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Mr Speaker
I have to notify the House, in accordance with the Royal Assent Act 1967, that the Queen has signified Her Royal Assent to the following Acts:
Supply and Appropriation (Main Estimates) Act 2015
European Union (Finance) Act 2015.
Oral Answers to Questions
(8 years, 9 months ago)
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Sir Simon Burns (Chelmsford) (Con)
1. What progress he has made on his long-term economic plan.
The First Secretary of State and Chancellor of the Exchequer (Mr George Osborne)
The long-term economic plan is working, but when it comes to building a Britain that lives within its means, we now need to finish the job. Today I am launching the spending review, which will support our priorities such as the national health service and national security. Savings will have to be made in other areas, but we have shown that, with careful management of public money, we can get more for less, and give working people real control over the decisions that affect them and their communities. The spending review will deliver better government and economic security, and the results will be announced to the House on 25 November.
Sir Simon Burns
The summer Budget took clear steps towards the delivery of a higher-wage, lower-tax, lower-benefits society, with the new national living wage as the centrepiece. Does that not clearly demonstrate that the Conservatives are the natural party for hard-working people and their families?
Mr Osborne
My right hon. right Friend is absolutely right. We are building the higher-wage, lower-tax, lower-welfare economy that our country needs if it is to compete in the future and give real opportunities to working people. The new contract that we offer is this: businesses will pay higher wages and pay lower taxes and people will receive bigger pay cheques, but there will be lower welfare. That, I think, is a contract that the British people support.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
The Chancellor’s plan will not look very well planned or very long if it does not include some reference to productivity, higher-quality management, and, indeed, manufacturing. What is he going to do about those key issues?
Mr Osborne
We entirely acknowledge that we need to improve the productivity of the British economy. That is why, after the Budget, we published the productivity plan, which will introduce, for example, an apprenticeship levy to ensure that young people are given the skills and training that they need, and roads funds that will help to ensure that we have the right infrastructure for our country’s future.
As the hon. Gentleman acknowledged this morning in an interesting tweet, I think it was, the Labour party is going back to the 1980s. Those were his words. Unfortunately, the sensible voices of the old intake—
Mr Speaker
Chancellor, sit down, man! I told you to sit down, so sit down! Mr Andrew Tyrie.
Mr Andrew Tyrie (Chichester) (Con)
I am sorry about that, Mr Speaker. I thought that the Chancellor was just getting into gear.
Growth will, of course, depend partly on what the Bank of England does. Over the past five years, the Chancellor and Parliament have granted the Bank huge new powers over not only monetary but, in particular, financial policy, which directly affect millions of people. Does that not make the reforms of the way in which the Bank runs itself that the Chancellor will propose, along with greater accountability for its new board—for which the Treasury Committee, among others, has been pressing for a long time—all the more essential?
Mr Osborne
I pay tribute to the work that was done during the last Parliament by the Treasury Committee, some of whose members are still in their posts, and I again congratulate my right hon. Friend on remaining Chair of that Committee. Today we are publishing the consultation document on the new Bank of England Bill, which will come before Parliament in due course. The Bill follows the reforms announced by the Governor of the Bank, which built on the work done by the Treasury Committee and others. It will ensure that a modern Bank of England is able to exercise the leadership that is required for the delivery of economic and financial stability. Moreover, for the first time—this is crucial, and I think that Parliament will appreciate it—the Bank will be open to the advice of the National Audit Office, and the value for money that that can deliver.
Stewart Hosie (Dundee East) (SNP)
The success of the economic plan, long-term or otherwise, and the potential to improve productivity must be driven in part by sustained infrastructure capital investment, so can the Chancellor confirm that, instead of doing that, the plans he laid out in the summer Budget show total capital expenditure down every single year between 2015 and 2019-20 compared with the March Budget?
Mr Osborne
We made some in-year savings in this financial year in capital budgets that were not going to be well spent. We want to deliver value for money for Scottish taxpayers, as well as for taxpayers across the United Kingdom, but we will be spending more as a percentage of national income on capital investment in this decade than occurred under the last Labour Government.
Stewart Hosie
That is a fascinating answer, because of course the real answer is that in cash terms the spending is down—from 2015-16 onwards down £1.2 billion, £0.8 billion, £0.9 billion, £0.7 billion, and £1.3 billion by the time we get to 2019-20. So we know the forecasts are reduced, we know the Chancellor is cutting more than he needs in order to run a balanced budget, and we know he is undermining the potential for long-term growth, so why did he ignore all the advice, particularly from the OECD who told him two days before the Budget that “gross investment is low” and
“Transport infrastructure investment is poor”?
Does he really expect us to believe every—
Mr Speaker
Order. Questions are too long. We have got the general drift of the argument; let’s hear the answer.
Mr Osborne
We are investing a record amount in our transport system, and the new roads fund will help with transport investment in England, but there will be consequentials and money for Scotland as well. I make this general observation to the hon. Gentleman: if the Scottish Government think we are not spending enough in Scotland, they can raise taxes on the Scottish people and spend all the money in Scotland. They should have the courage to make that argument to the Scottish people.
Stephen Hammond (Wimbledon) (Con)
My constituents would like to commend the Chancellor on the long-term economic plan, which is seeing great success in Wimbledon. Does he agree that the Budget measures, such as the apprenticeship levy and the drop in corporation tax, provide an incentive for employers to take on more apprentices and to reduce the productivity gap in the economy, and see further success in the long-term economic plan?
Mr Osborne
I thank my hon. Friend for the support he has given and welcome the fact that the people of Wimbledon understand that economic security is the bedrock on which we can support the aspirations of working people. The apprenticeship levy addresses the key problem of the lack of skills in the British economy that has bedevilled us for decades. We are now going to introduce a system whereby companies that train their workforces get rewarded, and companies that do not have to make a contribution to the training that they free-ride off.
Chris Leslie (Nottingham East) (Lab/Co-op)
Was it always part of the Chancellor’s long-term plan to scrap the maintenance grants for students from lower-income backgrounds? The Institute for Fiscal Studies said this morning that this change
“will raise debt for the poorest students, but do little to improve Government finances in the long run.”
Can the Chancellor tell us why this was not in his manifesto?
Mr Osborne
We put building a first-class university system right at the heart of our manifesto, and I think the person who made the best observation about this is the person the hon. Gentleman is backing for the leadership of the Labour party: the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper). This is what she said in the House of Commons in 1998 when the last—[Hon. Members: “1988?”] There was a Labour Government then, who abolished grants and introduced loans, and this is what she said:
“I ask the House, having listened to the debate this evening, not to vote for”
maintenance grants which have
“not helped my constituents, but to take the radical approach, to go for the new, fair student loan system”.—[Official Report, 8 June 1998; Vol. 313, c. 831.]
There we have it: support from the right hon. Lady. The hon. Gentleman is old Labour.
Chris Leslie
Well, that fell a bit flat. I was asking about the Chancellor’s manifesto and what he promised. Taking away maintenance grants was always part of his plan, but he did not have the guts to tell students and their families before an election. However much he spins it, he is hitting students with more fees, more repayments and more debt—much more debt. Will he confirm that the poorest students will graduate not with the current £40,000 of debt, but now with an average of £53,000 of debt?
Mr Osborne
We are increasing the maintenance support that students have. We heard all that in the previous Parliament, when the Opposition said our reforms would put off people from low-income backgrounds going to university. In fact a record number of students from low-income backgrounds are now going to university. The Labour party that he is a member of once supported getting rid of grants and introducing loans, but this shows the distance it has come—that it now opposes this measure to support our university system. It has a new intake of old Labour MPs dragging them back to the 1980s, and we know the direction they are heading in: left, left, left—away from the centre ground of British politics and away from support for working people.
Mr Speaker
Some of these answers require a bit of practice, because they suffer from the disadvantage of being not just a bit long, but far too long—hopelessly long.
Robert Neill (Bromley and Chislehurst) (Con)
2. What steps he is taking to ensure as many policy holders as possible are identified before the Equitable Life payment scheme closes to new claimants on 31 December 2015.
The Economic Secretary to the Treasury (Harriett Baldwin)
The Equitable Life payment scheme has already gone to great lengths to find policyholders, including checking against credit histories, a national advertising campaign and sending letters to last-known addresses. Thanks to that, almost 90% of policyholders have been paid. Where possible the scheme is now tracing all those remaining who are due £50 or more against DWP, national insurance numbers and address records.
Robert Neill
I accept that this Government and their predecessor have done much—more than anybody before did—to right an injustice that was done, but Equitable Life policyholders were victims of a regulatory failure, for which ultimately Government is responsible. As the economy grows, is it not time, out of decency and fairness towards that diminishing group of elderly people, to revisit the amount to be paid in compensation?
Harriett Baldwin
I am sure that my hon. Friend will welcome the fact that my right hon. Friend the Chancellor, in his excellent summer Budget, did in fact announce that all eligible non-annuitant policyholders in receipt of pension credit will see their lump sum payments doubled.
James Berry (Kingston and Surbiton) (Con)
3. What steps the Government are taking to support (a) people with savings and (b) home ownership.
The First Secretary of State and Chancellor of the Exchequer (Mr George Osborne)
We need to move Britain from an economy built on debt to a society built on savings and investment and home ownership. That is why we have reformed pensions and rewarded savers. To back home ownership we are building more starter homes, and our new Help to Buy ISA will be available from the beginning of December, because this Government support the aspirations of working people to buy their own home and provide for their future.
James Berry
In my weekly surgeries in Kingston and Surbiton a constant theme is how difficult it is to get on the housing ladder in London. Will my right hon. Friend explain how his Help to Buy policies will help my hard-working constituents? Does he agree that plans for more tax, more borrowing and more spending would put house building and families striving to save for a deposit at risk?
Mr Osborne
My hon. Friend is absolutely right. We are going to help his constituents to buy their own home. The Help to Buy scheme has helped 100,000 people; the new Help to Buy ISA will help the families he represents save up for that deposit; and of course we all still want to see more starter homes being built. We have to address the acute housing shortage in London, and we have the policies to do it.
Barbara Keeley (Worsley and Eccles South) (Lab)
Why are the Government abandoning people with savings and those who own their own homes? They are going to be forced to spend their savings and sell their homes to pay for their social care costs. The Chancellor raised the hopes of those older and vulnerable people before the election with a pledge that no one would have to sell their home to pay for care. Those people will feel badly let down by the Government’s U-turn. Did he ever intend to keep that manifesto pledge?
Mr Osborne
We are going to introduce that cap on care costs in this Parliament. It is a bit rich coming from a Labour party that was in power for 13 years and did absolutely nothing to cap those costs. That is why we are introducing the cap. We have also already introduced the changes that enable people to provide for their future care costs without having to sell their home. We are making those changes, alongside the support for savers and pensions, so that we move away from the society and economy built on debt that was left to this Government to an economy that builds and rewards savers.
Tom Pursglove (Corby) (Con)
4. What steps he is taking to support the creation of new enterprise zones.
The Chief Secretary to the Treasury (Greg Hands)
In the summer Budget we announced the opening of the bidding round for a new wave of enterprise zones throughout England. This round will focus on ensuring that all places in England can benefit from the programme, including rural areas where appropriate, and the Government encourage towns and districts to work with local enterprise partnerships to develop bids. Details of the application process will be released in due course.
Tom Pursglove
I thank the Chief Secretary for his answer. I can advise that, in Corby, we are busily getting together to put in a bid. Corby is also taking in very considerable housing growth. Does he agree that areas that are taking in such growth should also receive the benefit of new jobs and new infrastructure?
Greg Hands
I thank my hon. Friend for his question. He is of course right. During the course of the previous Parliament, the performance of the programme improved, and it was absolutely right to create strong incentives for local areas to take part. That was consistent with our long-term economic plan. We are looking forward to examining his case for an enterprise zone in his Corby constituency in due course.
Mr Gregory Campbell (East Londonderry) (DUP)
When the Government come to review the success of enterprise zones, especially those in the last wave, which includes one in my own constituency, will the Chief Secretary undertake to ensure that job creation becomes a major focus of enterprise zones as they are rolled out across the United Kingdom?
Greg Hands
The hon. Gentleman is absolutely right. Job creation is vital in the enterprise zone programme. Over the course of the previous Parliament, the programme supported more than 15,000 jobs, which brought in £2.1 billion of private investment.
Michael Fabricant (Lichfield) (Con)
19. My right hon. Friend will know that there is already a successful local enterprise zone within the Greater Birmingham and Solihull LEP, of which Lichfield is a member. Will the Government now accept invitations from LEPs, which already have zones, for further zones?
Greg Hands
I thank my hon. Friend for that question. The Government have opened up the bidding round for new enterprise zones, and are encouraging LEPs to work with towns and rural areas to develop new sites. The bidding round is open to all LEPs across England, but only those sites with strong commercial propositions and value-for-money cases will be accepted.
Teresa Pearce (Erith and Thamesmead) (Lab)
5. What estimate he has made of the number of people who will receive a net reduction in income as a result of the policies on tax credits announced in the summer Budget 2015.
The Exchequer Secretary to the Treasury (Damian Hinds)
The Government want to move from a low-wage, high-tax, high-welfare society to a higher-wage, lower-tax, less welfare-reliant society. That means more emphasis on support to hard-working families on low incomes by reducing income tax, increasing the personal allowance, increasing wages and topping up low wages through tax credits.
Teresa Pearce
Many large, profit-making employers currently pay low wages and enjoy a state subsidy of their staff costs via the tax credit system. What ideas and options did the Treasury team consider for clawing back that subsidy from the employers before it decided to take it from the low paid?
Damian Hinds
The hon. Lady highlights an important point and agrees, I think, with the analysis of Alistair Darling who said that an unintended consequence of the tax credit system was that it would end up making that subsidy in this way. We are introducing the national living wage. For someone working full-time, that will be worth £5,200 more in cash terms by the end of the Parliament.
David T. C. Davies (Monmouth) (Con)
Does my hon. Friend agree that the number of people losing out will be vastly outweighed by that of those who will benefit from the higher minimum wage, the higher tax threshold, and the incentive to be out there looking for work?
Damian Hinds
I can confirm that, when we take the fiscal measures of the summer Budget altogether, eight out of 10 families will be better off.
Ms Tasmina Ahmed-Sheikh (Ochil and South Perthshire) (SNP)
The consequence of this Budget is that 1.8 million women in low-paid work across the UK will lose an average of just over £1,000 a year over the next five years. Cuts to child and working tax credits will hit 2.8 million women in total, two-thirds of those affected. Why is it that this Government’s policies are having a disproportionately negative impact on this country’s women?
Damian Hinds
I can confirm that Scotland has the second lowest rate of female unemployment in the European Union, and the second highest rate of female employment. Women will disproportionately benefit throughout the UK from rises in their personal allowance and the introduction of the national living wage.
Gareth Johnson (Dartford) (Con)
When tax credits were first introduced by Gordon Brown, he said that it would cost £2 billion a year. It is now costing £30 billion, which is twice the Home Office budget. Surely the prudent thing to do is to address that ballooning expenditure, which too often simply subsidises low-paying employers.
Damian Hinds
My hon. Friend is absolutely right to say that the cost of tax credits has ballooned. They had trebled in the 11 years to 2010. To get the country back into the black, it was absolutely necessary to take control of it, but doing so at the same time as taking these other key measures.
Shabana Mahmood (Birmingham, Ladywood) (Lab)
Research from the House of Commons Library shows that the effect of the Chancellor’s decision to increase the tax credit taper from 41% to 48% is that workers earning above the income tax personal allowance threshold will face a marginal effective tax rate of 73% in 2015-16, which increases to a staggering 80% in 2016-17. How does the Minister reconcile the Chancellor’s rhetoric about standing up for workers with the reality of a marginal effective tax rate of 80%, which is a hefty work penalty by any measure?
Damian Hinds
The great reforming summer Budget is an integrated package of measures and people cannot just take one element alone. It includes the new national living wage, the increases in the personal allowance and a lot more support that the hon. Lady did not mention on childcare and on skills building. When all those things are taken together, it is a Budget in which the great majority of people will be better off and more are supported into work.
Shabana Mahmood
High tax rates are normally loathed by Conservative Members, but obviously not when they affect ordinary working people. The Chancellor has been busy trying to suggest that his national living wage will compensate for this work penalty, but he knows that the real living wage is calculated on the basis of a full take-up of tax credits—the very thing he has now cut. Is it not the case that, regardless of the rhetoric, all that this Budget has delivered for ordinary working people in our country is a hefty work penalty and a living wage con?
Damian Hinds
As the hon. Lady knows, the Budget contains a large number of measures to help hard-working families, including the rise in the personal allowance, allowing people to keep more of what they earn. Of course the big reform of universal credit is still to come, and it will further help on incentivising work. Throughout all this it is important to help to support people into work and to see them progressing through the hours, particularly through our increases in childcare support, which are worth thousands of pounds to some families.
Chris Philp (Croydon South) (Con)
Does my hon. Friend agree that working families will be enormously helped by the 30 hours per week of free childcare, which, speaking as a father of two-year-old twins, I particularly appreciate?
Damian Hinds
Indeed, families with twins will get double the benefit, but everybody with children aged three and four will get that particular benefit, which is part of a suite of increases in childcare support, including through universal credit and tax-free childcare.
Ms Margaret Ritchie (South Down) (SDLP)
6. What assessment he has made of the implications for his policy of the European Commission’s decision that part of an exemption from the aggregates levy constituted unlawful state aid; and if he will make a statement.
The Exchequer Secretary to the Treasury (Damian Hinds)
In March, a European Commission state aid investigation into the aggregates levy exemptions found almost all of them to be lawful. The Chancellor announced in his summer Budget that these lawful exemptions will be reinstated from August. However, the Commission decided that part of the exemption for shale aggregates provided unlawful state aid. Her Majesty’s Revenue and Customs is in contact with potentially affected businesses, and we will minimise the impact as far as possible.
Ms Ritchie
I thank the Exchequer Secretary for his answer. He will be aware that shale is fundamental to the quarrying industry in my constituency, so can he explain to the House: what persuasive case was made by the Treasury to the Commission in that regard?
Damian Hinds
I appreciate how important the shale industry is in County Down. Of course we are very disappointed that the Commission made this judgment on part of the shale exemption, having previously found all the exemptions to be legal in 2002. I say to the hon. Lady that if any businesses in her constituency have particular issues to raise, they should talk to HMRC, and it will continue to provide support through the staged payments of other taxes through the time to pay scheme.
David Rutley (Macclesfield) (Con)
7. What fiscal steps he is taking to support businesses.
The Financial Secretary to the Treasury (Mr David Gauke)
In addition to the measures we took in the last Parliament, in the summer Budget we announced that we will: cut the main rate of corporation tax to 19% in 2017 and 18% in 2020; publish a business tax road map by April 2016, giving businesses the certainty they need to plan for long-term investment; support business investment by increasing the annual investment allowance from £25,000 to £200,000—its highest ever permanent level; and increase the employment allowance from £2,000 to £3,000.
David Rutley
The announcement that national insurance and corporation tax will both be further lowered will be welcome news for businesses in my constituency and across the country, as we take forward our long-term economic plan. The Labour party went into the election promising to increase tax on businesses. Does my hon. Friend agree that that is the wrong approach and that it is by lowering taxes that we best back businesses to create the jobs needed by our families?
Mr Gauke
First, may I express my sympathies to my hon. Friend’s constituents affected by the tragic incident in Bosley on Friday? I know he raised that matter in the House yesterday. I agree with him that if we want to improve investment in the UK, and therefore productivity, we should be looking to cut corporation tax, not raise it. It would have been a big mistake to have reversed the progress we have made.
Clive Efford (Eltham) (Lab)
Actually, Labour’s plan at the last election was to cut business rates for small businesses. The Chancellor neglected to mention business rates in the Budget, so can the Minister tell us how the review is going and give us a guarantee that it will not result in an increase in business rates?
Mr Gauke
I have to remind the hon. Gentleman that Labour’s manifesto included a plan to increase corporation tax. A review of business rates is being undertaken, and it will report by the end of the year. Remember that it was the previous Government who in 2013 announced a package of business rates cuts worth £2.7 billion, and only this April we introduced a further set of measures that reduced business rates by £1 billion, so we have a proud record on this.
Steve Double (St Austell and Newquay) (Con)
18. Small businesses are the backbone of our economy in Cornwall. While many are thriving under the policies of this Government, those in the tourism industry are experiencing a downturn in business as a result of families not being able to take their children out of school during term time. Is the Minister prepared to meet me to look at the economic impact that policy is having on the Cornish economy and the challenges those businesses are facing?
Mr Gauke
Pupils should be in school during term time, and we believe that needs to be properly enforced. We have said that schools should have greater flexibility in setting their own term dates, which might help address the matter. I am happy to meet my hon. Friend to discuss this, but I know that he has already done so with Education Ministers.
Alison McGovern (Wirral South) (Lab)
Let me bring the Minister back to the important issue of business rates, because we have a crisis on our hands. There are reports that the valuation office is now having to deal with 500 appeals a day. Will he just throw businesses a rope? They do not believe that the Government will change a thing, so will he offer them an interim report on their review in September?
Mr Gauke
We are pressing ahead with various proposals to improve the administration of business rates, but I remind the House that it was the previous Government who brought in measures such as the rebate for retail and the 2% cap, so we have introduced measures to help on business rates and we are introducing measures to improve their administration as well.
Dawn Butler (Brent Central) (Lab)
8. What discussions he has had with the Secretary of State for Work and Pensions on the effect of proposed changes to employment support allowance on levels of employment.
The Chief Secretary to the Treasury (Greg Hands)
We created 2 million jobs in the previous Parliament, and our objective is to create a further 2 million in this Parliament. A crucial part of that is the welfare reforms that we have introduced to help make work pay, which is consistent with our long-term economic plan.
Dawn Butler
Of course we all want to see work pay, but a large section of the community are sometimes unable to work for short periods of time because of illnesses such as sickle cell disease. The Minister seems to have overlooked that group of people.
Greg Hands
I thank the hon. Lady for her question. Our welfare reforms are based on the principle of fairness; fair on those who receive the benefits and fair on those who pay the tax. With regard to a specific group, there is clearly a difference between the work-related activity group and the support group, and we are happy to look at those differences. She is clearly not satisfied with what we are doing, but she is also one of the 48 Labour Members who rebelled last night on welfare, so I do not think that she is satisfied with her Front Benchers’ position either.
William Wragg (Hazel Grove) (Con)
9. What fiscal steps he is taking to support small businesses.
The Financial Secretary to the Treasury (Mr David Gauke)
Small businesses are the lifeblood of our economy and the Government are committed to helping them grow and prosper. In the summer Budget we announced that we will increase the employment allowance from £2,000 to £3,000 to help small businesses with the cost of employment, and support business investment through the highest permanent level for the annual investment allowance. We will also transform the tax system over the course of this Parliament by introducing digital tax accounts.
William Wragg
The Government’s policies are creating a climate of economic confidence. However, they are also having the effect of strengthening the pound against other currencies, particularly the euro, which many small exporters in my constituency tell me is making the price of their exports uncompetitive. What advice and support can my hon. Friend give to those small and medium-sized exporters in Hazel Grove so that they can continue to lead our economic recovery?
Mr Gauke
We recognise that the recent weakness in our European trading partners has presented a particular challenge for SMEs trying to export. The Government are working hard to help British businesses export to a wider variety of destinations, contributing to strong recent performance in key emerging markets. That help includes a £20 million package of support this year for first-time exporters, but we need to do more and our productivity plan sets out how we will do that.
Simon Danczuk (Rochdale) (Lab)
Will the business rates review help small businesses? It is a simple question for a simply smart Minister.
Mr Gauke
I am grateful for that question—I think. It is a review; I do not want to judge in advance what the conclusions will be, but we have engaged very fully with small business organisations and listen very carefully to what they have to say, and we will report by the end of the year.
Rishi Sunak (Richmond (Yorks)) (Con)
10. What progress he has made on his deficit reduction plans.
The Chief Secretary to the Treasury (Greg Hands)
Since 2010, the Government’s long-term economic plan has halved the deficit as a share of GDP, but the job is not yet done. At 4.9%, the deficit remains too high. The summer Budget set out the action that the Government will take to eliminate the deficit and run an overall surplus and start paying down debt. The Government will reduce the deficit at the same rate as over the last Parliament, to reach an overall surplus of £10 billion in 2019-20, according to the forecast from the Office for Budget Responsibility.
Rishi Sunak
Future Governments need flexibility to respond to economic shocks. Does my right hon. Friend agree with me that the Charter for Budget Responsibility and plans to run a fiscal surplus are sensible measures that will provide that flexibility?
Greg Hands
I thank my hon. Friend for that question and he is absolutely right. The reliable way to reduce debt effectively over time is to run a surplus in normal time. Public sector net debt as a share of GDP reached 80.8% last year and the Government are committed to getting debt falling as a share of GDP from here on.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
I note that the hon. Member for Richmond (Yorks) (Rishi Sunak) is a new Member. Perhaps he might have forgotten that before 2015, the Chancellor said that he would eradicate the deficit by this election. May I ask the Minister to confirm that due to the recent fiscal changes in his July Budget, the OBR forecast that an additional £26.8 billion would be borrowed by the public sector between 2016 and 2017, and is it not the case that the Government have missed every single one of their deficit reduction targets?
Greg Hands
What I can confirm is that the surplus will be higher at the end of the Parliament and debt will be lower. But the hon. Lady was a Member in the last Parliament and she voted against every single one of the spending reductions and other measures that we took to deal with the deficit, and all the time she wanted higher deficits, higher debt and higher spending.
Steve McCabe (Birmingham, Selly Oak) (Lab)
11. What estimate he has made of the net change in revenue to the public purse that will arise from tax changes announced in the summer Budget 2015.
The Financial Secretary to the Treasury (Mr David Gauke)
The change in revenue from tax changes announced in the summer Budget is shown in the Budget document. It shows that net receipts increase by between £4 billion and £6.5 billion in each full year of the forecast period. The Government pledged to raise £5 billion per year from tax. The measures announced in the Budget mean that by 2019-20, the Government will have delivered on their targets, raising £5 billion from avoidance and tax planning, evasion and compliance, and imbalances in the tax system.
Steve McCabe
Ernst and Young points out that the rise in household taxes is reducing disposable income, with £47.2 billion of tax rises, including the insurance premium tax and vehicle excise duty. Does the Minister accept that over the course of this Parliament, these tax rises are twice as big as any tax cuts?
Mr Gauke
We said at the election that we would raise a further £5 billion in tax, but we have one question from a Labour MP complaining about the deficit being too high, we have Labour voting against any measures to control spending, and now we have Labour complaining about any tax increases. So where do they stand? We failed to find coherence from the Labour party in the last Parliament and there is no sign of it in this Parliament.
Mr Peter Bone (Wellingborough) (Con)
20. Over this Parliament, the UK will pay £27 billion more in EU contributions because the EU has failed to cut farm subsidies. Would it not help our revenues if the EU actually kept their word?
Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)
The Chancellor has made some noise—indeed, the Minister mentioned this—about closing tax avoidance schemes exploited by private equity and hedge fund managers, specifically the “Mayfair” tax loophole. Can he confirm that he intends to close these loopholes?
Mr Gauke
We achieved a huge amount in the previous Parliament on tax loopholes. In the Budget, the Chancellor set out plans for additional resources for Her Majesty’s Revenue and Customs to raise even more in dealing with tax avoidance and tax evasion. The particular example that the hon. Gentleman mentions relates to the long-standing treatment of the capital gains tax applying to private equity—something that has existed for many years and applied in most other countries. The Budget contained a number of measures that were designed to close loopholes for the private equity and hedge fund industries.
Victoria Prentis (Banbury) (Con)
12. What assessment he has made of recent trends in the level of employment.
The Exchequer Secretary to the Treasury (Damian Hinds)
Employment stands at 31 million having increased by 265,000 over the past year, driven entirely by more people being in full-time work. We are now moving into the next phase of our recovery, with high-quality employment helping to boost productivity and raise living standards across the country.
Victoria Prentis
The security of a good job and a regular pay packet are of fundamental importance to people in my constituency. Can my hon. Friend assure us that he will keep backing business across the country to create more jobs?
Damian Hinds
I can. The Government’s long-term economic plan is working. Since 2010, we have seen the creation of 1,000 new jobs a day, but the job is not yet done. The Government will continue working through the plan to secure Britain’s economic future.
Andrew Gwynne (Denton and Reddish) (Lab)
The Minister will know that the OBR analysis shows that the number of high-skill jobs in the UK economy is shrinking at a time when the number of low-skill jobs is increasing. Is he proud of that record?
Damian Hinds
There has been a growth in the number of jobs in low and medium-skill sectors, and we should all welcome that. [Interruption.] I am sorry—I meant high and medium-skill sectors. The Government’s focus on the productivity plan is all about making sure that as we move into the next phase we are boosting those highest-value-added sectors.
Simon Hoare (North Dorset) (Con)
22. May I point out to the Minister that jobs in the agricultural, food production and dairy sector are of vital importance to my constituents in North Dorset? Will he ensure that the Treasury team do as much as they possibly can to support those vital sectors?
Damian Hinds
Indeed. The food sector, from farming through to retail and catering, is hugely important, contributing £103 billion to the economy and employing one in eight people. In fact, food and drink manufacturing is the UK’s largest manufacturing sector. We will absolutely continue to keep its importance, in Dorset and more widely, at the front of the plan.
George Kerevan (East Lothian) (SNP)
Perhaps the Minister has forgotten that unemployment in the UK rose in the three months to May—the first rise in two years—but actually fell in Scotland. Will he now go to Scotland to talk to the First Minister about her long-term plan for growth?
Damian Hinds
With the growth and employment levels that we have seen in Scotland, it becomes increasingly difficult every day for Scottish National party Members to continue to peddle their line, although I am sure they will. It is true that in the most recent short-term figures there was a slight adverse movement. As we move closer to full employment, we will not see the same large increases in employment every month, but year on year, as the hon. Gentleman will know, the position has improved.
Geraint Davies (Swansea West) (Lab/Co-op)
13. What assessment he has made of the likelihood of the Government meeting its 2020 export target.
The Economic Secretary to the Treasury (Harriett Baldwin)
The 2020 export target of £1 trillion is ambitious. UK Trade & Investment has doubled the number of businesses it helps since 2010. The productivity plan sets out steps to take this further by mobilising the whole of Government behind helping our great British businesses to export much more.
Geraint Davies
Britain needs export growth, not just cuts, to clear the deficit, but the Chancellor is set to miss his export target by a massive £350 billion and to deliver the worst peacetime trade deficit since 1830. What action are the Government taking to combine the creative industries with our manufacturing base to target emerging middle classes in BRIC countries—in particular, China and India—to fire up growth and not rely solely on hitting the poor with cuts?
Harriett Baldwin
We can see the disarray in the hon. Gentleman’s personal life, given that he walked through the Lobby to support one leadership candidate last night, while publicly backing another who abstained. He mentions the importance of exporting to emerging markets. I can confirm that UK exports to China have increased by 72% since 2010, while exports to South Korea—many of them in the creative industries—are up by 148% and to Hong Kong by 63%.
Mr David Nuttall (Bury North) (Con)
Does my hon. Friend agree that British business would find it easier to export to the rest of the world if it did not have to comply with the red tape imposed on it by Brussels bureaucrats?
Harriett Baldwin
My hon. Friend is an example to Opposition Members in the consistency of his political viewpoint. He is right to point out that the euro area has indeed been sluggish. One of the reasons we are experiencing slow growth in the euro area is that our goods exports have been falling to that part of the world. That is why it is so important that we refocus British businesses on exporting to some of the faster growing parts of the world.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
16. That was an extraordinarily complacent answer from the Minister. On this Chancellor’s watch, the UK’s current account deficit has become the largest of any advanced economy, and the value of UK exports is largely what it was in 2010, when the Government came to power. Crucially, that cannot be put down to the sluggishness of the eurozone, because exports to non-eurozone countries have been equally static, and the figure the Minister gave for China reflects demand in the Chinese economy. Does she accept that whatever the strategies the Government have deployed so far, they simply have not worked?
Harriett Baldwin
I am glad that the hon. Gentleman shares my view that it is very important for us to help British businesses to export more. We have some fantastic British businesses, and many of them have started to export. UKTI has doubled the number of companies that it has helped in the past five years. He is absolutely right that we should aim to be very ambitious in this area. I would like to point out that export volumes outside the EU have actually grown by 24% since the first quarter of 2008.
John Pugh (Southport) (LD)
14. What steps he is taking to rebalance the economy away from London and the south-east.
The Economic Secretary to the Treasury (Harriett Baldwin)
The Government are committed to rebalancing the economy and strengthening every part of the UK. The summer Budget announced new commitments to rebalance the economy, including devolving further powers to city regions, inviting a new round of bids for enterprise zones and launching an ambitious transport package for the north of England.
John Pugh
I thank the Minister for that response. Currently, northern cities with elected Mayors have below-average economic performance in their region, whereas northern cities with above-average performances do not yet have elected Mayors. Why are the Government making a fetish of elected Mayors?
Harriett Baldwin
I know the hon. Gentleman has a long-standing point of view in this regard. The important point is that we want to empower local economic areas to grow as fast as London and the south-east. Among the important measures in the Cities and Local Government Devolution Bill are the strong and accountable governance arrangements for, for example, Mayors.
Chris Green (Bolton West) (Con)
15. What comparative assessment he has made of the rates of wage growth and inflation.
The Exchequer Secretary to the Treasury (Damian Hinds)
The hard work on economic recovery is now paying off as people see their pay packets growing faster. The most recent data show real pay growing at 3.2%. Inflation is low: the price of fuels has fallen by 10.5% in the past year and the price of food by 2.2%.
Chris Green
As the MP for Bolton West, I strongly welcome the Government’s northern powerhouse plans to invest in transport infrastructure and in science and skills. What are the Government doing to ensure that Bolton West is increasingly attractive as a place for high-tech business to invest, so bringing in high-skilled jobs and higher wages for my constituents?
Damian Hinds
The Budget contained measures that will boost skills and support high-tech businesses across the north, including in my hon. Friend’s constituency. Greater Manchester local enterprise partnership is invited to bid in the new round of enterprise zones, there will be new regius professorships to support universities and there is an ambitious transport package that will provide much needed infrastructure for the north of England.
Ian Blackford (Ross, Skye and Lochaber) (SNP)
T1. If he will make a statement on his departmental responsibilities.
The First Secretary of State and Chancellor of the Exchequer (Mr George Osborne)
The core purpose of the Treasury is to ensure the stability and prosperity of the economy.
Ian Blackford
We hear from the Institute for Fiscal Studies that the gross impact of the higher minimum wage will be about £4 billion, but that the cuts to tax credits represent about £6 billion. The proportion of children in poverty who are from families in work rose from 54% to 63%, and that statistic can only get worse. It is little surprise that the Government want to redefine child poverty. To change a definition is to change the truth—
Mr Speaker
Order. I thought the hon. Gentleman had a background in the financial world. He cannot have been allowed to prate on at that length when he was busy making important decisions with commercial substance involved. He will really have to practise.
Mr Osborne
Let me give the hon. Gentleman a figure: 200,000 workers in Scotland will gain from the new national living wage, which is 9% of the workforce. The Budget is offering people in Scotland and across the United Kingdom higher wages, lower taxes and, yes, lower welfare, as part of a new contract whereby this country lives within its means. That is one reason why jobs are being created in Scotland.
Luke Hall (Thornbury and Yate) (Con)
T2. I welcome the Chancellor’s recent announcement on Sunday trading hours. What steps can he take to ensure that neighbouring authorities take a joined-up approach, so that consumers have confidence in the consistency of Sunday trading hours and we provide the maximum possible benefit to our economy?
Mr Osborne
I remember visiting a vibrant high street in my hon. Friend’s constituency before the general election. It is for local areas to decide whether to extend Sunday opening hours and to work in partnership with other local authorities. My personal view is that doing so will help to protect the high street because an increasing amount of online shopping is done on Sundays. However, it will be for local people and local authorities to make that decision.
Kate Osamor (Edmonton) (Lab/Co-op)
T5. The Treasury loses out on hundreds of millions of pounds each year by allowing high-earning hedge fund managers to pay capital gains tax at 28%, rather than income tax of 45%, on carried interest payments. Does the Chancellor agree that we should close that loophole so that we can invest the money in properly paid apprenticeships and tackling child poverty?
Mr Osborne
Under the last Labour Government, such people were paying 18% tax. Indeed, people in the City boasted that they were paying lower tax rates than the people who cleaned for them. We have changed that and increased the capital gains tax rate to 28%. As a result of the Budget, we are also insisting that that rate is paid across the venture capital industry.
Rebecca Pow (Taunton Deane) (Con)
T3. I am delighted that in the Budget an allocation of £7.2 billion was made for transport infrastructure in the south-west. Will the Chancellor kindly confirm that that allocation includes funding for the much needed upgrade of the A358, the Henlade bypass and junction 25 of the M5, all of which will pave the way for a new strategic employment site?
Mr Osborne
The short answer is yes. All those vital projects for Somerset and the south-west are included in a massive investment in the transport of the south-west.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
T7. How can the Chancellor justify making people who go out to work worse off while he spends £1 billion on cutting inheritance tax for people who are already wealthy? That is not rewarding hard working; it is rewarding the fortunate few.
Mr Osborne
We have increased the personal allowance, taking low-paid people out of tax, and we are now introducing a national living wage, but we make no apology for supporting aspiration and the human instinct that people have to pass something on to their children. If the Labour party is against that as well, it really is moving backwards rather than forwards.
Tim Loughton (East Worthing and Shoreham) (Con)
T4. The Chancellor’s announcement on the living wage was widely welcomed, but what assurances can he give to residential care homes that offer subsidised places, of which there are many in Worthing, which will suffer from the proposed changes but will not benefit on the other side from the record reductions in corporation tax?
Mr Osborne
The reduction in corporation tax now applies to small companies as well as larger ones, and we have increased the employment allowance, which will help with the national insurance bills of companies in my hon. Friend’s constituency. We are of course aware of the pressures on the social care system, and that is one thing we will address in the spending review.
Mr Virendra Sharma (Ealing, Southall) (Lab)
The Institute for Fiscal Studies pointed out last week that although the number of workless households in poverty has fallen, that fall has been matched by a rise in the number of working households in poverty. Will the Chancellor acknowledge the scale of in-work poverty, and does he accept that cutting tax credits for working families and repealing the child poverty legislation will make the situation worse, not better?
Mr Osborne
I do not accept that cutting people’s taxes and introducing a national living wage will in any way hurt working people—it will help working people. The people who suffer most when we cannot afford Government services and welfare are the poorest in our country, and we saw that when Labour was in office. We have taken the approach of entrenching economic security by making sure that Britain lives within its means. Last night this House voted through the important welfare package. Now we have launched the spending review to finish the job.
Andrew Stephenson (Pendle) (Con)
T6. The announcement that the free childcare available for working parents of three and four-year-olds will double to 30 hours a week in 2017 is excellent news for families across Pendle. Does not the fact that we are delivering that commitment demonstrate that only by taking tough decisions can we afford to provide the high-quality services that hard-working families deserve?
Mr Osborne
My hon. Friend is right, and he does a brilliant job representing his constituents, bringing in investment, and supporting working people in Pendle. Working parents now have the added help of 30 hours of free childcare, which his Labour opponent in Pendle—and indeed Opposition Members here—have still failed to welcome.
Sammy Wilson (East Antrim) (DUP)
The Northern Ireland Assembly faces a £600 million overspend on its budget this financial year as a result of the blocking of welfare reform changes. What steps does the Chancellor intend to take to deal with this fiscal anarchy that is causing disruption in schools and hospitals and for all those who depend on public spending, and drives a coach and horses through spending limits?
Mr Osborne
We are well aware of the difficult situation with the finances of the Northern Ireland Executive, and of the objections in some quarters of the Assembly to what are, I think, sensible welfare reforms that will help people in Northern Ireland into work. We are working with the First Minister and the Deputy First Minister to resolve that impasse, but it is clearly not sustainable to allow a devolved Administration to ignore the controls placed on them. I know that the hon. Gentleman and his party support that position, and we are working with him, and others, to resolve the issue.
Huw Merriman (Bexhill and Battle) (Con)
Will my right hon. Friend continue to encourage Opposition Members to support our Budget proposals, noting that the legislation for a budget surplus comes before the House later this year?
Mr Osborne
There will be another interesting question for this House when we vote on the new fiscal rules. Two weeks ago the shadow Chancellor said that he supported a surplus, yet he has objected to every single welfare change that is being introduced in this House, and he refused to support our legislation last night. We shall see what he says about the spending review in the next few hours, but we cannot will the ends if we do not will the means, and that means difficult choices to ensure that our country lives within its means.
Paula Sherriff (Dewsbury) (Lab)
This Chancellor has missed every one of his own deficit reduction targets, and borrowed more than any other Chancellor in history. Will he confirm that, according to the Office for Budget Responsibility forecast, the fiscal changes in the summer Budget mean £26.8 billion more public borrowing in the next two financial years, and that since 2010 he will have borrowed a full £200 billion more than he planned?
Mr Osborne
I think that is exactly the same question that was read out about half an hour ago—I am not sure that it says much for improved productivity on the Labour Benches.
Martin Vickers (Cleethorpes) (Con)
In her reply to my Westminster Hall debate last week, the Economic Secretary to the Treasury spoke warmly of bank sharing. Will she join me in encouraging HSBC and NatWest, which are proposing to close their branches in Barton-upon-Humber, to delay that closure so that sharing can be seriously considered?
The Economic Secretary to the Treasury (Harriett Baldwin)
Residents in Barton-upon-Humber are very fortunate to have such a champion as my hon. Friend representing their interests. I am sure that as he has raised the matter in the House the banks in question will have noted his point, and he has represented his constituents well.
Mr Speaker
May I reassure the hon. Gentleman that I was not confusing him with Mr McCaig? I thought Mr McCaig wished to ask a question earlier. The hon. Gentleman is unique, we all know who he is and we want to hear him.
Mr Skinner
I can do it any day of the week.
Has the Chancellor of the Exchequer not got a bit of a cheek to be constantly using Question Time to attack the Labour leadership elections—[Interruption.] Take your time! The Chancellor is involved in an election himself. Every time he opens his mouth, it is directed towards the hon. Member for Uxbridge and South Ruislip (Boris Johnson) and the Home Secretary. Does he not realise that the Home Secretary has already knocked him out with the water cannon? Remember, some of us are watching that contest very carefully. The Chancellor should be careful he does not knock himself out.
Mr Speaker
With particular reference to his Treasury responsibilities, I call the Chancellor of the Exchequer.
Mr Osborne
What the hon. Gentleman and the Labour party fail to understand is that we cannot stand up for working people unless we create a strong economy that lives within its means. I would only make this observation: he has a Labour party he is very happy with now, and so do I.
Lucy Frazer (South East Cambridgeshire) (Con)
Does the Chancellor agree that the national living wage will not only improve the lives of working people on lower incomes but will improve the gender pay gap, because it is often women who are the worst paid?
Mr Osborne
My hon. and learned Friend is right. The good news is that the gender pay gap is at its lowest level in history, but we have more work to do and that is why we have introduced the new audits for companies. Of course, women will be the biggest group of winners from the national living wage.
Mrs Emma Lewell-Buck (South Shields) (Lab)
I listened to the Minister and Chancellor talking about tax credits earlier, but here is a bit of reality. A couple in my constituency told me that as carers for a disabled child, they work part time and will lose around £2,000 in tax credits under the Chancellor’s reforms. But they will not benefit from a higher minimum wage because their jobs are professional level and their hourly pay is already above that rate. Does the Chancellor think it is fair that his reforms will make families with disabled children poorer?
Mr Osborne
We have to look at the entire Budget package, because that is the new contract. Part of that is a tax cut, which I suspect will help the hon. Lady’s constituents, because we have increased the personal allowance. They may also be eligible for the new 30 hours of free child care. Many more of her constituents will also benefit from the national living wage. But what is the alternative? It is to have an unsustainable welfare system, the cost of which goes up and up and squeezes out spending on infrastructure, education and science, and puts our country at risk from economic storms abroad. That is what we lived through 10 years ago and we do not want to go back there.
Mr Nigel Evans (Ribble Valley) (Con)
The Chancellor is the darling of beer drinkers throughout the country, with his three tax cuts on beer and getting rid of the tax escalator. Will he continue his support for the brewing industry? Should he do so, it may even help any leadership bid that he may or not make at some time in the future.
Mr Osborne
I shall take that as an early representation for next year’s Budget. We have been able to help by reducing beer duty and ending the beer duty escalator that was putting pubs out of business. Other measures, such as those on apprenticeships and the employment allowance, are also helping the pub industry which is such a big employer of young people in our country.
Margaret Ferrier (Rutherglen and Hamilton West) (SNP)
The Scottish renewables sector supports more than 11,000 jobs, as well as contributing to a sustainable economy. Will the Chancellor please explain his reasoning for the removal of the climate change levy exemption for renewables, and tell the House whether he plans to start charging alcohol duty on soft drinks next?
Mr Osborne
I can certainly rule out the latter point. The point about the renewables levy is that it was introduced before the framework that we now have in place to support long-term investment in renewable energy through the levy control framework and the renewables obligation. We found that a third of the money, which after all comes from the electricity bills paid by the people we represent in Parliament, was going to overseas generators, so it was not really a fair approach. The approach we are taking now—supporting long-term investment in renewables and building up the UK industry—is the right one.
Mr Speaker
Order. I am sorry to disappoint remaining colleagues. Treasury questions is a box office occasion and demand tends always to outstrip supply. We must now move on.
Speed limit and traffic calming on Monmouth Road in Walsall
Mr Speaker
Order. I think we need to hear fully this petition about the speed limit and traffic calming on Monmouth Road in Walsall, which we cannot adequately do if people are leaving the Chamber noisily. People will leave the Chamber in a decorous manner, following the example of the hon. Member for North Dorset (Simon Hoare), who is leaving in a very statesmanlike fashion. The hon. Member for Walsall South (Valerie Vaz) is assured of a fair hearing on behalf of her constituents.
Valerie Vaz
Thank you very much, Mr Speaker. The petition, which has been signed by 223 people, states:
The petition of residents of the UK,
Declares that there is currently a 30mph speed limit on Monmouth Road, Bentley, Walsall, where there is a primary school and the entrance to a playing field. The playing field entrance is in constant use by dog walkers, families and the football clubs. Many vehicles travel at excessive speeds. There is a risk of serious incident if measures are not put in place to reduce the speed of vehicles using Monmouth Road.
The petitioners therefore request the House of Commons to urge Walsall Metropolitan Borough Council to implement a 20mph speed limit and traffic calming measures on Monmouth Road, Bentley, Walsall.
And the Petitioners remain, etc.
[P001537]
Humanitarian situation in Yemen
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
I rise to present a petition on a matter of great importance to people in my constituency and across the UK. I have received numerous representations from my constituents about the dire humanitarian crisis in Yemen. A petition on the matter has been signed by more than 600 individuals in Liverpool alone.
Due to the ongoing conflict thousands of people have lost their lives and homes, and utilities, ports and airports have been destroyed. The United Nations has declared its highest level humanitarian emergency in Yemen. The British embassy has closed, and there are now no embassies open in the country. Many British citizens, or immediate relatives of British citizens, are currently stranded in Yemen. Because of the conflict they cannot cross into neighbouring countries to apply for the visas that they need. Little or no support is being offered to help these people. The petition states:
The petitioners therefore request that the House of Commons urges the Government to take urgent action to ease the suffering of friends and families of British citizens in Yemen by speeding up and simplifying the application process for visa or entry requirements, by allowing the issuing of temporary sponsored visas for relatives and dependents of British citizens residing in the UK who are waiting for visas or whose passport applications are being processed and by coordinating evacuations for vulnerable British citizens who are in urgent need of evacuation from Yemen.
Following is the full text of the petition:
[The petition of residents of the UK,
Declares that the dire inhumane situation in Yemen due to the armed militia conflict (civil war) and the coalition bombing has led to thousands of people losing their lives or being injured as well as the destruction of thousands of homes, utilities, ports and airports; further that the United Nations now recognises the situation in Yemen as the world’s biggest humanitarian crisis; further that many British citizens and sole dependents and relatives of British citizens are stranded in Yemen; further that the petitioners have concerns about the requirements for settlement visas because the visa requirements cannot be met by many people and because Yemeni nationals who are spouses or children of British citizens cannot cross over into neighbouring countries and cannot apply for such visas as there are no embassies in Yemen; and further that a petition in Liverpool was signed by over 600 individuals.
The petitioners therefore request that the House of Commons urges the Government to take urgent action to ease the suffering of friends and families of British citizens in Yemen by speeding up and simplifying the application process for visa or entry requirements, by allowing the issuing of temporary sponsored visas for relatives and dependents of British citizens residing in the UK who are waiting for visas or whose passport applications are being processed and by coordinating evacuations for vulnerable British citizens who are in urgent need of evacuation from Yemen.
And the petitioners remain, etc.]
[P001536]
Humanitarian situation in Yemen
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
I present this petition on behalf of many of my constituents, but it is also of concern to many citizens throughout the United Kingdom. The horrendous humanitarian crisis in Yemen is causing great distress to my constituents, as many British citizens’ sole dependants and relatives are stranded in dire, life-threatening circumstances. The petition states:
The petitioners therefore request that the House of Commons urges the Government to take urgent action to ease the suffering of friends and families of British citizens in Yemen by speeding up and simplifying the application process for visa or entry requirements, by allowing the issuing of temporary sponsored visas for relatives and dependants of British citizens residing in the UK who are waiting for visas or whose passport applications are being processed and by coordinating evacuations for vulnerable British citizens who are in urgent need of evacuation from Yemen.
Following is the full text of the petition:
[The petition of residents of the UK,
Declares that the dire inhumane situation in Yemen due to the armed militia conflict (civil war) and the coalition bombing has led to thousands of people losing their lives or being injured as well as the destruction of thousands of homes, utilities, ports and airports; further that the United Nations now recognises the situation in Yemen as the world’s biggest humanitarian crisis; further that many British citizens and sole dependants and relatives of British citizens are stranded in Yemen; further that the petitioners have concerns about the requirements for settlement visas because the visa requirements cannot be met by many people and because Yemeni nationals who are spouses or children of British citizens cannot cross over into neighbouring countries and cannot apply for such visas as there are no embassies in Yemen; and further that a petition in Liverpool has gathered many signatures.
The petitioners therefore request that the House of Commons urges the Government to take urgent action to ease the suffering of friends and families of British citizens in Yemen by speeding up and simplifying the application process for visa or entry requirements, by allowing the issuing of temporary sponsored visas for relatives and dependants of British citizens residing in the UK who are waiting for visas or whose passport applications are being processed and by coordinating evacuations for vulnerable British citizens who are in urgent need of evacuation from Yemen.
And the petitioners remain, etc.]
[P001538]
Chemotherapy Drug Abraxane
Nic Dakin (Scunthorpe) (Lab)
The petition states:
The Petition of residents of the UK,
Declares that the chemotherapy drug Abraxane, used for treating people with pancreatic cancer, is being reviewed by the Cancer Drugs Fund panel at the end of July 2015; further that the drug should be retained on the Cancer Drugs Fund list of approved drugs; further that pancreatic cancer has the worst survival outcome of any of the 21 most common cancers with less than 4% of patients surviving 5 years or longer and that these low survival rates have remained virtually unchanged for the past 40 years; further that there are currently very few treatment options available for patients and that Abraxane offers a treatment option that some patients may be able to tolerate better than the most effective treatment currently available; further that ultimately Abraxane will give more patients access to life-extending treatment; further that removing Abraxane from the Cancer Drugs Fund will see pancreatic cancer patients in England disadvantaged; further that there is clinical support and demand for Abraxane and it is the only pancreatic cancer drug on the Cancer Drugs Fund; and further that an e-petition on this matter was signed by 2700 individuals.
The Petitioners therefore request that the House of Commons urges the Government to retain the chemotherapy drug Abraxane on the Cancer Drugs Fund list of approved drugs.
And the Petitioners remain, etc.
[P001539]
Lambeth and Southwark Milkspots
Helen Hayes (Dulwich and West Norwood) (Lab)
I wish to present a petition on behalf of my constituents, which has been signed by 4,000 residents. It raises the important issue of milk spots cafés in Lambeth and Southwark, which exist to support new mothers who are breastfeeding their babies. They are staffed by expert midwives from King’s College Hospital, and provide a gold standard for post-natal breastfeeding support in the community, being free, accessible and held daily, and allowing continuity of care from skilled health professionals. King’s College Hospital has recently announced that it intends to recall those specialist midwives to perform general midwifery, with the aim of skills-sharing, and to replace them with midwives who have been given basic training, with no obvious expert support.
The health benefits of breastfeeding for mothers and babies are proven, but women, particularly in deprived areas, need support to establish it, and to overcome the initial pain and challenges which are common, and which lead many women to give up in the early weeks. It is not clear that the replacement support will be sufficient for babies with complications such as tongue-tie. The petition protests against the proposed end of the current staffing arrangements.
The petition states:
The Petitioners therefore request that the House of Commons require the Department of Health to urge King's College Hospital to preserve the existing staffing arrangements of the Lambeth and Southwark Milkspots, and to investigate other means of sharing skills amongst its midwives.
And the Petitioners remain, etc.
Following is the full text of the petition:
[The Petition of residents of Dulwich and West Norwood,
Declares that the Lambeth and Southwark Milkspots cafes staffed by expert midwives from King's College Hospital provide a gold standard of postnatal breastfeeding support in the community, being free, accessible, held daily, and allowing continuity of care from skilled health professionals; and further declares that King's College Hospital has announced that it intends to recall these specialist midwives with basic training, without any obvious expert support, and this will leave women with complicated needs without adequate support, advice or referral to hospital services; and that around 4,000 people have signed a Change.org petition to protest against the proposed end of current staffing arrangements.
The Petitioners therefore request that the House of Commons require the Department of Health to urge King's College Hospital to preserve the existing staffing arrangements of the Lambeth and Southwark Milkspots, and to investigate other means of sharing skills amongst its midwives.
And the Petitioners remain, etc.]
[P001540]
DWP Data
(8 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
(Urgent Question): To ask the Prime Minister to make a statement on his commitment of 24 June to publish Department for Work and Pensions data on the number of people in receipt of employment and support allowance and incapacity benefit who have died since November 2011, including those found fit for work.
The Minister for Employment (Priti Patel)
The Government intend to publish mortality statistics, but before doing so the statistics need to meet the high standards expected of official statistics. Once we have completed that important work, we will publish them.
Debbie Abrahams
Thank you, Mr Speaker, for granting this urgent question.
I am disappointed that the Prime Minister is not here in person to explain why he has not yet honoured his commitment of 24 June to publish the data. On 30 April, the Information Commissioner ruled that the Department for Work and Pensions should publish data on the number of people in receipt of employment and support allowance and incapacity benefit who have died since November 2011, including those who had been found fit for work. The Government have since appealed the decision, stating in their appeal that the publication would be
“contrary to the public interest”
and that the publication of mortality statistics is “emotive”. To date, more than 240,000 people have signed a petition calling for the Government to publish the data.
As the House will be aware, on 24 June the Prime Minister was asked, at Prime Minister’s questions, by my hon. Friend the Member for St Helens South and Whiston (Marie Rimmer) about the publication of the data. He said:
“let me reassure the hon. Lady that the data will be published; they are being prepared for publication as we speak. I think that it is important that we publish data, and this Government have published more data about public spending than any previous Government.”—[Official Report, 24 June 2015; Vol. 597, c. 886.]
I have since raised this issue in two points of order, at a Westminster Hall debate on 30 June, by writing directly to the Prime Minister and by tabling a named day written question to him, which his office decided to transfer to the Department for Work and Pensions and to which I received a non-answer yesterday from the Minister for Employment.
I have some specific questions. First, when will we see the data published, including on those who have been found fit for work, given the Prime Minister’s comment of nearly four weeks ago? When are they being prepared for publication? Secondly, will the Minister commit to publishing the actual numbers of deaths, as well as the DWP’s proposed age standardised mortality rates, as they did in 2012 when the actual number of deaths was published?
Thirdly, will the Minister inform the House how much the Secretary of State’s Department has spent on staff and legal fees in the decision to refuse the initial freedom of information request and now to contest the Information Commissioner’s ruling? Fourthly, will the Secretary of State reconsider his decision not to publish the details on any of his Department’s 49 peer reviews into social security claimants who died, including, most importantly, changes his Department has brought forward as a result of them?
Finally, what assessment has been undertaken on the potential impact on the health status of those on incapacity benefit or employment and support allowance, given the measures introduced in the Welfare Reform and Work Bill?
Just four weeks ago, the Prime Minister promised urgent action. Now is the time to deliver—to be open, transparent and publish the numbers the public and Parliament are calling for. Without that, this House is brought into disrepute.
Priti Patel
I cannot be clearer than the Prime Minister, who last week set out the position very clearly. The data—[Interruption.] Would Labour Members like to listen to my response before they start chuntering away? I will restate what I said in my initial response: the data will be published and are being prepared for publication as we speak.
Priti Patel
If the hon. Lady will let me respond, I will tell the House exactly that.
Alec Shelbrooke (Elmet and Rothwell) (Con)
You are the Father of the House!
Mr Speaker
Order. I respect the fact that the hon. Member for Elmet and Rothwell (Alec Shelbrooke) is trying to help his Minister, but he should calm down, as should everybody. Let us hear the Minister’s answer.
Priti Patel
The position on data publication has not changed. The data are being finalised and will be published shortly. They will be published very soon, and no later than the autumn.
I say to Labour Members chuntering away and shaking their heads that Labour had 13 years to publish the data and failed to do so. Is it any coincidence that they are now showing some interest in this area?
Priti Patel
I say to the hon. Member for Brent Central (Dawn Butler) that we were the first Government to publish ad hoc statistics in this very area. [Interruption.] Labour Members are shaking their heads because they do not like the fact that we have published data previously.
Priti Patel
I say to the hon. Lady chuntering away that I am not misleading the House. I am informing the House that data publication will happen. I restate for the benefit of all Members that the data will be published no later than the autumn. We were the first Government to publish ad hoc statistics in this area, and I think this is quite audacious of the Labour party, given that it never published any such information when in government.
Mr Speaker
Order. I wish to say two things. First, I remind the House that moderation and good humour are underlined in “Erskine May” as being of the essence of good parliamentary proceedings. Secondly, it is important to say at the start that this urgent question is a narrow one, not an opportunity for a general exchange about employment support allowance or incapacity benefit, or the merit or demerit of the Government’s policies on those matters. There have been many such debates. This is an occasion for a narrow focus on the issue of data, upon which the urgent question was focused, so our proceedings will be tightly constrained. I do not intend there to be long exchanges on this matter. Perhaps we can be led, in a statesman-like manner, from the Government Back Benches by Dr Andrew Murrison.
Dr Andrew Murrison (South West Wiltshire) (Con)
My right hon. Friend will be aware of the well-established link between good health, particularly good mental health, and work. Will she ensure that in the long term her Department gathers information that will support or refute that assertion?
Kate Green (Stretford and Urmston) (Lab)
There is huge disquiet among disabled people, as story after story surfaces in the media about disabled people being found fit for work and dying shortly afterwards—last week another story appeared in the Daily Mirror about a disabled man who died two weeks after his assessment. The shenanigans in the DWP around the release of the statistics are concerning—and puzzling, if the Department has nothing to hide. First, the Secretary of State told Parliament that the DWP did not collect the data, in the teeth of the Information Commissioner’s ruling to release them. Within days, he was flatly contradicted by the Prime Minister, and now we hear that the DWP is appealing publication of the data that the Secretary of State first said were not collected.
Will the Minister come clean before the House? She said the data would be published “shortly”, “very soon” and “no later than the autumn”. Why is it taking so long? On what grounds is the DWP appealing publication, and will the data, when eventually published, be timely? It is feared that by the time this procrastination has finally resulted in publication, the data will be so out of date as to be pretty well useless. Will the raw data be published, and what analysis will accompany them to meet the high standards for the publication of Government statistics to which she claims the Department aspires? Finally, will she explain why the Secretary of State first claimed the data were not being collected, when blatantly they were and are, as he now apparently acknowledges?
Priti Patel
I thank the hon. Lady for her comments. I think it is fair to say that, as I stated earlier, the Government are going to publish these statistics. Despite the scaremongering and the gross misrepresentation from the Opposition—scaremongering about suicides, I should hasten to add, which is a complete misrepresentation —I should say that Labour introduced the work capability assessment back in 2008, and at that time Labour Members did not say that it was leading to people committing suicide.
When it comes to publication, this is complex statistical information. As the hon. Lady and, I am sure, all Opposition Members will know, we are bound as a Department by the Statistics Authority on the quality of information that is published, so it is very important that we get this right. Let me emphasise that officials are working as we speak to prepare the data, and we will be publishing them very soon. I have said it already and I will say it again: we will publish before the autumn this year, and once the data are published I will be very happy to take questions on the content and any other aspect of the data that the hon. Lady and hon. Members see fit.
Mark Spencer (Sherwood) (Con)
Will the Minister commit to releasing data pre-2010, from under the previous Labour Government, who introduced work capability assessments, so that we can fully assess the impact that the Labour party’s policy had?
Priti Patel
I thank my hon. Friend for his question. When we publish the data, they will cover all the relevant periods to which he has referred.
Sir Gerald Kaufman (Manchester, Gorton) (Lab)
I wish my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) every good fortune in awaiting a reply to a letter to the Prime Minister, in view of the fact that in the last five years I have had exactly one letter from him, and that was after I had received a letter from No. 10 signed by somebody who did not exist.
I say to the junior Minister that she needs to take some lessons from her boss in dealing with questions in this House, because whatever the nature of his replies, he replies with courtesy. She needs to learn about that as well. Let me put it to the junior Minister that yesterday the Government broke a pledge about providing information and conducting consultation, and today we have a further example of the Government breaking a pledge. Will she explain whether this is simply arrogance or incompetence?
Priti Patel
With courtesy to the Father of the House, I would re-emphasise that the data will be published, and when they are published, he can review them.
David T. C. Davies (Monmouth) (Con)
Does my right hon. Friend agree that any death is of course a tragedy, but that individual tragedies should not simply be rolled into a set of statistics and then plucked out by people who obviously have a political agenda to push?
Priti Patel
My hon. Friend raises a very valid point. When it comes to deaths, these are personal and individual tragedies, in circumstances—[Interruption.]
Priti Patel
These are personal and individual tragedies that affect both the individual and, obviously, their families as well. It is absolutely wrong for any political party to engage in handwringing and scaremongering to the extent that we have seen in this House.
Chris Stephens (Glasgow South West) (SNP)
May I also thank the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) for tabling this urgent question and assure her that I am getting the same answers to written questions as she is?
Too often, we hear stories in the media about people who have died having been found fit for work or who have been driven to their deaths by the Government’s pernicious benefits sanctions regime. We have heard from the Department for Work and Pensions that it currently investigates all deaths of benefit claimants
“where suicide is associated with DWP activity”,
and in other cases where the death of a vulnerable benefit claimant is brought to its attention, through a system of internal peer reviews. A freedom of information disclosure shows that, since 2012, the Department for Work and Pensions has carried out 49 peer reviews following the death of a benefit claimant and that 10 of the peer reviewed claimants were sanctioned.
Is the Department for Work and Pensions still pursuing an appeal against the Information Commissioner’s ruling, or is it abandoning it in the light of the data being published? If the Department is going to publish that information, can we be given a clear timetable for the publication of the data, not just “very soon” and “the autumn”, because they are complete opposites?
Lastly, the Minister will be aware that, last June, the Scottish Parliament’s Welfare Reform Committee called for an urgent review of the benefits sanctions and conditionality regime, and in March the Work and Pensions Committee in this place published a report calling for a full independent review of the benefits sanctions process. Having been asked by two cross-party Committees in two Parliaments, will the Government now go ahead with an independent review at the earliest possible opportunity?
Priti Patel
The hon. Gentleman raises a number of points. It is right that the Department reviews complex individual cases, including those in which claimants have died, to ensure that all processes have been followed correctly. As I have said on previous occasions to Scottish National party Members, I am happy to look at specific cases. On the point about sanctions, unemployment benefits have always been conditional, and benefits sanctions have been part of the system for the last four decades, as is right and proper. As regards the appeal and the publication of the data, I have already said that we will, as requested, publish all aspects of the data in the right format as is required of the Department.
Kit Malthouse (North West Hampshire) (Con)
I welcome the Minister’s pledge to publish the data in the autumn. Does she agree that, if we are to form a judgment, it is very important that comparative data are published, not least longitudinal data for the cohorts involved, to see whether the situation is improving, and perhaps some international comparisons?
Priti Patel
My hon. Friend is absolutely right, and we will publish all the relevant data in this area.
Mr George Howarth (Knowsley) (Lab)
Does not the Minister accept that although of course each case is a personal and individual tragedy, we aggregate and analyse data to see whether a pattern emerges? Does she accept that as long as she drags her feet on this issue, people will conclude that the Government may have something to hide?
Priti Patel
On the contrary, I find that question astonishing. I take no lessons in transparency or the publication of data from the Labour party. The last Government were more open and transparent in data publication than any other. In the wider context of statistics, I have said it once and will say it again and again that we intend to meet the high standards expected of official statistics when publishing these data, and that is what we will concentrate on doing.
Paul Maynard (Blackpool North and Cleveleys) (Con)
The Minister will be aware that the hon. Member for Oldham East and Saddleworth (Debbie Abrahams) and I sat on the Work and Pensions Committee in the last Parliament and took part in its inquiry into benefits sanctions, which reported just before Parliament dissolved. She will be aware also that we called for the publication of these data, but that we made a more subtle point, which is that the data are meaningful only if they include information about each individual’s experiences before contact with the benefits system. To publish the data in raw form would overlook the integration that they may have with the health service, mental health services and any other public agencies involved before the individual encountered the DWP. Will the Minister ensure that that information is included?
Priti Patel
My hon. Friend, from his time on the Select Committee, knows the significance of such information. He is absolutely right, and we should not make assumptions about such data.
Caroline Lucas (Brighton, Pavilion) (Green)
Does the Minister recognise that accusing Opposition Members of scaremongering is hugely insulting to those constituents who have contacted us because they are deeply worried about this matter? Does she recognise that, to them, it looks as though the Government are hiding this information, reinforcing concerns that this is a punitive regime designed to hurt people who are disabled? The Government have already rushed out 17 written ministerial statements today, the last day that the House sits before the recess. Why will the Minister not add a statement on this matter?
Priti Patel
Contrary to the hon. Lady’s point, we will be the first to publish this information. I say again for the record—not for the second, third or even the fourth time—the data are coming. They will be published, and we have nothing to hide.
Dr Tania Mathias (Twickenham) (Con)
I agree that transparency is important, but where data are sensitive, their interpretation and the human stories behind them are important too. I have had amazing help from the Minister and the Secretary of State, who have visited my constituency and met individuals with complex needs. I am very grateful for the troubleshooting and assistance being given, and I look forward to that continuing over the summer. While data are important, people’s ongoing needs are important too.
Priti Patel
My hon. Friend will know from her background as a doctor in her constituency that people have different needs, and individual cases are very complex. She is right to say that we can make no assumptions just by looking at data; it is about putting people first and understanding their needs.
John McDonnell (Hayes and Harlington) (Lab)
Just over a year ago, 130,000 people signed a petition and there was a debate in the House calling for a cumulative impact assessment by the Government of the welfare changes on people with disabilities. These data are just one element of that. The House decided without opposition that the Government should undertake that exercise. Are they giving any consideration to conducting a cumulative impact assessment?
Priti Patel
The last Labour Government never published a cumulative impact statement, and our focus right now is on publishing this set of data, as we have committed to do.
Jeremy Lefroy (Stafford) (Con)
I welcome my right hon. Friend’s announcement that the data will be published soon. Does she agree that, when they appear, it is important that they are analysed and that any lessons are learned, because data are pretty useless if we do not do that?
Priti Patel
My hon. Friend is right. As I have said, data are complex and we should not simply read them and make assumptions; they need analysis.
Rob Marris (Wolverhampton South West) (Lab)
I entirely agree that one should not make assumptions and that the last Government had a better record on transparency of statistics than some previous Governments, albeit the Office for National Statistics repeatedly criticised Ministers in the last Government for misusing statistics. The Minister accuses Opposition Members of scare- mongering and hand-wringing, but how can she know—I do not—unless she already has the statistics?
Priti Patel
As I have said, the statistics will be published, and the hon. Gentleman can then make his own informed decision.
Andrew Bridgen (North West Leicestershire) (Con)
As the Minister stated, unemployment benefits have always been conditional. Will she tell the House how often these statistics were published by the Labour party when it was in government?
Marie Rimmer (St Helens South and Whiston) (Lab)
Will the Minister tell us whether the Government are appealing against the decision on publishing the data, what costs have been incurred and why the Secretary of State did not make the House of Commons aware of the appeal in the first instance, instead of stating that the figures were not being collated?
Priti Patel
We will publish the data, and Opposition Members can then make their own judgment.
Tom Pursglove (Corby) (Con)
Does my right hon. Friend agree that if inaccurate or rushed data were published, she would then be accused, including by Opposition Members, of gross carelessness, given the sensitivity of those data?
Priti Patel
My hon. Friend makes a valid point. It is hugely ironic to hear the remarks of Labour Members, whose Government never published any information or data in this area. We are expected to meet the high standards required for the official publication of statistics, and that is exactly what this Government will do.
Neil Gray (Airdrie and Shotts) (SNP)
With all due respect to the Minister, she has not answered the question asked by my hon. Friend the Member for Glasgow South West (Chris Stephens) and the hon. Member for St Helens South and Whiston (Marie Rimmer). Will she appeal the Information Commissioner’s decision? Will the data be backdated to November 2011? Given that 200,000 people, including many of my constituents, have signed a petition calling for the data to be published, will there be parliamentary time to scrutinise it?
Priti Patel
The data will be published. The urgent question is specifically about the publication of mortality statistics.
Richard Graham (Gloucester) (Con)
I welcome the Minister’s announcement that she will provide the data requested and will look at it analytically, in the way that other Members have suggested. Does she share my slight concern that the phrasing of the urgent question, particularly the inclusion of the words “found fit for work”, implies something sinister? We all know of people not only found fit for work but actually working and fit while working who have died in sad circumstances, including former Members of the House. This issue should be handled very sensitively when the data emerge.
Priti Patel
My hon. Friend has made a valid point. I think it is fair to say that the fit for work assessment was introduced by the Labour Government. Our focus now is on the fact that—I remind the House—those data are coming, and will be published before the autumn.
Mr Gordon Marsden (Blackpool South) (Lab)
DWP Ministers tried to sit on information from internally generated data which suggested that one in five deaths of benefit claimants had been linked to sanctions. Perhaps we can be forgiven our scepticism about the Minister’s definition of autumn: after all, this Government publish their autumn statements in December.
More important, what steps will the Minister take to look into cases that have led from morbidity to mortality? In my constituency, the failure of Atos to pay home visits to severely ill people on some occasions has caused real health problems. A constituent of mine had motor neurone disease, but failed the assessment for employment and support allowance.
Priti Patel
The hon. Gentleman has mentioned Atos. We, of course, terminated that contract. [Interruption.] It was part of the Labour legacy that we were there to clear up. As for the data, they will be published, and they will be published before the autumn.
Mr Speaker
Order. I do not intend these questions to last longer than half an hour in total, so there is pressure on colleagues to be brief. I call Mr Skinner.
Mr Dennis Skinner (Bolsover) (Lab)
I think the Minister should tell us whether there is to be an appeal. She has been asked that several times, and she has not answered. I am thinking of the family of David Cowpe, who lived in my area, and whose case I raised with the Prime Minister more than two years ago. He lost his sight, he lost his hearing, and then cancer took his life when he had been waiting 11 months for an appeal. A lot of promises have been made, but nothing seems to be forthcoming. I have to say that this delay almost emanates from the Secretary of State, whom I call the Minister for Delay, and it has gone on for too long. I think it is high time that this matter was resolved. I say to the Minister, “Stand up at that Dispatch Box and say that you are not going to appeal, and that you are going to get on with it.”
Priti Patel
The hon. Gentleman has raised the tragic case of his constituent, but he has also raised the need to resolve this matter by publishing data, which is exactly what the Government will be doing.
Nia Griffith (Llanelli) (Lab)
This sorry story underlines the immense importance of the role of the Information Commissioner. Can the Minister give us an absolute assurance that, notwithstanding what is in the review, she will not make her Department take any action or demand any changes that restrict the availability of information and data?
Priti Patel
Not only will we publish the data, but we will publish all aspects of the data that we have been asked to publish.
Mr David Anderson (Blaydon) (Lab)
Given that autumn lasts from the September equinox until the December solstice, will the Minister spell out exactly what work her civil servants will be doing? She must have some idea of what is needed, because otherwise she would not have specified that timescale. What will those civil servants be doing during the intervening weeks and, possibly, months?
Priti Patel
We will be doing all that is relevant. This is complex statistical information, so it is important that we get it right, and that is precisely what my officials are doing.
Diana Johnson (Kingston upon Hull North) (Lab)
Exactly how much have the prevarication and delays cost the British taxpayer?
Priti Patel
There is no prevarication or delay. We have been very clear—[Interruption.] I hear sniggers on the Opposition Benches, but we were the first Government to publish data in this area, and I think it shameful that the Labour party has not done so. This Government now intend to publish the statistics, and that is exactly what we will do.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
Each month the Department for Work and Pensions publishes vast amounts of information on employment figures, wages and benefits. It has always done so, and, by the way, Ministers never seem to be shy about placing their own interpretation on those data. Should it really be so difficult for them to tell us whether people are alive or dead?
Priti Patel
We do not place our interpretation on data that my Department publishes, because we are bound by the UK Statistics Authority when it comes to how they are presented. As I have said, these data will be published. Let me also reiterate once again that ours is one of the most transparent Governments ever, in contrast to the hon. Gentleman’s Government.
Andrew Gwynne (Denton and Reddish) (Lab)
The Minister has said that the data will be robust, but I simply do not accept the Government’s narrative that some people in receipt of employment and support allowance or incapacity benefit are not ill, because those are good epidemiological considerations when it comes to public health indicators. Why will the Minister not do the decent thing and publish the data in full today?
Priti Patel
I am sorry that the hon. Gentleman was disappointed by my response, but the data will be published. He should remember, when he criticises these schemes, that his Government set them up prior to 2010, and that it is we who are reforming the mess that we inherited.
Steve McCabe (Birmingham, Selly Oak) (Lab)
How many meetings and discussions have taken place between Ministers and officials over the past 12 months about the compilation and presentation of the data?
Priti Patel
I have already said that we will publish the data. [Interruption.] We were the first Government ever to publish such information, which we did back in 2012. This is work in progress: my officials are now working on the publication of the data.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
I think the public will be appalled that the Government have adopted the tone that we heard in the Minister’s response today. May I pursue the question put by my hon. Friend the Member for Blaydon (Mr Anderson)? The Minister said that we would have the data by the autumn. Having looked it up, I have established that autumn will begin on 21 September. Can the Minister confirm that she will come to the House during the two weeks following our return in September, make a statement, and hear our responses to it?
Priti Patel
As I have said, the data will be published. Once they have been published, I shall be happy to take questions about them from Labour Members and, indeed, all other Members.
Natalie McGarry (Glasgow East) (SNP)
Given some of the Minister’s replies today, it is clear that she likes repetition, and now I am going to copy her. Will she please answer the question that has been asked by my hon. Friends, and tell us whether she will appeal against the decision?
Priti Patel
Let me say again, for the record, that we will publish the data—[Interruption]—and that, before the autumn, we will publish all the aspects of those data that we have been asked to publish.
Points of Order
David Rutley (Macclesfield) (Con)
On a point of order, Mr. Speaker. Some Members will be aware of the recent tragic events in Bosley, south of Macclesfield, following an explosion at the wood treatment mill site on Friday. Three people are still missing. I am very grateful for the support of the Under-Secretary of State for the Home Department, my hon. Friend the Member for Staffordshire Moorlands (Karen Bradley), and we thank the emergency services for all that they have done, and continue to do, in such challenging circumstances.
I should be grateful to you, Mr Speaker, for any advice that you can give about how I could best draw the incident to the attention of the House more widely, and convey to the families and friends of those who have been affected by this tragic incident that the thoughts and prayers of Members are with them at what is a very sad and difficult time.
Mr Speaker
I think that the hon. Gentleman has largely achieved his purpose by what he has said and the way in which he has said it. He has spoken for Members throughout the House who will empathise with him, and who will feel enormous sympathy for the families of those involved in this tragic event. As for the wider issues of help for those who have been affected and questions to be raised about the precise sequence of events, they can be aired subsequently in a variety of forums in the House. The hon. Gentleman is dexterous and innovative in his use of those forums, so I am sure that we shall hear from him further as appropriate. I thank him for what he has said today.
Ms Gisela Stuart (Birmingham, Edgbaston) (Lab)
On a point of order, Mr. Speaker. Yesterday the House completed the process of setting up departmental Select Committees and their equivalents. However, one Committee remains as yet unformed, and even its Chairman has not yet been appointed. That is the Intelligence and Security Committee. How can we ensure that the Government will proceed with some speed to set up a Committee whose members are appointed on the recommendation of the Prime Minister?
Mr Speaker
As the hon. Lady has implied, that particular Committee is in a different category from the others with which the House has dealt. However, her point of order is not a matter for me. It is possible that she would like it to be, but it is not. It is a matter for the usual channels, the most senior representative of which is sitting, statesmanlike, on the Treasury Bench, and will have heard what has been said.
In the interests of the House as a whole, I hope that these matters will be attended to before very long, but, knowing the hon. Lady as I do, I am sure that if they are not, she will return to the charge.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
On a point of order, Mr Speaker. You will have seen that the Home Office has sneaked out a written statement on the last day of term about a short consultation on the funding arrangements for the 43 police forces in England and Wales. There is much concern in areas such as Merseyside—which has already lost 23% of its budget and over 700 police officers—about what this will mean for the years to come. Have you, Mr Speaker, received any indication from the Government that a Minister is intending to come to the House and give an oral statement on this important issue?
Mr Speaker
I have received no such indication. Of course the method by which the Government intend to communicate their message on this subject is a matter for the Government and they have chosen to do so through the device of a written ministerial statement. There will be opportunities for the matter to be raised and probed further, but realistically that will have to wait a period of weeks. I recognise that that will disappoint the hon. Lady, but that is the factual answer to her inquiry.
Bill Presented
Constitutional Convention (No. 2) Bill
Presentation and First Reading (Standing Order No. 57)
Mr Graham Allen, supported by Mr David Davis, Tim Farron, Jon Cruddas, Jeremy Lefroy, Mr Alistair Carmichael, Caroline Lucas, Jeremy Corbyn, Mark Durkan and Zac Goldsmith, presented a Bill to make provision for a convention to consider the constitution of the United Kingdom; and for connected purposes.
Bill read the First time; to be read a Second time on Friday 11 September, and to be printed (Bill 61).
Public Nuisance from Wind Farms (Mandatory Liability Cover) Bill
Mr David Davis (Haltemprice and Howden) (Con)
I beg to move,
That leave be given to bring in a Bill to require the Secretary of State to make provision about obligations on wind farm operators in respect of financial cover for potential liabilities arising from cause of public nuisance; and for connected purposes.
Wind farms are contentious. Some argue passionately that they are a great public good and the solution to global warming while others equally passionately believe they are a waste of money. This Bill takes no side in that debate. It is narrowly defined to one aspect of public interest: it requires the operators of wind farms, who are in receipt of £797 million of public subsidy a year, to organise their affairs so that they are able to meet the costs of any nuisance imposed on people living near them.
In 1995 the World Health Organisation recommended that to prevent sleep interruption low frequency noise should not exceed 30 decibels. However, in 1996 the Government’s Energy Technology Support Unit—ETSU—set the noise limit for wind turbines at 43 decibels. That is an enormous difference; on the logarithmic decibel scale it is approximately double the WHO limit. We still use those standards today.
In the last five years no planning application was refused on noise-related grounds, but there have been 600 noise-related incidents arising from wind farm operations. The majority of complaints arise as a result of amplitude modulation, which is the loud, continuous thumping or swishing noise regularly described by those living near wind farms.
Numerous studies have identified that sleep is disturbed on a regular basis even at distances over 1 km away from turbines, yet under the ETSU standards turbines can be installed just 600 metres away from residential property. The wind farm companies are acutely aware of this, and all the more so since a member of the public, Jane Davis, sued a wind farm near her home for noise nuisance. The matter was settled out of court, and there is a gagging order preventing us from knowing the details, but the settlement is rumoured to have been in the region of £2 million.
Since this case, some dubious measures have been taken by the industry to obstruct perfectly legitimate claims for nuisance. The use of shell companies in the wind industry seems to be the commonest trick. The parent company provides a loan to a specially created subsidiary to set up the wind farm, then leaves it in control of operations. The subsidiary’s balance sheet typically comprises the wind farm physical assets, but they are more than offset by a very large loan from the parent company, with a resulting net liability. Profits from energy generation and large amounts of public subsidy are siphoned off to the parent company. The subsidiary is left as a financial shell, with very few liquid assets and total liabilities greater than total assets. That makes it impossible to bring litigation against a wind farm, simply because there is nothing to win from them. As such companies have negative net assets, even liquidating them would generate no cash to pay either damages or a legal bill.
One of my constituents bought his house in my constituency to enjoy a quiet retirement with his wife. After living there for more than a decade a 10-turbine wind farm was built near the house. The closest windmill is just over 600 metres from his home. He was assured at the planning stage that the wind farm would not trouble him, yet he has suffered the misery of regular noise and turbine blade flicker which has rendered his home almost unliveable. The low frequency noise from the turbines easily penetrates the double glazing. The couple have had to change bedrooms in order to sleep, but even so the persistent noise from the wind farm has taken its toll on his wife’s health; she now suffers heart palpitations and is prescribed anti-depressants on a permanent basis by her doctor.
My constituent, fearing his retirement has been ruined and his home thoroughly devalued, attempted to use his legal insurance to claim for nuisance from the wind farm operators. While there was a good chance of success in court, the company’s finances were organised so that there was no realistic prospect of recovering either damages or the legal costs of bringing the case. That being so, his insurers would, quite understandably, not cover his legal costs. That is despite the fact that the eventual owner of the wind farm is AES, a multibillion dollar international company involved partly in renewables but largely in coal and gas, that paid its chief executive $8.4 million last year. It laughably claims in its annual report to be a “World’s Most Ethical Company”.
It is not alone in its hypocrisy. In March I raised this disreputable practice with Falck Renewables, prospective operators of a wind farm near my own village in my constituency. I asked it whether it was going to do the same. It did not reply.
My constituents have no way to recover the tranquillity of the lives that they thought they were going to enjoy when they first moved to rural Yorkshire. They can neither sell their house nor get any financial recompense to enable them to afford to move, so they are trapped in this misery.
My point is a simple one. My constituents are just individual representatives of a situation that is repeated up and down the country. Wind farm companies must be adequately capitalised so that there can be a reasonable prospect of financial success for prospective litigants whose way of life they have damaged. It is not only the noise that is a nuisance, of course. When the sun is low in the sky behind a turbine it creates a “strobe effect” which can be harmful to health and wellbeing, and there are also now concerns that some wind farms could be abandoned at the end of their operational lifespan, creating another sort of visual blight, this time in perpetuity.
The simple solution that I propose in this Bill is to require wind farm-operating companies to hold enough cash in hand to manage a legal case at any time, and in addition a financial bond—a guarantee, or insurance policy—as a security against potential liabilities, including all public nuisance and final decommissioning costs. Any wind farm that fails to do that should lose its right to subsidy—which, as I said, amounted to £797 million in one year for the industry. This would ensure that citizens could reasonably sue when they suffer damage, but, just as importantly, it would be a strong incentive for the companies to operate wind farms in such a way as to avoid public nuisance, which is causing great distress in some cases, and would mean that when the turbines are decommissioned there is money or insurance to cover the cost of clearing the wind farm, avoiding a situation whereby the local council has to pick up the bill.
Whatever our stance on onshore wind, companies in receipt of public subsidy should be required to meet their public responsibilities. This measure seeks to ensure that the big wind farm companies can truly be held liable when they are at fault and gives families the protection they deserve.
Question put and agreed to.
Ordered,
That Mr David Davis, supported by Chris Heaton-Harris, Tom Pursglove, John Mann and Jim Shannon, present the Bill
Mr David Davis accordingly presented the Bill
Bill read the First time; to be read a Second time on Friday 11 September, and to be presented (Bill 62).
Finance Bill
(8 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
17:41 - The House divided: - Ayes: 61 / Noes: 307 - Question accordingly negatived.
17:54 - The House divided: - Ayes: 301 / Noes: 75 - Question accordingly agreed to.
Mr Speaker
I must inform the House that I have selected the amendment in the name of Mr Angus Robertson, on behalf of the Scottish National party.
The Financial Secretary to the Treasury (Mr David Gauke)
I beg to move, That the Bill be now read a Second time.
As my right hon. Friend the Chancellor set out in the recent Budget, the British economy is fundamentally stronger than it was five years ago. The deficit has been halved as a percentage of GDP; for the first time since 2001-02 debt as a share of GDP is falling; the UK was the fastest growing economy in the G7 in 2014, and we are expected to repeat that in 2015, too. We have more individuals in work than ever before, and wages continue to rise above inflation.
Having come so far, we need to stick to our long-term plan for economic recovery. The first Finance Bill of this Parliament demonstrates this Government’s commitment to continuing the plan to build a productive, balanced and secure economy, which delivers for working people at every stage of their lives.
I shall happily take interventions this afternoon, but let me first set out to hon. Members the order in which I intend to discuss the measures in the Bill. I shall begin by talking about those measures that are intended to support working people through the tax system. Next, I shall set out how the Bill will help put the public finances in order by tackling tax avoidance, evasion, non-compliance and imbalances in the tax system. Finally, I shall talk about how the summer Finance Bill 2015 will take the first steps in implementing measures to improve the UK’s productivity.
I shall begin with those measures designed to help hard-working people keep more of the money they earn, a principle to which this Government are committed. We have a proud record on reducing tax for the lowest paid. As a result of action taken in the previous Parliament, 27.5 million individuals saw their typical income tax bill reduced by £825. This Finance Bill makes even further progress, by increasing the tax-free personal allowance to £11,000 in 2016-17 and to £11,200 in 2017-18. As a result of those changes, a typical basic rate taxpayer will be £80 better off in 2016-17 compared with in this tax year. Further, the higher rate threshold will also increase from £42,385 in 2015-16 to £43,000 in 2016-17—£300 more than the amount announced in the March Budget. That will take 130,000 individuals out of the higher rate of tax by 2016-17.
It is the firm belief of this Government that individuals working 30 hours a week on the national minimum wage should not pay income tax. That is why this Finance Bill will enshrine that link in law for future increases in the personal allowance. Once the personal allowance has reached £12,500, it will always be at least the equivalent of 30 hours a week on the national minimum wage. Until that point, my right hon. Friend the Chancellor will have a legal duty, when setting the personal allowance, to consider the financial impact on an individual working 30 hours on the national minimum wage. This Finance Bill also delivers another legislative commitment to low levels of taxation. It introduces aspects of the five-year tax lock by ruling out increases in income tax and VAT for the duration of this Parliament.
Finally, this Government know that the wish to pass something on to one’s children is the most basic human aspiration. To give hard-working people the security of knowing that they can continue to provide for their families after they have gone, this Bill phases in a new £175,000 per person transferable allowance when a person’s home is passed on at death to their direct descendants. This means that by the end of this Parliament, the effective inheritance tax threshold for married couples and civil partners will be £1 million.
At the same time, to ensure that those with the broadest shoulders continue to bear the biggest burden, this new allowance will be gradually withdrawn for individuals with assets of more than £2 million. This reform will be paid for by cutting down on the £34 billion that the Government spent on pensions tax relief in 2013-14 —two thirds of which goes to higher and additional rate taxpayers. The benefits of pensions tax relief for top earners will be restricted by tapering away the annual allowance for those with a total income of over £150,000 from April 2016.
These are important measures, rewarding and supporting the efforts and aspirations of working Britain—and doing so in a fair and balanced way.
Richard Fuller (Bedford) (Con)
In the previous Parliament, under the previous Government, one outcome was that the wealthiest in the country paid a higher proportion of tax than they did under the preceding Government. Do this Government intend that to continue to be the case in this Parliament?
Mr Gauke
I can confirm to my hon. Friend that that will continue to be the case. We have set out a Budget that is balanced, ensuring that those with the broadest shoulders continue to bear the greatest burden.
I now turn to the way in which the summer Finance Bill 2015 will help to fix the public finances. We know that the UK’s economic recovery is well established, with growth at 3% in 2014, and continued robust growth for 2015 and 2016, according to the Office for Budget Responsibility’s forecast. But this country needs the economic security of running a surplus, and, if we are to achieve that, a further £37 billion in fiscal consolidation is required over the course of this Parliament. To deliver that, the summer Budget included measures to tackle tax avoidance and tax planning, evasion and compliance and imbalances in the tax system, which will collectively raise £5 billion a year by 2019-20.
This Finance Bill implements a number of those measures. First, it includes provisions preventing private equity and some hedge fund managers from exploiting tax loopholes to avoid paying the full rate of capital gains tax. Secondly, it removes the ability for companies to use UK losses and reliefs against their controlled foreign company charge. That will improve the effectiveness of the UK CFC regime in countering aggressive tax planning by multinational companies. Thirdly, the Bill legislates to stop a potentially significant tax planning risk, whereby corporate groups exploit tax rules for asset transfers between related parties. This puts it beyond doubt that the tax rules cannot be manipulated to prevent profits from being charged to tax.
Patrick Grady (Glasgow North) (SNP)
The International Monetary Fund recently said that developing countries lose £212 billion a year through corporate tax avoidance by multinational companies. Transparency will be absolutely crucial in dealing with that, but the Bill makes no mention of public country-by-country reporting. Will the Government look carefully at that, and at any amendments that might come forward, given that it would enable people in the developing world to see the taxes that companies pay locally for their benefit?
Mr Gauke
The UK has been instrumental in bringing in country-by-country reporting to tax authorities as part of the OECD’s base erosion and profit shifting project, which will be of great assistance to tax authorities. We want to ensure that developing countries can benefit from that co-operation between tax authorities and from greater use of data. The publication of country-by-country reporting is best approached multilaterally.
But we should all acknowledge the progress that has been made. For example, much more information is now available to tax authorities, enabling them to assess large companies’ tax strategies. One proposal in the Budget earlier this month was to make UK-based multinational companies publish their tax strategies. Such information would help to incentivise behaviour away from aggressive tax avoidance, which Members in all parts of the House wish to address.
Sammy Wilson (East Antrim) (DUP)
Does the Minister accept that the target of £5 billion is really small beer when one considers the amount of tax that many multinational companies, including those that operate here in the UK, avoid paying by moving their profits around?
Mr Gauke
No, I do not accept that. Indeed, if one looks at Her Majesty’s Revenue and Customs’ tax gap publication, which identifies where the tax gap falls, one sees that, in terms of avoidance and acting contrary to the intention of Parliament, we should not overstate the element that is corporation tax avoidance by large multinationals. It is important that we address it, but one should not believe that it amounts to a huge pot. We have taken a number of steps in this area, some of which are operational. For example, we have supported HMRC to expand its large business service. Again, further progress on that was announced in the Budget. We have introduced the diverted profits tax, which came into force earlier this year. That is a very significant measure to address aggressive tax avoidance. We want to take further steps. Indeed, the base erosion and profit shifting project, which the OECD is running, means that we can hopefully take further steps in future. But those areas are best dealt with on a multilateral basis, and the UK has been very engaged in ensuring that there is progress in that area. I hope that there will be further progress on that front later this year.
Once again, this Government have introduced a Bill that makes it clear that avoidance and evasion by corporates and wealthy individuals will not be tolerated. But fixing the public finances also means that everyone in Britain must pay their fair share of tax. The vast majority of people pay their tax on time and in full, but a small minority of taxpayers refuse to pay what they owe despite having the money to do so. The Finance Bill introduces direct recovery of debts, giving HMRC the power to recover tax and tax credit debts directly from debtors who have debts of over £1,000 and more than £5,000 in the bank.
The UK must remain competitive as a global financial centre, but it is only fair that the contribution banks make reflect the risk they pose to the UK economy. The Finance Bill introduces a new supplementary tax of 8% on banking sector profit, while gradually reducing the full bank levy rate over the Parliament. That will ensure that banks contribute a further £2 billion to the short-term task of deficit reduction, while ensuring the lowest tax rate of banks’ profit in the G7 nations.
George Kerevan (East Lothian) (SNP)
In the shift to the new tax on banks, the Government are sweeping in mutual banks, building societies and the smaller challenger banks. That creates problems both in capital accumulation for the mutuals and in the ability of the new challenger banks effectively to gain capital to take on the larger banks. Is that an accident, or has some decision been taken to penalise those organisations?
Mr Gauke
The first point I have to make is that banks with the smallest profits do not pay the surcharge. There is a minimum level to protect the very smallest banks. The bank levy that was introduced early in the previous Parliament reflected some of the issues that existed at that time. It was designed in part to encourage a different type of behaviour that would reduce risks. Regulatory changes have rather addressed that particular point. The move to a surcharge—a higher level of corporation tax—is sensible and timely given some of the changes that have been made. It is not possible in those circumstances to carve out those institutions that we like and dislike beyond putting in that de minimis level. That was a sensible approach to take.
Richard Fuller
Perhaps the Minister can clarify the intention of the levy. Is it to continue modifying behaviour? Do we need it because we have concerns about systemic risk, or because we want to close the deficit?
Mark Durkan (Foyle) (SDLP)
The Financial Secretary seems to imply that the banking levy, which was developed at the start of the previous Parliament, was essentially an ephemeral need that has now been taken care of by subsequent regulation. Banks have been able to cope with the fact that they have, essentially, a too big to fail subsidy—the VAT exemption. They have been able, with the levy, to absorb record-breaking fines for their own misbehaviour. Now he is saying that that is all to the good and that we do not need that same system of taking from the banks. Surely we do, though. They need to make a contribution to the public purse.
Mr Gauke
There is no disagreement over the need for a contribution from the banking sector towards the public purse. We have concluded that the better way to make that contribution is through a corporation tax surcharge, and that is what we are introducing. There was also a particular argument in 2010 about trying to influence behaviour, but, to some extent, that has now been addressed by a new regulatory regime. I agree that there is a need for a contribution. What we have here is a new surcharge on the banking sector, which performs precisely that task.
Britain’s insurance premium tax is also well below rates in many other countries, such as Germany, so this Bill proposes an increase to 9.5%. but that applies to only one fifth of all premiums. The Government are also committed to meeting their climate change objectives in a cost-effective way. Over the next five years, the climate change levy exemption for renewable energy is due to cost £4 billion, one third of which would subsidise overseas projects that bring no benefit to the UK. This Finance Bill therefore takes urgent action to stabilise CCL revenue.
Finally, to make the tax system fairer, the Bill restricts the amount of tax relief landlords can claim on property finance costs to the basic rate of income tax. That will ensure that landlords with the largest incomes no longer receive the most generous tax treatment. We are tackling tax avoidance by wealthy individuals and corporates, addressing imbalances in the tax system and taking bold steps to ensure that it remains fair.
Caroline Lucas (Brighton, Pavilion) (Green)
The hon. Gentleman made a point a moment ago about the removal of the climate change levy for green energy. Does he recognise that that measure, by being retrospective and incredibly disproportionate to the ends he is trying to achieve, will seriously disrupt the green energy sector? The sector is already massively concerned about that. He talks about the importance of cost-effective measures to reaching green energy outcomes. Onshore wind is one of the most cost-effective energies out there, but his measures are undermining it.
Mr Gauke
I do not accept that point. Removing this exemption will achieve better value for money in the Government’s support for low-carbon generation by targeting support directly at generators and preventing UK taxpayers from subsidising overseas renewable projects that bring no benefit to the UK. That was the weakness; that was the failure of the existing regime, and it is right that we address it.
I now wish to deal with productivity. As my right hon. friend the Chancellor set out in the recent Budget, the rate of UK productivity has been a historical problem. It is vital to increase our productivity, because that is one of the fastest routes to creating jobs and raising the standard of living for everyone. Earlier this month, we published our productivity plan, setting out how we will tackle this long-term challenge. This Bill implements a number of measures taking this plan forward. A stable tax regime with competitive rates and strong investment incentives is essential to drive productivity forward. In the previous Parliament, the main rate of corporation tax was cut from 28% to 20% as a central part of the Government’s economic strategy. This Bill goes further, by cutting it to 19% in 2017 and 18% in 2020, saving businesses more than £6 billion by 2021 and giving the UK the lowest rate of corporation tax in the G20.
Mr Nigel Dodds (Belfast North) (DUP)
The Minister will know that the Stormont House agreement contains plans to have a lower rate of corporation tax for Northern Ireland, if the Assembly and the Executive so decide. He knows the problems that exist on the implementation of that agreement. Will he undertake to continue to work with the Northern Ireland Executive—with those parties that want to make progress economically in Northern Ireland—to ensure that that corporation tax relief is introduced as quickly as possible?
Mr Gauke
I am happy to give that undertaking to the right hon. Gentleman. We have always been clear that the devolution of corporation tax was dependent on stability in the finances for Northern Ireland, and I believe we agree on that point. We want to be in a position to implement that policy and I know he is also keen to implement it, but it is dependent on proper progress being made, and I entirely agree with him on that point.
To provide certainty to business and encourage investment in plant and machinery, the Bill also sets the annual investment allowance at the permanent higher level of £200,000. Improving productivity also means prioritising investment in infrastructure.
George Kerevan
The reality surely is that the AIA is being cut from the de facto £500,000 per year to £200,000, so it is not an increase. Doing that at the same time as cutting corporation tax runs the risk that firms’ accumulated reserves will be used to buy back shares rather than to go into productive investment, thereby meaning that the productivity growth the Government are seeking will not be achieved.
Mr Gauke
I do not accept that point. First, the increase to £500,000 was temporary, as we always made clear. Very strong representations were made by business groups that what was important was putting a permanent level in place. We have the highest permanent level ever; at £200,000 it is twice the level we inherited in 2010, at a time when corporation tax rates are substantially lower. This is therefore a much more generous regime than we have had before. Our changes to corporation tax rates are an important measure in encouraging investment. I am sure I will be corrected if I am wrong, but I do not believe it was that long ago that the Scottish National party was advocating a corporation tax rate of 18%. I am sure the SNP is delighted that there will be a rate of 18% across all the United Kingdom.
Andrew Gwynne (Denton and Reddish) (Lab)
Before the Minister moves off the issue of support for businesses, may I say that although there are many measures in the Bill to support businesses that we welcome, many of my local small businesses are eagerly awaiting the Government’s review on business rates later this year? Will he give some indication that those small businesses in my constituency will not end up worse off as a result of changes that may be planned to the business rates?
Mr Gauke
Our record on business rates is that we have consistently looked after the interests of small businesses: we have extended small business rate relief on numerous occasions; we have introduced the rebate for retail premises; and we have made a number of reforms to business rates to assist small businesses in particular, as well as capping increases in business rates. A review is ongoing and I am not going to make any announcement today, however nicely the hon. Gentleman asks me what its contents will be. It is ongoing and the consultation period has only relatively recently finished. We are keen to progress this and we have brought forward the timetable by which we will complete that review; we will have something by the end of the year.
Improving productivity also means prioritising investment in infrastructure. Our road network has suffered from decades of underinvestment. This Bill implements reforms to vehicle excise duty to support the creation of a roads fund. The reforms will ensure that VED still incentivises purchases of the cleanest cars, while putting revenues on a sustainable long-term footing.
Caroline Lucas
The Minister will not be surprised to hear that I completely disagree with him, but it is not just me, as the Society of Motor Manufacturers and Traders also says that this change to VED means that the take-up of low-emission vehicles will be disincentivised. How can that be a positive thing to do? He talks about productivity and in other places about the importance of air quality, but these measures, again, undermine both.
Sammy Wilson
I can assure the Minister that there is not likely to be an alliance between me and the hon. Lady or her party. The revenues will apply to a roads fund for England, but what arrangements does the Minister intend to put in place for the tax that is collected in places such as Northern Ireland and for that money then to be diverted to infrastructure projects for roads in that part of the United Kingdom?
Mr Gauke
I understand the good point that the hon. Gentleman is making. There will be a need for discussions with the Northern Ireland Executive to ensure that we reach a sensible conclusion to reflect the various requirements across all the United Kingdom. I hope he appreciates that we understand the point he is making.
Through backing businesses and supporting infra- structure investment, this Bill will take important steps to boost our productivity, creating growth and prosperity for all.
Before I conclude this speech I would like to comment briefly on the Government’s tax policy making process. At the start of the last Parliament, the coalition set out its ambition to improve the tax policy making process, through high levels of consultation and legislative scrutiny. That approach was welcomed by tax professionals, and I am delighted to inform the House there have been real achievements. More than 150 formal and informal consultations on tax changes took place over the past five years, and our commitment to publish the majority of Finance Bill clauses in draft was met. I can confirm that this new approach will continue into this Parliament. Indeed, since the recent Budget, we have already published more than 10 consultations on tax policy proposals for future Finance Bills. I should also add that we are establishing the Office of Tax Simplification on a permanent footing as from today, and I am delighted that we are able to do that.
The Finance Bill before us today, at the start of the new Parliament, sets out the priorities and direction of this Government. Our direction is simple: towards stability and prosperity. The Bill rewards work and supports aspiration through lower taxes for working people; helps fix the public finances by tackling avoidance, evasion and imbalances in the tax system; and takes important steps in improving the UK’s productivity. I am delighted to commend it to the House.
Shabana Mahmood (Birmingham, Ladywood) (Lab)
I am grateful to the Minister for his comments on the measures set out in the Bill. It is a somewhat strange Finance Bill, because many of the most contentious measures announced in the Chancellor’s emergency Budget are not actually in it. Indeed, the Bill is almost as significant for what is not in it as for what is. It is important to reflect on that, and on the fact that the Budget exposed a real difference between the Chancellor’s rhetoric and the reality of what he is delivering, particularly for ordinary working people in our country.
It was certainly not the Budget, and this is certainly not the Finance Bill, that working people needed. The Institute for Fiscal Studies has told us that 3 million working families will be around £1,000 a year worse off. The Budget clearly leaves working people worse off. Despite what the Minister has said about productivity, as a package it fails the test of building a more productive economy to bring down the deficit in a more sustainable, stronger and fairer way.
The Bill does not provide for the contentious changes to tax credits, which the Minister and I have debated several times already over the past week or two, or the reduction in the work allowance and the increase in the taper rate, which will hit working people on middle and lower incomes. We discussed those changes during Treasury questions this morning, particularly the high marginal tax rates that people who earn just above the personal allowance threshold and are currently in receipt of tax credits will be facing. I understand that those changes will be made by delegated legislation, which we expect later this year. They will be hotly debated and opposed, because choosing to make 3 million working families £1,000 a year worse off is the wrong choice, regardless of how the Government try to dress it up.
The Bill also does not set out the changes to the minimum wage. Despite what the Minister and the Chancellor have been saying over the past week or so, what the Government have announced is not a real living wage.
Andrew Gwynne
My hon. Friend makes an important point. Just because the Chancellor calls an increase in the national minimum wage—welcome though that is—a national living wage does not make it “the” living wage. Is she as concerned as I am that the IFS has said that it is arithmetically impossible for the increase in the national minimum wage to match the losses that will result from the changes to tax credits?
Shabana Mahmood
My hon. Friend is absolutely right. The Government have been busily trying to claim that the changes to tax credits will result in no real change because the new national living wage, which is effectively only an increase in the national minimum wage, will make up for that. The IFS has made it clear that that is arithmetically impossible. That is a pretty damning indictment of the messages that the Government have been trying to put out since the Budget on 8 July.
Richard Fuller
I feel for the hon. Lady, because she has only one Labour Back Bencher here to support her—perhaps because the de facto Opposition are now the Scottish National party. On that specific point about the national living wage, which she calls an enhanced national minimum wage, will the Labour party be supporting or opposing it?
Shabana Mahmood
It is quality that counts, rather than quantity, and Labour Members will show their true quality, as opposed to those sitting to my left—literally to my left, that is—on the SNP Benches. We will of course support the measures that will bring in what is effectively the new national minimum wage, but it is important to expose the fact that it is not, in fact, a living wage. The living wage is calculated on the assumption that there will be full take-up of tax credits, which is exactly what the Chancellor has cut. Given the cut to tax credits, the real living wage will be significantly higher than anything the Chancellor has set out. The effect of his decision is that in 2016 he will be offering the people of this country the 2011 living wage. That is an important point to get on the record. That is why the IFS has said that compensating ordinary working people for the loss of their tax credits with the changes on wages is arithmetically impossible.
Sammy Wilson
Does the hon. Lady share my concern that while many under-25s will lose their tax credits, they will not be covered by the national living wage? On the one hand they will have money taken from them, and on the other hand the compensatory element will not be available to them, so work is certainly not going to pay for that group.
Shabana Mahmood
The hon. Gentleman makes a really important point. Taken alongside the changes to student maintenance grants and other measures, the Budget will leave young people, particularly those from poorer backgrounds, worse off. It will have a real impact on their life chances. As those measures are brought forward, it is important that we keep holding the Government’s feet to the fire on the impact they are having on young people.
Changes to the national minimum wage are normally made by statutory instrument, but given the change in the name—the Chancellor’s rebadging exercise—they might need to be done by primary legislation. I would be grateful if the Minister explained how the Government will go about making those changes. If primary legislation is needed, I am rather surprised that the changes are not set out in the Bill. It would be good to have the Government’s further comments on that.
The Bill contains nothing more on productivity, notwithstanding the Minister’s comments in his opening speech. Solving the productivity puzzle is absolutely imperative if we are to experience much stronger economic growth and get the deficit down more fairly. The Conservatives’ record on productivity is one of failure, given the difference between productivity in our country and in our competitors’ economies. I am afraid that the Budget simply offered more of the same.
Despite the Chancellor’s boasts, the Office for Budget Responsibility has revised productivity down next year, the year after, the year after that, and the year after that. His belated productivity plan was simply a patchwork of existing schemes, rather than a substantial reform to boost skills, business growth and wages. The Bill should also have included legislation on big infrastructure decisions, which the Government appear to have ducked.
Richard Fuller
To tie the issue of productivity, by which I think the hon. Lady means the record on labour productivity, to that of tax credits, does she feel that there is an argument to be made that the widespread nature of tax credits during the last recession played a significant role in the willingness of workers to job share and accept reduced wages in order to maintain themselves in employment, because they knew that the state was going to top up their income if it fell? Therefore, although I support the changes to tax credits, research is still needed into the beneficial impact they can have on maintaining employment in times of recession.
Shabana Mahmood
The hon. Gentleman raises a very important point. When we debated tax credits before the Budget, I discussed, I believe with the hon. Member for Brighton, Pavilion (Caroline Lucas), the way in which, in the last recession, tax credits assisted people to remain in work—to accept a reduction in hours, knowing that they would have the safety net of tax credits to help them through that difficult time. More research is needed; the Government should have looked at the way in which tax credits have assisted people. There is a real danger in removing tax credit support from people without having already embedded into the economy the high-skilled, high-paid jobs that we all agree are needed. If our economy had been transformed—if the Government had brought forward proposals that meant that vastly larger numbers of people were in higher-paid work—there would be no need for tax credits and it would be possible to move to a system where we could phase out or decrease the support.
A modern economy needs a modern infrastructure, but the Government have pulled the plug on electrification of the railways. They have pulled the rug out from under investment in renewable energy and flunked the decision on airports. I was interested to see that the Home Secretary was very willing to take on the hon. Member for Uxbridge and South Ruislip (Boris Johnson) when it came to water cannons. The least the Chancellor could have done was to take on the hon. Member for Uxbridge and South Ruislip when it came to the decision on airports. It would have been good to see this Finance Bill at least start that process.
Andrew Gwynne
My hon. Friend knows that several Greater Manchester MPs have already voiced their concern about the pause of the electrification of the line between Manchester and Leeds, not least because that is absolutely crucial for the economic growth that we need across the Greater Manchester and west Yorkshire “northern powerhouse”, as the Government like to call it. Does she also appreciate the frustration of Greater Manchester MPs that the only mention under the heading of “infrastructure” in the Budget was a plastic Oyster-style card to use on our Pacer trains?
Shabana Mahmood
My hon. Friend raises an important point. The northern powerhouse has very clearly got a power cut, and it remains the case that with changes to local government funding, we cannot empower local government and local people if we impoverish them. At the same time, there remain important critiques of the Government’s policy making in this area. He is absolutely right that the Budget, the Finance Bill and all the attendant documents that were published on 8 July certainly did not go far enough on infrastructure, and the example that he gives powerfully highlights that.
Maria Caulfield (Lewes) (Con)
Can the hon. Lady confirm that it was put on record during the election campaign that if Labour had formed the next Government, they would have cut infrastructure projects in my area, such as funding for the A27?
Shabana Mahmood
Infrastructure projects must be proceeded with on the basis of an economic case, and that was the underpinning of the announcements that we made during the election campaign, but it is also the case that under the hon. Lady’s party, infrastructure spending is down compared with 2010, and she should accept that the record of her Government and her party on infrastructure post-2010 is certainly nothing to write home about. A Government who were really serious about narrowing our productivity gap would be majoring on infrastructure. They certainly would not be kicking big decisions into the long grass for party political reasons and because of leadership ambitions, especially when it comes to airport expansion.
Shabana Mahmood
I assume that the hon. Gentleman will be backing the Chancellor of the Exchequer, whom he so loyally sits behind whenever we debate the economy.
The Budget and the Finance Bill have not lived up to some of the most pressing needs in our economy, and instead have actively imposed a work penalty and what can only be described as a living wage con. We will abstain on Second Reading. This is a relatively short Finance Bill, and we support a number of its measures, including raising the personal tax allowance threshold and the increase in business investment, particularly in respect of the annual investment allowance. We will want to scrutinise some of the other measures in much greater detail. We are concerned about the impact of some of the Government’s decisions, so we will return, especially in Committee of the Whole House, to issues on bank taxation, the climate change levy and the insurance premium tax.
Shabana Mahmood
That was not quite the cutting put-down that the Minister might have envisaged. That is our position, and that is what all our party will be doing today.
Richard Fuller
Given that the official Labour party position on the important Welfare Reform and Work Bill yesterday was to abstain and that its position on this Finance Bill is to abstain, can the hon. Lady clarify that it is the intention of the loyal Opposition to abstain on every major piece of legislation in this Parliament?
Shabana Mahmood
That question probably sounded more cutting in the development in the hon. Gentleman’s mind than in the delivery. [Interruption.] The hon. Member for Dudley South (Mike Wood) chunters from a sedentary position. He is welcome to intervene on me if he so wishes. I will be delighted to give way to him.
I say to the hon. Member for Bedford (Richard Fuller) and others that abstaining on Second Reading, as he well knows because he is a veteran of debates on Finance Bills, both in Committee and in the Chamber, does not mean that we will not press matters to a vote later in the Bill’s passage. Indeed, on the second sitting day in September we will be considering the Bill in Committee of the Whole House, where we will have tabled amendments, on which we will be voting, on other important measures including bank taxation, the climate change levy and the insurance premium tax. We can all have a lot of fun then when it comes to voting on amendments and debating them at great length.
Mark Durkan
Will the Opposition be supporting the reasoned amendment, opposing it or abstaining on it?
Shabana Mahmood
We will be abstaining on the reasoned amendment tabled by the Scottish National party. There are measures in the Bill that we definitely support. There are other measures that we wish to return to when the Bill receives detailed scrutiny in Committee of the Whole House and in Public Bill Committee, and we shall return to those issues and press some to a vote. On others, we will table probing amendments to gain greater understanding of the Government’s detailed intentions.
Mark Durkan
The Opposition Front Bench were saying similar things yesterday about the Welfare Reform and Work Bill, but they supported and tabled a reasoned amendment, so it is possible to abstain on a Bill but support a reasoned amendment. What is wrong with the reasoned amendment that would prevent the Opposition from supporting it?
Shabana Mahmood
I do not want to get into a tit-for-tat debate with the hon. Gentleman, but the SNP did not support our reasoned amendment last night. In my opinion, the measured and sensible way to take the Finance Bill forward, as we have done with previous Finance Bills in the previous Parliament, is to scrutinise it in detail. There are more opportunities with Finance Bills because we have Committee of the Whole House as well as the Public Bill Committee, and we shall press important measures in the Bill to a vote when we reach the latter stages of the Bill’s passage; but given that there are very important measures that we do support, it is important that we signal that by allowing the Bill a Second Reading.
One issue to which we will return in Committee of the Whole House is bank taxation. The Government will decrease the rate of the bank levy from January 2016 and will at the same time introduce a surcharge on profits of banks over a threshold of £25 million, which represents a switch from a tax on balance sheets to a tax on profits. Those measures are contained in clauses 16 and 17.
We will debate those in detail in Committee of the whole House in September, when we will seek to increase transparency regarding revenues from the banking sector. We will also push the Government for further details about the impact that these measures will have on the diversity of the financial sector, including any disproportionate impact on building societies. That is one of the things that people have been warning about since the measures in the Bill were unveiled.
As the Institute for Fiscal Studies has highlighted, by 2021 there will have been 13 tax rates in 10 years as the bank levy is gradually reduced from 0.21% to 0.1% by January 2021. This measure will cost £1.8 billion from 2021 onwards. Because from 2021 UK banks will be taxed on liabilities in the UK and not worldwide, that represents a fairly significant giveaway that it is important to test further in Committee. In contrast to what is happening to the bank levy, the 8% corporation tax surcharge, in effect, on bank profits from January 2016 raises £1.3 billion. There are a number of questions on the rationale for moving to this form of taxation for banks, as well as on the original intention of the bank levy and whether that will continue to be met in the new regime. It is important that hon. Members have the chance to test this further in Committee. The Minister will know that the bank levy was designed to discourage risky leverage, but whether it has been successful in doing so is a matter for some debate. Moving to a system of having a tax on profits possibly introduces a risk that there may be some discouragement from declaring UK profits. It will be important to analyse what risk that might pose in the banking sector.
There is a particular problem with regard to challenger banks, which were not subject to the bank levy but will fall within the new surcharge. Challenger banks are important for the overall health of the financial sector, because we need them to challenge the dominance of the big four or five banks. The Government will say, rightly, that the £25 million threshold is partly designed to prevent too much of the impact from being felt by challenger banks. Nevertheless, the Government will also be aware that a lot of the commentary since publication of the proposals has focused on the genuine concerns of challenger banks, which are worried that despite the £25 million threshold, they will still be disproportionately affected, with a significant impact on consumer choice as well. We will need to look at those issues further.
Richard Graham (Gloucester) (Con)
I am grateful for the shadow Minister’s confirmation that she and her party support much of what is in the Bill. Will she confirm that she agrees with its general direction, which is fundamentally towards an economy characterised by higher wages, lower taxes and less welfare?
Shabana Mahmood
I will shortly turn to insurance premium tax, which is a very significant tax-raising measure that the Government have not been quite as keen to trumpet as other measures in the Bill. As I said at the beginning of my speech—I am not sure whether the hon. Gentleman was in the Chamber—it is significant that most of the very contentious changes in the Budget, particularly in respect of working tax credits, are not in the Bill but will be made in delegated legislation Committees. I dispute the Government’s characterisation of these measures, because I believe that they will leave working people worse off. That is not necessarily directly relevant to all aspects of the Bill, but it is relevant to the overall package of measures introduced in the Budget.
There is serious concern about the impact that the 8% surcharge will have on building societies. Of the six main building societies—Nationwide, Yorkshire, Coventry, Skipton, Leeds and Principality—only Nationwide currently pays the bank levy. Based on the most up-to-date profit figures from 2014-15, it is estimated that the building societies will pay about £126 million a year through the corporation tax surcharge, equating to about £630 million up to 2020. The building societies point out that the primary way in which they build their capital is through retained profit, so a tax on profit has a disproportionate effect on them. Moreover, they do not have shareholders, unlike public limited companies, so this is, in effect, a tax on the customers who own them—retail savers and mortgage borrowers. It will be important for the Government to explain their thinking on building societies and what analysis there is of how these changes will play out for them in practice.
The next key issue that we will return to in Committee relates to the climate change levy. Clause 45 removes the climate change levy exemption for renewable source electricity generated on or after 1 August 2015. I am afraid that this is another example of the Government undermining investor confidence in renewable energy. They have already tried to halt the development of the cheapest form of clean energy by pulling the plug on onshore wind, and this continues that trend. It would be fair to say that since taking office they have put placating their Back Benchers’ more strident views about renewable energy generation above the jobs and investment that would be created across our economy if we were genuinely able to move towards a low-carbon economy.
We will particularly seek to push the Government on a suggestion by the Chartered Institute of Taxation that they produce a road map, as they have done previously on aspects of taxation policy—in particular, corporation tax policy—setting out their plans for the future of environmental taxes to help the renewable energy industry, and business more generally, to take long-term investment decisions. That could be an important way for the Government to set out their intentions for the life of this Parliament and for us to test whether they mean it with regard to charting a course towards a low-carbon economy for our country.
Insurance premium tax, as I said in response to the hon. Member for Gloucester (Richard Graham), is a significant revenue-raising measure. Clause 43 increases the standard rate of the tax from 6% to 9.5% with effect from 1 November 2015, raising £1.6 billion. There are very important questions about the distributional impact that that will have and whether those on middle and low incomes will bear the brunt of the increases. It is interesting that the Chancellor did not focus on the very significant revenue-raising measures in his Budget. Indeed, the rhetoric and narrative that he has been pursuing suggests that it is a Budget of giveaways. He will not be surprised that we will not let him get away with that characterisation.
Insurance premium tax has been described as a stealth tax. Ministers will be aware that several industry figures have warned that increasing it could prompt policyholders to buy less cover, possibly exacerbating problems caused by under-insurance, particularly with regard to car insurance. Again, we will wish to test those areas further in Committee when we will look carefully at any analysis by Government of the possible impact on under-insurance. The AA has said that insurance premium tax on the average car insurance policy is equivalent to a fuel duty increase of almost 2p per litre, so either way drivers are being hit in their pockets. I would be grateful if the Minister commented on the measure’s overall distributional income, what conversations the Government have already had with the insurance industry and what this means for future changes to fuel duty.
As I have said, we support other measures in the Bill, particularly the so-called tax lock both for income tax at the basic, higher and additional rates, and for VAT. I remind Treasury Ministers that, back in 2009, the current Chancellor was very critical about Chancellors passing laws to ensure that they fulfil the promises they make in general election campaigns, and I think that that criticism applies just as much to him now. However, we support the principle of the lock. We have pledged not to raise VAT, national insurance or the basic and higher rates of income tax, so we welcome those measures.
Andrew Gwynne
I commend my hon. Friend and the shadow Treasury team, because that particular lock would not have been introduced were it not for the valiant efforts of Labour Front Benchers in the run-up to the last general election in highlighting that the Government would probably have to raise VAT or other taxes. She has already described some of the stealth taxes that have come to fruition since the election.
Shabana Mahmood
My hon. Friend makes an important point. I wonder whether we would have the tax lock had it not been for the VAT bombshell poster we unveiled or for the exchanges at Prime Minister’s questions ahead of the general election. Ministers were certainly very quick to write such a law, and despite the Chancellor having suggested in 2009 that passing laws to ensure promises on taxation are kept was a very bad idea, he was very quick to convert to that cause. Nevertheless, they are passing a law on the tax lock. It was Labour party policy, and we are very pleased that we pushed the Conservative party into our territory in agreeing that the rates for ordinary people on lower and middle incomes should not go up.
Another change we support is on the annual investment allowance. I am pleased that the direction of travel has been set out for the whole Parliament. That contrasts very strongly with what happened during the last Parliament, when lots of chopping and changing on capital allowances definitely undermined business investment. Even if the deal is less generous, with a decrease from £500,000 to £200,000, it is important that businesses at least know that the deal they are going to get will last a lot longer than it previously did.
As my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) has mentioned with respect to the expected changes on corporation tax, there is a lack of concrete proposals for business rates. The Financial Secretary has raised expectations and hopes of real change on business rates when the consultation is finally unveiled later this year. We will certainly look at whether the business rates burden will come down for small and medium-sized companies.
Shabana Mahmood
As the Financial Secretary knows because we have already had such an exchange—I feel we are reliving our greatest hits—on a number of occasions in the past couple of years, our policy at the general election was our manifesto commitment not to go ahead with the corporation tax cut from 21% to 20%. We would not have gone ahead with that additional cut to 20%, but instead used all the money to pay for a cut to business rates this year and a freeze next year. It was a direct switch spend. We wanted to make a commitment to small and medium-sized businesses in our country to do something practical on business rates, but we needed to find a way to pay for that, and we chose to switch-spend in respect of the additional corporation tax cut. We of course lost the election, and the Government are proposing a further decrease of the corporation tax rate. We will support the corporation tax measures, but we will ask questions about what that means for the future direction of travel.
Following an intervention, the Financial Secretary mentioned the BEPS project. On corporation tax more generally, it is important—given how some companies seek to shift profits and game international taxation rules—to have international agreement. Concern has already been expressed in some quarters that some of the countries with which we need to do business and with which we need to agree international tax rules might start to see us as a tax haven. I disagree with such a characterisation, but there is such a risk in getting agreement within the OECD BEPS process. I would welcome it if Treasury Ministers could, in Committee, provide further details about what is happening and about how our friends in the BEPS process are reacting and responding to the Government’s proposal on the headline rate of corporation tax.
One measure we have already voted against relates to inheritance tax. Clause 9 introduces an additional residence nil-rate band for inheritance tax when a home is passed to the direct descendants of the deceased on or after 6 April 2017. The provision, which runs to more than 400 lines, is extremely technical, but it in effect allows parents to pass on a house worth £1 million to their children free of inheritance tax. We have made it clear that the focus of tax cuts should be to help people on middle and lower incomes and to tackle tax avoidance. The Treasury has admitted that 90% of households will not benefit from the Government’s inheritance tax policy. Their priority should be to help the majority of families and first-time buyers struggling to get a home of their own, rather than a further cut to the rate of inheritance tax at this stage.
Ian Blackford (Ross, Skye and Lochaber) (SNP)
I must say that I am listening to the hon. Lady with a degree of sadness. Last night, we saw the Labour party abstain on welfare. Today, Labour Members are yet again failing to provide an effective opposition to this Government. Is it not time that they came across to our Benches and to SNP Members, who are providing the real opposition that Labour Members are failing to provide?
Shabana Mahmood
The hon. Gentleman rather forgets that the Scottish National party is not a national party; in fact, it is committed to breaking up our Union. If he and his colleagues aspire to be an official Opposition, they may wish to stop being a party of only national interest and stop trying to break up our country. We did not merely abstain on the welfare Bill. As he well knows, we voted for our reasoned amendment, which is exactly what his party plans to do today. If that approach was not good enough for us yesterday, why do he and his colleagues think that it is good enough for them today?
If the hon. Gentleman has been listening to my now very lengthy remarks, he will know that I have gone through the Finance Bill and the Budget in detail and made it very clear that the Bill does not contain many of the most contentious of the Chancellor’s Budget decisions. We will debate and oppose such measures when they are brought before the House as statutory instruments, but those measures are not in this Bill. I have laid out in depth our approach to all the different measures in the Bill, including those that we support and those on which we will ask further questions and to which we will table amendments, which we will vote on, as the Bill continues through its stages in this House.
The Government have published further changes to the direct recovery of debts from bank accounts and in relation to carried interest. That has excited some interest in the inboxes of Members’ email accounts with the campaign by 38 Degrees. We had a manifesto commitment in respect of carried interest. I am not sure that the Government’s proposals in the Finance Bill go as far as we were hoping to go, had we been elected. As I say, we will test the detail in Committee.
In short—sorry, I mean “in conclusion”, as I have been on my feet for a while—many of the most contentious elements of the Budget are not in the Finance Bill. It contains a mixture of measures that we support and measures that we will return to in great detail when we get to Committee of the whole House. I look forward to debating with Ministers as the Bill progresses through the House. I hope that in winding up, the Minister will deal with some of the questions that I have raised in respect of bank taxation, the climate change levy and insurance premium tax.
Edward Argar (Charnwood) (Con)
It is a pleasure to follow a Minister and a shadow Minister who, although it will not surprise you to hear that I agree with one rather more than the other, Madam Deputy Speaker, always speak with passion, clarity and a deep understanding of and care for the issues that we are debating.
It is a pleasure to speak on a Finance Bill that has responsibility, security and the delivery of one nation policies at its heart. It is an ambitious Finance Bill that seeks fundamentally to reform our national finances and create a new settlement for the country. It sets out a clear plan to move Britain from the low-wage, high-tax and high-welfare economy of the past to a higher-wage, lower-tax and lower-welfare society, ensuring that those who work hard, do the right thing and take responsibility are able to get on and have their aspiration rewarded.
To working people and those who can work, the Bill says, “We will take more of you out of tax. Our new national living wage will ensure that you get a decent day’s pay for a decent day’s work, but fewer taxpayer-funded benefits.” The Budget says to businesses, “We will support you to grow through lower taxes but, in return, you must play your part, pay people more and help train our young people for work.” Doing that means taking tough decisions and not being diverted from a long-term economic plan that is working.
Let us not forget the scale of the Chancellor’s achievement over the past five years. His inheritance in 2010 was employment down, housing starts down and GDP down. The only things that were up were borrowing, debt and deficit. Since 2010, employment has gone up by 2 million, the economy has grown, GDP is up by about 3% and the deficit has been halved. Much has been done, but there is much still to do to ensure that, as a nation, we live within our means and spend only what we can afford.
This Budget package—it is a package that must be viewed as a whole with the other measures that we have debated in recent weeks—sets out the plan to finish that job and ensure that our economy remains stable and strong in the years ahead, better to weather any future global economic storms. Key to that is the welcome road map to the elimination of the deficit in this Parliament and the transition to a budget surplus by 2019-20, which will allow the UK to start paying down its national debt. The ambition to further reduce Government spending to 36% from about 40% of GDP is laudable. The state should always seek to take only what it needs in tax, and no more.
This package will help deliver another 1 million jobs by 2020, projected growth of higher than 2% per annum, a raised tax threshold to ensure that those who earn least keep more of their hard-earned money, cuts to taxes on business to deliver growth and a national living wage to ensure that work always pays. In parallel, the deficit and debt reduction will be achieved. The package requires spending in areas such as welfare to be reduced to make sure that we live within our means, but in a way that ensures that the overall package will see a majority of working families better off.
One aspect of the Finance Bill that I want to touch on in a little more detail is the tax avoidance and evasion measures that the Minister mentioned. We believe in a low-tax economy, but one in which people and companies pay the taxes they owe and contribute their fair share. Between 2010 and 2015, the last Government did more than any previous Government to tackle tax evasion and avoidance. I am pleased that the Finance Bill continues that important work. I see from tables C.3 and C.5 of the Red Book that tax receipts are projected to grow. While I am sure that much of that flows from the growth that our national economy continues to enjoy, I hope that it also reflects the improved recovery of taxes owed. I hope that the Government will continue to close tax loopholes as they are identified and finish the job of putting fairness at the heart of our tax system and, where possible, simplifying the tax system without compromising its rigour.
I strongly support the Finance Bill, which seeks to remake our country and to deliver a strong economy, economic security and one nation. Its individual measures are justifiable and necessary, but taken as a package, the logic and coherence of the Finance Bill and related Bills are irresistible.
Callum McCaig (Aberdeen South) (SNP)
The hon. Gentleman talks about logic, but one aspect of the Bill is the removal of the climate change levy exemption for green energy. Applying the climate change levy to green energy production is just about as illogical as one can get. Would the hon. Gentleman care to comment on that?
Edward Argar
It is absolutely right that we remove the levy to ensure that, over time, we bring energy prices down and so that we do not subsidise an industry that I do not believe should receive those subsidies.
To conclude, this is a package that rewards work, pays down the deficit and debt, drives growth and productivity, and puts the country securely on track for a secure and stable economic future, with everyone having the opportunity to benefit.
Edward Argar
I will not, because I am about to conclude.
This is a Finance Bill that truly reaffirms the position of the Conservatives as the genuine party of one nation and of hard-working people and families.
Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
I beg to move an amendment, to leave out from “That” to the end of the Question and add:
“this House declines to give a Second Reading to the Finance Bill because it fails to address the real economic needs of the country, continues to deepen the social divide between those who have and those who have not, restricts the financial discretion of the Scottish Government over its resources, fails to tackle the iniquity of the Scottish Police and Fire and Rescue Services being unable to reclaim VAT, creates unintended consequences for small challenger banks and building societies whose capital comes from retained profits, removes the exemption from the climate change levy of renewable energy resources and, in combination with welfare changes announced in the Summer Budget 2015 and inheritance tax changes, takes from people on low and middle incomes and gives to the very richest.”
I am proud to lead for the Opposition. I felt sorry, in many ways, for the hon. Member for Birmingham, Ladywood (Shabana Mahmood), as she sat there amidst the gathered masses of five Labour Members, which have now declined to three. I noticed that the Minister managed to attract 12 interventions, only one of which was from Labour.
Roger Mullin
Paying attention? That would be a good idea for the Labour party. You mentioned quality. If you stopped chuntering and listened, you might get a bit of quality.
We are going to do something that the Labour party has refused to do, which is to test the Finance Bill. The hon. Lady spent the first 12 minutes of her speech talking about other things because she said that there was nothing of any great substance in the Bill. I am going to try something rather unusual and talk about what is in the Bill.
Shabana Mahmood
I hesitate to be mean-spirited to the hon. Gentleman, but it is obvious from his remarks that he was not listening to my lengthy remarks in which I set out not that there is nothing of any substance in the Finance Bill, but that there are measures in the Bill that we support and measures that we have further questions about. That is different from the Budget, which contains measures on which we have a very real difference of opinion with the Government. We will test those when they come before the House in delegated legislation Committees.
Roger Mullin
So that, no doubt, explains why you could not think up a reasoned amendment.
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. I let the hon. Gentleman get away with it the first time, but now that he has done it for the second time, I must point out to him that when he says “you” he means me, not the hon. Lady. I am quite sure that he is addressing his remarks not to me, but to the hon. Lady.
Roger Mullin
My apologies, Madam Deputy Speaker.
Our amendment starts by stating:
“That this House declines to give a Second Reading to the Finance Bill because it fails to address the real economic needs of the country”.
As I sat through the Budget speech last week—in growing incredulity, it must be said—my greatest concerns were threefold: first, the crude and brutal attacks on protections for the most vulnerable in our society; secondly, the failure to address adequately the challenge of productivity in our economy—despite the remarks of the Minister at the Dispatch Box today, I will try to demonstrate why the Bill fails to address those requirements; and, thirdly, the impact on regional and national economies, not least in Scotland.
On receiving a copy of the Finance Bill and its associated papers, my concerns have not abated. Indeed, through reading the detail in the Bill, further concerns have come to light, and it is therefore my intention—and that of my colleagues—to table a series of detailed amendments in Committee.
Yesterday’s debate on the Welfare Bill exposed many of the negative effects that Government policy will have on the poor, the disabled, the vulnerable, the young, and in-work families. The Finance Bill adds another burden on hard-pressed families who will face a rise in national insurance premiums as a result of the increase in insurance premium tax.
Michelle Thomson (Edinburgh West) (SNP)
Does my hon. Friend agree with concerns expressed by the British Insurance Brokers Association, which stated that the rise in IPT is actually a tax on protection and will affect behaviour by limiting people from taking on that protection? It also states that that will affect young people disproportionately, and it is regressive in that it disproportionately affects families in lower socio- economic groups.
Roger Mullin
I agree entirely with my hon. Friend, and it must be a concern that the measure will lead many families not to take out necessary insurance, with those that do placing themselves in further hardship.
Those negative effects on the poor are matched by giveaway proposals for the rich. The extent of the commitment given to the rich is perhaps best evidenced by the fact that the Government devote no fewer than 13 pages of the Finance Bill to inheritance tax, ensuring that many loopholes are possible for the benefit of those with high-value homes. There is even a proposal to increase the allowance each year, based on the consumer price index, and to round that up to the nearest £1,000 in case the poor dears find it hard to cope.
The fact that the Government find it so essential to make changes that benefit holders of great wealth in our society, at the same time as they cut support for the most vulnerable, says much about the moral choices that they make. There is also a wider economic cost to such choices. The combination of sucking demand out of local economies by penalising the poorest in our society, combined with the largesse bestowed on the wealthy —who will no doubt find ways of spending or saving that do not benefit local economies—makes the simple point that the Government care more about rewarding their friends than about fixing the economy.
Let me move on to the Government approach to very high earners, who for years have found ways of avoiding and evading tax. I admit that I liked some of the Chancellor’s rhetoric during his Budget speech about closing tax loopholes and ensuring a fairer return from those with high earnings—often, people who earn more than £1 million per year—but looking at the detail in the Bill, it is clear that there is still a considerable distance to travel. For example, much more needs doing to close the so-called Mayfair loophole. It cannot be right that private equity fund managers will be able to continue paying capital gains tax at only 28% on so-called carried interest, rather than income tax at 45%. It is probably not unreasonable to estimate that more than £300 million extra revenue could be gained by tightening the rules in that area alone, and that would enable at least some mitigation of the worst excesses of the Government’s welfare proposals.
The Chancellor is undoubtedly highly skilled politically in his presentation—indeed, in that regard he may have been taking lessons from my predecessor in Kirkcaldy and Cowdenbeath. As always, however, the devil is very much in the detail, and the detail leaves too many loopholes.
Let me now address measures that are necessary to tackle some of the areas contributing to weaknesses in productivity—a matter that the Minister addressed.
Angela Crawley (Lanark and Hamilton East) (SNP)
If the Government are serious about improving productivity, should they not also be serious about improving capital investment?
Roger Mullin
Absolutely, and I am glad my hon. Friend raised a matter that I will come to shortly. Investment is critical for productivity in this country.
I am struck by how the detail of the Finance Bill suggests that, rather than addressing key issues in a positive manner, the Government present some highly counterproductive measures on productivity. I and my colleagues initially welcomed some of the changes to the banking levy and the introduction of a surcharge. However, whether through carelessness or incompetence—what I am about to say surely could not be planned—the scope of the changes now captures both challenger banks and many building societies whose practices are very different from those of the big banks. Challenger banks already face additional hurdles compared with the big banks, and as the British Bankers Association has pointed out:
“The surcharge’s disproportionate effect on smaller and challenger banks was evidenced by the resulting fall in their share prices following the announcement, in some instances of over 10%.”
Of more concern to me and my colleagues is that the BBA has estimated that:
“Our preliminary analysis based on modest growth projections across the sector suggests that the contraction in lending could be around £10 billion over five years”.
If there is anything we do not need when trying to boost productivity, it is a contraction in lending, particularly for SMEs. If that was to be the only drag on productivity it would be bad enough, but let me turn to another.
Ian Blackford
If we are to get sustainable economic growth in this country, we need sustainable growth in bank lending, but the Government’s actions will restrain what is necessary to deliver bank lending growth in this country. What has happened to the £375 billion of quantitative easing that was supposed to do exactly that and increase bank lending? It is another failure of this Government.
Roger Mullin
My hon. Friend answered his own remarks with his last four words. It has been a failure, and now the Government are also failing on productivity.
As I was saying, the potential contraction of £10 billion in lending is made worse because it is now paralleled by a further planned drop in public sector capital expenditure, as my estimable colleague, my hon. Friend the Member for Dundee East (Stewart Hosie), revealed earlier today in questions to the Chancellor.
Sammy Wilson
I agree with the hon. Gentleman about challenger banks and building societies, but rather than over-egg the pudding perhaps he could explain the mechanism by which £126 million of additional tax taken from those institutions will be multiplied up to a reduction of £10 billion in lending.
Roger Mullin
It is quite a complicated matter, I am told, and I would be willing to come back to it. I am sure that in one of our many discussions we could discuss precisely why that is, but I was not aware of the precise figure of £126 million that the hon. Gentleman mentions. The contraction in lending, mentioned by my hon. Friend the Member for Dundee East, suggests a loss of almost £5 billion over the next five years in public sector investment. Potentially, that adds up to a cumulative drop of £15 billion in private and public sector investment, and that can only be a major barrier to any chance of improvements in productivity.
Other factors with a direct impact on productivity are worthy of comment too. The ability to innovate is directly related to research and development. I therefore scoured the Finance Bill to see what was planned to boost the investment in company R&D. What did I find? Less than nothing. For example, the only change to R&D expenditure credits is the removal of universities’ ability to claim them. That in itself would not be such an issue if more would be done in other ways to significantly boost R&D expenditure, but that is not the case. Indeed, the Budget speech, and the accompanying Red Book, seemed keener to demonstrate adroitness with smoke and mirrors, rather than clarity and commitment to boosting research and development.
I turn now to the impact of the Finance Bill on Scotland in particular. The Chancellor may be many things, but he is far from stupid. In putting in place an income tax lock, which I admit to thinking is a very clever political trick, he has wisely not included in the lock the setting of bands. He recognises the importance of being able to adjust bands to suit economic conditions. He might find it odd that I wholeheartedly agree with him on that. I am sure he therefore appreciates why the SNP has called for the devolution of all aspects of income tax to the Scottish Parliament.
Sammy Wilson
The hon. Gentleman makes an important point. Would he acknowledge that the Red Book anticipates that receipts from PAYE over the period will increase by nearly 36%? That is faster than the growth in the economy and must be because of movements within bands.
Roger Mullin
I fully accept that: it is a very good point.
The Chancellor recognises the importance of the bands in terms of tax. Scotland needs full control of all aspects of income tax, so I hope that the Secretary of State for Scotland will learn from the Chancellor in that regard.
Of huge concern to Scotland, and to anyone with a concern for the future of our planet, is the continuing attack by the Government on the renewable energy sector. It would appear that the Chancellor has a bad addiction to carbon. He cannot get enough of it. How else can we explain the fact that the Finance Bill will remove the exemption for electricity from renewable sources? Combined with the Government’s insane attack on wind generation, we can see an attack on renewable energy, an attack on Scotland's economy, and an attack on all those working to take better care of our environment.
Sammy Wilson
Would the hon. Gentleman accept that carbon dioxide is not bad as such? It makes plants grow and allows increased productivity in agriculture. It is a good thing for the agricultural economy.
Roger Mullin
Climate change is largely man-made and carbon is no friend to the environment in that regard. I am sorry to disagree with the hon. Gentleman. I would add, as the owner of a hybrid car, that it seems perverse to add an estimated £1,000 to the cost of buying a greener car—more confirmation of the Chancellor’s addiction to carbon.
Andrew Percy
The hon. Gentleman mentioned the “insane attack” on, I assume, onshore wind. In areas such as mine, where people are surrounded by 100 turbines, they are driven literally to tears in my surgeries. They are genuinely concerned about the growth of onshore wind, and what we are saying is that we have reached the limit of onshore wind. We are responding to genuine concerns from real people, and my constituents are not insane for having the concerns they have.
Roger Mullin
I gently point out to the hon. Gentleman that the area of the United Kingdom that has made most progress in wind generation is Scotland. The Government’s attack pays no regard to the interests of Scotland or the policies of the Scottish Government. We are keen to develop renewable energy, not see it set aside.
Allow me to turn now to an area in which I hope the Government will find it easy to demonstrate some good will towards Scotland. Using the cover of technical consideration, Scotland’s police, fire and rescue services, unlike those elsewhere in the UK, are liable for VAT. However, I see from the Finance Bill that it is perfectly within the power of the Government to make special adjustments to taxation requirements. In part 4 of the Finance Bill, the Government have devoted six paragraphs to the London anniversary games, starting this week. In essence, they are deeming non-resident competitors to be free from the burden of having to pay income tax on earnings. It is even being backdated to 8 July. I am not complaining about that, but I would ask the Government to look again at exempting the Scottish police, fire and rescue services from the burden of VAT, with suitable backdating.
I declare an interest of sorts. My daughter’s partner, Dave, is a retained firefighter in Drumnadrochit in the highlands of Scotland. He often is called out to very difficult and tragic events. It is surely disgraceful that people performing such remarkable services for the community in Scotland should see their service penalised because of a technicality that the Government could easily resolve. If the Government right that wrong, I will be the first to thank and praise them for listening to Scotland. I hope that the Government will indicate a willingness to at least seriously consider an amendment to remove that unnecessary burden on Scotland’s police, fire and rescue services.
I commend the amendment to the House.
Mike Wood (Dudley South) (Con)
It seems slightly rude to intrude on the private squabbles between the Labour and SNP Front Benches, but I am delighted to speak in support of the Finance Bill, which implements many of the measures in the summer Budget.
Last week’s black country day celebrated our region’s industrial heritage, and the measures announced in the Budget will do much to develop the framework for businesses in my constituency and across the country. In Dudley South, many of the businesses that I visit are thriving, whether we are talking about Pressvess, which exports to south America and the middle east, or Mechatherm, which designs and exports foundries all the way to Taiwan. Those small and medium-sized businesses are the lifeblood of our local economy and the driving force behind securing economic recovery, increases in employment and greater prosperity for our constituents. Those businesses and others like them account for 60% of employment and almost half of turnover. The measures announced by the Chancellor a few weeks ago will ensure that such businesses can go from strength to strength and create the new jobs that our communities need—for example, the increase in the employment allowance from £2,000 to £3,000, cutting non-wage costs and making it cheaper to create new jobs and to invest in local people.
One of the first companies I visited as the local Conservative party candidate ahead of the general election makes tools and components for the aerospace and automotive industries. Among the frustrations it voiced to me was that, while it invests large amounts of money, effort, staff time and good will in apprenticeships and in training all its staff from apprentice to the boardroom, other companies seem to want a free ride on the backs of those who invest in that way. I therefore welcome the apprenticeship levy on large firms that the Chancellor announced in the Budget, because it will reward businesses that invest in their workforce and penalise those that attempt to get a free ride.
I am proud that the Government have demonstrated their recognition of people’s natural aspirations. They are on the side of people who want to succeed and make the most of their lives. It is vital that we press ahead with the economic reform we put to the country in the general election in May to ensure we secure the financial stability that safeguards people’s jobs and mortgages.
In the past few years, we have seen spending on out-of-work benefits fall to its lowest level since before the recession. The number of people in work in my constituency, and elsewhere across the country, has shot up. For far too long during the boom years before the recession, welfare spending spiralled. We know that many measures were introduced with the very best of intentions. I do not think anybody would argue with those intentions, but unfortunately it sometimes seemed as though too little thought was given to the consequences of the complexity of the systems being built.
Andrew Percy
I agree with everything my hon. Friend says about the complexity of the system. Does he agree that in making changes and trying to get away from the laudable aim of reducing in-work benefits, we have to be incredibly careful and ensure that the changes coming in next April do not go too far? I hope that—I am glad Ministers on the Government Front Bench will hear this—as we scrutinise the proposed reductions further, we will perhaps think a little more about the impact some of them could have on some of our working constituents.
Mike Wood
I am not sure that that intervention was necessarily directed at me. I agree with much of the sentiment behind it, but we have to be firm in the need to continue with reform while, as my hon. Friend says, being aware of the impact it will have. I am sure, like other hon. Members, he will have his attention drawn to that impact very regularly through his mailbox.
The consequences of the complexity of that welfare system did not help the millions who were trapped within the system, with little hope or opportunity to escape and to progress. It is important that the Government’s reforms continue to support people into work, but it is just as important to make sure that it pays to be in work. The Finance Bill moves the Government another step closer to achieving that goal. Securing our finances and ensuring welfare reform are essential to our long-term economic plan. Enormous progress has been made in the past year and in the past five years. We can see the evidence in our communities and in the employment statistics. There are more than 250,000 more people in work in the past year alone and nearly 2 million more in work over the past five years. The economy is continuing to recover and job creation is booming, which is why the measures in the Bill to secure that recovery are so important.
In my constituency of Dudley South, the claimant count has fallen by 29% in the past year, with 584 fewer people out of work and claiming benefits. Across the west midlands overall, the unemployment rate has fallen more than in any other UK region. This is not just a recovery for London and the south-east. The Government’s long-term economic plan offers the best strategy to ensure that that continues. They have shown that they have the courage to take the difficult decisions needed, and to put the measures in place to support working people. The measures we have already discussed go hand in hand with tax cuts for working people: the increases in the personal allowances rising even further than announced in the April Budget, alongside the new national living wage. A new, higher guaranteed wage will mean an immediate pay rise for 2.5 million people.
Alison Thewliss (Glasgow Central) (SNP)
Does the hon. Gentleman consider it fair that people under 25 will not see the benefit of that pay rise? The differential between those earning this wage at the 16 and 17-year-old rate and at the 25-year-old rate has now expanded significantly and could have a detrimental effect on their ability to live their lives.
Mike Wood
The hon. Lady raises a good point, but she should recognise that while the national living wage will be mandatory only for the over-25s, that does not mean that businesses should not pay young—[Interruption.] When the national minimum wage was introduced, there was a lot of controversy regarding the under-21 rates. The evidence, however, did not back up the idea that employers who were paying the national minimum wage rate for the over-21s were necessarily paying the under-21 rate for 18 to 20-year-olds. I would certainly hope that responsible employers invest in and value their workforce, and pay them accordingly.
The introduction of the national living wage will mean that a full-time person in Dudley South will earn an additional £5,000 in wages during this Parliament alone. The living wage will provide my constituents with the financial security of being able to enjoy higher earnings and a bigger wage packet. The message is loud and clear: the Government want people and businesses to succeed, but while we want the regulation of business to be as low as possible, there is a responsibility on employers, as part of that social contract, not to expect taxpayers to subsidise low wages.
The Government were elected in May because of the prospectus we presented to the electorate, which focused on the future. The Bill continues the strategy that will deliver a more prosperous and more successful future. Only by continuing to focus on our businesses, our apprentices, our jobs and our industries can we deliver for Britain. That is what the Budget set out and what the Bill will achieve. The summer Budget and the Finance Bill build on the success of the past five years to secure a better future for Britain and for our constituents.
Sammy Wilson (East Antrim) (DUP)
As a party that believes in low taxation, we welcome a number of measures in the Bill, including those to take more people out of taxation and allow them to hold on to the money they earn. The changes to tax thresholds, the reduction in corporation tax and the tax allowances to encourage businesses to invest in capital or research and development will contribute to the health of the economy and help to close the productivity gap that concerns Members across the House. We will not be voting for the reasoned amendment because we believe there are positive measures in the Bill and because we disagree with some aspects of the amendment anyway.
We do, however, have a few concerns—we discussed some of them yesterday in the welfare reform debate—including about the impact of removing tax credits from people in low-paid jobs and the Government’s misplaced faith in their being compensated by the rise in the national living wage. Rather than making work pay, the measure will act as a disincentive to work for many people, especially young people, to whom the national living wage will not apply and for whom the reduction in tax credits will result in lower incomes. The Government cannot ignore that aspect of their policies.
The hon. Member for Dudley South (Mike Wood) was optimistic that the gap would be filled by businesses volunteering to pay the national living wage to those not officially covered by it. I sometimes hear Government Members talking about the pressures on small businesses. We cannot have it both ways. On the one hand, we talk about businesses being under pressure and requiring help, including with taxation and business rates, but on the other hand, we say, “By the way, they will volunteer to pay higher wages to those not officially covered by the national living wage.” We cannot gloss over the impact of these changes. I believe the Government are being optimistic about the impact. If it backfires—if many people find themselves less well off in work and work therefore becomes less attractive—one of the key policy objectives of the Budget will not be achieved.
That point is particularly pertinent to places such as Northern Ireland, where, because of low productivity in industry, the preponderance of small businesses and other structural factors, a high proportion of people are employed in low-wage businesses and rely on tax credits to bring them up to a reasonable standard of living.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
I am grateful to the hon. Gentleman for giving way. While we are not political friends, we are at least friendly. He started by saying he was in favour of people keeping more of their tax, but then bemoaned the loss of tax credits. Will the loss of tax credits not enable a lack of redistribution by acting as a cover for the rich to keep more of their money and as further camouflage for inequality, especially with inheritance tax being cut for the very wealthy while the poor are losing out? When we say we want people to keep more of what they earn, we have to be sure what we mean. Quite often it is a cover for growing inequality and an opportunity for the rich to keep even more for themselves.
Sammy Wilson
Of course, some of the measures in the Bill will take people out of tax altogether, which I am sure the hon. Gentleman will welcome, and some will take people out of the higher tax brackets, especially people on middle incomes, which I am sure he would welcome too. When I referred to people being able to hold on to their income, I was thinking specifically about some of the measures in the Bill. It would be churlish not to acknowledge that the Government have at least recognised the need to find a mechanism to lift those on low incomes out of tax altogether. Administratively, that is a good thing too. Why tax people and then give it back to them in benefits?
The second issue I want to raise is about infrastructure, and the Minister’s answer to me on that was a bit woolly. I do not know how much will be available in the road fund arising from the tax changes to vehicle licence duty applying to cars sold and driven in Northern Ireland, but it is important—and this seems to be an afterthought—that in those parts of the UK not covered by the road fund, which is available as a result of directing vehicle licence duty to infrastructure projects, there be a speedy resolution with the devolved Administrations to ensure that the funding is available to them to develop the road infrastructure in their own areas.
I am also disappointed that the thorny issue of the extension of the hub airport, whether at Heathrow, Gatwick or wherever, is not being addressed in the infrastructure measures in the Bill. Regional connectivity is important for places such as Northern Ireland. That matter cannot be kicked into the long grass. If Britain is to remain competitive and not lose out more and more to Holland, Germany and France, where they are developing hub airports, it is important that we develop our own infrastructure. In Northern Ireland, we are increasingly worried about slots being lost at Heathrow because of the pressure on the runways there. The first places to look at are the flights coming in from other areas of the UK, but that connectivity is vital to the promotion of industry in Northern Ireland and has been part of the secret of our success with inward investment.
Mr Gregory Campbell (East Londonderry) (DUP)
Does my hon. Friend agree that part of the problem has been the preponderance of economic development in the south-east of the UK resulting in massive differentials in prosperity across the regions and nations of the UK? Is that not at the heart of trying to get our nation out of recession and into greater prosperity?
Sammy Wilson
That is exactly right, but if we do not have the proper infrastructure to do that, we will be disadvantaged. A continual theme in this Parliament has been the question of how to ensure that growth is spread across the UK and not concentrated in the south-east of England. One way is to ensure that our infrastructure enables the prosperity generated in the south-east of England to be spread across other parts of the UK.
Mr MacNeil
I am grateful to the hon. Gentleman for giving way again; he is underlining our friendliness. To build on the point from the hon. Member for East Londonderry (Mr Campbell), I wish to say that the hon. Member for East Antrim (Sammy Wilson) is absolutely right about the problem of connectivity with the south-east of England, where the airports are being built. It is not by accident. In the 40 years after world war two, there were bilateral air agreements specifying that planes had to fly into London airports, and we have paid for that. He is right about the Netherlands. The London docks lost out to Rotterdam, and it looks like it will happen again with the air infrastructure. As the chief executive of Schiphol said, it would be a good idea—
Mr MacNeil
The chief executive said it would be a good idea to have a long inquiry, and that is what is happening. It is taking too long.
Sammy Wilson
Madam Deputy Speaker, I hope you will indulge the hon. Gentleman, as it is his birthday today. Therefore, long interventions can perhaps be tolerated.
Madam Deputy Speaker
I would like to make it absolutely clear that there is no precedent for long interventions on an hon. Member’s birthday. However, we are about to rise for the summer recess and the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) made his intervention in such a charming way, and he’s made it.
Alex Salmond
It will be a very short intervention. My hon. Friend the Member for Na h-Eileanan an Iar (Mr MacNeil) is well enough versed in the procedure of this House to know that this is a debate on a Finance Bill and could potentially go until any hour, if he wanted to extend his interventions or speeches.
Sammy Wilson
That is a very worrying intervention for those of us who wish to get to the airport and go back to our constituencies, and I hope it will not be followed up on later in the debate.
Another issue I want to raise is corporation tax. I welcome the reduction in the rate of corporation tax and also the allowances. This has an impact on Northern Ireland, because as the rate set centrally is reduced, the cost of devolving corporation tax to Northern Ireland is reduced as well. That probably reduces Northern Ireland’s competitiveness vis-à-vis other parts of the United Kingdom. However, as the real target of the reduction in corporation tax is our competitiveness vis-à-vis the Irish Republic, a reduction in the cost of devolution—which can affect either what money we have available in the block grant or, indeed, how far we can reduce the level of corporation tax—is welcome.
We recognise the importance of corporation tax in attracting inward investment. Even though there might be lots of capital allowances and so on, the importance of the headline rate has been shown in the Irish Republic. This is something that we in Northern Ireland wish to implement as soon as possible, although given the way that some of the parties in Northern Ireland, including the Social Democratic and Labour party, have behaved in recent times in respect of the Stormont House agreement, the prospect of devolving corporation tax, with the advantages that it might bring, is being pushed further and further down the line. I hope we will not find ourselves hitting even more problems.
The other thing I wish to raise is the whole issue of taxes on energy. The reasoned amendment talks about the removal of the exemption from the climate change levy on the onshore wind. I accept the argument that the Government have given. Given that many of the companies involved are owned abroad, the tax concession given to them was not benefitting people here in the United Kingdom. We also need to bear in mind not only that there is huge opposition to many of the renewable sources, on the grounds of aesthetics and environmental impact, but that people are becoming increasingly aware of the cost of switching from cheap fossil fuels to expensive renewable energy, in terms of fuel poverty and the impact on industry.
Sammy Wilson
I know that the Member from the Green party gets appalled when we talk like this, but why do we even have a renewables obligation? Why is there an obligation on electricity distributors to purchase from renewable sources? If we were simply depending on market decisions, that would not be done.
Sammy Wilson
I will give way in a moment. Let me just finish the argument.
The renewables obligation is an obligation because the energy is more expensive. Indeed, the Department of Energy and Climate Change’s own estimation is that, by 2020, the cost of paying for expensive renewable energy, more and more of which is coming on to the grid, will be about £190 per household. At the same time, we in this House complain about fuel poverty, when one of the contributors to fuel poverty is the fact that we are orientating ourselves towards more expensive electricity generation. Only last week there were complaints about Tata Steel closing down its plant.
Sammy Wilson
I will give way in a moment.
High-energy users are increasingly finding that the United Kingdom is a place where energy is expensive—it costs jobs, it dips into people’s pockets and it causes fuel poverty. This is an issue that the Government are quite rightly addressing.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Mr Wilson, have you given way or have you finished your speech? None of us is sure what has happened.
Sammy Wilson
I have given way. [Hon. Members: “Who to?”] I have given way to the hon. Member for Na h-Eileanan an Iar (Mr MacNeil).
Mr MacNeil
And on my birthday, too. I am sure that the hon. Member for East Antrim (Sammy Wilson), the gentleman that he is, will of course give way to the Member from the Green party and to my hon. Friend the Member for Glasgow North West (Carol Monaghan).
The hon. Gentleman might find that one of the reasons why fossil fuel is so cheap is the low price of carbon, as a result of which the theory of “the polluter pays” does not apply to fossil fuels. Carbon is priced neutrally at the moment, and when that changes, the real price of fossil fuels versus renewables will become apparent. He mentions the change in the regime, but planning is a large part of that. Finally—this is my final point, Mr Deputy Speaker—the hon. Gentleman talks about the cost of energy in the UK, and the cost of the UK’s energy is actually about the highest in Europe, minus taxes.
Mr Deputy Speaker
Mr Wilson was very worried about the amount of time we are taking—we can go to any hour—and I think Mr MacNeil is trying to see whether we can get to that hour. However, as he knows, as much as I appreciate that it is his birthday, he blew out all his candles on his first intervention. We now want shorter interventions.
Sammy Wilson
Of course, the hon. Gentleman is absolutely wrong when he talks about there being no price on carbon. We are talking about the climate change levy. That is one of the costs of carbon. There is also the cost of the European trading scheme, in which carbon is traded and carbon allowances are given, so of course there is already a cost.
Caroline Lucas
I am grateful to the hon. Gentleman for giving way. I am not sure whether or not it is parliamentary to say that the hon. Gentleman is talking rubbish, but he is talking rubbish. The point is that far greater subsidies go to nuclear power and fossil fuel than ever go to renewables. There is currently a small amount of subsidy going to renewables to bring them to grid parity. They will be there in a year or so. Solar is already there, and it is one of the most affordable sources of energy. I think he should speak about what he knows and not about what he does not know about.
Sammy Wilson
Perhaps the hon. Lady takes a different view of what is small and what is large from what I do, but the £13.6 billion of subsidies that go to renewables do not simply come from the Government. They come from households, who pay for it in their electricity bills. That is why I support the Government’s attempts to remove some of the subsidies that consumers have to pay; £13.6 billion, or £190 per household, is hardly to be regarded as a small sum. My only worry is that environmental levies such as the climate change levy and the EU carbon trading scheme will rise from £5.6 billion this year to £16.1 billion by the end of this Parliament, which will add to energy costs and have an impact on industry and on household bills.
Alex Salmond
Does the hon. Gentleman accept that on a sunny day in East Antrim, one gets a magnificent view of some of our magnificent onshore wind farms on the west coast of Scotland, and will he concede that the contract for difference on wind energy on shore is lower than that for new nuclear energy?
Sammy Wilson
The right hon. Gentleman compares nuclear energy with renewable energy, but of course we have the option of gas, oil and coal. Before the hon. Member from the Green party becomes apoplectic about the impact of those energy sources, let me point out that some of the drivers in Europe who want to push us towards renewables, especially the Germans, are building coal-fired power stations because they are concerned about their industry and their economy. I welcome those aspects of the Finance Bill, and that is one reason why I will not support the reasoned amendment. I think that the Government are right and we have to redress the balance. We have to ask what is important for the UK economy and for UK consumers.
Finally, I turn to the employment allowance, which is important in drawing people into work and encouraging employers to take on new workers. The uptake in Northern Ireland has been very poor. I do not know whether that is because employers have not had sufficient information or because the scheme has not been widely publicised, but when we are trying to find ways of encouraging further employment, the Government should take that on board.
As I said, we will not support the reasoned amendment. We have concerns about many aspects of the Bill, but we believe that parts of it will be good for the economy generally and in Northern Ireland.
Maria Caulfield (Lewes) (Con)
I promise not to take as much time as the hon. Member for East Antrim (Sammy Wilson), but I enjoyed his take on things.
I rise to speak in support of the Bill because the recent Budget set out clearly a better future for this country. In the last Parliament the coalition Government had to turn around the economy that they inherited by turning around a record Budget deficit, public sector net borrowing at a high of 10.2% of GDP and a benefits system which accounted for nearly a quarter of all public spending, which left less money for public services such as our NHS, our schools and our infrastructure. The Budget and the Bill build on that progress. This is a Budget for ordinary people up and down this country, despite what others might say. This is a Budget for workers.
Four key elements support that claim. The Bill reduces personal taxation, so that people can keep more of the money that they earn. It ensures, again despite what others may say, that work actually pays; it is crazy that we inherited a system in which people are better off on benefits than in work. The Bill delivers on housing, and will make it easier for many people to have a place of their own. It also helps businesses, so that we have a thriving economy to pay for our much-needed public services. The Bill supports all those aims.
Mr MacNeil
The hon. Lady said that she would like work to pay. Is she saying that the Institute for Fiscal Studies is wrong when it says that the bottom four, five or six deciles of earners will actually be worse off as a result of the Budget? Surely if work is to pay, it should be paying more, not less.
Maria Caulfield
I wish the hon. Gentleman a very happy birthday. I take his point, but what has been missed from the argument is the raising of tax thresholds that will benefit people, especially those on the lowest wages. I shall come to that in a minute.
The Bill will make important differences to ordinary families. First, it will reduce personal taxation. During the last decade, under the Labour Government, more than 1.6 million people were dragged into the higher rate of tax, including hundreds of thousands of nurses, teachers, police officers, and other public sector workers. Our measures to raise the higher-rate threshold to £43,000 will make a difference to those people and their families. All in all, a basic rate taxpayer will be £905 a year better off. The families who will benefit from those changes are not wealthy; many of them work long hours and commute long distances, and deserve to keep more of the money that they earn.
The Opposition parties believe that the way to reward hard work is not to increase wages or reduce the tax that people pay, but to increase benefits in the form of tax credits. That is what Labour did in government, to such an extent that the welfare bill rocketed, accounting for about a quarter of all public spending. That meant that there was less money for our hospitals, our schools and our infrastructure.
Why are Opposition Members so adamant that the only way to improve people’s lives is to increase their benefits? I will tell you why: because they do not believe in aspiration. They do not believe in the fundamental principle that if people work hard enough, no matter what their background, they can achieve anything in life. A life on benefits is not inevitable, nor should it be the only way forward for working families. Conservative Members support workers by not only increasing the national living wage, which I cannot believe Opposition Members actually—
Carol Monaghan
Does the hon. Lady not accept that using language such as “national living wage” is sinister mischief-making? It is also hugely disrespectful to the Living Wage Foundation, which has set the living wage at £9.15 in London and £7.85 outside.
Maria Caulfield
I disagree. By 2020, the living wage will be £9, because that is the level at which we have set it. For the lowest-paid workers in the country, that has to be a huge advantage. I cannot believe that Opposition Members are actually disagreeing with a proposal to increase the wages of the lowest earners.
Barbara Keeley (Worsley and Eccles South) (Lab)
The hon. Lady is imputing various motives and feelings to Opposition Members, and is not doing so reasonably. May I point out to her that a living wage that took full account of the take-up of tax credits would be well over £11? The level set by the Chancellor is not that level, which is why this is not a national living wage.
Maria Caulfield
I assume that Opposition Members will support the wage increase for the lowest earners. I am pleased to see the hon. Lady nod in agreement.
However, we are doing more than just increasing the national living wage. We are also reducing the tax that people pay, not only by raising tax thresholds but by freezing national insurance, VAT and fuel duty levels for this year, to ensure that they have more money in their pockets.
Let me now say something about housing. It is, again, the Conservatives who are helping those on low incomes to reduce their outgoings by lowering social housing rents by 1% a year for the next four years. Opposition Members feel that they cannot support that move, and will either oppose it or abstain. That, I think, shows their true measure. However, the Bill goes a step further by ensuring that social housing occupied by people who have done well, and are earning more than £30,000 a year outside London or £40,000 inside London, will no longer be subsidised by hard-working taxpayers who may be earning less than that themselves. Instead, those people will pay market rents—the same market rents that others in the same position pay in the private housing sector.
In addition, to increase the supply of affordable housing, the Chancellor has announced an increase in the rent-a-room relief, which will enable people to rent rooms without having to pay tax that acts as a penalty. The tax relief for buy-to-let landlords will be reduced, too. That will level the playing field for ordinary families trying to get on the housing ladder, who have been in competition with buy-to-let landlords who have previously been at a significant advantage.
Alex Salmond
I represent what is on paper one of the most prosperous constituencies in Scotland, yet more than 3,000 children in Gordon are in working families who will be worse off as a result of the Budget, and I doubt whether there will be fewer children in Lewes similarly affected. What does the hon. Lady say to the children of working families in her constituency who will be worse off as a result of this Budget?
Maria Caulfield
There are lots of hard-working families in my constituency and if the right hon. Gentleman visits us he can see for himself that they are fed up with having to go out and work long hours often on low pay to subsidise a benefit system that historically has not been there to help such people.
Maria Caulfield
I will not give way; the hon. Lady will be pleased to know that I am almost at the end of my speech so I will continue, if I may.
There are some great measures in this Bill to support businesses, small and large, which have been the engine-room of our economy over the last few years. Cutting corporation tax from 20% to 18% by 2020 will be a huge help to many of them, and the ability to employ four people full-time on the new national living wage and pay no national insurance at all will be a real incentive to them to take more people on. There is also the increase in the annual investment allowance so that companies can grow their business more easily. All this means employers, not the state, will be increasing people’s incomes, so that Government money can be used to fund essential public services instead.
This is a Budget that not only deals with our deficit, but tackles the country’s debt in a way that supports those who work hard and do the right thing. This is a Budget that says to the ordinary person in the street that if they work hard, get up early and come home from work late they deserve a decent wage and a home. They should not have their wages topped up with benefits, but instead earn a decent wage in the first place. With the breaks that we are giving to employers, we expect them to invest in their workforce in return.
This is a Budget of aspiration not just for the individual, the family and businesses, but for the country as a whole, and that is why I support it.
Catherine West (Hornsey and Wood Green) (Lab)
First, as this is the last day of term—or at least it has the feel of the last day of term—may I thank you, Mr Deputy Speaker, and all the team in the Speaker’s Office for their warm welcome to all us new Members? That has made a huge difference to the beginning of what I hope is a long parliamentary career.
When I saw that today’s business would be a Second Reading debate on the Finance Bill with such exciting Ministers giving their remarks I thought it might be a bit dry, but in fact it has been stimulating and interesting, in particular the discussion of wages. I am glad we have got on to the question of low pay; that came up in the election and I am very pleased that the Treasury team has given it some thought. However, as somebody who worked hard on the living wage at local government level, I am a little concerned that it took a long time to introduce it in a meaningful way; the current living wage is £9.15 in London and introducing that in inner London takes an enormous amount of work for a large organisation such as a local authority or a business.
I am also a little worried about there being a cliff-edge in respect of the removal of working tax credits from those on low pay. We need a sliding scale to cover the fact that we have such a flexible workforce, which many say is a good thing. The trouble with that is that people can be in and out of work, on varying rates of pay in different sorts of employment, and have numerous different employment situations. Working tax credits tend, therefore, to be a safety net for people on low incomes, so, although this debate about low pay is to be welcomed, I am concerned that we will end up with less security for low-paid people. It may even create a perverse incentive: people may not want to take risks in the workplace and may even turn back to benefits. They may be worried that over the long term they will not be able to sustain themselves on what the Government call a living wage but which, in fact, is just an increase in the minimum wage.
Mr MacNeil
I hope the hon. Lady agrees that the Chancellor, in his description of the new wage that he has earmarked, has tried to downgrade what we all know as the living wage. That is reprehensible.
Catherine West
I thank the hon. Gentleman for his intervention and wish him a happy birthday. I am sure it is wonderful to be 21 again.
I understand that there are many examples of the living wage up in Caledonia, and many London authorities and others are trying their darnedest to introduce the living wage, which is a good and positive step.
Clause 45, on the climate change levy, removes the levy exemption for renewable source electricity generated on or after 1 August 2015. Unhappily, that is an example of the Tories undermining investor confidence in renewable energy. They have already tried to halt the development of the cheapest form of clean energy, by pulling the plug on onshore wind, and that comes hot on the heels of the rather flat green deal. I am not sure whether any Members know about the green deal. It was introduced back in 2010, it was heralded and much money was spent on it. The promotion money probably helped a few public relations companies to keep going, but the number of households that took up the deal was very low.
Alison McGovern
My hon. Friend makes an important point. May I remind her of the promise made—it sounds bizarre now, though I remember it being made at the time—to be the greenest Government ever?
Catherine West
I thank my hon. Friend for her intervention. Does she also remember the huskies trip? I am not sure whether we will be visiting polar bears any more with the huskies, but I remember around 2009 the promise to which she refers and, for a short while, a real sense that we were generating some momentum and genuinely approaching green issues with energy and commitment.
I wonder whether, as we move towards the Paris summit, we will see any improvement and any genuine debate, because this Budget fails to give any hope on the green agenda. I am pleased that Opposition colleagues have chosen the climate change levy as one of three topics to be debated in Committee in September. That is when we will all have more of a chance to debate this important deal—or lack of—and when we will table amendments.
Some of the statements on taxation are quite welcome, particularly those provisions that assist people on low and medium incomes. However, there are other provisions with which we could do more. In particular, we could consider gaining a little bit more from the financial sector. As we know, there have been some announcements on anti-avoidance measures. Provided that HMRC is resourced adequately to deal with those, we might see some positive developments in that regard.
However, we could be doing much more in relation to private equity and hedge fund managers. We could strengthen some of the proposed measures around the “Mayfair” tax loophole. For example, we could look at how private equity fund managers manage to shrink their tax bills, arranging to pay 28% capital gains tax rather than 45% income tax, which is what we could be getting.
Members will be aware from their advice surgeries that we are still in the tail of the recession. There should not be one rule for certain people in society and another rule for others. That is why we need to consider charging that 45% income tax rate—rather than the 28% capital gains tax—on the portion of income paid out of the profits of the funds that those managers manage, which is called carried interest. Carried interest is their remuneration for managing other people’s money and should therefore really be taxed as income tax. Their ability to pay capital gains tax on what is properly income also allows fund managers to avoid paying any national insurance contributions on a major portion of their income.
The “Mayfair” tax loophole also permits some fund managers to reduce their tax bills even further, sometimes qualifying for additional capital gains reliefs such as entrepreneurs’ relief. I do not hear that being offered to the small cafés or the small businesses on our high street, but the entrepreneurs’ relief for people in the City allows them to pay just 10% tax on up to £10 million of their carried income. That is why I throw back the idea that this is a Budget for working people—perhaps it is a Budget for those who work in the square mile. Some people in the City are still getting a 40% tax cut. They are paying less tax on much of their income than many nurses and teachers. We know what is happening to public sector recruitment: we are losing nurses and teachers every day, because they tend to earn much lower wages than others, and of those wages they are paying a higher proportion in tax than our friends in the City.
Huw Merriman (Bexhill and Battle) (Con)
Is it not the case that raising the tax threshold to £12,500 may help not only those in the City who are paid very low rates, but the very people that the hon. Lady is talking about outside the square mile?
Catherine West
I am very concerned about those people who are on that level. Indeed, many people in the financial sector, a large percentage of whom live in my constituency, work very long hours and are on low pay. I welcome some of the new tax changes, which is why I will abstain rather than vote against Second Reading tonight. However, we also know that certain others who go in on the tube with those lower paid workers, or ride their bikes in with them, might, in a good year, be earning between £1.2 million to £15 million or more. Using the private equity industry’s own statistics, we estimate that the “Mayfair” loophole may be sacrificing UK tax revenues of between £280 million to £700 million every year. That is likely to be a conservative estimate as it does not take into account forgone national insurance contributions, or the effects of some fund managers qualifying for additional entrepreneurs’ relief. Given that the Chancellor’s smaller plans are predicted to raise more than £350 million a year, we can be confident that a further tightening of the rules will raise substantially more. A simple legislative change, similar to those already achieved in our neighbouring European countries— I make no apologies for mentioning the word “Europe” in this Chamber—could ensure that some of the highest earners of the financial sector start to pay a fairer share in tax. That could be introduced as early as in this Bill, with a small change to the proposed legislation.
In conclusion, let me make some general points about productivity. The first relates to childcare, and this Budget and Bill and the various elements of productivity that need to accompany them. I understand from press reports this morning that various Departments face a difficult time on their savings targets, and I am worried that some of the good things that have come out of this Budget, small though they be in number, will be undermined by things such as the lack of childcare provision. In particular, I am thinking about cuts to local authorities, which are trying to introduce the Government’s 30-hour pledge on childcare. Children’s centres and Sure Start centres will once more be facing terrible cuts. We know that it is crucial to get women, and parents in general, back into the workforce, and that that is key to proper growth in the economy. Many economists have estimated that if we can return women to the workforce within two years after the birth of their first child—and indeed after the birth of subsequent children—the economy can take off exponentially. In many local authority areas, however, children’s centres and nurseries are closing, whereas they should be remaining open to provide that crucial childcare.
Mr MacNeil
I fully support what the hon. Lady is saying, and she had no less an authority than Tim Harford in the Financial Times writing, about seven or eight weeks ago, on exactly the same point. He highlighted how Sweden has done exactly what she is describing: enabled women to go back into the workplace, to develop their skills and to go further—and of course this yielded higher taxes—unlike in the UK, where they decide to stay at home and the taxman and mothers lose out.
Catherine West
I agree. There are many positive examples of universal free childcare in other European countries and I wonder whether that is the sort of measure we should be looking at, rather than just cutting back for cutting back’s sake.
Childcare is crucial, but so, too, is transport. Unfortunately, in the past fortnight the Government have announced that important rail projects are no longer going to go ahead, including electrification in the midlands, and they have dithered over the airport decision, perhaps because there is division in the top ranks of the Conservative party. Those sorts of decision need to be taken quickly, at the beginning of the Parliament, so that we give the right signals about getting on with investing in our infrastructure and in social mobility.
We know that young people will be negatively affected by this Budget, not just by the cuts to housing benefit and the reduction in working tax credits for younger families, but by the transition from university grants to loans. This does not specifically relate to the debate on this Bill, but we know that the background to the Bill is the situation young people face when coming out of university. I know of a student at London Metropolitan University who will come out with a £54,000 debt after three years of studying social care and will be virtually unable to pay that back over her working life. The good announcements on the employment and training levy are undermined by the university grants situation and the 24% projected cuts to further education, which we know provides the glue to bring together the crucial employment provisions.
I could not sit down in this Chamber without quickly mentioning housing, which, as we know, is crucial, and not only to a vibrant economy and not only in the social housing sector, which I have specialised in over the years. Affordable housing is also crucial to the workforce and to those who wish to rent in the private sector, given that in London and the south-east that sector is ridiculously expensive. A family with three children who wish to rent in Finsbury Park—not Chelsea, but Finsbury Park—would require a household income of £75,000 to do so. Indeed, the average age at which Londoners get on to the housing ladder is now closer to 40 than to 30. It is crucial that we address this situation in this Parliament so that we can address social mobility and productivity. Unless a young person has access to unlimited family funds for education and housing, they face, under this Government and with this Budget and this Finance Bill, a genuinely bleak future.
Lucy Frazer (South East Cambridgeshire) (Con)
There are two questions we ought to consider when thinking about passing this Finance Bill: first, if now is not the right time to balance the books, when is; and, secondly, is it right that our laws should ensure that it pays to work and that work pays?
Let me turn to the first question. Our GDP grew by 2.6% in 2014 and our economy is now the fastest growing in the western world. We have seen an increase in jobs growth, with 2 million more jobs created over the past two years. In the three months to April 2015, employment continued to rise and unemployment continued to fall.
As a matter of principle, it is right that our Government are fiscally responsible. In the previous Parliament the Labour party backed the charter for budget responsibility, recognising that it is necessary to cut the deficit. There is never a good time to implement tough decisions, but if now is not the right time, no time ever will be.
Mr MacNeil
I thank the hon. and learned Lady; I feel that I am taking advantage of this birthday— I might start claiming that every day is my birthday. Would she like to comment on the behaviour in Iceland, where there have been no cuts in public spending but where debt has fallen by 8% and the deficit has fallen to zero? It has done that not though austerity, but by growing its economy. The key metric is debt to GDP, not cuts.
Lucy Frazer
What is absolutely essential is that we have a strong economy, because through a strong economy we can build up business. Looking at one isolated country is not a great example—consider what is happening in Greece, which has not balanced its books and has a crippling economy. Balancing the books is absolutely right.
Lucy Frazer
I have already taken one intervention from the hon. Gentleman, so I will carry on.
The question arises: what are the Opposition really waiting for before balancing our nation’s books? This Budget helps make work pay for the poorest in society and encourages those who do not have a job to get one. It seeks to ensure that we build a society in which work is rewarded.
Alison McGovern
The hon. and learned Lady asks what the Opposition are waiting for before balancing the books. I am waiting for the Chancellor to meet his promise. In that regard, what representations has she made to him about the detail in the Red Book pushing out his deficit target by yet another year?
Lucy Frazer
I am answering the question. It is interesting that the Opposition were pushing for less austerity but now, when the Chancellor increases the time frame in which he wants to make the changes, the hon. Lady opposes it.
The Bill reduces taxes on working people by further increasing the personal allowance to £11,000 in 2016. The living wage will improve the lives of many people across the country. With tax credits, people are often penalised by deciding to change their hours because they lose far too much of their earnings. The Budget changes that.
It is worth noting that Labour has proposed no amendments of any nature to the Bill, which suggests that, at the very least, not everyone in the Labour party is opposed to all of it.
Barbara Keeley
The hon. and learned Lady is just not right on the detail. This is not the time for amendments today; this is Second Reading. We will table many amendments; she just needs to wait.
Lucy Frazer
I am grateful for that intervention. But clearly it is the time, because the SNP has tabled an amendment, and so have the Greens.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. We can have only one person on their feet. Mr Salmond, you know that better than anybody. If Lucy Frazer wishes to give way, she will, but we cannot have both standing on their feet. Are you giving way or not?
Lucy Frazer
If it was the birthday boy, I would be giving way.
It is remarkable that the position of both the SNP and the Greens is that this Finance Bill does not address the economic needs of the country and it continues to deepen the social divide between those who have and those who have not. Both amendments are very similar. But on both those questions, nothing could be further from the truth.
Lucy Frazer
On the economy, it is an economic necessity—[Interruption.] When is your birthday?
Lucy Frazer
Let me finish the sentence; then I will give way. On the economy, it is an economic necessity that as a country, we live within our means.
Stewart Hosie
I have no problem at all with getting to a position where any state lives within its means; it is how we get there that matters. But the hon. and learned Lady surely has misspoken. If a Government are choosing to increase inheritance tax thresholds while taking billions from the poorest with changes to tax credits, then they are indeed taking from the poor to give to the very wealthy.
Lucy Frazer
The hon. Gentleman is absolutely right that the question is how we get there. But when we are in a time of economic improvement, that is the very time in which we need to make changes. The changes to inheritance tax go back to a key principle and a key policy that we hold as Conservatives, which is that when you work hard and you spend money to buy a home to look after your family, and when you are taxed on the income with which you buy your home and pay tax, in the form of stamp duty, when you pay for your home, it is right not to have a third taxation when you leave your home. We all instinctively want to leave what we have earned to our children.
Lucy Frazer
No; I have not finished. There is one further point. We are not taking from the very poorest; we are giving to the very poorest. [Hon. Members: “You are not.”] In some ways we are giving to the poorest. The introduction of the national living wage will mean that about 2.5 million people will immediately get a pay rise.
Lucy Frazer
I shall continue. On society, it is very important that people are encouraged to work and that work pays. I agree with the director of the Living Wage Foundation that
“work should be the surest way out of poverty”.
That is what the Bill seeks to achieve.
Caroline Lucas (Brighton, Pavilion) (Green)
Thank you, Mr Deputy Speaker, for the opportunity to contribute to this debate. I have two fundamental objections to the Bill. First, it continues the Government’s cruel and counterproductive austerity agenda, which is both socially destructive and economically illiterate. Secondly, it flies in the face of the Government’s own rhetoric about the threat of climate change to our economy, society, security and wellbeing. Not only does it ignore the public interest in mitigating climate risk, but it fails to realise the economic benefits to the UK of being at the forefront of the global transition to a zero-carbon, resource-efficient, sustainable economy.
Over the past few months, hundreds of leading UK businesses—not just environmentalists—have repeatedly called on the Chancellor to prioritise green investment and climate action, warning that the UK’s green economy is at a crossroads without clear policy direction. It is astonishing that, this year of all years, when the Government say that we need a bold agreement at the climate summit in Paris, the Treasury is undermining both the UK’s reputation and, more importantly, the chances of meeting our own emission targets. It is hard to see how the Government really do think that “Do as I say, not as I do” demonstrates any real leadership.
One such backward provision in this Bill is the change to vehicle excise duty. The Government claim that
“the new VED system will be reviewed as necessary to ensure that it continues to incentivise the cleanest cars.”
Yet once again there is a gaping chasm between the spin and the substance, because while zero-emission vehicles still pay nothing—so no change there—high-polluting cars will pay far less tax than at present. Again, it is not only those concerned with air pollution and climate change who are pointing out the idiocy of this measure. Once more the Chancellor has managed to unite industry and environmentalists, with the Society of Motor Manufacturers and Traders saying that
“the new regime will disincentivise take up of low emission vehicles. New technologies such as plug-in hybrid, the fastest growing ultra low emission vehicle segment, will not benefit from long-term VED incentive, threatening the ability of the UK and the UK automotive sector to meet ever stricter CO2 targets.”
Maria Caulfield
The hon. Lady cannot have it both ways: she is either anti-austerity or she is not. The measures on VED that the Chancellor introduced in this Budget were to help low-income families who cannot afford a new car. Under the previous system, people who could afford to change their car were paying less VED than those who could not afford to do that. What does she say to the hard-working families in her constituency who will benefit from this measure?
Caroline Lucas
I say to the hard-working families in my constituency that I do not see why they have to choose between austerity and a greener world. We can have both if we have a bit of leadership, which this Government have been so conspicuously failing to provide. Why should only richer people be able to afford greener cars? No, we want to make greener cars the norm, because it is the poorest people who suffer from the air pollution that is caused by the cars that this Government are happy to have all over our roads. The hon. Lady’s question was wrong and misguided. I am very proud to say that I am standing up for some of the poorest people in my constituency, who should be able to have decent air quality as well as not suffering from the horrendous austerity that her Government are rolling out in front of them right now. In case the Chancellor has not noticed, air pollution in the UK is a serious public health crisis that is leading to 29,000 premature deaths every year. I would love to hear what the hon. Lady says to her constituents when they are facing that degree of air pollution and health imbalance as a result of her Government’s policies.
Caroline Lucas
I would love to hear it, but not that much, so I am going to continue.
Then we have the senseless proposal to tax renewable energy as if it were a fossil fuel by removing the climate change levy exemption for renewables.
Stewart Hosie
On the VED changes being intended to tackle the debt or the deficit, I am sure the hon. Lady will have heard the Chancellor say that the entire set of measures was fiscally neutral and has nothing to do with bringing down the deficit or the debt.
Caroline Lucas
I thank the hon. Gentleman—my hon. Friend—for that well-made point.
As campaigners have pointed out, the policy on the climate change levy exemption for renewables is like making people pay an alcohol tax on apple juice. The Government claim that it is intended to prevent taxpayers’ money from benefiting renewable electricity generated overseas. In fact, it is a completely disproportionate measure that turns a policy that was designed to encourage low-carbon electricity into just an electricity tax for businesses. It is interesting that Ministers remain suspiciously silent on the shocking revelation earlier this year that the Government spend 300 times more on backing fossil fuel projects abroad than on clean energy via the export credit agency. If they are that worried about the issue, one would have expected a little more consistency from them. The scandalous public spending on fossil fuel subsidies should be cut, not support for clean, green, home-grown renewable energy.
I agree with the shadow Energy and Climate Change Secretary, the right hon. Member for Don Valley (Caroline Flint), that removing the renewables exemption from the climate change levy will undermine investor confidence in renewable energy, and that we should instead be seizing the massive opportunities for jobs and investment that moving to a low-carbon economy would provide for this country. I hope that we can work together across all parties to remove this stupendously senseless provision from the Bill altogether.
The Minister spent a long time talking about how important this Bill is for productivity. I am a great supporter of productivity, but I fail to see how, for example, plans to scrap the long-established zero-carbon homes policy will support it. Indeed, in an open letter to the Chancellor, over 200 businesses warned:
“This sudden u-turn has undermined industry confidence in government and will now curtail investment in British innovation and manufacturing”.
So much for putting our economy on a stable footing; so much for this Government’s phoney concern about energy costs. Scrapping this policy means that future homes, offices, schools and factories will be more costly to run, locking residents and building users into higher energy bills. Businesses are increasingly speaking out not against the so-called green crap, but against the tsunami of Government blue crap that is putting up energy bills, harming business and undermining climate action.
I have a few last words on the welfare aspects of the Bill. The Chancellor can crow about raising the tax threshold so that fewer people on low incomes pay tax, but although that is the right thing to do, it does nothing to change the overall impact of his Budget and of the Finance Bill. As the IFS has shown, it leaves us with a tax and benefits system that is more regressive. The biggest losers are those in the second and third poorest tenths of the population—the working poor. Under the cover of austerity, the welfare cap will make housing, in particular, unaffordable for many families. Young and disabled people have been unfairly singled out to lose benefits. Child poverty already costs Britain upwards of £29 billion, and is set to rise under plans to limit tax credits, which could leave 3 million families on average £1,000 worse off, even allowing for increases elsewhere.
According to Treasury’s own analysis, the plan to raise the inheritance tax threshold will benefit high-income and wealthy households. Given that it is one of the easiest taxes to both avoid and evade, and that the very rich often find ways to pay very little, it is clear that this whole area needs a complete rethink.
On tax dodging, I welcome the Government’s recognition that the so-called Mayfair loophole needs to be closed. Many of Brighton’s residents have written to me about this, and it is thanks to the determination and persistence of individuals and campaigners that we have got this far. Yet again, however, the Government spin machine is in overdrive and the reality does not match the rhetoric. I urge the Chancellor to address that by agreeing that carried interest counts as income and should be taxed as income.
Finally, if the Chancellor is serious about tackling tax dodging, as I hope he is, I urge him to reconsider his opposition to the Robin Hood tax and to adopt the comprehensive policies set out in the tax dodging Bill proposals, which are supported by 25 UK and international non-governmental organisations and would generate about £3.6 billion in the UK.
Huw Merriman (Bexhill and Battle) (Con)
I applaud the content of the Finance Bill, and I am keen to explore certain clauses within it. Before I do so, may I applaud Labour Members for agreeing with the annual investment allowance and rise in the tax allowance? There may not have been as many Labour speakers as one would expect, but those who spoke have been considered in their tone towards the Bill. However, as someone from a socialist background, it makes me sad to see no Labour Back Benchers in the Chamber. I was always told proudly by my parents that Labour was the party of Keir Hardie and Nye Bevan, and those empty Benches would be a huge disappointment to them. None the less, we can perhaps all agree that the argument is being won on the Government side of the House.
Huw Merriman
No, I will not give way. I will make some progress, if I may, and refer to my predecessor, Mr Greg Barker, who organised the husky trip that was lamented by the hon. Member for Hornsey and Wood Green (Catherine West).
Clauses 1 and 2, on the income tax and VAT locks, and clauses 3 and 4, on the personal allowance and national minimum wage provisions, demonstrate that making work pay means giving workers more of their pay. Raising the personal allowance to £12,500 shows that the Government are committed to that aim. The increase in the tax allowance will take more than 800 of my constituents in Bexhill and Battle out of the tax system altogether, and a further 50,000 of my 80,000 electors will also benefit from the tax allowance increase. Indeed, my constituents will further benefit from the tax locks over this term, which will allow them to plan, save and spend in an organised manner, without fear of the Government raids so beloved by Chancellors between 1997 and 2010.
Mr MacNeil
Once the hon. Gentleman’s constituents get past the Blairite spin he is giving us, I am sure they will find that their incomes have actually decreased. Does he think that his constituents will be grateful to him when the changes go through and they find that their incomes have decreased, thanks to this Tory Government?
Huw Merriman
My constituents will be delighted that after the terror that this Government took over from, we are seeing earnings and incomes get back to their pre-recession levels. They are already there for those at pension age, of whom there are many in my constituency, and are getting there for those in other age groups. My goodness, if this Government had not taken the difficult decisions that the hon. Gentleman’s party has opposed all the way through, we would not be in the positive situation we are now in.
Huw Merriman
No, I will make some progress, if I may.
I was bemused by the Opposition’s attempts to lay claim to the policy of tax locks. Perhaps by losing the election and allowing this Government to gain a majority and introduce these clauses, they have brought the policy about.
This is a one nation Government that seek to help people into work and, in so doing, give them hope, aspiration and pride. By taking those who work 30 hours a week on the minimum wage out of the tax system, the Government are committing to the principle that work pays. Furthermore, by committing to review that principle and assess the tax position of an individual working 30 hours on the national minimum wage when reviewing the tax allowance over and above £12,500 in the future, the Government are demonstrating that they really mean for that proposal to be here to stay.
Alison McGovern
I am listening carefully to the hon. Gentleman. I am especially pleased to hear that he pays great attention to the views of his constituents. When a single parent with two kids who loses thousands in tax credits comes to his surgery and explains how much worse off they are in work, what is he going to say?
Huw Merriman
I will say that this Government, by creating millions of jobs, will give that individual the opportunity to get into work. If I were on the Labour or SNP Benches, I would say, “We will keep you on subsidies, keep you in your place and not give you hope, aspiration and a better opportunity for your life.”
Huw Merriman
No, I will not give way. I will make progress.
The first four clauses demonstrate that the Government are on the side of the worker, not the abstainer.
Clauses 7 and 8 relate to corporation tax and the annual investment allowance. I welcome the measures to reduce corporation tax to 19% by 2017 and 18% by 2020. In my constituency of Bexhill and Battle, the Government and East Sussex County Council have ploughed millions of pounds into a new link road between Bexhill and Hastings, which will deliver new homes, 500,000 square feet of new business park and a country park. The new link road and the labour that will come from the new housing will, if delivered in conjunction with the high-speed rail project from Bexhill to London St Pancras that we hope to get, encourage new businesses to relocate and existing businesses to expand.
However, we need to do more than deliver infrastructure. We need to encourage entrepreneurs to take risks, create new jobs and deliver wealth. That wealth will then be delivered to the Exchequer and the country as a whole. I therefore welcome the cut to corporation tax, which tells the world’s companies that UK plc is open for worldwide business, with the lowest corporation tax in the G7. I hope to use the favourable economic climate to champion the idea that companies should locate themselves in my constituency and to end its status as a constituency with no major corporate headquarters within its boundary.
I welcome the permanent status of the annual investment allowance. The temporary two-year allowance did much to boost spending on plant and machinery in rural constituencies such as mine. The trickle-down effect on suppliers, producers and small businesses has been immense. I welcome the manner in which my Government use the tax system to give firms more money to invest, rather than using the model of Government borrowing and spending, which crowds out private companies from the market.
The final clause that I wish to consider is clause 9 on the increased nil-rate band for homes that are inherited by descendants. Representing Bexhill and Battle as I do, I feel that the policy of effectively increasing the inheritance tax threshold to £1 million per couple will be highly relevant and even more highly welcome. Individuals who have worked hard and done the right thing deserve the right to hand on the fruits of their labour to their descendents, and that is particularly welcome in a period when interest rates on savings and investments has been low and delivered low yield, albeit that that has helped those with mortgages.
I welcome the mantra behind the Bill: lower taxes to make work pay; fairness by clamping down on those who do not pay their fair share of taxes; and rewarding endeavour by encouraging companies to invest and expand in this country by sending out positive signals that business is open under this Conservative Government. I look forward to proclaiming proudly the Government’s economic policies over the summer, and I am pleased that Labour Members have already stolen a march and are perhaps doing so already.
George Kerevan (East Lothian) (SNP)
Thank you for your forbearance, Mr Deputy Speaker. I had to slip out of the Chamber to take part in the Treasury Committee’s questioning of the Chancellor, and I bring a few bon mots from him to add to the debate.
The test of the Finance Bill and Budget is whether it will raise productivity—one might ask why the Chancellor has waited for five years to get round to that necessary development, but that is the test. Does the Bill meet the test? No it does not. Between the March Budget and the summer Budget, the Chancellor has reduced projected capital spending, and we raised that point in questions to him this morning, but in his boyish way he avoided answering it. Nevertheless, we have seen a reduction in the projected capital spend.
Capital spending is vital. It is the basic thing we need to get the plant, machinery and infrastructure that raise productivity, and Britain’s fundamental weakness in productivity is that we do not spend enough on capital and plant per worker. The Chancellor is cutting his projected capital spending, and he has done that in the five months since the March Budget and now—I wonder why.
The Chancellor had an interesting explanation for why he is doing that—in the Treasury Committee he could not avoid saying that that is what he was doing—because he said that he had discovered a way of making the outcome of his spending more efficient so that he needs less of it. If he goes on in that way, in another five months and by the time we get to the autumn statement, he will have reduced capital spending projections even more. I am talking about capital spending projections to 2020, so there is no real indication in the Budget that productivity will rise.
There are other things wrong with the Budget. Consider the investment allowance that the hon. Member for Bexhill and Battle (Huw Merriman) alluded to. De facto, the annual investment allowance is being cut from £0.5 million to £200,000. I know that, formally speaking, the available capital allowance was a marginal £20,000, and an emergency £0.5 million level was introduced in a previous Budget. Like some classic huckster trying to sell, the Chancellor pretended that the capital allowance was going to be removed on 1 January 2016, so that he could suddenly appear and say that actually it will be £200,000. We all knew that he was going to do that because in the autumn statement and the March Budget, while talking about his desire to raise productivity, he somehow neglected to tell us that the annual investment allowance was going to be not £20,000 but £200,000 in January.
Mr MacNeil
My hon. Friend might recall that before the general election, if memory serves me right, only one party was praised in the Financial Times for its plans to raise productivity, and that was the SNP. Could that be why we polled 51% of votes in the seats where we stood, but the Conservatives polled only 37% across the seats where they stood?
George Kerevan
I know that is true from talking to the small businesses in my constituency.
The Chancellor claims to want a productivity revolution, but that is given the lie by the fact that in the autumn statement in December and the March Budget he did not announce that the £500,000 allowance would stay or that it would in fact be £200,000. Investment requires long-term confidence—telling businesses well in advance what they can do in terms of investment. The fact that the Chancellor did not tell us, but has produced a rabbit out of a hat in the summer Budget, tells me that he is not that serious.
We have also heard today that the Chancellor intends to cut corporation tax progressively over the spending period to 18%. I do not gainsay that, but I ask the House to look at what happens when cutting corporation tax significantly is combined with a de facto reduction in the annual investment allowance. Surely we want to cut corporation tax to encourage firms to use their surplus capital to invest in plant and machinery. It is therefore necessary to maintain the £500,000 level—or perhaps even raise it further—to encourage firms to put their money into plant and machinery to raise productivity. By de facto cutting the investment allowance from £500,000 to £200,000 at the same time as cutting corporation tax, the Chancellor will encourage firms to keep their surplus capital sitting in the bank, instead of investing in plant and machinery. That is what has been happening in this country, and that is one of the reasons why productivity has fallen since 2008.
Stewart Hosie
Is it not therefore all the more important —at a time when the banks are still not lending fully—to incentivise to the highest possible extent to encourage businesses to use their own resources for investment?
George Kerevan
I take my hon. Friend’s point. We need incentives that co-ordinate and integrate, not just a series of random measures that allow the Chancellor to make headlines here and there but do not have an impact on productivity in the longer term.
The surplus balances held by British companies total something in excess of £0.5 trillion, and some estimates put it at more than £1 trillion. A reasonable estimate is £0.5 trillion or £550 billion. How do we incentivise firms to take that money out of the bank and put it into plant and machinery and create jobs? The Chancellor is doing his best to provide incentives in another direction. Raising the inheritance allowance on property is another way of encouraging shareholders—when shares are bought back by companies—to put their money into existing bricks and mortar rather than invest in companies.
We have a Budget that claims to be about productivity, but provides none of the efficient incentives required to get plant and machinery that will create jobs. Let us look at what has happened to productivity since 2008. Initially, when the recession started, UK productivity fell. What normally happens in the first few years of a recession, as workers are shed and firms rely on using their existing plant and machinery more intensively, productivity rises. It rose in most of the advanced industrial countries in Europe in the two or three years after the recession, and in America. Thereafter, we would expect firms to start to invest in new innovation and developments, and productivity would rise not simply from the shedding of labour but from expansion, new product lines and new companies. That is what has happened in America, which had a significant increase in investment and innovation, and productivity has risen significantly in a long-range curve, as American companies have grabbed market share. In the UK, we saw a second downward bump in productivity in 2011. That came just as the Chancellor realised the mistake he had made in rushing for austerity between 2010-11. He had made massive cuts, but at that point he changed. We have had several long-term plans. In 2011, his new long-term plan was to turn on the monetary tap and crank up an artificial housing boom. Of course, that created even more incentives for individuals, financial companies and businesses to put money into trading in property, rather than in factories and manufacturing.
What we saw post-2011 was British productivity getting even worse, while the productivity of other industrial countries—in particular the United States, but also China—started to improve for the very best of reasons: they were investing in new plant machinery. We have not solved our productivity problem because we have not got the incentives right. I see nothing in the Budget to change that.
Mark Durkan (Foyle) (SDLP)
Mr Deputy Speaker, you and others have made the comment that today is a day on which a birthday has occurred, so before I have to, in response to interventions, may I say to the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) breithlá sona dó? Go maire sé on lá.
I should also make an apology, because I missed a birthday yesterday in the debate on the Welfare Reform and Work Bill, which relates to the Budget measures.
Mr MacNeil
The hon. Gentleman gives me the opportunity to make a bilingual intervention—in Irish and in Scottish. Go raibh míle maith agat agus mòran taing.
Mark Durkan
We are getting far off the Finance Bill.
The Government told us that the Finance Bill should be taken as part of a whole suite of measures from the Budget, including those in the Welfare Reform and Work Bill. Yesterday, we missed the six-year birthday of the Second Reading debate on the Child Poverty Bill in 2009, when the then shadow Secretary of State for Work and Pensions, now the Home Secretary, said:
“When we talk about child poverty, we are also talking about family poverty. Children are poor because their parents are poor…I would almost like to change the name of the Bill from the Child Poverty Bill to the child and family poverty Bill.”—[Official Report, 20 July 2009; Vol. 496, c. 613.]
The measures in the Welfare Reform and Work Bill and the Budget tell us to forget that child poverty has anything to do with parental and household income, and that the Government are going to abolish definitions of child poverty. We heard from the Chancellor of the Exchequer today at Treasury questions that he believes the Budget is offering a contract: higher wages for less dependence on welfare. He said that people would support that contract. I think more people will see the con trick in what the Chancellor is doing than the contract.
Alex Salmond
It will not have escaped the hon. Gentleman’s notice that the Government seem to have run out of speakers on the Second Reading of the Finance Bill. Might that be because of the reality that thousands of families with children in every single constituency in this country are going to be worse off as a result of the Budget? Is that why the Tory party seems so unenthusiastic about supporting the Budget?
Mark Durkan
The right hon. Gentleman makes a very good point. I think many people will wonder about the paucity of attendance on the Benches at such an important debate today. We have been served notice that there will be various amendments in later stages of the Bill, but I think people would have expected a bigger attendance here today. Given the impact it will have on many people with marginal incomes and the consternation that many people feel about MPs’ pay increases and other matters, they will be wondering where everybody is.
Mr MacNeil
There are questions about where Labour and Tory Members are at the moment. Will the hon. Gentleman hazard a guess that they are perhaps off at merger talks?
Mark Durkan
Maybe they are away celebrating other people’s birthdays. [Laughter.] Maybe the hon. Gentleman, having had so many interventions, can now safely go and celebrate his. We all know he was here and not somewhere else.
In the provisions on the national living wage and some of the other early clauses, the Chancellor seems to be doing exactly what he decried his predecessors for doing: passing legislation to put restraints or constraints on himself. He is advertising in legislation his own behavioural discipline. It is the ultimate political selfie to put oneself into legislation. Some only last for the life of the Parliament, yet are being put into legislation. How gratuitous a political exercise is that? Perhaps that is why other hon. Members cannot see fit to indulge the Bill too much.
Government Members have said that the charter for budget responsibility is a key issue, which it is, but a key aspect of the charter is the welfare cap. In yesterday’s debate, we heard references to the benefits cap—there has been much discussion about the benefits cap, which affects households—but less attention has been paid to the overall implications of the welfare cap, which was first introduced as part of the charter last year. If we look at what the summer Budget, as opposed to the March Budget, does for the welfare cap over the next four years, we find some revealing figures. In the March Budget, the overall welfare cap for the UK for 2016-17 was £122.3 billion; in this Budget, it is £115.2 billion. For 2017-18, it was £124.8 billion in the March Budget; it is £114.6 billion in this Budget. It was £127 billion for 2018-19 in the March Budget, ahead of the election; it is £114 billion in the summer Budget, after the election. For 2019-20, it was £129.8 billion in the March Budget; in this summer Budget, it is £113.5 billion. Over those four spending years, that is a cumulative cut of £46.5 billion, as a result of the charter for budget responsibility and the welfare cap.
Many Opposition Members—or perhaps not many of us, as I think only 20-odd of us voted against the welfare cap when it was introduced—said that what the Treasury was bubble-wrapping as a neutral budgetary tool would turn into a vicious cuts weapon, and now we see it, in the name of the welfare cap. When there is so much discussion about the benefits cap, people forget that the real story is the welfare cap, and that will bear down on people in my constituency and lead to more conflict around the next wave of welfare reform when it comes to the Northern Ireland Assembly.
We heard earlier from the hon. Member for East Antrim (Sammy Wilson) and we heard yesterday what he thinks the implications of the cap will be. If he was still here, I would be saying to him directly that on this issue he and his party need to catch on; they have been wrong in the past, and it is a bit late to be scrambling now, when they have invited this very situation. Many of us told them that their support for the welfare cap, on top of their support for the last wave of welfare reform in the Assembly, would lead to this very situation, but they told us to forget about those concerns because there was nothing we could do about it.
Alex Salmond
Will the hon. Gentleman accept that Members from eight political parties last night voted against the welfare Bill, so perhaps it is a case of “better one sinner that repenteth”?
Mark Durkan
Yes, I certainly have no problem with that, and I welcome the breadth of opposition. I also welcome the depth of opposition I heard from some hon. Members who, because of their party’s Whips situation, did not vote but whom I know care passionately about a number of issues and have served notice that they will vote in the amendment stages. I hope, therefore, that we can go further in this Bill and yesterday’s Bill to build on that.
However, let us be clear: this Bill purports to cover more than just the issues that we discussed yesterday. Hon. Members have referred to the questions around corporation tax, and of course the Government have served notice that they are going to reduce it. I am someone who has supported the measures to give Northern Ireland the devolved capacity to vary the rate of corporation tax, and I have no issue or argument against that. Indeed, I predicted that one of the reasons why the Conservatives were so keen to devolve corporation tax was that they wanted to create an excuse or cover to do so in England and Wales as well.
However, although that can be welcome in Northern Ireland at one level, because it means that the cost of any variation in corporation tax for us will be less in time, let us be clear that, contrary to what the hon. Member for East Antrim said yesterday, it will not be parties such as mine holding these issues up; it will be the tactics and policies of the Government, who are trying to create a budgetary arm-lock on the devolved Executive. They are basically saying, “Unless you get your Assembly to pass the legislation that we want in respect of welfare reform, we are going to create budget stress”—which in turn will lead to a budget crisis, which in turn will become a political crisis—“as the price of your failure to do so.”
When we are locked in that budget crisis—which will be contrived and the result of the Government bullying us on welfare reform—they will then say, “You don’t have a balanced and sustainable budget; therefore, you’re not getting your corporation tax powers.” Just as the Government said they would not introduce the corporation tax Bill until they were satisfied with what it looked like the Assembly was going to do on welfare reform, so they have built in a clause for Northern Ireland in the Bill that says that, come 2017, they will not switch on the power unless they are satisfied that there is a balanced and sustainable budget.
When it comes to the outstanding measures in the Scotland Bill, I hope that hon. Members present in the Chamber will be mindful of the possible need for a clause to prevent the Treasury from adopting any such tactic on the dual exercise of welfare powers between Westminster and the Scottish Parliament, because the “twilight zone” difficulty that Northern Ireland has got into offers a very salient warning.
Jim Shannon (Strangford) (DUP)
I have the utmost respect for the hon. Gentleman, and he knows that, but the real reason why we have an impasse in Northern Ireland is the unfortunate delay from the SDLP in supporting the Stormont House agreement, which everyone signed up to. With that comes the delay in the corporation tax benefits for Northern Ireland. Surely it is time now for his party to honestly say, “Let’s support the Stormont House agreement, let’s get corporation tax back and let’s help everyone across the whole of the political spectrum in Northern Ireland.”
Mark Durkan
I would offer the hon. Gentleman the mutual observation of respect, but would also say, first, that we are not holding anything up. The legislation has already been passed. It provides for the switch-on of the powers in 2017. It is the Treasury that is imposing the condition, and let us remember that it is locked on to that condition in a way that is completely wrong and unwarranted. It is basically saying, “Yes, you have the nominal legislative power over welfare reform, but unless you do it exactly to our taste, as karaoke legislation, then we are going to interfere with your budget and claw back from the Barnett formula.” That is wrong. The Treasury has other ways of trying to control these things. If this is about welfare spending, then the Treasury already has a welfare cap that allows it to police welfare spending—literally—without creating budget stress within the Executive and between parties, so there is a different course that can be followed on all this.
As for some of the other provisions, I have no doubt that the Government will go further in their cuts to corporation tax. I know that they are saying that they want to get to 18% by 2020, but the Chancellor said in the second year of the last Parliament that there would be no more corporation tax cuts in that Parliament and of course there were. He is exactly lining up to do that again.
Let me touch on some of the other issues. The hon. Member for East Antrim rightly mentioned the road fund, in that the Chancellor said in his statement that the Government would have to work out exactly what would happen with the equivalent moneys in Northern Ireland—the money that would be raised in vehicle duties. However, I hope it is not the case that only the moneys raised directly in vehicle duties in Northern Ireland would be hypothecated for those purposes. Given the nature of our economy and the fact that many of the key commercial vehicles on our roads are not registered in Northern Ireland—many of those servicing many of our companies, not least in the retail sector, come from outside the region—and also, obviously, given our higher rurality, we have high relative overheads on roads, so we would need something more than that.
I asked the Financial Secretary earlier to clarify the position on banking because he seemed to be saying that the bank levy had largely served its purpose: the Government had to introduce it, but it was very much of its time, and now we needed to move on to something different. Let us recognise that although clause 18 rightly says that, in future, banks will not receive tax relief on expenses for compensation payments made to customers in respect of certain defined issues, until now the banks have been able to claim that tax relief. There is a catalogue of huge liabilities that they face because of their own wrongdoing, but they were able to absorb all that along with the bank levy, so it is not as though the bank levy was a serious burden to them.
Of course, the Government have responded to pressure from the likes of HSBC and StanChart, who have been saying that they will move if something is not done about the bank levy. So the Government have moved on the bank levy, but they are trying to tell the rest of us that that will be more than compensated for by the surcharge on corporation tax. If they reduce corporation tax by much more than they are currently advertising, that surcharge will not amount to as much. Given how they have rolled over on the bank levy, it is not very hard to canvass the suspicion that they will equally ameliorate the intended surcharge in response to the same threat.
On renewables, I do not intend to go on at anything like the same length or in the same colour as the hon. Member for East Antrim, but I want to make it clear that there is a different view from Northern Ireland. We see the Chancellor’s measures as directly interfering in our capacity to have a greener economy and to grow firms and businesses. It is a key target of the single electricity market in Ireland, north and south, to achieve over 40% supply from renewables. It is a key element in the grid investment that is needed. It is also a key aspect of the market, both north and south, to seek to export in terms of renewables. The Chancellor’s measures therefore fundamentally interfere in one of the growth sectors in Northern Ireland. It is a growth sector not only in terms of generation but in terms of renewable technologies, and the investment and export that goes with those. We take a fundamentally different view from that of the hon. Member for East Antrim. Let me be very clear: on issues such as contracts for difference, we have different politics, different starting points and different end points.
I agree with the hon. Gentleman on the age restriction on the national living wage; the fact that it does not apply to under-25s is grossly wrong. The whole concept of the national living wage as put forward by the Chancellor is not only an attempt to slightly enhance or rebadge the minimum wage; it is a blatant attempt to puncture the living wage, and to change its agenda and what is intended by it. That comes alongside other measures that we have discussed, such as changes to tax credits, which will directly take over £1,200 a year—over £100 a month—from people who are in work.
We are told that nobody who has more than two children at the moment will lose out as a result of the changes to the limits on child benefit; that will come later. If we are really to believe what Conservative Members were telling us earlier—that the number of children that people are having is an economic choice to do with the availability of tax credits and the eligibility for benefits—we need to hear from relevant Ministers how they will cope with the baby boom that we will have before April 2017, as people ensure that children are born in time to qualify for benefits. There will be either a race for benefits or a race for births, or both, if we believe half of what we heard across the way yesterday.
The new banking measures replace the big measures that were introduced by the Prime Minister and the Chancellor during the last Parliament, otherwise known as Project Merlin. A fairly effete bank levy was intended to sort out the banks and put manners on them. Now we have a new Project Merlin: the Chancellor seems to have decided to take key social policies from Merlin Entertainments. A family means two adults and two children, and no more. There is no deal for anyone who goes beyond that.
Tommy Sheppard (Edinburgh East) (SNP)
I rise to speak in support of the SNP amendment and, hopefully, to persuade the House to deny the Bill a Second Reading.
Before I go into the details of the Bill, I want to deal with a question of overview. Over the years, we have grown used to hearing glib statements from the Government, and soundbites rather than substance. Many of us marvel at the fact that the Conservatives manage, without smile or grimace, to get the words “working people” out of their mouths quite so often, given that, we suspect, some of them rarely meet the working people of this country, let alone have their best interests at heart. We have also grown used to the phrase ”long-term economic plan”, although the plan has been going for five years and has so far failed to meet every single objective that was set for it by the Chancellor. The latest mantra we hear consists of six words: the Conservatives believe in “high wages, low taxes, low welfare”. That is the type of society that they want to see.
I think it was the hon. Member for Gloucester (Richard Graham) who, at an early stage in the debate, asked the Opposition spokesman, the hon. Member for Birmingham, Ladywood (Shabana Mahmood), whether she agreed with the general direction indicated by those six words. I do not want to misrepresent the hon. Lady, but I did not hear her response, and I think that she tried to dodge the question. Well, I do not want to dodge the question. I want to say that I consider that statement to be facetious, glib and shallow, and that it is not a statement with which my colleagues and I agree.
I want to see a society in which there are high wages, fair taxes and decent welfare provision for everyone, and that is what I think we should be aiming for. I believe that prosperity is not just about what we have as individuals, and the wealth that one family gets through a wage packet, but about the things that we have together, in our society and in our communities. I believe in the whole concept of the social wage. If we know that we have well-funded, adequate, strong public services in respect of, for instance, health and education, and if we know that we have a strong system of social insurance that gives us a safety net should we fall ill, suffer disability, or find ourselves between periods of employment, we are much richer as a result. That is our attitude, and that is the philosophy in which we believe.
Let me now deal with some of the provisions in the Bill. So far, no one has discussed the tax lock provisions in clauses 1 and 2. The Government are saying that, for the remainder of the current Parliament, they will take upon themselves a legal obligation not to increase VAT or income tax. I made some inquiries about that, because I thought it a strange thing for the Government to want to do. After all, they are the Government now, and they will be the Government next year and for the following five years. If these provisions are included in what will become the Finance Act 2015, it will only take a clause in the 2016 Finance Bill to overturn them. They are therefore literally not worth the paper on which they are written. That is another example of a Government who prefer public relations to concern about the public finances.
The second detailed issue that I want to raise is that of the personal allowance. Members on both sides of the House will probably welcome the increase in the allowance and, as we are told, the ability of people to keep a little more of what they earn; but let us not kid ourselves.
Angela Crawley
IFS figures state that a £1,000 increase in work allowance available to a single parent earning £12,000 would boost their income by £650 a year, whereas in contrast a £1,000 increase in personal allowance would mean a family would benefit by only £70, resulting in further child poverty. Does my hon. Friend agree that this will not help families?
Tommy Sheppard
I agree with my hon. Friend and was just about to make that point, which has been endorsed by the IFS and others. The personal allowance is one lever we can use to enable people to keep more of what they earn, but we should not fool ourselves that it is going to do something about the lowest paid in our society and that it is the only thing we should do. Let us compare and contrast it with action on the work allowance, for example, which is the amount of money people are allowed to earn before they begin to lose benefit. As my hon. Friend said, increasing that by £1,000 would have a much better effect than increasing the personal allowance by £1,000.
Our manifesto had a proposal to increase the work allowance to 20% to allow people to keep more of the money they earn. That would also provide a powerful incentive for people either to go out and get higher paid work or to get more work, knowing they would be able to benefit from that and would not lose benefits as a consequence. Under these current proposals, however, someone who today has a part-time job earning, say, £5,000 a year will either lose benefits or have to work less and earn less than £5,000 to keep their benefits. Either way, their household income will go down. That will make the poorest in our society poorer still, and it is a serious indictment of this Government that that is the direction they are going in.
On inheritance tax, I do not think any Member of this House would suggest for one minute that people should not be allowed to pass on their good fortune to their children. All of us believe in that, but this is the question: when doing that, should the luckiest in our society who have benefited the most, as well as passing most of what they have on to their children, also make some contribution to other people’s children and society as a whole? That is why we have taxation, after all. Governments and their policies are about priorities and this Government have shown their priority is to look after people who live in £1 million houses and make the tax burden easier for them while clobbering the poorest in our society.
I also want to echo the comments of my hon. Friend the Member for Kirkcaldy and Cowdenbeath (Roger Mullin), who proposed our amendment, and ask the Minister to examine in the context of this Bill the serious value added tax anomaly that has built up in Scotland with our police and fire and rescue services. There is an opportunity to remove this anomaly whereby the forces in Scotland are the only ones in all of these islands that have to pay VAT. Police Scotland has to pay £23 million a year to the Exchequer. That is extremely unfair and it places a great burden on that service. The money would be better spent on police officers on the streets defending us against crime. Given the Government’s apparent commitment to doing something about crime in our society, I hope they will take that on board. If Ministers cannot deal with this point in today’s debate, perhaps they will at least give an undertaking to look into it as the Bill goes to Committee.
The insurance premium tax measure is a clear example of this Bill’s policies not being about those who can afford to pay the most and who have the broadest shoulders and are able to cope with this burden. Those who live in high-crime areas are usually in poorer households and poorer communities, and they will face heavier insurance bills—if, indeed, they can afford to buy insurance. As a result of this policy, we are taxing people who have to pay those premiums in those areas more than people in the leafy suburbs who are much better able to pay. This is an iniquitous, devious little measure, and it should be rejected.
I have two further points to make. First, there is the most interesting question of this entire debate—and we have sat here for hours now. It is, where are Her Majesty’s loyal Opposition? I was taken aback when I heard the Labour party’s representative say that it would abstain on this Bill, so I spent an hour out of the Chamber doing a little research. On 6 July 2010, the Labour party voted against the Second Reading of the Finance Bill. On 26 April 2011, the Labour party voted against the Finance Bill on Second Reading. Members may see where I am going with this. On 16 April 2012, there was a Division on Second Reading and Labour voted against the Finance Bill. On 15 April 2013, there was a Division on Second Reading of the Finance Bill and Labour voted against it. On 1 April 2014, Labour voted for its own reasoned amendment and then against Second Reading of the Finance Bill.
For five years the Opposition have voted against the Government’s Finance Bill on its Second Reading. Can it possibly be that the difference then was that it was a coalition Finance Bill put forward with the Liberal Democrats, and that, now, the Opposition find this Finance Bill, put forward just by the Conservative party, to be more acceptable? Even I would find that incredibly implausible, so I urge and plead with Labour Members, because the country needs better than this. The people who did not vote for the Conservative party—63% of them—expect it to be opposed in this Chamber, and, even if Labour Members agree with one or two things in the Bill, surely they can see that its overall rubric and intent is to penalise those people in society whom they should stand up for. I appeal to Labour Members to reconsider their position on this issue and to join us in the Lobby tonight as we vote against the Bill on its Second Reading.
My final point is this: in my country this Government have no mandate to bring forward these proposals. They got 14% of the votes in Scotland; they have one out of 59 Scottish MPs. Our country is completely opposed to the Bill, and the people have sent us here with a mandate to oppose it. That more than anything else shows the need for these measures to be transferred to the Scottish Parliament—in order that the Scottish Government can deliver to the Scottish people their own democratic wishes and the type of society that they want to see.
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. The right hon. Member for Gordon (Alex Salmond) puts me in something of a dilemma, because he appears to be indicating that he wishes to take part in the debate, but I do not recall that he was here for the opening speeches. I do not think he was, was he? If he wishes to contradict me with evidence, I will of course accept his point. I will allow him to explain.
Alex Salmond
I am grateful for the opportunity, Madam Deputy Speaker. I have been here for some substantial time in this debate—not for the opening speeches, but longer than just about any Labour or Conservative Member, apart from those on the two Front Benches. Indeed, I was here when the total number of Labour and Conservative Members present was in single figures. I am well aware of the rules of the House, Madam Deputy Speaker—[Interruption.]
Madam Deputy Speaker
Order. It is not for anyone else to judge who will speak and not speak in the Chamber. The right hon. Gentleman is, indeed, well aware of the rules of the House, as a seasoned performer in this Chamber. I know that he will appreciate that I also am aware that he was here for much of the debate, but not for the opening speeches. There are other people whom I have prevented from speaking earlier this afternoon because they were not here for the opening speeches. It is, however, obviously open to the right hon. Gentleman to intervene during the winding-up speeches that are about to begin from the Front Benches.
Sir Edward Leigh (Gainsborough) (Con)
On a point of order, Madam Deputy Speaker. I am very interested in your ruling. In future, will it not be open to members of the Whips Office, either Government or Opposition, to drag people in late in a debate to speak? Will that not be open to the Whips Office?
Madam Deputy Speaker
That has never been the case. If a Member is not here for the Minister’s opening speech and the opening speech of the Opposition, whichever Opposition that might be, they do not have a right to be called in the debate. But I have just ruled that there is nothing to stop a Member making an intervention in the speech of another Member, should there be some very pressing and important point that that Member wishes to make.
Simon Hoare (North Dorset) (Con)
Further to that point of order, Madam Deputy Speaker. I understand the ruling entirely, but will you clarify one thing? Is the speech of the principal spokesman from the Scottish National party to be deemed as an opening speech to which Members should be listening, or do the opening speeches principally come from the Treasury team and the Official Opposition?
Madam Deputy Speaker
Normally, speeches from the Treasury Front Bench and the Official Opposition Front Bench count as the opening speeches. But I have to say that that is a very narrow way of looking at the issue. If a Member wishes to take part in a debate—[Interruption.] Order. If a Member wishes to take part in a debate, it would be courteous and proper to be here for the whole of the debate. I am making no criticism of the right hon. Member for Gordon, who was here for much of yesterday’s debate and for much of today’s debate. I am just not allowing him to make a speech; it is not that I am not allowing him to say anything.
Alex Salmond
On a point of order, Madam Deputy Speaker. May I just point out that it is not immediately obvious to Members that a Second Reading debate on the Finance Bill will not be able to fulfil its time slot—they are not aware of that at the start of a debate? But, Madam Deputy Speaker, may I say that, as ever, your ruling has been most gracefully made, and therefore will be most gracefully accepted.
Madam Deputy Speaker
I thank the right hon. Gentleman for his graceful point of order.
Barbara Keeley (Worsley and Eccles South) (Lab)
Thank you, Madam Deputy Speaker, for calling me to speak. It seems that it is third time lucky.
We have had a lively debate. We heard speeches from the hon. Members for Charnwood (Edward Argar), for Kirkcaldy and Cowdenbeath (Roger Mullin), for Dudley South (Mike Wood), for East Antrim (Sammy Wilson) and for Lewes (Maria Caulfield), my hon. Friend the Member for Hornsey and Wood Green (Catherine West), the hon. and learned Member for South East Cambridgeshire (Lucy Frazer), and the hon. Members for Brighton, Pavilion (Caroline Lucas), for East Lothian (George Kerevan), for Foyle (Mark Durkan) and for Edinburgh East (Tommy Sheppard).
Last week, the Labour Opposition voted against the Budget, which my hon. Friend the Member for Streatham (Mr Umunna), the shadow Business Secretary, described as “unfair” and “regressive” and
“not equal to the challenges that we face as a country.”—[Official Report, 14 July 2015; Vol. 598, c. 768.]
This is the context in which we start our scrutiny of the summer Finance Bill. There has been much rhetoric and spin from Ministers but little acknowledgment of the hardship that the Government’s measures will cause to more than 3 million people on low incomes. We heard much on that point today.
The hon. Member for Edinburgh East challenged my hon. Friend the shadow Chief Secretary on Labour’s stance on the general direction of the Finance Bill. I am not a Hansard writer, so I do not claim that this is absolutely verbatim, but it is worth repeating what my hon. Friend said, which was that Labour disputes the Government’s characterisation of the measures in the Budget and the Bill. We do not see them as they see them. They use these descriptions of national living wage, working people and so on, but we do not see it that way. However—this is an important point—the measures we oppose are not all in this Bill. Some will be in delegated legislation. I hope that explains our position to the hon. Gentleman.
Given the hardship that the Budget’s measures will cause to 3 million families on low incomes and that we debated yesterday, the tax lock is of course welcome. However, there were giveaways in this Budget, which are detailed in the Finance Bill, such as the cut to inheritance tax. That featured a number of times in the debate. I want to question the priorities that are behind the choices made by this Government. Whenever we talk about increases to the national minimum wage, we must bear in mind, as many Members have done, that the cuts to tax credits more than outweigh those wage increases. My hon. Friends have taken the opportunity to outline our opposition to these regressive measures that will hit more than 3 million working people. Despite the gimmick of the tax lock on VAT and income tax, the Government’s other tax increases will also have an impact on families over and above the impact from cuts in tax credits.
Ian Blackford
I am pleased that the hon. Lady mentioned Labour’s opposition to the impact of the tax credits, but there is concern on the SNP Benches and elsewhere in the country—this goes to the heart of the matter—that people who will be affected by the Budget and what is happening in this Finance Bill need leadership. It is that failure to give leadership—to oppose, as the Opposition party in this House—and to stand up for people who are affected by these measures on which the Labour Opposition will be judged.
Barbara Keeley
I do not believe that is the case. We have been through the whole of the last Parliament being the official Opposition and we are still in that position again after the election, much to our chagrin. I know there are a lot of new Members in the House, but I must say that a Bill does not pass through the Commons in one sitting—it does not pass through the Commons in one day—because it goes to Committee. When we come back in September we will have a Committee of the whole House, and we have started to table amendments for debate on those days. There are also Public Bill Committee sittings, Report and Third Reading, so there are many occasions when speeches can be made.
Alex Salmond
As my hon. Friend the Member for Edinburgh East (Tommy Sheppard) pointed out, the Labour Opposition have divided the House on the Finance Bill for every Budget since 2010. What is it about this Budget—this extraordinary, regressive Budget—that makes it such that the Labour party does not want to support our opposition to it?
Barbara Keeley
I have made the point about the characterisation of the Budget. The right hon. Gentleman will have to take my word for it that some earlier Finance Bills contained all the measures that were in the Budget. Much of this Budget is split. It is not all in this Bill or the Welfare Reform and Work Bill. Some of it will be in delegated legislation. There will be plenty of opportunities to make the arguments he puts. Opposing at this point is not the only thing that we can do as an Opposition, and Members will just have to take my word for that.
Despite the gimmick of the tax lock on VAT and income tax, the Government’s other tax increases will have an impact on families over and above the impact from cuts in tax credits, as I said. The rate of insurance premium tax is increasing by more than 50%, which will be a hit to the cost of insurance for the family home, the family car and family holidays. A number of hon. Members referred to that. Insurance industry experts have raised concerns about the impact that this tax increase could have on the take-up of insurance. They have warned that it may mean policyholders buy less cover, in effect “taxing protection”. Half the poorest households do not have home contents insurance, and those households are more than three times as likely to be burgled as those with insurance. That leaves low-income households less financially able to replace goods lost through burglary, fire or flood. That point obviously was not understood by the hon. Member who mentioned it earlier.
We have welcomed the increase in the minimum wage set out in clauses 3 and 4. The Government are adopting a Labour policy to increase the value of the national minimum wage, a measure we introduced in 1998 in the face of fierce opposition—one could almost say ferocious opposition—from Conservatives. My hon. Friend the Member for Hornsey and Wood Green spoke effectively about implementing the real living wage and about the safety net that tax credits can provide as people move in and out of low-paid work. We had a number of useful interventions in which hon. Members clarified the status of the real national living wage versus the increased national minimum wage. Leaving aside that issue, it would help if the Chancellor got his facts right. In an article in The Guardian yesterday, he claimed that 2.7 million people would gain £5,000 each from the increase to the national minimum wage, but the Low Pay Commission tells us that there are, in fact, 1.4 million people in minimum wage jobs, including only 1.2 million people who are over 21. Perhaps the Minister can tell us why the Chancellor persists in using such incorrect figures.
There is real concern about the impact of minimum wage increases on social care provision, funded through local authority budgets, if the Government do not fund the increase in the minimum wage as it is a new burden on local authorities. The care sector is one of the lowest-paid sectors. The planned increases in the national minimum wage for care workers have been estimated by the Local Government Association to cost £330 million this year, rising to £1 billion a year by 2020. The Opposition believe that low-paid care workers should have a wage increase, but we obviously need to find ways to fund it that do not involve further cuts to care or other local authority services. I am sure that my hon. Friend, who was leader of her council, has battled through that, as have other local authority leaders.
Ministers are clearly in a mess over the funding of social care. Since the Budget, the Government have abandoned their manifesto pledge to cap care costs from next year, as we heard in Treasury questions this morning. Indeed, the vice-president of the Association of Directors of Adult Social Services has said that the pressures of rising demand, punitively reduced budgets and the impending obligation to pay increased wages all
“put an intolerable strain on social care finance.”
Abandoning the care cap seems to be a short-term palliative to those funding issues, but it will come at a high cost to people living with dementia and other long-term conditions.
The Opposition therefore question the Government’s priorities. Bringing in the nil-rate band of inheritance tax for properties worth up to £1 million when the property passes to direct descendants will cost almost £1 billion by 2020 onwards, yet families of people who need social care for long periods can lose nearly all the value of their homes through paying for care. It seems, unless the Minister can enlighten us otherwise, that there is no ray of hope for them in this Parliament.
The IFS has described the removal of the climate change levy exemption on renewables as a measure that makes “no economic sense”. Friends of the Earth has said that the change shifts the climate change levy from a carbon tax to just a tax on all electricity consumed. A number of interventions and speeches touched on that.
Andrew Gwynne
Of course, we should not be surprised about the changes to the climate change levy, given that the Government have already signalled their direction of travel through their proposed changes to onshore wind. Does my hon. Friend agree that that is a retrograde step, given that the United Kingdom is such a leader in renewable energy?
Barbara Keeley
Indeed I do. My hon. Friend the shadow Chief Secretary noted that the Chartered Institute of Taxation has suggested having some kind of audit and report on the way forward for the sector, which would be very helpful.
The removal of that exemption will come at a cost to companies and to the environment. It makes little sense to remove the exemption for renewable energy generators in the UK. It will not only increase tax on business consumption of energy, but reduce the relationship between the tax paid and the carbon content of the energy, as a number of Members have noted. The Opposition believe that the Government should be encouraging the renewables sector to develop and grow. Cutting green subsidies risks being a false economy and may cost the UK economy more in the long term.
It is right that banks should pay their fair share of tax. The bank levy, as many Members have noted, was designed to discourage risky borrowing. Now the Government plan to reduce the bank levy gradually. Instead, banks will be subject to an 8% corporation tax surcharge on bank profits from January 2016. The IFS estimates that the change to the bank levy will cost the Exchequer £1.8 billion from 2021 onwards, whereas the 8% corporation tax surcharge on bank profits will raise only £1.3 billion.
There is a question of priorities here. Is it fair at this time, when working families are going to be made worse off by the Government’s plans, to reduce the levy paid by the banks in that way? The Minister will probably say that it will make money in the longer term, but many concerns have been raised. The IFS and other organisations have raised concerns about the possibility of perverse incentives and disproportionate impacts on parts of the banking sector.
We want to ensure that the Bill helps to create a system in which banks are taxed proportionately and fairly. A number of concerns were raised about the impact of the corporation tax surcharge on bank profits on building societies and challenger banks. We clearly need to examine the issue closely in Committee of the whole House.
On tax avoidance, the Financial Secretary to the Treasury, who is not in his place, was asked whether £5 billion was small beer. Certainly, our Labour target for tax avoidance was £7.5 billion by the middle of this Parliament, and Labour Members have raised many points of concern about tax avoidance, including on the importance of going further to close the “Mayfair” loophole. We will return to those tax avoidance issues later in our scrutiny of the Bill.
Although we agree with some measures in the Bill, others obviously need to be amended. It is clear that the Budget, and hence the Finance Bill, together with the Welfare Reform and Work Bill, will have a regressive impact, and the Finance Bill highlights the wrong priorities chosen by this Government. The Chancellor claimed that his Budget was moving us to a low-tax society, when tax increases are actually at twice the level of tax cuts. Budget giveaways, like the cut to inheritance tax, look like the wrong priority when they are viewed against measures to penalise 3 million of the lowest-income households by £1,000 a year. Families will also be penalised when they take out insurance on their family car or home contents, if they can still afford to take out insurance on their car and home contents. A point which I come back to because it is so important is that the Government’s priorities mean that one group of families, with homes to a value of £1 million, are to be protected from inheritance tax, while the families of people needing social care over long periods will have no cap on the costs of their care.
We will return to the issues of bank taxation, the insurance premium tax and the climate change levy in our debates in Committee in September, and I hope Ministers will have time in between for more reflection on their priorities.
This is not the pre-recess Adjournment debate, but a number of good wishes have been expressed and I should like to add to them. I will take a chance here and wish the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) happy birthday; I am sure I made a mess of the pronunciation. Madam Deputy Speaker, I would like to wish all Members of the House a good recess and wish all the Officers and you a good summer, with some time off for a break before we return.
The Exchequer Secretary to the Treasury (Damian Hinds)
It is a pleasure to close this wide-ranging and lively debate. The right hon. Member for Gordon (Alex Salmond) reminded us, in a timely intervention, that it could have gone to any hour, but in the event it was not to be. We were helped in our timeliness by the Labour party. It has only been a short week so far, but it has not been a great week for Labour unity. Nevertheless, it has discovered a new answer to the question of how not to show disunity, which is preferably not to show up at all.
This Government have set out a bold plan for the next stage of Britain’s economic recovery and this Finance Bill helps us to deliver it. The Bill will help move our economy from a low-wage, high-tax, high-welfare economy to a higher-wage, lower-tax, less welfare-reliant economy. It rewards work and ensures that hard-working families can keep more of the money they earn. It cuts taxes for businesses, helping them to create jobs and deliver the growth we need to secure the future prosperity of our nation. And it tackles avoidance.
Alex Salmond
Let us get to the nub of this. Is it not the case, confirmed by a number of analysts, that in every single constituency in this country, thousands of families with children will be worse off as a result of the Budget? What does he say to those low-paid families who will be substantially worse off as a result of this Budget?
Damian Hinds
What “he” says is that eight out of 10 families will be better off as a result of the blend—the complete set—of measures in the summer Budget.
Sir Edward Leigh
With regard to the point about removing tax credits to families with more than two children, I want to establish a principle which I think is quite important. Perhaps I should declare an interest: I have six children. I apologise for that. I just want to establish that the Government are not following the sort of liberal line that there is an ideal family—that a family of two children is more worthy than one of one or three or four or five. The Government are not approaching the subject from that viewpoint, are they? We can at least establish that principle, can we not?
Damian Hinds
I can confirm that absolutely. We have not managed six in my household but we do have three, and I, like my hon. Friend, do not think there is an ideal number of children to have in a family. I do not think it is for Government to say what that should be. But what we do say is that in making decisions about starting a family and about growing their family, people in different circumstances, whether they are supporting themselves entirely through employment or with the help of benefits, should have to make the same sorts of decisions.
Damian Hinds
I must make progress. I must respond to several points that were raised in the debate.
This Bill takes the next steps towards Britain’s sustained economic security, putting us on the right path towards meeting our ambition to be the most prosperous major economy in the world within a generation. As the hon. Member for Worsley and Eccles South (Barbara Keeley) pointed out, the Bill is not about everything that is in the Budget. The Finance Bill is limited in scope specifically to tax measures intended for general expenditure. The national living wage is not within its scope, but as the direct question came up of how the Government would bring it in, I confirm that we will be making regulations to introduce it for April 2016.
I want to respond to a number of other points. The hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin) suggested that changes to inheritance tax were only to protect the rich. As a result of rising house prices, inheritance tax increasingly hits people with normal family homes and, without action, the number of estates facing an IHT bill was forecast to double from about 35,000 in 2014-15 to 63,000 in 2021. As he will know, there are provisions such that it is clawed back from the very largest estates so that the wealthiest people do not in fact benefit.
The hon. Gentleman, the hon. Member for Hornsey and Wood Green (Catherine West) and others mentioned the so-called Mayfair loophole and the treatment of carried interest. Carried interest is treated as a capital gain in the UK, as in most other jurisdictions, because it is not exactly the same as a salary; it reflects the return to the manager in terms of some of the investment risk that they have undertaken. That is aligned to the tax treatment applied to other investors.
The hon. Member for Kirkcaldy and Cowdenbeath spoke powerfully about the vital and sometimes dangerous work done by the emergency services in Scotland, as did the hon. Member for Edinburgh East (Tommy Sheppard), and asked about VAT treatment. The discontinuation of local funding for police and fire and rescue services in Scotland was a decision by the Scottish Government, not the UK Government. The Scottish Government were explicitly advised of the VAT consequences of that reorganisation. Because these bodies are no longer funded through local taxation, the rationale for providing exemption under section 33 of the Value Added Tax Act 1994 does not apply.
The hon. Member for East Antrim (Sammy Wilson), apart from his very engaging mini-debate with the hon. Member for Brighton, Pavilion (Caroline Lucas), asked about take-up of the employment allowance in Northern Ireland. It has been taken up by 27,000 businesses—an 84% take-up rate, which is a wee bit below the UK average, but fairly close to it. Of course, we must continue to draw attention to its benefits.
The hon. Member for Hornsey and Wood Green rightly talked about the vital role of childcare in enabling productivity gains. She mentioned particularly the importance of enabling mums to return to the workplace sooner if they so wish. I am sure that she will therefore welcome our increasing the facility for three and four-year-olds to 30 hours.
The hon. Member for East Lothian (George Kerevan) talked about the productivity problem. I am sure he would not suggest that it is a new problem, but if he had, it would have been misleading, as it has been around for a long time. I make no apology for the fact that in 2010, facing the economic crisis that we did, the very top priority of the incoming Government was to keep people in work. The success of that approach has been reflected in the 2 million jobs created over the past five years.
The hon. Members for Foyle (Mark Durkan) and for East Antrim asked about what would happen with vehicle excise duty in Northern Ireland. Devolved Administrations will of course continue to get funding for roads through the Barnett formula, and they could establish a specific fund for their roads if they chose.
We heard a number of other excellent speeches. My hon. Friend the Member for Lewes (Maria Caulfield) reminded us of the context of the deficit. My hon. and learned Friend the Member for South East Cambridgeshire (Lucy Frazer) said that it was easy to come up with reasons for not doing things now but that now is the right time to get on with these important measures. She and my hon. Friend the Member for Dudley South (Mike Wood) talked about the importance of businesses in creating jobs, and welcomed the apprenticeships levy.
Fairness was at the fore of the debate a number of times. My hon. Friend the Member for Charnwood (Edward Argar) put it very well when he said that we believe in a low-tax economy in which everyone pays their fair share. He is correct that our plans include improved tax recovery. It is partly because of that that we can ensure that everyone, especially the low-paid, can keep more of what they earn, as my hon. Friend the Member for Bexhill and Battle (Huw Merriman) noted.
Indeed, we have always believed that working people should be free to keep more of the money they earn. That is one of the most powerful incentives to aspiration. During the last Parliament, we increased the personal allowance from the £6,475 we inherited to £10,600. Clauses 5 and 6 will increase the personal allowance to £11,000 in 2016-17 and to £11,200 in 2017-18, and increase the higher rate threshold to £43,000 and to £43,600 respectively. As a result, nearly 600,000 more individuals will be taken out of income tax by 2016-17. These are important steps towards the Government’s ambition to increase the personal allowance to £12,500 by the end of the Parliament. We will ensure that, when that is achieved, the personal allowance will be uprated in line with the national minimum wage so that no one working 30 hours on the national minimum wage will pay income tax.
Damian Hinds
I had better continue, as I still have several of points to which I need to respond.
The Finance Bill provides further certainty for the people of this country by legislating for the income tax and VAT elements of the tax lock in clauses 1 and 2, which delivers our manifesto commitment to rule out in law any increases in the main rates of income tax, VAT or national insurance for the duration of this Parliament.
Finally, the Finance Bill recognises and rewards the natural aspiration to own your own home not just as a place to live, but as a piece of security, an asset to invest in through your working life, to take with you into retirement and one day to be able to pass on to your children.
Barbara Keeley
I am glad that the Minister has managed to spare some time out of the 90 or so minutes that remain. I raised the issue of the care cap, to which he has not responded at all. It will cost £1 billion to bring in the nil-rate band on inheritance tax. The Minister talked about childcare, but he has not touched on that particular point. [Interruption.]
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. I cannot hear the hon. Lady. The Members who have been in the Chamber for the whole debate will wish to hear her and the Minister’s answer. If other people, who have not been here for the debate, wish to have conversations, they can have them outside the Chamber.
Barbara Keeley
Will the Minister respond to the point I raised: is it reasonable to spend £1 billion so that people can pass on the value of their homes while others—people with dementia and other long-term conditions—can lose everything they have and all the value of their home through paying down care costs?
Damian Hinds
The hon. Lady will know that we still intend to bring forward the cap. It has had to be delayed, but we intend to do it during this Parliament. The Budget delivers for all the people of this country, including those who work hard, save hard and want to be able to pass on an asset to their children. In the Bill, we introduce a new £175,000 per person transferable allowance when a person’s home is passed on at death to their children or grandchildren. With the allowance, married couples and civil partners can now pass on an estate worth up to £1 million before having to pay any inheritance tax.
Damian Hinds
I will not give way, if the hon. Gentleman will forgive me.
Productive businesses are the fundamental drivers of national growth. Back in 2010, our corporation tax rate was 28%. Over the course of the last Parliament, we reduced it to its current level of 20%, the joint lowest in the G20. We are reaping the rewards of that, with the UK growing faster than any other G7 economy in 2014. Now we will go further. Clause 7 cuts the rate to 19% in 2017 and to 18% in 2020. The cuts will save businesses a further £6.6 billion by 2021. In addition, clause 8 sets a new permanent level for the annual investment allowance. At £200,000, it is the highest ever permanent level.
We need to invest more in our roads, because their quality has fallen behind as a result of decades of under-investment. That is why we have the reform of vehicle excise duty, which supports the creation of a new roads fund and puts vehicle excise duty revenues on a long-term, sustainable footing.
To respond to the hon. Member for Brighton, Pavilion, the incentives will still be there to purchase lower-carbon vehicles in the first year rates. We know from research that people focus on the first year rate in particular when buying a car. We will do that while dealing with the unfairness that my hon. Friend the Member for Lewes rightly identified, whereby people driving a second-hand car can pay a lot more than those who can afford to buy a new model every couple of years.
It is right that banks make a fair contribution to the public finances that reflects the risk that they pose to the UK economy. That is why we introduced the bank levy in the last Parliament. The additional contribution needs to be balanced with consideration for the UK’s global competitiveness. Therefore, we are legislating for a package of measures that includes making sure that banks cannot profit from the fines they incur and the supplementary rate of tax. I reassure hon. Members about the impact on smaller challenger banks, which we greatly support. The way in which the charge is structured will ensure that they are not adversely or unduly affected.
This is an ambitious Finance Bill for an ambitious nation. It rewards work and investment, provides certainty and security for families and businesses, delivers significant tax reform, helps our economy to be even more competitive internationally, and ensures that the burden of fiscal consolidation is distributed fairly. The Finance Bill marks the next step forward in our long-term economic plan and I commend it to the House.
Question put, That the amendment be made.
Proceedings | Time for conclusion of proceedings |
|---|---|
Clause 43 and any new clauses or new Schedules relating to the subject matter of that clause | Two hours after the commencement of proceedings on the Bill |
Clause 45 and any new clauses or new Schedules relating to the subject matter of that clause | Four hours after the commencement of proceedings on the Bill |
Clauses 16 and 17 and Schedules 2 and 3, and any new clauses or new Schedules relating to the subject matter of those clauses and Schedules | Six hours after the commencement of proceedings on the Bill |
Business without Debate
Delegated Legislation
Nic Dakin (Scunthorpe) (Lab)
On a point of order, Mr Speaker. I wish to draw this House’s attention to a vote in the other place, of 320 to 139, in favour of setting up a Committee of both Houses to examine the issue of English votes for English laws. I hope that the Government will look at this matter, in the interest of going forward in a cross-party way, before they come back with new proposals in the autumn.
Mr Speaker
Of course, in common with most attempted points of order, this is a not a matter for the Chair. That said, I can confirm that the House of Lords has communicated by message that it has resolved that a Joint Committee should be appointed to consider the Government’s proposals on English votes for English laws, a resolution to which it desires the agreement of the Commons. This message will be printed in the Votes and Proceedings in the usual way. There is nothing for me to add at this stage, except to say that the hon. Gentleman looks duly satisfied that he has made his point and it is on the record.
On a point of order, I call the hon. Member for Na h-Eileanan an Iar.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
Thank you very much, Mr Speaker—excellent pronunciation, yet again. On a point of order, Mr Speaker. Following the point of order last night from my hon. Friend the Member for Perth and North Perthshire (Pete Wishart) asking that the furniture be altered in this House so that the real Opposition could actually be in a place of opposition, is it in order that the party should change the seating instead, so that the actual Opposition—the SNP 56—sit in the right place, in opposition to the Tory party?
Mr Speaker
I do not want to be accused, least of all by the hon. Gentleman, on this, the last day before we rise for the summer recess, of lacking a sense of humour, but I think he might be being just a tad facetious.
After my little effort—well intentioned, though perhaps inadequate—to name his constituency, I should just say, in all humility, that I am quite open to lessons, either from him or from any of his colleagues arrayed across the Opposition Front Bench, in pronunciation or elocution, if they think that I would be a suitable pupil. We will leave it there for now.
petitions
Mr Speaker
Order. I think we need to hear fully this petition about the speed limit and traffic calming on Monmouth Road in Walsall, which we cannot adequately do if people are leaving the Chamber noisily. People will leave the Chamber in a decorous manner, following the example of the hon. Member for North Dorset (Simon Hoare), who is leaving in a very statesmanlike fashion. The hon. Member for Walsall South (Valerie Vaz) is assured of a fair hearing on behalf of her constituents.
Valerie Vaz
Thank you very much, Mr Speaker. The petition, which has been signed by 223 people, states:
The petition of residents of the UK,
Declares that there is currently a 30mph speed limit on Monmouth Road, Bentley, Walsall, where there is a primary school and the entrance to a playing field. The playing field entrance is in constant use by dog walkers, families and the football clubs. Many vehicles travel at excessive speeds. There is a risk of serious incident if measures are not put in place to reduce the speed of vehicles using Monmouth Road.
The petitioners therefore request the House of Commons to urge Walsall Metropolitan Borough Council to implement a 20mph speed limit and traffic calming measures on Monmouth Road, Bentley, Walsall.
And the Petitioners remain, etc.
[P001537]
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
I rise to present a petition on a matter of great importance to people in my constituency and across the UK. I have received numerous representations from my constituents about the dire humanitarian crisis in Yemen. A petition on the matter has been signed by more than 600 individuals in Liverpool alone.
Due to the ongoing conflict thousands of people have lost their lives and homes, and utilities, ports and airports have been destroyed. The United Nations has declared its highest level humanitarian emergency in Yemen. The British embassy has closed, and there are now no embassies open in the country. Many British citizens, or immediate relatives of British citizens, are currently stranded in Yemen. Because of the conflict they cannot cross into neighbouring countries to apply for the visas that they need. Little or no support is being offered to help these people. The petition states:
The petitioners therefore request that the House of Commons urges the Government to take urgent action to ease the suffering of friends and families of British citizens in Yemen by speeding up and simplifying the application process for visa or entry requirements, by allowing the issuing of temporary sponsored visas for relatives and dependents of British citizens residing in the UK who are waiting for visas or whose passport applications are being processed and by coordinating evacuations for vulnerable British citizens who are in urgent need of evacuation from Yemen.
Following is the full text of the petition:
[The petition of residents of the UK,
Declares that the dire inhumane situation in Yemen due to the armed militia conflict (civil war) and the coalition bombing has led to thousands of people losing their lives or being injured as well as the destruction of thousands of homes, utilities, ports and airports; further that the United Nations now recognises the situation in Yemen as the world’s biggest humanitarian crisis; further that many British citizens and sole dependents and relatives of British citizens are stranded in Yemen; further that the petitioners have concerns about the requirements for settlement visas because the visa requirements cannot be met by many people and because Yemeni nationals who are spouses or children of British citizens cannot cross over into neighbouring countries and cannot apply for such visas as there are no embassies in Yemen; and further that a petition in Liverpool was signed by over 600 individuals.
The petitioners therefore request that the House of Commons urges the Government to take urgent action to ease the suffering of friends and families of British citizens in Yemen by speeding up and simplifying the application process for visa or entry requirements, by allowing the issuing of temporary sponsored visas for relatives and dependents of British citizens residing in the UK who are waiting for visas or whose passport applications are being processed and by coordinating evacuations for vulnerable British citizens who are in urgent need of evacuation from Yemen.
And the petitioners remain, etc.]
[P001536]
Mrs Louise Ellman (Liverpool, Riverside) (Lab/Co-op)
I present this petition on behalf of many of my constituents, but it is also of concern to many citizens throughout the United Kingdom. The horrendous humanitarian crisis in Yemen is causing great distress to my constituents, as many British citizens’ sole dependants and relatives are stranded in dire, life-threatening circumstances. The petition states:
The petitioners therefore request that the House of Commons urges the Government to take urgent action to ease the suffering of friends and families of British citizens in Yemen by speeding up and simplifying the application process for visa or entry requirements, by allowing the issuing of temporary sponsored visas for relatives and dependants of British citizens residing in the UK who are waiting for visas or whose passport applications are being processed and by coordinating evacuations for vulnerable British citizens who are in urgent need of evacuation from Yemen.
Following is the full text of the petition:
[The petition of residents of the UK,
Declares that the dire inhumane situation in Yemen due to the armed militia conflict (civil war) and the coalition bombing has led to thousands of people losing their lives or being injured as well as the destruction of thousands of homes, utilities, ports and airports; further that the United Nations now recognises the situation in Yemen as the world’s biggest humanitarian crisis; further that many British citizens and sole dependants and relatives of British citizens are stranded in Yemen; further that the petitioners have concerns about the requirements for settlement visas because the visa requirements cannot be met by many people and because Yemeni nationals who are spouses or children of British citizens cannot cross over into neighbouring countries and cannot apply for such visas as there are no embassies in Yemen; and further that a petition in Liverpool has gathered many signatures.
The petitioners therefore request that the House of Commons urges the Government to take urgent action to ease the suffering of friends and families of British citizens in Yemen by speeding up and simplifying the application process for visa or entry requirements, by allowing the issuing of temporary sponsored visas for relatives and dependants of British citizens residing in the UK who are waiting for visas or whose passport applications are being processed and by coordinating evacuations for vulnerable British citizens who are in urgent need of evacuation from Yemen.
And the petitioners remain, etc.]
[P001538]
Nic Dakin (Scunthorpe) (Lab)
The petition states:
The Petition of residents of the UK,
Declares that the chemotherapy drug Abraxane, used for treating people with pancreatic cancer, is being reviewed by the Cancer Drugs Fund panel at the end of July 2015; further that the drug should be retained on the Cancer Drugs Fund list of approved drugs; further that pancreatic cancer has the worst survival outcome of any of the 21 most common cancers with less than 4% of patients surviving 5 years or longer and that these low survival rates have remained virtually unchanged for the past 40 years; further that there are currently very few treatment options available for patients and that Abraxane offers a treatment option that some patients may be able to tolerate better than the most effective treatment currently available; further that ultimately Abraxane will give more patients access to life-extending treatment; further that removing Abraxane from the Cancer Drugs Fund will see pancreatic cancer patients in England disadvantaged; further that there is clinical support and demand for Abraxane and it is the only pancreatic cancer drug on the Cancer Drugs Fund; and further that an e-petition on this matter was signed by 2700 individuals.
The Petitioners therefore request that the House of Commons urges the Government to retain the chemotherapy drug Abraxane on the Cancer Drugs Fund list of approved drugs.
And the Petitioners remain, etc.
[P001539]
Helen Hayes (Dulwich and West Norwood) (Lab)
I wish to present a petition on behalf of my constituents, which has been signed by 4,000 residents. It raises the important issue of milk spots cafés in Lambeth and Southwark, which exist to support new mothers who are breastfeeding their babies. They are staffed by expert midwives from King’s College Hospital, and provide a gold standard for post-natal breastfeeding support in the community, being free, accessible and held daily, and allowing continuity of care from skilled health professionals. King’s College Hospital has recently announced that it intends to recall those specialist midwives to perform general midwifery, with the aim of skills-sharing, and to replace them with midwives who have been given basic training, with no obvious expert support.
The health benefits of breastfeeding for mothers and babies are proven, but women, particularly in deprived areas, need support to establish it, and to overcome the initial pain and challenges which are common, and which lead many women to give up in the early weeks. It is not clear that the replacement support will be sufficient for babies with complications such as tongue-tie. The petition protests against the proposed end of the current staffing arrangements.
The petition states:
The Petitioners therefore request that the House of Commons require the Department of Health to urge King's College Hospital to preserve the existing staffing arrangements of the Lambeth and Southwark Milkspots, and to investigate other means of sharing skills amongst its midwives.
And the Petitioners remain, etc.
Following is the full text of the petition:
[The Petition of residents of Dulwich and West Norwood,
Declares that the Lambeth and Southwark Milkspots cafes staffed by expert midwives from King's College Hospital provide a gold standard of postnatal breastfeeding support in the community, being free, accessible, held daily, and allowing continuity of care from skilled health professionals; and further declares that King's College Hospital has announced that it intends to recall these specialist midwives with basic training, without any obvious expert support, and this will leave women with complicated needs without adequate support, advice or referral to hospital services; and that around 4,000 people have signed a Change.org petition to protest against the proposed end of current staffing arrangements.
The Petitioners therefore request that the House of Commons require the Department of Health to urge King's College Hospital to preserve the existing staffing arrangements of the Lambeth and Southwark Milkspots, and to investigate other means of sharing skills amongst its midwives.
And the Petitioners remain, etc.]
[P001540]
Public Transport (Greater Manchester)
(8 years, 9 months ago)
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Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
Thank you, Mr Speaker, for granting me this debate on an issue of vital importance to me and the vast majority of the 2.7 million people who live in Greater Manchester. I was advised as a new MP never to request the last Adjournment debate of the week with a title broader than my constituency. I appreciate that this is the last parliamentary business before the summer recess and have no doubt that you, Mr Speaker, like me, the Minister and other hon. Members present are itching to get out of this place and into a pair of Speedos as soon as possible, so I hope the debate will be an excellent way to start the summer. I thank all colleagues present in the Chamber: my hon. Friends the Members for Manchester, Withington (Jeff Smith), for Stretford and Urmston (Kate Green), for Worsley and Eccles South (Barbara Keeley), for Blackley and Broughton (Graham Stringer) and for Denton and Reddish (Andrew Gwynne), and on the Government Benches the hon. Members for Bolton West (Chris Green) and for Bury North (Mr Nuttall). [Interruption.] Yes, and the Labour Whip is from London. I also thank the Minister for his attendance and response and Transport for Greater Manchester for its assistance to me in preparing for the debate.
This debate is particularly timely, as devolution to northern cities as part of the Government’s much-vaunted northern powerhouse initiative offers a huge opportunity for improvements in Greater Manchester’s public transport. My aim for this debate is to make my own contribution on what I and my constituents would like to see happen, and to ask the Minister whether he believes the powers to achieve that will be forthcoming.
Greater Manchester needs an improved public transport system, and in particular greater capacity. Improvements have been made in recent years, such as the expansion of our iconic Metrolink system, but more needs to be done to meet the needs of our growing city. We need these improvements to cater for increased demand for leisure travel in a city where the population is expanding, but crucially we need them for the economic benefit that a vastly improved public transport system would bring. If Greater Manchester is truly to thrive, as London has, the movement of a skilled workforce around the conurbation is vital.
I am sure the Minister will agree with that, not least because over a third of jobseekers in Greater Manchester state that lack of transport is one of the top barriers to their attending an interview or getting a job. Furthermore, the expected growth in Greater Manchester jobs is likely to mean at least 30,000 more trips into the city centre at peak times in the near future, while at the same time 31% of households in Greater Manchester have no access to a car.
One of the main points I wish to make in this debate, however, is that it is not just travel into the city centre and back out again that needs to be upgraded, but, fundamentally, travel between the outer parts of Greater Manchester to facilitate the easier movement of people to jobs, and to ensure places like Tameside do not miss out on the benefits of “devo-Manc”. Currently, our public transport system is largely based on getting into and out of the city centre, but I am convinced that we must improve the connectivity between the outer parts of Greater Manchester if we are to unlock its economic potential, and I am absolutely certain that we can do that. In this debate I shall address the issues around rail, rolling stock, Metrolink, buses and car use that I want to see tackled in order to achieve that.
I must start on a negative point, however: the incredibly disappointing news regarding the electrification of the trans-Pennine line that the Government disclosed recently. When the electrification of the trans-Pennine route was first announced back in 2011 I was very pleased and very supportive, not least because it would finally end the problems of under-capacity and unreliable services that my constituents in Stalybridge and Mossley, and those of other Members in the Chamber, were enduring daily. Coupled with the wider Rail North and northern hub work, the benefits would be huge, and I was delighted that my constituents would be able to see the improvement. I was also hoping to see my casework decrease, as poor, overcrowded services from Stalybridge are rightly regularly raised with me as an issue. Yet four years later that optimism and anticipation has all but disappeared thanks to this Government’s handling of rail policy.
I was incredibly disappointed to be told of what the Government describe as an “indefinite pause” of work on the trans-Pennine electrification, a disappointment shared by my constituents and colleagues on both sides of the House. The Manchester Evening News even went so far as to describe this as the “Northern Powercut”, which should give the Minister some sense of the anger rail users in Greater Manchester feel. We are still yet to receive a full explanation of why the work has been delayed, with the Government principally blaming Network Rail. I hope the Minister will shed some more light on this in his reply. The Prime Minister denied in a recent reply to me in this House that this amounted to a cancellation of the work, although announcing a “pause” without setting a date for work to be completed, or even restarted, seems to me to be pretty close to a cancellation. Therefore, I want to press the Minister on whether he can give a cast-iron guarantee before the House today that the electrification work will definitely be completed, even if he cannot give a date for its completion. That would provide some much needed clarity for rail users in Greater Manchester.
One related issue, which deserves specific attention, is that of the poor-quality rolling stock on all lines serving Greater Manchester. The Pacer trains used by Northern Rail are quite frankly not fit for purpose and in desperate need of replacement. If the Minister is not aware of the type of trains I am talking about, their nicknames, which include boneshakers, cattle trucks, bus bodies and pacemaker trains, should give him some idea of the esteem in which they are held by fed-up commuters in Greater Manchester.
The trains were of course intended as a stop-gap solution for rolling stock back in the 1980s, but they are still in use today on major commuter routes in and out of Manchester city centre, screeching round corners and disliked by almost everyone who travels on them. The Prime Minister himself has promised to end their use in the north of England, yet commuters see no progress, so will the Minister in his reply tell the House how he intends to achieve this?
The one bright light at the end of the tunnel, I understand, is that those trains will have to be gone by 2020, as they do not comply with disability discrimination legislation. I appreciate that there are good intentions on the issue, but because of the wider problems in train franchising, stemming from the west coast main line debacle, in my constituency we actually saw the threat of newer trains being removed and transferred to the home counties. The pressure on the remaining fleet of diesel trains has become acute and will only get worse until electrification is completed. We fought off that proposal, but it means that my constituents repeatedly hear negative stories about the trains in our area, and I want to give them some hope for the future.
One area of public transport in Greater Manchester that has expanded successfully is the Metrolink network, and the new lines recently opened to Rochdale, Oldham and Ashton-under-Lyne have been very welcome. It is no coincidence that the number of passenger journeys, which has been increasing year on year, reached 31 million in 2014-15, and Metrolink has become a visible symbol of Manchester.
There are issues that Metrolink does need to address, because customer satisfaction is not as high as it could be, and there have been some teething problems along the new routes. But overall I believe that Metrolink is a hugely important asset, and I would like to see it extended to my own constituency of Stalybridge and Hyde. Extending Metrolink to my constituency could be a radical new phase for the network.
As I previously noted, greater orbital connectivity between areas outside Manchester city centre would be of great benefit to Greater Manchester as a whole. To use the example of my own borough, Tameside has a significant inter-dependence with the neighbouring boroughs of Stockport and Oldham, not least because Stockport has nearly three times as many jobs as Tameside, and many Tameside residents fill those jobs.
Andrew Gwynne
As well as being a Tameside colleague, I am a Stockport Member of Parliament. My hon. Friend makes an excellent point about the need for orbital public transport around Greater Manchester. On existing infrastructure, he will know that there is a very under-used line between Stockport and Stalybridge, which serves Reddish South and Denton stations, with one train a week in one direction only. Is that not precisely the infrastructure that could be utilised to bring about the orbital service to which he refers?
Jonathan Reynolds
It absolutely is. It seems absurd, given the cost of creating new rail capacity, to have a line that is not utilised, when the reason it was not originally closed but turned into what is called a parliamentary service no longer applies, because transport patterns have changed so much. When we consider the bus links between Tameside and Stockport, with less than one bus an hour in some parts of my constituency, it does seem absurd.
In putting forward this case, I want people to recognise the crucial point that, primarily due to the completion of the M60 motorway, people now choose more than ever before to live and work in different parts of Greater Manchester. Our public transport network needs to reflect that change in travel patterns. Many boroughs, including Tameside, are very keen to see an orbital expansion of the Metrolink network to connect key town centres, and to see it extended to Manchester airport, with the huge potential for jobs and growth that could bring. I would love to see Metrolink extended to run from Stockport town centre, through to Denton and Hyde, and then on to Ashton to create a genuine circle line for south and east Manchester.
Metrolink is wholly operated by Transport for Greater Manchester, but central Government have always been instrumental in supporting it, including when it comes to expansion, so I would be interested to know the Minister’s thoughts on whether this Government would support further Metrolink expansion—perhaps using Government funds to match the retained revenue from the increase in business rates that might occur through expansion.
Barbara Keeley (Worsley and Eccles South) (Lab)
There will be profound disappointment among my constituents, who have suffered the installation—or part-installation—of the Leigh guided busway, which is a gross mistake. We should have had Metrolink built. Guided busway schemes are expensive, and that one should never have been installed.
Jonathan Reynolds
I know that my hon. Friend feels strongly about that. The expansion of Metrolink could certainly fulfil such a need.
I want to go on to the subject of buses. Journeys by bus within Greater Manchester remain the predominant form of public transport used, with over 210 million journeys last year, but bus patronage continues to flatline, as opposed to what we have seen in London, where it has vastly increased. Transport for Greater Manchester recognises that that is an issue, and the preferred answer seems to be much further transport devolution.
I am very much in favour of bus regulation, similar to that in London. I know that Transport for Greater Manchester, too, is keen to explore the benefits of bus franchising in order to properly integrate and co-ordinate the public transport network so as to secure the growth in bus usage that has been lacking in recent years. A model such as the London one would mean a simpler single identity and a set of easier multi-modal fares and tickets across Greater Manchester as passengers’ travel patterns change. A good recent example of why this is necessary is surely the Healthier Together hospital reorganisation initiative, which shows that there is a crucial need for local transport authorities to be able to plan bus services and not be at the whim of timetables that do not always suit passengers’ requirements. We also need to be able to guarantee transport services in order to better provide other public services.
Of course, the true test of a region’s public transport success is whether it manages to decrease the number of car journeys taken—something that Greater Manchester has not yet achieved. The benefits of this are obvious, not least in terms of emissions and air quality, about which, as the shadow climate change Minister, I care a great deal. We should want people to get out of their cars and on to public transport, both for leisure and for commuting purposes. Greater Manchester did attempt this in a rather crude way with a proposal to bring in a London-style congestion charge back in 2008. The proposal was put to the people of Greater Manchester, and to say that it was overwhelmingly rejected would be an understatement, with 79% of votes cast being against bringing it in. I always smile when we talk about the Scottish independence referendum and it is suggested that it is difficult to make the case for voting no. That was not our experience in Greater Manchester with the congestion charge proposal.
That shows the scale of the challenge faced. One of the reasons why so many people were against bringing in that congestion charge was that they felt that the public transport infrastructure was not adequate for them to feel confident enough to ditch their cars. There is an argument that this was a chicken and egg scenario, and that public transport would be sufficiently improved if the demand existed, but that the demand would never materialise while the public transport infrastructure was not deemed adequate.
Kate Green (Stretford and Urmston) (Lab)
My hon. Friend will be aware that there are difficulties with the capacity and the reach of bus services, and that in recent weeks we have seen the withdrawal of night bus services. Does he agree that our strategy should be a 24-hour transport strategy for a 24-hour city?
Jonathan Reynolds
Absolutely. I look enviously at the night tube proposal for London. In big cities, so much of the offer within the evening economy is attractive, yet for people who live in my constituency, which is a relatively short distance from Manchester city centre, access is severely limited. The trains do not run and night buses are infrequent and under threat, so it is a huge issue.
If the investment is put into the public transport infrastructure, people will be more than willing to use it if it meets their needs. The benefits to the area, to the economy and to people’s health should not be understated. We often hear a great deal about London in terms of health and life expectancy because of the pollution issues, but those problems are seen in Greater Manchester too. Progress has been good, with improvements year on year in the number of non-car journeys, and I know that Transport for Greater Manchester is committed to further improvement. I also believe that there is huge potential in cities for the expansion of electric car use. I recently tested our electric car charging infrastructure in Greater Manchester, but I will leave that for another Adjournment debate.
An improved public transport system in Greater Manchester is vital to the region’s economic growth and to the success of “devo-Manc” and the northern powerhouse initiative, as I am sure the Minister would agree. A fully integrated transport network including all modes of public transport is key to this, and can be achieved only by devolving further powers to the region. In particular, I believe public transport should be one of the directly elected Mayor of Manchester’s key areas of responsibility, much as it is in London.
I hope that in his reply the Minister will be full of warm words for Greater Manchester and for the northern powerhouse, and feel able to express his agreement with a lot of what I have said regarding what Greater Manchester needs. What I want most from him, however, are not just words, but a firm commitment that the Government recognise the need in Greater Manchester, and that powers and access to funding will be forthcoming in order to allow us to fulfil that need. One thing that can always be said of us in Greater Manchester is that if we are given the tools we will always do the job.
Mr Speaker
I assume the hon. Lady has the consent both of the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) and of the Minister.
The Parliamentary Under-Secretary of State for Transport (Andrew Jones)
indicated assent.
Barbara Keeley (Worsley and Eccles South) (Lab)
I wish to make only a small number of points, because my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) made an excellent speech and most of us from the area would agree with almost everything—if not everything—he said. As an MP representing Salford, Worsley and Eccles South, I wish to talk briefly about the knock-on effect that this delay in rail electrification is having on planned upgrades affecting local rail services. We were in a ridiculous situation over the winter. As a result of rail electrification, we faced greatly increased congestion and delays while a bridge was rebuilt just off the A6 in Salford. It caused problems and tailbacks for commuters. We went through weeks and months of delays on the roads so that a bridge could be rebuilt for a project that has now been delayed. That sort of thing makes people really angry. All we have now are the delays and uncertainty.
Excellent work is being done by the Friends of Eccles Station, the Friends of Patricroft Station and the Friends of Walkden Station, which are dedicated friends groups in my constituency. They do award-winning work, brightening up the stations with flower planting, gardening, murals and other artwork, but they do not want just to make the stations better; they want better rail services too. They do not only talk to me about the wonderful work that they are doing to make commuting easier for people. They are as aware as I am that, for example, 70 to 80 people are left on the platform at Walkden station at peak times in the morning because we do not have the rolling stock and they cannot get on the trains. Those groups are all committed to improving our rail services. They want more services to stop at the stations on the way into Manchester, more and better carriages, and improved, up-to-date rolling stock. The promise—the tantalising, faraway thing—was that rail electrification would have a knock-on effect, and that rolling stock would become available for our local rail services. What we now have is uncertainty and delay. Those excellent groups, which do all that work in trying to get that modal shift, are profoundly disappointed.
Junction 13 of the M60 is one of the most congested anywhere in the country. Transport Ministers are looking at the string of motorways—the M60, M62 and M602— that span around my constituency to try to do something about the congestion, given that we do not have the congestion charge, thank goodness. But there is no improvement in sight. We cannot shift people on to rail, because there is no capacity, so we have truly faced the northern power cut to which our excellent Manchester Evening News has referred—and all the while congestion is building up. I implore the Minister to think of all those wonderful campaigning groups and the wonderful work they do in trying to improve our rail services, and tell us what hope we can give them that all their work is not in vain and that some improvement is in the distance.
Graham Stringer (Blackley and Broughton) (Lab)
I congratulate my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) on obtaining this Adjournment debate and on making such an excellent speech about transport in Greater Manchester. I wish to make three relatively simple points, the first of which is about the congestion charge. Greater Manchester has done better than most conurbations during this recession in terms of creating jobs and getting local people into those jobs. Our economy is thriving, with the city itself and Greater Manchester feeling vibrant and healthy. I have to say that had we had the congestion charge, none of that would have happened. The congestion charge would have actually created more congestion, it would have imposed a tax on individuals in low-paid jobs and on business, and it would have been a disaster for Greater Manchester. People such as my hon. Friends who campaigned against it are to be praised and that outcome is to be celebrated.
My second point is that I welcome the Government’s announcement that they will introduce a buses Bill, which will allow a franchising system for buses in Greater Manchester on a similar pattern to the one that we have in Greater London. Since buses were deregulated in 1985, it has undoubtedly led to a loss of patronage on the buses and a concentration of bus routes on radial routes into and out of the city centre.
That brings me to the point that my hon. Friend the Member for Stalybridge and Hyde raised, because while it is important to connect communities—towns—to the centre of Manchester, it is almost as important to connect those towns. The fact that private bus companies operating in a deregulated system can make more profit on radial routes means that there is a focus on those routes. The private Stagecoach and First Group pull their buses off routes that go around the periphery of Greater Manchester and put them on radial routes, and that leads to the isolation of those communities.
Many communities that are served well, or have an adequate bus service, during the day are not served at all at weekends and in the evening, which makes it difficult for people to access hospitals and employment. If, and when, the Government introduce a franchising system for Greater Manchester, I am sure that Transport for Greater Manchester will use that system to ensure that those communities get a better service.
Does the Minister have a timetable or schedule for the introduction of the Bill? I would be interested to see one, because people in The Dog and Duck and other public houses in Greater Manchester, and on buses and trams, talk about the regulation of buses in a way that they do not talk about many of the things that happen in this House. Bus deregulation is a real, live issue for the people of Greater Manchester.
My third point—my hon. Friends the Members for Stalybridge and Hyde and for Worsley and Eccles South (Barbara Keeley) referred to it—is on the pause, or stopping, of the electrification of the railway between Leeds and Manchester. Just as communications within Greater Manchester by buses and trams are important for the economy, the connections with other cities are vital for the improvement of the economy in Greater Manchester, and there is huge disappointment that that scheme has been paused. I would ask the Minister, if he can, to clarify some of the issues.
In the Transport Committee yesterday we had an interesting evidence session with the Secretary of State for Transport. I have the most enormous respect for him as a Member of this House and as a Cabinet Minister, but he was unable, or unwilling, to provide some of the evidence that would help hon. Members for Greater Manchester and the people of Greater Manchester to understand what has really happened and the reason for the pause. When he was asked what the overrunning cost was on the great western line, there was no answer from him. However, it was not just a matter of the figures, although he certainly did not trust the Committee enough to tell us what they were. His permanent secretary tried to help him by saying that in addition to the finance was the difficulty, on that very old route out to Bristol and the south-west, of obtaining planning permissions and dealing with some genuinely difficult engineering works. If it is the latter, it should not affect the midland main line, down the east of the city, and it certainly should not affect the Manchester-Leeds route. If it is the former, we need to know the cash figure. That makes me very suspicious about what is really going on, as the electrification of the two lines that have been paused was central to the Government’s election campaign a few weeks ago. We need to understand that issue.
The other thing that puzzled me yesterday was that when the Secretary of State talked about the reasons for the pause—the rail Minister, the hon. Member for Devizes (Claire Perry), has said very similar things—we were told that the electrification was being done back to front, with stanchions for the electric wires being put up before the route had been aligned. That is clearly the wrong way to do it. This is vital to transport in Greater Manchester, so I hope that the Under-Secretary of State for Transport, the hon. Member for Harrogate and Knaresborough (Andrew Jones), can explain the reason for the pause. Is it because of an overrun of costs in the south-west? Is it because the planning of the Manchester-Leeds route was done backwards and there is going to be, in the words of the rail Minister, a better, more efficient and more effective scheme? Whichever reason it is, that will be key to how long it takes for the project to get started again and to be the basis of the northern powerhouse.
Again, I congratulate my hon. Friend the Member for Stalybridge and Hyde on bringing very important matters about Greater Manchester to the House and on giving the Minister an opportunity, I hope, to clarify them for the people of Greater Manchester and for right hon. and hon. Members.
Andrew Gwynne (Denton and Reddish) (Lab)
I, too, commend my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) for securing this important debate, albeit that it has perhaps kept a number of Greater Manchester MPs in the House of Commons for longer than they had anticipated on the last day before the summer recess.
I commend my hon. Friend the Member for Blackley and Broughton (Graham Stringer) for making some very important points, not least about bus deregulation. He has long championed the cause of re-regulation of bus services in Greater Manchester, but not in the old monolithic way. He has been quite progressive in that he has always said openly that he is not against competition between bus companies, but that it should not be on-street, causing the chaos that we have seen over the past 20-odd years. It should be done in a controlled manner in a tendering system whereby Transport for Greater Manchester—or Greater Manchester Passenger Transport Executive, as it used to be known—could set the standards, the network and the ticketing arrangements, and we could have the properly planned and effective bus network across the county that, sadly, we have been missing for far too long.
My hon. Friend the Member for Stalybridge and Hyde talked about rail services and his desire, which I share, to have some kind of orbital service. Orbital services, not necessarily involving trains but certainly involving buses, are not new; we used to have them. Until about 10 or 15 years ago, there was a service that ran from Bolton in the north through Bury, Rochdale, Oldham, Ashton-under-Lyne, Denton and Stockport all the way to Manchester airport—the 400 Trans- Lancs Express. That was great for getting from Bolton in the north of the county through to Manchester airport in the south, along the eastern towns. There were similar services in other parts of Greater Manchester. As my hon. Friend the Member for Blackley and Broughton said, those services, sadly, were removed in favour of services into Manchester. The perversity of the current transport network in Greater Manchester is that 15 years ago someone who lived in Denton and wanted to get to Manchester airport could get a bus, but now they have to get a bus into town and then a bus out of town. The journey is twice as long and twice as expensive so, realistically, most people will not use that method of getting to Manchester airport from my constituency.
My hon. Friend the Member for Stalybridge and Hyde raised an important point about the underuse of the existing rail infrastructure in Greater Manchester. If ever there is a line that highlights that best, it is sadly the Stockport to Stalybridge line, which runs through my constituency.
Perhaps the Minister does not know the history of that line. It used to serve a useful purpose back when trans-Pennine trains went into Manchester Victoria. Services from the south of the country go into Manchester Piccadilly, so if one was connecting from one of those services to a trans-Pennine service in the days before Metrolink, rather than going into Manchester Piccadilly and trudging across Manchester city centre with one’s baggage to Manchester Victoria, one would get off at Stockport and use the very useful service from Stockport to Stalybridge, where they could connect to the trans-Pennine trains. When trans-Pennine trains were diverted into Manchester Piccadilly, that link was no longer necessary.
Having said that, the eastern side of the conurbation has grown and travel patterns, including travel-to-work patterns, have changed. We now have a piece of infrastructure with two stations, Reddish South and Denton, that are sadly served by one train a week in one direction only. The service is so pathetic that one cannot even get a return ticket from the constituency of my hon. Friend the Member for Stalybridge and Hyde to mine.
We have two excellent friends groups: the Friends of Reddish South Station and the Friends of Denton Station. For seven or eight years, they have championed the desire for a train service that uses the Stockport to Stalybridge line, or at least part of it. There is even a connection just north of Ashton Moss that would allow trains to be diverted along the line into Manchester city centre. I urge the Minister to look carefully at their campaigns, which I fully support, and to try to get Northern Rail and Network Rail to include in the new franchise a proper passenger service that utilises that line.
Barbara Keeley
On behalf of my right hon. Friend the Member for Leigh (Andy Burnham), who is not here, I want to mention the importance of keeping such urban rail lines open. Leigh must be one of the last places in the country that has no railway and no stations at all. I am sure that he would have added to this debate if he had been here. It is vital to keep such lines open.
Andrew Gwynne
My hon. Friend is absolutely right. Apart from Denton and Reddish South, which do have rail lines and stations, Leigh is probably the poorest served community by rail in Greater Manchester.
Lastly, I want to mention integration. It is all fine and well having great rail services and Metrolink services; possibly one day even having tram-train services, with trams using some of the under-utilised rail infrastructure across Greater Manchester, thereby reducing the capital investment that new tram lines cost the taxpayer; and having improved bus services when we have a properly franchised, re-regulated system, but none of that is any good to my constituents unless there is joined-up transport planning and integration.
The Chancellor announced in the Budget that the northern powerhouse is to secure an Oyster-style card that may, by the sounds of it, be used across the whole of the Northern franchise. That is an important step forward, although I am not sure that we want to be using state-of-the-art technology on 1980s, clapped-out Pacer trains, so I hope that the Minister will answer the questions from my hon. Friend the Member for Blackley and Broughton on the timing of the upgrades and the introduction of the new rolling stock in Greater Manchester.
My one desire is that we end up with a transport system like that in London. Ten years ago when I first became a Member of Parliament, I could not believe it when London MPs complained about the state of public transport in the capital city. If I decided to start a journey on one mode of transport in Greater Manchester—tram, for example—and then connect to a train and finish my journey by bus, as someone can in London with an Oyster card where the services join up, people in Greater Manchester would have thought I was bonkers. The services do not join up, and that is the problem. Someone would be left stranded on some station in the middle of the constituency of my hon. Friend the Member for Stalybridge and Hyde, without the opportunity to get a return ticket.
Jonathan Reynolds
My hon. Friend makes a fine point. We have probably all had the experience of standing at Stockport station, perhaps on the way home, and working out that it is quicker to get back to London than to a place such as Stalybridge on public transport. That really illustrates the point.
Andrew Gwynne
My hon. Friend is right. It is frustrating because someone can be so near to home, yet so far when they look at that board at Stockport station and realise that they have to wait for such a long time to get a connecting service to somewhere relatively close.
I know that Ministers are in the process of devolving powers to the mayor and the combined authority, which is right. We believe in devolution, and we know that our elected representatives in Greater Manchester have the capacity to take on those new powers, and to plan and prepare for a better transport system. We also need help and understanding from the Department for Transport, because where the transport system in Greater Manchester is today is not where we wish it to be. To get it to where we want it to be will require not only local leadership, direction and commitment, but also that same level of commitment and resources to flow from central Government.
I urge the Minister to answer the points that my hon. Friends have raised about electrification and orbital transport, and also, please, to give us some hope that this pause will not be for long. We desperately need a better transport system in all parts of Greater Manchester.
The Parliamentary Under-Secretary of State for Transport (Andrew Jones)
I congratulate the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) on securing this debate about public transport in Greater Manchester. There are so many positives to this subject that it provides a fitting conclusion to our business in the House this afternoon.
There is a vibrancy to the city of Manchester and the surrounding area, which transport investment has helped to create. Last year there were 267 million public transport journeys in that area, linking people with jobs, services, shops, leisure opportunities, and of course friends and family. It is an issue on which we and partners in Greater Manchester agree, recognising the intrinsic link between transport and growth, targeting our joint resources at locally determined priorities, and revolutionising the relationship between Westminster and those best placed to take—and be held accountable for—local investment decisions.
Because Greater Manchester has a track record of strong governance and effective delivery, the Government have supported it with investment and the devolution of powers. That has delivered the largest public transport investment programme outside London, and placed Greater Manchester at the heart of the northern powerhouse.
Local leaders have expressed their support for what is happening. They are very positive, although I did not always catch that tone of positivity in the speeches of some hon. Members who spoke earlier. This is a golden time for public transport investment, not just in Greater Manchester but across our country, and Greater Manchester is showing the way. Other areas are looking at what it is achieving with some envy.
Let me mention some of the revolution that has taken place in public transport in Greater Manchester in recent times. I remember clearly the opening of the first phase of Metrolink between Bury and Altrincham in 1992, and it has continued to grow. The extension to Greater Manchester airport was delivered last year ahead of time and on budget. In between those two milestones, we have seen Metrolink lines opened to serve Ashton-under-Lyne, Chorlton, Droylsden, East Didsbury, Eccles, Media Village, Oldham, Rochdale and Wythenshawe. Metrolink is now the largest light rail network in the UK with 60 miles of track, 92 stops and—
Andrew Jones
Metrolink will see investment of more than £240 million in 120 new trams by 2017: it will be brighter, more spacious and reliable. It is also hugely popular with the travelling public, with more than 31 million passenger journeys last year and we expect that figure to reach 40 million by the end of the decade.
Work is now under way to develop a further line to the Trafford centre—a key element of our devolution deal with the Greater Manchester combined authority, which gives it control of a reformed “earn back” deal for 30 years, giving it the certainty needed to invest in that and other schemes. Hon. Members have talked about growth in the network. I am all in favour of growth, but it will be determined locally and supported nationally.
It is not just Metrolink that is seeing investment rise and passenger numbers grow. That is also happening on the rail network. Successive Governments have failed to invest properly in our rail network, much of which dates back to the Victorian era. When the Government came to power, we faced a choice between putting a brake on growth and opportunity and cutting investment, or investing in public transport to drive growth. The Government chose to invest for the future.
Chris Green (Bolton West) (Con)
I congratulate the hon. Member for Stalybridge and Hyde (Jonathan Reynolds) on securing this vital debate.
The Farnworth tunnel in Bolton is being expanded to provide the capacity needed for the electrification of the rail line from Manchester, through Bolton and on to Preston. Does my hon. Friend agree that that shows our commitment to improving public transport in Greater Manchester?
Andrew Jones
I certainly do agree with my hon. Friend, who makes a timely intervention. Only yesterday the giant tunnelling machine was named “Fillie” by a local schoolgirl who has links with the area. The tunnelling machine being used for the Farnworth tunnel is greater in scale than those used on Crossrail, so this is a significant investment.
Rail is a big success story. Our rail industry is struggling to cope with the scale of passenger demand. Over the last 20 years, passenger numbers have grown from 750 million to 1.6 billion. In Greater Manchester last year there were 25 million rail journeys, compared with just 22 million five years ago and 18 million 10 years ago. Rail is vital to the local economy, and more and more passengers are using Manchester Piccadilly, Victoria and Oxford Road. Town centre stations, such as Stockport and Bolton, remain among the busiest in the Greater Manchester area, and that is excellent news. But passenger growth needs to be provided for, and the rail network in Greater Manchester needs investment to improve people’s journeys and to support economic prosperity. That is why the investment in the northern hub has been so important—something that Greater Manchester and the north have called for for years. It was supported across parties and regions—I am a Yorkshire Member, but I heartily supported that investment and lobbied for it in the last Parliament.
The northern hub is a significant scheme and commitment that will deliver better journeys, modern trains and more seats, including electrification between Manchester and Liverpool, with new trains and quicker journeys. Further electrification is under way between Manchester and Bolton and, further afield, planned between Blackpool and Preston. The magnificent redevelopment of Manchester Victoria station and the provision of a fourth platform at Manchester airport station have been completed.
We have also seen the reopening of Todmorden curve, which is providing a direct link between Manchester and Burnley for the first time in 40 years. As hon. Members mentioned, most importantly and popularly, the outdated Pacers will disappear from the north’s railways. I am aware of Pacer trains, as they serve the Leeds-Harrogate-York line and I catch them most weeks—indeed, I think most colleagues representing northern constituencies are aware of them. They are disappearing, and that was part of the invitation to tender in the franchise process.
Several hon. Members mentioned their concern regarding the recent announcement of the pause on trans-Pennine electrification. That is most certainly very disappointing. An improvement in the area’s rail links is critical, but it is because it is critical that we have to get a grip on Network Rail’s management of the work. We cannot tolerate cost overruns on the scale last seen on the west coast main line upgrade. The Transport Secretary has taken action to reset the programme and to get it back on track. This includes pausing the work on midland main line electrification and north trans-Pennine electrification east of Stalybridge, but let me be absolutely clear: this is a pause; it is not a stop. This is about getting the project back on track. To do that, we have a new chair of Network Rail, Sir Peter Hendy, who has a proven track record of delivering on major transport challenges. He will report in autumn to the Transport Secretary on how that will be achieved.
The hon. Member for Worsley and Eccles South (Barbara Keeley) talked about work on rail in her constituency. That work is not paused. The area of trans-Pennine investment in northern electrification that is paused is to the east of Stalybridge. If she would like any further information, I am of course more than happy to help to provide it after the debate.
Barbara Keeley
The uncertainty is twofold. I mentioned the excellent friends groups. The Minister should take them into account in terms of the expansion of passenger numbers, because they do a great job in letting people know about rail services. They are constantly frustrated by Network Rail, because it has not been willing to talk to them or to consider timetable changes. Nothing moves for them in terms of getting the better services through these stations. If there is to be a report, these local aspects of our urban services really need to be looked at, too.
Andrew Jones
I agree that friends groups across many parts of the north do a very valuable job and the hon. Lady is right to highlight that. In terms of having a responsive rail service, part of that is having franchises that generate growth. Of course, the previous Northern franchise was a no-growth franchise. Her basic point, however, about listening, communicating with the public and supporting those seeking to drive public transport usage is clearly appropriate.
Let me be absolutely clear: this is a pause, not a stop. Even without electrification, we will see significant improvements to rail in the north. On trans-Pennine services between Leeds and Manchester, there will be better journeys, more modern trains and additional capacity as part of the new franchise. The new franchise arrangements will be awarded later this year, to come in from April next year. To put to one side any concerns hon. Members may have, let me say that the budget for rail enhancements remains intact.
There is one huge rail project that has not yet had a mention in the debate: HS2. I have to mention it, because it will have a significant impact on public transport in Greater Manchester. We are committed to building the full Y network of HS2, including building the line from Birmingham to Crewe earlier. There is more work to be done on further analysis and final decisions on the preferred route. We are also looking at the case for accelerating construction of the Leeds to Sheffield part of the line. HS2 will transform north-south connectivity throughout our country and cut journey times. For example, the journey time between Manchester and Birmingham will be cut to 41 minutes—currently it is one hour and 28 minutes—which is a saving of 47 minutes.
The point, however, is not really about speed, but capacity on the network. We have not built a railway line north of London in our country since the reign of Queen Victoria. Indeed, our railway network is only a fraction of the size it was. The Beeching cuts might have been appropriate at the time—they were before I was even born—but they might not look quite so right now. We have failed to invest historically in our rail infrastructure, and HS2 is a part of correcting that.
Jonathan Reynolds
I am grateful to the Minister for mentioning HS2, of which many in the Chamber are firm supporters in the light of what it will bring to Greater Manchester. I say to him, however, that because a project of that size has a high price tag, it often arouses public cynicism about whether it is worth the money. It would be a grave problem as regards public opinion in Greater Manchester if the work was seen to proceed without trans-Pennine electrification being reinstated and a clear date being set for completion. From representations I have had, I think that could be a significant problem. I wanted to highlight that to him in good faith because I think he will appreciate the point I am making.
Andrew Jones
I do indeed appreciate the points being made—they have been made to me before—but as regards investment in our classic rail network and in HS2, I make the point that it is not one or the other; it is both. Progress on both needs to happen in parallel. I hope that reassures the hon. Gentleman and those who have contacted him.
The huge increase in capacity that HS2 will deliver will transform rail connections around our country, but even that will not be enough. Many rail journeys in the north, particularly east-west journeys, are too slow, too infrequent and suffer from unacceptable overcrowding, which has put people off using our rail network and certainly discourages development of city-to-city connections and business. The Government are determined to improve the situation, and we will do this in partnership with the north.
In the Budget, the Chancellor allocated £30 million to Transport for the North, which will act as a single voice for the whole of the north and work with us to identify the strategic transport investment priorities across the entire region. It is fantastic that we are seeing far more devolution. We should be working on the principle that decisions affecting local services should be taken as near as possible to where those services are delivered, so that they are more tailored to local needs. Incidentally, that devolution in transport is mirrored by other areas of devolution and is very encouraging and long overdue.
I would like to say a little about local transport. Most journeys in Greater Manchester are local and often less than 5 miles. We have invested heavily, alongside Greater Manchester, through our local major scheme budgets—the local sustainable transport fund and the cycle city ambition grant—and most recently with the local growth deals through which more than £500 million has been provided to support local transport investment, including improvements to the Bolton to Manchester bus corridor; enhancements to Salford central station; and new transport interchanges in Ashton and Stockport; plus, of course, the new trams for Metrolink.
Most journeys by public transport in Greater Manchester are by bus. In 2014, out of the 267 million public transport journeys I mentioned earlier, 211 million were on the bus network. Buses are vital. I am a huge champion of them. They are part of the answer to our public transport challenge. As the hon. Member for Stalybridge and Hyde mentioned, unlike with Metrolink and rail, passenger numbers are not growing and, despite significant investment in facilities and vehicles, have continued to decline. Greater Manchester has ambitious plans to arrest this decline, and it is right that areas with ambitious plans to grow and develop should be given the powers they need to promote an integrated transport system.
We signed a groundbreaking devolution deal with Greater Manchester last year in which we committed to providing it with powers to franchise its bus services, and we will legislate to make this deal a reality. The hon. Member for Blackley and Broughton (Graham Stringer) asked about the timing. I will have to check with the Leader of the House, but I am expecting a bus Bill to come through the House later this year. Areas such as Greater Manchester that are given the powers to franchise their services will be able to better integrate buses with other public transport modes and plan services to link with new developments or regeneration projects.
Franchising will provide local areas with the opportunity to introduce more Oyster-style smart ticketing—not necessarily the exact same technology—to improve service for passengers. It is a powerful tool for making public transport more attractive by making it more convenient and removing some of the barriers that people encounter in switching from one mode of transport to another. Smart ticketing integrates bus, train and tram journeys, driving convenience. Our aim is for public transport in Greater Manchester and across the north to become more convenient and attractive and for it to build on the enormous growth in demand that we are seeing. We know that a better transport system supports economic growth.
Before I finish, I would like to add that although this debate has focused on public transport, we are by no means neglecting the motorist. We have incredibly ambitious plans for our road network up and down the country. Specifically in Manchester, the M62 will provide a continuous four-lane smart motorway to Leeds. Similarly, the M60 between junctions 8 and 18 is being improved and will become a smart motorway. The south-east quadrant of the M60, between junctions 24 and 4, is also being upgraded.
Barbara Keeley
I understand that the Minister is taking a very positive outlook in his speech, but I should tell him that the M60 smart motorway roadworks are an out-and-out disaster, causing my constituents and many others to be kept awake at weekends and leading to great delays. I am happy to seek an Adjournment debate to tell him about it at much greater length, but we have got two years of torment ahead of us, so please can he not adopt such an optimistic outlook?
Andrew Jones
I am somebody who is generally a glass-half-full person. I find it reasonably difficult not to take quite a positive tone and, as I have just gone through the significant transport investments and the progress being made in Greater Manchester, I am feeling relentlessly cheerful, so I am not entirely sure that I can change the tone with which I operate. However, I nevertheless agree that it is unsettling and causes problems when we have roadworks. I regularly use the M1, about 40% of which has seen the introduction of smart motorways, and I have not yet found a way—and nor has Highways England—to work on the roads without having some roadworks.
Barbara Keeley
Will the Minister therefore accept my invitation to come along and tour the bit of the M60 motorway that goes through my constituency—we have three motorways in my constituency; I am really lucky—so that I can show him the extent of the disruption and the problems caused for my constituents? I would be happy to do that.
Andrew Jones
I have some knowledge of the area, having driven along that road only very recently, and there is indeed a challenge. I recognise the difficulties—I do not mean to make light of them—and we see that all over the country where road works are taking place. We are in the middle of a huge period of road investment. We are seeing a tripling of the budget in our first road investment strategy and we will be opening the process for the second road investment strategy—RIS2—later this year. Delivering such a significant scale of investment will cause some disruption. I am certainly keen to hear from colleagues about the challenges they are facing locally, and I will be taking them up with Highways England, but we need to get through this period. In part, this goes back to the long-standing failure to invest in our transport infrastructure over decades. We are playing catch-up and it is not at all straightforward.
Hon. Members have asked about the powers and the finances to deliver our ambitions. This Government are driving devolution and investing in public transport in record numbers. I would say gently to hon. Members that they are pushing at an open door. This Government are buying the idea that transport investment is a driver of economic growth—a regenerator of communities—and has a positive social function. Devolution is taking place in an unprecedented way. I hope that provides some comfort to hon. Members.
In summary, I hope I have been able to demonstrate just how important public transport in Greater Manchester is to this Government. We are committed to working alongside Greater Manchester in delivering the improvements that it decides are the most important for its economy, its residents and its future.
Question put and agreed to.