Budget Resolutions and Economic Situation

Richard Drax Excerpts

Thursday 16th March 2023 Commons Chamber

[Richard Drax (South Dorset) (Con)]

I welcome the hon. Member for West Lancashire (Ashley Dalton) to the House, and I refer the House to my entry in the Register of Members’ Financial Interests.

We are the party of low taxes, or we are nothing. It is a core Conservative value that we believe people should keep more of their money. In that regard, I commend the Chancellor for scrapping the pensions allowance. It is rather strange that the Opposition are wailing about it when they themselves wanted to remove it, albeit just for doctors. This reform will not just help doctors, but help to retain headteachers, police chiefs, senior officers in the armed forces, air traffic controllers, prison governors and many others.

However, what concerns me is the tax pressure on those who receive less. We are still facing the highest burden of taxation since the end of the second world war. I fear we are falling into the socialist trap of raising expectations that the Government will provide all the answers; they cannot, and should not try to. The consequence is higher and higher taxes to pay for services such as extra childcare. I entirely endorse the excellent speech by my right hon. Friend the Member for Camborne and Redruth (George Eustice) on the problems that this policy could raise. While welcomed by many, it fails to recognise that if families paid less tax, they would have more disposable income to pay for services such as childcare, rather than relying on the Government. Raising the tax threshold, especially at the higher rate, would help in that regard. The insistence that the Government can spend people’s money better than them is not our philosophy.

I accept in full that we are paying a heavy price for locking the country down during the pandemic, and now dealing with a major war in Europe, but this is not the time for faint hearts and overcaution, especially with a general election looming. For we know—we have just heard—where Labour will take us: myriad new taxes, a rise in existing ones, and a party driven sadly by the few, not the many, and by envy, punishing those who work hard and want to provide for their families. Let us stop reinforcing Labour’s values and start reminding the country of ours.

On that note, despite the many calls for corporation tax not to be raised from 19% to 25%, the increase will go ahead. Despite being mitigated by some capital allowances, it is a regressive and regrettable move. This after the Chancellor pledged to reduce corporation tax to 15% last year when he stood for the leadership of our party—how right he was then. Yesterday’s Budget rightly placed great emphasis on growth, and while I am all for getting people back to work, I am not in support of a tax hike on those who create the jobs in the first place. Beyond that, the increase will be a major and negative factor for companies deciding where and how much to invest. Let us not forget that the corporation tax of our nearest competitor, the Republic of Ireland, is a meagre 12.5%. As my right hon. Friend the Member for Wokingham (John Redwood) said of an earlier Chancellor:

“Lawson brought intellectual self confidence and energy to the task of being Chancellor. He fearlessly slashed income tax and corporation tax rates. Extra revenue poured in as growth improved.”

Surely that is what business needs: a visionary Conservative Government committed to creating an environment that gives wealth creators the incentives to take risk and create the prosperity and jobs that all of us in this House want. Unfortunately, that is not evidenced when we look at the oil and gas industries.

[Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)]

Will the hon. Gentleman give way?

[Richard Drax]

I will not, because we do not have time and others wish to speak.

Because of pandering to the green lobby and unachievable targets, oil and gas companies face punitive tax rates such as the 50% corporation tax rate and a 35% windfall levy. As the war in Europe has reminded us, energy security is paramount. Over-reliance on supply from overseas has left many countries—not just us—vulnerable to fluctuation in prices and supply. Regrettably, we are a long way from ending our reliance on fossil fuels, so surely it is common sense to encourage investment here at home, not to increase our carbon footprint by importing from abroad.

Before I conclude, I must mention defence. While the extra £11 billion over five years is to be welcomed, it is not nearly enough, with little—if any—of that money going to our conventional forces. This at a time when the world is increasingly unstable. Arbitrary figures for defence spending plucked out of thin air by both sides demean our armed forces and us in the House. In the face of some very real threats, a thorough appreciation needs to be undertaken and the defence budget set accordingly. To be an effective NATO partner, we need the mass to sustain a prolonged and major confrontation. Right now, we do not have it.

I conclude on a point of caution. As I hinted strongly at the start of my speech, this over-reliance on Government to provide the solution to everything must stop. It is simply unsustainable. Our Conservative Government would do well to recall the words of JFK in his inaugural address:

“Ask not what your country can do for you—ask what you can do for your country.”

[Mr Speaker]

We now come to the maiden speech of Ashley Dalton.

Income Tax (Charge)

Richard Drax Excerpts

Thursday 4th March 2021 Commons Chamber

[Richard Drax (South Dorset) (Con) [V]]

I refer to my entry in the Register of Members’ Financial Interests.

It was an impressive and assured performance by the Chancellor. Rightly, it was a no-harm Budget, aimed at steering us through treacherous waters, a light hand on the tiller essential. It has been heartbreaking for me and, I am sure, all colleagues to hear from so many businesses of their dire circumstances. They are run by men and women who have worked hard and taken risks, often having to mortgage their homes, all to make a living for themselves, their families and, of course, their staff. It is this industrious activity that pays for the public sector, not least the NHS and our schools. To raise taxes now would be the straw that broke the camel’s back, so I applaud the Chancellor for not listening to one or two commentators who used to frequent this place.

The Chancellor’s upbeat speech rightly called on enterprise and innovation to reignite our economy, both internally and from abroad. Global Britain requires low taxes, less state and a lithe public sector. Bureaucracy and red tape still afflict progress, but now that we are out of the EU, there is no excuse not to pursue Conservative values and philosophy, and that includes low taxes.

“Levelling up” is an expression frequently used by the Government, and nowhere is that more needed or deserved than South Dorset. At or near the bottom of every source of funding for decades, it is our turn to be nurtured. I shall soon be presenting a business plan to the Prime Minister and Treasury drawn up by business leaders in my seat. To ensure that we attract businesses and investors, we need help to improve our infrastructure. Our over-reliance on tourism and hospitality does little to boost incomes and raise living standards.

I also compliment the Chancellor on extending help to those who are struggling, many through no fault of their own. However, this staggering level of borrowing cannot go on forever. The way out of this financial meltdown is to work our way out. The Chancellor is right to warn that repairing our finances will take the work of many Governments over many years, and that is not taking into account the dual spectres of inflation and rising interest rates. One or both could easily put the ship on the rocks.

Nothing is more important now than to support and nurture the private sector. I welcome the extension of the business rates holiday, the VAT cut, the new restart grants and the recovery loan scheme. However, it should be noted that some businesses will not be able to repay the loans that they have already taken out. On a positive note, the Budget will give reassurance to business, with restrictions lifting and the economy reopening. Let me repeat: we must never forget that it is the tax paid by these businesses that funds our NHS, schools and more besides. The country getting back to work is crucial, and the sooner the better.

With an eye-watering debt of £2.8 trillion, the Chancellor is right to promote growth, growth and more growth. That is not a licence to splurge money now and hike taxes later. The former is necessary in the short term but clearly cannot go on indefinitely. Cutting this support is going to cause pain. Dishing out money is easy, but taking it away is another matter. That is why everything must be done to support those in the private sector, because it is they, not the politicians, who create the jobs. We create an infrastructure within which business thrives. My concluding message to the Chancellor is this: watch the spending and do everything you can to help those who generate our prosperity and jobs.

Oral Answers to Questions

Richard Drax Excerpts

Monday 11th May 2020 Commons Chamber

[Imran Hussain (Bradford East) (Lab)]

What recent steps he has taken to repatriate (a) British citizens and (b) UK residents overseas during the covid-19 pandemic.

[Richard Drax (South Dorset) (Con)]

How many British citizens are awaiting repatriation as a result of the covid-19 pandemic.

--- Later in debate ---

[Dominic Raab]

We certainly share the concern expressed by the hon. Gentleman about flights that are cancelled. There is an onus on the operators to make sure that they can be reimbursed. Insurance can also kick in. In the last resort, there is also financial assistance that can be made available in the form of a loan, but of course that would have to be repaid on return.

[Richard Drax [V]]

Many of my constituents have said, “We’ve all been locked down but people have still been allowed to come into our country.” Why is the quarantine about to be launched at airports being done now, and will it include arrivals by port and the channel tunnel?

[Dominic Raab]

The reason the measure is being introduced now is that the advice that we have always had is that there was little point, if any, in introducing quarantine at the border with the R level—the level of the prevalence of the virus—at a high level, particularly above R1. Now that it has come down, and is still coming down even further, it makes sense, as we reduce the level of coronavirus in the UK, to introduce the measure to stop reinfection coming in from people carrying it from abroad, particularly those who would not necessarily be showing symptoms. There will be some flexibility in the detailed arrangements set out, but this will cover, in principle, all people coming in, whether it is to ports or to airports.

Universal Credit: Delayed Roll-Out

Richard Drax Excerpts

Tuesday 4th February 2020 Commons Chamber

[Will Quince]

I have huge respect for the hon. Lady, and I would be happy to visit her constituency to meet some of the organisations she references. It is important to state that nobody has to wait five weeks for an initial payment, which can be done on day one. It is repayable over 12 months but, as of next year, that will be extended to 16 months. We also have additional measures such as the two-week housing run-on and, as of July this year, a further two-week run-on of other legacy benefits. Are there further improvements that I would like to make? Yes, of course there are. They would all require Treasury approval, but I would be happy to work with hon. Lady to look at them in further detail.

[Richard Drax (South Dorset) (Con)]

I, too, have visited my jobcentre and its staff universally welcome universal credit—there is no doubt about that—but there have been one or two hiccups. When an employer tends to pay early, say at Christmas, that does tend to muck up the next month’s universal credit payment. Are we trying to resolve that issue?

[Will Quince]

My hon. Friend asks a pertinent question that was raised by six separate colleagues at oral questions only last week. I am looking closely at this area and intend to organise a roundtable with interested colleagues and officials to explore how we can tackle the issue.

Personal Independence Payment

Richard Drax Excerpts

Tuesday 23rd January 2018 Commons Chamber

[Ms McVey]

We are constantly reviewing the numbers to support who is coming forward if we need further decisions or clarifications for people. That is part of the ongoing day-to-day process to make sure that we get this benefit right.

[Richard Drax (South Dorset) (Con)]

I welcome my right hon. Friend to her place. We are all right behind her, whatever some people might say. From my experience as an MP in South Dorset, I suspect that the main problem relating to people slipping through the net is the lack of home visits. I agree with the hon. Member for High Peak (Ruth George) on this point. I suspect that such visits are more expensive, but I think that they would save money in the longer term because the assessment would be more accurate. Will my right hon. Friend look into this, to ensure that we hit the targets smack on, first time?

[Ms McVey]

I thank my hon. Friend for his kind words and support. Anyone in need of a home visit can have a home visit, and I will be looking at the communications relating to this, because perhaps people, including MPs, do not know that. This is something else that we need to work on.

Housing and Social Security

Richard Drax Excerpts

Thursday 22nd June 2017 Commons Chamber

[Richard Drax (South Dorset) (Con)]

It is a genuine pleasure to follow my hon. Friend the Member for Strangford (Jim Shannon). I also congratulate my new colleague, my hon. Friend the Member for Berwickshire, Roxburgh and Selkirk (John Lamont), on his excellent maiden speech. Well done; brilliant!

Violence driven by hatred and intolerance have blighted our country in recent weeks, and the ghastly fire at Grenfell Tower has only heightened a growing sense of unease. I have to say that this feeling has been exploited shamelessly by some for political gain, and I find that totally inappropriate. I would like to place on the record the fact that I have the highest admiration for the Prime Minister, who was knocked first one way and then the other by events over which she had no control. Her apology to the House yesterday and today for the failure of both local and national Government to respond appropriately to the fire was delivered with great humility and should be welcomed.

Naturally, Brexit dominated much of the Queen’s Speech, and rightly so. We have a challenge ahead of us over the next two years, and one that we will rise to. I am a little tired of the siren voices, both in this place and in the media, for the decision to leave the EU has been made, and now it is time to get right behind UK plc. Of course jobs and our future prosperity must be key factors in future negotiations, but which idiot of a bureaucrat or politician would purposefully punish the UK by placing obstacles in the way of the free trade on which both we and the EU rely so heavily? I am confident that common sense and pragmatism will prevail against those wishing to prop up a failing political project. Let us face it: scores of countries already have access to EU markets, so why can’t we?

The future is exciting and prosperity beckons as we reach out to countries around the world for new trade deals. I was saddened that we did not hear more from the Secretary of State for International Trade and President of the Board of Trade during the election. He has much to sing about and all of it encouraging.

To ensure that our overseas exploits are a success, we really must secure our finances back home. The elephant in the room is our massive debt of about £1.9 trillion. The interest alone to service this elephant is circa £47 billion—just imagine what we could do with that money.

I also wish that we had a simplified tax system, as it gets more complicated with every Budget. The easier the taxes are to collect and the lower they are, the more money the Government will find. I welcome the Government’s commitment to spend at least 2% of our national income on defence—the NATO minimum—but, as I have argued in this place for the past seven years, that is not enough. It was over 5% in my time, and even then retaking the Falklands was touch and go. We often hear people say that the UK tries to punch above her weight. Yes, we do. As a beacon of freedom, hope and democracy, we have frequently been called on to do our duty around the world, which does not come cheap. I call on the Government to spend more on defence, especially as we face uncertain times and do not want to be caught napping again.

Internal security also concerns me. As a former soldier who served in Northern Ireland on three operational tours, I know how important it is to have a uniformed presence on the streets. It not only reassures residents, but dominates the ground on which the terrorist wants to operate. Similarly, more police on the streets would do the same. I appreciate that the nature of crime has changed. Online crime, for example, consumes much police time and officers, but community policing is just as important and, frankly, it is where much of the intelligence should and must come from to tackle crime.

On education, I must repeat my call for fairer funding for schools, especially in a rural constituency such as mine in South Dorset. I accept that there are now more good and outstanding schools, and that is to be recognised —people must be congratulated on that—but the current funding formula is really not fair. We do not want all the cake in South Dorset, just a fairer share of it.

The vexed question of climate change is my next observation. Although no one would argue with the need to break away from our reliance on fossil fuels, there has to be an affordable and workable alternative that keeps our economy turning and the lights on. Yes, renewables must play a part, but phasing out our coal and gas-fired power stations could be a “monstrous act of self-harm”, according to Nick Timothy, the former aide to the Prime Minister. Interestingly, the Office for Budget Responsibility says that soaring green subsidies and levies are due to virtually double during this Parliament to £14.7 billion a year. Those are paid through our energy bills. We really need a credible approach to our future energy needs, and setting unrealistic and potentially damaging targets is not a sensible way forward.

On overseas aid, I am afraid that I do not agree with the arbitrary 0.7% target. Yes, we should help those who need help, but we need help in this country, too. Charity starts at home. I want the money that we send—taxpayers’ money—better targeted, and the money that we do not send spent on very good causes in this country.

Personal Independence Payments

Richard Drax Excerpts

Tuesday 28th February 2017 Commons Chamber

[Damian Green]

I can only repeat the facts to the hon. Lady. Over two thirds of PIP recipients with a mental health condition get the enhanced rate daily living component, which compares with just 22% who received the highest rate DLA care. As I have just explained to my hon. Friend the Member for Kettering (Mr Hollobone), for the mobility component, which is the other part of PIP, the relevant figures are 27% and 9%. The facts are incontrovertible. More people with mental health conditions are receiving PIP than used to receive DLA. It is a better benefit for people with mental health conditions than DLA.

[Richard Drax (South Dorset) (Con)]

My South Dorset constituents will be relieved to hear what my right hon. Friend said about looking at the assessment process, which goes horribly wrong far too often. Would he give more consideration to home visits and take into account information not only from health officials and GPs but from relatives, families or friends?

[Damian Green]

As I explained to my hon. Friend the Member for Crawley (Henry Smith), we already do home visits. If there are cases where my hon. Friend the Member for South Dorset (Richard Drax ) thinks people should have had home visits but did not, I encourage him to get in touch with me so we can look at the details of them.

Universal Credit

Richard Drax Excerpts

Wednesday 6th March 2013 Commons Chamber

[Nigel Mills (Amber Valley) (Con)]

It is a pleasure to follow the Chair of the Work and Pensions Committee and to speak about the report. This is the first report that I had the pleasure of working on when I joined the Committee. I feel slightly guilty in that I missed all the evidence sessions because I did not join the Committee until it started to write the report. I therefore missed the hard work and did the fun bit at the end.

I should probably start where the Chair of the Select Committee finished—the complex IT system. Those of us who have followed the news of new, large IT systems from the outside over many years would be brave or foolish to be entirely optimistic that a new, super IT system will work flawlessly from day one. Perhaps the Minister will assure us that that will be the case, that the IT has worked in the various tests and trials, and that it will work when we switch over to having live feeds of millions of entries from HMRC.

[Richard Drax (South Dorset) (Con)]

I, too, am concerned about putting all our eggs in one IT basket. Would it not be sensible to retain the staff in local authorities—in my constituency, they are about to be laid off—so that there is a back-up, at least until it is proved that the system works?

--- Later in debate ---

[Richard Drax (South Dorset) (Con)]

I am grateful to have an opportunity to speak in this debate. From what I have heard, there appears to be a general consensus, with which I agree, that there is room for the universal credit system. Its aims are laudable; our welfare bill is too big and we have to tackle this problem. I think all Members across the House will agree that this bill cannot continue to grow. It is simply unsustainable. My view, which I am sure many share, is that for too long the poor and vulnerable have been trapped in a welfare mire. How often have we heard our constituents say, “There is no point working a bit longer because if I do that I will lose my benefits”? So clearly we have to examine the system and make it fairer, encouraging those in this trap to put in the extra hours as that will be beneficial for them.

I support the universal credit in principle; it will reward effort and will be responsive to changes in circumstances—if it works. Many hon. Members from both sides of the House have highlighted the word “if”, and I hope that my adding to the ifs will not be to the Minister’s chagrin. I have listened at great length to Mr Kevin Hodder, the chief executive of the East Boro Housing Trust; we debated this for a couple of hours. He has been in this business for many years and has shared with me, for some time now, his extensive knowledge and understanding of the benefits system. He has done so for my benefit, so that I can understand my constituents’ concerns. One or two of them—I suspect there will be many more—have come to me with their worries about the introduction of this new system.

The first risk, which has already been highlighted, is the reliance on one computer system. There are 8 million or 8.5 million claimants—we have heard the latter figure cited—so if the system goes wrong, the risks are obvious. There is no room for error or delay because we are talking about the most vulnerable in our society, and if the money does not arrive on the day they expect it, they will face serious problems. As far as I know, no Government national computer system has worked; I remind Members of the armed forces payments system, the NHS single patient record system, the tax credit errors and the collapse of the Child Support Agency—all of us get many constituents complaining about that. The problems were, in the main, the result of computer glitches. The risk of relying on one gigantic system is that failure would be catastrophic. Mr Hodder’s wise suggestion is that universal credit software could be circulated to the local authority housing benefit departments so that consistent rules are applied.

[Stephen Timms]

I am listening with great interest to the important argument the hon. Gentleman is making. Does he agree that the situation is rather worse than he says, because this involves not one great big computer system but two? The parallel real-time information, pay-as-you-earn system in Her Majesty’s Revenue and Customs is also involved, and the two systems have to interlock perfectly for universal credit to work.

[Richard Drax]

I agree with the shadow Minister. When I was a soldier, the great cry was, “Hope for the best and prepare for the worst.” I am a little concerned that, on this policy, the worst has perhaps not been prepared for. Will the Minister, when he sums up, reassure us that there is a system in place that will cope?

In dealing with the inevitable snags, community care grants and crisis loans could be administered by the local departments if this computer system were rolled out to them. The local housing benefit departments in my constituency are already running down their offices, yet their local knowledge could be invaluable in administering universal credit. In the world of IT and computers, how often have our constituents rung a telephone number and got a disembodied voice saying, “If you want flowers, press 1. If you want somebody else, press 2. If you want to go to heaven, press 3. And if you don’t want to bother us at all, press 4.”? At that stage the person wishes they had slammed the phone down and they give up the will to live. Although I welcome IT—I am not a luddite in that sense—I am a great believer in the human touch. Nothing beats eye-to-eye contact with constituents, including, as in this case, the many who need help. If people lose that contact with human beings—leaving aside the distress that will be caused if the computer system goes down—there will be an awful lot of concern, particularly among the elderly, many of whom do not understand the system in any case.

[Mr Hoban]

May I point out to my hon. Friend and to one or two other Members that universal credit is a working age benefit and will not affect the elderly?

[Richard Drax]

I take my hon. Friend’s point, but many people who are not of pension age are, like me, middle aged—shall we put it that way?

As we know, universal credit is also intended to go online. As we have heard from many Members on both sides of the House, that will be unfeasible for many and could result in many incomplete applications. Again, local offices equipped with universal credit software might be a great help at least until the system is up, running and proven.

Another of Mr Hodder’s concerns is about the receipt of a single lump sum payment once a month. Although most of the population—75%, I believe—receive their salary once a month, and although we want to treat everyone in this country in an adult fashion, it is pragmatic to realise that many of the people who will receive quite a lot of money in one blow are not necessarily in a position to handle it and have not been accustomed to it. Welfare recipients are currently paid out of many pots and money comes in at different times of the month, possibly to different accounts and different partners. For example, child benefit is often paid to the mother.

Management of a single lump sum payment is likely to prove challenging for many, at least at first. Mr Hodder suggests, and I concur, that payments should be split into two a month to lessen the stress of managing day to day. He also points out that that would make recipients less of a target for payday loan sharks, as the monthly benefit salary would not be so large. I believe that there will be a rise in the number of those sharks, who will prey on those who get their money one month, spend it and then want more money to pay off their bills. The problem will therefore be increased. The money will also often go to one member of the family. If the husband is abusive, for example, there will be a problem if the wife does not have access to the money and it all comes in one lump.

Mr Hodder’s main concern is the proposal to include housing benefit, which was once paid to landlords, in that monthly lump sum. Mr Hodder’s view, with which I agree, is that there is a “huge risk” of non-payment to landlords—I think that that is a pragmatic and realistic fear—because of wilful non-payment or the inability of the tenant to manage funds over a month. He says that the impact on his association and others will be a rise in arrears and collection costs. They will need more staff, the cash flow will be reduced and there will be less investment in social housing. Private landlords are already saying that they will not take on tenants who get their money first, for obvious reasons, so that could also shut the door on the private rented sector. Further down the line, arrears could lead to more evictions, more clogged-up courts and more families being thrown on the mercy of local authorities, which are charged with accommodating them in emergencies.

In my view, those are all unintended consequences, but the human cost means that they matter even more. This ambitious shake-up is bound to cause some problems and I think we all accept that there will be some. Mr Hodder, I and many people to whom I have spoken believe that they could be mitigated by careful forward thinking.

The intention of universal credit is to make the benefits system more streamlined and efficient. I think that we would all agree with the principle that incorporating some of Mr Hodder’s suggestions would give it the best possible start. I hope to hear from the Minister that some of those concerns, expressed by Members on both sides of the House, will receive some answers. I also hope that the Government will consider very carefully all that has been suggested.

Pensions Bill [Lords]

Richard Drax Excerpts

Monday 20th June 2011 Commons Chamber

[Richard Drax (South Dorset) (Con)]

It is a pleasure to follow the hon. Member for Kilmarnock and Loudoun (Cathy Jamieson)—I hope I have pronounced that correctly—although I do not entirely agree with what she said.

I want to congratulate the Secretary of State and the Front-Bench team on this Bill. This is a time-bomb that has been waiting to go off for years. The Labour party looked at it, sniffed it and walked away because it stank. It does stink. It is going to require a huge effort by this Government, particularly from the Pensions Secretary, for whose diligence I have huge admiration.

It has been long apparent that something had to give. As has been mentioned many times in this debate, our longevity has increased nationally by an average of 10 years since the 1970s. Today’s pensioner numbers have doubled since the 1950s and the increase is accelerating. The Office for Budget Responsibility has estimated that pensions will cost a stunning £32 billion by 2015—up by a third from today’s figures in just four years.

The problem was not created by the coalition, and neither is it exclusively our responsibility. Having packed the public sector to the gunwales, the last Government were well aware of the oncoming crunch, and had legislated to raise the state pension age to 66. The old understanding that public sector employees could rely on secure jobs with more generous final salary pensions as compensation for low pay is outmoded now. The pay gap has not only narrowed but reversed.

Figures from Policy Exchange for the past year show that the average public sector worker is now paid 35% an hour more than the average private sector worker, and Office for National Statistics figures tell us that in the year before that, the average public sector worker earned £2,000 more per annum than his or her private sector equivalent. Today private sector workers are worse paid, have less security of tenure, and have more fragile pensions than their public sector equivalents, but under the current arrangements they are expected to subsidise the more generous final salary pensions in the bloated public sector. They are understandably embittered, as, paradoxically, are the public sector workers, many of whose jobs were created by the last Government. They now feel threatened.

But deal with the pensions time bomb we must. The private sector has absorbed many shocks. So that we can survive the economic downturn, pensions, along with salaries and bonuses, have been hit hard. Final salary pensions are fast becoming a distant memory, even in larger firms, and new employer rules on automatic pensions enrolment which are due to come into force next year are likely to have further detrimental effects.

The public sector, however, needs a culture change. The current arrangements are simply unsustainable and unaffordable. The bottom line is that we all need to pay more into our pensions for longer, which means that the age at which we retire will be higher: it will be 66 by April 2020. The last Government legislated for that, but their legislation will be accelerated by this Bill. We will also need to supplement what we already pay with increased contributions.

We are told by Treasury Ministers that if we make these changes now, there is a chance of a decent and relatively generous pension for all entitled public sector workers. We are also assured that 750,000 of the lowest-paid public sector workers will not be asked to pay more, and that the extra contributions of another 500,000 will be capped. I am relieved to hear that the pensions of those who risk their lives serving their country—members of the police, fire service and military—will be protected.

Raising the state pension age to 66 and upwards will take years to implement, even on the revised timetable, and I am anxious to ensure that some worthy recipients do not slip through the net. Like others who have spoken today, I have received many letters and e-mails from people who are very concerned about the proposals. Mainly they are from women. The equalisation of the pension age, causing theirs to rise from 60 to 65, and the subsequent acceleration causing it to rise to 66 by 2020, appear to have left some unintended victims by the wayside. I ask the Secretary of State and the Treasury to think again about those cases.

In particular, women in their late 50s who were told to prepare for retirement at 65 have now seen the goalposts moved again. Overall, 5.5 million women now aged between 51 and 57 are affected to a greater or lesser degree, and 330,000 of them— those given less than two years’ notice of the change—are particularly badly affected. There will not be enough time for the women caught up in the scheme to save enough to address their loss. Many are among the lower-paid, 40% have private pensions, and many part-timers were excluded from occupational pension schemes until the 1990s. Moreover, members of that age group are more likely to be economically inactive owing to caring responsibilities. Perhaps an interim measure can be introduced to ensure that they are paid what they have worked for, and that the longer gap before they reach the state pension age does not cause unnecessary hardship. After all, those women worked through the years of genuinely lower pay in the expectation of a comfortable retirement, only to see it evaporate.

What matters most in this debate is to find a way to make our pensions fairer, more affordable and as generous as possible, while taking into account the changes in life span and the sheer numbers involved. I know that that is the intention, but now, for all our sakes and those of our constituents, we must make it a reality.

Amendment of the Law

Richard Drax Excerpts

Tuesday 29th March 2011 Commons Chamber

[Mr Byrne]

All unemployment fell. Then, once the scale of the global recession we confronted became apparent, it of course went back up again. What we never had under a Labour Administration is unemployment going up through the 3 million mark—not once but twice, as it did under the Conservatives. Every job lost is a tragedy for one family, and all the jobs lost are a tragedy for all of us—and, indeed, for the Exchequer. Lost jobs mean not only that our performance as a country cannot match our full potential, but that a bill is created that we all end up paying.

The Governor of the Bank of England has warned us of what is to come. He says that we now confront the biggest squeeze on living standards since the 1930s, and that because this Government’s economic plan is creating so few jobs, there is less and less demand for workers. Now there are five people chasing every job and the growth in people’s pay packets and wages is slow. The Office for Budget Responsibility forecasts 2% earnings growth this year, 2.2% next year, but when prices are growing by more than 5% this year and 3.6% next year, the squeeze on family budgets is now all too obvious.

In the circumstances, one would have thought that the Government would step in to help. Not a bit of it. Next month 10 Tory raids on the family budget get into full swing: tax credits cut for families earning more than £40,000; tougher criteria on families wanting to claim family support; reducing the income disregard; freezing basic rates of working tax credit; removing the baby element of child tax credit; reducing payable costs of child care; abolition of grants for pregnant mums; £500 taken away from families with more than one child; child benefit increases ruled out for another three years; and cancelling the child savings accounts.

This Government are proud of some of the measures foisted on them by Liberal Democrat Members. I am sure that is right. Once we take this list into account, however, £1.1 billion is going to be stripped from family budgets starting from next month, with another £300 million coming from children. By the end of this Parliament, £16.5 billion will have been taken out of family pay packets.

[Richard Drax (South Dorset) (Con)]

Will the right hon. Gentleman give way?

[Mr Byrne]

No.

Why are the Government not doing more to help? Because the cost of economic failure is sending the benefits bill through the roof. Last week we learnt from the detail of the Budget book just how big that bill has now become.

This afternoon the Secretary of State liked to boast about his reforms of housing benefit, but forgot to tell the House that the housing benefit bill is projected to rise by more than £1 billion in the next few years. In the small print of the Budget we saw something more: his benefits bill over the next few years is now projected to increase by £12.5 billion. That is £500 for every household in the country.

Almost as shocking is what will happen to the unemployment bill as a result of the Secretary of State’s great endeavours to get so many extra people back to work. When the Chancellor came to the House last year, he somehow forgot to tell us that as a result of his Budget higher unemployment figures would increase the dole bill by £700 million. Now we learn that it is going to go up again, by another £1.9 billion. In other words, since the Government came to office they have put the unemployment bill up by £2.6 billion. That is an indictment of their record in getting people back to work. In fact, £2.6 billion is the same amount that the Government are cutting from tax credits for people with children. The right hon. Gentleman is cutting support for our children in order to pay the bills for his economic failure.

What does this mean for the average British family? A single earner family with a child and an income of £23,000 will lose £400 a year. The Secretary of State may not care about what is happening to ordinary families, but I assure him that plenty of people are interested in the bills for his economic failure. Households with child care costs will be hit even harder. A family with average child care costs will lose nearly £500 a year, and for some it will be even worse. A single earner on the minimum wage with two children will lose more than £2,000 a year—6.5% of his or her income. Even for low earners, any gains that they make as a result of changes in income tax and child tax credits will be wiped out by the VAT rise. The Secretary of State is squeezing Britain’s families harder than ever to pay for his failure to get the country back to work. Does that not sound all too familiar?

--- Later in debate ---

[Richard Drax (South Dorset) (Con)]

It is a great pleasure to follow the hon. Member for Swansea West (Geraint Davies) and other Members who have spoken so well.

May I begin with a story? It is about a family brewery in Blandford, which is not in my constituency, but in the neighbouring one. The brewery was run by one of my closest friends, David Woodhouse. Tragically, he died prematurely of a heart attack recently, aged only 49. His brother, Anthony, now runs the business, which employs 1,500 people, and he plans to invest £5 million in a new brewery. When David was alive, he and I used to speak regularly about taxes, red tape, bureaucracy. His bugbear was the duty on beer. “Do they realise,” he used to say, “what politicians impose on our business every single year?” Our conclusion was that they—the politicians—did not realise, because so many have not operated in a business.

Now it is Anthony’s turn and he is aghast that the beer duty, as we heard from my hon. Friend the Member for Burton (Andrew Griffiths), has risen by 10p for no reason other than the nature of the product he produces. Why do we go on punishing this industry, year in, year out? Is it to discourage drinking? If it is, there is no logic in punishing publicans who serve, in the main, law-abiding citizens in a safe environment. The lager louts get their beer from cheaper sources, not least the supermarkets.

On that subject, Mr Woodhouse makes an additional point. Pubs have to pay VAT on food, while supermarkets which sell prepared meals—often full of salt and preservatives—do not. This inequality is crippling the pub business. On the continent, VAT has been reduced on eating out—what an excellent idea and incentive.

The only other reason for this annual tax raid is to fill the Treasury’s coffers. And this from a Government who want to encourage the private sector. Let us stop targeting the brewers, remove the escalator and allow a vital UK business to survive. On the subject of removing burdens, surely the Budget was a wonderful opportunity for boldness. Conservative economic principles—I emphasise “Conservative”—are simple: low taxes, the minimum of red tape and bureaucracy, fair and balanced employment law, and freedom from unaccountable institutions like the EU.

The EU is one of the main handicaps to business in this country and to growth and prosperity. We can talk until we are blue in the face about deregulating, removing taxes and all the rest of it, but unless we leave the EU and renegotiate a trade agreement, business will never truly be set free. The EU superstate will fail, as sure as eggs are eggs. The question is are we bold enough to lead the way to pastures new where our economy can thrive and our people prosper?

Let me dwell briefly on personal taxes. Why have we kept the 50p tax rate? I agree that we should all pay our fair share, but surely a ceiling of 40% is more than adequate. Taxes are not there to punish people who aspire, work hard and contribute enormously to their country. Regrettably, and all too often, it appears to many that taxes imposed by the Opposition were based on envy. Our coalition partners are no better. The Secretary of State for Business, Innovation and Skills suggested a mansion tax. That suggestion was spiteful, vindictive and regressive. Let us lower personal taxes. There is more than enough evidence to suggest that such a move increases the tax take.

Finally, let me touch on Saturday’s march. It proved to me and many others one point—how effective the Opposition had been in 13 years. Why? Because they effectively bought the electorate and created a bloated and unaffordable public sector. For those who are losing their jobs, I have every sympathy. We do not enjoy sitting on the Government Benches watching people lose their jobs, contrary to what many Opposition Members say. That is disingenuous of the Opposition. Now, as we have seen, tens of thousands of people are paying the price for Labour’s ideology. Wealth, which pays for the public sector, must come from the private sector. It is here that we must be bolder and far more far sighted.

The Government must free us from the EU yoke, lower and simplify business and personal taxes, review employment law and create a leaner public sector that we can afford. Let us finally take politics and politicians out of the economy and allow our business men and women get on with it. The Budget is a small beginning, but more boldness is needed in the years ahead.