(11 years, 9 months ago)
Commons ChamberI think we all believe that it is important that where lone parents can work, they should work, because that helps to boost their income and that of their family. Guidance is given to personal advisers on jobseeker’s allowance to ensure that the sanctions regime is applied appropriately to lone parents, as in the case of all jobseekers.
What, hitherto, has been the fraud and error rate in child benefit?
It would be pretty negligible because it is paid to everybody, and it would therefore be impossible to figure it out. Across the board in the Department for Work and Pensions, we are beginning to see a downward pressure on fraud and error. My hon. Friend will be pleased to see that over the next few years we will be saving considerable amounts of money.
(11 years, 11 months ago)
Commons ChamberIf the hon. Gentleman will forgive me, I said I would give way to my hon. Friend the Member for Gainsborough.
The problem with IT systems in the public sector, rather than the private sector, is the sheer scale of numbers—8 million households will use the new system—the complexity of the issues and the lifestyle of the recipients. I saw more failed Government IT systems in my time on the Public Accounts Committee than I have had hot breakfasts. I beg the Secretary of State to be cautious, to test and re-test, to pilot and re-pilot, and not to believe a word spoken to him by IT companies or his civil servants.
My hon. Friend was an excellent Chairman of the Public Accounts Committee—he is highly respected among Members on both sides of the House—and I absolutely agree with him. That is how I see my role. One thing I have done is brought into the system a red team, whose job is to go through and doubt everything I am told, and to ask questions. Being a sceptic and not believing are part of the process of delivering. I absolutely understand that. We are involving others in the process—that is our purpose.
(13 years, 4 months ago)
Commons ChamberI congratulate my right hon. Friend the Chancellor on sticking to his plan to reduce the Budget deficit. Far from these cuts being too much, too deep, too soon, I believe that what he has proposed is the minimum over the longest credible period that we can reasonably expect will enable us to avoid the sort of financial crisis that has hit many neighbouring countries.
I want to address an illusion. The right hon. Member for Birmingham, Hodge Hill (Mr Byrne), whom it is normally a privilege to follow, based his speech on it, and it permeated the speech of the Leader of the Opposition at the weekend when he addressed the large rally on cuts. It is the illusion that we can have something for nothing. We live in a world of finite resources. If we spend more on one thing, we have to spend less on another. If we spend more now, we must expect to spend less—substantially less—in future, when we repay our debts with compound interest. The Opposition do not seem to realise that. I would be more than happy to engage in debate with either of them if when they advocated the restoration of spending in one area, they simultaneously spelt out the additional cut they intended to propose in another area of spending, but they never do so and the right hon. Member for Birmingham, Hodge Hill did not do so today. As long as hon. Members refuse to spell out alternative cuts to those that they reject, rational debate in this place is simply impossible.
Mr Deputy Speaker, I know that you are well aware that the ancient states of the Peloponnese resolved these problems by rules of debate that required those advocating increased spending on programmes that would require extra taxation or more borrowing to stand up in the public forum on a platform and argue their case with a noose around their neck. If they succeeded in persuading their fellow citizens of the need for increased spending and taxation, the noose was removed, but if they failed, the platform was removed. I understand that this healthy discipline meant that those states remained solvent for centuries on end.
The slight problem with that is that if we had a similar system here, under whichever Government, there would be no Members of Parliament left.
That is slightly unworthy of a former Chairman of the Public Accounts Committee, who at least would remain, if in solitary glory.
A related illusion that the Opposition purvey is the call, frequently made by the Leader of the Opposition, for the Government to prepare a plan B in case the economic road gets rocky—a plan B would, by implication, involve higher spending and borrowing. Of course it is a bit rich for the Leader of the Opposition to ask for a plan B, given that he has not yet spelt out a plan A, but the reality is that if we abandon the plan set out by the Chancellor, we will get a plan B, but it will not come from the Opposition or from my right hon. Friend the Chancellor—it will come from the savers and pension funds whose money we would need to borrow to finance that increased borrowing. If we did bottle out of what we have proposed, they would demand deeper cuts over a shorter period and they would require us to pay a higher rate of interest. The net result would not just be deeper cuts in the public sector, as we have seen the markets impose on Portugal, Greece and Ireland; those higher interest rates would kill off and abort the recovery in the private sector on which we depend to create the jobs to take up the people not employed in the public sector. So it would be a disaster for this country if we were to go down that route.
The third illusion that some Labour Members purvey—perhaps the more honest elements among them—is the belief that we could avoid public spending cuts if we were prepared to put up taxation. But who would pay those higher taxes? Ultimately, taxes are always paid by individuals and if the squeezed middle are not going to pay them—they have been precluded from bearing a higher burden of taxation by the Leader of the Opposition —either the poor or the rich must do so. I would not put it beyond a party that sought to double the burden of taxation on the lowest paid by removing the 10p tax rate to seek extra revenues from the very poor, but that would not yield much money so Labour must look to the very rich for it. I just remind Labour Members that if they read the Red Book, they will see that the top 1% of income tax payers in the coming year are expected to pay no less than a quarter of the entire revenues of income tax—last year, the top 5% paid more than half of all income tax. We are reaching the point at which any further burden of taxation on those people would kill the goose that lays the golden eggs. In the words of my old friend, the sadly now deceased Lord Harris of High Cross, punitive taxes beyond a certain point do not redistribute income, they redistribute people. We have reached that point and we would go beyond it if we accepted the advice of the Opposition.
I urge my hon. Friends to support the Chancellor and my right hon. Friend the Secretary of State in what he is doing at the Department for Work and Pensions and to ignore the blandishments and illusions of the other side.
It is a pleasure to follow the hon. Member for Newcastle upon Tyne North (Catherine McKinnell), and her comments about the importance of apprenticeships are right, of course. I want in particular, however, to congratulate the right hon. Member for Birkenhead (Mr Field). In the past he chaired the Select Committee on Social Security, and I was proud to serve on it with him. He gave the best speech of the debate—with the exception, of course, of the contribution from the Secretary of State; I will be in trouble if I do not say that. The right hon. Gentleman was realistic about the position we are in. I do not want to say a great deal about the structural deficit; we all know it is there, and how much it is. We all know the political imperative behind the Labour party campaign against the cuts. We also all understand that it is in the interests of the Government to play up that campaign because it makes them look stronger and more determined. It is therefore in the interests of both parties to talk about this topic in that way.
The right hon. Gentleman highlighted a point that I want to emphasise too: we have yet to turn the tide against the culture of spending and the fix of borrowing. We are going to borrow £485 billion over five years. That is more than our total public debt in 1997. The annual interest repayment on the UK debt for last year alone was £42 billion. I know the public cannot visualise what £42 billion is, but if we consider that we are spending more on simply repaying the interest on our debt than the entire amount we spend on educating our children, that should bring home the scale of the crisis facing us.
I am not a very party political person, so I am not very good at apportioning blame. We all know the last Government had to go through a massive international crisis, but we also all know that there was an underlying structural deficit that they did not deal with. The key question, however, is: what are we going to do now? I want to take as my text what the TUC has been talking about, because I would like to bring a few Opposition Members with me. The TUC asks how we are going to deal with this deficit without making cuts in public services, and it says there is £13 billion-worth of tax avoidance by individuals and £12 billion-worth of tax avoidance by corporations. Let us assume for a moment that that is true. How are we going to deal with it? If we follow the TUC line, the only way in which we can deal with it is through a radical simplification of how tax is raised and how the Government spend it.
The Chancellor made one historic announcement that has not been discussed much today, on the merging of national insurance and income tax. I urge him to continue with that theme, despite the siren voices that we have already heard, including that of a former Chancellor, who has said that it will result in winners and losers. The Chancellor must embark on this essential crusade. It may take many years, but it is vital, because simplification of the entire tax system lies at the heart of how we are going to deal with the deficit, with tax avoidance and with tax evasion.
The UK tax code has more than doubled in size since 1997 and it is now the world’s largest, recently surpassing even that of India. The only way to achieve simplicity in taxation is through a gradual move towards a much flatter rate of tax for both personal and corporate income, while eliminating the complicated system of loopholes, deductions and exemptions. Thus we would, eventually, have a system whereby we would set a single exemption for individuals, so that low-income earners would pay tax only if they earned more than a determined level of income. Many countries have already taken such an approach, including nine in eastern Europe, Hong Kong and Russia, the largest country in the world.
On defending the poor, I say to the right hon. Member for Birkenhead that it is not in the interests of the poor to have a so-called “progressive” income-based tax system. Such a system is structurally biased against them because they do not have the same access as the wealthy do to accountants and lawyers, and so cannot be instructed by them in the complex methods of tax avoidance. The poor are also caught in the poverty and unemployment trap. Many scenarios and Treasury models can be used, but it is estimated that if we had a flat tax rate of 22% with a £15,000 tax-free allowance, about 10 million of the poorest taxpayers would see their entire income tax burden disappear.
I know that people will say that the wealthy must pay more, but every time the top tax rate has been significantly reduced anywhere in the world, the wealthy have increased the proportion of tax income that they contribute. Under Mrs Thatcher’s Government, the top tax rate declined from 83% in 1979 to 40% in 1990, but high-earning individuals paid 35% of the total in 1979 compared with 42% in 1990. So it makes sense to have a much flatter rate of taxation—it makes sense for the economy and for the poorest in society, and it makes sense in terms of re-creating a sense of enterprise in the nation.
Once we dramatically simplify the tax system and get rid of all those loopholes and deductions, we will be able to explain the whole Budget process so much more easily to Parliament. At the moment, the Budget process is largely incomprehensible. I have been involved in the “Clear line of sight” project, and we want to simplify the whole process so that we know, line by line, what we are spending on behalf of taxpayers and how we are trying to get the nation moving forward again. I urge the Chancellor to be vigorous and brave in this debate.
(13 years, 10 months ago)
Commons ChamberThe hon. Lady is right that child benefit has been and will continue to be a very effective mechanism to get money to the poorest families. We are not eradicating the universal benefit in the case of child benefit. We are capping it off at the higher rate. The rest—[Interruption.] Well, 85% of the public will get their child benefit. The hon. Lady asked specifically about the universal credit. I did not say that it would subsume child benefit. I said that as we reform the benefit system, and as the PAYE system is reformed, we should be able to look at these things long after the spending review and look for ways of getting rid of anomalies. Right now, in the spending review, there are no plans to make any such changes. We will do exactly as I said. Child benefit will be removed from families where there is at least one earner above the threshold.
For years my right hon. Friend and I argued in opposition that marriage should not be discriminated against in the tax and benefits system, and in particular that mothers who chose to look after their children at home should not be discriminated against. Can my right hon. Friend assure me that he has not changed his view, and that through mechanisms such as transferable allowances he will ensure that women are entitled to make their own choices and are not influenced by the tax and benefits system?
(14 years, 1 month ago)
Commons ChamberI welcome this Budget because I believe that it is an honest Budget. I have now sat through nearly 30 Budgets, and it is often a profoundly depressing experience, because there is great excitement during the Budget statement only for us to receive a let-down the next day when we actually start to read the Red Book. There is a lot of difficulty and pain in this Budget, but what you see is what you get. What we heard on Budget day was the essence of this Budget, which is the need to try to resolve the desperate financial crisis in which we find ourselves, with a potential debt of £20,000 on every man, woman and child, and £1 out of every £4 spent being borrowed.
I accept that there are many things in the Budget that many of us do not like. Does anybody in this Chamber like a VAT rate of 20%? We are in the desperate position of having to impose that rate on everything that we buy, apart from essentials—I am not sure why newspapers are zero-rated, considering all the rubbish that they put out, but it applies to some useful things like food—because we are faced with this financial crisis. However, contrary to what the right hon. Member for Normanton, Pontefract and Castleford (Yvette Cooper) said, the pain is shared. I agree that a VAT rise is regressive, and we did not want to do it, but we have increased personal allowances, and in doing so ensured that is not the rich who benefit.
I pay tribute to my right hon. Friend the Secretary of State. Who has done more than him to try to raise people out of the poverty and unemployment trap? Who has done more than he in setting up the Centre for Social Justice? Who has done more than he to visit all these areas and try to create a benefit and tax system that encourages people into self-reliance, self-help and self-belief, and does not trap them in sink estates without a job and without hope for the future? He has been working on this problem for more than a decade. Now, at last, he has a chance to put some of his ideas into action, and we welcome him to the Front Bench.
I understand the long and proud record that the Secretary of State has in this House. Does the hon. Gentleman understand, however, that some Labour Members have not just been there for 10 years, but have lived this? We lived this same experiment in the 1980s and we saw the devastating impact on the people we represent—the people who had to pay for the failure of the Government at that time, when unemployment was not a price worth paying in the areas where I and many other Labour Members come from.
Nobody doubts the hon. Gentleman’s commitment to relieving poverty, but does he think that the system that we have at the moment is perfect? Of course it is not. We are trying to create a fairer system in which there are real opportunities to create a society where people are given incentives to climb out of unemployment, despair and poverty. That is what this Budget is trying to do.
It is right to speak for the poor, but it is also right to speak for the many people who earn and who are creating jobs. Rightly, this will affect everybody earning more than £50,000—by the way, everybody in this Chamber will be £1,500 a year worse off—so it is not simply the case that only the poor are paying for this. Everybody, all the way up the income tax scale, is having to pay for our difficulties and helping us to climb out of this mess. Everybody in this nation is having to pay, and that is absolutely right. I also like the fact that this Budget is starting to create the conditions in which we can have a fairer tax system in which there is less churning of money and less of a deep unemployment and poverty trap. By all means let us raise personal allowances, and let us then try to move towards a flatter and fairer rate of taxation.
I will finish shortly, as each of us has very little time. First, let me make a point about much of the work that I was trying to do in the last Parliament to try to get efficiency in Government. We still have not got there. Does anybody think that we would have got into this mess if we had had a better Budget system? We need a triple lock. The Budget process that we have in this House is still not transparent enough. In the last Parliament, I tried to persuade the Liaison Committee that we should have a powerful Budget committee—a committee of this House—to which a Government Department should go when proposing to increase legislation. We should look at that and debate it in an open forum, not just have one minute per amendment, which is what we get with the Finance Bill. Does anybody think that our Budget process is, for example, as good or as powerful as the congressional one, whereby the President proposes and Congress disposes, and there are hundreds of hours of meetings?
We already have a good audit process—one of the best in the world—in the shape of the Public Accounts Committee, but we do not have the equivalent of the PAC inside Government. Frankly, the Treasury has not been strong enough in resisting waste, inefficiency and incompetence in Government spending. The Treasury has been overwhelmed, and the process is largely paper-based. We need a kind of star chamber—a PAC—so that when my right hon. Friend the Secretary of State or any other Minister come up with a proposal, they have to go before it, in private, to justify that proposal and to be hounded by senior Members saying, “Is this spending efficient? Is it properly piloted? Above all, are we reducing complexity in Government?”
Some of us think that complexity is so inherent in Government, with the civil service having this relentless itch always to try to control and regulate, that there is no way out of this, but I do not believe that. I believe that we can create a social security system which, although simpler, is fairer and provides more incentives. I believe that we can strip away whole areas of complexity. It will be a mighty task, but I believe, given all my right hon. Friend’s experience and all the work he has done, that nobody is better placed to carry out that work over the next five years.
The worst statistic of all is that last year, of the 85,000 children in receipt of free school meals, whom we should be helping more, only 45 got into Oxbridge, which is fewer than those who came from just one school—that attended by the Leader of the Opposition. That is the true demerit of what we have been creating in the past 13 years.
My hon. Friend is absolutely right to draw the House’s attention to that statistic. Likewise, the number of children who go from care into higher education is also a shameful figure. I therefore strongly endorse the ambition of my right hon. Friend the Secretary of State for Work and Pensions to tackle the deep-rooted causes of poverty in this country, and to tackle the twin aims of lessening the scale of social breakdown and improving the quality of life of the poorest in our society. If our Government achieve nothing less, they will have served our country in achieving that.
In my constituency, where we have recently suffered job losses, and where we also have low skill levels, lower-than-average pay and high welfare dependency, the problems are real and they are about people, not statistics. Hundreds of children in Peterborough live in dysfunctional families, their parents on welfare benefits. Those children lack ambition, a focus and, often, a moral framework, going without anything other than peremptory familial love and experiencing, through no fault of their own, an inevitable poverty of imagination, as well as, too often, material poverty. Dedicated teachers, nursery staff, health professionals and members of the extended family, such as grandparents, are often forced to assume a role in loco parentis. I believe that we have a moral duty to those children to do something about the situation, even if not to their often indolent and feckless parents.