House of Commons

Tuesday 15th September 2015 Commons Chamber

Tuesday 15 September 2015

The House met at half-past Eleven o’clock

Prayers

Tuesday 15th September 2015 Commons Chamber

[Mr Speaker in the Chair]

Oral Answers to Questions

Tuesday 15th September 2015 Commons Chamber

The Secretary of State was asked—

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

1. What recent assessment he has made of the UK’s membership of the EU on businesses.

[The Secretary of State for Business, Innovation and Skills and President of the Board of Trade (Sajid Javid)]

The UK was the fastest-growing major advanced economy in 2014. The OECD forecasts that that is to continue in 2015. This Government’s ambition is for Britain to be the most prosperous major nation in the world by the 2030s, and free trade with the rest of Europe has a very important role to play in that.

[Huw Irranca-Davies]

I welcome those words. The First Minister of Wales, Carwyn Jones, was in Japan only last week, building on our strong cultural, economic and social ties with that country, which have developed over a long time, and promoting our exports, which increased by 27% in Wales last year, building on the work of established companies such as Toyota, Sony and Sharp. Those companies view Wales and the UK’s membership of the European Union as key to the trading relationship and the thousands of jobs it underpins. Does the Minister agree with them?

[Sajid Javid]

I respect the hon. Gentleman, but given the utter shambles of his party’s EU policy I am surprised that he wants to ask that question. It is clear that free trade is hugely important to the prosperity of our nation, and that means working with our EU partners on more free trade agreements. That is at the heart of our renegotiation, because we want more free trade with an EU that is outward looking, not just inward looking.

[Mr Peter Bone (Wellingborough) (Con)]

First, may I congratulate the new Leader of the Opposition on his shift in policy in making Labour more Eurosceptic?

Is it not the truth that the European Union holds us back on free trade? Does our current account deficit of some £50 billion not prove that we would be better off out of the EU, with more free trade, more jobs and more business?

[Sajid Javid]

My hon. Friend highlights an important issue. [Hon. Members: “Shambles!”] Labour Members are talking about their EU policy, but my hon. Friend wants to hear my answer. We want more free trade, which means that, at this point, we have to work with the EU. For example, if the free trade agreement being negotiated between the EU and the US—the Transatlantic Trade and Investment Partnership—goes through as planned, it will add £10 billion a year to GDP, which is worth £400 for every hard-working family in Britain.

[Kelvin Hopkins (Luton North) (Lab)]

I utterly reject the idea that TTIP will be beneficial, but that is another question. The head of Vauxhall has said today that he is fairly relaxed about whether Britain remains a member of the European Union. We still import twice as many cars as we export, so there is plenty of scope for Britain to expand its manufacturing sector.

[Sajid Javid]

Under this Government, the manufacturing sector in Britain has been growing strongly, thanks to our policies to reduce the deficit and bring back economic confidence. As I have said, working with our EU partners is hugely important to increasing trade, particularly exports, and for sectors such as the automotive industry. They are doing very well, but they could do better if we keep working with our partners.

[Neil Carmichael (Stroud) (Con)]

Given that so many of our firms are in supply chains that benefit from the single market, does the Secretary of State agree that it is absolutely necessary for the Prime Minister to make sure that we reform that single market so that we can stay in the European Union and continue to thrive as a nation?

[Sajid Javid]

We are focused on delivering a successful renegotiation, and once that is done we will let the British people make the decision in the referendum. Having a better single market is at the heart of that renegotiation: it is about having more competition, less red tape and more free trade.

[Michelle Thomson (Edinburgh West) (SNP)]

Firms such as Nestlé and automotive companies such as Hyundai and Ford have indicated that a Brit exit could result in their scaling back. The UK automotive industry employs more than 700,000 people and accounts for 3% of GDP, according to KPMG. Does the Secretary of State really believe that it is worth risking foreign investment in the UK to solve an ideological battle within the Tory party?

[Sajid Javid]

The hon. Lady will know that the debate about the EU has been going on for many years and the right thing to do is to renegotiate. In order for that renegotiation to be successful, it is right to have a referendum. That is exactly what this Government are doing, and then the British people will decide. It is also clear that this Government have many policies that help industries such as the automotive industry to succeed, such as our investment in skills.

[Kevin Foster (Torbay) (Con)]

2. What plans he has to increase the number of apprenticeships.

[The Secretary of State for Business, Innovation and Skills and President of the Board of Trade (Sajid Javid)]

The coalition Government have delivered over 2.3 million apprenticeship starts since May 2010, and this Government will support 3 million new apprenticeship starts over this Parliament. We are developing a comprehensive plan for growth, including more work with large employers, more help for small businesses and a new funding system supported by an employer levy.

[Kevin Foster]

I thank the Secretary of State for his answer. Support for further education colleges, including South Devon college in Torbay, will be vital to delivering more higher level apprenticeships and, in particular, degree-level apprenticeships, which provide the highest level of training. What plans does he have to support FE colleges, including South Devon college, in delivering that type of training for employers?

[Sajid Javid]

I know that my hon. Friend is very passionate about this issue. I am happy to congratulate South Devon college on its plans. Degree apprenticeships are a fantastic route to higher level training. I assure my hon. Friend that my Department is working hard with colleges, universities and employers to support what is an increasingly popular route.

[Jenny Chapman (Darlington) (Lab)]

I am afraid that there is an issue not just with quantity, but with quality. With further education in a state that is getting close to desperate, too few apprenticeships are of a high enough quality. I visited Mech-Tool in my constituency, where apprenticeships are four years long and people get good jobs afterwards. What will the Secretary of State do to make sure that we improve quality for the rest of our apprentices?

[Sajid Javid]

The hon. Lady makes an important point. No one wants an increase just in quantity; we at the same time want to see quality improve. I hope that the hon. Lady will, for example, support the Enterprise Bill, when it is introduced in the other place on Thursday, which will for the first time protect the term “apprenticeship”.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

The agricultural sector in this country is small, but important. One of the things that is holding it back is a lack of skills on the technical side of agriculture. Wiltshire college in Lacock is particularly concerned about that. What can my right hon. Friend do to assist in building up technical skills in agriculture in this country, and in particular to increase the number of apprenticeships in agriculture?

[Sajid Javid]

My hon. Friend is absolutely right. That issue has come up a number of times in the agriculture sector, and there is more work to be done. My hon. Friend the Minister for Skills is working on seasonal apprenticeships, which will help to make a change.

[Ms Angela Eagle (Wallasey) (Lab)]

Britain has a serious and growing skills shortage in science, technology, engineering and maths, with businesses facing what they have called a “skills emergency”. Alarming new figures show that of more than 250,000 apprenticeship starts last year, only 140 were in science and maths, and fewer than a fifth of apprenticeships this year are in engineering. Will the Secretary of State tell the House how he hopes to close the skills gap when there are so few apprenticeship opportunities in those subjects?

[Sajid Javid]

May I again welcome the hon. Lady to her place and to her new position? I agree with her that there is a skills shortage. When we talk to employers across the country, that is one of the first issues they bring up. That is why the Government have brought significant investment and focus to bear on the issue. For example, we launched our higher apprenticeships earlier this year and I would like to see those increase; as I have said, we are currently seeing record growth. We are also setting up a network of national colleges: there will be seven national colleges, and I hope that they will all be operational by September 2017.

[Ms Eagle]

I thank the right hon. Gentleman for his second welcome in as many days. I hope that there are some things we can agree on, even though we started off on very disagreeable terms with the Trade Union Bill yesterday.

There are serious concerns that in the rush to meet the Government’s artificial, politically driven target, many apprenticeships are really little more than a rebranding of entry level jobs. The latest Government figures show that only 3% of new apprenticeships starts were at the higher level. How can that be compatible with the Government’s aim of creating a highly skilled workforce?

[Sajid Javid]

As the hon. Lady perhaps knows, we are starting to see a significant increase in the number of people taking STEM-related apprenticeships and higher apprenticeships. She will also be aware that, in the recent Budget, we announced the introduction of the apprenticeship levy, which will help to make sure that there is long-term sustainable funding not just for the quantity of apprenticeships, but for their quality. I hope that she welcomes that.

[Mr Alan Mak (Havant) (Con)]

I welcome the Government’s move to ensure that all big Government contractors deliver apprenticeships as a key part of their commitment. Does the Secretary of State agree that, with over £50 billion a year spent on procurement contracts, that represents a huge opportunity to boost apprenticeship numbers across the country?

[Sajid Javid]

My hon. Friend makes an excellent point. We looked at that issue in the coalition Government, but I believe that we can take it further and we will announce plans shortly.

[Michelle Thomson (Edinburgh West) (SNP)]

I am delighted that the Secretary of State has learned the value of apprenticeships from Scotland. Our Parliament has created 25,000 places each year during its lifetime. It has now exceeded its target and brought the number up to 35,000 annually. Moreover, every apprentice in Scotland is guaranteed a job once their training is completed. As part of the plans to impose an employer levy, has he assessed the cost to Scottish businesses and apprenticeship opportunities that such a levy would impose?

[Sajid Javid]

I am pleased to hear that apprenticeships are doing well in Scotland—I have been following that closely. I would like to see more apprenticeships throughout the United Kingdom. That would be a good thing. I hope that the hon. Lady welcomes the development of the employer levy. We are in the process of deciding exactly how it will work. We are talking to all devolved authorities and look forward to working with them on it.

[Ian Paisley (North Antrim) (DUP)]

Northern Ireland has a good story to tell with regards to the development of apprenticeships. However, with the resignation of the Minister responsible and the impending collapse of the institutions, will the Secretary of State indicate that he and his Department will step up to the mark if required, fill the gap and continue that good work?

[Sajid Javid]

Of course I hope that Northern Ireland is able to deal with these troubling issues and that there is no collapse of the institutions. If there is anything that we can do to help, we will of course look carefully at that.

[Bill Esterson (Sefton Central) (Lab)]

3. What assessment he has made of the level of technical skills required by employers.

[The Secretary of State for Business, Innovation and Skills and President of the Board of Trade (Sajid Javid)]

To increase productivity we need to deliver the higher level, technical and intermediate-level skills that employers demand, as we have just heard. Our approach is to create a responsive, employer-led system of higher vocational education through expanding higher and degree apprenticeships and creating national colleges and institutes of technology.

[Bill Esterson]

We have a shortage of technical skills, not least in engineering and construction. According to employers, the Government’s focus on the number of apprenticeships amounts to little more than a re-badging of existing in-work training courses. When will the Government take the necessary action to deliver the high skills that are needed to boost productivity, growth and living standards in this country?

[Sajid Javid]

That gives me an opportunity to highlight the legacy of 13 years of Labour Government, when hardly anything was done to boost the skills of our people, particularly young people, in every sector. This Government have changed that. We saw progress under the coalition Government. As I said earlier, we will focus on higher apprenticeships, we will have national colleges and we will set up a prestigious network of institutes of technology.

[John Howell (Henley) (Con)]

18. Will my right hon. Friend join me in congratulating my constituent, Senior Aircraftman Shayne Hadland on winning a silver medal for aircraft maintenance at the WorldSkills competition in São Paulo and on being named best of nation for the United Kingdom? Does that not illustrate the importance of good technical skills and how the RAF is providing them?

[Sajid Javid]

I join my hon. Friend in congratulating Shayne Hadland. It was a huge achievement to win such a prize at the WorldSkills competition—I know just how competitive it was. Luckily for Britain, we had many other winners and I congratulate them too. It is an inspiration to many people.

[Ian Austin (Dudley North) (Lab)]

Does the Secretary of State agree that the best way to improve the level of technical skills in the west midlands would be to get behind the proposals from the region’s local authorities and local enterprise partnerships for a combined authority and elected mayor with devolved skills budgets to improve skills, bring former industrial sites back into use, provide more housing and better transport links, and get the economy of the west midlands really moving?

[Sajid Javid]

I agree with the hon. Gentleman that the proposal for a west midlands combined authority looks exciting and should be taken seriously. Obviously, the Government are considering all the proposals and need to look at their merits. I have met a number of people behind that proposal and it would be great to see whether we can work together and bring it forward.

[Michael Tomlinson (Mid Dorset and North Poole) (Con)]

Dorset Young Enterprise is a voluntary organisation that goes into schools to help improve skills with local employers. I declare an interest as someone who has worked within Dorset Young Enterprise. Does my right hon. Friend agree that such organisations are vital in closing the skills gap and ensuring that young people leave school ready to start work?

[Sajid Javid]

My hon. Friend is absolutely correct that Dorset Young Enterprise and many groups like it throughout the country are doing a hugely important and vital job in closing the skills gap. The Government could look at how we can support that not just in Dorset but throughout the country. He is absolutely right to raise this matter.

[Scott Mann (North Cornwall) (Con)]

5. What steps his Department is taking to help apprentices with the cost of travelling to work in rural areas.

[The Secretary of State for Business, Innovation and Skills and President of the Board of Trade (Sajid Javid)]

Apprenticeships are paid jobs with quality training, and availability is determined by employers. There is no central publicly funded support towards travel costs, but some local authorities run schemes that help apprentices with such costs. Apprentices who were previously unemployed may be able to benefit from a travel discount card operated by Jobcentre Plus.

[Scott Mann]

It has been brought to my attention that many young apprentices struggle with their first car insurance premium. Will the Secretary of State consider bringing in special insurance premiums for apprentices?

[Sajid Javid]

I am pleased that my hon. Friend has raised that important point as the cost of car insurance is an issue for many young people across the country. Many insurance companies already offer ways to reduce the cost of insurance for young drivers, for example by installing driver monitoring devices, and I would welcome other approaches by insurance companies to reduce that cost. My hon. Friend may have some ideas in that regard, and I would be happy to meet him to discuss them.

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

Does the Minister realise that many young people in the rural part of my constituency have difficulty getting to the fine Kirklees further education college in Huddersfield? I beg him to take notice of Professor Alison Wolf’s clarion call that if we put all our money into apprenticeships and neglect our FE colleges, we will be on the road to ruin and will never sort out the productivity challenges of our country.

[Sajid Javid]

I listen carefully to what Professor Alison Wolf says. The hon. Gentleman points out the pressures faced by the FE system, and he will know that as the quantity and quality of apprenticeships increase—for example, with the introduction of the apprenticeship levy—that will help to support our college system.

[David Simpson (Upper Bann) (DUP)]

6. What steps the Government are taking to tackle cash retention within the construction sector.

[The Minister for Skills (Nick Boles)]

We are working with the industry through the Construction Leadership Council and its supply chain payment charter, which includes a commitment to zero retentions by 2025.

[David Simpson]

I am sure the Minister will agree that cash retention is having a major difficulty on the cash flow of SMEs across the United Kingdom. Surely some form of sanctions needs to be in place to alleviate cash-flow problems when companies are going out of business.

[Nick Boles]

I certainly agree that there are some problems with the system, but it is also a fairly deeply embedded feature of the construction industry. We must act on the basis of evidence, which is why the Government will commission an analysis of the cost and benefit of retention payments to inform future action. We endorse entirely the Construction Leadership Council’s commitment to remove such payments from the industry by 2025.

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

With last week’s construction output figures going backwards, and with so many small construction firms facing cash-flow difficulties, is it any wonder that the house building programme in this country has been so lamentable? Do we need to do more to help SME construction firms, for example with a help-to-build underwrite of some sort behind that loan finance for small building companies? We should not just avoid adding to borrowing; we should make a real difference for those construction firms, particularly small ones.

[Nick Boles]

We certainly want to support a range of construction firms, both small and large, but it would have been nice if the hon. Gentleman had taken advantage of his Back-Bench position to reflect a little more openly and honestly on the legacy of the last Labour Government, which saw the construction industry crushed. Housing starts are up by 50% from the low that was achieved at the end of the last Labour Government. There is a lot further to go, and we will work closely with construction firms to make that progress, but let us be honest about where the industry started.

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

Will the Minister and his colleagues hold a range of discussions with their colleagues in the Treasury and Her Majesty’s Revenue and Customs, to discuss the need to reinstate the aggregate levy scheme, and particularly the exemptions, as that would assist the construction sector and the cash-flow situation for industries in Northern Ireland?

[Nick Boles]

I would be happy to invite the hon. Lady to meet me to discuss that in detail.

[Stephen Kinnock (Aberavon) (Lab)]

7. What recent assessment he has made of the effectiveness of the Government’s strategic support for industries and sectors.

[The Minister for Small Business, Industry and Enterprise (Anna Soubry)]

Through sector councils and meetings with companies across all sectors we will continue to work closely with industry to understand its needs and what more Government can do to retain the UK’s competitive position within the global economy.

[Stephen Kinnock]

I thank the Minister for her response. Given the crucial role of the steel industry to the British manufacturing sector and our very sense of pride and prestige as an industrialised nation, will you today agree to accelerate the full implementation of the energy-intensive industries package? Crippling energy bills are crippling the steel industry, and it is time for the Government to act.

[Anna Soubry]

The question was obviously to me, Mr Speaker, but that does not matter. Importantly, we know that the steel industry faces very difficult times. It would be fair to say that these are the most difficult times it has ever faced in this country. We are looking at all the things that the Government can do to continue to assist the steel industry, and we have already started that work, which is one of the reasons why I am going to China next week, specifically to talk to the Chinese about their over-production and the allegations of dumping. I could expand on other points and will no doubt do so in answer to supplementary questions.

[Andrew Stephenson (Pendle) (Con)]

Rolls-Royce’s two factories in Barnoldswick are a key part of Pendle’s aerospace supply chain. When I visited Rolls-Royce in Derby in August, bosses told me of the huge benefit of the Government’s aerospace growth partnership. Does my hon. Friend agree that the continuation of that successful partnership is vital for that sector?

[Anna Soubry]

The short answer is yes. I am more than happy to visit my hon. Friend’s constituency to meet those companies and see the great work that they do. The aerospace sector is incredibly important and I pay tribute to all who work in it and all the success it has had.

[Anna Turley (Redcar) (Lab/Co-op)]

20. My hon. Friend the Member for Aberavon (Stephen Kinnock) is right: there is a crisis in UK steel making and 2,000 jobs in my constituency are at risk. I have secured a Backbench Business debate on Thursday, and I would be grateful if Ministers could come to pledge their support for UK steel making. We have to see action on energy prices and business rates. If we do not, UK steel will have no future. It is up to Ministers now to take action.

[Anna Soubry]

I am delighted that the hon. Lady has secured that debate on Thursday and I will be there. It follows on from the debate that we had in Westminster Hall. As we know, there is an over-production of steel across the world. The consumption of steel has fallen dramatically and that has meant, for example, that the price of slab has almost halved. People say we could do something about the price of energy—if only it were that simple. It is hugely complicated. We already have a compensation scheme and we are looking at how we can expand it, but we have to make it clear that if we begin to take the pressure off electricity-intensive industries, we have to shift it somewhere else. It is not as simple as it perhaps seems, but the hon. Lady can be assured that we are well aware of what is happening in SSI UK, which is why I met it last week.

[Tom Pursglove (Corby) (Con)]

High energy costs are affecting not only the steel industry—something I know from my own constituency—but the plastics industry. Over the summer recess, I visited both Amaray and RPC in the town. What steps are Ministers taking to help the plastics industry?

[Anna Soubry]

As I said, we are aware of the particular pressures that high electricity prices put on industries, especially those that use the most, and a compensation package is available. We all want a greener, cleaner environment, so we have set targets that we have to meet, and a cost is associated with that. I am happy to meet my hon. Friend to discuss that, especially as it affects the industries in his constituency of Corby.

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

The Minister and I have discussed the clear and present dangers to the UK steel industry in a constructive fashion several times since she took her post. Given a summer of deeply worrying developments in the steel industry, not least with the news today from Redcar, can she assure us—notwithstanding what she has said today—that she has the full backing of the Prime Minister and the Chancellor to take whatever action is necessary urgently to stand up for the steel industry in the UK?

[Anna Soubry]

Unfortunately, I was not present at Prime Minister’s questions last week, but I know that the hon. Member for Scunthorpe (Nic Dakin) put a question to the Prime Minister, who made it very clear that he wants to give his full support to our steel industry. We recognise its importance to the economy and I am delighted that I have had so many very positive meetings with Members, notably Opposition Members, in which we have explored all the difficulties in an atmosphere that has been frank about what more we can do. We also have to understand that we are limited in what we can do. The state aid rules just do not help.

[David Rutley (Macclesfield) (Con)]

8. What steps he is taking to support self-employed people.

[The Minister for Small Business, Industry and Enterprise (Anna Soubry)]

The new enterprise allowance and start-up loans schemes are making it easier for people to move into self-employment. We have appointed Julie Deane, founder of The Cambridge Satchel Company, to carry out an independent review and recommend what more we can do to support those who are self-employed.

[David Rutley]

The growth in self-employment is an important and positive trend, and I welcome the announcement of Julie Deane’s independent review. Will my right hon. Friend confirm to the House that it will include a full review of how the Government and their agencies communicate with the self-employed, so that they are fully aware of all the available support? Does she agree that that would help them to achieve their aspirations and to play an even greater role in taking forward the Government’s long-term economic plan?

[Anna Soubry]

As somebody who was self-employed for more years than I care to remember—about 20 years —I am fully aware of not only the benefits but the disadvantages. My hon. Friend makes a really good point about the importance of communication, so that people who are self-employed know what assistance is available. Julie will be looking at that particular aspect, and we welcome and look forward to her report and her recommendations.

[Caroline Flint (Don Valley) (Lab)]

By how many hundreds if not thousands of pounds will self-employed people lose out from the removal of working tax credits, which we will be discussing today, from working people, including the self-employed?

[Anna Soubry]

The straight answer is that I do not have a figure, but I will find out and I will write—[Interruption.] No, don’t be silly. I will write to the right hon. Lady with that figure. Let me make it absolutely clear: the rebalancing of our economy, paying off our debts, reducing the deficit and making sure that work pays are at the heart of what the Government stand for. That is what we were elected on, with a very clear manifesto and the support of the British people. We are doing the right thing by hard-working families.

[Rehman Chishti (Gillingham and Rainham) (Con)]

9. What steps he is taking to promote regional growth.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

12. What steps he is taking to promote regional growth.

[Heidi Allen (South Cambridgeshire) (Con)]

14. What steps he is taking to promote regional growth.

[The Parliamentary Under-Secretary of State for Life Sciences (George Freeman)]

The Government remain totally committed to the rebalancing of our economy through unleashing the economic potential of our cities and regions. We have invested in infrastructure, connectivity, and science and innovation across the country, not least in the northern powerhouse and most recently with the £235 million that the Sir Henry Royce Institute focused on research into advanced materials. We have agreed 28 city deals, 39 growth deals and a total investment of £7.7 billion, including the transformation of the Greater Manchester devolution agreement. It is working: the north-east and the north-west are now cited as the fastest-growing regions in the country. We are going further and are now discussing a further 38 radical devolution proposals to empower local regions.

[Rehman Chishti]

On regional growth, the Government have committed £7 billion of the £12 billion regional growth fund, including £488 million to my own South East local enterprise partnership, which is creating more jobs, homes and growth. However, when does the Minister expect the remaining £5 billion to be allocated? Does he expect the overall pot to grow?

[George Freeman]

My hon. Friend is right and I take this opportunity to congratulate him on his leadership locally in helping to secure that £7 billion and the £488 million that has gone into the Thames Gateway in north Kent. Decisions on the remainder of the RGF will be made in the spending review, but I will point out that we restated in the spending review guidance our commitment to the full £12 billion and to a radical package of devolution across the country.

[Kevin Hollinrake]

Regional growth in Thirsk and Malton depends largely on access to superfast broadband. We are delighted that 95% of premises will receive superfast broadband by 2017, but the final 5% percent is without doubt the biggest challenge. Many businesses cannot wait until 2020 to get access to superfast broadband. Will the Minister confirm that he will look at ways to open up the market to create more competition for the final 5%, thereby increasing the pace of roll-out?

[George Freeman]

My hon. Friend makes an excellent point. It is great news that, as a result of our £800 million programme, 95% of the country will have superfast broadband by 2017. However, the final 5% or 10% in the most rural areas require special attention, which is why my hon. Friend the Minister for the Digital Economy is actively looking at a package of measures to help the most marginal rural constituencies. We have launched an £8 million pilot programme looking at vouchers, mobile broadband and a range of innovative schemes, including social investment finance models.

[Heidi Allen]

The Minister might recall that a few weeks ago I mentioned to him the incredible economic growth in Cambridgeshire which risked being hampered because of infrastructure constraints. We are ready to present an innovative private funding model to him, so can I secure some time in his diary to share the proposals with him?

[George Freeman]

I would be delighted to give my hon. Friend a date. She makes an important point, and I welcome the ambition set out in the “Case for Cambridge” manifesto. Having sat myself on the board of the Greater Cambridge partnership, I well know that Cambridge is now a global technology cluster. Only last week, I went to visit AstraZeneca’s £500 million global research and development hub site. It is a city that needs global infrastructure, and we welcome the ambition set out in the manifesto.

[Mary Creagh (Wakefield) (Lab)]

Regional growth in Yorkshire and the north-east is dependent on good transport links, so the cancellation of electrification between Leeds and Manchester and Leeds and Newcastle was a bitter blow to our economy. May I urge the Minister to urge the Chancellor to review the decision in the autumn statement and to look at the skills capacity in the transport sector, which is pushing up costs and prices in the electrification area?

[George Freeman]

First, the programme has not been cancelled; it is paused. It is a massive programme. [Laughter.] Opposition Members do not know much about running major projects. It is absolutely necessary that we get it right. The howls of derision opposite reveal their embarrassment at our success. You would think we would get more thanks for what we have done: a £7 billion regional growth fund; city deals across the country; 11,000 small and medium-sized businesses helped; and 130,000 jobs created, not least in the north.

[Jo Cox (Batley and Spen) (Lab)]

The Minister will know that the suspension of the business rates revaluation in 2013 has had different effects in different parts of the country. Will he commit to investigating how businesses in my constituency, like so many in the north, were disadvantaged by the decision and find a way to redress this north-south divide?

[George Freeman]

I would be delighted to feed the hon. Lady’s comments into the Government’s review of business rates, which is already in hand. We recognise that particularly in many small towns business rates have a crippling effect on the high street. That is why we have launched a major review, which is ongoing and live at the moment.

[Toby Perkins (Chesterfield) (Lab)]

In response to my hon. Friend the Member for Wakefield (Mary Creagh), the Minister did not talk about the midland main line, but gave a list of other things he was doing. The cancellation of the midland main line electrification is a significant blow to south Yorkshire, north Derbyshire and the east midlands. What representations has the Department made on the impact on businesses and regional growth of not electrifying the midland main line? Will he respond to the question and tell us what is actually happening?

[George Freeman]

I dealt with that point. The midland main line is an important strategic rail route, and we are pausing to make sure we get it right. We will take no lectures from the Labour party on economic competence, when its own shadow Chancellor, according to his biography, is committed to the overthrow of capitalism.

[Mrs Anne-Marie Trevelyan (Berwick-upon-Tweed) (Con)]

I am aware that the Life Sciences Minister is creating a specialist life sciences enterprise zone to support sites across the UK hit by the global pharmaceutical corporate restructuring. Will he commit to providing every possible support to Covance, a pharmaceutical company in Alnwick, in my constituency, where more than 140 scientists’ jobs are at risk?

[George Freeman]

My hon. Friend has raised this matter with me already, and the Office for Life Sciences stands ready and is taking a close interest. We have already made contact with the local authority and will offer every support we can to its bid to make sure the site remains viable and that we protect local jobs.

[Peter Grant (Glenrothes) (SNP)]

10. What assessment he has made of the potential effect on businesses of the UK leaving the EU.

[The Minister for Small Business, Industry and Enterprise (Anna Soubry)]

The Prime Minister is focused on reforming Britain’s place in the EU, and rightly so. A wind of change is blowing through the EU, and it is a wind that wants reform. We are in a process of renegotiating, and when we have completed that renegotiation, the question will be put to the British public.

[Peter Grant]

Earlier this morning, the Secretary of State referred to the difference of opinion on the Labour Benches with regard to our membership of the European Union. Will the Minister take this opportunity to demonstrate the undeniable, 100% unity that exists on the Conservative Benches by confirming that she and all her ministerial colleagues will enthusiastically promote the positive case for remaining in Europe when the time comes?

[Anna Soubry]

I know that the hon. Gentleman is new to this place, but I do not think the Conservative party has ever shied away from the fact that we are not all as one when it comes to the future of our European Union membership and whether we should stay in or leave. What is absolutely the case is that, unlike other Governments who had the opportunity, we are trusting the British people. We are in a process of negotiation. We will go to the people, and let the people decide whether or not to stay within the EU.

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

Has the Minister seen the report from Business for Britain, entitled “Change, or go”? Does she agree with one of its conclusions, that leaving the European Union would

“not entail a loss of influence on the world stage.”?

[Anna Soubry]

I will be fascinated and delighted to read this document, and I am sure my hon. Friend will send me a copy, but given my long-term support for our continuing membership of the European Union, I might need a bit more persuading than his document could provide.

[Mr Speaker]

It looks as though it is going to be a very lengthy read, I must say, and probably rather heavy as well.

[Keith Vaz (Leicester East) (Lab)]

As part of the Prime Minister’s renegotiation, and as he visits various European capitals, he presumably has a list of reforms that he wants enacted. How many directly relate to business?

[Anna Soubry]

The Prime Minister has set out his broad categories. He continues to meet leaders throughout the European Union, and he continues to put the interests of our country first and foremost. In due course, and most importantly, the people of this country will decide whether or not to stay within the EU. As to my answer to the previous question, I take it all back—I am not reading a document of that length, but I will have a five-minute conversation with my hon. Friend the Member for Bury North (Mr Nuttall).

[Mr Philip Hollobone (Kettering) (Con)]

In the 1980s, the European Union accounted for about 30% of world trade. By the beginning of the next decade, that figure will be about 15%. Over that time, our trade deficit is growing to £50 billion a year. Is it not clear that Britain would be better off outside the EU?

[Anna Soubry]

Given the views of the new Leader of Her Majesty’s Opposition, it might be a good idea for my hon. Friend to meet him and persuade him further of the case that he advances. It seems that there is another major shift in the policy of the Labour party.

[Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)]

11. What recent estimate he has made of the value of UK membership of the EU to businesses and universities.

[The Minister for Universities and Science (Joseph Johnson)]

Our world-class universities, with their close links to business, are at the heart of the global knowledge economy. They will benefit from the reforms we want to see in place across the European Union. As the Minister for Small Business, Industry and Enterprise just said, the EU is our biggest market. Reform and growth on the European continent is good for British business, and it is good for our globally networked universities.

[Gerald Jones]

Universities UK recently highlighted the risk to potential funding and collaboration if Britain withdraws from the UK. That applies to my own constituency as well. Does the Minister agree with that, and does he support Universities UK and its campaign?

[Joseph Johnson]

I discuss these issues regularly with Universities UK, which recognises that reform across the European Union will support growth and competitiveness. In turn, that will help the links that our great universities have with business.

[Philip Davies (Shipley) (Con)]

Will the Minister confirm that last year our trade deficit with the European Union was £62 billion, and that it is therefore nonsensical for anybody to argue that we will see the end of free trade with the EU if we were ever to leave it? When he has confirmed that, perhaps he can set out what on earth we get for our £18 billion membership fee every year.

[Joseph Johnson]

We want to see the completion of the single market so that British businesses can compete more effectively across promising sectors of the European single market. We have a strong export sector and we want to break down further barriers that prevent our businesses from fulfilling their potential in that market.

[Liam Byrne (Birmingham, Hodge Hill) (Lab)]

May I stiffen the Minister’s answers? The truth is that British universities win more research grants from the European Research Council than any other country in Europe. Well over £1 billion flowed in last year from Europe into the British science base, which is more than any other country received. The European Union and our membership of it is mission critical to our success and the future of our high-tech, high-productivity industries. Over the months to come, will the Minister join me in helping to ensure that British universities are at the forefront of leading the campaign for this country to stay in the European Union?

[Joseph Johnson]

British universities and British science punch well above their weight around the world, and they secured 16% of the last batch of grant money from the European Union. That is because we have a competitive, world-class research base, and we are the Government who are supporting it and providing a stable climate for business and universities to invest in research and science. The Labour party would jeopardise that with its new economic policies, which would destabilise our business climate.

[Jason McCartney (Colne Valley) (Con)]

13. What recent support he has provided to small businesses in West Yorkshire.

[The Minister for Small Business, Industry and Enterprise (Anna Soubry)]

A total of 892 StartUp Loans have been issued to entrepreneurs across West Yorkshire, amounting to nearly £5 million, and 890 West Yorkshire businesses have secured guarantees under the enterprise finance guarantee scheme, amounting to £87 million. Through the growth deal funding in 2015-16, we have supported the establishment of a growth hub in the Leeds city region, which helps businesses across West Yorkshire to gain access to joined-up, expert advice, grants and loans.

[Jason McCartney]

I welcome that positive news. As the Minister knows, one of the big challenges for my local businesses, which are expanding at a fantastic rate, is finding new premises. There are many derelict mill sites, but they need a big capital injection to prepare them for the expanding businesses. Will the Minister continue to consider investing through the regional growth fund and the business growth deal to support those wonderful businesses, creating jobs and apprenticeships?

[Anna Soubry]

Of course we will continue to consider investing, but during this period we are looking at our future plans for public spending, and it is all part of that.

[Kirsten Oswald (East Renfrewshire) (SNP)]

15. What representations he has received from the further and higher education sectors on the number of students from abroad studying in the UK.

[The Minister for Universities and Science (Joseph Johnson)]

We have built a world-class university system in the United Kingdom. According to data published today following a survey, we have 10 of the world’s top 50 universities and four of the world’s top 10, and we warmly welcome the growing number of international students who choose to study at them. As I made clear in my first speech in my current role at the Going Global conference, there is no cap on the number of genuine international students who can come to study in the UK. However, it is right that we continue to seek to drive out abuse, and to tackle it wherever it exists in our system.

[Kirsten Oswald]

What economic assessment has the Minister made of the impact on the Scottish economy and the Scottish further education sector of the tier 4 regulations?

[Joseph Johnson]

International students who come to this country bring significant benefits to our higher education system, which is why there is no cap on international student numbers and the Government have no intention of introducing one. Our further education system also benefits significantly from the 19,000 or so international FE students in this country.

[Philip Davies (Shipley) (Con)]

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

[The Secretary of State for Business, Innovation and Skills and President of the Board of Trade (Sajid Javid)]

Over the summer, my Department has been responding to the Treasury’s request to find savings in the BIS budget. That is a vital part of the Government’s plan to eliminate Labour’s record budget deficit, support the recovery, and protect the economic security of the nation. We have also been preparing important legislation: the Trade Union Bill, which received its Second Reading here yesterday, and the Enterprise Bill, which will be introduced in the other place later this week.

Let me take this opportunity to congratulate all the British people who took part and won in the summer WorldSkills competition in São Paulo.

[Philip Davies]

Whatever one’s view of Sunday trading, does the Secretary of State agree that it is absolutely absurd that a Tesco Express can open all day on a Sunday, but a Tesco Superstore can open for only six hours? Will he commit himself to taking steps to allow people to work and shop when they want to, not when the Union of Shop, Distributive and Allied Workers tells them they can?

[Sajid Javid]

My hon. Friend always raises important issues like that. It is absolutely right for us to take a fresh look at Sunday trading rules, which have not been considered carefully for many years, and that is what the Government are doing. My hon. Friend will be fully aware of our proposal to devolve the relevant decision-making to local authorities.

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

In The Independent last week the previous Business Secretary described the deafening silence from this new Government on industrial strategy as “ominous”. Has the current Business Secretary decided if he has an industrial strategy yet?

[Sajid Javid]

Our policies for dealing with all industries are very clear: we have a very active dialogue with all industrial groups and with many companies, as well as with leading business groups, and that dialogue will continue. We do that, for example, through the sector councils; we listen very carefully to what they have to say and work in partnership wherever we can.

[Suella Fernandes (Fareham) (Con)]

T2. I recently visited SMR Automotive in Portchester, a global leader in vehicle exterior mirrors and camera-based ADAS—advanced driver assistance systems. With 750 jobs locally, it is an outstanding example of manufacturing. What is my right hon. Friend doing to ensure quicker and greater access to brownfield land so that companies such as SMR can expand?

[Sajid Javid]

It is great to hear another example from the UK’s successful automotive industry; it is one of the brightest stars in the constellation of British business. We encourage the effective use of land by reusing brownfield land. Local planning authorities, through their local plans, need to respond to market signals and set out a clear strategy for allocating land suitable for development.

[Mr David Hanson (Delyn) (Lab)]

T3. Following on from the question of the hon. Member for Shipley (Philip Davies), it is not just USDAW members who are opposed to changes in Sunday trading. Last week, for example, the British Retail Consortium said:“There is a strong consensus across the industry that the proposal to devolve these decisions to a local level, rather than them being decided nationally, is a matter for concern.”Will the Business Secretary truly take account of the consultation and, if business, workforces and the public say no, not make those changes?

[Sajid Javid]

As the right hon. Gentleman will know, the consultation is about to close and we will carefully look through its responses, as we always do, but I am sure the right hon. Gentleman agrees with choice, so that local authorities can decide if it is the right thing for them. If, for example, there is a local area with higher unemployment than elsewhere and the local authority thinks the changes will help to create jobs for local working people, that will clearly be a good thing. There was a time when the Labour party was the party of working people; what has happened?

[Stuart Andrew (Pudsey) (Con)]

T5. Is my hon. Friend aware of the example mentioned last week in the Science and Technology Committee of a £2 million Innovate UK investment leveraging a further £44 million from the private sector? Does he agree this shows the importance of Government supporting science?

[The Minister for Universities and Science (Joseph Johnson)]

Yes, I do agree. Science and innovation are among the UK’s greatest strengths, and the example my hon. Friend gives—I believe he is referring to the drug discovery firm Summit plc—is a good example of the way public investment in R and D crowds in additional private investment. Every £1 the public invests in R and D crowds in an additional £1.36 of investment on average.

[Alison Thewliss (Glasgow Central) (SNP)]

T4. Scottish Renewables announced yesterday that the sudden early withdrawal of the renewables obligation has already hit investment in projects, deeply concerning the sector. What assessment has the Minister made of the further impact the Government’s stance could have on the future viability of institutions such as the Green Investment Bank and the innovation they fund?

[The Minister for Small Business, Industry and Enterprise (Anna Soubry)]

There are a few questions in there, and forgive me if I did not catch all of them, but I am very happy to meet the hon. Lady to give her a full set of answers. On the renewables obligation, we are very aware of the burden it places on a lot of our industries, but, as I explained in a previous answer, if we move it from one sector, we have to find somewhere else for it to go, and it will either fall on the individual consumer or another part of business. It is not as simple as it appears at first blush.

[David Rutley (Macclesfield) (Con)]

T7. I welcome the steps being taken by the Under-Secretary of State for Life Sciences to accelerate the adoption of new, properly tested medical treatments in the NHS. Can he confirm that this not only has tangible benefits for patients, but also helps underpin the strength of the life science sector in north-east Cheshire and across the country?

[The Parliamentary Under-Secretary of State for Life Sciences (George Freeman)]

The accelerated access review that we have launched is about unleashing the power of the NHS to support 21st-century drug development and the test beds putting technology into practice in our health system. As my hon. Friend says, this has benefits not just for patients, but for industry, and not least for the north-west. During my visit to the Alderley site with my hon. Friend in the spring, I saw at first hand the power of that cluster in advanced medicines manufacturing and technology, and I think it has a very bright future in 21st-century life sciences.

[Ian Mearns (Gateshead) (Lab)]

T8. With only 6% of 16 to 18-year-olds going into apprenticeships, may I ask the Secretary of State what specific steps he is taking to ensure that the 3 million apprenticeships that the Government hope to create are of good quality, are quality assured and have proper qualifications that will lead to increasing the trainee’s career prospects and are not used, as we are currently seeing in the north-east, as a ruse by less scrupulous employers to employ young people on cheap wages?

[The Minister for Skills (Nick Boles)]

The hon. Gentleman will know that under the previous Government we had apprenticeships that did not even involve an employer and that lasted a few months. This Government have introduced a 12-month minimum. They have put employers in charge of developing apprenticeship standards so that apprentices learn skills that employers value, and they are introducing an apprenticeship levy to ensure that there is funding for the 3 million apprenticeships that will benefit his constituents.

[Chris Skidmore (Kingswood) (Con)]

T9. The current law allows for strikes to be called by unions on the basis of a mandate for industrial action that was secured up to two years ago. That is unfair on those whose lives are inconvenienced by strikes on which a vote was taken years ago. Does my hon. Friend agree —[Interruption.] The Corbynistas on the Opposition Benches should calm down. Does he agree that strikes should take place only on the basis of a current mandate?

[Mr Speaker]

I do not think that the hon. Member for Huddersfield (Mr Sheerman) has ever previously been so described.

[Nick Boles]

My hon. Friend is absolutely right. There was a National Union of Teachers strike in 2014 that closed 1,500 schools and colleges. It was based on a mandate from two years before, and it had secured only 27% turnout in the ballot. That is wrong. We are changing that, which is why I am delighted that the Bill passed its Second Reading so handsomely yesterday.

[Mr Iain Wright (Hartlepool) (Lab)]

In his written statement of 20 July, the Minister of State for Skills announced that the aim of area-based reviews of post-16 provision would be to create “fewer, larger” providers, and that colleges would remain “independent institutions.” Will the Minister explain how those two statements demonstrate policy coherence or indeed any logic at all? Will he confirm that the only means by which he can reconcile those statements is by cutting off funds to starve colleges into submission. Is that what he will do?

[Nick Boles]

I am slightly surprised at the hon. Gentleman who is a great man and a great Chair of the Business, Innovation and Skills Committee. He knows full well that it has required no arm twisting or strong arming by Government to encourage lots of colleges to combine with each other to form very successful groups. Manchester college and others are great examples of it. It is that kind of sensible consolidation to increase the strength of the college system that we will be encouraging through the area reviews.

[Will Quince (Colchester) (Con)]

At the weekend, my wife and I visited Bill’s, which is a new restaurant in Colchester and part of a large chain. At the end of the evening the bill had an automatic 10% gratuity, which the staff member said that they did not receive. Does my hon. Friend agree that the public expect staff members to get the tips in recognition for the service rendered?

[Sajid Javid]

Yes, absolutely. When a diner leaves a tip, they rightly expect that to go to the staff. Recent reports have suggested that some restaurants are not doing that, which is unacceptable. I have already launched a call for evidence. I will see whether the Government need to take any action. If they do, nothing is off the dining table.

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

Over the summer, we have seen example after example of consumers’ data—credit card details, travel records or dating preferences—being hacked or shared without their permission. What is the Minister doing to ensure that consumers can own and control their own data?

[Nick Boles]

I am very happy to talk to the hon. Lady who has a great deal of expertise in this area to take ideas from her. [Interruption.] Yes, I do believe in learning from those on the Opposition Benches on occasion about how we can do better on this important issue.

[Matt Warman (Boston and Skegness) (Con)]

Many of my constituents are employed on the minimum wage, with an average salary of £15,000 in Boston and Skegness. Has the Minister made an assessment of what impact the national living wage will have on my constituency?

[Nick Boles]

I am delighted to remind the House that from the beginning of October the national minimum wage, which will benefit all my hon. Friend’s constituents over the age of 18, will go up by 3%. That is the highest increase since 2006. Next April, the national living wage will come in, and it will give his constituents over the age of 25 a significant benefit. That is the result of this Government’s economic plan working. [Interruption.] It is benefiting working people throughout the country, and I would have thought that the Labour party, which used to stand for working people, would support it.

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

The Office for National Statistics has stated that in July our manufacturing output dropped, our exports—particularly to the emerging markets—dropped and that confidence levels among our manufacturers was very low. Given that the Chancellor said in 2011 that he was backing the “march of the makers”, what additional measures will the Minister take to ensure that that boast can become a reality?

[Sajid Javid]

I always listen carefully to what the hon. Gentleman says. He did a great job as Chair of the Business, Innovation and Skills Select Committee and he makes some important points, but he will be fully aware that manufacturing crashed as a proportion of our economy under the previous Labour Government, almost halving in size. Under this Government, the proportion has gone up as we rebalance the economy. He is right, however, to identify the question of exports, and we have set up an export taskforce to come up with new initiatives that will make a huge difference.

[Daniel Zeichner (Cambridge) (Lab)]

Last week the World Economic Forum published its “Inclusive Growth and Development Report”, which states that

“efforts are required to improve access to education as well as its quality, which would be important for tackling…the low levels of social mobility in the country.”

What efforts is the Secretary of State making to achieve that?

[Nick Boles]

The hon. Gentleman might not have noticed, but we are investing a huge amount of effort and money, through an apprenticeship levy that will be coming in in 2017, in the expansion and improvement of apprenticeships to create opportunities for young people and people in later life. I very much look forward to his contributing to the debate on this subject and supporting the apprenticeship levy in the Lobby.

[Several hon. Members]

rose—

[Mr Speaker]

Last but not least—I call Mr Bone.

[Mr Peter Bone (Wellingborough) (Con)]

The previous Secretary of State gave his approval for Rushden Lakes, a major retail and leisure facility in my constituency. The development is now well under way, and it will create thousands of jobs. Will the Secretary of State find time in his calendar next year to show his support for the development and for the success of Conservative economic policy?

[Sajid Javid]

Yes, absolutely, and I hope that Mrs Bone will be able to join us.

Northern Ireland

Tuesday 15th September 2015 Commons Chamber

12:32

[The Secretary of State for Northern Ireland (Mrs Theresa Villiers)]

With permission, I would like to make a statement about political developments in Northern Ireland. First, I welcome back the hon. Member for Gedling (Vernon Coaker) as shadow Secretary of State. I hope we can continue the constructive working relationship that we had when he last held the post. With that in mind, I would say that the new Labour leader and the shadow Chancellor are on record as having expressed their support many times for a united Ireland. That is an entirely legitimate view, as is the clearly held preference on the Conservative Benches that our country should stay together and that Northern Ireland should remain part of the United Kingdom. It would be helpful for the shadow Secretary of State to confirm when he responds to this statement that, under his party’s new leadership, the consent principle at the heart of the Belfast agreement will remain paramount.

Last week we started a new round of cross-party talks focused on two issues: the continued presence of paramilitary organisations in Northern Ireland and the pressing need to implement the Stormont House agreement. The talks began on Tuesday with a meeting of all the participants, at which everyone agreed that those two issues needed to be addressed as a matter of urgency, although views differed on the sequence in which they should be considered. On Wednesday morning, the Police Service of Northern Ireland arrested three well-known members of the republican movement, including the northern chairman of Sinn Féin, in connection with their ongoing investigation into the murder of Kevin McGuigan. It would not be appropriate for me to comment on a live police investigation, save to say that all three were subsequently released unconditionally. These developments had dramatic political consequences.

On Thursday evening, Peter Robinson announced that Democratic Unionist party Ministers, with the exception of Finance Minister Arlene Foster, were resigning from the Northern Ireland Executive. The First Minister himself has stepped aside, with Mrs Foster taking over the functions of that office for a period of six weeks. That does not trigger an early Assembly election—that would happen only if either the First Minister or Deputy First Minister were to resign. Nor does it mean suspension of the institutions or a return to direct rule—that would require primary legislation at Westminster, which is not something the Government believe would be justified in the current circumstances. It also does not mean that the Assembly or the Executive cease to function, but the situation is very grave.

A number of Departments are left without ministerial leadership, and relationships between the parties have almost completely broken down. That leaves the devolved institutions looking increasingly dysfunctional. Over recent days, I have been maintaining close contact with the five main Northern Ireland parties and with the Irish Government, and I have kept the Prime Minister constantly updated on the situation. Yesterday, I held a series of bilateral and trilateral meetings at Stormont, aimed at establishing a basis for further intensive talks. I plan to hold further such discussions at Stormont tomorrow and in the days ahead.

The events I have outlined do not alter the fundamental issues that need to be resolved. First, the brutal murders of Gerard Davison and Kevin McGuigan have brought into sharp focus the continuing problems around the existence of paramilitary organisations in Northern Ireland, and the involvement of some of their members in criminality and organised crime. The Government are clear that paramilitary organisations have no place in a democratic society. They were never justified in the past, they are not justified now and we all need to work together to find a way to bring to an end this continuing blight on Northern Ireland society. The Government are working with the parties in the Northern Ireland Executive on how to achieve that goal. For example, serious consideration needs to be given to whether the time is right to re-establish a body along the lines of the Independent Monitoring Commission. The remit the parties might wish to give to such a body is likely to be different from the matters addressed by the original IMC, reflecting changed circumstances. But there might well be scope for such a body to play a part in providing greater community confidence and repairing working relationships within the Executive. The Government will also actively consider whether there is more that we can do to support efforts to tackle organised crime and cross-border crime in Northern Ireland. In the days to come, we will continue to listen carefully to representations made to us on the best way to ensure that all parties can engage in this process.

The second issue on the agenda is just as important as the first. Resolving the differences that have been blocking the implementation of the Stormont House agreement is crucial if the finances of the Northern Ireland Executive are to be placed on a sustainable footing. Without welfare reform and steps to tackle in-year budget pressures, there is a real danger that Executive Departments could start running out of money, becoming steadily less able to pay their bills, with the serious negative impact that could have on front-line public services. As we have seen in those parts of Europe where Governments are unable to control their debts and live within their means, some of which are supported by the new leader of the Labour party, it is the vulnerable and most disadvantaged who suffer most in such situations. We have therefore made it clear that if these matters are not dealt with by the parties, as a last resort the Government would have to legislate here at Westminster, a position on which I hope we would have the support of the hon. Member for Gedling.

As things stand, every day that passes is likely to see the devolved institutions less and less able to function effectively. We have limited time, so once again I urge all parties to engage intensively and with focus, determination and goodwill in the talks under way. We on the Government Benches, and I hope those across the whole House, continue to give our full support to the Belfast agreement and the institutions it created. There can be no doubt that power-sharing, inclusive government comes with its frustrations and difficulties—indeed, I hear about them every day—but as my right hon. Friend the Prime Minister often reminds this House, the Northern Ireland political settlement was a huge achievement. It has transformed life in Northern Ireland for the better, and it is an awe-inspiring example of what can be achieved with political leadership and vision. On so many occasions in the past 20 years Northern Ireland’s politicians have come together to achieve the seemingly impossible. It is time to do so again, so that we can continue on the road to a brighter, more secure future for Northern Ireland. I commend this statement to the House.

12:40

[Vernon Coaker (Gedling) (Lab)]

I thank the Secretary of State for her good wishes and for advance sight of her statement. Let me take this opportunity to thank all the parties in Northern Ireland, as well as many others, for their good wishes.

Let me say straight away to the Secretary of State that it is the Opposition’s intention, as well as my own, to pursue a bipartisan approach based on the agreements reached, in particular the principle of consent. Our policy remains absolutely the same and I emphasise that to the Secretary of State and all those who are listening to or reading this debate.

I take up this post again at a time of real challenge in Northern Ireland. Will the Secretary of State reassure us all that the full authority of the British Government, working with the Irish Government and with Washington, will be used to help resolve these difficulties along with the parties of Northern Ireland? The current problems of political stability revolve around continuing paramilitary activity and the implementation of the Stormont House agreement.

Following the murders of Gerard Davison and then Kevin McGuigan, the Chief Constable of the Police Service of Northern Ireland said that some Provisional IRA organisational structures still exist, but for a radically different purpose than before, although some members still engage in criminal activity. Does the Secretary of State agree with this assessment? Can she explain what it means and give her assessment of what it means for communities? Will she update the House as far as she can on the investigation by the PSNI into the two murders I mentioned earlier? Does she agree that we need once and for all to end any ambiguity on the issue of paramilitary activity? As she said, paramilitaries have no place whatsoever in Northern Ireland, so will she update us on her assessment of the level of paramilitary activity in all communities, the threat it poses and what is being done to combat it? Does she agree that supporting a more comprehensive approach across all departments and agencies could be beneficial?

The rule of law must be paramount and there can be absolutely no compromise on that principle. The parties in the Northern Ireland Executive are all committed to that, but in the light of the Secretary of State’s statement to the House last week and today about the IMC, will she update us further on the current position, what she is considering and what any of the proposals she has outlined actually mean?

Let me turn to the implementation of the Stormont House agreement, which was a tremendous achievement by all involved. It has clear proposals on finance and welfare, on difficult issues such as flags, identity, culture and tradition, parades and dealing with the past, and on institutional reform—many, if not all, of the hugely challenging and difficult issues that arise in the context of Northern Ireland with its different traditions. However, it was a negotiated agreement to move forward on those matters, not to leave them as being too difficult to resolve, reflecting a desire to tackle them. It showed hugely courageous political leadership from all involved, including many in the Chamber today.

Does the Secretary of State agree that the price of negotiating a way of successfully implementing the agreement would be another historic milestone? Does she agree that it would take forward the peace process by saying that, although we have brought about a substantially better Northern Ireland now is the time to deal with many of the outstanding issues arising from the different traditions and competing narratives as well as legacy issues around victims, mental health, economic insecurity and poverty?

On that basis, how will the Secretary of State play her part in helping to break the impasse, particularly on welfare reform? Are there other ways of supporting vulnerable people with targeted Treasury money to help, for example, mental health or economic insecurity, both of which are significant legacy issues? Does she accept that to break the deadlock the same proposals cannot always be put forward time and time again? Although Northern Ireland should not be treated as a special case, there are in Northern Ireland special circumstances.

Can the Secretary of State also tell us what progress is being made on a Bill to implement the Stormont House agreement? Is there a timescale, and is a legislative slot available? She knows that many people would feel let down if bodies designed to deal with such issues cannot be set up.

These are immensely challenging issues, but let me once again reassure everyone in the House, and in Northern Ireland, that Her Majesty’s Opposition will work hard, in the spirit of bipartisanship, to play our part in helping to make the continuing progress that we all want to see. It is my strong belief that talks, discussion and negotiation, in the end, are the only way forward. Is the Secretary of State hopeful that roundtable talks will be possible in the near future? The prize of a more prosperous, stable and peaceful Northern Ireland is within reach. Let us all play our part in helping to seize it.

[Mrs Villiers]

I thank the shadow Secretary of State for his clear commitment to a bipartisan approach and his reiteration of the consent principle at the heart of the Belfast agreement, which I am sure will be warmly welcomed across the House. In response to his first question, yes the full authority of the Government will be deployed in our efforts to try to resolve these two very serious issues facing Northern Ireland’s political leaders.

Do I agree with the Chief Constable’s assessment of the situation in relation to the Provisional IRA? Yes, I do. The shadow Secretary of State asked me to expand on that. I think that we need to be cautious about what information we put into the public domain, but we are giving serious consideration as to whether there is a fuller picture that we could share with the parties and the public.

The shadow Secretary of State asked for an update on the police investigation. I do not think that it would be appropriate, or that it would serve the interests of justice, to provide a running commentary, although I appreciate that interest in the case is high. I think that the important thing is for the police to be able to get on with their job and to follow the evidence wherever it leads them.

I agree that there must be no ambiguity about the fact that there is no role for paramilitaries in Northern Ireland. It is time that all these organisations disbanded. I also agree that we need to work across agencies and Government Departments, with the Government and the Executive working together, and indeed with groups in society, as we develop a broader strategy to deal with the scourge of paramilitarism. There is no easy political fix; we need a range of people making an effort to bring an end to the paramilitary presence in Northern Ireland.

With regard to the Independent Monitoring Commission, the important thing is not to prejudge what the parties will put forward during the talks. In my discussions with all the parties in recent days there has been some recognition that an independent body of that sort could play a role in resolving the questions around paramilitaries.

I agree with the shadow Secretary of State’s comments on the importance of implementing the Stormont House agreement. The Bill is being worked on as we speak, and we still hope to be able to present it to Parliament next month, as planned. I agree that it is important to press ahead with creating the institutions on the past that are contained in the Bill in order to give better outcomes and greater support to the victims of the troubles who have suffered most at the hands of terrorists.

Lastly, the shadow Secretary of State mentioned the implications of Northern Ireland’s special circumstances in relation to welfare. We have often said that we will not fund a more expensive welfare system in Northern Ireland than we do elsewhere in the UK, but our settlement with Northern Ireland does reflect the fact that it requires extra help, which is why public spending per head in Northern Ireland is considerably greater than it is anywhere else in the UK. Northern Ireland’s special circumstances are one of the reasons why the Stormont House agreement is accompanied by a package worth £2 billion in additional spending power for the Executive.

[Mr Owen Paterson (North Shropshire) (Con)]

I thank the Secretary of State for her statement and for the steady manner in which she has reacted to recent events.

I congratulate the newly appointed shadow Secretary of State and thank him for the robust manner in which he stated that Her Majesty’s official Opposition will stand by the Belfast agreement and succeeding agreements that guarantee that Northern Ireland is a fully participating part of the United Kingdom so long as the majority deliver their consent. I am glad that that was delivered in the face of the new shadow Chancellor, the hon. Member for Hayes and Harlington (John McDonnell), who is no longer in his place.

In the talks, the Secretary of State has the full support of the people of Northern Ireland, who are exasperated and bewildered that the Stormont House agreement has not been delivered. Will she go forward by making it very clear that the current generation will be let down if the parties that are being difficult at the moment do not deliver on their responsibilities, and that future generations will be let down, because if powers were taken back to this Parliament, the local politicians could no longer implement corporation tax reduction, which is key to the long-term prosperity of every single citizen in Northern Ireland?

[Mrs Villiers]

I agree that it is in the interests of the current generation and future generations that the Stormont House agreement is implemented, not least because of the tremendously positive impact that devolution of corporation tax powers could have in rebalancing and transforming the economy in Northern Ireland.

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

I, too, welcome the hon. Member for Gedling (Vernon Coaker) to his place as the new shadow Secretary of State for Northern Ireland. I welcome the robust way in which he set out the commitment to maintaining Labour’s approach on support for the principle of consent. I wish him well in holding the line in terms of the position of the Labour party.

Does the Secretary of State accept that we need to be reminded in this House of how we have got to this position: namely, Sinn Féin’s decision to renege on its commitments in the Stormont House agreement; and Sinn Féin’s links to an existing IRA, in the words of the Chief Constable, whose current members carried out a murder on the streets of Belfast? People need to remember how we got to this point today.

So far as the Secretary of State is aware of the First Minister’s discussions with the Government in relation to our concerns about the basis on which talks need to take place, will she commit to continuing to discuss with us in the next number of days how our concerns can be addressed to allow full participation in the talks by us and others? We will then be able to have a proper talks process that will resolve the outstanding issues and not cause any further fudge or putting off of the difficult decisions? We need to move forward, but it can only be on the basis of our concerns being addressed.

[Mrs Villiers]

It is important for us to recognise the reasons why we have got to where we are on this. I do recognise that Sinn Féin’s change of mind on welfare reform has played an important part in destabilising relations between parties. One cannot have a coalition that works effectively if it is incapable of delivering a workable budget.

In answer to the right hon. Gentleman’s last questions, of course I will continue to engage with his party and others to discuss how we ensure that we have an effective talks process in which all parties can engage with enthusiasm and determination.

[Mr Laurence Robertson (Tewkesbury) (Con)]

The Secretary of State said that she was very reluctant to reintroduce direct rule, and rightly so. I speak as somebody who led for the Conservative party for a number of years when major decisions on Northern Ireland were taken upstairs in a small room with very few Members of Parliament present, even fewer Members from Northern Ireland present, and nobody from the Assembly able to influence the affairs of Northern Ireland. Has she been able to put it to those taking part in the talks that the very stark choice is that either we make the institutions work or we go back to that very unsatisfactory way of governing Northern Ireland?

[Mrs Villiers]

I firmly believe that no one wants to wind back the clock and go back to direct rule. As I have said, there are difficulties and frustrations with power-sharing and inclusive government, but it is hugely preferable to direct rule. That is one of the reasons why the Government are determined to work as hard as we possibly can with Northern Ireland’s leaders to find a way through to ensure that the Executive and the institutions can continue to work effectively to deliver on their priorities for the people of Northern Ireland.

[Deidre Brock (Edinburgh North and Leith) (SNP)]

I welcome the Secretary of State’s statement. I particularly welcome her view that this is not the time to re-impose direct rule. I must question, however, the need for the party politics in her statement. I hope that we can go forward in a more cohesive and co-operative manner.

The resignation of the First Minister and Ministers at Stormont was an unwelcome development. I understand the political frustration and I appreciate the stresses that politicians in Stormont are working under, but there needs to be leadership now, and the presence of all of them at the negotiating table is needed. A willingness to compromise by all parties to the negotiations is needed as well. No one should be going into these talks with anything but the best intentions and a determination to find a way forward that will allow the resumption of the Executive’s business at Stormont.

Alongside the full engagement of the UK Government, the involvement of the Irish Government would be advantageous. Ireland is not a disinterested party in this affair, and the good offices of her Government may provide an additional channel of opportunity. I understand that the Secretary of State has already been in touch with her Irish counterpart, and I hope that she will bring us up to speed on those discussions.

It is to be hoped that all the concerned parties will go into the negotiating rooms with a positive attitude and a determination to come away with a result that everyone can live with, even if it means that each has to give ground to get there. They have to enter into those negotiations without preconditions and without prejudging the outcome, and come to the table in a spirit of compromise and co-operation. The only real alternative is for them to lay out their case and allow the voters to judge them in an election, but that would leave Northern Ireland without the Assembly for even longer.

I wish the Secretary of State well in her endeavours over the next while, but may I ask her how far she considers us to be from getting all the parties around that table and whether she will update us on her discussions with the Irish Government?

[Mrs Villiers]

In answer to the hon. Lady’s first point, I make no apologies for holding to account the official Opposition and their new leader. It is useful that they have confirmed today that the consent principle remains paramount for Northern Ireland.

I agree that we are in a serious situation. The hon. Lady talks of the need for Northern Ireland’s leaders to enter talks with a positive attitude and a willingness to compromise. I firmly believe that all the five largest parties in the Northern Ireland Assembly want this to work, are trying to find a way through, and want to resolve these two important questions. They are going to be extremely tricky to get right, but with determination I think it is going to be possible.

The Irish Government have been taking part alongside the UK Government in the round of cross-party talks that we have recently started, in accordance with the three-strand approach. I do recognise that their input can be very positive in trying to find a resolution on these matters.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

I congratulate my right hon. Friend on her statement and welcome the reassurances of the hon. Member for Gedling (Vernon Coaker) in respect of the position of his party under its new leadership.

My right hon. Friend will remember from what happened at Christmas how important it was to engage those within civil society in the talks. I would be grateful to know what efforts have been made to re-engage with them in the light of recent events, and also what efforts have been made to contact the American authorities, who were extremely helpful at Christmas in brokering what we hoped was going to be an agreement.

[Mrs Villiers]

I agree that it is helpful for civil society to be involved in trying to resolve these questions. As I said in response to the shadow Secretary of State, if we are going to deal with this paramilitary problem we need a response from across society, not solely from politicians. The business community can play a part, not least because they have campaigned long and hard for the devolution of corporation tax and can see it slipping through their fingers unless these matters are resolved.

I agree that the influence of the United States has often been hugely positive and helpful in Northern Ireland’s political history over the past 20 years. I keep in regular touch with the representative of Secretary of State Kerry, Gary Hart, who is following events closely.

[Kate Hoey (Vauxhall) (Lab)]

The Secretary of State has mentioned dealing with the past. Has she had time to read the harrowing evidence given by the victims of Libyan-imported Semtex? There were strong views on how previous Governments and the current Government have dealt with the issue. The Government could help to sort this out—they really must do something. Will the Secretary of State please assure us that she will read the evidence and take action to make sure that the matter is settled once and for all?

[Mrs Villiers]

Of course I will read the documents to which the hon. Lady refers. I fully recognise the scale of the suffering caused by the Libyan Semtex. The UK Government have always tried to provide support to the victims of those brutal incidents. It is our policy not to espouse individual claims, but we are doing our best to provide support for victims in their efforts to find a way forward. We will continue to do so, but the reality is that the situation in Libya continues to be very difficult. Of course, however, the interests and needs of the victims of Libyan Semtex are taken into account in our relationship with Libya.

[Jack Lopresti (Filton and Bradley Stoke) (Con)]

Does my right hon. Friend agree that there will be no peace, security or long-term stability in Northern Ireland until we have dealt with the paramilitaries, and will she confirm that the police and security services are getting all the support and resources they need to do just that?

[Mrs Villiers]

I believe that the police and security services have the resources they need to properly and appropriately combat the dissident republican threat. One of the reasons it is crucial that the Stormont House agreement is implemented is that, if the Executive do not have a workable budget and they continue to pay out on a more expensive and flawed welfare system, that will mean fewer resources for the police, which could have worrying consequences for front-line services.

[Mark Durkan (Foyle) (SDLP)]

The importance of implementing the Stormont House agreement should not lead to any indifference about its detail. Obviously, some of us have different views on welfare reform, but I will not dwell on that now. Questions about the past are particularly important. The Secretary of State should be aware that many victims and victims groups are expressing suspicion and concern about the burden of the proposals relating to the past and the fact that the Department of Justice in Northern Ireland is declining to have open consultation and hiding behind the fact that negotiations are taking place among party leaders.

Will the Secretary of State assure the House that, if she introduces the proposed legislation, she will not hide behind or rest on the fact that there was no proper consultation, she will meet the victim groups to hear their concerns and suspicions, and she will avoid the sort of misadventure a previous Government got into in 2005 with the Northern Ireland (Offences) Bill? Many of the victims groups view the schemes and language attached to the arrangements on the past as on a par with that misadventure.

[Mrs Villiers]

The hon. Gentleman and his party do not share my view on welfare, but I emphasise that the agreement they helped to secure at Stormont castle was a good one for welfare in Northern Ireland. It provides a reformed system that is more effective in rewarding work, but it will also top it up from Northern Ireland’s own resources, giving Northern Ireland the most generous welfare system in the United Kingdom and one of the most generous in the world.

On the proposed legislation, there was a discussion about having a consultation in Northern Ireland, but there was not enough consensus to enable that to happen. We will do everything we can to engage with a range of groups and with the Northern Ireland Affairs Committee in advance of publishing our Bill, which we propose to do shortly.

[Nigel Mills (Amber Valley) (Con)]

The Secretary of State says that the Government will legislate on welfare reform as a last resort. Can she indicate how close we are to that last resort? Can she conceive of a situation where we could get to next year’s Assembly elections with no deal, without us having to take over that responsibility?

[Mrs Villiers]

We have reflected on whether it would be appropriate to set deadlines at this point. I do not think we are at that stage yet, but I reiterate that we cannot let this situation drag out indefinitely. The public finances are at stake. We have a duty to safeguard the interests of the taxpayer and we believe that, if the Northern Ireland parties cannot resolve these questions, ultimately this House will have to do so.

[Mr David Winnick (Walsall North) (Lab)]

Despite the present crisis, is it not a fact that the Belfast agreement has saved the lives of so many people, certainly compared with what happened previously? May I tell the Secretary of State, since she was not here at the time, that when atrocities and crimes were being committed by the IRA, the overwhelming majority of Labour Members of Parliament denounced such actions, as we did, of course, the murderous crimes of the loyalist gunmen? To describe the actions of the IRA in any way as an armed struggle is absolutely wrong and farcical.

[Mrs Villiers]

The hon. Gentleman is absolutely right and I welcome the reminder that the vast majority of Labour Members denounced IRA atrocities very vocally at the time. It was right that they did so.

[Stephen Phillips (Sleaford and North Hykeham) (Con)]

My right hon. Friend has set her face against the reimposition of direct rule at this stage and does not like to set deadlines, but could she tell the House, so that the parties in Northern Ireland can be very clear, what conditions she thinks would make it necessary to bring primary legislation before this House to reintroduce direct rule?

[Mrs Villiers]

I will reflect on whether we could talk about more specific conditions, but I am really not sure that trying to set them out at the Dispatch Box today would be helpful. All the parties know that we need to find a way through this. They have a deal—all five parties agreed it at Stormont castle. It is a good deal for Northern Ireland, giving it a better welfare system—one of the most generous welfare systems in the world. We need to find a way to get that back on track and get it implemented.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

May I join others in welcoming the hon. Member for Gedling (Vernon Coaker) to his new position? The maintenance of a bipartisan approach in this House has been enormously useful and necessary at times to keep the peace process on track. I say to the Secretary of State, in the nicest way possible, that that may occasionally mean that she and her colleagues will have to resist the temptation to make the most obvious digs, however tempting that may be.

May I welcome, albeit with a heavy heart, the Secretary of State’s recognition of the possible need to create a future Independent Monitoring Commission-type body? May I encourage her to talk to the parties in Northern Ireland and, indeed, the Irish Government and other interested Governments about the remit and possible membership of that body so that, should its constitution ever be necessary, it can be done as effectively and as quickly as possible?

[Mrs Villiers]

I am delighted to hear the right hon. Gentleman confirm that the Lib Dems will continue to take a bipartisan approach. He makes fair points about a potential new IMC. This is an urgent matter for Northern Ireland’s political parties to consider, but I agree that the input and thoughts of the Irish Government and contacts in Washington could also be helpful.

[Mr Steve Baker (Wycombe) (Con)]

I join other Members who have welcomed the remarks of the hon. Member for Gedling (Vernon Coaker), particularly because I remember the necessity, as a young officer, of checking under my car for explosives every time I used it. Will the Secretary of State join me in regarding with the utmost horror the now well-known comments made by the shadow Chancellor, which in particular endorsed armed struggle, bombs and bullets?

[Mrs Villiers]

I condemn those comments and hope the shadow Chancellor has changed his views. I have no doubt he will be questioned on that in days to come.

[Ian Paisley (North Antrim) (DUP)]

It is important for Her Majesty’s Opposition to express very clearly from their Front Bench that they will support the self-determination of the people of Northern Ireland. That is an important confidence-building issue and I welcome the statement made by the shadow Secretary of State and hope that others on Labour’s Front Bench were listening.

Does the Secretary of State agree that at some point the can kicking will have to stop and that the Government will have to start dealing effectively and determinedly with the issues of criminality that go right to the heart of the poison in Northern Ireland society? The sooner that is tackled, the better for everyone—both Catholic and Protestant—in getting these people off their backs.

[Mrs Villiers]

Like the hon. Gentleman, I welcome Labour’s confirmation of its strong support for the consent principle. His point about criminality has been at the heart of many of my discussions with his party colleagues and others over recent days. I am convinced that the Police Service of Northern Ireland, the Garda and their security partners are doing a huge amount of good work in tackling such matters, but I am of course open to seeing whether we as a Government can, with others, do anything further or take any further action to provide confidence that no criminality will be tolerated and that we will do everything we can to combat it.

[Bob Blackman (Harrow East) (Con)]

My right hon. Friend has raised the issue of perhaps creating an independent monitoring commission. What consideration has she given to the terms of reference, the membership and the timetable for the introduction of such a body, and whether any of the political parties in Northern Ireland could veto such an exercise?

[Mrs Villiers]

We would aim to build consensus across the five main parties. I would hope that we can discuss the terms of reference and membership in due course. As always with such matters, there is a trade-off between time and the perfection of the organisation: some structures may be ideal, but would be problematic if they took a long time to get established. We need to look for a compromise or middle way that provides an effective independent institution in which people can have confidence, but does not take forever to set up and to report.

[Mr David Anderson (Blaydon) (Lab)]

If I have learned anything from Northern Ireland in 30 years it is, first, do not leave a vacuum, and secondly, choose your words very carefully. The Secretary of State has come to the House today and has quite clearly not chosen her words very carefully in relation to tackling the history of some of my leaders. In the interests of moving things forward, what will her leader do now? I am not asking what my leaders did in the past, but what her leader will do now. Will he engage in a better way than he has during recent impasses in Northern Ireland, when his not being there has been very unhelpful?

[Mrs Villiers]

I assure the hon. Gentleman that the Prime Minister remains constantly engaged in these matters. He is updated all the time, and he has played a hugely positive role in delivering many things in Northern Ireland recently, not least the legislation on devolving corporation tax, which he championed for many months. We should bear in mind that it is important to scrutinise the new leadership of the Opposition. The track record of the attitude of the right hon. Member for Islington North (Jeremy Corbyn) and the shadow Chancellor on IRA violence is very worrying, and I make no apologies for challenging them in the House on such matters.

[Tom Pursglove (Corby) (Con)]

In the absence of elected ministerial leadership, what decision-making or interim processes will be put in place in individual Northern Ireland Departments?

[Mrs Villiers]

Such matters will clearly have to be discussed in the talks, but whatever process is ultimately set up, we must take into account the point that my hon. Friend has made.

[Tom Elliott (Fermanagh and South Tyrone) (UUP)]

I thank the Secretary of State for her statement. I, too, welcome back the hon. Member for Gedling (Vernon Coaker) as shadow Secretary of State for Northern Ireland. I also welcome his comments on the issue of consent in relation to the people of Northern Ireland, and I look forward to that being repeated by his party leader and the shadow Chancellor.

The Secretary of State will be aware that very few cases of criminality have been brought by Her Majesty’s Revenue and Customs for fuel laundering and tobacco and alcohol contraband products. Is the Secretary of State willing to engage the National Crime Agency in tackling the issue of criminal and organised paramilitary activity? It is an international issue, because some of those concerned come from the Republic of Ireland jurisdiction. I hope that the Secretary of State will ensure that they are not let off the hook by making sure that the Garda Síochana is also involved in tackling such criminality.

[Mrs Villiers]

The hon. Gentleman is right to raise matters relating to HMRC and the National Crime Agency, as well as law enforcement bodies south of the border. They all have a hugely important part to play in tackling organised crime, criminality and cross-border crime, and I know that they are making every possible effort. I will engage with my colleagues across government who have responsibility for such bodies to see whether we can do more to ensure that we do everything we can to combat criminality and cross-border crime.

[Mr Peter Bone (Wellingborough) (Con)]

I thank the excellent Secretary of State for coming back to the Commons to update us. I am not sure about the timescale in relation to what is undoubtedly a crisis. Are we talking about having to resolve it within weeks or within months? If it has to be done within weeks, will she undertake to request a recall of Parliament during the conference recess, if necessary?

[Mrs Villiers]

I do think we must press ahead as a matter of urgency. Last time I stood at the Dispatch Box, I said that we should aim for a period of four to five weeks. These matters are hugely difficult, but as every day passes, the credibility of the institutions is at stake. We do not want them to carry on in a dysfunctional way; we want to find a way to ensure that they are back up and running properly to enable them to deliver on their priorities in achieving a secure Northern Ireland for the future.

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

I welcome my hon. Friend the Member for Gedling (Vernon Coaker) to his position.

When I was Minister for Social Development back in 2007, I had to take action to ensure the protection of the then political institutions in Northern Ireland, because of paramilitarism. That position was supported and substantiated by the Police Service of Northern Ireland, but it was not supported by either Unionist parties or Sinn Féin. In that respect, does the Secretary of State agree that we need all parties in Northern Ireland to commit to round-table talks to discuss and resolve all the issues in order to underpin the political institutions and ensure that there is no further frustration among the wider public? Does she agree that there is a need, as the hon. Member for South West Wiltshire (Dr Murrison) emphasised, for the active involvement of a member of the American Administration, possibly as the independent chair of the round-table talks?

[Mrs Villiers]

As I said in my statement, we will only find a way ahead if we can engage all of Northern Ireland’s five parties in the process. I think that the American influence is positive, which is why I am engaging regularly with Senator Hart and keeping him updated. He has provided very helpful influence in relation to previous discussions, and I will continue to work with him.

[Kevin Foster (Torbay) (Con)]

I thank my right hon. Friend for her statement. She will agree with me that with power comes responsibility. In Wales and Scotland, devolved Administrations agree balanced budgets. Does she agree that it is now important that all, not just some, parties in Northern Ireland are prepared to agree a deal to do the same and to implement and deliver it?

[Mrs Villiers]

My hon. Friend is absolutely right. It is not possible to function as a Government unless that Government can live within their means. That is the key to everything else. If they do not have a workable budget, they will be plunged into the sort of chaos that we have seen in some parts of Europe. That is why it is imperative to implement the Stormont House agreement. It gives Northern Ireland a good deal, a workable budget and sustainable public finances.

[Lady Hermon (North Down) (Ind)]

In her statement to the House, the Secretary of State directly quoted the Prime Minister’s description of the political settlement in Northern Ireland as “a huge achievement”. It was, and it is. At what stage does the Secretary of State believe that it would be helpful for the Prime Minister to go to Northern Ireland and become directly involved in finding a resolution to the current difficulties?

[Mrs Villiers]

The hon. Lady will be aware that the Prime Minister makes regular visits to Northern Ireland. I am sure he will do so again in due course. I assure her that he is in day-to-day contact about events as they unfold. He is hugely supportive of Northern Ireland matters and is taking a great interest in what is a very serious political crisis.

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

The situation is extremely worrying and getting more dangerous all the time. The ordinary people of Ireland, including families—like mine—who live close to the border, are frankly worried sick over this. Is it not time for the Prime Minister and No. 10 to bother to get themselves involved?

[Mrs Villiers]

I assure the hon. Lady, as I have other hon. Members, that the Prime Minister is very focused on this matter and will continue to be so. It is a worrying situation for many people in Northern Ireland, and it is important that we resolve these matters. The Prime Minister is 100% behind that.

[Gavin Robinson (Belfast East) (DUP)]

Secretary of State, last week when the Prime Minister spoke in this Chamber, Members listened to his impassioned plea for the institutions in Northern Ireland but felt that he missed the elephant in the room. Given the lack of any content in the statement referring to consequences, will the Secretary of State outline what concrete proposals she has for consequences for those who wish politically to disrupt or dismantle our institutions and our peace?

[Mrs Villiers]

A number of parties have raised their concerns about the way the rules on exclusion from the Executive work. It is important for the political parties to give thought to that. A number of parties have indicated that they would like to look again at the ministerial code and how it is applied. It is important to look at that in the cross-party talks, in which I hope all parties will take part.

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

Some people who are listening to this statement might think that the Secretary of State is struggling with her political priorities. She has referred to her various contacts with Senator Hart. Has she asked the parties in Northern Ireland whether they would welcome the assistance of a Senator Mitchell figure to act as an honest broker, in an effort to save the peace and institutions at this worrying time?

[Mrs Villiers]

The party that has raised that matter, as it has this morning, is the SDLP, so I have discussed it with that party and the Irish Government. It is obviously important that Washington and US figures continue to provide support. There is not a clear case for a Senator Mitchell-type role, but I am open to ideas and discussions on those matters.

[Danny Kinahan (South Antrim) (UUP)]

I thank the Secretary of State for her statement. I am pleased to have secured a Back-Bench debate in this Chamber on 12 October to give everybody a chance to discuss this matter. We would like to get back to the Belfast agreement and the principles in it, which were voted on and agreed to in the referendums 17 years ago. On one key point from that agreement, we do not believe that the truth about the IRA can be negotiated as part of the talks, and neither can the issue of tackling paramilitary criminality. That should not be part of a process whereby nothing is agreed until everything is agreed. The truth cannot be a bargaining chip. Will she ensure that that point is fully recognised?

[Mrs Villiers]

I do recognise that point. The hon. Gentleman’s party leader, Mike Nesbitt, has made it very clear. I reiterate that it is essential that both those questions are resolved. Both cause a huge threat to the sustainability and future success of the institutions. Therefore, both must be addressed.

[David Simpson (Upper Bann) (DUP)]

I am sure that the Secretary of State will agree that with all the punishment beatings, the shootings, the murders, the 160 criminal gangs operating on both sides of the border, and a fuel-smuggling organisation run by republicans that is the second best to western Europe, this is an unacceptable society for the people of Northern Ireland. A group of people who have been forgotten about—the wounds are being opened again—is the victims. We saw some of that yesterday on TV. The wounds are being opened again and people are suffering again. That is an intolerable situation to be in.

[Mrs Villiers]

It is always important to have a reminder of the interests of those who have suffered most as a result of the troubles and the terrorism that took place. The hon. Gentleman is right to highlight the problem in Northern Ireland of so-called paramilitary assaults. These things are utterly unacceptable. For people to seek to take the law into their own hands is just an excuse for violent thuggery. Many people have lost their lives or suffered permanent disability as a result of those assaults. That is one reason why we need to address urgently the role of the continuing paramilitary organisations, so that we can finally see an end to what really is a scourge on Northern Ireland’s society.

[Jim Shannon (Strangford) (DUP)]

I thank the Secretary of State for her statement. I am especially pleased to see the shadow Secretary of State back in his position. I look forward to welcoming him down to Strangford. He said that it was the best constituency in Northern Ireland and I know he will say it again the next time he is there.

Political developments in Northern Ireland are obstructed and held back by criminality. Dissident republicans—who have been involved in maiming and killing—are involved in my constituency of Strangford in illegal fuel smuggling and the disposal of that fuel. The rise in the number of people being intimidated out of their homes by thugs is at an unprecedented level in my constituency and it continues to cause great concern. What discussions has the Secretary of State had with the Chief Constable in relation to those matters, and what steps will be taken to ensure that such criminality right across the Province and in my constituency comes to an end?

[Mrs Villiers]

I am regularly briefed on the actions that are taken to combat the dissident republican threat. That extends not only to their terrorist activities but to the criminal activities that they engage in to fund those terrorist activities. I am working closely with the PSNI and its security partners to ensure that the UK Government do all they can to combat this menace, whether on the criminal side, the terrorist side or both.

United Kingdom Borders (Control and Sovereignty)

Tuesday 15th September 2015 Commons Chamber

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

13:25

[Andrew Rosindell (Romford) (Con)]

I beg to move,

That leave be given to bring in a Bill to make provision for the re-establishment of the control and sovereignty of policy, administration and all other matters relating to the United Kingdom’s borders with the European Union and to the entry and exit to the United Kingdom of foreign nationals; and for connected purposes.

It is the paramount duty of Her Majesty’s Government to protect and defend the integrity of our national borders. There can be no doubt that today the British people expect and, indeed, demand that their elected Government do exactly that. I do not believe there has ever been an electoral mandate for open borders. On the contrary, Governments of all parties have promised the British people that they would strictly control the entry of peoples into our country.

Indeed, the expectation of my constituents is that our Government will implement a policy to guard our borders from land, sea, air and the channel tunnel; to manage our immigration system to serve our national interest; and, most importantly of all, to keep our people safe from harm. I have to tell the House that the clamour of the British people for such an approach is greater now than at any time before, and no Government can ignore it.

From the outset I should make it clear that, while it is my intention in presenting the Bill to introduce a vital change, restoring full control and sovereignty over our UK borders to Her Majesty’s Government and our elected Parliament, thus making it possible to achieve more sustainable levels of migration, I am not against immigration. Immigration to these islands over the centuries has been overwhelmingly positive in shaping our nation’s development and evolution, contributing to our cultural and economic success. Our island story has been enriched by the arrival of peoples of every nationality and, most especially in recent decades, those from our Commonwealth family of nations and territories, with whom we in the British Isles, including Ireland, share such a close bond through our cultural, historical and constitutional ties.

Immigration that is controlled and managed properly is therefore a good thing for Britain, but that can happen only if the power to decide who is allowed to enter our country and who is not allowed to enter is restored. A nation that does not retain sovereignty over its national borders will ultimately be powerless to determine its own destiny.

Figures released by the Office for National Statistics show that net migration for the year ending March 2015 was roughly 330,000 people, of whom nearly half were EU citizens. The Immigration Minister described those figures as “deeply disappointing”, reflecting not just his frustration but the Government’s inability to make progress in reducing net inward migration to the tens of thousands that the British people were promised.

Immigration now stands at its highest level ever, with huge social and economic consequences for our country. Some may welcome that and say that it is good for Britain, but others may argue—as I do—that such a colossal increase in our population is unsustainable and sensible controls are needed. Whatever one’s view, my Bill will give the British Government and British Parliament, elected by the British people, the absolute right to decide what our future British immigration policy should be.

Once sovereignty is restored, Her Majesty’s Government may wish to continue with the current policy of free movement of people from Europe, or even extend it to other countries, and that would be their right as the democratically elected Government of our country. On the other hand, they may decide to restrict numbers entering the UK, perhaps adopt a points system for all entrants, similar to that successfully implemented by Australia, or give greater preference to the nations of the Commonwealth and Her Majesty’s realms, with whom we share so much in common, most notably our English language. They may choose whether to extend the ancestry rule, depending on their point of view, but whatever the Government of day decide, based on a democratic mandate handed to them by the British people, my Bill would restore the absolute power to do what Her Majesty’s Government believe to be right for Britain, and deny any supranational commission, Parliament or court the power to overrule us.

Control over our borders is one of the defining attributes of statehood: in short, a state cannot be truly self-governing unless it can ultimately exercise control over who can and cannot enter that country. Unsurprisingly, the better we do economically as a country, the greater the number of people who want to come here, but our public services are now under relentless strain as they struggle to cope with the number of people arriving. It may be true that European immigrants have paid more in taxes than they have taken out in benefits, but the tangible provision of Government services simply cannot keep up. It takes time to build houses, establish GP surgeries, hospitals, and schools, and with the strain that we see on public services today, it is obvious that the increase in our population is having a significant social impact on our nation.

We must be realistic about the length of time that it takes for people to integrate into British society, and it is not unreasonable to say that such a rapid increase in population—including some people from very different cultures—has led to tension within our towns and communities. However, I believe that the overwhelming majority of people who have travelled to these shores and chosen to make their home in Britain are thoroughly admirable people who are prepared to uproot their entire lives to make a new life for themselves. I welcome those people, so let me be clear that it is not immigration but uncontrolled immigration that I believe is unsustainable. If we are serious about achieving more sustainable levels, it is imperative that we first reassert sovereignty over our national borders.

Through our ever-closer integration with the European Union, I fear that we have lost sight of our place in the world as a global, trading nation, neglecting our close ties with the English-speaking world and Commonwealth, and instead aligning ourselves most closely with the one region of the world where economic growth is stagnating. My Bill would repeal all legislation that prevents the United Kingdom from asserting sovereignty over our national borders, freeing ourselves to look to the wider world and to enable the brightest and best talent to come to Britain, attracting highly skilled workers from Canada, India, Australia, the Caribbean, Africa, the Americas and the far east, as well as from Europe.

My Bill will give Britain a fresh start on immigration policy, restoring the right of control over our national borders to the British people and their elected Government. That must surely be the only reasonable position of a legislative body that wishes to govern in the interests of its own nation. Our immigration policy and control of our nation’s borders rightly belong under the jurisdiction of our own sovereign UK Parliament, and it is to achieve that goal that I commend this Bill to the House.

[Madam Deputy Speaker (Natascha Engel)]

The question is that the hon. Member have leave to bring in the Bill.

[Mr Steve Baker (Wycombe) (Con)]

On a point of order, Madam Deputy Speaker. Certain Opposition Members have clearly indicated their dissent to this Bill, but they have not risen to oppose it. Can you give some indication of how the House might test the will of Members if no one opposes the Bill and see through their clearly indicated dissent by forcing a Division?

[Madam Deputy Speaker (Natascha Engel)]

There are a number of ways that people can indicate their dissent, including voting against something during a Division. It is perfectly possible for Members to indicate their dissent without voting against the Bill. I will now put the Question.

Question put and agreed to.

Ordered,

That Andrew Rosindell, Mr Henry Bellingham, Mr Douglas Carswell, Sir William Cash, Mr Jeffrey M. Donaldson, Frank Field, Mr Roger Godsiff, Kate Hoey, Ian Paisley, Tom Pursglove, Gavin Robinson and Mr Laurence Robertson present the Bill.

Andrew Rosindell accordingly presented the Bill.

Bill read the First time; to be read a Second time on 22 January 2016, and to be printed (Bill 68).

National Insurance Contributions (Rate Ceilings) Bill

Tuesday 15th September 2015 Commons Chamber

Second Reading

13:38

[The Economic Secretary to the Treasury (Harriett Baldwin)]

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

This Bill implements our manifesto commitment not to increase national insurance contributions for employers and employees. It will be interesting to discover whether it will be opposed by Her Majesty’s Opposition now that their new leader favours a 7% increase in national insurance for higher earners.

Hon. Members will be aware of the Government’s strong record of significantly reducing the burden of national insurance. At Budget 2011, my right hon. Friend the Chancellor announced a £21 a week above-inflation increase to the employers national insurance threshold. In 2014 we introduced the employment allowance to support businesses and charities across the UK by saving them up to £2,000 every year, and that has already benefited well over 1 million employers. The Government are now going further, and hon. Members will recall that the Chancellor announced in the summer Budget that that saving would be increased to £3,000 from next April. That means that a business will be able to employ four people full time on the national living wage and pay no national insurance at all.

From April 2015, the vast majority of employers employing under-21-year-olds were lifted out of employers national insurance as well. The exemption will be extended to cover apprentices under 25, helping young people to stand on their own two feet and fulfil their aspirations.

[Lady Hermon (North Down) (Ind)]

I am sorry to intervene so early in the Minister’s speech, but for the sake of clarity will she explain the long title to the Bill, which appears to apply only to class 1 national insurance contributions? I presume that the other classes will be covered in due course.

[Harriett Baldwin]

My remarks will be so short that hon. Members will need to intervene quickly with their points of clarification on this five-clause Bill. The hon. Lady will be aware that in the summer Budget the Chancellor announced that we are asking the Office of Tax Simplification to look at class 2 and class 4 contributions. We are expecting that consultation, which opened on 21 July, to inform the Budget next year. She asks a sensible question and I welcome her curiosity.

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

Can the Minister clarify what assessment she has made of the number of self-employed people who may apply for an exemption from paying class 2 contributions, especially as at least half of the increase in employment is self-employed people and, on average, self-employment incomes have fallen to less than £10,000?

[Harriett Baldwin]

We are very pleased that we are backing those who want to take a chance, start their own business and become self-employed. In fact, we have taken measures in previous Budgets to simplify the process so that self-employed people can consider making those contributions alongside their self-assessment.

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

Has the Minister done an impact assessment on public services—for example, the impact that the Bill will have on the national health service and benefits?

[Harriett Baldwin]

I am delighted to hear the first bid from the Opposition not to freeze national insurance for employers and employees. As the hon. Gentleman will know, national insurance contributes a substantial sum to the Exchequer and we have committed as a Government to continue to increase the amount of money that goes into the NHS.

[Mr Cunningham]

The Minister should not twist my words. I asked her about the impact of the Bill.

[Harriett Baldwin]

Of course, the impact of freezing national insurance for employers and employees is that throughout the life of this Parliament they can have the confidence that their national insurance rates will not change—a confidence they would not have if the hon. Gentleman had any say in it.

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

The Minister’s team might helpfully do something about the fact that if one searches online for the impact of this Bill, one gets a 404 error message. It would be useful to have some view on the Bill’s impact.

[Harriett Baldwin]

I thank the hon. Lady for her sensible suggestion. I know that those who put together the impact assessment online will have taken her wise words to heart and will make a change. Clearly, when one brings in legislation to freeze national insurance rates, the impact is that there is no change in national insurance and therefore no impact to report.

[Rehman Chishti (Gillingham and Rainham) (Con)]

I have businesses in my constituency that work hard and do the right thing. They do not want to be clobbered with more taxes. The impact of the Bill is that if people do the right thing and work hard, the Government will support them to succeed in life.

[Harriett Baldwin]

I thank my hon. Friend for making that excellent point. The Government want to back small businesses, entrepreneurs and those who want the certainty over the next five years that if they employ four people on the new national living wage, they will not have to pay any national insurance because of the employment allowance.

[Debbie Abrahams]

May I press the Minister on the point I made in my earlier intervention, which she did not actually answer? What assessment has she made of the number of self-employed people who earn so little that they could apply for an exemption from class 2 national insurance contributions?

[Harriett Baldwin]

When one starts out in business, it is often the case that one earns a small amount, but it is those fantastic people who start businesses, often at their kitchen table, whom the Government are trying to back with the measures in the Bill, which will give them a certainty that they would not have if Labour were in charge.

[Andrew Stephenson (Pendle) (Con)]

Freezing NI is important for my constituents, many of whom are low wage earners and have benefited tremendously over the last few years from the dramatic rise we have seen in the personal allowance. Does my hon. Friend agree that hard-working people already pay enough in tax?

[Harriett Baldwin]

I certainly agree that the Government are keen to take steps to back an economy that continues to grow and to create jobs so that everyone can have the dignity of taking home a pay cheque or starting their own business. We have taken other steps in the Finance Bill to raise the amount that people can make before having to pay income tax, and that is what this Government stand for.

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

Surely the Minister has not forgotten that in the lifetime of the previous Parliament—from 2010 to 2015—no fewer than 24 tax increases were put on working people by her Government. The latest Budget also includes the tax increase on insurance premiums.

[Harriett Baldwin]

That is an extraordinary line of attack. The Government have nearly doubled the personal allowance—the amount that people can make before they pay income tax—from the £6,475 that the hon. Gentleman thought was appropriate at the end of the 2010 Parliament. That is what this Government stand for.

[Mark Spencer (Sherwood) (Con)]

Will the Minister comment on how successful the previous Government were in getting people into work? This policy is in addition to that record and will increase the number of people in employment, taking home a wage packet and providing for themselves.

[Harriett Baldwin]

That gives me a welcome opportunity to state that every Labour Government in history has left office with more people out of work than when they came into office. This is the party of working people and we created many jobs during the last Parliament, which no one expected, and we continue to back businesses and their growth through this Bill.

[Simon Hoare (North Dorset) (Con)]

My hon. Friend may be ruing her invitation to Members to intervene. In a constituency such as mine, where the main focus of economic activity is on micro and small businesses, one of the first questions that a potential employer asks is how much it will cost to take on an additional person. That is the engine that will grow the economy, and the Bill is extremely welcome.

[Harriett Baldwin]

My hon. Friend’s point is well made, because in North Dorset and around the country it is the small and micro businesses that are the engines of job creation. That is why the employment allowance is so important—it will mean that a small business taking on its first employee will not have to pay employers national insurance at all under this Government. Indeed, if every small business took on just one extra employee, we would have full employment. That is why the Government back small businesses.

[Kevin Foster (Torbay) (Con)]

One of the problems with national insurance contributions for employers is that they are a direct tax on employment, making it more expensive to employ someone in both the private and the public sector. It may be worthwhile Opposition Members noting that putting up national insurance contributions for employers would hit local councils severely, giving them an extra bill to pay. The Bill backs business, but it will also help public services by keeping their bills low.

[Harriett Baldwin]

My hon. Friend is right. The Bill’s measures strongly back business and other employers, many of whom will benefit from the employment allowance too.

The Bill legislates our commitment to provide certainty on national insurance rates for the duration of the Parliament. Hon. Members will be aware that our other commitments in the manifesto to lock taxes were that we would not increase the main rates of income tax and value added tax, as well as not increasing national insurance. The Finance Bill will deliver those commitments and this Bill delivers the commitment on national insurance.

[Rehman Chishti]

The Bill is very much welcome and goes hand-in-hand with what the Government are doing in other areas, such as the local growth fund. The Government have set aside £12 billion, £7 billion of which has already been spent on building homes and supporting businesses. The wider picture is that the Government are supporting businesses on the front line, creating homes, jobs and opportunities. That is the right way forward.

[Harriett Baldwin]

My hon. Friend is absolutely right. This is part of a package of measures the Chancellor announced in the July Budget.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

The Office of Tax Simplification has been asked to look at proposals to merge income tax and national insurance. Will the Minister say where we are with that? In particular, what assessment has been made of its possible impact on pensioners?

[Harriett Baldwin]

My hon. Friend is correct. In the summer Budget, the Chancellor announced a consultation on behalf of the Office of Tax Simplification. It is currently undertaking its work. I expect my right hon. Friend to take its recommendations into account in due course.

Turning to the detail of this five-clause Bill, it provides that the rate of class 1 national insurance contributions paid by employees and employers must not exceed existing rates.

[James Cartlidge (South Suffolk) (Con)]

On a point of clarification—this may be a bit cheeky—I take it that we could reduce national insurance if we wanted to. The Bill would not stop us doing that.

[Harriett Baldwin]

That is not a cheeky question; that is a very sensible question. It is indeed the case that we will still be able to reduce levels of national insurance. This is only a ceiling, as is noted in the Bill’s title.

It has been the convention that the level of the upper earnings limit for national insurance is aligned with the level of the higher rate threshold for income tax. The Bill formally limits increases to the upper earnings limit, so that its annual equivalent amount cannot exceed the level of the higher rate threshold for income tax. Both the restriction on national insurance rate rises and changes to the upper earnings limit come into force on Royal Assent and apply until the start of the tax year following the date of the first parliamentary general election to take place after Royal Assent.

The Bill provides certainty for employers and for employees that the national insurance rates that affect millions of employees and employers across the UK will not rise for the duration of this Parliament, and that the upper earnings limit will not exceed the higher rate threshold. The Bill demonstrates the Government’s commitment to provide certainty on tax rates for the duration of this Parliament. I commend it to the House.

13:53

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

As the Minister described, the Bill provides for the Government’s commitment, as set out in their manifesto, to a tax lock: a commitment not to increase the rates of VAT, income tax or national insurance in the next Parliament. The Bill provides for the national insurance element of that pledge. Such a measure has to remain separate from the Finance Bill currently going through Parliament, because statutory provisions regarding national insurance contributions cannot be included in the annual Finance Bill.

As we have heard, the Bill prevents any increase in the current rates of class 1 national insurance contributions paid by employees and employers for the duration of the 2015-20 Parliament. It also provides that the upper earnings limit cannot exceed the higher rate threshold, which is to say that the upper earnings limit cannot exceed the sum of the personal allowance and the basic rate limit.

Responding to the tax lock announcement during the election campaign, many people wondered why such a commitment etched into the statute book would even be necessary. If Ministers—indeed, the Prime Minister—commit to not raising income tax, national insurance contributions or VAT in the run-up to an election, surely such a commitment should be taken at face value. Apparently not in the case of Conservatives, who perhaps felt that the low levels of trust in their pledges were such that they would have to go much further. No wonder, when we consider that the Prime Minister made a similar commitment in 2010 not to raise VAT, only then to raise it to 20% after entering Downing Street.

[Harriett Baldwin]

Will the hon. Lady confirm that in her party’s manifesto, on which she just stood, there was a similar commitment not to increase national insurance rates, yet the new leader of her party has stated publicly that he would like to increase them by 7% for higher earners?

[Barbara Keeley]

I will come on to my party’s manifesto commitments in a very short while. I do not think it is helpful, and I am not going to respond, to any interventions or points made by Government Members that refer to things the current Leader of the Opposition said before he was Leader of the Opposition. [Interruption.] That is a different situation. What I have just said is that when the Prime Minister was elected in 2010, he raised VAT when he had said that he would not do so.

Beyond the broken pledge on VAT, which is a serious matter—[Interruption.] Government Members can sit giggling, but these are very serious matters that hit the country hard. It is worth remembering that the Prime Minister appeared to rule out cuts to tax credits when appearing in front of a special “Question Time” audience during the recent election campaign. Yet, we are due to vote later today on that measure, and the Government’s cuts to tax credits will leave some 8 million families on average over £1,000 a year worse off. That is a shocking broken pledge.

[Simon Hoare]

Unlike the hon. Lady, not all Government Members are obsessed with the new leader of the Labour party. Surely she has to accept that on broken promises, the greatest albatross around her party’s neck is the previous Prime Minister, Mr Brown, who promised the end of boom and bust? That was signally incorrect and is the biggest albatross from which the Labour party can never be freed.

[Barbara Keeley]

Government Members should stop going back in time. I have just referred to the fact that the Prime Minister promised before the 2010 election not to raise VAT. [Interruption.] Look at your record. You’re in government. You’re defending your Bills.

[Madam Deputy Speaker (Natascha Engel)]

Order. The hon. Lady is using the term “you” which refers to the occupant of the Chair, not Government Members.

[Barbara Keeley]

Thank you, Madam Deputy Speaker, that is really helpful. It is sometimes easy to forget.

I have made the point and I am prepared to come back to it again and again. In five years, there have been two serious broken pledges that have cost the British public dearly.

Let us get back to the Bill. [Hon. Members: “Hear, hear.”] I did not make the diversion. Let me be clear, Labour in opposition wholeheartedly supports the principle of not raising taxes for working people. The Minister has just questioned me on this. During the election campaign, it was the Labour party that first pledged not to increase national insurance contributions. In fact, we did it before the election campaign, because the pledge was made on 25 March. As such, we will not be opposing the Bill today. Regardless of that, however, there is no doubt that this tax lock has become the height of gimmickry. It was said to be such during the election campaign and it remains so today.

Let me give you, Madam Deputy Speaker, and hon. Members present, some quotes relating to the tax lock. On 29 April, the Financial Times, lamenting what it saw as the level of gimmickry coming all too often from the Conservative campaign, put in its leader:

“What is more of a shock is the stream of gimmicks and poor policies coming from the Conservatives…arguably the silliest idea yet came this week when David Cameron proposed an act of parliament that would make it illegal for a future Tory government to raise various taxes to close the deficit: VAT, income tax, and national insurance…the UK fiscal deficit is still high. Removing the option of tapping revenue streams that in aggregate raise more than £350bn for the exchequer would make the challenge needlessly harder.”

[Andrew Stephenson]

I hear what the hon. Lady is saying—she believes the Bill is purely a gimmick—but would she not agree that this so-called gimmick will save money for millions of hard-working families? It is not a gimmick to the hard-working people we represent.

[Barbara Keeley]

In a minute, I will record how other commentators also think it is a gimmick. I have said we are not going to oppose the Bill because we do not want working people to pay more, but we have just seen in this Parliament a tax-raising Budget. I will talk more about that in a moment.

One of the main concerns about this policy gimmick is the serious constraints it will place on the Treasury and the Government’s ability to raise taxes or maintain the flexibility to raise revenue in response to economic events. As Alex Henderson, tax partner at PricewaterhouseCoopers, said:

“Arguably the lock means the Government has less flexibility on where tax revenues could come from, with the burden more thinly spread.”

He also pointed out that it would not constrain Ministers’ ability to raise revenue from the same taxes in other ways—for example, by delaying the uprating of thresholds and removing reliefs. So it is not true that people are not going to pay more; there are other ways. We know the Chancellor used such measures, otherwise known as fiscal drag, to great effect in the last Parliament, because, according to the Institute for Fiscal Studies, they have raised taxes of roughly £64 billion a year by doing so. The headlines people read do not indicate tax rises, but the measures used do.

Simon Walker, director general of the Institute of Directors, said:

“While IoD members are opposed to increases in the rates of VAT, Income Tax and National Insurance, we consider it imperative that the Government’s commitments do not prevent bold tax reforms to both simplify taxation and reduce the burden upon businesses and individuals.”

As Paul Johnson, director of the Institute for Fiscal Studies, pointed out, the tax lock could rule out sensible tax reforms, such as the treatment of national insurance contributions for the self-employed, which has already been referred to.

[Lucy Frazer (South East Cambridgeshire) (Con)]

I am a little confused. The hon. Lady has said that she supports the policy but is now quoting a load of people who do not support it. Surely, she supports it because it gives hard-working people the chance to keep more of their income and gives businesses certainty about the number of people they can employ.

[Barbara Keeley]

The hon. Lady confuses our not opposing a pledge that we made first on 25 March—it is our pledge, if you like—with a Bill that I am denouncing as a gimmick. It is not just me who is denouncing it as such; a range of commentators have done so as well.

[Christopher Pincher (Tamworth) (Con)]

Will the hon. Lady give way?

[Barbara Keeley]

No.

Paul Johnson believes that the tax lock could rule out sensible tax reforms. That is the answer to the question from the hon. and learned Member for South East Cambridgeshire (Lucy Frazer). The commentators and others who work day in, day out on these issues think it ties the Government’s hands too much. Paul Johnson said it was

“extreme to tie your hands for such a long period with the main rates of the three largest taxes”.

It is worth reminding Members of The Guardian’s view of the tax lock—Members may not have read it—as set out in its editorial on 29 April.

[Michael Ellis (Northampton North) (Con)]

Nobody reads it.

[Barbara Keeley]

I can assure the hon. Gentleman that Opposition Members do. It read:

“No one can see into the future. So a responsible chancellor ought to be duty-bound to keep options open, to be able to respond to events and adapt to unexpected changes in the economy, not close them off. Instead, the Conservatives are now committed to tying their hands behind their back, placing the taxes that provide roughly two-thirds of all government income – income tax, national insurance and VAT – wholly off-limits, come what may, for five years. This is madness.”

[Harriett Baldwin]

So it is not a gimmick then, but welcome certainty for families and business.

[Barbara Keeley]

The hon. Lady is not listening.

The Financial Times leader, to which I referred earlier, said:

“It is unwise for the Conservatives to bind their hands, legally or otherwise, against using tax rises to close the deficit. Much of public expenditure is unavoidable or politically protected”—

that is the important thing; these days certain budgets are politically protected—

“so that ever more savings need to be found from the shrinking funds for welfare, social care, justice and defence. It makes sense to leave oneself the option to turn to tax in times of adversity to smooth the path of consolidation.”

Nothing better reflects the gimmickry of this measure than the fact that the recent summer Budget included some significant revenue-raising measures that amounted to significant tax rises for millions of people. As the Office for Budget Responsibility set out, the tax-raising measures announced in the summer Budget amounted to nearly £16 billion of tax rises by 2020-21—we touched on this point last week—£3 billion of which will come from changes to vehicle taxation, as well as increases in the insurance premium tax, which will raise £8 billion by 2020-21.

Last week, we debated the increase in insurance premium tax, and as I pointed out then, some of the UK’s biggest insurers, including Aviva and RSA, have confirmed that they plan to pass on the cost of that tax increase to customers. Experts say that many people will now see their household insurance bills rise by between £50 and £100 a year, if they have more than one car and they insure their buildings and contents. I highlighted the fact, and still think it a serious point, that young drivers would be hardest hit, and many might wrongly take the risk of driving uninsured. In the last week, therefore, we have seen a £50 to £100 tax bombshell for millions of families, and this tax-lock Bill does nothing to guard against that.

What is more, the Government are yet to offer any assurances that they will not raise insurance premium tax further in subsequent Budgets. Given that a Conservative peer, Lord Northbrook, has called insurance premium tax an “easy target”, I invite the two Treasury Ministers present to say whether they will be increasing insurance premium tax any further. Would either like to say what their intentions are?

[Harriett Baldwin]

Madam Deputy Speaker, may I seek your guidance about whether we ought to be discussing something that Parliament settled last week or the Second Reading of this Bill?

[Madam Deputy Speaker (Natascha Engel)]

The hon. Lady is experienced enough to know that if she wishes to raise a point of order, she can do so by way of a point of order. However, the point she raises is a matter for discussion, so I invite the shadow Minister to respond, if she wishes.

[Barbara Keeley]

I think that the whole range of the tax regime and national insurance is under discussion today.

Given that we hear no assurances that there will not be further increases to insurance premium tax in this Parliament, I want to make it clear again that we support the principle of not raising taxes for working people. That is why we do not oppose the Bill. As I mentioned earlier, before the election campaign started properly, we pledged not to raise national insurance contributions, so this could rightly be described as our idea.

[Christopher Pincher]

The hon. Lady says that the Opposition will not oppose this welcome measure. Does that mean they will vote for it, or simply abstain?

[Barbara Keeley]

As I understand it, there will not be a vote because it will not be opposed, but I cannot speak for other parties in the House.

The Government’s tax lock, of which the Bill forms a part, is nothing more than a gimmick of epic proportions, as I have outlined and demonstrated with many comments from people outside the House. It speaks volumes about the lack of belief that Conservatives have in their own policy commitments. We vote annually on tax legislation, and the Government regularly introduce Bills on NICs alongside Finance Bills—we have already heard about suggested changes to NICs—and, as such, primary legislation, debate and Division are already required in the House.

[Mark Spencer]

The hon. Lady keeps referring to the measure as a gimmick. It would be helpful if she could explain why, when the Labour party commits to it, it is not a gimmick, but when the Government commit to it, it is.

[Barbara Keeley]

I do not think that the hon. Gentleman is listening. I know that Conservative Members often sit there with their Whip’s brief and try to find a way of working in some point that the Whips have given them to say. [Interruption.] I do not know what the hon. Gentleman is looking at. The point is, as I said earlier, this is a gimmick because we do not need legislation. A commitment was given on this. All that is required is that the Government and the Prime Minister stick to that commitment. It is a question of delivering on what was pledged. We do not need a Bill for every single element of what a party has pledged in the run-up to an election campaign. I am questioning—and people outside the House are questioning—why we need a Bill for the Government to bind themselves not to increase the rates, which they have already set out. It is very strange indeed.

[Dr Andrew Murrison (South West Wiltshire) (Con)]

I can understand why the shadow Minister does not want to comment on her new leader’s position, but will she comment on the shadow Chancellor’s position? The hon. Member for Hayes and Harlington (John McDonnell) recently said that he would commit his Administration to a 7% rise in national insurance and to a 2.5% increase in corporation tax. What she is saying now seems to suggest a change in position. Will she confirm that that is the case?

[Barbara Keeley]

We are not signalling any change of position. It is amusing to hear this from Conservative Members, after a tax-raising Budget that is taking £8 billion from British people through the insurance premium tax, and after they put VAT up to 20%—when they promised not to do it. The absolute gall of Conservative Members in raising these points is amazing.

[James Cartlidge]

Will the hon. Lady give way?

[Barbara Keeley]

No, I will not.

The tax lock restricts the Government’s ability to respond to unexpected economic events. That is why this Bill is seen, both outside and inside this place, as a gimmick. If we have learned anything in the last decade, it is that such flexibility is absolutely essential. Indeed, it was this flexibility at the time the Labour Government left office in 2010 that meant we had an economy recovering and growing once again. Above all, this tax lock provides no protection to millions of hard-working families, who, if the statutory instrument on tax credits is voted through by Conservative Members later today—

[Andrew Gwynne]

Is it not indicative of the level of trust in politics and politicians generally, but specifically in this Government and their record on tax, that they need to come to the House of Commons to legislate not to increase a specific tax, rather than allow people to accept their pledges at elections at face value?

[Barbara Keeley]

Indeed. I agree with my hon. Friend and I thank him for raising that point. I think that Ministers have got to think about what they are doing to public trust if they have to introduce gimmicks such as this Bill—it is a gimmick, and was seen as a gimmick by a host of commentators outside this place.

[Harriett Baldwin]

Will the hon. Lady give way?

[Barbara Keeley]

No, I have nearly finished.

As I have argued, the Bill provides no protection for millions of hard-working families, and if the statutory instrument on tax credits is voted through by Conservative Members, those families will be £1,000 a year worse off on average. That will be a direct result of the Chancellor’s fiscal decisions, and I believe many Conservative Members will come to regret it. Ministers should not be wasting their time on legislative gimmicks such as this so-called tax lock.

[Lady Hermon]

I am most grateful to the hon. Lady for allowing me to intervene. She will know that the Bill extends to Northern Ireland. I have listened very patiently to what she has said here today, but I think the people of Northern Ireland and of the United Kingdom generally are entitled to know the policy of the Labour party, the main Opposition party, after a change in the leadership and with a new shadow Chancellor of the Exchequer. What exactly is their policy on national insurance contributions? Is Labour not going to increase them? Does Labour agree with the Government that they should not be increased for five years? Is that the clear policy of the Opposition?

[Barbara Keeley]

Yes, it is. I am the shadow Treasury spokesperson responsible for the Bill today. [Interruption.] Well, I am standing here today. We made the pledge first. I am very pleased that the hon. Lady raised the question in the manner she did. As I say, we made the pledge first: it is our pledge. Let us get back to that point.

Rather than wasting their time with gimmicks such as this so-called tax lock, Ministers should perhaps direct their focus on supporting low and middle-income families. [Interruption.] Ministers should really bear in mind that every time they sit there laughing on a day when they are going to take £1,000 off 8 million hard-working families, they simply provide grist to the mill of people who contribute to newsletters up and down the country. The Government’s fiscal policies are too serious for Ministers to sit there laughing. I really advise them to stop it. They should direct their focus at supporting low and middle-income families who will be worst hit by the summer Budget of this Conservative Government—with or without a tax lock.

14:15

[Kit Malthouse (North West Hampshire) (Con)]

It is often forgotten that companies do not actually pay tax. All they do is collect their tax on behalf of the Government from their customers and pass it on. If we go into the Tea Room and buy a Mars bar or whatever, we pay the cost not only of the ingredients, the machines and the capital deployed by the company, but of the corporation tax, the duty, the VAT and indeed national insurance as part of the price. Over the last 30 years that I have been in business, it has certainly been the case that the moving parts in running a business have become ever more complex, and tax in the general sense has occupied ever more time of the business person, particularly those who run small businesses. Anything that injects an element of certainty into the tax horizon for business is therefore extremely welcome, particularly at a time when lots of other things are changing for small businesses. The introduction of reforms in pensions, particularly auto-enrolment, changes to the living wage and other employment regulations create an atmosphere in which running a business feels very much like a game of 3-D chess.

We can look around the world at tax regimes for business where stability and lack of change have been a constant for some time and see success, irrespective of the rates. If we look at the United States, corporation taxes are actually quite high in comparison with this country—pleasingly—but also with the rest of the world. The US economy does extremely well, largely because tax rates have not changed for decades. The US has elected for stability and a lack of change to the relative level of the rate because it knows that one of the things most valued by businesses is certainty. Whenever people are starting or running a business, they spend their entire lives forecasting what the world is going to look like over the next two or three years. When people do that, they know that the day after the forecast, it will be wrong because of the many different moving parts, as I said. One area that business should be able to rely on for some certainty and stability is government. So the introduction of the Bill, which provides a four-and-a-half or five-year time horizon on national insurance, is extremely welcome.

There are people who might say that this is a gimmick, but much of what we do in the House is about signals. Economics is all about psychology and the individual choices that people make.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

The hon. Gentleman talks about the need for certainty and explains why he believes that the Bill will give certainty to small and medium-sized enterprises. If certainty is so important, why have this Government removed the climate change levy exemption for many SMEs?

[Kit Malthouse]

The hon. Gentleman will have to ask my right hon. Friend the Chancellor of the Exchequer that question next time he appears. I hope that the hon. Gentleman would support me in urging those on the Treasury Bench generally to provide a level of certainty and in many ways to be slower about their decisions.

[Christopher Pincher]

My hon. Friend is generous in giving way. The question of certainty has been raised and eloquently explained by him. Does he agree that, when Members question certainty, they should ask themselves why they ask for referendums on whether they should be part of the United Kingdom, which surely breeds uncertainty?

[Kit Malthouse]

My hon. Friend has made a strong point. During the debate on the referendum concerning our possible divorce as nations, businesses piped up very loudly about what was likely to be a very uncertain horizon for them on the far side of the debate. The majority opted for the status quo, because a bird in the hand was worth God knows what in the bush.

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

I can tell the hon. Gentleman that it was certainly worth two Lords in the Lords.

In fact, the uncertainty has arisen as a result of our lack of independence. Scotland lost powers under the Energy Act 2013. The Government made a lot of promises on that. Now we are to lose the renewable energy obligation in Scotland because of the uncertainty caused by our losing the referendum. I wanted to put that on record, and to give the hon. Gentleman a bit of clarity.

[Kit Malthouse]

These things always involve a balance. A point that I have often made in another elected chamber—this is one of the things that dismays me a little—is that under the last Government we became used to having, effectively, two Budgets a year. There were two points during the year at which businesses, and indeed everyone else, had to hold their breath because there might be some change in the fiscal environment. Pleasingly, however, over the last four or five years, that change has been generally beneficial. The direction of travel of the United Kingdom has been towards a lower-tax environment for business, and we have seen the benefit of that in the jobs market and the growth of the economy over the last few years.

[Mark Spencer]

Does my hon. Friend agree that taking on staff constitutes a large responsibility for employers? They know that they are responsible not only for their employees’ health and safety, but for their future financial security, because the employees’ mortgages depend on their careers in the business. Anything that the Government can do to remove a barrier from the ability to employ someone has to be welcomed.

[Kit Malthouse]

That is exactly the point that I am making. Businesses are much more likely to employ people if they have some certainty about the overall cost of employment—not just wages, but on-costs such as expenses. Within that, national insurance is a very significant cost, and providing an element of certainty over the next four or five years is therefore extremely important.

Let me now return to a point that I was making earlier about signals. When I was Deputy Mayor for business and enterprise at City Hall, a position that I occupied for three and a half years, I was in charge of foreign direct investment. My job was to go around the world encouraging people to come and invest in London and the south-east. One of the things I learnt from that experience was that signals from City Hall about what we were willing to do, and how welcoming we were likely to be to particular companies, individuals or investors, was critical to whether they wanted to come here. In that context, an element of certainty and predictability, not just political and legal—we are seen to have that around the world—but fiscal, was absolutely vital

[Rehman Chishti]

Of course I agree with what my hon. Friend says about certainty and clarity. Does he not think that the shadow Minister’s argument—that when a promise has been made, there is no need to legislate for it—is quite contradictory? The Blair Government passed more legislation than any other Government: they passed 26,849 pieces of legislation. Labour cannot have one rule in government and another in opposition. Clarity is the way forward.

[Kit Malthouse]

My hon. Friend is absolutely right. It must be said that the Brown years injected an enormous sense of uncertainty into business. Although, for some of that period, we were benefiting from what could be described as a global boom, businesses existed in an environment, and on a battlefield, that was for ever changing. Anything that calms down such situations, and makes decision making much more predictable, is key.

That is particularly important when it comes to foreign direct investment. When businesses want to locate large manufacturing plants that are both capital and labour-intensive, employment taxation and employment law are the two biggest drivers of whether they decide to come to the UK. The Bill will make employment taxation much more predictable, and seen to be predictable, for the next five years, and not just on the say of a “here today, gone tomorrow politician”—was it John Nott who objected to being so described? The facts will be there on paper, in black and white, and the fact that they can be relied on will make a big difference to foreign direct investment decisions.

[Andrew Stephenson]

I applaud what my hon. Friend has said about stability and certainty in the business community, especially in relation to foreign direct investment. During Business questions this morning, I mentioned the aerospace growth partnership. The aerospace sector has longer product cycles than other sectors. It is important for us to support such sectors, and for firms investing in aerospace to have a long period of certainty. The UK’s aerospace sector is the second largest sector in the world, and we are keen to support it.

[Kit Malthouse]

My hon. Friend has made a powerful point. Some of the sectors that are the most critical to the UK’s future success—aerospace, technology and life science, in which I have a particular interest—are international businesses that make huge bets on countries on a regular but long-term basis. Some predictability is therefore absolutely key.

My final point is about inflation. We are living in a financial atmosphere in which inflation will be of concern over the next five to 10 years, and we need to be careful to ensure that it does not get out of hand. We have been extremely successful in doing that so far. As I have said, national insurance forms a large part of prices. The Government—any Government—must bear in mind that if taxes rise, so do prices, over time. By injecting an element of freeze into the national insurance bill, we are also doing our bit to relieve whatever inflationary pressures may be generated in the economy.

[Kelvin Hopkins (Luton North) (Lab)]

The hon. Gentleman talks about inflation as if it were the danger, but the real danger at the moment is deflation. Japan has been struggling with deflation for a decade and more. There is a serious problem across the world caused by prices rising below the threshold deemed appropriate by central banks, especially in Britain, and in America, the threat of rising interest rates is terrifying the world that we may be plunged into another economic crisis. It is deflation that is the problem; inflation is not even on the horizon.

[Kit Malthouse]

The hon. Gentleman may have a point at the current time, but some of us are of an age to remember the destruction that was wreaked on the last generation by inflation. My grandparents’ pensions were destroyed by it. I hope he will forgive me for having an atavistic fear of it, a fear that it may, at any point, appear over the horizon. Anything that we can do to defray that fear, either now or in the future, will be welcome.

I support the Bill. I think that it is a good idea. I will vote for it first because of the certainty that it will bring for business, secondly because of the international signal that it will send, and thirdly because I think that anything we can do to bear down on any inflation, either now or in the future, will be extremely welcome.

14:28

[Stewart Hosie (Dundee East) (SNP)]

As the Minister said, the Bill will prevent any increase in the current rates of class 1, class 1A and class 1B national insurance contributions paid by employees and employers for the duration of the current Parliament. It will also provide that, for each year, the annual upper earnings limit cannot exceed the higher-rate threshold, which is the sum of the personal allowance and the income tax basic rate. All that is very sensible. There is nothing wrong, in principle, with any Government’s providing certainty in the tax code for the duration of their term in office. However, we clearly do not need legislation to do that.

As has already been said—so I shall say it only once—the Bill is a gimmick. It also demonstrates, in many ways, a lack of confidence. I shall say more about that shortly, but the key point is that placing such an arbitrary and unnecessary restriction on the Government’s ability to respond to unforeseen events may yet come back to haunt them.

The Bill results from the Finance Bill, which was published in July, and which provides for the tax lock on national insurance contributions, income tax and VAT. As was said earlier, it is intended to apply to a tax year that comes after the date of the Bill’s Royal Assent and before the first general election after that date. The time scope is therefore rather limited. There is also a technical issue. This is a separate Bill; the measures are not in the Finance Bill because statutory provisions for NI cannot be included in it.

However, none of this should be any surprise to us. The Conservative manifesto said that in government the Tories would not increase the rate of VAT, income tax or NICs in this Parliament. That should have been enough; the legislation is not required. In a speech ahead of the general election the Prime Minister confirmed that the tax lock also meant there would be no extension to the scope of VAT or any increase in the ceiling set for the main rate of NICs for employees.

[Kelvin Hopkins]

The hon. Gentleman mentioned VAT and the lock that the Government propose. Does he agree it would have been more impressive if they had had that lock before they raised VAT from 15% to 20% rather than after?

[Stewart Hosie]

That is the kind of thing any Opposition politician should say about any set of Tory policy decisions that ends up with the kind of outcomes the hon. Gentleman describes.

The Government also committed to legislating within 100 days of the election to rule out increases in the rates, which is what we are seeing today, but of course serious unintended consequences for spending and for other taxes may flow from this measure. Let me explain. The Government laid out in the summer Budget discretionary consolidation—that is, cuts and tax rises to you and me—amounting to £97 billion in this Parliament. Of that, new draconian cuts to welfare amounted to a full third—£33 billion—but the entire spending plan was predicated on, among other things, NICs bringing in £115 billion this year, £126 billion next year, rising to almost £152 billion in 2021. That is a forecast rise in revenue yield from NICs of 9.6% this year to next, 4.3% the year after, 4.7% in 2017-18 to 20118-19, and a rise of over one third—£37 billion—between last year and the end of the forecast period.

One of the questions the Minister has to answer today is this: given the arbitrary freeze on NICs and some other rates, should the forecast yield be significantly less than expected, will other taxes rise and if so, which ones; and will the Chancellor take the axe to yet further spending, perhaps on pensions, or will borrowing rise and deficit reduction forecasts simply be abandoned, delivering exactly the same failure on debt and deficit we saw in the last Parliament?

[Mr MacNeil]

Of the options my hon. Friend has given, may I go for option three, which means the Government will borrow? As every schoolboy in Scotland who has been paying attention knows, the UK has not paid its way since 2001; it has borrowed each and every year since then. I would go for option 3 for the UK: in debt, with a black hole.

[Stewart Hosie]

My hon. Friend is right. Harking back to 2009 and the Fiscal Responsibility Bill, the then Chancellor made great play of legislation to bring down the debt and deficit, and what was the sanction should he fail? “We would just change the targets,” he said. I suspect the current situation is rather similar, and I may come to what the current Chancellor said about that particular legislation shortly.

[Mr Stewart Jackson (Peterborough) (Con)]

The hon. Gentleman must be vying for the 2015 Caledonian brass neck award. On the arc of prosperity of Iceland, Ireland and Scotland, if we are talking about black holes, would he care to enlighten the House about the £8 billion black hole predicated on the dwindling price of oil, which means that if the Scottish people had made a different decision the country and the constituency he represents would be bankrupt?

[Stewart Hosie]

The £1.5 trillion black hole, which is the UK national debt, is of rather more significance than any cyclical deficit any country may have, but then I suspect the hon. Gentleman probably knew that already.

Returning to the scope of the Bill, it is important that the Minister says what will happen should the yield forecasts be less than planned. That is important for his Government, too, because their rationale, as stated in their manifesto, was focused on

“reducing wasteful spending, making savings in welfare and continuing to crack down on tax evasion and aggressive avoidance.”

That allowed them to commit to no increases in VAT, income tax or NICs. They argued:

“Tax rises on working people would harm our economy, reduce living standards and cost jobs.”

I have no problem with tackling genuinely wasteful spending, such as Trident, or clamping down on tax evasion, but it is this Government’s attack on welfare which is harming the economy, reducing standards of living and threatening the growth needed to ensure the forecast yield from NICs is maintained in the way the Red Book forecasts suggest.

[Kelvin Hopkins]

I have a great deal of sympathy with what the hon. Gentleman has been saying. He mentioned the tax rises that have taken place which have brought the Government considerable increases in revenue, but does he agree that those taxes tend to be regressive and the one thing the Government are protecting is the progressive tax, which is much fairer, called income tax, which they have sought to reduce for high income earners?

[Stewart Hosie]

It is certainly the case that during the downturn the decision to remove the 50p rate of tax was wrong. We would certainly argue that in the current climate that 50p rate should have been maintained. In that respect at least, I agree with the hon. Gentleman.

I wish to raise at this point the Conservatives’ future plans to replace national insurance because that is pertinent to the measure under discussion. In July, the Financial Secretary commissioned the Office of Tax Simplification to review the interplay between income tax and NICs. He said:

“I would like the Office of Tax Simplification to look at what the impacts, costs and benefits of closer alignment would be and to set out what the necessary steps would be to achieve closer alignment. We believe greater integration of the two systems has the potential to remove economic distortions, reduce burdens on business, and improve fairness across individual earners.”

These are all sensible objectives, and I assume this is still a longer-term Government objective, so let me ask the Minister how this Bill assists in the delivery of that aim.

I said earlier in my contribution, and also in a debate on the financial statement in July, that the Chancellor promised a tax lock but that legislation to stop tax rises was

“just a gimmick and no one is going to buy it”—[Official Report, 8 July 2015; Vol. 598, c. 348.]

Indeed my hon. Friend the Member for Edinburgh East (Tommy Sheppard) made the same point:

“If these provisions are included in what”

is now this Bill today

“it will only take a clause”

in future legislation

“to overturn them. They are therefore literally not worth the paper on which they are written.”—[Official Report, 21 July 2015; Vol. 598, c. 1441.]

He was right, of course, and that ties in with what I said earlier about a lack of confidence.

Of the Bill that became the Labour Government’s Fiscal Responsibility Act 2010, where levels of debt and deficit were planned but there was no sanction if they were broken, the current Chancellor said that it would achieve

“a constitutional first of imposing no legal sanction on the person who is likely to break it. No other Chancellor in the long history of the office has felt the need to pass a law in order to convince people that he has the political will to implement his own Budget”—[Official Report, 26 November 2009; Vol. 501, c. 708.]—

until now.

Let me reprise that for this Bill. This is a constitutional second. Only one other Chancellor has felt it necessary to bring legislation before this House in order to convince people that he has the confidence to implement his own Budget. We saw Gordon Brown go from Joseph Stalin to Mr Bean; I fear the First Secretary may be reverting to a rather rusty clunking fist.

As has been said, a large number of stakeholders have contributed to this debate, and key from our point of view are the words of Howard Archer, chief European and UK economist at IHS Economics, who said that such a move would restrict the Chancellor’s ability to achieve his targets:

“In particular, if the public finances fall markedly short of their targets, the chancellor would have to face making even more spending cuts and/or raising other taxes. Or just accepting the missed targets. There really still needs to be a lot more clarity on the whole Conservative fiscal policy”.

That is absolutely right.

It is also worth noting the comments of Jonathan Portes from the National Institute of Economic and Social Research. He said the pledge not to increase the main taxes

“considerably reduces our flexibility if things turn out different from expected. This is why I have absolutely no doubt that Treasury and Bank of England officials were tearing their hair out at this.”

What discussions, if any, have the Minister, the Chancellor or the Treasury had with the central bank about these proposals and the inherent lack of flexibility that they generate?

Let me turn now to some of my final questions. I ask Members to bear with me as I describe some of the complexity of the current NICs regime. Employees pay NICs on their earnings if they exceed the lower earnings limit, which is set at £112 a week. A zero rate of NICs is charged on earnings between the lower earnings limit and the primary threshold of £155 a week. Earnings above the primary threshold are charged NICs at a rate of 12%, subject to a cap on the upper earnings limit, which is set at £815 a week. Earnings above that are set at 2%.

Employers pay NICs on employee earnings at a rate of 13.8% on earnings above the secondary threshold, which, at £156 a week, is a difference of £1 from the primary threshold for employers. There is no ceiling on secondary class 1 NICs.

As everyone in the Chamber knows, self-employed people pay a weekly flat rate class 2 NIC. They may apply for an exemption from paying class 2 contributions if there are no profits, or if their profits are less than, or expected to be less than, £5,965 for the year. This replaced a small earnings exemption from April this year. In addition, they may be liable for separate class 4 earnings, and on it goes.

Tax simplification is a great idea, and we can see precisely why. Will the Minister explain how these proposals will make the NICs regime more straightforward? In addition to those categories, individuals may be entitled to make voluntary class 3 contributions to avoid or fill gaps in their NI record to ensure that they qualify for basic retirement pension and bereavement benefits. Does the Minister expect more or fewer people to make additional voluntary contributions as a result of the tax lock to the NICs described in the Bill, and will there be any encouragement for them to do so?

The majority of NICs receipts are paid into the national insurance fund, which is separate from all other revenue raised by taxation. The fund is used exclusively to pay for contributory benefits. If the revenue yield from national insurance does not rise in the planned heroic way that I described earlier, can we expect to see cuts directed at the contributory benefits that people have already paid for? There is often unintended consequence from any legislative change—and sometimes perfectly foreseeable behavioural change that may affect yield forecasts. That is an argument that Treasury Ministers have, from time immemorial, fallen back on when they are implementing bad decisions. What assessment have the Government undertaken to predict whether any negative behavioural change is likely to result from these measures, particularly given the differential in rates and thresholds between employee, employer and self-employed national insurance contributions?

Finally—this is really my most important question and at the heart of our disquiet over a legislative attempt to provide certainty over this Parliament—as the majority of NICs receipts are paid into the national insurance fund and that fund is used exclusively to pay for contributory benefits, may we have a cast-iron guarantee from the Minister today that this Bill is not and will not be the start of an attack on, or an erosion of, the contributory principle that applies to national insurance contributions?

14:44

[Lucy Frazer (South East Cambridgeshire) (Con)]

The Bill is about low taxation. Low taxation is critical to encouraging our businesses and our economy to grow. Low taxation encourages entrepreneurship, and it means that work pays. The commitment not to increase national insurance contributions is a key part of the Government’s triple lock to ensure that we have low taxation for our working nation. As it is paid by both employer and employee on wages, it is an important part of our jobs tax.

Many sectors rely on their people knowledge. I have many such sectors in my constituency. Only a few weeks ago, I visited Cambridge Online, which deals in computer software. Its chief executive officer said to me, “We are nothing, Lucy, other than our people.”

Last week, I was at Marshall, which employs 3,000 people and is one of the biggest employers in my constituency. It spends a huge amount investing in apprenticeships and in training up the next generation who will be its workforce. Also in my constituency is the science park, which is a key place for biotech industries. Innovation and enterprise are fundamental, and individual experience and individual knowledge of people are key. Cambridge University is on our border, and the academics and their great research are fundamental to our economy. At the source of all that is people. Keeping national insurance contributions at the same level is critical to encourage employers to employ, to encourage the growth of businesses and productivity, and to ensure that businesses can recruit and expand. However, this Bill is about not just low tax, but certainty. As businesses expand, it is good for them to have foresight in respect of their expenditure, and that is what we are providing. We are providing them with certainty. As has been mentioned, that is particularly important for foreign investment. My constituency has biotech industries. We are competing not with Birmingham or Leeds, but with silicon valley. What we need is certainty that foreign investors will invest in our community and our businesses.

It has been said that this measure is a gimmick. It is not. It may be that the Bill is not required, but that does not mean that it is not welcome. It provides the certainty that we need. This Bill is about low taxation, certainty and transparency, as it tells people what this Government are doing, and it will help with jobs, and therefore our economy, in the future.

14:47

[Helen Goodman (Bishop Auckland) (Lab)]

I am pleased to take part in this debate, even though it is on a gimmick, and we are not so used to debating gimmicks in the Chamber. The Chancellor is a paradox. He constantly wants legislation that prevents him from doing things—measures in the Finance Bill to avoid taking further decisions on income tax or VAT, today’s legislation on not making any changes to NICs, and legislation at some point in the future on the fiscal stance and his proposals to have a permanent budget surplus.

I am afraid that this Bill is completely unnecessary. As the hon. Member for Dundee East (Stewart Hosie) said, the truth of the matter is that if there were a crisis and the Chancellor suddenly needed to raise more money, he could repeal this Bill. It does not give us the stability and certainty that the Government claim.

[James Cartlidge]

If we reach that point and the provisions have to be repealed, that will be a public act. This is an open and transparent Government. If we make this promise and then legislate, it is extremely difficult to repeal it on the sly. The Labour Government broke promises on the sly, hoping that we would not notice. It is impossible to do that with this type of approach.

[Helen Goodman]

I am afraid that I do not accept that. This is purely weak willed on the part of the Chancellor. I thought that the Economic Secretary to the Treasury did not give us nearly as good a defence of the Bill as the hon. Member for North West Hampshire (Kit Malthouse). He managed to situate it within the needs of the business community and give some rationale for it. The more the Minister spoke, the clearer it became that this is indeed a gimmick. I find that odd, because I thought that the Chancellor of the Exchequer wanted to be the Chancellor of the Exchequer and to take decisions, but clearly he does not. He just wants to tie his hands behind his back at every verse end.

I think it would be a good idea to vote against the Bill, and I am slightly disappointed that we are not opposing it. [Hon. Members: “Ah!”] It is not for me to say what the official Front-Bench position is, unfortunately. I want to point out to Conservative Members that we live in a world where the Chancellor has a desire to bring the deficit down very quickly. That is a difficult thing to do, as we saw when he failed comprehensively to achieve his target during the last Parliament. He is now having to go through some very choppy waters to get this done. He made a promise to introduce this legislation to fix VAT, income tax and national insurance because he thought that that would make him a low-tax Chancellor in the eyes of the British public. The fact is, however, that since then he has increased VAT to 20%, increased vehicle excise duty and increased the insurance premium tax, as my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) pointed out. He is not a low-tax Chancellor.

[Andrew Gwynne]

Does my hon. Friend agree that there is another reason to believe that this is purely a gimmick from the Government? The Chancellor can give the impression that he will not increase national insurance rate ceilings, but fiscal drag could still have an impact, through the back door, on the amount of national insurance that people pay.

[Helen Goodman]

My hon. Friend makes an astute point. That is one of the things that is going on here.

The Chancellor is also shifting more and more from direct taxation on income to indirect taxation on spending. In doing so, he is pushing the burden of tax from those on middle incomes to those on lower incomes. They are the true target of this Government, as we shall see in the debate on tax credits later this afternoon.

The hon. and learned Member for South East Cambridgeshire (Lucy Frazer) claimed that this measure was about low tax, but I would ask her to reconsider that. For whom is it about low tax? For all the reasons given by the hon. Member for North West Hampshire, including the fact that not raising the basic rate of national insurance is a good thing to do, it is clear that this is a tax on labour. At a time when we want more people to have more good jobs, that seems rather perverse.

The most perverse thing about national insurance is the upper earnings limit, and including that in the legislation is a highly political act. We shall have a debate on tax credits in a little while. Let us look at the marginal rate that the Chancellor is giving to people, taking account of the tax and benefits system. After the Budget, the effective marginal tax rate faced by second earners in couples on very low incomes with two children will be 75%. However, for those earning more than £150,000 a year, the normal marginal tax rate of less than 50% will apply. Even when universal credit is introduced, the marginal rate for people earning around £10,000 a year will be 65%, but the withdrawal rate for people earning more than £150,000 will be 48p in the pound. That is not about low tax or certainty. It is clearly about protecting the Tory party’s rich friends and rich donors.

[Lucy Frazer]

I heard the shadow Minister say that this was Labour party policy. What does the hon. Member for Bishop Auckland (Helen Goodman) say to that?

[Helen Goodman]

As I have said, I would not have made a commitment on the upper earnings limit. That is just not my view. Fortunately, in the House of Commons we are free to speak as we find things. We are having this debate and I am making my contribution. I am telling the House that that is not a terribly sensible commitment to make.

The hon. Member for North West Hampshire made some good points about the certainty that small and micro-businesses need, but I ask hon. Members to consider for themselves how many small and micro-businesses are employing people on £150,000 a year. I suggest that not many are doing so. I know that Hampshire is better off than County Durham, but it is not so much better off that every farmer and small shopkeeper is paying themselves and their staff £150,000 a year.

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

May I seek some clarity? The hon. Lady said that she would not make a commitment on the upper earnings limit. Is she therefore suggesting that the 12% rate of national insurance contributions should also apply to higher rate income tax payers?

[Helen Goodman]

I am saying that it would be perfectly reasonable to consider that, rather than pre-committing in the way that the Bill is doing. That seems to be common sense.

It is surprising that the Treasury thinks that it can simply continue to switch off policy levers and that that is an intelligent way of carrying on. As my hon. Friend the Member for Worsley and Eccles South has said, commentators including the Financial Times and PricewaterhouseCoopers have pointed out that this measure will force the Government into a more difficult and tricky situation. The position will become more constrained, and it will be more difficult to take sensible decisions on raising money. The Bill will put more pressure on the Government to cut public spending.

[Kit Malthouse]

I think I am grateful to the hon. Lady for her support earlier. That was kind of her. Would she accept that one of the strengths of having these measures embedded in legislation is that if a future Chancellor were to decide that he or she wanted to raise national insurance rates, an element of delay would be injected into the proceedings by dint of the repeal process? That would give businesses some months—and possibly a year or even longer, if the House were so to decide—in which to adjust to what would otherwise have been a sudden decision.

[Helen Goodman]

Well, it might or it might not, depending on the circumstances.

This quest for certainty is quite reasonable in regard to small businesses—

[Mr MacNeil]

rose—

[Helen Goodman]

I shall give way to the hon. Gentleman from the Scottish National party.

[Mr MacNeil]

In any debate about taxes, it is instructive to look at what the OECD tells us about global tax-to-GDP ratios, which is what I have just done. Denmark has a tax-to-GDP ratio of 47.2%. Mexico, at the other extreme, has a tax-to-GDP ratio of 19.7%. The Conservatives’ mantra is “lower taxes, lower taxes, lower taxes”, but that would appear to be sending us in the direction of Mexico. That is not the sort of society I want; I want a society that is high on the UN human development index such as Denmark. The figure for the UK is 33%. How far do the Government want to go? Do they want to give us a society like that of Mexico, or do they want us to be like Denmark?

[Helen Goodman]

The hon. Gentleman knows the way to my heart; he knows that I am half Danish and that I would much prefer the Danish model to the Mexican model.

Hon. Members have been talking about certainty, but the Bill will provide certainty only for the very well off. The Government are not worried about certainty for people on very low incomes, as we shall see in an hour’s time when we discuss the cuts to tax credits.

[Christopher Pincher]

The hon. Lady is a doughty individualist. I recall her calling me up a few months ago, when she was seeking the chairmanship of the Public Accounts Committee—regrettably, she was unsuccessful in that enterprise—and asking me what the PAC Chair should do. One thing she said was, “We must make Parliament more accountable.” Surely by passing this legislation, which would have to be repealed if the Chancellor wanted to make changes, we are making this House and the Chancellor more accountable.

[Helen Goodman]

That is rather a silly remark. If the Chancellor makes decisions on tax, we can question him about them. This Bill is more a non-decision about a non-tax. It does not do what the hon. Gentleman suggests. Conservative Members have reiterated some of their well-known mantras, but have added nothing of substance to the debate. There is no positive agenda in this Bill addressing the needs of the British economy. It is, I am sorry to say, a gimmick.

15:00

[Huw Merriman (Bexhill and Battle) (Con)]

I warmly support the provisions in the Bill to enshrine the level of contributions for national insurance. This measure, together with the commitment made earlier this year not to raise income tax, was an essential part of my party’s general election manifesto, and I am pleased to see the legislative effect being enacted.

I am passionate about my Government’s pledge to give people the opportunity of work. In the last term, the Government put business at the heart of their programme, creating more than 700,000 new businesses. That climate has helped to allow 2 million new jobs to be created in this country. In the term to come, the desire is to create a further 2 million jobs, to increase that success. In order for private enterprise to deliver these new jobs, it is essential to give business an environment of certainty, to allow it to plan over the next five years. That is what creates jobs.

[Callum McCaig (Aberdeen South) (SNP)]

rose—

[Huw Merriman]

If you disagree, I will take the intervention.

[Callum McCaig]

I am disagreeing. Certainty is being provided in one narrow aspect of business taxation. As my party’s energy spokesperson, I know that the oil and gas industry would love legislation ruling out increases in its taxation. Does ruling out an increase in one narrow aspect not increase the uncertainty in the whole range of other business taxation?

[Huw Merriman]

Not at all. Perhaps I can come on to deal with that by considering the macro levers the Government will have over this term, which will give a real boost to the economy, and other matters where it might be right to leave things open.

I was talking about the need to create jobs, which is what is essential here. Jobs change lives, creating hope, aspiration and well-being for all of our constituents. Any move to create more jobs should be welcomed by all parties, not just the Conservative party, and should not be branded as a “stunt” or a “gimmick”.

[Kwasi Kwarteng (Spelthorne) (Con)]

Does my hon. Friend feel that this Bill chimes in well with what we saw from the last Government, who created about 1 million new jobs in the private sector? Does he agree that this is exactly the kind of direction the country needs to pursue?

[Huw Merriman]

I absolutely agree with that. I recall that five years ago there were howls of derision when the Government announced that they would seek to create one new job in the private sector for every one public sector job lost. At the end of the five-year period I believe that the actual figure was five for every one. We had great success, and it shows that we are the Government who can manage the economy and turn it around, despite what we were faced with in 2010.

The content of this Bill was at the heart of this Government’s manifesto commitment. Today is all about honouring promises—it is not about gimmicks or stunts. What has this House become if, when we stand proudly and enact our manifesto in legislation, it is branded as a gimmick? What does that say about the manifestos of other parties, given that it is only four months since the previous election? I was reassured to hear from the Cabinet Office that a unit is in place to ensure that every Department is making good on this Government’s manifesto pledges, as opposed to the Labour party which, as mentioned, is tearing up its pledges after only four months and a leadership change.

With the commitment not to increase national insurance, which is, after all, a tax on job creation, Conservative Members are making good on our commitment to support business and create a platform for jobs.

[Rehman Chishti]

Our commitment to creating more jobs and bringing more jobs to our country goes hand in hand with what we are doing on corporation tax, where we have one of the lowest rates in the western world. As a result, Deloitte is saying, “These measures will bring more businesses into this country.” This lower taxation measure is therefore in line with the other measures put forward by the Chancellor to create more jobs and opportunity by having one of the lowest levels of corporation tax in the developed world.

[Huw Merriman]

I fully agree with that point and I think I can link it to the one made previously by the SNP. This Government have a commitment ultimately to reduce the deficit and run a surplus by 2020, and that requires some changes and some levelling in taxes. The key thing is to look at which taxes we use: which taxes will have to increase to pay back some of the debt and which ones can be cut, because every £1 cut creates more in the private sector and more spend.

Let me touch on two things. The annual investment allowance is a tax measure that was due to revert to £25,000 per annum at the end of this year, but after the July Budget it will now increase to £200,000 per annum. That is a good example of a tax change that will boost the UK supply chain and cause private industry to purchase more plant, causing more pounds to be created as a result. Alternatively, let us consider the insurance premium tax, which will rise but which will be way below levels in the European Union, particularly in Germany. I envisage that it is unlikely to have a negative effect. This is all about this Government understanding how the economy is managed and how these macro levers can be manoeuvred to favour private investment. [Interruption.] There may be chuntering from Opposition Members, but our record in government over the past five years—we have created jobs and started to balance the budget—cannot be denied, despite what is said by Opposition Members.

I come back to my personal commitment in Bexhill and Battle. The number of my constituents on jobseeker’s allowance stands at 613, which is a decrease on the 2010 figure of 1,400, of whom 135 are aged 18 to 24—that compares with a figure of 385 in 2010. Our focus on reducing youth unemployment makes me incredibly proud of what this Government have done. These figures show that some of the 2 million new jobs created in the UK over the past five years have been delivered in my constituency. But my local task is to attract new employers to Bexhill and Battle.

I was listening to my hon. and learned Friend the Member for South East Cambridgeshire (Lucy Frazer) talking about the science park and the developments there. I was fortunate enough to visit her constituency and Milton Keynes last weekend, when I was struck by the differences between those areas and East Sussex, which is home to my constituency and where I reside. We have a real need for regeneration and we do not have those new jobs being created. The challenge for us is incredibly difficult. We do not have the motorways, the dual carriageways or the rails—as yet; I am delighted by the commitment from the Government in this Budget to try to fix that. Our regeneration is a hard quest and moves such as those in the Bill, which provide certainty, make the job much easier. Thanks to this Government, a new link road is being built from Bexhill to Hastings, which will deliver thousands of houses, a 42-acre business park and a country park, all of which should attract thousands of high-skilled jobs and boost our economic regeneration and productivity.

Creating this infrastructure is one thing, but turning it into a jobs factory requires a persuasive case to be made to business to take risks. Being able to tell businesses that they can expand and grow without the danger of taxes rising is a key ingredient for them to take that risk involved in financing expansion.

[Rehman Chishti]

My hon. Friend talks about taxes rising. The Bill provides certainty, whereas rising taxes cause uncertainty. In his manifesto, the Leader of the Opposition said that he wanted to increase corporation tax from 20% to 20.5%. That would create uncertainty and hinder jobs and investment coming into this country.

[Huw Merriman]

I agree completely. The cut in corporation tax allowed this Government to justify the increase in the living wage, as it offsets that. Such a change would put all that at risk, although I very much hope that we will never see that day.

[Barbara Keeley]

Will the hon. Gentleman give way?

[Huw Merriman]

Perhaps I can make a little progress, but then I will of course give way.

The Government continue to reduce levels of taxation and I welcome that move. In a recent report, Bexhill and Battle constituency, which I represent, was in the top 10 constituencies for the fastest rise in wages for the past 10 years. As I am from a constituency that has lagged behind the national average for far too long, I am incredibly excited about this change in fortune.

I fully support the commitment in the Bill and hope that the benefits will be felt across the country as well as in my constituency.

15:11

[Kelvin Hopkins (Luton North) (Lab)]

I apologise, Madam Deputy Speaker, for having to leave the debate for a short while, but I managed to catch the major part of the speech by my hon. Friend the Member for Bishop Auckland (Helen Goodman). It was an excellent speech and I agree with every word of it, but I did not know that she was half Danish. I want to say something about Denmark, a very sensible country with a more appropriate taxation system than we have. As the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) said, would Members prefer to live in Denmark or Mexico? I know which I would choose; Denmark is clearly a more sensible country.

I have been to Denmark on a couple of occasions and it does two very sensible things. First, the Danes have retained their own currency, which is sensible, but they also seek to manage its value, which we do not, and that is also sensible. One result of the Danes’ sensible taxation system is that they can sustain students without fees but with grants until the age of 25. A few years ago, I understand, the average class size in schools in Denmark was 15. No wonder they have advantages that we do not; they are prepared to pay for them—[Interruption.] I shall talk about national insurance, but I wanted to mention the sensible country of Denmark, which I so admire, before I started.

The lock on the taxation system is a gimmick, as my hon. Friend the Member for Worsley and Eccles South (Barbara Keeley) has said from the Front Bench. Surely a promise from the Chancellor of the Exchequer would be appreciated, understood and believed by the business sector. A Conservative Chancellor making a promise is enough. This Bill is like saying, “I promise not to rob the bank any more, but do put the handcuffs on me.” He is clearly not a bank robber, but does he need to have those handcuffs on him just to do what he believes to be the right thing? He has given away flexibility in any case, and I certainly would not do that, because we cannot foresee what will happen.

There is a real possibility, for example, of another financial crisis coming down the road. I mentioned in my speech on the Budget forecasts that there will be another serious economic crisis in the not-too-distant future. Precisely when that will happen, we do not know, but we ought to retain flexibility with all the economic levers at our disposal to ensure that Britain is protected if that happens.

In the previous crisis, the British Government, led by Gordon Brown, persuaded the world to recapitalise the banks. If we had not done that, the whole financial system might have collapsed and we would have been in a much worse situation. I am not saying that I agree with everything that my former right hon. Friend did, as I was often a critic of our policies. Nevertheless, that had to be done, even though in a sense it rewarded the gamblers who had gambled away our future and made our lives so much more difficult. Those difficulties continue today, but it was the bankers gambling on the free financial markets who caused the problem. It was nothing to do with the Labour Government, and, indeed, all sorts of economists say that Labour did the right thing when the crisis happened.

[Kwasi Kwarteng]

We are wandering rather further from the topic of the debate than I would like, but how would the hon. Gentleman explain the consistent deficits we ran from 2001, as the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) suggested? We were in deficit every single year for the last nine years of the Labour Government.

[Kelvin Hopkins]

I can only refer the hon. Gentleman to the excellent article by the economist Ben Chu, which goes into detail showing why Labour was not to blame and was not responsible. The crisis caused the deficits, but if we had not recapitalised the banks, where would we be now?

Let me go back to the instability mentioned by the hon. Member for North West Hampshire (Kit Malthouse), who is no longer in his place. He talked about businesses wanting stability. Instability arises because of the globalisation of financial markets. Before 1979, we managed financial markets with exchange controls. The breakdown of the Bretton Woods agreement is what caused the problems.

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

The hon. Gentleman is completely right to say that this is purely a gimmick by the Government. There is no need for a legislative vehicle to enact this policy; the announcement could be made in a Budget statement or an autumn statement, as appropriate. Does he agree that, if the Government were serious about helping working people, and people on low incomes in particular, they would increase the threshold at which national insurance contributions kick in to the level of personal allowances for income tax, rather than implementing the pure gimmick of this Bill?

[Kelvin Hopkins]

That would certainly be one way of dealing with it, but I think that not cutting tax credits, which are coming up for debate this afternoon, would be a much more important way of helping people on low incomes. We should certainly do that.

[Graham Stuart (Beverley and Holderness) (Con)]

The hon. Gentleman, as ever, is gracious in giving way. He suggests that the Labour Government were not responsible. Surely, bankers are driven by the incentives in the global markets he described to make money and the job of Government is to regulate those markets so that they benefit the public and do not poison the public well. On that fundamental duty, including the dismantling of the previous Bank of England supervision regime, the Labour Government failed.

[Kelvin Hopkins]

I have to agree with the hon. Gentleman, but the great deregulation occurred in 1979 with the abandonment of exchange controls. During the period of the New Labour Government, I was one of those who called constantly for reregulation rather than deregulation. I was out of step with my colleagues at the time, but I think we have now learnt a lesson and believe in more regulation. I certainly look forward to a more regulated economic world in the future, and if we have another crisis, I believe that regulation will come back.

I ought to get on to the question of national insurance contributions, as those comments were by way of a preamble to my speech. The suggestion has come from the Conservative Benches that we should abandon national insurance contributions and merge them with the tax system. That has been discussed over some time and I have flirted with the idea myself, but I have come down against it. I believe that although there should be a threshold so that people on very low incomes do not pay national insurance contributions, they reinforce the sense of all of us paying into a system and having a sense of entitlement to what the system can do for us when we are in need.

Tying us all into a system on a relatively equal basis for at least part of the income revenues is important. We pay national insurance contributions and we therefore have a right to pensions, the health service and so on. There is clearly not enough and much more has to be paid out of other forms of taxation. I prefer the more progressive forms of taxation, income tax being the most important, and I regret that income tax rates at the higher end have been cut pretty savagely since 1979. I remember the 1988 Budget, when Nigel Lawson cut the top rate from 60% to 40%. I had lunch in the City shortly afterwards with a number of City people, and they were amazed by it. They had watched the Budget on television and asked, “Why has he done this? We don’t need the money.” That is what people in the City were saying about the cut in the top rate of tax. I have no doubt that there are some people in the world who are so greedy that they want even more money, despite having millions already, but most people think that having a high rate of tax for the very highest earners is a good and progressive thing.

[Graham Stuart]

The hon. Gentleman must have seen the figures. Every time the higher rate of tax was cut, the amount paid by the richest, in both absolute and relative terms, went up. The truth is that Governments receive more money when they impose fair taxation and less when they follow the policy that he is advocating.

[Kelvin Hopkins]

I thank the hon. Gentleman for that intervention, but the fact is that successive Governments have failed to ensure that the rich pay their taxes properly. We have a tax gap of £120 billion a year. The fact that fewer people might fiddle their finances is not an argument for reducing the top rate of tax. We ought to have a proper regime for enforcing tax payment by those who get away with it: the corporates and the billionaires who manage to avoid and evade tax on a massive scale. If we collected only a third of what is fiddled every year, we would have another £40 billion a year to spend. I think that we have failed on that because all Governments have opted for a light touch on the rich. That is the truth.

[Simon Hoare]

The hon. Gentleman obviously has the inside track on the voice of the City—he has referenced lunches he has had in the square mile—so could he illume the House on what the City’s view is on the new policies of his right hon. Friends who now occupy the Opposition Front Bench?

[Kelvin Hopkins]

I must say that I have not had lunch in the City recently. Indeed, my contacts with City people have not been of the highest order since 1998. I once had lunch with the Governor of the Bank of England, shortly after being elected, and very enjoyable it was too. That was when “steady Eddie” was in charge—he was a splendid Governor and I am sorry that he is no longer with us.

I believe that there are ways of ensuring that we collect the taxes that are due from the rich. Personally, I believe that I should pay more income tax, along with everyone else on my kind of salary—I earn £74,000 a year. Indeed, the majority of the population have said that they would be happy to pay a little more tax in order to help our health service, which is still seriously underfunded.

I believe that national insurance contributions set at a modest level are an important part of our tax and revenue-colleting system. It gives us all a sense of collectivity, which I think is right. We call that the contributory principle. It means that we have a sense of duty in paying taxes as well as a sense of entitlement in receiving what they pay for. I agree with my hon. Friend the Member for Bishop Auckland, who is no longer in her place, on the upper earnings limits.

VAT is a regressive tax. It was noticeable that Gordon Brown, when Prime Minister, cut VAT from 17.5% to 15%, which boosted demand at the moment that was needed and, together with a substantial depreciation of sterling, helped to keep the economy relatively stronger than some other economies. We have since survived, but I think that we are now making a mistake in allowing sterling to appreciate. It has moderated a bit in recent weeks, but it is still far too high, and manufacturing is suffering as a result.

I understand that the Opposition are going to acquiesce in what the Government are proposing today, but I agree entirely with the view put forward by my hon. Friend the Member for Bishop Auckland. I look forward to my party coming into government next time around with our new leader committed to ensuring that the rich, the corporates and those who have been getting away with it for years pay their taxes so that we can build a decent society on the revenues that they should provide.

15:24

[Kwasi Kwarteng (Spelthorne) (Con)]

I am pleased to follow the hon. Member for Luton North (Kelvin Hopkins), although I felt as though I was entering a time warp when listening to his speech; it is a long time since I have heard anyone defend exchange controls. I believe that the limit on the amount of money that someone could take out of the country was £50, and they had to declare everything else. Given the current political climate, it is very interesting to hear a Labour Member advocate such a policy.

[Kelvin Hopkins]

rose—

[Kwasi Kwarteng]

I am happy to give way this once.

[Kelvin Hopkins]

It was a temporary limit imposed on holidaymakers by Harold Wilson, but most had no problem spending money abroad. What we did was ensure that the bankers and international speculators did not have free rein.

[Kwasi Kwarteng]

I am glad to hear that everything was all right because it was Harold Wilson who imposed the limit, which I think was £40.

Of course this is a sensible Bill. Of course it makes sense to limit national insurances contributions, because they are, after all, as has been pointed out, a tax on jobs. My hon. Friend the Member for North West Hampshire (Kit Malthouse), who is no longer in his place, made an excellent point about the things we do here being a signal to people outside, such as investors, potential entrepreneurs and people who want to set up businesses. If the Government get the Bill through, I am confident that it will send a very good signal to people who want to invest in the British economy and in our constituencies and who want to set up small businesses.

My constituency of Spelthorne is very near Heathrow airport and lies on the Thames, and it is a case in point. It is an area where small business and private enterprise is at the core of people’s way of life. It is the basis on which people go to work, save and plan for their retirement. Essentially, they are people who are driven and motivated by small business. Therefore, a Bill that caps national insurance tax is an excellent development that will be warmly appreciated across my constituency.

We have heard a number of arguments this afternoon that simply do not make sense. On the one hand, we have heard from Labour Members that the Bill is a gimmick and that it is wrong. On the other hand, they have said that they will support it. Indeed, we have also heard that they were apparently the first people to come up with that gimmick. It seems very odd. I am still utterly confused about their position.

The hon. Member for Dundee East (Stewart Hosie) made a very good point, but I recall that before the general election his party was the biggest deficit denier—it was even worse than the Labour party in denying the deficit and ranting against austerity. It is a very confused picture. I would be very interested to see what the SNP will do if the House divides on the Bill.

15:27

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

It is a pleasure to make a short contribution on this important Bill, which I very much welcome. The Bill has been criticised as being a gimmick, and it has been suggested that it is not necessary. Let me take Opposition Members back a few years to the 2001 general election, when the victorious Labour party pledged—on pledge cards and billboards all over the country—that there would be no increases in income tax. The country voted the Labour party in by a very large margin. Within a matter of months, however, the then Chancellor, Mr Brown, decided to increase spending on the NHS, funded by an increase in national insurance contributions. Technically he was correct—he did not put up income tax rates—but most people regard national insurance as a tax on income, so if the letter of the pledge was not broken, the spirit certainly was.

This Bill is important because, as many colleagues have said, it gives certainty to employers to plan ahead. If my hon. Friend the Member for Bexhill and Battle (Huw Merriman) wants to make a return visit to Milton Keynes, he will be very welcome to come to the job show that is taking place there this weekend; I have the great pleasure of opening it on Friday. Milton Keynes has seen an enormous increase in the number of new jobs and business start-ups in recent years, and we very much want that to continue. Giving employers this certainty on their national insurance contributions will be a key part of instilling the confidence they need to start up businesses and expand existing ones.

Another important measure in sustaining long-term jobs growth and investment is addressing the skills gap we have in this country. That requires more apprentices to be taken on by companies. We must bear in mind that this Bill is part of a package from the Chancellor, who announced an apprenticeships levy to help to fund the growth in the number of high-quality, long-term apprenticeships. That policy is in place in many countries, although it is not without controversy. Alongside that is the pledge to cut corporation tax for large and small companies and to give them benefits in not increasing their national insurance contributions. I very much support the Bill as part of this broader package, which is essential for the long-term health of job creation in this country.

15:30

[Michael Ellis (Northampton North) (Con)]

This Bill is short but very important. It is a commitment not to increase national insurance, which will be very reassuring for the people in small and medium-sized enterprises that represent the lifeblood of this economy.

Labour Members have been saying all afternoon, “Why legislate? This is nothing more than a gimmick”—indeed, “a gimmick of epic proportions”, according to the hon. Member for Worsley and Eccles South (Barbara Keeley). Yet they then go on to say that they are going to support this measure, somewhat idiosyncratically; some might use a different word. In effect, they have said that they are so confident in our Chancellor of the Exchequer that legislation is not needed—his words should be enough. That is very reassuring. It is how I and other Conservative Members feel, but it is interesting to hear Labour Members argue in that way.

Labour Members say the Bill is a gimmick, but in fact it is a manifesto commitment. This may be a concept alien to them, but we are sticking to our manifesto promises. We undertook to do this within 100 days, and we are doing it. We stick to our promises, unlike Labour. Unlike Labour, Conservatives understand the markets. We understand the need of individuals to have some certainty in their lives, especially entrepreneurs and those operating small and medium-sized businesses. Labour Members do not understand the markets or business; they find them alien concepts. That is not particularly surprising given that their shadow Chancellor wishes to overthrow the capitalist regime.

It is ironic that Labour Members refer to unnecessary legislation when under the 13 years of the Labour Government there was such legislative incontinence that dozens of Bills were passed, many of which have been completely useless and otiose; I think of criminal justice legislation, for a start. Conservative Members welcome low taxes. The new far-left Labour leadership wants to tax people into oblivion, but we recognise that taxes should be kept as low as possible. Labour Members refuse to learn from their mistakes. They fail to recognise that in the 1970s when tax rates were extremely high—up to 80% and 90%—less money was coming into the Treasury coffers than when tax rates were at 40% under the late noble Baroness Thatcher.

With its super-high tax rates, the ultra-leftist Labour party of today does not recognise the mistakes of the former Labour party and other socialists around the world. It will not learn from its mistakes. This Conservative Government understand what it means to have a thriving economy, understand the importance of low taxes, and understand the importance of keeping to our manifesto promises. That is why this Bill is before the House today.

15:34

[Christopher Pincher (Tamworth) (Con)]

I should like briefly to add my voice in support of this welcome Bill. Having listened to the hon. Member for Worsley and Eccles South (Barbara Keeley), I am pleased that the Opposition do not propose to oppose the Bill. It appears that she has bravely come to the House to abstain in person.

The hon. Lady asked why the Bill is necessary. Were she present, she might like to reflect on this reason: the decision by the new Leader of the Opposition to appoint as his shadow Chancellor the hon. Member for Hayes and Harlington (John McDonnell), a self-confessed Marxist who wants to nationalise the banks, print money and soak almost everybody in the great cause of the proletariat. That sends shivers down the backs of many small and medium-sized enterprises in our country and of international investors. This Bill goes some say to guarding against that uncertainty.

As we have heard, businesses like certainty, even if that certainty generates bad news. It was bad news to hear from the Opposition in the last Parliament that they proposed to freeze energy prices. That increased the cost of capital for investors in our energy infrastructure and made them put off investment decisions.

This Bill, however, is good news. It gives business folk in all our constituencies the certainty that we will not increase taxes. That means that they will make investment decisions and grow their businesses. In my constituency, where unemployment has fallen faster in the past three years than anywhere else in the country, Jaguar Land Rover, BMW, Tamworth Steel Stockholders and Percy Lane Products will create new jobs and more wealth for our country. Business folk in my constituency say that this Bill is a no-brainer, which is one reason why it should commend itself to the Opposition. Let’s do it.

15:36

[Simon Hoare (North Dorset) (Con)]

I am delighted to speak in support of the Bill. A number of colleagues have spoken of the need for certainty, and my hon. Friend the Member for North West Hampshire (Kit Malthouse) has spoken about the need for signals. This Bill is not a gimmick, but a very good piece of proposed legislation. It sends a very clear signal to the country, employees, employers and the investment world that such is the Government’s confidence in their wider economic policies that they will not have to increase national insurance contributions or other taxes.

The Bill also sends a very clear message to both the employer and a potential employee. In rural constituencies such as mine in North Dorset, which is predominantly made up of agricultural micro and small businesses, the decision to recruit is often made on a knife edge. It is drilled down to almost the last shilling to work out whether or not it is financially viable.

The certainty provided by the Bill sends two clarion calls from this Government. The first is that the sensible employer can have the confidence to invest in their business and grow it. Secondly, it tells the new employee that returning to work or entering it for the first time pays. Those things are mother’s milk to Conservative Members, but they are an utterly alien substance to the Labour party.

I felt sorry for the shadow Minister, the hon. Member for Worsley and Eccles South (Barbara Keeley). She tried to defend abstention while desperately trying to show that, when the great purge comes in some Labour reshuffle or other, she will be able to say, “I decided to oppose it and please the purists on my side.”

We will get on with taking the difficult and sensible decisions of governing the country, to make sure that the economy continues to grow.

15:39

[Paul Maynard (Blackpool North and Cleveleys) (Con)]

A brief Bill deserves a brief speech. I am pleased to see the shadow Minister back in her place. She checked her phone several times, perhaps concerned that she had been reshuffled by text message for disloyalty. I am glad that she has survived until at least 4 o’clock.

I rise to speak in favour of the entrepreneurs in my constituency. Like my hon. Friend the Member for Bexhill and Battle (Huw Merriman), I have a town that needs regeneration. I have met many of those who have taken advantage of the new enterprise allowance to set up businesses around the kitchen table. The Economic Secretary referred to that in her speech. Whether they are lady funeral directors, stained glass window repairers or supermarket ready meal manufacturers, they all want to grow their businesses from the very smallest roots. To do so, they need three things: confidence, security and certainty. The Bill will give them confidence, security and certainty. My town needs such jobs. We need the Bill. Please get on with it.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

We now come to the Front-Benchers. With the leave of the House, I call the shadow Minister to speak again.

15:40

[Barbara Keeley]

Thank you, Mr Deputy Speaker. I thank the House for giving me leave to speak again.

We have had a very lively debate on this somewhat peculiar measure. As I said earlier, many people will wonder why we are debating it at all—we have spent a considerable time on it—and many commentators have called it a gimmick. If the Prime Minister commits not to raise income tax, national insurance contributions or VAT in the run-up to an election, surely such a commitment should be taken at face value. The essence of this debate is that what the Prime Minister commits to should not be questioned, but taken at face value.

However, other pledges made by the Prime Minister and his party have been broken. The commitment made in 2010 not to raise VAT was followed by an increase in VAT to 20% soon after the Conservatives entered government. I have found several other broken pledges that I would like to refer to Government Members. Before the 2010 general election, David Cameron—[Interruption.] Sorry, the Prime Minister told Andrew Marr that he had no plans to cut front-line services. Interestingly, for a Leader of the Opposition preparing for government, he said that if

“any cabinet minister if I win the election…comes to me and says, ‘Here are my plans’ and they involve frontline reductions, they’ll be sent straight back to their department to go away and think again.”

Since then, we have seen cuts in the number of NHS nurses, hospital beds, firefighters and front-line police officers.

As I said earlier, the Prime Minister said he had absolutely no plans to raise VAT. On child benefit, he said at a Cameron Direct event:

“I would not means test it.”

The coalition Government in effect abolished the benefit for higher earners and then froze it for three years. On the NHS, he said, “No more top-down reorganisations”, which is perhaps the most infamous broken pledge. It was made both by the Prime Minister and by the person who became Heath Secretary. On education maintenance allowances, the Prime Minister said in January 2010, again at a Cameron Direct event:

“We don’t have any plans to get rid of them.”

On Sure Start, he said:

“Yes, we back Sure Start.”

Over 550 Sure Start centres have closed, while more than half those still open no longer provide on-site childcare. I could go on and on, mentioning the future jobs fund and what the Chancellor said about bankers’ bonuses and many other pledges.

As I said earlier, following our discussion on the Bill, the next item of business will be a debate on the Government’s cuts to tax credits, which will leave some 8 million families over £1,000 a year worse off, on average. Let me say again that the matter we are voting on—or not voting on, because we support it—was a Labour pledge. [Interruption.] Presumably Government Members do not want a vote and would prefer the Bill to be supported. I have said that we will support it, so why raise such matters? There is no question about it.

We first pledged not to increase national insurance contributions, and, as I said earlier, we will not oppose the Bill. I have not heard any Member say that they oppose it. I say to Treasury Ministers—I hope that they will take this serious point away from the debate—that breaking pledges and using gimmicks, such as the so-called tax lock, further undermines people’s already reduced belief in government and politics. As I said earlier, one of the concerns that many people have in this policy gimmick is that it will place a serious constraint on the Treasury and, indeed, on the Government’s ability to raise taxes or to maintain the flexibility needed to raise revenue in response to economic events. That is the other serious point that I was making. The Government, as I and my hon. Friends have said, will have to resort to measures such as delaying the uprating of thresholds and removing reliefs, as they did in the last Parliament.

The suspicion remains that future Budgets will mean further increases to taxes like the insurance premium tax, which seemed to be regarded in the last Budget as an easy target. I am disappointed that Ministers declined my offer for them to use this debate to pledge that no further increases would be made to the insurance premium tax in this Parliament. The insurance premium tax, which we debated at length, will bring in £8 billion for the Government by 2021, but will hit many millions of hard-working families. It may lead, as I mentioned last week, to the negative consequence of even more uninsured drivers. The rate of uninsured drivers is already nearly 3% or 1 million vehicles on the road. We have to think about the negative consequences of the tax increases that we saw in the summer Budget.

As I have said on a number of occasions, we will not oppose the Bill. It implements our pledge and we stick by it.

15:45

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

It is a great pleasure to respond to a lively debate. I thank all those who have contributed, not least the hon. Member for Worsley and Eccles South (Barbara Keeley), who contributed twice. She carries a heavy burden on behalf of her party and I hope that it is noted by the powers that be. I welcome the shadow Chancellor to the Chamber. No doubt he will have noticed the effort that she has put in.

I thank Government Back Benchers for their contributions. My hon. Friend the Member for North West Hampshire (Kit Malthouse) began his speech with the sensible point that, ultimately, it is not companies that pay tax. It is always families and individuals who bear the tax bill, regardless of who writes the cheque. Like a number of hon. Friends, he went on to speak about the importance of providing stability and certainty in the tax system both for individuals and for companies. The tax lock will provide much greater certainty and stability.

That point was also well made by my hon. and learned Friend the Member for South East Cambridgeshire (Lucy Frazer), who highlighted the importance of low taxes to businesses in her constituency and to employees. She made the point that a number of those businesses compete with businesses in silicon valley, and that they need the certainty that the Bill and the Government’s other policies provide.

My hon. Friend the Member for Bexhill and Battle (Huw Merriman) made a similar point about the need for economic policy to support business. It is through the success of our businesses that we will see the economy grow and tax receipts come in, which will enable us to pay for high-quality public services. We must not forget the importance of an enterprising economy. It may well be that that point becomes more important in the debate in this country over the next few years, as the consensus appears to be breaking down.

My hon. Friend the Member for Spelthorne (Kwasi Kwarteng) rightly criticised the characterisation of the Bill as a gimmick. I will turn to that in a moment, but he was right to say that this is an important measure.

My hon. Friend the Member for Milton Keynes South (Iain Stewart) highlighted the fact that in 2001, a Labour Government were elected with a promise that they would not put up income tax, but shortly afterwards they put up national insurance contributions. We must not forget that national insurance contributions are paid by people in much the same way as a tax. It should not be open to Governments to use national insurance contributions as a stealth tax. That is why, as well as introducing legislation to provide a tax lock for income tax, it is important to have legislation on national insurance contributions. Given that national insurance contributions cannot be dealt with in a Finance Bill, such a measure is contained in this Bill.

[Barbara Keeley]

I am astonished that the Minister can talk about things that happened in the past and not reflect on the more recent pledge made and broken by his Government not to raise VAT. How can he stand there and talk about any issue when that is in recent memory? How hard did that hit many millions of families in this country? I think he would be better leaving that topic alone.

[Mr Gauke]

For those of us who were debating such matters at the time, the state of the public finances, and the deterioration identified by the Office for Budget Responsibility in the summer Budget of 2010, revealed that we needed to take steps to put the public finances back on track. We took those measures, and I remind the hon. Lady that the Labour party abstained on the increase in VAT. Labour Members did not oppose it at the time, presumably because they recognised that it was necessary. That was, I suppose, a time when the Labour party was flirting with fiscal responsibility. I am sure it would never repeat that now.

[Barbara Keeley]

My points are about the way the public feel about broken pledges. This gimmick of a tax lock means nothing if, whatever the circumstances, the Government are prepared to change their mind on things. I read the Minister a long list of pledges that his Prime Minister and Government have broken, and every time such things happen, the public get sick of it.

[Mr Gauke]

We are underlining our commitment not to increase the rate of class 1 NICs by introducing this Bill. The hon. Lady asks why we are legislating rather than making a pledge. She could apply exactly the same argument to the legislative commitment to spend 0.7% of gross national income on overseas aid, yet that was actively supported by the Labour party. If she feels that this Bill is a meaningless gimmick, why does she not oppose it today?

Let me finish thanking my hon. Friends. My hon. Friend the Member for Northampton North (Michael Ellis) described this as a short but important Bill, and may I say that he delivered a short but important speech? My hon. Friend the Member for Tamworth (Christopher Pincher) highlighted the need for greater certainty in the tax system and welcomed the Bill, as did my hon. Friend the Member for North Dorset (Simon Hoare), who also highlighted the importance of stability in the tax system. My hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) supported that argument and suggested that the Bill would provide greater confidence to businesses in his constituency.

The hon. Member for Dundee East (Stewart Hosie) raised a number of questions and asked about the potential for integration between income tax and national insurance contributions, and the work being undertaken by the Office of Tax Simplification. As he said, it was announced in the summer Budget that the OTS will undertake a review of the closer alignment of income tax and national insurance. The overall aim of the project is to build on earlier work undertaken in that area, and to understand the steps needed to achieve closer alignment of the taxes, as well as the costs, benefits and impact of each step. The terms of reference were published on 21 July, and the OTS will publish a final report ahead of the 2016 Budget.

On the one hand we heard from the hon. Member for Worsley and Eccles South that this measure is a gimmick and unnecessary. On the other hand, I was also struck by the contribution from the hon. Member for Bishop Auckland (Helen Goodman), who made the argument that we—I do not know whether she was talking about the Government or the Labour party—should consider abolishing the upper earnings limit. In other words, the 12% rate of national insurance contributions should apply also to higher rate taxpayers. That policy was supported by the hon. Member for Luton North (Kelvin Hopkins).

Let us be clear about what is being proposed. It would mean an increase in the tax rate for higher rate taxpayers of 10%, from a combined rate of 42% to a combined rate of 52%. That is not the policy of the Opposition, as the hon. Member for Worsley and Eccles South made clear, but three days into the leadership of the right hon. Member for Islington North (Jeremy Corbyn) the Labour Front Bench appears to be being attacked from the left, something that I had not anticipated. I do not know whether the hon. Members for Bishop Auckland and for Luton North are making a late bid for inclusion in the shadow Cabinet, although I was surprised that neither was there in the first place. I am sure that the shadow Chancellor, who is in his place, will have listened carefully to that proposal, which would clobber a large chunk of middle earners.

The hon. Member for Worsley and Eccles South upbraided hon. Members for quoting remarks made by the right hon. Member for Islington North before he became leader of the party and said that she would not respond. That is a novel approach, although I have some sympathy with her and really cannot blame her.

[Barbara Keeley]

The Minister seems to forget that I read out to him a list of various pledges on policy that the Prime Minister made before he became Prime Minister. Will he now defend every one of those? Will he defend what the Prime Minister said about Sure Start, EMA and other things that have been changed or abolished? It appears that the Minister thinks it is all right for the Prime Minister to say what he said when he was Leader of the Opposition. The Minister cannot have his cake and eat it, but that is what he appears to be trying to do.

[Mr Gauke]

I understand why the shadow Minister does not want to defend the position of the current leader of the Labour party, but let me make this point clear. The Prime Minister came into office in 2010 with a mission to turn around the UK economy. He succeeded and was re-elected with a majority in 2015.

The hon. Member for Luton North always makes entertaining and thoughtful speeches. I noted that he praised the tax system of Denmark, but I would point out that its VAT rate is 25% and it does not have any lower rates. I can assure him that we will not follow Denmark’s example and put VAT up to 25%.

[Kelvin Hopkins]

I would be happy if the Danes lowered their VAT rate, but can the Minister tell us what Danish income tax rates are?

[Mr Gauke]

I do not have all the numbers in front of me, but I take it from the hon. Gentleman’s remarks that he would like to put income tax rates up, not down—[Interruption.] Well, I know he is very close to the Labour leadership and I suspect that he may prove to be an influential figure in deciding policy.

I am delighted that we do not appear to be divided on this measure, even though we heard some doubts about it from Labour Back Benchers. I am grateful to hon. Members for their contributions. This is an important part of the Government’s long-term economic plan, providing certainty and stability to the taxpayers of this country. I am pleased that we are making progress on providing that certainty and stability, as well as protecting the British people from tax increases, at least for the course of this Parliament and—we hope—future years as well.

Question put and agreed to.

Bill accordingly read a Second time.

NATIONAL INSURANCE CONTRIBUTIONS (RATE CEILINGS) BILL (PROGRAMME)

Motion made, and Question put forthwith (Standing Order No. 83A(7)),

That the following provisions shall apply to the National Insurance Contributions (Rate Ceilings) Bill:

Committal

(1) The Bill shall be committed to a Public Bill Committee.

Proceedings in Public Bill Committee

(2) Proceedings in the Public Bill Committee shall (so far as not previously concluded) be brought to a conclusion on Tuesday 27 October 2015.

(3) The Public Bill Committee shall have leave to sit twice on the first day on which it meets.

Consideration and Third Reading

(4) Proceedings on Consideration shall (so far as not previously concluded) be brought to a conclusion one hour before the moment of interruption on the day on which those proceedings are commenced.

(5) Proceedings on Third Reading shall (so far as not previously concluded) be brought to a conclusion at the moment of interruption on that day.

(6) Standing Order No. 83B (Programming committees) shall not apply to proceedings on Consideration and Third Reading.

Other proceedings

(7) Any other proceedings on the Bill (including any proceedings on consideration of Lords Amendments or on any further messages from the Lords) may be programmed.—(Charlie Elphicke.)

Question agreed to.

Tax Credits

Tuesday 15th September 2015 Commons Chamber

16:00

[The Exchequer Secretary to the Treasury (Damian Hinds)]

I beg to move,

That the draft Tax Credits (Income Thresholds and Determination of Rates) (Amendment) Regulations 2015, which were laid before this House on 7 September, be approved.

I confirm, as required, that the provisions before the House today are compatible with the European convention on human rights.

The aspects of tax credits we are voting on today are amendable by statutory instruments, as laid down in primary legislation in 2002 by the then Labour Government. These and other aspects of welfare reform have of course been debated at length in the Budget debate, as well as in departmental questions and elsewhere. The underlying issues will also be debated in the Welfare Reform and Work Bill. In a response to a request from the right hon. Member for Birkenhead (Frank Field), the Government have brought the vote on the statutory instrument measures to the Floor of the House to allow all hon. Members the opportunity to vote.

[Lady Hermon (North Down) (Ind)]

Will the Minister give way?

[Damian Hinds]

Allow me to make a wee bit of progress.

Reforming tax credits and other benefits forms the first of five pillars of the Government’s approach to supporting working Britain. The second is the increase in the personal tax allowance; the third is the national living wage, the fourth is the major extensions to child care provision; and fifth is the overall sound economic management that is delivering growth in the number and quality of jobs, earnings and living standards.

[Stephen Timms (East Ham) (Lab)]

A couple with two children, in which one works as a senior schools admission official earning £26,000 a year, will be more than £2,500 worse off next year because of the measure the Minister is proposing. Does he recognise that it will wreck the solvency of that working family? What does he think they should do?

[Damian Hinds]

It is important we see these changes in the overall context. I outlined some of the additional elements that are relevant. I certainly accept that they do not all come into play at exactly the same time, but in the course of time they do and by 2017-18 eight out of 10 households will be better off.

[Lady Hermon]

I am most grateful to the Minister for allowing me to intervene at this early stage. A number of my constituents in Northern Ireland feel extremely aggrieved about the change to the income thresholds for eligibility for tax credits. Before I could support the measure, I have to urge the Minister to give some guarantees on how the Government plan to mitigate its worst effects for families throughout the United Kingdom—not just in Northern Ireland.

[Damian Hinds]

I have been talking about some of the other elements, but these are matters on which the hon. Lady has a long track record of campaigning. Northern Ireland has a particular situation with regard to welfare reform and I hope all parties will come together to get through that. Discretionary payments are designed for housing issues in particular and were increased substantially in the summer Budget. It is possible that local authorities can use some of those funds to help out people who find themselves in particular difficulty, but I am of course very happy to meet her to go through this in more detail.

[Mark Spencer (Sherwood) (Con)]

How would families in my constituency be affected by a Government who went back to borrow and spend, who wrecked the economy, and who allowed unemployment to rise again? How would that affect the welfare of families working in Sherwood?

[Damian Hinds]

My hon. Friend is correct that everyone benefits from the economic security that comes from the country living within its means.

[Several hon. Members]

rose—

[Damian Hinds]

If Opposition Members will allow, I will take some time to set out the regulations.

The regulations make three changes to the tax credit system. First, they reduce the working tax credit threshold from £6,420 to £3,850 and the child tax credit threshold from £16,105 to £12,125. Secondly, they increase the taper rate from 41% to 48%, meaning that when a claimant’s earnings reach the new tax credit income threshold, their award will be gradually removed by 48p in the pound, rather than the current 41p, ensuring that state taxpayer help is focused on those who need it most. For recipients of housing benefit, the interaction between the two systems of support means the overall change in the withdrawal rate will be 2p, not 7p.

Thirdly, the regulations reduce the income rise disregard from £5,000 to £2,500, taking it back to its level between 2003 and 2006 and matching the rate of the income fall disregard. Following the introduction of real-time information, Her Majesty’s Revenue and Customs has much more up-to-date information on claimants’ earnings, so there is no good reason to have such a high disregard figure. These three changes form part of a wider set of welfare reforms, most of which are currently under consideration in the Welfare Reform and Work Bill.

[Helen Goodman (Bishop Auckland) (Lab)]

The Institute for Fiscal Studies, following a request from the Treasury Select Committee, sent us a new analysis showing that lone parents earning less than £20,000 will have marginal deduction rates of either over 90%, if they are on the old legacy system, or 75%, if they are on universal credit. How does the Minister square that with his claims at the Dispatch Box?

[Damian Hinds]

I am afraid that high marginal deduction rates have long been a feature of the social security and welfare system. As many Opposition Members know, universal credit will change that by making a substantive change in the withdrawal rates.

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

The Minister knows that this is a serious matter, and Members on both sides are concerned about the work incentives and making sure we do not unfairly penalise people who want to get back into work. My hon. Friend the Member for Bishop Auckland (Helen Goodman) was right about the rapid increase in the marginal deduction rate to 93% from next April. He needs to address that specific point. How is it not a penalty to work?

[Damian Hinds]

For people in receipt of housing benefit, the change in the marginal withdrawal rate will be 2p in the pound. The changes do not reduce the incentive to work, and, as the hon. Gentleman knows, equally important are the incentive, ability and support to work more hours once in work and the fact that there are now more jobs offering more hours. Our reforms to childcare are another key part of our support for people who want to increase their hours.

The context to these changes is that, despite making great progress towards balancing the budget, we still ran a deficit of 4.9% last year and are expected to have the second-highest deficit in the G7 in 2015. We need to eliminate the deficit and start cutting the national debt in order to build up our resilience to global economic shocks.

[Mr Alan Mak (Havant) (Con)]

Will the Minister confirm that when tax credits were introduced, they cost the Government £1.1 billion a year and this year will cost £30 billion, which is unsustainable, and that these reforms are necessary to balance the country’s books?

[Damian Hinds]

My hon. Friend is right about the rapid escalation in the cost of tax credits—it trebled in real terms up to 2010—and that we are in the business of getting the country back into balance, because when we lose control of the economy, the people who lose out the most are those on the lowest incomes and in the toughest circumstances.

The burden of eliminating the deficit has meant a bigger tax contribution from those on higher incomes and now calls for further reductions in departmental spending while protecting our national health service. A further £5 billion comes from addressing tax imbalances and £12 billion from the welfare budget. That is the mandate on which we were elected. With near record employment, rising wages and stronger business confidence, now is the time to put the welfare system on a more sustainable, long-term footing, moving our country to a higher wage, lower tax, less welfare-reliant economy.

[Several hon. Members]

rose—

[Damian Hinds]

What a choice!

[Alex Cunningham (Stockton North) (Lab)]

I am grateful to the Minister. He talks about an environment in which wages are rising. Wages are rising in some areas, but public sector workers have seen a tremendous reduction in their income capacity, and many of them will be affected massively by what the Government want to do. The Government need to think more about public sector workers, whose wages are not going up.

[Damian Hinds]

The hon. Gentleman is absolutely right to note the hard work done by public sector employees. There are pay restraints going on in the public sector—I do not deny that for a moment—but wages are growing at 2.8% in real terms this year, which is pretty broadly based across the country, while output per head is growing more in the north than the south.

[Several hon. Members]

rose—

[Damian Hinds]

Time is short, so I am going to make some more progress.

For too long in this country—[Interruption.]

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order.

[Mr David Anderson (Blaydon) (Lab)]

On a point of order, Mr Deputy Speaker. For clarification, will the Minister please explain that the wages of public sector workers are going up not by 2.8% this year, but by only 1%?

[Mr Deputy Speaker]

That is not a point of order.

[Damian Hinds]

For too long, low pay has been addressed in this country not by genuine reform and driving productivity, but by subsidising it through the tax credit system. In the decade to 2010, tax credit expenditure more than trebled in real terms. The changes introduced in this order will build on the last Parliament’s reforms and return real-terms tax credit spending to its 2007-08 levels—a decade into the Labour party’s tenure in government. It is not a stand-alone measure, but part of what my right hon. Friend the Chancellor called a “new contract” with working Britain. It says to businesses, “You will have to pay higher wages, but you will get lower business taxes and a stable economy”; it says to people, “You can get higher pay and lower tax, but with less benefit top-up”; and it says to the country, “We are going to spend less and live within our means”. These regulations are an important part of that, and I commend them to the House.

16:13

[Seema Malhotra (Feltham and Heston) (Lab/Co-op)]

What we have just heard is a Government in denial about the impact these changes will have on what my right hon. Friend the Member for East Ham (Stephen Timms) has described as “wrecking family finances”. We are here today only because of the efforts of the Chairman of the Select Committee on Work and Pensions and of my right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman), who wrote to the Prime Minister in July to insist on a full debate on these cuts to tax credits, which were not included in the Tory manifesto. The original intention had been to implement these changes with the scantiest possible parliamentary scrutiny—through a statutory instrument not debated by the whole House, but considered by a short Committee session of no more than 15 MPs and without scrutiny in the House of Lords.

[James Cleverly (Braintree) (Con)]

I am obliged to the hon. Lady for giving way so early in her speech. Does she not recognise that rebalancing the financial relationship between the state, employers and employees was in the Conservative party manifesto, which was voted on and led to the return of a Conservative Government?

[Seema Malhotra]

The hon. Gentleman does not make it any better for his Front-Bench team, as what we have seen is a rise in child poverty. We absolutely agree that we need to find ways to encourage families to come off tax credits, but it should be done by a rise in income and through growth in the economy.

[Lyn Brown (West Ham) (Lab)]

During the election campaign, the Prime Minister told the country that the value of tax credits would not fall. Does my hon. Friend agree that the Government’s behaviour is putting democracy in peril?

[Seema Malhotra]

My hon. Friend is absolutely right, and it is shocking that a Government who profess to care about democracy should be so afraid of scrutiny.

Today’s changes are substantial and highly controversial, and we oppose them.

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

Will the hon. Lady give way?

[Seema Malhotra]

I will in a moment.

These cuts in tax credits will hit working families in every constituency, and they were to be sneaked in through the back door. Indeed, when asked directly during the election campaign whether the Government would cut child tax credit, the Prime Minister said:

“No, I don’t want to do that.”

His statement was repeated on “Question Time” on 1 May. Today’s debate is about a political decision made by the Chancellor which is set to see more than 3 million families lose an average of £1,000 a year.

[James Cartlidge (South Suffolk) (Con)]

Will the hon. Lady give way?

[Seema Malhotra]

I will in a minute.

This measure is ideologically driven, it is cynical, and it will directly increase levels of poverty in Britain.

[Mr Rees-Mogg]

Will the hon. Lady give way?

[James Cartlidge]

If the measure is passed, will it be Labour’s policy to reverse it?

[Seema Malhotra]

I am unclear—[Laughter.] I am unclear about why the hon. Gentleman wishes to make this an issue about the Labour party, and not an issue about why his Government have presented the House with a measure that will have a negative impact on his constituents as well. He will have to account to his constituents for the decision that he chooses to make today when they come to his surgery, knowing that—[Interruption.]

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I certainly want to hear the shadow Minister, and I would expect Conservative Members to want to hear her as well. If they do not, I am sure that the Tea Room awaits them.

[Seema Malhotra]

Thank you, Mr Deputy Speaker.

As I was saying, this measure is ideologically driven, it is cynical, and it will directly increase levels of poverty in Britain.

[Several hon. Members]

rose—

[Seema Malhotra]

I will give way in a minute.

The measure is part of an ongoing attack on the incomes of some of the most hard-working families in our constituencies, the very strivers whom the Chancellor purported to support.

[Clive Efford (Eltham) (Lab)]

The Chancellor said that Britain deserved a pay increase and Britain was going to get a pay increase. The Tories over there cheered him to the rafters when he increased the national minimum wage, but we now know from a document produced by the House of Commons Library—I have a copy here—that the changes in tax credits will more than wipe out the increase in the national minimum wage. At the same time, the Tories are cutting taxes for millionaires. It is an absolute disgrace.

[Seema Malhotra]

My hon. Friend is absolutely right. It is indeed shameful that we are seeing a cut in the incomes of the poorest people in our constituencies.

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

Will my hon. Friend give way?

[Seema Malhotra]

I will in a moment.

This measure will attack families in which people are working hard to do the right thing and to achieve what we all want to see: a higher-wage economy in which people are less reliant on tax credits to make ends meet. What is before us today must be called out for what it is. According to the Office for Budget Responsibility, it amounts to what will be a cut of more than £3.4 billion annually by 2020—a cut that the Government have sought to slip through without even having the courage to carry out an impact assessment.

[Andrew Gwynne]

I welcome my hon. Friend to her new position. I am very pleased that we are taking such a strong stance on tax credits. After the Prime Minister said that he would not cut tax credits, we are seeing the most pernicious and unfair cut imposed on some of the poorest people in society. Is that not why it is right for us to stand up for them today?

[Seema Malhotra]

My hon. Friend is entirely right. We are standing up for families who are doing the right thing: going out, working hard and trying to support themselves and their children.

[Jack Dromey (Birmingham, Erdington) (Lab)]

As a founder member of the drive, initially in London, for the real living wage, may I ask whether my hon. Friend agrees that the phoney living wage of the Chancellor of the Exchequer will not begin to compensate for the tax credit cuts, which will hit those in work particularly hard and will therefore punish the very strivers about whom the Chancellor is always lecturing us?

[Seema Malhotra]

I thank my hon. Friend for that intervention and for highlighting that the living wage will be lower than in any year since 2011. That is another example of this Government’s lack of transparency.

This move today amounts to a huge cut in the income levels of hard-working families.

[Mr Rees-Mogg]

Will the hon. Lady give way?

[Seema Malhotra]

I will give way in a moment.

Effectively, these regulations, which come into force in April next year, will lower the level at which working tax credit starts to be withdrawn from £6,420 to £3,850, and increase the taper rate at which tax credits are withdrawn from 41% to 48%, meaning that for every £1 earned over the threshold there will be a 48p reduction in the level of tax credit entitlement. As a consequence of these changes to working tax credit, the level at which child tax credit begins to be taken away is lowered from £16,105 to £12,125. This change was not announced in the summer Budget, but is a consequence of steepening the taper for working tax credit.

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

Does my hon. Friend agree that the Government have created a new phenomenon regarding zero-hour contracts? Women cannot get tax credits because of those contracts, as they have no continuity of employment, which affects families in many different ways.

[Seema Malhotra]

I thank my hon. Friend for that intervention. He highlights the collective impact of the decisions this Government are making on the income levels of many of the poorest families in our constituencies.

[Several hon. Members]

rose—

[Seema Malhotra]

I will make a little progress, and then I will give way.

Far from increasing work incentives, these measures will reduce them. Reducing the work allowances or thresholds and increasing the taper rates mean families will have their incomes reduced earlier and more quickly than would otherwise have been the case.

[Mr Kenneth Clarke (Rushcliffe) (Con)]

Does the hon. Lady accept that the vast majority of Members in this Chamber probably agree that we would like to see Britain move away from being a low pay, low productivity economy to a more advanced, higher productivity, better paid one? Can she explain how she thinks we can possibly move in that direction, even now the economy is recovering, if we do not tackle the absurd level of taxpayer subsidy to low pay from the tax credit system?

[Seema Malhotra]

I—[Interruption.]

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I want to hear the hon. Lady’s reply.

[Seema Malhotra]

I thank the right hon. and learned Gentleman for his intervention. He may first want to explain why he voted against the national minimum wage when it was put to this House. We agree about people needing to come off tax credits, but we would do that through an increase in wages and in productivity.

The Government have sought to argue that working people will be compensated for the cuts by the increases in the minimum or living wage. That is contested by the Institute for Fiscal Studies, which says that it is “arithmetically impossible”. Although we welcome the increase to the personal allowance and the introduction of the so-called national living wage, as the Low Incomes Tax Reform Group has stated, any gains from those measures will not negate the impact of these tax credit cuts from April 2016. The IFS recently concluded that families will lose over £1,000 a year on average from cuts to tax credits, while they will gain between £100 and £200 a year at most from the proposed national living wage, and even that is seen as optimistic.

The IFS analysis has also shown that those on the lowest incomes are hit hardest by the Government’s tax and benefits changes. The reduction in annual income over the next five years is most marked for the poorest four income decile groups, highlighting the regressive nature of this Government’s fiscal choices.

[Chris Philp (Croydon South) (Con)]

I am grateful to the hon. Lady for giving way when there is such stiff competition. Does she agree with Alistair Darling that tax credits are a subsidy to unscrupulous employers who underpay their staff, and that by rebalancing our economy away from tax credits and towards higher pay, everyone will be better off?

[Seema Malhotra]

The hon. Gentleman continues to miss the point. We cannot remove tax credits in that way without ensuring first that there is an increase in wages for families so that they can support themselves and not see an increase in household debt.

[Bill Esterson (Sefton Central) (Lab)]

On that point, the Institute for Fiscal Studies figures that were given to the Treasury Committee show that the average gain is only £200 for the 8.4 million working age households who are estimated to lose £750 through this measure. Does that not show that the Conservatives’ claim of being the party of working people is a complete fraud?

[Seema Malhotra]

My hon. Friend has made his point incredibly well. I now wish to make some progress.

The IFS has also shown that those on the lowest incomes are being hit the hardest by the Government’s tax and benefits changes. It is also of great concern that many tax credit claimants will not be aware of the cuts and will suffer additional hardship from April without any time to adjust their budgets. Cuts in families’ income will have wider economic impacts. For example, the changes will hit local businesses, and less will be spent in our local shops.

It is staggering that the Budget document did not include a distributional analysis of the impact of the Chancellor’s spending decisions. It is no wonder that people believe that that was deliberate and part of the intent to hide the impact of these changes. That pattern has continued today.

[Alison McGovern (Wirral South) (Lab)]

Was my hon. Friend as astounded as I was to hear the Minister say that these changes protect those with the least and are being paid for by those with the most? Not only have the London School of Economics and the IFS demonstrated that the Government have hit those in the lower half of the income distribution, but I have evidence of a real family in Merseyside who will be £32 a week worse off. Does that not prove that what the Government are saying is a falsehood?

[Seema Malhotra]

My hon. Friend is absolutely right, and I can guarantee that all Members in this House will see more people with exactly the same problems in their advice surgeries.

The pattern has continued with no Government impact assessment for the statutory instrument that we are debating today. The Low Incomes Tax Reform Group has emphasised that fact along with the Social Security Advisory Committee, which complained in a letter last week about the lack of information that it was given on these regulations and the impact of the changes. It also said that more information should be made available to Parliament to allow for proper scrutiny. It said:

“In the case of the Tax Credits (Income Thresholds and Determination of rates) (Amendment) Regulations, which are affirmative, we would expect Parliament to want more detailed information that clearly explains the changes and potential impacts to ensure that they can be subject to effective scrutiny. We would encourage you to take those steps to make that material available for that purpose.”

The Members who are here today have no official information from the Government about the impact of the changes on which they are voting. I am talking about the impact that those changes are likely to have on their constituents. Instead, we have to use the IFS figures, which are the most authoritative figures available.

[Suella Fernandes (Fareham) (Con)]

rose—

[Seema Malhotra]

I will not give way.

These measures will hit families with children the hardest and impact on child poverty at a time when the Government are also abandoning their commitment to eradicating child poverty by 2020, and effectively abolishing the child poverty watchdog. The Social Mobility and Child Poverty Commission’s remit will now just be social mobility. Tax credits have played an enormous role in tackling child poverty. I hope that Government Members will think twice before they go through the Lobby tonight.

[Mr Rees-Mogg]

Will the hon. Lady give way?

[Seema Malhotra]

I will give way to the hon. Gentleman.

[Hon. Members]

Hurrah!

[Mr Rees-Mogg]

I am very grateful to the hon. Lady for giving way and I congratulate her on her promotion and her new appointment. She is now more than quarter of an hour into her speech, but we still do not know where the £3.4 billion would be saved from, if not from this measure? The Opposition cannot be credible if they are still going to go for further deficit spending.

[Seema Malhotra]

The hon. Gentleman’s constituents will certainly be pleased to hear him raising their concerns about the likely impact of these changes on their incomes. I hope that he will engage—[Hon. Members: “Answer!”] He has heard the answer before from the Labour party. We certainly would not give tax cuts to the very wealthy in this country, which his party has had a good record of doing over the past five years.

Around 10 million people—a sixth of the population—will be affected by these changes. Every Member in the House represents some of those who will be hit—around half the working families in our constituencies. However, it is heartening to read in media reports today that at least five Members on the Government Back Benches are planning to vote against the changes. We have also heard reports, cited by the Chair of the Work and Pensions Committee, that the Chancellor spent yesterday talking to anxious Tory MPs and urging them not to defeat him in the vote today, after they took him at his word when he said that the Government represented low-paid workers. I am sorry that Conservative Back Benchers feel let down by their Chancellor, but it is not too late for the Government to change their mind.

It is disappointing that the Government have failed to tackle the real drivers of welfare spending—notably, low pay and the high cost of rent. That failure caused the Department for Work and Pensions to overspend by £25 billion over the last Parliament. The Chancellor has slashed entitlement to housing benefit, including through the bedroom tax and the benefit cap, yet the number of working people being paid housing benefit has still risen by 400,000 since 2010 because working people are not bringing home enough money to pay the rent. The number of people paid less than a living wage has risen by 45% since 2009, with 4.9 million workers today being paid less than the living wage.

This week the Government also launched the most sustained attack on rights at work in 30 years. The Trade Union Bill amounts to a suppression of the democratic rights of ordinary people, and the Government’s cuts to tax credits are a disgraceful attack on the incomes of families up and down the country. Labour would bring down welfare spending not by punishing the most vulnerable but through supporting a higher wage economy, introducing a real £10-an-hour living wage, tackling high rents by addressing the housing crisis, and supporting trade unions to ensure fair pay.

The proposed changes arguably represent the largest single cut to family incomes ever implemented by a Government. I hope that Conservative Members will search their consciences on this issue and vote with their hearts and their heads by joining us in the No Lobby today.

[Several hon. Members]

rose—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. A lot of Members want to get in, so let us crack on with a four-minute limit on Back-Bench speeches.

16:33

[Mark Garnier (Wyre Forest) (Con)]

I am not going to pretend that it is easy to stand up and speak in favour of something that is, as the hon. Member for Feltham and Heston (Seema Malhotra) has said, going to be tough on families, but this is none the less the right thing to do. We have heard a great many estimates of how families are going to be affected, with a variety being produced by the Institute for Fiscal Studies. The one that I have seen gives a figure of £750.

This measure will affect families, but it is worth bearing in mind the fact that there are mitigating factors that will make a difference for those families. We have heard about the tax threshold increases, and it is also worth bearing it in mind that many of those families are also small and micro-business owners who have benefited from reliefs on business taxes and small business rate relief. The economy is also a lot better, with very low inflation rates at the moment.

[Ian Blackford (Ross, Skye and Lochaber) (SNP)]

Would the hon. Gentleman like to reflect on the fact that someone working full time and earning £17,000 a year will lose close to £2,000 as a result of these measures? Why do the Government want to punish hard-working families in this way, at the same time as they are increasing the inheritance tax threshold? This is vindictive and nasty.

[Mark Garnier]

I am not sure I recognise the figure of £2,000 on a £17,000 income, and I do not accept that this Government are punishing hard-working people. I see a Government who are doing an enormous amount by reducing the threshold tax rates and by helping small businesses. We have seen more people come into work than there have ever been before. This Government have had a huge number of successes, so I do not recognise what the hon. Gentleman is describing.

There are two particular reasons why I support this measure, the first of which was highlighted by my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), the former Chancellor, and my hon. Friend the Member for Croydon South (Chris Philp) in talking about the effect that tax credits have on employers. We do not know exactly the extent to which this has been the case, but without a shadow of a doubt some employers will have been not paying the right salary or pay, given that the Government are subsidising not necessarily those people on low incomes but the employers employing people on low incomes. We also know that if that did happen early on, it is much more difficult to unravel it now, which is why it is very important that we have the new national minimum living wage. It is there to ensure that wages do start going up, although I concede that this does not necessarily cover it all.

[Helen Goodman]

How can employers take account of the tax credits, given that the tax credits are paid according to family circumstance and the wage is not?

[Mark Garnier]

Because employees will work for a wage that they can afford to work at, and if the Government are subsiding those household incomes the employers can take advantage of that. It is difficult—I completely concede that—to unravel this.

[Richard Graham (Gloucester) (Con)]

Conservative Members are clear that the macro picture is absolutely right and we have to reduce the welfare bill. Does my hon. Friend agree that the Government could do one specific thing that would help enormously? The BBC has withdrawn its online calculator for people who want to know how much they will be affected by this, and online forums suggest that different calculations are produced by different newspapers. Could the Government produce their own calculator so that our constituents can find out—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. Mr Graham, you know you are pushing your luck. The hon. Gentleman has already given way twice and you are taking up your colleague’s time.

[Mark Garnier]

A very wise idea.

The second reason I am very supportive of these changes goes back to the old argument about reducing the deficit. Conservatives made it perfectly clear at the last election that we would seek to find £12 billion through benefit changes, and that was a manifesto pledge. We were elected with an increase in our number of Members of Parliament and a rise in the sitting MPs’ majorities. We have been asked by the country to deliver on our manifesto pledges, and this is part of that delivery.

We still have a budget deficit, and the tax credits system costs the taxpayer about £30 billion a year. The IFS this morning said that it expects these changes potentially to deliver £6 billion in savings. It is worth remembering that, as has been said, tax credits cost just £1.1 billion when they were first introduced, but that has now ballooned to the current level and that is simply not acceptable. It is also worth remembering that they ballooned in a period of so-called “high economic growth”. The then Chancellor, famous for many things but in particular for claiming to have ended boom and bust, was running a bizarre programme of increasing benefits at the same time as telling us that the economy was fine and growing steadily. Perhaps he knew something that he was not telling us, increasing benefits in anticipation of the collapse caused by the crisis—perhaps he knew it was coming. By 2010, 90% of families with children were receiving tax benefits. Do 90% of families actually need these tax credits, even after all those years of the Labour Government, when we would have thought that the families would be doing better? Apparently, they are not. These tax changes take us back to the real levels in 2007 and 2008.

I wish to finish by discussing one point. I was very struck, as were many Members, by the election whose result we saw on Saturday. I was particularly struck by the number of young people who were voting in that leadership election. They were voting in the name of voting against austerity. They were objecting to what they see as cuts being delivered to them today. In 20 or 30 years’ time, they will have to take responsibility for the mess that they find—we have to do something now. If we hand over the shop to them as we found it five years ago, austerity would not mean some managed cuts; it would mean devastating cuts that would be unbelievably painful. We have to take responsibility for the way things are now. I am not in the business of mortgaging the next generation’s future. I want to take responsibility for the problems we have today and not kick the can down the road. This is not austerity-heavy; it is common sense.

16:39

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

Let there be no mistake: this statutory instrument will mean drastic cuts in the incomes of families with parents in low-paid work. Across the UK, about 7.5 million children live in about 4 million families that are in receipt of tax credits, and the vast majority of those families are in work. The key impact of the measure will be to reduce the incomes of more than 3 million working families by an average of more than £1,000 a year. We have a very short time today to debate a statutory instrument that will, at a stroke, make dramatic cuts to the incomes and life chances of millions of our citizens, and it deserves a lot more scrutiny then we are giving it today.

The Government have tried to argue this afternoon that their changes to benefits and tax credits are part of a plan to encourage people into work, but this measure overwhelmingly affects people who are already in work. Far from providing incentives for parents to enter the workforce, it actively reduces work incentives and makes it harder than ever for parents in low-paid work to support their families.

This is a hugely regressive measure. Our poorest working families are set to lose a dramatic proportion of their income. If we pass the regulations today, tax credits will start to be withdrawn from any family earning more than £3,850 a year rather than from those earning more than £6,420 a year, as is currently the case. More than half a million families earning less than £6,420 a year will lose out disproportionately because of these cuts to work allowances. That is a massive reduction in the amount that families can earn before tax credits start be withdrawn. Combined with the lower level at which universal credit will be withdrawn it means that, for example, a single parent earning £6,410 a year—roughly 20 hours’ work a week on the minimum wage—will lose 48p in tax credits for every pound they earn above the new threshold, which will leave them about £1,200 worse off a year.

One hundred pounds a month probably does not sound like a lot to Conservative Members—[Interruption.] It might not be a lot to them, but for those on low incomes a drop in income of that magnitude will almost certainly mean very difficult choices about very basic things, such as the quality and quantity of the food they eat and how to heat their home. Many poorer families already struggle with heating costs in winter, especially in my part of the world, but it is not only people’s health that is affected by living in cold and damp conditions. This is also about whether children have an adequately heated place to study and do their homework and the long-term consequences if they do not.

I recognise that disadvantage takes many forms, and we have heard a lot of rhetoric lately about social mobility, but the harsh fact is that income poverty is the single biggest driver of long-term disparities in children’s outcomes. Children who grow up in income-poor households are likely to have poorer health throughout their lives. They attain fewer qualifications at school, end up in lower-paid jobs and die younger than their peer group.

[Maria Caulfield (Lewes) (Con)]

The hon. Lady says that income-poor families have much poorer physical and mental health as well as educational attainment, but is that the case? The fact is that someone on benefits or welfare has poorer outcomes, so the route out is by gaining work and earning a decent wage.

[Dr Whiteford]

The hon. Lady is making a ridiculous argument and once again trying to pretend that there are people on welfare and people in work whereas in reality—as illustrated by the tax credit system—many thousands and millions of working people are dependent on benefits because of low pay. That is the key issue in this debate. The Government are attacking low-paid workers, just as they have over the last Parliament, while giving tax breaks to the wealthiest people in our society. The deep cuts to the incomes of the poorest families that the Government are trying to enact today will only exacerbate the inequalities we already have in our society and push opportunities even further out of the reach of those who already lag behind.

The most bizarre claim that has been made for the Government’s austerity measures is that they will encourage people to work harder. I think that we should reject the rather insidious implication that people in low-paid jobs somehow do not work as hard as people in better paid jobs, because that is simply not the case. We must remember that those low-paid jobs are often far more physically demanding, and many people who are set to see their incomes cut under this measure are already working very long hours in exhausting and often pretty unrewarding roles.

[Hywel Williams (Arfon) (PC)]

Does the hon. Lady also reject the glib answer from those on the Government Benches that low-paid workers can somehow just take more hours, because clearly those hours are not available?

[Dr Whiteford]

In various parts of the country unemployment is still unacceptably high. Whether someone can easily pick up extra hours depends on which part of the country they live in, which sector of the economy they work in and what caring commitments they might have, whether for children or other family members. It is not so straightforward when lots of parents are chasing part-time work between the hours of 9 am and 2.30 pm, when their children are at school. A lot of part-time work needs to be done outwith those hours, when parents have real difficulties accessing childcare.

The charity Gingerbread has today pointed out that some lone parents working full time on the minimum wage with one child will, by 2020, be no better off than non-working lone parents were in 2010. By 2020 many parents working full time will have fallen even further below the minimum income standard than they are at present, but essentially they will be no better off working full time than they would have been had they been out of work five years ago. Where is the work incentive in that? If we really want to incentivise work, we should be increasing work allowances, as my party proposed in the run-up to the general election, not cutting them. That would incentivise work and cut child poverty.

Once again, we have been told today that increases in the minimum wage will compensate for those losses, but the numbers simply do not stack up. Even if the Government proposed raising the minimum wage to the level of the current living wage, which is already £7.85 an hour—well above the Government’s proposed ceiling—the calculation of the living wage is based on not only the cost of living but the assumption that low-paid families are already receiving their full entitlement to tax credits at the current rate.

The Institute for Fiscal Studies, the Resolution Foundation, trade unions and others have all pointed out that the proposed increases in the minimum wage, and indeed the increases in the personal tax allowance, will not make up for the loss of tax credits. The crucial point is that if we cut tax credits in the way the Government are proposing today, the minimum wage would have to rise substantially further, to around £11 an hour, just to keep incomes standing still in real terms.

[Catherine West (Hornsey and Wood Green) (Lab)]

Has the hon. Lady considered the impact of the proposed changes on the housing benefit bill, particularly in the private rented sector?

[Dr Whiteford]

The hon. Lady makes a good point, because the cumulative impact of a range of benefit measures is hitting the same people again and again. She makes a valid point, and one that I hope to come to in just a moment.

The bottom line is set out clearly in the OBR’s estimates, which indicate that the higher minimum wage is likely to increase earnings by around £4 billion in total by 2020, compared with social security cuts of £12 billion in the same period, a large portion of which will come out of tax credits. The figures just do not add up. No matter how they repackage their minimum wage and tax changes, the Government are giving a little with one hand but taking a whole lot more with the other.

At the same time as the Government are slashing the incomes of the lowest paid families, the wealthiest families are set to benefit from huge inheritance tax breaks on properties worth over £1 million. For me, that exposes their perverse priorities on families. It is not so much robbing Peter to pay Paul as robbing Peter to pay Rupert and Sebastian.

My colleagues and I were elected on a commitment to fight the austerity agenda being recklessly pursued by this Tory Government. Almost half of all families in Scotland will lose out as a result of these measures, pushing into reverse much of the progress we have made in recent years to reduce child poverty. Around 346,000 children in Scotland will be impacted by these cuts, and the Child Poverty Action Group estimates that 100,000 more children in Scotland will be living in poverty by 2020 as a direct result of the UK Government’s changes to tax and benefits.

The Scottish Government are attempting to mitigate the worst excesses of austerity, providing over £300 million between last year and next, but we need to remember that the people affected by cuts to tax credits are in many cases the same people already disproportionately affected by the freeze in child benefit, the freeze in housing benefit, as the hon. Member for Hornsey and Wood Green (Catherine West) noted, pay freezes and other austerity measures. Once again, other public services and the voluntary sector will be picking up the pieces from the collateral damage of the UK Government’s ideological crusade.

Finally, I want to address the removal of child tax credits for a third or subsequent child. This is just a further blow to poor families already struggling. This measure, along with the introduction of the two-child policy in the Welfare Reform and Work Bill, will push more families with children into poverty, pushing them further behind in health and education, potentially for the rest of their lives. Only about one in six of the families receiving tax credits in Scotland has more than two children. Larger families are a rarity nowadays. By contrast, the majority—more than half the poorest families in Scotland—have only one child. In Scotland, it is in the more affluent areas that people tend to have more children, but across every income group our birth rate is unsustainably low. We need to be supporting family life and encouraging people to have more children if we are to dodge the demographic problems coming up on the inside lane. We should not be putting barriers in the way of those prepared to contribute to our society by doing the essential job of raising the next generation.

This Government have got it very badly wrong. Cutting the incomes of working families will only make it harder to tackle the embedded inequalities that already blight the life chances of too many children. Work should be a route out of poverty for families, but here in the UK it really is not. This statutory instrument pushes that aspiration even further out of reach. That is why my colleagues and I will oppose it and continue to press for the power to make these decisions in Scotland, for Scotland, in the interests of our people and in line with our commitment to building a fairer society.

16:51

[Peter Aldous (Waveney) (Con)]

In laying this instrument before the House, the Government are pursuing the right strategic course of supporting working families through the tax system and encouraging earnings growth rather than doing that through the benefits system. For that reason, I shall support it, although I have serious concerns about the impact on working families in the short term over the next two to three years. I urge the Government to address these issues in the coming months before the measures come into effect next April.

The Government are right to be going in this direction. The current system is extremely expensive, and if nothing is done the cost will escalate to unsustainable levels. For me, it is wrong to be promoting what is, in effect, state dependency. It is also wrong that the Government are subsidising employers so that they pay low wages.

[Clive Lewis (Norwich South) (Lab)]

The hon. Gentleman talks about high productivity and high wages, and Labour Members would agree with him on that, but yesterday we watched him file through the Lobby and vote against trade unions. They are one of the key ways that we can raise people’s wages, and he is undercutting them. How does he explain that?

[Peter Aldous]

I thank the hon. Gentleman for making that point, but I am constrained specifically to the issues we are debating.

It is wrong that the Government are subsidising employers in this way. Moreover, the current system of tapering income thresholds and interconnectivity with other benefits is ridiculously complicated and opaque.

I welcome the Government’s proposals to increase the personal allowance and to introduce the national living wage. It is right that working taxpayers, especially those on low pay, should keep more of the money that they earn as an incentive to work. My concern is that in the short term, over the course of the next two to three years, those who will be hit hardest by these measures are working families, often with children, on low wages. These are the hard-working families—the people doing the right thing—that all political parties say they support and must support.

In my constituency, where the median wage is just under £24,000, many people will be seriously affected by these changes. As of May this year, 4,200 families were receiving working tax credits.

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

Representing a constituency where the median salary is even lower, at £17,500, I entirely concur with my hon. Friend’s concerns about this measure, and that is why I will not support it. Does he agree, though, that if it goes through, there is time between now and next year to make changes, be they to national insurance, emergency tax codes, or whatever, to mitigate the impact on the poorest?

[Peter Aldous]

I agree with my hon. Friend. I will come to that when I conclude.

Yes, the rise in the tax threshold and the introduction of a national living wage will help, but, as shown in research by the House of Commons Library, they will not on their own make up for what will be significant reductions in income.

[Neil Parish (Tiverton and Honiton) (Con)]

My hon. Friend is making a powerful point. I also represent a constituency where wages are quite low. The Government must recognise that the living wage must be brought up so that people are not worse off as a result of the cut in tax credits. We have to drive up the living wage so that we do not take too much money away from them.

[Peter Aldous]

I thank my hon. Friend for that notable intervention.

In my Waverley constituency, the demise of traditional industries, high levels of unemployment, low wages, lack of skills and poor infrastructure have been brakes on growth and job creation for 40 years. Both the previous Government and this Government have taken decisive action to address those problems, to halt and reverse the seemingly never-ending downward spiral of decline: unemployment has fallen significantly since 2010; there has been notable investment in apprenticeships; an enterprise zone has been set up; assisted area status has been granted; and funds have been committed to upgrading the roads and railways. That support and investment is to be both applauded and welcomed, and it will bring new, well-paid jobs to the area. However, it will not do so overnight. In the meantime, a particularly vulnerable group of society will be left very much exposed.

As I said at the beginning of my speech, the Government are pursuing the right course, albeit through choppy waters, and for that reason I shall be supporting the proposals. However, there are real concerns that must be addressed, and I urge Ministers to ensure before next April—possibly in the autumn statement or the next Budget—that those on low incomes are not hit unfairly and disproportionately by the proposals and that they do not have the unintended consequence of undermining the incentive to work.

16:56

[Frank Field (Birkenhead) (Lab)]

I wrote to the Prime Minister to ask for this debate on the Floor of the House for a number of reasons. First, this is the most important aspect of the first Conservative Budget for many years; I have forgotten how many. Yet, by the nature of how the authorities decide how we give or withhold authority, we were not able to vote on the biggest change proposed in that Budget. I therefore think it important that we have the opportunity to debate it, and I am grateful to the Prime Minister for giving the whole House the chance to debate the “crown jewel” of the first Conservative Budget.

The second reason has already begun to erupt on the Conservative Benches. Not only is this the most significant fiscal change a Conservative Government have made, but it affects disproportionately the poor. Many Members will want to put on the record their disquiet with the Government—not just Labour Members, as one would expect, but Conservative Members, too.

The figures speak for themselves. We are talking about people at the bottom of the income pile. Just one headline figure tells us that well over 3 million of the lowest paid workers in this country will lose in the region of £1,300 a year. That might affect the standard of living of MPs; it will certainly affect the standard of living of many of our constituents and the choices that they will be able to make, whether they are represented by Opposition or Government Members.

[Andy McDonald (Middlesbrough) (Lab)]

Will my right hon. Friend give way?

[Frank Field]

I will not, partly because I am anxious that other Members have the opportunity to contribute.

I am surprised that the Chancellor is not present—this was my main reason for calling for this debate—because he was clearly the architect of the Budget. He is the most political Chancellor I have known in my whole period in the House of Commons. In the lead-up to the last election, and during it and since, he managed to push Labour into a very unpleasant corner where we were the welfare party and the Conservatives were the party of the strivers. In one single move, he has destroyed his 2020 election strategy. We heard the Chancellor’s very powerful speeches saying that the Conservative party was in favour of individuals who, when they got up in the morning to do grotty jobs for very low pay, passed the windows with the curtains still drawn of their neighbours on benefits. Individuals in this country who still get up with the work motive, which is so important for both economic and human advance, will know as they pass the windows with the curtains drawn that they do so with, on average, £1,300 a year less in their pocket.

It is an advantage to debate this proposed change in the House. The Government may not be harmed that much in the vote, but this issue will rumble and then catch fire in Members’ constituencies when the cuts come through. If Mrs Thatcher would bend under pressure from her Back Benchers when they did not like what they were hearing in their constituencies, I would be very surprised if our most political Chancellor did not bend like her.

17:01

[Luke Hall (Thornbury and Yate) (Con)]

Thank you, Mr Speaker, for giving me the opportunity to speak in this debate. I will keep my remarks short, because several other colleagues wish to speak.

This Government were elected just over four months ago with a clear mandate to get our country’s books in order, balance our finances and run a surplus. Our manifesto included the commitment to make £30 billion of savings, including £12 billion in welfare. Although the deficit was halved in the last Parliament, Britain is still borrowing too much money, with a budget deficit of 5%. The sheer scale of tax credits is

“subsidising lower wages in a way that was never intended”.

Those are the words of the former Chancellor Alistair Darling.

Under Labour, spending on tax credits more than trebled in its 10 years in office. In fact, as my hon. Friend the Member for Havant (Mr Mak) pointed out, the original tax credit system cost just £1.1 billion in its first year, but will reach a cost of almost £30 billion this year. Reductions in spending are therefore vital to ensure that we are not burdening our children, grandchildren and great-grandchildren with more debt than they can ever hope to repay.

In 2010, 90% of families were eligible for tax credits, which was a disproportionate amount. After these Budget changes, that will be reduced to five in 10, which is a much more sustainable number. Ultimately, the changes will return tax credit spending to pre-crisis levels—to the level that it was under Labour Governments in 2007-08—and deliver £4.4 billion of savings in 2016-17.

The Chancellor’s Budget delivered the promised increase in the personal tax allowance, which will rise to £11,000 next April and to £12,500 by 2020. The living wage will be £7.20 an hour, and employers are already pushing wages up to match that figure. That is equivalent to annual gross earnings of £13,100 for someone aged 25 or over working 35 hours a week. The projected increase to £9.35 an hour will increase the figure to £17,100 for someone aged 25 or over working 35 hours a week, which is a huge increase in a basic salary. In general, the losses from the combined effect of the threshold reduction and the taper increase will be greater for tax credit claimants with relatively high incomes, which is vital to ensure that our welfare system is kept affordable and provides support for those most in need.

In summary, the Government have a clear mandate to control our spending, to reform welfare and to balance our country’s finances. The proposed tax changes, combined with the increased personal allowance and the introduction of the first national living wage in the first Conservative Budget for 18 years, demonstrate that this Conservative Government are committed to creating a higher wage and lower tax economy. I believe that these changes will put our welfare system on a long-term sustainable footing, and I will support them today.

17:04

[Ms Karen Buck (Westminster North) (Lab)]

Before the election, the Prime Minister promised to maintain the value of tax credits. He has broken that promise. He also said on 22 April that the Government were

“using all the tools at our disposal”,

including the “tax and benefit system”, to “make work pay”. Today, we are debating the betrayal of that pre-election commitment.

As we have heard, 3 million working households will lose up to £1,000 each and a single-parent earner on £19,000—a modest income—will lose £2,000. Many extrapolations that are set out in the House of Commons briefing paper and elsewhere show the scale of the losses.

Today, we have heard from Government Members the argument that tax credits are a subsidy for bad employers. In some instances, that is true, but there is scant evidence for the assertion across the board. What is absolutely clear is that the tax credit system is an incentive, particularly for lone parents, to go into the workplace and stay in work. The positive employment incentive of the tax credit system has been almost entirely ignored by the Conservative party.

That masks a success story over the past 10 to 15 years, which has seen a dramatic increase in the number of parents, particularly lone parents, going into the workplace. We should celebrate that fact and support those working parents who have gone into work. A recent piece of research by the New Policy Institute, “Trends in parental employment in London”, demonstrates that success story in employment. Associated with that, there has been a

“large shift away from out of work claims towards in-work claims”.

A rise in the national minimum wage is welcome—indeed, employers should share with the state the responsibility for ensuring that working people enjoy a decent basic income—but it will not offset the huge hit on tax credits. As the analysis by the Institute for Fiscal Studies has shown, the new national living wage offers

“little compensation because the boost to gross wages is smaller than the announced fiscal tightening and almost one-third of the increase in gross wages goes to the Treasury in higher tax receipts and lower benefits and tax-credit entitlements.”

The IFS calculates that across the entire population that receives in-work benefits and tax credits, just 20% of the losses that will accrue from the benefit cuts will be returned to those people through the rise in the minimum wage.

[Mike Wood (Dudley South) (Con)]

Will the hon. Lady give way?

[Ms Buck]

I will not give way because many people want to speak.

My particular concern is that London has the highest level of child poverty of any region in the country and, with 356,000 families receiving tax credits, almost 750,000 children will be losers as a result of this policy. A study by the Trust for London on the higher costs that are faced by working people and parents in London, which has just come out, shows that even before the tax credit cuts, such families are £54 a week worse off than equivalent families outside London. These cuts will hit the working poor right across the country, but they will hit them harder in London than anywhere else.

As we look towards the election that we will fight next May, I absolutely guarantee that my colleagues will draw attention to those losses for families, and those families will not forgive this Government for betraying their commitment to protect the working poor.

17:08

[James Cartlidge (South Suffolk) (Con)]

There is no doubt that this measure is controversial and that it will hurt our constituents. It is a tough measure, but I nevertheless support it strongly because of the wider picture. This country must take the journey from being an economy of high welfare spending, high welfare dependency and high borrowing to being a more competitive country with higher productivity and, most importantly, higher real wages at every level of the economy. That, in turn, will put us on the path to more sustainable prosperity and sound public finances.

I have spoken on tax credits before in the House. I said on Second Reading of the Welfare Reform and Work Bill that they were one of the greatest mistakes in the history of the welfare state. When the Beveridge report made its recommendations, which led to the welfare state, the third key principle was that state benefits

“should not stifle incentive, opportunity, responsibility”.

My biggest problem with tax credits is that it is overwhelmingly clear that they stifle incentive and opportunity.

[Suella Fernandes]

I agree with my hon. Friend. Tax credits have distorted the principle of welfare, which was to help the most vulnerable in our society who are unable to work. We now have a distorted system of in-work welfare where the state is subsidising wages. It is unsustainable.

[James Cartlidge]

I strongly agree with my hon. Friend. My point about work incentives is based on my experience as a small business owner. I found the situation with tax credits extraordinary. I had members of staff who declined pay rises because they would lose so much from their tax credits, and most common of all were part-time staff who would not go full time because the tax credits were so generous.

[Owen Thompson (Midlothian) (SNP)]

Will the hon. Gentleman give way?

[James Cartlidge]

I will not give way at this moment. People were receiving the equivalent of full-time pay on part-time hours, and in that situation can we blame someone for not wanting to take on more hours? It is a real problem, and many other employers have made the same point to me. The problem is widespread.

[Steve Double (St Austell and Newquay) (Con)]

My hon. Friend might be interested to hear that as a small business owner, I share his experience. I have offered pay rises and additional hours to members of my staff, and they have turned them down because of the tax credits that they would lose as a result.

[James Cartlidge]

I thank my hon. Friend and emphasise that this is not a fantasy. This is not a think tank or a theory; this is the real world that we have experienced. With tax credits it is difficult to incentivise staff in their interest to make the most of their talent. I genuinely believe that every person was born with incredible skills and talents. We should seek to help people make the most of those talents, but tax credits provide a perverse disincentive to do so and place a ceiling on wages and ambition.

[Antoinette Sandbach (Eddisbury) (Con)]

Does my hon. Friend recognise that the points raised by my hon. Friend the Member for Waveney (Peter Aldous) have real resonance, in particular for single parents? The welcome childcare changes will not be implemented for some time, and that will lead to a transitional period during which people will be hard hit by these changes.

[James Cartlidge]

I do not disagree. As I said, we are having to make a choice about whether the pain that this measure undoubtedly involves—we must be honest and open about that—is a price we have to pay if we are to make the whole country more prosperous on a sustainable basis for the future.

My hon. Friend the Member for Wyre Forest (Mark Garnier) made an excellent fundamental point about tax credits. At a time of general prosperity, I do not think that the state should be embarking on a widespread expansion of the benefit system and the dependency culture. In 1945 when we set up the welfare state, this country was on its knees and people needed the welfare state.

[Several hon. Members]

rose—

[James Cartlidge]

I am sorry but I will not give way again. People needed that system to support those who were in desperate circumstances. In May 1997 when the Labour party came to power, we had a strong growing economy and were to have strong global trade for many years after that. We enjoyed low inflation because of the growth of China, and we had a wonderful period of economic growth with low inflation. It was an amazing opportunity for the Government to build for the long term, but in those prosperous times what did they do? They built a £30 billion extension to the welfare system, with nine out of 10 families with children able to qualify for those benefits. That is not a safety net, it is a massive extension of the dependency culture and a total nationalisation of family and household income. That is what we are voting on today.

There is a price to pay, but we are voting on a fundamental principle in this statutory instrument: should this country move forward to an economy based on stronger wages and where people become more reliant on wages to support themselves rather than on benefits and the state? I am proud to go through the Yes Lobby today. I think this is an important measure and a key step towards a competitive, dynamic country that has sustainable prosperity for all.

17:14

[Clive Efford (Eltham) (Lab)]

What a mean confidence trick the Chancellor carried out in the Budget. Some 3,600 households in my constituency will be affected, including 6,600 children. The Chancellor said:

“Britain deserves a pay rise and Britain is getting a pay rise.”—[Official Report, 8 July 2015; Vol. 598, c. 337.]

He also said that those on the national minimum wage can expect a cash increase and full-time workers can expect their incomes to go up by £5,000 a year. But we now know that the whole package is far from compensated for by the increase in the national minimum wage. People on the national minimum wage will not just be worse off next year, but the year after that, the year after that and the year after that—every year until 2021. The Library’s document tells us that on average they will worse off by £8,945 over the next five years.

Conservative Members cheered the Chancellor to the rafters. Did they understand that the overall package would result in the poorest workers among us having their incomes cut? The Secretary of State for Work and Pensions punched the air. Did he not understand that the overall package would result in a cut in the incomes of people on the national minimum wage? Was he being mean or is he just too stupid to be doing his job?

The Chancellor said in his 2010 Budget:

“I am not going to hide hard choices from the British people or bury them in the small print of the Budget documents. The British public are going to hear them straight from me”.—[Official Report, 22 June 2010; Vol. 512, c. 167.]

What happened in the latest Budget then? The Conservatives say that theirs is the party of working people. Here are some working people: a cleaner with one child will be £31.72 a week worse off. An assistant cook will be £32.49 a week worse off, a teaching assistant £32.49 and a health care assistant £35.36—

[Chris Philp]

Will the hon. Gentleman give way?

[Clive Efford]

No, I have heard the hon. Gentleman so many times. He has to stop reading out the Whips’ handouts: it does not add to the debate.

A nurse with three children will be worse off by £35.91—from the party that claims to be the party of the workers. I have a whole list of worker after worker, all of them worse off as a result of the changes to tax credits.

Conservative Members may have been convinced by the Chancellor that he will make some changes. We have heard them argue that this change is necessary and that we have to make it. Perhaps they think that they have been given a promise that something will be done and some changes made for the people on this list, but I am sick and tired of hearing Tories tell us that we have to make changes. The changes will not hit them: they will hit the poorest income earners in their constituencies. Let the Tories vote for this change tonight. People will not forget that. We will remember that the Tories voted to reduce incomes for families with children. They trooped through the Lobby, claiming to be the party of the workers but voting to reduce their incomes. People will not forget that.

17:18

[Maria Caulfield (Lewes) (Con)]

I am grateful for the opportunity to speak in this debate. I support the proposed changes to tax credits, but I acknowledge that it is a difficult and sensitive issue. I wish to make a few points to explain my reasons for supporting the measure.

While I acknowledge that tax credits were introduced to support low wage workers, it cannot be right in this day and age that people who work long hours, often doing difficult work, are reliant on benefits to supplement their wages because they do not earn enough to live on. The perpetuation of the tax credit system of topping up wages lets employers off the hook when it comes to paying a decent wage. As we have heard, even Alistair Darling, the former Chancellor, has said that tax credits are

“subsidising lower wages in a way that was never intended.”

The proposed changes to tax credits deal not only with the economic issues of reducing public spending, but aim to address the inequalities faced by those who find themselves on welfare despite being in work. Life on benefits can have a huge negative impact on life outcomes, even affecting length of life. Living on welfare can have negative outcomes on physical health, on mental health and on educational attainment, to say nothing of the dignity of living on benefits.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

Will the hon. Lady give way?

[Maria Caulfield]

I will not, I am afraid.

It is very important that we make work pay. I have met many constituents who are on tax credits because they are paid so poorly. We are subsidising employers unwilling to pay a decent wage, but relying on the taxpayer to subsidise low wages. Currently, taxpayers, many of whom are earning just above the tax credit limit, are subsidising employers to pay low wages. This must end.

Change to the tax credit system is more than an economic argument to reduce public spending, but reduce it we must. I have heard nothing from Opposition Members on how they would do that if there are no changes to the tax credit system. To facilitate the changes to tax credits, the Government have not just introduced the national living wage but are providing free childcare for 30 hours a week, freezing fuel duty, freezing VAT, national insurance and income tax for five years, and increasing the tax threshold to £11,000 as a step towards raising it to £12,500, thereby keeping more money that people earn in their own pockets.

Changes to tax credits are needed to reduce public spending, as we are accountable to the British taxpayer who is currently subsidising low pay. What message is that to low-paid workers? If people get up early, go out to work, work long hours and come home late, they deserve a decent wage, not a life on benefits. We should, in this place, be pushing the agenda for better wages, instead of accepting that a life on benefits is inevitable. I will be going through the Aye Lobby tonight.

17:22

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

It is unfortunate that we have only 90 minutes to debate the regulations, but it is absolutely right that we should debate them on the Floor of the House. The right hon. Member for Birkenhead (Frank Field) has done us a great service in bringing this matter to the Floor of the House. It is worth reflecting, however, that the reason why there is not more public outrage about the proposed changes is a reflection of the sheer complexity of our tax and benefit system. That will have to be addressed—not in this way—in the medium to long term.

There was a lot in the Minister’s speech with which I could agree quite easily. When he spoke about the importance of raising the personal tax allowance, the very welcome increases to the minimum wage and the importance of providing better childcare provision, those are all things with which I could have no difficulty. The difficulty I have with the regulations is that at a stroke they negate the benefits the Minister outlined. It ought surely to be a matter of common consensus in all parts of the House that the best route out of poverty is through work, but what the Government are doing today is giving with one hand and taking away with the other.

[Jim Shannon (Strangford) (DUP)]

Will the right hon. Gentleman give way?

[Mr Carmichael]

I am sorry, but I am short of time.

The average household in social housing could lose up to £1,700 a year under the changes. That means for every extra £1 earned, they will lose up to 93p in benefits. That is why the Government are not true to their stated intent to encourage people off welfare and into work by bringing forward changes of this sort.

To understand why today’s statutory instrument is the wrong measure at the wrong time, it is worth reflecting on what happened to people’s employment circumstances after the 2008 crash. We expected steep rises in unemployment, and sure enough it went up, but not to the extent we expected, because employers kept people in work. However, their wages were frozen or reduced and those in part-time employment saw their hours cut. We can now see the light at the end of the tunnel—at last, we are seeing some wage inflation—but surely at this moment the Government should be encouraging people to take more hours, not removing the incentives to do so.

The hon. Member for Waveney (Peter Aldous) made a characteristically thoughtful contribution, and one of the most significant. He said the Government’s proposals were strategically correct. He might well be right about that, but what he said thereafter in the rest of his contribution indicated they were tactically inept. I address myself to him and other Government Members who share his concerns, because they are part of the most powerful group in the House: Government Back Benchers. The Government have a majority of 12, so it needs only six of them to vote with us to take this down and make them think again. I say to him, because I know he is a genuine man, that if he has not had his assurances and compensations before the vote, he will not get them after it.

17:26

[Mr Alan Mak (Havant) (Con)]

The tax credit reforms before the House must be viewed in the wider context of the measures in the summer Budget and other Budgets to help working people: the £9 living wage, giving 2.5 million people a direct pay rise; the income tax, national insurance and VAT freeze for the next five years; the rise in the personal allowance; the doubling of the amount of free childcare; the council tax freeze; and the cut in fuel duty.

The hard truth is that our tax credit system is unaffordable, unsustainable and requires reform to help those working people who pay for it. The statutory instrument, which I am pleased to support, will do that. The system cost £1.1 billion in its first year. This year, it will cost taxpayers £30 billion. We spend more on family benefits than France, Germany and Sweden. Even the right hon. Member for Birkenhead (Frank Field) said it was unsustainable. The statutory instrument focuses tax credits on the lowest income groups to help them in their lives.

The only welfare system that is sustainable and credible is a welfare system that is affordable. We can support those most in need only if we protect the system by reforming the system, rather than allowing it to implode under its own weight. Britain is home to 1% of the world’s population and generates 4% of the world’s income, yet it pays out 7% of the world’s welfare. This is a drag on our competitiveness in the world and our economy at home. I support the statutory instrument and urge other Members to do the same.

17:28

[Damian Hinds]

With the leave of the House, I will respond briefly to some of the points made, particularly by the right hon. Member for Birkenhead (Frank Field). The Government do not recognise the £1,350 figure quoted, because it does not take account of the gains to households from the national living wage; the increased personal allowance; the fact that households in receipt of housing benefit will see some offsetting increase to their entitlement; or the improvements in childcare provision.

The hon. Member for Feltham and Heston (Seema Malhotra), whom I welcome to her place, said the Government had not published a distributional analysis, but we have, and it is available online. It shows that the distribution of public spending across the income quintiles was unchanged between 2010-11 and now and that those at the top of the income distribution are paying more. I urge hon. Members to evaluate these changes in their wider context and our record in government: helping businesses create 2 million extra jobs; lowering income tax for 29 million people; ruling out increases to income tax, VAT and national insurance contributions; extending free and subsidised childcare—we are soon to do much more; and of course ensuring that Britain gets a pay rise with a national living wage.

We must get Britain’s finances on a solid, sustainable footing, because the surest way to make working people worse off, as we sadly saw in the past, is to lose control of the public finances. Welfare spending needs to be reformed—for the benefit of those who pay for it, as well as those who use it. We are doing this as part of a package to move to a less welfare-reliant, lower-tax and higher-wage economy. I commend the regulations to the House.

One and a half hours having elapsed since the commencement of proceedings on the motion, the Speaker put the Question (Standing Order No. 16(1)).

17:30

Division 71

Ayes: 325

---

Conservative: 322
UK Independence Party: 1
Independent: 1

Noes: 290

---

Labour: 215
Scottish National Party: 53
Democratic Unionist Party: 7
Liberal Democrat: 7
Plaid Cymru: 3
Conservative: 2
Social Democratic & Labour Party: 2
Ulster Unionist Party: 1
Green Party: 1

Resolved,

That the draft Tax Credits (Income Thresholds and Determination of Rates) (Amendment) Regulations 2015, which were laid before this House on 7 September, be approved.

High Speed Rail (London - West Midlands) Bill

Tuesday 15th September 2015 Commons Chamber

17:45

[The Parliamentary Under-Secretary of State for Transport (Mr Robert Goodwill)]

I beg to move,

That it be a further Instruction to the Select Committee to which the High Speed Rail (London - West Midlands) Bill is committed–

(1) that the Select Committee have power to consider–

(a) amendments to accommodate changes to the design of Euston Station in the London Borough of Camden;

(b) amendments to accommodate the requirements of landowners and occupiers and changes to the design of the works authorised by the Bill in the London Borough of Camden;

(c) amendments, to accommodate the requirements of landowners and occupiers, relating to:

i. the London Boroughs of Brent, Ealing, Hammersmith and Fulham and Hillingdon and the Royal Borough of Kensington and Chelsea;

ii. the District of Three Rivers in the County of Hertfordshire;

iii. the parishes of Ellesborough, Great Missenden, Stone with Bishopstone and Hartwell and Wendover in the County of Buckinghamshire;

iv. the parishes of Aston Le Walls, Boddington and Chipping Warden and Edgcote, Greatworth and Marston St Lawrence in the County of Northamptonshire;

v. the parishes of Coleshill, Cubbington, Kenilworth, Long Itchington, Offchurch, Stoneleigh, Ufton, Water Orton, Weston under Wetherley and Wormleighton in the County of Warwickshire;

vi. the parishes of Balsall, Berkswell, Dickens Heath and Hampton-in-Arden in the Metropolitan Borough of Solihull;

vii. the City of Birmingham;

(d) amendments, to accommodate changes to the design of the works authorised by the Bill, relating to:

i. the London Boroughs of Ealing, Hammersmith and Fulham and Hillingdon;

ii. the District of Three Rivers in the County of Hertfordshire;

iii. the parishes of Amersham, Calvert Green, Denham, Preston Bissett, Quainton, Steeple Claydon and Wexham in the County of Buckinghamshire;

iv. the parishes of Boddington and Culworth in the County of Northamptonshire;

v. the parishes of Burton Green, Coleshill, Cubbington, Curdworth, Ladbroke, Lea Marston, Middleton, Offchurch, Shustoke, Southam, Stoneleigh, Water Orton, Weston under Wetherley and Wormleighton in the County of Warwickshire;

vi. the parishes of Hints with Canwell, Curborough and Elmhurst, Drayton Bassett, Fradley and Streethay, King’s Bromley and Lichfield in the County of Staffordshire;

vii. the City of Birmingham.

(e) amendments relating to the extension of the Chiltern tunnel in the parishes of Amersham, Little Missenden and Great Missenden in the County of Buckinghamshire;

(f) amendments for purposes connected with any of the matters mentioned in subparagraphs (a) to (e);

(2) that any petition against amendments to the Bill which the Select Committee is

empowered to make shall be referred to the Select Committee if–

(a) the petition is presented by being deposited in the Private Bill Office not later than the end of the period of four weeks beginning with the day on which the first newspaper notice of the amendments was published, and

(b) the petition is one in which the petitioners pray to be heard by themselves or through counsel or agents.

That these Orders be Standing Orders of the House.

Before I start, may I welcome the hon. Member for Nottingham South (Lilian Greenwood) to her post as the shadow Secretary of State in the new politburo—sorry, shadow Cabinet? She is already on record as continuing to support HS2, which will be music to the ears of her Labour colleagues who run our great cities in the west midlands and the north. I look forward to working with her. Indeed, many of the momentous decisions facing us will have implications for our infrastructure for many years to come.

The motion instructs the Select Committee on the High Speed Rail (London - West Midlands) Bill to consider two sets of amendments: the first set relates to changes at Euston and elsewhere in the London borough of Camden, and the second set to changes along the rest of the route. These are the third and fourth such additional provisions that have come before us, and I am sure that many in the House will now be familiar with the hybrid Bill process. However, for the benefit of new Members, I hope that the House will indulge me if I give a brief explanation.

The purpose of this motion is to bring within the scope of the Select Committee any petitions from those who may be affected by the proposed changes.

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

May I ask the hon. Gentleman what the requirements are of the landowners and occupiers? Is this related to compensation, as many people in my constituency have been badly hurt by the lack of compensation?

[Mr Goodwill]

This is not specifically related to the compensation issue. This is about the minor changes and some other more substantial changes that we are making. This is about the principle of the hybrid Bill Committee being allowed to consider these changes and about people being given the opportunity to look at the environmental statement, and also to petition the Committee if they are affected. Indeed, the purpose of this motion is to bring within the scope of the Select Committee any petitions from those who may be affected by the proposed changes.

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

I agree that constituents should be allowed to petition, but there is a fee for petitioning. Will the Minister consider getting rid of that fee to allow easy access for those who might not be financially able to petition?

[Mr Goodwill]

The £20 fee is a matter for the House. I can reassure colleagues that anyone who has already petitioned will not be asked to pay a second fee. I do not believe that a £20 fee is prohibitive in this particular case.

An explanatory note of the changes was made available to the House last week. Although it is not the purpose of this debate to discuss the changes in detail, it is clearly important that Members understand the principle of them. If the motion is passed, those who are directly and specially—to use the legal term—affected by these changes will be able to petition the Select Committee, which is chaired by my hon. Friend the Member for Poole (Mr Syms). The Select Committee will then consider their case for changing the scheme.

First, let me turn to the proposals in relation to Euston. In April 2014, the House gave a Second Reading to the High Speed Rail Bill. At the time, the Secretary of State, having considered Sir David Higgins’s recommendations, said that we would seek to develop more comprehensive proposals for the redevelopment of the station to maximise the economic potential and regenerate a site that has been neglected. Since then, HS2 Ltd has worked with Network Rail and Transport for London, as well as engaging with the local community to develop such a proposal. Indeed, I have visited the area myself with Frank Dobson, who used to represent the area around Euston. I am pleased to see his replacement, the hon. and learned Member for Holborn and St Pancras (Keir Starmer), in his place on the Labour Benches today.

The proposal announced today will substantially reduce the disruption to the travelling public, provide an enhanced underground service and do much more to support the wider regeneration of the local area. It is also fully compatible with the redevelopment of the remaining conventional station, which is for Network Rail to bring forward in due course.

[Mr John Spellar (Warley) (Lab)]

Will the Minister take this opportunity to comment on the stories in the weekend press that there would be a substantial increase in the cost as a result of these changes, as well as a reduction in the number of platforms for the inter-city services?

[Mr Goodwill]

I can certainly put the right hon. Gentleman right on that point. Eleven new platforms will be built for HS2 at the station, and 11 will remain in the current station to serve the existing network. Five approach tracks will remain, and there will be four for a period of approximately three years during construction. Works on the existing tracks and platforms will enable existing services to be accommodated. Those works will be undertaken prior to the start of the construction of the main HS2 works.

High Speed 2 will provide a step change in capacity on the west coast main line by enabling long-distance passengers to make their journeys much faster on the new line. This will free up space on the existing network for faster, more frequent trains. Indeed, it will also free up space on those platforms. I want to make it clear that for the existing west coast main line, the number of platforms will be reduced from 18 to 11, while the number for HS2 will increase from zero to 11. This means that there will be 22 platforms in total, which is four more than at present. The HS2 trains will also be longer, and the way in which they load their passengers will make it easier for people to get on them. That is because there will be a system similar to the one used by Eurostar, in which passengers come down escalators on to the platforms. This will avoid the situation of everyone trying to rush down to one part of the platform as the train starts to load.

[Philip Davies (Shipley) (Con)]

The people on the Committee are clearly good people and they are doing a very good job. It is all very well giving them the power to consider more options, but will the Minister give us an idea of how many of the recommendations he intends to accept?

[Mr Goodwill]

We have already accepted a number of the recommendations. Indeed, some of the additional provisions are the result of our accepting recommendations in situations where there was a need to take over additional land. I will give the House a couple of examples where we have listened to the Committee and accommodated its suggestions, which have now become part of the additional provisions.

I shall return to the points I was making about Euston. Delivering the additional benefits will mean that construction will need to be in two stages, so while construction disruption will be more localised, it will last for seven years longer overall. The peculiarities of the hybrid Bill process mean that an additional provision is required only when additional powers or land are required. The vast majority of our revised Euston proposal can be delivered using the powers and land that are already within the hybrid Bill. The information in the explanatory note therefore sets out only those small new areas of land and additional works that are required to give effect to our new vision for Euston.

However, the supplementary environmental statement that will accompany the additional provision, if this motion is passed, describes the environmental effects of the revised plans for Euston, to ensure that those affected are fully aware of the details of our proposals. In addition to the Euston station-related changes, the additional provision includes other minor changes in Camden, such as additional parking for London zoo, the provision of space to allow lorries to turn and the inclusion of some listed buildings within the relevant schedule to the Bill.

I turn now to the second set of additional provisions, known as AP4, which contains changes proposed outside Camden. These additional provisions include almost 70 mostly minor amendments—including eight in your own constituency, Mr Speaker—to powers relating to changes up and down the line of route outside Camden. These changes have come about following a combination of negotiations with petitioners and the recommendations of the Select Committee, as well as the continuing development of the design of the railway. Right hon. and hon. Members in the relevant constituencies were written to in July with an outline of these changes. As with the Camden changes, an explanatory note was sent to Members last week.

The most notable changes are: first, in response to the Select Committee’s recommendation, an extension of the northern end of the Chilterns tunnel past South Heath—I pay tribute to my right hon. Friend the Member for Chesham and Amersham (Mrs Gillan) as this is a result she can bank and it is a tribute to her campaign and that of her constituents for this extension; secondly, the relocation of a recycling facility known as a “bottom ash plant”, from a site in Castle Bromwich to a site off the route in Tyseley in the west midlands, delivering on an agreement with Birmingham City Council to avoid any interruption in service; thirdly, the relocation of a school in Water Orton in Warwickshire, as agreed with North Warwickshire Borough Council; fourthly, the relocation of vent shaft works from Salusbury Road to Canterbury Works, both in the London Borough of Brent; and finally, the provision of extra track at Greenford railway station in west London to support the transportation of excavated material from the scheme by rail—something we wish to see wherever possible.

[Dr Rupa Huq (Ealing Central and Acton) (Lab)]

AP3 and AP4 affect my constituency much less than AP2, but given that the Minister described how he made a site visit to the constituency of my hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer), will he make a visit to the affected roads in my constituency, which are largely in the NW10 area? No visit has been made since the one by the Select Committee in March, and since then all these additional provisions have come forward and the composition of the Committee has changed. Will he come to witness the disruption, disturbance, noise and nuisance that residents in these roads feel they will suffer as a result of living in a building site for the next 10 years? That is how they see it.

[Mr Goodwill]

I would be delighted to come to have a look at the problem. I believe the hon. Lady’s constituency has the ventilation shafts which will be the problem and that there is a local laundry facility available for many people who do not have washing machines, so it is important that we look at how they can still have that facility. [Interruption.] That is in the constituency of the hon. Member for Hampstead and Kilburn (Tulip Siddiq). Sorry, I got confused. As we have new Members representing that area, I would be delighted to visit once again to hear about that issue. If any additional problems are caused by these additional provisions, I would be happy to look at them and meet local people. If the leader of the local council would also like to attend, I would be delighted to see her, too.

[Mr Spellar]

I thank the Minister for the comprehensive explanation he has given of the changes and the two tranches. Will he also tell us what the Department’s outline estimate is of the additional costs of these changes?

[Mr Goodwill]

Some of these will be less expensive—indeed, that is one of the purposes of some of the changes we have suggested—and other changes will be within the budget that we have outlined, so there will be no need to have an overall increase in the budget. HS2 Ltd did, however, make provision, when planning for this project, for some changes that it expected the Select Committee may propose. I might expand on that a little later in my comments.

It should also be recognised that the changes set out in the additional provision are only a fraction of those that we have made to the scheme to address petitioner concerns. Many changes can be made within the existing Bill powers and so do not require an additional provision. Those include changes such as improved noise mitigation at Wendover and mitigations of the impacts on Bechstein’s bats—a species of vesper bats—in Sheephouse Wood in Buckinghamshire. The Bechstein bat is a particularly at-risk species and it is important that we protect the woodland habitat it uses.

The overall phase 1 budget is not expected to increase as a result of those changes, including the Euston proposals. Many of the changes come at no additional cost, some actually produce small savings and others are absorbed by the contingency set aside at the outset specifically for the purpose of addressing petitioner issues. If this motion is successfully passed, both these additional provisions will go through the same process, although the timings will be different for each. The relevant additional provision, an environmental statement describing the likely significant environmental effects of these changes and a supplementary environmental statement describing any new or different significant environmental effects of other proposed changes that do not require a change to Bill powers will be deposited in Parliament, council offices and libraries in affected areas. For the additional provision affecting Camden, these documents start to be deposited tomorrow. For the additional provision affecting other areas of the route, these documents will be deposited from 12 October.

A public consultation on the environmental statement will be held. The responses to the consultation will be analysed by Parliament’s independent assessor and the assessor’s report will be tabled in the House ahead of Third Reading. For the additional provision affecting Camden, the consultation will run from tomorrow until 6 November, and for the other additional provision, the consultation will run from mid-October.

There will also be a petitioning period for those directly and specially—to use that term again—affected by the changes in this additional provision to submit petitions against them. The petitioning period will run as usual for four weeks. For the additional provision affecting Camden, it will begin on Friday 25 September and end on Friday 23 October for all petitioners. For the other additional provision, the petitioning period will begin in mid-October for all petitioners. Newspaper notices will be published in national and local newspapers over two consecutive weeks following the deposit of each additional provision alerting the public to the changes and to the opportunity to feed into the process by petitioning or responding to the consultation as appropriate.

[Mrs Anne Main (St Albans) (Con)]

To ensure that enough people are aware of the additional petitioning process, will my hon. Friend explain how people who are visually impaired or who might not have access to the local and national newspapers will get the information about these new changes?

[Mr Goodwill]

I will look into what we can do to ensure that people who are visually impaired can access the information. For the vast majority of people affected by the changes, they will be no surprise. In many cases, we have made them in negotiation with the landowner or other interested parties, including local authorities. Indeed, some of them respond to petitions so there will be delight that the changes have been proposed, although other people who might be affected might well want to petition about them.

Taken as a whole, these two additional provisions mark a major step towards completion of the hybrid Bill’s progress through the Select Committee. They demonstrate the Government’s willingness to seize the opportunity that a redeveloped Euston station offers not only to the local area but to the nation as a whole. They also demonstrate our willingness to respond to the concerns of petitioners and the Select Committee to make beneficial changes to the project, and I therefore commend them to the House.

18:01

[Lilian Greenwood (Nottingham South) (Lab)]

I thank the Minister for his kind words and for providing advance sight of his statement. It is a true honour to take up the post of shadow Secretary of State and I pay tribute to my predecessor, my hon. Friend the Member for Barnsley East (Michael Dugher). He did an excellent job on behalf of passengers and road users and was never afraid to stand up for their best interests. I am sure that he will perform admirably in his new role shadowing the Department for Culture, Media and Sport at a critical time for that brief.

As a supporter of HS2, I am glad to have the opportunity to speak for the first time in my new role in this debate. I extend the gratitude of my party, and I am sure of the whole House, to my hon. Friends the Members for Bolton North East (Mr Crausby) and for Preston (Mr Hendrick) and the hon. Member for The Cotswolds (Geoffrey Clifton-Brown) for stepping up and joining the Committee. It has now heard several hundred petitions and there is general agreement that it is making both swift and fair progress. It is performing a vital role, improving and refining the project, and its work would not be possible without the professionalism of the Clerks and the contributions of petitioners, including Members of this House. They all deserve our thanks.

I know that a number of Members’ constituencies are affected by the proposals contained in these changes and it is important that they have time to address the Minister, so I shall keep my remarks brief.

We do not seek to obstruct the passage of these provisions, because some of the changes will reduce planning blight for petitioners and provide some measure of certainty for those who live along the route. They also provide an important mechanism for implementing the instructions of the Committee and the outcome of negotiations with petitioners, such as those on the longer Chilterns tunnel.

I know that a number of hon. Members have concerns, and I shall make way for them shortly, but before I do so I want to put some questions to the Minister about the revised proposals for Euston station. They can only be described as a partial proposal for redevelopment. It is clear that the Government and Network Rail have yet to develop an integrated plan for Euston which is, as I am sure Members on both sides the debate will agree, restricted by its inadequate design and compares poorly with the neighbouring terminal stations of King’s Cross and St Pancras. Yet last year the Chancellor said:

“I’m thinking that maybe we should go for a really big redevelopment of Euston. There is a really big opportunity for jobs and for housing in the area.”

Does the Minister believe that these proposals live up to those aspirations, or is this another case of the Chancellor’s rhetoric on rail being rather better than the reality?

The Minister said that it is for Network Rail to bring forward proposals on the development of the remaining station, yet Network Rail’s capacity to plan and deliver major upgrade projects is under exceptional scrutiny, not least in connection with the eagerly awaited Shaw, Bowe and Hendy reviews. What assurance can he offer the House that Network Rail is in a position to fulfil the function that he has set out today, and that it will not be blown off course in the coming months as a result of Government or regulatory action?

It is difficult to see how a high-speed extension to Euston can be planned in a manner that provides the maximum assurance for taxpayers’ money if there is no corresponding plan for the existing station. Surely we need an integrated solution for Euston. I would be grateful for an assurance from the Minister that the plans debated today will in no way inhibit the later replacement of the 1960s station.

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

The hon. Lady started by saying that she supports HS2, but can she confirm, for the House’s information, whether the new leader of her party is, because he has voted against it in the past?

[Lilian Greenwood]

My right hon. Friend the Member for Islington North (Jeremy Corbyn) has said that he supports investment in high-speed rail, and so do I. I am sure that Members on both sides of the debate would agree that the specific proposals can be improved further. Indeed, that is the subject of today’s debate.

Residents of Camden face years of disruption as a consequence of the proposals outlined today. The disruption might now be less intense than originally proposed, but the construction period will be prolonged. What consideration has been given to the feasibility of conveying construction materials by rail, as has happened during the Crossrail development, rather than by road, in order to reduce the impact on residents?

Furthermore, and incredibly, this is the fourth proposal for Unison—[Interruption.] The fourth proposal for Euston, I mean. [Interruption.] It was a Freudian slip. That is along with all the uncertainty that this situation has caused for local residents. The situation is clearly inadequate. It is vital that the Department, Network Rail and HS2 Ltd work as closely as possible with Camden Borough Council and campaigners to find a solution that works both for the railway and for local residents. Speaking as an observer of previous discussions over the past three years, I am not convinced that every effort has been made to date.

My right hon. Friend the Member for Warley (Mr Spellar), who is no longer in his place, noted that it was suggested in the press at the weekend that the overall number of platforms at Euston might be reduced. Careful planning to manage the disruption to existing services is essential, and contingency measures such as diverting commuter services into Crossrail should be considered. But I note that the lack of capacity on the west coast main line is also a constant and enduring source of delays and cancellations. Has there been a fundamental change in the Government’s policy, or will there still be a net gain in the number of platforms at Euston?

A number of compensation schemes have been established for people who live along the planned route, some of which have been withdrawn, and awareness of others appears to be low. The HS2 residents commissioner has said:

“It is vital that those who are eligible for the Government’s property compensation and assistance schemes get clear information and know what they are entitled to.”

Will the Minister set out for the House what support is available to residents, including those who live outside the rural support zone? When the House debated the second set of additional provisions in June, I cited the Committee’s pre-election report, which stated:

“The incoming Administration should make an early decision on whether to proceed with Phase Two and, if it decides to proceed, quickly finalise the Phase Two route.”

The precedents set by the Government and the Committee for phase 1 are of direct relevance to phase 2, particularly on compensation.

Some three months on, the Government’s position is no clearer. We have been told that they will set out the way forward on phase 2 later this year, but of course that is not the same thing as confirmation of the route. I urge the Minister in the strongest possible terms to return to this House, I hope before the end of the year, to provide some clarity on phase 2 and the introduction of the relevant legislation.

I noted that the Minister said that these changes would result in some small cost variances. I would be grateful if he could tell the House the net cost impact of the changes proposed in the motion.

We remain supportive of the additional provision process, and indeed of this important project. I assure the House that the Opposition will subject the Bill to line-by-line scrutiny when it enters that Committee stage.

18:10

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

I, too, welcome the hon. Member for Nottingham South (Lilian Greenwood) to the Opposition Front Bench. She is very familiar with HS2 from her previous work, and I am sure she will properly discharge her duties, despite disagreeing entirely with me on the merits of the project. I thank my hon. Friend the Minister for his kind remarks, and welcome the Secretary of State to his place on the Front Bench. It is good to see that this project is still engaging the Department fully.

The parliamentary process for High Speed 2 is both lengthy and confusing. The petitioning and consultation processes are time consuming and very arduous for my constituents and others who give evidence to the Committee, who have busy and demanding lives, and have not chosen to be affected by this project.

The additional provision process is another example of how opaque our procedures are here. There is a lack of information on additional provisions 3 and 4. While that is not entirely helpful to colleagues, it is certainly confusing to constituents, who want it explained to them why a motion like this can come before the House and be voteable on, yet the inherent details that will come with the major announcements from the Department are not available. I understand the intricacies of the House, but it is hard to explain them to constituents.

[Mr Goodwill]

I am sure that interested constituents watching the proceedings of the House will be aware that this is just opening the door to the opportunity to engage and petition. We are kicking the ball into play, and it is up to those who wish to petition and engage in the process to play the match.

[Mrs Gillan]

I am grateful for that. Anything that we can do to clarify the position for our constituents is much appreciated.

Notwithstanding the complexities of legislating for a major infrastructure project, I am very grateful for the HS2 Committee’s recommendation of the proposal for extended tunnelling through the Chilterns area of outstanding natural beauty, now known as C6, and the Government’s decision to adopt it. The extension of the tunnel from the originally proposed Mantle’s Wood portal to the South Heath green tunnel north portal will provide vital extra protection to our ancient woodlands and communities. It recognises the enormous efforts that my constituents, many national organisations, local organisations and I have made to try to save our area from real environmental damage.

While of course I am pleased that the Committee has proposed this additional mitigation, we must not forget that a large swathe of the area of outstanding natural beauty remains exposed to the railway itself. Unfortunately, the recommendation of C6 still falls short of what is required to protect the area fully from the severe impacts of this project. A long, continuous, fully bored tunnel throughout the entire AONB is really the only way adequately to protect our natural countryside and communities. I urge the Committee, and the Minister and his officials, to continue to look at the long tunnelling proposals. Indeed, I was hoping that I could encourage the Minister and his officials to think of this less as a railway in my constituency and more of a tube line, and continue the tunnelling to the end of the AONB.

Additional provision 4 contains two further amendments affecting Chesham and Amersham that I am keen to see implemented and consulted on carefully. Shardeloes Park in Amersham will, I hope, benefit from an improved design for the protection of its walled kitchen garden and grade II listed building. However, I remain concerned about the effects of construction on other historic buildings in the area, particularly in the nearby village of Little Missenden. In addition, there will be a realigned footpath south-west of Potter Row in South Heath, and I look forward to receiving more specific details of that amendment and that relating to Shardeloes gardens.

Many of my constituents will be affected by the proposals in AP4, particularly the changes that will provide for extra tunnelling. I encourage the Government to make sure that the dates for the release of the supplementary environmental statement, as well as those for petitioning and the deadlines for consultation responses, are published as widely as possible. As the Select Committee is hearing from petitioners in the Chilterns, it is crucial for my constituents to be able to plan their evidence accordingly and be as fully prepared as possible. In particular, the prompt release by HS2 Ltd of all the relevant noise data for the South Heath area would be appreciated, as people will be “directly and specially affected”—to use the legal terms—by the extra tunnelling. They may also, as I know the Minister acknowledges, wish to return and petition on the additional changes.

The constituency of the right hon. Member for Buckingham (John Bercow) is also affected by the provisions. Some landowners in the constituency have been affected by multiple additional provisions in the past. With each AP in which more land is taken, the impact on the landowner’s business increases. As such, would not it be right and proper, once all the additional provisions have been published and the true aggregate impact is known, for those affected landowners to be afforded an opportunity to present to the Select Committee again, in order to summarise the overall impact? The right hon. Gentleman also feels that there is a limited explanation as to why additional land is required. One affected landowner who has seen the additional provision knows he is going to lose more land, but claims he has had no explanation as to why. I hope my hon. Friend the Minister will take that into consideration.

Once again, my constituents in Chesham and Amersham will have a very small window between their petition date and the release of AP4 in mid-October. I ask the Committee in particular to be mindful that many petitioners will not necessarily have the time or resources to study AP4 prior to their first petition appearance, and that points may need to be picked up in further detail if a petitioner decides to submit another petition on AP4. I hope that any final decision on a long tunnel in the Chilterns will not take place until after AP4 has been consulted on and all Chilterns petitions heard, so that the Committee will then be in possession of all the arguments for and against the recommendation as it stands.

I ask the Minister whether it would be possible for me to meet HS2 Ltd officials soon after the release of AP4, in order to understand more closely the specific details and aid my constituents in any way I can. Perhaps my colleagues in Buckinghamshire could be similarly briefed.

The deadline for submissions in response to the AP2 supplementary environmental statement ends this Friday, 18 September. I plan to submit a response myself, but, along with several of my constituents who have contacted me, I have found it very difficult to distinguish which aspects of AP2 will be made redundant or affected by AP4. I ask the Minister to be aware that that has been a significant issue during the AP2 consultation period, which gives a further reason for the details on AP4 to be released as quickly as possible. I also continue to have concerns about compliance with the public participation requirements of the Aarhus convention, and situations such as the confusion surrounding AP2 and AP4 do little to assuage them.

I am also concerned that constituents who were affected by the original, pre-AP4 plans and who have conducted their business or made plans accordingly now find themselves in a better position following the adoption of AP4. I would like reassurances from Ministers that the Department will look carefully and favourably on those cases, because it is invidious to have told someone that they are going to lose their business and for them to go on to make arrangements as a result, only to then find that their business premises have in fact been saved by AP4.

I thank my constituents for all their work thus far. I also thank the Select Committee for its work. It is fair to mention the Clerk, Neil Caulfield, who has given exemplary assistance to my office and my constituents.

I hope that the Select Committee will continue to listen to the arguments made by petitioners from Chesham and Amersham and, if the project goes ahead, ensure that it is executed in what I consider the right way. It should ensure that our manifesto promises on the environment are adhered to, not sacrificed on the alter of this project. That still causes a great deal of concern not just among my constituents and other people, but to the Government’s assessment institution, the Major Projects Authority, which continues to afford it an amber/red classification.

Finally, I want to say that I have worked hard with many people and organisations over many years, and inch by inch, we are getting more tunnels in the Chilterns. My appeal to the Minister is: just tunnel to the end of the area of outstanding natural beauty and protect it. At least, we would then have the satisfaction of knowing that it was a job well done.

18:20

[Keir Starmer (Holborn and St Pancras) (Lab)]

I obviously support the motion because it is important for my constituents to have the chance to petition the Select Committee. That does not, however, mean that I support the proposals or HS2. I oppose HS2 on cost and on merit: it will not achieve its stated objectives.

The impact of HS2 on my constituency—on residents, businesses and the environment—will be devastating. It is a major cause of concern to very many of my constituents. Such is the concern throughout the constituency that it is raised with me daily. The plans for changes at Euston station have a long and sorry history. Standing back, we can see that not the least reason for that is that it does not make sense to bring a 21st-century, high-speed railway into a densely populated part of north London simply because that is where the conventional station is.

[Mr Goodwill]

There was a lot of disruption for the constituents of the hon. and learned Member—or for the people who are now his constituents—when the work was done at King’s Cross station. Do they consider that the work was worthwhile, now that the station has been finished?

[Keir Starmer]

That is a false comparison, as I am sure the Minister knows. The situation in and around King’s Cross cannot be compared with the densely populated area around Euston. We only need to look at a map, as I am sure the Minister knows, to see that the situations are not comparable. In fairness and in respect to my constituents, it is not right to make such a point when, anxious about their situation, they are coming to me daily. When I address them at meetings, I can see the anxiety on their faces. Please let us address the motion with respect to them, not make false comparisons. The Minister knows that the two situations are simply not comparable.

We have had plans, amended plans and further amended plans for Euston, but the only sensible plan is to abandon the project altogether. Far from being an improvement on the other plans, this plan is the worst of the lot. It leaves my constituents with all the pain and none of the gain. I want to focus particularly on the phased approach.

The plan offers and sets up decades of blight with no assurance about when the project as a whole will be finished. I will spell that out, because this is what it means for my constituents. Phase 1 will take up to 2026 and phase 2 will then go up to 2033, while the development of the eastern side of the station has no start or finish date. That amounts to 16 to 20-plus years of works and blight, so we can see why my constituents are coming to me daily and why they are so concerned.

Under the proposal, we will have half a station, but it will take twice the time. I will have children born in my constituency who will grow up and probably leave school knowing nothing other than construction works at what is likely to be the biggest construction site in Europe. I have people at the other end of the scale who will retire in the next few years and probably spend their entire retirement with the construction works going on. That is what this plan means for many thousands of people in the Euston area.

The Secretary of State described the plans in one document as

“essential for the local community”.

That beggars belief and is testimony to the failure of HS2 and others to listen to what the local community is saying.

I pose the following questions for the Minister. First, the hybrid Bill was premised on a new station being delivered at Euston by 2026. What is now proposed is half a station by 2033. How did HS2 Ltd get its planning so hopelessly wrong that we are in that situation? Secondly, why is HS2 Ltd no longer able to build a new station at Euston by 2026? Is it the cost, the impact on existing users or some other reason?

Thirdly, and I would like some detail on this, what is the current budget for the new station at Euston? How do the current costs compare with the estimated costs in March 2010, when the route for phase 1 was announced, and November 2013, when the hybrid Bill was deposited in Parliament?

Fourthly, the extended construction completion time of 2033 and beyond will blight the lives of up to 17,000 people in my constituency who live within 300 metres of the construction work. What is the proposal to compensate them for that?

Fifthly, appendix A to the explanatory note before the House states that

“The development principles in the EAP include promoting ‘comprehensive, commercial-led, mixed-use development above and around the new and existing stations’.”

That is at odds with the No. 1 objective in the Euston area plan:

“Prioritising local people’s needs: To ensure that new development meets local needs by ensuring homes, jobs, businesses, schools, community facilities and open space lost or affected by HS2, should it go ahead, are reprovided in the Euston area.”

I ask for an assurance from the Minister and, if appropriate, the Secretary of State that they recommit to that No. 1 objective in respect of local needs. Sixthly, by what date will the Government commit to re-provide new social housing, open spaces and community facilities on the land acquired for the new station?

My constituents are entitled to answers to those questions. The plan for Euston is a mess and there is a lack of information in the provisions. HS2, Network Rail and Transport for London need to step up and listen to local residents and businesses, who speak with a clear voice in opposition to these plans.

18:27

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

I am grateful, Madam Deputy Speaker, for this opportunity to make a short contribution.

I support the motion and, in particular, the AP3 proposals. Before I turn to those, I thank the Minister and the officials of HS2 Ltd and Network Rail who put on a helpful briefing for Members last week. That was particularly useful in helping us to visualise the proposed changes at Euston station.

I am a long-standing supporter of HS2, not least because of the benefits that will be delivered to my constituents in Milton Keynes by the freeing up of capacity on the west coast main line for additional commuter, regional and inter-city services. Notwithstanding that support, I and many of my constituents have been concerned about the impact on the commuter services into and out of Euston during the construction phase. I have been reassured by the presentation last week and the motion before us today that, during the construction phase, the current timetable will be maintained with minimal disruption. There will be some disruption at weekends and at other times, as is inevitable with large-scale infrastructure projects. I am grateful for that reassurance.

An earlier additional provision that we considered opened up the prospect that the west coast main line could be connected to Crossrail services and some commuter services could be diverted directly on to Crossrail. I simply ask for that option to be kept on the table should any further restrictions at Euston be required.

An article in The Sunday Telegraph at the weekend seemed to indicate that there would be a permanent reduction in capacity for the classic services at Euston when HS2 is complete, but all my information suggests that the reverse is true. In addition to the additional capacity on HS2, if my figures are correct, there will be a doubling of commuter seats into and out of Euston at peak hours once HS2 is complete. I would be grateful if the Minister would confirm that.

[Mr Goodwill]

I can confirm that. The revised plans include so-called path X, which is an underpass that allows much more flexibility in the way Euston can be used. When phase 1 of HS2 is open, we estimate that about 30% of passengers will alight at Old Oak Common and get on to Crossrail, or perhaps go to Heathrow on Crossrail 2, and that will take the pressure off Euston station for the remainder of the construction period.

[Iain Stewart]

I am grateful for that reassurance. One feature of the revised plans for Euston that I was pleased to see is the flexibility of its design. If in future Crossrail 2 is developed to go through Euston, the station has been designed in a way that could easily incorporate that.

I make one personal plea to the Minister. It may not be entirely within his gift, but perhaps he could use his good offices to encourage people at Network Rail or elsewhere—in the design there is room for this—to put back the old Euston arch, which was shamefully destroyed, or at least taken away, when Euston was redeveloped in the 1960s. That was a grave mistake. As well as building a brand-new railway line for the future, hopefully we can make reference to our architectural history and put back the Euston arch somewhere.

18:32

[Andy Slaughter (Hammersmith) (Lab)]

I am glad that we have clarified the purpose of this debate. When we debated AP2, some of us believed that we were to consider the detail of the proposals, but no detail was available. I understand from the Minister’s letter of 8 September that this is simply a permissive motion to allow debate in the Bill Committee, and that there will be an opportunity to challenge matters there.

We were promised an environmental statement to deal with matters of detail, but I am afraid that the statement on AP2 did not exactly do that. It was written in a peculiarly liturgical style that was highly repetitious and confusing, and did not clarify matters. It took several meetings and correspondence with HS2—HS2 now responds promptly and with courtesy, although it did not use to—before such clarification was possible. Where significant proposals affect the route, I ask that the technical details be expressed as clearly as possible so that we and our constituents can understand them.

I will not pass judgment on the Euston scheme or vote against the motion, but I will raise some notes of caution. This is not the first significant change to the proposals for Euston, but it is a significant change. When I put it to HS2 that seven extra years will be required to complete the scheme, it said that a long time had been allowed for the rebuilding of Reading station, but that was completed 18 months early. All that says to me is that these time frames are notional, and for the building and rebuilding of the station we are looking to 2033—a very long time.

My hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer) asked why this change is happening. It is happening because it is potentially better, or less disruptive, for existing users of Euston station. However, it will undoubtedly be worse for my hon. and learned Friend’s constituents and others who have to navigate their way around the Euston area.

Who is in charge of these projects and who will ensure that they function properly? Euston and Old Oak, which is in my constituency, are by far the two biggest projects within this huge project. Euston will have 22 platforms, 11 of them new, and Old Oak will have at least 14 new platforms, including Crossrail and the Great Western main line, not to mention overground and underground services. These are massive and complex schemes that will take place in very built-up areas. We should all pay tribute to the right hon. Member for Chesham and Amersham (Mrs Gillan) for fighting her corner and to other Members with rural seats, but the compensation on offer and the regard that is had to urban areas is clearly less than is the case elsewhere. That is as true of my constituency as it is of Camden, but there are differences. Fewer residents will be affected, I am pleased to say, around Old Oak than around Euston, but—as my hon. Friend the Member for Ealing Central and Acton (Dr Huq) has said—if they will be affected, they will be mightily affected and for many years.

I suspect, however, that the Euston scheme will receive more scrutiny because it is a landmark site in the centre of London. In Old Oak, we are in danger of getting second best, such as a sort of industrial warehouse environment rather than something more prestigious—although having seen the design for the entrance to Euston, I have to say that it looks like the entrance to Le Grand Macabre: I am not sure that the designers have got it quite right yet.

I urge the Government to turn their mind to the operational and logistical configuration at Euston and Old Oak. The rumour is that the two will be joined together and the mayoral development corporation will be extended to include Euston. That is not a sensible idea. I did not think that the mayoral development corporation was a sensible idea for Old Oak, which involves three boroughs—albeit three boroughs that are co-operating very closely. I doubt that the London borough of Camden will wish to have all its planning and regeneration powers seized by the Mayor, whoever that is, although I am sure that it will want to co-operate—as we do—with the Greater London Authority. The Old Oak and Park Royal Development Corporation is now a statutory body with statutory powers that was set up by this House, whereas Euston has an area planning board, which is not a statutory body and effectively relies on the good will of the co-operating parties.

At least three issues need to be addressed. The first is the competing interests of the locality and the national interest in an important national scheme—which I support. The second is ensuring that the planning and regeneration powers—and the conflicts of interest in bodies that have both at their disposition—are dealt with transparently and accountably. The third is the competent management of the scheme. I agree with what the leader of Camden council said about insufficient integration between what Network Rail is doing with the existing station and what HS2 intends to do. Exactly the same could be said about the integration of Crossrail and HS2 at Old Oak. We have to get this right in the economic interests of regenerating the area, in the national interests of ensuring that the country can be proud of these projects, and in the interests of local people living in the area. That is simply not happening at the moment.

I shall finish with an anecdote about my meeting yesterday with my clinical commissioning group. Hon. Members may wonder what that has to do with this issue, but it was part of my continuing campaign to persuade the CCG not to close down large parts of the acute hospital services in west London. I pointed to Old Oak and said, “Well, here are 24,000 new homes and there are 50,000 being built locally. How are you going to deal with that with much less provision?” “Oh don’t worry,” they said, “we have been assured”—I am sure the same is exactly true for Euston as well—“that these will just be occupied by young professional people of working age and they won’t really need health services in the way that other people do.” I wish somebody had told me that. Who is taking these decisions? Who, in smoke-filled rooms—probably not smoke-filled rooms in the health service these days—is making decisions about major infrastructure projects, looking decades or more ahead, without democratic input, without the input of local residents and businesses, and without the proper scrutiny of us in this House and of local authorities?

18:40

[Tulip Siddiq (Hampstead and Kilburn) (Lab)]

Like my hon. and learned Friend the Member for Holborn and St Pancras (Keir Starmer), I agree with the right to give residents the opportunity to come and petition if they feel that High Speed 2 is not affecting their areas in the way it should. I should make it clear that my overall stance is to oppose HS2. I have been campaigning against it for six years. I was a councillor for the Regent’s Park ward, where more than 300 council homes will be devastated and demolished. I sat through many a HS2 meeting in which HS2 Ltd was severely incompetent as regards taking forward the wishes of the community and listening properly to the grievances outlined. I hope HS2 Ltd will engage more with residents, both in Camden and in Hampstead and Kilburn.

I turn to the additional provisions that affect Hampstead and Kilburn constituency, which is in the boroughs of both Camden and Brent. The three items I will highlight are affected by the issues at hand today. The first is the acquisition of additional land at Alexandra Place. Alexandra Place is already to be the location of a vent shaft. The amendment will allow vehicles to turn at Dinerman Court. Some 84 existing landowners are already inconvenienced, but another 46 new landowners will now be impacted by the changes. What protection will the landowners have and have they been taken into consideration?

The second item I am worried about is the disruption of a grade II listed building on the Alexandra Road Estate. The situation changes with the amendment at hand today. It does not alter the builders’ plans and no new people will be affected—just to be clear—but it constitutes an admission that the listed buildings legislation can be contravened and that they will now have the right to exercise their powers to override it, as enshrined in the High Speed Rail (London - West Midlands) Bill. That is potentially an important admission and opens the way for questions about how the listed building will be protected while building works are taking place. I would be grateful for any reassurance the Minister can give me about the listed building.

The Minister is well aware of the loss of the launderette. Indeed, he mentioned it earlier. The residents live in apartments that do not have washing machines. This issue has been raised in my surgeries and in the public meetings I have attended. I would be grateful for any reassurance I could pass on to residents that the launderette will exist, along with the shops on that road. They are a lifeline for a lot of people who live in the area, many of whom are disabled and cannot venture any further on to Finchley Road.

Finally, this is the part I am most concerned about: the proposed moving of a vent shaft to Canterbury Road. This is in one of the most deprived areas in my constituency. It is being regenerated and the residents have been living in the middle of a building site for nearly 10 years, and now a vent shaft is being proposed right in front of the school. My worry is that a proper feasibility study has not been done to assess the impact on the students travelling in and out of the school, and on students inside the school.

I reiterate that south Kilburn is the most deprived area of Hampstead and Kilburn. People in the area, such as Pete Firmin, Liz, Ladi and Councillor Rita Connelly, are campaigning to ensure the removal of the vent shaft. I ask the Minister to reconsider whether the vent shaft should go in this area, where it would affect children, being on the school route, and new landowners. I invite him to visit the location to assess for himself whether it is appropriate to locate it there, putting residents through even more building work and inconvenience for the next 10 years.

18:45

[Mr Goodwill]

With the leave of the House, I will make a few remarks in response to the debate.

The fundamental point of the debate is to allow petitions to be submitted to the hybrid Bill Committee, so, while many of the points are perfectly reasonable ones to make, they should be directed to the Committee for it to consider and then, if necessary, make recommendations on. That said, the hon. Member for Nottingham South (Lilian Greenwood) made some points I need to address, particularly about how Euston station can be developed. We are all in awe of the development of King’s Cross and St Pancras stations and the regeneration of the surrounding area. People used to go to King’s Cross for all the wrong reasons; now they go for the right reasons. It is a great place to be.

We need such regeneration around Euston, although I recognise the points about there not being quite so much spare land around there. It is important that we work with Network Rail and Transport for London to co-ordinate the approach. Our Euston proposal is fully compatible with the redevelopment of the remaining Network Rail station and has been developed with Network Rail and TFL. The improvements to the underground station at Euston will be transformational. When the new Victoria development opens, we will get a taste of how a new state-of-the-art underground station can help commuters and particularly of how the tidal flows of people need not conflict in the way they often do in other areas. On project delivery, Sir Peter Hendy and his team are looking at how Network Rail can work more effectively.

The hon. Lady mentioned excavated material being removed by rail. Extended construction at Euston station will allow more excavated material to be removed by rail, as there is capacity to do so. We will work to maximise what can be taken out by rail. The fewer trucks the better for noise and congestion and for the safety of pedestrians and cyclists. I am a London cyclist myself. We know that, sadly, heavy construction vehicles are often involved in accidents. Despite the prowess and training of drivers and the modification of vehicles, accidents still occasionally happen. I can also confirm that there are no changes to the compensation schemes. The scheme in urban areas, compared with country areas, recognises the character of those areas and the effect that construction and development can have, particularly on property prices and people.

The hon. Lady asked about the net cost of the changes. I can confirm that the net cost is zero. The overall cost of phase 1 remains £21.4 billion at second quarter 2011 prices. Any changes that add costs simply draw down the contingency not set aside for that purpose. We always knew we would need to draw down the contingency—for example, to meet the cost of the Chiltern tunnel extension, the cost of which was more than £40 million, at second quarter 2011 prices, excluding the contingency. I hope I have reassured the House that the project is deliverable within budget.

The hon. Lady also asked whether we would return to the House to provide clarity on phase 2 and legislative plans. I can confirm that the Government will outline the way forward for phase 2 before the end of the year, including confirmation of the plans for legislation.

[Lilian Greenwood]

The Minister says that the Government will announce the way forward. Is that the same as confirming the line of route?

[Mr Goodwill]

On phase 1, the line of route is certainly becoming much closer to being confirmed, but on phase 2 there is obviously a lot more work to be done with local authorities and leaders of the great cities of the north, as we call them, to ensure that we get that right. Some criticism has been voiced today that we keep coming back with new changed proposals, but it is important that we react to the points that people make, as the Committee reacts to petitions, for example. We have reacted to ensure that we can deliver a state-of-the-art station at Euston and minimise the impact on local people during the construction phase.

My right hon. Friend the Member for Chesham and Amersham (Mrs Gillan) mentioned the supplementary environmental statement. Let me repeat that for Camden it will be available from tomorrow for consultation until 6 November, while the consultation period on the AP4 area will commence in mid-October—I cannot give an exact date—and will run for six weeks.

The hon. and learned Member for Holborn and St Pancras (Keir Starmer) talked about the phased approach and how that would certainly mean disruption for a longer period, but we need to consider disruption not only to the residents affected by vehicles, noise, dust and so forth, but to the commuters who use the station. Delivering the project in the way we have outlined today will mean having more capacity through that station. I am pleased to reassure Members that some of the coverage at the weekend about reductions in platform space is not correct. There will be an opportunity to make sure that we keep the passengers going through.

As I mentioned in an intervention, Old Oak Common will become one of this country’s most important stations—it will be as well known as King’s Cross, Victoria and Waterloo. Indeed, at least 30% of the passengers will alight there to get on to Crossrail and then to a number of locations around London. As for other areas where it might be quicker to go through Euston when the line is complete, passengers will be able to use Old Oak Common as a connection. To come to Westminster, for example, it will take only three minutes longer via Old Oak Common than it would be via Euston. Many people may get used to Crossrail and like to use the new facilities.

The hon. and learned Member for Holborn and St Pancras, and indeed the hon. Member for Hampstead and Kilburn (Tulip Siddiq), mentioned the provision of social housing. It is important, particularly in the more deprived areas of our capital, to have good social housing provision. We have already committed to replacing lost social housing at Euston. We have purchased the Netley development and we are funding the construction of more social housing in the area—all with the aim of ensuring that social tenants are required to move only once.

The hon. and learned Member for Holborn and St Pancras also asked why the whole station would not be ready by 2026. If we look at the project—phase 1 to Birmingham and phase 2, the Y section—we find that capacity will not be needed until later for additional trains coming from Leeds and Manchester, and many other trains will start their journey further north in Scotland.

I think I have covered a number of the points raised. The ability to divert into Crossrail will be maintained, as my hon. Friend the Member for Milton Keynes South (Iain Stewart) made clear. As for the environmental statement, there will be an ability to prioritise local needs. The hybrid Bill does not take powers for over-site development, which will all be subject to the normal local planning process, so it will need to conform to the local planning strategy. I am sure that there will be tremendous opportunities at Euston for other development in the area, which will capitalise on the new station.

Finally, I come to the Euston arch. I can tell Members that the Secretary of State is very keen to see the resurrection of the Euston arch. We think we know where the bits are. The Euston Arch Trust aims to re-form the arch, and it is for that trust to bring it forward through a local planning application. We have a location for the new Euston Square gardens for the arch to come forward. Personally, I wonder whether a holograph might be even better, but I can certainly confirm that the Secretary of State is very keen to see the arch resurrected.

[Mrs Gillan]

I thank my hon. Friend for letting me intervene before he finishes. Towards the end of my speech, I raised the position of constituents who were affected by HS2 before the announcement of AP4, which has now been reversed by the Chiltern tunnel extension. Will HS2 Ltd and the Government stand by their proposals to the landowners who were previously affected, or will their position change?

[Mr Goodwill]

Petitioners will be able to petition if they have locus standi, which is the legal term. We will look at the petitions as they are presented to check whether that is the case, but if people are affected by these changes, they will be able to petition. If, for example, there is no fundamental change in their circumstances on the part of the route to which the tunnel will not extend, they will not be able to present an identical petition for the identical reason that they did so on the previous occasion. It is important for the effective operation of the Committee that we do not open up more petitions that do not relate to the specific changes in AP3 and AP4.

[Mrs Gillan]

Will my hon. Friend clarify one more point?

[Mr Goodwill]

Just once more.

[Mrs Gillan]

I am thinking of circumstances in which a constituent has effectively lost their business because it was disrupted by the HS2 works, and has made alternative arrangements, with great difficulty and at a financial cost. Now that AP4 has introduced extended tunnelling, they would have been in a much better position, because their business could have been saved. Will the door still be open for them to negotiate with the Department for the compensation that would have been due to them had AP4 not come into existence?

[Mr Goodwill]

I think I understand the point that my right hon. Friend is making. Because we have improved the scheme from an environmental point of view, it will not have the impact that was envisaged on that particular business. I should be happy to receive representations from my right hon. Friend explaining the exact position, and we will look at them in the context of the compensation packages that we have announced.

I commend the instruction to the House, and hope that it will receive the support that it deserves.

Question put and agreed to.

Ordered,

That it be a further Instruction to the Select Committee to which the High Speed Rail (London - West Midlands) Bill is committed–

(1) that the Select Committee have power to consider–

(a) amendments to accommodate changes to the design of Euston Station in the London Borough of Camden;

(b) amendments to accommodate the requirements of landowners and occupiers and changes to the design of the works authorised by the Bill in the London Borough of Camden;

(c) amendments, to accommodate the requirements of landowners and occupiers, relating to:

i. the London Boroughs of Brent, Ealing, Hammersmith and Fulham and Hillingdon and the Royal Borough of Kensington and Chelsea;

ii. the District of Three Rivers in the County of Hertfordshire;

iii. the parishes of Ellesborough, Great Missenden, Stone with Bishopstone and Hartwell and Wendover in the County of Buckinghamshire;

iv. the parishes of Aston Le Walls, Boddington and Chipping Warden and Edgcote, Greatworth and Marston St Lawrence in the County of Northamptonshire;

v. the parishes of Coleshill, Cubbington, Kenilworth, Long Itchington, Offchurch, Stoneleigh, Ufton, Water Orton, Weston under Wetherley and Wormleighton in the County of Warwickshire;

vi. the parishes of Balsall, Berkswell, Dickens Heath and Hampton-in-Arden in the Metropolitan Borough of Solihull;

vii. the City of Birmingham;

(d) amendments, to accommodate changes to the design of the works authorised by the Bill, relating to:

i. the London Boroughs of Ealing, Hammersmith and Fulham and Hillingdon;

ii. the District of Three Rivers in the County of Hertfordshire;

iii. the parishes of Amersham, Calvert Green, Denham, Preston Bissett, Quainton, Steeple Claydon and Wexham in the County of Buckinghamshire;

iv. the parishes of Boddington and Culworth in the County of Northamptonshire;

v. the parishes of Burton Green, Coleshill, Cubbington, Curdworth, Ladbroke, Lea Marston, Middleton, Offchurch, Shustoke, Southam, Stoneleigh, Water Orton, Weston under Wetherley and Wormleighton in the County of Warwickshire;

vi. the parishes of Hints with Canwell, Curborough and Elmhurst, Drayton Bassett, Fradley and Streethay, King’s Bromley and Lichfield in the County of Staffordshire;

vii. the City of Birmingham.

(e) amendments relating to the extension of the Chiltern tunnel in the parishes of Amersham, Little Missenden and Great Missenden in the County of Buckinghamshire;

(f) amendments for purposes connected with any of the matters mentioned in subparagraphs (a) to (e);

(2) that any petition against amendments to the Bill which the Select Committee is

empowered to make shall be referred to the Select Committee if–

(a) the petition is presented by being deposited in the Private Bill Office not later than the end of the period of four weeks beginning with the day on which the first newspaper notice of the amendments was published, and

(b) the petition is one in which the petitioners pray to be heard by themselves or through counsel or agents.

That these Orders be Standing Orders of the House.

Business without Debate

Tuesday 15th September 2015 Commons Chamber

Delegated Legislation

[Madam Deputy Speaker (Mrs Eleanor Laing)]

With the leave of the House, we shall take motions 6 to 10 together.

Motion made, and Question put forthwith (Standing Order No. 118(6)),

Energy

That the draft Smoke and Carbon Monoxide Alarm (England) Regulations 2015, which were laid before this House on 16 March, in the last Session of Parliament, be approved.



Constitutional Law

That the draft Scotland Act 1998 (Modification of Schedules 4 and 5) Order 2015, which was laid before this House on 29 June, be approved.



Dangerous Drugs

That the Misuse of Drugs Act 1971 (Temporary Class Drug) (No. 2) Order 2015 (S.I., 2015, No. 1396), dated 17 June 2015, a copy of which was laid before this House on 25 June, be approved.



Defence

That the draft Armed Forces Act (Continuation) Order 2015, which was laid before this House on 7 July, be approved.

International Development

That the draft African Development Bank (Further Payments to Capital Stock) Order 2015, which was laid before this House on 14 July, be approved.—(Stephen Barclay.)

Question agreed to.

European Union Documents

Motion made, and Question put forthwith (Standing Order No. 119(11)),

EU General Budgets for 2015 and 2016

That this House takes note of the European Union Documents No. 9404/15, Draft Decision on mobilisation of the EU Solidarity Fund to provide for payment of advances in the 2016 Budget; No. SEC(15) 240, Statement of Estimates of the Commission for 2016 (Preparation of the 2016 Budget): Political Presentation; No. SEC(15) 240 Statement of Estimates of the Commission for 2016 (Preparation of the 2016 Budget): Financial programming 2017–2020 (Provisional figures); No. 9403/15, Draft Decision on the mobilisation of the Flexibility Instrument for the provisional measures in the area of international protection for the benefit of Italy and Greece; No. 10343/1/15, Letter of amendment No 1 to the draft general budget 2016: Financing of the EFSI Guarantee Fund; No. COM(15)351, Draft Amending Budget No. 6 to the General Budget 2015; supports the Government’s efforts to limit the size of the EU Budget, including use of the EU Solidarity Fund and Flexibility Instrument, in order to get the best deal for UK taxpayers at a time of tight constraints on domestic public spending; welcomes the fact that the 2016 Draft Budget respects the Multi-Annual Financial Framework agreement secured by the Prime Minister in 2013, which delivers an unprecedented real-terms reduction compared with the 2007–2013 period while protecting the UK rebate; notes that the 2016 Draft Budget achieves an increased payments and commitments margin compared to 2015 and that the Amending Letter No. 1 updates the 2016 Draft Budget to reflect strong political agreement on the Regulation on the European Fund for Strategic Investments which the UK supported as a mechanism to boost jobs and growth in the UK and Europe; and further notes that the Draft Amending Budget 6 concerns a routine adjustment of revenue calculations and welcomes that it provides for the payment of the rebate on the 2014 EU budget surcharge that was secured last autumn.—(Stephen Barclay.)

Question agreed to.

Adult Stem Cells and Life Sciences

Tuesday 15th September 2015 Commons Chamber

Motion made, and Question proposed, That this House do now adjourn.—(Stephen Barclay.)

18:58

[Mr David Burrowes (Enfield, Southgate) (Con)]

It is a pleasure to be here, and I welcome the opportunity to speak about this subject. I am pleased that the Under-Secretary of State for Life Sciences is present, because his passion and commitment to issues such as regenerative medicine and life sciences are very real, and go beyond his job.

A decade ago I had no real knowledge of the life-saving treatment that is available through stem cell transplantation, but after being involved in the scrutiny of the Human Fertilisation and Embryology Act, which received Royal Assent on 13 November 2008, I was convinced that, with increased investment in research, the life sciences industry could continue to improve outcomes and save many lives.

The then Government sought to enable the United Kingdom to lead stem cell research and treatment, but their attention was not on adult stem cells. Adult stem cell transplantation already saves the lives of many who are affected by blood cancers and haematological disorders, but it has the potential to do much more, and that is the point of this debate.

Let me put the issue in context. More than 10 years ago, an editorial in Nature Biotechnology admitted:

“forward steps continue to be made in the field of adult stem cell therapy. One estimate is that there are currently over 80 therapies and around 300 clinical trials underway using such cells”.

The latest data from the Commons Library does not go much further than that. Will the Minister tell the House how many therapies and clinical trials are currently underway using adult stem cell transplantation and therapy? I think the answer is that we are not much further on.

19:00

Motion lapsed (Standing Order No. 9(3)).

Motion made, and Question proposed, That this House do now adjourn.—(Stephen Barclay.)

[Mr Burrowes]

A fine example of a forward step is the progress made by Professor Geoffrey Raisman, director of the spinal repair unit at University College London institute of neurology, whose work could ultimately lead to the repair of spinal cord injuries in humans.

[Nick Thomas-Symonds (Torfaen) (Lab)]

Does the hon. Gentleman agree that the collecting of data at transplantation centres is very important and so is the sharing of it if we are to make progress? There should be greater emphasis on that, and it should be properly resourced.

[Mr Burrowes]

Absolutely, and I will come on to that. The quality of the data that can be shared is important, and the key ask of the Government is to support the call for a national stem cell transplantation network, which will help in that.

However, Professor Raisman’s pioneering work remains underfunded. He hit the headlines in 2014 when Polish surgeons, in collaboration with scientists in London, enabled Darek Fidyka, a man paralysed from the chest down in a knife attack, to walk again using a frame. Professor Raisman said that the achievement was

“more impressive than man walking on the moon.”

Sir Richard Sykes, chair of the UK Stem Cell Foundation, said:

“To fully develop future treatments that benefit the 3 million paralysed globally will need continued investment for wide scale clinical trials.”

We are trying to get to precisely that clinical basis.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Gentleman on securing this debate on what is an important subject. Given that a third of adults and a fifth of children who receive a stem cell transplant do not survive the first year, does he agree that we need better post-care provision, perhaps by establishing a national care pathway for patients for at least five years after transplant?

[Mr Burrowes]

I do, and I want to look at the long-term outcomes.

My co-chair on the all-party group on stem cell transplantation, the hon. Member for Alyn and Deeside (Mark Tami), is present, and our group has been looking at some of the outcomes of research. Last year we joined together with the all-party group on medical research and heard from a number of experts, not least Dr Rob Buckle, director of the UK Regenerative Medicine Platform. He said that the major challenge which remains is translating the basic science into the clinic. He said that we are still at least 10 to 15 years off routine clinical use of stem cells.

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

The hon. Gentleman has touched on some of the late effects of transplantation, and the fact that we are getting patients with late effects proves that people are living longer, but we need to put more money into research and into looking at these problems, to ensure that patients live as normal a life as possible.

[Mr Burrowes]

The hon. Gentleman and I have for a number of years been party to reports recommending to Government that we need to invest in research to provide better long-term outcomes in transplantation and future therapeutic treatments.

One key area is Alzheimer’s, and some of us may have received a briefing from the Alzheimer’s Society. We know from our constituencies the huge impact of Alzheimer’s. There are 850,000 people living with dementia in the UK today, and this is forecast to rise to over 1 million by 2025 and to exceed 2 million by 2050. A technique was developed in 2012 to turn adult cells into nerve cells, which again highlights the curative potential of stem cell transplantation. That can be particularly helpful in understanding and testing potential treatments for Alzheimer’s.

The Minister will know that the estimated cost of Alzheimer’s is a staggering £4.3 billion, which is approximately 3.4% of total NHS spending in the UK in 2013. Observing the initial stages of Alzheimer’s in nerve cells can give scientists clues to help them identify genetic risk factors. It can also be used to test potential treatments to see whether the damage from Alzheimer’s can be stopped. We are a long way from that, but it is an illustration of how important it is for us to carry out further research into adult stem cell transplantation. Indeed, it is vital; it makes economic sense and will save lives.

I wish to focus on my involvement with the all-party group on stem cell transplantation and to highlight the potential of cord blood donations to transform our ability to meet the needs of every patient who requires a stem cell transplant, including black, Asian and minority ethnic patients, who have suffered from such poor transplantation outcomes. It is a scandal that, in 2010, just 40% of BAME patients were able to find a well-matched stem cell donor. That figure has increased now to 60%, which is really welcome, and the Government can take plaudits for that. The £4 million that was pledged in 2013 and the total investment of more than £12 million since 2011, along with all the investment from the charitable sector, have made a difference, but we still face a situation in which four in 10 people from the black, Asian and minority ethnic community are unlikely to find a match, which is not good enough. We must do more, and I urge the Minister to support continued and sustained investment as we approach the next spending review.

We need to focus on the outcomes. Of the 6,200 patients who will receive a stem cell donation between now and 2020, one in three will not survive their first year after transplant. Of those who do survive their first year, many will suffer a number of post-transplant complications, including relapse, infection and graft versus host disease.

Since 1993, the collection of stem cells from cord blood and bone marrow has increased at impressive rates, meeting the needs of many patients in the UK. Over the past three years, we have seen progress in a number of areas. Cord banking rates have tripled, a quarter of all cord transplants in the UK are now sourced domestically, and the cost of transplants to the NHS has decreased dramatically. But the urgent need for improvements in long-term outcomes remains. In order to make the necessary progress, the UK needs to ensure that the early-stage advancements are sustainable by investing in long-term research, which is the focus of this debate, identifying improvements to treatments and developing potentially new life-saving therapies. So what needs to be done?

[Fiona Bruce (Congleton) (Con)]

I thank my hon. Friend for securing this debate. He referred to the fact that the potential for about 80 treatments has been discovered through adult stem cell research. Does he agree that it would have been preferable to have put all the resources that have gone into embryonic stem cell research, which has produced negligible results, into the work on adult stem cells?

[Mr Burrowes]

My hon. Friend will know that I was very much making that case in 2008 in the debates that we had on the Human Fertilisation and Embryology Bill. Strong lobbying went on in relation to therapeutic treatments. I remember being in Central Lobby when many charities said that we had to pass that measure to provide immediate treatments. I do not want to get too involved in that debate today, beyond saying that adult stem cell transplantation is saving lives now, and has potential for the future. We need to have a really good mutual circle of which everyone can be part. Such a circle must lend itself to looking at the big ask of the Government today, which is a national stem cell transplantation trials network to ensure that we save more and more lives. We also need to look at future therapies as well.

I urge the Minister, as he steps up to the Dispatch Box, to show his support for a national stem cell transplantation trials network. This will not only provide a turbo boost for improving patient outcomes and make the UK a world leader in stem cell transplantation, but also support the economy by growing the life sciences industry, and I know how seriously the Minister takes that.

The UK Stem Cell Strategic Forum, which was established at the request of the Minister of State for public health in 2010, stressed the need for further research into stem cell transplantation in 2014, and that included the recommendation that the network be established. Furthermore, the all-party group on stem cell transplantation has called for a clinical trials network a number of times over the past few years. Last year, the all-party group heard from experts in the field who pointed out some of the barriers to research into stem cell transplantation in the UK. They identified inadequate research infrastructure and inefficient data collection. Currently, the small number of patient cohorts and the complex regulatory environment—I ask the Minister to look at that aspect as well—mean that fewer than 5% of stem cell transplant patients are recruited into prospective clinical trials of any kind. Also, data collection at transplant centres is inefficient owing to inadequate staff training. The poor quality of the data means that they are unsuitable for research purposes, which significantly undermines the potential to achieving good outcomes in transplantations.

The infrastructure is ready to provide support for a national network, which would allow for the rapid recruitment of participants, standardise procedure and provide a central data hub to manage and evaluate research and share information which could be used to improve patient outcomes.

[Mary Glindon (North Tyneside) (Lab)]

Excellent UK charities such as the Anthony Nolan trust have been the first in the world to invest in third-generation sequencing. Does the hon. Gentleman agree that the Government should give support to that groundbreaking technology?

[Mr Burrowes]

Absolutely. I pay tribute to the Anthony Nolan trust, which has been supportive of the all-party group for many years. It has worked hand in hand with the Government on providing more collections, and its registry is world renowned for providing support and saving lives. The trust is making the call, as we are doing here, that we could do much more with high-quality research to support better long-term outcomes for patients.

I would like to highlight the success of the trials acceleration programme, which was established by someone the Minister knows well, Professor Craddock at the University of Birmingham. He is also connected with the Anthony Nolan trust. The early phase trials involve an initiative to speed up the pace of new clinical trials using a hub and spoke model to ensure that trials are conducted efficiently. The hub co-ordinates trial centres at hospitals around the UK and deals with bureaucracy and regulatory issues. The trials acceleration programme has successfully overcome the main barriers to research—namely, inadequate research infrastructure and inefficient data collection. I suggest to the Minister that this programme should be replicated in the form of a national stem cell transplantation trials network.

[Jim Shannon]

I understand that one in eight people in the UK fail to find a matching donor. That number increases dramatically, however, for people in black, Asian and minority ethnic groups. Does the hon. Gentleman agree that we should prioritise support for further research into stem cell transplantation and the factors that affect transplant survival rates?

[Mr Burrowes]

I agree with the hon. Gentleman on many of these issues. Progress has been made on collection rates, particularly among the black, Asian and minority ethnic communities, but we need to find better ways to do this. As I said, one in four people are unable to find a match. My hon. Friend the Member for Salisbury (John Glen) is himself a donor, and he can speak for himself on this. I know that others present in the Chamber have family members whose lives have been saved by people donating. I want to send out a message from the debate tonight for people to donate and to be part of the registry, so that they can help to save lives.

[Mark Tami]

This is not just about finding a match. We also have to think about the quality of the match. Everyone would like to see a 10 out of 10 success rate, but as a result of technological advances, lesser matches can now be used to help to save lives, even though they are not ideal.

[Mr Burrowes]

Absolutely; I welcome that point. We are not talking simply about increasing capacity all over the place. We must remain focused, particularly on the black, Asian and minority ethnic communities, to give them greater opportunities. We must also focus on quality and on the long-term outcomes. When a match is found, we must ensure that the transplantation happens and that there are no barriers to a good long-term outcome. We need further research if we are to achieve that.

Professor Craddock has estimated that the network will need £3.4 million of funding over four years. It is not going to be cheap, but there is a great return in terms of lives saved and good health outcomes. The lack of investment in this industry is a reflection on some of the uncertainty about the way in which we should go forward, but Professor Craddock’s approach is a trailblazing way forward.

The call to the Minister is to follow what is said in our report “Cord blood transplantation: meeting the unmet demand”. We made a specific recommendation to the Government to establish a national stem cell transplantation trials network to facilitate and promote high-quality research into cord blood as a curative therapy for patients with blood cancer and blood disorders. He will know that that is very much in line with the Government’s current strategy to develop the life sciences industry in the UK, as stated in the 2012 life sciences update. It says:

“We recognise the importance of empowering patients to participate in clinical research, and have set up the Clinical Trials Gateway, with associated mobile applications”.

We have yet to receive the Government’s formal agreement to support the all-party group’s recommendation, and I look forward to the Minister saying today that he agrees with it. I hope that he joins with the broad support from across the transplant community of well-organised stakeholders in the field who are looking to the Government to provide that lead, support and engagement, to make the UK a world leader in transplantation, research and life sciences—and that will need resources. I also ask that he meets the Anthony Nolan trust and other stakeholders to discuss this issue of research and long-term health outcomes, and the recommendation of the all-party group. We would be happy to welcome him to discuss all those things at our next all-party group meeting.

19:16

[The Parliamentary Under-Secretary of State for Life Sciences (George Freeman)]

I congratulate my hon. Friend the Member for Enfield, Southgate (Mr Burrowes) on securing this Adjournment debate on this crucial topic. I also thank Members from across the House—the hon. Members for Torfaen (Nick Thomas-Symonds), for Strangford (Jim Shannon) and for Alyn and Deeside (Mark Tami), my hon. Friend the Member for Congleton (Fiona Bruce) and the hon. Member for North Tyneside (Mary Glindon)—for staying late to raise and support this important issue. Let me take the opportunity to pay tribute to the Anthony Nolan trust, and to the work of the many volunteers who support its work around the country and the partnership it has established with the NHS and with the National Institute for Health Research. I have been invited by them twice to visit the facilities and I am very keen to do that. I want to put on the record that the only reason those two visits had to be rearranged was the intrusion of the general election, and I look forward to visiting as soon as I can.

As my hon. Friend the Member for Enfield, Southgate has made clear, stem cell transplantation is a life-saving treatment that plays a key role in the treatment of leukaemia and some other diseases. Almost 4,000 patients a year receive this type of treatment. Many patients are fortunate to have a closely related family member who can donate stem cells, but the treatment of more than 1,000 patients depends on stem cells from a suitable unrelated donor. The Department of Health has invested significantly in this area and since 2011 will have provided a total of £19 million in funding to establish and staff a series of donor centres around the country. Earlier in the year, I was delighted to announce the latest £3 million of funding, and just this week we have seen the formal opening of the £3 million blood and transplant research unit down in Bristol, where red blood cells are being manufactured from stem cells. It is based in Filton and is the world’s largest blood bank. It is one of four new NIHR-funded blood and transplant units—part of the £15 million programme the NIHR is putting in place. The latest analysis by the UK stem cell strategy oversight committee is that this funding has directly led to approximately 130 additional patients each year receiving a transplant.

That great achievement relies on not only the dedicated clinical teams working in hospitals across the UK, but the effective partnership between NHS Blood and Transplant and the charity Anthony Nolan. I want to take this opportunity to pay tribute to Professor Charlie Craddock and the work that he and all those involved in the trials acceleration programme are doing. They are, in many ways, trailblazers for the wider programme of accelerated access that I am leading through the accelerated access review. The Institute of Translational Medicine in Birmingham is breaking new ground on how we can take science into NHS practice.

The Government have also directly funded the creation of a unified registry—the Anthony Nolan and NHS stem cell registry—that ties together the different databases across the UK, making searching for a suitable donor quicker and easier. The number of registered donors continues to grow, and I am delighted that last year the registry passed the 1 million mark.

As hon. Members have highlighted, this is not just about the quantity; it is also about the quality. In response to the recommendations from the oversight committee, the funding from the Department of Health has specifically been used to create a panel of young male donors, who are much more likely to be able to donate. That panel now exceeds 70,000 and continues to grow. The data clearly show that that has been an effective strategy and that those young men are several times more likely to be asked to donate than others on the registry.

Finding a suitable donor is not the same for all patients. There is a global shortage of donors for patients from minority groups and those with diverse origins. To address that, the Government supported the targeted recruitment of donors from the black, Asian and minority ethnic community, which has now increased the chance of a patient finding a suitable well-matched donor from only 40% in 2010 to 60% today. It should be noted that our work with minority communities is supported by a number of partners in the charitable sector, such as the African Caribbean Leukaemia Trust, and more widely the Department continues to work with NBTA—the National BAME Transplant Alliance—which co-ordinates the work of those organisations on all forms of donation, including bone marrow.

It is an unfortunate fact that for many patients, finding a suitably matched donor will remain very difficult if not impossible, and in those situations umbilical cord blood might offer an alternative source of stem cells. Cells isolated from the umbilical cord are much more tolerant of slight mismatches and can be just as clinically effective as adult bone marrow and, unsurprisingly, BAME patients are almost six times more likely than Caucasian patients to receive stem cells from the umbilical cord. That is why funding from the Department has supported the targeted collection of high-quality cord blood samples. Both NHS Blood and Transplant and Anthony Nolan run dedicated units to collect cord blood and they have a specific target of collecting 40% of samples from BAME parents. The NHS cord blood bank now has more than 12,000 high-quality samples and, as a consequence, many more patients are now receiving cord blood samples obtained in the UK, making transplantation quicker and easier.

We continue to explore how transplantation can be improved, including clinical outcomes. I am aware that the NIHR Office for Clinical Research Infrastructure, NOCRI, has been in discussion with the University Hospitals Birmingham NHS Foundation Trust and other stakeholders to explore how it might be possible further to build on the NIHR national clinical research networks. The NIHR welcomes applications on any aspect of research related to stem cell transplantation and those applications are subject in the normal way to peer review and judged on the basis of scientific quality and the importance of the subject to patients and the healthcare service. The collection of clinical outcome data, which has been mentioned by a number of colleagues, remains an important issue within stem cell transplantation, which is why some of this year’s stem cell improvement funding of £3 million has been earmarked specifically to support data collection. That is an issue that the hon. Member for Torfaen has highlighted.

Such initiatives complement at every level the broader work we are doing to support the new life science landscape in which genomics and informatics drive better targeted treatments. When we are thinking of the future of stem cell transplantation in the UK, it is important to see it as part of a much wider strategy for the development of regenerative medicine. When we identified regenerative medicine as one of the eight great technologies in 2012 in the Department for Business, Innovation and Skills, it was largely on the basis of its theoretical potential to develop into a significant sector, but in the past few years we have seen an explosion of activity in this field, justifying that investment. Much of the work is, of course, for small and medium-sized enterprises.

We have not only established through the work of Innovate UK the Cell Therapy Catapult but have provided £55 million of funding to build the cell therapy manufacturing centre in Stevenage. That centre will enable UK and global companies that are looking to scale up to phase 3 manufacturing, solving a key barrier identified in the translation of research into commercially viable products. When that facility opens in 2017, it alone will support the creation of up to 150 new jobs on the Stevenage campus.

The creation of such centres of excellence attracts further inward investment and current estimates are that the sector will grow within the next 10 years to be worth £1.2 billion here in the UK. The Government have worked to co-ordinate funding across the regenerative medicine sector through initiatives such as the UK regenerative medicine platform, driven by Innovate UK. The unique role played by NHSBT is notable in this respect. It already has experience in cell processing, storage and delivery of living cell-based therapies from its work with blood supply and it will have a key role in the development of the logistics systems to respond to the specific requirements for regenerative medicine. In the coming years, the number of cell therapies and their clinical impact will expand far beyond their current use in transplantation, but will none the less rely on this key foundation. NHSBT is more than just a specialist logistics organisation; it has the ambition and potential to play an important role in the development and adoption of a wide range of novel therapies. It has already set in place a number of regenerative medicine projects, working in partnership with universities and the commercial sector.

Preparing the NHS for the novel regenerative therapies was a key aim of the regenerative medicine expert group, and am I pleased to say that the excellent report published in March this year contained a number of clear recommendations. To ensure that those recommendations are acted upon, I have asked the chief executive officers of the key delivery organisations to take them forward. I look forward to receiving their update in due course.

My hon. Friend asked whether I would be prepared to meet the all-party group on stem cell transplantation. I would be delighted to meet the group. In fact, I want to take this opportunity to announce that, in order to facilitate the process of submitting applications to the National Institute for Health Research, I am in the process of organising an NIHR parliamentary moment—I hope that it will become a parliamentary day—at which that great institution, which spends £1 billion a year on front-line clinical research at the heart of the NHS, can come to Parliament and set out for colleagues across the House the different programmes that we are running in the different disease areas and how applications can be made. I hope that the all-party group, along with the Anthony Nolan trust and clinicians such as Charlie Craddock, will play a role in making applications to the NIHR.

I echo my hon. Friend’s call for donor volunteers to come forward. I congratulate those, such as my hon. Friend the Member for Salisbury (John Glen), who have already led the way by donating. The truth is that progress in biomedical science, cell therapy, genomics, informatics and the development of autologous stem cells—stem cells that do not require donation—is moving at an incredible pace. I recently visited the Berlin institute for stem cell therapy, and the extraordinary advances across Europe are bringing within our range a whole new world of regenerative medicines based on autologous, manufactured stem cells that do not require donation. There is a whole new class of therapeutics, with the T cell and the immunotherapy drugs, which we hope will mean that in due course we can treat some of these cancers without that therapy being necessary. For now, however, it is our line of last resort, so it is crucial that we support that work and encourage and support donors to come forward.

[Mr Burrowes]

I welcome the Minister’s call for donors. I want to return to the point about trying to get the life sciences industry more involved. The Minister mentioned that it was largely SME-based. Although there has been public sector and charity involvement in the early stage of development, industry investment has been moderate. What does he put that down to, and how can we try to encourage the bigger life sciences industry to get involved?

[George Freeman]

My hon. Friend makes a good point. As in some other sectors, such as malaria, where the commercial models are not as well developed or as clear, there is a role for the Government, which is why we have set up the strategy and the partnerships. By de-risking and supporting the deep science in the early stages and bringing forward these partnerships of support, we hope to make it a sector in which more and more companies are beginning to see a return, and then they will start to invest their own money. All the indications are that that is beginning to happen here in the UK.

[Mary Glindon]

Will the Minister therefore ensure that the Government will continue to support the science budget in the years ahead?

[George Freeman]

Much as I would like to, I cannot take on the role of my right hon. Friend the Chancellor and announce the results of the autumn statement. I hope that the hon. Lady will see that our commitment to, and support for, the sector is clear. I am confident that we will see a continuation of that support for science in the autumn statement. We all know that funding is tight. The key is to demonstrate clinical impact and partnerships of support with companies.

I think that this is a great success story. I pay tribute once again to the Anthony Nolan trust, whose partnership with the NHS is genuinely changing outcomes for patients.

Question put and agreed to.

19:29

House adjourned.