Budget Resolutions and Economic Situation

Liam Byrne Excerpts

Friday 22nd March 2013 Commons Chamber

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

I welcome the Budget, which reiterates this Government’s commitment to restoring the damaged economy that we inherited. I remind hon. Members that the deficit—11.2% of GDP—was the largest since the second world war, higher than that of Germany, France and even the USA. The important point is that the deficit fuelled a high debt burden—which had been set to rise dramatically—of 65% of GDP and rising. In fact, if nothing had changed, it was forecast that borrowing would have risen by more than £200 billion during the course of the spending review. The deficit has cost more than £42 billion in interest payments each and every year since we entered office. [Interruption.] I am fascinated to hear that the right hon. Member for Birmingham, Hodge Hill (Mr Byrne), who is chuntering from a sedentary position, says that he is concerned about borrowing. The truth is that under Labour’s plans borrowing was set to rise by another £200 billion, and under its existing plans its solution for the problem of borrowing is to borrow more. Perhaps the right hon. Gentleman would like to explain how that would help the deficit.

[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

The Secretary of State is being characteristically generous in giving way so early in his speech. The previous Chancellor’s Budget would have halved the deficit over the course of four years, but this Budget confirms that borrowing is now set to grow by £254 billion more than first forecast. How can the Secretary of State judge that to be a success?

[Mr Duncan Smith]

Let us be clear about the plan left by the right hon. Member for Edinburgh South West (Mr Darling). Labour Members have been banging on about capital spending over the past 48 hours, but it is worth reminding everyone that while they now claim to want more capital spending, it was set to fall by 7% under the Darling plan. The honest truth is that, notwithstanding the euro crisis and the fact that the rest of Europe is mired in recession, as shown by the situation in Cyprus, the idea that there would have been a continuum and that all would have been well is complete and utter nonsense.

We are reducing the deficit and getting borrowing down, and it is set to fall further. Instead of banging on about capital spending, the right hon. Member for Birmingham, Hodge Hill should explain why Labour’s solution, which would send shudders through the world, is to borrow more. That would make our deficit position worse and raise interest rates dramatically, leaving ordinary people unable to afford their home loans.

[Mr Byrne]

The truth is that the Secretary of State is in this hole because the recovery that we left this Government has been knocked out. Growth has now stalled and, as a result, tax revenues are coming in at £5 billion lower than forecast. That is why we needed a Budget that would get back growth and jobs.

On capital spending, is the Secretary of State saying that he now agrees with the Deputy Prime Minister, who said earlier this year:

“If I’m going to be sort of self-critical, there was this reduction in capital spending when we came into the Coalition Government”?

[Mr Duncan Smith]

I do love these little exchanges with the right hon. Gentleman—I am sure we could become quite friendly—but the reality is that he is dancing around what was actually happening. I remind him that Labour’s capital spending programmes would have resulted in a real cut of 7% compared with our plans. It is all very well for Labour Members to talk about this now, but under the plan they left, capital spending was falling fast. We are spending more than their plan proposed, which would have resulted in a net 7% cut.

Borrowing today is lower than under Labour. It was £159 billion at its peak and it is now £120.9 billion, which is £38 billion lower, and forecasts approved by the Office for Budget Responsibility show that by the end of this Parliament it will be £63 billion lower and falling. [Interruption.] I say to the right hon. Gentleman that the public do not believe that Labour’s plan would have been any better. In fact, it would have been a lot worse and now Labour Members want to make it even more so, because they want to spend more, borrow more and see the deficit rise.

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[Mr Duncan Smith]

I know it is difficult in the Chamber for anyone to listen to what anybody else is saying, but I want to return to my point. Under the plan that Labour left behind, capital spending would have been 7% lower compared with what it is today. It is absolutely no good—

[Mr Byrne]

rose—

[Mr Duncan Smith]

I am going to make some progress. The right hon. Gentleman will have plenty of time to contribute and I want to finish responding to the intervention from the hon. Member for North Durham (Mr Jones). Capital spending was set to fall. The plan that Labour left was to lower capital spending and there is no way around that. He cannot talk about capital spending rising because it was set to fall. We are bringing borrowing down. Labour has no plans at all for that and would raise borrowing.

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[Mr Duncan Smith]

I will give way for the last time, and then I will make some progress.

[Mr Byrne]

The Secretary of State knows as well as I do that annual housing starts totalled just 98,000 in 2012. That is 11% down on the previous year, and half the number of homes that it is estimated are needed in this country. That is why Labour is saying clearly that we should spend the proceeds of the 4G licence sale, and half the money from a bank bonus, on building homes. This week’s figures show a 65,000 fall in the number of people working in the construction sector. This country needs investment in building homes, not a spare homes subsidy for the very rich.

[Mr Duncan Smith]

I thought the right hon. Gentleman would have avoided this issue because it is like walking into a large hole of his own making. Let me quote something from his right hon. Friend the ex-Prime Minister. This is how much he thought of house building:

“Housing is essentially a private sector activity...I don’t see the need for us to continue with such big renovation programmes”.

He cut spending, and I remind Labour Members that house building under his Government fell to the lowest levels since the 1920s—[Interruption.] No, absolutely not. Housing construction orders are up by 32%, and our plans will outstrip the house building figures of the previous Government.

[Mr Duncan Smith]

No. The reality is that under the previous Government, house building fell to the lowest level since the 1920s.

[Mr Byrne]

rose—

[Mr Duncan Smith]

No. The numbers of people living in overcrowded accommodation rose. The housing waiting list doubled. It was a shambles and a mess, and we are doing more to put it right. The plans in the Budget, which I will come on to, will improve the situation even more.

Let me make some progress. The Office for Budget Responsibility has confirmed that we are on course to meet the fiscal mandate one year early. The deficit has already been cut by a third to a forecast 7.4% this year, and it is predicted to fall every year in this Parliament. The likelihood of meeting the supplementary debt target has decreased. Public sector net debt is forecast to be 75.9% of GDP this year, and to peak at 85.6% in 2016-17. However, we have made a £31 billion saving in the debt interest payments predicted two years ago—almost as much as the whole defence budget.

Borrowing is down to £115 billion and forecast to be £87 billion by the end of this Parliament. Even excluding Royal Mail pensions and the asset purchase facility cash transfers, it is already £39 billion lower than the £159 billion peak for borrowing under Labour, and will be £63 billion lower—a reduction of 40%. I remind the House that Labour’s prescription is to borrow more, not less. The Institute for Fiscal Studies has estimated that in the absence of measures taken by the Government, total borrowing would have been £200 billion higher between 2010-11 and 2015-16.

It is important to note that since the beginning of this Parliament, issues in the eurozone have made matters very difficult, and in the current economic climate the challenge is harder than anyone could have predicted or hoped. As the OBR, OECD and others have explained, there are real risks to our stability and to others, in particular the financial storm in the eurozone, which shrank by 0.6% last quarter—the largest fall since the height of the crisis. With Europe accounting for 40% of our exports, it is no surprise that weak net trade has impacted on our GDP. In the words of the OBR, the

“unexpectedly poor performance of exports is more than sufficient on its own to explain the shortfall”.

Although the eurozone is expected to remain in recession throughout the year, the UK is forecast for a slight increase in growth. This Budget will, I believe, stimulate growth further still, so let us look at a few of its important measures. We are further reducing the main rate of corporation tax, which we had already lowered to 21%, to 20% from April 2015, down from the very high 28% inherited from Labour. It will now be the lowest rate in the G20. We are also—this is really important for my right hon. and hon. Friends, and for me it is the most important measure in the Budget—merging small company and main rates of tax at 20p. That had been asked for, but as I think Mr Frost said, it goes way past what was actually asked for. It is a real boost to small businesses.

We are increasing capital spending by a further £3 billion more than our existing plans from 2015-16, meaning that the Government will never cut capital to the levels planned by Labour which, I remind hon. Members, would have reduced spending by 7% more than our plans. We are taking measures to dramatically reinvigorate both house buying and the construction industry in this country by extending the excellent right-to-buy scheme, building 15,000 more affordable homes and increasing fivefold the funds available for building for rent. I remind colleagues that one of our biggest problems in getting housing benefit under control is due to the failure of the previous Government to allow enough houses to be built for rent, so that measure will be a huge help. We are introducing Help to Buy—a two-part scheme set over three years, committing £3.5 billion into shared equity loans for new builds, and offering new mortgage guarantees to support £130 billion of mortgages. That is really important.

I was watching the news programmes yesterday, and it was quite amusing to watch the shadow Chancellor run around. More and more he reminds me of the film “Toy Story”, and that rather angry Mr Potato Head who wanders around shouting, screaming and being very angry to absolutely no effect at all. Disaster, chaos, crisis, U-turns—I wonder what he does in his private life when anything goes wrong. He is certainly not much help to his wife I expect.

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[Mr Duncan Smith]

During the passage of our last Bill, we were clear about who was winning and losing in those circumstances, and I am happy to engage with the hon. Gentleman on that. There are two important things to remember. The Opposition go on about this, but the reality is that in every year of this Government, the wealthiest in society—the top 1%—will pay nearly a quarter of all income tax, and the top 5% will pay nearly half of all tax. The richest will pay more in every single year of this Parliament than they would have paid under the previous Government’s plans. The 14,000 people in the UK who earn more than £1 million a year will pay £14.2 billion in tax this year. Conservatives did not say that they were pleased for people to be filthy rich; Labour did. The previous Government allowed wealthy people to boast that they paid less tax than their cleaners. We need take no lectures on upper rate tax from the Opposition.

[Mr Byrne]

Will the Secretary of State tell the House what representations he has made to the Chancellor on whether it is right that universal credit should be calculated on post-tax income? The Secretary of State will know that the effect of that is to claw back three quarters of the increase in the personal allowance from Britain’s poorest families.

[Mr Duncan Smith]

The reality—the right hon. Gentleman needs to get his head around this—is that those who engage with universal credit, all the way up the scale, will be better off than they would have been going back to work under all the measures in place at the moment.

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[Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)]

As if we needed it, Wednesday’s Budget was the final, definitive, categorical proof that plan A has failed. Growth has halved; it will be lower this year and next year than was forecast. The deficit is not falling; it is static. The IFS said yesterday that the only way for the Chancellor to bring the deficit down this year and ensure that it is lower than last year would be to pay this year’s bills next year. Paul Johnson of the IFS concluded:

“The truth is that borrowing is the same this year as it was last year. And it will be the same next year as this year.”

Total debt is not down; it is going through the roof because the Government’s fiscal plans are in tatters. Borrowing is set to be £245 billion higher than was forecast. We were promised that the books would be balanced by 2015. That is a promise broken. According to Wednesday’s figures, the national debt will not be falling until 2017-18.

I am glad that the Secretary of State raised the idea of the global race. The House will have seen from the OBR’s figures on Wednesday that the fabled rebalancing that we were promised is simply not happening. Our exchange rate has fallen by 20% since 2007. Exports have grown by 1%. Once upon a time, in its early days, the OBR said that the export boost to GDP was set to be 1.2%. It now admits that net trade is dragging down our economy by 0.8%. What a contrast that is to 20 years ago, when sterling depreciated by 18% and exports grew by more than a third. Contrary to what the Secretary of State says, the OBR says that our market share is deteriorating not because the growth of our trading partners is slowing, but because our exporters have become less competitive. The Chancellor was right to say on Wednesday that we are in a global race. The problem is that we are set to lose it by setting sail for a low growth, low pay, low skill economy, and there was nothing in the Budget to change that course.

[Mr Duncan Smith]

The right hon. Gentleman is doing his usual trick of trying to rabbit around the figures and then arrive at an insoluble conclusion. He says that there are difficulties and complains about borrowing, but his prescription is to spend more and to borrow more. Will he please explain who agrees with him that we should spend more and borrow more when our problem is borrowing and our problem is a deficit?

[Mr Byrne]

The chief economist to the IMF has been clear that a different fiscal strategy is needed. Indeed, the Secretary of State for Business, Innovation and Skills hinted that what was needed at the moment was a whacking great boost in capital spending, and the Deputy Prime Minister has admitted that the Government cut capital spending far too fast. That is why we have set out clear, costed plans to increase capital spending and change course.

The Chancellor and the Prime Minister bear responsibility for that catastrophic failure and the failure of their fiscal plans, but, let us be honest, they have been aided and abetted by the Secretary of State for Work and Pensions, who has proved incapable of translating his fabled welfare revolution into practice. There could not have been a worse curtain-raiser to Budget day on Wednesday than the unemployment figures that we saw at 9.30 am. Halfway through this Parliament, unemployment is higher than it was at the general election—and it is not going down, it is going up. [Interruption.] I do not know where Government Members were on Wednesday. Unemployment rose on Wednesday. Youth unemployment went up by 50,000 on Wednesday. Unemployment among women went up, not down, on Wednesday. Government Members would do well to live in the real world for once.

[James Duddridge]

Will the right hon. Gentleman give way?

[Mr Byrne]

I will happily give way to the hon. Gentleman. Will he admit that unemployment rose—

[Mr Speaker]

Order. The hon. Member for Rochford and Southend East (James Duddridge) will resume his seat. [Interruption.] Order. Do not argue with the Chair, Mr Duddridge. The hon. Gentleman would not have the foggiest idea when to start or where. He will intervene when permission has been granted, and not before. If he does not like it, he can lump it and he might not speak at all.

[Mr Byrne]

I am grateful to you, Mr Speaker, but I am happy to give way.

[James Duddridge]

I thank the right hon. Gentleman for giving way. I thought he had already given way, which is why I started. I apologise to you, Mr Speaker, and to the right hon. Gentleman who has been kind to give way. The only point I wanted to make was that since 2010 employment has increased. Yes, in my constituency there was a short period last month when unemployment was reported to have gone up, but even on a year-on-year basis employment has gone up and unemployment has gone down for both men and women.

[Mr Byrne]

Unemployment is 50,000 higher than it was at the general election. Those are the facts and the hon. Gentleman cannot deny them.

[Ms Buck]

Does my right hon. Friend share my frustration at the constant repetition of the mantra from the Conservative Members that there are more people in work than ever before? Will he confirm that the employment rate is still lower than it was in 2008?

[Mr Byrne]

I can confirm that, and I will also say to the House that families are now paying an extraordinary price. They are doing anything and everything to get work. On average, people have taken a £1,250 pay cut since the election, and that is why it is such a bad idea to cut tax credits and give a tax cut to millionaires in two weeks’ time.

[Mr Duncan Smith]

Let me make two things clear. Unemployment is at a lower rate than when we took over in 2010, and there are more people in work than ever before. It is no good the hon. Member for Westminster North (Ms Buck) harking back to 2008—Labour bust the economy in 2008-09, which led to this problem, and youth unemployment was rising. The right hon. Gentleman said that he is supported by the IMF. Let me quote Christine Lagarde, who said

“when I think back myself to May 2010, when the UK deficit was at 11% and I try to imagine what the situation would be like today if no such fiscal consolidation”—

the one we are carrying out—

“programme had been decided... I shiver.”

She shivers at the problems caused by the previous Government and what they would have done.

[Mr Byrne]

The words of the chief economist Olivier Blanchard are clear: the Government are on the wrong fiscal path, and we know that the Business Secretary agrees with us.

[Steve Baker (Wycombe) (Con)]

The right hon. Gentleman is telling a tale of catastrophe. I do not doubt that the country is awash with suffering, but may I draw his attention to UK industrial production, which is at a 20-year low? The point is that it collapsed under his watch: UK industrial production collapsed to a 20-year low under his watch. Will he not just admit that it was his Government who dropped us into this mess?

[Mr Byrne]

We have unemployment rising and debt that is £245 billion higher than forecast. The hon. Gentleman should be ashamed of that record.

We needed a Budget to get unemployment down and we did not get one. I hoped to see a Budget that delivered for those who are out of work, but what did we get instead? The conclusion of the OBR was clear that the impact of the Budget on growth would be so significant that it would amount to precisely zero. That is what the Secretary of State has managed to negotiate from the Chancellor. He has been turned over, stitched up and done like a kipper yet again.

Any sensible Secretary of State, faced with a collapsing Work programme and rising unemployment, would surely ask for more help today, not tomorrow. People out of work need help today, not in the years to come. What did we see instead? The OBR has weighed up the efforts of the Secretary of State and the Chancellor and it has concluded that what is in hand is going so well that unemployment will not go down next year, but up—and that is against the projections set out in the 2010 Budget. Next year the International Labour Organisation measure of unemployment is expected to rise from 7.9% to 8%, and the claimant count is set to rise by another 50,000. What is even worse is that the OBR says that the welfare bill will not go down either—it will go up, including for housing benefit. Spending on social security benefits will now be £21 billion higher than the Chancellor first planned.

[Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)]

My right hon. Friend is making a strong point. There is no more striking indictment than the fact that in my constituency the number of those claiming for more than 12 months has risen against the previous year by 22.6%. That long-term unemployment—the loss of hope, talent and potential—is a striking indictment of the Government.

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[Mr Byrne]

My hon. Friend is absolutely right to raise that point. Not only did we see youth unemployment rise on Wednesday, but the claimant count for long-term unemployment went up again. That is why I say to the Secretary of State that we needed action in the Budget to bring unemployment down.

The organisation of back-to-work schemes under this Secretary of State is now in a state of complete chaos. This is what he had to say about the Work programme in November 2010:

“The difference between this Government and the previous Government will be that the Work programme—the most comprehensive, integrated work programme in existence, certainly, since the war”.—[Official Report, 22 November 2010; Vol. 519, c. 18.]

What have we had instead? We have had a Work programme that has been literally worse than doing nothing: just 2.3% of people referred on to the programme have found sustained jobs. The Public Accounts Committee had this to say:

“Actual performance was even below the Department’s assessment of the non-intervention rate—the number of people that would have found sustained work had the Work Programme not been running.”

Will the Secretary of State now tell us what on earth is going wrong and what he got from the Chancellor to fix it?

[Mr Duncan Smith]

I will hold the right hon. Gentleman to those words when we publish the next figures, because the Work programme will be proven to be a remarkable success. As the Work programme becomes a success, it will actually save the taxpayer money, because none of the companies are paid unless they get people into work for six months. He knows full well that his Government’s programmes were expensive and failed: unemployment rose dramatically, and youth unemployment was rising from as early as 2004, when the economy was meant to be growing.

[Mr Byrne]

I thank the Secretary of State for that bold assertion to the House. Would he like to intervene again and tell me that the targets for employment and support allowance will be hit by Work programme contractors when the data are published in May?

[Mr Duncan Smith]

I tell the right hon. Gentleman that when we publish the figures on the Work programme, he will be eating his words.

[Mr Byrne]

I will take that as a no.

The only measure in the Budget that might remotely help jobs is the employment allowance—a welcome idea that we support and for which we have argued before—but it will not kick in until halfway through 2014 and will not be fully up and running until 2015-16, when the GDP growth is forecast to be 2.4%, which is three times the growth forecast this year. We need action on jobs now, not in the first year of the next Parliament.

If we require any proof of the need for a big plan for jobs, we have only to look at the story by Mr Patrick Wintour in today’s Guardian. Here we learn some of the terrible ways in which front-line jobcentre staff are now being asked to reduce the unemployment figures—targets for sanctions and league tables for jobcentres. So tough is the pressure on staff that they are threatened with disciplinary action by their superiors if they fail to deliver for Ministers. They are even given a dictionary of which phrases to spot so that they can catch out jobseekers who have turned up to jobcentres for help. The leaked e-mails tell staff to look out for phrases such as, “I pick up the kids”, “I look after my neighbour’s children” and “I didn’t come in yesterday because my husband was ill”. It beggars belief that Ministers told the House on Monday that no such targets or league tables existed, yet we see from these e-mails that it is deep within the DWP’s culture.

[Mr Duncan Smith]

rose—

[Mr Byrne]

I will give way to the Secretary of State in a moment, because I am going to invite him to apologise to the House.

How on earth could Ministers not have known? How on earth could the House have been given information earlier in the week that was the opposite of the truth? I know that the Secretary of State will apologise, because he is a decent man. On Tuesday, the Minister of State, Department for Work and Pensions, the hon. Member for Fareham (Mr Hoban), said:

“There are no league tables in place. We do not set targets for sanctions”.—[Official Report, 19 March 2013; Vol. 560, c. 828.]

The Under-Secretary of State for Work and Pensions, the hon. Member for Wirral West (Esther McVey), said:

“There are no targets whatsoever.”—[Official Report, 19 March 2013; Vol. 560, c. 872.]

I am glad that we have secured an independent review of the sanctioning regime in the Jobseekers (Back to Work Schemes) Bill. It was clear that we were right to demand it, and it is now clear that the sanctioning regime is running out of control, so I hope that the Secretary of State will guarantee that the independent review will get to the bottom of every case in which sanctions have been used. If he does not, we will bring forward such amendments in the other place.

[Mr Duncan Smith]

First, I can absolutely commit to the fact that there are no targets for any sanctions whatsoever. To emphasise that, I should point out that the head of Jobcentre Plus has issued a reminder to everybody in the estate that there are no targets and that there will be no targets, and that anybody using those targets will be disciplined. It was the last Government, not this Government, who set up a target culture; we are breaking with that culture. I see the hon. Member for Walthamstow (Stella Creasy) in her place. The work they do in that jobcentre is remarkable at getting people back to work. They have accelerated and improved their performance. I would love to hear the shadow Secretary of State say to those working hard in jobcentres, “Well done for the work you do in getting record numbers back to work.”

[Mr Byrne]

My admiration for jobcentre staff working under this regime is unbounded. They are good people trapped in bad systems, with a Secretary of State who, I fear, is out of touch.

I have a copy of the e-mail that Mr Wintour reports today, and this is its concluding paragraph:

“Guys, we really need to up the game here”—

on the issuing of sanctions—

“The 5% target is one thing—the fact that we are seeing over 300 people a week and only submitting six of them for possible doubts is simply not quite credible.”

The e-mail says, “So the bottom line. I have until 15 February, along with other area managers, to show an improvement, and then it is a performance improvement plan for me.” He continues:

“Obviously if I am on a PIP…to improve my team’s Stricter Benefit Regime referral rate I will not have a choice but to consider implementing PIPs for those individuals who are clearly not delivering SBR within the team.”

That is why it is important that we have assurances that the independent review, set out in the Jobseekers (Back to Work Schemes) Bill, will get to the bottom of every sanction issued.

[Stella Creasy (Walthamstow) (Lab/Co-op)]

I was extremely disappointed to hear the Secretary of State’s response just now, because we are talking about the jobcentre that serves both our constituencies. The e-mail also states:

“Our district manager is not pleased”.

“James Corbett is not pleased and neither is John”, states the e-mail. It says that because John is

“under pressure to improve our office output and move up the league he has to apply some pressure downwards.”

The e-mail is talking about league tables. Will the Secretary of State comment on that? Who does my right hon. Friend think is putting together these league tables and applying this pressure on staff, from a regional perspective down to our jobcentres, to find reasons to sanction people in our community, not because of their behaviour, but simply to meet a target?

[Mr Byrne]

I congratulate my hon. Friend on bringing that to the House’s attention. This is an incredibly serious matter.

[Mr Duncan Smith]

Will the right hon. Gentleman give way?

[Mr Byrne]

I will in a moment. I assure the Secretary of State that I will give him time to answer.

The e-mail in question starts by stating that Walthamstow is 95th in the league table out of only 109. This is incredibly serious, not least because in response to repeated questioning the Minister of State, the hon. Member for Fareham, and the Under-Secretary, the hon. Member for Wirral West, assured the House earlier in the week that this was not happening, yet it clearly is.

[Mr Duncan Smith]

There are no targets for sanctions. There will be no targets. Anybody caught imposing a target will be dealt with. That is absolutely clear. That message has already gone out. It went out before on innumerable occasions. The target culture was under the right hon. Gentleman’s Government. I am sorry that the hon. Member for Walthamstow (Stella Creasy) did not say one word about the good work being done by staff in her jobcentre. She owes it to them to remind everybody that they are doing a brilliant job in difficult times and have improved their performance dramatically.

[Mr Byrne]

I know that my hon. Friend the Member for Walthamstow (Stella Creasy) will speak later and will provide the Secretary of State with a full answer on that. I repeat, however, that if the Government do not make refinements to the Bill, we will move the necessary amendments. I am glad that the independent review has been legally sanctioned in the Bill. We will ensure that it is used to get to the bottom of what is going on, and I am sure he will co-operate.

Just as bad as the lack of action on the Work programme in the Budget were the new surprises about universal credit. The Secretary of State and others have given frequent assurances that the programme is on track, but that raises the question: what on earth is the track? Earlier in the week, we heard in the Financial Times that small businesses were so badly prepared by HMRC for the introduction of real-time information—the method by which payrolls will be updated to calculate universal credit—that the Government have had to U-turn again, only a few days before the change is being introduced. The RTI system for businesses employing fewer than 50 people—covering about 7 million—will be slipped back by six months. There are worries now, not just about the Work programme and the lack of action on bringing down unemployment, but on universal credit.

As I said earlier in the week, the ultimate test for the Secretary of State is this: when he went to Easterhouse all those years ago, he talked about the need for a jobs revolution in this country, but if we now look at the 1% most-unemployed estates in our country, we see that unemployment has not fallen over the first half of the Parliament but gone up. It has gone up in three quarters of estates, and long-term unemployment, which we are so worried about, has risen on two thirds of those estates. This welfare revolution is falling apart, and we needed a Budget for jobs this week to fix it.

The greatest tragedy is who will pay for this failure. We know that a host of cuts, not least the bedroom tax, that are arriving in a couple of weeks will hurt some of the most vulnerable people in our country. Yesterday in Great Yarmouth, together with Lara Norris, I met a woman called Sandra who had cerebral palsy. She has brought up five children, but for reasons of her disability she sleeps separately from her partner, who is her carer. She will be hit by this bedroom tax in a couple of weeks. She now has to take decisions about switching off the heating for half the week because she can no longer afford to heat her home. She has to go to bed and snuggle up in an electric blanket in order to stay warm. That is what is happening in our country, yet these cuts will start on the same day as Britain’s richest citizens are given a tax cut. It is wrong and we should have had action in the Budget to reverse it.

[Jane Ellison (Battersea) (Con)]

Labour’s general election manifesto contained a commitment to tackle the rising housing benefit bill. Given that Labour has opposed every measure this Government have introduced, what did the right hon. Gentleman have in mind?

[Mr Byrne]

Perhaps the hon. Lady could remind us how much the housing benefit bill was projected to rise in Wednesday’s Budget.

[Jane Ellison]

Answer the question.

[Mr Byrne]

The housing benefit bill is going up by more than £1 billion, because policies such as the bedroom tax will cost more than they save. I cannot remember how many people will be hit by it in the hon. Lady’s constituency, but they will be interested to know that she voted for it. The truth, as she will know, is that those hit by the bedroom tax will have to move to the private rented sector or become homeless. Neither will cost the public purse less; they will cost it more. What we needed in the Budget was not a spare home subsidy; what we needed was action to reverse the hated bedroom tax.

[Jane Ellison]

The right hon. Gentleman has not answered the question. Given that Labour has opposed every measure this Government have introduced to reform welfare and housing benefit, what did he have in mind when that commitment went into the Labour manifesto?

[Mr Byrne]

What we need to bring down the housing benefit bill is to build more homes. That is why we have said that the 4G licences and half the bank bonus tax should be spent on building homes. The Deputy Prime Minister—the hon. Lady’s right hon. Friend—admits that capital spending was cut too fast. I look forward to hearing her justify to her constituents who will hit by the bedroom tax why they should pay £14 a week extra while millionaires get a £2,000 a week tax cut.

[Mr Duncan Smith]

rose—

[Mr Byrne]

I give way to the Secretary of State for the last time.

[Mr Duncan Smith]

May I just remind the right hon. Gentleman—as far as I can see he lives in cloud cuckoo land most of time—that under the last Government housing benefit bills doubled and were set to rise to more than £25 billion this year? We are saving a minimum of £2 billion from that rise. Under Labour the bill would have gone up and we had the lowest house building programme since the 1920s. Really, he should stand up and apologise for the shambles and the mess they left housing in.

[Mr Byrne]

The Secretary of State’s level of delusion is now bettering his previous level. He knows that the policy costings—which he has clearly not read—published by his right hon. Friend the Chancellor show that the housing benefit bill is not going down over the next couple of years, but going up. The Secretary of State’s efforts have been so successful that he is bringing in a policy—the hated bedroom tax—that will cost more than it saves. We saw the proof on Wednesday—housing benefit up by more than £1 billion. That is a mark of his failure.

[Clive Efford (Eltham) (Lab)]

The Secretary of State cannot rewrite history. This Government inherited the biggest council house building programme for 20 years. One of the first things they did was scrap it. They now have the lowest building starts since the 1920s—lower even than we had, and that is saying something.

[Mr Byrne]

My hon. Friend is absolutely right. What we needed in the Budget was determined action to build houses, not another subsidy for Britain’s richest citizens.

Let me start to conclude by reminding the House what most families will now experience. We heard in the Secretary of State’s speech some words about the rise in the personal allowance. The truth is that, even despite the rise in the personal allowance, the cuts buried in the Budget will mean that by April 2014-15 the same family who will see the personal allowance increase to £10,000 will be worse off. They will lose £600 a year in cuts, and my fear is that worse is to come.

The Chancellor gave away a lot of things in the first year of the next Parliament. Although we saw a little of how he will pay for it—he is going to fast-track the flat-rate pension—this is one of the great mysteries of this Budget, and we have not heard much about it yet. When the Minister winds up, I hope he will confirm at what rate the flat-rate pension will be introduced. The original White Paper set the figure at £144, which I notice is lower than £145, which is the combined total of pension credit and the state pension set out in the Budget book on Wednesday. As we know, the advance of the flat-rate pension offers the Treasury a huge national insurance windfall of about £5.5 billion in 2016-17 and 2017-18. What is interesting—we heard nothing about this—is that half of that windfall comes from public sector employers. The Library was able to tell me earlier in the week that the national health service, schools and the police will face a bill for £1.6 billion in higher national insurance contributions. We heard nothing about precisely where that money will come from. I hope the Minister will be able to set our minds at rest and say why this will not be another cut to the NHS in the next Parliament.

The second mystery surrounds the unspecified cuts of £11.5 billion in the first years of the next Parliament. We know that things such as the strivers tax and other cuts to working tax credits will deliver up to £6 billion, but where will the other £5 billion come from? Can DWP Ministers tell us how they will resist another huge great cut to welfare in the June spending review?

We got more of the same from the Chancellor on Wednesday and more of the same from the Secretary of State today. Once upon a time he liked to say that he cared about poverty. No more. One million children on his watch will be pushed into poverty. Tens of thousands of disabled people will follow. Families get less, while millionaires get more, all because this Chancellor has flatlined the economy and because the Secretary of State has asked for nothing, got nothing and delivered nothing to bring down unemployment.

[Several hon. Members]

rose—

--- Later in debate ---

[James Duddridge (Rochford and Southend East) (Con)]

Thank you for calling me, Mr Deputy Speaker. [Interruption.] In my rush to speak, I almost ended up advertising an election leaflet for the Conservative party. It was not intentionally aimed at Opposition Members.

I would like to focus on two quite technical issues that have not been raised but are worth raising, and then turn to some issues affecting Rochford and Southend East, the constituency I have the honour of representing. The first issue is the change to shares and stamp duty on shares on AIM—the alternative investment market. Although the change will not make the front page of the Southend Echo this morning, it will help the longer-term regeneration of small and medium-sized enterprises. However, this is not just about aspiring individuals for an aspiring nation; it is also about aspiring businesses that want a step up. Floating more companies on AIM and raising equity is essential. Reducing stamp duty on AIM, which represents only 6% of shares, is a step in the right direction that will allow small and medium-sized companies in Southend and elsewhere to raise equity, rather than having to rely on banks, which we all know have their own set of problems.

The Government have taken a step in the right direction. I hope that in future Budgets they will consider extending the decision to the other 94% of shares, to allow greater participation by small and medium-sized companies. That would also improve the liquidity of the London financial markets, which, although liquid enough to support basic transactions, will benefit from greater liquidity, which would mean cheaper financing for small and medium-sized enterprises, allowing them to grow further.

The second thing I would to note—again, it will not make the front page of the Southend Echo tomorrow, although I think a number of families will appreciate it when they start to benefit from it—is the change to the child trust fund regulations. The previous Government gave away £250 that could be put in a child trust fund—either a cash fund or an equity fund. This Government did not think that was affordable and introduced junior individual savings accounts. As all those changes were unwrapped, some anomalies emerged. Most people did not put in more money, which was what the previous Government desired; rather, most people’s children had just the £250. Firms are putting up their charging rates disproportionately—for what is, in the case of equities, essentially an index tracker—and people are locked into the funds.

To be frank, I feel a degree of sympathy for the financial services companies involved, because 1.5% on £250 plus a bit of growth does not even pay for the stamp on the statement at the end of the year. However, measures in the Budget will mean that such funds can be converted into junior ISAs. I have not seen the detail—I am not sure whether it has come out of the Treasury—but I would also encourage the Treasury, as well as looking at actual transfers, to consider allowing people, if they choose, to leave the fund to one side and still open a junior ISA. At the moment, people cannot have both open at the same time.

Those are two quite detailed, technical points in the Budget. I should apologise, Mr Deputy Speaker, for being unfamiliar with the process, but I think that at the beginning of my speech I should have drawn Members’ attention to the Register of Members’ Financial Interests and some work that I do outside the House.

My constituents in Rochford and Southend East talk to me about the cost of fuel—not only individuals, but businesses. In the run-up to the Budget, staff at Churchill’s sandwich bar, where I always get my panini on a Friday—it is very good and I recommend it to all hon. Members who visit my constituency—told me about the fuel cost not just for the business but for their suppliers. The cost made a difference to individuals, even within a sandwich business. When we leverage that up to show the costs to our constituents of other goods with greater transportation costs, we can see that the Budget will not just help aspiring companies. A van driver could save up to £340 a year, a haulier more than £5,000. Those are big numbers and this will assist people.

I welcome the non-increase in beer duty—the reduction by 1p. That will not transform the economic outlook of the United Kingdom, but it is a nice hat-tip to the direction that the Government would like to take in future as we do more for hard-working families.

The £10,000 personal allowance is enormously significant, particularly for young mums looking to get back to work. It provides clarity about the lack of bureaucracy in taxation and all of the first £10,000 will go into their pockets, rather than into tax. There is a barrier to entry to work, not only because of the growth of the economy but because of confusion about the interaction between the benefits system, which has been overly complex, and the taxation system, which has dragged in far too many people too early and too low down the salary scales.

I have been disappointed by the tone of the debate. I am a great fan of the right hon. Member for Birmingham, Hodge Hill (Mr Byrne). It is important to be candid when writing and it is an excellent idea to tell people what one wants, although the details about the cappuccino and so on might have gone a little over the top. The infamous letter that said, “Dear chief secretary, I’m afraid there’s no money left. Kind regards and good luck, Liam,” was not the total picture—even though in humour it is good to be brief. There is no money left and they maxed out the nation’s corporate credit card. I will give way to the right hon. Gentleman if he wants to apologise.

[Mr Byrne]

I am grateful to the hon. Gentleman for offering me that opportunity. He will know that I also left a Budget, drafted with my right hon. Friend the Member for Edinburgh South West (Mr Darling), who was Chancellor at the time, that would have halved the deficit over four years as opposed to putting the total debt burden of this country up by £245 billion, which is what his Government have secured.

[James Duddridge]

I am grateful to the right hon. Gentleman for that intervention and for the extra minute of time he has given me. If that was truly the sentiment and he felt that that was the case, why did he not leave that in a note? He left a candid note that gave half the picture.

The truth is that the previous Government ran down the economy. It is as if the nation were a family, and two individuals within that family had been given responsibility for the finance and budget for 10 years each. One spends and borrows and enjoys the good times, and the other has to clear up the mess.

--- Later in debate ---

[Michael Ellis]

In common with most Labour Members, the hon. Gentleman’s understanding of the economy is limited. The reality is that the country’s debt is the responsibility of the Labour Government. However hard Labour Members try to transfer the blame on to the Conservatives, we did not spend that money.

When the current Government took over, £1 for every £4 spent from the public purse went on interest. Borrowing is now £3 billion lower, and the deficit is down by one third. What is Labour’s plan? Labour wants to borrow £200 billion more. I wish we had that money, but we do not have it. That is Labour’s plan.

Meanwhile, the OBR forecasts, post-Budget, 600,000 more jobs in 2013. What is the Labour party doing about jobs? Labour Members pretend that the 1.2 million jobs that have been created are fictional, not real, low-quality and part-time jobs. That is a complete fiction, and they should be embarrassed about it. They should talk the economy up and promote industry, trade, manufacturing and jobs. Are they holding jobs fairs in their constituencies? I have a jobs fair in Northampton North on 17 May. A number of companies will attend. I am doing what I can to improve the jobs market, but all we hear from Labour Members is that they will spend and borrow more, and yet they complain.

Corporation tax will be 20%, which is one of the lowest rates in the world. If we had stuck with Labour’s figures, we would have 3p a pint more in beer duty. Not only has that escalator been cancelled, but 1p has been taken off beer duty, but I have sat in Chamber and heard Labour Members criticise even that. They cannot bring themselves to acknowledge positives.

What is more grating is the self-righteousness of Labour Members. They believe that only they can have any compassion or think in any way of the most disadvantaged in society. Well, I have news for them. My colleagues on the Government Benches are equally if not more compassionate. We do not need to be lectured by those who put this country into such debt.

The dramatic fuel duty measures taken by this Chancellor—[Interruption.] If Labour Front-Benchers want to intervene, I am happy to give way.

[Mr Byrne]

indicated dissent.

[Grahame M. Morris (Easington) (Lab)]

rose—