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Mark Pawsey (Rugby) (Con)
1. What recent progress her Department has made on its policies and programmes to tackle female genital mutilation and early forced marriage.
The Secretary of State for International Development (Justine Greening)
Last year’s girl summit achieved unprecedented international commitments to end both practices. We are now tracking to ensure that those commitments and deliverables are delivered, and supporting national efforts in more than 25 countries. The UK is the largest donor on female genital mutilation and we are implementing major new programmes to end child and forced marriage.
Mark Pawsey
Violence against women is always unacceptable, but female genital mutilation is child abuse and illegal. In the UK, there is increasing awareness of this repugnant practice as a result of the work of agencies such as the Kaiza project in my constituency. What efforts are the Government making to improve international awareness of efforts to combat FGM and to bring the perpetrators to justice in courts across the world?
Justine Greening
I commend the work of the Kaiza project in my hon. Friend’s constituency. It does absolutely vital work locally. Internationally, we are working closely with national Governments in the affected countries to support the development and implementation of legislation and policy to end FGM. When a case reaches prosecution, it means that there has been a failure to prevent a girl from being cut, so our programme is focusing particularly on prevention.
Ann Clwyd (Cynon Valley) (Lab)
As the Minister knows, I have a particular interest in this subject, as I changed and tightened up the law in 2003. The Easter holidays are coming up, and many young girls will be taken out of the UK to their countries of origin in the school holidays to have FGM practised on them. What are we doing across Departments to protect those girls from that awful fate?
Justine Greening
There are two things. First, there is improved guidance from the Department for Education and, secondly, the right hon. Lady will know that at the girl summit last year we broadened the ability to prosecute people who are taking girls abroad to be cut.
Sir Malcolm Bruce (Gordon) (LD)
I commend the Secretary of State, her Department and her Ministers for their campaigning work on this issue on behalf of women and girls. May I ask her not to hold back in countries such as Sierra Leone, where secret societies perpetrate female genital mutilation? The girls do not even know what is happening to them and they do not discuss it. Will she work with campaigners in that country to ensure that the matter is addressed?
Justine Greening
My right hon. Friend is right to address that point. In spite of the challenges that Sierra Leone faces with Ebola, FGM has, ironically, stopped. This is because it was one of the main ways in which the disease could spread. The key now is to prevent those practices from coming back, and I am already having discussions on that.
Given that my right hon. Friend is leaving the House soon, I should like to take this opportunity to pay tribute to all the work that he has done as Chair of the Select Committee on International Development since 2005. The Committee has published more than 90 reports in that time. On a personal level, I have very much valued his objectivity and constructive working with our Department.
Mr Speaker
I think that proposition is widely endorsed throughout the House.
Valerie Vaz (Walsall South) (Lab)
Could the Secretary of State go further and make it a condition of aid that those countries eliminate these appalling practices?
Justine Greening
We have been careful to work with the momentum in many countries in Africa. One of our biggest challenges is that tackling female genital mutilation can be seen as some kind of western agenda. It is right that we should press those countries and work with them, but we should also be prepared to work with community groups at a grass-roots level if we cannot get the political will behind us. But the hon. Lady is absolutely right to say that, in the end, political will is needed if we are going to make significant progress.
Mary Macleod (Brentford and Isleworth) (Con)
Communication on FGM and forced marriage is essential at home and abroad. In just one of my local hospitals, 50 cases of FGM were discovered last year when the women happened to go in to give birth there. Will the Secretary of State work with the Education Secretary to ensure that we are getting that communication out to the next generation, internationally and at home?
Justine Greening
My hon. Friend is absolutely right. The most powerful thing about the girl summit last year was the young people themselves, many from our country, saying that they wanted a different future. That is why the work that we do domestically in this country is so important. Getting the girls themselves to say no is one of the best ways of eradicating FGM.
Lisa Nandy (Wigan) (Lab)
2. What assessment she has made of the humanitarian effects of the blockade of Gaza.
Guy Opperman (Hexham) (Con)
7. What assessment she has made of the effectiveness of the efforts made by the (a) UN and (b) UK to improve the humanitarian situation in Gaza.
The Minister of State, Department for International Development (Mr Desmond Swayne)
Movement restrictions damage the Gazan economy, with the result that 80% of Gazans are dependent on aid, 57% are dependent on food aid and 43% are unemployed. Most of the UK contribution to the relief effort is delivered through the United Nations Relief and Works Agency, and I judge that to be effective within the limitations of the funding and the movement restrictions.
Lisa Nandy
As winter approaches, the Minister will know that the humanitarian situation in Gaza remains dire. It is welcome that the UK has pledged £20 million to help, but what is his Government’s long-term plan, given the re-election this morning of the Prime Minister who believes that the continuation of the blockade of Gaza is a good thing; believes in the building of illegal settlements; has abandoned a two-state solution; and believes that the deaths of more than 2,000 people in Gaza last summer were “proportionate”? Surely now is the time for the Minister to put pressure on his ministerial colleagues, recognise the state of Palestine and end this appalling situation.
Mr Swayne
The hon. Lady is right in that the state of affairs in Gaza is desperate. However, on the recent events and the election, I am tempted to call in aid the wisdom of the Ents and say that we should not be hasty. It will be some time before the true policies of the new Government emerge, after long negotiations over a coalition. In the meantime, we remain committed to the two-state solution and we make our representations known on all the issues that she has raised, at the highest level.
Guy Opperman
What specific assessment has been made of the Gaza reconstruction mechanism? How many people have been accessing the building materials?
Mr Swayne
As of this morning, more than 60,000 individuals have had access to building materials, out of the in excess of 100,000 who need such materials. I am confident that the mechanism is working effectively, but clearly there will have to be a step change in movement and access which can result only from a lasting solution.
Mr Andy Slaughter (Hammersmith) (Lab)
Israel will have a Government opposed to a two-state solution and a Prime Minister who turned out his vote by an emergency broadcast that said:
“Arab voters are heading to the polling stations in droves.”
What is the international community going to do to get aid to Gaza, which is in occupation and under siege? How is the international community going to provide that aid when the occupation and siege are permanent?
Mr Swayne
A great deal of aid for Gaza was pledged at the Cairo conference. We have delivered a quarter of our pledge, and within the first few weeks of the financial year we will have delivered all of the £20 million we pledged. We have been entering into a considerable diplomatic effort to get other countries that have made pledges to step up to deliver, and I am glad to say that Qatar and Kuwait have now done so.
Michael Fabricant (Lichfield) (Con)
10. My right hon. Friend will know that some 600,000 tonnes of concrete have been used for the construction of illegal tunnels for smuggling and to enable the firing of weapons into Israel. How can he ensure that aid gets to the people who need it and not to Hamas?
Mr Swayne
One part of the Gaza reconstruction mechanism is the material monitoring unit, which my Department supports. It is designed specifically to do what my hon. Friend requests: to ensure that any materials supplied, stored and dispersed are for the proper purpose and that any infractions are reported.
Grahame M. Morris (Easington) (Lab)
The Minister says that we should wait and see what is going to happen in Israel, but now the mask has slipped and Netanyahu has said he will not allow a two-state solution and will not allow a Palestinian state. Is not the only solution that will relieve the suffering of the people in Gaza a concerted international action to lift the blockade?
Dr Julian Huppert (Cambridge) (LD)
I share the concerns about the election results in Israel and what they mean for people in Gaza and elsewhere in that region. On a number of occasions Israel has had restrictions on parliamentarians being able to cross at the Erez checkpoint to see what is happening in Gaza. Will the Minister seek to get that changed so that people can see what is happening to the aid that we provide and to the people there?
Lilian Greenwood (Nottingham South) (Lab)
3. What steps her Department is taking to improve working conditions in developing countries
The Minister of State, Department for International Development (Mr Desmond Swayne)
We are improving working conditions through our country programmes and through global standards. For example, in Bangladesh, we are providing £7 million to improve working conditions and safety in 1,800 factories, and we support labour practices globally through the ethical trading initiative.
Lilian Greenwood
I am sure that the Minister agrees that decent work is central to people’s well-being, as it provides income, paves the way for broader social and economic advancement, and strengthens individuals, their families and communities. Given the International Labour Organisation’s vital action on that agenda for almost 100 years, why have this Government withdrawn their funding?
Mr Swayne
We have not withdrawn funding. After the 2011 multilateral review, we withdrew core funding because we had reservations about value for money and we wanted to shift our focus to fragile states. We continue to work with the International Labour Organisation. We have a £7.4 million project with the ILO in Bangladesh, and, together, we are pursuing the Work in Freedom project. We will review that work with the International Labour Organisation at the next multilateral aid review, as the Secretary of State has already said.
Mrs Caroline Spelman (Meriden) (Con)
Does the Minister agree that the Government’s inclusion of a specific clause on transparency and supply chains in the Modern Slavery Bill will help to improve dialogue between workers and management in Bangladeshi garment factories?
Nic Dakin (Scunthorpe) (Lab)
9. World Vision tells me that there are 168 million child labourers worldwide. An investigation by The Guardian has revealed that child labour was used in a DFID-funded project in Nepal. Will the Minister tell us whether that is correct and indicate what will be done to ensure that it does not happen again?
Mr Swayne
The hon. Gentleman is right about the figure of 168 million. The only positive thing that one can say is that it has fallen by a third since 2000. The World Food Programme was involved in the project in Nepal, and the services of the supplier were discontinued. None the less, it reinforces the message—we must get this through using our international ethical trading initiative—that producers must take control of their supply chains.
Martin Horwood (Cheltenham) (LD)
The Government’s successful International Citizen Service led by Voluntary Service Overseas also promotes good public health and good business practice, including better working conditions, but an unintended consequence of the new universal credit rules may be inhibiting young claimants from volunteering for ICS. I know that the Secretary of State has been supportive of VSO, but will DFID Ministers raise this matter with the Department for Work and Pensions to prevent this unintended consequence on an excellent Government programme?
Bridget Phillipson (Houghton and Sunderland South) (Lab)
13. Nearly two years on from the Rana Plaza disaster in which thousands of garment workers were killed or injured when their factory collapsed, will the Minister update the House on the work he is doing with UK brands and retailers to ensure safe working conditions and fair pay?
Sir Roger Gale (North Thanet) (Con)
I think we can probably agree that, as a result of recent events, working conditions in Vanuatu are rather challenging. Will my right hon. Friend take this oblique opportunity to indicate what we are doing to assist?
Mary Creagh (Wakefield) (Lab)
In 2012 Human Rights Watch documented the loss of jobs and violent forced evictions of the Anuak people from their ancestral lands in Ethiopia. The World Bank project linked to those abuses was funded by the Minister’s Department. What steps did he take in 2012 to investigate those allegations of human rights abuses?
Mary Creagh
The right hon. Gentleman’s Department decided to stop funding that World Bank project only in January this year, and it announced that decision only the day before the World Bank published the findings of its investigation into those issues. Why did he take three years to act, and what steps has he now taken to ensure that British aid truly supports better working conditions and jobs for the poorest, and is never again linked to human rights abuses?
Glyn Davies (Montgomeryshire) (Con)
5. What steps her Department is taking to help children affected by the crisis in Syria.
The Secretary of State for International Development (Justine Greening)
The UK has pledged £800 million in response to the Syria crisis, providing food, medical care and relief items to some of those most affected, including children. That includes the £50 million that I announced at the UN General Assembly for the No Lost Generation initiative, which provides education, psychosocial support and protection for Syrian children affected by the crisis in Syria and the region.
Glyn Davies
Children are affected by crises around the world. What measures has my right hon. Friend’s Department taken in Vanuatu, particularly to help children, following the devastation caused by Cyclone Pam?
Justine Greening
Work is already under way to help ensure that around 50,000 children can get back to school quickly. As my hon. Friend will be aware, many people are now in evacuation centres, so I can give him some reassurance that work is already under way.
Fiona O'Donnell (East Lothian) (Lab)
I am sure that the Secretary of State has read the report by the all-party group on protecting children in armed conflict and is considering its recommendations. Given the growing and unprecedented number of childhoods lost though conflict, will she commit to having someone lead on that vital issue within her Department?
Justine Greening
The hon. Lady obviously has not yet received the letter I signed off to her earlier this week, which says precisely that. I commend her for the work she has done on the International Development Committee and on her interest in what is clearly a vital area. I can assure her that the Department will work with her.
Jason McCartney (Colne Valley) (Con)
11. Many of the 5.6 million displaced children in Syria are struggling to access education. What role is my right hon. Friend playing to ensure that we do everything we can to keep Syrian children learning?
Justine Greening
For those children in places such as Jordan and Lebanon we have programmes under way to ensure that they can double-shift with local children in schools. For the several million children still in Syria, ensuring that they can access education is clearly far harder.
Mr Gregory Campbell (East Londonderry) (DUP)
The plight of young people in Syria is being used by pernicious elements online to recruit young people from this country to go out to Syria. What steps are being taken to ensure that that is minimised?
Justine Greening
My right hon. Friend the Home Secretary is working hard, as part of her work on combating extremism, to ensure that those sorts of messages are disrupted so that young people in our country understand the huge risks they would face were they to break the law and go over to Syria to do jihad.
David Rutley (Macclesfield) (Con)
6. What progress her Department has made on its work to end aid dependency.
The Secretary of State for International Development (Justine Greening)
The route to ending aid dependency is through inclusive growth, creating jobs, raising incomes and increasing tax revenue. We have set out priorities in a strategic framework for economic development and will more than double our spending on economic development to £1.8 billion in 2015-16.
David Rutley
Does my right hon. Friend agree that it is vital not only to target aid at those who need it most, but to establish new models—business and social models—to help with health and hygiene as well as livelihoods in the communities that need it most?
Justine Greening
My hon. Friend is right to point out that our work on livelihoods can have far broader effects—for example, work with private sector companies such as Unilever can not only help to raise incomes and prosperity, but be a route by which employees can, in that example, improve health and hygiene measures.
Anas Sarwar (Glasgow Central) (Lab)
In the last year of the previous Government we spent £56 million on private sector development. That is projected to rise exponentially to £1.8 billion. Rather than the Conservative party’s ideological approach of trickle-down economics, should not that investment be made on the promise of decent work, fair pay, good conditions and the right to join a trade union?
Justine Greening
I can assure the hon. Gentleman that our work is about raising prosperity, raising incomes and helping people to get the dignity of work with, of course, the sorts of safeguards he talks about in relation to working conditions. We are right to expand our work in this area and I hope I can get cross-party support for that.
Julian Sturdy (York Outer) (Con)
T1. If she will make a statement on her departmental responsibilities.
The Secretary of State for International Development (Justine Greening)
Last Friday, Cyclone Pam hit Vanuatu, causing widespread destruction. Working closely with the Governments of Vanuatu, Australia and New Zealand, the UK has made up to £2 million available to UN organisations and relief agencies working on the ground. In addition, the Royal Air Force’s swift action is providing further valuable support, alongside the rapid response facility that we launched.
My hon. Friend will be aware that since the last DFID questions I have been to Sierra Leone to see our work gradually bearing down on Ebola. I am proud that the private Member’s Bill introduced by the right hon. Member for Berwickshire, Roxburgh and Selkirk (Michael Moore) has completed its parliamentary stages and now awaits Royal Assent.
Julian Sturdy
Volunteers in my constituency who had hoped to visit Sierra Leone to build a new school have, sadly, been forced to postpone their plans owing to the Ebola outbreak. However, will the Secretary of State join me in welcoming the York Circuit Ebola appeal run by those same volunteers, which aims to raise much needed funds for those affected by the epidemic?
Justine Greening
I pay tribute to the work of the York Circuit on its Ebola appeal. I know how valuable that work is in helping to set up emergency education programmes. We have worked with UNICEF to set up care centres across the country. I hope the volunteers in my hon. Friend’s constituency can get on with their wonderful work shortly. [Interruption.]
Mr Speaker
Order. It would help the House and people attending to our proceedings if the answers could be heard.
Rosie Cooper (West Lancashire) (Lab)
T3. What is the Secretary of State’s assessment of the strength of the Commission on the Status of Women’s political declaration and its implications for women’s rights?
Justine Greening
As the hon. Lady will know, this year’s CSW was a vital discussion in order to make sure that we do not slide backwards on women’s rights, but position ourselves to get a stand-alone gender goal and mainstreamed improvements on tackling women’s rights across the new post-2015 framework. As it was hard for me to hear the whole of the hon. Lady’s question, I will check Hansard and write to her with a fuller response.
David T. C. Davies (Monmouth) (Con)
T2. Given the need to ensure in these dangerous times that our armed forces are properly funded, does my right hon. Friend agree that peacekeeping operations should be paid for in their entirety from the foreign aid budget, and that no cost should come out of the armed forces budget?
Justine Greening
My hon. Friend will be pleased to hear that currently a percentage of peacekeeping operations count as official development assistance. That is currently 7%, although I am sure he would like it to be higher. He will be pleased to hear that a review is under way to understand what element of peacekeeping can be classed as aid and it will report shortly.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
T7. One of my excellent community groups in Saddleworth supports Palestinian women into education. Members of the group inform me that one of the education centres that they know well was recently ransacked by Israeli forces. The education centre is in Palestinian territory. Does the Secretary of State agree that not only are these actions illegal, but they jeopardise future sustainable peace in the region?
Justine Greening
Much of our work in the occupied Palestinian territories focuses on providing basic services, including education. At the Cairo conference one of the main concerns of donors was the need to end the perpetual cycle of violence, reconstruction, then destruction and violence and the need for more reconstruction. I agree with the hon. Lady that this cannot continue ad nauseam.
Jeremy Lefroy (Stafford) (Con)
T4. Last month my hon. Friend the Member for Congleton (Fiona Bruce) and I had the honour of meeting Eileen Lodge, who has committed 60 years of her life to working for the poor and sick in Nepal. Does my right hon. Friend agree that the work of her Department would be impossible without the dedication of hundreds of millions of people, of all nationalities, who serve in difficult and dangerous situations, often for little or no financial reward?
Justine Greening
Eileen is a fantastic example of someone who has worked in a country tirelessly for several decades now. I know that she is particularly focused on Nepal and has worked on leprosy. I really want to pay tribute to the work done by her and by so many millions of others.
Ian Murray (Edinburgh South) (Lab)
Q1. If he will list his official engagements for Wednesday 18 March 2015.
The Prime Minister (Mr David Cameron)
This morning I had meetings with ministerial colleagues and others. In addition to my duties in this House I shall have further such meetings later today.
Ian Murray
The Chancellor said in his first Budget:
When we say that we are all in this together, we mean it.—[Official Report, 22 June 2010; Vol. 512, c. 167.]
When the Prime Minister and the Chancellor came up with such a vacuous soundbite, was it before they decided to give a £42,000 a year tax cut to millionaires, or before they attempted and failed to eliminate the deficit on the backs of the poorest?
The Prime Minister
The fact is that the hon. Gentleman cannot hide from the statistics that show that inequality is down, poverty is down, 3 million of the poorest people have been taken out of income tax altogether, and, most importantly, we have created jobs for tens of thousands of our fellow countrymen and women. Today, we see the unemployment statistics with a record number of people in work. In his constituency—I would have thought he would want to welcome this—the claimant count has fallen by 49% since the election. That is what has happened; that is how we are beating poverty.
Chris Kelly (Dudley South) (Con)
Q15. When this Government took office, metal theft was rife, especially in the black country. This Government listened to the all-party group on combating metal theft, banned cash payments, and passed the Scrap Metal Dealers Act 2013. Once my right hon. Friend has been returned for another term as Prime Minister, what more will he do to ensure that instances of this abhorrent crime reduce still further so that no more church roofs get horrendously damaged and no more trains get stopped in their tracks as a result of sheer greed?
The Prime Minister
My hon. Friend is absolutely right. This is an important line of crime that has been increasing, not least because of the value of this scrap metal. The roof on Witney church in my constituency has been stolen. We have made sure that scrap metal dealers are required to hold licences and councils can revoke a licence at any time. We have banned cash payments to purchase scrap metal, and we have provided £6 million of additional funding for a dedicated national metal theft taskforce. What I will do, if re-elected, is make sure the police continue to have the powers and the ability to crack down on this abhorrent crime.
Edward Miliband (Doncaster North) (Lab)
The Prime Minister promised before the last election no “top-down reorganisations” of the NHS. In the words of the chairman of the Conservative party, would he describe this as an “over-denial” or simply a straightforward broken promise?
The Prime Minister
What we did was we took the bureaucracy out of the NHS. We made two big decisions. Big decision No. 1 was to put more money in, and big decision No. 2 was to take the bureaucracy out. That is why we have 9,500 more doctors and 7,000 more nurses. I can see the shadow Chancellor chuckling. We know the shadow Chancellor wants to be in the kitchen Cabinet; he just does not know which kitchen to turn up to.
Edward Miliband
Somehow I thought the Prime Minister might mention kitchens. Let me just say that at least I paid for my kitchen, unlike the Government Chief Whip.
Let us get back to the NHS. First broken promise: on top-down reorganisation. Next, 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&E”.
Now we learn that the NHS will miss the four-hour A and E target for the whole of this year for the first time ever. Why did he break that promise?
The Prime Minister
Which of his kitchens did he pay for? I think we deserve an answer. I feel sorry for the Leader of the Opposition—he literally does not know where his next meal is coming from. [Hon. Members: “More.”] Oh, don’t worry, there is plenty more.
The right hon. Gentleman asked about accident and emergency. So far this year, 93.7% of people have been seen within the four hours. I want us to do better—we will bring together health and social care to make that happen—but we made a promise, which was that we would put £12.7 billion into the NHS. The Opposition said it was irresponsible; we invested in our health service.
Edward Miliband
That is another broken promise on accident and emergency. Now let us turn to cancer. On cancer, the Prime Minister said that the key issue was how long people had to wait to get treatment, but the NHS is missing the 62-day treatment target. Why did he make that promise?
The Prime Minister
Let me bring the right hon. Gentleman closer to home—genuinely, to his home in Doncaster. [Interruption.] This is the answer. Here are the cancer waiting times for his constituents: 95.2% of patients with suspected cancer were seen by a specialist within two weeks, and the target is 93%—target met; 97.9% of patients diagnosed with cancer began treatment within 30 days, and the target is 96%—target met; and 87% of patients began cancer treatment within 62 days of an urgent GP referral, and the target is 85%—target met. The fact is that on the NHS we have put in the investment, we increased the doctors and we increased the nurses. Frankly, if he cannot stand the heat, he had better get out of his second kitchen.
Edward Miliband
I think that was a long-winded way of saying the Prime Minister has broken his promises on the NHS. Now let us turn to another one of his promises. He promised “a bare-knuckle fight” to stop the closure of A and E and maternity units. He even did photo calls outside the hospitals whose units then closed. Why did he break the promise?
The Prime Minister
I am very glad that the right hon. Gentleman has raised this issue, because at a previous Prime Minister’s questions he stood at the Dispatch Box and produced a list of, I believe, 27 hospitals, seven of which were shut under a Labour Government. That is how incompetent he is as Leader of the Opposition. Just imagine what a mess he would make if he was running the country.
Edward Miliband
Great, because I have a photo of the Prime Minister at Chase Farm hospital, and he said that
“if you call an election on November 1, we’ll stop the closure of services at this hospital on November 2”.
Then he closed the services. That is what happened on his watch.
Since the last election, the Prime Minister has broken his health service promises on waiting times, cancer treatment, A and E and top-down reorganisation. When he makes a whole series of new NHS promises, why on earth should anyone believe him?
The Prime Minister
I will tell you why people should believe us: because we have the strong economy that can deliver a strong NHS. We promised more money for our NHS—promise delivered; we promised more nurses for our NHS—promise delivered; we promised more doctors for our NHS—promise delivered; and we said that we would sort out mixed-sex wards and hospital-acquired infections—promise delivered. Is it not interesting that the right hon. Gentleman has asked five questions and there has not been one mention of the unemployment figures today? The right hon. Gentleman cannot bear the fact that the employment rate in our country is at a record level: there is a record number of people in work; there is a record number of women in work; there is a record number of vacancies. That is what this country is delivering—a strong economy that builds a strong NHS.
Edward Miliband
People are worse off and the NHS is worse off on the Prime Minister’s watch, and that is why working families cannot afford another five years of him. Everybody knows the NHS cannot survive another five years of this Government. The NHS was built by Labour, saved by Labour and will only be safe in the hands of the next Labour Government.
The Prime Minister
There is only one Government in the history of the NHS who have cut the NHS and they were the last Labour Government in the ’70s: they did it because they lost control of the economy. Every forecast the right hon. Gentleman has made about the economy has been wrong. He said there would be no jobs; we have record jobs. He said we would not cut the deficit; the deficit is down. He said there would not be growth; we have the strongest growth of any major western economy. He has made misjudgment after misjudgment on every single question. We talk about our long-term economic plan because it is about changing lives, it is about jobs, it is about livelihoods and it is about giving people the chance of security—that is what will be on the ballot paper in 50 days’ time, and they will never trust him with the future of our country.
Mr Speaker
I call Jesse Norman. The hon. Gentleman is not here.
I call Sir Malcolm Bruce.
Sir Malcolm Bruce (Gordon) (LD)
Does the Prime Minister agree that the best prospect for the people of Scotland is to be a successful part of a growing United Kingdom, and that Alex Salmond’s mission to shake this House to its foundations will deny recovery, jobs and mortgages, and threaten both the UK and Scotland, which is why the people of Gordon are uniting to deny his return to this House?
The Prime Minister
My right hon. Friend makes an important point, which is that what the SNP wants is to break up our country. That is why it is so appalling that although the Leader of the Opposition has now said that he does not want a formal pact with the SNP, he will not rule out a confidence and supply agreement. He will not rule out relying on the SNP in vote after vote after vote, making sure that it would get the advantage and people in England, Wales and Northern Ireland would be let down—[Interruption.] Yes, we rule it out. What I would say to the shadow Chancellor is that his boss threw both his kitchen sinks at the NHS and he still could not win. [Interruption.]
Mr Speaker
Order. I say to Opposition Members that the hon. Member for Erith and Thamesmead (Teresa Pearce) must be heard.
Teresa Pearce (Erith and Thamesmead) (Lab)
Q2. One in four patients is waiting more than a week for a GP appointment, and some in my constituency are waiting two weeks. A third cannot even get through on the phone, but 23% of London GPs are due to quit the NHS in the next five years. Will the Prime Minister take responsibility for the increasing crisis in GPs on his watch?
The Prime Minister
What I would say to the hon. Lady is that nationwide we have 1,000 more GPs in the NHS. In her constituency, there are eight more GPs compared with 2010, there are 317 more GPs in the London area, and the Royal College of General Practitioners, which has often criticised the Government, has said that there has never been a better time to go into general practice.
James Morris (Halesowen and Rowley Regis) (Con)
Q3. The black country economy in the west midlands has been one of the fastest growing local economies of any region in the United Kingdom over the last two years, with more investment in manufacturing, new high-skill jobs, more exports and better opportunities for local people in my constituency. Would the Prime Minister agree that as part of our long-term economic plan, the people in the black country can be proud of that industrial revival, and be confident in saying that things are made in the black country and sold around the world?
The Prime Minister
My hon. Friend makes an important point. It is a remarkable statistic that growth value added in the black country means that the area has grown faster than any other local enterprise partnership area in the entire country. Compare that with the so-called boom years of the 2000s, when private sector employment in the west midlands went down, not up, and it shows that we are seeing a genuinely national recovery. Huge credit must go to Jaguar Land Rover which, in the last five years, has tripled its turnover, doubled its sales and doubled its work force. Manufacturing in Britain is growing again, including in the west midlands, and we should be proud of that.
Natascha Engel (North East Derbyshire) (Lab)
Q4. In January, John Smedley in Clay Cross announced that it was making 21 seamstresses redundant. It took nearly two months before someone from the Jobcentre Plus rapid response team went in to see those women. The response was unsympathetic, unhelpful and anything but rapid. What has happened to rapid response and why have those workers been so badly let down?
The Prime Minister
I agree with the hon. Lady: it is important that Jobcentre Plus is there to help employees when they are let go by their employers. That is what it is there for. Generally speaking, I hear very good reports of what it does. Of course, in her constituency, the claimant count has come down in the last year by 29%, so the overall economic picture is good. I will certainly look at the specific case and see if Jobcentre Plus needs a boost, but the fact is that jobs are being created and the vacancies are there. The hon. Lady talks about seamstresses, and we are actually seeing production in the garment industry being brought back onshore, which is very good news.
Karen Lumley (Redditch) (Con)
Q13. The unemployment count in Redditch at the end of the year had fallen to below 850 for the first time since 2005. Does my right hon. Friend agree that it would be catastrophic for the hard-working people of Redditch if that was undone by the Labour party?
The Prime Minister
I thank my hon. Friend for her question. Today’s figures are remarkable. We see employment up by 1.89 million since the election. We used to talk about creating 2 million private sector jobs; it is now 2.3 million private sector jobs. Another figure fresh out today is the youth claimant count, which is now at its lowest rate since the 1970s, 40 years ago. In Redditch, the claimant count has fallen by 63% since the election and the youth claimant is count down by 39% in the last year alone. The plan is working. It is not just dry and dusty statistics: this is about people getting a job, getting a livelihood, getting security. That is what we want to keep going.
Jim Sheridan (Paisley and Renfrewshire North) (Lab)
Q5. The Prime Minister will be well aware of the hard work that went into the Smith agreement. He will be as disappointed as I am to see the front page of the Daily Record today showing four Scottish National party councillors burning that very agreement. Not only did they escape discipline; one of them was actually promoted. Are these the actions of a party that seeks to increase its representation in this place?
The Prime Minister
The hon. Gentleman makes an important point, which is that the Smith process and the Smith agreement was about bringing together different political parties, which often disagree with each other quite violently on issues, to come to the right answer for the future of Scotland and the future of devolution. It was an excellent report. We are all committed to putting it in place, whoever is in government after the next election. It is disappointing that the SNP, which only wants to break up our country, will not stick to the promises it made.
Duncan Hames (Chippenham) (LD)
Last June, I asked the Prime Minister if he was satisfied with police investigations into organised child sexual abuse. By November, the Home Secretary acknowledged that years ago there might have been a cover-up. This week, we learned that the Met itself has identified as many as 14 cover-ups. Now that we have a judge-led inquiry, is it not time we treated this scandal, in the words of the Independent Police Complaints Commission, as
“high level corruption of the most serious nature”?
It went to the very core of the British state.
The Prime Minister
My hon. Friend is right to say how serious this is. It is right that not only is there an Independent Police Complaints Commission investigation into what happened in the police force, but that a separate part of the Metropolitan police is carrying out an in-depth investigation, Operation Fairbank, into what happened. Added to that, we now have the overarching Justice Goddard review to look at institutional failings in discovering child sexual abuse. What I would say to my hon. Friend and others in the House who I know are very interested in this issue is that we will do everything we can to get to the bottom of what happened. Anyone who is worried about whether people will be prosecuted under the Official Secrets Act for coming forward with information should be reassured by the assurances that have been given by the Attorney-General and the Home Secretary. It is in everybody’s interest that we get absolutely to the bottom of what happened. If people should be punished for their failures, they should be.
Fiona Mactaggart (Slough) (Lab)
Q6. When the Prime Minister answered the Leader of the Opposition, he was able to show that cancer waiting targets had been met in my right hon. Friend’s constituency. They obviously have a very effective Member of Parliament, but—[Interruption.] The Prime Minister is responsible for the national health service as a whole. He will be aware that nationally the 62-day wait for treatment for cancer patients after referral has been breached in each of the last four quarters. What does he have to say to the more than 5,000 cancer patients, including one in four people with bowel or lung cancer, who are waiting months before they get any treatment?
The Prime Minister
Everybody in this House, me included, knows people who have been affected by cancer and have died of cancer. This Government have put an enormous amount of effort, as previous ones have done—[Interruption.] I will answer the question. I will answer the question very directly, right? We have made sure—[Interruption.]
Mr Speaker
Order. Members must hear the answer. I said it a moment ago to the other side. The Prime Minister must be heard.
The Prime Minister
We have made sure that half a million more people have been referred for cancer treatment, and as a result, cancer survival rates are going up. As well as looking at the national figures, it is worth while looking at constituency figures, and I have the right hon. Lady’s figures here—she is obviously a very effective MP too, because her area is meeting all three cancer targets. That is what is happening in Britain—more people referred, more resources going in, more people surviving, but more to be done—but let me remind her: this can only happen with a strong economy. It is when the Labour party wrecks the economy that it wrecks the health service.
Sir Peter Bottomley (Worthing West) (Con)
My right hon. Friend has made the point that it is the economy that makes health service funding possible. What has happened to employment, inflation and the minimum wage over the last five years?
The Prime Minister
Yesterday, the announcement was made that the minimum wage should increase from £6.50 to £6.70, which is a real-terms increase. After the great Labour recession, we did not have increases in the minimum wage and it lost its value, but under this Government, it is going up. I can guarantee my hon. Friend that if we keep increasing the minimum wage at the rate it is being increased now, it will get to beyond £8 by the subsequent election. So Labour’s proposal for an £8 minimum wage will mean a cut in the minimum wage. It is like so many of its other policies, including its university tuition fees policy—as someone said today, the first example in political history where you get less for more.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
Q7. My neighbour Helen was able to live in her own home for many years with degenerative multiple sclerosis because of the independent living fund, until sadly she died. How can the Prime Minister and the Government morally justify taking away the fund from the most disabled people in our communities, so that they might end up being institutionalised, not independent?
The Prime Minister
As the hon. Gentleman knows, we have devolved the funding for the independent living fund, but we have also maintained the vital disability benefits, such as the disability living allowance, which has been uprated every year in line with inflation.
John Howell (Henley) (Con)
Q12. Does my right hon. Friend agree that our long-term economic plan is doing an outstanding job in my constituency? Unemployment now stands at 269, making it the best performance of any constituency in the country. Will he join me in thanking the firms that I visited last week in Thame that are running fantastic apprenticeship schemes, and the young people joining them?
The Prime Minister
I will certainly do that. I am delighted that unemployment is so low in my hon. Friend’s constituency. The latest figures show that the UK’s employment rate has seen the largest rise of any G7 country over the past year. Today, there are nearly 1 million fewer people on the main out-of-work benefits and nearly 2 million more people in work in our country. More young people have got into work in the UK over the past year than in the rest of the European Union put together. Those are the benefits of having a long-term economic plan, sticking to a long-term economic plan and ignoring the hopeless advice from the Labour party.
Ian Lavery (Wansbeck) (Lab)
Q8. Despite the Prime Minister’s fine words and rhetoric, his Government’s cost of living crisis has hammered many families in the north-east. Tens of thousands of public sector jobs have been butchered; we have the highest unemployment level in the UK; we have weekly earnings £71 less than the national average; and our life expectancy is 10 years less than anywhere else in the country. Is it not time that the Prime Minister showed some guts and apologised to the people of the north-east?
The Prime Minister
Let us look at what has happened in the hon. Gentleman’s constituency. The claimant count has fallen in the last year by 28%, or more than a quarter, and in the last year alone—not over the whole Government—the youth claimant count has fallen by 32%. I thought this was the party that said how important it was to get young people off the dole and into work. That is what the Government have done. Unemployment has fallen in every region of the UK. In the north-east, it has fallen by 21,000 over the last year. That is what is happening. We are creating jobs, generating growth and taking the poorest people out of tax altogether—3 million nationwide. [Interruption.] Labour Members say, “Calm down”. I cannot calm down when I see the success that our long-term economic plan is generating. We have 50 days to make sure that the people who delivered this plan can go on delivering it, instead of the people who would wreck it.
Mr Nigel Evans (Ribble Valley) (Con)
Q9. On that theme, BAE Systems, which manufactures world-beating military jets, announced that it is to set up a training academy in the Ribble Valley, upskilling the current work force and bringing on new talent via its ambitious apprenticeship scheme. Will the Prime Minister welcome the £15.6 million investment in this training academy, and when it opens next year, will he visit the Samlesbury site in his continuing capacity as the Prime Minister of our great country?
The Prime Minister
I am very grateful for the invitation. I was at BAE’s other main site in the north-west, the Warton site, last week as part of the celebration of national apprenticeship week. I was looking at the training and the skills being delivered there. It is hiring 440 apprentices this year, which is a record for BAE Systems which is doing very well under this Government. This is vital work. We have delivered 2 million apprentices in this Parliament and we aim to deliver 3 million in the next Parliament. These manufacturing apprenticeships are particularly vital. So yes, I will certainly take up my right hon. Friend’s invitation to come and open this excellent academy.
Keith Vaz (Leicester East) (Lab)
Last Saturday, the Prime Minister spoke at the unveiling of the magnificent Mahatma Gandhi statue in Parliament square. I observed him in deep conversation with Arun Jaitley, the Indian Finance Minister, and Amitabh Bachchan, the country’s greatest actor. Which man offered him the best advice for the next election? Was it the person who presented a budget that will affect a sixth of humanity, or an actor whose acting tips might well help the Prime Minister in the TV debates?
The Prime Minister
I am very grateful that the right hon. Gentleman was able to attend that beautiful ceremony around the superb statute. There was a great turnout of Members of Parliament, schoolchildren and others to see the extraordinary statue. I think it is quite right that Mahatma Gandhi stands there alongside Churchill and Mandela in such an important square for our nation. As for the advice I was given, those were private conversations, so I shall not delve too far into them. All I will say is that the new Indian Government and the reforms they are making, opening up the Indian economy, will make sure that the relationship between our countries becomes stronger still.
Paul Uppal (Wolverhampton South West) (Con)
Q10. Just over a fortnight ago, the Secretary of State for Transport visited Wolverhampton and reached a conclusion that I and almost every resident has reached: that the station is desperately in need of an upgrade. Locally, Centro, working with developer, Neptune, has come up with an innovative deal, bringing £80 million and 1,300 jobs, to make sure that we continue investment in the city. Will my right hon. Friend use his offices, along with the DFT, to ensure not only that Wolverhampton gets a station, but that we increase the industrial renaissance in the west midlands that we have seen over the last five years?
The Prime Minister
First, let me pay tribute to my hon. Friend for the incredibly hard work he has put in to campaign for that station. I can tell him that, following the visit of the Secretary of State for Transport, £13.5 million has been secured through the local transport and growth deal to fund the project. It is because of my hon. Friend’s hard work that it is going ahead. It is essential that Wolverhampton benefits from good road, rail and other infrastructure connections so that it can benefit from the growth we are seeing in our country.
Liz McInnes (Heywood and Middleton) (Lab)
Q11. The Prime Minister has a record of looking the other way when it comes to allegations of wrongdoing in his own team. He did it with Andy Coulson and he is doing it now with the right hon. Member for Welwyn Hatfield (Grant Shapps). Can the Prime Minister explain why he has been so quick to rule out an investigation into his own party’s chairman?
The Prime Minister
I would have thought that with all the things happening in the part of the world that the hon. Lady represents, she could have come up with a better question. My right hon. Friend has acknowledged that he made a mistake, but his entry in the Register of Members’ Financial Interests was correct. I think the hon. Lady is barking up the wrong tree. While I am here, let me say that I am sure she will want to welcome the fact that the claimant count in her constituency has fallen by 54% since the last election.
David Morris (Morecambe and Lunesdale) (Con)
I want to thank the Prime Minister for steering this country in the past five years through economic waters never seen before, caused by the previous Labour Government. Does he agree that 765,000 people starting up their businesses since 2010, the highest quota since the 1980s, is a good thing—unlike the Labour party, when it caused the collapse in the labour market?
The Prime Minister
My hon. Friend is absolutely right. Some 95% of the jobs that have been created over the last year have been created for employees in businesses, but we have also seen a big increase in entrepreneurism and business start-ups in our country, lighting the fires of enterprise. That is vital, because those individuals will go on to build great companies, build our industrial base, and provide the jobs of the future. Yes, my hon. Friend is right: so often in the House we talk about our growing economy, and never hear one word of regret from the people who crashed the car in the first place.
Mr Tom Watson (West Bromwich East) (Lab)
This week it was revealed that a second criminal inquiry into a former Member of this House, Sir Cyril Smith, had been closed down by senior police officers, and I believe that there are other examples of cover-ups which are yet to be revealed. Notwithstanding the reassurances from the Home Secretary, will the Prime Minister please give a cast-iron guarantee that former public officials with knowledge of the cover-ups are given full whistleblower protections?
The Prime Minister
I am grateful to the hon. Gentleman for asking that question, which I think comes down to three separate questions. There is concern about whether people will be prosecuted under the Official Secrets Act. In terms of people giving evidence to the Goddard review, Justice Goddard is perfectly able to ask the Attorney-General—as has happened in the case of all previous commissions of inquiry of this type—to make sure that no one can incriminate themselves when they give evidence, and I am sure that that will happen. In terms of giving evidence to the IPCC inquiry, the Home Secretary has given very clear guidance. And in terms of disclosure to the press, the Attorney-General said very recently that it was highly unlikely that it would ever be in the public interest for someone who revealed wrongdoing to be subject to prosecution. I am absolutely clear about the fact that I do not want anyone to be prosecuted for uncovering wrongdoing in such a way, and I hope that the hon. Gentleman will take that in the spirit in which it was meant.
Petition
(9 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text
Keith Vaz (Leicester East) (Lab)
I wish to present a petition signed by 120 residents and business owners who continue to be inconvenienced by overrunning roadworks around Belgrave in my constituency. The petition was co-ordinated by local volunteers in the area, led by the lord mayor, Councillor John Thomas, Councillor Manjula Sood and prospective councillor Mansukhlal Chohan. We expected the works to be completed by now. Even though they are in their final phase, they are not completed.
The petition states:
The Petition of residents of Leicester East,
Declares that the delayed roadworks in Belgrave, Leicester, which are part of an agreement made between Sainsbury’s and Leicester City Council, are causing significant problems for businesses and residents in the area.
The Petitioners therefore request that the House of Commons urges the Government to investigate this case, and call upon Sainsbury’s to honour their commitments and expedite the completion of these works. The Petitioners require assurances these roadworks and surrounding problems are addressed before seriously impacting residents and businesses over the Christmas period.
And the Petitioners remain, etc.
[P001453]
Ways and Means
(9 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text
Financial Statement
(9 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Deputy Speaker (Mr Lindsay Hoyle)
Before I call the Chancellor of the Exchequer, I remind all Members that copies of the Budget resolutions will be available in the Vote Office at the end of the Chancellor’s speech. I also remind all Members that it is the norm not to intervene on the Chancellor of the Exchequer or the Leader of the Opposition.
The Chancellor of the Exchequer (Mr George Osborne)
Today I report on a Britain that is growing, creating jobs and paying its way. We made difficult decisions in the teeth of opposition, and it worked: Britain is walking tall again.
Five years ago, our economy had suffered a collapse greater than that suffered by almost any other country. Today I can confirm that in the last year we have grown faster than any other major advanced economy in the world. Five years ago, millions of people could not find work. Today I can report that more people have jobs in Britain than ever before. Five years ago, living standards were set back years by the great recession. Today the latest projections show that living standards will be higher than they were when we came to office. Five years ago, the deficit was out of control. Today, as a share of national income, it is down by more than a half. Five years ago, they were bailing out the banks. Today I can tell the House that we are selling more bank shares and getting taxpayers’ money back. We set out a plan, that plan is working, and Britain is walking tall again.
So the critical choice facing the country now is this: do we return to the chaos of the past or do we say to the British people, “Let’s go on working through the plan that is delivering for you”? Today we make that critical choice: we choose the future. We choose, as the central judgment of this Budget, to use whatever additional resources we have to get the deficit and the debt falling. No unfunded spending, no irresponsible extra borrowing; for no short-term give-away can ever begin to help people as much as the long-term benefits of a recovering national economy. In the emergency Budget I presented to this House five years ago, I said we would turn Britain around, and in this last Budget of the Parliament, we will not waver from that task, because we choose the future.
Our goal is for Britain to become the most prosperous major economy in the world, with that prosperity widely shared. So we choose economic security. This Budget commits us to the difficult decisions to eliminate our deficit and get our national debt share falling. We choose jobs. This Budget does more to back business and make work pay, so we create full employment. We choose the whole nation. This Budget makes new investments in manufacturing and science and the northern powerhouse for a truly national recovery. We choose responsibility. This Budget takes further action to support savers and pensioners. We choose aspiration. This Budget backs the self-employed, the small business owner and the home buyer. We choose families. This Budget helps hard-working people keep more of the money they have earned. This is a Budget that takes Britain one more big step on the road from austerity to prosperity. We have a plan that is working, and this Budget works for you. [Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I am struggling to hear what the Chancellor of the Exchequer is saying. I am sure that all Members in the House want to hear the Chancellor; but, more importantly, so do our constituents.
Mr Osborne
The British economy is fundamentally stronger than it was five years ago, and that is reflected in the latest forecasts from the Office for Budget Responsibility. It seems remarkable that until this Government came to office, our national forecasts were manipulated by Chancellors, to be fiddled and fixed in pre-election Budgets. Today they are produced with independence and integrity by Robert Chote and his team, and I want to thank them for their work. The OBR confirms today that, at 2.6%, Britain grew faster than any other major advanced economy in the world last year. That is 50% faster than Germany, three times faster than the eurozone and seven times faster than France. There are some who advise us to abandon our plan and pursue the French approach. I prefer to follow the advice of the secretary-general of the OECD, which he gave to us all last month. He said:
“Britain has a long term economic plan”
and
“it needs to stick with it.”
“A long-term economic plan”—now there’s someone with a way with words. We need to stick with that plan, at a time when global economic risks are rising.
The biggest development since the autumn statement has been the further sharp fall in the world oil price. This is positive news for the global economy, but the overall boost this provides has not yet offset the rising geopolitical uncertainty it causes, and the eurozone continues to stagnate. So at this Budget, the OBR has once again revised down the growth of the world economy, revised down the growth of world trade and revised down the prospects for the eurozone. It warns us that the current stand-off with Greece could be very damaging to the British economy. I agree with that assessment. A disorderly Greek exit from the euro remains the greatest threat to Europe’s economic stability. It would be a serious mistake to underestimate its impact on the UK, and we urge our Eurozone colleagues to resolve this growing crisis.
The problems in Europe remind us why Britain needs to expand our links with the faster growing parts of the world. We have made major progress in this Parliament. I can report that the trade deficit figures published last week are the best for 15 years, and we will do even more, so today I am again increasing UK Trade & Investment’s resources to double the support for British exporters to China. We have also decided to become the first major western nation to become a prospective founding member of the new Asian Infrastructure Investment Bank, because we think we should be present at the creation of these new international institutions.
Mr Deputy Speaker, you would expect weaker world growth, weaker world trade and weaker European growth to lead to weaker growth here in the UK. However, the OBR has not revised down Britain’s economic forecasts; it has revised them up. A year ago, it forecast growth in 2015 at 2.3%. In the autumn statement, that was revised up to 2.4%. Today I can confirm that GDP growth this year is forecast to be higher still, at 2.5%. It is also revised up next year, to 2.3%. That is where it remains for the following two years, before reaching 2.4% in 2019.
The OBR reports growth revised up, and its numbers confirm that growth is broadly based, for we are replacing the disastrous economic model we inherited. Between 1997 and 2010, investment accounted for less than one fifth of Britain’s economic growth—four fifths came from debt-fuelled household consumption. Meanwhile, manufacturing halved as a share of our national economy, and the gap between the north and the south grew ever larger.
I can report that since 2010 business investment has grown four times faster than household consumption; Britain’s manufacturing output has grown more than four and a half times faster than it did in the entire decade before the crisis; and over the last year, the north grew faster than the south. We are seeing a truly national recovery.
Let me turn now to the rest of the forecasts. This morning we saw the latest job numbers. It is a massive moment. Britain has the highest rate of employment in its history—a record number of people in work and more women in work than ever before—and the claimant count rate is at its lowest since 1975. For years, Governments have talked about full employment. This Government are moving towards achieving it.
Unemployment today has fallen by another 100,000, and compared with the autumn statement, the OBR now expects unemployment this year to be even lower. It is set to fall to 5.3%, down almost a whole three percentage points from the rate we inherited from the last Government. When we set out our plan, the Leader of the Opposition predicted that a million jobs would be lost. Instead, over 1.9 million new jobs have been gained, because our long-term plan is based on the premise that if we provide economic stability, if we reform welfare and make work pay, and if we back business, then we will create jobs too. Today’s figures show that under this Government 1,000 more jobs have been created every single day. The evidence is plain to see: Britain is working again.
What about all those who say, “The jobs aren’t real jobs; they’re all part-time; they’re all in London”? Nonsense. How many of the jobs are full time? Eighty per cent. How many of the jobs are in skilled occupations? Eighty per cent. Where is employment growing fastest? In the north-west of England. Where is a job being created every 10 minutes? In the midlands. Which county has created more jobs than the whole of France? The great county of Yorkshire. We are getting the whole of Britain back to work with a truly national recovery.
It is only by growing our economy, dealing with our debts and creating jobs that we can raise living standards. To the question whether people are better off at the end of this Parliament than they were five years ago, we can give the resounding answer yes. We can measure it by GDP per capita, and the answer is, yes, it is up by 5%. Or we can use the most up-to-date and comprehensive measure of living standards, which is real household disposable income per capita—in other words, how much money families have to spend after inflation and tax. This is the living standards measure used by the Office for National Statistics and by the OECD. On that measure, I can confirm that, on the latest OBR data today, living standards will be higher in 2015 than in 2010. They confirm that they are set to grow strongly every year for the rest of the decade.
The British people for years paid the heavy price of the great recession. Now the facts show that households on average will be about £900 better off in 2015 than they were in 2010—and immeasurably more secure for living in a country whose economy is not in crisis any more, but is instead growing and creating jobs.
Because we have strong growth and a strong economy, we can also afford real increases in the national minimum wage. This week we accept the recommendations of the Low Pay Commission that the national minimum wage should rise to £6.70 this autumn, on course for a minimum wage that, as the Prime Minister just said, will be over £8 by the end of the decade. And we have agreed the biggest increase ever in the apprentice rate. It is the oldest rule of economic policy: it is the lowest paid who suffer most when the economy fails and it is the lowest paid who benefit when you turn that economy around.
Household incomes also go further because we now have the lowest inflation on record. The OBR today revises down its forecast for inflation this year to just 0.2%, and revises it down for the following three years. It is driven by falling world oil and food prices, not by the kind of stagnation we have seen on the continent. But we will remain vigilant.
I am today confirming that the remit of the Monetary Policy Committee for the coming year remains the 2% symmetric CPI inflation target. I am also confirming the remit for our new Financial Policy Committee, so that this time we spot the financial risks in advance.
The fall in food prices is good for families, but it reminds us of the challenge our farmers face from volatile markets. The National Farmers Union has long argued they should be allowed to average their incomes for tax purposes over five years. I agree and in this Budget we will make that change.
We will also use this opportunity to lock in the historically low interest rates for the long term. I can tell the House that we will increase the number of long-dated gilts that we will sell. We will also redeem the last remaining undated British Government bonds in circulation. We will have paid off the debts incurred in the South Sea bubble, the first world war, the debt issued by Henry Pelham, George Goschen and William Gladstone; the debt issued by Gordon Brown will take a little longer to pay off. [Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. We want to get through this Budget. The sooner we get through it, the better, and then we can debate it.
Mr Osborne
Since the pound goes further these days, now is a good time to confirm the design of the new £1 coin. Based on the brilliant drawing submitted by 15-year-old David Pearce, a school pupil from Walsall, the new 12-sided pound coin will incorporate emblems from all four nations—for we are all part of one United Kingdom.
I now turn to the national debt. Lower unemployment means less welfare. Compared with the autumn statement, welfare bills are set to be an average of £3 billion a year lower. Lower inflation means lower interest charges on Government gilts: those interest charges are now expected to be almost £35 billion lower than just a few months ago.
Rising unemployment and compounding debt interest contributed to our national debt problem, but they were not the only cause. The previous Government increased debt by £192 billion bailing out the banks and sent the national debt rocketing up by a third.
We have already sold the branches of Northern Rock and raised £9 billion from Lloyds shares. Now we go further. Today I can announce that we are launching a sale of £13 billion of the mortgage assets we still hold from the bailouts of Northern Rock and of Bradford & Bingley. Lloyds bank has returned to profit and is paying a dividend, so we can continue our exit from that bailout, too. We will sell at least a further £9 billion of Lloyds shares in the coming year. The previous Government put taxpayers’ money into the banks and this Government are getting it back.
The bank sales, the lower debt interest and the lower welfare bills present us with a choice. We could treat them as a windfall, even though we know the public finances need further repair. With an election looming, some of my immediate predecessors may have been tempted to do this, but that would be deeply irresponsible. We would be spending money we did not really have and racking up borrowing that our country could not afford. We would be repeating all the mistakes of the last Government instead of fixing those mistakes.
Today, the central judgment of this Budget is this: we will use the resources from the bank sales and the lower interest payments and the lower welfare bills to pay down the national debt. We put economic security first, for higher national debt leaves our nation exposed, harms potential growth and costs taxpayers billions of pounds in debt interest. That would be throwing away billions of pounds we should be using to fund our public services and lower taxes.
Five years ago, national debt was soaring. That was why in my first Budget I set a target that we would have the national debt falling as a share of GDP by 2015-16, the last year of this Parliament. The eurozone crisis made that task here at home all the more difficult and for much of the past five years it looked like we might fall short. The Leader of the Opposition confidently predicted we would fail and the shadow Chancellor repeated that prediction last week, but I can announce to the House that the hard work and sacrifice of the British people has paid off. The original debt target I set out in my first Budget has been met. We will end this Parliament with Britain’s national debt share falling. The sun is starting to shine and we are fixing the roof.
The OBR reports today that debt as a share of GDP falls from 80.4% in 2014-15 to 80.2% in 2015-16. It keeps falling to 79.8% in 2016-17, then down to 77.8% the following year, and to 74.8% in 2018-19 before it reaches 71.6% in 2019-20.
National debt as a share of our national income has been increasing every single year since 2001. Those 13 years amount to the longest year-on-year rise in our national debt since the end of the 17th century. Today we bring that shameful record of irresponsibility to an end and make sure we pay down our national debt. There is a consequence for our fiscal plans. As the national debt share is falling a year earlier than forecast at the autumn statement, the squeeze on public spending ends a year earlier too.
In the final year of this decade, 2019-20, public spending will grow in line with the growth of the economy. We can do that while still running a healthy surplus to bear down on our debt—a state neither smaller than we need nor bigger than we can afford. For those interested in the history of these things, that will mean state spending as a share of our national income of the same size as Britain had in 2000. That is the year before spending got out of control and the national debt started its inexorable rise.
When we came to office, the deficit stood at more than 10% of our national income, one of the highest of any major advanced economy and the largest in our peacetime history. The IMF says we have achieved the largest, most sustained reduction in our structural deficit of any major economy. Today, the OBR confirms that it now stands at less than half of the deficit we inherited, but at 5% this year, it is still far too high and it must come down. With our plan, it does. The deficit falls to 4% in 2015-16, then down to 2% the following year and down again to 0.6% the year after that. The deficit is lower in every year than at the autumn statement.
In 2018-19, Britain will have a budget surplus of 0.2%, followed by a forecast surplus of 0.3% in 2019-20. We will also comfortably meet our fiscal mandate and Britain will be running a surplus for the first time in 18 years. That leads to borrowing. Every one of the borrowing numbers is lower than at the autumn statement. We inherited annual borrowing of over £150 billion from the last Government. This year borrowing is set to fall to £90.2 billion, £1 billion lower than expected at the autumn statement. It falls again in 2015-16 to £75.3 billion, then to £39.4 billion the year after that, before falling to £12.8 billion. In total that is £5 billion less borrowing than we forecast just three months ago. In 2018-19, we reach an overall surplus of £5.2 billion, a £1 billion improvement compared with December. In 2019-20 we are forecast to run a surplus of £7 billion.
Growth is up; unemployment is down; borrowing is down in every year of the forecast; we reach a surplus—all contributing to a national debt now falling as a share of national income. Out of the red and into the black—Britain is back paying its way in the world today.
Lower borrowing and falling debt as a share of GDP will continue only with a credible plan to control public spending and welfare. As we end the Parliament, we can measure the scale of the achievement. The administrative costs of central Government will be down by 40%. We have legislated for welfare savings of over £21 billion a year, and because savings have been driven by efficiency and reform, the quality of public services has not gone down—it has gone up. Satisfaction with the NHS is rising year on year; crime is down 20%; 1 million more children attend good or outstanding schools—but the job of repairing our public finances is not done, and here is a very important point that the country needs to understand. National debt as a share of GDP is now falling and we will only keep it falling if we commit to the fiscal path set out in this Budget. If we deviate from this path, if we go slower or borrow more, the national debt share will not keep falling—it will start rising again.
After all the hard work of the British people over the past five years to reach this point, that reversal would be a tragedy. Britain is on the right track; we must not turn back. In order to deliver that falling debt share we need to achieve the £30 billion further savings that are necessary by 2017-18. I am clear exactly how that £30 billion can be achieved: £13 billion from Government Departments; £12 billion from welfare savings; and £5 billion from tax avoidance, evasion and aggressive tax planning. We have done it in this Parliament; we can do it in the next.
The distributional analysis we publish today confirms that the decisions across this Parliament mean that the rich are making the biggest contribution to deficit reduction. That has been true at every fiscal event under this Government. I said we would all be in this together and here is the proof—[Interruption.] Compared with five years ago, inequality is down, child poverty is down, youth unemployment—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. We have to get to the end to hear what the Leader of the Opposition has to say. We will not do that if Members keep trying to shout the Chancellor down.
Mr Osborne
They do not like to hear it, Mr Deputy Speaker, but inequality is down, child poverty is down, youth unemployment is down, pensioner poverty is at its lowest level ever. The gender pay gap has never been smaller. Payday loans are capped, and zero-hours contracts regulated. Even more than that, opportunity has increased. The number of university students from disadvantaged backgrounds is at a record high, apprenticeships have doubled and there are fewer workless households than ever before. In this Budget we are providing funding for a major expansion of mental health services for children and those suffering from maternal mental illness. Those who suffer from these illnesses have been forgotten for too long. Not any more, because we stand for opportunity for all.
We have also created a fairer tax system—further proof that we are all in this together. The share of income tax paid by the top 1% of taxpayers is projected to rise from 25% in 2010 to over 27% this year. That is higher than in any one of the 13 years of the last Labour Government. We are getting more money from the people paying the top rate of tax because we understand that if you back enterprise, you raise more revenue. The House will also want to know that the lower paid 50% of taxpayers now pay a smaller proportion of income tax than at any time under the previous Government. [Interruption.] I will not accept lessons from those who impoverished the entire country and left millions of people out of work. We are delivering a truly national recovery.
In this Budget, everything we spend will be paid for, and that requires the following decisions. We have already taken steps to curb the size of the very largest pension pots, but the gross cost of tax relief has continued to rise through this Parliament, up almost £4 billion. That is not sustainable. So from next year, we will further reduce the lifetime allowance from £1.25 million to £1 million. This will save around £600 million a year. Fewer than 4% of pension savers currently approaching retirement will be affected. However, I want to ensure that those still building up their pension pots are protected from inflation, so from 2018 we will index the lifetime allowance.
We have had representations that we should also restrict the annual allowance for pensions and use the money to cut tuition fees. I have examined this proposal. It involves penalising moderately paid long-serving public servants, including police officers, teachers and nurses, and instead rewarding higher paid graduates. So I agree with most of the Opposition Front Bench that such a policy would be neither progressive nor fair, and we will not do that.
Nor will we take advice on tax evasion and avoidance from those who, in office, were the friends of the avoiders and the evaders. When we came to office, City bankers boasted of paying lower tax rates than their cleaners, the rich routinely avoided stamp duty and foreigners paid no capital gains tax. We have changed all that, and it was this Prime Minister who put tackling international tax evasion at the top of the agenda at the G8. We will now legislate for the new common reporting standard that we have got agreed around the world. Our new diverted profits tax is aimed at large multinationals that artificially shift their profits offshore. I can confirm that we will legislate for it next week and bring it into effect at the start of next month.
I am also today amending corporation tax rules to prevent contrived loss arrangements, and we will no longer allow businesses to take account of foreign branches when reclaiming VAT on overheads, making the system simpler and fairer. We will close loopholes to make sure that entrepreneurs relief is available only to those selling genuine stakes in businesses; we will issue more accelerated payments notices to those who hold out from paying the tax that is owed; and we will stop employment intermediaries exploiting the tax system to reduce their own costs by clamping down on the agencies and umbrella companies that abuse tax reliefs on travel and subsistence, while we will protect those who are genuinely self-employed. Taken together, all the new measures against tax avoidance and evasion will raise £3.1 billion over the forecast period.
I can also tell the House that we will conduct a review on the avoidance of inheritance tax through the use of deeds of variation. It will report by the autumn. We will seek a wide range of views, and we look forward to drawing on the particular expertise of the Leader of the Opposition—unless, that is, the Labour party has executed its own deed of variation by then. My right hon. Friend the Chief Secretary to the Treasury will tomorrow publish further details of our comprehensive plans for new criminal offences for tax evasion and new penalties for those professionals who assist them. Let the message go out: this country’s tolerance for those who will not pay their fair share of taxes has come to an end.
Because we seek a truly national recovery, today I also ask our banking sector to contribute more. Financial services are one of Britain’s most important and successful industries, employing people in every corner of the country. We take steps to promote competition, back FinTech and encourage new business such as global reinsurance, but as our banking sector becomes more profitable again, I believe it can make a bigger contribution to the repair of our public finances. I am today raising the rate of the bank levy to 0.21%. This will raise an additional £900 million a year. We will also stop banks deducting from corporation tax the compensation they make to customers for products they have been mis-sold, such as PPI. Taken together, these new banking taxes will raise £5.3 billion across the forecast. The banks got support going into the crisis; now they must support the whole country as we recover from the crisis.
In each Budget we have used the LIBOR fines paid by those who demonstrated the very worst values to support those who represent the very best of British values. Today I can announce a further £75 million of help. Last week’s service of commemoration reminded us all of the debt we owe to those brave British servicemen and women who served in Afghanistan. We will provide funds to the regimental charities of every regiment that fought in that conflict, and we will contribute funding to the permanent memorial to those who died there and in Iraq. In the 75th anniversary year of the battle of Britain, we will help to renovate the RAF museum at Hendon, the Stow Maries airfield and the Biggin Hill chapel memorial so that future generations can be reminded of the sacrifice of our airmen in all conflicts. We will provide £25 million to help our eldest veterans. That will include nuclear test veterans, and I congratulate my hon. Friend the Member for Basildon and Billericay (Mr Baron) on his campaign on their behalf.
Many Members on the Government Benches have also written to me asking for support for their local air ambulances. We have backed these brilliant local charities in the past, and we do so again today, with funds for new helicopters for the Essex & Herts, East Anglian, Welsh and Scottish air ambulances, and for the Lucy air ambulance that transports children requiring urgent care. I pay tribute to many hon. Friends, including my hon. Friends the Members for Norwich North (Chloe Smith) and for Castle Point (Rebecca Harris) for their campaigns on this issue.
Our blood bike charities also do an incredible job. MPs from across the House have written to me about this campaign, and we are responding to it today by refunding the charities’ VAT. We are also setting aside £1 million to help to buy defibrillators for public places, including schools, and to support training in their use to save more lives.
Talking about people who save lives, and who sometimes sacrifice their own life to do so, we will also correct the historical injustice to the spouses of police officers, firefighters, and members of the intelligence services who lose their lives on duty. And there is additional money today to support the fight against terrorism.
The £15 million church roof fund that I set aside at the autumn statement to support church roof appeals has been heavily oversubscribed, so we are today more than trebling it. Apparently, we are not the only people who want to fix the roof when the sun is shining. Every weekend, thousands of people go out and raise sums for their local charities across Britain through sponsored events and high street collections. I am significantly extending the scheme that I introduced that allows charities to claim automatic gift aid on those donations, increasing it from the first £5,000 they raise to £8,000. That will benefit over 6,500 small charities.
We could not let the 600th anniversary of Agincourt pass without commemoration. The battle of Agincourt is, of course, celebrated by Shakespeare as a victory secured by a “band of brothers”, which is, sadly, not an option available to the Labour party. But it is, of course, when a strong leader defeated an ill-judged alliance between the champion of a united Europe and a renegade force of Scottish nationalists, so it is well worth spending £1 million to celebrate it.
Our country does not rest on its past glories. Within just 15 years we have the potential to overtake Germany and have the largest economy in Europe. Five years ago, that would have seemed hopelessly unrealistic; economic rescue was the limit of our horizons. Today, our goal is for Britain to become the most prosperous of any major economy in the world in the coming generation, with that prosperity widely shared across the country.
London is the global capital of the world and we want it to grow stronger still. Today, we confirm: new investment in transport; regeneration from Brent Cross to Croydon; new powers for the Mayor over skills and planning; and new funding for the London Land Commission to help address the acute housing shortages in the capital, for we do not pull the rest of the country up by pulling London down. Instead we will build on London’s success by building the northern powerhouse. Working across party lines, and in partnership with the councils of the north, we are this week publishing a comprehensive transport strategy for the north. We are funding the Health North initiative from the great teaching hospitals and universities there. We are promoting industries, from chemicals in the north-east to tech in the north-west. And I can today confirm agreement with the West Yorkshire Combined Authority for a new city deal.
Our agreement with Greater Manchester on an elected mayor is the most exciting development in civic leadership for a generation, with the devolution of power over skills, transport and now health budgets. I can announce today that we have reached provisional agreement to allow Greater Manchester to keep 100% of the additional growth in local business rates as we build up the northern powerhouse. For where cities grow their economies through local initiatives, let me be clear: we will support and reward them. We are also going to offer the same 100% business rate deal to Cambridge and the surrounding councils, and my door is open to other areas that want to proceed as well, for our ambition for a truly national recovery is not limited to building a northern powerhouse. We back in full the long-term economic plans we have for every region.
The midlands is an engine of manufacturing growth, so we are today giving the go-ahead to the £60 million investment in the new energy research accelerator that has been sought and confirming that the new national energy catapult will be in Birmingham. And we are going to back our brilliant automotive industry by investing £100 million to stay ahead in the race to driverless technology. To encourage a new generation of low-emission vehicles, we will increase their company car tax more slowly than previously planned, while increasing other rates by 3% in 2019-20.
We are also connecting up the south-west, with over £7 billion of transport investment, better roads, support for air links, and, I can confirm today, a new rail franchise which will bring new inter-city express trains and greatly improved rail services to the south-west. We are confirming the introduction of the first 20 housing zones that will keep Britain building, along with the extension of eight enterprise zones across Britain, with new zones in Plymouth and Blackpool, too. I congratulate my hon. Friends from those areas on their campaigns.
We are giving more power to Wales. We are working on a Cardiff city deal and we are opening negotiations on the Swansea bay tidal lagoon. The Severn crossings are a vital link for Wales. I can tell the House we will reduce the toll rates from 2018, and abolish the higher band for small vans and buses. It is a boost for the drivers of white vans—let me reassure the deputy leader of the Labour party that it will apply to pink vans, too.
The legislation devolving corporation tax to Northern Ireland passed the House of Lords yesterday and we now urge all parties to commit to the Stormont House agreement, of which it was part. In Scotland, we will continue working on the historic devolution agreement, implementing the Glasgow city deal and opening negotiations on new city deals for Aberdeen and, of course, for Inverness.
Although the falling oil price is good news for families across the country, it brings with it challenges for hundreds of thousands whose jobs depend on the North sea. Thanks to the field allowances we have introduced, we saw a record £15 billion of capital investment last year in the North sea. But it is clear to me that the fall in the oil price poses a pressing danger to the future of our North sea industry, unless we take bold and immediate action. I take that action today.
First, I am introducing, from the start of next month, a single, simple and generous tax allowance to stimulate investment at all stages of the industry. Secondly, the Government will invest in new seismic surveys in underexplored areas of the UK continental shelf. Thirdly, from next year, the petroleum revenue tax will be cut from 50% to 35% to support continued production in older fields. Fourthly, I am, with immediate effect, cutting the supplementary charge from 30% to 20%, and backdating it to the beginning of January. It amounts to £1.3 billion of support for that vital industry in the North sea. The OBR assesses that it will boost expected North sea oil production by 15% by the end of the decade. It goes without saying that an independent Scotland would never have been able to afford such a package of support. But it is one of the great strengths of our 300-year-old Union that just as we pool our resources, so we share our challenges and find solutions together—for we are one United Kingdom.
We back oil and gas, and we also back our heavy industry, such as steel and paper mills. I have listened to the engineering employers, and I will bring forward to this autumn part of our compensation for energy-intensive plants. But since we aim to be the most prosperous major economy in the coming generation, then we must support the latest insurgent industries too. So we take steps to put Britain at the forefront of the online sharing economy. Our creative industries are already a huge contributor to the British economy, and we back them again today: we make our TV and film tax credits more generous, we expand our support for the video games industry and we launch our new tax credit for orchestras. Britain is a cultural centre of the world, and with these tax changes I am determined we will stay in front. In the week after Cheltenham, we support the British racing industry by introducing a new horse race betting right. Local newspapers are a vital part of community life, but they have had a very tough time in recent years. Today, we announce a consultation on how we can provide them, too, with tax support.
Future economic success depends on future scientific success, so we will add to the financial support I announced at the autumn statement for postgraduates, with new support for PhDs and research-based masters degrees. We are also committing almost £140 million to world-class research across the UK into the infrastructure and cities of the future, and I can announce today that our national research institutes get new budget freedoms. We will also invest in what is known as the “internet of things”. This is the next stage of the information revolution, connecting up everything from urban transport to medical devices to household appliances, so should—to use a completely ridiculous example—someone have two kitchens, they will be able to control both fridges from the same mobile phone.
All these industries depend on fast broadband. We have transformed the digital infrastructure of Britain over the last five years. Over 80% of the population have access to superfast broadband and there are 6 million customers of 4G that our auction made possible. Today, we set out a comprehensive strategy so that we stay ahead. We will use up to £600 million to clear new spectrum bands for further auction, so that we improve mobile phone networks. We will test the latest satellite technology, so that we reach the remotest communities. We will provide funding for wi-fi in our public libraries, and expand broadband vouchers to many more cities, so that no one is excluded. And we are committing today to a new national ambition to bring ultrafast broadband of at least 100 megabits per second to nearly all the homes in the country, so that Britain is out in front.
We cannot create jobs without successful businesses. As well as the right infrastructure, businesses also need low, competitive taxes. In two weeks’ time, we will cut corporation tax to 20%, one of the lowest rates of any major economy in the world. There are those here who are committed to putting the rate of corporation tax up. They should know that that would be the first increase in this tax rate since 1973, and a job-destroying and retrograde step for this country to take.
Rather than increasing the jobs tax as some propose, we will go on cutting it. This April, we will abolish national insurance for employing under-21s. Next April, we will abolish it for employing a young apprentice. I can confirm today that 1 million small businesses have now claimed our new employment allowance.
From this April, we are also extending our small business rate relief and our help for the high street. In my view, the current system of business rates has not kept pace with the needs of a modern economy and changes to our town centres, and it needs far-reaching reform. Businesses large and small have asked for a major review of this tax, and this week that is what we have agreed to do.
The boost I provided to the annual investment allowance finishes at the end of the year. A better time to address that is in the autumn statement. However, I am clear from my conversations with business groups that a reduction to £25,000 would not be remotely acceptable and so it will be set at a much more generous rate. Today, I am announcing changes to the enterprise investment schemes and the venture capital trusts to ensure that they are compliant with the latest state aid rules and increasing support to high-growth companies.
Businesses, like people, want their taxes to be low. They also want them to be simple to pay. We set up the Office of Tax Simplification at the start of this Parliament, and I want to thank Michael Jack and John Whiting for their fantastic work in this regard. To support 5 million people who are self-employed and to make their tax affairs simpler, we will, in the next Parliament, abolish entirely class 2 national insurance contributions for the self-employed.
Today, we can bring simpler taxes to many more people. Some 12 million people and small businesses are forced to complete a self-assessment tax return every year. It is complex, costly and time-consuming. So, today I am announcing that we will abolish the annual tax return all together. Millions of individuals will have the information the Revenue needs automatically uploaded into new digital tax accounts. A minority with the most complex tax affairs will be able to manage their account online. Businesses will feel like they are paying a simple, single business tax, and again, for most, the information needed will be automatically received. This revolutionary simplification of tax collection will start next year, because we believe that people should be working for themselves, and not for the tax man. Tax really does not have to be taxing, and this measure spells the death of the annual tax return.
We want to help families with simpler and lower taxes, so let me turn now to duties. I have no changes to make to the duties on tobacco and gaming that have already been announced. Last year, thanks to the persistent campaigning of my hon. Friends the Members for Burton (Andrew Griffiths) and for Keighley (Kris Hopkins), I cut beer duty for the second year in a row, and the industry estimates that that helped to create 16,000 jobs. Today I am cutting beer duty for the third year in a row—taking another penny off a pint. I am also cutting cider duty by 2% to support our producers in the west country and elsewhere. To back one of the UK’s biggest exports, the duty on Scotch whisky and other spirits will be cut by 2% as well. Wine duty will be frozen. That will mean more pubs saved, jobs created, families supported, and a penny off a pint for the third year in a row.
I also want to help families with the cost of filling up a car. It is a cost that bears heavily on small businesses, too. The previous Government’s plans for a fuel duty escalator meant that taxes would rise above inflation every year. But I want to make sure that the falling oil price is passed on at the pumps, so I am today cancelling the fuel duty increase scheduled for September. Petrol is frozen again. It is the longest duty freeze in more than 20 years. It saves a family around £10 every time they fill up their car. That is £10 off a tank with the Tories.
We believe that work should pay and that families should keep more of the money they earn. When we came to office, the personal tax-free allowance stood at just £6,500. We set ourselves the goal—even in difficult times—of raising that allowance to £10,000 by the end of the Parliament, and we have more than delivered on that promise. In two weeks’ time, the allowance will reach £10,600. That is a huge boost to the incomes of working people, and one of the reasons why we have a record number of people in work. Today I can announce that we will go further. The personal tax-free allowance will rise to £10,800 next year, and then to £11,000 the year after. That is £11,000 that people can earn before paying any income tax at all. It means that the typical working taxpayer will be more than £900 a year better off. It is a tax cut for 27 million people, and means that we have taken almost 4 million of the lowest paid out of income tax all together.
As we pass on the full gains of this policy, I can make this announcement today: for the first time in seven years, the threshold at which people pay the higher tax rate will rise not just with inflation, but above inflation. It will rise from £42,385 this year to £43,300 by 2017-18. That means that an £11,000 personal allowance and an above-inflation increase in the higher rate have been delivered by a coalition Government and a Conservative Chancellor. That is a down-payment on our commitment to raise the personal allowance to £12,500 and the higher rate threshold to £50,000—it is an economic plan working for you.
In this Budget, the rate of the new transferable tax allowance for married couples will rise to £1,100, too. That is the allowance that is coming in just two weeks’ time to help more than 4 million couples. That is help that Labour would take away, but that we on this side are proud to provide.
This Budget takes another step to move Britain from a country built on debt to a country built on savings and investment. Last year I unlocked pensions with freedom for millions of savers, but there is more to do to create a savings culture. Today I announce four major new steps in our savings revolution. They are based on the principles that cutting taxes increases the return on savings, and that people should have freedom to choose how they use those savings. First, we will give 5 million pensioners access to their annuity. For many, an annuity is the right product, but for some it makes sense to access their annuity now, so we are changing the law to make that possible. From next year, the punitive tax charge of at least 55% will be abolished. Tax will be applied only at the marginal rate, and we will consult to ensure that pensioners get the right guidance and advice. That means freedom for 5 million people with an annuity.
Secondly, we will introduce a radically more flexible individual savings account. In two weeks’ time, the changes that I have already made mean that people will be able to put £15,240 into an ISA. But if they take that money out, they lose their tax-free entitlement, and so they cannot put it back in. That restricts what people can do with their own savings, but I believe that people should be trusted with their own hard-earned money. With the fully flexible ISA, people will have complete freedom to take money out, and put it back in later in the year, without losing any of their tax-free entitlement. It will be available from this autumn, and we will also expand the range of investments that are eligible.
Thirdly, we will take two of our most successful policies and combine them to create a brand new Help to Buy ISA. We do it to tackle two of the biggest challenges facing first-time buyers: the low interest rates when they build up their savings, and the high deposits required by the banks. The Help to Buy ISA for first-time buyers works like this: for every £200 they save for their deposit, the Government will top it up with £50 more. It is as simple as that. We will work hand in hand to help you buy your first home. This is a Budget that works for you. A 10% deposit on the average first home costs £15,000, so if you put in up to £12,000, we will put in up to £3,000 more. A 25% top-up is equivalent to saving for a deposit from your pre-tax income; it is effectively a tax cut for first-time buyers. We will work with industry so that it is ready for this autumn, and we will make sure that you can start saving for it right now.
So, there is access for pensioners to their annuities, a new flexible ISA, the backing of home ownership with a first-time buyer bonus—and one other reform. Today I introduce a new personal savings allowance that will take 95% of taxpayers out of savings tax altogether. From April next year, the first £1,000 of the interest earned on all savings will be completely tax-free. To ensure that higher rate taxpayers enjoy the same benefits but no more, their allowance will be set at £500. People have already paid tax once on their money when they earned it; they should not have to pay tax a second time when they save it. With our new personal savings allowance, 17 million people will see the tax on their savings not just cut, but abolished altogether—an entire system of tax collection can be scrapped. At a stroke we create tax-free banking for almost the entire population; and we build the economy on savings, not on debt.
Five years ago I had to present to this House an emergency Budget. Today I present the Budget of an economy that is stronger in every way than the one we inherited—the Budget of an economy taking another big step from austerity to prosperity. We cut the deficit, and confidence is returning. We limited spending, made work pay and backed business, and growth is returning. We gave people control over their savings and helped people own their own homes, and optimism is returning. We have provided clear and decisive economic leadership, and from the depths Britain is returning. The share of national income taken up by debt—falling; the deficit— down; growth—up; jobs—up; living standards—on the rise. Britain: on the rise. This is the Budget for Britain, the come-back country.
Provisional Collection of Taxes
Motion made, and Question put forthwith (Standing Order No. 51(2)),
That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motions:—
(a) Alcoholic liquor duties (rates) (motion no. 27.); and
(b) Tobacco products duty (rates) (motion no. 28.).— (Mr George Osborne.)
Question agreed to.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I now call upon the Chancellor of the Exchequer to move the motion entitled “Amendment of the Law”. It is on this motion that the debate will take place today and on succeeding days. The Questions on this motion and on the remaining motions will be put at the end of the Budget debate on Monday 23 March.
Budget Resolutions and Economic Situation
(9 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Edward Miliband (Doncaster North) (Lab)
Never has the gap between the Chancellor’s rhetoric and the reality of people’s lives been greater than it was today. This is a Budget that people will not believe from a Government who are not on their side. Because of the Government’s record, because of their instincts, because of their plans for the future and because the Chancellor, most extraordinarily, made no mention of investment in our national health service and our vital public services, this is a Budget that people will not believe from a Government they do not trust.
This Chancellor has failed the working families of Britain. For the first time since the 1920s, people are earning less at the end of a Government than they were at the beginning. [Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Quite rightly, I expected the Chancellor to be heard, and I certainly expect the same courtesy to be extended to the Leader of the Opposition.
Edward Miliband
People are £1,600 a year worse off. The next generation has seen wages plummet and tuition fees treble. The Government have built fewer homes than at any time in the past 100 years. It is certainly not a truly national recovery when there are more zero-hours contracts than the populations of Glasgow, Leeds and Cardiff combined. That is the reality of the lives of working people. These are the facts. These are the inconvenient truths of this Chancellor’s record. It is a recovery for the few from a Government of the few.
The Chancellor chose to make a number of references to me today. Let me just tell him that we are not going to take lessons on fairness from the trust fund Chancellor and the Bullingdon club Prime Minister. Not for the first time, this is a Budget from this Chancellor that simply will not be believed.
We support the change on the personal allowance, but on tax he gives with one hand and takes far more away with the other. Nobody believes this Chancellor when he says that he will cut their taxes, because that is not what has happened. Not only are wages down by £1,600, but taxes are up—24 tax rises. As a result of his measures, families are worse off by £1,127 a year, on average, which is equivalent to 8p on the basic rate of income tax. That is the reality behind a Budget that cannot be believed. Everyone knows what is coming if the Government get back in charge: another rise in VAT, the tax the Tories love to raise. Of course, in the finest Tory tradition, the lesson is this: deny it before an election and jack it up afterwards.
On living standards, which the Chancellor made much of in his speech, he knows that, as the official measure from the Office for National Statistics shows, people are clearly worse off under him, so he had a bright idea: invent a new measure of living standards to prove that what people know from their wallets and pockets to be true is somehow not true. People do not need a new measure that pretends they are better off; they need a new Government to make them better off. That is the reality behind a Budget that cannot be believed.
What about low pay, which the Chancellor also talked about in his speech? He poses today as the friend of the low-paid. You could not make it up, Mr Deputy Speaker. [Interruption.]
Mr Deputy Speaker
Order. There is too much noise coming from the back row. Mr Shelbrooke, do not think that I cannot see you just because you have moved position. The last thing I need is for you to explode. That would be good neither for you, nor for the Chamber.
Edward Miliband
I am bound to ask, whatever happened to the promise of a £7 minimum wage this year? The Chancellor made much of that 18 months ago, but he has broken that promise. The idea of this Chancellor boasting about a 20p rise in the minimum wage, expecting low-paid workers to be grateful: that is the reality behind a Budget that cannot be believed. Of course, the Chancellor does not just claim to be a friend of the low-paid; he now claims to be a friend of the north. [Interruption.]
Mr Deputy Speaker
Order. I will not keep saying that I want to hear the Leader of the Opposition; I expect everybody to hear the Leader of the Opposition.
Edward Miliband
On the specifics, we are pleased that the Chancellor has adopted our policy of councils being able to keep 100% of business rates, but why not for every council right across the country? Why is he doing it for just one? [Interruption.] Oh, he has done it for two, says the Chief Secretary, helpfully. Is it not great? The Liberal Democrats locked in the boot of the Conservative party.
Let us talk about what the Chancellor has done to the north of England. Let us test whether he is a friend of the north—75% bigger cuts to local government budgets in the north than in the rest of the country. In the north-west, 400,000 working families have seen their tax credits cut. That is more than any other region. In the north-east the Chancellor is spending £1 on transport for every £25 he spends in London. He spent time in his speech praising northern councils. Let us see what northern councils have to say about him. He talked about Leeds. This is what the leader of Leeds council said—[Interruption.] Yes, Labour. The Chancellor was praising northern councils in his statement. Let us see what they have to say. The leader of Leeds council says that the Chancellor “fails to deliver the devolution we need. This Government is no friend of the north.”
For the interests—[Interruption.]
Mr Deputy Speaker
Order. This is getting seriously out of hand. [Interruption.] Just a moment. He can shout all day. I have already looked at Mr Hands. He may hide behind Sir Tony, but we all know where he is. His voice carries and I know where he is sat. Sir Tony may move, but I recognise the voice. [Interruption.] I do not need any more help. All I will say to those on the Government Benches is let us listen. Let us get to the end because, as I said earlier, our constituents want to hear what both sides wish to say.
Edward Miliband
Joe Anderson, the mayor of Liverpool, said that the Chancellor has “bludgeoned Liverpool. We’ve had 58% of our funding taken away. Even Dick Turpin had the decency to wear a mask when he robbed people.” That is what he thinks of the Chancellor. [Interruption.] Hon. Members ask why I do not quote Conservative leaders. In the interests of balance, I would have liked to quote a Conservative leader of a northern city, but there are none, and with these two—the Prime Minister and the Chancellor—in charge, there never will be.
The Chancellor spoke about tax avoidance in his statement, but the gap between what is owed and what is collected is up, not down, and no wonder. He has not acted on tax havens, despite the Prime Minister’s promises. He did not act on HSBC. In fact, he appointed the chairman as a Minister. What about hedge funds? Those were strangely absent from the Chancellor’s statement. Where was the action on stamp duty avoidance? It is costing well over £l billion a year. Of course the Government cannot act on hedge funds because they bankroll the Tory party. The Chancellor cannot act because they own him, lock, stock and barrel. The Conservative party is now just the political wing of the tax avoidance industry.
The biggest sleight of hand of all is on the deficit. The Chancellor was rewriting history today. Five years ago, the Prime Minister said: “We will balance the books in five years”—no ifs, no buts, no maybes, just like the immigration pledge. Today, the Chancellor comes along to boast that he has halved the deficit, but that is not what the Prime Minister used to say about halving the deficit. He said that would be “completely inadequate”. Let me get this straight—it has gone from completely inadequate to a great triumph. I do not think that will wash with people. The only thing long-term about the Chancellor’s plan is that it will take nearly twice as long to balance the books. And it cannot be believed—[Interruption.]
Mr Deputy Speaker
Order. Mr Ellis, as I said earlier, a little more control, please.
Edward Miliband
It cannot be believed, because we have heard it all before—five years of promising a recovery for all, five years of delivering a recovery for the few, and now the Chancellor asks us to believe it all over again. The most unbelievable thing of all is the Government’s claim that we are “all in it together”. They say yes to the bedroom tax, no to the mansion tax. Food banks are on the rise, bank bonuses are in the billions. Taxes are up for working families, taxes are cut for millionaires. The best thing one can say about the Chancellor and the Prime Minister is that when the removal vans turn up, they will be in it together.
The Chancellor’s failure on living standards, on tax and on the deficit are all linked. That is because our economy is too unproductive, too unbalanced and too insecure. There are some things that he did not mention in his statement today. Our productivity gap with the rest of the G7 is now the worst for a quarter of a century—on his watch. He talked again today about rebalancing, but the rebalancing that he promised has not happened. The Chancellor’s target for exports is set to be missed by over £300 billion. On this Budget’s figures, he has overseen the slowest recovery for 100 years. That is the reality behind the Budget that cannot be believed.
For all the window dressing today, the Government cannot tackle insecurity at work, because they think that is how we compete. They cannot make work pay, because they believe low pay is the way that we succeed. They cannot build an economy for working families, because they think wealth flows from the top. Not for the first time, the chairman of the Conservative party perfectly summed up Tory philosophy in his celebrated handbook, “Stinking Rich 3”. I am not sure what happened to “Stinking Rich 1 and 2”.
The Chancellor announced a number of measures on savings and it is important that we look at the detail of these changes. We want people to have more flexibility, including on annuities. He talked about advice in the annuity market. It is incredibly important that advice is available quickly because there are rip-off merchants ready to pounce. We know that it has happened before—[Interruption.]
Mr Deputy Speaker
Order. Mr Williamson, you are this side of Mr Miliband. I can see you very easily.
Edward Miliband
This is a serious issue. We know that it has happened before. It happened in the 1980s—a dreadful mis-selling scandal—and the Chancellor needs to get proper regulation in place on these issues. We will look at the changes that he spoke about.
The glaring omission from this Budget statement was the national health service and public spending. It was an extraordinary admission. Where was that discussion of the national health service and investment in public services? It is time that we looked at the reality of this Government’s spending plans, because this is the Budget that cannot be believed. The Chancellor does not want us to know it, but he had an extreme spending plan yesterday and he has an extreme spending plan today. It is here in the Red Book in black and white. Page 69 shows his plan for extreme cuts in the next Parliament. Table 2.4 of the Red Book shows that he is trying to hide big cuts between 2015-16 and 2018, so let me tell the House what the Chancellor tried to hide. His plans are for at least as many cuts in the next Parliament as in this one, and the pace of cuts in the next few years will be faster than the cuts in the past few years.
Here is the thing, and it is important that the country knows it: the Chancellor came along today to try to suggest that the pain was over, but if the Conservatives get back, it is not. Their failure on the deficit means that they are planning massive cuts—billions of pounds of cuts—in the next Parliament.
You might ask, Mr Deputy Speaker, what is the evidence for it. There is a lot of evidence. Let us start with what the Prime Minister said in his education speech. He said they were going to cut early years, they were going to cut schools, and they were going to cut colleges: cuts in education spending. Short-changing education today means we cannot build a recovery for all tomorrow.
The position is most worrying of all on the national health service. The massive cuts that the Government have announced—all their Members will have to go and justify this to their constituents—mean that colossal cuts will be planned, and I emphasise “planned”, in defence, in policing, and in local government. But they will not be able to deliver those cuts, so they will end up cutting the national health service. That is the secret plan that dare not speak its name today. The Chancellor did not tell us—[Interruption.] You can tell they are really worried about it. The Chancellor did not tell us that his plans also continue massive cuts to social care. [Interruption.]
Mr Deputy Speaker
Order. The defence Minister and I do not want to fall out. If there are some letters to sign on her desk, that might be better if she cannot keep quiet.
Edward Miliband
They did not tell us that their plans involve massive cuts to social care as well. We have already, in this Parliament, seen hundreds of thousands fewer elderly people being cared for. What is the lesson? If you devastate social care, you betray the elderly and pile unsustainable pressure on our national health service—and these two are coming along and promising more of the same. That is why they cannot be trusted on the national health service.
Building a truly national recovery needs a new Government. We will not sit by when people are on zero-hours contracts month after month, year after year. Instead we will legislate for a new principle that if someone does regular hours they get a regular contract. The Chancellor talked about the minimum wage. Let us talk about what has happened on the minimum wage. [Interruption.]
Mr Deputy Speaker
Order. Mr Williamson, be helpful to the Chamber, or I will be unhelpful to you, and I do not want to get to that stage. Let us hear Ed Miliband.
Edward Miliband
The minimum wage has gone up by just 70p in this Parliament. A Labour Government will raise it by more than double that to a minimum wage of more than £8 an hour. And we will have a real industrial policy.
The Chancellor has been a particularly malign influence in this Government on climate change. The Prime Minister used to claim that he believed in climate change. I have to say that it is extraordinary, even by his standards, to put a wind turbine on your roof and then want a moratorium on wind turbines. I know he is a stranger to consistency, but even by his standards that is going some. We will end the dabbling with climate change denial and have a proper green investment bank.
A Labour Government will support the young, not make them pay the price of hard times. We will ensure that every major Government contract will guarantee apprenticeships. We will cut tuition fees to £6,000 to reduce the burden of debt on young people—and let the Deputy Prime Minister defend his broken promises on the doorstep.
All of this will be underpinned by a balanced plan that cuts the deficit every year, protects education and health, and has fairer taxes—yes, I do believe in a progressive tax system—by reversing the Chancellor’s millionaires’ tax cut, introducing a mansion tax to fund the NHS, and abolishing the vindictive, unfair bedroom tax that he imposed. That is what a Labour Budget would do, from a Labour Government who know that Britain succeeds only when working families succeed.
Now we know the choice at the election. We have seen five years of falling living standards, young people paying the price of hard times, and the NHS going backwards. This Budget did not solve the problems facing working families; it confirmed them. Britain needs a better plan—a plan for working families. Britain needs a Labour Government.
Mr Deputy Speaker
I suggest to the House that I do not put a time limit on, but I expect Members to take up to 10 minutes and no longer, and then we shall get everybody in. I call Andrew Tyrie.
Mr Andrew Tyrie (Chichester) (Con)
Thank you very much, Mr Deputy Speaker.
The Leader of the Opposition has to make the most difficult speech of anyone’s in Parliament: he has to respond to a Budget that he has not even seen. I congratulate him on his effort, and I can assure him that those bits of the Budget that he argued should be scrutinised carefully we will scrutinise on the Treasury Committee. It is a tall order to make that speech when the economy is weak, but when it is strong, it really is an impossible task—and the economy is strong, with the best growth in the G7 last year.
Chancellors should be judged on the performance of the economy during their tenure. We should all now accept that this current Chancellor deserves a good deal of credit for the improved performance of the British economy. Five years ago, Britain’s prospects were pretty bleak. The UK was saddled with a deficit of over 11% of GDP, and the developing euro crisis was shrinking the UK’s export markets and creating a massive risk of financial contagion. Above all, the UK was afflicted with a crisis of confidence. Five years later, as the Chancellor has announced, the deficit will be 4% of GDP next year—only a little over a third of what was inherited. The banking system, which he did not discuss at great length, is much better equipped to handle a euro crisis if it comes, particularly the risk of a disorderly exit by Greece. Confidence is returning. The evidence for the returning confidence is overwhelming from survey data.
A great deal of that success—
Michael Connarty (Linlithgow and East Falkirk) (Lab)
The hon. Gentleman makes an assertion that every analyst I have read denies. The lack of investment—the amount of money held in corporate bank accounts that is not being invested—is a major problem for this economy, so where does he get the evidence of this rising confidence in investment?
Mr Tyrie
I have not brought all the survey data along with me, but I can supply it to the hon. Gentleman if he is interested. He makes a valid point, which is that there is a lot more work to be done fully to restore confidence to the point that is needed to unlock cash piles on the balance sheets of some of Britain’s larger businesses. For smaller businesses, investment is often not taking place at the level we would like, although it is much better, because the small and medium-sized enterprise lending market is still relatively weak. The banks are not supplying them with the resources they need. We desperately need to break down what still amounts to a banking cartel on lending. We need to get to the point where these small firms—the new firms that create so much wealth in Britain—can get access to the lending they need.
Mark Garnier (Wyre Forest) (Con)
Does my hon. Friend agree that a very good indication of confidence is the extra 2 million-plus jobs and 450,000 new businesses created in the past five years?
Mr Tyrie
I agree entirely, but I will not linger on the point, because I am sure that my hon. Friend will be making his own speech in his own way very shortly.
What has also happened is that many people have found ways of improving quality and value for money in the goods and services they provide, whether in the public or the private sector. That has generated a good deal of force for the recovery—something that is not fully captured in productivity statistics. Governments do not create wealth; they either get in the way of it or create the conditions for it.
Sir Robert Smith (West Aberdeenshire and Kincardine) (LD)
Will the hon. Gentleman give way on that point?
Mr Tyrie
If the hon. Gentleman will forgive me, I would like to make a bit of progress now.
This Government have helped to create those conditions for growth in at least three important ways. First, in the early part of the Parliament, they authorised £175 billion of extra quantitative easing. That was crucial. Secondly, they allowed the so-called automatic stabilisers to kick in—that is, allowing the deficit to widen as eurozone demand collapsed. It is important to recall that the Chancellor was faced, right at the start, with a weakening of demand for our exports in European markets. That caused a great deal of difficulty for British industry. Thirdly, in my view, the Chancellor showed a good deal of tenacity. The coalition has contributed a great deal to restoring confidence. Few predicted that it would last five years. To be frank, I did not think that the Liberal Democrats had it in them to stay the course, but to their credit they have stuck with it, and for that they deserve a good deal of praise.
Sir Robert Smith
I thank the hon. Gentleman for his recognition of the coalition, which the broadcasters have lost sight of in reporting what happens in the House. The Budget specifically talked about how Government can get in the way of business, but has it not shown how the Government can, with the right engagement, take positive action, as they have with the North sea oil and gas industry? Entering into dialogue and bringing in incentives will see the industry through the downturn and enable it to reach maturity so that we get a long-term benefit; without the industry, the oil would be left in the ground, and we would get no tax.
Mr Tyrie
I wonder where the hon. Gentleman represents.
Broadly speaking, the hon. Gentleman is right, although I wonder whether we needed quite as many changes to the North sea oil tax regime during this Parliament, particularly since we began it by announcing there would be stability for the medium term in the overall fiscal regime. It can be argued, however, that North sea oil is a special case, and not like the rest of the tax system. Frequent changes in the tax system nearly always have an economic cost in the bottom line for growth.
My colleagues on the Treasury Committee and I will collect as much evidence as possible on the Budget before Prorogation. We will hear from the Office for Budget Responsibility, the Institute for Fiscal Studies and the Chancellor. One measure that was effectively announced before the Budget is the extension of pension freedoms to those who already possess an annuity, and we will take evidence on that major change. Likewise, we will look at the savings measures that have just been announced, not least the savings allowance and the change to the structure of individual savings accounts. Both of those measures sound extremely significant, given that we must revive the savings culture. The Committee will ask about other measures that the Chancellor announced today, including making sure we can be confident that £3 billion will be made available by the tax avoidance measures, the North sea tax regime to which the hon. Member for West Aberdeenshire and Kincardine (Sir Robert Smith) referred, and of course the increase in the personal allowance. There is a great deal for the Committee to do in a short space of time before the election, and we will get on with it as best we can.
We will hear a lot more argument about who is better off. A key recommendation of the Committee in 2010 was that the Treasury and the Chancellor should be required to provide much more information about the distributional impact of tax and benefit changes—who wins and who loses—and, to their credit, they now provide much more detailed analysis at each Budget and autumn statement. For decades, successive Chancellors—my right hon. Friend’s predecessors—were very reluctant to provide that analysis, but they now do so. We will consider the published distributional analysis in the light of the debate, about which we have already heard, about who is better off and who is worse off. It is already clear from the data that almost everybody has borne some of the burden of austerity one way or another, but also that everybody has now almost certainly gained overall, and I will come on to that if I get the chance.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
In relation to the distributional analysis, is the hon. Gentleman concerned that the Institute for Fiscal Studies has quite clearly shown that the situation for families on the lowest incomes has worsened, and that the Equality Trust has said that £39 billion has been taken out of the economy as a result of such inequalities?
Mr Tyrie
An answer to that would need to be quite long and involved, but I invite the hon. Lady to come to our hearing with the IFS because that is a central issue. I am not at all sure that the IFS got it quite right on the basis of the published data. In any case, if I may say so, it did not quite say what she purports it to say.
Helen Goodman
The Chairman of the Select Committee is trying to make the case that there have not been distributional problems, but as I am sure he knows, the truth is that according to the Government’s own statistics, there are 2 million more households living in absolute poverty in this country.
Mr Tyrie
We will be looking at such issues. I was not trying to make that case, or if I was, I was also pointing out that, in the early stages of the recession created by the financial crisis, almost every sector of society had borne some of the burden. I think that the Hansard record will show that I made that point.
We have to rely on conflicting survey data from the Office for National Statistics. The Bank of England has complained about the quality of data, and a heap of other people have said that the data need to be improved. The Treasury Committee ought to look at that in the next Parliament. Some data suggest that the man in the middle is not much better off even in nominal terms—the point was made by the Leader of the Opposition—which is based on the annual survey of hours and earnings. However, another ONS annual survey shows that the man or woman in the middle who has been in continuous employment has done well since 2010, both in nominal and real terms. Those data need to be considered very carefully, because the overwhelming majority of people in work have been in continuous or near continuous employment for the past five years. The data look quite persuasive as an overall picture of living standards. In answer to the hon. Lady’s intervention, the Treasury Committee will certainly consider that matter.
Whoever wins the next election—I hope the whole House will understand that I am very biased about who I think will win—all these tricky issues will need to be considered carefully. The Committee will need to set to work on further research into some of the points and policies covered in this Budget and over this Parliament. Competition in lending and banking has already been mentioned, and we must find a way of getting much greater competition in the banking sector. In relation to doing more to encourage long-term savings, the measures announced today are only a start, because something has been seriously wrong with the savings culture in this country for a long time. The Committee has already said a good deal about reforming and simplifying the tax system, and more needs to be done. The fact that some parts of the tax system are still hopelessly complex provides an opportunity for tax avoidance and evasion, reduces the yield and is bad for overall economic performance. There are also the economic effects—by no means all good—of current energy policy, among many other important energy issues, its reliefs, allowances and public spending subsidies.
What matters most are the measures that will succeed in releasing the energies of the British people. That used to travel under the name of supply-side reform. The next Parliament, with the next Government inheriting a more stable economy, will be an opportunity to get more supply-side reforms under way. I have a clear view, as do many other Members, about how to accomplish that, but it is absolutely essential to move on from the deficit reduction task to that of ensuring we improve the overall economic performance of the British economy in the long run.
Alison McGovern (Wirral South) (Lab)
It is an honour to follow the hon. Member for Chichester (Mr Tyrie). I have listened to his speeches during this Parliament, and he has offered us his wisdom and made a serious contribution. I am very glad that he finished by talking about deficit reduction, because that is how I want to start my speech.
I am afraid that I must begin with what I see as the Chancellor’s failed record on deficit reduction. We must not let people in this country forget what he promised when he came in and wrote the emergency Budget in 2010. He told people in this country that he would close the budget gap by the end of this Parliament, but he has failed to do so. Despite the most severe cuts to some of our communities in this country, he has failed in the objective he set himself. That will leave the next Government, whoever they are, with a serious and significant challenge. I will say more about the right way to meet that challenge.
The Chancellor has also failed on two of his other targets. Let us not forget the target he set himself on protecting our credit rating, which he failed. Given that the Chancellor’s target was to get debt falling, not rising, in this Parliament, do we really expect the British public to accept that a mere 0.2% is good enough to meet that target? That is meeting the target by the merest technicality. We have sort of and a little bit turned the corner on reducing debt, and that is supposed to be okay with the British public. Well, that might be okay for the Tory party, but it is not okay for my constituents.
The Chancellor has failed the tests he set himself, but—much more importantly—he has failed the test that the country set for him, which was to put money in the pockets of British people. I want to set out four ways in which the next Government will get that right. On the deficit, we will close the gap in the right way. We will not do as the Chancellor did and claim that severe austerity will do the job and that we just need to cut indiscriminately to fix the gap.
Caroline Lucas (Brighton, Pavilion) (Green)
With those cuts decimating some of the poorest people in society and the need to leave at least two thirds of fossil fuels in the ground if we are to avoid dangerous climate change, does the hon. Lady agree that handing out yet more eye-watering tax breaks to multinational oil and gas companies is a deeply irresponsible use of public money?
Alison McGovern
I am glad that the hon. Lady focuses on those with the least. I have been to Brighton and seen people rough-sleeping, and it worries me greatly that the council there is insufficiently focused on those with the least. She also mentioned wrong choices, and I want to say a little more about the right choices. First, we need to focus on the financial services industry, because it worries me that the Chancellor has defended bank bonuses on many occasions, not least in Europe. That is why I want to see us raise more through a bank levy, which we will invest in the next generation through our pledge for free universal child care for three and four-year-olds from working families.
Mr John Redwood (Wokingham) (Con)
In the final year of the five-year forecast, the Chancellor will increase public spending by £38.1 billion in a single year. Does the hon. Lady think that is enough? If not, how much more would she like?
Alison McGovern
If the right hon. Gentleman had been listening to my speech, he would have heard me say that we need to make the right choices and show our priorities. As I was saying, the right way to close the budget deficit is to focus on taking money through a bank levy on the financial services industry and investing that money in the next generation and in hard-working families in Britain. I am pleased that we have confirmed that the next Labour Government will have no requirement for new debt for our election pledges. That is the right way to go about managing the British economy.
The right investments matter. It matters whether we choose to invest in infrastructure for the long term. I am sorry that the rhetoric about investment is still not matched by the reality on the ground, and is still so heavily focused—as it has been over the past five years—on London and the south-east. Of course steel in the ground matters, but we also need to think about our education system as part of our country’s infrastructure. I am concerned that we have not heard a pledge from the Chancellor to match our commitment to fund education properly and to ring-fence that budget all the way through children’s lives.
While we are talking about the right balance and right investment, I want to talk about the north of England. I am in politics because I grew up on Merseyside in the 1980s and 1990s and I knew that the then Governments did not care very much about families like mine. I wanted to see a future for my friends and family in Wirral South in which they did not have to leave the place that they loved to have a successful career. Under the last Labour Government, that was happening. We had “The Northern Way”, which saw regional development agencies investing in the north. That was the right way to rebalance the economy, and it was working. Labour investment was working.
Today the Chancellor has tried to use rhetoric and spin to talk about a northern powerhouse that nobody in Merseyside believes in for a second. We have been living with the Chancellor’s true political priorities—a level of cuts not seen in the wealthier parts of the country. That is despite historical deprivation and the fact that we are still living with the consequences of a Tory Government who deindustrialised the north and provided no other options. “The Northern Way” and the regional development agencies were working under the last Labour Government, and that was the right way—not soaring rhetoric about northern powerhouses, but actual investment in the north—[Interruption.] If the Under-Secretary of State for Transport, the hon. Member for Devizes (Claire Perry), wants to intervene, she is more than welcome. As she does not seek to do so, I take it that she has nothing to say about the north.
David Rutley (Macclesfield) (Con)
I am a Member from the north-west and I have shared platforms with the hon. Lady in the past. Does she not accept that, under the Northwest regional development agency and the infrastructures that her party put in place, the jobs that were created were public sector jobs? We now have a more sustainable platform of private sector growth. From memory, unemployment in her constituency is down by more than 30% in the last year—does not she welcome that?
Alison McGovern
I bow to no one in my applause when unemployment falls, but to say that Wirral, Merseyside and the rest of the north-west have not suffered from huge cuts to local government is to ignore the facts. I know that that is an argument that almost everyone in the north-west—perhaps with the exception of members of the Tory party—will recognise.
We need not just the right investment but the right protections. We have seen family budgets hit radically and hard, we have seen child poverty rise and, on the relative measure, we have seen people in the middle of the income distribution fall back towards the bottom. That is not offering families in our country the right protections—
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
Will the hon. Lady give way?
Alison McGovern
I will not take any more interventions, because I might be here for a long time if I did.
We need a bank levy to fund 25 hours of free child care for working families with three and four-year-olds. That pledge alone will help 51,000 children in poverty and will be a real boost to their families’ incomes, which have been hit hard. Whatever the Chancellor says, and whatever the Tories try to convince themselves of, it is not only the London School of Economics and its analysis of the past five years that shows that the incomes of the bottom half have fallen while those of the top half have risen; the Treasury’s own figures now say that the bottom fifth has done worse. We need the right protections to ensure that when economic growth happens, it is not just for the few but real growth for the many. Rather than failed austerity, we need a truly progressive Government in favour of the many, not the few, and more than anything else we need a Labour Government.
Mr Mark Hoban (Fareham) (Con)
May I first refer Members to my declaration in the Register of Members’ Financial Interests?
I commend the Chancellor for his Budget, which continues the themes of economic reform and fiscal consolidation that we have seen in each of the Budgets and autumn statements in this Parliament. It is that twin-track approach that has led to a fall in the deficit, putting the nation on a path towards a surplus in 2019-20, with one of the strongest growing economies among our competitors, falling inflation and a job-rich recovery confirmed by today’s unemployment figures.
It is absolutely vital that we continue the programme of deficit reduction. The previous Government spent beyond the nation’s means, increasing the deficit even when the economy was growing. In his speech, my right hon. Friend the Chancellor mentioned the fact that debt as a proportion of GDP increased in each year of the previous Labour Government. Even in the good times, Labour continued to spend more than the country could afford. The problem we inherited was not that the UK was under-taxed, but simply that the Government were spending too much. It has therefore been right that the bulk of deficit reduction has been borne by spending cuts.
I am pleased the Chancellor has reconfirmed our commitment to tackling the deficit after the next general election. It is wrong of both the Labour party and the Liberal Democrats to seek to slow the pace of deficit reduction. The longer the deficit takes to tackle, the more debt we will incur. Labour has failed to mention—I notice the Leader of the Opposition failed to mention it in his speech today—the £30 billion of cuts it has already signed up to. It is also pledging to spend £50 billion more than we are, which would require increased borrowing or increased taxes. The people of this country cannot afford borrowing on that scale, and to continue would be inequitable. There are three reasons why I think it is wrong.
Mr Redwood
I would just like to point out that although we have cut the planned spending increases of the previous Government, public spending has actually been going up. As the Red Book confirms, Government spending went up by 1.5% in real terms in 2014, and by another 1% this year.
Mr Hoban
That demonstrates the challenges we face to get the pace right. One thing we should be absolutely clear about is the importance of sticking to the course. There are three reasons why it is important to stick to the course of reducing the deficit and reducing debt. It is inherently unfair for future generations to bear the cost of debt we have built up.
Geraint Davies (Swansea West) (Lab/Co-op)
Will the hon. Gentleman give way?
Geraint Davies
Does the hon. Gentleman agree that since 2010 debt as a share of GDP has grown from 55% to 80%, and that the Tories have borrowed more in five years than we did in 13 years even though we had to bail out the banks? Is that not a complete failure of economic management?
Mr Hoban
That is a remarkable argument. Is the hon. Gentleman saying that we should have cut further and faster? That is not the prescription of the shadow Chancellor or the Leader of the Opposition. They always said we were cutting too far, too fast. They cannot have it both ways. That is the problem and that is why the Labour party has no economic credibility: it has no coherent argument on the economy or on the deficit.
While interest rates are at historically low levels we can afford to service those debts, but when interest rates return to more normal levels, money that could be better spent on schools or hospitals will have to diverted to meet higher interest payments. The Chancellor today talked about the £35 billion we have saved as a consequence of lower interest rates. If we return to the economic chaos of the previous Government, will interest rates remain low? Will we not see an increase in the cost of interest payments cutting the amount of money that can be spent on health and social care?
Mr Andrew Love (Edmonton) (Lab/Co-op)
I was struck by the hon. Gentleman’s comments about economic credibility. What credibility do the current Government have, given that they insisted they would eliminate the deficit in this Parliament but have achieved only half that?
Mr Hoban
I am surprised by what the hon. Gentleman says, because he is a member of the Treasury Committee and has looked at these things very carefully. He will have seen what happened in the eurozone in the first half of this Parliament. The headwinds from the eurozone—the OBR confirmed this—had a negative impact on the UK economy. We cannot ignore the impact of turmoil abroad on the strength of the UK economy. It is surprising that a respected Member fails to recognise the lessons of what has happened over the course of this Parliament.
David Rutley
I congratulate my hon. Friend on the powerful speech he is making. Does he also recall that the OBR spelled out very clearly, a year or so after 2010, that it had underestimated the real impact of Labour’s recession?
Mr Hoban
My hon. Friend is absolutely right. The problem for Labour Members is that when they are confronted with the facts, they hide. That is the problem they will all face in the course of the next 50 days. They have clearly not developed economic credibility, because their plans and message are confused. They have no idea how they would deal with the economy. All we know about Labour is that it will spend more and borrow more and tax more, the way all Labour Governments have behaved in office.
The final reason we should be moving towards a surplus and reducing the national debt is that if we continue to lock in debt at high rates, we are reducing the capacity of future Governments to withstand future economic shocks. One of the challenges we faced in this Parliament was that the high levels of debt racked up by the previous Government made it increasingly hard to put in place the measures to turn the economy around.
We cannot simply pretend to ignore, or rack up, unfunded spending cuts. We need to work hard to tackle the deficit to ensure debt falls as a proportion of national income, as it will at the end of this Parliament, to get the right messages across. Let us be responsible about how much we spend. Let us be responsible on taxation and spending. Running a surplus in the good times will help the economy when difficult times lie ahead.
Mr MacNeil
Does the hon. Gentleman not accept that this has been the slowest recovery from any recession just about ever? Research from the National Institute of Economic and Social Research shows that, had it not been for the austerity cult and the Government choosing austerity, GDP would be 5% higher and extra tax revenue would be about £32 billion—about a third of the current deficit. Cuts and austerity have cost not just the economy but people’s opportunities.
Mr Hoban
I am really not going to be lectured by a Member from the Scottish National party about economic realities. We heard in the Budget today that because the United Kingdom is together, we are able to support the North sea oil sector in a way it could not have been supported if the SNP had achieved independence, so I am not going to take any lessons on economic credibility from the SNP.
In preparing for this speech, the last I will make in this House, I looked back to my maiden speech. Unsurprisingly, it touched on the local economy. I highlighted the strength of the business community in Fareham and its low unemployment rate. I also talked about the pressures on public services and infrastructure from house building. Perhaps it is with this frame of reference that I should talk about the economic reforms the Government have introduced in the past five years.
Fareham’s economy is still strong. In 2010, unemployment was 2.2%; today it is 1%. Strong businesses have helped to contribute to that and they have benefited from the Government’s reforms. Lower employment and corporate taxes have helped businesses to recruit locally. The apprenticeship reforms introduced in the past five years have meant that Fareham businesses have taken 740 apprentices in the past year, compared with just under 600 in 2010-11. The reforms have led to a renaissance at Fareham college where, thanks in part to taxpayers’ money, it has opened a specialist advanced manufacturing centre to meet the growing needs of local business, as well as refurbishing its campus in Fareham.
In my maiden speech, I criticised the top-down housing quotas that characterised the old-fashioned approach to planning. They had failed Fareham. The Government’s planning reforms, focusing on securing consent through a bottom-up approach, have secured widespread consent for 6,500 homes to be built in the new community of Welborne. This new settlement has benefited from the local growth deal funding infrastructure improvements, such as the new all-ways junction at junction 10 of the M27. Whereas in the past infrastructure never quite met local needs, I am more confident now than ever before that new development in Welborne will not harm the quality of life of local residents.
One of the challenges we face in Fareham is getting young people on the housing ladder. The Help to Buy ISA announced today by the Chancellor in the Budget will help to make it easier for many young people in my constituency to get a home of their own.
The economy of south-east Hampshire is dependent on good infrastructure, which is why I am pleased that the M27 is scheduled to be upgraded to a smart motorway in the next Parliament. I encourage my hon. Friends on the Treasury Bench to ensure that that is delivered in the first half of the next Parliament, not in the second half. Poor road and rail infrastructure makes it harder for those out of work in the older urban areas of south-east Hampshire to access employment opportunities in Fareham.
In taking forward the economy in south-east Hampshire, we have benefited from the abolition of regional development agencies and the introduction of local enterprise partnerships. I always felt that the South East England Development Agency neglected south-east Hampshire and focused its money and efforts elsewhere. The Solent LEP has had a relentless focus on economic growth in our community, playing an outstanding role in delivering all aspects of economic infrastructure in our community. I believe that our economic reforms and long-term economic plan have benefited Fareham and its residents and provided a route for further prosperity and security for local families. It has been an honour to serve those families over the last 14 years as their Member of Parliament, and I am grateful to them for the trust they have shown in me.
Through you, Madam Deputy Speaker, I would like to thank the staff of this House for the support they provide to Members of Parliament. Their work over the past 14 years has been invaluable and has supported me in becoming a more effective Member. It is ironic that I am making my last speech in front of you, Madam Deputy Speaker, as we sparred many times on Finance Bills under the last Government. One of the most important roles of any Government is economic stewardship. We need to provide jobs and growth for families and economic stability, which is vital to people’s confidence and well-being. I leave Parliament at the next election knowing that the economic future of my constituency is much more secure than it was five years ago. We should not squander those hard-won gains by losing the next general election.
John Healey (Wentworth and Dearne) (Lab)
It is a pleasure to follow the hon. Member for Fareham (Mr Hoban) in his last speech to the House. Like you, Madam Deputy Speaker, I faced him through the long hours of many long Finance Bills when he was on the shadow Treasury Front Bench. His reflective and loyal speech this afternoon was characteristic of the way he has served his party and Government. It is a shame he is not on the Front Bench this afternoon, because perhaps then he would not be leaving the House come Dissolution.
However, the hon. Gentleman has a problem, because, as the Leader of the Opposition said, this is a Budget that cannot be believed. I shall pick just two things that the Chancellor said during his Budget statement. He said that living standards were higher than when they entered office and that our economy was fundamentally stronger than it was five years ago. The gap has never been greater between their rhetoric and the everyday reality of people’s lives. I want to pursue two arguments that expose some of the rhetoric we heard from the Chancellor and some of the reasons why their long-term economic plan is failing and why the structural and cyclical weakness of our economy remains five years after they entered office.
There are two principal arguments. First, the Government’s economic policy directly choked off the recovery under way at the last election in May 2010, leading to the slowest economic recovery from recession in this country for 100 years. Secondly, the economic recovery is unbalanced, unequal and unsustainable. The structural weaknesses are still there, despite the rhetoric from the Chancellor—the rabbits coming out of the hat—and the underlying failures of the long-term economic plan are unchanged by this Budget.
Mr Brooks Newmark (Braintree) (Con)
I am listening carefully to the right hon. Gentleman, as are many Members opposite. Would he at least acknowledge that running a deficit of more than 10% was unsustainable? It might have fuelled some growth in the short term, but in the long term running a deficit in excess of 10% was not sustainable, and something had to be done about it.
John Healey
There are not many Members opposite, as the hon. Gentleman says. [Interruption.] He will remember, however, that after 10 years of the last Labour Government, before the global financial crisis and recession hit, borrowing and debt were lower than when we entered office. We have a deficit to deal with because of how the Government intervened to pull the country through that deep recession, to keep people in their homes and jobs and to keep firms in business. Of course there is a deficit, and of course it needs to be dealt with. The difference between the parties is that we will deal with it in a more balanced way. There is a choice. We can do it with tax rises that are fair, spending cuts and efficiencies. We will do what we need to do in a more balanced way.
Mr Redwood
Is it not the case that the most significant change after 2008 was the plan, which Labour backed and which the coalition continued with for its first two years, of taking the RBS balance sheet down from £2.2 trillion to £1.5 trillion? Was that not what provided the mighty shock to the British economy? It was something that Labour wanted to do.
John Healey
The intervention in the collapsed and failing banking system was a necessary step that the last Labour Government took with support from others, and most of the RBS and other bank intervention is dealt with differently in the national accounts. I would have thought that the right hon. Gentleman would have realised that.
John Healey
My hon. Friend characteristically anticipates one of the points I was going to make. He will know, because he will have seen the papers published alongside the Budget, that those papers confirm that over this Parliament public sector capital investment has fallen by 44%. His point is spot on.
I want to turn to some other facts. When the Government took office, the economy was growing quarter on quarter at a 4% annualised rate. The combination of policies introduced in the emergency Budget in 2010, which the Chancellor reminded us of, meant that by the end of 2010 growth was zero and that over the years 2011 to 2014 the annual rate was just 1.7%, not the 2.4% we were told we would get when he made his Budget statement. They choked off growth because of the policies and cuts they introduced. This has been the slowest recovery from a recession in this country in 100 years.
On public finances, I remind the Government Front-Bench team of that 2010 Budget speech. The Chancellor claimed that
“fear about the sustainability of sovereign debt is the greatest risk to the recovery”.—[Official Report, 22 June 2010; Vol. 512, c. 166.]
National debt then stood at 62% of GDP. Today’s figures confirm that it will be about 80% next year. On the deficit, the Chancellor issued his binding formal mandate in 2010 that the books
“should be in balance in the final year of the five-year forecast period, which is 2015-16”.—[Official Report, 22 June 2010; Vol. 512, c. 167.]
The failure here is astonishing. Far from balance, the Budget figures tell us that we will be in deficit by £75.3 billion. The point of balance is not next year; it is at least three years later than that. It is a comprehensive failure of long-term fiscal and economic planning.
What has gone wrong? The OBR says that the severe cuts and the significant VAT hike—let us not forget that—resulted in a loss to GDP of 2% in those first two years. Other estimates put the figure at 3% to 5%, at least, over the Parliament. The most productive spending in a downturn is capital spending. That is why organisations from the International Monetary Fund to the OECD and the OBR itself have all said that reducing investment spending has the most serious effect on negative economic growth, yet that is exactly what the Chancellor did, as my hon. Friend the Member for Edmonton (Mr Love) has just said. Over the Parliament, public capital investment has almost halved. When the Chancellor was faced with the choice either to spend money on, for example, short-term income tax cuts for millionaires or to invest in the infrastructure this country needs for the long-term future, he chose the tax cuts for the millionaires.
The unprecedented wage squeeze has come partly from the cuts in services, tax credits and benefits. It has come, too, because of the inherently weak demand for labour in this country. Before a Government Member jumps to their feet and asks, “What about the headline unemployment rate?” I would say that it is good that it is down, but the weak demand for labour has meant that people cannot get the hours or the wages to meet the bills that they are struggling to pay. Weak growth has been reflected in real declining wages. The area of South Yorkshire that I represent has seen the average full-time worker take home £2,500 less than in 2010.
Back in 2010, the Chancellor said he had a long-term economic plan. He said in that Budget statement:
“Our policy is to raise from the ruins of an economy built on debt a new, balanced economy, where we save, invest and export”.—[Official Report, 22 June 2010; Vol. 512, c. 167.]
The Parliamentary Under-Secretary of State for Transport (Claire Perry)
Hear, hear!
John Healey
The Minister says, “Hear, hear”, so let me tell her that household debts increased over this Parliament and are set to rocket over the next five years. Ministers have halved public investment over this Parliament, despite a pledge to protect it; and on exports, the balance of payments gap at the end of 2014 stood at 6% of GDP—the biggest since records began in 1955.
At the same time, our country has grown further apart. After 10 years with Labour’s regional development agencies in England, when the poorer English regions were able to achieve almost the same rate of gross value added growth as the richest regions, the gap has grown every year since 2010. The income of the UK’s richest region is now over 10 times that of the poorest, and real output per head has shrunk since 2010 in the north-west, Yorkshire and the east of England.
Let me remind my Front-Bench team of what the Chancellor tried to claim. He tried to claim that the north had grown faster than the south and he was talking about last year, but if we talk about the five-year period of the Parliament, the north has grown by 6% on his watch, while the south has grown by 10%. This is a Budget that cannot be believed.
Finally, at the heart of the Government’s failure is the dogma of pursuing a small state. We have seen less investment despite the consequences for productivity and growth; cuts to benefits and tax credits to fund millionaires’ tax cuts, despite the consequences for living standards; no serious export or industrial strategy, despite the consequences for our balance of payments; and no serious plan for balanced regional growth, despite the consequences for the inequalities in our country.
This Budget provides a warning to people about what is to come in the next Parliament. This Budget tells us that if the Conservative party is re-elected on 7 May, we will have a continuation of an economy and country for the few from a Government of the few.
Mr John Redwood (Wokingham) (Con)
I remind the House of my declaration in the Register of Members’ Financial Interests, as I offer advice to an industrial and an investment company.
I rise to correct some of the myths emanating from the Opposition, who do not seem to read the figures. I hope they will catch up with the Budget detail from the Red Book now that it is more commonly available. We are talking about a set of plans for a five-year period that demonstrate that the Government think that, given the growth in the economy, they can afford to spend £60 billion a year more by the final year of the forecast period than is currently being spent.
The biggest change announced in this Budget is a very substantial increase in the planned amount of spending for the end of the period, 2019-20, at which time the Chancellor proposes a £38.1 billion increase in total managed expenditure—well up on the figures in the autumn statement. This is good news. It shows that the Chancellor is reflecting the confidence in the economy, the reduced cost of interest charges as the cost of borrowing comes under better control and the lower rate of inflation, which will have a beneficial impact on the cost of providing public services.
Mr MacNeil
The right hon. Gentleman is giving an impression of a growing state, when what is happening in real terms is clear from page 112 of the Red Book—that, as a percentage of GDP, this Chancellor and his party are cutting the state by 13%, which will affect the poorest in society most. That is the legacy of a Tory Government.
Mr Redwood
I am giving the cash numbers, which are clearly set out on page 111. If the hon. Gentleman is patient, I will come on to deal with the argument about real terms and the percentage of the economy.
Let us start with cash. The £60 billion increase in the annual spend at the end of the period is a big increase, and if we can keep inflation of costs down, it could provide a real increase. We had these arguments at the beginning of the last Parliament. When I quoted the cash figures, people said it would amount to a real decline, yet we have had a real increase, with the last two years seeing real increases in total general public spending, as I indicated in a recent intervention and as this Red Book makes very clear. If the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) reads it he will see the real increases in general Government current spending over the last couple of years. Those have been affordable and the lower rate of inflation is helping.
If we look at public spending as a percentage of GDP, we see that, yes, it will fall, but that is extremely good news, because it means people will be able to keep more of the money they earn from their productive activities and as the economy is growing we can have better public services.
One of the cruellest myths being put around by the Opposition at the moment is that if we took public spending to 35% of GDP, we would be cutting it to 1930s levels. That is complete nonsense: for most of the 1930s, public spending as a percentage of GDP was well below 35% in any case, but I recently looked at the numbers and found that, in real terms, public spending this year is nine times the level of real public spending in the early 1930s—nine times in real terms.
Mr Newmark
It is statistically worth pointing out that the direction in which we are heading is towards 35.2% of GDP, but that when the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) was Chancellor he was spending about 35.8% or 35.9% of GDP. There is not a huge difference between where we are going and where he was.
Mr Redwood
To make the point, the Chancellor has said that he will spend a little bit more in the last year of the period so that we reach exactly the percentage of GDP that Labour thought appropriate in 2000. We cannot say that because we are spending the same percentage of GDP we have cut spending or that it is down in real terms. If we have a healthy, growing economy, public spending is well up in real terms, as is the general size of the economy. We should welcome that. What we want is growth in the economy, so that we can have affordable growth in the range and quality of public services. That is exactly what this illustrates. I hope that Labour Members will stop trying to con people into believing that if we ended up with 35% of GDP—1% lower than the Chancellor intends—we would somehow have 1930s levels of public services. It is so absurd that I cannot believe that they even dare to repeat such nonsense day by day.
What we want from this Budget, and what I think it helps to deliver, is more growth. It is great news that we now have such good employment figures, which show record highs. It is good news that unemployment is reducing and good news that youth unemployment in particular is reducing.
What has happened over these five years is quite remarkable if we consider two important background points. The first is the state of the banks inherited in 2010. This House has never really understood or grappled with the magnitude of what happened to the banking system under Labour, or the magnitude of the changes between 2008 and today, particularly with respect to RBS and HBOS. If we had asked most economic forecasters what would happen to the UK economy if we took about £1 trillion of assets off the balance sheets of two leading banks, they would probably have forecast that the economy would crash in a remarkable way. What is fantastic for our country is that after the initial crash over which Labour presided in 2008-09, we have managed to get the economy back to growth while mending the banks and going through the extraordinary shrinking on the banking balance sheets. [Interruption.]
I find it remarkable that Labour Members will not listen to what I am saying. They lived through this dreadful experience and their regulators allowed the banks to over-expand their balance sheets, when many of us were saying that it was going too far. [Interruption.] Indeed, we did. We constantly said that regulation was too lax. I remember writing in the report of the economic policy review undertaken by the Conservative Opposition that, while in some areas there was far too much regulation, the regulation of the things that really mattered—cash and capital—was far too lax, and needed to be tightened. However, the Labour Government and their regulators then made the worse mistake of over-tightening in a hurry, and precipitated a major crash. Labour needs to learn from that. Indeed, we all need to learn from it, because we do not want it to happen again. We need to understand why there was such a big crash in output and in people’s living standards and real incomes, and why it took time, between 2008 and 2013, for growth to resume. The reason was that the banking system was so badly damaged that, obviously, it took time to get it back into shape.
As the Chancellor said himself, there was another reason for our problems. In 2011 there was an extremely unpleasant euro crisis, which had an impact on Britain because we live by foreign trade as well as by our domestic activities. We had to shelter ourselves from the worst of that. We are now in the process of orientating our trade much more strongly towards Asia and the Americas, the growing parts of the world, and away from the European area, which is mired in recession and is still experiencing enormous difficulties. It decided to create a single currency without creating a single country to back it and love it, and is having to live with awful strains and stresses as a result.
As we meet today, this Budget is an important event. It is certainly a very important event politically in the United Kingdom. However, a far more important set of events is taking place on the continent, where hectic negotiations are taking place between Greece, Germany and the rest over whether Greece can stay in the euro. It is not easy to see a happy outcome in either direction from those very pained discussions, but are we not glad that we are not having to live with that awful experience in this country, thanks to some of us who urged very strongly that we should stay out of the euro? [Interruption.]
The hon. Member for Bishop Auckland (Helen Goodman) thinks it is funny that Greece has a youth unemployment rate of 50%, but I do not. I think it is a disgrace. I also do not think it is funny that several countries on the continent have a general unemployment rate of 25%. That is quite unacceptable, and the Labour party would rightly condemn it every day of the week if it were happening here, but it is not happening here because we ran our own economic policy, and we have done a much better job that they did on the continent.
Mr MacNeil
Does the right hon. Gentleman accept that most of the problems of the European Central Bank are to do with a fixation on inflation—a fixation that he shares?
Mr Redwood
I have no fixation on inflation, but neither do I think that runaway inflation creates prosperity. It is necessary to manage inflation, and to manage growth, and to have an economy that can expand. I am very pleased that this Budget helps to create and preserve the expansion that is now under way in the United Kingdom. I think it is good news that it contains measures to promote more home ownership and saving, and I think it is good news that it contains measures that will help enterprise and business to promote more jobs, because what we want are more jobs and better-paid jobs.
I was pleased to hear the Chancellor say that most jobs now are full time, and that many are highly skilled. That is what the country needs: more skills, more opportunity, and the chance for individuals to train, work and educate themselves well so that they can get better-paid jobs. That is what we all want in the House. It is sometimes suggested that the Conservatives do not want it, and I find that regrettable. We want it as much as anyone else. We want more jobs, better-paid jobs, and more skilled jobs. We know that we have to earn our money, and we want to create opportunities for people to earn theirs.
The Budget contains some sensible judgments on how much the country can afford in increased public spending. I think that £60 billion is a perfectly good judgment of the amount of extra public spending that will be possible by the end of the next Parliament. It also contains a judgment on how we can finally get rid of the deficit and start to cut the debt. I find it a bit odd that Labour has been telling us that too much was cut in this Parliament, and is now saying that the deficit is too high. I have news for Labour. You have to cut if you want to lower a deficit; it does not just magic away. The question is, how do you get that judgment right?
John Healey
It is possible to deal with a deficit simply by cutting, which is largely what the right hon. Gentleman’s party has done, but it is also possible to deal with it in a more balanced way by cutting where cutting is needed, raising revenue where it is right to do so, and ensuring that there is enough growth to bring in the revenue. That was the fundamental problem with the policies that existed at the beginning of the current Parliament.
Mr Redwood
The right hon. Gentleman has just described the policy of this Government. They put some taxes up, they went for growth—which is now coming through, and is helping to tackle the deficit problem—and they reduced the over-optimistic spending plans of the outgoing Government.
We have been told that it was wrong to cut capital spending. Well, I seem to recall that the only bit of spending that the Labour Government cut in detail before leaving office was the capital budget. They made massive cuts in capital. The Chancellor has restored some of those cuts, but because of the parlous state of the overall finances, he could not restore all of them.
The Budget presents a good package. There is good news on home ownership, good news on employment and good news on growth. A great many myths need to be put back into the dark room, because they are not going to con the British public.
Sammy Wilson (East Antrim) (DUP)
Let me begin by making it clear that my party has no political axe to grind when it comes to whether one party performs better than the other, although the hon. Member for Reigate (Crispin Blunt) has been on local radio in Northern Ireland telling people to vote for anyone but the DUP. We will not hold that against the Conservative party. We want the United Kingdom to succeed, and we want its economy to succeed. I think it is in the interests of all my constituents that the Government of the day—whoever they happen to be—get the policy right, because that means that people will have jobs, a good standard of living, and good public services.
The Chancellor began his speech today by saying that Britain was now walking tall, and he quoted some impressive figures. We had better growth than the rest of Europe and the other G7 countries, we had lower unemployment, we had rising living standards, and we were selling shares in banks that were bankrupt six years ago. However, while we may be walking tall in some respects, there are still people in the United Kingdom economy who are not walking tall, but are stooped under the burden of parts of the economy which are ailing. The growth that the Chancellor has talked about has not been universal. He cited impressive rates of growth in northern areas, although I note that he did not mention Northern Ireland. As I often used to say to economics students, “Look at the base from which you are starting.” Which areas were hit most by the recession? It was the northern areas, including the north-east and the north-west.
Mr Redwood
What Northern Ireland clearly needs is more private sector industry and activity. Does the hon. Gentleman not think that a good way of promoting that would be a much lower rate of corporation tax, which is just what the Government are giving him?
Sammy Wilson
I shall come to that point. I am not suggesting that everything that the Chancellor has done is wrong. What I am trying to do is paint a picture of a country in which not every region and not every individual is walking tall. Not only some regions, but some groups of people, are still suffering and stooped under the burden of an ailing economy. Young people in my constituency are suffering as a result of youth unemployment; other people are in the lower wage brackets, or are in jobs in which there is uncertainty or the effect of the economic downturn has depressed wages the most. Those people are not experiencing the improved living standards that the Chancellor has described today.
I welcome the fact that, as of the last year, 542 fewer people are on the dole or on welfare in my constituency. Nearly every week, however, people come and talk to me about the effects of the recession and the way in which it has changed employment practices, Many are uncertain about their incomes. Some are earning the minimum wage, some have jobs that are insecure, and some are not always paid because of the nature of their contracts. The Chancellor has said today that the minimum wage will be lifted and that some people will be lifted out of taxation; nevertheless, that has to be set against the fact that, for many people, those gains by Government action are depressed by employment practices that are becoming more prevalent in parts of the economy. Banks may be selling shares, but some of that growth and improvement—this is certainly the case in Northern Ireland—is being achieved by banks quickly foreclosing on those to whom they recklessly lent and by suppressing businesses instead of giving them the chance to grow.
Although the economy may be walking tall in the Chancellor’s eyes, there are many obstacles along the road that could cause us yet to stumble. I hope we avoid them, but let us look at some of the information even in the Red Book. Productivity growth is weak, which of course makes it difficult for real living standards to increase—if productivity does not increase, there is not the same chance for wage increases. Exports have not been growing in the way that the Government anticipated; indeed, the fact that the balance of payments deficit is 6% of GDP will have a deflating impact on the economy. Despite what the Chancellor has said, his own figures show that he is still dependent for future growth primarily on consumer spending. In other words, we are still dependent on people taking on the very debt that we have said brought about some of the problems we are now experiencing.
At the same time, growth in investment is weak. Growth in private sector investment is going to go up. That is quite right; however, according to the OBR forecasts, over the period of the next Budget, public sector infrastructure investment will be reduced by 17% as a percentage of GDP. That is one of the problems I have with the current policy. While I understand and, in fact, probably have more sympathy with the arguments put by Government Members—about getting the deficit down and making sure that we do not have huge debt interest, that we have confidence in money markets and that we do not have to pay more for the debt we undertake—there are ways that the Government can stimulate the economy. One way that can be done is through infrastructure investment.
I cannot understand why the money markets are more confident about lending us money to pay for welfare benefits than they are about lending it to pay for infrastructure development. There have been infrastructure developments in my constituency, such as the new road from Carrickfergus to Belfast. The improved travel times have led to investment by companies already in the town, which was isolated because of the difficult roads. The return to the Northern Ireland economy from the Titanic project in Belfast, with £90 million of investment and the return in tourist numbers—nearly 1 million in the first year and a half, with the impact that has on local pubs, hotels, restaurants and so on—has been terrific. At a time when we need to stimulate the economy, I cannot understand why the Government are planning to reduce infrastructure investment, which could produce real returns.
Jim Shannon (Strangford) (DUP)
One way of helping, which was announced by the Chancellor today, is the plan for farmers to spread their profits and losses over five years. As my hon. Friend will know, in Northern Ireland the dairy industry in particular is having a difficult time. It had to reinvest because of the EU regulations on slurry retention and disposal and also deal with a clear problem with the price of milk. The Chancellor’s announcement will enable the farming industry at least to balance its books over a five-year period. Does my hon. Friend welcome that as a way forward for the farming industry in Northern Ireland and for those in my constituency and, indeed, his own?
Sammy Wilson
I do not want to be churlish about this Budget, because there are a number of things—my hon. Friend has led me on to them—that I welcome. Given the way that farming income changes, it is important that farmers should have the ability to look at their income and spread their profits and losses, and the tax they pay on them, over a five-year period rather than a two-year period. I welcome the announcement of a requirement to have a universal service obligation for broadband, although I see that there is no timing for it, so maybe the Minister can give us some indication of that. I know that in my constituency smaller businesses that want to set up in rural areas are held back because they do not have that easy means of communication.
Ms Margaret Ritchie (South Down) (SDLP)
The hon. Gentleman is making a compelling argument about the need for investment in infrastructure, part of which is this whole area of investment in broadband. Does he agree not only that the time scale to be specified is an important consideration, but that we have to see geographical locations? He, like me, will have talked to constituents, particularly those in rural areas, who cannot get access for topographical reasons.
Sammy Wilson
Hopefully, a universal service obligation will mean exactly that and the investment in the infrastructure will include all parts, regardless of how difficult they are—I notice that one of the things that will help is satellite broadband where fixed line broadband cannot be used.
I also welcome the Government’s promise to improve incentives for people to save for the deposit for their first home—especially given the number of young people who come to me looking for ways to get their first home—and to give additional support of up to 20% for those savings. As one who supports the fair fuel campaign and represents a rural constituency where many people do not have the opportunity of using public transport, I also welcome today’s announcements on fuel duty.
I suppose the fears we have for the future, especially in Northern Ireland, are these. I welcome the fact that the Government have made available to us the devolution of corporation tax and the impact that I believe it can have on our economy. Nevertheless, as we seek to rebalance the economy, that must not be counterbalanced by serious public sector expenditure cuts, especially for an area that is still dependent on the public sector. It must not be offset by huge cuts in infrastructure. We have already suffered a 40% reduction in public infrastructure investment in Northern Ireland, with devastating effects on the ability to deliver on many of the things that we wanted to deliver on. I hope that the optimism that the Chancellor has expressed today comes to fruition, but I believe there are obstacles. They are highlighted in the Red Book and in the speech today. Some of them are in the Government’s control and some are outside it. I hope we will walk tall and not find that there are many people and many areas of the United Kingdom still stooped under an economic policy that is not doing its best for Britain.
Mr Brooks Newmark (Braintree) (Con)
I am delighted to follow the hon. Member for East Antrim (Sammy Wilson), who is a powerful advocate for his region of the United Kingdom. He raised many important points. It has not been a balanced recovery; he is absolutely right. The south has done a little bit better than perhaps Northern Ireland and some of the areas of the north. However, as the Chancellor pointed out during his speech, recoveries are never linear. Sometimes some regions grow faster than others. Sometimes we get recoveries that are slow and then there is a U-bend and suddenly the recovery accelerates a little more. I suspect that what we are seeing now is a little bit of the J-curve—we have had a much slower recovery than we expected, but it is now moving much faster, as we have seen from the Red Book.
Damian Collins (Folkestone and Hythe) (Con)
I wanted to intervene on the hon. Member for East Antrim (Sammy Wilson) but he was reaching his conclusion. Is it not a cause for positive reflection that job creation in Northern Ireland at the end of last year was growing at its fastest rate for more than 20 years? That shows that there has been growth throughout the United Kingdom.
Mr Newmark
My hon. Friend and the hon. Member for East Antrim are both right. The hon. Gentleman’s point was that at the beginning things were a little slower than he would have liked for his constituents, but as he said—this is my point—recoveries are never linear. In the past five years, we have seen slower growth than we would have liked, but we have far more accelerated growth through 2014-15, and certainly beyond to 2016-17 and 2018-19. That is good news.
In 2010, in Labour’s great recession, we faced economic meltdown. As UK plc, we were literally teetering on the brink of bankruptcy. What we needed at that time was an emergency Budget. The Chancellor, working with our coalition partners—I give credit to the Lib Dems—came up with a long-term economic plan. In producing that long-term economic plan, we had to deal with one important issue: the structural deficit. The deficit, which was running at roughly 10.2% of GDP, needed to be dealt with. We particularly needed to deal not just with the general deficit but with the structural deficit, which was an enormous problem in terms of our ability to achieve sustainable borrowing.
That was the challenge posed by the right hon. Member for Wentworth and Dearne (John Healey). He wanted an unsustainable deficit of 10%-plus. Perhaps he meant 12%; perhaps he wanted more borrowing. I do not know what direction of travel he would have liked to take, but if we had gone in that direction, we would have been in France’s position today.
Dr William McCrea (South Antrim) (DUP)
Does the hon. Gentleman accept that in Northern Ireland the construction industry is still having difficulties? Many of our major construction companies and the people working for them are having to come to the mainland to get contracts rather than staying in Northern Ireland. We need to encourage that industry.
Mr Newmark
The hon. Gentleman makes a good point. In introducing things such as the increased investment allowance—it was £25,000 and went up to £250,000—the Government have done a lot to help to turbo-charge investment. I shall come to the rate of investment and investment growth a little later in my speech.
The important thing was that we dealt with the deficit up front and brought it down by more than 50%. It is now trailing at around 5%. Do we have further to go? Absolutely, but bringing it down from 10.2% was very important.
The important thing about bringing down the deficit and dealing with the structural deficit was bringing back market confidence. Doing so allowed us to maintain low interest rates. Confidence means low interest rates. It is not just a matter of the Bank of England’s confidence in setting them—there is a worldwide market out there. Low interest rates mean low mortgage rates and low business rates for small businesses. All those things were important in helping to create growth in the UK.
John Healey
When the hon. Gentleman intervened during my speech, I made it clear that the deficit was caused after the global financial crisis by the Government stepping in to help the country through. That is what Governments can do. I said clearly that that caused the deficit and we had to deal with it. Any Government would have done so. What counts is how they deal with it. Will he remind us what Labour’s plan in the 2010 election was, as set out by my right hon. Friend the Member for Edinburgh South West (Mr Darling), the Chancellor at the time? Our plan would have reduced the deficit faster and further than the Chancellor has managed in the past five years.
Mr Newmark
I do not want to use the expression ceteris paribus—all things being equal—but the Chancellor at that time was probably right. Unfortunately, he too would have faced a euro crisis, and things would have been very different from what he originally projected, just as things were different for my right hon. Friend the Chancellor when he made his original prediction.
Mr Newmark
I am trying to stick to Mr Deputy Speaker’s instruction to keep roughly to 10 minutes.
Time and again, Labour Members talk about borrowing. Page 22 of the Red Book shows us that public sector net borrowing is coming down annually. That is the point. Labour Members look at the gross figure, but the important thing is that we are bringing borrowing down annually. In 2015, it will go down to £90 billion. It will then go down to £75 billion next year. Hopefully, by 2018-19 we shall be in some sort of surplus.
It is also important to look at cyclically adjusted net borrowing, which is also decreasing—we will be showing a surplus in 2018-19. The borrowing figure has been and is a problem. Are Opposition Members right to point out that the gross figure is growing? Absolutely. The point is that we are tackling the deficit to bring down the annual amount of borrowing. That is what the Government have done very well.
Mr Newmark
No, I am not giving way.
I talked about the J-curve. Growth was slower to begin with, but the OBR is forecasting that growth will be much faster than originally predicted. In 2015, GDP growth goes to 2.5%. In 2016, it goes up another 2.3%, and 2.3% beyond that.
It is important to note, as the Chancellor did, that we have rebalanced growth—we have growth in the north as well as in the south. Has the north faced more pain than the south? Absolutely. The facts are there. The important thing is that we are now seeing balanced growth. The service sector is growing hugely, but the manufacturing sector is growing equally fast.
The OBR forecasts business investment growth—this is important—of 5.1% in 2015 and 7.5% in 2016. Hopefully, some of that will benefit Northern Ireland, to support what the hon. Member for East Antrim said.
The critical thing about growth is unemployment and employment. Unemployment has decreased from 7.8% to 5.7%. That has happened much faster than the Governor of the Bank of England projected when I sat on the Treasury Committee. Most importantly, for my constituents unemployment has dropped from 3.7% to 1.5%, and youth unemployment has dropped from 5.4% to 2.6%.
We have a record number of people in work: 30.9 million people in work is a remarkable figure, but even more remarkably, more men and more women are in work than ever before. Some 1.85 million new jobs have been created. I started the Million Jobs campaign to try to address the problem of youth unemployment. I was delighted that the Chancellor took our recommendation to abolish the jobs tax for young people. The Million Jobs campaign supported the abolition of national insurance for under-21s, which will kick in this year. I hope that one year the Chancellor will extend it to 24-year-olds. We are already beginning to see the benefits for the under-21s.
On taxation, I never imagined that we would do this—I thought at the time that it would be costly—but the personal allowance has gone from £6,500 to £10,600. That has meant that we have been able to benefit the average family to the tune of something like £905 per taxpayer. That is good news for taxpayers. Increasing the personal allowance to £12,500 in the next Parliament is a great ambition: it would take something like 4 million people out of tax altogether.
Raising the minimum wage from £6.70 to £8 an hour is another good and important move, because it stops the state subsidising the private sector, which is what has been happening as a result of a very low minimum wage. Raising the minimum wage will ultimately benefit taxpayers overall and ensure that businesses take on the responsibility to pay their own employees a fair wage.
On business tax, corporation tax coming down from 28% to 20% has not only encouraged people to set up businesses, but encouraged businesses to come across from continental Europe and set up in the United Kingdom. We now have the lowest corporation tax rate in the G8.
I have mentioned the abolition of national insurance for young people. It is also good news that the employment allowance is saving about £2,000 per business, because it encourages small businesses in particular, which live on the margin, to perhaps take on an extra one or two people.
The freezing of fuel duty has also benefited almost all our taxpayers: my constituents save about £10 every time they fill up their cars. Energy costs coming down will benefit the elderly in particular, so it is all good news on that front.
Most importantly—Opposition Members have been making this point for a while—when inflation was running higher than pay, people were in effect losing money; the ordinary, average earner was suffering. Now, however, pay is up about 2.1% and inflation at 0.9%, so real pay is going up.
As an ex-charities Minister, I am particularly pleased that an extra £75 million will be available for charities from the LIBOR fines. I certainly pushed for that and wrote to the Chancellor asking for support for Essex Air Ambulance, which is based in my constituency. I am delighted that the Budget will provide support from the extra LIBOR fine money for Essex Air Ambulance, because that means it will be able to provide an emergency support service 24 hours a day, seven days a week.
The Labour party was financially reckless in government, but its promises in opposition seem to be even more so. It has promised something like £20.7 billion in unfunded commitments, which is something like an extra £1,200 per household. Labour is indeed the party of tax and spend and borrowing. It has not changed and, if elected, it would still not change and it would damage this country.
What would a future Conservative Government do? They would be committed to raising the personal allowance to £12,500 by 2020; cutting tax for 30 million people; taking 1 million more people out of tax altogether by raising the personal allowance; balancing the books beyond the next Parliament; and reducing Government spending to 35.2% of GDP.
In conclusion, the Chancellor has delivered on his long-term economic plan. He has reduced spending, the deficit, taxes and unemployment. Compared with five years ago, he has also overseen reductions in inequality, child poverty and pensioner poverty and a smaller gender pay gap. In the words of Christine Lagarde, head of the International Monetary Fund,
“this is exactly the sort of result that we would like to see: more growth, less unemployment, a growth that is more inclusive, that is better shared, and a growth that is also sustainable and more balanced.”
This is a Budget that the Government can be proud of. The Government’s long-term economic plan is working, and we hope that on 7 May the electorate will not give the keys back to the guys who crashed the car.
Madam Deputy Speaker (Dame Dawn Primarolo)
Order. May I remind Members that, at the beginning of the debate, the Chairman of Ways and Means asked for each Member to take up to 10 minutes? We have had six speakers and only one has responded to that plea. That was Alison McGovern; everybody else has spoken for longer. That means that there are Members in the Chamber who will not get to speak if others do not comply with the request to speak for no more than 10 minutes. It is very easy to tell 10 minutes on the clock—it is a nice round figure—so I ask Members to keep an eye on the clock and to speak for only 10 minutes. If not, we will have to have a time limit, which would be unfortunate, so please try to stick to 10 minutes.
Austin Mitchell (Great Grimsby) (Lab)
I will not follow the hon. Member for Braintree (Mr Newmark) into his fantasy world; the Government seem to be in danger of moving into a fantasy world where it is as if all the nation’s problems have been solved by the miraculous efforts of this Chancellor. The Budget seemed to me to be a matter of the Government moving furniture around a room in which they have just had four years of a very painful S and M party and inflicted 50 shades of austerity on the country, and they are now trying to clean up the mess for presentation to the electorate. It is a Budget of pathetic measures backed up by endless promises of a glowing future.
The fact is that the economy is better—we have to concede that—but not because of any Government long-term plan. I am getting fed up of hashtag politics and the endless mentions of the Government’s long-term economic policy. It is as if they think that, if they mention it for long enough and as many times as they can, people will believe that they actually had a long-term economic policy. But they did not: they came in with a fiscal policy of slash, cut and burn, and to roll back the state. It was an ideological policy, not an economic policy—that was the essence of what they offered the British people. The policy was designed to reward the rich, because if the state is rolled back and welfare and public spending cut, then taxes can be cut to reward the rich and start the trickle-down effect, but the trickle-down effect is what horses do to roads. That was the Government’s hope for the British people as a result of the money going to the rich.
On the basis of those expectations, the Chancellor made two promises right from the start: to pay off the debt, which he has singularly failed to do; and to eliminate the deficit, which he has also failed to do. Those two priorities have given us four wasted years of futile austerity in particular, and of pain, which has hit the poor and the north and cut the living standards and household incomes of people in this country. It has been four years of misery.
Growth in that period has now come about not because of the Government’s long-term economic plan but thanks to the efforts of the Bank of England. The Bank of England has been doing what the Government were not doing and has saved the Government’s bacon. If interest rates are kept flat to the floor for six years and £375 billion is pumped out, printed and shoved into the banks without any revival or economic benefits, the patient is dead. That is what has produced the economic revival, not the Government’s measures. It worked and now the Chancellor is trying to claim credit for it, by giving us a few pathetic tax cuts which he claimed were impossible a few years back; by benefiting the north, which he has been hitting for four years; and through glowing promises of a better future that has now been postponed until 2020. I have news for the Chancellor: that future will not come under this Government, fortunately, and it could not come from this Government’s policies. The Government are essentially the trade union of the rich, implementing policies to benefit the rich, and they will be thrown out by the people who have not benefited from those policies.
The Chancellor tells us that we are better off, but the nation does not believe him. The nation feels squeezed, as its living standards are being cut. It feels that it is still suffering and that it has been betrayed, and it does not like the spectacle of rewards being showered on the rich as a result of cuts to benefits and penalties on the poor. This has been the slowest recovery ever from any recession in this country and it has essentially been slowed by the cuts and reductions in demand introduced by the Government. The Government will not produce a glowing future because their policies cannot work. This is not a real recovery. A real recovery would involve building up British manufacturing strength so that Britain was able to pay its way in the world, and that has not happened and is not happening at the moment.
All the Government have done is repeat some old tricks for making people feel better off. For example, with rising house prices, everybody who owns a house feels better off, whereas the people who do not own houses feel and are worse off. Rising house prices, stoked by the Help to Buy scheme, have helped to produce a better feeling, as has the high pound. The pound is grossly overvalued at the moment, which means cheaper imports, even if it damages exports on a considerable scale. Falling food and fuel prices are transient factors and we can add the spending bonanza that the Government hope to see having given pensioners the freedom to spend their pension pots. Whatever the consequences in the future, that would produce an economic boost and a stimulus now.
This is not a recovery that will work and be sustained. It cannot, because the productivity gap has widened and investment is lower than it needs to be, in the private sector and, in particular, in the public sector, where it has been slashed. Programmes that were cut in 2010 have not yet been fully restored. This is not a real recovery because there is no substantial manufacturing revival on the scale that we need and it will not lead to a real recovery because we are still not paying our way in the world. The deficit has been 4%, 5% or 6% of GDP and has been rising. It came down in the past month, but that was a small dent in a long-term rise. We are paying our way only by importing capital, wealth and businesses and by people buying up British businesses, British land, British houses and the country in general. The profits from those buy-ups will eventually have to be exported. Those people will not want to stimulate demand here and it will be exported, dragging down our economy. Investments will be dictated by the long-term needs of overseas boards that take less account of the needs of this country.
Effectively, this has not been a revival in our ability to pay in the world and to stand proudly on our own two feet. The only march of the makers that has taken place seems to me to be the march of the Chancellor and the Prime Minister around factories, wearing hard hats and appealing pathetically for support from factory workers whose living standards have been reduced by their Government.
It is true that we are doing better than Europe, but that is because Europe has embarked on the folly of deflation to make the euro work. Europe has become the low growth, high unemployment blackspot of the west, so to be doing better than that is no great advance or commendation.
The Budget will not lead to the prospects the Chancellor was holding out. We need a real recovery in manufacturing and jobs. Let us remember that, although unemployment is falling, it still stands at 1.86 million, which is very high, and that people who are receiving benefits are not paying taxes. So unless we get a real recovery and a substantial increase in earnings to boost demand in the economy, it follows as night follows day that this Government—if they are re-elected—will have to go in for a massive programme of cuts to achieve their promise to get rid of the deficit by 2020.
This Budget foreshadows an enormous programme of cuts. Welfare cuts of £30 billion have been talked about, and defence cuts have also been mentioned. The Government are not committing themselves to maintaining the defence spending target of 2% of GDP. They have, however, committed to making cuts in local government spending. The Public Accounts Committee has stated that the cuts in welfare and social security are not sustainable.
That is the future that this Government are offering the country if they win the election, but the country will reject that future. It is instead going to accept Labour’s offer to invest to grow, to put people back to work so that more people are paying taxes and fewer are receiving benefits, and to bring down the deficit in that way by reviving the economy. I think that people will accept that offer at the election because they have been so badly bruised and betrayed by this Government, and because they want a party that will offer them hope.
Damian Collins (Folkestone and Hythe) (Con)
Listening to the speech by the hon. Member for Great Grimsby (Austin Mitchell) was a bit like getting a lecture from the captain who crashed the ship on the subject of how well the emergency services conducted the salvage operation. No one will believe Labour Members. When the Labour Government were in office, they ran up deficits in the good years while the economy was still growing, but Labour has now suddenly become the hawkish guardian of the balanced budget. It has become the party that shuns deficit and debt, saying that if it had been in power, none of this would have happened. We all remember the shimmer of growth that the last Government thought they had created after the banking crisis, but it was merely an artificial stimulus that they had not budgeted to continue. The money was not there, and Labour would have had to take the difficult decisions on spending, a fact that it consistently and conveniently chooses to ignore.
Looking at the Budget today, we can now see the benefits of the Chancellor of the Exchequer’s long-term strategy. We can also see coming to fruition many of the smaller initiatives and policies to increase investment in the economy, including from overseas, and to back entrepreneurs and growth in the regions. I want to talk about some of those policies today.
I shall start by talking about my own constituency, however, as have all the previous speakers in the debate. The hon. Member for Great Grimsby closed his speech with the word “hope”, and there is now undoubtedly much more hope in my constituency and the local economy in east Kent, based on the policies of this Government. We have seen substantial and consistent falls in unemployment, and that has been backed up today by further falls in the unemployment figures. The unemployment rate is now nearly half what it was at the peak of the recession. That means that there are typically 1,000 fewer people out of work each month than during the recession, which is a remarkable turnaround.
My area, like those of other hon. Members, has also seen substantial falls in youth unemployment. We have to remember that youth unemployment had become a problem in the British economy that was counter-cyclical. It ran through good years and bad, and seemed to be a problem to which there was no answer. However, we are now seeing solid, consistent falls in the youth unemployment figures too. That has certainly been backed up by the Government’s investment in the apprenticeship programme. In my constituency, we now have nearly double the number of young people entering and starting an apprenticeship—learning and earning—and entering the workplace. People were missing out on those opportunities in the past. That change is certainly having a dramatic impact.
These changes are not happening by accident. They are being supported by the Government’s policy of cutting taxes on business, and by the investment in east Kent and other regions through the Government’s regional growth fund. Tens of millions of pounds has been awarded to local businesses. That money has been spent and it has created new jobs in businesses that were wondering, five years ago, where growth was going to come from and how they were going to get support from the banks. Those businesses have now invested in themselves and they are employing more people. They are looking forward to the future. That is the change we have brought about.
That local growth, which has certainly taken place in east Kent, is backed up by good and big infrastructure, which is why I continue to support the Chancellor’s commitment to infrastructure, to improving the economy of the north and to investing in the northern powerhouse. There is no doubt that the economy of east Kent is being accelerated by the infrastructure of high-speed rail, which is bringing more investment and more jobs into our communities. Other communities in the UK will benefit from that commitment and that investment, too. Putting money aside for big infrastructure projects of that nature is long-term decision making and planning at its best.
There is also no doubt that the creative economy has been one of Britain’s great success stories for a number of years, particularly the past five years. Exports from Britain’s creative industries are growing at a rate of more than 11%, and their job creation rates are faster than those of the rest of the economy. The gross value added of the creative industries in the British economy is growing as a proportion of the size of the economy as well. That has been supported by decisions such as the investment in the production tax credits for TV drama, for children’s programmes and for animation. I am pleased that that investment is being continued into other sectors of the creative economy, particularly theatre and orchestras. By backing Britain’s productive and creative talent we are not only supporting the underlying strength of the industry, but bringing more revenues into the Treasury. That shows that if we cut the right taxes and provide the right incentive and support, we bring in more revenue for the Treasury and create more growth in the economy. There is no better example of that than there is in the creative industries.
The creative industries are a very important part of the regeneration and growth in towns such as Folkestone, but we see this all around the country: in Manchester we see the fastest growing media city in Europe; film and TV production are a key part of the growth of Belfast and the Titanic quarter; we have the video games industry in cities such as Dundee and many different locations around the country; and we see the growth and importance of creative industries in the regeneration in Digbeth and Birmingham. Right around the country we can see that growth in place, supported by the skills, ingenuity and creativity of the British people, and backed up by the Government and their policies.
Tech city in London is a global centre. After Silicon Valley it is arguably the global centre of tech industries, and it certainly backs up the commitment the Chancellor made at the start of this Parliament that London should be the European centre for creative and digital industries—it certainly is that. The enterprise and investment schemes that this Government put in place have been a key driver in the growth and success stories of many of those small businesses. The continuation of those policies makes London and makes the UK one of the best places in which to invest and start a business in this fast-growing, dynamic sector of the economy.
I particularly welcome what the Chancellor had to say about ultrafast broadband and the commitment to try to bring investment in that, starting with some of the harder-to-reach communities. Members representing areas that are both rural and urban will all have pockets in their constituencies that are hard to reach with superfast broadband. In questions a few weeks ago, the Prime Minister set out that the key challenge would be, once 95% of homes have superfast broadband, reaching the extra 5%. Today, the Chancellor set out a bold strategy and vision for how we can reach that final 5%. Delivering ultrafast broadband by satellite into hard-to-reach communities is an excellent way of doing that. We know that that broadband and the internet are not just a “nice to have” service, but an essential tool for homes and businesses, particularly those in rural areas. It enables people to trade, market and sell their goods anywhere in the world from the place where they live and work—it is a necessary tool. That commitment to the future investment in that vital piece of infrastructure is very welcome.
Finally, I wish to discuss what the Chancellor said about consulting on a review of business rates. Many people would agree that that is the right step to take. The nature of the economy has changed substantially; it is no longer based on just the square footage of a building. The nature of someone’s work, be they a tech entrepreneur or a traditional manufacturing company, can be very different, as can the revenues they generate. I just ask the Treasury to consider one thing when conducting that review: the role that business incubation units play in supporting micro-businesses and tech start-up businesses. We see that all around the country. We have seen a successful incubator running in Folkestone—it is called the Workshop—and new incubator spaces are being created. In most of the tech hubs around the country we see incubators as a key part of supporting new business growth. It will be interesting to look at whether business rate reductions or exemptions for genuine incubator spaces for very new start-ups and fledgling companies would incentivise the creation of more space. Equally, we could consider whether companies that have an excess of office space could give up some of it to support an incubator unit and, in return, offset that against their business rates or receive a reduction in their business rates. That would be a very low-cost way of supporting micro-businesses in the start-up economy. I would be interested to see that considered when the Government lead their review of business rates.
There is no doubt that this was a Budget to support the growth in the economy, and to give hope to anyone who is saving, working, or starting a business and looking to get on. It sets out a clear strategy for the next five years.
Stewart Hosie (Dundee East) (SNP)
Since this Government came to power, funding for the Scottish Parliament has been cut. Since 2009-10, it has been cut by around 11% in real terms, but, within that, capital expenditure has been cut by around 25%, and that is a common story around the country. Decisions taken by this Government so far mean that the Scottish Government have some £3.5 billion less in real terms to spend than they otherwise would have had.
The changes announced today will make no substantive improvement to the fiscal position in Scotland. Indeed, the cumulative impact of today’s announcements will lead, over the next five years, to a real-terms cut of around £12 billion. This is very much an austerity Government.
What this Budget and the Red Book also tell us is that the Government and the Chancellor have failed on all the substantive targets that they set for themselves. They promised that debt would fall as a share of GDP by 2014-15, that the current account would be in balance by 2015-16 and that the public sector net borrowing that year would be some £20 billion. The debt will not now fall as a share of GDP until the next financial year. The current account will not be in the black for two more years, and the £20 billion borrowing promise will be almost four times that at £75 billion for 2015-16.
In essence, the Chancellor has failed to meet all of his own targets. With Tory and Liberal Democrat policy having strangled recovery in 2010 and 2011 and with some £50 billion of cuts to come—that is the difference between the £106 billion achieved and the £126 billion of cuts promised and the other £30 billion threatened today—we are on track, unless there is a change, for a decade of austerity. And still not a single one of the Chancellor’s major targets has been met.
Amid the rhetorical flourishes, the Chancellor talked about recovery and suggested he was lifting some of the burdens on working people. I notice that he did not apologise for trying to rebalance the economy on the backs of the poor. In essence, this was a political platform for an election. We know that because if we look at the impact not of the threatened future cuts but of today’s Budget announcements we see that the Government will take an extra £1 billion either in tax rises or in cuts to services over the next three years. Not only was the Budget not fiscally neutral, it did not provide any stimulus that we need.
Of course the Chancellor did say a deal about tax, particularly about increasing thresholds, which I welcome. I was intrigued by the notion of increasing the 40p threshold, not least because the number of people paying the 40p rate has increased by 2.5 million over the past 25 years, 1.5 million of whom have emerged in the period of this Parliament. We now have almost 5 million paying a rate of tax that used to be for the rich. There is a question over the affordability of that change and the time scale on which it will be delivered, but we will come to that later.
The Budget also confirmed that for some of the poorest in society the misery of the austerity programme will continue. We know that the proportion of cuts to tax rises has moved from 4:1 to 9:1, which is the clearest indication that the Government are trying to balance the books on the back of the poor. We know that the pain of that will be felt in Scotland by the 145,000 households affected by the changes to incapacity benefit, with people losing about £2,000 each. It will be felt by the 370,000 households who have seen tax credits reduced by almost £1,000 a year. It will be felt by the 620,000 families hit by the child benefit freeze, who are losing £170 a year. It will be felt by the 120,000 people losing, on average, £2,500 a year as disability living allowance is removed. It will be felt by the 835,000 households hit by the 1% cap on benefit increases—almost 1 million people in Scotland alone are hit by that one measure.
That is important in the context of this Budget, because there is now a growing body of opinion, including not least the OECD, that suggests we do not simply need a growing economy to fund our welfare provision; we need to squeeze inequality out of the system to help to deliver a growing and booming economy. Once again, I suggest that the Government are swimming against the tide of informed public opinion.
Many of those austerity measures will have to be mitigated using the precious resources of the Scottish Government: £114 million on the Scottish welfare fund, £69 million on the council tax reduction scheme and £90 million to mitigate the bedroom tax—almost £300 million to mitigate the dreadful decisions of this Government. Why do we not devolve welfare so that rather than having to use our precious resources to mitigate bad Tory decisions, we simply do not make them in the first place?
What the Chancellor did tell us today was that he finally expects to see some substantive and prolonged growth, which of course is to be welcomed, but others have noted that we still have the drag-back from the impact of the balance of trade, which appears to be negative for the entire forecast period. I welcome what he said early in his statement about help for UK Trade & Investment with regard to exports to China, but China is only one of many countries and I fear that, in and of itself, that will not be enough to turn the negative impact of the balance of trade into a positive one.
I am also glad that the Government have U-turned on their North sea policy, particularly in relation to the reduction in the supplementary charge—an increase early in this Parliament that should never have happened—but that, in and of itself, does not make for a long-term economic plan. A long-term economic plan would require the Chancellor to change course, away from a further £30 billion of new austerity cuts, away from an approach that continues to put the recovery at risk and away from a further attack on public services and the poor; in short, away from an approach to fiscal consolidation that has damaged not only the public services but the economy and undermined attempts to improve the public finances.
How much better it would have been, as a genuine alternative, had the Government recognised that their plans have failed, which they have, and adopted a stance that, rather than inflicting further cuts, allowed for a modest 0.5% increase in public spending, which would see a real end to austerity and, essentially, see the deficit continue to fall, see debt fall as a share of GDP and deliver up to £180 billion of investment across the UK over the next Parliament, rather than the miserable plans and additional austerity cuts we have seen today.
Our judgment is that this was neither a Budget to strengthen a recovery, nor a Budget for fairness or for tackling inequality. There was no long-term economic plan, merely a long-term austerity plan. It was a political Budget, as ever, from an all-too political Chancellor. As I am sure many of us have said in the past, the Tory Back Benchers might have waved their Order Papers today, but they will pay the price at the ballot box on 7 May.
Mr Jeremy Browne (Taunton Deane) (LD)
I have heard it said that I was the only Minister in history to have been sacked for being too supportive of the Government. Although the decision to determine my future may or may not have been wise—others can judge that—I remain unequivocally enthusiastic about this Government, as I am about the Budget statement made by the Chancellor today. That is what I want to speak about in what will be my final speech as a Member of Parliament.
The reason I am an enthusiast for this Government and their record over the past five years is that we came into office in 2010 in remarkably difficult circumstances. Our country was in a catastrophic position. At our worst point this Government were borrowing £420 million every day. It is straightforwardly delusional of Labour Members of Parliament to think that if only we had borrowed even more, we would not have the problem of a deficit today. We saved the country—the Conservative party and the Liberal Democrat party, working together in the national interest, pulled our country back from the brink when our deficit was more than 10% of GDP. Far from going too far and too fast, as has been charged by the shadow Chancellor and others, if I am critical at all, I think we have done the minimum of what was required, rather than over-extending ourselves, and we can do even more in the future. But it is a good record.
Interest rates are extremely low. We could easily have had a position where houses were being repossessed right across the country. Inflation is extremely low. Unemployment, including youth unemployment, has fallen dramatically during this Parliament, and the deficit is falling as well. In my view, if this coalition Government put themselves forward for election—they will not, but if they were on the ballot paper on 7 May—they would win emphatically and they would deserve to win because they have an impressive record of taking a country from ruin to relative prosperity, with the prospect of further progress.
The best coalitions are those that are more than the sum of their parts. The worst coalitions are those that operate at the level of the lowest common denominator. This Government have not always functioned as effectively as they might have done, and that is true of all Governments, but more often than not the Government have had the characteristics of the best coalitions rather than those of the worst, and the United Kingdom has benefited from that.
It has also been of benefit that we have had two parties in government. This has been a hugely difficult process, wrestling with the massive deficit and many of the other structural problems that our country faces. Two parties coming together, representing about 60% of the votes cast at the last general election, gave a wider mandate for this Chancellor and this Government. If I am honest about our coalition partners, there would have been greater anxiety about the Conservatives adopting a programme of reducing state spending, had it not been done in partnership with the Liberal Democrats. While I am briefly being mildly critical of our coalition partners, I remember sitting on the Opposition Benches—it seems hard to believe that the Liberal Democrats once sat on the Opposition Benches—and hearing speeches from the now Chancellor promising that the Conservatives would match Labour’s spending commitments, even when we were running a deficit and the economy was growing. So I am pleased that this Government have shown a sober awareness of the predicament that we find ourselves in, and that my party has contributed some of the biggest and most enduring economic policies of this Government, not least the dramatic rise in the point at which people start paying income tax. The Chancellor, I am pleased to say, announced further increases in that threshold today.
There is still a long way to go. Many people in Parliament, the media and elsewhere talk as if this huge task was almost over. Even today the British Government are still borrowing £10 million an hour. Our debt interest is about £1 billion a week. Every week £1 billion of the taxes of our constituents goes not on schools, hospitals or the police, but on paying the legacy of overspending in the past, and that figure will rise because we still have a debt that is increasing. However, huge progress has been made.
Where now? Where do we go next? We have huge strengths as a country. Our top level education is among the best in the world, second only to that of the United States of America. Our labour markets are flexible. We attract inward investment. We are a country with a genuine global disposition and we are admired for our innovation and creativity. Britain can be a success; we have reasons to be highly optimistic.
However, we will be successful only if we address some of our serious weaknesses as a country—and we do have serious weaknesses. Our overall education performance, not at the elite level but the general level, is still not sufficiently good for us to be globally competitive. Our infrastructure, particularly our transport infrastructure but also our energy-generating infrastructure, needs to improve. Our welfare costs and welfare dependency are a problem. Angela Merkel has said—I repeat this from memory without the exact numbers in front of me—that Europe has 7% of the world’s population and 23% of the world’s economy but 50% of the world’s welfare spending. That is a very precarious position. The 7% is falling and the 23% is falling, but the 50% is not falling—or at least, not nearly as quickly as the other two numbers. We still have a very high level of Government debt and a high deficit. This Government, whether on educational shortfalls, excessive welfare costs and dependency, infrastructure or debt, have worked systematically to address the weaknesses that will otherwise hold our country back. We have enduring strengths, but in the past five years we have also had a Government with the wherewithal, talent and vision to address our weaknesses as well.
I want us to have a sense of purpose in politics. I want us to think about how we can become the biggest economy in Europe within a generation, as the Chancellor mentioned in his Budget speech. I want us to be able to think about how we, as a country, with less than 1% of the world’s population, can be relevant in an era of much more intense global competition—how we can be world leaders in innovation, skills, and job creation. All these are possible—they are prizes within our grasp—but we must have the level of optimism and vision necessary to realise those outcomes.
It has been a great privilege for me to represent the constituency of Taunton Deane in Somerset—Taunton for five years, and then latterly Taunton Deane—and to serve 10 years in the House of Commons, and also to support a radical and important Government in the history of our country. I want to make my final comments about politics generally and the role of Members of Parliament.
I was listening to the “Today” programme last week when a person was being interviewed—he was French or perhaps a Swiss French speaker—who was seeking to be the first person ever to fly around the world in an entirely solar-panelled plane. It is an extraordinary plane, because it has a wingspan of a 747 but weighs about the same as a family car, so it sounds like an absolutely terrifying undertaking. The interviewer said that he did not doubt his courage and his sense of adventure but questioned what possible application this feat of adventure would have, given that Boeing, Airbus and the airliners were not interested in the technology and did not think it would have any great future use. The interviewee said, with, I imagine, a shrug—it was on the radio, but it sounded like he was shrugging his shoulders in the way that only French-speaking people can—“That is to be expected. The inventors of the candlestick did not invent the light bulb.” It was a rather Eric Cantona-esque moment. However, he was making an important point, which is that we cannot, in our politics, always be risk-averse and always in the business of preserving the past rather than trying to seize the opportunities of the future. If we allow politics, in all parts of this House, in all parties, to be about how we can frustrate, regulate and tax light bulb inventors, and subsidise and prop up candlestick manufacturers, we will find that world events—in a globalised economy with very rapid technological, demographic and economic change—leave the House of Commons behind and trust in politics subsides further. That would be hugely regrettable.
We have made enormous progress under this Government in this Parliament, but, whichever Government are in office after the general election, I urge the people in that Parliament and the leader of that Government to be visionary and ambitious for our country, because we can have a great future ahead.
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. The Chairman of Ways and Means said at the beginning of the debate that a large number of Members wished to speak, and he asked them to speak for less than 10 minutes. Two Members have achieved that, so I now have to impose a time limit of seven minutes on Back-Bench speeches.
Mr Russell Brown (Dumfries and Galloway) (Lab)
Thank you for choosing me as the starting point for the reduced time limit of seven minutes, Madam Deputy Speaker.
I wish the hon. Member for Taunton Deane (Mr Browne) all the very best for the future in whatever he does. I will not engage with him in any kind of Eric Cantona-esque thoughts because I would probably do nothing more than confuse myself.
My right hon. Friend the Leader of the Opposition was exactly right to say that any recovery we have seen has not been a national recovery. I will return to that in reference to my constituency. I sat through his response to the Chancellor, and from the Opposition Benches the faces of both the Prime Minister and the Chancellor of the Exchequer were an absolute picture. I just got the impression that they wanted to be anywhere other than on that Front Bench.
When my right hon. Friend mentioned table 2.4 on implied departmental expenditure limits, on page 69 of the Red Book, it became glaringly obvious that there are still some major cuts to come. In fact, the OBR spokesman has said that the cuts will be on a greater scale than anything we have seen. From looking at the Red Book, we know that the return of a Conservative Government means major cuts in 2016 and 2017 followed, surprisingly, by an increase in spending thereafter. That may be just in time for the 2020 election, but perhaps that is just my suspicious mind. What if the long-term economic plan, as it is called, goes wrong, just as the economic plan of the past five years has not got rid of the deficit, as was promised in the Chancellor’s first emergency Budget?
On the issue of savings and annuities, the Chancellor said towards the end of his statement:
“First, we will give 5 million pensioners access to their annuity. For many, an annuity is the right product, but for some it makes sense to access their annuity now, so we are changing the law to make that possible.”
I do not have much of a problem with the policy or the concept, but there is a risk: the public will suddenly be exposed to a risk. I would tell him that such people do not need the right guidance, but they do need good, sound, solid advice. The vultures are circling and waiting to pounce, and the last thing we need is a different form of mis-selling that exposes the most unfortunate in our society.
I said at the beginning that this has not been a national recovery. I constantly share with the House the desperate plight of my constituency and the problems faced by many of its residents—not only the unemployed, but those in working households. Youth unemployment among 18 to 24-year-olds in Dumfries and Galloway has been above the national average every month since this Government came to power in 2010, and February’s figures showed the UK at 3.2%, Scotland at 4% and Dumfries and Galloway at 4.3%. The area is the lowest-paid region in Scotland, and it speaks volumes that the current average wage in the area is lower than when Labour left office. In 2010, the average hourly wage was £11.17, 11.3% below the national average. Last month, that average hourly wage was £10.96, 16.5% below the national average. The number of people in full-time work in 2010 was 34,100, but that has fallen to 33,300. So we are blighted with below-average wages, under-employment and a hard-core group of some 500 young people who are crying out for an employment opportunity and a chance to prove themselves.
The hon. Member for Fareham (Mr Hoban) said that we cannot ignore the deficit, and he is absolutely right, but we also cannot and dare not ignore the fact that some local economies are suffering and are not part of any recovery that the Chancellor painted in his Budget today. Once again, great play has been made of the increase in the personal tax-free allowance—going up to £10,800 next year and £11,000 the year after that—but only those working in excess of 31 hours a week and earning above the minimum wage will actually benefit from those increases. The employment profile in my area clearly indicates that many will see no benefit.
Small businesses are the lifeblood of the economy in my area. Some small businesses have made it clear to me over the last few years that it was a great boost to them when the previous Labour Government reduced VAT to 15%. Those businesses saw a real benefit from the reduction, and could employ one or two additional people. That is important, because if every small business in my constituency took on an additional pair of hands, there would be no unemployment. The fact that the Government have not ruled out a VAT increase, if the Conservatives were to win the next election, will be a worry to small and medium enterprises not just in Dumfries and Galloway, but—I strongly suspect—across the country.
The economy in my area cannot sustain another five years of Conservative Government. That is why May will present the country with an opportunity to take a different direction—a direction and a better plan that puts working people first. It will take a Labour Budget to deliver that.
David Rutley (Macclesfield) (Con)
I wish to add my thanks for the great work that the hon. Member for Taunton Deane (Mr Browne) has done during his service in the House. I worked closely with him in the Home Office and he did an outstanding job as a Minister. His decision to leave the House will be a sad loss to us.
It is a pleasure to speak in this debate, because the Government’s long-term economic plan is working and Britain is back in work with record levels of employment. We accept that further work remains to be done to achieve our aims, and that is our theme—we have achieved much, but there is still further to go. That is the driving force behind the Budget. It is a go-ahead Budget for those who want to get on, whether in Macclesfield or across the country. It includes support for savers, pensioners and hard-working families—and for small businesses, as the hon. Member for Dumfries and Galloway (Mr Brown) pointed out.
In Macclesfield, we have seen unemployment fall by more than 50% since 2010. That is a significant fall that is making a real difference in the lives of many people and I do not want Labour to put that in jeopardy. The Budget shows that we are the optimists. We have realistic plans and we are the party of ideas, leading the agenda that will keep the momentum of the British economy moving forward, with more jobs and greater success. That is particularly important in the north-west—I represent a seat in that area—where gross value added per head has grown by 3.4% per annum according to ONS statistics, a record unsurpassed in other parts of the country. I welcome that. After the disaster of the last Labour Government, and their internationally poor performance, the UK has now got an internationally praised rate of growth—the fastest in the G7, as we heard today. We have improved our position in the important international league of competitiveness, with rates of growth that are sustainable, unlike the unsustainable growth rates that were mentioned earlier.
The Government have delivered, the Budget will deliver more, and the next Conservative Government will deliver more again. No stone has been left unturned by the Government in their attempt to reduce regulatory burdens and enable the financing and growth of British businesses. It is right to continue those important efforts.
Specifically, we need to focus on enabling opportunities in the north-west. Many Members on both sides of the House want to rebalance our economy, which is why we are seeking to create a powerhouse of the north. There will be an extra focus on infrastructure projects in the north, such as the northern hub. We will ensure that there is extra capacity on trans-Pennine rail routes. We will focus on key sectors in the economy, in particular life sciences, which are vital in north-east Cheshire and Macclesfield. It is vital that we transfer power and finances to unleash civic renewal and to take the concept of the powerhouse of the north forward. That will require strong local partnerships. The Government will work not just in word but in deed to take this forward. We saw that today, with the announcement by my right hon. Friend the Chancellor of a new pilot to retain and pool 100% of additional business rates growth between Greater Manchester and Cheshire East council. That is the sort of strategic partnership we want between city and county to drive growth in the north and across the country. That success breeds growth. This is a pro-growth agenda, a pro-north agenda and, importantly, a pro-small business agenda.
Small businesses are the engine of our economy, particularly in terms of creating jobs. Since 2010, the total number of businesses in the UK has grown by a staggering 760,000 to 5.2 million, the highest number ever. The number of employers has increased since 2010 by 52,000—another fantastic achievement. There are surely more of the 4 million or so small businesses currently without employees—76% of all businesses—that could take on an additional member of staff given the right market conditions. We have been working hard to create those conditions. There are signs that this is happening, as the Federation of Small Businesses stated on the publication of its latest “Voice of Small Business Index”.
To ensure that the economy continues to thrive, we need to keep the focus on optimal conditions for the four Es: the entrepreneurs, the employers, the exporters and the employees. We want to keep the focus on people who are new to those roles. We want to help them to move forward and to get ahead, particularly those who do not have family history in these areas. We want to be the party of opportunity and ambition to help them to achieve their dreams.
We have record levels of self-employment, which is to be celebrated, but there is a lot more that can be done to help first-time entrepreneurs. The new enterprise allowance has helped. Today, we heard in the Budget the announcement of the abolition of class 2 national insurance contributions for the self-employed. That, combined with annual tax returns being fundamentally changed, will help more people to achieve their ambitions.
We have done more to help first-time employers. We have to do more to help to signpost the opportunities available and tackle the perceived and real barriers that confront them in taking forward their ambitions.
We want to do more for exporters. We heard about the improving current account deficit. We are on the right track, and I am pleased that the Chancellor announced today that more resources will be available for UK Trade & Investment to support our vital work in China.
We must not forget first-time employees. We have to help more young people in particular to get across the line and get that first job. We have done lots to enable more people to take on apprenticeships and traineeships. We have looked hard at how we can help to improve academic rigour. Real wages are now improving and there have been increases in the minimum wage. A lot is being done, but there is more to do. I hope very much that the voters, not only in Macclesfield but across the country, will recognise the economic achievements of this Parliament and the aims of this Budget, and vote for a Conservative Government to get the job done.
Mr Tom Clarke (Coatbridge, Chryston and Bellshill) (Lab)
I would like to begin by exploding the austerity myth, the so-called “mess Labour left behind”, which is repeated ad nauseam on the Government Benches. The myth is Labour’s excessive public expenditure. The reality is that on the eve of the 2008 international financial crisis, public spending was almost exactly the same as it was in the later years of the chancellorship of the right hon. and learned Member for Rushcliffe (Mr Clarke), when public expenditure stood at 39% of GDP.
It is absurd to suggest that Labour created a worldwide economic crisis. Indeed, the current Chancellor called for less regulation of the banking sector—the very banks that caused the problems we are still dealing with—in the months preceding the crash. William Keegan, the distinguished economic commentator, wrote recently that
“for all the apparent political success the Chancellor and his colleagues have had in making people believe them, the charge simply does not stand up.”
We have seen something similar in Scotland: reality turned on its head, facts switched into fallacy, rhetoric in place of reality. Last week, the “Government Expenditure and Revenue Scotland” report showed that with the SNP’s fetish for fiscal autonomy, and even including a geographical share of declining oil revenue, the amount of revenue raised in Scotland would be significantly less than the total Scottish expenditure by both the Scottish and UK Governments—a deficit of £6.5 billion. This is more than half of what is spent on the NHS in Scotland each year, and the equivalent of every person in Scotland losing £800. “So what?”, they say. Crushing the standard of living for pensioners and further impoverishing the struggling; destroying the life chances of young people and inflicting more hardship on hard-working families; putting at risk the NHS; lowering the educational opportunities for Scots; cuts to tax credits, child benefit and pensions; a harder future with less support and even less hope—all this, we are led to believe, is a price worth paying for the imposition of an ideology. In Holyrood, the obsession is with independence and its painful precursor, fiscal autonomy. With this coalition, as we have seen again today, the ideological obsession continues—personified by the Chancellor, whose Budget aims to cut public expenditure, reduce taxes for the rich and deliver for the few, not the many.
People are hurting. The Chancellor failed miserably to meet his own deficit target. My constituents are suffering from declining incomes and failing to find work. Hard-working families in my constituency are on average £1,600 a year worse off than they were in 2010. Stagnant wages, with low-paid and insecure work, are the reality for many of the people I represent. Of course they are hurting. Some 1.4 million people in Britain are on zero-hours contracts, with some of them reliant on text messages to tell them how many hours of work they will get that week. The truth is that unemployment has been replaced by underemployment, with the state subsidising businesses profiting from the low wages they pay their workers. As a result, tax receipts are more than £68 billion lower and receipts from national insurance contributions £27.3 billion lower than they were expected to be five years ago.
The working poor are increasing in number in our country, and many of them are forced to rely on food banks just to survive. The Trussell Trust told us that in 2009 we had one food bank in Scotland, but today we have 48. I want to live in a society where there is no need for food banks. In my constituency, unemployment is at 3.8% and youth unemployment at 5.3%—both well above the UK average. The average income in my constituency is lower than the UK average, and 3,785 children live in poverty. Government support is not a dispensable luxury; it is a necessity in order to survive, and for some it is simply not enough.
Great progress was made under the last Labour Government, and we should not underestimate it. More has to be done, and I believe more will be done. My constituents and the rest of the country simply cannot endure another five years under the Tories. I have great faith that on 7 May our country, the United Kingdom, will choose to be governed fairly—and that means a Labour Government.
Charlie Elphicke (Dover) (Con)
It is a great privilege to follow the right hon. Member for Coatbridge, Chryston and Bellshill (Mr Clarke). My experience is sharply different from his, as I represent Dover and Deal. Before I was elected to Parliament, under the last Labour Government the number of unemployed claimants in my area went up a shameful 50%. Under this Government and their clear plan, which has been implemented and is working through, the number has fallen dramatically by nearly 40%.
The right hon. Gentleman told us about his constituency experience, but I have looked at figures indicating that the difference was even sharper there. In the previous Parliament, the number of unemployed claimants in his constituency went up by 100%. Since this Government came to power, the number has fallen by 40%. This picture does not apply only to Dover and Deal or to Coatbridge; it applies across the country. We have seen a jobs revolution, which I put down to sticking to our long-term plan.
There are now 2.3 million more people in business jobs and nearly 750,000 vacancies available at any time. It is a dramatic change from how things were. As a country, we now have a record number of people in work, a record number of job vacancies and the lowest unemployment rate since 2008. My constituents tell me that we have come a very long way, and they wonder why anyone would want to return to how things were five short years ago. That provides the key issue for the next election: do we want to return to the economic chaos of the past and the risk of a Labour Government propped up by some kind of SNP deal, or do we want to stay the course and ensure stability by continuing to work through our plan? It matters to our constituents because their jobs matter.
More than 1,000 new jobs have been created every day that this Government have been in office, and 1.9 million more people now have the self-esteem and financial security of a pay packet. I think that matters to people—having that sense of stability and personal security. This is a jobs-led recovery that has done nothing short of transform people’s lives for the better on a daily basis. We are getting people into full-time work, and we are making work pay.
Let me spend a few minutes looking at the things people say when they rubbish the achievements of this Government. Let us start with zero-hours contracts and remember that the previous Government had 13 years to act on them. In fact, they brought forward some form of White Paper back in 1998, and then spent the rest of their time in office doing nothing whatever about them. That was shameful.
It is also shameful that Labour Members talk about how many people are on zero-hours contracts when they know that it is only 2.3% of those in employment—just one job in every 50. Over 80% of part-timers choose to be on these kinds of contracts because they suit them. Indeed, this Government have reformed zero-hours contracts to get rid of the exclusivity clause, so they should now be called flexible work contracts, which better describes them. They can no longer be used to exploit people in a way that the previous Government were unwilling to do anything about. In addition, we all know that the Office for National Statistics has directly rebuked the Labour party for making misleading claims about these flexible work contracts. I am proud that the Government have reformed zero-hours contract to make them fairer and to end the exploitation that the last Government allowed to take place.
Labour says, “These are all part-time jobs, and no one can get a full-time job.” In fact, more than three quarters of all the jobs that have been created since the election are full time. The number of full-time jobs has increased by 1.42 million since 2010, and the 481,000 on- year increase has accounted for 95% of the rise in employment over the past year. I think that that is dramatic. I think that it is a jobs revolution.
Labour says, “Oh, that is a London recovery”, ignoring the fact that nearly three quarters of the rise in employment since 2010 has taken place outside London. Every region has seen a fall in unemployment in the past year. Labour says, “Young people cannot get a job, and youth unemployment has gone through the roof.” In fact, youth unemployment has fallen by 181,000 in the past year. Excluding those in full-time education, there are now fewer than half a million unemployed young people, and the number of young people claiming jobseeker’s allowance is the lowest since the 1970s.
Labour says, “Wages are terrible, and all the new jobs are rubbish. They are all manual, unskilled jobs like shelf-stacking, and no one wants them.” That is not true either. Since 2010, two thirds of the rise in employment has been in higher-skilled occupations, and there has been a real-terms rise in pay in the past year. Regular pay for employees is up by 1.6% on year, and total pay is up by 1.8%. Over the same period, the annual inflation rate was 0.3%.
Then Labour say, “Women cannot get jobs.” In fact, a record number of women—14.48 million—are in work, and the female employment rate is at a record high of more than 68%. Moreover, the pay gap between men and women has been all but eliminated among those under 40. I think that that is a tremendous record of achievement.
The final lie that I want to nail is that long-term unemployment is increasing and the Government have been fiddling the figures. Actually, the Government have un-fiddled the figures. Labour used to fiddle them by sending people on courses when they had been jobless for two years, and then treating them as new claimants when they finished their courses and went back to claiming jobseeker’s allowance. This Government ended that abuse and un-fiddled the figures, but long-term unemployment has nevertheless fallen by 202,000—24%—in the last year, to 629,000, and the number of people claiming jobseeker’s allowance over the past 12 months has fallen by 11% since the last election.
Much has been done, but there is much more to be done.
Bill Esterson (Sefton Central) (Lab)
It is always interesting to enter the fantasy world of the hon. Member for Dover (Charlie Elphicke). He spoke of financial security and flexible work contracts, but, as we heard from my right hon. Friend the Member for Wentworth and Dearne (John Healey), the problem is a weakness in both employment and pay. That is one of the reasons why the deficit has not been paid off. The so-called long-term plan has been a failed plan. The Government promised to eradicate the deficit in one term, but they have failed to do so, and one of the reasons for that failure is the nature of the employment that the hon. Gentleman has just described.
A number of Conservative Members are following the Conservative campaign headquarters script very closely. They claim that the crisis became international on 1 May 2010, when, miraculously, it suddenly changed from what they describe as Labour’s crisis under the last Government to a euro crisis under this one. That is nonsense as well. We have been given a fantasy Budget by a fantasy Chancellor.
I am afraid that what is happening in my constituency is typical of what is happening all over the country: low pay, zero-hours contracts and part-time work. A third of my constituents who are in work are paid less than a living wage, and people have lost an average of £1,600 a year. There has been a recovery for a few at the top, with tax cuts for millionaires, but no sign of recovery for the majority. Just the other day, one of my constituents told me that he was struggling to make ends meet. He has not had a pay increase for years, and he struggles to afford his mortgage, the energy bills, transport, and all the other things that he and his family need. A lack of job security, as well as low pay, leaves many people feeling squeezed, and the position is the same all over the country.
Pensioners are feeling it too, with high energy prices. Added to that, we have a crisis in the NHS—people cannot get a GP appointment and there are huge delays at A and E—all on top of, and partly caused by, cuts to social care. Yet there is nothing in this Budget about the cuts to social care or the cuts to councils, nothing about what the future might look like for local government and nothing about our NHS. All we can conclude is that the Conservatives and their Liberal friends just want as small a state as possible, and that is what they have got in store for the people of this country if they win again. We have had a failure from this Government over five years and we do not need more failure over the next five as well.
What does business need? Many of my constituents either run or work in small businesses. They need a level playing field, proper skills and decent quality apprenticeships for the under-25s, not the over-26s who have benefited from what has happened under this Government. Young people need a proper choice between vocational and academic study and preparation for the wider world. We need a return to work experience and proper careers guidance in schools, something that has been removed by this Government. We have a Chancellor who did not mention what is in store for those in education. The 10% cut to education is not a sign of a long-term plan; I am afraid it is a sign of further failure from the Government, if they get in again.
The Institute for Fiscal Studies has told us that the holes in the Tory plans, even with the revisions today, can only be covered by further deep cuts to public spending, not least in the NHS, or by the usual Tory remedy, a rise in VAT. “Colossal cuts” in services is a phrase that the IFS has used, and the effect on the economy, certainly in my part of the world, will be to remove further spending power, as well as having an impact on living standards. We will see further cuts in services, which all has an impact, along with the VAT rise, on businesses and their ability to grow and create the good-quality jobs we need.
The Chancellor really has failed the people of this country over the last five years. Our constituents can do so much better than this Tory, top-down approach—the top-down reorganisation of the NHS and the failure of trickle-down economics, which helps a few at the top while the rest see their living standards fall. That has been the reality. What we need is a change of Government, because that Government will deliver success for working people. As we know, Britain succeeds when working people succeed, so let us help the majority of people in this country to succeed. Let us end the exploitation of zero-hours contracts, encourage living wage employers and have a proper rise in the minimum wage, because 20p just does not make up for the years when there was no increase.
Where was the announcement in the Budget about the exploitation of those in the care sector, such as the two women who looked after my mum in her final weeks and months? They did 25 hours in a weekend and were paid for only 10 hours. Like so many people up and down this country, they are completely undervalued, exploited and ripped off, yet we rely on them to look after the most vulnerable in our society.
What of those out of work? Self-employment is one of the options that the Government promote. The new enterprise allowance is great for those who have a business plan and know what they are doing, but the danger, I am afraid, is that it is pushing people into debt. That is what I have seen, sadly, for too many people who have gone down that route, having seen no other option because of the way the Department for Work and Pensions’ benefits system operates.
We need a change of approach. We need to see a better plan—a plan for the many, not the few; a plan that raises living standards, looks after pensioners, makes sure that businesses of all sizes can thrive, and ensures a decent society for us all. That is why we need a Labour Government to be elected on 7 May.
Sir Peter Bottomley (Worthing West) (Con)
We have a national health service we can be proud of; we have a national health service that we have protected; and we have a national health service that will get proper funding.
Last evening, having done a fair day’s work, I found I had about 100 e-mails from 38 Degrees, which had saved them up from my constituents then dumped them in my inbox because of a technical problem. They all asked the same question. On behalf of hon. Members on both sides of the House, I should be grateful if 38 Degrees wrote to MPs and got us to reply. It could then circulate our answers to all on its mailing list.
I invite 38 Degrees to ask its members whether they would like to provide their e-mail addresses to MPs so we can do that. It would make life much easier for our staff, who, from within that blizzard of e-mails, have to find the individual requests from constituents who have heart-rending problems and who need instant attention. Too often they will be overlooked because we are dealing with the blizzard of e-mails that 38 Degrees and others send.
Incidentally, I challenge 38 Degrees to put back on its Wikipedia entry the Labour activism of some of its founders. Accurate information was wiped off pretty quickly.
Sir Peter Bottomley
It was not falsifying. It was just taking things out that ought to remain. There is a record in the trail.
There are many things in the Budget on which hon. Members on both sides of the House can agree. Some measures could go further in future Budgets. I welcome the suggestion that farmers should be able to average their income over a number of years, but the same problem applies to a number of people in small businesses. A lot of people in small businesses work very hard for very long hours for very many years. They often do not make many profits. Sometimes they have good years and sometimes their business becomes worth a bit and they can sell it. The taxation arrangements are not easy for all of them—they are better for those receiving entrepreneurial relief. For other businesses, if people get a lump sum in one year, they should be able to spread it across a number of years, as under the provision for farmers.
I spend much time serving with hon. Members from both sides of the House on the High Speed Rail (London - West Midlands) Bill Select Committee. A number of farmers, business people and local residents come to see us. My admiration for people in business, whether on the land or in offices or factories, has gone up a great deal. I am very impressed by the quiet way in which people get on with their lives and come to Parliament to petition when their interests are affected.
Some cannot easily come to Parliament. I say this to those on the Treasury Bench: whatever the reasons of money, I do not intend to tolerate for much longer the fact that half the pensioners in this country who retire overseas get inflation increases and the other half do not. The Government say that there is no money, but we are getting out of austerity and into prosperity. The background is chance. We did not have agreements with some of the Commonwealth countries—the old dominions —but we did with other foreign countries, and the EU requires us to treat EU citizens the same.
It is frankly wrong that someone who has worked in this country and retires overseas should be treated differently on different islands in the Caribbean, in Canada, in the United States of America, in South Africa and other African countries and so on around the world. It is one of those things that is just wrong.
The Chancellor made a number of good jokes, some of which had tax prices attached to them. He said he wanted a review of the variation of wills. If that provision is taken away, a lot of ordinary people will find that they have to revise their wills several times over a decade. Most of us do not know when we are going to die. Being able to vary the beneficiaries of a will is important. People do it not just for tax reduction, but because it allows them to take account of changing circumstances. We have all heard examples of people who have made wills that were right 10 years ago, but that are not right 10 years later. If a variation can be agreed, it is a sensible way to do sensible things. It is not just about reducing tax.
Arguing that the lifetime pensions allowance should be reduced to £1 million is one thing. Someone who has a pension entitlement with a capital sum behind it of £1 million is lucky compared with many, but it begins to look a bit tight for those savers who are reasonably successful in their earnings. I remember once prison visiting with a retired newspaper editor. He said to me, “Tell me about MPs’ pensions.” I did, and said, “What about you?” He said: “When I retired as a newspaper editor, I had a pension pot of £10 million with a pension of £1 million a year.” I said: “Some people have all the luck. And you accuse us of having our noses in the trough.”
I say to the Government that there are some areas where money should not be restricted too much. On housing, we clearly have to improve leasehold, which requires civil servants in the Department for Communities and Local Government to watch what happens. We also need to bring in commonhold properly and make sure that resources are such that managing agents and freeholders do not get away with abusing leaseholders. I am not saying that they all do that, but it happens too often.
Finally, a number of people aged 19 are still doing A-level-type courses in further education and sixth-form colleges. The funding arrangements are becoming too tight for them, so I ask the relevant Departments—the Department for Business, Innovation and Skills and the Treasury—to ask themselves whether that is really their intention. They need to remember that they should not treat young people like racehorses by using their birthday as a rigid time to calculate how much money to spend on them. They all matter to us and I know that Members on both sides of the House care about that.
Barry Gardiner (Brent North) (Lab)
A Budget is not an exercise in economic theory; it is a practical attempt to manipulate the levers of the financial system, both fiscal and monetary, to maximise public goods and public benefit. It used to be assumed in British politics that uncertain inviolable public goods would always be defended by Government, but that assumption has fallen apart over the past five years. From the quality of our air and water to the threat of catastrophic flooding and climate change, many now see that the role of Government has been hopelessly diminished. Over the past five years, the Government have stepped back from so many of the key risks facing our country that in the eyes of many people they are no longer fit to govern.
I want to focus on climate change and resource insecurity—two issues on which the Government promised significant progress and on which the Chancellor himself once made significant promises, but which show the true face of this Government and their significant failure.
In 2013 the chief economists of the Department for Environment, Food and Rural Affairs, the Department of Energy and Climate Change, the Department for International Development and the Foreign and Commonwealth Office proposed a cross-departmental review of resource security, climate change and growth. They had been planning it for more than a year. The Chancellor, however, cancelled the review on the grounds that neither resource security nor climate change posed a threat to growth. One has to wonder whether he ever read those letters that the Governor of the Bank of England is obliged to send to him every time inflation misses its target, because all 14 of them specifically cited resource price spikes and resource insecurity as key factors in missing those economic targets.
One has to wonder whether the Chancellor ever listens to the speeches of the Governor of the Bank of England, because Mark Carney has spoken powerfully about a “tragedy of horizons”, whereby new challenges to our long-term prosperity and economic resilience, such as climate change, manifest themselves beyond the standard regulatory and market outlook, which is two to three years. Speaking only last year at the World Bank-International Monetary Fund meeting, Mr Carney highlighted the fact that the vast majority of fossil fuel reserves could become unburnable in the transition to a low-carbon economy, resulting in a problem of “stranded assets”.
Investment horizons, whether in terms of the maturity of debt, the scope of risk analysis or the focus of equity markets, are often much shorter than the lifetime of the underlying assets and the impacts they create. An extended time horizon, such as that advocated by the Governor of the Bank of England, is a critical yet poorly understood dimension of a sustainable financial system. What Carney is pointing out, and, sadly, what this Government and this Chancellor have ignored, is that standard investment practice underestimates the value of future threats, particularly for those that are poorly priced and build slowly over time.
Out of 2,868 companies surveyed about their approach to risk management, 72% identified a current or future risk related to climate. It is clear that businesses and investors agree with the Governor of the Bank of England and disagree with the Chancellor, but the situation is worse than that: businesses and investors are delaying investment because of the regulatory risks this Chancellor has created. Of those 72% of companies identifying climate-related risks, 90% cite regulatory risk as a key factor affecting their business. It is no wonder that Bloomberg screens now include a carbon risk valuation tool. The Chancellor should take a look at it.
One of the desperately short-sighted measures the Government took was to scrap the adaptation reporting power. That means that the companies that own and run our critical infrastructure no longer have an obligation to monitor and report but are free to ignore the risks of climate change, leaving us more exposed to the impacts of extreme weather events and flooding. Ironically, the Chancellor claims that that was done as part of reducing the burden on business of unnecessary regulation.
Another short-sighted but devastating decision that undermined the investment capacity and future productivity of UK business was the Government's decision to downgrade the UK climate change risk assessment. I say downgrade, but that is really a euphemism: the Government slashed the number of staff working on climate change impacts from 38 to six in 2012. I do not know how much those 32 officials were being paid, but I am absolutely confident that the cost to British business from the lack of capacity to make a proper future assessment of climate risks and how to adapt to them will be infinitely more.
The impact of climate risk on our economy has been made only too apparent by the devastation left by the floods in 2007 and in 2013-14. This is not an imagined threat of future danger but a proven disaster, so one might expect the Chancellor to abandon cynicism and make the necessary investment to protect the public good. In his autumn statement, the Chancellor announced funding for 1,400 flood defences. It has now been revealed that the lack of partnership funding means that only 93 are fully funded.
A proper Chancellor would understand that the value of the financial system lies in the power it has to catalyse and facilitate a dynamic and efficient real economy. The real economy is that part of the economy that is concerned with producing goods and services as opposed to the part that is concerned with buying and selling on the financial markets. The goal of the financial system should be only to deliver inclusive and sustainable development by facilitating transactions, intermediating capital, transferring risk, transforming maturity, providing liquidity and governing assets. In short, it should serve and support the real economy by enabling capital to be allocated efficiently where it can best be used.
This Chancellor has failed to understand that distinction. Under him, we have seen increasing financialisation of the economy and the increasing importance of financial markets. My point is that the local economy has abundant stocks of financial assets but insufficient flows of investment into the areas where they are required for long-term sustainable development. The World Economic Forum estimates that there is a $1 trillion gap in investment infrastructure each year, but why is that gap important and why is it so important this year? In September, Ban Ki-moon will convene the leaders of the world to agree the sustainable development goals and in December the world will look to Paris and the UN framework convention on climate change to deal definitively with the risks to all our economies posed by climate change.
We must ensure that the misalignment between the financial system and the real economy is addressed and ensure that the financial economy is properly aligned to deliver the investment flows into the productive economy that will supply the need for new energy infrastructure and new adaptive capacity; that will deliver the transforming power of education and public health objectives set out in the sustainable development goals; and that will make for a more, rather than less, inclusive society and end poverty.
We know that a Budget is not an exercise in economic theory but a practical attempt to manipulate the levers of the financial system, both fiscal and monetary, to maximise public goods and the public benefit. If we want peace in the world, we must create economic justice, and if we want justice we must live sustainably.
Jackie Doyle-Price (Thurrock) (Con)
The hon. Member for Taunton Deane (Mr Browne) is no longer in his place, but I cannot speak without referring to his parting comments, which were characteristically wise. We would all do well to remember his observation that it is our job in this place to inspire, to bring out ideas, to bring beliefs and to bring ambition. It is not the job of people in this place just to do what is politically expedient. We should always strive to do what is right and everyone in this House would do well to reflect on that observation.
I want to share with the House the experience of my constituents in Thurrock over the past five years. It is true that the future for Thurrock is looking much brighter than it did five years ago when I was first elected. Unemployment is falling and has fallen by two thirds in that period. We have more people in work than ever before, and new jobs are being created. The port of Tilbury, which is the primary business in the constituency, is expanding with a new distribution park, and at Purfleet, at my ferry port, three ships a day are exporting cars to Europe—an indication of the renaissance in car manufacturing over the past five years. Our young people also have access to many more opportunities through apprenticeships.
The Government can be very proud of the conditions they have created in Thurrock to enable growth against the odds. We need to make it easy for businesses to expand and grow and create jobs and we can do that by getting out of their way and by having a competitive tax system.
Infrastructure is important in facilitating growth, and I thank the Government for the introduction of free-flow tolling at the Dartford crossing and for the improvements to the A13 and to junction 30 of the M25, despite the fiscal challenges that we face. All those improvements are getting the traffic moving and enabling the creation of more jobs and growth—so a big thank you to the coalition Government for everything they have done for Thurrock.
I thank the Chancellor for what he has done in the Budget today to reduce the tax burden on working people. Lower taxes are in my DNA as a Conservative. I believe that we should all strive to ensure that people keep as much of their earnings as possible. By doing so, we reward them for their hard work and efforts and give them every incentive to succeed. For low-paid workers, the impact of benefit reduction combined with taxation kicking in can mean that they are effectively working for nothing. There can be no greater disincentive to join the world of work than that, and we cannot blame people for making a rational economic choice in those circumstances. The morally bankrupt thing for the Government to do would be to leave that be, but by putting an emphasis on increasing the personal allowance we have taken millions of people—the very people who can least afford to pay it—out of income tax altogether. We can be proud of that.
I encourage the Chancellor to continue with that policy and I hope that, when the Conservatives are returned with a majority, he will strive to make the living wage the point at which income tax kicks in. I also commend the Chancellor for increasing the allowance for those on higher rate taxes, because the previous rate has not been hitting the most well off. It is important that people who work hard and do the right thing are reassured that the Government are on their side and want them to keep as much of what they earn as possible.
I welcome the fact that the Chancellor has frozen the duty on wine and reduced the duty on spirits, but I want to make an observation about tobacco taxation. The duty on cigarettes is due to go up by 2% plus RPI later this afternoon. A week after the House voted to introduce standardised packaging for cigarettes, I would like to put the Exchequer on notice that it will take a big hit as a result of that measure. I represent a number of ports in my constituency, and I have seen at first hand the challenge that Border Force, HMRC and the port security authorities face in tackling the growing menace of tobacco smuggling. It is estimated that about a third of the cigarettes sold in the London area are contraband, in one way or another. Anyone who visits a car boot sale or market will be able to buy contraband cigarettes for a couple of pounds a packet.
As we move towards a standardised packaging regime in which much of the price of the product will be accounted for by taxation, I am afraid that we will have created a massive opportunity for organised criminal activity. I ask the Treasury to bear that in mind, and I hope that the proposed legal action in relation to standardised packaging does not cost the Exchequer even more billions of pounds. Whatever the good intentions behind the measure, I fear the consequences for the Exchequer. That lost revenue will of course have to be recovered from elsewhere. Apart from that, I wholeheartedly welcome the Budget. Let us continue the good progress that we have made into the next Parliament.
Ian Lucas (Wrexham) (Lab)
I want to start by quoting a Conservative, which is not something that I generally do. The commentator Tim Montgomerie has said of the Chancellor of the Exchequer:
“He promised austerity but repeatedly missed deficit targets and has presided over a massive increase in government indebtedness. He defended Plan A against all comers but pursued a semi-Keynesian Plan B.”
I have been here throughout the debate, and it never ceases to amaze me that Conservative Back Benchers repeat their mantra of the “long-term economic plan”, which of course has failed completely. As we have heard from a number of Opposition Members, in the emergency Budget the Chancellor stood at the Dispatch Box and said that there would be no deficit by now. He has failed in the target he set himself and he has done so because of his own poor policy choices. He inherited economic growth and falling unemployment, but in 2010, following his Budget, he introduced a number of specific policies that strangled growth. First, he increased VAT, the tax the Conservatives never mention. They talk about being a tax-cutting party, but they always increase VAT. It is a tax that takes money out of the pockets of consumers and channels it directly into the Treasury in Whitehall. It takes money away from high streets and presents it to central Government. If we look at high streets in the UK today, we see how much pressure is on them, and one reason for that is the choices this Government made on VAT.
In my constituency, the median wage has fallen by 7.4% in the past year alone. That is the reality of what life is like for my constituents today. To hear some of these speeches by Government Members is to hear about a complete fantasy world; that view is reinforced whenever my constituents see this Chamber and hear what Government Members are saying. The lack of demand is having an enormous impact on local businesses and our local economy, and it has all been presided over by this Chancellor, who decided to raise £14 billion from increasing VAT. His decision was so bad that he had to change policy. As Tim Montgomerie said, the Chancellor had to move to plan B. Plan B was a policy he pursued from 2012-13, because he had strangled growth in the two years from 2010 to 2012.
The Chancellor has introduced some public sector projects. It is extraordinary that the Minister responsible for prisons, the hon. Member for South West Bedfordshire (Andrew Selous), has just arrived, because I am about to refer to the proposal to build a prison in north Wales, which I welcome. It is a public sector project, investing public sector finance in the local economy. It is the first prison for a quarter of a century that is going to be run by the public sector and a Conservative Government introduced it. It will bring jobs and money to the local area, so I am puzzled about why a similar project was cancelled by the incoming Government in 2010.
Unfortunately, according to press reports, Her Majesty’s Revenue and Customs office in Wrexham is now to be closed. It is the last such office in north Wales, where a number of specialist tax public employees work. There has been no discussion with me about this and it has become known only because of newspaper articles in the past week. That move will take away 383 jobs, which is more than will be brought in by the new prison, so the picture is mixed.
We are approaching an election again and we have a budget deficit of £75 billion, which the Chancellor has failed to eliminate in the way he promised he would. The IFS tells us:
“Debt is set to peak at over 80% of national income. The deficit is still more than 5% of national income….Difficult choices lie ahead.”
What will this Chancellor do after the election? We recall that both the Conservatives and the Liberal Democrats said before the 2010 election that they had “no plans” to increase VAT. When I pressed the Chancellor on his plans for VAT when he delivered his autumn statement, he said:
“The plans that I have set out involve spending reductions and welfare reductions…We will go on reducing spending and reducing welfare, and we do not need tax increases.”—[Official Report, 3 December 2014; Vol. 589, c. 331.]
The Office for Budget Responsibility tells us today in its report that, if the next Government are to stick to the Conservative and Liberal Democrat spending plans, the budget cuts that will have to be made will be bigger than those implemented by the current Government, and we all know what those have meant.
What do the Conservatives do after elections when they want to raise money? They increase VAT. They did it in 1979, 1991 and 2010. They never say before an election that that is what they will do, but when they come in and raise VAT it has a devastating effect on economies and on people on low incomes. I have absolutely no doubt that the spending that the OBR is talking about cannot be done without tax rises. This Government are a tax-raising Government. They put up taxes and VAT in 2010, and raised £14 billion. As night follows day, if a Conservative Government are re-elected, they will increase VAT, and they will use the money raised to fund the positions set out in the OBR report.
Mark Garnier (Wyre Forest) (Con)
It is a great pleasure to follow the hon. Member for Wrexham (Ian Lucas). He made a passionate speech—the one thing I have learned is that Opposition Members feel very passionately about everything they talk about—but it does not mean that he was right. I wish to pick up on two issues, one of which is his reference to Conservatives being a high-tax party and the second is his reference to the fact that the promise to reduce the budget deficit by now has not been met. I look back to 2010 when I and many other Members were first elected to this place. We were listening to the Chancellor, who said that the budget deficit would be reduced to nothing by 2015 and that we would start to see the net debt reducing as a percentage of GDP. We cannot turn away from the fact that, although we were expecting a zero budget deficit by next year, that will not happen. But every single prediction that was made in 2010 was based on what was known at the time, on what was going on in the global economy and in our own economy and on a whole number of other different factors, all of which contribute to the great melting pot that is fiscal and economic forecasting.
What nobody could have understood at the time was the absolutely colossal problems that we would have in the eurozone and in Europe. When a country’s biggest trading partner has massive economic problems—we are seeing economic decline in Europe at the moment—it is inevitable that it will not reach its economic and fiscal targets. What is an extraordinary achievement is that, despite the fact that we are still seeing Government net borrowing going up, we have got to the stage where the economy is growing at such a rate, according to the OBR, that net borrowing as a percentage of GDP will peak this year at 80.4% and decline by 2020 to 71.4%. Finally, we are in a position in which we are reducing public sector net debt as a percentage of GDP. That is incredibly important because at the moment this Government—and the next Government and many Governments after that—are spending revenues not raised in this Parliament but that will have to be raised in 20, 30, 40 and 50 years’ time. It is our children, grandchildren and our great grandchildren who will have to pay down that debt.
I did not get elected to spend the money of future generations. I want to spend this generation’s money—this set of taxpayers’ money. However, when this Government came to power, there were a huge number of problems. There was a fragmented banking system. I am not somebody who will necessarily say that the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) was wrong to bail out the banks. I know that many people say that it was a rash thing to do—I said that at the time—but in retrospect, I can see that it was the right thing to do. We could not allow our banking system to collapse, so the decision was right. However, it was also necessary to reform the banking system completely, and this Government have done an enormous amount of work to do that. Credit conditions are improving and we have seen a big change in the financial regulatory system. That is all about ensuring that we remain one of the world’s pre-eminent banking centres and, much more importantly, that we get finance to the small and medium-sized enterprises, businesses and households that need it.
Ultimately, the Chancellor has achieved an extraordinary level of economic success over the past five years, and that is the result of a number of different factors. One of those factors, of course, is the reduction in corporation tax, which will fall to 20% next year. As a result, many companies around the world now view the UK as a tax haven, as evidenced by Pfizer’s AstraZeneca bid, and that is attracting a huge amount of inward investment. The net result has been over 750,000 new businesses created in the UK and 2.2 million new private sector jobs.
However, there are a number of issues that we have to be incredibly careful about. One of the most pernicious problems built up in the bubble years before the financial crisis—I bang on about this—was the colossal increase in household debt, which went from about £400 billion in 1997 to about £1.45 trillion in 2008. That was a huge increase of household gearing from around 100% to 170%. It has since come down to about 140%, and I am pleased that the OBR has predicted that the increase, which will happen, will not take it to the same level.
What does that mean for our constituents? Over the next few weeks we will all be knocking on our constituents’ doors ahead of the general election. They will open their doors and show us a glimmer of their lives. We will see the television flickering in the background, and there will probably be a couple of kids not doing their homework when they should be. What we know is that as a result of those bubble years the average household can rely on only six days of savings should one or both of those people lose their jobs.
The economy is still incredibly fragile. It is in a really dangerous place. If we do not stick to our plans and try to continue to grow jobs, we will end up jeopardising the jobs that we have grown. It is so important to get this absolutely right. When we look at our constituencies, as we will all be doing, particularly after this Budget, we will see that in the vast majority of cases unemployment has dropped. Unemployment in my patch has dropped from 2,300 to 999 today, which is a good thing, but we still have below-average wages and a higher than average number of part-time jobs.
That is why now is not the time to get the bunting out, although an enormous amount had been achieved. Now is absolutely the time to make sure that we do not deviate from the plan that has been proved right in the vast majority of cases over the past five years and that can finally finish the process of restoring this country to economic soundness and fiscal probity.
Mr David Lammy (Tottenham) (Lab)
As a former Universities Minister, may I begin by welcoming the decision on support for PhD students, which obviously builds on the progress previously made for masters students? That is hugely important to our economy. I also think that it is fantastic that the Mayor of London has been given greater powers in relation to skills and planning. The move on the London Land Commission is vital if we are to bring forward land for housing here in London.
I would like to have seen something in the Budget on Crossrail 2. It is hugely important that we build on the developments of Crossrail 1 and do not lose the expertise, so we must move on to Crossrail 2. The Chancellor was previously able to find £2 million to see the concept of that scheme move forward, and it would have been nice to see some determination at the Dispatch Box today, but it was not mentioned. There are also vital infrastructure developments here in London, including a bridge in the south-east and the Bakerloo line extension, but those, too, did not feature in the Budget statement.
The major issue facing London and the south-east is housing. Although the Chancellor set out his plans for a new ISA for first-time buyers, when one looks closely at the figures, it does not look as though that will go very far. The average London house is now being bought for £470,000. The average London earner is making £36,000. On any analysis, despite the ISA, which can be topped up to £15,000, a buyer would need a deposit of £75,000. It is going to take a lot of ISAs and a long time to get to that deposit. The Chancellor gives the impression that the Government support home ownership. My guess is that someone on average earnings might be able to find £1,500 to stick into an ISA, but it is unlikely that they will find £15,000, and if prices continue to rise, getting to that deposit might well take a decade or more.
Most people moving into housing in London this year are moving into private rented accommodation. We have heard nada—zero—from the Government about that lion’s share of our population who are in private rented accommodation. Here it is important to say that I am not talking about students or young professionals, often living in overcrowded circumstances. I am thinking of London’s working families, moving every six months because of shorthold tenancies with dodgy landlords. We heard nothing from the Government in relation to rent caps, the lettings crisis and that important group of Londoners—nothing on rents, nothing meaningful on house building and nothing for those who want to get on the housing ladder.
The real sadness is the travesty of social housing in this country. How many council homes did we build in London last year? Forty. Forty council homes were built in London last year. Because of the lack of grant to housing associations, the number of properties that they brought on to the market is also very low, relative to the need out there. At the same time, with right to buy and the huge discounts that exist, thousands of council houses are coming off the market. Of course, there is a discount. The discount available on council houses is £100,000. What happens? Someone buys their council house, gets the £100,000, and then sells it. In what other area of public policy can anyone get £100,000, handed across from the taxpayer? This Government took the bonds that we introduced for young children so that they would have assets, and they are prepared to give £100,000 to those who want to buy their own home and then sell it off.
So on housing, the biggest crisis facing our country, we have heard nothing. I said that I welcomed the handing over of greater powers in relation to skills to the Mayor, but that is handed over with one hand and taken with the other. It has not gone unnoticed that this Government have plans for a 24% cut in our further education budgets across the country—24%. How does someone get up the ladder if they are stuck in one of those poorly paid jobs in retail in this city and beyond? They often do it by going to night school. I say to the Minister, “Find me a college that’s open past 8 pm for an adult—not a young person—who is available to skill up, and I’ll give you a beer.” There are hardly any such colleges left in the country. The opportunity does not exist. If the Government were serious about vocational skills, they would attend to adults in adult learning who want to move up. Despite all the plaudits on apprenticeships, let us remember that the growth in apprenticeships in London is in customer services and hairdressing. I rest my case.
Julie Hilling (Bolton West) (Lab)
In his autumn statement, the Chancellor said:
“We have shown in this Parliament that we can deliver spending reductions without damaging front-line public services if we are prepared to undertake reform.”—[Official Report, 3 December 2014; Vol. 589, c. 309.]
Today, in two short phrases, he said that to achieve his £30 billion-worth of savings he would cut £13 billion from Government Departments and £12 billion in welfare savings: no more details and no discussion of the misery that this means for many of my most vulnerable constituents. His cuts to front-line services have damaged residents in Bolton West and will continue to do so. People used to say that when the tide rose it lifted all the boats, but this Government have proved that now it only lifts the yachts. Constituents in Bolton West will be £1,600 worse off at the end of this Parliament than they were at the start. On top of the £100 million cut in its budget, Bolton council now has to find a further £43 million in the next two years. Social care is harder to get, youth provision is down, roads are full of holes, and the voluntary sector is cut.
The Chancellor talks about £12 billion savings in welfare. A consortium of northern housing providers, including Wigan and Leigh Housing and Bolton At Home, has undertaken a survey of the impact of welfare reform on their tenants since 2012. Its latest report makes frightening reading. Average debt has tripled in two years and now stands at £3,500. One in two households is regularly unable to meet its weekly debt repayments, which are averaging just under £35 a week—88% higher than at the start of the study just two years ago. People in 23.5% of households are unemployed—the highest level of unemployment since the start of the study—and fewer than one in five is in full-time work, while 69% of those in part-time work want more hours. After their bills are paid, they have just £2.53 left per day. After bills, more than six in 10 households have less than £10 for the week’s spending money. One in five households has used a food bank. Although £3.63 per person is the average spend on food, three out of 10 families have less than £2.86 per day to spend on their food. A total of 53.8% of people say that they cannot heat their homes to the level they need, and 44% have said that their health has deteriorated since the start of the study just two short years ago. Tell those people that we are all in it together; tell them that Britain is walking tall again; tell them that the plan is working. Britain needs a better plan. The Tories will never understand that Britain only succeeds when working families succeed.
Young people have borne the brunt of many of this Government’s decisions, with tuition fees trebled, the education maintenance allowance abolished, Connexions got rid of—so they cannot now get the careers advice they need—and youth services about to become the first statutory public service to disappear altogether. The most vulnerable young people are being hit hardest, with 1,000 sanctioned every day. The YMCA has reported on many of the young people that it works with. Those who have been sanctioned say, for example:
“I was unable to eat and it was lucky that the YMCA could help.”
A young woman said:
“It’s how long they left me with no money for food knowing I was pregnant and had to buy my own food.”
Another young person said:
“I went 3 months living on food parcels which is really degrading because you lose all your dignity. It’s not just physically hard, it’s mentally hard.”
Sanctions are supposed to help young people into work, but one young person said:
“My focus turned to survival rather than gaining employment.”
Yesterday evening, Liam Preston from the YMCA told me of its serious concerns about the rise in poor mental health among young people, compounded by the cuts to child and adolescent mental health services and to youth services and other support services. Unless we look after the most vulnerable and make sure that ordinary families succeed, we will never succeed as a country.
A couple of weeks ago, at an event to encourage people to vote, one young woman spoke very eloquently about her life. She said that when someone has to worry every day about putting food on the table, paying their bills and clothing their children, they cannot worry about voting. Another young woman from Foxes of the Fold women’s group in Johnson Fold told me that she now has permanent asthma, because paying the bedroom tax meant that she could not afford to put her heating on all winter. Those are real lives.
This Government have targeted the weak and given tax breaks to the rich, and there have been tragic consequences, such as a rise in suicides. Let me tell hon. Members about one young woman whom I have known for many years; I used to be her youth worker. She has suffered from poor mental health ever since her terrible childhood, and she now lives in supported housing. She is waiting for an appointment at a pain clinic, which has been cancelled four times, and for a procedure to stop her pain, which has been cancelled twice. She was told that, owing to the cuts, her housing project would close. Unsurprisingly, she is now in hospital—she is very poorly—having tried to die. She is a victim of the cuts and of this Government’s policies. It need not be this way.
I presented apprenticeship awards at Forrest construction company in my constituency last week. The chief executive officer told me his story: from apprentice to CEO and from poverty to millionaire in 25 years. He recognises the need to put something back into the community, having benefited from careers advice and from people taking a chance on him. His company puts £1 million a year into the communities where it works. He believes that resources, play spaces, facilities and voluntary organisations make a difference to people. He says that if people’s horizons are raised, their lives will improve.
This Government offer not support but simply more cuts. Zero-hours contracts and food banks are not a legacy to be proud of. They do not understand the lives of working families, and they do not have the answers. Britain truly can do better than this, and under Labour it will.
Mr Iain McKenzie (Inverclyde) (Lab)
Members from across the Chamber would probably describe the Chancellor’s statement as quite unbelievable, but for very different reasons. My constituents would certainly describe it as unbelievable because they have again listened to a Budget that is unable to hide the fact that, after five years of this Government, working families are worse off. The Chancellor claimed otherwise, but we know that the real truth is that people in this country are still struggling.
As we know, we have a Chancellor who gives with one hand and takes much away with the other. His tax and benefit changes since 2010, including that big VAT rise, have cost families dearly year after year, and no pre-election tax cut can make up for that. Worse still, we know the Tories are planning more extreme cuts after the election, which will go way beyond balancing the books.
We need a better plan—a Labour Budget that puts working families first. That is why this Budget will not be welcomed by the majority of people in my constituency of Inverclyde, or indeed in Scotland. Labour’s plan for creating wealth does not just target a few at the very top, but, unlike this Government’s plan, aims to help hard-working families across the country. We need something better, recognising that Britain only does well when we all do well and prosper. The gap between rich and poor is still too wide, and history tells us that our society does not fare well when that gap is so wide. We need support for and investment in business; and, as has been said, we need investment in our young people too, to create not just jobs for them, but careers.
The Chancellor claims that the economy is a success, but the reality is failure on every measure which the Government have set themselves to achieve. They have borrowed more, debt is up, low-paying jobs are up and tax receipts are down. All those are connected, for people cannot expect to deliver an economic recovery solely through the millionaires at the top. The squeeze on living standards during the past five years means that the Chancellor has failed to bring in the tax revenues necessary to balance the books. Indeed, the Government have broken their promise to balance the books by 2015. Low and stagnant pay means that tax receipts have been £68 billion lower than expected and national insurance contributions £28 billion lower than expected.
The Government have failed to tackle the cost of living crisis. Wages continue to stagnate, and too many jobs have been created in low-paid, insecure work, rather than in high-paid, high-skill sectors. So what is the Government’s solution to fix their mess? As we have heard, it is to take Britain back to spending levels last seen in the 1930s, with further planned cuts of £50 billion. We have already had five years of that and it has not worked. The Government want to run the state, but they do not believe it should exist. The Government’s plan has clearly failed, and we need a different approach. We need a Government with new ideas on how to support business, to create jobs, especially for our young people, and to improve living conditions for hard-working families.
Labour’s Budget would have seen support for working families not simply through tax-and-spend redistribution but by building a more inclusive recovery. Wealth does not flow from the top down: it is created from the bottom up, by working people and families. Every person in every sector of the economy is a wealth creator.
My constituents in Inverclyde will not be fooled by the small rise in the minimum wage announced by the Chancellor to take effect in October. It falls far short of the £7 minimum wage that he promised over a year ago. Under this Chancellor, we have seen the value of the minimum wage eroded and working people’s living standards fall. The hard-working families I represent in Inverclyde are on average at least £1,600 a year worse off under the Chancellor. Without doubt, Labour has set a more ambitious target for the minimum wage, which would see it rise to £8 an hour. We will also act to make sure the national minimum wage is properly enforced, unlike this Government who have failed to get to grips with non-payment, and named and shamed but a handful of companies.
Labour will take action to help to make work pay with an economic plan that works for all, not just a few at the top. We will tackle low pay and address insecurity in the workplace. My constituents tell me on the doorstep that they are struggling to make ends meet as the cost of living crisis bites deep; they need a pay rise and fairness in their contracts at work. Increasing the minimum wage to £8 an hour would instantly benefit more than 6,000 people in my constituency, but we need to go further and encourage more employers to pay a living wage by establishing “make work pay” contracts.
My constituents would also benefit from our compulsory jobs guarantee to provide a job for every young person unemployed for more than a year. The Government sorely lack any plan to give those young people an opportunity in life. The jobs of tomorrow will come from a large number of small businesses, not simply a number of large ones. That is why we also need to look at how overheads can be cut for businesses, but the Chancellor has given us nothing like Labour’s promise to lower energy bills through a price cap or to reform the energy market. Cutting costs for businesses means they have more scope to hire, contributing to the recovery and creating more jobs.
Scotland needs more than low-paid, low-skilled jobs. In Scotland, 82% of the jobs created since 2010 fall into that category. Those jobs fall way short of allowing families to make ends meet from week to week, and we have seen in-work poverty increasing and zero-hours contracts flourish. If we do not get to grips with low pay, low skills and poor contracts, we simply cannot expect Britain to lead the way in existing markets or in developing new markets.
Labour’s agenda is about fairness and opportunity for all. I hope that this will be the last Budget from a Government focused on millionaires rather than the millions who need help.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
The Budget statement was very interesting, because it was an attempt to rewrite the Chancellor’s last five years. It is strange that the Chancellor forgets where he started, what he promised, and what he tried to do. He came into office five years ago with austerity max. That was his solution. He was going to drive out the deficit by slashing public sector expenditure—and he was applauded to the rooftops by Conservative Back Benchers. Within a year, the economy had stalled, we lost our triple A credit rating and the Chancellor panicked. What did he do? Strangely, he stole Labour’s plan B. He realised that he had to bring something other than austerity and cuts into the economy, because of the damage that they were doing. That is a lesson that the eurozone could learn, because it is doing the same thing across Europe now, with its obsession with austerity and cuts.
The Chancellor brought in some other measures. For example, he started to tax. For the past five-year period, 18% of his deficit cutting has been done by raising taxation and 82% by cuts. That is still the wrong balance, but at least it gave him some income with which to start to give incentives to the business community and to consumers to try to raise the economy.
The Chancellor got to a position where he had halfway run his race. If someone said to me, “I’m going to run a mile,” but then wanted a medal because they had run half a mile, I do not think they would get a medal. Yet he stood up today wanting applause from everyone on the Back Benches—he got it from his own side—for having failed to reach his own target! It is an amazing situation in politics, where someone sets out to do something, fails to do it and then tells us what a wonderful job he has done. The reason, of course, is that he is trying to put a gloss on his failure. A lot of the things that have happened in the economy have not been because of the Government; they have been despite the Government.
It is very important to look at where the Chancellor got his money from. He got it by taxing the low and middle-income people in this country. How can anyone expect the people of the UK to applaud the Government when it is the people who have felt the pain? The Government will never be able to justify to the vast majority of my constituents—and, I think, the people of the UK—cutting tax by 5% for those earning more than £150,000 a year. We get people saying that that is worth £40,000 to a millionaire, but the main thing is that it was unfair, it was unnecessary and it was playing to an ideology, not to practical economics. Why the Chancellor should think for a minute that he should get any applause for that, I do not know. He will get none in my constituency, even from the very hard-working people earning decent wages, for example in the oil and gas industry.
The Government have been telling us a mythology today. They expect people to believe it, but I have been listening to the commentators outside the Chamber and they are not buying it. This has been a feeble Budget, with little bits here and little bits there. How does one spend £6 billion, yet do very little to incentivise the people of this country? Just follow the Chancellor’s words. There is nothing there, as far as I can see, to help people.
The Budget, as far as I am concerned, is based on another mythology: the mythology of the unemployment level. They keep saying, “The unemployment level in your constituency, or in this constituency, has fallen.” If that was true, it would be fine. But it is not true. The unemployment claimant level has fallen. What has happened is that large numbers of people in the support system have been put on employment and support allowance and are not counted towards the claimant count. Massive numbers of my constituents tell me about the sanctioned people in my constituency. My hon. Friend the Member for Bolton West (Julie Hilling) elucidated that so well, with the number of examples she gave.
The example that struck me most was the person who, in the past couple of months, died of starvation. He was a person with a mental health problem, who had been sanctioned because he had not turned up for various signing on regimes. He had £3.66 in his pocket. The care worker who found him said that even murderers do not starve to death in this country, but people who cannot help themselves are sanctioned for three months. That is three months without any form of income. There are no other places to go. The supply of loans that used to exist have dried up. People live in absolute dire poverty.
I found a woman with three children who, because of a break-up in her relationship, went from summer to Christmas without any money from the local Department for Work and Pensions. She lived on her family allowance and by borrowing from everyone she could find to keep her alive. Eventually, she came to my surgery in tears, absolutely howling, looking at a Christmas with no money in her pocket and no one else to borrow from. That is the reality of this so-called unemployment fall. A massive number of people—the figure I have heard is as many as 1 million—have been sanctioned off benefits and are living below the breadline. That is not because they are not seeking employment, but because they despair. They give up. They try again, they try again. They are told, “That is not enough, fill your book in.” They keep trying, but are always told, “That is not enough.” That is not the economy that I particularly want to see.
The Chancellor said that he is going to do something for people on low wages. That is another joke. Government Members sneer and laugh when people talk and shout about zero-hours contracts or part-time employment, but that is the reality. I watch and wonder sometimes if they have any moral fibre in them. The reality for my constituents—I have taken up these cases—is exemplified by Burton’s Biscuits, which said, “We don’t have zero-hours contracts. We guarantee 150 hours a year.” No one can live on that.
The problem with what the Chancellor is trying to sell is that we are not buying it. It is a hard life out there for ordinary families, and what we need is a Budget from a Labour Government that says, “You build the economy up from below. You do not trickle down from above.” Every statistic shows that we have failed to grow because we still rely on trickle-down economics. We need a Labour Government with a better plan for our people—one that puts the people and my constituents at the bottom level first, so that they can work their way up, not a plan that gives to millionaires in the hope that they will trickle it down.
Geraint Davies (Swansea West) (Lab/Co-op)
It is a pleasure to follow my hon. Friend the Member for Linlithgow and East Falkirk (Michael Connarty), who sits on the European Scrutiny Committee with me.
First of all, I should welcome a couple of things in the Budget. One, of course, is the Swansea Bay lagoon. If that is going ahead—I assume that the Planning Inspectorate has suggested it supports it—it will be more than a small step for green energy and a giant leap for the Swansea economy. Secondly, I welcome the VAT withdrawal from tolls on the Severn bridge, which will loosen the noose around the neck of the south Wales economy, although I think the toll should be reduced down to the maintenance and operations level—about £1.50 a car—to encourage inward investment, tourism and trade, particularly with the south-west.
In general, however, I think this is a candy-floss Budget—it looks bigger than it is and seems to taste nice, but afterwards we are left feeling hungry, and it is not particularly good for us. Prior to the Budget, we heard from the OBR that the previous plan was to reduce spending to 1930s levels. It is as if the Chancellor is operating a time machine. He has moved the switches, and he can move around the numbers, because the oil prices are down, so now apparently we are only going back to the year 2000. However, the executive summary from the OBR mentions that the cuts, increased for 2016-17 and 2017-18, are much harsher and sharper than in the previous five years, but then he plans the biggest increase in real spending for a decade in 2019-20, which of course is election year. In other words, this is cynical electioneering, rather than a long-term economic plan.
On the long-term plan, the two variables people talk about are the deficit and jobs. It is hardly a success to see debt as a share of GDP move from 55%, where Labour left it, to where it is now, hovering around 80%. It is hardly a success that the Conservatives and the coalition Government have borrowed more in five years than Labour did in 13 years, during which time we bailed out the banks. The reason for that is the failure to generate growth. It is claimed that there is lots of growth, because there is 2.6% growth at last, but annualised growth over the past five years has been about 1.7%. Under Labour, growth was 40% over the 10 years prior to the banking crisis in 2008. Again, this is not a great success. We have lost our triple A rating.
There is talk about jobs. There are more jobs, but productivity is down and overall production is being spread among more people. There are 800,000 fewer people in jobs earning more than £20,000, and more people than that are earning less than £20,000. Through the economics of austerity and low wages, we are generating less tax revenue, we cannot balance the books and debt is going up. That is hardly great news. Meanwhile, there is talk of people literally dying on sanctions. In Swansea, 65% of people on jobseeker’s allowance, surviving on £72 a week, have been put on sanctions. Why are the Government not focusing on the 10% of wealth held in offshore accounts where it is evading or avoiding tax? We have heard something about that, but it is more talk than action and recovery.
The big choice is not about how much we spend versus tax and comparing the different numbers; it is about how growth can help to generate revenue and get the deficit and debt down. Anyone who, like me, has run a business knows that if they make a loss there are two ways forward: one is to make savings and the other is to grow the business. How are we going to do that? In fact, we are doing the opposite. We have the austerity of cuts. With the police, we have seen 26% cuts and another 20% of cuts are still to come through. The president of the Association of Chief Police Officers, Sir Hugh Orde, has said that we are at a tipping point and there might be greater risks from disorganised terrorism. It is the same with defence, with massive cuts to the budget, while Russia is spending £50 billion or 3.3 trillion roubles on defence. There are threats out there in the world; are we rising to them? No, we are not. Why not? Because we are not generating growth.
Growth incorporates the three elements of consumption, investment and net exports. Consumption confidence was dashed in 2010 when the Chancellor said he would sack half a million people and people stopped spending money. Investment was undermined when the funding for lending scheme of the Bank of England was focused on mortgages, not businesses, so that lending to business went down by 40%. There was no growth in net exports in 2013 in terms of the balance of trade, with no net contribution. Last year was even worse, as we lost £8 billion. Firing up exports has been a complete failure.
So we need a plan for growth, which includes things such as tuition fee reductions. What that does is increase productivity and the size of the cake. Whatever the Business Secretary says, the reality is that people are being deterred because of the prospect of having these massive debts. People’s credit ratings are being reduced; people cannot buy a house. At some point, if their incomes go up, they hit higher payback thresholds, and they want to avoid paying it all. It does not make sense; we need to invest in productivity. Tuition fees are relevant.
We need to say clearly that we want to be part of the EU because we need inward investment from China or India, platforming into the biggest economy in the world—it is the EU economy—from an English-speaking place, namely Britain. Those thinking of making such investment do not want to worry about a referendum and the possibility of our coming out of the EU. We want city regions and we want them supported by money from regional banks. We want a house building programme and we want a procurement strategy through which small businesses, which pay British tax, are encouraged and not discouraged by the bigger players.
We also want fairer taxes, whether it be a 50p top rate or getting rid of the bedroom tax. The reality is that poor people spend all their money, and rich people hide it away. If we want growth through consumption, we need a better way forward with a fairer balance of incomes. The truth is that we have a Chancellor who is looking to the future walking backwards. He is taking us back to an age in which the poor get poorer and the rich get richer. We all want a fair share, and we all want to be productive to help make Britain succeed together. That will only occur with a Labour Government.
Jack Dromey (Birmingham, Erdington) (Lab)
“No more top-down reorganisations”; “no plans to raise VAT”; “We back Sure Start”—these are all broken pledges from a Government and a Chancellor who cannot be trusted. Had I shaken the Chancellor’s hand last Sunday, I would have counted my fingers afterwards.
The pledge on no cuts to front-line services rings particularly hollow in the Home Office. Some 17,000 police officers have gone, 8,500 of them from the front line; 4,000 police and community support officers and 15,000 members of police staff have gone, too. These are the biggest cuts in Europe, and there is worse to come, with the Association of Chief Police Officers predicting 30,000 more losses in the next Parliament.
All of this is happening at the worst possible time. The threat from terrorism has been elevated to “severe”, yet we are seeing the systematic undermining of a vital tool in combating terrorism—neighbourhood policing, described by Peter Clarke, the former head of the counter-terrorism command, as the “golden thread” that runs through the police effort in combating it. The number of rapes is up by 31% and violent crime by 16%. As more cases of child sex exploitation and abuse come to light, so, too, are the pressures growing on police time and resources. We have heard of revelations in the midlands today of 500 vulnerable individuals, 70 separate investigations and a police service now devoting 10% and rising of its resources to combating child abuse.
As for the claim that crime is falling, crime is changing. It is true that traditional forms of volume crimes such as burglary and car theft are down, but other forms of crime—fraud, cybercrime, online crime—are increasing at a massive rate. The Office for National Statistics has said that if these were fully reflected in the annual crime survey for England and Wales, we would see an increase in crime of 50%. Many police forces are on the brink. In the words of Neil Rhodes, the chief constable of Lincolnshire, forces are
“on the edge of viability.”
On top of all that, our police forces are stretched to breaking point, and are taking up to 30% longer to respond to 999 calls. Nearly 14,000 more crimes have been unsolved since the Government came to power. The victims of crime are being let down as too many criminals get away scot free. Under this Government, 7,000 fewer crimes of violence have been solved, and, although domestic violence is on the rise, the number of cases passed for prosecution has fallen by 13%. The first duty of any Government is to provide for the safety and security of their citizens, and it will fall to us, as the party of neighbourhood policing, to rebuild it when we are in government. Neighbourhood policing is the bedrock of policing: it means local policing, local roots and a local say.
A more general choice now confronts the people of our country. Labour is, and always has been, the party of working people. The contrast with the Tories could not be more stark. They are the party of low wages and insecurity. One in five people in my constituency earns less than the living wage, and hundreds are on zero-hours contracts. The Tories are the party of high rents and high house prices, of high energy bills and high child care costs. They are pushing up the benefits bill with one hand, and borrowing £200 billion more than planned with the other.
The Tories are failing their own test, but they are also failing the big tests that my constituents apply to their own lives: “Am I better off? No, I am not”, I am told time and again on the doorstep. “What planet does the Chancellor live on?” asked someone in Kingstanding last week. The average family is £1,600 a year worse off. The other test is “Do my kids have real prospects for the future?” The answer to that question is that this is the first generation since the war who are growing up with less good prospects than their mums and dads and grandmums and granddads.
Labour, in contrast, is the party that believes in making work pay. Labour believes that it is wrong for people to go to work and live in poverty. It is the party of the much higher minimum wage—the £8 minimum wage. It is the party of the living wage. It is the party of security at work, which will tackle the exploitation of workers through zero-hours contracts. It is the party that will build the homes that Birmingham, and Britain, need, and will act to ensure security at home for those who live in the private rented sector. It is the party that will tackle the energy giants and bring down energy bills. It is the party that will provide affordable child care—25 hours free of charge—for all families. It is the party of equal pay and opportunity. It is the party that will tackle the abuse of power, and the abuse of workers by the rich or those who seek to take advantage.
There is but one alternative to this Government, and that is a Labour Government. UKIP? UKIP is not so much the party of the flat cap as the party of the flat-rate tax. It would privatise the national health service, drive women back into the home and gays back into the closet, and divide our country once again. My dad described to me the humiliation that he experienced when he came from County Cork to dig roads in London and saw signs reading “No dogs, no Irish.” As for Nigel Farage, boasting, vainglorious, saloon bar Nigel—a man of the people? In the immortal words of Ricky Tomlinson, my arse, or if that is not parliamentary language, Mr Speaker, my posterior.
What kind of society do we live in? This is a Government who are strong with the weak and weak with the strong. In the words of one former Tory voter in my constituency, an ex-policeman, they are a Government of the rich, for the rich, making the rich richer. What says it all is that they introduced the bedroom tax on the very day that they gave 13,000 millionaires a £100,000 tax cut—a grotesque combination. There are heartbreaking cases in my constituency of people who have been hit hard by the bedroom tax.
This is a Government whose days are numbered. Their end cannot come soon enough.
Helen Goodman (Bishop Auckland) (Lab)
We heard a characteristically self-congratulatory speech from the Chancellor earlier today. According to him, his strategy is working and his early austerity is paying off, with a growing economy, rising employment, a falling deficit and even enough room for manoeuvre for a few more tax cuts. Let us take each claim in turn.
This has been the slowest recovery from a recession ever recorded. The economy was growing when Labour left office in 2010. The Chancellor slammed on the brakes. The OBR estimates that the economic loss was 2% of GDP in the first two years; a professor of economics at Oxford university estimates it at 5%. That is £1,500 for every man, woman and child.
It is true, of course, that employment is now rising, but not as much as Government Members claim. The JSA claimant count is down to 800,000 but the figure on the International Labour Organisation’s unemployment measure is 1.8 million and the rate varies among particular groups. In the north-east it is 8%, while for young people it is 16%, and, as other colleagues have said, many jobs are zero hours and low paid. Average earnings have fallen. They are not forecast to reach pre-recession levels until 2020, fully 12 years later.
Poverty is up and earnings are down, the consequence of which is that tax revenues have been weak, so the Chancellor of the Exchequer’s deficit and debt reduction targets have both been missed. The deficit is down by a third, not eradicated as planned. Debt is up by a third and £200 billion more has been borrowed than was planned. Living standards have fallen and inflation is below target, verging on the negative, while interest rates have never been lower and are negative in real terms.
None of that suggests that the economy needs to be reined in or that there is spare capacity, yet the Chancellor is planning to go into the next general election with a plan to cut both tax and spending. The Red Book shows a 5% reduction in GDP—between £60 billion and £70 billion of cuts. The OBR analysis also shows huge reductions in the first two years—indeed, bigger than those we have seen in the last five. Obviously that will further deflate the economy. Even the Financial Times this week was describing it as “unnecessarily extreme”.
What the economy needs is continued growth and measures to boost productivity, which fell last year and has stalled in the last six. Productivity in Britain is now lower than it is in the United States, Germany, France and Italy. Higher productivity would mean higher wages and make our exports more competitive, which would be especially useful at the moment, when the pound is rising against the euro. According to the OBR, higher productivity would also mean higher growth and lower debt. Indeed, the OBR’s scenarios show a massive difference in the debt-to-GDP ratio, of 50% to 57%, compared with 87%. The OBR describes the productivity performance in this country over the last five years as disappointing.
In other words, what this Budget should have contained was measures to boost productivity, which would have improved the public finances—measures such as better access to finance for SMEs, through a British investment bank; maintaining and improving the skills of the labour force, through a young person’s job guarantee, better vocational education and cuts to tuition fees; substantial improvements to the nation’s infrastructure; and devolving economic power and funding to city and county regions.
Mr Newmark
I will buy the hon. Lady an extra minute, because I can see that she has got a thick wodge. She is one of the more economically literate Members on the Opposition Benches and she has made a number of proposals, so I wonder how she proposes to pay for all those things. Is it more tax, more borrowing or a higher deficit?
Helen Goodman
The whole point about the plans that we are putting to the British people is that we think it is reasonable to borrow for investment, in the same way that people borrow to buy a house. We think that is a sensible proposal for the nation as a whole. It would build capacity and mean that everybody had a higher standard of living, that we had faster growth and that revenues were higher, and in the end the deficit would come down.
Today, there is no new money for infrastructure. The Chancellor spoke about it a lot, but he was simply elaborating on the plans he put before the House in the autumn statement. There is no new money for science, for SMEs, for transport or for broadband.
The Chancellor proposed changes to personal tax allowances that will benefit people on higher incomes far more substantially than they will benefit those on lower incomes. A person earning under £10,000 a year will get no benefit. A person earning between £11,000 and £43,000 will benefit to the tune of £80, or by as little as £20 if they are on housing benefit or tax credits, because those benefits will be withdrawn. The biggest benefit of the increased tax allowance will go to people earning between £43,000 and £100,000. They will get £160 in their back pockets.
The Government propose significant changes to the savings and pensions tax regimes that will cost £1.7 billion. I put it to hon. Members that it might be nice for people to save and nice to have a better tax regime for a small number of people, but when our economy is in such a weak state, they can hardly be a priority on which it is appropriate to spend £1.7 billion. That will obviously benefit the better-off people in this country as opposed to the vast majority of people.
My right hon. Friend the Member for Tottenham (Mr Lammy) comprehensively demolished the Government’s help-to-buy proposals. It is absolutely absurd to keep pumping money into the housing bubble in the south-east and not to do something about the underlying problem. Building homes would tackle the housing crisis, create jobs and boost the economy. In my constituency last year, not a single property was exchanged for £600,000, which is the Government’s limit in their Help to Buy scheme. That epitomises all that is wrong with the Government and how totally out of touch they are.
Furthermore, I believe that the Budget is dishonest. It tells only half the story. It does not set out where a further £9 billion cuts in welfare would be found; it does not say what the rate of VAT will be after the election; it does not say how big cuts would be to defence, police and local government; and it does not say whether charges will be needed in the NHS.
I do not believe that the British people want a fundamental re-imagining of the state. They want something simple: a better future with a Labour Government.
Nia Griffith (Llanelli) (Lab)
I should like to set the record straight. People will see through the Budget very quickly. They know that a few gestures from the Chancellor and the recent lull in inflation will not make up for the loss of purchasing power that households up and down the country have suffered over the past five years.
Let us set the record straight on the Labour Government. There was a financial crisis in 2007-08. It was a worldwide banking crisis. At that time, Conservative Members agreed that we had to back the banks and bail them out to protect people’s savings and homes. The Labour Government understood that the only way to get the deficit down was to ensure that we got the economy growing first. By the time we left office in 2010, there was an annual growth rate of 4%. The first thing the Conservative-Lib Dem Government did was to choke off that growth. By the end of 2010, growth was down to 0%. As a result, the recovery has been much slower and demand has remained low, which has hit our manufacturing industry, and therefore tax receipts have been low, which has made it difficult to reduce the deficit.
The Government’s priorities have exacerbated the problem, because capital expenditure has the greatest impact on growth in an economic crisis. Money that is spent to improve our infrastructure and attract investment—capital expenditure—provides jobs in the UK and puts money in the pockets of local people, who spend it in our local economy. Capital expenditure also helps us to keep the skills base. For example, in construction, public capital expenditure has provided work and kept the skills base when there has been no work in the private sector. The Labour Welsh Government have tried to keep capital expenditure going in Wales. The Government parties have done nothing except cut back on that type of expenditure and then try to rewrite history.
For example, we had already agreed that the main line from London to Swansea would be electrified, but then the Government parties cut the funding before pretending to give it back, first to Cardiff and then, after a long struggle, to Swansea. They tried to take credit for that, but, to be frank, they should not have cut it in the first place.
The choices the Government parties have made on taxation are not only morally wrong, but economically unwise. Those on low and middle incomes, of necessity, spend their income back into the local economy much more quickly than those on the highest incomes. There is not a trickle-down effect, as the Tories seem to believe, and much of the tax cut for millionaires has probably gone on expenditure overseas. Those on low and middle incomes—the working poor—have been particularly badly hit. VAT is a very regressive tax that is levied on all sorts of things that are not luxuries, such as bathroom items, including toilet paper. Such items add up in household shopping baskets. In fact, families find themselves £1,000 a year worse off under this Government. That has been fuelling household debt and driving people to food banks. In Wales alone, which has 5% of the UK population, 79,000 people have visited a food bank in the past year.
I want to address some specific issues mentioned by the Chancellor. The first is his announcement about the Severn bridge toll rates for 2018. I remind the House that it was a Tory Government who set up the private finance initiative scheme for the Severn bridge in the first place and landed us with all the payments we have to make. It is also reasonable to say that prices will come down in 2018 anyway, because that is when the concession will end and we will finish paying for the building of the bridge, and VAT will be removed because it will return to being a publicly owned asset rather than a privately owned company. That will happen anyway, so it is not good enough simply to say that prices for white vans will be reduced. Haulier companies such as Owens in my constituency, which employs 500 people, pay a massive amount in Severn bridge tolls every year. Obviously, they find it difficult to compete against companies based in England, so we expect much more than the little reduction in 2018.
The rise in the tax threshold is welcome, but, as my hon. Friend the Member for Bishop Auckland (Helen Goodman) has said, too many people do not earn enough and will not benefit very much because of cuts to housing benefit and tax credits. Those who will benefit are much further up the tax scale, so the policy is not going to help half as much as it ought to and the people affected are still being hit by the increase in VAT.
On the issue of greater freedom for pensioners to use their money in different ways rather than purchase annuities, it is absolutely vital that stringent regulation is established straight away to ensure pensioners are not ripped off by the unscrupulous, who are, doubtless, rubbing their hands with glee and hoping to cash in on the unsuspecting.
I certainly welcome any measures that ensure that tax owed is tax paid, but tax avoidance measures taken by the Labour Government are now bringing in 10 times as much revenue as any measures taken by this Government. I draw the House’s attention to one problem in particular. January saw the introduction of new EU rules on the collection of VAT from companies that operate in more than one country. Clearly, the rules are necessary and were designed to stop big companies wriggling out of their moral tax responsibilities, but the practical procedures required by Her Majesty’s Revenue and Customs are threatening to put small digital businesses out of business. Such businesses sell knowledge-based products online; they may be very small domestic businesses selling recipes or knitting patterns that involve a small transaction. If sales are carried out in many different countries over the internet, those tiny transactions have to be logged in great detail, so I ask that HMRC takes another look at what it can do to ease the burden on those small businesses.
Let us be absolutely clear: the Chancellor is proposing massive cuts over the next few years to public services and welfare, and he has not even hinted at how they will affect people. The key issue is that, by doing so, he will repeat the problem of choking off growth and we will be back to a state similar to that in which we found ourselves at the end of 2010. This Budget is going nowhere. If we want to get a better system, we need a Labour Government to make sure that we tackle the energy crisis, prices and the problems that people face so that they are then able to spend more and get the economy going again.
Sheila Gilmore (Edinburgh East) (Lab)
In June 2010, we were told that we had to have an emergency Budget. Even at that stage, one of the strange things about that was that many of the measures were so un-emergency that they did not have to come in until the following January. To a large extent, the emergency Budget was a political statement about where the incoming Government wanted to go. Today’s Budget is a political statement as well, from a Government who are trying to convey the impression that they have solved the country’s economic problems and that there will be no need for many more harsh decisions or much more austerity as they want people to think it is safe to vote for them. It is therefore a highly political Budget.
Not only is this a political Budget but the Chancellor, optimistically I would suggest, seems to be planning not just for the election that is about to happen but for 2020. His predictions for spending show severe cuts in the first part of the next Parliament then a sudden uplift towards the end, just before another general election. Even the OBR says that that is very strange and that this is a “rollercoaster” of spending. It is not justified, I would suggest, by anything other than its politics.
The people of this country deserve something better than a Budget that will, as the Chancellor hopes, make people feel good when a lot of the underlying issues have not been resolved. Some of those people were badly affected by some of the things we were told were absolutely essential back in 2010 and will find it pretty galling to be told now that things are perhaps better when they are still suffering. At that time, we were told that we would have to cut disability benefits by 20%—people wonder why the disabled in this country are so angry, so upset and so worried. That was the prospectus put before them then.
One of the main things the Chancellor wanted to talk about today was the tax threshold, but we have to ask over and over again what that means for the low-paid. Between 17% and 20% of people in employment are already earning below the tax threshold and further rises in it do absolutely nothing for them. What is the Government’s proposal to help those low-paid people? There does not appear to be anything and there is a considerable fear that those low-paid earners will end up paying for this constant increase in the tax threshold, perhaps through a VAT increase, which they will have to pay for even though they gain no benefit from it. Even if people fully endorse the argument about the tax threshold, there should be provision for the low-paid as well so that at the very least they are provided for.
That point and some of the speeches we have heard show the fundamental differences between the Government and the Labour Opposition. Members have said how important it is that people can keep hold of their own money. Tax is basically a bad word for them and they want as little of it as possible. The problem is that that has consequences that are felt in the real world. If taxation is reduced, spending must be reduced unless taxation is being increased somewhere else, which brings us back to the question of VAT. If we want a society in which we provide good quality services and in which people are not anxious about things such as how their parents will be cared for or how they will encounter the care system in their old age, it has to be paid for. If anyone believes that the answer is to cut taxes they should be open and honest and say what impact that will have on services.
Adam Afriyie (Windsor) (Con)
Does the hon. Lady not recognise that when certain taxes are cut, the overall take by the Exchequer increases, as has been demonstrated over the past five years?
Sheila Gilmore
We have heard the argument that if we reduce taxes, we get more revenue in. Of course, it is usually heard in relation to the 50p rate of tax, but that was a very poor example. It hardly had any effect, and so many people made their own arrangements before and after the announcement was made on reducing the rate again that we cannot tell what really happened.
It is important that we should have a discussion about the kind of values we want and the kind of society we want to live in. There has been a similar debate north of the border, where we have a Government who are trying to suggest that, although they do not necessarily want to cut taxes, it is possible to have fantastic services without ever putting up taxes. That will also leave the public confused about what can really be achieved.
Geraint Davies
Does my hon. Friend accept that if the Government consistently put up tax allowances while putting wages down, tax revenues are going to fall? Does she agree that that is why we are nearly bankrupt?
Sheila Gilmore
Tax revenues have been falling, and the whole issue about low wages is extremely important.
We have had discussions in the House about zero-hours contracts. I think it was the hon. Member for Dover (Charlie Elphicke) who said today that Labour had done nothing about them for 13 years. I was not a Member of this House at that time, but I was a local councillor for much of that period and I met people constantly in that role. In all honesty, I do not recall people raising the issue in the way that they have been doing more recently.
Zero-hours contracts are a growing phenomenon, and they are still under-reported. I mention them on some of the literature that I give out when I am door-knocking, and a couple of the people I have spoken to in the past few days have looked at that literature and said, “What are zero-hours contracts?” When I explained, they said, “Oh yes, that’s what my son had when he was working for a pizza house.” Another man said, “Oh yes, that’s what happened to my son. The other day, he called and asked me to pick him up from work because he had gone in, only to be told to go home again because there was not enough work for him. They could do that under the terms of his contract.” Those people might not have known the term “zero-hours contract”, but they certainly recognised the conditions involved.
These issues are a matter of concern for young people. Unemployment is not falling as it should be. It is still, in the words of most commentators, “stubbornly high”, and we need to do something to address the problem. Also, earnings for younger people have not risen. The Government are proud of saying that average household incomes are beginning to rise again. Those in the oldest age group have done the best, and people in the middle are beginning to do a bit better, but young people are still doing significantly less well. That is a serious matter and we should be giving it greater consideration.
Many young people have a string of temporary jobs. They are in and out of jobs even when there is work available, which is very frustrating. One constituent told me that her son had worked for Royal Mail for three months at Christmas. He knew that it was a temporary job and he was told that there was no further work afterwards. He signed up with an agency that handled temping work, and he was phoned up a few weeks after Christmas and asked whether he was interested in a “call-on job”—a zero-hours contract, effectively—with Royal Mail, no less. So apparently there was no proper job on offer, but Royal Mail had none the less asked the agency to take on someone on those terms. How much better would it be for that young man if he could get a proper job that paid him a proper wage and in which he could learn a skill? We must do something for our young people. We must not sit back in apparent complacency and say that there is not a problem.
Mr William Bain (Glasgow North East) (Lab)
This was the Chancellor’s sixth Budget, and after a Parliament of unparalleled failure on living standards not seen in decades, today was his final chance to chart a fairer course for the British people. He failed that test. He failed it because the values by which he has conducted economic and fiscal policy for the past five years are not the values that build an economy where we have a dynamic industrial policy and public spending plans that generate more growth, decent jobs and rising living standards with higher productivity. He failed because, by his actions, he has shown that he does not believe in a society where opportunity and assets are more equally distributed to the benefit of all, and inequality is lower. He failed because time after time he has put short-term tactics before a long-term strategy for growth in our green industries. This is the Chancellor who told us he could balance the books without hurting the poor, yet young people have seen the biggest drop in incomes during this Parliament and all he has to offer now is a vision of a low-wage, lower-skill economy drifting out of the EU, thereby damaging our future prosperity even further.
Britain is a better country than this Chancellor gives it credit for. He said that his policies today will tackle waste and inefficiency, but what can be more inefficient than the waste of young talent or over-25s being idle? A Government with real ambitions for our country would be creating opportunities to give them hope with a decent job. He says his chancellorship has been about fairness, but what could be more inequitable than bonuses rocketing at the very top of society, while he has broken his promise on the minimum wage by raising it by a measly 70p, instead of to the £7 per hour by this autumn which he promised last year? He boasts of his record on growth, but the UK has had the slowest recovery from recession of any other developed country apart from Italy and Greece, with the IMF and other forecasters predicting that growth will be lower next year and the year after than this year.
According to the Fraser of Allander Institute’s most recent commentary on the Scottish economy, full-time employment is more than 4% below its pre-recession peak and the total numbers of hours worked in Scotland is still lower than it was before the recession. On this day, when unemployment has gone up in my constituency and risen across Scotland by 6,000, this Government should have had more measures in their Budget to deal with that.
We know that bank lending to small and medium-sized businesses has been falling and that exports are weak, with the OBR pointing out that net trade will make a negative contribution to growth all the way until 2019. Productivity is poor. People are having to take out credit and take on more personal debt to make ends meet. This was supposed to be a recovery based on the march of the makers, yet it has stretched households, who are taking on more debt and shouldering the burden of fuelling growth. This should have been the Budget that addressed structural problems in the British economy, because a Chancellor who wants a credible deficit reduction plan for the next Parliament has to have a plan for more balanced growth and prosperity. The rewards of that growth have to be more fairly shared among ordinary working people than this Chancellor has achieved. But he failed. He failed because not only does he have the wrong plan for Britain’s future, but he has the wrong values for our economy and our society, too.
Adam Afriyie
This is the 10th Budget that I have listened to in the House of Commons. The first five led to massive unemployment and a huge deficit, and really damaged the lives of the least well-off in this country. The five under the current Government seem to have led to greater levels of growth, lower youth unemployment, low unemployment overall and a lower deficit. Does the hon. Gentleman recognise that in any way, shape or form?
Mr Bain
I gently point out to the hon. Gentleman that the emergency Budget and the spending review adopted in autumn 2010 led to three years of hardly any growth at all in the economy, a dramatic fall in tax revenues, the deficit having not fallen or been wiped out as the Chancellor had promised, and debts doubling over the course of this Parliament. That was the reason the economy has underperformed and why this Government are going to leave to their successor the highest deficit in the developed western world. The fiscal policies that this Government have adopted could not have been more wrong.
We need a different plan for public spending and for more balanced economic growth, not the one the Chancellor has offered today. We need a plan for a fairer tax system, with tougher action against those who do not pay their fair share of tax or indeed do not pay any tax at all. It was very troubling to read in the OBR’s fiscal outlook this afternoon that it has doubts about the £5 billion that the Government have suggested they will pull in from the tax evasion measures set out today. For example, the OBR said that some of the specific measures were “unlikely” to generate the extra revenues that were scored in the Red Book.
The test for this Government in their Finance Bill next week is whether they will be prepared to bring in legal penalties for those who evade or avoid taxes so that we can fill the gap of £34 billion of tax that should be collected by the Exchequer and has been foregone under this Government. That is what hard-working taxpayers will want to see in the Finance Bill next week.
Despite the Chancellor’s modest U-turn today, he still intends by 2018 to force through the biggest fall in core public service expenditure since 1938. The cynicism of this Budget is that, by bringing in deeper cuts between 2016 and 2018 and then partially reversing them in 2019 and 2020, we can see that it is the electoral cycle that has motivated the Chancellor more than the cycle of what is good for jobs and stable growth in this country.
Labour has a different and a better plan. It is one that does not jeopardise investment in infrastructure. If we balance the current budget in the next Parliament, then, as the National Institute of Economic and Social Research has said, we would have more growth, more jobs and faster rises in wages—a better plan for Britain.
I welcome what the Chancellor did for the oil industry. With receipts forecast to fall to £700 million in the next fiscal year, there is an even stronger case for an oil resilience fund, which would do a great deal to secure investment and jobs in the offshore sector in Scotland.
We should have had a Budget that raised the minimum wage to beyond £8 an hour. We should have taken steps to encourage the living wage to be paid to as many people as possible in this country. We should have had a higher rate of income tax for those earning more than £150,000 a year. We should have had the opportunity to begin the job of change, but change is coming. A Labour Government are coming, and I believe that the British people will begin that job of change by voting, in just seven weeks’ time, for a Labour Government and for a more equal and prosperous society.
Diana Johnson (Kingston upon Hull North) (Lab)
When the Chancellor stood up this afternoon, one of his opening remarks was that his Government chose the whole nation. He talked about us all being in this together, which he has said on many occasions. But he did not talk about the 1 million people who use food banks, the 1 million people on zero-hours contracts, or the tax breaks that he gave to millionaires. He did not really talk about the widening regional inequalities in this country, which we are seeing more starkly than for many, many decades.
For my constituents in Hull, there was no mention of the disproportionate cuts to local authority funding—25% of Hull city council’s budget has gone, although it is in the top 10 most disadvantaged communities in this country. The Chancellor did not talk about the Centre for Cities report, which said that 13,300 private sector jobs had been lost in my city over the past decade. I want to talk a little about the regional nature of the inequalities in this country; and how the Budget that has been set out today will not tackle those growing divides.
The Chancellor talks a lot about the northern powerhouse. I had a look at page 43 of the Red Book to see what he was saying. I was very disappointed to find very little mention of great cities such as Hull. The little that there is is about the electrification of the rail line between Hull and Selby. Unfortunately, the Government and the civil servants forgot that the rail line across the Pennines stretches from Liverpool all the way to Hull. They decided, for reasons unknown to me or to many of my colleagues, that they were going to stop the electrification in this round at Selby.
To put matters right, Hull Trains has put together an excellent package of private finance to complete the electrification all the way to Hull. In fact, a strong cross-party delegation went to meet the Secretary of State for Transport to press for that to be done as soon as possible, particularly given that Hull will be the city of culture in 2017 and is expecting many more visitors. However, the Red Book states that electrification of the line to Hull will go ahead in the period from 2019 to 2024. The impetus for doing something very positive, using private sector money and doing it quickly, seems to have been completely lost.
I stress that if electrification to Hull does not happen, that will put in doubt the direct train services that currently operate between Manchester and Hull, because of the new franchise going through at the moment and the new rolling stock that will be required for the electrified line. Again, it is pie in the sky when it comes to investing in local rail services. There is talk here of High Speed 3, but I would like to get High Speed 1 to Hull in the first instance. I am still very conscious that £22 billion was spent on transport infrastructure in London in 2013, but in Yorkshire the figure was £1.1 billion. There is real discrepancy.
I mentioned Hull being the city of culture in 2017 because I was looking out for additional support for the city, given that special status. I note that paragraph 1.148 of the Red Book, which relates to the northern powerhouse, states that
“the government is already… investing in the vibrant cultural life of the north, including £78 million for the Factory Manchester.”
Well, good luck to the Factory Manchester, but what about the 2017 city of culture? I also note—this is on page 73 of the Red Book—that money is being provided to the Muni theatre in Pendle, but again there is no mention of Hull.
I want to move on to businesses. Hull had one of the lowest rates of business start-ups in 2013, according to the Centre for Cities report, so I welcome the extension of the Humber enterprise zone. It is just a shame that the Humber local enterprise partnership has had much less to spend than Yorkshire Forward did.
On digital matters, unfortunately only 22% of postcodes in Hull currently have access to high-speed broadband, which is one of the lowest rates in the country, although KC Communications tells me that we are future-proofed because our high-speed broadband goes to the property and not the cabinet, which is what happens across the rest of the country. For reasons I do not understand, Hull was excluded from the first tranche of the SuperConnected Cities voucher scheme, which local businesses have been complaining about. We are told that there are 50 cities in the next tranche, but we do not know whether Hull will be included—I hope that it is.
The Red Book also refers to a northern hub within the northern powerhouse, with £11 million to develop the digital industries in Leeds, Sheffield and Manchester—the Deputy Prime Minister’s golden triangle—but again Hull seems to have been excluded from that. May we have some clarification on that?
On jobs and growth, of course it is good to see more people in work, but in Hull 1,000 people applied for the 14 Siemens jobs that were advertised, which shows the lack of good-quality, full-time, permanent, skilled jobs in the area and how there is much more to do.
We know from today’s Budget that there are cuts ahead if the Conservatives win the general election. We already know that there have been massive cuts to policing, to council services and to the local NHS. In Hull we know that Humberside already has the lowest police numbers since 1979, that a quarter of our council budget has gone—£278 per person—and that our local NHS is really suffering, with our A and E department in crisis. I shall wait to see whether the money that has been announced for mental health services for children and young people comes Hull’s way, because many of our young people are having to travel hundreds of miles to get treatment.
Hull people know from our experiences since 2010 that a Tory-led Government would certainly direct the deepest cuts identified in this Budget at our city. Hull needs a Government who really have chosen to stand up for the whole nation, are on our side in Hull and not on our back. We need the economics of hope and investment in all parts of all regions. We need a Government looking to the 2030s, not the 1930s. Hull desperately needs a Labour Government.
Huw Irranca-Davies (Ogmore) (Lab)
Five years ago when the so-called emergency Budget was announced, I remember twice intervening on the Chancellor and challenging his assertion that there would be an economic recovery and that his was a good long-term plan that would benefit everybody. Ultimately, he had to acknowledge that it would come down to his judgment. Five years on, I have to say that his judgment has failed. It has failed miserably for the people whom I represent. This has not been the so-called long-term economic plan that benefits everyone. It has not been an economic recovery that benefits everyone. It has not been an austerity programme that hits everyone. It has been balanced on the backs of those least able to afford it socially and economically all the way through.
I do not believe it was ever intended to be a fair plan under which everybody would shoulder their fair burden. The language of the so-called emergency Budget of 2010 made that clear. The recovery has been unbalanced, both sectorally and geographically; it has been delayed, because there was a period of two or three years when we flatlined as a result of the decisions of the coalition Government to cut off infrastructure spending; and it has left people behind. It has left behind a generation of young people and a generation of working poor. When did we see this last? We saw the same approach in the 1980s—“Don’t worry. We’ll do our very best. It will trickle down and the effects will be seen.” The recovery does not trickle down into my constituency.
Some people, I accept, have hardly seen the impact of this recession. They have done well. They have been in a secure job. Life has gone on almost as normal. We have a great manufacturing belt in my constituency. Many people there will not have seen the recession. They will have got through okay, but underneath that there is now a huge group of people—those who work part-time, those who wait for that call in the morning to see whether they are to be brought into work, those who have seen a drop in earnings of probably 6% to 10% if they are working, and those who balance two or three jobs to try to make ends meet.
What would it be like—this is the reality check that we need five years down the line—if the Chancellor had to wait for a text in the morning to say, “Take a rest day today. You’re entitled to it. We haven’t got any hours for you”? Could he work on that basis? What if the Chancellor did not have to put on his suit and head up to the Banqueting House for a nice gala dinner or a fundraiser, but had to walk 4 or 5 miles between food banks on different days of the week to collect sufficient food for a working family to get through that week? Five years ago, after the emergency Budget, there was one food bank in my constituency. There is now not one town, one village or one street that does not rely on food banks. The generosity of those who supply them is amazing, as we always say, but we should not be in this situation when we are still the sixth most prosperous country in the world.
What would the Chancellor do if he had not simply to be the Chancellor, but to do another job to make ends meet, or perhaps three jobs—and I am not talking about directorships, by the way. That is the reality for many people. I have spoken to those people, and when I hear the Chancellor speak I wonder if he ever has the same conversations. Does he have constituents who come in and say, “Even after running two or three jobs, some of them on night shifts, I still can’t make ends meet”? Does he ever have that conversation? I have never heard it from him. My constituency must be very different from his, yet mine is not a poor, poor constituency. There are some people who are doing quite well, yet from other constituents I hear about the problems all the time.
That is backed up by the statistics, which show that in the Bridgend county borough area, a prosperous manufacturing belt on the M4 corridor in commuting distance of Cardiff, there has been a tenfold increase in people who rely on payday loans. Some of them are piggybacking payday loans—not just one, but another one to get over the original payday loan. I have referred to the extent of the food banks and to the fact that, under this coalition Government, people at those food banks are in work as opposed to not working, and that for the first time in history, we now have more working households in poverty than non-working households in poverty. All this stacks up to a compelling argument.
Since the emergency Budget five years ago, when the Chancellor said to me in response to two interventions, “You’ll have to trust in my judgment. This will not fall on the working poor or on the young”, we have seen what has happened to youth unemployment levels. It is great to see claimant counts coming down. They have come down in my constituency, and that is fantastic. However, the last time I heard such praise for claimant figures was during the 1980s when everybody was moving out of the jobcentres and on to sickness benefit. We can cut these figures in any number of ways, but if the people who are coming off claimant counts are in self-employment, they are typically earning 40% below the average median earnings of somebody in a full-time-wage job. If those people are working two or three jobs in order to make the money up, and if there is, as there has been under this Government, a massive increase in housing benefit and in poverty pay subsidised by the taxpayer, I say to Government Members that something has gone seriously wrong, and it stems back to the point in time when a decision was made to say, “We have to go for this austerity; we must have this fetish about deficit reduction above and beyond everything else.” At that point—
Huw Irranca-Davies
I have no time—I apologise. [Interruption.] Oh, I do have time, so I will give way. Perhaps the hon. Gentleman will explain why the Government chose at that time to do the complete polar opposite of what I did as Minister in the Department for Environment, Food and Rural Affairs, when we had capital spending on flooding and chose to keep people employed in their jobs.
Adam Afriyie
Of course we all agree that we want the least well-off in society to do well, and the measures that the Chancellor has taken over the years are beginning to show effect. Does the hon. Gentleman not remember that under Labour’s Budget proposals, the cutting of the deficit was at a steeper rate?
Huw Irranca-Davies
Nearly every party is agreed on this, apart from some who have said that there is no need to cut the deficit. We agreed that we had to cut the deficit, but we also made it clear that we had to keep people in jobs while doing so. That is why, when I was a DEFRA Minister, we brought the funding forward and made sure that people in the Environment Agency were employed building flood defences.
My argument to Government Members and to the Chancellor is that there seems to be a complete disconnect. Throwing around claimant counts stats and saying that everybody has had to shoulder the burden simply does not ring not true for my constituents. Over the years, there has been an honourable tradition among those on the Government Benches of arguing for the working poor as well as others, but that seems to have disappeared over this five-year cycle. I hope that next time we will have a Government who deal with zero-hours contracts and the exploitation of agency workers, give a jobs guarantee to young people, have the sorts of initiatives that are being carried out by Labour in Wales, and build an economic recovery that benefits everybody, not just those at the top.
Kate Green (Stretford and Urmston) (Lab)
I am sure that by now Government Members will recognise that the Chancellor’s Budget has not convinced my colleagues and has not convinced the country, and it will not convince my constituents. There is very little in it to return them to the confidence in the future that everyone I speak to on the doorstep tells me they desperately want. Whatever the Chancellor likes to say, low productivity, low pay, low tax receipts and high spending cuts have characterised his management of the economy until now. We heard this afternoon that such an approach is set to continue if his party returns to government in the next Parliament. Happily, we do not expect that to happen.
The Chancellor has taken a series of quite deliberate fiscal choices that have favoured the better-off, whether it is reducing the top rate of income tax or introducing the marriage tax allowance. The latter benefits only couples who are well off enough to be paying tax at all, and, what is more, only one in five of the couples who will benefit are raising children. Middle-income families have been squeezed repeatedly under this Government. My constituents report a pervasive feeling of insecurity and a deep concern for the future of young people.
Most distressingly of all, the very poorest have been pushed to the very margins of our society. There was a shocking rise in food banks from 60,000 visits in 2010 to nearly 1 million in 2013-14, and there was a 55% rise in homelessness and people sleeping on the streets between 2010 and 2014. I am sure that hon. Members cannot have escaped noticing that, as I have, including on their way home from this place in the evening.
The Chancellor repeated this afternoon the claim, which Government Members often make, that child poverty has fallen under this Government. Let us put the record straight: it has fallen in only one year under this Government—2010-11—which was before a single coalition fiscal policy had taken effect. Since then, it has flatlined at 2.3 million children, and the IFS has predicted that, under the measures the Government have already announced, it will rise by 700,000 children during the next Parliament. The fall in the first year of this Parliament was wholly and solely the result of the 2010 Labour Budget, since when median incomes have stagnated. Government Members used not to like the relative poverty measure for exactly the reason that it was bound up with what happened to middle incomes. I notice that they are not so vocal against the relative poverty measure now. They may now want to look at other measures of poverty, but it is an absolute disgrace that absolute poverty has risen under this Government for the first time since measurement of that element of poverty began, while material deprivation has also risen.
Mr Bain
Does my hon. Friend share my astonishment, and that of other Labour colleagues and indeed the whole country, that to try to persuade us people were better off the Chancellor used a metric that deals only with mean incomes—skewed to people at the very top of the income scale—and includes universities, which are not of course households?
Kate Green
The use of statistics this afternoon bore absolutely no relationship to the lived experience of my constituents and those of many of my hon. Friends.
As colleagues have said, most recently my hon. Friend the Member for Ogmore (Huw Irranca-Davies), this Government’s total lack of attention to working poverty is crucial: it is right and welcome that more people have moved into work since 2010, but that is not sufficient if they do not earn enough to live on. The increase in the national minimum wage will help a little bit, but the increase is more modest than we were promised last year. Increases in the tax threshold will increasingly give diminishing returns—they omit the poorest, who pay no taxes or whose incomes are already below the tax threshold—and what is more, they help the better-off. I remind Government Members that the better-off include us. The fundamental problem is that people cannot find the hours they need at the pay they need, which not only puts families under pressure, but is a major contributor to the failure to bring down the deficit as planned. The TUC says that we are set to borrow £54 billion more than planned this year, of which two thirds is a direct result of poor wage growth.
As colleagues have said, young people have been especially hard hit, again as a result of conscious policy choices by this Government. Of course older people should never face retirement in poverty—I am proud that Labour Governments halved pensioner poverty—and an ageing population means increasing the spending on this group, but we are significantly under-investing in the next generation. My constituents repeatedly say that to me. Hourly wages and weekly earnings have fallen fastest among young workers. Research by the London School of Economics has shown that typical incomes for those in their 20s were nearly a fifth lower in 2013 than they were five years earlier, and even those in their 30s with good degrees have lost out on their incomes. That not only blights young people’s lives today, but damages their ability to plan, save and look forward to the future. A Government who have made much of rewarding saving and forward planning should be mindful that they are putting a whole generation in a position in which they are simply unable to do so.
Although there were announcements today about helping people who wish to buy a home, an aspiration shared by many of my constituents, it is noticeable that there was absolutely no help whatsoever for the many young families who rent a property and will continue to do so for many years to come. If it is right to provide financial support to young people to buy their first home, will Ministers explain why it is not right to offer the same kind of financial support to those of them who rent?
Nor was there anything to comfort families with children. As the Child Poverty Action Group has pointed out, the cost of raising a child has grown significantly faster than its parents’ incomes under this Government. We heard nothing to help people with the additional costs of raising children, simply a tax break for married couples, many of whom will not be raising kids at the moment.
Finally, we heard today of the truly shocking plans for further cuts if the Conservative party were to form the next Government. Those shocking cuts to public service spending have been accelerated into the early part of the Parliament, no doubt so that a future Conservative Chancellor would be able to say that he was increasing spending as an election approached. We have heard in the past about shocking cuts to social security spending, and those cuts will be even harder on working-age people and families with children because pensioner benefits will be protected.
The Budget has told half the story today, hidden the pain for tomorrow and done nothing to put the country and families in my constituency back on their feet. It is not a Budget about the future: it is the Budget of a failing Government.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
I rise on behalf of my constituents to share my bitter disappointment about the Budget. It was out of touch and arrogant, and the Chancellor even had the gall to use the phrase—from which my constituents recoil when they hear it—“We’re all in this together”. He told people that they are better off now, when my constituents—I meet and engage with them every week—tell me that they are not. In fact, if we look at the evidence and what is actually happening, we see that there has never been a bigger gap between the rhetoric we heard today and the reality of people’s everyday lives. The Chancellor has presided over the slowest economic recovery in the UK’s history and has borrowed more in this Parliament than Labour did in 13 years. He has also broken his promise to eradicate the deficit by the end of this Parliament.
I have said it before and I will say it again: giving with one hand but taking more away with the other is nothing to celebrate. This has not been a recovery felt by millions of people across the country. Looking at the Tories’ tax and benefit changes, we know that families are on average £1,127 a year worse off; working people are £1,600 a year worse off; wages are down for the first time since the 1920s; and people are earning less at the end of a Government than they were at the beginning.
Despite what the Chancellor said in his speech, I found buried—on page 67 of the OBR document—the fact that the real consumption wage will not rise above its pre-crisis peak until the end of 2018. The Chancellor’s own documents, and the OBR’s documents, do not correlate with what we were told earlier.
We also know that the Government have raised taxes 24 times since 2010. I contrast that with the fact that people on the highest incomes have seen a tax cut, and hedge funds in particular have seen a tax giveaway of £145 million. This is not a recovery felt by the majority: it is a recovery felt by a very few people.
I am concerned that our NHS is in crisis. We know that one in four people cannot access a GP appointment, and we know that the Government did not met A and E targets for the whole of last year. Too many people have not received cancer treatment in good time. I hoped that the Chancellor might talk about what the Government would do about the NHS, and I was struck by his comments about child and adolescent mental health services and maternal mental illness. He said that the people affected had been forgotten for too long. I was surprised to hear him say that because it is on his watch that we have seen some clinical commissioning groups spend as little as 6% of their budget on mental health. Despite the campaign for parity of esteem for mental health services by Labour peers—they were successful, and it is one of the few things that the Opposition can be proud of in the Health and Social Care Act 2012—in practice we have seen the complete opposite.
It is on this Government’s watch that we have seen cuts to mental health trusts that are 20% higher than for other elements of our national health service. A response to a parliamentary question reveals that there have been real cuts of £50 million a year to child and adolescent mental health services. Just yesterday, the CAMHS taskforce released its report. It was interesting to see the sanitised version of the report, because we saw a leaked copy in The Times a couple of weeks ago. Across the country, we have seen a reduction in the number of specialist mental health nurses by 3,300, and a reduction in the number of beds by 1,500. Too many young people are having to travel hundreds of miles to access mental health services, if they are able to access any sort of treatment or support at all. I thought it showed some cheek for the Chancellor to say that these people had been forgotten, because it is on his watch, over the past five years, that we have seen this reduction in attention and support for mental health.
There was nothing in the Budget to counter one of the biggest problems in our country: job insecurity. Many of my hon. Friends have raised the challenges of zero-hours contracts. I was very interested to hear the hon. Member for Dover (Charlie Elphicke), who is no longer in his place, call them flexible work contracts. According to the ONS, 1.8 million zero-hours contracts were used by firms in the UK last summer. I know, from a report I conducted with two of my hon. Friends on Merseyside, the impact faced by too many of our constituents every time they wait for that text message or that phone call to find out if they have work. I was struck by the experience of my constituents who said that they could not buy a belt because they were not able to plan their finances from week to week. This is not just about zero-hours contracts, however; there are low-hour contracts too, and the millions of people who are in part-time work who wish to be in full-time work. If I had been the Chancellor, I certainly would not have talked about the national minimum wage, given that he previously backed a minimum wage of £7 an hour but has failed to introduce that in this Parliament.
Other hon. Friends have pointed to the challenges relating to food banks. It is a disgrace that just under 1 million people have had to access emergency food aid.
Huw Irranca-Davies
My hon. Friend is making an eloquent speech. What does she make of the study by the Children’s Society and the StepChange charity, which points to 86,000 families in Wales—23% of the total number of families—who are failing to keep up with household bills and loan repayments, and the response of a Wales Office spokesman who said, “The UK Government’s long-term economic plan is working”? Where have we heard that before?
Luciana Berger
I thank my hon. Friend for that intervention. He and I have been campaigning on this issue for many years, because we do not believe that in the sixth-richest nation in the world we should have any food banks, let alone the number that we have across all four nations. The fact is that just under 1 million people have had to access emergency food aid for themselves and for their children—all too often it is children who are affected. It is not just people who are out of work, but people in work, often on zero-hours contracts, who are struggling from week to week. People deserve better. I reflect on the comments made by my hon. Friend the Member for Stretford and Urmston (Kate Green) on the increase in absolute poverty. I am ashamed to live in the sixth-richest nation in the world, when we have seen an increase in absolute poverty in 2015.
I represent Liverpool Wavertree in north-west England. We heard in the Budget that cuts to local authorities are coming down the line. I have very serious concerns about what will happen to local authorities, particularly in the north-west where already we have experienced cuts 75% higher than in other parts of the country. Yet another report came out last week, showing that Liverpool has seen a reduction of £390 a head in funding since 2011, while in the south Wokingham has seen a cut of just £2.29. Our budget in Liverpool has been cut by 58% in real terms since 2011. That is £329 million. Page 130 of the OBR report states that we should expect a much sharper squeeze on local authorities’ real spending in the next Parliament. I shudder at what that will mean for my constituents and residents across Liverpool and the north-west. I am concerned about what will happen to our libraries, our social care and our children’s centres.
Ordered, That the debate be now adjourned.—(Mark Lancaster.)
Debate to be resumed tomorrow.
Business without Debate
(9 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text
Madam Deputy Speaker (Dame Dawn Primarolo)
With the leave of the House, we shall take motions 7 and 8 together.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Financial Services and Markets
That the draft Electronic Commerce Directive (Financial Services and Markets) (Amendment) Order 2015, which was laid before this House on 17 December 2014, be approved.
That the draft Financial Services and Markets Act 2000 (Miscellaneous Provisions) Order 2015, which was laid before this House on 3 February, be approved.—(Mark Lancaster.)
Question agreed to.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Income Tax
That the draft Income Tax (Construction Industry Scheme) (Amendment of Schedule 11 to the Finance Act 2004) Order 2015, which was laid before this House on 28 January, be approved.—(Mark Lancaster.)
Question agreed to.
Madam Deputy Speaker
With the leave of the House, we shall take motions 10 to 12 together.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Local Government
That the draft Greater Manchester Combined Authority (Amendment) Order 2015, which was laid before this House on 25 February, be approved.
Community Infrastructure Levy
That the draft Community Infrastructure Levy (Amendment) Regulations 2015, which were laid before this House on 2 February, be approved.
Environmental Protection
That the draft Single Use Carrier Bags Charges (England) Order 2015, which was laid before this House on 21 January, be approved.—(Mark Lancaster.)
Question agreed to.
Motion made,
Infrastructure Planning
That the draft Infrastructure Planning (Radioactive Waste Geological Disposal Facilities) Order 2015, which was laid before this House on 12 January, be approved.—(Mark Lancaster.)
The Deputy Speaker’s opinion as to the decision of the Question being challenged, the Division was deferred until Wednesday 25 March (Standing Order No.41A).
Madam Deputy Speaker
With the leave of the House, we shall take motions 14 to 17 together.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Electricity
That the draft Electricity and Gas (Market Integrity and Transparency) (Criminal Sanctions) Regulations 2015, which were laid before this House on 22 January, be approved.
That the draft Renewables Obligation Closure (Amendment) Order 2015, which was laid before this House on 27 January, be approved.
That the draft Emissions Performance Standard Regulations 2015, which were laid before this House on 2 February, be approved.
That the draft Contracts for Difference (Allocation) (Amendment) Regulations 2015, which were laid before this House on 23 February, be approved.—(Mark Lancaster.)
Question agreed to.
Madam Deputy Speaker
With the leave of the House, we shall take motions 18 and 19 together.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Health Care and Associated Professions
That the draft Health Care and Associated Professions (Knowledge of English) Order 2015, which was laid before this House on 23 February, be approved.
That the draft General Medical Council (Fitness to Practise and Over-arching Objective) and the Professional Standards Authority for Health and Social Care (References to Court) Order 2015, which was laid before this House on 23 February, be approved.—(Mark Lancaster.)
Question agreed to.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
National Health Service
That the draft Local Authorities (Public Health Functions and Entry to Premises by Local Healthwatch Representatives) and Local Authority (Public Health, Health and Wellbeing Boards and Health Scrutiny) (Amendment) Regulations 2015, which were laid before this House on 29 January, be approved.—(Mark Lancaster.)
Question agreed to.
Madam Deputy Speaker
With the leave of the House, we shall take motions 21 to 23 together.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Criminal Law, Northern Ireland
That the draft Protection of Freedoms Act 2012 (Northern Ireland) (Biometric data) Order 2015, which was laid before this House on 29 January, be approved.
Proceeds of Crime
That the draft Restraint Orders (Legal Aid Exception and Relevant Legal Aid Payments) Regulations 2015, which were laid before this House on 2 February, be approved.
National Crime Agency
That the draft Crime and Courts Act 2013 (National Crime Agency and Proceeds of Crime) (Northern Ireland) Order 2015, which was laid before this House on 29 January, be approved.—(Mark Lancaster.)
Question agreed to.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Broadcasting
That the draft Broadcasting Act 1996 (Renewal of Local Radio Multiplex Licences) Regulations 2015, which were laid before this House on 5 February, be approved.—(Mark Lancaster.)
Question agreed to.
Madam Deputy Speaker
With the leave of the House, we shall take motions 25 to 29 together.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Criminal Law
That the Criminal Procedure and Investigations Act 1996 (Code of Practice) Order 2015, dated 28 January 2015, a copy of which was laid before this House on 29 January, be approved.
Legal Services
That the draft Legal Services Act 2007 (Warrant) (Licensing Authority) Regulations 2015, which were laid before this House on 26 January, be approved.
That the draft Legal Services Act 2007 (Warrant) (Approved Regulator) Regulations 2015, which were laid before this House on 26 January, be approved.
Insolvency
That the draft Insolvency Act 1986 (Amendment) Order 2015, which was laid before this House on 15 January, be approved.
That the draft Insolvency (Protection of Essential Supplies) Order 2015, which was laid before this House on 9 February, be approved.—(Mark Lancaster.)
Question agreed to.
Sainsbury's roadworks in Belgrave (Leicester)
(9 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text
Keith Vaz (Leicester East) (Lab)
I wish to present a petition signed by 120 residents and business owners who continue to be inconvenienced by overrunning roadworks around Belgrave in my constituency. The petition was co-ordinated by local volunteers in the area, led by the lord mayor, Councillor John Thomas, Councillor Manjula Sood and prospective councillor Mansukhlal Chohan. We expected the works to be completed by now. Even though they are in their final phase, they are not completed.
The petition states:
The Petition of residents of Leicester East,
Declares that the delayed roadworks in Belgrave, Leicester, which are part of an agreement made between Sainsbury’s and Leicester City Council, are causing significant problems for businesses and residents in the area.
The Petitioners therefore request that the House of Commons urges the Government to investigate this case, and call upon Sainsbury’s to honour their commitments and expedite the completion of these works. The Petitioners require assurances these roadworks and surrounding problems are addressed before seriously impacting residents and businesses over the Christmas period.
And the Petitioners remain, etc.
[P001453]
Fishing Discards and Quotas
(9 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Damian Collins (Folkestone and Hythe) (Con)
Today, we have debated the Budget, focusing on much of the positive news for the economy and businesses right around the UK. I was pleased to be able to speak earlier on those matters. In the Adjournment debate, I want to raise the plight of a particular industry. Businesses operating in it are experiencing real difficulties and concerns. I am speaking particularly about the inshore fisheries industry in my constituency, but I know the subject is of interest to many other hon. Members with constituencies right around the UK’s coastal waters.
Many fisheries businesses are suffering acutely: they are landing fewer fish; they have a reduced quota and reduced incomes; and the operating costs, business costs and indeed the costs of living for the fishermen’s families are not going down. There is an urgent need, I believe, for additional quota for the under-10 metre fleet and the inshore fisheries in particular. I believe this is necessary to alleviate the considerable hardship being experienced, and if the proposed discards ban is going to be workable, the extra quota will be needed.
The inshore fishing fleet and the inshore fisheries businesses are an important part of the local economies that they serve—not just for the crews and their families and the vessels they maintain, but for the communities where the fish are landed. In my constituency, from Dungeness and Hythe to Folkestone, fishing businesses are linked to the trawlermen’s businesses. There are businesses such as the Dungeness Fish Hut and Richardson’s, also in Dungeness; Griggs of Hythe; and the Folkestone Trawlers association. These are popular fishing businesses. They sell fish into the restaurant trades, they are part of the important local food tourism offer and they support local food, fish festivals and so forth. They are an important part of a living coastal community—its heritage, its traditions and its economic life—and many other businesses rely on their sustainability.
The urgent matter of quota has been raised with me by my local fishermen. My hon. Friend the Member for Hastings and Rye (Amber Rudd) also met the Minister to raise with him concerns brought to her attention by fishermen in Hastings, who particularly highlighted the reduction in quota of 28% for sole and no increase in their quota for skate and rays. In my constituency, the Folkestone trawlers brought to my attention the fact that one of them had recently caught his entire month’s quota for plaice in an hour and half while fishing in Hythe bay—such is the level of abundance, yet the fishermen have the acute frustration that they do not have the quota to land more of the fish because they are already at their limits.
The Folkestone trawlers supplied me with some data based on the quota for this month. It is based on the quota for the North sea and English channel areas from which the Hythe-based fishermen fish, and it looks at levels of cod, plaice, skate and sole. The total catch value for the fishermen, minus their expenses, would bring in a total of £8,635, divided between four crews, but they tell me that they are unlikely to catch much sole. At the moment, sole would bring in over half of the value, so the real potential income from the quota of fish landed could be as little as £3,285 divided between the crews. The Folkestone trawlermen tell me that when that is broken down to the hourly rate for which the fishermen are working, it means that they could be working for as little as just over £5 an hour.
Ian Paisley (North Antrim) (DUP)
I thank the hon. Gentleman for raising this important issue. Are we not seeing the pernicious evil of Europe once again, as it sticks its nose into our affairs and prevents our fishermen from earning a livelihood?
Damian Collins
I agree that there is widespread concern about the operation of the common fisheries policy and the deal that it gives our fishermen, and I think that we would all like to see more local management of our waters. That is part of the agenda that the Government have pursued during their negotiations in Europe, which I think we would all support, and which the sector would certainly support.
There is also the question of the allocation of quota. The inshore fishing fleet has about 4% of the United Kingdom’s quota, although it supplies about 75% of the manpower for the UK fishing industry. Will the Minister consider making additional quota available for the inshore fleet? The fishermen tell me they need a substantial increase, and that they need it soon. The provision of additional quota in a year or two may come too late for a number of fishermen who are currently in great difficulty.
The question of conservation levels has been raised in the House recently, and, indeed, arose last week during questions to the Secretary of State for Environment, Food and Rural Affairs. It is especially relevant to sea bass stocks. Because sea bass is outside the quota, inshore fishermen in particular are going for whatever fish are available to supplement their catch, and sea bass is a good species to go for. It is possible that any concern about fish that are not on the quota will be exacerbated by the lack of quota for the inshore fleet.
Jim Shannon (Strangford) (DUP)
I, too, congratulate the hon. Gentleman on raising this matter. Fishing is important in my constituency. Nephrops and prawns are stable species in the Irish sea, contributing some 60% of the value of landings. We think it imperative for an exemption to be made by means of the survivability clause, of which I am sure the Minister is well aware. Does he agree that that is vital to the fishing fleets of Northern Ireland, and particularly vital to the fishing village of Portavogie?
Damian Collins
The Minister referred to the important issue during DEFRA questions last week, and I hope that he will say a little more about it this evening. Survivability rates are indeed important. In my constituency, plaice, skate and sole, including Dover sole, are an important part of the local catch. We know that survivability rates are good, and that fish that are caught can be returned. We also know that the gears that fishermen use often make it difficult to restrict catches, and that smaller fish, such as small plaice, cannot always be returned to the water, although they are normally thrown back as a matter of routine.
We do not want good fish, particularly smaller fish, to be left rotting in boxes on the quayside because nothing can be done with them, and we do not want fishermen to be unable to go out to sea because they cannot guarantee that their catches will not include fish that might tip them over the quota and that they cannot use, mixed up with other species. I think that when there is a good case for fish to be returned to the sea—and that certainly applies to flatfish—they should be exempt from the discard ban. Such an exemption would be greatly welcomed by the fishermen in my area of the North sea and the English channel. It would make the ban much more workable, as would additional quota for the inshore fleet.
The potential impact of the discard ban and the current lack of quota are crises with which inshore fleet fishermen must deal immediately, but in certain areas there is also concern about the impact of marine conservation zones. I thank the Minister and his team for their work in considering the proposal in tranche 1 of their consultation for a marine conservation zone in Hythe bay, and for deciding that the zone should go ahead only if it was compatible with the commercial interests of the fishermen. It is clear that there was no evidence to justify its imposition, and that the Government made the right decision. What has come from that is a proposal from the fishermen to create a permitted zone in Hythe bay, which would restrict access to the waters to larger vessels that operate heavier gear, which might damage the biodiversity of the bay, but would not restrict the current fishing rights that are enjoyed by the smaller vessels in the under-10 metre fleet and others that have certain rights to fish in those waters.
I think that is a good approach. It balances the need for conservation with the livelihoods of the fishermen. It respects the fishermen, particularly those in the under-10 metre fleet—they have the biggest vested interest in the sustainability of the waters they fish, because their livelihoods depend on it; they do not go deep out to sea, but fish from their local waters—and puts them at the heart of the management of future stocks. This proposal, which the fishermen are working on with the Inshore Fisheries and Conservation Authority, is a good approach. I hope that they can agree the proposals and present them to the Minister, and that this can be a model for the sustainable management of local waters, respecting sustainability targets. That is a much better model for the future.
However, that is part of an ongoing conservation. The urgent need for additional quota and exemptions in the discard ban to make it workable are the two pressing concerns now, and I ask the Minister to address those this evening.
The Parliamentary Under-Secretary of State for Environment, Food and Rural Affairs (George Eustice)
I congratulate my hon. Friend the Member for Folkestone and Hythe (Damian Collins) on securing this timely debate. I am grateful for the opportunity to discuss some of these issues because DEFRA has a number of consultations out at the moment, looking at the discard ban and how we implement it for the demersal fleet, as well as at some of the issues that are of direct relevance to the under-10 metre fleet.
Let me begin by saying a little about the common fisheries reform that was agreed at the end of 2013. The UK worked hard to ensure that the reforms were a success. A great deal of credit is due to my predecessor, my hon. Friend the Member for Newbury (Richard Benyon), for doing so much to get what is quite a radical reform. It was said earlier that the European Union was a big problem in this regard. When it comes to the common fisheries policy, I think we have some potentially quite radical reforms, which I shall describe in a minute. I believe that those reforms can help to safeguard the marine environment while giving new flexibilities to our fishermen.
There are three key aspects to the reforms. First, there is a ban on the wasteful practice of discarding fish, or the so-called landing obligation. Secondly, there will be more regional fisheries management, with more power given back to the nation states that actually have an interest in those waters. In future, much more of the plans we have for individual waters will be agreed multilaterally by member states before being put to the European Union for final agreement. The third and final key component is a legally binding commitment to fish sustainably—that is, at maximum sustainable yield. Together, those three components make up a radical reform, but I am under no illusion that there will be challenges along the way. As always, the marine environment is very complex. It will not be easy to do some of those things, but by working together with industry, NGOs, scientists and other European member states, we can ensure that the reforms are a success.
Let me turn to the discard ban. It is important to note that we have been trialling an early forerunner of the discard ban for some time. I am proud to say that the UK has been leading the way in Europe in tackling the problem of discarding. For several years now we have trialled so-called catch quota schemes, which manage fisheries in line with what is caught rather than what is landed. Those schemes have shown that we can significantly reduce discards. In the North sea, vessels on our catch quota schemes reduced discards of cod, for instance, to just 0.1%, compared with 41% for vessels that were not part of the scheme. That shows just what we can do by working with industry.
The first stage of the discard ban, covering the pelagic fisheries—predominantly mackerel and herring—entered into force in January this year and has been working well. As with any radical change in policy, we have encountered some issues along the way, but I am pleased to say that we have successfully overcome each of these. The discard ban will progressively cover all remaining fisheries—the so-called demersal fleet—between 2016 and 2019. I am under no illusion that the next stage will be more complex, but that is a reason to get going and develop those plans now, and why on 23 January we launched a public consultation seeking views on various implementation issues. The consultation closes at the end of March.
My officials are currently travelling the length and breadth of the English coast from Newlyn to Whitehaven visiting fishing ports. They are answering any questions or concerns the industry has, but they are also tapping into the detailed local knowledge of our fishermen. It is essential that we do that. Fishermen often complain to me that they are not listened to. They sometimes feel that science is done to them rather than with them, but we know from experience that policy works well when scientists and fishermen work together to identify solutions.
My officials have not yet visited Folkestone and Hythe, but I have said to them that we should visit the area as part of the roadshow. If my hon. Friend thinks that will be useful for his fishermen, I am happy for my officials to go down there.
Damian Collins
If I were to write to the Minister tomorrow, would he give a date before Parliament is dissolved on 30 March when his officials can come down that we can offer to the fishermen?
George Eustice
I am more than happy to do that. My officials are in the officials’ box listening. I can assure my hon. Friend of that offer. They wanted to hold one of those meetings in Kent; Folkestone and Hythe would be a perfect place for it.
Exemptions and flexibilities will help to make the discard ban work. To ensure that it works in practice as well as in theory, during the deal we negotiated increased flexibility in how we manage quota. Those problems were considered during the reform. There are a number of key flexibilities. First and perhaps most importantly, there is inter-species flexibility. If fishermen put their nets out in a mixed fishery and catch more haddock than they expected but do not have the quota for it, they might be able to count that haddock against whiting or cod. That inter-species flexibility is essential to making sense of a quota regime.
Secondly, fishermen will be able to bank or borrow up to 10% of their quota from one year to the next, which gives them more flexibility in matching catches to quota. Thirdly, to pick up on a point made by my hon. Friend, there is a survivability exemption. Fishermen will be able to return some catches to the sea if they have been scientifically proven to have a high rate of survival. Returning those fish to the sea allows them to grow and spawn, fortifying the stock for the future. As he pointed out, landing under-sized, juvenile plaice for which there is little market makes no sense if, by returning them and they survive, they can continue to grow.
Last year, we commissioned a large-scale research project to assess the survivability of plaice in different fisheries around the coast. The industry has identified plaice as a key species that has a high rate of survival. Once we have marshalled and considered that evidence, we will argue for exemptions on the basis of survivability for plaice and probably for a number of flat-fish species. It is important to recognise that we have access to other exemptions. That can include reasons such as disproportionate cost, or that it is not possible to further increase selectivity and reduce unwanted catches—that is the so-called de minimis exemption.
Finally, another point to bear in mind is that when implementing the discard ban, we will start with the species that define the fishery. It will not be a discard ban on every quota species from the beginning. We will start with those that define the fishery in 2016 and aim for it to cover all quota species by 2019. For instance, in the North sea, hake is sometimes referred to as a choke species. Fishermen find it difficult to avoid as a by-catch, but it would be possible to get to a discard ban on hake in later years, closer to 2019.
There are specific issues for the inshore fleet. I greatly value our inshore fishing communities and understand the specific problems they face. My hon. Friend used a figure that is often quoted to me—he said that they have access to only around 4% of quota. It is not quite as simple as that: the less mobile nature of the inshore fleet means that it is unable to access about 60% of the UK quota because it is in offshore waters—for instance, some of the mackerel fisheries well offshore are outside the range of the inshore under-10 metre fleet.
Within their inshore area of operation, however, by value the under-10 metre fleet land about a third of all quota stocks. At December Council I fought hard to secure roll-overs and quota increases for stocks around the UK, including some of those stocks that are important for the inshore fleet. Where there were cuts, which my hon. Friend has mentioned, we made an argument and brought fresh science to the table in order to reduce them. For instance, we managed to get a 10% increase in North sea skates and rays for Folkestone and Hythe and a roll-over for other areas in the UK, as opposed to a proposed 20% cut. I also agreed an extra 300 tonnes of whiting for the under-10 metre fleet in the north-east of England to allow it to land and sell its by-catch.
I recognise that many under-10 metre fleet fishermen will still feel that the current allocation means that they do not get a fair share, and they have a fair point. The reference period for when current allocations were decided was around the mid-’90s. By all accounts, some of the data for the under-10 metre fleet at that time were quite patchy and one result of that may be unfair allocation. That is why, since 2012, we have given the under-10 metre fleet access to additional quota to try to support it, and we continue to work with the industry on the quota realignment from unused quota on the larger vessels and producer organisations to the under-10 metre fleet. We are currently working to make that permanent and we are working through a number of appeals that some producer organisations have made to our approach. It is our intention to put that on a permanent footing.
The total increase in quota will vary from species to species, because it often depends on what is unutilised by the under 10-metre fleet. For instance, there could be significant increases in flatfish species that are particularly important to the under 10-metre fleet. Across the board, we estimate that the increase in quota could be about 12% for the under-10 metre fleet.
I also recognise that the under-10 metre fleet faces particular issues when implementing the discard ban, and we are looking at options to try to address them. As part of our consultation, we are seeking views on possible exemptions and changes to quota management for that part of the fleet, including options to make best use of any quota uplift. One option we have suggested in the consultation is to ring-fence 25% of the total national uplift in quota for the inshore fleet. That could give a significant increase in quota for the under-10 metre fleet.
I am also aware that the issue of latent capacity in the inshore fleet causes concern. We are currently consulting on options to make sure that inactive vessels are not able to re-enter the fisheries. That would provide certainty and security for those vessels operating in the under-10 meter pool. However, having discussed the issue at a number of fishing ports, I am aware that there are mixed feelings about that in the fishing industry. Obviously, I shall wait to see the full responses to the consultation.
I want to say a little about the new European maritime and fisheries fund, which will open shortly. The UK will receive some £200 million from the fund, which will help us to meet the challenges of implementing CFP reform. For instance, the lion’s share will go on selective net gear, helping fishermen to get the equipment they need to fish more selectively. It will also be used to help foster growth in the sector. Fishermen will be able to use the funding to help them adapt to the discard ban by purchasing more selective gear.
Across Europe, we have made real progress towards more sustainable fishing and stock recovery. In 2014, 27 stocks in the north-east Atlantic, North sea and Baltic were managed at maximum sustainable yield, up from just five species in 2009. At December Fisheries Council, I was pleased to secure a continued increase in the number of sustainable stocks this year and we expect to have 30 or more species that are fished sustainably. We are moving in the right direction with sustainable fisheries.
In my time as Fisheries Minister, I have visited many different ports across the UK and have always been impressed by the enthusiasm, determination and resourcefulness of the fishing industry. The marine environment, as I said at the beginning, is very complex.
Jim Shannon
As this is probably the last fishing debate we shall have in this Parliament, I thank the Minister for all the hard work he has done for all the fishing sectors across the whole of the UK, particularly in Northern Ireland. I know that he has a good relationship with the Minister for Agriculture and Rural Development, Michelle O’Neill. They have been an example of how to work together, in particular for the betterment of the fishing industry.
George Eustice
I thank the hon. Gentleman for those kind words, although I, like all hon. Members, very much hope to be back after 7 May. I have enjoyed my time working with the industry.
I am confident that together we can build on our past successes and strengthen and grow our fishing industry for the future. It has been a pleasure to discuss this issue today.
Question put and agreed to.
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Women Entrepreneurs
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Seema Malhotra (Feltham and Heston) (Lab/Co-op)
I am delighted to open this debate on the important topic of women and entrepreneurship. I grew up above my parents’ shop in Osterley, just half a mile from my constituency, and I have spent time self-employed and running my own business. I have visited women’s business centres in America and the UK and I passionately believe in the need for an ambitious strategy to support women-led enterprise. I would like to acknowledge the work Hounslow chamber of commerce does in my constituency and across Hounslow to support women-led enterprise. A number of women have set up and started their own businesses in the community, making a huge difference to the local economy.
Women’s entrepreneurship has great potential for growth, creating jobs and wealth while reducing gender inequality. Women-led small and medium-sized enterprises already add £70 billion to the UK economy, yet women are only half as likely as men to start their own business. According to the findings of the Women’s Business Council, chaired by Ruby McGregor-Smith, CEO of Mitie, it is estimated that if women were concentrated in entrepreneurial activity at the same rate as men, there could be an extra 1 million female entrepreneurs. Indeed, according to the most recent OECD data, there is a gender gap of almost 50% in entrepreneurship in the UK: total entrepreneurial activity, defined as the percentage of the working-age population either in the process of starting a business or running a new business, among working-age women was 7.5% in 2014, lagging behind the rate for men, which was 13.5%. In the US, the rate is 11.2% for women, compared with 16.5% for men.
There are real challenges, therefore, in realising the economic benefits that can come from women-led enterprise, but that should not be the case. Research published last week by the business software group Xero, for example, found that women-led start-ups tend on average to lose less money and to have more success in winning new contracts. Emerging findings from research being undertaken by the Centre for Entrepreneurs suggest that, although women have entrepreneurial and growth ambitions, men seem to be better than women at realising those ambitions. Continuing to understand and to deal with the barriers to women’s entrepreneurship needs to remain a core part of our economic policy.
A review of that policy area in the UK shows a growing focus on women entrepreneurs since 1997. The then Department of Trade and Industry formed a women’s enterprise policy team in its Small Business Service, and in 2003, the then Labour Government published “A Strategic Framework for Women’s Enterprise”, which was the first policy response of any kind from a UK Government on the potential for economic growth if women were encouraged to start their own businesses in a similar way to men. The report set out targets, and the women’s enterprise panel was formed to advise the Government.
David Simpson (Upper Bann) (DUP)
I congratulate the hon. Lady on bringing this debate to Westminster Hall. If I did not speak in it, my wife would be very angry, because she has been an entrepreneur for many years and has been very successful. Does the hon. Lady agree that to encourage young women to start up businesses or whatever, we need to start at the very root, in further education colleges, schools and universities, to encourage them to come out and use their skills?
Seema Malhotra
I thank the hon. Gentleman for his intervention. He is absolutely right. Although the Government have made some progress on increasing enterprise education, we have a long way to go. One finding from research that I undertook last summer was that women who were starting their businesses later in life wished that they had had that education earlier. Women never know at which stage in their life they will be starting a business. It is increasingly common for both very young women and those who may have taken time out of the workplace to have children to become returners to start enterprises and suddenly find that they do not have the support or knowledge they need. I therefore thank the hon. Gentleman for his wise comment.
The Women’s Enterprise Task Force, established in 2006, took forward some of the work. Although not a delivery body, the WETF provided input to Government on key policy areas that affected women’s entrepreneurial uptake. The WETF produced several recommendations and directed and implemented Aspire, a £12.5 million women’s co-investment fund to support high-growth, women-owned enterprises. In 2008, policy developments taken forward included Government provision of enterprise support focused on women through the regional development agencies and Business Link.
In recent years, there has been a slow-down in support for women-led enterprise. Although the Women’s Business Council, formed in 2010, has done very important work, Prowess, the UK advocacy network for women in enterprise, has been scaled back to, in effect, a newsletter service, and the regional women’s ambassador programmes have been disbanded. For the recently published Burt report, a survey was done of local enterprise partnerships. The author wrote to ask all 39 local enterprise partnerships about their current engagement with women entrepreneurs, but only seven responded; of those, none had more than one female director for every three male directors and none had a strategy for promoting women in enterprise.
I remain extremely concerned that activity is being scaled back instead of pushed forward in the way the Government have reallocated resources for development programmes across the regions. The Department for Business, Innovation and Skills small business survey in 2014 suggested that women-led businesses fare less well over time than equally led or entirely male-led businesses. In 2014, 24% of one-year-old businesses were female- led and 45% were male-led, but of four to five-year-old businesses, only 14% were female-led and 49% were male-led.
I mentioned research on women and entrepreneurship that I undertook some months ago. Through a series of seminars and public meetings, I looked at three dimensions of the gender gap in entrepreneurship in the UK: the rate of business start-up, the sustainability of enterprises, and the speed of growth of female-led versus male-led enterprise. Findings from our focus groups research suggest that there is greater support for starting up an enterprise, as well as perhaps at the top end, but a lack of support for established women entrepreneurs in the middle who are looking to grow their enterprise and are struggling to find support and advice on how to do so. Access to finance can be harder to come by, with investors and banks assessing some women’s businesses as more risky. Indeed, one woman I met, who had set up a child care business in Reading, was turned down for investment by her bank because it could not understand her business model—frankly, it did not understand the business of child care. She remortgaged her house to put her own finance into the business, and went on to increase her turnover and to employ about 20 people.
The needs of this group of women are not being met, so their economic potential is not being realised. The key question that emerges is what more needs to be done by the UK to bridge the gender gap not just in start-ups but in growth and sustainability. Closing the gap means understanding better the circumstances and gender differences in entrepreneurship, so I will spend a few minutes talking about motivations and barriers.
We know that although women have the ambition to set up businesses and grow them, different motivations make entrepreneurship attractive to them. They can include pursuing social goals, a personal passion or a niche in the market, or seeking a work-life balance, flexibility or more control over one’s life. It is positive that young mothers are leading an entrepreneurial surge in new business start-ups—the high cost of child care and the easy availability of technology that allows businesses to be started and run from home contribute to that surge—but if our current statistics are anything to go by, those businesses will need support to survive and grow. A new breed of business women, dubbed “the returners”, has made an excellent contribution to the increase in the proportion of small and medium-sized enterprises run by women from 14% a few years ago to 20% today. The number of women over the age of 30 seeking start-up finance and mentoring has increased by a third in recent years. In some measures, therefore, we see some positive trends, but the research suggests that women-led enterprises have less of a chance of surviving and growing.
Barriers to growth may be encountered by female and male entrepreneurs. According to emerging research by the Centre for Entrepreneurs, all groups express concerns about cash flow and about getting the right people and skills, but women are more likely than men to identify child care and supporting their partner’s career as barriers that affect their own enterprise. They were also more likely to want specific business education—a point made by the hon. Member for Upper Bann (David Simpson)—face-to-face contact, and good mentors, in contrast with men, who specified that they sought advice.
That may shed some light on another gender-specific barrier: lower self-belief, as identified in research by Xero. A third of women said that a lack of self-belief had been the biggest barrier standing in the way of launching their small business, and it was the single reason most often given. In my research, I found that access to support and advice remains a problem. Women want forms of business education that are better tailored to their needs, and they raised with me the need for enterprise education in schools, so that young people can build entrepreneurial skills. We do not know who will become the entrepreneurs of the future, and that door should be open to children from a very young age.
In Liverpool, I saw an excellent example of networking and advice tailored to reach women when I visited the outstanding Women’s Organisation. Simply by moving the sessions to more family-friendly times, the organisation ensured that the number of women who attended business support events increased. The classic timing of business events and drinks right after work at 5.30 pm clashes perfectly with the time when kids are at home, or at after-school clubs, and dinner needs to be made.
Confidence can also be a significant factor in personal risk levels that may guide or limit the decisions that women make. Women may calibrate risk and confidence differently in taking tough decisions; they may also be less likely to see themselves as entrepreneurs than as business owners or founders, which may affect how they perceive and respond to marketing campaigns.
The Government have introduced some strategies, but there is still a long way to go. The Government published the Burt report, “Inclusive Support for Women in Enterprise” in February. That was helpful, but it is unfortunate that when the role was established, it was aimed at promoting and supporting female entrepreneurs, focusing on raising awareness rather than producing sound, evidence-based policy recommendations. The report recognises some initiatives such as StartUp loans, the enterprise allowance and local growth hubs, but it also suggests that there have been deficiencies in the way support has reached women, because it has been extremely patchy, rather than universal.
The report recognises the need to change some of our language around support, so that it looks and sounds more accessible and relevant to women entrepreneurs, who may search for it online. I am often struck by the huge contrast between the US Small Business Administration website, which has mainstreamed women’s business support and which feels customer-centric and targeted towards small business, and the website of the Department for Business, Innovation and Skills, which I believes serves Ministers more than it does those who seek access to services.
I welcome the fact that the Government have recognised the need to give diverse businesses diverse support. They have extended the types of support that may need to be provided to businesses set up by different people—for example, young people and those from ethnic minority backgrounds—to ensure that there is access and guidance for mentoring, networking and sources of finance. However, women have told me that they feel the Government’s support is located in a range of places and those who are looking for support find it hard to join up; they also find it difficult to identify what is really relevant and where to get the quality help they need. A page for women-led enterprise is attached to the GREAT Business website, but it feels like an add-on and a collation of bits and pieces. It could be far more integrated. I would be interested to know why the Aspire fund, a £12.5 million fund that makes equity investments of between £100,000 and £1 million on a co-investment basis, has so far invested only £4.7 million in women-led enterprises. It is certain that problems remain. As David Prosser wrote in The Independent last week:
“There is certainly a problem to tackle here. Government statistics suggest that fewer than one in five smaller companies are led by women. That’s not enough—not just because social justice demands equality of opportunity, though of course it does, but also because there is every reason to expect women-led companies to outperform.”
I will close with a few questions for the Minister. First, what cross-Government work is going on to integrate support for women-led enterprises at start-up and growth stages, and which Departments are actively involved? Secondly, what consideration have the Government given to putting the Women’s Business Council, which has done some important work, on a statutory footing so that it remains part of our business and policy-making infrastructure? Thirdly, why has the Aspire fund, which is designed to invest in women-led enterprises, invested only a third of its intended funds? Fourthly, which Minister is accountable for closing the gender gap in entrepreneurship, and whose dashboard is it on?
Dr Julian Huppert (Cambridge) (LD)
It is a pleasure to serve under your chairmanship, Mr Robertson. I am really pleased that this debate has been brought to Westminster Hall, and I congratulate the hon. Member for Feltham and Heston (Seema Malhotra) on securing it. It is a shame that there are so few hon. Members here from both sides of the House. We are discussing a really important subject, and it would be good to have more participants.
I know from my constituency what a key role women entrepreneurs can play, have played and will play in our communities and economy. I have some experience in the matter, because I set up a very small biotech company with two women entrepreneurs and two other colleagues. It was extremely successful in every respect other than having a product that actually worked; as it turned out, that was quite important. One of the women with whom I worked has continued in entrepreneurial roles, and I am delighted about that.
Too often, we do not hear about women entrepreneurs. They are not the stereotype; they are too often the unsung heroes, and we must do far more about that. There has been some progress in the past five years, as the hon. Member for Feltham and Heston has described, in support for women entrepreneurs, including the appointment of an ambassador for women in enterprise, my hon. Friend the Member for Solihull (Lorely Burt), who is upset that she cannot be here this morning. Far more needs to be done, however. No Government have yet got it right, and we need to go much further.
Let me pick up on some of the examples in my constituency. It being Cambridge, many of our successful women entrepreneurs are involved in the tech sector. One example is Lily Bacon, who co-founded the pioneering software company RealVNC. She worked incredibly hard to get that company up and running in perhaps one of the earliest attempts at crowdfunding. Remarkably, the initial money for the company came from selling merchandise bearing the company’s logo. It is quite impressive to be able to do that ahead of time, and that was entirely Lily’s idea. The company is now a world-leading provider of remote-access software, and it has won three Queen’s awards for enterprise in three years.
There are many others, such as Martina King, who is doing amazing work at Featurespace, Julie Barnes at Abcodia and Annie Brooking at Bactest. I particularly want to mention Emily Mackay, who is doing some nice work with Crowdsurfer. She started the company while she was having her first child, and she has turned it into something quite exceptional. Sherry Coutu is an angel investor who helps entrepreneurs in a whole range of things and who is really committed to evidence base. She produced the “Scale-Up” report for the Government, which was excellent work. Outside technology, to pick one example, we have Julie Deane, who co-founded the Cambridge Satchel Company in 2008 with her mother. Only a couple of years later, they were making at least 3,000 bags a week in the UK and selling to 86 countries. It is an amazing company that makes very nice bags, Mr Robertson, if you ever want a satchel.
To enable women entrepreneurs to thrive, we must set the right conditions across the piece. I will talk about finance later, but much of the issue is not directly about entrepreneurs. It is about our society’s attitudes: the explicit and implicit discrimination that holds women back. We have regressive attitudes in so many areas, and one of those attitudes implies that women cannot and should not be innovators in our economy, that women should not take risks and that women should go for a safer job. I come across that attitude all too often. It is not right, and it has no place in what we are doing.
Another issue is imposter syndrome, which has been highlighted by one of my former colleagues, Professor Athene Donald. Many people, disproportionately women according to Athene and others to whom I have spoken, feel that however they are doing, they should not really be there and that they have not really earned their position. Frankly, that feeling strikes all of us. Anyone who claims that they have never felt that they do not deserve to be where they are is probably either over-confident or not telling the truth, but the feeling is expressed disproportionately by women. I recommend some of Athene Donald’s writings and comments on the subject.
We must address, rebut and debunk all those issues to make more progress. There has been work done, and I particularly highlight the work of my hon. Friend the Member for East Dunbartonshire (Jo Swinson) in both her roles as Parliamentary Under-Secretary of State for Women and Equalities and for Business, Innovation and Skills in trying to send forceful messages about sexist dogma in the workplace and, more broadly, society. Similarly, we have seen the work of my hon. Friend the Member for Solihull.
We have made some progress. We still have a society in which it is expected that women will do a disproportionate share of child care. We need to break that apart, and we have introduced shared parental leave, which is important not only for women but for men; parental leave should be open to everyone. Having spoken to many female and budding entrepreneurs, I know that that is an important issue for them. We have also worked to encourage parity of pay for men and women. There is no reason why men and women should be paid differentially for the same job. We have seen the gender pay gap come down, and after some internal coalition disagreements, we are now introducing measures so that large companies will have to publish the average pay of men and women. There are a number of schemes for women entrepreneurs, some of which the hon. Member for Feltham and Heston has already mentioned. There is the women and broadband challenge fund, support for women in rural areas, the road show of mentoring events and much more, so we are making some progress but not enough.
I completely agree with the hon. Lady that we are not there, and so long as we do not have more women entrepreneurs, we and our economy are missing out on a pool of talented, able people who could contribute much more. Research by Enders Analysis shows that raising women’s employment to the same level as men’s could lift GDP by 10% by 2030, which we should all want. As she said, the Women’s Business Council has said that if women had the confidence and support to start businesses at the same rate as men, the UK would be home to an extra 1 million female entrepreneurs, which we would all welcome. We are missing out, and we are doing too badly. Women majority-own only about one business in five, and they are about a third less likely than men to start a business. There is a lot to do.
We need to ensure that education is far more gender-neutral and to encourage women to take subjects that are not seen as traditionally feminine. I recently looked at the application rates for different subjects at the university of Cambridge in my constituency, and there is huge discrepancy between the subjects for which women do not apply and the subjects for which they do. We have to change that. Computer science is at one end and education is at the other. There is no good reason for that, and we have to change it. One thing we would like to do is to change application rates in science, technology, engineering and maths. We support initiatives such as the STEM diversity programme to address gender stereotypes. We need to ensure that each school has access to a female science champion to encourage the idea that women can be successful in technology and science.
Seema Malhotra
The hon. Gentleman is making an excellent speech. He reminds me that my sister studied engineering at Cambridge and now works with racing cars in America. He makes an important point about how we can attract more women into subjects that have not been female-led. Does he have a view on how we can build a stronger connection between schools and women who are running businesses and who have been successful in science or technology? Those women can be great role models and can encourage more women to come forward.
Dr Huppert
The hon. Lady is right that we have to do far more. In fact, her sister could perhaps be doing some of that. Various studies have asked people to draw an engineer, and almost invariably the person they draw is a man. We have to break that stereotype. There have been some great examples and, rather embarrassingly, I have forgotten the name of the brilliant engineer who worked on the Shard project. She featured in some of the television programmes, and I have met her, but I do not remember her name. She has gone out to try to encourage people in schools, which is essential. We need to show that there is diversity and that people from all walks of life can do it, whatever their background. The hon. Lady is right to raise that issue.
Female entrepreneurs have a particular issue with obtaining finance. Even if they have the background, the idea and the confidence to go for it, access to finance can be very difficult. As the hon. Lady said, banks can be very unsupportive of women entrepreneurs. Studies in the US found that when banks changed their approach to female enterprise, there was growth in female entrepreneurship. I am not saying that we should necessarily copy exactly what was done in the US—it might not exactly work here—but we should try to change the banking culture. We should work with the British Bankers Association to find information on lending to female entrepreneurs in England so that we can see how we can change it.
There are also non-bank funding issues. At the initial stage of funding, women are apparently rather more concerned to seek the three f’s: friends, family and fools. It can be difficult to ask people for money at that stage. There are similar figures for angel and venture capital investment. Only 8% of angel and venture capital investment goes to companies that are run or co-founded by women, which is an astonishingly small fraction. One ray of light is that we are seeing crowdfunding and equity crowdfunding, and 41% of successful equity crowdfunding goes to companies that are run or co-founded by women—we are seeing much more.
Amanda Boyle, the chief executive officer of Bloom VC, has talked about how crowdfunding is opening access to women. I do not have the figures with me, but I understand that men are still more likely to ask for money but women are more likely actually to get the money, which is changing the dynamics. I support all the recommendations of the report by my hon. Friend the Member for Solihull on inclusive support for women in enterprise.
I have spoken at length on some issues, and far, far more could be covered. It is good that we are having this discussion, and it is good that we are trying to make a difference. Whoever forms the next Government, and whoever is in the next Parliament, I hope that women entrepreneurs will be prioritised. So long as we have a society that stereotypes and gives the impression that women should like pink things and should be doing feminine jobs—we have no truck with those attitudes here—we will be weakening our economy and making our society less fair, which is the exact opposite of what we want. We want opportunity for everyone.
Jim Shannon (Strangford) (DUP)
It is a pleasure to speak in this debate, which I thank the hon. Member for Feltham and Heston (Seema Malhotra) for securing. I note that my party, the Democratic Unionist party, has the most Members in this debate. I am sure that is not a reflection on the other parties’ interest in this matter, and I am sure everyone would be down here if they did not have other things to do. Those of us who are here underline the importance of supporting women entrepreneurs.
I recently read an article on nibusinessinfo.co.uk stating that:
“If as many women as men were thinking of setting up a business in Northern Ireland we would have over 28,000 more entrepreneurs.”
To put that in perspective, if it created 28,000 new jobs—it would probably create more—there could in theory be zero unemployment in Northern Ireland. That is a possibility, and it would have a dramatic and positive effect on the local economy. That idea is not far-fetched. We must encourage ladies in Northern Ireland to be entrepreneurs, and we must ensure that they have a chance to do so. The article continues:
“The Global Entrepreneurship Monitor (GEM) report shows that women in Northern Ireland have a very positive view of entrepreneurship as a career choice.”
Entrepreneurship is not alien to women in Northern Ireland. They do not find entrepreneurship strange; they want to sign up to it.
“The report indicates that increasing the level of entrepreneurial activity among women will make a huge contribution to the diversity and success of the local economy.”
The Library debate pack has made me aware of one negative. It refers to:
“better support structures for women—think mentorship and networking”.
On the other hand, there is a problem with such an approach. If women are not starting businesses because they lack the confidence to do so, singling them out as a group in need of special treatment risks undermining that confidence even further. So there is a negative, and there needs to be a balance. At a women’s networking event at Middlesbrough football club in 2000, one of the award winners was south Wales-based Christine Atkinson, who said:
“Lack of confidence is so pervasive.”
Again, we cannot ignore that.
David Simpson
I am sure my hon. Friend will agree that the retail sector in the United Kingdom is vastly run by females. Within the commercial industry, there has to be opportunity as well.
Jim Shannon
I thank my hon. Friend for that intervention. His business expertise is good for this Chamber and for the House. He will not mind my saying this, but a part of his success is his wife. I mean that genuinely. My hon. Friend and his wife have a business partnership and they both work equally hard. The success of that business is due to the efforts of both of them. He and I know that, and his wife knows that as well.
When women take it upon themselves to launch businesses, often it is to beat the high cost of child care. Perhaps the Minister will address that issue. Child care costs are a big factor in whether ladies are able to start their businesses and move forward.
It is always good to give an example. A retired lady comes to my office. She does craft work and makes bits and bobs to help to raise money for orphan projects in Africa. I am amazed at her ingenuity at times. For example—my colleagues will know this—I am apt to give out business cards. As Members will know, they come in wee plastic boxes. Given the amount of business cards that I have given out over the past five years—and long before that—there are a lot of those wee plastic boxes. She has turned those wee boxes into memory boxes and she fills them with little cards with a poem on them or a thought for the day. She does that for her Elim church mission to raise money for Africa. She has used her skills as an entrepreneur and her skills in crafts to create a business of sorts. If that did not come under charitable purposes, I have every certainty that she could make enough money to live on with all the crafts and things that she sells. That is what an entrepreneur does—that is what it is all about—and that is a lovely example of what can happen.
Mr Gregory Campbell (East Londonderry) (DUP)
Does my hon. Friend agree that whenever there is a successful woman locally in business, quite often she is perceived and projected in the local press as achieving success against the odds in an uphill struggle? It is almost a perception that the woman is not a natural fit within a particular system, rather than giving encouragement that this is an automatic thing. It ought to be a natural phenomenon, rather than something that is the exception. It should become the rule and the norm.
Jim Shannon
My hon. Friend is absolutely right. It should not be something that happens against the norm, but naturally. We welcome every business start-up, and we want to ensure that women do not feel out of place by starting a business.
The reign of the internet is now allowing more women to use their skills in a way that will benefit them. It is not simply men who are now suiting themselves with their working hours and flexible dot.com businesses. One need only look at Facebook to see how people use that medium to display their abilities. We can have anything personalised and sent almost overnight by those who choose to make the best of their time on the internet. There are many possibilities and opportunities. This is entrepreneurship at its best.
I recently met a man and a woman who own a few clothing shops in my constituency and in the neighbouring constituency. They realised that the potential for online shopping was within their grasp and expanded to include that. A business that had a turnover of £3,000 in its first few months will this year have a turnover of £1 million in online sales. That gives us an idea of the possibilities that there are. We had a meeting this week with the Department of Enterprise, Trade and Investment, and we want DETI and BT to ensure that better broadband is available for shops to make the work a lot easier. The fact is that those people saw an opportunity and took it, and we need to encourage more women—and men—to take such opportunities.
In Northern Ireland, the average age for a female entrepreneur is late 30s. The hon. Member for Feltham and Heston referred to that figure in her introduction, but anyone of any age can be an entrepreneur. Opportunities should be there earlier. Many women work part time while setting up a business, which gives them the chance to develop their business idea, while reducing the financial risk that may be involved. Others work flexible hours in their new business to allow them to look after a home or to fulfil other commitments while getting their business off the ground. Sometimes women have to care for elderly parents or their partners or children. We need to help people who have caring responsibilities.
Seema Malhotra
The hon. Gentleman is making a powerful point about older women coming into entrepreneurship. There is no age barrier and someone can start a business when younger or when circumstances are different, but then need to accelerate later. Does he support my call for a more integrated approach to supporting women’s entrepreneurship, which has the backing and support of a range of different Departments where they may have different ways of interfacing with women’s lives?
Jim Shannon
I could not have said it better myself. I thank the hon. Lady for that intervention. Clearly, we need all Government bodies to work together to encourage people at whatever age they decide to start a business, whatever the reasons for starting at the time they started, and whether they are caring for a disabled relative or have family responsibilities. Whatever time they start a business, let us encourage them.
The opportunities are endless and it is clear that help and support should be given by the Government to allow people to understand how best they can begin a new business. In Northern Ireland, Invest Northern Ireland, in partnership with the Department of Enterprise, Trade and Investment, has help available. Indeed, it has a mentor programme. Perhaps the Minister and shadow Minister will say whether there is a mentor programme here in the UK mainland. If not, may I suggest they look at what Invest NI and DETI are doing in Northern Ireland? New starts are helped. There is a Training for Women website that has useful courses and guidance, and a lot of other help available.
Women into Business is Northern Ireland’s premier business women’s programme aimed at encouraging and supporting the progression of women hoping to enter or re-enter the workplace through employment or self-employment. Women in Business NI—WIBNI—is Northern Ireland’s largest and fastest-growing network for business women and entrepreneurs. WIBNI has more than 1,000 members and offers events aimed at helping women develop both personally and professionally, and to make connections and ultimately grow their business. WIBNI also offers a variety of free marketing benefits to all members, including publication of their news articles in a quarterly and a monthly magazine.
DETI and Invest Northern Ireland have worked out a strategy to encourage women in business and entrepreneurs in Northern Ireland. My hon. Friend the Member for Upper Bann (David Simpson) mentioned the importance of further education colleges. We see lots of good students coming through and taking up courses. The South Eastern Regional College does tremendous work in Newtownards and in my constituency, Strangford. It encourages young people when it comes to business start-ups and ideas, and helps to move them along the way. There are as many young girls and young women as there are young men involved in that college and those courses, and it is good to underline that as well.
There is an onus on the Government to offer help; more help can and should be offered. Again, I congratulate the hon. Member for Feltham and Heston on raising this issue today and on highlighting the great work that has been done, and the fact that there is the potential for so much more to be done, if only more support were offered.
It must be remembered that the greater the success of new businesses, the greater the benefit to the local economy and to the country as a whole. So, whether a woman wishes to create her own business at home, or open a shop, or indeed five shops or 10 shops—whatever their potential dream or wish may be—the advice and support must exist to help them do so. And the onus is on those of us in this place and in Northern Ireland, where this matter is a devolved one, to ensure that that advice and support are provided.
Stella Creasy (Walthamstow) (Lab/Co-op)
It is a pleasure to serve under your erudite chairmanship and beady eye this morning, Mr Robertson; you will ensure that all of us are well-served this morning.
I congratulate my hon. Friend the Member for Feltham and Heston (Seema Malhotra) on securing this debate. I know that this is a subject she is really passionate about. She has done a lot of research on it, which really shows in the insight she offers into it and the things that we can do about it.
I also want to put on record my interest in and support for the fact that there are a number of MPs here. May I venture to say to the hon. Member for Upper Bann (David Simpson), who sadly has now left Westminster Hall—
Stella Creasy
I am pleased that the hon. Gentleman will be back, because it is good to see male MPs supporting the idea that there is a gender gap that needs to be addressed. However, may I venture to say that that is not necessarily a concern because of his wife but because when 51% of the population are not fully utilised it is a concern for us all that we are missing out on the contribution that they could make? Frankly, sorting this issue out would help a lot of men, because it would help our economy, and therefore it perhaps has less to do with his wife and more to do with his constituents. It is because of them that he should be concerned about why we have such a gender gap. In particular, my hon. Friend set out well the particular gender gap that we see in the UK, because the situation is not the same in other countries, which should be very telling about what we can do in this country to address these issues.
A number of Members have already pointed out that there would be many more businesses if women were starting up businesses at the same rate as men. However, it is worth considering the situation in other countries. It is not only America that has a higher level of female entrepreneurship than the UK but countries around the world. Therefore, there is something happening in the UK. It is also worth noting that we have a higher rate of churn in the UK, so even when women start up businesses here they are failing more often than in other countries. Women entrepreneurs here are also less likely than elsewhere to attribute the closure of their business to business failure and more likely to cite personal reasons as one of the reasons why their businesses were not successful.
Why does this issue matter to us all? It is because equalising the labour market participation rates of men and women would boost the UK economy by an average 0.5 percentage points every year, with a potential gain of 10% of GDP by 2030. Given the recession that we have just gone through and given the fact that our recovery appears to be beginning to slow, getting more women into business and into leading more businesses would clearly make a tremendous difference to us all and our future economic position. Indeed, the Royal Bank of Scotland has calculated that boosting female entrepreneurship could deliver an extra £60 billion to the UK economy.
Seema Malhotra
As always, the shadow Minister is making an excellent speech. She raised the issue of female participation in the labour force and the important contribution to the economy that could be made by boosting the number of women entrepreneurs. Does she also see this situation as an opportunity for us to see women not only as entrepreneurs but as the employers of the future, who employ others and make changes as their businesses start to grow?
Stella Creasy
My hon. Friend has pre-empted one of the points that I was going to make, namely that this issue is not just about women employing themselves. Indeed, all the evidence suggests that on the whole women’s businesses tend to be better at creating jobs than men’s businesses, because women’s businesses are generally more labour-intensive than men’s businesses. Again, I go back to my initial theme that it would do men, and not just women themselves, a big favour if we could get more women into business.
Therefore, it is worth asking ourselves why we are not seeing that kind of progression in the UK, given that we need it within our economy to make it more stable. My hon. Friend set out the admirable record of the previous Government in bringing forward this agenda and I am very proud of the previous Government for making women’s business a priority for all, and not just for women. However, as the hon. Member for Cambridge (Dr Huppert) rightly said, we have all seen that the progress on this issue has been too slow. Since 2008, the percentage of small and medium-sized enterprises run by women in this country has only gone from 14% of the total number of SMEs to 20%, which is a 6 percentage point increase in that time period. That is simply not good enough. As a result, women own only about one business in five in this country. When we compare that with America, where women are twice as likely to be entrepreneurially active as women in the UK, even though the rates of entrepreneurship for men are very similar for both countries, that tells us the problem that we face here.
In that same time—the period since 2008—it is also worth reflecting on just how quickly women’s employment in and of itself has changed. Not only have women been hit disproportionately hard by the Government cuts but in terms of unemployment. Therefore, it is not a surprise that in the boom in self-employment that we have seen in this country in the last five or six years, women have accounted for much of that growth. Women account for under a third of those who are in self-employment in our country, but more than half of the increase in self-employment since 2008 has been among women. In fact, between 2008 and 2011 women accounted for an unprecedented 80% of the new self-employed people within our economy, which means about 300,000 more women going into self-employment since the economic downturn.
What sort of businesses might those new businesses be? I am sorry to see that the Members from Northern Ireland in Westminster Hall have now shrunk down to one—the hon. Member for Strangford (Jim Shannon)—but I hope that it is a case of quality not quantity. The hon. Gentleman himself talked about online shopping and women using their interest in that to drive business. What we have certainly seen is a boom in the internet economy and the opportunity not so much to shop online as to sell online; we have certainly seen that women have been taking advantage of that opportunity. I would wager that that is not so much because of women’s interest in shopping but because of the reduction in barriers to entrepreneurship that online activity creates. The fact that now someone needs only a few hundred pounds to set up a business rather than several thousand pounds, because it is possible to sell online, changes our economy in substantial ways. Indeed, online businesses have accounted for almost a quarter of total UK growth in recent years, and much of that has been driven by new entrants into the market, including women benefiting from the fact that they can combine work around some of their other commitments to get into that online business.
Seema Malhotra
The shadow Minister is making an excellent point and I am reminded of the excellent phrase in the book, “A Woman’s Place is in the Boardroom”, by Peninah Thomson, in which she talked about the “customer being queen”, because of the fact that women are responsible for more than 80% of retail purchases, or decisions about them. Does my hon. Friend agree that that highlights even further the need to focus on women and what they can bring to our economy through setting up enterprises? The fact is that when women make decisions about what to purchase for themselves and their families, they understand the market so much more than men, and when they come forward and start businesses they are often filling niches and going on—just as Anita Roddick did with the Body Shop—to be hugely successful.
Stella Creasy
Again, my hon. Friend shows her experience in this area. What we are certainly seeing is that women who start businesses tend to bring forward new products, as opposed to men who start businesses, who tend to bring forward competitor products. So women are certainly driving innovation.
My point in referring to the online economy is to set on the record that Labour thinks this issue is less about women bringing their previous experience of purchasing to business so much as their ability to use the opportunity that online behaviour offers to open up markets to people. When someone is bringing a new creative product to the market, having a window that sells to millions of people rather than perhaps having a window just in their local high street opens up the potential for greater success, and it is important that we consider that and ask ourselves how, for example, we can support more women to learn skills, such as coding, to be able to sell online.
A number of Members today have obviously focused on women themselves and what might be stopping them from getting into business. Certainly, one of the issues that people have come up with is child care. So let us be very clear that there probably is an issue around child care and helping women to be able to juggle, which suggests men are holding women back, because, after all, it takes two to have a baby. One thing that I would be interested to hear the Minister’s view on is how we can make men hold up their part of the bargain in looking after children, so that their wives can be the successful entrepreneurs that they want to be.
Labour’s child care proposals will probably help a lot of women entrepreneurs. For example, there is our proposal to increase the number of hours of free child care that are available. With child care costs rising by up to 30%, there could be many parents—for example, the women who want to be the next Anita Roddick or Laura Tenison—who find their ability to be entrepreneurial being hampered as a result of this Government, because they find they cannot afford the child care necessary for them to spend the time setting up a business.
Today, therefore, I will set out four areas that I would like to hear the Government’s response about. They are less to do with women and more to do with the environment that we are asking women entrepreneurs to enter.
First, hon. Members talked about finance. Clearly, finance matters. The evidence shows us that women start businesses undercapitalised, and with not just less finance, but fewer human resources and less social capital. That puts them at a disadvantage by comparison with their male counterparts. Not having the same level of resource is a factor in respect of confidence and risk-aversion among female entrepreneurs. It is important to say that it is not always a bad thing that women are risk-averse, but we should recognise it when they do not have the same resources, and so cannot take the same risks, as their male counterparts. We must consider how to ensure that they have access to more resources, rather than encouraging them to take more risks, and we should recognise that their lack of confidence may not be misplaced and that they might not have the resources to succeed.
How much of a barrier is finance? Some 10% of female entrepreneurs say that access to finance is their only barrier to entrepreneurship, and that it is a particular challenge in respect of expanding in the way they would like to. Again, that appears to be a bigger problem in the UK than in other countries, particularly in Europe. Women in Europe are much more likely to be able to access finance to start and run their businesses than their UK counterparts. Some 20% of women in the UK have tried to get money to start a business but have been turned down, compared with only 11% of European female entrepreneurs.
My hon. Friend talked about the Aspire fund, which was set up in 2008 to try to deal with this challenge and ensure that there was a dedicated pot of money to support women in business. As she said, as of last year only £4.7 million of the £12 million had been invested. It is worth comparing that with other forms of start-up finance backed by the Government to see what the difference is. For example, in the same period, the enterprise finance guarantee scheme, set up to provide assistance to small businesses with an annual turnover of less than £41 million, has offered £2.6 billion, and £2.3 billion has been drawn down. The regional growth fund, which matches private finance with public assistance, has awarded £2.6 billion, of which £1.15 billion has been drawn down. There is a differential. It would be interesting to hear the Minister’s view on why the Aspire fund has not been as successful in promoting and supporting women’s businesses as some other start-up funds.
Research by Strathclyde university states that decisions regarding women and finance are based on the interaction between women, who may lack confidence—perhaps because they recognise that they do not have the same level of resource to start a business—and those offering them finance, who may have a certain attitude and approach. There is an interesting challenge for us: if we can change the attitudes of those offering finance—for example, through the Aspire fund—will more women go into business?
Secondly, we have to acknowledge the issue of confidence. I challenge slightly the vicious circle that the hon. Member for Strangford mentioned: he said that dedicated schemes for women could undermine their confidence. I assure the hon. Gentleman that the other way of looking at that is that it recognises that they are a priority. Dedicated schemes, with mentoring and support for women, recognising that there is a gap, and bringing other women forward are helpful and supportive.
Some 38% of women in the UK, compared with just 3% of women in Europe, take advice from Government business support projects. Women are more likely to use all forms of business support than men, whether public or private, and are more likely to access support from professional services. It is important that mentoring schemes exist. It matters that other women are in business, because you cannot be what you cannot see. It is a simple principle, but seeing other women being successful in business offers a road map for women, showing them how they could be successful.
I pay tribute, as other hon. Members have, to a women’s business forum in my constituency. I venture to say that that forum, run by the amazing Jo Sealy, is more successful than our general business forum.
Jim Shannon
I just want to go back one sentence, with the hon. Lady’s permission, and talk about confidence. I was saying that we all have different natures. I have a different nature from other gentlemen in this Chamber, and the hon. Lady is different from other ladies here. It is important, when encouraging ladies to take a job up or move forward with their idea for entrepreneurship, that it is done in such a way that their confidence is encouraged. It is not that what is happening is not right; it is right for some, but perhaps not right for all.
Stella Creasy
I thank the hon. Gentleman for his clarification. My point is that he was querying whether a gendered approach to mentoring might not be counter-productive. I wanted to reassure him that such an approach is important for a lot of women, because it shows them a road map of where they could get to.
I also pay tribute to Simone Roche of Women 1st, Kate Hardcastle of Insight with Passion, Bev Hurley of Enterprising Women, Heather Jackson of An Inspirational Journey, and Margaret Wood of Opportunity Plus, who supports older women entrepreneurs. There are a number of schemes out there, and what they all have in common is that they were set up by women volunteering. Some of them have become social enterprises. I share the concern of my hon. Friend the Member for Feltham and Heston that, over the last couple of years, the work to support women doing that work has been downgraded. My second question for the Minister is: does he share our concern and think there should be a renewed effort to support and prioritise those mentoring networks, not just in local enterprise partnerships?
My hon. Friend and colleague the Member for Feltham and Heston is a fan of the work of the national Women’s Business Council, which was set up for a year as an independent body. Does the Minister think there is a case for making that a perpetual scheme and for considering how it could support mentoring, using and drawing on the experience there?
Thirdly, with regard to women finding it hard to see other women whom they might aspire to be, does the Minister share my disappointment and concern about the slow pace of progress in getting women into leadership positions in business across the piece? He must be disappointed with the slow pace of change, given the diversity dividend that comes from getting more women into boardrooms. He must also share the disappointment of his colleague, the Minister for Business and Enterprise, about the decisions of many businesses to appoint women to non-executive positions. The vast majority of women who have gone into leadership positions on business boards during the past couple of years have simply been appointed as non-execs and have not been in decision-making positions. I know that the Minister will be worried about that unacceptable situation, because it sends a message to women entrepreneurs that there are not women to trade with. Does he think that there is now a case for getting on with looking at what quotas could offer us, in respect of non-exec and exec positions, and the way that businesses are working with women?
My final questions to the Minister are about women to trade with. There is a slow pace of change when it comes to not just women in boardrooms and in entrepreneurship, but women to trade with. In a world economy, the way our businesses work with other businesses could provide huge opportunities for women entrepreneurs, but at the moment, women-owned businesses are winning less than 5% of corporate and public sector contracts.
The Government’s adviser has called for the Government to collect data on diversity in procurement processes, and said that the pre-qualification questionnaire should ask about women-owned business. Is the Minister concerned that the talk about removing the pre-qualification questionnaire for contracts smaller than €250,000 may mean that we will not see that level of engagement with the question of whether the Government are selling to women and doing all they can, through their own supply chain, to promote women’s business?
Although UK Trade & Investment measures women-led firms that export, we do not measure women being sold to and traded with in our economy. The Government have dismissed the idea of having a quota for tenders and the idea of measuring the number of women being sold to, although clearly that would help us understand the scale of the challenge and whether the Government are doing what they can. If the Minister wants insight into what difference that could make, he should look no further than that socialist utopia, the United States of America, where some 30% of all businesses are majority female-owned and the number of women-owned businesses continues to grow at twice the rate of all US firms. Women are increasing their economic clout and driving the American recovery. That is not happening by accident; it is being driven by the US Government’s deliberate choice. The USA Women’s Business Ownership Act 1988 put in place long-term infrastructure to support women’s enterprise development. The quotas and targets set by the US Government for women in their supply chain are changing the behaviour of companies in America.
In 1994, the federal Government established a 5% spending goal for federal agencies to encourage contracting with women-owned small businesses. That target has not yet been met, but it is almost being met and it is making a massive difference to women entrepreneurs in America. Indeed, it is changing the debate not just in the public sector in America, but in the private sector. Companies such as Walmart—again, not perhaps seen as a socialist leader, if the Minister is worried about that—have introduced “women-owned” labels since last year, allowing consumers to clearly identify products created by women-led businesses and buy accordingly. That company sees a commercial interest in this.
The Minister may be worried that I am talking straight away about bringing in a direct quota for selling to women. I recognise that first and foremost we have to ask the question, so will the Minister commit the Government to asking, in the public sector, about selling to women and to starting to monitor just how women’s businesses are being traded with in this country? Through that, we can understand the gaps in the industry. Perhaps there is a role in that for the Women’s Business Council and that dedicated lead on women’s entrepreneurship and business that my hon. Friend the Member for Feltham and Heston set out so clearly as being required.
Ultimately, if we want to give women confidence that their businesses will be supported, that they will be successful and that we can bridge the confidence gap, we have to show that the issue is a priority. The Opposition are committed to that; I hope that the Minister will show a similar commitment, so that we can all benefit from the increase in economic activity and productivity that bringing more women into the UK economy would offer.
The Parliamentary Under-Secretary of State for Business, Innovation and Skills (George Freeman)
It is a pleasure to serve under your chairmanship, Mr Robertson in the closing phase of this Parliament. I congratulate the hon. Member for Feltham and Heston (Seema Malhotra) on introducing this debate on Budget day—an important day, when attention will be rightly focused on the Government’s initiatives to support business and entrepreneurship. As a Business Minister, it is a pleasure to be here and to be able to respond to the debate. I pay tribute to the Members who have spoken today. We heard powerfully from the hon. Member for Strangford (Jim Shannon) on some of the good practice in Northern Ireland. I was there recently celebrating and supporting the Northern Ireland life sciences cluster. He made a powerful point about the importance of rebalancing the Northern Ireland economy from public to private sector and the role of women entrepreneurs in that. He also made an important point on mentoring—I would be interested to look at the scheme he mentioned—and also touched on child care.
The hon. Member for Feltham and Heston made a number of points and I will try to deal with them in my speech, as well as to answer some of her specific questions. I pay tribute to the large number of women who have contributed to the driving of the agenda outside this House. A number of pioneering entrepreneurs and women in policy have been mentioned today. It is another area where more needs to be done. I am proud of what this and the previous Government have done, but the Government agree that we need to keep our foot to the pedal and keep at it.
I particularly thank and congratulate those behind the Aspire fund, the taskforce and the Women’s Business Council for their work. The subject is close to my heart, partly because I have a 14-year-old daughter whose career I take a close interest in, and partly because I come from a 15-year career in the entrepreneurial sector in Cambridge and elsewhere around the country starting high-growth technology companies, particularly in the life sciences. In that sector, I am glad to say, there is a proud record of women achieving very highly both in our larger companies—I recently met a delegation from GlaxoSmithKline, and Members will be delighted to know that all five representatives were women—and in the smaller companies. There are huge opportunities for women in life sciences, both at the bench and in driving small businesses.
Women and entrepreneurship is also an area of interest from a policy point of view. Through the 2020 Conservatives group, I have set out a number of measures on how, in driving the rebalanced economy and the long-term economic plan, we have to liberate the entrepreneurial talents of all our citizens, and in particular reach into those areas where we have not properly unleashed them before. It is clear from what Members of all parties have said this morning that there is a lot of latent entrepreneurial talent in our female community. In our inner cities and our black and minority ethnic communities, there are incredible rates of entrepreneurial activity that we have not recognised, properly reached into and supported. Family finance supports a lot of our small businesses in some very business-hostile environments in some of our inner cities.
In the public services—before the shadow Minister leaps to her feet, I do not mean privatisation—we should unleash the spirit of entrepreneurship and the talents of people in the public services to deliver more for less. The economy nationally needs a strong focus on unleashing that spirit of enterprise. That does not always mean for-profit or very acquisitive, venture capital-backed businesses; it means a culture of delivering more for less and innovating. We need that to modernise our public services and to continue to drive the recovery that we are leading. The subject is close to my heart, and on Budget day it is close to the Government’s mission more widely.
The truth is that small businesses are the lifeblood of our economy. Every village, town and city in Britain contains shops, garages, cafes, manufacturing firms, hairdressers and so on. We take those small businesses for granted, but they are backed by enterprising and hard-working people who are taking risks to run those businesses. Responsible society depends on the ties that bind us, and as well as the economic benefits it brings, an entrepreneurial, small business economy does something else: it builds the ties and social capital that link communities.
Jim Shannon
The Minister is making a powerful response, saying what he feels he can do. One of the growth industries in my constituency and across the whole of Northern Ireland, particularly among ladies, has been the craft industry, where there are special talents and the ability to create products for sale. The Minister mentioned shops, small businesses and restaurants and so on, but the craft industry could release enormous talent and job opportunities across the whole United Kingdom. What are his thoughts on that?
George Freeman
The hon. Gentleman makes an important point. I was about to talk about the importance of small business in driving innovation if we want an innovation economy. Small businesses tend to be quicker to adopt innovation and to drive it. They are a force for insurgency in the economy. In tourism and crafts, we should not forget that small businesses are important in our theatre, media, digital and tourism sectors. A culture of empowering people and unleashing the talents of women in every walk of life is incredibly important if we are to build a diverse and strong economy and a strong and linked society.
That is why I am absolutely delighted that the UK is a truly great place to start a business. This year we have seen data confirming that 760,000 small businesses have been created in this Parliament since 2010. We are backing business every step of the way, making it easier to start, succeed and grow. We will hear about more such measures in the Budget later today, I have no doubt. I am delighted, too—but not complacent for a minute—that in 2013 there were more women-led businesses in the UK than ever before: 990,000 of our SMEs were run by women or a team that was more than 50% female, an increase of 140,000 since 2010. We know that more needs to be done, and we need to build on that positive momentum. I am also delighted that in the UK, women-led small businesses are contributing £82 billion to the gross value added of the UK economy.
Before the debate, I looked at the latest data, which are even more encouraging. The data from the Office for National Statistics for October to December 2014 show that there were 1.45 million self-employed women in the UK, which is 42,000 more than in the previous quarter and 281,000 more than in May to July 2010. Some 672,000 of those self-employed women were working full time and 778,000 were part time.
I pay tribute to the work of the Women’s Business Council and the important policy work that it has done and intends to follow up. It has rightly, as a number of Members have highlighted, pointed out that if we had women starting businesses at the same rate as men, we would have up to 1 million more entrepreneurs. That is a good reminder of the latent potential that we need to continue to drive at.
One or two Members asked about the Government’s commitment and which Minister is responsible for this. I am delighted to say that a number of Ministers are responsible. The Minister for Business and Enterprise leads on enterprise policy for the Government. The Secretary of State for Education is also the Minister for Women and Equalities. The Under-Secretary of State for Women and Equalities at the Department for Education is also an Under-Secretary of State for Business, Innovation and Skills. They are all working to develop joined-up policies with the Government Equalities Office. We take it seriously as part of our commitment to social justice and to the long-term economic plan.
Research by the Enterprise Research Centre has shown the challenges that confront women entrepreneurs, but in many ways they are similar to those facing men.
Seema Malhotra
The Minister has acknowledged the important work that the Government Equalities Office has been doing and the different Departments involved, but he has not been so clear on who is actually in charge of the policy area. Having many people involved is good, but who is in charge? Also, he has not mentioned what plans the Government might have for the Women’s Business Council and whether they think its role needs to be strengthened. Should it be looking at more diverse aspects of business? Should it be put on a statutory footing?
George Freeman
With eight days of this Parliament left, perhaps I could undertake to write formally to the hon. Lady to confirm the various initiatives that we have running. I assure her that if this Government are returned on 9 May, we will continue to keep our foot to the pedal and drive on this agenda. She would not expect me to commit now to what that might look like, given the uncertainties that we all face.
A number of colleagues mentioned access to finance, which is rightly regarded as a major obstacle preventing women from starting and growing a successful enterprise. It is worth pointing out that access to finance is an issue for all businesses, but although it is in many ways gender neutral, the truth is that women perceive higher financial barriers and the evidence shows that they are more likely to be discouraged, particularly by some forms of borrowing. Sources of finance for male and female-led businesses are similar, but studies show that women-owned businesses start with lower levels of overall capitalisation, use lower ratios of debt finance and are much less likely to use private equity or venture capital.
Encouraging women to start their own business is a key part of our long-term economic plan, which his why we have put in place a range of Government initiatives to support women. Through the GREAT website, we have brought together in one place all the relevant Government advice, guidance and support, but there is more to do. I am delighted that, this week, we in the Office for Life Sciences have redone our business support portal to make navigation easier for those outside the system. The Department for Business, Innovation and Skills has also launched a range of new measures, including a new web page specifically aimed at potential and existing female entrepreneurs.
The Government’s “Business is GREAT Britain” campaign has been highly effective at making small businesses aware of the range of support on offer to help them to grow. Specifically for women, we have committed additional funding to understand in communications terms the particular challenges that female entrepreneurs face, and we are making sure that existing activity is widely promoted among women. We have managed to match up experienced business women with those new to enterprise and invested £1.9 million in the “Get Mentoring” project—a number of colleagues mentioned mentoring. That project has recruited and trained more than 15,000 volunteer business mentors from the small business community, 42% of whom are women, I am delighted to say; that is more than 6,000 mentors trained specifically to support female entrepreneurs. Owing to the success of that project, the Government recently announced an extra £150,000 to host 12 “Meet a Mentor” roadshows throughout the UK for female entrepreneurs.
Seema Malhotra
The Minister mentioned the GREAT Business website, which I referred to, and said that it has been successful in raising awareness among small businesses. Has there been any formal evaluation of how successful it has been?
George Freeman
The process of evaluating the BIS portals has been taking place only in the past few months. Perhaps I could come back to the hon. Lady with the latest details of that assessment.
George Freeman
If I can just finish this section of my speech, I will happily give way.
We have invested in the women’s start-up project to provide opportunities for young women studying in the creative industries and the leisure and tourism sectors to start their own businesses. This pilot project, in partnership with Young Enterprise, will see the Government provide funding of up to £50,000 for teams of young women aged 19 to 24 studying at undergraduate level to set up and run their own businesses. We have also provided £2 million for small grants of up to £500 for those wishing to set up new child care businesses—help with child care is of course a major part of support, and I will say more about that in a moment. In the autumn statement, the Chancellor announced that that scheme would be extended until March 2016, with a further £2 million made available for next year.
As a number of colleagues have mentioned, we have provided a £1 million women and broadband challenge fund to help women to move their business online and take advantage of superfast broadband. Sixteen local authorities have been awarded a grant to support actions to encourage women’s enterprise in areas where superfast broadband is being deployed. I want to touch on the particular challenge faced by women entrepreneurs in rural areas such as my own.
George Freeman
I will just finish my point, then I will give way.
The Government are actively addressing a number of additional barriers for women in rural areas. We have provided £1.6 million to support women’s start-ups in rural areas, including improved access to transport links, virtual assistants for those in the most remote areas, online help, and local business support through mentoring, skills training and networking.
Stella Creasy
Before the Minister moves on from discussing Government support to women’s business, I want to press him on the Aspire fund—I hope that he has just received a note on it from his officials. He mentioned a number of different pots of money that are being given out to support women in business in various ways—for example, the broadband challenge. The Aspire fund was set up with £12 million to support high-growth women-owned ventures, but six years on, only £4.7 million has been invested. Will he say more about why that is the case and what the Government are doing to reduce the gap? If that money is there to support women’s business, surely we should ensure that it gets to women in business.
George Freeman
With her typical prescience, the hon. Lady anticipates the next paragraph of my speech. We recognise that the sector needs particular support, which is why we are so keen on the Aspire fund, which makes equity investments of between £100,000 and £1 million on a co-investment basis and is designed to help female-led businesses that aim to grow. The fund invested £1.3 million and supported £5.5 million of investment in 2013-14, and it has a total of £12.5 million to invest.
It is worth remembering that the fund was not intended to fund a large number of businesses; it is there as a beacon project to support women-only businesses and catalyse the sector. I am delighted that we have also made additional investment available to businesses led by women, as well as those led by men, through the £100 million business angel co-investment fund. We must not forget that although we are catalysing and driving women-only entrepreneurs, the whole range of business support mechanisms we have put in place—including the seed investment enterprise scheme and the expanded enterprise investment scheme—are all available to women entrepreneurs.
George Freeman
I just want to finish this point about funding.
Without the right funding, it would be hard for anyone to realise the potential of their ideas. The Aspire fund is one of a much larger range of measures. Women are also benefiting from the full range of start-up loans and the new enterprise allowance. More than 25,000 loans worth more than £160 million have now been made, with 37% going to women. The 25,000th loan was given to a female entrepreneur.
To help more parents to start their own business, from autumn 2015 tax-free child care will be available to nearly 2 million households to help with the cost of child care. That will enable more parents to go to work and, unlike the current scheme—employer-supported child care—it will be available to self-employed parents.
Stella Creasy
There is a £7 million gap between the £12 million that has been made available for women’s businesses and the money that has actually been drawn down. I take the Minister’s point, and I am not suggesting that that is the only funding available for women entrepreneurs, but compared with other Government-led schemes, there is a substantial disparity. Why does he think that is? Why has the Aspire fund not been able to lend at the same rate as the other available start-up funds? Will he commit the Government to monitoring across the piece the gender of those to whom they are lending through start-up schemes? The Government have not always monitored that, but they must do so to truly understand what we might have to change about finance for women to ensure that they all get the support that they need.
George Freeman
It is important to realise that we do not want the investment funds that take equity stakes simply to shovel the money out of the door irrespective of the quality of the bids. The decisions have to be based on proper investment criteria, and it is not for me or the hon. Lady to second-guess such judgments. I am pleased to see that after an initial period during which the rate of investment was slower, it has picked up. We are actively monitoring and supporting the fund, and our ambition is for it to be spent and invested, but it is important that we send a signal that the money is going into high-quality business propositions.
As we have all acknowledged this morning, there is a challenge in trying to observe the wider cultural point made by my hon. Friend the Member for Cambridge (Dr Huppert). He said that we must promote world-class, aspirational, high start-up businesses that are capable of receiving that sort of venture capital. It is not for us to signal that the money should be pumped out of the door irrespective of the quality of the bids. It is for the fund manager to ensure that they are picking the right investments.
I have tried to be generous in giving way, but time is running out, so I want to complete my remarks. For all the reasons I have outlined, and because we agreed that we must do more, in April 2014, my right hon. Friend the Secretary of State appointed my hon. Friend the Member for Solihull (Lorely Burt) to the role of women in enterprise champion, to promote the support available to women starting a business. In February, she presented her report on how the Government could boost support for female entrepreneurs, and we agree with much of the thinking and analysis it contains. I cannot be expected to commit the Government to agree with every single one of the recommendations, but we are actively looking at them and working on an implementation plan.
I want to pick up on some of the comments. My hon. Friend the Member for Cambridge focused in particular on science and start-up companies. I join him in paying tribute to the people in the high-tech and life sciences sector, which we both know well from Cambridge, and to entrepreneurs such as Julie Deane of the Cambridge Satchel Company. He made a number of interesting points about cultural attitudes and the need to ensure that, in what can sometimes be the quite macho world of finance, the quality of women entrepreneurs and of women in science is properly recognised.
My hon. Friend also talked about the importance of getting schools better connected to businesses. We can all do something about that in our own constituencies. Tomorrow night, the Norfolk Way is launching our first innovation awards for Norfolk, linking up science teachers and students in schools with local businesses in the area. He made an important point about 8% of venture capital funding but 41% of crowdfunding going to women-led businesses. That sends a signal about the power of some of the new financing mechanisms to support women’s businesses. Although the Enterprise Research Centre has shown that there are no specific obstacles to access to finance for women, strong perceptions have a powerful effect, and that is something we need to monitor.
My hon. Friend made a particular point about STEM. Since 2009-10 the number of women starting engineering in manufacturing apprenticeships has increased threefold, which is a real success for the coalition’s apprenticeships policy in that we are getting more and more women in the STEM subjects. More action is necessary, but with the apprenticeship ambassadors STEMNET programme we are making progress. The Your Life “Call to Action”, part of the campaign launched by the Chancellor and the Secretary of State for Environment, Food and Rural Affairs, has brought together employers, educators and the professions to make concrete pledges to increase the number of women in engineering and technology. I am delighted that more than 200,000 organisations have now pledged to create in excess of 2,000 entry-level positions, including apprenticeships, graduate jobs and paid work experience posts, as well as action to support their female work force.
Dr Huppert
The hon. Member for Feltham and Heston (Seema Malhotra) talked about mentors and I could not remember a name. I hope that the Minister will join me in congratulating Roma Agrawal, who worked on the Shard and has a website, romatheengineer.com, which promotes females going into engineering.
George Freeman
I absolutely join my hon. Friend in paying tribute to another beacon project that is sending out such a powerful signal to girls and women about opportunities available to them. I am delighted, too, that we allocated a further £20 million in the engineering skills fund to help employers to tackle skills shortages in engineering, including to develop women engineers.
Finally, my hon. Friend made a point about enterprise education. I am delighted to confirm that we are working actively with schools, colleges and higher education institutions to encourage and promote entrepreneurial attitudes and skills training, as well as providing mentors and role models and improving access to finance support.
I want to deal with the questions about child care and women on boards. A number of colleagues asked about child care support. The Government have increased the number of funded hours of free child care from 12.5 to 15 hours a week for all three and four-year-olds, saving families an additional £425 a year per child. Since September 2014, we have funded an additional 15 hours a week of free child care for the 40% most disadvantaged two-year-olds, saving families £2,500 a year per child. We have also increased child tax credit well above inflation to £2,780 a year, which is £480 more a year than at the beginning of the Parliament. All families under universal credit will be able to receive 80% support for child care costs, which is up from 70% under the existing working tax credit system. The introduction of tax-free child care could also save a working family up to £2,000 a year per child. In addition, we have committed an extra £50 million to introduce a new early years pupil premium in 2015-16 to support the most disadvantaged three and four-year-olds to access Government-funded early education. That is important if we are to support our entrepreneurs and innovators in all walks of society and to ensure that entrepreneurship is not the preserve of the well-off.
Women on boards is an important subject. A lot of our entrepreneurial companies do well and go on to become substantial, significant companies quoted on the stock market. We are ensuring that, at that point, women continue in leadership roles. Following Lord Davies’s recommendations in the 2011 “Women on boards” report, the Government are committed to achieving the target he set for the end of 2015 of 25% of FTSE 100 boards being women. We also want to increase the number of women on FTSE 250 boards. The graph that I have in my hands shows a line slowly climbing from 2004 to 2011, but then turning sharply upwards, going from 12.5% of women on the boards of FTSE 100 companies to 20.7% at the end of 2014. We are making a real impact and we must continue to do so. I am delighted that now 22.8% of FTSE 100 board members are women and that women now account for 28% of FTSE 100 non-executive directorships and 8.5% of FTSE 100 executive directorships. There is much more to do, but we are making real progress.
Stella Creasy
Does the Minister share the view of his colleague, the Minister for Business and Enterprise, that it is unacceptable that boards are only appointing women to non-executive positions and that what we need therefore is a target not only for women on boards, but for women in decision-making positions? Also, will the Minister answer the questions about the Women’s Business Council and about the supply chain? It would be incredibly helpful to hear his response on those issues as well.
George Freeman
I do share the ambition and desire of my fellow BIS Minister, my right hon. Friend the Member for West Suffolk (Matthew Hancock), to see a continuing increase in the rate of women being appointed to the boards of our top companies. The hon. Lady is right to highlight that we do not want women only to be in non-executive roles; they must be in executive roles as well. That is why I was saying that we are very much focused on that. We are pleased with the progress, but we need to go further—not, I hasten to add, because of a politically correct desire to hit some quota, but because women are talented and represent more than half of our work force. By not giving women fair representation in the leadership positions of our great companies, we deny those companies their talents. We are being hard-headed and not only concerned with social justice. It is in the interests of the country in every way. I am glad that we agree on that.
In closing, I want to return to the point with which I started. Many of the arguments used in the Chamber today relate to the economic contribution of women in entrepreneurship and start-up businesses and to the need to unleash the talents of women, because that is so important to our economy, but I want to highlight the importance of a small business and entrepreneurial economy to the wider stock of social capital and the ties that bind us. I am absolutely certain that if we are to rebalance our economy in the broadest sense, we need to create one in which small business not only contributes to economic success, but helps to bring communities together. Give me a deal between two small companies any day of the week and I will show people a deal that includes not only an economic deliverable, but a contribution to social capital and to building trust between communities. In many of our small towns, neighbourhoods, villages and inner-city communities, small businesses working together produce and deliver so much more than just economic growth. It is vital that we build women into that network as well.
For those reasons, I am delighted that, while there is not a shred of complacency in the Government, we are making real progress. We now have 1.45 million women enjoying the freedoms and flexibilities of self-employment, which is 42,000 more than in the previous quarter and 281,000 more than in 2010. We also have 900,000 SMEs run by women, more than at any time in our history. I am not complacent, but the Government are making progress.
Stella Creasy
Before the Minister closes, I wanted his response to two specific questions about the future of the Women’s Business Council and the supply chain. His own Government adviser on women-led businesses has suggested that the Government should monitor women in the procurement supply chain. Will he commit the Government to that, yes or no?
George Freeman
I have taken a lot of interventions and questions, but I will happily get back to the hon. Lady in detail. She made an interesting point about procurement. Through the work of the Cabinet Office, we are driving hard to ensure that we use every procurement power to support innovation throughout the economy. That is an important part of it and I will happily come back to her on it later.
The 900,000 SMEs run by women in our economy, the highest number in history, suggests that we are making real progress. I am not complacent for a moment, but we are on the right track.
AEA Technology Pension Scheme
(9 years, 8 months ago)
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Geoffrey Clifton-Brown (The Cotswolds) (Con)
I am grateful to you, Mr Robertson, and to Mr Speaker for giving me the opportunity to raise the matter of the AEA Technology pension scheme, following the company’s pre-pack administration in 2012. I am also grateful to the Minister, my parliamentary neighbour, for being here to respond to the debate, and to my right hon. Friend the Member for Saffron Walden (Sir Alan Haselhurst) and my hon. Friends the Members for Newbury (Richard Benyon), for Reading West (Alok Sharma) and for Oxford West and Abingdon (Nicola Blackwood) for being here to support me. I give special thanks to the Minister for Culture and the Digital Economy, my hon. Friend the Member for Wantage (Mr Vaizey), and to his staff. He is the constituency Member concerned with the matter, and he and his staff have been very active on it, as have lots of other right hon. and hon. Members.
I have received continuing representations from my constituent Dr Ken Nicholson, who has been affected by the issue. I know that constituents of other Members have also been affected. I will start with some background information for context. The AEA Technology pension scheme is a defined-benefit final salary scheme, set up when AEA Technology, which was previously the commercial arm of the United Kingdom Atomic Energy Authority, was floated on the stock exchange in September 1996. AEA Technology had become a Government-owned company that April, although staff remained members of the UKAEA pension scheme until flotation.
The Atomic Energy Authority Act 1995 detailed the conditions for the privatisation of AEA Technology and included specific information regarding the pension arrangements for transferring staff. A schedule to the Act stated that benefits from the daughter scheme should be “no less favourable” than those that would have arisen from the UKAEA scheme as it was at the time. There was a duty to ensure the arrangements for the new scheme satisfied the demands specified in the Act, something the then Energy Minister, Tim Eggar, stressed on Second Reading of the Bill in March 1995.
Alok Sharma (Reading West) (Con)
My hon. Friend has come quickly to the nub of the matter. People made the transfer because they believed that the terms would be no less favourable than those they were enjoying before they did so. Does he agree that the key question is, who will compensate those who have lost out? I know that it happened many years ago under a previous Minister, but perhaps the Minister will address that point as well when he makes his remarks.
Geoffrey Clifton-Brown
My hon. Friend has made his point cogently. I will return to the matter of compensation later in my speech.
Once part of the new scheme, members were encouraged to transfer all accrued pension service from the UKAEA scheme, by a leaflet presented as impartial advice from the Government Actuary’s Department; it has recently been found that the leaflet was changed several times at the request of the UKAEA to remove references to risks involved in the transfer. Scheme members were assured that their pension would be safe. As both schemes were based on final salary, the decision by scheme members on whether to transfer service to the new scheme or to freeze it in the UKAEA scheme was based on a judgment of what would happen to their own salary in future years. They could not make the decision based on whether the new scheme contained more risk, since they had not been warned of any.
Nicola Blackwood (Oxford West and Abingdon) (Con)
The AEA Technology staff are nuclear physicists accustomed to identifying risk and weighing cost-benefit. If they could not identify risk within the GAD advice, who could have?
Geoffrey Clifton-Brown
My hon. Friend makes a really potent point, which I will come on to later in my speech.
People had not been warned of the risks by the official leaflets that they received. The AEA Technology pension scheme received an initial injection of cash from its mother scheme, the UKAEA scheme, based on the accrued service and pension entitlements of the transferred members. The mother scheme was operating with a notional surplus at the time, but none of that surplus was passed to the new scheme, giving the Treasury an increased windfall. Since the AEA Technology pension scheme ran into deficit because of changes in actuarial valuations, it has now become apparent that insufficient funds were transferred into it when it was set up. Moreover, no written agreements appear to have been made to cover such an eventuality. In other words, either the Government have a continuing moral, and possibly legal, duty to those transferred members or they cannot have fully discharged their responsibility under the Atomic Energy Authority Act.
The Department for Work and Pensions has suggested the requirements of the Act may have been fulfilled because when it was launched the benefits from the new scheme matched those of the mother scheme. However, none of the transferring scheme members—my hon. Friend has made the very good point that they were extremely bright and able people—were eligible to draw benefits at the time, because none of them were retired, so the DWP’s claim cannot be true. The Act’s intention must have been that the new pension scheme would not change in future years if the UKAEA one did not, meaning the benefits were secure.
It is now proposed that the AEA Technology pension scheme be transferred to the Pension Protection Fund, where index-linking of benefits would be removed and replaced by an inflationary allowance, capped at a maximum of 2.5% for service from April 1997 onwards. That covers almost all post-privatisation service. It would further mean that all index-linking would be removed from service prior to that date—that is, from all service transferred from the Government sector, which the scheme members were told was secure. In addition, all members below retirement age would suffer a further 10% drop in their pension. The overall effect is a greatly diminished pension that is far less than the benefits that would have been due from the UKAEA scheme. It would not be equivalent, as was specified in the Atomic Energy Authority Act.
Richard Benyon (Newbury) (Con)
My hon. Friend is making a good point. The key point to which we want the Minister to respond is that, as a public sector pension, the AEA Technology scheme had full protection linked to the retail price index. That has now been lost, on the basis of wrong advice that was given at the time.
Geoffrey Clifton-Brown
As I will explain in a minute, it was partly wrong advice at the time and partly the fact that the subsequent company went into a pre-pack.
As I was saying, the proposed transfer to the PPF means that the scheme would not be equivalent to the UKAEA scheme, as was specified in the 1995 Act. I would be grateful to hear the Minister’s views on whether the AEA Technology pension scheme should present a special case because it was formed as a result of privatisation, as my hon. Friend the Member for Newbury said. Additionally, does the Minister believe that the Government should have a duty of care to those staff who were transferred into the AEA Technology scheme? Do the Government have a moral and legal duty to act to protect the pension scheme members against loss, given the assurances that, as my hon. Friend said, were made to staff as part of the privatisation process both in Parliament and in the printed materials provided to scheme members by an arm of the Government at the time?
I understand that in 2010 AEA Technology made an unsuccessful acquisition of the US firm Eastern Research Group by issuing a large number of shares. Problems arose with ERG the following year because of late payments and delays in the US Government’s awarding of contracts. AEA Technology issued a statement in November 2011, which played down the prospects of the UK-based part of the company and highlighted ERG’s problems. That drove the company share price down to virtually zero. Notwithstanding that, the long-term prospects for ERG appeared good, as it had recently won a £100 million contract, and AEA Technology’s successful UK-based business, which had originated from the privatisation exercise, was profitable and actively recruiting at the time.
Given its financial situation and low share price, AEA Technology ran into cash-flow problems. Therefore, in November 2011, it began negotiating with various parties, including its bank, the scheme trustees, the PPF and the Pensions Regulator. The aim of the negotiations was to improve its financial position, and the plan that was agreed involved arranging a pre-pack administration to allow it to default on its pensions obligations and to start afresh under new, improved trading conditions—AEA’s original pensioners were about to suffer a serious double whammy.
The company’s share price was driven down so low—to about 0.05p, following a peak of almost £10 soon after flotation—that the company’s market capitalisation was less than £l million, which was less than the annual profit from the UK-based business alone. Given the low share price, investors would face no great financial loss from entering administration. The idea was for the PPF to take over the pension scheme and its assets. However, the PPF has fixed rates of compensation and, in particular, limitations on its rates for inflationary allowances. The net effect on scheme members, therefore, would be to reduce their pension pots to less than half of what they might originally have expected. That drop is greater than that explained by the scheme deficit. To add insult to injury, the scheme is contracted out, which means that its members will not be eligible for an additional state pension.
The pension scheme trustees initiated the pre-pack administration of AEA Technology by electing to wind up the pension scheme and to invoice AEA Technology for the full buy-out costs. Such action would be enough to make almost any company insolvent. The argument for entering a pre-pack administration was that it would maximise—that is pretty unrealistic—the company’s value, which would, in turn, maximise the scheme’s value for its members. Of course, that later turned out to be totally false. The money put into the scheme from the sale of the company was negligible by comparison with the losses caused by winding the scheme up. Scheme members could never have benefited from that; the beneficiaries could only ever have been the bank and the PPF.
AEA Technology was profitable and expanding, and it had a healthy order book, when it elected to enter pre-pack administration. The surviving parts of the company have continued to prosper. An air of secrecy shrouds the pre-pack negotiations, with everyone stating they are someone else’s responsibility or that information is commercially sensitive. Who it is who is commercially vulnerable is a big secret. That has also been the disingenuous response of the relevant Departments, while the various ombudsmen have thus far refused to get involved. What is the purpose of an ombudsman if, the moment they encounter a really difficult case, they fold and refuse to investigate?
Pre-pack administrations were set up with the intention of being for the benefit of creditors. The PPF was set up as a safety net for company pension schemes that run into trouble. The Pensions Regulator has a duty to protect pension scheme members’ best interests, as have the trustees. Yet in the case of AEA Technology, it appears that all those parties got together to help the company financially, at the expense, yet again, of those they were supposed to protect—the pension scheme members.
The AEA Technology case is special because the company was formed through privatisation. Many of its pension scheme members are ex-Government employees, who are extremely well qualified and extremely intelligent, and the Government have a continuing duty of care towards them. For that reason alone, the pre-pack administration needs careful investigation.
The case has highlighted other important issues. For example, there is the question whether pre-pack administrations are being abused. Additionally, the implications of defaulting on pensions for commercial reasons need to be understood and controlled if the Government are to be successful in promoting saving for retirement and in introducing a unified, simplified pension system into which transfers are the norm.
Sadly, in this case, it is all too clear that a large number of very bright people were misled by the information issued by a Department. Some of the information—the drafting was heavily influenced to minimise any reference to risk—may also amount to a misleading prospectus, and it needs to be thoroughly examined by the Government regulator.
I end by saying that the pre-pack administration of the AEA Technology pension fund and the information on which members transferred their entitlements need proper and thorough investigation, and scheme members need compensating accordingly. I look forward very much to what my right hon. Friend the Minister has to say, and I thank him for listening.
The Minister for Pensions (Steve Webb)
I congratulate my constituency neighbour, my hon. Friend the Member for The Cotswolds (Geoffrey Clifton-Brown), on securing this important debate. As he knows, I have taken an interest in the issue, and I met his constituent Dr Nicholson with him in 2013. I have also had a number of meetings with hon. Members and scheme members.
It is important to say, for what it is worth, that I hugely sympathise with anybody who built up pension rights, was expecting a certain pension and then did not get it. Nothing I say subsequently about the Government’s position takes away from the fact that we are dealing with a very unsatisfactory situation that all of us would want to avoid.
Let me go through the points my hon. Friend raised and respond to them as best as I can. The first is the issue of what the legislation meant when it said that the value of accruals in the new scheme had to be “no less favourable”. The scheme people came out of was essentially a civil service-type scheme. That meant the new scheme had to enable people to go on building up benefits that were no less favourable; it did not mean that what was then a private company had its pension deficit, for example, underwritten by the taxpayer indefinitely—it could not have meant that.
Let us suppose that the trustees of a hypothetical privatised new scheme invested recklessly and generated a huge deficit, resulting in insolvency. Would the taxpayer be responsible for the trustees’ actions? Similarly, if investment returns went badly for that private company or other private companies, would the taxpayer be indefinitely on the hook for any deficit? Clearly, that is not what the law meant, and it is not our understanding of what it meant; indeed, the more one thinks about it, the more one sees that it could not have been what the law meant. The law was quite clear that people transferring across had to build up benefits on the same—no less favourable—basis as under the scheme they had left. That was the scheme that was set up, which complied with the legislation.
Geoffrey Clifton-Brown
I understand, and I agree with my right hon. Friend’s point. My point was that, at the time of transfer, the scheme was in surplus. Subsequently, the actuarial valuation proved that insufficient money had been transferred from the mother scheme to the daughter scheme. If insufficient money was transferred, the new scheme was never going to perform to the level the pensioners expected.
Steve Webb
Let me address that point. The first thing to say is that the trustees of the scheme the money went into agreed the transfer values. They could have said, “You’re not putting in enough money to reflect the benefits we are going to have to pay out,” but they signed off the transfer values at the time.
The notion of a surplus is strange, because this is an unfunded pension scheme until the point of transfer. It is just a liability on the Government’s books for decades to come. A flow of contributions has come in, and those are given a notional investment return in the Government books. The concept of a surplus is not what this means in plain language; it is not like the Government were sitting on a pot of money that they hid. Government accounting for public service unfunded pension schemes is very different from that for funded pension schemes, where a surplus has a real meaning. It sounds as though what we are talking about means something when it does not. This is about the way the Government accounts for public service unfunded schemes; it is not that money was held back.
A valuation was done on quite a prudent basis. If the money transferred across had been invested in quite a low-risk way, it would, at the point of transfer—that is the crucial point—have been enough to pay the liabilities that were transferred across. However, the world changed subsequently for this scheme and every other scheme: people started living longer, investment returns over time started falling and, as my hon. Friend said, accounting practices changed. All sorts of things changed, which meant that all sorts of private sector company pension schemes began to face bigger deficits. The AEA Technology pension scheme was not different or unique in that respect. The trustees accepted the transfer value, which was fair for the liabilities that were transferred across, even on a quite prudent basis.
Steve Webb
I wonder if I may make more progress, to be fair to my hon. Friend the Member for The Cotswolds, as I want to respond on a few points.
The money went across; the firm was then private. Clearly, the business went on trading for 15 years or so. An issue arises about whether it was a prosperous, expanding firm where something funny went on, or on the brink of insolvency. I want to clarify what went on; my hon. Friend referred to it in part. In November 2011, the company issued a trading statement saying its financial position was deteriorating, and it was discussing the situation with its banks. In April 2012, AEA Technology’s latest forecast indicated that the company would be insolvent on a cash-flow basis by June 2012.
It can be simultaneously true that a company is recruiting more people and that it has terrible cash-flow problems. If the point is reached where it cannot meet its liabilities, it becomes insolvent. To give a sense of scale, the deficit in the pension fund as of 2011, on a standard basis, was £315 million, and the company could not afford to pay £6 million towards it. That is how bad things had got. So on the notion that somehow that £315 million deficit, which was £450 million on a buy-out basis, was going to be cleared, that was not going to happen.
Pre-pack administration is controversial and difficult and happens only when the options are insolvency with jobs lost and the pension fund going to the PPF, or insolvency with jobs saved and the pension fund going to the PPF. That was the choice. In fact, because of the pre-pack, hundreds of jobs were saved. To make a comparison with a straight insolvency, I am advised that the scheme would have got about £1 million with a routine insolvency, but the pre-pack enabled it to get between £6 million and £8 million.
My hon. Friend is quite right: frankly, when a scheme is £300 million in deficit that will not make any difference, because it is going to end up in the PPF anyway, so the benefit is to the PPF and not the members. However, the Government do not encourage struggling firms to shovel their pension fund deficits off to the PPF and carry on trading. It is allowed only where insolvency is inevitable. Our judgment was that that was the state of the company at the time, and the goal was to save some jobs, because the scheme was going to end up in the PPF anyway.
My hon. Friend asked about PPF benefits, and he is right: it is a compensation scheme. It is not a pension scheme that replaces and mirrors the benefits that were to be provided in the scheme. The reason for that is that the money for the PPF comes from other pension schemes, so any improvement in the benefits under the PPF is a bigger levy on employers who run other pension schemes. We should bear in mind that it did not exist much more than a decade ago. When it was set up, it was decided that it would offer broad compensation—100% above pension age, and 90% below, and indexation post-1997. That is the statutory requirement; schemes must index post-1997, and not pre-1997, and that is why the PPF does so.
My hon. Friend asked whether, because the firm was privatised, it should be made a special case. Of course I sympathise, but on the other hand vast numbers of workers now work for private companies that were previously nationalised. If AEA Technology were to be declared a special case, the pension funds of all the people who used to work for BT or British Airways and all the privatised companies would have to have special arrangements, too, with huge cost implications.
The question about the advice note given at the time is important. I have read the GAD note, and its introduction says, at 1.1.3:
“The note is not intended to suggest that any one course of action is better than any other. This would depend on individual circumstances, and if you are unsure of the most suitable course of action you should seek Independent Financial Advice which would take into account your particular circumstances.”
That was the point of the note. People could leave the money where it was, transfer it across to the AEA scheme or take a personal pension transfer. The note was explicit from the start that it was not designed to lead people down a particular route. In a sense, from the Government’s point of view it did not matter. The Government were going to transfer across the cash value of the rights built up, so they did not care whether people transferred across. There would have been no reason for GAD to write a note designed to lead people to a particular outcome. It would cost the Government the same either way.
Sir Alan Haselhurst (Saffron Walden) (Con)
Does my right hon. Friend understand that the frustration of the pensioners and those of us trying to represent them is compounded by the fact that there seem to be different players in the game, including another Department? We are grateful to him for responding to the debate, but perhaps he could nudge the Department for Business, Innovation and Skills to reply to questions I tabled to try to get further answers for my constituents.
Steve Webb
I am very happy to ask colleagues at the Department to respond to my right hon. Friend’s questions. Obviously, as he said, the issue of PPF is a DWP responsibility, but insolvency policy—pre-packs and so on—is a BIS responsibility, and of course he should get prompt responses to his questions. If my hon. Friend the Member for Reading West still wants to intervene I am happy to give way.
Alok Sharma
I wanted to make the point that people affected by the scheme will be listening to the debate, and the bottom line for them is that what the Minister is saying—perhaps he will correct me if I am wrong—is that no compensation or redress will be forthcoming from the Government.
Steve Webb
Clearly, the Government have set up the Pension Protection Fund. As I have said, more than about 10 years ago, people in the situation we are talking about might have received a tiny fraction of the pension they had been going to get. In the present case, the base calculation for those over scheme pension age is 100%. I take the point about indexation, but it is 100%. It is 90% for those under scheme pension age. That is obviously still a significant part of their pension rights. Clearly, the reduction in indexation is important. I would not play that down.
The other thing to mention—my hon. Friend the Member for The Cotswolds did not refer to it—is that at the moment scheme benefits are capped. There is implicitly a salary cap—a cap on the amount of money that someone can get through the scheme. We legislated during this Parliament, with the support of my right hon. and hon. Friends, for that cap to be raised for long-serving employees. One reason I was keen to do that is if a relatively large pension through the PPF is capped, it may not be because the person in question was a ridiculously high earner; it could simply be because of very long service with that employer. I believe that that is so for many of my hon. Friend’s constituents.
I felt it was unjust that the cap applied quite as brutally as it does in those cases, so we are now working on the secondary legislation necessary to get the cap lifted. It will rise by 3% per year for each year above 20 years of service, so long-serving employees will get a higher cap. We are working on the measure, and if we can get it done this year, we will. I suspect that realistically we are probably looking at this time next year. However, I do not have a pot of money to offer beyond that. Clearly, the PPF is there for all employees of private sector companies.
Geoffrey Clifton-Brown
I am grateful to my right hon. Friend for that announcement, which I think affected scheme members will warmly welcome. I mentioned one other matter: being contracted out from the state pension scheme. Given what has happened to the poor people involved, is there any change that can be made, so that they could be considered contracted into the state pension scheme, and therefore receive additional state pension?
Steve Webb
The challenge is that the flip side of being contracted out is that both the employee and the employer paid a reduced rate of national insurance, so lower state benefits accrue, and the scheme essentially replaces part of the state benefit, up to a certain amount, often called a guaranteed minimum pension. The employee benefits from low contributions and has part of the state pension replaced by the scheme pension. I hesitate to say this definitively, but the vast majority of scheme members will certainly get at least the guaranteed minimum pension, I would expect, through the equivalent—through the PPF, now. I cannot swear that that will be true in every case. It will be very difficult to unwind all of that and to go back and say, “We offset your reduced NI, so we work out how much you and the employer saved by reduced NI; we take account of that and give you a bigger state pension and we net off the saving.” That would be a very complex calculation. I think there are occasions when this sort of thing gets unwound, but they are exceptional, and I would not want to raise my hon. Friend’s hopes.
I want to reiterate my sympathy. I believe that the Government transferred a fair amount of money across at the time and fulfilled their legal obligations to provide matching—at least as favourable—benefits. Obviously, we all regret where things ended up. I do not believe that the company was pressured into pre-pack administration. I believe that at the time that was done to save jobs, which it did. I am pleased that PPF exists to provide at least a safety net, and I hope that my hon. Friends will welcome the fact that we have done what we could to improve it during this Parliament. That will benefit a significant number of people who worked for AEA Technology and unfortunately will not get the full pension that they expected.
Equal Pay
(9 years, 8 months ago)
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Emily Thornberry (Islington South and Finsbury) (Lab)
It is a pleasure to serve under your chairmanship, Mr Weir. I thank hon. Members for taking the time to discuss this matter with me and to give their points of view. I hope that this debate will be part of a larger one. It is about time we had that.
Forty-five years ago, Barbara Castle’s Equal Pay Act 1970 inspired a generation of young women and girls, which included me. I was a member of St Mary’s church choir in Guildford the year the Act was passed and I was galvanised into action when I heard that the boys in a church choir in the same parish were getting paid twice as much as we were. With my friends, Bryony and Lesley, I wrote to the rector to complain about that great injustice. That did not go well. He showed what he thought of our protest in his next school assembly when he gave us an honourable mention in his sermon on avarice and greed. While I was inspired by that landmark law, I never imagined that I would be here today, talking about the need for a new one. However, like many other products of the 1970s—Status Quo, mood rings and cassette tapes—the Equal Pay Act has not really stood the test of time.
Thanks to the hit film and west end musical “Made in Dagenham”, many who were not around at the time are now familiar with the circumstances that helped the Equal Pay Act into being. In 1968, women sewing-machinists at Ford’s Dagenham plant walked out after their jobs were classified as less skilled, allowing managers to pay them 15% less than men doing comparable work. The women, who made car seat covers, managed to bring about a complete halt in the plant’s car production during their three-week strike. However, much more than that, they were the catalyst for a series of events that included a 1,000-strong rally for equal pay in Trafalgar square the following year, which culminated in the passage of legislation that, for the first time, explicitly outlawed the unequal treatment of men and women with regard to pay and terms and conditions of their employment.
On Second Reading, Barbara Castle rightly hailed the Equal Pay Act as an
“historic advance in the struggle against discrimination in our society”.—[Official Report, 9 February 1970; Vol. 795, c. 914.]
It certainly was an advance. Today, the wage gap between men and women is a quarter of the size it was at that time. I am afraid, however, that that was not a perfect solution, as Barbara acknowledged at the time. As anyone who was around then will know—as will those who have seen “Made in Dagenham”—the Equal Pay Act was a product of a time when, all too often, pay discrimination was blatant. Many women knew that they were being paid less than their male colleagues for no reason other than being women. The Act was crafted to fit the challenges the situation presented and the time of its passage. As such, its approach was essentially reactive. For example, a woman had to find a comparator: a male colleague who was paid more for similar work. She then had to marshal evidence to present to a tribunal. If successful, she would be compensated for loss of wages and achieve equal pay for the future.
That sounds like an entirely reasonable and simple solution, and at the time it was, but a law written to give women the tools to fight blatant discrimination was, perhaps inevitably and understandably, a blunt instrument. For a start, compensation paid to an individual was limited to that individual. At that stage there was no understanding of the importance of looking also at the impact on others affected in the same way and there was no requirement for offending employers to correct practices that led to such discrimination in the first place. Therefore, unless a claimant joined in an action at the outset, a sister colleague working in the same plant, doing the same work, would have to relitigate the matter from scratch even if her colleague had made a successful claim in identical circumstances. It has never been easy to take an employer to a tribunal, even before the near disappearance of legal aid for employment law cases and the introduction of tribunal fees that have led to an immediate 79% drop in the number of equal pay claims and that have been called—I think rightly—a tax on justice. However, there is more to it than that.
A fundamental problem with the Equal Pay Act is that its authors could not have predicted the extent to which the rise of fractured employment practices and insecure working have changed the context in which the law operates today. As Karon Monaghan, QC, a leading employment law specialist, has pointed out, the requirement that a male comparator be employed by the same employer, or an associated employer at the same establishment, causes
“very significant disadvantage to women employed in public sector services that have been contracted out to private contractors”.
Similarly, the increased fragmentation of pay setting in large organisations has undermined women’s ability to bring a claim under the Act. Robertson v. the Department for Environment, Food and Rural Affairs is a case in point. Civil servants employed by DEFRA sought to bring a claim using a male comparator at the Department for Transport. The Court of Appeal held that, although civil servants were all employees of the same Government, the claim could not be directed at a single source because pay was devolved for individual Departments to determine.
Many other loopholes have helped mire the legislation in inefficiency. Perhaps the most ridiculous is that the law explicitly states that a comparator must be someone employed at the time. Therefore, if a woman leaves a job and a man takes it and gets paid much more, that cannot be used as a comparator. Frankly, that is ridiculous and flies in the face of common sense. That is exactly the sort of thing that should be classed as discrimination and that any Equal Pay Act ought to deal with. I should clarify that I am not by any means blaming the authors of the 1970 Act for flaws that have bogged the legislation down in the intervening years. They were pioneers in the fight for equality and I applaud them. My point is simply that they were addressing the circumstances of their time and what has become increasingly clear to me and others who have studied this issue is that if we truly want to eradicate unequal pay once and for all, we need to follow their example and craft a new law that is fit to meet the new challenges of our time.
Sandra Osborne (Ayr, Carrick and Cumnock) (Lab)
I congratulate my hon. Friend on securing this important debate. When the Equality Act 2006 was passed, it was believed that voluntary pay audits would help to solve the problem. They have not, but she is illustrating how they are not the answer in any case. Does she agree that we need to take a whole new look at the law on equal pay?
Emily Thornberry
I agree completely. While I am pleased that, at last, the Government have now said that they will introduce that section of the Act, we have wasted a large amount of time on arguing over this matter. That minimal change could and should have been implemented much earlier than it will be. However, progress is progress and that should be recognised. I think that leaving it to the good will of companies to do audits led to only five of them doing them. Clearly that is not anything like sufficient.
To go back to Second Reading of the 1970 Act, Barbara Castle was prescient in asking, “What, then, of evasion?” She knew that there were circumstances—foreseen or unforeseen—that could allow the spirit of the law to be undermined. At the time, she said:
“I have no doubt that some employers will try it on…undoubtedly, pockets of discrimination will remain—unless women organise to put a stop to it.”—[Official Report, 9 February 1970; Vol. 795, c. 928.]
A number of women have followed on from Barbara Castle. Her fighting spirit has lived on through the generations of Labour women who succeeded her and in such a debate it is only right that I recognise them. My right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman), who joined Parliament when it was 97% male in 1982, has led the way in fighting for many changes that we take for granted today, such as a national minimum wage; longer maternity leave; higher maternity pay; the Equality Act, as has been referred to; and measures to promote pay transparency, which are a vital tool in tackling pay inequality.
Transparency must be the bedrock of a renewed effort to close the wage gap. As my hon. Friend the Member for Rotherham (Sarah Champion) said when making the case for her Equal Pay (Transparency) Bill:
“Pay transparency would push companies to focus on why the pay gap still exists”.
Further, she said that it
“places the responsibility on employers to be actively conscious of the law on equal pay, and to have policies to address the gap.”—[Official Report, 16 December 2014; Vol. 589, c. 1301.]
She is absolutely right. Perhaps it is a call to action.
Sarah Champion (Rotherham) (Lab)
I apologise for being late, and I am really grateful that the hon. Lady has secured this debate, because we need to challenge this situation all the time. Was my hon. Friend surprised, as I was, by just how big the pay gap is? Before researching it, I expected it to be 2% or 3%, but I find the fact that it is nearly 20% genuinely shocking.
Emily Thornberry
Perhaps I am not as much of an optimist as my hon. Friend. I was not at all surprised. Although the landscape is more complex, the effect is essentially the same: women and women’s work are still systematically undervalued in our country, and we have to be on our toes and be prepared to be imaginative and think laterally to tackle that. We have learnt, as was highlighted in the debate on my hon. Friend’s Bill, that we simply cannot leave it to good will; we need to be radical and brave and be prepared to tackle the situation head on. The change that the Government have agreed to, pushed for by my hon. Friend and many others, is a good start, but we need to go further. As I said, it is a shame that Ministers have dragged their feet, but I will not go any further than that. There is a lot that I could say, but I will be more generous.
As my noble Friend Baroness Thornton pointed out last week, of the 7,000 companies employing more than 250 people, just 270 have signed up to Think, Act, Report, but of those—this is what matters—only five have opted to publish data on their employees’ pay. It is clear, as she put it, that
“a voluntary approach on its own will not deliver the transparency needed to achieve a change in companies’ behaviour”.—[Official Report, House of Lords, 11 March 2015; Vol. 760, c. 668.]
It will seem like an obvious point to make, but when only five out of 7,000 companies—that is 0.07%—opt for transparency, we have to change the law. It took the Government some time to drop their opposition to the idea, but nevertheless, things have moved to a certain extent. However, now we have that, we have to look at what we are going to get in detail, because pay transparency and pay audits are good as slogans, but we need to know what they really mean. We should be celebrating the victory, but we need to go further and get rid of some of the more ridiculous loopholes that I have pointed out.
The law has moved since the 1970s in many ways, including the fact that instead of it being reactive—in other words: “If you don’t do this, you will get sued or taken to court”—Acts of Parliament have taken a more proactive role, beginning with the Human Rights Act 1998. I will not spend time going on about it, but that Act is a living, breathing legal document that puts obligations on organisations to comply with it, and to see their obligations under it and act accordingly. It seems an entirely different type of legislation from the type we have had in the past—and an entirely good one.
We can read across from that to the Bribery Act 2010, which said that if an individual in a company bribed officials, either abroad or at home, unless that company could show that it had systems in place to manage those employees, and therefore the employee was acting wholly outside the way in which the company expected their employees to behave, the company could be liable. We could read across from that to doing the same thing in relation to fraud; so if an individual behaved dishonestly for the benefit of a company, then unless the company could show that it had good management structures in place, the company should be liable.
What has happened with bribery has been really interesting. Experts have been going into organisations and making sure that those organisations have the correct management structures in place and are behaving in a proper way. To use a quote from the leader of my party, it is “responsible capitalism” in action. We can have legislation that brings in responsible capitalism and says to companies, “We expect you to behave in this way. Use your initiative, and get on with it. Stop being complacent and stop saying, ‘Well, it’s not against the law,’ or ‘You can’t take us to a tribunal,’ or ‘You can’t take us to court as things currently stand, so we are not doing anything about it.’”
We could do the same with an equal pay Act, which we should begin with a positive obligation on us all to ensure that equal pay is brought in over the next few years. Women have been waiting for long enough; the obligation should not just be on individual women taking their individual complaints to a tribunal and chipping away at the system one by one, piecemeal by piecemeal. We should all be obliged to ensure that if these women take their cases to a tribunal, they are treated like whistleblowers. If they take a case to a tribunal and they can show that on the face of things, they are a whistleblower, and that, in fact, there is systemic discrimination in that company, action should be triggered by that case. We should then have a more proactive law to ensure that the tribunal can say, “We want a pay audit.”
I know that the Government have changed the law, so that at the end of a tribunal there could be a pay audit, but what does the pay audit mean? It is not sufficient for a pay audit simply to be: “We’ve got 15 women doing the typing, and we’ve got 10 women doing administration, and we’ve got six directors and they happen to be men, and we’re publishing that.” We do not want that. What we want—what I want—is a skills audit to be done under that, so that we look at what skills the women have, in what way they are doing those jobs and what skills they are using. We compare jobs and do a proper jobs and skills audit, so we get under the skin of the box-ticking and look at how there may be a difference between the way in which men and women are paid in organisations.
A tribunal could trigger that after an individual woman has taken out a case. It could be done at the end of a hearing as part of the tribunal’s decision making, or—perhaps even better—at the beginning, when legal action is contemplated. At that point, as part of pre-litigation negotiations, a company or organisation might say, “Yes, we’ll do a proper, profound skills audit.”
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
My hon. Friend is making a characteristically superb speech on the extremely important issue she has brought before Parliament today. What is her opinion on what we should do about tribunal fees? As she will be aware, they have had such a detrimental effect on the number of cases coming forward across all discrimination tribunals.
Emily Thornberry
If I may, I will answer that later—I have quite a lot to get through, but I will come to that in my speech. I want to pray in aid some more quotes from my hon. Friend the Member for Rotherham, who said—so I know I have a friend in this—
“Why should the burden be on women to investigate pay inequality and to ask their colleagues how much they earn?”
She went on say:
“We should not have to wait for whistleblowers”.—[Official Report, 16 December 2014; Vol. 589, c. 1301.]
That is absolutely right. It is not a rhetorical question, but is very apt in highlighting the unfairness of a system that puts the entire burden on individual women to root out discrimination. They are the victims; we should assist them, and our system should make sure that they are given proper assistance.
We need an equal pay Act that enshrines in law the principle that tackling the wage gap is a collective responsibility. Therefore, a company found guilty of discrimination should be ordered to do a proper, profound pay audit. One of the problems with the changes the Government have made so that a tribunal may have a pay audit done is, first, it is not profound enough, and secondly, it is silent on the issue of how it will be enforced, what the plan will be and how it will work. It is important that we have it as a complete package. It is not sufficient to pass legislation by way of gesture—although I am sure that that was not necessarily the entire motivation. We have to look at the situation carefully and see what is going to work. Without that basis, it will not be enough and it will not work.
Under the regulations, there are no guidelines on what constitutes an acceptable plan and the regulations are silent on enforcement and monitoring. What is more, tribunals are not obliged to order a full audit in all circumstances and may opt out of doing so if it is believed that—and listen to this, Mr Weir—
“the disadvantages of an audit would outweigh its benefits.”
So there we are: the audits may be too superficial, they may not be enforced, there may not be a plan, and in any event they can get out of it if the disadvantages outweigh the benefits. That is hardly the radical stuff that we need in the 21st century.
Given that the Government’s actions have demonstrated the inadequacies of a voluntary approach to tackling the pay gap, we need a new law that requires not only stringent monitoring but vigorous enforcement. In my view, audits should be overseen by the Equality and Human Rights Commission and carried out by experts. I am very pleased to have read the paper, which I believe is circulating today, from the EHRC. Although the commission might not agree with all my suggestions with huge enthusiasm, it seems to agree with at least some of them, so I believe that I am making progress. The resulting action plans should be subject to EHRC approval and continued monitoring, with the threat of referral back to the tribunal for non-compliance.
That is the stick, but I am not talking just about sticks. I am also talking about carrots, and the carrot is that we should actively encourage all companies to carry out regular pay audits and eliminate disparities wherever they arise, even if they are not ordered to do so by a tribunal. A voluntary profound audit and evidence of compliance with the recommendations of an approved plan would virtually insulate companies from any equal pay claims. Prima facie, if a company had done these voluntary audits, had a plan and was implementing it, that would be a defence to any claim of unfair pay. It seems to me that that would be a catalyst for a culture change that shifts the onus of rooting out pay inequality from the victims to the employers themselves.
As the changes took root, we could hope for a greatly reduced need for women to pursue claims against their employers via the traditional route set out in the 1970 Act, but inevitably it would be some time before the changes took effect, so, to answer the question asked by my hon. Friend the Member for Washington and Sunderland West (Mrs Hodgson), we would need measures to streamline procedures within the tribunals to make them more efficient.
We could begin by encouraging more negotiation as opposed to litigation. A number of high-profile cases in recent years have seen unions trying to come to agreements with employers and then finding themselves sued by claimants—disgruntled women who believe that the settlements are unfair. Obviously, that has had a chilling effect on the actions of many trade unions. Given that it is a risk, but we do need to ensure that there are more settlements, it seems to me that we need to take into account the limited financial resources of many employers. We also need to understand that they need to balance the sometimes competing interests of back pay for claimants with pay protection for existing male employees. A new equal pay Act should include codes of practice, which should have legal standing. Therefore, if a trade union and an employer came to an agreement, and that agreement complied with the code of practice attached to the new equal pay Act—a code requiring the parties to make sure that there was proper job evaluation that would result in a settlement—both the employer and the trade union, prima facie, should have a defence and should not be able to be sued. That in turn, hopefully, would release them to get back on the front foot and start negotiating some fairness and some equality in the workplace.
Let me now deal with the tribunals themselves. When we introduced the Equal Pay Act, there was a period of bedding in, and we should have the same with a new equal pay Act. I think that the whole Act should be jump-started with a period of five years during which there should not be fees for tribunals for equal pay claims. Also, we should consider carefully whether, if an equal pay claim is successful, there should be six years’ back pay, as there is under the current law, or whether we should change that back to two years, which was in the original Equal Pay Act.
I know that the European Court of Justice has said that, given that our old Equal Pay Act is based on contract law, we should give contract law remedies, which is six years, but I think that we have a very strong argument to make. If challenged, we could go back to the European Court of Justice and say, “This is a matter of public policy. We in Britain are doing something about ensuring that we get equal pay in our country, so during this five-year period, we wish to be able to bring in some more carrots and sticks and actually get some action.” We all know where we want to go. We need to make sure that we have a plan that works and will get us there.
It seems to me that that could reverse some of the damage that has been done. Let’s face it, employers fight absolutely everything, and one can understand why. The loss for them is so huge if they lose a case—they have to pay six years’ back pay, and if it is a collective action, that is a huge amount of money—but that is not to say that they should not be doing something. We have to find a compromise, a practical and pragmatic way through this. I suggest scrapping fees not for ever, but for five years, and there are other things that we should do.
I have no understanding of why the Government got rid of the short form questionnaire. Before an action began, employers had to fill in a questionnaire for a woman who wanted to make an equal pay claim, which would give some facts for the woman so that she could take out her case. The Government scrapped that, saying that it was red tape. That is clearly counter-productive, because if the individual woman employee does know the circumstances in which she is employed, sometimes she will have some grist to her mill—she will have some evidence enabling her to take her case to the tribunal properly—but quite often, surely, it will have the opposite effect and she will realise that actually she is not being discriminated against. What is the problem with transparency? Why should we not have people with equality of arms—equality of arms as best we can—going before a tribunal where we all know what we are talking about in advance of it happening?
A new equal pay Act needs to bring back a questionnaire. Two pages—it does not have to be 50, 100 or 200 pages —with some basic information, so that the woman knows where she stands. That seems to me to be very important. The questionnaire should include questions such as “Have actions been taken out against you in the past?” and “Have you had to pay compensation in the past?” That questionnaire would be a minimal burden on employers and a vital tool for women who are trying to embark on a challenge. We ought to be supporting those women, who in the end are our whistleblowers. In the recent equal opportunities review, Professor Bob Hepple wrote a case that, in my view, is unanswerable, saying how important it is to have a questionnaire brought back into law.
We should go further in streamlining the process. We should also bring in senior judges. Employment tribunals, if they are dealing with a large and complex case, should be able to bring in extra firepower—perhaps a High Court judge—who will manage the more complex cases and ensure that they move through the courts and do not get bogged down. It is extraordinary to hear it, but there is at the moment a case that is still trundling through the employment tribunal and is still going through preliminary issues—they have not even got to trial yet—and it is five years on. This is not Barbara Castle’s vision. We are so far away from it, and we need to look again.
I have been clear about my views on the inadequacy of the existing system of individual tribunal claims. We will still need to have a system in which individual claims can be brought, but much more support needs to be given to individual claimants and we need to streamline the process.
I have touched on the ridiculous loopholes. A new Act would need to clear away the fog that existing laws have created around questions about whom claimants can identify as valid comparators. It should simply state that comparators can be based on all operations of a single employer. There have been cases in which a woman has said, “I don’t get paid the same as the guy in the building around the corner,” and a serious argument has been put up, “Well, you’re not in the same building, so it isn’t a comparator.” That is just not right and we have to do something about it. It is not a realistic excuse for inequitable pay.
While we are at it, our new law should provide much greater clarity on the issue of succession. We should certainly get rid of the idea that a man succeeding a woman and getting more pay is not prima facie evidence that she has been discriminated against.
We also need to look at outsourcing. Oxford law professor Sandra Fredman has written that, under current legislation, a woman doing equal work at the same establishment as a better paid male comparator has no claim if she is employed by an agency or outside contractor. Given the massive rise in the use of outsourcing over the years, it is time that we gave statutory protection to victims of discrimination whose employers hide behind that anomaly. We should require that public bodies reach binding agreements with contractors, setting out and guaranteeing the terms and conditions for transferred employees. I have a number of ideas about how we can deal with other issues of fractured employment—for example, bogus self-employment. You may be pleased to hear, Mr Weir, that I do not intend to go into the details now, but I will publish them on my website for those who are keen to know more.
I do not suggest that my proposals will wipe away the lingering effects of centuries of discrimination and eliminate the wage gap completely and immediately. There are other things that we need to do, such as looking at flexible working. Some of the changes made by the Government have been good, but it is a curate’s egg: some of them have made life more difficult. If my mum falls over and goes to hospital, I will need to look after her while she is there and work out what support she will have when she comes out. If I ask my employer for flexible working and he says, “I’ll have a look at it, Emily, but I can’t get back to you for three months,” that is not flexible working, and it makes life very difficult indeed. We need to look at practical solutions for women’s real lives.
We need to tackle the continued problem of the clustering of women in low-paid occupations, which are related to traditional gender stereotypes. Two thirds of women are in 12 occupational groups, including catering, cleaning and personal care. Women may, as Annie Lennox and Aretha Franklin sang, be coming out of the kitchen, but unfortunately they have not got very far, and we need to make sure that they have the ability or the choice to go further. Even if they choose not to do so, we need to make sure that women’s work is properly valued.
We need better careers advice at the earliest possible stage in a girl’s education. We need to address the chronic shortage of women who take up STEM subjects. Some of the ideas that I have read from the CBI on that aspect of equality policy are welcome, but we need to do more. We should make efforts to increase the number of women who take up careers in those growth industries, but our work is not solely about putting more money in women’s pockets, important though that is. A much more fundamental principle is at stake: if, as a society, we do not make use of the extraordinary range of women’s talents, we are a poorer society in every sense of the word. Since the Government came into office in 2010, the wage gap has continued to shrink, but only by an average of 0.35% a year. By my calculation, if we continue on that trajectory, it will be another 55 years before the gap is finally closed. I hope hon. Members agree that women have been waiting quite long enough. We are no longer content to wait. We need to legislate, and we need to be bold. Let’s get radical. Let’s pass ourselves a new equal pay Act.
Dr Eilidh Whiteford (Banff and Buchan) (SNP)
It is a particular pleasure to serve under your chairmanship, Mr Weir. I congratulate the hon. Member for Islington South and Finsbury (Emily Thornberry) not only on securing the debate but on setting out the case so clearly and persuasively for reform of the Equal Pay Act 1970. I support, in principle, the call for the 1970 Act to be brought up to date and into line with the needs of our society, our economy and our labour market in the 21st century. I am disappointed that only women MPs have shown up for today’s debate. Is it not shocking that there is not a single Government Back Bencher here for such an economically and structurally important debate? The subject of our debate impacts on all our lives and on the lives of men, because they also have to deal with the consequences of unequal pay.
The Equal Pay Act 1970 was introduced the year after I was born. Although women’s participation in the labour market has been transformed in the intervening 45 years, the pay gap remains stubbornly entrenched. Progress has been painfully slow, and even women of my generation, who expected to be the second generation of women to experience equal pay, still find that, on average, our pay falls significantly behind that of our male counterparts.
I want to say a few words about Scotland. Although compared with other parts of the UK, we have had higher rates of women’s participation in the labour market, consistently lower women’s unemployment and higher women’s employment over the past few years, our pay gap appears to be slightly wider. There are different ways of measuring that gap, but according to the Close the Gap campaign, provisional figures for 2014 indicate an 11.5% pay gap in the hourly rate for full-time workers, and a massive 32.4% pay gap between the hourly rate of women working part time and men working full time. Women working part time are earning almost a third less. Given that 78% of part-time workers in Scotland are women, the gap will have a long-term impact on women during their working lives and in retirement, when they are likely to have far lower pensions than men and to be far more susceptible to poverty in old age.
I take this opportunity to pay tribute to the Close the Gap campaign, which is doing much to lobby on equal pay in Scotland. I also pay tribute to Engender and the Scottish Women’s Budget Group, which provide a lot of research and analysis that informs not only the raising of awareness but action to tackle the problems caused by unequal pay. At the moment, on average, a woman in 21st-century Scotland earns £95.60 a week less than a man. As we know, a significant part of the problem is occupational segregation. Women are over-represented in jobs that tend to be low paid, as the hon. Lady has said, such as cleaning, caring, clerical work, catering and retail jobs. It is also significant that in Scotland, according to Close the Gap, 48% of women work in public administration, education and health.
Women represent more than half of workers in only six of the 20 standardised industry classifications, whereas men tend to be more evenly spread across industry groups. Some 80% of administrative and secretarial workers and those in personal service jobs are women. Women are more likely to work in the public sector: 67% of local government workers and 81% of NHS workers, but only a third of chief executives, are women. We know that 97% of child care and early years education staff are women, and 98% of classroom assistants. By contrast, less than 3% of chartered civil engineers in Scotland are women. I have been working hard with my local college and schools to try to change that, and some of the local companies that recruit people with STEM qualifications are keen to encourage such change. We are making progress with getting girls into engineering, but it is a long-term challenge.
The hon. Lady has alluded to the fact that the vertical distribution of pay in organisations often betrays a gendered division of labour. Higher-paid jobs are predominantly done by men, and lower-paid ones tend to be done by women. It is disappointing that efforts to encourage companies voluntarily to audit their pay structures by gender have had such derisorily poor uptake, especially when companies that have done so have changed their policies and practices as a result and become a lot more aware of their own institutional biases.
The hon. Lady made the point at length that it has become much more difficult for women to seek redress if they believe that they are being discriminated against in the workplace. A core underlying factor in the pay gap is the fact that caring for young children and frail, elderly, sick or disabled relatives still falls predominantly to women. It is often perceived to be a woman’s duty to step up at times of family crisis or illness. Consequently, too many women—mothers and unpaid carers—take jobs that they can juggle around their caring responsibilities. Too often, that means part-time, low-paid, insecure and low-skilled work, sometimes on zero-hours contracts, even when those women have the skills, experience and qualifications to take on much higher levels of responsibility. That is a huge waste of human and economic potential, and it costs our economy dear.
I do not mean in any way to undervalue the choices that people make to prioritise their family; I am merely reflecting the lack of choice and flexibility that women have when they are trying to establish a balance between their working lives and their home lives. Our workplaces and our legislation—indeed, our legislative system, although I will not say too much about the House of Commons today—have not kept up with changes in our society and with the aspirations of both women and men to earn a living and have a life. We need to take much more account of the impact of care in our economic models.
A step change in access to child care is as important as other legislative measures to tackle unequal pay. The cost of child care is simply prohibitive for far too many people, especially when it is combined with the cost of commuting to and from work. It acts as a huge disincentive to mothers who are keen to be in the workplace, and who want to work and use their skills and qualifications, but who cannot do so because they cannot earn enough to pay for child care and commuting. That problem gets even worse during school holidays, when many parents find that they are effectively working for nothing because they have to pay for very expensive child care over the holiday period. Sometimes, they have difficulty arranging any suitable child care at all during the summer months. That is helping to entrench occupational segregation, and it is driving the casualisation of employment.
Many things can be said about this issue, and I do not intend to make a long contribution, but introducing free access to child care and increasing the hours of child care to which parents are entitled goes much further than simply introducing tax breaks on child care, which tend to help women in higher-paid occupations, but which do nothing for the millions of women who top up their low pay with tax credits and who are already struggling to make ends meet.
In recent times, we have seen evidence that the pay gap is closing for younger women. Obviously, that is to be welcomed, but we should not be too congratulatory or pretend that the problem has been solved, because such developments are not really a sustainable solution. We need to think much more long term about how those women will fare in later years. If the only way for women to close the gender pay gap is not to have, or to delay having, children, that is simply not sustainable in terms of our demographics.
We therefore need to look at flexible working and at protecting women’s rights in the workplace. I absolutely agree with the hon. Lady that we need to bring the Equal Pay Act 1970 into the 21st century.
Emily Thornberry
Has the hon. Lady, like me, met young women beginning their careers who believe they will always be paid equally with men? When I point out that they would face an increasing gap with their contemporaries if they had children and tried to go back into work, they look at me as if I had two heads. They simply do not believe that that can happen, but we all know it does.
Dr Whiteford
It is interesting, and I have seen it in my own generation. When I was young and fresh-faced, I came out of university keen to build a career. If anybody had told me then that I would be disadvantaged in the labour market, I would probably have laughed at them. However, women find out the truth very quickly; indeed, that happens when they are first appointed to their jobs—in my day, there was still a big gap in starting salaries. There is also the issue of how they negotiate pay increases as they go through their careers. It is therefore difficult for young women to keep pace with their peer group.
It does not matter how hard they work, how committed they are or whether they have children; the pay gap persists for women who do not have children, as well as for those who do. This is not just as simple as whether a woman has a family. The layers of discrimination are often very subtle, and they have to do with the cultural dynamics in organisations and the vertical integration the hon. Lady and I have talked about.
Audits within organisations are therefore important, because they can expose to personnel departments their unconscious biases in offering different starting salaries to men and women and in looking at people’s investment in their careers and career progression. The hon. Lady therefore makes a good point, and I would absolutely encourage young women to be assertive in the workplace and to chase the careers they want. As a society, however, we cannot let that happen at the expense of the work-life balance, and it must be possible for women to pursue careers in a sustainable way, without burning the candle at both ends, and then some. At the same time, it cannot just be women who take responsibility for work-life balance. However, I was just winding up when the hon. Lady intervened, so I will do so now and hand the floor to other contributors.
Yasmin Qureshi (Bolton South East) (Lab)
It is a pleasure to speak under your chairmanship, Mr Weir. I congratulate my hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) on securing this important debate. It is important because we are coming to the end of this Parliament, and who knows what will happen after the election? It is also important because, irrespective of what people think, there is a fundamental principle that those who do the same job should be paid the same amount. It is well documented and accepted that, on the whole, women in the job market do worse than men in terms of pay.
I want to place on record my thanks to the Dagenham machinists who took action over equal pay, leading to the 1970 Act. However, 40 years later, women are still being paid less than men, which means they effectively stop earning, relative to men, on 4 November in any year, which is why that is equal pay day. On average, a woman earns £5,000 less than a man, whether they are in a part-time or full-time job.
There are many reasons for that. One is the motherhood penalty—the impact of having children—which affects women’s careers and earnings. There is also the fact that many women were employed in public sector jobs and are now having to go into the private sector, where the pay gap is often big and where no one knows what somebody may be earning. Since 2008, almost 1 million women have moved to low-paid jobs, zero-hours contracts and temporary jobs. Where women have become self-employed, the pay gap with men is 40%. Women are also still the primary carers for their children, elderly parents and other relatives, and we know how much pressure the growth in the elderly population is putting on the family and particularly women.
The good news is that more women are in upper management in different industries, but research from the Chartered Management Institute last year found that female managers aged 40 or above took home 35% less on average than their male counterparts. There is also a difference in bonuses. The average female director gets £41,956, but the average male director gets £53,010.
Some of what I am saying is in the public arena, but many people are still surprised by it. As has been alluded to, some young women probably think they will be paid equally with someone else because they will be doing a similar job, but they will find that the reality is very different. There is also still gender segregation, in that there are jobs that women do not tend to do. There are not many opportunities for women in those areas, whereas there are for men, who can earn quite a decent income.
I do not want to repeat everything that has been said, but my hon. Friend the Member for Islington South and Finsbury put forward some practical steps Governments can take to deal with these issues, and those should be taken on board. In that respect, I was disappointed earlier in this Parliament when the Government changed the rules on employment tribunals, effectively making them even harder to access and inevitably imposing a financial penalty on people. The mind just boggles.
As a barrister, I did not practise much in employment law, but I did a lot of voluntary work, and I went to employment tribunal appeals on behalf of claimants—many were women, some were disabled and some were from the ethnic minorities. It is not an easy thing for people to go to the tribunal system, as the Government suggested when they made their changes. Someone who is dismissed does not simply say, “Right, the first thing we are going to do is go to a tribunal, because that’s the way to deal with this.” The tribunal system was the last resort for many people. Although many people were discriminated against and unfairly dismissed, only a tiny percentage ever made it to an employment tribunal. At that point, however, there were at least judges and others who could independently evaluate the case.
The current financial penalties did not exist then. Putting such restrictions in place means that people can now rarely go to a tribunal. Constituents have come to me in my constituency about work-related issues. They want to go to an industrial tribunal about the way they have been treated, but they are unable to, because they are blocked from doing so. The changes the Government have brought in are punishing people. At least previously people had recourse to a tribunal, to which they could get access without too much difficulty. Now that is not possible, so will the Minister reconsider the tribunal issue and a return to the previous system? It worked fine, and was not being misused. Before a hearing, there would always be a case management hearing in which the tribunal judge would sit with the parties for discussion of the evidence, to learn what the contentious issues were. The tribunal would concentrate on the narrow issues that were the subject of dispute, and not spend time unnecessarily on issues that everyone agreed about.
I am sorry to say that the present Government’s ideology and rhetoric are anti-employee and anti-trade union. They comment all the time in Parliament on the fact that some Labour MPs have union funding, and make it sound as if it is really bad. Guess what? The unions are made up of working people who choose to give the union their subscription. If the union donates money to a political party, that is because the Labour party is the one that has always pushed for equal pay and workers’ rights and campaigned on discrimination. It created tribunals as useful bodies for people whose rights were being taken away. Now the majority of people cannot get access to a tribunal. There is an ideological dislike of the working person, and we should get rid of that mentality. There is a lot of bullying, intimidation and discrimination in the workplace. Women—and other groups as well—are suffering discrimination. That is not good enough. I ask for the question of tribunals to be reconsidered.
My hon. Friend the Member for Rotherham (Sarah Champion) argued for pay to be published. That is important—it is only right and fair. We believe in transparency and think that everyone should know what is going on. We believe in fairness; but where is the fairness in not telling someone what the person next to them earns, especially if they do the same job? The civil service and public sector are open about pay and grading, and what salary goes with what grade. What is wrong with the private sector doing the same? What does it have to hide? It hides the information because that allows it to discriminate without anyone being able to tell. It allows managers to pick favourites and to discriminate in secret, knowing that no one will jump on them for that. If we believe in an equal, fair and transparent society, that should be one of the first things we should deal with. The Government have been asked to do it, and have not.
Primary legislation would not even be needed, because regulations to require pay to be published can already be passed under section 78 of the Equality Act 2010, before the next election. It is not difficult, and it is important, because it would help women and would discourage employers from the practices in question. If they knew that what they were doing would be in the public domain, they would stop doing it. It would be a concrete step, and not a very complicated one, to help women to argue for fair pay. It would effectively stop private employers discriminating against women and getting away with it. It is not too much to ask for; it is a simple thing in a fair and equal society, and I ask the Minister to consider it.
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
It is a pleasure to serve under your chairmanship, Mr Weir, for what might be my last ever outing in Westminster Hall—that might be true of all of us here for today’s debate.
I congratulate my hon. Friend the Member for Islington South and Finsbury (Emily Thornberry) on securing this timely and important debate and on the work she has done on the issue over the years. Like her and the other hon. Members taking part in the debate, I am passionate about the topic. My hon. Friend’s research and insights are a testament to her dedication to the cause. What she has proposed and the things she has highlighted show why we can never take a back seat and hope for the best. I am proud, as I am sure she is, that the Labour party and Labour movement have always been true to that belief and are committed to continuing that tradition long into the future.
I am pleased that my hon. Friend the Member for Rotherham (Sarah Champion) was able to attend part of the debate, because she introduced an excellent ten-minute rule Bill a few weeks ago on the section 78 transparency clause. I am pleased that that eventually spurred the Government to act on the matter, after five years of sitting on it, and I am pleased to say it went through in the House of Lords last week.
In government, Labour was a strong advocate of gender equality in all sectors of society. We closed the gender pay gap by a third when we were last in office, oversaw a rise in the number of young women going into higher education—when they overtook boys for the first time in history—legislated to protect women from abuse at home and in the workplace, and, in one of the last acts of a Labour Government, in 2010 we passed legislation that would have made huge strides in tackling the gender pay gap by making large companies publish their hourly pay rates by gender. We were also the party that 45 years ago passed the very Equal Pay Act that we are discussing today. Decades have come and gone since the Act became law, but the problem it attempted to solve is still, sadly, very much with us, and today’s debate is a timely reminder of that.
On average women earn 81p for every pound a man earns, and recent figures cited by the Equality and Human Rights Commission show that women in full-time employment in 2014 earned almost a full 10% less than their male equivalents. That is truly shocking. Things are even worse for women in part-time work, where they earned just under 38% less than male full-time employees. The overall gender pay gap for all employees was 19.1%. It seems ridiculous to think that after 45 years of work and 15 years into the 21st century women are still not on equal terms with their male counterparts.
Last year, thanks to the debate led by my hon. Friend the Member for Rotherham, I was fortunate enough to meet some ladies who worked at the Ford plant in Dagenham. The Minister was also present—as was my hon. Friend the Member for Islington South and Finsbury. Anyone who cares about this issue was there. Those women famously went on strike to fight for equal pay, and their actions went a long way to bringing about the first Equal Pay Act, in 1970. Speaking to them it was fantastic to see women still so passionate, committed and hopeful of success, but it was also tragic that after so many years have gone by the imbalance has only been decreased, never destroyed.
Last week, my colleague, Baroness Thornton, highlighted contemporary examples during the debate in the House of Lords on gender and pay, such as the woman working in advertising whose end-of-year bonus was a £100 Liberty voucher, while her male counterpart received £2,000 cash; or the lawyer who was asked to take a pay cut to avoid redundancy, only to find out that none of her male colleagues had been asked to do the same; or the woman who worked in the media and, overhearing two male colleagues boasting about their salaries, realised that both were being paid an average of £10,000 more than she was, despite the fact that she had the same experience. Such gross inequalities are commonplace and things need to change.
Over the years women have had to contend not only with lower pay, but with the problems of glass ceilings, sexual discrimination and a tendency to be penalised in the work force for having children. We have made progress in those fields over the past decades, but too many women are still caught in a culture in which they are told that they have to choose between being carers or having a career, or they have had it drummed into them that they cannot achieve the same things as a man. That mentality holds back our society and all women. We know that companies with more women on their board routinely outperform their rivals, so any glass ceiling that limits a woman’s rise to the top also limits a company’s performance. Glass ceilings should be shattered for the good of everyone. As well as championing equal pay, Labour is committed to opening more boardrooms to women and will legislate to do that if companies do not understand the enormous benefits of doing it themselves. All those problems are linked, and none of them can be solved overnight. Only through dedicated and consistent hard work and pressure can we achieve meaningful and long-lasting success, so it is disappointing that over the past five years we have seen the cause slide down or, more accurately, slide off the political agenda, and it is no wonder that more problems have been caused as a consequence.
As I briefly alluded to, the Government’s record comes up extremely short on addressing inequality. Their record on the gender pay gap in particular can be described only as woeful. The coalition inherited a section of the Equality Act 2010 that would have made all large companies—companies with more than 250 employees—publish their hourly gender pay rates in their annual reports. That requirement was designed to build on existing equalities legislation, thereby boosting transparency and shining much needed light on the issue, which would have forced companies to look at themselves, see the extent of the problem and work towards addressing it. Sadly, the huge value of that section was either completely ignored or totally lost on the coalition Government, who refused to enact it. However, as I am sure all hon. Members present are aware, with two weeks to go before Dissolution, and facing a likely defeat in the House of Lords on Labour’s push for the enactment of section 78, the Government performed another policy U-turn and finally saw the light. I hate to question what may have been a truly Damascene experience for the coalition, but I fear it was a victory for political pragmatism more than for the ideals and values of gender equality. Although the outcome is extremely welcome, the last-gasp way in which it was achieved is sadly symptomatic of a Government who place no priority on equality legislation.
During the past five years, we have seen consistent inaction in the face of repeated calls from the Opposition to do more, or indeed to do anything. One has to wonder how much more we could have achieved on equality if that time had not been totally wasted by the Government. The recent victory only brings us back to where we were in 2010 and, sadly, we have regressed in some areas. The overall gender pay gap fell by a third under Labour, but that rate has slowed dramatically under this Government. The gap actually increased in 2013, partly because the so-called economic recovery saw a rise in low-paid jobs in sectors dominated by women, such as care, and a rise in insecure zero-hours jobs in which women also outnumber men.
Since 2010, the number of equal pay claims brought against employers has fallen from just over 37,000 a year to around 17,000, with the most dramatic fall happening since the coalition’s introduction of tribunal fees. That fall came as no surprise to many Opposition Members, who predicted that it would happen. We were not scaremongering, as we were accused, but it was utterly shocking, none the less. Women are now being put off fighting for equal pay, and the message that the introduction of tribunal fees sends out to women across the country is extremely damaging for the cause. I am interested in the proposals to address the situation suggested by my hon. Friend the Member for Islington South and Finsbury. As she knows, Labour fought against the introduction of tribunal fees and, when we are back in government, we will introduce reforms to ensure that cost is never a barrier to justice.
Equal pay should not have been something for which we had to fight for so long. In truth, more should have been done in the 45 years since the 1970 Act was passed to keep it fresh and doing what it needs to do. My hon. Friend expertly raised a number of issues, and they all need to be addressed. I am sure none of us believes that the Act cannot be improved to meet the new challenges of modern Britain. In her proposals, she made many points and cited many examples with which it is hard to disagree, and I would welcome a much deeper look at those issues. That is why I am pleased that Labour supports a review of the Equal Pay Act to see which areas are working, which areas need improvement and which areas are either redundant or need entirely new provisions to make them fit for our modern world.
The goal of the Equal Pay Act to deliver the promise of equal pay has not changed since 1970. We need to establish whether that means amending the Act or introducing something new, and we believe a comprehensive review is the best way to do that. The Equality and Human Rights Commission recently announced that it is also in favour of such a review, and the commission’s experience makes it perfectly placed to ascertain where best to take the Act from here. I am sure the commission will want to see my hon. Friend’s work when it undertakes that process.
Sadly, this debate is as necessary today as it was in the 1970s. The more momentum we can build for reaching the goal of equal pay, the better for every single person in our society. We may have lost five years to complacency and inaction, but we now have a chance to push on and complete the work for this generation and for generations yet to come. Labour is committed to that fight, and I look forward to a time when such debates are consigned to the realm of history, not politics.
The Parliamentary Under-Secretary of State for Women and Equalities (Jo Swinson)
It is a pleasure to serve under your chairmanship, Mr Weir. I emphasise the word “man,” because you are the sole male MP in the Chamber. The hon. Member for Banff and Buchan (Dr Whiteford) made a good point that men, as well as women, have an important role in fighting for equality. Such debates answer the question whether having more women MPs makes a difference.
I congratulate the hon. Member for Islington South and Finsbury (Emily Thornberry) on securing this debate and on putting forward an interesting set of proposals into which she has clearly put a great deal of thought. I recognise that equal pay will not be addressed in the next 10 days, but she has started the debate now on what needs to be a careful consideration of equal pay laws and whether they are delivering the outcome that we all want. She wrote an article about equal pay for the New Statesman, and she spoke about it in the international women’s day debate a couple of weeks ago. Her contribution is excellent and welcome, particularly because of her legal expertise. It is good that we have diversity in this place, with some Members having legal expertise and some Members not having legal expertise. As a non-lawyer, I found her speech interesting.
In the hon. Lady’s powerful speech, I particularly loved the example of the fight for equal pay beginning with church choirboys and girls, and quite right, too. She ended her remarks by saying, “Let’s get radical,” and I am open to radical ideas for proceeding on these issues. The legislation, which was of its time, may need to be revisited and addressed. Indeed, this is a particularly timely point to do that because, although the Equal Pay Act was passed in 1970, the provisions were rolled into the Equality Act 2010. The Government are undertaking a thorough five-year review of that Act, which will include the equal pay and sex discrimination provisions, with a view to reporting to Parliament later this year. This is a topical and timely point at which to have this wider debate.
The hon. Lady set out the history of the Equal Pay Act, which came from the battle of the ladies of Dagenham —I agree with the hon. Member for Washington and Sunderland West (Mrs Hodgson) that it was a great privilege to meet them—and addressed blatant pay discrimination. It is important to recognise the difference between the pay gap and pay discrimination because it is easy to muddle the two terms. A casual observer might think they are the same thing, but outright pay discrimination is different from the pay gap itself, which is caused by discrimination, yes, but is also caused by other factors. About a third of the gender pay gap is due to occupational segregation. Typically, an engineer will be paid more than somebody working behind the till in a retail establishment. Women tend to be more concentrated in such sectors and in roles that are less well paid. Roughly about a third of the pay gap is because of time taken out of the labour market, largely because child care responsibilities still tend to fall disproportionately on women rather than men, but it is not solely about child care. There is also caring for elderly relatives and other reasons for time out of the labour market.
Other factors contribute to the pay gap, including pay discrimination and other issues that have been discussed today such as unconscious bias and perhaps the social conditioning of girls and boys. We still live in a very gendered world. A man might negotiate a pay rise in a different way from a woman, and that can lead to problems with the pay gap.
The Government’s record in tackling some of the issues has been positive, although I absolutely accept there is still a long way to go. On occupational segregation, there is a dearth of women in the STEM sectors: fewer than 10% of engineers are women, for example. We have the Eurolife initiative. We have recently published new careers advice aimed at parents, called “Your Daughter’s Future”. Although careers advice in schools is important, it is also sometimes about the messages that girls get at home.
I recently visited some apprentices in the construction industry in my constituency. Only one of the apprentices is a girl. I chatted to some of the young men who are doing their apprenticeships there. I said, “Why did you come to do an apprenticeship in construction?”, and one of the young men said, “My family encouraged me to do this.” He said that he had a sister, so I said, “Did they encourage her to go into construction as well?”, and he said, “No, they encouraged her to do a beauty course.” So the family environment matters. We live in a society with a lot of stereotyping generally, so that guide for parents might break down some of the stereotypes that people have in their minds. They have an image of what engineering is. They imagine someone in oily overalls working in a dirty factory environment, but high-tech modern engineering is a million miles from that. Sometimes people’s ideas about what certain careers entail are stuck in another time.
We have also worked with the Institute of Physics and the Royal Academy of Engineering to get role models into schools. STEMNET ambassadors, 40% of whom are women, do a fantastic job in encouraging girls to aspire and to get involved and interested in the issues. Part of the problem is also the wider cultural issue of stereotypes that start to take root at an early age, before children even start school. Certainly, the Government have a role to play in some of that, but, more widely in society, there is cultural campaigning, and the feminist movement is particularly valuable in addressing that.
We touched on time out of the labour market and the pay gap in the international women’s day debate. The 19% pay gap gives us a part of the picture, but while the pay gap is almost eliminated for women in full-time jobs under the age of 40, there is the massive problem that at that stage in women’s lives pay diverges hugely. A big part of that—not the only part—is about child rearing and the fact that such responsibilities are still shared unequally. That is why I am so passionate about the new shared parental leave laws, which I introduced. For babies due from 5 April this year—some might be born already—their mums and dads will be able to choose how to share the leave. I believe that that will drive radical change, and I want to do everything possible to break down some of the cultural barriers that will stop men taking it up. In year one, a certain number of people will take it up. In year five, it will be more, and in year 10 it will be even more, because this cultural change is happening. It is part of men generally being much more involved in their role as fathers.
In the 1950s, it was very unusual for men—a tiny percentage—to be present at the birth of their child, but that is now commonplace. Men used not to take paternity leave, but now most men take some time off after their baby has been born. I think this tide is going in the right direction, but we need to do everything we can to hurry it along.
Emily Thornberry
The Minister is making a very good speech. There is very little that I disagree with, but there is an additional element. Although we should welcome the fact that younger men are prepared to be more actively involved in their role as fathers, they still leave two thirds of the unpaid work in the home to women. Are they hoovering? Are they ironing shirts? Is there anything that can be done to encourage them to do that?
Jo Swinson
Shared shirt ironing would certainly be a winning policy for half the population. The hon. Lady is absolutely right. There are the wider domestic responsibilities, too, which are harder to legislate for, but there is interesting research on the harmony of relationships in which domestic chores are spread more equally.
Flexible working delivers two things. If men are more involved in caring responsibilities, it makes it easier for their partners as mums to combine their roles at work with their mothering responsibilities, but it also means that the workplace starts to change, because it is not only women who want something different. Dads are involved in that as well. That means we can start to reduce the parenting penalty. Flexible working becomes more commonplace and much more normal. That is why the extension of the right to request flexible working to all employees is so vital. Although parents already had it, it is about making it something that is not stigmatised and is just a modern, agile way of working.
The issue is not only about children. The hon. Lady mentioned flexible working in relation to carers. We have changed the legislation so that requests have to be considered in a reasonable manner. In the case of an urgent request for a specific issue, it would not be reasonable to wait three months for a decision. We are piloting a wider piece of work on how to get more carers into employment. Many carers want to stay in employment, and there are different ways in which they might be able to be supported to do so. So we will get the results of those pilots in different parts of the country and perhaps move forward.
I agree with the point about unconscious bias and discrimination. The hon. Member for Rotherham (Sarah Champion) said that it should not be the woman’s burden to find out what people are being paid and then take up the fight. I absolutely agree. The pay gap is not the fault of women, but equipping women with the confidence and skills to negotiate hard for a pay rise is also a sensible thing for us to do. So I welcome the guide by the Everywoman organisation that we were able to publish, which sets out basic things that women might consider when they go into pay negotiations and how they might argue for a pay rise. We should encourage women as well as men to develop such skills. The Women’s Business Council will shortly be publishing a guide for business, called “Mending the Talent Gap”, which looks at why, from an employer’s perspective, dealing with the pay gap is important. It looks at what it is and what they can do about it.
On the specific issue about whether all women in the employ of a particular business should be awarded equal pay, it is currently possible for a tribunal judgment to be read across. Certainly, the risk of future pay claims is one that would encourage most employers to do so. What the hon. Member for Islington South and Finsbury said about comparators was fascinating. She raised the point about whether the comparator had to be employed at the same time. During the 2010 discussions on the Equality Act 2010, the Government agreed to Lord Lester’s amendment that comparators are not limited to people working at the same time as the claimant, which is in section 64(2) of the Act.
The hon. Lady also mentioned delays, which relate to the issue about comparators. One of the reasons for a delay is that the reporting and working out of what the comparators are can be a process that takes months on end. Part of that is inherent in trying to deal with 45 years of case law that has built up, but perhaps that is something that highlights the importance of looking again at whether this can be made simpler.
Emily Thornberry
The Minister has just made a point about someone taking over someone else’s job and whether a person can say they are being discriminated against if the other is paid more. There is a problem with the Equal Pay Act 1970 and it is in the notes of guidance. Perhaps we can discuss this outside Westminster Hall. I appreciate that if Labour is carrying out a review and the Government are also carrying out a review, and we have highlighted this issue enough, presumably the right people will look at this matter.
Jo Swinson
I certainly hope that that will be the case.
The hon. Lady also asked how far back the backdating goes, as the six years is quite a perverse disincentive to companies to get on and deal with this matter. As she rightly said, the potential issue is about a legal issue, in terms of the European Court of Justice ruling. However, it is worth exploring this matter in the review process to see whether anything can be done on it.
As for bogus self-employment, clearly the employment status review that is under way at the moment will look at a range of issues, because bogus self-employment is a problem not only in terms of equal pay but much more widely.
Regarding the pay audits that are in place where a tribunal has found that companies have been found not to have paid men and women correctly, there is redress. The order that was passed in Parliament provides for a £5,000 fine to be imposed for failure to produce an audit, and the audit must be published. The Equality and Human Rights Commission is in a position to monitor these cases and therefore it can pursue an employer further if it suspects that it has not complied properly with what is required of them.
On the particular issue about the exemption if the disadvantages of pay audits would outweigh the advantages, I understand the concern that the hon. Lady raised. Perhaps, however, I can provide some reassurance about the intention behind it. It was primarily put in to avoid the risk that would arise if an employer was close to insolvency, and was told that it had to undertake an audit, the cost of which would tip it into receivership and therefore end up jeopardising the jobs of employees. So it was there for very specific circumstances and not for general circumstances. I hope that she agrees that in the kind of specific circumstance I have just described, the overriding responsibility is to try to safeguard jobs in a business that could still be rescued and that could continue as a going concern. There may be some limited circumstances where that would be the case, but the exemption was certainly not envisaged as a wide exemption.
Pay transparency is hugely important. The hon. Member for Ayr, Carrick and Cumnock (Sandra Osborne) raised it, as did others. As for section 78 of the Equality Act 2010, I will put something straight about its chronology, because I fear that history is being slightly rewritten in this debate. In the debates in 2010 during the passage of the Act, it was my right hon. Friend the Member for Hornsey and Wood Green (Lynne Featherstone) who made the case for pay transparency. The Labour Government at the time were ultimately forced to take a power in the Act to be able to introduce that. However, the Labour Government at the time said very clearly that they wanted to adopt the voluntary approach first; in fact, they gave an undertaking that they would do so for at least three years before bringing anything else forward. In negotiations within government subsequently, that made it much harder to win an argument to go for pay transparency at an earlier stage. I want that to be clearly on the record and I am absolutely delighted that we are bringing forward the proposal to activate section 78 of the Act, because it is a vital tool to shine a light on the problem.
One reason why some people have not liked that idea is that it will make quite uncomfortable reading for some organisations. That is a very good thing, because they should be uncomfortable about a pay gap, and all credit to the five companies that have gone forward and already published information about their pay gaps. However, when I spoke to some of the people who argued for that action within those organisations, they told me how difficult it was to get it through their own legal departments because they were so worried about the outcome.
One important thing to bear in mind is that a difference in pay does not automatically mean that an employer is discriminating, because there are a range of reasons why that difference could exist. Nevertheless, the point is that having that transparency means that questions can be asked, and that if there are particular reasons why there is a difference in pay they can be set out by the employer. It also means that the employer has to ask questions of itself, so that it can provide answers to those questions, whether to employees, to the media or to customers who may be interested. That consciousness about what is going on is hugely important.
Think, Act, Report is the Government’s initiative, and 2.5 million employees are covered by the 270 companies that have signed up to it. It is worth putting on the record that while it has not delivered significant pay transparency, about half the companies who have signed up are conducting pay audits, and so on; they were just not publishing those audits. Also, the initiative was very much designed to be about things wider than pay. Pay is a hugely important issue, but the initiative is also about recruitment of women, retention and promotion within the workplace—all those different strands of gender equality. While legislation has been needed to force the issue of pay transparency, none the less the initiative is valuable, because companies can share best practice and learn from one another about how to promote gender equality.
All those other elements are important if we are going to solve the issue about the executive pipeline—how we get women into more senior roles and how we address these different issues. Organisations may have problems at the recruitment stage. For some sectors and some companies, that is exactly where their problem lies; their intake of new staff out of education is not equal. However, other companies have an entirely different set of issues. They may have a 50:50 gender divide of their intake, but they suddenly lose lots of women part way through their careers. Last night, I was at the everywoman in Technology awards, where a scary statistic that was given was that 41% of the women who go into work in technology leave after 10 years. So, not enough women are going into that industry—only about 15% of jobs in technology are held by women—and there is also a real problem in retaining women. We need to look at all those different elements of gender equality.
Other issues have been raised today. The hon. Member for Banff and Buchan (Dr Whiteford) rightly identified the cost of child care as a key issue. This Government have taken steps to help to address that issue, which I am very proud of. In particular, we have extended free early years education to 15 hours a week for three and four-year-olds, and indeed to 260,000 of the most disadvantaged two-year-olds, which is 40% of two-year-olds. That is really positive, although I hope we can go further in future; that is certainly what I want to see. I also hope that the Scottish Government can be encouraged to follow suit, because their extension of free early years education to two-year-olds currently reaches only 15% of two-year-olds, so there is a more lot more that we can do on both sides of the border.
Dr Whiteford
Of course, the Scottish Government have not over-promised more than we can deliver. That is why we have set those targets. Other parts of the UK have set very ambitious targets but have not been able to meet them. Surely, however, the bigger ambition is to get all children under the age of five into as much child care as their parents need to be able to do a job and fulfil their economic aspirations as well as their child care responsibilities.
Jo Swinson
There are two reasons why early-years education is important. One of them is that, regardless of whether parents are working, once children are over the age of two, and certainly once they are over the age of three, there are real developmental advantages to them having some quality early-years education. The second is related to the point that the hon. Lady raises about the child care element; child care can make the difference to whether it works economically for a family for the parents to be in work, and it is important to provide that choice. One of the big issues is the gap that exists at the moment, because if someone has to wait until their child is two before it makes economic sense to go back to work, and if they are going to have more than one child, that situation can suddenly lead to there being four, five, six years out of the labour market, which can have a really negative impact on someone’s career. If someone had wanted to go back to work, perhaps in between having their children, it is a shame if they are not being enabled to do so. That is another issue that the future Government should look at.
The hon. Member for Bolton South East (Yasmin Qureshi) raised a particular issue about employment tribunal fees, and other Members raised it, too. We are absolutely aware of the drop in equal pay claims. In my role as both a Minister at the Department for Business, Innovation and Skills, and the Minister for Women and Equalities, I absolutely understand the concerns that have been expressed. The Government are committed to a review, including on the equality impacts of this policy of having fees and the level of those fees, and on the impact that those factors have on access to justice.
As Members will know, that policy sits with the Ministry of Justice, which has full access to all the data. I am looking forward to that review. From a BIS perspective, we are very keen to be helpful and BIS officials are already looking at the evidence that is available, which has been published by a range of bodies; those officials are analysing the data they can analyse. Of course, when the MOJ launches its review, at least some of the necessary analysis and work will already have been done. As I say, I understand the concerns that have been raised about this issue.
In conclusion, we have had a positive debate this afternoon. Equal pay is an important issue for us to make progress on, and to continue to make progress on. There is a whole lot of food for thought, in terms of how the shape of equal pay law might be fit for the next 45 years.
MG Rover
(9 years, 8 months ago)
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Richard Burden (Birmingham, Northfield) (Lab)
In the next half an hour, I will talk not about the success story of the UK motor industry today, but about what happened to one company, and about the impact of what happened on a community and a region.
April 2015 will mark 10 years since the collapse of MG Rover. None who lived through that time—I am pleased to be joined by my right hon. Friend the Member for Warley (Mr Spellar)—will ever forget April 2005. The effect was most keenly felt by employees of MG Rover, more than 6,000 of whom lost their jobs, and it was felt by whole families. However, it went further than that: it was about the identity of an entire area.
The collapse of MG Rover happened in the middle of an election campaign. When elections are on, it is usually difficult to get any politicians thinking or focusing on anything else. However, for all of us involved in events at Longbridge in 2005, the election was a sideshow. What was important was just being there at Q gate at Longbridge; and working with the city council, the taskforce and the Government to see if the administration of MG Rover could be prevented from becoming liquidation—and, if not, dealing with the consequences. All this happened in what should have been the centenary year of car making at Longbridge.
Part of me wants to say that I never experienced anything like that before. However, for many of us this was the second time we had been through something like this at Longbridge. In spring 2000, without warning, Rover Group’s then owner, BMW, announced that it was pulling out. Longbridge was to be sold to a firm of venture capitalists called Alchemy, led by Jon Moulton. If that Alchemy deal had gone ahead in 2000, Rover would have been rapidly downsized to become a small manufacturer of MG sports cars.
The west midlands as a whole, and the Government, pressed BMW to at least consider alternatives. The Government intervened to create a Rover taskforce, to bring the region together: it united government, universities, businesses, local authorities and trade unions. I was one of two Members of Parliament on that taskforce. Its task was to see how the region could accommodate downsizing a company on whose future the supply chain, and swathes of midlands industry, was then dependent. Within weeks it was clear that it could have been worse.
Negotiations between BMW and Alchemy collapsed. Rover at Longbridge was at risk of closing altogether. Nobody knows exactly how many jobs would have gone if that had happened—20,000 jobs, perhaps more. Of course, it did not collapse. An alternative to Alchemy stepped in, in the form of the Phoenix Consortium. I will say a little bit more about that in a while.
The fact is, though, that Rover’s remaining in existence for the next five years bought the west midlands time to diversify, and to modernise its automotive and manufacturing base in a programme initiated by the Rover taskforce—and it worked. By the time MG Rover collapsed in 2005, job losses across the region were less than 10,000—less than half of what they would been five years before. However, people who lost their jobs in 2005 were still 100% unemployed; and if they worked for MG Rover, they lost pretty well everything, including their job, buying five years so that thousands of others in the west midlands could keep theirs. That is why there is still a debt to be paid to former MG Rover workers that has not been paid.
That brings me to the Phoenix four. They took over Longbridge on the crest of unprecedented public support. Given that we faced closure, or downsizing with Alchemy, what Phoenix offered made sense: stabilising the company; pricing products more realistically; looking for partners, or a partner, on whom the long-term survival of that company depended; and buying the regional economy the time it needed to adjust.
Getting a partner nearly worked, too. A deal with Shanghai Automotive Industry Corporation was so close towards the end of March 2005 that I was preparing to join the then Secretary of State at Longbridge at a press conference, to announce that negotiations over in China had been successfully concluded. It did not happen. Arguments continue to this day, and will no doubt continue for much longer, about why not. There is not the time now to go into theories about that.
I want to say something about the Phoenix four and what their stewardship of MG Rover involved. We now know, from the Department for Business, Innovation and Skills inspectors’ report, that the four had been engaged in creating a spider’s web of companies and deals that made them millions, but left employees utterly exposed when collapse came. They promised that Phoenix would be a stakeholder effort—that employees would have shares and a stake in the company—but the only shares they gave employees rapidly became worthless, while they kept profitable bits of Phoenix and related companies for themselves. Oh yes, and they even compensated themselves for giving worthless shares to their own employees.
Then there was the cruellest deception of all: the promise of a trust fund for the benefit of employees, which would divide up the assets of the remaining Phoenix companies if MG Rover collapsed. However, even as the Phoenix four were making that promise, they knew that they had taken money out for themselves from those companies and had effectively mortgaged what was left to the banks. Employees have never seen a penny, and the trust fund that was theoretically set up has now been wound up. Again, I say today to the Phoenix four—to John Towers, Peter Beale, John Edwards and Nick Stephenson—“Put your hands in pockets. Your employees did all you asked of them, and you owe them.”
Of course, the Phoenix four did not operate alone. The well known accountancy firm, Deloitte, advised them on many of their deals. That led to inquiries and eventually a fine of £14 million being imposed by the Financial Reporting Council—a record in the history of the FRC. Recently, Deloitte appealed and won some aspects of the appeal. No doubt its fine will be reduced, although we do not know exactly by how much. However, Deloitte was still found guilty on several other counts, particularly relating to conflicts of interest. One key aspect on which it won its case with the FRC was its contention that it is really too much to expect an accountancy firm to identify a broader public interest in such cases. My initial reaction was, “Have I heard that right?” If it is too much to expect Deloitte to take the public interest into account, does that not show that significant reforms to corporate governance rules are needed? I am working on some ideas in that regard with Aston university’s Professor David Bailey.
Looking back at MG Rover specifically, closer scrutiny by the Government of corporate governance arrangements set up by Phoenix—perhaps insisting, in the early 2000s, on having somebody on the board—might have helped to avert some of what the Phoenix four got up to in the meantime. Even if the Phoenix four continue to refuse to prise open their wallets, the Financial Reporting Council could show an example. Most of the fine payable by Deloitte, whatever it is, should go to former MG Rover workers and the communities that are affected, even 10 years later. It is an overwhelming moral case. Will the Minister think about that, consult colleagues and, I hope, endorse that request to the FRC?
Most MG Rover employees got other jobs within a year of the collapse. Some real success stories of individual employees came out of it, but many found themselves in insecure jobs, paid less than when they were at Rover. They were vulnerable when the financial crash came in 2008-09. Those who lived closest to the plant were often the worst affected. That says something about not only the dominance of one company in the Longbridge area, but longer-term changes happening in the south-west Birmingham economy. We see echoes of those changes in suburbs of other cities, too. Those changes have impacted on skill levels and aspiration, and ultimately they affect the life chances of people growing up there.
Yes, a lot of good work is going on—there is a renaissance in parts of the Longbridge area, where the development firm St Modwen is a major player—and yes, we even still make cars at Longbridge. Shanghai Automotive’s European technical centre, under the banner of MG, is based at Longbridge. Those things are good, but they are not enough. Shocking recent figures from the TUC show that my constituency is the worst blackspot in the country for the proportion of residents earning less than a living wage. Local people deserve better and they deserve more from the Government, whoever is elected in May.
Beyond the Longbridge area, the work that the Rover taskforce did between 2000 and 2005 was important in diversifying the regional supply chain. When Longbridge collapsed in 2005, the speed with which that taskforce was brought together again by the Government was impressive. It included the organisation of retraining, the re-engagement of former MG Rover workers in other parts of the automotive industry and in other industries, and the sorting out of problems with banks over car lease schemes, payments, benefits and redundancy issues. It sorted out mechanisms for emergency financial support for otherwise viable companies hit by major cash-flow problems by the collapse of MG Rover. It is still quoted as a model internationally, and the financial support packages devised in the west midlands in 2005 became a model when the general crash hit the UK in 2008-09.
As important as anything to the employees concerned is that when MG Rover collapsed in 2005, their pensions went with it. Were it not for the Labour Government’s pension protection legislation, which came into law just days before, many more ex-MG Rover workers would be facing poverty in retirement. The Pension Protection Fund did not happen by accident; active government made it happen. Will the Minister please learn lessons from that? Will he talk to colleagues at the Department for Work and Pensions to look again at whether the PPF indexing arrangements are as fair as they can be? Will he reflect on how the fragmentation of agencies, the way in which the DWP works today and the current funding of further education would all get in the way of developing the kind of response that there was in 2005?
Will the Minister do the MG Rover test on local enterprise partnerships? In the Greater Birmingham and Solihull area, we have a good LEP, but how many LEPs today could perform the central co-ordinating role that the regional development agency, Advantage West Midlands, did during the two Rover crises in 2000 and 2005? If the LEPs would not react with the same speed and efficiency in bringing partners together, we need to work out what needs to be done. Will the Minister reflect on that?
I leave the Minister with another request, which is to think about what the coalition Government’s employment law reforms would have done had they been in place when MG Rover collapsed. The company went into administration in 2005 and ultimately went into liquidation. There was no money in the pot for redundancy payments. It meant that employees had to apply through their trade unions to employment tribunals for protective awards to ensure that they could get their statutory payments for redundancy from the Government’s national insurance fund, and for protective awards to get even eight weeks of their contractual entitlements from the redundancy payments service. Thank goodness that the trade unions were there to help them with that, but thank goodness, too, that this Government’s employment reforms were not in place.
Under the Employment Tribunals and the Employment Appeal Tribunal Fees Order 2013, which was brought in by this Government, employees would have had to pay £1,500 even to issue a claim at an employment tribunal, and £5,700 to get their cases heard. A total of £7,200 would have probably had to be paid out to get the cases heard properly and resolved—paid by employees who had just lost everything. Guess what? Under the 2013 reforms, when the employer is insolvent, employees cannot get those fees back, even if they win their case, unless they get special dispensation. That cannot be right. Such situations can and do happen to other firms, including firms with no union to represent employees.
Even employees working in a small firm that went bust would have to pay more than £2,000 just to get their statutory redundancy pay and eight weeks’ contractual entitlements paid by the redundancy payments service, so will the Minister take a step back, think about that, and review that order and that law? I would like him to say that the 2013 order will be repealed, but even if he is not prepared to do that, I hope he will at least agree that the fees should be waived where an employer is in administration, receivership or liquidation. The MG Rover story is an example of where that could make a real difference to lives. The MG Rover story gives more than 6,000 individual reasons why the Minister should do that.
The Minister for Skills and Equalities (Nick Boles)
It is a pleasure to serve under your chairmanship, Mr Weir. I congratulate the hon. Member for Birmingham, Northfield (Richard Burden) on securing a debate on a matter that is of such painful importance to so many of his constituents and the communities he represents.
It is perhaps rare but also important that we do not just talk about what is happening today and over the next six weeks—it is easy for us all to become caught up in that—but that we look back at the past and try to make sure that we are always learning lessons from things that went wrong to ensure that they do not happen again. It is obvious that the collapse of MG Rover and the closure of the Longbridge plant was a devastating blow to the community and to the many thousands of people and their families who depended on the jobs they had in that company.
It is a matter of great regret that the people who took over MG Rover when there was an earlier threat of collapse did so without, frankly, proper intentions to build the company and secure its long-term future. Instead, they acted in ways that led to their disqualification as directors or managers of limited companies. Their conduct as directors was found to have fallen well short of the standards of commercial probity and the general conduct befitting the director of a limited company. Frankly, I hope that their part in such a shameful episode that caused so much pain to so many people, and such loss to the community that the hon. Gentleman represents, is a matter of great personal shame to the individuals he has named. I also hope that he agrees that the disqualification penalties that those individuals suffered were appropriate, but he is right to point out that they have not suffered financially in the same way that many of his constituents have. I completely understand why he and many of his constituents feel an abiding sense of injustice at the distribution of the penalties for the failure of MG Rover between those who ran it and those who worked for it so loyally for so long.
The hon. Gentleman referred to the Financial Reporting Council investigation into the action taken by the company’s auditors, which led to a fine that the auditors then appealed. He is right to say that the appeal is ongoing and it is not yet clear what fine will be imposed. He suggested that, when that fine is finally levied, the Financial Reporting Council should consider making the proceeds available in some form to the local community. He will understand that the Financial Reporting Council is an independent body established by the accountancy profession, so it would not be proper for me as a Minister to issue any direction or even guidance, but I will say that he made a very strong argument with which many people with a sense of natural justice will have sympathised. I have no doubt that, when the fine has been determined and is about to be levied, the members of the Financial Reporting Council will have heard him and will no doubt want to respond directly with their thoughts on the matter. I can think of no better use for such a fine than the one he suggested.
The hon. Gentleman asked about the Pension Protection Fund. I agree that it was a fortuitous fact for which we should all be grateful that the fund was introduced in advance—just—of the failure of MG Rover, so that many people were at least able to benefit from that level of protection of the lifelong savings that they had worked so hard to put aside. He also asked about the indexation rates. I am afraid I am not an expert on that, but I will encourage officials in the relevant Department to respond to him directly on his concerns about the indexation rates that apply in that scheme.
The hon. Gentleman asked how, had they been in force at the time, the current rules on access to employment tribunals would have affected his constituents following the failure of MG Rover. That is another subject on which a different Department, in this case the Ministry of Justice, leads. Nevertheless, he will know—and it is important that the public know, so that they are not unnecessarily afraid of the circumstances, should they become victims of a company’s failure—that people can apply for an exemption from or reduction of employment tribunal fees. That way, people with limited means are not excluded from seeking redress. About a third of applications for fee remissions by people making a tribunal claim are successful. He made a reasonable point when he said that one consideration in assessing such applications could well be the circumstances that had led people to go to an employment tribunal, such as the failure of a company in the manner he described.
Richard Burden
I am grateful to the Minister for the spirit in which he is approaching the debate. I recognise that the matter does not fall under his portfolio, but my point is that although remission can be awarded, the problem is that it is all retrospective. People need confidence when they lose their jobs, not afterwards.
Nick Boles
I understand the hon. Gentleman’s point. He referred to the role of trade unions. Perhaps to the surprise of some members of the Labour party, I am generally a supporter of trade unions, because there are occasions—he has outlined one of them—when they have a very important role representing their members and bridging any difficulties that they have in accessing justice. The hon. Gentleman is aware that the Government have announced a review of tribunal fees. I would not want to prejudge that, but he has made a powerful argument about how they might operate in circumstances such as those at MG Rover.
What I am about to say will not necessarily come as much comfort to the individuals who lost their jobs at MG Rover, because although many—indeed, most—found other jobs, the pain and loss that they experienced will never be removed from their memories. Nevertheless, it is important that we reflect on the wider success of the automotive industry, including some at the Longbridge site, as well as of the communities that the hon. Gentleman represents and the wider west midlands. It has been a remarkable feat, almost entirely the work of the people he represents. They have managed to pick up the automotive industry from a pretty dismal place and turn it into one of the most successful automotive industries anywhere in the world. Would that it had happened within the form of MG Rover and without the traumatic experience that so many of his constituents had to undergo, but I am sure that he too would like to thank and pay tribute to those who have managed to rebuild British car manufacturing to its current position and to celebrate the rapid growth in manufacturing employment in his constituency and the broader west midlands region. Long may it continue.
Mr John Spellar (Warley) (Lab)
I know that time is tight for the Minister, but in acknowledging the role of the companies and the work force, will he also pay tribute to the constructive long-term work of the unions in bringing about that success?
Nick Boles
I am happy to do that. Revivals of this sort are never the work of one party or another; they are almost always the result of effective collaboration between far-sighted investors, hard-working and committed employees and trade unions that want to achieve success for everyone because that creates jobs and increasing wages. I am therefore happy to pay that tribute. We can all look forward to continued growth, more jobs, more exports and better wages for people working in the automotive sector and its supply chain in the west midlands.
Torbay (Economic Support)
(9 years, 8 months ago)
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Mr Adrian Sanders (Torbay) (LD)
I think this may be the first time that I have served under your chairmanship, Mr Weir. It is a pleasure to do so.
My speech today is not going to be a big whinge about what has gone wrong. In fact, I am going to praise the Government for many of the things that have happened, but I do want to talk a little about some of the problems facing my constituency that are not unique to it but shared by a number of coastal resort economies.
Many of our key tourist resorts exist as a consequence of two major developments: first, the coming of the railway, which made them accessible to large populations; and secondly, the social change of statutory holiday pay, which gave the working person a few days of the year when they could take a holiday, and in those days the train took them to our tourist resorts. Many of the problems faced by my constituency give us much more in common with Scarborough, Blackpool, Hastings and other tourist resorts than with other communities in the south-west—the region in which my constituency lies. The holiday resorts grew, with big investment in attractions such as piers, theatres, pleasure gardens and all sorts of things that the Victorians loved and cared for, but today that infrastructure is perhaps looking a little faded. I am grateful that this Government are the first to recognise that some of our piers should be funded. I will come to other things funded by the Government, but will also highlight some problems.
All our seaside resorts were hit very hard by the invention of the jet engine, which enabled the development of package holidays. Let us be honest, if people only have a week or two of holiday, will they go to where the sunshine is guaranteed or will they spend a similar amount of money going to a hotel in an English resort? Our English resorts are less likely to be people’s primary holiday destination. They are more likely to be a secondary destination for a short break. As a result, they have had to change their offer.
Other developments have taken place at the same time. Businesses in most of our seaside resorts were family owned. Small hotels and guesthouses ploughed their profit back into the area, keeping electricians, carpenters and others in work in the winter. Today, however, we are more likely to find brands and national chains, which take their profit out of the area; they purchase their food and services centrally and bring them in, so less of the tourism pound stays in the local economy. That is a real challenge for many of our seaside resorts—none more so than Torbay.
Conferences, which were becoming big business, have changed. Government money was invested in convention, conference and exhibition centres in our cities. Furthermore, conferences do not last as long as they used to, so an accessible location became more and more important, which has certainly hurt the coastal resorts on the periphery when competing with inland conference centres for important business.
If I am going to have a whinge, it is going to be a whinge over a period of time. For years successive Governments, whether Conservative or Labour, have tended not to recognise the problems of coastal economies. In the latter days of the previous Labour Government, they came up with a programme called coastal change, which involved a small amount of money to help, but in general terms my constituency in the periphery of the south-west, which is dependent on tourism, at a time of economic downturn has tended to go in early and deeper and to come out later.
The coalition has achieved a lot for my constituency. I will run through some things and the Minister, too, might refer to them. Perhaps the most important was the money for the bypass at Kingskerswell. Connections to the rest of the country are vital for all communities, but for one that depends on visitors that is doubly true. For more than 50 years we have wanted a better road link. One can travel from the Penn Inn roundabout to the north of Scotland without once leaving a dual carriageway or a motorway, but the last five miles from that roundabout into Torquay, a big urban community with a population of 137,000, is a single-track road. That was becoming a barrier—a barrier to investment and to businesses. When businesses based in our area wanted to grow, they would cite road links and move elsewhere. They would grow their business out of the area even though it had started in it.
The Government granted the money and Devon and Torbay councils came together with their contributions, so a dual carriageway will now open in November or December this year, we hope. Already that is having an impact. Businesses that in the past would have grown and moved out of the area are staying. Consequently, unemployment has fallen faster in Torbay than anywhere else in Devon. For the first time ever, we have been coming out of recession faster than other areas, rather than always being the ones to lag behind.
Other things have helped, such as the South West Water rebate. On privatisation, with 3% of the population having to fund 30% of the nation’s coastline, our water and sewage bills rocketed to meet the new clean water directives. The rebate of £50 last year, £50 this year and £50 next year brings us down closer to the national average, but still leaves us with higher water bills than most areas, although not the highest.
Broadband has come to Torbay ahead of most other areas. That is an important aspect of connectivity—not only physical links, but digital links are important. The broadband money that has come in ahead of other areas means that 97% of business addresses in my constituency had access to superfast broadband by the end of last year, although we still have 3% to go.
Assisted area status was taken away 15 years ago, but is now back. That is important to help businesses grow and to support entrepreneurial activity in the constituency. The coastal communities fund, which replaced the fund created by the Labour Government, is also important, although I have to say that it is too small a fund, given that it is oversubscribed.
The regional growth fund is important as well, although there is a real problem with it, and I wonder if the Minister will take this one away with her. The regional growth fund rests heavily on the private sector being able to lever in large amounts of money. An economic community that is mainly small, with few medium and no large businesses, cannot get such leverage so that it is able to compete with the larger inland towns for regional growth funding. I argue that we ought to take a small amount away from the overall regional growth fund budget and put it into the coastal communities fund. That would have a big impact on the ability of coastal communities to access funding to help their businesses to grow and regenerate their economies.
On convergence funding, we argued the case with MEPs and with Ministers and, at last, agreement was reached. The area has benefited greatly from European funds, so to be able to continue to do so has been vital. The Plymouth and south-west peninsula city deal linking in Torbay, in particular with mentoring schemes for young people who have been unemployed for a long time, is vital and long overdue, so I am glad it is happening. Furthermore, having such designations has enhanced our ability to access lottery funding, which historically we have not done as well as other areas in obtaining. Only the other week the Deputy Prime Minister announced £5 million for marketing Devon and Cornwall to overseas visitors, and that was very helpful.
More needs to be done, though. We need to diversify our economy away from its overdependence on tourism. We need three things, the first of which I have already talked about: connectivity, both physical and digital. Secondly, skills are crucial for businesses to be able to grow and expand in the area. We have good schools and an outstanding college but, sadly, too many of our skilled workers—our young people certainly—move away to fill market labour gaps in other areas. They cannot afford to live in Torbay, so affordable housing is the third thing—the missing link. We need to do far more on that.
Our tourism industry could still do with more support, certainly for skills training, to help schools and colleges to make tourism a more attractive option for work. Young people look at tourism and think, “Oh, I don’t want to be a waiter, make beds or do this, that or the other,” yet hotel and restaurant managers and chefs, for example, can earn good money and offer good careers. We need to get across that tourism has some good opportunities and lift the status of tourism in the eyes of school leavers.
Earlier this week, we had a debate in Westminster Hall on VAT and tourism, with the suggestion of a cut in VAT to levels similar to those in the rest of Europe. That would be worth up to £10.5 million a year to the Torbay economy, but it is not only an issue for coastal resorts. We tend to focus on them when we talk about tourism areas, but London and Birmingham need the tourist pound as well. They have new hotels and convention centres to help them get it, but a VAT cut could be just as important to them.
On education, as people in my area have low incomes, a lot of pupils qualify for free school meals, so we have done very well out of the pupil premium, but our overall funding for local government places us in the f40 group of local authorities whose underlying education grant does not reflect where our funding ought to be. I ask the Government to look again at the case made by the f40 campaign, for the sake not just of my own local authority but the other 39 that find themselves in that position.
I mentioned convergence funding. It is absolutely fantastic, but we need to match European funding. That is a difficulty for Torbay and other west country areas. In coastal areas, there are costs that tend not to be met by the local government grant. For example, if an area has a population that goes up two and a half to three times in the summer season, it needs more bins, which have to be collected more often, than it would for a much lower population; it needs more parks and gardens, promenades and car parking spaces, which all have to be maintained for 12 months a year, even though they will be used to capacity only for a short time in the middle of the year.
The local government grant is one subject on which I will have a whinge. It is not just my whinge; it is my Conservative-led council’s whinge and my elected Conservative mayor’s whinge—in fact, it is everybody’s whinge. We have had a poor deal from the local government grant. Although every local authority has had to suffer a reduction in cash, year on year, during this period of trying to get the economy back on track, the fact remains that we have not had the kind of reserves to dip into that other councils have. We hear quite often from Government, “Local government has billions of pounds of reserves, so that justifies us cutting local government budgets,” but some councils, mine included, simply do not have the reserves to cut into any more. There are predictions from my town hall treasury that the council could be bust within a few years unless something changes radically.
The only radical change there really could be would be to the grant system itself, if we looked again at the peculiarities of coastal resorts, which tend to have a high level of people on minimum wage, if they are in work, and of people who are welfare-dependent, as well as large numbers of older people and pensioners who are winding down economically. Areas need somehow to ensure that they can still provide the services that those people need and that still have to be provided when the grant is being cut.
Finally, I will talk about one feature of coastal communities that is becoming critical in my constituency. It is wonderful to have lots of older people. They are really important: they keep the voluntary sector, the local council and public bodies going because they can volunteer their expertise, knowledge and time, but in some communities the demographic balance has become too far skewed towards older people. That need not be a problem if there has been planning for the fact that there will always be that imbalance. The problem comes when the imbalance increases.
In the commercial market, there has been a move towards more and more accommodation for older people. The Minister may well know about this from her own constituency—the McCarthy & Stone and Peverel developments that come before planning committees, which see them as good investments that meet national targets on providing housing. Those developments provide housing for people who move in at the height of their earning capacity and who are often attracted from other areas by national advertising; often they come from areas that are capital rich, and can therefore use their purchasing power. That lifts house prices in the area they have moved to beyond the reach of people who would otherwise have found housing there—I will not use the term “local people”, but working people of working age. After people have moved into those developments, the demands on health and social care services increase. If a community already has a way above average number of people who depend on health and social care services and the balance is suddenly skewed even further, it is really unfair to the people who were already there to have to compete for those services, and the local authority—underfunded by the grant—will not be able to meet the need.
We need more people of working age, who are earning a living, paying taxes and making sure that communities are more balanced. That is not necessarily in the Minister’s power, but it should certainly be taken into consideration when looking at housing targets. They should not be seem only in numerical terms. It should be a case of meeting local housing need, rather than building nationally advertised lifestyle accommodation that in the long term creates enormous financial pressures and competition for services within certain communities.
My speech was not entirely a whinge, then. We have done well, in government and out of it, but we could do better, and I hope we will do so in future.
The Parliamentary Under-Secretary of State for Communities and Local Government (Penny Mordaunt)
It is a pleasure to serve under your chairmanship for the first time, Mr Weir.
I congratulate my hon. Friend the Member for Torbay (Mr Sanders) on securing this debate, which affords me the opportunity to speak about the Government’s track record in supporting growth and creating jobs and to praise the businesses and organisations in his constituency. My experience from visits there is that the people are incredibly resilient and entrepreneurial. They have seized the opportunities the Government have provided to create jobs, improve growth and assist and improve quality of life. I have a soft spot for Torbay—it is the place of my birth—so I am delighted to take part in the debate.
The Government are committed to the devolution of power to the local level. That is not a one-way deal but a partnership: we have given local areas powers to drive economic growth, and in return we are asking them to show strong and accountable leadership and the ability to improve efficiency and outcomes in their area. Lord Heseltine’s independent report, “No Stone Unturned”, which was published in October 2012, recommended that more funding, freedoms and flexibilities should be devolved to local level to help places grow. That was a starting point for the unprecedented degree of devolution that the Government have achieved.
The Government published their response to the report in March 2013 and accepted its key proposal, which led to the creation of the local growth fund and growth deals. They represent a genuine revolution in how our economy is run. For the first time ever, housing, infrastructure and other funding are being brought together in a single pot and put directly into the hands of local authorities and businesses. That means local power to build stronger local economies, taking power and money from Whitehall and giving it to the people and organisations who know their areas best, and so know best.
Through growth deals, every local area in England is sharing money from the local growth fund to spend on projects that matter to their people and local economies. Growth deals have been made in all 39 local enterprise partnerships in England, with £12 billion available for the deals announced in July 2014. The deals have been allocated £2 billion from the local growth fund for 2015-16, and a further £4 billion has been committed for future years. The quality of proposals was excellent, and because of that, in some cases we have committed to funding projects over the long term, providing certainty and stability for local areas.
In the autumn statement, the Chancellor announced a further £1 billion worth of funding to be distributed through local enterprise partnerships. That funding has now been allocated to projects aimed at increasing economic growth around England, including in the hon. Gentleman’s constituency. His constituency has benefited considerably from growth deals made with Heart of South West local enterprise partnership. The hon. Gentleman touched on a number of those initiatives, including £3.4 million towards the Torquay gateway transport scheme, which will deliver road junction improvements and improved cycle links in the Torquay gateway area, much improving access into the town from the northern boundary; £400,000 to improve town centre access; £3 million for an electronics and photonics centre, based at Whiterock business centre in Paignton; a commitment to a new rail station and infrastructure; and £2.6 million of Public Works Loan Board funding to accelerate the delivery of 350 homes at Whiterock.
In the Budget today, the Chancellor announced a new enterprise zone in nearby Plymouth, which will be focused on growing the marine sector. That will be an important driver of growth in my hon. Friend’s LEP area, as businesses in his constituency in the supply chain will benefit. That is on top of an earlier £76 million investment in the south Devon link road, which he referred to.
We set up the coastal communities fund in 2012 in recognition of the unique challenges faced by coastal areas, as the hon. Gentleman said. In his area, £3 million of funding is going towards a new cycleway, which will put Torbay on the map for cycle tourism. To date, that funding has helped more than 320 businesses, supported 95 new business start-ups and created nearly 150 jobs.
Those opportunities would not be seized, taken up and made a reality without the drive and enthusiasm of businesses and other organisations in the hon. Gentleman’s local area. I saw that first hand when I visited the South West Coast Path Association, which had £1 million of coastal communities funding to safeguard nearly 800 jobs. I also visited Brixham Sea Works, a work hub developed with £1.4 million of coastal communities funding, focused on social enterprise and start-up businesses. It is benefiting from the investment in broadband that is also going into his constituency: Heart of South West will get 95% coverage and there were further announcements on broadband today.
The hon. Gentleman is right to touch on the older and ageing population of coastal communities and to point out the advantages that that brings. Next week, I will meet with Age UK to discuss how we can unlock some of that community’s potential. As he mentioned, they have tremendous knowledge and experience and our voluntary sector is propped up by them. They also have a tremendous amount of business experience that we can capitalise on.
On our care reforms, although they are not strictly in my brief, as well as helping alleviate the situation in which self-funders become reliant on state funding, we have also pushed for people to receive or be signposted towards independent financial advice when looking for a care home place or sheltered housing. That is sensible, because it is better for the individual, who gets advice, and for the local authority, which will not wind up with an enormous bill in future years. Our coastal communities are really embracing the opportunity. One community that has a lot of difficulties to overcome is Jaywick, but it has seen the care sector as the route to driving its economic growth. It is not just providing accommodation, but having a centre of excellence for innovation in the sector, providing jobs to the local community. It is a matter of seeing opportunities, not problems, and turning them into positives.
There is more to do. We recently set up the coastal heritage revival fund, which will be a fantastic catalyst. We understand the difficulty of unlocking private sector funding. Sometimes, with heritage assets in seaside towns, whether piers or lidos, we get a perfect storm. Perhaps the local authority does not want to get involved because it is worried about liabilities and the private owner does not have cash to put in, so a huge amount of community good will cannot be unlocked. That fund is designed to be a catalyst in unlocking that and helping those organisations, whether through charitable means, crowdsourcing and all that stuff or through levering in private sector investment. That is what the fund is there to do. I hope that we will see the coastal communities fund evolve and continue its good work.
Mr Sanders
The Minister has spoken a lot about peripheral funds. Sadly, Brixham and Whiterock are not in my constituency, but they are important to my constituents because many of them work there and there is a lot of interaction. She has not, however, addressed local government funding—the bread and butter, core funding for the area—which has gone down by 11%, 4%, 5%, 10% and, in the last year, by 17%. We have done well on the periphery, but the core funding has been reduced.
Penny Mordaunt
The hon. Gentleman anticipates my finale. We are clearly aware of the Barnet graph of doom, which years ago predicted that all local authority budgets would have to be spent on adult social care. Our local authorities are having to adapt. In today’s Budget, we had announcements about some areas getting 100% business rate retention, but we need to shift how we fund our local authorities.
Councils across the country have been doing a fantastic job in becoming more efficient, pushing more money to the front line and finding new ways of doing things. We have supplemented those pots of money with new initiatives. For example, the power to change fund, which will come on stream soon, will enable local people to pick up services that a local authority does not wish to continue. We must think of new ways of working. We recognise the additional challenges that coastal communities face, which is why we set up bespoke support and why they have the first ever Coastal Communities Minister.
From the work I have seen in the hon. Gentleman’s constituency and around the country, I know that local people have the resilience, creativity and drive to be successful. We need to keep listening to them, learning and sharing good practice, but I am confident about the future. The journey has just started; we have got to continue growth, creating jobs and sticking with our long-term economic plan.
Question put and agreed to.