Amendment of the Law
Danny Alexander Excerpts(9 years, 8 months ago)
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The Chief Secretary to the Treasury (Danny Alexander)
We have had a good debate with distinguished contributions from Members across the House, and like the shadow Chief Secretary I particularly wish to recognise the contributions of those who are not seeking re-election to this House. A number of hon. Members said that their speech would be their final contribution here, including the hon. Members for Sheffield, Heeley (Meg Munn) and for Thirsk and Malton (Miss McIntosh), the right hon. Members for Holborn and St Pancras (Frank Dobson), for Sheffield, Brightside and Hillsborough (Mr Blunkett), for Salford and Eccles (Hazel Blears) and for Edinburgh South West (Mr Darling). I am sure the House will agree that in their different ways they have all made a significant contribution to British public life, and the whole House will be grateful for their service to their country.
The right hon. Member for Salford and Eccles spoke movingly about the circumstances in which she grew up and the commitment to social mobility that that imbued in her—a commitment I strongly share. I am grateful for her kind words about the Government’s decision to support the Speaker’s parliamentary placement scheme, which as the House will know provides opportunities for many young people from disadvantaged backgrounds to work in this House. Credit should go to the right hon. Lady, and to you, Mr Speaker, for promoting that scheme. In her remarks she gave some examples of young people who have benefited from the scheme that she promoted, and many hon. Members will have encountered young people who have gained apprenticeships through it.
My hon. Friend the Member for Thirsk and Malton spoke about her rural constituency, and drew attention to the issues facing rural communities and the need for broadband. As a Member who represents a very rural constituency, I share that concern. I draw her attention to the supplementary document that was published alongside the Budget which included the strategy for superfast broadband, and indeed for moving to ultrafast—[Interruption.] The shadow Chief Secretary is muttering, but I will come to that point. The supplementary document on the move to ultrafast broadband set out a new and ambitious strategy for this country, including moves towards superfast broadband for 95% of households through the BT scheme, the roll-out of 4G broadband to 98% of households, and the availability of a vouchers scheme for the most remote households to gain satellite connections. I hope that that answers her point, which I am sure is an important issue for many hon. Members.
Other strong contributions included the one from my hon. Friend the Member for Cheltenham (Martin Horwood)—I do not know whether he is in his place. He made an important point about the decision in the Budget to extend the pension changes to police and fire service widows and widowers where someone has lost their life in the line of duty. We made clear in the Budget that we also intend to extend that change to apply to members of the security services who have lost their lives in the line of duty. That pension change is not yet fully worked out, but we intend to make it along the same lines as the measure announced for police officers and members of the fire service who lose their lives in the line of duty.
The hon. Member for Liverpool, West Derby (Stephen Twigg) made a balanced speech—I think he was the only Labour Member to welcome the strong record of job creation we have seen since 2010, and I credit him for that. He also—fairly, I think—called for further improvements to the quality of job creation, and the measures that the Government announced in the Budget, as well as the creation of more than 2 million apprenticeships during this Parliament, will help to support the agenda he described.
We also heard distinguished contributions from two former Chancellors of the Exchequer. My right hon. and learned Friend the Member for Rushcliffe (Mr Clarke) provided distinguished service in government during this Parliament, and indeed for many, many decades before that—[Laughter.] I know he is standing again; I am not citing him as a Member who is stepping down. He is an immortal in this House as far as many of us are concerned. In his remarks he gave strong support for a balanced, fiscally neutral Budget, and responsible measures from the coalition Government. He rightly celebrated the rise in the income tax personal allowance, a matter to which I will return. I am bound to say, however, that his customary generosity deserted him when describing the political heritage of this particular policy commitment. My hon. Friend the Member for Cheltenham corrected the balance of the ledger in that respect, when he made clear that this policy emerged from the 2010 Liberal Democrat manifesto. It is making a huge difference to 27 million people.
Mr Kenneth Clarke
I cannot remember whether I raised personal allowances once or twice in my Budgets, but once certainly, so it does have slightly older antecedents. I always thought it was a good idea. I was unfortunately discouraged by the then Prime Minister who told me that he thought there were no votes in it.
Danny Alexander
It is fair to say that the current Prime Minister also discouraged this policy. In the television leaders debates in 2010 he said it could not be done and could not be afforded. We have shown in this Parliament that we can afford it. The difficult decisions we on the Government Benches have been willing to make in other areas have meant that we have been able to deliver the largest income tax cuts for working people in a generation. That is something of which I am very proud indeed.
My right hon. and learned Friend also rightly highlighted how much progress we have made in tackling tax avoidance during the course of this Parliament. He was humble enough to admit that progress had not always been as strong during his time as Chancellor. There were many measures in the Budget to tackle tax avoidance and evasion.
We then had a contribution from the right hon. Member for Edinburgh South West. It is fair to say that there were many things in the Budget that he was not very keen on. He certainly made that clear. He did not like the rollercoaster, as he described it, of the public finances. I have set out my own alternative scenario on that. He did not mention the big dipper that the public finances had been on during his time in office.
The right hon. Gentleman rightly welcomed the package of measures to support the oil and gas sector, which was a very strong feature of the Budget. The measures will ensure that the sector, which is suffering from a dramatic fall in the oil price, has some confidence in the future. He welcomed those measures, but he rightly pointed out that the oil revenues in the OBR forecast at this Budget were a little more than a 10th of those predicted by the nationalists in the recent Scottish referendum. He made the point that had Scotland voted for independence and experienced the fall in oil prices, the difficult decisions made in this Parliament—I think I quote him correctly—would have seemed like a school picnic in comparison.
The right hon. Gentleman was too modest to remind the House of the service he rendered to his country with the leadership he showed in the Better Together campaign. I hope that Members on all sides of the House express their appreciation for that. It was certainly something I experienced first hand. It was immensely important in ensuring that the people of Scotland voted the right way in the referendum. The experience of working with him on that campaign, although we may have disagreed on many other matters over the years and will no doubt continue to do so, is one I will always remember. He showed himself to be a man of the greatest statesmanship in his conduct of that campaign.
Before I respond to some of the other points, I want to respond to the jibes from the shadow Chief Secretary—[Interruption.] It certainly is not—there are another 10 minutes to go. The shadow Chancellor, the shadow chunterer, is in his place chuntering as usual. He doesn’t have many policies, but he sure does like to chunter.
The Budget, as set out in the Red Book, was agreed by Conservatives and Liberal Democrats working together in the coalition Government. There is no policy measure in the Budget which Liberal Democrat Ministers did not sign off. Are there differences in the way the two parties in the coalition would approach the task of deficit reduction in the next Parliament? Yes, of course there are. I have made clear in this House and outside that there is another way we can meet the fiscal mandate that all parties signed up to when we voted for the charter for budget responsibility in January. Opposition Front Benchers appear to have forgotten about that, but we can do it in a more responsible and stable way. For that reason, last week I published and set out an alternative fiscal scenario for the next five years—a plan to borrow less than Labour and cut less than the Conservatives, a plan to give the UK a brighter future without sacrificing financial prudence. As the independent OBR mentioned in its economic and financial outlook, this profile of public expenditure
“is driven by a medium-term fiscal assumption”,
but
“both parties have said that they would pursue different policies if they were to govern alone.”
The Budget that my right hon. Friend the Chancellor presented last week is a coalition Budget that reflects the hard work the coalition Government have carried out over the past five years to turn the country around from the mess we inherited from Labour and to set us on a path back to prosperity. I do not hesitate, therefore, to speak in favour of it.
Chris Leslie
This is very confusing. So the right hon. Gentleman supports the Budget, but he opposes the Government. He wants to be a Minister, but he does not want to be a Minister. Will he at least agree that the cuts for the next three years are extreme and would be damaging, and will he confirm that he does not support the depth of the cuts to our public services over the next three years?
Danny Alexander
It really is not that confusing. Even the shadow Chief Secretary ought to understand that two different parties in a coalition Government will have different views about the future direction of policy in this country. I would say—[Interruption.] If the hecklers would silence themselves, I would say that Labour signed up to £30 billion of deficit reduction in the first three years of the next Parliament when they voted for the charter for budget responsibility. I am sure you remember the occasion, Mr Speaker. It was an important debate in the House, and one to which the country should be paying great attention. It is fair to say that all parties in the House have different views about how to achieve that £30 billion of cuts, and I set out my view to the House on Thursday.
Danny Alexander
If the hon. Member for Denton and Reddish (Andrew Gwynne) had not been cavorting so loudly, the shadow Chief Secretary might have been able to listen to my speech on that occasion.
Sir Nicholas Soames
Inexplicably, my right hon. Friend seems to have failed to mention the excellent points I made about my constituency, particularly the need for more spending on infrastructure in Mid Sussex and compensation for passengers being grievously delayed by improvements on the railway line. Will he look into these matters and let me have an answer before 6 May?
Danny Alexander
My right hon. Friend made his points so powerfully I did not see the need to repeat them, but I will certainly look into the matters he raises and respond to him. However, the Government have a very good record of investment in infrastructure, including the largest programme of rail investment since Victorian times; the largest programme of rail investment since the 1970s; and a huge investment programme in broadband infrastructure.
This is a Budget for fiscal responsibility that meets the supplementary target for debt as a share of GDP that the Government set in 2010. The deficit has fallen by a half over the Parliament, and every year we have borrowed less than set out in the autumn statement. This is a Budget, too, for a strong economy. The UK is the fastest-growing major economy in the G7. We have record numbers of people in work and the highest employment rate in our country’s history. It is very different from the predictions we heard from Labour Members, who said that jobs would be lost this Parliament. Instead, nearly 2 million jobs net have been created. Astonishingly, more jobs have been created in the UK since 2010 than in the whole of the rest of the EU combined. That is a truly extraordinary record.
There were measures in the Budget to support job creation and key sectors in the economy. I have mentioned the measures to support the oil and gas sector, which have been widely welcomed by Oil & Gas UK, Sir Ian Wood, who authored the Wood review, and many other figures in the oil and gas sector who see the package as one that will increase confidence in the sector.
I could mention the measures we took on alcohol duties, which were particularly warmly welcomed by the Scotch Whisky Association, as I discovered at its reception at the Scottish Liberal Democrat conference in Aberdeen on Friday evening. We also announced radical new measures to pilot full retention of business rate increments in Manchester and Cambridge, and a number of hon. Members have welcomed the wide review we announced of the way in which the business rate system operates.
This is a Budget that delivered on several key Liberal Democrat party priorities. I particularly note the package of measures to support mental health. The hon. Member for Birmingham, Edgbaston (Ms Stuart) wrongly said that the Budget did not mention the national health service. In fact, it contained a full package of measures to help fund additional support for people suffering from mental ill health. I pay tribute to the Minister of State, Department of Health, my right hon. Friend the Member for North Norfolk (Norman Lamb), who worked very hard to devise this package. It is a £1.25 billion package that provides measures for children’s mental health services, perinatal mental health services, and to improve support for the mental health of people who are out of work. Worth more than £1 billion over the next five years, we will be able to start new access standards and see 110,000 more children cared for over the next Parliament. Some £118 million will be invested over the next four years to complete the roll-out of the children and young people’s increasing access to psychological therapies programme. The measures to support mental health in this Budget mark a radical departure and a radical change. It is perhaps not surprising that some hon. Members said that the national health service was not mentioned in the Budget—so weakly has mental health been accorded its proper status under previous Governments. Because of the Liberal Democrat involvement in this Government, that particular thing has changed.
The Budget included further big increases in the income tax personal allowance, increasing the tax-free allowance to—[Interruption.]
Danny Alexander
No, I am not giving way. I am going to make some progress. The hon. Lady was not here for the debate, so I am certainly not giving way to her.
Danny Alexander
No, I am not giving way. I am going to finish.
The income tax personal allowance will increase to £10,800 in 2016-17 and—
Danny Alexander
No, I will not.
This is the most significant tax cut for working people in a generation. As a result of the increases to the personal allowance, a typical basic rate taxpayer will be £905 a year better off in 2017-18, and 27.2 million individuals will have benefited from increases to the personal allowance since 2010. As a result of these changes, over 3.7 million people—[Interruption.] Opposition Members do not like to hear about tax cuts for working people, Mr Speaker.
Danny Alexander
No, I will not give way. Opposition Members do not like to hear about tax cuts for working people because they did not deliver those cuts themselves. If they cared about cutting taxes for working people, they would be welcoming and celebrating the fact that 3.7 million working people on the lowest incomes no longer have to pay any income tax at all. That is something that Government Members would celebrate; Opposition Members should be celebrating it, too.
When a Government lose control of the public finances, it is the poorest who are hardest hit. That is why imposing fiscal discipline was such a priority for us in 2010. We created the stability necessary to deliver growth, jobs and investment. Last year, the shadow Chancellor channelled Ronald Reagan and asked, “Are you better off than you were in 2010?” On Thursday, the independent Institute for Fiscal Studies confirmed that families are set to be £900 better off in 2015 than they were in 2010.
Compared with five years ago, we have lower inequality; child poverty is down; pensioner poverty is at record lows; the gender pay gap is smaller than ever; and the number of students at university from disadvantaged backgrounds is at an all-time high. Some 1.9 million people are now in work, which is 1,000 new jobs a day, four fifths of them full time and four fifths in skilled occupations. This is a record to be proud of, and I am proud of these achievements. I am proud of the role my party has played in achieving them.
Responsible government does not mean standing on the sidelines and complaining about how long other people are taking to clean up the mess they created. Responsible government is about stepping up to the challenges and not flinching from taking the tough but necessary decisions. That is what we have done since 2010. We have created a stronger economy, we have created a fairer society, and we have delivered for the people of the United Kingdom. I commend the Budget to the House.
Question put.
amendment of the law
Danny Alexander Excerpts(10 years, 8 months ago)
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The Chief Secretary to the Treasury (Danny Alexander)
It is a pleasure to close this excellent Budget debate. We have heard some very good speeches today. I particularly commend my hon. Friend the Member for Forest of Dean (Mr Harper), who gave strong support to the Budget. I pay tribute to his work as a Minister, not least as Minister responsible for constitutional reform when he worked so closely with the Deputy Prime Minister on those matters.
I particularly note the speech by the right hon. Member for Edinburgh South West (Mr Darling), who rightly highlighted the importance of securing this country’s long-term competitiveness. I would also highlight the work we are doing on infrastructure, on skills, and on making this country more attractive for investment. In that context, I find his party’s decision to vote against the corporation tax cut utterly extraordinary. If we want this country to become more welcoming to investment, that is precisely the sort of measure we should be supporting.
The right hon. Member for Salford and Eccles (Hazel Blears) spoke particularly about social investment. I welcome her support for the tax relief on social investment that we confirmed in the Budget. The hon. Member for Aberdeen South (Dame Anne Begg) gave an important speech about her concerns about pensions and annuities. I am sure that those issues can be addressed as the Finance Bill goes through the House. My hon. Friends the Members for Bedford (Richard Fuller) and for Daventry (Chris Heaton-Harris) made particularly strong speeches. I commend the hon. Member for Paisley and Renfrewshire North (Jim Sheridan) for his speech, particularly the attention he paid to the warm welcome in the Scotch whisky industry for the measures we have taken on spirits duties—just one of a number of ways in which this was a Budget for Scotland. He is right to have welcomed that.
However, we heard at the end the most extraordinary speech by the shadow Chief Secretary to the Treasury. I gather that his party is intending to vote against the whole Budget tonight. That is surprising—or perhaps not that surprising in the context of Labour’s changing position on annuities and pension reform. Last week’s announcements on annuities complete the most progressive and important reforms to our pension system since Lloyd George was the Liberal Minister in the Treasury. The reforms are founded on the decisions we have made and are being ably led by the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb), who has responsibility for pensions. They include the creation of a single-tier pension—a firm foundation on which everyone can save—and the triple lock, which ensures finally that we will not have the kinds of derisory pension increases that we saw when Labour was in office.
People often wonder whether there will be a rabbit-out-of-the-hat moment in a Budget and I am sure the whole House will agree that our annuities announcement has been successful in rabbit production—a whole Labour Front Bench of them. They are rabbits caught in headlights. It has gone on for days. As my hon. Friend the Member for Daventry memorably said in his speech, Labour’s economic policy is like a chameleon that has fallen into a bag of Smarties. You can ponder for yourself what that means, Mr Deputy Speaker, but I think he was drawing attention to the fact that we have not had a sensible reaction from the Opposition. [Interruption.] I am not sure: I think ginger rodents play a very important role in our democracy, to answer the shadow Chancellor’s remarks.
On Wednesday the Leader of the Opposition said absolutely nothing. On Thursday the hon. Member for West Bromwich East (Mr Watson), presumably frustrated by the continued silence of his Front Benchers, took it on himself to tell his party that it should oppose our plans on annuities and pensions. Friday saw the hon. Member for Leeds West (Rachel Reeves) getting around almost at least to welcoming the move. To think that Labour Members used to say that we in my party wore sandals; they are surely now the flip-flop party. They now say—this is a serious point—that they will vote against the Budget as a whole and, therefore, against all of the reforms contained in it. They did not know what to say about the reforms, then they were against them, then in favour of them, then sort of in favour of them and now in just a few minutes’ time they are going to vote against them. The truth is that our great liberalisation of the pensions market has hit Labour Members like a missile. It has cracked open one of the great dividing lines between their values and our values. We on this side of the House know that the best people to trust with money are the people who earn that money in the first place. Labour Members do not seem to agree with that.
I draw the House’s attention to the following quote:
“You cannot trust people to spend their own money sensibly”.
Who said that? It was a former Labour adviser in No. 10 under the previous Government. That says it all. Having been in opposition to that Government for so long, I understand John McTernan’s concerns. After all, when the Labour party was given access to the public purse, it went on a giant spending spree. It splurged on all sorts of unsuccessful projects. It is a party that wastes money and expects someone else to clean up after it. We are the party—the Government, the coalition—that it has left with the cleaning up. [Interruption.] Yes, the Liberal Democrats are clearing up the mess that the Labour party made of this country’s economy. I think that the people of this country know not only about the mess the Labour party made of our economy, but that people who have spent their lives saving for their retirement can be trusted to make sensible, long-term choices. It is just the Labour party that cannot be trusted to do that.
This was, in the end, a Budget for freedom. It was a Budget for the freedom of pensioners to choose to use their own savings in the way that best suits them; a Budget for working people to be free to keep more of the money they earn for themselves; and a Budget to support businesses that want to invest. The only way we can deliver the rise in living standards that has been discussed by some Labour Members is by making sure that our policies are as fair as possible.
Chris Leslie
Now that the Chief Secretary has finally come to the question of living standards, will he do what he failed to do four times when asked on the “PM” programme on the day of the Budget and admit that living standards will be lower at the time of the next election than they were at the last election—yes or no?
Danny Alexander
I rather agree with the analysis that my right hon. Friend the Secretary of State for Work and Pensions set out on that question. In his opening remarks—[Interruption.] The Opposition might not like it, but no matter how much the shadow chunterer makes his noises from the Front Bench, I will make the point that the recession that they helped to cause when they were in office cost every household in this country £3,000. That is the mess that they made. It is no wonder that we are having to work so hard to repair the British economy and to ensure that there are jobs for people.
Danny Alexander
No, I will not give way any more—sit down. I will give the hon. Gentleman the treatment that he deserves.
In the Budget, we have sought to help those at the bottom of the earnings scale by taking them out of tax altogether. I am incredibly proud, as a Liberal Democrat, to stand at this Dispatch Box and say that, come next April, the rise in the personal allowance will mean that typical basic rate taxpayers will be £800 a year better off than they would have been under the previous Government’s plans.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The right hon. Gentleman is not giving way and persistence will not help.
Danny Alexander
I have quite a few more things to say, Mr Deputy Speaker, and I have less than three minutes in which to say them.
The rise in the personal allowance is not just a reward for hard work, but an incentive for hard work, as are the substantial changes that we have made on child care in the Budget. Those changes mean that we are getting more people into work and that people are keeping more of what they earn.
We have taken measures to incentivise businesses to invest, such as enhancing capital allowances. I pay tribute to my hon. Friend the Member for Burnley (Gordon Birtwistle), who pushed hard for those changes. They will make a serious difference to business investment in this country.
To conclude, this is a Government with a long-term economic plan, and they are an Opposition without any plan at all. For businesses, we have doubled the tax relief on new plant and equipment, while they are frightening off the investors whom we need to invest in the energy to power those machines. They will vote against the cut in corporation tax and confirm that the Labour party is the anti-business party in this House. For working people, we have lifted the personal tax allowance even further than we promised in our election manifesto. While they talk about a 10p rate, we have lifted the personal allowance to £10,500. For pensioners, we have delivered a triple lock, the largest cash rise in the basic state pension in a generation and the greatest pensions liberation in a century. In their time in office, they delivered a paltry 75p rise in the basic state pension.
Some people have referred to this as the Lamborghini Budget. That may well be so, because there is one person in this Chamber who has shown that he can out-accelerate a Lamborghini. That is the shadow Chancellor in retreating from his predictions on the economy, such as the 1 million jobs that were never lost and the triple dip that never came.
Ed Balls (Morley and Outwood) (Lab/Co-op)
Is the right hon. Gentleman calling me a Lamborghini?
Danny Alexander
The shadow Chancellor might think that he is more of a Robin Reliant, but he is not for the purposes of this Budget.
This Budget is another landmark on our long road to repairing the economy that the Opposition wrecked. It gives more people more control over their own money. It cuts income tax for working people. It helps businesses to invest for growth. It is a Budget that helps put Britain and business back on their feet, and I commend it to the House.
Question put.
Amendment of the Law
Danny Alexander Excerpts(13 years, 8 months ago)
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The Chief Secretary to the Treasury (Danny Alexander)
There has been a good debate today and over the past four days. Today the debate was graced in particular by a contribution from the right hon. Member for Edinburgh South West (Mr Darling), the former Chancellor, who addressed the topic of business confidence and gave the House the benefit of his experience of issues in the world economy. He might have noticed that figures today show that business confidence is rising, but it was good to hear from him in the debate, and also from the right hon. Member for Birkenhead (Mr Field) who, among many other hon. Members, made the point that it was important to hear from the Opposition what they would cut.
This year’s Budget is about reforming the nation’s economy so that we have sustainable growth and jobs in the future. As many hon. Members observed in the debate, none of this would be possible without the difficult decisions that we have already had to take to tackle the enormous budget deficit that we inherited—decisions that have secured our international credit rating and been praised by the OECD, the International Monetary Fund and the World Bank; decisions that have provided the firm platform that we need to build a strong, sustainable and balanced economy; and decisions that have brought about economic stability and confidence in Britain’s ability to pay its way in the world. That stability and confidence would be forfeit if we stepped back from our plan, as some have suggested. To do so would cost jobs and growth and would mean more cuts for more people for longer in the future.
The action that the Government have taken is allowing us to move from rescue to recovery, from a decade of unbalanced, unsustainable policy to the hard road back to prosperity, for this Budget confronts the problems that our predecessors chose to ignore. For the past decade Britain has been losing ground in the world’s economy. While other nations have reduced their business tax rates, ours have increased. While other countries have removed barriers to enterprise, ours have grown higher still. While our competitors have improved their education systems, reformed welfare and increased exports, we have had to endure the opposite. That is the legacy of the Labour Government.
That is why, in the Budget, we have set out the Government’s new vision for growth—a vision that has four key ambitions at its heart. First, Britain should have the most competitive tax system in the G20. Secondly, Britain should be the best place in Europe to start, finance and grow a business. Thirdly, Britain should be a more balanced economy by encouraging exports—
Geraint Davies
If the right hon. Gentleman is creating an environment for inward investment and enterprise, how does he explain the fact that when I spoke in Dusseldorf to UK Trade & Investment, which markets Britain abroad, it said that it was generating lots of leads for inward investment, but because the Government had abolished the RDAs, those were not being drawn down and all that inward investment was going elsewhere? Is that not a pathetic indictment of the Government’s failure to generate growth?
Danny Alexander
I am grateful for that intervention, but I disagree with the point that the hon. Gentleman makes.
Danny Alexander
Let me answer the intervention before I give way again. We have abolished the regional development agencies, which were bureaucratic and inflexible, and we have replaced them with a localised, bottom-up process of local enterprise partnerships that are making a real difference in our economy.
Chris Ruane
I thank the Chief Secretary for giving way. Has he read the article in The Guardian today, which reports that the UK has slipped from third position to 13th in the whole world on green renewable energy technology under the Tory-Liberal Democrat Government?
Danny Alexander
I am afraid I have not read The Guardian today. I will turn to green issues later in my speech. I disagree with that assessment, although of course the hon. Gentleman is quoting one of the very few organisations that backed his party’s economic plans, if that is what they can be called.
The fourth objective of our growth strategy is to have a more educated work force who are the most flexible in Europe.
Let me turn first to creating a more competitive tax system. We used to have the third lowest corporation tax rate in Europe, but we now have the sixth highest, so from April this year corporation tax will be reduced not just by 1%, as we announced last June, but by 2%. It will continue to fall by 1% in each of the next three years, taking our corporate tax rate down to just 23% and giving us the lowest corporation tax rate in the G7.
Dame Anne Begg
Which oil and gas companies said that they would enjoy a lower tax take as a result of the Budget?
Danny Alexander
I will mention the oil and gas sector in the course of my speech, but it is worth observing at this point that, as a result of the very high oil price, oil and gas companies are expected to make £24 billion in profits over the next 12 months. Even with the tax changes that we have announced in the Budget, it is expected that they will make more profit per barrel of oil over the next five years than they did in the past five years, when the previous Government last changed the supplementary charge regime.
We are also creating a competitive tax system in relation to personal taxation. We have of course confirmed that the national insurance increase that the previous Government announced will have to go ahead at least partially, but because we have increased the threshold we are making it cheaper to employ people on incomes of less than £21,000 a year. Anyone earning less than £35,000 a year will, as of next week, be better off because of our £1,000 increase in the personal allowance that was announced in last year’s Budget, the largest increase in the personal allowance in history. That means that in real terms 23 million taxpayers will be around £160 a year better off—£200 in cash terms.
The coalition agreement also commits the Government to real increases in the personal allowance in each and every year of this Parliament. It also sets us the goal that no one earning less than £10,000 a year will be caught in the income tax net. I am happy to be able to tell the House that the £630 increase in the personal allowance announced for next year puts us on track to meet that goal in this Parliament. This is about rewarding work.
We are also reforming the welfare system, and I know that a number of comments were made in the debate on the disability living allowance regime. The right hon. Member for Coatbridge, Chryston and Bellshill (Mr Clarke) should look at page 55 of the Red Book for the answer to his question.
Mr Tom Clarke
I welcome the fact that the right hon. Gentleman has referred to the important mobility component of disability living allowance. Earlier today I invited the Government to take the time available to tell us whether they intend to continue with their plan to abolish that element, which would mean that many people with disabilities living in residential accommodation —82,000 in all, including children—would lose out. What exactly is the Government’s position?
Danny Alexander
As I was saying, the right hon. Gentleman should look at page 55 of the Red Book, which states:
“As announced by DWP at the introduction of the Welfare Reform Bill 2011, the Government will no longer remove the mobility component of DLA for people in residential care in October 2012. Mobility provision for people in residential care will be reviewed as part of the wider reform of DLA to be introduced from 2013-14.”
That is a clear and sensible position.
Sheila Gilmore (Edinburgh East) (Lab)
Will the right hon. Gentleman give way?
Danny Alexander
I am sorry, but I must press on and make some progress.
As well as a competitive tax system, we need a fair one, as the hon. Member for Central Devon (Mel Stride) observed in his speech, which is why we have responded to the concerns of hard-pressed motorists by cancelling Labour’s fuel duty escalator for the remainder of this Parliament.
That is on top of announcing a fuel duty rebate for the most remote parts of the UK; it is on top of introducing a fair fuel stabiliser to share the burden of high international oil prices; it is on top of cutting fuel duty by 1p per litre, which is already feeding through to the prices at the pump; and it is on top of reversing Labour’s planned 5p a litre in April. So, fuel will be 6p a litre cheaper than it would have been under the previous Government.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
When might the European Commission give the green light to the rural fuel derogation for the islands of Scotland, particularly as today in Benbecula diesel is £1.52 a litre?
Danny Alexander
The hon. Gentleman and I agree about the importance of that point. We have submitted the formal application to the European Commission, and I hope that, European processes willing—as he knows, they are not always entirely predictable—we will have that permission over the next few months.
The help that we are providing to motorists has to be paid for, and it is right that we ask the oil companies to pay a greater share of the extra profits that they are making from the high international oil price. Even with those changes, the profits on a barrel of oil are forecast, as I said, to be higher over the next five years than they were over the past five, so I say to the oil companies, “We do understand your concerns, and there is plenty for us to discuss with you, especially to support”—
Danny Alexander
No, no. I am not going to give way. [Hon. Members: “Give way!”] I am not going to give way. [Hon. Members: “Give way!”] I am not going to give way.
I say to the oil companies, “There is plenty for us to discuss with you, especially to support new gas exploration through the regime of field allowances.” That is the right decision, it is fair—
Mr Tom Clarke
On a point of order, Mr Speaker. You will have heard the Minister refer me to page 44 of the Red Book, which I have now read. Is it in order for the Minister to refuse to allow me to respond?
Danny Alexander
The right hon. Gentleman misheard me; I referred to page 55.
It is the right decision—
Danny Alexander
No, I am sorry; I am going to press on. I referred to page 55. I gave an answer to the right hon. Gentleman’s question and I must press on. There is very little time left.
Mr Speaker
Order. The right hon. Member for Coatbridge, Chryston and Bellshill (Mr Clarke) is well able to look after himself, but it is for the Chief Secretary to decide whether or not to give way. He is not giving way at the moment.
Danny Alexander
Our second ambition is for Britain to become the best place in Europe to start, finance and grow a business, and in that area there is pressing need for reform. A number of hon. Members referred to enterprise zones, including the hon. Members for Newcastle upon Tyne North (Catherine McKinnell), for Stockton North (Alex Cunningham) and for Witham (Priti Patel). I say to them that we have learned from the experience of previous enterprise zones, where of course there was some success and some concerns. By working with all the local authorities in the local enterprise partnership areas, we hope to ensure that we learn some of the lessons to which those hon. Members referred.
On the long road to sustainable growth, we cannot ignore the problems that businesses are facing when it comes to accessing finance. Small businesses, in particular, have been the innocent victims—
Mr Tom Clarke
On a point of order, Mr Speaker. It is patently obvious that the right hon. Gentleman is having trouble finishing his speech. Would he allow me to answer the point that he asked me to—
Mr Speaker
Order. I am grateful to the right hon. Gentleman, but he has been in this House long enough to know that that is not a point of order. I think that it is a point of frustration.
Danny Alexander
I am not going to give way to the right hon. Gentleman. I must press on. I have answered his point.
Small businesses, in particular, have been the innocent victims of the credit crunch. They have seen the flow of affordable credit dry up, which is why we have agreed with the banks a £10 billion increase in the availability of—
Ms Eagle
Will the Chief Secretary turn his attention to page 44 of the Red Book, and the “Measures announced at Spending Review 2010”? Measure d states:
“Disability Living Allowance: remove mobility component for claimants in residential care.”
It is scored to save £155 million in 2013-14, £160 million in 2014-15 and £160 million in 2015-16, so how could the Prime Minister say that it was not happening when it is still scored in the Red Book?
Danny Alexander
As I said in answer to the right hon. Member for Coatbridge, Chryston and Bellshill (Mr Clarke), that question is a subject of the review that my right hon. Friend the Secretary of State for Work and Pensions has announced and we are carrying out. We have made it very clear that we are looking at that question, and we will provide the mobility component at a level that is necessary in care homes when we have removed the overlaps and the issues quite rightly identified.
The Government’s third ambition for growth is to encourage investment in exports as a route to a more balanced economy. In “The Plan for Growth”, which we published last week, we set out specific measures to help out a range of businesses. In life sciences, which the hon. Member for Macclesfield (David Rutley) mentioned, we will radically reduce the time it takes to get approval for clinical trials; in our digital and creative industries, we will improve the intellectual property regime; and in manufacturing, which the hon. Members for Wolverhampton North East (Emma Reynolds) and for Warrington South (David Mowat) addressed, we are launching Britain’s first technology and innovation centre for high-value manufacturing, creating new export credits to help smaller businesses, doubling the limit on the capital allowances for short-life assets from four years to eight years and investing in infrastructure, which my hon. Friend the Member for Manchester, Withington (Mr Leech) referred to. These are some of the measures that we are taking to ensure that growth is more balanced and more sustainable, and supports employment across a wide range of sectors.
On green growth, first, we have announced that we will become the first country in the world to introduce a carbon price floor for the power sector. The price will start at around £16 per tonne of carbon dioxide in 2013 and move to a target price of £30 per tonne in 2020. That will provide the incentive for billions of pounds-worth of new investment in our dated energy infrastructure.
Danny Alexander
I will not give way.
The second step that we are taking is to create the green investment bank, as the hon. Member for Stroud (Neil Carmichael) mentioned. As part of the spending review we committed £1 billion to this new facility. Last week, we announced £2 billion more, funded from asset sales and underwritten by the Treasury. This is another step to ensure that we are the greenest Government ever.
Danny Alexander
I will not give way.
That leads me to our fourth ambition for growth—a better educated work force who are the most flexible in Europe.
Danny Alexander
No, I am about to finish.
Listening to many of the contributions made by Opposition Members, it seems that they are living in a parallel universe in which deficit-denial constitutes a credible economic strategy. It is a place where Labour economic plans involve cutting public spending, too, but where it is still perfectly logical to participate in an anti-cuts demonstration just as long as you never say where the cuts will fall—and we have not heard many suggestions on that point from the Government Front Bench. It is a place where Labour councils think that the responsible approach is to slash front-line services and sit on reserves just to score cheap political points. It is a place where an apology means saying—
Catherine McKinnell
On point of order, Mr Speaker. There appears to be a fundamental anomaly in this Budget, which hon. Members are expected to vote on—[Interruption.]
Mr Speaker
That is a matter of debate, and it is for Ministers to decide whether and when to explain their position and in what way.
Danny Alexander
I have already explained this point in answers to interventions.
It is a measure of the Opposition’s denial about the problems that they created in the British economy that they do not want to talk about the mess they made of it. They think that the responsibility for fuelling the biggest peacetime deficit in our history is a badge of achievement. They think an apology means saying that it is everyone else’s fault. Labour Members had ample opportunity in this debate to show the British public that they had woken up to reality, but they failed on every count.
This Government are clearing up the mess that the last one left behind and putting Britain back on a path to sustainable, balanced growth. It is a hard road but it is the only one available. We will make Britain Europe’s leading destination for enterprise with the most competitive tax system in the G20, the most flexible work force and an economy that is able to compete on the world stage. The Budget will create a more balanced economy. It gives support to hard-pressed families and hope to those looking for work, and it will create jobs across Britain. It is a Budget that stands firm on our plan for the recovery. It is good for business and good for growth. I commend this Budget to the House.
Question put.
Capital Gains Tax (Rates)
Danny Alexander Excerpts(14 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
The Chief Secretary to the Treasury (Danny Alexander)
And this from the man who wrote the note saying, “There’s no money left”, the most infamous letter in recent British political history. However, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne) gave us not one single word of apology for his Government’s actions.
Our good, full debate has been illuminated by the excellent maiden speeches made by the hon. Members for East Surrey (Mr Gyimah), for Maidstone and The Weald (Mrs Grant), for Airdrie and Shotts (Pamela Nash), for Thurrock (Jackie Doyle-Price), for Pudsey (Stuart Andrew), for Truro and Falmouth (Sarah Newton) and for Glasgow Central (Anas Sarwar). I served on the Scottish Affairs Committee with the father of the hon. Member for Glasgow Central, so I know that he has big shoes to fill.
This decisive emergency Budget sets out a credible plan to deal with the record deficit that we inherited from the previous Government. It is a tough Budget, and it needed to be tough to reverse the dreadful state of the public finances with which they left us. However, it is a fair Budget that recognises that we are all in this together and that those with the broadest shoulders must carry a greater share of the burden. The previous Government left behind the second largest budget deficit in Europe. Thanks to their incompetence, we are now borrowing £1 for every £4 that we spend, which is a gap of £149 billion this year.
The right hon. Member for Birmingham, Hodge Hill was right to say that at the centre of the Budget was one big judgment: we must go further and faster to reduce the deficit to protect this country and its people from the biggest economic risk of failing to act. If we had failed to act as we have through the Budget, the consequences would have been severe, and the poorest would have suffered the most. We only have to look at Greece to see what happens to countries that do not live within their means: more businesses going bust and higher unemployment.
The Liberal Democrats and Conservatives have come together to tackle the debt crisis facing our country. We have taken the tough decisions that the Governor of the Bank of England and the G20 called for, but that Labour ducked.
Alec Shelbrooke (Elmet and Rothwell) (Con)
Will my right hon. Friend give way?
Danny Alexander
I will press on, if hon. Members do not mind.
At the weekend, President Obama praised the action that we have taken, describing it as necessary and courageous. Yesterday’s G20 communiqué made the situation clear when it said:
“Those countries with serious fiscal challenges need to accelerate the pace of consolidation”,
and no major country has more serious fiscal challenges than those that the previous Government left Britain. Her Majesty’s Opposition seem to have adopted the strategy of Fabio Capello: they blame everyone else and deploy the same formation of arguments, leaving a gaping hole in their own defence. They refuse to accept responsibility for their mistakes, let alone apologise.
This Budget stands for three things: responsibility—taking action to eliminate our structural deficit; freedom—helping the businesses that we rely on to rebuild our broken economy; and fairness—protecting the most vulnerable while ensuring the contribution of all. Failure to deal with the deficit is the greatest threat to growth. Failure to act now would mean higher interest rates hitting businesses, hitting families and hitting the cost of repaying the Government’s enormous debt, losing jobs and losing growth too. This Budget takes action now to restore confidence in our economy—the confidence that is needed to underpin the recovery that we all want to see. This Budget’s forward-looking fiscal mandate will eliminate the deficit in five years and puts us on track to get debt falling by 2015-16. The Office for Budget responsibility, in fact, forecasts that the measures in our Budget will lead us to meet that challenge a year early.
Before I outline our plan, let me remind the House of the previous Government’s commitments. They were planning £50 billon of cuts, about which they had nothing of substance to say. Some of their leadership contenders—I do not see any of them here—are rowing back even on that plan. Our emergency Budget sets out the path of public spending for the next five years with the following additional measures: an extra £17 billion comes from reductions in departmental spending, £11 billion from reductions in welfare spending, £3 billion from lower debt interest payments and £8 billion from net tax increases.
As has been observed by all sides in this debate, we know that this will be painful, but it is absolutely necessary to secure the growth and prosperity that this country needs in the future. The last Government’s spending plans implied a reduction in departmental budgets of 20%. We are committed to real increases in NHS spending and to protecting international aid, and this Budget implies, as the Chancellor said, that other Departments will face an average real cut of 25%. We will set out the details of those cuts in the spending review, and we will consult widely to inform those plans. In fact, we launched our consultation on Friday, and we have already had more than 20,000 substantive responses from public sector workers, setting out ideas for areas where they know savings can be found. If only we had had a single serious suggestion from the Labour party.
We have taken the tough decision to increase VAT by 2.5%. With a structural deficit some £12 billion larger than the previous Government told us, we had a difficult choice to make: whether to fill that hole by making yet more spending cuts or to increase taxes. Further spending cuts would, I believe, have made it impossible to protect the most essential services in the spending review, so the VAT rise was unavoidable.
Mr Anderson
Does the right hon. Gentleman agree with his colleague, the hon. Member for Bermondsey and Old Southwark (Simon Hughes), who said, only on 15 June:
“I hope we don’t get a VAT rise because it is the most regressive form of tax”?
Danny Alexander
No party went into the election promising to increase VAT, but the hon. Gentleman should make no mistake: the rise in VAT is a result of the public finances that we inherited from his Front-Bench colleagues. One could say that it is a Labour inheritance tax.
Danny Alexander
I shall press on. I have already given way.
In response to the points raised by my hon. Friend the Member for St Ives (Andrew George), I can say that we have already demonstrated our commitment to transparency by publishing data on the distributional impact of the Budget measures, which has never been done before. We are committed to continuing with that level of transparency in future fiscal events, and we will continue to look at whether we can further improve the breadth of information provided. Parliament will, of course, as my hon. Friend requested, continue to have full scrutiny of the Government’s decisions, and I hope that the information that we have already provided, and will provide in future, will facilitate that debate.
Michael Connarty (Linlithgow and East Falkirk) (Lab)
Will the right hon. Gentleman give way?
Danny Alexander
No, I want to press on.
Thirdly, this is a Budget for fairness. Fairness underpins this Budget, and fairness runs throughout this Budget. This is the first Budget to include an analysis of the distributional impact of its measures. It shows that overall the richest will contribute most to deficit reduction, and it will have no measurable impact on child poverty by 2012-13. That is a good start, and of course we will take further action to underpin fairness on future occasions and in future Budgets. It is important to stress to the House the fact that the principles that have shaped the Budget will also shape the decisions that we make in the spending review, too.
As my right hon. Friend the Chancellor said, this is a progressive Budget. It is a Budget that takes almost 1 million of the lowest-earning income taxpayers out of income tax altogether—that is progressive. It is a Budget that locks in an annual increase in the state pension in line with earnings, prices or 2.5%, whichever is highest, to the benefit of 11 million pensioners. That is progressive, too. It is a Budget that increases capital gains tax rates by 10% for higher rate taxpayers, but keeps it the same for basic rate taxpayers. That is progressive. It includes a radical programme of welfare reform to focus support on those most in need. The welfare bill has ballooned from £132 billion 10 years ago to £192 billion today. If we ignore the economic and social pressures caused by this system, we will only put the whole country and the front-line services on which we rely under even greater financial pressure in future. The Government will tackle that situation head on, including through the reforms in the Budget to the disability living allowance, housing benefits, and the uprating of benefits. As my right hon. Friend the Secretary of State for Work and Pensions said, these reforms will ensure that help is targeted on those most in need.
Danny Alexander
I will not give way. The irresponsible Opposition, when in government, caused many of the problems that we face today. We have heard accusations from them today that the measures we announced in the Budget are unfair. Let me test that accusation. The previous Government uprated pensions by 75p. That is not fairness. We have reintroduced the earnings link as our first action—that is fairness.
Danny Alexander
I will not; I must press on.
The previous Government abolished the 10p rate of income tax. [Interruption.]
Mr Speaker
It is for the Chief Secretary to decide. He is not giving way at the moment.
Danny Alexander
That is not fairness. We have taken nearly 1 million people out of income tax altogether. That is fairness. The previous Government left an open door for the highest earners to exploit the gap between the rate of capital gains tax and the top rates of income tax, costing the taxpayer £1 billion a year. That is not fairness either. We have raised capital gains tax for higher rate taxpayers, and only higher rate taxpayers, by 10%. That is fairness.
Yvette Cooper
I thank the right hon. Gentleman for giving way. Will he confirm that pensioners will pay hundreds of pounds a year in VAT as a result of his VAT hike, but he chose not to include them in his increase in the personal allowance?
Danny Alexander
I thought that the right hon. Lady was going to do better than that. We have relinked pensions to earnings after 13 years. She failed to answer the question from my right hon. Friend the Work and Pensions Secretary earlier about the uprating she had planned, which was less than ours even in the second year.
We should compare the Opposition’s denial that there is a genuine economic need to tackle the deficit with our decisiveness, taking the action on the deficit that we all know is necessary. Compare their complacency with our responsibility. Compare their legacy of ruin in the public finances with our approach of fairness as we take steps to clean up the mess that they left. Compare their obstinate refusal to take unilateral action in introducing a banking levy with our resolute leadership, which not only delivered a levy but brought France and Germany along with us too. The Opposition would have us living in denial. Their approach to the deficit seems to be see no deficit, hear no deficit, speak no deficit. One Opposition Member even told us in today’s debate that they believed the deficit was a fantasy. It is such self-indulgence and complacency that led us into the mess we are in. The way that they got us here is not the way out.
This is a Budget for responsibility, it is a Budget for freedom and it is a Budget for fairness. It is a coalition Budget, and I commend it to the House.