Finance (No. 2) Bill

Debate between Ian Swales and Lord Beamish

Tuesday 1st April 2014 Commons Chamber

[Ian Swales (Redcar) (LD)]

This Finance Bill represents another step in clearing up the mess left by the previous Government. Most of my constituents know that a standard of living that depends on borrowing from the bank and running up credit card bills will eventually be reduced when people have to start paying off the debts. That is what we had under the previous Government. The Opposition are trying to con the public—

[Mr Kevan Jones]

Will the hon. Gentleman give way?

[Ian Swales]

Just a moment; I have only managed a couple of sentences. The Opposition are trying to con the public into believing that the cost of living can remain the same, regardless of the history and of the amount of money that was left behind.

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[Mr Jones]

I put this question to the Chief Secretary to the Treasury earlier. Can the hon. Gentleman tell us whether the Liberal Democrats ever opposed the previous Government’s spending plans? Did they ever say that we should have been spending less?

[Ian Swales]

Unfortunately, I was not here during the last Parliament, but I have read a great deal of what my right hon. Friend the Member for Twickenham (Vince Cable), now the Business Secretary, said at the time. He was warning of the difficulties many years before they actually arose. I am quite certain that our party was watching the situation carefully, and that it could see what was happening.

There is a growing myth, which was repeated by the hon. Member for Cardiff South and Penarth (Stephen Doughty), who is no longer in his place—[Hon. Members: “He is here.”] My apologies; he is in a different place. That myth has also been repeated in the Opposition’s reasoned amendment, which states that

“working people are £1,600 a year worse off”.

Even the Institute for Fiscal Studies would admit that that is to do with gross income; it is not to do with net income, and it is not the amount by which people are worse off. Even the shadow Chief Secretary to the Treasury, the hon. Member for Nottingham East (Chris Leslie) pointed that out in his speech. One reason why people are not worse off by that amount is that there has been a large cut in income tax. That was a high priority for the Liberal Democrats, and I am delighted that in a few days’ time people will have experienced a £700 tax cut since the general election. The Bill includes another £100 for basic rate taxpayers.

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[Ian Swales]

Everyone is in a different situation, but it is certainly not true to say that, for more people, the Government have given with one hand and taken away with the other. The hon. Lady should know that.

The Opposition’s reasoned amendment also mentions a “tax cut for millionaires”. This is from a party whose former Business Secretary said that he was

“intensely relaxed about people getting filthy rich”.

And it showed in what the Labour Government did for 13 years: the top rate of income tax was 5% lower than it is now until 6 April 2010, the very last day Labour Members sat on the Government Benches—until then they cut taxes for millionaires every year they were in power; capital gains tax was 10% lower, meaning that hedge fund managers in the City had a lower tax rate than those cleaning their offices; tax relief was available on pension contributions of £250,000 a year, whereas the current figure is £40,000—the difference is £100,000 in tax; and VAT was 2.5% lower, making a top Ferrari £5,000 cheaper—that is what was actually happening for millionaires.

[Mr Kevan Jones]

What about Lamborghinis?

[Ian Swales]

It was the same for Lamborghinis.

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[Mr Jones]

I would not put anything past the new Conservative party, although I know that the hon. Gentleman is part of the ancient—even prehistoric—Conservative party. It is clearly part of the Conservative party’s strategy to try to give the impression that we have turned the corner and that the sunlit uplands are now before us. The public are neither so stupid nor so naive as to believe that, however, because they are living the reality of what this Government are doing to this great nation of ours.

[Ian Swales]

rose—

[Mr Jones]

I will give way to the “Conservative” Member for Redcar (Ian Swales).

[Ian Swales]

I thank the hon. Gentleman for giving way. The North East chamber of commerce said recently that its members’ business outlook was the most positive since 1995. Does he disagree with that? I accept that business is not everything, but surely he can welcome that.

[Mr Jones]

I have great respect for the North East chamber of commerce, but it represents only a certain section of the business community—it does not represent all the business community—and I have never seen it disagree with any Budget, because, understandably, it likes to keep in with the Government of the day. The “Conservative” Member for Redcar is clear in giving an upbeat assessment of his own constituency, but it is not one that I recognise and neither do many Members representing north-east constituencies.

The hon. Member for Macclesfield said that the Government had a clear sense of direction and the hon. Member for Dover (Charlie Elphicke) said that they had a clear plan, unlike the Opposition. Let us look at this clear plan and sense of direction. The narrative goes as follows, and before any Government Member says differently, these things are not invented by the Opposition; they are what this Government did when they came to power. We should recall that in 2010 our economy was actually growing. Why did it go into recession? It did so because of what happened during their first few days, including the measures on investment, which my hon. Friend the Member for Nottingham East (Chris Leslie) mentioned. What the Government did sucked money straight out of the economy, so demand went down. We have had the longest recession and recovery in history. On the Conservative party’s and the Chancellor’s own figures—these are not my figures or the Labour party’s—by now we should have seen 8.4% growth, whereas we have actually seen 3.8% growth. We were supposed to have got rid of the deficit by 2015, but we are actually borrowing another £190 billion more than we were planning to borrow.

That is the Chancellor’s supposedly successful plan. People would think that he would apologise for that, but that is about as likely as the hon. Member for North East Somerset (Jacob Rees-Mogg) walking into the Chamber wearing a pair of Wrangler jeans. The fact is that the Chancellor’s plan has not been working, with the root cause—the Liberal Democrats have been going along with this—being an ideological Conservative party, which is not just about deficit reduction, but is actually about small state Conservatism. The headlines in last week’s Budget were clearly designed around things such as the pension measure, which I will discuss in a moment, but tucked away were another £1 billion of cuts, which the Chancellor made permanent for future years. So that is more pain for Departments across Whitehall and communities across our country.

The Budget headline was clearly on pensions, and much has been said about the freedoms that the measure is going to give. I do not usually agree with the hon. Member for Watford (Richard Harrington), but he made some interesting points in his contribution and I share his fear about people’s ability to get proper financial advice about what to do with their pensions. I take his point that we are dealing with relatively small sums in terms of pension pots of £20,000 to £25,000 and the costs of giving that advice would be astronomical. Are we, however, going to avoid the chaos we had—many of us remember seeing it in the 1990s—when the vultures descended on workplace pension schemes, advising people to take money out and put it into all sorts of products, which led to people making bad investment decisions?

The Minister of State, Department for Work and Pensions, the hon. Member for Thornbury and Yate (Steve Webb), who is responsible for pensions, says that he is not really bothered if someone wants to go and blow it all on a Lamborghini. Hon. Members might not be surprised to learn that I do not know a great deal about Lamborghinis, but I was a bit disappointed that he did not use an example of a British car, because it would have been a good idea to boost the British economy if he really wanted to give an example of an expensive car. Today, I looked up the cost of the cheapest Lamborghini and found that it is £300,000—that represents quite a big pension pot. The problem arising out of that policy is that the Government have not published the modelling on what the effects will be on the public purse. They need to do that because hidden issues need addressing. It is right to give people choice and freedoms, but the Chancellor did nothing at all to affect the charges, fees and so on that small pension pots are attracting, which can be substantial, not only at the time of buying an annuity, but over the lifetime of the pension. That would be a thing to do.

I have serious concerns. For example, if a pensioner uses their £300,000 plus to buy a Lamborghini—or possibly a Bentley, which would at least boost jobs in this country rather than in Italy—what do they do when they have no money left? The Pensions Minister says, “Well, that’s fine because it has all been taken care of by the new generous state pension.” He forgets that there are other things. There is no mention, for example, of care costs or of housing benefit. Those things need to be explained. It helps the Chancellor; he has a figure in the Red Book for the amount of tax he will raid out of pensions in the short term. There will clearly be a boost if people spend their money in the economy. I am not usually a great fan of the Association of British Insurers, but a serious issue has been raised about the future of the annuities market. Insurers do not just get in money and sit on it; they invest it, so we are talking about long- term investment that is being taken out of projects and businesses. To make a full assessment of the effects of this move, we need to understand the modelling of the scheme, and that has not been forthcoming. It will be interesting to see whether the Government will produce it.

The other issue is the increase to £15,000 a year in the allowance for individual savings accounts. Like the hon. Member for Macclesfield, I speak to my constituents. It is laughable to suggest that they may have £15,000 lying around to invest each year. I think that most people are in the same position. As my hon. Friend the Member for Glasgow North East (Mr Bain) said, people are not investing the money; they are actually spending it to live in their old age. Some 8 million people in this country have no savings whatever, and another 32% have less than £1,000 in savings, so the proposal will not help anyone. It may help some who have £15,000 to invest. Should we welcome that? Possibly, but the idea that it will help most of my constituents, or most of the constituents of my hon. Friends, is frankly not right. On Saturday, when I was out at an event in Chester-le-Street in my constituency, someone said to me, “Who’s got £15,000 lying around to invest in that type of savings plan each year?”

When the Chief Secretary to the Treasury opened the debate, my hon. Friend the Member for Nottingham East said that he was suffering from Stockholm syndrome, because he has actually become part of the Conservative party. Indeed, having heard the speech and the comments of the hon. Member for Redcar, I think that he also has a very bad dose of the syndrome.

I asked the Chief Secretary at what point in the previous Labour Government did his party say that spending was too high. I then gave him another chance and asked him whether the Liberal Democrats had called for reduced expenditure in any area—whether it be in the NHS or anywhere else. There was not one single area. At least the Conservatives could say that they ditched the pledge around 2008-09. The Liberal Democrats kept going right into the last general election. To hear the hon. Member for Redcar now, we might think that he had long been there calling for fiscal responsibility and less expenditure. The Liberal Democrats may trumpet it now, but that was not the case back then.

The Chief Secretary to the Treasury said that he was proud that the increase in allowances was straight from the last Liberal Democrat manifesto. It might have been, but the commitment on VAT—he was challenged about what happened to that—went the same way as the commitment on tuition fees. Remember the VAT bombshell? It was the first thing they did and the Liberal Democrats could not even claim at that stage that they had been affected by Stockholm syndrome, as they were only in the early days of captivity. And what did they do? They increased VAT. The hon. Member for Redcar says that the increase in VAT is a progressive form of taxation. I am sorry, but it is not. All the indications show that it is a regressive form of tax that hits some of the poorest in our communities, including in Redcar.

North-East Independent Economic Review

Debate between Ian Swales and Lord Beamish

Thursday 5th September 2013 Commons Chamber

[Ian Swales (Redcar) (LD)]

I congratulate those who have secured the debate. For a small but beautifully formed part of the country to be discussed in the main Chamber is terrific. I bring apologies from my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith), who unfortunately cannot be here as he is on Justice Committee business. He certainly wanted to be.

I welcome the high-quality report. I was slightly surprised at some of the critical remarks about it in the opening speech, because I understood it to be a bottom-up initiative by a lot of people in the region, and therefore a good summary of what was happening and what should be done. Lord Adonis said in his report that he had been immensely stimulated by being in the region and meeting various people, and had left “full of optimism”. That is certainly the spirit in which we should see the future.

I welcome the five key aims set out in the report, especially the one about the skills agenda. We saw in the news today that Dyson had said it would employ 2,000 more people if only it could find the technical and engineering staff that it needed. It is frustrating for me, in an area of high unemployment, constantly to meet employers who say that they cannot find the people they need. We also need more entrepreneurs in the north-east. That is not well covered in the report, but we have one of the lowest levels in the country of entrepreneurship and small and medium-sized enterprises. There is plenty of room for growth there.

As a Tees valley MP, I look at the report through the lens of that area, and I would make one observation that is meant to be helpful. The report is quite heavy on structures and low on dynamism and the private sector. I know that there are real issues in the North Eastern local enterprise partnership area, but Tees Valley Unlimited is different in that the local authorities come together in the LEP rather than as a separate group. That leads to cohesion and also gives the LEP a strong mandate for action. It remains to be seen how the north-east’s structures will work in future.

Of course, our region has been hit hard by the decline of traditional industries, but it is recovering. As has been said, it is the only region with a net trade surplus, and we are benefiting from the Government refocusing on manufacturing. Recent figures show growth in manufacturing, and Redcar steelworks had record production just a few weeks ago. The Government are also making more effort on foreign trade, which is benefiting our region, and we can all do our bit. As chair of the all-party group on the chemical industry, I was pleased to lead the north-east process industries trade mission to India in March.

The Government have been working hard on the north-east in many ways. Enterprise zones have been mentioned, and I am delighted that those in the Tees valley have already attracted 10 new companies and more than £400 million of investment. The regional growth fund was derided earlier in the debate, but let us remember that it is genuine regional policy. Only the areas that really need the money are getting it. The north-east is a huge beneficiary—in rounds 1 and 2, the two LEP areas got nearly one third of the entire country’s projects.

[Mr Kevan Jones]

Is it not a fact that in the last year of the regional development agency, it had an annual budget of nearly £250 million? Now the Government have taken that away, which the hon. Gentleman voted for, and there is a bidding game in some areas. Some of the decisions that are being taken are difficult to justify given the deprivation that exists and the support that areas need, but they are perhaps being taken for political reasons. The idea that the regional growth fund somehow replaced what was taken away is complete nonsense.

[Ian Swales]

I accept the hon. Gentleman’s point about the amounts of money concerned, but of course we were left in a situation where the Government were basically bankrupt. It is excellent that instead of spraying money around all the regions of the country, the Government have picked the regions that actually need it. The limited amounts of money are coming to areas such as the north-east. The recent announcements of EU funding are of course welcome, and I congratulate the Government on taking only a small slice of it, as opposed to the 50% slice that I believe the previous Government took. The EU’s recognition of Tees valley and County Durham as areas needing special assistance is welcome, because it will result in large amounts of money. There is more to come from the EU youth unemployment funds, because we qualify on that ground too.

The hon. Member for Burton (Andrew Griffiths) said we should celebrate good news. It was great to see the ground being broken for the Hitachi factory a few weeks ago. It already has its first orders. We have heard about the effect that Nissan has had on the north-east. Hitachi has the potential to be a similar success story, with the supply chain as well as the company itself. We should celebrate that.

As the briefing for hon. Members states, the North Eastern local enterprise partnership is the fourth biggest. It is working on a huge number of activities. Were my right hon. Friend the Member for Berwick-upon-Tweed in the Chamber, he would certainly mention the need to continue with rural broadband investment for Northumberland, and to build on the recent Government announcement on dualling the A1.

The overall region is stronger with two LEPs based on the two main conurbations. I have spoken in previous north-east debates on how I believe that the Tees valley lost out under the old arrangement. The statistics are clear on that. I congratulate Tees Valley Unlimited on its work. As well as enterprise zones and successful regional growth fund bids, it has an economic strategy and a business plan. It is aiming to have 25,000 extra jobs over the next 10 years. It has launched a £20 million contract catalyst fund, giving performance bonds for small and medium-sized enterprises; secured £12 million for a pinch point on the A19; and engaged with more than 750 local businesses.

We are getting much needed improvements to local bus and rail services, including a new rail station at James Cook hospital.

Unemployment (North-east)

Debate between Ian Swales and Lord Beamish

Wednesday 20th June 2012 Westminster Hall

[Ian Swales]

That was never party policy, but it was a remark made by the Business Secretary. I think everyone recognises that One North East was the best of the regional development agencies. My point was that giving money to every region will not rebalance the economy. I salute the bravery of our Government in not giving money to regions that do not need help.

A month or two ago, I said in this Chamber that in the two years before the general election, the RDA approved 96 projects, worth £148 million, in which One North East directors had to declare an interest. Of those, only eight projects and £6 million related to the Tees valley. The Tees valley got a poor deal from One North East. Experian assessments place Hartlepool, Middlesbrough, Redcar and Cleveland in the weakest 10 economic areas of the country, so I welcome the local enterprise partnership and its work.

The LEP is doing a lot of good work, part of which is defining clusters—we have process industries and automotive clusters, and we are now developing a steel cluster. The welcome news is that Sahaviriya Steel Industries has bought the Redcar steelworks, and is now producing; Tata is still in the area, and opened a new research centre just two weeks ago, which had some Government support; Siemens has its worldwide centre for steel processing development in Stockton; and Teesside university is opening up a new department, so a good cluster is developing there. We also have clusters in green technology, and I welcome new initiatives in renewables, with the industry forming the Energi Coast group—20 companies getting together to exploit the new market jointly—and Narec has been included in the new technology innovation centre for renewables. Clusters attract like-minded companies. Global Marine Systems has just relocated from Essex to Middlesbrough, and last month it hired the Riverside stadium to recruit people.

Manufacturing is having some success in the area. International trade is booming with record exports— the best ever—from the region during the 12 months to March, including 20% growth in exports outside the EU. Jonathan Greenaway, a partner at PricewaterhouseCoopers in Newcastle, recently reported those successes and said:

“This is a great time of opportunity for manufacturers, and…UK companies are really rising to the challenge.”

We have some problems with the public sector, to say the least, with job losses and so on. I believe that taxpayers expect efficiency in public services and that they do not see them as job creation exercises, but there has been a worrying trend of relocation of jobs, certainly out of the Tees valley. Under the previous Government, the ambulance service was lost—it still baffles me that an area of 750,000 people is not deemed capable of running its own ambulance service, but that was moved out of the area. We also lost the office of Her Majesty’s Revenue and Customs in Middlesbrough, and thus 400 jobs. There are other potential problems, such as the Insolvency Service office in Stockton. I urge the Whip to reverse that trend and to move jobs to hard-pressed areas in the north-east such as Teesside.

I note that some agencies are looking at Yorkshire and the north-east as a region. I point out to them that the Tees valley is exactly the midpoint—I measured it this morning—and an ideal location for headquarters. The regions are massive, however: Sheffield in South Yorkshire is as close to Southampton as it is to the constituency of my right hon. Friend the Member for Berwick-upon-Tweed (Sir Alan Beith).

For 13 years, the north-east had a Labour Government—almost all MPs and councils were Labour—but between 1997 and 2010, the number of unemployed people in the region went up by 7,000, and the rate remained approximately the same, despite the unprecedented amount—

[Mr Kevan Jones]

The hon. Gentleman is being selective. I was going to say that it is a pleasure to hear him speak, but he seems to be saying that everything in the garden is rosy. In fact, between 2009 and 2010, 24,000 extra jobs were created in the north-east, and over the longer period from 1997, unemployment went down, not up.

[Ian Swales]

I checked the figures with the Library this morning, and 7,000 more people were unemployed in 2010 than in 1997, despite the unprecedented amount of grants and unsustainable borrowing that were pumped into the area.

Big problems remain. Unemployment is way too high, especially in constituencies such as Redcar, and it remains my No. 1 priority. The hon. Member for Hartlepool said that the north-east was once the workshop of Britain. It can be again, and in fact already is to some extent—even today, it is the only region with a positive trade balance—but a lot more can be done. I agree with the hon. Gentleman that we need a clearer industrial policy. We also need consistency on renewables and public procurement. There are opportunities for further investment in infrastructure—I do not want to steal the thunder of my right hon. Friend the Member for Berwick-upon-Tweed, because I am sure that he is about to give an example.

I welcome the Government’s attention to the north-east. We have a regular troop of Ministers coming through, and it is good to hear that the Employment Minister will be meeting the Teesside business community on 10 July. I look forward to hearing the response from the Whip today.