Budget Resolutions and Economic Situation
(Limited Text - Ministerial Extracts only)
Read Full debate18:40 - 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.
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.
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.