Budget Resolutions and Economic Situation

Bob Blackman Excerpts

Thursday 21st March 2013 Commons Chamber

[Ed Balls]

I think the hon. Lady may find that that is before the millionaires’ tax cut kicks in in 14 days’ time.

The hon. Member for Bognor Regis and Littlehampton asked whether I am being serious. I am being deadly serious about the failure of this Government’s economic plan. They are failing on growth and on borrowing, and living standards are falling as families and businesses pay the price. I warned the Chancellor two and a half years ago that his plan could not work and that, given that a global hurricane was brewing, it was the wrong time to rip out the foundations of our own house. I told him that monetary policy in a situation akin to that of Japan in the 1990s or of the world in the 1930s could not do the trick to restore growth. I warned him that attempting to have the biggest tax rises and fastest spending cuts in our post-war history, and probably beyond, would backfire and choke off recovery rather than support it.

The Under-Secretary of State for Skills, the hon. Member for West Suffolk (Matthew Hancock) is the Chancellor’s former adviser and he is now a member of the Business Secretary’s ministerial team. He wrote an article in The Times in the autumn of 2010 in which he said—this is the Chancellor’s former adviser—that faster deficit reduction would lead to stronger growth. He said, as the Chancellor has also argued, that this was an example of expansionary fiscal contraction, but fiscal contraction has not been expansionary—it choked off the recovery. If the Chancellor was relying on advisers like the hon. Gentleman, it is no wonder that he got into such trouble.

[Bob Blackman (Harrow East) (Con)]

The shadow Chancellor has made great fun of tax changes and other issues relating to growth. Does he welcome the Government measure that means that next month 36,270 working people in his own constituency will get a tax cut?

[Ed Balls]

The hon. Gentleman needs to look at the figures and understand the impact on working families in his constituency. The problem with his Chancellor is that he gives with one hand and takes a lot more with the other. A one-earner family on £20,000 and with two children are worse off, even with the personal allowance, by £380 a year because of the cuts to tax credits. Working families are losing out. The Chancellor tried to divide the country into strivers versus shirkers, but we do not hear that any more because it turned out that his shirkers were the working people of this country.

The real tragedy for this Chancellor is that he is set to join a long line of past Chancellors. Philip Snowden, Norman Lamont and now George Osborne—

--- Later in debate ---

[Bob Blackman (Harrow East) (Con)]

It is a pleasure to follow the hon. Member for Birmingham, Selly Oak (Steve McCabe), who grudgingly accepted that there are good things in the Budget as well as things to condemn. A Budget is a snapshot in time that builds on previous Budgets. Good things have come out of previous Budgets and there are great things in this Budget.

One performance measure of an economy is the level of unemployment. In my constituency, in April 2005, the level of unemployment was 1,402. By the time the Labour Government left office in April 2010, it was 1,901. That is an increase of 36%, but then we all know that Labour Governments always leave office with higher unemployment than when they arrive. Now, however, unemployment is down to 1,632—a fall of 14% in three years—showing that despite the recession and the difficulties, the Government have got it right on encouraging and promoting employment.

Next month, 4,035 of my constituents will be taken out of tax completely by the Government’s increases in the personal allowance. More importantly, 40,101 working people in my constituency will get a tax reduction, which means they will have more money in their bank accounts to spend as they choose. One of the great measures is the new employment allowance, from which 145,000 businesses across London will gain. They will be able to employ people without having to pay national insurance contributions. Furthermore, 75,000 of those businesses will pay nothing at all for the people they recruit, which has got to be great news. Combined with the abolition of the fuel and beer duty escalators, that means that the Government have got it right on taxation.

I want to dedicate most of my speech to the treatment of Equitable Life policyholders. For 13 years, when Labour ran the country, it refused to do anything about the 1 million people who suffered as a result of this scandal. I am proud to belong to a party and a Government who have taken steps to assist the victims. In 2010, the coalition Government honoured our election pledges to compensate the victims of that fiasco. The claimants asserted that £5.2 billion-worth of compensation would be needed, if full compensation was to be paid. Clearly, given the economic position, we could not afford that, so £1.5 billion was set aside to ensure that the victims received due recompense.

The victims split into three groups. The first group comprised the 37,000 with-profit annuity policyholders, who have received full compensation for the losses that resulted from the scandal for which the then Government, the regulator and Equitable Life were responsible. The nearly 900,000 people who took out pension plans have also been compensated, but at a much lower level, because they had the alternative of transferring their pension plans elsewhere. Unfortunately, however, owing to how the scheme was implemented, the people who were most vulnerable and most desperately in need of assistance—those whose money was trapped in their pension plans because they took them out before 1 September 1992—received no compensation at all.

[Mr Love]

I congratulate the hon. Gentleman on his campaign. Will he be campaigning for further compensation for those who have not received anything thus far?

[Bob Blackman]

I shall come to that when I conclude my remarks.

Some 10,000 of the most vulnerable people received no compensation at all. The all-party group on justice for Equitable Life policyholders put forward clear evidence that they suffered as much as the people being compensated. We pointed out that they could not have known before 1 September 1992 that this scandal was going on, and that they had suffered and lost money like all the others. It has taken a long time and a lot of persuasion, and my hon. Friend the Economic Secretary to the Treasury listened with great patience, weighed the evidence and proposed to the Chancellor that the pre-1992 trapped annuitants receive compensation. I am delighted to congratulate the Chancellor and his team on listening to the evidence, weighing it up and saying, “Yes, we got it slightly wrong.” All the people I have mentioned will now get £5,000 in compensation automatically, as an ex gratia payment without taxation, while those on pension credit will get an additional £5,000. It is not the full compensation that we would like to see, but it is a recognition of the fact that every policyholder suffered as a result of the scandal and will be repaid.

Let me turn to the intervention by the hon. Member for Edmonton (Mr Love). The campaign continues. The policyholders have not received the full compensation that they are due or the compensation that has been promised—it is still being paid. My clarion call to my colleagues on the Front Bench is this. Let us ensure that they receive the money—particularly the trapped annuitants —as fast as possible, because since we started the campaign in 2010, 1,000 of the trapped annuitants have sadly died, and they are dying each day. We want to see people compensated and receiving their money as fast as possible, so that they can enjoy their retirement in a reasonable way. I say thank you to my colleagues on the Front Bench, but with this word of warning: we will carry on campaigning and ensuring that the compensation is paid as it should be.

Finally, I want to refer to housing. Currently, banks and financial institutions are demanding a 25% deposit before they will allow people to get a loan for a mortgage. In my constituency, prices start at £300,000 for a two-bedroom flat. A detached house can be up to £1 million or more. A reasonable three-bedroom property is of the order of £500,000. Imagine trying to find £125,000 as a deposit to buy a family home. It is almost impossible and beyond the reach of ordinary working people. I therefore welcome what the Government are doing to support them. We want to get the housing market moving, with new properties being built and existing properties passed on, so that the starter homes can be used by new people.

[Several hon. Members]

rose—