National Infrastructure Plan

Jonathan Reynolds Excerpts

Wednesday 4th December 2013 Commons Chamber

[Danny Alexander]

The evaluation of all the projects is very stringent, and I ensure that that happens, but we have also taken some very difficult decisions to constrain public spending in other areas to make more investment available for infrastructure projects. I think that that is the right balance, because infrastructure projects are so important for the long-term future of the country. Under-investment in infrastructure has been a British disease for decades, and we need to end it.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

Further to the very good question from the hon. Member for High Peak (Andrew Bingham), may I politely say to the Chief Secretary that since his announcement on 27 June of the transport routes feasibility study, it has been very hard to get details even of its terms? It took me three letters to the Department for Transport just to achieve that; it was obviously very busy delivering all the numerous projects around the country. Will he reaffirm his commitment to work with not only me and the hon. Member for High Peak, but colleagues from around the affected area—from Sheffield, Barnsley, Derbyshire—because trans-Pennine connectivity is truly awful at the minute? It needs a lot more attention than it is getting, and there is huge consensus in the House about trying to improve that.

[Danny Alexander]

I certainly agree that the Department for Transport is working very hard to deliver a large number of projects. I am grateful that that is recognised by at least one Opposition Member. As I said in my remarks, we need to make sure that local views are listened to as part of feasibility studies. I am sorry if the hon. Gentleman has had difficulties in getting across such views, and I will certainly pass that point on to colleagues in the Department for Transport. I wholeheartedly agree with him about the importance of trans-Pennine connectivity. That is why we initiated the feasibility study in the first place, and I hope that he will welcome its proposals when they are made.

Co-operatives

Jonathan Reynolds Excerpts

Wednesday 3rd July 2013 Westminster Hall

[Chris Evans]

There is still a lot to work out with the Co-operative bank. These issues are serious. I am not going to deny those things, but the central thrust of what I am saying is that co-operatives have worked and there is still a lot to done about that.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

It is appropriate to raise the Co-operative bank in this debate, but when doing so we have to consider the Britannia takeover in relation to the situation that the Co-operative bank finds itself in. It would be wrong to besmirch the values or the running of the co-operative movement during this difficult time. Of course, that situation must be faced up to, but we should still consider that, considering the whole array of banking and financial institutions in this country, the co-operative movement—the Co-operative bank—is still very much up there in terms of best practice in this country, difficult as this time is.

[Chris Evans]

I agree with my hon. Friend; he is correct.

--- Later in debate ---

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I pay tribute to my hon. Friend the Member for Islwyn (Chris Evans) for securing this important debate. In his speech, he not only highlighted some of the best practice in co-operatives but made a strong argument about how many current public policy problems in this country could be addressed by taking a more co-operative approach. In particular, I thank him for mentioning co-op housing and my Co-operative Housing Tenure Bill, which I believe has huge potential to address some of the housing challenges that this country faces.

It is with great pride that I sit in Parliament as a Labour and Co-operative MP. I am fortunate to represent a constituency steeped in the co-operative tradition. The first co-operative store in my constituency was opened in Mossley in 1856, and to this day there is a Co-op store on the same site. The co-op movement was active in parts of my area well before the Labour party even existed, and my constituency, of course, is only a stone’s throw away from the co-operative movement’s spiritual home in Rochdale. It would be wrong to claim that the values championed by the co-op movement—democracy, openness, trust and social responsibility—are characteristic only of areas such as mine or south Wales, because the modern co-op movement is nationwide, but it is not mere coincidence that we started it.

I cite these things not just as an amusing historical preamble to my speech, but because it is extremely important, particularly for those of us on this side of the political divide, to remember and stay true to the political tradition that the co-operative movement represents. For many reasons, not least the success of the 1945 Labour Government in creating national institutions such as the NHS, which celebrates its 65th birthday this week, the Labour party in modern times has prioritised a statist, top-down view of politics, but we should never forget to combine that with the earlier tradition of bottom-up, grass-roots and community campaigning.

It is interesting that in recent years, through the work of the co-operative movement and through things such as community organising and living wage campaigns, we have begun to get back in touch with that tradition, which is good. We should recognise that at times, domination by the state can be as detrimental as domination by the market. The co-operative movement is a fine example of something that has always been balanced between the two.

We are obviously still in a difficult economic situation, facilitated by the failure of the Government’s plans to get things going at any level. I am of the firm belief that co-operatives are vital to the economy of this country, not just for their economic value but for their social benefits. More than 15 million people in the UK—nearly a quarter of the population—are members of a co-operative. That is no small number. It is a sign to all of us that there is more to be explored in co-operatives and the value that they can bring.

I want to discuss how co-ops can have a positive impact on our economy and the social fabric of our communities. It is timely that in a week when the Government have organised a summit with the heads of payday loan companies, this debate gives us the opportunity to showcase the value of credit unions, which offer a brilliant example of how co-operative values can have a positive effect on local economies.

More than 1 million people in the UK use credit unions. Research by Salford university on behalf of Leeds city council found that for every £1 the council invested in credit unions, there was a £10 benefit in retained income for the local economy. Manchester credit union, which serves people in my constituency, can trace part of its roots to the Hattersley area, which I represent. Today it has more than 10,000 members and lends out more than £4 million a year. In a few weeks, Cash Box, a local credit union in Hyde, will open its first high street branch, which we should celebrate.

Yet credit unions account for only a small proportion of the total consumer lending market. Given that their average annual percentage rate is 26.8%, we must ask why people are attracted to payday loan companies that get away with APRs of more than 4,000%. Something has to change. Many of us believe that payday lending in this country is out of control.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

I apologise for not being able to be here at the start of this debate. My hon. Friend is making a strong case about the importance of credit unions. Does he also agree that one thing that credit unions bring to the debate about the cost of living crisis in this country is how they help members, not just by giving loans but by giving debt advice? That is precisely the value of a co-operative mindset: to think in the long term and to think about the whole person and what they need from services. That is why credit unions are so important.

[Jonathan Reynolds]

I agree completely. We all pay tribute to my hon. Friend for her tremendous campaign against payday lending. My hon. Friend the Member for Islwyn discussed trust and the wider benefits to a person, rather than the exploitative relationship that many of us believe payday lenders have. My hon. Friend the Member for Walthamstow (Stella Creasy) is absolutely right to address the wider benefits of that approach for people and their communities.

I recognise that the Government have relaxed the rules on how credit unions can operate, allowing them to reach out to more of the community, but to echo the point made previously, I regret the Government’s refusal to accept the Co-operative party’s amendments to the Financial Services Bill, which would have helped promote mutuals and create a more competitive financial services industry. In a climate where people feel increasingly detached from the banks, credit unions based on co-operative principles help local people deal with everyday issues and make a positive impact on the local economy.

My second point involves the relatively new idea of co-operative councils and how they may be able to offer a new, innovative way of procuring local services to meet the needs of local communities in difficult financial circumstances. I read the Select Committee on Communities and Local Government report from 2012, “Mutual and Co-operative Approaches to Delivering Local Services”, particularly the evidence given by Lord Glasman, who said that giving users a stake in public services ensures that they feel that they are at the heart of local government, and that making people feel involved strengthens their relationship with their local economy.

Co-operative and mutual models help councils facilitate long-term jobs and investment and help ensure that long-term social benefit is prioritised over short-term gain. It is no coincidence that a majority of all the councils that have signed up to the co-operative council network already pay their staff a living wage, which is clearly of huge benefit to local economies.

The question that we should ask in debates such as this is how the Government can help organisations and local authorities deliver economic growth by building on best practice within the co-operative movement. One of the key conclusions of “Mutual and Co-operative Approaches to Delivering Local Services” is:

“The Government has a choice, if it wants more mutuals and co-operatives to develop: it must take action to provide support.”

Although a recent Co-ops UK report shows that the co-operative movement in this country is still growing, we would all say that the Government could do more to encourage that development. The Government talk a good game on mutuals, but in reality, many of their proposals for public services are joint venture spin-offs with private partners. Those may have merit, but they should not use the language and clothes of the co-operative movement unless that is truly what they are. The example often given is the behavioural unit in the Cabinet Office known as the nudge unit. It is often cited as a flagship Government mutual, but most of us, as well as most people in Co-ops UK and the Co-operative party, would barely consider it a mutual at all.

As we are in the middle of co-operatives fortnight, this debate is an excellent opportunity to promote the benefits of co-ops. I believe that they have a part to play in the economy of every society, from credit unions that lend to families to the running of core services and bigger ideas such as co-operative housing, which has been mentioned. The positive economic and social impact of co-ops should be celebrated, particularly after the financial crisis, when people are seeking to ensure that we never again get ourselves into the situation that we got into in 2008. I believe that all Members should do whatever they can to advance and promote the cause of co-operatives.

amendment of the law

Jonathan Reynolds Excerpts

Monday 25th March 2013 Commons Chamber

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

It is a pleasure to follow the hon. Member for Wolverhampton South West (Paul Uppal). He asked us about the debt to GDP percentage ratio. Looking at the 1996-97 financial year, after 10 years of a Labour Government we not only had a lower debt to GDP percentage ratio, but our deficit was lower.

[Paul Uppal]

I appreciate the hon. Gentleman’s response, but does he not accept that for the first half of that Labour Government they stuck to Conservative spending plans laid down by the previous Conservative Chancellor?

[Jonathan Reynolds]

In the rare years since the end of the second world war when there has been a surplus, not a deficit, it is Labour Governments who have traditionally delivered that. That proves we are much better at the national finances, as well as at providing for the people of this country.

[David Wright]

Will my hon. Friend give way?

[Jonathan Reynolds]

I will; I am getting a lot of extra time, here.

[David Wright]

Does my hon. Friend recall that the Conservatives were wedded to our spending plans right up until the global recession hit? They have never explained which action they would not have taken to save the banks.

[Jonathan Reynolds]

My hon. Friend is absolutely right. Just last week, when listening to the Chancellor deliver his fourth Budget and its dreadful assessment of the state of the British economy, it was hard to believe that if everything had gone to plan for him and we had managed to pull off what he proposed in the emergency Budget, we would be well down the road to balancing the books and debt would be peaking this year as a percentage of GDP. Such a plan now seems nothing more than a fantasy.

Larry Summers, the distinguished American economist and Treasury Secretary under President Clinton, told a conference I attended last year about the response he gives when asked what one event would make him completely reassess everything he believes to be true about modern economics. He said that since 2010, his answer has been, “If the UK Government manage to bring about a rapid recovery through their deficit reduction plan.” I thought that was quite a bold statement when I first heard it, but of course, Mr Summers knew what he was talking about.

When the Chancellor took office in 2010 and first came to the House, he said we would have five years of pain to eradicate the deficit, but then we would have done it. Last week, he came back to the House to say that there will be another five years of pain, and then we will have eradicated the deficit—maybe. There has been almost no progress, but the pain for our constituents has been very real.

Stripping away all the partisanship in this Chamber, there are surely Government Members who thought last week, “What if we had done things slightly differently?” The truth behind all that misplaced rhetoric in 2010 about the UK being on the verge of bankruptcy or that we would be the next Greece, all but destroyed business and consumer confidence, before the measures in the emergency Budget were even on the statute book. When the Government’s agenda did bite, the combination of that, the collapse of confidence they had already fostered and the worsening eurozone produced an economic disaster. We all see the casualties of that every day in our constituencies. We needed more from this Budget.

There are three issues I would like to address in the brief time available to me, the first of which is manufacturing. I agree entirely with my hon. Friend the Member for Huddersfield (Mr Sheerman) that this Government have done some good things in that regard. I am pleased that there are Members on both sides of the House who, like me, are passionate about manufacturing, a sector in which a fifth of my constituents still work. However, the Budget speech made no mention of the “march of the makers”, and it did not address the two main issues that still remain: that such businesses cannot borrow money when they need to; and that they feel that the Government do not give them sufficient strategic direction, be it on renewable energy, High Speed 2, aviation policy or anything else. I hope the Chancellor has had time to read the excellent report by the former director of the Institute of Directors, Sir George Cox, on short-termism in the UK economy. I hope he will take on board its main recommendation: that we need to develop a coherent and workable modern industrial strategy if we are to remain competitive. I agree with Government Members when they say we are in a global race, but at the moment we do not even have a map of the course.

Secondly, despite the job creation record that Government Members like to emphasise, unemployment, particularly youth unemployment, is still a major problem. We know enough about the Work programme to know that it has not been a success. Due to the combination of a lack of jobs generally and an inadequate payments system, it has not had the impact it should have had. We had on the statute book a range of measures that were getting people back into work; the future jobs fund, for example, should never have been dropped. Much of the Government’s borrowing—they announced £245 billion on top of their 2010 figure—is paying for the costs of failure. It is not unreasonable to wonder what might have happened if we had invested a fraction of that sum in putting people back into work.

My third point is about the equity of the Government’s agenda and how things have been shared, because the lower down the income scale people are, the harder they have been hit. The contrast between the tax cut for millionaires in the next few days and the bedroom tax is startling. The latter is a tax on people struggling with their child’s disability, struggling with their own or their partner’s ill health, or struggling to be a good parent in the event of the breakdown of their relationship. The fact that it may lead to higher costs for the Exchequer, as families are forced to move into higher-cost private accommodation, flies in the face of all reason. On this measure, more than any other, we need another famous Budget U-turn.

Let me deal with some specific Budget measures. I welcome the concessions on fuel duty, which does have a real impact on household income, and the scrapping of the beer tax escalator, which will benefit real ale towns such as Stalybridge. The nod towards the Heseltine report is also good, but it could have gone so much further. Had the Government pursued the previous Government’s Total Place community budgeting reforms, they could have improved public services while saving billions of pounds. However, Lord Heseltine’s logic that regional leaders are best placed to determine spending which will lever in private sector investment is surely correct.

I also welcome the commitment to spend 0.7% of our GDP on international aid, and here I have the opportunity to qualify remarks that got me on to page 2 of The Sun a few weeks ago. I am a supporter of international aid, but we have to acknowledge that it is contentious to increase it when our constituents are facing hardship. I just want the focus to be on what aid will achieve, rather than simply patting ourselves on the back for what goes into it. That is a reasonable way to build support for aid among the British people.

There is no doubt that whoever was in charge right now would face difficult choices about where the pain that the British people face should lie. However, the deal we have to offer them is that the pain will be worth it, and that the distribution of that pain will be equitable and will show empathy with people’s lives. On all those criteria the Chancellor has failed, and it is surely time for a new approach.

Oral Answers to Questions

Jonathan Reynolds Excerpts

Tuesday 11th December 2012 Commons Chamber

[Danny Alexander]

Significant progress is being made in that respect. We have seen significant investment in Thames Water, for example, by overseas investment funds. We announced in the autumn statement some funding for junction 30 of the M25, which is part of ensuring a significant investment from people in Dubai in a major port facility near London. No doubt there will be further such announcements to make in future.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

In my constituency, the claimant count is just short of 3,000, double what it was five years ago. Does the Treasury accept that it is the rise in long-term unemployment and the failure of the Work programme that has resulted in the benefits bill rising so much this year?

[Danny Alexander]

No, I do not accept that. As I said in answer to the hon. Member for Edinburgh East (Sheila Gilmore), who has taken a great interest in these matters, the Work programme is a great success in getting people off benefits and into job starts, but not necessarily through job outcomes. Over 1 million jobs have been created in the past two and a half years, so that there are now a record number of people in employment in this country. He should welcome that, not criticise it.

The Economy

Jonathan Reynolds Excerpts

Tuesday 11th December 2012 Commons Chamber

[Kwasi Kwarteng]

That is right. Many historians will be needed fully to plumb the depths of the goings-on of that Administration—the level of incompetence, the level of secrecy, the high spending, the culture of fear that prevailed in the Treasury for much of that time. It will need many people to investigate that.

It was always the function of the British Treasury, as my hon. Friend well knows, to have a very conservative approach to public finances. It was always the tradition that we in the British Treasury tried to match expenditure to income.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

I am listening carefully to the hon. Gentleman, but I think his historical facts are a little distorted. There has been some sort of deficit in nearly every year that we have had a Conservative Government since the end of the second world war. If he looks at the period 10 years on from 1996-97, he will see that both the debt and the deficit were lower after 10 years of Labour government. What he is saying is simply not correct.

[Kwasi Kwarteng]

I appreciate the hon. Gentleman’s intervention, but if he looks at the deficit and the direction of travel and what happened in the 1980s, he will see that the deficit came down, again after a period of Labour mismanagement, every single year from 1979 to 1989, and that the budget was balanced in 1989. It was only as a consequence of the recession that we went back into deficit, as a Keynesian economist would tell him.

Let us look at what has happened over the past three years. The Government came into office when the eurozone was in crisis and there was a massive run on Greek sovereign bonds. The Chancellor’s approach, quite rightly, was to make the deficit our No. 1 priority. That, in effect, calmed the markets. Opposition Members might scoff at the bond markets, but they are very powerful. It was particularly interesting to note that in the six weeks before the general election British gilts were actually rising in value and yields were falling, because the markets rightly believed that Labour would be turfed out of office. In anticipation of that happy event, and before the quantitative easing, people started buying British gilts.

The Chancellor’s approach to dealing with the deficit is exactly the right one, because it followed the insight that we have to deal with spending. All countries in the western world have to do that. That is what the fiscal cliff debate in America is about, because it understands that spending has to be on the table; the issue is the degree to which revenue should be on the table. It has a mature approach to public spending. It is only the Labour party that lives in this Shangri-La world in which we can carry on spending and borrowing money with abandon and making the crisis even worse.

--- Later in debate ---

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

May I say what a pleasure it is to follow the maiden speeches by our new colleagues, my hon. Friends the Members for Rotherham (Sarah Champion), for Croydon North (Steve Reed), and for Middlesbrough (Andy McDonald)? I think that I speak for everyone on the Opposition Benches when I say that they were superb contributions and that the arrival of six new Labour MPs, in all, has given us a tantalising glimpse of what life will be like in 2015 when Labour again has a parliamentary majority.

There is no doubt that the economy is the defining issue of this Parliament and that the deficit reduction plan is the defining measure by which this Government will be judged. In that context, last week’s autumn statement showed us that it is shocking how far they have fallen short, on the basis of their own yardstick, in terms of the progress they have made so far. In the emergency budget after the election, the Chancellor told us that he would need, first, four and then five years to sort the deficit out. He said that we could not afford to do it any slower and ease the pain, as Labour wanted. He said that it would be painful but it would be worth it. Last week, two and half years in, with hundreds of thousands of people made unemployed and the stripping out of the Army, the police, council services and everything else, he told us: “I need another five years.” He told us that we have almost nothing to show for the pain our constituents have endured so far.

Whether people are supporters of the Chancellor or not, the fact is that every time he comes to the House to report on his progress, he has to tell us that the economy has not grown as he had hoped since the last time he was here; that he is planning, more often than not, to borrow more than the last time he was here; that spending on public services will be cut more than the last time he was here; and that future growth will be less than he expected the last time he was here. Crucially, we now know that without the Treasury’s accounting tricks, borrowing would be higher this year than last year. This is a Chancellor who has failed, but it is our constituents who have to pay the price of that failure.

[Lisa Nandy (Wigan) (Lab)]

Austerity has wreaked havoc in areas such as Wigan precisely because the public and private sectors are so interdependent. The huge cuts to the public sector have had an appalling impact on the private sector as well. Does my hon. Friend share my disappointment that the Chancellor has refused to acknowledge that and refused to change course, as we have urged him to do? Having listened to the hon. Member for South Dorset (Richard Drax), it seems to me not only that the Government refuse to acknowledge that, but that they simply do not understand it.

[Jonathan Reynolds]

I completely agree. It is self-evident. The economy has grown by just 0.6% in the past two years and this year it has shrunk by 0.1%, with talk of the UK yo-yoing back into recession for the third time as the recovery continues to falter.

Without any significant growth, the Chancellor will fail to meet his own targets. Borrowing is only lower this year because the Chancellor has included on the balance sheet the £3.5 billion from the auction of 4G. That would make sense if the 4G mobile spectrum had indeed been sold for that amount, but the auction has not taken place yet. That means that the Chancellor has balanced the books with money that he simply does not have. If I asked my bank manager to accept that I had paid off a chunk of my mortgage as long as she factored in the sale of my car, but that I had not actually sold it yet, she would laugh at me. We should be no more convinced by the Chancellor’s actions.

Without the addition of the estimated windfall from the 4G auction, borrowing this year would actually be £2 billion higher than last year. Despite the promises that the austerity measures would stabilise the economy, this year the Government will borrow more—£212 billion more—than they had planned. Coalition MPs frequently warn us of the dangers of borrowing too much, but they never seem keen to take their own medicine. The Government’s deficit reduction plan is not working and it is simply mismanagement to pretend otherwise.

Deficit reduction is not the only promise that the Chancellor has broken. As well as telling us that austerity would be the solution, he famously promised that we are all in this together. We are not all in this together. The Government have given a £3 billion handout to the richest people in the country, yet a family with two children where one parent earns a relatively modest income of, for example, £20,000 are the ones who lose out.

Furthermore, the Government’s claim that the 50p tax rate meant that millionaires fled the country does not stand up to scrutiny. A simple look at the figures shows that the overall number of taxpayers remained almost unchanged between 2009-10 and 2010-11. Following the introduction of the 50p rate, there may have been a deterioration in declared incomes above £1 million, but that was without doubt the result of the wealthy forestalling their income from one tax period to another. The Government should have kept the rate for the next tax year to ascertain exactly what it brought in, because, goodness knows, we needed the money.

It is the same unequal story right across the country: it is Labour-run councils, particularly those in the north of the country, that bear the brunt of the cuts. On average, Labour-run authorities have seen their budget cut by £107 per person, which is three times higher than the figure for Conservative town halls. Councils will not receive detailed information for their 2014-15 budgets until later this month, but nationally they know that they will face cuts of £445 million in that financial year. Councils such as Tameside face an anxious wait to see whether that reduction will be applied equally or whether councils such as ours will again have to suffer disproportionately.

The situation in adult social care in particular is of great concern to me. I meet people in my surgeries who are in severe need of help, but simply not enough money is provided for social care in this country to meet that need. I have met people with caring responsibilities for adults and children who have told me of their sheer desperation at the prospect of their respite care being taken away. We need to do something urgently to properly support those people.

On unemployment, in my constituency 10 jobseekers are now chasing every advertised vacancy. A good portion of them are over 50 years old and starting to wonder if they will ever work again. Long-term unemployment is rising across the country and nearly 1 million young people are out of work. That is the principal cause of the Government’s borrowing problems and the OBR forecasts that the claimant count will continue to go up.

The Work programme was the Government’s attempt to get people off welfare and into work, but a successful welfare-to-work programme is not possible if there is no work available. According to the Government’s own statistics, just two out of 100 participants were still in work after six months, which means that the chance of getting a job was higher if people did not take part in the scheme. Members should contrast that with the success of the future jobs fund, run by the previous Government and spearheaded by the former Member of Parliament for Stalybridge and Hyde, James Purnell. Unlike the job-hunting support offered through the Work programme, the future jobs fund provided six months’ real work for every participant. It also had long-lasting results: in Tameside, half of those who took part went on to secure permanent employment. Of course, if we are to cut the deficit, we need to get people back into work—that is vital—but the turnaround is not just about the nation’s finances; it is also about an individual’s pride. I therefore urge the Government to look again at the success of the future jobs fund as they try to move forward from the failure of the Work programme.

For those who want to work, but have been failed by the lack of jobs and the impotence of the Work programme, there was even worse news last week. The Chancellor announced that they will be made poorer in real terms because their benefits will not be increased in line with inflation. That will cause hardship not just for the unemployed, but for a great many people in work. We heard today in Treasury questions that the majority of the people who will be affected are in work.

If that had been done as part of the Chancellor asking us to tighten our belts, it would be one thing, but the autumn statement in its totality represents a net giveaway for the next three financial years. It was not the Chancellor asking for more from the British people. The Chancellor can afford a tax cut for millionaires and a cut in corporation tax, but he asks people who get out of bed and go to work on low wages to pay for it. That is a disgrace.

The autumn statement is proof that the economic policies of the Conservative Government are simply not working. We cannot cut the deficit effectively unless the economy is growing, and the Government are not doing enough to foster economic growth. Today, while we talk about taxes, growth, double dips and triple dips, let us not fall into the trap of thinking that this is a debate purely about numbers; this debate is and should be firmly rooted in the increasing struggles of the people we all represent: the growing number of people who are accessing food banks, those who are choosing between eating and heating, and those who live with the fear that their homes may soon be repossessed. Those people are the economic reality of our country and we owe it to them to run our economy better than we are doing at present.

Budget Leak Inquiry

Jonathan Reynolds Excerpts

Thursday 22nd March 2012 Commons Chamber

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

Does the Minister agree that, if any profiteering took place due to leaking the announcement on stamp duty land tax, it would be morally repugnant? What action will he take if his secret leak inquiry finds evidence that it took place?

[Mr Gauke]

We ought to put the matter into proportion. The idea that someone would be able to identify a property and exchange contracts in the course of a morning is highly unlikely. As I have said, I have no reason to believe that the Treasury was in any way involved in briefing that particular item, but there was a lot of speculation that there would be something on properties, and that speculation turned out to be correct.

Oral Answers to Questions

Jonathan Reynolds Excerpts

Tuesday 6th March 2012 Commons Chamber

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

4. What assessment he has made of the effect on the economy of changes to the working tax credit to be introduced in April 2012.

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

6. What assessment he has made of the effect on the economy of changes to the working tax credit to be introduced in April 2012.

--- Later in debate ---

[Miss Smith]

I cannot comment on that particular set of circumstances, as the hon. Lady will appreciate, but the fact is that about 80% of households with children will see their tax credit awards rise. It was the previous Government who allowed nine out of 10 households with children to be eligible for tax credits. That was unsustainable and uncontrolled spending.

[Jonathan Reynolds]

The Minister will remember that in an Adjournment debate last November I warned her about the devastating impact that the cuts would have, particularly because the hours were simply not available for people to increase the number they worked to meet the eligibility criteria. This week, a coalition of charities has written to the Government begging them to postpone these devastating changes. May I ask her and the Chancellor to meet some of the families affected so that they can understand what the impact will be on them from April?

[Miss Smith]

Any elected MP will regularly meet constituents in their constituency and discuss a range of matters. I certainly do that, and when I have met those affected in my constituency—whether as a constituency MP or, most recently, as a Minister—I have explained the fairness of this measure, which is that it puts couples on a par with lone parents. Where is the Opposition’s concern for single mums and dads, who have always had to face that challenge?

Youth Unemployment and Bank Bonuses

Jonathan Reynolds Excerpts

Monday 23rd January 2012 Commons Chamber

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

If the future jobs fund was not a success, why have the Government introduced the youth contract, and is it not simply a watered-down future jobs fund?

[Richard Graham]

Let me be clear that I was not writing off the future jobs fund—I did say that it was useful. However, there are better ways of dealing with these issues, which the Government have identified and are going ahead with.

I was coming to a point that will answer the hon. Gentleman’s query about our alternatives to the hon. Lady’s four main ideas about how the problem of youth unemployment can be solved. I believe that we need a mixture of different things. We need to allow manufacturers to thrive again by reducing corporate tax and the bureaucracy that surrounds their activities. We need to encourage their entrepreneurial spirit. Happily, and by chance, I can show hon. Members an excellent packet of tea that is made in Gloucester and exported to China. I also have in my pocket an aluminium pedal made on the Bristol road in Gloucester and exported to Australia. These examples show that the entrepreneurial spirit is alive and kicking in my constituency and I hope that all Members’ constituencies have similar companies doing great things. Both the companies I have mentioned are looking to take on apprenticeships this year. That speaks to the point made by my hon. Friend the Member for Central Devon (Mel Stride) about the heavy support and increased numbers of apprenticeships that the Government are delivering.

We also need incentives for small and medium-sized enterprises and I am very grateful that the debate I led in Westminster Hall last year, in which many hon. Members spoke up in favour of SMEs, was heard by the Government, who have introduced those incentives so that SMEs can take on apprentices. If every member of the Federation of Small Businesses in the land took on one apprentice, the largest part of the problem of youth unemployment would be solved. Similarly, we can all lead by example by taking on our own apprentice. I wonder how many Members from the Labour party have taken on an apprentice. We can also encourage businesses in our communities to take on apprentices and we can create apprenticeship fairs and job fairs. I am delighted to be welcoming the employment Minister to the skillsfest in Gloucester on 9 February, when he will see what we are doing to promote all aspects of the Government’s programme and will be quizzed by businesses on what more he can do to help them to grow.

The motion mixes an unacceptable fact—high youth unemployment—with an unpopular sector: banking. It is my strong belief that hammering our financial services sector, which is vital to this country, and destroying jobs in it will not help to create jobs elsewhere, so I propose, as an alternative, an idea that I believe would resonate across the land. It came to me when opening a regenerated bank branch in Gloucester two months ago. It would enable banks to reconnect with their customers and grow cost-efficiently, and it would support our communities by reducing youth unemployment. The idea is simple: every bank in the land should take on one apprentice in each of its branches. That would include the Co-operative Bank, which is shortly, I hope, to take over the Cheltenham & Gloucester branches from Lloyds. If the financial sector pursued that idea, Members in all parts of the House, instead of haranguing bankers, would be able to praise them for their role in solving the problem of youth unemployment. Some talks have already taken place; I hope that there will be more. I commend that policy, rather than the motion before us, to the Minister.

Working Tax Credits

Jonathan Reynolds Excerpts

Wednesday 30th November 2011 Westminster Hall

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

It is a pleasure to have been able to secure a debate on which I have been trying to be successful in the ballot for some time. It is a pleasure to serve under your chairmanship, Mr. Robertson, and to welcome the Minister to her relatively new job. I warmly congratulate her on it. She is surely further proof that all the best parliamentary careers begin in the Whips Office.

I am pleased to see a number of other hon. Members present. Several changes have been announced to working tax credit, not least those yesterday in the autumn statement. I will try to accommodate any colleagues who might wish to highlight their concerns or those of their constituents. For my part, in the time available, I want to discuss the changes to working tax credit that were announced in the spending review in October 2010. Specifically, from April 2012, the total weekly hours that a couple with children need to work in order to qualify for working tax credit will go up from 16 to 24, with one partner needing to work at least 16 hours a week. At present, couples whose annual income is less than about £17,700 a year qualify for tax credit if at least one of the couple works 16 hours a week. I want to talk about what these changes will mean for working families, how many of those families will be affected and what it will mean for couples where one partner has caring responsibilities.

[Ann Coffey (Stockport) (Lab)]

I congratulate my hon. Friend on getting this important debate. We are all sorry that it is not longer.

My hon. Friend might be interested to know that I recently sent out a survey to find out about the child care arrangements of parents in my constituency. Interestingly, a number of grandparents replied; they all made the similar point that, without the free child care that they provided, parents would be facing mounting debts because of the squeeze on their family incomes and long-term financial problems. Does he agree that the Government have not properly thought through the cumulative affect of their policies on families?

[Jonathan Reynolds]

I agree with my hon. Friend. If we had had one of the longer slots for debate, perhaps we could have discussed in more detail the interaction between working tax credit, child tax credit and the child care allowance. The interconnection between them is crucial. I shall ask the Minister near the end of the debate what transitional arrangements could be considered for some of those who are most badly affected by the changes.

Working tax credit has played an important part in recent development of the welfare state. When working tax credit was introduced in 2003, it balanced the goal of eradicating child poverty with promoting work. It currently offers around £4,000 for families on lower incomes and aims to ensure that families will always be better off in work. Until it was introduced, too many families had complained that going out to work might leave them less well off financially. Working tax credit was introduced to ensure that work always paid. It did so much more. Encouraging people back into work concerns more than just the contents of their pay packet. Work is about skills.

[Bill Esterson (Sefton Central) (Lab)]

My hon. Friend has done well to secure this debate. He is talking about the difficulties of getting into work. This is particularly true for part-time staff. The change in the threshold from 16 to 24 hours is of great concern to people in my constituency, particularly those in the retail sector, where shifts will not be available because of the dire economic situation we face. Those people are among the 200,000 families who potentially will lose up to £4,000. This measure could force families back on to benefit and out of work. Surely this is not the right way to proceed.

[Jonathan Reynolds]

I agree with my hon. Friend. It is specifically the impact on people working in, for instance, the retail sector that has prompted me to apply for this debate. I am sure that my hon. Friend and I agree that we do not want to see anything that makes it potentially less attractive for people to go out to work.

Couples and single parents who currently work for at least 16 hours a week are eligible for working tax credit. According to the Government’s proposals, from April couples will have to work an extra eight hours in order to qualify. Failure to secure additional work will exempt claimants from the credit completely. The reality is that about 280,000 families in receipt of working tax credit currently work less than 24 hours a week. Under the proposals, they could lose up to £4,000 a year.

[Stephen Timms (East Ham) (Lab)]

This is a very important point. Will my hon. Friend confirm that they will lose not only their working tax credit, as he said, but their child care tax credits if they use child care, as many will? They could lose another couple of thousand pounds there.

[Jonathan Reynolds]

Absolutely. They stand to lose even more when child care is taken into consideration. There is an internal tension between the Government’s stated ambition on universal credit and these actions. It would be interesting to hear the Minister’s views on how those two aspects interplay.

[Mr Andrew Smith (Oxford East) (Lab)]

I join the chorus of congratulations extended to my hon. Friend. I hope that he gets time to make some points between interventions.

Does my hon. Friend agree that this represents an incredible retreat from, and abandonment of, the historic pledge by the previous Government to eradicate child poverty within a generation? Will this not have the opposite effect, in terms of the welfare to work agenda—perversely forcing some people to go back on to benefit because of all the losses they will suffer, as hon. Members have said?

[Jonathan Reynolds]

Indeed. A family currently on £18,000 a year could lose £4,000, which is a huge loss. It will, as I understand it, push as many as half a million children back below the poverty line.

The Minister may say to me that the simple solution is for claimants to work an additional eight hours. For some people in receipt of working tax credit, the demands of caring, child care or limited health may make it difficult for them to work those additional hours. These changes make no allowance for that.

I was first alerted to the scope of this issue when I was contacted by a resident in my constituency who was hit by a car 11 years ago. He was previously employed as a printer and would routinely work 12-hour shifts a day for his family. He has not been able to work since the accident and needs some degree of care. His wife, as well as caring for her husband and their young daughter, works 17 hours a week in a before and after school club. She cannot increase her hours at the school because the club runs only for those 17 hours a week. With the caring responsibilities for her husband and daughter, she would struggle to find a second job with sufficiently flexible hours. The money they receive though working tax credit makes a real difference. Under the Government’s plan they would lose it.

I acknowledge that, rightly, the Government do not plan to increase the hours of work required by single parents, in recognition of the additional pressures they face. However, they also need to consider the impact that these changes will have on families where one member is disabled, or one member has a caring responsibility, or both. They should urgently consider whether additional exemptions should be applied. Indeed, I put a range of parliamentary questions over the past six months to the Exchequer Secretary, to try to ascertain how many of the 280,000 couples that this will affect have a partner with caring responsibilities or a disability, and to get a more detailed breakdown. However, the Government could not provide much of that information, and what they could provide was extremely limited.

As I have said, the promotion of work is at the heart of the working tax credit scheme. The principle of asking people to take on work to qualify for working tax credits is a positive one. But if the amount of work we require is unrealistic, it will hurt rather than help some of the most vulnerable people in our society.

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

I thank my hon. Friend for giving way and for securing this debate. I am sure he will be aware of this, but will he comment on the point made by the trade union USDAW that 78% of the couples it has surveyed who work between 16 and 24 hours say that there is no way in which they could increase their working hours, and that the retail sector is particularly squeezed at present, meaning that overtime that may have been guaranteed in the run-up to Christmas in previous years is no longer available ?

[Jonathan Reynolds]

Absolutely, and I am very grateful to USDAW for its support in giving me research and case studies relevant to this debate, because these proposed changes will particularly impact on the retail and service sectors, where there is a prevalence of part-time work. They are rightly concerned about the impact it will have on their members. I have seen their tax credits survey, which suggests that 79% of their members who receive working tax credit would not be able to secure additional hours from their employers before next April. Indeed, they have already talked to members who have repeatedly tried to secure extra hours from their employers, but been told that the work is not available. Where additional hours are available they are often late at night or very early in the morning. The lack of public transport means that members cannot take them.

An added complication is that there is often a mismatch in the retail sector between the hours staff are contracted to work and the hours they actually work. In recent years there has been a trend for retailers to cut the hours staff are contracted to work, with an expectation that they will work longer, additional hours at busy periods. That means that under the proposed changes couples actually working more than the 24 hours that makes them eligible for working tax credit might not get it because not all of their hours are contracted.

I put it to the Minister that that would be completely unconscionable, and I respectfully request that she address this point when she responds to me later in the debate.

I do not yet believe that the full impact of these changes has been considered or identified by the Government. The Government claim they are still committed to ending child poverty, but this is a measure that has the potential to push many families well below the poverty line. It is a regressive step that will concern many Members.

I would hope that the withdrawal of working tax credit from those who could not secure additional work would not prompt a return to the old idea that work will not pay. But that is the risk, and that would be the tragedy, not only for the employees concerned but for the parts of industries that rely on a flexible work force willing to work just a few hours a week.

In these tough economic times I would rather that the Government reviewed their plans, but I do not think that they will do that. Instead, may I implore them to do two things? I ask them, first, to exempt couples where one partner is either disabled or a carer from these changes; and, secondly, to increase awareness of the change among employers and employees, to ensure that they have the best chance of working together so that they can fulfil the requirements for eligibility for working tax credit payments. In addition, if these changes are to go ahead, will the Minister consider what help the Government can give to the most badly affected couples in terms of transitional arrangements?

This change will impact on the lives of many thousands of struggling families, many of whom are my constituents, and I am extremely grateful to be able to highlight this matter before the House this afternoon.

--- Later in debate ---

[Miss Smith]

Regrettably, I thought that the right hon. Gentleman wanted to respond to why higher earners would have received tax credits under the previous system, but I will come to his point in the bulk of my comments.

[Jonathan Reynolds]

May I bring the Minister back to the specific move from 16 to 24 hours? The figures I have from the Treasury estimate that this change will save £380 million a year. Yes, that is a substantial sum, but the context is one of a Government now borrowing £158 billion more over this Parliament than they said they would just a year ago. If a family’s income goes from £18,000 a year to £14,000, based on this change, will they not feel some angst at a statement that focuses only on higher earners having their tax credits taken away and the wider economic impact? To go from £18,000 to £14,000 is a very big change for a family in my constituency.

[Miss Smith]

Let me move on to the change that the hon. Gentleman highlighted, which is the move from 16 to 24 hours. As he explained, under the current system couples with children can claim working tax credit if one partner works 16 hours a week. The hon. Gentleman will know that at the moment lone parents must also work at least 16 hours to qualify for the working tax credit. As he said, however, under the 2010 spending review, from April next year couples with children will have to work 24 hours between them, with at least one partner working 16. In response to the interventions made, this change makes the system fairer by reducing that disparity between couples and lone parents. I would not like to stand here to defend why those two groups should be treated differently. I can see the hon. Member for Stalybridge and Hyde twitching but I must move on in order to tackle two of the points he specifically asked me to address.

There are exemptions where couples may have a limited capability to work. That means that couples with children will continue to qualify for working tax credit where one member works at least 16 hours a week and that person is eligible for the working tax credit disability element. In addition, there will be an exemption for some couples with children where only one member works at least 16 hours a week and the other adult does not work, for example where one adult is incapacitated. A couple with children will continue to qualify for working tax credit at 16 hours if one partner is in receipt of disability living allowance.

Moving on to how else we can increase support for lower and middle income earners and improve the rewards to work. On work incentives, which I said I would cover, universal credit has already been mentioned and it is in that area—

--- Later in debate ---

[Miss Smith]

We need to move in one direction in this economy, which is to tackle the deficit. I made that point very strongly up front. We must also look to major reforms such as the universal credit, and perhaps before that the Work programme in some cases. There are a number of examples that I look forward to the Government delivering. I have given some; let me give some more that will also answer the points made about what people might get in return.

The Government are investing a further £380 million by 2014-15 to extend the offer of 15 hours of free education and care a week for disadvantaged two-year-olds, which will cover an extra 130,000 children. That is only one element of what the Government will do to help working families. Support has been focused on those on out-of-work benefits—this is a key point that I have no doubt the right hon. Member for East Ham will appreciate. They need greater protection against rising prices than people on working tax credit who are, of course, not solely reliant on this income; they also have income from work, which is key. I do, though, take the points made regarding the difficulty of getting a job in the palm of one’s hand before asking for it.

The Government, however, remains committed to making work pay. As the Chancellor made clear yesterday, the best way to help working people is by taking them out of tax altogether. In April 2012 we will make a £630 increase in the income tax personal allowance, taking it to £8,105. This is in addition to the £1,000 increase in April this year. Together, these increases will benefit 25 million individuals and take 1.1 million low-income individuals out of tax from April 2012.

As I started to articulate, there is then the reform to which I look forward. Universal credit will unify the complex current system of means-tested out-of-work benefits, tax credits and support for housing into one single payment. The award will be withdrawn at a single rate, with the aim of offering a smooth transition into work and encouraging progression into work.

For parents currently on working tax credit, and in the future, the Government continue to provide support for 70% of child care costs—I am conscious that hon. Members have mentioned child care today. That goes up to a weekly limit of £175 for families with one child and £300 for two or more children. Under the universal credit this support will be extended to those working fewer than 16 hours, which will allow 80,000 additional families to receive help with child care costs. That will give second earners and lone parents, typically women, a stronger incentive to work, and I am proud of all those measures.

I shall deal briefly with child poverty and the way in which the Government see it before concluding. Poverty is about more than income; it is about a lack of opportunity, aspiration and stability. We are keen to tackle its root causes, and ensure that children born in low-income families realise their full potential. I have suggested measures that will help, both in the short and long term, but policy in this area has been distorted by a preoccupation with counting the number of children below a certain line, rather than moving families over a real line, as opposed to an imaginary one.

[Jonathan Reynolds]

Surely, that is the purpose of working tax credits. As has been said, with universal credit, the Government are going in the opposite direction from the policy that the Minister is pursuing; it disincentives people who wish to go out to work, which goes against what she said about the wider impact and causes of poverty. Incentivising people to go into the workplace is the best solution, but this policy moves in completely the opposite direction.

[Miss Smith]

Indeed, we need to incentivise people to go into the workplace. However, we have less money than we thought, and we have less money than any previous Government cared to highlight. We have to prioritise who we spend that money on. I would rather give it to people who have no other source of work—in other words, those on out-of-work benefits, rather than those on in-work benefits. That is a sensible principle.

To conclude, the Government have had to take urgent action to tackle what is unsustainable in broader economic terms as well as an unsustainable Welfare Reform Bill. Spending on tax credits has increased from £18 billion in 2003-04 to an estimated £30 billion last year, which is unsustainable and unfair, given the examples that I have mentioned. If we look at the cumulative impact on households of tax, tax credits and benefit reforms introduced both yesterday and before, the top income decile sees the largest reduction in income, both in cash terms and as a percentage of net income. I will take no lectures from the Opposition on believing in more spending, more borrowing and more debt, spent unsustainably and spent unfairly across the income range. I do not think that any working household will thank them for that.

Northern Rock

Jonathan Reynolds Excerpts

Monday 21st November 2011 Commons Chamber

[Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)]

Like my fellow Co-operative party MPs, I strongly wanted to see a mutual solution for Northern Rock. The Government’s reasons for not going down that route seem to change every time the issue comes before the House. The Government were happy to sell at a discount and use vendor financing, but are not those the very reasons why the Government used to say they could not proceed with remutualisation? Further to that, the Minister’s statement that “no mutual came forward with a bid” suggests that he does not really understand the issue at all. Surely the point of a mutual is that the members themselves would buy it out and become the owners.

[Mr Hoban]

I question whether the hon. Gentleman himself understands mutuals. There are situations where mutuals come forward and make bids. We have seen the consolidation of the mutual sector in recent years as a consequence of the financial crisis, so there are different ways in which a mutual option could arise. Let me reassure the hon. Gentleman and his hon. Friends. We looked closely at the mutualisation option, and we were open in reaching out to Mutuo, Adrian Coles, the Building Societies Association and Jonathan Michie to encourage them to come forward with a workable solution for how Northern Rock could be remutualised. No one came forward with such a solution. That is why this deal is the best one for the taxpayer.