Budget Resolutions and Economic Situation

Jeremy Quin Excerpts

Thursday 9th July 2015 Commons Chamber

[Dr Whiteford]

I am sure that the hon. Lady is well aware that Scotland’s childcare offer is significantly better than that enjoyed by people in other parts of the UK, and that our housing situation is not exacerbated by real rent imbalances similar to those experienced in London and the south-east of England in particular. I will pick up on that later.

The hon. Lady will also be aware that the Scottish block grant is calculated on the basis of the contents of the Red Book. The money currently allocated to Scotland is determined by this Chamber, so this Budget is relevant to everybody throughout the UK. It would be very wrong to ignore the fact that the purse strings are still controlled here, and that is one of the reasons why I argue for those powers to be sent up the road to Scotland, where we can use them more wisely.

I want to return to the issue of child poverty and the paper exercises conducted to measure it. Whatever we do to massage the figures, I do not think any of us can avoid the evidence of our own eyes in our constituencies. We are seeing growth in child poverty on the ground. We see it in the rise of food banks, which have already been alluded to, and in the larger number of people coming through MPs’ doors with income-related problems. That is also being experienced by advice bureaux. We also see it in the evidence of organisations that work directly with vulnerable families and those on low incomes.

In my constituency, one in five children is growing up in poverty. That might come as a surprise, because we enjoy some of the lowest unemployment in the whole country. A very small percentage of people are not in work, but many thousands of people are in low-paid work, and it is those working poor who are going to be most affected by what was announced yesterday.

More families than ever are running to stand still, and under this Government more people are being left behind. The UK has a deeply polarised labour market, and the ability of people in low-paid work to get ahead is severely curtailed.

[Jeremy Quin (Horsham) (Con)]

Will the hon. Lady give way?

[Dr Whiteford]

I will not give way at the moment.

Amid all the rhetoric and the hyperbole of Budget day, it would have been very easy to form the impression from the media lines being trotted out yesterday that tax credits are predominantly a benefit paid to unemployed people, when in fact the opposite is the case. In Scotland, the overwhelming majority of tax credits are paid to working people. In fact, half of all families benefit from tax credits, and 95% of tax credits in Scotland are paid to families with children. We should make no mistake about where the cuts are being targeted.

It is inevitable that today we will consider the short-term consequences, because those cuts will put acute pressure on families, but we should be under no illusion: growing up in poverty has serious long-term consequences for children, too. It is associated with poorer educational attainment, poorer job prospects, poorer health throughout life and lower life expectancy. That is why asking families to bear the brunt of the cuts is so short-sighted. It has not only an enormous social cost, but an enormous economic cost: it holds back our economic progress and productivity, which are what we should really be focusing on and trying to improve.

The Government have tried to argue, today and yesterday, that the cuts will be offset by increases to the minimum wage and changes to the personal allowance, but that claim simply does not stand up to scrutiny. I think we all welcome the announcement of a long-overdue increase in the minimum wage to £7.20 an hour from next year and, indeed, the changes to national insurance, but let us not kid ourselves that rebranding the minimum wage as a living wage will actually make it a living wage.

There is already a living wage: it is calculated by the Living Wage Foundation and is already used by employers in the public, private and third sectors, including, I am very pleased to say, the Scottish Government. The living wage is based on the actual cost of living and it is already £7.85 an hour outside London and is due to go up again in November. We need to be absolutely clear that £7.20 is not a living wage and it will not offset the cuts in tax credits.

The critical point about the living wage is that it has been calculated on the basis of low-paid workers claiming their full entitlement to tax credits at the present rate, so any cut in tax credits means that the living wage will have to go up even further in order for it to provide enough for people to live on. If the Government take on board only one of the points I make today, I want it to be that one.

--- Later in debate ---

[Graham Evans]

I am most grateful to the hon. Lady. I will indeed look into those figures. I hold surgeries every Friday, so I will see constituents about that. What I would say to her is that unemployment in Weaver Vale has dropped by 70% since 2010, and that is 80% full-time, good quality jobs.

I am not saying it is easy, but these difficult decisions have to be made. When Gordon Brown introduced working tax credits, he said the figure would be £2 billion. It is now £30 billion. The Labour party has to decide—I asked this question yesterday and did not get a reply—whether £30 billion is too much, too little or about right. We have to make these difficult decisions, but the hon. Lady makes an important point. I am not saying for a moment that it will be easy, but we are the party of aspiration. We are the party that always makes work pay, which is something that did not happen under 13 years of Labour.

[Jeremy Quin]

My hon. Friend will recognise, as those of us on the Government Benches do, that we will still be paying out tax credits in the same numbers that we were paying them out in 2007 and 2008, under the last Labour Government. What we are talking about is the sudden spike to which my right hon. Friend the Secretary of State for Work and Pensions referred in his speech.

[Graham Evans]

My hon. Friend makes a powerful point. Working-age benefits are something we have to tackle so that we can eradicate the deficit and start paying down the national debt. That is what I believe in. I believe that the Government are right: a higher-wage, lower-tax, lower-welfare economy. Britain is open for business. That is the future for our country.

--- Later in debate ---

[Lucy Frazer]

In a global economy, where companies can invest in any country they choose and base their operations anywhere around the globe, it is absolutely essential that we get companies to invest in our country. We are ensuring that that happens by setting a competitive rate of corporation tax.

[Jeremy Quin]

Does my hon. Friend, like me, welcome the OBR’s confirmation that business investment grew by 8% last year? It expects business investment to grow this year and next year. I think my hon. Friend has quite a lot of ammunition with which to respond to the hon. Member for East Lothian (George Kerevan).

[Lucy Frazer]

I am very grateful to my hon. Friend for his intervention. Investment in our country is growing, which is why we have an increase in revenues.

For all three reasons, this is a Conservative Budget that is a Budget for all. It is founded on principles that should command cross-party support.

--- Later in debate ---

[Jeremy Quin (Horsham) (Con)]

It is a pleasure to follow the hon. Member for Birmingham, Erdington (Jack Dromey), and we have also heard five excellent maiden speeches this afternoon. Between them, they covered Walter Scott, the Brontës, George Eliot, Roosevelt and Voltaire. I do not want to sow any dissension within the ranks of the Scottish National party, but I will leave it to the hon. Members for Caithness, Sutherland and Easter Ross (Dr Monaghan) and for Berwickshire, Roxburgh and Selkirk (Calum Kerr) to sort out between themselves who has the more beautiful constituency, to which they both laid claim. All five maiden speakers exhibited the great passion with which I am sure they will defend their constituents in the future. I hope that they would all agree that in setting any budget—for a household, a company or a country—it is best to start with reality.

The reality that we face is a deficit of £90 billion a year and a national debt of 80% of GDP. That should have a sobering effect on all our considerations and, clearly, the former Chancellor Alistair Darling is well aware of it, given his remarks this morning. I hope that where he leads the official Opposition will follow. It is the easiest thing in the world to run up a deficit, and a Government can become very popular in doing so. As the House knows, it is very painful to get it back under control.

The Budget can be commended on many grounds, but its most important characteristic is that it means we can anticipate our national finances returning to surplus during the lifetime of this Parliament—and a healthy and growing surplus at that. To have eliminated a deficit of £150 billion is a historic achievement.

[Stephen Timms]

Of course, the Chancellor actually announced that he was postponing achieving a surplus for a year, which he said he would achieve by 2018-19. Does the hon. Gentleman welcome that deferral?

[Jeremy Quin]

I am delighted that the Chancellor set out a clear, smooth plan that will get us to a surplus of £10 billion—a larger surplus than was anticipated previously—by the end of this Parliament, and it will grow from there. I recognise the point the right hon. Gentleman makes, but I am proud of what the Chancellor has managed to achieve. I am sure the right hon. Gentleman would accept that the elimination of a deficit of £150 billion is no mean feat.

As we all know, the best way to eliminate a deficit is to achieve growth in the economy. The best news, which I am sure we would all endorse, is the forecast from the OBR of continuing growth in our economy. It is a solid basis on which to build. I especially welcome the extra 8% investment from business in 2014, and the fact that that is expected to grow this year and next will be an important part of our recovery programme. It is great that we are achieving that growth notwithstanding the external headwinds. The shadow Chancellor was a little ungenerous in criticising us for having fewer exports to the eurozone: we are growing as an economy, but the eurozone is in a sorry state and it is no wonder that our exporters are suffering at the moment.

All economic forecasts, however, including those of the wise men and women of the OBR, are of course vulnerable. We only need to look at China and Greece at the moment to realise that no one with any credibility would ever claim that we can abolish boom and bust. I therefore welcome the Chancellor’s publication of the new rules of the fiscal charter. This Government, once they have returned the country to surplus within this Parliament, will still be looking to the future. The fiscal charter will help this Parliament and, in particular, future Parliaments to hold the Government to account, to ensure that in normal times they continue to pay down our national debt and restore our national fortunes. Without sound and sustainable public finances, there is no economic security for working people. With sound and sustainable public finances, we will ensure that by the 2030s Britain is the most prosperous major economy in the world.

The whole House would recognise that that prosperity, while welcome, is not a goal in itself. It would be a hollow success if that prosperity was not widely shared among all our citizens. That is why I welcome the Chancellor’s creation of the national living wage and the raising of the basic tax threshold to £11,000. I am delighted that it is a one nation Conservative Government who are seeking to take the lowest paid out of income tax altogether. I went on record supporting the principle of a living wage during the election campaign. It seems to me a positive step in ensuring that work pays for all those who undertake it. The principle that we have a society in which everyone has access to work and is fairly paid for it is surely a good one. Higher wages and lower taxes must be a principle that surely Members on both sides of the House would endorse. The natural corollary of that is that in good times there will be lower welfare expenditure.

I welcome the progress on corporation tax, making the UK an enormously fiscally attractive place in which to operate a business. Combined with the employment allowance, this will ensure that the costs for business of meeting the new national living wage are offset. Similarly, I note what my right hon. Friend the Secretary of State for Work and Pensions said earlier about tax credits. The original system cost just over £1 billion but has risen to £30 billion, which is not sustainable. It needs to be addressed, and I note that we will still maintain expenditure on tax credits in real terms at around the level spent in the 2007-08 fiscal year, under the last Labour Government.

Lastly—I recognise that time is short, Madam Deputy Speaker—I welcome the Chancellor’s announcement on the road fund and the increased expenditure on the NHS to meet the NHS’s own five-year plan, as recognised earlier by my hon. Friend the Member for Halesowen and Rowley Regis (James Morris). My constituency of Horsham has had to accept significant additional house building. That is a concern for many residents. Those concerns will not be eradicated, but they can be mitigated if we all know that there will be enhanced infrastructure to meet the needs of an expanding population. That is especially the case with healthcare, and I look forward to taking up specific issues with my right hon. Friend the Secretary of State for Health. I welcome the additional expenditure on the NHS as a positive recognition that, while we cannot have increased NHS spending without a growing economy, a growing economy may also place increased and different demands on the NHS. I congratulate the Chancellor on an excellent Budget.