Chris Leslie
Main Page: Chris Leslie (The Independent Group for Change - Nottingham East)Department Debates - View all Chris Leslie's debates with the HM Treasury
(11 years, 7 months ago)
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Mr Gauke
Borrowing is down by a third from the position it was in when we came into office—that is the reality of the situation. We have to remember that if we had the policies advocated by the previous Government, borrowing in this Parliament would be £200 billion higher than it is going to be.
Chris Leslie (Nottingham East) (Lab/Co-op)
I do not know whether the Minister did not get the memo, but the Office for Budget Responsibility confirmed that, compared with the Government’s predictions for the 2010 spending review, borrowing is predicted to be £245 billion more. The Minister needs to get a grip on the fact that borrowing is getting higher. I dare him to say that the deficit is being reduced in this financial year as compared with the previous financial year, because that is just not happening.
Mr Gauke
The hon. Gentleman is right to say that borrowing levels are higher than predicted by the OBR three years ago, but that is not the same thing as saying that borrowing is higher now than it was. The fact is that at the last Budget the OBR forecast that the deficit was going to be lower this year than it was last year.
Mr Gauke
The reality is that, had we pursued the policies the Opposition advocated at the last general election, let alone now, the deficit would be much, much higher. In fact, the Opposition are not standing behind any of the deficit-reduction policies they advocated at the last general election. For example, I think they support what we are doing on the fuel duty—it was one of the few measures the previous Government had in order to reduce the deficit.
Chris Leslie
I thank the Minister for giving way so generously, but I just want him to answer my question. He is not claiming that the deficit is still being reduced, is he? It is not falling this year compared with the last financial year, is it?
Mr Gauke
My hon. Friend is absolutely right. We want an international tax system that ensures that economic activity is taxed where it occurs. That involves working internationally, and he is right to highlight the Prime Minister’s ambitions while we have the presidency of the G8, which will feed through to the G20 and the work that the OECD is already doing, which we support. It is right to have an international tax system that reflects the reality of how multinational businesses work.
Clauses 203 to 212 introduce the UK’s first general anti-abuse rule—GAAR—which will provide a significant new deterrent to abusive avoidance schemes and strengthen HMRC’s means of tackling them. On top of that, we are taking action to close a further 15 tax avoidance loopholes, which will increase tax revenues by almost £1 billion up to 2017-18, as well as protect future revenues. The Chancellor gave a clear warning in the 2012 Budget that the Government would take action on aggressive stamp duty avoidance. The Bill follows up on that warning by legislating against those who continue to avoid tax on property transactions. All these measures will stop people exploiting legislation to gain tax advantages that were never intended, and they will also encourage fairness.
Chris Leslie
While the Minister is on the subject of companies that might not pay their fair share of corporation tax, will he confirm that the banks received a substantial corporation tax cut in the past financial year and the one before that, yet he has done nothing to correct the situation?
Mr Gauke
No, I cannot confirm that, because it is not correct. The reality is that the reductions in corporation tax falling to banks have been more than offset by increases in the bank levy. We have sought on every occasion to offset the decreases in corporation tax through increases in the levy.
Chris Leslie
I had a feeling the Minister would say that the corporation tax reduction had been offset by the bank levy. However, although the Prime Minister promised that the levy would raise £2.5 billion, it raised only £1.8 billion in 2011-12—[Interruption.] Perhaps the hon. Gentleman is getting an answer to this point from the Economic Secretary. In the past financial year, the levy raised only £1.6 billion, so there is a massive shortfall compared with the amount that the Prime Minister said it would raise. How on earth does that offset the corporation tax cut for the banks?
Mr Gauke
We were clear that our objective was that the bank levy would collect £2.5 billion, on a permanent basis, which is more than the bank payroll tax ever collected. When the amount has fallen below our expectations, we have adjusted the levy, and the independent Office for Budget Responsibility anticipates that the bank levy will raise £2.5 billion this year. We have made adjustments largely because the banking sector has continued to be afflicted by economic difficulties throughout the world, as a consequence of the crash, so fragile global conditions have played a part. I am not going to be preached to by the Opposition on the taxation of banks. We have introduced a bank levy; the Opposition had 13 years in which to do something about that, but failed to do so.
Chris Leslie (Nottingham East) (Lab/Co-op)
The Minister’s job was clearly to drill down into the technical details, rather than focus on the big picture of the Budget and the Finance Bill. [Interruption.] There is heckling already. It would have been nice to see a bit of life from the Minister during the debate. How to draw the sting from a Finance Bill? Send for the Exchequer Secretary. It is true that he is less provocative than the Chief Secretary to the Treasury; I will give him that.
It is true that the Government wanted to kill off any interest in the Bill and put it on the back burner. Towards the end the Minister tried to arouse the enthusiasm of his colleagues on the Back Benches for the Bill by saying that it was about building a fairer society and energising Britain, but it is not a Bill for building a fairer society or energising business. It is not a Bill for the economy. It is not about what is best for the country at all. It is a Bill totally designed around what the Chancellor thinks is best for him. As the weight of evidence mounts that his plan is failing, he flails around desperately to justify his strategy, casting around constantly to blame everyone and everything else for the fact that everything is going so badly wrong.
The Bill gives us a glimpse of just how desperate things must be getting inside the Treasury. For the Treasury team, it is all about the politics, but what about the economics? Let us be clear. There is no positive impact on economic growth from the Bill. The Government’s own Office for Budget Responsibility on page 46 of its report on the Budget states that it will have
“no impact on the level of GDP at the end of the forecast horizon.”
The OBR also says that
“these measures reduce GDP growth”
in 2013. After all that effort by the Chancellor, culminating in the Budget and this weighty Finance Bill, what is the impact on economic growth in this calendar year? It is negative.
It is no wonder that the Treasury’s plans and the OBR forecasts are on a slippery slope, constantly and continuously downgrading their projections for the economy while upgrading the size of the deficit. Those grandiose plans and supposedly tough decisions that the Chancellor set out three years ago have seen economic growth of just 0.8%, compared with the 5.3% that they forecast and promised at the time. All the while, our international competitors are moving forward, leaving us behind. Only two other G20 countries have grown more slowly than the UK since the 2010 spending review—Japan and Italy.
Chris Leslie
Let us not forget the double-dip recession, together with the shrinking economy in the last quarter for which figures are available.
I give way on the double-dip recession.
David Rutley
I thank the hon. Gentleman for giving way. I am pleased to see that he has departed from the vaudeville act that we normally see from the shadow Chancellor, and instead adopted the posture of Eeyore. Has he failed to notice that the IMF has projected that the growth in the UK for this year and next will be greater than that in both France and Germany?
Chris Leslie
I am sorry if I am upsetting the hon. Gentleman by having to emphasise some of the things that are going wrong in the Government’s plan, but somebody has to wake up the Back Benchers after the scintillating comments that were made from the Government Front Bench. If the hon. Gentleman thinks he has the capability to stand up and defend his Government’s record on economic growth, we would all be impressed. He must surely accept that it has been a massive and total failure and a disappointment which has not only hurt all our constituents, but has made the public finances far worse than the Government were predicting.
The Government said that they wanted to rebalance the UK economy, but look at the latest trade statistics, which showed our trade deficit increasing by £1 billion between January and February, with the balance of payments deficit for our country now at £36 billion. Despite the depreciation of sterling, our exports are shrinking, and despite the problems in the eurozone, our exports to other non-eurozone countries, such as the United States, are getting worse as well, and all that from the Chancellor who two years ago promised he would deliver
“a Britain carried aloft by the march of the makers.”
Mark Field
The hon. Gentleman will appreciate that the global situation, particularly among the eurozone countries, makes it incredibly difficult for us to achieve the export-led growth that we would all have liked over the past three years. Will he give credit to the Government for the fact that more than 1 million private sector jobs have been created over the past three years? That should be welcomed and should counter some of the pessimism emanating from his speech.
Chris Leslie
If I can try to be optimistic, I hope that there will be a sustained increase in employment, but I am getting worried. The latest figures showed that unemployment is rising again. We must look at the underlying situation reflected in the productivity gap and the capacity problem in the economy, which the Treasury is worsening. The Minister spent a large part of his speech trumpeting the reductions in corporation tax that the Treasury have put into the Bill as the big solution to those problems. Of course we want the UK to be seen as a good place for investment, but the Treasury has not produced any analysis of how those further cuts in corporation tax will feed through into economic growth. We hope they will, but it is time we saw some clear proof that inward investment and business growth are flowing from that approach, and that we are not just stacking up corporate surpluses which are locked away because businesses fear that they will not be able to access bank credit.
Geraint Davies
My hon. Friend will know that the debt to GDP ratio will have grown from 55% in 2010 to 85% in 2015, and that the way to sort that out is by confronting the debt and/or confronting the GDP—namely, growth. Does he accept that even though 1 million more people are in jobs, overall production has not gone up, so their average productivity has gone down? Does he agree that it is time to invest in infrastructure, super-connectivity and skills, and to make Britain more productive and make it grow?
Chris Leslie
My hon. Friend makes a good point. It is not a good sign that it is taking more and more people to produce the same amount of output. In the long run that is not a sustainable strategy for our economy. Ministers need to look more seriously at that issue. The problem is not just the fact that the Bill neglects economic growth.
Tim Loughton
I am slightly puzzled that the shadow Minister cannot see the link between the reductions in corporation tax and attracting businesses to this country. He should get out more. Is he not aware of a number of companies which have relocated from the Republic of Ireland, for example? Bank of America has relocated £50 billion worth of its trading business to the City of London. Firms in my constituency are bringing business back from Denmark to this country because the corporation tax rates are much more beneficial for them. That sends out a clear message that this is the place to do business.
Chris Leslie
I am afraid that the former Minister’s suggestions are not borne out by the evidence. Ultimately, corporation tax benefits a company only if it is turning a profit. I am yet to see action being taken in the Bill to help businesses now, particularly those struggling to get back into the black. Those are the steps that are needed to help the businesses that are finding the current economic conditions very difficult indeed.
It is not just the failure on growth; the Bill does not contribute to deficit reduction either. The deficit is already set to be £245 billion larger than the Government planned. The OBR reacted to the Budget and the Finance Bill with some stark predictions. In fact, it stated on the first page of its Budget analysis that the deficit reduction plan has now stalled. The £121 billion deficit recorded in 2011 will turn out to be the same for 2012, and the OBR predicts that it will be the same for this financial year. I challenged the Minister earlier to stand up and say that the deficit is still falling. He tried to claim that the OBR figures pointed in that direction. Well, they point in that direction by less than one tenth of 1%—a fig leaf of £100 million. The claim that the Government still have a deficit reduction strategy is not credible. The deficit reduction strategy is gone.
The Deputy Prime Minister and the Chancellor of the Exchequer both promised that they would balance the books by 2015, so what has happened to that promise? Their explanations for the failure become more and more desperate. They blamed the snow, the royal wedding, Europe, the banks and the unemployed. The blame has been laid at everyone’s door except where is belongs—No. 11 Downing street. The time has come for Ministers to take some responsibility for their failings.
The OBR also predicts—these are pretty shocking figures—that real wage levels will fall by 2.4% over the course of this Parliament. Wages are forecast to fall most steeply this year, relative to prices. The cost of living it increasing, but it is getting harder and harder for people to keep pace.
Where are the measures in the Bill to create a fairer society? The Budget and the Bill are deeply unfair for millions of hard-working families who will be, as my hon. Friend the Member for Corby (Andy Sawford) said, on average £891 worse off this year because of the changes introduced since 2010. In fact, the Institute for Fiscal Studies statistics show that a lone-parent household in work will lose £1,206 this financial year, a couple with children where both parents are earners will lose £1,869 and—this is the most staggering statistic—a couple with children where only one parent is an earner will lose, typically, £3,995 this year as a result of the changes the Government have announced since 2010.
Tim Loughton
On that point about families in which one parent is an earner, will the hon. Gentleman therefore commit his party to supporting a transferable tax allowance for married couples, which, as well as sending out a strong message, would specifically help those couples where one person goes out to earn and the other looks after the children?
Chris Leslie
I understand that the hon. Gentleman will be tabling amendments on that issue and look forward to seeing how he will frame them. I know that Ministers are looking forward to seeing those amendments, because they will spark a useful debate within the Government ranks. Personally, I do not think that is the best strategy. I think that it would be better to look at the damage his hon. Friends have been doing to the tax credits system. It is women and families, in particular, who are paying the price for the Chancellor’s economic mistakes. In fact, the Government have cut support for parents by reducing statutory maternity and paternity pay so that by 2015 it will be worth £180 less than it would have been had it been uprated in line with inflation. I think that the hon. Gentleman needs to look at that point. The Prime Minister once promised—I know that this is something the hon. Gentleman feels keenly—that he would lead the most family-friendly Government ever, but it is ordinary families across the country who are paying the price for the Government’s failed economic strategy.
The Finance Bill will make Britain less fair. We are definitely not all in this together. For example, let us look at the Government’s “shares for rights” scheme, set out in clause 54, which I know we will be considering again in the Chamber. The Government’s view of a fairer society is one in which businesses are allowed to force new employees to give up their rights at work, including the right not to be sacked unfairly and the right to redundancy pay, something so unpopular that even former Conservative Ministers voted against it in the House of Lords. It is not even as if the business community is asking for that power. Of the 184 businesses that responded to the official consultation, only three said that they wanted to use the scheme. Ministers are totally out of touch with employees and employers on that issue.
Whatever rosy picture the Minister tries to paint, the public can tell that living standards are falling, not rising. The Government just do not seem to understand how extreme austerity has hit consumer confidence, how it is sapping business confidence and how precipitous cuts and tax rises have had the opposite of their intended effect. Let us take the study published only last week by the Financial Times showing that they are harming the prospects of recovery for some of our most fragile local economies, especially in poorer areas of the country, by removing £19 billion of spending power from their residents. It is the regions of the UK most in need of regeneration and private sector investment that are feeling the heaviest impact.
Andy Sawford
My hon. Friend is making an incredibly important point about the uneven effects of the Government’s policies. In some parts of the country people have been able to return to work, according to the much-vaunted statistics on unemployment in recent months, but across East Northamptonshire 126 more people this year are on employment and support allowance because of the Government’s failure to get our economy growing overall and their particular failure to help those communities that have suffered most in recent years.
Chris Leslie
Where is the regional economic strategy from the Government? Where is their attempt to revitalise those parts of the country that have suffered most of all? I am sorry if I sound a little like Eeyore to Government Members, but somebody has to say, as my hon. Friends have been saying, that Government policies are just going to harm those parts of the country that are in desperate need of regeneration and will make the situation worse for them. My hon. Friend makes that point well.
Geraint Davies
Does my hon. Friend accept that one of the Government’s biggest failures has been not to resuscitate consumer demand, which would stimulate growth? It is the poorest in our communities who spend the highest proportion of their income, because they cannot afford to save. By hitting the poorest the hardest the Government are hitting growth overall and making a more unbalanced economy and a more divided society.
Chris Leslie
It is the politics of shooting oneself in the foot. The difficulty is that the Chancellor does not even understand that his strategy is making his task far harder in the long run. It is not just the fact that people on lower and middle incomes are suffering as a result; it is the unfairness when they compare it with what the Government are doing for those parts of the economy and of society that they favour. The banks are still getting away with not paying their fair share. A tiny corner of the country is doing very well out of the Chancellor. The banks, whose actions created the deficit, are not contributing their fair share towards repairing it. In fact, astonishingly, they are benefiting from the Chancellor’s generosity. This Bill fails to get a grip on the contribution the banks ought to be making. It is still too weak on the very institutions that had to be bailed out by the taxpayer because of their perilous self-indulgence. We have debated in the past, and we will do so again, the fact that Ministers have failed lamentably when it comes to tackling bonuses. In opposition, the Prime Minister promised:
“Where the taxpayer owns a large stake in a bank, we are saying that no employee shall be paid a bonus of over £2,000”.
My hon. Friends probably remember that comment. However, when I express my dismay about the Bill’s weakness, I am not just talking about the lack of a bank bonuses tax. The Government said that the bank levy, as a charge on bank balance sheets, was their answer to clawing back some of the costs for the taxpayer.
The Prime Minister said in 2011 that once the levy was “fully up and running” it would raise £2.5 billion each year—in fact, he said that it would raise £9 billion over the spending review period. We now see that the Government have totally failed to live up to their promise and that the banks have swerved to avoid the bank levy; they have not paid anything like the amount mentioned. In fact, the Chancellor has raised nearly £2 billion less from the banks since the Prime Minister made that promise just two years ago. Those are not my figures, but the latest figures from the Office for Budget Responsibility and HMRC.
The Government repeatedly claim—the Minister did it again today—that the bank levy will raise £2.5 billion a year and that the cuts in corporation tax will not benefit the banks; the Minister said that those corporation tax cuts would be offset by increases in the levy. However, the OBR figures, published alongside the Budget, estimate that in the financial year that has just ended, 2012-13, the bank levy will raise just £1.6 billion—a massive shortfall. We have then to deduct a further £200 million because of the generous corporation tax cut. All in all, the banks have paid £1.1 billion less than Ministers promised. That is even worse than in the previous financial year of 2011-12, when the combined shortfall was £800 million less than the Minister promised.
What on earth is going on? Why cannot the Minister get a grip of the issue? The bank levy strategy is haemorrhaging money when it should be boosting the Exchequer far more significantly. I ask my hon. Friends to think of what that nearly £2 billion could have achieved in the past two years. This is the third or fourth attempt by the Government to get the issue right, but each time they have failed to raise what they promised. The Minister has to go back to the drawing board now and come up with a policy that will actually work, rather than something designed to pass a press release test.
The Chancellor is making bad decisions because he is getting deeper into difficulty, proving time and again that saving his own skin comes before getting the judgment right. It did not take long for the world to see, for example, that the Government had not properly thought through their flagship Help to Buy scheme after it was announced in the Budget. That was hailed as the boost that we needed for housing, but focusing only on demand without any corresponding action to supply more affordable homes is only a half-policy partially thought through.
I hope that the scheme succeeds, but why on earth cannot the Government ensure that funds are not siphoned off for second-home purchases? By contorting the scheme so that it does not count against the deficit figures, do they not realise that they have added complexity that might hinder take-up? After all, the Government promised that 100,000 people would have used last year’s NewBuy scheme by now, but only 1,500 people have become involved so far.
Chris Leslie
We will undoubtedly be able to judge the success of these issues, but there are some deeper flaws in the design of the Help to Buy scheme; we will debate that issue in more detail this week. It all reeks of a policy that has not been thought through properly—designed in haste and yet again not having the intended effect.
Understanding what the Government have put into the Finance Bill requires an understanding of what they have not put in. This was the Budget and the Finance Bill that were supposed to learn the lessons of the 2012 omnishambles Budget and Finance Bill—the pasty tax, the granny tax and the caravan tax. Here is the product of all the Government’s care and vigilance this year; I am sure that the Minister’s officials will be proud of him. The Government have painstakingly avoided anything that will have a positive and significant impact on growth, meticulously evaded any measures that might stimulate job creation and sidestepped anything that might repair the mess that they are making of the public finances.
In fact, the only real aspiration in the Bill is to get through it without any more U-turns. But by avoiding the bold action that we need to stimulate the economy, the Government have created a Bill bereft of the major reforms we need. So many measures are conspicuous by their absence. The Government have cut public investment, and now they are cutting back on policies, too.
I had hoped that the Chief Secretary to the Treasury would be here today; normally, he would open the debate on the Finance Bill. I do not know whether his not being here is a deliberate strategy or whether he has a decent reason; the shadow Chief Secretary has a decent reason for not being here, but that could not apply to the Chief Secretary.
We had hoped, before the Budget, that the Liberal Democrats would stick to one pledge—their pledge to support a mansion tax. We even tabled a one-line motion for Lib Dems to vote for, but they did not want to offend the Conservatives. But they should not worry because we will give them another chance to support their own policy later in the week—a mansion tax on properties worth over £2 million to deliver a tax cut for lower and middle-income households. We favour a 10p starting rate of income tax as the best way to do that and we think that should be in the Bill.
Why have the Government not legislated for their child care voucher extension, which has been pencilled in vaguely for some time after the general election? Where is the national insurance help for small businesses that we have been calling for and which the Chancellor should be acting on sooner? Why is that not in the Bill? It is not good enough for such provisions to be in black and white in a Budget book; it needs to be in the Bill. There have been so many promises in the media, but they have not been seen through in the Finance Bill.
The Finance Bill could be the moment when the Government change their mind on the bedroom tax, and it should be the legislation that repeals their lovely gift of an average £100,000 tax cut for Britain’s lucky millionaires through the cut to the 50p tax rate. As I have said before, it seems that with this Government there is one rule for the rich, but only one room for the poor.
Where do the Government get such a gratuitously unfair sense of priorities? The language used to validate a cruel, harsh, selfish approach is breathtaking—they insist on the caricature of the “spare room subsidy” and bristle at the term “bedroom tax” because they know that the public can see the policy for the disaster it is proving to be. The Chief Secretary to the Treasury, who is not here, wrote in The Sun on Easter weekend that he wanted to tackle the “bedroom blockers”—that from a Liberal Democrat Chief Secretary who could and should have blocked the bedroom tax in the first place.
Mark Field
Like me, the hon. Gentleman represents an inner-city seat. He will know from his own mailbag that the biggest housing issue is overcrowding. I find that in my constituency, and I cannot believe for one moment that the hon. Gentleman does not get similar letters from constituents. That is what is behind the so-called “bedroom tax”. We are trying to ensure that more vital social housing resource is made available to those in genuine need.
Chris Leslie
The Government are not putting any of those resources into building affordable social housing. Kicking people out of their homes will not help people in that way. We have already seen evidence that nine out of 10 of those affected by the bedroom tax have no option of going anywhere else at all. The Government have totally neglected the supply of affordable housing. They have not prioritised that.
Then we come to the grotesque spectacle of a Chancellor of the Exchequer demeaning his office—using the case of a multiple child killer to argue for his changes to the welfare system. We knew that Conservatives relish any opportunity to do down social insurance protections and that the Government’s policies are actually pushing more people into welfare—not helping them out, but pushing up the welfare bill to record levels. However, we did not know the depths to which the Chancellor would stoop. The nasty party is back.
The Chancellor certainly grabbed the headlines, but I say to Government Members that what he said diminished his standing in the eyes of millions who rely on benefits—those in work relying on tax credits as well as people looking for work, pensioners and the disabled. Those millions have absolutely nothing in common with Michael Philpott whatever and were all sickened by the evil behind those crimes. In his speech at the beginning of the month, the Chancellor had the audacity to castigate his critics for their “shrill, headline-seeking nonsense”—he said that without a hint of irony. He suggested that those who dared to criticise his plans
“always complain, with depressingly predictable outrage”
and are just another bunch of “vested interests”.
Let us just think about that accusation—“vested interests”. Putting to one side for a moment the fact that the Chancellor knows a thing or two about defending positions of privilege, is he really saying that those who care about defending the well-being of some of the most vulnerable in society are “vested interests”? Well, for the record, yes—we are interested in, and deeply concerned about, the impact that the bedroom tax, the withdrawal of council tax benefits and the changes to disability benefits will have. However, the more important question is why the Chancellor is not interested. Why does he think it makes sense to tell 660,000 people, most of whom have a disability, that they need to give up a spare room but leave nine out of 10 with no option of moving anywhere smaller? Why does he think that some of the poorest and most vulnerable can cope with significantly higher council tax bills as a result of the withdrawal of council tax benefit, the arrears from which could end up costing a fortune to collect? Why does he think it makes sense to penalise working people by cutting their tax credits at a time when we should be making work pay?
The Chancellor is not concerned because for him this is a political game. He is not serious about helping those on welfare; for him, and for the Conservatives’ new spin supremo, Lynton Crosby, this is all about ideology and tactics.
Geraint Davies
My hon. Friend will be aware that housing benefit costs have doubled in the past 10 years, but is he also aware that 70% of that increase is due to private sector rents because rents have been inflating and we have not been building enough houses? Does he accept that if we built more houses we could lower average rents, sort out housing benefit and give people stable communities and more chance of getting a job as well?
Chris Leslie
Looking at the situation in the round, that is exactly the sort of welfare reform that we need. If we are going to get to the root of these problems, we must have serious reforms to our welfare system, and we need a Government who are serious about delivering them.
The Chancellor and his Ministers are not serious about solving these issues; all they want to do is to stoke up fear and prejudice, blame the unemployed and the welfare system, and deflect attention from their own woeful failures to repair public finances. Serious welfare reform has to be a continuous process to fit the modern circumstances of society. Reform is never just a “job done”, nor should it aim only at being headline-grabbing. We should crack down harder on fraud but also on tax evasion, we should better reflect the contributory principle, and above all, we should focus relentlessly on getting people back into work so that they are making a productive contribution while also paying taxes again to bring in those much needed revenues.
A Work programme where only 2% of participants find themselves in sustained employment is a humiliation for these Ministers. They should never have scrapped the new deal, and if they were genuine reformers they would immediately set out a compulsory jobs guarantee, using the repeat of the banker bonus tax to fund a minimum-wage job placement for all young people unemployed for a year, and using the money saved from reducing the pension tax relief for the richest 1% to fund a job for all adults who are long-term unemployed for two years or more. No excuses: if they turn down those decent and properly paid job opportunities, they should forfeit unemployment benefits. Languishing on the dole for the long term must end, but we need to treat those looking for work with respect and give them a decent and real job opportunity, not cast them aside.
Andy Sawford
My hon. Friend rightly highlights the importance of helping the long-term unemployed back to work and the new deal’s success relative to the Government’s Work programme, which is a contradiction in terms. Does he recognise that in my constituency, which, according to independent surveys, is the most difficult place in the country for young people to find work, we need approaches such as the future jobs fund, which the Government scrapped as one of their first acts of vandalism on coming into office? We need those programmes, which we have proposed.
Chris Leslie
This is the answer to Ministers who were saying earlier from a sedentary position, “Where are your policies?” The difference between the parties is that they do not understand that jobs, at the heart of welfare reform, are the way to get revenues flowing into the economy. If they neglect economic growth and do not recognise that growth has an effect on the wider prosperity of society as well as on public finances, they will never repair the deficit as they claimed they would, and they will never have the fairer society that the Minister had the cheek to mention when concluding his speech. Ministers talk about fairness: tell that to the families who are losing £891 this year—households who are in work—when at the same time they see these Ministers giving away £145 million in the Budget to hedge fund managers by abolishing stamp duty reserve tax on some unit trust investments; tell that to those who are forking out 20% VAT and losing hundreds of pounds through higher taxes while the banks are let off the hook; and tell that to our constituents who we see, all too frequently, left with only £60 per week to live on while Ministers lavish on millionaires an average £100,000 tax cut in this financial year by scrapping the 50p top rate.
The Chancellor either does not understand fairness or does not care that he is creating unfairness. The Finance Bill will make the rich richer but do nothing to help the vast majority to secure a better standard of living. Worse still, the Bill will harm the prospects for our economy this year. Just at the moment we need measures to stimulate growth, the Government have produced this misguided Bill. They give a little away with one hand but take away so much more with the other. Their tax rises and cuts more than offset what they have promised in several years’ time on child care or changes to the personal allowance. Taking a penny off a pint of beer does not go very far when they have added 5p a pint through higher VAT.
Why is this such an inappropriate Bill? It is because the Chancellor does not prioritise the British economy or the prosperity of the British people. His No. 1 priority is himself: his own political reputation. It is all about reviving his own fortunes and trying to shore up his ideological credentials. This Budget and this Finance Bill were not about anyone else’s job but the Chancellor’s. That explains the fudging of the public accounts to make it look as though the deficit was falling when it is plainly as high as the year before. It explains the Chancellor’s refusal to budge from a failing strategy in case he had to admit his mistakes and swallow his pride, it explains the ever-widening net of blame for why things have fallen so off course, and it explains why the country’s fortunes have been downgraded while he carries on regardless. It is time that the Chancellor’s reputation was not the be-all and end-all of Treasury policy. It is time that we put the boost that our economy needs at the heart of everything we do. This Bill is bereft of the bold steps we need to kick-start Britain’s economy. I urge my hon. Friends to oppose it because Britain deserves better.
Chris Leslie
Let me make it absolutely clear that we should have a Government who are arguing for a financial transaction tax. We need to ensure that we get New York, in particular, on board, but we now have evidence of what will happen in the European Union, and there is no doubt that there is a very strong case for such a tax.
Frank Dobson
Yes, indeed. I have been advocating such a tax for some time, and I shall continue to do so.
I have asked Treasury Ministers several times how much money would be raised for the taxpayer by a 0.01% tax on financial transactions, but the great Treasury mandarins have always said that they have not worked out the figure. If that is the case, how can they possibly conclude that the money that would have to be paid out would damage the finance industry? If they do not know how much such a tax would raise, how can they know how much the industry would have to pay out?
We continue to find ourselves in the absurd situation in which the banks and their friends, and the big accountancy firms and their friends, are advising the Government on the taxation system that should be applied to them. We do not—as far as I know, anyway—have criminals advising the Home Office on criminal law, and I do not think that an industry with such a disreputable record should be advising the British Government on how it should be dealt with.
David Rutley
In 2014. [Interruption.] We have to take a stepped approach to rectify the changes Labour put through. The allowance is important and will be welcomed, and the other measures we are taking on the supply side, such as the reduction in corporation tax, will all help to create a platform for economic growth.