Lucy Frazer
Main Page: Lucy Frazer (Conservative - South East Cambridgeshire)
Rachel Reeves
Unsecured debt, as the right hon. Gentleman knows, grew by 10% last year. That is not secured against anything solid at all. The household income ratio, which is back to being close to the levels of 2008, should sow seeds of doubt in all our minds about the sustainability of our economy. I am concerned about the ability of consumers to carry on bearing this burden. To do so, they will have to increase their debts or have real wage increases, but this Budget sees real wage growth contract sharply because of the sharp increases in inflation as a result of the depreciation of our currency. This is not an economy that is well placed to withstand the strains and shocks that lie ahead.
My argument today is that this dangerous reliance on borrowing and debt is directly connected to the Government’s failure to put wealth and opportunity in the hands of the many rather than just the few. While those on the Government Front Bench keep saying that they are on the side of ordinary people, they have not shown it in their actions today.
Last week, the Institute for Fiscal Studies reported that we are on course for a rapid rise in inequality over the next five years. The bottom 10% of the earnings distribution—those who already have the least—will see their incomes fall in the next few years, particularly due to cuts to universal credit. Meanwhile, those with the most—the top 10%—will see their take-home pay increase by 10%. That is a direct consequence of the Government’s failure to reverse our economy’s growing reliance on low-paid work and low productivity, with one in five people now paid less than the living wage, and deep cuts to in-work benefits, which make it harder for those families in work to make ends meet. That cannot be right.
However, that is not all. The Government have now ignored two independent court rulings by cutting access to disability benefits for over 160,000 people, which will save them £3.7 billion. There is no mention at all of that in the Budget. Switching people from disability living allowance to personal independence payments has also seen nearly 50,000 people lose their Motability cars because their benefits have been cut under the blatantly unfair changes to the assessment rules. That is not the sort of country I want to live in, and I do not think it is the sort of country our constituents want to live in either. Not only is this a betrayal of the hard-working majority the Government promised to put first, but it shows a callous disregard for the poorest and most vulnerable in all our communities. It is also not the way to build the better balanced and more broad-based economy we need to build for the more turbulent times we are bound to see ahead.
Let me set out a few areas where today’s decisions have been misjudged, and how the Government could have delivered a fairer Budget. First, the Government are going ahead with a £1 billion cut to inheritance tax for the richest people in our country. That money should instead be spent on expanding free childcare for families, particularly those on the lowest incomes. Almost half of this inheritance tax giveaway will go to London and the south-east; in fact, 96 of the top 100 constituencies that will benefit are in London and the south-east. But what about our constituencies in the north of England, Scotland, Wales and Northern Ireland—in the rest of the UK, which does not benefit by one penny from these cuts in inheritance tax?
Lucy Frazer (South East Cambridgeshire) (Con)
The hon. Lady said it was important to spend more on childcare. When the Chancellor delivered his speech, did she hear that the Government spend £6 billion a year on childcare?
Rachel Reeves
The hon. and learned Lady will also know that the manifesto promise the Conservative party was elected on has been delayed time and again. If she really thinks that the support that will, we hope, come forward in September will be enough to help women get back to work and to deliver the high-quality childcare we need for all children, I am afraid she is deluded.
Cutting inheritance tax is unfair and misguided, and this blatantly unfair policy is further evidence of the Government’s warped sense of priorities at a time when we should be doing far more to help the millions of families struggling with childcare costs. Just one in 2,500 people in England and Wales will benefit from this cut, which will lift 26,000 of the richest families out of inheritance tax. This measure will only deepen the north-south divide, and it is another Tory policy benefiting the already well-off, when we could be investing in the future of all our people.
Secondly, I would like to turn to the issue of the self-employed. Today, the Chancellor made changes to national insurance contributions for the self-employed. I am all in favour of cracking down on bogus self-employment, especially when employers effectively force employees to become self-employed and to lose out on the security and benefits that go with being employed. I am also all in favour of cracking down on tax avoidance as a result of individuals incorporating rather than being direct employees.
However, I am worried about these changes. My back-of-the-envelope calculations suggest that a self-employed person on £20,000 a year will end up paying £20 extra a month because of these changes in national insurance. We also know from the Budget documents and from previous announcements in Budgets that the cuts to corporation tax are worth £3.8 billion and will primarily benefit the largest businesses, yet in this Budget, we are increasing taxes on the self-employed by £2 billion. That seems to be the wrong priority: we should be doing more to help the self-employed and small businesses, and less to help the big businesses already making large profits. In the Budget documents, the Chancellor also speaks about tax avoidance, but the tax avoidance measures amount to £810 million. Again, we have this huge discrepancy: we are taking £810 million from tax avoidance, but asking the self-employed to pay an extra £2 billion.
While it is right for the Chancellor to say that we should look at access to maternity and paternity benefits for the self-employed, what about the other benefits that people take for granted if they are direct employees, such as sickness benefits, out-of-work benefits and access to universal credit? Will the Chancellor look at access to those for the self-employed, as well as ensuring that the self-employed can get a mortgage and a private pension—things that too many self-employed people find are denied to them?
Lucy Frazer (South East Cambridgeshire) (Con)
“It is not the strongest of the species that survive, nor the most intelligent, but the ones most responsive to change.” That is the theory of the great evolutionist, Charles Darwin. That theory is now very relevant, because we are facing a technological revolution. We have recently seen the rise and fall of various technologies, from Polaroid and PalmPilot to vinyl and video. The pace of change is so extreme that economists predict that two thirds of children starting school today will be in jobs that do not yet exist. The countries that can adapt and change will be the most successful.
As the Chancellor highlighted, in order to give our children the best opportunities we need to think carefully about how we train them. That training must not only encompass the ability to write, read and calculate, and include the capacity for thought, judgment and responsibility; it must also incorporate the practical, technical training needed to support our local economies.
As I represent an area with a thriving bio and agri-tech industry, I am delighted by the Chancellor’s focus on the importance of technical education, because his announcement in and of itself recognises the value of those skills. He is right to identify their worth, in circumstances where ICM Research states that employers rate higher apprentices as 25% more employable than others. His proposal to streamline such qualifications, putting them on a par with academic qualifications, makes them of equal weight and more comprehensible to employers. His announcement of £500 million a year to give 16 to 19-year-olds the necessary technical skills is also most welcome.
For many years we have talked about technical education. Today the Chancellor has given it the support and respect it deserves, but should we go further and be even more ambitious? Responding to change, linking up with business and inspiring innovation should start not as children leave their formal education but much earlier, in our primary and secondary schools. That needs to be facilitated by our dedicated teaching workforce. We need to link up our businesses with our teachers and to incentivise our innovative and technological industries to play a role in supporting, training and informing teachers of the work they are doing at the cutting edge of industry. When we fully embrace this, we will truly become a flexible, responsive and competitive country.