Budget Resolutions

Edward Leigh Excerpts

1st reading: House of Commons
Tuesday 14th March 2017 Commons Chamber

[Chris Philp (Croydon South) (Con)]

It gives me some pleasure to follow the shadow Secretary of State for Education, the hon. Member for Ashton-under-Lyne (Angela Rayner).

Let me start by welcoming the Budget and congratulating the Secretary of State on her speech. I am delighted that she has managed to secure protection for the schools budget, which will continue to grow in real terms, and I congratulate the Chief Secretary on facilitating that. I also welcome the national funding formula, which the Secretary of State for Education has been working on with a forensic attention to detail. It will ensure that funding follows need, rather than being an accident of postcode. Croydon, the borough I represent, has historically been underfunded. We will now see that injustice corrected, so I congratulate the Secretary of State on her work and welcome the national funding formula.

The shadow Secretary of State for Education gave us a blizzard of statistics. I wanted to intervene on her to say that the most important statistic on education is this: 1.8 million more children are being educated in good or outstanding schools than in 2010. The hon. Lady can quote all the sums she likes, but the fact remains that the Government are delivering a better education for more children than ever before. Conservative Members are proud of our Government, and our free school and academy programme, and I am delighted that the Government are expanding it.

I was pleased that the Chief Secretary, the Chancellor and the Education Secretary found an additional £1.035 billion over the next five years—up until 2021-22—to fund further new schools. New schools give choice to parents and, as the statistics I quoted show, they encourage higher standards. Some of those schools might well be new grammar schools, which the hon. Member for Ashton-under-Lyne criticised. I should declare to the House that I am a grammar school boy. I know from my experience in a south London grammar school that such schools help children from ordinary backgrounds to fulfil their potential. All the studies show that children from ordinary backgrounds who go to grammar schools do a great deal better than those who go to other schools.

[Sir Edward Leigh (Gainsborough) (Con)]

I am sorry that the hon. Member for Ashton-under-Lyne (Angela Rayner) did not give way to my hon. Friend, although she did give way to the hon. Member for Bassetlaw (John Mann), many of whose constituents attend a grammar school in my constituency. The question she failed to answer was this: why, since the abolition of grammar schools, has there been a catastrophic fall in social mobility in the most deprived areas?

[Chris Philp]

My hon. Friend raises an important point. Grammar schools can and should be an engine for social mobility. The Government’s White Paper and the Education Secretary’s proposals include new measures to ensure that grammar schools take on a higher proportion of pupils on free school meals. There is a very successful case study: the King Edward VI grammar schools in Birmingham. They have taken a number of steps, including offering outreach to local primary schools in deprived areas, free tuition for their tests, and bursaries to fund school uniforms and travel. Together, they have increased the grammar schools’ free school meal intake from 3%, which is a very low figure, to about 22%. This shows that the Education Secretary’s proposals work in practice, and I strongly welcome them.

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[Sir Edward Leigh (Gainsborough) (Con)]

It is a pleasure to follow the hon. Member for East Lothian (George Kerevan). He rightly had a lot to say about education in England, but we might have liked to hear more from him about education or health outcomes in Scotland.

[Roger Mullin (Kirkcaldy and Cowdenbeath) (SNP)]

Will the hon. Gentleman give way?

[Sir Edward Leigh]

Well, I have hardly started, but—

[Roger Mullin]

I can tell the hon. Gentleman that the outcomes of Scottish education, in terms of the number of people entering work and higher education, are significantly higher than they are in this part of the United Kingdom.

[Sir Edward Leigh]

I am very grateful for being informed. Before the hon. Gentleman stood up, I did want to say to him and his colleague the hon. Member for East Lothian that the events of the last 24 hours had convinced me more than ever that I was right to table an amendment, at the beginning of the present Parliament, to give full fiscal autonomy to Scotland, with a modern equalisation formula which would ensure prosperity throughout the nations of the United Kingdom and replace the outdated Barnett formula. Perhaps SNP Members should not intervene on me too often, because basically I am on their side when it comes to these matters.

I want to say a few words in defence of the Government. I am aware that that is sometimes an unpopular thing to do, but I feel that the Chancellor was courageous. I know that that is what Ministers are sometimes told by their civil servants when they are doing radical things—“It is a very courageous thing that you are doing, Minister”—but I think that this was the right thing to do. A storm has broken about the Chancellor’s head over the last few days. Why was it the right thing to do to try to plug the funding gap and to increase national insurance contributions? It was the right thing to do because this is, I think, about honesty in politics. Too often in Budgets we have seen gimmicks and little giveaways. We have only learnt the full story the next day, and we have realised that successive Chancellors have pretty well taken back from us what they have given to us. The Chancellor was trying to say, “We have to have a mature, grown-up debate in this country about how we are going to meet the funding gap in adult care.” That debate will run and run. We have a few months to think about it and to come up with a solution.

People say to me, “You made a manifesto commitment.” Sometimes, circumstances change, and one has to do what is right for the country. It is a difficult thing to do. Manifesto commitments are not written in stone—[Interruption.] I did not mean that to be a joke. We all know the history of that particular Labour party manifesto commitment and what might have happened to those words written in stone if the Labour party had won the election.

We have to have a mature debate about how we are going to pay for the NHS. Why do I say that? I am going to be completely honest about it. A lot more needs to be done for our NHS. I rely, as do my family, entirely on the NHS. We have no other providers. People of my age are deeply worried about the funding crisis. We have seen what has happened on A&E—targets have been missed. We have seen the report that puts the UK just ahead of Slovenia, Croatia and Estonia. As a country, we should be doing better than that. What is worse, England was ranked 30th for accessibility because of our exceptionally long waiting times for treatment. The 2013 figures from the OECD show the Netherlands, Sweden, Germany and France at the top, with their spending hovering at around 11% of GDP, while the UK’s stands at just 8.5%. Therefore, we need to have a mature debate about how we are going to meet the funding gap for all our people.

The King’s Fund estimates that, if we wanted to close that gap solely by increasing NHS funding from central Government, by 2021 we would need to increase our spending by 30%—a whopping £43 billion increase in real terms. That would push NHS spending to £185 billion overall.

Are there any alternatives to those scenarios? I pose that question. I know that that is unpopular. I know that people do not necessarily want to debate this, but we cannot raise this money from general taxation—there is not the political will and we cannot afford to do it—not if we want to maintain the NHS as universal, non-contributory and entirely free at the point of use. Something has to give.

The 2015 Euro health consumer index points out a contrast between two styles of health care: the “Bismarck” systems and the “Beveridge” systems. Bismarck systems are based on citizens taking out insurance available from a range of providers, whereas Beveridge systems such as ours have one body that provides all the care. The ECHI says that the largest Beveridge countries—the UK, Spain and Italy—

“keep clinging together in the middle of the index.”

The ECHI rated the Dutch health system as the best performing in Europe. The Netherlands happens to have a contributory Bismarck-style system. I believe—I know that it is controversial and that colleagues do not necessarily want to debate it because it is politically very sensitive—that, without appointing a royal commission and wasting years, Ministers, and the Opposition, have to have an open mind about how we are going to raise money for people not from general taxation, but by moving gradually, for parts of our healthcare, to a social insurance-based system.

We also have to have the courage to think radically about following the German and French example and indeed the Australian example. If you go to see a GP in Australia, you have to pay some money; if you do not turn up, you lose the money. In France, if you go to see a doctor or go to A&E, you have to pay a “facture”. If you cannot afford to pay, all that will be returned to you; if you can afford to pay, you have to make a contribution.

I know that these are radical ideas. However, if people are going to dismiss them, and dismiss the need for an open debate about how we are going to fund our healthcare system, they have to explain to us how they will raise the money from general taxation. There is no point simply attacking for Government for increasing national insurance contributions without proposing how they are going to tax to have a world-beating healthcare system, which is in all our interests. We want an open debate on that.

We need to have a realistic debate about education, too, on both sides of the Chamber. I do not think the way to approach the debate is to say, “I believe in grammar schools,” or “I oppose selective education in any shape or form.” The Opposition have to ask themselves a serious question: why has social mobility declined so catastrophically in our most deprived areas? The solution may not be to have grammar schools in our deprived areas. It may be to have more academic streams in our comprehensive schools. It may be to set up some selective schools only in deprived areas. It may be to provide places only for academically gifted children who come from deprived backgrounds. If politically and ideologically one says that we are not going to go down that route at all and believes in neighbourhood comprehensives in deprived areas, one has to ask oneself why social mobility is declining, has declined and will go on declining.

The Prime Minister is trying to open up a serious and interesting debate, and the Health Secretary is starting to open up a serious and interesting debate about how we are going to fund the NHS, and the Chancellor is opening up a serious and interesting debate about how we are going to find the money to meet all our future needs. In those terms and on that basis, I welcome the Budget speech.

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[Mr Barry Sheerman (Huddersfield) (Lab/Co-op)]

I have heard a few Budgets in my time. The first was delivered by Sir Geoffrey Howe, who was a thoroughly decent man. Denis Healey unkindly said that Sir Geoffrey had been round the country stirring up apathy, but he was a decent man and I remember his Budget.

This Budget is deeply, deeply disappointing. In the context of the miserable votes last night, with this country heading headlong into a hard Brexit, I expected an imaginative Budget that prepares the country for what Harold Macmillan called, “Events, dear boy, events.” Well, we have already seen one such event from the First Minister of Scotland, and there will be many more from left field and right field. This country is going to be rocked by events over the coming years, and this Budget does not help anyone—nationally or regionally.

I represent Huddersfield, which is almost the average town in Britain, and it is in a dreadful state. They are going to close the accident and emergency services at our local hospital, and they are going to close the whole hospital. There is chaos across our country, not just in Huddersfield. Two thirds of the health services in our country are in dreadful trouble.

Most of the local authorities I know, especially the ones with indecent levels of deprivation and poverty—the ones in the average, real parts of our urban communities in Britain, not the ones in the leafy suburbs that some Conservative Members represent—are in deep trouble and are unable to bear the cost of social care and health. I was expecting something imaginative from the Budget, and we did not get it.

We also got very little indeed on education. Some earlier speakers asked where we could get alternative funding. The hon. Member for Gainsborough (Sir Edward Leigh) and I used to sit together on the Liaison Committee, and I used to call him, very unkindly, a member of the “barmy army,” but he actually thinks a lot. He has always been quite provocative, and he always has something to say. The fact of the matter is that we need imagination and passion to solve our country’s problems, but I heard little passion from the Government Front Bench today. I feel passion because I believe that every little child in this country has a spark of potential. If we, as politicians, cannot create a system that liberates that spark, we are not doing our job.

As Sir Michael Wilshaw said, the disaster of our education system is that we find bright little kids in our primary schools and we lose them after the age of 11. What sort of country and what sort of school system is that? All parties have underachieved, but we have seen some real change. There are signs of improvement, and I shall briefly give the test that most primary school teachers use to assess a young person’s work. They use “two stars and a wish,” and these are my two stars. First, I give a star for the good fundamental policy approach to skills in this Budget. We have been languishing on skills policy for so long, but there is now some imagination there. Who would have thought it? They used to say that John Prescott was a crazy man of the left who wanted a levy for training. Conservative Members used to say that was an absolutely disgraceful left-wing horror. Well, we now have an apprenticeship levy, as we should. It comes in in April and I hope it will succeed.

The Government actually went about policy making in a sensible way. They took evidence and consulted. They put Lord Sainsbury in charge, along with the former Minister the hon. Member for Grantham and Stamford (Nick Boles), who actually got to know something about skills and training. He has gone now, but some of us will miss him, because he listened. He introduced Lord Sainsbury to the skills commission that I chair, and I gave evidence to them both about what I wanted to see in skills policy. Some of that stuff is in the policy that came through in the Budget. I welcome such evidence-based policy. When I was Chair of the Education Committee, we used to applaud evidence-based policies, along with policies that seemed to work in countries like ours. So, there is something in the Budget in terms of skills, Alison Wolf’s recommendations to the Select Committee, and the work done by the Sainsbury review to talk to businesses, employers and practitioners on a cross-party basis. That is the way to make policy.

[Sir Edward Leigh]

The hon. Gentleman is speaking with great passion and is doing his best to provide some solutions. May I give him another one? Perhaps we should end the fiction that national insurance contributions can pay for all social care. We should merge national insurance and taxation, simplify things, and try to raise more money that way.

[Mr Sheerman]

I have already complimented the hon. Gentleman on being a good, out-of-the-box thinker, and that is another interesting suggestion to debate.

My second star is for productivity. Actually, it is only half a star, because we cannot really check. The Budget includes additional high-value investment, the national productivity investment fund and world-class infrastructure investment. I like most of that, except I am one of those quirky people who still cannot believe in High Speed 2 and in the fact that all that national treasure is being put into a railway that will be out of date by the time it opens in 2033. I think the money should be spent on the national health service, but I know I am in a minority on that.

The Budget also includes £300 million for the future development of the UK’s research talent and to attract talent from the research powerhouses of China, Brazil and Mexico. I like all that—it is all quite good stuff, so it gets half a star. All the stuff about disruptive technology investment to transform the UK economy, electric vehicles, artificial intelligence and robots is good stuff, but there has not been enough private sector research and development for a number of years. Co-operation between business and universities has not been good enough. We will never get the levels of productivity we want until we have the right kind relationships.

Finally, I come to my wish: for goodness’ sake, where is the evidence that grammar schools and free schools do anything to find the spark in children that we want to release? There is no evidence and no research. Not one reputable research institute or organisation in this country believes that a return to selective education will help anyone—quite the reverse. Look at all the research and the experience in other countries. Just look at Kent, for God’s sake! It is the most selective place in the country and it has the worst performance across all schools in the country. That is selective education. It has no research base and no experience base, and there is no global comparison of which we can say, “Isn’t it wonderful?” They do not have it in Denmark, Sweden or Finland. I doubt it is even the latest fashion in Shanghai.

I like policy that is based on good research and good evaluation, and yes, sometimes we should work across the party divide—that is the way to make policy. This Budget has not delivered it. We want that spark to be found and promoted—we want the country to be rich and successful in the challenging disaster of Brexit—but it is not in this Budget.

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[Richard Drax (South Dorset) (Con)]

It is a great pleasure to follow the maiden speech given by the hon. Member for Stoke-on-Trent Central (Gareth Snell). We all remember our maiden speeches. I personally thought the hon. Gentleman made an excellent speech full of passion and conviction. Perhaps a little shiver went through those on these Benches at hearing a man of conviction, which is what this House needs, in my humble opinion, on many occasions. From Staffordshire oatcakes to the ceramic empire, we heard it all. The hon. Gentleman represents an honourable seat and I am sure he will do an honourable job.

I congratulate the Government on doing an excellent job so far, bearing in mind the appalling inheritance that we had back in 2010, along with the banking crisis and many other factors that led to the massive cash crisis that we face. The UK economy is forecast to grow by 2%, real wages are forecast to rise every year to 2021, the deficit is due to fall, and the debt in proportion to national income is also due to fall. All this, and more, is most welcome, and I congratulate the Government of whom I am proud to be a member.

I am also glad that the Government are not ashamed, as they should not be, to mention the dire financial circumstances that our country still faces. Wherever I go in my constituency—I am sure that most Members are the same—we cannot brush over the fact that we are still on a knife edge. We are told—the figures are there—that there is debt of £1.7 trillion, or £62,000 per household; that private debt, which is not often mentioned, is a similar figure; and that there is £50 billion a year of debt interest, which is more than we spend on defence and policing put together. These are horrifying figures that Government Front Benchers are desperately trying to deal with.

I would not be doing my duty as a Member of Parliament if I did not raise a few of my concerns about the Budget, although overall I support it. The word “fairness” is used a lot by the Chancellor of the Exchequer, for reasons I quite understand, but I am not sure that it entirely resounds with those who are going to be affected by one or two tax rises. As a Conservative, I long to hear from a Conservative Chancellor a vision for this country that involves a massive reform of our tax system, which today is one of the most complicated in the world. For example, why cannot we have a flat-rate income tax of, say, 30%? KISS—keep it simple, stupid—is what we were told in the Army, and I think that there is a lot of room for that in the tax system of this country.

[Sir Edward Leigh]

My hon. Friend is making an interesting speech. The reason why we cannot have a flat-rate tax—this is not often mentioned by Labour Members—is that the top 2% pay a quarter of all income tax. It would therefore be impossible to move to a true flat-rate tax, but we could completely simplify the tax system, perhaps by having two rates. We could also try to merge capital taxes, and their terms and rates, much more into income tax. We could therefore start to get rid of the poverty and unemployment trap.

[Richard Drax]

I entirely concur with my hon. Friend. As always, his intervention was absolutely spot on.

Another point I have noticed during the six or seven years I have been in the House is that everything is ring-fenced—every Department is ring-fenced. The Chancellor says, as we have heard previous Chancellors say, that there is so little room for manoeuvre. May I suggest that we take away the ring fence, think radically about areas such as the national health service—my hon. Friend mentioned it—and try to look at things far more in the round for the future of our country? I would have liked to have heard a lot more about Brexit, and the future—where we are going—in the vision from the Chancellor, as I do not believe that we heard about that.

I want to touch on one or two other issues, the first of which is the national insurance hike. I must say that I am concerned about that because many people who will be affected work and live in my constituency of South Dorset. The money raised will be relatively pitiful, but 2.5 million people are facing an average rise of £240. We have heard about a manifesto pledge being broken, and I believe it has been broken. I am not saying that manifesto pledges cannot be broken, because circumstances may change, meaning that they have to be broken.

I have consistently argued that if we are to look for more money, the overseas aid budget is the area that we should consider. Many of my constituents certainly believe that we should help the less well-off—of course we should. However, setting an arbitrary figure for such aid of 0.7% of GDP—interestingly, the average figure for the EU is 0.4%—is a pledge too far. It is also a pledge that this country clearly cannot afford, because many areas of our national life are now calling for more money.

Self-employed people take risks that the employed do not, as we all know. They risks their homes, livelihoods and families. That is one reason why they have, or did have, such a tax advantage. I know that there has been equality as far as pensions are concerned, but I still believe that the risk takers, the entrepreneurs and the aspirational —the people we need to create wealth, prosperity and jobs for our future, especially as we move to leaving the EU—should not be penalised.

I am not happy about quarterly reporting. The self-employed and small businesses will be required to fill in four income tax returns a year instead of one. They will need to do so digitally, but if hon. Members speak to farmers about applying for grants digitally, they will find that that is not always easy. Such people will require an accountant and there will be extra costs. Income tax will have to be paid at the end of each quarter, rather than in one or two instalments each year, and that will inevitably affect cash flow. It is important—in the good times or the bad times that we know businesses experience—to have an annual look at a business, rather than for it to be affected during a poor period by a cash payment that has an impact on its cash flow.

Another area that I am concerned about is probate fees. At the moment, probate costs are capped at £215. It is worth noting that the costs on estates of over £50,000 could now range from £300 to £20,000. The press have dubbed this a “death tax”, and I think that that is a fair comment.

On death taxes, I want to mention inheritance tax—I declare an interest. I think that inheritance tax is completely immoral. We pay a lot of tax all our lives, and when we die, as we cannot avoid doing, 40% is charged by the state. In my view, that is completely immoral. Let me quote the previous Prime Minister, David Cameron, who said at the last election:

“We will take the family home out of inheritance tax. That home that you have worked and saved for belongs to you and your family—you should be able to pass it onto your children”.

I entirely concur.

In my remaining minute, let me say that I want the abolition of inheritance tax, a review of capital gains tax and the simplification of the whole tax system. I also want much more investment in technology colleges— I entirely agree with the hon. Member for East Lothian (George Kerevan)—where I think the future lies for all the jobs that we will need to fill. If money is needed, I want the overseas aid budget to be targeted, rather than any other ring-fenced area.

The situation regarding business rates concerns me. In the view of Tim Martin, the very able founding chairman of Wetherspoons, who came to address my apprenticeship fair last week, supermarkets will get away with it and his pubs will get hammered. Finally, may I gently ask Ministers that we stop using the terms “tax avoidance” and “tax evasion” in the same sentence? Tax evasion is illegal; tax avoidance is something we all do for our families’ sake. I would be grateful if we could stop using the two terms together.