(12 years, 4 months ago)
Commons ChamberWe have heard the same old stuff from the hon. Gentleman for the last 42 years. Perhaps it is time for him to help youth unemployment by creating a vacancy. We are providing young people with more help to get into work, with an extra quarter of a million apprenticeship places. I would have thought he would have welcomed the fact that the city of Sheffield enterprise zone is at Markham vale in his constituency. That is the sort of practical action this Government are taking to ensure that jobs are being created.
Will the Minister explain to employers—in Bolsover and elsewhere—that as of this month there is a youth contract that will pay them to take on unemployed young people?
(12 years, 4 months ago)
Commons ChamberI will make some progress.
For the reasons that I have given, pensioners from the National Pensioners Convention have come to Parliament today to lobby MPs to vote against the change. Let us take each issue in turn and consider who will be hit, because there has been some myth making by defenders of the granny tax about how only well-off pensioners will be affected. The truth is, those who will be hit have very modest incomes.
The hon. Lady refers to the “granny tax”. I know that she, like me, would really like to see older women retiring with the same income as men over time. Does she therefore accept that 60% of the effect of the freezing of the age-related allowance will be on men and 40% on women, so it should not really be referred to as a granny tax?
The money involved will not alleviate the pressure on women in retirement. It will all be used to give a tax cut of £40,000 to 14,000 millionaires. The hon. Lady talks about women in retirement, and it was Government Members who voted to increase the state pension age for women with just five or six years’ notice, hitting them by up to £15,000 in lost retirement income. We will not take any lectures from them about the matter.
I am conscious of the time, Mr Bone, so I will keep my speech short. May I start by congratulating my hon. Friend the Member for Leeds West (Rachel Reeves) on her excellent introductory speech? What she said clearly reflects the views of Labour Members.
The Chancellor’s granny tax is certainly the aspect of the Budget that has caused the most anger among my constituents. As we now know, the Chancellor’s plans, which were buried in the Budget smallprint and described as a “tax simplification”, will mean that 4.4 million pensioners who pay income tax will lose an average of £83 per year next April, with people who turn 65 next year set to lose the most, at up to £322. This measure will affect pensioners on modest incomes of between £10,500 and nearly £30,000, with pensioners on incomes above the higher threshold being unaffected by the change. The pensioners in my constituency I have spoken to about the granny tax are really angry about the Chancellor’s decision to hit them in this way. It seems obvious to them that it cannot be right that while putting up taxes for pensioners, the Government are giving the rich a tax cut. My constituents simply cannot understand why, after they have worked hard all their lives, the Chancellor is now targeting those on low and middle incomes in retirement in order to fund a tax cut for millionaires. As one constituent put it to me recently,
“I sincerely hope you and your colleagues do not support this granny tax and you fight for all our pensioners who worked all our lives to help this country. I am 71 years old and thought I had seen it all, but this is the pits, so do your job and kick this out.”
Has the hon. Gentleman shown his constituents the article in the Financial Times headed: “When is a tax not a tax? Answer: when it’s ‘the granny tax’?
The article says:
“let’s calmly consider what has actually happened…In fact, grannies have retained their cherished position within the UK tax system: they will continue to be allowed more tax-free income than other members of the population—and for at least another three years”.
Has he shared that article with his constituents?
I must confess that I have not shared that article from the Financial Times with my constituents, who, like me, are more avid readers of the West Lothian Courier. As we know, the increase in inflation, high fuel, energy and food prices and the VAT increase up to 20% have eroded any increases given to pensioners by the Government.
I am delighted to be able to tell the constituent whom I have just quoted and all the others who have contacted me about this issue that we on the Labour side of the Committee are trying our best to do exactly that today. In other words, we will do our job and kick this proposal out.
That point was very well made. I am never surprised by the ability of people to brush over things. We have heard this afternoon that this is a minor technical change. As I said, I am quoting the BBC itself—[Laughter.] I know that Conservative Members are not always the greatest fans of the BBC, but it states that
“it is a ‘middle-income’ range of 40% of pensioners who will not get what they might have expected from the tax system.”
Much as we all love and admire the BBC, not everything that it puts on its website to do with benefit changes is accurate. I am sure that the hon. Lady would want to find a more reliable source.
Would the hon. Lady like to intervene on me again, then, and say what proportion of pensioners will be affected, if she thinks the BBC is unreliable?
A BBC website had a wholly inaccurate story yesterday about the changes to employment and support allowance, so it is not an accurate source. That is the point I am trying to make.
Is the hon. Lady therefore saying that the proportion is not 40%? She indicates that she does not know—that is fine.
I defer to the parliamentary private secretary to the Financial Secretary, my hon. Friend the Member for Reading West (Alok Sharma). [Interruption.] At least he is at the moment.
The hon. Member for Denton and Reddish (Andrew Gwynne) made a very important point about crossing the Rubicon of undermining the universality of child benefit. The same point was made earlier by my hon. Friend the Member for Christchurch. Some time ago, the Child Poverty Action Group said this about child benefit:
“A benefit which goes to virtually all children is of course expensive. But it can also be argued that it is more likely that such a benefit will have ‘substantial and wide-ranging support’, and may be difficult to abolish; provision for the poorest children only, whilst cheaper, is often more precarious.”
Specifically, intergenerational redistribution and the value placed on children are universal values that we are seeking to undermine.
What would my hon. Friend say, though, about the example of two wealthy Americans who have four children born in this country who receive child benefit tax-free from the UK Treasury, but have to pay tax on it to the internal revenue service?
My hon. Friend makes a valid point and I accept her argument, but we need to look at this proposal within the context of the wider proposals in the Budget. We are rightly reducing the top rate of tax and corporation tax, so for those in the upper 20% income range we have introduced fiscal policies through which we seek to support entrepreneurship and business, supporting those higher-rate earners. We are also proud to be taking a substantial number of poorly paid working people out of tax. My concern is that we are not extending those same tax breaks to the squeezed middle and it is a very important message that we are sending. I accept that the Chancellor has tackled the specific issue of the cliff-edge effect, but he has not done enough to secure my vote in terms of the discrepancy regarding the one taxpayer in a two-person household.
(12 years, 4 months ago)
Commons ChamberI do not know how many times I need to keep telling the hon. Gentleman this, but the simple answer is no. He should turn to page 2 of the document, which clearly says that this rate raised £1 billion; he should turn to page 39, which says that it raised £1.1 billion; he should turn to page 51, which says that it will rise to £3.1 billion next year. These would be the static costs. It goes on to say—[Interruption.] No, £1.1 billion is the actual amount lost to the national accounts as a result of this change. That is a fact. It is not uncertain; it is a fact. The Treasury thinks that the money would have gone up to £3 billion, rising to £4 billion subsequently.
Can the hon. Gentleman confirm that his party’s next manifesto will contain a pledge to restore the 50p rate?
When we get close enough to the next election to write our manifesto, we will write it, and the hon. Lady will be able to see it then. That is the simple answer to her question. Can she tell us exactly what will be in her party’s manifesto at this stage? I do not think so, and I do not intend to tell her what will be in ours. We will decide.
I wonder what the Tory manifesto will say about the NHS and VAT at the next election. I suspect that it will not say that the Tories will look after the former or fail to increase the latter, because no one would believe them any longer, would they?
Let us be clear. The document says that £3 billion would be the static cost of a cut in the rate to 45p. It also says that the behavioural change based on the magic of Arthur Laffer’s cocktail napkin calculus would generate £2.9 billion. Unfortunately, as I have said, HMRC is not terribly certain about that, which is why it has covered its rear so often.
I promised to give the Committee a few examples of the use of the words “uncertain” and “uncertainty”, which occur more than 30 times in the document, and I cannot resist doing so, because they are so juicy. The document states that
“the yield estimates were highly uncertain.”
It states:
“There is considerable uncertainty over the true level of the elasticity.”
It states:
“The incompleteness of returns at this stage gives the results and conclusions a margin of uncertainty.”
In fact, there is so much uncertainty in it that there is a separate section entitled “Areas of uncertainty”. My personal favourite appears on page 38, where uncertainty is expressed about the uncertainty. In an attempt to estimate the behavioural effects, the document states:
“The level of uncertainty associated with this estimate is therefore driven by the uncertainty of all the other stages described above.”
Why is the document so uncertain? The reason, in short, is taxable income elasticity or TIE. The Treasury decided that the appropriate TIE for the calculation of a £100 million loss was 0.45; not the standard number that the previous Treasury had used, 0.35, and not—I look forward to an intervention on this point—the standard numbers used in the vast welter of academic research which puts a delta at between 0.12 and 0.4. The figure of 0.46, which is used in this Treasury document, is at the very top end of the possible delta. Even if it were true that 0.45 is appropriate, however, the uncertainty would still be enormous. All we need do is shift the figure slightly to 0.35, and what do we find? Not a £100 million loss, but a loss of £700 million. If we shift it nearer to the 0.12 that has been used in many United States studies, we see a loss to the tune of between £3 billion and £4 billion.
Paul Johnson, director of the Institute for Fiscal Studies, told the Treasury Committee, whose report was published only today, that the Treasury’s
“central estimate… is incredibly uncertain, to the extent that we think that its estimate suggests there is only a two-thirds probability that a revenue-maximising rate lies between 30 per cent and 75 per cent.”
That is what the IFS had to say about what the optimal rate might be on the basis of the Treasury’s calculus. Mr Johnson continued:
“Those numbers are absurd in some sense, but that gives you a sense of the level of numbers of assumption and uncertainty that underlie what”
the Treasury
“has done.”
It was the highest income tax rate in the G20. We heard earlier from the Opposition spokesman that Labour did not understand the effect that that would have on our international competitiveness, which shows why it is not fit for office.
Did my hon. Friend share my shock at hearing the Opposition Front-Bench spokesman arguing that the sensitivity of the top rate of tax is static? The logic of that argument is that the top rate should be 75p, 80p, 90p or, perhaps, even 100%.
Yes, and perhaps some Opposition Front-Bench Members should move to France, where they might find that such policies are more conducive to their way of thinking.
At this time of increased international competition and great movements of people and capital around the world, and with new economies rising such as in India and China, according to the World Economic Forum Britain is 94th in the world in respect of the effect and extent of our taxation. One factor in that is the top rate of tax under the previous Government, and another is the extremely long tax code, which is a result of their meddling with our tax system over many years.
The UK is 11% less productive than the G7 average, and our skills base is lower than that of the US, France and Germany. If we are to become competitive again and improve our productivity and skills, we need incentives for people in this country to work and to invest in their skills, and we need to rebalance the tax system away from income tax and taxes on work such as national insurance, which the previous Government increased. We also need to reform our education and welfare systems and take the 2 million lowest earners out of tax, in order to give everybody more incentive to work. We must also merge our income tax and national insurance system to make things simpler for employers. We need to get rid of the previous Government’s flagship 50p tax rate as well, as it has done so much damage to people in this country who are seeking to work, to invest and to be part of building our future economy.
The Government have made it clear that we want shareholders to have proper control over executive pay in their companies, and that must happen. People must be rewarded in line with the skills they use, the risks they take and the income they generate. We need incentives for people to set up businesses, and to create and produce more. We also need to look outside Britain and see what the rest of the world is doing. We need to move away from the myopic approach that it does not matter what is going on elsewhere. If our country takes that approach, we will not succeed.
I am listening to my hon. Friend’s excellent speech with great interest because of his expertise as a tax accountant.
Tax lawyer even. Was he as surprised as I was at the £16 billion to £18 billion of forestalling measures taken after it was preannounced that the rate would rise to 50p?
Very much so. My hon. Friend makes a good point. It is also in the OBR report. These are the forestalling measures—[Interruption.] Labour assumes that people forestall for only one year and that the income will suddenly pop up the following year. That is not what really happens. Often people will take a long career break. [Interruption.] I shall give the hon. Member for Pontypridd, who is chuntering from a sedentary position—
(12 years, 5 months ago)
Commons ChamberI want to return to the “nascent recovery” in just a moment, but first I should say that I was particularly pleased to hear the Minister refer to a number of successful growth industries including publishing, and in that connection I should draw the House’s attention to the Register of Members’ Financial Interests.
Before turning to the question of growth—or, more accurately, my concern about the lack of it—I want to say a word about the 50p rate of tax, since I introduced it. At the time, I said it was a temporary measure. I did not particularly want to introduce it, but I took the view that, at a time when we were asking many people in this country to share the burden of meeting the increased cost of the downturn, it was right that those who had done well over the previous 10 years or so should bear their fair share of it. I do not have a philosophic attachment to that rate at all, therefore, but this is not a Budget in which I would have returned to the topic, simply because the incomes of many other people in this country are currently being squeezed and they are going to lose out this year. I would have tried to do something about their position first.
The documentation that the Treasury has produced on the measure reminds me of the stuff that was produced for the five tests in respect of the euro, in that so much evidence has been adduced in support of the Government position. Why did they not just say that they philosophically did not want the 50p rate so they were going to cut it? As the OBR says that its calculations are highly uncertain and it is very difficult to estimate behavioural effects, especially after only a year, and given that there are so many uncertainties and there will be so much forestalling, it is difficult for the Government to say, “Look, this wasn’t actually raising anything.” At a time like this, I think the fact that the rate brought in £1 billion and that we are talking about smaller sums in relation to some of the welfare reforms means that the Government cannot simply write it off. If they want to bring the rate down to 45p, that is fine, although I am bound to say that I have never understood the argument that someone will still work harder if the rate comes down to 45%, yet they will also work harder if they are told at the same time that they will be paying five times as much tax in the future. That seems a very odd argument to run.
I thank the right hon. Gentleman for making these interesting points. Was he as shocked as I was to see that, as a result of the measures that he introduced as Chancellor, there was £16 billion to £18 billion-worth of forestalling in 2009-10?
Inevitably, there is some forestalling and there will be an awful lot more of it this year when people realise that they will pay a lesser tax rate next year. The hon. Lady makes a point, but perhaps not the one she intended.
The real problem we face as a country is the lack of future growth. I am concerned about that, because our borrowing levels are still high. The Chancellor is still having to borrow £150 billion more than he set out to borrow in his first Budget, in 2010, and his room for manoeuvre is very slight. He has given away about £2 billion this year. He says that he is going to get that back in two years’ time, but £1.5 billion of it is coming out of the reserve. That is not normally what we would expect a Chancellor to be doing if he is saying that he is conducting his finances in a prudent manner.
Of course, a lot of what the Chancellor is saying is dependent on cuts still to be specified—he used to criticise us when we did not specify these things. An awful lot more cuts are yet to be implemented and yet to be specified. When the Budget figures show that borrowing will be only £1 billion less than the Government thought, it is easy to see that we are right on the margins at the moment and that, unless we get growth going, the chances are that that borrowing will increase, not decrease. The need to get growth going is paramount.
We are already on plan B, in that what the Chancellor announced in his autumn statement last year was rather different from the course he set out on 12 months earlier. We are also relying heavily now on monetary policy—on quantitative easing and the Bank of England continuing low interest rates—to try to bring about a recovery. I welcome some of the things that the Government have done, but it is sobering to read the OBR analysis that the Budget will have a limited effect on growth. The best it can say is that the cutting of corporation tax will get us 0.1% of growth, which shows how much more the Government have to do.
I do welcome some of the measures the Government announced. Of course we are in favour of the patent box, which we introduced. It is very impressive that GlaxoSmithKline was, within hours, suddenly able to decide that it would open new factories and new production. It is just a pity that some of the new investment will take three or four years, if not longer, to be put in place. I also certainly welcome what was done for the creative industries. The deputy leader of the Labour party, who spoke for us earlier, made the point that I introduced a number of these proposals in 2010. They were rubbished by the coalition in 2011, but they are back again in 2012, and I wholeheartedly support them. I am also glad that the Green investment bank is coming to Edinburgh, and I hope that it will be up and running fairly quickly.
Turning to the other end of the country, the Government’s recognition that they have to look again at airport capacity in the south-east of England is welcome. It is a difficult issue, it is 10 years since we looked at it and we need to get a move on with it. However, a lot of the measures that have been announced are small or will not be implemented for a long time. Public investment is set to drop. I hope that the private sector comes in on infrastructure and so on, but unless we do more we are simply not going to get the investment we need.
Lastly, I wish to discuss the cloud hanging over us all—Europe. At the moment, we have something of a lull, as it has gone out of the headlines, but the problems have not gone away. We should all be grateful for what the European Central Bank has done, as it almost certainly prevented at least one, if not two, banks in continental Europe from getting into trouble earlier this year. However, the deep-seated problems that Spain has, that Italy has and that Greece has have not gone away. I hope that we will use whatever influence we have to try to engage with the eurozone, so that, for once, they get ahead of the game, because until that happens, that situation will hold back our prospects of growth even more.
This is a Budget that rewards work from a Government who are making work pay, and I want to express on behalf of the small businesses in Malvern and the surrounding cyber valley in my constituency the enthusiasm that exists for taking advantage of the opportunities for growth and the lower taxation rates for small businesses.
Since today’s debate is the technology debate, I point out that in my constituency we have a growing cyber sector. There is an enormous amount of business growth, and it is estimated that 500,000 jobs will be created in the sector over the next decade. Those jobs are great for young people. There is enormous demand among firms in my constituency for teenagers who may have spent a lot of time in their bedrooms on their computers and have become ethical hackers. People in my constituency with those skills are snapped up by local businesses. Perhaps that is why the number of unfilled jobcentre vacancies in West Worcestershire rose by 70% last month, which shows that there are a lot of businesses with the confidence to take on an additional employee.
As a member of the Select Committee on Work and Pensions, I wish to make a point about the Government’s introduction of universal credit. We have talked a lot in these debates about the top rate of tax, but let us think about the rate that those on the lowest incomes had to pay for 13 years under Labour. Page 95 of the Red Book shows that the marginal deduction rate for a lone parent with one child working more than 10 hours was 100%. We are changing such disincentives to work by moving to universal credit, which will be very powerful in helping those on the lowest incomes into work and out of poverty.
I want to make the rather controversial statement that despite the bad press on behalf of pensioners on Thursdays, this Government have done more to help pensioners and future pensioners than any other Government in history that I can remember. First, there is the triple lock on the state pension, which will increase pensions every year by the higher of inflation, 2.5% or earnings. That is worth an enormous amount to today’s pensioners—no more 75p increases.
Did my hon. Friend, like me, hear the shadow Chancellor appearing on the Vine show during the week? The first person who came on after he had spoken was a pensioner, who denounced him and his measures.
My hon. Friend will also have heard in the Budget that we are abolishing the means test, which has been such a disincentive to saving for low-income pensioners, and bringing in a powerful simplification of the state pension. That will be worth much to future pensioners.
The Government are also introducing auto-enrolment, which will bring 5 million additional savers into the occupational pensions market. That is a most important step to strengthen the pensions system, and it has cross-party support.
Most important was what the Budget did not do. It did not make further changes to pension taxation and regulation, such as the amount that people can defer from their salaries to take as future retirement income. That is an important point for the overall stability of the system. Did you know, Mr Deputy Speaker, that under the previous Government it was possible to put £250,000 into your pension fund? That was absolutely extraordinary, and I welcome the fact that this Government have lowered that limit substantially so that pensions provide fewer tax reduction opportunities for those on the highest incomes.
Finally, the Government have taken some difficult decisions on overall pensions policy and made some sensible changes that will stabilise the pensions system and make it more sustainable for the future. This is a Budget that rewards work and is good for business, and I urge all hon. Members to walk through the Lobby this evening to support it.
(12 years, 5 months ago)
Commons ChamberUrgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
Given that the centrepiece of the Chancellor’s Budget yesterday was an increase in the personal tax allowance that gives a tax break to 24 million people on low and middle incomes, and given that that was in the coalition agreement, does the Minister agree that a journalist would not need to be Sherlock Holmes to speculate that that increase would be in the Budget?
(12 years, 5 months ago)
Commons ChamberI am just coming to the issue of the top rate of tax. The Chancellor tries to claim that the top rate of tax does not raise any money, and that he is raising in stamp duty and tax avoidance five times the cost of cutting the top rate of tax. But his own HMRC report makes the true position clear, in table A2 on page 51. It says that next year he will give £3.01 billion in tax cuts to existing and legitimate top rate taxpayers, paid more than £150,000. That is a fact. That is six times more in tax cuts to the richest than he is raising in the stamp duty and tax avoidance measures. He is gambling that this will then bring in £2.9 billion in new tax revenues from people currently not paying tax, without any hard evidence to justify that claim—an estimate that the OBR says in the Budget documentation is “highly uncertain” and could lead to a much higher cost.
The head of the OBR said last night:
“This is a judgement based on not even a full year’s data based in terms of how people have responded to the 50p rate, in particular in terms of those self assessment tax-payers.
The costing of these sorts of changes is by no means unarguable”.
Just a few weeks ago, the Institute for Fiscal Studies said:
“If the future of the 50p rate is to be determined on the basis of evidence...then Budget 2012 will be too soon to form a robust judgement.”
Another expert has said on these matters:
“Some believe that if taxes on the wealthy are cut, new revenue will miraculously appear. I think their reasoning is this—all those British billionaires who demonstrate their patriotism by hiding from the taxman in Monaco or some Caribbean bolt-hole will rush back to pay more tax but at a lower rate. Pull the other one.”
That was the Business Secretary speaking to the Liberal Democrat conference last September. Pull the other one indeed. A £3 billion tax cut giving £10,000 each to 300,000 taxpayers and we are supposed to believe that all these people in tax havens are suddenly going to say, “I want to pay more tax.” Let me say to the Chancellor, “Pull the other one, it’s got bells on.”
May I therefore assume that a 50p tax rate will be in the shadow Chancellor’s next manifesto?
There will be a vote next week, and we will vote against the 50p change. It is the wrong tax cut at the wrong time. I have always said that no tax rate is set in stone, but how can anyone believe it is right to take tax credits from working families, child benefit from middle-income families and more tax from pensioners, but give £10,000, on average, to every top rate taxpayer in the country? If there were a general election tomorrow, our manifesto would state clearly that we would reverse it. That is the clearest answer I will give.
(12 years, 5 months ago)
Commons ChamberI do agree with my hon. Friend. As I have said already, it is a question of fairness. This measure asks a couple to do what a lone parent has always had to do, and I think that is fair.
Can the Minister confirm that, under the current system, a single parent who is offered more than 16 hours’ work a week by his or her employer would face a marginal withdrawal rate of up to 97%, and that such anomalies will disappear with the change to the universal credit?
My hon. Friend makes a very fine point, and she is absolutely right that the reform paves the way for the universal credit, through which this Government are proud to be tackling the incentives that make work pay.
(12 years, 6 months ago)
Commons ChamberThe problem was the US sub-prime mortgage market, and that the failure of regulation there rippled around the world. There were failures also of lending and regulation at Northern Rock here in Britain. I do not in any way deny that there were failures here in Britain and failures of regulation, but I do not accept that it was solely a UK failure, because it happened in America, France, Germany, Japan and all around—
I will make some progress and take both interventions in a minute.
I understand why politically the Chancellor is so keen to blame the structure of UK regulation—the tripartite relationship between the Bank, the Treasury and the FSA. He wants to claim that his particular institutional reforms are the solution, but my advice to him is to be very careful indeed, because this was not a peculiarly British crisis; it was a global crisis. It hit countries with tripartite systems of regulation, quartet systems, twin peaks, more powerful central banks, less powerful central banks and statutory and non-statutory regulators alike, and it was not a failure of regulatory structure, but a collective global failure to see the risks inherent in the structure of the global financial services industry.
We heard from central bankers earlier, but Alan Greenspan, the former chair of the US Federal Reserve and architect of the US system, when asked by The New York Times about his and the world’s understanding and management of risk, said:
“The whole intellectual edifice…collapsed”.
He was right. It was not simply a failure of structure, but a flaw in the way regulators understood the financial system, and that is why the British Bankers Association is right in its submission on the Bill to say that
“we consider that successful regulation depends more on regulatory culture, focus and philosophy than structure.”
On that very point, I should like to understand where the right hon. Gentleman is coming from in his objections to the Bill. What was his philosophy in terms of separating the supervision of banks from the Bank of England, which has day-to-day responsibility for monitoring that canary in the goldmine—their day-to-day funding operations?
I am going to come on to explain my analysis. I am not sure I fully understood the question, but I might as time passes.
At its heart, the regulatory failure of the global financial crisis was not a failure of one approach to the institutions of regulation, but a failure of understanding and risk assessment which covered central bankers, regulators and Treasuries throughout the world. That line is not in the Conservative party Whips’ briefing, but it is absolutely true none the less.
(12 years, 7 months ago)
Commons ChamberWe expect that that policy will be additional in the sense that it is extending it to disadvantaged two-year-olds. We expect 130,000 disadvantaged two-year-olds to be assisted by the 15 hours of free child care, and we certainly expect local authorities to take sensible decisions with the limited resources that they also have.
With 2 million children living in workless households, does the Minister agree that the essential steps include not only the additional child care places, but the universal credit and the fact that every hour of work will count towards increased reward for the household? That is an essential part of those fiscal measures.
I certainly do agree with my hon. Friend, and on a couple of counts. First, poverty is not about income: it is about work. I am sure that she will agree that it is a crying shame that under the previous Government the number of children in workless households reached one in every six. I also agree with the chief executive of The Big Issue, who says in The Times today that
“You don’t help the poor by making them dependent on handouts”.
(12 years, 7 months ago)
Commons ChamberAs I understand it, the EU’s ambition is to develop a trans-European network in transport, telecommunications and energy as part of the treaty on the functioning of the EU. It therefore wants the budget for 2014 to 2020 to include sufficient funds to put an extra €50 billion into a connecting Europe facility. However, it also wants to regulate EU-wide programmes. Specifically, on transport, it is proposing that member states commit to a core network by 2030, and to a comprehensive transport network by 2050. The EU estimates that it would cost Britain between £64 billion and £137 billion to meet those targets over that period. Does the Minister believe that if such a regulation were to come into force under qualified majority voting, it could force Britain to spend that amount of its own resources in a way that would be directed by the EU? That would be an astonishing outcome.
On energy, the Commission believes that member states need to spend €200 billion on electricity and gas networks alone, and that €1 trillion is needed for EU energy infrastructure in total. Will the Minister tell me what proportion of that the UK would be required to spend, and whether that requirement would be enforceable at EU level under QMV?
On telecoms, the EU target for rolling out broadband is different from that of the UK. The Commission believes that there are telecoms bottlenecks that hinder the single market. In the light of our own recent commitment to rolling out superfast broadband, I would be interested to know whether the Minister thinks that the British Government need the EU’s advice or the Commission’s targets on how, and to what level, we roll out superfast broadband here. Are those legitimate areas for the EU to be involved in, or are they domestic matters? Does the Minister see a pan-European angle to these questions or not?
What is the Minister’s view of top-down EU expenditure, made entirely at the taxpayer’s expense, as opposed to private sector, or combined public and private sector, investment? Is he aware of any efforts by the Commission to test private sector interest in some of its pet schemes? What proportion of the roughly €7 billion that Britain’s taxpayers would contribute to the connection fund would be spent here, where there is a huge backlog of infrastructure needs, rather than elsewhere in Europe?
I want to make three broad comments on the proposals, in support of the motion. First, I find it astonishing that the European Commission seems to be the only bit of Europe in which the recession, the financial crisis and the issues of sovereign insolvency have passed unnoticed. It is as though it were inhabiting a parallel universe.
Does my hon. Friend agree that the cost of moving from Brussels to Strasbourg on a regular basis is an ideal budget item to be struck through before forcing member states to spend money on these proposals?
Yes, I completely agree with my hon. Friend’s excellent idea. That would be high on my list of bits of wasteful bureaucracy to get rid of.
What sort of parallel universe is the European Commission inhabiting, if it thinks it reasonable to be expanding the European budget for 2014 to 2020 in the current climate? Why is the EU seeking to take power and control over these particular policy areas, at a time when they are already high on our own Government’s agenda? Requiring Britain to contribute to EU funds is not acceptable, and giving the Commission the authority to require Britain to make expenditure on its own domestic projects is equally unacceptable.
My second point is that the EU has proved itself time and again to be an inefficient allocator of scarce resources. In regard to structural funds, Open Europe estimates that Britain has contributed €33 billion between 2007 and 2013, and that we have received roughly €9 billion. If we took back control over that €33 billion, we might well wish to continue to contribute to the poorer EU member states—that is, those with a national income of 90% of the average or less. However, if we had contributed the same amount to those poorer member states, we could also have spent the same €9 billion that we received from the structural fund, creating a £4 billion saving. If Britain had allocated that same amount, €9 billion, to its own regions, plus the same amount to the poorer EU states, there would have been a £4 billion saving that could have gone towards reducing our deficit or investing further in the poorer regions of the UK. The difference identified by Open Europe’s estimate is a result of the leakage due to the recycling of cash between the richer countries.
It is interesting to note that the Department for International Development spends about 4% of its budget on administration, with a target of 2%. By contrast, the EU Commission spends 5.4% of its contributions to overseas aid on administration. No doubt it is very conscious of that figure, as it has been singled out for comment.