Transport
Neil Gray Excerpts(5 years, 6 months ago)
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Neil Gray (Airdrie and Shotts) (SNP)
Ms Ghani
There is a £300 million step-free access programme. I do not recognise the hon. Gentleman’s complaint, because 73 further stations were identified in Scotland to get step-free access between 2019 and 2024.
[Official Report, 13 June 2019, Vol. 661, c. 818.]
Letter of correction from the Under-Secretary of State for Transport, the hon. Member for Wealden (Ms Ghani):
An error has been identified in the response I gave to the hon. Member for Airdrie and Shotts (Neil Gray).
The correct response should have been:
Funeral Plans: Regulation
Neil Gray Excerpts(5 years, 6 months ago)
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Neil Gray (Airdrie and Shotts) (SNP)
I am grateful to you, Mr Deputy Speaker, and to Mr Speaker for granting me this opportunity to raise the important issue of funeral plan regulation again in the House. Much has changed since the last time I brought a debate on funeral plan regulation to the Chamber. I will go into more detail regarding what has happened in the industry shortly, but first I want to explain why this is such an important issue and why action is so important.
Pre-paid funeral plans allow consumers to save for a funeral. If they are sold and handled appropriately, they are a good thing. They allow people to purchase a funeral and secure it at today’s prices. They can avoid the double-whammy shock of losing a loved one and dealing with the financial consequences of a funeral at the same time. Alongside appropriate regulation of the funeral industry itself and the wider anti-poverty work that is required, funeral plans are the best route to avoiding funeral poverty.
I proposed a ten-minute rule Bill in December 2016, as I want to see better regulation of this market. The debate in 2016 followed a report from Citizens Advice Scotland that same year, commissioned by the Scottish Government, on funeral poverty. It made a series of recommendations regarding the action required to stop funeral poverty. Many of them were devolved responsibilities that are now being pursued by the Scottish Government, but some were issues reserved to Westminster, including this one of the regulation of funeral plans. That report, with its case studies of people being mis-sold funeral plans, and representations made to me by constituents prompted me to ask this Government whether they should be doing more. According to UK Government figures, about 200,000 funeral plans are sold each year, and I expect that figure to continue to rise.
Jim Shannon
Mr Deputy Speaker, I did seek the hon. Gentleman’s permission beforehand, so I have done this the right way.
I congratulate the hon. Gentleman, who so often brings to an Adjournment debate many important political issues that we are all involved in and which I am aware of as well. I know of many people who immediately began a funeral payment policy when they retired, yet this has proved to be a negative move for many families. Does the hon. Gentleman agree that, while it is admirable that 95% of funeral plan providers are signed up to regulation by the Funeral Planning Authority, the fact that this is completely self-regulated takes some of the sting out of the tail? I believe there is also a role for the Government to play, perhaps in stronger legislation to protect the elderly and the vulnerable from being taken advantage of as they come towards the end of their life.
Neil Gray
I thank the hon. Gentleman for his intervention, and it would not be an Adjournment debate without his intervening.
The hon. Gentleman raises an important issue, which is the current status of the Funeral Planning Authority, which I will come on to discuss in greater detail in my speech. He is right that it is a voluntary body at the moment, and there has been much debate about whether the best route of regulating this market is through putting the FPA on a statutory footing or through Financial Conduct Authority regulation. The Government appear to be looking at FCA regulation, which I am happy enough with, although I do have some concerns about the direction of travel, which I will ask the Minister to look at. The hon. Gentleman is right. At the moment, the FPA perhaps does not have the teeth to regulate the market properly. It would acknowledge that although it has done a great deal of work in this area since my ten-minute rule Bill was introduced, if it were to have a full suite of powers to regulate the market properly, that would require it to become a statutory body.
Hannah Bardell (Livingston) (SNP)
The hon. Member for Strangford (Jim Shannon) is right. My hon. Friend the Member for Airdrie and Shotts (Neil Gray) brings a great number of important issues to the Chamber, and this is one on which he has spoken many times. He will be pleased to know that this week I heard from a local family-run funeral service in my constituency, who expressed support for the Treasury proposals and for enhanced consumer protection. He made the point that most funeral firms, as we know from the Treasury proposals, are small and micro businesses. He is concerned, given that the majority of funerals are delivered by those businesses, that such businesses could be at competitive disadvantage compared with larger providers and threatened by the cost of FCA regulations. What are my hon. Friend’s thoughts on that?
Neil Gray
I am well aware of that family-run business, and I share its concerns. My hon. Friend speaks well for them, and it is a point that I wish to make. How do the Government protect competition in the market to make sure that smaller funeral providers and funeral plan providers are not squeezed out of the market by the burden of FCA regulation? Of all the criticisms of the route that the Government have chosen, that is the one that is expressed most keenly by people in the market.
Given the number of funeral plans that have been sold in recent years and the growth in the sector, it is critical that we get the regulation right and ensure that consumers are protected. The Citizens Advice report published a few years ago gave examples of mis-selling—people were promised particular aspects of a funeral, but when the plan was redeemed they were told that that was not part of the deal. Particular cars, coffins or flowers that were chosen for sentimental reasons, for example, were not delivered, although people thought they had paid for them. There have been widespread reports of bad sales practices such as cold calling, aggressive selling and the targeting of vulnerable customers.
Since I introduced my ten-minute rule Bill, which proposed the areas of regulation that the Government now appear to have adopted, a significant amount of change has taken place in the market. The FPA, as I have said, has taken great steps to reform its practices as a voluntary market regulator, and it suggests that 95% of the market has signed up to its regulatory model. There have been great moves across the market to reform practices, including by plan providers themselves. Some of them are moving away from the third-party selling model that appeared to be problematic and was part of the 5% issue that concerns us all. I am pleased that my Bill proposal, which was intended to spark debate and action for change, has led to that progress. I am grateful to the Minister for taking action.
Carolyn Harris (Swansea East) (Lab)
I thank the hon. Gentleman for introducing the debate on a subject that is close to my heart. I met him, the hon. Member for Strangford (Jim Shannon) and other Members attending this debate to form a working party, and we intend to consider how we support the Government in looking at environmental funerals, funeral plans and the social fund. While I welcome the Government’s announcement, does the hon. Member for Airdrie and Shotts (Neil Gray) agree that we need to look at the small percentage of funeral plans that are not covered by the FPA? In that two-year window, there is an opportunity for people who can least afford to pay exorbitant fees to be exploited.
Neil Gray
I thank the hon. Lady, who is a doughty campaigner in this area, for her intervention. It should go without saying that she has done a great deal, particularly on children’s funerals, and I commend her for her work. She is absolutely right. There is a potential gap, with the two or three-year transition period the Government propose, before moving to FCA regulation. I will turn to my concerns about that in due course, but she is absolutely right to raise the issue and I look forward to continuing to work with her in this area to try to drive the changes we want.
I am pleased that my Bill proposal, which was intended to spark debate and action for change, has started that progress. I commend the Minister in particular. I am grateful that the Government are taking this issue seriously enough to consult on funeral plan regulation and are now proposing moving to a model of FCA regulation. A consultation is now under way until August on what the Government now propose to do in this area. I am grateful to the Minister and to some of his colleagues who also wish to see change and have supported my work, such as the hon. Member for Southend West (Sir David Amess), but I do have some concerns about the direction of travel that I am sure the Minister will be able to answer.
There should be some clear benefits to moving to FCA regulation, such as access to the Financial Ombudsman Service for those who have complaints about the products they have received, but it is not yet clear whether consumers who have a dispute over a funeral plan product will be able to access the financial services compensation scheme.
Mr Jim Cunningham (Coventry South) (Lab)
I congratulate the hon. Gentleman on securing the debate and, more importantly, on his Bill. Has he noticed how funeral costs and some of the practices that go on in the industry are now being highlighted in the press? Does he not agree that there should be a good look at costs in more depth? Very often, bereaved families feel ashamed to raise the question of cost, because there is the matter of pride.
Neil Gray
I absolutely agree with the hon. Gentleman, who raises an important issue. He might be aware that the Scottish Government are doing some work in this regard to set up a funerals regulator, part of which will be looking at the practices of funeral directors. I believe—I will turn to this in my speech—that that is probably what the Competition and Markets Authority investigation will be looking at, too. It is also right to acknowledge that many family-run funeral directors are linchpins of their communities. Some take on great burdens, acknowledging the hardships their customers are going through. It is right that we acknowledge that, while also accepting that there are some in the market who are not perhaps operating to the qualities that we would hope and expect to see.
On the financial services compensation scheme issue, I hope the Minister will be able to clarify in his response whether he envisages this particular model of regulation covering the financial services compensation scheme.
I am also concerned that although the Government appear very keen to move forward to a different regulatory model, as they have accepted there is a problem, they have not, in their own work, quantified the consumer detriment in the market. There was clearly a problem identified by Citizens Advice Scotland researchers in 2016, but to what extent has that problem been improved or exacerbated? The Government need to do a bit more work to update the findings of the Citizens Advice Scotland report and also the “Fairer Finance” report that followed my 10-minute rule Bill. It is clear that there are still issues in the market that need to be addressed, but I think the Minister must agree that it is for the Government now to quantify what they are so that the FCA is clear as to its remit and focus.
There also needs to be greater clarity on the likely three-year wait for changes to take effect. First of all, what happens with regulation in the interim, as there will be no incentive for those currently signed up to the voluntary scheme to carry on engaging? There certainly will not be an incentive for those outside FPA regulation—those we really wish to target in whatever model of regulation we bring forward—to come on board. What assurances can the Minister give about what the market will look like and how it will behave during the three-year wait until the FCA fully takes up responsibility for the market? Will the Minister say how many firms will be regulated under the scheme? The Treasury’s consultation document accepts that there will be consolidation in the market, as my hon. Friend the Member for Livingston (Hannah Bardell) suggested. In other words, there will be fewer companies offering these services because of the burden of FCA regulation. Has the Minister assessed whether he feels this model would continue to provide appropriate competition in the market for the consumer? Of course, the Competition and Markets Authority has been critical of some bigger funeral companies for inflated funeral costs, yet this move may give an even bigger market share to those same companies.
I do not have a crystal ball or any insider knowledge, but I fully expect the CMA to follow the Scottish Government’s lead by recommending a funeral regulator, which will look after the funeral director industry and probably some of the at-need market. That means we will be left either with a bit of a crossover in regulation or blurred lines as to who will have overall regulatory responsibility. Perhaps the Minister can clarify how he sees the regulatory environment working when both these areas are established.
In conclusion, for the last three years I have been working across this House, with the funeral plan market and with campaigning organisations to ensure that consumers are protected from being ripped off when they are perhaps at their most vulnerable. I want to see a system of regulation that stops the outrageous practices that we have had reports of in recent years, and I want to see consumer confidence so that there is a greater uptake of funeral plans to avoid the growing problem of funeral poverty.
I am greatly heartened by the Government’s acknowledging that they share my concerns and have effectively taken on my ten-minute rule Bill. I thank the Minister and his officials for what they have done to date, but I hope he will also accept that there is a great deal of work still to do and many questions to answer. Above all else, we have to ensure that the regulatory system in place for this critical industry gets it right for consumers. That means ensuring that we have consumer protection from cold calling, greater transparency in pricing, greater transparency in the products on offer and a better link between some plan providers and the funeral directors. There needs to be greater recourse to pursue complaints and to be compensated when things go wrong.
I am not particularly bothered about who from which body has responsibility for the regulation at the end of the day. I just want to make sure that it is right and that it stops people being ripped off and funeral poverty being exacerbated. We must therefore look at where problems remain with similar issues in the over-50s plan market, which is under FCA regulation, and learn lessons for funeral plan regulation.
Thank you again, Mr Speaker, for granting this debate. I want to know from the Minister that the FCA will always see this area as a priority and that he is alive to the concerns I have expressed this evening, while accepting my thanks for pursuing this matter in the way he has.
Spring Statement
Neil Gray Excerpts(5 years, 9 months ago)
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Mr Speaker
May I very gently exhort caring and sharing comrades to care for and share with each other, and not to speak in such a way as to stop others speaking? I am sure they would not want to do that—it would be uncomradely.
Neil Gray (Airdrie and Shotts) (SNP)
I and my colleagues, the Joseph Rowntree Foundation and, I presume, the Work and Pensions Secretary have encouraged the Chancellor to scrap the final year of the benefit freeze. Given that he knows that, alongside the two-child policy, it is one of the worst policies for driving up child poverty, why has he maintained it? Why has he not scrapped it in the spring statement?
Mr Hammond
I repeat once again that the spring statement is not a fiscal event, so I am not making fiscal announcements. I have already explained why the benefit freeze was necessary—difficult but necessary—and that we have no intention of extending it. When it comes to an end, benefits will resume their increase in line with CPI inflation.
Oral Answers to Questions
Neil Gray Excerpts(5 years, 11 months ago)
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Mel Stride
We are truly the party for working people, as my hon. Friend states, unlike the Labour party. We are the party that raised the personal allowance to £12,500 one year ahead of our manifesto commitment to do so, taking well over 4 million of the lowest paid out of tax altogether. We are also the party of the national living wage, which will go up by 4.9% this April and be of great benefit to the very lowest paid in our country.
Neil Gray (Airdrie and Shotts) (SNP)
We knew that shifting the BBC licence fee concession to the BBC has always been folly, but we now know from the BBC’s consultation that the £745 million cost is likely to mean either a reduction in output, pensioners losing the concession, or both. Will the UK Government finally reverse this ridiculous decision and bring the concession back to the Government?
Mr Philip Hammond
A consultation is under way that I believe ends on 13 February. Once it is complete, the Government will consider it.
HMRC Estate Transformation
Neil Gray Excerpts(5 years, 11 months ago)
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Mel Stride
The hon. Lady raised a number of questions, one of which was about the issue of staff.
Mel Stride
If the hon. Gentleman gives me a moment, I will do precisely that, as I always do.
The answers to the hon. Lady’s questions relating to staff and the way in which we will be handling the staff are as I have set out. All staff will have at least one year’s notice of any impending move. The mapping process that HMRC undertook, as it went into the detail of where to locate the regional hubs, was very thorough. It took into account a number of principles, which I will come on to in a moment to answer another of the hon. Lady’s questions. Among those principles is the issue of the travel-to-work time, and every single employee’s home location was mapped against the possible new alternatives under consideration at the time those decisions were being made. I have also raised the issue of the transition offices, which are of course there, among other reasons, to provide employment opportunities for the staff.
The location principles—this comes to the questions the hon. Lady asked about why we have chosen one particular location rather than another, or indeed the existing location of the legacy offices—come down to eight key principles. They include transport connections, which are of course excellent in both Edinburgh and Glasgow, and the talent pool there, such as in universities—for example, Edinburgh and Glasgow have world-class universities—as well as the housing that is available, the quality of the schools and all the matters that will sustain the recruitment of the teams we will be bringing together in these 21st-century and much more sophisticated hubs for dealing with our tax purposes.
The hon. Lady raised the issue, which I know she has raised on previous occasions, of the location of these hubs in relation to our ports and points of entry into the United Kingdom. I think I can reassure her that, quite outside this whole process of the transitional arrangements, we will of course ensure that Border Force, HMRC and the Department for Environment, Food and Rural Affairs have the personnel available at those locations to make sure that they are able to run imports and exports efficiently. There is a general premise, however, in the suggestion that the offices somehow need to be close to people all the time. In fact, since 2014, it has been the case—[Interruption.]
Draft Financial Services and Markets Act 2000 (Claims Management Activity) Order 2018
Neil Gray Excerpts(6 years, 1 month ago)
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Neil Gray (Airdrie and Shotts) (SNP)
It is a pleasure to serve under your chairmanship, Mr Bailey. I was involved in the passage of the Financial Guidance and Claims Act 2018, so I recognise much of what we are discussing. Mostly, the measure is necessary and welcome, not least because the Government’s brief highlights that 76% of the public have said that they do not trust claims management companies. Taken with the scandals around the RBS global restructuring group and the mis-selling of payment protection insurance, that highlights the desperate need to beef up the UK Government’s failing regulatory framework to ensure that consumers are treated fairly. Hopefully the FCA will do a better job of that than the Ministry of Justice has to date.
I support much of what the hon. Member for Oxford East has said, including her call for appropriate resources to be directed to the FCA, given its ever-growing burden of responsibility. She also spoke about cold calling, on which I would welcome the Minister’s response. That is something that my constituents and I are plagued by on a daily basis. I know that the Scottish Government passed a legislative consent motion for the 2018 Act, but I would appreciate an update on what discussions about this SI have taken place with the Scottish Government, as well as with actors such as the Law Society of Scotland and others that will be directly impacted.
In conclusion, although much of this is to be welcomed and supported, the five-year wait for a monitoring review is too long. We need earlier monitoring to ensure that what has been done has been done correctly. I hope that the Minister will look at coming back to the House on a voluntary basis to report on the progress of the measures in the Act and this SI, to make sure that this is being done appropriately.
John Glen
I will move on to that in a moment. I also want to touch on the point about the ICO as an enforcer, and why not the FCA. There are two debates here. The hon. Member for Garston and Halewood asked about the FCA’s suitability. One issue that has come up—my hon. Friend the Member for South Norfolk mentioned it as well—is the ICO’s experience and powers to enforce the restrictions on CMC cold calling. The ICO can levy fines of up to £500,000 for breaches of the Privacy and Electronic Communications (EC Directive) Regulations 2003. It has the international reach to enable enforcement action when companies are operating abroad, and perhaps calling my hon. Friend.
The ICO and the FCA work together to establish whether the claims management company has FCA authorisation to carry out marketing activity. The FCA will be able to consider whether the CMC is in breach of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 and will sanction appropriately. It is really about the concentration of the FCA’s skills and experience in this domain.
Neil Gray
I thank the Minister for explaining where the Government are trying to move to in terms of CMC cold calling, which was a hot topic of debate during the passage of the Financial Guidance and Claims Act 2018. What he has described does not go as far as banning CMC cold calling, although he has banned it for pensions. Why is he not banning it? That is what we are getting plagued with. The hon. Member for South Norfolk and many others will be in the same position as me.
John Glen
I entirely agree. That is the purpose of the draft order, which will enable claims management regulation to be transferred to the FCA and the Financial Ombudsman Service. Given the breadth of their existing regulatory oversight, that will satisfy the concerns of those who want a more robust regulatory regime in place. Consumers will benefit from a well-regulated and professional claims management industry. The industry can provide important services to some consumers, but there needs to be confidence in how difficulties are handled.
Neil Gray
I do not believe that the Minister has adequately addressed the point raised about the five-year wait for monitoring. He says that he is accountable to the House. Of course he is, but it would be far more useful if he could lay progress reports before the House and have more frequent voluntary reviews to allow proper scrutiny of progress.
John Glen
My view is that there are clear categories that the Government have been challenged on with respect to inclusion. There was a judgment to be made about what was to be included in the order at this point in time, but I would seek to make regular reports to review progress—far more frequently than every five years, which is the formal requirement. It would certainly be within the FCA’s remit to introduce changes far more regularly; if the hon. Gentleman reflects on the FCA’s work on high-cost credit, he will agree that its interventions have led to more rapid changes. My expectation is that the regulator will respond to market changes and consider the appropriateness of extending to additional categories.
I hope that the Committee has found this evening’s sitting informative and will support the order.
Question put and agreed to.
Resolved,
That the Committee has considered the draft Financial Services and Markets Act 2000 (Claims Management Activity) Order 2018.
Finance (No. 3) Bill
Neil Gray ExcerptsMonday 19th November 2018
(6 years, 1 month ago)
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The Exchequer Secretary to the Treasury (Robert Jenrick)
In these parts of the Bill, we make sensible preparations for our exit from the European Union. While right hon. and hon. Members across the House may well disagree on Brexit, I would hope that all would wish to see us prepare as carefully as possible so that we can maintain the stability of the tax system; provide as much certainty for the taxpayer as possible; in respect of carbon pricing, meet our commitments to the environment; and do all those things in all eventualities, including in the event of no deal, which is clearly not the Government’s preference but remains a possibility.
At Budget, the Government announced essential provisions to ensure that the tax system can continue to function in any outcome.
Neil Gray (Airdrie and Shotts) (SNP)
The Minister talks about preparations for no deal. In the OBR’s “Blue Book”, it quoted assessments made by economists who suggested that the economy had already shrunk by between 2% and 2.5% since the referendum, and the Library has suggested that that has cost the UK economy anywhere between £40 billion and £50 billion. Does he agree with that assessment, and what work has been going on in the Treasury to account for it?
Robert Jenrick
What I can tell the hon. Gentleman is that the economy has been growing for eight years—for five years, in every successive quarter. Unemployment is at its lowest rate in my lifetime and employment is at its highest. The British economy is sound and robust, and that is exactly why in the Budget the Chancellor was able to make the tax cuts for 32 million of our citizens and the increased spending on the NHS.
Robert Jenrick
I will not give way again at this stage, but I could come back to the hon. Gentleman later.
The changes that we have outlined in these clauses will, I hope, signal that the UK is committed to maintaining stability and certainty for taxpayers and for businesses across the economy, especially in respect of the environmental tax provisions that I will talk about in a moment. Clauses 69 to 78 will allow the Government to introduce a carbon emissions tax to replace the EU emissions trading scheme—the ETS—in the event of no deal. Clause 90 will allow for essential preparatory expenditure to begin work on a domestic emissions trading scheme in the event that one is required. Clause 89 will introduce a power to make minor technical amendments to UK tax legislation—essential for maintaining the continued effect of the tax system.
Let me turn first to clauses 68 to 78 with respect to the carbon emissions tax. These clauses will take effect only if the UK leaves the European Union in 2019 without a deal. The clauses will give the Government the power to introduce a no-deal carbon emissions tax. The rate for 2019 would be set at £16 per tonne of carbon dioxide equivalent, and the tax would cover the same electricity generators and industrial businesses that currently participate in the EU ETS. The tax would provide the same protections against carbon leakage as the EU ETS. Operators would pay the tax only on emissions of carbon dioxide and other greenhouse gases emitted above an allowance set for each installation in advance of the tax year. This is in line with the EU ETS system of free emissions allowances.
In effect, the carbon emissions tax would seek initially to replicate the effects of the EU ETS as closely as possible, in the event of no agreement. This is important, as I hope hon. Members in all parts of the House will agree, for two reasons: first, because we want to provide certainty for businesses and for the energy industry to enable them to make investment and business decisions with confidence, as the industry has asked us to do; and secondly, because maintaining a carbon price is a key component of meeting our legally binding climate change commitments.
Oral Answers to Questions
Neil Gray Excerpts(6 years, 1 month ago)
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Robert Jenrick
I have met my hon. Friend and his Gloucestershire colleagues to discuss this matter. It was with strategic roads and roundabouts, such as the air balloon roundabout, in mind that we made the largest ever investment in our strategic road network. Decisions on specific roads will be made next year.
Neil Gray (Airdrie and Shotts) (SNP)
I welcome HMRC’s rather belated decision to return tax wrongly paid by the Roadchef employee benefit trust. It is clearly now necessary to honour previously made commitments in respect of tax implications for beneficiaries. Did HMRC use its discretion to make that payout, and, if so, on what basis?
Mel Stride
The hon. Gentleman and I have had a number of discussions about this issue, both formal and informal, and have engaged in an Adjournment debate on it. I have always been very attentive to his specific questions, but if he would like me to meet him again to discuss the issue further, I should be more than happy to do so.
Oral Answers to Questions
Neil Gray Excerpts(6 years, 6 months ago)
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Mel Stride
As Departments right across Government do, we look at the opportunities available in various towns and cities up and down the country, including Bradford. The hon. Gentleman mentions the employment impact of this particular measure; I remind him that the employment rate in Bradford is up 6.4% since 2010. That is above the national average and is a direct consequence of this Government’s policies.
Neil Gray (Airdrie and Shotts) (SNP)
Mel Stride
I slightly detected from the hon. Gentleman’s question the suggestion that that meeting between HMRC and the EBT did not take place, and it most certainly did. He and I have discussed this matter, both formally in a meeting and informally, and we have debated it in the House. I have always stressed that there is a dividing line between HMRC and Treasury Ministers: we cannot intervene in the tax affairs of individuals or organisations. I am confident that HMRC is progressing in an appropriate manner.
Scottish Economy
Neil Gray Excerpts(6 years, 6 months ago)
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Ged Killen
I thank the hon. Gentleman for his comments; I know we have very different views on tax and spend, and I do not think we will resolve them here.
To add to all that, Scotland is more unequal than ever. The wealth disparity means that the average household would need to save every penny of their income for 43 years to enter the top 10% of wealthiest Scots. A failure to increase wages, build more houses or spread wealth means that the most significant factor in determining whether a person will own their own home or secure a top-tier job is not their skills and talents, but who their parents are and where they live. A Scotland where circumstances of birth will take people further than their skills and talents is not the kind of country we should aspire to be, but that is the situation we find ourselves in.
Despite those facts, the vision put forward by our governing parties is not for the radical transformation that is clearly needed. On one side, one of Scotland’s Governments supports a damaging Brexit policy that will cut the ties of Scotland and the rest of the UK to the EU’s internal markets and the customs union. The Fraser of Allander Institute has modelled that with each degree of separation from those two tenets of the EU, Scotland will be more and more damaged. Scotland faces being between 2% and 5% worse off in GDP terms as a result of this Tory Brexit, while in the worst of cases, under a no-deal Brexit, in which we default to World Trade Organisation rules, wage growth will go into reverse, the economy will shrink and, most worryingly, Scotland’s successful food and drinks exporting industry could suffer as much as a 26% reduction in trade.
Neil Gray (Airdrie and Shotts) (SNP)
Can the hon. Gentleman explain how the position of his party’s Front Benchers on Brexit is any different from that of the Conservative Government?
Ged Killen
I thank the hon. Gentleman for his comments; he is obviously not paying very close attention in the Chamber. The UK Governments have very clear red lines drawn all over the place, and none of them seem to reach any kind of consensus. [Interruption.]
Ged Killen
Thank you, Mrs Main. The Labour party position is quite clearly putting jobs and the economy first. If the hon. Member for Airdrie and Shotts (Neil Gray) intends to contribute to this debate, perhaps he can explain why it is very important for Scotland’s economy to remain in the European Union but his party wants to take us out of the United Kingdom. That is something I would find difficult to square.
The UK Government, the Scottish Government, the Institute for Fiscal Studies and the Fraser of Allander Institute have all warned of serious damage to Scotland’s economy as the result of a no-deal Brexit. Worryingly, recently it has seemed that some members of the Conservative party believe that that is an acceptable outcome. In no circumstances should any public representative be recommending that that risk be taken in pursuit of gains that, in my view, are vastly outweighed by the negatives.
On the other side of the equation we have the SNP Government, who have produced a growth commission to set out how they want to see Scotland’s economy grow in the future. In 2015 and 2017, the SNP stood on a manifesto that claimed that it was anti-austerity. The publication of the growth commission and the endorsement of its policies by the First Minister should represent the day when the mask slipped and the SNP was shown to be the party of austerity that we know it to be.
In the growth commission, the Scottish Government propose reducing Scotland’s budget deficit through an approach that would see spending on public services and benefits fall by about 4% of GDP over a decade. Compare that with the policies of the Conservative UK Government, as set out by the Office for Budget Responsibility. The UK Government’s projections see spending on public services and benefits over a five-year period, from 2018-19 to 2022-23, falling by 0.9% of GDP. The plans set out by the SNP in the growth commission would mean the Scottish Government cutting public expenditure on public services and benefits close to five times faster than this Conservative UK Government.
In its model for the future of an independent Scottish economy, the SNP has given up on monetary policy as a tool for stimulating the economy. By not proposing a new currency and by setting public spending and borrowing targets that even George Osborne would have considered ambitious, the SNP has baked serious public spending cuts into its preferred future economic model. Relying on fiscal policy alone to reduce Government debt and budget deficits, they will have to introduce spending cuts, raise taxes or do a combination of both. That is the dictionary definition of austerity.
Those are the most optimistic of figures. The IFS says that, with an ageing population adding to the pressures on the health, social care and state pension budgets, keeping to the growth commission’s targets would likely require cuts to many public services, with the commission not taking the time to spell out exactly where the axe would fall and who would lose out as a consequence. Furthermore, the IFS also said what all know to be true:
“It is also inconsistent to claim that these plans do not amount to austerity but the UK government’s current policy does”,
particularly while the growth commission’s plans
“imply slightly slower real growth in spending than the UK Government is currently implementing.”
I am sure that the SNP will not cease to call itself the anti-austerity party, even after the growth commission’s publication. However, the facts speak for themselves. These are empty calls and stolen clothing. The growth commission is most disappointing because of its lack of ambition. The two Governments of Scotland have produced plans for the future of the Scottish economy that leave much to be desired, and it is therefore up to the Labour party to present a true alternative.
The Scottish economy has three core structural problems: stagnant GDP growth, low productivity and demographic challenges caused by a projected significant increase in the over-65 population and a shrinking in the relative size of the economically active population. Labour has a vision to address all three problems. The problems of growth and productivity cannot be separated; they are twin problems. The Scottish labour market is strong—we have a relatively low unemployment rate by European standards, and an exceptionally low youth unemployment rate.
However, while unemployment has decreased over the years, wages have stagnated and economic output has not matched the increase in the labour force that would usually be expected. That is because, while jobs have been created, they are predominantly low-skill, low-wage jobs that have not helped to accelerate growth; nor have they been productive enough to increase wages. By introducing a minimum wage of £10 per hour, we can reverse the trend of low wages and encourage investment to improve labour productivity. If we increase the minimum wage, companies will have to invest in technology and training to improve the output of their workforce to match the demands they are under. No longer will low-wage, gig economy jobs serve to undercut the advantages of investment.
Neil Gray
The hon. Gentleman talks about raising the minimum wage, which is a laudable aim for us all to strive for. However, we are talking about Scotland’s economy, and he will of course realise that this area of economic policy is reserved to the UK Government, so this is not in the gift of the Scottish Government to enforce.
Ged Killen
The hon. Gentleman will of course realise that we are in the UK Parliament. Scotland has two Governments, and I am talking about Labour’s vision for both. [Interruption.]
Luke Graham (Ochil and South Perthshire) (Con)
It is a pleasure to serve under your direction, Mrs Main. I congratulate the hon. Member for Rutherglen and Hamilton West (Ged Killen) on securing this important debate on a matter that is close to my and many of my colleagues’ hearts.
I will begin by looking at some of the statistical indicators for Scotland’s current economic performance, starting with GDP. Scotland’s GDP was 1.7% in 2015; it plummeted to 0.2% in 2016 and rose marginally, to 0.4%, in 2017. In comparison, UK GDP was 2.3% in 2015, 1.9% in 2016 and 1.8% in 2017. The employment rate in Scotland in the first three months of 2018 was 75.2%, compared with a UK rate of 75.6%. The unemployment rate in Scotland was 4.3%, slightly higher than the UK rate of 4.2%, over the same period.
Luke Graham
Not just now. According to figures provided by the House of Commons Library, the unemployment rate for my constituency of Ochil and South Perthshire is 0.5% higher than the UK unemployment rate. Meanwhile, the Scottish Fiscal Commission’s predicted growth rate for Scotland is 0.7% in 2018, 0.8% in 2019 and 0.9% thereafter until 2022. In comparison, the Office for Budget Responsibility forecast the UK growth rate to be 1.5% this year, 1.3% next year and to rise thereafter to 1.5% over the same period.
The more observant among us will have noticed that for every single one of those economic statistics, Scotland lags behind the UK in terms of economic performance. However, it is not just in GDP, employment and unemployment rates or forecast growth that that is the case. Scotland’s median weekly earnings are also lower than those of the UK. When it comes to small business confidence, Scotland lags about 23 percentage points behind the UK. Meanwhile, Scotland has higher public sector expenditure per head yet lower public sector revenue per head than the UK. Put simply, Scottish taxpayers are not getting value for money from their public sector.
Under the guidance of the SNP, the Scottish economy has grown at half the UK rate. It has failed to meet its targets to match the UK GDP growth rate and succeeded only in overseeing the slowest growth rate of any country in the EU.