(8 years, 5 months ago)
Commons ChamberI would like, if I may, to advance the argument made by the hon. Member for East Lothian (George Kerevan) about the downgrading of productivity. Productivity was the central economic challenge of this Parliament—so said the Chancellor last year. A failure to address the productivity gap between ourselves and our main economic rivals would undermine our competitiveness and reduce living standards, so to address that, the Government published their productivity plan in July 2015.
In our inquiry into the plan—our first in this Parliament—my Select Committee found it to be somewhat worthy but vague, and without the firm delivery and implementation measures needed truly to address the productivity challenge. Of course, it is difficult for any Government to turn around something as substantial and structural as the productivity gap, especially only nine months after the publication of their report, but the downgrade to productivity in last week’s Budget reinforces the Committee’s view that although many measures in the plan were welcome, collectively they did not constitute a radical departure or step change that would really help to boost productivity. Crucially, as the OBR stated in its report last week:
“Lower productivity growth means lower forecasts for labour income and company profits, and thus also for consumer spending and business investment. In aggregate, this reduces tax receipts significantly.”
Productivity improvements require a long-term and sustained approach to business investment, yet the Red Book shows how much business investment—that engine that will power better competitiveness, increase wealth creation and employment generation and, ultimately, bring about higher wages and rising living standards—has stalled. Real business investment fell in the final quarter of last year. The manufacturing sector in our country is in recession. The OBR forecasts that business investment will be 2.6% in 2016, a massive 4.9 percentage points weaker than only four months ago at the time of the autumn statement.
The Government are not helping through their policies. The Chancellor should be encouraging firms to invest in the latest technology, plant and machinery to ensure that they can compete with the most modern kit anywhere in the world, as well as investing in research and innovation to ensure that British-based firms are coming forward with the goods, services and products that the world wants to buy.
Is that not exactly why the Chancellor has cut corporation tax and capital gains tax: to encourage companies of all sizes, particularly small and medium-sized businesses, to invest in research and development, new products and the jobs of the future?
I would suggest that the approach on capital gains tax is contrary to having a long-term economic plan, as it encourages short termism—people do not scale up, but sell out quickly. That is a major structural concern.
To a large extent, the Chancellor has done positive things in this Parliament to encourage investment. In particular, the changes to the annual investment allowances are very welcome and will allow firms to invest with greater certainty. Other countries, however, are doing much more, and Britain risks missing out. Addressing the huge disincentive in business rates for firms wanting to invest in new plant and machinery should have been at the very top of the Chancellor’s list, and although the changes to business rates for small businesses were welcome and constituted the largest tax cut of this Budget, it seems ridiculous that the Chancellor did not resolve the ludicrous situation whereby a firm faces a larger tax bill in the form of higher business rates by choosing to invest in new plant and machinery. For a Government who pledged to do all they can to rebalance the economy towards manufacturing and specifically, in the past six or seven months or so, to help the hard-hit British steel industry, the omission of that single measure from the Budget was a significant blow for industry, particularly the steel industry, which wanted the Government to give a favourable signal to invest.
It seems that there is only one club in the Conservative golf bag for tackling productivity, and that is tax alone. The Conservatives have to face up to infrastructure, to the low-wage economy and to the lack of housing. Owner occupancy is at a 20-year low and house building is low as well. Workers need houses, and if that growth does not happen, combined with infrastructure, productivity will remain low.
The hon. Gentleman makes an important point about infrastructure, and there was very little in the Budget to address that. Earlier, I mentioned the possibility of rebalancing. In 2012, we were promised an export-led recovery, and the Government announced proudly a target of £1 trillion of exports by 2020. I am all for ambition and for stretching targets, but given the Government’s limited ability to shift the needle on the value of exports by companies, that ambition seemed at best somewhat misplaced and, at worst, even very foolish.
The OBR stated last week that the Government will miss its target by 36%, which is £357 billion, and that net trade will actually be a drag on economic growth for every single year of this Parliament, but there was nothing in this Budget to boost exports. The word “exports” did not even pass the Chancellor’s lips in his statement on Wednesday and it was not mentioned again this morning. Does that mean that the Government have shelved that target? Will Ministers consider providing assistance and encouragement in the form of export vouchers so that firms from Britain can invest and export?
A further way to boost productivity is by investing in skills, and the flagship skills policy of this Government is the target of 3 million apprenticeships by 2020, funded through the apprenticeships levy. Now, only 2% of larger firms will pay that, so what will happen to the other 98% of firms, as well as the detail of the levy? We were promised by the Minister for Skills in the run-up to the Budget that all would be revealed, including this new shiny model, in the Chancellor’s Budget statement, but for a Budget billed as putting the next generation first, there was precious little detail about how the apprenticeships levy—only 12 months from its start—will operate in practice. As with exports, the word “apprenticeships” was not even mentioned by the Chancellor.
Does the hon. Gentleman agree that one of the biggest drags skillswise on productivity in our economy is at the intermediate and higher intermediate skill levels? We have had this problem for more than 30 years.
The hon. Gentleman makes an important point. My point is that by trying to ramp up the quantity of apprenticeships while making a major—possibly the major—change to the institutional architecture of apprenticeship delivery, the Government risk missing their target and that, as a result, the skills policy in this country will be affected adversely.
Budgets are rarely remembered past a couple of weeks or months. This one will be remembered, but for all the wrong reasons: incompetence, callousness, clumsiness and the resignation of a Cabinet Minister. It is also concerning that it will be remembered for downgraded productivity and a failure to address it, leading to lower economic growth, relatively falling living standards, lower tax receipts and deteriorating public finances. The Budget has helped to make this country somewhat poorer.
(9 years, 1 month ago)
Commons ChamberProductivity is the pressing economic challenge of this Parliament. Unless the country addresses productivity, especially the widening gap in output per hour between ourselves and our main competitors, wage levels and living standards will not rise, and our competitiveness and position as a leading economic nation will be severely under threat. It is welcome that the Chancellor himself has now acknowledged the issue. In his Mansion House speech on 10 June he said:
“Britain must address its poor productivity.
We don’t export enough; we don’t train enough; we don’t save enough; we don’t invest enough; we don’t manufacture enough; we certainly don’t build enough, and far too much of the economic activity in our nation is concentrated here in the centre of London.”
I hope to address all those points in my speech, and ask how the Budget will address them.
Today is the first day in debate on the Budget that the House is able to consider the Government’s productivity plan, which was published on Friday. It is curious that the plan was not published alongside other documents at the time of the Budget statement, as is the norm. That suggests either that the Government fancied another hit in the 24-hour news cycle 48 hours after the Budget or that the productivity plan was not ready for publication on Budget day, and that Whitehall was trawled in a desperate attempt to scrabble together some half-baked measures in order to publish something—anything—in the immediate aftermath of the Budget. Indeed, the plan is littered far too much with phrases such as “will be published shortly”, or
“the government will set out more details of these reforms in the autumn.”
That suggests that the productivity plan has not been thought through as much as the Government would have liked.
On the question of exporting enough, it is a huge concern that there was nothing in the Budget to help to increase the number of firms exporting, or to address the persistent structural trade deficit. The Red Book shows that that is getting worse: in 2014, exports grew by 0.5% but imports grew by 2.4%. The Office for Budget Responsibility forecast that net trade this year is going to be more of a drag on GDP growth than it predicted even in the March Budget. The Red Book predicts a widening gulf between growth in world trade and growth in UK exports in every year of this Parliament. This country is not taking advantage of the growing opportunities throughout the world, and the Government should be helping to address that.
The productivity plan states:
“The government will remodel its delivery on trade, exports, investment and prosperity”,
but it does not give much else in the way of explanation. I hope that the Business, Innovation and Skills Committee can play a role in helping to shape that aim to ensure the Government meet their targets of £1 trillion by 2020 and 100,000 more companies exporting—an important aim that I am very keen to see the Government achieve, but I fear that it is looking increasingly unlikely.
While my hon. Friend is on the subject of exports, can he tell us how he thinks withdrawal from the European Union would help our export drive?
I pay tribute to my right hon. Friend who speaks eloquently on these matters. With regard to our largest trading partner, I certainly think that withdrawal would not be conducive to hitting our export targets. I hope that the Select Committee will look at the costs and benefits to British businesses of EU membership, which will be important in the run-up to any referendum.
On the matter of there being enough training, the apprenticeship levy is a welcome step, although businesses, training providers and learners need more clarity. The Red Book says that the levy will support all post-16 apprenticeships in England and that
“firms that are committed to training will be able to get back more than they put in.”
What will that mean in practice? Given that the apprenticeship levy will be confined to large firms, will small and medium-sized businesses—which often find it difficult to train apprentices on the grounds of size, capacity and uncertainty over the order book—also benefit from the “get more out than you put in” principle? What happens to excellent large companies that are already exemplary when it comes to apprenticeship training, such as Nissan—in my region—Rolls-Royce and Airbus? Will the levy apply to them? I think it will and, if so, will the levy be used to cascade skills through prime companies’ supply chains, so that entire sectors are as competitive and productive as possible?
I mentioned Airbus a moment ago. The Red Book states that the apprenticeship levy applies in England, so how will it take into account large companies such as Airbus, which has a multinational operation throughout the UK, including at Filton in England and Broughton in north Wales? Will the levy apply to trainees in Filton in the south-west of England and in Broughton in north Wales? In addition, how does the levy link in with existing post-16 provision of education, skills and training, particularly in relation to further education cuts, which undermine colleges’ capacity to provide the training that firms want? Does the Minister anticipate that the levy will offset in full the proposed cuts to further education provision?
On the matter of investing enough, I really want to praise the Government on the measure to make the annual investment allowance permanent and at least £200,000. This is a very welcome step to encourage more firms to invest, with certainty in the long term. Hopefully, it will do much to boost productivity. However, more could be done to encourage innovation, product design, development and manufacture here in the UK. I would therefore have liked to have seen consideration of the expansion of the R and D tax credit, too.
To make us more competitive and productive, it is essential that we have a modern infrastructure. The Red Book and the productivity plan both prioritise road building. There is also mention of airport capacity and broadband connectivity, but for an island nation there was a striking omission. UK ports handle about 95% of all UK import and export tonnage, and 75% of all trade by value. Our ports are vital to our export capability, yet I find it odd that there was no mention of them in the Chancellor’s statement. Will the Minister explain how ports will play a part in boosting productivity? What do the Government intend to do to ensure our ports are as competitive as our rivals’ ports across the continent?
I am keen to see this country at the forefront of innovation, business creation and growth, and for the Government to provide a framework for competitive and productive firms employing highly skilled and well-paid employees. Where the Government have done the right thing to help to achieve that, such as with the annual investment allowance, I will say so, but I am afraid the Budget does not do enough of what is needed to address our massive productivity challenge.
(9 years, 2 months ago)
Commons ChamberIt is a pleasure to follow the right hon. Member for Wokingham (John Redwood). I seem to recall reading in the Financial Times three or four weeks ago an extremely perceptive article by him on productivity, so it is a real pleasure to follow him. He has given these issues careful thought.
I am pleased that we are discussing productivity so early in this Parliament. UK output per hour is about a fifth below that of the rest of the G7. It is the largest gap since 1991. In France, output per hour has increased by 2%. In the US, it has increased by 9%. Ours has not shifted. It has been said time and again that if we want rising living standards and a historically decent long-term economic growth trend of 2.5% or 3%, productivity needs to improve.
In France, productivity figures may well have been achieved at the expense of extremely high unemployment. Is the hon. Gentleman suggesting that he would like to see very high unemployment here in exchange for fractionally better productivity?
I represent a constituency in the north-east that has suffered and still bears the scars of long-term unemployment. I do not want to see unemployment at all. We need to address that. But in order to remain competitive in the global economy, we must address productivity.
The Chief Secretary to the Treasury said that not all sectors of the economy had been affected by stagnating productivity. It is true. High-value manufacturing sectors such as aerospace and automotives have seen huge leaps in productivity in recent years. They have led to better, more innovative products that are more competitive than our rivals’ products, and which are sold in increasing numbers around the world. He mentioned Nissan in Sunderland, which produces a car every 61 seconds, to rival any other car plant on earth. This week we are seeing the Paris air show, where about £7.8 billion-worth of products from enterprises based in the UK have been sold around the world. We need to encourage this virtuous cycle, because that will lead to more well-paid jobs in these sectors. It is the model of the British economy that we should be encouraging.
To be fair, credit must be given to Vince Cable and David Willetts when they were in the Department for Business, Innovation and Skills for continuing the approach set out by the Labour Government. That long-term approach, a mature business policy transcending individual Parliaments and thinking about what is required for our economy for the next 20 or 30 years, gives business the confidence to invest for the long term. We have seen the dividends of such an approach in globally competitive sectors such as aerospace and automotives, but I worry that we have seen no endorsement of that approach from the new Business Secretary. It is concerning that in his interview in the Financial Times about two weeks ago, he seemed to draw a line under the industrial strategy that has helped competitive sectors succeed in Britain.
Great examples of business-Government collaboration, such as the Automotive Council, the Aerospace Growth Partnership and the Aerospace Technology Institute, which have brought billions of pounds of investment into Britain, no longer seem to have Ministers’ attention. Is the new Business Secretary going to adopt a new approach? Is that long-term business policy going to wither on the vine on his watch? That would be to the detriment of long-term, high-value economic success and improvements in productivity. I hope that when he responds, the Minister will provide clarity as to what the new Government’s industrial strategy will be.
A key way to improve our competitiveness and productivity is to invest in new technology and innovation. However, our long-term performance in that respect is woeful and has been for far too long. UK gross domestic research and development expenditure, as a percentage of our GDP, peaked in 1986 at 2.03%. In the past 15 years or so, R and D spend as a percentage of GDP has been in the range of 1.59% to 1.73%, well below the EU average and significantly below ambitiously innovative nations. South Korea spends five times as much on R and D—not as a percentage of its economy, but the actual amount—as the average European nation, and that relentless focus on innovation and moving up the value chain has reaped massive rewards. Half a century ago, South Korea was poorer than Bolivia and Mozambique; now, it is richer than Spain and New Zealand. That is the lesson we have to learn.
We are living in what could be the most significant era of challenge and innovation for humanity. Britain’s historic strengths in science and in areas such as pharmaceuticals, aerospace and motor vehicles should and could be harnessed much more and spread throughout the economy in a much more balanced way. We are complacent in the extreme if we think we can carry on as before and not provide more resources to R and D. So will the Government commit to prioritising science? What is the future of the catapult centres, which have seen Government and industry collaborate on a range of issues relating to technology and innovation? Will funding be secure in those areas?
A further way in which we will rise up the productivity chain and in competitiveness is by emphasising skills. The days 40 years ago when somebody in my constituency would leave school on a Friday at the age of 15, start work at the steelworks on the following Monday and stay there for 35 years have gone. That will never come back. The modern British workforce will need to adapt and retrain and, crucially, be given the opportunity to do so. Men and women in Hartlepool and elsewhere may be made redundant in their 30s and 40s, and will need the means to retrain for a new career—quite possibly several different careers. But BIS, supposedly the Department for growth, is cutting the adult skills budget by 11% in this financial year.
The total budget from the Department for adult further education and skills funding will fall not just in real terms, but by 5% in absolute terms. When the BIS cuts took place during this Parliament, announced by the Chancellor in the Queen’s Speech debate a couple of weeks ago, £450 million was stripped out of further and higher education. That will not give us a modern, innovative workforce.
Should we not be prioritising adult skills? We should have flexibility areas to ensure that we can maintain Britain’s future prosperity. As Neil Carberry, CBI director for employment and skills, said today:
“If we are to deliver sustainable higher wage growth, we need to see a rise in productivity. That means businesses investing in skills, and the Government helping firms innovate by supporting investment in next month’s Budget.”
I hope that for the sake of future prosperity, productivity gains and our competitiveness as a nation, the Government will respond to those concerns and make sure that we can be a high-value, innovative nation that can compete with the rest of the world.
(9 years, 5 months ago)
Commons ChamberI think you will agree, Madam Deputy Speaker, that this has been an excellent and often revealing debate on the impact of the Budget. I thank hon. Members for making excellent contributions.
The Chair of the Business, Innovation and Skills Committee rightly criticised the Chancellor’s use of the words “walking tall”, which ring hollow when people are walking to a food bank. My hon. Friend the Member for Halton (Derek Twigg) reminded us of memory, particularly with regard to the Lib Dems helping to stop the education maintenance allowance and how the Government have also failed to meet their policy objectives on deficit reduction and debt, which I will return to later.
My hon. Friend the Member for Luton North (Kelvin Hopkins) rightly mentioned how the NHS, local government and housing are in crisis, threatened still further by the proposed sharp acceleration of cuts to public spending.
I was particularly pleased to hear the contribution of my hon. Friend the Member for Clwyd South (Susan Elan Jones), who rightly talked about the importance of entrepreneurs and the self-employed in the British economy. She praised Alice Murray, founder of Giggles and Games. I thought that the Liberal Democrats’ yellow toytown box was by Fisher Price, but I wonder whether Giggles and Games might have produced it for that toytown and busted flush of a political party.
My hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier) mentioned the £30 billion post-election bombshell if these plans go through. She also talked about the pressure on working families in her constituency with regard to child care, so I think she welcomes Labour’s plan to provide 25 hours of free child care for working parents of three and four-year-olds.
My parliamentary neighbours, my hon. Friends the Members for Stockton North (Alex Cunningham) and for Easington (Grahame M. Morris), made excellent contributions. They rightly said that there is nothing in this Budget for people in Teesside, east Durham or, indeed, the whole of the north-east. My hon. Friend the Member for Stockton North mentioned the disproportionate cuts in our area—they are far worse than those in any other area—to police, fire and local government. My hon. Friend the Member for Easington said that he was underwhelmed by the Budget and talked about the pressure on his constituents. They will know that the Chancellor mentioned Agincourt more times than the north-east, but they will not be surprised, because the Government’s record shows that he has neglected the north-east for the whole of the past five years.
My hon. Friend the Member for Birmingham, Selly Oak (Steve McCabe) argued for his own city to be given similar freedoms on business rates to those given to Greater Manchester. I particularly liked his subtle references to Beatles songs: he quoted lyrics from two songs on “Abbey Road” when he said that the Chancellor was more like the “Sun King” than “Here Comes the Sun”. My right hon. Friend the Member for Knowsley (Mr Howarth) mentioned the importance of manufacturing to a modern, innovative and resilient economy, and I fully agree with him.
In an at times warm speech, the hon. Member for Daventry (Chris Heaton-Harris) was kind enough to mention Hartlepool United. I think he was being kind, but we are bottom of the Football League at the moment.
As the shadow Chancellor says, the only way is up. We have just won two games on the trot, which is unusual for us. We are only four points away from the next team up, so we have everything to play for.
My hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) told us that this Government’s tax and benefit changes mean that families are on average £1,127 a year worse off. She has been a fantastic champion of the NHS, and she mentioned how A and E and the rest of the NHS is at breaking point. She said that Oldham never had a food bank until 2012, which is very similar to my experience in Hartlepool and to the experience elsewhere around the country. I particularly pay tribute to her for being a champion in tackling late payments to contractors, which can be a blight on small businesses trying to pay their way in the economy.
Several hon. Members who spoke are leaving the House voluntarily; I imagine that several others will leave involuntarily. I pay tribute to the hon. Members for Dudley South (Chris Kelly) and for North Warwickshire (Dan Byles). I am genuinely sorry that they have decided not to stand again, but I look forward to welcoming the excellent Natasha Millward to the House, and to Mike O’Brien coming back. I also pay tribute to the right hon. Member for Mid Dorset and North Poole (Annette Brooke), who has been a fantastic champion for park homes, on which we have worked closely together.
I want to single out the hon. Member for Northampton South (Mr Binley), who has just walked into the Chamber. I consider him a real friend to me and to business in this country, as he is very knowledgeable. Before he leaves this place, I hope that we can have a pint and celebrate the great work that he has done, and the great work he will continue to do.
It’s a date—and perhaps I can bring along the hon. Gentleman’s successor in his seat, Kevin McKeever.
The hon. Member for North Dorset (Mr Walter) made a weak joke, frankly, about how the Leader of the Opposition’s kitchen must be a butler’s pantry. That was particularly welcome from the hon. Gentleman, who I know has serious and relevant credentials for talking about the experiences of ordinary working families in this country. As an alumnus of Warminster boarding school, a former international banker and a freeman of the City of London, his comments were very relevant.
The Chancellor should have focused on the country’s long-term prosperity and competitiveness, using the Budget to do more to strengthen productivity, investment and trade, yet that did not happen. Today’s Financial Times stated:
“This was a Budget that offered little to business”.
It was revealing that the Chancellor did not once utter the word “productivity” in his statement, but tackling the productivity gap is the single biggest means by which Britain can improve competitiveness, raise living standards for all and ensure that the deficit is brought down. UK output per hour has fallen to 17% below the rest of the G7, the largest gap since 1991. It takes British workers until the end of Friday to produce what a German or American worker has produced by Thursday. The OBR reports that actual growth in productivity per hour has again been weaker than expected, with a fall in the final quarter of 2014. It states that productivity growth
“remains the most important and uncertain judgement in our forecast”.
Failing to act on productivity during the next Parliament will make the difference between the austerity well into the future that the Conservatives will provide and the better plan for business and rising living standards that Labour is preparing. We need to restore the link between economic growth and higher living standards for all. To do that, our economy needs more high-skill, high-pay jobs in the high-productivity sectors in which Britain has an advantage. That will require a proper, co-ordinated and focused industrial strategy, but Ernst and Young said yesterday that the Chancellor’s “scatter-gun approach” to UK industry will not help to deliver a proper industrial strategy, or to achieve the 300,000 additional jobs that a sector-focused strategy could produce.
Higher productivity would be boosted by higher investment, but spending on infrastructure has fallen by a third under this Government. The Red Book shows that there will be a planned reduction in capital spending over the five years to 2019-20. The OBR has said that business investment fell by 1.4% in the last quarter of 2014, following a fall of 1.2% in the third quarter. The failure of the Chancellor to announce future plans for the annual investment allowance disappointed business, has increased uncertainty and delay, and almost certainly postponed investment in new equipment and jobs.
Why did the Government not set up an independent national infrastructure commission to stop long-term decisions about the performance of our economy being kicked into the long grass? Why did the Chancellor not announce a boost to the investment in low-carbon technologies? Why did he not ensure that Britain is a world leader in green technology? The Business Secretary mentioned in passing, almost in embarrassment, changes to the green investment bank. Will the Economic Secretary put a little more meat on the bones of that proposal? The Chancellor put in place measures that will increase the demand for homes, but there was nothing to help the construction industry and the supply of new homes—things that are vital for the future of this country. Why did he not introduce a long-term innovation strategy for science and research, with a stable and secure funding framework, to improve the UK’s record on R and D?
Throughout his time in office, the Chancellor has made much of an export-led recovery. He said yesterday:
“Out of the red and into the black—Britain is back paying its way in the world today.”—[Official Report, 18 March 2015; Vol. 594, c. 770.]
He sounded less like Shakespeare and more like an episode of “Bullseye”. What he said was simply untrue. He will not achieve his objective of doubling exports by 2020. He is certainly not going to win Bully’s special prize of the keys to No. 10. I can hear the voice of Jim Bowen talking to the Chancellor: “Look at what you could’ve won.”
The OBR said yesterday:
“The current account deficit remains wide by historical standards.”
In the third quarter of 2014, the deficit was at 6% of GDP, which it said was
“the second largest quarterly deficit in National Accounts data stretching back to 1955.”
The contribution to GDP growth that is made by Britain selling things around the world is falling. Page 108 of the Red Book shows that in every one of the six years from 2014 to 2019, the percentage growth in imports of goods and services will exceed that in exports of goods and services. Our trade position is forecast to worsen in every single year. The Chancellor has failed to produce an export-led recovery.
In a very complacent and out-of-touch speech that was soaked in hubris and arrogance, the Chancellor said that people have never had it so good. After five years, he has failed. He has failed on debt, he has failed on deficit reduction and he has failed working families, who are on average £1,600 a year worse off. The Budget has shown what a further five years of Conservative rule would inflict on this country: a sharp acceleration in the cuts to public spending; a rollercoaster approach to managing the public finances; threats to our NHS and other valued aspects of British life; uncertainty for business that will lead to reduced investment; and, ultimately, poorer living standards for all. The British people will deliver their verdict on this Government in 48 days’ time. They deserve a better plan for Britain’s future, and that can be achieved only with a Labour Government.
(10 years, 2 months ago)
Commons ChamberI had intended to focus on the structural weaknesses in the British economy of stagnating business investment and a widening productivity gap. However, yesterday I received a call from Maxine Bartholomew, an old friend, who told me that her mother, Rose Stubbs, had died on Tuesday at the age of 87. Rose would have had a lot to say about the Gracious Speech and she would have said it much better and faster than I could, but I will try to do her justice.
Rose and Maxine were present at the first Labour party meeting that I ever attended, in the Borough hall in Hartlepool, where somewhat nervously I said I would like to somehow become more involved in the local Labour party. Rose took me under her wing then and she has never let me go.
Rose lived all her life in the Headland part of Hartlepool, a unique and historic part of the world, where people have far too often had to endure hard times. In an area of big characters, Rose—at 4 feet 11 inches and 7 stone wringing wet—was the biggest. Her father was a fisherman and a veteran of the first world war, living on the croft and eking out a wage in the harshest environment—in terms of both the North sea and the economic situation—of the 1920s and ’30s. In the last years of her life, Rose was angry at the return in the 21st century to the insecure employment practices of the ’20s and ’30s that characterised her father’s generation, and an economic model for this country that focused on low skill, low pay and a lack of security at work. I know, too, that she would have been angry at the absence of any meaningful provision in the Queen’s Speech to address the situation.
Rose always told me that her father had said, “Get a good job in a factory and join a union to ensure that you receive better pay and conditions,” so she would have been angry at yesterday’s announcement that average weekly earnings in the north-east fell by 7.3% last year, leaving full-time workers in our region £36 a week worse off. The situation is even worse for women in the north-east, who have lost £49 a week from their pay packets over the past year. There is nothing in the Queen’s Speech to address that, so Rose would have supported today’s Opposition amendment, which calls for
“a plan to secure a strong and sustained recovery that delivers rising living standards for the many, not just a few at the top”.
Rose believed passionately in social mobility, in giving working people the power and the tools to better themselves and to ensure that a decent day’s work was well paid. That is why she would have been impressed with what our amendment says about a compulsory jobs guarantee, the importance of vocational qualifications and a new partnership with business that emphasises the importance of apprenticeships.
Despite the forces of globalisation and discontent with politics, we in this House still have the power to effect change for the better for people like Rose and those who come after her. We need to build an economy for working people like her. She would have approved of the Opposition amendment, which is why I will be voting for Rosie tonight and the many people like her in Hartlepool.
(10 years, 3 months ago)
Commons ChamberI absolutely agree. We all want to see an empowered citizenry. We believe that would be positive for our public services by encouraging feedback on how services work for the public. But the risk with the Bill as it stands is that those with sharp elbows will do well and those without will simply be left behind. I think that is why both Citizens Advice and Unison, which after all has considerable expertise in some of these relationships, support the amendments and say that they want to see further debate and scrutiny on how we ensure that we do not have a two-tier system, with only those services that have a direct relationship getting better service responsiveness because of such legal rights, and only those people who can access services and complain getting those rights.
Trading standards has told us how it often refers people to what it calls the “sausage machine” of local council complaint services. Under this new legislation, it is not clear whether trading standards would then be able to pick up issues. That could lead to real inequalities in both the public and private sectors without advocacy and clearer information rights, which is why we have tabled the amendments.
I also want to draw colleagues’ attention to paragraph 5 of new schedule 1, which we also believe will tackle nuisance calls. We recognise that the misuse of data is as important as the analysis of data and that there is a need to put in place a proper framework on that. Many of us will have had constituents complain about nuisance calls and texts. Indeed, only this afternoon, while waiting for this debate, I received a text telling me that I could get compensation for an accident that I have not had—perhaps it came from the Government Whips.
However, we know that there is a gap at the moment where it is hard for the Information Commissioner to prove that there has been a lack of consent, where companies themselves will not be clear about whether they have the consent of the person they have bombarded with text messages and phone calls. In one six-month period alone, 71% of landline customers said that they had received a live marketing call and 63% said that they had received a marketing message. We also know that the Information Commissioner receives about 2,500 complaints a month about unsolicited text messages. We want to close that loophole. The all-party group on nuisance calls also recommended tightening the rules on consent, and Ofcom has said that it agrees. Indeed, the Government’s own report on the nuisance calls action plan said that we should do more on consent.
Paragraph 5 of new schedule 1 would enable fines to be imposed for those people who do not show that they have the explicit consent of consumers to send them that kind of marketing message. We think that is entirely proportionate and hope that Government Members, even if they are scrabbling to understand quite what the Bill would do in the public sector, will recognise the issue of nuisance calls and act accordingly to address it. I would also encourage those among us who speak up for taxpayers—perhaps Gary Barlow should take note—to support new schedule 1.
Indeed. “Take that” is the answer we would give on many of these things.
New schedule 1 looks at the cumulative impact of Government policy on households. Currently, among European nations only Estonia has a worse proportion of people struggling to pay their energy bills than the UK. Yet one of the issues that have been debated across the House is the impact of some of the long-term planning on the infrastructure building projects for our energy system in this country and the consequences for energy bills. Indeed, in November last year the National Audit Office published a damning report stating:
“Government and regulators do not know by how much overall expected new investment by the private sector in infrastructure will increase household utility bills and whether bills will be affordable.”
We know that the concept of affordability is contested by some, and we know from the evidence the Department for Environment, Food and Rural Affairs gave the Public Accounts Committee that it does not even have a target for affordability in relation to water bills. Yet many of us will have seen at first hand in our constituencies how people are struggling with those basic costs of living. We think that the Government should be able to publish an analysis of the impact of their own policies on the cost of living. Paragraph 7 of new schedule 1 asks for such a report to be provided by the Treasury. I am sure that Government Members who support transparency will want to support it.
I will say a little about new clause 2, which concerns implementation. After all, we think that with this framework we are offering the Government a way forward on information and advocacy, but we also recognise that it is no good having rights written on paper if they are not a reality in practice. One of the concerns that came up repeatedly in Committee—many of the Opposition amendments that the Government opposed related to this—is how consumers will actually access rights in practice. When will they know that they have a right to a repeat performance? At what point will the BBC tell us that we have a right to a price reduction because we did not like its commentary?
Those are all questions that the Minister said would be dealt with by the implementation group. It became a mythical beast in our minds, because it will cover so many issues, from point-of-sale information, information on remedies open to consumers, how businesses should be informed of these rights, the length of time before people can get a refund, the time limits people would get on a repair, replacement or repeat performance, or even testing consumers’ understanding of their rights.
Time and again the Minister said that we should leave it to a body of experts, which we believe—we are not entirely sure—includes organisations such as Citizens Advice, Which?, the Trading Standards Institute, the British Retail Consortium and even the Financial Conduct Authority. They are worthy bodies indeed to look at these issues, but we had some concerns in Committee, having seen some of the minutes of their meetings, which are not very frequent. Despite their good works, any recommendations they make would not be statutory guidance. Therefore, new clause 2 simply states that the recommendations they make about the rules on how the Bill should be implemented should have meaning, that they should have real teeth, that it is no good saying that it would be good for consumers to be informed of their rights if that does not actually happen at the coal face or at the shopping till.
In proposing this first group of new clauses, we are trying to make this Bill what it could be. We are trying to find the hope at the bottom of Pandora’s box. We are trying to ensure that consumers have access to the information and advice they need to make good choices the first time around. The old model of politics, in which progress depends on centralising these abilities, will no longer work with our communities. The task at hand, we believe, is to give the public more control and more power over their lives to enable them to make the choices that they want to make first time. As it stands, the Bill will leave citizens to navigate services alone, without the resources, either money or skill, to struggle to make them work.
We want to do something different. We want to reform the public sector by devolving power to people, investing in the prevention and co-operation they need to make services work for them, to stand shoulder to shoulder with every consumer and every citizen, not blunting the efforts of those who already fight for services, but enabling more people to give the feedback about the kinds of services we want in the public and private sectors. We believe that new clauses 1, 2, 3 and 5 and new schedule 1 will enable that framework to be put in place, and we hope that the Government will respond positively to the points that we have made as a result.
(10 years, 5 months ago)
Commons ChamberIt is a pleasure to follow the hon. Member for Rugby (Mark Pawsey). He mentioned negative equity. I fear that when interest rates rise, as they may well do over the next few months, there will be an awful lot more people across the country— including many of his constituents and mine—in negative equity. That is a massive concern for this country’s long-term sustainability.
I want to focus my remarks on productivity. Productivity remains the vital element of Britain’s competitiveness. If British makers and doers are to compete in world markets, our productivity has to match or better that of our rivals, yet we are falling behind our competitors. Last month the Office for National Statistics released data showing that output per hour in the UK was 21% below the average of the other G7 countries—the widest productivity gap our country has seen since 1992. Output per worker in the UK fell year on year, while it rose for the rest of the major industrialised nations. That is probably one reason why our share of exports is falling and expected to fall further, as per the Red Book, which means that we will not meet the target that the Chancellor set of doubling our exports by 2020.
Without productivity growth, Britain cannot increase its competitiveness and there will be no long-term improvement in living standards. Wage inequality will increase and in-work poverty will worsen, which will mean that my constituents in Hartlepool, who saw a year-on-year actual—not relative—fall of 6.1% in average full-time wages in 2013 will see further real falls in their wages. That is on top of the fact that Hartlepool has lost £28.9 million since 2010 as a result of public sector cuts—a drop of 24.5% since 2010. That means that spending power in Hartlepool has diminished by £680 a household since the general election. The cost of living crisis in my community will get worse if the Government do not address the issue of productivity.
The Chancellor did not mention the word “productivity” once in the financial statement. Without business investment in innovation and technology and better skills for workers, our living standards will fall over the long term. In his first Budget, the Chancellor forecast that business investment would rise by 8.1% in 2011, 10% in 2012, 10.9% in 2013, 9.5% in 2014 and 8.2% in 2015. The actual out-turn figures to date have been 3.1% in 2011 and, as this year’s Red Book shows, 3.9% in 2012. The forecast is an actual fall in business investment of 1.2% in 2013. I hope that I am wrong and that pent-up demand for investment will be unleashed in the next few months, but given the record of the past four years, the figures in this year’s Red Book suggesting business investment growth of 8% in 2014 and 9.2% in 2015 seem widely exaggerated and optimistic.
This Budget also marked the time when the Government gave up any ambition for this country’s becoming a leading player in the future of global low-carbon technology. The CBI report “The Colour of Growth” found that investment in the low-carbon economy could have accounted for more than a third of all growth in 2010-11 and had the potential to halve the UK trade deficit by 2014-15. It seems a long time since the Chancellor stated in his first Red Book in June 2010:
“The Government is committed to playing its part in moving to a low-carbon economy. The transition will change the shape of industry, growth and jobs. As part of this, the UK needs £200 billion of investment to 2020 to provide secure low-carbon energy.”
This Budget provided nothing to help realise that ambition, and in certain ways, such as the ending of the renewable energy enterprise investment scheme, it actively worked to deter investment in the low-carbon economy. That target of £200 billion of investment in a decade, which would have helped manufacturers such as those in wind turbine supply chains in my region, the north-east, and my constituency, will now be difficult to realise.
The fact that the Government will exempt from the carbon floor price fuel used in combined heat and power plants for electricity generated to supply manufacturing firms is welcome, and I have asked parliamentary questions about that. Mitigating actions for energy-intensive industries might also help manufacturing, but not immediately, because the announcement in the Budget does not kick in until 2016-17. As my hon. Friend the Member for Penistone and Stocksbridge (Angela Smith) said, it only reverses something that happened on the Chancellor’s watch last year.
Business rate reform, which would help manufacturing, was not mentioned in the Budget. Expanding capital allowances might help incentivise business investment, but again, as my right hon. Friend the Member for Wolverhampton South East (Mr McFadden) mentioned, that measure only reverses the cut that the Chancellor made to such allowances in his first Budget. The tax relief to boost North sea oil and gas investment will only remedy the damage that he did to the sector in his Budget of 2011.
Those matters all show a wider problem in the Government’s economic and industrial policy. Businesses want long-term policy stability and a stable framework that gives them the confidence to plan and invest for the long term. Those oscillations in policy, with a measure in one year’s Budget reversed in a subsequent Budget a year or two later, do not give companies the stability and certainty that they need. It is little wonder that business investment has flatlined and our productivity has fallen behind that of our rivals. That is a real weakness of the Budget that the Chancellor shows little appetite to resolve for the long-term good of the British economy and the good of my constituents.
(10 years, 5 months ago)
Westminster HallWestminster Hall is an alternative Chamber for MPs to hold debates, named after the adjoining Westminster Hall.
Each debate is chaired by an MP from the Panel of Chairs, rather than the Speaker or Deputy Speaker. A Government Minister will give the final speech, and no votes may be called on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
It is a pleasure to serve under your chairmanship again, Mr Streeter. I thank my hon. Friend the Member for Coventry South (Mr Cunningham), and the hon. Members for Portsmouth North (Penny Mordaunt) and for North Swindon (Justin Tomlinson). There was also a good late substitution when the hon. Member for Nuneaton (Mr Jones) came on to the pitch. Most of all I thank the hon. Member for Folkestone and Hythe (Damian Collins) for securing the debate. The manner in which he advanced his excellent, eloquent argument was first class, and he set the tone for the rest of the debate. He closed his remarks by explaining that the issue is one that arguably affects all our communities. It certainly affects millions of football fans.
I was particularly pleased that my hon. Friend the Member for Wirral South (Alison McGovern) was here, because she is a fan of Liverpool football club, and Bill Shankly, one of this country’s greatest ever managers, famously said:
“Some people believe football is a matter of life and death, I am very disappointed with that attitude. I can assure you it is much, much more important than that.”
In many ways that is true, as we have heard today. Football makes a remarkable contribution to society. In my own patch, about a fifth of Hartlepool’s population travelled to Cardiff’s Millennium stadium to see Hartlepool United against Sheffield Wednesday in the league one play-off final in 2005, where we were cruelly robbed by an appalling refereeing decision. [Interruption.] It was a fabulous stadium.
Football provides a place with a sense of identity and belonging, and a recurring theme of the debate has been that clubs are much more than merely businesses. They are vital social institutions that bring and bind communities such as the people of Hartlepool together. There is a strong case for saying that in matters of business, governance, ownership, transparency about those matters and insolvency, the wider effects on society and communities should be considered.
It always strikes me as odd that, given football’s central importance to our society and communities, its finances are often precarious. Every year, Deloitte, a firm for which I used to work—I draw the House’s attention to my entry in the Register of Members’ Financial Interests—produces a review of football finance. The latest review showed that in the 2011-12 season, the total revenues of the 92 clubs in the top four divisions of English football exceeded £3 billion for the first time. However, the Premier League accounted for almost four fifths of that total. Lower down the leagues, it is a different story. In the 2011-12 season, the average revenue of a league one club was £5 million, with an average net loss of £2.4 million; and in league two revenue was £3.3 million, with an average net loss of £0.3 million.
My local club, Hartlepool United, has had its fair share of flirtations with insolvency, although not in recent years, thankfully. We are infamous for a record number of re-elections to the Football League, and in the 1980s there was a time when we owed £52,000 to the Inland Revenue and a six-figure sum to other creditors. We were days away, in 1983, from being wound up, and the bailiffs took the goal posts, goal nets and grass cutter to pay the debt—not that we noticed much, because that year we finished third bottom, with a goal difference of minus 30. The only people below us, funnily enough, were Hereford United. It is funny how things go. We were actually wound up in the High Court in 1992-93 but the town’s club was saved by a great man—Harold Hornsey—and that helped to put Hartlepool United on a much better, sound financial footing.
Even though a club may be small, it makes a contribution to its town or city, and to society, and gives people pride even when it is not playing as well as it might or as well as people would like. Those are important factors for communities, and we should not take away from that. Perhaps a club will never become a Manchester United, Liverpool or Rangers, but it can always be an Ards football club, or a Hartlepool United. Those things are important to society.
I must disagree with the hon. Gentleman. In my lifetime, Hartlepool United will become a Manchester United or a Liverpool, and I will live to see us lift the champions league trophy, so the hon. Gentleman is wrong in that respect. He is right, however, about the vital contribution that clubs make to local businesses. Hartlepool borough council recently undertook an assessment of Hartlepool United’s economic impact on local businesses and, astonishingly, the club provides something like £5 million to Hartlepool’s economy.
The figures I have quoted show how inherently uncertain is the business model on which much of football is based. The hon. Member for Folkestone and Hythe said that 46% of clubs have been through a formal insolvency procedure since 1992. No other sector of the economy has had that level of insolvency, which highlights—this was one of the hon. Gentleman’s most articulate points—the possibility of reckless spending. Entry into the premier league—the most exciting and followed league on Earth—could mean as much as £50 million to a club. It is the glittering prize to which all supporters and owners aspire, but it leads to reckless gambles in the transfer market, which could undermine the financial viability and long-term security of a club. Some argue that the football creditors rule prevents clubs from spending money on players whom it cannot afford, but we have heard today that that is far from the case. The football creditors rule means that there is no inherent brake on transfer spending or on—as the hon. Gentleman said—the shared risk of a club not being paid for the transfer of a player, because football creditors are paid in full at the expense of other unsecured creditors.
I agree with the hon. Gentleman’s point. Does he agree that, without the creditors rule, clubs would have to be much more open about their financial status, because that would be a prerequisite of clubs wanting to enter into transactions with them?
That is a fair point. The insolvency rule specifically, as well as the hon. Gentleman’s wider point about governance and transparency, would be better for the game. He also suggested replacing the football creditors rule with some form of sinking fund, and I would be interested to hear whether the Minister is working with the Football League, the Football Association and others to examine such a proposal.
The rule can often act as a drag on a club returning to speedy financial health. I am pleased that the hon. Member for Portsmouth North was here earlier, because Portsmouth football club is now owned by the fans, but still has a significant liability of some £7 million owed to ex-players, which the supporters, because of the football creditors rule, must pay in full. That cannot be a good way of getting the club back to financial health. The need to curb the tendency to overspend makes the financial fair play rules, which cap the salaries of league one and league two clubs against a percentage of their turnover, so important, but are the rules the full answer? What will the Minister do to ensure that they are complied with and enforced?
The essence of today’s debate, which has been articulated by many hon. Members, is this: why should we have the football creditors rule if it means that clubs and players are paid in full ahead of all other creditors when a club enters insolvency? This quote from former Sunderland chairman, Niall Quinn, has been mentioned before, but it is worth repeating, because it sums up the problems of the game. He said:
“The fan in the street meets the guy who printed the programmes who didn’t get paid and he sees the player driving out in the big car who was paid, and I think that’s damaging.”
As mentioned by several hon. Gentlemen, there seems to have been a marked shift in tone and emphasis since the Government response to the original Culture, Media and Sport Committee report in 2011, which stated:
“We have sympathy for those who described the consequences of the rule as ‘morally indefensible’.”
“Morally indefensible” is an extremely strong phrase, and the Government sympathise with the position, from which I can infer that the Government wanted to see an end to the rule and wanted to move, through legislation if necessary, as quickly as possible. After the follow-up investigation by the Select Committee, however, the Government response in April 2013 stated that the Government hope that financial fair play rules will
“negate the need for football to rely on the Football Creditors Rule in cases of club insolvencies. However, we will monitor the effect this self-regulation has on the financial discipline and solvency of clubs, and, if necessary, will re-consider whether legislation is needed to address this issue.”
The tone is markedly different. The hon. Member for Hereford and South Herefordshire (Jesse Norman) also referred to a written parliamentary question from last month, in response to which the Under-Secretary of State for Culture, Media and Sport, the hon. Member for Maidstone and The Weald (Mrs Grant),said:
“The Financial Fair Play rules now introduced across football which, combined with compliance checks that the FA and league administrators carry out on participating clubs, aim to improve financial management and stability across the leagues…Legislation remains an option if the football authorities do not demonstrate that they can reform their own governance of the game…The Government’s position on the football creditors rule is clear.”—[Official Report, 27 February 2014; Vol. 576, c. 495W.]
As we have heard time and again in today’s debate, the position is far from clear. The Government seem to be shying away from the necessary heavy tackle. What are the criteria for legislation to be brought forward? What is the time scale on such legislation? How long do clubs have to demonstrate reform of governance and financial management before the Government act?
There is a wider point here about insolvency policy in general. The Opposition are keen to improve the insolvency regime, so that the public and investors have greater confidence that delinquent directors who are unfit to run a company are pursued efficiently and effectively, which is not the case under this Government. In 2012, just a fifth of reports passed to the Insolvency Service by insolvency professionals resulted in a disqualification court order or an undertaking, compared with 45% 10 years ago. Why has there been such a drop? Why are the Government allowing unfit directors to walk away from their responsibilities? What are the Government going to do about it? Last week, we tabled an amendment to the Deregulation Bill to scrap the need for insolvency practitioners to submit certain forms in hard copy and allow them to do so online, as a means of streamlining the process and ensuring that insolvency policy can be brought up to speed. Will the Minister accept that?
I thank all hon. Members for contributing to today’s debate, which has been incredibly important. We have seen a cross-party approach to this important matter, and I hope that the Minister will provide what hon. Members are calling for: greater clarity and a plan to address the wider point about an insolvency policy that is allowing delinquent directors to get off scot-free both in football and elsewhere.
I appreciate what the hon. Gentleman is highlighting. I have sympathy for the views he is expressing.
To back up what the hon. Member for Folkestone and Hythe (Damian Collins) says with a specific example, Plymouth Argyle FC went into administration in 2011. Its football creditors were paid in full, but the unsecured creditors received a dividend of 0.77p in the pound—less than a penny. That cannot be a fair means of making sure a business can become viable. Will the Minister change legislation to change that?
Changing the legislation would not necessarily have made any difference. The money that goes to pay the football creditors does not come out of the pot of assets that is used to pay the unsecured creditors. There is no evidence that if we changed the football creditors rule there would be more money available for the unsecured creditors. They would quite possibly still get exactly the same return on a pound. Clearly, in the case the hon. Gentleman cited, the return was extremely low, but I have seen no evidence to suggest that it could have been greater. It is not the same pot of money that is used to pay each group.
To put the matter in the context of insolvencies as a whole, in 2013 there were about 20,000 corporate insolvencies in England and Wales, of which around 2,400 were administrations. The Government feel that using primary legislation to outlaw a provision that is relatively infrequently used is disproportionate, particularly given that the industry is already trying to improve the underlying financial stability of clubs via the financial fair play rules. Other than those to which special regimes apply, all insolvencies are subject to the same legislation, the Insolvency Act 1986. It would be potentially confusing for users of that legislation if we modified it just for football insolvencies. No other industry is treated differently under general insolvency legislation, and the Government feel that there is no compelling reason why football club insolvencies should be.
Football is undoubtedly incredibly important for fans. I understand the frustration of fans whose clubs become insolvent through no fault of those in the stands or on the terraces. Given the emotional importance of football for fans, I understand how distressing it can be when a club goes into insolvency. However, as I said at the start, the rules that govern corporate life cannot be selectively applied—they apply across the board—and those who act as directors of football clubs should act properly in execution of their duties.
A number of hon. Members have highlighted concerns about directors. The law allows the Secretary of State to undertake civil proceedings against company directors who are found to have been culpable in the failure of a company. However, until a person has been disqualified, they are free to act as a director of any number of companies in the UK, irrespective of their track record or any criminal charges that may be pending, although someone who is personally bankrupt or subject to bankruptcy restrictions is prohibited from acting as a director.
Hon. Members have mentioned the owners and directors test, which places additional restrictions on clubs. I understand that those restrictions are increasingly based on intelligence, and that football authorities are co-operating to make the test as effective as possible.
Overseas convictions were mentioned. At the moment, there is nothing to prevent a person who has been convicted of offences in connection with a company overseas from acting as a director of a UK company. However, the “Transparency and Trust” discussion paper published last year included a proposal to enable the Secretary of State to bring disqualification proceedings in the UK against anybody convicted of a serious offence in connection with a company overseas. We will publish the Government response to that consultation soon. The issue is currently being considered.
We want the UK to be a trusted place for people to carry out business. Part of that is ensuring that directors of limited companies take responsibility for their actions and have regard to creditors and employees. The majority of directors do that effectively, but action can and will be taken against those who do not play by the rules. When a company enters formal insolvency, such as administration, the administrator has a duty to report on the conduct of all directors in office in the previous three years. The Insolvency Service, which acts on behalf of the Secretary of State, looks at all reports in which the administrator suggests that misconduct has occurred, and when it is in the public interest to investigate, it will do so.
If disqualification proceedings are highlighted as being necessary, once the Secretary of State has authorised them, the company director can either give an undertaking or be disqualified. If disqualified, a director can be banned for up to 15 years, depending on the seriousness of the misconduct. Over 100 directors are disqualified each month; the average period of disqualification is around six years, and over 10% of disqualifications are for more than 10 years. That is all a matter of public record, as details are held at Companies House.
Various football directors have been disqualified over the years. For example, in 2011 four directors of Luton Town football club were disqualified for a combined total of 19 years, a significant penalty. They were found to have breached Football Association and FIFA rules and caused the company to trade at risk to, and to the detriment of, HMRC.
Hon. Members raised issues about specific clubs. I am an MP for Cardiff, where the Bluebirds now wear red, and was previously a local councillor in Merton, when Wimbledon football club was having a number of local difficulties about where they were going to play, so I have witnessed at first hand the trauma that club ownership issues can cause to supporters. A number of Members have mentioned their concerns about Coventry City football club. The hon. Member for Coventry South raised the golden share, which I mentioned earlier. My understanding is that the Football League has learned from the case of Coventry City and has strengthened its checks on who holds the golden share in response.
(11 years, 5 months ago)
Commons ChamberIt is always a pleasure to follow the hon. Member for Foyle (Mark Durkan), who represents a very different part of the United Kingdom from the one I represent. It is always informative to listen to his contributions, and I always learn something from them.
There are some very good points in the Budget for the people of Bedford and Kempston. The cuts in national insurance rates—Labour’s job tax—are a welcome change, meaning that the people of Bedford are more likely to have a job. When they travel to work in their cars, they can look at the petrol pump and see that fuel duty has been frozen. When they arrive at work, they will know that at the end of the day, thanks to the increase in the personal allowance, they will keep more of the money they have earned. When they get home in the evening and go out to the pub with their mates, they can raise a pint to the Chancellor and say, “Thank you very much for scrapping that other iniquity of our tax system left by the last Labour Government—the beer duty escalator.” Those are all very welcome measures. On fuel duty, it is particularly important for everyone to realise that when they fill up their tank and look up at the price per litre, 13p of that is Labour’s price on fuel, which applies every time we fill up our cars.
Let me draw your attention, Mr Deputy Speaker, and that of Members to page 12 of the Red Book, which features an interesting chart—I see Members avidly reaching for it—showing the growth of debt in this country from the mid-1990s until 2010. It shows that the last Labour Government left this country as the most indebted nation on earth. They grew our debt—this does not include Government debt, which has to be added on top—from two times to five times the size of the economy. That is a massive debt that must be paid for by our children and grandchildren. I wonder whether the Economic Secretary would consider adding the Government debt to this chart and requiring to be displayed on a poster in every single school, so that our children know what they are going to have to pay back owing to the policies pursued by the last Labour Government. Their policies were an abject failure of economic management.
In the private sector, when companies have poorly performing management, we fire them and bring in other people. In the Labour party, they promote them.
The Leader of the Opposition and the shadow Chancellor were promoted, yet their fingers are all over this increase in debt. I must say that the hon. Member for Hartlepool (Mr Wright) has it right. Those two are acting as bed blockers for more talented people on the Opposition Front Bench. Let us hope there will be a change in that regard some day.
Let me say more broadly, if I may—I sometimes get a little controversial—that the debates I have heard in this place since becoming a Member of Parliament have reinforced my view that the political class has let down the people of this country, regardless of political party. The debt is not just the fault of the last Labour Government but of the country as a whole, which had got itself into terrible levels of debt.
There are two ways of looking at the problem. The Government are borrowing £1 billion every three days, the interest on which amounts to £15 million. So, every three days, £15 million has to be taken out of the budget for our schools and our hospitals. That is a very considerable burden that places pressure on the Government, and I say to the Economic Secretary that I am not sure the Government have done enough to bring public expenditure under control. We have to go further. We need to look at the Heseltine review of the way the Government spend their money—not as an end-point, but as a starting-point for a much more radical reform of how we provide our cherished public services, so that we can deliver on the promise of providing more for less money.
In my remaining time, let me mention the Help to Buy mortgage guarantee scheme. I have read the scheme outline and there are some interesting charts in it, but an important chart is missing—that for the loan-to-value ratio over time.
I thank all hon. Members who have contributed today. By my reckoning, we have heard valuable and insightful speeches from 30 hon. Members—although, with the exception of the Business Secretary, no Liberal Democrats. All those hon. Members brought to the debate their feelings about, and analysis of, the impact that the measures in the Budget will have on families and businesses in their constituencies and across the country. We have heard about massage parlours, whip cracks and the Kama Sutra—but I shall move on.
At the start of the debate, we heard a tour de force from the shadow Chancellor, who exposed the complete confusion about the new Help to Buy scheme, suggesting that we now have a second omnishambles Budget. We are expecting a U-turn very shortly. It seems that the scheme will not help hard-pressed families get a foot on the property ladder: it is actually a bung, a spare-home subsidy for millionaires. That is not what the housing market needs, and it is certainly not what the economy needs.
We have heard that public sector net borrowing has been, with acute financial management, revised down next year by £0.1 billion. I thought that would have entailed the Treasury going round Whitehall telling Departments not to order photocopying paper this month, but it is a lot more serious than that. As my hon. Friend the Member for Denton and Reddish (Andrew Gwynne) said, we are seeing £2.2 billion moving away from the NHS. Valuable, important and often life-saving operations may not happen as a direct result of the Government’s attempts at financial management. That is an absolute disgrace.
I am afraid that I do not have time.
I would support a comprehensive, intelligent and active industrial strategy, based on rigorous analysis and for our competitive advantage. I commend the Government on Monday’s announcement on the aerospace strategy, which is welcome, but there was precious little in the Chancellor’s statement yesterday to back up such an approach.
I was particularly concerned to read in table 2.4 of the Red Book that both resource and capital departmental expenditure limits—DEL—for the green investment bank will be cut to zero in 2014-15. Given that the CBI and others have rightly identified the low carbon sector as a potential growth area in which the UK can be a leading global player if we have the right long-term vision and targeted investment to provide certainty, the figures in the Red Book do not fill me with confidence and I would be grateful if the Minister could outline the Government’s longer term plans and investment for the green investment bank.
Similarly, I was disappointed that no mention was given in the Budget to science. The Chancellor made great play of the need for Britain to compete in the global race. I agree with him. If we are to avoid slipping behind in the international competitiveness race, we must prioritise science and technological innovation, because if we do not, our future industrial capacity will be undermined. Will the Minister outline why science was not mentioned in the Budget?
Several hon. Members, including my hon. Friend the Member for Denton and Reddish and the hon. Member for North Swindon (Justin Tomlinson), mentioned business rates and retail, and they were right to do so, because the Budget certainly did not. David McCorquodale, head of retail at KPMG, said:
“The decision to go ahead regardless and increase business rates will squeeze embattled retailers further and will not deliver the respite the retail sector needs to recover.
Retailers are now left facing a 2.6% hike to their business rates bill, a move which will add £175 million to their overheads. Amongst a backdrop of flatlining sales and continued austerity, this is not a welcome move by the Government.”
Can I ask the Minister why the Government did not help the embattled retail sector?
In today’s debate, many hon. Members, starting with the shadow Chancellor, reminded the House of what the Chancellor had promised in the run-up to the general election and in his first Budget. He set himself several key targets and tests by which his economic record, competency, judgment and capability should be judged. First, the Conservative party’s manifesto stated that the first objective would be to
“safeguard Britain’s credit rating with a credible plan to eliminate the bulk of the structural deficit over a Parliament.”
In early 2010, he backed that up by saying that
“our first Benchmark for Britain is to...cut the deficit more quickly to safeguard Britain’s credit rating.”
We all know how successful the Chancellor’s performance has been on that score. Curiously enough, there is no mention of the credit rating in the Red Book; nor was it mentioned in the Chancellor’s speech yesterday. Funnily enough, I did not hear many Government Back Benchers mention how important the credit rating is either, although my hon. Friends the Members for Birmingham, Selly Oak (Steve McCabe) and for Scunthorpe (Nic Dakin) certainly did mention it.
At the start of this Parliament, the Chancellor said that the current structural deficit would be eliminated by the end of 2014-15. Yesterday’s Red Book, however, shows that the Chancellor’s target to balance the books by the end of this Parliament will be missed by three whole years. Public sector net borrowing at the end of this Parliament is now forecast to be approximately £96 billion—five times larger than the Chancellor expected it to be in 2010. Every year, he comes to this House and has to admit that borrowing is rising, and that the time scale to cut the deficit is growing ever longer.
The Office for Budget Responsibility has said that deficit reduction has stalled. Net borrowing is higher in each year as a result of weaker economic outlook. My hon. Friend the Member for Barnsley Central (Dan Jarvis) reminded us that the Government are forecast to borrow £245 billion more than they originally planned, and my hon. Friend the Member for Luton South (Gavin Shuker) said that borrowing in the five years of this Government is higher than it was in the 13 years of the previous Labour Government. The dramatic deterioration in sentiment, even since Christmas, is striking. According to Red Book figures, the Government now expect to borrow £55.7 billion more in the next five years than they thought they would have to even three months ago.
The Chancellor assured us that, as a result of his policies, net debt would be falling as a proportion of national income by 2015. That was one of his fiscal targets. Judge me, he said, by my ability to get debt as a share of GDP down. However, the Red Book reveals the true failure of the Chancellor’s approach: net debt as a proportion of national income is not falling but rising in every single year of the rest of this Parliament and beyond, from 75.9% of national income this year, to 79.2% in 2013-14, to 82.6% in 2014-15, to 85.1% in 2015 and peaking at 85.6% in 2016-17. As the OBR states:
“As borrowing now falls more gradually, debt rises more quickly as a share of GDP.”
We are now paying more in debt interest—£51 billion a year, which is more than we spend on the defence of this country—than the £44 billion when this Government came to office. The TaxPayers Alliance, which I do not think is a friend of the Labour party, said today:
“By 2017-18, even on the OBR’s optimistic forecasts, the Coalition Government will have more than doubled the official national debt it inherited.”
The Chancellor is refusing, in the face of all the evidence, to change direction in economic policy, as my hon. Friend the Member for Barnsley Central said. On every single test of economic policy that the Chancellor has set himself and asked to be judged on, he has failed, and because of those failures families in Britain are struggling. Life is worse now and living standards are lower for ordinary families than they were three years ago, and they will be worse in 2015. The Chancellor is pursuing this course for reasons of political vanity and ideological arrogance, rather than from economic necessity. His incompetence and lack of judgment have meant that he has boxed himself in. There is nowhere for him to go with any dignity and he refuses, for reasons of pride rather than economics, to change course. As Andrew Smith, chief economist at KPMG in the UK said in response to the Budget yesterday:
“It is now clear that ambitious deficit reduction is stunting growth. Hemmed in by what is left of ‘Plan A’, today’s measures amount to little more than rearranging the deckchairs…hopes that exports and private business investment will come to the rescue depend crucially on strengthening overseas markets—something over which neither the Chancellor nor the Bank of England have any control.”
The Chancellor is fast running out of excuses. He has blamed the lack of growth in the economy on the snow, on the rain and on the sun. I am sure that the recent eruption of Mount Etna must also somehow be causing a drag on the British economy. He has blamed lack of growth on the diamond jubilee, the Olympics, the number of bank holidays and, as far as I am aware, on the fact that Girls Aloud have reformed and split up, and the Rovers Return has burned down. The excuses have got to stop. The Chancellor needs to look in the mirror.
Despite the difficult European situation, the flatlining economy is down to the Chancellor. A deficit reduction programme without a strategy for growth is no deficit reduction programme at all. Growth forecasts have halved, living standards are falling for millions of people, borrowing is soaring and control of the public finances have been kicked well into the next Parliament. The hon. Member for Bedford (Richard Fuller), for whom I have a lot of respect, has said that we should not kick the can down the road, but with this Budget that is precisely what the Chancellor is doing. He and the Government need to acknowledge their failings and change course, or, better still, make way for a team that will help fulfil the British promise, not hinder it.
(11 years, 6 months ago)
Commons ChamberMy hon. Friend raises a very important point. In the 13 years of the previous Government, the welfare budget went up by 62% in real terms; it was out of control. If we are going to deal with the problem that they left behind, we have to make sure that everyone makes a contribution.
3. What recent assessment he has made of the effect of the Government’s fiscal policies on the level of long-term youth unemployment.
Despite difficult economic circumstances, more people in the United Kingdom are in work than ever before in our history. Unemployment, youth unemployment and long-term unemployment are now falling. Through initiatives such as our city deals programme we will work with local communities to respond to particular local challenges.
Back in the real world, long-term youth unemployment in Hartlepool has risen by 86% since this Government took office. How much of that increase can be attributed to the Government’s economic policies and which of those policies will the Minister now change to help the jobless youth in my constituency?
I know that the hon. Gentleman was a member of the previous Government who left the mess that we are clearing up, but I would have thought—[Interruption.] I take an interest in Teesside, as he knows. In his article for the Hartlepool Mail, he said:
“The town’s economy has the makings of a modern, innovative and highly skilled manufacturing”
town. The hon. Gentleman should get behind his town and support the city deal for Teesside that his colleagues are campaigning for.