amendment of the law

Debate between Margot James and Charlie Elphicke

Tuesday 25th March 2014 Commons Chamber

[Margot James]

I heartily agree, and I would not be surprised if things got even better than that over the next few years. We have momentum now, as my hon. Friend’s point shows.

Our economic strategy has been about far more than reducing the deficit: how we do that matters. The Chancellor set out a strategy to rebalance the economy, and we wanted to see growth that was more balanced between London and the south-east and the other important regions, between the service sector and the manufacturing sector and between the public and private sector. We also wanted to build an economy made more secure by savings and investment, instead of one built on excessive debt.

This Budget marks another milestone—it capitalises on the hard-won and sustainable economic progress to secure radical reforms that will restore the incentive that has been so recklessly destroyed over recent years. Scottish Widows estimates that fewer than half of us are saving enough for our old age, and that one in five are saving nothing at all. The bold increase in the ISA tax-free limit to £15,000 is welcome. There are more than half a million ISA savers in the west midlands alone. Not all of them will be able to put away the maximum every year, but the fact that they will now have complete freedom to invest cash as well as equities will encourage more saving among people who just want their cash to grow in a tax-free environment.

Before 1997, Britain had one of the best-funded occupational pension systems in the world. That proud state was totally undermined by the last Government’s decision to end dividend tax relief on pensions. Incentives to save were also undermined by the growth of means-testing of the state pension. The welcome pension reforms that the current Government have already introduced were given a further boost last week by the Chancellor’s dramatic announcement that we are no longer to be forced to buy an annuity. That is welcome news for everyone who is saving into a pension scheme, regardless of their age.

Just under 20,000 people in Stourbridge are of pensionable age, and many have been badly hit by the poor annuity rates and exceptionally low interest rates of recent years. I was therefore delighted on their behalf by the new pensioner bond, which from next year will offer a much better return than anything available on the market today. Low-income savers will also benefit from the abolition of the 10p tax rate on savings from income of £5,000 or less.

[Charlie Elphicke]

Does my hon. Friend agree that unchaining annuities is likely to encourage more people to save into pensions and pension funds, so that contrary to what was said by the former Chancellor, the right hon. Member for Edinburgh South West (Mr Darling), that is likely to mean more money for infrastructure funds and other forms of investment?

[Margot James]

I know that my hon. Friend is an expert in these matters, and I strongly agree that the change will definitely encourage more people to save into pensions. The forced way in which people have had to invest so much of their pension savings into annuities was a disincentive, certainly to my generation.

In my last couple of minutes, I want to turn to opportunities for young people. The number of people aged 18 to 24 claiming jobseeker’s allowance in my constituency has fallen since 2010 by 18%, and we can all agree that we would like such falls to accelerate. The vast majority of young people on JSA gain employment within six months, but a small group do not. They face very real social problems, but this Government’s Work programme and their reforms in very much improving jobcentres and supporting young people—and those of all ages—into work will make and are making a difference.

Unfortunately, an even smaller minority of young people have been conditioned to not want to work. For too long, they have perhaps been allowed to be too choosy about their first job: if it is not the one they really want, they would rather have none. I am talking about a very small minority. There is no doubt, however, that the changes introduced by the Government—I give the credit to my right hon. Friend the Secretary of State for Work and Pensions—have made people realise that they are entering a contract with the jobcentre and the taxpayer, and that they need to put in the effort to make a serious attempt to find work, with the state providing the necessary support.

In addition, I strongly welcome the continued support for the apprenticeship programme. My constituency has had a 90% increase in apprenticeship starts in the past couple of years. Last week’s Budget gave further support to apprenticeships by providing £85 million for the employers’ apprenticeship grant scheme and £20 million extra to support apprenticeships right up to postgraduate level, which carries on the good and vital work of creating greater parity of esteem between apprenticeships and degrees.

None of the support—for exporters, manufacturers, taxpayers, savers, pensioners—announced in the Budget last week would have been possible without the work done on restoring the public finances. There is a very long way to go to overcome our indebtedness, but the fact that we are now so clearly on the right road, with results starting to come in almost daily across every single economic indicator, means that the Government can provide support where it is most needed. That was amply demonstrated by last week’s Budget, which will make Britain truly competitive once again. I am delighted to support it in the Lobby tonight.