Finance (No. 3) Bill

Peter Dowd Excerpts

2nd reading: House of Commons & Programme motion: House of Commons
Monday 12th November 2018 Commons Chamber

[Peter Dowd (Bootle) (Lab)]

I beg to move an amendment, to leave out from “That” to the end of the Question and add:

“this House declines to give the Finance (No. 3) Bill a Second Reading because it derives from the 2018 Budget which confirmed the continuation of austerity and tax cuts for the wealthiest, failed to introduce a fair taxation system which protects middle and low earners but requires a greater contribution from the top 5 per cent of highest income earners, implied real terms per capita cuts for unprotected departments between 2019-20 and 2023-24, failed to halt roll-out of Universal Credit with planned social security cuts still to come, failed to raise the funding needed for mental health services, failed to provide the long-term funding needed for long-term adult social care, failed to provide adequate school funding, failed to address the funding gap that local councils face, failed to end the funding crisis facing public services, with police, teachers, nurses and doctors having no reassurances that the public sector pay squeeze will end in 2019, failed to tackle child poverty and growing inequality across our country, failed to tackle the fact that 87 per cent of the impact of the Government’s tax and benefit changes since 2010 has fallen on the shoulders of women, failed adequately to address climate change and delayed the much-needed reduction in the maximum stake for fixed-odds betting terminals until October 2019, and because the Bill is not based on an amendment of the law resolution, thus restricting the House’s ability to properly scrutinise and improve the Bill.

I have to give credit to the Financial Secretary to the Treasury: he managed to keep his face straight throughout his delivery. We had lots of flowery words from him, and I am surprised that we did not have phrases in his cliché-ridden speech such as “sunny uplands”, “green shoots of recovery” and “the end of the rainbow”. Why were those clichés not in his speech as well?

We have been asked to scrutinise a Finance Bill under the most difficult circumstances the Government could create, short of barring the Opposition from actually attending the House. The timetable set for the Bill meant we were expected to table amendments on Second Reading before the Bill had even been published—an abuse of power. To add insult to injury, printed copies of the explanatory notes to the Bill only arrived in the Vote Office earlier today. How busy Members are expected to provide proper scrutiny under these conditions is beyond me. It is an abuse of power. Worse still, the Government’s refusal to table an amendment to the law for the third Finance Bill in a row means that we will be unable to meaningfully amend this proposed legislation following Second Reading. As I said in my speech on the Budget resolutions, that is unprecedented. It is another abuse of power.

Last week, the President of the United States fired his Attorney General to undermine an investigation against him. Mr Trump also barred a journalist asking legitimate questions from the White House. Perhaps he gave the Prime Minister the odd tip on how to side-step conventions and constitutional process. Stitching up Committees with a false majority, obstructing scrutiny of the Finance Bill and giving a £1 billion bung to a minority party to keep the Prime Minister’s Government alive are further abuses of power. In any other country, we would use a word for this behaviour: malfeasance, plain and simple.

This is a desperate state of affairs, especially given how much the Bill is in need of change. The Government’s policies announced in the Budget fail to tackle a single one of the great challenges now facing this country after eight years of austerity. Most notably, this Bill of broken promises fails to end austerity, as the Prime Minister said it would during her conference speech—once she had finished gyrating. As our reasoned amendment points out, this promise has been broken: £4 billion of Tory social security cuts are still on their way. Only half the money cut from universal credit work allowances was returned to the programme. There was nothing on the social security freeze or the two-child limit.

[Kevin Hollinrake]

The hon. Gentleman mentions the reasoned amendment, which refers to the long-term funding of adult social care. Two Select Committees, the Health and Social Care Committee and the Housing, Communities and Local Government Committee, recommended a social insurance system in their inquiry’s report. Is he willing to support that cross-party recommendation as a solution to the future funding of adult social care?

[Peter Dowd]

The hon. Gentleman needs to speak to his own Government about cross-party support. My party cannot discuss these issues in this Chamber, let alone outside it. He would be better off engaging with his own Government on these matters.

What we have in the Budget is more spent on potholes than on our schools, not a penny more for everyday policing or fire services and nothing to begin to unravel the 40% budget cuts that have taken place across local authorities.

[Michael Tomlinson (Mid Dorset and North Poole) (Con)]

My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) asked a very straightforward question, and I am going to give the hon. Gentleman another chance to answer it. Will he, as suggested by my hon. Friend, engage in cross-party support—yes or no?

[Peter Dowd]

It is not in the Finance Bill. Frankly, the hon. Gentleman should worry more about the 8% cut to per pupil school funding in his constituency than trying to get me to answer questions that the Government should be answering.

[Vicky Ford]

On police funding, when the Government proposed hundreds of millions of pounds of additional funding for the police by raising the police precept, why did the Labour party vote against it? [Interruption.]

[Peter Dowd]

From a sedentary position my hon. Friend the Member for Stalybridge and Hyde (Jonathan Reynolds) says that one in four policemen have gone from his constituency. That is similar to what has happened in my constituency and, I suspect, in the hon. Lady’s constituency. There is not one penny more of day-to-day spending in the Budget. She should be asking her Government why the police are still being underfunded.

[Ruth George]

Does my hon. Friend agree that the huge rise in council tax for council tax payers on every level of income is a highly regressive form of tax? In my Derbyshire constituency, people are having to pay more council tax for fewer police.

[Peter Dowd]

“Regressive” and “Conservative Government” go in the same sentence pretty easily.

The Budget does not move us towards parity for mental health services. It does nothing to end the crisis in social care, to which the hon. Member for Thirsk and Malton (Kevin Hollinrake) referred, or in children’s services. It gets worse as the days go on. The Budget was a continuation of austerity under anyone’s definition, and the Bill is a written testament to that broken promise.

[Charlie Elphicke]

As ever, the hon. Gentleman is very passionate. May I just take him back to the question put by my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake)? Will he support that generous and very sensible proposal? Does he think that that is the right way to go about things?

[Peter Dowd]

Look, we are always prepared to look at any idea, but we are trying to deal with the problem today. We are trying to deal now with the hundreds of thousands of elderly people who are not getting the service they are entitled to.

[Alex Chalk]

Back in 2010, at the height of the crisis the hon. Gentleman’s party left us with, it was a Labour Chancellor, Alistair Darling, who said that Labour would close the deficit by 2020. That will not now happen until 2025. How can the hon. Gentleman credibly suggest that this is an austerity Budget?

[Peter Dowd]

That is remarkable coming from an hon. Member who is a member of the party that promised us all that the deficit would be gone by 2015.

[Mr Jim Cunningham]

The Government have apparently suggested that we should have a cross-party talk to resolve the issue of social care. They were offered that chance by the Labour Government before the 2010 election and they turned that opportunity down. Let us set the record straight. Tory Members talk about Labour Governments leaving office with high unemployment, but the Major Government left 3 million people unemployed. We introduced the minimum wage, and they said it would lead to 3 million people unemployed.

[Peter Dowd]

National living wage—the clue is in the title—but what the Government have proposed is not a living wage.

The Chancellor did not use the phrase “climate change” once during his hour-long speech—it felt longer than an hour, I’ll grant you that—despite the recent Intergovernmental Panel on Climate Change report, which warned that we only have 12 years to avert climate catastrophe. The Government cling to their woeful plastic straws initiative, but the only measure in the Bill addressed to the 100 corporations that produce 71% of our global emissions was yet another tax break. That is the sort of stuff that the Government should be tackling. This is for the oil industry. The Government have really got to get to grips with its approach to climate change. This oversight is catastrophic. History will remember the Government’s failure to tackle the greatest threat to humanity—that does not overstate it.

Meanwhile, the vulnerable suffer. The Government reneged on their promise to tackle the social devastation wreaked on our communities by fixed odds betting terminals, causing the resignation of yet another Minister. It has since become apparent that they reneged after lobbying by the gambling industry, in spite of the known link between these machines and people taking their own life. Here we have it: the Chancellor of big business pays little regard to the tragedy of lives lost to this awful addiction, as long as the gambling industry can keep making a return and continue its donations to the Conservative party—a fact.

So what remains in the Bill when all these pressing issues have been left out? There has been much discussion about the Government’s change to tax thresholds in clause 5. Let me make our argument clearly: after eight years of austerity, we will not stand in the way of any change that will put additional income into the pockets of low and middle earners, regardless of how that is brought about—[Interruption.] We have said that time after time. However, Labour’s policy remains that we believe we should be taxing the wealthiest more to deliver the end of the austerity that the Tories have failed to provide. We will therefore table an amendment to clause 5 setting out our tax proposals. These proposals would protect everyone earning below £80,000 a year— 95% of the population—from any further tax increases, while ensuring that the top 5% of our society pay their fair share. We call on the House to support our amendment in the Committee of the whole House.

[Colin Clark (Gordon) (Con)]

Will the hon. Gentleman concede that 1 million people will be lifted out of the higher rate of taxation and that many of them are consultants working in hospitals, GPs, senior police officers and senior council officers? Does he not recognise that that is a good thing?

[Peter Dowd]

The hon. Gentleman really must listen more—[Interruption.] I will send him a signed copy of my speech; he might learn a thing or two.

We believe in building a coalition of the many—a broad, democratic movement of 95% of the public—to spread prosperity across the furthest reaches of our country. We cannot in good faith increase taxes on those who have struggled for eight long years while the richest continue to accrue even more wealth.

[Vicky Ford]

I thank the hon. Gentleman for giving way—I was listening. What does he intend to do to individuals earning over £80,000 a year?

[Peter Dowd]

Actually, we set out our tax policies in “Funding Britain’s Future”, and I will send a signed copy to the hon. Lady for her to have a look at. Perhaps Government Members can have a tutorial with Sir Roger Scruton and tease out some of the issues.

On Brexit, yet again, we have seen the Government using our exit to hand themselves broad powers, indefinitely. This is a continuation of the theme that I described—of a Government’s demand for power, even though they are clueless about how to exercise it.

[Charlie Elphicke]

The whole House understands that the hon. Gentleman is very enthusiastic about raising the rates of taxes for richer people, but does he not remember that the experience of reducing the top rate of tax from 80% to 60%, and then from 60% to 40%, was that more money was brought into the Treasury on each occasion? Labour’s plans to increase taxes will mean less money for the Treasury and less money for the NHS.

[Peter Dowd]

International evidence does not show that, but let me give the hon. Gentleman a figure. The top 1% have received an increase in share of total income—from 5.7% in 1990 to 7.8% in 2016-17. That was identified by the Institute for Fiscal Studies.

[Nigel Huddleston (Mid Worcestershire) (Con)]

What I do not understand—if the hon. Gentleman really believes this—is why, for 99.3% of the time that the last Labour Government were in power, the top rate of income tax was 40%, whereas for the duration of this Government, it has been either 45% or 50%. Does Labour say one thing in power and a completely different thing in opposition for purely opportunistic, party political and vote-winning purposes?

[Peter Dowd]

A Conservative Member of Parliament talking about opportunism! It is not quite as bad as the Liberal Democrats talking about opportunism, I grant you, but there we are—[Interruption.] I think the hon. Gentleman should worry about working people in his constituency who, overall, are £800 a year worse off after the longest fall in wages since the Napoleonic era—I suspect that one or two Government Members were here at the time. The Prime Minister has stood staring at the Brexit menu for two years while her Cabinet devours itself in the queue behind her.

[Kevin Hollinrake]

According to the economist David Smith, if Labour policies at the last election had been implemented, people who were earning between £100,000 and £120,000 a year would have been paying, on that element of their earnings, a marginal rate of taxation of 72%. Does the hon. Gentleman feel that that is a fair burden of taxation on earners at that level?

--- Later in debate ---

[Peter Dowd]

In the context of a fair taxation system, as set out in “Funding Britain’s Future”—which, again, I exhort the hon. Gentleman to look at—we look at everything, and we will look at everything, unlike the Government.

The indecisiveness that I referred to means that the Government have to try to amass as much power as possible so that, if the Prime Minister cannot make her mind up, our hands are tied in a constitutional sense. It seems that, when Tory Brexit theocrats talked about wanting to take back control, they wanted us to give it to them. We cannot allow such a vast power grab to take place from a Government who have shown such disregard for our constitution already.

Turning to another issue, I draw the House’s attention to the measures that are supposed to address tax avoidance—hope springs eternal. Once again, these are simply inadequate. They are a series of half-measures that leave so much room to wriggle, they must have been written by the Prime Minister. The Government promised us a full public register of beneficial owners. Where is it? I have looked through the Bill numerous times—I have to admit, it was painful—and I can see no reference to it. It is yet another broken promise.

We have been waiting for two years for the Government to act to tackle burning injustices, yet they seem more focused on fanning the flames. Again, we find ourselves being forced to debate a Bill that is heavy on rhetoric, as evidenced in the speech from the Minister, and light on content. No wonder the Government will not let us amend it. They are scared that we would put something useful in it and add some policy to the lacuna that is there now.

[Siobhain McDonagh]

Does my hon. Friend agree that a response to the Taylor review would be the start of something real and possible and the abolition of payment between assignment contracts?

[Peter Dowd]

I refer my hon. Friend to the response given by the Minister earlier. We are prepared to look at all proposals.

[Vicky Ford]

The shadow Minister just said that the Bill is light on content, but it is 315 pages long. I have just read his Labour party document “Funding Britain’s Future”, which is eight pages long, three of which are footnotes. What am I missing, sir?

[Peter Dowd]

What is the hon. Lady missing? A great deal, I would contend.

[Rachel Maclean]

The hon. Gentleman talks about the policy on tax collection, so surely he will welcome the Government’s innovative approach to unexplained wealth orders. These measures have already been implemented. They are an innovative approach to capturing people who seek to avoid our tax system, and they are bringing wealth into the Treasury. Surely he can find something to welcome in that.

[Peter Dowd]

They have been so successful that the Government have only used them once.

[Mr Jim Cunningham]

The Bill might be thick, but it is low on content when it comes to public sector funding for public sector pay—we notice that that is for the spending review—and it is very light on content in relation to the Taylor review and people on zero-hours contracts.

[Peter Dowd]

My hon. Friend, who is a great advocate for his constituency, is spot on. Some 4.5 million children—7,000 per constituency—are living in poverty in the UK. Conservative Members should concentrate on sorting out that kind of problem. That is what the Government should be focusing on.

[Rebecca Pow]

The hon. Gentleman just talked about spurious rhetoric, but I want to take him back to what he said about climate change, because he completely misses the point. The Government are doing more on climate change than any before them. A great deal of it is being done by the Department for Business, Energy and Industrial Strategy, the Department for Environment, Food and Rural Affairs and the Foreign and Commonwealth Office—it is about joined-up thinking. We have the 25-year plan, the Agriculture Bill, the green growth strategy and the electric car strategy, and measures in the Budget draw this together. The plastics tax is one very good example of how seriously we take the issue.

[Peter Dowd]

Investment in renewables is down. The idea that the Government are green is itself green—it is a pathetic claim.

The Government promised us a public register of beneficial ownership. I have asked before: where is it? It is another broken promise. I call on the House to support the amendment to give the people of the United Kingdom action on the great challenges facing our nation, which the Government appear incapable of addressing and which have been ignored for too long.

I end on the note I started on: the abuse of power. It was once said that:

“Worse than a corrupt government is an incompetent one, not least because having the second characteristic does not exclude the first”.

Given the way the Government have behaved over the ability of Parliament to do its job, that notion is becoming closer and closer as the days progress. It should be deeply worrying to any democrat.

Financial Statement

Peter Dowd Excerpts

Monday 29th October 2018 Commons Chamber

[The Chancellor of the Exchequer (Mr Philip Hammond)]

Today, I present to the House a Budget for Britain’s future: a Budget that shows the perseverance of the British people finally paying off; a Budget for hard-working families who live their lives far from this place and care little for the twists and turns of Westminster politics. People who get up early every morning, who open up factories, shops, and building sites, drop their kids off at school, check on elderly relatives and neighbours—the strivers, the grafters and the carers who are the backbone of our communities and our economy. People who ask only of Government that we protect the jobs that put food on their table; that we deliver the public services their families rely on; and that we do it efficiently, minimising the amount of tax we need to take from their hard-earned wages. People who Conservative Members are proud to represent. So I say to them today: this Budget is unashamedly for you.

The British people put their faith in us to do the job, and today we repay that trust with a Budget that paves the way for a brighter future. Let me be clear why. The tough decisions of the past eight years were not driven by ideology—[Interruption.] They were not driven by ideology—they were driven by necessity and by Labour’s failure in government which led to our deficit soaring to a post-war record and our economy suffering the deepest recession since the second world war. That was our inheritance and, as ever, we did what needed to be done.

Now we have reached a defining moment on this long, hard journey, opening a new chapter in our country’s economic history where we can look confidently to the future and set our course for where this remarkable country will go next. Because today, I can report to the British people that their hard work is paying off, and the era of austerity is finally coming to an end.

I am sure that like me, many Members of the House keenly remember the last Budget delivered on a Monday. It was 1962: I was six years old. Tensions between Russia and the United States were rising, and a former Foreign Secretary turned Chancellor delivered a Budget amid Cabinet revolt. I am acutely aware of the phenomenon of false memory, but I could swear that I remember my parents turning to me and saying, “Philip, one day that could be you.”

The media have been full of speculation about the timing of today’s Budget. Some were hoping for a December Budget. I am sure the headline writers were ready with something like “Spreadsheet Phil turns Santa Claus”. Others were desperate for it to be on Wednesday—“Hammo House of Horrors” perhaps. But the truth is that by choosing today rather than Wednesday, I have not avoided the blood-curdling threats, the anguished wailing and the strange banging of furniture that is usually associated with Wednesday; I have been kindly invited to a special meeting of the 1922 committee this evening.

Our economy continues to confound those who talk it down, and we continue to focus resolutely on the challenges and opportunities that lie ahead as we build a new relationship with our European neighbours and a new future outside the European Union. But as we do so, let us not forget the remarkable achievements of the British people in clearing up the aftermath of Labour’s great recession. Because for all Labour’s carping and relentless negativity, talking Britain down at every opportunity, we the British people have a record to be proud of: eight straight years of economic growth; over 3.3 million more people in jobs; higher employment and lower unemployment in every region and every nation of the United Kingdom; wages growing at their fastest pace in almost a decade; income inequality lower now than at any time under the last Labour Government; an economy back on its feet again; an economy working not for the few, and not even for the many—an economy working for everyone.

We are at a pivotal moment in our EU negotiations, and the stakes could not be higher. Get it right, and we will not only protect Britain’s jobs, businesses and prosperity, but harvest a double “deal dividend”: a boost from the end of uncertainty, and a boost from releasing some of the fiscal headroom that I am holding in reserve at the moment. We are confident that we will secure a deal which delivers that dividend—confident, but not complacent. So we will continue to plan for all eventualities, and I will do so at this Budget with a three-pronged approach.

First, I have already allocated £2.2 billion to Departments for Brexit preparations, and in the autumn Budget last year I set aside a further £1.5 billion to be allocated for 2019-20. Today I am increasing that sum to £2 billion, and in the coming weeks the Chief Secretary will announce allocations to individual Departments.

Secondly, I shall today maintain the headroom to my fiscal rules broadly as set out in the spring statement, retaining firepower to intervene if the economy needs more support in the coming months. Thirdly, as I have been clear since moving to an autumn Budget, if the economic or fiscal outlook changes materially in-year, I will take whatever action is appropriate, if necessary upgrading the spring statement to a full fiscal event. The House can be confident that we are working for the best outcome for Britain and preparing for every eventuality.

I shall first report to the House on the economic forecasts of the independent Office for Budget Responsibility, and I thank Robert Chote and his team, once again, for their excellent work. The OBR expects growth to be resilient across the forecast period, improving next year from the 1.3% forecast at the spring statement to 1.6%; then 1.4% in 2020 and 2021; 1.5% in 2022; and 1.6% in 2023.

This Government have prioritised getting people into work because the best way to help people is to provide them with the stability of a pay packet every month. Since 2010, over 3.3 million more people are in work, and today the OBR confirms Britain’s “jobs miracle” is set to continue—revising up participation in the labour market, revising down the country’s equilibrium unemployment rate and predicting 800,000 more jobs by 2023. By my calculation, that is over 4.2 million net new jobs since 2010, making the shadow Chancellor’s prediction of 1.2 million jobs lost out by just the tiniest margin of 5.4 million people—roughly the population of Scotland.

But now we need to focus on pay, and with the proportion of low-paid jobs at its lowest since 1997, with regular pay growth at 3.1%—its strongest in almost a decade—and inflation forecast to average 2% next year, the OBR is forecasting sustained real wage growth in each of the next five years, which is a far cry from the dismal picture that the Leader of the Opposition is so desperate to paint every Wednesday.

I turn now to the fiscal forecast. We inherited the highest budget deficit in our peacetime history, but after eight years the hard work of the British people is paying off, and we will not squander their efforts. Today’s forecast, taking into account all announcements made since the spring statement, including measures I shall announce today, shows the deficit down from almost 10% under Labour to less than 1.4% next year under this Conservative Government, and falling to just 0.8% by 2023-24. Borrowing this year will be £11.6 billion lower than forecast at the spring statement—just 1.2% of GDP —and is then set to fall from £31.8 billion in 2019-20 to £26.7 billion in 2020-21, £23.8 billion in 2021-22, £20.8 billion in 2022-23 and £19.8 billion in 2023-24, its lowest level in over 20 years.

So we meet our structural borrowing target three years early and deliver borrowing of just 1.3% of GDP in 2020-21, maintaining £15.4 billion headroom against our 2% fiscal rules target. We are no longer borrowing at all to finance current spending, and today the OBR confirms that our national debt peaked in 2016-17 at 85.2% of GDP, and then falls in every year of the forecast from 83.7% this year to 74.1% in 2023-24. That is lower in every year than forecast at the spring statement, and it means that we meet our target to get debt falling three years early: a turning point in our nation’s recovery from Labour’s great recession—both our fiscal rules met, both of them three years early—so Fiscal Phil says, “Fiscal Rules OK”.

While we are working to get Britain’s debt down, to end the nightmare of wasting over £50 billion a year on interest, the party opposite would do the opposite. Labour’s plans would increase tax and borrowing by £1,000 billion, taking our debt to GDP ratio soaring to well over 100% of GDP—a reckless and irresponsible policy from a reckless and irresponsible party.

I have always been clear: sound public finances are essential, but they are not an end in themselves. So since I have been Chancellor I have taken a balanced approach, putting an additional £60 billion into our public services and investment in our future, cutting tax for 31 million people, and all the while reducing borrowing and getting our national debt falling. Now, we must do more, and thanks to the hard work of the British people, in this Budget we can do more.

I said at the spring statement that our careful management of the public finances was beginning to pay off, and that if the improvement we saw then continued, I would be able to provide more support to our public services on a sustainable basis. Today, the OBR confirms a significant improvement in our public finances—an upgrade that underscores the hard work of the British people and this Government’s stewardship of the economy since 2010, and means that I can deliver on the promise I made in the spring, setting out a new path for public spending and a clear view for the British people of the fruits of their hard work.

Next year, we will conduct a full spending review, setting our priorities for public spending within a sustainable funding envelope, deciding on the right balance between investing in Britain’s future and current consumption of public services. Today, I have set out an indicative five-year path for departmental resource spending—RDEL, as it is known to aficionados of public finance. To give context, in spending review 2010, average annual real growth was minus 3%; in spending review 2015, it was minus 1.3%; from next year, average annual real growth will be plus 1.2%—but that is not the limit of my ambition. When our EU negotiations deliver a deal, as I am confident they will, I expect that the deal dividend will allow us to provide further funding for the spending review. The hard work of the British people is paying off; austerity is coming to an end.

Mr Deputy Speaker, you will know better than most that every Chancellor likes to have a rabbit or two in his hat as he approaches a Budget, but this year, some of my star bunnies appear to have escaped just a little bit early. In June, my right hon. Friend the Prime Minister announced the single largest cash commitment to our public services ever made by a peacetime Government—an £8.4 billion five-year deal for our precious NHS, half as much again as the increase Labour offered the NHS at the last election. Let me be clear: we are delivering this historic £20.5 billion real-terms increase for the NHS in full over the next five years. So in a very important sense, we made our big choice for this Budget four months before it was delivered.

This was the right decision. Our NHS is the No. 1 priority of the British people, and as we approached the 70th anniversary of its foundation, they had a right to know the scale of our commitment to it. But the British people also care that money invested in the NHS goes to the frontline and to improvements in services, so we did not just hand over money; we agreed that the NHS would produce a 10-year plan, setting out how the service will reform, how waste will be reduced, and exactly what the British people can expect to get for their money.

That plan will be published shortly, but I shall give the House a sneak preview today. [Hon. Members: “Ooh!”] I, too, can poach a rabbit every now and then.

There are many pressing demands on additional NHS funding, but few more pressing than the needs of those who suffer from mental illness. Today, I can announce that the NHS 10-year plan will include: a new mental health crisis service with comprehensive mental health support available in every major A&E; children and young peoples’ crisis teams in every part of the country; more mental health ambulances; more “safe havens” in the community; and a 24-hour mental health crisis hotline. These new services will ensure that people suffering from a crisis, young or old, can get the help they need, ending the stigma that has forced too many to suffer in silence and ending the tragedy of too many lives lost to suicide. We are proud to have made this extraordinary commitment to funding our NHS, a precious institution that has been nurtured for most of its life by Conservative Governments.

Departmental spending allocations with be settled at the spending review next year. However, there are a small number of areas where I will provide further support now in order to deliver necessary certainty for forward planning. Local government has made a significant contribution to repairing the public finances and this Budget ensures local councils have more resources to deliver high-quality public services. We are giving councils greater control over the money they raise: through the adult social care precept; through our plans for increased business rate retention from 2020; and by removing the housing revenue account cap, so that councils can help to build the homes this country needs.

We will shortly publish our Green Paper on the future of social care, setting out the choices, some of them difficult, for making our social care system sustainable into the future. But I recognise the immediate pressures local authorities face in respect of social care. So today, building on the £240 million for social care winter pressures announced earlier this month, I will make available a further £650 million of grant funding for English authorities for 2019-20, and an additional £45 million for the disabled facilities grant in England in 2018-19. We will invest a further £84 million over the next five years to expand our successful children’s social care programmes to 20 further councils with high or rising numbers of children in care, allowing councils to improve services for older people, for people with disabilities and for children in care now, while longer-term funding decisions will be made at the spending review.

The UK spends more on defence than any NATO member except the US, but over the past year we have had stark reminders of the scale, scope and complexity of the threats we face. My right hon. Friend the Defence Secretary is working with the Cabinet Office and the Treasury to conduct a review into the modernisation of our armed forces in response to the evolving threat, which will form the basis for a comprehensive consideration of defence spending next year. As a former Defence Secretary myself, I understand the immediate pressures our armed forces are facing, so I will today provide an additional £1 billion to the Ministry of Defence to cover the remainder of this year and next to boost our cyber capabilities and our anti-submarine warfare capacity, and to maintain the pace of the Dreadnought programme to ensure continuous at-sea deterrence, a deterrent that allows us to sleep easy in our beds, but one that the Leader of the Opposition and the shadow Chancellor have spent their political lifetimes campaigning to abolish. Nobody should be in any doubt that those of us on the Government Benches are proud of our armed forces and we will always back them with the investment they need to keep this country safe.

It is not only our armed forces who keep us safe. Our counter-terrorism police play a vital role in defending Britain against the evolving threats we face. We committed in 2015 to spend 30% more on counter-terrorism capabilities over the current spending review period. And today I commit an additional £160 million of CT police funding for 2019-20 to protect CT police numbers in 2019-20 and to allow future CT police funding to be considered in the round at the spending review.

I recognise that policing more generally is under pressure from the changing nature of crime. I also recognise the representations made on this by many colleagues, such as my hon. Friend the Member for South West Bedfordshire (Andrew Selous), and I can tell the House today that my right hon. Friend the Home Secretary will review police spending power and further options for reform when he presents the provisional police funding settlement in December.

As I have already set out, due to the hard work of the British people, public borrowing this year is coming in substantially below forecast. This allows us to provide additional support for public services in the spending review and contributes to the significant reduction in forecast debt this year. But I also want to use this good news to give a little bit back, where it can be put to good use, in this financial year.

This year marks a century since the end of the first world war. And as we remember our fallen servicemen and women whose sacrifice ensured the freedom we enjoy today, many projects are raising money for veterans’ charities from sales of commemorative items on which VAT is charged. We cannot waive the VAT due on these sales, but we can make a donation with the VAT we will receive, and I commit today that the Treasury will mark the centenary of the armistice by making a donation of £10 million to the Armed Forces Covenant Fund Trust to support veterans with mental health needs.

Many of our nation’s village halls were built to commemorate the sacrifice of world war one, and many of them are being refurbished to commemorate the centenary. So I will also provide funding for grants equivalent to the VAT chargeable on such refurbishment projects. And as our focus moves from the anniversaries of the first world war to the second, I will also provide £1.7 million for educational programmes in schools to mark the 75th anniversary of the liberation of the Bergen-Belsen concentration camps, ensuring that the next generation hears the stories of those who survived the holocaust and of the British soldiers who liberated them, because as the terrible events in Pittsburgh this weekend remind us, the battle against antisemitism did not end with the defeat of Nazi Germany.

Across the length and breadth of England, our air ambulance services work tirelessly to get those with life-threatening illnesses and injuries quickly to the expert medical care they need. Funded entirely by philanthropy, they do a fantastic job, and today I am making £10 million of funding available to help them to go on doing so.

We are investing record amounts in our schools and that investment is paying off, with 86% of schools now rated good or outstanding, compared with 68% in 2010. But I recognise that school budgets often do not stretch to that extra bit of kit that would make such a difference. So today I am announcing a £400 million in-year bonus to help our schools buy the little extras they need—a one-off capital payment directly to schools, averaging £10,000 per primary school and £50,000 per secondary school.

I have one final in-year measure to announce: every Member of Parliament will testify that potholes are high on the public’s list of concerns. So as autumn takes hold, I am making an additional £420 million available immediately to local highway authorities to tackle potholes, bridge repairs and other minor works in this financial year.

But if we want sustainable world-class public services and rising living standards, we must make the serious long-term reforms our economy needs to tackle the productivity challenge, to prepare our nation for the technological change ahead and to show the next generation that our market economy can evolve once again to meet the needs of the new age. That is because, for us on the Government Benches, ending austerity is not just about funding public services; it is about real wage growth and leaving more of people’s hard-earned money in their pockets. This is the nation of the industrial revolution, of Stephenson, Whittle, Lovelace and Faraday—people whose ideas shaped the world around them—and today Britain once again can lead the world as we exploit a new wave of scientific and technological discovery pouring out of our universities and research institutes. We can solve the productivity challenge if we are willing to embrace the future, to make the choice to invest in infrastructure, research, skills and our regions, to manage change, not hide from it.

I believe passionately in this agenda, but even I would admit that at the last two Budgets I might have given the House just a little more detailed information on productivity and technological innovation than it strictly needed, so this time I will leave it to the Budget Red Book to set out more detail of the many measures we will take today. [Hon. Members: “More!”] Sensing the disappointment of my colleagues, I will just mention that the list in the Budget Red Book includes our commitment to technology, with £1.6 billion of new investments to support our modern industrial strategy, ranging from nuclear fusion to quantum computing; £150 million for fellowships to attract the brightest talent to these shores from around the world so that our scientific research can continue to lead the world; and our commitment to infrastructure, including our expanding of the national productivity investment fund once again to over £38 billion by 2023-24, so that over the next five years total public investment will grow by 30% to its highest sustained level in 40 years and will on average be an astonishing £460 million a week higher, in real terms, than under the last Labour Government. This is a Conservative Government investing in the roads, the railways, the research and the digital infrastructure that will power this country in the 21st century.

Half of the UK’s £600 billion infrastructure pipeline will be built and financed by the private sector. In financing public infrastructure, I remain committed to the use of public-private partnership where it delivers value for the taxpayer and genuinely transfers risk to the private sector, but there is compelling evidence that the private finance initiative does neither. The shadow Chancellor, of course, rages against PFI at every opportunity yet curiously forgets to mention that nearly 90% of those contracts were agreed by the last Labour Government. That has left the nation with a bill of more than £200 billion to pay off and would be the most potent symbol of the economic mismanagement of the last Labour Government, if only Gordon Brown hadn’t sold the gold.

Labour’s policy is to terminate all these contracts, triggering the ruinous penalty clauses that the Labour Government themselves agreed to in the first place and adding tens of billions more to an already enormous bill. It is a classic Labour solution: pouring good money after bad. I will not do that—we will honour existing contracts—but the days of the public sector being a pushover must end. We will establish a centre of excellence to actively manage these contracts in the taxpayers’ interest, starting in the health sector, but we will go further. I have never signed off a PFI contract as Chancellor, and I can confirm today that I never will. I can announce that the Government will abolish the use of PFI and PF2 for future projects, putting another legacy of Labour behind us.

We are investing in our nation’s infrastructure and backing the technologies of the future, but we know that the real engine of growth is enterprise. The right hon. Member for Hayes and Harlington (John McDonnell) lists

“fermenting the overthrow of capitalism”

as his pastime.

Mine is “reinvigorating capitalism for the digital age”, because I want Britain to be one of the great winners of the technological revolution. On this side of the House, we will always back enterprise and the market economy that underpins it, because we know that it is the only way to deliver the high-wage, high-skill economy of the future.

As we finalise our departure from the EU and deliver a deal that secures Britain’s future trade, we must unleash the investment that will drive our future prosperity. So today I can announce a package of measures to stimulate business investment and send a message loud and clear to the rest of the world: Britain is open for business. I am increasing the annual investment allowance from £200,000 to £1 million for two years, delivering on a long-standing ask of the British Chambers of Commerce; I am providing a targeted relief for the cost of acquiring intellectual property-rich businesses; and I am introducing a permanent tax relief for new non-residential structures and buildings, partly funded by an adjustment in the special writing-down rate for long-life assets from 8% to 6% to better align the tax and accounting treatment of these assets.

To support British exports, we will increase UK Export Finance’s direct lending facility by up to £2 billion. We will open the use of e-passport gates at Heathrow and other airports, currently only available to European economic area nationals, to include visitors from the United States, Canada, New Zealand, Australia and Japan. We will provide an additional £200 million of funding for the British Business Bank to replace access to the European investment fund, if needed. We will back another 10,000 entrepreneurs by extending start-up loans funding to 2021. Following representations from the Federation of Small Businesses, I am extending the new enterprise allowance, providing mentoring and support for benefit claimants to get their business ideas off the ground.

With thanks to my hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake), we are working with the Financial Conduct Authority on expanding access to the Financial Ombudsman Service for larger small and medium-sized enterprises. As well as backing businesses to invest and grow, we will make sure that British workers are equipped with the skills that they need to thrive and prosper. We have introduced a new system of T-level vocational training, we have put the first £100 million into the new national retraining scheme, and, through the apprenticeship levy, we are delivering 3 million high-quality apprenticeships in this Parliament. But that system is paid for by employers, and it has to work for employers. So today, in addition to the flexibilities that I announced earlier this month, I can announce that for smaller firms taking on apprentices we will halve the amount that they must contribute from 10% to 5%. In total, this is a £695 million package to support apprenticeships.

As our economy evolves in the digital age, so too must our tax system, to ensure that it remains fair and robust against abuse, and raises the revenues that we need to fund our public services. The employment allowance was introduced to incentivise businesses to take on employees, but at a flat rate of £3,000 per employer, it does not provide any real incentive for larger employers. So from April 2020, we will target it at small and medium businesses with an employer’s national insurance bill of less than £100,000 a year. We will also bring the treatment of capital losses for the largest companies into line with that of income losses.

We recommit ourselves today to keeping family homes out of capital gains tax, but some aspects of private residence relief extend it beyond that objective, and provide relief for people who are not using the home as their main residence. So from April 2020, we will limit lettings relief to properties where the owner is in shared occupancy with the tenant, and reduce the final period exemption from 18 months to nine months.

I have received representations that I should abolish entrepreneur’s relief and put the savings towards funding our NHS commitments, but I do not believe we can have sustainable public services unless we have a dynamic economy, and encouraging entrepreneurs must be at the heart of any strategy for a dynamic economy, so I will retain entrepreneur’s relief, but to ensure it is going to genuine entrepreneurs, I will extend the minimum qualifying period from 12 months to two years.

In the period since the last Budget, we have explored all avenues to address the cliff-edge effect of VAT registration, but our options are restricted by EU law. We will continue to work on this issue as our future VAT regime becomes clear over the years ahead, and in the meantime, to give small businesses certainty and in response to representations from my hon. Friend the Member for Mid Worcestershire (Nigel Huddleston), the Federation of Small Businesses and others, I will leave the threshold unchanged for a further two years.

The off-payroll working rules, known as IR35, are designed to ensure fairness so that individuals working side by side in a similar role for the same employer pay the same employment taxes. Last year, we changed the way these rules are enforced in the public sector, but widespread non-compliance also exists in the private sector, so following our consultation, we will now apply the same changes to private sector organisations as well. But after listening carefully to representations made—including many from right hon. and hon. Friends—during the consultation, we will delay these changes until April 2020, and we will only apply them to large and medium-sized businesses.

There is one standout example of where the rules of the game must evolve now if they are to keep up with the emerging digital economy. Digital platforms delivering search engines, social media and online marketplaces have changed our lives, our society and our economy, mostly for the better, but they also pose a real challenge for the sustainability and fairness of our tax system. The rules have simply not kept pace with changing business models, and it is clearly not sustainable or fair that digital platform businesses can generate substantial value in the UK without paying tax here in respect of that business. The UK has been leading attempts to deliver international corporate tax reform for the digital age. A new global agreement is the best long-term solution, but progress is painfully slow. We cannot simply talk forever, so we will now introduce—[Interruption.] We will now introduce a UK digital services tax. This will be a narrowly targeted tax on the UK-generated revenues of specific digital platform business models. It will be carefully designed to ensure it is established tech giants, rather than our tech start-ups, that shoulder the burden of this new tax.

It is important that I emphasise that this is not an online sales tax on goods ordered over the internet; such a tax would fall on consumers of those goods, and that is not our intention. The digital services tax will only be paid by companies that are profitable and that generate at least £500 million a year in global revenues in the business lines in scope. We will consult on the detail to make sure we get it right and to ensure that the UK continues to be the best place in the world to start and scale-up a tech business. The tax will come into effect in April 2020 and is expected to raise over £400 million a year.

In the meantime, we will continue to work at the OECD and G20 to seek a globally agreed solution, and if one emerges, we will consider adopting it in place of the UK digital services tax, but this step shows that we are serious about this reform, because it is only right that these global giants with profitable businesses in the UK pay their fair share towards supporting our public services. I am already looking forward to my call from the former leader of the Liberal Democrats.

We are updating the rules of the game, but we must also make sure people play by the rules. And today we continue the work of the past eight years, where we have secured £185 billion since 2010 that would otherwise have gone unpaid, with a package of measures today to further clamp down on tax avoidance, evasion and unfair outcomes, raising another £2 billion over the next five years. We will make HMRC a preferred creditor in business insolvencies, to ensure that tax that has been collected on behalf of HMRC is actually paid to HMRC. We will end the practice of purchasing services through overseas branches to avoid UK VAT, and we will crack down on insurance companies routing services through offshore territories. And we will stop our generous R&D tax credits system being abused by reintroducing a PAYE restriction for the small and medium-sized companies scheme. Labour talk tough on tax avoidance and evasion. We take action.

Investing in our infrastructure, backing the technologies of the future, supporting British businesses, and updating our tax system for the digital age—that is how we will deliver the high-wage, high-skill economy of the future. But we must also recognise that technological change will bring challenges as well as opportunities, and there is one part of our economy that is currently confronting that challenge in spades: our high streets. Embedded in the fabric of our great cities, towns and villages, the high street lies at the heart of many communities, and it is under pressure as never before as Britain adopts online shopping with greater alacrity than any other large economy. So if Britain’s high streets are to remain at the centre of our community life, they will need to adapt. Today, we support them to do so, responding to calls from across this House, especially from my right hon. Friend the Member for Putney (Justine Greening) and my hon. Friends the Members for Southport (Damien Moore) and for Croydon South (Chris Philp).

We will provide £675 million of co-funding to create a future high streets fund to support councils to draw up formal plans for the transformation of their high streets, to invest in the improvements they need and to facilitate redevelopment of under-used retail and commercial areas into residential, at one and the same time helping with the housing challenge and delivering much-needed footfall to high street businesses. We will consult on how modernisation of the use classes order and compulsory purchase order regime can help to facilitate the transformation of the high street.

The change our high streets face is irreversible and it will take them time to adapt to it, but I know that many small retail businesses are struggling to cope with the high fixed costs of business rates. Since 2016, we have introduced business rates relief measures worth £12 billion, and many of these reliefs will have benefited high street businesses, but today I can go further. At the next revaluation, in 2021, rateable values will adjust to reflect changes in rental values, but I want to help retail businesses now. So for the next two years, up to that revaluation, for all retailers in England with a rateable value of £51,000 or less, I will cut their business rates bill by a third. That is an annual saving of up to £8,000 for up to 90% of all independent shops, pubs, restaurants and cafés. I will also extend the £1,500 local newspaper discount for a further year. Whatever the national press says, I have been assured of a warm welcome for my Budget from the Royston Crow and The Keswick Reminder.

Local authorities have long been able to provide discretionary business rates relief to other bodies, but not to themselves. And so following representations from my hon. Friends the Members for North Cornwall (Scott Mann) and for St Austell and Newquay (Steve Double), I am pleased to announce a new mandatory business rates relief for public lavatories, so that local authorities can, at last, relieve themselves. For the convenience of the House, Mr Deputy Speaker, and without wishing to get unduly bogged down in the subject, this relief—

[Peter Dowd (Bootle) (Lab)]

Toilet humour.

[Mr Hammond]

Well, at least I am demonstrating that we are all British. This relief will extend to any such facilities made available for public use, whether publicly or privately owned. I can honestly say that that is virtually the only announcement in this Budget that has not leaked. [Hon. Members: “More!”]

We cannot resolve the productivity challenge or deliver the high standards of living that the British people deserve without fixing our housing market. In last year’s Budget, I launched a five-year, £44 billion housing programme to deliver the biggest increase in housing supply since 1970, and I abolished stamp duty for first-time buyers on properties up to £300,000. Some 121,500 first-time buyers have already benefited from our new relief, and the number of first-time buyers is at an 11-year high. Today, I am extending that relief to all first-time buyers of shared ownership properties valued up to £500,000, and I will make the relief retrospective so that any first-time buyer who has made such a purchase since the previous Budget will benefit.

But we have more to do, so I can announce today a further £500 million for the housing infrastructure fund to unlock a further 650,000 homes, the next wave of strategic partnerships with nine housing associations, which will deliver 13,000 homes across England, and up to £1 billion of British Business Bank guarantees to support the revival of SME housebuilders. We are consulting on simplification of the process for conversion of commercial property into new homes, and because we want to see parishes and neighbourhoods enabling more homes for sale to local people to buy at prices they can afford, we are providing funding to empower up to 500 neighbourhoods to allocate or permission land for housing through the neighbourhood planning system for sale at a discount to local people in perpetuity.

I am also grateful to my right hon. Friend the Member for West Dorset (Sir Oliver Letwin) for his review of build-out rates, published today. He concludes that the large housebuilders are not engaged in systematic speculative land banking—[Interruption.] Perhaps Opposition Members would like to read the report. My right hon. Friend makes several recommendations for reform of the planning system in respect of large strategic housing sites, and we will respond to his report in full in the new year.

Meeting the productivity challenge means tapping the potential of every region and nation. Our devolution agenda is giving power back to the people, and today we go further to fire up the northern powerhouse, fuel the midlands engine and back our regions across the UK. We are increasing the transforming cities fund to £2.4 billion and providing an additional £90 million to trial new models of smart transport, including on-demand buses—I think, Mr Deputy Speaker, that is what we used to call taxis in our day. We are launching a competition for proposals for business-led development corporations. We are funding 10 university enterprise zones. There is £115 million for digital catapults in the north-east, Northern Ireland and the south-east and for the medicines discovery catapult in Alderley, £70 million to develop the Defence and National Rehabilitation Centre near Loughborough, £37 million of additional development funding for northern powerhouse rail, and £10 million for a new pilot in Manchester to support the self-employed to acquire new skills. We are backing a new special economic area in south Tees, and we are providing £20 million to further develop the plan for the critical central section of east-west rail between Oxford and Cambridge. And here, in our capital, we support the delivery of a further 19,000 homes by improving the docklands light railway with housing infrastructure fund money.

The decisions announced in this Budget mean, in 2020-21, an additional £950 million for the Scottish Government, £550 million for the Welsh Government and £320 million for a Northern Ireland Executive. Obviously, there are much larger sums to come, as we move ahead over the spending review period with our NHS funding change.

I can also announce funding for further city and growth deals, including £150 million for Tay Cities, £350 million for Belfast and £120 million for North Wales, while negotiations progress with Ayrshire, Mid Wales and Borderlands, and will begin with Moray, Derry/Londonderry and Strabane as well.

I was pleased to be able to respond to a joint request from the right hon. Member for Belfast North (Nigel Dodds) and the hon. Members for Belfast East (Gavin Robinson) and for Belfast South (Emma Little Pengelly) to provide the city with £2 million of help towards the recovery of the city centre following the fire at the iconic Bank Buildings, and we are also moving forward with schools projects in Northern Ireland worth £300 million to increase the provision of shared and integrated cross-community education. And we have agreed to the establishment of a working group to progress plans for short-haul air passenger duty devolution.

To continue to support Scotland’s oil and gas industry, we will maintain headline tax rates at their current level and launch a call for evidence on our plan to make Scotland a global hub for decommissioning. Finally, to support our vital fishing industry as we leave the EU, we will invest £12 million over the next three years in cutting-edge fisheries technology and safety measures.

A Conservative Government delivering for all our proud nations and for all our English regions, driving growth and prosperity across our United Kingdom.

We are driven by a determination to ensure that the next generation will be more prosperous than ours, but we cannot secure our children’s future unless we secure our planet’s future. So at this Budget I take further action with a package of measures, set out in the Red Book, to ensure that we leave our environment in a better state than we inherited it.

There is one particular measure I want to mention. The shadow Chancellor’s recent accident has reminded us all of how dangerous abandoned waste can be, so I will provide £10 million to deal with abandoned waste sites, although I cannot guarantee to the House that £10 million is going to be enough to stop him falling flat on his face in the future.

I also said at the spring statement that we must become a world leader in tackling the scourge of plastic littering our planet and our oceans. Billions of disposable plastic drinks cups, cartons, bags and other items are used every year in Britain—convenient for consumers, but deadly for our wildlife and our oceans. Where we cannot achieve reuse, we are determined to increase recycling, so we will introduce a new tax on the manufacture and import of plastic packaging which contains less than 30% recycled plastic, transforming the economics of sustainable packaging. We will consult on the detail and implementation timetable.

I have also looked carefully at the case for introducing a levy on the production of disposable plastic cups—not just for coffee, but for all types of beverage—and I have concluded that a tax in isolation would not, at this point, deliver a decisive shift from disposable to reusable cups across all beverage types. I will monitor carefully the effectiveness of the action which the takeaway drinks industry is already taking to reduce single-use plastics, and I will return to this issue if sufficient progress is not made. In parallel, my right hon. Friend the Environment Secretary will look to address this issue through the reform of the packaging producer responsibility scheme. Working across government, this ambitious package reflects our determination to lead the world in the crusade to rid the oceans and the environment of plastic waste.

It is only by dealing with our debts and tackling the long-term challenges our country faces that we can sustainably raise wages and living standards. But I recognise that many people are feeling pressure on their household budgets now, and because the hard work of the British people is paying off, I am pleased to be able to announce today a series of measures to help families across Britain with the cost of living.

Turning first to duties, as my right hon. Friend the Prime Minister has already announced, we will freeze fuel duties for the ninth successive year, bringing the total saving to the average car driver to over £1,000 and to the average van driver to over £2,500. The tobacco duty escalator will continue to rise at inflation plus 2%. I have received numerous representations from my right hon. and hon. Friends on one particular subject, and in response I will be freezing beer and cider duty for the next year, keeping the cost of beer down for patrons of the great British pub. And in response to the concerted lobbying of my Scottish Conservative colleagues, I will also freeze duty on spirits, so that we can all afford to raise a wee dram to Ruth Davidson on the arrival of baby Finn, saving 2p on a pint of beer, 1p on a pint of cider and 30p on a bottle of Scotch or gin compared with the inflation assumption in the OBR forecast, while proceeding with the usual RPI increases on wine.

As promised at the autumn Budget 2017, so-called “white ciders” will be taxed at a new higher rate. From October next year, I can confirm that we will increase remote gaming duty on online games of chance to 21%, in order to fund the loss of revenue as we reduce FOBT—fixed odds betting terminals—stakes to £2.

From April 2020, APD—air passenger duty—will be indexed in line with inflation, but there will be no change in the duty rate for short-haul flights. The new 26-30 railcard, which I announced at Budget last year, will be available across the network by the end of the year, saving up to 4.4 million young people one third off their fares, and we launch a package of measures on affordable credit and support for credit unions, which is set out in detail in the Red Book.

The switch to universal credit is a long overdue and necessary reform. It replaces the broken system left by the last Labour Government, a system that trapped millions on out-of-work benefits for nearly a decade. This is not just a welfare measure; it is a major structural reform to our economy that will help to drive growth and employment in the years ahead, and I pay tribute to my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith), without whose tenacity universal credit would never have seen the light. However, I recognise the genuine concerns among many right hon. and hon. Friends about two issues, the first of which is the implementation of this programme. It is an enormous undertaking and we have always been clear we want the migration process to be as smooth as possible. I have already delivered nearly £3.5 billion to help with the transition, including a £1.5 billion package of support at last year’s Budget. Today I can go further, with a package of measures worth £1 billion over five years—[Interruption.] What a surprise. What a surprising response from the Opposition Front-Bench team. It is a package of measures to aid the transition worth £1 billion over five years, enabling my right hon. Friend the Secretary of State for Work and Pensions to introduce additional protections as existing welfare claimants move on to UC. She will announce details when she introduces the managed migration regulations later this year.

Secondly, I have heard the concerns about the rates and allowances within the design of the system. In my first autumn statement, I reduced the UC taper rate from 65% to 63%. Today, I can tell the House that I am increasing work allowances in universal credit by £1,000 per annum, at a cost of £1.7 billion annually once roll-out is complete. That will benefit 2.4 million working families with children and people with disabilities by £630 per year. Universal credit is here to stay, and we are putting in the funding it needs to make it a success because, on this side of the House, we believe that work should always pay.

Delivering higher wages for those in work is core to my mission as Chancellor. Under this Conservative Government, the poorest 20% have seen their real incomes grow faster than the richest 20%, and the proportion of jobs that are low paid is at its lowest level for 20 years, thanks to the national living wage introduced by a Conservative Government in 2016. From April, it will rise again, by 4.9%, from £7.83 to £8.21, handing a full-time worker a further £690 annual pay increase and taking his or her total pay rise since the introduction of the national living wage to more than £2,750 a year.

We accept the Low Pay Commission’s recommendations on national minimum wage rates and will support young people and apprentices with further above-inflation increases. The Low Pay Commission’s current remit is for the national living wage to reach 60% of median earnings by 2020, subject to sustained economic growth. Next year, we will give the Low Pay Commission a new remit, beyond 2020. We will want to be ambitious, with the ultimate objective of ending low pay in the UK. We will also want to be careful, protecting employment for lower-paid workers, so we will engage responsibly with employers, the TUC and the Low Pay Commission itself over the coming months, gathering evidence and listening to views to ensure that we get it right. I will confirm the final remit at the Budget next year.

EU Customs Union and Draft Withdrawal Agreement: Cost

Peter Dowd Excerpts

Monday 22nd October 2018 Commons Chamber

[John Glen]

I am grateful to my right hon. Friend for a number of Budget representations on that point. What I can confirm is that, when the sum of £35 billion to £39 billion was agreed, it was agreed on three principles: the UK would not make its payments sooner than it would otherwise have done; it would be based on the actual rather than the forecast; and it would mean that we would include all benefits as a member state. I recognise the wide range of concerns in the House, including those raised by my right hon. Friend, but we are at a delicate stage of the negotiations and the Prime Minister will be speaking to the House shortly.

[Peter Dowd (Bootle) (Lab)]

The right hon. Member for Wokingham (John Redwood) has some brass neck. He spent eight years being a cheerleader for austerity and he comes to the House today and says that; it is unbelievable. Amid the Tory quarrelling, the Prime Minister’s negotiations appear to succumb to a new failure every day. She has stood staring at the menu for two years while the Cabinet devours itself. It now seems that it may take a bit longer for her to make up her mind, demanding that the EU give further time in relation to the transition period. What we cannot fathom is how the Government are unable to negotiate our exit within the agreed period, begging instead to make it longer.

Humiliatingly, I have to say, we hear that 95% of the agreement is done, as though that is supposed to reassure us. Perhaps I may remind the Government that 95% of the Titanic’s journey was completed successfully. Meanwhile, the Government have gone from discussing a backstop to discussing a backstop to a backstop, to requesting an extension to the transition. These do not signal a Government who are about to emerge victoriously.

Let me ask a couple of questions, if this 95% deal is done. First, on the EU’s trade policy, during the transition, the common external tariff and customs regime will continue to apply to the UK, but third countries will have no legal obligation to continue to treat the UK as if it were a member state. Therefore, what trilateral discussions have the Government had with both the EU and third country partners, such as Mexico, South Korea, Switzerland and all the other countries with which the EU has preferential trading agreements in place, to ensure that the UK will continue to benefit from these arrangements during the transition period? Secondly, what progress have the Government made towards acceding to agreements facilitating trade, such as the pan-Euro Mediterranean convention that facilitates diagonal cumulation of origin, during the transition period and in any deal thereafter?

These matters, along with the question of the wider trade in goods, are easily resolvable with the transition period that has already been agreed. If the Government had got their act together, there would not be talk of additional time. The only thing that is costing the Government is this useless Government.

[John Glen]

It is difficult to discern the precise questions there, but I thank the hon. Gentleman for his comments. The Government are in a negotiation and there are a number of issues that are not yet resolved. With respect to the final state around our future freedom to trade, those are matters that will be reported on to this House before there is a meaningful vote. So he needs to be patient a little longer as we move through that last 5% and deal with those matters.

Oral Answers to Questions

Peter Dowd Excerpts

Tuesday 11th September 2018 Commons Chamber

[Elizabeth Truss]

I am sure my hon. Friend will recognise that we are not going to announce the contents of the Budget at today’s Treasury questions, but I point out that we are a Government who believe in low taxes: we have reduced taxes on basic rate taxpayers by £1,000. Of course, as well as putting that extra money into the NHS, my job as Chief Secretary is to make sure we get value for money from every penny we spend, and that is why we are developing a 10-year plan. We are improving the use of technology and we are getting better value for money from the drugs budget as well.

[Peter Dowd (Bootle) (Lab)]

Is the Chief Secretary aware in the discussions the Health Secretary may have had on NHS funding whether he mentioned his unilateral plan to ditch the 2013 pensions deal agreed with representative bodies, which was supposed to last for 25 years, and which may affect 1 million NHS staff?

[Elizabeth Truss]

What I am aware of is the deal that has been done with NHS workers to give them a 6.5% pay rise in exchange for reform over the next three years. We know that on average public sector workers get approximately 10% more in terms of pensions than their private sector counterparts, but we are also making sure that we have the right wages to recruit and retain people in the NHS.

[Peter Dowd]

Clearly, the Chief Secretary to the Treasury does not even know what she has put out in her name. The pension changes snuck out on Thursday evening could negatively affect the pensions of a further 4 million public sector workers—[Interruption.] No, that is not the case. So I ask on behalf of those dedicated public sector workers—nurses, doctors, social workers, teachers, support staff and refuse collectors—will the Chancellor withdraw these snidey proposals and honour his predecessor’s deal? Is that too much to ask? Or will millions of staff in the public sector be let down and betrayed yet again by this Government?

[Elizabeth Truss]

I think the Labour party has misunderstood the announcement we made last week, which will actually ensure that more money goes into public sector pensions, in line with the deal that we did with the unions previously.

Public Sector Pay

Peter Dowd Excerpts

Tuesday 24th July 2018 Commons Chamber

[Peter Dowd (Bootle) (Lab)]

(Urgent Question): To ask the Chief Secretary to the Treasury if she will make a statement on the public sector pay announcement.

[The Chief Secretary to the Treasury (Elizabeth Truss)]

I am delighted to have this opportunity to discuss today’s announcements of public sector pay rises.

Last September, I informed the House that we would scrap the cap, and now we are delivering on that commitment. What we are announcing today amounts to the biggest pay rise in almost 10 years for about 1 million public workers across Britain, including teachers, armed forces personnel, prison officers, police, doctors and dentists. This comes on top of the positive news we were able to announce in March that 1 million nurses, midwives, porters and other NHS staff would receive a 6.5% pay rise over three years. That deal was a benchmark example of where high pay awards are agreed in return for modernisation of terms and conditions.

We were able to announce these pay rises thanks only to the hard work of the British people, which has brought down the deficit by over three quarters and allowed us to reach the point where the debt will begin to fall this year. We did not listen to the siren calls from the Opposition for damaging splurges, and that is why today we are able to scrap the cap and increase public sector pay. These new pay deals represent what this Government are about. They are affordable and responsible, while making sure that we continue to provide the public with world-class public services. They also reward our hard-working public servants.

It is great, on the final day of this Session of Parliament, that we are able to give every person who works in the public sector positive news on which to enjoy their summer.

[Peter Dowd]

These uninhabited proposals will do nothing to repair the damage done to our brilliant public sector workers by this Government’s slash-and-burn policy in relation to public sector pay. Over the past seven years, our teachers have lost £2,500, our firefighters £3,000, our prison officers £4,000 and our paramedics £4,000 in real-terms pay cuts. Even the armed forces have been affected by this stingy Government.

Yet the Government think it is enough to announce to the press—to the press, Mr Speaker, yet again—an uncosted proposal that will, at best, leave workers just about breaking even on their austerity-slashed pay, while civil servants and others continue to see their pay cut. This is a mendacious PR exercise. Based on today’s announcement, after eight years of real-terms pay cuts for employees in the public sector, our police officers, junior doctors, some specialist doctors, GPs and dentists are all being offered a further real-terms pay cut.

Will the Minister now confirm what the additional cost of each announcement is to Departments? Will she also confirm that this cost is being siphoned from existing departmental spend, with no new money made available? This will have a disastrous effect on Departments already close to ruin from austerity; they will be forced to cut staffing levels and services to cope. Can she guarantee that there will be no reductions in staffing levels across the public sector because of this unfunded increase in pay? Can she guarantee that public services will not be adversely affected by her failure to provide proper funding? Will she explain why civil servants continue to see real-terms pay cuts? They are always at the back of the queue when it comes to pay. How much additional social security expenditure has resulted from seven years of cuts to public sector workers’ pay? Does she agree that it has been this Conservative Government’s policy for the past seven years to force thousands of public servants on to social security by cutting their income?

The Conservative party should be ashamed. The Government’s announcements today leave public sector workers treading water. These proposals will force threadbare Departments to make further cuts to vital services and to reduce staffing levels, and what for? All so that the Prime Minister can get a cheap PR hit to try to cling on to power. We do not buy it. Labour demands that public sector workers get the pay that they deserve.

[Elizabeth Truss]

Yet again, we hear from a Labour Front Bencher not a positive welcome of the news today, which will mean hundreds of pounds more in the pay packets of public sector workers, but yet more complaints and no solutions.

We have scrapped the cap, and we are making sure that public sector workers get a decent pay rise. Let me tell the House what that will mean for workers in the public sector. For teachers earning under £35,000, it will mean a 3.5% pay rise, earning them an extra £800 a year. Police will see a 2% rise, with the average police constable on a £38,000 salary seeing a £760 pay rise. Prison officers will see a 2% rise and a 0.75% bonus, with extra for those who are new recruits. Junior doctors will get at least a 2% pay rise, and the hard-working people in our armed forces will receive a 2% pay rise and an additional 0.9% bonus, to reflect the brilliant work they do for our country.

The hon. Gentleman asks me how these pay rises are funded. Unlike the profligate Labour party, we have worked to support every Department to ensure that these pay rises are affordable within their budgets. In the case of the Department for Education—[Interruption.] The hon. Gentleman asked me the question. Does he want to hear the answer or not? [Interruption.] He obviously does not.

Taxation (Cross-border Trade) Bill

Peter Dowd Excerpts

3rd reading: House of Commons & Report stage: House of Commons
Monday 16th July 2018 Commons Chamber

[Kirsty Blackman (Aberdeen North) (SNP)]

Given that there may not be a Third Reading, I will start very briefly with some thank yous. I would like to thank Scott Taylor, one of our researchers. I would also like to thank the work of the Public Bill Office, particularly that of Colin Lee and Gail Poulton, who have been absolutely excellent in their support to all of us who have been here throughout the passage of the Bill.

I want to talk about the history of the Bill and how we got to this point. We had the Committee stage earlier this year. On the Saturday morning after it finished, and almost out of the blue, the UK Government announced that they would not be entering into a customs union. They clearly did not think it through, bringing out the announcement at the most stupid time: after all the debates in Committee. It was totally ill-thought-out.

We then had the Chequers agreement on 6 July. The White Paper was published on 12 July, which Members will note was the day after the amendments were tabled to this Report stage of the Bill—we all had to table our amendments before we had actually seen the White Paper. I thank the Minister for coming to Westminster Hall to give us some level of reassurance, but pretty much all the reassurance he could give was, “Please look at the White Paper that’s coming out on Thursday.” It has, therefore, been really difficult to prepare for the Bill. It has been really difficult to write this speech, trying to game exactly what is going to happen tonight. I am still not clear.

There are too many factions in this House. We have the UK Government, the Conservative remainers, the European Research Group, the Democratic Unionist party, the Labour leavers, the Labour remainers and the Labour Front Bench. The UK Government will not support things put forward by anybody who supports remain. The Labour Front Bench will not support anything put forward by the Conservative remainers. The members of the ERG will not support anything put forward by anybody except themselves. The Democratic Unionist party will support whatever the UK Government tell it to, on the basis that it is being paid to do so. It is a complete shambles. Trying to do anything sensible in this House is incredibly difficult, especially given that we know there is a majority for a customs union among the Members of this House. Despite that, we are going to end up in a situation where members of the ERG, who believe in the polar opposite of a customs union, are having their amendments accepted. When the rest of us put forward anything vaguely sensible, our amendments are not accepted.

This is certainly not about sovereignty for the people or sovereignty for Parliament; it is about sovereignty for a very small group of elite Tories who want to have their say. The Government are letting them have their say. I could not be more angry about the fact that the ERG’s amendments are apparently going to be accepted. I do not want to direct all my ire at those on the Government Front Bench. Those on the Labour Front Bench need to be absolutely clear on their position. They need to be clear that they will support the softest possible Brexit. If they are talking about a jobs-first Brexit, they need to recognise the benefits of the customs union and the single market. They have the opportunity to do that tonight by supporting some of the amendments that have been tabled by those who support a soft Brexit.

The Scottish National party does not support fully a number of amendments that we plan to vote for tonight. Our position is that Scotland voted to remain in the EU, so we would like to remain in the EU. Scotland supports remaining in the single market and the customs union, so the SNP will support anything that keeps us in the single market and the customs union. In the absence of those options being on the table, we will do what we can to protect the economic and cultural interests of the whole United Kingdom. Even though some of the amendments are not brilliant, we will vote for anything that makes Brexit slightly softer than the Brexit that is being proposed. I needed to make it clear that just because we support an amendment here does not mean that it is a preferred option. It means that it is not quite as bad as some of the other options.

I make it clear that I will press new clause 16, in my name and the names of my colleagues, and I would also like to speak in favour of our other amendments. The SNP position is crystal clear, as I said. The UK Government position is not. I welcome some clarity that is given in the White Paper that was published after Chequers, but I have major concerns about some of it. It mentions specifically a trusted trader scheme. On the trusted trader scheme that we have—the authorised economic operator scheme—I have raised concern after concern about it, and I am not the only one; organisations such as the British Chambers of Commerce have, too. If there is to be an expanded trusted trader scheme, it needs to actually work. It needs to be applicable to small businesses and businesses need to be able to access that scheme. We are now at the stage that businesses should know what those schemes are. If the Government are going to bring them forward, they need to do so as quickly as they possibly can so that businesses can be clear on what basis they will be trading in future. That is really important.

I am pleased to see that diagonal accumulation has been recognised in the Chequers agreement. I have been talking about it for some time, and I am really glad that it has been recognised and that we will have a situation where we will possibly still be able to export cars to South Korea, because that is really important for our car industry. I am pleased that the Government have now made it clear that they are pursuing that.

Protective geographical indicators are also mentioned in the Chequers White Paper. I am slightly concerned about the way the Government are going on this. It would be very good to have more information around that. A PGI scheme that applies only to the UK and does not recognise EU PGIs is a bit of a problem, so we need more clarity from the UK Government on how they intend the PGI scheme to work. I know that there is a negotiation, but if we could have their point of view first, that would be very useful.

I want to briefly mention some of the other meat in the Bill and something that the British Retail Consortium brought to us. It encapsulated some of the issues with the Bill very neatly. It said that there are not yet agreements on security, transit, haulage, VAT and people and that we need mutual recognition on veterinary, health and other checks with the EU. It seems that the Government are pursuing some of this, so that is good news. We need investment in IT systems to deliver the customs declaration system. Again, I am still not convinced that this will come through in time, so if the Minister could give reassurance that it will, I would very much appreciate it. We need co-ordination between agencies at ports and borders, as well as investment and capacity and staff at ports. The Government have not done enough on both those things. They have not put the extra resource into ports. They have not told ports how they will be administering these things in the future. If ports are going to have to massively increase their staff numbers, they need to know now how they will do that.

On queuing, a two-minute delay at Dover will create a 17-mile queue, so it is not as though Operation Stack will just happen as normal. This will not be Operation Stack. It will be an incredibly large version of it, and Operation Stack was bad enough. The BRC also mentioned AEOs, particularly in relation to small and medium-sized enterprises. All those things are still concerns about the Bill and I will raise them on Third Reading, if we have a Third Reading debate, because I do not believe that the Bill is fit for purpose as it is.

I specifically want to talk about the new clauses from the ERG. If the UK Government are bound to accept them, we have a very, very severe problem. I have major issues with new clauses 36 and 37 and amendments 72 and 73. New clause 36 relates to reciprocity. Page 13 of the Chequers agreement says:

“At the core of the UK’s proposal is the establishment by the UK and the EU of a free trade area for goods.”

It then goes on to make clear on page 17 that

“the UK is not proposing that the EU applies the UK’s tariffs and trade policy at its border for goods intended for the UK.”

This new clause directly contradicts that.

What is the point in having a White Paper released on a Thursday if the Government are going to ignore it on Monday? I do not understand how we can be in that position. How can businesses know where we are going if the Government do not even know where they are going? For the Government to be accepting amendments by a group of around 14—who knows how many of them there are?—ERG members to get a hard Brexit is absolutely ridiculous. If there is going to be a Brexit, we need a Brexit that does what the Labour party suggests it should do: protects jobs. We need the Labour party to support a Brexit that protects jobs as well, not just us.

The Bill is a mess. It does not do what it set out to do, which is replicate the union customs code, and it does not now do what the Chequers agreement said it would on Friday. We need everybody in the House, from all the various factions I mentioned earlier, to get behind proposals that protect jobs and the sovereignty of the people, not just the sovereignty of an elite few.

[Peter Dowd (Bootle) (Lab)]

I read the White Paper on the train home on Thursday, if only out of a sense of morbid curiosity, but following the Prime Minister’s capitulation to the Brexiteers today, that curiosity has turned to a sense of the macabre. To begin with, we had the woman in the bunker with the blacked-out windows saying we were outward facing. Are we? This from the Prime Minister who invented a hostile environment for the Windrush generation and for disabled people claiming their rightful benefits and whose Government have been on the wrong side of the law more times than Arthur Daley.

The Prime Minister went on to state that we had a dynamic and innovative economy. Do we? Our economy is 35% less productive than Germany’s; we invest less and we have the most regionally imbalanced economy in Europe. Growth is sluggish and inflation stubborn. And on it goes—it gets more surreal. She says we live by common values of openness and tolerance for others and the rule of law. Really? The only thing the Conservative party is open to and tolerant of is big fat donations from Russian oligarchs. But here is where it gets really interesting. When she speaks about sticking to our principles, one has to wonder which principles she is referring to—the ones she referred to yesterday and which are enshrined in the White Paper or those she holds this afternoon, which tear the White Paper to shreds. Perhaps the Minister can enlighten us.

The Prime Minister wanted to deliver an ambition to “once and for all” strengthen our communities, our Union, our democracy and our place in the world. I will take those claims one by one: our communities have been ripped apart by austerity; our Union is in danger from Ministers out of touch with the needs of any nation and afraid to move away from their desks in case someone else takes it; our democracy is threatened by swathes of Henry VIII powers; and our place in the world is a laughing stock due to the Prime Minister’s supine sycophancy to Donald Trump, who humiliated her.

The White Paper—what is left of it—came from the pen of a Prime Minister obsessed with silly soundbites. She used to talk about “Labour’s magic money tree” until she wanted a magic money tree of her own with which to bribe the Democratic Unionist party, when that phrase was quickly ditched. What about the infamous “strong and stable” mantra? It turned out to be more like a strong and stable smell of panic during the election and was ditched as well. Finally, it seems that this White Paper has also been ditched.

As for Northern Ireland, I present, the buffer zone—a 10-mile-wide area along the entire boundary between Northern Ireland and the Republic. Under the EU’s trading rules, to be operational this buffer would have to be policed on both sides of the 10-mile divide. Did we really spend decades trying to get rid of divides in Northern Ireland only to resurrect them? I think not. As for the facilitated customs arrangement, we are not clear what about it constitutes a partnership, as it would effectively leave UK customs officials working to maintain a customs union that we are no longer a part of.

Regardless of who is responsible for managing the duties, it remains unclear how the FCA would be frictionless. Presumably, the final destination of goods would have to be queried as they enter the UK. This would slow down the passage of goods across our borders and prevent intricate supply chains from functioning properly. It would lead to waste, uncertainty and expense for business, to higher prices for consumers and to job losses and production moving abroad, as the right hon. Member for Broxtowe (Anna Soubry) pointed out. In that regard, the comments from the hon. Member for Gainsborough (Sir Edward Leigh) were unconscionable.

What about the UK border? Does the Minister expect checks to be in place to ensure that goods that claim the UK as their final destination are not diverted into the EU once they arrive? Presumably, we would need customs checks and controls between the EU and the UK to reconcile goods to documents when, for example, UK anti-dumping duties exceed those applicable on import. Can the Minister clarify? Can he tell us how many trusted traders—the Tories using the word “trusted”; that’s a laugh, isn’t it?—are currently registered with the Government’s scheme and how many they believe will be registered by the end of the transition period?

Of course, all this can be avoided if the House chooses to support Labour’s clear and pragmatic solution to the issues of frictionless trade within the EU and preventing a hard border in Northern Ireland. New clause 11 presents Labour’s practical solution to the problems that have confounded the Conservatives. In our new clause, we call on the Government to negotiate a new customs union with the European Union, to be in place when we leave the current customs union at the end of the transition period. That is the only way to ensure that we can have frictionless trade with our largest trading partner and help to prevent a hard border between Northern Ireland and the Republic. It is what business needs and producers want, and it is what would most benefit the public.

Banking Sector Failures

Peter Dowd Excerpts

Thursday 12th July 2018 Westminster Hall

[Peter Dowd (Bootle) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Bone. I thank my hon. Friend the Member for East Lothian (Martin Whitfield) and the hon. Member for Stirling (Stephen Kerr) for bringing this important matter for us to debate, discuss and tease out. I thank the hon. Member for Beckenham (Bob Stewart) and the hon. Member for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry) for their comments. I thank, of course, the hon. Member for Thirsk and Malton (Kevin Hollinrake), whose report set a good scene for us.

I want to briefly quote from that report. I know we do not have as much time as we would have if the hon. Member for Inverness, Nairn, Badenoch and Strathspey had not taken up so much time, but I am not criticising that.

[Mr Peter Bone (in the Chair)]

Order. That is not quite right. I think we have until 4.30 pm, so do not cut your remarks short because of that.

[Peter Dowd]

Okay. Thank you, Mr Bone. The report states:

“In the wake of the financial crisis, the banking sector’s reputation has suffered from a number of disturbing scandals, many of which have had a catastrophic effect on thousands of individual lives and livelihoods. They have also damaged confidence, resulting in reduced demand for business borrowing and, consequently, a slowing of economic growth.”

That encapsulates not just the context of those affected, but the broader sense of the economy.

This is not about bashing bankers. Other hon. Members have noted that many thousands of people work in the banking sector whose hands are clean regarding this. Let us not—we have not—go down the path of blaming everybody in the banking sector. My constituency has a large banking sector. Santander has a centre there with about 2,000 people. We all appreciate that it is not everybody in the banking sector.

[Bob Stewart]

It is about the morale of people who work for companies such as RBS. How could all those decent people, who are working really hard, want to be associated with these bloody criminals? They do not! It is really bad for their morale.

[Peter Dowd]

I think the hon. Gentleman should tell it as it is and stop holding back on these matters. Clearly, there is something rotten in the state of Denmark. The banking system appears, at times, to have fallen under the worst instincts of greed, instinct and, in some cases, a predatory capitalism, which others have alluded to.

This year marks the 10th anniversary of the Government bailing out the banks at the height of the financial crisis. In October 2008, the then Chancellor, Alistair Darling, announced £17 billion and, subsequently, £20 billion-worth of recapitalisation funds for Lloyds and RBS respectively. At the height of the crisis, taxpayers—everybody here and people in the Public Gallery—paid out of their own pockets, in one fashion or another, to the tune of £1.5 trillion. That is an awful lot of cash to come out of people’s pockets.

It is worth remembering that it was the ineptitude, at least, of certain bankers and the greed of others—not, I must say, a Labour Government—that trashed the global economy, leading to the UK financial sector receiving the largest taxpayer-funded bailout in history. That narrative has given many people a “Get out of jail” card. Blaming the last Labour Government is not helpful, because it takes attention away from the real culprits.

The taxpayers who funded the bailout of RBS and Lloyds have since found themselves rewarded by the Government, with the deepest cuts to public services. That has to be said, because it is a consequence of the banking crisis, too. There are consequences for individual businesses, for small and medium enterprises, but there are also consequences of that greed that we all—in one fashion or another, whether it is our brothers, sisters or parents—suffered. Let us not forget that, nor self-flagellate on this matter.

I have to tell the Minister, it is an inconvenient truth that the Chancellor has sold off taxpayers’ shares in Lloyds and part of our shares in RBS. According to the National Audit Office, the Government sold shares in Lloyds at a loss of £5.9 billion. The recent sale of 925 million shares in RBS left taxpayers with a £2.1 billion loss. That is a total of £8 billion taken out of the pockets of taxpayers and of small and medium enterprises. That money could have been used for compensation and redress. That is the fact of the matter. We should not be selling these things off when people are already queuing up to get back some of the money that was inappropriately taken from them; that is the context.

I turn now to the failures of the banking sector since the financial crisis. Several Members used their speeches to express concerns, for example about the number of banks closing in the high street, and those closures are happening despite the Government introducing the access to banking protocol to prevent closures. This issue about trust and confidence continues; we must have trust and confidence in our banks.

In 2015, the four big banks made £11 billion in profits from high street banking. It is clear that they are in a position to provide these vital services and curtail closures, which are contributing further to the decline of our high streets and leaving communities all over the country financially excluded. We were there for the banks when they messed up and they must be here for us in our communities now. We helped them and they have got to help us and our communities.

The next Labour Government are committed to ensuring that banks provide the financial infrastructure that businesses and communities need, and we will replace the access to banking protocol with alternative legal requirements. My hon. Friend the Member for East Lothian referred to those alternative legal requirements and he also raised the issue, as did others, of the Global Restructuring Group. It is worth my making a comment on that issue, too.

Apparently—indeed, evidently—the GRG was originally set up to support businesses that were in trouble and bring them back to financial health; apparently that was its original raison d’être. And where that was not possible, the GRG would manage the cessation of a business to protect the bank’s interests. There is nothing wrong with protecting the interests of a bank, if it is done reasonably, fairly and through the proper channels, and not with a predatory approach. However, thousands of small and medium businesses, many of which had been viable in the medium or long term, were put into the GRG and little attempt was made to help them. That has become apparent and these banks have got to recognise that that was the case.

I think the Tomlinson report has been referred to already today. It examined numerous cases of businesses consigned to the GRG and found very few examples of a business entering the GRG and then moving back out and into local management. It was a one-way street; it was a cul-de-sac for those businesses.

The Tomlinson report recorded strong evidence of RBS extracting

“maximum revenue from the business, beyond what can be considered reasonable and to such an extent that it is the key contributing factor to the business’ financial deterioration.”

So, the people who it was thought would help a business did not just fail to help it; they actually gave it a good kicking. That is the fact of the matter for many, many businesses. As I said, the very people who were expected to help save businesses did the opposite.

Of course, in their speeches today Members have cited a number of specific cases of businesses in their constituencies that were victims of this scheme, and “victims” is not too strong a word to use, because they were victims. There are heart-rending, heartbreaking stories of people that Members have brought to us today, and in our constituencies we have all encountered such cases, so these incidents are not isolated incidents.

All of that has meant that in certain situations the GRG effectively intervened in the valuation of assets, as has been indicated already today, triggered default and then took advantage of the consequences. Some businesses saw as much as a two-thirds reduction in their valuation in just two months. I repeat that—some businesses saw as much as a two-thirds reduction in their valuation in just two months.

I am aware that a complaints process is still ongoing between the RBS and its former business customers, and the victims of the GRG, as well as discussions about compensation. As I have said, many of us have been involved, to some degree or other, in this process. So I echo the calls made by hon. Members today and by my hon. Friends the Members for Norwich South (Clive Lewis), for Sefton Central (Bill Esterson) and for Stalybridge and Hyde (Jonathan Reynolds) in previous debates that this issue demands a full and independent public inquiry. Given the revelations in the Financial Conduct Authority’s section 166 report, there must be a comprehensive examination of all matters that could have led to practices that, at the very least, bordered on being illegal or were illegal. I know that the hon. Member for Thirsk and Malton was more robust in his approach to this issue than I have been, but I understand his sentiments.

The reality is that the Government’s response to what amounts to a scandal has been woeful at best, particularly when we consider the seriousness of the reports on this issue. Over the past decade, the relationships between banks and their customers have been damaged by a series of high-profile incidents. Business banking scandals, record fines and the closure of high street banks across the country have placed an insurmountable amount of pressure on this relationship.

The hon. Member for Thirsk and Malton says that one bank in particular is getting a bit tired of these indications. The suggestion that, in effect, we really ought not to be pushing this inquiry and that as a result their own good will is going, is frankly outrageous. It really is outrageous. Taxpayers were forced or required—whatever word people want to use—to bail out the banks 10 years ago, and quite rightly they feel aggrieved by the continuing culture in some situations in the banking system, which too often treats customers as a commodity and not as customers, which is really not good for the health of the economy. The question is this: what is the purpose of finance? We have got to get a grip and realise that the purpose of finance is to benefit the nation and not just a few.

Things are in pretty dire need of change, which is why Labour are committed to creating a more diverse banking system, backed up by legislation. A Labour Government would create a national investment bank, similar to the ones already operating in Germany and the Nordic countries, which will bring in private capital finance to deliver lending power. The national investment bank would also support a network of regional development banks that would be dedicated to promoting growth in their communities. The banks will deliver the finance that our small businesses, co-operatives and innovative projects desperately need, and in a trusting environment.

We need action now. We have had passion and anger, and quite rightly so, but what we need now is action. We need to put matters right as soon as we can. We do not need any more talk; we need action now. So, in that regard, I turn finally to the legislative process. As you know, Mr Hanson, a good deal of parliamentary time has been spent in talk and debate on these matters, and in talk and debate on other matters, which may be relevant for some people but are not relevant to the health of our economy, our banking sector and our businesses, including our SMEs.

So I make an offer to the Minister today, to help restore trust in the banking system. Yes, let us have a tribunal system; let us have a dispute resolution system; and let us have access to all those things. However, let us also have a tribunal system that we can all trust and believe in.

I give a commitment from the Labour party that if the Government want to set aside legislative time to put that tribunal into the system, they will have our full backing to do that, because we must take action now—not tomorrow, next week or next year. We must take action now.

--- Later in debate ---

[John Glen]

I thank the hon. Gentleman for that intervention, but I will take the opportunity to correct him. The Government do not have a 70% shareholding. We have a 62.4% shareholding. We do not have control of the day-to-day running of the bank, in the same way as the Scottish Government do not have control of Prestwick Glasgow Airport, yet they have a complete shareholding in it. We need to be real. There is a difference between ownership and day-to-day control. I want to address the practical issues because our constituents want to know what is being done to deal with these challenges. Before I go into that, I want to acknowledge that in previous debates I was challenged by Members from constituencies in Scotland. I will visit Scotland for four or five days at the end of August during the recess to address specifically the issues around rural banking. I went to look at the mobile banking units of one of the banks in Derbyshire in the previous recess, and I take very seriously the concerns about how effectively they function in terms of support for disabled people.

[Peter Dowd]

What sort of message does it send to banks when all these closures are happening and in 2016 the Government decide to cut, for example, the banking levy from £3 billion to £1.3 billion, sequentially, year on year? The Minister can try to duck the issue, but he gives a bung to the banks while they close their branches, and that is not acceptable.

[John Glen]

I want to try to address our constituents’ concerns about bank closures and what the Government are doing to see that their services are provided. The Post Office and the banking industry have a commercial agreement that enables 99% of the UK’s personal and 95% of the UK’s business customers to carry out their day-to-day banking. I am concerned about the effectiveness of that arrangement, so I am determined that public awareness of those services should be greater. I am pleased that UK Finance and the Post Office have responded to my call for further action, particularly when the last bank in town closes, to make sure that the transfer of responsibility—

--- Later in debate ---

[John Glen]

I am happy to look carefully at the issues and the respective responsibilities and interaction between them that the hon. Gentleman raises. I fully accept the sensible point he makes.

I want to return to the case raised by my hon. Friend the Member for Stirling. Several specific cases were raised and my hon. Friend spoke passionately about his constituent’s case, which is illustrative of many of the experiences that sadly occur. Following my meeting, I received a letter from Ross McEwan in May that said that his complaints handling team would be happy to discuss constituency cases with Members. I encourage all Members to do so. I want to put this on the record. I particularly encourage my hon. Friend the Member for Stirling to raise his constituency case with the team. I am keen to understand what sort of response he gets and how satisfactory the process is.

As to the comments of the hon. Member for Bootle (Peter Dowd) about the sale of RBS shares, I am not one to enter into unnecessary partisanship in such discussions, because the issues are important, and I generally welcome the tone of the debate, but he must acknowledge that when the shares were purchased by the Government for £5.02 in 2008 it was not a rational economic choice. It was necessary for the Brown Government to secure the banking system. Therefore, to point out the difference in price, after the Government had taken advice from those who are stewards of the Government’s interest, based on value for money, is not really rational. Most consumers would not have purchased shares at the time in question; it was for the good of the nation.

[Peter Dowd]

Okay, so if we push the bank aside and forget that, how does the Minister explain the loss to the taxpayer in the sale of the Post Office, which was another billion or two pounds—or is that irrelevant as well? How does he explain the reduction of 26% in corporation tax for banks and other corporations, to 19%, when people in the Gallery cannot get a penny out of the Government?

[John Glen]

I am glad that the hon. Gentleman has conceded the point on RBS. I want to focus on banks, and I was responding specifically on the matter of RBS.

I want to set out what the Government have done to address the issues that came to the fore during the financial crisis, because the regulatory framework and what has evolved over the past 10 years is a foundation for some of the outstanding challenges that we need to resolve. Since the crisis, the Government have reformed the UK system of financial regulation for the benefit of the industry and the people who rely on it. We have bolstered standards across the sector and taken strides to restore public trust in financial services. I acknowledge that there is more work to be done, and I shall come specifically to the issues raised in the report of the all-party group, and in other work. We have regulators armed with comprehensive powers and responsibilities co-operating to identify and address risks across the financial sector. The Financial Stability Board has praised the UK for its successful transition to a new regulatory regime, and the International Monetary Fund has applauded the UK’s more resilient system. We have implemented reforms to improve individual accountability in the financial services sector, and that includes the introduction of the senior managers and certification regime, which promotes individual responsibility.

My hon. Friend the Member for Thirsk and Malton (Kevin Hollinrake) set out a list of individuals about whom he has outstanding concerns; and it must be right to hold people to account. Where evidence exists for individuals having behaved criminally or in a way that needs further analysis, it must be brought forward. I understand that the shadow cast over the issue by outstanding cases needs to be resolved by the regulator. However, the SMCR promotes individual responsibility, holding senior managers to account for misconduct that occurs on their watch. It ensures that individuals at all levels can be held to appropriate standards of conduct. Both those things were key recommendations of the post-crisis Parliamentary Commission on Banking Standards. The SMCR was implemented for all banks, building societies, credit unions and Prudential Regulation Authority-designated investment firms in 2016. The regime will be extended to cover insurance firms from December 2018, and all other Financial Conduct Authority-regulated firms in December 2019.

I want now to talk about the core issue of SME lending. Despite significant improvements to the system at large, I am acutely aware that concerns remain about misconduct within the sector.

Treasury Spending: Grants to Devolved Institutions

Peter Dowd Excerpts

Tuesday 3rd July 2018 Commons Chamber

[Peter Dowd (Bootle) (Lab)]

I am not quite sure whether I need a wee dram after that speech by the hon. Member for Glasgow North (Patrick Grady). We have moved from the turgid to the ranting in one fell swoop, and it got the point where I was looking forward to the Chief Secretary’s speech, which takes something.

I will not regurgitate what has been said, because I could not make head nor tail of it, quite frankly, and I do not suspect the Members who made those speeches could, either. These debates come on the eighth anniversary of the Conservatives’ first austerity Budget, and we are still seeing the effects of that pernicious and ill-informed policy in these estimates.

Back in 2010, the then Chancellor outlined a package of cuts worth £81 billion, to be rolled out gradually, with many still to take effect during this Parliament. There has been an absolute decimation of the public realm, and the vast contraction in spending has had devastating social consequences. A cash-starved NHS is at crisis point; social care has been forgotten and ignored; there has been the longest fall in living standards since records began; and the Office for Budget Responsibility is saying that wages will stagnate for another two decades. Meanwhile, swingeing cuts to the regions have left the UK more unequal.

Today, the Local Government Association published a report showing that local authorities will have had £16 billion cut from their core funding by the end of the decade, leading to a £7.8 billion funding gap by 2025. When Conservative Members call for special consideration, I remind them that they all supported those decisions, with no dissent, year in, year out. With no codicils and no caveats, they supported every one of those spending cuts. They are now complaining and saying that they need their communities back up and running. Quite simply, they voted for these cuts in their own areas, and they should have the guts and the backbone to admit it.

Those cuts helped to create a sense of hopelessness and destitution in many places across the UK, one which no doubt contributed to the Brexit vote a few years after Mr Osborne’s slash-and-burn Budget. It is very strange that, after pursuing this unpopular and ineffective programme, cutting Department after Department, the Prime Minister managed to find enough cash to buy the support of the Democratic Unionist party. It is regrettable that DUP Members are not here today, but the fact is that the DUP should not have had to ask in the first place.

Yes, ironically, the Prime Minister sprouted the magic money tree in the rose garden of No. 10 on the very spot where the giggling David and Nick shook hands on the austerity deal. Indeed, £410 million of that deal is included in these estimates, with some £590 million left to be allocated. Perhaps the Chief Secretary could tell the House when the remaining millions promised to the DUP will be put before Parliament.

We have no issue with the funding of Northern Ireland. After all, following eight years of austerity, 370,000 people there are now living in poverty. What we object to is the Government telling the public during an election campaign that there is no fiscal headroom for investment, before immediately finding a £1 billion windfall to keep themselves in power. Unfortunately, the other devolved nations have not been privy to similar arrangements, as they could not afford to offer the Prime Minister continued tenure in office in return.

Looking north of the English border, the Scotland Office sees a significant reduction in its departmental budget. I also note that some spending has been allocated for city deals in Edinburgh, Inverness and Aberdeen. Alongside that funding, perhaps the Chief Secretary can tell us how much money the UK Government will invest in the new or recently signed city deals in Scotland, such as the Stirling and Clackmannanshire deal. Will she give us more details on the Glasgow and Clyde Valley city deal by updating us, for example, on whether there will be any additional Government funding for that deal, particularly for infrastructure projects?

Turning to Wales, the cash grant proposed for the devolved Welsh Government is 2% lower than the amount they received last year and comes at a time of unprecedented austerity for Wales. The Welsh Labour Government’s budget will be 7% lower in real terms by the end of the decade than it was in 2010-11 as a result of the UK Government’s cuts. That means there is £1.2 billion less to spend on public services. As with Scotland, this is the first financial year the Welsh Government have been given greater control over taxation. The Wales Act 2017 and the Welsh fiscal framework devolved stamp duty and landfill tax to the Welsh Government. Responding to that, the Government have reduced the block grant by £269 million to reflect changes to the amount of tax revenue the Welsh Government now collect directly.

Although the devolution of Welsh taxes is welcome, Labour is the real party of devolution and wants to ensure that the Welsh Government have a greater level of fiscal autonomy and financial self-determination. However, this also puts Wales in a vulnerable position. Welsh taxes will need to grow as fast as those in the rest of England to keep up with cuts to the block-grant. In the case of stamp duty, which has been replaced by a land transaction tax, Wales has received no agreement from the Government to protect any fall in revenue. That is particularly concerning given the deep-rooted differences in UK property market conditions, especially after Brexit, which risk leaving the Welsh Government exposed to risks that are outside their control. In addition, Wales’s slower population growth may lead to slower revenue growth than in the other nations of the UK.

The Opposition are also concerned by the method that has been agreed upon to determine how the Welsh block grant is cut. The comparable model means that Wales will lose out even if revenues per head grow at the same rate as everywhere else in the UK. When offered the same method, the Scottish Government rejected it outright, and the Welsh Government agreed to it only after the Treasury agreed to a Welsh needs-based factor being included in the Barnett formula.

So although the Government’s recognition of the Welsh population’s higher needs is a welcome step, the uprating of Barnett consequentials to reflect the high need must also be closely monitored. The transitional uprating of 5% and the agreed funding floor of 15% should not be considered a fait accompli by the Treasury. Instead, both rates should be regularly reviewed by this House and the Welsh Assembly, and, where necessary, uprated.

The day-to-day spending budget for the Welsh Government is yet another casualty in the Government’s continued austerity programme. The Welsh Government this year will see a 3.3% reduction in both their capital and resource budget compared with last year’s final budget. The reality is that the Treasury is pulling the rug from under the Welsh Government by demanding that they do more with less. It is the same old story that we have seen played out time and again, for example, in relation to local government in the UK. Ministers have cynically devolved taxation as a means to also devolve their austerity agenda. That is another case of the Tories not having the courage of their convictions; it is all a charade and an illusion. Financial settlements are dressed up, but in the end Scotland, Northern Ireland and Wales will inevitably find that they have less. Those nations deserve better from the Government; they deserve a better deal, one that is fair. With these estimates, they are not getting that deal and, to use the words of the Chief Secretary, “That’s a disgrace”.

--- Later in debate ---

[Elizabeth Truss]

I have already had some discussions about the Tay cities deal with the Secretary of State for Scotland, and we will look at the details. We constantly have to make sure that every piece of Government spending has the best possible value for money. It was significant that in the speeches from SNP Members we heard nothing about value for money or the fact that taxpayers pay for spending.

[Peter Dowd]

Will the Chief Secretary join me in congratulating the hon. Member for Stirling (Stephen Kerr) on actually getting an answer out of this Government?

[Elizabeth Truss]

My hon. Friend the Member for Stirling is an extremely effective Member of Parliament from whom Members from all parties could learn.

Oral Answers to Questions

Peter Dowd Excerpts

Tuesday 3rd July 2018 Commons Chamber

[Elizabeth Truss]

We are currently considering those responses carefully, and we will publish them shortly.

[Peter Dowd (Bootle) (Lab)]

Eight failed years of austerity have meant poor levels of funding for local government. In fact, today the Local Government Association reports that, by 2020, councils will have had £16 billion of funding cuts. With low pay, woeful productivity, tenuous job security, stubborn inflation, rising national debt, a huge deficit, a sinking pound, creaking public services, decaying infrastructure and chaotic railways, what other wheezes does the Chief Secretary have up her sleeve to wreck the economy further?

[Elizabeth Truss]

We are building. We saw a record number of new businesses started last year. We have record levels of employment across our economy. We have brilliant Conservative Mayors, like Andy Street and Ben Houchen, who are attracting new businesses to their areas and redesigning their port infrastructure, whereas Labour councils across the country are doing things like closing down Airbnb, trying to stop Uber and trying to stop progress.

[Peter Dowd]

Yes, that told me. It gets worse, if that were possible. This year, business investment growth is slowing, annual export growth is slowing, service sector growth is slowing and economic growth is slowing. With Brexit looming and punch-ups in the Cabinet, should the nation’s economic future really rest in the hands of a go-slow Government?

Business Rates

Peter Dowd Excerpts

Wednesday 13th June 2018 Westminster Hall

[Peter Dowd (Bootle) (Lab)]

It is a pleasure to serve under your stewardship, Mr Gray.

I thank my hon. Friend the Member for York Central (Rachael Maskell) for securing this debate. It is important to put the issue of business rates into context with regard to the amount of money they raise in receipts. In 2018-19, the rates will raise £30.5 billion, the sixth highest tax receipt in the country. That is a substantial amount of money. We need to look at the business rates again, and in context.

I am pleased that my hon. Friend mentioned the turmoil on the high street, although that is not equal across the country—in some places, there is even more turmoil than in others. Nevertheless, the general tone is one of turmoil, with 10,000 stores to close, including the casework examples she alluded to. The prevarication needs to stop, and I am pleased that my hon. Friend gave us four ideas to consider.

The right hon. Member for East Devon (Sir Hugo Swire) made a point about the Valuation Office Agency. It is important that the VOA plays a part in this but, in reality, as an agency it can only play the hand it has been dealt. Yes, it may be able to sharpen up its footwork, but that does not go to the heart of the matter. However, I do see his point about the concoction of planning and parking—he raised several issues there. On parking, as local authorities have been denuded of support from central Government, they have tended to change how they get their money, given the reduction in grant. They’re damned if they do and damned if they don’t.

My hon. Friend the Member for Sheffield South East (Mr Betts) talked about more local control. That is a potential way forward, because as we are giving less money to local authorities from the revenue support grant, there has to be some more flexibility. That should be considered as part of the review. As the hon. Member for St Ives (Derek Thomas) said, it is a complex situation. Second homes is an issue that affects different areas of the country in different ways. He talked about the business rate calculation not being sensible, but that is a technicality. Trying to pin down how a valuation is arrived at does not deal with the heart of the issue: if £30 billion is being raised a year, how and where should it be raised and in what context? We need a review of business rates. My hon. Friend the Member for High Peak (Ruth George) said that there are strains on businesses. Her point about cash machines is a crucial issue in many areas. I am glad that it has been a thoughtful debate.

Business rates are causing a great deal of crisis in our retail sector, which is the UK’s largest private sector employer. In the first few months of this year, 21,000 jobs were lost due to closures. Thousands of working people face an uncertain future, and that has sent ripples through the retail sector. Only this week, Poundworld fell into administration, putting 5,000 jobs at risk. That follows administration or store closures at Maplin, Toys R Us, House of Fraser, Marks & Spencer, New Look, Carpetright and Mothercare.

The Government must recognise that there is barely a British brand left that is not affected by what many consider to be a hostile environment, given the business rates situation, whether by design or default. The high street is being denuded because the review has gone on and on. The Government have taken their eye off the ball. I do not want to introduce the “B” word, but Brexit must be a factor. Everything is dominated by Brexit, so the crucial day-to-day issues are not being picked up as they would and should be.

The independent retail analyst Richard Hyman predicts that 20% of retail space will close over the coming years. My hon. Friend the Member for Sheffield South East alluded to that and we must give thought to it—that is before we even get on to poor pay and faltering productivity, both of which are driving poor consumption across the economy, as well as leading to pretty miserable lives for so many in precarious work. Why is this happening? Last week, the chief executive of Tesco blamed the collapse of these retailers on the Government’s business rates policy, saying that it played a “large part” in sending some retailers to the wall.

The Government’s approach to business rates has been combined with, in effect, inaction, which has left a significant portion of the British economy exposed. There has been one review after another; there is nothing wrong with a review and we are quite happy to have them, but we would have to not let the review drift but taken action, as I am sure you would, Mr Gray. Uncertainty does not help.

The problem has been exacerbated by structural changes in the retail sector. For example, 791 villages and towns in England and Wales will face higher tax bills. Rates are rising by up to 500% for half a million businesses. That cannot be right. The rise will cause the average small shop to be hit by an extra £3,600 in rates over the next five years. Nearly three quarters of small companies say business rates are the most important issue they face. What is worse, at the same time, some large supermarkets’ rateable value has reduced by nearly 6%.

Online retailers, which have been referred to many times, have benefited from the structural shifts in retail and are the also winners of the Government’s business rate changes. The bill of online retailer ASOS fell from £1.17 million to £1.14 million, despite UK sales growth. The Government are in a business rates mess—it is no good pretending that they are not. The mess is hitting those who cannot bear the brunt of the tax changes, while letting others off the hook.

The Government will claim that they are introducing a package of support to mitigate the steep increases that have resulted from the seven-year wait for a revaluation, yet the Federation of Small Businesses does not take the same rosy view. They have called on the Government to

“speed up help for small firms facing unacceptable increases in their Business Rates”,

while arguing that the £300 million relief promised in the Budget has not made its way to businesses. Perhaps the Minister will let us know what the hold-up is. It is the same old story: we cannot rely on rhetoric to cover things up. The Government have to recognise that the cracks are getting bigger. In some areas, panic has set in, with major newspapers now reporting on a “high street crisis”. We do not want that panic to spread—I accept that it is overblown—and we do not want the Government not to deal with the matter and to put their head in the sand.

If we want to continue to have a high street, we must follow steps for business rates such as introducing a statutory annual revaluation, to stop business facing periodic and unmanageable hikes and to guarantee a fair and transparent appeals process—that has been touched on in the debate. The Government’s seven-year wait for a revaluation was one of the major reasons the process descended into chaos. Had the Government got their act together, businesses would not face such steep rises in valuations and could plan accordingly. It is quite shocking in certain situations how companies and businesses are being treated.

We would exclude new investment in plant and machinery from future business rates revaluations, to encourage investment. After eight years of the Government’s economic policies, we have the lowest productivity in the OECD; businesses must be incentivised because they are relying on pools of precarious, cheap labour rather than investing in fixed capital. That is especially the case in the retail sector. Government business rates policy should reward shifts to more productive models. I hope that we will be able to deliver on that.

Overall, we want fundamentally to reform the business rates system in the age of online shopping, to ease the burden on traditional high streets and town centres and to create a fairer system of business taxation for the £30 billion that comes in. We must recognise the gigantic shifts happening in the sector, and ensure that our fiscal framework properly adapts to that. It is not about hoping another review will make it all go away; our reform of business rates must be considered in the context of our wider support for small and medium-sized enterprises.

We want to build an economy for the many businesses, not the few. That means supporting small businesses so they can compete on a level playing field, rather than playing to the interests of big companies and monopolies, which seems to be happening all too often. To do so, we have committed to increasing lending to small and medium-sized enterprises, through our network of regional development banks. We have also committed to introducing a lower small business corporate tax, which would ease the burden on smaller retailers. We would scrap quarterly reporting, to end the scourge of late payments and reform.

Labour is offering a number of proposals, but the Government must act as soon as they can, to stop the prevarication.