Enterprise Bill [Lords]

Kevin Hollinrake Excerpts

Wednesday 9th March 2016 Commons Chamber

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Before entering this place, I was in business for 25 years. It is absolutely right to consider the needs of large businesses and, of course, small businesses, and the family lives of workers, but, as all business people know, the customer comes first. If the customer wants to shop at other times at the weekend, should they not be allowed to do so, and is the pilot not the right way to take it forward? Members on both sides of the House say that customers do not want this policy, but should we not ask them, through a pilot, to see if they actually do want this and to see the effect that it has on small businesses in particular?

[Brandon Lewis]

My hon. Friend gets to the heart of a key issue: what is right for the wider community and for our consumers and residents? To build on his very direct point, let me add that I spoke to somebody just last week who made a very salient point: as someone who works in the health service six days a week, they really want this wider opportunity on a Sunday to shop in the way everybody else does on a Saturday, a Friday and a Thursday, and to spend time with their families in these shopping areas, supporting their high street, as many of us can on a Saturday. I am sure that there are many Members of this House who work hard on a Saturday and who might also take advantage of this freedom on a Sunday.

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[Bill Esterson]

If the hon. Gentleman wants to organise an Adjournment debate about the people of Carlisle, I am sure the Minister will answer him. The reality is, however, that if one—[Hon. Members: “Answer!”] If hon. Members will let me answer the question, I will. If one council changes its rules, neighbouring authorities will feel under pressure to do exactly the same thing. They will have no choice. If a Tesco opens on a Sunday until 10 o’clock at night, then the Tesco, Asda or Morrisons in the borough next door will have to open until that time, too.

[Kevin Hollinrake]

Will the hon. Gentleman give way?

[Bill Esterson]

I am going to make some progress, because unfortunately the Minister took up so much time.

Oral Answers to Questions

Kevin Hollinrake Excerpts

Tuesday 1st March 2016 Commons Chamber

[Damian Hinds]

I thank the hon. Lady. I would of course be very happy to meet her and the company to see what proposal it would put forward.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

An application for shale gas exploration in my constituency may result in many millions of pounds in community benefits. Does the Minister agree that those community benefits should go to the communities most affected by development?

[Damian Hinds]

My right hon. Friend the Chancellor has said that the shale wealth fund could deliver up to £1 billion of benefits to communities hosting shale gas development. This is in addition to the existing industry scheme. My hon. Friend is entirely right that it is important that communities see those benefits and have the reassurance of additionality.

Tax Avoidance and Multinational Companies

Kevin Hollinrake Excerpts

Wednesday 3rd February 2016 Commons Chamber

[Kevin Hollinrake (Thirsk and Malton) (Con)]

First, let me draw the House’s attention to my entry in the Register of Members’ Financial Interests. A company in which I have an investment is, in a very small way, a competitor of Google’s. If it ever makes a profit, it will always pay—at least while I am involved—the correct rate of corporation tax, as most companies do. All of us on the Conservative Benches believe that that is absolutely right. None the less, this is a global problem.

In the 1960s, Zhou Enlai was asked about the consequences of the French revolution 200 years earlier, and he said that it was too early to tell. The same applies to globalisation. These are all global problems. In the US, the effective rate of corporation tax has halved in the past 60 years. Apple has £120 billion of assets invested offshore. It does not want to repatriate them as it will have to pay tax. The Opposition sound like a failed football manager turned TV pundit who lost all their games without scoring a goal and who now criticise the new manager for not winning by a big enough margin.

Of course, nobody on the Government Benches would countenance tax avoidance. The thin justification is that the arrangement is for shareholders. Only this week, James Anderson, a Google shareholder, said that Google should be paying the effective rate of corporation tax. That is absolutely right. Warren Buffett has gone on record many times saying that companies should pay the going rate of corporation tax. We need to look at the role of advisers. My experience in my business, when these things have come across our desk, is that such a policy has been rejected on the recommendation of tax advisers. Firms such as Ernst and Young, global corporations themselves, are responsible for much of that activity. I wonder whether they have public sector contracts and whether such organisations should be allowed access to public contracts in the light of those activities.

My hon. Friend the Member for Mid Worcestershire (Nigel Huddleston) asked what we would be saying if we were the parents of Google. If I were the parent of Sergey Brin, I would say, “Pay your taxes.” The company talks about values. It cannot talk about integrity and not pay its fair share of taxes.

Perhaps we should give companies that do pay their taxes greater prominence and recognition through some kind of kitemark for paying fair levels of tax. Overall, we must rely on the integrity of companies to pay their taxes where they have built their businesses—on the back of British people.

Oral Answers to Questions

Kevin Hollinrake Excerpts

Tuesday 1st December 2015 Commons Chamber

[Mr Osborne]

Universal credit is a new benefit where it will always pay to work and it will always pay to expand the number of hours that are worked. It will get rid of a complex series of benefits. That will help working families. Let me make this point, since the gang of four on the other side of the House are chuntering away. The hon. Member for Leeds East (Richard Burgon), who is a shadow Treasury Minister, has not bothered to turn up today because he is marching on the Labour party’s headquarters on a Stop the War march. The truth is that until the shadow Treasury team get their act together in this Chamber, their cases will not be listened to seriously.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

T2. Will my right hon. Friend join me in welcoming the 60% reduction in unemployment in my constituency since 2010, the 100% rise in house building since 2014 and the fact that Helmsley won best market town in yesterday’s—

[Mr Speaker]

Order. I am sorry and I do not wish to be unkind, particularly to new Members, but we do not have time for these lists. What we need is single sentence questions.

[Kevin Hollinrake]

My apologies, Mr Speaker. The A64 is still a bottleneck to investment and a traffic blackspot. Will the Chancellor look again at further investment in that important route, which would unlock further investment and economic progress for the northern powerhouse?

[Mr Osborne]

We certainly want to hear the good news about what is going on in Yorkshire. On the A64, we have committed billions of pounds to improvements to the road network of Yorkshire and, specifically, we have created a £475 million pot for local major roads. This is the sort of bid that should be put in.

Spending Review and Autumn Statement

Kevin Hollinrake Excerpts

Wednesday 25th November 2015 Commons Chamber

[Mr Osborne]

We are providing a permanent exemption to the maximum amount allowed by EU state rules for steel industries in the hon. Gentleman’s constituency and elsewhere, as well as chemicals and other energy-intensive industries. This will be a permanent exemption, rather than a grant from the Department for Business, Innovation and Skills. That makes it much more sustainable going forward.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

I welcome the £50 million investment in our agri-tech centre at Sand Hutton and the protection for our North York moors, both of which are in my constituency. I welcome the apprenticeship levy as well. Will the Chancellor welcome the comments made during my visit to Karro Foods that the apprenticeship levy would allow it to employ more local people and fewer people from abroad?

[Mr Osborne]

My hon. Friend is right that we have been able to boost skills in his Yorkshire constituency. We have been able to fund the great national parks of Yorkshire. We have also been able to invest in one of our great British industries, which has not always got a mention in Chancellors’ speeches in the past—farming. The big investment that we are making in agri-tech science with those four centres around the country, including one in York, will be very welcome.

The Economy

Kevin Hollinrake Excerpts

Wednesday 18th November 2015 Commons Chamber

[Geraint Davies (Swansea West) (Lab/Co-op)]

It is always a hilarious pleasure to follow the hon. Member for Monmouth (David T. C. Davies). I am very sorry that the Economic Secretary to the Treasury, the hon. Member for West Worcestershire (Harriett Baldwin), who is so brightly coloured in her UKIP blazer, has left the Chamber after giving her black and white comedy speech. A part of that speech was about how Labour has caused the problems and misery of the current day, but that is completely false. In fact, in the 10 years to 2008 under Labour, the economy grew by 40%, which is why we could double the size of the health service and the education service and lift millions of people out of poverty.

In 2008, we saw the financial crisis caused by the bankers and the sub-prime debt crisis. The then Labour Government under Gordon Brown along with Barack Obama provided a fiscal stimulus that got us back to growth by 2010. The key strategic issue in this debate is the balance between growth and cuts to get down the deficit. Labour errs on the side of growth, and George Osborne, when he arrived in 2010, decided to revert to cuts—I am talking about half a million job cuts. People stopped spending and we have had flatlining growth until relatively recently. What that has meant is that, while we have had more jobs, the overall production per job has gone down.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Does the hon. Gentleman not recognise that, in 2008, the UK was in the deepest recession that it had been in since the second world war, and that we are now the fastest growing economy in the G7? Will he acknowledge those facts today?

[Geraint Davies]

The fact that I do recognise is that, when we left office in 2010, debt as a percentage of GDP was 55%, and now it is 80%. The Labour party borrowed less in 13 years than the Conservatives have in five years. There has been a complete failure to invest in strategic growth, productivity, and wealth creation. Instead, debt has been used as a cover to attack the welfare state and public services, which are part of the public-private partnership on which Britain relies.

Housing and Planning Bill (First sitting)

Kevin Hollinrake Excerpts

Tuesday 10th November 2015 Public Bill Committees

[The Chair]

A large number of interests. I wish I had some.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

May I draw Members’ attention to my entry in the Register of Members’ Financial Interests?

[The Chair]

All duly noted. Thank you very much indeed.

Before we move to the discussion, I need to deal with a few formalities. I first call the Minister to move the programme motion.

Ordered,

That—

(1) the Committee shall (in addition to its first meeting at 9.25 am on Tuesday 10 November) meet— (a) at 2.00 pm on Tuesday 10 November;

(b) at 9.25 am on Tuesday 17 November;

(c) at 11.30 am and 2.00 pm on Thursday 19 November;

(d) at 9.25 am and 2.00 pm on Tuesday 24 November;

(e) at 11.30 am and 2.00 pm on Thursday 26 November;

(f) at 9.25 am and 2.00 pm on Tuesday 1 December;

(g) at 11.30 am and 2.00 pm on Thursday 3 December;

(h) at 9.25 am and 2.00 pm on Tuesday 8 December;

(i) at 11.30 am and 2.00 pm on Thursday 10 December;

(2) the Committee shall hear oral evidence in accordance with the following Table:

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[Seema Kennedy]

Q 15 In relation to clauses 22 to 31 on rogue landlords, do you think the provisions in the Bill will raise the standard of property available in the rental sector in London?

Richard Blakeway: We very warmly welcome Government’s measures on tackling rogue—often criminal—landlords, not just the measures in the Bill but more widely. We very strongly welcome that. One of the key changes which we would like to see is for us to have access to the data which will be collected around bad landlords. One of those clauses pertains to that. We would like the GLA to have access to that because it would enable us to build on existing programmes which are seeking to improve the quality of the rented sector in the capital, not least the London rental standard. We have something like 140,000 private rented properties already managed under that standard and the higher expectations which that demands. So we think it will make a significant impact, we welcome the changes, but we would like access to the bad landlord database.

[Kevin Hollinrake]

Q 16 Mr Blakeway, one of the biggest challenges in providing more housing is delays in the planning system. There are a number of measures in the Bill, such as insisting on local plans by 2017, simplifying overall plans and more timely decisions in planning in principle. How do you think these will work out in terms of expediting the planning system?

Richard Blakeway: We welcome all the measures that are being introduced by the Government to try to accelerate or expedite the planning processes. As you know, since the GLA’s inception, we have had a long-established strategic planning role and in particular we are keen to build upon clause 101, which gives the Mayor greater authority to exercise those strategic planning powers. In addition, we would like to be able to play a role around permission in principle and issuing development orders, as well as the register of brownfield sites and our ability to co-ordinate that. As a basic principle, we would like to see the Mayor of London exercise the kind of functions that the Secretary of State envisages exercising in the rest of the country.

[Mr Jackson]

Q 17 Obviously there is a predisposition in the Bill towards support for residential accommodation and housing in London and across the country. What impact do you think that might have, specifically in London, on commercial and business premises?

Richard Blakeway: I think that some of the issues in relation to the conversion of office to residential are actually outside the Bill. None the less, we very much welcome the Government’s agreement that there will be an exemption until May 2019 for some of the existing areas that we have sought exemptions for, such as the CAZ—the central activities zone—the Royal Docks enterprise zone, Tech City, and the northern part of the Isle of Dogs. We really welcome the Government’s move on that. Clearly, the article 4 measure allows those areas to formulate an application to extend the exemption beyond 2019 and there is obviously a window to do that.

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[Mr Bacon]

You might want to look at Berlin.

Phil Glanville: Returning to what Mayor Bullock said about scale, it is the scalability of the housing co-ops that exist in London that makes it challenging. We are looking at working with, say, the almshouse movement to build new, affordable homes that are also exempt because people are beneficiaries rather than tenants. Where we can innovate on our land, we will do so, but the scale of the crisis in terms of the thousands of homes that we need to build makes it difficult to use the co-op movement as it is currently constituted.

[Kevin Hollinrake]

Q 43 The National Audit Office recently produced a report saying that some local authorities had reduced their budgets for planning and their planning departments by up to 50%. The Bill contains a number of changes that should expedite the planning process. Will this mean that authorities are more likely to staff up their planning departments with the right number of competent people to be able to turn round applications?

Philippa Roe: The absolute key to having the right staffing within our planning departments is to be able to charge a fee that covers the cost of expediting the planning process. At the moment, we cannot charge anything like enough to cover that cost, so basically our council tax payer is subsidising the developers. We are very lucky in Westminster, because of where we are. We have a Westminster Property Association, which funds six planners, to whom its members have access. We can pay appropriate salaries to attract good people, but they are limited to the Westminster Property Association members. I think other local authorities struggle, as we struggle with the rest of our planning applications. As was mentioned earlier, our good people who have Westminster experience are very valuable in the private sector, and they are being hoovered up. We cannot keep them unless we can pay them the appropriate salaries. We really need planning fees to be raised.

Martin Tett: I completely support Councillor Roe on this. There is an almost universal plea from local authorities, whatever their political complexion, that they be allowed to recoup the costs of planning with appropriate planning fees. That would do a great deal to help us to resource up. I also re-echo the point that some of the salaries that the private sector pays good, experienced planners are very high compared with what local government can pay. It is a real challenge.

[Kevin Hollinrake]

Q 44 But would you accept that cutting a planning department’s budget is a false economy?

Martin Tett: I want to echo one thing, to put it in context. Remember that lots of authorities, particularly municipal boroughs, have responsibilities that also include social care for children, safeguarding adults and so on, and almost universally those statutory responsibilities are growing as a proportion of total council budgets, so councils are in a very difficult position. I understand your point, but we have to weigh that against some of the other responsibilities that councils have.

Sir Steve Bullock: I was going to say exactly the same thing. The funding stream that goes into the planning department comes out of the same pot as social care, libraries, youth services and so on.

[The Chair]

We are drifting slightly wide of the Bill itself.

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[Helen Hayes]

Q 64 Some of the housing associations that recently appeared before the Select Committee on Communities and Local Government indicated that they thought the likely impact of this Bill would be fewer homes delivered by housing associations for social and other forms of affordable rent. I wanted to ask both of you, first, what you think the net impact of the Bill will be on housing associations’ delivery of social and other affordable forms of homes for rent and, secondly, whether you fear developers deserting housing associations in favour of delivering starter homes themselves?

Sinéad Butters: Our members have raised significant concerns about the potential erosion of social rented housing as a result of a combination of impacts. That combination includes the pay-to-stay option, the starter homes initiative and, depending on what is replaced under right to buy, the erosion of social housing under right to buy. What I would like to make absolutely clear is that our members collaborated with the Government on the home ownership options and see home ownership as one part of something—it is not “either/or”, it is an “and” for our members.

The impact on the future for social rented housing prompts the question, where will the poorest live? If there is nowhere for poor people to live in future, one might imagine that poverty is decreasing, yet I do not see that. It is a very real question. We would ask for the flexibility to have local solutions in the areas where we work closely with local authorities to determine what is needed in that area, including a range of social rented housing, home ownership options, market rent and sale. Our members would embrace the opportunity to work locally to make sure that what the community needs is what the community gets.

David Orr: The Bill itself is a relatively small part of a combined package. If we are going to build a whole lot of new homes we need land first and foremost. Anything that this Bill can do to help to release land for new home building would be helpful. Like Sinéad, I have anxieties about the competing priorities in the space where section 106 presently operates. It has been a useful mechanism for delivering affordable homes for rent and for shared ownership, and a useful mechanism for volume developers to front-end the cash for their developments. If all these things are squeezed out by starter homes, the impact is likely to be a reduction in the overall supply. If we are able, as Sinéad has said, to have an environment where we see significant growth in new home building across all tenures—some for market sale, market rent, social rent, shared ownership, starter homes—that is where we need to be. We need to have this mixed-tenure package. The new homes that we build need to be across all tenures.

With regard specifically to the ability to provide social rent, I think that the Government have made it clear that they do not consider social rent to be their top priority. It remains the top priority for housing associations. The spending review will obviously be an important component, depending on what money, if any, is available to support that. Right to buy, certainly in some markets, has the potential to liberate assets that would then be turned to cash and could be used to build social rented homes. That will vary according to the different markets in different parts of the country. There is a range of factors that will influence this, but I am anxious about starter homes appearing in the section 106 space and crowding everything else out.

[Kevin Hollinrake]

Q 65 I also sat through the Select Committee hearing, and listened to the evidence from the housing associations. I took the absolutely opposite view, so perhaps we should review the evidence together.

In an article on your website, Mr Orr, under the heading, “More homes to rent (and buy)”, you state that,

“our offer to the government will see an increase in the number of…homes built, which has the potential to ease pressure in all parts of the market, including the rental market.”

Do you still stand by that in the overall context of this agreement?

David Orr: I completely stand by that being the offer that housing associations want to be able to deliver. We published a document called “An ambition to deliver” and I commend it to you, because it is a very strong statement of ambition about getting—at some point in the future—to a position where we are able to build perhaps 120,000 homes a year, half for sale and half for rent, half market value and half subsidised. That is exactly that: making a contribution across all parts of the market. We are completely committed to doing that. Ideally we would want to be working with Government—whichever Government—and local government to work in partnership to deliver that kind of package.

The most fundamental thing that will make a difference is access to land, both publicly and privately owned land. If you look at the pattern of provision, we have failed dismally to build the number of new homes that we need, particularly in rural England, and part of the reason is that we just say, “There’s no land.” We have kind of given up. We need to stop giving up because there is plenty of land that we could build on. Measures that speed up planning are helpful. Measures that give priority to the expectation of delivery of new homes are helpful. Accessing land is the thing without which the rest will not really work.

[Kevin Hollinrake]

Q 66 Can you see measures in the Bill that will speed up the planning process?

David Orr: I see measures that have the potential to speed up the planning process.

[Dr Blackman-Woods]

Q 67 At the moment, it seems as if homes sold under the right to buy will not have to be replaced in the same area. Do you have any concerns that that might lead to further regional disparities in the amount of affordable accommodation available? Would you like to see an amendment that would ensure that they are replaced in the same area?

Sinéad Butters: Our members certainly would. They are concerned about like for like replacements in the same geographical areas. The overriding factor is that local authorities working with their housing association partners can decide on what is appropriate for that community and have the flexibility to apply that. Some of the provisions in the Bill, such as the pay-to-stay provisions, are blunt instruments applied nationally which do not take account of local factors.

We would like to see that. Our members would be keen to ensure that those strong relations with local authorities in helping meeting housing need are maintained.

David Orr: I think this is a matter for individual housing associations and the conversations they have with local government partners and others. If, in any given local authority area, housing associations sell under the right to buy, I think how they are replaced is a matter for them in discussion with their local authority partners. I am not keen to impose unnecessary restrictions. It seems to me that we are under a great deal of pressure. There is much less public money going into new housing and we need to retain as much flexibility as we can. We have to look at the objectives and the pattern of behaviour of housing associations across the country. They mainly want to invest in the areas that they work in. That is what they care about, right across the country. I am anxious that we are creating a debate that will not turn into anything in real life because, in practice, if people sell they will want to try to replace in those areas where they can.

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[Mr Thomas]

Q 79 Do you think that the rest of the Bill will help to increase the supply of co-operative housing, or will it just leave it as a tiny fraction of the housing stock?

David Orr: I think it is likely to be relatively marginal.

[Kevin Hollinrake]

Q 80 Ms Butters, I think you referred to the provisions under clause 74 on high-income social tenants as a blunt instrument, yet you conceded that there is provision to charge a proportion of market rent—I think you made some cursory reference to the taper. Is that not proof that the clause is not a blunt instrument?

Sinéad Butters: For us it is about the freedom and flexibility to set our own rents—decisions for our local areas, made by our boards, working with our communities and our local authority partners. I can understand that the taper has been set to mitigate some of the negative impact of applying that blunt instrument, in terms of an immediate move to market rents from social or affordable rents; however, that would not be my answer. My recommendation would be locally set rents, determined by local areas, with boards and local authority partners. We would still see the potential for those choices about higher-income tenants, but they would be based on real evidence and real income data and analysis, not on a judgment about what level is set nationally.

[Kevin Hollinrake]

Q 81 But the principle is that it is inappropriate for taxpayers to subsidise someone who can live in market-value housing. Do you accept that principle?

Sinéad Butters: Yes. Absolutely.

[Teresa Pearce]

Q 82 Mr Orr, on the voluntary deal, your organisation and the G15 will work very closely. It is my understanding that the G15 opposes the forced sale of vacant high-value council homes. Is that the position of the National Housing Federation?

David Orr: Just to be clear, the G15 are all members of the National Housing Federation, so we are all part of the same group, as is PlaceShapers. The deal that we have done with the Government is one that says that if the Government provide funding for a discount we will organise the sales. It is the job of the Government, under that voluntary arrangement, to find the finances to fund that. We have never proposed the sale of high-value council stock as a means of paying for it—that is a proposal that came from the Government—and we have not and will not endorse the proposal.

Tax Credits

Kevin Hollinrake Excerpts

Tuesday 20th October 2015 Commons Chamber

[Kevin Hollinrake (Thirsk and Malton) (Con)]

“We should measure welfare’s success by how many people leave welfare, not by how many are added”—so said Ronald Reagan. In 2010 nine out of 10 families in the UK were on welfare. We do not need more welfare; we need more jobs, and better jobs which will pay a national living wage of £9 by 2020, ahead of the estimated living wage at that time.

We have record employment in the UK. Britons have more opportunity and more jobs. During the last Parliament, we created more jobs than were created in the rest of the European Union combined. What we have not discussed in this debate is the effect of the whole package of these reforms—universal credit, tax thresholds, child care and the national living wage. They create an incentive, enabling people to do more work. All those estimates from the IFS and the Adam Smith Institute have not taken into account people’s potential to go out and work more.

[Graham Jones]

I find the hon. Gentleman’s comments bizarre. This matter is close to home for me. My son and his wife are on tax credits. He does over 40 hours a week, and she is retraining and doing 12-hour bank shifts. I have a granddaughter who is going to suffer a cut of more than £100. Can the hon. Gentleman explain to me how they can retrain any more than they are, where they are going to get extra hours when they are both doing nearly 50 hours, and the impact that that has on my granddaughter? The hon. Gentleman is out of touch.

[Kevin Hollinrake]

Wages have been subsidised for employers for too long. It is a crazy, convoluted system in which people pay tax and then it is returned to them in welfare. How can that be right? Employers should value their workforce and pay them more. Of course we need to look carefully at the consequences of these changes, but without the reforms in the previous Parliament the tax credits bill would have been £40 billion. We cannot afford that. We have to balance the books, and employers have to take up the slack.

We are still losing £73 billion a year in this country, so we must balance the books, and we can do that by building a new culture. What do I say to an employer in my constituency who employs hundreds of workers? He says that on a Friday night, when the shout for overtime goes up, it is the overseas workers who step forward. We need to build the right culture. The culture in my house was built by my parents, who worked all the hours God sent, not to line their pockets, but to benefit the next generation and set the right example for them.

Freud, distilling the learning from his life’s work, said that happiness depends on two things: love and work. Over the previous Parliament, 700,000 workless families went back to work. We need better jobs, we need to balance the books, and we need to build a new aspirational culture in which work pays.

Budget Resolutions and Economic Situation

Kevin Hollinrake Excerpts

Tuesday 14th July 2015 Commons Chamber

[Rachael Maskell (York Central) (Lab/Co-op)]

It is a pleasure to follow my hon. Friend the Member for Swansea West (Geraint Davies). I congratulate the new Members on making their excellent speeches, particularly the hon. Member for Paisley and Renfrewshire South (Mhairi Black), who drew on the wise words of the late Member for Chesterfield, who is a political hero of mine, too.

At the weekend in York, I talked to local businesses, our public services and those who support the poorest in our community. There were no cries of “Fantastic!” for the Budget—quite the reverse. Those are the people who will live with the consequences of what the Budget creates.

Three themes stand out from my conversations, but they were all left out by the Chancellor, who is more set on driving down our public services and our public sector workers, who, we must remember, have already had a 15% cut to their pay, than he is set on driving up exports and the prospects of so many who are left to flounder as they are stripped of essential resources to help them get by each week. The first theme was generating productivity and good-quality, high-skilled jobs; the second was strengthening public services; and the third was addressing the shameful inequality in our nation that the cuts to 30 million people will increase, and addressing the staggering nearly £2 trillion of personal debt that is being built up.

Today, I will focus on productivity. Unless we grow our productivity—our base—the long-term poverty in our country will be sustained. It is therefore not an either/or strategy, but both. We need to address inequality and to drive up our economy: investment now for future growth.

Obviously, there was deep concern at what came out last week not just in the Budget, but in the productivity plan, which should fix the foundations to create a more prosperous nation. I took the plan and put it through what I call the York test. I asked how the plan would drive the economy in the city I represent, a northern city that is so much at the centre of rhetoric at the moment.

York has so much potential. It could have high-quality, well-paid jobs, and with the considered interconnectivity of a productivity plan we could recreate the city as an engine in the north. I read in the plan lots of suggestions to bring together experts to write a strategy for productivity. If there are many gaps in the road map, having experts come together can help to grow the economy for the future, but time is wasted as we wait for the plan to be developed.

One of the loudest cries that I hear from my constituents —but it is not in the plan—is the need to address the needs of small businesses in York. They desperately want business rates to be addressed, so that our local entrepreneurs and business leaders can confidently build a sustainable employment strategy in the light of the ridiculously high cost of premises—another issue that must be addressed.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Does the hon. Lady welcome the 75% reduction in unemployment in York since 2010, and the 45% reduction in 2014?

[Rachael Maskell]

I do not accept that those are the high-quality, highly skilled jobs that are so important for growing our economy. In fact, many jobs in York are now zero-hours contracts in the tourism industry, retail and other trades, and the number of people on the minimum wage is a real concern.

While the apprenticeship levy sounds good—I will examine the initiative as it makes progress, in particular to ensure that the apprenticeships are of high quality and not just learning experiences for people in work—we need to view that alongside the cuts in education. York college has experienced a 24% cut in funding for adult courses. Those cuts are in direct conflict with the warm words about supporting a technical curriculum. The small print of the plan also includes higher and higher tuition fees, at the same time as the removal of the maintenance grant—money that people will be expected to pay themselves. Those are disincentives for people to engage in education in the future, so the plan fails the York test on skills.

It is a scandal that the links between education and work have been severed in this country. In schools, colleges and universities, courses do not lead directly to high-quality, good jobs. Education is often in one silo and work in another, and the bridges have not been built between the two. How is it that someone can spend £50,000 on their development to end up in a zero-hours job or having to volunteer to get the necessary experience to get a decent job—experiences that a couple of people reported to me over the weekend? When people embark on a course, we want to see a guaranteed good-quality job at the end of it—a student to job guarantee. That is the sort of initiative that I expected in the Budget last Wednesday to kick-start careers and growth, and to start to help to clear up student debt, which is a scandal in itself, but one for a separate debate.

When I looked at the productivity plan, I had to ask, “Where is the manufacturing strategy?” I could not find it and I did not hear it in the Budget—nothing on good-quality, highly skilled jobs. Where was the real opportunity to develop the housing infrastructure—and the construction jobs that would go with that—that we desperately need? The plan talks of a growth in the number of houses of 40,000 a year, but we need at least 200,000—possibly 300,000—a year. Labour had a programme to ensure that by 2020 we would be building 200,000 houses a year. Of course, the OBR and the IFS believe that the right to buy and the cuts in social rent will slash that already under-ambitious building programme. So the productivity plan fails the York test on housing, even though more housing is central to the city’s ability to grow the local economy.

Where was the environmental strategy on retrofits for our businesses, public services and the domestic market, on growth in renewables, and on science and manufacturing? As Labour promised, that would create 1 million more jobs. I am committed to developing a sustainable economy, but the Government’s approach to climate change puts us at further risk of missing our 2050 carbon reduction targets. Not only is there investment in road instead of rail, but the removal of subsidies for onshore wind and the charging of renewable energy users through the climate change levy. This will chase away another potential boom area for our future economy. The Budget fails the York test on sustainability and productivity.

There was nothing in the Budget on upgrading our infrastructure and providing good construction jobs in our schools and hospitals through new build. The state of our schools and hospitals means that this is desperately needed in York. We are seeing a strategy that will not deliver.

I would like to question the Minister more closely on investment in science and research, and on whether any of the money will be coming to our universities to give us the opportunity to ensure that York benefits from good solid jobs by 2020. I would be interested to hear his reply.

Finally, on the northern powerhouse, we have heard much about rail and the northern power cut. York is famed for its rail heritage and the national rail museum. We are at the intersection of the trans-Pennine route and the east coast main line, so we should be the rail hub of the future. We have a real opportunity to grow the northern economy, but that was not in the Budget and that was not in the productivity plan. Will the Minister sit down with me and local MPs to ensure that we have an opportunity to kick-start the economy?

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[Shabana Mahmood (Birmingham, Ladywood) (Lab)]

We have had a good debate—today and over the last few sitting days. It is a pleasure to close our Budget deliberations on behalf of the Opposition. I would like to start by congratulating the hon. Members for Kensington (Victoria Borwick), for Paisley and Renfrewshire South (Mhairi Black), for Brecon and Radnorshire (Chris Davies), for Airdrie and Shotts (Neil Gray) and for Linlithgow and East Falkirk (Martyn Day) on making their maiden speeches today. I am sure all Members will join me in wishing them well as they begin their journey of standing up for their constituents in this place.

Last week, the Chancellor delivered his first Budget of this Parliament. Although his rhetoric might have delivered him positive headlines on Thursday morning, the reality is that his Budget will deliver misery and hardship for ordinary working people because it leaves them worse off, penalised for doing the right thing in working and punished for circumstances outside their control. Not only does this Budget penalise people in low-paid work; it fails the test of building a more productive economy, because the Chancellor has either flunked or ducked the big long-term decisions that need to be made on infrastructure.

What ordinary working people in our country needed was a Budget that would make their lives easier, make work pay and help people not just on to the first rung of the work ladder but on to the next one—into better jobs with better prospects and better pay. Instead, the Chancellor focused his energies on his own bid for a better job, better prospects and better pay. Rather than help the working poor to move up, he focused on his own move next door.

The truth that Government Members have to confront is that 3 million working families will bear the brunt of the Chancellor’s £4.5 billion-worth of cuts to tax credits. These cuts will hit working people on middle and lower incomes, completely undermining the Tory argument that this is a Budget for working people. They penalised the very people in work who are trying to do the right thing and who do not earn enough to make ends meet. As I said only a week ago, it is wrong and unfair to remove tax credits from working people without first creating the conditions that would allow it to be done in a way that does not pull the rug from under people on low incomes—by hitting them with what is effectively a hefty work penalty. We all want to see a higher-wage economy, in which people are less reliant on tax credits to make ends meet, but we need to embed higher wages in the economy before we consider going ahead with any changes to tax credits.

[Kevin Hollinrake]

Does the hon. Lady agree with her leader when she said that she should accept the changes to welfare and tax credits contained within this Budget?

[Shabana Mahmood]

That was hardly worth the wait. I have to say that the hon. Gentleman should have been paying attention to what my right hon. and learned Friend the Member for Camberwell and Peckham (Ms Harman) actually said. She came out very strongly against the whole package of working tax credit changes. If he had listened to my remarks, rather than try to intervene with a Whip’s question, he would have realised that that is exactly what I am doing myself.

The Government will say that they have moved on pay. Again, however, there is a big difference between rhetoric and reality. The Government’s cuts to tax credits overwhelmingly outweigh their measures on pay. I welcome the proposed rises in the national minimum wage, which is still what it is. [Interruption.] I am pleased to see that the Chancellor has joined us. He has failed to explain why raising the minimum wage was so wrong only a few short weeks ago during the general election campaign, in view of our manifesto commitment, or how he came to agree with us so soon after the general election. Nevertheless, imitation is indeed the sincerest form of flattery. We are pleased to observe that the party that forced the last all-night sitting in the House in an attempt to block the introduction of the national minimum wage by the last Labour Government now agrees with us not only that it is important and necessary, but that it should go up. However, we should be clear about the fact that it is not a living wage.

There has always been a difference between the minimum wage and the living wage. Re-badging the new national minimum wage as a living wage will not help the Chancellor, because ordinary working people can see a political con for what it is. The Living Wage Foundation was quick off the mark on Budget day in making that very point. The inconvenient fact for the Chancellor is that the living wage—the real living wage—is calculated on the assumption of a full take-up of tax credits, the very tax credits that the Chancellor has just cut. To make up for the loss of those tax credits, a real living wage would have to be considerably higher than what the Chancellor is now promising working people in Britain.

The new national minimum wage rate of £7.20, when it is introduced next year, will be lower than the current living wage of £7.85. In effect, the Chancellor, who says that he stands with working people, will offer working people in 2016 the 2011 living wage, and we will not let him pretend otherwise. In the end, the simple truth is that the wage increases that are on their way are not enough to make up for the loss of tax credits.

Twenty-four hours after the Chancellor delivered his Budget, the Institute for Fiscal Studies dismissed his claim that increasing the minimum wage would compensate working people. The IFS said:

“the key fact is that the increase in the minimum wage simply cannot provide full compensation for the majority of losses that will be experienced by tax credit recipients. That is just arithmetically impossible.”

The IFS also said that the biggest change, which sounded very technical, was the reduction in the work allowance. It explained:

“The work allowance is the amount that a claimant can earn before benefit starts to be withdrawn. Significant allowances were an integral part of the design of UC”

—universal credit—

“intended to give claimants an incentive to move into work. This reform will cost about 3 million families an average of £1,000 a year each. It will reduce the incentive for the first earner in a family to enter work.”

A regressive Budget with a work penalty of £1,000 a year: that is what the Government have delivered to ordinary working people in our country—and while they hit those ordinary working people, they also fail to address a central economic challenge—productivity. That is the puzzle that it is crucial for us to crack and solve, because getting it right is vital if we are to achieve higher living standards, sustained GDP growth, and effective deficit reduction, but this Budget failed the productivity test.

Tax Credits (Working Families)

Kevin Hollinrake Excerpts

Tuesday 7th July 2015 Commons Chamber

[Shabana Mahmood]

I want to make some progress, but I will give way a little later.

A study of tax credits by the Resolution Foundation in 2012 found that the introduction of working families tax credit, which was the predecessor to working tax credit, provided a

“small but direct boost to employment”,

particularly for single parents. The economics editor of the Financial Times recently said:

“Britain’s financial support for low income working families is a key reason why we now have a high employment rate and…the Prime Minister must take care not to put at risk a 20 year success story”.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

The hon. Lady cites the Resolution Foundation report. Does she agree with the same foundation’s report which says tax credits have

“a predictably negative impact on work incentives”?

[Shabana Mahmood]

No, I do not agree, and there is a difference between eliminating support from working people in the Budget tomorrow and charting a course that would look more like long-term reform of working tax credits to deal with some of the issues relating to clustering at 16 hours, which Members have spoken about previously. However, that should not be done before tackling the underlying factors that are driving people into low-paid employment and keeping them stuck in that employment.

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[Mr Gauke]

We want to see growth in every part of the United Kingdom. Again, we have a Budget tomorrow. The record of the Chancellor shows a determination to ensure that there is growth in every part of the United Kingdom. I also make this point: it is a fundamental point of principle that taxpayers’ money must be spent wisely to make Government more efficient, effective and accountable. As a consequence, we need to target our spending so that we continue to support those who need supporting while helping millions of people achieve their fullest potential, which we refuse to believe is a life on benefits.

[Kevin Hollinrake]

Does my hon. Friend agree with this information from the House of Commons Library that says that tax credit changes in the previous Parliament were about focusing support on those on lower incomes? The Institute for Fiscal Studies said that, in terms of net incomes, the average household was £900 a year better off at the end of the previous Parliament than it was at the start.

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[Kevin Hollinrake (Thirsk and Malton) (Con)]

I congratulate the hon. Member for Bradford West (Naz Shah) on an excellent maiden speech, on an excellent election victory, and on the many excellent curry establishments in her constituency, which I have visited on a number of occasions.

Let me start by drawing the House’s attention to my entry in the Register of Members’ Financial Interests. I have been an employer for more than two decades.

This is a debate about dependency: the dependency of the worker. I cannot believe that any workers make their career choices thinking that they will bring up a family and will have to rely on state aid in order to do so; nor am I aware of any business people who embark on their business plan thinking that the state will subsidise their businesses. That, however, is exactly the situation in which we find ourselves. Subsidies are anathema to business people. They suppress innovation and deter investment. Someone earning £10,000 a year who has three children can receive as much as £12,000 in in-work benefits. That is not a sustainable position. The total benefit bill for working tax credit and child tax credit is £30 billion. We frequently talk about productivity in this House. To engender real productivity in our economy we need business people to invest, and not just in the cheapest labour.

The system is very complex. Adam Smith said that the first rule of the tax system is that it must be simple. This revolving door of people paying tax then collecting it back through tax benefits cannot be right. All of us in this House are charged with the responsibility of cutting the cost of government and the cost of this system of tax credit, which must cost hundreds of millions of pounds every year.

The tax credit changes under the last Government were, according to the House of Commons Library, focused on supporting those on the lowest incomes. The 2012 Resolution Foundation report said that tax credits have a negative impact on work incentives and in turn on productivity. That cannot be right. We need people to climb the ladder of success, not stand in the queue.

We need simplicity in order to deliver incentives to work. Universal credit has been introduced to do that. It also makes sure there is transitional protection so that nobody is worse off. I believe that we need to change the tax credit system to make work pay.

Work is paying for more people, however. There are 600,000 more people in work than there were in 2010, and 40,000 households who had never worked are now working. Can there be a finer example to the children in those households than to see somebody getting up and going to work? These are all parts of the change to the system that we need to make.

We need to make work pay by getting the employer to make work pay. The minimum wage is too low and we should move over time towards a living wage. We have a strong economy, and in a strong economy everybody deserves a decent standard of living.

We should reform the tax credit system, and ideally lose the tax credit system if everybody in work is earning a decent amount of money. We need to make these changes progressively and over time.

[Tommy Sheppard (Edinburgh East) (SNP)]

Does the hon. Gentleman therefore agree that wages should rise and tax credits fall accordingly as they rise, rather than take money away from families already living on the breadline and impoverish them still further?

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[Kevin Hollinrake]

Under the universal credit system there is transitional protection so no one is worse off, and I absolutely believe in that. If we increase the minimum wage by 5% a year, over 10 years it would reach the then current level of the living wage. This needs to be done sensitively—sensitively for business, as we do not want it to cost jobs. It therefore needs to be done progressively. I absolutely believe we need to reform the system, and that should be reflected in what employers pay, so that there is something in it for them.

What we need is higher wages, lower tax credits and lower tax for the employer.