Jobs and Growth
Gavin Shuker Excerpts(13 years, 1 month ago)
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Ed Balls
To be fair to the hon. Lady, she is half on message, as she was back in January when she called for national police cuts, but not in Norfolk. That is little better than her neighbour over the border, the hon. Member for West Suffolk. I am in favour of the dualling of the A11. I personally wish we had done that, given that we did a lot of road-building and investment, but for some reason Norwich City season ticket holders did not have a strong enough voice in this House. Perhaps Mr Charles Clarke is to blame.
Gavin Shuker (Luton South) (Lab/Co-op)
Is my right hon. Friend as outraged as I am by the series of east of England Tory and Liberal Democrat MPs who choose to ignore the massive cuts to programmes such as Building Schools for the Future, which would have rebuilt schools in their own areas?
Ed Balls
My hon. Friend is being unfair. The hon. Member for West Suffolk campaigned to reverse the cuts in Building Schools for the Future, as we know. To be fair to the hon. Member for South West Norfolk (Elizabeth Truss), she has campaigned for fewer cuts in Norfolk. If only she did not take such a regional view.
Mr Osborne
I shall make some progress and then take some more interventions.
I shall touch briefly—because we covered this during Monday’s statement—on the situation in the eurozone. I set out on Monday what I felt was needed and what many in the world now feel is needed: we need to ring-fence the eurozone by giving its bail-out fund maximum power; recapitalise Europe’s banks when they are weak; resolve the situation in Greece; and then set out the path to the political and economic changes required to make monetary union work, with greater fiscal integration and improvement in competitiveness on the periphery. I said that Britain wanted no part in the fiscal integration, but that we want to protect our say in the single market, financial services and competition issues. We also want the whole of the UK to become more competitive—with a more complete single market and freer trade.
Since Monday’s statement, we have had the news that the Slovakian Parliament has voted down the proposed changes to the eurozone financial fund—the European financial stability facility—which is clearly a disappointment. We all hope that it will pass in the coming days and urge the Slovakian Parliament to pass it. What has also been disappointing in the past couple of days is the suggestion from the President of the European Commission that Britain should make a direct contribution to eurozone bail-outs. Britain chose not to join the euro and the British Prime Minister has fought hard to get Britain out of the bail-out fund to which the previous Government signed us up. I want to make it clear that whatever the Commission President says, British taxpayers will not be contributing to the eurozone’s bail-out of Greece—full stop. However, we will work with our eurozone partners to help them to resolve the crisis and work with our international partners in institutions such as the IMF to ensure that they have the resources to deal with the problems across the world.
I said that the first thing missing from the shadow Chancellor’s speech was a credible deficit plan, but there was—
Mr Osborne
Let me make just a little bit of progress and then I shall give way.
There was an absolutely staggering second omission from the shadow Chancellor’s speech, which was any reference—I will take an intervention if I have got this wrong—to Labour’s big new economic policy idea, which was unveiled at the Labour conference two weeks ago. I am referring, in case hon. Members have forgotten, to that great plan to divide British businesses into producers and predators—good and bad—and to levy different tax rates on them. Remember the speech from the Labour leader? Did the shadow Chancellor have any part in writing that speech?
Mr Osborne
No, and not even in my memoirs, because the conversations between the Chancellor and the Governor of the Bank of England should be confidential. However, let me make it absolutely clear to the hon. Gentleman that we are talking about an entirely independent decision by the Monetary Policy Committee—not just the Governor of the Bank—and that I followed exactly the procedures established by my predecessor.
Mr Osborne
No, I will make some progress and then perhaps take an intervention from the hon. Gentleman.
We did not hear today about the big Labour idea on the economy that was unveiled two weeks ago. Hitting businesses with more taxes and more regulation at a time like this is absolutely the wrong thing. The way to help businesses to create jobs is to give them competitive tax rates. That is why we have cut corporation tax this year—we have three more cuts to come—and why we have reversed the proposed Labour increase in the small companies tax rate and frozen business rates for all. It is also why we have set up a series of schemes to help unemployed people who have either just lost their jobs or never had a job into the labour market by getting them work. We have launched the biggest back-to-work scheme that the country has seen in 80 years and funded 250,000 more apprenticeships and 100,000 work experience places. Today we have launched the new sector-based work academies to help tens of thousands of young people with training and job interviews. Youth unemployment in this country has been rising since 2004. The last Government did next to nothing to confront it; we are rolling up our sleeves and getting stuck in to sort out this long-term problem for Britain.
Global Economy
Gavin Shuker Excerpts(13 years, 3 months ago)
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Mr Osborne
Small businesses are, of course, the engine of job creation in our country. As I have said, 500,000 new jobs have been created in the private sector over the last year. That is the second highest rate of job creation in the G7. As for specific help for small businesses, we avoided the increase in small business taxation that the Labour party included in its last Budget.
Mr Osborne
The hon. Gentleman shakes his head. He obviously did not know that there was to be an increase in small business taxation. We have cut it.
We have also introduced support for the exports of small business. A central part of the strategy developed by Stephen Green as trade Minister is helping small businesses to export. I have already mentioned the Merlin lending agreements with banks, which are beginning to bring about an increase in lending to businesses that simply was not happening last year.
National Insurance Contributions Bill
Gavin Shuker Excerpts(13 years, 10 months ago)
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Mr Hanson
That is absolutely right. One of the key tenets of any objective in society has to be that if we set out on a course of action for which we have clear objectives, as the Minister has, then we need, at some point in time, to evaluate whether it has achieved what was claimed for it. The Minister’s objective is to ensure that this scheme benefits areas with high levels of public sector employment that are losing jobs because of public spending cuts. The annual report would show progress towards that objective. This is not meant to be threatening to the Minister—it is simply meant to say to him that the information that he will have, we should have, as a matter of course, so that we know exactly what the scheme has achieved. There is nothing wrong with that. We support the scheme. We are not complaining about the scheme—we are simply saying, “Let’s look at how it has operated in practice.”
Amendments 5 and 6 deal with the same issue in a different way. I suggest in amendment 5 that we should consider reducing the end of the scheme’s operational period from 2013 to 2012. That is not to say that we should stop the scheme in 2012, but that we should, as suggested in amendment 6, review it at the end of December 2011 and
“may extend the relevant period until 5 September 2013.”
The Minister’s scheme may well take off—the 400,000 businesses that he anticipates taking it up do so, and his objectives are being clearly and specifically achieved. However, it is also possible that only 200,000 businesses will have taken up the scheme by the end of the first or second year, and it might then be appropriate for him to amend it accordingly and consider widening its scope. Amendments 5 and 6 offer the Minister the opportunity, without scrapping the scheme, to evaluate it at a break point in December 2011. It is worth our examining whether the take-up he has promised has been achieved and, if not, whether we need to expand or modify the scheme accordingly.
The Minister has indicated that public sector employment is key to his objectives. The constituencies of Edinburgh South; Liverpool, West Derby; Glasgow North; Wansbeck; Wirral West; Blackpool North and Cleveleys; Plymouth, Moor View; Birmingham, Selly Oak; and Glasgow North East are in the top 10 on the scale of public sector employment. If, at the end of two years, there has not been business take-up in those constituencies, but there has been take-up in constituencies much lower down the scale, that would be a reason to review the operation of the scheme.
It may be appropriate to consider including London, the south-east and east region in the scheme. If the Minister cannot do that today through later amendments, he could consider doing so at a later date, and the proposed review point in the scheme would give him that opportunity. The Thames Gateway London Partnership, which is made up not only of authorities under Labour control but those under Conservative and Liberal Democrat control, says in a briefing sent to Members of this House:
“We urge the government to commit to an annual review of the National Insurance Holiday scheme. At this time should the minister find that some areas currently benefitting from the scheme already have a high rate of business survival and a low level of public sector job dependence we would urge him to consider retargeting the measure to allow some of the more deprived authorities in the Thames Gateway to take advantage of the benefits conferred by the scheme.
That reflects amendments that I will come to later. The briefing gives an example that is of particular interest to my hon. Friend the Member for West Ham:
“At a Local Authority level, Newham, which has a public sector employment level of 33.6% would not be eligible for the proposed NI Holiday, however, Macclesfield, which has a public sector employment rate of only 11.8% will benefit from the National Insurance holiday”.
Those issues could be reflected on and taken into account during the break in the operation of the scheme proposed in amendments 5 and 6.
The Minister would have my full support—even if he cannot accept including London, the south-east and east today—if he came back to the House in a year’s time to say that the Government had reviewed the scheme, come up with an annual report, and as a result would like to extend it to Luton South, Walthamstow, Lewisham Deptford, Ilford South, Luton North and Leyton and Wanstead, to give but six constituencies of Members in the House today. I am sure that my hon. Friends would welcome that move from the Minister; they would even say well done to him, invite him to visit the new businesses in their constituencies and cheer him from the rafters. I know that he would appreciate that greatly. I see no reason why he cannot say that he will review the scheme, even if he cannot accept the inclusion of other regions under later amendments. If the review shows that the benefit from the national insurance holiday is going to constituencies with low levels of unemployment, deprivation and public sector employment, he should consider bringing in those other constituencies by extending the scheme to a wider area.
Gavin Shuker (Luton South) (Lab/Co-op)
Those figures might also draw out the effects on constituencies that border areas that are covered, where there might be a differential effect on job growth and creation, which is an issue that came up in Committee.
Mr Hanson
Indeed. My hon. Friend knows that there are issues relating to the borders between London, the south-east and east and other regions, because there could be differentials relating to new businesses. He made that important point in Committee, and the hon. Member for Portsmouth North (Penny Mordaunt) has made it in parliamentary questions to the Minister. On Second Reading, Government Members asked questions similar to mine on why the scheme was not applicable to their regions.
I am not being aggressive, but am trying to give the Minister a chance to listen to the case. I hope that he accepts that there is a case for producing information, so that he can evaluate it and so that we as taxpayers know how the almost £1 billion of resource has been spent: where it is going, who is benefiting from it and how, and what levels of employment it is creating and where. Amendments 5 and 6 give the Minister an opportunity to have a break after about a year to review the scheme formally and to consider the issues that we will discuss later, which are important to my hon. Friends.
It does not matter where one is unemployed, because an unemployed person is 100% unemployed. For the Minister to say that we do not need to worry if public sector jobs are lost in London, the south-east and east, or in other regions of high employment, and that the scheme does not apply there, is not a positive way forward. I hope that he reflects on the proposals genuinely. I know that he is a reasonable chap and that he will consider them positively. He knows that the Bill will be considered in another place and that these matters can be discussed there, if not agreed today. I believe that a sensible case has been made for the proposals—although I would say that—and I commend them to the House and the Minister.
Gavin Shuker
Will the Exchequer Secretary confirm that the evidence we took in Committee shows that there are no technical restrictions on looking at the postcodes of qualifying businesses and therefore on providing that information? In other words, restricting the information would be an ideological rather than a technical decision.
Mr Gauke
It is not an ideological position. I am finding it surprisingly difficult to convince Labour Members of my point—or perhaps they are not prepared to be convinced of the fact that people do not necessarily work in the constituency in which they live, and that it would therefore be wrong to try to make a big case about the number of employers in a particular constituency being low compared with the number of people living there, and their not benefiting from the scheme.
Sheila Gilmore (Edinburgh East) (Lab)
It has puzzled me slightly over the years that successive Governments, and the Treasury in particular, have been so reluctant to engage in hypothecated funding. I know that there are arguments for and against it, but one of the main arguments for it—as has been borne out by the changes in 2003 involving the hypothecation of increased national insurance contributions—is the building of public support for the deed itself. It is true that if we want good services we must pay for them, but people want to know for sure that their money is going where they think it is going.
People in Britain tend to say that we should have Scandinavian-style public services with American-style taxes, but the two simply do not fit together. Scandinavian-style public services come with high taxation. If people can feel confident that their money is going where it is most needed, they will be much more committed to spending it. As I said earlier, I have not always understood why even my own party’s Governments have not necessarily been particularly keen on that point of view. It seems that Members have been captured by the Treasury as soon as they have become Treasury Ministers. However, an innovative step has been taken.
Amendment 8 does not ask for the national insurance increase to be hypothecated at this stage. It merely suggests that the door should be left open, and that if it proves impossible to reach the health service spending target to which the Government have committed themselves, it should be possible to use the national insurance increase to ensure that that commitment can be fulfilled.
Gavin Shuker
Have not the Government already accepted the case for the hypothecation of national insurance contributions for the health service? Does not the amendment merely seek to help them along the way by ensuring that the hypothecated funds end up in the right place so that they can fulfil their own commitment?
Sheila Gilmore
It is true that they have not chosen to retreat from the path taken by the previous Government, but the amendment gives them an opportunity to use the fresh, additional contributions if that is required.
The Government have taken a huge step forward in accepting that more money needs to be spent on the health service. For some years, when we were in government, one of the themes that emerged from the then Opposition was that spending lots of extra money was not making a difference. According to them, lots of money was going in at one end, with no indication that anything good was happening at the other end. I perceived that as a sort of softening up: they were telling people that they would still have a good service if they did not spend as much on it. Now, however, there seems to be a recognition that the money is important, and that spending is necessary after all.
That approach is vindicated by the increase in public support for the health service over the past 13 years. According to the findings of a 1997 survey, the level of public satisfaction with the service then stood at 34%. When the same question was asked in 2009, it had risen to 64%—the highest level since the study was first conducted, well before 1997—which showed that people really appreciated what was happening to health spending. I urge the Government not to put all that at risk, but to leave this opportunity open by accepting an amendment that would allow them to meet their own health spending targets and ensure that we do not lose people’s current satisfaction with the NHS.
Dr Creasy
That is a very good point. I am talking about the public sector workers who are most at risk of redundancy. The people who live in my constituency may not do the same jobs as those who work in the public sector in Edinburgh. They are teaching assistants, nurses, and people working in inclusion units and Sure Start. They are losing their jobs because of the cuts that are being made in local and national Government. People such as civil servants—who knows, perhaps they include the admin assistants in the Minister’s offices—fear for their jobs. They are looking to the Government, who say that the private sector will pick up the pieces following the cuts in the public sector, and they are asking how that will happen. In my region, the answer is very unclear.
This policy could be part of the remedy, and that is the aim of the amendment. It asks, “How can we generate jobs? What are the motives that lead people to set up businesses and industries that generate jobs in the private sector?” Many of us share an interest in whether the private sector could generate jobs as part of the recovery. We think that the policy has failed that test, and needs to be amended. Excluding London and the south-east means excluding a key wealth-creating element of our national economy, and we feel that that is remiss.
I also think that the Government have been remiss in excluding the voluntary sector and charities, and in Committee I supported amendments seeking their inclusion. According to the National Council for Voluntary Organisations, if the voluntary sector could benefit from the change of policy on national insurance holidays, an extra 2,500 charities could be created. Perhaps even more could be created through the big society, given the interest in how the voluntary sector could work in public sector commissioning. Cruelly, however, they have been excluded. The questions “Who are the people who are generating jobs?” and “Where are the places where people who are losing their jobs in the public sector can best find employment in future years?” have not been answered; the test has not been passed.
I ask the Minister to consider amending the policy in the way we have suggested, not least on the basis of his own evidence. He will recall that, in Committee, I was particularly concerned about the way in which the Government had constructed the policy, and the evidence on which it was based. He himself has described it as an uncertain benefit, and his officials have admitted that they did not have much evidence on which to assess whether they could reach all the people whom they wanted to reach, or involve all the businesses that the Minister had hoped to involve. In the impact assessment, the Minister said that he hoped that the policy would help 400,000 businesses, but he has admitted today that only 1,500 have applied so far. In Committee, one of the officials suggested that the number of applications would increase at the remittance stage, but that is not job creation. The jobs would have already been created, and people would be applying retrospectively for remittances. That suggests a challenge to the status of the policy as a job creation measure.
According to the Minister’s own analysis, the inclusion of London and the south-east might well make possible the creation of an extra 300,000 businesses. Before he says that there is no extra money, let me suggest to him that the creation of those extra businesses might enable him to meet his target of 400,000 over the three years. He could then return to the House and reassure all of us who are concerned about the efficacy of the policy that it had succeeded in generating new business in the United Kingdom and forming a key part of our recovery. Let me also encourage him to consider the extra tax take that the Treasury would gain as a result of the creation of all those new businesses, as well as the fact that all the extra national insurance funds could be spent on the national health service or on pensions, as he desired. There are many benefits in considering how the Bill could be amended to include London and the south-east. Let us think about all the people who would be affected by the jobs that this would create, the money it would bring into our national Exchequer and, above all, the economic recovery it could help drive.
I therefore hope the Minister will accept the amendments and acknowledge that they have been tabled in good faith. They are motivated by a genuine desire to make sure this policy is effective. Whether or not we agree with the Government—and we certainly disagree with many of the changes they want to make—I hope the Minister will understand and share our concern that jobs must be the first priority of any British Government in the current economic climate.
Gavin Shuker
I believe these amendments would make a real and fundamental difference to people in my constituency who wish to start their own businesses—to people who are creative and dynamic, and who want to have the opportunities that come from not being at a disadvantage to those running businesses in other parts of the country.
This Bill seeks to bring about a social benefit. There is a reason why national insurance contributions are going up. They are going up to help bring down the deficit, which is important. The structural deficit needs to be tackled over time. There is a further aspect to the Bill, however: it is also about trying to rebalance the economy.
The Minister has been very clear about his desire to see public and private sector employment rebalanced in various regions, but I personally do not have a problem in this regard, because for me a job is a job. I do not think people in the public sector should be in any way disadvantaged or looked down on because they work in the public sector rather than the private sector. We accept that private sector jobs should be generated, however, because Opposition Members believe that economic growth is the way to tackle the deficit, not slash-and-burn economics.
We accept that under the Government’s plans to reduce the number of public sector workers by about 500,000, those of us in areas with high public sector employment will need more businesses coming up and through. My point is simple, therefore. Across wide swathes of the greater south-east, including the Luton seat I represent, there are areas of very high public sector employment and high unemployment, and the Minister would do well to accept these amendments in order to ensure that we are not disadvantaged, which we are. That would be a positive step.
I agree that legislation has a role to play in helping to moderate behaviour. We want more businesses coming up and through. In Committee, the Minister made a number of salient points about the complexity that might be added by including regions such as the greater south-east, but we are not just in politics to administrate. We are in politics to make a difference. We are in politics to ensure that everyone in this country has a job they enjoy and through which they can generate both wealth for their family and self-worth, and it is unfair to the people in my constituency, and to others in the east, the south-east and London, that they should be exposed to this great disparity.
We in Luton have a number of particular issues with this proposed legislation. First, we have great transport links, which is a positive. It is why businesses like to locate in Luton. However, those same transport links also allow people to travel outside Luton to set up their new businesses, meaning that people in Luton who need a job cannot find employment. We have a young and creative work force; they are the kind of people who want to get stuck into building new businesses, and I am constantly amazed by the range of new businesses I see in my constituency. They are innovative, professional young people who want to establish businesses and set out on their own path, but they are going to be disadvantaged by these measures.
Luton has areas of deprivation, and we also have high public sector employment; that is certainly the case in the constituency of my hon. Friend the Member for Luton North (Kelvin Hopkins), as well as in Luton South. It would be deplorable to say to the people in my constituency that if they move 15 or 20 minutes up the train line or on the roads they will get a £50,000 golden hello, which they would not get if they set up their business in Luton.
Labour Members who represent seats in the greater south-east are willing to make a stand. We want to stand up for our constituents and constituencies, and to talk about our creative people. I hope that the Government will support these amendments, and that Conservative Members will want to stand up for their constituents as well, and say that this disparity is wrong.
In Committee, the Minister discussed why this exemption is being applied and spoke of a constrained budget. We could tackle that in a number of ways, and the amendments take account of them. Obviously, we could address the amount of time on the scheme, the number of businesses that engage in it, the percentage rate of take-up and the number of employees that the businesses take on. I urge the Government to re-examine the matter and find a way to include the greater south-east in this arrangement.
I make my final point to ensure that we are not in any doubt. The Committee took evidence from the assistant director of Her Majesty’s Revenue and Customs, who made it clear that it is possible to check where people are in the scheme. There was a high level of postcode accuracy about businesses, so it would be possible to re-examine this. As his first point in thinking again, I urge the Minister to consider the greater south-east as a region. It has great disparity between parts and constituencies, containing areas of deprivation, areas with high public sector employment and areas with high unemployment. He should say that those areas are just as deserving as the others represented here today.
Mr Gauke
In this group of amendments, the right hon. Member for Delyn (Mr Hanson) has returned to a matter that was debated extensively on Second Reading and in the Public Bill Committee. I commend him on his persistence, but I expect that he will not be surprised with my response, given the Government’s position, which I have set out in the earlier debates.
The amendments relate to the regional nature of the national insurance contributions holiday, a matter that was raised during all the earlier stages of our consideration of this Bill. Amendments 1, 2, 3 and 4, if taken together, would make the holiday a UK-wide scheme. The NICs holiday is aimed at helping the formation of new businesses employing staff in those countries and regions most reliant on public sector employment. The reason why the Greater London, east and south-eastern regions are excluded is that the proportion of the population in public sector employment is lower in those regions as a whole than in any other part of the UK. We also estimate that a national scheme would increase the costs by about 70%.
Gavin Shuker
I, like many hon. Members, have followed the debate extremely closely. When the changes were first announced in June, I authored an early-day motion that stated the inadequacies of the Bill for the greater south-east—the south-east, the east and London. On Second Reading, I flagged up my concerns and in Committee we looked at the evidence in greater detail. The Bill will have a real impact on my constituents, and on those of hon. Members from across the House. In particular, it will impact on people in the greater south-east.
Obviously, we accept the Treasury’s need for more national insurance income to sort out the structural deficit. Although we are not opposed to the legislation and will not press for a Division, I still have a number of concerns that it is important to place on the record.
First, I believe that the Exchequer Secretary’s motivation is confused. We have heard contradictory statements. We have head that it is about rebalancing the economy; we have heard that it was decided which areas should receive a holiday to match the price tag that was set for the policy; and we have heard that it is about simplicity. Clearly, it would be simplest to implement the scheme for all new businesses across the country, yet that is not the scheme we are looking at.
Secondly, I believe that the implementation of the scheme is flawed. So far, just 1,500 applications have been received. We all hope that every eligible new business will take up the scheme, but the target of 400,000 for the next three years seems a long way off, given the current trajectory. The simplest approach would have been a blanket scheme, and that would have been simple to communicate to new businesses. Certain groups will be disadvantaged by the holiday: the east, south-east and London will be disadvantaged, and, as was discussed in Committee, charities who employ people will miss out compared with businesses. Also, as we discussed earlier, the NHS, for which some of the money is hypothecated, will not benefit to the extent we believe it should.
Thirdly, I believe that the spin relating to the Bill has been conflated. The Exchequer Secretary said that he is not implementing Labour’s jobs tax. However, there is a 1% increase, and it is important for this place to acknowledge that. The scheme will have an effect on businesses in certain areas. Although we accept the need to find fair and just ways to reduce the deficit, I am worried about some of the rhetoric about public sector jobs. Public sector workers not only support their families but serve us. Whether a job is in the public or private sector, people should be able to have pride in it.
Finally, I believe that the analysis that comes out of the legislation will be flawed in a number of ways. We tabled amendments calling for a report and more information on the effectiveness of the scheme, but we will not receive the constituency-level data we would like. They would enable us to compare data for future reference, so that after, say, three years, we could consider how we might wish to implement the scheme again, whether it was worth extending or whether the time for which it was in place should be reduced. Instead, we will have to go through a laborious process of tabling parliamentary questions and will not be able to examine constituency-level data as a whole. That is a real shame.
The Exchequer Secretary says that in this case simplicity should outweigh justice and that the simplest way to balance the scheme is to exclude certain groups. I do not believe that that is the case, but we accept that there is a need for the scheme, and for that reason the Bill will go forward tonight.
I have one question for the House, though: what is just about business men and women in my constituency, an area with deprivation, losing out compared with those setting up businesses in other constituencies just 20 minutes away up the train line? I do not believe that there is a whole load of justice in that. I ask the Minister to think again as the Bill proceeds, and I know that if he does, living where he does, he will receive the thanks of a grateful constituency.
National Insurance Contributions Bill
Gavin Shuker Excerpts(14 years ago)
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Gavin Shuker (Luton South) (Lab/Co-op)
As a new Member of this House, I am learning an awful lot of lessons, including the one that says never attempt to follow my hon. Friend the Member for Ealing North (Stephen Pound) at the end of a long debate, so I will keep my remarks characteristically short.
Like many Members, I was surprised to find myself as one of the MPs for the greater south-east—a new region of which we are all delighted to be a part, particularly those of us in the east of England. Joking aside, this Bill will have a serious impact on my constituents in Luton South. Luton is my home town; it is a jewel in the east of England and businesses like it.
A 2010 survey showed that access to a strategic road network, rail networks and Luton airport and its proximity to London are all great for business. None the less, we have problems, too. Even as a jewel in the east, we suffer from unemployment. Jobseekers’ allowance claimants form 7.5% of the population—it has risen over the past couple of years—compared with an average of 4% in the wider east. Median earnings are £350 a week in Luton compared with £410 a week in the rest of the east.
The east is a vastly disparate area. I am reminded of that when it takes me two and a half hours to drive to Norwich and two hours to Cardiff. It is a vast area as well, but it gets the same blanket national insurance conditions under this Bill, which is surely unfair.
Being at the margins of the east is also a problem. Those same road and rail networks that make Luton an attractive place for business can help its creative work force to leave—and to receive a £50,000 golden hello for setting up a business elsewhere. If the purpose is to encourage jobs in the non-excluded areas rather than in the greater south-east, then areas at the margins will be disproportionately affected. For places such as Luton it is a double whammy because there will be public-sector job losses over the coming years and a less competitive environment in which to establish a new business. Indeed, it is a triple whammy because Luton’s great road and rail networks will encourage people to move 15 or 20 minutes away to establish their business, and the area will lose valuable new jobs at a time of rising public sector unemployment. That is why I sponsored early-day motion 537, which said:
“That this House notes that the Government’s decision to introduce a Class 1 Employer National Insurance exemption for new businesses in regions other than the East, South East and London will have a negative effect on growth in those areas collectively termed the Greater South East; further notes that in areas which border, or have good rail and road links with non-Greater South Eastern town and cities, the strategy positively encourages entrepreneurs to start new businesses away from their own communities, breaking community ties and vastly increasing unemployment; and further notes that the same strategy fails to recognise the vast disparity within the Greater South East region, where some towns and cities experience levels of unemployment and deprivation that are equal to or worse than the parts of the country that will benefit from this scheme.”
The disparity within regions is the key point. Luton’s businesses will be hit hard as will others across the south-east. Potential new businesses will be affected. Some 82% of Luton’s businesses employ fewer than 10 members of staff, which are exactly the sort of operations that this policy is meant to help in other parts of the country. Again, more than four-fifths of local businesses do not have sites elsewhere in Luton. These are Luton-based businesses run by Luton people, and they will be hit before they even have the chance to get started.
The Government argue that anything other than the binary distinction between south-east and the “other” would be too difficult a distinction for the boffins at the Treasury to work out. In response to the hon. Member for Gosport (Caroline Dinenage), the Exchequer Secretary said that the measure
“is targeted on countries and regions within the UK where reliance on public sector employment is at its highest. For practical reasons the Government have no plans to introduce national insurance contribution exemptions for smaller geographical units.”—[Official Report, 10 November 2010; Vol. 518, c. 359W.]
I hope that in Committee, the Government will be open to considering different models or different, more graduated distributions of the national insurance holiday schemes. Changing the ratio is the stated ambition of the Bill. The data for it exist for local authority areas, which are explicitly listed by name in the Bill. Will the Government choose to look at that as an option for applying the changes? My constituents in the Luton local authority would be extremely grateful if they did so.
In summary, the Government have chosen to favour some people, some businesses and some communities over others. Although I understand that there are pros and cons to such an approach, to apply that choice as a blanket holiday over vast swathes of the country, meaning a £50,000 golden hello for some businesses just 15 or 20 minutes away from the borders of my constituency, will have a negative effect on Luton South. Such an approach does not fulfil the other part of the Government’s stated bargain, which is that if a business loses out by having higher national insurance rates on new start-ups, that will be offset by living in an area that is already doing better when it comes to higher public sector employment. As we heard from my hon. Friend the Member for Luton North (Kelvin Hopkins), his constituency is in the top 10 seats for public sector employment rates, so his constituents will be affected.
In short, if the Government scheme is to favour some areas over others, and it does not work, it will be a waste of money and parliamentary time. If it does work, it will hit my constituents hard and unfairly—judged by the Government’s own criteria. A reasoned amendment will not be moved tonight, and Opposition Members will not oppose the business as it goes forward. We accept that responsible national insurance increases will be required to address the deficit. None the less, I hope that the Government will have the courage to look at the distribution of this holiday so that the hard-pressed and creative people of Luton are not the victims of a Tory triple whammy.
Finance Bill
Gavin Shuker Excerpts(14 years, 4 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Lammy
The hon. Gentleman knows that this is robbing Peter to pay Paul—I am sure that his mother said that to him. One cannot give to people on the one hand and take a damn sight more in VAT on the other, and he knows it. I am talking about people such as the Uddin family, who live on the Broadwater Farm estate in my constituency. I am grateful to the TreeHouse charity for asking me to spend a Friday afternoon with a family in my constituency, dealing with the issue of autism. Because of the context of this Budget and the Finance Bill that flows from it, I was, of course, examining the wider issues that surround this family.
It was privilege to go to the Broadwater Farm estate, which I have known all my life, as I grew up and spent many years there. It was a privilege to go up the stairwell to the 15th floor to spend time with the Uddin family. In that two-bedroom flat was Mr Uddin and his wife, a family of five children and a niece. There were eight of them in this flat surviving on income support of £322 a week and struggling with a five-year-old autistic child. I was the bearer of bad news, because I had to explain to them that Mr Uddin, who cannot work as a result of an injury at work—he was a chef in an Indian restaurant and he had a serious back injury—would face a new medical test in order to get the disability living allowance that made up that £322. I had to explain to them that once again—I recalled this from my own background—their child benefit would be frozen. I had to explain to them that the price of living would go up because extra VAT would be whacked on their household goods and items such as school uniforms. I had to explain to them that the toddler element of the child tax credit and the element for their new five-week-old baby had been taken away. That was worth £1,000 to many families across the country. The Uddin family would be experiencing huge hardship as a consequence of this Budget.
It gets worse. What the Uddin family would dearly love of course is better housing. The prospect of better housing in London as a consequence of this Budget is dark indeed. That brings me on to the real test of what is progressive and what is fair. The cap on housing benefit will have the most pernicious effect in this city. Rents in London boroughs such as Islington, Camden and Westminster can run into the many hundreds of pounds, so there will inevitably be an exodus from zones 1 and 2 to zone 3. My constituency already has 20,000 on the housing list, more than 3,000 in temporary accommodation and, as I speak, more than 800 in emergency accommodation. It will become even more crowded. There will be no prospect of the Uddins moving anywhere, particularly when, as we would expect, Conservative local authorities in London continue to refuse to build. Guess what? Westminster council built just 200 affordable homes in the last year for which there are records. The Royal Borough of Kensington and Chelsea built just 100; Richmond built 127; Wandsworth just over 300. That is the record on affordable housing. It is very bleak indeed. The Mayor has made not one representation on the housing consequences of this Budget.
Gavin Shuker (Luton South) (Lab/Co-op)
Does my right hon. Friend agree that beyond metropolitan areas such as London the Government’s decision to take away the regional spatial strategies that allowed councils to work together to deliver affordable housing will have a profound effect on the way in which we manage the problem of affordable housing?
Mr Deputy Speaker
Order. That was wide of the mark. May I ask hon. Members from time to time at least to mention things contained in the Finance Bill.
Gavin Shuker (Luton South) (Lab/Co-op)
Thank you for calling me, Mr Speaker. I am constantly amazed by this Chamber. I had had ambitions to speak in this debate today, but I now discover that it is tomorrow—[Hon. Members: “No, it’s still today.”] Of course it is not tomorrow; it is still today. That is another surprise. I shall keep my remarks characteristically short.
We have been looking at two opposing risks in the debate today. The one that has been mentioned most by those on the Government Benches is that we would find ourselves in a debt crisis as a result of a lack of confidence in the cuts that we are making. I might have a different view from those on the Government Benches. The other risk is that we will cut too deeply and take out investment that would otherwise go into growing our economy. To remove the bulk of the structural deficit, as the Government have chosen to do, reflects one of those positions very strongly. However, it does not reflect the fact that we must walk a path between those two risks. We must find a way.
I was pleased to stand for Parliament on a manifesto commitment to reduce the deficit by half over four years of the next Parliament. That struck me as a good route to take between those two risks. To go further than that, as the Government are choosing to do, is ideological. We all have different ideologies—I understand that—but at a time when risk is such an important aspect of the debate, not to recognise that fact is deeply worrying. Today, we have been talking about VAT, capital gains tax and insurance tax. There is one other tax that I would like to talk about tonight.
Jim Fitzpatrick (Poplar and Limehouse) (Lab)
My hon. Friend makes the good point that those on the Government Benches are offering an alternative view on the Finance Bill. However, we have not heard very much from them for a considerable period of time. Does he think that they have run out of arguments to defend their position, or that we are actually winning the arguments and that they will vote with us in opposing the Bill’s Second Reading tonight?
Gavin Shuker
I thank my hon. Friend for that intervention.
I represent the east of England in my constituency of Luton South, and there is another tax that will have profound implications for my constituents. It is the change in national insurance. I am one of only two Opposition MPs representing the east of England and, as of Budget day, I represent part of what the Government now call the greater south-east. I am sure that hon. Members can imagine how delighted I was to receive that accolade but, having never heard of the greater south-east, and given that I live there, I decided that I should find out more about it.
I learned that, contrary to the coalition’s view that our area is so affluent that, even in the most serious downturn of the past 60 years, it needs no Government support, it houses some of the most deprived wards in our country. It should be recognised, as some on the Government Benches have chosen to do tonight, that the inequality within regions can be as great as the inequality between regions. For example, the Dallow ward in my constituency stands in stark contrast to Elstree, one of the most affluent wards in the country, through which I pass every day on my commute to Parliament. Both are in the greater south-east.
I have also learned that, of all the regions in this country, the greater south-east is the most likely to have vital infrastructure projects shelved. Given the VAT rise and the other measures in the Bill, this will have a really profound effect on the inhabitants of the region. Investment in infrastructure is a far better way of kick-starting economies than cheap, short fixes and making cost savings. Indeed, the independent Office for Budget Responsibility accepts that growth projections must be downgraded as a result of the coalition’s plans.
Most importantly for the people living in my constituency, I have learned that if an entrepreneur wanted to start a new business in the greater south-east, they would find themselves some £50,000 worse off than if they had started their business elsewhere. Let us be clear about the impact. For my constituents in Luton South, that means that moving just two stops up the train line or two junctions up the M1 would effectively give them a £50,000 golden hello for starting up. This Government would deprive our region and our town of new jobs and businesses, and fresh opportunities for growth.
Rising unemployment often hits the poorest and the youngest hardest. Indeed, my right hon. Friend the Member for Tottenham (Mr Lammy) spoke passionately about his experiences of growing up at a time when he faced a double whammy of weak growth and spending cuts, along with increased taxation, and he pointed at the profound effects on the local economy—not just in the short term, but in the long term as well. All things being equal, who would not want to establish their business within a few miles of their own home? Who would not want to employ people from within their own community?
These plans are a missile aimed at the heart of the recovery in the east and in Luton South. As glamorous as “the greater south-east” sounds, I simply have to tell Government Members that the continued membership of this region simply does not serve our constituents. Given a choice, I would like to continue to be a Member representing the east of England.
Dr Thérèse Coffey
Speaking as a fellow Member from the east of England, and one representing Suffolk Coastal, I am finding it difficult to understand the hon. Gentleman’s argument that we are disincentivising the growth of employment, given that we have reduced the threshold for employers’ national insurance. Surely that provides an incentive, not a disincentive. I would appreciate some further clarification on why we are disincentivising employment.
Gavin Shuker
I thank the hon. Lady for her intervention. I do not want to give a geography lesson here, but the point I am making is that there is disparity within a region, as some areas are more affluent than others. That applies locally as well as regionally, and some parts of regions are much closer to other regions. For example, in Luton South, we have a particular issue about bordering an area that will not be affected by the £50,000 incentive I mentioned for starting a business.
Mr Jones
One of the economic drivers in Luton is the success story of Luton airport. Does my hon. Friend agree with me that the Budget’s proposals to increase insurance premium tax from 17.5% to 20% is going to have a terrible effect on that success story, as Luton airport employs huge numbers of people in his constituency?
Gavin Shuker
I thank my hon. Friend for his characteristically timely intervention, rightly making the case that within these green pages tonight are a series of measures that will have a profound effect on each individual constituency. In Luton South, I could pick out the particular effect on the airport and I could talk more about our position within the UK. In each community and in each constituency, we will have to go back to our constituents and explain why we voted either for or against the measures in the Bill. I for one will vote against the Bill, and I would like to encourage Government Members from the east of England to do so as well. If they do, they can go back to their constituents with their heads held high and say that they stood up for their constituents and their region on a night like tonight.