The Economy
Michael Fallon Excerpts(5 years, 1 month ago)
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Sir Michael Fallon (Sevenoaks) (Con)
I remind the House of the interests recorded in my entry in the Register of Members’ Financial Interests.
In supporting the excellent Queen’s Speech, I wish to touch briefly on just three areas: expenditure, the new borrowing framework, and what more we can do to make our capitalism inclusive.
On expenditure, the new money for the NHS and for schools is extremely welcome. With regard to the NHS, I hope it will help to relieve the pressure on our general practitioners, to get more resources into mental health and to start to fill the gap between health and social care. I hope it can do all that without involving us in yet another bureaucratic reorganisation, at any level.
The extra money for schools is particularly welcome in Kent. At long last, it addresses the inequality of funding between some of our shires and the metropolitan areas. It will mean more for primary schools in my constituency, which have been historically underfunded. As that money comes through, I hope the Secretary of State for Education will also look into how we can better protect the main schools block, which authorities such as Kent are currently having to raid to cope with the increasing demands for special needs provision.
Having welcomed the extra expenditure, given that the previous fiscal framework is clearly under some stress, I also welcome the Chancellor’s ambition to set out in his Budget a new fiscal framework for the future. I hope the framework will be clear and credible for the markets, and I also hope he will avoid some of the fudgeable targets and fuzzy definitions and classifications that we saw in the later years of Gordon Brown’s chancellorship.
I hope that, as Conservatives, we will continue to look at how we defend and refresh our capitalism and make it more inclusive for all our country. Back in the 1980s, we developed popular capitalism: 11 million people in this country held shares and had a stake in the privatised industries. Thirty years on, too many of those private industries are too poorly regulated, and we have seen share ownership in decline. Let me give an example of two of those industries.
The first industry is rail. Last year, we Members of Parliament—my hon. Friend the Member for Tonbridge and Malling (Tom Tugendhat) was with me—had to intervene in the timetable chaos and persuade one rail operator that shared a line with another to pick up passengers who had been stranded by that other operator. Both rail operators were subsidiaries of the same group, so why did Members of Parliament have to intervene? Where was the rail regulator to sort it out? I welcome the proposals in the Queen’s Speech to look again at the structure of the industry and ensure that it is more accountable and better regulated.
The second industry is water. Thames Water has been privatised for 30 years. It pays hundreds of millions over to its shareholders and to its parent company, yet it is behind on its leakage targets and behind other water companies on the installation of smarter meters. Because it is behind, it is bleeding the chalk streams around London, including the River Darent, with the extraction of water that it needs to top up its supplies in the centre of London.
Tom Tugendhat
My right hon. Friend has been an example in helping to bring together the various companies to realise their duties. Does he agree that there are also good examples? Greggs has done an enormous amount by pushing share ownership to employees and has massively improved the equity stake that individuals have in the product of their own labour.
Sir Michael Fallon
I certainly understand that, and my hon. Friend takes me to the point with which I wish to conclude, which is what more we can do to encourage share ownership. Some of the employee share schemes we have—I have written to the Chancellor on this—are still very complicated. The qualifying periods are still very long and do not reflect the mobility of the modern workforce. I am afraid some of the lower-paid staff simply cannot afford to participate in them. I hope that when it comes to his Budget, the Chancellor will keep looking at how we can do more to promote employee share ownership in particular, by reducing the qualifying periods and giving people a real incentive to save.
Sir Michael Fallon
I am sorry but I will not; I am just finishing.
One of my heroes of the year—there may be many other candidates—is an entrepreneur called Julian Richer, who is now coming up to retirement and is handing over 40% of his company, Richer Sounds, to the employees, ensuring that they have a stake in the future. We need more incentives like that to promote loyalty and give people a real stake in their future. I thoroughly support the Queen’s Speech.
Spending Round 2019
Michael Fallon Excerpts(5 years, 3 months ago)
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Sajid Javid
The hon. Lady will know that this spending round covers day-to-day departmental spending and that the vast majority of DWP spending is not covered by day-to-day spending. So, when we get to a Budget, we can say much more about DWP spending. She will also recognise that this spending round will help more vulnerable people by protecting our economy and making sure it continues to grow and to generate jobs, which is the best way out of poverty.
Sir Michael Fallon (Sevenoaks) (Con)
I welcome the increase in defence spending, which is well justified by the increase in the threats that the country faces. However, can my right hon. Friend reassure the House that any revision of the fiscal rules will never make the Government vulnerable to the charges of fudged targets, reference periods and spending classifications that characterised the last Labour Government?
Sajid Javid
I thank my right hon. Friend for his support for the increase in defence spending and I can give him that assurance. When the fiscal rules are looked at in time for the next Budget, that will be done openly, transparently and clearly, which is exactly what is needed to maintain market confidence.
Loan Charge
Michael Fallon Excerpts(5 years, 8 months ago)
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Stephen Metcalfe
My right hon. and learned Friend makes some good points, and I am aware that the Government have set out some of the mitigating measures they want to put in place. I am sure we all welcome those measures, but there is a need for both a pause and a full and proper review of what is being proposed to see whether we are acting in a way that would be considered to be natural justice.
Stephen Metcalfe
I want to continue. In failing to act back in 2012, when it had the opportunity—and surely the duty—to do so, HMRC denied my constituent the opportunity to depart the arrangements and seek an alternative solution for his payroll needs.
Sir Michael Fallon
My hon. Friend has been so generous in giving way that I hesitate to intervene once again. When he says that something feels wrong, he is on to something, because what feels wrong to some of us is that the equivalent effort does not seem to be put into pursuing the promoters of the schemes, or indeed the employers, and that the entire weight of recovering the so-called tax gap is falling only on the employees. That does not feel right.
Spring Statement
Michael Fallon Excerpts(5 years, 9 months ago)
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Sir Michael Fallon (Sevenoaks) (Con)
Can the Chancellor reassure me that the very welcome consultation on future infrastructure financing will not become any reason to delay a start on some of the essential major projects such as the lower Thames crossing, which will not only relieve pressure on the Dartford crossing but will be a fundamental link between two great wealth-creating regions of our country?
Mr Hammond
I can give my right hon. Friend that assurance. I am acutely conscious of the fact that we are committed to building a tunnel under the Thames but we have not yet committed to the link roads that will link that tunnel to the rest of the road network, and of course we absolutely will do so. This is a broader-based review to look at how we replace PFI and EIB funding over the medium term.
Leaving the EU: Economic Impact of Proposed Deal
Michael Fallon Excerpts(5 years, 10 months ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
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Sir Michael Fallon (Sevenoaks) (Con)
Will the Financial Secretary undertake to publish to the House, in good time for the meaningful vote, the decisions that he and his colleagues are currently taking on the tariffs that would apply in the event of no deal, including which industries would be protected, at what rate, and what the impact would be on prices?
Mel Stride
Tariff policy in the event of no deal is clearly something that we are heavily engaged with. My right hon. Friend rightly identifies the aspects or elements of tariffs that relate to protecting domestic producers, and that of course will be a very important part of the considerations that we are undertaking at the moment. We will come to the House in due course with the details of those tariffs.
Budget Resolutions
Michael Fallon Excerpts(7 years ago)
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Sir Michael Fallon (Sevenoaks) (Con)
I hope to find an early opportunity to speak out on what is the right level of defence spending to meet the threats that our country faces, and to do so more freely than the constraints of government allowed, but today I want to focus on the Budget before us. It is the first Budget of this Brexit Parliament, and I warmly welcome it.
It is extraordinary that we still have no answers from Labour Front Benchers on the amount of additional borrowing they would undergo, or indeed, 24 hours later, on the amount of additional interest that they are prepared to rack up. Those are legitimate questions. This is not trite journalism. A shadow Chancellor should be able to tell the House exactly how much more he would be spending and borrowing.
I particularly welcome the additional money for the national health service and the measures for long-term investment in our infrastructure, but that long-term investment will need to be accompanied by other and deeper structural reforms. How can we be encouraged to save again rather than to spend on credit? How can we reverse some of the more pernicious side-effects of quantitative easing, which seem to benefit those who already hold significant assets?
The fall in unemployment has probably been the greatest single achievement since 2010. Unemployment has fallen not because of one single policy, but because of the cumulative reductions in taxation and regulation that have taken place over the last seven years, almost every one of which was opposed by Labour Members. The 5 million small businesses and nearly 5 million self-employed people are the real wealth creators. They are the people who work every hour that God sends, and who invest—and risk—their own money to create, in turn, the tax revenue that funds our public services. I hope that, over the current Parliament, we will continue to cut the form-filling and let them keep more of what they earn.
There are four areas in which I hope we can make even more progress. The first is low-paid work. No Government have done more for the low-paid than this Government, who have introduced the national living wage and taken so many more people out of tax altogether, but we need to keep going. Is it logical to go on raising the personal allowance but not the national insurance threshold? A full-time worker on the national living wage pays almost as much in national insurance as in income tax. Those who are working part-time—for example, 25 hours a week—and earning between £8,000 and £11,000 a year miss out as we raise the thresholds. I hope that Ministers will look at that again.
Secondly, I particularly welcome the steps to tax the global digital companies more effectively.
Sir Desmond Swayne (New Forest West) (Con)
Will my right hon. Friend acknowledge the leadership of the Government of which he was a part in driving that particular agenda internationally?
Sir Michael Fallon
I certainly recognise that, and it is important for these matters to be approached internationally.
Our constituents do, of course, benefit from the greater convenience and efficiency that digital retailers provide, but it cannot be right for our high streets, small shops and local businesses to bear all the pain of local rates while giants such as Amazon pay rates on a handful of warehouses. Their staff, too—Amazon staff, Google staff and Facebook staff—need well-funded schools, good local services and a proper NHS. It is right that they should pay their proper share of local and national taxes, and I applaud the steps that the Chancellor is taking down that path. One nation should mean one economy, for large and small businesses alike.
Thirdly, if we want to be one economy, more of our people should have a stake in it. In the year when Margaret Thatcher left office, 11 million adults in our country held shares. Today, although the population is significantly larger, only 8 million do so: a quarter fewer. When I privatised Royal Mail, I offered free shares to each of its 150,000 employees. Despite union advice—or possibly because of union advice—99% of the employees took up the offer. We deliberately skewed it towards small investors, and, as a result, 20% of Royal Mail is now owned by its staff and by small investors.
That is what we should be doing with all our remaining shareholdings, including the banks and the new social enterprises, and we should go further. Employee-owned companies are more productive and more profitable. Is not higher productivity the golden fleece for which Ministers keep searching? We need not just one John Lewis Partnership, but 1,000 John Lewis Partnerships across our economy. Existing schemes such as Sharesave and share incentive plans are not increasing the number of share ownership companies.
Scott Mann (North Cornwall) (Con)
I speak with a bit of personal experience, having been a Royal Mail employee and having benefited down the line. My right hon. Friend is absolutely right: apart from the trade unionists who drive the Royal Mail train, a huge number of workers have benefited greatly from having that share option. I pay tribute to those workers, who are doing a good job and who will be delivering our post during the Christmas period.
Sir Michael Fallon
I echo that tribute. I should like that example of share options to be followed much more widely. Let us incentivise our companies, with a lower tax rate, to offer free shares to all their employees.
Finally, let me say something about exports. Our constituents benefit, of course, from cheap imported goods, but we are now importing far more than we export. We have run deficits of more than £30 billion in goods and services in each of the past five years, and a deficit of more than £43 billion in the last year alone—and this on an island of entrepreneurs, of engineering excellence, of innovation and of ingenuity. It is good that, according to the CBI, a quarter of manufacturers now expect an increasing order book, but the cheaper pound should not obscure the reality that outside the single market we will live or die by what we can sell to the world in goods and services.
It is not just down to this Government. There were serious deficits in the Labour years as well. Too many medium-sized companies do not bother to export at all, but, post-Brexit, we must clearly put exports at the front and centre of our economic policies. Campaigns such as GREAT and Global Britain are important, but they are just campaigns. We now need to hard-wire exporting into every British business: exporting should be a condition of all our major Government support schemes, our grants and our loans. In return, the Chancellor is beefing up our export finance, making it easier for first-time exporters to take the plunge, and I fully support that.
A fairer economy, much wider employee share ownership, putting exporting at the heart of every Government industrial programme: those are some of the necessary steps towards our new economic future. Let us agree across the House, Brexiteers and Europhiles alike, that muddling along—mere managerialism—is not going to be enough. Brexit Britain demands a bigger vision: more confident, outward-looking, self-rewarding. Let us build on this successful, sensible Budget to enable Britain to be bolder still.
Willenhall Crown Post Office
Michael Fallon Excerpts(10 years, 8 months ago)
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The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
Let me begin by saying that the hon. Member for Walsall North (Mr Winnick) has certainly discharged his responsibility to his constituents by raising Post Office Ltd’s proposals to seek a franchise partner to operate Willenhall Crown post office. He has set out very clearly his concerns, and the concerns of his constituents, on the proposed changes, and I fully appreciate those concerns. As Members of Parliament, we all recognise that post offices are a vital part of the local community, and I understand the real issues and worries that some constituents may feel when changes to our post offices are proposed.
Such concern is not surprising given that there were two major closure programmes between 2003 and 2008, when six branches in his constituency were permanently closed. Five branches in my constituency were also permanently closed. I hope the hon. Gentleman recognises that this Government are taking a different approach. There is no programme of post office closures under this Government and there will be no such programme. We recognise the important social role that post offices play in our communities. Since 2010, we have committed nearly £2 billion to maintaining the post office network at a minimum of 11,500 branches. We are providing for the modernisation of up to 8,300 branches by 2018, bringing improvements such as longer opening hours for the Post Office’s millions of customers. We are also protecting 3,400 community branches and providing an investment fund to deliver improvements to those branches.
The post office network is made up of nearly 12,000 branches, the vast majority of which are owned and operated by private businesses and individuals more commonly known as sub-postmasters. Just 3% of the network—approximately 370 branches—is directly operated by Post Office Ltd. That is the so-called “Crown” network that the hon. Gentleman has spoken about. This small segment of the much wider post office network has historically incurred heavy losses, which amounted to some £37 million in the last full financial year. They account for nearly a third of the losses incurred by the whole network. That is not sustainable, and those losses cannot continue. They are a drain on the company, but, more important, they are a drain on the taxpayer. No business, including the Post Office, can continue to allow some of its high street branches to cost substantially more to run than they bring in. That, I am sorry to say, includes the branch at Willenhall, which I understand costs £1.44 for every £1 of income that it generates.
In return for the historic financial commitment that the Government are providing for the Post Office, we require the company to eliminate Crown losses by 2015. That is good commercial practice, and it is also fair to the taxpayer. The Post Office has a plan to end the losses, which includes working with retail franchise partners in 70 locations to provide continued access to post office services where the Post Office cannot do so viably itself.
As for the franchising proposals, it is important to be clear that Willlenhall is a loss-making branch. Following a process of careful consideration and modelling, the Post Office does not believe that it can operate the branch profitably or sustainably. However, it does believe that another retailer in the community can do so. It has therefore advertised the opportunity to local businesses and retailers, and has received expressions of interest from a number of parties. It is assessing those responses to ensure that the most appropriate partner is chosen to provide access to services, but until we know more details, we cannot take a proper view of how the franchising proposals will affect residents of Willenhall. However, I can reassure the hon. Gentleman and his constituents that this is not a branch closure. Customers will continue to enjoy access to post office services at a new branch close to the existing one.
Mr Winnick
The Minister says that it is not a closure, but it is a closure, to the extent that the existing building will close. There is no doubt about that, and indeed the Minister has not said otherwise. What he is saying is that the post office facilities will be transferred to a retail outlet, and I have not challenged that.
While I am on my feet, may I ask the Minister a simple question? Are the views of the local community on the role that the Crown post office in Willenhall plays and has played for so many years being taken into account?
Michael Fallon
As the hon. Gentleman himself mentioned, a consultation will take place, and the views of local residents will be important. I think he will concede that the post office is not in an ideal condition, in terms of the state of the building. It could also be argued that it is not in an ideal location. The key, surely, is to ensure that customers can continue to access post office services at a new branch that is close to the existing one. What we do know is that the full range of services that are currently offered will continue to be available at the new branch.
I assure the hon. Gentleman that before any changes are made, there will be that six-week local public consultation, under the terms of the code of practice agreed between the Post Office and the organisation Consumer Futures. The consultation will focus—perhaps this answers the hon. Gentleman’s question more directly—on the specific and detailed proposal to relocate the service. That will include issues such as the accessibility of the branch, the layout of the store, and the parking that would be provided. Anyone can express an opinion, and all responses will be considered carefully by the Post Office before a final decision is reached.
Already 17 former Crown branches have been reopened by the Post Office’s franchise partners. In these communities, customers are benefiting from continued access to the Post Office services they rely on, but in more modernised stores that deliver an improved customer environment and are fit for the 21st century. In all franchised branches customers are, importantly, also benefiting from longer opening hours, including in many cases on Sundays, too. That is important. It allows the Post Office to offer its customers the flexibility that they enjoy across the rest of the high street. Responding to its customer needs is the key to securing the long-term future of the network.
It is also the case that these franchised branches are now no longer a financial cost to the Post Office network. Franchising branches presents an excellent opportunity for a business in the locality, or a sub-postmaster, to take on and improve the branch. As with the many thousands of branches already operated by sub-postmasters, these franchised branches are being successfully operated by the Post Office’s business partners and sub-postmasters who are meeting the needs of their customers. They are also helping the Post Office become more sustainable and viable in the long term and reducing the need for taxpayer handouts.
Mr Winnick
I was not aware that the Minister was conversant with Willenhall, and he will no doubt respond on whether he will accept my invitation. He said that the post office is not in the most central place, but it is in the centre of Willenhall town. It is very near the market. I do not know of any location that could be more central in the town.
Michael Fallon
I am certainly going to pass the hon. Gentleman’s kind invitation on to the post office Minister, my hon. Friend the Member for Cardiff Central (Jenny Willott), and perhaps she can go and see for herself and establish beyond any doubt whether the location is optimal. Of course, I stand to be corrected by the hon. Gentleman, as he will know it far better than any of the Ministers, but it is my understanding that it is not on the main high street. All I have seen is a photograph of the location, but let me pass on his very kind invitation and we will see whether my hon. Friend is able to find time in her diary to take it up herself.
Mr Speaker
Order. May I just say to the Minister of State that we wish his hon. Friend the post office Minister an early recovery from her indisposition, but in the unfortunate event that it were to be lengthy, which we very much hope will not be the case, the Minister of State could always consider taking responsibility for the invitation and attending in her stead, and I am sure he would anticipate that with enthusiasm?
Michael Fallon
The House always benefits from your interventions, Mr Speaker, and thank you for your kind good wishes to my hon. Friend. I think the House has already guessed that my hon. Friend would normally have been answering this debate. I receive a number of kind invitations from all quarters of the House to visit, and I will certainly consider a visit to Walsall when I next draw up my regional visits programme.
The commitment I have outlined demonstrates that the Post Office has a plan that sustains and improves services. It is a plan that sees the introduction of new products and services. This is not a return to the closure programmes seen under the last Administration.
Alongside the plans to modernise and improve the Crown network, we are also delivering our network transformation programme, which is seeing the modernisation of up to 8,300 post offices by 2018. That includes Bloxwich post office in the hon. Gentleman’s constituency, which has converted to the new main model. The customers of that branch can now access Post Office services between 8.30 in the morning on their way to work and 7 o’clock in the evening on their way home. Across the UK, more than 3,000 sub-postmasters have signed up to convert, and nearly 2,000 branches, such as the one in Bloxwich, have already converted and are open and operating.
In 2010, we set out our commitments to the post office network in our policy statement, “Securing the Post Office network in the digital age”. I stand here three years later and tell the House that we are delivering on those commitments, and we will continue to deliver. We said then that there will be no programme of post office closures under this Government and there is not—and nor will there be. We said that we will provide £1.34 billion for the Post Office to modernise the network—we are providing that money and the Post Office is modernising. In November last year, we announced a further £640 million funding package to enable the programme to be extended to modernise and protect the whole network by 2018.
We said that we want to see the Post Office become a genuine front office for Government, and the company has so far won every contract it has bid for in the past three years, including the vital Driver and Vehicle Licensing Agency front office contract. We said that we will support the expansion of accessible and affordable personal financial services through the Post Office, and we are doing so. My hon. Friend the Member for East Dunbartonshire (Jo Swinson) was delighted to be one of the first people to open a Post Office current account last year when the company began a pilot in East Anglia. We also said that we will create the opportunity for a mutually owned Post Office. We have held a public consultation on that, and the company, alongside its stakeholders, is engaging the public to agree its public benefit purpose.
In summary, this Government’s track record on the Post Office speaks for itself. We remain committed to the network and we are continuing to invest in it to secure its future. The proposals of the Post Office to seek a franchise partner in Willenhall will ensure that the hon. Gentleman and his constituents will continue to benefit from continued and improved access to vital post office services.
Mr Speaker
Order. Before I put the Question on the Adjournment, the hon. Member for Devizes (Claire Perry) has a point of order relating to the Division at 3.23 pm, in respect of which she was a Teller.
Oral Answers to Questions
Michael Fallon Excerpts(12 years, 5 months ago)
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Miss Smith
As I have just set out, this is a question at present for the independent pay review bodies, which will report back in July. There is an argument that more local, market-facing pay in the public sector has the potential to support more for the same investment, and to help local businesses become more competitive.
Michael Fallon (Sevenoaks) (Con)
23. How can it be fair for small businesses outside London and the south-east to have to compete for staff paid on national rates working in public offices? Given that the last Government committed us to local pay nearly 10 years ago, and that it already operates in the Courts Service, what is the problem with encouraging other departments to follow suit?
Miss Smith
My hon. Friend makes a valuable point that I am sure the independent pay review bodies will consider. If I were to put a number on the average premium for working in the public sector, I could name 18% in Wales.
Business and the Economy
Michael Fallon Excerpts(12 years, 7 months ago)
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Mr Chuka Umunna (Streatham) (Lab)
Thank you, Mr Speaker. I shall try to achieve that aim.
In responding to Her Majesty’s Gracious Speech, let us first take stock of the state of our economy and British business. Following the 2008-09 financial crash, born in the banking sector, to which the Secretary of State has already referred, the economy went into recession, like many others around the world, but thanks to the action that Labour took in office, we prevented that recession from turning into a depression and got the economy growing again. In so doing, we ensured that the pain of recovery was shared fairly, so that those with the broadest shoulders bore the heaviest burden.
When the Conservatives and Liberal Democrats took office, unemployment was falling, the economy was growing and the recovery was settling in. Consequently, borrowing in the last year of the Labour Government was £20 billion lower than forecast, because our approach was working. Today, the UK economy has not grown since the Government’s spending review, unemployment has soared beyond 2.6 million and 50 businesses are going under every single day. As a result, we are now in a double-dip recession created by this Government, and what is more, they are borrowing £150 billion more than forecast to pay for their failures. And who is bearing the burden of their policies? While taking tax credits away from families who want to stay off benefit and in work, they have given a tax break of more than £40,000 to millionaires. So they are unfair and out of touch as well as incompetent.
At the ballot box a couple of weeks ago, the public made it clear what they thought of the policies of the two governing parties. This is what the Business Secretary said about that vote of no confidence a couple of days after his party’s drubbing:
“as a party we’ve got to maintain our identity, we’re going to work in the coalition but by the time we get to the election we’ll be an independent force with our own values competing independently and I think those are the elements that will form the basis of our recovery.”
For all the murmurings of discontent from the Secretary of State, for all the attempts at differentiation and threats to press the nuclear button, the simple fact is that he, the Chief Secretary to the Treasury, sitting next to him, and their Liberal Democrat colleagues have all facilitated and voted for the things that their Government are doing but which are holding back our businesses and economy. They have waved through—more often than not, enthusiastically—all those things that the public made it clear they disliked a couple of weeks ago. For the avoidance of doubt, then, the Conservative’s out-of-touch and unfair economic policies are the Liberal Democrats’ unfair and out-of-touch economic policies; and the Prime Minister and the Chancellor’s incompetence is the Liberal Democrats’ incompetence. No amount of differentiation or smoke and mirrors will change that now or by the general election.
Michael Fallon (Sevenoaks) (Con)
I thank the shadow Secretary of State for giving way so early in his speech. Does he not recall the Governor of the Bank of England describing the Government’s economic policy as a “perfectly sensible” “textbook response”? Why is the Governor wrong and he right?
Mr Umunna
In case the hon. Gentleman has not noticed, we are in a double-dip recession. That says something about his party’s policies, given that, as I have just said, it inherited an economy that was growing, unemployment that was falling and a recovery that was setting in.
Before the Queen’s Speech, there was, of course, the Budget. Let us remember what people said about it. The general secretary of the TUC said:
“We needed a Budget that looked to the future and made jobs - particularly for young people - the national priority… Instead we have got a Budget by the rich for the rich.”
The chief executive of the Forum of Private Business said:
“what small businesses and the economy need are confident strides forward now. Largely, that has not happened in this Budget.”
People were looking in the Queen’s Speech for signs that Ministers understood what people were telling them—to change course and to put in place policies that will deliver an economy that works for working people and businesses, and the building blocks upon which a new economy can be built.
Did the Queen’s Speech deliver the change that people and businesses signalled they wanted to see? There are things that we welcome, subject to the small print being worked through. I have given the Business Secretary credit for ensuring that the Government established the Independent Commission on Banking. We are playing our part, in a cross-party spirit as far as possible, to implement its recommendations, and will look at the detail when it is published. The Government, by their own admission, said that they were bequeathed one of the best competition regimes in the world by this party. The Business Secretary will need to demonstrate that the creation of the single competition and markets authority—which he has just spoken about—will improve on that legacy, not squander it.
Our 2010 manifesto included plans to create a supermarkets ombudsman to protect farmers and food suppliers from unfair and uncompetitive practices by major retailers. The Government are taking that forward through the grocery adjudicator, which the Secretary of State has mentioned. We will work to ensure that the grocery adjudicator is given powers to ensure fair access across the supply chain. In office we set up the primary authority scheme—which he also mentioned—to help reduce the local regulatory burden on firms. The enterprise Bill will extend that to include more businesses, which is welcome. The Secretary of State also referred to the changes to parental leave. Again, we will look at the details, but on the whole, that does not sound like a bad measure.
We were told that the enterprise Bill would contain measures on executive remuneration—something the Secretary of State has just repeated. In order to build a more productive and responsible capitalism, it is important to ensure that we bring an end to rewards for failure and the excessive pay we have seen, which is bad for our economy and our businesses. On both sides of the House we agree that change and reform must be led by shareholders and investors with Government support. In office, we were the ones who introduced the advisory shareholder votes on remuneration reports, which have been causing a lot of news recently.
Mr Umunna
That quote has already been used. I would say two things to that. The hon. Gentleman, who studies these matters keenly as a writer for The Financial Times, will know that Christine Lagarde, the head of the International Monetary Fund, has said that to have a credible fiscal policy, we need growth. The problem is that there has been no growth since the comprehensive spending review. Secondly, we have had historically low interest rates on our sovereign debt and, of course, we control our own monetary policy, which has helped matters.
Mr Umunna
I am not saying that the Governor of the Bank of England was wrong. What I am saying is that we need growth for a credible fiscal policy. Many, including Government Members, would not necessarily argue that the Governor has always been right, particularly during the 2008-09 crisis.
The people have spoken, our businesses have spoken, families up and down this country have spoken, but the Government do not want to listen, so they persist with the same failed economic strategy, the same failed approach, exemplified in their Finance Bill carried through from the last Session with its granny tax, caravan tax, pasty tax and tax break for millionaires.
What of measures to put in place the building blocks for our economy in the long term? Was any change signalled in this Queen’s Speech? The Business Secretary famously wrote to the Prime Minister and the Deputy Prime Minister about industrial policy, outlining his and their failures. He quite rightly argued in his letter for Government to adopt an industrial policy. He said he sensed that there was “something important missing” from what the Government were and are doing—and that was “a compelling vision” of where the country was headed beyond deficit reduction. He rightly said, too, that
“market forces are insufficient for creating the long term industrial capacities we need”
and that
“we should be willing to identify British success stories as identified through success in trade and explicitly get behind them at the highest political level.”
That is precisely what we did in government in respect of the automotive industry—and we are now reaping the rewards from that.
The problem for the Business Secretary is that the Chancellor and the Prime Minister do not buy into active government and industrial policy. To their names we can add that of the Foreign Secretary as another roadblock to the active Government and industrial policy that those who own and work in businesses want to see. What evidence is there in the Queen’s Speech that the Business Secretary has been able to exercise any influence over these roadblocks to bring about a change of approach? None whatsoever.
The Business Secretary’s letter identified our energy and low-carbon industries as an important sector. We are told—the Business Secretary mentioned it—that the enterprise and regulatory reform Bill will include provisions to set up the green investment bank, which is an essential component of an industrial policy for a low-carbon economy. According to conventional definitions, however, a bank is an entity that borrows and lends money. Given the absence of those capacities and capabilities, we are left not with a body that can be called a bank, but with a fund. That is the only proper name that we can give to this initiative. It is not planned to become a bank until 2016, and will do so then only if public sector net debt is falling as a percentage of GDP at that point, which is by no means certain.
Often cited by the Business Secretary as evidence of an industrial policy, or industrial strategy, is the regional growth fund, and that was exposed as a complete shambles by the independent National Audit Office on Friday. The Deputy Prime Minister and the Business Secretary have been going around the country boasting that the scheme will create half a million jobs. What did the National Audit Office tell us on Friday? Only 41,000 jobs will be created, and many of them would have been created in any event. The House will remember that the Government abolished the future jobs fund on the basis that it was too expensive. It was claimed that each job created from that fund cost £6,500. How much did the NAO tell us each of these jobs has cost us? Up to £200,000.
While I am at it, let me thank the Minister of State, Department for Business, Innovation and Skills, the hon. Member for Hertford and Stortford (Mr Prisk)—who has been chuntering from a sedentary position—for the letter that we all received from him inviting us to encourage businesses in our constituencies to bid for RGF money last week. In that letter, he said
“my officials are ready to help”
and
“there will be plenty of opportunities for bidders to meet the appraisal team to discuss their ideas before the bidding deadline”.
There is, of course, a small snag. The NAO told us that the fund started off with 12 economists seconded from other Departments to process these matters. They all returned to their home Departments before due diligence on the first round of bids began, and the fund had no dedicated administration budget. Let us hope that there are some officials left for us to see.
Amendment of the Law
Michael Fallon Excerpts(12 years, 9 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Ed Balls
We will have to wait to see the details. There will be some winners and some losers, but the one thing that we can categorically confirm today is that thousands of pensioners in the hon. Lady’s constituency will lose up to £300 a year as a result of yesterday’s Budget. She did not say whether she supported that—hardly a clarion call of support for the Chancellor’s pensions tax grab.
Michael Fallon
Could the shadow Chancellor make it absolutely clear—yes or no—whether he would restore the age-related allowance if he came to power?
Ed Balls
I will make it absolutely clear: we will vote against the change in the Budget debates and I hope that he will join us in the Lobby. We will vote against it, but the Chancellor knows very well that I will not go through every tax rate, relief, allowance or spending commitment and make commitments for three years’ time. But if the election were called tomorrow, our manifesto would be clear—we would rescind the measure and the Government would go ahead with it. That is the difference.
Michael Fallon (Sevenoaks) (Con)
I remind the House of my interests on the Register of Members’ Financial Interests. One of the most remarkable things about the Opposition’s response to this Budget is that we have not heard a single pledge to reverse any of the changes being proposed. We have heard a lot of carping and that they are going to vote against some of the measures on Monday, but they are not actually going to change them should they ever come back to power. When they do carp, they seem to be carping on behalf of some rather strange interests. They want the top 10% of households to keep their child benefit. They want the better-off pensioners to keep their age-related allowances. Indeed, they want the super-rich to go on enjoying some £65 million-worth of evasion of stamp duty and abuse of tax reliefs. That seems to me an extraordinary position for the Opposition to get into.
Mr Sam Gyimah (East Surrey) (Con)
Is it possible that the opposition to these measures we are hearing, which my hon. Friend has outlined, is opportunistic politics dressed up as principle?
Michael Fallon
My hon. Friend is on to something. We note that the shadow Chancellor could not answer the questions on whether Labour would restore the age-related allowances, the changes to which its Members have been moaning about today.
Where I hope there is common ground across the House is that we all want a dynamic, high-growth economy. In my view, that can be built only on sound public finances, fully flexible labour markets and rising productivity in both the private and public sectors.
I shall begin with the public finances. I welcome confirmation in the Budget that we remain on track to eliminate the structural deficit, with the result that, even in difficult trading circumstances both in the eurozone and globally, the Chancellor was able to avoid big increases in taxation or further increases within this spending round. A broadly neutral Budget confirms that we are on course, but keeping our public finances on course will require continued firm control of public spending.
I note that in cash terms public spending continues to rise each successive year that is illustrated in the Red Book. It may be that we have to have a fresh look at some of the entrenched spending targets of the previous Government. We may well need to ask ourselves whether specific targets, for example on child poverty or climate change, are the best way of focusing our spending where it is most needed.
I welcome moves towards flexible labour markets and more local pay. The hon. Member for Foyle (Mark Durkan) is right—this is not a new announcement. If you look back at the spending review of 2002, Mr Deputy Speaker, you will see that the then Government were committed to more flexible local and regional pay. You will find it in the Budget documents of 2003. You will also see it in the previous Prime Minister’s last Mansion House speech as Chancellor in 2006. Of course, the Labour Government did nothing about it; their union paymasters would not allow it. But local pay has applied for the past 25 years at least across the private sector, and it would be wrong to continue to rope off the public sector from the real differences in the associated costs of labour up and down the United Kingdom.
It is unfair to local businesses to have to compete for labour with public bodies and offices that pay well above the market rate. It is certainly unfair to the jobless in those labour markets, who are priced out of jobs as a result. I hope that the Chancellor will go on to tackle some of the other inequalities, such as the big differences in sickness pay between the public and private sectors and the real difficulties that young people under 25 have in getting that first job. One third of the unemployed are under 25. That is the legacy of the Labour party, and we have to do everything possible to help those people to get their first job, not least when at the moment we control their wages and other conditions that create so many disincentives for small companies to take on a single extra member of staff. Why should the state make it so difficult for young people to get into employment?
The test of all the Budget measures in the end is whether they will improve our productivity, as so many Labour Budgets and so much Labour spending signally failed to do. The Office for National Statistics figures for 2010 say it all and are a good summary of 13 years of Labour government. In terms of GDP per hour, France is 18% more productive, Germany is 19% more productive and the United States is 24% more productive. That shows the importance of improving incentives at every level and it is why I welcome the new incentives for the lower paid and middle earners that will be created by the changes to the personal allowance. Taking 2 million people out of tax altogether in two years will improve those incentives. That is a coalition achievement in which both parties on this side of the House can take real pride.
Sound public finances, more flexible labour markets and higher productivity are the keys to the future and to the jobs that our children need. I welcome the progress being made in this Budget towards them.