Section 5 of the European Communities (Amendment) Act 1993

Peter Dowd Excerpts

Tuesday 26th March 2019 Commons Chamber

[Peter Dowd (Bootle) (Lab)]

The Chief Secretary referred to the gnashing of teeth. The only gnashing of teeth going on in this country is by those people who cannot get access to a dentist because of her party’s health policy. She talked about the Tories being the party of business. She may well wish to have a word with the right hon. Member for Uxbridge and South Ruislip (Boris Johnson), who used an Anglo-Saxon phrase in relation to business—the second word was “off”, basically.

If education is so wonderful and marvellous and schools are in such a good state, how come headteachers marched on Downing Street and presented the largest petition about the condition of schools and education? The answer from the right hon. Lady is always more deregulation.

[Elizabeth Truss]

indicated dissent.

[Peter Dowd]

That is what the right hon. Lady said in relation to planning law. It is deregulation—that is what it comes down to. However she wants to dress it up, it is deregulation. Deregulation has got this country into so much trouble in a whole range of areas, including banking and housing. Let us not hear any more about how deregulation is going to solve all the problems of the world. It will not.

After that, I would like to thank the Chief Secretary to the Treasury, and give credit where credit is due. In a speech given on 19 March, the Chief Secretary finally acknowledged that we will now

“throw off the constraints of the post-financial crash world”.

There it is: it is official. It was a financial crash world, not Labour’s crash. But better late than never—apology accepted.

We find ourselves in the absurd and surreal position of debating a motion to approve the Government’s programme of convergence with the EU at a time when the issue of Britain’s membership of the EU is about to bring down yet another Conservative Prime Minister, so the only convergence on the cards is the one between the Prime Minister and her P45. The theological obsession of the European Research Group, which is opposed to any convergence with reality in fact, has hamstrung the Brexit negotiations and left the majority over there—on the Government Benches—as spectators in an unfolding disaster of their own making.

Reflecting on the first time I spoke in the debate on the Government’s convergence programme with the EU, I recall it was just before the snap election in spring 2017. I am sure we all remember that. At the time, prominent newspapers ran headlines such as “Blue Murder” in the sure and certain belief that the Conservatives would wipe out the Labour party, or “Steel of the New Iron Lady”, comparing the Prime Minister to Margaret Thatcher.

[Andrew Bowie (West Aberdeenshire and Kincardine) (Con)]

We’re still in government.

[Peter Dowd]

The hon. Gentleman says that they are still in government, but that is a complete and utter fantasy, and even his honourable colleagues all smiled and smirked at that particular one.

Those supine, oleaginous headlines in the newspapers are gone, along with the words that dare not speak their name, “Strong and stable”. Whatever happened to that? Just two years later, those same newspapers now call for the Prime Minister to resign, stating, “Time’s up, Theresa”. This sea change among the Tories’ biggest supporters in the press sums up the failures of this Government.

While we are on the maritime theme, the Environment Secretary could not even use the limited imagination he has to think up another metaphor, and resorted to the hackneyed one:

“It’s not time to change the captain of the ship”.

What an imagination!

The Prime Minister’s red lines and her intransigence and insistence on a deal that has little or no support in the country or in this House have led us to this crisis. This weekend, we had the ludicrous spectacle—the ludicrous spectacle—of Cabinet Ministers jostling to brief the press about her imminent departure and her would-be likely successor, only to be followed by quick recants and unconvincing oaths of loyalty. It is almost Shakespearian.

The Government’s motion is based on the economic forecast provided by the Office for Budget Responsibility and the Chancellor’s spring statement—what there was of it. I am sure all Members would agree that the work of Robert Chote and his staff at the OBR is indispensable in informing debate and offering an independent forecast of UK economy. [Interruption.] If the hon. Member for Solihull (Julian Knight) wants to intervene, he should feel free to do so, but perhaps he could stop muttering across the Chamber inane comments that nobody can hear and nobody understands, and I suspect he himself does not even understand what he is actually saying.

However, it is worrying that the OBR’s recent forecast continues to be based on the UK securing a Brexit deal, which the Chief Secretary did not even mention, and a smooth transition, which she did not mention, particularly at a time when the Prime Minister continues to keep the option of no deal on the table. It is still there; it has not been taken off. This assumption means that if the UK does leave without a deal or leaves with a poor deal, the OBR’s forecasts will be in serious need of revision.

Similarly, at the spring statement the Chancellor spoke again of this mythical Brexit “deal dividend” that the economy will receive once parliamentarians sign up to the Prime Minister’s deal. According to the Chancellor’s imagination—which is significantly more febrile than the Environment Secretary’s—this “deal dividend” will lead to an increase in the public coffers. However, the Chancellor’s claims have already been debunked by the Treasury Committee, which described the dividend as “not credible” and “not fully consistent” with his own fiscal rules—yes, the rules that keep changing.

Rather than the fantastical picture that the Chief Secretary to the Treasury seeks to paint for our EU partners, I will take the opportunity to outline the real state of the UK economy and the Government’s woeful record. That is where we hear the gnashing of teeth—woeful record. Under the Conservatives, we have faced nine years of politically instituted austerity, which has weakened our economy and pushed our public services to breaking point. The Government’s austerity programme has suppressed incomes by more than £3,600 per household, costing the economy £100 billion; yet austerity is far from over. The departmental spending review that the Chief Secretary mentioned—likely to report in the autumn, as she said—will see real-terms cuts for most Departments. I will sit down if the right hon. Lady would like to give us some more information on that one.

[Elizabeth Truss]

I would be happy to. It is a 1.2% increase in real terms.

--- Later in debate ---

[Peter Dowd]

I do not think that is correct. I am afraid we will have to look at those figures. We will see them and we will hold the Chief Secretary to account when she is at this Dispatch Box and I am at the Dispatch Box where she is now.

[Matt Rodda]

My hon. Friend makes a good point about the complete failure of the Government’s austerity agenda. Earlier, the Chief Secretary mentioned nursery schools. Many school and nursery school heads are experiencing a continuing programme of austerity, which is actually due to get worse. She mentioned that she had a brief conversation with her colleague in the Education Department. [Interruption.] However long the conversation was, the message I have had from headteachers is quite to the contrary; actually, a very short stay of execution has been given, for just one year, when the headteachers I speak to in my Reading constituency need a long-term programme of sustainable investment in nursery schools, rather than warm words.

[Peter Dowd]

My hon. Friend is absolutely right. May I nip back to the point about the 1.2% increase, if I may beg your indulgence, Madam Deputy Speaker? The 1.2% is the overall increase. What will happen—[Interruption.] No; the reality is that some Departments will have major cuts in their budget.

[Rachel Maclean (Redditch) (Con)]

The hon. Gentleman is referring to a number of figures that he claims show a hit to every taxpayer; but 32 million taxpayers have had their taxes reduced under this Government, so they are keeping more of what they earn and they are better off. How many of those 32 million people would see their taxes put up under his proposals, and how many would be poorer under his proposals?

[Peter Dowd]

I will pick up some of those points later.

The reality is that meanwhile, the Government have presided over the slowest recovery since the 1920s—stubborn fact. The OBR has revised down GDP growth, and business investment is now falling. Those are not my figures; they are the OBR’s figures. What about wages? I will touch on the points that the hon. Member for Redditch (Rachel Maclean) raised. Real wages are still lower than they were a decade ago, and according to the OBR,

“average earnings growth remains below the rates typical before the financial crisis”.

These are real people’s real lives—real wages are not going up. For many workers who have seen their wages stagnate, borrowing and debt has plugged the gap. Household debt relative to income is forecast to increase over the next few years.

What about transparency in Government spending? Long gone are the days when Tory Ministers hailed their Government as the most transparent in history—replaced by a culture of secrecy and a disregard for parliamentary convention that saw the Government held in contempt of Parliament for the first time in history. It is not a proud record to have.

Even on transactional issues, such as the regular and timely release of figures for departmental spending of over £25,000, the Government seem to have quietly backslid, in some cases releasing data series late, incomplete, or not at all. The question is: what are they hiding? The Chief Secretary has made much of the Government’s record on the deficit, yet the reality is that on her watch, and that of her predecessor, they have simply passed deficits on to our schools, our hospitals and our local councils, with departmental spending cuts of over £40 billion since 2010.

[Mr Jim Cunningham]

When we talk about more money being put into Departments, whether for education or the health service, we have to remember that any additional money starts from a lower base. The Government are partially replacing what they took out in the first place. People do not seem to understand that major point. They said that austerity was over, but we still have it. Yes, people are in jobs, but they are very low-paid jobs. That is not taking people out of poverty; that is keeping people in poverty. What interests me the most, however, is that nothing has been said about further education, which has had major cuts. If the Government want to continue with austerity, they have to do something about further education.

[Peter Dowd]

My hon. Friend has obviously been reading Labour’s “Funding Britain’s Future” document, in which we picked up on that particular point. The hon. Member for Redditch mentioned tax cuts. Try telling that to people who have had 15% and 16% rises in their council tax, because the Government have shunted that on to the people. They are still taxpayers. Try mentioning to them that they have fantastic local services, when increases to their council tax do not even cover social care bills.

The Chief Secretary has bragged about the so-called Tory jobs miracle. However, she made no mention in the speech of the fact that it is built on insecure work, low pay and regional disparities. We have nearly 4 million people in insecure work and nearly 3 million people working under 15 hours a week across the UK. Workers in the north-east earn around £200 less than those in London, reifying the regional imbalance.

[Simon Hoare]

I hate to shoot the hon. Gentleman’s unicorn just as he has started to ride it, but 90% of new jobs created are full-time jobs. This is a total myth that his party keeps peddling. It belies the hard work, initiative and enterprise of the British people. Is it not time to stop misleading?

[Peter Dowd]

Try telling that to the 3 million people in insecure work. It is okay hon. Members jumping up and being outraged at the facts. The facts are stubborn, I completely grant them that. We are not living in the halcyon world that the hon. Member thinks we are living in. There are 3 million people living in insecure work. That is not acceptable in a modern society. The Chief Secretary has done nothing to help headteachers who having to close schools early or the 87 people a day dying while they are waiting for social care, or to assist the nurses, doctors, police officers, social workers, road sweepers, fire fighters, security services staff, civil servants or the back-office staff who keep all those services running day in, day out and night in, night out. Those are the so-called vested interests the Chief Secretary refers to in her regular speeches.

The Chief Secretary recently visited Felixstowe, Walsall and Tadcaster—commiserations to the people of Felixstowe, Walsall and Tadcaster. She said that people want

“the local roads fixed and not to have to sit in a traffic jam.”

Well, the Government are in a big jam at the moment. She went on:

“They want a less crowded commute into work. They want the basics sorted.”

This is after nine years of Tory Government! Where has she been? Did she really have to ask that question? A report today highlights that there are 2 million potholes out there with a £10 billion backlog of repairs under the Tories. No wonder people are sitting in traffic jams—they cannot get through the road for potholes. That is the reality under the Tories. Anyone with a scintilla of awareness already knows the answer to that. The good people of north Lincolnshire were certainly aware of it when I was in Crowle on Saturday, campaigning to rid them of their useless Tory council with the excellent Labour candidates. They want the Transport Secretary to do his job, and they want the Chief Secretary to do hers.

What about productivity—another abysmal failure of Tory economic policy? Productivity remains weaker than in most other advanced economies. The fact is that the Government have failed to prepare the UK economy for the future. Britain’s infrastructure ranks behind that of Germany, France, the USA and Japan in terms of quality, and its rate of public investment is among the lowest in the OECD.

[Elizabeth Truss]

Is it not the case that in 1997 the Labour Government cancelled the road building programme?

[Peter Dowd]

Yes—to invest in public transport. We now have the Chief Secretary to the Treasury resorting to decisions made by a Labour Government two decades ago. That is how grim it has got for the Conservatives’ arguments—they are talking about something that happened 20 years ago.

Despite that, the Government have cut planned public sector investment. Their failure to negotiate a credible Brexit deal has already led to huge uncertainty, stifling investment and putting jobs at risk. Manufacturing is in recession; numerous employers have announced job losses; and businesses that rely on the EU supply chain have been left in confusion and despair—like most Government Members, who are in confusion and despair at the actions of the Prime Minister.

The internecine warfare within the Conservative party has paralysed the Government yet again, while the economy and many people’s livelihoods hang in the balance. It is affecting people’s livelihoods, manufacturing and business—more vested interests to be ridiculed and ignored by the Chief Secretary to the Treasury. All that while the Government are reporting to our EU partners that everything in the garden is rosy—no pun intended, Madam Deputy Speaker. Surely it is time for the Chief Secretary to acknowledge that the only Brexit that will gain majority support is Labour’s alternative plan: a permanent customs union, a strong relationship with the single market and full guarantees of workers’ rights and environmental protections.

The Government’s assessment of the UK economy is not based in reality. It does not account for the Conservatives’ catastrophic record of austerity, which continues to destroy our public services and suffocate the economy. It pays no regard to the Tory failure on wages, which remain lower than they were a decade ago. In addition to radio silence on productivity, there is little mention of the lack of public investment in our infrastructure. In short, the Government’s assessment says far more about the ideological position of Tory Ministers and their insolvent ideas than it does about the actual economy. It says more about the hubris of a Government who have stayed in office well past their sell-by date and do not recognise the experiences of ordinary people.

In summary, economic growth stands at 1.2%; productivity is 35% below the Germans’; household debt as a proportion of income is set to rise from 139% to 143% by 2024; the national debt still stands at 82% of GDP—the Conservatives have doubled the national debt —and the deficit is £22.8 billion. That is the Conservative Government’s record after nine years of economic incompetence. That epitomises why the country needs a Labour Government that will put jobs and our economy first and invest to rebuild Britain for the many, not the few. I urge Members to reject the motion.

--- Later in debate ---

[Simon Hoare]

In an intervention on the shadow Chief Secretary, the hon. Gentleman referred to something that I am sure we have all heard from headteachers in our constituencies. Whether we are talking about national insurance, about pensions or about the demands of special educational needs, although increased DFE expenditure is going into most of our schools, it is nowhere near enough. We are asking schools to do more for more pupils with not quite as much money as they need. That is why I make the distinction. I welcome the increase, but new money is required, particularly as the range and the choice become wider and deeper.

I challenge anyone who represents a rural constituency, as I do, not to share my views on rural schools. I was delighted when the Chief Secretary took my point about the needs of maintenance. The costs of heating and running a whole estate of Victorian primary schools are greater than those in new build, perhaps in an urban setting, although that is not to say that there are no Victorian schools in urban settings. Such schools do not provide a good learning environment. Last month, I visited Motcombe primary school in my constituency. In a small classroom, one child is effectively being fried against a not particularly adequate heater, because the school does not have enough money to replace the heating system.

We must make a balanced judgment: we must aim to take those at the lowest end of the earning spectrum out of taxation, while also investing properly. We must strike that sensitive and sophisticated balance. My right hon. Friend was absolutely right: it is not just the big and sexy that we must consider, but schemes for local roads such as the C13 and the A350 in my constituency, and support for those who wish to remedy the rural broadband and mobile blackspots, which could become engines of economic growth and entrepreneurialism.

That takes me to my closing point, to which the hon. Member for Bootle alluded. Some of our recent debates appear to have pitted my party against the Government. I am sorry—I meant to say “against business”. [Laughter.] That was not a Freudian slip—or perhaps it was.

Business is the engine that generates the tax that delivers the services. We cannot have a hostile viewpoint; we cannot have a hostile environment for UK business to flourish. Without a flourishing business sector, without the freeing up of the entrepreneurial spirit that underpins the British character, the proceeds of growth—

[Peter Dowd]

rose—

[Simon Hoare]

I am drawing to a conclusion.

We all want to see the proceeds of growth and the investment in our public services that is required.

[Alison Thewliss (Glasgow Central) (SNP)]

I beg to move amendment (a), in line 1, leave out from “House” to end, and add

“declines to approve for the purposes of section 5 of the European Communities (Amendment) Act 1993 the Government’s assessment of the medium term economic and fiscal position as set out in the latest Budget document and the Office for Budget Responsibility’s most recent Economic and Fiscal outlook and Fiscal Sustainability Report, because it does not contain detailed analysis of the impact of the Withdrawal Agreement and the Framework for the Future Relationship with the EU on the UK’s economic and fiscal position; and calls on the Government to publish an assessment containing that analysis immediately.”.

I was curious to hear the Chief Secretary to the Treasury start by saying she is so glad that this is the last statement she will ever have to make to the EU. I cannot agree, and the Scottish National party cannot agree either. It is surreal to be standing here days from the original day of departure from the EU attempting to fulfil this legal obligation as though things were business as usual. These past few days prove beyond any doubt that we could not be any further from business as usual in this House; we are absolutely through the looking glass. Events are developing every day around what kind of country we are going to be left with; there are grave concerns about the future from every aspect of civic society. So I certainly do not share the Chief Secretary’s optimism that there is a bright future ahead.

The Chief Secretary talked about young people. Young people are the most pro-EU group in this country, and it is their future that this Government want to take away, so shame on her for not recognising the limitations that young people will face when they want to set up businesses, when they want to trade with the EU, when they want to travel and advance their education and opportunities in life.

I do not wish by way of proposing the amendment to diminish the work that the Office for Budget Responsibility does. My colleagues on these Benches and I will always welcome efforts to make public accounts more transparent and independent. The OBR has conducted this analysis rightfully and properly within its remit, but unfortunately this is precisely the reason why the SNP cannot support the approval of this statement tonight: because the OBR can only make forecasts on the basis of stated Government policy regardless of whether the policy is likely to be achieved or, as the hon. Member for North Dorset (Simon Hoare) said, whether it is his party against the Government, or whether in fact the right hon. Member for West Dorset (Sir Oliver Letwin) is now the Prime Minister, because who knows? It is a Dorset thing; Dorset is leading the rebellion against their own Government. That is very interesting—and I see how happy the hon. Member for North Dorset is to be doing so. It is an absolute shambles when a Member who ought to be supporting the Government ends up leading the charge against them—although that is not at all uncommon these days; it is part of the whole madness of this Government.

The latest OBR fiscal sustainability report was published on 17 July 2018. It does not reflect the reality of the Prime Minister’s proposed deal, which was published much later, on 25 November 2018. In the OBR’s outline of the assumptions made in its economic and fiscal outlook, it is clear that the terms of the UK’s departure from the EU are unclear and that there is “no meaningful basis” on which to predict the nature of the relationship between the UK and EU. That is the situation in which we have we remained.

I checked and I have £3.52 in my purse and I would be as well throwing it down the stank as putting it on any outcome of the UK leaving the EU, so it would be an understatement to say that I could find it risky to endorse a fiscal spending plan based on one assumption of our future relationship with Europe. It is ludicrous for MPs to be asked to approve this motion without having any sight of any analysis of the Prime Minister’s deal. It is our job in this place as MPs to scrutinise the UK Government, but we are not being given the opportunity to do so effectively.

The Prime Minister has said that such an analysis of her deal does exist. She confirmed it in a letter to my colleague, the right hon. Member for Ross, Skye and Lochaber (Ian Blackford), so why will the Prime Minister not share the details of that analysis with the House? Is it because she knows, as we all know, that the economists are right and her deal will be bad for GDP, public finances and the living standards of all our constituents?

GDP growth has gone from being the highest in the G7 before the EU referendum to the lowest today. Imports have been slower than for other G7 countries, despite an unprecedented drop in the value of sterling, and it is interesting that for some time now the exchange rate on the cash machines at Glasgow airport, which I see when I come down to London every week, has been taken off, because nobody would take any money out if they saw how dreadful it was.

Inward and outward foreign direct investment have dropped, with some analysis suggesting that the drop in inward FDI is as much as 19% compared with a no-Brexit scenario, and we are starting to see job losses on a regular basis across these islands. It is no coincidence that this is happening. The Brexit job loss index says that more than 200,000 jobs have been lost already, without the UK having even left. In a no-deal scenario, Scotland can expect to lose 100,000 jobs, according to research by the Fraser of Allander Institute, which is based in my constituency. Speaking of my constituency, I recall hearing from a significant business there on Friday afternoon. It says that it is going down from a five-day week to a four-day week, that it has laid off temporary staff and that it is losing orders because of the uncertainty of this Government. It is unacceptable that businesses the length and breadth of these islands are being put into this position because of an internal dispute within the Tory party.

The OBR has not explicitly modelled the effects of a no-deal Brexit on the economy, but the London School of Economics has suggested that if the UK Government were to stick to their frankly unreasonable targets for reducing net migration, it would not be unreasonable to expect a long-term decline in output and productivity. The UK Government’s shambolic Brexit deal would also be hugely damaging, because EU nationals contribute hugely to our society and our economy. The Government’s aim to reduce the number of EU nationals here by 80% would have a massive impact on the UK’s economy, on population growth and, quite frankly, on our ability to survive as a country. The Government do not want poor people to have children—they have brought in the two-child limit—and they do not want people to come to this country and build their lives here, but we have an ageing population. Where do they think we are going to get the people from? I have absolutely no idea, and neither do they.

On top of all this, income inequality has risen since the Brexit vote to the extent that on two occasions the OBR could not predict the levels of tax that the Treasury was going to receive from the 1% in society. The tax windfall that the Chancellor is celebrating is not a sign that the economy performing well; it is a sign of deep-seated inequality, which is worsening under the UK Tory Government.

[Peter Dowd]

I am sure the hon. Lady is aware that, according to the Institute for Fiscal Studies, an extra £5 billion will be required to maintain services in line with population growth, along with an appropriate number of people to support those services.

[Alison Thewliss]

The hon. Gentleman makes an excellent point, and he is absolutely correct. Without people, the economy will falter. That is the economic reality.

The Resolution Foundation has said that the income tax take is up 8% so far this year, but that that is coming from the very highest earners. The wages at the bottom continue to stagnate. If the OBR cannot openly predict the short-term economic performance, it is unreasonable to ask the House to sign off on its guidance. It is more difficult now for families to survive on the money they have. Since the vote, the cost of bread is up 11%, the cost of butter is up 23% and the cost of milk is up 11%—and we still have not left the EU. If people cannot afford to put bread and butter on the table, this economy is heading for the drain.

It is a well-established fact that Scotland did not vote for or particularly want to leave the EU. I checked just before I stood up to speak, and 13,920 of my constituents have now signed the petition to revoke article 50. The Prime Minister has consistently ignored attempts by the Scottish Parliament to find any kind of compromise solution, such as staying in the customs union and the single market, which would limit the damage of this hard Tory Brexit. If she wants to drag Scotland out of the EU against its will, she should have the bottle to come to this House and present the analysis that she says exists. She should have the courage to tell people that it will cost jobs and businesses and that she cannot make guarantees about the future.

If the Prime Minister does not believe that her Brexit deal can stand up to scrutiny in this House, the UK Government need to face up to reality and ditch Brexit altogether by revoking article 50. They are throwing good money after bad on no-deal planning, on fridges, on staged traffic jams and on botched ferry contracts, when they could be spending that money on lifting the awful austerity cuts that we have seen over the past nine years. The Chief Secretary to the Treasury talks about going round the country and listening to people’s public spending priorities, but I bet none of them talked about spending £33 million on Eurotunnel due to the shambles created by the Secretary of State for Transport, or about the £1 billion to bribe the Democratic Unionist party in an attempt to keep the Government in power.

Day after day in my constituency, I see the impact of this Government’s callous approach to cost-cutting. I see the benefits freeze, which is expected to cost families £800 a year, on top of the £900 a year that the Bank of England says Brexit is already costing every family. I see the two-child policy, which leaves families nearly £3,000 a year worse off if they have a third child and which makes a woman with three children on a 16-hour contract work the equivalent of 45 hours to make up the difference. I also see the thousands of pounds a year being lost by the WASPI women who are no longer entitled to their side of the pension bargain, having had their pensions cruelly stolen by previous Governments and by this one as well. How can any Minister look the population in the eye and say, “There is no money for you,” when the Government are asking us to sign a blank cheque for a hard Brexit?

I am a lifelong campaigner for Scottish independence and scarcely have I seen a clearer case for it than the shambles of the Conservatives and the incompetence of the Labour party in opposing them. The UK Government’s incompetence is changing hearts and minds all over Scotland on the merits of independence, and I hope that there will soon be an opportunity for the people of Scotland to take matters into their own hands.

Oral Answers to Questions

Peter Dowd Excerpts

Tuesday 5th March 2019 Commons Chamber

[Mr Hammond]

That is what we are doing. This will be the world’s first plastic tax and it is carefully designed to go with the grain of the market: to incentivise manufacturers to use more recycled plastic in their packaging. Because of that, it creates an effective market for packaging and, together with the producer responsibility note system, will transform the way in which plastic packaging enters the circular economy in this country.

[Peter Dowd (Bootle) (Lab)]

I am pleased that the Chancellor is, apparently, taking the issue of plastic waste seriously. The Government have committed £61.4 million to global research to help to prevent plastic waste from entering the oceans. Given the challenge, is that sufficient?

[Mr Hammond]

It is a good start. The idea is to identify ways in which we can work with countries around the world, including many of our overseas territories, which are particularly vulnerable to this issue, to ensure that we develop effective methods of avoiding plastic waste entering the ocean. Of course the best way to do that is by ensuring that plastics are not created in the first place, or that they are effectively recycled, but avoiding dumping at sea is our No. 1 priority.

[Peter Dowd]

Talking of preventing waste, what with the millions wasted on the ferries fiasco, the drone debacle, the Northern rail mess, the Carillion collapse, the electronic tagging turmoil, the £2 billion East Coast chaos and, finally, £72,000 spent on defending an illegal prisoner book ban, is it not time for the Chancellor, as the custodian of the public finances, to impose a ban on the failing Secretary of State for Transport wasting any more public dosh?

[Mr Hammond]

I am not going to take any lectures about waste from anybody on the Opposition Front Bench. This lot are world-champion wasters of public money. They have done it before and given half a chance they will do it again.

Draft Transparency of Securities Financing Transactions and of Reuse (Amendment) (EU Exit) Regulations 2019

Peter Dowd Excerpts

Wednesday 27th February 2019 General Committees

[Peter Dowd (Bootle) (Lab)]

It is a pleasure to see you in the Chair, Mr Davies. Once again, the Minister and I are in a Committee Room discussing a statutory instrument that would set up a regulatory framework after Brexit in the regrettable event that we parachute out of the EU without a parachute. On each such occasion, my Labour Front-Bench colleagues and I have explained our objections to the Government’s approach to secondary legislation. The Minister referred to financial stability, but the best way to maintain financial stability would be through continued access to a customs union and a single market—that is a hint that he may wish to take to the Chancellor.

The volume and flow of secondary legislation on EU exit raises deep concerns about accountability and proper scrutiny—I have just raised a very similar matter in the main Chamber. The Government say that no policy decisions are being taken, but establishing a regulatory framework inevitably involves policy and raises questions about resourcing and capacity, as we have heard many times. The Government should be using secondary legislation to make technical, non-partisan and uncontroversial changes, but they are persistently using it to push through contentious legislation with high policy content.

As legislators, we have to get this right. The draft regulations could represent major changes to the statute book, so they need proper, in-depth scrutiny. In that light, the Opposition put on the record our deepest concerns that the process behind them is not as accessible and transparent as it could be, or as the Minister suggests.

The draft regulations will introduce into UK law a regime for securities financing transactions. They set out a process to allow the Financial Conduct Authority to suspend reporting obligations for up to a year. It would be useful to understand the logic of the one-year period. What assessment has been made of the subsequent impact on transparency standards?

Regulation 8 will give the Bank of England and the FCA powers to draft technical standards. Has any consideration been given to allowing Parliament to undertake that role or giving it greater oversight? It is not completely clear—I would be grateful for clarification from the Minister—why the requirement for the ESMA to draft certain regulatory standards is being replaced with the option for the FCA to do so. In particular, will he assure us that the draft regulations are not being used to dilute democratic accountability?

Regulation 23 will give the Treasury the power to make more secondary legislation. I would like the Minister to provide more information on that, if possible, especially in relation to scope and accountability.

Part 4 of this SI makes provision for trade repositories, which is a different subject with different EU regulation. The SI seems to allow the FCA to issue new penalties. The Opposition feel that that is not the sort of thing that should be done through an SI. We note that the FCA has been asked to issue a statement of policy for penalties, but surely that should have been done before the SI was introduced, not afterwards. That seems perfectly reasonable. The explanatory memorandum states that these regulations include:

“Changes to the treatment of EEA branches of financial services firms in the UK, so that after exit, EEA branches operating in the UK must report their transactions to a UK trade repository. This will bring treatment of EEA branches into line with the current treatment of other third country branches in the UK.”

I would be grateful to hear more from the Minister about that. For example, could it represent a change to regulatory standards? That would be quite worrying. I note that the explanatory memorandum refers elsewhere to

“reporting the same data on the same templates, but to two separate trade repositories.”

Again, I seek clarification on whether there could be any changes to such a template.

The explanatory memorandum also states:

“Given the highly regulated nature of financial services, the volume of trade between UK and EU markets, and a shared desire to manage financial stability risks, the UK proposes a new economic and regulatory arrangement that will preserve mutually beneficial cross-border business models and economic integration for the benefit of businesses and consumers. Decisions on market access would be autonomous in our proposed model, but would be underpinned by stable institutional processes in a bilateral agreement and continued close regulatory and supervisory cooperation.”

The use of the word “new” does not suggest continuity. Similarly, the phrase “preserve mutually beneficial” suggests some element of selection and discretion. It will not surprise the Minister to learn that the Opposition do not always share the Government’s analysis of what is beneficial for our economy or our constituents. I would be grateful if the Minister elaborated on the planned “autonomous” nature of the decisions on market access.

Why are parts still highlighted on pages 6 and 7? Is that a drafting error? Is it a sign of the hurried chaos of the process? As the Opposition have made clear numerous times, this process is unprecedented in its scale and scope, and there are unquestionably many areas that have received insufficient scrutiny. The potential for problems to be discovered only after the fact is very real. In fact, on Monday it was rightly acknowledged that there had been mistakes in the drafting of the Financial Services and Markets Act 2000 (Amendment) (EU Exit) Regulations 2019. Last week, the Financial Regulators’ Powers (Technical Standards etc) and Markets in Financial Instruments (Amendment) (EU Exit) Regulations 2019 had to make technical amendments to correct measures passed just last December—not years ago, but pretty recently. I have to say that we opposed those regulations and called for greater scrutiny of them.

The Minister knows that we have identified drafting errors in other SIs that have been presented to us. Indeed, during a Committee sitting last week in the other place, the Conservative peer Lord Lexden voiced concerns about the number of drafting errors in instruments. I want to make it clear that I do not believe that this is the fault of civil servants, who are working enormously hard on this package of legislation in extremely difficult circumstances—they have a Herculean task. The fault is in the process. The Government are recklessly pushing through the process with incredible short-termism and a lack of respect for the magnitude of the task and for Parliament in general.

I note that the ESMA is having its responsibilities shifted to the FCA through regulations. I am forced, once more, to give voice to our concerns and queries about this unprecedented transfer of powers via secondary legislation. What consultation has there been on this transfer? Were other institutions considered? What resourcing has been provided? Has the Minister considered the possibility that too many powers are being given to the FCA—more than is practical?

The Opposition have repeatedly stated our increasing alarm at the Government’s unfolding approach to regulating financial services: still no overall plan, still no indication of how different pieces fit together and still, above all, no clarity. I put on the record again that the Government are continuing to put the economy at risk through their shambolic handling of Brexit. Rather than pushing through such a large volume of piecemeal secondary legislation, we clearly need a consolidated piece of primary legislation that can be scrutinised in the proper way.

I know that the Government do not like a great deal of scrutiny and go out of their way not to enable it—well, there we are—but it does not alter the fact that that is what we are asking for. The regulations will transfer far too much power, have possible ramifications that are too significant, and they are shrouded with too many unanswered questions. We cannot in conscience just wave through something like this. Therefore, we do not feel that it would be responsible to agree that the Committee has considered them adequately today.

Making Tax Digital

Peter Dowd Excerpts

Tuesday 19th February 2019 Commons Chamber

[Peter Dowd (Bootle) (Lab)]

I thank the Financial Secretary for providing a copy of his statement in advance, and for his reference to Henry VIII. I must say that the Government are obsessed with Henry VIII, and with all the powers that they are using in that connection.

As has been recognised by the Federation of Small Businesses, the Labour party has consistently called on the Government to rethink their making tax digital policy, not least because our manifesto commits us to scrapping quarterly reporting for companies under the VAT threshold. The Opposition’s concerns are therefore well versed. We have raised them during numerous debates in relation to numerous pieces of legislation, announcements, delays and, indeed, U-turns. Unfortunately, we are here again today, addressing the Government’s absolute failure to handle the digital transition—a failure that has serious consequences for businesses throughout the country.

Let me make it clear that we fully support digitalised tax reporting, which we all agree has the potential to drastically reduce the time that individuals and business owners have to spend filling out long and complicated tax returns. We are also aware of the productivity gains that it will bring, to which the Financial Secretary referred. If handled correctly, it could make positive changes in the way in which people report their tax position for decades to come. However, the stakeholders to whom we have spoken in the business sector and the tax community continue to raise deep concerns about their ability to be ready for digital VAT reporting, and they have expressed those concerns to the Treasury Committee.

Owners of small and medium-sized businesses are already worried about the stark changes that they will have to make in 2019 to prepare for Brexit. They are worried about the possibility of a no-deal scenario and the overnight effect that it would have on costs and supply chains. There is also the potential introduction of tariffs and the impact on staff who are EU citizens. The Government have continuously failed to provide the certainty that is needed, so it is little wonder that business confidence is pretty low.

What is more, few people inside or outside the Government believe that HMRC is actually ready. To the best of my knowledge, it has the same problems as many of the businesses that will be required to begin digital reporting in 2019. Those concerns are echoed by tax professionals, who emphasise that the current timetable is unrealistic and unworkable for HMRC and the business community.

That is why the Opposition propose a delay in the introduction of digital reporting for VAT and income tax purposes until the end of the current Parliament in 2022, assuming that it lasts that long. Such a delay would give HMRC and small and medium-sized businesses the time that they need to prepare adequately and to implement new software in their businesses. Notwith- standing today’s announcement, there is a risk that the Government’s current timetable will bring chaos and confusion unless the concerns of the business community are fully addressed.

I should be grateful if the Minister would answer the following questions. Are any further costs anticipated as a result of today’s announcement? Is the delay in the implementation of making tax digital in any way connected with the so-called estate transformation—or downsizing—of HMRC, which has seen 170 regional offices merged into 13 “regional centres”? Is there not a need for in-house provision of making tax digital software, given the bespoke nature of HMRC’s UK-specific needs and the need to co-ordinate with other Departments? Under what legal authority or process has HMRC outsourced provision of that software?

A total of 0.5% of eligible businesses—one in 200—have signed up to making tax digital. Is the Financial Secretary confident that all the businesses will have signed up by the end of the Parliament? He says that he wants to listen to business, but I am afraid he is not listening hard enough, and the rosy picture that he has painted is not quite as rosy as he thinks. He need only ask businesses.

[Mel Stride]

I thank the hon. Gentleman for his response to my statement. I am pleased that he, like me, recognises the value of the digital processing of tax returns. Indeed, he made a specific and welcome reference to its productivity advantages. However, he also referred to what I think he suggested were serious failings in our approach, suggesting that it was not the right approach. I could not disagree more. In my statement, I was at pains to emphasise the proportionate and measured way in which we had approached these matters. I said that when I first became Financial Secretary to the Treasury, I decided to delay the roll-out of MTD so that it related only to VAT-registered businesses by 2019, and carved out the very smallest businesses and individuals from these measures. Indeed, I gave reassurances to the House and the business community that nothing will be introduced in terms of income tax and corporation tax any earlier than 2020 and that we would see how the roll-out of the VAT MTD went before we took any further decisions in that respect.

The hon. Gentleman raised several specific questions, which I will address in turn. He asked whether there will be any additional costs as a result of today’s announcements to those businesses in scope of MTD, and the answer to that is most certainly not. He might be familiar with the estimates already produced that suggest that on average a business in the UK that is in the scope of these measures will face additional costs of some 60p per week, and that does not take into account the efficiency gains that can be expected or indeed the fact that in many cases those costs will be able to be written off against taxation.

The hon. Gentleman referred to the continuing estate transformation work and asked whether there was any link between that and MTD. I think there is in the sense that we have a clear drive to make sure that HMRC is a lean and efficient organisation itself in the 21st century and that its estate is not scattered across the country in numerous offices, some employing fewer than 10 staff, but is in state-of-the-art hubs where digital and IT approaches can be maximised.

The hon. Gentleman asked whether we had considered developing in-house software for MTD, and I think he might have been urging us to do so. I know that it is a passion of the Labour party to centralise and have monolithic organisations that do all the organising at the centre, but that is not the way of us on this side of the House; we believe that the market generally knows best, which is why I was delighted to have been able to announce that we have no fewer than 160 different competing products, and that number is growing by the month.

The hon. Gentleman asked whether the Government were confident that we would be signing up the right number of companies in time, and I would make a few important points on that. First, there is no cliff edge on 1 April; that is the date at which companies and individuals will be required to keep digital records, but for most companies the first time they will have to submit a VAT return under MTD will be for the first tranche around 6 August and for subsequent tranches in the months following that date. There is plenty of time for companies to sign up and get involved. Secondly, as I have already elaborated, we will take a proportionate, light-touch approach to penalties, working with companies and businesses to make sure that MTD roll-out is a success.

Draft Financial Services Contracts (Transitional and Saving Provision) (EU Exit) Regulations 2019

Peter Dowd Excerpts

Wednesday 13th February 2019 General Committees

[Peter Dowd (Bootle) (Lab)]

It is a delight to see you in the Chair, Mr Pritchard. Once again, the Minister and I are here to discuss a statutory instrument that would set up a regulatory framework after Brexit in the event of us leaving in a disorderly fashion without a deal. On each of these occasions, my Labour Front-Bench colleagues and I have explained our objections to the Government’s approach to secondary legislation.

The volume and the flow of EU exit secondary legislation give rise to deep concern, from the point of view of accountability and proper scrutiny. The Government say that no policy decisions are being taken, but establishing a regulatory framework, for example, inevitably involves policy, and raises the questions about resourcing and capacity referred to by my hon. Friend the Member for City of Chester.

Secondary legislation should be used when the Government want to do things that are technical, non-partisan and uncontroversial. This Government continue to push through contentious legislation with high policy content using secondary legislation. As legislators, we have to get it right. These regulations could represent major changes to the statute book, so they need proper, in-depth scrutiny. In light of that, the Opposition would like to put on record our deepest concern about the fact that the process for these regulations is not as accessible and transparent as it should be, or as the Minister suggests it is.

Unfortunately, the regulations seem to have three statutory instruments within them: one amending the EEA Passport Rights (Amendment, etc., and Transitional Provisions) (EU Exit) Regulations 2018; one amending the Central Counterparties (Amendment, etc., and Transitional Provision) (EU Exit) Regulations 2018; and one amending the Trade Repositories (Amendment and Transitional Provision) (EU Exit) Regulations 2018. The way they have been pasted together causes concern, to say the least, and the result is that they are extremely difficult to follow, let alone scrutinise. I would be grateful if the Minister responded to a number of concerns.

Part 2 sets up a temporary permissions regime that says that if someone is carrying out an activity that is authorised in their home state, and several conditions are met, for a temporary period that person can carry on with that activity in the UK. The activity had to have been allowed under the Financial Services and Markets Act prior to exit day, and the person had to have had an establishment in the UK. Several further criteria must be fulfilled; in particular, the regulations seem to say that if the activity was part of performing a pre-existing contract or, more tenuously, part of “reducing the financial risk” to a party to a contract or a third party affected, a temporary permission should apply.

In other words, it seems that these regulations are trying to avoid cutting across existing contracts. They might have in mind, among others, private equity funders on one side of a contract when referring to parties involved with reducing the risk of a contract. I would like the Minister to explain more about that. What is meant by “reducing the financial risk”, and how far does that go?

Chapter 3 of part 2 sets the period for the temporary permissions regime. It seems to say that the period is 15 years for a contract of insurance and five years for other purposes. Does that mean that EU law continues to apply for 15 years for the purposes of insurance contracts, and for five years for other contracts? Clarity on that would be helpful. There is not much detail, and a period 15 or even five years is stretching the limits of “temporary”. We are concerned that in trying to avoid chaos for contractors, the Government might be creating even more uncertainty. I would be grateful if the Minister commented on that and clarified it.

Proposed new part 6, chapter 4 of the EEA Passport Rights (Amendment, etc., and Transitional Provisions) (EU Exit) Regulations 2018 appears to modify the Financial Services and Markets Act. This is the application of a Henry VIII clause—something that is much criticised by lawyers and judges, as we all know. Chapter 4 also gives the Financial Conduct Authority power to receive applications for permission to vary. That seems to be a significant amount of power going to the FCA, and there is seemingly little power here for Parliament to review or hold accountable.

Proposed new chapter 4 allows the FCA to cancel the temporary permissions based on:

“(a) the person’s conduct,

(b) the practicality of supervision by a regulator,

(c) the size of the person’s undertaking, and

(d) the nature or extent of the regulated activity”.

Can the Minister clarify what conduct would or might justify cancellation, and what

“the nature or extent of the regulated activity”

means? Are we correct in understanding that there does not appear to be a right of appeal on this determination? I would be grateful if the Minister clarified. Obviously, just process and natural justice should be upheld. We are concerned about the implications of making the FCA into a judge in individual cases, and a lawmaker.

Proposed new part 9 of the EEA passport rights regulations appears to give the Treasury the power to extend the temporary regime, as the FCA has to submit to the Treasury an assessment of the need to extend the regime. That, again, leaves doubt about how temporary this all is. I would be grateful for assurances on that.

Other parts of the regulations deal with transitional arrangements relating to central counterparties and trade repositories. On central counterparties, for certain activities a one-year transition period appears to apply, and for others,

“the Bank may direct that the central counterparty be subject to such transitional arrangements as it considers necessary or expedient”.

Again, I would like to know more about the thinking behind issuing such power and discretion to the Bank of England.

We are becoming increasingly alarmed at the Government’s unfolding approach to regulating financial services. There does not appear to be an overall plan; there is no indication of how different pieces of legislation fit together; and, above all, there is no clarity. I looked at legislation across the world that appears to be clearer than this, but is ridiculous. For example, in Fairbanks, Alaska, it is illegal to sell alcohol to a moose.

[Christian Matheson]

It is also illegal to sell antifreeze to the Indians of Quebec.

[Peter Dowd]

That seems a much clearer position than the Government’s. In Quitman, Georgia, it is illegal to change the clothes on a storefront mannequin unless the shades are down. That seems perfectly sensible. In South Bend, Indiana it is illegal for monkeys to smoke cigarettes. Apparently, cigars are okay, but only if the monkey goes outside. I am sure that monkeys could understand that legislation, but some of the regulations coming to us are quite ridiculous. We have to be clear.

As Members will know, earlier this week, Labour opposed the Financial Services (Implementation of Legislation) Bill on Second Reading, because it represented a worrying transfer of powers of significant scope to the Executive. We have all been deeply concerned about this, as we have said time after time. Today, colleagues will debate in the Chamber the Securitisation Regulations 2018, which Labour prayed against for similar—or at least related—reasons.

I believe that when we voted to leave the EU, the aim was to empower Parliament to debate and make those decisions, not to concentrate them in the hands of civil servants or Ministers, yet the Government continue to put our economy at risk through their chaotic and opaque approach to lawmaking and the handling of Brexit. It is clear that rather than the Government pushing through such a large volume of piecemeal legislation, we need consolidated pieces of primary legislation, scrutinised in the proper and correct way, as opposed to regulations being brought to Committees in which no one from the Government Benches tries to challenge them.

Ultimately, we legislators have to get this right. This is not just about the principle of democracy and accountability, but about robust lawmaking that is clear, comprehensive, coherent and enforceable. That is our duty as parliamentarians. As far as the public are concerned, we are paid to do that, and we should do it, but the Government are not allowing us to. It is precisely because the stakes are so high, and because the Opposition view their responsibilities to the British public with the utmost intensity and severity, that we will be voting against the regulations.

[Robert Jenrick]

I am grateful for the opportunity to respond to the questions put by the hon. Members for Bootle, and for City of Chester.

I disagree with the hon. Member for City of Chester. Leaving without a deal is clearly not our preference—there are sectors of the economy, including financial services, for which that would be a very difficult situation indeed—but it is not responsible to take no deal off the table at this stage, and to diminish our leverage in the crucial final stages of the negotiations. In fact, it is not possible to take it off the table, because there is the matter of the primary legislation that is already in place. Until such time as the House of Commons passes a law to the contrary, we have to act on the basis that no deal is a potential scenario.

Any responsible Government would be taking the steps that we are today. The regulations have been welcomed by the industry, which has described them as the final piece in the puzzle, and an important piece of legislation that we need to pass to ensure that UK financial services institutions and consumers are protected.

By approving the regulations, we are making a fair, unilateral regime available to our friends and partners across the EEA—a regime that will give firms temporary access allow them to run off their businesses in an orderly manner. That is what people would expect us to do.

The hon. Member for Bootle asked why we were using secondary rather than primary legislation. We have had that debate on numerous occasions during this process. The European Union (Withdrawal) Act does not allow the Treasury to make major changes to policy or legal frameworks, and does not give the Government the power to make changes beyond what is needed to correct deficiencies that will arise solely as a result of exit. That is all we are attempting to do today.

The hon. Gentleman asked about scrutiny. As I said in my opening remarks, we published the instrument in draft form on 17 December, along with an explanatory memorandum that sets out how it will operate, maximising transparency to Parliament and the industry. We have had numerous meetings with stakeholders across the financial services sector; they welcome the instrument and believe it is absolutely essential. I am therefore disappointed to hear that any Member would choose to vote against it, because the consequences of doing so would be significant in the event of no deal.

The hon. Gentleman asked why there is a contractual run-off period, and whether that would mean that consumers would not be safeguarded—I think that was one of the implications. The period is precisely to ensure that consumers are protected. The example I gave was of a consumer with a long-duration insurance product that lasted for 10 or 15 years. We would want to ensure that the product could be used and the consumer could make a claim if necessary, and that the provider of that service—for example, an EEA insurance company —could not renege on that by virtue of it being illegal. The regulations protect consumers, and enable us to make a fair, unilateral offer to our partners elsewhere in the EEA.

Contracts and businesses will not be unregulated during that period. They will not be permitted to carry out new business in the UK. The FCA and the PRA will have additional powers over firms, including the power to move firms into the supervised run-off period, in which they would be subject to the full UK regulatory regime, and the power to cancel their exemption altogether. Consumers will not be exposed during that period.

The hon. Gentleman asked for further information on cancellation. The regulators’ powers in respect of a person under the temporary regime are the same as under part 4A of the Financial Services and Markets Act 2000, so there will be no change to the powers available to the regulator to take action.

On our ability to extend the duration of the regime, Lord Bates in the House of Lords made clear that to do that, we would submit a written ministerial statement. That followed the expression of similar concerns in the other place in the consideration of the EEA Passport Rights (Amendment, etc., and Transitional Provisions) (EU Exit) Regulations 2018. That clarification has satisfied stakeholders. It is not our intention that extensions will happen in perpetuity; the powers are purely to give greater clarity and certainty to the industry that in extreme circumstances there is an ability to extend, and to ensure that there is no detriment to consumers or business.

[Peter Dowd]

On the point that the Minister just raised about exceptional circumstances, that is the problem with the totality of the legislation. The Government seem unable to set us on the track to ensuring that we or organisations will eventually have clarity. They seem to be kicking the can down the road all the time. They put things off. They say, “If there is a problem, we will look at it then.” It goes on and on. There is absolutely no clarity for organisations, and the Minister should take that into account.

[Robert Jenrick]

The legislation has precisely the opposite purpose; its purpose is to provide clarity and certainty to industry. Voting against the regulations will do precisely the opposite of what the hon. Gentleman purports to want to achieve. Of course, the way to provide the greatest certainty to consumers, users of financial services, and the 1.1 million people who work in the sector in all parts of the United Kingdom is to vote for the Prime Minister’s deal—or a deal—before exit day and avoid a no-deal Brexit.

[Peter Dowd]

The Minister says that organisations welcome the regulations, but at the end of the day, they welcome them because they are the only thing on the table. Would I welcome them, if I were them? I most probably would, because this instrument is the only document I have that gives me any certainty at all—but it is still not good enough.

[Robert Jenrick]

It is not the view of the industry that this document is not good enough. The industry thinks that this is the final piece in the puzzle; it provides them with the certainty that they require in the event of a no-deal Brexit. There will now be a temporary regime into which financial institutions can pass, should they wish to. If they do not want to do so, or if they do and then ultimately fail to gain the authorisation that they require, the measures before us provide a further safety net to ensure that consumers and those businesses are protected and safeguarded for a period of time as they run off their business in the UK.

With that, unless any other right hon. or hon. Members wish to comment, I commend these regulations to the Committee.

Question put.

Draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2019 Draft Tax Credits and Guardian's Allowance Up-rating Regulations 2019

Peter Dowd Excerpts

Monday 11th February 2019 General Committees

[Peter Dowd (Bootle) (Lab)]

It is a pleasure to see you in the Chair, Sir Graham. Last week, while preparing for the Committee and to set the context for the debate, I had a look at various documents, including the draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2019 and the draft Tax Credits and Guardian’s Allowance Up-rating Regulations 2019. The House of Commons Library has published an excellent briefing on these statutory instruments. To help set the context, I went even further back to Monday 6 March 2017, which might actually have been the last appearance of the former Chief Secretary to the Treasury before the election. Looking at those documents for context is worth while and I am sure that all hon. Members have done so.

As the Minister clearly outlined, the draft Social Security (Contributions) (Rates, Limits and Thresholds Amendments and National Insurance Funds Payments) Regulations 2019 enact the annual re-rating of the various national insurance contribution rates, limits and thresholds, and allow for a Treasury grant not exceeding 5% of the estimated benefit expenditure for the coming tax year to be paid into the national insurance fund. In light of the impact of inflation on incomes in conjunction with the poor wages that we have seen over the past 10 years, we will not oppose the regulations, and we accept that they will uprate national insurance thresholds in line with the consumer prices index.

As the Minister outlined, the draft Tax Credits and Guardian’s Allowance Up-rating Regulations 2019 make it possible to increase certain tax credits and other child benefits rates, as well as the guardian’s allowance, from April 2019. Although the Government are uprating some benefits, they are excluding others entirely. For the fourth year in a row, most working-age benefits are being kept at the 2015-16 cash value. That costs a couple with children in the bottom half of the income distribution £200 on average. According to analysis by the Institute for Fiscal Studies of the 2018 Budget, around £4 billion-worth of cuts to social security remain in the pipeline. The benefit and tax credit rates in 2019-20 are worth 6.1% less than if the freeze had not been introduced.

Although we will not divide the Committee, we place on record our objections to the Government’s social security strategy, which is wholly inadequate to tackle the growing inequality in our country. As Members know, over the past five years we have seen a 31% increase in the use of food banks. That is a direct result of cuts that the Government have inflicted on the country, and that were not reversed in the most recent Budget. The Government have to take responsibility for that growth fairly, squarely and unambiguously.

Although the Chancellor might insist that austerity is over, the Resolution Foundation concluded in its analysis of his most recent Budget that that will be achieved only by reversing many of the remaining social security cuts. Rather than making slight adjustments to social security through statutory instruments, the Government need to look at redesigning our social security system so that it provides the basic protection that people need. Of the benefit cuts announced in 2015, 75% remain Government policy.

The Institute for Fiscal Studies previously noted that the Government’s social security policies, including the freeze, have left many families ill-prepared for another economic slowdown. The announcement in the last day or two that growth in the coming year might be 1.2% indicates that such a slowdown is not unlikely. Putting that in the context of Brexit draws a multi-coloured tapestry, as such forecasts are particularly pertinent given the uncertain economic period that the country could be about to face. The regulations should therefore be condemned, not for what they are but for what they leave out. They offer inadequate support for struggling families across the United Kingdom.

Oral Answers to Questions

Peter Dowd Excerpts

Tuesday 29th January 2019 Commons Chamber

[Mr Hammond]

We have taken a large number of measures to ensure that all companies pay the appropriate amount of tax, and we have closed a significant number of loopholes that have been used to avoid corporate tax in the past. My hon. Friend will understand that I cannot discuss individual taxpayers at the Dispatch Box, but of course the Government want to see every taxpayer paying the appropriate amount and contributing fairly to the support of our public services.

[Peter Dowd (Bootle) (Lab)]

Bonkers, Mr Speaker. Let me add, respectfully, that I am referring not to you, Sir, but to the response of the Resolution Foundation’s director to the Chancellor’s £6.2 billion corporation tax giveaway. Even the adviser to the previous Chancellor says that the cut represents poor value for money, and the danger is that it will slow progress in reducing the deficit. If the Chancellor is giving away £6.2 billion, does he accept that it would be better given to, for example, cash-strapped local councils, rather providing handouts for cash-rich corporations?

[Mr Hammond]

The Labour party will have to get its act together, and organise a discussion between its Front Benchers and its Back Benchers.

[Mr Hammond]

Well, I know where the deep divisions lie. [Interruption.] We have heard many Opposition Members express concern about a lack of investment and the potential relocation of businesses, but now the hon. Member for Bootle (Peter Dowd) has popped up on the Front Bench suggesting that we hit business with an additional tax charge. Labour is the party that is proposing to increase corporation tax for businesses, including the smallest in our country. We will remain the party that is encouraging businesses, large and small, by ensuring that ours is an attractive jurisdiction for investment to take place.

[Peter Dowd]

Not content with his Government’s manic drive—and there was an example of it—to turn Britain into a bargain basement economy, the Chancellor is splashing out billions of pounds of taxpayers’ money to prop up a no-deal Brexit. Will he come clean and admit that the hard Brexit for which he is reluctantly preparing may lead to increased borrowing, more debt and the widening of the deficit, not to progress in reducing it?

[Mr Hammond]

Some might think it a bit rich for Labour Members to lecture us about increasing deficits and debt, given that their stated policy is to increase the deficit and the debt. Let me be frank with the hon. Gentleman. He has seen the analysis that the Government have published. If we leave the European Union without a deal, yes, it will lead to an increased deficit, and it will lead to an increase in the debt. That is why the Conservatives are working to ensure that we deliver the deal that will protect the British economy. What I do not understand is why Labour Members who genuinely fear a no-deal outcome do not get behind the solution.

Balanced Budget Rule

Peter Dowd Excerpts

Wednesday 23rd January 2019 Westminster Hall

[Peter Dowd (Bootle) (Lab)]

It is a pleasure to serve under your stewardship, Mr McCabe. I thank the hon. Member for North East Derbyshire (Lee Rowley) for securing this debate, which gives us an opportunity to brush aside some of the myths that he referred to. I also thank the hon. Member for Southport (Damien Moore), the hon. Member for Dundee East (Stewart Hosie), who spoke eloquently and sensibly, and the hon. Member for Cheltenham (Alex Chalk), who referred to the Greeks. I remind him that Thucydides said that

“while the strong do what they will, the weak suffer what they must.”

That is precisely what the Tories have done. They talk about the poor all the time, but it is the strong that they stick up for, and they do it time after time.

The hon. Member for North East Derbyshire forgot to mention that the global financial crisis that the Tories use time and again started in the United States. [Interruption.] The hon. Member for Cheltenham can sit there and pretend to snore, but that is the reality: until the Tories accept that fact, we will not be able to move on. There is a danger that there could be accusations of dishonesty and disingenuousness—I am not making those accusations, Mr McCabe—until those on the Government Benches begin to acknowledge that.

The issue is not just about fixing the roof before the rain comes through; we were all in it together at the time, and we all know that we have not been in it together under Tory policies. The poor have been getting a stuffing year in, year out. The Tories have also missed every target they have set. Talk about a moving target! The situation was supposed to be sorted out years ago. The hon. Member for Cheltenham said there was a debt of £800 billion, but the Tories have doubled the debt since they came into power. They have borrowed more money than Labour ever has.

[Alex Chalk]

We have this extraordinary situation where on the one hand Labour complains that the national debt has gone up too much, and on the other it complains that the Conservatives are not spending enough. That kind of illogicality would embarrass a 10-year-old. Surely the hon. Gentleman can do better.

--- Later in debate ---

[Peter Dowd]

Of course I will do better. At the end of the day, it is about priorities. As the hon. Member for Motherwell and Wishaw (Marion Fellows) said, the Tories have spent the money in the wrong way. The hon. Member for Southport effectively accepts that. We have had £15 billion wasted on the introduction of universal credit by the Tory party, so let us get a little bit real.

I am sick to death of talking about how useless the Tory party is, so I will speak about Labour’s fiscal credibility, which I am sure will get a certain amount of unanimity in the Chamber, and the issue of balancing. [Interruption.] I am happy to deal with it. We could have discussed the issue in a mature and grown-up way with adults in the room. Yanis Varoufakis wrote a book called “Adults in the Room”, but there are not many in the Chamber today. I suggest Members have a read of that book; it will show them what happened to Greece.

Following discussions with our advisers, including Professor Joseph Stiglitz, on 11 March 2016, the shadow Chancellor announced a fiscal credibility rule, which has five key elements. I am happy to set that out in the symposium that hon. Members are here to attend. First, Labour committed to closing the deficit on day-to-day spending within five years. Secondly, we committed to excluding investment from that commitment so that we can borrow to invest, which is important. Thirdly, we undertook that Government debt as a proportion of trend GDP would be lower at the end of a five-year parliamentary term than at the start.

Fourthly, we committed to giving the Monetary Policy Committee of the Bank of England the power to suspend the rule if it determines that interest rates are not having their usual effect due to the lower bound. That would allow stimulus action to step in when monetary policy is ineffective. Fifthly, we would shift the reporting requirements of the Office for Budget Responsibility so that it reports to Parliament, rather than the Treasury, and ensures ongoing Government compliance, to which the hon. Member for Dundee East referred. All the facts are there, so let Parliament have them. The elements of the rule mean that a Labour Government would not need to borrow to fund our day-to-day expenditure.

[Alex Chalk]

The United Kingdom last lived within its means in 2001. Under a Labour Government, when would it next do so?

[Peter Dowd]

If the hon. Gentleman listens to what I have to say, he will find out in due course. [Laughter.] The hon. Gentlemen laugh and snigger. Meanwhile, millions of people suffer under their policies. They should stop their sniggering and listen. I know that the Tories think they have some divine right to rule and some divine economic ability, but they have not. They need to show a little humility occasionally and listen to other people.

Unlike the Conservatives’ different, haphazard and unsuccessful attempts to achieve fiscal credibility, our fiscal credibility rule has three criteria for good economic policy. I know that economic good in economic policy is an alien concept to the Tories, but they might learn one or two things if they listen to what I have to say. The three criteria are: responsibility in economic management; recognition of the value of long-term public investment; and flexibility for changing economic circumstances. A Government trying to bind themselves into a model that has palpably failed all over the world are not particularly helpful. There has to be some flexibility.

[Stewart Hosie]

Is the irony not that that model would look like Greece? It is running a current account surplus, but the pain of a decade of even more brutal austerity than was faced here will be felt for generations to come. That would be success according to the hon. Member for North East Derbyshire (Lee Rowley).

[Peter Dowd]

The hon. Gentleman is spot on. I do not want to misquote the Secretary of State for Transport, but when East Coast went bottoms up he said that that just proved that the market works. That is the sort of economic approach that the Tories take to our country.

Let me go through the three criteria one by one. We are a party that, first, takes seriously the mantle of being guardians of a sustainable economy. We fully costed our election promises in our grey book, “Funding Britain’s Future”. The Conservative party, by contrast, gave no costings whatever in its manifesto. As the shadow Chancellor said, the only numbers in the Conservative party manifesto were the page numbers.

Meanwhile, Carl Emmerson of the Institute for Fiscal Studies said in his election briefing that Labour’s

“forward-looking target for current budget has much to commend it”.

The IFS also estimated that we would have met our deficit target with £21 billion to spare, and that we would meet our debt target.

Secondly, we recognise that Government spending is not something to be scared of, or to have a phobia about, and that some economic metrics do not fully capture the benefits of the gradual build-up of public assets, as the hon. Member for Dundee East mentioned. That is why we distinguish between day-to-day spend and investment in our fiscal credibility rule, because investment is a different kind of Government activity that contributes to a stock of public assets, providing benefits over time. A country is not a house, or an individual who has a lifetime; it goes on, as we know, for a long time. Comparing us to a household might be a soundbite, but it is economic fantasy.

[Lee Rowley]

Given the hon. Gentleman’s point about us binding our hands, can he explain why, in 2006, I think, his sister party in Chile not only determined that it was going to adopt the kind of policies that he just described, but codified them into law?

[Peter Dowd]

I am not here to explain what sister parties anywhere do. I could quote sister parties for the Tories all over the place. The hon. Gentleman should be careful what he is wishing for when he starts to make those sorts of comparisons.

The Conservatives have been unable to appreciate this point in their words and in their actions: the Government’s fiscal target of cutting borrowing to less than 2% of GDP by 2021 does not exclude investment, or distinguish between spending and investment. In so doing, the Government overlook, and undervalue, the special character of investment. They do that time after time.

Their austerity programme, the mythical end date of which was in 2018—previously, it was before that—was more a signal of the Government’s failure than of any actual shift in approach. It has done lasting damage to our economy and society, and has left us with rough sleeping up by 169% since 2010, stagnant wage growth—the worst since Napoleonic times—and few examples of public infrastructure being patiently built up and supported.

The third aspect is flexibility when thinking about sound economic policy. The Tories’ austerity programme arises from, as the hon. Member for North East Derbyshire has reaffirmed today, a rigid ideological belief—not always reflected in practice, I have to say—that a smaller state is always better, notwithstanding good evidence of the state’s entrepreneurial capacity and the human costs of austerity. Such rigidity in approach is something that we have avoided in our fiscal credibility rule.

The zero bound knockout that we proposed, which would allow the Bank of England to change course in times of impending crisis when interest rates can do only so much, shows our willingness to adjust economic policy frameworks in the light of circumstances. Any sensible Government would do that—not bind themselves into a failed ideology and process. That knockout is informed by lessons learned after the global financial crisis—lessons that the Conservative party seems incapable of learning—when it became clear that continual cutting of interest rates was having little impact on spending habits and aggregate demand.

More was needed from fiscal policy, and that zero bound knockout—the fourth element of the fiscal credibility rule—acknowledges that that will sometimes be the case. Professor Simon Wren-Lewis writes that if that part of the rule

“had been in operation in 2010, we would have seen further stimulus in this and perhaps subsequent years, leading to a much quicker recovery from the GFC.”

Wren-Lewis describes that part of the rule—the part that allows a reversion to expansionary fiscal policy in times of crisis—as the part that makes the rule

“unique, and brings it up to date with current macroeconomic thinking.”

[Stewart Hosie]

Is it not part of the problem, although we are moving slightly away from a balanced budget, that there has not been a comparable fiscal response to the substantial monetary response that we have seen over the last decade?

[Peter Dowd]

That is a perfectly reasonable comment. Time and again the Conservative Governments whom we have had to endure—I choose to use the word “endure”—over the last nine years have failed to take a wider view on policy-making in the country. Petty in-fighting over Brexit has put us on a precipitous, catastrophic no-deal path. They failed, through austerity, to see, and to care about, how an ideological commitment to cutting apart Government would have ripple effects across the country on rough sleeping, indebtedness, demand and productivity, which is virtually the worst in Europe under this Government.

Our fiscal credibility rule, and economic policy in general, takes a wider view, which is important. We understand how fiscal and monetary policy have to interrelate for the economy to function well in different times, and we understand how principles of economic management such as our fiscal credibility rule have to fit into a broader vision of an economy that serves society, and not just those with the strongest voices.

[Alex Chalk]

Will the hon. Gentleman give way before he sits down?

[Peter Dowd]

I have finished—I am sorry.

[Alex Chalk]

He did not answer my question.

[Steve McCabe (in the Chair)]

Order. Have you finished, Mr Dowd?

[Peter Dowd]

Yes, I have.

[Steve McCabe (in the Chair)]

Okay. I call the Minister.

--- Later in debate ---

[Robert Jenrick]

No, I do not accept that for one minute. It is exactly as a result of this Government’s fiscal responsibility in that period that the public finances have now improved, credibility has been restored in the market and business has continued to invest. For those reasons and others, we now have continued record levels of employment, record low levels of unemployment and an economy that remains remarkably resilient. Let us not forget that public spending is £200 billion higher today than it was in the last year of the last Labour Government.

We are not complacent about the debt or the deficit. The fiscal outlook may be brighter, but the need for fiscal discipline continues, as my hon. Friend the Member for North East Derbyshire made very clear. The debt is still more than 80% of GDP, which is equivalent to approximately £65,000 per household, and we want to reduce that figure, for a number of reasons. We are concerned to ensure that if there is a future economic shock, the economy is resilient, and we want to improve fiscal sustainability. In the most recent Budget, the Chancellor set aside £15 billion of headroom for economic shock, out of concern for any further uncertainty that might arise as a result of Brexit.

There is a broader point, however: servicing debt is costly. If our spending on debt interest were a Ministry, it would be the third largest, after health and education. Our spending merely on servicing our debt is equivalent to what we spend on the police and the armed forces. As my hon. Friend made clear, that has an opportunity cost, because that spending has no economic or social value and reduces our ability to spend on our priorities and keep personal and corporate taxes as competitive as possible. The debt burden of interest is merely being passed to future generations.

The foundations of the Government’s approach are our fiscal rules: first, to reduce the cyclically adjusted deficit to below 2% by 2020-21, and secondly to have debt fall as a percentage of GDP in the same year. Sticking to those rules will guide the UK towards a balanced budget by the middle of the next decade. The OBR’s economic and fiscal outlook, which was published in October and was quoted from earlier, shows that the Government are forecast to have met both our near-term fiscal targets in 2017-18, three years earlier than predicted. Sensibly, given uncertainties in the fiscal outlook, the Chancellor took the view that we should retain the £15 billion of headroom against the fiscal mandate in the target year and £73 billion against the target of getting debt to fall. The forecast also shows that borrowing will fall to 0.8% of GDP by 2023-24, its lowest level since 2001.

[Peter Dowd]

If the Chancellor and his predecessor have been so wonderful at economic management, why have they missed every single target that they have set over the past eight years?

[Robert Jenrick]

The hon. Gentleman rather makes the point that my hon. Friend the Member for Cheltenham (Alex Chalk) made. He cannot have it both ways. Either the hon. Gentleman supports debt falling—in which case he should support continued fiscal responsibility, which is one of the Government’s guiding missions—or he wishes to spend more and more. His speech argued that we should spend even more, getting us into further debt and making the situation more difficult for future generations.

[Peter Dowd]

rose—

[Robert Jenrick]

I will give way one last time, but then I must make progress.

[Peter Dowd]

First, I did not make the latter point. The Tories can make up their own policies on the hoof—but don’t make up ours. Secondly, the Minister still has not answered the question. It has nothing to do with the outcome; it is about why the Government, if they are so economically capable and confident, have missed all their targets.

[Julian Knight (Solihull) (Con)]

He has already answered you.

[Peter Dowd]

No, he hasn’t.

[Robert Jenrick]

I have tried to answer. We are meeting our fiscal rules, as the OBR states—in fact, we are meeting them three years early. That has given us room in the Budget to invest at record levels, with £20.5 billion a year for the NHS, for example—its largest injection—and reserve headroom in the event of fiscal shock. However, the hon. Gentleman is arguing for £500 billion of additional public spending. As my hon. Friend the Member for Cheltenham said, that makes no sense whatever.

In the little time I have left, let me answer the question asked by my hon. Friend the Member for North East Derbyshire about how we can create better architecture to ensure that we and future Governments can be more fiscally responsible. We have done so in a number of ways. Our greatest step was the creation of the OBR, an institution that is now maturing and respected and will be retained on a cross-party basis in the future. It has enabled commentators and Members to have greater confidence in the figures—of course, there may be more that could be done in that respect. This year, we will institute the first zero-based spending review, which will look at all Government spending. We have taken account of the parallel with Chile, which has adopted that model in that past.

On longer-term spending, we have created the National Infrastructure Commission, which was designed to ensure that the Government think about the long-term challenges and invest appropriately within a defined spending envelope, guiding investments in our infrastructure according to a clear economic strategy. We have also taken action to ensure that our public accounts are among the world’s most transparent—they have been certified as such by the International Monetary Fund, for example. Most recently, the Chancellor announced the retirement of the private finance initiative, so that we continue to ensure that when our accounts are scrutinised, they are as clear and transparent as possible and we are always seeking to derive the greatest value for money for the taxpayer.

We have also sought to distinguish clearly between day-to-day consumption—important though such investment is for the future of the economy, whether it is in the police, in education or in the health service—and the long-term economic infrastructure investments that will really drive the economy forward. Over this Parliament, we will make the greatest investment in such economic infrastructure—our roads, our railways, our digital infrastructure—by any Government since the 1970s.

I thank my hon. Friend the Member for North East Derbyshire for his remarks. This is an extremely important and timely debate. He made his case in his usual eloquent way, as one of the great champions in this House of smaller Government, lower taxes and fiscal responsibility. If only there were more colleagues who followed his example.

Draft Crown Dependencies Customs Union (Guernsey) (Eu exit) Order 2018 Draft Crown Dependencies Customs Union (Isle of Man) (Eu exit) Order 2018 Draft Crown Dependencies Customs Union (Jersey) (Eu exit) Order 2018

Peter Dowd Excerpts

Monday 21st January 2019 General Committees

[Peter Dowd (Bootle) (Lab)]

It is a pleasure to see you in the Chair, Mr Stringer. The Crown dependencies are not members of the EU but form part of the EU customs union by virtue of protocol 3 of the UK’s Act of Accession to the EU, which says:

“The Community rules on customs matters and quantitative restrictions, in particular those of the Act of Accession, shall apply to the Channel Islands and the Isle of Man under the same conditions as they apply to the United Kingdom.”

That is a bit of the context, but it begs the question why we are actually here today.

A press release was sent out on 26 November— I think the Minister referred to it—which said:

“The government has…signed new arrangements with…the Crown Dependencies…to maintain and reaffirm our close customs relationships.”

It seems that yet again the Government have gone off, without recourse to Parliament, signing deals. In effect, we are ratifying something today that, to all intents and purposes, has already been agreed. That is typical of this whole process in relation to leaving the EU. There’s the old point about asking questions first and taking action later; the Government have taken the action and then asked the questions.

That brings me nicely to a series of questions that the Minister might be able to answer. The Government’s position in the press release is ambiguous. At the top, the press release says that new arrangements with the Crown dependencies will be necessary when the UK leaves the EU customs union, but later it says that the new arrangements will be compatible with any form of relationship with the EU. There is a certain ambiguity there.

I will ask a series of questions, if the Minister would be kind enough to answer them. Can he clarify something? Although the regulations are not labelled as no-deal regulations, they seem to be drafted in preparation for the UK not being in the EU and not being in the customs union—or any customs union for that matter? Would it be correct to say that, although, technically, there might be another form of Brexit that does not involve a customs union or a no-deal Brexit, it seems that the instruments are being prepared for a hard Brexit? Would the provisions still be necessary if we were in a customs union with the EU? How could the orders be affected by a customs union or a no-deal Brexit?

Why were separate statutory instruments drafted for Jersey, Guernsey and the Isle of Man, given the common features of the instruments? The fact that we are considering them as a whole prompts the question of why they were not drafted as a whole. Would it not be preferable in terms of simplicity, clarity and consistency to have one piece of coherent regulation to govern the position of the Crown dependencies?

Given the constitutional significance of the UK’s relationship to the Crown dependencies, why were these matters not dealt with in legislation that could have received fuller public and parliamentary attention? Does the Minister not agree that, consistent with the broad thrust of the Supreme Court decision in the Miller case, quasi-constitutional changes ought to be carried out by the legislature via proper processes, rather than via a truncated SI process, which seems to have been truncated even further, given the statement at the end of November?

The press release indicates that there must have been discussions with the dependencies, as they have signed up to this, so perhaps the Minister could tell us what consultation has been undertaken with relevant individuals and bodies in Jersey, Guernsey and the Isle of Man on the content of the orders?

Finally, could the Minister clarify why the proviso that the UK could still charge VAT on items coming into the country is included, from what I can gather? Those are my questions, and if we could get some clarity on them from the Minister, I would be more than happy.

--- Later in debate ---

[Peter Dowd]

The Minister referred to section 31 of the Taxation (Cross-border Trade) Act. We tried to press the Government on it time after time, but what does it actually refer to? It does not restrict a customs union to just the overseas territories. In fact, I think that is why the Government have left it completely unamended: because it is a backstop—another backstop—to the potential for a customs union. If they were that persistent about not having a customs union, they would have made it clear that clause 31 did not apply to territories in relation to the European Union.

There is an important question that we never resolved during the passage of the Act, although we spent a fair amount of time discussing it. The EU customs union is worth the best part of £15 trillion or £16 trillion, but we are now going down the path of having a customs union with the four territories named in the orders, and possibly with 10 other Crown dependencies and territories. The total GDP of all those territories is not £17 trillion; I do not think it even comes to £17 billion—it is more like £15 billion. We are in the bizarre scenario of going from a customs union of £15 trillion to a customs union of an infinitesimal percentage of that. That is a real shame.

The other aspect of the matter is that most of the people affected by the arrangement did not have a vote in the referendum. They did not vote to come out of the customs union; effectively, it is being forced on them. The Government often say that they do not like forcing Crown dependencies and overseas territories to do anything, but in this case they are forcing them out of a customs union of £16 trillion.

There is a huge amount of ambiguity in this measure, both in the technical sense and the political sense. Given that ambiguity, the answers I have had from the Minister today do not convince us that we should support these proposals.

Taxation of Low-income Families

Peter Dowd Excerpts

Wednesday 16th January 2019 Westminster Hall

[Peter Dowd (Bootle) (Lab)]

It is a pleasure to see you in the chair, Sir David. I appreciate the opportunity to make some comments and I thank the right hon. Member for South Holland and The Deepings (Sir John Hayes), the hon. Members for Stafford (Jeremy Lefroy), for Congleton (Fiona Bruce), St Austell and Newquay (Steve Double), Bolton West (Chris Green) and for South West Bedfordshire (Andrew Selous), and the spokesperson for the Scottish National Party, the hon. Member for Glasgow Central (Alison Thewliss), for their contributions.

It is a pleasure to have been invited to the launch of a manifesto to strengthen family policies for a Conservative Government. I was not going to make comments about that, because I did not realise it was on the agenda today, but I will do so now, if I may, Sir David, with your indulgence. There were eight asks in the document, and I have time to comment on about four, which are all linked to the debate.

There is a reference to having a Minister for families. We had a Secretary of State for Children, Schools and Families, which David Cameron got rid of, so that idea of co-ordination went out of the window in 2010. I am pleased that Conservative Members now think that that was a good idea. Perhaps if they had kept that Secretary of State eight years ago, we might not be in the difficult position that we are in in relation to families.

The document refers to family hubs and how wonderful they are, and to children’s centres, but hundreds of children’s centres have been closed in the past eight years under austerity. It is all right to refer to family hubs and children’s centres, but they have gone by the dozen, week in, week out.

[Fiona Bruce]

May I clarify the distinction between family hubs and children’s centres? Regarding family hubs, we are saying that we need to give holistic support to families as they bring up their children right through their childhood—not just from nought to five, but from nought to 19 and beyond.

Family hubs are designed to support not only people bringing up children but, as we have heard, people caring for elderly relatives and couples resolving difficulties in their marriage. It is a one-stop shop where families can go to get help for anything that they have difficulty with, from statutory agencies or from charities working together, much as people go to a citizens advice bureau in a wholly non-judgmental way. I am delighted that family hubs are springing up all over the country. Next month, there will be a major launch here in Westminster where Westminster City Council will promote family hubs.

[Peter Dowd]

The hon. Lady reinforces my point. To set up a family hub via charities or local authorities is fantastic—no one disputes the policy—but that has to be set in the context of austerity, as the hon. Member for Glasgow Central said.

My local authority has had a 50% cut in its funding, resulting in the potential closure of children’s centres, some nurseries and day centres. It is okay to talk about having a family hub or a children’s centre, but the resource is not there, because the Government have decided they will redirect their resources elsewhere. That is fine, but I am afraid that it is impossible to have both. A political choice has to be made, and has been made. The political choice that the Government have made is, de facto, to outsource the closing-down of many of those centres, fantastic community facilities and charities through cuts to local authorities.

The document talks about supporting mental health services, which face major cuts as a result of austerity. The Government have talked about parity of esteem time after time, but they have not done a great deal about it. They have come to that issue as a Johnny-come-lately.

[Fiona Bruce]

Again, our report talks about mental health challenges. Those of us who support strengthening families believe that we need to strengthen families so we can help many children who, at an early stage of their life, could and do suffer mental health challenges because of relational difficulties in the family.

I am the patron of a children’s mental health charity in my constituency, and not long ago, I asked the former chief executive, who has now moved on, how many of the children that the charity is counselling, who can be as young as four years old, have mental health difficulties at least in part because of relational difficulties in their home environment. He looked at me and said, “Fiona, virtually all of them.” A key purpose of our manifesto is tackling the root cause of many young people’s mental health problems.

[Peter Dowd]

I am pleased that the hon. Lady made that intervention; she is reinforcing every point that I make as I go along. Again, the Government have decided to cut early intervention services year in, year out— I can say that because I worked in that area for many years. The hon. Lady is absolutely right that we have to start early, but if services for early intervention are cut and there is a lack of funding, the impact is the £48 billion from family dislocation that the report identifies.

[Fiona Bruce]

Will the hon. Gentleman give way?

--- Later in debate ---

[Peter Dowd]

No, because I have not got much time and I have given way several times. I have other points to make.

The manifesto is linked to the issue of taxation of families, but it is not just the fiscal issue that we have to identify—that is the problem; it is the wider determinants that go way beyond issues of taxation. The hon. Member for Stafford referred to the Christian background. I think it is in Matthew that Christ says,

“render to Caesar the things that are Caesar’s, and to God the things that are God’s”.

Effectively, he was saying, “Pay your taxes.” He is a fantastic role model for people who avoid paying their taxes. The bottom line is that a society can be cohesive only if everybody plays their part in it, whether through paying their taxes, charitable interventions or political inventions of the sort we make every day. That is what we have to do.

In the report, the hon. Member for Congleton talks about fathers being registered on birth certificates. That is fine, but an Office for National Statistics report on registration identified the fact that the vast majority of fathers are registered on birth certificates and that of those who are not, something like two thirds or a third are identified as being very much involved with the family. The idea that the registration of a father on a birth certificate will somehow solve some sort of problem is—I will not say laughable—only one element of the totality.

[Andrew Selous]

Will the hon. Gentleman give way?

[Peter Dowd]

I will, but the hon. Gentleman will appreciate that I do not have much time.

[Sir David Crausby (in the Chair)]

Order. Interventions should be short.

[Andrew Selous]

It will be, Sir David. The point that my hon. Friend the Member for Congleton (Fiona Bruce) was making was that if registrations take place in family centres, the fathers become more involved in what the family centre can provide.

Briefly, in the impact assessment of the Child Poverty Act 2010, which was introduced by the hon. Gentleman’s party when it was in government, there was a recognition that, although poverty leads to family breakdown, family breakdown also leads to poverty. Is that still the Labour party’s position?

[Peter Dowd]

We would reintroduce the targets that we set in relation to child poverty, which the hon. Gentleman’s Government got rid of. That is what is frustrating—Conservative Members are coming to us with all these ideas that the Labour party had for many years and which the Conservative party got rid of when it came to power. The Government got rid of all the things that hon. Members have been talking about and introduced austerity. They said, “Austerity is here. We’re all going to play our part. We’re all in the boat together,” but in reality, we are not.

Although I recognise many of the worthy points made by hon. Members, that worthiness has got to be put in place, not by mechanisms, but by everybody playing their part in society and paying their taxes, and by corporations not getting tax breaks or being able to avoid this, that and the other. The point that the hon. Member for Stafford makes about tax reliefs is fair; I will potentially look at them.

There is a complicated pattern, and on that basis, although I understand some of the points that the hon. Members for Congleton and for Stafford have made, I would say that actions speak louder than words. We need more action and fewer words.