mini has shown what is possible. I thank the work force for all that the success of the Mini means to Oxford, and our partners in both the Mini production triangle at Swindon, where the body panels are made, and the engine plant at Hams Hall, which enabled Mini engine production to be repatriated from Brazil. I also thank BMW for the sustained investment and its commitment to the future, which can keep Plant Oxford and all its workers in my constituency at the forefront of automotive success for years to come.

14:56

[Chris White (Warwick and Leamington) (Con)]

I am delighted to congratulate my hon. Friend the Member for South Staffordshire (Gavin Williamson) on securing this debate, and I am also pleased to follow the right hon. Member for Oxford East (Mr Smith). I worked for MG Rover, which was one of the most iconic firms in the country, between 1997 and 2004. When I suggested to the work force that I wanted to become a Member of Parliament, they took it with much hilarity. As I did not make it in 2001 or 2005, they were partly right. I did say, however, that if I ever got to this place, I would be delighted to speak on behalf of our manufacturing community and, in particular, our automotive sector.

It was interesting to hear from the right hon. Member for Oxford East about the success of the Mini, which was one of the reasons for the demise of MG Rover—it did not have the good fortune of manufacturing the Mini at its plant—but I congratulate him on his particular success. I am delighted to see the hon. Member for Birmingham, Northfield (Richard Burden) here. He was the first Member that I debated against, when I was working at the MG plant.

As co-chair of the all-party manufacturing group and the Member for Warwick and Leamington, I am aware of the importance and enduring heritage of manufacturing and the automotive sector supply chain, which runs through the whole west midlands, as my hon. Friend the Member for South Staffordshire said. I am also very much aware of the need to re-shore manufacturing and encourage the export of British-made goods. The trend of re-shoring is growing, I am pleased to say. A recent report from the EEF found that one in six firms has brought part or all of its production back to UK suppliers. The Minister has encouraged and achieved action on reduced operating costs, affordable finance and investment. Britain has the most productive automotive sector in Europe and in 2012, as has been recognised, we exported more vehicles than ever before.

Until recently, it was often assumed that manufacturing cars in Britain was a thing of the past, but new technology and a renewed focus on research and development in recent years has turned that around. The national automotive innovation campus at the university of Warwick is one example of that renewal. An investment of nearly £100 million over 15 years will provide an unparalleled centre for research and innovation, which Members will recognise as a magnet to bringing manufacturing home. Over more than 30 years, the Warwick Manufacturing Group has been a clear example of how collaboration between universities and industry can benefit both sectors and provide a strong foundation for practical and innovative research. Making cars more efficiently has been a defining feature of the past decade and has widespread positive benefits. Improvements to manufacturing processes have reduced energy use by 43% and water use by 48%.

Another key Government focus, on skills and apprenticeships, is also having a significant positive impact on the manufacturing and automotive industries. Developing a more skilled work force starts in schools, where a variety of schemes are in place to encourage the uptake of STEM subjects and to encourage career paths through apprenticeships. The Government’s introduction of employer-led and designed apprenticeships is important and allows skill development to be tailored to the needs of the sector.

My constituency has a proud tradition of manufacturing, and I am particularly pleased that the automotive business, both locally and in the wider economy, has improved greatly over the years. We must ensure that Britain continues to build on the momentum of recent years and continues to be the home of a thriving automotive sector.

15:00

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

It is a pleasure to serve under your chairmanship, Sir Alan.

I received an e-mail on Sunday from a young man from Castle Vale who was desperate because he has been out of work for two years—one in four young people in my constituency are out of work—and he said, “Jack, can you help me to get into Jaguar Land Rover?” For him, times are bleak, but Jaguar Land Rover’s remarkable transformation and success story over the past five years offers hope.

The future looked bleak when Ford was in control. When I was elected in 2010, the assumption was that the Jaguar plant would close. Mercifully, Tata, an excellent company, took over and brought in two outstanding Germans, Carl-Peter Forster, managing director and group chief executive officer of Tata, and Ralf Speth, the new CEO, to have a fresh look at the business together with the remarkable Lord Kumar Bhattacharyya. I remember meeting them within days of the general election, as they were having a fresh look at the fortunes of Jaguar Land Rover, and two points stick out in my mind.

First, the people brought in by Tata said that notwithstanding the run-down of the automotive industry in the west midlands, there were great residual strengths. There are both primes and component companies, from GKN on the one hand to Jaco-Sumal, which employs eight engineers just off Erdington High street, on the other. There are logistics companies, research and development facilities and universities, such as the university of Warwick. That goes all the way down to the midlands’ world-class games industry, with which the automotive industry wants to collaborate on the next generation of in-car entertainment. Secondly, they said that they welcomed the Labour Government’s commitment to an automotive sector strategy and the incoming Government’s commitment to continuity of policy.

Over the past four years, what we have seen is nothing short of a remarkable transformation. Jaguar Land Rover is now one of the jewels in the crown of British manufacturing. Like my right hon. Friend the Member for Oxford East (Mr Smith), I want to pay tribute both to the company and the work force. It is sometimes popular in this place to knock Unite, which does get it wrong from time to time, but its role in the transformation of the automotive industry and in what happened at Jaguar Land Rover has been nothing short of outstanding.

I have two points about what the next stages should be. First, I hope that the Government back Jaguar Land Rover’s skills bid. The hon. Member for South Staffordshire (Gavin Williamson), whom I congratulate on securing the debate, was right to focus on skills. JLR wants 5,000 more people in its factories and 20,000 in its supply chain. It is already running into skills bottlenecks and is therefore crucially working with its supply chain, but it needs Government support if it is continually to ramp up the necessary skills.

Secondly, just when we are seeing a major transformation of the industry into a world-class success story, it is crucial that we do nothing to put it at risk. The continuing uncertainty over our membership of the European Union is damaging to the automotive sector. Inward investment is key to the success of the sector, but key to inward investment is our continuing membership of the European Union. The problems within the Conservative party over membership of the EU do not help to secure the industry’s medium to long-term success.

In conclusion, we are rightly celebrating a success story, but we must sadly mourn the fact that Dunlop Motorsport is leaving these shores after 125 years of production in our country. It is a bitter irony that just when automotive industry is increasingly onshoring its supply chains, Goodyear, which is based 3,500 miles away in Ohio, is offshoring. Having said that, the main emphasis today has rightly been on celebrating and building on the success stories, but the Government’s role is crucial.

15:05

[Richard Burden (Birmingham, Northfield) (Lab)]

It is a pleasure to follow my fellow Birmingham Member of Parliament and hon. Friend the Member for Birmingham, Erdington (Jack Dromey) and the hon. Member for Warwick and Leamington (Chris White), whom I have known for many years—I remember well that first debate. I also congratulate the hon. Member for South Staffordshire (Gavin Williamson) on securing the debate. He started off his remarks by talking about “Top Gear”, and I think I may be the only Member in this debate who has actually been on the programme. I appeared on a feature looking for the fastest political party, and the good news, at least for the Opposition, is that I soundly beat the Conservative candidate, but the rather bad news is that I was beaten by the Legalise Cannabis Alliance, so I do not necessarily talk about that too much.

[Sir Alan Meale (in the Chair)]

Order. As a result of Members kindly keeping their contributions short, we have the opportunity to allow a little more time to subsequent speakers. The hon. Gentleman can now speak for reasonably longer than he was planning.

[Richard Burden]

Thank you, Sir Alan; it is much appreciated.

As my hon. Friend the Member for Birmingham, Erdington said, ask anyone in the automotive industry what they want from Government and two words will come up time and time again: continuity and predictability. It is not always exciting for politicians, because we all love to blame everything that goes wrong on the other side and to corner the market in everything that goes right for our side, but the automotive sector does not work that way. The reality is that all major political parties underestimated the importance of manufacturing for too long, but that has now turned around.

The automotive industry has been a trailblazer, with great partnerships within the industry, which my hon. Friend the Member for Birmingham, Erdington and my right hon. Friend the Member for Oxford East (Mr Smith) discussed, but also with the Government and with Parliament. The industry forum that thrived under the previous Government was a building block of that success, as was the creation of the Automotive Council, which creates road maps for future issues facing the industry, such as skills and the low-carbon agenda. Other hon. Members have referred to the figures that highlight the automotive industry’s success story. Despite your offer that I can speak for longer, Sir Alan, I will not repeat them, but suffice it to say that some of the figures are startling.

I want to discuss something that the hon. Member for South Staffordshire mentioned, namely the role of the motorsport and performance engineering industries in the automotive sector. Eight of the 11 Formula 1 teams are based in the UK. Lewis Hamilton won the Malaysian grand prix on Sunday, which was very good, and the results state that he was driving a Mercedes, which he was, but that Mercedes was built in Brackley. The factory in Brackley has been Honda, Brawn and Mercedes, but it has always been British. Motorsport companies are involved in so much more than what many people usually think of as motorsport, such as the fantastic work being done in a range of areas at the McLaren Technology Centre by McLaren Applied Technologies. How many people know that the skeleton sled on which Lizzy Yarnold did so well at the winter Olympics was designed by McLaren here in the UK? Williams Advanced Engineering’s centre is also doing much great work, and companies such as Prodrive and Cosworth are also involved in state-of-the-art work.

The UK, however, is the home of motorsport not only in Formula 1, but in so many other ways. The national and grassroots series are among the building blocks that make our motorsport and performance engineering industries as world-class as they are. The premier national racing series is the British Touring Car championship, the opening round of which was on Sunday. The main sponsor of the series is Dunlop Motorsport. Why therefore is Dunlop Motorsport, as part of that cluster, turning its back on the home of motorsport? When the Minister responds, will he update the House? I know that approaches have been made on the matter from both sides of the House. My hon. Friend the Member for Birmingham, Erdington and I have worked hard on the issue, and it needs to be said to Dunlop that it has still not answered satisfactorily the questions that have been put to it, and that the reasons it has given for doing what it seems intent on doing have not been convincing. It will be bad for motorsport, for the cluster and for Dunlop if it goes ahead with what it is doing.

I mentioned the British Touring Car championship. Two of the races on Sunday were won by Hondas built in the UK. The road car, the Civic, is also built in the UK. Despite the success of the automotive industry, we sometimes find things that are not great, and it is worth pausing for a moment to reflect on the fact that just in the past week Honda has had to cut back on some shift working at Swindon, which is something to be mourned by all of us. If we ask the people at Honda why that is, they say that it is about the market for their cars, and crucially the European market. Europe is still the largest export market for UK vehicles.

In my constituency, Shanghai Automotive still produces MGs and has its European technical centre there as a base, a foothold and a bridge into Europe. The hon. Member for South Staffordshire was right that the automotive industry needs reassurance, but it needs reassurance that we will not play fast and loose with our membership of the European Union. That is important not only to the motor companies exporting into Europe. Jaguar Land Rover, for example, has fantastic export achievements in other parts of the world, but ask it and those who want to export to the United States about the European Union and they will also say that continued membership is vital to them, apart from anything else because of the free trade agreements and other ongoing negotiations. I accept that the Conservative party might have one or two problems, looking at its flank with the UK Independence party, but frankly the interests of Britain are more important. Continued membership of the EU and reducing the uncertainty about our membership are very important.

On the supply chain, the hon. Member for South Staffordshire was right that one way in which we can and should do more is by ensuring that its component sections—the original equipment manufacturers—in the UK are firmed up and developed. About two years ago, KPMG produced an important report for the Society of Motor Manufacturers and Traders which showed that about £3 billion-worth of opportunities are being missed in the supply chain. That is why it is important for us to do more.

Some good things are going on: the Automotive Investment Organisation, headed by Joe Greenwell, formerly of Ford of Britain, has been set up to attract vital foreign investment, which is good news; the advanced manufacturing supply chain initiative has been established, which is good news; and the advanced propulsion centre is being established, which is important to ensure that there are opportunities for small and medium—and not so small and not so medium—companies in the development of ultra-low-emission vehicles and so on.

We need a sustainable framework, however, which is why the hon. Member for South Staffordshire was right to stress the importance of predictability and speed of action by things such as the regional growth fund. I believe that it was a mistake to get rid of the regional development agencies. We may disagree about that, but they at least provided a framework for making decisions and ensuring that those decisions were carried through. All too often, things are too hand-to-mouth at the moment. I hope that the Minister will address that issue, because the automotive industry is very much the jewel in our industrial crown.

Many other sectors in the UK and beyond are asking, “How did you do it in automotive?” They want to copy things such as the Automotive Council or the partnership. That is good news, but we must not rest on our laurels. There is a huge skills agenda to be developed and so much more yet to be done with the supply chain to ensure that we achieve our potential.

In conclusion, I hope that the Minister will say a few words about Dunlop, because that is still not a done deal and we still need to apply pressure. I hope that he will join me in applauding the work of the Automotive Council. I also hope that he will say a little more about the advanced propulsion centre; about how the UK will accelerate on the ultra-low-emission vehicle agenda, because we are lagging behind other countries in the take-up of such vehicles; and about what we can do to better address the concerns expressed by the industry about skills and the supply chain.

15:16

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

I appreciate the opportunity to speak in the debate, which I had not intended to do, but with the slight west midlands bias I thought that I might divert attention back down to the south-east and speak about a specific aspect of the automotive industry and the impact that it has had on my constituency.

I imagine that the instant inclination is to think that I will talk about Ford, and of course it was a huge loss to Southampton when the Transit plant closed last year. In fact, the Transit had been made in Southampton for my whole life and, historically, there were always adverts in the local paper claiming Southampton as the home of the Transit. I pay tribute to the hard work of Ford to ensure that an automotive base remains in the city, as well as a level of employment in my constituency that, at the time of the original announcement to close the plant, we had not expected. One hundred and thirty-four jobs remain in the city, but much of the focus has moved to the port and to the export of vehicles through Southampton docks.

Even at the height of the recession, when economic conditions were difficult, we saw significant expansion in Southampton, particularly of multi-deck car parks. Massive numbers of cars from all the main manufacturers that have been mentioned this afternoon are exported through the port of Southampton—at the moment the figure stands in the region of 0.5 million vehicles every year. We rightly regard the port as one of the significant economic drivers of our entire region. I was privileged to be there yesterday at the opening of the new Southampton container terminal, SCT 5, and there was no doubt that the emphasis was on the automotive sector and its contribution to jobs in the city and to the export of cars through Southampton.

Ford did a fantastic job locally, in partnership with the university, on the Ford scholarships, providing 10 scholarships a year of £10,000 to young people seeking engineering jobs in the automotive industry. Significantly, 50% of the scholarships have gone to women. I notice that the debate has been all-male so far this afternoon, but there is role for women in the automotive industry. I remember the chairman of Ford telling me several years ago that some of the attitudes towards women that he encountered in Westminster would not be tolerated on his factory floor. He is absolutely right; Ford has been a trailblazer in ensuring that the automotive industry is one in which there is an equal place for women. I congratulate Ford on that, as I congratulate my hon. Friend the Member for South Staffordshire (Gavin Williamson) on securing the debate.

15:18

[Mr Iain McKenzie (Inverclyde) (Lab)]

It is a pleasure to serve under your chairmanship today, Sir Alan. I, too, congratulate the hon. Member for South Staffordshire (Gavin Williamson) on securing the debate.

Today in the UK, we produce more than 0.5 million vehicles and 2.5 million engines each year, of which we export some 80%. That equates to a vehicle rolling off the production line every 20 seconds, making us the 14th largest producer in the world. Of course, as we have heard, the west midlands dominates the car manufacturing industry in terms of employment, but UK manufacturing industry as a whole employs about 2.6 million people, which is 8% of all jobs. Sadly, only 2,000 people now work directly in the automotive industry in Scotland, but I am old enough to remember the heady days of manufacturers such as Rootes and Chrysler just up the road from my constituency in Linwood. What plans do the Government have to encourage vehicle manufacturers to locate elsewhere in the UK and to take advantage of Government help north and south of the border and the skills that still exist in those areas of the country?

We should not forget that there are also jobs in the supply chain. More than 2,000 UK companies regard themselves as automotive suppliers, and they employ about 82,000 people. The UK automotive supply chain generates £4.8 billion of added value annually, with an estimate now of a possible further £3 billion if the opportunities are taken. They should be taken, because about 80% of all components required for vehicle assembly operations can be procured from UK suppliers. I repeat my question to the Minister about how he is encouraging sourcing from UK suppliers.

What will build the future of the automotive industry in the UK? It can probably be summed up in a few words: innovation and quality in design. Innovation means product improvements, and challenging accepted practices, processes and design limitations. This country has been a trailblazer of vehicle innovations that pushed boundaries and showed our competitors a clean pair of heels. In the past those innovations included transverse engines, limited-slip differentials and independent suspension, as well as numerous safety features and a reduction in weight by using new metals to build our engines. I could go on—I am an old mechanic and I could spend hours reciting British vehicle innovations.

Quality in design is what makes products timeless. Anyone who thinks of iconic cars of the past will recognise that British design is there. Hon. Members have spoken fondly today of the forerunners of the small family cars we see so much of today, such as the Mini, whose subframe chassis allowed the first transverse engine, with new positioning of the gearbox. That was a revelation. The Hillman Imp, built in Linwood in Scotland, had a cutting-edge rear-mounted aluminium alloy engine. With its less than 1-litre engine size it produced the same power as a much larger vehicle by cleverly optimising a 9:1 swept volume ratio. That gave sports car performance to a small family saloon. Further up the market range are classics such as the E-Type Jaguar, which is still one of the most iconic sports cars around. With its limited slip differential it was the forerunner of the 4x4. The weight that heavy goods vehicles can now carry is the result of our development of the air braking system.

Unfortunately, we lost our way for a while and stopped pushing at the design boundary and quality mark. The world overtook us. Most significantly, at first, the Japanese took quality to a new level. However, the way of thinking I have described is being revived by manufacturers in the UK, including Jaguar Land Rover and Nissan, not to mention bus and truck builders. The vehicles they are developing and the innovative designs they are offering are the reason why they are winning markets. That is why I firmly believe we need to plan for manufacturing; the resurgence cannot be left to chance, or to peter out. We need to plan for continued success and maximise benefit around the country. The Government need to encourage more research and development and put their foot on the accelerator.

We need small and medium-sized firms to be a critical part of the supply chain. How do the Government intend to promote a fully integrated UK supply chain and green procurement? We need to overcome supply and demand problems in relation to products and skills, and we need to tackle the culture that refuses to take pride in professions such as engineering and prevents good manufacturing firms from coming to schools to talk to young people. We need high-skill jobs; we need to win the race to the top; and we need many more apprenticeships like the one I served. We need to move up the chain of employment and skills.

Any plan should include green jobs in the automotive industry. We need to design cleaner factories and vehicles, along with cutting-edge production flow and quality assurance techniques, to embrace fully the culture of right first time and defect-free manufacturing. We need procurement that sources around the country to create jobs, but we also need to reduce lead times and promote a just-in-time procurement practice that complements a constant-flow production strategy. We need to end the competitive strategies that value low wage costs over a trained work force. For the consumer, price is not the only factor when purchasing.

As we have heard, one of the most important issues for the industry and the country is the debate about the UK’s membership of the EU. Ahead of the European election, the Society of Motor Manufacturers and Traders wants to ensure that its voice is heard in the automotive sector. Given that we are a significant part of a global industry, and that 80% of all cars manufactured in the UK are exported, the SMMT has commissioned a report, to be published tomorrow, that will provide an economic assessment of the value of the EU to the UK automotive industry.

Labour is clear that business is the solution, not the problem. A plan for manufacturing, with business working in partnership with the Government, is central to building an economy that works for everyday working people, resolving the cost-of-living crisis, delivering jobs that pay a wage people can live on and ensuring that we can pay our way in the world. All that can be made in Great Britain.

15:26

[Mr Iain Wright (Hartlepool) (Lab)]

It is a pleasure to serve under your chairmanship again, Sir Alan. I thank the hon. Member for South Staffordshire (Gavin Williamson) for securing the debate. It has given us a welcome opportunity to discuss what he rightly said is a hugely important part of the British economy.

I think that the hon. Gentleman began by mentioning Italy; he also mentioned the importance of the west midlands for the UK automotive industry. That is true, but in God’s own country, the north-east of England, a single Nissan plant produces more cars than the entire Italian car industry. That is a remarkable achievement and shows how the British car industry has been transformed. Forty years ago, it was a symbol of industrial decline, inferior products, obsolete manufacturing processes, poor industrial relations and a lack of competitiveness. The sector has undergone a remarkable and welcome transformation in fortunes in the past seven or eight years. As the hon. Gentleman said, the task for all of us is to maintain that competitive edge for the UK automotive sector, with an emphasis on high productivity, high skill levels and innovation, with the aim of raising living standards for all within the industry.

As has been mentioned, there has been great news recently, including the launch of the new Quashqai by Nissan at its plant in Sunderland, the new factory being built by Jaguar Land Rover in Wolverhampton, and the new Mini in Oxford, but there has been bad news too, with the recent announcements at Honda. Anne Snelgrove, whom you will remember from her time in this House, Sir Alan, has been championing the issue in Swindon.

Last month, my hon. Friend the Member for Streatham (Mr Umunna), the shadow Business Secretary, framed the challenge facing the British economy, terming it Agenda 2030. It has four clear pillars: active government investing for the long term; liberating the talents of all; solving tomorrow’s problems today; and an outward-looking, open approach to the world, not isolation. I want to base my discussion of how we can maintain the comparative advantage of the UK automotive industry on those four pillars.

As for an active industrial strategy, it is, as my hon. Friends the Members for Birmingham, Erdington (Jack Dromey) and for Birmingham, Northfield (Richard Burden) said, vital that the Government provide long-term policy certainty and predictability which transcend electoral and political cycles and align more closely with industry’s investment and process cycles. We should be thinking not only about next year or the next five years, but the next 15, 20 or 30. That is why my hon. Friend the Member for Streatham chose the title Agenda 2030. It is five years this month since the Labour Government published “New Industry, New Jobs”, with an emphasis on activism and targeted investment. A grant was provided to Nissan to support a new battery plant and the manufacture in the UK of the Nissan Leaf. The scrappage scheme helped maintain the industry at a time of acute falling demand. More importantly, as we have heard today, the Automotive Council was set up to lay the foundations for a long-term partnership between the industry and the Government and to build long-lasting capabilities and create supportive policies for the automotive industry; it is something that we strongly support. We remain committed to the long-term continuation of the Automotive Council as the key institution for driving strategy, collaboration and innovation in the sector. As we have heard today, we cannot achieve that without the pride, professionalism and commitment of the industry’s work force.

My right hon. Friend the Member for Oxford East (Mr Smith) mentioned Cowley, and my hon. Friend the Member for Birmingham, Erdington mentioned Jaguar Land Rover. As my right hon. Friend the Member for Oxford East said, trade unions often get a raw deal in the media and the House. However, we must give Unite credit for playing a leading and proactive role in the automotive industry in general. I am pleased that it did so much great, proactive work to ensure the next generation Astra will be built at Vauxhall’s Ellesmere Port plant. I hope that the Minister agrees that the collaborative approach of the industry, the work force and the Government is the model we should take forward for the long term.

To ensure the UK’s automotive industry achieves its potential, we must address the issues surrounding the supply chain. The Automotive Council estimated that an additional £3 billion per annum could be provided in the UK’s automotive supply chain—a 40% increase on current levels of UK-based supply chain activity. Reshoring is an exciting opportunity. KPMG estimates in its excellent report from about 18 months ago, “Capturing opportunity”, that supply chain opportunities could result in tens of thousands of additional jobs in the UK automotive supply chain by 2017. The prize of more and better-paid jobs, additional industrial capability and renewed competitiveness is huge, and we must grasp it. That is why the Labour party asked Mike Wright of Jaguar Land Rover to undertake an independent review of the manufacturing supply chain to ensure that it is as collaborative, co-ordinated and competitive as possible.

Will the Minister update the House on what he is doing to bring more of the global supply chain in the sector to the UK? How many firms in the automotive industry have received funding from the advanced manufacturing supply chain initiative? Does he plan to put AMSCI’s funding on a more permanent footing to give industry the long-term ability to plan for the future?

As the Minister knows, access to finance remains a problem in the supply chain. Firms often require funding to purchase tooling to complete an order, but they are not paid by the customer until the products are shipped, which puts immense pressure on their cash flow and undermines the potential of the UK automotive supply chain. We need the banking system to work with and for British industry, especially the excellent and promising automotive industry. Far too often it does not. The automotive industrial strategy states:

“The Automotive Council will…work with the financial services industry to develop long-term investment finance products that meet the needs of the automotive industry”.

Will the Minister update the House on progress with that? What has been the flow of finance to the automotive supply chain, and what else will be done?

I mentioned the potential to create tens of thousands of additional jobs, which brings me to the second pillar of Agenda 2030: skills. Every right hon. and hon. Member mentioned skills in their contribution, and they are a massive issue in the automotive industry, and in manufacturing in general. It will make or break the potential of our country’s automotive industry in the next 20 or 30 years. The automotive industrial strategy states that the pipeline for new entrants into the industry narrows too early, with too much leakage at important points. In addition, I am struck that in several of the automotive industry’s bright spots, such as my region of the north-east, as well as the west midlands, unemployment is appallingly high. The unemployment rate in Birmingham, Erdington is the 53rd worst in the country and in Birmingham, Northfield it is the 59th worst. My hon. Friend the Member for Birmingham, Erdington said that one in four young people in his constituency are jobless. We need to marry up skills and potential with the potential work force of the future.

My hon. Friend the Member for Inverclyde (Mr McKenzie) talked about the cost-of-living crisis. It is more fundamental than simply prices versus wages; it is about how our kids get decent jobs, a high standard of living and a good career. A co-ordinated industrial strategy should link education policy and curriculum content with the automotive industry’s needs. Will the Minister update the House on how the skills road map for the sector is progressing? How will it improve skills and ensure there are more opportunities and fewer vacancies in the industry? The strategy states that 7,600 apprentices and 1,700 graduates will be recruited in the period 2013-18—the hon. Member for South Staffordshire mentioned those numbers. How is that progressing? What are the Government doing to promote better collaboration between firms in the industry to address the sector-wide problem of skills?

The third pillar of Agenda 2030 is solving tomorrow’s problems today, or the importance of innovation, which my hon. Friend the Member for Inverclyde discussed in his strong contribution. In a debate last month on the automotive industry in the other place, it was said that the chief executive of Jaguar Land Rover expressed the view that the most important thing to his company was innovation. We have a lot of so-called “sticky” technologies and comparative strengths that we need to enhance. This country is particularly strong in designing, producing and manufacturing engines. I am pleased to see the hon. Member for Romsey and Southampton North (Caroline Nokes) in the Chamber. She mentioned Ford. It should be a source of enormous pride to us that one in three engines produced by Ford globally are produced in the UK. We must continue to be strong in engine technology. Will the Minister tell us what progress is being made in setting up the advanced propulsion centre?

This morning, I met Air Products, a firm that is a leading player in the hydrogen industry. It is normally a business-to-business firm in the chemicals industry. What is the Minister doing with the Automotive Council to develop capability and infrastructure for hydrogen fuel cell technology in cars? How successful has the planned collaboration been between the Automotive Council and the Engineering and Physical Sciences Research Council? Will the Minister update us on the work that the Automotive Council has done to identify evolutionary and disruptive technologies that will have an impact on the UK automotive industry and which could hinder progress or provide benefits to our comparative advantage?

The fourth pillar of Agenda 2030 is being outward-looking and open. It is clear from today’s debate that the House wants to encourage inward investment, so original equipment manufacturers and tier 1 and tier 2 automotive manufacturers base their European operations in the UK. The domestic market is important, but that springboard to a European marketplace of half a billion customers is the key selling point for reshoring and encouraging inward investment. As my hon. Friend the Member for Birmingham, Northfield said, internal wrangling and navel gazing will not help potential investment into the UK. We may lose our competitive edge if we do not address the policy certainty issue about European issues.

Will the Minister address directly the point made by the head of Nissan late last year, when he said bluntly that the car maker may have to evaluate its UK operations if Britain pulls out of the EU? Does that not concern him? Has he seen the report on UK jobs supported by exports to the EU published this week by the Centre for Economics and Business Research, which shows that 4.2 million jobs—particularly those in the north and in the motor trade—are associated with the demand in exports to the EU? It is vital that we remain part of the EU to ensure that manufacturers can base their operations in the UK.

I congratulate all hon. Members who have spoken today. It is clear that the automotive industry is a massive success for British manufacturing. It is a great case study in how industry, the work force and the Government can work together for the long term, with an emphasis on innovation, productivity, competitiveness and exports. We cannot be complacent in the fiercely competitive world in which we live. We must work together for the long term to maintain and strengthen the enviable comparative advantage of the automotive industry in the UK. I look forward to working with all hon. Members to meet that challenge.

15:39

[The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)]

Thank you for the way you have chaired the debate, Sir Alan, and for allowing me a reasonably generous time to respond to the points that have been made. I congratulate my hon. Friend the Member for South Staffordshire (Gavin Williamson) on securing this debate on a subject about which he feels passionately. He made an excellent speech, and I want to echo his comments about the Jaguar Land Rover decision to invest £500 million in a new engine plant in his constituency. That is very welcome news indeed and will bring a massive boost to the area and the supply chain, creating some 1,400 jobs. I am pleased that JLR is already making good progress in recruiting to fill those positions. I am also pleased that the Government are able to support that investment with a £10 million grant.

Various points were made by several hon. Members in excellent speeches. I will touch on as many as I can in addressing the three themes that have emerged today: the supply chain and the need to continue to strengthen it; skills and the need to continue to attract people, including women, into the industry; and what we are doing to advance our enormous strengths in innovation, technology and design.

Our economy is growing now, and the automotive sector is contributing hugely to that growth. Last year, turnover in the automotive industry reached an all-time record, exceeding £60 billion, and was up 9% on the previous year. We have overtaken France, and the UK is now the third largest car producer in Europe, just behind Germany and Spain, producing more than 1.5 million vehicles in the UK in 2013. We have the most productive automotive workers in Europe.

Last July, with the industry we set out a long-term strategy—some hon. Members today reinforced the need for that strategy—for growth and sustainability for the automotive sector in our automotive industrial strategy, which will help to keep Britain at the forefront of the global auto market. We are working closely with the industry, through the Automotive Council and the strategy, to remove barriers to growth when we find them, and to create opportunities across the sector.

An excellent example is the co-operation between the Government and industry on an advanced propulsion centre over the next 10 years and investment of £1 billion from both the Government and the industry to help to research, develop and commercialise the next generation of low-carbon technologies, ensuring that the UK stays at the forefront of the design, development, manufacture and use of ultra-low emission vehicles and in so doing helping to secure up to 30,000 jobs.

The Automotive Council met last week to review developments since the publication of the industrial strategy last year. The advanced propulsion centre is progressing ahead of schedule with a senior team in place and two funding competitions well under way, covering innovation and the centre’s location. The council heard that the first successful collaborative research and development projects will be announced later this month with significant public support. A decision on the location of the centre will be made by the executive in the summer.

On the supply chain, the automotive investment organisation reported good progress with early wins and numerous investment opportunities in the pipeline. On skills, the council noted a successful skills bid to the advanced manufacturing supply chain initiative, and continuing progress on the industry employer ownership pilot bid.

[Richard Burden]

Will the Minister clarify a couple of points about the advanced propulsion centre, particularly the competition around the development of ultra-low emission vehicles? I understand that the budget for that development is £500 million, but it is projected that only £230 million will be spent in this Parliament and there is a question mark about whether any roll-over is anticipated. Will he clarify exactly how much of that £500 million will be spent and how?

[Michael Fallon]

I am certainly happy to write to the hon. Gentleman about that. The Government have committed our side of the £500 million funding, but we cannot commit expenditure through and beyond the next Parliament. Perhaps the hon. Gentleman will allow me to write to him about that specific point.

Although there has been recent growth and expansion in the centre, and a lot of positive news, we should not become complacent. There is much more to be done to ensure that the growth we have seen in recent years is sustainable, particularly in building the capability and capacity of the supply chain, and I will turn to that now.

My hon. Friend the Member for South Staffordshire is right in saying that there is much more to do to strengthen the supply chain. Currently, only about 40% of the components of a UK-built vehicle come from a UK supplier, so there is clearly an opportunity for us to capture more of the supply chain. Through the strategy and the council, the Government and industry are working together to boost the competitiveness of the UK’s supply chain growth. We are investing some £129 million to strengthen advanced manufacturing supply chains that will create around 1,400 jobs, and we are supporting a Society of Motor Manufacturers and Traders-led project with £13.4 million of funding to help to improve the competitiveness and capability of 38 automotive supply chain companies.

The sector is also benefiting from Government funding worth more than £56 million for a total of nine AMSCI bids across four rounds of the competition. Between them, the projects aim to create more than 3,700 jobs and to safeguard a further 3,800 jobs. The Automotive Council has identified a potential £3 billion of opportunities for UK-based vehicle and engine manufacturers, where components are currently sourced from overseas.

The sector has also been successful in gaining funding from the regional growth fund, and has secured some £236 million in awards from that funding in rounds 1 to 4. To marry the opportunity with investor appetite, the automotive investment organisation, to which several hon. Members referred, aims to double the number of jobs created or secured in the automotive supply chain through foreign direct investments over the next three years to 15,000, and is currently on target to achieve that. It has had some early wins and has many investment opportunities in the pipeline.

The hon. Member for Inverclyde (Mr McKenzie) asked about the supply chain and what I have been doing to help to promote supply chain events. I have attended and spoken at events in London, Detroit and Milan for suppliers in the Po valley, and I have done the same in Tokyo and Nagoya, where tier 1 and 2 component suppliers already have some interest in the UK. I have been working very hard with UK Trade and Investment, and now the automotive investment organisation, to persuade suppliers to increase their presence in the UK and to do more closer to the prime producers.

[Mr McKenzie]

Does the Minister agree that encouraging a green supply chain would enable more manufacturers to source in the UK, and to get round what is always put up as an excuse—the idea that EU procurement legislation does not allow them to source as close to home as they would like?

[Michael Fallon]

I will certainly consider that and draw it to the attention of the Automotive Investment Organisation. It is an intriguing thought. We are obviously working closely on procurement issues in preparing to help manufacturers here with negotiations under the transatlantic trade and investment partnership with the United States, and we are looking at EU procurement rules in that context.

We know that the industry has concerns about the skills levels in the supply chain, and we share those concerns. To capitalise on the growth of the major manufacturers in the UK, we must tackle those skills gaps, so that we can build a strong UK supplier network. We are providing significant support through the employer ownership pilot. In the west midlands, for example, £1 million will support the Telford manufacturing partnership, led by DENSO, in assisting in pre-employment activities and in upskilling employees. We are working with the industry through the Automotive Council to ensure that we target the next phase of support where it is most needed.

Apprenticeships are at the heart of our approach to improving work force skills. In 2012-13, we supported over 66,000 apprenticeship starts in the engineering and manufacturing technologies sector subject area. Trailblazers are leading the way in implementing new apprenticeships and in helping to design the first apprenticeship standards.

[Heather Wheeler (South Derbyshire) (Con)]

Please accept my apologies, Sir Alan; I was detained on other parliamentary business, so I arrived late for today’s debate. I apologise to the hon. Member for South Staffordshire (Gavin Williamson). Would the Minister like to congratulate Toyota, which is based in South Derbyshire? It has taken on the challenge of expanding its apprenticeship centre, so that it is producing apprentices for the supply chain as well. It is over-extra-supplying in the apprenticeship area, and that is very important for the future.

[Michael Fallon]

Yes. That is a very important approach, and I hope that it will be copied more widely.

The Trailblazer group is chaired by Ian Eva, the apprenticeship manager from Jaguar Land Rover, with the involvement of a number of other companies, including Toyota and BMW. Traineeships are another key strand of our strategy to help unlock the potential of young people who are motivated to work but lack the skills and experience needed to compete for apprenticeships and other jobs. Hundreds of employers are already on board, including household names in the automotive sector, such as Jaguar Land Rover and Nissan.

[Mr Andrew Smith]

On apprenticeships, although progress is of course welcome, will the Minister respond to my point about the need for a standard automotive framework for apprenticeships with a high level of quality assurance?

[Michael Fallon]

Yes, I will. We need to drive up the quality of apprenticeships, and that is part of what is called the Trailblazer exercise. Those involved will help to draw up the standards, and ensure that there is a rigorous test at the end of the apprenticeship and that we improve the quality of what is on offer.

I turn to what we are doing to support innovation and technology. Our aspiration is for almost every car and van in the UK fleet to be an ultra-low emission vehicle by 2050, with our industry at the forefront of the design, development, manufacture and use of those vehicles, delivering opportunities and contributing to the decarbonisation of road transport. We have made a commitment of £400 million over this Parliament to making the UK a leading market for ultra-low carbon vehicles, and we announced an additional £500 million of capital funding for the period between 2015 and 2020.

To ensure that we maintain our position at the forefront of that technology, as I have said, we have already agreed the investment in the Advanced Propulsion Centre, and we are supporting further innovation, research and development through an £82 million investment up to 2015 from the Office for Low Emission Vehicles through the Technology Strategy Board.

As my hon. Friend the Member for South Staffordshire said, we have great automotive design capacity in this country. Nissan has a cutting-edge European design centre based in Paddington—London, of course, is one of the creative hubs of the world—but with its sister Nissan technology centre at Cranfield and the largest single production plant at Sunderland, we can be proud to say that the latest version of the best-selling Qashqai has been designed and developed, and is being successfully manufactured, here in the UK.

Nissan is not alone in that. Ford invests some £450 million each year in designing, developing and researching advanced gasoline and petrol engines for its global product range at Dunton. Volkswagen spends £200 million each year at its engineering centre at Crewe, which, of course, designs the interior and exterior of Bentley cars. The scale of JLR’s research and development investment places it in the top 10 of all R and D investment in the UK. Some £2.75 billion was invested in 2013-14.

Let me turn to points that have been raised. The hon. Member for Birmingham, Northfield (Richard Burden), asked me about Dunlop. We have been working closely with Dunlop to see what we can do in Government to secure a better outcome for all parties concerned, particularly the Dunlop workers, given the expiry of the lease next year. The company met the Secretary of State for Business, Innovation and Skills recently. There have also been key meetings at official level. We continue to offer our full support to Dunlop. The company has acknowledged that offer of support and will contact officials once the consultation has concluded.

The hon. Gentleman also asked me about the regional growth fund, which I have referred to. It is true that in the first couple of rounds of the regional growth fund, a proper time scale was not in place. I put that in place for round 3. It is in place for round 4, and it will shortly be put in place when we announce the award winners for round 5, so I think we have a more systematic process for looking at the allocations.

The hon. Member for Inverclyde asked me specifically what we were doing to make sure that all this growth was more evenly spread throughout the United Kingdom. It is fairly spread, certainly across England. I recognise the decline of some elements of the Scottish car industry. Industrial policy, of course, is a devolved matter, so the instruments at our command here—the regional growth fund and AMSCI—are not available in Scotland. It has its own separate instruments, but companies from all over the United Kingdom are represented on the Automotive Council, and we work closely through UK Trade & Investment with counterparts in Scotland.

The hon. Member for Hartlepool (Mr Wright) asked me about a number of points. He referred to the partnership with the unions. I, too, would like to place on record the important part that unions have played in the revival of our automotive industry. We saw that in emphatic fashion in the negotiations over Ellesmere Port; it was the constructive partnership—the agreement on more flexible working practices—that made it able to win investment in the face of a competing bid for Germany. I remind hon. Members that Unite is represented on the Automotive Council. It is right that it has its place there, and I, too, pay tribute to the constructive way in which it has worked on a number of the changes that have taken place in the industry.

The hon. Gentleman asked me about the supply chain, but I think I have answered questions about the efforts that we are making to improve supply chain capabilities right across the world.

Finally, let me say that the United Kingdom is now a competitive place to do business. When we came to office back in 2010, the rate of corporation tax was 28%. Yesterday it was 23%, today it is 21%, and next April it will be 20%. Our labour costs are already among the lowest in western Europe. We have an attractive research and development tax credit regime and the patent box. All those combine to make this country an attractive location for innovative industries such as the automotive sector. With the automotive sector investing over £2.5 billion in our country last year, it is very clear that vehicle makers value the UK as one of the best places in the world to do business. Through the Automotive Council, the Government are working in close partnership with automotive companies to continue to improve the overall competitiveness of the business environment, both domestically and internationally.

[Sir Alan Meale (in the Chair)]

Mr Williamson, we have about one minute left. That gives you the opportunity to thank Members on both sides of the Chamber and the Minister for their participation, but there is no time for questions.

15:58

[Gavin Williamson]

Thank you, Sir Alan. It is always a pleasure to speak again and to thank everyone, as you so kindly prompted me to, for their contributions.

The debate has shown that, as I said at the start, we are all passionate about this industry, and we all have a clear idea of some of the challenges to it. I have a great feeling that there is an immense amount of consensus on making sure that the industry thrives in future, so that instead of being the third largest car manufacturer in Europe, we will be the largest, hopefully in the not-too-distant future.

15:59

Sitting suspended.

16:30

[Sir Alan Meale (in the Chair)]

It does not seem as if the Member has arrived for the next debate, so I shall adjourn the sitting.

Question put and agreed to.

16:31

Sitting adjourned.

Written Statements

Tuesday 1st April 2014 Written Statements

Tuesday 1 April 2014

Intellectual Property Office

Tuesday 1st April 2014 Written Statements

[The Parliamentary Under-Secretary of State for Business, Innovation and Skills (Jenny Willott)]

My noble Friend the Parliamentary Under-Secretary of State for Business, Innovation and Skills, Viscount Younger, has today made the following statement:

As an Executive agency and trading fund of the Department for Business, Innovation and Skills, we set targets which are agreed by Ministers and laid before Parliament. For 2014-15 our targets are:

Deliver the infrastructure and supporting regulations required for the UK’s orphan works and extended collective licensing schemes by the end of the year;

Offer faster handling of patent applications, by providing an examination report with a search report when both are requested at the application date, and meeting at least 90% of requests for an accelerated two-month turnaround for search, publication and examination;

Publish 80% of acceptable applications for national trade marks for opposition within 90 days of filing:

Ensure customer satisfaction is at least 80%;

With our partners, the Office for Harmonization in the Internal Market (OHIM) and the European Commission, deliver an international enforcement summit that provides an effective forum for the discussion and debate of intellectual property (IP) enforcement globally, and attracts an international audience, by summer 2014;

Reach an audience of 5 million people with messages to build respect for IP by the end of March 2015;

Reach an audience of 10,000 businesses through our online tool “IP for Business” by the end of March 2015;

Ensure 95% of our managers have completed a management development activity by the end of March 2015;

Achieve a 4% return on capital employed (ROCE);

Deliver an efficiency gain of 3.5%.

These targets reflect the purpose of the Intellectual Property Office, which is to promote innovation by providing a clear, accessible and widely understood IP system.

Business Rates

Tuesday 1st April 2014 Written Statements

[The Parliamentary Under-Secretary of State for Communities and Local Government (Brandon Lewis)]

As part of the Government’s long-term economic plan, the biggest package of business rate support in over 20 years, announced in the autumn statement, goes live today. This package of measures will make a massive difference for small shop owners and help businesses and the high streets across the country build a stronger economy.

The package includes:

a new £1,000 business rates discount for small shops, restaurants and pubs for 2014-15 and 2015-16;

a further extension of small business rate relief;

a new reoccupation relief to help get empty shops back into use;

the opportunity for firms to choose to pay bills over 12 month instalments to help them with their cash flow; and

capping the annual indexation at 2% this year.

I have today placed in the Library of the House estimates that each individual local authority has made of the number of retail premises, pubs and restaurants that will benefit from the new £1,000 business rates discount. Overall, councils estimate that they will provide more than £272 million of retail relief in 2014-15.

The £1,000 discount applies to eligible businesses with a rateable value of £50,000 or less, and is being delivered by local billing authorities using their Localism Act powers to provide new local discounts. In this case, the entire cost will be met by central Government. Local authorities are locally determining eligibility, given the diversity of different types of retail hereditament. My Department published on 29 January guidance to assist local authorities in ensuring that eligible local firms receive the support they deserve. A copy of that guidance is also in the Library of the House.

I have also today published guidance to assist authorities in their administration of the new reoccupation relief. Ratepayers that move into retail premises that have been empty for 12 months or more will be eligible for an 18-month 50% discount off their rates bill. This reoccupation relief is intended to encourage reoccupation of shops that have been empty for a long period of time and to reward businesses that make this happen. Businesses moving into previously empty retail premises between 1 April 2014 and 31 March 2016 should be eligible for this relief A copy of the guidance to authorities is also in the Library of the House.

I would encourage hon. Members to draw these measures to the attention of local firms and shops, and ensure that all eligible firms are benefiting from the range of financial assistance open to them.

Civil Court System (Fees)

Tuesday 1st April 2014 Written Statements

[The Parliamentary Under-Secretary of State for Justice (Mr Shailesh Vara)]

I have today laid and published the Government’s response to part one of the consultation “Court Fees, Proposals for Reform” which ran from 3 December 2013 to 21 January 2014.

For many years, the civil court system has operated under the principle that those who use the courts should pay the full cost of the service they receive. However, this has not yet been achieved in practice and, last year, the deficit was more than £100 million. At a time when we have made deficit reduction our top priority, the Government do not believe that the courts can be immune from the tough decisions we have had to take in order to bring public spending in line with what we can afford.

It was within this context that the consultation outlined the Government’s approach to reducing the cost of the court system to the taxpayer in two parts. The first part “Cost recovery” set out proposals to align court fees with the cost of the service provided, to move closer to our long-term goal of cost recovery through fees. The second part “Enhanced charging” set out proposals to charge users of some court services more than their cost, where they can afford to do so.

We received 162 responses to the consultation from a range of stakeholders including the judiciary, legal representative bodies, voluntary organisations, business representatives, and members of the public.

Having carefully considered the views of stakeholders, the paper published today sets out the proposals we intend to take forward in response to the cost recovery proposals in part one of the consultation. The Government will announce their response to enhanced charging proposals in part two of the consultation to this House in due course.

The changes set out in the consultation response will see fees rise for some court users so that they will pay the full cost of the service they receive, reducing the taxpayer subsidy for those able to afford higher fees and ensuring that in cases such as judicial review, those bringing claims have a more proportionate share in the financial risks of the proceedings.

In building the package of changes, the Government have sought to continue to protect the most vulnerable court users. Those with limited financial means will be able to access a system of fee remissions to ensure that they are not denied access to the courts. In addition, the scrapping of the £75 application fee for domestic violence injunctions will help thousands of women seeking non-molestation and occupation orders, while the decision to freeze many fees in family applications at current levels will assist those who need to access the courts to resolve difficult family issues.

The Government will be laying the relevant statutory instruments to implement most of the changes announced in the consultation response today and the changes will take effect on 22 April 2014.

Copies of the consultation response will be available in the Vote Office and the Printed Paper Office.

An online version of this consultation paper will be available at:

https://consult.justice.gov.uk/digital-communications/court-fees-proposals-for-reform

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Parole Board Rules

Tuesday 1st April 2014 Written Statements

[The Parliamentary Under-Secretary of State for Justice (Jeremy Wright)]

My right hon. and learned Friend the Minister of State for Justice, Lord Faulks, has made the following written ministerial statement:

I have signed the Parole Board (Amendment) Rules 2014 Order which amends the Parole Board Rules 2011 to remove the requirement that a judge should sit on and chair Parole Board oral panels hearing the cases of prisoners sentenced to life imprisonment or a sentence during Her Majesty’s pleasure. As a consequence, the chairman of the Parole Board will be able to appoint any member, including sitting or retired judges, to sit on or chair such panels.

This approach will enable the Parole Board to adopt a flexible approach in assessing which of its members are best able to sit on and chair oral panels involving life sentence prisoners. Oral hearing panels, which do not include sitting or retired judges, already consider determinate cases and cases involving sentences of imprisonment for public protection (IPP). These cases can be just as difficult and complex as the cases of life sentenced prisoners.

The Parole Board already assesses non-judicial members as to whether they possess sufficient skills and experience to be effective in chairing IPP cases. Following the amendment of the 2011 rules, the process of assessment and additional training will be extended to all members in respect of serving on and chairing life sentence panels.

This Government regard the protection of the public as a priority and this change will help us create a more effective and efficient criminal justice system and will allow greater flexibility, given the demands on a sitting judge’s time.

Airspace Restrictions (Glasgow Commonwealth Games)

Tuesday 1st April 2014 Written Statements

[The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)]

The 20th Commonwealth games are due to take place in Glasgow this summer. While overall responsibility for the security of the games rests with Police Scotland, aviation is a matter reserved to the UK Parliament under devolution legislation. Police Scotland has, therefore, requested that the Government develop a set of temporary airspace restrictions from 13 July to 6 August to help protect the games venues from potential airborne risks.

Initial proposals were developed during the autumn of last year, based on a scaled-down version of the model used successfully during the London 2012 Olympic games. Police Scotland, working with colleagues from the Civil Aviation Authority (CAA), has subsequently engaged extensively with aviation representatives from the airports located within the proposed airspace restrictions to test the proposals and to develop mitigations to minimise the impact on business as usual.

As a result of that engagement work the Government, with the assistance of the CAA, refined their proposals and have now prepared the necessary statutory instruments to give effect to the temporary airspace restrictions that will be put in place for the Commonwealth games. NATS, the UK’s en route air traffic service provider and publisher of the UK’s aeronautical information, will be publishing the details of these regulations on 17 April 2014 in a number of aeronautical information circulars. In addition, full details of the planned airspace restrictions, including maps, will be published on the airspace safety initiative website at www.airspacesafety.com

In total there are six sets of regulations, two covering the Glasgow area (a core prohibited zone over the city’s Commonwealth games venues and athletes’ village, surrounded by a larger restricted zone), and four smaller restrictions of shorter duration, protecting specific events—the cycling time trials at Muirhead, the triathlon events at Strathdyde country park, the diving competition at the Royal Commonwealth pool in Edinburgh and the shooting competition at the Barry Buddon range near Dundee.

All the regulations have been designed to allow aviation business to continue as usual so far as possible, while ensuring the safety and security of the Commonwealth games. They also provide specific exemptions for aircraft such as those operated by the police or emergency medical services to enter the protected airspace. We do not expect that any airports within the restricted airspace will need to close as a result of the planned measures, and there should be no impact on scheduled air services that will be vital to competitors, officials and spectators.

The Government’s paramount objective is the delivery of a safe and secure 2014 Commonwealth games for all, and the airspace restrictions will help to provide this while minimising the impact on the aviation community, so far as possible. However, the Government reserve the right to implement additional airspace security measures should the need arise.

HGV Road User Levy

Tuesday 1st April 2014 Written Statements

[The Secretary of State for Transport (Mr Patrick McLoughlin)]

For the benefit of Members of the House, I am pleased to announce that from 00:00 this morning, all HGVs at or above 12 tonnes using UK roads have been required to pay a new time-based road user charge, the HGV road user levy. The introduction of the levy is a coalition Government commitment, and following the introduction of the HGV Road User Levy Bill in October 2012, has been delivered nearly a year ahead of schedule.

The introduction of such a measure in the UK has been called for over many years by our domestic haulage industry. The levy must be paid by foreign-registered and UK-registered HGVs alike, and creates a fairer system by removing some of the inequality UK hauliers feel when paying to use many roads abroad. The introduction of the levy ensures all HGVs make a contribution to the costs of UK road maintenance, irrespective of their country of origin.

The levy is structured in a series of bands to reflect vehicle type, maximum weight and axle configuration, with heavier, more road wearing HGVs paying the most. For a given vehicle type, the annual rates of levy and six-month rate of levy are the same for foreign and UK-registered HGVs.

The vast majority of UK hauliers will notice no difference. For over nine out of 10 UK-registered HGVs, the cost of the levy will be fully offset by reductions in vehicle excise duty (VED). The levy will be paid alongside VED in a single transaction so that unnecessary administration costs are not incurred.

Foreign HGVs must pay the levy before they use UK roads and can purchase for between a day and a year, with discounts available for longer periods. The introduction of the levy is one of a number of initiatives designed to help the haulage industry. We have introduced a trial of longer semi-trailers. We are spending £6 billion on maintaining motorway and trunk roads between 2015-16 and 2020-21 and providing over 500 miles of additional lane capacity to the strategic road network.

Duty on standard diesel is now lower than it was in October 2010. VED on HGVs has remained frozen during this Parliament and we have announced a decade’s worth of lower levels of duty for methane gas fuelled HGVs. The introduction of the levy is expected to bring in circa £20 million in taxation revenue and could lead to economic benefits through international haulage market share increases.

For ease of use, foreign operators making regular visits to the UK have been encouraged to pay online using registered accounts on gov.uk. Infrequent visitors to the UK can chose to “pay and go” and can make purchases online, at some point of sale facilities or by phone.

Non-payment of the levy is a criminal offence. The offence will generally be dealt with at the roadside via a fixed penalty notice of £300. On summary conviction a fine of up to level 5 on the standard scale—currently £5,000—will be payable for non-compliance. The Driver and Vehicle Standards Agency (DVSA) are leading on levy enforcement in Great Britain, and the Driver and Vehicle Agency (DVA) in Northern Ireland. Both agencies intend to enforce the levy through a combination of additional targeted stops and as part of existing road safety related stops. The police also have enforcement powers.

Office for Nuclear Regulation

Tuesday 1st April 2014 Written Statements

[The Minister of State, Department for Work and Pensions (Mike Penning)]

Today, I am announcing that the Office for Nuclear Regulation (ONR) has been created as the new independent statutory regulator of the nuclear sector. This follows my signing of an Order under part 3 of the Energy Act 2013 for this purpose. The ONR will operate as a public corporation.

The new ONR is responsible for the regulation of nuclear safety, nuclear site health and safety, nuclear security, nuclear safeguards and the transport of radioactive material.

As a public corporation outside of Government, the new regulator has increased agility to address the regulatory demands of an expanding nuclear industry, holding it to account on behalf of the public.

The Government announced plans in February 2011 for primary legislation to create this new regulatory body. The Energy Act 2013, which received Royal Assent in December last year, and its associated secondary legislation, provides the statutory basis for the new body’s operations.