EU Referendum: Timing
Iain Stewart Excerpts(8 years, 10 months ago)
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Iain Stewart (Milton Keynes South) (Con)
I am grateful for the opportunity to contribute to this debate. I congratulate the right hon. Member for Belfast North (Mr Dodds) and his colleagues on introducing this important topic and exploring some of the genuine issues of concern in a very moderate and civilised way.
Whatever date is eventually chosen for the referendum and the campaign period, there will always be perfectly good arguments that can be made against it. In this country, by democratic tradition, we narrow down a lot of the time for holding elections to when it is sensible to do so. Traditionally, unless there is a period of emergency, we have them in the spring, early summer or autumn. There are perfectly good reasons for that. It is not pleasant to be out knocking on doors and delivering leaflets in the wilds of winter. It is important to respect the times when different parts of the United Kingdom have their summer holidays. For example, I would not suggest that we hold a referendum in July because that would clash with the Scottish holiday period, or August in the case of England.
Patrick Grady
The Scottish referendum was held very successfully in September when we had longer evenings, warmer days, and the full summer period in which to campaign. That would give us more of the time and opportunity that the hon. Gentleman is talking about than a June date.
Iain Stewart
If the hon. Gentleman is suggesting that he would like a roadshow visit from my hon. Friend the Member for Stone (Sir William Cash) or my right hon. Friend the Member for Wokingham (John Redwood) to entertain his electors over the summer, he is very welcome to it.
The point I am making is that there are a relatively small number of periods when we can sensibly have an election.
Alex Salmond
I understand the hon. Gentleman’s point perfectly, but, as a matter of interest, what are the arguments against an autumn date, as specified by the right hon. Member for Belfast North (Mr Dodds) in opening the debate and as mentioned by my hon. Friend the Member for Glasgow North (Patrick Grady)?
Iain Stewart
I will happily answer that. First, I am not in charge of selecting the date, and I have no objections to June or September. I am merely saying that there are a number of considerations that we have to bear in mind.
Another consideration, more generally, is that there is a delicate balance to be struck between allowing a sufficient period of time for all the arguments made by both sides of the campaign to be properly explored and challenged, and not having so elongated a campaign that we bore the electorate to death or create such a long period of uncertainty that it is unhelpful to our economy. I am not arguing that it should be 23 June, or 18 September or whatever it would be at that time of year, because that is not my job; I am saying that it is about a balance of different considerations.
Ms Tasmina Ahmed-Sheikh (Ochil and South Perthshire) (SNP)
Where do the views of the First Ministers of all the devolved Governments fit into the balance of considerations that the hon. Gentleman mentions?
Iain Stewart
That neatly leads me on to the point I was about to make.
In relation to purdah, we have heard about the potential overlap between the Scottish Parliament campaign and the referendum campaign, if the date were to be 23 June; that is hypothetical. I will make two observations on that. First, whenever purdah is, it will be disruptive to the usual governance of the UK Government, the Scottish Government, and the Governments of Wales and Northern Ireland. If it were to be in September, it would cause disruption to the legislative programme of whoever forms the Scottish Government after May. There is a case to be made that it would be less disruptive for one period to immediately follow the other. The Scottish and other Governments could then get on with their full programmes without interruption, rather than being blocked in the autumn. I would also point out that, to avoid future election clashes, the length of the next Scottish Parliament has been extended by a year, so the Scottish Government have more time than was originally envisaged.
Iain Stewart
If the right hon. Gentleman will forgive me, I have taken a few interventions and have a limited amount of time left.
I am not an expert on what Governments can and cannot do during purdah, but I hope we can have a sensible debate so that if a purely domestic Scottish matter that would have no impact on the EU referendum needs to be introduced during purdah, a way could be found for that administrative work to continue.
There is a precedent on this matter, namely the alternative vote referendum, which was held on the same day as the Scottish, Welsh and Northern Ireland elections in 2011.
Iain Stewart
I am not arguing that the elections should be held on the same day—we have accepted that they should be held on a separate day and that there should be a minimum of six weeks between them and the referendum—but there are lessons that we can extrapolate from that campaign. The Electoral Commission report on the 2011 AV referendum specifically addresses the issue of media coverage, which a number of Members have raised, and it concludes that it was not an issue. Paragraph 3.60 states that there was
“no inherent disinclination on the part of the media from Scotland, Wales and Northern Ireland…to cover the referendum; rather, the elections were considered to be a greater priority than the referendum.”
The right hon. Gentleman and his colleagues should not be worried about the capacity of the Scottish media to cover both the Holyrood elections and the referendum over the same period.
Iain Stewart
Forgive me, but I am down to my last minute and I want to conclude.
As my hon. Friend the Member for Blackpool North and Cleveleys (Paul Maynard) said, this debate is not starting from a zero base. The arguments about Europe are not new. People are already exploring them and have been doing so over many years and many election campaigns. They are perfectly capable of computing the arguments for the devolved elections and for the referendum at the same time. To be fair to the right hon. Member for Belfast North, he is not saying that they are incapable of doing that.
Ultimately, this comes down to a judgment of whether we as a country have the bandwidth in Government, the media and among our voters to make up our minds on the referendum and the devolved elections at the same time. My judgment is that we can perfectly well do that. America combines many elections—presidential, Congress, state and referendums—at the same time. If it can do it, so can we.
Spending Review and Autumn Statement
Iain Stewart Excerpts(9 years ago)
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Iain Stewart (Milton Keynes South) (Con)
In the welcome context of increased capital investment in transport, may I ask my right hon. Friend to say more about the progress of the Hendy review, particularly the east-west rail project that is vital to unlocking economic and housing growth in Milton Keynes and Aylesbury Vale?
Mr Osborne
Peter Hendy is doing an excellent job in sorting out the finances of Network Rail. We funded the projects in control period 5 and funded additional spill-overs into control period 6. East-west rail is an important project and it will go ahead.
National Insurance Contributions (Rate Ceilings) Bill
Iain Stewart Excerpts(9 years, 3 months ago)
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Iain Stewart (Milton Keynes South) (Con)
It is a pleasure to make a short contribution on this important Bill, which I very much welcome. The Bill has been criticised as being a gimmick, and it has been suggested that it is not necessary. Let me take Opposition Members back a few years to the 2001 general election, when the victorious Labour party pledged—on pledge cards and billboards all over the country—that there would be no increases in income tax. The country voted the Labour party in by a very large margin. Within a matter of months, however, the then Chancellor, Mr Brown, decided to increase spending on the NHS, funded by an increase in national insurance contributions. Technically he was correct—he did not put up income tax rates—but most people regard national insurance as a tax on income, so if the letter of the pledge was not broken, the spirit certainly was.
This Bill is important because, as many colleagues have said, it gives certainty to employers to plan ahead. If my hon. Friend the Member for Bexhill and Battle (Huw Merriman) wants to make a return visit to Milton Keynes, he will be very welcome to come to the job show that is taking place there this weekend; I have the great pleasure of opening it on Friday. Milton Keynes has seen an enormous increase in the number of new jobs and business start-ups in recent years, and we very much want that to continue. Giving employers this certainty on their national insurance contributions will be a key part of instilling the confidence they need to start up businesses and expand existing ones.
Another important measure in sustaining long-term jobs growth and investment is addressing the skills gap we have in this country. That requires more apprentices to be taken on by companies. We must bear in mind that this Bill is part of a package from the Chancellor, who announced an apprenticeships levy to help to fund the growth in the number of high-quality, long-term apprenticeships. That policy is in place in many countries, although it is not without controversy. Alongside that is the pledge to cut corporation tax for large and small companies and to give them benefits in not increasing their national insurance contributions. I very much support the Bill as part of this broader package, which is essential for the long-term health of job creation in this country.
European Union Referendum Bill
Iain Stewart Excerpts(9 years, 6 months ago)
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Mr Laurence Robertson (Tewkesbury) (Con)
Will the right hon. Gentleman give way?
Alex Salmond
I am very tempted to do so, but I can see that the Chairman is encouraging me to move on to our other amendments in this group, new clauses 3 and 4, on the whole question of how the Government should behave in a referendum campaign.
The members of this group of 56 speak from the standpoint of being totally united in our support for the European Union—we are pro-European to our fingertips —but that does not mean we would be willing to accept a referendum that was in any way biased or rigged by the Government. Just because they are pro-European, and the suspicion is that the Government may wish to bias the referendum in the pro-European direction, does not mean that that would be right and proper. It does seem to SNP Members that if the rules of purdah about the behaviour of a Government during an election campaign are correct, as recommended in the Political Parties, Elections and Referendums Act 2000 all those years ago, that must pertain during a referendum campaign as well. In new clauses 3 and 4, we have set out in some detail what a referendum code of conduct for the Government should be.
It is astonishing that the Government should think that the exclusion of any such restrictions from the Bill would be meekly accepted by a majority of Members in Committee. It is entirely wrong for the Government to do so. We have a very recent example of why it would be very foolish for the Committee to take the Government at their word in saying that they would not engage in behaviour that breached the normal standards of purdah in the upcoming referendum campaign.
Let us take the scenario or possibility that, at some point in the course of the referendum campaign next year or the year after, the no side moves to the front. In that scenario, let us just assume that, to try to get the yes result that the Prime Minister wishes, he needed a last-minute initiative. With no rules or restrictions saying that new political initiatives should not be made at governmental level during the last 28 days of the campaign, what would stop the Prime Minister doing a tour of the capitals of each of the Governments across Europe—suspending Question Time in the national Parliament—and stop their flying as one to London to announce a new commitment, a new undertaking, a new pledge, a new vow? A new vow might be made to the people of the United Kingdom saying, “Only if you vote yes will we secure these new terms, which we did not mention before the campaign started, but which we now, as good Europeans, undertake to offer to the people.” Let us just say that, under those circumstances, that vow was influential in persuading enough people, perhaps one in 20, to switch their vote and to vote in favour, and let us just say that, after the dust had settled, all those European leaders did not really want to go forward with the full extent of the vow they had made. How would people in the United Kingdom view that situation? Would it not be rather better for the Bill to state explicitly that during the last 28 days—and only during the last 28 days—of a campaign period, the people must be able to make a judgment on the arguments that are property presented, without the use of the governmental machine to bias the result one way or the other?
When the Government explain why they want to wipe away these rules, I hear them say, “Of course, Government cannot really function in a purdah period. We won’t be able to make representations to the European Council. It will be impossible to do so over a 28-day period.” But that is what happens in each and every general election that we fight. In April and May, I did not notice that the Administration of this country ground to a halt. In fact, a lot of people thought it was better not having a fully activated Government during the campaign period. If it can be done in each and every general election, it can certainly be done in this referendum campaign.
Even more insidious than the role of the Government in making political announcements is the role of the civil service. In normal times, the civil service quite rightly views impartiality as following the policies of the elected Government. That is what the civil service is there to do; it is not meant to be neutral on issues, but to follow Government policy. When it comes to the purdah or quarantine period in an election or in a referendum, however, it is the job of the civil service to be impartial over that 28-day period.
Oral Answers to Questions
Iain Stewart Excerpts(9 years, 6 months ago)
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Alan Mak (Havant) (Con)
8. What steps his Department is taking to (a) support savers and (b) promote home ownership.
Iain Stewart (Milton Keynes South) (Con)
13. What steps his Department is taking to (a) support savers and (b) promote home ownership.
The Economic Secretary to the Treasury (Harriett Baldwin)
The Government stand firmly on the side of people who want to work hard, save up, buy their own homes, and retire with dignity. We have increased allowances for individual savings accounts, introduced the Help to Buy scheme, pensioner bonds and pension freedoms, and taken 95% of people out of tax on their savings.
Harriett Baldwin
What a pleasure it is to welcome my hon. Friend to the Chamber. He is absolutely right: more people are employed than ever before, and mortgage rates are extremely low. As a result of our long-term economic plan, my hon. Friend’s constituents in Havant, and constituents elsewhere, can now aspire to own their own homes one day.
Iain Stewart
Policies such as Help to Buy have proved very popular in my constituency, but may I urge my hon. Friend to be more ambitious in the longer term? Will she consider expanding the shared-ownership model, which enables people to take an initially small equity share in a property at the start of their careers, and then save up in order to expand it as their careers progress?
Harriett Baldwin
I congratulate my hon. Friend on the strong endorsement he received from the voters of Milton Keynes to return here and express their interests. I am very pleased to hear Help to Buy is so popular in Milton Keynes. The town tops the charts for the attractiveness of buying versus renting. Shared ownership is indeed an excellent way to help people take their first steps on the property ladder, and the Government remain committed to it.
The Economy
Iain Stewart Excerpts(9 years, 6 months ago)
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Stewart Hosie
I would be slightly more gracious than that. I think that the right hon. Gentleman will make a contribution to his party’s policy development. Let us hope that it moves to somewhere progressive rather than sticking to the kind of austerity-lite position that it had before the election.
We need to squeeze inequality out of the system. The December 2014 OECD report told us that rising inequality in the UK had cost it 9 percentage points in growth between 1990 and 2010. It is an obvious fact: it is not possible to squeeze inequality out of the system at the same time as the squeeze is being put on the poorest in society, and once again this Government are swimming against the tide of informed public opinion.
The alternative to the Government plan is clear; it is the alternative economic plan that we pursued, rather successfully, in Scotland at the election. It is a plan aimed at balancing deficit reduction with increased investment in public services. We argued rightly that with a modest 0.5% real-terms spending increase between 2016-17 and the end of this Parliament we could release £140 billion for essential spending and investment over and above the Government’s plans. The alternative for Scotland is £11 billion of spending compared with £12 billion of cuts. Our plan makes sense. It is a fiscally responsible plan that protects public services, protects investment, really ends austerity and lifts the squeeze off ordinary people, but still sees the debt and deficit fall.
Iain Stewart
May I repeat the question put by my right hon. Friend the Chancellor? The Scottish Parliament already has significant tax powers and it will gain more in this Parliament. The leader of the Scottish Conservatives, Ruth Davidson, has pledged not to have tax rates in Scotland that are higher than in the rest of the UK. Will the hon. Gentleman meet that pledge, or does he want to pursue his expansionary agenda and raise taxes?
Stewart Hosie
I do not think that Scottish people should pay tax twice for services that we would have if we simply had full fiscal autonomy.
The UK Government have advocated an approach that will result in further spending cuts in the coming years to achieve the fiscal targets set out in the budget charter, but those cuts have not been spelt out in full. The Tories have not said where the axe will fall. The Chancellor said some things today, particularly about in-year cuts and asset sales in certain Departments, but nowhere near enough to explain what he plans to do. Perhaps he or one of his Ministers might decide to come clean with this House later today and tell us where the axe will fall.
Will they really restrict carer’s allowance to those eligible for universal credit, so that 40% of claimants lose out? Will they really increase means-testing for the contributory element of employment and support allowance, or of jobseeker’s allowance, which would see 30% of claimants—300,000 families—lose £80 a week? Will they remove the tax-free status of disability benefits to save £1.5 billion? Will this Chancellor and the Secretary of State for Work and Pensions really take the axe to those most in need to deliver £8 billion of tax cuts, which right now, and I have heard nothing today to change my mind on this, are completely unfunded?
I said that the UK Government plan is designed to achieve the fiscal targets set out in the charter for budget responsibility, but we know that the scale of the spending cuts plan, as set out in the March Budget, significantly exceeds what is required for the UK Government to meet their targets. There is therefore flexibility for the UK Government to meet those objectives without implementing in full the spending cuts that are currently planned for the coming years.
Based on plans set out in the March Budget, public sector net debt is projected to begin falling in 2015-16, and a cyclically adjusted current budget surplus of £35 billion is projected for 2018-19, rather than simply returning the adjusted current account to balance. Therefore, the UK Government have the flexibility to cut spending by less than currently planned while meeting their fiscal targets. I hope the Chancellor uses that flexibility wisely.
I want to move on to the real economy. As our First Minster, Nicola Sturgeon, said, there are three areas where we seek to achieve outcomes at a UK level that will benefit the economy in Scotland. First, we will continue to oppose spending reductions of the scale and speed that the Government have suggested. We believe that those would slow economic recovery and make deficit reduction more difficult.
Secondly, we do not think it is desirable for trade or business for there to be an in/out referendum on membership of the EU. However, since a referendum now seems inevitable, we will protect Scotland’s interests. We propose a “double-lock”, meaning that exit is only possible if all four nations in the UK agree to it, which would quite rightly prevent Scotland from being dragged out of the EU against the will of the Scottish people. [Interruption.] I think we have worked out what the Government mean by “one nation”, and they will need more than one nation to take the state out of Europe.
Thirdly and finally, we will seek greater powers for Scotland, to ensure, at the very least, that the recommendations of the Smith commission are met in full. However, we are seeking additional responsibilities, beyond those that the Smith commission identified, in particular greater power over business taxes, employment law, the minimum wage and welfare, to enable us to create jobs, grow the economy and lift people out of poverty. That was the manifesto on which we were elected.
Those powers will allow us to tackle one of the challenges that the First Minister, and indeed the shadow Chancellor in his speech today, have raised: that of productivity. Those comments are important, not least because they chime with what Mark Carney, the Governor of the central bank, said recently at the launch of the quarterly inflation report. He said that
“productivity growth…is the key determinant of income growth. Our shared prosperity depends on it.”
However, the Bank of England also highlighted the extent to which the UK as a whole has a productivity problem. Output per hour is below pre-recession levels; it is 13% below that of Sweden and 20% below that of Germany. In Scotland we know, and I suspect that the figures are the same for the UK, that if we can boost total factor productivity by 0.1% over a decade, we can see 1.3% additional GDP growth and additional tax yield of around half a billion pounds a year. With better productivity, living standards would be higher and the budget deficit lower.
In Scotland, we have set out how we intend to do that, based around the “four I’s” of innovation, internationalisation, investment in infrastructure and skills, and promoting inclusive growth, but we have also made it clear that promoting a more equal and inclusive society is an important part of building a stronger economy.
The Scottish Government are mitigating the consequences of this Government’s welfare reform, promoting gender equality, investing in early years education and care, and setting targets to ensure that everyone—irrespective of their background—has the chance to go to university. Essentially, that economic strategy sets out a vision of an economy based on innovation rather than insecurity; on high skills, not low wages; and on enhanced productivity rather than reduced job security. We want to climb the global competitiveness rankings on quality, rather than racing to the bottom on costs, and we want to deliver positive change in the real economy to drive changes in the big fiscal numbers. So we have to improve productivity, we need to encourage innovation and exports, and we must support business growth and job creation. There are a hundred things on which we must take specific action, not least delivering fairness in electricity connectivity charges across the grid and certainty in the tax code, and ensuring that businesses have access to bank lending.
I hope that there will be scope within the enterprise Bill to replicate many of the ideas contained within the Scottish business pledge, whereby in return for support from agencies businesses must commit to innovation, to seeking and taking export opportunities, and to paying the living wage. I also hope that there will be scope within the national insurance contributions Bill to continue to bear down on employer costs, to encourage more businesses to create jobs. There must be scope within the energy Bill to end the inequity of a £25.50 per kW charge to connect to the grid in the north of Scotland and a £5.20 per kW subsidy for any old chugger to connect in central London.
I hope that the Budget will support business investment. We have gone from an industrial buildings allowance, done away with in 2007, to an annual investment allowance of £50,000 in 2008, which increased to £100,000 in 2010; decreased to £25,000 in 2012; increased to £250,000 the following year; and increased to £500,000 the year after that. It was then temporarily maintained, but will come to a cliff edge and a grinding halt at the end of the year and revert to £25,000 on 1 January. That is not tax certainty; that is a shambles, and I hope that the Chancellor undertakes to fix it, even at a little cost, in the Budget in July.
We will be a constructive Opposition. We will support individual measures, where they merit it, and seek to mend and improve provisions where they do not. We will also be a principled Opposition, because we oppose the Tory programme of cuts. We wish to see growth and fairness in our economy and more power for Scotland, and we want to support aspiration and deliver help for those who need it most. As well as being a principled Opposition, unless or until our friends in other parties work out what their economic policy actually is, we will be the principal opposition to Tory cuts in this Parliament.
Budget Resolutions and Economic Situation
Iain Stewart Excerpts(9 years, 9 months ago)
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Hilary Benn
We have made it clear that we will have a fairer allocation from within using funding that is there at the moment. The right hon. Gentleman’s problem is that he cannot justify what the Government have done, and therefore applying more fairness so that everybody has to make a contribution is the right thing to do.
The National Audit Office and others have said there is not much evidence that the new homes bonus encourages house building that would not have taken place anyway. It is top-sliced from revenue support grant and tends in the main to be taken from the more deprived communities with the greatest needs and to go to communities that are less deprived with fewer needs. We will phase that out and redistribute the money back to local authorities on a fairer basis. Government is about making choices. We will devolve £30 billion of economic powers from existing money for county and city regions.
Hilary Benn
I have been very generous in giving way, but I am going to bring my remarks to a close.
We will devolve that money so that local authorities, coming together, have powers over skills, business and employment support, housing and bus regulation. We have talked about London today. If bus regulation, the ability to control routes and fares, is good enough for London—and it is—why is it not good enough for the whole of England? That is something we will do.
The truth is that the Secretary of State has devolved in one other respect: he has passed responsibility for taking difficult decisions down to the areas with the greatest needs. As we know, the 10 most deprived local authorities have seen their council spending reduced by 16 times more than the 10 least deprived. He has taken most from the communities that can least afford it.
I asked the right hon. Gentleman at the beginning of this week about the real impact on social care for elderly people—I said I would come to this—of the decisions he has made, or, to be more precise, as a result of his failure to stand up for local government and social care. He tried to pretend that the fact that there are 220,000 fewer elderly people now getting a hot meal a day, which is what research demonstrates, had nothing to do with him. He even tried to blame the councils, but it is everything to do with the way he has unfairly applied the cuts to local government. If, as he claims, it has been fair to all, north and south, how can he explain cuts to social care being deepest in the councils he has hit the hardest as the result of the decisions he has made? That is what NAO analysis confirms. Everyone knows the answer to that question is that he has taken most from those who have least. Worse is to come. The Office for Budget Responsibility says we will see
“a much sharper squeeze on real spending in 2016-17 and 2017-18 than anything over the past five years.”
Those cuts would be extreme and irresponsible, and have a big impact, including on social care. The Health Secretary takes all the stick for the problems in the NHS, but the Communities Secretary is fanning the flames.
We need a different approach. Local communities and local government are crying out for a different approach. Times are tough, but there is no justification for applying the cuts to local government in such a fundamentally unfair way. There is no justification for taking decisions that mean elderly people in one part of the country are less likely to get social care or a hot meal a day because they live in an authority that has been penalised by the right hon. Gentleman. There is no reason why local communities and the people they elect should not be given the powers and the tools to build homes for their children and their grandchildren. There is no reason at all why all the city and county regions of England—all of them—should not get the economic powers to help them to build their own strong local economies, invest in skills, build homes and create jobs for the future. All those things are possible, but it will take a change of Government to make them happen.
Iain Stewart (Milton Keynes South) (Con)
It is a pleasure to speak in this debate, alongside many right hon. and hon. Friends who sadly are stepping down at the general election. I shall be sad to see many of them retire, and I think the House will lose a great deal of wisdom and experience. Let me say for the record, however, that I do not intend this to be a valedictory speech! I hope the good electors of Milton Keynes South will return me in 47 days’ time.
I welcome the long-term nature of this Budget, and I believe the Chancellor is to be commended for not yielding to the temptation of using the better than expected fiscal position resulting from our strong economic performance as a windfall for short-term gains. Instead, he has stuck to his guns and sought to get the country back to living within its means.
It is easy to forget just how close to the brink this country was five years ago. We have heard from some speakers today a rather rose-tinted view of our position in 2010, but it is worth thinking about just how precarious our financial position was. It has been an incredibly difficult job in a very turbulent global economic situation to get this country back on track. Interruption.] I hear hon. Ladies opposite saying from a sedentary position that the problems were global. Yes, but in case they have forgotten, there has been a small problem in the eurozone, and this country started from a much weaker position because we ran up a structural deficit, which made the challenge even more difficult to deal with.
We must stay on course to eliminate our deficit and then start repaying our debt. That is not dry economic theory or dogma. An interesting table in the Red Book shows what the Government will spend in 2015-16. Next year, we will spend £35 billion on debt interest payments—not repaying the debt, just paying the interest to service it. That is more than we are spending on transport, on industry, agriculture and the environment and on public order. It is money that is not available for spending on defence or the NHS or infrastructure, and means passing on more bills for the next generation to take up. Addressing our debt addressed is also important for our national security. The money we borrow has to be lent by someone. The greater our debt, the more we have to borrow from other countries. The savings glut in many far eastern countries in recent years has meant that borrowing has been comparatively easy and cheap, but that might not always be available or desirable, so we are right to stick to our plans to look to the long term and pay our way as a country.
I warmly applaud the Budget measures on savings and pensions, and particularly the encouragement of personal savings that we have seen in this and previous Budgets. I do not want to encourage the stereotype of a Scotsman and his money, but I say that we need to save more as a country. That is right for the long term. Just as it is right to reduce the country’s debt, so it is right to reduce personal debt that is not secured against an asset. I warmly applaud the abolition of tax on savings for many people. Double taxation is wrong, and people were paying interest on their savings on money that they had invested after taxation. I welcome, too, the pensioner bonds that were introduced in previous Budgets as they give a higher rate of interest to pensioners, and I welcome the greater flexibility in ISAs. Encouraging saving is good for our economic security.
Let me raise one concern, however, about an otherwise excellent Budget. I refer to the restriction of the lifetime personal pension allowance. I completely understand that, as part of our objective of getting our books back in balance, we have to keep a close eye on every single item, and I accept that the cost of this allowance has gone up by £4 billion during this Parliament. It is completely understandable that we have to keep it controlled in the short term. I welcome the Chancellor’s rejection of restrictions on the annual allowance and the fact that the lifetime allowance will be indexed from 2018.
I do hope—let me make a plea perhaps not for the next Budget, but for several Budgets down the line—that as we get our finances back into the black, the lifetime allowance limits will be revisited. I say that not just because it is right to encourage the savings culture, but because it is sustainable in the long term in that the tax forgone on pension contributions is only deferred and not lost. When people draw down the income from their investments in the future, the Government will gain. It is important because pension funds will be increasingly significant for funding investments in our infrastructure.
My right hon. Friend the Member for Havant (Mr Willetts) is no longer in his place, but both he and the right hon. Member for Somerton and Frome (Mr Heath) alluded to the important pension reforms that this Government have made. The attack by the previous Government on one of the best pension funds we had, when they abolished dividend tax credits, caused huge problems for a situation that was previously well into the black. The reforms we have made have put us back on a sensible course.
I have one specific question for my hon. Friend the Exchequer Secretary. It was raised by my constituent Nicholas Clarke, who will be affected by the reduction in the lifetime limits on pensions. He has done the right thing by his family and saved into his pension fund, and he hopes not to be too far away from taking retirement. In the 2014 Finance Bill, an individual protection provision was introduced when the allowance limit was reduced previously. If the Minister does not have the information to hand, perhaps she will write to me about whether it is likely that a similar provision will be introduced to coincide with this reduction. This information would be most helpful to constituents such as Mr Clarke in planning for their retirement.
In the last few minutes, let me turn to a couple of themes relevant to the local government focus of today’s debate. On housing, I very much welcome the Chancellor’s announcement of the new Help to Buy ISA, which will be particularly useful in constituencies like mine. Our demographics show that the children of young families who moved to Milton Keynes in the 1980s, when there was a big expansion in growth, are now at an age when they want to buy their own homes. It is a perfectly natural and laudable aspiration. This new ISA, along with the stamp duty reform in the autumn statement, will help people to get their foot on the housing ladder.
Reference has been made to housing supply. In Milton Keynes, we are delivering. Our core strategy, agreed in 2013, provides for 28,000 homes over the next decade or so. The Government have helped to bring forward some of these developments—at Newton Leys in the western flank of my constituency, for example. I endorse the point made by my right hon. Friend the Member for South East Cambridgeshire (Sir James Paice), who said that we need to do all we can to bring forward these developments.
I have some concerns. Some in Milton Keynes want to go outside this plan prematurely and look at other developments—at Salden Chase, for example. I think that is very short sighted. We should consider further expansion only when it is part of a broader and more strategic view that takes into account other developments such as the new garden cities at Bicester and other places nearby. If I am returned in a couple of months’ time, this is a civic discussion that I wish to lead.
Finally, and not unrelated, is the reform of business rates announced by the Government. I very much welcome it. Under the current system, Milton Keynes pays out far more than it receives, and I would like this review to look at that balance. I was very concerned by some of the comments of the right hon. Member for Leeds Central (Hilary Benn), particularly when he said that a Labour Government would look at rebalancing the distribution of support from central Government. I worry—Labour has not been open about this—that this will mean taking money from fast-growing areas such as Milton Keynes and redistributing it elsewhere.
I note with pleasure the Chancellor’s invitation for other areas to replicate what has been proposed for business rate retention in Manchester and in Cambridge. If re-elected, I shall encourage Milton Keynes council and the business community there to beat a path to his door to see whether we can arrange something similar. That will be important for funding the additional infrastructure we need if we are to continue to grow our housing.
I would also welcome the rebalancing of business rates between the large-scale businesses and the small high-street ones. I have both in my constituency: I have everything from the big John Lewis distribution centre right down to small and wonderful local shops.
This is a good Budget for the long-term success of Milton Keynes and the United Kingdom as a whole. I look forward to participating in our further growth in the next Parliament.
Equitable Life
Iain Stewart Excerpts(9 years, 9 months ago)
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Bob Blackman
I will call the hon. Gentleman my honourable Friend because he has been stalwart in defending the rights of the people of Northern Ireland who have suffered in this scheme.
The key point is that, according to the published figures, the Treasury had a surplus of £8.8 billion in January, which was remarkable given that we were expecting £6.5 billion. Some proportion of the additional £2 billion surplus could be put towards compensation for policyholders who have suffered.
Iain Stewart (Milton Keynes South) (Con)
My hon. Friend rightly mentions the surplus in January. We are coming to the end of the financial year, and many Departments may have an underspend in their allocated budgets. Would it not be a good idea to divert some of that underspend to the victims of Equitable Life?
Bob Blackman
I thank my hon. Friend for his suggestion. The Chancellor will be listening to such rumours, and will no doubt want to hoover up that money to dispense for appropriate good causes, of which this is clearly one.
Barnett Formula
Iain Stewart Excerpts(10 years ago)
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Iain Stewart (Milton Keynes South) (Con)
It is a pleasure to serve under your chairmanship, Sir Alan. I am grateful to have this opportunity to discuss the future of the Barnett formula in a little more depth than recent debates have allowed.
My reason for calling for the debate was neither to call for the abolition of Barnett, nor to say that it must stay unchanged for ever more. My motivation was born out of frustration at some of the ill-informed comments made about it. In advance of the draft legislation on further devolution to Scotland, which is due before Burns night next year, I want to put on the record an explanation of what the Barnett formula is and, perhaps more importantly, what it is not. I also put on the record that I absolutely support extra fiscal powers for the Scottish Parliament. That is good for the democratic accountability of Holyrood.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
The hon. Gentleman mentioned the Barnett formula and, before he goes too far, I want to highlight its operation. About a fortnight ago, the Treasury gave out money because roads and health in England had a shout for that. Therefore, from that followed Barnett consequentials to Northern Ireland, Wales and Scotland.
However, I notice that, if there is a need in Scotland, Wales or Northern Ireland for money for health or transport, the Treasury does not dip its hands in its pockets in the same way with Barnett consequentials running in the other direction. Barnett consequentials follow on from need in England. It is surely a governance problem when the Treasury responds only to health and transport needs in England and then we get consequentials. Should not the Treasury give money and have consequentials running in the other direction when need arises?
Sir Alan Meale (in the Chair)
Order. May I point out to Members that we have only a short time for the debate? If interventions are to be made, can they be questions to the speaker at that time rather than statements? Hopefully everyone will have an opportunity to speak.
Iain Stewart
I am grateful for the hon. Gentleman’s intervention. If he bides his time a little, he will see that I will touch on some of those issues later on in my speech.
Karen Lumley (Redditch) (Con)
Does my hon. Friend agree, though, that the majority of people in my constituency would think that the Barnett formula is unfair?
Iain Stewart
There certainly is that perception. Part of my motivation for securing the debate was to address such issues so that we can have a more informed debate on the fiscal relationship principally between Scotland and England. I am conscious that Members from Wales and Northern Ireland are in the Chamber as well. My comments will be principally about Scotland and England, but the arguments also apply to the rest of the United Kingdom. As I said, there is much ill-informed comment and misunderstanding about what the Barnett formula is and does and that is why I wanted to have this debate.
As well as being misunderstood, the Barnett formula is much maligned. Contradictory simultaneous comments are made that it both penalises Scotland and is too generous to Scotland, but both of those cannot be right. I am reminded of a comment that Lord Foulkes made when he was a Scotland Office Minister about a decade ago:
“If the SNP think that Barnett is too mean and the English Tories think that it is too generous, most sensible people would think that it is just about right”.
For many years, reform of the Barnett formula has been parked in the “too difficult” box.
Jim Shannon (Strangford) (DUP)
In Northern Ireland’s case the Barnett formula is just right. It recognises the need to keep the balance of wealth, because in Northern Ireland our wages are lower and the products we buy in shops are more expensive. At the same time, if the current talks work out—I hope that they do—and corporation tax is devolved to Northern Ireland, that could be a poisoned chalice. However, Northern Ireland has already been able to set its air passenger duty for long-haul flights with the permission of the British Government.
Iain Stewart
As I said earlier, the purpose of the debate is not to say whether Barnett is right or wrong or whether it needs to be changed or not; it is just to help inform a more considered debate about the issues.
Glyn Davies
I feel that Wales should have a contribution to this international debate. My hon. Friend is addressing the issue of clarity. In Wales, the lack of clarity in the Barnett deficit is leading the Welsh Government to resist financial accountability. Does he agree that it is vital that we find out what the Barnett deficit is? A whole range of figures have been bandied about. Most of them are untrue, but they are being used to prevent the financial accountability in Wales that we all want to see.
Iain Stewart
My hon. Friend makes an excellent point. There is a lot of darkness and cloud about these matters, and if we are to have a sensible debate about the fiscal balance between the component parts of the UK, we need that greater clarity.
Eric Ollerenshaw (Lancaster and Fleetwood) (Con)
I think that Lancashire needs a say. In the debate that is coming on English votes and so on, does my hon. Friend agree that we need to be honest with the English people? There is a cost to being the biggest part of the Union and there is a cost to the Union. Whether we agree about Barnett or not, England will have to pay more than the rest of the component parts of the United Kingdom.
Iain Stewart
My hon. Friend as ever makes a good point. At the conclusion of my speech I will say a little more on that.
Mr MacNeil
While the hon. Member for Lancaster and Fleetwood (Eric Ollerenshaw) may be correct that England pays more, it pays more only because it is larger; it does not pay more per capita. Unfortunately, that has been Scotland’s preserve: it has paid more tax per capita into the UK each and every year for the past 33 years.
Iain Stewart
Again, I shall address those very points in a few moments. I want to shed some light on the issue. Critics of Barnett usually start by quoting Treasury figures that say that public spending per capita in Scotland is £1,600 greater than in England as a consequence of the Barnett formula. For once I may be in agreement with the hon. Gentleman, because that is not correct. The Barnett formula is only one part of the complex fiscal relationship between the different parts of the United Kingdom.
The Barnett formula applies only to certain parts of public spending. Currently, about 40% of public spending in Scotland is not covered by it because that spending is not determined by the Scottish Parliament. That proportion will reduce in time as further taxes are devolved, but that point is important. Nor does Barnett determine the size of the Scottish block grant as a whole. That has built up incrementally over the years and the Barnett formula determines only the annual changes.
In simple terms, Scotland gets a population share of a departmental budget change in England where the equivalent is determined by Holyrood. Each year, the changes for each spending programme are totalled up and an overall adjustment to the previous year’s block grant is made. It is then up to the Scottish Parliament to decide how it spends that grant; it is not hypothecated. If Scotland gets £100 million more for health services because of the change in England, it is not obliged to spend that on health. That partly explains why some public services and other matters in Scotland are different from south of the border.
It is important to note that when the formula was introduced in the late 1970s it was designed as a convergence formula to narrow public spending per capita between Scotland and England. In advance of the devolution legislation proposed by the Wilson and Callaghan Governments, the Treasury carried out a needs-based review to determine the extent to which public spending per capita in Scotland would need to be higher to provide a comparable level of public services to those in England. It was found that because of factors such as Scotland’s proportionally greater landmass, rural population, council housing stock and poor health indicators, spending needed to be 16% per capita higher than in England. It was actually 22% higher, so Barnett was introduced gradually to narrow the gap and avoid the annual round of what was described as table-thumping over agreements between the different spending Departments.
It would seem that convergence has not happened, and it is important to understand why. First, in the initial years of operation, the population share was never adjusted, and that was at a time when Scotland’s population relative to England was falling. For a decade or so, a bias was therefore built in to the formula in Scotland’s favour. In the 1990s, the population share was adjusted, but it helped to sustain the higher levels. Secondly, and more significantly, were the number of deals done outside the Barnett formula. Whatever calculation Barnett produced, there was always pressure, under Governments of all parties, for extra funding arrangements. In his autobiography, the noble Lord Lang notes that when he was Scottish Secretary, between 1990 and 1992, Barnett should have reduced the Scottish Office block grant by £17 million, but, as a result of separate deals agreed with the Treasury, it was increased by £340 million.
Iain Stewart
I hope that the hon. Gentleman will forgive me, but I must make some progress.
The simple point is that if Barnett were to be ended tomorrow, the issue of comparative spending would not go away. There has not been a needs-based review since the 1970s, in which time many economic, social and demographic changes have taken place, so we do not actually know what the current position is. There are also difficulties in defining exactly what territorial spending is. One example is the building of High Speed 2, a project of which both phases will be entirely within England. One could therefore argue that spending on it should accrue only to England, but there is a benefit to Scotland and Wales—
Iain Stewart
I am not quite sure whether the hon. Gentleman’s geography is correct. High Speed 2 will go from London to Birmingham and the north of England.
Mr MacNeil
The hon. Gentleman has conceded, as he is right to do, that High Speed 2 will be built in England, and says that it will also bring benefits to Scotland. If there are benefits to Scotland in the north, surely there will also be benefits at the other end, in the south—namely, to France. The benefits will be not only within but outwith the United Kingdom. High Speed 2 is not running in Scotland, but the hon. Gentleman argues that it will benefit Scotland; if it is going to benefit Scotland, it will benefit France in the same way.
Iain Stewart
Given the fact that there is currently no straight link between High Speed 2 and High Speed 1, that is a slightly tangential point. I have simply given High Speed 2 as an example of how difficult it is to assign exactly public spending on a territorial basis; I could cite many other examples.
It is worth while to look not only at public spending relationships between Scotland and England and Wales and England, but within each nation and the regions of each nation. There is currently a process of further devolution in England, which is producing more demands for tax and spending powers in the cities and regions. The north of England says quite regularly, “We’re being hard done to because of the Barnett formula.” London says that it pays far more than it receives in public spending—[Interruption.] I am not saying whether that is right or wrong, merely that such comments are made. I have funding issues in Milton Keynes in my constituency: with a rapidly growing population, sometimes the funding formulae do not keep up with the population need. There are also tensions between urban and rural spending—the issue is not only between the component countries of the United Kingdom.
We must start to open up a wider debate about the allocation of public spending right across the UK, bearing in mind the fact that we have a finite pot of money. We must also look at the tax receipts side of the ledger, which is also controversial. We have never definitively established the comparative amount of taxes raised north and south of the border, or, indeed, within England, because we have never had to assign taxes territorially. Many studies have been conducted, but they have been based on controversial assumptions.
It is difficult to assign tax revenues on a territorial basis because we have long had a unitary system. For example, my father was employed by the Civil Aviation Authority. He was based at Prestwick but spent one week in every two working at head office in London. He commuted between the two, so his time was spent equally between Scotland and England, and, to throw another spanner into the works, his tax office was in Cardiff. It would not be impossible to unpick all that, but it would be difficult, for corporation taxes as well as personal taxes. Nevertheless, it is something that we will have to do if more tax powers are devolved to Holyrood. We must also look at the disaggregation of national insurance and pension receipts and liabilities.
Simple calls for the retention or abolition of Barnett are very wide of the mark. If we are going to dismantle what has been a unitary fiscal system, there are many aspects to consider. Without updated figures on the current costs of providing public spending in each nation of the UK and within each region of each nation, we are working in the dark. I gently suggest to my hon. Friend the Minister that the Treasury looks at providing those figures.
My final point echoes the excellent one made by my hon. Friend the Member for Lancaster and Fleetwood (Eric Ollerenshaw). We must look at this matter in the context of the cohesion of the United Kingdom. The hon. Member for Na h-Eileanan an Iar (Mr MacNeil) has left the Chamber, but his party, the SNP, lost the referendum. We must make the Union work better and we need a sense of fairness; as my hon. Friend the Member for Redditch (Karen Lumley) said, every part of the Union must be treated fairly.
A few years ago, I began to do research for a book, and I looked at what is done in places such as Canada, Germany, Spain and the United States with regard to different tax-raising and spending powers in the component parts. Whatever the system, everyone still argued about spending levels and transfers from more to less affluent areas. That will never end—it is part and parcel of political debate—but the important thing is that we have a sense of fairness. I hope that today’s debate has helped to shed some light on matters that are often simplified and on a debate that is often inflamed, and that I have made a useful contribution to a much longer debate that we must have about public spending in the UK.
Sir Alan Meale (in the Chair)
Mr Stewart, would you like to add anything? We have a short period of time left.
Iain Stewart
I was not planning to, Sir Alan, but may I thank the Minister and other Members for their contributions? The debate has been helpful. I am particularly interested by the work of the Office for National Statistics on the development of sub-national accounts. I think that will help to inform the debate, but I am sure that this is not the last word on the subject.
Autumn Statement
Iain Stewart Excerpts(10 years ago)
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Mr Osborne
Because of the hard work of the police and the reform that has been undertaken, crime is down and there is more policing on the front line. That shows that savings can be made to the Home Office budget while achieving reform. The hon. Gentleman’s question again reveals the default position of the Labour party. The shadow Chancellor attempts to say that it has newly converted to fiscal discipline and that it would take the difficult decisions. Every single Labour MP then gets up and complains about future spending and welfare decisions. That just shows that they are totally unreformed and unreconstructed.
Iain Stewart (Milton Keynes South) (Con)
I thank my right hon. Friend for the additional help he has given to hospices. Will he join me in paying tribute to the staff and volunteers at Willen hospice in Milton Keynes, which provides patients and their families from my constituency, the constituency of my hon. Friend the Member for Milton Keynes North (Mark Lancaster) and indeed your constituency, Mr Speaker, with incredible support?