The Economy
Geraint Davies Excerpts(5 years, 1 month ago)
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Sajid Javid
Sound public finances are the foundation of economic prosperity and strong public services, and we have come a long way since 2010. We inherited a deficit of 10% of GDP. At that time, that was the biggest Budget deficit of any advanced economy. It was equivalent to borrowing £5,000 every single second.
Leaving the EU: Economic Impact of Proposed Deal
Geraint Davies Excerpts(5 years, 9 months ago)
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Mel Stride
The hon. Gentleman says that we have not had the courage to produce an analysis of the deal, as he terms it, but we have done precisely that, as was required by this House, with a range of potential landing points for the deal set out in broad terms in the future political declaration. The Government have done just that.
Geraint Davies (Swansea West) (Lab/Co-op)
The Father of the House knows better than others that Margaret Thatcher was instrumental in creating the single market and in encouraging Japanese companies to come here to platform into it. Given that the EU now has a free trade agreement with Japan and the Government intend to Brexit, is not the loss of Japanese investment and associated jobs painfully predictable? Is it not now incumbent on the Government to give business and the people, including Honda workers and others, the final say on whether this botched deal is really what they want, or whether they want to stay in the EU to secure future jobs?
Mel Stride
The hon. Gentleman overlooks the fact that the trade deal with Japan has been struck at a time when we are members of the EU. There will be an impact on car producers, and we see that as part of the reason why Honda has taken its decision. The most important thing is that we enter into an arrangement with the EU where we minimise the frictions at our borders, have a free trade agreement with the EU27 and make sure that trade continues to flow. The best way to do that is to support the deal we are negotiating with the European Union.
Oral Answers to Questions
Geraint Davies Excerpts(6 years, 2 months ago)
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Geraint Davies (Swansea West) (Lab/Co-op)
The Minister will know from the UN that by 2050 there will be more plastic in the sea than fish, so will he ensure that the Chancellor brings forward a Budget with a comprehensive fiscal strategy that ensures that plastic producers pay 100% of the recycling and that targets tax on plastics according to their recyclability?
Customs and Borders
Geraint Davies Excerpts(6 years, 7 months ago)
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Yvette Cooper
That is right. If a manufacturer’s components come in from China but then, as part of the manufacturing process, the product moves to France for further manufacturing, and the components come back again and are then sent somewhere else, at every stage those calculations would have to be done. At the moment, because we all have the common external tariff, when the components come in from China or elsewhere in the world, those rules of origin checks do not need to be done after the manufacturing process and before it is sold on. It does not matter where the widgets come from or where the gadgets go; we have the common external tariff, which makes that process much, much smoother than it would otherwise be.
Geraint Davies (Swansea West) (Lab/Co-op)
My right hon. Friend will be aware that third countries represent some 12% of our exports via the EU. Already, South Korea, Australia and Chile have said that they want to renegotiate the trade agreements, including tariffs, if we are not in the customs union, and many more may. Is she fearful that we will end up with higher tariffs, worse terms of trade and fewer jobs?
Yvette Cooper
That is right. I think there is common agreement that we want no tariffs with the EU as part of this—I think that is shared across the House—but we also want to ensure that we do not end up with worse terms of trade with the rest of the world, rather than having the promises we have had that somehow things will magically be better.
Geraint Davies (Swansea West) (Lab/Co-op)
Resisting a customs union and the single market without a mandate from the voters, which we have not, would be an act of grotesque economic irresponsibility. Being in the customs union means that we are part of team Europe when we negotiate with big blocs such as the United States, China and Japan. If we leave, we will be one player against a whole team. The idea that we can negotiate better terms is farcical. The idea that we can get more trade to compensate for the trade lost as a result of turning our backs on the EU in terms of the single market, tariffs, product standards and barriers, is absurd.
People may be aware of the economic model of trade called the gravity model, which says that the closer and bigger a market is, the more there is trade. Empirically, over the past 140 years, it has been found that the relationship is: halve the distance and you double the trade. That basically accounts for the fact that 50% of the UK’s trade is with the EU, while for Wales, the north-east and Yorkshire the figure is 60%.
In Britain, some of the poorer areas that voted for Brexit will suffer much more if we end up out of the single market and the customs union. Some people still believe, because of Government spokespeople, that we can boldly go and trade where others have not been before, when in fact we are already trading there. The former permanent secretary at the Department for International Trade likened leaving the single market and the customs union to swapping a three-course meal for the promise of a pack of crisps. He was right, and why did he say that? Because if we look at the big markets, where the opportunities are, are they there? In the United States, Donald Trump said in his inaugural address that he would stop foreign countries ravaging his economy and taking jobs, and would stop the country importing more than it exports. We have seen with Bombardier, EU steel and tariffs on China that the US will act against anyone who thinks they can gain an advantage, and the US is much bigger than us alone, as opposed to us as part of the EU. What is more, the US will try to export its standards, be they in chemicals, food, the environment or workers’ rights, which will prevent us from exporting to the EU.
We have already heard that the Germans export four times more to China than we do. We can do that on our own. Again, China will be much more powerful. The Chinese have demanded that they build Hinkley Point, even though the cost of energy is sky high, and have already negotiated to build HS2. They will be coming in, taking our jobs—exporting our jobs—and we will be like putty in their hands, without any ability to negotiate on human rights, carbon and so on.
On Japan, the EU is doing a trade deal that will embrace a third of the economy of the world. If that trade deal is secured after March next year, we will not be part of it. Forty per cent of Japanese investment in the EU is in the UK. We will lose that, and it is not just cars. I am talking about financial services, and 80% of our exports are in services. The EU-Japanese deal will include financial services and we will be out of it. Therefore, a centre of gravity for financial services will grow in Europe, with the axis of yen and euro, and that will hurt the City of London.
As for third countries, 14% of our trade is with them. Chile, South Korea and Australia have already said that they want to change the terms of trade, and so will the others. When it comes to the timing, we will end without any trade deals in the transition period. We will basically close the door behind us and it will be a complete nightmare. After March we will have left, and Wallonia can just vote down whatever we agree and we will end up with no deal.
So why are the Government doing this? Why are they like a doctor prescribing cigarettes to someone with anxiety, knowing that ultimately it will kill them? The answer is that the Government know that the only hope for Brexit voters is believing that there will be these trade deals, and the Government know that there will not be. That is why Lord Patten, Lord Heseltine, Lord Lansley and Lord Willetts have all put country before party, and the people out there know this is too complex, and too costly, and too much time—
Social Mobility and the Economy
Geraint Davies Excerpts(6 years, 8 months ago)
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Geraint Davies (in the Chair)
May I say at the outset that there are 11 speakers, so I will impose a time limit? I call Justine Greening to move the motion.
Justine Greening (Putney) (Con)
I beg to move,
That this House has considered social mobility and the economy.
Most of our debates in this place are about problems, but today, I want to have a debate about solutions. Improving our poor social mobility is this country’s biggest challenge, and our biggest opportunity. Britain will not truly succeed until it becomes a country where there is equality of opportunity for the first time.
Like other hon. Members present, I did not grow up with advantage or privilege. I grew up in Rotherham, south Yorkshire, where my father and grandfather worked in the steel industry. My father would probably have benefited from the national minimum wage being in place and he spent time unemployed, so I know what it is like to grow up in a family on benefits. I am sure that many young people who are starting out today feel the same as I did: I never wanted to have extra advantages over my peers; I just wanted to have the same opportunities as everyone else—a level playing field.
Most people in our county are not connected. They do not necessarily have someone who they can ask for advice on careers when they need it. They do not have someone to make the right introductions to get them work experience. When they apply for jobs, they do not have anyone who knows x, y or z in that company to put in a good word for them. They do not have the contacts to help them to get work experience in the kinds of companies that they might be interested in working for, so they tend not to get as much experience and do not do as well when they apply for jobs. Because of that, far too much of our nation’s talent goes to waste, which is totally unacceptable and has to change. There is still such a thing as a class ceiling for most people in Britain, and we have to get rid of it.
A year from now, Britain will be on the verge of Brexit. The debate has divided our country, but the time is rapidly approaching when we will need to come together behind some sort of common vision of what kind of country we want Britain to be post-Brexit. That common vision should be of finally creating a Britain that has equality of opportunity for the first time. Brexit must be a moment for change when we smash that class ceiling on opportunity once and for all. In a knowledge-based, global economy, it has never been more important to use all our nation’s talent to the max.
I will focus on social mobility and the economy, and the huge role that businesses can play in driving the economic benefits of social mobility. The social mobility dividend for our economy and our people is significant.
In July, the Sutton Trust published its modelling of the link between stronger social mobility and productivity. The research looked specifically at European countries and found that, if the UK simply improved its performance on social mobility to match the western European average, the benefit to our economy would be an improved annual GDP of between 2.1% and 9%. That is an annual benefit to our economy of between £39 billion to £179 billion, which is the equivalent of each household being £590 to £2,620 better off. We talk about minimising tariffs and barriers to have strong trade, but talent is no different. We know the benefits of free trade, and a free market in talent is just as, or perhaps even more, important.
Education has a huge role to play. The social mobility action plan that I launched before Christmas sets out a clear agenda for the Department for Education to strongly tilt its strategy to lift up the educational prospects of children being left behind. Business has a key role to play too.
Several hon. Members rose—
Geraint Davies (in the Chair)
Order. I am going to need to immediately impose a time limit of four minutes, which I may need to reduce if there are interventions. I call Sarah Champion to set an example by speaking for four minutes or less.
Sarah Champion (Rotherham) (Lab)
It is a pleasure to serve under your chairmanship, Mr Davies. It is the greatest pleasure to follow the right hon. Member for Putney (Justine Greening), who is a Rotherham girl. She lives and breathes exactly what she is outlining. Her family background is very common in Rotherham. The fact that she has achieved such incredible heights is genuinely an inspiration to my constituents. It is exactly what we are looking to do. I fully support her social mobility pledge. I urge her to come back to Rotherham so that we can work together to make it happen.
I am particularly proud that a woman is launching the social mobility pledge, and a great deal is owed to the right hon. Lady for her work on this. We have now got cracks in the glass ceiling. Indeed, as she rightly said—I am going to steal her line—a ton of bricks is now falling on the class ceiling. That is something we have to address as a country, not least because this week the Children’s Commissioner highlighted the huge gaps that exist between the poorest children in the north and the poorest in the south. Her report found that a child on free school meals living in Hackney is three times more likely to go to university than a child on free school meals from Hartlepool. London children on free school meals are 40% more likely to achieve good maths and English GSCEs than children in the north. Rotherham, by contrast, ranks 188th out of 324 local authority areas for social mobility and has the seventh highest secondary school exclusion rates in the country. The Children’s Commissioner found that too many children are dropping out of education and training before 18, with several northern cities having more than 10% of children missing out on crucial parts of their education.
The all-party parliamentary group on social mobility recognised that social mobility is improved through education and high-quality teaching, yet its former chair now leads a Department that is cutting school funding by 4.6% between 2015 and 2019. Across England, more than half a million primary school children are in super-sized classes. Between 2014-15 and 2016-17, class sizes in Rotherham rose in more than half of our schools and the pupil to teacher ratio rose in two thirds. Some 57% of schools have cut their staff. While the Government talk of a fairer funding formula, schools in Rotherham will have suffered cuts of nearly £3 million between 2015-16 and 2019-20. I fail to understand how that can help our children reach their potential.
Another issue that we cannot ignore is the economic environment that children live in. I am pleased that the Children’s Commissioner recognised that northern children are proud and optimistic, but her report found that many lacked confidence that economic regeneration will mean more job opportunities for them.
Rotherham ranks 119th out of 650 constituencies on the highest number of young people claiming jobseeker’s allowance and universal credit. According to the Office for National Statistics, productivity growth nationally over the past 10 years was the weakest since modern records began. We have some fantastic businesses in Britain. As the right hon. Lady knows, we have fantastic businesses in Rotherham, but there is a serious skills shortage, as she outlined. A recent survey from the British Chambers of Commerce found that skills shortages were reaching critical levels in the last quarter of 2017. How will we address the gap and the lack of productivity if we are not training our young people in the skills needed for a modern economy?
In Rotherham, many businesses are in manufacturing. They recognise—
Geraint Davies (in the Chair)
Order. I invite Gillian Keegan to try to get below four minutes.
Gillian Keegan (Chichester) (Con)
It is a pleasure to serve under your chairmanship, Mr Davies. I thank my right hon. Friend the Member for Putney (Justine Greening) for securing this debate.
Everybody should be given the opportunity to make the most of their life, irrespective of where they were born. It is equality of opportunity that matters. The Social Mobility Commission report published last year identified hotspots and coldspots, which were areas with higher and lower levels of social mobility. I never considered Knowsley, where I grew up, to be a particularly socially mobile region, but it ranks reasonably well at 171st out of the 325 local authorities in England. What may come as a surprise is that my constituency of Chichester is 287th. Chichester is not unique in that respect, as a quarter of coastal authorities were classified as coldspots, and only 6% were identified as hotspots.
The problems are clear and have been for generations. Tackling the issue is complex, but incredibly important, not only for the young people who gain an opportunity to change their circumstances, but for the economy. In 2016, the Sutton Trust estimated that just reaching Europe’s social mobility average would equate to an annual increase to GDP of 2%. It is key that we bring out people’s talents at all ages. Almost every one of my classmates in my failing comprehensive school in Knowsley had talent and the potential to achieve whatever they put their minds to. Some of us beat the odds despite our school, but others did not get that opportunity. They were let down in school and were not offered enough support or alternative routes into work when they left at just 16. From attending a failing comprehensive school every day for five years, I know there was as much talent there as on the playing fields of Eton.
My social mobility journey came in the form of an apprenticeship that I started at 16, so I know from personal experience the benefits they can provide. It gave me seven years of work experience, a degree and no student debt—all I needed to build a career. It was a business that changed my life, not school. More than 3.4 million young people have started apprenticeships since 2010. Although that is a significant achievement, we must work to ensure that they are high-quality training programmes. I am pleased that we are seeing a greater emphasis on quality, with advanced and higher level apprenticeships up by 35% last year as compared with the previous year.
Colleges, universities and business are developing successful, collaborative relationships. Chichester College has seen more than 25,000 apprentices pass through its doors, and its success continues with increased participation year on year. Some 94% of level 2 apprentices continue into employment or further education. The college has put employability at the heart of its curriculum, and it is working with around 5,000 businesses to do that. At the University of Chichester, 34% of its largely regional intake are from the lowest household income groups, and more than half are the first generation in their family to participate in higher education. The university has increased its numbers and is reaching out to the latent local marketplace.
It is important to remember that even if all those opportunities pass someone by, it is never too late for them to learn and improve their opportunities in life. There are such programmes as “Get into”, which is run by the Prince’s Trust; the “Choose Work” programme that Chichester District Council runs, which is designed to help young people get work experience; and the brilliant work of Business in the Community, which works to give young people CV and interview training and work experience. Many businesses are now involved in Business in the Community.
Different areas have always varied in social mobility outcomes. My life has been what some might call a social mobility success story. The solution to better outcomes for young people is multi-faceted, but we should tap into talent wherever it is to satisfy growing demand and bolster our economy.
David Evennett (Bexleyheath and Crayford) (Con)
It is a great pleasure to be able to contribute to this debate today. I congratulate my right hon. Friend the Member for Putney (Justine Greening) on her excellent speech and on opening the debate on this important topic, which I know she is passionate about. I was honoured to be able to work closely with her as her Whip when she was Secretary of State for Education. I particularly welcome her speech, her approach and the support she has already received from the business sector. I welcome and endorse strongly her social mobility pledge. Partnership, access to work experience, a level playing field and of course open recruiting are vital if we are to go forward and utilise the talent that we have across the whole country.
As a former teacher and lecturer, education and social mobility are particular passions of mine and are areas in which I have always tried to be involved. We are discussing social mobility in Britain to ultimately ensure that everyone has the opportunity to build a good life for themselves, regardless of their family background or the area of the country that they come from. In a socially mobile society, every individual should have a fair chance of reaching their full potential. Social mobility is not only good from a moral perspective, but from an economic perspective. By ensuring that talent is harvested across the social spectrum, we have the opportunity to boost productivity and GDP, more of which later.
I come from a family that grew up in the east end of London. It was education, opportunity, good teachers, family encouragement and also some businesses that allowed me work experience that gave me an appetite to develop. I grew up in Essex, but my family background was in Bow, where opportunities were very limited except through education, so we need to look across the country to make sure that opportunities are greater than currently exist in some places.
I actually enjoyed work experience because it meant I met other people and did other things. I learnt and got into the habit of getting up and getting there on time and participating as far as I could.
The Government have made considerable progress on education and opportunities, with 1.9 million more children now in good or outstanding schools. That is a real achievement and we should not minimise that. We should be proud of what has been done, but we need to do more. Local and central Government cannot do it all. It has to be businesses and communities—all of us—contributing and participating.
We are rather fortunate in my borough of Bexley. We are a hotspot when it comes to these things. We achieve things and I am proud of the opportunities that businesses, the council and Government policies have encouraged, which has resulted in a very good situation, but it is not enough. Even within Bexley there are children who underachieve and do not have ambition. I have always fought hard against people who say, “What can you expect? They come from that background in more deprived parts of the borough.” That is absolute rubbish. Everyone has the potential wherever they come from, and we must realise it and get opportunities for every individual. I had a longer speech, but unfortunately I have not got time to do it.
The Government, of course, have a key role, but when we look at the figures, the “State of the Nation 2017: Social Mobility in Great Britain” report found that only 6% of doctors and 12% of chief executives were from working class origins. More has to be done. In conclusion, we need a plan, and my right hon. Friend the Member for Putney has offered us a good plan that we can all sign up to. It is not party political; it is something for the benefit of this country and I endorse it strongly.
Geraint Davies (in the Chair)
Because of the discipline and rigour of Members, I am now able to raise the limit to five minutes. Somebody has kindly pulled out of the debate.
Oral Answers to Questions
Geraint Davies Excerpts(6 years, 8 months ago)
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Mr Hammond
The Government are committed to the northern powerhouse project and recognise that that has to be supported through infrastructure investment. We are looking at northern powerhouse infrastructure investment projects on a case-by-case basis, and we will continue to support the development of the northern powerhouse.
Geraint Davies (Swansea West) (Lab/Co-op)
The Financial Secretary to the Treasury (Mel Stride)
The Government are undertaking a wide-ranging set of analyses of the impact of our departure from the European Union. This is changing through time as we develop our approach and we move to a bold and comprehensive agreement with our EU partners.
Geraint Davies
The Chancellor knew in 2016 that the majority of people would prefer a soft Brexit to a hard Brexit. I am referring to remainers, plus people such as the Foreign Secretary, who said he favoured a single market and would vote for it. Now that the Chancellor knows that a hard Brexit will cost us £45 billion in lost tax receipts, will he at least acknowledge that people such as me on both sides of the Chamber who support our remaining in both the customs union and the single market do so in the name of prosperity and of upholding democracy?
Mel Stride
The Government have made their position very clear: we are leaving the European Union, and that means we are leaving the customs union and the single market. However, we are determined to negotiate a deal under which our trade with the EU27 is as frictionless as possible and we are able, as a globally facing nation, to secure free trade agreements with other countries around the world.
Autumn Budget as it Relates to Wales
Geraint Davies Excerpts(6 years, 9 months ago)
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Hywel Williams
Mae’r Foneddiges anrhydeddus yn gwneud pwynt arbennig o dda. Mae’r Trussell Trust, a mudiadau eraill wrth gwrs, yn rhedeg banciau bwyd trwy Gymru gyfan, ac maen nhw wedi cynyddu’n sylweddol. Mae gennym ni rhai da iawn yng Nghaernarfon ac ym Mangor, a ’dwi wedi bod yna yn eu gweld nifer o weithiau. Gyda llaw, fy marn i am fanciau bwyd yw bod o’n dda i’w cael nhw, ond yn gywilydd bod gennym eu hangen. Fel dywedodd y Foneddiges anrhydeddus, mae cael benthyciad ar y dechrau yn golygu bod yna ddyled yn syth bin. Tydi hynny ddim yn safbwynt da i gychwyn gyrfa fel hawliwr credyd cynhwysol. Nes ymlaen, wna’i sôn am ymchwil sydd wedi cael ei wneud yn Sir Fflint ynglŷn â lle mae’r problemau efo credyd cynhwysol. Bydd hyn yn ddadlennol.
O’r hyn roeddwn i’n deall, prif bwrpas yr wythnos o ddisgwyl oedd arbed arian. Doedd dim pwrpas arall iddi. ’Dwi’n eithriadol o falch o weld y cyfnod yna yn mynd, ond gallasai’r Canghellor fod wedi gwneud llawer mwy, er enghraifft, torri’r cyfnod prosesu hefyd, fel bod rhywun yn cael yr arian mwy neu lai’n syth bin ar ddiwedd y pedair wythnos pan mae’r incwm wedi’i wirio.
Newid arall ydy, fel y sioniodd yr Aelod anrhydeddus dros Fynwy, y bydd taliad ymlaen llaw ar gael o dan rhai amgylchiadau o fewn pump diwrnod o wneud y cais. Yn fuan iawn, bydd rhywun yn dod i sylweddoli efallai nad yw’r credyd cynhwysol ddim yn ddigon a bydd rhywun yn medru gwneud cais am bres ychwanegol. Gobeithio bydd pobl ddim yn mynd heb ddim. Ond er hynny, fel ddywedodd yr Aelod anrhydeddus dros Ddwyrain Casnewydd, mae hyn yn rhoi rhywun i fewn i ddyled. Y newid arall positif a gyhoeddodd y Canghellor oedd bod y cyfnod talu’n ôl yn 12 mis yn hytrach na chwech. Ond benthyciad ydy hwn. Newid bychan ond un i’w groesawu. A dyna ni yn y bôn, hyd y gwela i, o’r Gyllideb. Nid y cyfnod disgwyl ydy’r brif broblem efo credyd cynhwysol, na chwaith y taliadau ymlaen llaw.
Hoffwn siarad ychydig bach am y pethau y byddwn i a Phlaid Cymru yn hoffi gweld yn cael eu newid ynglŷn â’r budd-dal, fel rhyw rhestr siopa i’r Ysgrifennydd Gwladol a’r Canghellor at y dyfodol. Mae credyd cynwhysol yn arbennig o bwysig i Gymru, gyda chynifer o bobl yn medru ei hawlio. Ac i fod yn blaen—waeth i ni fod yn blaen ddim—mae hynny am fod gennym ni gymaint o bobl sy’n dlawd ac ar gyflogau isel. Dyna pam rydym yn medru hawlio gymaint o’r arian yma ar gyfradd uwch na’r Alban a Lloegr.
Bydd y cyfanswm o bobl sy’n medru hawlio credyd cynhwysol yng Nghymru yn cynrychioli tua 400,000 o aelwydydd. Mae hyn yn gyfran enfawr o’r bobl sydd yn byw yn ein gwlad, yn arbennig o gofio mai cartrefi ac aelwydydd yw’r 400,000, ac mae’r teuluoedd sy’n byw yno—y plant a’r gŵr neu’r wraig—yn ychwanegol i hynny. Felly, bydd y nifer absoliwt o bobl fydd yn dibynnu i ryw raddau ar gredyd cynhwysol yn sylweddol eto. Oherwydd hynny, byddai diwygio pellach o fudd eithriadol i ni yng Nghymru, yn arbennig o gofio fod pobl ar incymau is yn tueddi i wario’n lleol ac mae’r bunt sy’n cael ei gwario’n lleol yn mynd ymhellach o lawer yn yr economi lleol hefyd. Felly, nid mater absoliwt o gael incwm ychwanegol yw hyn, ond hefyd rhoi hwb i’r economi lleol.
(Translation) The hon. Lady makes an exceptionally good point. The Trussell Trust and other organisations run food banks throughout Wales. The number of food banks has increased substantially—we have two very good ones in Caernarfon and Bangor, which I have visited many times. It is good to have them, but it is shameful that we need them. I will try to assist them. As the hon. Lady said, receiving a loan at the beginning means that debt is immediately accrued, which is not a great position for someone receiving benefits to start from.
The problems in Flintshire are illustrative of the problems with universal credit. From my understanding, the main purpose of the additional week of waiting was to save money, so I am glad that it has been removed. The Chancellor could have done much more, however, such as trying to cut down on the processing time so that people get the money almost immediately after the four weeks in which income has been checked.
The other proposed change is that the payment beforehand, which the hon. Member for Monmouth mentioned, will be available five days before. Very soon, people will come to see that universal credit may not be sufficient, and it will be possible to apply for further funding. I hope people will not lose out or go without anything as a result because, as the hon. Member for Newport East said, that can lead to debt. The other positive change that the Chancellor introduced was to make the repayment period 12 months, rather than six. I welcome that change, although it is very small. I do not think the waiting time or the advance payments are the biggest problem with universal credit.
I would like to talk about some of the things that I and Plaid Cymru would like to see in relation to the benefit—a sort of shopping list for the Secretary of State and the Chancellor to look at in the future. Universal credit is extremely important for Wales, because we have so many people who can claim it. To be plain—we might as well speak plainly—that is because we have so many people who are poor and on low incomes, which is why we claim the benefit at a higher rate than England and Scotland.
About 400,000 households can claim universal credit in Wales, which is a huge number, particularly when we bear in mind that there are other members of those families, including children, so a huge number of people are to some extent dependent on universal credit. Further reform would be extremely beneficial for us in Wales, particularly bearing in mind that people on lower incomes tend to spend their money locally. A pound that is spent locally goes much further in the local economy. This is about not simply getting additional income, but boosting the local economy.
Geraint Davies (Swansea West) (Lab/Co-op)
I am following what the hon. Gentleman is saying very closely. Is he aware of a study commissioned by the University of Cambridge and University College London, which found that austerity killed 45,000 people between 2010 and 2014, and that a further 152,000 people will die because of austerity between 2018 and 2020? It describes austerity as economic murder. Does he agree that Wales is particularly vulnerable to the impact of that inhumane policy?
The Chair
Order. Before I call the hon. Member for Arfon, may I remind Members that, when they stand to speak or intervene, they must turn down the volume of their headsets? Otherwise, we all hear the noise that we are currently experiencing in our headsets.
Geraint Davies
Thank you, Mr Hanson. I will be brief, so I will speak in English. I say in passing that my mam-gu—my grandmother—had to wear the “Welsh Not”, which was introduced after the Blue Books. Children were required to pass on a “Welsh Not” to a child who spoke Welsh. They were beaten at the end of the day, and she was beaten at the end of every day because she was very religious and did not want to pass on the “Welsh Not”.
I thought I would also mention, on the centenary of women’s suffrage, an Emily—not Emily Davison or Emmeline Pankhurst, but Emily Phipps. She was one of the 17 women who stood 100 years ago, and she was in fact from the Swansea area. She hid in a cave in the Gower to avoid the census, as a protest.
Geraint Davies
I certainly regret taking that intervention. On the Budget, the mammoth in the room is obviously Brexit. This Budget should have been preparing Wales for Brexit. Some 70% of our trade goes to the EU, and 25,000 jobs in Swansea bay depend on those exports. We wanted to see investment in infrastructure and skills to boost productivity to our most important market, but instead there has been a failure in rail investment, including the electrification of Swansea. There was no commitment on the Swansea metro that we asked for, either. I mentioned earlier that despite having 6% of the rail network, Wales gets only 1% to 2% of the overall investment.
People have mentioned the lagoon. At a time when 80% of fossil fuels cannot be exploited, if we are to avoid irreversible climate change it is plainly stupid not to invest at the start of a technology that could drive a future global export market. It is strange that the cost per unit of energy at Hinkley Point far exceeds the projected cost for the lagoon. The reason, of course, is Brexit; the Prime Minister needs to go out to China on bended knee, ignoring human rights and everything else, plead for a trade deal, and we are suffering the consequences.
On skills, the primary skills delivery system is the Welsh Assembly Government, but they have undergone cuts of some 5% in the last year alone—£900 million in cuts. That is delivering cuts on the doorstep of local schools, and Swansea is certainly suffering as a result of that.
I welcome the news on tolls. That tax on Welsh trade and industry has been going on for far too long. The fuel freeze should have been more sophisticated, to push us in a more sustainable direction for transport in terms of our air quality problems; there are 40,000 diesel deaths a year in Britain.
People have not talked about quantitative easing. Basically, quantitative easing lifts asset values so the rich get richer and the poor stay poor or get poorer. The value of property in Camden is now worth more than the value of all property in the whole of Wales.
On austerity, I mentioned earlier that a study done by University College London and the University of Cambridge attributed 40,000 deaths to austerity between 2010 and 2014, and 152,000 more are expected between 2015 and 2020. Until 2010, the death rate was falling by 0.7% a year; it is now rising by 0.8%. The International Monetary Fund has shown that greater inequality generates less growth. What we are doing in Britain is making the poor poorer to pay for the bankers’ greed. In so doing, we are stifling growth. All that pay freezes, cuts to benefits and universal credit do is prevent people who would spend every penny they have to reflate the economy from doing so. They are becoming ill, and becoming liabilities to our social and health services. We are in a crisis. We must invest in a stronger, fairer future for Wales and Britain. That means investing in our skills, productivity and infrastructure, especially in Wales, which is the poorest part of western Europe, particularly the valleys and west Wales.
Finally, I will mention in passing some of the issues with universal credit. Although the Labour party has said that we should pause and look again, the reality is that the universal credit system pulls together through complicated computer systems—the Inland Revenue system, the local authority system and the jobcentre system—into an integrated system that is doomed to failure, as a way of delaying and reducing overall benefit costs and cutting corners, in the hope that the poorest, who are often the most vulnerable, can cope with their own meagre allowance and pay the rent themselves rather than being tempted to spend it on other things, even though they face delays and loans. This is a mean Government causing terrible damage to Wales, particularly its poorer communities. We need to think again and invest in the future and in productivity. We need a fairer, better Wales.
Budget Resolutions
Geraint Davies Excerpts(7 years ago)
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Mr Mitchell
My right hon. Friend makes his point exceedingly eloquently.
I want to underline to the House the fact that free enterprise and open markets have been, and continue to be, the greatest engines of social and economic advancement known to man. We need to stand up for those things more than we have done recently, against the opposing views espoused by the shadow Chancellor and, indeed, by large numbers of young people who were not around to learn some of the pretty basic economic truths that many of us learned in the 1970s and ’80s.
Having said that, capitalism has always required Governments and regulators to set boundaries to human activity and, inevitably, human greed, and that point chimes in very well with the activist views that our Prime Minister has expressed since she took up the job. I want to point briefly to three areas in which I think such regulation of capitalism is of the greatest importance. The first, which we have debated in the House, concerns open ownership registers, particularly for the British overseas territories. That was an initiative of the Cameron Government. We in Britain have imposed such transparency on ourselves, and we need to do so for the overseas territories. Many in this House care deeply about the matter, including my hon. Friends the Members for Stafford (Jeremy Lefroy) and for Amber Valley (Nigel Mills), and the right hon. Members for Barking (Dame Margaret Hodge) and for Don Valley (Caroline Flint). It is important that the Treasury recognises that point in the Finance Bill, and I very much hope that it will do so.
Energy prices are the second area in which regulation is important. The Government are absolutely right to pursue that, because the current monopolistic situation works against the interests of consumers. The right way to deal with it is by regulation rather than by nationalisation, which is entirely unnecessary because of the regulatory regime.
Other Members have mentioned the third area in which regulation is required, but I will make the point again. A recent study of the annual reports of FTSE 100 companies shows that average pay for chief executives rose from £5 million a head in 2014 to £5.5 million in 2015. I find it offensive and totally unjustifiable that that is 140 times the average salary of their employees. It is noteworthy that only a quarter of FTSE 100 companies pay the voluntary living wage to their employees. The scale of that inequality, which is vastly greater than it was, gives capitalism a bad name. At a time when inequality more generally has fallen, with income inequality at its lowest rate for 30 years, this is something that the Government need to address through regulation.
Geraint Davies (Swansea West) (Lab/Co-op)
The right hon. Gentleman will be aware that the OECD identified a relationship between inequality and growth, namely that more inequality means less growth and a smaller cake. Is he also aware that when it is analysed using the Gini coefficient—the normal way of evaluating inequality—inequality in the UK is among the highest and fastest growing in Europe?
Mr Mitchell
I do not agree with the hon. Gentleman’s last point. I will rest on the recently published statistics showing that income inequality is now at a 30-year low in Britain.
My final point, which has already been raised today, is about intergenerational fairness. It is of course absolutely right that housing inequality should be right at the top of the list. We want future generations to have the opportunities that our generation had in terms of not only ownership, but part-ownership and rental. The importance of the decisions announced in the Budget is that they will give a real boost to the creative use of space. There is real encouragement for using brownfield land, which I spoke about earlier, and it is quite right to attack the misuse of land banks. It is also absolutely right to be creative in building new communities, but we need far more imagination. I would like the Government to commit to 1 million new housing starts over the next three years, which is slightly further than they have gone today.
We need to recognise that building new communities and focusing on infrastructure are absolutely at the top of everyone’s agenda. We should look at garden cities, and many people will be delighted at what the Government have said today. In the midlands, we want the Black Country garden city to be developed; so far, it is an idea without much flesh on the bones, and we need far more flesh to be added to those bones. We must build in the right places—progress will become ever more bogged down if we start to attack the green belt, and in my view, it is very important that the Government do not do that—but such building should be the top priority.
When it comes to intergenerational fairness, which everyone agrees is vital, we must not forget that excessive borrowing makes it worse. In the past six months, Germany had a public spending surplus of £8 billion, but we had a deficit of about £26 billion. This will have to be repaid, and it is a cruel and unfair deception on the next generation if we do not make it clear that if our generation does not repay it, theirs will have to do so. Austerity is not optional. It is not a Tory vice; it is fiscal responsibility, and we have to return to living within our means.
My final point on intergenerational fairness is that one of the best investments in future generations is Britain’s contribution to international development. The work Britain is doing, with the commitment made across the House to the 0.7% target, is driving real change in the world—it does a huge amount to help some of the poorest in our world—and contributes directly to making the world a safer and more prosperous place for future generations. It tackles directly the international dangers from climate change, migration, terror, pandemics and protectionism, and the Government should make more of this work. The Government, of which I was proud to be a part some five years ago, have done an immense amount, and such work is very important in addressing intergenerational inequity. In making more of such work, the Government will note that it is very strongly supported by people from across our country who are under 35—a cohort conspicuously absent among Tory voters at the last election.
I want to end by saying how pleased I am to see that the Government have given £1.3 million from the LIBOR fines to ZANE—Zimbabwe a National Emergency—a body that does hugely good work for elderly people in Zimbabwe. On behalf of all those involved with ZANE, I express my gratitude to the Treasury and the Chancellor of the Exchequer for making that very wise decision.
Priti Patel
My right hon. Friend is absolutely right. On many occasions since 2010, the Labour party has not only not supported the Government’s approach on deficit reduction, but failed to vote to support policies to reduce the deficit and bring sound financial economic management back into our public finances. We have come a long way on bringing the deficit down and understanding the reasons why sound financial management matters. We need money to be available to invest in our public services. We need an economy that embraces enterprise, which brings in the tax receipts to pay for hospitals, schools, police and the armed forces. Today’s Budget absolutely recognises that fundamental point.
We have heard criticism in the debate about the NHS. Our NHS is a great institution. It is right that the Chancellor has today committed more public funds— billions—to the NHS. As an Essex Member of Parliament, I am delighted to see new support and capital investment in the NHS. Frankly, for 13 years under Labour, health services in Essex went backwards and suffered from underfunding. My right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) is right to say that Labour Members have a brass neck criticising the work we have been doing and the investment we have made.
One great success since 2010 is the record level of job creation in our economy. Like many of my right hon. and hon. Friends, I recall sitting through these debates from 2010 onwards hearing doom and gloom and scaremongering from the Labour party, with outlandish claims about unemployment and recession. As we know, those predictions proved to be completely wrong. In today’s Budget, we heard about greater investment in key sectors going forward. We know we have to think about the future of the labour market. Automation will be coming in, and we need to consider how we can invest in construction and key services.
Geraint Davies
Does the right hon. Lady not recognise that under the Labour Government the economy grew by 40% in the 10 years to 2008? The Conservative Government have doubled debt from 45% to 90% of the economy and we have the lowest growth in the G7. Surely that is not a success.
Priti Patel
In my constituency, the claimant count has fallen by 70% from its peak under Gordon Brown, and there has been a 17% growth in small enterprises. That means more jobs for my constituents and the county of Essex. We should welcome that, rather than talk it down.
Geraint Davies (Swansea West) (Lab/Co-op)
So much for Euro-Phil’s “Fudge it Budget”. He talked about embracing the future of global Britain, but there was virtually no mention of Brexit. We know that he will be in contempt if he does not reveal the 58 sector reports to the House, but he did not mention them at all in his Budget speech.
Even before the Budget, we saw the Government increase debt as a proportion of GDP, from 45% to 90%—it has doubled since 2010. Our debt is now £1.8 trillion—£30,000 per person, or two and a half years of expenditure. Under Labour, of course, we saw growth of 40% over the 10 years to 2008 and before the banking crisis. That sets the context of how appalling the past has been under the Tories.
We have seen hopeless productivity and hopeless growth. We saw a policy of quantitative easing, which basically pumped money in and inflated asset values. Anyone who has a house or any asset is richer, and the poor, without assets, are poorer. We know from the OECD that growth is related to inequality. If there is more inequality, there is less growth. We know from European studies using the normal methodology of the Gini coefficient that inequality has grown fastest and to the highest level in the UK.
We know from the United Nations, for example, that cuts have hit the disabled harder than anyone else—disproportionately, grotesquely —and their rights have been abused. The UN has asked us to change the way we deliver universal credit. And so on and so on—it is absolutely appalling.
Turning to Brexit, nobody on the Government side has mentioned the £40 billion divorce bill—it will end up being in the region of £1,000 per person. People have talked about free trade, but Brexit is the biggest withdrawal from free trade in UK history. We are turning our back on the biggest and most established marketplace in the world. We hope to have a relationship with other markets, but they are coalescing in their own trade agreements. We are likely to pay massive tariffs to the EU and under the World Trade Organisation. Given that most of our exports are services, we will pay even more on those.
We are seeing depreciation reduce everyone’s assets and wages by between 10% and 15% at a stroke. We have inflation eating away at people’s household income, whether that is through housing, food or energy prices. We have seen our growth basically at the bottom among the G7, and we are now seeing skills leaving the country and going back to other parts of Europe, such as Poland, as we get restricted market access and disinvestment. The prospects for Britain are appalling.
Obviously, I welcome a few things. I introduced the Clean Air Bill today—31 years ago, Tony Benn was the last person to introduce a private Member’s Bill on a Budget day—so I welcome some of the things about clean air. But it is unfortunate that there is not an increase in diesel duty that could be hypothecated to pay for electric buses in all our city centres, for instance. I also welcome the initiative on taxis.
I would have liked to see a focus on the Swansea Bay tidal lagoon and green energy, because 80% of fossil fuels cannot be exploited if we are to avoid irreversible climate change. I would also have liked to see electrification and connectivity on the Swansea Metro for my constituents.
Unfortunately, we now face a future in which we are going to be forced into the groping hands of Donald Trump and into trade relationships where we are going to be on the back foot, and we are going to have to accept what we are given. I do fear for the future.
I solemnly believe that the British people, who did, at the margin, give an advisory mandate for leaving Europe, should be given the final say in 2018 as to whether what they are getting now represents what they understood in 2016 that they would get. I will leave my remarks there.
Finance Bill
Geraint Davies Excerpts(7 years ago)
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Mel Stride
My right hon. Friend is entirely right and pre-empts the point that I was about to make, which is that it is quite wrong of the Opposition to castigate all non-domiciled individuals in this country and to characterise them as tax dodgers. In fact, the hon. Member for Bootle made the point that there are over 100,000 non-doms in the United Kingdom. The vast majority of them do not have lots of overseas assets or may have no overseas assets; they are not opening up trusts and putting assets in them. They simply come over here, sometimes for a couple of years or so, to work and contribute to our economy.
Geraint Davies (Swansea West) (Lab/Co-op)
What the Minister says is true so far as it goes, but I recently met representatives of Man, with which the Minister will be familiar. At £100 billion, Man runs the biggest hedge fund across Europe. They want robust, predictable and understandable regulation to provide certainty for investors, rather than slackness that allows people to creep through holes and exploit loopholes. They want to know where they are. They do not necessarily want a race to the bottom; they just want a reliable system for investing over the long term.
Mel Stride
Certainty for the future is precisely what the proposals deliver, and they were extensively consulted on for a couple of years before coming into effect. We are providing exactly the certainty that the hon. Gentleman wants.
As is characteristic of the hon. Member for Aberdeen North (Kirsty Blackman), she made some fairly thoughtful comments about the importance of ensuring that the tax code is not overly-complicated. She will be aware of the work that we are doing with the Office of Tax Simplification. I was grateful for her at least partial welcome for some of our anti-avoidance measures which, as many Members rightly pointed out this afternoon, have brought in £160 billion since 2010.
My hon. Friend the Member for Braintree referred to the Bill as “gargantuan.” Having spent what feels like most of my life reading every syllable of it, I think that is a rather polite description of this colossus of a Bill, which has 760-odd pages. He mentioned Morecambe and Wise, and it was a nice touch to characterise the way in which the Opposition play the same old tunes. For the Government, of course, the tune is “Bring Me Sunshine”. We believe in an economy that works for everybody; we believe in bright, sunny uplands; we believe in possibilities, we believe in the future; and, above all, while I am a Treasury Minister, we believe in fair taxation.
My hon. Friend was also right to mention the £160 billion. He particularly stressed the importance of getting away from the corrosive message of always beating up those who are an apparently easy target. We need to talk our country up, not do our country down.
Geraint Davies
Does the Minister understand the deep concern about the need for transparency, legitimacy and fair returns in the aftermath of the Panama papers? What specific actions have the Government taken, or are they just saying, “Oh, well. It doesn’t matter. We’ll just get on as normal.”?
Mel Stride
We are right in the vanguard, as the hon. Gentleman knows. The OECD’s initiative to address base erosion and profit shifting has, among other things, brought in the transfer of information between countries on the very issues he raises. We are no slouch when it comes to addressing such issues.
My hon. Friend the Member for Hitchin and Harpenden (Bim Afolami) also talked about tax avoidance. He confessed to the “novelty” of listening to the hon. Member for Bootle, which is perhaps a little harsh as I often learn a lot from listening to him. My hon. Friend also talked about the importance of attracting the best people to our country from all walks of life, and he is right.
My hon. Friend the Member for Brentwood and Ongar (Alex Burghart) made an important point about the setting up of trusts. The trusts of those who become deemed domiciled under the Bill will have to have been in place before that particular moment in time. It is worth stressing that taxation falls due, in the normal manner, only when income in taken out of a trust. My hon. Friend also got us tangled up in a debate about the Beatles and Ringo Starr, but then my hon. Friend the Member for Walsall North (Eddie Hughes) told us that it was Jasper Carrott all along, and we are grateful to him for that.
I begin my response to the hon. Member for Bootle by reminding the House of the significant changes that the Bill introduces to the way in which non-domiciled people are treated in the United Kingdom for tax purposes. The new rules that the Government are introducing fundamentally change the way non-doms pay tax in the UK by ending permanent non-dom status. Under the Bill, non-doms who have been resident in the UK for 15 of the last 20 years will no longer be treated as non-domiciled by the tax authorities. Instead, they will pay tax in the same way as everyone else, bringing £1.6 billion in much-needed extra revenue for our public services.
To maintain fairness and to keep our tax system competitive, the Bill protects non-residents’ trusts from being wholly introduced to the UK tax system. New clause 1 would impose an obligation on HMRC to review the operation of those protections for non-resident trusts. The review would consider the cost of the protections and the effects they have on taxpayer behaviour, including the effect of removing the protections. Although I understand the intention behind the new clause, I do not think it is necessary to legislate for such a review to take place. HMRC and Her Majesty’s Treasury have hundreds of officials monitoring the tax system and assessing the risks, which is right and proper given the Government’s responsibility to ensure that the tax system delivers value for money for the UK taxpayer.
There is a more fundamental case against the new clause—a case about fairness and unintended consequences. The trusts that the Bill seeks to protect are those created before an individual is deemed to be UK domiciled. Many of these complex trust structures will have been set up long before the individual even thought about moving to the United Kingdom and will not have been set up to comply with the UK’s tax rules. In the circumstances, it is not unreasonable that the new domicile rules are introduced in a way that protects trusts from unintended consequences. It would be unfair to ask a non-dom to pay tax on money they never intended to bring into contact with the British tax system in that way.
Geraint Davies
Is the Minister saying it is fair for someone to tax plan to leave the country, make a load of money and hide it in various places where tax is not charged before coming back to live in the British environment, where they always wanted to live, and avoid all that tax?
Mel Stride
I am not saying that at all. What I am saying is that, where a non-dom has a family trust or some other perfectly legitimate arrangement—they might not have been to this country at all when the trust or arrangement was set up—and is subsequently deemed to be domiciled in this country, it is not unreasonable that the contents of that trust should be protected, with the important caveat that tax is due to the UK tax authorities as soon as income is taken out of the trust.
Geraint Davies
In terms of tax planning, a merchant banker or whatever in their twenties could plan to leave Britain for a number of years, make a lot of money and protect that money in a tax haven before coming back and receiving all the benefits—sending their kids to public school and all the rest of it—without paying tax in Britain.
Mel Stride
I think I have answered that question. It is probably time to move on.
Even with these protections in place, non-doms who become deemed UK domiciled will be protected from tax, as I have said, only on income and gains that remain in the trust. Any moneys withdrawn or benefits provided will lead to a tax charge on the individual. This is a fair system that has been carefully considered and consulted on since it was announced more than two years ago. It is simply unnecessary to introduce legislation to place additional bureaucracy and additional reporting burdens on HMRC, which already scrutinises non-doms’ compliance with the UK tax regime.
Government amendment 17 will remove and correct a minor inaccuracy in schedule 8 to ensure that the policy is delivered as intended. The change applies to part 4 of the schedule, on the cleansing of mixed funds. For the purpose of these rules, a qualifying individual is one who was not born in the United Kingdom and whose domicile of origin is not in the United Kingdom. The amendment simply corrects the Bill by replacing “or” with “and” when defining a qualifying individual. I therefore urge the House to accept the amendment.
These reforms have been carefully drawn up to ensure that we get the right balance between protecting the public finances, remaining internationally competitive and showing how much we value the contribution of non-doms in the UK. I therefore urge the House to reject new clause 1.
Oral Answers to Questions
Geraint Davies Excerpts(7 years, 4 months ago)
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Mel Stride
As I said, we recognise the value of merging national insurance and income tax where that is practical and achievable, and there are some measures coming up in the Bills in the autumn that will address that in certain circumstances, but to do it right across the piece at this stage is perhaps a long-term aspiration rather than one we will be addressing in the short term.
Geraint Davies (Swansea West) (Lab/Co-op)
The Minister will know that as people go into the higher tax threshold they stop paying more national insurance, so would one of the impacts of merging the two be to reveal that the British tax system is not as progressive as people think, and make the case for those with the broadest shoulders to pay more?