Budget Resolutions and Economic Situation

Ian Swales Excerpts

Wednesday 19th March 2014 Commons Chamber

[Ian Swales (Redcar) (LD)]

This Budget represents another step in dealing with the economic mess left by the Labour party. Everybody at home knows that if they live on borrowings and max out their credit card, they will one day have to cut their standard of living. It is completely disingenuous of the Labour party to pretend otherwise. The Liberal Democrats want a stronger economy and a fairer society. We are proud that our No. 1 manifesto commitment to cut income tax for 25 million people by raising the threshold to £10,000 will be met next month, and that the Chancellor has gone further in this Budget by raising the figure to £10,500.

We hear a lot from the Opposition about tax cuts for millionaires, and they are now complaining about tax rises. Since April 2010, millionaires have paid higher taxes on their income, on their capital gains, on their pension contributions, on their spending and on their private jets, and they have had to engage in less tax avoidance. We know that the Chancellor in the previous Labour Government, the right hon. Member for Edinburgh South West (Mr Darling), put the higher rate of income tax up from 40%—they kept it at that level throughout their time—to 50% on 6 April 2010. That was an important day for two reasons: first, the higher rate went up to 50%; and secondly, Parliament was dissolved. Labour Members were on the Government Benches only for a few hours while the top rate was 50%, so we should not take any lessons from them.

All the Budget documents show that the rich are paying a lot more. [Interruption.] The hon. Member for Wrexham (Ian Lucas) shouts from a sedentary position about VAT, but VAT is on spending, and I have news for him: millionaires spend the most, and they therefore pay the most VAT.

[Ian Lucas (Wrexham) (Lab)]

When the hon. Gentleman sought the votes of the people of Redcar, he assured them that he would not support a rise in VAT, so why did he do so when he went in with the Tories?

[Ian Swales]

When I stood in Redcar, I had not seen the note left by the then Chief Secretary to the Treasury, the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), saying that there was no money left.

I am pleased that the Government will give further support to apprenticeships. There have been 1.5 million of them in the country, with more than 4,000 in my constituency, and I welcome today’s news about an extra 100,000 apprenticeships. I welcome the cut in beer duty, and I pay tribute to my hon.—he ought to be right hon. one day—Friend the Member for Leeds North West (Greg Mulholland) for his relentless campaigning on the issue. I also welcome the cut in fuel duty, which will help hard-working people all over the country. We would certainly have paid a lot more under the Labour party’s plans.

[Lorely Burt (Solihull) (LD)]

Will my hon. Friend also welcome the scrapping of the duty escalator for wine? Certain Liberal Democrat Members like a glass of wine, but that is beside the point. The wine industry has suffered, but it will be much better off under the new move.

[Ian Swales]

I am well aware that my hon. Friend enjoys a glass of wine. It is clearly good news for the wine industry that taxes will be frozen.

Players at Beacon Bingo in Redcar—they had to endure my calling the numbers a few weeks ago as part of the Boost Bingo campaign—will be delighted not only that their campaign to cut the duty from 20% to 15% has been successful, but that the Chancellor has gone further by cutting it to 10%. Bingo is a harmless social form of gambling and, from having talked to many players that day, it seems to me exactly the kind of thing that we should not penalise too heavily, as opposed to the high-stakes fixed odds betting terminals visited on us by the Labour party. I totally support the rise in taxes on those machines, of which we would like to see less.

I have a race course in my constituency and have campaigned in this House for the past three years for offshore bookmakers to be charged the betting levy. I am delighted to see that that is in today’s Budget. It will be a huge boost to the racing industry.

Other speakers have mentioned the measures on savings and annuities. I will not say much on those, except that the measures on annuities will be warmly welcomed. I receive a lot of correspondence from constituents who feel locked into products that have a very poor return. In some cases, they are not able to draw down the amounts that they want. Loosening all that is the right thing to do. As the Chancellor said, people should be able to access their own money. I welcome the safeguards in the small print to avoid people spending all their money and becoming dependent on the state. There is a threshold in the detail.

There is a lot of manufacturing in my constituency. We must remember that manufacturing supports many of the service industries. If one looks at the classification of industries, one will see that industries such as logistics exist mainly because of manufacturing. Those who say that the manufacturing industry is only a small part of the economy forget all the service industries that depend on it. The previous Government had a shameful record on manufacturing. It halved as a proportion of the economy and my constituency felt that particularly badly. I am pleased to see the growth that is happening.

I am pleased about the measures on energy-intensive industries. My constituency has not only a steel industry, but a large chemical complex. The employers will welcome those moves. I also welcome the moves on combined heat and power plants, which are relevant to my constituency. All those measures will help Britain to be more competitive and they are certainly needed.

We worry about the amount of money that sits on companies’ balance sheets and is not invested, so we should all welcome the increase in capital allowances. They were raised from £25,000 two years ago to £250,000 and are now being increased to £500,000. That is a huge incentive for people to invest in new equipment, plant and facilities. I have a special reason for welcoming the £60 million for new technology to support carbon capture, which is mentioned in the Red Book, because it is extremely relevant to my constituency.

[Caroline Lucas (Brighton, Pavilion) (Green)]

The Lib Dems used to pride themselves on their green policies, so I wonder whether the hon. Gentleman is equally happy that the Government are hell-bent on getting every last drop of oil out of the ground, as the Chancellor said? While I am at it, does he agree that, although the £140 million for repairing flood defences is welcome, it is well short of the £500 million that we need?

[Ian Swales]

I am disappointed that, having given way to the hon. Lady, she took quite a lot of my time. I will see her outside the Chamber with the answers to those questions.

There are many further measures in the Red Book on corporate tax avoidance, about which the Chancellor did not go into detail. It is good to see that further steps are being taken on electronic services and the shifting of profits. There is more to do, but there are some good things in the Red Book about that.

I was interested to hear what the Labour party had to say. I must say that I was hoping for a lot more. We heard about the bankers bonus tax—the gift that keeps on giving. I was thinking about this the other day. If the Labour party wants to put income tax up to 50% and to tax bank bonuses at 50%, I have news for it: 50 plus 50 is 100. How many banks will keep on paying bonuses if the entire amount goes to a future Labour Government? They will find different ways to reward their staff, as they already are doing.

That policy does not hang together at all, and neither does the electricity price freeze, which is criticised by everybody, from large energy companies down to organisations such as uSwitch and Age Concern, for being completely impractical. I was at an event last week about the price freeze, where even a Labour shadow Energy Minister failed to defend it. I think that we will hear the end of that one quite soon.

The hon. Member for Halton (Derek Twigg) spoke about social housing, but made no apology for the fall of 421,000 homes under the Labour Government—a truly shocking record.

The right hon. Member for Newcastle upon Tyne East (Mr Brown), who is not in his place, made some powerful points about inequality. I was listening very carefully. I do not necessarily understand how it is calculated, but the Red Book states that

“inequality is at its lowest level since 1986.”

That is because we are taxing people with the broadest shoulders, despite what the Opposition claim. I know that we have a long way to go, particularly in my area in the north-east, which has stubbornly high unemployment and many social issues.

I welcome the child care credit and, in particular, the 85% for people who are on universal credit. That will certainly help people get into work.

Overall, this is a Budget for a stronger economy and a fairer society, and I commend it to the House.

--- Later in debate ---

[Luciana Berger (Liverpool, Wavertree) (Lab/Co-op)]

For one hour, I listened very closely to the Chancellor of the Exchequer—during the past few hours, I have had a chance to look through the Red Book to check that I did not miss anything—and I desperately waited for any acknowledgment that millions of people up and down our country are really struggling to get by.

Despite the Chancellor not wanting to hear it and Government Members laughing at my right hon. Friend the Leader of the Opposition when he suggested it, there is a cost of living crisis. We know that working people are £1,600 a year worse off under this Government. Real average earnings are more than £1,600 a year lower today than in May 2010. Prices are going up faster than wages, and the OBR has confirmed that people will be worse off in 2015 than they were in 2010.

Not a week goes by when, at my surgery or on the doorstep, I do not meet a constituent who is really finding it tough. As my hon. Friends have said, such constituents have to make very real choices about having a hot bath or putting food on the table, with mums having to decide whether to go without food in order to feed their kids. A constituent at my surgery last week said that he was reduced to brushing his teeth with salt water and growing a beard because he could not afford toothpaste or razors; not very long ago, he did not have such challenges. Every week, numerous constituents come to my surgery because they cannot pay utility bills and have no answers for the people who come knocking on their door, which is the reality for too many people.

My local food bank will be celebrating—if we can call it a celebration, which it is not—its third year in a few weeks’ time. The number of people in my constituency who have to access emergency food aid has gone up from 2,126 in 2011 to 8,600 in this financial year, and that is not even the final figure. Nationally, more than 500,000 people are having to access emergency food aid, and that is a very conservative estimate.

I raised that point at Prime Minister’s questions the other week after I visited Ilkeston. I raised the case of a young person I met who was called Billy. Billy had been in employment since he left school, but was made redundant at the age of 23. He was making 70 job applications a month on average and could not feed himself. I learned the term “skipping”, which I had not heard before, and raised it at PMQs. Skipping is when people wait for supermarkets to throw food out at the end of the day in order to feed themselves, because they cannot afford to buy food. People wait to forage in the bins of Iceland to feed themselves and their families. The fact that people cannot afford to feed themselves in the seventh richest nation in the world is a national disgrace. I am ashamed that we have a Government who will not acknowledge the impact of their policies, such as people having to turn to food banks.

It is not just families and pensioners on low incomes who are being affected. I held a “what women want” session the other week to celebrate international women’s day. I had a discussion with mums from all different backgrounds at one of my local children’s centres. One of them told me that although both her and her husband have what she described as good jobs—management jobs—they can no longer afford a holiday. Every month, they struggle to make ends meet. That experience was repeated by many people during the discussion. Where is the help for the millions of people on middle and lower incomes who are not feeling any recovery at all? Those people are angry that the Government have given a £3 billion tax cut to people earning more than £150,000, while they and everyone else are worse off.

In the same discussion with women, another concern that was raised was the cost of child care. I echo the concerns raised by my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier). Many of the women said that the cost of child care was making the move into work impossible. The Chancellor’s announcement today does nothing for parents who are suffering eye-watering increases in the cost of nursery places, which has gone up by 30% since 2010. That is compounded by the fact that there are 35,000 fewer child care places. That is unsurprising from a Government who will have taken £15 billion out of support for children by the next election. Parents need support with child care now.

[Ian Swales]

Will the hon. Lady give way?

[Luciana Berger]

I will.

[Mr David Lammy (Tottenham) (Lab)]

That is generous.

[Ian Swales]

I am listening carefully to what the hon. Lady is saying about child care. I wonder whether she is going to mention the 85% of child care costs that will be paid for people who are on universal credit.

[Luciana Berger]

Oh, goodness! As my right hon. Friend the Member for Tottenham (Mr Lammy) said, I was very generous in giving way. I come back to the point that one in three councils do not have enough places to deliver the Government’s promised child care for disadvantaged two-year-olds. Today’s announcement will not come into effect until next year. I reiterate that parents need help now, because child care costs are putting parents off going back into work. I am very disappointed as a result of what we did not hear from the Chancellor today.

I listened closely to the Chancellor’s announcements on energy bills, but the best deal in a broken market is not a good deal. Energy bills have gone up by about £300 since 2010. As I said before, my constituents are facing the choice between heating their homes and eating. The Liverpool Echo, my local newspaper, carried out a special investigation last week that highlighted the experience of Merseyside pensioners, who are being plunged into fuel poverty by rocketing energy bills. Under the Government’s new definition of fuel poverty, my constituency is among the top three in the country for that challenge. Where was the help for those people with their energy bills in the Chancellor’s Budget? There was none.

We need proper reform of the energy market. We need to freeze bills so that we can do what needs to be done to ensure that we know the cost of the energy that is generated by the six companies that generate 70% of the energy in the UK. At the moment, we have no idea of the true cost of that energy. We need to create a transparent pool, so that we are all fully aware of what the companies are generating and the cost of that energy. We also need a regulator with teeth, which we do not have at the moment. There needs to be a means by which people can properly compare and contrast prices, as they can for mobile phone bills. That is not possible at the moment because we do not have single standing charges and unit prices that can be compared. Again, there was nothing from the Chancellor to help not only households and individuals but businesses that are struggling to pay their energy bills.

On the day of the Budget, we have also heard the unemployment figures. The hon. Member for Dover (Charlie Elphicke) just talked about the statistics, but when we talk about long-term youth unemployment, we are talking about young people in my constituency who do not have employment, which will have long-term effects—[Interruption.] The hon. Gentleman gesticulates that the number has come down. In my constituency, the number of long-term unemployed young people—those who have been out of work for more than a year—has gone up by more than 60% since 2010. That is a waste of the talent of our young people and has long-term implications not only for them but for the wider economy. The young people who are not employed at the moment bring a cost to our economy of £3.2 billion over their lifetime. In my constituency, 835 young people are out of work, and I wanted more from the Chancellor to address that situation properly. We know that the current schemes are not working, and that less than 20% of young people locally are getting into work. We need to do everything we can.