Customs and Borders

Peter Kyle Excerpts

Thursday 26th April 2018 Commons Chamber

[Mr Clarke]

Not deliberately—but accidentally, several times. [Laughter.] The hon. Gentleman makes reference to my great longevity, which is the one non-controversial feature of my presence in this House. Practically all my old friends from several Governments are now ennobled and in the House of Lords, where they are debating these very matters. Actually, all my colleagues who have served in Governments during my time—particularly under Margaret Thatcher and John Major—who are still with us and in the House of Lords are voting in line with this motion. They are of the same opinion, because is it is utterly unprecedented for us to get into a position of this kind.

The only argument—certainly the only one the Prime Minister ever uses—for leaving the customs union is that we can have trade agreements with the rest of the world. We also refer to “a customs union”, for reasons that have been explained; it would be a replica of the present customs union. It is quite right to say that, in the customs union, we do not have total freedom to negotiate. We have a common tariff barrier around the customs union, and no member can punch holes through it and start letting in goods from various markets under different arrangements. Once anyone started to do that, it would be necessary to stop the goods seeping through. A great deal of work is being done at the moment, as I understand it from following the leaks in the newspapers and talking to my contacts among those involved, to try to find a way to achieve something similar that would be acceptable. We will have to see how that goes.

It has already been said that, for over 40 years, Governments of both parties in this country who essentially believed in free trade, and who found that Britain gained ever more advantages from developing a free trade climate, have been extending free trade through our membership of the European Union. First, we had the common market—the customs union—and then we added the single market to it, removing all the regulatory barriers. Then we encouraged EU agreements with an ever-increasing number of countries, which reduced the barriers yet further in all those markets around the world. Indeed, my right hon. Friend the Member for Wokingham (John Redwood) has said that this helped us to make progress in the rest of the world as well. Not only have we participated in that but, in my opinion, British Governments have been the most influential and leading advocates of that approach inside the European Union.

It is not true to say that we have been an isolated, powerless member, ignored and penalised by the others. I believe that on issues of the economy, on liberal economic policy and on trading policy, the United Kingdom has been the leading influential member in Europe, and I think that was probably as true under the Blair Government as it was under the Thatcher and Major Governments. We were responsible for the single market. All the way up to the Cameron coalition Government, we were in the lead in Europe in pressing for the EU agreements to be extended to other countries.

I do not remember even Eurosceptics bothering to raise much objection to that policy. Even during the referendum, I did not hear any Brexiteer, including the ones I debated with, saying that they wanted more protectionism or that they wanted to withdraw from all that. Dan Hannan is one of the most articulate advocates of the Eurosceptic cause, and I debated with him twice in town hall settings during the referendum. I always got the impression that he was in favour of the single market. Again it is important to stress that it is possible to leave the European Union and to stay in the single market and the customs union. There is no constitutional or legal barrier to that happening, and the Commission has made it plain that it could be on offer. However, if we are not going to do that—for reasons that I do not understand—we will have to replicate it pretty well.

[Peter Kyle (Hove) (Lab)]

Will the right hon. and learned Gentleman give way?

[Mr Clarke]

I will give way, after which I will go back to the question of trade relations with non-EU countries.

[Peter Kyle]

On a recent visit to Norway with the Business, Energy and Industrial Strategy Committee, we heard Norway’s lead negotiator with the EU explain that, being outside the customs union, Norway is in a permanent state of negotiation with the EU regarding trade and customs. He said that Norway would sometimes win a concession, only to lose it in a negotiation a couple of years later. Is not this precisely the status that businesses come to Britain to avoid?

[Mr Clarke]

I quite agree. The Norwegians have a second-best solution by a good long way. When I was Chancellor, we were engaged in negotiating with the Norwegian Government and with other would-be new members over full membership of the European Union, which on the whole the entire Norwegian political class, left and right, supported. The same thing happened here during the referendum, when every significant political party in this country was in favour of remaining, with the exception of UKIP and the Democratic Unionist party. The Norwegians came out with not a bad compromise, but it was far less satisfactory than the one we are starting from as we negotiate now.

Social Mobility and the Economy

Peter Kyle Excerpts

Wednesday 28th March 2018 Westminster Hall

[Justine Greening]

I absolutely agree with the hon. Gentleman. There are three elements to that. First, it is great that the educational attainment gap is steadily closing, but it needs to happen faster. Secondly, businesses can play a role in lifting the aspirations of young people while they are in our education systems, starting from the earliest age in primary school, which is part of what the social mobility pledge asks companies to come forward and do. Thirdly, we must ensure that businesses continue to nurture and develop young people’s talent once they enter the world of work, and that they have a level playing field when they seek to progress their career after leaving the education system.

[Peter Kyle (Hove) (Lab)]

This is an important debate and having a former Secretary of State for Education here is a real treat for us. At the moment, the Government fund young people who go to university to the tune of about £10,500. For people who go to a further education college, the funding is about half that. For young people who get an apprenticeship, it is about £1,500 on average. For people who fall off the cliff altogether, there is very little money and it is a confused landscape, unless they end up in the criminal justice system, in which case we spend a fortune on them. Does the right hon. Lady believe that it is time the money followed the young person rather than the institution?

[Justine Greening]

The hon. Gentleman makes a powerful point. The T-levels reform will help to ensure that the route a young person follows, whether they are interested in a more academic route and university, or want a more vocational, technical route, will be every bit as high quality as any other. Towards the end of my comments, I will briefly talk about how Government reform could enable that to happen more easily.

--- Later in debate ---

[The Financial Secretary to the Treasury (Mel Stride)]

It is a pleasure to serve under your chairmanship again, Mr Davies.

May I say how grateful we all are that my right hon. Friend the Member for Putney (Justine Greening) secured this debate? She has done so on the back of an outstanding record in government, including at the highest level. She brings to our debates a burning strength within her as to the importance of social mobility.

During this debate a number of Members have referred to their backgrounds, which have informed in many ways the views they have reached on social mobility and their desire to do something about it. My parents left school at the ages of 15 and 14 because of economic hardship, and the thought of them ever having become a doctor or a scientist, or even having gone to university, is about as fanciful as any one of us stepping on the surface of the moon. It would have been entirely and utterly impossible. My great break in life was when I got a free place at the grammar school, and I took that opportunity and never looked back. I therefore share with many of those present the burning drive to do something about the issues that we have discussed.

We can all agree that far. The question is, how do we approach these issues? As has been evident in the debate, many different strands are involved. The hon. Member for West Ham (Lyn Brown) mentioned housing, for example, which is one component. There are of course many other components, but I will focus on a couple of key areas, if I may, because they relate to the worthy and outstanding initiative launched today by my right hon. Friend the Member for Putney: educational skills, and the economy and business.

We should not overlook the progress we have made, in particular on education and skills, some of it on my right hon. Friend’s watch. We now have 1.9 million more children in good and outstanding schools than we had in 2010, and a record number of young people in education and training. We have more disabled and disadvantaged young people going to university than at any time in our history. We have driven up standards right across the piece. There is no point in getting people into education and training unless we give them good education and training that will be useful to get them work in future. We are achieving that: the EBacc is driving up standards and we have opened up access, particularly in the case of our great universities.

We recognise that we need to do more, so we recently invested £72 million in the 12 opportunity areas across the country, with £50 million allocated to early language and literature skills and £250 million to technical education. We have delivered £406 million for education and skills within the industrial strategy, particularly focusing on maths, digital skills and technology. My right hon. Friend mentioned apprenticeships and T-levels; there have been 3 million new apprenticeship starts since 2010 and 1.2 million since 2005.

My hon. Friend the Member for Ochil and South Perthshire (Luke Graham) mentioned the importance of not writing people off early in their career and the idea of lifelong learning. We are launching our national retraining scheme to ensure that we have upskilling at the centre of our offer. He mentioned the economy, and there is no doubt that providing a strong economy and employment is the best way to get people moving up in society and, in particular, avoiding poverty.

[Peter Kyle]

There are a lot of things I would like to comment on, but the Minister mentions the economy; is it not true that we live in a world where if someone is born into a family that has assets, they are almost certain to succeed in life, but if they are talent-rich but asset-poor they are not? What will the Minister do to restructure the economy so that those born into families who do not own property and do not have savings have a much better chance of success?

Spring Statement

Peter Kyle Excerpts

Tuesday 13th March 2018 Commons Chamber

[Mr Hammond]

My hon. Friend is a tireless advocate of the technology that will fuel the fourth industrial revolution, and the important thing is that, while we are talking about it, this is actually happening across the country. These technologies are actually being used by large, medium and small businesses. They are not just something in the laboratory or the university classroom; they are actually happening in the factories and business parks across Britain, and they will transform the way we live and work.

[Peter Kyle (Hove) (Lab)]

I am sure the Chancellor will agree that it is not talking down the economy to report in this place the real lived experiences of the people we represent, the majority of whom will not see real average wage incomes exceeding the pre-crash levels until 2022. Does he not agree that all the measures announced today and the rhetoric will not make a difference to those who need it most until their average incomes increase above the pre-crash levels? When will that happen?

[Mr Hammond]

Real income growth is the principal target that we focus on, but the country suffered a recession after the financial crisis that wiped out 6% of our national income, and we are rebuilding our economy from that crisis, hindered and hampered by the fact that the previous Government were ill-prepared for the crisis when it came. As I have made clear today, we are determined to ensure that our economy and public finances are in good shape to deal with the economic cycle in the future, because we do not believe that we have abolished that economic cycle, and we have to prepare for future downturns because that is the nature of economic life.

Oral Answers to Questions

Peter Kyle Excerpts

Tuesday 16th January 2018 Commons Chamber

[Mr Hammond]

As my hon. Friend knows, we are seeking a bespoke vehicle for a deep and special partnership, and we are certainly prepared to look into any constructive suggestion from any part of the House.

[Peter Kyle (Hove) (Lab)]

T4. Last night, the chief executive of Airbus said that every Brexit scenario that is currently on the table will weaken British industry. Is the Chancellor listening?

[Mr Hammond]

Yes. We engage frequently with industry, and our No. 1 priority is obviously to ensure that we protect the UK economy as we exit the EU. In fact, as a manufacturer of aviation equipment, which has a zero EU tariff, Airbus should be relatively minimally affected. Nevertheless, I think the company’s particular concern is about the ability to bring EU nationals into the UK to work, and we have assured it that we will make sure that high-skilled individuals can continue to come.

Oral Answers to Questions

Peter Kyle Excerpts

Tuesday 28th February 2017 Commons Chamber

[Jane Ellison]

My hon. Friend raises an important point, and at Budget 2016 the Government announced new measures to better enable Her Majesty’s Revenue and Customs to tackle just such activity. The measures are forecast to raise £875 million in total by 2021. Over the past year, HMRC has already seen a more than tenfold increase in online non-EU businesses applying to register for VAT.

[Peter Kyle (Hove) (Lab)]

A week before the election, the Chancellor’s predecessor came to Sussex and pledged support for infrastructure improvements to the rail line between London and Brighton. He commissioned a £100,000 study that has never been released. When will the Government release the south coast and London main line upgrade programme report?

[Mr Philip Hammond]

Shortly.

Concentrix

Peter Kyle Excerpts

Wednesday 26th October 2016 Commons Chamber

[Rebecca Long Bailey (Salford and Eccles) (Lab)]

I beg to move,

That this House notes that Concentrix has not fully met the performance standards set out in its contract with the HM Revenue and Customs to correct tax credit claims, and welcomes the announcement that the services performed by Concentrix will be brought back in-house to HMRC next year; and calls on the Government to conduct a comprehensive investigation into the performance of Concentrix under its contract with HMRC, which includes a consideration of the potential effect on other HMRC services, take urgent action to compensate people who have erroneously had tax credits withdrawn by the company, and in doing so mitigate any adverse effect or reduction in service for claimants.

The topic of today’s first Opposition day debate affects every single hon. Member’s constituency. I have received many case studies from Labour Members, and I thank them for their hard work on this issue. I welcome the comments in the amendment tabled by Scottish National party Members; I am very pleased that we are on the same page on this issue. We have heard how constituents of Conservative Members have been affected by this scandal too. My own inbox and postbag have seen a surge in the number of anxious and distressed families needing my help after their tax credits have been stopped. I put on record my thanks to my right hon. Friend the Member for Slough (Fiona Mactaggart) and my hon. Friend the Member for Sheffield, Heeley (Louise Haigh), and to the Chairs of the Public Accounts Committee, the Work and Pensions Committee and the Treasury Committee, for their hard work in shining the spotlight on this very serious issue.

I am sure that Members will assist the Minister by illustrating their own cases, but I will begin by outlining a shocking yet typical case study brought to my attention recently. The lady in question is a single parent with three children and a job, although at the time of her exchanges with Concentrix she had just had a baby and was on maternity leave. This lady had been accused on two separate occasions of living with an undisclosed partner. On both occasions, she had never met the person. The first time, she was accused of living with a man who turned out to be the former tenant of the housing association flat that she now lives in. This was sorted out fairly easily. We can imagine her shock, though, when only months later she received another letter accusing her of living with another undisclosed partner. When she phoned Concentrix, she was told that she was living with a woman of whom she had never heard. The lady pointed out that there was absolutely no truth in that allegation and sent all the requested documentation, by recorded delivery, to Concentrix. She received no response. She gave birth to her third child two weeks later.

When the claimant phoned Concentrix, she was told that the documents that she had sent were not on the system, and she then received a letter cancelling her tax credits. That left her with only maternity allowance to live on and a demand to repay £4,100.

The lady in question obtained replacement documentation, after Concentrix appeared to have lost the originals, and sent a request for mandatory reconsideration, again by recorded delivery, to Concentrix. By this time, she was running very short of money and contacted her Member of Parliament for help. When the parliamentary office investigated the matter, it was told that there was a backlog of mandatory reconsiderations, so it could take six weeks for the case to be looked at.

By this time, the lady in question had been waiting for three months for a resolution to her case—that is three months in complete stress and turmoil, on the breadline, when she should have been enjoying those precious early moments of her child’s life.

[Peter Kyle (Hove) (Lab)]

I am grateful to my hon. Friend for giving way so early on. I was contacted not long ago by a woman in a similar situation. Her tax credits were cut because Concentrix accused her of having a lesbian relationship with her sister. It took her coming to me as her Member of Parliament and calling Concentrix myself before it started to believe the truth. Is it not absurd that it takes a direct intervention from a Member of Parliament before this ridiculous company takes these people seriously?

[Rebecca Long Bailey]

I thank my hon. Friend for his comments. The term, “It beggars belief” springs to mind. Unfortunately, his case is not an isolated one.

After much chasing, it was eventually confirmed that the lady had no connection to this mystery woman. She was paid all the money she was owed, and the demand to repay the £4,100 was withdrawn.

Small Businesses: Tax Reporting

Peter Kyle Excerpts

Monday 25th January 2016 Westminster Hall

[Peter Kyle (Hove) (Lab)]

May I thank the hon. Member for Hertsmere (Oliver Dowden) for securing the debate? I share his condolences for the family of his predecessor, who passed away today. Even though his predecessor was not a Labour Member, he certainly made a big impact on politics in his day, and that legacy will be remembered for a great deal of time.

I am the Member of Parliament for Hove, in the city of Brighton and Hove, which is one of the most entrepreneurial cities in the whole country. It also has one of the highest rates of self-employment in the country. The self-employment rate for 16 to 64-year-olds in work is 13.5%, against a national average of 10%, with 55% of those people working in construction and 36% in professional, scientific or technical trades. That shows the nature of self-employment in the south, and self-employment is often a gateway to entrepreneurialism. Many of those self-employed people will go on to set up limited companies and become creators of wealth and employment, which drives the economy in Brighton and Hove.

Statistics, however, do not cover the nature and challenges of making the move to self-employment or setting up a microbusiness. I became self-employed early in my career and then moved on to set up a limited company and a microbusiness. I co-founded a local business, which, looking back, was the most educative experience of my life. We learn a huge amount when we decide to jump in with both feet and set up a business, as an enormous breadth of understanding and skills goes into setting up an enterprise and becoming an entrepreneur.

One key thing I learned from that experience was the nature of the risk involved in becoming self-employed or running a microbusiness. When we talk about people who are self-employed or run small businesses—sometimes as their friends, but particularly as policy makers—there is often an assumption that growth is linear, and that money increases and risk diminishes each year, as they get used to growing business and to the sector they are involved in.

My experience was very different. Growth came on the back of extreme risk and extreme vulnerability, followed by a period of comfort. I then had to make a decision: should I stay in my comfort zone or take the decision to move out of it, back into extreme risk and vulnerability? The business jumped into periods of growth, with each jump and each improvement in annual figures coming on the back of a period of risk. As the business employed more people and its growth increased, the risk did not diminish; it got greater and greater, because more depended on the business’s success. I have a huge appreciation for entrepreneurs who are growing businesses, because there is no inevitability about the success of any business. It comes only on the back of extreme hard work and the ability to take risk on behalf of a business and the people who depend on it.

Few people enter self-employment or set up small businesses with all the skills they need to do so. They sometimes lack skills in sales, admin, accounting, marketing, social media and product development. No one inherently possesses all those skills—particularly accounting—when they go into business or become self-employed. It is very unlikely that all of the 55% of self-employed people in the city I live in who work in construction have all the administrative and accounting skills they need. Talk of changes to accounting and reporting can therefore be extremely intimidating to them.

Gaps in people’s skills can be not just intimidating but terrifying. While people are learning skills, or worrying about lacking them, they are not doing. They are not out there selling, building the relationships that every business and self-employed person needs or winning new business. We must be mindful of that when we heap new regulation, and changes in accounting and reporting, on people who are self-employed or run small businesses. Talk of regulatory change can be intensely worrying for those who lack accounting skills. People who are worried become risk-averse and do not have the boldness of character we need in our entrepreneurs, particularly in the small business sector.

The self-employed have a lot to worry about. One third of them will earn less than the minimum wage for two or three periods in a year. They have no statutory holiday, and the working time directive does not cover their work. All of us will have heard stories from knocking on doors and talking to constituents at community events or reading their correspondence. I was struck by one particular story when I was campaigning during the general election. I knocked on the door of a tradesman who was self-employed and always worrying about the next contract. He told me, as he held his young baby in his arms, that he had never once been on a full week’s holiday with his wife and children. Instead, his wife takes the children away for a week once a year and he goes to meet them for the weekend, because he cannot take the risk of not completing a contract. That type of experience is repeated throughout the self-employed sector and the microbusiness sector. People in those sectors make a lot of personal sacrifices in order to drive the economy, particularly in the south of England.

[Caroline Lucas]

The hon. Gentleman is making a powerful speech, and he tells a strong story about the constituency of Hove, which is relevant to my constituency next door. Does he agree that the pressures on small businesses are made even worse by the fact that they often struggle to get hold of HMRC advice right now, whether on the phone or by other means, because tax offices are closing? As well as having a bigger consultation on the issue, the Government should look again at the resources going to HMRC.

[Peter Kyle]

The hon. Lady makes an incredibly important point. We have both been involved in local government issues and campaigned on national issues. Every moment that a self-employed person spends on the phone to the local council, HMRC or any other Government Department is a moment they are not spending getting new business, delivering new contracts and earning the money that will give them the security they need in the long term.

We know that HMRC has a lamentable record on customer service, which the Minister graciously acknowledged in answering questions in the main Chamber recently. I know that he will focus on that issue, and people such as myself and the hon. Member for Brighton, Pavilion (Caroline Lucas) will continue campaigning on it, because it is extremely important. In the interests of fairness, I will also carry on campaigning against my council in Brighton and Hove, which is a Labour-run council, to ensure that it offers better services for, and better contact with, its local businesses and self-employed people.

I am well aware that people who run big businesses in the city that I represent, whether American Express in Brighton, Kemptown or EDF in my constituency of Hove, have a named contact in the local authority. That contact is called the chief executive. If the chief executive of one of those big businesses wants to get the council on the phone, they call the council’s chief executive. However, the drivers of our local economy—people who run companies that employ fewer than eight people, which make up 90% of the businesses in our city—do not have a named contact in the local authority. There are no consequences if a phone is not picked up, or if a message is not returned. That symbolises how power is distributed in the wrong direction.

It would be wrong if we designed and implemented policies that put people off wanting to become self-employed. The calls that Members from all parties have made in this debate, imploring the Minister to ensure that there is a period of consultation, have been extremely well put.

[James Cleverly]

I thank the hon. Gentleman for sharing his experiences as an entrepreneur. As someone who has run a small business, I completely understand the point that he is making about fear of change. Does he therefore agree that if the Government showed that the new policy could be intuitive and easy to understand and implement, many of the potential hurdles that he has highlighted could be put to one side? If some of the tech entrepreneurs who I know are prevalent in his constituency could be involved in designing the implementation and roll-out of the measure with the Government, that would go a long way to addressing the issues that he has raised.

[Peter Kyle]

I am extremely grateful for that thoughtful intervention, and I have some sympathy with the hon. Gentleman’s points. However, when policies are thoughtful, intuitive and in the interests of business, businesses usually flock to take them up. In this case something has clearly gone wrong in one of two ways: either it is being communicated in the wrong way, but it is a great policy; or it is a poor policy that is being communicated in the right way but is not managing to hit home. The purpose of the debate is to decide which it is.

The policy needs to be tested and communicated better. We need to ensure that people who run businesses—smart people who want to do the right thing by paying their taxes and ensuring that their businesses are not disproportionately burdened—are fully involved as the policy is implemented in the long run. In my view it certainly should happen in the long run, because at the moment, people are being put off going into self-employment or setting up their own business.

Interestingly, on the train up here today, when I was speaking to my brother, who works as a postman in the Brighton, Pavilion constituency, he told me that one of his colleagues had seen on the news that this debate was coming up and had talked about self-employment. His colleague was self-employed for a number of years—more than a decade—but moved away from it because of the fear of the accounting, bureaucracy and regulation that was being heaped on to self-employed people.

The freedom that is associated with self-employment has diminished. As well as the burden of regulation, people fear not having the skills that they need, and they fear the unknown. Because they are not a trained accountant or an experienced administrator—rather, they are a skilled labourer—they fear that they might step outside regulatory measures without being aware of it. That was enough to drive my brother’s colleague away from self-employment and back into paid employment. We should be wary of that, because it would be a huge shame if entrepreneurship were to become the preserve of the middle classes. I do not believe that entrepreneurial spirit is class-based or education-based; it is evenly distributed, even though it is not evenly expressed in our economy.

Public policy on the self-employed needs to be got right, particularly for people who run small businesses or microbusinesses. At the moment, I do not believe that Government policy across the board is on their side. Let us take one example—the much vaunted, much hyped productivity plan, which I know the Minister is keen to refer to often in the Chamber and in the media. It is interesting that in the Government’s flagship productivity plan there is not one single mention of the self-employed, who make up 15% of the workforce and number 4.5 million people. The fastest-growing employment trend in our country does not warrant a single mention in the productivity plan.

In my constituency there is a fantastic business called Crunch, which has been set up specifically to supply accountancy services to people who are self-employed or running microbusinesses. I know that the hon. Member for Brighton, Pavilion, went to visit a couple of weeks ago, which was absolutely fantastic. It now provides services not only right across our city but right across the south of England, and it is great that people are starting to notice just how fantastic the business is and how important its services are. It provides light-touch, fast, responsive support to people setting up businesses. The great thing about being able to visit it is that because it has thousands of customers, it can harness insight into real-time trends in self-employment and see the impact of public policy on the small business and self-employed sector. I know that quite often, HMRC and Government Departments struggle to get real-time data on the impact of Government policy.

One prediction that Crunch makes about the negative impacts of policy is that the leap from 0% to 7.5% in basic rate dividend tax will hit lower-earning company directors the hardest. Those are probably self-employed people who are moving their company to limited status, have a very small number of employees and pay themselves through dividends. Everyone wants to make sure that the right people are paying tax, but the proposal could have the most negative impact on people on lower incomes who run microbusinesses. For example, a limited company director paying themselves primarily through dividends would pay £1,528 more tax a year on pre-tax profits of £48,000, whereas a director with £78,000 of pre-tax profits would pay only £1,343 more.

We can also see from the statistics that the change in income tax for a microbusiness from 2015-16 to 2016-17 will have a negative impact of 21% on somebody earning about £40,000. The equivalent impact on somebody earning £58,000 will be minus 1%. There is something regressive, not progressive, about the changes to dividend tax, and we need to shift the tax burden so that it is progressive, not regressive. If the Minister does so, I know that he will be met with support from both sides of the House. I would very much welcome his comments on that point.

[Dr Huq]

My hon. Friend’s point reminds me of something that Andrew Dakers, who is from West London Business in my constituency, has said:

“One can only assume the measure is being planned to speed up tax receipts, which is a duff basis for policy-making in this area.”

Will my hon. Friend comment on that?

[Peter Kyle]

I am extremely grateful for that intervention, and I have a lot of sympathy with my hon. Friend’s comments and the example that she has given. It is definitely worth mentioning that, and I am sure the Minister will respond to it.

Crunch, the company in my constituency that I mentioned, has a proposal for the Minister. I hope he will take it away with him, because Crunch represents a large number of self-employed people and microbusinesses. It says that the transition will be most challenging for microbusiness owners,

“as it leads to a steep hike in tax overnight.”

It proposes

“either deferring the introduction of these changes for at least 2 years”,

which would enable businesses to have time to adapt,

“or introducing a 3 year credit to keep dividend taxes at 0% for those business owners on the basic rate.”

I support those proposals, and I hope that the Minister will consider them in the same spirit.

It is difficult to devise policies that support self-employed people, because many people go into self-employment because they enjoy the freedom. Increasingly, however, we see a trend whereby larger employers are restructuring and people are being forced into becoming self-employed at a time when they would otherwise not have done so. This area of policy is not dissimilar to youth unemployment in the challenges it provides for policy makers. Self-employed people, like young unemployed people, are hidden away behind front doors in neighbourhoods and communities. They often work from home, so there are problems of connectivity and how they network as a group. It is certainly easy to overlook them. The fact that they are hidden and dispersed in neighbourhoods makes it difficult to target them as one group.

It would be welcome if the Government examined professional development, which would not be burdensome and would link directly with the policy that the Minister is considering. Self-employed people as a sector underinvest in their own professional development, and other spending trends among self-employed people include a fall in pension contributions every year for the past five years. The key measures of their long-term strategic thinking about their own professional development show that there are challenges that are intrinsic to the self-employed.

Anyone who goes into full-time employment with a company looks at the professional development that it offers. That is a key magnet for talent. Self-employed people are so worried about month-to-month living that they do not invest as they should. We must tackle the productivity challenge among the self-employed and microbusinesses. The Government should launch a consultation into that so that we can work cross-party to get deep into what trends are emerging and how we can support the sector. The challenge of professional development would then be won.

Oral Answers to Questions

Peter Kyle Excerpts

Tuesday 1st December 2015 Commons Chamber

[Harriett Baldwin]

My hon. Friend is right that many of the 900,000 workers in the social care sector will benefit from the new national living wage, including many working in residential care. That is why last week in the autumn statement we made an announcement that councils will have the power over the course of this Parliament to access money that they may need to increase the amount that they pay for social and residential care, with new revenue streams for social care worth up to £3.5 billion by 2020.

[Peter Kyle (Hove) (Lab)]

As the Minister will be aware, the national living wage does not apply to people who are self-employed, whose wages have been stagnating and whose pension contributions have fallen every year for the past five years. Why were self-employed people not mentioned once in the productivity plan, and what does she intend to do to tackle low pay and conditions among the self-employed?

[Harriett Baldwin]

The hon. Gentleman speaks powerfully of the importance of the self-employed to our economy. We pay tribute to the excellent work that so many self-employed people, including many in my family, do to generate economic growth in this country. He is right that, as wages across the economy grow and as we put more spending power into budgets for social and residential care, we expect that to be passed on to those who are self-employed.

Tax Credits

Peter Kyle Excerpts

Tuesday 20th October 2015 Commons Chamber

[Peter Kyle (Hove) (Lab)]

I want to make three points in the time that I have. First, I want to explain why Labour used tax credits to start with.

It is extraordinary for Labour Members to hear the party that opposed the minimum wage say that we are not supporting the living wage. If, when we implemented the minimum wage, the Conservatives had been fighting on the other side and said that we were not doing enough and it was not high enough, the dynamic of the argument about poverty in work would have been completely and fundamentally different. Every single measure that the Labour party tried to implement to tackle in-work poverty was opposed by Conservative Members. We implemented the minimum wage, and in the first 10 years of the Labour Government the bottom 20% got richer faster than the top 20%. We lifted 1 million children out of poverty, but the Resolution Foundation has said today another 200,000 will be plunged back in as a direct result of the Chancellor’s Budget.

Secondly, Government Members have been pointing at Opposition Members today and saying that we do not support the aspiration to replace tax credits with wages. That is fundamentally wrong, as my hon. Friend the Member for Streatham (Mr Umunna), my right hon. Friend the Member for Birkenhead (Frank Field) and many others have proved. It is the right thing to do, but the Government are implementing it in the wrong way.

Thirdly, this change will have a fundamental negative impact on vulnerable people and on communities. Each of us has people in our constituencies who turn to us in their hour of need with problems with tax credits. We know how vulnerable they are and the Government’s policy will do nothing more than make poor people vulnerable people. It is wrong.

Productivity

Peter Kyle Excerpts

Wednesday 17th June 2015 Commons Chamber

[Greg Hands]

The OBR remit is pretty clear on this kind of thing. Let me just say that I have listened to the hon. Gentleman a great deal in the past five years. Coming from a party that never set up the OBR, or any equivalent to it, he seems now to be rather over-fascinated in what its operations should be. He might have thought of some of those questions during the 13 years of the Labour Government.

The hon. Gentleman said that employment growth had been of poor quality. I would dispute that. I think we will find that in the five years since the first quarter of 2010, more than 60% of the increase in employment has been in high skilled occupations. Some 75% of the increase has been in full-time employment and, after the excellent results this week, wages growth now exceeds inflation for the eighth consecutive month.

I am going now to make a bit of progress, because I am conscious that we have one or two maiden speeches coming up and a highly subscribed debate. Let us look at what we did in the previous Parliament. In 2010, the priority clearly for the Prime Minister and the Chancellor was to put in place a jobs-based recovery. We all know the result: 1,000 jobs created every day, with three quarters of them full time. The employment rate is now at its highest on record at 73.5% and around the highest level on record at 31.1 million. We make no apology for prioritising job growth in the past five years. It is the best way to make people’s lives better, as the nearly 12,000 people who found employment in the shadow Chancellor’s constituency will surely agree.

At the same time, we put in place important supply side measures to improve our national productivity. We increased average public and private infrastructure investment to about £47 billion a year between 2011 and 2014, which is more than a sixth higher than it was in the previous Parliament. We have completed 15 major schemes on the strategic road network, worth £3.4 billion, with a further 17 schemes, worth £2.5 billion, under way. We have completed more than 2,650 infrastructure projects and extended access to superfast broadband to more than 2.5 million more premises. We have accelerated the academies programme, with more than 4,600 academies now opened, and we have set the path for high-speed rail to unleash the full potential of our northern cities. We have protected the science budget in cash terms and set out a long-term capital commitment on the science budget as well, ensuring that it will rise in line with inflation for the duration of the Parliament.

[Peter Kyle (Hove) (Lab)]

Does the Chief Secretary recognise that in constituencies such as mine 90% of all businesses employ fewer than eight people? The skills and productivity challenge we have is on the softer, entrepreneurial side. He mentions the skills challenge and the setting up of academies. Does he acknowledge that we need to invest more in the soft, communication and entrepreneurial skills that young people need in an economy such as mine?

[Greg Hands]

I welcome the hon. Gentleman to this place and thank him for his intervention. I do not necessarily disagree with anything he says. Equally, I am sure that he would welcome what has been done in Hove in the past five years. Unemployment has fallen by, I think, almost 1,200 in his constituency—a 53% fall in joblessness. We will consider what he proposes, but he must recognise what has been delivered for his constituency.

We have raised the annual budget of Innovate UK, the core innovation support mechanism for businesses in the UK, from £360 million in 2011 to more than £500 million in 2015-16. I am sure the hon. Gentleman will also be delighted to learn that we have put a premium on apprenticeships, of which more than 2.2 million have been created, and that we have pledged to deliver 3 million this Parliament.

As I said, productivity began to rise last year, although we are still below our pre-crisis peak. We agree on the extent of the problem. The OBR expects productivity to pick up in 2015 and to grow at a reasonable rate afterwards in every year of the forecast period, which is good news for businesses and individuals and has undoubtedly contributed to our economic recovery.

I want to say a few words about the next five years, because, although a lot has been done, now is the time to redouble our efforts. My right hon. Friend the Chancellor told the CBI last month that we had a once-in-a-generation opportunity to find an extra gear for the British economy. Our productivity plan will set out how we will do that, and I will not, and cannot be expected to, pre-empt that plan. Let me remind hon. Members, however, of our manifesto commitments to boost productivity. We said we would invest in infrastructure, on which previous Governments failed to take the decisions that other countries did, meaning we fell behind in the ’90s and in the time of the last Labour Government.

Can you imagine, Madam Deputy Speaker, that in 2010 we did not even have a national infrastructure plan? I appreciate that the hon. Member for Nottingham East was not here between 2005 and 2010, having lost his seat in Shipley, but he was a Minister for part of the time Labour was in government, so he could have raised some of these points when he was sitting around the table. We have caught up a lot since, but our historical stop-start approach has meant that our physical infrastructure is not nearly as good as it should be. Now is our opportunity to fix that.