Jobs and Growth

Jim Shannon Excerpts

Thursday 17th May 2012 Commons Chamber

[Stephen Timms]

My hon. Friend is right. Not one person has been referred to St Mungo’s since the Work programme started. If the homeless are not being referred to St Mungo’s, we can be very confident that they are not being helped by anybody, and that is at the heart of what is going wrong. We certainly need guidance so that people can start telling us what is going on in the Work programme.

The hon. Member for Wolverhampton South West (Paul Uppal) is rightly concerned about the challenges of securing investment. I am disappointed that no communications Bill was announced in the Queen’s Speech. A year ago yesterday, the Department for Culture, Media and Sport announced the first stage of what it described as a

“comprehensive period of consultation that will inform a Parliamentary Bill.”

Unfortunately, no such Bill has been announced.

The Communications Act 2003, which I was responsible for, is excellent, but technology has moved on and the regulation needs updating. The problem is clearly highlighted by the failure on 4G mobile services. Capital Economics estimates that a go-ahead for 4G in the UK would trigger private sector investment of more than £5 billion and raise gross domestic product by the end of the decade by half a percentage point. It says:

“The UK is off the international pace. The technology has already been deployed commercially by more than 50 operators in over 30 countries.”

In the UK, we still do not know when the spectrum auction, and liberalisation of restrictions on existing spectrum, will go ahead. We cannot afford further delay. The destructive promotion, which we have unfortunately seen, of the narrow interests of individual operators must now give way to the speediest possible implementation, allowing investment to be made. One of the benefits will be viable access to superfast broadband for a significant part of the country where landline services will not be available in any reasonable time scale.

We shall need new legislation and I hope that Ofcom and the DCMS will press ahead to make sure that the changes that are needed—the auction and liberalisation of the existing spectrum—proceed without further delay. We have waited long enough already.

I welcome the inclusion in the legislative programme of the draft Groceries Code Adjudicator Bill, following the initiative of the previous Government.

[Jim Shannon (Strangford) (DUP)]

As the right hon. Gentleman is aware, small firms have suffered at the hands of the giant supermarkets for far too long. The Bill lacks the teeth to allow the ombudsman to fine large supermarkets. Does he agree that the ombudsman needs those enforcement powers?

[Stephen Timms]

The hon. Gentleman makes a telling point. The legislation will have to be scrutinised closely and we will need to make sure that it delivers on the purpose for which it is being introduced.

I have to express my regret at the lack of a Bill that would put into law the commitment to raise the international development budget to 0.7% of GDP. The Secretary of State for International Development has made that promise and I hope it will come forward.

Amendment of the Law

Jim Shannon Excerpts

Monday 26th March 2012 Commons Chamber

[Ms Margaret Ritchie (South Down) (SDLP)]

This Budget will not deliver on growth and it will not deliver on fairness, and it does not surprise me that it has been met with such a degree of concern and resentment. It has demonstrated missed opportunities, misplaced priorities, and a distinct lack of imagination. Ultimately it may hinder, not help, the families and businesses right across Northern Ireland who are struggling at this difficult time.

Now is the time to stimulate growth in our economy, not the time to hand a £42,000 a year tax cut to millionaires through the 45p rate. Aside from that, my party has three primary concerns about the Budget—the refusal to act on fuel prices, the attack on pensioners’ incomes—

[Jim Shannon (Strangford) (DUP)]

With the prices of diesel and petrol in Northern Ireland at the highest ever level and rising even higher, as they are across the United Kingdom, does the hon. Lady feel that the Chancellor and the Government have missed an opportunity, for example with the VAT increase, to help those who are under pressure because of fuel prices?

[Ms Ritchie]

I thank the hon. Gentleman for that useful intervention. I agree with him and will come on to that.

The other area that concerns me is the proposal on regional rates of pay. All these measures will hurt low and middle income earners and do nothing to stimulate and grow our economy.

Rather than handing out a massive subsidy to the wealthiest in our society, the Chancellor should have focused on growing the real economy, starting with mitigation measures against record fuel prices. As the hon. Member for Strangford (Jim Shannon) stated, the problem of high fuel prices is striking in Northern Ireland where, since the turn of the year, we have had the highest diesel prices in Europe and higher overall prices than in any comparable region in the UK or the south of Ireland. Duty prices must be lowered to mitigate the rising cost of imported fuel. Ultimately, while we rely on such a volatile imported commodity, we will always face such pressures. However, short-term measures are necessary to help those who are in need now. High fuel prices are hurting our people and are hurting our economy by restricting growth.

I will now turn to the so-called “granny tax”. The elderly should not be forced to pay for the systemic problems in our economy—problems that were in part brought about by the same high-salaried workers who have benefited from the Chancellor’s tax cut. The impact of this proposal will be widespread across Northern Ireland, with almost 100,000 people affected and many new pensioners potentially losing more than £200 a year. It represents a further blow to the elderly, who have been particularly affected by inflation, which has effectively wiped out years of savings and pushed up food prices, while high fuel costs have put a severe strain on the affordability of home heating.

Finally, I will address the issue of regional pay that has been put forward for consideration. The Government are saying that people can do the same job in the public sector, but that those who live in the devolved jurisdictions or the northern reaches of England will be paid less. That is a scandal. Public sector workers in what are already the most disadvantaged regions will earn less and those same disadvantaged regions will suffer the loss of spending power that follows. Things may be different in the world of big donations, but in the area of public sector pay for workers doing the same job, whether in England, Scotland, Wales or Northern Ireland, there should be no premier league. I put the Chancellor on notice that my party will oppose, both in this place and in the Northern Ireland Assembly, regional pay proposals that would further impoverish Northern Ireland and other less well-off regions.

The Budget will not deliver the necessary growth in Northern Ireland and will leave those who are most vulnerable in the current economic conditions, namely the young, the unemployed and the elderly, even more vulnerable. Those people did not get us into this situation and the Budget provides no signal that the Chancellor will steer the economy out of it.

--- Later in debate ---

[Graeme Morrice]

I have been told that I am not getting an extra minute, so I will just press on with my speech.

I want to say a few words about the 50p tax rate and about the granny tax, which has angered many people in my constituency, before finishing with the Government’s failure on jobs and growth.

The 50p rate raised about £1 billion in its first year, and its continuation could have been used to cut fuel duty, about which many of my constituents have written to me, to reverse the Government’s damaging cuts to tax credits or to help reduce the deficit. Instead, the Chancellor has chosen to give the richest 1% of earners a huge payout. People on middle and low incomes are already being squeezed by rising fuel, energy and food prices, and now their tax credits and child benefit are being cut. Yet again, the Government have made the wrong choice and proved how totally out of touch they are.

[Jim Shannon]

Will the hon. Gentleman give way?

[Graeme Morrice]

Do I get an extra minute, Mr Deputy Speaker?

[Graeme Morrice]

I will give way if the hon. Gentleman is very brief.

[Jim Shannon]

I thank the hon. Gentleman. Does he feel, as I and many people outside the House do, that as the threshold for a single person will be approximately £50,000, which will affect their tax credit, but for two people earning £40,000 each there will be no cut to their—

[Mr Deputy Speaker]

Order. If you want to put your name on the speaking list, do so by all means, but interventions have to be short.

Consumer Insurance (Disclosure and Representations) Bill [Lords]

Jim Shannon Excerpts

Tuesday 6th March 2012 Commons Chamber

[Chris Leslie]

I join the Minister in welcoming the Bill. It was prompted by a Law Commission report in the days when we had a Labour Administration. The recommendations were made back in 2009, and I am glad that the present Government have seen fit to accept them,

As I said earlier, these are incredibly important changes. They put some of the more opaque and obscure elements of common law and voluntary codes into a more statutory form, thus placing them beyond doubt. They update the law in relation to pre-contractual disclosure and clarify the rules about misrepresentation, making a distinction between consumers who, perhaps unknowingly, misrepresent their circumstances, and those who knowingly mislead insurers.

There have been circumstances in which insurers have used the opacity of the common law to take advantage of consumers who were unable to make a claim because they did not disclose a particular aspect of their lives to the insurer at the time of the contract. In some particularly insidious examples, people who had developed cancer or multiple sclerosis were unable to receive insurance payments because, although they had not known that early symptoms might develop into a more serious long-term condition, their insurers told them that they should have mentioned a tingle in their feet, or some other symptom that no one would expect to be the beginning of a more serious disease. I am glad that the Bill will close some of those loopholes.

We do not want consumers to have to have recourse only to the Financial Ombudsman Service to gain redress. The current rules are inadequate, we need the courts to be able to rely on clearer legal statute to clarify the arrangements, and the Bill achieves that. It abolishes the consumer duty to volunteer information in a more general, non-specific way. It also clarifies arrangements for group insurance, life insurance and rules on intermediaries. We therefore think this is an important Bill. I am glad we have touched on some of these important questions, including the state of the motor insurance industry and why more action needs to be taken to help consumers in that regard.

[Jim Shannon (Strangford) (DUP)]

In this Bill, has consideration been given to the differentials in prices across the United Kingdom? Northern Ireland has the highest insurance premiums in the entire United Kingdom. Is it not time to have the same competition in Northern Ireland—

[Mr Deputy Speaker (Mr Lindsay Hoyle)]

Order. We are now on Third Reading, and questions must be relevant to that stage.

Fuel Duty (Northern Ireland)

Jim Shannon Excerpts

Wednesday 22nd February 2012 Westminster Hall

[Ms Ritchie]

Thank you, Mrs Main. I thank the hon. Member for North Antrim (Ian Paisley) for his long intervention. I could not agree more—rural communities, particularly in Northern Ireland, are more deeply affected because they rely totally on car transportation. There has been insufficient investment in public means of transportation—a matter for the Northern Ireland Executive—and no doubt the Minister will take care to pass that on. We will no doubt pass that point on as individual Members of Parliament from Northern Ireland.

I will highlight specifically the problems faced by businesses and consumers in Northern Ireland, but those problems do not exist in a vacuum. We must consider the scale of the problem confronting consumers across these islands. The Automobile Association’s latest data, from industry price trackers Experian Catalist, showed that the latest average pump prices for petrol are 134p, compared with 128p a year ago, and 111p in mid-January 2010. That is within sight of the record prices witnessed last May. Indeed, the average price of diesel has just hit an all-time high at an average price of 143p. The AA reported that in Northern Ireland the price of diesel is the highest of any region in the European Union.

[Jim Shannon (Strangford) (DUP)]

Does the hon. Lady share my concerns? The fuel that comes in through the ports of Belfast and Londonderry, and is then dispersed across the whole of Northern Ireland, is the same as the fuel in Great Britain, so why is it so much dearer in Northern Ireland? It is an unfair penalty towards those in the rural community.

[Ms Ritchie]

I thank the hon. Gentleman for his intervention. I agree that it is the same fuel type, which is imported directly from the middle east and wherever it is refined before it reaches the ports of Belfast and Derry. I also agree that rural communities are more deeply affected as a result of fuel duty increases. We find little reassurance in the current global situation. Just this week, Iran suspended the sale of crude oil to the UK, and the strait of Hormuz, through which 35% of all traded oil travels, is in a state of great uncertainty. It is not my intention to turn this into a debate on Iran and the middle east, but the point remains that while we rely so heavily on imported fossil fuels we will be somewhat captive to external events. Set against that, the Treasury is not doing enough to ameliorate the consequences of these events for consumers and businesses alike.

Consumers and business are caught in a pincer between the volatile price of a critical commodity and an inflexible Treasury duty regime. With the current instability in Iran, combined with the suspension of the refinery at Coryton, we would be naive to think that there will be no more inflationary pressures on the price of petrol. While the Minister has little control over an uncertain world, I would like to know what plans she has to protect people from the worst effects of those circumstances. Put more bluntly, in the short-term the Chancellor must extend the freeze on fuel duty hikes that was announced in the autumn statement. The measures announced in the autumn statement—the deferral of the 3p increase in duty and the cancellation of the escalator—were welcome short-term measures, but they will do little to mitigate the increased long-term rise in fuel prices. According to Consumer Focus back in March 2011, the 1p reduction in fuel duty was wiped out within days by rising oil prices. There is not the feeling that the Treasury is shouldering its share of the rise in the same way that motorists and businesses are.

Rural Bank Closures

Jim Shannon Excerpts

Tuesday 21st February 2012 Westminster Hall

[Roger Williams]

In the long run, it is in the banks’ interest to ensure that they provide a comprehensive level of service to the communities that they wish to serve and services that are more accessible and more convenient. I think that it is probably the role of the Government to sit down with the bankers, as was suggested by the hon. Member for Harrow West (Mr Thomas), and set out what should be required of banks. Not all the banks were bailed out with public money as a result of the banking collapse, but all banks have benefited from Government action—quantitative easing, for instance—and just about all banks are dependent or have depended on measures that the Government have brought forward. It is time to sit down and see what can be achieved to help these communities.

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Gentleman on bringing this matter to Westminster Hall today. My constituency of Strangford has had two bank closures: the Ulster bank in Portaferry and the Northern bank in Balloo have closed. Two campaigns were fought, but not won. We did, however, win the campaign to save the Northern bank in Kircubbin, with community support. Does the hon. Gentleman agree that the impact of closures on elderly people is horrendous? If there are not banks close at hand, they may carry cash around with them, and many of us will be aware of a large number of people who have been robbed as a result. Banks therefore have a responsibility to elderly people and to rural communities. Perhaps the Government could work together with the banks on that. Perhaps, somewhere along the way, banks need to carry a loss leader, covering their losses in such areas through profits in other areas.

[Roger Williams]

I thank the hon. Gentleman for that intervention. Yes, I believe that there may be a role there. There is the American model of a shared bank, whereby one facility houses different banks. They share the costs and maintain a presence in the community. That may be a way forward; the Government could help with, or initiate, a pilot scheme of that type. I had intended to suggest that later.

Banking (Responsibility and Reform)

Jim Shannon Excerpts

Tuesday 7th February 2012 Commons Chamber

[Mr Michael Meacher (Oldham West and Royton) (Lab)]

No one can seriously doubt that Britain urgently needs fundamental banking reform, but what has been done so far, since the crash of 2008-09, is timid beyond belief. Hardly any of the factors behind the crash have been effectively dealt with. Extreme light-touch regulation left too much to the markets; a vast global market was created in credit derivatives, which were not well understood but were recklessly securitised throughout the world because of their huge profitability; the selling frenzy was stoked even further by enormous bonuses, which drove the recklessness; the banking structure was so over-concentrated in the lead banks that, when disaster struck, they were judged too big to fail, with catastrophic and desperate consequences for the national budget and debt; and the business model linked speculative investment with retail deposit-taking, with the former as well as the latter protected by an implicit taxpayer guarantee.

All those problems, which were familiar to all of us, need to be dealt with, but none has been, partly because of the intransigence of the banking lobby in resisting reform, and partly because of the weakness of political supervision. That makes another crash quite likely, but if there is one we might find it much more difficult to get public support for a bail-out.

First, no significant action has been taken to curb complex financial derivatives, which were, perhaps more than any other factor, central to the collapse. Derivatives are the obvious candidate to trigger the next crisis, because they add opacity and leverage to the financial system. The obvious requirement is transparency, and in the United States that was provided by the Dodd-Frank Act, which requires that all derivatives be traded across public exchanges. We all know that in this country some highly dubious securities gained a spurious status due to the scandal of the credit-rating agencies, which were paid by the very institutions whose creditworthiness they were supposed to assess. That ought to be made illegal; better still, the function should be transferred to the public sector to ensure integrity and transparency.

Secondly, there is public outrage—even now at this late stage the Government find it difficult to accept it—at a banking system which owes its continued existence to massive Government intervention, paying itself mega-salaries and bonuses, and at the fact that 90% of investment bank profits are, in an age of austerity, directed not at strengthening balance sheets, not at shareholder dividend, not at lower fees for customers, but at gigantic personal pay-offs.

Ministers say that to do what some countries such as France are doing, with a mandatory cap and the removal of the bonus guarantee, is impractical, but there can be no doubt that, if the G20 Governments insisted on limits and made continued liquidity provisions dependent on compliance, no bank could refuse.

Thirdly, to avert financial crises, the Government have placed far too much emphasis on enhancing capital controls, and they have done so in a manner that is unlikely to be effective. At the outset of the 2008-09 financial crisis, almost all financial institutions across the globe had capital adequacy at least equal to, and in some cases even twice as much as, the minimum Basel regulatory requirements. But, despite the near-global collapse of the system under those provisions, Basel III proposed in 2010 that the core top-tier capital requirement be only 4.5% and the contingency capital requirement be only 2.5%. Of the EU's top 50 banks, 45 had already met those requirements, and Basel III does not even require them to come into force until 2019. For the Government to accept that is incredibly feeble. It is far too little, far too late and it reflects the Government’s connivance with the banks in minimising reform.

Fourthly, the Vickers commission proposals that the Government, unsurprisingly, have accepted are weak and deeply flawed. Trying to separate retail banking from investment banking with some kind of internal Chinese walls is doomed to failure because of regulatory arbitrage. Financial institutions always invent ever more sophisticated products simply to get around regulatory controls. That is the argument for a clean break between retail high-street banking and investment casino banking. That would have the key advantage of removing the implicit taxpayer guarantee, which allows financial conglomerates safely to use retail deposits for proprietary trading.

Britain arguably retains the most profoundly dysfunctional banking system of any G7 country. It came closer to collapse than any other in autumn 2008. The banking sector in this country is twice as large, relative to the rest of the economy, as in any other major EU country. It is stuffed with mega-banks that are addicted to property, mortgage lending, offshore speculation and tax evasion. Barclays Capital is only the most obvious example of that. Britain needs a much more diversified banking structure with smaller banks, in particular specialist business banks such as infrastructure banks, housing banks, green banks, creative industry banks and knowledge economy banks.

[Jim Shannon (Strangford) (DUP)]

Does the right hon. Gentleman share my concern and that of many people inside and outside this House over bank charges for the ordinary account holder? The ordinary account holder seems to pay a higher price every time, whereas those at the top of the banks get the dividends.

[Mr Meacher]

I wholly agree with the hon. Gentleman. The mega-bonuses go along with small businesses having to pay exorbitant interest charges, if they can get a loan at all. The Financial Secretary says that the Government are doing their best with RBS, but why do the Government not tell RBS what level of business lending there should be and what the conditions on it should be?

North Sea Oil and Gas

Jim Shannon Excerpts

Wednesday 25th January 2012 Commons Chamber

[Nicholas Soames (Mid Sussex) (Con)]

Thank you, Mr Speaker, for allowing this short Adjournment debate on North sea oil and gas taxation. It is a very serious and important matter. It is not one with which I have previously been concerned, but I think the Economic Secretary should know that I was invited to a briefing the other day, given by the oil industry, on the impact of taxation changes in the North sea and it excited my interest. I had always been aware of what a very substantial business it was but had no idea of how very important it is to the United Kingdom economy on the scale of employment and other matters, and I thought it right to bring the matter to the attention of the House. I am therefore, as I said, very grateful to you, Sir, for allowing the debate.

The United Kingdom is indeed fortunate to be endowed with significant resources of oil and gas. Over the years, hundreds of millions of pounds of hard-earned, always risky and sometimes very courageous investment and endeavour have allowed the nation to realise these resources, and for the British people to enjoy the substantial benefits of employment, sophisticated and high-level skills at all levels of the skill chain, tax revenues and balance of payments, and to develop a leading position in the global oil and gas supply chain—all of which has stood this country in good stead down the recent years.

Figures for 2011 show that around £16 billion was spent by the oil and gas industry on exploration, development and operations. This included £8 billion in new capital investment, an increase of 25% over 2010. I know that the Economic Secretary will agree that in anyone’s terms these are massive numbers, and thus once again make the oil and gas sector the single largest investor of all the industrial sectors in the United Kingdom.

The positive benefits of this remarkable industry are not confined to Scotland. They extend throughout the United Kingdom, supporting employment for more than 400,000 people, and those jobs are widely distributed throughout the whole country. Unsurprisingly, of course, a substantial proportion—45% in fact—are in Scotland, but that means that 55% of the jobs, which is the majority, directly benefit employment throughout the rest of the UK.

The taxes forecast to be raised from the industry in 2011-12 include some £6 billion in income tax, national insurance contributions and corporation tax paid by the supply chain companies, with an additional £11 billion from taxes on production itself. That amounts to 25% of all the corporation tax received by the Exchequer. The production of indigenous oil and gas improved the balance of payments by £35 billion in 2011, thus halving the trade deficit, and the supply chain added another £5 billion to £6 billion with exports of oilfield goods and services. Incidentally, that aspect of the industry is doing extremely well here and overseas, and it is flying the flag for Britain effectively.

At a time when Britain above all else needs growth and the energetic encouragement of inward investment, I regret to have to say to the Economic Secretary that all is not well in this crucial sector that is so important to our economy. Production declined by 17% from 2010 to 2011, which was the biggest fall seen by the industry in the past 40 years. As a result, future tax receipts will decrease rapidly without new investment. Receipts for 2011-12 have already suffered a £2.3 billion downgrade due to lower than expected production.

[Jim Shannon (Strangford) (DUP)]

I understand that the reduction in North sea oil production is due to many factors, but one of them is maintenance. There have been many maintenance programmes over the past 12 months. Is the fact that production is down, because maintenance is up, one reason why taxation is down?

[Nicholas Soames]

The hon. Gentleman raises an important point. I am sure that it is germane, but the decrease that I am highlighting is, in my judgment, due to the taxation regime.

The United Kingdom already imports around 10% of its oil and almost 40% of its gas, and such imports will increase rapidly without the benefit of new investment. The Government’s decision in March 2011 to increase tax rates on the industry, which increased the top tax rate to 81% and the corporation tax rate to 62%, is inevitably and regrettably having a chilling effect on the leading indicators of investment.

While total capital investment this year has increased to about £8 billion from £6 billion in 2010, that was largely due to development momentum from previous years. Worryingly, just nine new fields accounted for 40% of the total capital invested and all the development projects were well advanced prior to the tax increase.

The signs of lower investment in the future are already apparent. Indeed, my hon. Friend the Economic Secretary will see from the Department of Energy and Climate Change’s latest energy trends analysis a significant impact on drilling activity, with exploration wells down 50% in 2011.

It is from that exploration drilling that the future large capital investments will flow. The March 2011 tax increase reduced the value of future projects by 25% overnight. My hon. Friend knows that the future development of the North sea depends in large part on clever, technical solutions at the very forefront of what is manageable for marginally economic fields, but the increase in the tax rate has rendered many of those future fields uneconomic to develop. That serious matter for the country must be addressed.

I gather from the estimates of Oil & Gas UK, the industry’s trade body, that investment of at least £12 billion in more than 1 billion barrels of oil and gas resource will not occur without some stimulus. That is 60,000 jobs that will not be created and a loss of a benefit of £15 billion to £20 billion to the budget deficit as a result of the tax increase.

Banking Commission Report

Jim Shannon Excerpts

Monday 19th December 2011 Commons Chamber

[Mr Osborne]

The financial compensation scheme is very clear. We cover 100% of eligible deposits, up to £85,000 in a subsidiary. It is important that people are aware of that, and I think the public are more aware of it than they were three or four years ago. We want the explicit taxpayer guarantee of people’s deposits; what we do not want is the implicit taxpayer guarantee of the banks that took those deposits.

[Jim Shannon (Strangford) (DUP)]

I welcome the Chancellor’s statement. Will he confirm that the legislation will apply to mutual societies? If so, would it have prevented the crisis in the Presbyterian Mutual Society in Northern Ireland?

[Mr Osborne]

One of the things we are considering is whether there should be a de minimis exemption from the regulations for smaller banks and building societies. Vickers proposed that in the interim report, but not in the final report, so this is an area where we are looking at the interim report, rather than the final report. However, we will consult, and the views of Members from Northern Ireland and others will be welcome in that process.

The Economy

Jim Shannon Excerpts

Tuesday 6th December 2011 Commons Chamber

[Mr Michael Meacher (Oldham West and Royton) (Lab)]

There is a paradox at the centre of the autumn statement that makes it self-defeating. The statement was widely touted as a growth Budget, but it is the opposite. The infrastructure plans relate to the medium-term future, on a three to 10-year time scale, but even if they materialise they are not the stimulus that is urgently needed now. Pension funds will certainly not invest in infrastructure unless the Government fully underwrite the risk, in which case it will be registered in the national accounts as a potential increase in expenditure and thus a rise in indebtedness. The paradox is that even to achieve that “smoke and mirrors” impression of growth the Chancellor is such a deficit fetishist that he has been obliged to tell the markets that there is no increase in spending at all, and everything has been funded by cutting spending elsewhere.

Significantly, the Chancellor has chosen to make those cuts by hitting the poorest hardest. Of the £1.2 billion child tax credit and working tax credit savings over the next year, 32%—nearly a third—will come from the poorest fifth but only 6% from the richest fifth, yet the poorest are precisely the segment of our population that is by far the most likely to spend and thus to stimulate growth. Reducing that source of growth in favour of will-o’-the-wisp infrastructure plans in the medium-term future is a pretty silly policy. It is certainly perverse and anti-growth.

The biggest problem facing Britain is not indebtedness, but the lack of aggregate demand. Everyone recognises that except our myopic Chancellor. In the 1930s, John Maynard Keynes said that if we look after unemployment, the budget will look after itself. Exactly the same thing applies today. Christine Lagarde, the head of the International Monetary Fund, warns that if all countries deleverage at the same time, it will be economic suicide. It is absurd to imagine that the markets would not accept some modest loosening of the monetary targets if it was likely to produce a serious prospect of growth; indeed, they would welcome that.

Of course we have constantly heard the Chancellor’s refrain against this argument, his canard that any increase in public expenditure will push up interest rates, threaten the precious triple A rating and cost Britain more, but he does not have to increase public borrowing to kick-start growth. There are two sources of funding that he could draw on at no risk from the markets whatsoever. One is to require the super-rich to make a fair contribution to the Exchequer at a time of crisis for the country. At present they are contributing next to nothing.

In the past year, according to the IFS, the income of the bottom 10th of the population rose by 0.1%. The income of the directors of the top FTSE 100 companies rose by 49%. That is just about 500 times as much. It is time those latter people and the financial and corporate elite of which they are such a part made a fair contribution.

[Jim Shannon (Strangford) (DUP)]

The right hon. Gentleman has clearly identified those at the top of the earnings scale, but at the bottom of the earnings scale are the long-term unemployed. Does he accept the concern of many in the House that the long-term unemployed are not looked after, and that there seems to be little regard for them?

Autumn Statement

Jim Shannon Excerpts

Tuesday 29th November 2011 Commons Chamber

[Mr Osborne]

Yes, I of course agree with my hon. Friend. Again, another success story at the moment is the car industry. I am absolutely delighted by Jaguar Land Rover’s announcement, which is a real vote of confidence in the UK—the company could have constructed that engine plant elsewhere in the world. The announcements that I have made on R and D above-the-line tax credits will also help larger companies do their R and D in Britain.

[Jim Shannon (Strangford) (DUP)]

One of the biggest problems of modern society is youth unemployment. The Chancellor said that companies would be given national insurance discounts and other incentives to recruit and train young people. What other help will they be offered for that purpose?

[Mr Osborne]

We are helping companies to train young people through our apprenticeship programme, and I am happy to be engaged in active discussion with the devolved Administration in Northern Ireland about how that help can best be delivered there.