Finance (No. 2) Bill
Lindsay Hoyle Excerpts(9 years, 8 months ago)
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Ms Angela Eagle (Wallasey) (Lab)
On a point of order, Mr Deputy Speaker. It has just come to my attention that the Government have tabled a motion for debate on the final day of this Parliament, with no notice whatever to myself as shadow Leader of the House. The motion proposes changes to the way in which the Speaker is elected—procedural matters in the House—with no consultation with Her Majesty’s loyal Opposition and no consultation with the Chair of the Procedure Committee, for debate in only one hour tomorrow. Is this in order? Do you believe that the procedures of this House should be bandied around by the Government in this way, and that we should have surprises delivered to us in this manner on the last day of the first ever fixed-term Parliament? The motion attempts to influence the results of the first thing that will happen in the next Parliament, with no chance for large numbers of Members who had no knowledge that this was happening to participate.
Mr Deputy Speaker (Mr Lindsay Hoyle)
It is a business matter for the Government, as the shadow Leader of the House is well aware. Rightly or wrongly—whichever the House may decide—a business motion was agreed to yesterday, as I understand it, and as we know, business of the House is decided by the Government, not by the Chair, so it is not a matter for the Chair.
Kevin Brennan (Cardiff West) (Lab)
Further to that point of order, Mr Deputy Speaker. Usually I am an assiduous attender, as you know, of business questions, but I was unable to attend last week. Was this announced then? If it was not, can you tell us when you and Mr Speaker were informed that the motion was to be tabled?
Mr Deputy Speaker
It was a business motion that was agreed yesterday, but not the terminology, I presume. Mr Speaker is not in the Chair so I do not know when he was told. I was told about five minutes ago when I came into the Chair. [Interruption.] No, that is correct. There is a business motion. [Interruption.] Mr Doughty, we are trying to deal with this. We have many other points of order on that matter.
Mr John Spellar (Warley) (Lab)
Further to that point of order, Mr Deputy Speaker. We have had some slightly strange events on the Budget, with Ministers speaking from the Government Dispatch Box—from the Treasury Bench—but speaking for their parties. My understanding is that the Government speak from there—the Government Benches. May we be clear? Is the motion a Government motion, which has therefore been signed off by the coalition partners, or is it a motion from the Conservative party?
Mr Deputy Speaker
We are getting into areas that are not a matter for the Chair. This is agreed business of the Government. That answers that.
Barbara Keeley (Worsley and Eccles South) (Lab)
On a point of order, Mr Deputy Speaker. Is it in order for a member of a Select Committee who has been involved in a serious leak and a possible breach of privilege in this House then to raise that, as happened today at Prime Minister’s questions in a question from the hon. Member for Bristol North West (Charlotte Leslie), thus exacerbating the situation the Committee has found itself in? I would be grateful for your advice.
Valerie Vaz (Walsall South) (Lab)
Further to that point of order, Mr Deputy Speaker. Other members of the Health Committee are also affected. The hon. Member for Bristol North West (Charlotte Leslie) has openly leaked the private considerations of the Committee. What action can be taken immediately?
Mr Deputy Speaker
May I just say that we are raising a matter where a Member is being discussed? I presume that they are aware that this matter was going to be raised as a point of order.
Rosie Cooper (West Lancashire) (Lab)
Further to that point of order, Mr Speaker. Like my hon. Friends, I think that we, as members of the Health Committee, need the advice of your good self as to how we can address the distorted report of events at the private sitting of the Committee without falling foul of the very convention that prevents this. Conservative members of the Health Committee have previously been referred to the Liaison Committee by a vote in the Committee, and here we have it again. How do we defend ourselves?
Grahame M. Morris (Easington) (Lab)
Further to that point of order, Mr Deputy Speaker. I do think it is an absolute outrage that the hon. Member for Bristol North West (Charlotte Leslie) did not give us notice that she was raising the matter. She is subject to a referral. Other Select Committees have chosen not to publish reports.
Mr Deputy Speaker
I am sure that you are aware that Mr Speaker has sent a letter to the Chair of the Select Committee. I can also inform you that it is not a matter for the Chair; it is a matter for the Committee. In the new Parliament, there will also be a new Committee that can look into it. Unfortunately, as I say, it is not a matter for the Chair.
Budget Resolutions and Economic Situation
Lindsay Hoyle Excerpts(9 years, 8 months ago)
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Mr Pickles
We are talking about something in the region of £400 million in London. The hon. Lady needs to understand that she is the queen of the cheap point. None of us will forget the tweet she sent out—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Just to help everybody, it should be the Chair who everybody speaks to and addresses.
Mr Pickles
Thank God you’re here, Mr Deputy Speaker. I was very happy to address the hon. Lady, but you were absolutely right to pull me up on that point of etiquette.
The plans are there; they are published. If the hon. Lady cannot be bothered to look at the plans and work with her local council, that is hardly our fault.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I remind Members that speeches should be up to, or around, 10 minutes long.
Gregory Barker
Very quickly, on the point about green issues, may I point out to my hon. Friend in case he missed it—I am sure that he did not—something that was buried at the back of the Budget, which was the announcement of marine-protected areas in Pitcairn? This is the largest ever marine conservation programme embarked on by any Government—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. The right hon. Gentleman has made one speech; I do not need another one. Interventions must be short, and I am sure that Mr Yeo is coming to the end of his speech, as he has just gone past the 10 minute-mark.
Mr Yeo
I am indeed coming to the end of my speech. I am afraid that I had missed that detail in the Budget, so I am glad that my right hon. Friend mentioned it.
We must be mindful of the costs of low-carbon technologies. Some of them, such as solar, are within sight of needing no subsidy at all. Let us facilitate their expansion, and not obstruct it through the planning system.
Onshore wind potentially offers good value for money, and in some areas it is acceptable. I am concerned that we may turn our backs on a good value for money technology altogether. Onshore wind will always be cheaper than offshore wind. Although local concerns must always be respected, indeed paramount, we should not block its deployment in those places where it is acceptable. It is right to pilot lagoons, but we should persist in that process only if we are reasonably sure that the cost will fall, because the initial cost is undeniably extremely high.
While I am talking about energy, let me just mention nuclear power. I hope that, early in the next Parliament, we shall see a conclusion of the tortuous negotiation over Hinkley Point. I urge the Government to seek further ways of cutting the cost of new nuclear power stations—possibly by using their own fantastic and well deserved credit rating, which means that they are able to borrow more cheaply than any other borrower in the world—perhaps by funding the cost of construction, which is a great element of the ultimate cost of nuclear power, and then selling the power station on to a private operator for its operational lifetime. We should also consider how using tried and tested technology in nuclear power could help us to cut costs.
This was a magnificent Budget from an outstanding Chancellor and a terrific coalition Government. Anybody who believes that the quality of their lives and the prosperity of their families will be affected by the performance of the economy would be certifiably insane not to vote Conservative on 7 May. If the people of Britain do not recognise the merits of the long-term economic plan and the continuing need for it, then I will sadly conclude that the voters deserve their fate. I am confident that that will not happen, and that, seven weeks today, Britain will wake up to the joyous news that the country has returned a new Conservative Government by a landslide majority.
Amendment of the Law
Lindsay Hoyle Excerpts(9 years, 8 months ago)
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Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I have to apply an eight-minute time limit to ensure that everybody gets eight minutes.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Let me say to Members that we have more time than expected because of some withdrawals, so I can lift the time limit to 12 minutes. I call Brian Binley.
Mr Binley
The deficit was reduced because you spent more money—of course that would reduce the deficit.
I thank the hon. Lady for her intervention, because it leads me on to the next part of my speech. You failed to mend the roof while the sun was shining. You failed to recognise the fact that there was a global storm approaching. You massively increased borrowing when every business in the land was doing just the opposite—I can tell you that as a business man. Indeed, you almost broke the country.
Mr Deputy Speaker
I think you need to sit down for a second. Once was fine, but I think that was your fifth “you”. I am being accused of a lot of things that I know you will not want me to take responsibility for.
Mr Deputy Speaker
Order. I can assure the hon. Gentleman that there will not be a lax approach. I will allow him to get on with his speech without any more “yous”.
Mr Binley
I am most grateful, Mr Deputy Speaker. I will remember that.
This Government need no lessons from the Opposition, even if they had lessons to give, which I have failed to hear during this Budget debate. The Minister will not be surprised to know that I will again bang the drum for business, as I have in this place for the past 10 years. In many respects, I am sorry that this place does not have more business entrepreneurs, and often fails to appreciate their needs or the sort of economic atmosphere in which they work best. Thankfully, this Chancellor has had a plan. It is a plan that is working, and business confidence continues to rise. The Budget will frame our prosperity for the entirety of the next Parliament. I have no doubt that there will come a time when, if the Opposition ever again assume the seat of government—pray the Lord that it will never happen—they will recognise the reality of the situation, instead of talking in Shakespearian fairy tales, as the shadow Chancellor did.
The Chancellor has introduced Budget measures that business will welcome: the reduction of the rate of corporation tax to 20%; the abolition of national insurance contributions for those employing under-21s, and indeed young apprentices, which will come into effect in April next year; the extension of small business rate relief and the much welcomed employment allowance; and especially the promise of a major review of business rates. Business will be delighted by the abolition of class 2 national insurance contributions for the self-employed, which will follow in the next Parliament, and by the abolition of annual tax returns. On behalf of small businesses up and down the country and of the independent operators—it is so important for this nation that those single men and women plough their own furrow—I thank you.
Chris Heaton-Harris
It will be a great loss not to have my hon. Friend in the House after the general election, because he is a worthy champion of the wealth creators of this country. In his valedictory speech to this place, will he share with us some of his great expertise on why small businesses are the bedrock of British society, and how they employ so many people to the benefit of our tax system?
Mr Binley
I would be delighted to do so. Small businesses are the bedrock of the growth in the number of businesses overall because, first, they welcome the Government’s approach, and secondly, they have the courage to go out, put their own money on the line and add to the number of jobs available in this country. I am delighted to say that that is exactly what I did 25 years ago, and the companies I founded now employ 300 people —that is what entrepreneurialism is about—and to say that that is a part of my record and always has been.
The Chancellor has acknowledged that the success of the Budget will not be calculated by the accumulation of individual measures. I will therefore speak about the economic architecture that will help to achieve his ambitions. I want to comment on how his efforts to rebalance the economy are taking off, something which requires a bold and strong local infrastructure that supports businesses.
In particular, I want to speak about the importance of local enterprise partnerships. I am delighted to say—here is a compliment—that I understand that the Opposition have welcomed LEPs and will continue to use them. That is sensible, and we should give the Opposition credit when they agree with sensible measures. LEPs are critical to the rebalancing of a successful economy in every part of the UK. As some of my colleagues know, I am the vice-chairman of the Northamptonshire LEP. I may be the only Member of the House to be so intimately involved in an LEP. I believe that it is important for hon. Members to take an active interest in their LEPs and be associated with them with a view not to running them or overpowering their potential, but to being involved because they can be a great help. I hope that the Opposition spokesman, the hon. Member for Hartlepool (Mr Wright)—to be fair, he is a great supporter of small business—will take that message on board.
Northamptonshire had the vision to create the Northamptonshire enterprise partnership before LEPs were mooted. I pay tribute to the leaders of the county council for their foresight. The pressures on local government funding will increasingly restrict the ability of local authorities to sustain their support for LEPs. If we are to make them work, they need to be owned by the entirety of the local economic community, and not just by one sector.
Why has the performance of LEPs across the country been so patchy? I believe that it is because many of them, particularly many of the smaller ones, are not in receipt of the support that they need to create the sort of administration that will produce the growth that we are seeking. The original design for LEPs envisaged local businesses as the main source of income for the administrative costs. However, in areas where small businesses are the main engine of economic growth, that is an optimistic expectation. In Northamptonshire, some 94% of those working in the private sector work in SMEs. SMEs simply do not have the spare cash fully to support the LEPs in the way the Government originally envisaged.
I would like to see a system whereby a proportion of the finance that is available for the projects that LEPs handle is allocated to sustain their administration. I hope that the Economic Secretary will recognise that I am not asking for more money, but for some of the money that is devoted to local growth to be redirected to the administration of LEPs so that they can achieve the objective of growth.
This Budget must be seen as the prelude to prosperity in the next five years. Frankly, the Chancellor will need the support of LEPs after the election. That support will have to be strong and sensible. Consequently, the Government will have to give careful thought to how best to organise and manage the structure of LEPs. I appeal to the Economic Secretary to recognise that, in view of the Government’s policies that were expressed by the Chancellor, LEPs will need a little more financial help if they are to do their job correctly on behalf of the Government.
I am happy to offer an exemplar for what can be achieved by a LEP. I refer to my own LEP in Northamptonshire —there’s nothing like blowing your own trumpet! The economy in Northamptonshire is recovering well from the great recession. The food and drink sector is the largest sector in our county in terms of employment and turnover. We are building a new food and drink academy at one of the important colleges just outside Northampton. More than 40,000 people are employed in the auto sport and aerospace industry. They are grateful for the help that has been given to the industry, but they want it to continue. Our craft industry, which makes the best boots and shoes in the world, has received help from the LEP. Church’s, which is one of the best-known brands, has had help to extend its manufacturing facility. Northamptonshire’s enterprise zone has created more than 1,000 jobs.
Finally, Northamptonshire’s Challenge 2016 project, which aimed to achieve a massive reduction in youth unemployment, has far exceeded our expectations. Two years ago, we had more than 5,600 young people not in education, employment or training; there are now a little under 1,500. That is the success of this Government—giving people opportunity and aspiration. I say to those who tell me that young people do not have aspiration that it is amazing how aspirational young people become when they have a job.
If we are to put ourselves in the premier league of economic growth, the measures in the Budget must be combined with an effective local economic framework. I am confident that Northamptonshire will continue to provide an example of how best to drive regeneration and economic growth, but it will need more help, as will many LEPs across the country. I beg that you consider that factor—you being the Economic Secretary, Mr Deputy Speaker—
Financial Statement
Lindsay Hoyle Excerpts(9 years, 8 months ago)
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Mr Deputy Speaker (Mr Lindsay Hoyle)
Before I call the Chancellor of the Exchequer, I remind all Members that copies of the Budget resolutions will be available in the Vote Office at the end of the Chancellor’s speech. I also remind all Members that it is the norm not to intervene on the Chancellor of the Exchequer or the Leader of the Opposition.
The Chancellor of the Exchequer (Mr George Osborne)
Today I report on a Britain that is growing, creating jobs and paying its way. We made difficult decisions in the teeth of opposition, and it worked: Britain is walking tall again.
Five years ago, our economy had suffered a collapse greater than that suffered by almost any other country. Today I can confirm that in the last year we have grown faster than any other major advanced economy in the world. Five years ago, millions of people could not find work. Today I can report that more people have jobs in Britain than ever before. Five years ago, living standards were set back years by the great recession. Today the latest projections show that living standards will be higher than they were when we came to office. Five years ago, the deficit was out of control. Today, as a share of national income, it is down by more than a half. Five years ago, they were bailing out the banks. Today I can tell the House that we are selling more bank shares and getting taxpayers’ money back. We set out a plan, that plan is working, and Britain is walking tall again.
So the critical choice facing the country now is this: do we return to the chaos of the past or do we say to the British people, “Let’s go on working through the plan that is delivering for you”? Today we make that critical choice: we choose the future. We choose, as the central judgment of this Budget, to use whatever additional resources we have to get the deficit and the debt falling. No unfunded spending, no irresponsible extra borrowing; for no short-term give-away can ever begin to help people as much as the long-term benefits of a recovering national economy. In the emergency Budget I presented to this House five years ago, I said we would turn Britain around, and in this last Budget of the Parliament, we will not waver from that task, because we choose the future.
Our goal is for Britain to become the most prosperous major economy in the world, with that prosperity widely shared. So we choose economic security. This Budget commits us to the difficult decisions to eliminate our deficit and get our national debt share falling. We choose jobs. This Budget does more to back business and make work pay, so we create full employment. We choose the whole nation. This Budget makes new investments in manufacturing and science and the northern powerhouse for a truly national recovery. We choose responsibility. This Budget takes further action to support savers and pensioners. We choose aspiration. This Budget backs the self-employed, the small business owner and the home buyer. We choose families. This Budget helps hard-working people keep more of the money they have earned. This is a Budget that takes Britain one more big step on the road from austerity to prosperity. We have a plan that is working, and this Budget works for you. [Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I am struggling to hear what the Chancellor of the Exchequer is saying. I am sure that all Members in the House want to hear the Chancellor; but, more importantly, so do our constituents.
Mr Osborne
The British economy is fundamentally stronger than it was five years ago, and that is reflected in the latest forecasts from the Office for Budget Responsibility. It seems remarkable that until this Government came to office, our national forecasts were manipulated by Chancellors, to be fiddled and fixed in pre-election Budgets. Today they are produced with independence and integrity by Robert Chote and his team, and I want to thank them for their work. The OBR confirms today that, at 2.6%, Britain grew faster than any other major advanced economy in the world last year. That is 50% faster than Germany, three times faster than the eurozone and seven times faster than France. There are some who advise us to abandon our plan and pursue the French approach. I prefer to follow the advice of the secretary-general of the OECD, which he gave to us all last month. He said:
“Britain has a long term economic plan”
and
“it needs to stick with it.”
“A long-term economic plan”—now there’s someone with a way with words. We need to stick with that plan, at a time when global economic risks are rising.
The biggest development since the autumn statement has been the further sharp fall in the world oil price. This is positive news for the global economy, but the overall boost this provides has not yet offset the rising geopolitical uncertainty it causes, and the eurozone continues to stagnate. So at this Budget, the OBR has once again revised down the growth of the world economy, revised down the growth of world trade and revised down the prospects for the eurozone. It warns us that the current stand-off with Greece could be very damaging to the British economy. I agree with that assessment. A disorderly Greek exit from the euro remains the greatest threat to Europe’s economic stability. It would be a serious mistake to underestimate its impact on the UK, and we urge our Eurozone colleagues to resolve this growing crisis.
The problems in Europe remind us why Britain needs to expand our links with the faster growing parts of the world. We have made major progress in this Parliament. I can report that the trade deficit figures published last week are the best for 15 years, and we will do even more, so today I am again increasing UK Trade & Investment’s resources to double the support for British exporters to China. We have also decided to become the first major western nation to become a prospective founding member of the new Asian Infrastructure Investment Bank, because we think we should be present at the creation of these new international institutions.
Mr Deputy Speaker, you would expect weaker world growth, weaker world trade and weaker European growth to lead to weaker growth here in the UK. However, the OBR has not revised down Britain’s economic forecasts; it has revised them up. A year ago, it forecast growth in 2015 at 2.3%. In the autumn statement, that was revised up to 2.4%. Today I can confirm that GDP growth this year is forecast to be higher still, at 2.5%. It is also revised up next year, to 2.3%. That is where it remains for the following two years, before reaching 2.4% in 2019.
The OBR reports growth revised up, and its numbers confirm that growth is broadly based, for we are replacing the disastrous economic model we inherited. Between 1997 and 2010, investment accounted for less than one fifth of Britain’s economic growth—four fifths came from debt-fuelled household consumption. Meanwhile, manufacturing halved as a share of our national economy, and the gap between the north and the south grew ever larger.
I can report that since 2010 business investment has grown four times faster than household consumption; Britain’s manufacturing output has grown more than four and a half times faster than it did in the entire decade before the crisis; and over the last year, the north grew faster than the south. We are seeing a truly national recovery.
Let me turn now to the rest of the forecasts. This morning we saw the latest job numbers. It is a massive moment. Britain has the highest rate of employment in its history—a record number of people in work and more women in work than ever before—and the claimant count rate is at its lowest since 1975. For years, Governments have talked about full employment. This Government are moving towards achieving it.
Unemployment today has fallen by another 100,000, and compared with the autumn statement, the OBR now expects unemployment this year to be even lower. It is set to fall to 5.3%, down almost a whole three percentage points from the rate we inherited from the last Government. When we set out our plan, the Leader of the Opposition predicted that a million jobs would be lost. Instead, over 1.9 million new jobs have been gained, because our long-term plan is based on the premise that if we provide economic stability, if we reform welfare and make work pay, and if we back business, then we will create jobs too. Today’s figures show that under this Government 1,000 more jobs have been created every single day. The evidence is plain to see: Britain is working again.
What about all those who say, “The jobs aren’t real jobs; they’re all part-time; they’re all in London”? Nonsense. How many of the jobs are full time? Eighty per cent. How many of the jobs are in skilled occupations? Eighty per cent. Where is employment growing fastest? In the north-west of England. Where is a job being created every 10 minutes? In the midlands. Which county has created more jobs than the whole of France? The great county of Yorkshire. We are getting the whole of Britain back to work with a truly national recovery.
It is only by growing our economy, dealing with our debts and creating jobs that we can raise living standards. To the question whether people are better off at the end of this Parliament than they were five years ago, we can give the resounding answer yes. We can measure it by GDP per capita, and the answer is, yes, it is up by 5%. Or we can use the most up-to-date and comprehensive measure of living standards, which is real household disposable income per capita—in other words, how much money families have to spend after inflation and tax. This is the living standards measure used by the Office for National Statistics and by the OECD. On that measure, I can confirm that, on the latest OBR data today, living standards will be higher in 2015 than in 2010. They confirm that they are set to grow strongly every year for the rest of the decade.
The British people for years paid the heavy price of the great recession. Now the facts show that households on average will be about £900 better off in 2015 than they were in 2010—and immeasurably more secure for living in a country whose economy is not in crisis any more, but is instead growing and creating jobs.
Because we have strong growth and a strong economy, we can also afford real increases in the national minimum wage. This week we accept the recommendations of the Low Pay Commission that the national minimum wage should rise to £6.70 this autumn, on course for a minimum wage that, as the Prime Minister just said, will be over £8 by the end of the decade. And we have agreed the biggest increase ever in the apprentice rate. It is the oldest rule of economic policy: it is the lowest paid who suffer most when the economy fails and it is the lowest paid who benefit when you turn that economy around.
Household incomes also go further because we now have the lowest inflation on record. The OBR today revises down its forecast for inflation this year to just 0.2%, and revises it down for the following three years. It is driven by falling world oil and food prices, not by the kind of stagnation we have seen on the continent. But we will remain vigilant.
I am today confirming that the remit of the Monetary Policy Committee for the coming year remains the 2% symmetric CPI inflation target. I am also confirming the remit for our new Financial Policy Committee, so that this time we spot the financial risks in advance.
The fall in food prices is good for families, but it reminds us of the challenge our farmers face from volatile markets. The National Farmers Union has long argued they should be allowed to average their incomes for tax purposes over five years. I agree and in this Budget we will make that change.
We will also use this opportunity to lock in the historically low interest rates for the long term. I can tell the House that we will increase the number of long-dated gilts that we will sell. We will also redeem the last remaining undated British Government bonds in circulation. We will have paid off the debts incurred in the South Sea bubble, the first world war, the debt issued by Henry Pelham, George Goschen and William Gladstone; the debt issued by Gordon Brown will take a little longer to pay off. [Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. We want to get through this Budget. The sooner we get through it, the better, and then we can debate it.
Mr Osborne
Since the pound goes further these days, now is a good time to confirm the design of the new £1 coin. Based on the brilliant drawing submitted by 15-year-old David Pearce, a school pupil from Walsall, the new 12-sided pound coin will incorporate emblems from all four nations—for we are all part of one United Kingdom.
I now turn to the national debt. Lower unemployment means less welfare. Compared with the autumn statement, welfare bills are set to be an average of £3 billion a year lower. Lower inflation means lower interest charges on Government gilts: those interest charges are now expected to be almost £35 billion lower than just a few months ago.
Rising unemployment and compounding debt interest contributed to our national debt problem, but they were not the only cause. The previous Government increased debt by £192 billion bailing out the banks and sent the national debt rocketing up by a third.
We have already sold the branches of Northern Rock and raised £9 billion from Lloyds shares. Now we go further. Today I can announce that we are launching a sale of £13 billion of the mortgage assets we still hold from the bailouts of Northern Rock and of Bradford & Bingley. Lloyds bank has returned to profit and is paying a dividend, so we can continue our exit from that bailout, too. We will sell at least a further £9 billion of Lloyds shares in the coming year. The previous Government put taxpayers’ money into the banks and this Government are getting it back.
The bank sales, the lower debt interest and the lower welfare bills present us with a choice. We could treat them as a windfall, even though we know the public finances need further repair. With an election looming, some of my immediate predecessors may have been tempted to do this, but that would be deeply irresponsible. We would be spending money we did not really have and racking up borrowing that our country could not afford. We would be repeating all the mistakes of the last Government instead of fixing those mistakes.
Today, the central judgment of this Budget is this: we will use the resources from the bank sales and the lower interest payments and the lower welfare bills to pay down the national debt. We put economic security first, for higher national debt leaves our nation exposed, harms potential growth and costs taxpayers billions of pounds in debt interest. That would be throwing away billions of pounds we should be using to fund our public services and lower taxes.
Five years ago, national debt was soaring. That was why in my first Budget I set a target that we would have the national debt falling as a share of GDP by 2015-16, the last year of this Parliament. The eurozone crisis made that task here at home all the more difficult and for much of the past five years it looked like we might fall short. The Leader of the Opposition confidently predicted we would fail and the shadow Chancellor repeated that prediction last week, but I can announce to the House that the hard work and sacrifice of the British people has paid off. The original debt target I set out in my first Budget has been met. We will end this Parliament with Britain’s national debt share falling. The sun is starting to shine and we are fixing the roof.
The OBR reports today that debt as a share of GDP falls from 80.4% in 2014-15 to 80.2% in 2015-16. It keeps falling to 79.8% in 2016-17, then down to 77.8% the following year, and to 74.8% in 2018-19 before it reaches 71.6% in 2019-20.
National debt as a share of our national income has been increasing every single year since 2001. Those 13 years amount to the longest year-on-year rise in our national debt since the end of the 17th century. Today we bring that shameful record of irresponsibility to an end and make sure we pay down our national debt. There is a consequence for our fiscal plans. As the national debt share is falling a year earlier than forecast at the autumn statement, the squeeze on public spending ends a year earlier too.
In the final year of this decade, 2019-20, public spending will grow in line with the growth of the economy. We can do that while still running a healthy surplus to bear down on our debt—a state neither smaller than we need nor bigger than we can afford. For those interested in the history of these things, that will mean state spending as a share of our national income of the same size as Britain had in 2000. That is the year before spending got out of control and the national debt started its inexorable rise.
When we came to office, the deficit stood at more than 10% of our national income, one of the highest of any major advanced economy and the largest in our peacetime history. The IMF says we have achieved the largest, most sustained reduction in our structural deficit of any major economy. Today, the OBR confirms that it now stands at less than half of the deficit we inherited, but at 5% this year, it is still far too high and it must come down. With our plan, it does. The deficit falls to 4% in 2015-16, then down to 2% the following year and down again to 0.6% the year after that. The deficit is lower in every year than at the autumn statement.
In 2018-19, Britain will have a budget surplus of 0.2%, followed by a forecast surplus of 0.3% in 2019-20. We will also comfortably meet our fiscal mandate and Britain will be running a surplus for the first time in 18 years. That leads to borrowing. Every one of the borrowing numbers is lower than at the autumn statement. We inherited annual borrowing of over £150 billion from the last Government. This year borrowing is set to fall to £90.2 billion, £1 billion lower than expected at the autumn statement. It falls again in 2015-16 to £75.3 billion, then to £39.4 billion the year after that, before falling to £12.8 billion. In total that is £5 billion less borrowing than we forecast just three months ago. In 2018-19, we reach an overall surplus of £5.2 billion, a £1 billion improvement compared with December. In 2019-20 we are forecast to run a surplus of £7 billion.
Growth is up; unemployment is down; borrowing is down in every year of the forecast; we reach a surplus—all contributing to a national debt now falling as a share of national income. Out of the red and into the black—Britain is back paying its way in the world today.
Lower borrowing and falling debt as a share of GDP will continue only with a credible plan to control public spending and welfare. As we end the Parliament, we can measure the scale of the achievement. The administrative costs of central Government will be down by 40%. We have legislated for welfare savings of over £21 billion a year, and because savings have been driven by efficiency and reform, the quality of public services has not gone down—it has gone up. Satisfaction with the NHS is rising year on year; crime is down 20%; 1 million more children attend good or outstanding schools—but the job of repairing our public finances is not done, and here is a very important point that the country needs to understand. National debt as a share of GDP is now falling and we will only keep it falling if we commit to the fiscal path set out in this Budget. If we deviate from this path, if we go slower or borrow more, the national debt share will not keep falling—it will start rising again.
After all the hard work of the British people over the past five years to reach this point, that reversal would be a tragedy. Britain is on the right track; we must not turn back. In order to deliver that falling debt share we need to achieve the £30 billion further savings that are necessary by 2017-18. I am clear exactly how that £30 billion can be achieved: £13 billion from Government Departments; £12 billion from welfare savings; and £5 billion from tax avoidance, evasion and aggressive tax planning. We have done it in this Parliament; we can do it in the next.
The distributional analysis we publish today confirms that the decisions across this Parliament mean that the rich are making the biggest contribution to deficit reduction. That has been true at every fiscal event under this Government. I said we would all be in this together and here is the proof—[Interruption.] Compared with five years ago, inequality is down, child poverty is down, youth unemployment—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. We have to get to the end to hear what the Leader of the Opposition has to say. We will not do that if Members keep trying to shout the Chancellor down.
Mr Osborne
They do not like to hear it, Mr Deputy Speaker, but inequality is down, child poverty is down, youth unemployment is down, pensioner poverty is at its lowest level ever. The gender pay gap has never been smaller. Payday loans are capped, and zero-hours contracts regulated. Even more than that, opportunity has increased. The number of university students from disadvantaged backgrounds is at a record high, apprenticeships have doubled and there are fewer workless households than ever before. In this Budget we are providing funding for a major expansion of mental health services for children and those suffering from maternal mental illness. Those who suffer from these illnesses have been forgotten for too long. Not any more, because we stand for opportunity for all.
We have also created a fairer tax system—further proof that we are all in this together. The share of income tax paid by the top 1% of taxpayers is projected to rise from 25% in 2010 to over 27% this year. That is higher than in any one of the 13 years of the last Labour Government. We are getting more money from the people paying the top rate of tax because we understand that if you back enterprise, you raise more revenue. The House will also want to know that the lower paid 50% of taxpayers now pay a smaller proportion of income tax than at any time under the previous Government. [Interruption.] I will not accept lessons from those who impoverished the entire country and left millions of people out of work. We are delivering a truly national recovery.
In this Budget, everything we spend will be paid for, and that requires the following decisions. We have already taken steps to curb the size of the very largest pension pots, but the gross cost of tax relief has continued to rise through this Parliament, up almost £4 billion. That is not sustainable. So from next year, we will further reduce the lifetime allowance from £1.25 million to £1 million. This will save around £600 million a year. Fewer than 4% of pension savers currently approaching retirement will be affected. However, I want to ensure that those still building up their pension pots are protected from inflation, so from 2018 we will index the lifetime allowance.
We have had representations that we should also restrict the annual allowance for pensions and use the money to cut tuition fees. I have examined this proposal. It involves penalising moderately paid long-serving public servants, including police officers, teachers and nurses, and instead rewarding higher paid graduates. So I agree with most of the Opposition Front Bench that such a policy would be neither progressive nor fair, and we will not do that.
Nor will we take advice on tax evasion and avoidance from those who, in office, were the friends of the avoiders and the evaders. When we came to office, City bankers boasted of paying lower tax rates than their cleaners, the rich routinely avoided stamp duty and foreigners paid no capital gains tax. We have changed all that, and it was this Prime Minister who put tackling international tax evasion at the top of the agenda at the G8. We will now legislate for the new common reporting standard that we have got agreed around the world. Our new diverted profits tax is aimed at large multinationals that artificially shift their profits offshore. I can confirm that we will legislate for it next week and bring it into effect at the start of next month.
I am also today amending corporation tax rules to prevent contrived loss arrangements, and we will no longer allow businesses to take account of foreign branches when reclaiming VAT on overheads, making the system simpler and fairer. We will close loopholes to make sure that entrepreneurs relief is available only to those selling genuine stakes in businesses; we will issue more accelerated payments notices to those who hold out from paying the tax that is owed; and we will stop employment intermediaries exploiting the tax system to reduce their own costs by clamping down on the agencies and umbrella companies that abuse tax reliefs on travel and subsistence, while we will protect those who are genuinely self-employed. Taken together, all the new measures against tax avoidance and evasion will raise £3.1 billion over the forecast period.
I can also tell the House that we will conduct a review on the avoidance of inheritance tax through the use of deeds of variation. It will report by the autumn. We will seek a wide range of views, and we look forward to drawing on the particular expertise of the Leader of the Opposition—unless, that is, the Labour party has executed its own deed of variation by then. My right hon. Friend the Chief Secretary to the Treasury will tomorrow publish further details of our comprehensive plans for new criminal offences for tax evasion and new penalties for those professionals who assist them. Let the message go out: this country’s tolerance for those who will not pay their fair share of taxes has come to an end.
Because we seek a truly national recovery, today I also ask our banking sector to contribute more. Financial services are one of Britain’s most important and successful industries, employing people in every corner of the country. We take steps to promote competition, back FinTech and encourage new business such as global reinsurance, but as our banking sector becomes more profitable again, I believe it can make a bigger contribution to the repair of our public finances. I am today raising the rate of the bank levy to 0.21%. This will raise an additional £900 million a year. We will also stop banks deducting from corporation tax the compensation they make to customers for products they have been mis-sold, such as PPI. Taken together, these new banking taxes will raise £5.3 billion across the forecast. The banks got support going into the crisis; now they must support the whole country as we recover from the crisis.
In each Budget we have used the LIBOR fines paid by those who demonstrated the very worst values to support those who represent the very best of British values. Today I can announce a further £75 million of help. Last week’s service of commemoration reminded us all of the debt we owe to those brave British servicemen and women who served in Afghanistan. We will provide funds to the regimental charities of every regiment that fought in that conflict, and we will contribute funding to the permanent memorial to those who died there and in Iraq. In the 75th anniversary year of the battle of Britain, we will help to renovate the RAF museum at Hendon, the Stow Maries airfield and the Biggin Hill chapel memorial so that future generations can be reminded of the sacrifice of our airmen in all conflicts. We will provide £25 million to help our eldest veterans. That will include nuclear test veterans, and I congratulate my hon. Friend the Member for Basildon and Billericay (Mr Baron) on his campaign on their behalf.
Many Members on the Government Benches have also written to me asking for support for their local air ambulances. We have backed these brilliant local charities in the past, and we do so again today, with funds for new helicopters for the Essex & Herts, East Anglian, Welsh and Scottish air ambulances, and for the Lucy air ambulance that transports children requiring urgent care. I pay tribute to many hon. Friends, including my hon. Friends the Members for Norwich North (Chloe Smith) and for Castle Point (Rebecca Harris) for their campaigns on this issue.
Our blood bike charities also do an incredible job. MPs from across the House have written to me about this campaign, and we are responding to it today by refunding the charities’ VAT. We are also setting aside £1 million to help to buy defibrillators for public places, including schools, and to support training in their use to save more lives.
Talking about people who save lives, and who sometimes sacrifice their own life to do so, we will also correct the historical injustice to the spouses of police officers, firefighters, and members of the intelligence services who lose their lives on duty. And there is additional money today to support the fight against terrorism.
The £15 million church roof fund that I set aside at the autumn statement to support church roof appeals has been heavily oversubscribed, so we are today more than trebling it. Apparently, we are not the only people who want to fix the roof when the sun is shining. Every weekend, thousands of people go out and raise sums for their local charities across Britain through sponsored events and high street collections. I am significantly extending the scheme that I introduced that allows charities to claim automatic gift aid on those donations, increasing it from the first £5,000 they raise to £8,000. That will benefit over 6,500 small charities.
We could not let the 600th anniversary of Agincourt pass without commemoration. The battle of Agincourt is, of course, celebrated by Shakespeare as a victory secured by a “band of brothers”, which is, sadly, not an option available to the Labour party. But it is, of course, when a strong leader defeated an ill-judged alliance between the champion of a united Europe and a renegade force of Scottish nationalists, so it is well worth spending £1 million to celebrate it.
Our country does not rest on its past glories. Within just 15 years we have the potential to overtake Germany and have the largest economy in Europe. Five years ago, that would have seemed hopelessly unrealistic; economic rescue was the limit of our horizons. Today, our goal is for Britain to become the most prosperous of any major economy in the world in the coming generation, with that prosperity widely shared across the country.
London is the global capital of the world and we want it to grow stronger still. Today, we confirm: new investment in transport; regeneration from Brent Cross to Croydon; new powers for the Mayor over skills and planning; and new funding for the London Land Commission to help address the acute housing shortages in the capital, for we do not pull the rest of the country up by pulling London down. Instead we will build on London’s success by building the northern powerhouse. Working across party lines, and in partnership with the councils of the north, we are this week publishing a comprehensive transport strategy for the north. We are funding the Health North initiative from the great teaching hospitals and universities there. We are promoting industries, from chemicals in the north-east to tech in the north-west. And I can today confirm agreement with the West Yorkshire Combined Authority for a new city deal.
Our agreement with Greater Manchester on an elected mayor is the most exciting development in civic leadership for a generation, with the devolution of power over skills, transport and now health budgets. I can announce today that we have reached provisional agreement to allow Greater Manchester to keep 100% of the additional growth in local business rates as we build up the northern powerhouse. For where cities grow their economies through local initiatives, let me be clear: we will support and reward them. We are also going to offer the same 100% business rate deal to Cambridge and the surrounding councils, and my door is open to other areas that want to proceed as well, for our ambition for a truly national recovery is not limited to building a northern powerhouse. We back in full the long-term economic plans we have for every region.
The midlands is an engine of manufacturing growth, so we are today giving the go-ahead to the £60 million investment in the new energy research accelerator that has been sought and confirming that the new national energy catapult will be in Birmingham. And we are going to back our brilliant automotive industry by investing £100 million to stay ahead in the race to driverless technology. To encourage a new generation of low-emission vehicles, we will increase their company car tax more slowly than previously planned, while increasing other rates by 3% in 2019-20.
We are also connecting up the south-west, with over £7 billion of transport investment, better roads, support for air links, and, I can confirm today, a new rail franchise which will bring new inter-city express trains and greatly improved rail services to the south-west. We are confirming the introduction of the first 20 housing zones that will keep Britain building, along with the extension of eight enterprise zones across Britain, with new zones in Plymouth and Blackpool, too. I congratulate my hon. Friends from those areas on their campaigns.
We are giving more power to Wales. We are working on a Cardiff city deal and we are opening negotiations on the Swansea bay tidal lagoon. The Severn crossings are a vital link for Wales. I can tell the House we will reduce the toll rates from 2018, and abolish the higher band for small vans and buses. It is a boost for the drivers of white vans—let me reassure the deputy leader of the Labour party that it will apply to pink vans, too.
The legislation devolving corporation tax to Northern Ireland passed the House of Lords yesterday and we now urge all parties to commit to the Stormont House agreement, of which it was part. In Scotland, we will continue working on the historic devolution agreement, implementing the Glasgow city deal and opening negotiations on new city deals for Aberdeen and, of course, for Inverness.
Although the falling oil price is good news for families across the country, it brings with it challenges for hundreds of thousands whose jobs depend on the North sea. Thanks to the field allowances we have introduced, we saw a record £15 billion of capital investment last year in the North sea. But it is clear to me that the fall in the oil price poses a pressing danger to the future of our North sea industry, unless we take bold and immediate action. I take that action today.
First, I am introducing, from the start of next month, a single, simple and generous tax allowance to stimulate investment at all stages of the industry. Secondly, the Government will invest in new seismic surveys in underexplored areas of the UK continental shelf. Thirdly, from next year, the petroleum revenue tax will be cut from 50% to 35% to support continued production in older fields. Fourthly, I am, with immediate effect, cutting the supplementary charge from 30% to 20%, and backdating it to the beginning of January. It amounts to £1.3 billion of support for that vital industry in the North sea. The OBR assesses that it will boost expected North sea oil production by 15% by the end of the decade. It goes without saying that an independent Scotland would never have been able to afford such a package of support. But it is one of the great strengths of our 300-year-old Union that just as we pool our resources, so we share our challenges and find solutions together—for we are one United Kingdom.
We back oil and gas, and we also back our heavy industry, such as steel and paper mills. I have listened to the engineering employers, and I will bring forward to this autumn part of our compensation for energy-intensive plants. But since we aim to be the most prosperous major economy in the coming generation, then we must support the latest insurgent industries too. So we take steps to put Britain at the forefront of the online sharing economy. Our creative industries are already a huge contributor to the British economy, and we back them again today: we make our TV and film tax credits more generous, we expand our support for the video games industry and we launch our new tax credit for orchestras. Britain is a cultural centre of the world, and with these tax changes I am determined we will stay in front. In the week after Cheltenham, we support the British racing industry by introducing a new horse race betting right. Local newspapers are a vital part of community life, but they have had a very tough time in recent years. Today, we announce a consultation on how we can provide them, too, with tax support.
Future economic success depends on future scientific success, so we will add to the financial support I announced at the autumn statement for postgraduates, with new support for PhDs and research-based masters degrees. We are also committing almost £140 million to world-class research across the UK into the infrastructure and cities of the future, and I can announce today that our national research institutes get new budget freedoms. We will also invest in what is known as the “internet of things”. This is the next stage of the information revolution, connecting up everything from urban transport to medical devices to household appliances, so should—to use a completely ridiculous example—someone have two kitchens, they will be able to control both fridges from the same mobile phone.
All these industries depend on fast broadband. We have transformed the digital infrastructure of Britain over the last five years. Over 80% of the population have access to superfast broadband and there are 6 million customers of 4G that our auction made possible. Today, we set out a comprehensive strategy so that we stay ahead. We will use up to £600 million to clear new spectrum bands for further auction, so that we improve mobile phone networks. We will test the latest satellite technology, so that we reach the remotest communities. We will provide funding for wi-fi in our public libraries, and expand broadband vouchers to many more cities, so that no one is excluded. And we are committing today to a new national ambition to bring ultrafast broadband of at least 100 megabits per second to nearly all the homes in the country, so that Britain is out in front.
We cannot create jobs without successful businesses. As well as the right infrastructure, businesses also need low, competitive taxes. In two weeks’ time, we will cut corporation tax to 20%, one of the lowest rates of any major economy in the world. There are those here who are committed to putting the rate of corporation tax up. They should know that that would be the first increase in this tax rate since 1973, and a job-destroying and retrograde step for this country to take.
Rather than increasing the jobs tax as some propose, we will go on cutting it. This April, we will abolish national insurance for employing under-21s. Next April, we will abolish it for employing a young apprentice. I can confirm today that 1 million small businesses have now claimed our new employment allowance.
From this April, we are also extending our small business rate relief and our help for the high street. In my view, the current system of business rates has not kept pace with the needs of a modern economy and changes to our town centres, and it needs far-reaching reform. Businesses large and small have asked for a major review of this tax, and this week that is what we have agreed to do.
The boost I provided to the annual investment allowance finishes at the end of the year. A better time to address that is in the autumn statement. However, I am clear from my conversations with business groups that a reduction to £25,000 would not be remotely acceptable and so it will be set at a much more generous rate. Today, I am announcing changes to the enterprise investment schemes and the venture capital trusts to ensure that they are compliant with the latest state aid rules and increasing support to high-growth companies.
Businesses, like people, want their taxes to be low. They also want them to be simple to pay. We set up the Office of Tax Simplification at the start of this Parliament, and I want to thank Michael Jack and John Whiting for their fantastic work in this regard. To support 5 million people who are self-employed and to make their tax affairs simpler, we will, in the next Parliament, abolish entirely class 2 national insurance contributions for the self-employed.
Today, we can bring simpler taxes to many more people. Some 12 million people and small businesses are forced to complete a self-assessment tax return every year. It is complex, costly and time-consuming. So, today I am announcing that we will abolish the annual tax return all together. Millions of individuals will have the information the Revenue needs automatically uploaded into new digital tax accounts. A minority with the most complex tax affairs will be able to manage their account online. Businesses will feel like they are paying a simple, single business tax, and again, for most, the information needed will be automatically received. This revolutionary simplification of tax collection will start next year, because we believe that people should be working for themselves, and not for the tax man. Tax really does not have to be taxing, and this measure spells the death of the annual tax return.
We want to help families with simpler and lower taxes, so let me turn now to duties. I have no changes to make to the duties on tobacco and gaming that have already been announced. Last year, thanks to the persistent campaigning of my hon. Friends the Members for Burton (Andrew Griffiths) and for Keighley (Kris Hopkins), I cut beer duty for the second year in a row, and the industry estimates that that helped to create 16,000 jobs. Today I am cutting beer duty for the third year in a row—taking another penny off a pint. I am also cutting cider duty by 2% to support our producers in the west country and elsewhere. To back one of the UK’s biggest exports, the duty on Scotch whisky and other spirits will be cut by 2% as well. Wine duty will be frozen. That will mean more pubs saved, jobs created, families supported, and a penny off a pint for the third year in a row.
I also want to help families with the cost of filling up a car. It is a cost that bears heavily on small businesses, too. The previous Government’s plans for a fuel duty escalator meant that taxes would rise above inflation every year. But I want to make sure that the falling oil price is passed on at the pumps, so I am today cancelling the fuel duty increase scheduled for September. Petrol is frozen again. It is the longest duty freeze in more than 20 years. It saves a family around £10 every time they fill up their car. That is £10 off a tank with the Tories.
We believe that work should pay and that families should keep more of the money they earn. When we came to office, the personal tax-free allowance stood at just £6,500. We set ourselves the goal—even in difficult times—of raising that allowance to £10,000 by the end of the Parliament, and we have more than delivered on that promise. In two weeks’ time, the allowance will reach £10,600. That is a huge boost to the incomes of working people, and one of the reasons why we have a record number of people in work. Today I can announce that we will go further. The personal tax-free allowance will rise to £10,800 next year, and then to £11,000 the year after. That is £11,000 that people can earn before paying any income tax at all. It means that the typical working taxpayer will be more than £900 a year better off. It is a tax cut for 27 million people, and means that we have taken almost 4 million of the lowest paid out of income tax all together.
As we pass on the full gains of this policy, I can make this announcement today: for the first time in seven years, the threshold at which people pay the higher tax rate will rise not just with inflation, but above inflation. It will rise from £42,385 this year to £43,300 by 2017-18. That means that an £11,000 personal allowance and an above-inflation increase in the higher rate have been delivered by a coalition Government and a Conservative Chancellor. That is a down-payment on our commitment to raise the personal allowance to £12,500 and the higher rate threshold to £50,000—it is an economic plan working for you.
In this Budget, the rate of the new transferable tax allowance for married couples will rise to £1,100, too. That is the allowance that is coming in just two weeks’ time to help more than 4 million couples. That is help that Labour would take away, but that we on this side are proud to provide.
This Budget takes another step to move Britain from a country built on debt to a country built on savings and investment. Last year I unlocked pensions with freedom for millions of savers, but there is more to do to create a savings culture. Today I announce four major new steps in our savings revolution. They are based on the principles that cutting taxes increases the return on savings, and that people should have freedom to choose how they use those savings. First, we will give 5 million pensioners access to their annuity. For many, an annuity is the right product, but for some it makes sense to access their annuity now, so we are changing the law to make that possible. From next year, the punitive tax charge of at least 55% will be abolished. Tax will be applied only at the marginal rate, and we will consult to ensure that pensioners get the right guidance and advice. That means freedom for 5 million people with an annuity.
Secondly, we will introduce a radically more flexible individual savings account. In two weeks’ time, the changes that I have already made mean that people will be able to put £15,240 into an ISA. But if they take that money out, they lose their tax-free entitlement, and so they cannot put it back in. That restricts what people can do with their own savings, but I believe that people should be trusted with their own hard-earned money. With the fully flexible ISA, people will have complete freedom to take money out, and put it back in later in the year, without losing any of their tax-free entitlement. It will be available from this autumn, and we will also expand the range of investments that are eligible.
Thirdly, we will take two of our most successful policies and combine them to create a brand new Help to Buy ISA. We do it to tackle two of the biggest challenges facing first-time buyers: the low interest rates when they build up their savings, and the high deposits required by the banks. The Help to Buy ISA for first-time buyers works like this: for every £200 they save for their deposit, the Government will top it up with £50 more. It is as simple as that. We will work hand in hand to help you buy your first home. This is a Budget that works for you. A 10% deposit on the average first home costs £15,000, so if you put in up to £12,000, we will put in up to £3,000 more. A 25% top-up is equivalent to saving for a deposit from your pre-tax income; it is effectively a tax cut for first-time buyers. We will work with industry so that it is ready for this autumn, and we will make sure that you can start saving for it right now.
So, there is access for pensioners to their annuities, a new flexible ISA, the backing of home ownership with a first-time buyer bonus—and one other reform. Today I introduce a new personal savings allowance that will take 95% of taxpayers out of savings tax altogether. From April next year, the first £1,000 of the interest earned on all savings will be completely tax-free. To ensure that higher rate taxpayers enjoy the same benefits but no more, their allowance will be set at £500. People have already paid tax once on their money when they earned it; they should not have to pay tax a second time when they save it. With our new personal savings allowance, 17 million people will see the tax on their savings not just cut, but abolished altogether—an entire system of tax collection can be scrapped. At a stroke we create tax-free banking for almost the entire population; and we build the economy on savings, not on debt.
Five years ago I had to present to this House an emergency Budget. Today I present the Budget of an economy that is stronger in every way than the one we inherited—the Budget of an economy taking another big step from austerity to prosperity. We cut the deficit, and confidence is returning. We limited spending, made work pay and backed business, and growth is returning. We gave people control over their savings and helped people own their own homes, and optimism is returning. We have provided clear and decisive economic leadership, and from the depths Britain is returning. The share of national income taken up by debt—falling; the deficit— down; growth—up; jobs—up; living standards—on the rise. Britain: on the rise. This is the Budget for Britain, the come-back country.
Provisional Collection of Taxes
Motion made, and Question put forthwith (Standing Order No. 51(2)),
That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motions:—
(a) Alcoholic liquor duties (rates) (motion no. 27.); and
(b) Tobacco products duty (rates) (motion no. 28.).— (Mr George Osborne.)
Question agreed to.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I now call upon the Chancellor of the Exchequer to move the motion entitled “Amendment of the Law”. It is on this motion that the debate will take place today and on succeeding days. The Questions on this motion and on the remaining motions will be put at the end of the Budget debate on Monday 23 March.
Future Government Spending
Lindsay Hoyle Excerpts(9 years, 8 months ago)
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Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I have to intervene. I have allowed some leeway here, but I will not let this debate be turned into an election broadcast for all Members who wish to speak. This is about future Government spending. Obviously, the hon. Gentleman has set out a bit of a programme, but we are in danger of going around every constituency and hearing what the measures will be. That is not what today is about.
David Morris
I respectfully understand that, but I do agree with my hon. Friend on that particular point.
Under the coalition, we have had to make some very distasteful decisions, but in my area, health is on the up. We had problems in my local hospital which were put to bed yesterday in the Kirkup inquiry. Since 2010, we have had four new hospital wards at the Royal Lancaster infirmary. [Interruption.] Yes, we have had a new health centre costing £25 million in Heysham—
Mr Deputy Speaker
Order. I am trying to be helpful. This debate is about future Government spending. We cannot talk about what has been spent. I have allowed some leeway in that regard. I understand that a general election is coming, but we cannot be so blatant about it. This is about future Government spending. I am sure that the Government want Members to recognise their vision for the future, and that the Opposition want to challenge the Government. I know that that is what everybody wants. If we can stick around that, I will be very grateful.
David Morris
Thank you, Mr Deputy Speaker, for indulging me. I got a bit carried away with the good news in my constituency. So, yes, where are we going in the future? The deficit has been halved. As the self-employment ambassador to the Government, I can say that one of the largest sectors in our economy is self-employment. I am sad to see that the Opposition have not recognised the importance of that sector.
Jake Berry (Rossendale and Darwen) (Con)
My hon. Friend has set out very eloquently the investment that we have seen in Lancashire in transport and infrastructure, including the £15 million invested in the rail link between Darwen and Manchester—
Mr Deputy Speaker
Order. Absolutely not. The hon. Gentleman should know better than to tempt fate, as the fate will not be good for either of us. This is about future Government spending. We do not need pats on the back over spending that has already been invested.
David Morris
Once again, thank you for your indulgence, Mr Deputy Speaker.
The self-employment sector in this country accounts for 760,000 new businesses created since 2010, which shows that the country has an entrepreneurial spirit, with huge advantages for taxation. I hold out an olive branch to the Opposition and ask them to embrace it, purely and simply because it is better for us all, irrespective of political party. I believe that the country is going in the right direction—[Hon. Members: “Hear, hear.”] Thank you, I really do. Unemployment is moving towards historic low levels and the future is bright. I would like to think that the future is blue, but the electorate will have their say in about eight weeks’ time. I thank the House for the five years for which I have been a Member of Parliament, the Opposition as well as my colleagues, and I thank you, too, Mr Deputy Speaker. I hope that I shall be returned to carry on the good work for Morecambe and Lunesdale’s constituents.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Before I call Mr Stewart Jackson, let me say that there is now a six-minute limit on speeches.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I am reducing the time limit to five minutes.
Equitable Life
Lindsay Hoyle Excerpts(9 years, 8 months ago)
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Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Unfortunately, I must reduce the speaking time limit to six minutes. If Members really must intervene, by all means let them do so, but I ask them to try not to use too much time. We need to move on to the next debate sooner rather than later.
Bankers’ Bonuses and the Banking Industry
Lindsay Hoyle Excerpts(9 years, 8 months ago)
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Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Whether or not the hon. Gentleman is talking about the hon. Lady’s constituency is not the question. It is a question of whether Mr Opperman wishes to give way.
Guy Opperman
I am afraid that I will not give way—first, because I have already gone on too long and, secondly, because I want to enlighten the hon. Member for Bishop Auckland (Helen Goodman), who would surely welcome the fact that unemployment for 18 to 24-year-olds in her constituency has reduced over this last year by 40.2%. I could say much more, Mr Deputy Speaker, but I think you would stop me doing so.
Tax Avoidance (HSBC)
Lindsay Hoyle Excerpts(9 years, 9 months ago)
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The Financial Secretary to the Treasury (Mr David Gauke)
I welcome the opportunity to respond to this question and to the information released today in respect of an HSBC subsidiary’s involvement in facilitating tax evasion during the course of the previous Parliament.
Her Majesty’s Revenue and Customs has a long-standing approach to tax evasion that is based on collecting the tax and interest due, changing taxpayers’ behaviour to discourage them from evading in future, and enforcing the most appropriate and effective penalties. Overwhelmingly, this means providing disclosure facilities to encourage tax evaders to sort out their affairs, backed by civil penalties to fine them for the offence. This has been the consistent approach under Governments of all parties. This Government have supported HMRC’s approach by increasing investment in its enforcement capacity and by strengthening its powers, including increasing the maximum fines for hiding money in tax havens to 200% of the tax evaded.
This approach has been very successful in tackling tax evasion, whether by plumbers, barristers and medics in the UK or by the wealthy hiding money in offshore accounts. HMRC has collected more than £1.6 billion from 57,000 disclosures as a result of a wide range of UK and international initiatives. Internationally, since 2010, HMRC has brought in about £2 billion in previously unpaid tax as a result of the UK’s agreement with Switzerland on a withholding tax on Swiss bank accounts, and the international Liechtenstein disclosure facility. In a small number of cases, HMRC will institute criminal investigations into serial tax evaders and those who deliberately conceal information from it, but in most cases disclosure and civil fines are the most appropriate and effective intervention. That is how HMRC has approached the receipt of data from leaks and whistleblowers, including the Swiss HSBC data that were shared with the department in May 2010.
Using the civil disclosure approach, HMRC has systematically worked through all the HSBC data that it has received and has brought in more than £135 million in tax, interest and penalties from tax evaders who hid their assets in Swiss HSBC accounts. HMRC received data from about 6,800 entities, and that, after removing duplication, resulted in information on 3,600 businesses and individuals. Of those cases, over 1,000 were challenged and the cases were settled. HMRC believes that the remainder are compliant but continues to monitor their activities.
HMRC is examining whether it has all the same data that the International Consortium of Investigative Journalists has, and that we have seen reported today, and it will be asking the ICIJ for any data that we have not already been given. HMRC received the HSBC data under very strict conditions that limited the department’s use of it to pursuing offshore tax evasion and prevented HMRC from sharing the data with other law enforcement authorities. Under these restrictions, HMRC has not been able to seek prosecution for other potential offences such as money laundering. However, the French authorities have today confirmed that they will provide all assistance necessary to allow HMRC to exploit the data to their fullest.
HMRC’s powers to crack down on international evasion are being further strengthened by the new international common reporting standards, which more than 90 countries have agreed to as an extra tool for closing down the options for tax cheats to pursue this increasingly high-risk practice. This has been as a consequence, in part, of the leadership shown by the Prime Minister and the Chancellor of the Exchequer at the G8. This is further evidence of progress made by this Government—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I cannot believe that I cannot hear the Minister. Please let him finish.
Shabana Mahmood
The Financial Secretary’s remarks simply do not go far enough. We need much more detail from him as to what the Government have been up to since they were made aware of this information and why they have apparently failed to act over such serious allegations.
First, when the French authorities passed this information to HMRC, who saw it and what was done with it? Were Ministers informed and what communications did HMRC have with the Treasury and No. 10? If there was no communication, why not, given the seriousness of the issue?
Secondly, what information did the Government seek from Lord Green about the allegations of malpractice at HSBC and his involvement in them prior to his appointment as a trade Minister? The Financial Secretary said this morning that the information was in the public domain before 2010. What information was sought and received? Any failure by this Government to question Stephen Green before his appointment would be an inexplicable and inexcusable abdication of responsibility, and the Government must address that point.
Does the Financial Secretary agree that the minimum to be expected now must be an immediate statement by Lord Green, with a full explanation of his role in these allegations while at HSBC; his knowledge of them while he was a Government Minister; and all communication he has had on these issues with Government Ministers?
Thirdly, at any point during Lord Green’s stint in government, did the Financial Secretary or any other member of the Government discuss allegations of tax avoidance and evasion at HSBC with Lord Green? In 2011, HMRC was open about conducting investigations into the UK individuals on the so-called Falciani list. Can the Financial Secretary give a categorical statement about what discussions have been had between May 2010 and now between HMRC and members of the Government about such investigations?
This Government have failed to back Labour in our calls to crack down on tax avoidance, whether on stopping hedge funds avoiding hundreds of millions—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I want to hear the end of this and I want the shadow Minister to be given the same courtesy as the Financial Secretary.
Shabana Mahmood
Thank you, Mr Deputy Speaker.
This Government have failed to back Labour in our calls to crack down on tax avoidance, whether on stopping hedge funds avoiding hundreds of millions in tax on shares or on closing the eurobonds loophole, and now it seems that wrongdoing may have been overlooked on their watch. As Richard Brooks, a former HMRC tax inspector, has said, the Treasury and HMRC
“knew that there was a mass of evidence of tax evasion at the heart of HSBC”
in 2011, but they
“simply washed their hands of it.”
Mr Gauke
The essence of the hon. Lady’s speech was the accusation that wrongdoing has been overlooked on this Government’s watch, but events between 2005 and 2007 did not take place under our watch—the Labour party was in government between 2005 and 2007. The allegations relate to activity between 2005 and 2007.
The hon. Lady’s first question was on what was done with the information. I almost feel like apologising to the House for going through this information in such excruciating detail. A total of 6,800 cases were looked at and it was discovered that there were a number of duplications within those data: they were not clean data. That left 3,600 and there has been a full investigation of more than 1,000 of them—the remainder appear to have no case to answer—and a settlement has been reached. As a consequence, £135 million has been raised for the Exchequer that would not previously have been raised. If we put that in the context of the very many other measures that this Government have taken to deal with the problem, we will see that it demonstrates a Government willing to address it.
Let me turn to Lord Green. He was a very successful trade Minister and there is no evidence to suggest that he was involved in or complicit with tax evasion activities. If we are talking about complicity and asking about what happened on someone’s watch, what about the City Minister at the time, the right hon. Member for Morley and Outwood (Ed Balls)? Sadly, he is not in the Chamber today. Indeed, let us look at the failure of the previous Government to address issues of tax evasion and tax avoidance. [Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I am struggling to hear the Minister. I think it is beneficial for the Chamber that we all hear the Minister.
Mr Gauke
The essence of the charge is that not enough has been done to address tax evasion or tax avoidance, but the reality is that this Government have consistently cleared up the mess that we inherited. It was the case that wealthy people could avoid paying stamp duty land tax—we have sorted that problem. It used to be the case that aggressive tax avoidance schemes were prevalent, meaning that people could sit on the cash for years while cases dragged through the courts—that has now been addressed through accelerated payments. It used to be the case that remuneration could be disguised through loans and other instruments and that no income tax would be paid—we have fixed that, although the Labour party voted against it.
This Government have enabled HMRC to increase yields from £17 billion in 2010 to £26 billion this year, which is dramatic progress. Just as we have dealt with tax avoidance, we are dealing with tax evasion—we are seeing progress on the exchange of information—and that is a very big improvement on everything we inherited.
Stamp Duty Land Tax
Lindsay Hoyle Excerpts(9 years, 11 months ago)
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Mr Gauke
I should like to ask the hon. Lady a practical question about her policy of excluding from the mansion tax those with an income below £42,000. She will be aware that some of the richest people in this country live off their capital rather than their income. Does she acknowledge that such people could conceivably fall within the proposed exemption?
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. We need to be a bit careful here. We should not really be discussing the policies of the Opposition. The debate is about stamp duty. We have already had a difficult start, and I do not want things to get any more difficult.
Shabana Mahmood
Thank you, Mr Deputy Speaker. I would be happy to discuss those technical details with the Minister on another occasion when we would not fall out of order.
I reiterate that we expect our policy to raise the £1.2 billion that, according to the Chief Secretary to the Treasury, internal Treasury modelling has shown it could raise. We have seen nothing to change our assessment of those figures. As I was saying, the NHS is in dire straits. There is a crisis in accident and emergency, and it is getting harder to see a GP. This Government have made things worse with their £3 billion top-down reorganisation of the NHS. If that money was available at the beginning of this Parliament, it should have gone into front-line services. We therefore need an annual source of revenue to help to deal with those issues, and a tax on the highest-value homes—the so-called mansion tax—will help the next Labour Government to do that. As I said at the outset, we believe that the proposed changes to stamp duty represent a sensible measure, and they will have our support today and next week when the proposed legislation is formally brought forward.
The Economy
Lindsay Hoyle Excerpts(9 years, 12 months ago)
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Mr Robert Syms (Poole) (Con)
I thank the Opposition for affording us the opportunity to laud the success of the Government’s economic policy. I do not think we debate economics and how the economy is doing enough, and this is a useful opportunity.
The trick in running an economy is to ensure, as the world economy goes up and down, that the downs are small and the ups are large. We had the biggest downturn in our history at the end of the Labour Government, some of it down to the facts of world economics but some of it down to the fact that you spent rather more than you should have done and did not regulate the banks as well as they should have been regulated—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I do not think I was responsible. Others might wish to take the blame, but I certainly do not.
Mr Syms
I am sorry, Mr Deputy Speaker. I have not been in the Chamber for a while, as I have been on a Bill Committee.
We have a coalition that has set out a firm framework for managing the economy and a long-term economic plan. The result is that we have pretty good employment figures, but we all know that many of those jobs are low paid. That is the start of a recovery. The main benefit of people getting jobs is that they are afforded the opportunity to upskill and move into better-paid jobs as the recovery takes hold.
The economy is healing, but it is a long-term project and it will take a while before we get back to what most of us would consider normal economics. Indeed, interest rates will have to go up at some point so that my retired constituents can also get some benefit from the economic recovery. Good progress has been made and the Government have taken a sensible point of view.
The reality is that it is difficult to export if one’s main export markets in the eurozone have trashed their economies by running stupid economic policies, and if the far east is going into recession as well. If we compare Britain and the United States with most of the world, we can see that we are doing better. We have created more jobs in the past four and a half years than the rest of the 27 European Union states combined. Clearly, there is more to do, but Britain has proved that it has an open and resilient economy. We still have some excellent companies. The car industry is reviving and we still have extremely good educational establishments. Ours is an open economy and the City of London is one of the major financial centres. So long as we provide the framework for a decent economy, I am sure the British public will rise to the challenge by producing jobs, wealth and prosperity.
We have all seen an improvement, but there is more to do. We appreciate that many people are struggling on low pay and having a difficult time of it. We do not deny that, but we must set out that we need to stick with the economic policy, and people’s living standards will start to rise. Wage increases are picking up over and above inflation, which is the start of a slow march towards improving living standards.
We should stick to what we are doing, have confidence in our economic policy—