Welfare Reform and Work Bill
David Anderson Excerpts(8 years, 8 months ago)
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Owen Smith
I have given way once. I will move on and give way again in a moment.
Mr David Anderson (Blaydon) (Lab)
My hon. Friend the Member for Wansbeck (Ian Lavery) mentioned the word “bribe”. Is not the real bribe in the Bill the bribe that will be given to the children of dead millionaires through the changes to inheritance tax, to the detriment of the people who will be hit by tax credit cuts?
Owen Smith
I am glad I gave way, because my hon. Friend makes the excellent point that politics is always a choice. Politics is about priorities. Politics is about who we stand up for, who we speak for and whose side we are on. It is very, very clear that, in the Bill and in this House, the Conservative party is on the side of millionaires and the wealthy, and are standing up against the ordinary working people of Britain, who will not forgive them for doing so.
Debbie Abrahams
My hon. Friend makes some excellent points. The Equality and Human Rights Commission is able to undertake that analysis. Other bodies and organisations are doing it, so why are the Government not able to do it? Surely this is what we should expect from the Government in their implementation of policy. There are real concerns from disabled charities, disabled groups and Lord Holmes, the chair of the EHRC’s disability committee, about the extent to which the assessment of the impact on disabled people is understood.
On incentivising work, on Second Reading the Secretary of State for Work and Pensions stated:
“the current system discourages claimants from making the transition into work.”—[Official Report, 20 July 2015; Vol. 598, c. 1259.]
What about people with progressive conditions, such as Parkinson’s, multiple sclerosis and motor neurone disease, who have no prospect of recovery but have undergone a work capability assessment? They have been found not fit for work and placed in the WRAG group. Are the Government seriously saying that the measure will incentivise this group of disabled people into work? They have already been found not able to work through the Government’s own assessment process. Their progressive conditions are not going to change. This is a real concern.
Mr Anderson
I welcome my hon. Friend to her position on the Front Bench. As chairman of the all-party group on muscular dystrophy, I would like to tell her that information shared with me suggests that people across the whole field of disability believe that this measure will actually have the opposite effect from the one intended. Rather than providing an incentive for people to go to work, it will mean that they will struggle to continue to have the independence they need. This £30 deduction will make a big difference: people will wonder whether they can afford to maintain their mobility, which will have a detrimental effect, making it less likely that they will find work than if they are left where they are now.
Debbie Abrahams
My hon. Friend makes an entirely valid point. Disabled people will find it more and more difficult to live fulfilling lives that enable them to make contact and fulfil their potential, which everyone should have the right to do, so it will be a disincentive.
Helen Whately
Thank you very much, Madam Deputy Speaker.
Labour’s new clause calls for an impact assessment. There have already been several impact assessments, but the strongest one of all was that made by the thousands of people in May who voted for a Conservative Government on a manifesto that pledged to build a stronger economy with more jobs and lower taxes, to move from deficit into surplus, to protect public services such as the NHS, and to bring down the welfare bill. Labour Members oppose these reforms. They want to keep on taxing people and using that tax to subsidise below-the-breadline wages.
It is time to break that cycle, and these reforms will do that. They include the national living wage, from which 2.7 million people will receive a direct increase in income and at least 3 million more will get a knock-on benefit. Would Labour Members seek to delay that? If so, they would already be too late, because the benefits are already being felt. Wages are going up, and 200 companies have committed to increasing their lowest rates of pay in advance, including Sainsbury’s, Morrisons, Lidl, IKEA, Asda, and British Gas.
Mr Anderson
Does the hon. Lady have any idea what her Government plan to do about the people who have been left behind with pay increases—the 5 million or so public sector workers who have had their pay frozen or cut over the past seven or eight years? What do the Government intend to do to bring them up to the living wage, because they have not had a pay rise for more than seven years?
Helen Whately
I am just summing up, so I will not give way, if the hon. Lady will forgive me.
Coupled with that is the desire of Opposition Members to keep a welfare system that does not work and does not help enough people into work, when we now—with the economy growing, plenty of jobs and wages going up—have an opportunity to do something about it. We have a plan, and in the absence of a plan of their own, I encourage them to back ours.
Mr Anderson
This debate should be about people, not constitutional niceties or the economy. It is not about some faceless, inanimate objects, but real people at the sharp end. I have been asked by the Muscular Dystrophy Campaign, with which I work as the chair of the all-party group on muscular dystrophy, to raise the impact of these changes to support, which build on the cuts and challenges brought in by the coalition Government during the past five years. It has real concerns about the changes to ESA, JSA, housing benefit, tax credits and the new universal credit. It has asked me to raise the cases of real people, and that is what I will do.
I want to talk about Bill. After 25 years as a coalminer, he had to retire in his early 40s. He had long-term health problems and died at the age of 48. Joy, who as a young girl swam with Durham County, went into the world of work and then, in her early 20s, was struck down by a disease. She died at the age of 53, from heart failure. Joanne, a girl who was born with defects, spent a lifetime struggling to get on in her life. A lovely young woman, she died at the age of 42, cruelly, after suffering for a long time. Jacqueline died from a massive heart attack at the age of 40. Unfortunately, the hon. Member for Beverley and Holderness (Graham Stuart) has left the Chamber, but she was one of his constituents. Ian, a young boy who struggled through his early years, was just starting to develop, but died at the early age of 19 from a heart attack, beside a swimming pool while doing what he did best.
These five people had three things in common: they were all part of my family; they all suffered from myotonic muscular dystrophy; and, to a greater or lesser extent, they all looked for support from the welfare state. These people’s lives were happy if tough, but ultimately they were short-lived. Thank God that the people who went before them had the guts, nous and determination to build a welfare state that meant they could live a reasonably secure and stable life.
No doubt Conservative Members would say that my family were part of the dependency culture. Do you know what? They would be absolutely right. These members of my family were dependent on the state for help with the costs of medication and of care, and they were dependent on the state for day-to-day living costs, as well as for help with transport, mobility, housing and hospitalisation. If they were alive today, they would no doubt be in the direct sights of Conservative Members, so I will now use the language that has been used today.
This Government have demonised people who depend on the welfare state, and through a clear strategy of dog-whistle tactics, they have worked to convince many in this country that anyone on benefits is a scrounger. They have led people to believe that if anyone passes a house with closed curtains while on the way to work in the morning, they can safely assume that anyone inside is a bone-idle waster who needs to be ridiculed and demonised.
Tax Credits
David Anderson Excerpts(8 years, 10 months ago)
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Mr David Anderson (Blaydon) (Lab)
On a point of order, Mr Deputy Speaker. For clarification, will the Minister please explain that the wages of public sector workers are going up not by 2.8% this year, but by only 1%?
Budget Resolutions and Economic Situation
David Anderson Excerpts(9 years ago)
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The Secretary of State for Business, Innovation and Skills and President of the Board of Trade (Sajid Javid)
Last Wednesday, the Chancellor unveiled a one nation Budget with one aim in mind: security—the economic security of a country that lives within its means; the financial security of lower taxes and higher wages; and the national security of a Britain that defends itself and its values. Since then we have had almost a week of debate—a week of the Opposition trying and failing to pick holes and a week in which we have had the usual predictions of doom and disaster. It is a familiar story from Budget debates past. In June 2010, the then shadow Chancellor called our approach “a profound mistake” that ran the risk of “derailing the recovery”. Two years later, another shadow Chancellor said that our long-term economic plan had “failed”, although I should add that in the same speech, the former Member representing Morley and Outwood also warned that “after hubris comes nemesis”—a lesson he apparently failed to learn himself. Let us fast forward to 2015, and yet another shadow Chancellor said last week that
“this Budget made the wrong choices for working people”.—[Official Report, 9 July 2015; Vol. 598, c. 481.]
We have heard it all before.
Every year, the Opposition warn of catastrophe around the corner, yet every year Britain’s economy has got stronger. They said our policies would lead to mass unemployment, yet today more people are in work than ever before. They said that economic growth would be strangled; today, our economy is growing faster than any other in the G7. They said we could not bring down the deficit, yet today we are on course to have a surplus by the end of this Parliament. Even the most partisan critics can see that our economic plan is working. That is why, in May, the British people gave us a mandate to finish what we started, which is exactly what this Budget delivers.
Mr David Anderson (Blaydon) (Lab)
While I accept that it is part of political knockabout that the Government say one thing and the Opposition say another, does the Secretary of State agree with external groups such as Parkinson’s UK, which said that the change to welfare benefits will have a debilitating impact on people with Parkinson’s and will do them real harm? Does he think that is part of the political knockabout, or does he accept what it is saying?
Sajid Javid
What I accept is that we need a welfare system that protects the vulnerable and is affordable and sustainable for the long term. As we deal with excessive welfare spending, we are able to strengthen the economy, which means higher wages for working people. I hope that the hon. Gentleman can support that.
Sajid Javid
People will be receiving the new national living wage, as set out by the Chancellor in his Budget. That is a huge step forward, raising the incomes of millions of people throughout Britain. At least 2.6 million people will benefit directly, and a further 6 million will also benefit. I am sure that the hon. Gentleman will join me in welcoming that.
Mr Anderson
The Secretary of State is being very generous. May I ask him what will be the living wage—his living wage—for under-25s and for under-21s?
Sajid Javid
As the hon. Gentleman may know, the new national living wage applies to those aged 25 or older. The statutory wages for younger age groups are already being set by the Low Pay Commission.
The economic challenge of our time is boosting Britain’s productivity. Britain is home to some of the world’s most dynamic businesses, staffed by incredibly talented, hard-working individuals, yet our productivity—the rate of output per hour worked—is well below its potential. Let me put this in stark terms. It now takes a worker in the United Kingdom five days to produce what his or her counterpart in France can deliver in four. There is encouraging news—the British automotive industry is among the most productive in the developed world, with a vehicle rolling off the production lines every 20 seconds—but by and large, in a situation familiar to fans of the England men’s football team, the country that invented modern industry has fallen behind its competitors, and the Germans in particular.
Mr Umunna
That is a good point. The cuts that the Government are making in FE are already having a hugely negative impact, not least in the college that the Secretary of State attended.
To go back to undergraduate student financing, I note that the Government are switching from student grants to loans, but that simply dumps more debt on students. In the end, that is debt that, along with the loans taken out to pay tuition fees, will end up in the hands of the taxpayer. It is estimated, according to House of Commons Library figures, that that will add £280 billion to the national debt and we have heard no solutions from the Government to address that.
In the 2011 plan for growth, the Government told us to judge them not only against their achievements on skills but on whether they helped to deliver a substantial boost in business investment. Clearly, we must address that, because, as I said, our performance lags behind that of our competitors.
Mr Anderson
The Secretary of State said that the Government were working on a one-nation basis. Young people in this one nation are being deprived—they are being denied maintenance grants, will lose housing benefit and will not be allowed the proper living wage or minimum wage, yet they are supposed to be able to make their way in that one nation. Is that not nothing other than a two-nation strategy from the Conservative party?
Mr Umunna
My hon. Friend is right to draw attention to the assault on the aspirations of young people all the way from school to when they get a job. We remember that the Government stopped the Building Schools for the Future programme, which helped to give our young people a decent place to work. The Government took away the education maintenance allowance when people got to college and trebled their tuition fees when they got to university. Now, when they leave university the Government tell them that they should not earn as much as everybody else and that they will not extend the increase in the national living wage to those under 25.
Let me return to research and development. Although I welcome putting the annual investment allowance on a more long-term footing and the corporation tax changes, which also help, I would ask Ministers, who have suddenly perked up, this: where was the action on business rates for small businesses in this Budget? They create two thirds of private sector jobs, so where was the news for them?
Reducing the tax burden is all well and good, but in order to invest people need to be able to raise the finance to do so. According to the Bank of England, net lending to small firms has fallen by more than £1 billion in the past year and it continues to be an issue. Towards the end of his time in office, the Secretary of State’s predecessor joined us in championing a state-backed investment bank and put in place the British Business Bank, which we support. Now that he is no longer in post, and with the Government flogging off the Green Investment Bank, the British Business Bank has had no guarantees of future funding in the spending review and faces an uncertain future. I note that there was just one mention of it in the Red Book. I am happy to give way to the Business Secretary if he wants to answer this question: can he confirm today whether the Government plan to sell off the British Business Bank, too, and can he rule out doing that in this Parliament? The silence is deafening.
Let me turn now to infrastructure. We must end the dither and delay in making decisions on projects that not only increase our productivity but iron out regional imbalances and help people travel around in a more cost-effective way. In the Red Book, we are told that the Government believe that a modern infrastructure network is vital, so why, having commissioned the Davies report on aviation, do they appear to be locking themselves into a holding pattern right through until the autumn before coming into land and making a decision on this important matter? Our aviation industry employs hundreds of thousands of people, contributes more than £50 billion to GDP and pays the Exchequer more than £8 billion in tax every year. We have been clear that we will make a swift decision on this matter in the national interest. If the commission’s proposals to build a third runway at Heathrow can meet our tests, including consistency with our climate change obligations, we will take swift action to back them. I suspect that the Business Secretary agrees with me and all I say to him is that he needs to face down the opposition arising in Cabinet and do the right thing.
As for the regional growth policy, there has been a lot of chat about the northern powerhouse, so let me make a few observations. We cannot build a powerhouse if there is no power to connect our northern cities. The decision to shelve northern rail electrification, such as for the TransPennine Express route between Manchester and Leeds, was a kick in the teeth to the areas and regions of the north, and plans for a northern Oyster card do not make up for it. If I have one criticism of the Government’s overall approach to devolution, it is that they should be seeking to make every region a powerhouse rather than simply having a northern powerhouse.
Mr Howarth
The hon. Gentleman is probably right. In some areas, a food bank has an enormous impact. It is something I honestly never thought I would live to see.
Mr Howarth
I will give way to my hon. Friend and then I will press on, because I know, Mr Deputy Speaker, that you do not approve of interventions in added-on time.
Mr Anderson
Does my right hon. Friend agree that Conservative Members would probably say that going to a food bank is a lifestyle choice?
Mr Deputy Speaker
I do not mind interventions, but I want to ensure that speeches come in below 10 minutes.
Mr David Anderson (Blaydon) (Lab)
I congratulate the people who have made their maiden speech today. I particularly commend the very mature speech from the hon. Member for Paisley and Renfrewshire South (Mhairi Black), and I agree with her view that Labour Members and our colleagues from Scotland must form a shared opposition against the Conservatives.
It is well known that British education is among the best in the world. We also know that the more we pay for it, the better it is. And didn’t that show last week, when we saw our Chancellor, the Old Etonian, in action? We are used to the Tories fiddling the figures, but now they are using a new tactic. As well as fiddling the figures, they are misleading by message. Let me give the House some examples. The first, and most blatant, is the renaming of the national minimum wage as the new living wage. That is clearly a farce. It might have seemed to Conservative Members like a real wheeze, a rabbit being pulled out of the hat, but it is nothing other than subterfuge.
The concept of the living wage—the real living wage—has been around for decades. Back in the 1990s, when the national minimum wage was introduced at a level of £3.60 an hour, I led the Unison delegation to the Low Pay Commission, where we proposed a living wage of £4.85 an hour. We made the case that that was the level at which working people would not need wage support from the state. It is on that basis that the proper living wage has been developed over the last two decades.
The farce is that the rip-off Chancellor wants to con our people by pretending that this new living wage is a genuine substitute not only for the national minimum wage but for the present and very worthy living wage. Added to his attack on young people who will be excluded, and building in the appalling attack on in-work benefits, we now have a new basic wage that is nothing but a con. He has not spelt out what he intends to do to support public sector bodies to pay the so-called new living wage. For example, councils have already said that they will have a £1 billion funding gap in paying their in-house workforce and at least a £500 million funding gap in paying the wages of workers contracted in from private sector service companies providing things such as care for the elderly.
Sammy Wilson
Is that not the flaw in the argument that we move the burden of wages from the taxpayer to the employer? First, there is no guarantee that the timing will be correct, secondly, there is no guarantee that employers can make the payment and, thirdly, there is no guarantee that many employers will even bother making the payment.
Mr Anderson
It is absolutely clear that that is the case and that this was nothing other than a political ruse to try to mislead the country and to wrong-foot the Labour party to pave the way for the Chancellor to move from No. 11 to No. 10 Downing Street. It is nothing other than that.
The Government now call this the new living wage, but we have been here before. We were there in the 1980s and 1990s, when the Conservatives tried to pretend that the community charge was not really the poll tax. We have been with them over the past five years as they have tried to pretend that the spare room subsidy was not a bedroom tax. Just as those two ideas have never stuck, the new living wage will not stick. People know that it is nothing more than half of a new minimum wage that blocks out young people in this country.
I want to move on to something else the Chancellor said last week:
“The left will never understand this, but we on the Conservative Benches know that the wish to pass something on to your children is about the most basic, human and natural aspiration there is.”—[Official Report, 8 July 2015; Vol. 598, c. 330.]
Well, he is half right. The left never will believe that providing for the grown-up children of dead millionaires with a bung from taxpayers while poor families and children go hungry is a basic, human or natural aspiration. What is basic is that far too many families face the reality of sending kids to school hungry, and worrying about where the next meal will come from and whether they can afford to clothe and feed their children. Too many families are worrying about whether to keep the house warm or not, and now they are being hit even harder in the struggle to pay their rent. The hit is £60 a week in this city and £120 a week for the rest of us across the nation. When the landlord says, “I want your rent off you,” the tenant has to say, “I’m sorry, I can’t pay the rent this week and, by the way, next week I will pay you £120 a week less than I am now.” I really do not know where those people will end up. That is basic, that is life at the sharp end and that is what is happening in the real world. That is what happens when the children of dead millionaires are prioritised over the children of poor working people. It is an utter disgrace.
Mr Anderson
I certainly will, even though the hon. Gentleman has only been here for five minutes.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I think that I am the judge of how long people have been here. We have already had one intervention from Kwasi Kwarteng and I can assure the hon. Gentleman that he has been here for a lot longer than five minutes, although it might only feel like that.
Kwasi Kwarteng
I promise that my intervention will not last five minutes. Who are the dead millionaires that the hon. Gentleman is talking about?
Mr Anderson
The people who die leaving property worth £1 million. In the past, some of that would have been taxed and now it will not be. Instead, the Government will tax poor working people, people who are on the dole and people who have more than two kids—they can have two kids, but no more.
Let us also consider the deliberate misuse of language by this Government over the past five years. They have replaced the notion of social security with the idea of welfare, yet they pretend to be the workers party. The concept of social security is crucial to the notion of how civilised we are in this country. Social security underpins the lives of working people and is based on the real concept of people being in this together, with a national insurance scheme that we all pay into if and when we can work and a security net that will support us when we cannot work for whatever reason. I know that the Conservative party has spent the past 10 years trying to paint everybody who uses public services or needs social security as a skiver and not a striver, or a shirker and not a worker, to further its own political narrative. That despicable tactic has to be challenged as the poor, the vulnerable, the ill, the young, the women and the disabled people of this country struggle to make ends meet in desperate times. They are the people the Tories are making pay for the economic mess that their friends in the City, the banks and the hedge funds got us into.
At the same time, the Tories are attacking the millions of public sector workers in this country who take care of the nation by freezing their pay for what will become a decade. We have to stop making nurses, careworkers, firefighters, police and other public sector workers pay the price for the failure of the Tories’ friends. Let us acknowledge in the debate about productivity the productivity gains that have been made in the public sector, where far fewer people are doing a lot more.
James Cleverly
If the hon. Gentleman is so proud of his party’s credentials in relation to working people, perhaps he would like to explain why the working voter has deserted his party for mine and even for the United Kingdom Independence party?
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. It might help if I remind people that this is a Budget debate, not an election debate.
Mr Anderson
Actually, less than a quarter of the people of this country voted for the Tory party, and the vast majority of them would not be traditional working people. More than 75% of the people of this country did not vote for the Tory party.
Let us acknowledge that people in the public sector have made great sacrifices. The hon. Member for Braintree (James Cleverly) told us less than five minutes ago about the 4,000 businesses in his constituency. What about the thousands of people who work in the public sector in his constituency, who he never mentioned once? They have not had a pay rise for five years and will not have one for another five years, but they are the people who pay for his businesses to make their way.
Quite frankly, this Budget stinks—it is as simple as that. It is divisive, it is dishonest, it is damaging, and people inside and outside this House know it. It will not be long before they and those of us who really care about this country stand up against it to get rid of it. We have to send a strong message from this House. On Saturday, going on for 150,000 people marched on the streets of Durham saying clearly, “You’ve got it wrong. We’ve got to stand up. We’re not taking any more of this. We’re sick to death of the poor paying for the failings of the rich.” It is time to change the tune in this country.
Productivity
David Anderson Excerpts(9 years, 1 month ago)
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Alan Mak (Havant) (Con)
I congratulate the hon. Member for Sheffield, Brightside and Hillsborough (Harry Harpham) and my hon. Friend the Member for Hertsmere (Oliver Dowden) on their wonderful maiden speeches. I am grateful for this opportunity to speak in today’s debate on productivity.
The central issue is how we as a Government can help our people to fulfil their potential and how we can unleash Britain’s core strengths as a nation through hard work, aspiration and creativity. That is what productivity means in reality. It involves a commitment to helping hard-working people to get on in life, and that is what this Government have been doing.
Opposition Members are right to say that productivity is key to living standards and our public finances, but they are wrong to suggest that all is doom and gloom. Productivity rose last year after plummeting during Labour’s recession, which caused the biggest fall in living standards for a generation. That recession meant banks not lending to our businesses and it led to our biggest drop in productivity since 1974. Incidentally, that was when a previous Labour Government gave us the three-day week. This Government have been clearing up that mess. To coin a phrase, we are the Government who have been fixing the roof while the sun has been shining.
Alan Mak
I want to make some progress.
Over the past five years, and now in government alone, we have taken action in three areas that all hon. Members should welcome. First, we have been rebalancing the economy geographically so that wealth, opportunity and productivity are spread more evenly across the country. In 2013, London enjoyed 29% higher productivity than the UK average. We are supporting other regions to get ahead and stay ahead, which is why the Chancellor has launched the northern powerhouse to connect up our great cities in the north. Its population of 15 million, its great industrial and manufacturing heritage and its strong reputation for science and technology provide a big foundation for the northern powerhouse to be built on.
Foreign investors also have confidence in the northern powerhouse concept. We have seen massive investments all over the north, with Hitachi, Nissan and Rolls-Royce in the north-east, Siemens in Hull and East Yorkshire, the airport city in Manchester, and the new deep-water port in Liverpool. These are the strong foundations on which the northern powerhouse is being built.
Secondly, we are rebalancing the economy by sector, supporting manufacturing, science and technology rather than just relying on financial services. We must, of course, champion our financial services sector across the entire UK—it is a world leader and a big source of tax revenue—but as we saw during the last Labour Government, we need a more broad-based economy with high-quality manufacturing, technology and science at its heart. That is why this Government have created the Catapult centres, a network of world-leading centres designed to transform the UK’s innovation and productivity in seven areas, including manufacturing and cell therapy.
Thirdly, we are cutting red tape for businesses and reducing the burdens on hard-working people. In my constituency of Havant, for example, manufacturing and engineering businesses such as Colt, Eaton Aerospace and Pfizer are benefiting from the most competitive rate of corporation tax in the G7, allowing them to train apprentices, to export, to innovate and to boost productivity. Through the red tape challenge, we have removed or amended more than 3,000 regulations. We have also cut taxes for hard-working people, allowing them to keep more of the money they earn, which is the best possible way of boosting productivity.
I also commend the Government for appointing the noble Lord O’Neill of Gatley as the new Commercial Secretary to the Treasury. I heartily recommend that Members read his maiden speech, which focuses on productivity. I have engaged with his lordship on a number of initiatives in the City to bring to this country best practice from fast-growing economies such as China, and I know that he will bring a huge amount of experience to the debate. This Government are committed to our economic recovery, with a long-term economic plan that has already ensured that Britain has the fastest growing economy in the western world. I look forward to the publication of the Government’s productivity plan, which will set out further steps to strengthen our economy and boost productivity in the years to come.
Budget Resolutions and Economic Situation
David Anderson Excerpts(9 years, 4 months ago)
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Mr Pickles
In a few moments I will. It would be rather nice if I was able to start the speech, because I am sure that the hon. Gentleman would like something to critique.
Five years later, it is a different story: we have stepped back from the cliff edge, our growth rate is faster than that of anywhere in the G7, and our job creation is the envy of the developed world. It all confirms the old Yorkshire proverb, “Where there’s muck, there’s brass” and, boy, did Labour leave us a lot of muck. We have managed to start cleaning up the mess only because we stuck to our long-term economic plan. We stood our ground when ferocious economic headwinds blew in from the eurozone. We did not listen to those who said that the only solution was more borrowing and more spending beyond our means. Nobody now talks about plan B. We stood firm, and as a result today the deficit has been brought down by a half. Living standards are rising and a record number of people have found jobs. With our council tax freeze, there is more money in people’s pockets. The Budget is built on economic success. It will make our economy more resilient and protect taxpayers’ money. It will bring down the deficit and ensure that Britain pays its way in the world, so much so that the shadow Chancellor said that there is nothing in the Budget that Labour would vote against. Now the hon. Member for Blaydon (Mr Anderson) will tell me why the shadow Chancellor was wrong.
Mr David Anderson (Blaydon) (Lab)
I will tell the right hon. Gentleman what I want to tell him. He cited a Yorkshire phrase, but what we have seen over the past five years is closer to another Yorkshire phrase: “What’s thine’s mine, what’s mine’s my own.” That is how they operate in the right hon. Gentleman’s party, and they always have.
Mr Pickles
I kind of regret giving way to the hon. Gentleman. That sort of bellicose description is not worth considering. After all, Yorkshire is at the very heart of our economic growth, but naysayers like him—
Mr Nicholas Brown (Newcastle upon Tyne East) (Lab)
It is a pleasure to follow the right hon. Member for Bexhill and Battle (Gregory Barker), particularly since he referred to the most left-wing Opposition the country has seen for years. I am afraid that my remarks may not have as much credibility in that regard as he hopes. The one thing his speech has confirmed is that the subject under discussion is a Conservative pre-election Budget. When he made his tentative references to the northern powerhouse even the sun hid behind the moon, and we know that when it re-emerges the Liberal Democrats will take the credit for it and say that that is what they achieved for us, by working with others.
The Chancellor made it very clear—although he did not emphasise the point—that he is raising money in this year’s Budget and he is doing the same again next year. The substantial spending comes in 2018-19 and beyond—in the future. It is unreasonable to criticise a man for being lucky, but the Chancellor has enjoyed good fortune: inflation is falling; the oil price is coming down—no doubt the Liberal Democrats want to take credit for that as well, but such things are largely outside the control of individual Governments—and he is the beneficiary of the one-off receipts of the Northern Rock and Bradford & Bingley mortgages and the Lloyds bank share sell-off.
The Chancellor’s strategy, however, relies on achieving a further £25 billion-worth of public expenditure cuts. In fairness to the Secretary of State for Communities and Local Government, he has made the point that he cannot do the same thing over again in his Department. Three Departments have a measure of protection: Education, Health and International Development, leaving the burden to fall on the rest. Given the significance of what is proposed, we should have more detail before us. We know that at least £12 billion is to come out of the Department for Work and Pensions budget—and almost certainly out of the working-age component of the budget. Since much of this is demand-led, that seems to me to be quite a difficult thing to do, and the Chancellor should have set out to the House exactly how he intends to do it.
In his 2014 conference speech the Chancellor pledged a freeze in working-age benefits up to 2017, saving £3 billion. There is more to be found. He has indicated changes to jobseeker’s allowance and housing benefit and, in that context, the words “change” and “reform” must mean “less”. It is worth reflecting on what other proposals there might be as part of the £12 billion in working age benefit cuts. For example, there is the restriction of child benefit to the first two children. Of course the devil is in the detail. If that turns out to be unachievable, the alternative—if the Government are to have a chance to stick to their long-term plan—will be to look at indirect taxation or at the budgets of the three exempted Departments, such as Health.
The Conservatives have form on indirect taxation. Before the 1979 election they specifically denied they would double VAT. I remind the House, however, that they moved it from 8% to 15%—thus did they keep their pledge. Towards the end of John Major’s Government, the right hon. and learned Member for Rushcliffe (Mr Clarke) abolished zero-rating for fuel bills, bringing them permanently into the lower VAT band. Before the last general election the Conservatives had no plans to raise VAT, but managed to come up with some immediately after the election.
In earlier decades Conservative Chancellors would treat us to a Budget-day lecture on the money supply without mentioning quantitative easing or the over-optimistic use of leverage in the financial services sector, including the unregulated shadow banking sector. The Chancellor did not mention these things earlier, either. We, as a House—this ought not to be a party political point—need to focus on the work of the Governor of the Bank of England as regulator of the financial services sector and on the Governor’s work in foreseeing potential future shocks to the financial system.
The Chancellor did make one reference to this in the Budget speech, wedged between a section on inflation and a section on farmers’ tax returns. He confirmed the remits of the Monetary Policy Committee and the Financial Policy Committee. There is no new architecture between those committees and the House of Commons, but I think there should be. Accountability and transparency would be powerful weapons in ensuring that those serious issues are being taken seriously. The Chancellor made much of the employment figures, although the tightening of the labour market is not evenly spread throughout the United Kingdom. Unemployment is still an issue for the north-east of England.
I would like to have had some analysis from the Government Front Benchers about the mismatch between the employment figures and the productivity outcomes. The Office for Budget Responsibility described the UK’s “productivity puzzle” as the biggest risk to the United Kingdom’s economic health. The Chancellor is banking on increased tax revenues to help fulfil his Budget forecasts. Low productivity is holding down pay rises, and we are in the fifth year of public sector pay restraint. So there seems to be a contradiction, unless there is an as yet unspoken plan to increase indirect taxation. No doubt, if the Conservatives win and plough on with their long-term plan, they will think about that after the general election.
Unemployment remains an issue for the north-east of England. I welcome the Chancellor’s new-found interest in regional policy, but we in the north-east are not his northern powerhouse—that is Manchester and Leeds; we are his northern outhouse. It is not as if the Chancellor is averse to talking about far-away places in his Budget speeches—last year it was Mars; this year it was Agincourt, so perhaps next year it could be Tyne and Wear and Teesside.
I really would welcome the Chancellor’s taking an interest in the north-east of England. The tragedy is that the political parties do not really disagree about what we need to do. We need to grow, strengthen and deepen the private sector base of the region’s economy.
Mr Anderson
Does my right hon. Friend agree that one of the first things the Government did when they came in was to abolish the regional development agency, which had transformed the north-east after decades of deprivation and deindustrialisation? We were moving forward in a positive, united way, in partnership. It was a cynical, clinical move by the Government to get rid of the regional development agency, and it has been detrimental to the north-east.
Mr Brown
My hon. Friend is absolutely right. The abolition of the development agency was the largest single blow dealt to economic development in the north-east of England. The Government did it quickly. Governments make most of their mistakes in their first six months. Certainly, on economic development in the north-east of England, this Government did make most of their mistakes in their first six months.
As I said, the tragedy is that we do not disagree about what needs to be done. Resources need to be focused, and the work needs to be led in an authoritative, clear-sighted way. The coalition’s structural changes do not deliver for the north-east of England. Abolishing the RDA was a big step backwards, and the local enterprise partnership is not working for us—it has not even had a chief executive for the past year. If the North East local enterprise partnership had achieved anything, surely the Secretary of State would have told us about it, but he did not have anything to say about it. When I intervened to give him a chance to tell us about it, he still did not have anything to say, apart from generalisations. The money spent over the past five years on regional economic development in the north-east is less than it was for one year under the previous Labour Government’s arrangements.
There is a further regional danger: the unprotected budgets that are lined up for public expenditure cuts disproportionately hit local councils in the north-east. Separately, there have been at least two attempts to redistribute within the budgets that the Chancellor has protected. There are proposals to take £230 million out of the north-east’s health budget and redistribute the money to wealthier parts of the country.
The Chancellor said that we are all in it together. However, on the cost of living, job opportunities, local government budgets and a workable economic development strategy, it does not feel that way in the north-east of England.
Mr David Anderson (Blaydon) (Lab)
Thank you, Madam Deputy Speaker. Having sat here for the past four hours, I will try my best to do as you say. In passing, may I wish you all the best for your future as well as your partner, who is a very good friend of mine from way back?
Nothing epitomises this callous Government more than what we saw on Wednesday at Prime Minister’s Question Time, when the Prime Minister, as usual, tried to make a joke out of it and said that the leader of my party:
“does not know where his next meal is coming from”.—[Official Report, 18 March 2015; Vol. 594, c. 755.]
The sad reality in this country is that far too many of our citizens do not know where their next meal is coming from, but 2 million do—it is coming from the food banks. What an absolute disgrace. What a record of failure. It is those people who will again face the brunt of Tory policy—whether in trying to find out the £12 billion of secret welfare cuts or the £13 billion of secret public sector cuts, neither of which have been spelled out in the past three days of the Budget debate. So can we trust the Chancellor going forward? He has failed miserably up to now.
May I add, Madam Deputy Speaker, that I do not have any problem with hearing, but I do have a problem when people talk during my speech, as the right hon. Member for Hazel Grove (Sir Andrew Stunell) is doing now.
Let us have a look at this Chancellor’s record. This week we had a report from the King’s Fund. The NHS has supposedly had its budget protected, if we are to believe what the Government said, and yet the number of cancelled operations is up by a third. Ambulance response times are going backwards; all three national targets have been missed this year. Sixty out of 83 foundation trusts are in deficit.
In A and E, in December 2014, 414,000 people waited longer than four hours—a 47% increase on the previous quarter. In December, 42,000 people waited on trolleys—a 124% increase since 2013. Sixty-six foundation trusts missed the target for A and E waiting times—double the number in 2013. The percentage of people waiting longer than 18 weeks for treatment was up from 2.5 million in 2010 to 3.2 million in 2014. In the last year alone, there has been a 30% increase in people waiting longer than 18 weeks for treatment. In this country, 12.5% of patients are waiting longer than 18 weeks—the worst ever recorded level.
For cancer, there is a 62-day target for people to be treated. Although the target was met in 86.7% of cases in April 2010, it was met in only 83.5% of cases in October 2014. In December 2014, 31 trusts missed the target—double the number in the middle of last year. In adult social care, because of 12% cuts across council care budgets we have seen a 25% reduction in the numbers receiving community care services. That obviously has a huge knock-on effect on the capacity of the NHS.
Another public service hit by this Government—another public service struggling—is the police service. The Metropolitan police have 1,748 fewer police officers than in 2010. Over half a million rest days were owed in one year. That means that every week in this city, 1,000 policemen are working shifts for which they are not getting paid. In addition, 43% of officers say they are suffering from stress-related illnesses. Case loads are described as unmanageable. More people than ever are living in this city—nearly 9 million more people—and £1.5 billion less is being spent on them. That is the legacy of this Government.
The Prison Service is in disarray. This week, the Prison Officers Association responded to the news that its members would not be getting a pay rise by saying that in the past year there have been 4,000 assaults on prison staff; a 40% increase in serious assaults; an overcrowded prison system, with a prison population at record levels; 3,500 fewer officers to the year ending 2014; a service that is finding it difficult to recruit and retain; staff forced away from their homes and families because they are being put on detached duty to make up for lost staff; and motivation and morale at an all-time low. It is no wonder, because the service is failing to meet every recognised health and safety requirement.
I received a letter from a constituent, Craig Robson, who is a prison officer. This is what he said to me:
“Dear Dave,
As you can see, one of your constituents who was”
once
“a proud Crown servant is”
yet again
“being treated as a second class citizen”
with
“a pay rise of 0%. I will give you some history. The last 5 years have been”
for me
“0%, 0%, £100, 1%, 0%.”
These are supposed to be pay rises.
“Am I happy? No, but to add insult to injury I was looking at a pay note from”
September 2011 and comparing that pay note with the one I received this month.
“I am now £109.41 worse off”—
£27 a week worse off. When the Tories deny the claims that we make regularly that people are £1,600 a year worse off, they might be right, because that gentleman is a lot more than £1,600 worse off, and that takes no account of inflation. He goes on to say:
“The prime minister stated not two weeks ago that he thought everyone should have a pay rise. What happened to loyal servants who were in hand to hand combat”
in jails every day up and down this country?
What we have seen is a record of failure: every target missed; a record of pain for those who are least able to handle it; and a record of spin and deceit from the Tory party. Gull manure was talked about earlier. It is not gull manure that we are getting from this Budget; it is bull manure—left, right and centre—and there is a promise of more to come. The Tories promise more pain for those who are on welfare, more cuts for our essential services and more bungs for their friends, whether MPs in marginal seats or their friends in the City. They are failure personified, and this country will have a chance in seven weeks’ time to hold them to account for their failure and for the way in which they have led this country astray.
Priti Patel
I will correct the hon. Lady. It is not nonsense. The money has gone to the Greater London authority to deliver affordable new homes. She said that the Help to Buy ISA would not help her constituents. It is projected to help 190,000 people in London buy their first home over the next five years. Of course, the average first-time buyer is a basic rate taxpayer.
We have heard complaints that the North East combined authority is not doing enough. Let us be clear: more people are employed in the north-east then ever before. We have heard about Croydon. There has been £7 million of funding in Croydon and the GLA is delivering 4,000 new homes and 10,000 new jobs. Those are positive and proactive measures that are transforming people’s lives.
When it comes to job creation and job growth—
Priti Patel
The hon. Gentleman will recognise that I do not have time to give way.
In every single region of the United Kingdom, unemployment has fallen over the past year. We should put to bed the desperate myth of the Labour party that the new jobs are somehow second-tier jobs. That is an insult to the British public. Some 80% of the jobs are full time and 80% of them are in skilled occupations. Each and every one of them represents one more person standing on their own two feet. The Budget delivers for every single region of our great nation, whether it is by helping manufacturing in the midlands, connecting the south-west or growing the economy.
I would like to pay tribute to a number of Government Members. My right hon. Friend the Member for Bexhill and Battle (Gregory Barker), my hon. Friend the Member for South Suffolk (Mr Yeo), my right hon. Friends the Members for Somerton and Frome (Mr Heath), for Havant (Mr Willetts) and for Uxbridge and South Ruislip (Sir John Randall), my hon. Friend the Member for Bury St Edmunds (Mr Ruffley), my right hon. Friends the Members for Banbury (Sir Tony Baldry) and for South East Cambridgeshire (Sir James Paice) and my hon. Friend the Member for South Thanet (Laura Sandys) are all distinguished Members who have made substantial contributions to the House and to this afternoon’s debate. They covered some of the key Budget points that affect their constituencies. They drew on their expertise from their time in the House or from their time as Ministers to speak in detail about infrastructure, energy, jobs, education and higher education.
My right hon. and hon. Friends also spoke about the prudent financial management that this Government have introduced through our long-term economic plan. It is this Government who have set out long-term economic plans for every region in the United Kingdom. It is this Government who are committed to investing in the whole of the United Kingdom. It is this Government whose long-term infrastructure plan is connecting our regions.
My hon. Friend the Member for Milton Keynes South (Iain Stewart) mentioned the housing growth and infrastructure growth in his constituency. I will come back to him on the personal pension allowance, which he asked me to do. We are allowing the local leaders in our communities to make the key growth-delivering decisions in their areas, rather than making top-down decisions from the centre. We are recovering from the worst recession since the second world war. We are turning the country’s finances around, improving the lives of hard-working families, and putting more of people’s hard-earned cash back into their pockets where it belongs. We are increasing living standards, with real household disposable income revised up to increase by 3.7% this year, and to keep on rising—[Interruption.] As ever, the Labour party sneers when it comes to discussing living standards and household incomes. [Labour Members: “What?”] Well, let us be clear: the best way to improve living standards is to get people back into work and boost productivity and growth. This Government have delivered the highest levels of employment ever. Unemployment is down to 1975 levels—it has fallen at its fastest and was down by just under 500,000 in the year to December 2014. We are putting Britain back on its feet, and this Budget marks a step in delivering prosperity to all corners of our country.
The choice our country faces is between returning to the economic chaos that Labour Members were part of under the previous Government, or sticking to the long- term economic plan that will deliver for the constituents of the hon. Member for Islington South and Finsbury (Emily Thornberry) and every Member of this House. In this Budget we choose the future and are taking another big step on the road to a stronger economy.
As I close this debate I thank all hon. Members for their contributions this afternoon, and in particular I send—[Interruption.] I hoped for a degree of courtesy and civility at this point. I send my best wishes to all right hon. and right hon. Members who have made their last contributions in the Chamber today. I thank you, Madam Deputy Speaker, for your time overseeing debates and the civil way you have handled them, and I commend the Budget to the House.
Ordered, That the debate be now adjourned.—(Greg Hands.)
Debate to be resumed Monday 23 March.
Future Government Spending
David Anderson Excerpts(9 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
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.
Mr Anderson
In the unlikely event that the Minister is in charge after 7 May, is he as confident that he will reach the target in 2017 as he was in 2010 that he would get rid of the deficit in four years, at which he completely and utterly failed?
Mr Gauke
We stand by the OBR’s projections. We have made considerable progress at a time when other economies have struggled and when there has been a eurozone crisis. But for the steps that we have taken, our debts would have risen much more quickly.
Let us return to the position of the Labour party. Where are its answers on deficit reduction? We get the old answers, which are that it would squeeze the rich and reintroduce the 50p top rate of tax. It conveniently forgets that the previous Government had a top rate of 40p for all but 36 of their 4,758 days in office.
The House will want to be aware that our move to the 45p rate cost only around £100 million—a small price to pay for making the international message loud and clear that we are open for business. How much does Labour think that reversing that policy would raise? I am happy to give way to the shadow Minister on that. To say that a return to the 50p rate would bring in an extra £3 billion a year, which is what he implied, is frankly ludicrous, and I challenge him to identify one reputable economist between now and 7 May who will support such a position.
Paul Uppal (Wolverhampton South West) (Con)
I am afraid this Opposition day debate proves one thing more than anything else: Labour has not changed and it never will.
I am a bit of a political anorak and occasionally I watch re-runs of previous general elections. One of my favourite moments is from the 1983 election when, in the early hours of the morning, Robin Day, with a glass of Scotch in his hand, turned to Arthur Scargill and asked him, “Well, Mr Scargill, what do you think a future Conservative Government will mean for all the voters out there?” Arthur Scargill proceeded to give a bit of a diatribe not dissimilar to the utterances of the hon. Member for Nottingham East (Chris Leslie) on the Labour Front Bench. He said, “Public services will be smashed and the NHS will be privatised.” I half expected the four horsemen of the apocalypse to turn up at some point and also to see Mr Burns from “The Simpsons” rubbing his hands.
The reality is that everything changes in politics, but nothing does actually change. If my hon. Friend the Financial Secretary wants guidance on where Labour is in the 21st century, he would do well to look at the soothsaying words of Arthur Scargill, because that appears to be the party’s direction of travel.
Mr Anderson
As a matter of historical fact, was Arthur Scargill right that the Conservative Government decimated the public service that was the National Coal Board and the coal industry, putting 200,000 miners on the dole and ending up with this country today importing coal from places such as Ukraine, where 30 men were killed yesterday because of the lousy safety record in that part of the world?
Paul Uppal
The hon. Gentleman’s words prove my point. We need to look forward to the future.
Through 13 years of government and five years of opposition, Labour has not learned from its previous mistakes—mistakes that left us with the biggest deficit in our peacetime history and took this country to the brink of bankruptcy. The Leader of the Opposition has returned to the old Labour argument that cutting spending will work and refuses to accept that the £30 billion of consolidations that we will continue to make are what is needed for the economic health of the country. Labour’s plans to spend more without higher taxes will naturally lead to increased borrowing and an ever-increasing debt burden on future generations. Our children and grandchildren will have to pick up the tab for those plans.
Paul Johnson, the director of the Institute for Fiscal Studies, who has already been quoted, predicts that Labour rule would mean that the national debt will climb £170 billion higher by the 2020s. The irony is that the Opposition frequently rail against banks and the bankers, but it is their policies that will mean that a higher proportion of our national income flows into banks and bankers’ pockets in debt repayments and interest charges, instead of being spent on public services. Surely the Opposition can see that the only way we can get to grips with Britain’s debt is to tackle the deficit. Thanks to the difficult decisions this Government have made, we are cutting it by half.
Let us not forget that there is some good news out there. Opposition Members seem to forget that. Our economy is growing at the fastest rate in the G7, and the only way to ensure that this continues is the Conservatives’ long-term economic stewardship. Over the past few years nearly 750,000 businesses have been created and unemployment is down by almost 2 million. In my constituency, Wolverhampton South West, unemployment has fallen by more than 1,000 since May 2010, after rising in the previous five years.
There is still much more to do, which is why Britain must stick with our long-term economic plan. Labour still believes fundamentally in more borrowing, more spending and more debt. It does not have a serious, long-term plan to fix Britain’s economy or to reduce our debt. Often when talking about public services we look at what is being put in, rather than the more important point of what is being achieved. Through greater efficiency and a reduction in bureaucracy and waste, we can be smarter with public money. People often say to me on the doorstep, “We want politicians to spend our money the way you would spend the money in your own pocket, your own wallet, your own purse.” We need a long-term approach from a party which has the long-term interests of the economy at its heart.
The NHS provides a good example of how less bureaucracy leads to improved services. We have rightly increased the NHS budget, but at the same time we are using public funds better. The NHS is something to be valued and protected, but we have made tough decisions to improve front-line services. Let us be under no illusion. The only thing that is a long-term threat to the NHS is Labour being in power and running our economy into the ground, because without a strong economy we cannot have good public services. If Labour is not going to borrow more to cover its spending binge, how will it pay for it? I am sure most of the country want an answer to that question.
It is my view, and that of many others, that Labour is planning a post-election corporation tax rise. The BBC has already reported that Labour will pay for some of its spending by not going ahead with our vital 1p cut in the main corporation tax. That is not just a cut in the rate of corporation tax, but simplifies the tax system. I fear that Labour will go further and instead increase corporation tax, taking Britain out of its competitive position. Such a rise would be disastrous for the UK economy and our jobs recovery. We have seen the impact that low taxes have had on the jobs market, and that move would undo the hard work that we have done to ensure that families have a guaranteed monthly pay cheque. Analysis has shown that even a 1p rise would lead to massive job losses, forcing unemployment up and increasing welfare. The Institute of Directors has described it as a
“dangerous move to risk our business-friendly environment in this way”.
The BBC has gone even further and said:
“Labour must realise that you can’t rob Peter to pay Paul.”
Our business-friendly policies have helped the UK become one of the best countries to do business in, increasing employment levels and reducing the deficit. Labour’s plans, or the lack thereof, would wreck that.
I am surprised that Labour has chosen to go down this route on its final Opposition day. It would have done better by apologising for the financial heart attack it inflicted on this country. Thank goodness that the Government have sorted it out. We might think that there are lots of smart people in this Chamber, and there are, but one lesson is absolutely crucial: never take the voters out there for fools or think that they are stupid. They can see the reality of what we have delivered over the past five years.
Mr David Anderson (Blaydon) (Lab)
I am glad that the hon. Member for Wolverhampton South West (Paul Uppal) finished his speech by saying that this is Labour’s final Opposition day—hopefully it will be the last for a very long time. Is anyone else sick of hearing the term “long-term economic plan”? Government Members are not; they seem to think it is a catchy phrase. What have we had for the past four years? We have had a short-term economic scam.
The Government promised to cut the deficit in four years, but they have completely and utterly failed. They promised not to borrow, but they have borrowed £219 billion more that they said they would—enough to run the health service for two years. They have decimated public services, destroying hundreds of thousands of good-quality jobs done by people who were delivering vital public services to the people we represent. They were working hard, contributing and paying income tax and national insurance contributions.
The Government have hammered every man, woman and child in this country with a 2.5% VAT rise, and the Liberal Democrats supported it, despite saying they would not. The Government have made life desperate for those people who rely on benefits, so those who were already poor have been made poorer. They have penalised people for having the temerity to be in poverty by bringing in things like the poverty tax—I meant the bedroom tax, but actually I was right first time.
The Government have given away successful public assets such as Royal Mail. They privatised the successful side and nationalised the deficit, which was the pensions. Now even the chief executive worries that it will not be able to keep the universal service obligation. This week they privatised East Coast, the best performing railway line in the country, and now they are talking about privatising Eurostar. We all know, despite their promises, that if they are re-elected the NHS will be moving rapidly towards privatisation, whether via a transatlantic trade and investment partnership or some other route.
My council has been hammered. It now has 45% less money than it did four years ago, meaning that every man, woman and child has been robbed of £328. We have lost 1,700 high-quality people who were delivering services to the people of my town. We have lost a fire engine, and another has been lost in a different part of the constituency, and 130 firefighters had to go across Tyne and Wear. The fire chief’s advice is, “I am being forced to make 35% cuts, and if I do that lives will be lost.” Lives will be lost not only in fires, but on the A1 motorway, which goes through my constituency, the third most congested road in Britain, because firefighters will no longer be available to get people out of damaged vehicles.
There really is a long-term economic plan, and we know what it is: to continue making rich people richer—the same as it has always been with the Tories. They will not stop their friends having dodgy tax deals, because they use the dodgy tax funding for their election campaigns. They will not cut taxes for the poor, but they will for the rich—£7 billion of unfunded tax promises.
Andrew Gwynne
My hon. Friend, as an avid watcher of politics, will have seen that at last year’s Conservative party conference the Prime Minister and the Chancellor promised £7 billion of unfunded tax cuts. Is he as worried as I am that they would fund those by making more cuts to the public services that our constituents rely on?
Mr Anderson
I rarely disagree with my hon. Friend, but I could never bring myself to watch the Tory party conference. However, I heard what they said, and it is quite clear what they would do: they would have to take £7 billion from somewhere, and it will be the public sector. They are committed to going back to the level that things were at in the 1930s, when people in this country were, quite frankly, living like slaves, working in conditions that were abhorrent and going home to houses that were a disgrace. That is why when my party came into government in 1945 we had a massive house building project. That is why we nationalised the coal industry, the rail industry and the steel industry—the Conservatives had let them run into disrepair for decades and did not care a toss about the people who worked in them and lived in conditions that were worse than we could ever imagine.
The Government have not only failed on those levels—they have also failed to collect money because they have made people go out of wealthier jobs into low-paid jobs where they are not paying income tax or national insurance contributions. They have collected £68 billion less in income tax than they projected and lost £27 billion in national insurance contributions. You couldn’t make it up, Mr Deputy Speaker. We can see where they want to be. They want to take us back to the 1930s, when we had a low-paid, low-skill work force who were frightened to stand up to the boss, made to go to work when they did not want to, and made to work for poverty wages. That is exactly what they want to us to go back to—unless, of course, you are one of their friends who happens to be the chairman of a FTSE 100 company, and who last year, on average, had a £4.27 million salary. That is a lot of money, even for the Conservatives. Perhaps it is not as much as some of them earn, but it is a lot of money. The directors in those firms got a 21% pay rise, on average, while at the same time the Government are denying a pay rise of even a meagre 1% to nurses, firefighters and care workers—the people who keep this country running day in, day out, and contribute more in a day than some of these leeches will do in a lifetime.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
My hon. Friend is making a very powerful speech. Is it not also a disgrace that young people are being hammered in so many different directions by this Government and have seen an average 7.8% drop in their income over the past five years?
Mr Anderson
It is an absolute disgrace. One of the saddest things of my life is that I might go out of it—I hope a long time from now—and leave behind a generation who are worse off than I was, for the first time ever. We should hang our heads in shame if that is where we end up with the young people of this country, because it is clearly where we are going. During the past week, I have been approached by a young man who was an apprentice, and who became ill and had to come off work. He was not even allowed to get statutory sick pay. That is how disgraceful things are in this day and age.
Oliver Colvile
I am interested in what the hon. Gentleman has to say, but nobody has mentioned how we are going to create wealth in order to meet some of the costs that we end up having to pay.
Mr Anderson
I am glad that I gave way: thank you very much for being my straight man, Oliver. The Tories will have us believe that prosperity will trickle down. Where is it going to trickle down from? There is no proof of that. In my part of the world, 4,000 people will benefit from the income tax hand-back, but 144,000 have seen their tax credits cut at the same time. Young people and other people in my part of the world have lost £1,160 a year, so they will not be doing very much to create the wealth of this country.
In the programme that we will put forward, we will put small businesses first by lowering their taxes. We will promote a proper industrial strategy for our biggest employers, not just the high-tech firms, and work in partnership with them and the trade unions—I know that is a dirty word for Conservative Members—to create the situation where we increase the national minimum wage to a level it should be at, unlike the Conservatives, who opposed it at every step. We will reverse the cut in the top rate of tax, because that is the right thing to do. We will close the loopholes that have been exploited by the friends and funders of the Conservatives, who take the money off them to run their election campaigns.
We will freeze gas and electricity bills, because we are sick to death of these companies saying “We can’t do any more.” Now they are saying, “Leave us alone, leave us alone.” They have bled this country dry ever since they were privatised in the 1980s. The hon. Member for Wolverhampton South West complained about what was said in the 1980s, but what was projected then is exactly what happened. Public services were decimated and the people of this country are paying the price every time they pay an electricity bill, a gas bill or a water bill.
We will devolve power to councils and people at lower levels so they can take proper decisions on the front line and at the cutting edge, where they know what is going on in their areas. We will make work pay. We will stop exploitive zero-hours contracts, because nothing in the world will ever convince me that having people on tenterhooks, not knowing whether they will work the next day, is an absolute and utter disgrace. We will increase the minimum wage to £8 an hour. That will boost the pay of more than 76,000 people in my part of the world, which they will be really delighted about.
At the end of the day, we will end this system of despair. People have said, “We had no alternative. We had to do it this way.” They did not have to do it this way; they chose to do it this way—on the back of the most vulnerable in society.
National Minimum Wage
David Anderson Excerpts(10 years, 6 months ago)
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Vince Cable
In general, that is the case. However, my experience, from talking regularly to trade unions and employers, is that most of our trade unions, certainly in the private sector, are extremely pragmatic and flexible on wages—indeed, that is one of the reasons why we have had relatively low unemployment. They deserve some credit for that.
Mr David Anderson (Blaydon) (Lab)
I thank the right hon. Gentleman for giving way; he is being very generous. At whatever level the fines are set, will he look at the possibility of reinvesting the money they raise directly into enforcement, so that the enforcement keeps on going to the point where, hopefully, we do not have to fine anybody, because nobody is breaching the rules?
Vince Cable
In line with the commitment to enforcement, I think we have produced more resources for that. My hon. Friend the Economic Secretary to the Treasury, who will be summating, may want to say a little more about that, but we recognise that the enforcement authorities need resources to do their job.
Mr Anderson
My hon. Friend spoke about care workers’ pay before the 1997 election. I was then a negotiator for care workers in the public sector, who were getting at least £5 an hour—twice as much. We introduced this legislation because people were being exploited by private companies. Is that not the same worry that we see today?
Chris Ruane
I concur entirely.
When we want to improve the efficiency of businesses, we say that we must pay those at the top as much as we can to reward their energy and enterprise and that we must reduce the pay of those at the bottom because it is in their own best interest. There is one rule for the rich and one for the poor.
Mr Newmark
My hon. Friend is right that there should be more publicity about those who abuse the system. Naming and shaming is a good idea.
To put some numbers on what has been said about penalties, in 2012-13 HMRC identified 736 employers who had failed to pay the national minimum wage, which led to the recovery of £3.9 million in unpaid wages for more than 26,000 workers. This week’s announcement will see the penalty for rogue employers raised to up to £20,000. The Government are taking punitive, robust action.
We should not forget that the last Labour Government left us with the biggest recession in recent history. This Government are helping some of the lowest-paid people in our society by raising the tax threshold and taking more than 2.7 million people out of tax altogether.
Mr Newmark
No, I cannot take any more interventions.
Furthermore, under this Government we have seen a net increase of almost 1 million jobs. That means that a record 30 million people are in work. In other words, more men and more women are in work than ever before. Youth unemployment is falling. In the past three months, it has fallen by 19,000. I warmly welcome the abolition of employer’s national insurance contributions for the under-21s, which is something that I have campaigned for hard over the past year with the Million Jobs campaign. I encourage businesses to take on young people and to give our young men and women their first step on the job ladder.
The cost of living is an issue for the low-paid. Given that the recovery is well under way, I ask the Government at least to consider increasing the minimum wage further. I believe that would be a win-win. It would be a win for the low-paid because it would help with the cost of living issues that have been raised by Opposition and Government Members. It would also be a win for the Exchequer because it would reduce the amount that is paid in tax credits. Notwithstanding that, I support the Chancellor’s position that we should leave the final judgment to the Low Pay Commission, which takes into consideration the impact on overall employment and on businesses.
Although I join Opposition Members in celebrating the 15th anniversary of the introduction of the minimum wage, I believe that the Government are tackling the issues that they have raised. I therefore cannot support the overall motion, but will support the Government amendment.
Mr David Anderson (Blaydon) (Lab)
The hon. Member for Vale of Clwyd (Chris Ruane) reminded us that in 1906 the Labour party was in favour of a national minimum wage. During the 92 years before we got one, the people who kept the light shining for the campaign were members of the trade union movement, although I should add that some union members were not in favour.
Throughout the dark days of the 1980s and 1990s, the person who led the campaign more than anyone else was Rodney Bickerstaffe, the leader of the National Union of Public Employees and Unison. In 1997, I was proud to sit with Rodney at the first Low Pay Commission hearings, where we gave evidence about what should be done about the national minimum wage. The union argued at the time that the level should be set at £4.15 an hour, but unfortunately the Government of the day, although they were doing the right thing in general, decided to press for a level of £3.60.
If the Government had listened to the unions, we would not be having a debate about the living wage, because if the minimum wage had been set at £4.15 then, it would be a living wage now. That would not only have been the right thing to do for people in work, but it would have saved the billions of pounds in benefit that we have been spending over the past 15 years to supplement the wages paid by exploitative employers. We could do a lot worse than listen to what the unions are saying now. Unison’s submission to the Low Pay Commission for this year includes a number of recommendations which I hope will be supported by both Front Benches.
First and foremost, the union makes the point that it is clear that the national minimum wage has slipped behind, and we should move progressively in stages towards having a living wage for all workers. In particular we should make up the ground that has been lost, as the Secretary of State acknowledged, of its being at least 5% behind the retail prices index this year. The Government as well as the trade unions should have that objective going forward.
The subject of breaches of the legislation has been talked about on both sides of the House. The unions are putting forward the case that there should be a new formal complaints mechanism, meaning that if a trade union, law centre or citizens advice bureau puts forward a formal complaint on behalf of workers, that should be treated by HMRC as a formal complaint and must be investigated. That should be supported, because those are the people on the ground with direct contact with workers.
On enforcement, the unions make the case clearly that instead of freezing funding for enforcement, which is what has happened over the last period, it should be dramatically increased for the people on the ground. If that were the case, we would not be seeing the exploitation that was mentioned by my hon. Friends the Members for Hayes and Harlington (John McDonnell) and for Corby (Andy Sawford).
On penalties, we welcome the increase and the fact that the penalties will be for each worker not just per company, but I asked the Secretary of State whether he will reinvest the money raised through fines in funding for enforcement. That is where it should go. It should not be a windfall to the Treasury so that the vicious circle is continued.
The right treatment for 18 to 20-year-old apprentices has always been clearly argued for by the trade union movement. The differentiation based on a person’s age is immoral. If somebody is good enough to do the job, they are old enough to do the job and that principle should be enshrined in law. If they are not doing the full job, then differentiation is fair enough, but if they are doing the full job they should be paid the full rate. The Secretary of State mentioned that apprentices were getting a derisory 3p pay increase to £2.68. We cannot buy a pint of beer in this place for £2.68—and before somebody from the TaxPayers Alliance has a go at me about that I will add that we all know that the beer here is subsidised. Apprentice pay should be at least the development or the youth rate. There must also be a discussion about zero-hours contracts and the national minimum wage and exploitation.
The argument put forward about travel time is an absolute disgrace. The care workers who do such important work for people in our communities are not being paid for travelling from house to house. The Secretary of State says that is illegal, so let us make sure everybody in this country gets behind that. It is also clear that we must give the people running care in this country—the councils and private organisations—the necessary funds.
It is also a disgrace that people are being made to lose money because of having to live where they work, as has been mentioned. After all, £4.91 might not be very much to us, but it is a big chunk out of some people’s pay.
Finally, there is another scam: people being made to pay for uniforms and work equipment. That is wrong, it is immoral and it should not happen.
Public Service Pensions Bill
David Anderson Excerpts(11 years, 3 months ago)
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Sajid Javid
I can tell the hon. Lady that I am not the only Minister in the Treasury working on this issue, as there is a whole team of Ministers, including my noble Friend Lord Newby. Treasury Ministers have had meetings with representatives of the respective work forces and other stakeholders. I would like to plough on—
Sajid Javid
I promise that I will in a few moments.
It is our duty as parliamentarians to look at the whole picture of pensions, which are only one part of the remuneration and employment packages for these particular work forces. We should not simplify the issue by making stark comparisons out of context. Simply comparing these forces to their local authority counterparts achieves no useful purpose beyond critical grandstanding. Differences between these forces’ terms of employment are of long standing. If these issues are to be reopened, they should be considered in the round, with proper consultation between employer and employees.
As well as having different retirement ages from local authority, fire and police personnel, the MOD employees have different contribution rates and levels of pay. Unlike their local authority counterparts, they also have access to benefits such as the civil service compensation scheme. To pluck out their pensions from the wider package would be short-sighted, and potentially damaging to the efforts of both employers and employees to get the package right.
Mr Anderson
I thank the Minister for giving way. He is being very generous.
We are not just legislating on people’s terms and conditions, and it is important for us not to legislate and get it wrong. What about people’s capability to do the job? Are people over 60 expected to go into a burning building in the same way as they did when they were 26? John Hutton clearly does not think that they should do so if they work for a local authority, and the same should apply in this context. We should think not only about the person who is running into the building, but about the person who is inside waiting for him. That is why the Minister should change his mind.
Sajid Javid
The hon. Gentleman has made a good point, and made it well. It is important to consider the capability of each work force, especially in view of increased longevity, and to ensure that the retirement age is appropriate. That is what I expect the MOD to do, and that is what it is doing, but it should do it in the context of the particular scheme for each work force, rather than by becoming involved in the details of each work force that are affected by the broad changes introduced by the Bill.
We have a responsibility to look rationally at the costs of the proposed changes. The additional costs may appear small in comparison with the savings that the Government are making through their overall programme of pension reforms, but the Government consider them to be both unnecessary and significant. They are unnecessary because those concerned will continue to have access to the civil service pension scheme, which is an excellent scheme that many in the private sector, including those doing the most arduous or specialist work, would envy. They are significant because some early indications suggest that they could be as high as £10 million a year for the lifetime of the schemes. This expenditure would take money away from front-line servicemen and women, and from other important defence priorities.
Those who support the amendments may believe that the members should pay the cost of the reduced retirement age themselves. That would imply increased employee contributions and a potential average take-home pay cut of over 8%—although it would depend on the exact terms—which might not necessarily be welcomed by members of the forces.
As politicians, we should not be trying to set the fine detail of public servants' pension schemes on the Floor of the House. Rushing at it might lead to mistakes. As I hope I have made clear, I acknowledge that the issue deserves further consideration allowing time for discussions between employer and employee. We owe it to the DFRS and the MDP to get this right.
Sajid Javid
What I can confirm is that the Treasury and the MOD are in exactly the same place. The MOD agrees with the terms that I am presenting today, and, as I have said, has made it clear that it will think about the issue. It has already written about it to members of the forces, as I would expect it to do in its capacity as the employer of these vital groups of workers.
The Government have not dismissed the claims of the DFRS or the MDP; far from it. The MOD has acknowledged in writing that there is a case for looking at their pension age to check that it is still appropriate.
Finally, there is a technical reason why the Government cannot accept these amendments as they currently stand. They would—unintentionally, I assume—confer powers on the Scottish Parliament and Welsh Assembly to make schemes for these civil servants. That would give new functions to devolved Administrations, without any proper consultation or consideration of whether that is the appropriate framework for managing the interests of these specialised work forces.
In summary, this is a complicated and inevitably emotive issue, and one that we have discussed at some length. I am sure I will not have persuaded all Members present today.
Mr Anderson
The Minister has made two clear points: this issue has not been resolved and needs to be resolved; and there is an issue to do with the Welsh and Scottish Parliaments. Therefore, is not the genuine thing to do to withdraw the Bill today, until those points can be put right?
Sajid Javid
I have to disagree. Of course that is not the right thing to do. This Bill is about 12 million workers in the public sector and their pensions, and about the settlement between those employees, their employers and the taxpayer, and it is vital that we make this reform so we can get the public finances on a sounder footing. I think the hon. Gentleman knows that, but I do not blame him for trying.
I hope hon. Members at least understand why we are taking this position on these amendments. I have explained why we have to resist the amendments, citing the financial privileges of this House on this occasion. I therefore urge hon. Members to disagree with this group of amendments.
Mr Reid
I agree that the pension rules are immaterial to their ability to carry out the job. That is the point that I am trying to make. The work of the uniformed services is unique because it involves short bursts of high physical effort and mental alertness. That is what makes these jobs different and why I do not believe it makes sense for them to have to carry on beyond 60.
There should be a simple rule for retirement age. The uniformed services should retire at 60 and other people should retire at the state pension age. If the Lords amendments were accepted, that principle would be implemented. Defence police and firefighters, like other uniformed services, are highly trained and their job puts them in dangerous situations and requires a high degree of fitness.
I hope that the Government will reflect and agree—if not today, then at some point in the future—that people in these occupations can retire at 60.
Mr Anderson
Ever since this Government took office there has been an attack on public sector pensions. Throughout the debates on public sector pensions, they have ignored the advice of the members of the schemes, the trade unions and the organisations that represent the members. They have torn up long-held agreements, reduced payouts, increased the length of time that people have to pay in and increased the level of contributions.
Many of the Government’s arguments have been based on the work of John Hutton. They have said to Labour Members: “Not us, guv! Your man gave us the template and we’re following his work.” Why on earth are they ignoring John Hutton now? Is it because they have an in-built anti-public sector dogma? Do they want to pull down public sector workers whenever they have the chance to get away with it? Is it because—I think this is the main reason, because the Treasury’s fingerprints are all over this—they are driven by the dogma of a failed Chancellor, who wants to save money in any way that he can because his plan A has failed miserably and the economy of this country has not just stagnated, but has stalled and gone backwards?
John Hutton has said clearly that he made a mistake. My hon. Friend the Member for Nottingham East (Chris Leslie) quoted him. He said that he had missed this point, that he had made an error, and that if he had known about it, he would have addressed it at the time. At the end of his speech, John Hutton said:
“It is incumbent on us to address that issue and not to use the technical arguments as an excuse for not addressing this fundamental discrepancy.”—[Official Report, House of Lords, 12 February 2013; Vol. 743, c. 570.]
A discrepancy is what this is. It is not a huge issue of principle. It is something that was missed by the people who were advising John Hutton, including the trade unions. It was also missed six or seven years ago when we changed the rules. Back Benchers like me should have raised it with our Government. Opposition Members at that time, including Liberal Democrat Members, should have raised it. However, we did not raise it, the trade unions did not raise it and the civil servants who were giving the advice at the time did not raise it, and it went through.
It could be put right now. As John Hutton said, it is a fundamental error. If it is not put right now, is it just because the Government are being contradictory, given that they have argued at every other time that we should follow John Hutton’s template, or because they are being cynically hypocritical? We could put it right, and we could do it now.
It is nonsense to say that the workers in question are somehow civil servants first and police officers or firefighters second. When they run into a building, they do not think, “I’m a civil servant”, they think, “I’m the man who’s going in to sort out a terrorist or to try to rescue somebody from a fire.” I said before that there is no difference between them and a police officer or firefighter working for a local authority, but at times there is, because sometimes they run into buildings where there are things like nuclear weapons, explosives or somebody waiting for them with a shotgun, a machine gun, a hand grenade or other explosive device. The physical and mental intensity and the pressure on them is huge, and that should be represented in the Bill.
The argument that people in different pension schemes cannot be on different terms and conditions is nonsense. For years in the national health service, we allowed mental health nurses to retire at 55, or if they chose to carry on working, their pension was guaranteed at that age, because of the nature of their work. It was about the intensity of going to work every day and grappling with some of the most disturbed people in society. That was the right thing to do then, and it is the right thing to do today.
We all saw what happened 30 years ago, when Margaret Thatcher’s Government reduced the retirement age for coal miners first to 62 and then to 60. They did so for the right reason—they realised that people in that industry were a special case and deserved to be seen in that way. At the time of the reduction, in 1980, the life expectancy of a miner was 65 years and two days, so they got their pension for two days. Because of the change in the law, they got the chance to get their pension for up to five years longer, and that was the right thing to do. It is clear to me that the change in the Bill is nothing other than an attempt to escape from the need to pay people what they are entitled to.
Mr Frank Roy (Motherwell and Wishaw) (Lab)
Is there not a danger of there being a poorer level of service if emergency workers are older?
Mr Anderson
I agree entirely, as somebody who is facing his 60th birthday—it comes up like an express train. I was a care worker, and I would hate to think that I would still be caring for people at my age, and in the physical shape that I am in at the moment. I would guess that the people I would be caring for might share that view.
The Minister says that there will be negotiations and discussions, but if there is to be a serious discussion, a job evaluation scheme needs to be put in place to see who a worker should be compared with. So far, the people in question are being compared with other civil servants. Should somebody carrying backpacks and armour be compared with somebody working in an office? Of course not. They should be compared with people who are out there doing a similar job for a different organisation. That would lead to exactly the conclusion that John Hutton has now come to. That is why we should support the Lords amendments and the Minister should have the good grace to accept them. They would get him off the hook.
Stephen McPartland
The Lords amendments are great, and I would like to be able to accept them, but I have some concerns about them. Members of all parties are concerned about the emotive nature of the Bill’s effects on a small group of people. I would like to put it on record that I am proud of the public sector. Many members of my family work in it, and they show great commitment to the services in which they work on a day-to-day basis. Some of them risk their lives, and others almost risk their lives teaching very small children—I would much rather address the House than a classroom of 30 primary school children.
The work of Ministry of Defence police and firefighters is incredibly important, and it would be disingenuous of Members to try to identify whether the job of one set of police officers in the Home Office is more dangerous than that of another set in the Ministry of Defence. Some police officers in the Home Office do a great deal of work in difficult circumstances in some of our areas on a Friday and Saturday night, and some have jobs that are predominantly focused around the desk and paperwork. Those jobs are also very important in the attempt to reduce crime and provide police intelligence.
As I said, this is an emotive issue, and the real problem is the knee-jerk reaction that we are seeing on the Floor of the House to the attempt to resolve it. The shadow Minister said honestly that a mistake was made in 2007 that went through by ministerial order. There was no debate in the Chamber on the retirement age of the forces in question being raised from 60 to 65. I understand, as the hon. Member for Blaydon (Mr Anderson) said, that some people of a particular size, weight and age would not be the best at resolving the problems we have in some of our towns and cities.
Sajid Javid
I thank all who have spoken during the past hour. I also thank my right hon. Friend the Member for East Yorkshire (Mr Knight), who could not speak in the debate, but who has an interest in the issue and has made representations to me on behalf of his constituents. I hope that I shall be able to respond to the points that have been made in the time that is available to me.
Both my hon. Friend the Member for Argyll and Bute (Mr Reid) and the hon. Member for Banff and Buchan (Dr Whiteford) made a number of points. As they will understand, I could not agree with everything that they said, but they both made the sensible point that the Treasury and the MOD should take account of those who retire early on health grounds when considering the potential cost implications of the changes that we are discussing. I agree that we must bear in mind all the impacts on costs that the amendments might have.
My hon. Friend the Member for Stevenage (Stephen McPartland) also raised a number of issues, including the important issue of the Opposition’s credibility in this regard. Some MOD firefighters and police officers who are listening to the debate will already have a retirement age of 65 rather than 60 because of the changes made by the last Government in 2007. When the hon. Member for Nottingham East (Chris Leslie) speaks about such matters, his own credibility becomes somewhat shallow.
I do not often agree with the hon. Member for Blaydon (Mr Anderson). I again did not agree with much of what he said, but I know he believes passionately in what he says, and I respect fully what he had to say. He is a great advocate for his constituents, but he, too, did not address the issue of the change that was made in 2007, and nor did his party colleague, the hon. Member for Hayes and Harlington (John McDonnell). For the purposes of this debate, it would be useful to know whether the hon. Members who have spoken up today also did so when the retirement age was changed in 2007.
Mr Anderson
If the Minister checks the record tomorrow, he will see that I specifically said I made a mistake, and I also made a point about the Liberal Democrats not raising this issue at that time. The Minister is therefore wrong if he is saying I did not deal with the issue.
Sajid Javid
I shall now give way to the hon. Member for Hayes and Harlington.
Oral Answers to Questions
David Anderson Excerpts(11 years, 5 months ago)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
The Government will, of course, look closely at the Committee recommendations. As my hon. Friend the Minister of State, Department for Culture, Media and Sport has made clear, it is time for football to get its house in order.
Mr David Anderson (Blaydon) (Lab)
The Chancellor is well known for trying to help us Back Benchers to do our job. Would he be so kind as to place in the Library the criteria that he uses to define whether or not the economy is in the danger zone, and will he tell us whether it is in the danger zone today?
Mr Osborne
There is a pretty simple definition. Every day and every week the British Government have to go and borrow money to fund the extremely large deficit that was left behind, but we can command record low interest rates because of the confidence that the rest of the world has in our economic plans.
Income Tax
David Anderson Excerpts(11 years, 7 months ago)
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Rachel Reeves
My hon. Friend makes an important point. The work of Wilkinson and Pickett in “The Spirit Level”, and other academic research, has shown exactly that. Some people will be a lot happier next year—the 8,000 millionaires who will have their taxes cut—but ordinary working people who see their taxes go up will be a lot worse off and, I expect, not very happy with either their finances or the Government who have inflicted that situation on them.
In the same Budget as the Chancellor’s giveaway to the richest, buried in the small print as a tax simplification, was the Chancellor’s granny tax. The freeze in the age-related allowance for the over-65s will see 4.4 million pensioners who pay income tax losing an average of £83 each per year. People who turn 65 next year will lose most of all—up to £322. Listening to the Chancellor was like watching Robin Hood in reverse. Most pensioners who will be hit by the granny tax live on incomes that put them in the bottom half of income tax distribution. Those with a small personal pension of £67 a week—£3,000 a year—will be in line to lose under this measure. How insulting to pensioners who have worked hard all their lives, who have not earned large salaries, but who have done the right thing and saved responsibly so they could provide for themselves in later life.
Mr David Anderson (Blaydon) (Lab)
Does my hon. Friend recognise figures from Hansard that show that in the north-east some 4,000 taxpayers will benefit from the changes, but more than 278,000 will be worse off and they will mainly be pensioners? Does that not show all we need to know about the Conservative party?
Rachel Reeves
My hon. Friend makes an important point. People on modest incomes such as pensioners will lose out, while those at the top get a little bit more—well, not a little bit more; they will get £107,000 more next year from the Government. How insulting for those pensioners to see their taxes go up on the same day that millionaires have their taxes cut. Families, pensioners and young people cannot escape the Chancellor’s austerity programme—only millionaires can do that.
Pensioners have already seen their winter fuel allowance cut and their pension indexed to a lower measure of inflation. The increase in the state pension age for women has been brought forward, and the rise in VAT has added £275 to the costs faced by an average pensioner couple. Services such as the national health service, social care and local transport have been cut, and the TUC estimates that a single pensioner will lose access to services worth 11% of his or her income. No wonder so many people have spoken out against what the Chancellor is doing.
Age UK has stated:
“We feel it is disappointing that the budget offered a tax break of at least £10,000 to the very wealthy while penalising many pensioners on fairly modest incomes who are already squeezed.”
The chief executive of Saga has said:
“Over the next five years, pensioners with an income of between £10,500 and £24,000 will be paying an extra £3 billion in tax while richer pensioners are left unaffected”.
The National Pensioners Convention has said:
“We have been inundated by pensioners who are disgusted that those on around £11,000 a year will no longer get additional reductions in their tax…whilst those earning £150,000 or more will see their tax bills reduced…This is seen by many as the last straw…Pensioners feel they are being asked to bail out the super rich…and it’s simply not fair.”
The Opposition could not agree more. It is the same old out-of-touch Tories.
Mr Gauke
It depends where we are on the Laffer curve, but, if we have the highest rate of income tax of any of the G20 economies, we are clearly in a vulnerable position. That was the position we inherited and why we were right to remove it.
I want to touch on the HMRC report laid before the House of Commons at the time of the Budget. It contained the assessment of the 50p rate. It showed that the additional rate was distortive, inefficient, and damaging to our international competitiveness, and that the previous Government greatly understated its impact on the behaviour of those affected. High earners were able to bring forward about £18 billion before the new rate came in, which the previous Government did not account for in their revenue projections. The 50p rate has failed: it has been criticised by business, damaged the UK economy and raised much less for the Exchequer than the last Government had hoped. In fact, it could have generated a net loss. The HMRC report estimates that it raised at most only £1 billion, and, when indirect taxes are taken into account, could have raised less than nothing.
The Government have decided not to stifle the economy further and to show that we are open for business, which is why we will reduce the rate to 45p from April next year. This move to 45p, based on the central estimate of the taxable income elasticity, will cost only £100 million—a small price to pay to regain some of the international competitiveness we lost as a result of the previous Government’s decisions. In fact, when indirect taxes are taken into account, this move could even result in a positive yield.
The 50p rate not only harmed our economy and contributed little to the Exchequer, but placed us in the unwanted position of having the highest statutory rate of income tax in the G20. Our decision to lower the rate will see us drop below Australia, Germany, Japan and Canada. In 2011-12, the top 1% of taxpayers paid about 25% of income tax revenues, and for over a decade our dependence on them has grown. Owing to this considerable economic contribution to the UK, each highly mobile earner who is driven out by internationally high tax rates hits the Exchequer and results in less revenue for public services.
Opposition Members might not care when internationally mobile individuals leave, but, given our dependence on high earners, we want them working in the UK, creating wealth and paying taxes, not moving abroad or retiring early. A competitive tax environment is unambiguously in the UK’s interests, and failing to act decisively as we did would be to ignore our long-term interests, as the 50p rate continued to drive high earners out of the country.
Mr Anderson
Has any assessment been made of how many people have become highly mobile and left, how many will leave and how many will come back?
Mr Gauke
The HMRC assessment set out the impacts that had already emerged. I highlighted the number of people moving to Switzerland and so on. The assessment of the behavioural impact was that about one third to half was a consequence of reduced economic activity—either people retiring or moving outside the UK. That is a considerable impact. It is not good for the UK economy, and the sooner we take steps to address it and set out plans to get rid of the 50p rate, the better.
Mr David Anderson (Blaydon) (Lab)
I start by congratulating my hon. Friend the Member for Cardiff South and Penarth (Stephen Doughty). He has two hard acts to follow, but he made a great start today and long may he continue.
On a point of clarification, the hon. Member for Beverley and Holderness (Mr Stuart), who is no longer here, said that my party had chosen the debate today because of the way it is funded—by the trade union movement. Can we be very clear? The funding that goes to the Labour party is dictated by rules and laws that were written mainly by the Conservatives and the arrangements are transparent and open to scrutiny. Let us also be clear that none of the people who donate to the Labour party has been in jail, unlike Michael Brown or Asil Nadir. Those two people were given back the money that they stole by the Conservatives and Liberal Democrats. Those two parties can have no credibility at all when they talk about paymasters.
I have been paying income tax since 1969—I know it is hard to believe, Mr Deputy Speaker, but I have—and I am quite happy to pay my share, but everybody else should be paying their share as well. It took a long time coming, but the hon. Member for Dover (Charlie Elphicke) said it—that this debate is about the politics of envy. It is not about the politics of envy; it is about the politics of fairness, and what is right and what is wrong.
The parties in government have a raft of policies based on the so-called politics of fairness. They believe it is fair to cut benefits, fair to sack 750,000 public servants, and fair to move people out of homes that they had lived in for decades just because the children have moved out. They think it is fair to sign sick and disabled people off the sick list if the incentivised company that they have employed says that that is the right thing to do. They think it is fair to make people work longer, pay more and receive less for their pension. They think it is fair to slash people’s living standards, fair to force young people to go to work for nothing on workfare schemes, and fair to treble the cost of going to university.
But now the Government also think it is fair to do other things. They think it is fair to tell 4.5 million pensioners that in a year’s time they will be losing £83 a year. People who have contributed all their lives will be paying more because of the Government’s failure. The Government think it is fair to tell thousands of people who are just turning 65 that, despite promises that reinstating the pensions link would be good for them, they will lose more than the amount of the pension rise—they will be losing more than £300 a year. They think it is fair to tell hard-working families struggling to bring up kids that from next year they will be more than £500 a year worse off.
Why do they think all that is fair? Because they want to give their pals a 100-grand backhander. There are 8,000 of them, so that is an £860 million giveaway to their friends, people who are raking in at least £1 million a year. This is the face of the modern Tory party and it is no different from the old one, except for the back-up by the yellow-livered Liberal Democrats. This is their way of looking after themselves, their pals in the City and the millionaires of this country. They want to give themselves a nice little six-figure Easter egg from the public purse, from a public worn out by cuts and austerity, and they are being supported every step of the way by the so-called nice guys, the Liberal Democrats.
Fairness? The Conservatives do not know the meaning of the word. This is not the politics of fairness and it is not the politics of envy. It is the politics of greed. It is the politics of a party intent on dismantling the consensus that has existed in this country since the end of the war. They are intent on slash and burn, and on feathering their own nests in the name of the people who bankroll them. This is the action of members of a party who do not care who they hurt, as long as it is not their kind.
The real sadness is that this is not new. It is the same kind of attack as they carried out in the 1930s when they destroyed communities throughout the country where people were living in desperation, despair and depression. It is the same kind of attack as in the 1980s when towns such as the one I lived in were wiped off the face of the earth, with debt, drugs and depression replacing years of hard work and people living in good quality communities. We saw crime going through the roof. We in the north-east of England became the car crime capital of the world. Burglary was commonplace, while the Tories were lighting cigars with £5 notes, swapping their Quattros for Porsches, and having battles to see who could spend the most on a bottle of Bolly.
They believe in a two-tier country, in two-tier government and in a two-tier, class-ridden ideology. It is the same old story with the same old Tories, backed by the Liberal Democrats. In this together? Not a chance!