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Oral Answers to Questions
(6 years, 2 months ago)
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Mr Virendra Sharma (Ealing, Southall) (Lab)
The Secretary of State for the Home Department (Sajid Javid)
With your permission, Mr Speaker, I would like first to express how shocked and appalled I am at the deadly gun attack that took place this weekend at the synagogue in Pittsburgh. I am sure that the whole House will want to join me in expressing our deepest sympathies for the victims and those injured, as well as their families. The UK stands shoulder to shoulder with our Jewish friends across the world and utterly condemns antisemitism in all its forms.
My thoughts today are also with the friends and families of the victims of the terrible crash at Leicester City football club. I thank the emergency services for their response to this awful tragedy. I know that they did their absolute best.
Turning to Question 1, Government support towards integration is given through English language tuition, but it is available only once asylum seekers are recognised as refugees. This focuses resources on those recognised as being in need of protection.
Sajid Javid
The hon. Gentleman raises an important question. It is right that we support those who are given protection in ways to integrate into British life, and language is important to that. I assure him that we have a good budget in this area; in 2016-17, it was £99 million of the total adult learning budget.
Michael Fabricant (Lichfield) (Con)
Does my right hon. Friend agree that perhaps the success of the Jewish community in this country has been its willingness to integrate, to do in Rome as the Romans do and to learn the language? That is not always the case with other ethnic groups, so it is a question not only of providing sufficient funds but of encouraging them to learn the language and become a part of our community.
Sajid Javid
It is right, of course, that this Government do more to welcome all communities and help them to integrate. That is why the Government published—I published it when I was Communities Secretary—an integration Green Paper, which we will build on. It is also worth commending the work that World Jewish Relief does to help all communities to integrate.
Mr Speaker
In the light of the terrible tragedy in Leicester, it is with particular feeling that I call Mr Keith Vaz.
Keith Vaz (Leicester East) (Lab)
I thank the Home Secretary for the comments that he made following the death of Khun Vichai and four others in the helicopter in Leicester. Khun Vichai was an amazing man—someone who spent so much time in Leicester and did so much for the club—and he was adored by the people of Leicester. He will be greatly missed, and it is kind of the Home Secretary to mention him today.
On the substance of the question from my hon. Friend the Member for Ealing, Southall (Mr Sharma), the issue is not just English language lessons but the right to work, which goes hand in hand with being able to speak English. Will the Home Secretary look again at the rules to make sure that those who are waiting can get their right to work quicker and asylum seekers can be fully integrated in our society?
Sajid Javid
It will be a difficult time for the right hon. Gentleman’s community and he has our full support in dealing with this tragedy.
On the issue of asylum seekers and support, the right to work is also very important. He will know that after 12 months, asylum seekers start getting some rights to work, but we are always looking at what more we can do.
Bob Blackman (Harrow East) (Con)
I associate myself with the remarks by the Home Secretary in relation to the terrible attack in Pittsburgh and the victims of the terrible tragedy in Leicester.
In my schools in Harrow, 161 languages are spoken and it is vital that we integrate young people, but they are getting the education. What more can we do to integrate the adults who come here and need this training, so that they can take their place in our society?
Sajid Javid
My hon. Friend is right to raise that. He may recall that the integration strategy, which was launched earlier this year, talked of almost 700,000 adults in Britain who speak no or very poor English. That has led to more work in this area, especially on using members of the communities concerned as mentors to try to encourage others to take up English language learning.
Alex Burghart (Brentwood and Ongar) (Con)
The Minister for Policing and the Fire Service (Mr Nick Hurd)
I am sure there is cross-party support for wanting our emergency services to make the best use of existing resources, and the Government are extremely active in encouraging greater collaboration, whether it be through innovation funding, the work of the Emergency Services Collaboration Working Group or legislation that enables police and crime commissioners to take on fire and resource governance where a local case exists.
Alex Burghart
As the Minister will know, Essex is a pioneer in this area, where Roger Hirst, our police and crime commissioner, has brought fire services in. Will the Minister consider allowing the pooling of capital budgets to enable better joined-up working of back offices?
Mr Hurd
I completely agree with my hon. Friend. Roger Hirst is doing a fantastic job in seizing the opportunity to get more out of existing resources, and I completely understand the point about capital budgets. There are restrictions in place for good reasons, but Roger and other PCCs can already use police and fire budgets to invest in shared functions, such as joint back offices, although both fire and police budgets need to make an appropriate contribution to the shared service.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
One of the issues with capital budgets is that some services are selling their capital assets and then renting from another part of the service, which can lead to very imbalanced budgets locally. Does the Minister have a grip at the centre on the long-term impact this could have?
Mr Hurd
I recognise the point the hon. Lady is making. In taking through the enabling legislation in this area, we were careful to put restrictions in place to assure stakeholders in particular that it was not a takeover of fire budgets, for example. Restrictions are in place, and for good reasons, but we monitor the situation carefully and listen to representations on both sides of the argument.
Alberto Costa (South Leicestershire) (Con)
Leicestershire police is based in Enderby in my constituency. Does the Minister agree that the collaboration between Leicestershire police, the fire service and the other emergency services the other day demonstrated the hard work that our emergency services do in Leicester and Leicestershire?
Mr Hurd
I join the Home Secretary in his remarks about the performance of the Leicestershire emergency services. Leicestershire is an excellent example of where services are going the extra mile to explore ways of working together and making the best use of existing assets and resources. As they are public assets and public resources, there is a duty to make the most of them.
Karen Lee (Lincoln) (Lab)
Merging services is yet another ploy to promote the Government’s austerity agenda: cutting one budget rather than two. For example, in Essex, the recently merged fire service budget is now being used to prop up the local highway plan, while the Essex service is forecast to lose £8 million between 2016 and 2020. Does the Minister agree that the Government are putting the future of the fire service at risk? If austerity is really over, will he tell the House when he will speak to the Chancellor about properly funding the service, based on community importance, rather than sporadic demand?
Mr Hurd
The hon. Lady could not be more wrong. We are not talking about mergers; we are talking about the imperative on those deploying public money to use it in the smartest possible way and to make the best possible use of the public resources at their disposal. It is about value for money, which of course the Labour Front-Bench team has no interest in at all.
James Cartlidge (South Suffolk) (Con)
The Parliamentary Under-Secretary of State for the Home Department (Victoria Atkins)
The Government are tackling the abhorrent crime of modern slavery both at home and overseas. We have strengthened the law enforcement response and introduced new requirements for businesses to report on slavery in their supply chains, and are transforming the support we provide to victims. Internationally, we continue to work to stop modern slavery wherever it occurs.
James Cartlidge
I strongly welcome the steps the Government are taking to tackle modern slavery. Does the Minister agree that, as we leave the EU and bring in much tougher rules on unskilled immigration from the EU, we will need to be vigilant to ensure that it does not provide new opportunities for people traffickers who may seek to exploit those tougher rules?
Victoria Atkins
Our determination to tackle modern slavery will be unaltered by our exit from the EU. On 6 September, the Government announced the introduction of a new seasonal workers pilot for horticulture, but we are of course very alert to the risks noted by the independent Migration Advisory Committee, which my hon. Friend outlined, and we will work with sectors, including the Gangmasters and Labour Abuse Authority, to ensure that migrant workers are protected against modern slavery and other labour abuse.
Mary Creagh (Wakefield) (Lab)
Victoria Atkins
I thank the hon. Lady for chairing the Environmental Audit Committee’s inquiry into this important subject. It was a pleasure to appear before the inquiry some weeks ago. She is absolutely right: these criminals do not restrict themselves to exploiting human beings, but break every rule going. That is why we are leading a cross-governmental approach, having regard to environmental offences as well as offences of labour exploitation, such as failing to pay the minimum wage. We want the message to go out to these criminals loud and clear that we will not tolerate modern slavery, whatever form it takes.
Mrs Maria Miller (Basingstoke) (Con)
Many businesses want to show more clearly how they are trying to tackle modern slavery in their supply chains, as some need to in law. Will the Minister’s modern slavery team talk to her equalities team and learn some lessons on how we are showing gender pay gap reporting, which is making that information more readily available?
Victoria Atkins
I thank my right hon. Friend for the important work that she is doing on the review of the Modern Slavery Act 2015, along with the right hon. Member for Birkenhead (Frank Field) and Baroness Butler-Sloss. I hope that the review will help us to tackle the problem that some—although not all—businesses have with meeting their duty under the Act to report that their supply chains are slavery-free. We have started that work already: last week, in celebration of Anti-Slavery Day, we wrote to 17,000 businesses across the country setting out our expectation of their compliance with the law.
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
North Wales police was the first force in Wales to establish a modern slavery unit, working to combat human trafficking at Holyhead, which risks being a soft target for modern slavery gangs. What measures is the Secretary of State introducing to ensure that security at the port of Holyhead specifically is not compromised as a result of the UK’s leaving the EU?
Victoria Atkins
I thank the hon. Lady for her commitment to this issue. As she knows, the Home Office is taking an in-depth look at the security of our borders as we leave the EU. However, our exit from the EU does not in any way affect our determination to tackle modern slavery, and to work with our international partners to stop slavery around the world.
Tom Pursglove (Corby) (Con)
The Council of Europe has been a real force for good through its proactive work to tackle modern slavery. It is entirely separate from the European Union, but will my hon. Friend confirm that we will continue to be at the forefront of the important work in that collaborative organisation?
Victoria Atkins
I am delighted to confirm that not only are we at the forefront in terms of the Council of Europe, but the Prime Minister is leading the world through the United Nations’ global call for action to end modern slavery by 2030. We are very ambitious and determined in this regard, and the rest of the world is working with us.
Carolyn Harris (Swansea East) (Lab)
On Anti-Slavery Day, ECPAT UK—Every Child Protected Against Trafficking—handed No. 10 a petition calling for specialist support for trafficked children. No Government funds are currently available for specialist children’s care, and that leaves children vulnerable to re-trafficking. The Government must commit themselves to giving local authorities additional funds. Will the Minister agree to provide those funds to protect vulnerable children?
Victoria Atkins
The hon. Lady will know that we are committed to the introduction of independent child trafficking advocates, and I am delighted that next year a third of local authorities will have ICTAs to look after the most vulnerable victims of trafficking. However, we have noted that the crime type is evolving. We are piloting schemes for UK-trafficked as opposed to internationally trafficked children, because we appreciate that the needs of those two different sets of children must be encompassed.
Dr Philippa Whitford (Central Ayrshire) (SNP)
Marion Fellows (Motherwell and Wishaw) (SNP)
The Minister for Immigration (Caroline Nokes)
After the UK leaves the EU, free movement will end. In a recent report, the Independent Migration Advisory Committee concluded that the economic impacts of EU migration had been “relatively small”, with “limited regional variation”. As we leave the EU, we will create a single global immigration system that works in the interests of the whole United Kingdom.
Dr Whitford
Ending freedom of movement will have a major impact on the health and social care sector, which employs high numbers of EU nationals, and the tier 2 visa threshold of £30,000 is far more than any social care worker earns. Do the Secretary of State and Minister not recognise that wealth is not the same as worth?
Caroline Nokes
We have been very clear that employers should take all possible steps to reduce their reliance on low-skilled migrant labour. The MAC does have serious concerns, however, about the social care sector and is clear that this sector needs a policy wider than just migration policy to fix its many problems. The MAC report has given us some sound advice, but the Home Office continues to discuss with all sectors, with business leaders and indeed with the devolved Governments so that we can come forward with an immigration policy that works for the whole country.
Marion Fellows
As someone who has recently been the beneficiary of care and care support, I would refute what the Minister has just said. Scottish Government analysis published in February estimates that real GDP in Scotland will be 4.5% lower by 2040 than it would otherwise have been, as a result of lower migration. Does the Minister agree that this is why immigration powers must be devolved to Scotland, so that Scotland can create a system that is fair and that meets our needs and values?
Caroline Nokes
The Government have been repeatedly clear that immigration policy remains a reserved matter. Four years ago the people of Scotland confirmed in a referendum that they wanted to remain part of the United Kingdom and we will deliver an immigration policy for every part of the UK.
Mr Robert Goodwill (Scarborough and Whitby) (Con)
There are 115,000 people looking for work in Scotland. Does the Minister think it would be a good idea if the Scottish Government did more to help those people to acquire the skills they need to get into the workplace and build the Scottish economy, rather than just ship in more people from beyond our shores?
Caroline Nokes
I thank my right hon. Friend for his question. It is crucial that we work across the whole of government—through our modern industrial strategy, the Department for Education, local government and the devolved Administrations—to make sure that we provide the opportunities for young people across the whole economy so that they can find work.
David Duguid (Banff and Buchan) (Con)
I welcome the news that free movement will be replaced with a single control system based on people’s skills, not where they come from. Can my right hon. Friend reassure me that the future system will both facilitate the supply of foreign labour where there is a domestic shortage and complement the Government-wide approach to domestic skills to tackle the shortages where they can be addressed by upskilling UK workers?
Caroline Nokes
My hon. Friend makes an important point. Our first priority must be upskilling UK workers and making sure they can move into the vacancies that we know are there. My hon. Friend is always diligent in promoting the interests of businesses in Scotland, which might find it difficult to acquire the labour they need. I will be delighted to work with him in that respect.
Joanna Cherry (Edinburgh South West) (SNP)
The Scottish Government’s analysis shows that the average EU citizen working in Scotland contributes £10,400 per annum to Government revenue and £34,400 per annum to GDP. What plans have the UK Government made to mitigate the adverse economic impact on Scotland as a result of the UK Government’s decision to end free movement?
Caroline Nokes
The hon. and learned Lady will be conscious that an immigration White Paper will be coming forward very soon, but it is crucial that we reflect on the advice given to us by the independent Migration Advisory Committee, which made the point that there were only limited regional variations.
Joanna Cherry
I am very conscious of the much heralded and long awaited White Paper. However— the Minister may not know this—a nationally representative survey conducted by British Future and Hope not Hate shows that nearly two thirds of people in Scotland think the Scottish Government should have the power to decide which visas are issued to people who want to work in Scotland. Will the Minister meet me in advance of the White Paper to discuss how it will address the wishes and needs of the people of Scotland?
Caroline Nokes
I gently remind the hon. and learned Lady that Scotland will be part of a single immigration policy for the whole United Kingdom, however strongly she might argue against that, but I will be delighted to meet her after the White Paper is published, because we do not want the White Paper to be the end of the conversation, and we will still be asking business and industry leaders, representative groups, stakeholders and the devolved Administrations to give us their views.
Danielle Rowley (Midlothian) (Lab)
The Secretary of State for the Home Department (Sajid Javid)
EU citizens make a huge contribution to our economy and society, and we want them to stay. The EU settlement scheme enables them to do so, in line with the draft withdrawal agreement. The scheme provides a simple streamlined process for residents and EU citizens and their family members to obtain their new UK immigration status.
Danielle Rowley
The Roslin Institute in my constituency conducts world-leading scientific research, and it benefits significantly from the expertise of the EU citizens who work there. Given the Government’s plans to level down the rights of EU citizens living here from 30 March onwards and the false categorisation of many scientific researchers as low-skilled, what is the Secretary of State doing to ensure that EU researchers do not find the UK a hostile environment for themselves and their families and choose to go elsewhere?
Sajid Javid
The Government are supporting all those EU citizens who wish to stay in our country. As I said, we actually want them to stay, not just because of the economic benefits they bring but because they are part of our society and part of many of our families. So we want them to stay, and as we have made clear, whether there is a deal or not, they will still be welcome to stay. Our new immigration system will continue to welcome talent from across the world.
Sir Edward Davey (Kingston and Surbiton) (LD)
How does the Home Secretary propose to honour his promises to EU citizens living in the UK and to British citizens in the EU in the event of no deal? Will he now seek to negotiate and ratify a citizens’ rights agreement with the EU that would come into force if there were no wider deal?
Sajid Javid
We have made it clear that if there is no deal—which we do not expect, but we need to plan for all eventualities—all 3.5 million EU citizens in the UK will be allowed to stay and welcome to stay.
Afzal Khan (Manchester, Gorton) (Lab)
Today, I wrote to the Home Secretary about the Home Office illegally requiring DNA data for people’s immigration applications. We have just had the Windrush scandal, and the EU settlement scheme will be the biggest task that the Home Office has ever undertaken. With an additional 3.5 million EU citizens subject to the hostile environment, it will be a question of when, not if, another scandal will break. The Home Secretary has committed to conducting a review of the structure and processes of the Home Office. Will that review be fully independent, and will it roll back the hostile environment?
Sajid Javid
I gently remind the hon. Gentleman that the first Ministers to stand at this Dispatch Box and talk about the hostile environment were Labour Ministers. He should never forget that. Also, almost half the people affected by the Windrush saga were pre-2010. He should reflect on that as well. He is right to say that the EU settlement scheme is large and ambitious, and we are confident that it can be delivered. In our beta testing of the scheme so far, 95% of the people taking part say that it has worked very well for them.
Mr Ranil Jayawardena (North East Hampshire) (Con)
The Secretary of State for the Home Department (Sajid Javid)
The distress that local communities face as a consequence of unauthorised encampments is unacceptable. The Government have recently consulted on what more can be done to ensure that existing enforcement powers are used effectively and on whether additional powers are required.
Mr Jayawardena
Will my right hon. Friend join me in unequivocally damning the disruption and antisocial behaviour caused to innocent residents by illegal Traveller encampments? May I urge him to go further and to give the police more powers to tackle trespass, from which all our constituents deserve the right to be protected?
Sajid Javid
Yes, I join my hon. Friend in that; I fully recognise that unauthorised encampments can cause the settled community significant stress. I have seen that in my own constituency of Bromsgrove, and he has seen it in his. I am not convinced that the existing powers are strong enough, which was why, as Communities Secretary, I launched a consultation, and we will be responding to it shortly.
Kate Green (Stretford and Urmston) (Lab)
Has the Home Secretary read “Policing by consent: Understanding and improving relations between Gypsies, Roma, Irish Travellers and the police”, the report published last week by the Traveller Movement? Will he take note of the concerns in that report that police officers still display signs of unconscious bias and racism towards the Traveller community, and will he meet the all-party parliamentary group for Gypsies, Travellers and Roma to discuss those concerns?
Sajid Javid
I have not yet had the opportunity to read that report, but I will certainly take a look now that the hon. Lady has mentioned it. She reminds the House that the vast majority of the Traveller community are law-abiding citizens, but there are a few, as there are in any community, who break the law through unauthorised encampments, and what people want, including perhaps people in her community, is a balanced approach.
Mr Marcus Jones (Nuneaton) (Con)
My constituents have suffered significantly from illegal Traveller encamp- ments for several years, leading to a significant loss of local amenity and significant cost to council tax payers. I am glad that my right hon. Friend is working with the Secretary of State for Housing, Communities and Local Government on that matter, but enforcement is key, so will he reassure me that whatever powers are put in place are backed up with decent, proper enforcement?
Sajid Javid
It is worth reminding the House that there is a joint consultation across the Government between the Ministry of Housing, Communities and Local Government, the Ministry of Justice and the Home Office and that it will lead to better powers, whatever the results.
Stephen Pound (Ealing North) (Lab)
The fact remains that the system simply is not working. This lawlessness is having a corrosive effect on local communities, and there have been catastrophic consequences for local government finance. Will the Home Secretary please listen to the suggestion that I have made many times before? We should use the number plates of these gleaming, glistening chariots that invade our open spaces and prosecute these malefactors through the identification of their vehicles.
Sajid Javid
I dare not heed Pound, but the hon. Gentleman makes an important point. The consultation’s purpose is to look not just at what is happening at the moment, but at what new powers and sensible policies should follow to deal with this issue.
Alison Thewliss (Glasgow Central) (SNP)
The Minister for Immigration (Caroline Nokes)
On 30 November, UKVI’s existing premium service centres will close to undergo refurbishment and conversion to service and support centres. Home Office staff will be given tailored training sessions, enabling them to best serve customers’ needs when the centres reopen in January 2019.
Alison Thewliss
Delays in Home Office decision making have been a feature of just about every surgery that I have ever held. Given the recent announcement that some services will be outsourced to Sopra Steria—the same company that managed to lose half a million NHS documents—and the experience that we have had with Serco in Glasgow, will the Minister tell me how on earth this privatisation agenda will help my constituents?
Caroline Nokes
It will help the hon. Lady’s constituents by providing a transformed experience for those who may need more face-to-face interaction or help with their applications. At the free appointments, customers will meet experienced frontline staff to help UKVI better to understand their circumstances, take appropriate safeguarding action and validate their documents.
Chris Elmore (Ogmore) (Lab)
The Secretary of State for the Home Department (Sajid Javid)
The Minister for Policing has spoken to all police forces about the demands that they face. We have increased police funding by over £460 million this year, including by providing additional flexibility through the council tax precept.
Chris Elmore
The Home Secretary will be aware that the South Wales police and crime commissioner, Alun Michael, is lobbying the Home Office for additional funding because Cardiff, as a capital city, receives no additional funding despite hosting major sporting and cultural events. Will the Home Secretary support Mr Michael’s bid and deliver new funding for the South Wales police authority area?
Sajid Javid
The Minister for Policing has met the hon. Gentleman’s local force—I believe he actually met the hon. Gentleman to discuss the issue—and we are giving the matter careful consideration.
Vicky Ford (Chelmsford) (Con)
Last week, the police force in Chelmsford, Essex, and its local partners came first in the country for the national Pubwatch scheme, which has reduced violent crime at night by 45%. Will the Home Secretary praise Essex police and continue to help to fund our frontline?
Sajid Javid
Essex police force has my full congratulations on what it has achieved, which shows what can be done to tackle serious violence with creative thinking. Indeed, I may well invite the force to the cross-party serious violence taskforce.
Ms Diane Abbott (Hackney North and Stoke Newington) (Lab)
I associate myself with the Home Secretary’s remarks on the tragedy in Leicester and on the horrific events in Pittsburgh. Our thoughts and prayers should be with the family and friends of the slaughtered and with the people of Pittsburgh.
The Home Secretary will be aware that the National Audit Office has clearly set out how the Government have failed to protect police funding. Does he accept that this is a mark of shame and is putting the public at risk? Since 2010, over 21,000 police officers have been cut under the Tory Government’s austerity policy. All our constituents can see the consequences in delays in responding to 999 calls and in rising violent crime. Will we see the Chancellor today offer any additional funding for policing? The fear must be that the Government will not even properly fund the police pension settlement.
Sajid Javid
The right hon. Lady is right to talk about policing and the incredible work that the officers and staff do, but it is worth reminding the House that Labour planned to cut police spending by 5% to 10% had it won the 2015 election. Labour did promise an increase in 2017, but it was not enough, because we increased police funding by more than Labour promised—by £460 million. Labour went on to vote against that increase. Not a single Labour MP voted for an increase in police funding when they had the opportunity, so we will not take any lectures from Labour on policing.
David T. C. Davies (Monmouth) (Con)
The Parliamentary Under-Secretary of State for the Home Department (Victoria Atkins)
The Government are very concerned about increases in knife crime and its impact on victims, families and communities. The action we are taking is set out in our serious violence strategy and includes new legislation in the Offensive Weapons Bill; the community fund to support local initiatives; the #knifefree media campaign; and continuing police action under Operation Sceptre.
David T. C. Davies
The Minister knows that the Police and Criminal Evidence Act 1984 currently prevents the police from using past criminal convictions as grounds for determining whether a search is proportionate. Will she consider changing PACE so that people who are stopped for a legitimate reason and who are found to have a recent criminal conviction for carrying knives can actually be searched by a police officer?
Victoria Atkins
My hon. Friend brings his experience as a special constable to the Chamber, and I am grateful for his service. We are clear that stop and search is a vital policing tool, and we are committed to tackling knife crime. Under the Police and Criminal Evidence Act officers already have the power to search an individual they suspect to be carrying a knife. We therefore believe the current arrangements to be proportionate, but we will keep them under review and continue to work closely with the police to ensure they have the tools they need. I will be happy to meet him to discuss it further.
Vicky Foxcroft (Lewisham, Deptford) (Lab)
The Home Secretary announced in September that the Government would adopt a public health approach to tackling knife crime, a measure recommended by the Youth Violence Commission following strong evidence that it works. When will the House be given the opportunity to debate this vital issue?
Victoria Atkins
I am extremely grateful to the hon. Lady and other hon. Members on both sides of the House for their work with the Youth Violence Commission. She will know from our scrutiny of the Offensive Weapons Bill how seriously we take the public health approach—we looked at it through the development of the serious violence strategy. She will know there was a debate before the summer recess on serious violence, but I am always happy, as she knows, to debate how we help to support our police forces in tackling this terrible crime.
Several hon. Members rose—
Kevin Hollinrake (Thirsk and Malton) (Con)
The Minister for Security and Economic Crime (Mr Ben Wallace)
We have made significant progress since the National Crime Agency was established in 2013. Capabilities have improved; partnership working is better; and we intervene earlier to prevent serious and organised crime. The agency has gone from strength to strength, with an impressive and sustained track record of disruptions across the full range of serious and organised crime threats.
Kevin Hollinrake
Thames Valley police spent £7 million investigating the HBOS Reading banking scandal. Will my right hon. Friend consider establishing regional fraud squads, which would be self-funded from the proceeds of both fines and recovered funds, to properly investigate business banking fraud and other financial crimes?
Mr Wallace
My hon. Friend’s suggestion is similar to what already happens through the regional organised crime units. We have injected £140 million in grant funding to help to establish them and to ensure that we put in place the right financial investigators in each region to tackle fraud.
Yvette Cooper (Normanton, Pontefract and Castleford) (Lab)
Organised crime crosses borders, and the National Crime Agency relies on the European arrest warrant and databases and joint operations with Europol, all of which will fall if we leave the European Union without a deal in place in April. Given that Ireland has repealed its extradition arrangements to do with the previous 1957 convention, will there be any legal way to extradite organised criminals from Dublin if there is no deal?
Mr Wallace
The right hon. Lady makes an important point about what happens post Brexit. She will of course know that the negotiations with Michel Barnier are all about issues like that. I suspect that Ireland will go along with whatever the EU’s deal is to implement, and we are seeking a security treaty so that we can put in place many of these important measures.
Several hon. Members rose—
Lloyd Russell-Moyle (Brighton, Kemptown) (Lab/Co-op)
Mr Wallace
I hear what the hon. Gentleman says. We have to stem the demand for drugs, both recreational and in respect of other users. Therefore, it is important that we work with the police to deliver that.
Wes Streeting (Ilford North) (Lab)
The Secretary of State for the Home Department (Sajid Javid)
We will be launching a £200 million youth endowment fund to intervene with children at risk of serious violence; we will be consulting on a new duty to support the multi-agency approach to tackling violence; and we will be undertaking a review of drug misuse.
Wes Streeting
The recent murder of a 23-year-old man in my constituency has once again brought violent crime to the forefront of concerns in my community. My constituents understand that whether in Labour-led cities such as London or in Tory shires, cuts to police numbers are having a serious impact, which is leading to increases in violent crime across the country. When will the Home Secretary accept that and put the money back into the police that our communities need?
Sajid Javid
The hon. Gentleman is absolutely right to raise this. He will know that the Government have a cross-government serious violence strategy, but we do need to do more. That was why I recently announced these further steps, especially the new £200 million fund, which will help prevent violence.
Sir David Evennett (Bexleyheath and Crayford) (Con)
Does my right hon. Friend agree that we need to remain committed to steering young and often vulnerable people away from crime? What is the Department doing to strike a balance between prevention and robust law enforcement?
Sajid Javid
My right hon. Friend is right to raise this. We have this new £200 million fund announced earlier this month, and we also have an early intervention youth fund of £22 million.
Louise Haigh (Sheffield, Heeley) (Lab)
The Home Secretary might not want to take any lessons from Labour on policing, but in March Her Majesty’s inspectorate of constabulary warned that
“the lives of vulnerable people could be at risk”
if cuts continue. In May, the Metropolitan Police Commissioner said she was “certain” that the Government’s cuts have contributed to violent crime. In September, the National Audit Office warned that the Home Office
“does not know if the police system is financially sustainable.”
Last week, the Select Committee on Home Affairs declared that the police could become “irrelevant” without serious investment in today’s Budget. Every one of those warnings has been ignored by the Government. Can the Home Secretary tell us why he thinks they are all wrong and he is right?
Sajid Javid
Of course the police need to have the right mix of resources as well as other factors, which is why we have increased police funding this year by more than £460 million. But the hon. Lady also knows this is not all about resources. For example, the changes in drug markets are playing a big role, which is why I hope she would welcome the review that I have recently announced.
Chris Stephens (Glasgow South West) (SNP)
The Minister for Immigration (Caroline Nokes)
The Government are committed to protecting the rights of asylum seekers and to ensuring that those who would otherwise be destitute are provided with accommodation and other support to meet their essential living needs. We continue to work closely with local government, the devolved Administrations, the private sector and civil society to make improvements to the services that are provided.
Chris Stephens
The Minister will be aware that, following a legal challenge in Scotland’s Supreme Court by two of my constituents and Govan Law Centre, Serco undertook to put its lock-change evictions on hold. Is she aware that Serco is verbally threatening my constituents with lock-change evictions? Does she agree that that is completely unacceptable, and will she investigate?
Caroline Nokes
It is important that the Home Office continues to work with Serco, Glasgow City Council and non-governmental organisation partners as part of a dedicated taskforce to make sure that all those individuals who are no longer entitled to asylum support or accommodation are managed appropriately. The hon. Gentleman is of course right to point out that, following his constituents’ legal challenge, no service users have been evicted while the appeal is ongoing.
Bambos Charalambous (Enfield, Southgate) (Lab)
The Minister for Policing and the Fire Service (Mr Nick Hurd)
As taxpayers, we are investing over £1 billion more in our police system than we were three years ago. That shows the Government’s recognition of not only the increasing demand on police and the increasing complexity of that demand, but the progress that we are making in reducing the deficit in our public finances—progress jeopardised by the current Labour Front-Bench team.
Bambos Charalambous
The Minister will no doubt be aware of the lamentable findings of the recently published Home Affairs Committee report, “Policing for the future”. Does he agree with its conclusion that without
“additional funding for policing…there will be dire consequences for public safety, criminal justice, community cohesion and public confidence”?
Will he join me in calling on the Chancellor to provide substantially more funding for policing not only in my constituency of Enfield, Southgate, but throughout the country?
Mr Hurd
I agree with much of the Select Committee’s report, including on the need for more resources for policing, which is exactly what we are providing through an additional £140 million taxpayer investment in our police system this year. That is a police funding settlement that the hon. Gentleman and other Labour MPs voted against.
Chris Stephens (Glasgow South West) (SNP)
The Secretary of State for the Home Department (Sajid Javid)
It has been a busy few weeks at the Home Office as we continue in our efforts to deliver for the British people. On Thursday, regulations that allow the medicinal use of cannabis-based products will come into effect, providing relief to those people, particularly children, who have known so much pain. I shall shortly visit the United States to monitor progress on my challenge to tech giants to help us to fight child sexual exploitation. For those who fall short, there will be no place to hide.
Chris Stephens
On Friday, my constituent was supposed to be moved by Serco to new social housing accommodation, following a successful claim. However, that did not happen, and Serco removed beds, heating and £22.50 in cash. Does the Secretary of State believe that Serco is a rogue provider of services that should be removed its contract?
Sajid Javid
I am happy to take a closer look at the case that the hon. Gentleman mentions. He will know that we have consulted the Scottish Government, local government and others on a new approach, and we are confident that that new approach will bring significant improvement.
Gareth Johnson (Dartford) (Con)
The Minister for Policing and the Fire Service (Mr Nick Hurd)
As a London MP, I am absolutely delighted that moped crime is down by around 50% from its terrible peak. That is the result not only of superb police action but of the work convened by the Home Office that has brought together Government, industry and civil society to bear down on the problem. So pleased are we with that work that we taking the model forward to tackle vehicle crime.
Nick Thomas-Symonds (Torfaen) (Lab)
I thank Max Hill QC for his work as the reviewer of counter-terror legislation—a role that he left on 12 October to become the Director of Public Prosecutions. Given that his departure was announced on 24 July, why has no successor been appointed and the post been left vacant with counter-terror legislation going through Parliament? What on earth is the Home Office excuse for this sheer negligence?
Sajid Javid
We are about to start the process for appointing Max Hill’s successor. To suggest that that has held back progress on counter-terrorism would be completely incorrect. The new counter-terrorism strategy was launched just a few months ago and sets out how seriously the Government take the issue.
Theresa Villiers (Chipping Barnet) (Con)
In the light of the horrors of Pittsburgh, will the Government provide assurance—[Interruption.]
Mr Speaker
Order. This really is a matter of the utmost sensitivity, and the right hon. Lady’s question must be heard with solemnity and respect.
Theresa Villiers
Thank you, Mr Speaker.
In the light of the horrors of Pittsburgh, can the Home Secretary provide the reassurance that both the Government and the police will always take very, very seriously the security of the Jewish community and other minorities who may be subjected to hate crimes and violence?
Sajid Javid
I can absolutely provide that reassurance to my right hon. Friend. In fact, this weekend, following that tragedy, I spoke to the head of the Community Security Trust to offer that reassurance. It is an organisation that we are proud to support, but we want to look at new ways of helping the community with its security needs. It is sad, in this day and age, that any community needs security of that type but, for as long as they do, we will always be there. Tonight, I will also be attending a vigil to mark the terrible tragedy at Pittsburgh.
Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)
The perpetrator of the Pittsburgh murders has a history of posting the most vile antisemitism, Islamophobia and threatening comments. Similarly, the man suspected of sending pipe bombs to prominent Democrats threatened the life of a political commentator via a tweet a few months ago, but Twitter said that that did not violate its online guidelines. In the wake of these terrible tragedies, what are the Government doing to address the very serious issue of online hate?
Sajid Javid
The hon. Lady is again right to raise this matter. We have seen the role that social media is playing not just in Britain, but abroad, in feeding hate. That is one reason why the Government recently refreshed our anti-hate strategy and that is exactly one of the things that we will be looking into further.
Mark Pawsey (Rugby) (Con)
This summer, Rugby saw a number of illegal Gypsy and Traveller encampments on new housing sites. Our local councillor, Jill Simpson-Vince, brought together developers and Warwickshire police to put a protocol in place. Can the Secretary of State encourage others to follow Warwickshire’s lead?
Sandy Martin (Ipswich) (Lab)
The Minister for Immigration (Caroline Nokes)
I thank the hon. Gentleman for that question. He will know that Martin Forde QC recently asked the Government, and we agreed, to extend the consultation period for the compensation scheme so that we can make sure that we get the best responses possible and so that he can engage more widely with the community. In exceptional circumstances, the Home Office has already made payments to some individuals.
Steve Double (St Austell and Newquay) (Con)
Meat and fish processing businesses in my constituency rely heavily on migrant workers. Many of their staff are highly skilled even though their skill is not formally recognised by a qualification. What steps are the Government taking to make sure that these sorts of skills are properly recognised in our future immigration policy?
Sajid Javid
Our food and drink industry is vital to the success of our economy and I know that many Cornish businesses are very successful in this sector. I can reassure my hon. Friend that we will be taking these issues very seriously as we develop our new immigration system.
Mrs Madeleine Moon (Bridgend) (Lab)
Sajid Javid
If the hon. Lady would care to write to me, I will look closely at the case that she has mentioned.
Greg Hands (Chelsea and Fulham) (Con)
Next March will see the 40th anniversary of the brutal assassination of Airey Neave on these premises. Airey Neave’s family, my constituents, are seeking more information about the circumstances of the murder. I have been told that my questions on this have been transferred from the Northern Ireland Office to the Home Office. Will my right hon. Friend the Home Secretary agree to meet me and Airey Neave’s family to discuss how they can get answers on how and why Airey Neave was murdered 40 years ago?
Ruth George (High Peak) (Lab)
Mr Hurd
Operating priorities are local decisions, but what I can tell the hon. Lady is that the priority of the Department is to make sure that the police have the resources that they need to do their job, which was why we took steps to increase public investment in our police.
Bill Grant (Ayr, Carrick and Cumnock) (Con)
May I seek an assurance from the Minister that any revised immigration policy will reflect the needs of the farming and fishing community in Scotland and indeed the whole UK?
Sajid Javid
I can give my hon. Friend that assurance, and that was one reason why we recently launched a pilot for a seasonal workers agricultural scheme for 2019.
Emma Reynolds (Wolverhampton North East) (Lab)
Maggie Throup (Erewash) (Con)
Town centres are at the heart of the Erewash community, but on occasion they can become the target for antisocial behaviour brought on by the misuse of drugs and alcohol. What more can be done to ensure a visible police presence in our town centres, and does my hon. Friend agree that sharing back-office functions with other emergency services to free up resources may be one solution?
The Parliamentary Under-Secretary of State for the Home Department (Victoria Atkins)
I am delighted to be visiting my hon. Friend on Friday to see for myself the hard work that she does in taking care of her constituents, working alongside her local police force. This Government support greater collaboration and have placed a statutory duty on police, fire and ambulance services to keep collaborative opportunities under review and enter into them in the interests of efficiency or effectiveness.
Wera Hobhouse (Bath) (LD)
Caroline Nokes
I share the hon. Lady’s admiration for small and medium-sized businesses the country over. The immigration system already facilitates recruitment of foreign graduates of UK universities by waiving many of the usual requirements. We will shortly be setting out our plans for the future immigration system, following the recent report by the Migration Advisory Committee.
Ben Bradley (Mansfield) (Con)
Following on from my Adjournment debate on the subject and a letter from 20 police and crime commissioners, will the Minister confirm that he shares my concerns about the impact of Mamba and Spice on communities such as Mansfield and consider potential solutions to support local police and other services in tackling this issue?
Layla Moran (Oxford West and Abingdon) (LD)
Victoria Atkins
I am of course very sorry to hear that, as I am sure the entire House is. The hon. Lady will know that the Home Secretary has commissioned an independent review of drugs so that we may understand better how they are used in the 21st century, and I would of course be honoured to meet her and her constituent to discuss this.
Chris Philp (Croydon South) (Con)
When we leave the European Union, we will of course have control of all aspects of immigration policy. Does the Home Secretary agree that we can then prioritise higher-skilled immigration as a way of boosting our nation’s productivity?
Sajid Javid
Yes, I agree with my hon. Friend. That is exactly what we will do, and we will set out the approach in the White Paper in a few weeks.
Liz Twist (Blaydon) (Lab)
Sajid Javid
The hon. Lady’s local police force will be getting an extra £5 million this year, and she will also know that later this year we will have the policing settlement—something that I know she will look forward to.
Kirstene Hair (Angus) (Con)
The seasonal agricultural workers pilot scheme was warmly welcomed both by farmers and by agricultural bodies across the United Kingdom. [Interruption.] Will the Minister update farmers in my constituency on when further detail will be released? [Interruption.]
Caroline Nokes
I thank my hon. Friend for her question. I was delighted to go to her constituency over the summer to meet soft fruit farmers who made a compelling case for a seasonal workers scheme. She will no doubt be delighted that the Government are having a pilot in the horticultural sector to make sure that it can access the labour that it needs.
Several hon. Members rose—
Mr Speaker
Where is that new young Member, John Spellar? Ah, there he is. Let’s hear the fella.
John Spellar (Warley) (Lab)
Sajid Javid
The right hon. Gentleman will know that West Midlands police had an increase of almost £10 million this year. However, it is always worth listening to local forces. I am happy to meet west midlands MPs, as I have done in the past, and to listen more.
Ways and Means
Financial Statement
(6 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Deputy Speaker (Sir Lindsay Hoyle)
Before I call the Chancellor of the Exchequer, I remind hon. Members that copies of the Budget resolutions will be available in the Vote Office at the end of the Chancellor’s speech. I also remind hon. Members that it is not the norm to intervene on the Chancellor of the Exchequer or the Leader of the Opposition.
The Chancellor of the Exchequer (Mr Philip Hammond)
Today, I present to the House a Budget for Britain’s future: a Budget that shows the perseverance of the British people finally paying off; a Budget for hard-working families who live their lives far from this place and care little for the twists and turns of Westminster politics. People who get up early every morning, who open up factories, shops, and building sites, drop their kids off at school, check on elderly relatives and neighbours—the strivers, the grafters and the carers who are the backbone of our communities and our economy. People who ask only of Government that we protect the jobs that put food on their table; that we deliver the public services their families rely on; and that we do it efficiently, minimising the amount of tax we need to take from their hard-earned wages. People who Conservative Members are proud to represent. So I say to them today: this Budget is unashamedly for you.
The British people put their faith in us to do the job, and today we repay that trust with a Budget that paves the way for a brighter future. Let me be clear why. The tough decisions of the past eight years were not driven by ideology—[Interruption.] They were not driven by ideology—they were driven by necessity and by Labour’s failure in government which led to our deficit soaring to a post-war record and our economy suffering the deepest recession since the second world war. That was our inheritance and, as ever, we did what needed to be done.
Now we have reached a defining moment on this long, hard journey, opening a new chapter in our country’s economic history where we can look confidently to the future and set our course for where this remarkable country will go next. Because today, I can report to the British people that their hard work is paying off, and the era of austerity is finally coming to an end.
I am sure that like me, many Members of the House keenly remember the last Budget delivered on a Monday. It was 1962: I was six years old. Tensions between Russia and the United States were rising, and a former Foreign Secretary turned Chancellor delivered a Budget amid Cabinet revolt. I am acutely aware of the phenomenon of false memory, but I could swear that I remember my parents turning to me and saying, “Philip, one day that could be you.”
The media have been full of speculation about the timing of today’s Budget. Some were hoping for a December Budget. I am sure the headline writers were ready with something like “Spreadsheet Phil turns Santa Claus”. Others were desperate for it to be on Wednesday—“Hammo House of Horrors” perhaps. But the truth is that by choosing today rather than Wednesday, I have not avoided the blood-curdling threats, the anguished wailing and the strange banging of furniture that is usually associated with Wednesday; I have been kindly invited to a special meeting of the 1922 committee this evening.
Our economy continues to confound those who talk it down, and we continue to focus resolutely on the challenges and opportunities that lie ahead as we build a new relationship with our European neighbours and a new future outside the European Union. But as we do so, let us not forget the remarkable achievements of the British people in clearing up the aftermath of Labour’s great recession. Because for all Labour’s carping and relentless negativity, talking Britain down at every opportunity, we the British people have a record to be proud of: eight straight years of economic growth; over 3.3 million more people in jobs; higher employment and lower unemployment in every region and every nation of the United Kingdom; wages growing at their fastest pace in almost a decade; income inequality lower now than at any time under the last Labour Government; an economy back on its feet again; an economy working not for the few, and not even for the many—an economy working for everyone.
We are at a pivotal moment in our EU negotiations, and the stakes could not be higher. Get it right, and we will not only protect Britain’s jobs, businesses and prosperity, but harvest a double “deal dividend”: a boost from the end of uncertainty, and a boost from releasing some of the fiscal headroom that I am holding in reserve at the moment. We are confident that we will secure a deal which delivers that dividend—confident, but not complacent. So we will continue to plan for all eventualities, and I will do so at this Budget with a three-pronged approach.
First, I have already allocated £2.2 billion to Departments for Brexit preparations, and in the autumn Budget last year I set aside a further £1.5 billion to be allocated for 2019-20. Today I am increasing that sum to £2 billion, and in the coming weeks the Chief Secretary will announce allocations to individual Departments.
Secondly, I shall today maintain the headroom to my fiscal rules broadly as set out in the spring statement, retaining firepower to intervene if the economy needs more support in the coming months. Thirdly, as I have been clear since moving to an autumn Budget, if the economic or fiscal outlook changes materially in-year, I will take whatever action is appropriate, if necessary upgrading the spring statement to a full fiscal event. The House can be confident that we are working for the best outcome for Britain and preparing for every eventuality.
I shall first report to the House on the economic forecasts of the independent Office for Budget Responsibility, and I thank Robert Chote and his team, once again, for their excellent work. The OBR expects growth to be resilient across the forecast period, improving next year from the 1.3% forecast at the spring statement to 1.6%; then 1.4% in 2020 and 2021; 1.5% in 2022; and 1.6% in 2023.
This Government have prioritised getting people into work because the best way to help people is to provide them with the stability of a pay packet every month. Since 2010, over 3.3 million more people are in work, and today the OBR confirms Britain’s “jobs miracle” is set to continue—revising up participation in the labour market, revising down the country’s equilibrium unemployment rate and predicting 800,000 more jobs by 2023. By my calculation, that is over 4.2 million net new jobs since 2010, making the shadow Chancellor’s prediction of 1.2 million jobs lost out by just the tiniest margin of 5.4 million people—roughly the population of Scotland.
But now we need to focus on pay, and with the proportion of low-paid jobs at its lowest since 1997, with regular pay growth at 3.1%—its strongest in almost a decade—and inflation forecast to average 2% next year, the OBR is forecasting sustained real wage growth in each of the next five years, which is a far cry from the dismal picture that the Leader of the Opposition is so desperate to paint every Wednesday.
I turn now to the fiscal forecast. We inherited the highest budget deficit in our peacetime history, but after eight years the hard work of the British people is paying off, and we will not squander their efforts. Today’s forecast, taking into account all announcements made since the spring statement, including measures I shall announce today, shows the deficit down from almost 10% under Labour to less than 1.4% next year under this Conservative Government, and falling to just 0.8% by 2023-24. Borrowing this year will be £11.6 billion lower than forecast at the spring statement—just 1.2% of GDP —and is then set to fall from £31.8 billion in 2019-20 to £26.7 billion in 2020-21, £23.8 billion in 2021-22, £20.8 billion in 2022-23 and £19.8 billion in 2023-24, its lowest level in over 20 years.
So we meet our structural borrowing target three years early and deliver borrowing of just 1.3% of GDP in 2020-21, maintaining £15.4 billion headroom against our 2% fiscal rules target. We are no longer borrowing at all to finance current spending, and today the OBR confirms that our national debt peaked in 2016-17 at 85.2% of GDP, and then falls in every year of the forecast from 83.7% this year to 74.1% in 2023-24. That is lower in every year than forecast at the spring statement, and it means that we meet our target to get debt falling three years early: a turning point in our nation’s recovery from Labour’s great recession—both our fiscal rules met, both of them three years early—so Fiscal Phil says, “Fiscal Rules OK”.
While we are working to get Britain’s debt down, to end the nightmare of wasting over £50 billion a year on interest, the party opposite would do the opposite. Labour’s plans would increase tax and borrowing by £1,000 billion, taking our debt to GDP ratio soaring to well over 100% of GDP—a reckless and irresponsible policy from a reckless and irresponsible party.
I have always been clear: sound public finances are essential, but they are not an end in themselves. So since I have been Chancellor I have taken a balanced approach, putting an additional £60 billion into our public services and investment in our future, cutting tax for 31 million people, and all the while reducing borrowing and getting our national debt falling. Now, we must do more, and thanks to the hard work of the British people, in this Budget we can do more.
I said at the spring statement that our careful management of the public finances was beginning to pay off, and that if the improvement we saw then continued, I would be able to provide more support to our public services on a sustainable basis. Today, the OBR confirms a significant improvement in our public finances—an upgrade that underscores the hard work of the British people and this Government’s stewardship of the economy since 2010, and means that I can deliver on the promise I made in the spring, setting out a new path for public spending and a clear view for the British people of the fruits of their hard work.
Next year, we will conduct a full spending review, setting our priorities for public spending within a sustainable funding envelope, deciding on the right balance between investing in Britain’s future and current consumption of public services. Today, I have set out an indicative five-year path for departmental resource spending—RDEL, as it is known to aficionados of public finance. To give context, in spending review 2010, average annual real growth was minus 3%; in spending review 2015, it was minus 1.3%; from next year, average annual real growth will be plus 1.2%—but that is not the limit of my ambition. When our EU negotiations deliver a deal, as I am confident they will, I expect that the deal dividend will allow us to provide further funding for the spending review. The hard work of the British people is paying off; austerity is coming to an end.
Mr Deputy Speaker, you will know better than most that every Chancellor likes to have a rabbit or two in his hat as he approaches a Budget, but this year, some of my star bunnies appear to have escaped just a little bit early. In June, my right hon. Friend the Prime Minister announced the single largest cash commitment to our public services ever made by a peacetime Government—an £8.4 billion five-year deal for our precious NHS, half as much again as the increase Labour offered the NHS at the last election. Let me be clear: we are delivering this historic £20.5 billion real-terms increase for the NHS in full over the next five years. So in a very important sense, we made our big choice for this Budget four months before it was delivered.
This was the right decision. Our NHS is the No. 1 priority of the British people, and as we approached the 70th anniversary of its foundation, they had a right to know the scale of our commitment to it. But the British people also care that money invested in the NHS goes to the frontline and to improvements in services, so we did not just hand over money; we agreed that the NHS would produce a 10-year plan, setting out how the service will reform, how waste will be reduced, and exactly what the British people can expect to get for their money.
That plan will be published shortly, but I shall give the House a sneak preview today. [Hon. Members: “Ooh!”] I, too, can poach a rabbit every now and then.
There are many pressing demands on additional NHS funding, but few more pressing than the needs of those who suffer from mental illness. Today, I can announce that the NHS 10-year plan will include: a new mental health crisis service with comprehensive mental health support available in every major A&E; children and young peoples’ crisis teams in every part of the country; more mental health ambulances; more “safe havens” in the community; and a 24-hour mental health crisis hotline. These new services will ensure that people suffering from a crisis, young or old, can get the help they need, ending the stigma that has forced too many to suffer in silence and ending the tragedy of too many lives lost to suicide. We are proud to have made this extraordinary commitment to funding our NHS, a precious institution that has been nurtured for most of its life by Conservative Governments.
Departmental spending allocations with be settled at the spending review next year. However, there are a small number of areas where I will provide further support now in order to deliver necessary certainty for forward planning. Local government has made a significant contribution to repairing the public finances and this Budget ensures local councils have more resources to deliver high-quality public services. We are giving councils greater control over the money they raise: through the adult social care precept; through our plans for increased business rate retention from 2020; and by removing the housing revenue account cap, so that councils can help to build the homes this country needs.
We will shortly publish our Green Paper on the future of social care, setting out the choices, some of them difficult, for making our social care system sustainable into the future. But I recognise the immediate pressures local authorities face in respect of social care. So today, building on the £240 million for social care winter pressures announced earlier this month, I will make available a further £650 million of grant funding for English authorities for 2019-20, and an additional £45 million for the disabled facilities grant in England in 2018-19. We will invest a further £84 million over the next five years to expand our successful children’s social care programmes to 20 further councils with high or rising numbers of children in care, allowing councils to improve services for older people, for people with disabilities and for children in care now, while longer-term funding decisions will be made at the spending review.
The UK spends more on defence than any NATO member except the US, but over the past year we have had stark reminders of the scale, scope and complexity of the threats we face. My right hon. Friend the Defence Secretary is working with the Cabinet Office and the Treasury to conduct a review into the modernisation of our armed forces in response to the evolving threat, which will form the basis for a comprehensive consideration of defence spending next year. As a former Defence Secretary myself, I understand the immediate pressures our armed forces are facing, so I will today provide an additional £1 billion to the Ministry of Defence to cover the remainder of this year and next to boost our cyber capabilities and our anti-submarine warfare capacity, and to maintain the pace of the Dreadnought programme to ensure continuous at-sea deterrence, a deterrent that allows us to sleep easy in our beds, but one that the Leader of the Opposition and the shadow Chancellor have spent their political lifetimes campaigning to abolish. Nobody should be in any doubt that those of us on the Government Benches are proud of our armed forces and we will always back them with the investment they need to keep this country safe.
It is not only our armed forces who keep us safe. Our counter-terrorism police play a vital role in defending Britain against the evolving threats we face. We committed in 2015 to spend 30% more on counter-terrorism capabilities over the current spending review period. And today I commit an additional £160 million of CT police funding for 2019-20 to protect CT police numbers in 2019-20 and to allow future CT police funding to be considered in the round at the spending review.
I recognise that policing more generally is under pressure from the changing nature of crime. I also recognise the representations made on this by many colleagues, such as my hon. Friend the Member for South West Bedfordshire (Andrew Selous), and I can tell the House today that my right hon. Friend the Home Secretary will review police spending power and further options for reform when he presents the provisional police funding settlement in December.
As I have already set out, due to the hard work of the British people, public borrowing this year is coming in substantially below forecast. This allows us to provide additional support for public services in the spending review and contributes to the significant reduction in forecast debt this year. But I also want to use this good news to give a little bit back, where it can be put to good use, in this financial year.
This year marks a century since the end of the first world war. And as we remember our fallen servicemen and women whose sacrifice ensured the freedom we enjoy today, many projects are raising money for veterans’ charities from sales of commemorative items on which VAT is charged. We cannot waive the VAT due on these sales, but we can make a donation with the VAT we will receive, and I commit today that the Treasury will mark the centenary of the armistice by making a donation of £10 million to the Armed Forces Covenant Fund Trust to support veterans with mental health needs.
Many of our nation’s village halls were built to commemorate the sacrifice of world war one, and many of them are being refurbished to commemorate the centenary. So I will also provide funding for grants equivalent to the VAT chargeable on such refurbishment projects. And as our focus moves from the anniversaries of the first world war to the second, I will also provide £1.7 million for educational programmes in schools to mark the 75th anniversary of the liberation of the Bergen-Belsen concentration camps, ensuring that the next generation hears the stories of those who survived the holocaust and of the British soldiers who liberated them, because as the terrible events in Pittsburgh this weekend remind us, the battle against antisemitism did not end with the defeat of Nazi Germany.
Across the length and breadth of England, our air ambulance services work tirelessly to get those with life-threatening illnesses and injuries quickly to the expert medical care they need. Funded entirely by philanthropy, they do a fantastic job, and today I am making £10 million of funding available to help them to go on doing so.
We are investing record amounts in our schools and that investment is paying off, with 86% of schools now rated good or outstanding, compared with 68% in 2010. But I recognise that school budgets often do not stretch to that extra bit of kit that would make such a difference. So today I am announcing a £400 million in-year bonus to help our schools buy the little extras they need—a one-off capital payment directly to schools, averaging £10,000 per primary school and £50,000 per secondary school.
I have one final in-year measure to announce: every Member of Parliament will testify that potholes are high on the public’s list of concerns. So as autumn takes hold, I am making an additional £420 million available immediately to local highway authorities to tackle potholes, bridge repairs and other minor works in this financial year.
But if we want sustainable world-class public services and rising living standards, we must make the serious long-term reforms our economy needs to tackle the productivity challenge, to prepare our nation for the technological change ahead and to show the next generation that our market economy can evolve once again to meet the needs of the new age. That is because, for us on the Government Benches, ending austerity is not just about funding public services; it is about real wage growth and leaving more of people’s hard-earned money in their pockets. This is the nation of the industrial revolution, of Stephenson, Whittle, Lovelace and Faraday—people whose ideas shaped the world around them—and today Britain once again can lead the world as we exploit a new wave of scientific and technological discovery pouring out of our universities and research institutes. We can solve the productivity challenge if we are willing to embrace the future, to make the choice to invest in infrastructure, research, skills and our regions, to manage change, not hide from it.
I believe passionately in this agenda, but even I would admit that at the last two Budgets I might have given the House just a little more detailed information on productivity and technological innovation than it strictly needed, so this time I will leave it to the Budget Red Book to set out more detail of the many measures we will take today. [Hon. Members: “More!”] Sensing the disappointment of my colleagues, I will just mention that the list in the Budget Red Book includes our commitment to technology, with £1.6 billion of new investments to support our modern industrial strategy, ranging from nuclear fusion to quantum computing; £150 million for fellowships to attract the brightest talent to these shores from around the world so that our scientific research can continue to lead the world; and our commitment to infrastructure, including our expanding of the national productivity investment fund once again to over £38 billion by 2023-24, so that over the next five years total public investment will grow by 30% to its highest sustained level in 40 years and will on average be an astonishing £460 million a week higher, in real terms, than under the last Labour Government. This is a Conservative Government investing in the roads, the railways, the research and the digital infrastructure that will power this country in the 21st century.
Half of the UK’s £600 billion infrastructure pipeline will be built and financed by the private sector. In financing public infrastructure, I remain committed to the use of public-private partnership where it delivers value for the taxpayer and genuinely transfers risk to the private sector, but there is compelling evidence that the private finance initiative does neither. The shadow Chancellor, of course, rages against PFI at every opportunity yet curiously forgets to mention that nearly 90% of those contracts were agreed by the last Labour Government. That has left the nation with a bill of more than £200 billion to pay off and would be the most potent symbol of the economic mismanagement of the last Labour Government, if only Gordon Brown hadn’t sold the gold.
Labour’s policy is to terminate all these contracts, triggering the ruinous penalty clauses that the Labour Government themselves agreed to in the first place and adding tens of billions more to an already enormous bill. It is a classic Labour solution: pouring good money after bad. I will not do that—we will honour existing contracts—but the days of the public sector being a pushover must end. We will establish a centre of excellence to actively manage these contracts in the taxpayers’ interest, starting in the health sector, but we will go further. I have never signed off a PFI contract as Chancellor, and I can confirm today that I never will. I can announce that the Government will abolish the use of PFI and PF2 for future projects, putting another legacy of Labour behind us.
We are investing in our nation’s infrastructure and backing the technologies of the future, but we know that the real engine of growth is enterprise. The right hon. Member for Hayes and Harlington (John McDonnell) lists
“fermenting the overthrow of capitalism”
as his pastime.
Mine is “reinvigorating capitalism for the digital age”, because I want Britain to be one of the great winners of the technological revolution. On this side of the House, we will always back enterprise and the market economy that underpins it, because we know that it is the only way to deliver the high-wage, high-skill economy of the future.
As we finalise our departure from the EU and deliver a deal that secures Britain’s future trade, we must unleash the investment that will drive our future prosperity. So today I can announce a package of measures to stimulate business investment and send a message loud and clear to the rest of the world: Britain is open for business. I am increasing the annual investment allowance from £200,000 to £1 million for two years, delivering on a long-standing ask of the British Chambers of Commerce; I am providing a targeted relief for the cost of acquiring intellectual property-rich businesses; and I am introducing a permanent tax relief for new non-residential structures and buildings, partly funded by an adjustment in the special writing-down rate for long-life assets from 8% to 6% to better align the tax and accounting treatment of these assets.
To support British exports, we will increase UK Export Finance’s direct lending facility by up to £2 billion. We will open the use of e-passport gates at Heathrow and other airports, currently only available to European economic area nationals, to include visitors from the United States, Canada, New Zealand, Australia and Japan. We will provide an additional £200 million of funding for the British Business Bank to replace access to the European investment fund, if needed. We will back another 10,000 entrepreneurs by extending start-up loans funding to 2021. Following representations from the Federation of Small Businesses, I am extending the new enterprise allowance, providing mentoring and support for benefit claimants to get their business ideas off the ground.
With thanks to my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake), we are working with the Financial Conduct Authority on expanding access to the Financial Ombudsman Service for larger small and medium-sized enterprises. As well as backing businesses to invest and grow, we will make sure that British workers are equipped with the skills that they need to thrive and prosper. We have introduced a new system of T-level vocational training, we have put the first £100 million into the new national retraining scheme, and, through the apprenticeship levy, we are delivering 3 million high-quality apprenticeships in this Parliament. But that system is paid for by employers, and it has to work for employers. So today, in addition to the flexibilities that I announced earlier this month, I can announce that for smaller firms taking on apprentices we will halve the amount that they must contribute from 10% to 5%. In total, this is a £695 million package to support apprenticeships.
As our economy evolves in the digital age, so too must our tax system, to ensure that it remains fair and robust against abuse, and raises the revenues that we need to fund our public services. The employment allowance was introduced to incentivise businesses to take on employees, but at a flat rate of £3,000 per employer, it does not provide any real incentive for larger employers. So from April 2020, we will target it at small and medium businesses with an employer’s national insurance bill of less than £100,000 a year. We will also bring the treatment of capital losses for the largest companies into line with that of income losses.
We recommit ourselves today to keeping family homes out of capital gains tax, but some aspects of private residence relief extend it beyond that objective, and provide relief for people who are not using the home as their main residence. So from April 2020, we will limit lettings relief to properties where the owner is in shared occupancy with the tenant, and reduce the final period exemption from 18 months to nine months.
I have received representations that I should abolish entrepreneur’s relief and put the savings towards funding our NHS commitments, but I do not believe we can have sustainable public services unless we have a dynamic economy, and encouraging entrepreneurs must be at the heart of any strategy for a dynamic economy, so I will retain entrepreneur’s relief, but to ensure it is going to genuine entrepreneurs, I will extend the minimum qualifying period from 12 months to two years.
In the period since the last Budget, we have explored all avenues to address the cliff-edge effect of VAT registration, but our options are restricted by EU law. We will continue to work on this issue as our future VAT regime becomes clear over the years ahead, and in the meantime, to give small businesses certainty and in response to representations from my hon. Friend the Member for Mid Worcestershire (Nigel Huddleston), the Federation of Small Businesses and others, I will leave the threshold unchanged for a further two years.
The off-payroll working rules, known as IR35, are designed to ensure fairness so that individuals working side by side in a similar role for the same employer pay the same employment taxes. Last year, we changed the way these rules are enforced in the public sector, but widespread non-compliance also exists in the private sector, so following our consultation, we will now apply the same changes to private sector organisations as well. But after listening carefully to representations made—including many from right hon. and hon. Friends—during the consultation, we will delay these changes until April 2020, and we will only apply them to large and medium-sized businesses.
There is one standout example of where the rules of the game must evolve now if they are to keep up with the emerging digital economy. Digital platforms delivering search engines, social media and online marketplaces have changed our lives, our society and our economy, mostly for the better, but they also pose a real challenge for the sustainability and fairness of our tax system. The rules have simply not kept pace with changing business models, and it is clearly not sustainable or fair that digital platform businesses can generate substantial value in the UK without paying tax here in respect of that business. The UK has been leading attempts to deliver international corporate tax reform for the digital age. A new global agreement is the best long-term solution, but progress is painfully slow. We cannot simply talk forever, so we will now introduce—[Interruption.] We will now introduce a UK digital services tax. This will be a narrowly targeted tax on the UK-generated revenues of specific digital platform business models. It will be carefully designed to ensure it is established tech giants, rather than our tech start-ups, that shoulder the burden of this new tax.
It is important that I emphasise that this is not an online sales tax on goods ordered over the internet; such a tax would fall on consumers of those goods, and that is not our intention. The digital services tax will only be paid by companies that are profitable and that generate at least £500 million a year in global revenues in the business lines in scope. We will consult on the detail to make sure we get it right and to ensure that the UK continues to be the best place in the world to start and scale-up a tech business. The tax will come into effect in April 2020 and is expected to raise over £400 million a year.
In the meantime, we will continue to work at the OECD and G20 to seek a globally agreed solution, and if one emerges, we will consider adopting it in place of the UK digital services tax, but this step shows that we are serious about this reform, because it is only right that these global giants with profitable businesses in the UK pay their fair share towards supporting our public services. I am already looking forward to my call from the former leader of the Liberal Democrats.
We are updating the rules of the game, but we must also make sure people play by the rules. And today we continue the work of the past eight years, where we have secured £185 billion since 2010 that would otherwise have gone unpaid, with a package of measures today to further clamp down on tax avoidance, evasion and unfair outcomes, raising another £2 billion over the next five years. We will make HMRC a preferred creditor in business insolvencies, to ensure that tax that has been collected on behalf of HMRC is actually paid to HMRC. We will end the practice of purchasing services through overseas branches to avoid UK VAT, and we will crack down on insurance companies routing services through offshore territories. And we will stop our generous R&D tax credits system being abused by reintroducing a PAYE restriction for the small and medium-sized companies scheme. Labour talk tough on tax avoidance and evasion. We take action.
Investing in our infrastructure, backing the technologies of the future, supporting British businesses, and updating our tax system for the digital age—that is how we will deliver the high-wage, high-skill economy of the future. But we must also recognise that technological change will bring challenges as well as opportunities, and there is one part of our economy that is currently confronting that challenge in spades: our high streets. Embedded in the fabric of our great cities, towns and villages, the high street lies at the heart of many communities, and it is under pressure as never before as Britain adopts online shopping with greater alacrity than any other large economy. So if Britain’s high streets are to remain at the centre of our community life, they will need to adapt. Today, we support them to do so, responding to calls from across this House, especially from my right hon. Friend the Member for Putney (Justine Greening) and my hon. Friends the Members for Southport (Damien Moore) and for Croydon South (Chris Philp).
We will provide £675 million of co-funding to create a future high streets fund to support councils to draw up formal plans for the transformation of their high streets, to invest in the improvements they need and to facilitate redevelopment of under-used retail and commercial areas into residential, at one and the same time helping with the housing challenge and delivering much-needed footfall to high street businesses. We will consult on how modernisation of the use classes order and compulsory purchase order regime can help to facilitate the transformation of the high street.
The change our high streets face is irreversible and it will take them time to adapt to it, but I know that many small retail businesses are struggling to cope with the high fixed costs of business rates. Since 2016, we have introduced business rates relief measures worth £12 billion, and many of these reliefs will have benefited high street businesses, but today I can go further. At the next revaluation, in 2021, rateable values will adjust to reflect changes in rental values, but I want to help retail businesses now. So for the next two years, up to that revaluation, for all retailers in England with a rateable value of £51,000 or less, I will cut their business rates bill by a third. That is an annual saving of up to £8,000 for up to 90% of all independent shops, pubs, restaurants and cafés. I will also extend the £1,500 local newspaper discount for a further year. Whatever the national press says, I have been assured of a warm welcome for my Budget from the Royston Crow and The Keswick Reminder.
Local authorities have long been able to provide discretionary business rates relief to other bodies, but not to themselves. And so following representations from my hon. Friends the Members for North Cornwall (Scott Mann) and for St Austell and Newquay (Steve Double), I am pleased to announce a new mandatory business rates relief for public lavatories, so that local authorities can, at last, relieve themselves. For the convenience of the House, Mr Deputy Speaker, and without wishing to get unduly bogged down in the subject, this relief—
Mr Hammond
Well, at least I am demonstrating that we are all British. This relief will extend to any such facilities made available for public use, whether publicly or privately owned. I can honestly say that that is virtually the only announcement in this Budget that has not leaked. [Hon. Members: “More!”]
We cannot resolve the productivity challenge or deliver the high standards of living that the British people deserve without fixing our housing market. In last year’s Budget, I launched a five-year, £44 billion housing programme to deliver the biggest increase in housing supply since 1970, and I abolished stamp duty for first-time buyers on properties up to £300,000. Some 121,500 first-time buyers have already benefited from our new relief, and the number of first-time buyers is at an 11-year high. Today, I am extending that relief to all first-time buyers of shared ownership properties valued up to £500,000, and I will make the relief retrospective so that any first-time buyer who has made such a purchase since the previous Budget will benefit.
But we have more to do, so I can announce today a further £500 million for the housing infrastructure fund to unlock a further 650,000 homes, the next wave of strategic partnerships with nine housing associations, which will deliver 13,000 homes across England, and up to £1 billion of British Business Bank guarantees to support the revival of SME housebuilders. We are consulting on simplification of the process for conversion of commercial property into new homes, and because we want to see parishes and neighbourhoods enabling more homes for sale to local people to buy at prices they can afford, we are providing funding to empower up to 500 neighbourhoods to allocate or permission land for housing through the neighbourhood planning system for sale at a discount to local people in perpetuity.
I am also grateful to my right hon. Friend the Member for West Dorset (Sir Oliver Letwin) for his review of build-out rates, published today. He concludes that the large housebuilders are not engaged in systematic speculative land banking—[Interruption.] Perhaps Opposition Members would like to read the report. My right hon. Friend makes several recommendations for reform of the planning system in respect of large strategic housing sites, and we will respond to his report in full in the new year.
Meeting the productivity challenge means tapping the potential of every region and nation. Our devolution agenda is giving power back to the people, and today we go further to fire up the northern powerhouse, fuel the midlands engine and back our regions across the UK. We are increasing the transforming cities fund to £2.4 billion and providing an additional £90 million to trial new models of smart transport, including on-demand buses—I think, Mr Deputy Speaker, that is what we used to call taxis in our day. We are launching a competition for proposals for business-led development corporations. We are funding 10 university enterprise zones. There is £115 million for digital catapults in the north-east, Northern Ireland and the south-east and for the medicines discovery catapult in Alderley, £70 million to develop the Defence and National Rehabilitation Centre near Loughborough, £37 million of additional development funding for northern powerhouse rail, and £10 million for a new pilot in Manchester to support the self-employed to acquire new skills. We are backing a new special economic area in south Tees, and we are providing £20 million to further develop the plan for the critical central section of east-west rail between Oxford and Cambridge. And here, in our capital, we support the delivery of a further 19,000 homes by improving the docklands light railway with housing infrastructure fund money.
The decisions announced in this Budget mean, in 2020-21, an additional £950 million for the Scottish Government, £550 million for the Welsh Government and £320 million for a Northern Ireland Executive. Obviously, there are much larger sums to come, as we move ahead over the spending review period with our NHS funding change.
I can also announce funding for further city and growth deals, including £150 million for Tay Cities, £350 million for Belfast and £120 million for North Wales, while negotiations progress with Ayrshire, Mid Wales and Borderlands, and will begin with Moray, Derry/Londonderry and Strabane as well.
I was pleased to be able to respond to a joint request from the right hon. Member for Belfast North (Nigel Dodds) and the hon. Members for Belfast East (Gavin Robinson) and for Belfast South (Emma Little Pengelly) to provide the city with £2 million of help towards the recovery of the city centre following the fire at the iconic Bank Buildings, and we are also moving forward with schools projects in Northern Ireland worth £300 million to increase the provision of shared and integrated cross-community education. And we have agreed to the establishment of a working group to progress plans for short-haul air passenger duty devolution.
To continue to support Scotland’s oil and gas industry, we will maintain headline tax rates at their current level and launch a call for evidence on our plan to make Scotland a global hub for decommissioning. Finally, to support our vital fishing industry as we leave the EU, we will invest £12 million over the next three years in cutting-edge fisheries technology and safety measures.
A Conservative Government delivering for all our proud nations and for all our English regions, driving growth and prosperity across our United Kingdom.
We are driven by a determination to ensure that the next generation will be more prosperous than ours, but we cannot secure our children’s future unless we secure our planet’s future. So at this Budget I take further action with a package of measures, set out in the Red Book, to ensure that we leave our environment in a better state than we inherited it.
There is one particular measure I want to mention. The shadow Chancellor’s recent accident has reminded us all of how dangerous abandoned waste can be, so I will provide £10 million to deal with abandoned waste sites, although I cannot guarantee to the House that £10 million is going to be enough to stop him falling flat on his face in the future.
I also said at the spring statement that we must become a world leader in tackling the scourge of plastic littering our planet and our oceans. Billions of disposable plastic drinks cups, cartons, bags and other items are used every year in Britain—convenient for consumers, but deadly for our wildlife and our oceans. Where we cannot achieve reuse, we are determined to increase recycling, so we will introduce a new tax on the manufacture and import of plastic packaging which contains less than 30% recycled plastic, transforming the economics of sustainable packaging. We will consult on the detail and implementation timetable.
I have also looked carefully at the case for introducing a levy on the production of disposable plastic cups—not just for coffee, but for all types of beverage—and I have concluded that a tax in isolation would not, at this point, deliver a decisive shift from disposable to reusable cups across all beverage types. I will monitor carefully the effectiveness of the action which the takeaway drinks industry is already taking to reduce single-use plastics, and I will return to this issue if sufficient progress is not made. In parallel, my right hon. Friend the Environment Secretary will look to address this issue through the reform of the packaging producer responsibility scheme. Working across government, this ambitious package reflects our determination to lead the world in the crusade to rid the oceans and the environment of plastic waste.
It is only by dealing with our debts and tackling the long-term challenges our country faces that we can sustainably raise wages and living standards. But I recognise that many people are feeling pressure on their household budgets now, and because the hard work of the British people is paying off, I am pleased to be able to announce today a series of measures to help families across Britain with the cost of living.
Turning first to duties, as my right hon. Friend the Prime Minister has already announced, we will freeze fuel duties for the ninth successive year, bringing the total saving to the average car driver to over £1,000 and to the average van driver to over £2,500. The tobacco duty escalator will continue to rise at inflation plus 2%. I have received numerous representations from my right hon. and hon. Friends on one particular subject, and in response I will be freezing beer and cider duty for the next year, keeping the cost of beer down for patrons of the great British pub. And in response to the concerted lobbying of my Scottish Conservative colleagues, I will also freeze duty on spirits, so that we can all afford to raise a wee dram to Ruth Davidson on the arrival of baby Finn, saving 2p on a pint of beer, 1p on a pint of cider and 30p on a bottle of Scotch or gin compared with the inflation assumption in the OBR forecast, while proceeding with the usual RPI increases on wine.
As promised at the autumn Budget 2017, so-called “white ciders” will be taxed at a new higher rate. From October next year, I can confirm that we will increase remote gaming duty on online games of chance to 21%, in order to fund the loss of revenue as we reduce FOBT—fixed odds betting terminals—stakes to £2.
From April 2020, APD—air passenger duty—will be indexed in line with inflation, but there will be no change in the duty rate for short-haul flights. The new 26-30 railcard, which I announced at Budget last year, will be available across the network by the end of the year, saving up to 4.4 million young people one third off their fares, and we launch a package of measures on affordable credit and support for credit unions, which is set out in detail in the Red Book.
The switch to universal credit is a long overdue and necessary reform. It replaces the broken system left by the last Labour Government, a system that trapped millions on out-of-work benefits for nearly a decade. This is not just a welfare measure; it is a major structural reform to our economy that will help to drive growth and employment in the years ahead, and I pay tribute to my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith), without whose tenacity universal credit would never have seen the light. However, I recognise the genuine concerns among many right hon. and hon. Friends about two issues, the first of which is the implementation of this programme. It is an enormous undertaking and we have always been clear we want the migration process to be as smooth as possible. I have already delivered nearly £3.5 billion to help with the transition, including a £1.5 billion package of support at last year’s Budget. Today I can go further, with a package of measures worth £1 billion over five years—[Interruption.] What a surprise. What a surprising response from the Opposition Front-Bench team. It is a package of measures to aid the transition worth £1 billion over five years, enabling my right hon. Friend the Secretary of State for Work and Pensions to introduce additional protections as existing welfare claimants move on to UC. She will announce details when she introduces the managed migration regulations later this year.
Secondly, I have heard the concerns about the rates and allowances within the design of the system. In my first autumn statement, I reduced the UC taper rate from 65% to 63%. Today, I can tell the House that I am increasing work allowances in universal credit by £1,000 per annum, at a cost of £1.7 billion annually once roll-out is complete. That will benefit 2.4 million working families with children and people with disabilities by £630 per year. Universal credit is here to stay, and we are putting in the funding it needs to make it a success because, on this side of the House, we believe that work should always pay.
Delivering higher wages for those in work is core to my mission as Chancellor. Under this Conservative Government, the poorest 20% have seen their real incomes grow faster than the richest 20%, and the proportion of jobs that are low paid is at its lowest level for 20 years, thanks to the national living wage introduced by a Conservative Government in 2016. From April, it will rise again, by 4.9%, from £7.83 to £8.21, handing a full-time worker a further £690 annual pay increase and taking his or her total pay rise since the introduction of the national living wage to more than £2,750 a year.
We accept the Low Pay Commission’s recommendations on national minimum wage rates and will support young people and apprentices with further above-inflation increases. The Low Pay Commission’s current remit is for the national living wage to reach 60% of median earnings by 2020, subject to sustained economic growth. Next year, we will give the Low Pay Commission a new remit, beyond 2020. We will want to be ambitious, with the ultimate objective of ending low pay in the UK. We will also want to be careful, protecting employment for lower-paid workers, so we will engage responsibly with employers, the TUC and the Low Pay Commission itself over the coming months, gathering evidence and listening to views to ensure that we get it right. I will confirm the final remit at the Budget next year.
Mr Hammond
I hear the hon. Lady, but her point is slightly blunted by the fact that she made it in the autumn of 2016, again in the spring of 2017 and again in the autumn of last year.
As well as making work pay, we want working people to keep more of the money that they earn. When we came into office, the personal allowance stood at £6,475 and the higher rate threshold was at £43,875. In April, I raised the personal allowance to £11,850 and the higher rate threshold to £46,350, as steps towards our manifesto commitments of £12,500 and £50,000 respectively by 2020. Those manifesto commitments were, of course, made before our new funding pledge to the NHS. I have received representations that the least painful way for taxpayers to contribute to increased NHS funding would be to abandon our manifesto pledges and freeze the personal allowance and the higher rate threshold at current levels.
Let me reassure the House that, unlike the right hon. Member for Islington North (Jeremy Corbyn), my idea of ending austerity does not involve increasing people’s tax bills. I did not come into politics to put taxes up, and the improvement that we have delivered in the public finances means that, based on the Office for Budget Responsibility’s forecast published today, I do not need to do so. I can therefore confirm today that I will meet our manifesto commitments for April 2020 to raise the personal allowance to £12,500 and the higher rate threshold to £50,000, before indexing both in line with inflation from 2021 to 2022. But our careful management of the economy allows me to go further, so I will raise both the personal allowance and the higher rate threshold to these levels from April 2019, delivering our manifesto commitments one year early. A tax cut for 32 million people, £130 in the pocket of a typical basic rate taxpayer, meaning that, since 2015, we have taken 1.7 million people out of tax altogether and nearly 1 million people out of higher rate tax. As a result of the announcements that I have made today, a single parent, receiving universal credit and working 25 hours a week on the national living wage will benefit by £890 next year—the hard work of the British people paying off in hard cash in their pockets.
We have turned an important corner and now we must pull together to build the bright, prosperous future that is within Britain’s grasp if we choose to seize it— embracing change, not hiding from it, building on the inherent strength of the British economy and the indomitable spirit of the British people.
Under this Conservative Government, austerity is coming to an end, but discipline will remain. [Interruption.] Austerity is coming to an end, but discipline will remain. That is the clear dividing line in British politics today: between a Conservative Government delivering on the British people’s priorities, supporting our public services, investing in Britain’s future, keeping taxes low and getting our debt down; or the Corbyn party, whose idea of ending austerity is to raise taxes to their highest level in peacetime history, which would send our debt soaring, squander the hard-won achievements of the past eight years and take this country back to square one. We are at a turning point in our history and we must resolve to go forwards, not backwards, and work together to build a Britain that we can all be proud of. I commend this statement to the House.
Mr Deputy Speaker (Sir Lindsay Hoyle)
Under Standing Order No. 51, the first motion, entitled “Provisional Collection of Taxes”, must be decided without debate. Will the Chancellor of the Exchequer please move it formally?
Mr Deputy Speaker (Sir Lindsay Hoyle)
The Question is that, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effects shall be given to the following motions: (a) stamp duty reserve tax (listed securities and connected persons) (motion No. 49); (b) tobacco products rates—[Interruption.] Order. May I just say to hon. Members that they need to listen to what is going to affect their constituents? I will say it once again: hon. Members may be interested in what affects their constituents—I certainly am—but we will not know what affects them and what does not until I can complete the motion. Let us complete the motion—I do not need any help from those on the Back Benches.
Provisional Collection of Taxes
Motion made, and Question put forthwith (Standing Order No. 51(2))
That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motions:—
(a) Stamp duty reserve tax (listed securities and connected persons) (Motion No. 49);
(b) Tobacco products duty (rates) (Motion No. 57).— (Mr Philip Hammond.)
Question agreed to.
Mr Deputy Speaker (Sir Lindsay Hoyle)
I now call upon the Chancellor of the Exchequer to move the motion entitled “Income tax (charge)”. It is on this motion that the debate will take place today and on succeeding days. The Questions on this motion and on the remaining motions will be put at the end of the Budget debate on Thursday 1 November.
Budget Resolutions
Jeremy Corbyn (Islington North) (Lab)
The reality is that, whatever the Chancellor claims today, austerity is not over. Far from building a strong economy, eight years of austerity has damaged our economy, delayed and weakened the recovery, and endlessly postponed fixing the deficit. Unnecessary austerity has caused real hardship to millions of our fellow citizens, held down living standards for the majority and failed on its own terms. People have had enough—[Interruption.]
Mr Deputy Speaker (Sir Lindsay Hoyle)
Order. We heard the Chancellor of the Exchequer; I expect to hear the Leader of the Opposition. To those who may have sat where they think I cannot see them, yes I can, and I do not want to hear any more. I want to hear the Leader of the Opposition in the same way that your constituents do.
Jeremy Corbyn
The Prime Minister pledged that austerity is over. This is a broken-promise Budget. What we have heard today are half-measures and quick fixes, while austerity grinds on. Far from people’s hard work and sacrifices having paid off, as the Chancellor claims, this Government have frittered them away in ideological tax cuts to the richest in our society. This Budget will not undo the damage done by eight years of austerity and does not begin to measure up to the scale of the job that needs to be done to rebuild Britain.
The Government claim that austerity has worked, so now they can end it, but that is absolutely the opposite of the truth. Austerity needs to end because it has failed. Just two years ago, the Chancellor forecast growth of 2.1% next year and the year after. Today he boasts that he has created robust economic growth, but the forecasts have been dropped to just 1.6% next year and 1.4% the year after. Economic growth in the first half of this year was the slowest since 2011, the last year that we had the lowest growth of any major economy. This is not a strong economy but a weak one, with chronically low investment, low wages and low productivity, and the uncertainty caused by this Government’s shambolic handling of Brexit is making things even worse. The warnings come—[Interruption.]
Mr Deputy Speaker
Order. Mr Bowie, Mr Philp, I expect better. You are very obviously right in my sight, so I suggest that you go quietly out of the Chamber if you cannot behave.
Jeremy Corbyn
The warnings come from across the economy: the car industry; farming and food; road haulage. UK manufacturing is currently in recession. So much for the much-vaunted “march of the makers”.
The Government said that austerity would mean that the deficit would close by 2015. Today the Chancellor has confirmed that it will still be there nine years later, in 2024. Even now, great chunks of the deficit have simply been palmed off to others, not eradicated—moved into the accounts of NHS trusts; shuffled on to the books of local councils that have collapsed, with many more on the brink; and most worryingly, and frighteningly for many people, loaded on to the very fast-rising levels of personal and household debt.
For too long, the Conservatives have peddled the myth that the last Labour Government crashed the economy by overspending on public services—as if investing to bring health spending up to European levels, as the last Labour Government did, had caused the global financial crash. Labour Members believe that spending on public services is an investment that benefits the health of our people and the economy of our country. This morning the Health Secretary said that it would take a generation to achieve parity of esteem of mental health and refused to say whether the money was ring-fenced—and that money is only half of what leading mental health experts say is necessary.
But the impact of austerity on our people’s health is about more than NHS funding. Improvements in life expectancy are stalling for the first time in modern history, and in the poorest areas of our country life expectancy is actually falling and child mortality is rising. The national health service—our precious national health service—is a thermometer of the wellbeing of our society. But the illness is austerity: cuts to social care, failure to invest in housing, and slashing of real social security. It has one inevitable consequence: people’s health has got worse and demands on the national health service have increased, with 1.4 million elderly people not getting the care they need. Tory cuts have taken £7 billion—£7 billion—from social care budgets. Today’s announcement is a drop in the ocean both for adult and child social care. At this time of rising demand, nurse numbers are falling, GP numbers are falling, health visitor numbers are falling, and there are 10,000 vacancies for doctors in our national health service.
Under the last Labour Government, NHS budgets averaged an increase of 6% a year. That has been slashed to just 1.4% under this Government. The Health Foundation says that the Government’s much-heralded extra money for the national health service is “simply not enough”, while the Institute for Fiscal Studies says that funding at this level will only “maintain…current levels”. And let us remember what the current levels are in the NHS: record waiting times in accident and emergency—[Interruption.]
Mr Deputy Speaker (Sir Lindsay Hoyle)
Order. Mr Hoare, I think you know better. We caught each other’s eye before, and I will not want to catch it again—seriously. You might think Halloween is for screaming, but it is not what I want to hear in this Chamber.
Jeremy Corbyn
There are 4.3 million people on national health service waiting lists and longer waits to start cancer treatment. We need to go further—which is why, as we pledged in our manifesto, Labour will raise taxes on the highest earners to fund an increase above the Government’s baseline.
But it is not only the national health service that is in crisis. Defence spending has actually been cut; the size of the Army has been cut by a fifth. However, we welcome the donation based on VAT gains to commemorate the Armistice and £1.7 million more for educational programmes to ensure that people learn about the horrors of the holocaust. I join the Chancellor in absolutely condemning the horrific and vile anti-Semitic and racist attack that occurred in Pittsburgh over the weekend. We stand together with those under threat from the far right, wherever it may be, anywhere on this planet.
The Conservatives used to claim to be the party of law and order. Now they cannot even maintain law and order in our prisons, with assaults at record levels as depleted staff try to cope with the difficult situation. Our streets are less safe too. Police numbers are down, violent crime is up, and convictions are down. Chief constables are warning that criminals are taking advantage, and police officers are having to take the Government to court just to get a pay rise.
After eight years of austerity, firefighters today are paid £6,700 less than they were 10 years ago, nurses are paid £4,750 less and teachers £4,650 less. Every public sector worker deserves a decent pay rise, but 60% of teachers are not getting it, and neither are the police, nor the Government’s own civil service workers. Cleaners and security guards in the Ministry of Justice and the Department for Business, Energy and Industrial Strategy still are not even getting the London living wage.
The gap between those at the very top and the rest is not closing; it is growing. The pay of the chief executives of our biggest companies rose by 11% this year. They are paying themselves 145 times more than the workers in the companies that they lead. At the other end of the scale, 6.3 million workers are paid less than the real living wage—up 300,000 in the last year alone. The very lowest earners and insecure workers on zero-hours contracts or short-hours contracts will not benefit from the increase in the threshold, and they are the very people being punished by the cuts still hardwired into universal credit.
The Chancellor boasts of a “balanced approach”, but what is balanced about cutting social security for disabled people or slashing services to the bone, when by the end of this Parliament the Government will have doled out £110 billion in tax giveaways to corporations and the super-rich? Meanwhile, in the real world, homelessness has more than doubled, fewer people are able to buy a home, household debt is rising, child poverty is up to over 4 million and rising, and more disabled people are living in poverty.
Far from tackling the “burning injustices”, as the Prime Minister said her Government were going to do, they have actually made them worse and increased the injustices in our society. The Equality and Human Rights Commission warned just last week that Britain is becoming a “two-speed society”—all right for the richest few and failing the many. This Government are harsh on the weak and feeble with the strong. They labelled good people “scroungers” and “skivers” while they imposed punitive sanctions, demeaning assessments and a benefits freeze, none of which has been reversed today.
Universal credit is causing increases in poverty, food bank use, rent arrears and homelessness. When even the Work and Pensions Secretary admits that some people will be worse off, and the architect of universal credit says the system is underfunded, it was inevitable that the Chancellor would have to act, though he is only reversing barely half the cuts made. However, the problems with universal credit are also structural, harming the self-employed, lone parents, people with larger families and survivors of domestic abuse. That is why we believe the roll-out must be halted immediately.
Since 2010, 86% of the cuts through tax and benefit measures have come from women. There was not even a recognition of, let alone money set aside for, the women born in the 1950s who have been denied pension justice. Women in Britain today have just one fifth of the pension wealth of men, in part because of the grotesque gender pay gap, which at current rates will not close until 2073. And there was no extra money to fund women’s refuges—a lifeline for women fleeing from domestic abuse. Since 2010, almost a fifth of all refuges have been forced to close.
Months after the scale of the Windrush scandal became clear, the Chancellor has failed to set up a hardship fund for those affected, let alone the compensation scheme for the hundreds of people wronged by the Prime Minister’s nasty and perverse “hostile environment”. We have heard no guarantees for older people, and free TV licences for the over-75s remain at risk from the Government who have threatened to tear up the triple lock, take away the winter fuel allowance from millions and force people in need to pay for care at home.
A country that fails its young people is failing its own future. Schools funding per pupil has been cut by 8%, the college budget has been slashed and the adult skills budget has been hacked by 45%. There are 123,000 children in this country living in temporary accommodation, causing them unbelievable levels of stress and uncertainty, and consequently often underachievement in schools. Children’s services face a £2 billion funding gap, and we now have the highest number of children being taken into care since 1985.
Last Saturday, I visited North City children’s centre in Norwich, which is threatened with closure due to council cuts. With too many children whose Sure Start centres have already closed, the users of that wonderful centre are very frightened about their future. They have benefited, like so many others have in so many other parts of the country, from the great achievement of the last Labour Government, which was children’s centres and the Sure Start initiative all over the country. Spending on youth services has fallen by 62%, while 600 youth centres have closed and there are 3,500 fewer youth workers.
The UK is the only major global economy in which investment is falling. UK business investment is the lowest in the G7. This failure to invest means Britain’s productivity is 15% lower than that of major economies. Public sector investment is over £18 billion lower than it was in 2010. Britain is the most regionally unequal country in Europe, with six of the 10 poorest regions in northern Europe in this country. The Government reinforce these disparities. Let us just take an example: when it comes to transport funding, the north receives £2,500 less per person than London, while people in the midlands get £1,900 less—so much for the northern powerhouse and the midlands engine.
Local economies are also struggling. Over 100,000 retail jobs have been lost in the past three years, and there are 25,000 boarded-up premises across Britain. To visit many of our high streets is to see roller-blind shutters on shops that have been closed because of job losses and the problems they have faced. The Chancellor’s business rates announcement today only unpicks his own disastrous revaluation last year, and he has again delayed slashing the maximum stake on fixed odds betting terminals.
First, the Chancellor will not solve the crisis on our high streets until he tackles the institutionalised tax avoidance of big online retailers. His digital services tax, announced today, is too little, and too late. Secondly, the Chancellor must tackle the level of household debt, which is driven by low wages. High streets will not thrive until people have money to spend, so we hope he will endorse our call for the minimum wage to be a real living wage of at least £10 an hour by 2020, and to remove the discriminatory youth rates from the system.
This Chancellor has again failed to back Labour’s plan to create a national investment bank, with regional development banks. Today’s announcement on broadband investment is a very small step, but Britain ranks 35th in the global rankings of broadband speeds. Currently, just 2% of UK premises have full-fibre broadband compared with 80% in Spain and 100% in South Korea.
The Government still lack any meaningful strategy for creating high-skilled jobs in every region and nation, and they are failing abysmally to invest in the industries of the future necessary to tackle climate change. The Intergovernmental Panel on Climate Change report this month was clear on the consequences: we can avoid climate catastrophe only if we act now. The Government’s response has been to: cut support for our solar industries, losing 12,000 jobs in the process; slash building of onshore wind; cut subsidies for electric vehicles; and sell off the UK Green Investment Bank, and instead to back fracking in the face of overwhelming local and scientific opposition.
Ten years ago, a Labour Government passed the Climate Change Act 2008—world-leading legislation to reduce greenhouse gas emissions by 80% by 2050. This Government are not even on target to do that. Clean energy investment fell 56% last year, and the UK produces less of our energy from renewables than Germany, Spain, France or Italy. This Government are, I believe, failing to protect our environment, and in doing so failing to protect the future of us all.
The extra £500 million announced today to help the Government to cope with Brexit is not about planning, but about panic, and that panic is very deep rooted. Yesterday, the Chancellor said that another Budget would be necessary to set out a new economic strategy in the event of a no-deal Brexit; this morning, the Prime Minister said that all these spending commitments are funded, irrespective of a deal. It is clear: if they cannot agree a good deal with the EU, it is because they cannot agree a deal amongst themselves in the Cabinet or in the Tory party.
As we approach the crucial stage of the Government’s bungled Brexit negotiations, we face a choice about the sort of economy we want. Some on the Government Benches fantasise about taking Britain down the path to being a Singapore-style tax haven, with a race to the bottom in rights and protections. That must be rejected outright. What we need is an active Government who will invest in our people in every region and every nation of our country and who will use the wealth we create to fund world-class public services. What is needed is a real break with austerity and a Government committed to raising investment across the board to rebuild our economy, communities and public services. That is a route to a country that could work for all. Austerity is not over, and the quick fixes and half measures we have heard today do not begin to measure up to the scale of the job that needs to be done to rebuild Britain.
Nicky Morgan (Loughborough) (Con)
Everybody is leaving the Chamber—it must be something I said, or perhaps something the right hon. Member for Islington North (Jeremy Corbyn) did not say. The Chancellor had a difficult job, with a conflicting economic outlook as he prepared today’s Budget, but he has offered solutions and a vision for the future, unlike the Leader of the Opposition, from whom we heard no vision, no solution and no idea what needs to be done to support growth in this country.
On the one hand, borrowing is down to its lowest levels since the beginning of the century, and although plenty of economic challenges remain—not least the need to boost growth—there are encouraging signs that pay and productivity are picking up at last, while unemployment rates remain at historic lows. As my right hon. Friend said, the OBR forecasts sustained real wage growth, and it is extremely good news—albeit undersung—that this country is no longer borrowing to fund current spending. That is the result of an enormous amount of hard work by the British people and by Ministers, including the previous Chancellor.
On the other hand, the job of bringing back down the national debt—a lasting legacy of the financial crisis—is only just beginning, and the OBR’s long-run projections make it clear that demographic pressures on the public finances will only build further from here. My right hon. Friend rightly referred to the 2019 spending review, which will be a critical moment for the future of public spending in this country.
Caroline Lucas (Brighton, Pavilion) (Green)
Barely two weeks ago, the world’s scientists issued their most stark warning yet that we have just 12 years in which to tackle climate change and avoid climate catastrophe, yet there was not a single word from the Chancellor about climate change, nothing about clean energy, nothing about green energy. Does the right hon. Lady agree—[Interruption.]
Mr Deputy Speaker (Sir Lindsay Hoyle)
Order. Interventions are meant to be short. I think the hon. Lady has got her message across.
Nicky Morgan
Thank you, Mr Deputy Speaker. I heard the Chancellor mention climate change. The hon. Lady will have her own opportunity to speak later on in this debate.
It is time to look at the next iteration of the Government’s plan to ensure that public services have the funding they need while keeping borrowing and debt under control. The Chancellor made a welcome start on that plan today by setting out how the boost to NHS spending will be funded and indicating the overall envelope for the forthcoming spending review. The Treasury Committee will of course take a close look at the detail of the plan. I particularly welcome the NHS spending on mental health. I declare an interest as a trustee of a small mental health charity in my constituency. The fact is that it is this Government who have made a clear commitment to parity of esteem for mental and physical health.
With sustainable public finances comes the resilience to deal with the challenges and risks that may lie ahead. Brexit is of course the greatest and most imminent source of uncertainty looming over the Budget. It is just stating the obvious to say that the nature of the United Kingdom’s withdrawal from the EU could up-end the economic forecast on which the Budget is based. The Office for Budget Responsibility is still playing its cards close to its chest. It is still forecasting a relatively benign Brexit with a smooth transition that has no implications for productivity. I am sure that is what we all hope for. However, its forecast of continued reductions in public borrowing depend on those benign assumptions becoming a reality. None the less, the OBR has begun to make some of its thinking about Brexit clearer. Its view of the implications of a no-deal Brexit has become very clear indeed. The nearest precedent the OBR could think of was the three-day week, which it says knocked 3% off our economy that quarter. But even assuming a smooth transition, the OBR also says that increased trade barriers with the EU, not just tariffs, will likely leave our economy smaller and reduce long-run productivity growth.
Mary Creagh (Wakefield) (Lab)
Does the right hon. Lady not find it slightly disingenuous of the Chancellor to talk about a deal dividend from Brexit, when every single Treasury forecast for any Brexit deal shows that our economy will be worse off?
Nicky Morgan
It is undoubtedly the case that our economy will be worse off because of Brexit. We could have the best possible deal, but no deal secured will be as good as the deal we have at the moment. As a strong and ardent remain campaigner, I have to accept how 17.4 million in this country voted. The hon. Lady, and I am sure others in this House, will be very aware of my particular position, which is that if we are going to go down this route, there is a deal that can be done that mitigates the worst of the damage. That deal is the Norway option, which I hope my Government will seriously, seriously consider. I also gently say to the hon. Lady that had the Opposition Front Bench, particularly the Leader, played its part fully in the referendum campaign, we might well not be in this position now.
It has been said repeatedly that the divorce bill and the UK’s contributions to the EU budget will be dwarfed by how the future UK-EU relationship impacts on trade, migration and productivity. Amid this uncertainty, the Treasury Committee will support Parliament in scrutinising the economic implications of the UK’s withdrawal agreement. My right hon. Friend the Chancellor will know that we have requested detailed assessments of the withdrawal agreement and the future framework, once negotiated, from the Treasury, the Bank of England and the Financial Conduct Authority. We need those assessments in good time before Parliament comes to vote. The Committee has appointed a specialist adviser, Professor Sir Stephen Nickell, a former member of the OBR budget responsibility committee, who will subject the Treasury’s analysis to independent assurance. The Committee will also take evidence from the Chancellor. I know he is looking forward to that session.
As far as the Budget is concerned, the forecast on which it is based can only be considered preliminary until the OBR gets an opportunity to review the Brexit deal. The OBR’s next forecast, the spring statement, will therefore assume a greater importance than usual. The Committee will expect the OBR to receive the analysis and information it needs from Government Departments and agencies in good time to incorporate the agreement fully into its forecasts. I note that the OBR has made it clear in some documents today that it was pushed for time in the analysis that it did before the Budget. We all understand why the Budget is early, but we want to make sure that the OBR has sufficient time in future.
In that context, I remind the House of my comments at last year’s Budget debate concerning the role of the Treasury Committee in upholding the independence of the OBR as well as subjecting it to scrutiny and challenge. The OBR is a vital tool in helping this Parliament to hold the Government to account, and the Committee will continue to seek assurances that the OBR has done its work free of political interference and will defend its reputation for independent judgment, if need be. That is all the more vital given the extraordinary situation that UK politics finds itself in at the moment. I am sure the whole House would agree that when Jon Thompson, the chief executive of Her Majesty’s Revenue and Customs, receives death threats for the evidence that he gives to my Committee, that is abhorrent and has no place in our democracy.
I have said before that the Government should not wait for Brexit before moving forward on their domestic policy agenda. In an uncertain economic climate, households are also under financial pressure, with the saving ratio at record lows and negative in cash terms. Earlier this year, the Committee’s household finances inquiry called for the Chancellor to report on the state of household finances and savings at the Budget and set out his strategy for improving their resilience. I do not think that has happened today, but I hope that it happens in future fiscal statements. I note, however, the Chancellor’s announcement of such things as income tax cuts, which very much help with the cost of living, and savings to beer duty—although I did notice the calls from my hon. Friends on the Bench behind me regarding wine duty, which I am sure he will have heeded. I also note that the Chancellor has announced a package of support for affordable credit and credit unions, including announcements on the “breathing space” changes, which will be very welcome.
Following last year’s Budget, the Committee also called for the Treasury to publish robust equalities impact assessments in future that include gender breakdowns of Budget measures. I gently remind the Leader of the Opposition that it is the Conservative party in government that has introduced the gender pay gap regulations and is on its second female leader, while the Opposition still need to have their first. The Committee will be taking evidence from the Women’s Budget Group and others later this week, and I welcome the evidence that they will give us.
The Committee has also just published its report on SME finances, making a number of recommendations that, if implemented, will allow small businesses to make an even greater contribution to our economic performance. The Chancellor has announced measures today, including in relation to the annual investment allowance, that will support small and medium-sized enterprises.
I note that the Chancellor said he would encourage the expansion of the Financial Ombudsman Service to deal with problems that small and medium-sized businesses have with their banks. Neither I nor the Committee think that that goes far enough. A tribunal is needed to allow those for whom going to court is simply not an option to have their access to justice when their relationship with their bank—a critical relationship—goes so badly wrong.
Kevin Hollinrake (Thirsk and Malton) (Con)
I am very appreciative of the Chancellor’s recognition of the work in this area by the all-party group on fair business banking and finance, but 90% of the cases that we deal with are claims well in excess of the £350,000 threshold, or even the £600,000 threshold, as recommended by Simon Walker. We need to fill that big gap in justice before we can finally put these issues behind us. Does my right hon. Friend the Member for Loughborough (Nicky Morgan) agree with that position?
Nicky Morgan
I thank my hon. Friend very much. He has done a huge amount of work in this space through his all-party group, and he has spoken eloquently in debates on this subject. Just as we welcome wage increases, which we have not seen over the last 10 years—I would argue that that is much of the reason why UK politics is in the state it is in at the moment—he is right to say that putting these issues to bed, including the relationship breakdowns between the banks and smaller businesses, is vital to allowing that important relationship to move on. That is why I think that both he and I would agree that a tribunal is the right way forward.
The Chancellor talked about productivity, which is clearly going to be part of the debate. He also talked about the need to review business rates; he is absolutely right and the help that has been given today is very important. However, the Committee will look further at business rates because, although today’s announcement is obviously welcome—I speak as somebody whose constituency office pays business rates—there has to be a more fundamental look at this issue going forward, if we want to support our retailers and small and medium-sized businesses.
The Chancellor also announced changes on digital tax, which is another issue of fairness. We welcome that announcement and await the details, and we look forward to questioning him on these issues at future scrutiny sessions. The Committee is rising to the challenge of an early autumn Budget with an accelerated schedule for our own scrutiny and analysis. As I say, we will be taking evidence from the OBR and others this week, and we look forward to hearing further from the Chancellor in a week’s time on the measures he has announced and on the economic and fiscal outlook.
As a constituency MP, I would like to thank the Chancellor for the £70 million for the Defence and National Rehabilitation Centre just outside my constituency. I would have liked him to say more, however, about the national retraining scheme announced in last year’s Budget. Investing in things is important to the industrial strategy, but so is investing in people and skills.
Finally, the Chancellor said right at the start that this was a Budget for the strivers, the grafters and the carers. I fully endorse his desire to build an economy that works for everyone, and we look forward to asking him further questions in the scrutiny sessions ahead.
Several hon. Members rose—
Mr Deputy Speaker (Sir Lindsay Hoyle)
Order. Before I call the leader of the Scottish National party, I should tell people now that I expect to start off with a speech limit of eight minutes.
Ian Blackford (Ross, Skye and Lochaber) (SNP)
It is disappointing in some respects that the statement this afternoon was affected by a protest in the Gallery, but we all recognise that what we saw was very much in the spirit of the suffragettes. SNP Members understand the suffering of the women born in the 1950s who have been betrayed by this Government. When women pay national insurance, they do it on the basis that they will get a pension, and to find that they have had their pension entitlement taken from them, in some cases for six years, with only 14 months’ notice—[Interruption.] The Secretary of State for Education seems to be suggesting that the Scottish Government can fix this. I say to him: it is a reserved matter. The UK Government are the only people who should be fixing this.
I can understand the frustration of these 1950s women, many of whom are suffering in poverty, and it is about time they got what is rightly theirs. The behaviour of this Conservative Government is shameful. The Chancellor does not even have the good grace to stay and listen to the speech by the third party’s spokesperson. That is the contempt he shows for Parliament and these 1950s women. [Interruption.] He’s not the Chancellor and he never will be. The Chancellor stated that this was the first Monday Budget since 1962. I remind him that his predecessor who gave that Budget was gone in three months. We know the Prime Minister has little time for him and that he will no doubt be gone soon.
We hear much about the ending of austerity, including from the Prime Minister, but there was no sign of it in the Chancellor’s statement, and then we are told there will be investment in universal credit, and it is trumpeted and cheered to the rafters by Tory Members. Of course, we welcome the additional money, but when we look at the Red Book—[Interruption.] This is serious—this is about people who are really suffering—and all the Secretary of State for Education can do is chunter from a sedentary position. Show some respect for people in this country for once! According to the Red Book, the investment in universal credit through the work allowance next year will be £545 million, but the Joseph Rowntree Foundation tells us that £2 billion is required, and at the same time there is a tax cut through the increase in the higher rate worth £2.8 billion. That is the reality and those are the priorities of this Conservative Government. Austerity coming to an end? Don’t kid us!
The Budget statement shows a chronic lack of understanding of the threats we face and the storm clouds ahead. The icy blast this weekend was a foretaste of the dark winter to come—a winter that the Tory Government are ill prepared for. Ten years since the Labour party presided over the financial crash, the Conservative party today risks another. Ten years on from the onset of the last recession—[Interruption.] I wish that people in Scotland and the rest of the United Kingdom could see the hon. Member for Stirling (Stephen Kerr) sitting there and laughing as we discuss matters of great importance to the people of this country.
Ian Blackford
The Scottish Conservatives are a disgrace to the people of Scotland and should be utterly ashamed of themselves.
Ian Blackford
He can shout all he likes. I will tell him what is shocking: the Budget from the Chancellor today.
Ten years after the onset of the last recession, history tells us that, statistically, we are likely to be closer to the next recession than to the last. The UK’s preparedness and ability to respond is impacted by the failure of leadership of the Chancellor and his Government. How ill-prepared has the Chancellor come to the Dispatch Box today! It is a pity he is not here; what disrespect he has shown.
Over the weekend, the Chancellor said that he might have to change his forecast if there was a no-deal Brexit. Can we even believe this Budget? What price will we all have to pay for a no-deal Brexit? Perhaps the Prime Minister does not believe it. Hours after the Chancellor made his announcement that a no deal would require a change in forecast, No. 10 said that it would not. What an utter shambles. Whose Budget is this, the Chancellor’s or the Prime Minister’s?
The Chancellor comes before us today without adequate planning to give us any of the assurances that his Government can protect our economy over the next few months, never mind the next few years. To add insult to injury, we were promised £350 million a week as the Brexit dividend—it was on the side of a bus—
Ian Blackford
Instead, we are getting 50p: a shiny new 50p to distract us from the devastation that the Government walk blindly into, as they railroad ahead with their Brexit plan.
Mr Deputy Speaker (Sir Lindsay Hoyle)
Order. Mr Philp, it is up to the right hon. Member for Ross, Skye and Lochaber (Ian Blackford) whether he wishes to give way, and I think it is quite clear that he is not giving way.
Ian Blackford
Thank you, Mr Deputy Speaker. I think that there is a precedent for the third party speech on a Budget to be made without intervention.
It is not just a no-deal Brexit that will cost families. Even if the UK gets a deal, it will cost families. The whole Brexit process will hit the economy. There is no such thing as a good Brexit, and the House must wake up to that reality. The hon. Member for Gordon (Colin Clark) can carry on gesticulating. He really is the village idiot.
The storm is coming, and the Government have not even brought an umbrella, never mind the shelter that we need. This Budget leaves us wholly unprepared for the Brexit bombshell that is heading towards us. It fails to protect current and future generations. “An end to austerity”, said the Prime Minister. Scotland’s budget will have been slashed by £1.9 billion since the Tories came to power. This from a Tory Government who are ideologically obsessed with austerity—because, after all, austerity is a political choice.
We hear about the Government’s hands having been tied by the debt burden, yet over the past nine years, the Government have found £435 billion of new money for quantitative easing. Those with money and assets were rewarded with rising house prices and financial asset prices. Ordinary working folk—the poor and the disabled—were rewarded with austerity. They paid the price for the financial crash. The Institute for Fiscal Studies has made clear that even the mildest version of “ending austerity” would cost a minimum of £19 billion, the equivalent of a penny on income tax, national insurance and VAT.
An analysis published by the Resolution Foundation stated that we needed to see a boost in annual spending of £31 billion by 2022-23 to end austerity, so let us not kid ourselves that the Tories are going to end austerity. It simply is not going to happen. There is no such boost. Austerity has not ended; austerity remains under this Tory Government. This Tory Government continue to balance the books on the shoulders of the poorest and the most vulnerable, yet they continue to give away tax cuts. That is the reality. That is why austerity is purely and simply a political choice of this Conservative Government.
To end austerity, the Chancellor would need to cancel the final year of the four-year freeze on benefits and reverse cuts in in-work benefits introduced as part of the roll-out of the new universal credit system. That would cost a combined £5.1 billion by 2022-23. We already know that cuts to social security since 2010 will cost £39 billion by 2021-22; that is £39 billion taken out of the pockets of those who would spend cash on goods and services. Cutting the incomes of the poorest in our society has depressed growth in the economy; the only people who cannot see it are the Conservatives. [Interruption.] What about the living wage? If they were to bring in the real living wage, we would support them, but they are miles away from doing that.
Over the same period that the Women’s Budget Group has calculated that tax giveaways will cost the Treasury £47 billion, £39 billion was taken out of the pockets of the poorest and £47 billion given in tax cuts—robbing Sarah to pay John. This heartless Conservative Government have utterly failed to do the right thing, robbing citizens across the United Kingdom of a chance of increased living standards and the prosperity our communities deserve from economic growth. Austerity is hurting and this Budget will continue to hurt citizens through Tory austerity. Again, with a Tory Government we get cheap promises. Well, we have had enough of broken promises. The SNP will not support a Budget that will make our economy smaller and weaker and make our people poorer.
From 2010 consecutive UK Governments have delivered empty promises and robbed Scotland, limiting the opportunities for our Parliament and our people. This year, the Scottish Government’s fiscal budget will be £1.9 billion lower in real terms than it was in 2010-11. This is about more than the statistics, however; it is about the harsh impact on those who depend on our public services—the young, those in work, the elderly, and the disabled. We all pay a price for Tory austerity.
With Brexit coming down the tracks, this Government have picked up where Labour left off and abandoned the people of Scotland. Instead of arming themselves with a Budget that would protect jobs, drive investment and boost growth, the UK Government have delivered a Budget that will leave the communities of the United Kingdom frozen in failure. Time and again, we were told that the economy in Scotland would be stronger if we stayed with the United Kingdom—that the Union would protect jobs and that the Union would protect the Scottish economy. Well, the Union is threatening to destroy our economy by dragging us out of the European Union against our will.
Closing the door on the single market and the customs union is risking 80,000 jobs and risks losses of £2,300 on average from every person in Scotland. This Budget—this Union—has placed at the foot of the people of Scotland a choice of two futures: a future tied to a Union with the UK that will lead to further hardship and a deepening of austerity, or a future with Scotland in the EU, filled with opportunity, prosperity and economic growth, with an outward-looking Scotland and our destination within Europe, or our destination within an inward-looking United Kingdom.
The Chancellor today has made the case for the SNP. Like their Labour predecessors, this UK Government have shown their incompetence. Distracted and divided by the chaos of Brexit, the Government have not prepared for the future. Where is the vision? Where is the plan to create the circumstances that will encourage investment, drive up productivity and result in real wage growth? The fact that we have had the worst decade for wage growth in over 200 years should have sparked action by the Government to deal with that, but what do we have? We have inaction.
The Prime Minister famously talked about those who were just about managing. They have been shown to be hollow words from the Prime Minister and her do-nothing Chancellor. This is a Budget that cannot weather the Brexit storm. This is a Brexit bombshell Budget, with the clock ticking down to deliver absolute economic chaos to households right across the country. Conservative Members of Parliament sit and laugh; we talk about people who are going to be in economic hardship and Tory MPs laugh about the impact of a hard Brexit. That is the reality.
The Chancellor came before us today—he came and went—with his trick or treat Budget. He came in the hope that we would be distracted from the bigger picture by the small number of welcome announcements, most of which are undoing his Government’s shoddy policies, but we are not. He might trick some of his more gullible Back Benchers, but he will not trick us. The UK is facing a significant social, economic and political crisis with Brexit, but this Budget utterly fails to build a safety net for our economy’s future after our exit from the European Union.
We have made it clear that, short of remaining in the EU, only membership of the single market and the customs union will best protect our economic future, yet the Government blunder on, leading us to a no-deal Brexit that will be an economic catastrophe. It is widely accepted by economists that, if the UK leaves the EU without a deal, there will be material economic disruption. We are already seeing a weakened currency, higher inflation and lower business investment growth as a result of instability and a lack of security.
The EU is the largest market for Scotland’s international exports, worth £12.7 billion in 2016. The UK Government’s own analysis shows that reverting to World Trade Organisation trading rules would reduce growth by 8%. The Scottish Government’s analysis shows that a hard Brexit threatens to cost our economy £12.7 billion a year by 2030, compared with remaining in the EU. Worse still, even if the UK signed a free trade agreement with the EU, Scotland’s GDP would be £1,610 per person lower by 2030. Households are already paying the price. Mark Carney told the Treasury Committee:
“Real household incomes are about £900…lower than we forecast in 2016. The question is why and what drove that difference. Some of it is ascribed to Brexit.”
That is the reality for Mark Carney.
The only solution to offset economic disaster, short of staying in the European Union, is to stay in the single market and the customs union. I am pleased to see that some on the Labour Benches agree with us on that, but does the Leader of the Opposition agree? We need to get real. The Chancellor has not insulated our economy to deal with Brexit, and the Prime Minister is hamstrung by the extreme Brexiteers in her own party. We must not allow the extreme Brexiteers to hold the UK to ransom. We must unite across the House to protect our economic future. I call on the Leader of the Opposition today. If he is true to his word, and if he agrees with me that this Budget is unfit for the future, he will join with the Scottish National party, Plaid Cymru, the Greens and the Liberal Democrats to keep us in the single market and the customs union. Today, Labour must show that it can be an Opposition. It must join the effective Opposition to tell the Prime Minister that she will not get a deal through this House that does not keep us in the single market and the customs union. The stakes are high. We have time, but not much. The Chancellor still has time to rethink his fiscally flawed decisions in order to help to protect our economy.
Many will study the detail of what is in the Budget, but we must also examine what is not. The UK Government should rethink and back SNP and Institute of Directors demands to introduce a small and medium-sized enterprise support service to help firms to map out and prepare their supply chains to deal with Brexit. There is so much missing from this Budget. Where is the removal of residency fees for EU citizens applying to remain in the UK? It is morally reprehensible that those living here are, through no fault of their own, facing a charge to protect their residency. That is not making EU citizens who live here welcome. It is, by extension, yet another impact of the Prime Minister’s hostile environment. The Chancellor could have waived those fees today.
Last year, the Chancellor righted a wrong when he announced that Scotland’s emergency services were no longer to be charged VAT, but where is the £175 billion that had already been paid? We want it back to invest in our emergency services—[Interruption.] I expect Scottish Tory MPs to back us on this so that we can get Scotland’s money back to invest in our public services. Yet again, this Government have ignored SNP calls to support the Scottish oil and gas industry at a time of recovery. Why has the Chancellor again sat on his hands? The UK Government are once again not stepping up to support the sector.
I come now to farmers and crofters, and I declare an interest as an active crofter, as is my hon. Friend the Member for Na h-Eileanan an Iar (Angus Brendan MacNeil)—
Ian Blackford
I am just a simple crofter with 10 acres—[Interruption.] Let me deal with the seriousness of the situation. The European Union recognised the underfunding of hill crofters and farmers in 2013, creating a new fund from which payments were to be made between 2016 and 2020. Almost 90% of the fund was meant to come to Scotland, but we have been short-changed. We have been given only 16.5% of the funds. Some £160 million that should be going to Scottish farmers and crofters has not materialised. Where is it, Chancellor? Why has he not given Scottish crofters and farmers the money that they were due? Why has he withheld funds that were explicitly meant for Scotland? Why does he think it is right to hold back EU funds that he was meant to pass over? It is little wonder that our crofters and farmers should worry about funding post Brexit; this UK Government have form. Make no mistake that not passing over funds the EU earmarked for Scotland is a serious breach of trust. I would even go so far as to say that the UK Government have stolen that money from the pockets of crofters and farmers.
Let me turn to what the Chancellor has done in this Budget. With Brexit having pushed inflation above its 2% target for each month since February 2017, I welcome that he has frozen fuel duty. I also welcome the fact that the UK Government have finally lived up to their responsibility on broadband, which is, after all, a reserved matter. Despite a few welcome gimmicks, Scotland’s promised £600 million in NHS consequentials, we are getting only £550 million. We have been short-changed again—£50 million should be coming to Scotland for health; we are not getting it.
Those at the bottom of the pile will continue to struggle while the Tories fail to put dignity and respect at the heart of their social security policies. By 2021, low-paid women stand to lose £1,400 a year from changes to universal credit, according to the Women’s Budget Group. A couple with two children will be £832 a year worse off due to the benefit freeze, according to the Joseph Rowntree Foundation. Some 600,000 three-child families will see £2,500 a year robbed from their budgets, and those with four or more children will lose around £7,000 a year. The Chancellor could have done the right thing today. He could have halted and fixed universal credit. Instead, he failed to go far enough to put money into the pockets of those who desperately need it.
The SNP has long championed the case against cuts to the work allowances, and another U-turn from the Tories is welcome, but it does not go far enough. The Chancellor’s increased spending on universal credit is nothing but a drop in the ocean. He is putting a sticking plaster on a wound that needs to be redressed. His failure to halt and review universal credit means that more people will be left behind, left in poverty, left in hardship and left struggling by a Tory Government.
Now, I do not think that there is a magic money tree, but political choices can be made: to deliver a society where the sick or unemployed can be helped out of hardship; or a society that punishes the poor and abandons those who are out of work. Why has the Chancellor failed again to end age discrimination and give young people, as well as other workers, a real living wage?
Since Brexit, electricity bills have gone up by 17.1% and gas bills by 4.3%—young people continue to be left behind with those higher prices. All workers should be treated fairly, yet this Government continue to underpay young people. Young people have again been short-changed, as the Chancellor has failed to pay a real living wage. Young people in Scotland deserve better. The Chancellor should immediately devolve the powers so that the SNP Scottish Government can uplift young people and end this discrimination.
But it is not just young people. Women born in the 1950s have seen their pensionable age increase by as much as six years, in some cases with only 14 months’ notice. We in the SNP have long accepted that the equalisation of men and women’s pensionable age should happen, but the women affected by the changes had paid national insurance on the condition that they would get their state pension earlier than many of them now are. They have been short-changed. Women’s pensionable age has increased too quickly, and many are living in poverty, relying on benefits. Of course, in a Westminster Hall debate, the Under-Secretary of State for Work and Pensions, the hon. Member for Hexham (Guy Opperman), ludicrously suggested that the women affected should think about going on apprenticeship schemes. Talk about a lack of humanity. Absolutely outrageous. This is a Government who simply do not get it and do not accept their responsibility.
Why was this not addressed in the Budget? Where is the dignity? Where is the compassion for the millions of women who have given a lifetime of service? It is utterly shameful that that issue has not been addressed, and it is not going to go away. The Chancellor should have listened to the SNP on 1950s women and, more widely, on austerity.
The Scottish Government are already delivering £125 million of mitigation in this year alone to protect those hit by Tory austerity. We have established in law that social security is a human right, and I recommend that this House also thinks about that. We are building a social security system based on dignity and respect. Society is only as strong as its weakest link. Social security is not just a nice thing to provide; it is a necessity that we provide a safety net to those who need it.
We are also working to bolster our economy and society by supporting business and by working to boost job opportunities and growth: a 64% increase of £270 million in the economy, jobs and fair work budget, as part of a total investment of £2.4 billion in enterprise and skills; a 70% increase in investment in business research and development; £18 million as part of a £65 million package of investment in the National Manufacturing Institute; and £340 million of resources set aside to provide initial capitalisation for the Scottish national investment bank. The Leader of the Opposition called for a UK state investment bank; we are getting one in Scotland, courtesy of the SNP.
The Scottish Government have an ambitious programme of infrastructure investment for 2018-19 of more than £4 billion, in line with the “Programme for Government” commitment to invest £20 billion over the lifetime of our Scottish Parliament. That is our commitment to infrastructure investment.
In Scotland we are using the powers we have to change lives for the better and to strengthen our economy, and it is working. Scotland has strong economic fundamentals, with higher growth than the UK as a whole and the most inward investment anywhere in the UK outside London. Scotland’s economy grew by 0.5% in the second quarter of 2018, faster than the UK. Over the past 12 months, the Scottish economy has grown by 1.7%, faster than the 1.2% in the UK. The Scottish Government are delivering for the people of Scotland.
According to the Office for National Statistics, long-term pay growth has been highest in Scotland and lowest in Wales. Median pay for full-time workers is 87% higher in Scotland than it was in 1997. Fraser of Allander expects Scotland to have higher growth and lower unemployment than the UK in 2019 and 2020. Scotland’s female unemployment rate fell over the quarter and year to 3.2%, lower than the UK’s 4%. In the face of Tory austerity, the Scottish Government are building an economy of the future with measures to unlock innovation and drive increased productivity.
In Scotland, those measures, outlined in the “Programme for Government”, have been welcomed by the business sector. Scottish businesses, customers and our workforce rely on robust and reliable infrastructure, as the foundation which keeps our economy moving, and it is right to increase investment in that area—but it will not stop there. The Scottish growth commission’s report is clear that an independent Scotland can leave the broken economic model of the UK and deliver an inclusive, sustainable growth programme. If the approach to spending growth recommended by the commission had been applied by Westminster over the past decade, the £1.9 billion cut in real terms to Scotland’s budget would have been wiped out.
The report recommends adopting the following fiscal rules: that the deficit is reduced to below 3% of GDP within five to 10 years; that national debt does not increase beyond 50% of GDP and stabilises at that level; and that borrowing is undertaken for public investment only over the course of the economic cycle. Closing the per capita income gap to the median of the 12 best-performing small advanced economies, the report’s peer group, through a 21st century economic model focusing on productivity, population and participation would mean, in today’s values, an additional £22 billion in GDP and a potential additional £9 billion in tax revenues—that is £4,100 per person.
In Scotland, we are not just focusing on the now; we are focusing on the future. The Chancellor today attempts to pull the wool over our eyes and distract us from the bigger picture, but we are not distracted. This Budget is a typical Tory offering: giving with one hand and taking with another. The Budget exposes to the people of Scotland that there is a choice to build a better future—to turn away from the isolated, economically failed UK and instead look to a more prosperous Scotland in the European Union. Only with independence can we secure a strong future for the Scottish economy, and deliver for our communities and families, who are being left behind, scrambling to make ends meet, moving from crisis to crisis at the hands of consecutive failed UK Governments.
Mrs Maria Miller (Basingstoke) (Con)
On a point of order, Mr Deputy Speaker. I tried to intervene on the right hon. Member for Ross, Skye and Lochaber (Ian Blackford) on a number of occasions. Could you confirm to the House whether or not there are any rules in place preventing the Scottish National party from taking such interventions?
Mr Deputy Speaker (Sir Lindsay Hoyle)
It was up to the right hon. Gentleman whether he wanted to give way. At the beginning, he was very clear, saying, “I will be treating this like the Chancellor of the Exchequer and the Leader of the Opposition.” It was up to him whether he wished to take interventions and he made it clear that he would not. I am sorry if that was missed—[Interruption.] Because she was not here, but I am not going to go into that. [Interruption.] Did you not hear him? It was quite clear. He said at the beginning that he was not giving way, and we all heard that. Let us make some progress because we have 38 speakers who want to get in today. I call Greg Hands, with an eight-minute limit.
Greg Hands (Chelsea and Fulham) (Con)
It is always a bit bizarre to follow the right hon. Member for Ross, Skye and Lochaber (Ian Blackford), with his half-hour peroration, all of which he appeared to have written before the Budget was delivered. He described himself as a “simple crofter”. I have a little doubt about that, as I had a career in the City of London and I do not recall him being a simple crofter at that time. Perhaps that was his codename on his Bloomberg terminal as he was buying and selling financial assets.
Anna Soubry
If my right hon. Friend would like to do a Google search, as I have just done, he would discover that, apparently, the small, simple croft of the right hon. Member for Ross, Skye and Lochaber is valued in the region of half a million pounds.
Greg Hands
That is a very apposite intervention, as I am going to talk about stamp duty land tax in due course.
This is my first Budget speech since closing the debate in 2016, when I delivered a progress report to the House on how the Budget deficit had been reduced from about £6,000 per household to about £3,500 per household, and reported on the very good progress that had been made on restoring the public finances to good order over the previous six years. So may I start by commending the Chancellor of the Exchequer, the Chief Secretary to the Treasury and the entire Treasury team, the Financial Secretary included, on the further progress they have made in the past two and a half years? I remind Members that we inherited a budget deficit of £175 billion—10.5% of GDP—in 2010. At that point, of every £4 being spent by the Government, £1 was being borrowed. I think I heard the Leader of the Opposition blaming the financial crisis, but there had been a budget deficit in each and every year from 2001—a full six or seven years before the financial crisis even began. So I am pleased to see the budget deficit coming down from £175 billion to £27 billion next year—the lowest year-on-year borrowing since 2002. But it is worth reminding ourselves that we are still borrowing money—
Chris Bryant (Rhondda) (Lab)
If Labour’s spending was so terrible in those years, why did George Osborne and David Cameron say that they would match it pound for pound?
Greg Hands
The hon. Gentleman is recalling a little bit of ancient history, but if he looked at the debate within the Conservative party around the time of the party conference in 2006, he would find some interesting submissions to the debate within the party at that time.
We are still borrowing, and it is worth recalling that. Debt is peaking now, at 80% of GDP. Of course, for the years that debt has increased, we see that the maths make that an inevitability if we are running a deficit. Although reducing debt as a percentage of GDP to 74% by 2023 is progress, I worry whether that figure will be too high in terms of our stated mission of fixing the roof while the sun is shining. Labour Members say that debt is too high and that we have not done a good enough job on cutting the deficit. So what do they think we should have cut more? It is worth recalling that Alistair Darling’s pledge in 2015 was to only halve the deficit, which would of course have led to much higher debt.
Other successes of those years are, first, the increase in capital expenditure, which has not featured so far in the reactions to this Budget. It is increasing by a healthy 4% per annum over the next four years—that is a case of building for the future. So we have been fixing the roof while the sun is shining, but the job is not yet done. We need to bring debt down below the 74%—and not through tax rises. This country is already sufficiently taxed. I warmly welcome our meeting the 2015 manifesto commitments on the personal allowance and on the £50,000 higher rate threshold. Meeting those one year early is very encouraging.
I also welcome measures to encourage the conversion of surplus retail to residential properties, which is incredibly important in constituencies such as mine, where we have a lot of retail space that has been dead since even before Amazon came along—that has simply been unable to be converted to residential. That move is very welcome. The extra Brexit resources are sensible, and I hope that they will include money for the Department for International Trade to take advantage of future trading opportunities, although the £2 billion increase in UK Export Finance capital is also welcome. I am disappointed that there are no specific further funds for the Royal Borough of Kensington and Chelsea for dealing with the Grenfell tragedy.
I want to speak about something that was not in the Budget but which may have to be in due course—stamp duty land tax, which goes back to my point about crofters, lairds and the leader of the SNP. I have been a keen observer over the years of these changes, and I am glad the Financial Secretary is in his place. I was not part of the Treasury team in autumn 2014 that made those important reforms, and I would have urged caution at that time, but there must be a question as to whether stamp duty land tax is too high, including at the top of the market. I ask the Treasury to consider this in good time. There is no point coming to a fast conclusion on SDLT.
Many of the principles of the reforms were sound. Home purchases were made cheaper for 90% of properties and the SDLT slab system was removed. Subsequent reforms have meant that people pay more for second-home ownership, which is reasonably correct, and there is no SDLT at all for many first-time buyers, which is beneficial. There has to be a question, though, as to whether the overall yield from SDLT can be improved. If I understand it, to date the receipts are down by 10% a year. In August, only 79,000 homes throughout the UK were sold at all. That is down 4% year on year. If I read the numbers correctly, there is a £1 billion shortfall compared with the OBR estimate.
The increase in stamp duty land tax on homes worth more than £937,500—
Greg Hands
I will not take any more interventions as I will not get any more time.
It may seem bizarre to speak about people in such homes, but in large parts of inner London, £937,500 does not buy an astronomically sized home. That is the cost of a typical large flat or small house in many parts of inner London. The average buyer in my constituency now pays £43,000 in stamp duty land tax. For many Members, £1.5 million may sound like a huge amount, and it is, but that is the average price for a three-bedroom house in my constituency. If someone wished to trade up to a four-bedroom house because their family had increased, they would have to pay £153,750 in stamp duty alone. That is increased from £53,750—three times as much.
What are the effects of the change? First is the question of whether revenue is being maximised at a time when we need revenue. Secondly, it is a serious tax on home ownership in general. Thirdly, it heavily penalises downsizers. If someone is in a larger house and looking to move to a smaller house, which is a socially beneficial activity, they are heavily penalised by the SDLT consideration on their new house, as well as the buyer of their previous house having to fork out more than £150,000 or £200,000, in some cases.
Fourthly, it encourages the over-development of homes, which is to be seen all day, every day around my constituency and in much of inner London, as people are tax-incentivised to extend their homes rather than buy and sell to move to a larger or, indeed, smaller house. The amount of building work has skyrocketed. I did a poll of my local estate agents and residents and got some very interesting frontline responses about the effects.
Fifthly, it encourages over-conservativism in property moves. People think, “It is so expensive to move. I have to make sure I’ve got it right.” That can cause a delay in a property move that may be unbeneficial to the economy. Sixthly, it cuts labour mobility and, as such, social mobility. If someone gets a new job in a more expensive part of the country, it will cost them a huge amount to make the move in order to take the job.
I welcome the Budget, the tax cuts being introduced and the extra money for the NHS. We have to keep a close eye on debt. I support the Budget.
Frank Field (Birkenhead) (Ind)
This Budget will do nothing for the growing number of Members, Opposition and Government, who are troubled that their constituents are not only hungry but being pushed towards destitution. If there is one thing we should vote on, I hope it will be a resolution that shows how unfair the Budget is for the group of people who have given most to the country’s recovery.
The analysis that the House of Commons Library has done for several Members looks at the cuts in living standards, since the coalition Government came in, for those who are of pensionable age—a growing number of us—and those with families. Pensioners have seen increases in their standard of living every year. That is good, but it does not help much to reduce the budget deficit. The whole budget deficit has been put on families, particularly those with children. There was silence on that from the Chancellor as he told us that we were turning the corner and lifting the burden of austerity. Surely to goodness those who have borne most in making a success of getting the budget deficit and fiscal deficit down should be first in the queue to get some relief.
There was no relief in the Budget for the cuts in the social security budget, the most deadly of which was the freeze in benefits that each year makes it more and more difficult for the most vulnerable to manage their budgets. It is no surprise that food banks throughout the country, along with other organisations, report an increase in the number of people who are reduced to going to food banks or who are taking other actions to try to assuage their hunger. I say this to Members from all parties, because the Opposition have failed to convince the Government of how serious things are. There is something deeply shameful in talking about lifting austerity while at the same time making sure that the cuts for families will get worse next year, the year after and the year after that.
Linked to that is what we will do with universal credit. The National Audit Office gave us the grim report that it was a benefit that the Government could not scrap but did not know whether it could go forward. The Government’s answer today was to make some very important additions to the universal credit budget. I am grateful, as all of us who see our constituents massacred by this benefit must be, but there are four big changes that the Government have yet to announce that will be necessary if we are to be satisfied that universal credit can be rolled out safely to every one of our constituents.
First, will the Government extend legacy benefits right up to the time when people claim universal credit? There was talk about some changes, but they have not been announced today. Such a change would mean that nobody—but nobody—would be without money. On the day that their universal credit payments started, their legacy benefits would stop. Will the Government commit themselves to that change?
Secondly, we talk about single parents going out to work, and many of them try to do so, but their childcare payments are not paid during the first month. They can be claimed after the first month. If we are serious about people with children moving from universal credit into work, should we not make those payments up front?
Thirdly, people can get an advance, which is good, but that advance has to be paid back. For working-class people who are used to payment on a daily or weekly basis, it is totally inadequate to have a benefit that is designed for middle-class budgets like ours and to talk about an advance. I had hoped that we would hear more from the Chancellor than some support for credit unions, welcome as that is. We need a system of citizens banks that work with universal credit and are targeted at people on universal credit, so that they can get a loan up front—meaning no collapse in payments—that they then pay back, free of interest, over a reasonable period.
Fourthly, the guardians of the roll-out ought to be Citizens Advice, which the Government have commissioned to provide the all-important roll-out service. If Citizens Advice says, “We cannot yet take any more universal credit claimants for the moment because we cannot provide the wraparound care,” will the Government listen—if not to Members from the Government and the Opposition, then at least to the body that the Government have charged to look after the roll-out and to make sure that people can move from their current situation to universal credit payments?
There is a challenge for those on the Front Bench—my Front Bench or whatever old Front Bench you want to call it—which is to put down a motion behind which we on these Benches and the people of good will on the Conservative Benches can unite to say that we are not satisfied with the Budget, which leaves in place all those austerity measures that most affect families, particularly families with children. There was no relief for those families in this Budget and on that ground alone, the Budget should be voted down.
Sir Henry Bellingham (North West Norfolk) (Con)
It is a privilege to follow the right hon. Member for Birkenhead (Frank Field) who commands huge respect in this House. I agreed with much of what he said, but I remind the House that increasing personal allowances and creating an economy that now has the lowest unemployment since 1975 is another way, perhaps the main way, to help people on low incomes and people who have been in poverty in the past.
I welcome much in this Budget; it is a balanced Budget. I certainly welcome the increases in personal allowances, the extra money for mental health and defence and what the Chancellor said about enterprise, which I will come on to in a moment. I also welcome his realism on Brexit. He made it very clear that he expects Britain to get a good deal. He has also explained very clearly that he will make sure that, if we do not get that deal, we will be prepared for that eventuality. Indeed, there may well be an emergency Budget. I am also optimistic. The Prime Minister has laid down those red lines, which I support 100%. We cannot countenance any initiative or structure that treats Northern Ireland fundamentally differently from the rest of the UK, thus undermining our precious Union. We certainly cannot accept a backstop that is completely open-ended. I know that 50 of our most talented civil servants are working on Brexit and I am confident that, with good will and a degree of flexibility on Europe’s side, we will get a deal. I ask the Minister, in the unlikely event of our getting no deal, what happens to the £39 billion? How much of that will actually be committed and owed, and how much of it will come back and revert to the Treasury? Will he answer that point?
I really was impressed by the Chancellor’s vision for the future—for Britain over the next number of years. For the first time in a long, long time, and at a time when the EU faces huge problems, a Conservative Minister has actually laid out a really clear vision for the future. In fact, what is happening in Italy could precipitate a systemic pan-European monetary union crisis and put at risk the very survival of the euro, and, at the same time, we are looking at markets elsewhere and are actually optimistic about the future. I was really pleased that the Chancellor said that. I think that he would agree with me that what we need is a high-skill, high-productivity, low-tax, business-friendly economy. There is still some way to go to simplify our tax system, and, when I look at Tolley’s Tax Guide, I see it getting bigger and bigger. Just as my right hon. Friend the Member for Chelsea and Fulham (Greg Hands) had a word of caution about austerity, there should be a word of caution also about the fact that the UK has recently slipped down the OECD rankings of the most competitive tax systems in the world. We have gone down to 23rd from about 15th. We must arrest that.
On the wider economy, it is good news that the OBR has predicted a 7% drop in our borrowing for this year and, as a result, the Government will be £13 billion ahead on the forecast. All of this is taking place at the same time as we have better growth than expected—we might even have better growth this year than both France and Germany—exceptional employment figures, wage growth at 3.1% and inflation easing to 2.4%. Yes, there are numerous woes, not least on the high street, but the overall picture is incredibly encouraging, and the Chancellor made that clear. I also agree with my right hon. Friend the Member for Chelsea and Fulham when he said that we have to be realistic and cautious about austerity. As he pointed out, when the coalition Government took office, we inherited an all-time record budget deficit. At that time, total managed expenditure was just under £700 billion. It went up in every year of the coalition Government and indeed of this Government. It is now moving to just over £800 billion. That is controlling public expenditure increases; it is not actually cutting public expenditure. It is not austerity as such. As my right hon. Friend pointed out, the interest on our debt—every year our overdraft goes on the national debt—is currently £41 billion. We should remind Opposition Members, particularly the shadow Chancellor, that, at the moment, that £41 billion, which is equivalent to just slightly more than the policing budget, slightly more than the transport budget, and 40% of the education budget, is currently manageable and fundable. That is at a base rate of 0.75%. If rates returned to the pre-recession levels of 4% to 6%, the amount the Government would spend on debt interest would quadruple. I just say to the shadow Chancellor that some of his spending commitments, some of his proposals for a massive spending surge, are not only grossly irresponsible, but quite cruel on the many people whose hopes will have been built up by that.
I just want to say something very quickly about the high street. I warmly welcome what the Chancellor said about the high street. Our local high street in King’s Lynn is thriving, despite all the closures of national chains. I particularly welcome what he said about the high street fund. We must get more flats above shops in high streets opened up for people to live in. If I look back 50-odd years ago to when I was a child in King’s Lynn, there were many independent retailers in our local market towns. Every single one of them had a flat above a shop where either the retailer or someone in his family lived. Many of those retailers have been taken over by large chains and most of the flats are now empty. I recently went round King’s Lynn, fairly late in the evening, and saw for myself that about 10% of the flats are now occupied. We need changes in the planning system, a much easier route to converting these flats back into accommodation and a change of attitude on the part of many of the regional and unit managers of these national stores. Very often, this is not on their agenda; it is in the “too difficult to do” category. If we take this issue forward with the high street fund, we can seize an opportunity to transform many of our market towns.
In conclusion, it was Jean-Baptiste Colbert, the Minister of Finances for France, who said:
“The art of taxation consists in so plucking the goose as to procure the largest quantity of feathers with the least possible amount of hissing”.
The Chancellor’s innovation and imagination has meant that he has not had to follow that advice and he has produced a first-class Budget that I fully support.
Rachel Reeves (Leeds West) (Lab)
The Budget today neither ends austerity nor shows that our economy is on a strong and resilient footing. On page 7 of the OBR document, our growth trajectory is referred to as “unspectacular”. Even by 2023, eight years after the last Chancellor, George Osborne, said that the budget deficit would be eliminated, we still have a budget deficit.
In my short time this afternoon, I will just look at some of the detail on family finances and business taxation and, finally, at Brexit. The £1.7 billion announced for universal credit work allowances by the Chancellor this afternoon is welcome, but it falls short of the £3 billion that is necessary to ensure that no one is worse off under universal credit and it only undoes one half of the cuts made by George Osborne to universal credit just two years ago. It is somewhat ironic that the Chancellor tells us today that he is introducing a scheme to help people struggling with problem debt—although this scheme is worth only £5 million and is for one year only—but it has not occurred to him or the Prime Minister why people are struggling with debt in the first place. They are struggling with debt because of the ongoing austerity, because wages are not keeping up with the rising cost of living, because they are working in the gig economy or on zero-hours contracts, and because they work in the public sector and have not had a pay rise for almost a decade. It is also worth reflecting that 60% of families in poverty today are in work. They are working hard, often in more than one job or in the precarious gig economy. They are working for their poverty and their children’s poverty too.
The Institute for Fiscal Studies forecast that a further 1 million children will fall into poverty in the next five years, taking the number of children in poverty to a record high of over 5 million, including 7,000 children in my constituency of Leeds West. While we are talking of the next generation, today’s announcement of £400 million for schools, although welcome, is less than what the Chancellor announced to fix potholes. Although we all agree that potholes are an issue in all our communities, I think that we would probably all agree that the education and future of our children are more important. The numbers equate to £10,000 for a primary school and £50,000 for a secondary school, which works out as £24 to £48 per child per year—50p or £1 a week, or about 20p a day per child. The Chancellor said it was to pay for those extra little things, but our children, the next generation, were offered very little extra indeed in his speech this afternoon.
I want to say something about business taxation. The experience of families on low and middle incomes jars with what is happening in some parts of our corporate sector and with some of the evidence that we have taken on the Select Committee on Business, Energy and Industrial Strategy, some of it jointly with the Select Committee on Work and Pensions, which my right hon. Friend the Member for Birkenhead (Frank Field) chairs. People are angry, and rightly so when, 10 years after the financial crisis, they see corporate bosses engaging in the sort of malpractice and incompetence that characterised the management of Carillion, BHS and, most recently, Patisserie Valerie. The Chancellor has said today that he is ending PFI and PF2, but when Carillion collapsed the Government had a choice: to take its contracts back in-house or farm them out to other PFI contractors. They chose the latter, embracing PFI rather than bringing those contracts back in-house, which we know will deliver better value for money and better public services.
Meanwhile, we have seen the new head of Royal Mail given a £5.8 million golden hello to take the job of chief executive, while not paying a penny of tax in the UK—another example of botched Tory and Liberal Democrat privatisation. We have also seen the Persimmon CEO take home £35 million last year, while the firm does not even guarantee all its workforce a living wage. The chief executive of Persimmon was one of the few beneficiaries of the Government’s Help to Buy scheme. He has enjoyed a huge bonus on the back of that, while very few people benefited with more affordable homes.
If the Prime Minister had fulfilled her promise to put workers on the boards of our businesses, I am sure that such an outrageous pay packet would not have been awarded, but workers on boards is just another broken promise from this Government. It would now take a worker on the average wage 167 years to earn what a FTSE 100 CEO earns in just one—austerity for some, and largesse and riches for others. Austerity is well and truly over in the boardroom. What a contrast with the lives and experiences of the vast majority of our constituents. At Carillion and elsewhere we have also seen auditors in a cosy cartel, failing to do a decent job while executives make reckless decisions over their companies’ futures and the futures of people who work for them. Government and regulators must do more.
The Chancellor could have used today’s Budget to cancel the further cut in corporation tax from 19% to 17%—which will cost £6 billion and overwhelmingly helps bigger businesses—and instead use the money to support smaller businesses and our struggling high streets, which the Government say are the priority. But today’s announced changes to business rates, while welcome, are worth just a quarter of the additional cut to corporation tax, at £1.5 billion. Again we see the Government’s priority: a tax cut for big businesses while others have to struggle. We see the same with the digital tax. Although it is worth £400 million, page 234 of the OBR’s Blue Book says that the uncertainty associated with achieving that figure is very high. Indeed, the Chancellor has announced only a consultation. Where is the urgency? Where is the action? Frankly, when we consider the profits of those huge companies, £400 million is hardly very much.
Finally, hanging over this Budget is Brexit. Yesterday the Chancellor failed to answer the most basic of questions: will the public finances and our people be better or worse off with a Chequers deal than what we have at the moment? He could not or would not answer, because it is increasingly clear that the Government’s botched negotiations will leave us all worse off. As for a no-deal Brexit, the Chancellor said it would mean having to rip up this Budget and start again. He said in this afternoon’s statement that he is putting money aside if the economy needs additional support, paving the way for a spring Budget and preparing for every eventuality. The Office for Budget Responsibility has revised down net exports next year and says that it is difficult to make any economic forecasts at all because of the huge uncertainty. Nobody voted for this mess. That is why we should now go back to the country with a people’s vote.
John Redwood (Wokingham) (Con)
I have declared my business interests in the register, but I am not going to be talking about them.
I welcome this Budget. I particularly welcome the decision to provide some more money for crucial public services. In Wokingham and West Berkshire, we need more money for social care, and there is some in the Budget. We need more money for our local surgeries and hospitals, and a lot of money will be coming through for the health service in the years ahead. I just urge the Government to ensure that it is well spent and that there a proper prospectus before the money is finally committed in detail.
We definitely need more money for our roads and local transport. I am pleased to see funds with imaginative ideas to improve flows and safety over junctions and to ensure more roundabout junctions and improvements in strategic local route networks. I will be working with West Berkshire and Wokingham Councils, encouraging them to come forward with schemes that I hope qualify, because these are important to the productivity of my part of the world and, indeed, any part of the United Kingdom. Anyone with customers or clients in their area who goes to work daily in a van or car cannot book as many appointments as they would like and might lose one or two contracts each day because they are spending far too many minutes or even hours in traffic jams, particularly at the busy periods of the day. We therefore need to improve flows, which can also improve safety and lower fuel usage, which would be great benefits.
I also welcome the way that the Chancellor is injecting a bit more money into the economy, because there has been quite a sharp fiscal and monetary squeeze administered to the economy since March 2017. The story so far is one of dreadfully inaccurate forecasting by the OBR and the Treasury. We had the idiotic, wild forecasts about how we would have a recession, falling house prices and a big increase in unemployment if we voted to leave the European Union. They said that that would happen in the winter of 2016-17, whereas I am pleased to say that the economy continued to grow pretty well until March 2017. Jobs and employment went up and house prices did not tumble in the way that was forecast, because Brexit was not bad news. A lot of people thought that Brexit was very good news, and they went out and spent a bit more money because they liked it.
We then had a fiscal and monetary squeeze. The Bank of England has put interest rates up, and it withdrew special lines of credit from the clearing banks and issued instructions to lend less against cars and certain types of houses. That had a visible impact on the car and housing markets. We had a fiscal squeeze, because as we see in today’s figures, in this year alone £7.4 billion more has been collected in tax and £4.5 billion less has been spent on public services than was forecast in March. There has therefore been a £12 billion—I presume unplanned—fiscal squeeze on the economy since March, and there was also a squeeze in the previous year, combined with a rather sharp monetary squeeze, whereby money growth has now halved, as a result of what I think was the Bank of England’s fairly untimely and overdone interventions. I do not think there is a huge inflation problem out there, and I think the action that it has taken is too strong.
I am therefore delighted that something has been given back. What the Chancellor is giving back next year—about £11 billion—only matches the £12 billion of the squeeze that was being taken out this year. The OBR says, “This is a big giveaway,” but it is not actually a giveaway compared with what it said as recently as March this year. One needs to put that into perspective.
We now have to discuss what impact Brexit will have. All the forecasts grossly exaggerate the economic impact of Brexit. It is an extremely important political event, but I do not think we will see it on world economic graphs when we look back in two or three years’ time, and I think we would be hard pushed to see it on the graphs of the UK economy as well. The effect could be reasonably neutral. If we go for a no-deal Brexit because, unfortunately, the EU does not offer us something that is better than no deal, or if there is a continued breakdown in the negotiations—at the moment, the Chequers plan does not look very popular with the EU—then, yes, the Chancellor is right that we will need an additional Budget, but it will be a Budget full of good news because it will be the Budget to spend the £39 billion.
An awful lot of Brexit voters voted in part to take back control of our money. The OBR confirms that if we go ahead with the withdrawal agreement it has in mind, we will indeed be asked to spend £39 billion, sending that money over the exchanges to be spent in relatively rich continental Europe rather than having it available for our own priorities here. So will it not be great to have a Budget to confirm that we can spend £39 billion in a no-deal scenario?
Sir Henry Bellingham
A moment ago, as my right hon. Friend will recall, I also made the point about the £39 billion. It is incredibly important that the Government clarify the situation on that, because some Ministers are saying that part of it is owed contractually in many different ways, while other Ministers are saying that the whole lot would revert to the Treasury in the event of no deal. Surely, the Minister must clarify that when he winds up.
John Redwood
I have looked into this. I have taken advice from lawyers. I have also read the report from the House of Lords—not a known bastion of leave enthusiasm. Its legal conclusions were wholly admirable. It said, “No, there is no legal requirement to pay a penny to the EU after we have left.” If we leave on 29 March 2019, we would definitely save that money. There is no requirement to pay. We did not get a bonus when we joined the thing, because there were lots of inherited liabilities, so we do not have to go on paying for liabilities after we have left. That is quite an absurd proposition. We should be able to grasp this opportunity.
If we were able to spend that £39 billion over a three-year period—I know that it is spread over three years and does not come all in one year—there would be, over that period, a 2% boost to the UK economy. That could take our growth rate back up to about 2% per annum. The OBR forecasts are a bit gloomy, and it could be that our economy has grown by only 1.5%, but that is underperforming. We need to ask why that is, and it is certainly nothing to do with Brexit. The reason the growth rate fell is, as I say, deliberate policy by the Bank of England and possibly inadvertent policy by the Treasury creating a combined monetary and fiscal squeeze. This Budget does something to start to lift the fiscal part of that squeeze, and that is very welcome.
It is crucial that we do end austerity. I am absolutely with the Prime Minister on this. Indeed, I fought two elections on the proposition that we want prosperity not austerity. I strongly agree with the Chancellor that we should define austerity, as the public do, in its wider sense. Austerity does not just mean not having enough money for social care, which we need to remedy; it means that people’s real wages have not gone up enough or at all, so they are not better off. People expect us collectively, as a result of our interventions in the economy and our supervision of the general position, to help them to progress and have real income increases so that they can afford more and improve their lifestyles as they go on life’s journey. That is what we should be doing. We should be in the business of promoting more jobs, better-paid jobs and lower taxes so that people keep more of the money from those jobs and the income they are earning. I therefore welcome the bringing forward of the income tax reductions, which will be very helpful.
I also strongly support tackling the problem of low pay. There is still too much low pay, and I am glad that the Government regard this as an important issue. We need to do more on productivity measures, because the real way to eradicate low pay is by higher productivity: “work smarter and get paid more” is what we need to be thinking and doing. That requires a whole raft of the policies that were mentioned in the parts of the Budget document on education, training, transport and many other areas. That will contribute to making a more productive economy.
I am fully behind the Government’s aim of banishing austerity. I am fully behind the aim of getting real wages up and allowing people to spend a lot more of their own money. I want the £39 billion because that would be a really knock-out blow in getting a stronger and better economy.