Draft European Union Budget

John Healey Excerpts

Thursday 12th July 2012 Commons Chamber

[Mr Hoban]

I am pleased to have this opportunity to discuss the 2013 EU budget.

As Members will know, the economic climate in the EU has changed dramatically in recent years, and the situation remains fragile. The uncertainty in the euro area is the biggest challenge facing the EU economy, and there is a risk that it will affect growth and jobs in Britain. That is why we have pressed the euro area to address both the immediate challenges and the long-term systemic issues that it faces. In the midst of one of the biggest debt crises to hit Europe, this Government and Governments across the EU have made difficult decisions in order to consolidate their public finances and implement structural reforms.

The EU budget, funded by EU taxpayers, cannot be immune from the changes that are sweeping across Europe. An ever-increasing EU budget is not the way in which to fix Europe’s problems, and it is time for the EU to live within its means. That requires a strict reprioritisation and the targeting of areas that support growth and reduce the waste and inefficiency that has become characteristic of EU spending.

[John Healey (Wentworth and Dearne) (Lab)]

The Financial Secretary mentioned supporting growth. As he will know, as part of the preparation for the EU’s next budget period there are proposals for “transition regions” status, which could benefit at least 11 regions in this country. We in south Yorkshire are aware of the benefits that it could bring by supporting local jobs, businesses and growth. Are the Government in favour of the concept of transition regions?

[Mr Hoban]

I am surprised that the right hon. Gentleman has raised that point, given that the amendment tabled by a member of his own Front Bench calls for a more restrained budget and given that one of the consequences of a cut in the budget would be a further constraint on spending. Our main priority is to deliver a freeze in the multi-annual financial framework, and we need to establish which measures in the budget are consistent with that. However, we do need to focus on jobs and growth, and the biggest challenges in that regard are often presented by the newer accession states when the gap between their economies and those of countries such as the UK, France and Germany is at its widest. We need to focus on spending in the areas where there is the greatest potential for those countries to yield real fruits in terms of economic growth and jobs.

[John Healey]

I am not entirely sure whether that was a yes, a no, a maybe, or an “I don’t like to say.” The Financial Secretary will know that the qualification for transition regions status is a GDP that is between 75% and 90% of the EU average. Some parts of our country require that extra help; they need more balanced growth, and support for jobs and businesses. Does the Financial Secretary support the concept—I am not asking about the quantum—of transition regions in the next EU budget period?

[Mr Hoban]

The negotiations on regional funding are a matter for my colleagues in the Department for Business, Innovation and Skills, and I am sure that they will respond to the points that the right hon. Gentleman has made. Our overarching priority is to ensure that our spending in the EU gives us value for money, and the overall settlement for the next seven years and the multi-annual financial framework must reflect that. He may wish to participate in the debate on the preparations for the framework which will take place in European Standing Committee B when the House returns in September. That is one of the many opportunities for debate provided by my hon. Friend the Member for Stone (Mr Cash) in his role as Chairman of the European Scrutiny Committee.

--- Later in debate ---

[Mr Hoban]

My hon. Friend makes a powerful point. We need to view expenditure issues in the context of the impact of our contribution and how it is linked with the rebate, but I do not want this to turn into a debate entirely about structural funds. There will be many other opportunities to discuss those.

[John Healey]

rose—

VAT on Air Ambulance Fuel Payments

John Healey Excerpts

Wednesday 11th July 2012 Commons Chamber

[John Healey (Wentworth and Dearne) (Lab)]

I pay tribute to the hon. Member for Hexham (Guy Opperman) for moving this debate, to my hon. Friend the Member for York Central (Hugh Bayley) for ably supporting him and leading our campaign to support our Yorkshire air ambulance service, and to all Members, on both sides, who have spoken in support of their local air ambulance services. I pay particular tribute to Ken Sharpe, my hon. Friend’s constituent, who must hold the record for getting 100,000 names on an e-petition in the shortest possible time and who has helped provide the basis for this debate.

I say to the Minister that we are asking for a small contribution that will be a big boost to the efforts of those who support and keep our air ambulances flying across the country. The motion covers the interests of our 18 air ambulance services across England. All of them are sustained by the dedicated efforts of those who raise funds to help finance the costs and all are kept flying by the dedicated, skilled, professional staff who provide this vital emergency service. I am particularly pleased that the Yorkshire caucus is so strong in the House tonight, with not only my hon. Friend the Member for York Central leading the charge but the hon. Members for Leeds North West (Greg Mulholland) and for York Outer (Julian Sturdy), whom I am delighted to follow.

Like most other air ambulance services, ours is a charity. It is, so to speak, the airborne wing of the Prime Minister’s big society. It deserves the House’s support in deed, not just in word, and the sort of support that the motion is urging on the Government. It is funded by the public to provide a vital emergency service for the public across our county. Since the debate started, I reckon that our fundraisers in Yorkshire will have had to raise at least £300 as a contribution towards keeping our two helicopters and our service going. That is a total of more than £7,000 a day or £2.65 million a year. They do this because they understand, like we do, how vital this emergency service is and how essential it is in many parts of our county that patients requiring such help can be at their nearest hospital within 10 minutes. It flies more than 1,000 missions each year, which is a unique and essential service, of interest and concern to us all. As others have said, the fuel costs are about £10,000 a month and the VAT costs are something under £6,000 a year.

I say two things to the Minister in conclusion. We are not asking in today’s motion for the same sort of exclusion from VAT that the lifeboat service has. We are not asking today for the same sort of VAT rebate scheme that has been in place to support the cost of church repairs. We are asking simply for a review to look at the fairness of the situation and the case for making a small public contribution to the voluntary efforts of those who keep our air ambulances flying. I hope that, in responding to this debate, he will accept the terms of the motion and the review that is urged upon him. But I hope actually that he may stand up to tell us that the motion is not needed and the review is not needed because he will introduce that sort of compensation scheme to cover the costs of VAT on fuel and will do so on a similar basis to the one we have established with the precedent of helping with the VAT costs of church repairs.

--- Later in debate ---

[Mr Hoban]

I do not have that information available but I will ensure that either my colleagues in the Department of Health or I write to the hon. Lady with it.

The second review that is being undertaken looks at the tax position of health care charities. The Secretary of State for Health is required by the Health and Social Care Act 2012 to lay a report before Parliament on matters that might affect the ability of providers of NHS services to carry out their activities. That report is expected to cover the full range of different providers, including charities, and will include taxation issues. Treasury officials will be actively involved in the review.

I therefore suggest that, rather than having a separate, Treasury-led review, the most efficient way forward is for the existing engagement to continue, and for the Department of Health and the Treasury to work collaboratively to consider the tax impacts of different funding models as part of the wider work already in hand.

[John Healey]

rose—

[Mr Hoban]

Perhaps the right hon. Gentleman will tell us whether he looked at the matter when he was a Treasury Minister.

[John Healey]

The Minister mentions the review under the 2012 Act, but it is a review of charities that carry out NHS services. The whole point about the air ambulance services is that they are not NHS services, although they play a great role in emergency health support. Therefore, they are unlikely to be covered by the second review. The Minister says that the review proposed in the motion is useful, but will he accept the motion and conduct the review it urges on him? I am still not clear about that.

[Mr Hoban]

I appreciate the right hon. Gentleman’s knowledge—he is a former shadow Secretary of State for Health—but my point is that the Treasury is working with Department of Health officials to ensure that the matter is covered by the review. I can confirm that, if it is ultimately not covered, the Treasury will carry out its own review. However, rather than having three reviews into air ambulances, I believe that two are sufficient if the second covers the tax issue. We are working with the Department of Health to ensure that that is the case. I can confirm to hon. Members that there will be a review and that the Government will not vote against the motion. Indeed, we believe it raises valid issues.

It would be possible in principle to introduce a refund system for air ambulance charities’ non-business activities, although it is important to consider that in the context of broader public spending, as I am sure my hon. Friends appreciate.

To refer to a point made by my hon. Friend the Member for Rugby, it is important for us to consider carefully how air ambulance charities can provide a better service by improving efficiency, and not just through refunds and tax breaks. Effective co-ordination of services could bring cost reductions that far outweigh the scale of a VAT refund on fuel. I am sure the House will join me in applauding such innovation and agree that we should continue to do all we can to improve this excellent service further. As my hon. Friend said, the air ambulance based in his constituency delivers a co-ordinated approach to providing the service across Warwickshire, Northamptonshire, Leicestershire, Derbyshire and Rutland. It has made significant cost savings and earned the transformational change award at the Orange national business awards last year.

I hope I have set out clearly my reasoning on why a change to the VAT law is impractical. I believe the best review on a level playing field for providers is being done by the Department of Health, but, as I have made clear, if that does not fully cover air ambulances, the Treasury will conduct its own, separate review.

Interest Rate Swap Products

John Healey Excerpts

Thursday 21st June 2012 Commons Chamber

[Guto Bebb]

That is a key point. Time and again, businesses have told me that their relationships with banks go back 15 or 20 years, and that they believed the banks had their best interests at heart. In some situations, however, they have clearly been sold products that they did not understand, but they trusted their bank manager because they had dealt with them for so long.

Having been persuaded by Mr Jones’s transcript to look into this issue, I started asking questions, and as a result I came across the Federation of Small Businesses working hard on this issue and the organisation Bully-Banks. We have identified literally thousands of businesses that have been affected, and debates such as this are necessary to show that the House understands and cares about the problem and wants to see a resolution.

[John Healey (Wentworth and Dearne) (Lab)]

I congratulate the hon. Gentleman on his leadership of this debate. He is looking for evidence and examples, but has he come across Guardian Care Homes, a firm with two care homes in my constituency? Its problem was that the term of the swaps that it was sold far exceeded the term of the loans to which they were linked.

[Guto Bebb]

That is a key issue. In many cases, the term of the swap is longer than that of the loan, which the Financial Services Authority believes to be evidence of mis-selling.

Evidence about the background to interest rate swaps suggests that banks started to target small businesses from about 2006 onwards. The practice was probably curtailed in 2008-09, although there are a few examples of such products being sold after that. In a number of cases, banks have settled with businesses out of court. My concern is that banks have placed significant gagging orders on those businesses, which stops them explaining the terms and conditions of the settlement.

Existing regulations should have been taken into account when these products were sold. Swaps are financial derivatives covered by section 85 of the Financial Services and Markets Act 2000. They are, therefore, a regulated product and any adviser who tries to sell them has a duty to understand the needs of their customer. That is a key point. A fair, clear and not misleading explanation of the product must be provided to the customer, yet in many of the cases I have seen the information provided was far from satisfactory.

--- Later in debate ---

[Emma Reynolds]

I totally agree with the hon. Gentleman. I would very much like to hear from the Minister today whether the Government have a grasp of the scale of the problem, as it is certainly significant.

[John Healey]

Like my hon. Friend, I have written to the head of Barclays, which was responsible for selling the two swaps that have cost Guardian Care Homes at least an extra £12 million so far. Does my hon. Friend agree with the point being made on both sides of the House that such small companies are often afraid to complain, for fear that their loans will be pulled? Does she also agree that a moratorium is needed following complaints, and that firms should be able to make collective challenges for redress?

[Emma Reynolds]

I thank my right hon. Friend for making those points, and I hope that the Minister will be able to respond to them in due course, if not today.

There seems to be an extremely worrying level of coercion involved in the banks’ selling these products to small businesses without making sufficient information available. I have no doubt that what happened to the company in my own constituency has been replicated across the country. That is regrettable at a time of such difficult economic uncertainty when small businesses are the backbone of the British economy. We need to make sure that they are supported, not systematically exploited.

Financial Services Bill

John Healey Excerpts

Tuesday 22nd May 2012 Commons Chamber

[Steve Baker]

I was not suggesting that it would create a barrier to entry. I was suggesting that it would put in place measurement and management. That may well appeal to some people, but if we want spontaneous order, mutual societies and bonds of friendship, we cannot get them by state direction. There is very little point in measuring the Financial Secretary’s performance when we want spontaneous order and the bonds of mutuality. I do not support the amendment, but like many other Government Members, I certainly support the thrust of the Government’s policy.

[John Healey (Wentworth and Dearne) (Lab)]

I congratulate my hon. Friend the Member for Nottingham East (Chris Leslie) on tabling the amendment. He is doing the job that the coalition parties promised to do in the coalition agreement but are failing to do.

I shall remind the House of a quotation from the coalition agreement. That is the benchmark for the action that the Government have pledged to take, so the House and others can judge them on it. It states:

“We will bring forward detailed proposals to foster diversity in financial services, promote mutuals and create a more competitive banking industry.”

I applaud the aim of greater diversity and competition, but missing from that statement is the aim of greater confidence and trust in financial services. My hon. Friend’s amendment captures the aims of diversity, the promotion of mutuals and greater growth in mutuals. Crucially, it would also require an action plan from the Government within six months. We have not had one after two years. It would also require regular public reports and stock-takes of progress. I say to the hon. Member for Wycombe (Steve Baker) that those reports would be about not the Minister’s progress but the growth of mutuals, the diversity of the industry and the growth of competition in the sector—all the aims that the Government set for reform.

Mutuals bring something quite special—a concern about values, not just valuation. That is the root of the consistently greater levels of confidence and trust demonstrated by those who deal with and borrow from building societies and mutuals compared with those who deal with their corporate competitors. Mutuals display a prudence born of concern for and knowledge of their members. If we look back over the past several years, we see that building societies and mutuals have not run the reckless risks that banks and other financial services have. They have not lost their core business purpose and their sense of what they are there to do and who they are there to serve, as many banks and other financial service companies have. Mutuals did not need a public bail-out and did not cost the UK taxpayer billions of pounds to make up for their mistakes like others in the banking and financial services sector did.

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[Mr Thomas]

Is not one of the unsung successes of the building society movement that it has sought to maintain an effective and broad-based branch network in the communities from which they grew, which sadly is not necessarily something that can be attributed to the major banks? There were wholesale bank branch closures in the last generation, and they are beginning again.

[John Healey]

My hon. Friend, who knows far more about this matter than me and many in the House, is absolutely right. At a time when a loss of trust and confidence in financial services is evident across the board, that local presence and face-to-face relationship counts for a great deal.

[John Hemming]

Amendment 72 is a permissive amendment, and yet clause 47(3)(f) mentions

“making provision that appears to the Treasury to be necessary or expedient in consequence of the provisions of this Act.”

What will the amendment enable the Government to do by order that is not already possible under that measure?

[John Healey]

I am disappointed in the hon. Gentleman, because he, too, has a strong track record on this matter, and that sort of nit-picking misses the point of the amendment. The point of the amendment is to hold the coalition parties in the Government to their coalition pledge, which he is unable to do. It is a way of making public two years of failure and saying, “Within six months, you must do better.”

[John Hemming]

The amendment does not make the Government do anything, because clause 47 states that the

“Treasury may by order amend the legislation”.

If the Treasury does not want to do so, it does not have to do so. The amendment does not hold the Government to account. No wonder you are failing as an Opposition; your amendments are badly drafted.

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. I am not failing as an opposition, so I do not think that is parliamentary.

[John Healey]

I have not seen the hon. Gentleman’s amendments to make the measure not permissive, but a requirement of the Government—Mr Speaker must not have selected it. Clearly, anything in statute would be a significant step forward, as the shadow Minister, my hon. Friend the Member for Nottingham East, has argued. Those on both sides of the House who have an interest could use a permissive measure in future.

[John Hemming]

Does the right hon. Gentleman believe that we make a man any taller by measuring his height?

[John Healey]

No, but by measuring height, one makes a statement that height matters. The amendment makes a statement that the coalition pledge on mutuals, and on greater diversity and competition in financial services, matters. That is the purpose of the amendment and the debate. I hope that my hon. Friend presses it to a Division because it will expose the Government’s complacency in making promises and failing to live up to them.

[Mark Durkan (Foyle) (SDLP)]

I wanted to respond to the hon. Member for Birmingham, Yardley (John Hemming), who seems to rest everything on clause 47(3)(f), on the basis that it could easily include what the amendment proposes. In the same vein, paragraph (f) could mean that there is no need for paragraphs (a) to (e) because it is all encompassing.

[John Healey]

I am grateful to my hon. Friend, who has an eye for detail that I cannot match—it almost matches the eye of the hon. Member for Birmingham, Yardley (John Hemming).

[Geraint Davies]

The amendment requires the Government to measure the number of mutuals and their share of the market. In so doing, it brings the Government to account. If there is no point to that, and if we want only what the hon. Member for Wycombe (Steve Baker) called “spontaneous order”, we would not have the Office for Budget Responsibility, and we might as well forget measuring and management. The amendment seeks to bring the Government to account, and should therefore be supported.

[John Healey]

There is a saying that what is measured matters, and if it matters, measure it. In many ways, that is the core of the argument being made by Opposition Members.

Sixteen per cent. of those who aspire to own their own home and who borrow to buy do so from building societies. Roughly one in six of us borrows our mortgage from a building society. That significant market share is gradually growing. That is why I have argued that building societies are the unsung success of British financial services. They are certainly unsung by a Government who promised to be their champion.

In my view, building societies are the quiet strength of British financial services, but it is time that that strength was properly supported by Government policy and action. Mutuals look at the coalition agreement and point to the words on the paper, but they cannot point to the action that followed. The amendment is designed to force the hand of the Minister, the Treasury and the Government. I am surprised that it finds any objection on the Government Benches, because it simply seeks to hold the Government to the promise they made

[Mr William Cash (Stone) (Con)]

I have found this debate both curious and inconsequential in many respects. There has been a great deal of talk about the technicalities of achieving the objective, but not, as far as I can judge, a great deal about the reasons why mutual societies are so important. However, I share the view expressed by the right hon. Member for Wentworth and Dearne (John Healey) that the coalition agreement, of which I am not an uncritical observer, clearly stated that there should, in effect, be support for mutuals.

I declare an interest, because my family founded the Abbey National building society and the National Provident in the 1830s and later in the 19th century. The Abbey National is now Santander, and we need only look at what is happening in Spain to hope that there is some ring-fencing for its customers in the United Kingdom. The reason why mutuals are so important is the same reason why John Lewis is so important. It is the reason why the co-operative movement, which was founded in Rochdale—I do not apologise for also pointing out that that was where John Bright was born—is important. The Rochdale co-operative movement was the means whereby people could buy houses that they could not otherwise afford.

I have always been very much in favour of the right to buy, because having a property stake is important for individual responsibility. The great thing about the mutuals—and it still pertains, because they still exist, but need to be enhanced, improved, developed and encouraged—is that they enable people to come together in a proper and balanced relationship, with a sense of individual responsibility and, by co-operating together, to benefit each other and society as a whole in relation to the most fundamental aspects of property and insurance, without excessive profits, or indeed any real profits, for the people who put it together. That does not mean that I am against capitalism. Indeed, those who promoted mutual societies were invariably capitalists, and I count my own family in that number. William Cash founded the National Provident with the Lucas family, and the Cadburys were much involved in similar objectives. A raft of Quakers and other Dissenters were integral to the development of this incredibly important movement, which changed the face of society in the 19th century. We could do with that now.

Some five years ago, I wrote a letter to The Times, criticising aspects of the manner in which the banking system had given way to greed and self-indulgence. The Minister knows my views on the subject of the transfer of jurisdiction from the City to Brussels, including the point that legislation is no substitute for self-help. My hon. Friend the Member for Wycombe (Steve Baker) understands that better than anyone else. Indeed, Samuel Smiles, who wrote the famous book on self-help, was devoted to all these objectives because he knew that individual responsibility, operating within the framework of co-operatives and mutuals, would and should provide the kind of society that is worth living in. I put it as high as that, because to me this is a moral objective. We do not talk enough about morality. Law is no substitute for morality.

Budget Leak Inquiry

John Healey Excerpts

Thursday 22nd March 2012 Commons Chamber

[Mr Gauke]

Within the constraints of the question, I will just say yes.

[John Healey (Wentworth and Dearne) (Lab)]

Will the Minister concede that the Chancellor has shot himself in the foot with such widespread leaks, because all that he had to announce yesterday was the tax grab on grannies, which he hoped people would not notice? Will he concede that the leak inquiry that may or may not be going on now in the Treasury should consider the leaks of Office for Budget Responsibility judgments, and that now is the time to put the OBR on a proper independent basis similar to that of the Office for National Statistics?

[Mr Gauke]

Of course the OBR is independent, and that may be some irritation to Opposition Members, given its conclusions about the failure of the 50p rate.

Amendment of the Law

John Healey Excerpts

Wednesday 21st March 2012 Commons Chamber

[John Healey (Wentworth and Dearne) (Lab)]

It is a pleasure to follow the hon. Member for Daventry (Chris Heaton-Harris), and I think that the whole House is glad that he had more than three minutes and 52 seconds in which to speak today, because that allowed us to hear for the first time about his days as a fruit and veg man in Covent Garden and the speed of his e-mail downloads in Daventry. I have to say that we did not hear much that was new from the Chancellor, who spent an hour telling us what we have been reading in the newspapers for the past week. It makes me think how times have changed since Hugh Dalton was required to resign in 1947 over the leak of a single duty rate change. Nevertheless, in my experience announcements that look clever on Budget day often look less certain and more complex in the days that follow, and what often follows is that the economics behind the politics becomes much clearer. It seems valuable to recall the warning that Winston Churchill gave:

“We shall not be judged by the criticisms of our opponents, but by the consequences of our actions.”

[Barry Gardiner]

Does my right hon. Friend agree that one of the things that might look a little shakier later is the granny tax and the fact that 4.1 million people will be worse off in real terms, with an average loss of £83, and as a result of which 230,000 people will be brought into income tax?

[John Healey]

My hon. Friend is right. This might well become a Budget in which the closer people look, the less they like. That might apply to the granny tax, as he suggests, but it might also apply to the threshold for the 40p top rate of income tax, which many people might find themselves hit by over the next few years, rather than benefiting from the raised threshold for payment in the first place.

The consequences of the Government’s actions at a national level are already becoming clear. The UK economy grew by 3% in the year before the Chancellor stood up and delivered his spending review in 2010. In the 12 months that followed it grew by just 0.5%. That is because he took the decision to cut too far, too fast and choked off growth. Based on the economic projections we heard today, this country is still set for feeble growth in the coming year and the year after. It seems to me that a credible economic plan to deal with the deficit must be supported by a successful plan for jobs and growth alongside it. At present, the Chancellor is condemning Britain to being a one-legged man in a three-legged race. The International Monetary Fund has made a similar point, stating that

“growth is necessary for fiscal credibility.”

We have to look harder at what we earn as a country, not just what we spend. The UK’s GDP last year was still nearly 4% lower than it was before the global financial crisis hit in 2007-08. In other words, our economy was smaller and our national income was lower. If we draw a comparison with the US or with Germany, we find that both countries have a more balanced approach to dealing with their deficit, both countries are growing more strongly than Britain and both countries now have economies that have regained the loss of productive capacity which everybody in the modern, developed world suffered during the global financial downturn of 2008.

[Austin Mitchell]

That is a very important point. My right hon. Friend will know that the Institute for Fiscal Studies Budget forecast makes the point that that 4% now lost is lost for ever: it is 4% lost every year into the future.

[John Healey]

Indeed, and that is one reason why Britain is so far off the economic pace, and why so much more must be done than has been so far to boost jobs and growth in this country.

To use the household income analogy, well loved of the Tory party, I note that if a household looks to pay down its debts at the same time as reducing its earnings, the spending cuts that it must make to do the job have inevitably to be more savage and to last for longer in order to be successful. That is the position this country is in.

If I look at the consequences of the Government’s action locally, I have to say that in south Yorkshire, our area, it is hurting but not working: flat growth, higher unemployment, higher bills, lower confidence. In our area, more than 12 people are now competing for every single job that becomes vacant, and the number of young people without a job for more than six months has more than doubled in the past 12 months alone.

At a time when courts, hospitals, councils, civil service, police and fire service are all cutting public service jobs, any difference that there may be in south Yorkshire between public sector and private sector pay rates is simply not the reason why growth is being held back; it is the loss of jobs, of pay and of support through working tax credits that is sapping demand and confidence.

The Chancellor this afternoon singled out for special treatment those earning more than £150,000 a year, cutting their 50p income tax rate and giving them a tax break that is worth more to those people than many in Rotherham or Barnsley can earn in a year. With more than 800 households and families in Barnsley and more than 1,000 families in Rotherham—working hard, working part-time—faced next month with the total loss of their working tax credit, which could amount to almost £4,000 a year or £70 a week, the Chancellor’s decision to cut the top rate of tax at this point will simply not be accepted or understood.

Let me turn to several of the Budget measures. Any performance report on the Government would be hard put to place the Department for Business, Innovation and Skills anywhere other than close to the bottom, and any judgment on policies would be hard put to say that business support policies have been anything other than close to failure. The Merlin project was supposed to lead to a 15% increase in lending this year; in fact there was a net reduction of £11 billion in net lending to small firms. There was a similar failure of the regional growth fund, of the business growth fund and of the national insurance holiday for small firms.

I look in this Budget with a degree of welcome, however, to the new credit scheme for lending to small firms, and to the new managed funds for lending to mid-sized firms. Those may be small in scale, but they are a start. The margins to make lending more affordable may be modest, but the design and concept, at least, are innovative. Interestingly, the schemes signify that the Government recognise that they were wrong when first elected to say that there was no role for active government and that the private sector would pick up the slack if the public sector stepped back.

The schemes are interesting because they help to reduce risk and cost by using the power of the Government to stand behind them rather than support being funded up front. I say to my hon. Friend the Member for West Bromwich West (Mr Bailey), who chairs the Business, Innovation and Skills Committee, and the hon. Member for Chichester (Mr Tyrie), who chairs the Treasury Committee, that I hope that the Select Committees will make sure that those schemes do not fail as the other business support schemes have and that they provide more lending and lead to more economic activity and support for business in every region of the country.

International experience and all the data underline the fact that, in the long run, high levels of business investment are at the heart of strong economic growth. It seems to me that the case is clear, and has been so since the global financial crash and the requirement for Government to step in and provide big public support to commercial banks, that now must be the time to set up a British investment bank—the sort of industrial investment bank that Germany, Singapore and India have, which can offer strong support to indigenous research and development, domestic manufacturing and regional economies.

The Chancellor told us this afternoon that, taken together, the anti-avoidance measures in this year’s Finance Bill would increase tax revenue over the next five years by about £1 billion. It is interesting that table 2.1 in the Red Book indicates only about a quarter of that over the five years, and that is about half what we did in our first year in government. You, Madam Deputy Speaker, will recognise in the proposal for a general anti-avoidance rule, which I welcome, the same approach that we took and you fought for, against Tory opposition, in respect of the disclosure rules in the Finance Act 2004.

This Chancellor’s Budget was a rich man’s Budget. He chose to cut the top rate of tax and give a kick-back for the rich—and at a time when the deficit is getting bigger, not smaller, when the national minimum wage for young people has been frozen and when the working families tax credit and public services are being cut across the country. This is not a Budget for working people, and the Government are not working for working people. It is not now, and never was, a question, as the Government claimed, of the richest bearing the biggest burden; this Budget proves that the richest are getting the biggest benefit.

Oral Answers to Questions

John Healey Excerpts

Tuesday 24th January 2012 Commons Chamber

[Danny Alexander]

As my hon. Friend knows, at the Budget last year we announced reforms to the enterprise investment scheme and the venture capital trusts scheme, which are subject to state aid approval. The Government are committed to finding innovative ways to invest in new firms, such as the seed enterprise investment scheme, and we will consider further ideas in the future.

[John Healey (Wentworth and Dearne) (Lab)]

The economy has flatlined for more than 12 months since the Chancellor’s spending review, unemployment has hit a 17-year high and the national debt has now topped £1 trillion. What has gone wrong?

Public Service Pensions

John Healey Excerpts

Tuesday 20th December 2011 Commons Chamber

[Danny Alexander]

Yes, I am happy to confirm that. We set out at the beginning that no one earning less than £15,000 should see any contribution increase at all. In fact, through the consultation process, better terms were able to be offered in some cases. In particular, my right hon. Friend the Secretary of State for Health was able to offer better terms to lower-paid workers in the health sector. This demonstrates once again this Government’s commitment to supporting the lowest paid in these difficult times.

[John Healey (Wentworth and Dearne) (Lab)]

The 2 million public service staff who took action last month will note that the Government have given no ground on the imposition of a 3% tax grab on their pension contributions. The Chief Secretary has said that the heads of agreement are not the actual agreement, but the basis for further detailed negotiations. What are his deadlines for starting and ending those negotiations, and when will the millions of scheme members who must, in the end, decide on their future have something put in front of them to which they can say yes or no for themselves?

[Danny Alexander]

It is a matter for the trade unions to discuss their individual processes of engagement with their members. We have worked well with many of the trade unions in this process, but that does not extend to my being able to describe their internal processes to the right hon. Gentleman.

National Insurance Contributions Bill

John Healey Excerpts

Thursday 13th January 2011 Commons Chamber

[Mr Hanson]

The key issue—this is one reason I have suggested an annual report—is that 1,500 is significantly less than the trajectory we would hope for and which is necessary to achieve a take-up of 400,000 by the end of the scheme. It is already six or seven months since the Exchequer Secretary announced the scheme, and we effectively have two years this September—until September 2013—before completion. A target take-up of 400,000 and today’s take-up of 1,500 show that the trajectory is not there.

I intend to withdraw the new clause—the Minister can relax in that knowledge and take it as a helpful contribution to the debate—but I hope he will still reflect on the fact that one reason we have asked for an annual report is to ensure that we are able to know every year what the trajectory of the take-up is and in which regions and sub-regions it is occurring. If, for example, by the end of 2011, 30,000 or 40,000 businesses have taken up the scheme, and there is a capacity of 400,000 and just two years left of the scheme, a considerable effort would be needed to generate those new businesses in the two years.

If the Minister does not want to build in failure to his scheme, he needs to monitor that and, if need be, consider the suggestions we will make later about expanding the scheme into other regions, such as London and the south-east, to ensure that the 400,000 take-up that he wants is met. I will make the case later, supported by my right hon. and hon. Friends, that high levels of public sector employment in London and the south-east region will be hit by public spending cuts; without the necessary debate on those issues generally, that will happen as much in London and the south-east as in north Wales, the north-west, Yorkshire, Scotland, Northern Ireland and other parts of the United Kingdom.

If we do not have the trajectory of take-up that the Minister anticipates, we might end up with a scheme that, after three years, does not deliver a take-up of 400,000. At the same time, colleagues in London and the south-east and eastern regions will have been impacted by public spending cuts, but their constituents will not have benefited from that scheme. In tabling the new clause and amendments, I was trying to give the Exchequer Secretary some flexibility to enable him to design the scheme, review it and bring back suggestions accordingly. More importantly, hon. Members on both sides of the House, including the hon. Member for Wimbledon (Stephen Hammond), whose constituency will not benefit from the scheme, can assess its impact.

We welcome the holiday and think it will have a positive impact, although it will not compensate for the things that my hon. Friend the Member for Luton North (Kelvin Hopkins) mentioned. We will have to consider what its outputs are, whether we achieve them and whether the scheme is successful, and we will return to these matters in parliamentary questions. I hope that the Exchequer Secretary will reflect on some of those issues before the Bill reaches another place. I beg to ask leave to withdraw the clause.

Clause, by leave, withdrawn.

Clause 3

Increased product of additional rates to be paid into National Insurance Fund

[John Healey (Wentworth and Dearne) (Lab)]

I beg to move amendment 8, page 2, line 2, at end insert

‘The National Audit Office shall report to Parliament by the time of Royal Assent on the Finance Act 2011 on the sum that would be required from the product of additional rates in order for the health service allocation to grow in real terms in every year.’.

It is good once again to face the Exchequer Secretary across the Dispatch Box, although not so good to do so from the Opposition side and with him on the Government side. However, he is a serious Minister doing a serious job. He showed that in the way he responded to my right hon. Friend the Member for Delyn (Mr Hanson) and the debate on the first group of amendments. I hope that the Exchequer Secretary will feel that amendment 8 and the amendments that were not selected were intended to be helpful to the Government. With them, we are offering to him, his boss the Chancellor and his colleagues in government the opportunity to act to prove to the public that they will honour the promises the Government made about protecting NHS funding and ensuring it sees a real funding increase each year, not a real cut.

The Bill and national insurance contributions legislation more generally are about raising and allocating national insurance funds and contributions paid into that fund. The NHS has had a special place in that legislation certainly since 2002, when we decided to move, from April 2003, to raise an extra 1% on earnings above £43,800 and to allocate all that extra income to the health service and the NHS. The amendments we tabled, including amendment 8, give the Government the chance to do the right thing by the NHS and the British people. Amendment 8 in particular lays the groundwork for the Exchequer Secretary and his colleague the Chancellor to make the right decisions in order to honour their promises in the Budget.

There were big improvements as a result of Labour’s investment in the NHS over the past decade—51,000 extra doctors, 98,000 extra nurses, patient satisfaction at an all-time high—and it is hard to remember that in 1997 there were more than 280,000 people waiting more than six months to get into hospital for the operations they needed. I make that point to explain the broader context to amendment 8, as I am conscious that the House is debating a relatively narrow provision.

--- Later in debate ---

[Mr Kevan Jones (North Durham) (Lab)]

Does my right hon. Friend agree that the NHS will incur another huge cost—a cost that will not go towards improving patient care—owing to the announced reorganisation of the NHS? For example, with the abolition of the primary care trust in my constituency, most of the money will go on redundancy and organisational costs, which will be another burden and, basically, a cut in the NHS budget.

[John Healey]

It is an extraordinary state of affairs that a series of serious and significant pledges, set out formally in the coalition agreement in May, should have been broken in the White Paper produced by the Health Secretary in July. My hon. Friend is right: the one thing that the Government promised not to do in the coalition agreement was to go ahead with a top-down internal reorganisation, but that is exactly what is now planned. It could cost up to £3 billion. It is high risk and high cost; it is exactly the wrong thing to do at this stage, when the NHS is facing such tight financial pressures. I also have to say to the Minister that his colleagues are already showing signs of strain.

I am anxious to return to the amendment that the House is discussing. The House will notice that it refers to the National Audit Office, which is an independent, authoritative body. The Minister will appreciate the assessments, analyses and authoritative views of independent bodies. He and his colleagues set up the Office for Budget Responsibility. Its independence has—shall we say?—been put on perhaps a slightly more questionable footing than that of the NAO, but it is nevertheless an important organisation. Indeed, the problems of the hon. Gentleman and his colleagues were compounded when their Office for Budget Responsibility updated the economic forecast and the fiscal numbers in November. One of the significant changes in its independent, authoritative assessment of this country’s economic prospects was to its forecast for inflation, thereby changing the deflator—in other words, the amount by which the Government and everyone else anticipate that costs in general, and Government spending in particular, will rise. Instead of a GDP deflator for 2011-12 of 1.9%, as set out in the OBR’s June report, its updated economic forecasts in November gave a deflator of 2.5%.

In other words, even before we take into account the double-counting of funding for both the NHS and social care, we have, instead of the wafer-thin rise of 0.1% for England that the Chancellor promised, a much heavier cut, of 0.5%. That has been confirmed by the Library, and by independent, authoritative bodies in the health field and the Select Committee on Health, which said in its report into public expenditure on 14 December that

“the Government’s commitment to a real terms increase in health funding throughout the Spending Review period will not be met.”

So the Government are breaking their promises to protect NHS funding in England, Scotland and Wales. Next year, Scotland is now being short-changed in NHS funding by £70 million, while Wales is being short-changed by £40 million. In total next year, there will be a shortfall from the promise made by the Government to the British people in their coalition agreement of more than £1.3 billion—not a rise in NHS funding next year, but a cut. On 20 October, the Chancellor promised to increase health spending over and above inflation. That promise is being broken by £1.3 billion.

Our amendments today, including amendment 8, are intended to be helpful, as I said to the Minister. They are intended to demonstrate how the Government can deal with the problem, if they have the will to keep their promises on funding for the NHS. We endeavour to act as a responsible Opposition, as our leader promised we would. The amendment is therefore designed to show helpful ways in which the Government can use this legislation to keep good both the Chancellor’s word and the Government’s promise to protect NHS funding, and thereby to see a real increase each year in this Parliament, and not, as at present, to deliver a real-terms cut.

The amendment suggests having an independent assessment and a report carried out by the National Audit Office. The independence is important: it is designed to try to give the public more confidence in what the Government are doing; to give this House more confidence in what they are doing; and to give everyone more confidence that what was a central promise from the Government and a personal promise from the Prime Minister is in fact being met.

This subject came up at the last Prime Minister’s Questions before Christmas, and it was interesting to note that the Prime Minister told the House:

“I am confident that we will fulfil our goal of real-terms increases every year in the NHS.”—[Official Report, 15 December 2010; Vol. 502, c. 902.]

That will not happen next year. The Exchequer Secretary is a talented Minister and he has an opportunity to give his big boss, the Prime Minister, the confidence that he clearly wishes to see by accepting the amendment and allowing the NAO to do an independent report, demonstrating the extent of the shortfall and the extent to which the Government are breaking their promise fully to fund the NHS. By doing so, he would do the House and perhaps even himself a favour.

[Jonathan Edwards]

In the light of the situation that he has explained applies in England, does the right hon. Gentleman agree that it is reckless for the Conservatives in Wales to promise in the forthcoming National Assembly elections to increase spending on health above the retail prices index?

[John Healey]

One of the two consequences of devolution is that in this area of health such decisions are taken in Wales for Wales. The second, however, is, I have to concede to the House, that I, as an English shadow Health Secretary do not follow those decisions in detail, so I think the hon. Gentleman is going to have to prosecute that argument in his home area.

Finally, the House will note that the date in the amendment is anticipated to be after the expected Royal Assent to the Bill, so it is tied to the Finance Act. The Exchequer Secretary might want to discuss with the Chancellor the idea of doing this assessment, publishing the report and highlighting the shortfall, showing the extent to which the promises they made to protect NHS funding and give it a real-terms increase in each year of this Parliament are being broken. The Budget, of course, provides the Chancellor’s opportunity to make good his word and make good the promises that his Government have given to the British people on the NHS.

[Dr Creasy]

I rise to speak to amendment 8, because it goes to the heart of the Bill and what we do in this House. We do not pass laws to raise money for no purpose. Clearly, we raise national insurance for social insurance purposes. Since 2003 there has been a hypothecated fund in our national insurance contributions specifically for funding the NHS, and the amendment addresses that. It is critical that we get the Bill right and that it reflects the important purpose that we attribute to national insurance. I note that, back in 2003, the then Opposition opposed such use of national insurance, but they have come a long way in the past seven years. That is why it is important to get the Bill right and make sure that the public can have confidence that when national insurance is levied, funding will go to national health care services. My first point concerns why that is important and why the NHS therefore needs the guarantee that amendment 8 would provide. Secondly, I will explain why the public have a reasonable expectation that such provision be made.

--- Later in debate ---

[Mr Gauke]

I note the hon. Gentleman’s remarks. The position is set out in the coalition agreement, and the October 2010 spending review met the Government’s commitment on HNS funding in full, and did so without changing the allocation of national insurance contributions to the NHS. The effect of our policy is to maintain the level of national insurance contributions allocated to the NHS and to allocate additional revenues from rate rises to the national insurance fund. This helps ensure that plans for payment of pensions and other contributory benefits are sustainable in the long term. We can protect pensioners by the new triple-lock, which guarantees each and every year a rise in the basic state pension in line with earnings, prices or a 2.5% increase, whichever is greater.

In ordinary circumstances, we should expect contributions to rise broadly in line with earnings, and therefore to rise in real terms. Therefore, under the Government’s proposals we should expect allocations to the NHS to rise in real terms in a typical year. Amendment 8 would require the NAO to report on how much would be required from the additional rates in order for the health service allocation to grow in real terms every year. The Government’s view is that this would be a pointless exercise, since whether or not the NHS allocation grows, the Government have decided on the amount the NHS will spend. In any case, the amount allocated to the health service from national insurance contributions would, other factors being equal, be expected to grow in line with earnings and therefore grow in real terms every year under the terms of the Bill. This amendment is therefore unnecessary, and I recommend that the right hon. Member for Wentworth and Dearne withdraw it.

I have focused my remarks narrowly on what the amendment is about and why it does not do what is intended. However, I must remind the House of Labour Members’ comments on the subject of health spending more widely. The right hon. Gentleman’s predecessor as shadow Health Secretary, who is now shadow Education Secretary, has said:

“It is irresponsible to increase NHS spending in real terms within the overall financial envelope that he, as chancellor, is setting.”

It was also not that long ago that the shadow Chancellor, whose remarks we study closely, said that there was

“no logic, sense or rationality”

to the policy of ring-fencing NHS spending. I am pleased that Labour Members are now taking a different approach. It has been clear from the remarks made by the right hon. Member for Wentworth and Dearne that they are in favour of real-terms increases in health spending, and we are pleased that the Government have won that argument.

[John Healey]

The Minister was talking about the shadow Chancellor and the approach we take to the decisions that the Government have made on NHS funding. May I therefore remind the Minister of what my right hon. Friend said when he so ably responded to the spending review statement? He said:

“We support moves to ring-fence the health budget”.—[Official Report, 20 October 2010; Vol. 516, c. 968.]

[Mr Gauke]

That was the shadow Chancellor’s position then, but I believe that a few days earlier he had said that there was

“no logic, sense or rationality”

to the policy. If he has changed his position, Government Members would welcome that. The Prime Minister—my “big boss”, as the shadow Health Secretary has described him—has said that we are

“confident that we will fulfil our goal of real-terms increases every year in the NHS.”—[Official Report, 15 December 2010; Vol. 520, c. 902.]

That will occur, regardless of whether any amendment such as that proposed by the right hon. Member for Wentworth and Dearne is included in the Bill; this is a matter of spending and this mechanism is not terribly helpful. Given those comments, I hope that he will withdraw the amendment, although I am not optimistic.

Savings Accounts and Health in Pregnancy Grant Bill

John Healey Excerpts

Tuesday 26th October 2010 Commons Chamber

[Kerry McCarthy (Bristol East) (Lab)]

It is almost obligatory for a Minister or shadow Minister rising at the Dispatch Box to respond to a debate to say that we have had a fascinating discussion, but I can genuinely say that our debate has been very engaging with lots of issues discussed and clear differences expressed between Labour Members and those on the Opposition—or, rather, Government—Benches. If only they were still in opposition; then we would not be in this position of having to try to defend measures such as these against attack from them.

At least the hon. Member for Blackpool North and Cleveleys (Paul Maynard) was brave enough to speak in the debate, unlike many of his Conservative counterparts. I do not think a single Liberal Democrat spoke, and it was very disappointing to see the lack of interest from them.

[John Healey (Wentworth and Dearne) (Lab)]

It was a lack of support.

[Kerry McCarthy]

Yes, we have to wonder whether the absence of so many Members from the Government Benches was due to a lack of interest or the fact that some of them have serious reservations about what is being proposed today. It was particularly noticeable that very few women Members from the coalition parties attended or spoke in the debate. I hope that that shows some concern on their part.

The hon. Member for Blackpool North and Cleveleys suggested that children would be better served by a piggy bank in their bedroom than a child trust fund, which shows a shocking lack of understanding of the issues. The hon. Member for Gloucester (Richard Graham) showed a similar lack of understanding by saying that an individual savings account was a better form of saving at zero cost to the taxpayer than a child trust fund. I gather from his CV that he worked for Baring Asset Management; I suspect that a background of working for Barings is not the best qualification for advising other people on how to manage their assets.

My hon. Friend the Member for Erith and Thamesmead (Teresa Pearce) made an eloquent speech in defence of the child trust fund. I want to congratulate her on becoming a grandmother today—[Interruption.] Has it not arrived yet? Well, I hope mother and baby do very well when it does finally come along. [Interruption.] Yes, there should now be a pregnant pause in my speech, as the shadow Chancellor, my right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson), says.

The hon. Member for Strangford (Jim Shannon) and his colleagues from Northern Ireland showed how important they thought the child trust fund was for the people of Northern Ireland. He mentioned that it is backed by the credit union movement, which is obviously well developed there, and that it has cross-party support. We very much valued his support on that point.

The hon. Member for Mid Norfolk (George Freeman) described the contributions of Labour Members as “hysterical”. I have to say that that word is often used by a certain type of man when women express strong views. I am sorry if this makes him uncomfortable, but Labour Members are not desiccated calculating machines and we care passionately about defending the measures that the Government are trying to abolish in this Bill. My hon. Friend the Member for Stretford and Urmston (Kate Green) gave, as always, an awe-inspiring speech. She has impeccable credentials on this point and demonstrated the eloquence that comes from truly knowing her subject and caring passionately about it.

My constituency neighbour—in all other senses he is probably from another planet from me—the hon. Member for North East Somerset (Jacob Rees-Mogg), talked about these measures involving “pitiful” amounts that are “too small” to make a difference. It may be that in the world that he inhabits these sums are pitiful, but I ask him to cross the constituency border and come to meet some of the people whom I deal with in Bristol East, because he would then learn some lessons about how much difference these small amounts of money can really make.

That was something that my hon. Friend the Member for Walthamstow (Stella Creasy) showed in a well researched speech full of statistics. She described just how investing small sums can create substantial assets for a child in its future.