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Oral Answers to Questions
(8 years, 8 months ago)
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Andrew Stephenson (Pendle) (Con)
1. What progress has been made on improving cancer survival rates.
Chris Davies (Brecon and Radnorshire) (Con)
11. What progress has been made on improving cancer survival rates.
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
Before I answer the questions, may I start by saying that I am sure the thoughts of the whole House are with the people of Brussels today after the shocking events that they have witnessed? As the Prime Minister made clear this morning, we will do all we can to support them.
Cancer survival rates are at a record high. We are on track to save an estimated 12,000 more lives a year for people diagnosed between 2011 and 2015, but we know that we need to strive to be better. The independent cancer taskforce report, “Achieving World-Class Cancer Outcomes”, which was published last summer, recommends improvements across the cancer pathway and sets a clear ambition for further improvement of survival rates.
Andrew Stephenson
I thank my hon. Friend for that answer, and I associate myself with her comments about the terrorist outrage in Brussels.
As my hon. Friend may be aware, the Rosemere cancer foundation has been fundraising for a new chemotherapy unit at Burnley general hospital, which will be a huge boost for cancer patients in my area. Because of the huge generosity of Pendle residents, Rosemere has already raised £90,000 towards its target of £100,000. Will she join me in congratulating Rosemere on its efforts and encouraging residents to help it to meet its full target?
Jane Ellison
Absolutely. It is a delight to associate myself with my hon. Friend’s support for that excellent local group. The Rosemere cancer foundation supports world-class cancer treatment throughout Lancashire and south Cumbria. Around 4,000 chemotherapy treatments are delivered each year at Burnley general hospital, and the new unit will be of real benefit to local cancer patients from my hon. Friend’s constituency—for which, as he knows, I have great affection—and from the surrounding area.
Chris Davies
Is there anything further that my hon. Friend can do to incentivise NHS trusts to replace linear accelerators that are more than 10 years old, and thereby allow more patients to access cutting-edge radiotherapy techniques?
Jane Ellison
This, of course, is one of the areas covered by the cancer taskforce, and it is a very important matter. Cally Palmer, the NHS national cancer director and chief executive of the Royal Marsden, is leading on taskforce implementation. The replacement of LINACs is being taken into consideration in planning improvements across the pathway. That can only be done because we are putting into the NHS and into cancer treatment the money that we need to achieve those world-class outcomes.
Colleen Fletcher (Coventry North East) (Lab)
Each year, 38,000 people in the UK are diagnosed with a blood cancer, but very few people are familiar with the term blood cancer. Patients have expressed concern about the fact that a lack of awareness has a significant impact on them throughout their patient journey, from causing confusion and uncertainty at diagnosis to making them unaware of the organisations that provide the support and care that they need. Will the Minister tell us what more the Government can do to tackle that lack of awareness in order to improve outcomes and survival rates for all patients affected by the 137 types of blood cancer?
Jane Ellison
The hon. Lady is absolutely right to draw the attention of the House to the challenge of joining up thinking across the cancer pathway. That is exactly the approach that Cally Palmer and the taskforce implementation team are looking at. I recently had a conversation with her and with NHS England representatives in which we talked about how we get that joined-up approach. That is at the heart of the taskforce’s recommendations, and we will be taking it forward for all the reasons that the hon. Lady has eloquently expressed.
Julie Cooper (Burnley) (Lab)
Cancer Research UK has said that cancer waiting targets have been missed so many times that failure has become the norm. Does the Minister agree that failure to tackle that is undoing the good work of the last 15 years on survival rates?
Jane Ellison
These days, we are dealing with the fact that a hugely greater number of people are being diagnosed. The increase in the number of people being referred by GPs is extraordinary. For example, last year GPs referred nearly half a million more patients to see a cancer specialist. That is an increase of 51%. When it comes to waiting lists, of course we want to make sure that everyone is seen. The Government have committed more money to diagnostics, for example, but we expect the NHS to look urgently at any local dips in performance and to take action to make sure that all patients get access to treatment as quickly as possible.
Maria Caulfield (Lewes) (Con)
Will the Minister join me in welcoming the Government announcement of funding for a new radiotherapy machine in Eastbourne district general hospital, which will improve cancer survival rates for patients from Seaford, Alfriston, Polegate and East Dean in my constituency?
Jane Ellison
Absolutely. My hon. Friend again highlights where we are investing, upgrading machines and putting in money, effort, people and resources to make sure that we can achieve world-class cancer outcomes. As I say, we are on course for record outcomes in terms of patients surviving 10 years beyond a diagnosis. However, we always want to do better, so I applaud the local efforts that she has highlighted.
Margaret Ferrier (Rutherglen and Hamilton West) (SNP)
I would like to reiterate what the Minister said. As I sure my hon. Friends would agree, our thoughts go out to everybody in Brussels at this time.
Will the Minister please inform the House of what consideration has been given to bringing the bowel cancer screening age into line with that in Scotland—at 50 rather than 60—following the recent Westminster Hall debate on this subject?
Jane Ellison
We had an excellent debate. An extraordinary number of colleagues turned up in Westminster Hall, a debate of just half an hour, demonstrating how many people are interested in this important subject. I outlined in my response to the debate the fact that we have the bowel scope screening programme and the bowel cancer programme in England, which complement each other. The result, particularly of bowel scope screening, is that we can actually make a huge impact on mortality rates for people who are caught. I went into that in more detail in my response to the debate, but that is the key to making sure we identify more people and stop them dying from this dreadful disease.
Ann Coffey (Stockport) (Lab)
2. What recent representations he has received on the effect on health budgets of the administration of deprivation of liberty safeguards.
The Minister for Community and Social Care (Alistair Burt)
I have received a range of representations on the effect of the deprivation of liberty safeguards, including on the impact that the current system has on health and care budgets. The hon. Lady is a respected voice on the challenges that these safeguards pose, and I can reassure her and the House that there is ongoing work to address those challenges.
Ann Coffey
I thank the Minister for his reply. Deprivation of liberty assessments are costing Stockport Council £1.2 million this year, as a result of the Cheshire West judgment. Not one single penny of that is providing social care. This is clearly unsustainable at a time when social care budgets are under intense pressure. Something needs to be done now; we cannot wait for the Law Commission. Will the Minister consider, as a small step forward, scrapping costly automatic annual reassessments and the necessity to reassess every time an elderly person leaves a care home to go into hospital?
Alistair Burt
I will happily look at anything that might assist us. As the hon. Lady knows, we are caught in the process of trying to deal with a court judgment and the issues surrounding mental capacity in relation to deprivation of liberty safeguards, which are genuinely serious and cannot be easily changed at the stroke of a pen, as well as the extra costs that the problem has raised. We are now close to hearing the Law Commission’s post-consultation proposals. I understand that it will publish its latest analysis in mid-May and will have drafted detailed legislation by the end of December. I will look at any suggestion of hers that might ease the situation practically.
Mr David Nuttall (Bury North) (Con)
Will the Minister confirm that when the new legislation is finally introduced, it will be simpler to understand and result in fewer bereaved relatives facing distressing delays when a loved one dies in care?
Alistair Burt
My hon. Friend is absolutely right. What has caused the confusion has been a definition of loss of liberty and dying in state detention that bears no relation to anyone’s common-sense understanding of the situation. Whatever new legislation is proposed by the Law Commission, it must meet the test of being much simpler, but it must also meet the legislative test of meaning what it says so that it does not get disrupted in the courts again.
Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
3. If he will make it his policy to eliminate hepatitis C.
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
The UK Government take the issue of prevention, diagnosis and treatment of hepatitis very seriously. I can confirm that Public Health England and NHS England, together with key stakeholders, are continuing to develop a strategic approach to tackling hepatitis C, including plans which have now been published for treatment through operational delivery networks.
Roger Mullin
So far as I am aware, the Scottish Government provide treatment for all those with sensitive hepatitis C, including those infected with contaminated blood, and that transforms the lives of patients and reduces the risk of further infection in the population. Will the Minister commit to providing similar access to treatment in England?
Jane Ellison
The National Institute for Health and Care Excellence has provided guidance on the new drug, so the hon. Gentleman is right to highlight how effective the new treatments are compared with what was previously available. The NHS is in the process of rolling out its response. It has already treated a number of people, and there is a commitment to treat 10,000 people with those treatments in 2016-17. We are of course looking more widely at how we can tackle these issues, not least in the context of the tragedy of those infected with contaminated blood, which he has highlighted.
Jim Shannon (Strangford) (DUP)
What discussions has the Minister had with her counterpart in Northern Ireland regarding the reduction and eventual eradication of hepatitis C? Does she agree that it is important to have a strategy that encompasses the whole United Kingdom of Great Britain and Northern Ireland?
Jane Ellison
Absolutely. The consideration of all aspects of how we eliminate hepatitis C over time is important, but we should not underestimate what a difficult job that is, largely because an awful lot of people are not aware that they have it—they are asymptomatic and therefore much of the burden of the disease is not visible to us. However, there is always more we can do, and we continue to make this issue a priority.
Kirsten Oswald (East Renfrewshire) (SNP)
4. Whether the terms and conditions of the junior doctors contract were finalised before he took the decision to introduce that contract.
The Secretary of State for Health (Mr Jeremy Hunt)
May I start by echoing the thoughts of my the Under-Secretary of State for Health, my hon. Friend the Member for Battersea (Jane Ellison), for the people of Brussels, with whom we stand shoulder to shoulder?
In my statement to the House on 11 February, I gave a broad outline of the new terms for doctors and dentists in training, which were recommended as fair and reasonable by Sir David Dalton. I am still reviewing the exact terms, alongside the equality impact assessment, and finalised terms will be published shortly.
Kirsten Oswald
When the Secretary of State declared that he was imposing the contract on junior doctors last month, he claimed the support of senior NHS leaders, many of whom subsequently denied supporting his position. Given that foundation trusts are free to offer their own terms, how does he envisage enforcing that contract?
Mr Hunt
We consulted widely with NHS leaders about the terms of the new contract, and they confirmed that it was fair and reasonable. Any decision to proceed with a new contract when it is not possible to have a negotiated settlement is inevitably controversial, but we wanted to ensure that independent people thought that the terms of the contract were fair. I think we have done that, and when junior doctors see their new contracts—as they will do shortly—they will realise that we were right to say that.
Helen Whately (Faversham and Mid Kent) (Con)
Underlying the dispute over the junior doctors contract is a long-standing problem of morale among junior doctors, and a failure to pay enough attention to their experiences in training. I welcome the Government’s decision to launch an independent review led by Professor Dame Sue Bailey, and I ask my right hon. Friend to update the House on the progress and timing of that review.
Mr Hunt
As ever, my hon. Friend speaks with great knowledge about NHS matters, and she is right to say that some of the underlying issues have nothing to do with contractual terms but are about very big changes in the way that training has happened over recent years, in particular the loss of the firm system and the sense of camaraderie that was part of the deal for junior doctors in training. We would like to see whether we can rectify some things that have gone in the wrong direction, but we have not yet had the co-operation of the British Medical Association for that independent review, which is led by the highly respected Professor Dame Sue Bailey. I hope that the BMA will co-operate with that, because it is a big opportunity to sort out some long-standing problems.
Dr Philippa Whitford (Central Ayrshire) (SNP)
There are currently 4,500 gaps for trainees in the NHS. Junior doctors often have to cover those gaps, which can mean having to do extensive extra shifts, or even covering two roles at the same time. It looks as if that situation will get worse, because fewer than half of the most junior trainees have applied for ongoing training this year. Does the Secretary of State accept that that represents a serious threat to patient safety?
Mr Hunt
The purpose of the changes is to improve patient safety, and particularly to deal with the issue that we have higher mortality rates for people who are admitted to hospital at weekends than for those admitted during the week. Because of the confrontational approach taken by the BMA, it has been difficult to negotiate an agreement, but we are committed to doing the right thing. What is right for patients is also right for doctors. We have been talking about morale, and the biggest way to dent doctors’ morale is to prevent them from giving the care that they want to give patients, so we must sort that issue out.
Dr Whitford
I suggest that what is good for doctors is also good for patients, and if people are being texted four or five times a day and asked to do a second shift to cover for a junior and a senior post at the same time, that is not good for either. On 11 February the Secretary of State said that he was imposing the contract to bring stability to the NHS, but that has not exactly gone well. What is his plan to re-establish his relationship with junior doctors and get us back out of where we are now?
Mr Hunt
With the greatest respect, we are trying to solve a problem that in Scotland is being ducked. We want a seven-day NHS with mortality rates that are no higher at weekends. There is no plan in Scotland to deliver that across the whole NHS. Rather than sniping, the hon. Lady should recognise that, in the interests of patient safety, we need to take difficult decisions. In the end, doctors will see that it is the right thing for them, too.
Justin Madders (Ellesmere Port and Neston) (Lab)
First, on behalf of the Opposition, I associate ourselves with the comments made by Ministers about the tragic events in Brussels, and offer our condolences and solidarity to the people there.
Yesterday in Westminster Hall, there was a debate calling on the Health Secretary to resume meaningful contract negotiations with the BMA. The Health Secretary was not there—I do not know, but perhaps he was out buying a leaving present for the Chancellor—but if he had been, he would have heard his junior Minister confirm that, since the announced imposition, the Government have made no attempt to prevent further industrial action. They know more industrial action is coming. Do they not owe it to patients who would be inconvenienced by further strikes to get off their backsides and do something to prevent it?
Mr Hunt
The reason we made the decision to proceed with the new contracts is that we had independent advice that a negotiated settlement was not possible. On that basis, we decided that it was important to have certainty for the service by making clear what the new contract is. The contract that we decided on is one that strikes a mid-point between what the Government wanted and what the BMA asked for. It is a fair contract and a better contract for patients. The Labour party would support it if it was really on the side of patients.
David Rutley (Macclesfield) (Con)
5. What steps the Government is taking to improve support for children and young people with mental health problems.
The Minister for Community and Social Care (Alistair Burt)
The Government are committed to delivering the vision set out in “Future in mind” and are driving forward a major system-wide transformation programme, working alongside our partners in Government and arm’s length bodies to improve access to high-quality support across the country.
David Rutley
I thank my right hon. Friend for the steps he has set out. Will he join me in congratulating the charity YoungMinds on the important work it does in highlighting the mental health challenges young people face, not least from the so-called dark net and social media. Does he agree that we must ensure that the internet is a positive and not a negative force in tackling young people’s mental health challenges?
Alistair Burt
Yes, the work that YoungMinds and a range of other partners have done and continue to do to ensure that children and young people can access information safely is commendable. Children, young people and their parents have expressed the need to access both high-quality and reliable information and support online. That was reflected in the “Future in mind” report on children’s and young people’s mental health. We are investing with MindEd and a number of groups and organisations to work on apps for young people. It is important that they have access to safe material to exclude that which is rather darker.
Mr Gareth Thomas (Harrow West) (Lab/Co-op)
The Minister will recognise that walk-in centres run by experienced GPs can offer important support to children with mental health problems, yet popular walk-in centres that were established by local GPs in my constituency are being put out to tender, putting at risk the leadership and involvement of those experienced GPs in the centres. Will the Minister give guidance to the NHS Procurement Authority that walk-in centres should be led by local GPs with experience of that area?
Alistair Burt
I will look at what the hon. Gentleman says. As he will appreciate, I am not responsible for individual commissioning decisions. The commissioners will have full regard to the needs of the local population when they are putting those services out. It is important that access is increasingly available at GP and primary level, as well as in other areas where the Government are investing further money. I will have a look at what he says.
Jeremy Quin (Horsham) (Con)
20. Will the Minister inform the House of what dialogue is maintained between his Department and the Department for Education to ensure that those issues are picked up and that help is signposted as early as possible?
Alistair Burt
There is a growing relationship with the Department for Education—it is better than it has ever been. For the first time, there is a Minister responsible for mental health in the Department, and there is a schools champion for mental health, whom I met the other day at a conference in Cambridge. The Departments work closely together to deliver the vision set out in “Future in mind”. For example, there is a £1 million pilot project, working across 22 schools, to find the right people in schools to deal with mental health issues. There is much greater recognition that, the earlier we pick up these things, the better it is for youngsters and their future mental health.
Dr Lisa Cameron (East Kilbride, Strathaven and Lesmahagow) (SNP)
Eating disorders among children and teenagers cause life-threatening health problems and even death. What steps is the Minister taking to enable early detection and intervention, which result in better prognoses and support closer to home?
Alistair Burt
There are two things that can help the hon. Lady. The first is the commitment to build £30 million a year into budgets over the next five years to support those with eating disorders, about which I spoke at a conference last week. The second is the earlier detection of eating disorders. We reckon that, by 2020, 95% of urgent eating disorder cases will be seen within a week, with routine cases seen within four weeks. There is recognition of the real danger now posed by eating disorders.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
Earlier this month, school and college leaders reported a large rise in the number of students suffering from anxiety. Two thirds said that they struggle to get mental health services for their pupils, and of those who had referred a student to child and adolescent mental health services—CAMHS—most rated them as “poor” or “very poor”. Despite the Minister’s warm words, things are getting worse, not better. Will he confirm that every single penny promised to children’s mental health will reach those services and that none of this money will be used to plug the gap in hospital budgets?
Alistair Burt
Following long and frank conversations between me, the NHS and the Treasury, I can give the hon. Lady that assurance—every penny of the £1.4 billion pledged in the 2015 Budget for CAMHS and for eating disorders will be spent on children’s mental health by the end of this Parliament. It is not fair continually to say that nothing is going on. The first tranche of money—£173 million—is being spent: £75 million to the clinical commissioning groups; £30 million to tackle eating disorders; £28 million for the expansion of children’s IAPT—improving access to psychological therapies—services; £15 million for perinatal services; and £25 million to address other issues involving training. That is money already committed and it is being spent now. The problems that she mentions are a high priority and are being dealt with.
Luciana Berger
I listened carefully to the Minister, but by his own admission—in response to parliamentary questions—he is going to underspend this year by £77 million on his pledge to spend £250 million on CAMHS, and by £11 million on his £15 million pledge regarding perinatal mental health. He talks about the importance of intervening earlier. Does he agree with Labour that every child should receive personal, social, health and economic education so that young people are equipped with the resilience better to support their mental health?
Alistair Burt
We cannot have it both ways, it would seem. I have given a pledge, which the hon. Lady asked for in her first question, that the £1.4 billion committed to CAMHS will be spent by the end of this Parliament—and it will be. It is known that the first tranche has not been fully committed, but this is the first year and some money has to roll over. However, I have made absolutely sure that that money will be spent, including on perinatal services, which will reach a much better place than when we came into office, and that is very important. The work will be done. PSHE is not a matter for this Department, but I fully agree that it is important that children have such information. The pressure caused through social media, sexting and the like means that children these days need to have a very up-to-date, modern understanding of issues associated with personal health and social education, which I fully support.
Mr Speaker
May I gently point out to colleagues that, very useful and comprehensive though these exchanges have been, as usual at this stage we have got a lot to get through and we need to speed up a bit? There is a long waiting list of colleagues and we must get through that list.
Maggie Throup (Erewash) (Con)
6. What progress the 100,000 Genomes Project has made on providing UK leadership for international developments in precision medicine.
The Parliamentary Under-Secretary of State for Life Sciences (George Freeman)
Our groundbreaking 100,000 Genomes Project, which was announced by my right hon. Friend the Prime Minister as part of our 10-year life sciences strategy, represents the moonshot of medicine in making the UK the first nation on earth to sequence the entire genetic sequence of 100,000 genomes from NHS patients. Through our precision medicine strategy, the launch of 13 genomics medicine centres in the NHS, funding from Government and the precision medicine catapult, we are winning international plaudits and attracting inward investment, as a sign of our commitment to a 21st century NHS.
Maggie Throup
I recently visited the medical school in Nottingham where I saw the great work being carried out, including groundbreaking genomics work on identifying Alzheimer’s risk genes. What support is the Department providing to ensure that work is fully funded and expanded, so that the east midlands and the UK continue to be world leaders in the search for treatments and ultimately a cure for Alzheimer’s, based on our research?
George Freeman
I pay tribute to my hon. Friend, who had a distinguished career in the life science sector, including through setting up her own business. She is right to highlight the work at Nottingham University which, along with Leicester and Birmingham, represents something of an east midlands powerhouse. The Nottingham University Hospitals NHS Trust is part of the East of England NHS Genomic Medicine Centre, recruiting patients and becoming one of our hubs for NHS genomics medicine. In addition, we are actively supporting research into Alzheimer’s through our £1 billion a year National Institute for Health Research budget, the £150 million Dementia Research Institute and our dementia plan. I continue to lead conversations with dementia charities.
Alex Chalk (Cheltenham) (Con)
7. What progress the Government have made on achieving parity of esteem for physical and mental health services.
The Minister for Community and Social Care (Alistair Burt)
We remain committed to achieving parity of esteem between mental and physical health, and we are investing more than ever in mental health. We welcomed the publication of the Mental Health Taskforce report last month and will work to embed its recommendations in our policies.
Alex Chalk
Steph Cater, a 17-year-old at Pate’s Grammar School in my constituency, is concerned that mental health in-patient services are distributed unevenly, meaning that those needing treatment can end up being cared for hundreds of miles away from their families. What more can be done to ensure that those in crisis are treated closer to home?
Alistair Burt
A review of beds in 2014 partly redressed that uneven distribution. In my hon. Friend’s area, an analysis of the impact of the new beds shows that the average distance travelled to child and adolescent mental health services units in the south-west has improved from 114 miles in 2014 to 39.9 miles in 2016. It is not enough simply to provide more beds, however. We have to provide more community-based support and treatment—that is at the heart of “Future in mind”. The number of out-of-area treatments also has to be reduced.
Norman Lamb (North Norfolk) (LD)
I was delighted that Paul Farmer’s taskforce report endorsed the plan first proposed by the Secretary of State and myself in 2014 to have comprehensive maximum waiting times in mental health by 2020 so that people with mental ill health have exactly the same right to treatment on time as others. I was delighted that the Government endorsed the whole plan, but dismayed that Simon Stevens then confirmed that there was no money to implement it. How will the Minister ensure that the comprehensive waiting time standards are implemented by 2020?
Mr Speaker
If anything, questions are getting longer, not shorter. I say with great courtesy to the right hon. Gentleman, whom I hold in the highest esteem and whose track record is greatly respected across the House, that his question was far too long.
Alistair Burt
Two things: the first set of waiting time standards—the first ever by a Government—are already in place from April 2015, with 50% of people experiencing an episode of psychosis treated within two weeks and improved waiting times for talking therapies; and, secondly, we have to get the database right. The right hon. Gentleman will know that we are doing an extensive and much greater data trawl to find a base on which those waiting times can be set, but it remains our determination to get them introduced by 2020.
Mr Gavin Shuker (Luton South) (Lab/Co-op)
8. What improvements have been made to child and adolescent mental health services since the publication of the Government’s strategy, “Future in mind”, in March 2015.
The Minister for Community and Social Care (Alistair Burt)
Progress has been made on many of the key ambitions set out in “Future in mind”. Of greatest significance is the development of local transformation plans that cover the full spectrum of children and young people’s mental health issues, from prevention to intervention for emerging or existing mental health problems, for every clinical commissioning group in the country.
Mr Shuker
This month, the Mental Health Network, representing NHS providers, said that very little, if any, of the money promised for child and adolescent mental health has yet materialised and that some services are experiencing cuts in-year. The Minister must accept, despite his assurances to my hon. Friend the Member for Liverpool, Wavertree (Luciana Berger), that the Department’s efforts in getting this money out the door has been woeful. What will he change?
Alistair Burt
I do not necessarily, despite the energy of the hon. Member for Liverpool, Wavertree, accept everything that she says. I gave a list of where the money is being spent. However, I think I can help both the hon. Gentleman and the hon. Lady. Much more is being done to ensure that CCGs deliver what they need to deliver in relation to mental health. This year’s figures will show that, whereas there has been a 3.7% uplift for CCGs, there has been an uplift of 5.4% in mental health spending. With more transparency and more determination by the NHS on CCG spending, hopefully what people are saying and feeling will become less justified in the future.
Kelvin Hopkins (Luton North) (Lab)
9. How much was spent on healthcare as a proportion of GDP in (a) 2009-10 and (b) 2014-15; and what estimate he has made of the amount that will be spent on healthcare as a proportion of GDP in 2020-21.
The Secretary of State for Health (Mr Jeremy Hunt)
Because in 2010 the country faced a deficit that constituted 11% of GDP, all major political parties committed to plans that reduced Government spending, including on health, as a proportion of GDP. However, because of this Government’s commitment to the NHS, health spending as a proportion of Government spending will increase from 14.2% to 15.8% over the decade.
Kelvin Hopkins
Former coalition Minister David Laws has recently written that under the previous Government the NHS chief executive told Ministers that the health service required an additional £30 billion, and that he was forced to cut that figure and squeeze it down to £15 billion, but was allocated only £8 billion by the Treasury. That was a savage cut of £22 billion to what the NHS really needed. Is that not the root cause of all the NHS’s problems, and does it not make utter nonsense of the Government’s claim to be protecting NHS funding?
Nigel Huddleston (Mid Worcestershire) (Con)
16. Does my right hon. Friend agree that as well as focusing on health inputs and how much we spend on the NHS, it is also important that we focus on health outcomes?
Mr Hunt
My hon. Friend is absolutely right, which is why I am so proud that under this Conservative Government we have put 27 hospitals into special measures, 11 of which have now come out of special measures. We are improving the standard and quality of care, and increasing the number of people being treated across the board. Outputs matters, and that is what this Conservative Government will deliver.
Heidi Alexander (Lewisham East) (Lab)
The Health Secretary may talk a good game on funding, but the reality in A&E departments and GP surgeries tells a very different story. The whole system is on its knees, and the revelations of the former Chief Secretary to the Treasury this weekend confirmed what everyone in the NHS already knew—making £22 billion of efficiency savings over the next four years is pure fantasy. In the interests of transparency, therefore, will he now publish the full analysis explaining how NHS England arrived at the figure of £22 billion?
Mr Hunt
Let us look at what the chief executive of NHS England, Simon Stevens, actually said, and not what he is alleged to have done, which he denies. He said that, when it came to the spending review, the Government had listened to and actively supported the NHS’s case for spending and that he could kick-start his plan for the NHS. But it is rather academic—is it not?—because Labour refused to fund his plan at all, which all goes to show, when it comes to the NHS, that Labour writes the speeches but Conservatives write the cheques.
Heidi Alexander
I did not ask the Health Secretary what the chief executive of the NHS said. I asked the right hon. Gentleman to publish the analysis behind the £22 billion figure, but he will not do so because he knows that the only way to achieve these politically motivated efficiencies is by making cuts to staff and pay. The truth is that the NHS survives on the good will of its staff, yet he has pushed that good will to breaking point. How does he expect to improve current services, let alone deliver a seven-day NHS, with fewer staff and a demoralised workforce?
Mr Hunt
Under this Government, staff levels have actually risen: we have 11,000 more doctors and 12,000 more nurses. If the hon. Lady is worried about NHS funding, perhaps she might look in the mirror, because in 2010 her party wanted to cut funding to the NHS—in Wales, it actually did cut it—and in 2015 it wanted £5.5 billion less than the Conservatives. The NHS does not need Labour rhetoric; it needs more doctors and more nurses, which we can have only on the back of the strong economy that only the Conservatives can deliver.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
10. What recent assessment he has made of staff morale in the NHS.
The Parliamentary Under-Secretary of State for Health (Ben Gummer)
The Department assesses staff morale in the NHS using engagement scores from the annual NHS staff survey. I am delighted to say that the engagement score currently runs at 3.78 out of 5, which is a rise from the position in 2012, when the survey began, when it was at 3.68.
Dr Huq
On top of the junior doctors debacle, the staff survey shows that midwives are stressed, with 90% of them working extra shifts unnecessarily. I have raised before the case of the radiographer Sharmila Chowdhury, who was sacked for exposing bribes at Ealing hospital, but has yet to get a practical response, other than the words, “Francis review”, which has yet to be implemented. When will the Government get a grip on plummeting morale in the NHS?
Ben Gummer
The hon. Lady asked a number of questions. On the specific issue about this particular member of staff, I know that my right hon. Friend the Secretary of State has met her, and I would be happy to discuss this further. The hon. Lady is wrong about the Francis recommendations, which are being implemented in full. She should look at the balanced results from the staff survey, with more staff saying that their motivation at work is going up, with the number recommending their trust as a place of work and as a place to receive treatment going up, and with the number able to contribute to improvements at work also going up. There are issues in the staff survey that we would like to address—it is unfortunate to see reports of bullying and harassment going up—but we are addressing the problem through the staff partnership forum, which I chair. Overall, however, this is a balanced and positive return from the staff survey.
Andrew Bridgen (North West Leicestershire) (Con)
Will my hon. Friend confirm that, as well as the importance of staff morale, we should note that in hospitals where seven-day working has been implemented, patient morale is also improving considerably?
Ben Gummer
My hon. Friend is right, and the returns from the friends and family tests across the country show increasing patient satisfaction with the NHS.
Liz McInnes (Heywood and Middleton) (Lab)
22. How does the Minister think that staff morale is affected when people hear the Government’s constant refrain of “implementing seven-day working”, particularly among pathology staff and others who have for decades provided a 24/7 service?
Ben Gummer
Despite the best efforts of Labour Members, staff morale has gone up over the past few years. The situation is not helped when the nature of the junior doctors contract is misrepresented, as it continually is by Labour Members. If they were to give a fair account of the contract to their constituents, I am sure we would see further improvements in staff morale in years to come.
Nusrat Ghani (Wealden) (Con)
Staff morale at Uckfield community hospital is exceptionally high, partly owing to its receiving 100% in a recent friends and family survey. Will the Minister join me in congratulating all the nurses, volunteers and front-office staff in Uckfield community hospital?
Ben Gummer
I happily congratulate the staff at my hon. Friend’s local hospital. This shows where good constituency representation, reinforcing the efforts of local people working in local hospitals, can produce improvements in staff morale and therefore in the experience of patients, which is something from which Labour Members would do well to learn.
Barbara Keeley (Worsley and Eccles South) (Lab)
In a recent survey, 70% of GPs warned that their workloads were becoming unmanageable, and 55% said that the quality of the service they provided had deteriorated, with too few patients getting appointments, treatment and the range of services needed. We now hear reports of a large decrease in applications for GP training places, and this is one of the last cohorts to be fully trained by 2020. Unless the Minister takes urgent action to address these issues affecting GP morale, workload and recruitment, patient care will just get worse. What is he going to do about it?
Ben Gummer
The hon. Lady raises the issue of GPs. We are ensuring that there will be 5,000 additional GPs by the end of this Parliament, which addresses precisely the issues that she raises.
Ben Gummer
I do not know why the hon. Lady is shaking her head. She asked what I am doing, and 5,000 additional GPs will help to solve her problem. Secondly, we are putting a greater proportion of funding into general practice, by comparison with the proportion of the NHS budget as a whole, than any previous Government. Thirdly, we are increasing the number of GP training places. I am pleased to report that we are doing well in ensuring that more people in training positions are choosing to become general practitioners.
John Stevenson (Carlisle) (Con)
12. What progress his Department has made on improving the performance of hospitals in special measures.
The Secretary of State for Health (Mr Jeremy Hunt)
Trusts put into special measures have recruited 1,363 more doctors and 4,190 more nurses, with one estimate saying that this has reduced mortality rates by up to 450 a year.
John Stevenson
In the past six years, the North Cumbria University Hospitals NHS Trust has had four chief executives, an acquisition that is going nowhere and a so-called success regime that is reporting later than intended. There are clearly tough decisions to be made in the north Cumbria health economy, and the sooner they are made, the better. Will the Secretary of State undertake to ensure that the recommendations of the success regime are implemented in full and in a timely manner?
Mr Hunt
I thank my hon. Friend for his persistent campaigning on behalf of his local trust. He is right that there are big issues there. He is also right generally that the NHS has too rapid a turnover of chief executives. There is a new one, Stephen Eames, who is one of the top-rate NHS chief executives. The Care Quality Commission says that things are improving and mortality rates are going down. I will support my hon. Friend in every way I can to resolve the situation as quickly as possible.
Valerie Vaz (Walsall South) (Lab)
As the Manor hospital is in special measures, Walsall mothers-to-be are being denied the right to choose to have their babies at that hospital. Will the Secretary of State confirm that there are safe staffing levels at the Manor and at other hospitals?
Alex Cunningham (Stockton North) (Lab)
13. What recent representations he has received on the future funding of mesothelioma research.
The Parliamentary Under-Secretary of State for Life Sciences (George Freeman)
I thank the hon. Gentleman for raising this issue. Mesothelioma is a terrible disease from which more than 3,000 people die in this country every year. The Government are completely committed to supporting treatment, prevention and compensation. In the last three months my noble Friend Lord Prior has had a number of discussions with interested parties, and, as the hon. Gentleman will have noted, my right hon. Friend the Chancellor was able to announce £5 million of funding for a new mesothelioma research centre in last week’s Budget.
Alex Cunningham
The British Lung Foundation has welcomed the £5 million that the Government have announced for a national mesothelioma centre, but when will those funds be released, and how will the Government ensure that funding for research is sustained in the years that follow?
George Freeman
We are engaged in active discussions with the various parties, including charities such as Cancer Research UK, and we have received some interesting submissions from some of the research institutes. Over the coming weeks, we will consider how best to put that £5 million from the Government to work in order to maximise inward investment and build UK leadership in this important centre.
Mary Glindon (North Tyneside) (Lab)
14. What steps he is taking to ensure that people with muscle-wasting conditions who require a cough assist machine have access to such a machine, commissioned in the community by their clinical commissioning group.
The Parliamentary Under-Secretary of State for Health (Ben Gummer)
NHS England is working with Muscular Dystrophy UK through the Bridging the Gap project, and looking at issues such as the provision of cough assist machines, which are a local matter for clinical commissioning groups. A number of CCGs now have commissioning policies for these devices, based on a policy developed by Walsall CCG and shared nationally as an example of good practice by Muscular Dystrophy UK.
Mary Glindon
Twenty-one-year-old Freddie Kemp, who had muscular dystrophy, sadly died of cardiac and respiratory complications. He had been refused a machine by his CCG. The Minister said that he was working with Muscular Dystrophy UK. Will he meet representatives of that organisation to discuss what can be done to persuade CCGs to prioritise the provision of these important machines?
Ben Gummer
I thank the hon. Lady for bringing the matter to the House’s attention. Of course I will meet any groups who are concerned with it. I understand that the clinical evidence is divided in respect of the efficacy of cough assist machines as opposed to manual massage, but Walsall CCG has sought to resolve that—successfully, I understand—and other CCGs might wish to adopt its template. However, I will of course discuss with the hon. Lady personally the issues that she has raised.
Catherine West (Hornsey and Wood Green) (Lab)
15. What the timetable is for the launch of the public consultation on HIV pre-exposure prophylaxis for adults at high risk of contracting HIV.
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
NHS England will invest £2 million over the next two years in order to run, together with Public Health England, early implementer test sites which will seek to answer the remaining questions about how PrEP could be commissioned in the most cost-effective and integrated way to reduce the incidence of HIV and sexually transmitted infections for those at the highest risk.
Catherine West
Yesterday NHS England scrapped plans to fund PrEP. Is there anything that the Minister can do to end this erratic and inconsistent decision making? Does she agree that yesterday’s decision to abandon the roll-out of a game-changing drug totally failed those who are at risk of contracting HIV?
Jane Ellison
NHS England’s senior specialised commissioning management team made that decision, and I think NHS England recognises that it could have been made earlier. However, it is also recognised that NHS England has already done valuable work. Some important lessons have been learned, and we do not want to lose that. We must now work with both NHS England and Public Health England to understand how we can continue to learn from, for example, the test sites.
Mike Freer (Finchley and Golders Green) (Con)
I share some of the concerns expressed by the hon. Member for Hornsey and Wood Green (Catherine West) about the roll-out of PrEP, but it is only one tool in HIV prevention. Will my hon. Friend update the House on the progress of the HIV prevention innovation fund?
Jane Ellison
My hon. Friend is right to draw the House’s attention to the fact that PrEP is only one part of prevention, although obviously we understand its importance. He is also right to mention the innovation fund, which, of course, he championed. We have invested up to £500,000 in new and innovative ways to tackle HIV. Some excellent organisations have come forward with some very innovative approaches, and we have also established the first national HIV home sampling service.
Dr Andrew Murrison (South West Wiltshire) (Con)
T1. If he will make a statement on his departmental responsibilities.
The Secretary of State for Health (Mr Jeremy Hunt)
The latest performance figures show the challenges that the NHS faces in coping with extraordinary levels of demand. Despite these pressures, however, the Government are making good progress in our ambition that NHS care should be the safest and highest quality in the world. Figures from the Health Foundation show that the proportion of patients being harmed has fallen by more than a third in the past three years, that MRSA infections have nearly halved since 2010, and that C. diff infections fell by more than a third over the same period.
Dr Murrison
The “Five Year Forward View” said that the NHS would need between £8 billion and £21 billion extra from the Treasury by 2021. It got a commitment of £8 billion, which was opposed by the party opposite. Can the Secretary of State say when the Stevens plan will be formally reviewed, and where in the range between £8 billion and £21 billion he expects the real requirement will be found to lie?
Mr Hunt
We are actually putting in £10 billion of additional public money to support the NHS over the next few years. That means that we need to find between £20 billion and £22 billion of efficiency savings. We will be reviewing the progress of the plan as we go through it, but I want to reassure my hon. Friend that I meet the chief executive of NHS England to view the progress of the plan every week and that we are absolutely determined to ensure that we roll it out as quickly as possible.
Margaret Greenwood (Wirral West) (Lab)
T4. I would like to express my sadness at the news that two people in my constituency lost their lives in a house fire yesterday. My thoughts are with their family and friends at this extremely sad time. The coalition Government legislated for NHS hospitals to earn up to 49% of their money from private patients. Arrowe Park hospital in my constituency is highly valued by local people for the service that it delivers, so for the sake of clarity will the Minister tell us whether he sees an increase in the number of NHS beds being used for private patients and a decrease in the number being used for NHS patients as a sign of success or a sign of failure?
The Parliamentary Under-Secretary of State for Health (Ben Gummer)
The matter of private beds is entirely for the trust to decide, but we are very clear that NHS patients should always come first.
Henry Smith (Crawley) (Con)
T3. In the last decade, under the then Labour Government, Crawley hospital saw its accident and emergency and maternity units close. However, I am pleased to say that in recent years we have seen casualty services returning, as well as the introduction of a GP out-of-hours service and a greater number of beds. Will my right hon. Friend join me in congratulating the NHS staff in my constituency who are working so hard to deliver these new services?
Mr Jeremy Hunt
I am absolutely delighted to join my hon. Friend in congratulating the staff in his constituency. A&E targets there have been met in the year to date: at the moment they are seeing 36,509 more people in under four hours every year compared with six years ago. The trust is meeting its 18-week target and its diagnostic waiting time target, so that is a very good performance.
Ian Blackford (Ross, Skye and Lochaber) (SNP)
T8. Scotland has consistently outperformed all other nations in the UK on A&E over the past year. With England’s performance dropping in every single month since weekly publication was abandoned last July, does the Secretary of State think it is time to return to more frequent analysis and to eliminate the obfuscation of the six-week delay in publication?
Mr Hunt
I am somewhat surprised at the complacency of the hon. Gentleman’s question after Audit Scotland identified in the autumn that performance against seven of the nine key targets for the Scottish NHS had deteriorated in the past three years, that spending since 2009 had fallen in Scotland while increasing in England, and that spending on private sector providers was increasing. The hon. Gentleman should think about that before he criticises what is happening in England.
Dr Tania Mathias (Twickenham) (Con)
T5. Successful cardiopulmonary resuscitation often involves people knowing where the nearest public access defibrillator is located. In my constituency, however, it is difficult to find out exactly where such defibrillators are located. Will the Minister ask the Department of Health to carry out a live mapping of public access defibrillators as well as ensuring that every workplace with a first aid point has a clear sign showing where the nearest defibrillator is located?
The Minister for Community and Social Care (Alistair Burt)
This work is already in hand through the British Heart Foundation. I should like to add that last week the Chancellor announced another £1 million to make public access defibrillators and CPR training more widely available in communities across England. Coupled with last year’s funding of £1 million, that means that there are now over 690 more publicly accessible defibrillators in communities across England. That mapping work is important, however, and my hon. Friend is right to raise it.
Rosie Cooper (West Lancashire) (Lab)
I believe that the Capsticks governance review, published today, will show that serious harm was caused to patients and staff, that there was a culture of bullying and harassment even after the Francis inquiry, and that Liverpool Community Health NHS Trust is the community equivalent of Mid Staffs. In the spirit of openness and transparency, will the Secretary of State instigate a public inquiry to establish the full extent of the harm caused to patients and staff?
Ben Gummer
May I commend the hon. Lady for the brave stance that she has taken on this difficult issue? I will certainly take her concerns seriously. I want to read the report now that it has been delivered, and will speak to her at the earliest possible opportunity to establish how the Government and local commissioners can take things forward. It is imperative that the NHS has the best possible culture for how staff are treated and heard. I hope she will look at the announcement made by my right hon. Friend the Secretary of State about ensuring that people have the freedom to speak up and safe spaces in which to blow the whistle.
Will Quince (Colchester) (Con)
T6. At Colchester general hospital, insurance premiums under the clinical negligence scheme for trusts have more than doubled to £11.2 million in four years. What steps is the Department taking to reduce that figure?
Ben Gummer
My hon. Friend points to variations across the service. Premiums sometimes go up and down in different trusts. We are examining the whole scheme at the moment, and I am happy to speak to him further about what we are doing.
Gavin Robinson (Belfast East) (DUP)
Does the Secretary of State agree that this week’s public debate about breastfeeding has been destructive and condemnatory of women who suffer from post-natal depression and struggle to bond emotionally, never mind physically, with their children? Do we need to reframe the debate and reduce, rather than reinforce, the stigma for mothers who want to do the best by their children?
Ben Gummer
As my right hon. Friend the Minister for Community and Social Care, who is responsible for mental health, takes forward the increase in funding for perinatal mental health, he will want to work with me on breastfeeding rates and the relationship between breastfeeding and mental health that the hon. Gentleman correctly raises.
David Tredinnick (Bosworth) (Con)
T7. Is my right hon. Friend aware of the agreement struck by President Obama and Prime Minister Modi of India to collaborate on the research and development of traditional medicines for preventive and palliative cancer care? Should we not be aiming for a similar agreement, bearing in mind antimicrobial resistance?
The Parliamentary Under-Secretary of State for Health (Jane Ellison)
It is worth saying that the National Institute for Health and Care Excellence does not recommend homeopathy to treat any health condition. My hon. Friend mentioned antimicrobial resistance, and an increasing number of studies from around the world show that resistance to common treatments is growing, which serves to underline the importance of the responsible stewardship of all drugs and medicines and why the international efforts on AMR, in which the UK is at the forefront, are so important.
Mr Ben Bradshaw (Exeter) (Lab)
Given the latest, very worrying reports about goings on at the office of the Parliamentary and Health Service Ombudsman, does the Secretary of State still have confidence in the leadership of this vital regulator?
Mr Jeremy Hunt
I have expressed my concerns on the behalf of patients about some of the things that have been happening, but I respect the fact that it is a matter for this House and its relevant Committee, not for the Government, to deal with. I do have concerns, and it is important that patients have confidence in the ombudsman, because it is a vital, independent avenue to challenge NHS trusts when things go wrong.
Chris White (Warwick and Leamington) (Con)
T9. Will my right hon. Friend join me in congratulating chief executive Glen Burley and the whole team at Warwick hospital on delivering the excellent new orthopaedic ward, which I was honoured to be invited to open? Will he tell the House what support the NHS is being given for similar state-of-the-art facilities across the country?
The Parliamentary Under-Secretary of State for Life Sciences (George Freeman)
I am delighted to join my hon. Friend in that congratulation and to confirm the announcement in the autumn statement that the Government are committed to putting £4.8 billion of capital into the NHS every year through to 2021. That will include funding for proton beam therapy and for major new hospitals at Brighton and at Sandwell, in addition to our billion pounds a year for NHS research and our £700 million a year for medical research through the Medical Research Council.
Alison McGovern (Wirral South) (Lab)
The financial year ends next week. What does the Secretary of State expect the NHS provider budget deficit to be by then?
Mr Jeremy Hunt
We know that the deficit will be bigger this year, and that there is extreme pressure. Part of the reason for that is that NHS trusts have rightly said that, in the wake of what happened at Mid Staffs, they want to ensure that their wards are properly staffed, but they have done that by using unsustainable agency staff. The most important thing that we need to do is to move to permanent full-time staff rather than agency staff who are too expensive and not good for care.
Philip Davies (Shipley) (Con)
T10. A number of my constituents are unable to access an NHS dentist. May I ask the Minister to look at the availability of NHS dentists in my constituency and use his good offices to ensure that there is enough capacity for all of my constituents who want to use a good NHS dentist to be able to access one locally?
Alistair Burt
Overall access to NHS dentistry is good, but it does vary from area to area, and West Yorkshire, as the hon. Member for Dewsbury (Paula Sherriff) well knows, is one of the areas that worries us and that we are trying to do something about. Work is being undertaken in the West Yorkshire area to look at issues around NHS dentistry. I have met a number of hon. Members to discuss this matter. It has my attention, so I will be monitoring it closely, and my hon. Friend was right to raise it.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
The King’s Fund analysis revealed that there will be not a £10 billion, but a £4.5 billion real-terms increase to the NHS. Will the Health Secretary apologise for misleading not just this House but the public as a whole?
Mr Speaker
Order. The hon. Lady must not accuse a Member of misleading the House. If she wishes to insert the word “inadvertently” she would spring back into order, which is where I am sure that she wishes to be. Do I take it that the word “inadvertently” has been inserted?
Mr Jeremy Hunt
The hon. Lady may inadvertently have not been listening to my previous answers. Let us look at what Simon Stevens, the chief executive of the NHS, actually said about that spending settlement. He said that the Government had listened to and “actively supported” the NHS case for public spending.
Dr Sarah Wollaston (Totnes) (Con)
Following the very welcome announcement of a graduated levy on sugar, sweet and drinks manufacturers, will the Minister please tell the House what discussions she is having with manufacturers to speed up the reformulation process and also to introduce a differential in price at the point of sale? Given the importance of childhood obesity, will the Department welcome the opportunity to take over the lead on this strategy so that we can make progress on this vital issue?
Jane Ellison
There are a number of invitations there, some of which I will resist. My hon. Friend is absolutely right to highlight the importance of this announcement. Obviously, it is the first step towards the Government’s comprehensive childhood obesity strategy, which we will be launching in the summer. The Chancellor of the Exchequer was absolutely right to go ahead with this and to move forward. The burden of childhood obesity, as she knows all too well, falls very, very heavily on poorer communities, and my right hon. Friend was absolutely right to champion that measure, because it will make the most difference in the poorest areas.
Greg Mulholland (Leeds North West) (LD)
Families with boys with Duchenne muscular dystrophy are anxiously awaiting the NICE guidance to be published next week. Can I get an assurance from the Minister that, with this drug already being licensed and available in 18 countries, if NICE approves it, NHS England will bring the funding forward very quickly?
George Freeman
The hon. Gentleman is a doughty campaigner. Although he tempts me to pre-empt the decisions of NICE, I cannot, and it would not be appropriate for me to do so. I am afraid that we will just have to wait for its decisions, which are rightly taken on the best clinical evidence.
Amanda Milling (Cannock Chase) (Con)
Hednesford is a dementia-friendly town, and I am pleased that my office team, who are based on Market Street in Hednesford, will be receiving dementia-friendly training next month. Does the Minister agree that we should be encouraging more towns to become dementia-friendly?
Mr Jeremy Hunt
I absolutely recognise the excellent work that is happening in Hednesford, and in South Staffordshire, as a dementia-friendly community. I know that there are more than 2,000 dementia friends in Cannock Chase. Fantastic work is going on, and I thank my hon. Friend for her support.
Mark Durkan (Foyle) (SDLP)
When will we have a decision on the future of the human papilloma virus vaccination programme? Will it be clear, and is there due engagement with the devolved counterparts?
Jane Ellison
As the hon. Gentleman knows, two programmes are going on. There is a very large-scale piece of modelling work going on with regard to the HPV vaccination for boys, and that work, as I have previously told the House, will look to report in 2017. We already have guidance on HPV for men who have sex with men from the Joint Committee on Vaccination and Immunisation, and we are working through it in some detail to see how we can take it forward in practical terms.
Several hon. Members rose—
Mr Speaker
Order. I am afraid that demand exceeds supply. We must now move on.
Points of Order
Mr Pat McFadden (Wolverhampton South East) (Lab)
On a point of order, Mr Speaker. Have there been any discussions between you and the Government about a possible statement on the terrible events unfolding in Brussels? Of course, we do not yet know the final facts, but a number of innocent people have been killed. We do not yet know whether there are any British victims, but there will be many families anxious to find news of relatives. I am sure that those on both sides of the House would welcome the opportunity to question the Prime Minister and the Home Secretary about the ongoing efforts of the police and security services here to protect the public in the UK from similar attacks.
Mr Speaker
I thank the right hon. Gentleman for his point of order and for the terms in which he put it to me. As Members present throughout Question Time will know, condolences have been expressed by Members on both sides of the House as regards the victims of this terrible outrage and their loved ones who will live with the consequences. The short answer to the right hon. Gentleman is that I have had no such discussions with any Minister to date. I think that it is a matter of public record that the Prime Minister has been chairing an important meeting of Cobra this morning and I think it will be accepted in all parts of the House, not least by the right hon. Gentleman, that the Prime Minister is punctilious in coming to the House to address these matters at such a point as he feels that he has the requisite level of information to impart to colleagues and is best placed to be informative and helpful. We should await the development of events, but the serious concern registered by the right hon. Gentleman will be keenly felt across the House. I thank him again for the terms in which he raised his point.
Bill Esterson (Sefton Central) (Lab)
On a point of order, Mr Speaker. My thoughts are with the people of Brussels, as will be those of all Members of the House. I understand that Ministers will as a priority work with our colleagues in Brussels, putting security in this country first. I have been contacted by a number of my constituents who travelled to Brussels earlier today and who are trying to get home, as I am sure are many others. They have been told by the airline, Ryanair, that it will cost them £6,000 to be brought back to this country. Through you, Mr Speaker, may I ask Ministers to intervene and suggest to Ryanair and other carriers that all efforts are made to help those who want to come back to this country in a reasonable way?
Mr Speaker
I thank the hon. Gentleman for his attempted point of order. That is not a matter for the Chair, but, again, he has raised a question of real and immediate concern. That real and immediate concern will have been heard by those on the Treasury Bench and, knowing the hon. Gentleman’s ingenuity, I feel sure that if he does not receive some sort of contact or reassurance from an appropriate quarter, he will not rest in continuing to highlight his concern, and I thank him for doing so.
Geraint Davies (Swansea West) (Lab/Co-op)
On a point of order, Mr Speaker. On Friday, the Government were taken to the Supreme Court by ClientEarth for failing to meet EU air quality standards which have resulted in 40,000 deaths a year at a cost of £20 billion a year. Are you aware of any statement that will be made by the Government on this important issue, particularly in the light of what is happening in the Budget? They have an opportunity to stop people dying and becoming disabled, rather than charging people for being disabled.
Mr Speaker
I confess that I have received no such indication. Once again, the hon. Gentleman has put his concerns on the record. They will have been heard and doubtless he will return to the matter if he does not receive the satisfaction he seeks.
Mr Iain Wright (Hartlepool) (Lab)
On a point of order, Mr Speaker. May I seek your advice and guidance on a matter of principle for this House? Select Committees have the power through this House to send for persons, papers and records, to enable them to obtain oral and written evidence to allow them to undertake their work. In keeping with this long-established power, the Business, Innovation and Skills Committee, which I chair, has sought to take evidence from the owner of Sports Direct, Mr Mike Ashley, on the treatment of workers at his company. That was in response to reports that workers at Mr Ashley’s warehouse in Shirebrook were not being paid the minimum wage. I have received correspondence from workers at Sports Direct, who have told me of practices such as employees being made to clock out but having to continue to work so that wages were not over budget; of staff kept for an hour after their scheduled finish time without pay to tidy shops; and of workers finishing work at 5 am and being required back at work two hours later.
We on the Select Committee naturally and not unreasonably wish to question Mr Ashley on the review of working conditions at his company that he announced he would undertake personally. After his refusal to accept our initial invitation to attend on a mutually convenient date, last week the Committee formally ordered Mr Ashley to attend on 7 June. Yesterday he indicated to the press, although not to the Committee, that he has no current intention of attending the Committee. He referred to the order to attend as
“an abuse of the parliamentary process”
and described the Committee as “a joke”. I do not think that scrutinising reports of Victorian-type employment conditions in modern-day Britain is a joke.
Can you confirm, Mr Speaker, that the Committee has acted in accordance with the procedures of this House? Can you advise me what steps can now be taken to ensure that Mr Ashley complies with the very reasonable request, and then the formal order, of the BIS Committee?
Mr Speaker
I am grateful to the Chair of the Business, Innovation and Skills Committee for notice of his point of order. The House delegates to nearly all its Select Committees the power to send for persons, papers and records. Each Committee is free to decide whom to invite to give oral evidence, and if the invitation is refused, the Committee may decide to make an order for the attendance of a witness.
In response to the hon. Gentleman’s direct question, therefore, it appears to me that so far the proper procedures have been followed. As long as the Committee is acting within its terms of reference, the House expects witnesses to obey the Committee’s order to attend. If, after due consideration, the hon. Gentleman’s Committee wishes to take the matter further, the next step would be to make a special report to the House, setting out the facts. The hon. Gentleman may then wish to apply to me to consider the issue as a matter of privilege, and to ask me to give it priority in the House. Under procedures agreed to by the House in 1978 and set out on page 273 of “Erskine May”, this application should be made to me in writing, rather than as a point of order. I would then be happy to advise him on the options open to him.
Mr Dennis Skinner (Bolsover) (Lab)
Further to that point of order, Mr Speaker. This could be a long, drawn-out process, based on what Mike Ashley has been doing and saying over the years. He operates zero-hours contracts for many thousands of people. There are very few full-time people. He believes that as a billionaire he can do as he likes. I put it on the record for you, Mr Speaker: you had better act very firmly with the person concerned. There used to be a woman in the House working for the Serjeant at Arms called Mary Frampton. We will need one to deal with him.
Mr Speaker
We have such a person. I can say only that I shall always profit by the counsels of the hon. Gentleman.
Mr David Winnick (Walsall North) (Lab)
Further to that point of order, Mr Speaker.
Mr Speaker
I do not know that there is more to add, but I will give the hon. Gentleman the benefit of the doubt—he is a very experienced Member. I have tried to treat of this matter fairly and factually, but of course I will take a point of order from the hon. Gentleman if he persists.
Mr Winnick
The point of order I wish to raise with you, Mr Speaker, is simply this: in view of the obvious contempt that this person has shown for the House of Commons, would it not be appropriate for him to appear at the Bar of the House? [Hon. Members: “Hear, hear.”] There have been occasions in the past when that has occurred, and the House of Commons has shown that it will not tolerate such contempt. I put it to you that that could perhaps be considered as well.
Mr Speaker
I am very grateful to the hon. Gentleman for his point of order. I recognise that there are historical precedents, but it is only right for me to say that it is not for me to make any such decision. If we were to get to that point, and I am not suggesting that we shall do so—I am not seeking to anticipate events—that would be a matter for the House to decide, but I hope that I have dealt fairly, squarely and intelligibly with the important matter that the Chair of the Select Committee and others have raised.
Taxi and Private Hire Vehicle Operators (Regulation)
Wes Streeting (Ilford North) (Lab)
I beg to move,
That leave be given to bring in a Bill to make provision about the skills and knowledge required of a person driving a taxi or private hire vehicle (TPHV) and related responsibilities of TPHV company operators and service providers; to require operators of TPHV companies and service providers to hold specified types and levels of insurance; to make provision about the tax liability of TPHV companies and service providers; and for connected purposes.
I am grateful for the opportunity to present the Bill, and I am delighted by the strength of support from right hon. and hon. Members on both sides of the House, which is reflected, I think, in the attendance today.
The Bill seeks to put fair competition and passenger safety at the heart of the taxi and private hire vehicle industry in London and across the country. The advent of new technology in the industry is revolutionising the way people navigate our great capital city; indeed, it is revolutionising transport in cities across the United Kingdom and the world. At its best, disruptive technology drives innovation and increases competition, with enormous benefits for businesses and consumers alike. However, as we have seen on the streets of London, it also brings significant challenges. The Bill seeks to address some of those challenges, which have been neglected for far too long.
The debate about the future of London’s taxi industry has been unfairly characterised as a debate between those who support competition and innovation on the one hand and those who want to cling to the past on the other. That is lazy analysis. It is true that London’s iconic black taxi trade is at risk; indeed, I would go as far as to say that the threat to it is existential—but the cabbies I represent are not afraid of change and innovation, they are not afraid of new technology and they are not afraid of competition. However, they are finding it increasingly hard to compete in a changing marketplace with both hands tied behind their backs. [Interruption.] It is great to see even the Chancellor taking an interest in their plight. [Hon. Members: “Taxi?”] The Chancellor may need a taxi.
I represent many black taxi drivers; indeed, Ilford North was once known as “Green Badge valley”, and it is still not unusual to see taxis parked on the driveways of Gants Hill, Clayhall, Barkingside and Woodford. I also represent hundreds of minicab drivers and drivers who work for new market entrants such as Uber. Like many Londoners, I use black taxis, particularly in central London. I also use minicabs and apps such as Uber locally. I welcome the choice and enjoy the benefits of competition, but I also recognise that the explosion in the number of private hire vehicles in London presents regulatory challenges and risks for passengers.
An investigation for LBC by Theo Usherwood exposed the ease with which individuals can access a private hire licence without adequate insurance. We know that a number of vehicles are already on the road without appropriate insurance. Last year, The Guardian was able to demonstrate how easy it was for an Uber driver to pick up a customer, having provided fake insurance paperwork via the company’s operating system. Some private hire vehicles are illegally plying for hire and touting, increasing the risk of passengers getting into cars driven by unlicensed and unknown drivers, with considerable risk to their safety. This is an illegal practice that the regulators ought to be acting a lot harder on. Guide Dogs UK found in a survey of assistance dog owners that 43.5% of respondents had been refused access to private hire vehicles, and it is all too common for lesbian, gay, bisexual and transgender passengers to experience discrimination.
Though I enjoy price competition as much as anyone else, is it really fair to expect cabbies to compete on fares while Transport for London continues to put up regulated fares for black taxis and apps such as Uber are able to drive their prices down, as profit-shifting allows them to avoid paying their fair share of taxes here in the UK? If we fail to act, London’s iconic black taxis will be driven off our streets. This is bad for competition, bad for passengers, and bad for London.
The Bill proposes action in three areas to improve passenger safety and make competition fairer so that our black taxi industry can continue to survive and thrive alongside minicabs and other private hire operators. First, on the issue of training, private hire vehicle drivers undertake only a rudimentary topographical test and in many cases do not undergo formal training. This sees many relying on sat-nav, which means that the risk of collision is increased owing to sharp braking or not focusing on the road ahead. The Bill proposes that in order to obtain a PHV—private hire vehicle—licence all drivers should complete an enhanced Driver and Vehicle Licensing Agency assessment, requiring additional skills such as how to drop off and pick up passengers and wheelchair exercises to learn how to support the disabled. PHV drivers should also undertake an assessment on the principle of plying for hire and touting regulations, so that there can be no excuses for breaching regulations. PHV drivers should be properly and fully trained and assessed in their obligations under the Equality Act 2010, so that protected groups such as LGBT people and disabled people can travel with confidence.
The second issue that the Bill seeks to address is insurance. The current system requires “hire and reward” insurance for all drivers where the responsibility for insurance rests with individual drivers. There is a higher cost for this insurance, which means that many private hire vehicle drivers can be tempted to opt for a cheaper form of insurance when accepted by a licensed operator. In order to resolve this issue, I propose moving to a system of operators’ insurance that places the responsibility on operators as a prerequisite for obtaining their licence. This will deliver three key benefits for passengers and the industry: guaranteeing that cars managed by the operator are insured so that customers have confidence that they are safe; reducing the cost of insurance through bulk purchasing, thereby delivering better value for money; and making the regulators’ task easier because checking a few thousand operators is easier than checking over 100,000 individual policies. Some companies, such as Addison Lee, already do this voluntarily, meaning that customers and businesses can book with the confidence that is sometimes lacking around private hire operators.
Finally, my Bill makes provision for the tax liabilities of taxi and private hire vehicle companies. It cannot be right that some companies in this industry are making huge profits but not paying their fair share of taxes. Lower fares are great, but some operators are frankly trying to drive their competition off the road through new apps by offering lower fares made possible by offshore tax arrangements, in effect robbing Peter to pay Paul. I pay particular tribute to my right hon. Friend the Member for Don Valley (Caroline Flint), who a week ago today brought forward her own ten-minute rule Bill on transparency for multinationals. Her proposals would be a refreshing step in the right direction.
This Bill would introduce a requirement for the Chancellor or the Financial Secretary to the Treasury to make an annual statement to this House on the progress of the OECD’s base erosion and profit-shifting project and the action that Her Majesty’s Government are taking to ensure that there is proper scrutiny in this area—though I hope that the Chancellor might be better at making progress there than on his own targets. It is a small measure, but it would indicate the view of this House that the Government need to do much more to tackle tax avoidance. These changes collectively would go some way towards levelling the playing field. TfL needs to go further than it currently proposes, and, in any event, these challenges also exist in towns and cities across our country.
Gwyneth Paltrow once said:
“Brits are far more intelligent and civilised than Americans. I love the fact that you can hail a taxi and just pick up your pram and put it in the back of the cab without having to collapse it.”
Perhaps more profoundly, Professor John O’Keefe, a Nobel prize-winning neuroscientist, said:
“Some of the best navigators in the world are London taxi cab drivers. They have to learn 25,000 streets and how to get from one to the other.”
I am sure that the whole House will agree that Brits are more intelligent and taxi cab drivers are the best navigators in the world. They are also small businessmen and women providing a world-famous service and struggling to make their families a good living. We owe them a chance to compete fairly, and we owe it to our great capital city to ensure that the iconic black taxi industry and the great iconic black taxi itself are not consigned to London’s history books. For these reasons, and so many more, I commend this Bill to the House.
Question put and agreed to.
Ordered,
That Wes Streeting, Lyn Brown, Neil Coyle, John Cryer, Clive Efford, Mr David Lammy, Kate Osamor, Joan Ryan, Mr Virendra Sharma, Mr Gareth Thomas and Mr Charles Walker present the Bill.
Wes Streeting accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 22 April and to be printed (Bill 154).
Ways and Means
Budget Resolutions and Economic Situation
(8 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
18:40 - The House divided: - Ayes: 310 / Noes: 275 - Question accordingly agreed to.
18:57 - The House divided: - Ayes: 307 / Noes: 62 - Question accordingly agreed to.
19:10 - The House divided: - Ayes: 311 / Noes: 274 - Question accordingly agreed to.
Mr Speaker
Before I call the Chancellor of the Exchequer, I should inform the House that I have selected amendments (b) and (a), so both can be debated together with the Budget motions today. With the leave of the House, I will call the shadow Chancellor to move amendment (b) after the Chancellor has opened the debate. At the end of the day’s debate, the Question will first be put on amendment (b). As long as time permits before 7 pm, I shall then call the hon. Member for Dewsbury (Paula Sherriff) to move amendment (a) formally, and the Question on that amendment will be put. The House will then proceed to decide on the Budget resolutions.
The First Secretary of State and Chancellor of the Exchequer (Mr George Osborne)
Let me start by offering all our condolences to the victims, and their families, of the attacks in Belgium. The full details of this morning’s horrific attacks are still emerging, but we know that at least 13 people died in the attack at Brussels airport and that there are reports of multiple dead at Maelbeek metro station. As details of these horrific events continue to unfold, my thoughts and prayers, and indeed those of right hon. and hon. Members in all parts of the House, are with those who have lost loved ones or have been injured.
Earlier this morning, the Prime Minister chaired a meeting of Cobra attended by the Home Secretary, myself and others. The police have confirmed that, on a precautionary basis, they are increasing the policing presence at key locations, including transport hubs, to protect the public and provide reassurance. In London, the Metropolitan police have deployed additional officers to patrol key locations and the transport network, and Border Force efforts have been intensified.
It is too soon yet to comment on the details of these attacks, which are still emerging, but the Government would reiterate that the UK threat level remains at “severe”, meaning that an attack is highly likely. We would urge the British people to remain vigilant, and the Home Secretary will keep the House updated. But let us be clear: terrorists seek to threaten our values and our way of life, and they will never succeed. It is a reminder of what a precious thing our democracy is, and this Budget debate is part of that democratic process.
This is the first time in 20 years that a Chancellor has spoken on the last day of the Budget debate, and I think it is fair to say that we have had a livelier debate about this Budget than about many. Let us be clear: the key principles behind this Budget are that if we are going to deliver a strong and compassionate society for the next generation, we have to live within our means, we have to back business to create jobs and we have to make sure work pays by putting more money into the pockets of working people. That is what we committed to in our manifesto. That is what the British people elected us to deliver. That is what this Budget does, and that is what we are going to vote on tonight.
Several hon. Members rose—
Mr Osborne
I will give way in a moment, but let me straightaway address the resignation of my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith). I am sorry that my right hon. Friend chose to leave the Government. Let me here, in this House, recognise his achievements in helping to make work pay, protecting the vulnerable and breaking the decades-old cycle of welfare dependency. Together, we had to confront a huge deficit and uncontrolled welfare spending. Of course, there is always robust discussion between the Treasury and the spending Departments when money needs to be saved. The decisions we make to keep our economy secure are always difficult, and where we do not get them right, I have always been prepared to listen and learn.
I am very proud that my right hon. Friend and I worked together longer than any two people who have done our jobs before us in any Government, and we have been part of the team that has reduced the number of people on out-of-work benefits to levels not seen for 40 years, reduced inequality, seen poverty fall, seen child poverty fall and seen pensioner poverty fall, and got a record number of people into work—a long-term economic plan and welfare reform delivering a fairer society for all.
Chris Leslie (Nottingham East) (Lab/Co-op)
I am grateful to the Chancellor for giving way. It is less than a week since he stood up to deliver the Budget and made that decision affecting disability independence payments—something that upset many hundreds of thousands of people across this country. He has made a welcome U-turn, but should not he now acknowledge that that decision was a mistake that he should say sorry for?
Mr Osborne
I am going to come on to speak about the disability benefits and our way forward, but I have made it very clear—I have just said it—that where we have made a mistake, where we have got things wrong, we listen and we learn. That is precisely what we have done. Where is the apology from the Labour party for the things that they got wrong? Why don’t they take a leaf out of that book? Why don’t they get up and apologise for the countless decisions that added to the deficit—that bankrupted our country?
The progress we have made on social justice did not happen by accident. It happened because we in this Government set out to turn our economy around, to control spending, to back business and, yes, to reform welfare.
Mr Osborne
I will give way in a moment to my former partner in the coalition Government that undertook many of these welfare reforms. The reform has meant difficult decisions to strengthen the incentives to find work and the sanctions for not doing so; to make sure that every hour extra that people work is rewarded, instead of seeing them trapped in dependency; and to cap benefit payments so that our welfare system is fair both to those who need it and to those who pay for it. It has not been easy, and it has often been opposed, but the truth is that many of the acts of progressive social change that we seek to achieve in government are difficult and they are opposed. In any democracy, you have to fight to make lasting improvements in society, and that is what we have done.
Tim Farron
I thank the Chancellor for giving way, and I want to associate myself with the remarks that he made earlier about the appalling situation in Brussels.
Does the Chancellor agree with me that the one thing that is more dangerous for our economy than his remaining Chancellor is that we might leave the European Union; and does he agree that his being called out by his former colleague as acting not in the economic interests of the country, but in a short-term political way, introduces a risk that the referendum will be a referendum on him, not on the future of our role in Europe? Will he act in the national interest and resign?
Mr Speaker
May I remind Members that interventions should be brief? We want to hear from both Front Benchers, and I want to hear from dozens of Back Benchers. I repeat that interventions should be brief.
Mr Osborne
That was like one of those interminable interventions at ECOFIN. I happen to think that it is better to be in that council than not, but that is a debate for another day. We are talking here about the reforms we are making to welfare and to our economy.
Gareth Johnson (Dartford) (Con)
I am grateful to the Chancellor for giving way. Is he aware that had he stuck with Labour’s plans for fuel duty, a litre of petrol would cost 18p more than it does? Has he assessed what impact that would have on the lowest-earning people in our society?
Mr Osborne
My hon. Friend is absolutely right. If we had stuck with the fuel duty escalator that we inherited from the last Government, it would have cost much more to fill up a car, which would have cost small businesses much more. We took action in this Budget to freeze fuel duty for the sixth year in a row, because we are on the side of working people.
Sir Simon Burns (Chelmsford) (Con)
To put this debate in context, would my right hon. Friend like to share with the House, in both financial and non-financial terms, how much help this Government have given to assist the sick and the disabled since May 2010?
Mr Osborne
I am coming on to talk about disability benefits, but my right hon. Friend is absolutely right to draw attention to the support we give—close to £50 billion—to disabled people. When we look just at the disability benefits, disability living allowance and personal independence payment, we see that that support has gone up from £13 billion when we came into office to £16 billion today, and it will go up to £18 billion in the future. As my excellent right hon. Friend for Preseli Pembrokeshire (Stephen Crabb), the new Welfare Secretary, made clear yesterday, we continue to give support to disabled people. I will come on to deal with that in detail.
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)
The Chancellor boasted when he opened the debate that this was the first time a Chancellor had opened the final day of a Budget debate. He will know that that is because it is also the first time a Chancellor has had to drop the biggest revenue raiser in his Budget within two days of announcing it. The former Work and Pensions Secretary, who has just resigned and to whom the Chancellor paid great tribute, described the Budget as “deeply unfair” and “drifting” in a wrong direction that will divide the country, not unite it. He said all those words after the Chancellor announced that he was ditching the PIP cuts. Is the former Work and Pensions Secretary deluded?
Mr Osborne
I am glad that the right hon. Lady intervened, because I have done a little research and, frankly, I wish that when she was the Chief Secretary to the Treasury we had seen a few more revenue raisers in Budgets, such as savings in welfare and savings in public expenditure. During the period in which she was the Chief Secretary, the deficit went from £76 billion a year to £154 billion a year. The measures that my right hon. Friend and I have been taking over the last six years are to clear up the mess that she and her colleagues in government left.
Several hon. Members rose—
Mr Osborne
Let me make a little more progress, and then I will come back. The proof that these difficult changes are worth while—
Mr Osborne
I will give way to the right hon. Lady. I have said that when we have made a mistake, we have listened and learned. When is she going to apologise and say that she made mistakes and her colleagues made mistakes during that period in government, which is what we have been clearing up for the last six years?
Yvette Cooper
The Chancellor did not address the issue of the unfairness of his Budget, so will he address the issue of the revenue behind his Budget? He has abandoned £4.4 billion in revenue raisers from his Budget. Where is that money going to come from, or will he change the scorecard that he set out?
Mr Osborne
I will tell you what is unfair: to saddle the next generation with debts you have no way of paying off. That is what the right hon. Lady did. [Interruption.] That is what she did. I will come on specifically to disability benefits, but let me tell her about fairness and what we have done over the last six years. We have taken action that means 500,000 fewer children are growing up in workless households than when she was at the Treasury, 1 million fewer people are on out-of-work benefits and over 2 million more people are in work than when we came to office. That is the social justice record we on this side of the House are proud of.
I am also proud that the work continues, and in this Budget we are taking further steps to build a stronger society. There is money and reform to improve our nation’s schools. There is action to reduce sugar intake and give our children better healthcare. There is support for the savings of low-income families. There is more help and housing for homeless people. There are personal allowance increases that will lift another 1 million of the low-paid out of income tax altogether, and there is an increased minimum wage ahead of the introduction of the first ever national living wage in just two weeks’ time. Those are all in the Budget we will debate today—all the actions of a compassionate, one nation Conservative Government determined to deliver both social justice and economic security.
Rachel Reeves (Leeds West) (Lab)
The new Secretary of State for Work and Pensions said yesterday, in his first statement, that the Government would not be making any further cuts to welfare during this Parliament, but later on he said that there were “no plans” to make further cuts to welfare during this Parliament. Will the Chancellor now confirm, for the sake of disabled people and others, that there will be no further cuts to the welfare budget in this Parliament?
Mr Osborne
Yesterday, my right hon. Friend the Secretary of State gave exactly the Government’s position, which is that,
“we have no further plans to make welfare savings beyond the very substantial savings legislated for by Parliament two weeks ago, which we will…now focus on implementing.”—[Official Report, 21 March 2016; Vol. 607, c. 1268.]
I will now address the specific issue of welfare savings and disability, but I should have thought that the hon. Lady, when she got to her feet, might have thanked the Government for delivering the flood defence schemes that she asked for for her city, and which were in the Budget statement a week ago.
Let me turn to the disability benefits. We are proud that this Government are providing more support to the most disabled people. It was very clear that while the reforms proposed to personal independence payments two weeks ago drew on the work of an independent review, they did not command support. We have listened, and they will not go ahead. Even if they had, this Government are spending more on disabled people than the previous Labour Government ever did.
People have asked what this means for future support for disabled people, for our welfare cap and for the numbers in the Budget. Let me directly address all three points.
Several hon. Members rose—
Mr Osborne
Let me address these points, and then I am happy to take interventions.
First, over 3 million disabled people are now in work, which is 300,000 more than just a couple of years ago. We are also providing more support than ever before for the most disabled people. The budget has risen, will continue to rise and is much greater than the one we inherited. We are going to take our time, listen, consult widely and continue to build a system of disability support that works much better with our health and social services. As my right hon. Friend the Secretary of State said in his excellent statement yesterday, we will continue to support disabled people, and we will work with him to make sure that we do.
Paul Maynard (Blackpool North and Cleveleys) (Con)
Does the Chancellor agree with me that we can be a compassionate Conservative Government only if we have a strong, stable economy, with a reduced deficit, to enable us to protect the most vulnerable in society?
Mr Osborne
My hon. Friend is absolutely right. I was coming on to make precisely that point.
Several hon. Members rose—
Mr Osborne
Let me deal with the measures we are taking to control spending, and then I will take some interventions.
The welfare cap is the instrument we have introduced to set out, in a transparent way to Parliament, what we aim to spend on welfare. It is independently judged by the Office for Budget Responsibility every autumn, which is when we either have to comply with the cap or explain to Parliament and the country why we have not done so. I find it incredible to hear Labour Members protesting about the welfare cap. It never existed at all under a Labour Government: there was no cap, no control on the largest area of Government spending, no transparency, no independent forecast, and as a result, welfare costs soared by 60% and the country was brought to the brink of bankruptcy.
Margaret Greenwood (Wirral West) (Lab)
On Friday afternoon a couple, Mr and Mrs Ford, came to visit me at my surgery. Mr Ford, who is in a wheelchair, is unable to feed himself, dress himself or do anything for himself. They live on £559 a month in PIP, plus £63 per week in carer’s allowance. They still have a mortgage to pay. They have clocked up 80 years of national insurance contributions between them. They ask the simple question, “How are we meant to cope?” They were in a real state of distress. Will the Chancellor please now apologise to such people for the distress that he has caused?
Mr Osborne
I have already said that we are not going ahead with those changes. [Interruption.] I have addressed these issues. The truth is that that family and many more families are getting increased support under this Government. We would not be able to provide any of that support unless we had a strong economy and we controlled public spending, because the people who suffer most when the economy—[Interruption.]
Mr Speaker
Order. I apologise for having to interrupt the Chancellor. [Interruption.] Order. Members are yelling—in some cases, from sedentary positions—very noisily. If people put questions to the Chancellor, they must leave him to respond. The same will go for Government Back Benchers when they no doubt challenge Members speaking from the Opposition Benches. Let us try to restore some sort of order to this debate.
Andrew Griffiths
Will the Chancellor confirm to the House that this Government are spending £2 billion more on support for the disabled, that inequality is at its lowest rate for 25 years according to the Institute for Fiscal Studies and that there are 2 million more people in work thanks to this Government? Is that not what we are doing for the vulnerable?
Mr Osborne
My hon. Friend is absolutely right: more people in work, reduced inequality, reduced poverty, more disabled people in work and, by the way, we got in a freeze on beer duty as well.
Several hon. Members rose—
Mr Osborne
Let me make a little progress, and then I will give way again.
Not proceeding with the PIP changes means that spending on disabled people will be just over £1 billion a year higher by the end of the decade than was set out in the Budget. This will be an important factor, but only one of many, that will affect the overall forecast for welfare that the OBR will make in the autumn—
Several hon. Members rose—
Mr Osborne
I am going to make some progress.
At that point, we will assess the level of the cap. What my right hon. Friend the new Work and Pensions Secretary said yesterday, with my full support, is that we do not have further plans to make welfare savings to replace the £1 billion more we will spend on PIP. We made very substantial savings in the Welfare Reform and Work Act 2016, which has just passed through Parliament. We have now legislated for the £12 billion a year of working-age welfare savings we committed to in our manifesto, and we are now going to focus on implementing that.
Several hon. Members rose—
Mr Osborne
Before I give way, let me say this about benefits to pensioners because it has been raised. People say to me that we are not saving enough from pensioners while, in the same breath, complaining about everything from long-term increases in the state pension age—to keep pace with rising life expectancy—to restrictions on the lifetime allowances for the largest pension pots. The truth is that we have made substantial savings from pensioner welfare—£500 billion of savings—which are vital to the long-term sustainability of our public finances, but we have made these savings in a way that enables us to go on giving people who have worked hard all their lives a decent, generous basic state pension. We committed to that in our manifesto, and I am not going to take it away from people.
Geraint Davies (Swansea West) (Lab/Co-op)
Does the Chancellor accept that poorer people spend a much higher proportion, if not all, of their income, while richer people save? Does he not accept that his Budget, which has transferred money from poor people to rich people—it is a sheriff of Nottingham Budget, robbing the poor to pay the rich—will undermine growth and deficit reduction, which is wrong both morally and economically?
Mr Osborne
Under this Government, the richest 1% are paying a higher proportion of income tax receipts than in any single year of the last Labour Government whom the hon. Gentleman used to support when he was a Member of Parliament for Croydon—until he was replaced by a much better Member of Parliament for Croydon.
Several hon. Members rose—
Mr Osborne
Let me make progress, and then perhaps I will take more interventions. On the Budget numbers, I find it ironic to receive all these expressions of concern from Labour Members about making the sums add up when they presided over the biggest single fiscal fiasco in the country’s history and have a black hole in their current plans so large that it would break the Hadron collider.
Several hon. Members rose—
Mr Osborne
I will give way in a moment, but let me make this point. The central fiscal judgment of the Budget, and of this Government, is clear: borrowing has been cut from £155 billion when we came to office to £55 billion next year, and there have been falls every year; and higher spending on people with disabilities will be reflected in the autumn statement forecast, and we do not propose to make any further changes ahead of that. We can afford to absorb such changes when we are getting public spending under control, and we can make those changes and still achieve a sensible surplus of 0.5% of GDP by 2019-20. In short, we will go on delivering the economic security that this country elected us to provide.
Graham Evans (Weaver Vale) (Con)
Talking of Labour fiascos, may I remind the House of Gordon Brown’s 10p tax fiasco? We have taken 3 million of the lowest paid workers out of tax altogether.
Mr Osborne
My hon. Friend is absolutely right—what a contrast! This Government turned the 10p tax into 0p as we raised the personal allowance and took the poorest out of tax altogether.
Mr David Anderson (Blaydon) (Lab)
If it has been relatively simple to absorb this change, why on earth did the Chancellor introduce it in the first place and frighten the life out of seriously disabled people in this country? People were terrified about what was being proposed, yet the Chancellor has just said that we can absorb this change easily. Why did he do it in the first place?
Mr Osborne
If we take no decisions to control welfare spending and public expenditure, we destroy the nation’s finances, and the people who suffer are precisely the most vulnerable in society. Yes, we have taken difficult decisions, but where we have not got them right, we have listened and we have learned. If we had not taken those decisions, the country would be in an even bigger mess than the one we inherited.
George Kerevan (East Lothian) (SNP)
The Chancellor mentions security, including for the poor. Does he realise that until Monday, 340,000 people on PIP were worried that their benefits were going to be cut? If he just apologised and changed that, we could move on and discuss the economics.
Mr Osborne
I could not have been clearer. I said that we listened, we learned, we made a mistake, and we withdrew the proposals. The hon. Gentleman talks about days of the week, and Thursday would have been the day when Scotland separated from the United Kingdom if the nationalists had had their way. They would have plunged that new country into a fiscal crisis the likes of which few western countries have ever seen. They would have impoverished the Scottish people and driven businesses away. They based all their numbers on oil revenue forecasts that were totally fanciful, and it is time that they got up and apologised for leading the Scottish people into that potential trap. Thankfully, the Scottish people thought better.
Several hon. Members rose—
Mr Osborne
Let me make some progress. We have taken difficult decisions to control public expenditure and reduce a crippling budget deficit.
Mr Osborne
I have given way twice to the right hon. Lady so I will now make progress and explain what we have done to clear up the mess she left. We took more decisions last week in the Budget, but we will also implement these decisions today to ensure that the work of reducing our deficit is done fairly, and that we ask more from the well-off. Look through the measures. They include provisions on dividends, lifetime pension allowances, stamp duty on second properties, banks and hedge funds, and a host of measures to tackle evasion and avoidance. The Institute for Fiscal Studies has been quoted a lot over the past four days in the Budget debates, and its head stated that
“the very highest earners have seen significant tax increases”.
I think that has been a reasonable thing to ask of the most well-off when faced with such a budget deficit, because we are all in this together.
Christopher Pincher (Tamworth) (Con)
On personal economic security, during the Chancellor’s Budget statement, my constituent Dan Ball, who is aged 19 and from Amington, tweeted to say, “This lifetime ISA—where can I get one?” Does that not demonstrate that young people up and down the country see in this Budget an opportunity for their generation to save?
Mr Osborne
My hon. Friend is right to raise his constituent’s concerns about where he can get hold of the new lifetime ISA. It will be coming in from April next year, but his constituent can open a Help to Buy ISA now, roll it into the new lifetime ISA when it becomes available, keep the Government bonus, choose to save for a home or a pension, and not have to face the agonising choice that so many people have faced in the past. It is part of a Budget that backs savers.
Several hon. Members rose—
Mr Osborne
Let me make a little progress and then I will take more interventions. It is a classic socialist illusion to think that we can solve all society’s problems with taxes on the very richest, and it is the age-old excuse for not managing public spending or welfare costs. That brings me to a central point that I want to make to the House today: there is not some inherent conflict between delivering social justice and the savings required to deliver sound public finances—they are one and the same thing. Without sound public finances, there is no social justice.
Mr Osborne
I will give way in a moment to the Member for the taxi business.
It is the easiest thing in the world to do this job and say yes to every new demand for Government spending and to please all the people all of the time, but we know where that leads. We know that because before me we had a Chancellor who spent a whole decade going around the country saying yes to even more spending and ever higher welfare bills, and we know what happened then: it brought our country to the brink of collapse. That was not compassion; it was economic cruelty, and the people who paid the price are those who always pay the price when Government spending gets out of control and welfare bills spiral. It was not the politicians at the time who paid the price—no, they are happily sitting on the Opposition Benches; it was the poorest who paid the price and the most vulnerable who suffered. Those people lost their jobs and had their livelihoods snatched from them, and those are the people I am fighting for—real, decent, hard-working people, not numbers on a Treasury spreadsheet: people whose lives would be impoverished, and whose hopes and aspirations would be crushed, if we had gone on spending more and more than the country earns. Getting things right for those people is what I am all about, and that weighs on every decision that I have taken as Chancellor over the past six years. Those are the people whom we in the Conservative party have been elected to serve.
Wes Streeting
The Chancellor rightly talks about learning lessons, but it is also important to have clarity about the future. The Government line seems to be that there are no plans to further reduce the welfare budget, but yesterday the Secretary of State for Work and Pensions said in the House
“we will not be seeking alternative offsetting savings”,
and that
“the Government will not be coming forward with further proposals for welfare savings.”—[Official Report, 21 March 2016; Vol. 607, c. 1279-86.]
Will there be further welfare cuts or not? What is the answer? The Chancellor has not offered any clarity this afternoon.
Mr Osborne
That is exactly the position set out by my right hon. Friend the Secretary of State, and agreed by me and the Prime Minister. We understand that if we do not control spending, we will have a fiscal crisis. Because we are controlling spending and have passed difficult welfare legislation in recent months, the deficit is coming down and we are delivering economic security.
Chris Philp (Croydon South) (Con)
Given what the Chancellor just said about the importance of fiscal responsibility, will he confirm that, had he listened to the advice of the Labour party over the past five years, our national debt would be £900 billion higher?
Mr Osborne
My hon. Friend is absolutely right. The analysis shows that, had we not taken the decisions to reduce the structural deficit, we would have added £1 trillion further to our national debt. That is proof that we can never trust Labour with the nation’s public finances.
Maria Caulfield (Lewes) (Con)
Does the Chancellor agree that Conservative Members will not take lectures on fiscal management from the Labour party? Its legacy from 13 years in government was a Post-it note saying that there was no money left.
Mr Osborne
My hon. Friend is absolutely right. That is all we found in the Treasury—a letter saying, “I’m sorry. There’s no money left.” After 13 years of a Labour Government, that summed up their economic achievement.
Several hon. Members rose—
Mr Osborne
Let me make a little progress before I give way again.
We will go on driving down the budget deficit. We are down from borrowing £1 in every £4 when I became Chancellor to borrowing just £1 in every £14 next year. We will then be on to the security and good times of a budget surplus—a country earning more than it spends, and a generation that does not pass its debts on to its children and grandchildren. That is what we committed to do in the manifesto and what we were elected to do, and it is what this Budget delivers.
Finally, let me turn to the measures in the Budget that back enterprise and business. Again, I completely refute Opposition Members who say there is a choice between backing business and promoting social justice. We cannot have social justice without a strong economy, and we cannot have a strong economy unless we have a tax system that backs business and enterprise.
James Cartlidge (South Suffolk) (Con)
We inherited an unprecedented budget deficit. It is not just about controlling spending—the country has to earn more. Is it not the case that the only way to do that is to cut corporation tax and capital gains tax so that our entrepreneurs can go out into the world, compete and earn this country the living it needs?
Mr Osborne
My hon. Friend is absolutely right. Without a strong economy, we cannot have social justice, and we cannot have a strong economy without successful, vibrant businesses.
Steve Brine (Winchester) (Con)
My right hon. Friend spoke a lot last week about the next generation and Chancellors who always said yes. One thing he said yes to last week that was very much welcomed by many young people in Southampton and across the south was the backing of the new children’s hospital in Southampton with £2 million of match funding. That is what looking after the next generation looks like. May I say thank you on behalf of many people across the south?
Mr Osborne
My hon. Friend campaigned tirelessly for that extra money for the hospital in Southampton—he raised the matter countless times in the Chamber. That shows that, if Members persevere on getting the vital services for their local constituency, the Government listen and deliver for them in this Chamber.
Several hon. Members rose—
Mr Osborne
Let me make a couple more points and then I will take another intervention.
Yesterday, the Leader of the Opposition stood at the Dispatch Box to reply to my right hon. Friend the Prime Minister. People have focused on what the Leader of the Opposition failed to say, but I am focused on what he did say. He said we should not be reducing taxes on business. In other words, he thinks the answer to the challenge of low productivity and of growth in an uncertain world is that taxes on business should be higher. I totally disagree with that approach. That is Labour’s answer these days: pile the taxes on business and increase the basic rate of income tax on working people, as they propose in Scotland. Again, the price would not be paid by Labour Members. It would be paid by the young people who cannot get jobs—they cannot get jobs in countries where business taxes are too high and where enterprise is stifled. It would be paid by people who work in our public services, whose resources would be drained as the economy became more and more uncompetitive. It would be paid by the whole country, as living standards declined and the nation got poorer.
If that is the Budget hon. Members want, they should vote in the No Lobby tonight. If they want a small business Budget that cuts taxes for small firms, takes 600,000 businesses out of paying business rates, and reforms commercial property tax so that small premises pay less, that is the Budget we are voting on tonight. If they want an enterprise Budget that boosts investment in our small and medium-sized firms, with lower CGT, dramatically reduces burdens on our vital oil and gas industry, and gives us the lowest headline business tax rates of any of our competitors, that is the Budget we are voting on tonight. If they want a one nation Budget that increases the resources for education, supports children’s healthcare, devolves power across our nation and builds infrastructure for our future, that is the Budget we are voting on tonight. If they want a Budget for working people that helps them to save for their future, freezes their fuel duty and cuts income tax so they keep more of the money they earn, that is the Budget we are voting on tonight.
It is a Budget that delivers security, that helps the next generation and that backs working people. It is a one nation, compassionate Conservative Budget, and I ask the House to support it tonight.
John McDonnell (Hayes and Harlington) (Lab)
I beg to move amendment (b), in paragraph (2), after “tax”, insert—
“(except in relation to value added tax on insulation, solar panels and any other category of energy-saving material or their installation)”.
I and my party share the sentiments expressed by the Chancellor and those across the House in condemnation of what happened in Brussels today. Our thoughts and prayers are with the victims and their families. We support the security measures, of course, taken by the Government and say to the people of Belgium that we stand with them.
I am glad to see the Chancellor has at least turned up today. Let me make it clear from the outset that, in my view, and I believe the view of many others, the behaviour of the Chancellor over the last 11 days calls into question his fitness for the office he now holds. I also believe that it certainly calls into question his fitness for any leading office in government. What we have seen is not the actions of a Chancellor, a senior Government Minister, but the grubby, incompetent manipulations of a political chancer.
For the record, let us go back to last Friday week. The Chancellor personally forced through cuts in personal independence payments. The statement issued by the Government that Friday on PIPs was not a consultation and not a suggestion; it was a statement of policy. Personal independence payments are the benefits that, for many disabled people, make life worth living. They help them get to work. They help them have some normality in their lives. Often, they keep people out of residential care. The Chancellor was willing to cut away that vital support to some of the poorest and most disadvantaged members of our community. Do not tell us that we are all in this together.
Kevin Brennan (Cardiff West) (Lab)
Would it not at the very least help to dispel the impression that the Chancellor is acting in his own political interests, rather than in the national economic interest, if he made it clear today that he was not going to stand for the leadership of the Tory party so that he could concentrate on his job as Chancellor of the Exchequer?
John McDonnell
The reason I refer back to fitness for office is because many of us know the distress that has been caused to so many people over the past week.
James Cartlidge
The hon. Gentleman makes a very personal point about fitness for office on the day of a major terrorist attack. Will he withdraw his previous support for terrorist organisations that have attacked this country?
John McDonnell
Mr Speaker, you heard me share the sentiments of the whole House on the issue of Belgium. To bring that into the debate as a political point at this stage is unacceptable. [Interruption.]
Mr Speaker
Order. I made it clear earlier that attempts to shout the Chancellor down were unacceptable. That was made very, very clear and I do not think anybody would doubt or deny it. I make it similarly clear that no attempt in this Chamber will be successful if it is an attempt to shout down the shadow Chancellor. Get the message: it ain’t gonna happen.
John McDonnell
On that Friday before last, there was outrage among disability groups—the Multiple Sclerosis Society, Parkinson’s UK and Disability Rights UK. Why? Because all of them, like many of us, had gone through that process of agreeing the criteria—at least coming to some compromise on what would constitute the criteria for access to this benefit. But the Chancellor moved the goalposts, those already agreed through consultation. Disabled people and their families have been sick with worry about the threats to their benefits.
Tom Tugendhat (Tonbridge and Malling) (Con)
The hon. Gentleman has called into question the morality of the leadership of my right hon. Friend the Chancellor, but would the hon. Gentleman please discuss with this House the morality that allows him to stand with bombers who murdered my friends in Northern Ireland and to question the integrity of the Chancellor? [Interruption.]
Mr Speaker
Order. Before we proceed further, perhaps I can just say to the House, on my own account and on the basis of sound procedural advice, that we must stick to the matter of the Budget. [Interruption.] Order. I do not require any comeback or any comment, agreement or disagreement. Let us proceed in a seemly manner with the debate. That is in the House’s interest, and that is what the country has a right to expect.
Clive Efford (Eltham) (Lab)
During the Chancellor’s opening speech, we heard him say that the Government have legislated to make £12 billion-worth of savings within the welfare budget. That means that this £4.4 billion attack on PIP was in addition, and it was based neither on social justice nor on compassion. Does that not show that this Government are mean-minded and prepared to attack people who have disabilities? It is not necessary to make these cuts in welfare and they should guarantee that they are not going to return with this cut.
John McDonnell
The proposals that came forward did not just shock those on our side of the House; they shocked many Members from across the whole of the House with their brutality.
John McDonnell
No, I have given way enough—I will come back to the hon. Gentleman.
There is scheduled to be a 6% real-terms decline in spending on disability benefits between 2015 and 2020. After that Friday, when we reached the Wednesday of the Budget, we discovered that these cuts to disabled people were being made to pay for capital gains tax cuts benefiting the richest 5% in our society and for corporation tax cuts. Of course, a deep feeling of unfairness was felt in this House, among Members in all parts of it. I welcome the expression of concern by the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith) during that period and his conversion to our cause of opposing these benefit cuts. But the first person to call attention to the scandalous targeting of people with disabilities was my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams). She rightly said, in response to the announcement:
“In coming to this decision, the Tories are yet again ignoring the views of disabled people, carers and experts in the field, trying to press ahead with changes, just two years since the introduction of the system.”
After it became clear that the cuts to PIP were planned as a way to fund tax cuts for the wealthy, my right hon. Friend the leader of the Labour party made this issue a key part of his excellent response to the Budget last week, and he was not alone in doing so. My hon. Friends the Members for Ilford North (Wes Streeting) and for Nottingham East (Chris Leslie) were among several Opposition Members who pressed the Chancellor on the issue, as I did when opening the Budget debate last Thursday. I want to give thanks to everyone on our Benches and across the House who has helped to force this rethink and helped end the worry that thousands of disabled people have been experiencing in the past week.
Andrew Bridgen (North West Leicestershire) (Con)
The shadow Chancellor is right about U-turns being embarrassing, but I remember his embarrassing U-turn on the fiscal responsibility charter. Does he regard himself at the moment as a socialist or a Marxist, and does he agree that all that the politics of the far left offers people is an equal share of misery?
John McDonnell
This is a debate about the threat of cuts facing some of the most vulnerable people in our society. This is not a time for engaging in student union politics in this Chamber.
By Friday of last week, the Chancellor was facing so much criticism that he needed to find someone to blame. So, in one of the most despicable acts we have witnessed in recent political history, the Chancellor sent out his large team of spin doctors to try to lay the blame on the former Secretary of State for Work and Pensions, the right hon. Member for Chingford and Woodford Green. That was a disgraceful act of betrayal of one of the Chancellor’s own Cabinet colleagues to save his own skin and his leadership hopes.
Pete Wishart (Perth and North Perthshire) (SNP)
Will the shadow Chancellor give way?
Mr Speaker
Order. [Interruption.] Order. Leave me to deal with this. Mr Cleverly, I have known you for years and you have always struck me as a very polite fellow. You are getting over-excited, young man. You will have an opportunity to intervene, perhaps in due course, but you don’t do it like that. Learn from a few old hands.
Pete Wishart
I am surprised that the shadow Chancellor is taken in by some of the crocodile tears from the Tories and this concern for the disabled. Surely he agrees that this is nothing to do with the Tories’ new-found concern for the disabled in this country—it is all about their euro civil war.
John McDonnell
Let me move on. I appreciate the point made. The betrayal was why the right hon. Member for Chingford and Woodford Green resigned. I have not agreed with a single policy that he has brought forward, but I do not doubt his sincerity in the policies that he has pursued.
Dr Rupa Huq (Ealing Central and Acton) (Lab)
Does my hon. Friend not agree with the words of the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith) that this Chancellor’s policies are
“in danger of drifting in a direction that divides society rather than unites it”?
Was the right hon. Gentleman not right when he said that?
John McDonnell
I believe that the right hon. Gentleman’s interview on the Marr programme on Sunday expressed a profound concern that he had about the unfairness of the Budget, and we agreed with this. As I said, I have not agreed with a single policy he has pursued, but I do not doubt his sincerity. The right hon. Gentleman saw—
John McDonnell
I will in a minute. There is no need to shout out so loud again.
The right hon. Gentleman saw the unfairness of the PIP cuts to disabled people in the Budget. As he said, it is a Budget that benefits high earners. He also saw himself being set up by his own Cabinet colleague.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
The shadow Chancellor is right to say he does not agree with the former Secretary of State’s policies. Indeed, even with the U-turn on PIP disabled people are still left distressed by the reforms that will still be going through. Will he join me in urging the Chancellor and the new Secretary of State for Work and Pensions to look again at this very flawed process?
John McDonnell
I fully concur. The same week that this was being discussed, ESA was being cut by £30 a week.
James Cleverly
I thank the hon. Gentleman. He has been speaking now for 14 minutes. He has criticised Conservative Members for making this about politics and people, but I was just wondering when he will actually get around to talking about any of the Budget proposals.
John McDonnell
The role of the Opposition is to hold the Government to account. We are holding this Chancellor to account for a potential attack on disabled people that I believe would have devastated their lives.
What I find most disgraceful through all of this is that there has been no word of apology from the Chancellor or any Conservative Member. Apologise, I say. I say apologise for the pain and anguish he has caused disabled people and their families in the past two weeks. We all make mistakes. I understand that. But when you make a mistake and correct it, you should at least apologise.
Anna Turley (Redcar) (Lab/Co-op)
Does my hon. Friend share my view that the most distressing thing the former Secretary of State said this weekend was the point he made about
“it doesn’t matter because they don’t vote for us”?
Is there not a constant thread running through everything—from the bedroom tax to local government cuts to this Budget—that this is a deeply political Government who do not care unless people vote Tory?
John McDonnell
I find a form of electoral politics, where you target a vulnerable group in society just because they do not vote for you, unacceptable. Not a word of apology! One nation Conservativism? It is a contradiction in terms.
Chris Philp
May I remind the shadow Chancellor that the richest 20% are now paying 52% of all income tax, which is up from 49%, and that the national living wage is putting money into the pockets of our country’s poorest citizens?
John McDonnell
The hon. Gentleman refers only to income tax. If he had looked at last weekend’s analysis of the overall cuts and what has happened with regard to tax and benefits, he would have seen that it is actually the poorest decile who are paying the most. The two groups hit hardest are young women with children and older women with caring responsibilities. Some 81% of the cuts are falling on women. This is a discriminatory Budget.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
We are pleased that the Chancellor has found that the PIP cuts are a cut too far, even for this ideological Government. Does the shadow Chancellor agree that characterising all benefits claimants as workshy, stay-in-bed, lazy scroungers, which the Chancellor of the Exchequer has done on many occasions, contributes to an atmosphere in which it is acceptable to enrich the better off at the cost of the poorest among us?
John McDonnell
That language has been used by the Conservative party. Let me return to the Budget. The hon. Member for Braintree (James Cleverly), who has now left us, asked me to return to the Budget, so let me press on.
Even worse, there is still no certainty about further welfare cuts. We were told yesterday by the new Secretary of State for Work and Pensions—this was repeated today—that there were to be no further cuts to welfare in this Parliament. Within minutes, the Treasury were briefing to correct the Secretary of State, as that then became “no planned cuts”. There is complete confusion—chaos on chaos. Nobody believes or has any confidence in the mealy-mouthed assurances that are being given today.
John McDonnell
In a second.
The PIP withdrawal now leaves a £4.4 billion hole in the Chancellor’s Budget, as has been consistently pointed out by my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper).
John McDonnell
Let me finish this point.
The simple fact is that the sums in the Budget, as my right hon. Friend pointed out, simply do not add up anymore. They simply do not compute.
Yvette Cooper
The shadow Chancellor will be aware that page 26 of the Red Book states that the Chancellor will set out plans to meet the welfare cap by this autumn, and that page 198 of the OBR report says that that will require further welfare savings of £3 billion a year. Did he hear the Chancellor say clearly this afternoon that he was going to ditch the plans for £3 billion a year of additional welfare cuts by the end of this Parliament?
John McDonnell
Cuts upon cuts, and who to? The most vulnerable in our society.
Steve Brine
I believe that the shadow Chancellor and the Leader of the Opposition, with whom I have served on Select Committees, are decent men. The shadow Chancellor said five minutes ago that he did not agree with a single policy introduced by the former Secretary of State for Work and Pensions during his time in office. Given the shadow Chancellor’s new fiscal responsibility, with the new rules he announced just a week or so ago, will he tell the House—people will be looking to him, because he is the shadow Chancellor—whether he would keep the welfare cap? If he cannot tell me that, will he tell me just one single saving that he could make from the welfare budget?
John McDonnell
We supported the welfare cap. I find it ironic that that point is being made on behalf of a Government who are not meeting their own welfare cap. They are breaching it and then moving it up. They are moving the goalposts again.
Let us be clear that the £4.4 billion black hole in the Chancellor’s Budget means either further cuts in departmental budgets and to benefits, or stealth taxes. No solution has been announced today. We are told that all this will be resolved by the autumn. Between now and then, no public sector job, benefit or service will be safe.
Tim Farron
The hon. Gentleman is right that the Chancellor has a £4.4 billion black hole that needs to be filled by cuts to public services or by stealth taxes, but that is in existence only because the Chancellor has set himself a false target. Does the hon. Gentleman agree that the real problem at the heart of the Chancellor’s credibility is the fiscal charter?
John McDonnell
I am grateful for the hon. Gentleman’s intervention and I will come back to that point in due course. I realise we are under pressure of time, Mr Speaker, so I will try to be as brief as I can.
The Chancellor’s political manoeuvring has real consequences. The drama over Budget week has clouded a further astounding revelation about his behaviour. His former Government colleague David Laws revealed at the weekend that the Chancellor pressurised senior officials to reduce their estimates of the funding needed to maintain the NHS. We discovered that the Chancellor had forced through a cut of almost half the funding—this was independently assessed—needed by the NHS. The result is that the NHS and hospital trusts around the country cannot plan. They are facing a crisis: waiting times are rising, staff are under intense pressure and morale is at rock bottom. At the start of the year, the NHS recorded its worst ever performance as services struggled to cope with demand. It is now facing its biggest funding crisis for a generation and that is putting patient care at risk.
Sammy Wilson (East Antrim) (DUP)
Does not the welfare cap, and support for it, suggest that if welfare spending goes up, we will have to revisit that spending? At that stage, would the shadow Chancellor cease to support the cap, or would he support measures to keep within it?
John McDonnell
We support a welfare cap, and we believe we have better policies—building homes, for example, rather than spending money on housing benefit—that would enable us to meet it.
Nothing in the Budget says that the NHS can find £22 billion in savings over the next few years. The idea is pure fantasy written into the Budget. It is typical of this Chancellor to opt for spin and presentation over addressing the real problems. He needs to stop living in fantasy land and to start being honest with the public over his own numbers.
John McDonnell
I have been extremely generous in giving way, but we are running out of time.
On schools, this was far from a Budget for the next generation, as the Chancellor claimed it was. Not only is the plan to turn every school in the country into an academy unpopular with parents and teachers, but we now know that schools face an 8% real-terms cut in their funding. This is the first time since the 1990s that schools’ funding has been cut.
As the hon. Member for Westmorland and Lonsdale (Tim Farron) said, at the heart of all this failure is the Chancellor’s economic incompetence. His huge mistake was to force through a fiscal rule that has proved to be unworkable. Against all sound economic advice, he put politics above economics and imposed a fiscal rule that now, like his Budget sums, simply does not add up. Virtually every target he set himself has been missed. On the deficit, which he promised would be eradicated last year, he has failed. The debt was supposed to be falling, but it is rising.
Rushanara Ali (Bethnal Green and Bow) (Lab)
The former Work and Pensions Secretary described the cuts to PIP as deeply unfair when juxtaposed against tax cuts for the wealthy. Does my hon. Friend agree that the Chancellor should consider scrapping that tax decrease for the wealthy to help to fill the £4.4 billion black hole, which might help to improve his competence?
John McDonnell
That is the sort of proposal we should be considering and voting for today.
Several hon. Members rose—
John McDonnell
I want to finish the next section of my speech. I am straining your patience, Mr Speaker, so I shall press on.
The Chancellor is set to leave our children with £1.7 trillion of Government debt. Hundreds of billions have been borrowed on his watch. The welfare cap, which the hon. Member for East Antrim (Sammy Wilson) mentioned, is set to be breached each year until 2020. The OBR confirmed to the Treasury Committee that it would be breached by £20 billion over five years. The Chancellor has broken two of his own rules already. The third—the overall surplus—now hangs by a thread, and only with some seriously creative accounting will he meet it.
Meanwhile, across the country, the Chancellor’s economic approach is failing, as was evidenced by last week’s OBR report: forecast for growth—down; forecast for wages—down; forecast for productivity—down; and forecast for business investment—down again. Why will he not take responsibility for the last six years?
Antoinette Sandbach (Eddisbury) (Con)
Does the hon. Gentleman celebrate the fact that 1,700 of the lowest paid in my constituency will be taken out of tax altogether as a result of the Budget, and that 1.3 million of the lowest paid have already been taken out of tax altogether in this Parliament?
John McDonnell
That is why we support the increase in the lower-rate threshold, but we have concerns that shifting the thresholds in that way actually benefits higher earners too much.
At the bottom of the Budget is a Chancellor who, as some have mentioned, is more interested in his political career than the welfare of disabled people, and more interested in becoming the leader of his party than in the health of our economy. He is not a Chancellor but a political chancer. I pay tribute to colleagues on both sides of the House who forced him to U-turn on his proposed cuts to disabled people.
This is not a one nation, compassionate Budget—nobody believes that—but a Budget shot through with unfairness at its heart. Even one of the Chancellor’s own Cabinet colleagues last week denounced it as fundamentally divisive and unfair. It is not a competent Budget. It fell apart within a couple of days, and the Chancellor still cannot explain how he will fill the £4 billion hole. This is not a Budget for the long term either—a long-term economic plan that lasts three days? It is a Budget built around short-term political tactics and it has backfired spectacularly. They used to say that a week was a long time in politics but, under this Chancellor, a weekend is the length of a long-term economic plan. What a failure!
This is not a Budget for the economy or the country, either, but one that is constructed around self-imposed austerity. It is about politics—incompetent politics at that —not economics, and it has blown up in the Chancellor’s face. For the sake of his party—he might think about that—and certainly for the sake of the country, it is time for him to go.
Mr Kenneth Clarke (Rushcliffe) (Con)
I congratulate my right hon. Friend the Chancellor on reviving the tradition of the Chancellor speaking on the last day of the Budget debate. It is one of the many things that my successor, Gordon Brown, should not have abandoned. I think we will agree it has enlivened the debate very considerably, compared with what usually happens. I also congratulate him on his extremely effective and spirited performance in defence of his Budget. He rightly took pleasure in his achievements so far in his term as Chancellor.
It is remarkable that we are having such a lively debate on the Budget at a time when, as we have just discovered from listening to the shadow Chancellor, there is absolutely no alternative economic strategy or policy on offer—no doubt my party will make up for that lack of challenge in its own curious way, but meanwhile I congratulate the Chancellor on where he has got so far.
In case the Chancellor is worried about the controversy surrounding the Budget, let me tell him that it is not unusual. I have been here so long that I have seen much worse. Geoffrey Howe’s 1981 Budget was extremely controversial, and passions ran higher, and far more seriously, than they have on this occasion. Nigel Lawson had his Budget speech interrupted, and the House was suspended because of disorder, when he tried to cut the taxes on the higher paid.
I had merely one defeat on a Finance Bill. I lost to a rebellion on the Floor of the House. My mitigation was that it was not my proposal—it was Norman Lamont who proposed VAT on domestic fuel—although I still think it was perfectly sensible. I immediately came back with more tax proposals to get the revenue I had lost, but my right hon. Friend is quite right to wait for events between now and the autumn statement and then to continue the fiscal discipline he has rightly maintained so far.
Geraint Davies
The right hon. and learned Gentleman probably knows that the Royal College of Physicians has announced that 40,000 people are dying a year, at a cost of £20 billion, from diesel emissions and pollution. Does he think the Chancellor should reconsider promoting green transport, public health and savings and rebalancing the tariffs on electric, diesel, hydrogen and petrol in order to save lives and money?
Mr Clarke
We have been extremely active on that front, but scientific knowledge is moving on. I remember when diesel was positively subsidised by Governments because it was thought to be more environmentally friendly. In a more appropriate debate, those issues are well worth pursuing. I understand the problem. I turn to what the Chancellor has to devote himself to: the Budget judgment and its implications for the economy. The Chancellor accepted, as he has to, that that is his principal responsibility. The Chancellor has the most difficult job in government, because he has to spend all his time challenging all the lobbies that demand extra expenditure and challenging his colleagues to find savings or improvements in the budgets of their Departments in order to close the gap.
What this Chancellor has not done is take a short-term view at any stage. That is why he has achieved such remarkable economic success. What I liked about his Budget speech was when he stressed how it was for future generations. What he said a few moments ago—a soundbite, if I may say so, which I had not heard before: there is no social justice without sound finance—is one of the best summations of one nation Conservatism I have heard for a very long time.
Mr Speaker
Let me say to the right hon. and learned Gentleman that he has never been in trouble with the Speaker.
Mr Clarke
I am trying to be reasonably concise rather than too expansive. I apologise to the right hon. Member for Leicester East (Keith Vaz).
I tried to think of what I would have done had I been Chancellor in the present situation. Before the Budget was delivered, I expected a much tougher Budget. Thank the Lord that I am not in my right hon. Friend’s position; I never had to face problems of the kind that he inherited from his predecessor. My instincts are classic, traditional stuff for anyone for whom the iron of the Treasury has entered the soul. This is the first Budget after an election, we have not made fast enough progress in eliminating the deficit and debt, and we will not have sound future progress with a modern rebalanced economy unless we have done that, so my first thoughts would have been to get on with it.
I would have introduced a Budget, as I frequently did in my time, raising taxes and cutting public expenditure. I am glad to hear, for reasons that I shall return to later, that my right hon. Friend has committed himself to his continuing long-term objective, and has decided to pause. I thought this was going to be a popular Budget. People speculate as to why we chose an easier path. [Interruption.] The Chancellor has in the short term relaxed fiscal policy. It is good that the Bank of England is retaining a very relaxed monetary policy, but it will tighten it if we were to abandon fiscal discipline. In the short term, my right hon. Friend has lowered taxation and lowered Department spending targets for cuts. He has eased off on public spending and lowered taxation. I was surprised by that.
I assume that this was partly caused by the considerable uncertainty that the economy faces. No one has addressed that issue in any of these debates, although the Chancellor did in his Budget speech. The global economy is slowing down, and mainly as a consequence of that, the British economy is slowing down. The uncertainties for our economic prospects over 2016 are very concerning. There are many uncertainties, all of which would threaten most of the developed economies if things go wrong. We still do not know whether China, for example, is going to achieve a soft landing; I think it will. In the emerging markets—there are associated problems with emerging market debt—there is volatility and some unsoundness in the financial world.
And there is the risk of Brexit. I am very glad that the Governor of the Bank of England decided to reassure people by setting out publicly that he was prepared to take action if we had a flight of capital from this country should people be alarmed about the referendum. So far, such risk has led only to a big decline in the value of sterling and the freezing of most people’s investment plans. One would be a bit of an idiot to invest in the British economy in anything that had the slightest risk when we do not know what the circumstances and trading patterns are going to be in six months’ time.
I assume one reason why my right hon. Friend took a more relaxed view than a traditional Chancellor would have done and did not make those big spending cuts or increase taxation—in fact, he eased taxation for businesses and the low-paid—was to avoid the mistake of being too severe when circumstances might well worsen as the year goes on. That underlines the point that, in the long term, one cannot forecast and fix these kind of things further forward.
A great deal of the debate around the Budget centred on the forecasts and the Office for Budget Responsibility. The fact that the OBR’s forecasts keep changing so rapidly just underlines what I am saying about the uncertainties for the immediate future. Fortunately, thanks to my right hon. Friend, the British economy has been the fastest growing developed economy in the last 12 months, and we are probably less at risk than most others. However, the fact remains that this was a time to be cautious. Personally, I would have maintained the squeeze—it has all been put off until the latter half of this Parliament, and into the next if we are not careful—because so long as the economy continues to grow, and there is a reasonable prospect that it will, we should not be running a deficit of this percentage of GDP, piling up more debt for our successors.
My doubt is whether this pause was totally justified. I accept that it probably was; but certainly we must resume things. I listened to a shadow Chancellor who plainly does not have an idea in his head about how he would save any money or do anything other than continue spending and borrowing. It is totally profligate stuff, as we have seen very much in the past.
I am very glad that my right hon. Friend made the changes to business taxation. When I was in office, I put up taxes, but I never put up business taxes because I was trying to encourage growth. We still need to make our economy stronger, so it is welcome that the Chancellor stepped in, keeping our corporation tax level at a competitive rate. I particularly welcome the help he has given to small and medium-sized businesses. Encouraging business is, of course, the best way of protecting ourselves against economic risks for the future in this uncertain world.
My right hon. Friend has not been wholly generous towards big business. He and the Government have been leading in the OECD on attempts to tackle the problem of tax evasion and tax avoidance on the part of big multinational companies. He has incorporated the first serious attempt for a long time to attack the problems of tax relief on interest when it is exploited and misused, on royalties and on past losses. I get told a lot about how the Chancellor should be collecting more from big international companies, but no Government have done a blind thing about tackling this tax avoidance for the past 20 years. This Government are leading international discussion towards agreement, which is what is needed, and in this Budget, the Chancellor has started to act.
We are told that we are relieving tax on the rich, but everybody knows—I certainly know, and not just from the newspapers—that the Treasury has been looking at the idea of doing more on tax relief for the wealthy when they contribute to their pension funds. If they have very high earnings, tax relief on pension funds is the way of avoiding tax and it is a great way of ensuring that 45% tax is not paid on a very considerable part of one’s income. That was the case, but we have now put a cap on it. I feel that we are still rather too generous, but in today’s politics that was another lobby, and when someone leaked it, it was seen off by the pensions industry in about 10 days flat. So my right hon. Friend was not allowed—on that occasion, I suspect, because of fear about what would happen on this side of the House—to proceed with fairly modest changes in tax relief for the rich.
As far as other tax moves that my right hon. Friend has made, on personal allowances and the thresholds for the higher rate, because the higher paid—the rich—now pay such a huge proportion of tax, it is almost impossible for Chancellors to ease the tax burden on the low-paid and the ordinary citizen without it being possible to demonstrate mathematically that they have done quite a lot for the rich as well. If Chancellors bought that argument every year, they would never move the threshold at which people start to pay tax, and they would never raise the 40% rate for the people who are currently in modest jobs and find that they are subject to a marginal rate of 40% because Gordon Brown started the habit of freezing the threshold in order to secure stealth taxation. Raising these thresholds is welcome, and I am glad that my right hon. Friend felt able to do it.
Other measures should be seriously canvassed. The pensioner benefits, to which I am entitled, are discussed every now and again. I am always told that we have put things in a manifesto, but I have yet to meet a candidate or an elector who read the last general election manifesto, which, although it seems to contain considerable detail, was certainly not crucial to my constituency victory, or, I suspect, to anyone else’s. We have ruled out ever raising income tax, ever raising national insurance, ever raising VAT; we appear to have ruled out doing anything at all that would stop the very wealthiest people having free bus passes and receiving the winter fuel allowance. I am not going to advocate the breaking of manifesto pledges, but I know of no prosperous pensioners, and certainly none who are in full-time employment like me, who would object to, at the very least, those benefits being made taxable.
I think that there is a case for considering those measures and various alternatives, but I will not risk going into it any further, first for reasons of time, and secondly because, given today’s populist politics, I fear that if I do, some lobby yet unknown to me will descend on me in the next two or three days in order to mount a campaign, through our ridiculous media, to blow that case out of the water.
Of course we must judge the Budget on its own merits, and I understand why my right hon. Friend has got to where he is. No two Chancellors have ever done the same in respect of every measure. Within our system, a Chancellor makes an overall judgment, and this Chancellor retains my full confidence: I am prepared to support his judgment.
I have another reason for supporting my right hon. Friend’s judgment. As I have already said, the present Government are in a strange position. Absolutely no alternative proposition is being advanced by anyone outside. Some pundits, and, as a result, some politicians, seem to believe that we are wrong to maintain our target of a balanced budget over the cycle, or however we choose to put it. They suggest that, actually, there are no problems, and the answer is simply always to run a deficit, on and on and on. After all, it is free money. It is a bit troublesome that interest rates might return to normality one day, but meanwhile, just let it pile up: it will sort itself out.
People on the far right say “Tax cuts, that is all you want. Tax cuts will inspire such tremendous entrepreneurship that jobs will be created, wealth will be created, and it will all be paid back. You will not be in debt for long.” On the left, the argument is “Boost every welfare payment, increase public spending on every public service, and that will generate such demand from the grateful taxpayer recipients that they will pump it into the economy, and it will pay for itself.” That is Mickey Mouse economics, as practised by the last Labour Government, and it got us into this trouble that we are still—thanks to my right hon. Friend—getting out of now.
As for my final reason for backing my right hon. Friend’s judgment, his record, after eight Budgets and six years, is absolutely amazing. I must concede, having been one of his competitors at one point, that he is far the most successful departmental Minister in this Government to date. If anyone had said, when he took over the state of affairs that he took over more than eight Budgets ago, that he would stand here, in charge of the fastest growing economy in the developed world, with near-full employment and with employment at record-breaking heights, able to demonstrate the steadily improving state of not only the public finances but the condition of the poor, as well as the alleviation of social problems across the country, that person would not have been believed. It is a quite remarkable performance.
So I back my right hon. Friend’s judgment. I am also delighted that he is helping us all to avert the risk of Brexit in the forthcoming referendum, because, if the public were so ill advised to vote for it, that would be the only thing that could really send this economic recovery off the rails in a big way.
Several hon. Members rose—
Mr Speaker
Order. Before I call the spokesman for the Scottish National party, it may be convenient for the House to know that, owing to the level of demand among those wishing to contribute to the debate, a five-minute limit on Back-Bench speeches will have to take effect immediately after his own speech.
George Kerevan (East Lothian) (SNP)
Let me begin by associating the SNP with the words of the Chancellor and the shadow Chancellor in expressing sympathy for the people of Belgium—Flemish, Walloon, and recent immigrants—at this tragic hour.
I must give the Chancellor his due. He gave us a bravura performance: in my view, a more assured and more interesting performance than we were given last week. However, I am always worried when he goes into his expansive, emotional mode. What is he hiding? We know what he hid last week, which was the fact that he would have to come back and tear up his Budget and create a new one, but what did he hide this week? He hid what he always hides and never addresses: the crucial issue of productivity. Without productivity growth, there can be no tax growth, no jobs growth and no wage growth. The truth is that, under this Chancellor, productivity has risen at an annual average of 0.1%. Since the top of the boom in 2007, the cumulative increase in UK productivity has been less than 1%. That is the Chancellor’s failure.
I have great respect for the Chancellor, but he is not a Chancellor who ever had a real job. He is not a Chancellor who ever worked in the private sector. He is not a Chancellor who ever had to lie awake at night—as I have, and as, I am sure, have many other Members on both sides of the House—and worry about how to pay the next wage bill. This Chancellor is an intellectual Chancellor: that is his problem.
Chris Philp
I have spent the last 15 years setting up and running businesses. As someone who has done that, I am glad that it is this Chancellor who is sitting in that seat, because he is the man who has created jobs and helped businesses like mine! [Interruption.]
Mr Speaker
Order. May I just say, for the benefit of the House, that moderation and good humour are the precepts of “Erskine May”. Members on both sides of the House can learn from the right hon. and learned Member for Rushcliffe (Mr Clarke), who has just given a textbook example of a robust speech made with good humour. Many Opposition Members can do the same, and new Members could learn from them.
George Kerevan
Thank you, Mr Speaker. I serve on the Treasury Committee with the hon. Member for Croydon South (Chris Philp), and I did not take what he said personally.
If we do not get productivity, what happens? We do not get growth. The right hon. and learned Member for Rushcliffe (Mr Clarke) gave us a wise presentation, as he normally does, but he slipped up a little. He said that, under this Chancellor, the United Kingdom had experienced the fastest growth in the developed world. That is not true. As he phrased it, it is not true—unless, of course, Australia is not developed; unless, of course, the United States is not developed; unless, of course, Sweden is not developed; unless, of course, Korea is not developed; unless, of course, Spain is not developed. All those countries experienced faster GDP growth than the UK in 2015, largely because they experienced faster productivity growth. That is what this Chancellor has not delivered. That is not what this Budget contains. And that is this Budget’s weakness.
If we look at the failure of productivity growth in the UK under this Chancellor, we see that productivity is lagging in practically every commercial and industrial sector. Crucially, productivity has been falling by an average of 1% a year in the financial services industry—our flagship industry, our key service industry, the industry that is leading our service exports. This Chancellor has devoted a lot of time and effort to reconstructing the financial services sector—I grant him that—but what have we got? Falling productivity. According to the Office for National Statistics, productivity in the British financial sector, including insurance, is now behind the level of financial services productivity in France and Italy. That is not a great record, Chancellor. Here is the bottom line: if we do not have productivity growth, the cash economy will not grow, wages will not grow and income to the Treasury will therefore not grow.
Marcus Fysh (Yeovil) (Con)
Does the hon. Gentleman not recognise that there is a lot in this Budget to improve the performance of the economy? Does he not agree that a massive cut in business rates will deliver exactly the productivity that he is talking about?
George Kerevan
I utterly accept that point. This is at the core of what I am saying. The kind of business rate cuts for small companies that the Chancellor has belatedly introduced in this Budget have long been available in Scotland. What has happened to productivity in Scotland? Despite the Scottish Government’s limited drivers for economic growth, productivity in Scotland has gone up 4.4% since the recession. That is more than four times what this Chancellor has managed to deliver. In Scotland, our limited tax powers have forced us to concentrate on the supply side, and my bill of fare against the Chancellor is that he does not do that. Yes, there are lots of bits and pieces in the Budget that I welcome—particularly the move to clamp down on transfer pricing in multinational companies—but in the end, there is no strategy. The Chancellor has no strategy apart from his rendezvous with 2020 and trying to run a budget surplus.
Sammy Wilson
Does the hon. Gentleman accept that he is perhaps being a bit harsh? There are many supply-side measures in this Budget, including improved investment in infrastructure and the digital economy and cuts in corporation tax and business rates, all of which should help investment and therefore increase productivity.
George Kerevan
Indeed, and I welcome all the supply-side measures, but—[Interruption.] Wait for it! We have had five Budgets in the past 15 months. Why did those measures not appear in the last four of them? In fact, if we count today as well as last week, we have had six Budgets in that time. Why did those measures not appear before? This is not about the Treasury officials, who are bright men and women; this is about the fact that there is no strategy apart from trying to run a budget surplus in a particular year, because the Chancellor knows that if he does not deliver in 2020, what is left of his reputation after this week will be in shreds.
Mr Steve Baker (Wycombe) (Con)
I should like to draw the hon. Gentleman’s attention to page 2 of the Red Book. It states:
“This is precisely why the UK has been working through its long-term economic plan. Since 2010 the plan has been focussed on reducing the deficit, while delivering the supply side reforms necessary to improve long-term productivity growth.”
Will he at least concede that the Chancellor has in his Red Book precisely the kind of strategy that he is criticising him for not possessing?
George Kerevan
I cannot accept that. There is a tension in the Chancellor’s mind. It is like good and evil sitting on either shoulder. One side is telling him to run a budget surplus, because that is an easy road to take. That is not badly thought out. Given the number of rules that Chancellors have thought up over the years and then failed to implement, running a budget surplus is an extremely simple rule. It is just too crude, however. That argument vies with the supply-side strategy.
Following on from the question from the hon. Member for Wycombe (Mr Baker), another friend from the Treasury Select Committee, let us look at what the Office for Budget Responsibility says in its report about how the Budget supply-side measures will work. It states:
“We also expect smaller positive contributions to potential output growth over the next five years from population growth, while average hours worked are expected to trend down over time.”
With a decrease in average hours, in input and in population growth, where is the productivity increase going to come from? I should like to hear the answer from the Chancellor.
Geraint Davies
Does the hon. Gentleman agree that we have such hopeless productivity growth because, first, our research and development is very low, by international standards, and secondly, so is infrastructure investment? Thirdly, the rights and security of people in work are now low, making it easier for them to be sacked. In Germany, where people can stay in work, employers have to invest in their productivity because they cannot get rid of them. Here, however, we are destroying rights and creating short-term, low-paid jobs, which is resulting in lower productivity.
George Kerevan
I could not agree more with all three points, so I will just accept them.
The Red Book also shows that public sector net investment—capital investment in the public sector—is set to fall for the next four years. I have to ask Conservative Members this question. With industry in trouble and manufacturing contracting, as it has done in the past quarter, how will it help productivity if we have to cut public sector net investment in the capital side of the economy in order for the Chancellor to meet his rendezvous with destiny in 2020 and have his budget surplus? We need investment in capital in order to have productivity—that is where it comes from.
It is interesting to see what the OBR thinks we will have to do in order to get the books to balance. It believes that UK private sector business investment will have to make up the difference. It believes that private business investment will come to the rescue and contribute a quarter of the expenditure contribution to GDP growth in the period to 2020 in order to achieve the Chancellor’s fabled budget surplus. So, to make all the sums work, there has to be growth. Where is the growth coming from? According to the OBR, a quarter of all the potential expenditure in the economy between now and 2020 has to come from business investment. [Interruption.] Bear with me as I go through the numbers, because they are important. According to the OBR, business will have to contribute 0.6 percentage points each year to GDP in order for the economy to grow sufficiently to deliver the taxes to enable the Chancellor’s budget to come into balance.
There is only one problem. Historically, from 1990 to 2008—that is, throughout the boom period—the level of investment that British business managed to achieve as a percentage of GDP annually was 0.3, which is precisely half what the OBR thinks that business will have to invest between now and 2020 if the Chancellor’s numbers are to work. That is not going to happen.
David Rutley (Macclesfield) (Con)
The hon. Gentleman says that the Chancellor lacks strategy, but that is clearly not the case. He was clearly not listening to the same Budget speech that I was listening to. That speech included supply-side measures, with business taxes going down and infrastructure being improved. We are seeing massive Government investment in the northern powerhouse to tackle the challenges, and private sector investment is coming in on the back of it, including £1 billion of investment in Manchester airport over the next 10 years. Is not that the sort of leverage that the Government should be seeking?
George Kerevan
If the hon. Gentleman had been listening carefully instead of following his script, he would understand that I am in favour of all the supply-side measures that we can get, because that is how we get growth. I am simply pointing out that the Budget figures that we have been presented with in the Red Book, alongside the OBR’s independent analysis, suggest that business investment will have to be double the level of its historical average, at a time when the global economy is slowing, in order for the Budget numbers to work. That is not going to happen.
The hon. Member for Macclesfield (David Rutley) made a reasonable point, however, and I shall follow on from it by asking: how do we boost business investment? The Budget includes a cut in corporation tax, yet our rate is already the lowest in the G20. How can a further cut produce any more inward investment? The incentive is already the biggest it is going to be, so cutting it even more at the margins will not increase incentive. That will just waste funds. Even with that—I have raised this in the House before—because there is so little outlet for investment at the moment, much of companies’ profits from reduced corporation tax is going into share buy-backs, which is a complete waste of time because it does not add to productivity.
The other tax issue in the Budget is the cut in capital gains tax. There is an argument for cutting capital gains tax, but here’s the point: which Chancellor raised capital gains tax in 2010? It was the Chancellor who is sitting there. Where is the long-term plan in raising it and then lowering it? The confusion of signals is exactly why businesses are not investing. They do not know what taxes will be from one Budget to another, which, at the moment, is every three months. [Interruption.]
David Rutley
I thank the hon. Gentleman for giving way. I was not seeking to make a point, but I will now. The Chancellor has clearly demonstrated that he has his public finances under control—[Interruption.] The deficit is massively down and he is now in a position to take forward the changes to which the hon. Member for East Lothian (George Kerevan) refers.
Madam Deputy Speaker (Natascha Engel)
Order. The hon. Member for East Lothian (George Kerevan) has been on his feet for 15 minutes and is taking an awful lot of interventions—he is very generous like that —but over 40 Members want to speak and I do not think that I am going to get everybody in. If he limits the number of interventions he takes, I will be very grateful.
George Kerevan
As ever, Madam Deputy Speaker, I am at your service and the service of the House. I will come to my final point, because I am sure that we will be discussing this at the next Budget in another three months.
The Chancellor talks about living beyond our means. He prioritises the budget surplus. He talks about intergenerational fairness. He says that if we do not get overall national debt down, it will be a burden on future generations. Let us test that and go back to the late 1940s and 1950s, when the national debt as a share of GDP was more than twice what it is now and was coasting at over 200% at one point. For most of the ’50s it was 150%, which is twice what we have at the moment. Where did it come from? It came from Governments, particularly Conservative Governments, borrowing money. Most of the rise in national debt did not come during world war two, but during the late ’40s and early ’50s as we tried to rebuild Britain’s infrastructure following the depredation of the war. Harold Macmillan was building a million houses a year. We invested and the national debt was pushed up.
Here is the thing: if huge national debts weigh heavily on future generations, let us look forward. What happened to baby boomers such as the right hon. and learned Member for Rushcliffe and me? Our generation has houses and pensions. We have benefited from state-funded investment in national infrastructure. The whole notion that investing and running up a budget deficit places a burden on future generations is not historically true. Did the economy grow fast in the ’50s and early ’60s? Yes, it did.
Here is my final point and my message for the Chancellor to reflect on: when trying to control public spending, what matters is what it is spent on. Harold Macmillan and the Conservative Governments of the 1950s invested in infrastructure. This Chancellor is borrowing to invest in current spending, which gets blown away by the wind, and if we do that, we fail. It is no wonder that the Chancellor wants his rendezvous with destiny in 2020. He wants to pretend that he can run a budget surplus. It may never happen. Even if it does for one year, it is unsustainable. The Chancellor does not understand business or how the economy works. He pretends he does and talks a good game, but he has not delivered productivity, which is the core thing that we need in this country.
Mrs Maria Miller (Basingstoke) (Con)
It is a great pleasure to follow the hon. Member for East Lothian (George Kerevan), who always speaks so eloquently, but I must say that I disagree with absolutely every word he said. Boosting productivity is at the heart of this Government’s Budget, which is plain for everybody to see. My right hon. and learned Friend the Member for Rushcliffe (Mr Clarke) said that the global economy is slowing down and that we need to be fighting fit for the future. This Budget will help put Britain in that place.
I pay tribute to the Chancellor for delivering such a strong Budget, but what we should all do first is pay tribute to our nation’s wealth creators. It is they, not us sitting here in Parliament, who have put Britain back on top with one of the world’s strongest economies. They are the farmers whom I met last week in Hampshire. They are the partners who run the new John Lewis store in my constituency. They are small and medium-sized businesses up and down the country. They are people like Beryl Huntingdon, who runs Absolutely Offices, or Graham Murphy, who runs RDT. They are the people, innovators and entrepreneurs putting Britain back on top. We must acknowledge their immense hard work in getting our country into the position it is now in.
Mrs Miller
If the hon. Lady will forgive me, I want to make progress because of the number of people who want to contribute.
The Government have recognised their role in creating the right conditions for business success. They have created an environment in which businesses feel confident about investing by putting in place the right reductions in business and job taxes to encourage growth and success. They have put in place the right infrastructure investment—the £100 billion going into infrastructure over this Parliament, including Crossrail 2, which will do so much to reduce pressure on other parts of the rail network, such as the Wessex route, which affects many hon. Members and is well over capacity. The Budget is also investing in people, underlined by the commitment to 3 million new apprenticeships by 2020, including 5,000, some of which will be degree level, in my constituency at the Basingstoke College of Technology.
People are the biggest asset of most organisations. According to the CBI, some of the biggest challenges facing business in the UK today are retaining top talent and getting appropriately skilled staff. We may have record employment levels, which is to be applauded, and the highest number of women in work, but if we are to be fighting fit for the future, we must get the best out of every single member of our community. While much has been done, there is still more to do, particularly on women’s role in the workforce.
Record numbers of women are in work and the Chancellor is to be congratulated on that, particularly because of the investment he secured for doubling the amount of free childcare. There are 2 million women who would like to be in work and 1 million working women who would like to work more, but they cannot find the right jobs. Some 41% of women in this country work part time, many because they cannot get hold of the right flexible work that fits around their family and caring responsibilities. I gently draw the Chancellor’s attention to the second report of the Women and Equalities Committee, which is all about one of the Government’s great aspirations: to eliminate the gender pay gap in a generation. We can do that if all jobs are more flexible, if men are better able to share care in their family life, and if there are national pathways for women to get back into work.
I also draw the Chancellor’s attention to an Equality and Human Rights Commission report, published today, on the level of maternity discrimination that 77% of pregnant mothers and people on maternity leave are enduring. We are not making the best use of women in this country, and I would like the Government to pledge to take active steps to change the situation, so that all women can do a job that they want to do in order to make the biggest contribution they can to boosting productivity in this country.
Paula Sherriff (Dewsbury) (Lab)
I rise to speak to amendment (a), tabled in my name and those of the hon. Members for Glasgow Central (Alison Thewliss), for Berwick-upon-Tweed (Mrs Trevelyan) and for Leeds North West (Greg Mulholland). I served on the Finance Bill Committee with the hon. Member for Glasgow Central last year, and it was during that Bill’s passage that she and I first tabled amendments on this issue. I hope that we will finally see them reflected in legislation this year.
I thank the hon. Member for Berwick-upon-Tweed, who, as a Government Back Bencher, co-sponsored the amendment, and my right hon. and hon. Friends who have given their support, but it is the campaigning work of so many others outside this Chamber that has driven us forward, including more than 300,000 people who signed Laura Coryton’s petition on the issue. The campaign against the tampon tax will serve as an inspiration. It is an example of how grassroots campaigns and Back-Bench Members can make a positive change at the highest level.
It is one of the absurdities of our tax regime that tampons and sanitary towels are treated as luxuries, when periods are simply a fact of life for women. Last week, we heard appalling reports from food banks about how women, who were unable to afford tampons, were resorting to using newspapers and socks.
Mrs Miller
Will the hon. Lady join me in thanking the Financial Secretary, who is in his place, for all his hard work in taking the fight directly to the European Union and in negotiating the change that the Government have put on the table today?
Paula Sherriff
I do thank the Financial Secretary in the same way that I thank everybody who has supported this long-standing campaign.
It cannot be acceptable that women are having to use socks and newspapers as a substitute for sanitary protection. I hope that, as well as cutting prices across the board, we can ensure that all women have access to the protection that they need.
This campaign is not just about money. It is about time that we removed the stigma attached to the basic facts of women’s lives. The Prime Minister said yesterday that he will always remember explaining this issue to the 27 Heads of Government at the European Council. The fact that they had to address this issue directly is itself a great step forward for women.
I am glad that the Government have now taken on board the campaign’s message. It makes me the first Opposition Back-Bench MP successfully to move an amendment to a Budget resolution. If nothing else, I will at least achieve lasting fame as a parliamentary pub quiz answer. That does not mean that our work is done here. There are a couple of outstanding issues that I hope the Minister can address.
Most pressingly, there is the question over what will happen to those women’s charities that have benefited from the tampon tax fund since the autumn statement back in November. I hope the Minister will confirm today that even after the tax is scrapped he will continue to provide the financial support that they so desperately need.
We will also need to take the final step by legislating for the measure the Finance Bill, and at European level. It would be fitting if this House could pass those amendments before the referendum in June, and I hope that the Minister can commit to that timetable today. On the latter point, I hope that he will be back at the Dispatch Box tomorrow with the expected announcement of the EU VAT action plan.
There is also a challenge to ensure that women get the full benefit of the tax cut, and that the cut does not simply result in increased profits for the manufacturers and retailers of sanitary products. I am writing to them on that matter myself, and I encourage the Government to join me. Those companies might be able to provide part of the answer to the issue of future funding for women’s charities. I hope that it would not be too much of a test of our powers of persuasion to encourage them to advertise women’s charities on their packaging, and make donations themselves. Women have no choice but to pay companies for their products, and I hope that those companies will make the choice to help pay for our services.
Alison Thewliss (Glasgow Central) (SNP)
I thank my honourable sister for giving way on this point. I thank her for her support and for the work that we have done on this. I fully support what she is suggesting about the charitable giving from the sale of packets of tampons and sanitary towels. Does she accept that the definition of sanitary products needs to be widened slightly to cover items such as breast pads for mothers who breast feed, maternity pads for women who have just had children and incontinence pads, which are not always available to people free of VAT?
Paula Sherriff
I thank the hon. Lady for her intervention, and I very much look forward to campaigning with her on the issues that she has just mentioned.
This evening we have the opportunity to put right an historical injustice by making clear our intent to abolish VAT on female sanitary products. The amendment allows us to do just that, and I hope that the whole House will support it.
Graham Evans (Weaver Vale) (Con)
Thank you, Madam Deputy Speaker, for calling me to speak in this very important debate. It is a pleasure to follow the hon. Member for Dewsbury (Paula Sherriff), to whom I pay tribute. Given the mark that she has made on this place—I am pretty sure that I speak for the whole House in this regard—she will be more than just an answer in a future pub quiz. It is also a pleasure to follow my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke). He is certainly still a big beast. He was a big beast in the Treasury and he is now turning out to be a bit of a national treasure on the Government Benches.
This Budget puts the next generation first—I have to declare an interest here, as I have three young children—and it continues our long-term plan to reduce the deficit and achieve a surplus, and sets out the long-term solutions to long-term problems to ensure that Britain is in a strong economic position for the future.
Thanks to the work of my constituency neighbour, my right hon. Friend the Chancellor, Britain is set to be the fastest-growing economy in the G7, with the Office for Budget Responsibility predicting growth rates in excess of 2% for the remainder of this Parliament. [Interruption.] We are still the envy of the European Union, and we are stronger together. The challenges that the country faces are growing: global stock markets have had the worst start to the year for 45 years, prospects for emerging markets have worsened, and the sharp fall in the price of oil and commodities has contributed to lower global growth.
Eight years ago, the UK was one of the worst prepared countries to face the financial crisis. Today, it is one of the best prepared. We have fixed the roof while the sun was shining. Against that backdrop of global uncertainty, this Budget delivers security for hard-working taxpayers. Small businesses are the engine room of our country. They account for 99% of all private sector businesses, employing 15 million people—60% of all private sector employment. The combined annual turnover of SMEs was £1.8 trillion last year, nearly half of all private sector turnover in the United Kingdom.
Along with many small businesses across Weaver Vale, I welcomed the announcement in last week’s statement that business rate relief would be doubled permanently. Businesses with a rateable value of £12,000 and below will receive 100% relief. Some 600,000 small businesses across the country will now pay no business rates whatsoever.
Simon Danczuk (Rochdale) (Ind)
On that point, I also welcome the fact that, from 2017, 600,000 small businesses will be taken out of business rates, but it does not happen for a year. Retail business rate relief, which is worth £1,500, has also been abolished, but small shop owners will still have to pay that £1,500 for the next 12 months. Is that not disappointing?
Graham Evans
I bow to the greater knowledge of the hon. Gentleman, who does a great job as a small business owner in Rochdale. We cannot do everything at the same time, but overall I welcome this Budget. I am sure that he, too, welcomes the overall message to small businesses as they receive help with those reliefs.
Businesses with a property rateable value between £12,000 and £15,000 will receive tapered relief. Two thousand properties in Halton Borough Council and 7,000 properties in Cheshire West and Chester have a rateable value of below £15,000 and will all benefit substantially from the changes.
Building a northern powerhouse and rebalancing the national economy is a core part of this Government’s economic strategy. In 2015, over half a million more businesses were established outside London and the south-east than in 2010. A third of new businesses are in the northern powerhouse, and the overwhelming evidence is that those new businesses are creating more and more jobs.
In my constituency of Weaver Vale, unemployment is down by 57% since 2010. Almost three quarters of the growth in employment has been in full-time jobs, and real wages are rising strongly. Since 2010, there have been around 4,000 new housing starts in Cheshire West and Chester, and just under 2,000 new starts in the Halton and Runcorn area.
Nationally, housing starts are at their highest levels since 2008, and are up by 91% when compared with the low point in 2009. Local authorities will be able to access the £1.2 billion starter home land fund to help prepare more brownfield sites for starter homes, such as the legacy brownfield sites from ICI in Northwich in my constituency. This Government are helping generations of younger people in their 20s and 30s to buy their first home. Crucially, they are protecting our green belt while at the same time helping more young people to get on the property ladder.
The UK was the fastest growing major advanced economy in 2014, the second fastest in 2015 and it is forecast by the OECD to be the fastest growing in 2016. Under Labour, £1 in every £4 spent by the Government was borrowed, which was absolutely outrageous. Now it is £1 in every £14. The deficit has been cut by two thirds, and we will run a surplus by the end of this Parliament.
This Budget moves Britain from a high-tax, high-welfare, low-wage economy to a high-wage, low-tax, low-welfare economy. Next year, the long-awaited Mersey gateway bridge will be opened by a Conservative Government—and a Conservative Chancellor has made that happen. That reminds the world, if it ever needed reminding, that Great Britain and the north of England are open for business.
Mr Iain Wright (Hartlepool) (Lab)
I would like, if I may, to advance the argument made by the hon. Member for East Lothian (George Kerevan) about the downgrading of productivity. Productivity was the central economic challenge of this Parliament—so said the Chancellor last year. A failure to address the productivity gap between ourselves and our main economic rivals would undermine our competitiveness and reduce living standards, so to address that, the Government published their productivity plan in July 2015.
In our inquiry into the plan—our first in this Parliament—my Select Committee found it to be somewhat worthy but vague, and without the firm delivery and implementation measures needed truly to address the productivity challenge. Of course, it is difficult for any Government to turn around something as substantial and structural as the productivity gap, especially only nine months after the publication of their report, but the downgrade to productivity in last week’s Budget reinforces the Committee’s view that although many measures in the plan were welcome, collectively they did not constitute a radical departure or step change that would really help to boost productivity. Crucially, as the OBR stated in its report last week:
“Lower productivity growth means lower forecasts for labour income and company profits, and thus also for consumer spending and business investment. In aggregate, this reduces tax receipts significantly.”
Productivity improvements require a long-term and sustained approach to business investment, yet the Red Book shows how much business investment—that engine that will power better competitiveness, increase wealth creation and employment generation and, ultimately, bring about higher wages and rising living standards—has stalled. Real business investment fell in the final quarter of last year. The manufacturing sector in our country is in recession. The OBR forecasts that business investment will be 2.6% in 2016, a massive 4.9 percentage points weaker than only four months ago at the time of the autumn statement.
The Government are not helping through their policies. The Chancellor should be encouraging firms to invest in the latest technology, plant and machinery to ensure that they can compete with the most modern kit anywhere in the world, as well as investing in research and innovation to ensure that British-based firms are coming forward with the goods, services and products that the world wants to buy.
Robert Jenrick (Newark) (Con)
Is that not exactly why the Chancellor has cut corporation tax and capital gains tax: to encourage companies of all sizes, particularly small and medium-sized businesses, to invest in research and development, new products and the jobs of the future?
Mr Wright
I would suggest that the approach on capital gains tax is contrary to having a long-term economic plan, as it encourages short termism—people do not scale up, but sell out quickly. That is a major structural concern.
To a large extent, the Chancellor has done positive things in this Parliament to encourage investment. In particular, the changes to the annual investment allowances are very welcome and will allow firms to invest with greater certainty. Other countries, however, are doing much more, and Britain risks missing out. Addressing the huge disincentive in business rates for firms wanting to invest in new plant and machinery should have been at the very top of the Chancellor’s list, and although the changes to business rates for small businesses were welcome and constituted the largest tax cut of this Budget, it seems ridiculous that the Chancellor did not resolve the ludicrous situation whereby a firm faces a larger tax bill in the form of higher business rates by choosing to invest in new plant and machinery. For a Government who pledged to do all they can to rebalance the economy towards manufacturing and specifically, in the past six or seven months or so, to help the hard-hit British steel industry, the omission of that single measure from the Budget was a significant blow for industry, particularly the steel industry, which wanted the Government to give a favourable signal to invest.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
It seems that there is only one club in the Conservative golf bag for tackling productivity, and that is tax alone. The Conservatives have to face up to infrastructure, to the low-wage economy and to the lack of housing. Owner occupancy is at a 20-year low and house building is low as well. Workers need houses, and if that growth does not happen, combined with infrastructure, productivity will remain low.
Mr Wright
The hon. Gentleman makes an important point about infrastructure, and there was very little in the Budget to address that. Earlier, I mentioned the possibility of rebalancing. In 2012, we were promised an export-led recovery, and the Government announced proudly a target of £1 trillion of exports by 2020. I am all for ambition and for stretching targets, but given the Government’s limited ability to shift the needle on the value of exports by companies, that ambition seemed at best somewhat misplaced and, at worst, even very foolish.
The OBR stated last week that the Government will miss its target by 36%, which is £357 billion, and that net trade will actually be a drag on economic growth for every single year of this Parliament, but there was nothing in this Budget to boost exports. The word “exports” did not even pass the Chancellor’s lips in his statement on Wednesday and it was not mentioned again this morning. Does that mean that the Government have shelved that target? Will Ministers consider providing assistance and encouragement in the form of export vouchers so that firms from Britain can invest and export?
A further way to boost productivity is by investing in skills, and the flagship skills policy of this Government is the target of 3 million apprenticeships by 2020, funded through the apprenticeships levy. Now, only 2% of larger firms will pay that, so what will happen to the other 98% of firms, as well as the detail of the levy? We were promised by the Minister for Skills in the run-up to the Budget that all would be revealed, including this new shiny model, in the Chancellor’s Budget statement, but for a Budget billed as putting the next generation first, there was precious little detail about how the apprenticeships levy—only 12 months from its start—will operate in practice. As with exports, the word “apprenticeships” was not even mentioned by the Chancellor.
Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)
Does the hon. Gentleman agree that one of the biggest drags skillswise on productivity in our economy is at the intermediate and higher intermediate skill levels? We have had this problem for more than 30 years.
Mr Wright
The hon. Gentleman makes an important point. My point is that by trying to ramp up the quantity of apprenticeships while making a major—possibly the major—change to the institutional architecture of apprenticeship delivery, the Government risk missing their target and that, as a result, the skills policy in this country will be affected adversely.
Budgets are rarely remembered past a couple of weeks or months. This one will be remembered, but for all the wrong reasons: incompetence, callousness, clumsiness and the resignation of a Cabinet Minister. It is also concerning that it will be remembered for downgraded productivity and a failure to address it, leading to lower economic growth, relatively falling living standards, lower tax receipts and deteriorating public finances. The Budget has helped to make this country somewhat poorer.
Mr Steve Baker (Wycombe) (Con)
I rise to support the Budget and, in particular, to welcome the Government’s supply-side reforms. This has been a dramatic Budget, and I would be failing the Government if I did not concentrate on the areas of drama. First, on the disability reforms, the challenge before the Government is clear: to deliver a policy that we can all be proud to defend in our constituencies and in front of any objective scrutiny. I do not think we would have been able to do that if the Government had not wisely made the decisions that they have over the past few days.
When I look at page 150 of the OBR’s report, on the successive forecasts for spending on disability benefits, I can see that the Government’s envelope within which to deliver this humane disability policy is very clear. When we came to power in 2010, the Government were spending £12 billion on disability benefits, which rose to £16 billion by now, which is an increase of a third. The figure is forecast, with the reversal of the PIP measures, to reach £18 billion by 2020-21. It is clear that the Government have an envelope within which to work to ensure that we have a world-class policy that any of us can defend, even in an environment of fierce and partisan political attack.
I signed the two amendments on VAT to highlight the extent to which VAT is controlled by our membership of the European Union. Neither amendment has legislative effect. I congratulate the hon. Member for Dewsbury (Paula Sherriff) on her amendment, which, as she said, makes clear our intent to zero rate tampons and other sanitary products. Of course, both amendments are pursuant to Government policy, and this is the bitter irony of our membership of the EU. We had to have a dramatic row over VAT in the context of an EU referendum in order to secure the following commitment from the European Council:
“The European Council notes that the Commission intends to publish shortly a communication on an action plan on VAT. It welcomes the intention of the Commission to include proposals for increased flexibility for Member States with respect to reduced rates of VAT, which would provide the option to Member States of VAT zero rating for sanitary products.”
That is welcome, and it is clear that the Government’s policy and the House’s wish is that sanitary products should be zero-rated. It is welcome that the Government have secured this change of EU policy but, particularly as a participant in the campaign, I do not want us to have an EU membership referendum every time we want a different policy on our second largest tax.
Mr Kenneth Clarke
Will my hon. Friend accept that British Governments have always supported the idea of having an EU framework on VAT? Otherwise, the problem is that there is pressure on Governments to compete with each other in lowering the tax on selected products when they think that their manufacturers or producers will benefit. Also, it is very difficult to operate an open trade area if everybody is going for competitively different tax rates. If we go too far down that path, the main beneficiaries are smugglers.
Mr Baker
My right hon. and learned Friend raises some interesting points and, although I am grateful for the additional minute for my speech that he has given me, I cannot touch on all of them. He illustrates the difficulty of operating a customs union among interventionist nation states. The old doctrines of liberalism did not require that one got rid of non-trade barriers, for the most part. There were no non-trade barriers because laissez-faire was the norm. I abridge an argument that could be made at much greater length, but at the heart of the exchange that we have just had is the difficulty involved in interventionist nation states attempting to engage in free trade. In a world of globalisation, air travel and the internet, we need some degree of harmonisation on a global scale, provided that that enjoys democratic consent. That is probably a subject for another debate, but I am grateful to my right hon. and learned Friend for his intervention.
Until the VAT directive 2006/112/EC is changed, it will be technically unlawful under EU law for any amendment to be introduced in UK law, even if it is not applied and takes effect in the future. That is the situation that we face. It is similar to the situation concerning insulation products, on which a judgment in the European Court of Justice on 4 June 2015 ruled that
“The United Kingdom cannot apply, with respect to all housing, a reduced rate of VAT to the supply and installation of energy-saving materials, since that rate is reserved solely to transactions relating to social housing.”
That is the position in law while we are in the EU. Although I hear what my right hon. and learned Friend says, it is a fact that while we remain in the EU, we cannot control what is currently our second-biggest tax. I am grateful that we have had this opportunity to put this part of the EU membership debate on the public record and have it discussed in the media. I am particularly grateful that the Government will not be opposing either amendment. If there is a Division, I shall certainly vote for amendment (a) and I shall probably abstain on amendment (b).
Perhaps the most dramatic aspect of the Budget is a subject that I have talked about at every Budget. It is a subject that I mentioned in my maiden speech—the insane state of monetary policy all around the world. If the European Central Bank was printing €80 billion of new money every month in paper and shipping it around the continent in articulated lorries, it would already have destroyed faith in paper currency. Yet, because the process is one of buying Government and corporate bonds, we simply notice a recirculation of money and celebrate the coarse aggregate results. In 25 seconds, I cannot give a lecture on capital-based macro-economics—[Hon. Members: “Oh!”] If Opposition Members would like to call a Back-Bench debate on the subject in their own time, I would be glad to give them the lesson. I welcome this Budget, but its dramatic consequences will be felt much later as a result of easy money.
Rachel Reeves (Leeds West) (Lab)
The Budget was a story of missed targets for the Chancellor and missed opportunities for our country and, like the Budget of 2012, it is rapidly turning into a total mess. I am pleased to see some of the U-turns, but much more is needed.
I associate myself with the remarks of my hon. Friend the Member for Hartlepool (Mr Wright), the Chair of the Business, Innovation and Skills Committee. He spoke powerfully about the importance of rebalancing our economy. That is greatly needed, especially after some of the numbers we saw in the Budget last week. As a result of the lower productivity, the lower exports and the other things my hon. Friend spoke about, economic growth has been revised down for every single year of this Parliament. A staggering £71 billion has been knocked off our tax revenues. As a result, the Government are now set to borrow an extra £38 billion over the next five years. That is why, after breaking his promise to clear the deficit in the last Parliament, the Chancellor has now broken his pledge to bring the debt down as a share of GDP in this Parliament as well.
Mr Stewart Jackson (Peterborough) (Con)
Would the hon. Lady’s argument not have a lot more weight and credibility had her party—as she well knows because of her position on the Front Bench—not opposed every single one of the £83 billion-worth of welfare cuts that had to be made in the wake of the 2010 fiscal inheritance?
Rachel Reeves
I wonder whether the hon. Gentleman still thinks we should go ahead with the cuts to personal independence payments. It certainly sounds like it from those remarks.
Let me deal with the specific issues surrounding personal independence payments and the impact that this Government have had on disabled people. While the fiasco is unfolding around us, let us remember the broader points. This is a Government—the Chancellor, the Prime Minister, the former Secretary of State for Work and Pensions and the current Secretary of State for Work and Pensions—who forced through the bedroom tax, affecting 500,000 people, the majority of them disabled, by about £700 a year. This is the Government who forced through the closure of the independent living fund. This is the Government who forced through cuts to employment and support allowance only last summer, affecting 500,000 people and worth about £30 a week or £1,500 a year. The U-turn on personal independence payments, although welcome, deals with only a fraction of the damage and the pain that the Government have caused to disabled people in all our constituencies.
Let us be clear what this U-turn means. The new Secretary of State for Work and Pensions came to the Chamber yesterday and said that the Government are not going back to the welfare bill and to disabled people for further cuts. But in the course of yesterday’s statement, that was watered down a little. The Government now have “no plans” to come back to the welfare budget and disability benefits. That is reminiscent of when they had no plans to increase VAT and all the other things they had no plans to do, until they did them and until they hurt the people who least need to be hurt.
When the Chief Secretary winds up the debate this evening, I would like to hear whether there are no plans, or whether the Government can guarantee that there will be no further cuts to the welfare budget or to the benefits of disabled people. We know that there is a black hole of £4.4 billion in the public finances. If it is not the wealthy and not disabled people, who is going to pay the price? Are there going to be further cuts to education, health, defence and our police? Will there be further increases in taxes—on VAT and taxes for ordinary working people? Something has to give and we need some answers about the black hole in the Budget that we are voting on, although we do not know what it means. What does it mean for all those different groups of people?
As the Chair of the Office for Budget Responsibility told us at the Treasury Committee meeting this morning, the issue is not just that there is a £4.4 billion black hole in the social security budget, but that the Government have failed to meet their welfare cap. They are going to fail in every year of this Parliament, by a staggering £20 billion—£20 billion more on social security spending in this Parliament than the Government set out, a further black hole in their public finances. Why did they get into this mess in the first place? It is because they wanted to cut taxes for the wealthiest in society. They wanted to cut capital gains tax, increase the threshold before people started paying the 40p rate of tax, and increase the ISA limit from £15,000 to £20,000 so that we can all save the full £20,000 a year tax free. That is great for those who have the money, but most of our constituents are lucky to earn £20,000 a year, let alone put it away in savings. That is why the Government raided the social security budget yet again to give tax cuts to their friends, the wealthiest and the most privileged in our society.
Last week’s Budget could have been different. For example, the Government could have put more money into infrastructure investment. In my constituency, we are paying a heavy price for the floods on 26 December. The Chancellor said earlier that I should have welcomed the money for flood defences, but in 2011 the Government cancelled a flood defence scheme in Leeds worth £135 million. Last week, they announced £35 million for Leeds. Well, I am sorry for not thanking the Chancellor, but an offer of £35 million rather than £135 million is not really worth the thanks, and the businesses in my constituency will pay a heavy price if the rains come again.
Rachael Maskell (York Central) (Lab/Co-op)
I was with the Environment Agency just last night, and it told me it will not have sufficient funds to put in place measures—particularly catchment management measures —to prevent future flooding.
Rachel Reeves
Last week, the Government announced £150 million for York, Calder Valley, Leeds and Cumbria. However, as I said, the scheme that was cancelled in Leeds was worth £135 million, and that £150 million is for flood defences, flood resilience and flood maintenance. Yet again, the Government are short-changing people who need them to step up to the mark, as our volunteers in York and Leeds and across the north of England did when the rains fell, the rivers rose and buildings—houses and businesses—were flooded.
Last week’s Budget could have been different. It could have been a different Budget for disabled people. It could have been a Budget that helped ordinary working people and the most vulnerable in our society. It could have been a Budget that put money into the northern powerhouse and the infrastructure that we need. However, it was a different Budget, because this Government have different priorities. That is why we need a Labour Government on the side of ordinary working people and the most vulnerable in our society.
Mr Stewart Jackson (Peterborough) (Con)
The hon. Member for Leeds West (Rachel Reeves) made a strong case, but, unfortunately, it is desperately flawed. As she knows, the fact of the matter is that, in the 13 years of the Labour Government, the gap between the richest 10% and the poorest 10% widened. During her party’s period in government, we had record numbers of children in workless households, and unemployment, including youth unemployment, rose.
Graham Evans
My hon. Friend is making a powerful point. During 13 years of Labour, many gaps were created, but particularly the north-south divide. Does he therefore welcome the Chancellor’s announcement of the High Speed 3 line from Manchester to Leeds, which will significantly cut train times—by 30 minutes?
Mr Jackson
I do. My hon. Friend is absolutely right. The fact of the matter is that this Government are taking the difficult decisions on infrastructure—on things such as nuclear power and airport capacity.
Mr Jackson
I will not at the moment, but I might later.
The previous Labour Government, in very benign economic circumstances—mainly driven, of course, by debt and borrowing—failed to take those decisions.
I welcome the Budget in general terms—of course, I took issue with the Chancellor’s comments about Brexit, and I think the OBR’s anodyne comments on Brexit were misrepresented. However, there were some good things in the Budget, which was not a redistributive Budget from poor to rich, but largely a redistributive-neutral Budget, as the Institute for Fiscal Studies said.
Mr Jackson
I will not at the moment.
I welcome the lifetime ISA. I welcome the tax crackdown on offshore property developers and transfer pricing. It was good to see the changes in the personal allowance, which will take many of my constituents out of tax.
Indeed, my constituency is in a very fortunate position, and I pay tribute to the Chancellor for delivering nothing short of a jobs miracle. We have seen the largest reduction in youth unemployment in the history of my seat—and probably in England as a whole—at over 70%, and there has been a more than 60% reduction in adult unemployment. We also have record numbers of apprenticeships. That is taking people out of poverty. That is the great record of this Government.
The decision to resile from the commitment on PIP was absolutely right. There is a moral, social equity issue—[Hon. Members: “A U-turn.”] It is a U-turn—that was well spotted by Labour Members. However, it was absolutely right to make that decision. It was right for my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith) to point up the juxtaposition of tax reductions for well-off people and the change in PIP. However, it ill behoves Labour Members to lecture the Government, when they voted against every welfare change in the last Parliament. What would they have done, and what would they do now? It is incumbent on the Opposition to come through with a coherent, comprehensive alternative on fiscal policy, public expenditure and tax.
Let me raise two issues that have caused me some concern with the Budget. The problem the Government have encountered, which we have discussed over the last few days, has given rise to a proper debate about intergenerational fairness. We need to look again at pensioner benefits. We cannot discuss welfare without looking at things such as the triple lock and pensioners benefits. I rarely agree with my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), but he is absolutely right that we cannot see these things in a vacuum, and it is important that we look again at means-testing and pensioner benefits. It is morally wrong to make large transfers of wealth from the young to the old. There has to be a consensus on this issue.
One suggestion I would make is that, if we are going to means-test pensioner benefits, we should perhaps link that to the most acute societal issue we have at the moment, which is adult social care. We should have co-ordination and integration between acute district hospitals and the provision of care and housing for older people. I think there are older pensioners who would understand that, and it is something the Treasury needs to go forward with and look at very seriously.
The second concern is that, as we speak, Cambridgeshire County Council—it is not my local authority, because Peterborough City Council is a unitary authority—is looking at the devolution plans for East Anglia. At the moment, those do not stack up. We have not had enough information—in some senses, I am reprising the comments of my hon. Friend the Member for North West Norfolk (Sir Henry Bellingham) yesterday—and we need more. The proposal has been rushed to get it in the Budget statement. It needs to be finessed. We need to carry businesses with us. Neither local enterprise partnership agrees with it. The majority of councils are, at best, ambivalent, and that includes Cambridge City Council, which has rejected it. We need to look at this proposal again.
Mr Jackson
I will not at the moment.
It may be that there are synergies between Lowestoft and Peterborough, or between Norwich and Ipswich, but I have yet to see them. Let us have more information about funding, governance, infrastructure spending, the role of an executive mayor and what will happen to the existing local government structure. I am not against this in principle, but we cannot promise £30 billion of spending over the next 30 years without more facts. We need to see those, and that is the challenge I give to those on the Treasury Front Bench.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
We learned many things from last week’s Budget, and we have learned perhaps even more from the fallout since. However, the overriding message we seem to be getting is that, six years into his job, the Chancellor cannot keep a promise and does not seem to learn from his past shambolic Budget mistakes. He promised to balance the books by last year, to get debt falling as a percentage of GDP each year and to keep welfare spending within his welfare cap, but on virtually all of his own fiscal targets, as the independent Office for Budget Responsibility confirmed last week, he has failed to deliver.
Of course, this Government’s shortcomings go much further than the Chancellor’s own meaningless targets. A mere six months ago, the Prime Minister told his party conference that he would govern according to “one nation, modern, compassionate” Conservatism. This is the same Prime Minister who last week cheered on a Budget that cut capital gains tax, raised the threshold for the 40p rate, further cut corporation tax, and would see the poorest losing about £1,500 a year in the next few years while some of the richest gain £200. To top it off, the Chancellor pledged to slash disability benefits by up to £1.3 billion a year, which the OBR estimated would lead to some 370,000 disabled people losing an average of £3,500 a year.
Robert Jenrick
I want to give some context on the important point about capital gains tax that is being made by the Opposition. Jim Callaghan created capital gains tax when he was Chancellor in 1965, but it has always been lower under Labour Chancellors than under Conservative Chancellors. Even after this change, capital gains tax will be 2% higher under this Chancellor than it was under Alistair Darling, and indeed Gordon Brown in the previous Labour Government.
Catherine McKinnell
I do not understand the hon. Gentleman’s point. He is digressing on details of capital gains tax when the point I am clearly making is about the context in which the cut has been made, where the burden of this Budget very much falls on the poorest and the most vulnerable in our society. If that is compassionate Conservatism, bring the nasty party back!
I am pleased and relieved that the Government have backed down on this issue within less than a week. However, I am angry that those people who rely on the personal independence payment, including 1,100 people in Newcastle upon Tyne North, have endured days and weeks of huge anxiety about how they would cope if this level of support was cut. It is unforgivable. I remain equally concerned about how the existing reforms to PIP are quite clearly failing disabled people. Constituents continue to get in touch with me following my recent question to the Prime Minister because they have been told that they are no longer eligible for a Motability vehicle despite its clearly being the only means by which they can leave the house, or indeed get to work. The new PIP assessment is fundamentally flawed. I strongly urge the Work and Pensions Secretary and the Chief Secretary to the Treasury to revisit this issue with fresh eyes and look at reforming the current PIP changes before they embark on any further welfare reform.
Despite the Chancellor’s so-called
“revolution in the way we govern England”,
with the pledge last May to give local areas greater control over local transport, housing, skills and healthcare, it appears that he does not place the same faith in local communities when it comes to our schools. Last week’s Budget confirmed that, far from handing control to local communities, the Government are about to embark on the greatest ever centralisation of our schools system, which will see an end to the role, now a century old, of democratically accountable local authorities as the stewards of our children’s education. My Front-Bench colleagues have already highlighted the glaring black hole in the finances of this plan—£560 million—which raises questions about the extent to which the schools budget will be raided to make up the shortfall.
Mr Jim Cunningham (Coventry South) (Lab)
My hon. Friend mentions the schools budget. I do not know whether she is aware that in Coventry one or two academies are already in serious trouble because of falling numbers as a result of certain changes in the education budgets.
Catherine McKinnell
I appreciate my hon. Friend’s point. It is not just local academies that are in trouble—there are some much bigger and more serious questions that we need to raise. First, why are the Government doing this? There is no proof whatsoever that academies per se raise educational standards. It is a distraction that schools now need to focus on this rather than on their educational attainment. Secondly, how will the Government enable the local political leadership to drive up standards and work together, as happened so effectively with the London Challenge, if the power and decision making is so centralised in Whitehall?
Is the Department for Education even fit for purpose to deal with over 20,000 schools across the country—about 3,400 secondaries and almost 17,000 primaries? There are signs that it is already struggling with its current workload of 4,000 schools. As the Education Committee, of which I am a member, recently uncovered, the Department could not even deliver its annual accounts to Parliament in time and required a statutory extension, and there remains doubt as to when it will ever be able to present them. This mass rush to conversion will only add to the current mess. We need only look at the fiasco of the free schools application process, where there is no clear rhyme or reason to the Department’s decisions to authorise new schools.
We see a Department in disarray. Of particular concern for my constituents is how the forced academisation process will fit alongside the large-scale programme of house building that is planned for our area. As a result of the coalition’s national planning policy framework, some 21,000 new homes are expected to be built in Newcastle by 2030, a large proportion of which will be in my constituency. That will require new school capacity, but who will be the guiding mind that will match and create that new school capacity in an area that will be controlled by Whitehall? Newcastle City Council already finds itself in the impossible position of being unable to establish new community schools to cope with existing demand. How on earth will it be able to deliver the right school places across Newcastle upon Tyne North when every school is accountable to the Secretary of State?
Finally, in addition to the fact that apprenticeships were not mentioned in the Chancellor’s Budget even though we were promised that they would be, another glaring omission was the lack of any announcement about how the Government intend to protect our regional airports from the impact of devolving air passenger duty to Scotland. That is crucial to Newcastle airport, which supports 12,000 jobs in the region, and through which £300 million of goods are exported every year. All talk of a northern powerhouse will be completely undermined if the Chancellor fails to deal with the issue urgently.
Chloe Smith (Norwich North) (Con)
It is a pleasure to follow the hon. Member for Newcastle upon Tyne North (Catherine McKinnell). This Budget, like my right hon. Friend the Chancellor’s previous Budgets, helps to create jobs. That is the right thing to do, which is why I continue to support the strategy of lowering business taxes to encourage growth. The corporation tax cut will benefit 1 million companies in Britain, and the business rates measure will help 600,000 small businesses. Cutting capital gains tax, as my hon. Friend the Member for Newark (Robert Jenrick) has carefully laid out, will help to boost enterprise. Reforming stamp duty and abolishing national insurance contributions will help the smallest businesses of all.
The Government have my wholehearted support in putting the next generation first. Our philosophy in the Conservative party is that debt is the most unethical thing of all to leave to the next generation, and I am proud that we continue to pay down the country’s debts; to reduce spending that cannot possibly have the consent of those who are yet to come; and to steer towards a surplus, which will put the public finances in the strongest position for today’s youngest.
Making it feasible for young people to buy a home or to save in a pension is crucial to intergenerational fairness, which is why I think that the lifetime ISA in this Budget is a positive thing. It should be seen alongside all the other measures that are already helping people in every corner of this country to get their first home. Ultimately, building homes is the most important way to provide homes at a price that can be afforded, and I urge the Chancellor and Housing Ministers to continue to build.
Mr Anderson
With the average pay for somebody on a zero-hours contract at £189 a week, how does the hon. Lady expect them to save in an ISA or buy a house?
Chloe Smith
I make two points to the hon. Gentleman. First, the percentage of people on zero-hours contracts remains about 2.5% of all who are in work. Secondly, as he will know from the small print of the Budget, for every £4 that somebody saves, the Chancellor will put in £1. That means that at the rate that the hon. Gentleman cites, for example, it is possible to consider taking up a savings product.
It is vital that those who come out of education and skills training have every possible opportunity, which is why the Budget is right to keep up job creation and investment in infrastructure. It is also crucial that we try to represent the values of the next generation. Generation Y —my own generation—and those coming after us value enterprise. Many will set up their own businesses, and many will work in a totally different pattern over their lifetime, so the Budget is smart to turn attention to the growing army of the self-employed. Many of the smallest businesses of all will welcome a drop in their NIC burden.
Richard Fuller (Bedford) (Con)
Will my hon. Friend use this opportunity to congratulate the Government on the start-up loans scheme, which has done so much to help young people to go into business and fulfil their entrepreneurial objectives?
Chloe Smith
I certainly will, and I welcome my hon. Friend’s reminder of that. I am sure he will agree with me on my next point, which is that we should also prize the ethical approach to business of many of those entrepreneurs. We should welcome the measures in the Budget that begin to make sense of taxing multinationals in the 21st century. The Government have my full support in ensuring that our tax system demands and gets a fair contribution from companies large and small, domestic and global.
Let me turn to the welfare measures in the Budget. As is well documented, Generation Y has a sceptical approach to the welfare state, and support for the welfare state has steadily declined by generation. We should therefore remind ourselves of the basic principles of what welfare is for. It is a safety net for when we are unable to look after ourselves, perhaps because of sickness, old age or disability. It is a safety net that we will all need in one way or another, so we all have a responsibility to maintain it. Because we are going to live longer on average than previous generations, we need to make sure it is affordable for the future. We also, of course, expect the richest to pay most. In summary, we need a sensible method of working out who needs most support and how to get it to them.
I did not support the measures announced in the Budget seeking to reduce support for the disabled through PIP. The manifesto on which I and my hon. Friends stood at the last election made it clear that we would spend less on welfare, but that we would do so by protecting the most vulnerable. I have supported the Government’s welfare reforms since 2010, principally because they put work first. Universal credit puts work first, as does the most recent reform of the rate for those who are on employment and support allowance and can work. In the 21st century, we should not write off people from work and independence; the policy of spending more on helping people to work despite a disability or a health condition is right.
In some cases, our welfare reforms have been about injustice in other ways, such as in relation to the removal of the spare room subsidy. For example, the pay to stay policy in our current Housing and Planning Bill will relieve taxpayers of subsidising the housing of those who may well earn more than they do, such as, dare I say it, the leader of Norwich City Council. These reforms are about fairness for taxpayers who foot the bill for a benefit they themselves could not expect to enjoy.
I am in the Chamber today to speak up for many constituents who simply want us to use limited resources to provide properly for those who need support. I helped constituents to record their concerns during the consultation on aids and appliances, and I am very pleased that my right hon. Friend the new Secretary of State for Work and Pensions has stopped that measure. We should protect the disabled and make savings elsewhere.
Our manifesto clearly pledged us to back pensioners. At some point in the future, however, we will have to look again at universal benefits. As I have said, the welfare state is a safety net, which means that pensioners need a decent income. That is why I wholeheartedly support the triple lock. But it does not necessarily mean that the most well-off pensioners need benefits as well, as my hon. Friend the Member for Peterborough (Mr Jackson) and my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke) have already argued. When others are more in need—and, indeed, when there must be a balance with other generations—is it right to maintain such policies?
A Mrs Brown recently wrote to the Norwich Evening News letters page:
“Excuse me, but as a baby boomer I was…brought up in post-war abject poverty. We got an apple or orange for Christmas...I worked for everything I have. We never had credit and only had anything we could pay for or we went without.”
She is of course right. I deeply respect her and all my constituents, from any generation, who have worked hard and done the right thing. I am making an argument for fairness in the future, for helping those who most need it and for balance between the generations.
Susan Elan Jones (Clwyd South) (Lab)
It is a pleasure to follow other speakers in this Budget debate.
There is not a single Member of the House who has not received scores of letters in the past couple of weeks from people deeply concerned by what the Budget proposed on personal independence payments. Let me give the House just one example from my constituency. A woman living in a rural area, about 15 miles from the nearest railway station, was about to lose her Motability vehicle, which she uses to get to work, and she has a pretty severe disability.
I think it is abhorrent and extraordinary that the changes—we welcome them, whether they be resiled from, U-turned or whatever—have come about because of the internal workings of the Tory party, not because of the requirements of people in the most need and those of disabled people across our country. There is no morality in the way that decision was made, and the Government should hang their head in shame for all that has happened in the past few days.
On infrastructure, others have noticed—indeed, my hon. Friend the Member for Leeds West (Rachel Reeves) wrote an article about it—that according to latest figures from the National Infrastructure Pipeline, which monitors public and private sector projects of more than £50 million, only 114 of 565 major projects are under construction. In 2013 The Economist published an article entitled “Let’s try to catch up with Mali”, which noted that OECD figures showed how low Britain ranks for infrastructure investment, including for rail, roads, airports and energy.
The Government now claim, as the Chancellor said, to be opening the door for growth in north Wales, but it is difficult to open a door to anything if people cannot get there. All the rhetoric about a northern powerhouse matters precious little if we do not deal with things such as tackling accident blackspots and single-track highways on both sides of the A483 and A5, or if we do not make it quicker and safer to travel on both sides of the border. We must also start speeding away with HS2 to Crewe, which will transform the economies of north and mid-Wales, and we need more direct trains to London on the Wrexham to Shrewsbury line to take the pressure off the Chester line and give us better connectivity. We should sort out a proper north Wales train infrastructure to Manchester and Liverpool airports, and we should consider what should be happening with 4G. I was intrigued to see astronaut Tim Peake out in space wishing us all a happy St David’s day, because he would not have managed to do that if he had been on a mobile phone in Llandrillo.
The hon. Member for Norwich North (Chloe Smith) spoke about an ethical dimension for corporate taxation, but one issue that the Government did not consider in the Budget—although they needed to—is the insidious closure of banks across our country. In Wales, 130 bank branches have closed or will close over five years. That is simply unacceptable, and those banks that close their branches are not paying anything back to wider society.
My final point is about measures on philanthropy or rather the lack of them in the Budget. Gordon Brown introduced millennium gift aid in a previous Budget, and if the right hon. and learned Member for Rushcliffe (Mr Clarke) were here now, he would say how either he or John Major introduced the initial gift aid proposals in 1990. There was no mention of anything to do with philanthropy in this Budget, however, and it is time to consider that issue in greater detail. That might involve the implementation of a gift aid package for text donations, or another look at corporate philanthropy—those are just some of the measures that I am trying to fit into a five-minute speech on a mixed Budget.
Finally, in my last few seconds, I welcome what the Chancellor said about EU membership. There are three MPs in Denbighshire. I might be the only one who welcomes the stay-in vote, but I do.
Rishi Sunak (Richmond (Yorks)) (Con)
I am grateful for the opportunity to support this one nation, responsible and pro-enterprise Budget. Tucked among the beautiful Yorkshire dales in my constituency is a thriving community that is built on the jobs provided by our small and medium-sized businesses—businesses such as the Wensleydale Creamery, whose cheese has taken a slice of Yorkshire to kitchen tables around the globe, or Tennants Auctioneers, a fourth-generation family business that is now one of the UK’s largest private auction houses.
Before I arrived in this place, I spent my career investing around the world in companies such as those, and providing the capital to help them grow. I am delighted that this Budget recognises what my own experience has taught me: for growing SMEs, there are few more important ingredients for success than solid access to finance. Indeed, there are few more important ingredients for our nation’s success than growing SMEs. Small and medium-sized businesses account for more than half of private sector employment. They are responsible for three quarters of the jobs created since the recession. They are also delivering social justice—the unemployed are six times more likely to find work with a smaller company.
Those companies need the fuel of deep capital markets to power their growth, but despite improvements, it is still not always easy for SMEs to get the funding they need. The challenges they face fall into two distinct categories: debt and equity. For debt finance, companies can go either to banks or to the corporate bond market, but our bond markets are underdeveloped. Europe’s economy is the same size as that of the United States, yet its bond market is only a third as big, which means that our companies are too reliant on banks for their debt needs. Indeed, they are four times more reliant on banks than their American counterparts. At a time when banks are rightly deleveraging, the reality for British companies is that far too many loan applications go without success.
There are also problems for companies wishing to access equity finance. Although we are a European leader, the UK’s venture capital market still has room to grow. Adjusted for GDP, the US’s VC market is seven times the size of the UK’s. We also lag behind Sweden, South Africa, Ireland and Israel. That matters because equity is the kind of capital that SMEs need to grow beyond their early stages. Thanks in part to the policies of this Chancellor, our nation has become one of the world’s start-up capitals, but we must now focus our energy on growing those start-ups, for just 3% of British companies manage to expand beyond 10 employees, which is half the success rate of companies in the United States.
The Government have consistently shown that they understand those challenges, which is why they created the seed enterprise investment scheme, which has helped more than 3,000 companies to raise early-stage finance; why they launched the funding for lending programme to ease credit for SMEs; and why they fund the British Business Bank to power our growing companies.
Neil Parish (Tiverton and Honiton) (Con)
I agree wholeheartedly with my hon. Friend. Getting enough capital, and venture capital in particular, and allowing small businesses to grow, especially those that traditional banking systems do not necessarily support, is key to stimulating more growth in our economy. I very much welcome his comments.
Rishi Sunak
I am grateful to my colleague, the Chair of the Select Committee on Environment, Food and Rural Affairs, for those comments. I will go on to some of those points in due course.
I am delighted that the Budget goes even further to encourage investment in our businesses and our job creators. I am confident that reducing capital gains tax rates together with a brand-new 10% rate for long-term investments in private businesses will unlock millions in much needed funding. From speaking with investors this past week, it is clear that those policies have cut through and generated a fresh wave of enthusiasm for investing in British companies. On debt, I welcome the Budget’s further help for businesses rejected by traditional banks, which will now more easily be able to access alternative providers of finance.
Whether it is cheesemakers in the Yorkshire dales or FinTech companies in Old Street, the Chancellor has always backed the aspirations of Britain’s growing companies. By continuing to close the tax loopholes that Labour left open, the Budget has another message: Britain is becoming not only the best place to do business, but the fairest place to do business. This is a Budget for the little guy, for a new generation of British ideas, and for a country where the rules do not bend for big balance sheets. It is a responsible, one nation, pro-enterprise Budget that will get our companies the vital funding they need to unleash their potential, and I commend it wholeheartedly to the House.
Karin Smyth (Bristol South) (Lab)
I want to focus on apprenticeships and the levy, which is key to opportunities for young people in Bristol South. I support the 3 million target by 2020. It is an ambitious target but we should be ambitious for our young people.
In many ways, Bristol is a booming city, with the highest household income outside London and easily the highest productivity of any big conurbation outside the capital, but apprenticeships are important in Bristol South because, as UCAS tells us, it sends fewer of its young people into higher education than any other constituency. Other opportunities are a lifeline to Bristol South’s young people. Apprenticeships and training are the route to a better future for so many people living in our communities. Although Bristol South is not home to a huge number of large companies, very many small and medium-sized enterprises are based there, owned by and employing local residents. I may disagree with the hon. Member for Richmond (Yorks) (Rishi Sunak), but I am glad he mentioned SMEs. I am particularly interested in the role that they are going to play in the delivery plan for apprenticeships and how the levy is going to work for them.
Last week, three important interventions emerged and caused me concern. First, the co-chair of the Government’s delivery board confirmed that SMEs will not be in the levy system when it launches, and that only firms paying the levy will have access to the new funding system from April 2017. Secondly, at the FE Week annual apprenticeship conference, we heard from the former Business Secretary about concerns that the levy may in fact be a revenue-raising measure, rather than a genuine one. Thirdly, we saw comments from the Social Mobility and Child Poverty Commission, which was concerned that the number of young apprentices has flatlined since 2010 and that many of these apprenticeships do not offer people a foundation they can build on.
I would like the Government to guarantee that every penny of the £3 billion this levy is expected to raise will be invested back into improving training and apprenticeships; that SMEs will have their fair share; and that the special and unique opportunities and challenges that SMEs bring to the apprenticeship table will be fully taken into account. How will young people, business, colleges and other training providers in Bristol South be able to access these opportunities? What guarantee can the Government give that my constituency will receive its share?
The Government plan for apprenticeships seems very much at the drawing board stage, so I am inviting firms in my constituency to help. I have issued an open call to SMEs in Bristol South to set out their ambitions for the shape of apprenticeship schemes over the next decade. I am sure the Government agree that the reaction and responses of employers to the levy will make or break the target. Will the Government therefore please accelerate the publication of the action plan, showing how the target will be met, how the levy will work and other fine details of the grand plan, so that I and others can work in Bristol South, alongside employers, colleges and other training providers, to promote and encourage full engagement?
An additional key consideration is the number of Bristol South residents who are not yet ready to take up an apprenticeship, so the detail of the Government’s plans for pre-apprenticeship training is of interest. It is essential we ensure that Bristol residents are not blocked from accessing these valuable opportunities because of a lack of existing skills.
I also have concerns about the realism of the 3 million target by 2020. Do the Government agree that there is a genuine danger that an apparently arbitrary target will risk a dangerous trade-off between quantity and quality? I heard of a call to my constituency office this week about a young person in Bristol South who was on an apprenticeship and was being asked to work from 7 am to 7 pm, with very poor support. That highlights the importance, in driving towards the 3 million target, of not ignoring the quality of that experience and support offered to young people. I also fear that post-19 loans will deter people from accessing training for the skills that employers need, which would have a negative effect on my constituency, so I look forward to reassurances on that from the Minister.
Earlier today, the Chancellor said to a Conservative Member—I hope he extends this to others—that where constituency MPs raise the issue of vital services for their constituency, this Government are listening.
In concluding, let me say that for me this is not a party political issue; I make my points in the spirit of co-operation and what is best for the people of Bristol South, who have sent me here to represent their interests. This is key to their ambition and aspiration.
Richard Fuller (Bedford) (Con)
Parents in Bedford and Kempston will have wanted a Budget that said, “Yes, we are going to make sure you get a good job. Yes, we are going to make sure you get a decent amount of pay, whatever job you do. Yes, we will make sure you can keep as much of your taxes as possible. And, yes, we will deliver a Budget that will make sure that your children have a better future than you do.” The Chancellor, in his robust performance today, has demonstrated that this Budget can deliver on all those items.
I was shocked to hear the response from the shadow Chancellor, as he seemed to spend 20 minutes of his speech trying to hold the Chancellor to account for something that the Chancellor is not doing. That shows part of the Labour party’s problem: there is no coherence in its approach to this Government. I would therefore like to provide a bit of coherence in my criticism of one aspect of this Budget—the sugar tax. I do so because it is not what it says it is, it will not raise the taxes ascribed to it and it will not achieve the health benefits that were its original vaunted purpose.
It is clear that this is not actually a sugar tax. There will be no tax on sugar in cakes, puddings or confectionary. That might be great for food manufacturers, restaurant owners and chefs, but it is not actually a tax on sugar. It is not even a tax on soft drinks, because sugars in milk-based drinks or fruit juices are not covered either. In fact, it appears to be a tax not on sugar, but on five companies: Coca-Cola, Britvic, AG Barr, Nichols Vimto and Lucozade Ribena Suntory. The Government ought to be careful about having very specific taxes targeted on very specific companies, because they will be open to challenge at the Commission or in the courts.
Seema Kennedy (South Ribble) (Con)
My right hon. Friend the Chancellor made it very clear in the Budget that one of the objectives of the so-called sugar tax was to get companies to change their behaviour by making low-sugar drinks rather than full-sugar drinks. I used to drink a lot of full-sugar Vimto, but I now drink no-added-sugar Vimto. Does my hon. Friend accept that that is also one of the aims of the tax?
Richard Fuller
It is bizarre for the Government to attack one of the sectors of British industry that has done the most to innovate and bring in new products, while ignoring other parts of the industry that have not made the same changes. As my hon. Friend rightly says, the core of the issue is the impact on obesity. Office for National Statistics figures show that obesity among adults doubled between 1993 and 2013. The proportion of obese children in 2013 was 9.5%, which was higher than in 2012, but lower than in 2006-07. The products being targeted originate from way before the current obesity issue. Irn-Bru, which is often described as the national drink of Scotland, was introduced in 1901. Robinsons Barley Water was introduced in 1935, and Coca-Cola in 1886.
The Government are ignoring the advice of Public Health England which, in its October 2015 report, said that it is not possible to compare the impact of price increases achieved by, for example, the introduction of a tax on sugar sweetened drinks, with other factors, such as the demonstrated effects of marketing on children or the impact of in-store promotions on purchasing habits. Nevertheless, the general tone of the available evidence is that restrictions on marketing and promotions may be more effective than fiscal measures.
Neil Parish
Does my hon. Friend not think that it would be better for the Government to work with the companies to reduce the amount of sugar in their drinks, rather than bringing in any form of tax? In the end, all we will do is to make it more expensive for poorer people to buy these drinks. That will not necessarily stop them drinking them, whereas if the amount of sugar in them could be reduced, that might have a greater effect on their diet.
Richard Fuller
My hon. Friend, the Chair of the Environment, Food and Rural Affairs Committee, speaks with enormous sense and knowledge. He is, of course, absolutely right. It is much better to engage the industry than arbitrarily to impose a levy, especially one with such great uncertainty. The OBR states:
“The tax will operate with a specific revenue target of £500 million for the second year of implementation”.
It goes on—here is some real Budget gobbledegook—to say:
“From a pre-behavioural yield of over £900 million, the behavioural responses lower the yield to around £500 million a year. As a new tax likely to prompt a large behavioural response, these estimates are clearly subject to significant uncertainty.”
Well, there we have it—not a clue at all.
Maggie Throup (Erewash) (Con)
Surely the two-year lead-in for the sugar levy is the right approach because that tells the manufacturers to reformulate. Surely the future and health of our children are more important than anything else.
Richard Fuller
The health of our children is, of course, extremely important, but, as I said, the sector is already innovating. There have been remarkable reductions in the sugar content of soft drinks compared with what has happened in other sectors, in which there has been no change in the amount of sugar that people consume. There are question marks over whether the levy will have the impact on health it is supposed to achieve. In Mexico, for example, where a sugar tax was recently introduced, the calorie reduction amounted to six calories a day. This regressive measure goes much against the principles that the Chancellor himself rightly outlined as the overarching ethos of the Budget.
Mary Glindon (North Tyneside) (Lab)
Does the hon. Gentleman agree that this tax, which has many ambiguities, simply indulges our celebrity chefs and gives them more credence than they deserve?
Richard Fuller
I could not be more delighted to have given way to the hon. Lady, because she is quite right. The sugar tax is a passion of TV chef Mr Jamie Oliver, who is just the latest in a line of celebrities—think of people such as Mr Russell Brand and Mr Benedict Cumberbatch—to use their position to influence public policy. To quote The Independent, the
“chief beneficiaries of star-studded attempts to raise the profile of a good cause are the celebrity themselves”.
Can we have a new levy on policy pronouncements by well-heeled celebrities who sprinkle their fame to dazzle Ministers into ill-thought-through changes? The levy could pay for the unintended consequences for the public of their brief, highly jaundiced opinions. Emma Thompson’s pronouncements alone should secure the defence budget.
Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)
The Chancellor of the Exchequer’s Budget and the figures reported by the Office for Budget Responsibility—considered by many to be a contradiction in terms—demonstrate yet again the Chancellor’s inability adequately to manage the economy. He has failed on several key economic indicators and missed the targets the Tories have set for themselves. Notably, debt, deficit and borrowing levels are even worse than he promised last autumn.
Given time constraints, I shall summarily mention a few of the problems with the Budget, before focusing on a concern that has not been adequately covered by others. Page 136 of the OBR forecast shows that inflation is set to rise significantly from its current close-to-zero rate.
John Mc Nally (Falkirk) (SNP)
Does my hon. Friend agree that a sharp rise in inflation can have a negative impact on working households?
Philip Boswell
Yes, I completely agree. With the sterling depreciation, thanks in part to the uncertainty created by the UK Government’s EU referendum, consumer inflation has started to rise. The OBR has predicted that CPI will rise from 0.7% this year to 1.6% next year. Likewise, RPI is set to rise from 1.7% this year to 3.2% in 2017. Such a spike in inflation can have a negative impact across the economy, as my hon. Friend mentioned, because it means that many households around the country that are already struggling, including in my constituency, will find that the price of necessities rises at a time when they can least afford it.
Exports, which are already weak, will likely see further decline. Total export sales fell from £521 billion in 2013 to £513 billion in 2014, yet the Chancellor has declared an export target of £1 trillion by 2020. It is no surprise, then, that he is already likely to fall short of the target by over £300 billion, as was touched on by the hon. Member for Hartlepool (Mr Wright), who is no longer in the Chamber.
On business investment, which was mentioned by my hon. Friend the Member for East Lothian (George Kerevan) and the hon. Member for Hartlepool (Mr Wright), there is more bad news with regard to productivity, and research and development. Page 12 of the OBR’s “Economic and fiscal outlook” states that business investment will grow by only 2.6% this year, which is substantially less than the 7.4% predicted just three months ago in the autumn statement. Furthermore, the level of investment in 2019 is predicted to be a staggering 10% lower than predicted in December. So far, not so good.
I move now to an area of concern to me. Page 27 of the Red Book states that the Government expect to raise £25 billion from the sale of the Royal Bank of Scotland. Given several factors, however, including the current price of oil, I fear that this price might be exaggerated. In focusing on this issue, which I have grave concerns about, I would point out that between 2011 and 2014, RBS arranged £14.3 billion in leveraged loans to the oil and gas industry. In fact, RBS has been a leader among UK banks in arranging these high-risk loans. The falling price of oil has resulted in an increase in the default rates of these loans, however, and many of them have been repackaged into derivatives for sale to investors in the form of collateralised loan obligations—a derivative product starkly similar to the collateralised debt obligations that contributed to the 2007-08 financial crisis. How many of these risky loans RBS still has on its books remains uncertain, hence my concern for that particular £25 billion.
Let me take a minute to highlight what I view as a failure on the part of the Government to address the systemic risk inherent in the financial system and the wider economy in relation to the price of oil and leveraged investment. Alongside RBS, a number of US lenders with a large and active presence in UK markets have a high exposure on energy, due to leveraged lending in the oil and gas sector. For example, JP Morgan currently has $13.8 billion in outstanding debt relating to loans out of the roughly $100 billion in leveraged loans it issued to the oil and gas sector between 2011 and 2014. Wells Fargo arranged $98 billion in leveraged loans to the sector in that same time period, many of which are non-investment grade, and $17.4 billion of which is already outstanding. Alarm bells should be ringing somewhere.
On 15 December 2014, when the price of Brent was at $60 a barrel, the Financial Times predicted that if the price of oil were to continue to fall,
“there is a stark parallel with the US property market collapse that heralded the start of the 2008 global financial crisis—and upended banks along the way.”
Yet the systemic risk inherent to the financial system due to these high-yield loans and the “slice and dice” nature of derivative products relating to these loans that have been sold to investors were not even mentioned in the most recent Bank of England stress test result.
Finally, in the years since the 2007-08 financial maelstrom and ensuing recession, the Tory Government have demonstrated their expectation that the most vulnerable in society should pay the price for the mistakes of the financial institutions. In 2011, the Bureau of Investigative Journalism found that over 50% of Conservative funding came from the City. We know whose interests the Conservatives have at heart. The Budget clearly highlights the fact that this attitude has not changed, as evidenced in the £3.5 billion of new cuts that it introduces. This Budget is not good enough, and if the Chancellor really wants to be head boy, he should heed his report card, which should read “Must do better”.
Richard Drax (South Dorset) (Con)
Let me first condemn the outrage in Brussels today and those who perpetrated it. My sympathies and prayers go out to all the victims and their loved ones.
While some highly respected colleagues are sitting on the Treasury Bench, may I put in a plug for the armed police in Dorset and around the country, and not least in our capital, to receive more money for training? As a former soldier, I know full well the complications of storming buildings and dealing with civilians who are fleeing from bombs, as they were doing in the departure lounge this morning, as well as about the chaos, the blood, the gore, the mess and the noise. To go into a building that has been attacked, armed police need an incredibly high degree of training, otherwise even more problems could be caused.
Richard Fuller
Does my hon. Friend recall the Prime Minister saying after the events in Bataclan that he would support continued funding for the police and particularly for our armed police?
Richard Drax
I do, and I welcome the Prime Minister’s comments. I am simply expanding on the need for highly specialist training. All kinds of things—images that can change during an attack and different lights—are needed in what will be a highly strategic attack. Our armed police would not be able to stay outside and wait for the Special Air Service to come; they would have to get into the building and save lives, as I am sure they would. I do not doubt for one second their courage or dedication. I am requesting that the Treasury and the Prime Minister look carefully at the moneys available to train our armed police to deal with assaults such as what we saw this morning which, sadly and tragically, are becoming more common.
Speaking of the military, may I congratulate my right hon. Friend the Chancellor on resorting to military tactics? It is always said that attack is the best form of defence, and my right hon. Friend’s robust performance in the House today was a very good example of that.
I welcome much of what is in the Budget. I welcome the raising of the tax-free personal allowance, the increase of the higher-rate threshold to £45,000, the freezing of fuel, beer and cider duties, and the expanding of the savings culture. The Chancellor also reduced corporation tax and cut taxes for small businesses, and I want to direct my remarks about those measures to Opposition Members. We heard the shadow Chancellor say that they constituted a tax cut for the rich. May I remind the Opposition that such businesses are the engine room of our country? Many people risk their homes to invest in businesses and struggle for years to make a profit. They then pay for all the people whom we are trying to get into work, while also taking vast risks in making all the goods that we need for the economy to run, and generating the money that we need to spend on, for instance, schools and hospitals.
The more money those business people keep, the more they can reinvest in their companies. It is not a matter of people jetting off in their 747s. I have visited many businesses, and I am sure that Opposition Members have done the same in their constituencies. I know that small engineering companies are now having to buy equipment that is worth £600,000, £700,000 or £800,000, and that profits are minimal. We need to help such companies for the sake of the future of our country, and the future of those whom we want to get back into work.
I agree entirely with my hon. Friend the Member for Bedford (Richard Fuller) about the sugar tax. I, too, have doubts about it, and I hope that Ministers will think again. I am also concerned about the effects of raising the business rates threshold for small businesses and exempting some businesses altogether. I am sure that someone will correct me if I am wrong, but I understand that more and more local authorities, particularly rural authorities like mine, will rely increasingly on business rates, because central Government funding will be reduced to zero. If that is the case, and if businesses are to be exempted from business rates—which I absolutely applaud; do not get me wrong—where will the money come from for small rural councils such as mine? I should be grateful if the Minister could answer that question when he sums up the debate.
Let me now say something about the personal independence payment, and all that has happened in that connection. Like others, I have huge praise for my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith). Having been the leader of our party, a lesser man would have gone off into a cave and stayed there, but not this man; he went out and did all that he could do, and has done, for the poorest in our society. He has dedicated so much of his life to that, and I commend him for it.
I want to draw attention to an aspect of the PIP that greatly concerns me. Many constituents come to my surgeries and say that they have been assessed unfairly or lazily—whatever it may be. It is a tick-box culture, and I have never liked the ticking of boxes. In some instances, support has been withdrawn from my constituents while their cases are assessed, although many of them have had doctors’ certificates explaining why they need the money. May I strongly urge the Government to look closely at the assessing system? We need occupational therapists, family members and doctors to contribute to assessments. It is true that that would probably be more expensive, but at least we would get the assessments right, rather than causing huge distress to those who are least able to deal with it by taking away what support they have, and then giving it back to them X months later when a Member of Parliament has become involved.
Finally, let me point out that virtually every departmental budget is now ring-fenced. Which areas can we stop ring-fencing? There must be savings to be made, not least in overseas aid, which I am sure could be spent and targeted in a far better way.
Stella Creasy (Walthamstow) (Lab/Co-op)
Let me begin by associating myself with the comments made by the hon. Member for South Dorset (Richard Drax) about the dreadful situation in Brussels.
This debate has seemed to be more about astronomy than about the Budget, because we have all been talking about black holes. However, there is a clear analogy to be drawn. It will be remembered that Stephen Hawking famously described what he called the “black hole paradox”: the idea that information could simply disappear into a black hole, never to be restored, although all matter contained information that was to be held in perpetuity. What a perfect analogy that is, given that, at this point, we simply have no information about how the Budget will stack up. Our colleagues in local government would rightly be horrified.
Where can we find information about the impact of the Budget? We can find it in our constituencies, and obtain it from the people whom we represent. In the time that I have been granted, I shall offer three areas of information on which we can judge the Chancellor’s work. The first is personal debt; the second is savings; and the third is productivity. Those are three areas in which this Budget signally fails the British people.
It is no accident that personal household debt in this country is going up and up. “Unprecedented” is the term that the Office for Budget Responsibility has used to describe the impact of the Chancellor’s plans on our constituents. Unsecured personal debt is set to reach 3% of GDP and to stay at that level. This is a black hole into which the Chancellor is asking the public to pour their own money to pay for his mistakes. Just how bad is the situation? The Bank of England tells us that people are now borrowing £1 billion a month in this country. In January alone, people put £500 million on their credit cards, and Aviva tells us that the average family debt is now £13,000, up £4,000 from last summer’s level.
Those on the Conservative Benches who are casual about credit miss the point. Not everyone is paying the same level of interest. Some are being charged excessive amounts for the debts that they are getting into to pay for the Chancellor’s mistakes. The hon. Member for South Dorset talked about people putting their houses up to fund their businesses, but many in our communities have long given up on the dream of home ownership as a result of the debt that they are now in. Wages have risen by just 4% in the last few years, but house prices have gone up by 76%. We know that every single penny matters. That is why it is such a problem that people face these levels of debt. This Chancellor is banking on the British habit of borrowing, but that is like putting Wayne Rooney in charge of a stock-take in a Nike shop.
This is not just about people’s borrowing habits. The fact is that we are now a nation that cannot save either. We are saving just 4% of our disposable income, which is half as much as we were saving four years ago. That is the lowest level of personal saving since 1963. Help to Save will do little for the 26 million people in our country who do not even have access to £1,000 for an emergency. On this Government’s watch, they have no rainy day money. Lifetime ISAs are out of reach for those people who have too much month at the end of their money.
We are seeing a situation of rising personal debt, and low or no savings, in which wages are now stalling. This has an impact on our public finances, because it leads to lower tax receipts. They are down £44 billion on the projections made in 2011. That is why we on this side of the House are angry when we see that those who will do well out of the Budget are those who can well afford to pay. We know that 80% of the gains from the Budget will go to those in the top half of the income distribution, and that half of that amount will go to the top 20%. Meanwhile, debt is locking our people out of opportunities.
George Kerevan
Is the hon. Lady aware that the very act of running a budget surplus—that is, putting more in than we take out—forces the public accounts into a situation in which private borrowing increases?
Stella Creasy
The hon. Gentleman might not know of my long-held concerns about the way in which this Government are managing the public finances. We do not have time today to talk about PFI debt, or about PF2, which is going to lead to even more problems.
We on this side of the House get the fact that we need to get the deficit down, because every single penny that we pay in interest, and every single penny that we use to pay for the mistakes in this Government’s borrowing, is money that could be invested in our people. It could be invested in the public services that our communities need in order to succeed. That is the point about this Budget. It is not just about the damage that it is doing to people today, or about the debts and destitution that they face now. It is about the narrowing of their horizons tomorrow, too.
We can see the Government signally failing to deal with the productivity gap Britain faces, and the 18% difference between ourselves and our competitors. They are failing to invest in our young people. By the end of this Parliament, China intends to produce 195 million graduates. Not just China is investing in its people; Brazil, Russia and Argentina are as well. Our children will have to compete with graduates from those countries, but our Government are offering them nothing in that regard. We can see the consequences for them in the productivity gap. And when the Government are forcing every school to become an academy, we can see that they are rejecting their own responsibility.
How very different this is from when we sat here a year ago and listened to the Chancellor claim that he was fixing the roof and that Britain would be able to walk tall again. He is a bit like one of those builders we see on the “Watchdog” programme. I would encourage the British people to go to their trading standards officer about him, but the Government have cut that service too. They are left with only one alternative, to look to an alternative party of government—the Labour party—to offer a genuine investment in the future of our young people and a genuine recognition of why fiscal responsibility matters. This is a black hole that is sucking everything out of this country—including, hopefully, the Chancellor’s career.
Bob Blackman (Harrow East) (Con)
It is a pleasure and an honour to follow the hon. Member for Walthamstow (Stella Creasy). As a graduate in physics and maths from the University of Liverpool, I both congratulate and condemn her on managing to get both Stephen Hawking and Wayne Rooney into the same speech.
I want to send my condolences to the families of the victims in Brussels. I was in Brussels shortly after the Paris attacks and the degree of security being implemented demonstrated that the authorities were already on high alert. It is clearly a devastating tragedy.
The events of the past few days seem to have over-shadowed a remarkably good Budget from the Chancellor. Reducing business taxes to promote growth to enable people to have the dignity of earning a living, rather than a life on benefits, should be applauded on both sides of the Chamber, not condemned. I trust that that will be the Government’s focus over the next four years.
London has done particularly well out of the Budget, but I have not heard many details mentioned in the Chamber. The Chancellor has invested £80 million in Crossrail 2, which will be this country’s single biggest transport operation outside HS2 and something that we clearly need to get on with. I am looking forward to Crossrail 2 enhancing north-west London and my constituency in particular. It will be excellent for everyone involved in transport across London. Transferring business rates powers to the Mayor of London and London councils is remarkably important and will mean that the transport projects that London desperately needs will be funded by the business rates paid by London’s businesses, with that money being appropriately retained. Kick-starting the redevelopment of Old Oak Common will be central to the generation of new homes, new jobs and new businesses and a much better transport infrastructure for London.
Combating rough sleeping across the country is important. Ensuring that people do not experience a second night out is vital, particularly in London. I ask the Chief Secretary to the Treasury, my right hon. Friend the Member for Chelsea and Fulham (Greg Hands), to make it clear when he replies to the debate how much of the money will go to London, because London has the biggest homelessness problem and we all want to see it combated. I recently visited FirmFoundation in my constituency, which does a brilliant job of dealing with single homeless men, but it needs additional resources to assist such men and to enable them to get back into a proper home and get their lives back together again. It desperately wants to know how it can apply for the extra money being made available, so I trust that we will hear more details later.
In contrast to my hon. Friend the Member for Bedford (Richard Fuller), I applaud the Chancellor for introducing the sugar tax. Given that behaviours can be driven by taxation, something of which I strongly approve, the Chancellor has missed an opportunity. I welcome the increase in tobacco duty, particularly on rolling tobacco, to encourage people to give up smoking. However, given that the Chancellor has said that the sugar tax will be spent on things to encourage a reduction in obesity, let us drive behaviour by adding additional duties. Just a penny increase on every cigarette smoked in this country would raise £500 million, which could be invested in initiatives such as encouraging people to give up smoking or, even better, not to start in the first place.
The other issue that I want to mention is something that is not going to go away: seeking justice for Equitable Life policyholders. I had hoped that we would hear something in the Budget about further compensation for both the pre-1992 trapped annuitants and the people who have not received compensation thus far. Let me put the Chancellor on notice that we will continue our campaign until we get justice for those who suffered as a result of that terrible scandal.
Dr Roberta Blackman-Woods (City of Durham) (Lab)
It is a pleasure to follow my namesake, the hon. Member for Harrow East (Bob Blackman). I did not agree with everything he said, but I associate myself with his comments about the dreadful events in Brussels today.
I am not sure that I buy everything that the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith) said at the weekend, but he was right when he said on “The Andrew Marr Show” that the Budget was unfair and widely perceived to be so. When the Budget was announced last week, it contained cuts to support for disabled people while giving tax breaks to the wealthy and to large corporations. Although I agree with the right hon. Gentleman on the unfairness point, it is a pity that his conscience did not jump into life some years ago so that we could have avoided the suffering that his cuts—or the cuts that he supported—to tax credits, employment and support allowance and other benefits have caused to so many vulnerable people.
The decision to abandon the cuts to PIP are welcome, but we must not forget the distress that was caused to many, many people who have visited our surgeries in recent weeks. Those people were really concerned about how they would manage should the cuts go ahead. I have not finished worrying yet, because we do not know from where the £4.4 billion of cuts will come, never mind the £3.5 billion-worth of efficiency savings that are also mentioned in the Red Book. It is really irresponsible to ask Government Members to go through the Lobby tonight in support of the Budget when they know so little about the detail and where the cuts are going to be made.
The Chancellor said many, many times that this was a Budget for young people and for the future, but it most certainly was not. Where was the step change in new investment for our universities and colleges, allowing Britain to build the knowledge-based economy that the Prime Minister is so keen to talk about and that would provide high value jobs for young people and others? As the organisation Million+ said, universities will have to foot the bill for increased employer contributions to pension schemes without any additional funding, and it is very disappointing that the overall reduction in capital expenditure for the Department for Business, Innovation and Skills remains in place until 2020.
Similarly, the National Union of Students has been reminding everyone that the removal of education maintenance allowance, the scrapping of maintenance grants and the repayment hike for student loans have been devastating for many young people. The union, like others, is pleased about doctoral loans and some limited new money for lifelong learning—the individual savings account—and the apprenticeship levy, but, as it says, those measures are too little too late. It says:
“While George Osborne’s promises might sound appealing, his words do not make up for his actions. The government has forced cut after cut onto students who are already struggling to get by. If the chancellor truly wants to help young people, he could start by reversing his own damaging decisions.”
We all know that science funding is extremely important to our economy, so I hope that the Minister will ensure that the materials catapult centre proposed by Durham university gets the go-ahead.
The Budget was also unfair to regions. Once again, the north-east got very little out of it. There was some mention of a future upgrade to the A66 and A69, but nothing significant to reverse the continued underinvestment in the region from this and the previous coalition Government. The chamber of commerce said of the autumn statement—it has spoken for many—that it was disappointed by the lack of substance around the northern powerhouse, particularly what it means for the north-east, and it has said the same of this Budget. We all know that north-east councils, along with other authorities in more deprived areas of the country, have had their budgets hit hardest, so how will this northern powerhouse be delivered? As my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) said earlier, there was nothing about air passenger duty and how Newcastle airport will be supported to expand. The north-east could benefit from a huge increase in resources to renew our infrastructure, build our green energy sector, grow our automotive businesses and extend our processing sector, but there is nothing to support that, just ridicule for our schools.
Maggie Throup (Erewash) (Con)
I am delighted to contribute to today’s Budget debate and I congratulate my right hon. Friend the Chancellor on continuing to deliver a long-term economic plan that has seen unemployment in my constituency fall by a record 63% since 2010.
I have always been a passionate believer that for those who can work, work is the only real way to get on in life and succeed. This is not just a personal view but one that is shared by people up and down the country, and I am proud to belong to a Government who support a strong work ethic and are helping more families to keep more of what they have worked hard for. As a result of the measures announced in the Budget, in Erewash alone more than 45,000 people received an income tax cut and around 2,000 people were taken out of tax altogether.
Turning to business support, I warmly welcome the huge boost to the midlands engine, which includes £16 million of investment in our world-class aerospace industry, including support for Rolls-Royce, which has just announced that it is to create 350 new jobs locally as it prepares to ramp up the production of the new Trent XWB engine. Locally, SMEs and those who are self-employed stand to gain significantly from changes to small business rate relief and the abolition of class 2 national insurance contributions. These measures not only provide a welcome boost to the Erewash economy, where many of our businesses are small furniture manufacturers or engineering firms, but recognise the fact that those businesses are the real backbone of the British economy.
As chair of the all-party group on adult and childhood obesity and as a member of the Select Committee on Health, I want briefly to address the new sugar levy. The atrocities in Brussels today are a sharp reminder that the first duty of any Government is the protection of their citizens, but we rarely consider that phrase from anything other than a national security point of view. There is no doubt that obesity and the problems that arise from being obese, such as diabetes, cancer and heart disease, are becoming a serious issue within our society. Responsibility for tackling that lies on many heads—manufacturers, retailers, Governments, educators, health professionals—and, of course, on people taking individual and personal responsibility for the matter. By introducing the sugar levy, the Government are accepting their duty to protect the health of our citizens and of generations to come. In that, I must disagree with my hon. Friend the Member for Bedford (Richard Fuller), who is no longer in his place.
I urge drinks manufacturers to step up to the mark and play their part in tackling the obesity crisis by reformulating drinks and recipes over the next two years to reduce added sugars. We cannot tackle the obesity crisis by a sugar levy alone, and I look forward to the Department of Health announcing further measures in the forthcoming weeks and months.
In my view, this is a fiscally responsible Budget for the long term, supporting workers, businesses and our future generations. More importantly, it is a one nation Budget that truly puts the health and wellbeing of our nation first and I commend it to the House.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
It is a pleasure to contribute to such an important debate and to follow so many speeches from my hon. and right hon. Friends. Although I might not have agreed with what the hon. Member for Erewash (Maggie Throup) said, I commend her focus on jobs and the importance of delivering a high-wage, job-based economy for our country. By contrast, the Chancellor opened with the mix of bluff and bravado, arrogance and malice that has become his trademark, but even so, I was absolutely astonished to hear him refer to social justice. This is a Budget with unfairness at its heart and misery in its veins. The Chancellor’s record of failure—failure to achieve any of his own debt targets, failure to deliver decent wages—
Suella Fernandes (Fareham) (Con)
Does the hon. Lady agree with me and the Institute for Fiscal Studies, which reported yesterday that since the Chancellor has been in place, the gap between rich and poor has narrowed because most people have got into jobs? That is the way to bring about social justice.
Chi Onwurah
I would thank the hon. Lady for that contribution, but it flies in the face of the lived experience of my constituents, who are in low-wage jobs, cannot make ends meet and find themselves attacked by this Chancellor’s Budget. The Chancellor has failed to deliver for working people. His failure to raise productivity has been trumped in the past few days, in media terms at least, by his failure to deliver a Budget that lasts 48 hours.
The 1,443 PIP claimants in Newcastle will, like me, be pleased at least that that cut proved an ideological attack too far, but it is undoubtedly the case that by demonising and attacking all benefits claimants, the Chancellor hoped to create an atmosphere in which it was acceptable to enrich the better-off on the backs of the poorest and most vulnerable among us. It will be some compensation for them that members of the Government are now attacking and reviling each other almost to the same extent they have attacked and undermined benefits claimants.
I do not want to focus on the 48 hours following the Budget as experienced by the Chancellor. Instead, I want to give three examples of events that I attended in those 48 hours that highlighted the huge gap at the centre of the Budget, which was a failure to address our future economy and the future of the next generation, as he put it. On Thursday I visited the Big Bang fair organised by EngineeringUK with engineering professional bodies and businesses from across the country, where 70,000 young people discovered or rediscovered the excitement offered by a career in science, technology, engineering and maths. Those are the jobs of the future, the ones I want for my constituents, high-paid—not minimum wage, minimum skill—jobs.
But where were such jobs mentioned in the Budget? Where was the investment in the future to help create those jobs? There were, it is true, tax breaks for those hiring out their assets in the digital economy, but there was nothing for manufacturing or technology. There was no investment in digital infrastructure. There was no more detail on apprenticeships, which we need to ensure that we have the skills of the future. This was a Budget that left behind the technology that we need for our future.
That evening I visited the Creative Newcastle Get Digital summit, celebrating one of the fastest-growing sectors in the north-east, only hundreds of yards from where Stephenson’s Rocket was built. That was the real northern powerhouse, powering our economy into the future. But the Budget offered a few hundred million pounds for investment in north-east transport, against the tens of billions of investment in transport in London. This Budget did not offer any investment in digital infrastructure, and we stand to lose the millions of investment from the European Union, thanks to the referendum and the chaos on the Government Benches over that.
Finally, on Friday morning I visited St Paul’s primary school, where 10 and 11-year-olds were taking on the Pioneer challenge with employers and other schools across the region to promote STEM and entrepreneurship. Those children are the future basis for our economy in the north-east. They are proud Geordies, yet what the Budget did for them was to force the academisation of their school, taking it out of the local authority and the community that it seeks to support and atomising it—in effect, privatising it and taking away responsibility from the local parents and putting it on a desk in Whitehall, which is also where the northern powerhouse is found.
This Budget offered nothing for the future of our young people, for the north-east economy or for our country.
Chris Philp (Croydon South) (Con)
I would like to start with fiscal responsibility, as the Chief Secretary is on the Front Bench. Fiscal responsibility is very important —for the sake of our children, if nothing else. I have two-year-old twins, and there is nothing noble, moral or ethical about consistently spending more than we can afford and sending the bill to the next generation. Moreover, as the Chancellor eloquently put it earlier, without fiscal responsibility we cannot deliver the services that are so important.
Clearly, a good start has been made on fixing the deficit left behind in 2010; about half of it has been eliminated. Labour Members are right to point out that there is still more work to do, but it does not seem entirely appropriate for them to give angry lectures on the topic, when they have opposed every measure proposed by the Government over the last five years to reduce the deficit. In fact, had we followed their advice during the last Parliament, our national debt would be £900 billion higher than it is today.
During his thoughtful speech, my colleague on the Treasury Committee, the hon. Member for East Lothian (George Kerevan), suggested that high spending during the late 1940s and 1950s demonstrated that we could in fact spend money to grow. I am afraid that I dispute that analysis, because that spending spree ended in 1976, when we had to go cap-in-hand to the IMF. Even Denis Healey, the then Chancellor of the Exchequer, said:
“You can’t spend your way out of a recession”—
a lesson we would do well to remember.
George Kerevan
My point was to go not into the 1970s, but into the very specific period of the 1950s, when national debt as a share of GDP was significantly higher—twice as high—in many years than it is now. That did not lead to a burden on the generation that was young then—my generation—which is in fact extremely well-off as a result of that spending. I was trying to look at whether borrowing per se disbenefits future generations, and it does not—it depends on how we spend the money.
Chris Philp
I must respectfully disagree with the conclusions of my Treasury Committee colleague. If we look at economic performance in the 1960s and 1970s, we see that the enormous debt overhang, with the state spending too much money, was a drag on the economy and culminated in the 1976 bail-out. That was the natural conclusion of the overspending that started in the 1950s and continued through the post-war consensus period, which ended only in 1979.
The second main criticism levelled at the Budget by Opposition Members is on the issue of fairness. I am afraid I disagree with the comments made over the weekend by my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith). This is a fair Budget, but let me produce some evidence to substantiate that.
Over the last five years, spending on disability benefits has increased by £3 billion, and it is forecast to increase further. That strikes me as fundamentally fair. We are spending more than we ever have on the NHS and on education—particularly on pupils from low-income backgrounds, via the pupil premium. Moreover, we are introducing the highest-ever national minimum wage—the national living wage—which takes effect in about a week’s time. We have taken millions of people out of income tax entirely, which disproportionately benefits people on low incomes. We have frozen petrol duty once again, which also disproportionately benefits people on low incomes, because things such as petrol duty are inherently regressive.
If we consult the Treasury’s distributional analysis, we see that the lowest 20% of earners pay just 6% of tax; we would expect that to be 20% if everything was even. They will pay the same in 2019-20 as they paid in 2010, while the top quintile will pay 52%—up from 49% five years ago. The highest earners will therefore pay proportionately more in five years’ time than they did five years ago. This analysis excludes the effect of the national minimum wage; if that is included, the skew will go even further. I believe that this Budget is a fair Budget. It protects spending on the most vulnerable, and those with the broadest shoulders are bearing the burden.
Let me turn briefly to business. Before coming here, I spent 15 years setting up and running entrepreneurial businesses. There is a reason why our economy has created 2.4 million jobs in the past five years, and why youth unemployment in my constituency is down by an incredible 62%—it is not an accident. It is because corporation tax has been cut, which has encouraged businesses to invest in creating jobs. I am delighted that the Chancellor is continuing this very successful long-term economic plan—[Interruption.] I see it commands widespread support—with further cuts in corporation tax and capital gains tax to encourage investment. My Treasury Committee colleague suggested that lower corporation tax encouraged share buy-backs, which is a bad thing. I would respectfully suggest that share buy-backs cycle money back into the investor community, who can then reinvest in other opportunities.
I welcome the Government’s action on international tax evasion through the BEPS initiative, although they could forerun that with further moves on transparency and disclosure unilaterally in the UK, as has been suggested. There is a consultation document on giving the Financial Policy Committee further powers to direct buy-to-let mortgage lending, which appears to be very high. I urge the Government to look seriously at those proposals and enact them at the earliest opportunity.
I support this Budget. It is good for business and good for our country—and most of all, it is fair.
Mr Jim Cunningham (Coventry South) (Lab)
I am interested in something that the hon. Member for Croydon South (Chris Philp) said when he mentioned Denis Healey. There was another individual who said, “You never had it so good” in 1959, but by 1963 the economy of this country was in very serious trouble. People should be very careful when they start sloganising like that.
To be charitable about this Budget, the most one can say about it is that it is divisive. Frankly, it puts the burden of the national debt and the national economy on the shoulders of the poorest. Over the past few days—I will not rehearse it now—we have had the fiasco with the Chancellor and the Secretary of State for Work and Pensions. If the Chancellor had an economic plan, why was he blown off course over the past 48 hours or so? He would not have been blown off course if he knew what his economic plan was. Did he not know the implications of the cuts he was inflicting on the poorest members of our society?
During the general election, the Conservatives bandied about a figure for cuts in benefits—I think it was £12 billion —but when they were pushed to spell out exactly where they would find that sum, they never answered the question. There has been a deception on the British public based on the argument that the country was in an economic mess that they inherited when in fact it was the world economic situation that had deteriorated. If Ministers really want to know about this, they should watch the second part of the BBC 2 programme about Obama. The first part was about how Obama dealt with the debt that he inherited—from a conservative Republican, George Bush, by the way. Interestingly, at that stage Obama spent $85 billion on bailing out the motorcar industries, so I have no doubt there was an economic problem.
The Government are preparing the ground for some of these measures by always hinting at the international economic situation, so if we listen to them very closely, we can expect more cuts. It is no economic strategy to continually inflict cuts on the poorer people in society, and on local government and the public services. On the one hand they say they value those in the public services, but on the other they only give them a 1% wage increase. If they really value the nurses and the doctors in this country, then they ought to give them a decent increase.
Equally, in fairness to the Government, I have to say that I certainly welcome the help given to small businesses. That is an important factor, because 3 million or 4 million jobs have been created in this country by small businesses, but sometimes they are picked up by the larger companies. People tend to forget that.
Not enough is being invested in skills, and we must be careful about that. It is one thing to have a target of 200,000 apprentices, but the question is: are they quality apprenticeships? More importantly, we had the recent example of student nurses, whose grants have been cut. A married woman who suddenly wants to study part time will no longer qualify for that grant.
Once again, the Government have placed the burden on local authorities. Over the next few years, Coventry City Council will have to find between £70 million and £90 million for something that has been slipped out in the Budget. Not a lot of people have picked up on this, and it certainly has not been mentioned today, but Government grant will be shifted on to local authorities. When local authorities have to put up council tax to counter that and to deliver public services, the Government may come along and call local authorities prolific spenders, or they may want to cap it three years down the road. These are things that we should be conscious of. In the west midlands, the police budget is 80% funded by Government grant. Can people not see the implications for those services and for local government in terms of jobs? As I have indicated, local government is paying a terrible price, along with the poor of this country.
I will finish by talking about academies. An academy is closing in Woodlands ward in Coventry, which is in the constituency of my hon. Friend the Member for Coventry North West (Mr Robinson). I do not want to intrude on his territory, but I intend to start taking the matter up with Ministers, as a route for consultation, and with the local authority.
Seema Kennedy (South Ribble) (Con)
Since 2008, all developed economies have struggled with low confidence, lack of investment and sluggish growth. How each finance Ministry has responded to that challenge is quite clear from the growth and unemployment rates of our competitor economies.
The long-term economic plan is not just a slogan; it is a plan that we can be proud of. Since 2010 it has delivered for our constituents record levels of employment, stable interest rates and low inflation. Those are not just dry, dusty economic terms. They mean that in our constituencies, people have jobs; that we are not seeing mass house repossessions like we did in previous recessions; and that savings have kept their value. We have only to look at countries that are almost on our doorstep, such as Greece, to see that mass unemployment has massive social consequences when Governments lose control of their economies.
Our economy still faces great challenges. My hon. Friend the Member for Richmond (Yorks) (Rishi Sunak) talked about access to finance and investment, and I want to touch on those measures briefly. Many colleagues have quite rightly pointed out that cutting taxes leaves businesses with spare cash to invest. That leads to more recruitment and more tax take; it is a virtuous circle. I very much welcome the cut in corporation tax, and I disagree with the hon. Member for East Lothian (George Kerevan) who said we do not need to cut it any further because it is already low enough.
I welcome the 10% rate on long-term investment in small cap companies. We need to do more to foster a culture of long-term investment, and the Budget goes some way to addressing that. Access to finance is still a barrier for some businesses. I was glad to see that the British Business Bank will carry on supporting SMEs through the Help to Grow programme from this spring, supporting at least £200 million of lending, and that the enterprise finance guarantee programme will be extended until 2018.
I have long been troubled not only by the brakes on investment but by the barriers to entry that prevent entrepreneurs from starting up in the first place. Business rates are one such barrier, because they are a fixed cost paid by businesses before they even start up. When I have spoken to small businesses in my constituency, they have welcomed the extension of small business rate relief. I also welcome the discussion paper on the revaluation of properties for business rates, because the three-year cycle will fit in a lot better with standard rent reviews.
I welcome most the changes in stamp duty land tax for commercial properties. Again, this tax is a barrier to businesses opening or expanding. In my previous life as a commercial property solicitor, I saw small businesses unable to open or grow because of the stamp duty land tax, or they adopted avoidance behaviours, which did not help anybody.
I want to speak briefly about investment infrastructure in the north, which I feel passionate about. We need more investment, particularly in east-west connections. I respectfully ask Treasury Ministers if there could be some money in the next Budget for the Ribble bridge.
The aim to have £1 trillion of exports by 2020 will boost our economy, and the investment in UK Trade & Investment is most welcome. Yesterday was the festival of Nowruz, when Iranians celebrate their new year. I very much welcome the fact that my right hon. Friends the Chancellor and the Business Secretary will visit Iran in May, and I wish them the best of luck.
The record shows that this Government’s long-term economic plan is working in the face of a difficult global economy. This Budget focuses on investment, and I shall be happy to support it tonight.
Several hon. Members rose—
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. There are still a great many Members who wish to speak, so I will have to reduce the limit to four minutes.
John Mc Nally (Falkirk) (SNP)
I give the Chancellor credit for one thing—he is consistent. After all this time, he is still failing: he has failed on key economic indicators; he has missed the targets that he has set; he has failed on his target debt and GDP; he has failed to hit his target on the current account and on public sector net borrowing. The one thing that the Chancellor has achieved is to prove beyond doubt that the Tories’ claim to economic credibility now lies in tatters. The Budget announcement clearly reveals that the Chancellor and the UK Government made the move to a decade of austerity through choice, certainly not through necessity. No matter what further U-turns are announced, his Budget means that society’s poor are in effect still paying for the mistakes of society’s rich. This pursuit of austerity—this Government’s callous actions favouring society’s rich—means, as the Chancellor confirmed this afternoon, that it is always the poor who, in his words, “pay the price.”
Philip Boswell
Since the Bureau of Investigative Journalism found in 2011 that over 50% of Conservative party funding under the current Prime Minister comes from the City of London, does my hon. Friend agree that we can see whose interests the Conservatives truly have at heart?
John Mc Nally
I thank my hon. Friend for that very valuable point. I hope Conservative Members will think deeply about what he has said.
I want to take this opportunity to welcome the Secretary of State for Work and Pensions to his new position. I urge him to use his portfolio to protect, support, enable and empower the most vulnerable in society, and return to them some peace of mind. The Chancellor did not provide an answer earlier today when he was asked about the plans for welfare cuts. To my mind, he succeeded only in causing the disabled more stress than they are already experiencing.
Not only have the Government managed to fail on the economic and productivity targets they set themselves, but we can clearly see that the deficit, the debt and the level of borrowing are worse than was promised last autumn. By contrast, the Scottish National party has set out a sensible alternative to austerity, which would return the public finances to a sustainable path, while continuing to invest in public services.
It is worth noting that, after much debate, wrangling and negativity, the UK Government have, in my opinion, seen sense and agreed to introduce a graduated sugar tax on soft drinks in 2018. Let us hope that we see some corporate responsibility among manufacturers and that they will willingly announce reductions in the sugar content of their products.
Health is a subject about which I have been deeply concerned for some time. I spoke during the sugar tax debate in November, when I gave my support to Jamie Oliver, the celebrity who has been mentioned today, and the other MPs present that day who have fought hard to bring this issue into the public domain and bring about change. I met Jamie at a House of Commons debate on diabetes, and I agreed with his aim of offering the public clear and reliable information about the sugar that we all consume—indeed, the planned confusion on some labelling reminds me of the Budget that we are discussing. I am grateful for the Government’s U-turn from their position before the debate in November, when they stated that they had
“no plans to introduce a tax on sugar-sweetened beverages”.
Philip Boswell
Does my hon. Friend agree that the sugar tax is as much about taking the first step to reduce sugar consumption as about raising awareness?
John Mc Nally
Absolutely. It is the first step in raising awareness throughout the land, and as I said, perhaps more manufacturers should take cognisance of the fact that sugar is causing a lot of problems in this country.
I am delighted that the SNP was joined by the FairFuelUK campaign and The Sun in calling for a freeze on fuel duty. We have successfully pressured the Chancellor not to raise fuel duty—a victory for small businesses, rural communities, and family budgets across Scotland and the UK. I praise my hon. Friend the Member for Glasgow Central (Alison Thewliss) and other MPs—particularly the hon. Member for Dewsbury (Paula Sherriff)—for their help to remove VAT on women’s sanitary products. I would like the Chancellor to go further, and I refer him to the gender pricing debate that colleagues and I took part in on 2 February, so that we make the added cost of living for women in the UK a thing of the past.
I am pleased that the Chancellor has followed the example of the Scottish Government and realised that small and medium-sized businesses are a huge driver of economic growth. I welcome the Chancellor undertaking a review of business tax, which is designed to be a road map to a more competitive tax. He could do no better than match the Scottish Government’s commitment to supporting SMEs—a commitment which has meant that spending on economic development in Scotland is more than double the UK average. Over the last quarter, Scotland’s overall employment rate has increased by more than the UK equivalent. Finally, I seek the Chancellor’s reassurance that before Members make arrangements for a summer break, he will announce to the House the date of a corrective Budget.
Mike Wood (Dudley South) (Con)
The Budget builds on the Chancellor’s strong record over the past six years of restoring sanity to the public finances, rebuilding the nation’s economy and securing growth. It is a shame that the shadow Chancellor is no longer in the Chamber, but I am sure that the shadow Chief Secretary to the Treasury will pass on the message that despite the shadow Chancellor’s mean-spirited comments to the Chancellor, such a feeling is not reciprocated on the Government Benches. Indeed, I am sure that I speak for all Conservative Members when I say that I hope that the shadow Chancellor will remain in his position for many years to come.
The Budget contains many measures that will benefit people and businesses in Dudley South by creating opportunities that are the hallmark of any compassionate society. There are nearly 3,000 small and medium-sized employers in Dudley South, many of which will benefit from the permanent increase in small business rate relief thresholds, as well as the increase in thresholds at the higher rate of business rates. As the hon. Member for Coventry South (Mr Cunningham) was generous enough to acknowledge, such measures are indisputably good for small businesses. About 2,000 self-employed people in Dudley South will benefit from the abolition of class 2 national insurance contributions as part of an ongoing simplification and modernisation of the taxation system.
For me, the most significant announcement in the Budget last Wednesday was of a new enterprise zone for the Waterfront in my constituency. I had been running a campaign about that since before the general election, so I put on record my personal thanks both to the Chancellor and to the Minister for Communities and Resilience, who has responsibility for devolution, who have taken the time to meet me, to listen to the arguments for the enterprise zone and, more importantly, to understand and act on them.
The enterprise zone will create more than 4,000 net new jobs—[Interruption.] As the hon. Member for Wolverhampton South West (Rob Marris) said, it will create significant benefits not only for Dudley borough, but for the wider region, which I happily acknowledge. It will mean a 100% business rate holiday alongside 100% capital allowances on large investment in new plant machinery, which has been extended for eight years. It is a big boost to our local economy and promises to add millions of pounds to local prosperity. I thank Dudley Council and the Black Country local enterprise partnership for all the work they did in making that possible.
The Budget is a big step forward in creating opportunities for all nations and all regions of our country. The black country is well placed to take full advantage, and I will certainly support the Budget this evening.
Melanie Onn (Great Grimsby) (Lab)
I want to focus my comments on homelessness and the effects on it caused by the Budget and the changes over the past six years, specifically because I attended an event this weekend organised by Rucksack, a charity that gives advice and clothing to homeless people in Grimsby and the surrounding area. It directs rough-sleepers to hostels with spare beds and other organisations that can offer help, such as the YMCA, Salvation Army and Harbour Place, which is a well-known local organisation. They all do fantastic work but, due to the recent surge in homelessness, some local hostels have extensive waiting lists of 15 people who cannot get beds. Rucksack tells me that each of those organisations is substantially overstretched in offering their provision to local people in dire straits. Homelessness is not caused by fluctuations in the economy; it is about people’s support structures.
In my area—I am sure the situation is replicated across the country—there is a critical shortage of appropriate properties for people suffering varying degrees of disability, and their partners, children or people they care for, because of the funding available for adaptations in social housing and private housing for people with disabilities. It is becoming more difficult not only because the funding is decreasing significantly, but because the thresholds that people face to qualify for it are so high.
It is a test for our society. I heard colleagues say eloquently yesterday that the debate is about whether we are compassionate enough to ensure that help is there for people in their most difficult time. We have failed that test in recent years. The Treasury briefed The Sun before the Budget that the Chancellor was drawing up plans to eradicate homelessness. How typical was that of the Chancellor! There was a great pre-Budget story for the papers, complete with a celebrity endorsement from Richard Gere to catch attention. On the day itself, that grand scheme turned out to be nothing more than a sticking plaster. I defy any Government Minister to stand up and say, with a straight face, that the scheme will get us anywhere near eradicating homelessness. As the chief executive of Crisis said, the measures do little to tackle the underlying problems.
I am no spreadsheet geek, by any stretch of the imagination, but I have had a look at tables 2.1 and 2.2 in the Red Book, which deal with measures in this Budget and those in previous Budgets and autumn statements that are due to come into effect this year. They relate to housing benefit changes, the temporary accommodation funding mechanism and reductions in social housing rents, which have impacts on the ability of housing associations to invest in existing properties or to build new ones. All those things have a significant impact on homelessness and the likely increases in it. The £115 million proposed is therefore a case of giving with one hand and taking significantly away with the other. I know that organisations such as Rucksack and other small charities in my constituency, such as Harbour Place, will say that they are not clear where that £115 million is going to go. It really needs to go to those who need it the most and the organisations that provide direct care and help. Under their welfare reforms, the Government made those under the age of 25 ineligible for housing benefit. That is another cut within this Budget, but I will end there.
Chris White (Warwick and Leamington) (Con)
A number of measures in this Budget will have a positive impact on smaller businesses, and it is absolutely right that we continue to stimulate growth in the size and number of small and medium-sized enterprises as they have undoubtedly been a key contributor to a strengthening economy, both locally and nationally.
The midlands is vital to our economy, and I am pleased that the Government—
Chris White
And Opposition Front Benchers are generous enough to recognise it as such.
Some 96,000 more businesses have been formed in the midlands since 2010, which amounts to about 52 a day. The announcement of the midlands engine investment fund, which will see more than £250 million invested in smaller businesses across our region, will be a boost for the local economy and will go some way to ensuring that the progress made in recent years is built upon.
It is worth recognising the tremendous impact that the reform of business rates will have. As the Chancellor outlined on Wednesday, it will mean that 600,000 businesses will pay no business rates at all. The Federation of Small Businesses has said that its members welcome this as an “important step”, and I echo that sentiment. The further cut in corporation tax to 17% by 2020, the freeze on fuel duty, and the action on VAT on overseas firms to create a more level playing field are all welcome measures.
We must not lose focus, however, on enterprise policy and the idea of the “march of the makers”, which is particularly relevant. Manufacturing is key to the midlands and an important aspect of rebalancing our economy. As co-chair of the all-party group on manufacturing and a member of the Business, Innovation and Skills Committee, I have worked closely with industry to discuss and hear about some of the challenges that it faces. High-value manufacturing catapult centres have been a revelation, and I am pleased that the Government continue to back them, with more than £200 million of investment since 2011 and an increase in financial support in the latest autumn statement. Fostering an environment in which innovation thrives has to be a priority when thinking long-term, and these catapult centres, which bridge the gap between businesses, academia and some of the UK’s world-class research centres, are instrumental in achieving that. However, such action must be matched by a supply of skills, and apprenticeships are of huge significance. In my constituency, Warwick Trident College works with industry—it partners with industry—and is providing hundreds of students with the necessary skills to succeed. Empowering further education colleges to extend the provision of tailored courses should be an important part of the Government’s future apprenticeship agenda.
Another underestimated sector is video games, which contributes a huge amount to our economy, not least in my constituency. There is no doubt about the value of the games industry to the economy: we are talking about £1.4 billion in gross value added, support for 23,900 jobs nationally and the generation of £429 million in tax receipts. We must continue to support this very important sector.
Mr David Anderson (Blaydon) (Lab)
It has been a bad week for the Chancellor. It was his eighth Budget and sixteenth economic statement, so he ought to know better. The Budget unravelled in 24 hours and then it got worse: outrage at PIP cuts as it became clear that the disabled were being sacrificed for the rich; education in chaos as he forced academisation on every school, using our kids in his war against local government; stealth cuts on the NHS and local government, with changes to employer pension contributions; and, to cap it all, the Secretary of State for Work and Pensions giving in after six years.
This latest mess only builds on the Chancellor’s catalogue of failure. He is still nowhere near eliminating the deficit, despite his plans to have done so two years ago. In February, we had the lowest manufacturing output for four years. National debt is up 50% under this Chancellor—up to an eye-watering £1.6 trillion—and he has lurched from one missed target to another. He has blamed everybody and everything except himself. He blamed the Greeks. He blamed the Queen for having a jubilee holiday. He even blamed the snow. He did not find any money down the back of the settee this week, unlike the £27 billion he found miraculously before Christmas.
Who pays for the Chancellor’s folly? Who else but the poor, the vulnerable and the sick—those least able to fight back. The Resolution Foundation has him bang to rights. It showed that what the Budget really means is that on average the richest will get a £225 rise, while the poorest might get a measly rise of £10 a year. In fact, it shows that, with other changes and the cuts announced since last year, the richest in our nation can expect to be £235 a year better off, while the poorest will be £375 a year worse off by the end of this Parliament. He is the Robin Hood-in-reverse Chancellor. He has made a career out of making the poorest in our country even poorer.
It is worse than that, however, because in an amazing show of puffed-up pride, the Chancellor stated in his speech that the northern powerhouse is
“the most radical devolution of power in modern British history.”—[Official Report, 16 March 2016; Vol. 607, c. 960.]
Has he not heard what is happening in Scotland and in Northern Ireland, where they are running their own affairs, getting extra money and having proper devolution?
Mary Glindon
Does my hon. Friend agree that devolution for the north-east is no deal at all? It is a raw deal, because we cannot even agree between councils what we want. We are just not getting the real democracy we need.
Mr Anderson
I thank my hon. Friend for her intervention. I will come on to the north-east in a moment.
The Chancellor should be aware of what is happening in this city, where £2,000 a head is being spent on transport, while in my part of the world the figure is £5 a head. Where is the fairness in that?
The institutions of devolution were set up properly under a Labour Government who trusted the people with referendums and democratic discussion, but that is unlike what has happened in my part of the world. It is one thing to exaggerate—we all do it in this House, and I am as guilty as anybody else, believe it or not—but last week the Chancellor said from the Dispatch Box that
“powerful elected Mayors have been agreed for Manchester, Liverpool, Tees Valley, Newcastle and Sheffield.”—[Official Report, 16 March 2016; Vol. 607, c. 960.]
At least in the case of Newcastle, that is simply untrue. Newcastle is not being offered an elected mayor. That is exactly as it should be, as it is less than four years since the people of that great city rejected a mayor in a referendum by 62% to 38%. What is actually on offer is an elected mayor for the north-east, but that has certainly not been agreed yet. In fact, this morning Gateshead Council, one of seven councils involved, threw that out. Northumberland Council says is will agree to it only with certain additional powers that do not look like being given. Durham County Council has already said it wants a delay and not to be forced to make a decision on Thursday on proposed legislation that has not even gone through this House and will not do so until November.
So did the Chancellor—the great manipulator; the political strategist; the man who does not get out bed in the morning without weighing up the political advantage; the Machiavelli of Downing Street—make a mistake? He might have. If he made a mistake by saying that that had been agreed in the north-east, he should come and apologise for it. If he did not make a mistake, however, and if he deliberately tried to mislead the House, he should come back here and tell the truth—that he was deliberately misleading the nation and pretending that the so-called northern powerhouse was up and running in the north-east of England, as it is struggling to do in the rest of England. I have been really chuffed in these past two days to hear the right hon. Member for North Norfolk (Norman Lamb) and the hon. Member for Peterborough (Mr Jackson)—I never, ever thought I would agree with the hon. Member for Peterborough—share exactly the same concerns as me and my hon. Friend the Member for North Tyneside (Mary Glindon), and saying very clearly that what is on offer is not fair, not democratic and not open to proper consultation.
The proof is in what the Chancellor said last Wednesday. This is a party political Chancellor who puts his and his party’s interests first. He said last week, in relation to the £20 million for building houses in the south-west:
“it is proof that when the south-west votes blue, their voice is heard loud here in Westminster.”—[Official Report, 16 March 2016; Vol. 607, c. 961.]
Unfortunately for those of us who vote red, our voice is never heard, but we are going to keep on shouting at ’em.
Shabana Mahmood (Birmingham, Ladywood) (Lab)
During the Chancellor’s opening speech today, I could not help but reflect that he should consider a job swap with his Financial Secretary to the Treasury, who did a much better job of trying to defend the indefensible in the Chamber yesterday. The Chancellor could have improved his performance by saying sorry—sorry to all the disabled people he has frightened over the last few days—but not for the first time for him sorry proved to be the hardest word.
On the basis of the things the Chancellor does say, it is clear he has a habit of saying one thing and then doing quite another. He famously promised in 2010 that he would eliminate the deficit within five years, but it now seems it will take him another full Parliament to achieve that. He said the debt would peak at 70% of GDP in 2013-14 and then fall and that our debt-to-GDP ratio would fall every year, but he has missed those targets.
The borrowing figures out today do not make for good reading for the Chancellor. Public sector net borrowing was higher than expected last month. Last week, the borrowing forecast was lowered to £72.2 billion, but the ONS tells us that borrowing so far this fiscal year, from April 2015 to this February, is already at £70.7 billion, meaning he can only borrow £1.5 billion in March. I very much doubt this is achievable, given that in March 2015 he borrowed £7.4 billion. It is another target that is likely to be missed. He said he would cap welfare spending, but he has well and truly bust his own welfare cap. Last summer, when he launched the productivity plan, he said it would produce “world-beating productivity”. It is a damning indictment of that plan that the OBR has significantly revised down its forecasts of our national productivity.
The combination of all those factors means that as a nation we are ill prepared for the global cocktail of risks that the Chancellor himself has spent the last three months telling us about. His habit of saying one thing and doing another is something he has been getting away with for some time, but this year, finally, some on his own side are recoiling. His iteration of that famous phrase “We’re all in it together” was too much for the former Work and Pensions Secretary. Taking money from the disabled and cutting capital gains tax for the better-off was more than he could bear—and he is not exactly a soft touch. It comes to something when the Government are deemed too right wing even for him.
The Government’s retreat is welcome, but with it comes a hole in the Budget and a scorecard that no longer adds up. The scorecard already had the air of surrealism about it. Many people play fantasy football, but it seems the Chancellor plays fantasy Budget. The fiscal forecast for 2019-20 suggests that in one year we will go from a £21.4 billion deficit to a £10.4 billion surplus—never mind that we will never have reduced the deficit by that much in any year since 2010; never mind that the fiscal charter, introduced in October, has already been broken; never mind the retreat from the cuts to PIP.
The Chancellor has reigned over a litany of missed targets—growth down, productivity down, fiscal rules broken, a fantasy scorecard. The resignation of the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith) puts the attention squarely back where it should be—on the Chancellor’s ability to deliver what he says he will—and it has become clear, especially over the last few days, that he has utterly failed.
Mark Durkan (Foyle) (SDLP)
I am among those whose names are on both amendments today. I congratulate, in particular, the hon. Members for Dewsbury (Paula Sherriff), for Glasgow Central (Alison Thewliss) and for Berwick-upon-Tweed (Mrs Trevelyan), and I acknowledge the good work of Ministers on the important issue raised in amendment (b). I also acknowledge the thoughtful contributions today, including the critiques by the hon. Members for East Lothian (George Kerevan) and for Hartlepool (Mr Wright) on the issues of productivity and public sector investment.
On some of the more local aspects of the Budget, I must decry the fact that Northern Ireland gets very little out of the Budget, although that is not all the fault of Ministers. A lot of it is the fault of a dereliction of initiative and responsibility on the part of our own devolved Executive. They have not made the case for city deals in Northern Ireland. They have certainly refused for a very long time to make the case for a city deal for Derry, pretending instead that city deals were for England, which did not have devolution. That completely ignored the fact that much work on city deals has been done in Scotland and Wales. Some of them are represented in the Budget. I know that the city deals, in terms of the northern powerhouse, are not all necessarily what the Chancellor puffs them up to be, but they are initiatives worth pursuing, and we in Northern Ireland have been left out of them.
As for what is in the Budget for Northern Ireland, I welcome the spending for the air ambulance coming from the LIBOR fines. I and others had lobbied for that. Billed as a big gain for us are the enhanced capital allowances for an enterprise zone in Coleraine—a zone that should have been in Derry, which is the place of the highest unemployment. It is intended that Coleraine can benefit from Project Kelvin—a project that was initially meant to benefit Derry in the first place and other places on both sides of the border. This has happened courtesy of a letter from the First Minister and the Deputy First Minister to the Chancellor before the 2014 Budget, asking for that enterprise zone so that Coleraine could benefit from Project Kelvin.
As for the wider arguments around PIP, having listened to the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith) and to the Chancellor on both his Budgets, I think we have tuned into the cognitive dissonance game, whereby each gives an account of their motives and purposes on the record that are far removed from my sense of what is really happening and certainly far removed from my constituents’ experience.
I am one of 22 who voted against the introduction of the welfare cap nearly two years ago in March 2014, and I am very glad that I did. We said at the time that while it was being bubble-wrapped as a neutral budgetary tool, it would be a cuts weapon in the hands of the Treasury—and that is exactly what it has been. What we heard from the former Secretary of State for Work and Pensions at the weekend was essentially that the welfare cap, which he voted for and used to boast about, has become simply a search engine for benefit cuts by the Treasury. We saw that in the summer Budget when the Chancellor revised the welfare cap downwards by £46.5 billion over four years. It is no wonder that we then saw other cuts being pursued.
We need to hear exactly what is going to be done with the welfare cap in future. Is it the case from what we heard from the new Secretary of State for Work and Pensions yesterday that the attempt to have further legislative change on welfare is going to be abandoned, or will the welfare cap be used to impose cash-limited administrative decisions on rates, rules, interpretations around criteria and so forth so that the cuts will effectively be stealth cuts? Yes, Parliament will be spared any legislative cuts, but the cuts will still be there by administering the welfare cap ruthlessly.
Mr David Hanson (Delyn) (Lab)
Oh—thank you very much, Mr Speaker. [Laughter.] I have been here so long that I was falling into a general stupor. I am so pleased to have you back in the Chair. It is pleasure to be here under your chairmanship, and I welcome you back.
Over the last couple of days, I have taken some time to think about when a Budget was either as bad or has unravelled as quickly as this one. I thought of this Chancellor’s Budget of 2012, with its pasty tax and caravan tax, and I was reminded today of the failed Budgets of the right hon. and learned Member for Rushcliffe (Mr Clarke) in the early ’90s. He raised VAT on fuel, including gas and electricity, and was defeated on it. However, after 24 years in the House, I cannot think of a Budget that has unravelled so quickly, or in such a damaging fashion, as the one proposed by the Chancellor of the Exchequer today.
We will vote on the Budget at 7 o’clock, when we do not even know—because we have not had an answer from the Chancellor today—from where the £4.4 billion loss of revenue from the appalling cut that he initially proposed will come. He said, “Trust me: we will discuss this in the autumn”, but it strikes me that we cannot wait until the autumn, given that we have a vote this evening. I hope that the Chief Secretary will respond to those central points when he winds up the debate.
The Chancellor admitted today that he had made a mistake. He admitted that he had made a U-turn. I put it to the House that this is no mistake, and no U-turn. This is simply the Chancellor who could not get his proposals through the House of Commons. The values that led him to make the choices that he made last week—the values that led him to choose to take money from disabled people in personal independence payments, and the values that led him to cut capital gains and business taxes—were values that he still holds today. If he could have got those measures through the House, he would have done so. His central value is one which ensures that we see a shift from the poor to the rich, that we have a small state, and that members of an out-of-touch elite are managing issues that they know little about, and care little about. I hope that the Chief Secretary, who represents Chelsea and Fulham, will accept that he lives in a bubble that does not relate to the lives of the vast majority of people in the constituencies that we represent.
On my patch, more than 1,200 people would have lost those personal independence payments. The fact is that the Chancellor has changed his mind not because of his desire to make the world better, but because his values would have been defeated, and defeated, dare I say it, by some of his own colleagues who faced the wrath of their constituents.
Time is limited, but I want to say three more things. First, we need to look at spending on infrastructure, including infrastructure in areas like north Wales. The Chancellor announced welcome money for Manchester airport, but we need a rail link to Manchester from north Wales. We need to think about how we can develop the north Wales economy with extra support for the HS2 route from Crewe to north Wales. We need to think about how we can electrify the rail network. That would be positive, valued investment, and we need to make it in a united European Union whose benefits are shared throughout the United Kingdom for all the people of the United Kingdom.
I take just one positive thing from the Chancellor’s Budget today: the Government’s commitment to campaign for a yes vote on 23 June. I look forward to working with them to achieve that yes vote for the good of the United Kingdom, and the good of north Wales.
Several hon. Members rose—
Mr Speaker
Order. I am afraid that, so that I can try to accommodate the maximum number of Members who have not yet spoken, I must reduce the time limit on Back-Bench speeches to three minutes, with immediate effect.
Barry Gardiner (Brent North) (Lab)
Let me begin like this.
“My husband was diagnosed with oesophageal cancer and has not been able to work since. We are now reliant on the ESA he receives. There is nothing more that either of us want than for life to somehow return to normal and for him to be able to return to the job he loves. We did not choose these dreadful circumstances—the benefits system is intended to protect those in society as much as possible when things go badly wrong. Forcing people in very difficult circumstances into poverty seems an outrageous way for any government to behave.”
That is a letter from one of my constituents, and she is absolutely correct. More than 9,000 Brent residents rely on ESA to live independently and with dignity. Their income has been cut by £30 per week, and the cut in the PIP would have caused 640,000 disabled people to lose up to a further £3,500 a year by 2020. It is therefore with great relief that many of them will have watched the Government’s U-turn on the proposed £4.4 billion cut. However, disabled people in my constituency have already suffered real hardship under this Government as a result of the bedroom tax, the benefit cap, the benefits uprating policy, the scrapping of disability living allowance, and the 12-month time limit on contributory ESA.
Yesterday the new Secretary of State for Work and Pensions said in his statement that the Government would not be making further cuts in to the welfare budget, but that gives the Chancellor a serious problem. He has a fiscal charter which enshrines in law that he must achieve a budgetary surplus by 2020. Last Wednesday, he believed that in order to meet that fiscal charter, he had to make £4.4 billion of cuts affecting the most vulnerable people in our society, because he wanted to cut corporation tax and capital gains tax and to raise the higher-rate income tax threshold to benefit the very richest. If he is genuinely not seeking to identify other cuts in services to offset that £4.4 billion, it is essential that we are told how he does propose to balance the books. The choice is simple: he must make further cuts in services, increase taxes, or fail to meet his own fiscal charter.
The inescapable facts of the Chancellor’s record will come back to haunt him. In 2010, he promised to balance the books by 2015. He did not. This year, he has a deficit of £72 billion. He has a debt-to-GDP ratio of 83.7%, and productivity failure means that manufacturing still lags behind its 2008 level. This is the failing Budget of a failing Chancellor who lacked the courage to come to this House and explain its collapse yesterday. That failure branded him a coward. Today he came to the House, but his failure to apologise to the most vulnerable in our society has branded him a nasty coward.
Mr Pat McFadden (Wolverhampton South East) (Lab)
For six years now, we have had Budgets made on the basis of targets and rules announced by the Chancellor, which have then informed the Government’s spending choices. Each time, the Chancellor has set out his targets as an iron necessity, suggesting that any deviation from them meant that those guilty of the deviation could not be trusted with the public finances, yet time after time, the deviation has been his. The traps he has fallen into have been traps of his own making.
The Chancellor began in the last Parliament by telling us that he would eliminate the deficit within five years. He failed to do so. His strategy of austerity was so successful that he announced it would be necessary to carry it on for two Parliaments, rather than just for the intended one. Instead of eliminating the deficit, he roughly halved it. That was the same pace of deficit reduction that Labour had asked for, but which he dismissed at the time as irresponsible profligacy.
Then, in this Parliament, there were three rules. First, there was a welfare cap designed to show how tough the Chancellor was on welfare. It lasted barely six months after the election. He was forced to break it, in his U-turn on tax credit cuts in the autumn statement, by the justified anger at his hitting the working poor who were trying to do the right thing by themselves and their families. His second fiscal rule involved a pledge to reduce debt year on year. Another fiscal rule made, another one broken. The Office for Budget Responsibility’s verdict is:
“The Budget measures make little difference to net debt in 2015-16, so we expect that target still to be missed.”
That leaves only his target for a surplus in 2019-20, which the OBR rates his chances of meeting as no better than 50:50.
This was supposed to be a Budget that did not frighten the horses, yet it has fallen apart in a matter of days. Whatever the motivations of the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith), he has exposed the reality of the approach of the Chancellor and the Prime Minister to Budget-making: make up a rule, then pick on the same group of low-income people to pay for it time after time. The right hon. Gentleman has described the measure as “unfair” and “divisive”, but perhaps his most damning statement is that he believes the Chancellor targets the non-pension part of the Department for Work and Pensions budget because it relates largely to a group of people who do not vote Conservative.
The Chancellor says that we are all in this together, but we cannot all be in it together if the Budget is a series of tax giveaways on thresholds for higher earners, capital gains tax cuts and other measures that, in the main, go to the better-off while disabled people are expected to take a £4 billion hit. The cuts to the disabled have been abandoned, at least for now, but the bigger impact involves not just one spending measure. The Prime Minister and the Chancellor prided themselves on fashioning a one nation compassionate Conservatism, but that claim has now been turned to dust by this Chancellor’s Budget. This is not a reformed Conservative party; it is the same old Conservative party, rewarding those it thinks will vote for it and punishing those it thinks will not. It is not just one spending measure that has been killed; it is the whole project of one nation compassionate Conservatism.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Most Budgets lose a bit of their lustre as the days wear on, but this one started to disintegrate before it was delivered, during its delivery and, spectacularly, afterwards. First there was the great pension reform that never materialised. Then the pound suffered a rocky period as Mr Memory—not!—tried to forget the deficit and the borrowing, and the fact that growth and exports should by now be seeing the sunny uplands as he had predicted. He then managed to knock down the share value of A.G. Barr, Britvic and Tate & Lyle with his clumsily scrabbled together announcement of the sugar tax. What we have learned over eight Budgets is that this guy has run out of excuses and is rapidly running out of friends. He is now correcting previous Budget errors—his errors. We see a cut in capital gains tax, which he increased in 2010, an increase in insurance premiums to pay for his cuts to flood defences, cuts in North sea taxes from the man who ignored advice and increased them in 2011, and a promised cut in business rates for small business, except that local authorities were promised such rates only four months ago, which is another £1.7 billion unaccounted for. The Government say that local authorities will be compensated, but will they be only blue authorities as usual?
What are we left with? We have the abolition of class 2 national insurance contributions, which on the surface will help the self-employed, although we need an assurance that it is not a cunning ploy to make them ineligible for employment and support allowance and another hidden welfare cut. Personal allowances will be raised, which is good for the top half of earners. There are also some new capital projects. The Chancellor is cutting corporation tax, which helps the service sector, but there is no sign of the rebalancing of the economy that he promised. There is nothing for manufacturing on capital allowances, and, of course, 9% of the catapult innovation resources is going to the Midlands and 46% to London. There is not a hint of support for the WASPI campaign. We have seen a legacy of 14% council tax increases, meaning an average of £162 for Birmingham households, to pay for his cuts to the police and social care. That is his plan for Birmingham.
In the fall-out of the Budget, we have been told that there are no new plans to attack the disabled. However, in a little-noted item, the Department for Work and Pensions is to receive £22 million to hire more staff to defeat disabled people’s claims at PIP tribunals. Maybe there will be more cuts for the disabled after all. The Chancellor has failed. He has broken every promise. He is finished.
Hannah Bardell (Livingston) (SNP)
Thank you for calling me, Mr Speaker.
“By failing to prepare, you are preparing to fail.”
The words of Benjamin Franklin are as resonant and appropriate today as they were when he uttered them, especially in relation to this Government and their mismanagement of the public finances. The Government are failing to prepare our country by implementing, by their own parliamentarians’ admissions, short-termist policies that risk failure in the long term. They continue to unravel the fabric of our society by pursuing their relentless austerity agenda.
As we come to the end of the Budget debate, there is much to reflect on, particularly after a weekend of turmoil for the “party of Government”. As the Tory party tears itself apart over Europe and its horrible benefits cuts, the most-affected people of our nations have a painful wait to find out how they will be affected by the Tory cuts. The IFS has warned that British voters should “all be worried” about the risk of job cuts and lower wages amid growing concerns of another economic downturn. The Chancellor’s cuts have even been criticised by his own leader in Scotland, Ruth Davidson. That the party of Government has the temerity to self-style itself the party of working people is an absolute joke. It has a target to increase the number of disabled people working, yet it cuts employment and support allowance and other supports that enable people with disabilities to find employment.
It is good to see that the Chancellor is taking a lead from the SNP Government in Scotland by cutting business rates, showing that while the Government often lag behind in reacting, they occasionally listen and do the right thing. However, it is important that the system is easy for business to understand and navigate. I have already heard some businesspeople raising concerns about the complexities of working out the rates reduction. Similarly, support for the oil and gas industry is welcome, but the time taken to reach the decision was woeful. Tens of thousands of people have lost their jobs and investor confidence is faltering. Quite frankly, it is too little, too late. Both the SNP and the industry have called for a proper strategic review of the tax regime for the North sea and our wait continues.
The apprenticeship levy is allegedly designed to help the next generation to get into work, but we are still waiting for clarity on how it will be implemented. I have raised the double-charging of industries such as oil and gas, but we continue to wait for a response.
The Guardian reported after the Budget that IPSE chief executive Chris Bryce described the move to abolish class 2 national insurance contributions as a
“long overdue and welcome step.”
However, he also said:
“The Government missed the perfect opportunity to back self-employed mums by giving them the same maternity pay as employees. This measure was recommended in the recent self-employment review.”
The Chancellor has failed to achieve his own targets on debt, the deficit, trade and exports and has stubbornly failed to listen to calls to invest in the economy.
Tristram Hunt (Stoke-on-Trent Central) (Lab)
I think we can all agree that this has been a pretty disastrous Budget, and that was the case even before the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith) revealed the Government’s extraordinary mendacity in their pursuit of policies for political purposes rather than for the national economic interest. What is worse, as my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) said, they are hammering the working-age poor because they do not vote Conservative.
Even on the Chancellor’s own terms, it is a shocking state of affairs. He has breached two of his three fiscal rules. Indeed, this Budget might end the period of fiscal rules that we have enjoyed for the past two decades. He has failed to meet his commitments to get debt falling as a share of GDP each year and he has failed to cap welfare spending. He tried to sweeten that with a spoonful of sucrose replacement, but we all saw through it.
The Chancellor is on track to meet only his third target, because he is deploying all sorts of fiscal shenanigans. He is rescheduling capital investment and shifting a one-off boost to corporation tax receipts. We also have to find £3.5 billion in unprotected spending.
The Chancellor is now set to borrow £38 billion more over the course of this Parliament than he planned just four months ago. Worst of all, this Parliament of productivity has stalled at the first outing. The OBR is clear on the collapse of productivity, even over the past six months.
Where I do agree with the Government is on the risk posed to our economy by fears of Brexit. The latest evidence from the CBI spells out the immediate costs to the British economy. Why, at a time of such fragile economic growth, would we knowingly want to turn our back on one of the most successful single markets in the world?
The key issue that we look at today is the morality of this Budget. To balance the books, the Prime Minister has chosen to focus on the weakest and most vulnerable in society. As the IFS has reported, the Government’s tax and benefit changes have
“resulted in significant losses for those of working age in the bottom half of the income distribution.”
Then came the hit on the disabled, with the assault on PIP, now thankfully reversed. But who gained from all that? Well, it was those paying capital gains tax. Half went to 35,000 individuals with incomes of £100,000 a year or more. It is a totally shocking result. According to the Resolution Foundation, the poorest 30% of households are set to lose around £565 by 2020, while the richest 30% of households are set to gain around £280. That is the morality of the Conservative party, and that is why we will be voting against the Budget tonight.
Angela Rayner (Ashton-under-Lyne) (Lab)
Last week, the Chancellor told us that he would put stability first, choose the long term and deliver real opportunity and social mobility. I am afraid that this Government have not appeared very stable since that statement and, far from being long term, the Budget that was delivered only last week appears to have been abandoned before we have even come to vote on it.
I suppose there was some opportunity and social mobility, even if it was limited to the Department for Work and Pensions. The former Secretary of State revealed the simple truth in his resignation letter: this is a Chancellor who puts his career before the country. Even by his own fiscal rules, he has failed, and blaming Labour will just not wash. This was a Budget not for the long-term interests of the country, but for the short-term interests of his ambition to lead the country—an ambition that seems to have unravelled almost as fast as his Budget.
As remarkable as it is to watch what has unfolded on the Government Benches, my concern is what is happening for my constituents in Ashton-under-Lyne. My constituent Marie has worked all her life, but then, unfortunately, developed hymphoedema as a secondary of breast cancer. She should be entitled to a dignified life while managing her condition, and this Budget has sought to deny her that.
One borough that sits in my constituency is Oldham, and under this Government, Oldham is now the most deprived town in England, according to the latest figures of the Office for National Statistics. Since 2010, more than half of the council’s income has been taken away. Real jobs are lost, real services are withdrawn and the most vulnerable suffer the worst. Our local economy and businesses suffer. Meanwhile, councils such as Surrey, given minimal cuts to local government finance in the first place, now receive a sweetener of nearly £12 million on top. Guess what the two local authorities serving my constituency, Oldham and Tameside, received: a big fat zero. Of course, the Chancellor has revealed exactly why that is the case; people in my constituency do not vote for the Conservatives.
Cuts to ESA to fund tax cuts, proposed cuts for the working poor through tax credits and universal credit—if the cruelty was not bad enough, the incompetence is now becoming obvious as well. In the last Parliament, we saw plans to tax everything from caravans to pasties proposed and abandoned, and this year the Chancellor becomes the first Chancellor in history to have to accept not one but two amendments to his own Budget resolution just days after he tabled it. Mr Speaker, I do not need three minutes to tell you about this Chancellor. I have three words, and they are “Not good enough”.
Geraint Davies (Swansea West) (Lab/Co-op)
What a shambles from the Wizard of Osborne, with the revelation that the tin man, the former Secretary of State for Work and Pensions, has a heart. I do not really believe it myself—I believe that he is thinking of jobs after Brexit with the Mayor of London, but other people will have other views. Of course, we now have a new Secretary of State, the former Welsh Secretary, who has just done a U-turn on the Wales Bill and has now done a U-turn on disability payments. I never thought that crabs did anything other than move sideways, but there we are. He was cheering away at the Budget a few days ago, but apparently now he does not agree with it.
As usual, the Wizard of Osborne has blamed Labour, but let us not forget that in the 10 years to 2008 the economy grew under Labour by 40%, some 4% a year, whereas that figure is now about 2%. We left debt as a share of GDP at 55% and it is now 83%. Why is that? Because of economic failure and slow productivity growth. Why is that? Because we have low investment in research and development and in infrastructure compared with the rest of the developed world. In particular, that is focused on London and the south-east and not in the north, in Wales or elsewhere.
I welcome the sugar tax, which I have been fighting for and which is a good idea—taxing something bad to invest in something good while costing the health service less. Similarly, I would have liked the Chancellor to take bold steps on air pollution, as 40,000 people a year are dying from diesel pollution, costing £20 billion a year, but of course he did not have the guts to re-tilt the fiscal structure for taxes and incentives to promote a sustainable green transport system. Instead, we have this epidemic of pregnant women having their babies’ mental health affected, children losing their lung capacity and so on. It is time that the Chancellor took that seriously.
I welcome the reduction in the Severn bridge toll, but that could have been reduced to a quarter of the price to cover operational costs as opposed to half the price, as the Government will continue to make a large margin of profit by basically putting a tax on trade with Wales. I welcome the news that there might be a new city deal for Swansea and the fact that the Chancellor is still trying to support the EU. The reality is that if we do have Brexit, as IDS and others want, we will be turning our backs on a large market. The argument that we are essentially net importers does not follow because, in essence, that applies only to Germany and Spain.
Finally, I should mention the other stealth tax from employers’ contributions on pensions, which is a back-door cut for the Welsh Government that I resist. In a nutshell, this is a sheriff of Nottingham Budget that I resist.
Rachael Maskell (York Central) (Lab/Co-op)
This was a Budget about words, not wisdom. I want to focus on that because we have now had six years of the Chancellor presiding over a very worrying economic picture while using a narrative to disguise the fragile place into which he has put our economy. It is also a Budget that exposed the worst aspects of the cruel, callous and uncaring Conservatives, crushing disabled people and some of the most vulnerable and economically disadvantaged groups in our society. Those actions over the past six years have worried me as the weaknesses in the structure of the economy have not been addressed and the economy has been used to deliver a political agenda, not productivity and not fiscal security.
This is leading to a risk shift, increasingly away from Government to local communities and individuals—those who cannot weather the storm. Politicians can use any words they want, but what lingers behind those words is what matters. Apprenticeships are not apprenticeships any more, the living wage is not a living wage, and affordable housing is unaffordable. Remember the phrase “long-term economic plan”? I will let hon. Members work that one out for themselves.
I know the impact of all this in my local community and on my local economy. York has a low-wage, insecure and high cost of living economy where housing is now inaccessible. We heard about the next generation being better off. With the debts that young people now carry and the difficulty in accessing housing, I was interested in the lifetime ISA, which will mean that the people who are least worse off will get £1,000, while those struggling with tax credit cuts and increased in-work poverty will feel the pinch.
I hang my head in shame at the way that disabled people are treated in the Budget. No compassion there. That takes me back to the economic picture which I worry so much about. The Chancellor has borrowed more than all Labour Chancellors put together throughout history, and wants to borrow even more now. The question is what he will do with that money. We know from our economic experts how to invest that money to lead not to a growing debt, but to growing productivity. When the Chancellor has had to cut his own growth targets twice in the past six months, from 2.4% to 2.2% and now to 2%, he is admitting that his economic plan is not working. He did not clear the deficit in the previous Parliament, and it seems that with this omnishambles Budget he will not do so in this Parliament either.
I am worried, and I am most worried about the people I represent. In six years of low productivity, their insecurity and risks are rising, the local economy in York is totally inequitable—a two-speed economy, as it is known, speeding up for those who are well off—
Kate Osamor (Edmonton) (Lab/Co-op)
I would like to focus my speech on the announcements in the Budget that all schools will be forced to become academies by 2020. This will lead to a fundamental shift in the way education is managed in this country, turning education into a business. I am concerned that, like most businesses, it will benefit the richer, and leave behind those who most need educational reform. This is a concern echoed by the public. More than 100,000 people have signed a petition to hold a public inquiry and a referendum on turning all schools into academies.
I have a history of campaigning against forced academisation. Before becoming an MP, I campaigned against forced academisation in Haringey. The experience taught me how much community support there is for the state sector in Britain, and how much people care about their schools having the right priorities for their children. Forced academisation is a costly exercise. The timing of this move appears highly questionable. At a time when councils, especially Labour-run councils, are having their budgets cut by 79%, and when they are having to make severe cuts to valuable front-line services, money spent on forced academisation seems like a political exercise, rather than money well spent.
Roy Perry, chairman of the Local Government Association’s children and young people board, stated:
“With mixed evidence about academisation improving standards and when public spending is facing significant cuts imposing academisation on schools regardless of local opinion cannot be an appropriate use of public money.”
This policy was not in the Conservative manifesto. There needs to be proper debate and scrutiny, looking into the cost and how the policy will affect local communities.
Academies do not solve the big problems facing our schools—problems of a shortage of teachers, a shortage of head teachers, and increasing class sizes. Until we look at all those aspects, we should not proceed with academisation.
Ruth Cadbury (Brentford and Isleworth) (Lab)
Is this a Budget where those with the broadest shoulders bear the greatest burden, or is it one that cuts support for those who are already struggling, such as the parents and carers of people with learning disabilities whom I met in Hounslow yesterday, who are bearing the brunt of service and benefit cuts? The Resolution Foundation has shown that the poorest 30% of households are set to lose around £565 per annum by 2020, while the richest 30% are set to gain around £280. Is it not right to suggest, as the former Work and Pensions Secretary did, that we are not all in it together?
On housing, the lifetime ISA will, according to the Office for Budget Responsibility, actually increase home prices, and it has added 0.3% in its Budget book to the level that house prices will reach by 2021. That proves that the Government plan to use taxpayers’ money to further inflate house prices out of the reach of young people, rather than to build affordable homes for rent that help people on low incomes to have a permanent home over their heads.
Let me move on to the topic of today’s budget debate: business and the economy. First, investment in infrastructure is essential for future growth, but business investment is falling, and the Government are set to spend just over half the level spent by the Government of 2010. Britain is set to slip yet further down the international rankings on infrastructure investments.
Secondly, are not skills a crucial element of our economic infrastructure? There is nothing in the Budget to help West Thames College, which, like all further education colleges, faces a 21% funding cut, resulting in a cut in courses and in the number of students being trained. There is nothing to provide the essential step change in skills that the UK economy needs.
Finally, on the 19% gender pay gap, the Women and Equalities Committee concluded today that not using women’s skills fully costs the UK economy £36 billion or 2% of GDP. There is nothing in the Red Book to address that, and nor is there anything to address the fact that 81% of the Budget cuts have fallen on women.
So, is this a Budget from a Chancellor with a track record of growth and stability, or is it a Budget that yet again has to revise his figures on growth, productivity and exports downwards? I conclude by using words from the former Work and Pensions Secretary and by asking what the Chancellor cares more about—the “fiscal self imposed restraints” or the “national economic interest”.
Peter Dowd (Bootle) (Lab)
May I put on record my condolences to the people of Brussels and Belgium? My home town has been twinned with the town of Mons for more than 50 years, and the current Mayor of Mons—Elio Di Rupo—is the former Prime Minister of Belgium. I would therefore like to make sure my views are recorded.
Anything I say about the Chancellor in relation to the Budget will be as nothing compared with the thrashing he received over the weekend from his colleagues and particularly from the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith) or, conversely, with the assault that the right hon. Member for Chingford and Woodford Green received in retaliation. It was the nasty party in full flow, arguing among themselves for all to see. If Conservative Members do that to themselves, hon. Members can imagine how easy it is for them to do the same to disabled people.
Before our very eyes, the acrid smoke from the smoke-and-mirrors Budget is starting to choke the Chancellor, and the mirrors have cracked. As for compassionate Conservatives, they would not know a good samaritan if he crossed the road to help them—by their standards, they would expect to be mugged. Expecting the country, at this point in the whole unfolding charade, to believe that a mass damascene conversion has taken place among Conservative Members is stretching credulity to its limits.
The Chancellor is fond of talking about cocktails: the problems faced by the economy are the result of a cocktail of external pressures—oil prices, the squeeze in China, the instability in the middle east—that have little to do with him. In my view, what we have seen is more cock-up than cocktail. According to the Chancellor, that has nothing to do with the fact that, as John Humphrys pointed out on the “Today” programme, he has missed virtually every target he has set himself.
Labour Members would be impressed by the conversions we have seen if we did not smell a rat. At the end of the day, however, we all remember the right hon. Member for Chingford and Woodford Green punching the air at the autumn statement and trying to claim that the Chancellor was Mr Christmas. Evidently the Chancellor had laid his hands on another £27 billion, and of course Conservative Members were all cheering and chinking glasses. Well, the chinking of glasses is often followed by a hangover, and the hangover is on its way. The Government are going to have to deal with the hangover, because they cannot and must not—and we will not tolerate it—make people in the most vulnerable positions the fall guys for the arrogance, the incompetence and the brass neck of this Chancellor.
Daniel Zeichner (Cambridge) (Lab)
It was striking how little the Chancellor had to say about science and innovation in the Budget. Nearly 60,000 people are employed in the Cambridge cluster, and Cambridge is home to over 1,500 tech companies with a combined annual revenue of about £13 billion. This Government’s record on science is erratic. Investment in research and development is only at 0.49% of GDP—below the OECD average of 0.67% and well below the EU target of 3%. That means that the UK comes last in the EU 27 and eighth in the G8 in terms of R and D spending as a proportion of GDP. The annual funding shortfalls resulting from the 2010 flat-cash settlement for the resource science budget meant a £1 billion loss to the UK research base over the lifetime of the previous Parliament.
There was some relief when the Government committed to protecting the science resource budget in real terms over the course of this Parliament, but £1.5 billion of this funding has been reserved for a new global challenges fund—a new funding commitment tucked within existing science resource funding. I would welcome clarification of how this will impact on current scientific research. It should be noted that funding for innovation and wider research sits outside the ring-fenced science budget. This funding supports companies, especially small and medium-sized enterprises, in translating their research into products.
Like many others, I was very disappointed by the Government’s decision to bin research grants for companies and replace them with loans. This will have a significant impact on key early-stage enterprises, which have explained that they will struggle to secure investment if they have a hefty loan on the books. Sadly, the Government did not listen. They should, because, as I have said on previous occasions, Cambridge’s future success is not assured. Last week, new data from the Office for National Statistics showed that house prices in Cambridge have risen faster since 2010 than anywhere else in the country. If people cannot live in the city, they are then forced to live outside, and that is why local transport matters so much.
I turn to the devolution deal—so-called. Let us be clear: Cambridge and the area around us need the freedoms to make the investments needed to tackle the housing and transport challenges we face. That was why Cambridgeshire councils, business and universities came together to create the Case for Cambridge—a thoughtful and sensible set of proposals put to Government last year. However, instead of responding positively to that locally agreed and developed proposal, the Government came back very late in the day with a completely different solution, and basically said, “You’ve got three weeks to take it or leave it.” Unsurprisingly, the reaction has been furious. The local enterprise partnership has rejected it, individual business leaders have rejected it, the city council has rejected it, and today Cambridgeshire County Council rejected it. This is no way to deal with the huge and urgent challenge that faces one of the most successful parts of the country: it puts that very success at risk. I hope that those involved in this process—ultimately it is Treasury-led—will reflect on what has happened and reopen discussions in good faith with Cambridgeshire. Cambridgeshire needs a deal, but it needs a deal for Cambridgeshire, not for the Treasury.
Ms Angela Eagle (Wallasey) (Lab)
Today we have heard contributions from 30 Opposition Members and only 14 Government Members—the Government ran out of contributors quite a while ago.
The Chancellor has had to be dragged back to the Chamber today to explain what on earth has happened to his Budget which, after all, is still only six days old and already contains three U-turns. He put in a bravura performance, but there was not a windmill that he did not tilt at or a straw man that he did not set up. Even then, he had the gall to claim that he supports the vulnerable. At the end of all that sound and fury, however, his Budget was still a mess, and the idea of one nation Conservatism is still a national joke.
What we actually got was a botched Budget that has disastrously unravelled in just a few short days. It was a Budget created by a Chancellor far more concerned with advancing his own interests than advancing the national interest. We all knew that this was a Budget that had to be seen through the lens of the Chancellor’s own long-cherished ambition to become leader of the Tory party and Prime Minister, and that the chief interest the Chancellor was promoting was his own. In an effort to curry favour with his own side, he announced increases in tax thresholds and cuts to capital gains tax, and he decided that cuts to disability benefits would pay for them.
The Chancellor has presented a catastrophic Budget—omnishambles does not do it justice. The Prime Minister had ordered him to produce a “safety first” budget; instead, he has succeeded in producing a Budget that has torn the Cabinet apart. Despite his performance today, we see a Chancellor at bay, on the run from attacks in his own party. He has completely lost control of his own Budget. He is now so weakened that he is accepting amendments on the tampon tax and solar panels because he knows he would lose the votes, and he dare not let that happen. He has had to reappear in the Chamber today to explain where it all went wrong.
It took less than 24 hours for the Chancellor’s triumph of Wednesday to turn into chaos at the weekend. We have seen a Government in complete and utter disarray and a Chancellor who has only succeeded in shredding his own reputation. Today, we see the utter collapse of his authority. His popularity has halved since the election, and two thirds of people who voted Conservative last May do not think that he is up to the job of being Prime Minister.
The Chancellor’s Budget was rightly savaged as deeply unfair by his then Secretary of State for Work and Pensions, the right hon. Member for Chingford and Woodford Green (Mr Duncan Smith). Back Benchers’ outrage grew as they realised that the huge cuts to disability support were being used to fund a tax giveaway for the well-off. We then had Panic Friday, as the Prime Minister realised that his party was in revolt and ordered a hasty retreat on the Chancellor’s biggest revenue raiser in the Red Book. Then came a dramatic Cabinet resignation by the Work and Pensions Secretary, who had reached the end of his tether. On Manic Monday, the cowardly Chancellor went missing, sending out his hapless junior to cover for him.
The former Work and Pensions Secretary made clear his opposition in his devastating resignation letter, in which he said that cuts to disability benefits were
“not defensible in the way they were placed within a Budget that benefits higher earning taxpayers.”
That was this Chancellor’s choice. The former Work and Pensions Secretary called the disability cuts that the Chancellor presented last week “morally indefensible”. The former Work and Pensions Secretary has questioned the entire moral basis of the last six years of Conservative government, and weak assertions from Conservative Members that they are really, really compassionate are revealed for what they really, really are: hollow nonsense. The former Work and Pensions Secretary was also clear that he thought that the Chancellor’s welfare cap was unsustainable, and he questioned the motives of his erstwhile Cabinet colleagues, slamming the Chancellor’s indefensible Budget. He said
“they’re losing sight of the direction of the travel that they should be in”
and
“it is in danger of drifting in a direction that divides society rather than unites it. And that I think is unfair.”
It is still unclear in what form this Budget statement will survive, but it now contains an abandoned £4.4 billion of disability benefit cuts and an unspecified £3.5 billion cut in public expenditure. This is a Budget that continues to disintegrate before our very eyes. The Chancellor has given us a Budget that is an economic failure, a moral failure and a political failure. The OBR forecast accompanying the Budget formed a sharply deteriorating backdrop, caused mainly by his own failures at home. Productivity has been revised down and down. Growth has been revised down and down. Earnings have been revised down and are still lower in real terms than they were when the Chancellor took office. It is the same for business investment, which was downgraded by two thirds this year alone. That is not the forecast that most concerns the Chancellor, however. I do not know if you are a betting man, Mr Speaker, but over the weekend the odds on the Chancellor moving next door to No. 10 have slipped from a healthy 2:1 to a distant 4:1. He is on the slide—and fast.
This is a Chancellor who has an astonishing record of missing his own targets. He promised to protect our triple A credit rating—he has failed. He said he would eliminate the deficit by 2015—he has failed. In his 2012 Budget, he set out a target to double UK exports to £1 trillion by 2020—he has failed, admitting he will miss it by £357 billion. In his last Budget, the Chancellor established three targets he wished to be judged by in this Parliament. First, he promised to keep social security spending below an arbitrary cap he imposed on himself. He has, by his own admission, failed, and he will fail every year of this Parliament, and that was even before he was forced to row back on the cuts to PIP.
Secondly, the Chancellor promised to reduce debt as a percentage of GDP in every year. He will fail, by the end of the month, to meet his target, and he only met it last year by flogging off public assets, such as bits of Royal Mail. Thirdly, he has promised to have an overall surplus by 2020, and that rule is now dangling by the thinnest of threads. The Red Book shows that he only hangs on to meeting his economically pointless surplus rule by a series of tricks the Joker would have been proud of, and a promise to cut borrowing by an unprecedented £32 billion in a pre-election year. These are fiscal gymnastics that would embarrass the dodgiest accountant. It does not take a genius to see that this amounts to an economic plan that has lost all credibility in the country, just as he is losing credibility in his own party.
This Budget is also a moral failure. It is a Budget with unfairness at its very heart, from a Chancellor who is making the wrong decisions for our country. Since 2010, over 1 million people have been forced to go to food banks, and over 1 million benefit claimants have been sanctioned, often for utterly trivial reasons. Dying people have been found fit to work—one woman in a coma was found fit to work—and people have committed suicide. Homelessness has soared, and the bedroom tax has caused untold misery. The Chancellor has talked about workers and shirkers, stigmatising all benefit claimants, including those with disabilities, and that has led to a discernible increase in hate crimes against them. I hope the Chancellor is proud of that record, but it is clear that this is not and can never be called compassionate Conservatism.
This is a Budget that planned to eliminate the deficit on the backs of the poor and some of the most vulnerable in our society. None of this is morally justifiable. Never again will this Government be able to claim, “We’re all in this together”. Never again will they be able to don the mantle of compassionate Conservativism with any shred of credibility. This is a political failure of a Budget, as well as a moral failure and an economic failure. This is a Chancellor who has mishandled tax credit cuts, who has pushed and lost on Sunday trading and who has now mishandled disability benefit cuts, too. He is a Chancellor who has lost control of his Budget and lost control of his leadership hopes. This is an omnishambles Chancellor who has produced an immoral Budget, which is disintegrating before our eyes. That is why we will vote against it tonight.
The Chief Secretary to the Treasury (Greg Hands)
May I associate myself with the comments made by the Chancellor, Members on both Front Benches and many Back Benchers about the terrible terrorist outrages in Brussels this morning? I remind everybody that we stand shoulder to shoulder with the people of Belgium, as we in this country have done many times before against the scourge of terrorism.
The past four days of this debate have certainly been lively. I want to look back not just four days, but more than six years. Let us cast our minds back to six years ago, in 2010, when the whole world doubted the UK’s ability to pay its way. Now the UK is forecast to grow faster than any other major advanced economy in the world.
Six years ago, we were borrowing 25p out of every £1 that we spent—almost £6,000 per household per annum. Now that figure is down to 10p, and will be 7p next year. Six years ago our deficit was more than 10% of GDP. Now we are three years away from building that surplus. Our economy is a full 12.6% bigger than it was in 2010 when my right hon. Friend delivered his first Budget. Our foreign exchange reserves have doubled, and every day has seen an average of 1,000 jobs created. Inflation is low, poverty and inequality are falling, and wages are rising. Yes, that is due to our long-term economic plan.
We can only have a fair and compassionate society on the back of a strong economy. That is what the British electorate asked us to do in May, and that is what we are doing. We are proud of the jobs created over the past six years, proud of having lifted more than 1 million low-paid people out of income tax, proud of having introduced the national living wage, and proud of our record as a compassionate one-nation Conservative Government.
Let me respond to some of the points raised today, partly because the shadow First Secretary of State failed to mention any of them. The hon. Member for Dewsbury (Paula Sherriff) and my right hon. Friend the Member for Basingstoke (Mrs Miller) raised a technical detail and asked, with reference to the tampon tax, what will happen to the money now allocated for that in the Budget. That was a one-year bidding process, and all the organisations will get the money that we announced on Wednesday. The relevant clause for that will be in the Finance Bill, which will be published on Thursday.
Various Conservative Members, including my hon. Friends the Members for Warwick and Leamington (Chris White), for South Dorset (Richard Drax), for Richmond (Yorks) (Rishi Sunak), for Croydon South (Chris Philp) and for Dudley South (Mike Wood), my right hon. Friend the Member for Basingstoke, and others, praised the wealth creators and business, and this is very much a Budget for business, wealth creators and enterprise. My hon. Friends the Members for Harrow East (Bob Blackman) and for Peterborough (Mr Jackson), the hon. Members for Clwyd South (Susan Elan Jones) and for City of Durham (Dr Blackman-Woods), and the right hon. Member for Delyn (Mr Hanson) all mentioned infrastructure spending—albeit with slightly differing views—and individual projects.
The Government remain on course to deliver £100 billion in infrastructure projects this Parliament. The Budget announced more for flood defences, and for transport projects in the north, London and right the way across England. My hon. Friend the Member for Harrow East raised a point about rough sleeping, and we are committing £110 million extra for that. No allocations have yet been made, but London is very much a focus of that additional money.
When the hon. Member for Coatbridge, Chryston and Bellshill (Philip Boswell) spoke I had to stop and check that I had heard him correctly, because he spoke about a risk “in relation to the price of oil”. I can tell him something about a risk “in relation to the price of oil”, because if Scotland were to have separated on the SNP’s proposed date of this Thursday, it would now be facing a fiscal black hole of £19 billion, largely caused by a 98% collapse in oil revenue.
My hon. Friend the Member for Norwich North (Chloe Smith) called this a Budget for savers and the next generation. She is absolutely right, and the Lifetime ISA will apply even to those who do not put in the full £4,000 a year. We have also launched the Help to Save initiative, which will help lower-paid savers who are on universal credit or tax credits.
My hon. Friend the Member for Erewash (Maggie Throup) highlighted our income tax cuts, which deliver on our manifesto commitment—we are accelerating them for the low-paid, the lower-paid and the medium-paid.
We heard opposing speeches on the merits of the soft drinks industry levy from my hon. Friend the Member for Bedford (Richard Fuller), the hon. Member for Falkirk (John Mc Nally) and others. My hon. Friend raised a number of technical objections to the levy. We are consulting on the details and are keen to work with the industry on it, but hon. Members should make no mistake: we think it is the right thing to do to help to deal with the UK’s £27 billion per annum obesity problem.
The hon. Member for Foyle (Mark Durkan) thanked us on behalf of Northern Ireland for launching funding for the new air ambulance, which I know has been very well received. We are open to ideas on UK city deals coming from Northern Ireland, but I should say to him that the Stormont House agreement committed more than £2.5 billion to the Executive, which I think was very generous.
We heard from many former members of the Labour Treasury team—the shadow shadow Treasury team, as they have been called—including the right hon. Member for Delyn, and the hon. Members for Birmingham, Ladywood (Shabana Mahmood) and for Leeds West (Rachel Reeves). All protested at the policies and initiatives launched by the Government. I have two things to say to them. First of all, in all of the last Parliament, I do not recall any of them coming up with a single proposal to save money or cut spending, or to back any tax rise. More interestingly, not one of the shadow shadow Treasury team had a word of praise for their actual shadow Treasury team, which was absolutely compelling evidence of where they are going wrong.
It is because we have faced up to the facts and because we have taken the difficult decisions that our economy is fundamentally stronger, more resilient and better able to protect our families and households in uncertain times. Uncertain times are what we must currently deal with. Growth worldwide is slowing, commodity prices have fallen and productivity growth has been sluggish, particularly in the most advanced economies. The middle east remains unstable and global markets have experienced worrying turbulence. The UK is immune to none of that. Responsible government means preparing our economy for the challenges that lie ahead. It means ensuring that we never again find ourselves in the position we found ourselves in six years ago. It means that, when problems come up, we deal with them in full and early on.
Rachel Reeves
Many Labour Members have asked about the £4.4 billion black hole. Will the Chief Secretary to the Treasury please confirm whether that £4.4 billion will be plugged by further cuts to welfare, tax increases, spending cuts or more borrowing? It has to be one. Which is it?
Greg Hands
It is always good to hear from the shadow shadow Treasury team. I can tell the hon. Lady that more will be outlined in the course of this year in the autumn statement. However, we remain on course—[Interruption.]
Mr Speaker
Order. Members are becoming a little over-excitable. The Chief Secretary must be heard.
Greg Hands
We remain on course to deliver our budget surplus in 2019-20, which is far more than Labour ever achieved. I would have thought that the hon. Lady would take the opportunity to congratulate the Government on the new commitment to flood defences in Leeds, which she did not mention.
I will be working to find a further £3.5 billion of efficiencies by 2019-20 so that we deliver that surplus by the end of this Parliament. That means that we keep our economy on course, and we refuse to pass on the burden to our children and grandchildren.
At the same time, we will continue to reward aspiration, back growth, invest in education and help people get on in life—because this is a Budget that backs Britain’s businesses. It cuts the burden of business rates by £6.7 billion over the next five years, taking 600,000 of our smallest firms out of business rates altogether. It cuts the rate of corporation tax even further, to 17% in 2020, giving us the most competitive rate in the G7 and benefiting more than 1 million businesses. Through a £1 billion North sea oil and gas package, it is a Budget that helps Britain’s largest industry succeed in difficult economic times; through cuts to both the higher and basic rates of capital gains tax, it encourages investment—the lifeblood of Britain’s businesses; and, through the abolition of class 2 national insurance contributions, it creates a simpler tax system and a tax cut of more than £130 for the 3 million-plus self-employed people in Britain—this Government stand squarely behind them.
This is a Budget that puts cash into people’s pockets. It raises the tax-free personal allowance to £11,500 from next year, and the higher rate threshold to £45,000. We recognise that money should be in savings accounts as well as in pockets, so this is also the Budget that creates the lifetime ISA, helping people to buy their first home or save for their retirement. This is a Budget that freezes fuel duty, helping people every time they fill up their tank. It is a Budget that supports responsible drinkers; helps the nation’s pubs and gives a further boost to the Scotch whisky industry.
I recall seeing on the morning of the Budget the Scottish National party’s lead spokesman saying that he had three asks in this Budget, and he listed them on Twitter. They were to freeze fuel duty, to keep down duty on Scotch and to have a fiscal package for oil and gas. We have met all three of his asks and much more, and this is a very good Budget for Scotland, too.
It is a Budget that strengthens our tax base, through reforming the tax system so that it is in line with the realities of global, 21st-century economics. As I said, in this Budget we take action on the scourge of obesity, which, as well as putting unsustainable pressures on the NHS, ruins people’s health and quality of life, and costs the country about £27 billion a year.
Greg Hands
I do not have time to give way. Because we continue to get the public finances under control, our Budget—[Interruption.] I am sorry, but all the Labour MPs elected in 2010 and 2015 do not remember the last Labour Government, and that is part of their problem. Because we get the public finances under control, our Budget gives this country a stable base from which to support those in need of support. That is a point that too many on the Opposition Benches still do not get: there can only be true social justice on the back of a functioning economy. Had we not taken action in 2010, borrowing would have been £930 billion more by the end of the decade than it is now forecast to be. On a serious point, one more downturn and we could have lost control altogether in this country, and when that happens it is the poorest and the most vulnerable who are hit the hardest. So we say: never again. That is why we take action now, so we do not pay later.
To conclude, I am sure that some on the Opposition Benches will vote against the Budget tonight, but they will be voting against more money going to our schools. They will be voting against 600,000 small businesses being taken out of paying business rates altogether. They will be voting against support for our North sea oil and gas industry. They will be voting against increases for children’s healthcare. They will be voting against helping working people save for their future. They will be voting against lower taxes for the lowest paid. They will be voting against a better future for Britain.
I say that Members should vote for this Budget. Stability, security, prosperity is what the electorate asked us to provide last May and it is that which this Budget provides, and I ask the House to support it tonight.
Amendment (b) agreed to.
Amendment made: (a), after ‘importation’ in paragraph 2(a), insert—
‘other than in respect of value added tax on women’s sanitary products’.—(Paula Sherriff.)
Main Question, as amended, put.
Mr Speaker
I am now required under Standing Order No. 51(3) to put, without further debate, the Question on each of the Ways and Means motions numbered 2 to 69 on which the Bill is to be brought in, and on the motions on Procedure and Finance (Money). I should point out that motion No. 13 includes a schedule. These motions are set out in a separate paper distributed with today’s Order Paper.
I must inform the House that, for the purposes of Standing Order No. 83U, and on the basis of material put before me, I have certified that in my opinion the following founding motions published on 16 March 2016 and to be moved by the Chancellor of the Exchequer relate exclusively to England, Wales and Northern Ireland and are within devolved legislative competence. I am referring, as I feel sure colleagues are keenly aware, to the following motions:
45. Stamp duty land tax (calculating tax on non-residential and mixed transactions);
46. Stamp duty land tax (higher rates for additional dwellings etc.);
47. SDLT higher rate (land purchased for commercial use);
48. SDLT higher rate (acquisition under home reversion plan);
49. SDLT higher rate (properties occupied by certain employees);
50. Stamp duty land tax (co-ownership authorised contractual schemes);
57. Landfill tax (rates); and the motion on Procedure (Future Taxation) relating to rates of landfill tax.
Any of these motions on which the House may divide will be subject to double majority voting. With the leave of the House, I will put the Question on motions 2 to 7 together.
The Speaker put forthwith the Questions necessary to dispose of the motions made in the name of the Chancellor of the Exchequer (Standing Order No. 51(3)).
2. Income tax (charge and main rates)
Resolved,
That—
(1) Income tax is charged for the tax year 2016-17.
(2) For that tax year—
(a) the basic rate is 20%,
(b) the higher rate is 40%, and
(c) the additional rate is 45%.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
3. Dividends etc.
Resolved,
That provision may be made about distributions (within the meaning of the Tax Acts), including provision about rates of income tax on dividend income (within the meaning of the Income Tax Acts).
4. Taxable benefits (application of Chapters 5, 6 and 7 of Part 3 of the Income Tax (Earnings and Pensions) Act 2003)
Resolved,
That—
(1) Part 3 of the Income Tax (Earnings and Pensions) Act 2003 (employment income: earnings and benefits etc treated as earnings) is amended as follows.
(2) In section 97 (living accommodation to which Chapter 5 applies), after subsection (1) insert—
“(1A) In determining for the purposes of this Chapter whether this Chapter applies to living accommodation provided for an individual it is immaterial whether or not the terms on which it is provided constitute a fair bargain.”
(3) In section 114 (cars, vans and related benefits to which Chapter 6 applies), after subsection (1) insert—
“(1A) In determining for the purposes of this Chapter whether this Chapter applies by virtue of subsection (1) to a car or van made available to an individual it is immaterial whether or not the terms on which the car or van is made available constitute a fair bargain.”
(4) For section 117 substitute—
“117 Meaning of car or van made available by reason of employment
(1) For the purposes of this Chapter a car or van made available by an employer to an employee or member of an employee’s family or household is to be regarded as made available by reason of the employment unless subsection (2) or (3) excludes the application of this subsection.
(2) Subsection (1) does not apply where—
(a) the employer is an individual, and
(b) the car or van is made available in the normal course of the employer’s domestic, family or personal relationships.
(3) Subsection (1) does not apply where—
(a) the employer carries on a vehicle hire business under which cars or vans of the same kind are made available to members of the public for hire,
(b) the car or van in question is hired to the employee or member in the normal course of that business, and
(c) in hiring that car or van the employee or member is acting as an ordinary member of the public.”
(5) In section 173 (loans to which Chapter 7 applies), after subsection (1) insert—
“(1A) In determining for the purposes of this Chapter whether a loan is an employment-related loan it is immaterial whether or not the terms of the loan constitute a fair bargain.”
(6) The amendments made by this Resolution have effect for the tax year 2016-17 and subsequent tax years.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
5. Taxable Benefits (diesel cars)
Resolved,
That—
(1) In section 24 of the Finance Act 2014 (cars: the appropriate percentage), omit the following (“the repealing provisions”)—
(a) subsection (2),
(b) subsection (6),
(c) subsection (10),
(d) subsection (11), and
(e) subsection (15).
(2) Any provision of the Income Tax (Earnings and Pensions) Act 2003 amended or omitted by the repealing provisions has effect for the tax year 2016-17 and subsequent tax years as if the repealing provisions had not been enacted.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
6. Taxable Benefits (vans)
Resolved,
That—
(1) Section 155 of the Income Tax (Earnings and Pensions) Act 2003 (cash equivalent of the benefit of a van) is amended as follows.
(2) In subsection (lB)(a), for “2019-20” substitute “2021-22”.
(3) In subsection (1C), for paragraphs (b) to (e) substitute—
“(b) 20% for the tax year 2016-17;
(c) 20% for the tax year 2017-18;
(d) 40% for the tax year 2018-19;
(e) 60% for the tax year 2019-20;
(f) 80% for the tax year 2020-21;
(g) 90% for the tax year 2021-22.”
(4) The amendments made by this Resolution have effect for the tax year 2016-17 and subsequent tax years.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
7. Income tax (exemption for trivial benefits provided by employers)
Resolved,
That—
(1) The Income Tax (Earnings and Pensions) Act 2003 is amended as follows.
(2) After section 323 insert—
“323ATrivial benefits provided by employers
(1) No liability to income tax arises in respect of a benefit provided by, or on behalf of, an employer to an employee or a member of the employee’s family or household if—
(a) conditions A to D are met, or
(b) in a case where subsection (2) applies, conditions A to E are met.
(2) This subsection applies where—
(a) the employer is a close company, and
(b) the employee is—
(i) a person who is a director or other office-holder of the employer, or
(ii) a member of the family or household of such a person.
(3) Condition A is that the benefit is not cash or a cash voucher within the meaning of section 75.
(4) Condition B is that the benefit cost of the benefit does not exceed £50.
(5) In this section “benefit cost”, in relation to a benefit, means—
(a) the cost of providing the benefit, or
(b) if the benefit is provided to more than one person and the nature of the benefit or the scale of its provision means it is impracticable to calculate the cost of providing it to each person to whom it is provided, the average cost per person of providing the benefit.
(6) For the purposes of subsection (5)(b), the average cost per person of providing a benefit is found by dividing the total cost of providing the benefit by the number of persons to whom the benefit is provided.
(7) Condition C is that the benefit is not provided pursuant to relevant salary sacrifice arrangements or any other contractual obligation.
(8) “Relevant salary sacrifice arrangements”, in relation to the provision of a benefit to an employee or to a member of an employee’s family or household, means arrangements (whenever made, whether before or after the employment began) under which the employee gives up the right to receive an amount of general earnings or specific employment income in return for the provision of the benefit.
(9) Condition D is that the benefit is not provided in recognition of particular services performed by the employee in the course of the employment or in anticipation of such services.
(10) Condition E is that—
(a) the benefit cost of the benefit provided to the employee, or
(b) in a case where the benefit is provided to a member of the employee’s family or household who is not an employee of the employer, the amount of the benefit cost allocated to the employee in accordance with section 323B(4),
does not exceed the employee’s available exempt amount (see section 323B).
323B Section 323A: calculation of available exempt amount
(1) The “available exempt amount”, in relation to an employee of an employer, is the amount found by deducting from the annual exempt amount the aggregate of—
(a) the benefit cost of eligible benefits provided earlier in the tax year by, or on behalf of, the employer to the employee, and
(b) any amounts allocated to the employee in accordance with subsection (4) in respect of eligible benefits provided earlier in the tax year by, or on behalf of, the employer to a member of the employee’s family or household who was not at that time an employee of the employer.
(2) The annual exempt amount is £300.
(3) For the purposes of subsection (1) “eligible benefits” means benefits in respect of which conditions A to D in section 323A are met.
(4) The amount allocated to an employee of an employer in respect of a benefit provided to a person (“P”) who—
(a) is a member of the employee’s family or household, and
(b) is not an employee of the employer,
is the benefit cost of that benefit divided by the number of persons who meet the condition in subsection (5) and are members of P’s family or household.
(5) This condition is met if the person is—
(a) a director or other office-holder of the employer,
(b) an employee of the employer who is a member of the family or household of a person within paragraph (a), or
(c) a former employee of the employer who—
(i) was a director or other office-holder at any time when the employer was a close company, or
(ii) is a member of the family or household of such a person.
(6) In this section “benefit cost” has the same meaning as in section 323A.”
(3) The amendment made by this Resolution has effect for the tax year 2016-17 and subsequent tax years.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
8. Travel expenses of workers providing services through intermediaries
Question put,
That—
(1) In Chapter 2 of Part 5 of the Income Tax (Earnings and Pensions) Act 2003 (deductions for employee’s expenses), after section 339 insert—
“339A Travel for necessary attendance: employment intermediaries
(1) This section applies where an individual (“the worker”)—
(a) personally provides services (which are not excluded services) to another person (“the client”), and
(b) the services are provided not under a contract directly between the client or a person connected with the client and the worker but under arrangements involving an employment intermediary.
This is subject to the following provisions of this section.
(2) Where this section applies, each engagement is for the purposes of sections 338 and 339 to be regarded as a separate employment.
(3) This section does not apply if it is shown that the manner in which the worker provides the services is not subject to (or to the right of) supervision, direction or control by any person.
(4) Subsection (3) does not apply in relation to an engagement if—
(a) Chapter 8 of Part 2 applies in relation to the engagement,
(b) the conditions in section 51, 52 or 53 are met in relation to the employment intermediary, and
(c) the employment intermediary is not a managed service company.
(5) This section does not apply in relation to an engagement if—
(a) Chapter 8 of Part 2 does not apply in relation to the engagement merely because the circumstances in section 49(1)(c) are not met,
(b) assuming those circumstances were met, the conditions in section 51,52 or 53 would be met in relation to the employment intermediary, and
(c) the employment intermediary is not a managed service company.
(6) In determining for the purposes of subsection (4) or (5) whether the conditions in section 51, 52 or 53 are or would be met in relation to the employment intermediary—
(a) in section 50(l)(b), disregard the words “that is not employment income”, and
(b) read references to the intermediary as references to the employment intermediary.
(7) Subsection (8) applies if—
(a) the client or a relevant person provides the employment intermediary (whether before or after the worker begins to provide the services) with a fraudulent document which is intended to constitute evidence that, by virtue of subsection (3), this section does not or will not apply in relation to the services,
(b) that section is taken not to apply in relation to the services, and
(c) in consequence, the employment intermediary does not under PAYE regulations deduct and account for an amount that would have been deducted and accounted for under those regulations if this section had been taken to apply in relation to the services.
(8) For the purpose of recovering the amount referred to in subsection (7)(c)(“the unpaid tax”)—
(a) the worker is to be treated as having an employment with the client or relevant person who provided the document, the duties of which consist of the services, and
(b) the client or relevant person is under PAYE regulations to account for the unpaid tax as if it arose in respect of earnings from that employment.
(9) In subsections (7) and (8) “relevant person” means a person, other than the client, the worker or a person connected with the employment intermediary, who—
(a) is resident, or has a place of business, in the United Kingdom, and
(b) is party to a contract with the employment intermediary or a person connected with the employment intermediary under or in consequence of which—
(i) the services are provided, or
(ii) the employment intermediary, or a person connected with the employment intermediary, makes payments in respect of the services.
(10) In determining whether this section applies, no regard is to be had to any arrangements the main purpose, or one of the main purposes, of which is to secure that this section does not to any extent apply.
(11) In this section—
“arrangements” includes any scheme, transaction or series of transactions, agreement or understanding, whether or not enforceable, and any associated operations;
“employment intermediary” means a person, other than the worker or the client, who carries on a business (whether or not with a view to profit and whether or not in conjunction with any other business) of supplying labour;
“engagement” means any such provision of service as is
mentioned in subsection (l)(a);
“excluded services” means services provided wholly in the client’s home;
“managed service company” means a company which—
(a) is a managed service company within the meaning given by section 61B, or
(b) would be such a company disregarding subsection (l)(c) of that section.”
(2) In section 688A of the Income Tax (Earnings and Pensions) Act 2003 (managed service companies: recovery from other persons), in subsection (5), in the definition of “managed service company”, after “section 61B” insert “but for the purposes of section 339A has the meaning given by subsection (11) of that section”.
(3) After section 688A of the Income Tax (Earnings and Pensions) Act 2003 insert—
“688B Travel expenses of workers providing services through intermediaries: recovery of unpaid tax
(1) PAYE regulations may make provision for, or in connection with, the recovery from a director or officer of a company, in such circumstances as may be specified in the regulations, of amounts within any of subsections (2) to (5).
(2) An amount within this subsection is an amount that the company is to account for in accordance with PAYE regulations by virtue of section 339A(7) to (9) (persons providing fraudulent documents).
(3) An amount within this subsection is an amount which the company is to deduct and pay in accordance with PAYE regulations by virtue of section 339A in circumstances where—
(a) the company is an employment intermediary,
(b) on the basis that section 339A does not apply by virtue of subsection (3) of that section, the company has not deducted and paid the amount, but
(c) the company has not been provided by any other person with evidence from which it would be reasonable in all the circumstances to conclude that subsection (3) of that section applied (and the mere assertion by a person that the manner in which the worker provided the services was not subject to (or to the right of) supervision, direction or control by any person is not such evidence).
(4) An amount within this subsection is an amount that the company is to deduct and pay in accordance with PAYE regulations by virtue of section 339A in a case where subsection (4) of that section applies, (services provided under arrangements made by intermediaries).
(5) An amount within this subsection is any interest or penalty in respect of an amount within any of subsections (2) to (4) for which the company is liable.
(6) In this section—
“company” includes a limited liability partnership;
“director” has the meaning given by section 67;
“employment intermediary” has the same meaning as in section 339A;
“officer”, in relation to a company, means any manager, secretary or other similar officer of the company, or any person acting or purporting to act as such.”
(4) In Part 4 of the Income Tax (Pay As You Earn) Regulations 2003 (S.I. 2003/2682) (payments, returns and information), after Chapter 3A insert—
“Chapter 3B
Certain debts of companies under section 339a of ITEPA (travel expenses of workers providing services through employment intermediaries)
97ZG Interpretation of Chapter 3B: “relevant PAYE debt” and “relevant date”
(1) In this Chapter “relevant PAYE debt”, in relation to a company means an amount within any of paragraphs (2) to (5).
(2) An amount within this paragraph is an amount that the company is to account for in accordance with these Regulations by virtue of section 339A(7) to (9) of ITEPA (persons providing fraudulent documents).
(3) An amount within this paragraph is an amount which a company is to deduct and pay in accordance with these Regulations by virtue of section 339A of ITEPA in circumstances where—
(a) the company is an employment intermediary,
(b) on the basis that section 339A of ITEPA does not apply by virtue of subsection (3) of that section the company has not deducted and paid the amount, but
(c) the company has not been provided by any other person with evidence from which it would be reasonable in all the circumstances to conclude that subsection (3) of that section applied (and the mere assertion by a person that the manner in which the worker provided the services was not subject to (or to the right of) supervision, direction or control by any person is not such evidence).
(4) An amount within this paragraph is an amount that the company is to deduct and pay in accordance with these Regulations by virtue of section 339A of ITEPA in a case where subsection (4) of that section applies (services provided under arrangements made by intermediaries).
(5) An amount within this paragraph is any interest or penalty in respect of an amount within any of paragraphs (2) to (4) for which the company is liable.
(6) In this Chapter “the relevant date” in relation to a relevant PAYE debt means the date on which the first payment is due on which PAYE is not accounted for.
97ZH Interpretation of Chapter 3B: general
In this Chapter—
“company” includes a limited liability partnership;
“director” has the meaning given by section 67 of ITEPA; “personal liability notice” has the meaning given by regulation 97ZI(2);
“the specified amount” has the meaning given by regulation 97ZI(2)(a).
97ZI Liability of directors for relevant PAYE debts
(1) This regulation applies in relation to an amount of relevant PAYE debt of a company if the company does not deduct that amount by the time by which the company is required to do so.
(2) HMRC may serve a notice (a “personal liability notice”) on any person who was, on the relevant date, a director of the company—
(a) specifying the amount of relevant PAYE debt in relation to which this regulation applies (“the specified amount”), and
(b) requiring the director to pay to HMRC—
(i) the specified amount, and
(ii) specified interest on that amount.
(3) The interest specified in the personal liability notice—
(a) is to be at the rate applicable under section 178 of the Finance Act 1989 for the purposes of section 86 of TMA, and
(b) is to run from the date the notice is served.
(4) A director who is served with a personal liability notice is liable to pay to HMRC the specified amount and the interest specified in the notice within 30 days beginning with the day the notice is served.
(5) If HMRC serve personal liability notices on more than one director of the company in respect of the same amount of relevant PAYE debt, the directors are jointly and severally liable to pay to HMRC the specified amount and the interest specified in the notices.
97ZJ Appeals in relation to personal liability notices
(1) A person who is served with a personal liability notice in relation to an amount of relevant PAYE debt of a company may appeal against the notice.
(2) A notice of appeal must—
(a) be given to HMRC within 30 days beginning with the day the personal liability notice is served, and
(b) specify the grounds of the appeal.
(3) The grounds of appeal are—
(a) that all or part of the specified amount does not represent an amount of relevant PAYE debt, of the company, to which regulation 97ZI applies, or
(b) that the person was not a director of the company on the relevant date.
(4) But a person may not appeal on the ground mentioned in paragraph (3)(a) if it has already been determined, on an appeal by the company, that—
(a) the specified amount is a relevant PAYE debt of the company, and
(b) the company did not deduct, account for, or (as the case may be) pay the debt by the time by which the company was required to do so.
(5) Subject to paragraph (6), on an appeal that is notified to the tribunal, the tribunal is to uphold or quash the personal liability notice.
(6) In a case in which the ground of appeal mentioned in paragraph (3)(a) is raised, the tribunal may also reduce or increase the specified amount so that it does represent an amount of relevant PAYE debt, of the company, to which regulation 97ZI applies.
97ZK Withdrawal of personal liability notices
(1) A personal liability notice is withdrawn if the tribunal quashes it.
(2) An officer of Revenue and Customs may withdraw a personal liability notice if the officer considers it appropriate to do so.
(3) If a personal liability notice is withdrawn, HMRC must give notice of that fact to the person upon whom the notice was served.
97ZL Recovery of sums due under personal liability notice: application of Part 6 of TMA
(1) For the purposes of this Chapter, Part 6 of TMA (collection and recovery) applies as if—
(a) the personal liability notice were an assessment, and
(b) the specified amount, and any interest on that amount under regulation 97ZI(2)(b)(ii), were income tax charged on the director upon whom the notice is served,
and that Part of that Act applies with the modification in paragraph (2) and any other necessary modifications.
(2) Summary proceedings for the recovery of the specified amount, and any interest on that amount under regulation 97ZI(2)(b)(ii), may be brought in England and Wales or Northern Ireland at any time before the end of the period of 12 months beginning with the day after the day on which the personal liability notice is served.
97ZM Repayment of surplus amounts
(1) This regulation applies if—
(a) one or more personal liability notices are served in respect of an amount of relevant PAYE debt of a company, and
(b) the amounts paid to HMRC (whether by directors upon whom notices are served or the company) exceed the aggregate of the specified amount and any interest on it under regulation 97ZI(2)(b)(ii).
(2) HMRC is to repay the difference on a just and equitable basis and without unreasonable delay.
(3) HMRC is to pay interest on any sum repaid.
(4) The interest—
(a) is to be at the rate applicable under section 178 of the Finance Act 1989 for the purposes of section 824 of ICTA, and
(b) is to run from the date the amounts paid to HMRC come to exceed the aggregate mentioned in subsection (l)(b).”
(5) The amendment made by paragraph (4) is to be treated as having been made by the Commissioners for Her Majesty’s Revenue and Customs in exercise of the power conferred by section 688B of the Income Tax (Earnings and Pensions) Act 2003 (inserted by paragraph (3)).
(6) The amendment made by paragraph (1) has effect in relation to the tax year 2016-17 and subsequent tax years.
(7) The amendment made by paragraph (4) has effect in relation to relevant PAYE debts that are to be deducted, accounted for or paid on or after 6 April 2016.
And it is declared that it is expedient in the public interest that this Resolution should have statutory effect under the provisions of the Provisional Collection of Taxes Act 1968.
Relevant consideration | Percentage |
So much as does not exceed £150,000 So much as exceeds £150,000 but does not exceed £250,000 The remainder (if any) | 0% 2% 5%” |
“Over £150,000 but not over £5 million Over £5 million | 1% 2% |
Relevant consideration | Percentage |
So much as does not exceed £125,000 So much as exceeds £125,000 but does not exceed £250,000 So much as exceeds £250,000 but does not exceed £925,000 So much as exceeds £925,000 but does not exceed £1,500,000 The remainder (if any) | 3% 5% 8% 13% 15% |
“144A (regulated home reversion plans) | 5A” |
56. INSURANCE PREMIUM TAX (STANDARD RATE)
19:24 - The House divided: - Ayes: 307 / Noes: 62 - Question accordingly agreed to.
19:38 - The House divided: - Ayes: 297 / Noes: 62 - Question accordingly agreed to.
CO2 emissions figure | Rate | ||
(1) | (2) | (3) | (4) |
Exceeding | Not Exceeding | Reduced Rate | Standard Rate |
g/km | g/km | £ | £ |
130 | 140 | 120 | 130 |
140 | 150 | 135 | 145 |
150 | 165 | 175 | 185 |
165 | 175 | 290 | 300 |
175 | 185 | 345 | 355 |
185 | 200 | 490 | 500 |
200 | 225 | 640 | 650 |
225 | 255 | 875 | 885 |
255 | — | 1110 | 1120 |
CO2 emissions figure | Rate | ||
(1) | (2) | (3) | (4) |
Exceeding | Not Exceeding | Reduced Rate | Standard Rate |
g/km | g/km | £ | £ |
100 | 110 | 10 | 20 |
110 | 120 | 20 | 30 |
120 | 130 | 100 | 110 |
130 | 140 | 120 | 130 |
140 | 150 | 135 | 145 |
150 | 165 | 175 | 185 |
165 | 175 | 200 | 210 |
175 | 185 | 220 | 230 |
185 | 200 | 260 | 270 |
200 | 225 | 285 | 295 |
225 | 255 | 490 | 500 |
255 | — | 505 | 515”; |
1. Cigarettes | An amount equal to 16.5 per cent of the retail price plus £196.42 per thousand cigarettes |
2. Cigars | £245.01 per kilogram |
3. Hand-rolling tobacco | £198.10 per kilogram |
4. Other smoking tobacco and chewing tobacco | £107.71 per kilogram”. |
Description of wine or made-wine | Rates of duty per hectolitre £ |
Wine or made-wine of a strength not exceeding 4% | £85.60. |
Wine or made-wine of a strength exceeding 4% but not exceeding 5.5% | £117.72 |
Wine or made-wine of a strength exceeding 5.5% but not exceeding 15% and not being sparkling | £277.84 |
Sparkling wine or sparkling made-wine of a strength exceeding 5.5% but less than 8.5% | £268.99 |
Sparkling wine or sparkling made-wine of a strength of at least 8.5% but not exceeding 15% | £355.87 |
Wine or made-wine of a strength exceeding 15% but not exceeding 22% | £370.41” |
Procedure (Orchestra Tax Credits)
Procedure (Social Security Contributions)
Procedure (Measures Relating to Large Businesses)
Procedure (Raw Tobacco Approval Scheme)
Procedure (Information Powers in Connection with Tax Advantages Constituting State Aid)
Mr Peter Lilley (Hitchin and Harpenden) (Con)
On a point of order, Mr Speaker. You, above all, will be aware that the power of this House historically derives from its right to levy taxation, a right in respect of value added tax that it handed over to others 40 years ago. Can you confirm that although the Government have not contested two amendments altering rates of VAT, those changes will be nugatory, despite having the unanimous support of this House, unless all 28 member states agree, as the Government hope they will, to accord to this House the rare privilege of being able to determine two rates of VAT on important, but tiny, items? Can you therefore advise whether the House should be enormously grateful for the possibility that we will regain this small power to affect some taxation? Or should we make it a rule of the House that should we ever want to exercise powers of taxation in future, we announce a referendum before each Finance Bill?
Mr Speaker
I am extremely grateful to the right hon. Gentleman for his point of order. I know, or at least I feel confident, that he will not take it amiss if I suggest, on the basis both of the content of his point of order and of the manner of its delivery, that he was more interested in what he had to say to me than in anything that I might have to say to him. What I would say to the right hon. Gentleman, who is very deeply versed in these matters, is that I can comment on the matter of fact, which is that the House has agreed to the two amendments, a point not in dispute between or us or a matter of any doubt in the Chamber, but I do not feel able to comment upon effect—what it will or will not be. However, I have a sense that his point of order was something of a warm-up, and I have a feeling that to this matter he, and doubtless others, will soon, possibly at greater length, return—[Interruption.] Some mischievous soul says, “Hope not.” I think the hope is in vain.
Ordered,
That a Bill be brought in upon the foregoing Resolutions;
That the Chairman of Ways and Means, the Prime Minister, Mr Chancellor of the Exchequer, Secretary Sajid Javid, Secretary Nicky Morgan, Secretary Greg Clark, Greg Hands, Damian Hinds, Harriet Baldwin and Mr David Gauke bring in the Bill.
Finance (No.2) Bill
Presentation and First Reading
Mr David Gauke accordingly presented a Bill to grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance.
Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 155) with explanatory notes (Bill 155-EN).
Business without Debate
Mr Speaker
With the leave of the House, we shall take motions 3 to 7 together.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Family Law
That the draft Child Support (Deduction of Orders and Fees) (Amendment and Modification) Regulations 2016, which were laid before this House on 8 February, be approved.
Pensions
That the draft Automatic Enrolment (Earnings Trigger and Qualifying Earnings Band) Order 2016, which was laid before this House on 1 February, be approved.
Companies
That the draft Companies (Address of Registered Office) Regulations 2016, which were laid before this House on 8 February, be approved.
That the draft Registrar of Companies and Applications for Striking Off (Amendment) Regulations 2016. which were laid before this House on 8 February, be approved.
Insolvency
That the draft Enterprise and Regulatory Reform Act 2013 (Consequential Amendments) (Bankruptcy) and the Small Business. Enterprise and Employment Act 2015 (Consequential Amendments) Regulations 2016, which were laid before this House on 22 February, be approved.—(Julian Smith.)
Question agreed to.
Business of the House
Ordered,
That, at the sitting on Tuesday 12 April—
(1) notwithstanding sub-paragraph (2)(c), as applied by paragraph (4), of Standing Order No. 14 (Arrangement of public business), the backbench business set down for consideration may be entered upon at any hour, may be proceeded with, though opposed, for three hours, and shall then lapse if not previously disposed of; and
(2) notwithstanding the provisions of Standing Order No. 20 {Time for taking private business), the private business set down by the Chairman of Ways and Means may be entered upon at any hour (whether before, at or after 4.00pm) and may then be proceeded with, though opposed, for three hours, after which the Speaker shall interrupt the business.—(Julian Smith.)
high Speed Rail (london – west midlands) bill
Ordered,
That, at the sitting on Wednesday 23rd March, the following provisions shall apply to proceedings on the High Speed Rail (London – West Midlands) Bill:
1. (1) Proceedings on Consideration shall be taken in the order shown in the first column of the following Table.
(2) The proceedings shall (so far as not previously concluded) be brought to a conclusion at the times specified in the second column of the Table.
Table
Proceedings | Time for conclusion of proceedings |
|---|---|
New clauses, new schedules and amendments relating to economic and financial issues including compensation and railway ownership | One hour after the commencement of proceedings on Consideration |
New clauses, new schedules and amendments relating to the route and environmental issues; remaining proceedings on Consideration | Two hours after the commencement of proceedings on Consideration |
(3) Proceedings on Third Reading and proceedings on the Motion in the name of Secretary Patrick McLoughlin relating to carry-over (No. 3) shall (so far as not previously concluded) be brought to a conclusion three hours after the commencement of proceedings on Consideration.
2. (1) This paragraph applies for the purpose of bringing proceedings to a conclusion in accordance with paragraph 1.
(2) In relation to proceedings on Consideration and Third Reading, the Speaker shall put the following Questions in the same order as they would fall to be put if this Order did not apply—
(a) any Question already proposed from the Chair;
(b) any Question necessary to bring to a decision a Question so proposed;
(c) any Question on any amendment, new clause or new schedule selected by the Speaker for separate decision;
(d) the Question on any amendment moved or Motion made by a Minister of the Crown;
(e) any other Question necessary for the disposal of the business to be concluded.
(3) On a motion made for a new clause or a new schedule, the Speaker shall put only the Question that the clause or schedule be added to the Bill.
(4) In relation to proceedings on the Motion mentioned in paragraph 1(3), the Speaker shall put forthwith the Questions necessary to dispose of the proceedings.
3. Standing Order No. 15(1) (Exempted business) shall apply so far as necessary to proceedings to which this Order applies.
4. Standing Order No. 41A (Deferred divisions) shall not apply in relation to proceedings on the Motion mentioned in paragraph 1(3).—(Julian Smith.)
Mr Speaker
Just before I call the hon. Member for Rossendale and Darwen (Jake Berry), I appeal to Members who are leaving the Chamber, perhaps unaccountably, to do so quickly and quietly so that the hon. Gentleman can make his case and be afforded a decent hearing.
Breast Ironing
(8 years, 8 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Jake Berry (Rossendale and Darwen) (Con)
I will start with three letters: FGM. Thanks to the tireless campaigning of charities such as Daughters of Eve and Dahlia, we now know that those letters are an abbreviation for: the abhorrent practice of female genital mutilation. For any colleague who still struggles to understand FGM, I cannot put it in clearer or more stark terms than those used by my hon. Friend the Member for Twickenham (Dr Mathias) in her excellent contribution to the recent International Women’s Day debate:
“the equivalent of female genital mutilation in a man would be the removal of the head of the penis and of a third of the shaft.” —[Official Report, 8 March 2016; Vol. 607, c. 233.]
FGM was hidden from us for many years, and while this practice did not originate in Britain, we have come to know and tackle it here in the UK. FGM was first legislated on by the UK Government in 1985, at which point the Prohibition of Female Circumcision Act 1985 made the practice of FGM illegal. In 2003, it became an offence to take a girl abroad for the purpose of FGM. Finally, the Serious Crime Act 2015 took further measures to create a robust legal framework to deal with this abhorrent practice. Thanks to a 30-year journey of revealing and legislating on this barbaric practice, it is now widely recognised. I am ashamed to say, however, that in that 30-year journey, there has not been a single prosecution here in the UK.
It is against the perspective of this lengthy struggle that I wish to raise the issue of breast ironing. It is perhaps unsurprising that so few people have heard of it. Breast ironing—or breast flattening, as it is often referred to—is believed to have originated in Cameroon but is also found in Nigeria, the Republic of Guinea, South Africa, Chad, Togo, Benin, Birmingham and London. It is the practice of pounding the developing breasts of young girls with objects heated over coals or on a stove, and it tends to be performed on girls from about the age of 10 up until the end of puberty. Hot stones, hammers and spatulas are used twice a day for several weeks or months to stop or delay, and in some cases permanently destroy, the natural development of the breast.
Girls subjected to this abuse are told by the perpetrators that it is necessary to continue with this abhorrent practice until it no longer hurts. This gives us some idea of the unimaginable pain and suffering they are subjected to. Breast ironing exposes girls to numerous health issues, such as cancer, abscesses, itching, discharge of milk, infection and asymmetry of the breasts. Girls who undergo breast ironing can expect to experience an increased prevalence of breast cysts, breast infections, severe fever, tissue damage and even the complete disappearance of one or both breasts.
Mr Deputy Speaker, you are probably sitting there, like many other right hon. and hon. Members, thinking, “Why would anyone do this to a young woman or girl?” Breast flattening, or ironing, is carried out by the perpetrators in the belief that it makes girls less sexually attractive to men; in the certainty that mutilation of the breasts will protect young girls from sexual harassment, rape or early forced marriage; and with the confidence that the breasts of young girls can develop only if they think about sex, if a man touches their breasts, if a girl watches pornography or even if a girl visits a night club.
Dr Philippa Whitford (Central Ayrshire) (SNP)
Is it not also the case that some parents believe they can prevent puberty from happening altogether by carrying out breast ironing?
Jake Berry
That is the point, but it is a mistaken belief, and one that has no place in any society, let alone ours here in Britain.
The words “culture”, “tradition” or “religion” come up when people try to explain this absurdly harmful practice, but as in the case of FGM, these words are just a thinly veiled excuse for a ritualised form of child abuse.
Jim Shannon (Strangford) (DUP)
The hon. Gentleman brought this issue to the House on International Women’s Day. That evening I sponsored an event on domestic violence that was attended by more than 100 people. I had not heard about breast ironing until that day, but FGM and breast ironing, and their prevalence in our society, including here in London, were raised that night. Does he agree that we need zero tolerance when it comes to this practice?
Jake Berry
I will come to that. I hope that the Minister will say what steps we can take to send the message out loud and clear from this House of Commons that the practice is completely unacceptable, whether it happens in London, Birmingham or any other city, or whether young girls are being taken to Cameroon, Nigeria or elsewhere for it to be done over the school holidays. No one should think that they can get away with it in this country without fear of prosecution.
Kit Malthouse (North West Hampshire) (Con)
I applaud what my hon. Friend says. I was responsible for bringing in the first ever anti-violence against women and girls strategy in London, which looked at some of these issues. The police did something like a cultural cringe when dealing with some of these problems until I highlighted to the commissioner the fact that if little boys were appearing across London on a systematic basis with their little finger missing, we would be doing something about it. I pointed out that because this involved girls, was possibly invisible and had this cultural overlay, the police felt that they should stand off from it. Pleasingly, that is no longer the case, but I hope that my hon. Friend agrees that we could do much more to make the unacceptability of these practices widespread.
Jake Berry
I agree absolutely. This idea that puberty, the natural development of a woman’s adult body and the natural journey to maturity can be violated as part of some mistaken or bizarre belief system has no place in our society.
As with FGM, the practice of breast ironing is hidden because it is most often carried out by a family member. A recent UN report revealed that 58% of the perpetrators of breast ironing are the girl’s own mother. Although awareness of FGM is probably at an all-time high, the practice of breast ironing will remain hidden unless we in this House speak out about it wherever we can. Breast ironing has been identified by the UN as one of the five most under-reported crimes relating to gender-based violence. That is why this debate is so important
I said that this practice of breast ironing has been found in Birmingham and London. However, because of the hidden nature of this abuse, it is hard to prove the extent of its prevalence in the UK. In the words of Margaret Nyuydzewira, founder of the UK-based pressure group, CAME:
“Breast ironing is a practice that happens in the privacy of women’s homes, it’s hard to see who is doing it, and people are not willing to talk about it. It’s like female genital mutilation: you know it’s happening but you are not going to see it”.
Despite the secrecy around breast ironing, the anti-FGM campaigner and co-founder of Daughters of Eve, Leyla Hussein, recently revealed she had met a woman in the UK who had undergone breast ironing. Recent press coverage has said that it is endemic and experts believe that the custom is being practised among the several thousand Cameroonians now living in the UK.
CAME has estimated that up to 1,000 girls in the UK have been subjected to breast ironing and that an unknown number have been subjected to it abroad. It highlighted to me one case reported to the police in Birmingham where no further action was taken, as it was put down to being part of someone’s culture rather than a crime.
Jake Berry
I am sorry, but I will not, because I must make some progress.
The Mayor of London’s harmful practices taskforce, on which my hon. Friend the Member for North West Hampshire (Kit Malthouse) served, described breast ironing as an emerging issue here in the UK. It is precisely the lack of hard facts and figures that has led me to seek this debate on breast ironing and the Government’s response.
It has also led me to do something else. I wrote to every police force in the UK and every local authority in the UK to ask what they were doing about this issue. The police forces that wrote back to me showed real concern. They know that this is a worrying crime and they have a worrying lack of knowledge of it. Some 72% of the police forces that responded either failed to answer a question about breast ironing or admitted that they had never heard of it, while 38% said they wanted more guidance. This demonstrates a lack of understanding among our police forces about breast ironing and the signs that reveal that it is happening. Although some police forces, including West Mercia, Merseyside, Thames Valley and Hertfordshire, are taking encouraging steps to raise awareness, I hope that the Minister will consider issuing guidance from the Department to ensure that this best practice is spread and that those who do not have the information on breast ironing can be enlightened.
I also wrote to representatives of all the local authority children’s services departments. Of those who responded, 23% volunteered the information that they had never undertaken any training in this area, and 65% said that they would like more guidance. Departments in Greater Manchester, Leicester and the City of London are already taking action, but, like the police forces, all the children’s departments in our local authorities want more information. On their own admission, the police and local authorities need further training in dealing with this practice and bringing criminals to prosecution. If we fail to give them the tools that they require to identify and understand the victims of this crime, they will never be able to tackle it.
I understand that there is currently no stand-alone crime of breast ironing in the United Kingdom, and that police and prosecutors have to rely on the existing pool of criminal offences that are available to them. I believe that, as with female genital mutilation, that is not an adequate protection for young women and girls in our country. I pay tribute to the Minister for her work on the Bill that became the Serious Crime Act 2015, which, among other things, provided anonymity for victims of FGM, created a new civil protection order, created a new offence of failing to protect a girl from FGM, provided for statutory guidance, and imposed a duty to report on public sector professionals such as teachers, social workers and doctors. I believe that all those protections should be considered in relation to the crime of breast ironing. I hope that the Minister will consider the creation of a stand-alone offence, and will also extend the protections in the 2015 Act to breast ironing.
As I hope I have demonstrated, this crime is not given the recognition that it needs to be given in our communities here in the United Kingdom. One of the main barriers that I have been able to cite this evening is a lack of awareness among all Government agencies, including police, local authorities and schools. The very people who should be keeping these girls safe do not know what to look for, and, more important, do not know where to look. I ask the Minister to undertake to ensure that the Department gives guidance to those Government agencies on how to spot the girls who are at risk. I also ask her to request the Department to make a thorough study of the prevalence of breast ironing in the UK. If we are to tackle this crime, we must find out where it is taking place and how many people are victims of it.
Yesterday, a colleague asked me why I, as a man, had chosen to speak about breast ironing. The answer is simple. If we in the House of Commons fail to act, if we fail to speak out about this horrendous and abhorrent crime, it is we who are letting young girls and women down here in our country. Unless we speak out and raise the profile of breast ironing, the hidden suffering of young teenage girls will always remain hidden.
The Parliamentary Under-Secretary of State for the Home Department (Karen Bradley)
I congratulate my hon. Friend the Member for Rossendale and Darwen (Jake Berry) on securing a debate about an important issue on which he has previously been campaigning. He should be assured that the fact that the subject is on the Order Paper has really made people sit up and listen today. I had to explain to a number of colleagues what this evening’s Adjournment debate was about, and the utter horror on each and every face when they understood is testimony to the importance of the debate and the fact that my hon. Friend has secured it.
One of my hon. Friend’s final points related to men raising these matters. These are not just women’s issues. This is violence against women and girls—some of it is perpetrated by men and some by women—but we need men to speak out and make it clear that these practices are unacceptable. The excuse given for FGM, breast ironing and other so-called honour-based violence is that men require it, and that it has to happen to women so that men will accept them. That is simply not true, and men need to speak out and make it clear that that is not the case. I congratulate my hon. Friend and the other men who have spoken in the debate, as well as the women who have contributed. It is important that we all speak on this matter.
I want to make it absolutely clear that breast ironing is not just an abhorrent practice; it is illegal. It is child abuse, and no political or cultural sensitivities should ever be used as an excuse for us to stop tackling it. As my hon. Friend has noted, there are parallels between breast ironing and other harmful practices such as FGM. One such parallel is the fact that these practices are often hidden crimes, which makes it difficult for us to estimate their prevalence. We want to find the victims of these crimes and we want to stop the crimes happening, but we will be able to do that only if people and communities are brave enough to speak out and say that the practice is unacceptable. It is also the responsibility of the police proactively to look for these crimes and to devise and implement measures to increase the confidence of victims to report them and to give evidence.
Dr Whitford
As this practice is predominantly carried out during puberty when the girls are at school, should we not be educating them about it within the school system in the United Kingdom? Would that not encourage them to come forward?
Karen Bradley
The hon. Lady is absolutely right. I work closely with Ministers in the Department for Education to ensure that guidance material is available to enable schools to teach people about this. I will say more about that shortly. However, I know that certain professionals might feel reticent about the subject. They might feel that cultural sensitivities are involved or that there are political reasons why they should not go there. That is simply not the case, however, and we need to give those professionals the confidence to know that this is something they should be looking for, to know what the signs are and to take action. That is what we all need to do.
Kit Malthouse
I completely agree with the Minister. I wonder whether her Department, or indeed the police, might look at the French experience, which has involved a significant number of prosecutions and convictions, particularly for FGM but also for other harmful cultural practices. My hon. Friend the Member for Rossendale and Darwen (Jake Berry) made the point that one of the difficulties that the police sometimes face from a cultural point of view is that the perpetrator is often a family member. So we may well be prosecuting granny and putting her in prison, but even that is no excuse, and we need to lock some of these people up, if only to send a signal.
Karen Bradley
Let me address the point about convictions. My hon. Friend makes the point that France and other countries have had successful prosecutions resulting in convictions, but we have to accept that there are different legal systems involved. It is also worth making the point that although FGM was first made a crime in 1985, the Crown Prosecution Service did not receive a single referral of a case that it might have been able to take to prosecution before 2010. That is why the organisations and community groups that work on this are very important, and we have to work with them at a community level. What my hon. Friend says is true: victims of FGM might have to give evidence in court against a family member.
We are sometimes asked why we cannot just go ahead and get a conviction, if we know that a crime has happened. Well, there are plenty of unsolved murders. There might be a body, and we might know that someone has been murdered, but we cannot necessarily get the evidence we need. This is about equipping the police, law enforcement agencies and other professionals with the tools that they need to gather the necessary evidence, information and intelligence. Like my hon. Friend, I want to see a conviction for this. We have had a successful conviction for forced marriage, and I want to see a conviction for FGM, but we all have to acknowledge and respect the difficulties involved in getting such a conviction.
It is important to remember that a conviction is in many ways a failure—a crime has happened. The more that we can do to prevent the crime from happening in the first place and to make it clear that the practice is illegal and therefore should not happen, the better the result will be. Where this crime does occur, we want to ensure that the law enforcement response is as robust as possible.
I want to discuss with my hon. Friend his thoughts about legislation, but let me be clear that breast ironing is against the law today. Although there are no specific offences, the police have a range of other offences at their disposal to deal with any cases that they encounter, including common assault, actual bodily harm or grievous bodily harm, child cruelty and causing or allowing a child to suffer serious physical harm. The Crown Prosecution Service takes seriously the effective prosecution of all forms of honour-based violence. In 2014-15, 225 defendants were prosecuted in cases flagged as having an honour-based violence component, a rise from 206 in the previous year, with 129 convictions—the highest ever recorded. However, it is true that we want more convictions. This debate can send a message to law enforcement and the CPS that we want the offence to get more attention.
In December, Her Majesty’s inspectorate of constabulary published its review of the police response to honour-based violence. The review found some areas of good practice, but also raised serious concerns about the police’s handling of such issues. I stress again that honour-based violence is a crime. The so-called honour-based context—there is no honour in any of these crimes—does not prevent it from being a crime. HMIC’s report showed that the police were not bringing to bear some offences, such as domestic abuse or child abuse. We are working closely with HMIC, considering the report’s findings, and working with police forces, the national policing lead and the College of Policing to ensure that we get the right guidance. That means further work and training to help to increase the understanding of crimes such as breast ironing.
On mandatory reporting, my hon. Friend talked about the measures that we introduced in the Serious Crime Act 2015 regarding FGM, which we know are working. I had an email from my county council in Staffordshire only today saying that an FGM protection order had been put on a baby. It is absolutely fantastic that the orders are being used in practice and preventing this dreadful crime from taking place. We placed a mandatory reporting duty on professionals who are aware of FGM cases involving girls aged under 18. We are also committed to consulting on a mandatory reporting duty for all child abuse, and that consultation will start shortly. The consultation is broad and wide ranging. We are looking at various measures, including a mandatory duty to report all forms of child abuse. We will consider all responses, and I encourage anybody who is listening to this debate to make sure that they feed into that consultation.
Before I wrap up, let me mention the work that we are doing internationally. We know that cases of breast ironing have been documented in Cameroon and other parts of Africa. In Cameroon, the British High Commission has been working closely with the Minister of Women’s Empowerment and the Family in co-ordination with local religious leaders on campaigns to raise awareness and to support a community-led change to end breast ironing.
My hon. Friend will know that last year the Prime Minister appointed my noble friend Baroness Verma as ministerial champion for tackling violence against women and girls overseas. I work closely with her to ensure that we are doing all that we can not only in this country, but in countries where we know that there is a high prevalence, or a higher prevalence, of such practice. We need to tackle harmful practice overseas. I have met some fantastic charities that work with communities and stand up and say that this practice is wrong. They also try to get villages and tribes to say that it is wrong, because if they do that, the next village will follow. Fantastic work is being done.
There is always more that we can do. I am conscious of time, so I will finish by thanking my hon. Friend for securing this debate and commending the work that is being done by many organisations, particularly CAME women and Girls Development Organisation, to bring hidden practices, such as breast ironing, to the fore.
My hon. Friend has done a great service. He has raised awareness of this practice in a way that one is able to do in this Chamber. Sometimes we underestimate the power an Adjournment debate in this place to raise awareness of an issue. Let me reiterate that what we are talking about is illegal. It is a crime and it is not acceptable. I want to assure the House that the Government fully understand that and are absolutely committed to putting a stop to it.
Question put and agreed to.