Prevention of Nuclear Proliferation
Martin Horwood Excerpts(12 years, 7 months ago)
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Jeremy Corbyn
Absolutely. I sat in the Chamber in the run-up to the wars in Afghanistan and Iraq, when the House indulged in an orgy of demonisation of a particular country. That created a sufficient head of steam in public opinion that was deemed by the Governments of the day to endorse an invasion of those countries. I remind the House that 10 years later we are still in Afghanistan, we have spent £9 billion or £10 billion on wars in Iraq and Afghanistan, and there is no end in sight.
The reason the Minister gave for proposing the Financial Restrictions (Iran) Order 2011 to the House was that this is a banking order—a finance order—but he relied heavily on the IAEA reports and the issue of Iran’s nuclear capacity and nuclear capability. I stand here as somebody who is passionately opposed to nuclear power and nuclear weapons in equal measure. I believe nuclear power to be intrinsically environmentally unsustainable and dangerous, and I think nuclear weapons are absolutely immoral. However, I recognise that in law there is a distinction in that any country is allowed to develop nuclear power; it is not allowed to develop nuclear weapons.
Iran remains a signatory to the nuclear non-proliferation treaty. Last year’s NPT review conference came to the conclusion that the best way of bringing about a nuclear-free world—a big step—would be the creation of a nuclear-free middle east. That would, of course, mean a mechanism for negotiation involving Israel and Iran. Israel, I remind the House, has 200 nuclear warheads and the rhetoric of the Israeli leaders is strongly critical of Iran. We need to bring about a mechanism, impossible within the NPT while Israel remains outside it, and possible only within the terms of a nuclear weapons convention. I hope the Government will put considerable efforts into promoting a nuclear weapons convention, and retaining a diplomatic link and debate, negotiation and discussion within Iran.
There are those who say that the war has not started yet and there is nothing to worry about. I remind them of a number of facts. One is that the US fleet in the Gulf is enhanced and enormous. There is a US base in Bahrain. Iran shot down and captured a drone missile that had apparently strayed over the border or been deliberately sent over it, depending which narrative we care to follow. A serious and significant number of assassinations and explosions have occurred in Iran over the past few weeks, with greater and greater intensity. I do not know who is causing those explosions. It could be foreign forces; it could be internal opposition; it could be all kinds of people, but there are clearly enormous tensions. Isolating Iran in the current circumstances is more dangerous than anything else I can think of.
Martin Horwood (Cheltenham) (LD)
The hon. Gentleman is making some interesting points, but I am not clear whether he opposes a tougher sanctions regime. Surely a tougher regime is the peaceful means by which we will persuade Iran not to develop nuclear weapons, and therefore avoid the higher risk of another state intervening in a more aggressive and violent way.
Jeremy Corbyn
What I want is engagement and recognition, first, of the human rights abuses in Iran, which are clearly immoral and wrong; a great deal of attention has been drawn to those. Secondly, serious engagement is needed that does not lead us to a descent into war with all the incalculable consequences of that, not to mention very high oil prices for the rest of the world. Today’s debate is, to me, one staging post in the process. Whether the sanctions will have any effect I have no idea. I suspect they will have very limited effect, particularly as my right hon. Friend the Member for Blackburn (Mr Straw) pointed out that they are being imposed by Britain with the United States, virtually in isolation from the rest of the world.
I hope we have learned lessons about the folly and stupidity of getting involved in wars that allegedly are for our own protection, but in reality are often seen to be part of western expansionism and the assertion of US power within the whole region. We are here to make a decision on one fairly small aspect. I hope we can be a little more careful and sensible about this and recognise that there are very many people in Iran who will be united, as my Friend the Member for Newport West pointed out, in opposition to any foreign intervention and any invasion of Iran. Perhaps it is those people whom we should be thinking about now, rather than preparing for yet another war.
European Budgets 2014 to 2020
Martin Horwood Excerpts(12 years, 8 months ago)
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Mr Denis MacShane (Rotherham) (Lab)
I stand as a resolute Thatcherite on this question. In 1940, Polish pilots came and grappled with the enemy, getting much closer than our pilots while risking their lives, and shooting down proportionally many more planes. Forty years later, Polish Solidarity helped to dig the grave of European Communism. What is our response? Today Poland is the fourth larger contributor to the UK rebate, despite being a much, much poorer country.
That is why, in the 1980s, the Prime Minister—now Lady Thatcher—was happy to see Britain’s contribution to the European Community budget, as it was then, rise from £656 million in 1984 to £2.54 billion in 1990. During the same period, the EC budget grew threefold. When taxed by Labour Members of Parliament—including my right hon. and good Friend the Member for Blackburn (Mr Straw), who said, “She has come back from Brussels, hauled down the Union flag and hauled up the white flag of surrender to Europe”—the Prime Minister said “No, no, no: we must help our new friends and encourage growth in the economies of the countries that are joining Europe.” Well, we are a different Britain now. We do not like the Poles, and we do not like Poland. We are saying to the Poles, “Keep signing a very large cheque for our rebate.”
There has been much talk about unaccountable transfers of money. May I draw the House’s attention to one very unaccountable and huge transfer of money? I refer to the £40 billion that it is proposed that we should give to the International Monetary Fund, which is unaccountable and secretive and whose staff salaries make the average EU salary look like pauper’s pay. That sum—£40 billion—is more than the entire amount raised in corporation tax in Britain each year. It is bigger than the combined budgets of the Foreign and Commonwealth Office, the Ministry of Defence, the Department for International Development, the Department for Culture, Media and Sport, and all Departments except for the big spenders who have responsibility for costly areas such as the NHS and social security. We are happy to send that £40 billion to Washington with barely a nod or a debate in this House, but it is a far bigger sum than any amount being imposed in respect of Europe.
I agree with the points about maintaining budget discipline, but I ask the Minister to confirm in his winding-up speech that from 2014 to 2020 the EU budget is due to increase by 11%, which is a rise of well under 2% per year—far below current inflation rates in this country. I have every sympathy with the Minister, because I have done some of this work in Europe myself and, frankly, dealing with EU budget questions makes the Rosetta stone translation look like child’s play.
The bottom line is that the EU budget will not go above 1% of Europe’s gross national income because it cannot do so. There are debates to be had about how this money should be spent, and 85% of it comes straight back to nation states, including Britain, to spend on agriculture subsidies and structural and regional funds. If we did not have a common agricultural policy, we would have to have a British agricultural policy, and I can assure colleagues that our farmers’ lobby would extract a far bigger share of taxpayers’ money than it does under the CAP.
Mr MacShane
No, because I want to conclude.
This is not just a European question. The signal we are sending around the world is that we are open to business but are closed to foreigners, and that we want inward investment but want to disconnect from Europe. We are sending a very negative and dangerous signal that we do not like the biggest single market in the world and we do not want to be full partners with the rest of the 500 million people living under the rule of law and democracy.
I understand Front-Bench colleagues’ interpretation of the Robin Hood tax—the fair trade tax—but I feel a lot happier in the current economic crisis standing with the spirit of St Paul’s rather than the spirit of bean counters.
Mr Peter Bone (Wellingborough) (Con)
It is a great pleasure to follow the right hon. Member for Rotherham (Mr MacShane), although I did not agree with a single word he said.
I rise to support the motion in the name of the Financial Secretary to the Treasury, which is signed by me, my hon. Friends the Members for Kettering (Mr Hollobone), for Bury North (Mr Nuttall), for Basildon and Billericay (Mr Baron), for Worthing West (Sir Peter Bottomley), for Brigg and Goole (Andrew Percy) and for Harlow (Robert Halfon), and my right hon. Friend the Member for Wokingham (Mr Redwood). It is disappointing that no Member from Her Majesty’s official Opposition or any Liberal Democrat felt able to sign the motion. How can anyone disagree with a motion that says that the EU budget proposed by the Commission is
“completely unacceptable and an unwelcome distraction from the pressing issues that the EU needs to address”,
that declares it
“supports the Government’s ongoing efforts to reduce the Commission’s proposed budget”,
and that states that
“the Commission’s proposal for very substantial spending increases compared with current spend is unacceptable, unrealistic, too large and incompatible with the tough decisions being taken in the UK and in countries across Europe”?
Mr Bone
No, I am not giving way.
How can anyone disagree with a motion that states that the
“proposed changes to the UK abatement and new taxes to fund the EU budget”
are “totally unacceptable”?
Why on earth did Opposition Members and our Liberal Democrat coalition colleagues not support the motion? May I suggest that Labour did not do so because of embarrassment, as—
Mr Bone
I must go back to talking about Labour, and I suggest that its approach arises from embarrassment, because in its 13 years in power it rolled over to each and every command put to it by the European Union. The lack of Members on its Benches just goes to increase Labour’s embarrassment. Labour does not understand how a Government could put British interests first and stand up to the European political elite. I suggest that the approach of our Liberal Democrat partners does not arise out of embarrassment; it arises because they love European bureaucrats spending British money without any proper democratic accountability to the British people. If the Lib Dems had their way, we would be in the euro and in a complete financial mess. Of course they represent 8% of the British electorate, but they are likely soon to be overtaken by the United Kingdom Independence party, which is at 6% in the polls.
We have a British bulldog of a Prime Minster who is taking the fight to Europe and putting British interests first, second and third. At least on the Conservative Benches there is unity on wishing the Prime Minister success in reducing the budget. We have a superb Minister, and we want the message to go out that our Prime Minister is going to Europe to get a reduction in the budget and to explain to the Europeans that they cannot spend and spend and spend. My speech goes on to say that “the Deputy Prime Minster thinks”—well, actually that is where it ends.
Public Service Pensions
Martin Horwood Excerpts(12 years, 8 months ago)
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Danny Alexander
The hon. Gentleman makes a very important point. These matters have been discussed regularly at the Finance Ministers quadrilaterals, which bring the Finance Ministers of the devolved Administrations and me together, so people have been kept informed. The tradition has been that the devolved pension schemes follow by analogy the agreements reached at a UK level. I will write to the devolved Finance Ministers to set out what I have announced today, so they can take that into account in their own decisions on these matters.
Martin Horwood (Cheltenham) (LD)
I strongly welcome the improved flexibility, and ask that we be as generous as that allows. This is not just about fair rewards in future or burdens on the taxpayer; it is also about recruitment and retention now, to keep people in the police, teaching and, in my constituency, GCHQ, working for the well-being and safety of taxpayers and non-taxpayers alike.
Danny Alexander
My hon. Friend makes the point that public sector workers have traditionally considered the level of pension to be an important part of their reward package, and they are right to think that. I hope my hon. Friend agrees that the offer we have set out today constitutes a very fair reward for a career spent in precisely the sort of public service institutions he has described.
Eurozone
Martin Horwood Excerpts(12 years, 9 months ago)
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Mr Osborne
Let me address this. There certainly were some people on my side, and no doubt some of them may ask me about it today. I am very happy to stand up and explain why I think that is wrong, why Britain has been a founding member of the IMF, and why the international institutions like the IMF and the World Bank are absolutely central in trying to get an international response to economic problems. However, there is a big difference between Back-Bench Members of this House deciding to vote against this issue as a matter of conscience and the shadow Chancellor leading the entire Opposition into an official vote against an IMF package that—let us remember this—was supposed to be the crowning achievement of the last Prime Minister’s premiership. When we look back at the last Prime Minister’s premiership, the one thing we say he got right was the London G20 summit, and then the shadow Chancellor leads his party into the Division Lobby against it. That is pathetic.
Martin Horwood (Cheltenham) (LD)
Does the Chancellor agree that if your neighbour’s house is on fire, with or without exits, and if it threatens to set yours on fire too, the sensible, constructive and intelligent thing to do is to protect your own house, do your best to help your neighbour to put out the fire, and not start an argument about where the boundary line falls between the two properties—or, as Labour Members suggest, throw away the fire extinguisher?
Mr Osborne
There are quite a lot of fire analogies there. We are trying to do those things. First, we are trying to protect our own country. Of course, this was an independent decision of the Bank of England, but when it made its decision it explicitly referenced what was happening in the eurozone as the principal reason for doing so. Secondly, we are very actively engaged with the eurozone in trying to find this international solution to its problems. I mentioned all the conversations that have been had just in the past 72 hours or so. There have been a string of international meetings where we have made forceful interventions. We have helped to push the eurozone in the right direction, but there are also people—leaders—in the eurozone who are trying to lead it in the right direction as well. The hon. Gentleman’s point about the rather remarkable vote by Labour Members against the IMF is well made.
Civil List
Martin Horwood Excerpts(13 years ago)
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Martin Horwood (Cheltenham) (LD)
I speak as—I hope—a radical democrat who really believes that sovereignty resides with the people and should be only cautiously delegated to Crowns and perhaps even Parliaments. Nevertheless, I declare myself a monarchist, not just for sentimental reasons but because I believe that the monarchy performs an important role as an impartial focus for national sentiment at a time when public confidence in other public institutions, with which we are of course familiar, may be seen as being at an all-time low. Moreover, it is clear—certainly from the celebrations of the royal wedding day in my constituency—that royal occasions provide a terrific excuse for a party which will make people feel good, and that must be a good thing at a time when we are increasingly measuring national well-being as well as simple economic indicators.
Let me say to my hon. Friend the Member for Northampton North (Michael Ellis) that I consider those to be rather better justifications for the civil list and the spending of public money on the monarchy than the fact that monarchy offers better value for money than the DVLA, which I think is a dangerous road on which to embark. Obviously affection for, and confidence in, the monarchy has been reinforced by the conduct of the current Queen, who has performed her role over many decades with enormous dignity and professionalism. It is important that the monarchy has also moved with the times, not least by responding appropriately to the recent austere financial situation in which this country finds itself. I am therefore very supportive of the Chancellor’s announcement.
Michael Ellis
As the hon. Gentleman is so eloquently expressing his support for the monarchy, will he be contributing towards Parliament’s gift for the Queen’s diamond jubilee—the window?
Martin Horwood
I think that is a rather inappropriate question actually, but I was strongly inclined to do so, although it might be a rather expensive window, so if we can bring the cost down a bit, that might be appropriate.
I was making the important point that it is entirely right to bring greater audit and transparency to the arrangements for the Head of State. My hon. Friend the Member for Bristol West (Stephen Williams) said that too, and he is also absolutely right that public money and public confidence must go together. However, some issues remain to be tackled if we are to maintain that confidence over future generations for the Queen’s heirs and successors.
I am pleased that the Minister for Equalities is sitting on the Front Bench as well as the Chancellor, because I want to discuss the issue of absolute cognatic primogeniture. I am not referring here to the situation of Catholics in the succession, which is simple in terms of equalities but rather complicated in terms of the role of the Church of the England as the state Church; that raises all sorts of issues. The issue of succession to the Crown by women in order of birth is important, however. Without wanting to cause any embarrassment to Their Royal Highnesses the Duke and Duchess of Cambridge, it is an issue on which we have a window of opportunity that may close in a year or so.
This was an issue in Sweden in the 1980s, when the birth of an infant daughter following the birth of the young Crown Prince Carl Philip meant that it became a question of disinheriting a young heir to the throne. It would be unfortunate if we were to go down that path in this country, so if we want generally to modernise the monarchy, now would be a good moment for this issue to be addressed alongside the financial issues. We could then look forward to future generations of the monarchy enjoying the same affection and confidence as Her Majesty the Queen.
Hospices (VAT)
Martin Horwood Excerpts(13 years, 2 months ago)
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Bob Russell (Colchester) (LD)
The hospice movement is a great British success story. If we wanted to think of something that epitomises the big society, the 209 independent hospices the length and breadth of the land, with an army of more than 100,000 volunteers, tick all the boxes.
The hospice in my Colchester constituency—St Helena hospice, named after the town’s patron saint—which serves the whole of north Essex, has around 800 volunteers who help in a wide variety of ways, raising money and organising events, working at several charity shops and helping at the hospice itself, which is centred on an ancient farmhouse, Myland Hall. Around 180 professionals are employed by the hospice as medical and key support staff, but without the volunteers the hospice could not exist. It is very much a partnership, which for the past 25 years has been a beacon of community involvement. But all this has been achieved with one arm—financially speaking—tied behind their backs.
I refer to the unfairness of the value added tax which penalises the charitable hospices while exempting exactly the same level of operation undertaken at the 36 national health service hospices and hospitals, which are VAT-exempt. This unfairness—the taxman taking money raised for charitable good causes—does not affect hospices alone, of course, but tonight’s debate is specifically about hospices. I look to the coalition Government to take urgent action to provide the necessary means to ensure that the VAT currently paid is refunded so that the money can be spent for the purposes for which it is raised or donated—the treatment of patients.
I am grateful to Help the Hospices, the national umbrella group, for its assistance with background briefing for my speech. I also thank the Charity Tax Group for the information that it provided. The Charity Tax Group estimates that before VAT was raised to 20%, the total irrecoverable VAT across all charities was more than £1 billion. The new higher level of VAT has cost the charitable sector an estimated extra £143 million. For the record, I voted against raising VAT to 20%.
This is not the first time that I have raised with the Government of the day the unintended consequences of VAT charged to charities, and thanks to my intervention several years ago the then Chancellor of the Exchequer, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), moved quickly to came up with a solution whereby the Royal British Legion receives a matching grant for the VAT it is required to pay on the production of its Remembrance day poppies. I invite the coalition Government to use this as a precedent to give matching grants to hospices for the VAT that they pay, as an interim measure in advance of seeking to amend the legislation to exempt them from VAT as if they were part of the NHS for this purpose. After all, the work they do is no different from what the NHS does, other than the fact that it involves the voluntary and charitable sector.
If the “poppy” solution is not acceptable, I invite the Government to see whether the relief enjoyed by local authorities and other public bodies under section 33 of the Value Added Tax Act 1994 and certain health care provisions under section 41 of the same Act could be used to assist hospices. Failing that, why not adapt the provisions in the Finance Bill to ensure that academy schools can recover VAT on non-business supplies in the same way as local authorities can? If it is okay for academies—educational establishments that are not universally welcomed—applying the same solution to hospices would probably generate near unanimous approval. In this respect, I congratulate the hon. Member for Scunthorpe (Nic Dakin) on his ten-minute rule Bill earlier this year, which proposed a simple legislative solution.
When the original European Union VAT system was developed, the special position of charities was not considered. Alas, because hospices provide services that are either exempt from VAT or outside the scope of the VAT system, they cannot recover the VAT they pay on their expenditure on supporting their charitable aims. This is something that I am sure Members across the House would want to see changed.
Increasing demand for hospice care, alongside the Government’s public service reform and big society agendas, is likely to result in more care services being transferred to hospices. Indeed, I am grateful to the Sue Ryder charity, which already has seven hospices. It first alerted me to this serious problem, telling me:
“A recent transfer of an NHS hospice to Sue Ryder under the Transforming Community Services initiative has sparked interest in the viability of charities taking on other NHS hospices and services. We believe there should be a level playing field in VAT between charities and the NHS so that all possible funds can go towards the delivery of care.”
Martin Horwood (Cheltenham) (LD)
One of the Sue Ryder care hospices is in my constituency, and I warmly support what my hon. Friend is saying. Does he agree that as we see the outsourcing of more NHS services to providers such as Sue Ryder, that could deliver a windfall to the Treasury rather than directing funds where they are most needed, which is to health and palliative care?
Bob Russell
I am grateful to my hon. Friend for raising that point, which I was just about to mention. Let me be financially blunt about this: if the hospices did not exist, the excellent work that they do would fall to the NHS and cost the public two to three times more because of the considerably lower cost of hospices, brought about by the special working combination of professionals and volunteers, with fundraising and so on, which is the basis on which hospices were founded and have existed over the years.
I understand that, on average, charitable hospices receive about one third of their funds for the services they provide from statutory sources, which leaves two thirds to be raised to cover all the other costs. This already challenging target is not helped when it is realised that the taxman is helping himself to 20%. I am advised that most local hospices do not have three-year agreements with NHS commissioners, relying instead on year-on-year negotiations that are, by their very nature, subject to budgetary pressures within the NHS. Alarmingly, a survey of member hospices conducted by Help the Hospices last March found that 64% of primary care trusts had frozen NHS funding for hospices for the period 2010-14.
I will set out some statistics about the excellent job that the nation’s hospices do. Collectively, they provide more than 26 million hours of specialist care and support every year, 90% of which is provided through day care services and care in people’s homes, and 77% of adult palliative care in-patient units are run by hospices, with the voluntary sector providing 2,139 adult in-patient beds, compared with just 490 provided by the NHS. All children’s in-patient units in the UK are run by the voluntary sector. Independent voluntary hospice expenditure increased by a fifth between 2007 and 2009, which indicates the continuing growth and importance of hospices in the life of the nation. More than £1 million is raised every day for the nation’s hospices, from fundraising, legacies and donations.
The value of the voluntary work carried out by the 100,000-plus volunteers is estimated to be worth in excess of £112 million every year. Help for Hospices has told me:
“Hospices are unique among providers of healthcare because they contribute so significantly to the funding and provision of hospice and palliative care. In 2009, hospices spent £687 million. For every £1 the State invests in local charitable hospices, those hospices deliver £3 worth of care.”
It thus makes sense that the burden of VAT on hospices should be lifted so that they can do even more good for the benefit of the communities that they serve.
Help for Hospices also told me:
“Hospice care receives overwhelming public support in the UK. A recent survey showed more than 80 per cent of people believe everyone with a terminal illness should have the right to receive hospice care.”
My only observation is that I am amazed the figure is as low as 80%.
I would like to say a little more about the St Helena hospice in Colchester, which I visited on Saturday ahead of this evening’s debate and in order to inspect the newly extended Joan Tomkins day care centre, which was officially opened to coincide with the annual fete in the grounds of the hospice.
The original day care centre, named in memory of the late wife of local business man Mr Robin Tomkins, whose generosity made the building possible, was opened in April 1988 by the Princess of Wales. I remember that well, because my mother was in the nearby hospice and died a few days later. The princess spoke to my father at my mother’s deathbed, and he spoke afterwards of the warmth of compassion that she had shown.
St Helena hospice, the main building, was officially opened in April 1986 by Her Majesty Queen Elizabeth, the Queen Mother, so we have just celebrated its 25th anniversary. As an aside, I should have said that my mother was one of the volunteers in the early months after the hospice opened.
Like other hospices throughout the country, St Helena is rooted in the local community that it serves. It provides free medical and nursing care and therapy to adult patients with any diagnosis. Alongside the two day centres there is also one at Clacton, and there is in-patient accommodation in the purpose-built extension to the historic Myland Hall.
Services are also provided for patients in their own home. Indeed, in the past five years there has been a 58% increase in the services in patients’ homes. St Helena hospice also provides pre and post-bereavement support to family members, including children, and attached to the hospice is an education centre, providing education for health and social care professionals.
It will cost St Helena hospice more than £4.6 million in the current financial year to provide its valuable services, and it would be great if it did not have to pay value added tax, but could instead spend that money on the purposes for which people wish it to be used—supporting the work of their local hospice.
Help for Hospices told me:
“As the population ages and people approach the end of life with ever-more complex co-morbidities, a spectrum of highly flexible and adaptive hospice and palliative care services need to be available.”
Mr Gauke
If the hon. Gentleman will forgive me, I will come back to that point. It is kind of him to say that I am going through this in a detailed way. If I may, I will proceed and then come back to what we can do. It is worth making the point that the last time we tried to change the list of matters that can be zero rated for VAT, it took six years and some negotiation.
It is worth highlighting the help that Government provide for charities. We are limited in the support that we can give through changes to the VAT system, but it is important to understand that the Government can and do support charities more widely through the existing VAT system and in other ways. We are committed to retaining the existing VAT zero rates that apply specifically to charities, which provide a benefit of about £200 million a year. Those include VAT zero ratings for qualifying charities on sales of donated goods, for medical and scientific equipment, and for goods for use by disabled people. Charities are not charged VAT on the costs of advertising and public media. They also qualify for zero rating on the construction of certain buildings to be used for charitable purposes. All those zero rates are derogations from the normal EU VAT rules and are not enjoyed by charities in other member states. Charities also benefit from the more widely available VAT zero rates that are applicable to purchases.
The UK has one of the most generous tax systems in the world for charities. Our existing reliefs for charities are worth more than £3 billion a year. Gift aid is the largest single relief, and it is now worth nearly £1 billion to charities each year. Our position, which is in line with that taken by successive Governments, is that the most appropriate way of supporting charities is to encourage charitable giving, rather than to create a complex and burdensome system of additional reliefs or refunds.
Martin Horwood
As a former director of fundraising for a national charity, I tell the Minister that encouraging giving is easy to say, but more difficult to achieve, whereas a VAT refund would make a substantial and immediate difference. The problem of the burden on the charity would be easily overcome in exchange for the benefit. The important point, which has been made, is that as we commission more health care services, it will not be cost-neutral for the Treasury, but will give a windfall benefit to the Treasury. Surely something can be done so that at least new services that are provided gain a refund for VAT, and do not just deliver a benefit to the Treasury for no benefit to the community.
Mr Gauke
Again, hon. Members are raising fair points. To jump to the conclusion, we are looking closely at this area.
The help that we provide to charitable giving is important. Charities are central to our big society agenda. The 2011 Budget announced the most radical and generous reforms to charitable giving for 20 years, including reducing the inheritance tax rate when 10% or more of the net estate is left to charity. From 2013, a new scheme will allow charities to claim a gift aid-style top-up on small donations that they receive without gift aid declarations for up to £5,000 for each charity every year. Overall, 100,000 charities can benefit from the 2011 Budget changes to the tune of about £600 million.
It is also worth mentioning the transition fund that was announced at the spending review. It makes £100 million available to charities, voluntary organisations and social enterprises that are delivering front-line services and are affected by reductions in public spending. The fund provides grants of between £12,500 and £500,000 to help organisations make the changes necessary to thrive in the long term. Funding was made available in 2010-11 and 2011-12, and the fund is focused on helping organisations transit and adapt to the new funding environment rather than merely keep going. The first 18 awards were made on 15 February, with further awards in March, April and May.
The Government continue to examine ways of ensuring that VAT does not act as a barrier to the reform of public services, which was the point that the hon. Member for Cheltenham (Martin Horwood) raised. We are examining such options where they are open to us and affordable within agreed funding arrangements. For example, the Government announced in the Budget that we would continue to consult charities and organisations in other sectors to explore options for implementing the EU VAT exemption for cost sharing. I can tell the House that one of the options under consideration is to issue a consultation paper on the subject within the next two months, and we are exploring that possibility closely.
More widely, there are often ways of mitigating the impact of VAT within the existing system. For example, where local authorities and other public bodies enter into contractual rather than funding arrangements with charitable providers, it can greatly lessen any irrecoverable VAT incurred by those providers in many cases. It has to be acknowledged, however, that such an approach does not offer much scope for services that fall within the health exemption.
As I said earlier, I recognise that there is genuine concern about VAT among people involved in hospices. That was why, in March, I met the hon. Members for Scunthorpe (Nic Dakin) and for Leeds North West (Greg Mulholland) and people working in the hospice sector, including for Sue Ryder. Following that meeting I asked officials to continue the dialogue, and they have met subsequently with the intention of exploring any viable options. I hope that that provides some reassurance, although I cannot give more detail at the moment. I am certainly keen that we explore options.
Section 5 of the European Communities (Amendment) Act 1993
Martin Horwood Excerpts(13 years, 2 months ago)
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Mr Hoban
I do not agree that Parliament has been placed in a subordinate position. We are passing this information to the European Union having already made it available to the House, particularly during my right hon. Friend the Chancellor’s Budget speech, and there is no requirement on us to accept any recommendations that the Commission might make as a consequence of having read the information. We are in a very different situation to those member states that will provide their convergence programmes at the same time as the UK, but before their Budgets rather than after them.
Martin Horwood (Cheltenham) (LD)
Does the Minister agree that all European economies have a shared interest in there being proper economic governance in all other European economies? Britain therefore clearly has an interest in proper economic management within the eurozone. Indeed, will he go further and welcome the recommendations of the European Parliament’s Economic and Monetary Affairs Committee, which pressed for even stronger sanctions against those countries that do not manage their public finances as well as this Government are doing?
Mr Hoban
Of course, sanctions are a matter for the eurozone countries. They do not apply to us, as we are outside the eurozone thanks to the opt-out secured under the Maastricht treaty and reiterated in the Lisbon treaty, so that point is not relevant to tonight’s debate. We have ensured, through our opt-outs and our commitment not to join the euro—this addresses the point raised by the hon. Member for Glasgow South West (Mr Davidson)—that Parliament remains sovereign.
The Commission has endorsed the UK’s domestic consolidation plan, which is laid out in the convergence programme. As a result of the measures the Government have taken, the path set for fiscal policy means that the UK is on course to meet the Commission’s recommendations and deadline for dealing with our excessive deficit. We are not doing this to get a gold star—to use the language of the hon. Member for Glasgow South West’s analogy—from Brussels; we are doing it for the UK’s economic health. The plan will tackle our record deficit, with expenditure falling as a share of income in every year of this Parliament and national debt falling as a proportion of gross domestic product by 2014-15.
For those in opposition who question this approach and who would condemn Britain to years of unaffordable and wasteful expenditure, let us look at the facts. In Britain we have a higher budget deficit than both Portugal and Greece. Last year, we also had a similar level of national debt to Ireland, but our market interest rates are a fraction of those countries’ rates. Greece’s currently stand at more than 14% and Portugal’s at more than 9%, while Ireland’s is approaching 10%. Britain’s market interest rates have fallen to 3.6%, our triple A credit rating has been secured and we have avoided the sovereign debt storm that has engulfed our continent. That is a direct result of the decisive action that we have taken.
Chris Leslie
I am very grateful for the hon. Gentleman’s work on the European Scrutiny Committee. This is, as I say, an incredibly important debate, and more hon. Members ought to be aware of it.
Martin Horwood
I am not sure what greater publicity the hon. Gentleman wants other than a debate on the Floor of the House in the middle of a parliamentary week, but, if the implication behind his references to the obligation to report to the European Union is that we should not do so, is he suggesting that that shared obligation among all European economies should not apply to places such as Greece, Italy, Spain or Ireland? Would he be happy for those countries not to report the state of their economies?
Chris Leslie
I simply note at the outset that we are now engaging in a particular debate. Yes, I am glad that it is taking place on the Floor of the House, but we did not really know that it was going to be on the Floor of the House, in this particular form, with this set of papers and this particular motion, until 24 hours ago. It is curious that the Government, in their relationship with many hon. Members throughout the Chamber, have not made it clear that this is quite an important component of our obligations under European Union treaties. I know that Ministers are keen to abide by their obligations under such treaties, but I just point out that some Members might be less keen.
Chris Leslie
That is precisely the point that we need to make this evening: an austerity approach that cuts too far and too fast will cost more in the long run. That is not just in terms of the lost generation of young people who are now on the dole—one in five young people are now unemployed—and not just in terms of the higher welfare costs, which will mean higher borrowing. The House of Commons Library told me today that if the past six months of the economy had emulated the first six months since the general election, the Exchequer would have received an additional £6 billion in revenues. However, because growth is flat-lining, the Treasury is recouping less revenue. The Chancellor will therefore have to add £6 billion to borrowing and the deficit will be higher as a consequence of low growth in the years ahead.
Martin Horwood
The hon. Gentleman has expanded at length on the fragility of the economy and the recovery, which I do not think is in dispute, but we are still a little thin on the alternative from Labour. In recent months, it has talked rather admiringly of the American economy and its expansionist approach. However, that has earned America a credit warning from the rating agencies. If that had happened to us, it would undoubtedly have led to higher interest rates, which would have hit everyone with a mortgage, everyone with an overdraft, and all the people who are vulnerable to debt—people about whom the hon. Gentleman is supposed to be concerned. That, in turn, would have hit economic growth. What is Labour’s alternative?
Kelvin Hopkins
I think that the hon. Gentleman and I agree on this point. It has learned absolutely nothing. To try to squeeze the life out of an economy that is already almost wrecked is nonsense. The Commission should allow those economies to grow, and they can grow only if they can recreate and depreciate their own currencies, and start to compete again. Ireland is in a terrible state because it chose—foolishly, I think—to join the euro. I have said to Irish politicians—in as friendly and comradely a way as possible—that they should recreate and depreciate the punt to something like the level of sterling, and rejoin the sterling zone, which is where Ireland belongs. Its economy would then start to recover. Without that, it will not recover.
Martin Horwood
I am just curious: who does the hon. Gentleman think would lend those Governments the money to finance that public spending, given their credit ratings at present?
Kelvin Hopkins
In the end Governments can print money if they wish to, but the idea that we can squeeze those economies into growth is complete nonsense. We could debate these matters at great length—I would be happy to do so on another occasion—but that is not what this debate is about. I want to focus on the Government’s economic policy, which I think is profoundly mistaken.
Another point in the document is the emphasis on fiscal neutrality. The Government do not seem to appreciate that fiscal neutrality can be achieved in various ways. If we cut public spending and taxation at the same time, that is, in a sense, fiscally neutral. If we raise public spending and taxation, that is also fiscally neutral. We can also achieve fiscal neutrality by raising taxes on the rich and reducing them on the poor. Fiscal neutrality can have all sorts of different effects. If we cut taxes on the rich and raise them on the less well-off, we will drive the economy into recession, because poor people will spend less money. The marginal propensity of the poor to consume is higher, so if we tax the rich and give more to the poor, they will spend. If we give pensioners a rise in their pensions, for example, they will spend more, but if we give a wealthy person a tax cut, they will not spend.
Those are marginal changes, but my general point is that fiscal neutrality can be achieved in various ways. In fact, it is nonsense to have fiscal neutrality when growth is flatlining. We ought to have an expansionary fiscal strategy, not a neutral fiscal strategy. I might add that this is my view, not necessarily the view of my hon. Friends on the Opposition Front Bench. They are perhaps more cautious than me, but in the end I would like to think that I and others will be proved right. We have to generate growth, but it will not happen if the Government continue to operate in the way that they are at the moment.
Amendment of the Law
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Chris Williamson
That is a point that I will come to later in my speech.
The Chancellor is presiding over the highest and longest squeeze on public spending since world war two. My fear is that the Budget and the unprecedented cuts being pursued by the Government will impede economic recovery. As my hon. Friend said, the Chancellor refuses to accept that there is an umbilical link between the public and private sectors. Taking an axe to one causes catastrophic bleeding in the other. Last year’s PricewaterhouseCoopers report highlighted that connection admirably in pointing out that the half a million job losses in the public sector will be replicated in the private sector.
Chris Williamson
No, I will not give way any more.
This Budget does little or nothing to ameliorate the public service cuts. The cuts to local council budgets in particular are vindictive, gratuitous and counter-productive. The Department for Communities and Local Government budget is set to experience a whopping real-terms reduction of 67.8% over the next four years.
The Chancellor needs to create demand in the economy. My hon. Friend the Member for Coventry North West (Mr Robinson) referred to the importance of the construction industry. Every pound invested in construction generates £2.84 in total economic activity, and 92p of every pound spent on construction is retained in the UK. Every pound invested by the public sector yields a return of 56p to the Exchequer, making it a net investment of just 44p. In spite of those facts, house building is at an all-time low, Building Schools for the Future was scrapped and housing targets have been abolished. The £250 million announced in yesterday’s Budget to support first-time buyers is not enough.
The proposed changes to the planning system, which as the Chancellor said will introduce a presumption in favour of sustainable development, contradict the proposals in the Government’s Localism Bill. What is going on? On the DCLG website, the Minister of State, the right hon. Member for Tunbridge Wells (Greg Clark), who has responsibility for decentralisation, is quoted as saying that the Localism Bill
“will enact new rights allowing local people to shape and influence the places where they live, revolutionising the planning process by passing power down to those who know best about their neighbourhoods.”
A Budget briefing from the UK Contractors Group states that
“it has been much harder to obtain definite information on investment intentions from a number of key public sector clients. Indeed, there appears to be some deliberate attempts to delay decisions and to obfuscate on forward plans. A prime example of this is the future of the school building programme. The Sebastian James review was originally scheduled to report to ministers before Christmas. In March, we are still waiting for the Department for Education to signal its intentions. Equally on energy supply, the industry stands ready to support the enormous amount of investment needed but to deliver this support effectively and efficiently we need a clear understanding of the future programme.”
It goes on to say how the health reforms have caused further confusion.
I turn to the Chancellor’s modest reduction in fuel duty. As other Members have said, it is more than offset by the imposition of the VAT rise. I have been lobbied heavily by small businesses and residents in my constituency, who say that the VAT rise on petrol is hurting and needs to be reversed. It is not acceptable for the Government to argue that they are prevented from doing so by the European Union—that simply will not wash.
Mr Bailey
I thank the hon. Gentleman for that intervention. For personal reasons, I could not join the Committee’s visit to China. However, he put those proposals to me forcefully, and I have spent the morning with the appropriate Ministers pressing that very point, because a lot of damage has been done. We need to rectify it if we are to realise any of the potential in the document.
On the localism agenda, noises were made in the Budget about improving planning for local businesses. Despite the fact, however, that the Localism Bill places planning priorities in the hands of local communities and neighbour planners, the local organisations set up by the Government—the local enterprise partnerships—have no defined role in that. I do not understand how we can have a legal process for devising planning programmes locally without incorporating the representatives of the local business community. There is enormous concern among the business community about the potential damage that that could cause.
Mr Bailey
I am sorry but I am not taking any more interventions, because a lot of Members want to speak.
There are a number of measures that in themselves might be good, but which I do not think address the scale of the problem created by the Government’s macro- economic policy. First, research and development tax credits are very welcome. Business has been pushing for them, particularly in high-quality manufacturing, but at the end of the day they will affect only a few thousand businesses. They are very welcome but will not in themselves transform the economic landscape. Entrepreneur reliefs are also welcome, but they affect only a few hundred people. National insurance holidays for start-ups were announced some time ago, but so far only some 1,500 of the 400,000 that it was thought would apply have done so. The Government need to look at that again.
I have mixed feelings about enterprise zones. There will be one in my area, which I very much hope will work—I will certainly be working with the black country business community to ensure that it does. However, the reality is that enterprise zones are a recycled policy from the 1980s, which was not even very successful then. Indeed, those fears were expressed yesterday by the hon. Member for Chichester (Mr Tyrie), the Conservative Chair of the Treasury Committee. If the policy is to succeed, we have to prevent existing businesses from relocating just to pay less tax, while not necessarily employing more people. I am concerned that we may end up trying to prevent that by incorporating a lot of regulations that will defeat the purpose of having enterprise zones in the first place.
Although there are some measures in the plan that are good, they are not sufficient to address the core problem of the macro-economic policy that undermines them. They are hot on rhetoric, but they will not deliver very much, I am afraid—although my Committee will be probing and supporting those that can.
Jesse Norman (Hereford and South Herefordshire) (Con)
I speak not merely as a member of the Treasury Committee but on behalf of tens of thousands of working people in my county of Herefordshire. It is a county where the average income is £21,000, where residents face the very high costs of living in a rural area—especially for fuel and transport—and where there is a very high relative number of small businesses. These are real people putting in the hours to support themselves and their families at a difficult economic time.
I welcome the Budget and especially several measures that will have a direct impact on the well-being of my constituents. The first is the cut in fuel duty, which we have pushed for very hard with the Treasury. The second is the rise in the income tax threshold, which will take many Herefordians out of income tax all together. The third is the support for small businesses and entrepreneurship; for apprenticeships; for local housing; for the university technical colleges; for the green investment bank; and, finally—a measure that is perhaps as important as any of those—for filling in potholes, an area in which Herefordshire rather specialises.
The Budget marks a further decisive step in dealing with the disastrous legacy of the previous Government. We know the brute economic facts, but it is important to remind ourselves of the wider picture: that this country now faces paying nearly five times more in debt interest every day than it does on care for the elderly; and that we have, in addition to the disclosed public debt numbers, £200 billion-plus of off-balance sheet debt for the private finance initiative. The wider story, however, concerns the atmosphere of unreality on the Labour Benches, and particularly on the Front Bench, which one might describe as a fog enshrouding planet Balls.
The intention seems to be to rewrite history and to deny, as the shadow Chancellor did today, the fact that in 2007-08 the previous Government created a 3% budget deficit at a time of 3% economic growth—a structural deficit that had existed at that point for seven years. It is unrealistic to pretend that America and Germany are parallel cases to ours in terms of economic recovery. America has the global reserve currency in the dollar and therefore has a far greater intrinsic ability to inflate its way out of trouble, and Germany has benefited massively over the past year or two from the expansion in the American purchasing of industrial goods. Their situations are not parallel to ours. The truth is that our economy is grossly unbalanced and that that is what exposed us to the situation we find ourselves in.
Also unrealistic is the Opposition’s refusal to acknowledge the weight of expert opinion supporting the present policy, including from the G20, the IMF, the OECD, the US Treasury Secretary and even Tony Blair. The Bank of England testified only a couple of weeks ago that without the current austerity measures, our borrowing costs would be 3% higher. Given the amount of refinancing we have to do over the next two or three years, that implies additional borrowing of some £10 billion. If one has any doubts about this issue, one need only look at Portugal, which is close to economic meltdown.
Finally, we have the shadow Chancellor’s denial, which we heard again today, that any deficit ever existed. As they say, “De Nile is not just a river in Egypt.” [Interruption.] I am in town all week! Labour’s strategy has been pretty clear: ignore economic reality, disavow the previous Chancellor’s own plans to make cuts and increase taxes, attack the coalition wherever possible and hope the voters do not notice. The result has been a refusal to articulate any constructive, concrete proposals at all. I note the contrast with the Republicans in the US, who have opposed the Democrats with great vigour. Whatever their personal merits, the fact is that the Republicans in Congress have created positive alternative plans that have to be debated. That is in sharp contrast to the actions of the Opposition in this House.
The truth is simple: this country has suffered the biggest economic shock since the great depression. It will take years to recover fully from that shock and the world’s economic system remains very fragile. The USA took slightly longer than a decade to rebuild after the great crash of 1929. Japan started to recover from the asset-based deflation of the early 1990s only a few years ago and it will be a doubly cruel blow if the earthquake sets back its recovery any further. The idea being pushed by the Opposition that this Government are in any way responsible for the current economic mess is laughable.
Martin Horwood
The hon. Gentleman makes a powerful case about the Opposition’s economic strategy, or lack of one. Does he agree that what they might also have done is risk an increase in interest rates that would have hit everyone with a mortgage, everyone with an overdraft and every new business seeking to borrow?
Jesse Norman
I thank the hon. Gentleman for that intervention. It is certainly true that if we had higher borrowing costs and a tighter monetary policy, interest rates would be higher, mortgage rates would be higher and the average mortgage holder and household would be suffering considerably.
I welcome the fact that the Budget is a reforming Budget that has not shied away from taking difficult long-term decisions, such as the proposals to merge income tax and national insurance. A properly functioning system of social insurance could have been a very fine thing—indeed, that was what Beveridge originally anticipated—but the system has been allowed to slip away from the contributory principle into a disguised income stealth tax. The new reform will bring home to people just how heavily they are taxed and will encourage them to demand better public services for their money.
In short, the country is emerging from a time of fake capitalism that was matched by fake government—a time when Fred Goodwin could destroy an august 200-year old financial institution, squander billions in shareholder value and then walk away with a fortune and have a Minister sign off on his pension. The economy became grossly unbalanced in that time and executive compensation soared both inside and outside the financial sector with little or no relation to performance. It was a time of increased complexity, short-termism, bureaucracy and regulation. As every Herefordian knows, what we need now is real capitalism, with real people taking real risks, investing real time in real work and reaping real rewards for their efforts, and this Budget is a very important step in that direction.
Mrs Sharon Hodgson (Washington and Sunderland West) (Lab)
The Budget was billed as a Budget for growth, which my constituents wanted and the Sunderland economy needed, but it is not a Budget for growth. In fact, it is a Budget in which the Chancellor has had to admit that he is failing to create growth. What is growing after this Budget and the tax and spending announcements of the past 10 months? I will tell you, Madam Deputy Speaker, what is growing: the Chancellor’s nose. It is the dole queues that will be growing, with all the projected job losses. The cost of living will be growing, with the Government’s regressive VAT hike, which hits the poorest families hardest. The number of young people not in education, employment or training will be growing, due to the scrapping of the future jobs fund and the education maintenance allowance.
Mrs Hodgson
Not at the moment.
John Campbell from Washington e-mailed me yesterday. He currently receives £30 a week in EMA to support his studies. He asked me what support he would now get. I cannot answer, because Ministers have not told us yet, despite repeated hints from the right hon. Member for Bermondsey and Old Southwark (Simon Hughes). I share the disappointment that he will no doubt have felt yesterday. Students are making choices about their future now. How can they do so while this silence persists?
We heard that the Chancellor will lift the tax-free allowance by £630 in 2012. I am sure that those of my constituents who will be lucky enough still to have a job this time next year will be very grateful for the extra 92p a week they will get. Perhaps they could use it towards the increased prices of their weekly shopping and energy bills, or to offset their loss in tax credits or frozen child benefit. What this Chancellor gives with one hand, he takes away many more times over with the other.
I remember, as I am sure do my hon. Friends, the furore in 1999 when the Government of the day announced an increase in the state pension of 75p a week, which was widely decried as an insult, despite being part of a wider package of measures that included the introduction of the winter fuel allowance and free TV licences. I checked with the Library this morning and found that 75p in 1999 is equivalent to around £1.05 today, which is 14% higher than 92p. Using that reasoning, the Budget’s increase is an even bigger insult. The right hon. Member for Havant (Mr Willetts), who was shadow Minister for social security, asked my right hon. Friend the Member for Edinburgh South West (Mr Darling) at the time whether he felt guilty about cutting taxes for business at the same time as making such a derisory offer. I wonder whether the right hon. Member for Havant feels guilty today.
Ian Murray (Edinburgh South) (Lab)
There was so much and yet so little in yesterday’s Budget that could be talked about this afternoon, but I will concentrate on the growth section.
The first line of the foreword to the Government’s document, “The Plan for Growth”, states:
“This Plan for Growth is an urgent call for action.”
At last, after almost a year of the coalition Government, they have finally realised that hard-pressed businesses and families up and down this country need an urgent call to action for growth. However, I do not see a call to action for growth in cutting public spending too deep and too fast; the highest unemployment since 1994; the highest youth unemployment since records began, with no plan to get it down; inflation on the march, with the retail prices index at its highest level in 20 years; the largest squeeze on living standards in modern times; increasing VAT to 20%, which puts more pressure on consumer confidence and further compounds business insecurity; a continued lack of liquidity in lending markets through our banks; fuel prices that are out of control; consumer confidence at its lowest level in more than 20 years; and an overwhelming, ideologically driven attack on public services. That is certainly hurting people in my constituency, but it definitely is not working. We have all that, and the real effects of the VAT increase and the public sector job losses are still to feed through to the real economy. This does not seem to me to be a call to action for growth; it is no plan for growth, or perhaps a panic plan for growth.
That point is made clearly by the Office for Budget Responsibility, the independent body set up by the Chancellor, which we debated a few days ago in this Chamber. Even after the Chancellor’s “Budget for growth”, which, to use his words, should add fuel to the economy, the OBR has reduced its growth forecast for this year and next year, as it did last year. It is surely a huge embarrassment for the Chancellor that his Budget for growth actually downgrades growth. It is extraordinary that it does, given the urgent call for growth in the Government’s own document and the Chancellor’s own words that it would be a Budget for growth. This must be a historical first.
The Chancellor has failed to realise that cutting too deep and too fast is damaging our economy. The public and private sectors are inextricably linked. Slow growth and rising unemployment will make it harder to get the deficit down. The move from 2.1% to 1.7% is a reduction. Unemployment has been revised up to 8.2%. As someone said to me at my surgery a few weeks ago, “How can you possibly pay back debt from the dole queue?” They were absolutely right.
Martin Horwood
In its submission to the comprehensive spending review, the hon. Gentleman’s party suggested that the cuts in unprotected Departments should be no more than 20%. What the Government actually delivered was only 19%. Does he think Labour’s proposed cuts were going too far and too fast?
Ian Murray
I find it surprising that the Liberal Democrats always jump to their feet during these debates and throw out statistical analysis of stuff that is, quite frankly, not true. The Liberal Democrats’ leaflets from the general election, which I still leaf through, tell me time and time again that they supported what we were doing on the economy, that the banks were all to blame, that VAT would not have to go up and that employment was the key to growth. The Secretary of State for Business, Innovation and Skills said that to Jeremy Paxman after the general election.
European Summit
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Martin Horwood (Cheltenham) (LD)
Do Ministers agree that, having just put in place the most comprehensive system of democratic checks on further transfers of power to the European level of government, it is now high time that this Government got on with the priority of providing a positive leadership role for Britain in all European decision-making forums, and that the anti-European guerrilla warfare from the Back Benches really does not help?
Savings Accounts and Health in Pregnancy Grant Bill
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Martin Horwood (Cheltenham) (LD)
Does the right hon. Gentleman accept that child trust funds were never designed to help children because they are paid to 18-year-olds and that when funds are scarce it is better to target them at children who are in education through something like the pupil premium? If his party was so concerned about people having an asset at the age of 18, why did it introduce tuition and top-up fees?
Mr Hanson
I shall not take lessons from the Liberal Democrats on tuition fees given the outcome that they have got in that regard. The hon. Gentleman needs to recognise that the trust funds are an investment to tackle inequality among people at the age of 18 and to give poor people in society a chance at the age of 18. Not every will have a trust fund at the age of 18: some of the Cabinet’s will, but not everyone’s. He should recognise that poor people need that help and support at the age of 18.
Mr Hanson
I agree. The Government are not in touch with the difficulties of raising a child or of meeting the costs when children reach the age of 18.
The child trust fund is worth £500 to each child over their lifetime, but it is worth £1,000 to the poorest children. The Minister will know that the previous Labour Government also introduced a disability living allowance payment on top of £100 or £200 for those entitled to DLA. That measure was introduced to take into account the significant extra challenges that disabled people face at that important time in their lives. When that measure passed through Parliament earlier this year, under the previous Labour Government, the Conservative party did not oppose that addition. Indeed, the present Financial Secretary said that
“we recognise that additional support is required for children with disabilities, and we have no objections to this statutory instrument.”—[Official Report, Eighth Delegated Legislation Committee, 10 February 2010; c. 4.]
The Liberal Democrats’ spokesperson at the time said they were happy to support the regulations. Quite simply, the Government say one thing in opposition and another in government.
As young people reach 18, the financial challenges—not least those imposed on them by the current Government—will be more difficult. If individuals do not come from a wealthy background, the prospect of stumping up extra money for tuition fees is an eye-watering one. Not everyone will have a trust fund of their own to manage those resources. The children’s trust fund would have provided young people with an extremely welcome lump sum, would have helped people with education and training from the age of 18, and would have helped people to save who had never saved before to supplement their future income.
Martin Horwood
I may not necessarily be supporting the tuition fee proposal of my hon. Friend the Financial Secretary to the Treasury, but at least he is increasing maintenance grants for the poorest students, which the Labour Government did not manage to do.
Mr Hanson
May I just say three words to the hon. Gentleman: education maintenance allowance? I look forward to him voting to abolish that and to raise tuition fees—both of which he pledged not to do at the general election.
With child trust funds we are trying to help poorer people and those on lower incomes to save for their children’s future. Before the child trust fund, only 18% of children had regular long-term savings made for them. The child trust fund industry average is now 31%. Among families on incomes just above welfare dependency, 30% of the child trust fund accounts now have money saved into them every month. Families in the lowest income bracket are now saving a higher proportion of their household income for their children than those in affluent groups. Do not take it from me, Mr Deputy Speaker: parenting groups, charities, think-tanks and academics have all put their names to motions and supporting letters that say the decision to abolish the child trust fund, along with the saving gateway, is short term and misguided.
So today, as the Government prepare to take the child trust fund from our children, we need to know what they intend to replace it with. The Minister has said that there will be no substitute and no compensation for the scheme where there is a Government contribution to encourage that saving. I welcome the fact that he wants to consider a future scheme to maintain the infrastructure. We know that the annual cost of running the child trust fund was about £5 million last year. I hope the Minister will confirm and look, in the winding-up speech at least, at how we keep that infrastructure in place to ensure that parents can make voluntary contributions.
Mr Hanson
My hon. Friend makes an important point. There was a thread running through the Labour Government’s intentions to ensure help and support for children, help and support for those on low incomes to save, and help and support for families to save for their children’s 18th birthday and beyond. [Interruption.] The Liberal Democrats are down by 50% already—down to one Member present.
Martin Horwood
In defence of my hon. Friend the Member for Bristol West (Stephen Williams), he is attending a Bill Committee.
Mr Hanson
The hon. Member for Bristol West (Stephen Williams) is a member of the Finance Bill Committee, as am I. I am in the Chamber defending our position on behalf of the Labour Opposition. The hon. Gentleman is in the Finance Bill Committee saying nothing about what is happening upstairs and supporting the Conservative party in Divisions upstairs. The hon. Member for Cheltenham (Martin Horwood) should reflect on those matters.
The changes proposed in the Bill, coupled with changes to direct tax, tax credits and benefits, will hit women harder than men. The spending review changes hit women twice as hard as men. The emergency Budget changes hit women three times as hard as men. Cuts in child care, tax credits, child benefit and other support will make it harder for women to work. More than £6 billion is now being cut in direct financial support for children—three times more than is being taken from banks.
I come back to the fact that the banking levy proposed by the Conservative Government, which was a Labour Government initiative, will raise £2.4 billion. My right hon. Friend the Member for Kingston upon Hull West and Hessle proposes a banking levy of £3.5 billion.