Budget Resolutions and Economic Situation
Richard Fuller Excerpts(8 years, 5 months ago)
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Chloe Smith
I make two points to the hon. Gentleman. First, the percentage of people on zero-hours contracts remains about 2.5% of all who are in work. Secondly, as he will know from the small print of the Budget, for every £4 that somebody saves, the Chancellor will put in £1. That means that at the rate that the hon. Gentleman cites, for example, it is possible to consider taking up a savings product.
It is vital that those who come out of education and skills training have every possible opportunity, which is why the Budget is right to keep up job creation and investment in infrastructure. It is also crucial that we try to represent the values of the next generation. Generation Y —my own generation—and those coming after us value enterprise. Many will set up their own businesses, and many will work in a totally different pattern over their lifetime, so the Budget is smart to turn attention to the growing army of the self-employed. Many of the smallest businesses of all will welcome a drop in their NIC burden.
Richard Fuller (Bedford) (Con)
Will my hon. Friend use this opportunity to congratulate the Government on the start-up loans scheme, which has done so much to help young people to go into business and fulfil their entrepreneurial objectives?
Chloe Smith
I certainly will, and I welcome my hon. Friend’s reminder of that. I am sure he will agree with me on my next point, which is that we should also prize the ethical approach to business of many of those entrepreneurs. We should welcome the measures in the Budget that begin to make sense of taxing multinationals in the 21st century. The Government have my full support in ensuring that our tax system demands and gets a fair contribution from companies large and small, domestic and global.
Let me turn to the welfare measures in the Budget. As is well documented, Generation Y has a sceptical approach to the welfare state, and support for the welfare state has steadily declined by generation. We should therefore remind ourselves of the basic principles of what welfare is for. It is a safety net for when we are unable to look after ourselves, perhaps because of sickness, old age or disability. It is a safety net that we will all need in one way or another, so we all have a responsibility to maintain it. Because we are going to live longer on average than previous generations, we need to make sure it is affordable for the future. We also, of course, expect the richest to pay most. In summary, we need a sensible method of working out who needs most support and how to get it to them.
I did not support the measures announced in the Budget seeking to reduce support for the disabled through PIP. The manifesto on which I and my hon. Friends stood at the last election made it clear that we would spend less on welfare, but that we would do so by protecting the most vulnerable. I have supported the Government’s welfare reforms since 2010, principally because they put work first. Universal credit puts work first, as does the most recent reform of the rate for those who are on employment and support allowance and can work. In the 21st century, we should not write off people from work and independence; the policy of spending more on helping people to work despite a disability or a health condition is right.
In some cases, our welfare reforms have been about injustice in other ways, such as in relation to the removal of the spare room subsidy. For example, the pay to stay policy in our current Housing and Planning Bill will relieve taxpayers of subsidising the housing of those who may well earn more than they do, such as, dare I say it, the leader of Norwich City Council. These reforms are about fairness for taxpayers who foot the bill for a benefit they themselves could not expect to enjoy.
I am in the Chamber today to speak up for many constituents who simply want us to use limited resources to provide properly for those who need support. I helped constituents to record their concerns during the consultation on aids and appliances, and I am very pleased that my right hon. Friend the new Secretary of State for Work and Pensions has stopped that measure. We should protect the disabled and make savings elsewhere.
Our manifesto clearly pledged us to back pensioners. At some point in the future, however, we will have to look again at universal benefits. As I have said, the welfare state is a safety net, which means that pensioners need a decent income. That is why I wholeheartedly support the triple lock. But it does not necessarily mean that the most well-off pensioners need benefits as well, as my hon. Friend the Member for Peterborough (Mr Jackson) and my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke) have already argued. When others are more in need—and, indeed, when there must be a balance with other generations—is it right to maintain such policies?
A Mrs Brown recently wrote to the Norwich Evening News letters page:
“Excuse me, but as a baby boomer I was…brought up in post-war abject poverty. We got an apple or orange for Christmas...I worked for everything I have. We never had credit and only had anything we could pay for or we went without.”
She is of course right. I deeply respect her and all my constituents, from any generation, who have worked hard and done the right thing. I am making an argument for fairness in the future, for helping those who most need it and for balance between the generations.
Richard Fuller (Bedford) (Con)
Parents in Bedford and Kempston will have wanted a Budget that said, “Yes, we are going to make sure you get a good job. Yes, we are going to make sure you get a decent amount of pay, whatever job you do. Yes, we will make sure you can keep as much of your taxes as possible. And, yes, we will deliver a Budget that will make sure that your children have a better future than you do.” The Chancellor, in his robust performance today, has demonstrated that this Budget can deliver on all those items.
I was shocked to hear the response from the shadow Chancellor, as he seemed to spend 20 minutes of his speech trying to hold the Chancellor to account for something that the Chancellor is not doing. That shows part of the Labour party’s problem: there is no coherence in its approach to this Government. I would therefore like to provide a bit of coherence in my criticism of one aspect of this Budget—the sugar tax. I do so because it is not what it says it is, it will not raise the taxes ascribed to it and it will not achieve the health benefits that were its original vaunted purpose.
It is clear that this is not actually a sugar tax. There will be no tax on sugar in cakes, puddings or confectionary. That might be great for food manufacturers, restaurant owners and chefs, but it is not actually a tax on sugar. It is not even a tax on soft drinks, because sugars in milk-based drinks or fruit juices are not covered either. In fact, it appears to be a tax not on sugar, but on five companies: Coca-Cola, Britvic, AG Barr, Nichols Vimto and Lucozade Ribena Suntory. The Government ought to be careful about having very specific taxes targeted on very specific companies, because they will be open to challenge at the Commission or in the courts.
Seema Kennedy (South Ribble) (Con)
My right hon. Friend the Chancellor made it very clear in the Budget that one of the objectives of the so-called sugar tax was to get companies to change their behaviour by making low-sugar drinks rather than full-sugar drinks. I used to drink a lot of full-sugar Vimto, but I now drink no-added-sugar Vimto. Does my hon. Friend accept that that is also one of the aims of the tax?
Richard Fuller
It is bizarre for the Government to attack one of the sectors of British industry that has done the most to innovate and bring in new products, while ignoring other parts of the industry that have not made the same changes. As my hon. Friend rightly says, the core of the issue is the impact on obesity. Office for National Statistics figures show that obesity among adults doubled between 1993 and 2013. The proportion of obese children in 2013 was 9.5%, which was higher than in 2012, but lower than in 2006-07. The products being targeted originate from way before the current obesity issue. Irn-Bru, which is often described as the national drink of Scotland, was introduced in 1901. Robinsons Barley Water was introduced in 1935, and Coca-Cola in 1886.
The Government are ignoring the advice of Public Health England which, in its October 2015 report, said that it is not possible to compare the impact of price increases achieved by, for example, the introduction of a tax on sugar sweetened drinks, with other factors, such as the demonstrated effects of marketing on children or the impact of in-store promotions on purchasing habits. Nevertheless, the general tone of the available evidence is that restrictions on marketing and promotions may be more effective than fiscal measures.
Neil Parish
Does my hon. Friend not think that it would be better for the Government to work with the companies to reduce the amount of sugar in their drinks, rather than bringing in any form of tax? In the end, all we will do is to make it more expensive for poorer people to buy these drinks. That will not necessarily stop them drinking them, whereas if the amount of sugar in them could be reduced, that might have a greater effect on their diet.
Richard Fuller
My hon. Friend, the Chair of the Environment, Food and Rural Affairs Committee, speaks with enormous sense and knowledge. He is, of course, absolutely right. It is much better to engage the industry than arbitrarily to impose a levy, especially one with such great uncertainty. The OBR states:
“The tax will operate with a specific revenue target of £500 million for the second year of implementation”.
It goes on—here is some real Budget gobbledegook—to say:
“From a pre-behavioural yield of over £900 million, the behavioural responses lower the yield to around £500 million a year. As a new tax likely to prompt a large behavioural response, these estimates are clearly subject to significant uncertainty.”
Well, there we have it—not a clue at all.
Maggie Throup (Erewash) (Con)
Surely the two-year lead-in for the sugar levy is the right approach because that tells the manufacturers to reformulate. Surely the future and health of our children are more important than anything else.
Richard Fuller
The health of our children is, of course, extremely important, but, as I said, the sector is already innovating. There have been remarkable reductions in the sugar content of soft drinks compared with what has happened in other sectors, in which there has been no change in the amount of sugar that people consume. There are question marks over whether the levy will have the impact on health it is supposed to achieve. In Mexico, for example, where a sugar tax was recently introduced, the calorie reduction amounted to six calories a day. This regressive measure goes much against the principles that the Chancellor himself rightly outlined as the overarching ethos of the Budget.
Mary Glindon (North Tyneside) (Lab)
Does the hon. Gentleman agree that this tax, which has many ambiguities, simply indulges our celebrity chefs and gives them more credence than they deserve?
Richard Fuller
I could not be more delighted to have given way to the hon. Lady, because she is quite right. The sugar tax is a passion of TV chef Mr Jamie Oliver, who is just the latest in a line of celebrities—think of people such as Mr Russell Brand and Mr Benedict Cumberbatch—to use their position to influence public policy. To quote The Independent, the
“chief beneficiaries of star-studded attempts to raise the profile of a good cause are the celebrity themselves”.
Can we have a new levy on policy pronouncements by well-heeled celebrities who sprinkle their fame to dazzle Ministers into ill-thought-through changes? The levy could pay for the unintended consequences for the public of their brief, highly jaundiced opinions. Emma Thompson’s pronouncements alone should secure the defence budget.
Richard Drax (South Dorset) (Con)
Let me first condemn the outrage in Brussels today and those who perpetrated it. My sympathies and prayers go out to all the victims and their loved ones.
While some highly respected colleagues are sitting on the Treasury Bench, may I put in a plug for the armed police in Dorset and around the country, and not least in our capital, to receive more money for training? As a former soldier, I know full well the complications of storming buildings and dealing with civilians who are fleeing from bombs, as they were doing in the departure lounge this morning, as well as about the chaos, the blood, the gore, the mess and the noise. To go into a building that has been attacked, armed police need an incredibly high degree of training, otherwise even more problems could be caused.
Richard Fuller
Does my hon. Friend recall the Prime Minister saying after the events in Bataclan that he would support continued funding for the police and particularly for our armed police?
Richard Drax
I do, and I welcome the Prime Minister’s comments. I am simply expanding on the need for highly specialist training. All kinds of things—images that can change during an attack and different lights—are needed in what will be a highly strategic attack. Our armed police would not be able to stay outside and wait for the Special Air Service to come; they would have to get into the building and save lives, as I am sure they would. I do not doubt for one second their courage or dedication. I am requesting that the Treasury and the Prime Minister look carefully at the moneys available to train our armed police to deal with assaults such as what we saw this morning which, sadly and tragically, are becoming more common.
Speaking of the military, may I congratulate my right hon. Friend the Chancellor on resorting to military tactics? It is always said that attack is the best form of defence, and my right hon. Friend’s robust performance in the House today was a very good example of that.
I welcome much of what is in the Budget. I welcome the raising of the tax-free personal allowance, the increase of the higher-rate threshold to £45,000, the freezing of fuel, beer and cider duties, and the expanding of the savings culture. The Chancellor also reduced corporation tax and cut taxes for small businesses, and I want to direct my remarks about those measures to Opposition Members. We heard the shadow Chancellor say that they constituted a tax cut for the rich. May I remind the Opposition that such businesses are the engine room of our country? Many people risk their homes to invest in businesses and struggle for years to make a profit. They then pay for all the people whom we are trying to get into work, while also taking vast risks in making all the goods that we need for the economy to run, and generating the money that we need to spend on, for instance, schools and hospitals.
The more money those business people keep, the more they can reinvest in their companies. It is not a matter of people jetting off in their 747s. I have visited many businesses, and I am sure that Opposition Members have done the same in their constituencies. I know that small engineering companies are now having to buy equipment that is worth £600,000, £700,000 or £800,000, and that profits are minimal. We need to help such companies for the sake of the future of our country, and the future of those whom we want to get back into work.
I agree entirely with my hon. Friend the Member for Bedford (Richard Fuller) about the sugar tax. I, too, have doubts about it, and I hope that Ministers will think again. I am also concerned about the effects of raising the business rates threshold for small businesses and exempting some businesses altogether. I am sure that someone will correct me if I am wrong, but I understand that more and more local authorities, particularly rural authorities like mine, will rely increasingly on business rates, because central Government funding will be reduced to zero. If that is the case, and if businesses are to be exempted from business rates—which I absolutely applaud; do not get me wrong—where will the money come from for small rural councils such as mine? I should be grateful if the Minister could answer that question when he sums up the debate.
Let me now say something about the personal independence payment, and all that has happened in that connection. Like others, I have huge praise for my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith). Having been the leader of our party, a lesser man would have gone off into a cave and stayed there, but not this man; he went out and did all that he could do, and has done, for the poorest in our society. He has dedicated so much of his life to that, and I commend him for it.
I want to draw attention to an aspect of the PIP that greatly concerns me. Many constituents come to my surgeries and say that they have been assessed unfairly or lazily—whatever it may be. It is a tick-box culture, and I have never liked the ticking of boxes. In some instances, support has been withdrawn from my constituents while their cases are assessed, although many of them have had doctors’ certificates explaining why they need the money. May I strongly urge the Government to look closely at the assessing system? We need occupational therapists, family members and doctors to contribute to assessments. It is true that that would probably be more expensive, but at least we would get the assessments right, rather than causing huge distress to those who are least able to deal with it by taking away what support they have, and then giving it back to them X months later when a Member of Parliament has become involved.
Finally, let me point out that virtually every departmental budget is now ring-fenced. Which areas can we stop ring-fencing? There must be savings to be made, not least in overseas aid, which I am sure could be spent and targeted in a far better way.
Enterprise Bill [Lords]
Richard Fuller Excerpts(8 years, 5 months ago)
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Richard Fuller (Bedford) (Con)
I am not that new. Can my hon. Friend knock on the head the point that Conservative Members are making about permission? The issue is not about the fact that permission is given; it is about who will exercise that permission. The permission will be exercised by local authorities, but do individual shop workers who wish to run their own store six or seven days a week have such a right of permission?
Mr Burrowes
That is an important point. This is not simply about providing local councils with such powers, because our duty goes much further. We need to look further than simply at whether councils want this or not—whether 100, 200 or more councils want it. We need to look at what businesses and shop workers want.
On the question of imposition, in September, a survey of 10,000 shop workers showed that 91% of them do not want to work more on a Sunday. The current six-hour restriction is important to them because, as they say, Sunday evening is often their only guaranteed “family time”, especially if they have children at school in the week or partners who work weekdays. Not so many staff are required under the current regime—usually, there is a single shift—so most staff are able to work a Sunday rota with some Sundays off. We must look at the imposition on shop workers and businesses.
Brandon Lewis
My hon. Friend has made a very good point. Research conducted by the Association of Convenience Stores has established that there are more small independent shops per head of population in Scotland than there are in England. So the liberalisation in Scotland has worked—unless the hon. Member for Livingston (Hannah Bardell) is going to tell us, when she makes her speech later, that the SNP is about to go backwards and change the law there.
Richard Fuller
It seems to me that, if Conservative Members are being asked to vote for something that was not in our manifesto so shortly after the election, it should be because the situation is urgent, because there is a compelling argument in favour of the move, or because the circumstances have changed. The situation does not appear to me to be urgent. The Minister will finish his remarks, and he may advance a compelling argument. However, he seems to be resting on the assumption that the circumstances have changed, and in that context he has laid emphasis on internet shopping. He may be aware that, only yesterday, the head of the British Retail Consortium appeared before the Business, Innovation and Skills Committee and talked about the evolution of business models. He said that, because high street retailers now have their own online retail outlets, they do not necessarily feel compelled to draw a distinction between the two kinds of retail for the purposes of achieving growth.
Brandon Lewis
My hon. Friend has, in fact, made it clear why it is important for local authorities to be able to decide locally what is right for them. He should also acknowledge that it is often the larger high-street stores that are the draw for footfall in local areas. As he knows, I think that free car parking also plays a part, and I should like to see more of that.
As we all know, politics is not an exact science, and all but the most saintly of humans can sometimes contradict themselves, or be open to the charge of inconsistency. However, the contradictions that are inherent in the Labour-SNP opposition to our liberalisation proposals are so immense that I must draw attention to them.
As others have pointed out, there are no restrictions on Sunday trading in Scotland. First, SNP Members said—as one would expect—that they would support our proposals, and now they say that will not. Will the SNP Administration in Edinburgh be introducing the restrictions that currently apply in England, in order to be consistent? I should be interested to hear the answer to that question.
Do Labour Members—along with USDAW—plan to send letters to their constituents urging them to give up using the internet on Sundays, lest someone, somewhere, be exploited in a warehouse owned by Amazon or a similar company? I am tempted to ask the Opposition why they did not vote against this proposal in Committee, or even, in some cases, speak against it—neither the SNP nor Labour voted against it—and why they have not tabled an amendment themselves. Perhaps the wording of the amendment could have been something like “It has come to the attention of Labour and SNP that that some people shop on the internet on Sundays.” After all, Sunday is now the biggest internet shopping day of the week. It could have continued: “Labour and the SNP demand a law requiring people to switch off the internet on Sundays, in order to stamp out this disgraceful behaviour.”
Perhaps I should not give Opposition Members any ideas. How can anyone be opposed to the idea of walking into a shop on a Sunday to buy something—a book, for example, whether it is a little red one or not—but not opposed to the idea of buying that very same book, so long as it is done on the internet? Labour and the SNP—parties that are, effectively, in coalition today—are supporting Amazon’s profits at the expense of shops on our high streets. I am afraid that I struggle to understand the logic of that.
The Economy
Richard Fuller Excerpts(8 years, 9 months ago)
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Harriett Baldwin
I would listen more to the advice of the SNP on the economy if it had not projected that the oil price would remain at over $100 forever and fought last year’s referendum on that basis.
Various hon. Members have mentioned tax credits. The British people want to see a lower welfare, lower tax and higher wage economy, and that is what they voted for in May. In the summer Budget, we set out a package of reforms for working people, which included the introduction of the new national living wage, continued increases in the personal allowance and the doubling of free childcare worth up to £5,000 a year for working parents. Of course, we will listen to the concerns raised about the transition period, and my right hon. Friend the Chancellor will set out our response to those concerns next week. But make no mistake, creating a low-welfare, low-tax, high-wage economy is one of the most progressive goals a Government can have, and one that we will continue to work towards.
Richard Fuller (Bedford) (Con)
As my hon. Friend analyses the Opposition motion to decide whether she will support it—I think we are fairly clear on that—is she as surprised as I am that it does not mention the new national living wage? That is probably the most significant change in our economy over the next five years—[Interruption.] Well, there are issues with tax credits—I am not making a speech, Mr Speaker—but the fundamental point is that we will ask companies to pay our poorest paid workers what is effectively a 38% increase in their wages over five years, plus 3% on their pensions. Does she agree that that needs more attention from Members on both sides of the House?
Harriett Baldwin
My hon. Friend is right to highlight that progressive move, and it gives me a chance to emphasise the fact that yesterday’s data on earnings showed that the lowest earning 10% in our society saw a wage increase of 3.4% over the last 12 months, and that is before these changes have even taken place.
The Opposition motion also mentions child poverty. The best route out of child poverty is for a parent or parents to work. On our watch, the number of children growing up in workless families is at a record low, down almost 500,000 from 16.2% of all children to 11.8%.
Oral Answers to Questions
Richard Fuller Excerpts(8 years, 10 months ago)
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Mr Osborne
I am very glad that the hon. Gentleman has a copy of the Conservative manifesto. It is an excellent document, which says we are going to deliver better schools for people, we are going to put more money into the national health service for people, we are going to invest in transport for people and we are going to make £12 billion of welfare savings.
Richard Fuller (Bedford) (Con)
It is good to see the Chancellor in listening mode. There is another group that can assist practically but which we are not talking about—companies. Are our companies in listening mode about the measures that they can take in moving their employees to the national living wage much more rapidly? What can the Chancellor say about what they are doing to help on this issue?
Mr Osborne
My hon. Friend makes a very important point. The savings we make in welfare are part of a package that includes a national living wage. Although the national living wage starts to come in next year, over 200 major companies—such as Sainsbury’s, Morrisons, Costa Coffee and many others—have already, since the Budget, introduced wage increases that match what we are proposing to do by statute, so we are already seeing the benefits of the national living wage coming into effect before it is even introduced.
Finance Bill
Richard Fuller Excerpts(9 years, 1 month ago)
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The Financial Secretary to the Treasury (Mr David Gauke)
I beg to move, That the Bill be now read a Second time.
As my right hon. Friend the Chancellor set out in the recent Budget, the British economy is fundamentally stronger than it was five years ago. The deficit has been halved as a percentage of GDP; for the first time since 2001-02 debt as a share of GDP is falling; the UK was the fastest growing economy in the G7 in 2014, and we are expected to repeat that in 2015, too. We have more individuals in work than ever before, and wages continue to rise above inflation.
Having come so far, we need to stick to our long-term plan for economic recovery. The first Finance Bill of this Parliament demonstrates this Government’s commitment to continuing the plan to build a productive, balanced and secure economy, which delivers for working people at every stage of their lives.
I shall happily take interventions this afternoon, but let me first set out to hon. Members the order in which I intend to discuss the measures in the Bill. I shall begin by talking about those measures that are intended to support working people through the tax system. Next, I shall set out how the Bill will help put the public finances in order by tackling tax avoidance, evasion, non-compliance and imbalances in the tax system. Finally, I shall talk about how the summer Finance Bill 2015 will take the first steps in implementing measures to improve the UK’s productivity.
I shall begin with those measures designed to help hard-working people keep more of the money they earn, a principle to which this Government are committed. We have a proud record on reducing tax for the lowest paid. As a result of action taken in the previous Parliament, 27.5 million individuals saw their typical income tax bill reduced by £825. This Finance Bill makes even further progress, by increasing the tax-free personal allowance to £11,000 in 2016-17 and to £11,200 in 2017-18. As a result of those changes, a typical basic rate taxpayer will be £80 better off in 2016-17 compared with in this tax year. Further, the higher rate threshold will also increase from £42,385 in 2015-16 to £43,000 in 2016-17—£300 more than the amount announced in the March Budget. That will take 130,000 individuals out of the higher rate of tax by 2016-17.
It is the firm belief of this Government that individuals working 30 hours a week on the national minimum wage should not pay income tax. That is why this Finance Bill will enshrine that link in law for future increases in the personal allowance. Once the personal allowance has reached £12,500, it will always be at least the equivalent of 30 hours a week on the national minimum wage. Until that point, my right hon. Friend the Chancellor will have a legal duty, when setting the personal allowance, to consider the financial impact on an individual working 30 hours on the national minimum wage. This Finance Bill also delivers another legislative commitment to low levels of taxation. It introduces aspects of the five-year tax lock by ruling out increases in income tax and VAT for the duration of this Parliament.
Finally, this Government know that the wish to pass something on to one’s children is the most basic human aspiration. To give hard-working people the security of knowing that they can continue to provide for their families after they have gone, this Bill phases in a new £175,000 per person transferable allowance when a person’s home is passed on at death to their direct descendants. This means that by the end of this Parliament, the effective inheritance tax threshold for married couples and civil partners will be £1 million.
At the same time, to ensure that those with the broadest shoulders continue to bear the biggest burden, this new allowance will be gradually withdrawn for individuals with assets of more than £2 million. This reform will be paid for by cutting down on the £34 billion that the Government spent on pensions tax relief in 2013-14 —two thirds of which goes to higher and additional rate taxpayers. The benefits of pensions tax relief for top earners will be restricted by tapering away the annual allowance for those with a total income of over £150,000 from April 2016.
These are important measures, rewarding and supporting the efforts and aspirations of working Britain—and doing so in a fair and balanced way.
Richard Fuller (Bedford) (Con)
In the previous Parliament, under the previous Government, one outcome was that the wealthiest in the country paid a higher proportion of tax than they did under the preceding Government. Do this Government intend that to continue to be the case in this Parliament?
Mr Gauke
I can confirm to my hon. Friend that that will continue to be the case. We have set out a Budget that is balanced, ensuring that those with the broadest shoulders continue to bear the greatest burden.
I now turn to the way in which the summer Finance Bill 2015 will help to fix the public finances. We know that the UK’s economic recovery is well established, with growth at 3% in 2014, and continued robust growth for 2015 and 2016, according to the Office for Budget Responsibility’s forecast. But this country needs the economic security of running a surplus, and, if we are to achieve that, a further £37 billion in fiscal consolidation is required over the course of this Parliament. To deliver that, the summer Budget included measures to tackle tax avoidance and tax planning, evasion and compliance and imbalances in the tax system, which will collectively raise £5 billion a year by 2019-20.
This Finance Bill implements a number of those measures. First, it includes provisions preventing private equity and some hedge fund managers from exploiting tax loopholes to avoid paying the full rate of capital gains tax. Secondly, it removes the ability for companies to use UK losses and reliefs against their controlled foreign company charge. That will improve the effectiveness of the UK CFC regime in countering aggressive tax planning by multinational companies. Thirdly, the Bill legislates to stop a potentially significant tax planning risk, whereby corporate groups exploit tax rules for asset transfers between related parties. This puts it beyond doubt that the tax rules cannot be manipulated to prevent profits from being charged to tax.
Mr Gauke
The first point I have to make is that banks with the smallest profits do not pay the surcharge. There is a minimum level to protect the very smallest banks. The bank levy that was introduced early in the previous Parliament reflected some of the issues that existed at that time. It was designed in part to encourage a different type of behaviour that would reduce risks. Regulatory changes have rather addressed that particular point. The move to a surcharge—a higher level of corporation tax—is sensible and timely given some of the changes that have been made. It is not possible in those circumstances to carve out those institutions that we like and dislike beyond putting in that de minimis level. That was a sensible approach to take.
Richard Fuller
Perhaps the Minister can clarify the intention of the levy. Is it to continue modifying behaviour? Do we need it because we have concerns about systemic risk, or because we want to close the deficit?
Shabana Mahmood
My hon. Friend is absolutely right. The Government have been busily trying to claim that the changes to tax credits will result in no real change because the new national living wage, which is effectively only an increase in the national minimum wage, will make up for that. The IFS has made it clear that that is arithmetically impossible. That is a pretty damning indictment of the messages that the Government have been trying to put out since the Budget on 8 July.
Richard Fuller
I feel for the hon. Lady, because she has only one Labour Back Bencher here to support her—perhaps because the de facto Opposition are now the Scottish National party. On that specific point about the national living wage, which she calls an enhanced national minimum wage, will the Labour party be supporting or opposing it?
Shabana Mahmood
It is quality that counts, rather than quantity, and Labour Members will show their true quality, as opposed to those sitting to my left—literally to my left, that is—on the SNP Benches. We will of course support the measures that will bring in what is effectively the new national minimum wage, but it is important to expose the fact that it is not, in fact, a living wage. The living wage is calculated on the assumption that there will be full take-up of tax credits, which is exactly what the Chancellor has cut. Given the cut to tax credits, the real living wage will be significantly higher than anything the Chancellor has set out. The effect of his decision is that in 2016 he will be offering the people of this country the 2011 living wage. That is an important point to get on the record. That is why the IFS has said that compensating ordinary working people for the loss of their tax credits with the changes on wages is arithmetically impossible.
Shabana Mahmood
The hon. Gentleman makes a really important point. Taken alongside the changes to student maintenance grants and other measures, the Budget will leave young people, particularly those from poorer backgrounds, worse off. It will have a real impact on their life chances. As those measures are brought forward, it is important that we keep holding the Government’s feet to the fire on the impact they are having on young people.
Changes to the national minimum wage are normally made by statutory instrument, but given the change in the name—the Chancellor’s rebadging exercise—they might need to be done by primary legislation. I would be grateful if the Minister explained how the Government will go about making those changes. If primary legislation is needed, I am rather surprised that the changes are not set out in the Bill. It would be good to have the Government’s further comments on that.
The Bill contains nothing more on productivity, notwithstanding the Minister’s comments in his opening speech. Solving the productivity puzzle is absolutely imperative if we are to experience much stronger economic growth and get the deficit down more fairly. The Conservatives’ record on productivity is one of failure, given the difference between productivity in our country and in our competitors’ economies. I am afraid that the Budget simply offered more of the same.
Despite the Chancellor’s boasts, the Office for Budget Responsibility has revised productivity down next year, the year after, the year after that, and the year after that. His belated productivity plan was simply a patchwork of existing schemes, rather than a substantial reform to boost skills, business growth and wages. The Bill should also have included legislation on big infrastructure decisions, which the Government appear to have ducked.
Richard Fuller
To tie the issue of productivity, by which I think the hon. Lady means the record on labour productivity, to that of tax credits, does she feel that there is an argument to be made that the widespread nature of tax credits during the last recession played a significant role in the willingness of workers to job share and accept reduced wages in order to maintain themselves in employment, because they knew that the state was going to top up their income if it fell? Therefore, although I support the changes to tax credits, research is still needed into the beneficial impact they can have on maintaining employment in times of recession.
Shabana Mahmood
The hon. Gentleman raises a very important point. When we debated tax credits before the Budget, I discussed, I believe with the hon. Member for Brighton, Pavilion (Caroline Lucas), the way in which, in the last recession, tax credits assisted people to remain in work—to accept a reduction in hours, knowing that they would have the safety net of tax credits to help them through that difficult time. More research is needed; the Government should have looked at the way in which tax credits have assisted people. There is a real danger in removing tax credit support from people without having already embedded into the economy the high-skilled, high-paid jobs that we all agree are needed. If our economy had been transformed—if the Government had brought forward proposals that meant that vastly larger numbers of people were in higher-paid work—there would be no need for tax credits and it would be possible to move to a system where we could phase out or decrease the support.
A modern economy needs a modern infrastructure, but the Government have pulled the plug on electrification of the railways. They have pulled the rug out from under investment in renewable energy and flunked the decision on airports. I was interested to see that the Home Secretary was very willing to take on the hon. Member for Uxbridge and South Ruislip (Boris Johnson) when it came to water cannons. The least the Chancellor could have done was to take on the hon. Member for Uxbridge and South Ruislip when it came to the decision on airports. It would have been good to see this Finance Bill at least start that process.
Shabana Mahmood
That was not quite the cutting put-down that the Minister might have envisaged. That is our position, and that is what all our party will be doing today.
Richard Fuller
Given that the official Labour party position on the important Welfare Reform and Work Bill yesterday was to abstain and that its position on this Finance Bill is to abstain, can the hon. Lady clarify that it is the intention of the loyal Opposition to abstain on every major piece of legislation in this Parliament?
Shabana Mahmood
That question probably sounded more cutting in the development in the hon. Gentleman’s mind than in the delivery. [Interruption.] The hon. Member for Dudley South (Mike Wood) chunters from a sedentary position. He is welcome to intervene on me if he so wishes. I will be delighted to give way to him.
I say to the hon. Member for Bedford (Richard Fuller) and others that abstaining on Second Reading, as he well knows because he is a veteran of debates on Finance Bills, both in Committee and in the Chamber, does not mean that we will not press matters to a vote later in the Bill’s passage. Indeed, on the second sitting day in September we will be considering the Bill in Committee of the Whole House, where we will have tabled amendments, on which we will be voting, on other important measures including bank taxation, the climate change levy and the insurance premium tax. We can all have a lot of fun then when it comes to voting on amendments and debating them at great length.
Budget Resolutions and Economic Situation
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Richard Fuller (Bedford) (Con)
Will the hon. Lady confirm that even with the changes to working tax credits, they will still be higher as a proportion of gross domestic product at the end of this process than during any period of the Labour Government prior to 2004, and that at that stage there was no commitment to a national living wage?
Emma Reynolds
I say to those on the Government Benches that they are simply out of touch with the lives of working people up and down this country. Of course we want an economy in which people are highly paid and highly skilled, but the course towards such an economy has to be charted before the support is cut off.
Let us deal with the crucial issue of devolution. We urgently need to rebalance our economy to drive growth and prosperity in all parts of the country. We are one of the most centralised countries in Europe. London dominates our economy, and its growth surpasses that in all of our major cities, which is not the case in either Germany or France where other cities beyond Berlin and Paris are true engines of economic growth. I agree with what the Chancellor said last week—that we will not achieve a better settlement by pulling London down. We should be proud of the dynamism and success of our capital city—and long may it continue. We must, however, reverse the long tradition of British politicians of all parties and of civil servants who have hoarded power in Whitehall and failed to trust local government.
There is a huge political and economic imperative to devolve power as close as possible to local communities. As ever, the Chancellor’s Budget speech on devolution was heavy on rhetoric, but rather light on substance. This Government boast about bringing about a “northern powerhouse”, but their rhetoric rings hollow, given that no part of the country has faced bigger cuts to local authority budgets over the last five years than those in the north of England. Indeed, the shelving of the electrification of the Manchester to Leeds trans-Pennine railway means that the Government’s plans are closer to a power cut than a powerhouse. We need a settlement for every part of the north, but as one of my hon. Friends pointed out to the Secretary of State earlier, there was barely a mention of the north-east in the hour-long Budget statement or in the 123 pages of the Red Book.
Ahead of the Budget, we know that there were briefings about which deals would be announced, and we know that the Secretary of State did what some might call a frenetic round of local government speed-dating during the Local Government Association conference two weeks ago. We welcome, for instance, the extra powers that the Government are planning to devolve to Greater Manchester. We also welcome the progress that three combined authorities—Sheffield city region, Liverpool city region and Leeds, West Yorkshire and partner authorities—are making towards a devolution deal, and the progress that Cornwall is making. As a Wolverhampton MP, I particularly congratulate the leaders of the local authorities that are working so hard to create the West Midlands combined authority. We are proud of the fact that Labour leaders in local government are making the weather on devolution.
While we welcome that progress, we also believe that the Government should not impose a one-size-fits-all approach to devolution, and should stop putting obstacles in the way. In his first major speech after the election, the Chancellor said that he would not impose the mayoral model on anyone, but in the very same breath he said that he would not settle for anything less. Why are the Government running scared of letting local people decide, and when will they clarify exactly what different areas and combined authorities can expect to achieve from devolution if they do not opt for a mayor?
Alison Thewliss
When the powers this Government have force people into poverty and do not help to support them at their time of need, I say that that is a crisis and that we are hamstrung in our ability to help people. This Government expect the Scottish Government to mitigate the worst of their policies, but we should not exist to do so. Give us the powers, and we will do what we can.
Cuts have now come to the bone. Service provision has been removed, including things that make no logical sense to cut because such low-level interventions save money down the line. Sheltered housing services, which keep the elderly active, and services such as the Glasgow Association for Mental Health, which prevents those with mental health problems from slipping into crisis, have had their funding removed. This makes no sense: we can spend to save by investing at a certain level, but the cuts now mean that local government has to make such choices.
I do not know what the full impact will be of cuts that are starting to amputate huge chunks of our local bodies, but I very much worry that they will threaten the life of the patient. Local government serves both a social and an economic purpose, and the shrinking of public services takes well-paid and useful jobs out of areas and damages small business. In the past few days, the Local Government Association analysis has suggested that a £3.3 billion cut in 2016-17, or some 12%, will mean potentially devastating choices in many areas. These are not arbitrary cuts or figures on a balance sheet; they affect lives.
The proposed housing changes will have a significant impact. In Scotland, we take the attitude that a house is a home. That does not vary depending on whether someone’s house is a bought house or a rented one. I know from my case load that a social rented home in Glasgow is very desirable indeed. The huge numbers on housing waiting lists highlighted by organisations such as Shelter certainly seem to bear that out.
A lot of what has been said in the Budget seems to assume that markets will take care of the housing crisis in this country, but I would turn that contention on its head. The commercial rental market has driven up rents to the point at which people on average or even generous wages cannot afford to live, particularly in this city.
Richard Fuller
The acting leader of the official Opposition has said that their goal is not to oppose just for the sake of doing so. The hon. Lady has not mentioned anything in the Budget with which she agrees. Does she disagree with the acting leader of the Opposition?
Alison Thewliss
The hon. Gentleman will find that the Scottish National party takes its own stance on many issues and does not follow the Labour party.
The problem with market rents is not, as the Red Book implies at paragraph 1.154, with social rents. I believe that, by and large, council and housing association rents are fair, not subsidised. I was glad that the shadow Secretary of State mentioned the proposed pay-to-stay policy, and I agree with a lot of what she said on that. The policy will drive people out of the communities they call home, push out key workers on modest salaries and all but ghettoise swathes of our towns and cities. The proposals are unfair in that local authorities will not see the benefit of the policy, because their share from increased rents will go back to the Exchequer, while local housing associations get to keep the funds. If the Government insist on pursuing this daft policy, they should at least give an even playing field to all housing providers to allow them to invest in new housing.
I note that there is a proposal to end so-called lifetime tenancies. Long tenancies can contribute positively to the fabric of our communities by ensuring that people stay and make their lives in an area and that they belong to it. They are part of what makes renting with a housing association or a local council attractive, as opposed to the uncertainty of the private sector, where people have to move all the time.
Mr Robin Walker (Worcester) (Con)
This is a Budget that can make a step change in the British economy. It is a Budget that can step us up a gear in terms of work, productivity and pay.
It is a pleasure to follow an excellent maiden speech from my hon. Friend the Member for Somerton and Frome (David Warburton), and a very thoughtful speech from the new Chairman of the Business, Innovation and Skills Committee, the hon. Member for Hartlepool (Mr Wright), whom I congratulate on his election.
I am delighted to be called to speak in a debate on local growth, because I believe that the first objective of the Budget is to deliver growth and prosperity throughout the United Kingdom, and particularly in places such as Worcester. If growth is to reach every part of the UK, it must be sustainable, and if it is to benefit the whole population, it must be translated into sustainably higher pay. For that, the first requirement is fiscal credibility. We need only look at Greece to see the situation countries can get into when they lose control of their finances to know that the Chancellor is right to say that if we do not control our debt, our debt controls us. As my right hon. Friend the Secretary of State pointed out in his opening remarks, that was very much the situation in the UK in 2010, but through the gargantuan efforts of the British people, British businesses and the British Government we have reduced our deficit and set out on a path to begin to pay down our debts.
The second requirement to deliver sustainable growth is security, and I am delighted that this Budget does what the coalition could never, and commits firmly to investing in our nation’s security and defence with that 2% of GDP commitment.
The third requirement is productivity, and I particularly welcome the detailed productivity plan that was published on Friday. This is not before time. The UK lags behind other leading economies in productivity, and it was not a Labour spokesman but my hon. Friend the Minister for Skills who set out the scale of the challenge in his 2012 Macmillan lecture for the Tory Reform Group, when he said:
“we in the political pack must not duck the really hard economic question— which is, why have people in the low and middle-ranking jobs not been able to secure a real increase in their pay for nearly a decade? And we must not dodge the really hard answer—which is, that the productivity of people in those jobs is falling behind that of their competitors.”
He concluded:
“If we want our economy to grow again, if we want our national income to be honestly earned and fairly shared…if we want to benefit from healthcare that is high quality and free, if we want to live comfortably in retirement, if we want all these things, we need to ensure that we are all a lot more productive than our competitors.”
He was right to put productivity at the heart of our mission, and the Chancellor has been right to put productivity at the heart of this Budget. I welcome the plan that sets out to raise investment in skills, in research and development, in infrastructure and, most of all, in people, in order to achieve this.
We need to provide the right incentives to businesses to invest and that should become a core principle of the Government’s ongoing review of the business rates system. We need to remove the disincentives that penalise manufacturing businesses from investing in value-added plant and that create an artificial shelf on business expansion for businesses of all sorts when they move from smaller to larger premises that fall just above the small business rate threshold. We need to design the system so that it supports growth and helps scale-up businesses. We should consider discounts for businesses that invest more in training their staff, and tapers to support businesses that grow through the thresholds for small business rate relief. I look forward to further updates on that important review, promised by the end of this year. This must not be seen merely as an administrative review, but rather as an important tool in the drive to provide higher productivity.
To get there, we need to improve our skills base. It has long been a truism in the post-war period that Germany does skills and apprenticeships better than us. This Government’s commitment to driving up the quality and quantity of apprenticeships has begun to change that, and it is essential that this continues. I am pleased to see the drive to achieve 3 million apprenticeships by 2020 and the use of the German funding model, where large employers pay a levy towards the cost of training.
We also need to make sure that schools deliver the best possible education across the country, which means delivering on one of the key commitments of the Conservative manifesto: fairer funding for all our schools. In a time of overall budget constraint this has never been more urgent, and I look forward to seeing the detail for delivering that in the next spending review. I was pleased to see fairer funding highlighted up-front in the executive summary of the productivity plan.
One of the most welcome changes in the Budget was the creation of the new roads fund predicating vehicle excise duty revenues to investment in our roads. I recently held a debate on the vital priority of upgrading Worcester’s southern link road, including the Carrington bridge, a key bottleneck in our area. Any Government committed to local growth will want to fund such projects.
We need to keep focusing on holding down the cost of travel. That is why I particularly welcome the extension of the fuel duty freeze that the Conservatives in government have now maintained over five years. So many of my constituents are concerned about this and so many businesses have told me what a massive issue it is for them that it has been something I have campaigned on in each year of my parliamentary career. Fuel costs contribute to the cost of living for everyone, whether or not they drive a car, and the price of food in our supermarkets is one of the things that would be higher and less affordable if Labour had had its way and fuel duty was higher. I also believe that the Treasury benefits from holding down fuel duty over the long term as economic activity increases.
Beyond transport, higher productivity will require businesses to have the confidence to keep investing, and the decisions to keep bringing down corporation tax and to maintain the UK’s world-beating research and development tax credit offer and extend capital allowances each have a vital role to play.
Richard Fuller
Does my hon. Friend agree that it is not just the specific measures that are valuable to the economy? The record over a number of years of setting a trajectory of lower taxation for businesses assists all of us, creating jobs and increasing the wealth of the country.
Mr Walker
My hon. Friend is absolutely right about the track record of delivery and the confidence that that gives business to invest over the long term.
The biggest change we can make to help people with the cost of living is to ensure they are paid better and keep more of what they earn. The Budget takes this further by delivering a national living wage. I welcome the fact that not only is this key social reform being delivered by a Conservative Government, but that the Government are taking steps to help to ensure that businesses, particularly small ones, have the help they need to deliver it. The extension of the employment allowance by a further £1,000 and the reduction in corporation tax will help to make sure that businesses can play their part. I hope the Chancellor will consider carefully how the charitable sector and the care system can be supported in adjusting to this change.
The Opposition have made much of the changes to tax credits. One would think from hearing some Opposition Members’ speeches that in altering this system we were taking on a core principle of the post-war consensus and the welfare state. In fact this invention of Gordon Brown has always been problematic. As the right hon. Member for Birkenhead (Frank Field) has pointed out repeatedly, the limited resources of Government can be better used in targeted support for early intervention and in helping troubled families than in a subsidy for employers to pay low wages. The growth of its cost from £1 billion when it was launched to £30 billion today is clearly unsustainable. The right hon. and learned Member for Camberwell and Peckham (Ms Harman), who is currently leading the Labour party, was right in thinking this is a change it should support, and it is a shame that the contenders for the leadership and those on the Labour Front Bench do not share her vision.
I welcome this Budget as a boost to local growth and look forward to supporting it in delivering a more prosperous, better paid and more productive Britain.
Richard Fuller (Bedford) (Con)
It is a pleasure to follow an extremely gracious maiden speech by the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Stuart C. McDonald). I particularly noted his kind words for the staff of the Houses of Parliament, which I thought was a particularly noteworthy thing to put in one’s maiden speech, and his kindness to his namesake who took his seat on the aeroplane. The hon. Gentleman follows a man, Gregg McClymont, who was probably one of the most intelligent Members and was one of the most fair-minded, so he certainly has big shoes to fill. He has made a very good start with his maiden speech today.
For me, the test of the Budget is whether it fits with what the good people of Bedford and Kempston talked to me about during the election campaign. As mine was a marginal seat where people had a straight choice between Labour and Conservative, and obviously chose Conservative, I listened intently to what they had to say. Their first and most abiding thought was that they appreciated the need to continue with the Government’s economic policies. They appreciated the stability that those policies had brought to their lives after the tremendous fears about the economy at the time of the 2010 election, when it could have gone either way for the United Kingdom. They appreciated the need for deficit reduction and understood the fundamental point that it is unfair on our children and grandchildren for this generation to continue to live beyond its means, and that somehow, in the fairest way possible, the Government have to find their way to getting the books in balance and to starting to repay the debts. That is the trajectory that was outlined in the Budget.
The second thing that people in Bedford and Kempston told me was that they understood the need for welfare reform and benefit reform to be at the centre of the changes that would be made. As my hon. Friend the Member for Cannock Chase (Amanda Milling) said, for many people, the idea that a benefit cap of £26,000 is somehow fair to them, when they pay their taxes—the median income in Bedford is £19,000—does not strike them as fair. People in Bedford will think that the Government’s proposals in the Budget to reduce the benefit cap, both in London and separately outside London, are fair. They will also see changes such as the limiting of child tax credit to two children, the introduction of a maximum income for staying in council housing and the changes to housing benefit as fair and reasonable.
Alison Thewliss
Does the hon. Gentleman consider it fair that a woman who has been raped will have to declare that to Her Majesty’s Revenue and Customs and the Department for Work and Pensions to qualify for her child to receive tax credits?
Richard Fuller
The hon. Lady repeats a point that one of her colleagues made in an earlier day of the debates on the Budget. We need to examine in this debate the broad range of the impact of the Government’s policies. When the Government make any change, they are moving big blocks around—that is one reason why I am a Conservative, actually. When that happens, there will be specific examples of an impact on people’s lives that the general policy was not supposed to have. The hon. Lady should raise those instances directly with Ministers, so that changes can be considered. However, we should not undermine the entire sweep of Government policy because of a particular example. I have found the Government reasonable in understanding the need for certain changes to benefit policies if they have a deleterious impact on individuals.
Emily Thornberry
The hon. Gentleman is making a thoughtful, although wrong, speech.
If a constituent of mine were a single parent with two children and met up with a man who had a child, would the hon. Gentleman advise her not to get together with that man because they would then have three children and be subject to cuts in their benefits?
Richard Fuller
It is not the role of an MP to advise an individual constituent on their life choices. That is their decision. With respect, the role of an MP is to analyse and scrutinise Government policies to see whether, in the round, they will provide the changes that the British public think are fair and reasonable. Against that test the deficit reduction policies, with welfare reform at their core, accord with what I heard on the streets of Bedford and Kempston. I hope that when the hon. Lady’s party has finished tearing itself apart at its parliamentary Labour party meeting, it will come together and see that it is worth supporting the welfare reforms.
I wish to say a few words about the Government’s proposals on pay. A lot of hon. Members have mentioned the interaction between the introduction of a national living wage and the changes to tax credits. That is an important debate to have, but I hope that Members of all parties will give the Chancellor credit for grasping that important nettle. At some point, the era of corporate welfare, with the taxpayer subsidising wages, had to be brought to a close. The cost to the Exchequer and the taxpayer was getting larger and larger. We were sending terrible signals to employers about what they should do about pay rates, and terrible signals to people in work that if they chose to improve their wages by getting extra skills or training, all their extra pay would be taken away because of changes in benefits. The change needed to be made, so I look to the Opposition to bring forward more thoughtful responses in the weeks ahead. They should have the grace to say that the change is important and that, overall, they support it.
As a Conservative, I say to my party’s Front Benchers that we have not yet seen the impact of tax credits following the recent recession. There is an argument that in the previous recession, during which the Government had a tremendous record of overseeing growth in jobs, tax credits had a beneficial impact in dampening the impact of the recession. They made people more willing to accept reduced hours, because their income was increased by tax credits, so employment could stay high. I urge the Government not to get too ideological about the transition from tax credits to the national living wage, and to be cautious about the impact on businesses on a sector by sector basis.
I welcome my right hon. Friend the Secretary of State’s comments about housing policy. There has been tremendous take-up of Help to Buy in Bedford—one of the highest proportions in the country. The extension of the right to buy to social landlords will be particularly welcome in Bedford. Between 1991 and 2001 the decline in home ownership there was 10%, compared with 4% in the rest of the country, because in 1991 the council put all the housing stock into a social landlord. Since then, the most significant increase in household wealth has been through people buying their own home. For 20 years, a large proportion of people in my constituency were denied access to one of the most fundamental ways in which they could have provided a better future for their children, because they were denied the right to buy. The change to the right to buy has been presented thoughtfully, and I encourage the Government to move it forward.
This afternoon I have heard the progressives and socialists on the Opposition Benches say that they do not support the national living wage, poor people getting a pay rise or people in council houses having a cut in their rent, and that they would deny people on low incomes the chance to buy their home. The right to buy has been one of the most successful policies that any Conservative Government have ever introduced, and I hope that the Government will move forward with it later this year.
Catherine West (Hornsey and Wood Green) (Lab)
I am very pleased to be speaking in the Budget debate. The Chancellor’s announcement on the increase in the minimum wage, mistakenly called a living wage, raised the issue of low pay. That is a debate we all welcome. Sadly, when it is combined with high housing costs and cuts to working tax credits, families in my constituency will be worse off. I will not vote in favour of this Tory Budget. Not only will many families be worse off following the Chancellor’s Budget; it has failed to address the deeper issue of social mobility.
This was not a good Budget for young people. For younger people, it is becoming more expensive to attend further education or to secure well-paid employment, and it is much more difficult for them to get on to the housing ladder. The employment training levy, to be levied against workplaces, could provide much needed workplace training opportunities. However, coupled with the proposed cuts to further education due in the autumn, training programmes could be at risk—one step forward, two steps back. Converting student maintenance grants into student personal debt will increase the debt of our young students further. In one case I know of, a student will leave a local university with £56,000 of personal debt—hardly a good start to a career for a young professional.
Preventing under-24-year-olds from gaining access to housing benefit could lead to long-term homelessness problems among a small but needy group of youngsters— many of the rough sleeping population are in this critical age group—creating not just personal misery, but further cost to the NHS in later years.
The cost and availability of childcare is a major block to productivity, and in high value areas such as London it is becoming prohibitively expensive. Childcare cuts to Sure Start and children’s centres undermine the Government’s excellent 30-hour childcare commitment, slowing down parents’ return to work and preventing the return to work of much needed skilled workers. Assessments show that returning women to work in London would be a real spur to the economy. Unfortunately, owing to the prohibitive cost of childcare and lack of childcare places following cuts to Sure Start and children’s centres, we have a false economy.
Renting in the private rented sector is now prohibitively expensive. A family would need a household income of £75,000 per annum to rent a modest three-bedroom property in Finsbury Park in my constituency. This is unaffordable and represents a failure of the housing market to support local families. By spending such a high proportion of income on housing costs, people are unable to save eventually to get on to the housing ladder. The average age of first-time buyers is going up every year in London. We are becoming not just a city of renters, but a nation of renters. Many of our children are in low-quality, high-cost housing with no hope of remaining in the local area to look after us in our older age.
While some elements of the Budget, such as applying the brakes on buy-to-let property, might have benefits, they are undermined by a failure to announce more new affordable housing and by the regressive right-to-buy housing association discounts, which set us back decades on housing supply. We must address the supply issue; it is critical.
Furthermore, pay freezes in public sector employment will be bad for young people. We know we have a crisis in retaining teachers, particularly in English and maths. We know we have a problem retaining nursing staff in our A&Es and our local hospitals. This pay freeze for the public sector is detrimental. Unless young people have access to unlimited family funds for their education, housing and training, they face a bleak future under this Tory Chancellor.
Richard Fuller
The hon. Lady has listed a number of steps that would lead to an increase in expenditure to cover some of the important topics she mentioned. Does she accept, however, the overall need, while we are borrowing over £70 billion a year, to reduce expenditure more each year so we can get back into balance? Does she accept that general trend in principle?
Catherine West
Let me deal with aspects of the question of expenditure in turn. First, the employment training levy is being levied on small businesses by your Government. It is not a Labour proposal, but I support it because it is about investing in the workplace. Secondly, the position on student maintenance grants amounts to cost shunting—taking the costs from the university and putting them on to the individual. I referred to a case of a student owing £56,000, so instead of it sitting on the balance books of the Chancellor, it is sitting on those of the individual, which is a bad thing. Thirdly, we spent £60 billion on housing benefit over the last Parliament. We should have invested more of that in new build housing. We should not forget that council housing is not a cost. It is a net contributor to the economy because the rent is so low that housing benefit is not payable on many council properties. Housing benefit is mainly payable in the private rented sector. By investing in social homes, we will be saving the housing benefit bill in the longer term. Finally, on childcare, your own pledge by your own Government is 30 hours per week—
Tax Credits (Working Families)
Richard Fuller Excerpts(9 years, 1 month ago)
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Shabana Mahmood
I think that it is for the Government to tell us what they plan to do about the living wage, and I hope that the Minister will enlighten us when he winds up the debate. At the time of the general election, we made a manifesto commitment to incentivise employers to pay the living wage. The Government are welcome to steal that policy, but they should steal it—and allow it to embed a living wage, and higher wages, in our economy—before they start messing around with tax credits.
Shabana Mahmood
I will give way to the hon. Member for Bedford (Richard Fuller), but then I must make some progress.
Richard Fuller
The hon. Lady mentioned the Labour party manifesto. Will she be a bit more specific? For example, does she favour the granting of tax credits for training contracts to take people from the minimum wage to the living wage, does she support a requirement for local authorities that commission care to commission it in a way that enables employers to pay the living wage, and does she agree that, given the persistence of zero-hours contracts for less than two years, there should be a requirement for such contracts to carry the living wage?
Shabana Mahmood
The hon. Gentleman has made some interesting and important observations about the way in which we can encourage employers to pay the living wage, and I hope that Ministers take up his suggestions. Ours was a clear, straightforward policy to incentivise the paying of the living wage by sharing with employers the benefit that the Government obtain because people are earning more money.
Greece
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Mr Osborne
Just as I do not particularly like other nations telling the British nation how to conduct its own affairs, I do not think we should go around lecturing others. They have chosen to form a currency; we chose not to join it. The point I have made is that there is a remorseless logic to being part of the eurozone that leads to greater political, fiscal, financial and economic integration. That is why I do not want to be part of it. I have also made the point that that integration, although necessary to secure the stability of the euro, has an impact on the UK as a large non-euro member. That is one of the issues that should be addressed in the renegotiation. We would not be having a renegotiation if we had not had a Conservative Government elected and able to put this issue to the British people in a referendum, and quite a lot of us in this House worked to achieve that Conservative Government.
Richard Fuller (Bedford) (Con)
What assessment has my right hon. Friend made of the financial risks based on Greece’s decision spreading to the sovereign debt of other eurozone countries? Can he assure the House that the Bank of England has done whatever it can do to ensure that if financial risk does spread, British companies and British banks are secure?
Mr Osborne
As I have said, Britain is much better placed than it was a few years ago; our banking system is much better capitalised. Of course, the eurozone and the European Central Bank have previously taken steps to try to contain the contagion, for example by setting up the outright monetary transactions programme and the European stability mechanism—in other words, various bail-out mechanisms that came into operation during Spain’s financial problems a couple of years ago—but I was very clear in my statement that a Greek exit from the euro would have an impact on Europe’s financial system and knock-on effects for the UK. I do not think that anyone should underestimate the challenge of establishing that a country could leave the euro. Those are all issues that we need to be alert to in the months ahead.
Oral Answers to Questions
Richard Fuller Excerpts(9 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Osborne
What we are fighting for is Britain to be part of a reformed European Union. Now that we have finally persuaded the Labour party to come to its senses and support the referendum, we can get on with the business of negotiating a good deal for this country.
Richard Fuller (Bedford) (Con)
May we have a Treasury review into how effectively the balance sheets of housing associations are meeting the challenge of building new housing, looking in particular at their average cost of capital, the amount of leverage and whether a change in accounting policy would help to meet the housing challenge?
Mr Osborne
I congratulate my hon. Friend on his re-election; I enjoyed visiting him in Bedford just before the election. He raises an interesting point about how efficient housing associations are in increasing the housing supply, which is what we want them to do, and we are certainly looking at that at the moment.
Royal Bank of Scotland
Richard Fuller Excerpts(9 years, 2 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Harriett Baldwin
I welcome my hon. Friend to the House. He is right: over the past five years, we have taken painstaking steps to establish a system of regulation in the financial services industry that will ensure that never again will the taxpayer be forced to bail out a bank.
Richard Fuller (Bedford) (Con)
As my hon. Friend will know, there is a direct connection between the tolerance of reckless and illegal activities in financial institutions and the destruction of valuable banks such as RBS. Will she confirm that she will allow the Government to give full force to any recommendations concerning the fair and effective markets reform that was announced by the Governor of the Bank of England yesterday? Will she also confirm that unlike the last Government, who showered honours on bankers who were reckless, this Government will bring the full force of the law to bear?
Harriett Baldwin
I am pleased to welcome my hon. Friend back to the House. He has made an important point. In his speech, the Governor said that it was right to fine many financial services organisations that had behaved badly in both the recent and the distant past, because such behaviour reduces banks’ capital. Responsibility needs to fall on the individuals who are culpable, and also on the management of those individuals. Reducing the capital that is available through regulatory actions contracts the supply of lending to small businesses.