Leaving the EU: Economic Analysis

David Davis Excerpts

Wednesday 28th November 2018 Commons Chamber

[Mel Stride]

I echo your congratulations, Mr Speaker, to the right hon. Gentleman on his very special day. In the case of the political declaration, the right hon. Gentleman will know that it does not give a specific outcome because that is to be negotiated as we go forward, as was always going to be the case. However, while the analysis that we are presenting today is anchored on the Chequers arrangements and the July White Paper, it of course provides a sensitivity analysis around that to reflect the fact that there is a spectrum of potential outcomes.

[Mr David Davis (Haltemprice and Howden) (Con)]

The Treasury, the OBR and the Bank of England between them produce numerous forecasts every year. When was the last time that any of them got one right?

[Mel Stride]

I suspect that in the history of highly detailed, complicated economic forecasts with myriad variables, there is probably not one in the entire history of the planet that has been entirely right in every respect. However, that is not an argument that my right hon. Friend can deploy not to go out and do an honest, sensible appraisal of what the likely outcomes are going to mean, both fiscally and in terms of GDP, as we go forward.

Taxation (Cross-border Trade) Bill

David Davis Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Monday 16th July 2018 Commons Chamber

[Madam Deputy Speaker (Dame Eleanor Laing)]

Order. It will be obvious to the House that a great many people want to speak. We have three hours of debate left, but we cannot continue with speeches of the length that we have had so far, although there is nothing wrong with what any hon. Members have done. We will therefore start with a time limit of 12 minutes.

[Mr David Davis (Haltemprice and Howden) (Con)]

For the convenience of members of the Gallery, I should start by saying that this is not a resignation statement—that was last week. This week is a return to my normal business, as an ordinary Back Bencher carrying out the scrutiny of business. I thought that it would be rather mundane until I walked into what appears to be this rhetorical firefight that we have had so far in the debate.

Before I come back to that, the Taxation (Cross-border Trade) Bill and its partner, the Trade Bill coming tomorrow, are vital pieces of legislation. In the newspapers at the weekend, I read that some people were so cross with the White Paper that they were proposing to vote against this. Well, I do not think that they can be much more cross than I am with the White Paper, but I urge them not to vote against it. These are vital pieces of legislation and they are necessary, whether we have the Government’s White Paper policy, my old White Paper policy, the FTA that some have talked about or indeed even the World Trade Organisation outcome. In every single case, we need these Bills and therefore I will be supporting them.

I want to speak directly to the new clause proposed by my right hon. Friend the Member for Broxtowe (Anna Soubry). I will do so without impugning anybody’s motives or questioning whether somebody is acting in the national interest or not and I will not be firing off any gibes. I am not quite sure who she was referring to when she talked about having an excessive attachment to public office, but I do not think it was me. The simple truth is that this is a vitally important argument. It is central to the whole question of the economic aspect of Brexit—Brexit is not just economic; it is democratic as well, but it is central to that—and I will put to one side in my arguments the fact that being out of the customs union was in the Conservative party’s manifesto and therefore, in theory at least, one we are committed to.

The arguments go right to the heart of the principal issues. The proponents of the new clauses have a clear belief in the national economic interest, but they clearly believe that being outside the customs union will lead to a precipitate loss of trade and that the loss of the ability to make trade deals matters less than that potential loss of trade. That is the core of the argument. It is pretty straightforward in that respect.

Let us look at some facts. Back in 1999, the United Kingdom—we are talking about the customs union, so this is about goods—was exporting 60% of its goods to the European Union and 40% to the rest of the world. Since then, that has gone down by approximately 1% per annum, so it is now about 45% to the European Union and the rest to the rest of the world. Pretty much by the end of this decade, it is likely to be 60:40 in favour of the rest of the world, so because it takes away the right to our own commercial policy, the prospect of staying inside the customs union favours the shrinking minority of our trade over the expanding, fast-growing majority of that trade. That is the very simple, fundamental, initial point that we should take on board. It also presumes that being outside the customs union will significantly damage trade because there will be friction at the border.

[Mr Kenneth Clarke]

One of the most remarkable features of the last 20 years has been the globalised economy and the very rapid growth and emergence of major new markets, so inevitably the balance of our trade was going to grow with them and decline with the European Union. We want to remain as attractive to investors from the new economies as to the old. It does us no advantage in our dealings with China, Brazil and India to damage the value of our access to the European market. Outside events have altered this balance; it is not a failing of our EU arrangements.

[Mr Davis]

My right hon. and learned Friend was being uncharacteristically inattentive, because that is exactly what I said: because of the growth in world trade, that is what is going on. He is exactly right that we should take a great interest in the fast growth in world trade because we are best placed, probably of most countries in the world, to take the most advantage of that. Also within his comment was the presumption, which I was about to address, that friction in our trade with the European Union—low friction, but friction—will cause enormous damage.

[John Redwood (Wokingham) (Con)]

Will my right hon. Friend give way?

[Mr Davis]

I will give way, but I will have to constrain interventions because of the time limit.

[John Redwood]

Will my right hon. Friend confirm that many successful manufacturing businesses in Britain today have these just-in-time supply chains bringing in large quantities of raw material and component from outside the EU through a system of authorised economic operators, electronic manifests and the settlement of any bills not at the port? There are not people sitting in boxes in the port taking the money.

[Mr Davis]

My right hon. Friend is exactly right. It is an issue that I will return to in a second, but before I do I want to make a point about friction. The presumption in all this is that we have a magical, frictionless system at the moment. Actually, we will have seen on our television screens that that is not true. This entire House will have watched Operation Stack in progress over various years. Operation Stack is what we do when one of the ports gets locked up for one reason or another—a strike in France or whatever. It has been operated 74 times in 20 years. In 2015, it took up 31 days of friction, and our businesses—the just-in-time businesses and the perishable goods businesses—all coped with it, so let us not frighten ourselves in doing this negotiation. Nobody wants it and nobody likes it, but they cope with it. My hon. Friend the Member for Dover (Charlie Elphicke) pointed out that with World Trade Organisation facilitation, we will actually minimise the friction on trade through these ports, as was reinforced by my right hon. Friend the Member for Wokingham (John Redwood).

Secondly, while people understandably focus on some of the pressure points—most particularly Dover, which we heard about a second ago—they forget that there is strong competition between the ports on the North sea and the ports on the channel. Zeebrugge, Antwerp and Rotterdam all want to increase their throughput at the cost of the Calais-Dover crossing. They are already preparing for increases in throughput in their own areas when we are outside the EU and preparing for the increase in work—because there will be some increase in work—but again, as my right hon. Friend said, it will not happen at the border. It will happen before they get there or after they pass through it, so our so-called dependency on French ports will turn out to be illusory.

Thirdly, in support of the arguments that any friction at the border is unacceptable we hear lots of talk about supply chains. We had it from my right hon. Friend the Member for Broxtowe who proposed this new clause. The simple truth is that this ignores the fact, as my hon. Friend the Member for Harwich and North Essex (Sir Bernard Jenkin) pointed out, that lots of international supply chain operations operate across borders where there are customs, tariff and currency arrangements. I happen to know one of them very well, because I operated a business across just such a border myself—between Canada and the USA. [Hon. Members: “Thirty years ago.”] I went back last year.

[Anna Soubry]

Will my right hon. Friend give way?

[Mr Davis]

No, I will not give way.

I went back last year to look at it again, and yes it was 15-year-old technology. It could be better now; it could be faster. What happens in Detroit, the centre of the American motor industry? In Ontario, across a very difficult and constrained border, tougher than Dover, there is an entire industry supplying parts, components and engines for that motor car industry. It operates across a border that has tariffs on it, too.

[Kevin Hollinrake (Thirsk and Malton) (Con)]

Will my right hon. Friend give way?

[Mr Davis]

No, if my hon. Friend will forgive me. I am short of time.

The simple truth is they operate even where there are tariffs, and we are proposing a non-tariff arrangement—there would be no tariffs here; the primary concerns will not be the collection money but other things.

[Anna Soubry]

Will my right hon. Friend give way?

[Mr Davis]

No, if my right hon. Friend will forgive me.

The issues that remain at the border will depend on the customs policy we decide on, which very clearly will alter how that border operates. It will include rules of origin, as has already been pointed out; tariff-paid status, if we are in the future customs arrangement, which is more difficult than rules of origin; and regulatory compliance. None requires action at the border. All can be dealt with by electronic pre-notification or pre or post-audit at either origin or destination.

Without doubt, the most difficult issue in the negotiations as they relate to borders has been Northern Ireland. There is no way, however, that a UK Government are ever going to install a hard border in Northern Ireland—that is as plain as a pikestaff. No UK Government would risk the peace process, which has been going on for decades. Neither would the Irish Government. I cannot imagine in a century that an Irish Government would do that either. What many people forget, however, are that there is already a border there—there is a currency border, a VAT border, an excise border, and there are other tax borders. They are operated north and south of the border by the UK and the Irish tax and customs collection organisations, operating together using intelligence- led intervention.

Much is made of the 300 border crossings. One of the outstanding issues with being outside the customs union is, as somebody said, the issue of rules of origin, but in Northern Ireland, while there may be 300 border crossings, there are only six ports. Rest-of-world imports can actually be surveilled and controlled very straightforwardly. This issue, which has become much more difficult since it was politicised—it was actually working quite well in the negotiations before it was politicised—is eminently soluble, by technical means and co-operation between the two states.

[Joanna Cherry (Edinburgh South West) (SNP)]

If what the right hon. Gentleman says about the border is so, why was he part of a Government that agreed to the backstop last December?

[Mr Davis]

They did not agree to the backstop; they agreed to the joint report that talked about full alignment. [Interruption.] Does the hon. and learned Lady want to listen to the answer? She will remember me standing at the Dispatch Box saying that we interpreted full alignment as outcome alignment and relating directly to the issues in the north-south strands—principally, agriculture, transport, and environment as it applies to the single electricity market. Those are the primary strands, and they are eminently soluble, by arrangements that already exist in Northern Ireland—for example, the carve-out on environmental legislation. It is a very straightforward issue, but it has been blown up into something else by the other side of the negotiations.

The risk and costs of having a customs border are less than is being claimed, and what we would give up to join a customs union is much more than is imagined. The EU is a slow and not very effective negotiator of free trade agreements. We keep hearing about its size and negotiating power, but the fact that it represents 28 different countries means it comes up with sub-optimal outcomes all the time, and actually we are the country that does least well out of the EU’s free trade agreements. They almost never involve services, for example, which are our primary trade. The EU is a slow and not very effective negotiator of trade deals.

--- Later in debate ---

[Yvette Cooper]

That is really flipped logic. The hon. Gentleman is effectively saying, “They do not have to do the checks because they can all just pay the tariffs.” Why on earth are we going through this whole process in the first place if all we are going to get is a tiny reduction in tariffs that no one will take advantage of in order to get any benefits?

[Mr David Davis]

The logic is actually very simple. Empirical evidence shows that in international trade, companies seek to claim their rebates and do what is necessary to avoid tariffs when a tariff is lower than 3%, not when it is above. What that tells us is that the cost of rules of origin administration is less than 3%. Companies are rational operators. The numbers that the right hon. Lady cited from a supposed Government study were wrong.

[Yvette Cooper]

I would caution the right hon. Gentleman against dismissing the rules of origin checks. There is a huge worry about the burden that they will impose on small businesses in particular. There is a big difference between large and small businesses in this regard. It might be worth large businesses claiming the money back because they can set up systems to do so, but for small businesses the process can be devastating. I am thinking particularly of the huge number of small businesses that have not yet traded outside the EU and for which rules of origin will be a new burden.

Why on earth would we want to add these additional burdens and checks on businesses that have not faced them before? I find myself in a very strange position. I, as a Labour MP, am arguing far more strongly and passionately against these additional burdens on businesses than those on the hard right of the Conservative party, who ought to be arguing against such burdens.

--- Later in debate ---

[Ian Murray (Edinburgh South) (Lab)]

It is a great privilege to follow the right hon. Member for Witham (Priti Patel). We sit on the Select Committee on Foreign Affairs together and agree on much of its work. However, I am afraid that we agree on nothing when it comes to Brexit, and we have those battles in the Committee.

It is unfortunate that we have been left here this evening with a set of four amendments from the group of Conservative rebels who want to take us off a cliff edge. That is what the amendments are designed to do. We have unconfirmed reports that the Government may accept the amendments. I do not know whether the Financial Secretary to the Treasury will nod to indicate that he will accept them, but if he does, I hope he has a match or a lighter in his pocket, because he would do just as well to set the Chequers agreement alight, given the consequences.

On top of all that, the former Secretary of State for Exiting the European Union, the right hon. Member for Haltemprice and Howden (Mr Davis), must now regret leaving the Government, given that after threatening to resign five times, he finally went through with it by resigning following the Chequers agreement, which is just about to be ripped up by his own Front-Bench team and replaced with a much more hard-line position that will take us off the cliff with a hard Brexit. If he had only stayed on a few more days, he may have been able to see through the proposals that he started.

[Mr David Davis]

rose—

[Ian Murray]

I am happy to give way to the right hon. Gentleman, given that I mentioned him.

[Mr Davis]

I rise just to tell the hon. Gentleman that nearly everything he just said in that sentence is untrue.

[Ian Murray]

I am delighted to hear that he would have resigned regardless, but he must surely have some regret. Perhaps we should be glad that he resigned, given that he stood up in this Chamber, as a former Secretary of State, and tried to persuade the House that Operation Stack and having trucks and lorries queued up at our ports was positive for the country. I have never known a former Secretary of State to look at something like Operation Stack, which would be a tragedy for our economy had it continued for much longer, and turn it into a positive. If that is the kind of argument he is offering to this House and to the country, we should ensure that we vote down most of these amendments.

I find it extraordinary that after going through this process—these debates give me déjà vu—we are still hearing arguments about the customs union and the single market. The Government managed to botch together what is now called the Chequers agreement and now, a week away from this Parliament adjourning for the summer recess, they have completely torn it apart by again pandering, as the right hon. and learned Member for Rushcliffe (Mr Clarke) said, to 30 or 40 people on the hard right of the Conservative party. Those people would be being much more honest if they just stood up and said that they want the cliff-edge hard Brexit, rather than tabling amendments that drive a coach and horses through the agreement that the Government managed to reach.

Iraq Inquiry Report

David Davis Excerpts

Thursday 14th April 2016 Commons Chamber

[Mr David Davis (Haltemprice and Howden) (Con)]

I beg to move,

That this House calls on the Government to conclude the National Security checking of the Iraq Inquiry report as soon as possible in order to allow publication of that report as soon as possible after 18 April 2016, and no later than two weeks after that date, in line with the undertaking on time taken for such checking by the Prime Minister in his letter to Sir John Chilcot of 29 October 2015.

As an aside, Mr Speaker, I never cease to be impressed by your short-term memory.

The second Iraq war was started to liberate the Iraqi people. Instead, it shattered their country. It was intended to stabilise the middle east. Instead, it destabilised the middle east. It was intended to remove a threat of weapons of mass destruction that did not exist. Instead, it exacerbated and massively increased a threat of terrorism that does exist. It was supposedly fought in defence of our values, but it has led to the erosion of civil liberties at home and the use of torture abroad. Because we were misled on the matter, Parliament voted for the war by 412 to 149. So there were very good reasons for setting up the inquiry in the first place.

The war led to the deaths of 4,800 allied soldiers, 179 of them British. The lowest estimate of Iraqi civilian casualties was 134,000, but plausible estimates put the number up to four times higher. The war immediately created 3.4 million refugees, and half of them fled the country. It cost the British taxpayer £9.6 billion, and it cost the American taxpayer $1,100 billion. It has done untold damage to the reputation of the west throughout the middle east and, indeed, among Muslim populations at home and abroad. Initiated to protect the west from terrorism, it has, in fact, destroyed the integrity of the Iraqi state and triggered a persistent civil war that has created the conditions for perhaps the worst terrorist threat yet to the west: ISIL or ISIS. The war has done huge harm to the self-confidence and unity of the west, in effect neutering our foreign policy. The war was, with hindsight, the greatest foreign policy failure of this generation, and I say that as someone who was misled into voting for it.

It has been more than six and a half years since Gordon Brown launched the Iraq inquiry and more than five years since it heard its last evidence. It has been more than a year since this House, in a similar debate, called for the Government to publish the Iraq inquiry report as soon as possible, and yet that report has still not been published. It is no surprise that one of the most pre-eminent politicians of our era, the highly respected and very civilised ex-Foreign Secretary, Douglas Hurd, branded the delays a scandal. He is right. They are a disgrace.

In 2009, the then Leader of the Opposition, who is now Prime Minister, was scornful about the suggestion that the report would not be published before the 2010 election. In 2009, Sir John Chilcot told families that he would complete the inquiry in a year if he could, but that it would definitely not take more than two years. In fact, the evidence taking did not conclude until 2 February 2011. Nevertheless, at that time—more than five years ago—Sir John Chilcot said:

“It is going to take some months to deliver the report itself.”

It has been 62 months and counting.

Then the inquiry started the classification process. Under the inquiry protocols, there are nine different categories of reason for turning down the classification—for preventing Sir John not from seeing the information, but from publishing it. What the inquiry can publish is determined by a series of protocols that have criteria so broad that a veto on application can be applied virtually at Whitehall’s discretion.

Compare that with the Scott inquiry into the Iraqi super-gun affair. It also covered issues of incredible sensitivity in terms of national security, international relations, intelligence agency involvement, judicial propriety and ministerial decision making—the whole gamut. Sir Richard Scott was allowed to decide himself what he would release into the public domain, unfettered by Whitehall, so that whole tranche of time—that couple of years—would have been unnecessary. By contrast, Sir John Chilcot, a former permanent secretary at the Northern Ireland Office who chaired an incredibly sensitive inquiry into intercept—some Members of the House may remember that—and who is considered a responsible keeper of the Government’s secrets, is tied up in protocols subject to the whim of Whitehall.

There have been long negotiations between the inquiry and Sir Jeremy Heywood, the Cabinet Secretary, and his predecessors over the disclosure of some material, most notably correspondence between ex-Prime Minister Tony Blair and George W. Bush. There is no point whatsoever in the inquiry if it cannot publish the documents that show how the decision to go to war was arrived at. That is, after all, the point of half the inquiry. Chilcot wrote in a letter to the Cabinet Secretary:

“The question when and how the prime minister made commitments to the US about the UK’s involvement in military action in Iraq and subsequent decisions on the UK’s continuing involvement, is central to its considerations”.

The negotiations between Chilcot and Jeremy Heywood concluded only in May 2014, when it was announced that an agreement had been reached. The process was clearly frustrating for Sir John. He queried why it was that

“individuals may disclose privileged information (without sanction) whilst a committee of privy counsellors established by a former prime minister to review the issues, cannot”.

He was of course referring to Alastair Campbell and Jonathan Powell’s respective diaries, which quoted such information, again without Whitehall veto.

Then came the excruciatingly long process of Maxwellisation. This is meant to be a process of notifying any people criticised in the report so they can correct factual errors and be ready to respond to those criticisms when they become public. It is not intended to allow protected negotiation between the commission and teams of expensive lawyers—incidentally, those expensive lawyers are paid for by the taxpayer—who negotiate ad nauseam, at any cost, to protect their client’s reputation, even over and above the national interest. That is what is happening.

We know that finally, after all that, the Iraq inquiry is now due to submit its report to the Government next week. The next stage will be security clearance before publication. The Prime Minister stated last October that he fully expected security clearance to take less than two weeks, the time taken by the equally enormous Saville inquiry. Let us remember that the Saville inquiry took decades to come to its conclusion, but it was cleared in two weeks. I cannot believe that clearance will take any longer than that, given, as we already know, that every single piece of this report has already been negotiated with Whitehall, presumably on the basis of security considerations.

Given that, and the Prime Minister’s declaration that he is as exasperated as anyone by the delays to publication, the public ought to expect the report to be published in the first week of May. That should be the reasonable conclusion, but that is not the case. There are now reports that the publication of the report will be postponed until after the EU referendum at the end of June. This is frankly outrageous. It is for this reason that I, together with right hon. and hon. Members from all parties in this House, have called for this debate. We demand that the Government publish the report as soon as security clearance is complete, and certainly no more than two weeks after its receipt.

While this inquiry has lumbered on, there have been at least three significant foreign policy decisions that could have been dramatically different had we had the benefit of the Iraq inquiry’s findings. The decision to intervene in Libya was intended to prevent a massacre, but since then, partly because we changed the aim to regime change, the country has descended into civil war and miserable, fractured chaos. On the question of regime change, when the Prime Minister first asked this House to support military action against the Assad regime in Syria in 2013, the House turned him down. Had the House not blocked military intervention, we could have ended up as military supporters of our now sworn enemies, IS. In Iraq, the UK is of course involved in the ongoing civil war that has raged since the invasion in 2003.

There are lessons to learn from the Iraq war about our foreign policy, our political decisions to go to war and our military operations. The longer we leave it, the less useful these lessons will be, and the more likely it is that we will make the same mistakes. When decisions such as those that were made in Libya, Syria and Iraq are made without knowledge of the facts, mistakes are made and sometimes people die as a result. Therefore, it is not hyperbole to say that the delay to the Iraq inquiry could cost lives because bad decisions may be made. I would go further and say that it probably has cost lives because bad decisions were made. Indeed, many of the revelations in the report will come too late to be useful in relation to decisions that have already been taken. This is the irrecoverable harm that has been caused by the delays—the unconscionable delays—in this inquiry.

[Mr Graham Allen (Nottingham North) (Lab)]

The right hon. Gentleman is absolutely right that the Iraq war was the most appalling miscalculation and the most idiotic way of conducting foreign policy in living memory. As he is looking to the future, does he accept that the fracture within Islam that the war exacerbated and the Pandora’s box that was then opened of violence and extremism within Islam, both in the middle east and internationally, are sadly the gift of the Iraq war that will keep on giving, and that there may be decades’ worth of interventions from extreme Islamic elements across the globe?

[Mr Davis]

I do not think it is a question of “may be”; I think there will be the continued disruption of international affairs and the continued threat of terrorism. Europol’s assessment that there are 5,000 jihadists in Europe implies an arrival rate of 1,000 a year, and the rate is going up, not down. It is clear that the hon. Gentleman is absolutely right.

That brings us to a significant point. When the individual Prime Ministers involved in each of the decisions I mentioned made their decision, I am sure that in their own mind they were doing the right thing—they were trying to save lives, to save a civilisation or to intervene to prevent further terrorism. The trouble is that every single one of them made simplistic decisions, without detailed understanding. The complexity of the issues they were reaching into was beyond their knowledge. It is correcting, enhancing and improving that knowledge that the inquiry report is all about.

I am no pacifist, but I find myself horrified at the thoughtless, aggressive and unnecessary interventions by the west in areas that it does not understand. I did not like the Gaddafi regime; I did not like the Saddam Hussein regime; I do not particularly like the Bashar Assad regime, but ripping them out has led to something even worse. The hon. Member for Nottingham North (Mr Allen) is therefore absolutely right in his analysis, which demonstrates why this report and its speed of preparation are so important.

[Mr Andrew Mitchell (Sutton Coldfield) (Con)]

My right hon. Friend is making an immensely compelling point. Does he agree that when the report is published, which, I like him, hope will be as soon as possible, although the tendency in the British media will be to use it as a trial of the former Prime Minister—Blair guilty or innocent—the great gain of the report will be in showing how the whole mechanism of government worked in the run-up to the decision to go to war? A Prime Minister is not Dr Strangelove; this is about how the whole machine in Whitehall works.

[Mr Davis]

My right hon. Friend will forgive me if I do not follow him down his comparison between Dr Strangelove and past Prime Ministers, but he is right in one respect: the most important element of this is what we learn from our mistakes. However, there are also issues of accountability and closure, which I will return to in a moment.

[Pete Wishart (Perth and North Perthshire) (SNP)]

I am reluctant to interrupt, because I am very much enjoying the powerful case that the right hon. Gentleman is making, but I invite him to ignore the representations of his colleague, the right hon. Member for Sutton Coldfield (Mr Mitchell), because this war is bound up with one key individual: Tony Blair. For ever and a day, he will be associated with this particular war. It was personalised around the personality of that Prime Minister. As far as I am concerned, he could have a tattoo across his forehead reading “Iraq”, such is his legacy. This will be a comment and a statement about his day. I was in this House when we voted to go to war, as was the right hon. Member for Haltemprice and Howden (Mr Davis), and I had to listen to the nonsense and drivel that was that former Prime Minister’s case for war. Please let us make sure that where blame is to be apportioned, it is apportioned rightly.

[Mr Davis]

I will come back to this issue in the latter part of my speech. My right hon. Friend the Member for Sutton Coldfield (Mr Mitchell) and I have a very dear common friend who thinks that Mr Blair should be at The Hague, so there is a range of opinion on this, but to come to that conclusion today would be to pre-empt the report. I do not intend to do that, but I do intend to turn to the issue of accountability in a minute.

[Mr Graham Allen]

Just to get the balance correct, if we go back to the time of the vote, a majority of the non-payroll vote in the Labour party—122 Members, and I was proud to be one of the organisers—actually rebelled against their own Government. Had the Conservative party supported us we would not have gone to war. Those are historical matters, but it is important to place on the record that the biggest ever parliamentary rebellion within a governing party was by the Labour party on the issue of taking us to war. Many of us at the time realised that it would be a disaster, but none of us realised what an appalling disaster it would be—one that would carry on for decades and influence us domestically as well as in the middle east.

[Mr Davis]

The hon. Gentleman has made his point well, but one of the issues that the report will face up to, one hopes, is the veracity of what was told to the House that day. That will be one of the key issues, which is why the argument between Sir John Chilcot and Whitehall is very important. Reading between the lines of his letters, that argument was very much about what decisions were taken before the House made its decision and after—what was told to the House, whether it was accurate, whether it was based on impartial briefings and whether, indeed, the politics of the issue coloured the views of important components of the state. I am not going to attempt to answer those questions today, but I would be incredibly disappointed if the commission’s report did not actually answer them in plain English. That is why I would not be drawn by my right hon. Friend the Member for Sutton Coldfield, who is a very great friend of mine. The report has to answer those questions; what the tabloid and other press do with the report the day after publication is not for me.

I will press on, briefly, with the lessons to learn not just about the war but about how we should conduct these inquiries. The Government now intend to review the Maxwellisation process, in which those who have been criticised in a report are given the chance to respond. That is to be welcomed, as Maxwellisation has been responsible for half the delays here. It is clear that strict time controls are needed for future inquiries. It cannot be right that those who are to be criticised can delay publication for their own interests, so I hope that strict time controls will arise as a result.

There is no reason for further delay. It has been suggested that the delay between the report being security cleared and its publication is because it needs to be proof-read and typeset. That would be unacceptable if true. The report is already in electronic format. It has already been repeatedly checked for accuracy, and will be checked again by the security services. It will have been read by more people than some newspapers. The fact is that the report has been pored over by many people for five years. We are in the 21st century, not the era of hot lead typesetting. Someone said to me this morning that I might have summarised the rather long motion rather more crisply by saying, “This House instructs Sir John Chilcot simply to press ‘send’.”

[Liz Saville Roberts (Dwyfor Meirionnydd) (PC)]

I am sure that the right hon. Gentleman agrees that the public at large, and bereaved families in particular, deserve answers, so redactions must be kept to an absolute minimum. Those families should not have to endure any further suggestions of a cover-up.

[Mr Davis]

The hon. Lady is absolutely right, but, to be honest with her, I will be astonished if there are any redactions in the report. I remember that once, when I was Chair of the Public Accounts Committee, a report was given to me about the overrun of MI5 and MI6 on their buildings. It had four chapters: the introduction, the chapter on MI6, the chapter on MI5 and the conclusion. The chapters on MI5 and MI6 were virtually identical, except that all the redactions were different. We rang up MI5 and said, “MI6 has agreed to all these,” then we rang up MI6 and said, “MI5 has agreed to all these,” and then we removed nearly all the redactions. They were political—they were redactions to preserve the interests of the bureaucracy involved, not the national interest. The simple truth is that the facts in the report have already been cleared. That is what two years of the argument was about. If there is a single redaction, I and others will be looking at it very closely and asking why it was not redacted years ago instead of now. The hon. Lady is absolutely right about the rights of the families in this affair.

There is no doubt that the whole country is fed up with waiting for the final report, but none more so than the families of those 179 British soldiers who died fighting for their country in Iraq. The families have suffered for years as this inquiry has dragged on and on, and it would be disgraceful to make them wait for months longer, just because the Government are worried about what effect—if any—the report will have on the referendum. I cannot imagine what impact that might be, given that there is no party political advantage in this to either side.

The Conservatives and Labour both supported the war. As the hon. Member for Nottingham North said, half the Labour party stood back or voted against it, and there is no advantage either way. The inquiry was started by Labour and supported by the Prime Minister. It is therefore inconceivable that the Government should seek to wait until after the June referendum to publish the report, and I hope that when the Minister replies to the debate, he will make it clear that that will not happen—I am sure he will address that point directly.

Let us put this issue in context. If the report waits until June, it will be seven years since the inquiry started, and some parents of the dead soldiers will have been waiting 10 or 12 years for an answer. To give the House a simple comparison, the Israeli Government appointed the Winograd commission in 2006 to investigate the war with Lebanon. It produced its interim report not in seven years but in seven months, and it was highly critical of the existing Government that had set it up. The final report was produced after 17 months. Any argument for delay on grounds of political sensitivity or national security would be far more pressing in Israel, where that is a matter of daily life and death to all its citizens. Because of that, it is also a matter of very high and extremely important politics. If Israel can produce a report in seven and 17 months, we should be able to do it in a lot less than seven years.

Some people will, of course, be held to account in this report; otherwise it will properly be dismissed as a whitewash. That is to be expected and must be right. However, this is principally about learning from mistakes that we made as a nation, and ensuring that we do not make the same mistakes again. It is also about remembering those who have suffered great loss, and giving them some measure of solace in the truth and some degree of closure. This is about doing the honourable thing by those who have made the ultimate sacrifice on behalf of their nation, and to delay any further for no good reason would be an insult to those brave soldiers who died in the Iraq war, and a cruel insult to their families who have waited more than six years for a proper answer.

--- Later in debate ---

[Sir Gerald Howarth]

Indeed. I could not possibly disagree. That is entirely right.

Secondly, we felt the inquiry was necessary

“to consider how we should adjust our whole military posture to the new type of military operations we face, including at the tactical level: whether our soldiers, sailors and airmen are getting the right training package for that type of warfare; whether…we have the right equipment for the task; whether we have the correct balance of forces, and what needs to be done so that we do not become disproportionately reliant on urgent operational requirements—a kind of panic-buying formula—to make up the shortfall in equipment.”—[Official Report, 11 June 2007; Vol. 461, c. 583.]

Thirdly and finally, there had already been several Select Committee inquiries, and there was a real need for a comprehensive inquiry by an independent committee established by the Government. We suggested there was real urgency. In introducing today’s debate, my right hon. Friend mentioned the effect of the time lag. At the time, I said:

“The reason for the relative urgency is that, as my right hon. Friend the Member for Richmond, Yorks”—

now Lord Hague—

“said, while the events are fresh in people’s minds and the e-mails have not been destroyed, we need to learn whatever lessons we can from the background to operations in Iraq so far, and to apply them to Afghanistan before it is too late.”—[Official Report, 11 June 2007; Vol. 461, c. 585.]

So there was an imperative, and a great disservice has been done to everybody, in that the inquiry was not established in the immediate aftermath of the Iraq war but indeed was six years late. As I said, the bereaved are owed an explanation.

[Mr David Davis]

My hon. Friend has been a Defence Minister and shadow Defence Minister. What is his opinion of the argument put at the time that, whenever our forces are in the field, we cannot have an inquiry, which seems madness to me? We had a successful inquiry into Norway, for example.

[Sir Gerald Howarth]

I agree with my right hon. Friend. He mentioned Norway, and indeed there is plenty of precedent. I think that that was an excuse for not holding an inquiry, and I think that it was a mistake.

It is not just the bereaved who are owed an explanation, however. Those of us who were in the House at the time are owed one as well. All of us bore a responsibility for the decisions that we made on whether to vote for the war or not, and those of us who were on the Front Bench bore a special responsibility. However, we had no more information than what we read in the newspapers.

When I voted for the war, I did so for three reasons. First, I had had a meeting in New York with Hans Blix, the United Nations chief weapons inspector, who had said that he had no doubt that Saddam Hussein intended to develop weapons of mass destruction, and that if he could develop them he would use them, but he—Hans Blix—could not, at that point, find them. He said that just a month before the war started, and I thought that it was pretty compelling.

My second reason was, of course, the “45 minutes” claim. I remember this vividly, because it was all over the front page of the Evening Standard. We were told that Saddam Hussein could launch what I think were described as “battlefield biological and chemical weapons” at 45 minutes’ notice, and reach the sovereign British base of Cyprus. I thought, “I have a responsibility. I am a shadow defence Minister.” I could hear Mr John Humphreys, on the “Today” programme, saying, “Well, you knew all about this, Mr Howarth, so why did you not take action at the time?” I felt that that claim had to be taken seriously.

Thirdly, I thought that, as a key ally of the United States, we had a very close relationship with that country, and we had to have a good reason for not supporting our US friends. I realise that that view will not be shared universally in the House.

--- Later in debate ---

[Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

It is an honour to speak in the debate, but I take no pleasure in doing so. I do not think that we should be having this debate, because the Chilcot report should have been published by now.

Time has been a huge issue since the genesis of the report. We should particularly bear in mind that Sir John Chilcot promised that the report would be delivered by 18 April, or the week commencing 18 April, and I understand that he will honour his word. Also, the Prime Minister promised to have it security-cleared within a fortnight, which would be by the week beginning 2 May. The promise that I seek from the Minister is that the Government will keep their word, and that a fortnight after Sir John Chilcot has delivered his report, we shall see it published.

As many have said, and as was said at the press conference, publishing a report is not a difficult matter these days. It is no longer a matter of “cold lead”. It is, as we heard from the right hon. Member for Haltemprice and Howden (Mr Davis), a matter of pressing “send” and the thing is published. People have waited far too long for this report, and further delays are only adding to the pain of the families who are looking for closure. Delays also add to the ever-increasing time during which we have failed to learn the lessons of Iraq, which we should have learned several years ago.

There are further timelines relating to the Chilcot report. On 29 January last year, there was a debate—also hosted by the right hon. Member for Haltemprice and Howden—on a motion calling for the report to be published by 12 February 2015. There was uproar in the House during Prime Minister’s questions and at other times when it was suggested that the report could be delayed beyond the general election of May 2015. We are now in April 2016, and again there is uncertainty about the report.

This report was kicked off in 2009, but there was another timeline before that of impatience for the report. I remind the House of a cross-party debate held here on 31 October 2006, when I was quite a new MP, having been here for about a year and a half. It was led by Adam Price, the then hon. Member for Carmarthen, East and Dinefwr. It is instructive to go back and look at the words that Adam used at the beginning of his speech. He said:

“It is about accountability. It is about the monumental catastrophe of the Iraq war, which is the worst foreign policy disaster certainly since Suez, and possibly since Munich. It is about the morass in which, regrettably, we still find ourselves. It is also about a breakdown in our system of government—a fault line in our constitution that only we, as Parliament, can fix. Fix it we must, if there are not to be further mistakes and other Iraqs under other Prime Ministers, in which case we shall only have ourselves to blame.”—[Official Report, 31 October 2006; Vol. 451, c.163.]

Those words still ring true today.

There was another debate, to which Tony Blair refused to come, despite saying a few weeks earlier to a Conservative Member that he would come at “any time” to a debate on Iraq. Part of the defence for that was that soldiers were in the theatre of operation, but that was admirably dealt with by Douglas Hogg, then a Conservative MP and now Lord Hogg. He said during world war two, the debate on the Norway debacle was led by his father, and that took place when troops were in action. The key moment of the Norway debate—I am not certain about the name of the inquiry—led to the removal of Chamberlain and the installation of Churchill, which may have been instrumental in changing the course of world war two, because this Chamber had shown that it was not afraid.

[Mr David Davis]

The House needs to address this idea that we cannot debate or investigate anything when troops are in the field. When I have spoken to our troops in the field, they have said that they want our democracy to work properly. They want to feel that they are fighting for an honourable cause. In future, we should dismiss this idea that we are undermining our troops; we are standing up for something that will ensure that their lives are not wasted in the future.

[Mr MacNeil]

The right hon. Gentleman is quite right. People, and especially troops, want to feel that this place is not on auto-pilot. They want to know that it is living, functioning, thinking and reacting to lessons. As was said, to commit troops to a morass and refuse to learn lessons is an absolute abdication of the House’s responsibility.

--- Later in debate ---

[Mr Holloway]

I entirely agree with the hon. Gentleman in the sense that the original invasion of Afghanistan was highly effective and that the Afghan people essentially removed al-Qaeda and the Taliban, but unfortunately it was the disastrous NATO deployment to Afghanistan that whipped up the insurgency. I shall come on to that point in a minute if I may.

As I was saying, people do not get promoted for telling the truth. I sent my first draft of this speech to a friend who is a well-known and courageous BBC foreign correspondent. He emailed me, saying, “Reminds me of being attacked for negative coverage that I put out in Iraq and Afghanistan by officials who later admitted, either privately or in memoirs, that things were actually worse than I was saying in my news reports.”

With some hugely honourable exceptions, the same is true of senior military officers. After a recce of Helmand in 2004, a military officer reported back to his boss, a general at Permanent Joint Headquarters. The general asked him, “So, what’s the insurgency like in Helmand?” The officer replied, “Well, there isn’t one, but I can give you one if you want one.” At the time, the mission statement at PJHQ actually stated that the military were to give “politically aware” advice. The top brass volunteered the UK for Helmand and, as in Iraq, assured Ministers that it was doable with the original force numbers.

We experienced exactly the same with the lack of equipment. Military people in Afghanistan constantly reminded us that we had enough helicopters to do the job. A few weeks before Colonel Rupert Thorneloe and Trooper Joshua Hammond were killed by an improvised explosive device, Rupert wrote that he and his men were making “unnecessary...road moves” because of the lack of helicopters. He went on to say:

“This increases the IED threat and our exposure to it.”

A senior British general briefed the Defence Committee at ISAF headquarters in Kabul, and basically tore my head off for being a naysayer. When I was back in Kabul a few weeks later, again on a private trip, I went to see him at the end of the day. As I rather nervously walked into his office, I said, “Well, general, are we still winning?” He said, “If we damn well are, I’ll be dead by the time we do.” I was hearing one thing in public and another in private.

As a soldier, I was in Iraq before the war in 1991, and in 2003 I found myself back on the ground. As I have said before, I will never forget driving into Mosul after the regime dissolved and the city collapsing into anarchy before our eyes. It was the first time as a journalist that I had kept a sub-machine gun close to me. There were bodies on the streets. There was chaos, and a really nasty, threatening environment. American jets were coming down low, fast and noisily to intimidate people. I went to a police station to find out where the American troops were in the city. Saddam Hussein lookalikes were standing around, and the police brigadier general told us where the Americans were. Just before we left he said, “When you find the Americans, can you please get them to come up here and give us our instructions?” I hope you will agree that it was pretty astounding that, as their regime was falling, they were taking instructions from the Americans. I found the American colonel, and when I had done my business with him I said, “By the way, the Iraqi police brigadier general up the hill wants his instructions.” The American colonel said, “You can tell him to go **** himself.” It was quite extraordinary.

We ignored other experts who could have helped us. Of all the people who knew anything about Iraq, who suggested it was a good idea to dismantle Ba’athists like those police officers from the various structures of government? Would any expert have thought that that was a good idea, if asked? I do not know of anyone, apart from General Tim Cross, who thought about our responsibility to the people of Basra after the invasion.

In Afghanistan, too, the experts were consistently ignored. I was there in 1984—for part of my gap year before I went to university—when the mujahedeen were fighting the Russians. No one listened to our officials who had run the training programme for the Afghan resistance. No one listened to the senior ex-mujahedeen commanders living in north London or in the suburbs of Kabul. No one heard the concerns being expressed by the expert contractors to our foreign intelligence services, who knew many of the Taliban leadership personally. No one spoke to the agronomists who had been working for decades in the Pashtun belt.

[Mr David Davis]

Does my hon. Friend agree that the criticisms he is rightly laying at the door of several different establishments should properly be laid at the top of those establishments? Just before the Iraq war, a regimental colleague of ours serving in the planning section of the Ministry of Defence said to me, “David, I have never known a war in which the British officer class has been less happy”—so somebody was asking questions and not getting any answers.

[Mr Holloway]

Absolutely. If my right hon. Friend will forgive me, I will give the House one more anecdote on this subject. I had a barbecue in my garden in Gravesend for the officers of a regiment that was about to go to Afghanistan. I asked the officer who would be responsible for engaging with the local community in Helmand province how he would do that. He came up with a pretty unconvincing answer. About 15 minutes later the colonel, the commanding officer who was about to lead his troops on a six-month tour, took me aside and said, “Adam, I’ll tell you the best way to influence the people living in Helmand positively towards us: it’s not to get on the plane in the first place.”

No one listened to the experts. The Pakistanis, for example, know a little bit about Afghanistan and the Taliban, and the Russians certainly do—but of course, as ever, we knew it all. I remember sitting in Kabul with the general who had looked after Helmand province for a couple of years after the Russians had left. I said to him, “ISAF must be consulting you the whole time.” He looked down at his four mobile phones and said, “No one has rung me yet. I am still waiting for them to ring.”

--- Later in debate ---

[Mr David Davis]

This has been a very good debate. Every speech has been impressive, well-informed and passionate. There are three reasons why Chilcot matters: one is learning lessons; one is holding people to account; and one is giving closure to those who have suffered the loss of their nearest and dearest. From the point of view of the last of those reasons, I want to say through the Minister to Sir John Chilcot that publication in June or July is incomprehensible and unacceptable. In the Gallery is Peter Brierley, whose son Shaun died 13 years ago in the service of his country. In my mind, he represents the 179 families who have lost sons, daughters, brothers, sisters, husbands, loved ones, wives and, in some cases, mothers and fathers. We owe them a debt. We call ourselves right hon. and hon.—and sometimes gallant—Members, and this is a matter of honour: let us give those families closure.

Question put and agreed to.

Resolved,

That this House calls on the Government to conclude the National Security checking of the Iraq Inquiry report as soon as possible in order to allow publication of that report as soon as possible after 18 April 2016, and no later than two weeks after that date, in line with the undertaking on time taken for such checking by the Prime Minister in his letter to Sir John Chilcot of 29 October 2015.

Tax Credits

David Davis Excerpts

Thursday 29th October 2015 Commons Chamber

[Frank Field]

Well, indeed. Our plea is to have made available the range of analysis that has traditionally accompanied any Budget statement that any Member of this House, however long he or she has served, has come to expect.

The Work and Pensions Committee has emphasised a fourth factor, which is that there may be some wage push as a result of the introduction of the national living wage. Will that be taken into account in the Government’s analysis? I am slightly sceptical about the extent of that wage push—again, it is one of the problems of having been a Member of this House for some time. When I was initiating the Low Pay Unit’s campaign for a statutory minimum wage, the official trade union position was to oppose it on the ground that there would be a mega-bill as we re-established differentials. However, when we look at the impact of the statutory minimum wage, we see a great deal of bunching of wages, and not the big increases that some people feared and expected.

[Mr David Davis (Haltemprice and Howden) (Con)]

Will my right hon. Friend give way?

[Frank Field]

Yes, I give way to my right hon. Friend.

[Mr Davis]

I can call him my right hon. Friend, because we have known each other for 40 years. On the data the Government provide, because this is an incredibly complicated area, there are elements of data that are important but that would not normally be provided. One of them is the marginal withdrawal rate of any scheme that the Government put into effect. Government spokesmen have previously said that people can work their way out of poverty, but it looks as though some of the effects of the national living wage will result in a 93% withdrawal rate, which will mean that people cannot work their way out of poverty. Will he add that to his list of data for the Government to provide?

--- Later in debate ---

[Frank Field]

I was waiting for those on the Treasury Bench to point out the difficulties involved with all such moves. It is important to say that we are not in the hole; the Government are in the hole. We are trying to make suggestions about how to get out of the hole. It is no use the Government turning round to us and saying, “Did you not realise that this would have this effect and that effect?” I know we will not get that from the Exchequer Secretary, but a suitable sense of humility from the Government would be welcome.

[Mr David Davis]

Does that point not reinforce the requirement for the changes to be made not with another yes/no measure such as a statutory instrument, but through primary legislation?

[Frank Field]

There would of course be a tendency for any Chancellor to say, “I’m going to make the Lords agree to my new SI.” If it was an SI that this House cheered on its way down to the other place, that might be wise. If it is an SI on which there was still deep disagreement, particularly among Conservative Members, I think it would be very unwise not to bring forward the proposal in primary legislation.

--- Later in debate ---

[Stephen McPartland]

That is a possible solution and I am sure that the Treasury is looking into it. I would like to work with the Treasury on how the mitigation could work, and I hope that it will listen.

[Mr David Davis]

Give him a job!

[Stephen McPartland]

I would like to point out that I do not want a job.

Getting back to the people who are on £11,000 a year or thereabouts and who will be particularly punished by the policy as it stands, I am pleased that the Chancellor is now listening. Although I do not agree with what the House of Lords did, I accept that it has brought us to this position. I want the debate to focus not on constitutional issues but on the loss of income for people who have no ability to make it up elsewhere. How can we help those people?

I have talked about the increase in the personal income tax allowance from £11,000 to £12,500, which will cost about £9 billion. The Government spend over £700 billion a year, yet it seems as though if we cannot find this £4.4 billion it will be the end of life as we know it. We all know that that is not the case. There is a way in which the effects can be mitigated.

How do we reform tax credits without punishing those who are trying to do the right thing—those who get up, go to work and try to move their families forward? Some £3 billion of the £4.4 billion saving is down to the change in thresholds that I spoke about—the initial £1,200 cut. It is an incredibly broad instrument that will punish people whether they earn just over £6,420 or £19,000 and it must be mitigated and changed. We have to find a way around that initial £1,200 cut. It is too much and it goes too far.

There is talk of a discretionary hardship fund. I would certainly welcome that for people who are struggling in one way or another. There has been a lot of talk about national insurance. I would like people not to pay any tax on the first £11,000 or £12,000 of their income, but that will not be looked at fully because it would be incredibly expensive. For me, this debate is about how we can help these families.

Basic macroeconomics suggests to me that if we take £4.4 billion off the people who earn the lowest incomes, that is £4.4 billion that will be taken straight out of the economy, because it will be taken out of the pockets of people who would have spent it right away. Every pound that is taken off those people is a pound that is taken out of the shops in their local economies. It just does not make sense.

I do want to work with the Treasury. I can be a prodigal son and be returned to the fold, I am sure.

--- Later in debate ---

[Mr David Davis (Haltemprice and Howden) (Con)]

It is a privilege to speak in this debate. I am one of its co-sponsors, but the entire credit for the idea belongs to the right hon. Member for Birkenhead (Frank Field). He rightly identified the need for a cross-party, less partisan and, as it turns out, non-binding debate to allow everyone properly to explore these issues in the national interest without being fettered by feelings of joining one side or the other in the playground of politics.

The result has, I think, been good. I think this has been the best debate so far of a number on this subject. It falls on us all to be honest about it. This policy was a mistake. One can only think that, because I am sure that nobody in any party would intend deliberately to impoverish the working poor with dependent families—I am afraid I do differentiate in this context.

[Neil Gray]

Will the right hon. Gentleman give way?

[Mr Davis]

Not for the moment.

The problem was compounded by the method employed—the measure was introduced by statutory instrument, and is therefore unamendable—and by a lack of sufficient information. As four or five Members have already pointed out today, there was no proper impact statement. Had the measure been introduced in primary legislation and thus been amendable, and had the Government provided proper information, the measure would not have gone to the House of Lords in its current form; it would have been reformed in this House, and that is what should have happened.

I subscribe to the Government’s wish to balance the books by 2020, which I consider to be an eminently sensible and responsible aim. However, I also subscribe to the view that we need to protect the poor at all costs. The question is, how do we identify what this policy does? I wanted to find some examples that would enable us to assess both sides of the argument—not just the attack, but the Government’s line as well—and I thank the Chancellor’s Parliamentary Private Secretary, my hon. Friend the Member for Kingswood (Chris Skidmore), for being so helpful in that regard. I put some of the points that he made in defence of the policy to the House of Commons Library, and I shall now give a couple of examples that the Library supplied to illustrate its impact.

The worst-case example that I could find was that of a working single parent with two children, who, without the mitigating effects, could be £2,000 a year worse off in virtually every year until 2020. That is an unbelievable sum to take from a family who are already poor. If the family were eligible for mitigation, in particular housing benefit, the sum could be reduced to roughly £700—the fine detail is unreliable—but, again, it would be lost in virtually every one of the next four or five years,

The great battle over the 10% rate when Labour was in power involved sums that were a quarter of that amount. The great battles over the poll tax, which I remember only too well, involved sums of that size. The impact on a family who are already on the poverty line, by definition, is unspeakable and unthinkable. I grew up in a rather poorer era, and I remember children being hungry on Fridays when the bills were just a bit too big, or it was cold and the heating costs were too high.

[Guto Bebb]

My right hon. Friend touched on the issue of housing benefits mitigating some of the tax credit changes. Is that not another problem with the policy? Someone living in rented accommodation and receiving housing benefit would receive mitigation under the current system, but someone who had bought their own property would not.

[Mr Davis]

Exactly—and before anyone suggests that a person who owns his or her house is better off, let me say that many people in that category have fallen into it and got out of it later. The idea that someone earning less than £20,000 a year, and with two children to support, should lose £2,000 is simply untenable.

The right hon. Member for Birkenhead suggested that there were four possible strategies, but in my view there are three. The first possibility is that we shift the burden elsewhere. The right hon. Gentleman proposed that we should shift it up the income scale, and Lord Lawson said the same during the debate in the House of Lords. I shall not elaborate on that possibility, because I think that there are better ways.

The second strategy is to find savings elsewhere. Here I strongly disagreed with the right hon. Member for Birkenhead, who almost encouraged the Chancellor to go hunting for the pensioner pound. It will not be today’s pensioner pound; it will be tomorrow’s. I think it would be very unwise to remove the tax benefits of investing in pensions and undermine what we have left of our private pension scheme. I am protected, because virtually all my pension is paid for now; it is the next generation that will have to worry.

[Frank Field]

I thought that my argument would appeal more to Conservative Members, because it was a free-market argument. When Governments have guaranteed a minimum, it is not our business to put our sticky fingers into other people’s lives and tell them how they should save or not save. Once there is a minimum pension agreement for everyone, how and when people save should not be a question for the House.

[Mr Davis]

I shall not go too far down that road. Let me simply say that middle-class pensioners are now paying one of the highest effective income tax rates in the country. People who have saved a lot for their pensions and gone above the lifetime allowance must pay 55%. I think we ought to be a bit careful, because if we let the Treasury get at that deferred income, it will take as much as it can.

The third option, which I think is probably the winner—although not by itself; it would have to be modified—is to stage the cuts. I believe that the right hon. Member for Birkenhead lit upon this strategy as well. The cuts would be staged to match movements in the minimum wage and the living wage so that people would not lose.

The Government’s figures for 2020 seem broadly to balance, although they are not perfect. We shall have to work through the mitigation carefully, and that is where the impact statement comes in. Those figures do two things. They protect the working poor, but they also achieve the deficit reduction, which is vital. If we hit the deficit reduction target by 2020—this point was made by my hon. Friend the Member for Stevenage (Stephen McPartland)—each saving of £4 billion a year is not critical. It represents less than 1% of the economy. The really critical issue is how the financial markets see the position. The financial markets do not care about the trajectory from here to 2020; the fact that we get there is good enough. We do not need to worry about the £4 billion a year in between, but we do need to worry about the final outcome. My argument, therefore, is that we should cut the tax credits in step with the minimum wage and the living wage.

The criterion is what is important here. The criterion that the Government must meet is that there should be no losses for the least well off in any of the three intervening years. The poorest, the working poor and their dependants cannot afford to lose one pound. I was never a great fan of the minimum wage, but I was persuaded that it was worthwhile.

[Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)]

Will the right hon. Gentleman give way?

[Mr Davis]

I am afraid not. I have already taken two interventions, and if I take another, I shall lose time.

One of the things that persuaded me that the minimum wage was worth while was the information in social data that it cut crime. We must not lose sight of the social impact of changes such as this: the distress caused to families, the breaking up of families, and the pushing of families towards food banks and, worse, towards loan sharks and petty crime. We have to think about those things, because there is a cost to them as well.

The Institute for Fiscal Studies told the Work and Pensions Committee, which is chaired by the right hon. Member for Birkenhead, that the Government could hit the 2020 target on a staged route. That is what we should aim for. We can achieve the fiscal target, while still remaining faithful to Conservative “one nation” aims. That, after all, has been the leitmotiv of the last few months for us. If we do that, the Chancellor will have good reason to be proud of his achievement.

Financial Services Authority and Connaught Income Fund

David Davis Excerpts

Wednesday 7th May 2014 Westminster Hall

[Andrea Leadsom]

I am grateful to the hon. Gentleman for making that point, which I will certainly look into further. Those two organisations belong to the same parent company, but are in fact different subsidiaries. As he might be aware, Government contracts are awarded in line with EU procurement rules.

In addition to the work by the FCA, I can also confirm that other law enforcement agencies are looking into this matter. I will urge the police to consider the case very carefully. I know that Members are interested to hear whether the police are looking at this matter, and I can confirm that they are. The FCA has been working closely with law enforcement agencies to identify and pursue avenues that will yield the best outcome for investors. It continues to look into the matter, and its work is very much ongoing. In the meantime, it is encouraging any investors who believe they might have been mis-sold a product to contact their independent financial adviser. It has disclosed information to the police and the administrators of the firms involved to help them with their inquiries.

A number of points were made during the debate, and I will try to address them. I was asked whether Capita Financial Managers Ltd was negligent in its operation of the fund and whether it breached its obligations under the Financial Services and Markets Act 2000, the operator agreement or its duty of care to consumers. The Government and the FCA take those allegations very seriously, and the FCA is carrying out its own inquiries, but the requirements on the operator of an unregulated fund are limited under FCA rules. I was asked whether the FCA has made a restitution order against Capita. I stress that the FCA is considering all the different avenues by which those who have suffered could obtain compensation. I was asked about the information provided by George Patellis.

[Mr David Davis (Haltemprice and Howden) (Con)]

In a number of these cases, some involving Capita and some involving others, it has been clear that the financial structure of the company has been set up with limited liability subsidiaries to prevent the compensation demands from going back to the parent. Will she ask the FCA to look at the acceptability of that approach, with a view to future concerns like these? It seems to me that it is a way for the company to get the benefit from a reputation, without meeting the liability that goes with it.

[Andrea Leadsom]

I completely agree. There are questions to be asked about how this apparent ability to avoid culpability has been allowed, whether steps can be taken to ensure it cannot happen again and whether there are compensation issues. The FCA is looking into all those matters, but I will take up the point my right hon. Friend makes.

I was just talking about the action the FSA took when it received information from George Patellis. The FSA met with other parties to discuss his concerns, and as a result of those discussions, it became seriously concerned about the financial position of Tiuta plc. Having considered the regulatory options in respect of Tiuta plc, in May 2011 a requirement was added to the permission of the firm that it should cease any further regulated mortgage lending. In the same month, the FSA issued the consumer alert on the fund. A further alert was issued to financial advisers asking them to consider the suitability of advice they had given to consumers who had invested in the fund and to take action accordingly. In light of the fact that very little of Tiuta’s business was regulated, the FSA considered those steps to be appropriate and proportionate at the time. I certainly take on board the point made by my right hon. Friend the Member for Haltemprice and Howden (Mr Davis) about whether that was, with hindsight, acceptable.

On the other questions I was asked, Capita issued an information memorandum that consumers believe to be fraudulent, as the fund did not operate as it said it would. I was asked what action the FCA is taking against Capita. As I said, the FCA is considering all avenues by which investors might be compensated. Unfortunately, I cannot comment on that further at this time. One point I make, because the question has been implied, is that IFAs are not supposed to sell unregulated investment schemes to retail investors. The circumstances in which unregulated schemes can be promoted to consumers are generally restricted to certain types of consumers, such as sophisticated investors and high net worth individuals, for whom the products are likely to be suitable. The FCA has brought in new rules, banning the promotion of unregulated collective investment schemes to ordinary retail consumers. IFAs have the responsibility to promote the fund only to eligible individuals. That is an important point.

My hon. Friend the Member for Hexham (Guy Opperman) asked whether the police are involved. I confirm that they are. A question was asked about the deadlines for issuing complaints. The fund was incepted in June and July 2008 and suspended in March 2012. Action can be taken either six years from the cause of action, which will start to expire from June 2014—all those investors who invested in the early days of the fund need to take careful advice if they wish to make a complaint about that product, because the deadline is fast approaching—or three years from the date of knowledge of the cause of action, which is likely to expire in March 2015 or, at the latest, September 2015. I urge those consumers who feel that they were mis-sold the fund to look carefully at these deadlines. If the case goes to court, it depends on those courses of action. Insolvency reviews of those companies will be reporting in the near future. We do not have a more specific date for that.

Once again, I would like to thank sincerely my hon. Friend the Member for Vale of Glamorgan for instigating this debate on this important case, which is upsetting for many investors. I hope I have reassured him that the Government are fully aware of his concerns and that we take this issue seriously. We are absolutely determined that our financial services sector serves consumers in a right and fair way, and that investors receive the protections they need.

Transferable Tax Allowances

David Davis Excerpts

Wednesday 28th November 2012 Westminster Hall

[Mr Jackson]

I could not have put it better myself. My hon. Friend’s intervention allows me to pay warm tribute to his fantastic work as children’s Minister. I look forward to the day that he is back in government, sharing his plethora of talents with the nation, but I know that he will do a fantastic job on the Back Benches for his constituents and the country.

I return to my argument about polling. My right hon. Friend the Secretary of State for Work and Pensions said during marriage week in February 2011:

“When asked about their aspirations, young people are very clear: three quarters of those under 35 who are currently in cohabiting relationships want to get married, and some 90% of young people aspire to marriage. So perhaps the question we should be asking ourselves is this: if people from the youngest age aspire to make such a commitment in their lives, what stops them doing so? Government cannot and should not try to lecture people or push them on this matter, but it is quite legitimate to ensure people have the opportunity to achieve their aspirations.”

I must, in addressing this point, congratulate the Secretary of State on bringing in the long-overdue reform that our benefits system requires and on introducing universal credit, which takes important steps to erode the couple penalty. However, the couple penalty remains such that, even with a fully transferable allowance, it would still be in place for all couples, apart from those without children. In other words, where one is dealing with one-earner married couples with children, the provision of a fully transferable allowance would not even create a level playing field, let alone any incentive to marry. It would simply erode the disincentive not to marry.

In the current context, where we make it harder for people to marry in this country than it is across the EU on average, the lack of support for marriage gives rise to family breakdown, not primarily through the breakdown of existing marriages, but by making marriage no more fiscally attractive than cohabitation, despite requiring a much higher and much more costly level of commitment than cohabitation. In such a context, cohabiting, which, as we have seen, is far less stable, inevitably becomes more attractive.

“Family breakdown in the UK”, a publication from December 2010, made the point that

“the problem is not divorce. While marriage accounts for 54% of births, the failure of marriages—i.e. divorce—accounts for only 20% of break-ups and 14% of the costs of family breakdown, amongst all families with children under five. Unmarried families account for 80% of the break-ups and 86% of the costs.”

It subsequently stated:

“These new statistics demonstrate dramatically that family breakdown is a huge and growing problem and that the main driver of family breakdown is the collapse of unmarried families. A failure to acknowledge these key points will lead to the inevitable failure of any government policy aimed at strengthening families. Witness the continued rise of lone parenthood since the 1980s at a time while divorce rates remained stable or declined.”

The arguments for a transferable allowance for married couples, defined narrowly in terms of the benefits of marriage, are more than enough to justify the change, but there are other compelling arguments for introducing transferable allowances: first, to make the tax system fairer by reducing the tax burden on one-earner families with modest incomes; and secondly, to make work pay, which is even more important.

In the first instance, it is not fair to place a tax burden on the income of one-earner families that is 42% greater than the OECD average. Crucially, most one-earner families who would benefit from a transferable allowance are in the poorer half of the population. The Institute for Fiscal Studies published figures shortly before the election showing that the transferable allowance proposals in our manifesto would have overwhelmingly benefited families in the poorer half of the population. In contrast, the IFS said that raising the tax threshold—the implementation of which has been prioritised to date in order to please the Liberal Democrats—would benefit mainly taxpayers in the top half of the population.

When independent taxation was introduced in 1990, it was realised that, unless special provision was made for families, they would lose out. As Nigel Lawson recognised at the time, the logical solution was to give a non-earner in a one-earner household the right to transfer their unused personal allowance to their spouse. He was not able to do that and as a compromise, the married couples allowance and the additional personal allowance were introduced. It is now clear that, without those allowances or transferable allowances, one-income married couples, most of whom are relatively poor, were bound to end up bearing an increasing share of the tax burden. That is what has happened, generating a completely unfair situation.

A few years ago, the Treasury published figures showing that, in 2009-10, a single taxpayer on three quarters of the median wage—approximately £20,000—was paying 21% less tax than in 1990. A single-earner married couple were paying 11% more tax. Under the coalition agreement, we are putting considerable resources into raising the tax threshold. For a single person under 65, the tax threshold this year is 170% higher than it was in 1990. However, the tax threshold for a one-earner married couple has risen by only 71%, so in real terms it is lower than it was in 1990. I urge the Minister to examine those figures carefully and to draw them to the Chancellor’s attention.

[Mr David Davis (Haltemprice and Howden) (Con)]

I commend my hon. Friend on his compelling analysis. Listening to him reminded me of something that my mother—my single mother—said about 40 years ago. She used an old phrase, “When money troubles come in the door, love goes out the window”, which is a good measure of the stresses that are put on families by financial pressures. Does he agree that there is no more important time than now for this issue, when the least well-off in our society are facing job and cost pressures as never before, which will put pressures on marriage as never before?

[Mr Jackson]

My right hon. Friend is bang on the money. Although such tax changes would be costly in the short term, the benefits for society would be incalculable, were we to enact them, which I hope we will in the Budget next March.

In considering the fairness arguments, it is also important to deal with the misguided claim made by some that, rather than helping one-earner families, the answer is to make them two-earner families. That logic is the occasion of great unfairness, because more often than not that option is not available. The latest DWP figures demonstrate that in 2.2 million households one member is in full-time work and the other is not earning; that 1.2 million, or 53%, of those households contain children; that in 700,000, or 58%, of those households with children there is a youngest child who is under five; and that a further 300,000, or 21%, have a youngest child between the ages of five and 10. Some 61% of all one-earner couple families have a young child under five, someone who is disabled or someone with caring responsibilities. Many of the remainder are likely to be doing voluntary work. It is clear that the majority of one-earner families are one-earners out of necessity rather than choice.

Professional Standards in the Banking Industry

David Davis Excerpts

Thursday 5th July 2012 Commons Chamber

[Mr David Davis (Haltemprice and Howden) (Con)]

I will start by declaring an interest. When I was the chairman of the Future of Banking Commission it was funded by the Consumer Association, which might have influenced my views on this matter.

May I start by commending the Chairman of the Treasury Committee, my hon. Friend the Member for Chichester (Mr Tyrie), for the tone of his speech? I agree that we should not let the smoke of political battle in this place come between us and rescuing one of the most important industries in the country. Members on both sides of the House should bear that point in mind.

The title of the debate and of both motions refers to the professional conduct of the business of banking. This is not just about LIBOR and the LIBOR scandal. If it stopped there, we could deal with it through two actions: a change to the procedure to make it transaction-based and audited, and the criminal prosecution of everybody involved. That would resolve the issue once and for all, but that is not as far as this goes.

We all know that the practice of banking in this country has become perverted by huge incentives, which have led bankers to behave in ways that do not serve the economic interests of the country or our national interests—indeed, they have had the opposite impact. Although the Chairman of the Select Committee rightly said that the inquiry would need to be tightly drawn, it will nevertheless go pretty far. I am quite certain, for example, that even if it is confined to banking, things such as the derivatives market will undergo a lot of investigation in the course of the Committee’s investigation. We must understand that this issue is much bigger than just LIBOR.

Secondly, we should take on board the fact that we are debating the superstructure of the inquiry when we should perhaps be talking about its engine room. What matters are the inquiry’s powers, whichever we have, and they do not need to be so different for a judicial inquiry and for a Select Committee inquiry. I am afraid that the hon. Member for Eltham (Clive Efford) was just plumb wrong about the status of Select Committees in this House and their powers. I speak as a past Public Accounts Committee Chairman who summoned bankers, rail operators, pharmacy companies and all sorts of companies that did not want to come, to give their documents or to give evidence. We did not take evidence on oath, but they did not want to give evidence to the Committee and were made to do so.

[Bill Esterson]

I want to ask the right hon. Gentleman about the relative skills of a parliamentary inquiry and a judge-led inquiry. Some people in this House have very deep skills, but not everybody does, but a judge-led inquiry would have the necessary skills to carry out the kind of deep inquiry that he rightly says is needed. Will he comment on that?

[Mr Davis]

Absolutely. The Select Committee on Culture, Media and Sport and its inability to reach a unanimous view has been held up as an example. In my entire time as PAC Chairman—and, I think, that of all the subsequent Chairmen—there was never anything other than a unanimous outcome, because of the factual basis of the inquiries. That is what this inquiry must have. It must rest on the facts, which is why the Committee will need forensic accountants, lawyers and investigating teams. It will, I think, need one change in the law. It will need protection for whistleblowers, as we do not have that, but the same would be true of a judge-led inquiry. That would open the inquiry up to its full extent.

Let me make one more point about judge-led inquiries—it goes back to the Leveson inquiry and is slightly embarrassing for those on my side of the House, but I shall make it anyway. Judge-led inquiries cannot work around a criminal investigation without paying attention to it, and that can cramp what they do. If Members did not see it, I recommend that they look back at the evidence given by Andy Coulson and Rebekah Brooks, both of whom were facing potential criminal charges. Those were wholly useless days at the Leveson inquiry because the QC involved had to tiptoe around the issues. That might apply to almost every witness who appears before this inquiry, thanks to the issues facing it, so we must bear it in mind that we cannot solve that with a judge. We will solve it through a different mechanism that either approach would have to use and that, frankly, would be in camera hearings with those witnesses. Although the conclusion will have to be wide, open, wide ranging, honest and transparent, that might not be possible for the evidence-taking.

Although a House inquiry will be faster than a judicial inquiry—there is no doubt about that, for the reasons the Chancellor has given—there is the simple problem that any inquiry will have trouble completing by Christmas.

[Alison McGovern (Wirral South) (Lab)]

Will the right hon. Gentleman give way?

[Mr Davis]

I have taken one intervention and I cannot take any more.

Whatever the inquiry, it will take a long time, because it is a big issue, and it has to be got right. If it is got wrong and the inquiry is handled badly, and it turns out not to be well managed, it will do enormous damage to the City of London and the entire economy. If it is got right and it leaves the City of London with a reputation for clean and honest dealing it could be the single most important thing that happens under this Government.

Static Caravans (VAT)

David Davis Excerpts

Thursday 26th April 2012 Commons Chamber

[Mr Stuart]

My hon. Friend is absolutely right.

I have good news, as I am sure the Minister will confirm later, in that the Government have listened to us. Hon. Friends on both sides of the House who represent East Yorkshire constituencies came together immediately after the Budget and we met the manufacturers. What we heard from them was chilling. The industry employs thousands in the manufacturing sector and tens of thousands in the parks. The Government estimate a 30% drop in demand, and that can only mean that thousands of jobs will be lost and that an industry that is struggling to recover from the credit crunch will be knocked backwards.

[Mr David Davis (Haltemprice and Howden) (Con)]

I congratulate my hon. Friend on securing this important debate. He has raised the central point. The aim of the Budget was, quite rightly, to encourage growth and jobs and to pay off the deficit. Is it not the case, however, that this particular measure is likely to destroy jobs and raise less money than we currently raise? It would therefore meet none of those objectives, and the Treasury ought to retract the measure in total.

[Mr Stuart]

My right hon. Friend is absolutely right. He and I have discussed this matter with the Chancellor, who has spoken to us about it separately on a number of other occasions. We also went in a group of 11 colleagues to see the Exchequer Secretary to the Treasury, my hon. Friend the Member for South West Hertfordshire (Mr Gauke). The reason for our only being 11 was that we did not think that there would be room for more around the table; it was not due to lack of interest. There is enormous concern about this issue.

I am delighted to say that, when we debated the matter last week, the Minister agreed to extend the consultation. The Chancellor confirmed that it was a genuine consultation and that the Government would look at the evidence from us and from those out there in the industry—everyone should get involved in that—and would be prepared to look at the matter in the light of the impact that the measure will have.

Finance (No. 4) Bill

David Davis Excerpts

Wednesday 18th April 2012 Commons Chamber

[Mr Bradshaw]

My hon. Friend is exactly right. As I said, the grant already covers only less than half of the cost of repairs, and the £5 million that is being offered to extend it to alterations covers only a quarter of the likely annual cost of those alterations.

A number of churches and cathedrals have already put on hold schemes that were planned or under way. My own cathedral in Exeter faces having to raise several hundred thousand pounds more for its exciting cloister project. The wife of the dean of Wakefield cathedral, which faces an extra £200,000 of costs for alterations, has famously composed a protest song about the VAT hike. The lovely little church in the small Herefordshire village of Llangarron, at which I attended Easter Eucharist, will have to find an extra £60,000 for a project that has been in the pipeline for seven years.

As 26 deans of cathedrals wrote in an unprecedented letter to The Sunday Times on Sunday, this change will seriously jeopardise the sustainability of many of our great buildings, not only for present-day use but for that of future generations. I urge the Government to think again on this very important matter, and I hope, Ms Primarolo, that you will help to facilitate the expression of the will of the House on it shortly.

[Mr David Davis (Haltemprice and Howden) (Con)]

I want to associate myself with the comments made by my right hon. Friend the Member for East Yorkshire (Mr Knight), by my hon. Friend the Member for Beverley and Holderness (Mr Stuart), and by my right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson); I embarrass him again by calling him that. The proposal for VAT on static caravans will have a seriously deleterious effect on all of east Yorkshire, including Hull, dramatically cutting employment in the area at a time when we are trying to encourage growth and to balance the books. This proposal will do neither; in fact, it will reverse both.

This is a Finance Bill; the aim is to raise money. The latest estimates of the employment impact of this measure are that it will result in 4,000 to 7,500 job losses, of which 1,500 to 2,000 will be in the vicinity of our constituencies. The effect of that in financial terms is pretty straightforward to calculate. The Government estimate that they will raise £30 million to £40 million in VAT from this change. They will lose between £32 million and £65 million in lost national insurance, lost inland revenue, and extra welfare costs. It will therefore do the opposite of what the Budget is attempting to do. When I put that point to the Treasury, people said to me: “We don’t calculate things in that way.” That might sound silly, but there is a substantive point behind it—as I am sure that the shadow Chancellor, who is smiling, will know. Usually when one introduces a tax change that leads to job losses, people will, in due course, find another job. In east Yorkshire, two of the three Hull seats have dramatically high unemployment levels already, and the ratio of jobs available to unemployed people seeking them is one of the highest in the country. As a result, the resulting unemployment will not be short term but is likely to last for more than five years. We should calculate the effects of the proposal in this way because, for the foreseeable future, it will cost more than it will raise.

[Diana Johnson]

The right hon. Gentleman is making an excellent speech. Has he seen today’s report that 43 people in my constituency are chasing every vacancy? I set that figure alongside the comments that he is making.

[Mr Davis]

The hon. Lady makes a powerful point that I am not unfamiliar with. We have all been in similar battles over job losses at BAE in Brough and, in my constituency, job losses to the tune of 1,700 have been announced in the past six months.

This proposal does not stand up, on the Government’s own criteria. Accordingly, I support new clause 6 and will vote for it when it is put to the test.

[Albert Owen]

It is a pleasure to follow the right hon. Member for Haltemprice and Howden (Mr Davis). Although I agree with the contributions of Members on both sides of the House on the pasty tax and the church buildings tax, I will concentrate on the caravan issue.

As has been said eloquently by the previous speaker and my right hon. Friend the Member for Kingston upon Hull West and Hessle (Alan Johnson), the exemption was put in place for good reason. It has been left as it is because previous Chancellors have understood its importance, not only to manufacturing but to tourism. Those two important industries will be damaged if this proposal goes forward. I do not have the confidence of some Members who have spoken that the Chancellor will extend the consultation and that all things will be rosy. The effect of the proposal will be catastrophic for tourism across the United Kingdom.

Amendment of the Law

David Davis Excerpts

Monday 26th March 2012 Commons Chamber

[Danny Alexander]

My right hon. Friend is, as usual, absolutely spot on. From next month, pensioners will see the largest ever increase in the basic state pension, because we have put in place the triple lock promised in our manifesto to ensure that never again will pensioners be awarded derisory increases of the sort that Labour brought us. Thanks to my hon. Friend the Pensions Minister, who is in his place, we will also be introducing, as the Chancellor announced, the single-tier pension at £140 or thereabouts a week, so that new pensioners will no longer be trapped in the means-testing system that Labour left them in for so long.

[Mr David Davis (Haltemprice and Howden) (Con)]

Will my right hon. Friend give way?

[Danny Alexander]

The full depths of the economic incompetence of the Labour party have been revealed in the course of the debate. [Interruption.] They are opposed to most of our spending reductions. They are opposed to many of the revenue-raising measures in the Budget. They have opposed tax cuts for business. I heard from the deputy Leader of the Opposition that they are opposed to our cap on unlimited tax reliefs for the wealthy. We know what Labour’s economic plan for this country would be—income taxes up, business taxes up, borrowing up, debt up, and interest rates and mortgage rates up. The only thing that would go down under the Labour party would be the British economy. It may seem astonishing that the party that got Britain into the worst economic crisis for a generation now wants to put us right back into the mess that this coalition Government are trying to get the country out of. The Labour party of the 1970s and 1980s is back and I hope the British public have been watching.

[Danny Alexander]

There we see it again—a party in denial about the mess it got this country into. [Interruption.] I know the hon. Gentleman is a rational man and has played a great role in Scottish politics, but he ought to have a bit more sense than to pretend that his party has no responsibility whatsoever.

[Mr Davis]

Will my right hon. Friend give way?

[Danny Alexander]

The Budget is fair. It raises additional taxes from the wealthiest and asks the wealthiest in this country to pay more. That is why, for example, we are capping—[Interruption.]

--- Later in debate ---

[Danny Alexander]

You are quite right, Mr Speaker. I could not hear my right hon. Friend, but I am happy to give way to him.

[Mr Davis]

I will start by saying that I entirely support the growth orientation of the Budget, which is much better than everything we have heard for the past 10 years, but I hope my right hon. Friend will forgive me for raising a narrow issue, because 90% of the effect of one of his tax changes falls in and around my constituency—the VAT change on the production of static caravans. That will have an impact which, he says in his own Red Book, is £40 million positive, but the cost in unemployment will be £45 million negative. Will he review this issue?

[Danny Alexander]

My right hon. Friend will know that all these measures are consulted on, but I think the measure is appropriate. As he knows, mobile caravans are subject to VAT, but static caravans are not. Static caravans that are used for residential purposes, which people make their main home, will continue not to be subject to VAT. That may be some comfort to him.

I shall draw my remarks to a close by referring to the measures in the Budget that deal with the wealthiest in society. We have capped reliefs on income tax which the wealthy exploit. We have capped benefits; now we are capping reliefs. It is, if you like, a tycoon tax. We have introduced a new stamp duty land tax at the rate of 7% on properties worth more than £2 million. We are increasing the stamp duty charge to 15% for residential properties over £2 million and we are consulting on a new annual charge for people who continue to envelope their properties—a mansion tax on tax dodgers, if you like.

This is a fair Budget. It is for the millions, not for millionaires, a Budget for the many, not the few, and I commend it to the House.

Question put.