Oral Answers to Questions

Catherine McKinnell Excerpts

Tuesday 17th January 2017 Commons Chamber

[Mr Gauke]

The Government are committed to supporting the skills we need to deliver our national infrastructure. In the transport infrastructure skills strategy for 2016, we committed to creating 30,000 road and rail apprenticeships by the end of the Parliament. In addition, the Department for Business, Energy and Industrial Strategy is investing £40 million in the national college for high-speed rail, with additional funding for the college coming from local government and industry. Finally, Heathrow airport has committed to double the number of its apprentices to 10,000 by the time the new third runway is operational.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

Changes to the rateable value for solar panels for organisations mean that business rates for organisations with solar rooftop installations, such as schools, hospitals and SMEs, could increase dramatically—six to eightfold—in April. Do the Government recognise the huge damage that this will cause to organisations that have installed panels in good faith, as well as the solar panel industry?

[Jane Ellison]

The installation of solar panels is only one of the factors that determines the rateable value. That said, a £3.4 billion transitional relief scheme will support businesses facing an increase in business rate bills, while businesses with solar panels will also benefit from the £6.7 billion package—the biggest ever—to reduce business rates.

Concentrix: Tax Credit Claimants

Catherine McKinnell Excerpts

Tuesday 18th October 2016 Westminster Hall

[Fiona Mactaggart]

My hon. Friend is right that we need to work out what Government should do. I will deal with that point later, but it is clear that part of the problem with Concentrix is that if people were notified, they often did not believe what they were told, because the Treasury insisted that Concentrix use its own branding on the letters, so people got letters from some company asking for extensive data. I would have treated that as phishing and thought, “This is someone trying to scam me.”

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I congratulate my right hon. Friend on securing this debate. She is absolutely right that we need to learn the lessons from this mess. Many of my constituents have been left in utter financial disarray by having been left for a time with no income. Does she share my belief that we need reassurances from the Minister that the Government will take every step necessary to sort out this shambles and help those who have been left in a mess?

[Fiona Mactaggart]

Indeed. Not only that, but the Government ought to ensure that it does not happen again. There is a risk that it could, not just in the Treasury but in other Departments. The reason why I persisted with this debate after the Treasury abandoned the contract is that I believe that this is an opportunity to learn lessons that should be spread throughout Government.

[Fiona Mactaggart]

My hon. Friend is absolutely right. It was a gendered contract, and the Government did not stop to think—or maybe they did think about it, and thought that women in such circumstances should be blamed. All Members here will know that their constituents feel harassed, scared and pinned up as targets as a result of how things have been done. It is not acceptable in a civilised society to treat mothers in that manner, and it is mothers who have been treated badly.

[Catherine McKinnell]

I agree that the majority of my constituents who have been in touch are single mothers, but single fathers have also been affected. One constituent who came to me looks after two children and works 16 hours a week, and he received no money for six weeks. Ultimately, it is the children in those households who suffer. The Government must ensure that this does not happen again.

[Fiona Mactaggart]

My hon. Friend is absolutely right. One consequence for a number of children is that they have lost their entitlement to free school meals, so they have suffered doubly as a result of what has happened to them.

--- Later in debate ---

[Fiona Mactaggart]

Indeed, and if we look at the figures for mandatory reconsideration we can see that it is overwhelmingly decided that our constituents were in the right and the decision makers in the wrong.

It is striking that the process was also expensive for those who complied. As my hon. Friend the Member for Dewsbury (Paula Sherriff) pointed out, sending precious documents by registered post costs money, as do printing inks. People also have to pay fees to have documents reissued. Yet in every case HMRC had initially decided that the application was justified. We are not talking about initial applications for tax credits; we are speaking on behalf of people who are trying to continue to receive them. The burden of proof has to be on HMRC.

[Catherine McKinnell]

My right hon. Friend is making a vital point. Several of my constituents were asked by HMRC to prove a negative—something that was not, in fact, the case—and had no way of doing so. Some of the people they were accused of living with were not alive.

[Fiona Mactaggart]

Indeed. There is an important principle in the UK’s administrative law that public authorities act on the basis of evidence and law, and that if they dispute someone’s claim, they should have a good reason. The HMRC charter says that people have a right to be treated as honest. Well, the lone parents who were targeted did not feel that they had that right. Nearly a third of claimants applied for a mandatory reassessment, and they were overwhelmingly successful. Will the Minister guarantee that in future the Government will put acting legally before getting money out of citizens who do not have any? That is the question at the heart of this debate: illegal action has screwed money —excuse my language—out of citizens and damaged their ability to do their main job, which is to look after their families.

HMRC implies that the reason for dropping the contract is a sudden decline in the level of customer service, in particular the backlog of 200,000 incomplete cases and the terrible performance of Concentrix’s telephone service. Concentrix responded by saying that the case numbers were far above predicted rates. In August this year, they were nearly five times the forecast rates, which were developed by HMRC. One contributor to the backlog was HMRC’s automatically terminating 45,000 cases—guess when? In the week beginning 8 August. Where do mums and dads go in that week? They go on holiday, because it is the only time they can take their children on holiday, because otherwise they are at school. The Government have form when it comes to sending out such letters and starting consultations at the beginning of August. If the Minister can say that one of the things he is going to do is ensure that this nastiness in August will end, I think we would all be pleased to hear it.

Why were the predictions of the number of cases so brutally wrong? Why was the letter sent out on 8 August to terminate all those cases on the grounds that they had not fulfilled their information returns? In management terms, it would be more sensible to spread such a policy across the year, so that when someone does not respond to an information return they get a notice at the time. I do not believe that all the cases were started in August. I do not believe that thousands and thousands of people made their first tax credit application in the week beginning 8 August, yet so many of their cases were terminated in that week, causing extreme chaos in a situation that was already brutally chaotic.

It seems to me that the discovery of a service failure just after I sought this debate and just after the Department was called before the Work and Pensions Committee does not bear looking at. A cursory look at Mumsnet web chats, at the Child Poverty Action Group’s advice logs or at all the letters that the Minister and civil servants have received from MPs would have made it clear that the company’s performance has been unacceptable for a long time. Will the Minister ensure that any new contracts with private companies will permit a swift end if performance is substandard and ensure that the Government get information about the standards that are achieved in a timely fashion?

The current contract states that if Concentrix delivers less than 97% accuracy, its commission will be reduced, but I have discovered that in this case accuracy does not mean making the right payments to the right people; it means jumping through the hoops devised by HMRC. Let us have a real definition of accuracy, which is that the right payments should go to the right people and should not go to the wrong people. We all accept that people should not be paid tax credits wrongly, but accuracy must be judged on the real results, not on some process that is extremely burdensome.

I am concerned about the fact that, as my hon. Friends have said, the burden has particularly hit women and mums. What equality impact assessment was done at the start of the contract? We know that David Cameron called such assessments “bureaucratic nonsense”, but it seems to me that this issue is crying out for one, because someone should have thought about the fact that mums would be targeted. Of course, some dads were drawn into the net, and I am not denigrating their experience in any way, but it is not acceptable for Government policy to lay a particular burden on mothers in such circumstances.

Oral Answers to Questions

Catherine McKinnell Excerpts

Tuesday 19th July 2016 Commons Chamber

[Mr Gauke]

That will be me again.

My diary is filling up, and I was planning to take a summer holiday, but I may need to reconsider. I should be delighted to meet my hon. Friend.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

Two infrastructure projects are critical to the north-east: increased airport capacity at Heathrow, and an expanded Metro system. What funding commitment can the Government make to those projects today?

[Mr Gauke]

As I think has been made clear, a statement on airport capacity in the south-east will be made in the autumn. As for the Metro, I cannot add much to what I have said before, but the Government obviously want to support transport infrastructure throughout the country, and are looking at all good projects.

Article 50: Parliamentary Approval

Catherine McKinnell Excerpts

Monday 11th July 2016 Commons Chamber

[John Penrose]

The hon. Gentleman is absolutely right that article 50 is uncharted waters. No one has done this before and we are, of necessity, having to address brand-new problems. I will take the rest of his remarks as a submission to the incoming Prime Minister and her negotiating team. He is absolutely right that whatever decisions they make, and whatever process and timetable they lay out, those will have to be founded on one central principle that I hope we can all sign up to: we need to maximise the negotiating position and negotiating strength of this country as a whole to get the best deal possible.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

The Minister cannot say what “Brexit means Brexit” really means, so is it not vital that, given we have no idea what the terms of exit will be, this is properly scrutinised and voted on by democratically elected Members of this House?

[John Penrose]

I think I addressed that in my initial remarks, but I am sure that there will be plenty of opportunities over a long period for Parliament to discuss many facets of the negotiations, and that the hon. Lady and many others will have a chance to make their views known. As for any decisions that might be made, I, like everyone else, will have to wait for the new Prime Minister to lay out her programme and timetable. I am sure that all will be clear at that point, and that we shall be able to address any decision points that may be offered.

Anti-corruption Summit

Catherine McKinnell Excerpts

Tuesday 3rd May 2016 Westminster Hall

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

As chair and co-founder of the all-party corruption group, chair of the parliamentary friends of CAFOD group, and a long-standing advocate for anti-corruption efforts, may I say that it is a pleasure to speak in today’s debate? I congratulate the hon. Member for Amber Valley (Nigel Mills) on securing it. It is important and timely. Hon. Members have made important speeches and I look forward to the Minister’s response to the questions that have been raised.

As we have heard, the forthcoming anti-corruption summit presents a unique opportunity for world leaders, business and civil society to come together and advance the international transparency and the anti-corruption agenda in a way that we have not seen for years. I agree with the hon. Gentleman that we are not here to criticise the Government, because we welcome the summit and the efforts made in that regard. However, as my right hon. Friend the Member for Barking (Dame Margaret Hodge) powerfully made clear, if we are going to call on the rest of the world to take action, we must get our own house in order.

Last summer, the Prime Minister said in Singapore:

“I’m determined that the UK must not become a safe haven for corrupt money from around the world...there is no place for dirty money in Britain”.

However, Transparency International said in its report, “Corruption on Your Doorstep”, that there is still a place for dirty money in the UK. Since 2004, over £180 million of property in the UK has been brought under criminal investigation as the suspected proceeds of corruption; over 36,000 properties are held by offshore companies based in tax havens—a point made by my right hon. Friend—and in 2011 alone, £3.8 billion of UK property was bought by companies registered in the British Virgin Islands. If we hope to see progress at an international level, we must lead by example. The Prime Minister has rightly given a commitment on public registers of beneficial ownership, and I hope we see that come to full fruition. It is critical that the Prime Minister turns this leadership into action and that we ensure the British overseas territories and Crown dependencies come on board with their own public registers—a point made by the hon. Member for Amber Valley.

The UK can lead by example in other areas, but what more can we do here at home on enforcement? The hon. Member for Folkestone and Hythe (Damian Collins) asked whether our enforcement agencies do enough. My key question is: do they have the right resources and legislative framework to do all they can to stamp down on corruption?

One of the first issues I want to raise is how we hold companies criminally liable for actions of their employees that facilitate corruption, tax evasion, money laundering and fraud. I have spoken about that previously. I have pressed various Ministers and the Prime Minister on the issue because, astonishingly, the UK remains one of the most popular places for the facilitation of all forms of corruption. The Panamanian firm Mossack Fonseca, of recent Panama papers fame, worked with almost 2,000 professional enablers in the UK—accountants, estate agents and lawyers—to set up companies, foundations and trusts, all or some of which could potentially have been used to launder money or facilitate illicit financial flows. The UK was the second most popular place for Mossack Fonseca to operate in. I do not think that is an achievement of which the Prime Minister is particularly proud.

Many factors are involved, but one key issue in the UK is the law on corporate criminal liability. Under UK law, it is extremely difficult to hold a company criminally liable for the actions of its employees in terms of corrupt acts or any similar offence. To do so, prosecutors have to prove who is the “controlling mind” of the company, with direct knowledge of those acts. Our law enforcement agencies, including the Serious Fraud Office, have raised the issue time and again. The SFO director, David Green, has said:

“That is difficult because inevitably the email trail tends to dry up at middle management and evidentially it is hard to prove.”

There is a potential solution. The Bribery Act 2010, introduced by the last Labour Government, sets a more reasonable evidential threshold for prosecuting companies where their employees have been involved in acts of bribery. It requires companies to prove that they have taken “adequate” steps within their organisation to prevent employees from committing such acts. The SFO secured its first prosecution and conviction for that new “failure to prevent” offence last December, and we understand that more prosecutions are on the way.

The Government recognise the effectiveness of the offence, because the Prime Minister recently announced, in the wake of the Panama papers revelations, that he would legislate to create a similar offence in respect of tax evasion, but he needs to go further and apply the new law to all forms of economic crime. I strongly urge the Minister, as I did a Treasury Minister two weeks ago, to look closely at part 2 of schedule 17 to the Crime and Courts Act 2013, because it contains an exhaustive list of offences, all of which cause immense harm both abroad and at home—they range from false accounting and forgery to fraudulent trading, bribery and money laundering—to which the Government could easily apply the new offence. That would send a clear message to the rest of the world that criminal corporate behaviour will not be tolerated in the UK and that the full force of our criminal justice system will bear down on corporate wrongdoing wherever it is found. I am sure that the Minister would like to send that message. The Prime Minister recently committed to “consider carefully” that proposal when I put it to him during his statement on the Panama papers. It would be helpful if the Minister updated us on whether the Prime Minister has been able to do that as of yet.

Ahead of next week’s summit, the Government could also commit to ensuring that our law enforcement agencies across the board have the tools they need to properly tackle the facilitators and enablers of corruption in this country. I have mentioned the SFO. Under the Roskill model, it is charged with investigating and prosecuting the most serious and complex crimes, much of which falls under the umbrella of corruption. That unique model of investigating and prosecuting crime, all under one roof, has proved to be highly effective, yet doubts still linger about the SFO’s future. I hope the Minister will today give a reassurance that the SFO will be provided with the support and resources it needs over the long term. There is always a question mark hanging over its future and whether it will be absorbed into the NCA. It is important that the SFO is able to concentrate on these very important matters, not the least of which are the issues that the hon. Member for Folkestone and Hythe raised.

Another great weakness in the armoury of our law enforcement agencies is their ability to recover stolen assets or the proceeds of crime. As Transparency International has highlighted, the UK’s asset recovery regime has not been up to the job. It is estimated that £23 billion to £57 billion of dirty money is laundered in the UK each year, given London’s role as a global financial centre, second only to the US. Against that, the National Audit Office estimates that only 25p out of every £100 is confiscated from organised criminals; a significant proportion of that sum is likely to be the proceeds of corruption. It is therefore extremely welcome that the Government say in their “Action Plan for anti-money laundering and counter-terrorist finance” that they are considering new legal powers

“to enable the quick and effective forfeiture of money held in bank accounts in cases where...there is suspicion that the funds are the proceeds of crime.”

Such powers are long overdue. In the light of that new impetus, can the Minister say whether asset recovery regimes will feature highly on the agenda of the Government’s summit next week? What aims do the Government have for increasing co-operation and joint working across national borders to ensure that those words on asset recovery are translated into action? At the end of the day, it is only through global co-operation and by demonstrating that there is nowhere to hide from law enforcement agencies that we will be able to disrupt and ultimately recover stolen assets and, hopefully, prevent this sort of crime.

I want to finish by reiterating a key point made by the hon. Member for Amber Valley and my right hon. Friend the Member for Barking: the central importance of public registers of beneficial ownership to the Government’s anti-corruption efforts. The Prime Minister himself said last September:

“If we’re to beat corruption, we need transparency.”

That means transparency over who owns properties, transparency over which companies own other companies and transparency over which individuals own those companies. It is simply not good enough for Ministers to accept assertions from overseas territories and Crown dependencies that providing access to beneficial ownership registers to law enforcement agencies alone is sufficient.

[Sir Edward Leigh (in the Chair)]

Order. Will the hon. Lady please conclude?

[Catherine McKinnell]

I will just sum up.

[Sir Edward Leigh (in the Chair)]

Very briefly please.

[Catherine McKinnell]

Okay. The Government need to do more and ensure that the public have access to the registers. We saw the power of public light falling on the Panama papers and we need to ensure that the public have the same right of access to the ownership registers. The summit is an extraordinary opportunity for the UK to press ahead with the anti-corruption agenda. There is much to do, including here at home, and we do not want this to be a missed opportunity, so I hope the Minister will provide reassurance this morning that it will not be.

[Sir Edward Leigh (in the Chair)]

I know that the next Member will be brief and to the point and will on no account speak beyond 10.35 am.

Tax Avoidance and Evasion

Catherine McKinnell Excerpts

Wednesday 13th April 2016 Commons Chamber

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

As the co-founder and chair of the all-party parliamentary group on anti-corruption, I am pleased to have the opportunity to contribute to today’s debate.

The issues under discussion are, rightly, very high on the public agenda, and a great number of my constituents have contacted me to share their concerns. They, like many others, have a strong sense of both the real and the perceived injustice in our system, whereby the vast majority of people in this country play by the same rules and have very little choice about the contribution they make to the public purse. This is not about envy or anger at wealth, whether it be earned or inherited; it is about the fact that those at the top end of the income scale seem to play by an entirely different set of rules. That, understandably, makes people angry, and the Government must take genuine steps to level the playing field and regain the public’s trust.

One of the assertions that has been made in representations to me is that the solutions to the problem are easy. Although I do not necessarily subscribe to that view, I do think that there are a few relatively simple steps that the Government could take to make a significant difference. Those steps would bring about much greater transparency about the ownership of individual and company assets and wealth, and enable a very clear view of who the beneficiaries are of investments and funds, whether they are held here in the UK or in offshore trusts and accounts. It is essential to deal properly not only with aggressive tax avoidance that Parliament never intended to be pursued, but with tax evasion and other criminal activity, such as fraud and corruption. Too often, both issues go hand in hand.

In his statement on the Panama papers on Monday, the Prime Minister acknowledged:

“Under current legislation it is difficult to prosecute a company that assists with tax evasion”.—[Official Report, 11 April 2016; Vol. 608, c. 26.]

He is absolutely correct. In fact, the challenge is understated, and I will briefly explain why. At present, under UK law, in order to hold a company criminally liable, prosecutors must identify an individual sufficiently senior within the organisation—usually at board level—as its “controlling mind” with knowledge of the offence. In an increasingly globalised world where multinational organisations, which have very complicated structures and management arrangements, are the norm, that sets an extremely high bar for prosecutors to cross. By contrast, in the US a company can be held vicariously liable in criminal law for the actions of its employees undertaken in the course of their employment.

The Government seemed to acknowledge that inadequacy in UK law and included proposals in their 2015 manifesto to introduce corporate criminal liability for economic offences. Yet by September 2015 those proposals were quietly dropped, a fact that came to light only in response to a written parliamentary answer. The grounds stated by the Minister who gave that answer were that

“there is little evidence of economic crime going unpunished.”

That was, frankly, a ridiculous assertion, and I hope that the Panama papers have finally put that notion to bed.

It is clearly unacceptable that, here in the UK, prosecutors of economic crime—tax evasion, corruption and fraud—are effectively operating with one hand tied behind their backs. Indeed, David Green, the director of the Serious Fraud Office—the law enforcement agency tasked with prosecuting the most serious and complex economic crimes—has been clear for some time about the inadequacy of our law. As he pointed out in an interview with the Evening Standard in January, the identification principle

“is difficult because inevitably the email trail tends to dry up at middle management and evidentially it is hard to prove.”

I put that point to the Prime Minister on Monday, and I was glad to hear him commit to going away and looking at the proposals. I hope that Ministers are listening carefully to this debate and that those at the Ministry of Justice in particular will report back to him as a matter of urgency. The proposal is to extend the application of the section 7 offence—which I will explain—not only to tax evasion, but to all economic crime.

This is the nub of the issue. As the Prime Minister announced on Monday—indeed, he had announced it previously, but no follow-up action has been taken as yet—the Government intend to legislate so that corporates can be held criminally liable for failing to prevent the facilitation of tax evasion. That is an acceptance that the current corporate liability framework, which applies to all economic crimes, does not work.

The Government propose to do that by creating an offence modelled on section 7 of the Bribery Act 2010, introduced by the last Labour Government, that holds a company liable if it fails to take “adequate steps” to prevent bribery by its employees. In other words, it puts the onus on companies to ensure that proper compliance procedures are in place and holds them criminally liable if they do not do so. That model, which already applies to the offence of bribery, will apply to tax evasion under the Government’s proposals.

Why stop at tax evasion? Why not extend the provision to cover failure to prevent other crimes, such as fraud or money laundering, as promised in the Conservative party’s 2015 manifesto? The director of the Serious Fraud Office has suggested that that is a workable solution. Back in 2013, he highlighted the benefits:

“Such an approach would merely add a criminal sanction to existing obligations; it would assist in the reform of poor corporate culture which contributed to the crash; it would underpin the recovery by encouraging clean and stable markets; it would increase investor confidence, assist in more rapid prosecutions and dovetail well with deferred prosecution agreements.”

[Mr Jim Cunningham (Coventry South) (Lab)]

My hon. Friend mentioned earlier the situation in America. None of the bankers in this country was held to account for the crash, but a number of those in America were. Does she agree that something should be done about that?

[Catherine McKinnell]

Absolutely. My hon. Friend raises a very important point. The banks in America have paid significant fines as a result of their behaviour ahead of the crash, but it has been significantly more difficult to ensure that justice is done here. That is the very reason why the issue needs to be addressed. The solution is very simple and workable. The Government already intend to legislate on tax evasion, so it would simply be a case of expanding the number of offences to which the legislation applies.

I strongly urge the Government to look closely at part 2 of schedule 17 to the Crime and Courts Act 2013. It sets out a useful list of offences, covering all manner of fraudulent and corrupt offences—from false accounting and forgery, to fraudulent trading, bribery and money laundering—that the Government’s proposed new offence could equally apply to. The work is all done. The ducks are lined up; the Government just need to implement the change.

The revelations in the Panama papers represent a pivotal moment that the Government must not squander. The Panama papers have not just highlighted issues relating to tax evasion and, indeed, avoidance, but raised even greater questions about illicit financial flows, laundered money and the proceeds of crime, and about how companies exploit tax havens and secretive jurisdictions to facilitate that. Ahead of next month’s anti-corruption summit the Government should send out to the rest of the world the clearest of messages that the UK is serious about tackling economic crime in all of its forms, and its facilitation. I urge the Government to take the opportunity to take this important step to arm our law enforcement agencies and courts with the ability properly to hold companies to account.

Budget Resolutions and Economic Situation

Catherine McKinnell Excerpts

Tuesday 22nd March 2016 Commons Chamber

[John McDonnell]

I will in a minute. There is no need to shout out so loud again.

The right hon. Gentleman saw the unfairness of the PIP cuts to disabled people in the Budget. As he said, it is a Budget that benefits high earners. He also saw himself being set up by his own Cabinet colleague.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

The shadow Chancellor is right to say he does not agree with the former Secretary of State’s policies. Indeed, even with the U-turn on PIP disabled people are still left distressed by the reforms that will still be going through. Will he join me in urging the Chancellor and the new Secretary of State for Work and Pensions to look again at this very flawed process?

[John McDonnell]

I fully concur. The same week that this was being discussed, ESA was being cut by £30 a week.

--- Later in debate ---

[Mrs Maria Miller (Basingstoke) (Con)]

It is a great pleasure to follow the hon. Member for East Lothian (George Kerevan), who always speaks so eloquently, but I must say that I disagree with absolutely every word he said. Boosting productivity is at the heart of this Government’s Budget, which is plain for everybody to see. My right hon. and learned Friend the Member for Rushcliffe (Mr Clarke) said that the global economy is slowing down and that we need to be fighting fit for the future. This Budget will help put Britain in that place.

I pay tribute to the Chancellor for delivering such a strong Budget, but what we should all do first is pay tribute to our nation’s wealth creators. It is they, not us sitting here in Parliament, who have put Britain back on top with one of the world’s strongest economies. They are the farmers whom I met last week in Hampshire. They are the partners who run the new John Lewis store in my constituency. They are small and medium-sized businesses up and down the country. They are people like Beryl Huntingdon, who runs Absolutely Offices, or Graham Murphy, who runs RDT. They are the people, innovators and entrepreneurs putting Britain back on top. We must acknowledge their immense hard work in getting our country into the position it is now in.

[Catherine McKinnell]

Will the right hon. Lady give way?

[Mrs Miller]

If the hon. Lady will forgive me, I want to make progress because of the number of people who want to contribute.

The Government have recognised their role in creating the right conditions for business success. They have created an environment in which businesses feel confident about investing by putting in place the right reductions in business and job taxes to encourage growth and success. They have put in place the right infrastructure investment—the £100 billion going into infrastructure over this Parliament, including Crossrail 2, which will do so much to reduce pressure on other parts of the rail network, such as the Wessex route, which affects many hon. Members and is well over capacity. The Budget is also investing in people, underlined by the commitment to 3 million new apprenticeships by 2020, including 5,000, some of which will be degree level, in my constituency at the Basingstoke College of Technology.

People are the biggest asset of most organisations. According to the CBI, some of the biggest challenges facing business in the UK today are retaining top talent and getting appropriately skilled staff. We may have record employment levels, which is to be applauded, and the highest number of women in work, but if we are to be fighting fit for the future, we must get the best out of every single member of our community. While much has been done, there is still more to do, particularly on women’s role in the workforce.

Record numbers of women are in work and the Chancellor is to be congratulated on that, particularly because of the investment he secured for doubling the amount of free childcare. There are 2 million women who would like to be in work and 1 million working women who would like to work more, but they cannot find the right jobs. Some 41% of women in this country work part time, many because they cannot get hold of the right flexible work that fits around their family and caring responsibilities. I gently draw the Chancellor’s attention to the second report of the Women and Equalities Committee, which is all about one of the Government’s great aspirations: to eliminate the gender pay gap in a generation. We can do that if all jobs are more flexible, if men are better able to share care in their family life, and if there are national pathways for women to get back into work.

I also draw the Chancellor’s attention to an Equality and Human Rights Commission report, published today, on the level of maternity discrimination that 77% of pregnant mothers and people on maternity leave are enduring. We are not making the best use of women in this country, and I would like the Government to pledge to take active steps to change the situation, so that all women can do a job that they want to do in order to make the biggest contribution they can to boosting productivity in this country.

--- Later in debate ---

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

We learned many things from last week’s Budget, and we have learned perhaps even more from the fallout since. However, the overriding message we seem to be getting is that, six years into his job, the Chancellor cannot keep a promise and does not seem to learn from his past shambolic Budget mistakes. He promised to balance the books by last year, to get debt falling as a percentage of GDP each year and to keep welfare spending within his welfare cap, but on virtually all of his own fiscal targets, as the independent Office for Budget Responsibility confirmed last week, he has failed to deliver.

Of course, this Government’s shortcomings go much further than the Chancellor’s own meaningless targets. A mere six months ago, the Prime Minister told his party conference that he would govern according to “one nation, modern, compassionate” Conservatism. This is the same Prime Minister who last week cheered on a Budget that cut capital gains tax, raised the threshold for the 40p rate, further cut corporation tax, and would see the poorest losing about £1,500 a year in the next few years while some of the richest gain £200. To top it off, the Chancellor pledged to slash disability benefits by up to £1.3 billion a year, which the OBR estimated would lead to some 370,000 disabled people losing an average of £3,500 a year.

[Robert Jenrick]

I want to give some context on the important point about capital gains tax that is being made by the Opposition. Jim Callaghan created capital gains tax when he was Chancellor in 1965, but it has always been lower under Labour Chancellors than under Conservative Chancellors. Even after this change, capital gains tax will be 2% higher under this Chancellor than it was under Alistair Darling, and indeed Gordon Brown in the previous Labour Government.

[Catherine McKinnell]

I do not understand the hon. Gentleman’s point. He is digressing on details of capital gains tax when the point I am clearly making is about the context in which the cut has been made, where the burden of this Budget very much falls on the poorest and the most vulnerable in our society. If that is compassionate Conservatism, bring the nasty party back!

I am pleased and relieved that the Government have backed down on this issue within less than a week. However, I am angry that those people who rely on the personal independence payment, including 1,100 people in Newcastle upon Tyne North, have endured days and weeks of huge anxiety about how they would cope if this level of support was cut. It is unforgivable. I remain equally concerned about how the existing reforms to PIP are quite clearly failing disabled people. Constituents continue to get in touch with me following my recent question to the Prime Minister because they have been told that they are no longer eligible for a Motability vehicle despite its clearly being the only means by which they can leave the house, or indeed get to work. The new PIP assessment is fundamentally flawed. I strongly urge the Work and Pensions Secretary and the Chief Secretary to the Treasury to revisit this issue with fresh eyes and look at reforming the current PIP changes before they embark on any further welfare reform.

Despite the Chancellor’s so-called

“revolution in the way we govern England”,

with the pledge last May to give local areas greater control over local transport, housing, skills and healthcare, it appears that he does not place the same faith in local communities when it comes to our schools. Last week’s Budget confirmed that, far from handing control to local communities, the Government are about to embark on the greatest ever centralisation of our schools system, which will see an end to the role, now a century old, of democratically accountable local authorities as the stewards of our children’s education. My Front-Bench colleagues have already highlighted the glaring black hole in the finances of this plan—£560 million—which raises questions about the extent to which the schools budget will be raided to make up the shortfall.

[Mr Jim Cunningham (Coventry South) (Lab)]

My hon. Friend mentions the schools budget. I do not know whether she is aware that in Coventry one or two academies are already in serious trouble because of falling numbers as a result of certain changes in the education budgets.

[Catherine McKinnell]

I appreciate my hon. Friend’s point. It is not just local academies that are in trouble—there are some much bigger and more serious questions that we need to raise. First, why are the Government doing this? There is no proof whatsoever that academies per se raise educational standards. It is a distraction that schools now need to focus on this rather than on their educational attainment. Secondly, how will the Government enable the local political leadership to drive up standards and work together, as happened so effectively with the London Challenge, if the power and decision making is so centralised in Whitehall?

Is the Department for Education even fit for purpose to deal with over 20,000 schools across the country—about 3,400 secondaries and almost 17,000 primaries? There are signs that it is already struggling with its current workload of 4,000 schools. As the Education Committee, of which I am a member, recently uncovered, the Department could not even deliver its annual accounts to Parliament in time and required a statutory extension, and there remains doubt as to when it will ever be able to present them. This mass rush to conversion will only add to the current mess. We need only look at the fiasco of the free schools application process, where there is no clear rhyme or reason to the Department’s decisions to authorise new schools.

We see a Department in disarray. Of particular concern for my constituents is how the forced academisation process will fit alongside the large-scale programme of house building that is planned for our area. As a result of the coalition’s national planning policy framework, some 21,000 new homes are expected to be built in Newcastle by 2030, a large proportion of which will be in my constituency. That will require new school capacity, but who will be the guiding mind that will match and create that new school capacity in an area that will be controlled by Whitehall? Newcastle City Council already finds itself in the impossible position of being unable to establish new community schools to cope with existing demand. How on earth will it be able to deliver the right school places across Newcastle upon Tyne North when every school is accountable to the Secretary of State?

Finally, in addition to the fact that apprenticeships were not mentioned in the Chancellor’s Budget even though we were promised that they would be, another glaring omission was the lack of any announcement about how the Government intend to protect our regional airports from the impact of devolving air passenger duty to Scotland. That is crucial to Newcastle airport, which supports 12,000 jobs in the region, and through which £300 million of goods are exported every year. All talk of a northern powerhouse will be completely undermined if the Chancellor fails to deal with the issue urgently.

--- Later in debate ---

[Greg Hands]

We remain on course to deliver our budget surplus in 2019-20, which is far more than Labour ever achieved. I would have thought that the hon. Lady would take the opportunity to congratulate the Government on the new commitment to flood defences in Leeds, which she did not mention.

I will be working to find a further £3.5 billion of efficiencies by 2019-20 so that we deliver that surplus by the end of this Parliament. That means that we keep our economy on course, and we refuse to pass on the burden to our children and grandchildren.

At the same time, we will continue to reward aspiration, back growth, invest in education and help people get on in life—because this is a Budget that backs Britain’s businesses. It cuts the burden of business rates by £6.7 billion over the next five years, taking 600,000 of our smallest firms out of business rates altogether. It cuts the rate of corporation tax even further, to 17% in 2020, giving us the most competitive rate in the G7 and benefiting more than 1 million businesses. Through a £1 billion North sea oil and gas package, it is a Budget that helps Britain’s largest industry succeed in difficult economic times; through cuts to both the higher and basic rates of capital gains tax, it encourages investment—the lifeblood of Britain’s businesses; and, through the abolition of class 2 national insurance contributions, it creates a simpler tax system and a tax cut of more than £130 for the 3 million-plus self-employed people in Britain—this Government stand squarely behind them.

This is a Budget that puts cash into people’s pockets. It raises the tax-free personal allowance to £11,500 from next year, and the higher rate threshold to £45,000. We recognise that money should be in savings accounts as well as in pockets, so this is also the Budget that creates the lifetime ISA, helping people to buy their first home or save for their retirement. This is a Budget that freezes fuel duty, helping people every time they fill up their tank. It is a Budget that supports responsible drinkers; helps the nation’s pubs and gives a further boost to the Scotch whisky industry.

I recall seeing on the morning of the Budget the Scottish National party’s lead spokesman saying that he had three asks in this Budget, and he listed them on Twitter. They were to freeze fuel duty, to keep down duty on Scotch and to have a fiscal package for oil and gas. We have met all three of his asks and much more, and this is a very good Budget for Scotland, too.

It is a Budget that strengthens our tax base, through reforming the tax system so that it is in line with the realities of global, 21st-century economics. As I said, in this Budget we take action on the scourge of obesity, which, as well as putting unsustainable pressures on the NHS, ruins people’s health and quality of life, and costs the country about £27 billion a year.

[Catherine McKinnell]

rose—

[Greg Hands]

I do not have time to give way. Because we continue to get the public finances under control, our Budget—[Interruption.] I am sorry, but all the Labour MPs elected in 2010 and 2015 do not remember the last Labour Government, and that is part of their problem. Because we get the public finances under control, our Budget gives this country a stable base from which to support those in need of support. That is a point that too many on the Opposition Benches still do not get: there can only be true social justice on the back of a functioning economy. Had we not taken action in 2010, borrowing would have been £930 billion more by the end of the decade than it is now forecast to be. On a serious point, one more downturn and we could have lost control altogether in this country, and when that happens it is the poorest and the most vulnerable who are hit the hardest. So we say: never again. That is why we take action now, so we do not pay later.

To conclude, I am sure that some on the Opposition Benches will vote against the Budget tonight, but they will be voting against more money going to our schools. They will be voting against 600,000 small businesses being taken out of paying business rates altogether. They will be voting against support for our North sea oil and gas industry. They will be voting against increases for children’s healthcare. They will be voting against helping working people save for their future. They will be voting against lower taxes for the lowest paid. They will be voting against a better future for Britain.

I say that Members should vote for this Budget. Stability, security, prosperity is what the electorate asked us to provide last May and it is that which this Budget provides, and I ask the House to support it tonight.

Amendment (b) agreed to.

Amendment made: (a), after ‘importation’ in paragraph 2(a), insert—

‘other than in respect of value added tax on women’s sanitary products’.—(Paula Sherriff.)

Main Question, as amended, put.

Enterprise Bill [ Lords ] (Seventh sitting)

Catherine McKinnell Excerpts

Thursday 25th February 2016 Public Bill Committees

[Kevin Brennan]

I thought the Minister’s response was disappointing, given the weight of the evidence submitted to the Committee and the strength of feeling among hon. Members and their constituents. The workers have made their plans and taken decisions on the basis of guarantees and promises given by Government. As far as we can surmise from the limited information that the Minister is prepared to provide about the Government’s intentions, it now appears that the Government are going to take action that will affect them.

To listen to the Minister, one might think that the workers would not be affected at all. She seemed to be dealing with all sorts of shibboleths that were nothing to do with what is in the new schedule, rather than telling us directly whether the workers’ pensions and prospects would be affected by the exit payment cap. The Minister rehearsed arguments about all sorts of scares, which may have been put about by mythical people she was not prepared to name, but going by the evidence submitted to us, the workers in question will be affected—and to quite a large extent.

We represented those arguments and made the case on the workers’ behalf, and quoted, albeit selectively, from a heavy weight of evidence that they submitted to us about their circumstances. All we got from the Minister was a response to issues that had not been raised in the workers’ letters to us and a vague reference to secondary legislation at some later date that will name some as yet unknown entities that may be excluded from the cap.

I am sorry, but I was brought up not to buy a pig in a poke, and if I were the Magnox workers I would not fall for that for a second. It is the oldest trick in the book for Ministers to say “We might do something at a later date, but let something through in the meantime.” That is not why we are here. We are here to get on the record the Government’s position, and whether they accept the arguments about Magnox and other workers that we have set out in the new schedule. We want to know whether they are prepared to exclude those workers, through secondary legislation, from the exit payment cap. At the very least, will they give a strong indication that that is how they are minded to act?

All we got from the Minister was an empty sheet of paper, with nothing written on it. I am afraid that is not good enough for the constituents who have written to us and who are directly affected.

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

My hon. Friend is making an important point. I want to express my concerns about the issue. It speaks to what seems to be a wider Government issue on pensions. We had a debate yesterday about women born in the 1950s who have been significantly affected by the Government’s switching the goal posts. The Government are pulling the rug out from under people. People have paid into the system and saved all their lives for their pension, only to find that the Government have changed the rules at the last minute. That suggests a profound disrespect for those people, but also for the principle of saving and doing the right thing. The Government profess to support those people, but they are doing the opposite.

[Kevin Brennan]

Indeed. Those people are the definition of strivers; they are hard-working—the beating heart of the working people of this country. It shows in their letters to us. Neither are they swivel-eyed lefty loonies or anything of that kind. Their letters reveal that they are ordinary working people. Often they live in the constituencies of Conservative Members. The one I quoted earlier lives in Maldon, the constituency of the Secretary of State for Culture, Media and Sport, and there are many others in constituencies represented by Members from both sides of the House and all parts of the United Kingdom.

--- Later in debate ---

[The Minister for Housing and Planning (Brandon Lewis)]

It is a pleasure to make my first outing under your chairmanship, Ms Buck, even just for these last few minutes before we move on to the afternoon sitting.

In the 20 years since the Sunday Trading Act 1994 was passed, the nature of retail has changed. For example, internet retailers now operate 24 hours a day, seven days a week, and the working patterns of families have changed, so many now want greater flexibility about when they shop. New clause 21 devolves the power to extend Sunday trading hours to local authorities. That includes unitary authorities and district councils that are not unitary authorities across England and Wales, the elected Mayor of London and future mayors resulting from future devolution deals, including the Mayor of Greater Manchester.

Let me be clear. The Government will not dictate to local leaders how they should use the power. We are putting decision-making powers where they should be: in the hands of local leaders. Councils will be able to decide for themselves whether it is effective and appropriate to extend Sunday trading hours in their area, reflecting the needs of local businesses and communities and the shopping habits and economic conditions of the locality.

We have seen the rise of the internet, particularly in the past few years. As the Minister for high streets in the previous Parliament, I know from talking to retailers just how fast online retail is moving. In the UK, we already have the largest online market in Europe, and online sales have continued to increase, reaching 15% of total retail sales in 2015. Things are moving very quickly.

Local leaders will be able to use the consent notice to zone their local area, if they wish. That enables them, for example, to support local traders and independent shops in a focused way in and around high streets and market squares, helping them to compete with online retailers. Retailers in the west end and Knightsbridge— [Laughter.] While Members on the Opposition Benches laugh, I think they should listen to the figures, so that they realise just how important this matter is. Those retailers estimate that opening for just two extra hours on a Sunday would bring economic benefits in the region of between £190 million and £290 million annually. Those retailers also estimate that up to 2,160 full-time equivalent jobs would be created. Just think about what that could mean right across the country, not least in areas that have the opportunity to see real benefit, particularly given that Sunday is now the biggest online retailing day of the week. Devolving the powers will provide greater flexibility for businesses and shop workers and reduce prices for consumers. It will drive competition and productivity, creating jobs and boosting local economies.

Some shop workers are keen to have the opportunity to work longer hours on a Sunday. For them, the weekend represents the best or, in some cases, only time they can work. For example, it may be easier for them to access childcare or they may be students looking for extra or more part-time work.

Members will no doubt know that we have heard from many respondents with concerns that shop workers could be pressured to work on Sundays or to work more hours on a Sunday than they may want to, at the expense of important time with the family, for caring responsibilities or for religious observance. I am clear and up front that we recognise the need for effective protections for shop workers who do not want to work on Sundays or who do not want to work longer hours on Sundays. That is why new clause 21 introduces new schedule 1, which delivers significant strengthening of the rights for shop workers in England, Wales and Scotland by amending the Employment Rights Act 1996 and the Employment Act 2002. The new schedule reduces the notice period for shop workers to opt out of Sunday working altogether from three months to one month in large shops. We recognise that there is a bigger challenge for small shops, so they will need longer to find alternative staffing. The new schedule creates a new right for shop workers to opt out of working more than their normal Sunday working hours subject to one month’s notice for large shops and three months’ notice for small shops.

[Catherine McKinnell]

rose—

[Mary Creagh]

rose—

[Brandon Lewis]

I will give way in one second; I just want to finish the last point. The new schedule updates the obligation on employers to notify shop workers of their rights by specifying in regulations the form and content of the explanatory notice that employers must provide to existing and new shop workers. It also strengthens the consequences for failure to comply in some important ways.

[Catherine McKinnell]

The Minister talks about rights for shop workers, but surely he must understand that rights are only as good as the ability to use and enforce them. I could make many points, and I will when I make my speech, but one point I must make is that the Government have made it increasingly difficult for any employee to enforce their rights at work, so much of what he is saying is meaningless.

--- Later in debate ---

[Catherine McKinnell]

What work have the Government undertaken to assess how many shop workers are currently able to exercise their existing rights to exempt themselves from Sunday working in order to inform these measures which, supposedly, protect employees who do not want to work on Sundays?

[Brandon Lewis]

All shop workers have that right, but my view is very much that we need to ensure that it is more transparent and that they have a better understanding. To exercise rights, people need to know what they are.

New schedule 1 provides powers to make regulations about the meaning of “normal Sunday working hours” and the form and content of explanatory notices. Amendment 76 will enable those powers to come into force on Royal Assent and allow the Government to pass the regulations, but naturally we intend the regulations themselves to come into force with the provisions on Sunday trading hours and the improvements to shop workers’ rights. We intend to define a shop worker’s “normal Sunday working hours” as an average over a number of Sundays, so that the phrase means essentially what it says but is specific enough that both the shop worker and the employer know where they stand. We will publish draft regulations and invite views from stakeholders to take into account issues such as seasonal work.

On the hon. Lady’s very fair point, our intention on the form and content of explanatory notices to shop workers is that as well as being updated, they will be in clearer English than the text in the existing legislation so that shop workers can clearly understand their rights and will be able to exercise them. We also intend to include pointers to sources of further information and advice, such as the ACAS helpline, guidance on gov.uk or, indeed, the relevant union. The changes amount to substantial improvements to shop workers’ rights.

[Catherine McKinnell]

In explaining the purpose of the clause, the Minister is shining a light on the big problem that the provisions will present to many shop workers in trying to remedy the situation in advance. He must recognise, though, that many shop workers do not want to enter into a dispute with their employer over this issue. Perhaps the Government should think again about whether they should introduce changes that will put both shop workers and their employers into a difficult position.

Money Creation and Society

Catherine McKinnell Excerpts

Thursday 20th November 2014 Commons Chamber

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I congratulate the hon. Member for Wycombe (Steve Baker) on his thoughtful and thorough opening speech, as well as my right hon. Friend the Member for Oldham West and Royton (Mr Meacher) on his remarks. In their absence I also congratulate the hon. Members for Brighton, Pavilion (Caroline Lucas) and for Clacton (Douglas Carswell) on securing today’s important debate.

This debate follows a significant campaign by Positive Money, which has raised important issues about how we ensure financial stability, and how we as parliamentarians and members of the public can gain a greater understanding of the way our economy works, in particular how money is supplied not just in this country but around the world.

Some important questions have been highlighted in the debate, although not all have been answered. There are questions about how money is created, how money or credit is used by banks and others, how our financial system can be more transparent and accountable, and particularly how it can benefit the country as a whole. That latter point is something that Labour Members have been acutely focused on. How do we re-work our economy, whether in banking or in relation to jobs and wages, so that it works for the country as a whole?

It is worth reflecting on our current system and what it means for money creation. As the hon. Member for Wycombe set out eloquently in his opening speech, we know that currency is created in the conventional sense of being printed by the Bank of England, but commercial banks can create money through account holders depositing money in their accounts, or by issuing loans to borrowers. That obviously increases the amount of money available to borrowers and within the wider economy. As the Bank of England made clear in an article accompanying its first quarterly bulletin in 2014:

“When a bank makes a loan to one of its customers it simply credits the customer’s account with a higher deposit balance. At that instant, new money is created.”

Bank loans and deposits are essentially IOUs from banks, and therefore a form of money creation.

Commercial banks do not have unlimited ability to create money, and monetary policy, financial stability and regulation all influence the amount of money they can create. In that sense, banks are regulated by the Prudential Regulation Authority, part of the Bank of England, and the Financial Conduct Authority. Those regulators, some of which are—rightly—independent, are the stewards of “safety and soundness” in financial institutions, especially regarding banks’ money-creating practices.

Banks are compelled to manage the liabilities on their balance sheets to ensure that they have capital and longer-term liabilities precisely to mitigate risks and prevent them from effectively having a licence to print money. Banks must adhere to a leverage ratio—the limit on their balance sheets, compared with the actual equity or capital they hold—and we strongly support that. Limiting a bank’s balance sheet limits the amount of money it can create through lending or deposits. There are a series of checks and balances in place when it comes to creating money, some of which the Opposition strongly supported when we debated legislative changes in recent years. It remains our view that the central issue, the instability of money supply within the banking system, is less to do with the powers banks hold and how they create money than with how they conduct themselves and whether they act in the public interest in other ways too.

We believe the issues relate to the incentives in place for banks to ensure that loans and debts are repaid, and granted only when there is a strong likelihood of repayment. When the money supply increases rapidly with no certainty of repayment, that is when real risks emerge in the economy. Those issues were debated at great length when the Financial Services (Banking Reform) Act 2013 made its way through Parliament, following recommendations from Sir John Vickers’ Independent Commission on Banking and the Parliamentary Commission on Banking Standards, which considered professional standards and culture in the industry. The 2013 Act created the Prudential Regulation Authority and gives regulators the power to split up banks to safeguard their future, to name just two examples of changes that were made. However, we feel that it did not go far enough.

The Opposition’s concern is that the Government’s actions to date in this area have fallen short of the mark. They have failed to boost sufficient competition in the banking industry to raise those standards and to create public confidence in the sector. As hon. Members with an interest in this area know, we tabled a number of amendments to try to strengthen the Bill, and to prevent banks from overreaching themselves and taking greater risks, by ensuring that the leverage ratio is effective. That goes to the heart of many of the issues we are debating today. The Government rejected our proposals to impose on all those working in the banking industry a duty of care to customers. That would help to reform banking so that it works in the interests of customers and the economy, and not solely those of the banks. Those are the areas on which we still feel that reform is needed in the sector.

It is clear from this debate that there is a whole range of issues to consider, but our focus is that the banks need to be tightly and correctly regulated to ensure that they work for the whole economy, including individuals and small and large businesses. That is the key issue that we face at present. Only when the banks operate in that way and work in the interests of the whole economy will we find our way out of the cost of living crisis that so many people are facing.

I thank hon. Members for securing this very important debate and for the very interesting contributions that have been made from all sides of the House. I am pretty certain that this is not the end of the conversation. The debate will go on.

Childcare Payments Bill

Catherine McKinnell Excerpts

Monday 17th November 2014 Commons Chamber

[Catherine McKinnell (Newcastle upon Tyne North) (Lab)]

I beg to move, That the clause be read a Second time.

[Madam Deputy Speaker]

With this it will be convenient to discuss the following:

Amendment 2 in clause 1, page 2, line 4, at end insert—

‘( ) The amount of the top-up payment is 66.66 per cent. of the amount of the qualifying payment where the qualifying child is a disabled child.”

Amendment 1 in clause 14, page 8, line 42, at end add—

‘(3) A child is a qualifying child for the purposes of the Act until the last day of the week in which falls on the 1 September following the child’s eleventh birthday (or eighteenth birthday in the case of a disabled child).”

[Catherine McKinnell]

New clause 1 stands in my name and that of my hon. Friend the Member for Wirral South (Alison McGovern), whom I wish to congratulate on her new role. It calls on the Government to consider the necessary help that hundreds of thousands of parents of three to four-year-olds need now to cover the ever-rising costs of child care.

Before I elaborate on the new clause further, I wish to reiterate a point that the Opposition have stressed throughout proceedings on the Bill. We welcome any new investment in child care and, in particular, any extra support for hard-pressed parents and families up and down the country who are struggling to juggle work and family life. That is worth remembering because, after all, we are the party which, in government, pioneered investment in early years. The principle that every child matters was at the centre of the Labour Government’s work across all Departments. We are the party that, in government, made no apology for focusing our efforts on, and redirecting any available support to, the children and families who needed our help the most. We are the party that, in government, made it its business to tackle disadvantage and to improve the life chances of every single child from the earliest possible age to give them the best possible start in life.

[Andy Sawford (Corby) (Lab/Co-op)]

I agree with the case my hon. Friend is making. Does she share my concern about the closure across the country of Sure Start centres, which were a key part of that commitment to supporting children and families, including the Raunds Sure Start centre in my constituency, which the Tory county council is now going to close?

[Catherine McKinnell]

My hon. Friend makes a very valuable point and I was just about to come to that. We are the party of Sure Start and the thousands of Sure Start centres that existed in 2010. It is not specifically relevant to this debate, but we could not allow it to pass without mentioning the very deep concern up and down the country about the future of our Sure Start centres.

There are concerns, which were made abundantly clear by a number of witnesses in Committee last month, that the Bill does not go anywhere near far enough to provide the support that thousands of parents and families desperately need right now. They need that support now, not in 12 months’ time, which is why we tabled new clause 1. Based on the Family and Childcare Trust’s annual survey, we know that child care costs have risen five times faster than wages since 2010, at a time when wages have lagged behind prices, leaving people £1,600 a year worse off on average. This support is even more vital when we see how much parents have lost out as a result of the Government’s choices: the decisions to cut tax credits, child benefit and maternity pay, and to close thousands of Sure Start centres.

As we saw and read in the news yesterday, research from the London School of Economics and the Institute for Social and Economic Research at the university of Essex shows clearly how the burden of austerity under this Government has fallen most heavily on those with lower incomes. The research found that the Government’s tax and benefit changes have seen the poorest lose about 3% of their incomes, while the richest half of the country have actually seen their incomes increase by 1% to 2%. That blows away the Government’s claims from the start that we are somehow all in this together. The research highlighted the fact that families with children have fared worst of all, which confirms our worst fears. Single parent families, in particular, have lost far more through cuts to tax credits and other support than they may have gained through any tax changes, proving that the Government have given with one hand but taken away far more with the other—so much for being the most family-friendly country. Families have lost out on up to £1,500 a year due to changes to tax credits alone. Tax credits are a vital part of income for many working parents, especially those on the most modest incomes.

When we look at all the tax and benefit changes since 2010, including the Government’s much-lauded and touted personal allowance increases, we see that families have clearly been hit hardest of all, and that will remain the case right up to the general election. A family with both parents in work will be about £2,073 a year worse off and a family with a single parent in work will be about £1,300 a year worse off. Despite the Conservatives’ claim of creating the most family-friendly country and the Liberal Democrats’ supposed belief that families should get the support they need to thrive, the Government have not been family-friendly and they have not stepped in to provide families with the help they so desperately need to get to grips with the soaring costs of child care. Far from stepping in, they have pulled the rug from under the feet of many families. Any extra help for parents struggling with the cost of child care is clearly to be welcomed. However, not only is the Bill too little too late for hundreds of thousands of families, we are disappointed that the Government have so far refused to consider that additional support could be offered to families right now. That is why we have tabled new clause 1.

[Mr Jim Cunningham (Coventry South) (Lab)]

Does my hon. Friend agree that we can see the Government’s attitude to child care with their closure of more than 400 Sure Start centres?

[Catherine McKinnell]

Up and down the country, there is deep concern about the disappearing Sure Start services. We know that the worst is yet to come when we look at the dire straits in which many local authorities find themselves and the difficult decisions that many are having to make about their Sure Start services. My hon. Friend makes a very good point: that does sum up the Government’s attitude to support for children and families. They simply wash their hands of the issue whenever it is raised in this House.

We tabled new clause 1 because we want to compel the Government to explore the effectiveness of extending the free entitlement for three and four-year-olds when both parents are in work. The first part of new clause 1 seeks to understand what support the current proposals will provide to the parents who need it most. The free entitlement introduced under the Labour Government, which happily has been continued under this Government, makes a real difference to hard-pressed families. The simple truth is that, months after the Bill was first published and introduced, we are still none the wiser about exactly how many parents will be better off as a result of the top-up payments, or, crucially, by how much.

That stands in marked contrast to our plans to extend the free entitlement for three and four-year-olds, which will be worth £40 a week, or £1,500 a year, to about half a million children. We know from the Government’s impact assessment that of those families who will be newly eligible for support under the Bill—those who are self-employed, or those whose employers do not currently offer employer supported child care vouchers—the average benefit will be about £600 a year. Clearly, that is far lower than the £2,000 per child that the Government have been touting ever since they announced the policy for top-up payments in March.

It is worth remembering that some 520,000 families currently benefit from ESC vouchers. The Government’s impact assessment sets out a number of case studies where families might be better off or, indeed, worse off under the new top-up payments. The impact assessment suggests that families can retain their ESC vouchers if they wish, but goes on to list a whole range of caveats relating to whether parents will be able to continue to qualify, whether they would be better off remaining under the current voucher scheme, or whether the new top-up scheme might be better for them.

Clauses 62 and 63 seek to wind down the ESC scheme over the next few years, closing it to new entrants. Presumably, ESC vouchers will eventually vanish completely. If a parent changes jobs or if their employer stops offering vouchers—this could well happen, as voucher providers are set to see the majority of their business disappear—they will have no choice but to switch to top-up payments, leaving many worse off.

We heard evidence from a wide range of witnesses in Committee last month who cited the Resolution Foundation’s work. It is worrying that the Resolution Foundation had to undertake that work because the Government have not done sufficient work to look at the true impact on parents. The Resolution Foundation suggests that 80% of the families who will benefit from top-up payments are in the top 40% of income distribution. The remaining 20% will go to those in the middle of the distribution scale. If the key aims of the Bill are to support parents with the cost of child care and to help more parents back into work by making work an economically viable option, those figures raise questions about whether its aims are achievable through this Government scheme alone. In contrast, many child care experts agree that Labour’s child care plans, as outlined in new clause 1, meet these twin aims.

--- Later in debate ---

[Priti Patel]

I thank the hon. Gentleman for his comment. I outlined measures relating to disabled children in Committee. We recognise the high costs faced by parents of disabled children, and the specialist care that their children need, but increasing the amount of top-up is obviously not appropriate, for the reasons that I have already outlined. I have made a commitment on disabled children, and I am exploring the possibility of increasing the maximum amount that a parent of a disabled child can pay into their child care account. For those reasons, I ask the Opposition to withdraw their new clause.

[Catherine McKinnell]

I thank the Minister for her thorough reply to the concerns that I expressed earlier. She has gone some way towards alleviating them, but some concerns remain. We shall have to give the Government the benefit of the doubt on the delivery of her reassurances, but that does not take away from the fact that dealing with the supply-side issues and extending the free entitlement for three and four-year-olds would constitute a much better offer to parents. The Government could do that now to provide support for parents who are struggling with child care costs and with the cost of living more generally. We will therefore press new clause 1 to a vote.

Question put, That the clause be read a Second time.

--- Later in debate ---

[Catherine McKinnell]

Any new investment in child care—particularly support for struggling families up and down the country who are battling to juggle their work and family lives—is clearly welcome. The Bill is therefore important, but it is long overdue for thousands of parents.

Fundamentally, we remain concerned that the Bill will simply not address the situation in which too many parents have been left. The evidence is now overwhelming. The cumulative changes to tax and benefits over the Government’s time in office have hit families hardest, as is clearly shown by new research published today. From our analysis of official statistics, we know that some families in which both parents are in work will be £2,000 a year worse off on average by the next election as a direct result of the Government’s tax and benefits choices. Researchers from the London School of Economics and the university of Essex have released findings showing that the clear losers under the Government are lone-parent families, large families and children.

This summer, the Prime Minister announced that all Government policies have to pass a families test. It is interesting that that is his aspiration only now, because it is abundantly clear that the Government have completely failed the families test to date. We share the widely expressed concern that the Bill will not go anywhere like far enough to make up the shortfall that families face, partly because of the tax and benefits changes, but also because of soaring child care costs.

Aside from that central issue, we have several other concerns. We are worried that parents will be left exposed to inflated child care prices, as my hon. Friend the Member for Wirral South (Alison McGovern) clearly set out in her speech on new clause 2. The Government have only one chance to get the hugely important IT infrastructure right, but crucially there is huge concern that parents might face a nightmare of complexity and confusion if the Government fail to provide adequate support and information to help them to make informed choices and to navigate between the schemes for universal credit and for the top-up payments.

Welcome though the support is, for far too many parents it will be far too little, far too late. I hope that the Minister has taken on board the concerns we raised throughout the proceedings in Committee and on Report, whether on some of the more technical aspects of the Bill’s operation or on the more fundamental issues.

[Ms Ritchie]

My hon. Friend is making some compelling points. Is she aware of research by the Resolution Foundation that found that 80% of the families who will benefit from the top-up payments available through the tax-free child care scheme are in the top 40% of the income distribution scale, and that the remaining 20% will go to families in the middle of it? How will the scheme help those on low incomes, lone parents and those with large families?

[Catherine McKinnell]

My hon. Friend has herself made the point very powerfully. I was concerned when the Minister spoke at length about child poverty because the Bill will do very little to deal with such issues, and we know that such figures will only increase. Levels of child poverty have increased significantly under this Government, as the facts and evidence prove.

Although we should focus on what the Bill will achieve—it will provide support in meeting demand for some payments for child care—my hon. Friend clearly sets out which parents will benefit most from the support. However, even those parents are concerned that the scheme might unduly complicate their lives. It might be burdensome for parents to navigate it, particularly those at the lower end of the income scale who have to navigate between a reduction in universal credit support and a movement into the top-up payments scheme, where potentially disastrous child care support pitfalls await them. We discussed that at length in Committee and we have put our concerns on the record. Other Opposition Members and I very much hope that the Minister has taken all such concerns on board and can deliver on the reassurances that she has given.

Let me take this last opportunity to urge the Government to recognise the value to parents not only of this support with child care costs, but of the extension of the free entitlement to three and four-year-olds. Quite simply, that would ensure that working parents are better off. It would help more parents to get back into work or to work more hours, and it would help to bring home more pay for the hours they work. We know that so many parents are desperate for such support. It would be simple and effective, and it would not place any more burdens on parents than those they already face. It would not add any more complexity to a child care market that is already hugely complicated.

Parents have struggled for four years under this Government with a child care crunch of rising prices alongside stagnant wages. Although we will support the Bill tonight, I urge the Minister to ensure that she, her officials and her partners who deliver the scheme fulfil the promises that have been made during its passage in Committee so that parents can receive this much-needed support.

I look forward to the arrival, in 2015, of a Labour Government who will ensure that parents receive not only the support provided in the Bill, but an additional 10 hours of free child care for three and four-year-olds. That will deal with many of the supply-side and price inflation concerns, and it will also provide child care support for the parents who will not benefit at all from the scheme.