Budget Resolutions and Economic Situation

Peter Dowd Excerpts

Monday 13th July 2015 Commons Chamber

[Greg Clark]

I am grateful for the support of my hon. Friend, who has contributed to the Select Committee’s deliberations. Local councils have now had plenty of time to get on with their plans. More than 80% have published a plan, so we are pushing at an open door.

The Budget and its accompanying documents make clear, in tangible form, our commitment to provide the land and a simplification of the planning system to allow the homes that are needed to be built.

[Peter Dowd (Bootle) (Lab)]

On the issue of brownfield sites, my constituency has areas that are heavily contaminated and need significant remediation. Can the Secretary of State advise local authorities and developers where they can get support for that remediation?

[Greg Clark]

One of the benefits of devolving some of the powers and funds to local authorities is that by combining investment in transport infrastructure, housing and commercial development it is possible to get private sector investment in some of those regeneration projects. The hon. Gentleman has a valid point and, in recognition of the issue, we are establishing a brownfield fund that will help with the remediation of some brownfield land.

We have important themes in the Budget. It is an opportunity for our country to be even bolder over the five years ahead than we have been in the past. I am pleased that the shadow Secretary of State is on record as being a moderniser in her party. She supports a leadership candidate who says that she wants to challenge her party to be bolder. I hope that she will take the opportunity to do that. A vigorous debate on these matters—on housing, on planning and on furthering the devolution agenda—is very much to be commended in this House. Reflecting ruefully on the past five years, I found that I had a fruitful dialogue with leaders of local government, not just with Conservative leaders, such as my hon. Friend the Member for Uxbridge and South Ruislip, but with Labour leaders across the country, too. However, I did not, and they did not, get the support from Labour’s Westminster politicians. I hope that will change this time.

The hon. Member for Stoke-on-Trent Central, again providing wise words, said that this needs to be a summer of hard truths. That is good advice to the hon. Lady and I hope she will be bold. As the former shadow housing spokesman and now shadow Secretary of State, if she is not going to be bold, who is? Will she support tenants who dream of owning their own home, or not? Will she support our plan to build 200,000 starter homes? Will she back our register of brownfield sites with automatic planning permission so that builders can get on with building and young people can get a home of their own? Will she back our plans to extend home ownership through Help to Buy, right to buy and the starter homes initiative, or will she sit it out, a would-be radical afraid to speak out lest she finds that her leader is an old Labour figure who takes fright at confronting the future?

Britain has come a long way in the past five years, a journey that has taken us from the brink of ruin to the fastest growing advanced economy in the world. Confidence has returned and living standards are rising. Local economies are prospering and house building is on the rise. Businesses are growing and more people are in work than ever before. This progress bears testament to the hard work and sacrifice of the British people. It is their economic recovery and their hard-fought gains will not be squandered. Having come this far, there will be no turning back to the age of irresponsibility that caused so much damage to our country. The Budget sets out a new settlement for Britain to keep our country on the straight path to economic security and prosperity. It will give cities, towns and counties across the country the power to make their own decisions and to galvanise their local economies; it will help local communities to build the homes they need; and it will ensure that social tenants benefit from a fair rent. It is a Budget for working people and for one nation, so that whoever you are and wherever you live, you can benefit from Britain’s progress. I commend it to the House.

--- Later in debate ---

[Peter Dowd (Bootle) (Lab)]

The Budget statement, although difficult to hear at the time, was a hocus pocus concoction with built-in excuses should things go wrong: “Things will be better tomorrow, but then again they might not be”—it was a sort of mañana Budget. Having told us that growth was strong, the Chancellor attempted to make a subliminal and conflated link with the Greek crisis, and the possible implications if we do not allow him to get on and finish the job he started. Of course that was just the warm up excuse, because he then went on to say that—notwithstanding what a fantastic job he claims to be doing—we cannot be complacent.

To reinforce his potential alibi, and in case things went wrong, he reminded the House that the economies of the United States and China have slowed. Like an astrologer or a Mystic Meg character, he told us that the global risks are in the ascendant. He then wagged his finger at Europe, reminding it in a vague and imprecise way that it must not allow our future prosperity to be put in danger. Of course he forgot to remind us that Europe is way ahead in productivity, and that the French and Germans, among others, look on a little bemused—the French no doubt gave a bit of a Gallic shrug. The Chancellor also told us that this year the share of the national debt is falling after five years. I recall that he said—indeed, he boasted—that he would do much better than that on both the deficit and the debt, but he has not.

This was a back to the future Budget. If there is any doubt about that, we simply need to look at the self-satisfaction with which the Chancellor announced the sales of public assets, including some quasi-private assets in the form of housing association stock. It is the biggest sell-off since the 1980s says the Chancellor, but it is the old Conservative two-step shuffle of “Miss your targets, have a back-up plan, get the money from elsewhere—preferably somebody else’s money.” It is consistent, if not wholly imaginative. The Chancellor’s ambitions are not matched by the practical proposals that he has put in place to achieve them. Transport infrastructure proposals are currently in a mess. Many Conservative Members thought that they were going to get rail or road upgrades—or perhaps both—but they will have to wait a little longer until the mess is sorted out.

The Chancellor said that he wanted to make the NHS a priority in the Budget, but in short order he proceeded to tell the very people who make it run effectively and efficiently that they will be on a pay go-slow—in fact, they will have to be even more effective and efficient over the next four years because they will get just a 1% pay rise each year. That has become a habit. Local government—an area that I know reasonably well—has had to bear an unfair and disproportionate burden of cuts to budgets. Within the cuts to local government, some councils—including my own Sefton council—have had to bear even more significant and disproportionate reductions in central support.

If the funding of the NHS is taken in isolation from the funding of social care, that will create problems because they are different sides of the same coin. This is where local government comes into its own as it is the most efficient of public services. I hope that the new Secretary of State for Communities and Local Government will spend time ensuring that the devolution process for local government moves ahead positively and effectively, and at a pace consistent with good and effective governance, whatever those governance arrangements turn out to be. A slight glimmer of hope is the flexibility that devolution may bring to local government, and the ability to enable local growth that is unhindered by political and economic centralisation that, in my view, has hindered growth.

Let me make one salient point about the Chancellor’s claim that 1% of the world’s population generates 4% of the world’s income yet pays out 7% of the world’s welfare spending. In reality, a significant proportion of that is pensions that people have paid into and to which they are entitled. The Government’s jiggery-pokery on the issue must be challenged, day in, day out.

Tax Credits (Working Families)

Peter Dowd Excerpts

Tuesday 7th July 2015 Commons Chamber

[Julian Knight (Solihull) (Con)]

It is a particular pleasure to follow the right hon. Member for Manchester, Gorton (Sir Gerald Kaufman), the Father of the House.

Tax credit payments play an important role in the finances of many of my constituents, helping them to provide for childcare, meet ongoing expenditure and, crucially, join the workforce. My constituency is the prosperous town of Solihull, but there is still a legion of very hard-working people on not particularly high salaries who are helped by tax credits. I remember one door I knocked on in Shirley about a year or so before the general election. I met a young couple who told me that they both worked full time, brought up two children and earned something like about £20,000 a year between them. They had to drive around in a 15-year-old car. Their lives were difficult financially and tax credits really helped them to get over a hump in the road. It would therefore be wrong to lose tax credits overnight without proper recompense through the tax system and other means of helping individuals. Incidentally, the couple also commented on how the state provided for people local to them who did not work, but had a much higher standard of living—a strong argument for a sensible cap on benefits, with which it seems that the shadow Chancellor now agrees.

We should not pretend, however, that tax credits are perfect. When they were launched, there was a massive problem with over and underpayments—2 million instances in the first year alone—and this has not stopped. Okay, they are better managed by Her Majesty’s Revenue and Customs, but there is still a great deal of confusion in the tax credits system. If we were designing a system now to help people into work and to support families, would we really design tax credits with the inbuilt pitfall of overpayments that must then be clawed back, often to the great personal distress of the claimant?

There are also long-standing issues of fraud in the tax credits system. The online portal was closed in 2005 when tens of millions of pounds was defrauded, much of it by organised gangs from overseas. I remember reporting on the story in my capacity as BBC News personal finance correspondent and being told by officials that although it was unfortunate, the fraud was seen as a price worth paying to deliver the project. The phrase used was “spray and pay”.

In addition, there is an issue, touched on by hon. Members, about how tax credits effectively top up low pay in the economy. They are effectively a subsidy for big business. I note that the hon. Member for Birmingham, Ladywood (Shabana Mahmood) disputed this fact, but that august publication, The Guardian, carried a story on 20 April saying that £11 billion was being used to top up low pay through the tax credits system.

There is also a strong cultural issue. Does it not damage society and individual entrepreneurialism to have so many people effectively in receipt of welfare and beholden to the state, as my hon. Friend the Member for South Suffolk (James Cartlidge) asked earlier? As we have seen in Greece and elsewhere, over-reliance on the state damages society and leaves individuals incredibly vulnerable to global financial shocks, as well as domestic economic shocks. He made an interesting point about whether many loans that are now active are predicated on tax credits. Surely that needs to be investigated further by the Financial Conduct Authority.

Also, it is possible that some governing parties have used tax credits as a means by which—heaven forbid—to curry favour with the electorate. We should not forget that the biggest rises in tax credits came just before the 2005 and 2010 general elections. Is it not significant as well that tax credit spend rose by 340% between 1997 and 2010, whereas average salaries rose by only 30%? Tax credits have increased by 10 times the level of average salaries, drawing more and more people into dependence on the state. There is also the wrongheaded situation of people on salaries far in excess of the national average being dragged into tax credits. In particular, single people often do not get any help whatsoever, yet the pattern in this country is of more single households being formed.

No Government Member has so far suggested that tax credits should be done away with overnight. They should, however, be replaced slowly over time by a different, cleaner system less open to fraud and miscalculation. For me, increasing the personal allowance, from £10,000 to £12,500 and potentially beyond, is key. We should cut out the middle man. There is no need to claw cash back. It is also essential to raise the 40p personal allowance. There are many people paying tax at 40p in the pound who should not be; the system should not have been so designed that they have to pay it.

We are doubling the amount of free childcare from 15 hours to 30 hours—a key means by which to enable people to get back into the workforce—while fuel duty is now 18p cheaper than it would have been under Labour’s plans, which has made a massive difference to family finances. In addition, ending the green levies on energy, including home energy supplies, should press down on home energy costs. In Solihull, we have just managed to freeze council tax for the fifth year on the trot—another means of delivering tax cuts, in effect, when compared to inflation, for working people. This has happened while unemployment in my constituency has fallen by 67% since 2010.

[Peter Dowd (Bootle) (Lab)]

Does the hon. Gentleman agree that the Chancellor was very specific about how he intends to cut tax credits for poorer working families, but very woolly about how, as part of the so-called long-term economic plan, he would encourage employers to pay decent wages?

[Julian Knight]

rose—

Royal Bank of Scotland

Peter Dowd Excerpts

Thursday 11th June 2015 Commons Chamber

[Harriett Baldwin]

My hon. Friend ably summarises a range of options. Today’s statement clearly illustrates that we have rejected his first option of doing nothing. The Government have never shrunk from making difficult decisions that are in the right interests of the country’s economic future. On the second option of selling everything in one go, it is not our opinion, given the size of the holding and as the reports make clear, that the sale can be done in short order; it will take a period of time—which leaves us with the third option.

[Peter Dowd (Bootle) (Lab)]

Has the Minister read, “Freeing Britain to Compete”, produced by her party in 2007 and endorsed by the Prime Minister and, I believe, the Chancellor, which called for a vast range of regulation in financial services to be abolished or watered down, including in relation to money laundering? In particular, has she read the part that says that the Labour Government

“claims that this regulation is all necessary. They seem to believe that without it banks could steal our money”?