The Economy
Chris Leslie Excerpts(9 years, 5 months ago)
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Chris Leslie (Nottingham East) (Lab/Co-op)
I beg to move an amendment, at the end of the Question to add:
“but regret that the Gracious Speech fails to provide a strategy to build the productive economy that the country needs; note that a fragile recovery and stagnating productivity harms living standards and makes it harder to reduce the deficit; believe that every effort should now be concentrated on supporting middle- and lower-income working people; further note that the Gracious Speech is a missed opportunity to tackle the principal causes of rising welfare costs that flow from a low wage, high rent economy; further believe in the pooling and sharing of resources across the UK as the best mechanism for delivering social and economic change; urge the Government to pursue sensible savings in public expenditure as part of a balanced approach and not an ideologically-driven attempt to shrink public services beyond what is needed to address the deficit; and call upon Ministers to spell out where their cuts will fall and who will pay for their unfunded election pledges.”
I welcome the Chancellor to his place. Very few people serve two full terms as Chancellor and I am sure that the whole country will be grateful that he does not plan to do so either. Although he might have his eye on another job, I congratulate him on his reappointment to this one. Of course, we should not ignore the fact that he has a fancy new title to illustrate his role in the EU renegotiation process. He is now the First Secretary of State, no less, following in the footsteps of John Prescott and Peter Mandelson. Let us hope that his ministerial counterparts are suitably impressed.
The Chancellor must now deliver negotiations with other member states to convince the public to opt decisively for Britain to remain a member of the European Union. It is important to secure stronger rules so that welfare payments go only to those who have contributed to our system, but in my view we also need greater devolution from Brussels, an overhaul of the EU budget and far greater accountability of the main institutions of the European Union, which still feel too distant and out of touch. It is also essential that he agrees that we need a comprehensive independent risk analysis of Britain leaving the European Union. It needs to be carried out by the Bank of England, the Treasury and the Office for Budget Responsibility and it needs to be published in ample time for the public to consider it in full before the referendum.
Although this is not the Queen’s Speech that I wanted the House to be debating, I reassure everybody and remind the Chancellor that we will be a vigilant and responsible Opposition, watching closely the choices he still has to make and holding him to account at every step.
James Morris (Halesowen and Rowley Regis) (Con)
The shadow Chancellor talks about being a responsible Opposition. In the spirit of responsible opposition, will he admit the errors in his previous economic policy, in which he predicted that unemployment would rise and that we would have no growth? He was comprehensively proved wrong in the election. Has he had time to reflect on how he might recalibrate his economic message?
Chris Leslie
I have had plenty of time to reflect on the result of the general election. Obviously, we are disappointed with it and we will review our policies accordingly, but it is now our job to ask questions and scrutinise what the hon. Gentleman and those on his Front Bench plan to do. I shall come shortly to my observations about that.
Let us not neglect the subject at hand, which is the Queen’s Speech. The headlines have, of course, now been spun and the rhetoric from Ministers has started. They are trying in vain to make all the right noises about fairness and even a one nation Government, but let us pause for a moment, walk through the measures in the Queen’s Speech and cut through the spin.
The tax-free minimum wage for those working 30 hours sounds fine until we realise that it is already tax free. The real question is why there is no action in the Queen’s Speech for the low paid, such as incentives for a living wage, which even the Mayor of London supports. I do not know whether he is in his place, but perhaps he will join us later.
As for the rest of the spin, the household benefit cap, although it is necessary, is only a drop in the ocean of the overall welfare bill, saving less than one 10th of 1%, and is a total distraction from the root cause of escalating welfare costs for the taxpayer in recent years, the low-wage nature of our economy.
What about devolution to a northern powerhouse? If it is genuine, that is all well and good, but local communities have heard these promises before and they know that when the Chancellor talks about devolution it is usually code for shifting the consequence of cuts and not the power to deliver services.
Stuart Andrew (Pudsey) (Con)
At a meeting of the leaders of northern cities on Monday, the Labour leader of Manchester City Council, who has many years of experience, said that the north is working together better than it ever has before. Does that not show that the northern economic powerhouse is a reality and that it is working?
Chris Leslie
The clue was at the beginning of the hon. Gentleman’s intervention. Labour leaders do work well together in local government, and when we hear the Chancellor’s response to this debate they might find that there are a few surprises and a hidden agenda with a bit of a sting in the tail for them over the next few months.
What about the rest of the spin in the Queen’s Speech, such as extending the right to buy? Everyone is in favour of home ownership, of course, but the scheme proposed by Ministers is so badly thought through, throwing housing associations into chaos, that even the Mayor of London—for it is he—has called it the “height of insanity”.
There was a further piece of spin, of course: a tax lock designed purely to stop the Chancellor raising VAT again. Do not get me wrong, we welcome any effort by the Chancellor to legislate against his own record and his own worst instincts, but this legislation does nothing more than prove that he does not even trust himself on tax. Of course, it does not give any guarantees about other stealth tax rises elsewhere, nor does it prevent him from acting on his other instinct of always prioritising tax cuts for the very richest over those for those on middle and low incomes—[Interruption.] Conservative Members are all shouting from the Back Benches, but the Chancellor’s eyes are down on his notes. Is the Chancellor planning to cut that top rate of tax from 45p on earnings of more than £150,000? I will give way to the Chancellor if he can clarify for us whether that is his plan. Will he cut that rate of 45p for those earning £150,000, or not?
Graham Evans
Why in 13 years of the Labour Government did they not increase the top rate from 40p to 50p?
Chris Leslie
We have heard those arguments. I was asking the Government whether they plan to cut the top rate of tax of earnings of £150,000 from 45p, and perhaps down to 40p, and there is silence from the Government Benches and from the Chancellor. Perhaps he will come to that later in his speech.
The Queen’s Speech was high on rhetoric but was in reality the usual combination of diversion and distraction. As ever with this Chancellor, there is more than meets the eye. All the rhetoric is just the tip of a Tory iceberg, with 90% of their real agenda hidden below the surface, still invisible from public view. That agenda will not even be partly revealed until the emergency Budget on 8 July. Until then, serious questions remain unanswered about what drives the Government, and in what direction.
The trajectory of overall cuts set out in the March Budget goes beyond what is needed to eradicate the deficit by the end of the Parliament. According to the Institute for Fiscal Studies, the Queen’s Speech still leaves us totally in the dark about more than 85% of the Chancellor’s planned £12 billion of welfare cuts. Just this morning, the IFS criticised the Government for giving a
“misleading impression of what departmental spending in many areas will look like”.
Frankly, there is growing disbelief across the country that the Chancellor can protect those in greatest need while keeping his promises to the electorate on child benefit and disability benefits. My hon. Friends will not have failed to spot during Prime Minister’s Question Time yesterday how the Prime Minister, when challenged by my right hon. Friend the Member for East Ham (Stephen Timms) on the question of disability benefits, digressed into all sorts of reminiscences about the campaign trail and how much fun it was going to various meetings. The Prime Minister promised that
“the most disabled should always be protected”
and I will be looking to the Chancellor and the Secretary of State for Work and Pensions to keep the Prime Minister’s promises. The Government might have secured a majority, but they did not secure a mandate for specific cuts to departments or services because those were never explained or set out before the election. Nor have we ever had an explanation of how they will pay for their multi-billion pound pledges on tax and services or, crucially, for the NHS.
The Opposition agree with yesterday’s OECD assessment that a fair approach is the right one to take—sensible savings and protection for those on middle and lower incomes. Cuts that decimate public services would be too big a price to pay, especially as they may even result in higher costs in the longer term. We also heard how 8,000 nurse training places were cut in 2010. The use of agency nurses then proliferated to fill the gap. Is it any wonder, therefore, that NHS trusts now face a deficit of about £2 billion? Part of the reason the deficit is so big is that productivity has been so poor. Britain has the second lowest productivity in the G7, and output per worker is still lower than in 2010. This should have been at the top of the Chancellor’s agenda throughout the last Parliament, but he did not even mention it in his last Budget speech. For the Tories, it seems that productivity just springs magically if the Government just get out of the way, unrelated to any fiscal or policy choices that they make.
Mark Garnier (Wyre Forest) (Con)
The shadow Chancellor will know that many pundits have been looking at that productivity puzzle. The Treasury Committee has examined it for the past five years. If the Governor of the Bank of England, economists and everyone else does not understand that productivity conundrum, will he share with us where he thinks the lack of productivity comes from?
Chris Leslie
I will come to that in a moment. The hon. Gentleman must also be staggered that the Chancellor did not even mention it in his Budget speech. That was an omission that the Chancellor needs to correct. We take a different view of where productivity comes from because, for us, it depends in part on having decent infrastructure and public services—motorways that flow freely and trains that commuters can actually get on, tax offices answering business queries efficiently rather than keeping companies’ staff waiting on hold, employees who are off sick able to get treated swiftly in a decent NHS, an education system that supports a work force and provides training in high-quality skills. Each of these is crucial for our future economic productivity, and each depends on the Chancellor making the right fiscal choices for this Parliament.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Will my hon. Friend push the Chancellor a little harder on productivity? The recent report from the Chartered Management Institute said that management and skills were at the heart of productivity. The Government have not tackled those, and a culture has grown up in which even when managers fail to meet targets they still get their bonus.
Chris Leslie
My hon. Friend makes a good point. According to the OBR, if productivity growth per worker was closer to 4%, our national debt would be £350 billion lower by the end of this Parliament. There is a connection between the choices that are made in fiscal policy and the productive nature of our economy.
The OECD confirmed just yesterday in a sobering reality check for the Chancellor that continued weak productivity could lead to a higher than expected budget deficit, and he should listen to the OECD.
Damian Green (Ashford) (Con)
The shadow Chancellor rightly says that infrastructure is important. On the day when, by coincidence, the Crossrail tunnel is completed, will he not bring himself to recognise that, even at times of great public spending restraint, the last Government continued and, I am sure, this Government will continue with essential infrastructure spending on rail and roads, which lays the foundations for future long-term prosperity, but is difficult to do if the Government run up an unsustainable deficit?
Chris Leslie
The civil service used to have a phrase for things like this. It was a brave decision of the right hon. Gentleman to defend his Government’s record on infrastructure. Many projects that were started under the previous Government have still not been completed. Would it not be better if we rose above party political picking out of which infrastructure project should proceed and tried to have a more mature debate about how we plan infrastructure in this country?
The Chancellor knows that Sir John Armitt’s report on infrastructure was widely received across the business community and that all sorts of parties wanted to find an independent approach to infrastructure planning. I still believe that that would be a better, more grown up way to plan for infrastructure.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
Why did the Labour party announce in its manifesto that it would put on hold the dualling of the A359, which is very important to delivering good transport links to the west country and my constituency?
Chris Leslie
Of course individual choices have to be made, but it would be better if they were made on the basis of need and evidence, not simply on whether the hon. Gentleman has the ear of a particular Minister at a particular point in time. That is the old way to plan infrastructure, and he knows in his heart that we should reform it.
The choices that the Chancellor makes in the emergency Budget in July will be crucial for productivity and therefore crucial to the health of the economy and public finances. I want to know whether the Chancellor will set out a sensible approach to deficit reduction by prioritising the areas of public spending that raise productivity. Why do we not ask the OBR to report on how the options for the spending review might impact on productivity and living standards and to set out the impact of the different choices that the Chancellor could make? He will have our support if he wants it to do that work. As the OECD suggested yesterday, the uneven profile of his planned fiscal pathway poses real risks, and higher productivity would give greater scope to protect working families, while still balancing the books. So these are the choices that he must confront. Is he still planning to double the pace of cuts, regardless of the impact on productivity, or is he now planning to moderate that pathway? The Chancellor has wiggle room here, even within his own fiscal rules.
Seema Malhotra (Feltham and Heston) (Lab/Co-op)
I thank my hon. Friend for giving way. He is making an excellent speech. I want to follow up on a point made by my hon. Friend the Member for Huddersfield (Mr Sheerman). According to the CMI report, leadership and management are a key issue for this country, and we have seen nothing in government strategy on that issue. How much does my hon. Friend think that that should also be part of our review of why we have such problems with productivity in this country?
Chris Leslie
This is at the heart of the Chancellor’s policy choices. Is he looking not just at how much but how spending is taking place? He can choose to ensure that where spending has to be prioritised decisions lean towards supporting growth and productivity and the skills that will in turn get us into that more virtuous cycle.
Chris Leslie
I will give way in a moment. Not to take a reasonable and measured approach, when the Chancellor clearly has scope to do so, would suggest that he is influenced much more by Conservative ideology than by economic judgment. That is what it always comes down to with this Chancellor. Is he focusing on securing the long-term needs of the economy or on securing his own long-term future; is he focusing on the country or on his Back Benchers; is he focusing on his current job or on a future one?
Kevin Hollinrake (Thirsk and Malton) (Con)
Does the shadow Chancellor agree that the best way to drive productivity is to increase competition and that 800,000 new businesses created in the last Parliament will drive productivity in this country?
Chris Leslie
Of course competition is essential, but so are important public services that support businesses and enable them to optimise the outputs from the inputs to the production process. That is the crucial point that we have to focus on.
John Mann (Bassetlaw) (Lab)
Does my hon. Friend agree that one of the issues with productivity is that we have become obsessed with mergers and acquisitions for short-term profitability, rather than allowing industry to invest for the longer term as economies such as Germany have been doing?
Chris Leslie
Long-term investment, especially production process technology and business investment, is crucial, which is why the stop-start approach of recent years from the Treasury has seen us underperform in business investment into the productive economy. It is essential.
Andrew Bridgen (North West Leicestershire) (Con)
Governments should try to encourage increased productivity in the private sector, but it is down to business confidence and reinvestment decisions. Although business confidence is now the highest it has been since 1992, investment dropped off in the run-up to the general election, because business was scared that there would be a hard-left socialist Government.
Chris Leslie
I know that the hon. Gentleman wants to make his political points, but I think we have a duty to ensure that we examine far more forensically the drivers of economic productivity and the growth that will help us to repair the public finances more successfully. That is the agenda we have to follow.
These are serious times, and we needed a serious Queen’s Speech agenda to address Britain’s long-term economic challenges. We should not forget that progress in our economy is still fragile and the recovery is still too constrained. The economy remains fraught with pressures, which have been heaped on the shoulders of many working people. For example, the number of people who have to work a second job in order to get by has increased dramatically in recent years, and a record number of pensioners are returning to the labour market. Indeed, the number of over-65s in employment has increased by more than 8% over the past year alone. The Office for National Statistics says that our share of high-skilled jobs is falling. The Government’s vision for Britain is one of a low-wage, bargain-basement economy. That is not the vision of a party for working people.
Gareth Johnson (Dartford) (Con)
I am listening to the hon. Gentleman carefully, but he has said very little about job creation under the previous Government. Will he take this opportunity to recognise that we now have record numbers of people in work in this country, which contrasts with the fact that no Labour Government, from the time they came into power to the time they left, have ever managed to bring down unemployment?
Chris Leslie
I do not know whether the hon. Gentleman has seen the ONS report published yesterday, but it shows that we are losing high-skilled employment in this country and that gradually it is being replaced with low-skilled employment, which is a real worry. We need to ensure that we compete in the world on the basis of a high-skilled, virtuous cycle. I think that he would be complacent if he ignored what is happening in our economy.
Chris Leslie
I cannot remember whether I have given way to the hon. Gentleman already but, given that he is being so polite and persistent, I will give way one last time to him.
Christopher Pincher
I am obliged to the hon. Gentleman. He likes to give the impression that sweetness and light always surround him, but he might like to look behind him occasionally. He must recognise that no one will take his talk about deficit reduction seriously when sitting behind him is his former leader, who less than a month ago said that the previous Labour Government did not spend too much.
Chris Leslie
When it comes to deficit reduction, let us never forget that the Chancellor of the Exchequer promised to eradicate the deficit by the end of the previous Parliament. We have passed that deadline, so he has broken that promise. He should put his hands up and admit that, when it came to his promise on the deficit, he failed.
We now need focus to address our economic challenges, not a Chancellor distracted by his own political ambition. We need a concerted drive to boost productivity; a balanced recovery reaching all corners of the country, with no sector left behind; a meaningful effort to tackle the root causes of higher welfare costs, low pay and insecure working conditions; a guarantee that any scope for tax cuts should be focused entirely on middle and lower earners; and a commitment to reject an ideological drive to shrink public investment. That is the approach Britain needs. That would be a genuinely one-nation approach.
Instead, we had a Queen’s Speech that focused on short-term political headlines, rather than long-term economic gain. It was designed to lay political traps for the Chancellor’s opponents as part of a grand political chess game, rather than to focus on productivity and balanced growth. This obsession with short-term, narrow political gain is the Chancellor’s curse. He is the Chancellor for whom productivity means kicking the Home Secretary off her Cabinet Committees. He is the Chancellor for whom a long-term plan means a move next door. He is sticking with the family business and measuring up the wallpaper for No. 10 already. That is his real agenda. Cold and calculating, he is the iceberg Chancellor, with hidden dangers beneath the surface. He is putting productivity and public services are risk, prioritising the very richest above those on middle and lower incomes, pitting one nation against another. Britain did not vote for a hidden agenda. I urge the Chancellor to put the ambitions of Britain above his own.
Mr Osborne
But it is anti-aspiration to deny working people in housing associations the right to buy their own homes. That will be an early, key test of whether the Labour party has learned anything from its massive election defeat.
The enterprise Bill supports the small businesses that are the productive engine of the modern economy. The High Speed 2 Bill commits us to the vital modern transport infrastructure that we need. The Childcare Bill supports the working parents—especially the working mothers—who have never had the backing that matches their contribution to our economy. The full employment and welfare Bill delivers the 3 million apprenticeships and creates the work incentives in our welfare system so that every citizen who can work is able to.
Yesterday, we discovered that the UK had climbed up the global employment league table, overtaking Canada to have the third highest employment rate of any of the major advanced economies in the world, on the path to full employment that we have set out. There is the promise of further devolution, delivered in the legislation, to Scotland, Wales and Northern Ireland. Then there is the Cities and Local Government Devolution Bill, which helps to dismantle the failed model that says that we have to run the entire country from the centre of London. Instead, it empowers our great cities across England and adds to the foundations of the northern powerhouse that we are building.
That is the agenda that we offer—full of ambition, brimming with ideas, not afraid of the future but excited about what it can bring. What of the alternative? The Labour party has taken the unusual approach of erecting the headstone first and then conducting the post-mortem. What conclusion has it reached? The shadow Chancellor just said that this is not the Queen’s Speech that he would have wanted. The Queen’s Speech that he does want is not entirely clear. He said that Labour’s economic policy was not credible; that its spending policy meant that it spent too much; that its tax policy was punitive and, in his word, “crude”; that its housing and rent policy was unworkable; that its energy policy meant higher energy bills; that its European policy was anti-democratic; and that its business policy was anti-business. Other than that, it was all okay!
Mr Osborne
I will give way, but I should properly welcome the hon. Gentleman, along with the rest of his shadow Treasury team. One of the great pleasures of doing this job has been the opportunity to work with four different shadow Chancellors. I wish the hon. Gentleman the same success as his predecessors enjoyed.
Chris Leslie
Very funny. I asked the Chancellor about an issue of substance—whether he is planning to cut the 45p rate of tax on earnings of £150,000. Is he able to rule that out as unfair and inappropriate?
Mr Osborne
There was a very good intervention which pointed out that there was a 40p rate for almost the entire period of Labour government. But let me say this. My tax priorities are clear: to raise the tax-free personal allowance to £12,500 and the higher rate threshold to £50,000. Those are my priorities and they will be reflected in the Budgets presented from this Dispatch Box.
The shadow Chancellor is a thoughtful man. Last weekend, he gave an interview to The Guardian, in which he tried to pinpoint what went wrong. This was his conclusion:
“It’s the Which? magazine strata of society that somehow we just didn’t understand”.
To be honest, I would stop worrying about Which? magazine and start focusing on which leader. There are four members of the Labour Treasury team. Three have backed different potential Labour leaders and the shadow Chancellor has led from the front by deciding that he is not going to back anyone at all. The truth is that it does not matter which of the leaders they pick—none of them understands the aspirations of working people because, in the devastating words of the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper), Labour has become the “anti-worker” party. That is what she said. That is a quote that I suspect we will hear again in this Chamber in the coming years.
Mr Osborne
I will make a little progress, if the hon. Lady does not mind. As I say, lots of Members want to get in on this debate later.
In every year of the previous Parliament, Government Departments kept their spending not just within budget but well under budget. Outside key protected areas like the national health service, those budgets have been reduced year on year to more sustainable levels. At the start of this Parliament, it is important that we continue to control spending in the same vein. Two weeks ago, my right hon. Friend the new Chief Secretary asked Government Departments to seek further savings beyond the £13 billion of savings that they are already delivering this year. I can report today that together we have got straight back to the task in hand. We have found a further £4.5 billion of savings that we can make to the Government budget this year, including sensible asset sales. Some £3 billion of these extra savings come from finding more efficiency in Whitehall Departments and from the good housekeeping of coming in under budget. The breakdown per Department is being published by the Treasury today.
There is another component to this: I am today announcing that the Government will begin selling the remaining 30% shareholding we have in Royal Mail. It is the right thing to do for Royal Mail, for the businesses and families who depend on it, and, crucially, for the taxpayer. That business is now thriving after we gave it access to investment from the private sector in the last Parliament. There is no reason we should continue to hold a minority stake. That stake is worth about £1.5 billion at current market prices.
Of course, share prices fluctuate and the final value will depend on market conditions at the point of sale. We will sell our stake only when we can be sure that we are getting value for money, but let us be clear: holding over £1 billion of Royal Mail shares in public hands is not a sensible use of taxpayers’ money. By selling it, we help that important national business to prosper and invest in the future, while we use the money we get to pay down the national debt and pay less interest on that debt as a result. It is a double win for the taxpayer, for we on this side never forget that it is not our money or the Government’s money; it is the money that people work for and pay in taxes, and entrust to us to spend wisely.
Chris Leslie
I warned in my earlier remarks about the Chancellor’s hidden agenda. Before he went into the section on Royal Mail, I think I heard him announce upwards of £4.5 billion or more of in-year cuts to public services. [Hon. Members: “Savings!”] I think he called it “good housekeeping”. He announced in-year savings of that magnitude without coming to the House to give an oral statement or publishing them for the House, so that we can scrutinise what he has just announced. It sounds to me as though any semblance of a long-term plan has been totally ripped up, and that there is panic in the Treasury and chaos, with in-year public spending decisions being taken. Why did he not announce those in the March Budget if they were part of some sort of long-term continuum? Has he suddenly decided rapidly to change his course when it comes to public expenditure? And why do it in such a shabby way?
Mr Osborne
Only the Labour party would think it shabby to make an announcement first in the House of Commons.
Mr Osborne
The shadow Chancellor can sit down.
We set out two weeks ago that we were going to find further efficiencies and savings in Government, and that is what we deliver today.
Chris Leslie
On a point of order, Mr Speaker. It is the usual convention, if there are significant changes to the estimates and supply that support public services, that the documentation and details for every single Department are laid before the House of Commons, so that all Members can be informed of what is happening with our public services within a financial year. This is ripping up any semblance of long-term continuity, and it is a shabby way to treat Parliament and the public services.
Mr Speaker
The shadow Chancellor has spoken, but this is not a matter with which the Chair needs to deal. He has made his point and it is on the record, but the Chancellor will now continue.
Mr Osborne
We made this announcement to the House of Commons, and the detail is there for people to examine. There will be estimates debates as usual, but there is a very simple question: does the Labour party support further savings in public expenditure? If it does not, that means the Labour party wants to increase borrowing, increase taxes and take this country back to square one and repeat all the mistakes it carried out in office—and, indeed, repeat all the political mistakes that meant it went down to a historic election defeat just a month ago.
Mr Osborne
I have given way to the hon. Gentleman. He will have his opportunity.
Further savings in Departments this year, selling our stake in Royal Mail, getting on with what we promised, and reducing the deficit—that is how to deliver lasting economic security for working people, for as everyone knows, when it comes to living within your means, the sooner you start, the smoother the ride.
We continue today to deliver on our long-term economic plan. The measures in this Queen’s Speech back aspiration and opportunity, but they rest on the bedrock of economic security that our plan has delivered and continues to deliver. We have taken further steps today to prioritise that economic security. It is the security that the working people of this country elected this Government to provide, and I commend the Queen’s Speech to the House.
Finance (No. 2) Bill
Chris Leslie Excerpts(9 years, 8 months ago)
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Chris Leslie (Nottingham East) (Lab/Co-op)
It is a strange moment in the life of this five-year Parliament to be here debating the coalition’s last Finance Bill. Obviously I have great disagreements with the Financial Secretary and his colleagues in the Treasury team, but I want to extend a little hand of friendship across the Chamber. I know that this can be a difficult, even frenzied time, trying to draft legislation straight after a Budget and get things together at the last minute. However, we all aspire to be good parliamentarians, and it is incumbent on us to do our duty to scrutinise the Bill’s provisions properly and ensure that they are considered fully.
We are in the dying hours of this Parliament, but the Bill’s provisions—as my hon. Friend the Member for Edmonton (Mr Love) said, they will add to the tax code—are significant and will have a real impact on the economy and on many people’s tax and financial affairs. Ensuring that the Bill has proper scrutiny is therefore incredibly important. If we are honest, we have limped along in what has felt like a zombie Parliament in the past year in particular, with little going on. I am therefore a little surprised that there is a burst of energy all of a sudden, given that many of the Bill’s provisions could have been discussed, published and thought through at a more civilised pace. It is almost as though the Financial Secretary were doing one of those cycle races in a velodrome where it is all very slow until the last minute. There seems to be a bit of a panic in the Treasury.
The Bill contains 131 clauses of complex tax changes, affecting the energy generating sector, tax avoidance, pensioners and businesses, but we have been given only six hours to cover all of it. I accept that we have little choice about that because of how the Fixed-term Parliaments Act 2011 works—in the fifth and final year of the Parliament we can see that Parliament will prorogue at a given point. Nevertheless, I want to put on record our disappointment that we have not found a better way of improving the scrutiny of this year’s Finance Bill. Normally we would have a Public Bill Committee, in which we could spend fun-packed hours going through every provision. Sometimes I feel that such Committees go all too quickly.
Chris Leslie
I will; perhaps the Minister can say how we will compress that process into six hours.
Mr Gauke
I share the hon. Gentleman’s sense of loss that there is not the usual Committee stage upstairs this year. To be clear, it is necessary to pass a Finance Bill after Budget resolutions have been passed, and there is clearly a short period between those resolutions being passed and Prorogation. I am sure he recognises that there were discussions last week in the usual manner, and that clauses that the Opposition believed should be debated and dealt with in the next Parliament have been withdrawn. The clauses that remain are those that the Labour party accepted should be dealt with in the Bill.
Chris Leslie
I do accept that, and it is good that we have had discussions through the usual channels, treating the Finance Bill this year more in what is known as the “wash-up” procedure rather than our normal less-constrained procedures. Nevertheless, I think we should pause and dwell on the fact that in a fixed-term Parliament the date of the final Budget may have consequences downstream for the legislation that is spat out at the other end. Perhaps we should consider allowing a little more time between the final Budget and the end of the Parliament—obviously a Labour Government will be in power for the next five years, so this may be quoted back at me in five years’ time—so that we have a more considered approach.
Charlie Elphicke
Is it a Labour party manifesto commitment to have an early Budget in the last year of a Labour Government in a fixed-term Parliament scenario?
Chris Leslie
The hon. Gentleman must wait for our manifesto in which we shall reveal all those details.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
Is my hon. Friend as concerned as I am that there is so little distributional analysis in the Finance Bill, given the past five years in which the poorest in society fared the worst and our concerns about an increase in VAT looming in the not-too-distant future if the Government get back in?
Chris Leslie
My hon. Friend’s point about distributional analysis is a good one. We know that those on lower and middle incomes have been hit particularly hard: people on the lowest incomes do not benefit from many of the changes that the Government have made, and we must consider what data we need.
My point about parliamentary procedure is not just about the political dates of Budgets and so forth; it is also about the time that officials and civil servants have to draft some of the provisions and proposals. I do not understand why it has to be so last minute and by the seat of their pants. It is one thing to exclude one’s political opponents from the reveal moment of the Budget, but surely it would be good to ensure that proper internal arrangement are in place in the Treasury for drafting these arrangements.
The Institute of Chartered Accountants in England and Wales has its concerns:
“we do not think that Parliamentary consideration amounting to only one day is in any way sufficient to consider and pass another significant Finance Bill that runs to 349 pages and contains a considerable amount of controversial legislation.”
An article in today’s Financial Times quoted Heather Self of the law firm Pinsent Masons. She said that the decision to rush through the Finance Bill was
“an abrogation of the parliamentary process…Legislation this complicated should not be going through without parliamentary scrutiny”.
My hon. Friend the Member for Edmonton was right when he talked about Tolley tax handbooks—I know his walls are adorned with the tax code in fine, leather-bound tomes. He will know that when the coalition came to office, there were 17,795 pages in that tax handbook, but by the end of this Parliament that has risen to 21,414 pages. The Minister says that is not a good barometer. I suppose it is good for publishers and perhaps makes my hon. Friend’s library a little more expansive and extensive, but I suspect it makes things more difficult for people to understand and follow. I think that our constituents deserve better and want proper scrutiny of the Finance Bill, and we will try our best to do that. The House should bear in mind the fact that the Bill appeared in the Vote Office yesterday, so it is difficult even for my diligent hon. Friends properly to absorb and assimilate all the provisions and to do justice to the Bill. Nevertheless we will give it a go and try our level best.
Ultimately, the Finance Bill could not disguise the coalition’s failures of the past five years. There is a slow recovery, but it is not being felt far and wide. By the standards and tests that the Government set when they came to office and made their promises in 2010, the Conservatives and Liberal Democrats have failed, particularly on the public finances. They have failed to eliminate the deficit, which should have gone by now. In fact, in the autumn statement 2010 the Chancellor trumpeted that he would bring forward to 2014-15 the year by which the current structural deficit would be eradicated, yet we find ourselves with a £90 billion current budget deficit, which fell by only 5% on the previous year—not exactly the rate we were promised.
There are many other structural issues in the economy. I do not know whether my hon. Friends remember the Chancellor’s promise about the march of the makers, but I am afraid that this country’s exports have not lived up to the £1 trillion target set for 2020; we are already a mere £300 billion off course in achieving that. Before the last election the Chancellor set the litmus test of cherishing our triple A rating, but of course that was downgraded.
One thing in the Finance Bill that supports the Government’s fiscal strategy was the revelation of how extreme the cuts will be to public services over the next three years—twice as deep over the next three years as we have seen for the past five years. In the words of the Office for Budget Responsibility, the “rollercoaster” is about to go over the precipice, and public finances, social care, the police, defence and many other public services will be pushed over the edge of that cliff should the coalition parties Government have a further five years in office.
It is no wonder that when people look at the impact of deep and extreme cuts to what Government Ministers term “non-protected Departments”, and see how deep they will be, they say, “Well that isn’t going to happen; it’s impossible to countenance that they would end up taking 30%, 40% or 50% from some of those Departments.” It is no wonder that people then believe there must be another plan, either for raising taxes or for cutting other services that some assume ought to be protected, in particular the national health service.
We had the debate on VAT, but I find it difficult to take the Prime Minister’s words seriously. These days, he has a habit of shooting from the hip—about whether he is retiring or what his views are for the day—so I am not sure that people will necessarily say, “Oh well, the Prime Minister said he’s not going to do it. That’s that then.” That is sort of what he said before the last general election about having absolutely no plans to raise VAT, but it was only a matter of weeks before he got round to doing it.
Geraint Davies (Swansea West) (Lab/Co-op)
My hon. Friend will know that the number of people earning more than £20,000 has fallen by 800,000 since 2010, and the slack has been taken up by more and more people on low pay and zero-hours contracts. Does he accept that we are facing these draconian cuts because the Government are overseeing a completely unsustainable business model and creating more and more low-paid people who cannot pay any tax? The revenues are not coming in, which is why they have borrowed more in five years than Labour did in 13.
Chris Leslie
As ever, my hon. Friend manages to sum up the Government’s record in a pithy and simple intervention. I had not heard those statistics about the number of people earning more than £20,000, but I shall certainly take a look at the points he makes. We shall perhaps look at those statistics in more detail.
My hon. Friend’s point about living standards is a good one that all Members should intuitively and properly understand. If we do not include everybody in the growth of the economy, if everybody does not have a stake or a share in it, if their consumer capabilities are not stronger, and if we do not tackle the sustainability challenge for growth in the future, we should not be surprised to find that we have an unequal recovery. Britain will only succeed if working people succeed. That is a catchy way of summing that up, and Government Members may well hear it a few more times in the coming weeks, but it is true.
Ultimately, our public finances are not determined in isolation, as though they are frozen in aspic. They cannot simply be dealt with in terms of cuts or changes in revenue: there is a dynamic, strategic set of issues that relate to what is happening in the real economy and the real world. The health of our economy will ultimately determine the health of our public finances. The Prime Minister and others say, “Why are you talking about living standards? Why are you talking about these things? That is not really the economy; it’s not about growth.” Of course it is. Ultimately, these things are related.
The low-wage economy the Chancellor has been heading us towards is a danger to our public finances. We are enduring an epidemic of job insecurity. The number of zero-hours contracts has ballooned by more than 20% in the past year alone. That is a problem for those who cannot plan even for the child care they need for the week ahead, let alone for getting a mortgage. It is also bad because it undermines the tax receipts the Treasury needs to sustain and pay for public services. It means that tax credits need to be higher to subsidise low pay and it is why the social security bill is £25 billion higher than the Chancellor expected.
Those living standards issues come up time and again in surgeries, meetings and encounters that my hon. Friends have with our constituents. Some 900,000 people are using food banks, and some 600,000 people have been hit by the cruelty of the bedroom tax. These issues will come back to haunt Ministers. They have attempted to deal with the deficit by hurting those on the lowest incomes. It has not worked; it has not succeeded; and it is a strategy that will just get worse in the coming years.
Thomas Docherty (Dunfermline and West Fife) (Lab)
I was at a Budget briefing in Dunfermline given by a local accountancy firm, Thomson Cooper, on Friday. It was pointed out that those earning more than £150,000 a year under this Government actually have a lower marginal tax rate than those earning £100,000 a year. Does my hon. Friend think that that is a really good example of how the Government have got their numbers completely wrong? Those who can afford to pay the most are in fact paying far less.
Chris Leslie
It is in the very first clause of the Bill: it seems that the Government’s proudest achievement is to cut the highest rate of income tax for those earning £150,000. They want the rate to be 45p instead of 50p. That has been their priority. They regard that as something that the country has been crying out for and that will make a big difference to the economy. I suppose if one views the economy through a trickle-down prism and believes that tax cuts lavished on the very wealthiest in society will percolate down and everybody else will benefit as a result—
Chris Leslie
Well, maybe that is the logic of the Liberal Democrats in supporting these particular measures. I will give way to the hon. Gentleman, but he has to admit that it was an error to ensure that those earning more than £150,000 received a tax cut. Anyone earning £1 million this year will have benefited to the tune of £42,000 in tax cuts. He does have regrets about that, doesn’t he?
Ian Swales
Will the hon. Gentleman explain why the Government he was a part of put up 100 taxes in 13 years, but rejected putting up the higher rate of income tax for the entire period until the day they left office? It was 40% then—those same millionaires were that much better off under his Government.
Chris Leslie
That sounds as though the hon. Gentleman was in favour of the 50p rate and regrets that it was not implemented earlier. That is the usual argument: why did the previous Government only put it up towards the end of the Parliament? The global banking crisis hit in 2008, when we were already a long way through that Parliament. [Interruption.] The hon. Gentleman seems to be a banking crisis denier. He seems to think that it had nothing to do with the fiscal situation. He must admit in his heart of hearts that the banking crisis created great pressures on our public finances. It reduced a number of revenues and caused the deficit we have had to tackle. As a consequence, the tax changes that followed the banking crisis were bound to come in 2009, and that was the period in which we chose to introduce the 50p top rate. He should not be surprised that it came in towards the end of that Parliament, because the banking crisis and all the ripples that flowed from it also happened at the end of the Parliament. Let us nail that one for a start.
The cut in the rate of income tax was the wrong thing for the hon. Gentleman and the Conservative party to have prioritised. I think many people in our country regard it as a real obscenity. It is a perverse set of priorities and we would reverse them because the public finances need the extra support. The public finances need those with the broadest shoulders to contribute a fairer share.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
My hon. Friend will know the excellent work of the Union of Shop, Distributive and Allied Workers in raising the profile of issues affecting workers in the retail sector, who are sometimes at the sharp end when it comes to serving the public. They do a very important job. I recently met members from across the north-east who raised exactly the points he is making about insecurity at work and the need to tackle zero-hours contracts. This is a major area of concern, and retail workers in particular feel that the Government are failing to act.
Chris Leslie
The retail sector is edging towards greater and greater insecurity, as companies feel that the only way to make that extra margin is by eroding standards of contract security for many of their work force. In that context, I have to reiterate the position of those of us on the Opposition Benches: someone who works regular hours deserves a regular contract. That is why we intend to abolish exploitative zero-hours contracts.
Fiona O’Donnell (East Lothian) (Lab)
Following on from the previous intervention, in Scotland we are seeing an abuse of apprenticeship payments to young people in the retail sector. There are a lot skills involved in working in retail, but to call three months working in a shop an apprenticeship undervalues them. That does, however, help the Scottish National party to massage the figures.
Chris Leslie
My hon. Friend should bear that in mind when we hear Ministers trumpeting their apprenticeship numbers in aggregate, because there is always a story behind them. We need genuine apprenticeships to help the next generation obtain skills and career assistance, rather than what has been happening: the re-badging of many apprenticeship programmes, existing training courses and other arrangements that have been rebranded to allow tax support for applications for apprenticeships.
The Bill is not just divisive and unfair but a missed opportunity. There are several omissions. It is not just that the Chancellor could barely drag from his lips those three little letters, NHS, which I think got one mention in the Budget—Agincourt got twice as many. We should have had action to help the next generation, for example by reducing tuition fees to tackle the burden of debt facing students. Students graduate typically with £44,000 of debt, which is a burden not just on those individuals but on the national finances. Government Members should be very scared by some of the projections. Owing to their inability to collect tuition fees from some students, barely half of all tuition fees will be collected, which is adding to the national debt in the hundreds of billions of pounds. That needs to be tackled.
Chris Leslie
We are delighted that the Government took a shine to our proposals for pension tax relief changes—I suppose that imitation is the best form of flattery. We will stick with our policy to reduce tuition fees to £6,000, and we will set out in our manifesto, in a matter of days and weeks, how it will be funded. Still at this late hour, the full costings in our manifesto are available for the Office for Budget Responsibility to audit and verify—if only the Minister had shaken my hand on that. I offered him the hand of friendship—was it on the “Daily Politics” the other day?—but sadly he could not do it. It is important that we have fully costed and funded manifestos and that all parties engage in the process. We will look closely at the Conservative party manifesto. The Conservatives have made some grand promises about tax which will cost at least £10 billion to implement, even in the final year of the next Parliament, yet we have not seen a dicky-bird—even in the Budget figures—on how they will be paid for. I am looking forward to reading that chapter in its manifesto.
Geraint Davies
I mentioned that low productivity was driving down wages. Is not the point of tuition fees policy to increase the number of qualified people, productivity and national wealth, to end the deterrence on going to university, to stop people having credit ratings that prevent them from buying houses and to stop them not wanting a pay increase in case they have to pay back more of their fees? Surely this makes economic sense, while the Conservative party’s unsustainable economics of low pay and austerity is sending us into bankruptcy.
Chris Leslie
My hon. Friend knows that the change from £9,000 to £6,000 would make an appreciable difference. Of course, it is still a significant fee, but we will only ever make promises we know can be kept and that are fully funded. I would love to do more on many other tax issues, but given the state in which the Chancellor will be leaving the public finances in only a matter of weeks, we must show students that we understand the burden of debt on them and the nation. The Government never appreciated that so many students would never be able to pay back their debts and that the bill would have to be picked up by the taxpayer sooner or later.
As well as measures on tuition fees, the Bill should have contained a proper bank bonus tax for the starter jobs that many young people who are having trouble finding employment need.
Jake Berry (Rossendale and Darwen) (Con)
Will the hon. Gentleman clarify his statement about the Government not realising how many people could not pay back their tuition fees loan? If tuition fees were reduced to £6,000, under his party’s policy, at what salary would people start to pay that back?
Chris Leslie
The arrangements for the rate of payback were set out in the policy documents we published, but the hon. Gentleman should know that on current projections, by 2030, which is only 15 years away, £281 billion is expected to be added to the national debt now that we have reached the proportion of 49% of people who are incapable of paying back their tuition fees. It might have been a miscalculation by the Department for Business, Innovation and Skills, so perhaps he could blame the Liberal Democrat Business Secretary—that might be the function the Liberal Democrats fulfil—but whether it was the Business Secretary’s miscalculation or the Treasury’s miscalculation, I would urge hon. Members just to take a look at the projections.
Chris Leslie
I want to make some progress—I have several pages still to get through and I want other Members to contribute.
The Bill should have contained a bank bonus tax for starter jobs and measures to scrap the bedroom tax. Given today’s timetable, however, I must move rapidly to some specific issues in the Bill and ask the Minister some questions. It is not just that we have general objections to the 45p higher rate of tax for earnings over £150,000; we have anxieties about the plans for a married couples allowance that will benefit only one third of married couples and only one sixth of families with children, and although the increases in the personal allowance are a concession, rather than leap straight to a 20p basic rate, it would be better to start with a 10p rate, as a fairer and more effective way to ease people on lower incomes into income tax.
Mike Kane (Wythenshawe and Sale East) (Lab)
My hon. Friend makes an important case about the bedroom tax. The average cost of the bedroom tax is £700 per annum, and across Greater Manchester, 28,000 people have been affected. In my constituency alone, 3,038 families—the highest figure in the land—suffer from it, whereas in Witney in Oxfordshire, 300 families suffer from it. This has been of huge detriment to northern regions—across the country but mainly northern regions. Government Members have no understanding of its impact on our constituents.
Chris Leslie
This is always the dilemma. Do Government Members not understand—is it just a question of ignorance?—or have they just turned a blind eye? My hon. Friend has been a diligent campaigner against the bedroom tax and has managed to articulate very successfully the harm and difficulties that people have encountered, particularly those with disabilities who need the extra space in the house. Again, that should have been covered in the Bill.
Chris Leslie
Many studies suggest that it costs more than has been raised. Of course, the Government knew how unpopular the bedroom tax would be and came up with their “discretionary fund” to allow local authorities to ameliorate the impact, but it has not been enough and has certainly not been extended to many people who need it. My hon. Friend the Member for Wythenshawe and Sale East (Mike Kane) will also note that there has been no guarantee that the fund will continue into future years. The Government are hoping that this will go away and that nobody will notice, but our constituents will notice.
Chris Leslie
My hon. Friend feels strongly about this, so I will give way one more time.
Mike Kane
I do feel strongly about it. I can cite, with his approval, the case of Mr Gunning from my constituency, which has five wards in Labour Manchester and three in Tory Trafford. He lives in Tory Trafford and was not given the discretionary payment. If he had lived in Labour Manchester, he would have got the discretionary payment, although by now it would have come to an end.
Chris Leslie
That is interesting. This sort of postcode lottery has afflicted many people, so my hon. Friend makes an important point. I now want to move on.
This Finance Bill contains a series of measures relating to vehicles and emissions. On clauses 7 to 9, will the Minister take some time in his response to explain the direction of travel—if he will pardon the pun—in the differential for different types of vehicle and different years of what is charged for ultra-low emission vehicles? Our reading is that there is a differential of 4% for the financial year 2017-18 and then 3% for 2018-19. If there is an explanation for that, I am not clear what it would be. We would be grateful if the Minister could seek some inspiration over the next hour or so and help us out with that. Similarly, why are the Government using the Bill to remove the incentive for companies to provide zero-emission vans over the next Parliament? Again, I cannot understand the logic behind the provisions as it appears in the explanatory notes, so it would aid the process of debate if the Minister could clarify it for us.
In clauses 13 and 14, the Government are legislating to protect two particular groups, carers and ministers of religion, who may suffer as a result of the Bill’s abolition of the £8,500 exemption on what are known as “benefits in kind”. That is obviously welcome for those who benefit from it, but will the Minister reassure us and confirm that adequate due diligence has been applied to ensure that no other categories of low-paid worker could be adversely affected by this change? The provisions are very specific in naming the particular types of occupation, but I always slightly worry when particular types of job have to be named that other forms of occupation or employment might be affected. I would like to know more about the process the Treasury pursued in framing the clauses in that particular way.
The Bill brings forward several clauses relating to tax avoidance. Everybody knows that the Government’s record on this is atrocious, given that the tax gap increased by £1 billion to £34 billion last year. We also know that Lord Green, the champion of the Tories on many of these issues, has his own track record at HSBC. In this context, any moves to tackle extreme tax avoidance and evasion are welcome—clause 33, for example, provides for anti-avoidance measures on carried-forward losses and there are provisions on entrepreneurs’ relief—but we have some questions that it would be helpful for the Minister to answer.
Clause 12 deals with the abolition of the dispensation regime. Is there a danger that, during the course of the simplification of expense reimbursement—a principle we support—some opportunities for abuse might arise? For example, a flat-rate expenses allowance could lead to some avoidance issues. Do the Government have some figures to show the amount of taxes collected through PAYE and the benefit audit from current companies?
We support the principle of clause 20 on intermediaries and gift aid, encouraging charitable giving and making gift aid a more attractive prospect by removing the need to send off the gift aid forms through the post. Donating online is obviously welcome, but can the Government confirm how they will prevent rogue intermediaries from seeking to profit from the gift aid market? How will the Government ensure sufficient understanding of this so-called “tax to cover” principle?
Do the changes outlined in clauses 26 and 27 undermine the original anti-avoidance intentions of the late interest rule? Could these provisions be rendered in any way redundant by the ongoing BEPS—base erosion and profit shifting—process? Will the capping of group interest deductions be covered? Labour Members want to hear that proper attention has been paid to this international process and that we are not unduly jumping the gun.
We have questions about the clause 28 restrictions on research and development relief, whereby the costs of materials incorporated in products that are then sold commercially will not be eligible for that relief. Have the Government considered any exemptions for companies selling items that they had not intended to sell—for cash-flow reasons, for example? What will be the impact on liquidation of a company? Would its R and D credit-containing assets be devalued?
Before leaving my assessment of the anti-avoidance measures, I want to draw the House’s attention particularly to part 3 on diverted profits tax, which tries to deal with artificially contrived arrangements. Opposition Members want arrangements to work effectively, but we worry about the haste and laxity of the drafting. In his opening remarks, the Minister introduced this new tax on diverted profits through counteracting arrangements by which foreign companies exploit the permanent establishment rules and prevent companies from creating tax advantages by using transactions or entities that lack economic substance. We were told that the draft clauses published in December would be replaced, but the first we saw of the new iteration of the provisions was when the Bill was printed yesterday. That provides insufficient time to scrutinise and assess such a large number of highly complex and potentially important measures. This, I fear, is a direct result of the rushed timetable with which we have been presented today.
These are my questions to the Minister. What is the expected impact on the base erosion and profit shifting process? What challenges is he expecting on the basis of EU law and how will he address them? Why is it still showing such a low yield in the Red Book, given that the UK turnover of the multinational tech giants is so significant? What research has the Department undertaken into the effectiveness of the proposed enhanced civil penalties for offshore tax evasion and will the increase improve compliance?
We welcome the measure on country-by-country reporting and common reporting standard issues, but the Office for Budget Responsibility has labelled the costings and related aspects as “highly uncertain”. I understand that the wording in the draft clause that we have seen would enable public disclosure of the country-by-country reporting rules, if the OECD updated its guidance to allow for it. Is that still the case for the clause before us today? Will the Government push for public disclosure or is the Minister trying to allow the disclosure only secretly for the Revenue authorities? Public disclosure is where we should be; if not, why not?
The clauses that extend capital gains tax arrangements to foreign individuals when they dispose of UK residential properties are welcome, but again the way in which the Government have brought them forward at the last minute means that we have little opportunity for proper scrutiny. It is worrying to those outside this place to see attempts to pass such provisions in this way. We understand that the Treasury might have further legislative proposals, but can the Government address the concerns raised by the Chartered Institute of Taxation about the complexity of the new rules and the perceived unfairness in how they apply to people temporarily on assignments overseas who would not normally be required to pay a CGT charge on their main residence?
On the simplification measures, there are questions about the correct penalty regime for the new reporting requirements in the Finance Act 2014. Removing the need for a tribunal process is one such arrangement, but there might be consequences from rushing through this legislation.
My shadow DEFRA colleagues would certainly want to ask the Government why they have not done more on flooding and flood prevention. The tax change to encourage private investment in flood prevention is certainly welcome, but is it not more of a fig leaf to cover the Government’s failures properly to support flood defences? The de-prioritising of flood defence investment that we saw at the start of this Parliament will be a legacy that many communities will not forget.
On the new tax reliefs for film, TV programmes and video games, the Minister will know of the history of scams, tax shelters and bogus arrangements that have been exploited in the past. Some have been convicted of abusing those arrangements. Will he assure us that proper due diligence has been done to prevent some of those abuses from happening again?
Finally, let me deal with the measures relating to the oil and gas industry. My hon. Friend the Member for Birmingham, Ladywood (Shabana Mahmood) wrote to the Minister about the impact of the Bill on the safeguarding of the future of the North sea oil industry. The recent fall in global oil prices has put a number of jobs at risk in the sector, which is one of Scotland’s greatest success stories, and its current predicament requires a long-term solution.
We welcome the measures that will cut the supplementary charge and petroleum revenue tax, which were outlined in Labour’s “oil industry roadmap” in January. However, we have also consistently called for greater certainty for the sector, particularly because of the long-term nature of much of its investment. A simpler investment allowance should be delivered, as long as the industry can be assured that the transition from the current regime will not cause any interruption in investment.
The Finance Bill should be establishing a mechanism for joint reporting by the Treasury and the finance directorate to the United Kingdom and Scottish Parliaments on the fiscal risks of volatility, and how they will be managed in the future to maximise recovery from the UK continental shelf. I also urge the Minister to consider the need for a full assessment, in the round, of the impacts of tax reliefs and rates
My hon. Friend the Member for Birmingham, Ladywood will shortly have an opportunity to talk about other changes that we feel are necessary. Let me say now, however, that we should like to see a review of the impact of the rise in VAT in recent years, and of the changing of the top rate of tax from 50p to 45p. I hope that we can extract some more data and information from the Treasury. We should be finding ways of helping small firms with a cut in business rates, rather than always prioritising a small number of larger companies, as the Government are doing. Their priority is reducing corporation tax rather than cutting business rates in 2015-16 and freezing them in 2016-17, which we think would be preferable.
We should have had a Finance Bill that deals in the round with many of the problems that our country faces: the living standards that have been squeezed, and the fact that wages have been surpassed by prices for such a long time during the present Parliament. Our public services require revenues to help them to serve our constituents—particularly the national health service, which we have to conclude is at risk because of the Government’s extreme plans for cuts. Those plans go way beyond simply focusing on the deficit, as the Government have also done. The Office for Budget Responsibility have talked of
“a sharp acceleration in the pace of implied real cuts to day-to-day spending on public services”.
At the general election in, I believe, 43 days’ time, the country will have a clear choice between the failing plans, the failing Budget and the failing Finance Bill that we are debating today, and a better plan to put working people first and to save our national health service. We will raise living standards by increasing the minimum wage to £8 an hour, and we will try our best to fund 25 hours of free child care for working parents with three and four-year-olds by means of changes in the bank levy. Our plan will help to transform our NHS with a “time to care” fund, which we will support by asking those who are fortunate enough to live in properties that are worth at least £2 million to chip in a little more, and it will ensure that we balance the books fairly by reversing the approach of the Government parties. That would be a better Finance Bill and a better Budget, and I look forward to seeing it under a future Labour Government.
Fiscal Responsibility and Fairness
Chris Leslie Excerpts(9 years, 8 months ago)
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Chris Leslie (Nottingham East) (Lab/Co-op)
What a farce! Why has the right hon. Member for Inverness, Nairn, Badenoch and Strathspey (Danny Alexander) been allowed to use the Government Dispatch Box for his party political pleading this morning? Is this a statement of the Treasury’s policy or not? He said he was publishing fiscal plans today—where is that document? I thought that statements in the House of Commons were supposed to be from Ministers speaking collectively on behalf of the Government, but the right hon. Gentleman has totally abused that privilege, assembling MPs this morning on a false pretence.
I know it is usual to have several days of Budget debates in the Commons, but not several Budgets. On a procedural point, I have to ask you, Mr Speaker: what recourse do we have, as the official Opposition, when statements are made that are not Government policy? [Interruption.] I do not know where the Deputy Prime Minister is going. I think that was his valedictory appearance in the House of Commons.
Can we all have a turn at giving statements and using civil service resources in this way? Will we get to vote on both Budget statements or just one of them? The Government refused to let the Office for Budget Responsibility cost all the manifesto policies of the main parties, but then they waste Treasury time and money specifically funding a Lib Dem policy document. Will the Chief Secretary at least tell the House how much this morning’s phoney exercise cost the taxpayer? What better illustration can there be of the shambolic downfall of this miserable Government when we cannot even tell whether a Minister is speaking in an official capacity? This is an alliance driven totally by party political interests, rather than Britain’s best interests.
The right hon. Gentleman spoke about measures supposedly to tackle tax evasion and tax abuses. Are they actual Government policy or are they things that he would quite like to do but that other Ministers are squabbling about? Are they genuinely new powers to tackle tax evasion or just a series of press releases to give the impression of activity?
The OBR has expressed doubt about the right hon. Gentleman’s approach to common reporting standards and says that these plans have “very high” levels of uncertainty. Can he clear that up? The OBR also says on page 209 of its report that today’s announcement relies
“on extra HMRC operational capacity in order to be implemented as intended.”
How much additional HMRC resource will be committed to the measures? When will it be committed and with what guarantee?
With the tax gap widening a further £1 billion, to £34 billion, why should we believe that these steps will be any different from the Government’s failed deal on tax disclosure with Switzerland, which has raised less than a third of the promised £3 billion and involved agreeing to turn a blind eye to abuses in the future? Would the new powers to tackle offshore tax abuses prevent what looks to have happened at HSBC? The ex-chairman of HSBC’s Swiss bank, Lord Green, apparently admitted last night to feeling “dismay and deep regret”, adding with enormous understatement that
“the real world of the markets is shot through with imperfections”.
You san say that again! Will the Chief Secretary at least now admit that it was an error that Lord Green was appointed as one of his ministerial colleagues in the face of all the evidence, or did he sign up to that as well?
The Chief Secretary came to the Dispatch Box to set out an alternative Lib Dem Budget, desperately trying at the eleventh hour to distance himself from the extreme and hazardous fate that awaits our public services—our police, our defence, our social services and the NHS—if his boss is re-elected. Let us just get this straight: is he now saying he cannot sign up to the Chancellor’s Budget, as in the Red Book, this time around? We know, or at least I thought we knew, that the quad, of which he is a member, had signed off the Budget and autumn statement figures. Is he now saying that next week he will not be voting for what is in the Red Book?
Are the Liberal Democrats ruling out a coalition with the Conservatives after the election? If they cannot even sign up to the Chancellor’s Budget when they are part of the Government, how on earth could they sign up for another five years? Does the Chief Secretary not realise how two-faced he looks? They want to have their cake and eat it—to be in government, but not in government. I can almost hear his constituents saying, “It’s too late, Danny. You’ve been propping up the Tories for five years—taking the NHS backwards, imposing the bedroom tax and trebling tuition fees, while slashing taxes for millionaires—so don’t come along now with your alternative plans and expect anybody to believe you.” It is too late for this: the Liberal Democrats have backed the Tories all the way—working families have paid the price—and now it is time for him to pay the ultimate price for his behaviour.
Danny Alexander
Frankly, the hon. Gentleman should know about farce—he has presided over the farce that is his own economic policy for the past five years.
The hon. Gentleman referred to collective agreement. I can confirm that the publication of “An alternative fiscal path beyond 2016-17” has been collectively agreed by the Government as an alternative fiscal scenario. He may not like this constitutional innovation, but he should get used to having coalition Governments in the future. The fact that he does not like constitutional innovation is perhaps why he and his colleagues blocked House of Lords reform earlier in this Parliament.
No Treasury resources were expended apart from in the work of the civil servants who calculated the numbers. It is entirely appropriate for civil servants to carry out work on a scenario on behalf of the Chief Secretary. In relation to the hon. Gentleman’s questions on tax evasion and avoidance, the new powers introduced by this Government are set out in a report today. I am sorry to hear that he opposes the common reporting standard. I would have thought that he welcomed the fact that there is UK leadership on ensuring that there are international agreements to open up offshore bank accounts to scrutiny by tax authorities from around the world. The new offences and penalties will of course hit any organisation, whether a bank or an accountancy firm, that facilitates others to engage in tax evasion.
On the hon. Gentleman’s last question, he knows very well that, as the OBR says in its own document, its forecast is constructed on the basis of a neutral fiscal assumption that is presented for the rest of the Parliament. That conceals a range of differences between the parties in the coalition. It is entirely proper for me to set out today what I think we are undertaking, exactly as the Chancellor did in his speech yesterday. Instead of this pathetic display, the Labour party should get on with apologising for the economic mess it created, and it should congratulate the Liberal Democrats and the coalition Government on clearing up its mess.
Oral Answers to Questions
Chris Leslie Excerpts(9 years, 8 months ago)
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Danny Alexander
My hon. Friend has made a very fair point. Comparing the NHS performance of different Administrations is an important activity, in which I am sure he will engage very fruitfully over the next few weeks. Let me add that if we are to judge a Labour Government by their actions, we should look at the mess that the Labour party made of the economy when it was last in power. If we found ourselves with problems of that kind again, money for our NHS would be one of the resources that would suffer.
Chris Leslie (Nottingham East) (Lab/Co-op)
As we heard from my hon. Friend the Member for Denton and Reddish (Andrew Gwynne), the pressures on the NHS are already putting care services in crisis. Why has the Chief Secretary colluded in Tory plans to shrink public investment and take an additional £70 billion from public services in the next Parliament, thus posing an even bigger risk to health and social care? He has dodged the question in the past; will he give us a straight answer now? Why did he sign off those Tory plans in the autumn statement?
Danny Alexander
The hon. Gentleman would do better to begin any question about the NHS with an acknowledgement of his own party’s failures I have made it clear that the figures published by the Office for Budget Responsibility represent a neutral assumption. I think the hon. Gentleman’s party would borrow too much and the Conservatives would cut too much, and that what we need is a balanced approach in the middle.
Chris Leslie
I do not know whether the Chief Secretary knows what he is doing. The letter from the OBR’s Robert Chote explicitly says—I have it in front of me—that the forecast for that £23 billion of surplus in 2019-20 was
“signed off by the ‘quad’”,
of which I think the Chief Secretary is a member. Is Robert Chote wrong, or did the Chief Secretary not realise what he was signing up to? Will he at least assure us that, if that was a mistake or he did not spot it in the past, he will be opposing a repeat of those Tory plans in next week’s Budget Red Book?
Danny Alexander
Matters relating to the Budget will be revealed by the Chancellor in his Budget statement next Wednesday and not before, as I am sure you would expect, Mr Speaker. I have listened to the hon. Gentleman today, as I listened to him on the “Today” programme yesterday, and there was not a single answer about how Labour would balance the books, and not a single answer about how Labour would invest in public services. I heard yesterday about Labour’s zero-based review, which seems to mean zero savings, zero ideas, zero economic credibility.
Mutuals’ Deferred Shares Bill [Lords]
Chris Leslie Excerpts(9 years, 8 months ago)
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Chris Leslie (Nottingham East) (Lab/Co-op)
I think that, on this fine morning, I too should declare an interest, although there is no requirement for me to do so. I am a Labour and Co-operative Member, and have received support from the Co-operative party. More generally, the House is aware of my historical support for the mutual sector. Unlike other Members, I come to the Bill at a late stage in its progress, and I commend, in particular, the hon. Member for Cardiff North (Jonathan Evans) and Lord Naseby for their diligence.
As the hon. Member for Cardiff North explained, after the global banking crisis had swept across the world like a tsunami and the tide had eventually ebbed, one of the critical risks that were revealed was the issue of the ability of organisations—in this instance, mutual insurers and friendly societies—to withstand, and have the capacity to absorb, difficult circumstances that might make a call on their capital. So the need to resolve this has been a priority for these institutions, although I feel that regulators and others have perhaps not put this as high up the agenda as it should have been, hence the point made by the hon. Member for Cardiff North about the building society sector getting its house in order in terms of the core capital deferred shares, but now we also require a similar set of instruments for the insurance sector.
It is important to put on the record the work done not just by the Building Societies Association but the Association of Financial Mutuals and many others who have helped create a potential solution here. It is not absolutely necessary for the sector, which is able to cope with the new regulatory requirements, but it would certainly make it easier and provide much more of a level playing field, given the ability of the PLC shareholder sector to obtain capital in a far simpler way.
I also want to commend the right hon. Member for Banbury (Sir Tony Baldry) for at least taking the opportunity to put the spotlight on clause 2 and the question about the number of votes. Having listened to his comments, however, I would not want to see that part of the Bill taken out. The hon. Member for Cardiff North was very persuasive in pointing out that the particular character of mutual insurers and friendly societies is that their members together have control and ownership of the organisation, and history shows, through demutualisation efforts in the past, that we need to safeguard the ownership and the integrity of those organisations in this way. Therefore, I am persuaded that the single vote, regardless of the amount of the investment, through the deferred shares is the right way to proceed.
This is a sensible set of measures. It is important that we have them on the statute book. However, we are at a late stage in this Parliament and I ask the Minister to clarify the Government’s intentions for bringing forward the regulations and making sure we can get these changes through, because this is a piece of primary legislation that then enables regulations to be made by affirmative order, hopefully in quick succession. I therefore ask the Minister to give us a sense of the time scale for when that may happen, because, with the level of scrutiny we have had on this, there is quite a lot of consensus on the matter and we need to ensure that the financial services and insurance sectors have this diversity. The gradual disappearance of mutuals in this area will be to the detriment not just of the sector and competition, but consumers as well. Therefore, we have to modernise and sustain the mutual sector. The Bill provides worthwhile provisions for doing that and has the support of the Opposition.
The Economic Secretary to the Treasury (Andrea Leadsom)
I would like to put on record my great pleasure at the extent of cross-party consensus on the importance of this Bill to support the mutuals sector. I thank my right hon. Friend and constituency neighbour the Member for Banbury (Sir Tony Baldry), who raised some important points. I hope he will be persuaded to withdraw his amendments, as there are clear reasons for doing so.
One of the Government objectives for the Bill is to preserve the mutual status of firms in the sector. Government amendments give firms the option to provide membership rights to deferred shareholders, if they so wish. However, if deferred shareholders do become members of the firm, they will not be entitled to additional voting rights, regardless of the value of their deferred shareholding. This clause serves to protect the principle of mutuality. My hon. Friend the Member for Cardiff North (Jonathan Evans) set out very clearly why that is vital to ensure the success of this sector, which the Government have been so keen to support.
The proposals in the Bill have been carefully drafted to provide mutual organisations with a means to raise external capital in a way that preserves the mutual status of firms. This is no easy task, and the merits of attracting external capital into the mutual sector have been debated at length by mutuals, and some mutual organisations have taken steps to reform and issue mutual capital instruments. For example, in recent years building societies have commonly issued permanent interest-bearing shares that pay the holder a fixed rate of interest. The shares cannot be sold back to the society, although they can be bought and sold on the stock exchange, which means that the price can vary. Changes in banking regulation mean that those instruments will no longer be classed as core tier 1 capital, so the building society sector has designed a replacement mutual capital instrument, known as core capital deferred shares, which will enjoy the same tax treatment as ordinary shares.
Chris Leslie
I have my own Michael Foot story. I will come to it in a minute, but first I wish to support the Bill, which will make a vital change to support the integrity of mutual financial services and the insurance sector.
I echo the tributes that the hon. Member for Cardiff North (Jonathan Evans) paid to all those involved, and I should mention Mutuo and Peter Hunt, who have been crucial in ensuring that the Bill’s details are right.
The Bill will provide a more level playing field for the sector, so that it can cope with difficult circumstances that might call on capital in the future. The creation of the deferred share facility is very important and does not jeopardise the fundamental values of these institutions, which are so vital to preserve the integrity of organisations that are owned and controlled for the benefit of their members. That is an important principle. It would be a great shame if that alternative model disappeared and we were dominated by the monoculture of the plc shareholder structure. This important Bill could bring the extra capital that we need into the sector, while safeguarding against demutualisation and risks to the sector.
I had not realised that the hon. Gentleman stood against Michael Foot at the outset of his career. When I was a mere stripling—I know that hon. Members think that I still am—my father wrote to Michael Foot because he knew that I was interested in parliamentary procedure for my first degree. By return of post, to complete strangers, Michael Foot sent his own signed copy of “Erskine May”. The generosity of a great parliamentarian and bibliophile was overwhelming. I regarded that as one of the key spurs that made me get involved in politics, and here we are today. Some people may regret that, but I regard it as a mark of the man.
The hon. Member for Cardiff North mentioned the beginning of his career, and he has had an important political career in this place. The House will be worse for his departure, but whatever may happen in the future, I wish him well. This Bill will be useful testimony to his support for the sector. I urge the Minister to tell us when the starting gun will be fired on the regulations, because the Bill facilitates a great change, but that does not necessarily mean that it will actually happen.
Future Government Spending
Chris Leslie Excerpts(9 years, 8 months ago)
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Chris Leslie (Nottingham East) (Lab/Co-op)
I beg to move,
That this House rejects this Government’s failing austerity plan set out in the Chancellor’s Autumn Statement which the Office for Budget Responsibility has said will take public spending back to a share of national income not seen since the late 1930s, before the National Health Service came into existence; notes that the Institute for Fiscal Studies has said that this would entail cuts on a colossal scale and has raised concerns that this could involve a fundamental reimagining of the role of the state; further notes that the Chairman of the Office for Budget Responsibility has said that these spending figures were based on the policy assumption presented by the Chancellor of the Exchequer and signed off by the quad, which consists of the Prime Minister, the Deputy Prime Minister, the Chancellor of the Exchequer and the Chief Secretary to the Treasury; and calls on the Government to instead adopt a different, fairer and more balanced approach, which involves sensible reductions in public spending, a reversal of this Government’s £3 billion-a-year top rate of income tax cut for people earning over £150,000 and an economic plan that delivers the sustained rises in living standards needed to boost tax revenues, in order to get the current budget into surplus and national debt as a share of GDP falling as soon as possible in the next Parliament.
I associate myself with the remarks made by my hon. Friend the Member for Barnsley Central (Dan Jarvis) in his point of order. He made the point eloquently and I pass on our condolences from the Opposition Front Bench.
The choice between this Government’s failing austerity plan and a better plan for working families at this election is now clear. The majority of people are not feeling the benefit of the recovery and the squeeze on living standards has not been so prolonged since the 1920s. When we cut through the Chancellor of the Exchequer’s rosy view and spin and look at the report produced today by the Institute for Fiscal Studies, we can see that it confirms that the vast majority of people, typical working people, are worse off than they were in 2010.
Chris Leslie
I shall give way in a moment. What has been less well known is the devastatingly corrosive effect of stagnant wages, falling tax receipts and rising welfare costs on the health of our public finances. The social security bill is £25 billion more than planned at the outset of the Parliament. Tax credit costs have risen to subsidise the low-wage economy. Incidentally, my hon. Friends know from looking at the statistics last week that, in just one year, the number of zero-hours contracts in our society has grown by 20%.
Chris Leslie
I shall give way in a moment. The number of working people receiving housing benefit has gone up by two thirds since the last general election, tax receipts have been £68 billion lower than expected and national insurance contributions have been £27 billion lower than expected. That impact on the state and health of the public finances has been a direct result of the stagnant wages and suppressed living standards in our society.
Chris Leslie
I hope that the hon. Member for Aldershot (Sir Gerald Howarth) can explain why the deficit has continued at such a level and whether he agrees that the fall in living standards has had that effect on our public finances.
Sir Gerald Howarth
I am grateful to the shadow Chief Secretary for giving way. I will tell him why we are in this situation today: the destruction of the public finances by his right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown), the former Chancellor of the Exchequer and the former Prime Minister. When will the shadow Chief Secretary apologise to the British people on behalf of the Labour party for having put them through this misery, which we have now amended? We are restoring the strength of the British economy and we have the fastest-growing economy in the G7. That is no thanks to the shadow Chief Secretary but is thanks to this Government. Apologise.
Chris Leslie
I expected better than that from a knight of the realm. I thought that such partisanship would be beneath the hon. Gentleman, but no. I did not quite hear him mention those words “global banking crisis” and perhaps I might remind him of the cause of the difficulties our economy has faced. He did not answer my question about the state of our public finances today. He seems to feel content that the Chancellor of the Exchequer, who promised that the deficit would all have been eradicated by now, has not done exactly the job he set out to do in 2010. The hon. Gentleman also did not explain why things have not turned out as the Chancellor promised.
Chris Leslie
I will give way to the hon. Gentleman, because I know that he will try his hardest to explain why things have not turned out as the Chancellor promised.
Mr Newmark
I would be delighted to explain it to the hon. Gentleman. It is about something called the structural deficit and the Opposition must acknowledge that the problem we face was created not just by the banking crisis but by the massive overspending of the previous Government. That is called the structural deficit.
Chris Leslie
Now we are coming to some of the issues. The hon. Gentleman feels that the Chancellor did not make an error when he promised back in 2010 that by now we would have no deficit and that it would all have been eradicated. The esteemed Chancellor of the Exchequer promised in his autumn statement that
“we will meet our fiscal mandate to eliminate the structural current budget deficit one year early, in 2014-15.”—[Official Report, 29 November 2010; Vol. 519, c. 532.]
That is the year we are in now. This is about the Government’s record for the past four and a half to five years.
Chris Leslie
I will give way to my hon. Friend, whose constituents have been very much affected by the squeeze in living standards. He knows that it is the health of the economy and of the finances of working people across the country that determine the health of our public finances.
Chris Bryant
Will my hon. Friend explain to the hon. Member for Braintree (Mr Newmark) and everyone else who seems to have forgotten that, in 2008, the massed ranks of the Conservative party supported Labour’s public spending plans, so they cannot now pretend that they were not in this as well?
Chris Leslie
It is amazing how quiet Conservative Members are on that particular point.
Chris Leslie
I will give way to the hon. Gentleman in a moment, because a particular part of my speech is dedicated to him.
On the “Today” programme this morning, the Chancellor of the Exchequer—for it was he—uttered the phrase:
“We’ve got on top of our debts and deficits.”
Those were the words—[Interruption.] If Government Members really believe that they have been reducing the national debt and that the deficit has been eradicated, they are either delusional or not feeling particularly well.
Mr Raab
I thank the hon. Gentleman for giving way; he is being very kind. He has blamed the biggest peacetime budget deficit, which we inherited from the previous Government, on the global economic crisis. Will he confirm that the Office for Budget Responsibility’s public finances database clearly shows that public spending rose by £267 billion between 1997 and 2009-10, and that 71% of that rise took place by 2006-07—well before the financial crisis? Will he confirm that that is true?
Chris Leslie
I wonder whether the hon. Gentleman was making those points before the last general election. If he can point to evidence that he was warning, “No, those spending plans are entirely wrong and we shouldn’t be spending on schools and hospitals in that way,” I will give way to him again. Did he warn us about those problems at the time?
Chris Leslie
The hon. Gentleman is misrepresenting the OBR’s views. It is clear, as the Institute for Fiscal Studies has said today, that the global banking crisis had a devastating effect not just on this country’s public finances, but across the world. Conspicuous by its absence from the hon. Gentleman’s comments was any evidence that he had said in the past that public expenditure plans were all wrong. The Chancellor of the Exchequer and the Prime Minister signed up to support all the previous Government’s proposals.
Helen Goodman (Bishop Auckland) (Lab)
Does my hon. Friend agree that Government Members should be reminded of chart 1.1 of the OBR report, which shows that total managed expenditure rose from 36% to 40% of GDP between 1998 and 2008, and then from 40% to 46% by 2009? In other words, the biggest part came from the banking crisis.
Chris Leslie
If we had a Government who understood that a connection exists between living standards, the health of our economy and the health of our public finances, perhaps we could make some progress on deficit reduction and tackle some of those issues. Instead, recent figures show that the gap between what the Government spend and their income is perpetuating at a very high level. I think it came down from £80 billion in the first nine months of last year to £74 billion in the first nine months of this year. The deficit reduction strategy is a thing of the past for this Government, because they do not realise how stagnant wages have pulled the rug from underneath it.
Andrew Gwynne (Denton and Reddish) (Lab)
Of course, the inconvenient truth for the Conservative party is that it cannot whitewash history. [Interruption.] A BBC news online article on Monday 3 September 2007, under the headline, “Tories ‘to match Labour spending’”, said:
“A Conservative government would match Labour’s projected public spending totals for the next three years, shadow chancellor George Osborne has said.”
Chris Leslie
The reason Conservative Members are getting so irritated is that they do not like being reminded that it was a global banking crisis. They like to airbrush that entirely from the record. That has been their strategy throughout, but we will not let them forget that there was a banking crisis across the globe. We needed to take greater action to regulate it, but I did not hear Conservative Members calling for stronger regulation of financial services; the truth was quite the opposite.
If we had a rational debate, we would see the connection between living standards, growth and the health of the public finances.
Chris Leslie
I will give way in a moment.
I am afraid that Conservative Members are not driven by rationality when it comes to a strategy for dealing with the public finances. They are driven by dogma. [Interruption.] Oh, yes. They are on an ideological crusade to shrink public services as a percentage of national income. Their plan, when they stand up to talk about these things, is not about eliminating the deficit at all; it is beyond that. The guiding principle of the Conservative party is a desire for public services actively to decline year after year after year.
That is why so many Conservative Members have joined that fabled Conservative group, the Free Enterprise Group of Conservative MPs. The hon. Member for Spelthorne (Kwasi Kwarteng) is not in the Chamber, but he has famously called for massive reductions in public spending. The Economic Secretary, who will wind up the debate, is also a member of the Free Enterprise Group, as is her colleague the Exchequer Secretary and the hon. Members for Macclesfield (David Rutley), for Wyre Forest (Mark Garnier), for Esher and Walton (Mr Raab) and for Dover (Charlie Elphicke). I am sure there are others, although perhaps of a lower ranking order within the Free Enterprise Group structure. [Interruption.] Well, I am not a member of the Free Enterprise Group of Conservative MPs and, with members like that, I am quite glad I am not.
That organisation reveals the true face of the Conservative agenda. It believes very much in shrinking the state and it is driven by that fundamental belief. It is highly dogmatic and has used the financial crisis as a pretext for reducing the level of public investment.
Chris Leslie
The hon. Gentleman is a member of the Free Enterprise Group. Does he stand by its manifesto?
Charlie Elphicke
Let us talk about Labour’s spending commitments. The shadow Minister has been going up and down the country making £20 billion-worth of unfunded spending commitments. Would they be paid for by more borrowing or more taxes?
Chris Leslie
That was a good try, but the hon. Gentleman knows very well that we do not have unfunded spending commitments. Our manifesto will be fully costed and fully funded. He does not need to take my word for it: we would be more than happy to let the OBR audit all of the proposals in our manifesto and to undertake to validate that they are, indeed, fully costed. I wonder if any Government Members would like to support the idea that all the political parties should have their manifestos fully costed by the OBR. Can I see a show of hands?
Chris Leslie
There is one individual: the hon. Gentleman is an independent champion on Treasury matters. I wonder whether he would like to at least say that there is a strong case for letting the OBR cut through this political nonsense and make sure that we have proper independent validation of spending commitments. Does he agree with that?
Mark Garnier
I do—absolutely. In the early part of this Parliament the Treasury Committee looked at exactly that point and there was a big and heated debate about it. Conservative members were in favour of it, but Labour members were not, and they were led by the shadow Business Secretary, the hon. Member for Streatham (Mr Umunna), who was dead against it. What does the shadow Minister have to say about that?
Chris Leslie
Well, we are all in favour of it now and I am delighted that there is consensus. In fact, I am tempted to invite the hon. Gentleman to this side of the Chamber, but we have a rigorous application process and he would need to go through a number of other stages first.
The Conservatives’ strategy is failing and there are good reasons for that. They do not realise the important role that active Government can play in supporting our economy and improving living standards. Government and public investment can make a real difference, whether by guaranteeing apprenticeships, tackling unfair energy bills, raising the minimum wage, banning exploitative zero-hours contracts or action on housing and infrastructure to boost productivity. All these would represent a better plan but the Conservatives’ 1930s strategy, coupled with that trickle-down philosophy, is totally discredited. Lavishing tax cuts on the very wealthiest 1% is not just the wrong priority; it is also the wrong strategy.
Chris Leslie
I am conscious that there are many hon. Members who want to get in so I will limit the number of interventions hereafter, but how could I resist giving way to the hon. Member for South Derbyshire (Heather Wheeler)?
Heather Wheeler (South Derbyshire) (Con)
The hon. Gentleman is very kind. He speaks about tax cuts being only for the top 1%. Will he congratulate Conservative-controlled South Derbyshire district council, which is not only holding the council tax for the fifth year running, but is going to give a rebate in July to every council tax payer in the whole of South Derbyshire? They will all get a council tax rebate.
Chris Leslie
Local government matters are for individual authorities. I know that there are a number of authorities that are struggling financially and finding things very difficult, not least because the funding formula has been so heavily rigged and skewed by the Secretary of State for Communities and Local Government. I do not know the individual case of the hon. Lady’s district council. Individual local authorities will have to make their own decisions. Her constituents, like others, have to look at the situation in the round. The Government are very good at giving a little bit with one hand, and taking back so much more with the other. Her constituents know about the rise in VAT that she voted for and those cuts to tax credits, among other things.
Mr David Anderson (Blaydon) (Lab)
I thank my hon. Friend for giving way. He is being far too generous to Government Members, who do not deserve it. In my council area, £328 is being stolen from every man, woman and child and 1,700 good quality public servants are being put on the dole, just to prove that the Government’s long-term economic plan is working. It is not a plan; it is a sham.
Chris Leslie
We need to tackle the blatant unfairness of the rigged funding formula for local government finance, which the Labour party has committed to do in government.
Helen Jones
Will my hon. Friend remind Government Members that when the Government introduced their Local Government Finance Act 2012, they deliberately set up a system that penalised the poorest councils more than the richest councils, they took no notice of the amount of council tax that could be raised from different boroughs, and in doing so they destroyed the social services system, which is now leading to people remaining in hospital when they should be out—a prime example of a stupid cut which costs more in the end? [Interruption.]
Chris Leslie
Government Members are trying to shout down my hon. Friend because they do not like to hear the truth. The truth is that many of our public services are affected by the support and the funding formula given to local government. She is right to highlight the impact—
Andrew Bridgen (North West Leicestershire) (Con)
Will the hon. Gentleman give way?
Chris Leslie
No.
My hon. Friend the Member for Warrington North (Helen Jones) is right to highlight the impact on our national health service of some of the devastating changes that have hit social care. She made her point well.
It is bad enough that the Chancellor and the Prime Minister fight so hard against the idea that an inclusive approach leads to a stronger economy and a better plan. [Interruption.] What is worse is that the Prime Minister, the Chancellor and Government Members fully intend to accelerate the failing plan for a further five years—[Interruption.]
Madam Deputy Speaker (Dame Dawn Primarolo)
Order. Conservative Members have had their fun in shouting across the Chamber. The debate should settle down now, with interventions when they are taken, but a proper debate. Mr Smith, if you have a question, it is normal to stand up on an intervention, not just speak by Christian name across the Chamber. Thank you.
Chris Leslie
I may give way to the hon. Gentleman in a moment, but not just yet.
I want to pause for a moment and reflect on the implications of taking UK public expenditure on vital public services down to the 35% level that was announced in the autumn statement. These plans would mean that we are only halfway through the cuts. These are plans for the biggest cuts to public services since the second world war. The Office for Budget Responsibility says on page 148 of its report that
“the closest equivalent in the National Accounts implies that by 2019-20 day-to-day spending on public services would be at its lowest level … since the late-1930s as a share of GDP.”
The OBR goes on to say—Government Members may not have heard this—that
“total public spending is now projected to fall to 35.2 per cent of GDP in 2019-20, taking it below the previous post-war lows reached in 1957-58 and 1999-00 to what would probably be its lowest level in 80 years.”
That recalls a time before we had an NHS, when children left school at 14, and when life expectancy was just 60. That is why Paul Johnson of the Institute for Fiscal Studies said on 4 December that we can expect
“Spending cuts on a colossal scale…taking total government spending to its lowest level as a proportion of national income since before the last war.”
Chris Leslie
I seem to have hit a nerve with Government Members. I give way to the good-looking one.
Stephen Hammond (Wimbledon) (Con)
That is one of the few points on which I agree with the hon. Gentleman. He has been quoting selectively from various institutions. He has just quoted the IFS. The director general of the IFS has said that
“if the Conservatives win the election they will neither, despite what the opposition would have us believe, destroy the NHS nor return the welfare state . . . to 1930s level of provision.”
Does the hon. Gentleman accept that, and will he now withdraw his previous comment?
Chris Leslie
With the greatest respect, I do not accept that. I will come to that shortly.
When we look at the effect on public finances of the plan that the hon. Gentleman has signed up to with the Free Enterprise Group and with the Prime Minister and the Chancellor, the effect on our public services, not least the NHS, could be exceptionally difficult and potentially implausible.
Paul Johnson of the IFS asks:
“How will these cut be implemented? What will local government, the defence force, the transport system, look like in this world? Is this a fundamental reimagining of the role of the state? ... If we move in anything like this direction, whilst continuing to protect health and pensions, the role and shape of the state will have changed beyond recognition.”
Is it any wonder that UKIP has backed Conservative plans? No surprise there.
Be under no illusions—the Conservatives’ pathway for the next Parliament is a statement of intent to wage war on public services, and people need to understand the tremendous risks involved. It is a major threat to the viability of public services, which would wreak havoc especially in non-ring-fenced areas such as policing, border controls, child protection and social care. Such extreme plans would decimate skills, infrastructure, research and development and science, undermining the competitiveness of our economy. Devastation on that scale would not be tolerable, which is why we suspect that the Conservatives have secret plans to hit household finances in other ways.
Chris Leslie
I want to make sure that other Members have a chance to contribute to the debate, so I will give way one final time.
Andy Sawford (Corby) (Lab/Co-op)
The difficulty that Government Members have is the question of motive. When people across the country see Sure Start centres, police stations and NHS walk-in centres closing, underinvestment in schools and queues outside our A and Es, they know what a Tory Government have done already, and they know what will happen if we go back to their 1930s plan.
Chris Leslie
The whole country will be affected, including Scotland, Wales and Northern Ireland, if the Conservatives are given a further five years for their ideological plan. The plan has not just failed to date; it will continue to fail and will continue to harm those on lower and middle incomes and those who depend on public services. The Conservatives will not set out where their billions of social security cuts will hit, for example, so we have to take past performance as a guide.
Chris Leslie
I will not give way again, because I want to make some progress.
Tax credits, for example, have already been hit hard in this Parliament. The typical household is £1,127 worse off this year as a result of the tax and benefit changes introduced since 2010. Those who depend on tax credits to make ends meet need to be aware of what five more years of Conservative Government would mean.
There is a better, sensible and balanced alternative, a sensible fiscal framework aimed at getting the current budget into surplus and national debt falling as soon as possible in the next Parliament. We must make progress and cut the deficit every year. Where we make promises in our manifesto, supported by the hon. Member for Wyre Forest (Mark Garnier), they will be fully funded—we want them to be audited independently by the OBR—and they will not involve additional borrowing. We need workable efficiencies and spending reductions in non-protected areas. We have already published seven of our interim zero-based review reports listing examples of where those could be made. We need fairer choices on taxation, not a £3 billion give-away to the richest 1% earning over £150,000 a year. Fundamentally, we need rising living standards and sustained growth to repair tax receipts and control welfare spending, which has got totally out of control under this Government.
This Government’s failing plan has not eradicated the deficit, but it has left us with an NHS in crisis, the bedroom tax and 20 million meals served in food banks last year. Their sharp turn towards a right-wing ideological approach would cull public investment to levels not seen since the late 1930s. For our public services, for policing, for social care, for defence and for the NHS, at this election the stakes have never been higher. I urge the House to reject the Conservatives’ risky and extreme approach and instead back Labour’s fairer and better plan for the future.
Mr Gauke
My hon. Friend is absolutely right. I was struck that when it came to the substance of the shadow Chief Secretary’s speech, he rather rushed through that process. He tells us that he does not like our spending plans—I will come to the details of that in a few moments—but he does not tell us how much extra he would spend, or, if he is going to spend extra, how he is going to pay for it. Will it be through higher taxes or through more borrowing? We did not get any indication.
Chris Leslie
If the Minister wants to clear all these things up and make sure that we have an independent appraisal, does he back the hon. Member for Wyre Forest (Mark Garnier) in supporting the idea that the Office for Budget Responsibility should be allowed to report on the proposals of all the parties? What is so wrong with that?
Mr Gauke
I am afraid that that is a bit of a red herring. If the shadow Chief Secretary wants to set out what his plans are, and if he believes that spending needs to be higher than it would be under a Conservative Government, he can tell us how much higher—he does not need the OBR to look at his numbers. Does he believe that spending should be financed through more borrowing or more tax? What is it to be—a tax bombshell, a borrowing bombshell, or both? I will happily give way to him. He does not want to answer.
Mr Gauke
My hon. Friend makes a very important point, to which I will return in a moment.
Although we have made considerable progress, the reality is that we face further difficult decisions. On that basis, the House signed up to the “Charter for Budget Responsibility” last month. It enshrines in law that the Government elected in May, whatever their colour, must have a plan to tackle the deficit and to bring our national debt under control. Pretty well all of us, with one or two exceptions, committed to achieving falling national debt as a share of GDP by 2016-17, and to balance the cyclically adjusted current budget by the end of the third year of the rolling forecast period, which is 2017-18.
On the latest forecasts, the charter requires about £30 billion of consolidation in the first two years of the next Parliament. Under the plans set out by the Chancellor, it will be achieved by bearing down on spending, the welfare budget, and tax avoidance and evasion. To break the figure down, that is at least £13 billion of savings from Departments’ spending, at least £12 billion from welfare and more than £5 billion from tax avoidance and evasion.
The Labour party agreed to the charter: the motion was passed by 515 votes to 18. Perhaps it believes that a fiscal consolidation of £30 billion is too much. After all, that is the position of the Greens and the nationalist parties, who have explicitly said that they would borrow more over the next three years. That position is irresponsible, but I accept that it is coherent with everything else that those parties are saying. Labour, however, has voted to accept that a fiscal consolidation of £30 billion is necessary, so where is it coming from?
Mr Gauke
In a moment. If the Labour party does not believe in making savings from departmental budgets or welfare, where is the money coming from? To quote its leader,
“if we just try and cut our way to getting rid of this deficit, it won’t work.”
That is the Labour party’s position. Out come the old answers, but where is the money coming from?
Chris Leslie
The Minister must have the charter for budget responsibility with him. I will give him a moment if he wants to pick it out of his file. Where does it say in the charter for budget responsibility—perhaps he could give us a page or line reference—that the figure is £30 billion? Can he quote the OBR on that figure either? Is it not the case that the charter for budget responsibility was about agreeing to focus on current budget plans, and not about the absolute budget surplus that his party was apparently committed to? What on earth was going on?
Mr Gauke
That position is supported by the IFS. The figure is £30 billion. Where is it coming from? The Labour party simply does not have an answer. If it is not prepared to accept the £30 billion figure, it will be borrowing more. If it does accept the £30 billion figure, where is it coming from? If it is not coming from spending, it must be coming from tax.
Mr Gauke
As I said, the money has to come from somewhere, and middle-income earners are probably pretty high up the list. To be fair, it is not just the 50p rate, although that is the only policy mentioned in the motion. In television interviews, the shadow Chief Secretary to the Treasury has proclaimed one other policy to reduce the deficit. This is the key to deficit reduction and the policy that will restore public finances to health: a future Labour Government will put up fees for gun licences. How much will that raise? A whopping £17 million—except, to be fair, the shadow Home Secretary has already pledged to spend that money elsewhere.
Chris Leslie
The hon. Gentleman urged me to give the Minister both barrels, but I will try to resist. It is all very good banter trying to claim that that is the only way we would deal with the deficit, but of course that is absolute nonsense—when asked for examples, we give examples. The Minister raises an important point about gun licences. It is a small amount of money but it is still worth doing. Is he saying that we should not raise gun licence fees? Is he ruling that out because he thinks it is the wrong idea?
Mr Gauke
It was an attempt to show how ridiculous the Labour party’s economic policy is when the only example it puts forward, apart from the 50p rate, which is likely to cost money, is increasing the cost of gun licences. I did not really expect the shadow Chief Secretary to take it seriously that that was the big policy. Does he disagree that the shadow Home Secretary has already claimed that that money will be spent on policing? It is going to be spent on policing, is it not? There was a time in debating these matters when the big argument from Labour Members, their big macro-economic analysis, was that we were going too far, too fast. Now it has come down to this. What have they got a few days away from a general election? They have a policy on gun licences—that is it. What has the great Labour party come to? Gun licences!
Oral Answers to Questions
Chris Leslie Excerpts(9 years, 10 months ago)
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Mr Gauke
My hon. Friend raises an important question to which I could give a lengthy reply. But what I will say is that, as a Government, we have taken action, for example, to improve the automatic exchange of information between various jurisdictions, so that there is nowhere for people to hide their money. The net is closing in on those who have evaded their taxes, and we are increasingly effective at dealing with tax avoidance as well.
Chris Leslie (Nottingham East) (Lab/Co-op)
With economic growth now showing signs of slowing and wages stagnating, is the Minister not worried that the amount of income tax and national insurance that he said he would collect is failing to live up to expectations? Will he tell the House by how many billions of pounds income tax and national insurance receipts have fallen short because of low wages, compared with the original Office for Budget Responsibility forecasts back in 2010?
Mr Gauke
We are aware that, since 2010, the economy has had to face challenges, which in 2010 were not anticipated by the OBR to occur in the way that they did. We have had to deal with the eurozone crisis, the high commodity prices at the time and the aftershocks of the financial crisis. The consequences have been significant, but if we want wages to rise we need to improve productivity. That is about improving our education system, and having more apprentices and a competitive tax system, and that is what this Government are delivering.
Chris Leslie
The answer is that income tax and national insurance receipts are down by a staggering £95 billion over this Parliament. Is it any wonder that the Minister and the Chancellor have failed so woefully to eradicate the deficit, and when will he realise that it is the low-wage economy that is the recipe for more borrowing, more welfare spending and more debt?
Mr Gauke
We discovered this morning that in 2014 the UK was the fastest growing major western economy. Employment is at a record level and unemployment has fallen dramatically, contrary to the Opposition’s predictions—but, yes, we have got further to go to reduce the deficit, which is why we need a Government who are prepared to make difficult decisions. All that we have heard from the hon. Gentleman is that he is going to put up fees on gun licences, which is not going to solve the deficit.
Charter for Budget Responsibility
Chris Leslie Excerpts(9 years, 10 months ago)
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Chris Leslie (Nottingham East) (Lab/Co-op)
It is worth recapping at the end of this debate why we are here and why we are having this debate at all. We are still talking about the deficit because the Chancellor of the Exchequer has failed to fulfil his promise to get rid of that level of borrowing—the difference between our expenditure and our income as a nation. This charter, of course, is a device designed to distract from the Chancellor’s failure, making out as though the Tories still have a plan as they originally set out. As my hon. Friend the Member for Glasgow North East (Mr Bain) correctly pointed out, this debate was also supposed to provide a party political opportunity to smear the Opposition and to set up the Conservatives’ election tactics.
Pete Wishart (Perth and North Perthshire) (SNP)
Will the hon. Gentleman give way?
Chris Leslie
No, I will not give way to the hon. Gentleman.
The trouble for the Chancellor is that this debate gives us an opportunity to draw attention to his colossal failure to fulfil his promise to tackle the deficit. In his eagerness to trip up the Opposition, he has caught himself in a series of contradictions and entangled himself in his own spin.
We should remember that it was only nine months ago that this charter was changed. It keeps changing because the Government desperately have to pretend that they have a grip on things and that they are somehow on top of the deficit issue. The deficit after the next general election, however, is predicted to be a massive £76 billion. Revenues have collapsed over the lifetime of this Parliament, and we have seen rising tax credits and rising levels of housing benefit to subsidise low pay and the high-rent economy that the Chancellor has been fashioning. The Government now find themselves with an extra £200 billion-worth of borrowing over what they originally set out.
The Tories love to talk tough. They publish their documents—[Interruption.] I am delighted to see the Chancellor back in his place. He loves to bang that Dispatch Box and was getting very shouty and loud in his earlier contributions, but the reality is that his strategy has failed. The Chancellor and the Chief Secretary do not have a clue about what they are doing.
The debate was revealing, however, and I would like to ask the Chancellor about it. He said in his opening remarks that his deficit plan had not gone any slower than he had planned. I have taken the opportunity to look at the Hansard record of what the Chancellor said. He said:
“What we have done is cut the deficit by a half. We have neither gone faster than we said we were going to go, nor gone slower than we said we were going to go.”
The Chancellor has got himself into a terrible muddle if he thinks that he did not promise to eradicate the deficit back in 2010. The Prime Minister himself said:
“In five years’ time, we will have balanced the books.”
That was the Prime Minister’s solemn promise to the country.
The Chancellor did become a little bit over-excited. Perhaps he found this rather a difficult occasion, given that the situation was blowing up in his face. Not only did he get into a tangle thinking that he had not changed his deficit reduction plan, but he got into a terrible muddle with the charter. That is quite embarrassing for the Prime Minister in particular. At 3.30 pm on 15 December, the Prime Minister said in a speech that targeting the current budget deficit would be
“a great, black, ominous cloud”
—that it would be a total disaster—but by 4.30 pm, the Chancellor had tabled a Charter for Budget Responsibility that actually supports a current budget process, which is, of course, the correct strategy.
Perhaps the Chancellor needs to be reminded what he said originally, in his 2010 Budget speech. He said that the mandate was current—[Interruption.] Does the Chancellor want to deny that he said, back in 2010, that the mandate was
“current, to protect… productive public investment”?—[Official Report, 22 June 2010; Vol. 512, c. 167.]
If so, let him correct the record now from the Dispatch Box. He will not do that, however, because he knows that targeting the current budget is the right thing to do.
At no point does the Charter for Budget Responsibility commit itself to a fixed deadline for 2017-18. The Treasury would like to pretend that it does, but it does not. Instead, it goes for a “rolling horizon” and year 3 of a five-year rolling forecast. The Chancellor needs to understand properly what that means; he did not quite get it earlier. It means that the target moves forward by a year each year. Perhaps the Chancellor does know that. Perhaps he did this because he wanted to wriggle out of any responsibility to which he might be held now, ahead of the approaching general election. However, if he feels that this is somehow a firm commitment to 2017-18, he is wrong. Labour Members believe that we shall need to get the current budget into surplus as soon as possible in the next Parliament, and nothing in the charter is inconsistent with that view. The Chancellor, incidentally, did not really talk about the charter at all.
Chris Leslie
No, I will not. We have only a few minutes left, and I must give the current Chief Secretary to the Treasury a chance to reply to some of my questions.
The Chancellor referred to an “aim” rather than a “target”. I should be grateful if the Chief Secretary could explain why he chose to allow the language in the charter to move away from the idea of a target and towards the idea of an aim.
It is not enough for the Government to explain in the charter how they will measure progress. They need to explain how they will make progress, and that requires a balanced and fair plan. Ministers simply do not understand that the health of the economy and rising living standards are a vital pillar in the process of tackling the deficit and securing healthier public finances. If only wages and living standards rose at the historic average level during the next Parliament, there would be an additional £12 billion in tax revenues.
Cuts alone do not cut it. We have seen where that road leads: it leads to failure. We need a balanced approach across the three routes to improvement in public finances. Yes, we need sensible reductions in public spending, but we also need fairer tax choices—which means not giving away £3 billion to the richest 1% in society—and, crucially, we need rising living standards and sustained growth. The Government have lost revenues of nearly £100 billion over the current Parliament, and if we repeat that, we will lose £100 billion again. Any proposals in our manifesto will be fully funded, and the IFS has said that we are taking “the most cautious approach”.
Before I end my speech, I want to ask the Chief Secretary two more questions.
Chris Leslie
No, I will not, because I do not have time.
First, I want to ask the Chief Secretary about whether we can have an elevated level of debate and discourse ahead of the general election. Does he agree that it would be preferable for the OBR to audit and validate the costings of the manifesto proposals of the main political parties properly? My understanding is that the Chief Secretary agrees with that, but I want to get on the record and make clear his view on that.
My second question for the Chief Secretary is about what happens after deficit eradication and the Chancellor’s lurch to the right—his wish to return to what the OBR has called the public expenditure situation of the late 1930s, when we did not have a national health service, there were only 1 million cars on the road and children left school at 14. We know that the Conservatives want to wage war on the public services, but the Chief Secretary signed off the spending assumptions in the official projections. We know from Robert Chote, chairman of the OBR, that these projections, all the way to 2020, were
“signed off by the quad”,
and so far as I understand it the Chief Secretary is a member of the quad, so why did he agree to allow the official projections to take that lurch to the right—to go down that particularly ideological route? [Interruption.] The Chancellor might give him some clues, but I want him to answer for himself. If it was a genuine mistake and he did not spot it, he should just say so and we will accept that; or did he for some reason actually think that, yes, he does want to go down that far right-wing position? If that is the case, did he get scared when he saw the public reaction to it? I want to get a sense from him of what is happening.
Going down to that consistent 35% of GDP or national income has severe consequences for our public services. The Government must realise that we need a sensible, moderate approach to tackling the deficit. The focus must be on eradicating the current budget deficit. That is what the charter says, but we will take a fairer and more balanced approach to clearing the deficit. Where the Government have failed during this Parliament, we will succeed in the next.
Danny Alexander
Each Government have to account for their own economic policy in their own way. I am proud that we have put in place a plan that has got the deficit down by half and, more importantly, got us the best economic growth in the European Union and the strongest record of job creation—Opposition parties are notoriously silent about that.
Let us put this matter into some sort of context. While we have been busy cutting the deficit, the shadow Chancellor and the Leader of the Opposition have spent their time marching their troops up and down the hill of deficit denial. If their votes today are to have any credibility, they will have to march them down that hill again. We have still not heard one word of acknowledgement for their role in the crash of 2008, let alone a word of apology.
By the end of this Parliament the Government will have halved the deficit as a percentage of GDP. That has meant facing up to reality and taking difficult decisions. This has been a process during which Labour voted against every measure that we have had to introduce to rescue the economy. There have been scores of votes on deficit reduction and, you guessed it, the Opposition voted against every one. So I say this to Labour: “Supporting this motion does not restore your credibility on the deficit. You have said your aim is to push out the time scale as far as possible. You are perfectly happy to borrow tens of billions of pounds more. That will mean more debt, more interest payments and the pain of rebalancing the books dragging on for years to come.”
Numerous contributions have been made to this debate, and I thank those who have spoken from the Conservative and Liberal Democrat Benches. We heard a wise contribution from the right hon. and learned Member for Rushcliffe (Mr Clarke), and excellent contributions from my hon. Friend the Member for Redcar (Ian Swales) and from the hon. Members for Hexham (Guy Opperman) and for Ipswich (Ben Gummer), in particular.
However, some Conservative Members have criticised me in this debate for the views I have taken on Conservative plans beyond 2017-18—the shadow Chief Secretary asked me about this, too. Let me send a note of warning to some of my Conservative colleagues. We formed the coalition to tackle the deficit in a timely manner. That is why we agree that the structural deficit must be eliminated by the end of 2017-18 and debt must fall as a share of GDP. Hitting that 2017-18 target will require further consolidation to the tune of some £30 billion, and to say that we can reach that figure by spending reductions alone, with some £12 billion coming from cuts to welfare, would be grossly unfair. It would hurt millions of families who are trying hard to make a success of their lives. Tax on the wealthy should and must play a significant part in how we finish the job in the next Parliament. But our real concern, and where we differ, is on what happens after that mandate is met. As a country we should not be wedded to austerity for austerity’s sake. People in this country supported our coalition approach because it has been necessary and successful in turning the economy around, but they will not support an ideological drive for an ever smaller state.
Chris Leslie
I will. Why then did Robert Chote say that these assumptions were
“signed off by the ‘quad’”?
Did the Chief Secretary sign them off? Was it a mistake or is he now trying to “reverse ferret” out of it? Which is it?
Danny Alexander
It is a neutral assumption about the public finances that does not reflect the policies of the Liberal Democrats. I was just in the middle of describing those things, because people want to see some light at the end of the tunnel. They do not want a Dickensian world of decimated public services. I do not see any need for tens of billions of pounds of further cuts beyond 2017-18. If it happens, the reality for many people would be grim. Going too far or too slowly will not offer that light at the end of the tunnel.
Oral Answers to Questions
Chris Leslie Excerpts(9 years, 11 months ago)
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The Exchequer Secretary to the Treasury (Priti Patel)
I thank my hon. Friend for his question. The reductions in air passenger duty announced last week are to be welcomed not just by his constituents and by Thomas Cook but by hard-working families across the country. As with all other taxes, air passenger duty will be kept under review, taking into account our commitment to creating sustainable public finances alongside helping households and, of course, the tourism industry.
Chris Leslie (Nottingham East) (Lab/Co-op)
Will the Chief Secretary confirm that table 2.3 on page 67 of the autumn statement shows that total managed expenditure will fall to 35% of GDP by 2020? According to the Office for Budget Responsibility, that is a level not seen since the late 1930s. Does he stand by the autumn statement or not?
Danny Alexander
The way in which the autumn statement is constructed is that the OBR is given an assumption about the path of the public finances over the course of the whole of the next Parliament. As I explained yesterday to readers of The Daily Telegraph—perhaps the hon. Gentleman does not count himself as one of them—a neutral assumption is built into the public finances post 2017-18 which assumes that spending will stay flat in real terms. That enables the OBR to construct its forecast. In my view, when we have finished dealing with the structural deficit post 2017-18, public expenditure will be able to grow faster than that.
Chris Leslie
It does not sound as though the right hon. Gentleman stands by the autumn statement much, Mr Speaker. On Wednesday, the chairman of the Office for Budget Responsibility wrote to the Business Secretary confirming that the autumn statement and all the policy assumptions leading to this figure of 35% were
“signed off by the ‘quad’”.
Is the Chief Secretary still a member of the “quad”, and is that actually true? Why is he now pretending to distance himself from his consistent record of Tory collaboration when he has been as thick as thieves with them in vote after vote, year after year, time and time again?
Danny Alexander
I guess it is a tough job being shadow Chief Secretary: he has to deal with the shadow Chancellor. I saw a quote from the previous Chancellor just this weekend, in Alan Cochrane’s diaries. It said, “I don’t think Miliband gets much of a look-in on the economy now. He’s a difficult man, is Balls.” I guess that is what they mean by a zero-zero economy: one Ed has zero influence; the other has zero credibility. Let me say this to the Labour party and to the Conservative party: both of them, in different ways, are advocating relentless austerity for the whole of the next Parliament, and it is only the Liberal Democrats turning around the public finances after 2017-18 who offer any hope of a change in the future.
The Economy
Chris Leslie Excerpts(9 years, 12 months ago)
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Chris Leslie (Nottingham East) (Lab/Co-op)
I beg to move,
That this House believes the Government has failed to deliver rising living standards and a recovery that works for the many, with working people on average £1,600 a year worse off since 2010; notes that the Office for Budget Responsibility has said that stagnant wages and too many low-paid jobs are leading to lower tax revenues and more borrowing, with the Chancellor of the Exchequer’s pledge to balance the books by 2015 set to be broken; calls on the Government to bring forward a plan in the Autumn Statement to deliver a recovery for the many, not just a few at the top, with proposals for a minimum wage rising as a proportion of average earnings, an expansion of free childcare for working parents, a cut in business rates for small firms, an independent infrastructure commission, and the building of 200,000 new homes a year; believes that a tough and fair plan to deliver a current budget surplus and falling national debt as soon as possible in the next Parliament would include reversing the Government’s £3 billion a year tax cut for the top one per cent of earners and introducing tougher measures to tackle tax avoidance; and further believes that the Autumn Statement should use £1 billion of fines from the recent foreign exchange manipulation scandal for an immediate boost to health and care, and announce a £2.5 billion a year fund to help save and transform the NHS, including funding for an extra 20,000 nurses and 8,000 GPs.
The Government deputy Chief Whip will have spotted that, next week, the Chancellor is bringing forward his autumn statement, which gives the Chancellor a chance to reflect on his nearly five years in office and on the impact made over that period on the living standards of millions of our constituents who have, of course, been following so carefully the choices he has made. I have taken the liberty of digging out the 2010 autumn statement of 29 November because it is always worth reflecting on what the Chancellor was saying four years ago, and worth comparing his intentions back then with the reality we and our constituents now face.
Back in 2010, then, when the right hon. Member for Chelsea and Fulham (Greg Hands) was knee-high to a grasshopper in political terms, the Chancellor of the Exchequer said that the Government
“will meet our fiscal mandate to eliminate the structural current budget deficit one year early, in 2014-15.”—[Official Report, 29 November 2010; Vol. 519, c. 531-2.]
He said:
“Britain is on course…to…balance the books, something that some people repeatedly said could not happen.”—[Official Report, 29 November 2010; Vol. 519, c. 530.]
Well, I am afraid to say that it has not happened. In fact, last year the deficit was £102 billion and so far, during the first seven months of this year, it is heading even higher.
Ben Gummer (Ipswich) (Con)
The hon. Gentleman has put a motion before the House on the performance of the economy. I have read the motion carefully, and before he starts reflecting on previous speeches, I wonder whether he could explain why unemployment is not included in it and why we now have the lowest unemployment and the highest rate of employment in our history?
Chris Leslie
I have only just started my remarks. I shall come on to employment, the levels of under-employment in our economy and the changing nature of the employment market because that is crucial. It links in particular to the health of our public finances and I want to touch on some of those issues, but I wanted to make sure that the House was aware of the Chancellor’s promises made in the autumn statement of 29 November 2010, just so everybody can see the context in which we have to appraise the Chancellor’s performance.
Chris Leslie
I will come to the hon. Gentleman in a moment, but it is not just on the deficit that we have seen difficulties, as there is a second aspect of the Chancellor’s promises back in 2010. He promised that by this financial year, he would
“get debt falling as a percentage of GDP”—[Official Report, 29 November 2010; Vol. 519, c. 532.]
Yet it turns out that he has failed on that, as well. In fact, he is now saying that debt is not going to start falling as a percentage of GDP until some time in the middle of the next Parliament. It is really important to pin down the Chancellor’s promises and the failure to deliver on them.
Chris Leslie
If my hon. Friend does not mind, I said I would give way to the hon. Member for Dover (Charlie Elphicke) first.
Charlie Elphicke
This morning, 30.8 million people went to work—a record in our country’s history. That is no mean feat after Labour’s crash. With the storm clouds gathering again in the eurozone, why would we ever want to go back to where we were four and a half short years ago?
Chris Leslie
When it comes to the nature of our recovery, the fact is that most people are not feeling the great benefit that the hon. Gentleman espouses. The vast majority of people—confirmed in opinion polls just last week—are reporting that, as far they are concerned, life is getting harder and their living standards are falling, not rising.
Mr Sheerman
Did my hon. Friend hear John Humphrys interviewing Jim Rogers, one of the leading American investment gurus? When asked why he would not recommend investing in the UK, he said that it was a country with a Government who keep on borrowing and printing money.
Chris Leslie
I listen avidly to the “Today” programme, but I did not hear that interview. It is important that we pin these Tories down on their failure to deal with borrowing and the deficit. This situation is going to continue well into the next Parliament, and we need to address it in a serious way, not with more of the politicking that we have seen from the Chancellor.
Mr George Mudie (Leeds East) (Lab)
My hon. Friend the shadow Minister says that the debt has not started dropping. Will he confirm that when we left power, it was £750 billion, whereas today it is in the region of £1.4 trillion?
Chris Leslie
The Prime Minister likes to say—the Tories have said it in party political broadcasts and keep repeating it—that the national debt is somehow falling. The national debt has got larger and larger—[Interruption.] No, let me correct the hon. Member for Wyre Forest (Mark Garnier)—there is a difference between the national debt and the deficit. The national debt has got higher and higher and higher. My hon. Friend the Member for Leeds East (Mr Mudie) was right to say that it now stands at more than £1.4 trillion. He knows that the Prime Minister and the Chancellor have added more to the national debt in their four and a half years in power than the previous Administration did in 13 years.
Mark Garnier (Wyre Forest) (Con)
The hon. Gentleman is clearly struggling a little with the definitions of how we run the public finances. The reason why the national debt is going up is that in 2010 this Government inherited a deficit, which is the difference between income and outgoings, of £156 billion. That had been set in place some time before. If the hon. Gentleman remembers, the deficit in 2005—fully two or three years before the financial crisis—was already around £50 billion a year. The previous Government, then, were increasing the national debt. It is going up because the only way to account for the deficit is by putting it on the national debt. The hon. Gentleman must understand the most basic facts of fiscal policy.
Chris Leslie
We have an admission there—that the national debt is rising and has risen more in the past four and a half years than it did in the 13 years of the previous Administration.
Chris Leslie
I will give way to hon. Members in a few moments, but there are other facets of the Chancellor’s promise in that 2010 autumn statement we have to nail down and put on the record. In that statement, he also promised that he would cut the interest charges to service the national debt by £19 billion. Do hon. Members know where we are when it comes to the national debt’s servicing costs? This year, debt interest has hit £52 billion and is forecast to be £75 billion by 2018-19—a situation compounded, of course, by the Government’s failure to tackle the deficit. Each year that they add another £100 billion to the deficit, they have to fund and service the debt levies accrued.
Mr Marcus Jones (Nuneaton) (Con)
What the hon. Gentleman says is all very sanctimonious, particularly given that his leader could not even mention the word “deficit” in the speech he made at Labour’s party conference. Furthermore, the hon. Gentleman’s party has set out £166 billion more in spending than the Government have, so how will he pay for that?
Chris Leslie
The hon. Gentleman is slightly deluded in his understanding of our position. We have made it absolutely clear that we will not have any manifesto commitments funded by additional borrowing, yet we have not heard the same promise from Conservative Ministers, so I invite the Exchequer Secretary to stand up and tell us how the Conservative Front-Bench team are intending to pay for the £7 billion-worth of pledges that the Prime Minister has made. Opposition Members have to conclude that the Government are going to add it to VAT. That is what they have done in the past; it is their track record. Ducks quack, the sun comes up in the morning and Tories increase VAT. It is what they always do.
Jake Berry
I thank the hon. Gentleman for stating his party’s position so clearly. Just to restate it, he did not question the £116 billion-worth of extra commitments, but he did say that Labour has a commitment not to increase borrowing to pay for all these spending commitments. Will he now take the opportunity to clarify that point by saying which taxes he intends to put up to pay for his spending commitments?
Chris Leslie
I shall come shortly to the particular changes that we believe need to be made for our economy. For example, we believe that the national health service needs additional support and that we need to increase a levy on ultra-high-value properties to pay for such things. I shall come on to the specific details in a moment, but I want first to finish giving the Chancellor’s record and his promises in that autumn statement.
The Chancellor made other promises, too. He promised that business investment would zoom away over the four years, saying that it would be
“8% for each of the next four years”.—[Official Report, 29 November 2010; Vol. 519, c. 530.]
In reality, it has been barely half that. Back then, in autumn 2010, the Chancellor promised that exports would grow on average by more than 6% a year. In fact, in 2012 he promised that he would more than double annual UK exports to £1 trillion by 2020. The problem is that that would require 10% annual growth in exports and we have had barely 4%, leaving them £330 billion short of their target.
It was not supposed to be like this. The Chancellor set out with a totally different set of ambitions and made a series of promises to the electorate. He set out his pledges and he has failed to deliver on them. What is worse, and what matters to our constituents, is the promise that the Conservatives made on living standards. They said that living standards would rise and that was the solemn pledge in their manifesto:
“We want to see an economy where not just our standard of living, but everyone’s quality of life, rises steadily and sustainably.”
These Tories—by which I also mean the Liberal Democrats—need to be held to account for the neglect they have shown and the distress they have caused, particularly to some of the poorest and most vulnerable people in society. After prices have been taken account of, wages have fallen in real terms by an astonishing £1,600 a year and prices continue to rise.
Rehman Chishti (Gillingham and Rainham) (Con)
The shadow Minister talks about the Chancellor’s record, what he has achieved and what he has set out to achieve. One of the key planks of the proposals was a reduction in youth unemployment. In the hon. Gentleman’s constituency, youth unemployment has gone down from 6.1% to 4.2%, and in my own constituency it has gone down considerably. That clearly supports what the Chancellor set out to do by giving young people a chance and opportunity in life through work.
Chris Leslie
My constituency has the 10th highest youth unemployment of any in the country and I will not take any lectures from the hon. Gentleman. The Government have no answer for the 700,000 young people who remain long-term unemployed. They have a Work programme that sends more people back to the jobcentre than it puts back into work—[Interruption.]
Mr Speaker
Order. I am very uncertain quite what the hon. Member for Wyre Forest (Mark Garnier) had for breakfast this morning. Without wishing to be personal, I would simply observe that a close family relative of his lives in my constituency and he is a person of impeccable manners, as the hon. Gentleman usually is. My constituent would not approve of the hon. Gentleman’s ranting from a sedentary position. If the hon. Gentleman undertakes to behave in a seemly manner from now on, I promise not to report his bad behaviour to my constituent.
Chris Leslie
I was about to give way to my hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams).
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
My hon. Friend is making a powerful argument about the appalling economic context that the country faces. Does he agree that the reduction in full-time jobs—there are 670,000 fewer full-time jobs in the economy since 2008—is an indictment of the poor health of the economy under this Government?
Chris Leslie
My hon. Friend is right: the labour market is changing, and not always for the better. The instability, short-term assignments and zero-hours culture that are now much more prevalent add to the insecurity experienced by so many of our constituents.
Mr Sheerman
I do not usually chide my hon. Friend, but I am going to do so today for being too generous and kind to the Chancellor of the Exchequer. My hon. Friend has not mentioned the appalling performance of this country on productivity. We are 20% below our competitors. What is the Chancellor doing about that? My hon. Friend has to be tougher and nastier to the Chancellor.
Chris Leslie
All my hon. Friend will get from the Chancellor is the hollow slogan about the Government’s plan, but their plan contains nothing to tackle the productivity crisis in our economy. My hon. Friend hits the nail on the head. We need a plan that deals with those infrastructure challenges and with getting bank lending back on its feet again to help enterprises make the next move into growth and innovation. We must tackle the skills problem. They are all factors that would represent a genuine plan to tackle the productivity issue.
Chris Leslie
I would like to make a little progress, because I know that a lot of Members want to speak.
The problem with this Chancellor and the promises that he made back in 2010 is that he has failed abysmally to complete the deal and ensure that he delivers on those promises. It is not just about the record on the national health service or even on immigration, where the Government have failed to meet their target of reducing net migration to tens of thousands. They have failed to deliver a recovery shared by all, they have failed to eliminate the deficit, as they promised to do, and they have failed to detoxify their reputation on the NHS. The real question is whether the Chancellor and the Prime Minister, after nearly five years, are prepared to start taking some responsibility for the situation.
Chris Leslie
Will they do what I suspect the hon. Gentleman is about to do and blame Europe? They love to blame Europe, in particular, but they have also blamed the weather and even the royal wedding. Who is the hon. Gentleman going to blame?
James Morris
Is the hon. Gentleman seriously arguing that the challenges we are addressing through our long-term economic plan have nothing to do with the fact that we had the deepest economic recession since the second world war—a recession over which his Government presided—which led to thousands of people being made unemployed, hundreds of businesses going bust and an absolutely devastating long-term effect on many people’s lives? Does he not take any responsibility for that?
Chris Leslie
Government Members want to airbrush the fact that there was a banking crisis, and a global banking crisis—[Interruption.] They do not like the fact that there was a banking crisis. They want to pretend that it was everybody else’s fault—there they go again.
I must tell the hon. Member for Halesowen and Rowley Regis (James Morris) that he has been in government—perhaps he has not been a Minister, but he has supported the Government—for nearly five years. The Government must start taking some responsibility for the state of the economy.
Ian Lucas (Wrexham) (Lab)
On living standards, in Wrexham median weekly earnings have fallen by 7.4% in the past year. The Government show a complete lack of comprehension of my constituents’ lives. For as long as they continue to do that, they will not even begin to address this country’s fundamental economic problem.
Chris Leslie
It is the complacency from those on the Government Benches that will, I think, shock our constituents most of all.
Only last week, the Deputy Prime Minister said in questions that “the economy is fixed”. How out of touch are Ministers in this Government, whether they are Liberal Democrats or Tories?
Mr Jim Cunningham (Coventry South) (Lab)
If we listened to the Government, we would never think that the collapse of Lehman Brothers and the collapse of Fannie Mae in America caused the last economic crisis. They continually blame the previous Labour Government, but they have to face up to the truth, which is that it started in America and no Government could have legislated for it. They have now found out that there is an economic crisis and recession in Europe, so is that the next excuse for a punitive Budget?
Chris Leslie
The previous Government did the right thing after that banking crisis by getting growth moving forward—growth that had the rug pulled from under it by the lack of confidence shown by the Chancellor and the measures he took in that autumn statement back in 2010 and in his emergency Budget.
The Government’s long-term plan is little more than trickle-down economics, which has failed in the past and will fail again in the future. The share of national income held by 90% of earners has shrunk since this Government came to power, whereas the share of the cake held by the wealthiest 1% has—surprise, surprise—gone up.
We need a plan that genuinely delivers a recovery for the many, not just for the few. We do not need the slogan-heavy, content-light, trickle-down plan of Treasury Ministers, but we need action on house building, which is at the lowest level since the 1920s, with a goal of building 200,000 new homes each year by 2020. We need a minimum wage rising as a proportion of average earnings and real incentives for the living wage. We need the expansion of free child care for working parents, paid for by the bank levy that the Government failed so spectacularly to collect. We need a cut in business rates for small firms, rather than a reliance and a focus only on corporation tax cuts for big businesses. We need an independent infrastructure commission to deliver the transport networks that our economy needs, rather than what suits the Government’s short-term political needs. We need to tackle the abuse of zero-hours contracts, we need to hear the Government argue for Britain to play a leading role in a reformed European Union, and we need a real economic plan that can enable us to earn our way towards rising living standards for all, not just for the few. Those are the priorities for next week’s autumn statement.
Stephen Hammond
I am interested to hear the hon. Gentleman’s words, but let us write some facts into the debate about living standards. Will he deny the statistic from the House of Commons Library which shows that real average weekly earnings were falling faster between 2008 and 2010 than they were after 2010? Will he deny the statistic which shows that the average earnings of those who had been in a job for over a year have risen by more than 4% in the last year? Will he deny the fact—this, too, is a statistic from the House of Commons Library—that 71% of all the jobs created in the last year have been full-time jobs?
Chris Leslie
I do not know where the hon. Gentleman has been, but did he not see the headlines in all the newspapers about the results of the annual survey on hourly earnings that the Office for National Statistics published last week? According to the ONS, the average weekly pay of full-time workers went up by just £1 between 2012 and 2013. That is a rise of just 0.1%, far below the rate of inflation. Prices continue to rise, but pay, wages and earnings do not keep pace with them. Government Members may not realise that. In the world that they inhabit, life is sweet—everything is fine in the world that they inhabit—but for most of our constituents, times are tough and life is getting harder.
Chris Leslie
This may even be the worst situation since the 1870s. Perhaps we should ask the House of Commons Library to go back in history, and tell us how bad things were in the 19th century.
I have set out our priorities for the autumn statement. However, we do not just need a strong economy to ensure that everyone gets a piece of the action; we need a strong and sustained economy to deliver strong and sustained public finances, which is why the autumn statement also needs a plan to balance the nation’s books in a fair way.
When will Ministers realise that the health of our economy shapes the health of our public finances? During the first seven months of this year, borrowing has been £3.7 billion higher than it was during the same period last year. Why? The Office for Budget Responsibility itself says that stagnant wages and all those low-paid jobs are keeping tax revenues down. The Chancellor has to realise that a low-wage, low-productivity economy will not deliver the goods. The OBR is predicting that growth will slow down next year, and yesterday the OECD cut its growth forecast for this year and next year.
The deficit has not been tackled effectively, and not just because of falling revenues. The Government like to sound tough on welfare inflation, but they do nothing to tackle the underlying causes of it. The Department for Work and Pensions has overspent by £25 billion since 2010. Let me give the House a few examples of where it has gone awry. It has spent £5 billion more than it planned to spend on tax credits during the current Parliament, because of the failure to tackle rising levels of low pay and insecurity. The number of working people—working people!—who are claiming housing benefit has risen by 50% since 2010 and is set to double by 2018, which will cost nearly £13 billion.
Whether the underlying issue is low pay, rising rents or the 700,000 young people who are in long-term unemployment, the Government have produced no serious, structural response. For them, tackling the deficit means little more than lopping off a fixed percentage from every departmental expenditure limit in each 12-month cycle. We need an economy that delivers higher-quality jobs, decent living standards, and robust and sustained growth, as well as tough decisions on spending and tax.
The Chancellor of the Exchequer caved in too easily to the lobbying of his friends who pushed him for that £3 billion a year tax cut for the top 1% who are earning over £150,000 a year. They must have been pestering him—“Give us that tax cut!”—and he did not have the will power just to say no. Instead, he piled higher VAT and cuts in tax credits on to millions of working people, because he did not mind that so much. I am afraid that a fairer plan for reducing the deficit must mean reversing the huge tax giveaway for millionaires—
Chris Leslie
Which I know the hon. Gentleman, in his heart, recognises is deeply unpopular with his constituents. Or am I wrong?
Charlie Elphicke
Let me point out not only that a record number of people went to work this morning, but that both long-term unemployment and worklessness rose under the Labour Government. Thanks to this Government’s welfare reforms and long-term economic plan, long-term unemployment has fallen by 99,000, and worklessness has fallen dramatically. Does the hon. Gentleman not accept that the Government’s long-term economic plan and welfare reforms have worked extremely well?
Chris Leslie
How disappointed the hon. Gentleman’s constituents must be to hear his comments, which contained no reflection or recognition of any of the problems that they face, including their cost of living difficulties. No, as far as the hon. Gentleman is concerned, everything is fine and wonderful: it is all working totally as it should be. I must tell him that he will have to face his electorate in a few months’ time, and that he will face their anger and concern about his failure to deal with the living standards that they have been experiencing.
Gordon Birtwistle
Will the shadow Minister remind the House what the growth of the economy was in 2009?
Chris Leslie
We had a global banking crisis, but, as I recall, growth was 1% in the first quarter of 2010. We had a strong level of growth as we came out of that crisis, because we took up the challenge to stimulate the economy and get it moving again. There was a VAT reduction at that time, and then what happened? What did the Chancellor of the Exchequer do? What did he do, with the help of the hon. Gentleman’s votes? He whacked up VAT to 20%, although the hon. Gentleman had not mentioned that in his election manifesto. He, too, will have to face his electorate and account for the decisions that he has made.
I do not want to take up too much time, because I know that many other Members wish to speak, but it is important for me to say something about the fiscal challenge. There will have to be other difficult decisions, which is why Labour is looking at every single Department and every item of expenditure, line by line, in our zero-based review, and identifying the different choices that can be made to enable us to live within our means. We have already proposed scrapping winter fuel payments for the richest 5% of pensioners, cutting Ministers’ pay by 5%, capping child benefit rises at 1% for two years, reviewing the value for money of assets and non-essential buildings owned by the Government, and making savings of £250 million in the Home Office budget—by, for example, scrapping police and crime commissioners—in order to better protect front-line policing. Over the weeks ahead, we will set out more of our early findings from other Departments.
Our plan is to balance the books and get the national debt falling as soon as possible in the next Parliament. While the Prime Minister and Chancellor think it is okay to make £7 billion of unfunded pledges—the Prime Minister said that again today at Question Time—although even the Secretary of State for Business, Innovation and Skills has described that as a “total fantasy”, our manifesto will not make commitments that would be paid for by additional borrowing. When we make promises, we will say where the money will come from. We would willingly put all our costings before the OBR so that it could check and validate them—but, of course, that would upset the Chancellor’s plan to smear our proposals and run a dirty election campaign based on fear rather than fact. If the Chancellor only had the guts to put his plans, and all our plans, in front of the OBR, perhaps we could let the public form a judgment based on the values and merits of the manifestos and their policy proposals.
Nick de Bois
How can the hon. Gentleman credibly expect the public to buy into Labour’s ability to balance the books? Every year, from 2001 onwards, the Labour Government spent far more than they took in, which is why they were left with one of the biggest deficits in the G7. You cannot spend more than you take in: that is the root cause of the problem, but Labour Members do not get it.
Chris Leslie
The hon. Gentleman and the Chancellor of the Exchequer were backing all the spending plans during those years. Moreover, the hon. Gentleman did not even mention the banking crisis. Where was he during that period? Does he really think that his constituents will be tricked by his airbrushing of the situation? The hon. Gentleman’s party has been in office for five years, but the Conservatives have failed on the promises they made to tackle the Budget deficit and get borrowing down. They promised that we would not have a Budget deficit, and they failed and it will be up to the next Government to finish the job.
Whoever wins the next election will have to pick up the pieces of this current mess. We will make sure that resources are channelled towards the issues that matter most to the public, but we should not have to wait until next May: the Chancellor has the opportunity to act now. That is why the third task for this autumn statement is to deliver a costed and funded plan to save and transform our national health service. In my constituency in Nottingham it is getting harder to see a GP; on cancer waiting times we still have a system struggling to meet the two-week target from GP referral to first outpatient appointment; and at the beginning of the month in Nottingham almost one in five patients had to wait more than four hours at our local emergency department. We have excellent staff and diligent management at our local hospital, but the pressures on their shoulders have been getting worse and worse, and Ministers have left the NHS to cope on its own, without finding the new sources of funding to put this situation right.
I therefore put this challenge to the Minister today: when she gets to her feet to respond to this debate, will she accept our suggestion to use £1 billion of banking fines from the recent foreign exchange rigging scandal and earmark this windfall for the NHS? More than that, will the Minister do what is required to tackle tax avoidance, and introduce a levy on tobacco firms and a tax on properties worth over £2 million to raise £2.5 billion a year—on top of the Government’s spending plans—for an extra 20,000 nurses and 8,000 doctors? These are necessary—and some of them are difficult—decisions, which focus relentlessly on supporting the NHS at this time of need.
These are the tests for next week’s autumn statement: a recovery for the many; a fairer approach to balancing the books; and a plan to save our NHS. Britain cannot afford another autumn statement of inactivity, neglect and the same old trickle-down economics. We need a Government who step up and take action to deliver a recovery shared by all. I commend the motion to the House.
Priti Patel
Our welfare reforms have been focused on ensuring that work pays. The Opposition were fully opposed to our reforms to the welfare system, and they still stand against welfare reform today—
Priti Patel
The Opposition are firmly against the reforms that we have brought in on welfare. We inherited a broken welfare system; let us get that on the record and be categorically clear about it. Our reforms are about making work pay and providing opportunities through work, training and employment.
Priti Patel
My hon. Friend is absolutely right. The public should be terrified of going back to the same old days of more borrowing and spending and higher taxes under Labour.
Chris Leslie
The Minister is talking about taxes. She will know that the Prime Minister made pledges at his party conference involving a total of £7 billion. Does she agree that if the Government are making such pledges, they really should say where the money will come from? I should like to give her an opportunity to put on record now specifically how she intends to pay for the £7 billion-worth of promises that the Prime Minister made.
Priti Patel
The answer is simple and straightforward: it is through sustainability in our economy. That means making hard choices, tackling the challenges of public spending and encouraging the economy to ensure that it grows more. It is about the creation of more jobs, not about higher taxes that penalise the wealth creators of this country.
Priti Patel
I say to the hon. Gentleman that, by growing the economy, we will see—[Interruption.] The hon. Member for Nottingham East is gesticulating with his hands, which is something I know the Labour party likes to do. The Prime Minister was very clear in his party conference speech. We are all about economic growth, growing the economy, getting our budget back on track and sorting out the finances, unlike the Labour party, which just wants to spend, borrow and tax more.
Chris Leslie
The hon. Lady is being very patient in allowing us to intervene on her. It is important that we pin this down. The Prime Minister has announced £7 billion of unfunded pledges, and she is standing there and saying, “We’ll pay for it through sustainable growth.” If the Opposition said that they were going to put £2.5 billion into the NHS through unfunded growth, what would she really say in response? It is our duty to ask her to be specific and to say what she will cut to fund those pledges or how she will raise the money by raising other taxes such as VAT.
Priti Patel
It is our duty to be clear about the fact that we will tackle public spending, as the Chancellor and the Prime Minister highlighted during their conference speeches, in addition to supporting the economy through wider economic growth.
Stephen Hammond (Wimbledon) (Con)
I am grateful for the opportunity to contribute to this debate this afternoon. It is a pleasure to follow the hon. Member for Coventry South (Mr Cunningham). I listened carefully to his remarks, and feel sure that he would have wanted to put it on the record that unemployment in his constituency has fallen by 32% over the past year and youth unemployment by 48%. That fact goes to the heart of what we are talking about today.
I read the Opposition motion extraordinarily carefully last night. I do not want to use unparliamentary language, so I will speak in economic terms. When we talk about being economical with the truth, we should look at the great speech from the Opposition Front Bench. We had not only deficit denial but fact denial. This motion shrinks away from reality. It is economically and historically inaccurate and, as those on the Opposition Front Bench know, economically inept. I am pleased that the motion has at least one virtue: it gives us the chance to remind everyone in this country that Labour left the largest ever budget deficit in peacetime. It caused the mess that this Government are clearing up. Of course, it is historically the job of Conservative Governments to clear up the mess that Labour Governments leave behind.
It was extraordinary that the speech made by hon. Member for Nottingham East (Chris Leslie) included not only deficit denial, but a denial of facts set out by the Office for National Statistics about the rise in living standards that is beginning due to this Government’s long-term economic policy. We heard no apology from him for the economic mess. No one says that there was not a financial crisis and a banking crisis, but had he listened to my hon. Friend the Member for Enfield North (Nick de Bois)—and responded to my hon. Friend’s point, rather than trying to deny the facts—he would have recognised that the previous Labour Government created a structural budget deficit over a full 10 years, which was why this country had a significantly worse budget deficit than any other European country.
Stephen Hammond
The hon. Gentleman shakes his head again. This is not only deficit denial, but fact denial.
Stephen Hammond
At the end of the article, quite rightly, The Daily Telegraph points out all the facts that my lawyers have made available, and it now recognises those facts. If the hon. Gentleman wants to make an apology, I shall happily accept it.
The motion refers to a
“tough and fair plan to deliver a current budget surplus and falling national debt”,
yet the Opposition’s spending plans involve £166 billion of extra spending. The hon. Member for Nottingham East talks about Labour’s tough and fair plan and its zero-based review of every pound spent, yet the shadow Chancellor’s article in last night’s Evening Standard said that Labour had so far identified £250 million of savings against that £166 billion of unfunded promises. We hear about unfunded spending promises from the hon. Member for Nottingham East, so will he clarify whether the zero-based review has identified any more savings than that £250 million?
Chris Leslie
Our zero-based review of all Government Departments is an ongoing process, but I want to ask the hon. Gentleman about the £7 billion promised by the Prime Minister. The hon. Gentleman is a man of integrity—he has been debating this with my hon. Friend the Member for Dudley North (Ian Austin)—so surely he does not think that the Prime Minister can get away with saying that future growth will pay for that £7 billion. How should that £7 billion be paid for?
Stephen Hammond
I am delighted to accept the hon. Gentleman’s word that I am a man of integrity and I hope that the hon. Member for Dudley North (Ian Austin) will also make that clear in the Chamber. It is perfectly reasonable to say that we will implement the policy when the economy allows. That was exactly what the Prime Minister said, as the hon. Member for Nottingham East knows.
The hon. Gentleman also knows that growth in our economy is at 0.7%, in line with data from the past eight or nine quarters, and that the OECD forecasts that the UK will be the fastest-growing economy in the G8 this year and the second fastest next year. He also knows that the deficit has been cut and that our interest rates mean that mortgage rates remain low for many. There is long-term economic progress in an economy that is now 3.4% larger than when we went into recession. Under Labour, borrowing steadily rose throughout the period of economic activity, but this Government are starting to cut the deficit, which is benefiting the many. People have been taken out of tax and business investment is rising. It is clear that our long-term economic plan is delivering for the people of this country, and the only thing that would put that plan in danger would be the election of a Labour Government. The public see through Labour’s plans, as an opinion poll shows that on economic competence, the Conservative party’s rate is, understandably, 26% higher than Labour’s.
Andrea Leadsom
My hon. Friend is absolutely right. In particular, our achievements must be seen against the backdrop of our inheriting the toughest economic conditions in living memory.
I do not accept that we have broken our pledge to balance the books; nor do I accept that the recovery has somehow insulated the richest. What total nonsense! The richest are contributing more in income tax than they ever did under Labour, with over 28% of income tax revenue coming from the top 1%. In every single Budget, we have raised revenues from the most well off, and we have used those extra revenues to help the most vulnerable in our society. It is a sad fact that many have been hit hard by this recession, and I know how genuinely difficult many people have found it. We owe it to them not just to improve their living standards through an economic recovery, but to make sure we never get into this mess again. That is why it is all about finding the right balance: between ensuring that those with the broadest shoulders take the biggest burden and ensuring the UK remains internationally competitive and open for business.
This Government have looked to strike the right balance. That is why our above-inflation increase of the adult national minimum wage came into force on 1 October: more than 1 million people benefited from the largest cash increase since 2008 and the first real-terms increase since 2007. On child care for working parents, we are introducing comprehensive support. Under our tax-free child care plans, 20% support for child care costs of up to £10,000 per year for each child will be available. We have also doubled small business rate relief for a further year, helping more than 500,000 small businesses and giving 300,000 local shops, pubs and restaurants a £1,000 discount. We have made infrastructure a top priority—we are setting out a long-term pipeline of infrastructure investment of £383 billion to 2020 and beyond. Housing is a major part of this, and we are investing £7.8 billion to deliver 335,000 new affordable homes.
However, it is not our plan to reinstate the 50p tax rate. That rate was crudely thought out, distortive and economically inefficient. It failed to raise the £2.5 billion Labour claimed it would and it gave a damaging signal that the UK was not open for business. We have instead raised far more from tax changes targeting the richest, including the bank levy, which will raise £8 billion during this Parliament. We have also taken tough measures against tax avoidance: we have closed loopholes; we have clamped down on stamp duty avoidance; we have given Her Majesty’s Revenue and Customs new powers to collect disputed tax; and we have led international tax reforms through the G20.
The motion's final point related to creating new funds for health and care. Since 2010, the Government have increased the NHS budget in real terms every year. Health funding will continue to grow in real terms in 2015-16, which means an additional £2.1 billion for the NHS next year. But a strong NHS needs a strong economy, and our long-term economic plan is designed to provide both.
Chris Leslie
The £1 billion from the foreign exchange-rigging scandal is coming in as a windfall. Will the Minister do the right thing and allocate it for the NHS?
Andrea Leadsom
As the hon. Gentleman will appreciate, a strong NHS needs a strong economy. In answer to the point raised by the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) about foreign exchange fines, she is absolutely right to say that we are talking about disgusting, appalling behaviour, which represented extreme arrogance on the part of the bankers who thought they could rig foreign exchange. Our Chancellor decided that those fines for misdoing would no longer go back to reducing the levy for the industry’s own regulation, but would instead be used for the public good. This is a big sum and we intend to think carefully about how we use it, but it will be used for the public good.
Whatever happens, we cannot go back to the bad old days. What a shocking mess we were left with—total economic carnage. The Opposition’s motion, calling for a current budget surplus and falling national debt as soon as possible, shows complete economic illiteracy. They want to keep on borrowing, hiding behind so-called “capital spending”, as if, somehow, one type of borrowing does not count. I do not see how voters can be fooled by that; it is the equivalent of saying, “I will spend my wages on food, clothes and petrol, but if I buy a car or a house, that’s investment and so borrowing to fund it doesn’t count.” It is this Government’s plan that will get our debts under control; eliminate borrowing over time to ensure that our debts fall as a share of GDP; and allow future Governments to respond much more quickly to any economic shocks, while continuing to support individuals and businesses across the country.
We know that the job is far from finished. As storm clouds gather once again over the world’s economies, we need to be clear about the scale of the task that we face. When a country loses control of its finances, it loses control of everything, and it is the poorest who are hit the hardest. Labour’s recession proved that only too clearly. This Government have taken the tough decisions to pull our economy back from the brink and, through our long-term economic plan, to put an economic recovery in place, so now, more than ever, it is a plan that nobody can afford to abandon.
Question put.