Fuel Duty
Russell Brown Excerpts(12 years ago)
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Cathy Jamieson
The hon. Lady makes a valid point. I am certainly well aware of the problems faced by people in rural areas where there might be no alternative. I hope that she will support our motion this evening.
The Chancellor and the Prime Minister might never have had to worry about the cost of filling up their cars, but millions of people across the country worry about that every day, as we are hearing. To be fair, some Government Members recognise that and have been vocal about it, or at least they were until today, when they suddenly appeared to go quiet.
Mr Russell Brown (Dumfries and Galloway) (Lab)
Surely this is a no-brainer. If the Chancellor decided before August to freeze fuel duty and not introduce the additional 3p rise, surely the same logic should be used today, when fuel costs even more, and the increase should not be introduced in January.
Cathy Jamieson
My hon. Friend makes a valid point. We have neighbouring constituencies, so I am certainly aware of the difficulties some of his constituents face in trying to access fuel at an affordable cost. He will also be aware that although there have been some price reductions by the big supermarkets, which can afford to use fuel as a loss leader, the small and independent garages, many of which his constituents rely on, do not have that luxury. Many of those small retailers are under increasing pressure as a result of tighter margins and are having to take smaller deliveries of fuel to ensure that cash flow does not become a problem. Those are often the businesses that serve rural areas. If they cannot continue to operate, customers will face having to travel many more miles just to fill up the tank.
It was only after pressure from Labour and campaigns such as FairFuelUK that the Chancellor decided to delay the last rise until 2013. Indeed, if we look back on what could be called the fastest U-turn in history, we see that he backed down only hours after Labour called for that help for businesses and families. We welcomed his climbdown then, and we and millions of motorists up and down the country would welcome a renewed commitment from the Government.
Public Service Pensions Bill
Russell Brown Excerpts(12 years ago)
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Danny Alexander
The hon. Gentleman will know that Royal Mail is a public corporation, and therefore not within the scope—
Danny Alexander
Let me respond to one intervention before I take another. I know that the hon. Gentleman is keen for me to clarify one of my points—I am sure that I will be able to do so—but let me respond to the important matter raised by the hon. Member for Blaydon (Mr Anderson). As part of our measures to support Royal Mail, we recently took its pension scheme on to the Government’s balance sheet. Many schemes took holidays during the previous Government’s time in office—
Mr Russell Brown
In response to my hon. Friend the Member for Central Ayrshire (Mr Donohoe), the Minister made it clear that the devolved Administrations would need to fund anything different that they wished to do. However, will he clarify the situation fully? We know that the devolved Administrations must fund those differences, but will there be an additional financial penalty through the block grant allocation?
Danny Alexander
No, there will not. Let me describe how this works. The negotiations that my ministerial colleagues and I conducted in UK Government Departments allow considerable flexibility within the parameters of the Bill—for example, the link between the state pension age and normal pension age, and the move away from final salary—and within the so-called cost envelope set up around the schemes. For example, the hon. Gentleman will note that the teachers pension scheme has agreed a different balance between accrual rates and revaluation factors for its new scheme from that for the health workers pension scheme. There is great flexibility in the provisions, provided things stay within the cost envelope. Under the Bill, the devolved Administrations are free to make more generous provision, as happened with the offer for prison officers. The Ministry of Justice agreed to fund an additional element of the proposed scheme to enable prison officers to have enhanced early retirement factors beyond those that were affordable within the cost envelope. The Ministry had offered to put additional resources on the table from its own departmental expenditure limits, and that was part of the offer that prison officers sadly rejected. Should the devolved Administrations wish to do something similar, they will be within their rights to do so, at their own expense.
Robert Neill
I certainly agree that the impacts of crystallisation have to be considered carefully. It is worth saying, however—I was going to come to this point later, but I will deal with it now—that the reason why we are dealing with the matter in this way is in no small measure the result of an agreement between the unions and local government employers. They agreed that it was desirable to have a single reform of the system to deal with both short and long-term pressures, which was referred to as a “single event”, and that it should take place in 2014. There is a technical debate to be had about how best to achieve that while avoiding the risk of crystallisation, and I hope that my hon. Friend the Economic Secretary and his ministerial colleagues will have that debate. However, that is certainly not a reason for opposing the Bill, and I do not think for one moment that it undermines the major thrust of the Government’s reforms. The structural issues that require reform in all the public sector funds, including the LGPS, need more radical work than that.
It seems to me that there is scope to reflect the particular circumstances of the LGPS within the parameters of the Bill, and I hope that Ministers will recognise that. It is still significantly funded, and at its best it has very high standards of governance. Many of us in local government have wanted to examine the capacity of some of the smaller schemes, and I believe that there is scope for the Government to encourage greater collaboration between some of them, or perhaps even mergers. The large and well run ones such as those in Greater Manchester, London and elsewhere have good governance arrangements, and I concede the point that was made about the Greater Manchester scheme. There is no reason why we cannot ensure that those arrangements are reflected in the secondary legislation that flows from the Bill. That will be a desirable outcome.
I hope that there will be democratic local accountability through elected members serving on the boards of schemes. I do not think it is necessary to impose a one-size-fits-all approach on the governance of schemes in order to achieve the important financial and structural reforms that are needed, which I support the Government in taking forward. We can reflect the particular circumstances of the local government scheme within the parameters that the Government have rightly set. That also applies to certain aspects of the scheme’s design, because there were constructive negotiations on the LGPS on the basis that the key point was to achieve the required cost envelope, which, as I recall, was 19.5% of salaries. Particular parts of the scheme enable us to do that while reflecting the particular nature of the local government work force and the scheme’s governance arrangements. I hope Ministers will ensure that the commitment to do so is maintained, and I have no doubt that they will.
I referred earlier to the investment potential of the local government scheme. It is already a significant player in many investment markets, but it could do more. I support the Government proposal to lift the cap on the amount that local government schemes can invest in local infrastructure schemes, which is currently an arbitrary 15%. When I was a Minister, I believed passionately in ensuring not only that local authorities had more resources of their own to put towards local investment but that they made the best use of their current assets, so it does not seem unreasonable that we should remove that cap. The professionals in the field have suggested that something like 30% would be a more realistic cap, and I am open-minded about the exact amount.
I recognise that Brian Strutton, from one of the public sector unions, has some concerns about that idea. If I may say so, I regarded him as a responsible interlocutor in my dealings with the trade unions. He rightly recognises that it might be possible to achieve our objectives either through changing the cap, which I think the unions are wary of, or through the creation of a new asset class for infrastructure. I hope that my hon. Friend the Economic Secretary will consider how we can achieve the important objective of giving local schemes a greater ability to invest in local infrastructure. We should not miss that important opportunity.
I turn now to the firefighters scheme. Again, I accept that it has differences from other schemes. A particularly important issue in all my negotiations with the Fire Brigades Union was the retirement age. The final agreement that was achieved, on which I reported to the House shortly before the summer recess, provided us with adequate and proper flexibility to take on board the concerns of our firefighters, whom I greatly respect. Two matters were put forward in that agreement. The first was that there would be a review of contribution levels from 2013-14 onwards, taking into account the impact of opt-outs, to which the hon. Member for North Ayrshire and Arran referred. I am sure the Economic Secretary will confirm that that remains the position.
Secondly, it will be recalled that I commissioned Dr Tony Williams to examine the evidence base for the case that was made about the physical impact of a firefighter’s job and its relation to the retirement age. The new firefighters scheme has had a normal pension age of 60 for new entrants since 2006, so the situation will not change for many firefighters. In addition, the retirement age of 55, or 50 after 25 years’ service, has been protected for entrants from before 2006. There are significant protections built in for long-serving firefighters. Dr Williams is extremely reputable in this field. He is the medical director of Working Fit and has 15 years’ experience as an occupational physician in the NHS as well as experience of firefighting. I hope that my hon. Friend the Economic Secretary will be able to confirm that the Government will look very closely at the outcome of his review.
Mr Russell Brown
The hon. Gentleman is absolutely correct in saying that there is some element of protection for firefighters, but we need to look forward, because that is what pensions are about. The new retirement age will keep firefighters working to 60 years of age in future. Are we about to breed supermen and superwomen who will be able to withstand such work at the age of 60?
Robert Neill
We need to look with care at the evidence, but that does not mean that we should keep the current generous—I use that word with care—retirement age. Firefighters work very hard, but the nature of jobs changes, and there is a case to be made—I put it no stronger than that—that the job of a firefighter is less physical than it was in some respects, because of the amount of technology and kit that they happily have to assist them. There is also a case to be made that increasing health levels in the population should not be taken out of account.
Equally, although I take on board the point raised by the hon. Member for North Ayrshire and Arran, it is realistic to accept that there are generally fewer “light duty” jobs in the fire service than in the police service. That is because fire authorities generally operate within a lean and flat structure, and there are fewer civilian-style jobs to which people can be moved. We must take all those important considerations on board, which is why the report was commissioned.
Mr Russell Brown (Dumfries and Galloway) (Lab)
It is ironic that we are discussing pensions today, given that much of what we have seen in the press over the past 10 days or so has been about the comments of the Secretary of State for Work and Pensions on whether we, as taxpayers, should support unemployed families with two or more children. No thought has been given to who those children are, but they will become the next few generations of taxpayers who will be making contributions to support pensions, either through public sector pensions or by putting money into the pot to provide benefits for others. I am pleased that we have moved on from having a go at households in which no one is working to looking at a different group of people.
I want to put on record the fact that some of the poorest paid people in our country are public sector workers. As my good friend and colleague, my right hon. Friend the Member for Wentworth and Dearne (John Healey), said earlier, pensions in the public sector are actually pay deferred. That is exactly right, and when we end up with poor pay in the public sector, we also end up with poor pensions.
Much has been said about Lord Hutton’s report. The commission firmly rejected the claim that current public sector pensions were gold-plated, and we have heard that the average pension paid to public sector scheme members is about £7,800 a year, while the median payment is about £5,600. We have also heard that half of women public sector pensioners get less than £4,000 a year.
Labour Members recognise that public sector pensions need to be reformed, which is why we have consistently argued that there will need to be some kind of an increase in contributions and, as the population gets older, an increase in the retirement age. We have also been clear that any settlement or agreement should meet three tests, which are slightly different from the Government’s four tests, although there are elements on which we agree.
The first test is affordability: will the changes deliver a fair deal for taxpayers when times are tight, when taxes are rising and when spending is being cut? The second test is fairness: will the changes deliver a fair deal for public sector workers on low and middle incomes whose pensions are far from being gold-plated and who have given a great deal to the services in which they work and on which each and every one of us—in the House and throughout the country—depend? The third test is sustainability, because anything that any Government do needs to be sustainable. Will the changes deliver a workable settlement for the long term that does not undermine the sustainability of existing schemes and that can be flexible in the face of rising life expectancy?
I recently took the opportunity to meet several serving police officers in my constituency, and I have been tasked with raising their concerns in the Chamber this evening. We often talk about the good job that the police do, but I almost never hear people talking about police service pensions. For the sake of clarity, I should point out that although certain public sector pensions in Scotland are administered by the Scottish Government, the reality is that the decisions reached here in Westminster are followed—or mirrored, as the hon. Member for Banff and Buchan (Dr Whiteford) said—north of the border.
Despite the stated opposition of the Scottish Government’s Finance Secretary, John Swinney, to the increase in pension contributions, he confirmed in a statement to the Scottish Parliament on 21 September 2011 that the Scottish Government would apply the increase in employee contributions for the NHS, teachers, police and firefighters schemes in Scotland. As my right hon. Friend the Member for Wentworth and Dearne said, that represents an additional 3% tax on those workers in the public sector.
Dr Whiteford
Is the hon. Gentleman aware that, before that decision was made, the Chief Secretary to the Treasury wrote to the Scottish Finance Secretary to say that if those contributions were not increased, £8.4 million a month would be removed from the Scottish Government’s financial settlement until such time as the Scottish Government followed the lead of other parts of the UK? I do not know what the hon. Gentleman thinks John Swinney should have done in those circumstances, but I believe that his hands were completely tied. Not only would the Scottish Government have lost that money out of the block grant, but they would have had to find it from another budget. In effect, therefore, they would have had to pay for those contributions twice.
Mr Brown
I am pleased that the hon. Lady has come into the debate. I am not sure whether she was here when I intervened on the Chief Secretary to the Treasury to ask whether any such penalty had been suggested, but he did not answer my question in a straight manner, so I thank her for that intervention.
The serving police officers whom I have met are seriously concerned and feel that they have been let down by their representative body, the Scottish Police Federation. We all know about the technique of divide and conquer, yet with regard to the pension changes, it has become clear that we are seeing protection—understandably—for those nearing retirement age, but that that is being provided at a cost to those who joined the police service between 1992 and 2006. Those who fall into that category feel that they have been abandoned and hung out to dry.
Those people joined the police service under certain terms and conditions, one of which was that after paying their contributions into the pension fund, they could retire after 30 years and then qualify for a lump sum and a pension. One officer pointed out that he was halfway through that 30-year period. It was difficult for him to get a forecast, but the closest he could get was an indication that having worked an extra seven years, his lump sum would be about 30% of what was first anticipated, while the pension would be about 70% of what was expected. We all go through life making plans, and for some of us retirement comes that little bit sooner. When people cannot recover ground as they move towards retirement age, it leaves them in a real dilemma. As one chap pointed out, “I had looked at retiring at a specific age. My lump sum would have cleared my mortgage. I now need to rethink where I am going.”
There is a strong belief that section 2 of the Pensions Act 1995 prevents the Government from changing pensions, so I hope that the Economic Secretary will put a clarification of that point on record. The first Winsor report of many years ago stated that officers could not work beyond the age of 55, but we are now seeing a significant change. Officers will be subject to a fitness test, but what will happen if someone fails such a test? Will they be made compulsorily redundant?
We know about some of the activity on our streets today. We should not just condemn groups of people, but there are criminals out there, and I would hate to think that police officers will be trying to chase younger people on foot. If officers are between the ages of 55 and 60, there is every chance that criminals will be significantly younger than them. We will be asking the police to do a task that is beyond many people’s comprehension.
Police officers are asking the Government why there is a further review, given that the scheme was changed in 2006 and every officer who joined after that time is on the new 35-year scheme. Many who joined after 1992 are halfway through their service period and their financial future looks extremely uncertain. We all recognise that police officers are not in a position to take strike action—in all honesty, I do not think that they would—but the fact is that those who joined between 1992 and 2006 feel as if they have been singled out.
Although, according to my Front-Bench team, we will not divide the House on Second Reading, I share colleagues’ real concern about retrospection, which has been raised on several occasions. I look forward to colleagues seeking to improve the Bill in Committee and working to offer some protection to those who work —day in, day out—to deliver the services in our public sector that each and every one of us demands.
Professional Standards in the Banking Industry
Russell Brown Excerpts(12 years, 4 months ago)
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Mr Russell Brown (Dumfries and Galloway) (Lab)
I suspect that we are concentrating on how we can improve the system for businesses, rather than for the banks. I want to concentrate on some of the activity that has been drawn to my attention by my constituents. Small businesses are hurting at the moment, and some of them are reluctant to come forward because they are embarrassed at finding themselves in such a fiasco. Those people are running businesses that are in severe financial difficulties because of the activities of the banks.
To a certain extent, I agree with the Chair of the Select Committee, the hon. Member for Chichester (Mr Tyrie), and others who said that the vast majority of people who work in the finance and banking sector are decent, hard-working people. Many are not on particularly large incomes. Talk of the bonus culture tends to concentrate on the Bob Diamonds of this world, but many of those people on low incomes depend on their bonuses to get by. There is no doubt, however, that the business is full of wide boys and spivs.
I have seen e-mails spanning a period of time involving a company called Guardian Care Homes. That company has been successful in some of its prosecutions. For Bob Diamond to say that he did not really know what was going on in his organisation is complete and utter nonsense. For two months, The Daily Telegraph trailed the activities involving Guardian Care Homes.
I also want to mention an issue that was drawn to my attention some 18 months ago. I spoke to the Chairman of the Select Committee—I am sorry that he is no longer in his place—one evening after a Division, and expressed my serious concern to him about the sale of hedges and swaps. According to my inquiries, Barclays appears, a number of years ago, to have set up a specific section to target and home in on leisure facilities, caravan sites and the like. In July 2005, one of my constituents was approached by Barclays and asked whether he would go back to banking with it. He was offered a loan, as well as two swaps to protect him against fluctuations in interest rates. Over a short period of time, the value of his assets climbed. The bank then approached him and asked him to consider some of its hedges.
I want to thank the Financial Secretary to the Treasury, who is in his place, for providing some of the FSA’s findings on these matters over the past couple of days. The manner in which some of these banks have been operating is absolutely unbelievable. If I could not see it in writing myself or hear what constituents were saying, I would not have believed it, as there has been 100% hedging of some of the loans offered.
This time last week, I met another constituent who also operates in the leisure and caravan sector. He is a partner in two small businesses, running two caravan sites in my constituency and two in a neighbouring constituency. His bank—not Barclays bank, incidentally—pulled him in and encouraged him to have a look at another three caravan sites that were on the market. The guy was not that keen, but he went away and considered the proposal, and came back to the bank to say, “Yes, I might be interested in a loan.” He was offered the loan, but only on the basis that he took out more swaps.
That sort of activity has been going on, but I really do not know how many people out there have been caught up in it. It is interesting to note that the Financial Services Authority’s letter to Financial Secretary says:
“During the period 2001 to date, banks sold around 28,000 interest rate protection products to customers.”
What does that mean? How big is the scale of this? That is particularly important if compensation has to be paid. There is a serious concern that if compensation is paid, it could bring banks down. When it comes to protection, people are looking for answers.
Sheila Gilmore
Does my hon. Friend agree that it is not just businesses, but some individuals who have been led into over-borrowing and so forth? These people have been affected, and it appears from polls reported today that 55% of them think there should be an independent judicial inquiry to get to the bottom of these issues.
Mr Brown
Let me tackle that quickly. Yes, during the last couple of days, I have received more than 30 e-mails from constituents, saying that they want a proper inquiry. Here we are in this Chamber, but we all have to stand outwith it. What will people have witnessed here this afternoon? Partisanship. I understand that we can all get dragged into it, but I have to say that people have no faith in this place. On both sides of this House, we see ex-bankers and ex-financial advisers. Quite honestly, Madam Deputy Speaker, if you were to ask me, “Would you trust these people?”, my answer would have to be no. [Interruption.] If we seek a genuine answer, this problem needs to be tackled by being placed in the hands of someone else. [Interruption.] Conservative Members should calm down. I have listened to the hon. Member for Rochester and Strood (Mark Reckless), who used to be in the business, and to others. It could be due to my ignorance, but I have to say that financiers and bankers could be from another planet. They know the ins and outs, but as the FSA has said, when the issues are complex, it hides what is going on.
David Mowat (Warrington South) (Con)
I was neither a banker nor a financial adviser in a previous life, but given the hon. Gentleman’s points, it seems to me likely that amendments will be required to the Financial Services Bill, so should we not proceed with that as quickly as possible? Can he think of a better way of getting into a position to action that than setting up a Joint Committee that can identify the requisite amendments and get them ready for January? That seems to me to be the point the hon. Gentleman is making.
Mr Brown
The point I am making is that the people of this country will have faith only if this matter is dealt with in a truly independent manner. That means it needs to be done through a judicial system.
The local business man who initially approached me had four businesses operating in four different parts of the country. The bank put so much of a squeeze on him as he chopped and changed these swaps and hedges that it ended up forcing this guy to sell three of his businesses, one after another, to repay it. I highlight to the Government Front-Bench team that the bank has now moved in administrators on the basis that the man owes it £1.4 million. That debt includes a charge of £900,000 as a break fee or cancellation for those swaps and hedges. That is a phenomenal charge; it is just breathtaking. There has now been an admission of mis-selling. I have tried to contact the administrators to say, “Back off, you’re taking this business down”, and I wonder how many others out there are in a similar position.
I say to Ministers that it is important for us to put the system right, as a House, as an Opposition and as a Government. We need to stamp on banks now to get them to stop some of the activity in which they are engaged. They are taking businesses to the wall, administrators are running rife, and we sit back and just allow it to happen. That is not acceptable.
Oral Answers to Questions
Russell Brown Excerpts(12 years, 5 months ago)
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Mr Hoban
The scheme is designed to encourage lending not just to small businesses and households but across the board to all businesses. We want to make sure that when banks put collateral to the Bank of England, it is in response to their having lent more. That is absolutely vital for a scheme that encourages lending and we will make sure that we design the scheme to do so.
Mr Russell Brown (Dumfries and Galloway) (Lab)
12. What assessment he has made of the effect of the Government's fiscal policies on the level of child poverty.
The Economic Secretary to the Treasury (Miss Chloe Smith)
The Social Mobility and Child Poverty Commission is being set up and will provide an assessment of child poverty using a wide range of measures, including income.
Miss Smith
The Government have confirmed their commitment to child poverty targets and we are going further by consulting on better measures of child poverty in the autumn. We seek a range of views on that.
Finance (No. 4) Bill
Russell Brown Excerpts(12 years, 7 months ago)
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Danny Alexander
No, that is not what is in our mind. It is one of a number of anomalies in the VAT system that we addressed in the Budget, although it is not actually a matter contained in the Bill. My right hon. Friend will be aware of the comments of, for example, the National Federation of Fish Friers, which makes the point that small independent fish shops, of which there are thousands around the country located in the constituency of every Member, have for many years been charged VAT on sales whereas other retailers have not. We are seeking to correct that anomaly.
Mr Russell Brown (Dumfries and Galloway) (Lab)
Is the Chief Secretary now in a position—he was not in the early days after the announcement—to clarify matters on hot food takeaways, particularly pasties and pies? If a product is freshly baked and hot, but then allowed to cool down, is it sold with VAT added or not?
Danny Alexander
I will give the hon. Gentleman time to cool down, if he likes. He will know that a draft statutory instrument has been published, which goes into the matter in some detail, and the House may well have an opportunity to discuss it in due course. However, the basic answer is that food that is hot and taken away is taxed as hot takeaway food. It is as simple as that.
We will stick to our plans on the economy because financial discipline is the essential pre-condition for economic growth, even though that requires difficult and sometimes unpopular decisions, and helps provide confidence and the low and stable interest rates that businesses need to invest in growth and job creation. That confidence was shown at the weekend by the reaffirmation of this country’s triple A credit rating by Standard & Poor’s, the same agency that called it into question when the right hon. Member for Morley and Outwood (Ed Balls) was a member of the Cabinet.
We are committed to securing a recovery led by private sector entrepreneurs, wealth creators and export industries—the sort of growth that the Opposition failed to deliver in more than a decade in government. That is why we are going even further in the Bill to boost our competitiveness and ensure that Britain is again one of the best places in the world to do business, reversing our fall down the global competitiveness league tables that took place under the Labour Administration.
Danny Alexander
No, I will not confirm those figures. According to my figures, 23 million individuals will be better off as a result of the personal allowance change—[Interruption.] A number of families are affected by our tax credit changes but many more benefit from our income tax changes.
Danny Alexander
I will take one more intervention from the hon. Gentleman, who has not cooled down.
Mr Brown
I assure the Chief Secretary that I have cooled down—I do not take much cooling down. In the run-up to the 2010 general election, he and his Liberal colleagues made abundantly clear what they wanted to do with personal allowances to take some people out of paying income tax. Did they honestly expect to do that off the backs of pensioners?
Rachel Reeves
The hon. Gentleman was not in the House earlier when it was mentioned that between 1997 and 2007, the debt-to-GDP ratio fell from 42.5% to 36%. The debt burden fell in the first 10 years of the Labour Government. I was not in the House in the last Parliament, but I wonder whether any Members can remember the Liberal Democrats asking for lower Government spending then. I do not remember it, but perhaps the hon. Gentleman could enlighten me about when he opposed Labour’s spending on schools and hospitals in Bradford and elsewhere.
Mr Russell Brown
My hon. Friend has hit the nail on the head. Government Members talk about the Labour Government’s overspending, but I cannot recall a single occasion in the time I have been in the House when any of them talked about not wanting a hospital or school built in their constituency. They were four-square behind us.
Rachel Reeves
My understanding is that the Government parties matched us on spending and often called for additional spending, but the Liberal Democrats have changed their mind so often that it is sometimes difficult to keep up.
The fiscal challenges that this country faces are real, and we need to deal with the deficit and get our debt on a downward path, but the choice before us is how to do that and on whose backs. The Opposition’s priorities are to get unemployment down, to get our economy growing and businesses investing so that we can reduce the welfare bill and bring in more tax revenue, and to ensure that the biggest burdens of deficit reduction are borne by those with the broadest shoulders.
Mr Russell Brown (Dumfries and Galloway) (Lab)
I want to look at what the Bill does for the economy, the country and the people of our nations. What does it mean in terms of jobs, growth and fairness?
After the global recession, there needed to be tough decisions on tax and spending and how best we pay the deficit down. As was indicated earlier, much has been said about the previous Government spending in an excessive manner, but when my party was in government, those who now find themselves on the Government Benches said nothing at all about programmes for new schools and hospitals. That was not excessive spending; it was all needed after years of lack of investment, and it was welcomed with open arms. Members now on the Government Benches went to official openings, and applauded what was happening in their back yards, yet suddenly it has become “excessive spending” by the Government who were in power at the time.
The 50p top tax rate on the richest was introduced by the previous Government, and it is why we set out the difficult cuts that would be required to police, education and welfare budgets. However, by raising taxes and cutting spending too far and too fast, this Tory-led Government have choked off the country’s economic recovery and put hundreds of thousands more people out of work.
As I have said on many occasions in the House, my constituency is a rural one. The two biggest employers are the national health service and local government, so in the private sector my constituency depends on small and medium-sized enterprises. This afternoon, we have heard what SMEs are looking for. Yes, they want to be able to employ an extra pair of hands—if the work is there—and people have said that should be made easier for them. I am not about making life difficult for SMEs, but I can tell Members who are still in the Chamber that SMEs are looking for a bit of optimism. They want to see the optimism that, when the national minimum wage was introduced, allowed them to invest and employ additional hands; it was a sign of growth or green shoots—call it what we may.
America had the same deficit problem as Britain after the worldwide slump, but President Obama stuck to the plan that we were pursuing when we were in government: supporting the economy until recovery was secure. The US is growing, as we can all see, and unemployment is falling—the opposite of what is happening here. As we have no growth and so many more people are out of work—on the dole rather than paying taxes—the Chancellor’s deficit reduction plan is not working. In fact, as has been recognised on both sides of the House, the Government are set to borrow an extra £150 billion to pay for that economic failure.
The sole Scottish National party Member who was in the Chamber has left his place for the time being. Much was said in the ’80s and ’90s about the abundant revenues that were accumulated in this country from North sea oil and gas, but it was clear even in those heady days that they were being used up in economic failure. We are seeing a repeat of the mistakes of the late ’80s and the early ’90s; we are paying a heavy price for economic failure. That is why to a certain extent it is difficult to oppose some public sector pay restraint when others are losing their jobs, but in tough times, it is even more important to do things fairly. We should freeze wages for top-paid public sector workers to fund bigger pay rises for those on the lowest incomes, because if they have more money in their pocket, they will spend it in our high streets, which will give a glimmer of hope to SMEs.
Ministers simply have not listened, but that is no surprise. Only last week, the right hon. Member for Haltemprice and Howden (Mr Davis) wrote that with every passing day the Government seem more and more out of touch with people on modest and middle incomes. They are not just out of touch; they are already showing signs of increasing incompetence. Over the last couple of weeks, we have seen half-hearted attempts at U-turns—going back and wishing to consult and reconsider. The next few days will really test this Government and this Chancellor and his Treasury team.
We all witnessed the Government’s incompetence when we read in our newspapers, heard on our radios and saw on our televisions that they had caused panic at filling stations the length and breadth of the country. The Government’s economic policies are failing. Working families are paying the price, and it is a heavy price. We all live in hope of a change of heart. Unless there is one, next year pensioners will be hit hard, as millions are asked to pay more so that millionaires can pay less.
The Budget does nothing to give Britain the jobs and growth we desperately need now, and nothing to support families and pensioners on modest and middle incomes. Instead, it will do the opposite. This month, families are starting to find out what the Government’s decisions will mean for their budgets. As my Front-Bench colleagues have pointed out, according to independent experts the changes coming into effect this month will leave a family with children worse off by an average of £511 a year. To many of us in this place, £10 a week may not seem a lot, but it is to a family merely getting by.
Nick de Bois (Enfield North) (Con)
The hon. Gentleman would do well to reflect on one thing that would really hurt families: it would be far more devastating if the Government did not stick to their policies, and there was an increase of 1% or more to the interest rate, and to mortgage rates. Does he agree?
Mr Brown
Only in certain respects. The hon. Gentleman talks about mortgage interest rates; I am sure that he does not need me to remind him that not every household has a mortgage. Some families are finding it difficult to pay their rent, let alone a mortgage. That is why I make the point that £10 a week would make a real difference to many families.
Sheila Gilmore
Does my hon. Friend agree that many families are experiencing increases in mortgage rates? Increases have recently been announced, despite what the hon. Member for Enfield North (Nick de Bois) says. People are feeling the pain.
Mr Brown
I thank my hon. Friend for her intervention. There is no doubt that there are myriad different experiences out there in our communities, towns, cities and villages. To keep their jobs, people are deciding to take pay cuts or to work fewer hours, and that is tragic, because when that happens, household income is affected. That will have a greater impact on some families than on others.
A point was made about the working tax credit. I have spoken to welfare rights services in my constituency, and to Citizens Advice, and only now—since the end of last week, and in the two or three weeks ahead—are we all beginning to see the impact. It had not really dawned on people how much of an impact there would be. I will undoubtedly see some of the 400 families in my constituency who will lose all their tax credits. They do not have a hope of moving from 16 hours’ work per week, for a couple, to 24 hours’ work a week. I just mentioned that some families are working fewer hours to keep their job. The work is not there. For those families, the loss is potentially in excess of £70 per week. In many cases—this has been mentioned to me by two constituents whom I have met—people feel that they would be better off quitting work and living off benefits. That is not to say that benefits are excessive in this country—anything but. People are struggling to make ends meet. How does that square with the idea, which I hope all of us in this House agree on, that work pays? Some families are saying, “It’s a waste of time working; I would be better off on benefits, because I am about to lose my tax credits.”
There are key Budget decisions that it is not too late to stop. The £3 billion tax rises for pensioners—the so-called granny tax that the Chancellor announced last month—does not kick in until next year. That is why I say to Government Members that, to a certain extent, I live in hope that there will be a change of heart over the next few days. Then there is the £3 billion handout that the Chancellor announced for people earning more than £150,000, when he cut the 50p top rate of income tax. That is a tax cut of more than £40,000 for 14,000 millionaires, all on the back of pensioners and working families. How out of touch are the Prime Minister and the Chancellor if they think that millions of pensioners who have worked hard all their life should have to pay more tax next year, so that millionaires can pay less? It does not square. Ministers boast that the state pension is increasing, but when we look at it in more detail, we see that it is only keeping up with inflation.
What is happening in the Budget is not fair or right. That is why, as my hon. Friend the Member for Leeds West (Rachel Reeves) said, Labour will hold a vote in the House on Thursday to try to defeat the granny tax. We will ask MPs from other parties to join us. We will also vote to stop the £3 billion tax cut for the richest. We will call for a tax on bank bonuses to fund a guaranteed job for every young person who is out of work for more than 12 months—a job that they should have to take up, and that they will relish the challenge of taking up, given the opportunity.
I shall soon conclude, because my points about VAT have already been made, but I did mention, in the three or four-day debate that followed the Budget towards the end of March, the issue of VAT on caravans. I said that I did not know how many caravan parks I had in my constituency, but I guessed that in no part of my constituency would a person be more than 8, 10 or 12 miles from a caravan park. There are 58 sites in my constituency. The VAT will have an impact on those businesses, and a considerable number of them have contacted me already. It is my intention to meet them to discuss how much of an impact the measure is having.
We have talked about hard-working families; the plea to families is that they should enjoy a staycation this summer—in other words, they should holiday here in the United Kingdom. That is the right thing to do. After October, unless there is a change of heart, there will be an increase in the cost of holidays for hard-working families on many of the sites that I am talking about. It is not just my constituency that is affected; I know from my discussions with Government Members that it is a serious issue for the tourism sector the length and breadth of the UK.
Let me say for the third and perhaps final time that I hope that there will be a change of heart, because we are heading in the wrong direction. There is far too much pain in the country at the moment. There is more to come—I recognise that—but it is not being shared fairly.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
I intend to make only a short speech, concentrating on fuel prices. Plaid Cymru has been consistent in calling for a fuel duty regulator to prevent unexpected spikes in prices that cost users at the pump and are then pocketed by the Treasury.
Figures for November 2011 from the Office for National Statistics showed that the poorest 20% of households spend twice as much of their disposable income—nearly 4%—on petrol duty as the richest 20%, who pay less than 2%. We already know that rural families spend hundreds of pounds more on petrol than urban families, so constituents in rural Wales, where there are lower incomes, are being hit by a double whammy.
Since 2005, Plaid Cymru and the Scottish National party have called for a fuel duty regulator, through which an advance estimate of UK tax returns would be made. If prices rose faster than expected, a price cap would be introduced, so there would be no windfall tax for the Government. In 2005 and 2008, Labour voted against our amendments, while the Conservatives and Liberal Democrats abstained. In 2011, it was the other way round. At least this place is consistent, no matter who is in government. The Federation of Small Businesses has published proposals for a stability mechanism in the last few weeks; the Treasury should at least look at it.
Mr Russell Brown
The hon. Gentleman has mentioned dates when proposals were put forward. There was one year, 2006, I think—it may have been 2007—when no proposal came from anyone for a fuel duty regulator. Why was that?
Jonathan Edwards
I have admitted that we proposed amendments in 2005, 2008 and 2011. The hon. Gentleman is right that we did not do it every year, but every time we made the proposal, the voting record of each of the Unionist parties has been consistent.
The 1p off fuel duty announced last year was not a regulator in the way that the Treasury suggested, and the 3p increase in August is most certainly not either. In the continuing poor economic circumstances, I would rather the proposed fuel duty rise in August was cancelled, so that businesses did not have to face that extra cost in these tough times. Families could use that money for their own benefit; that would help them and the wider economy. As my hon. Friend the Member for Dundee East (Stewart Hosie) said, that would be one way of removing a serious drag on economic recovery.
I hardly need explain that my party and I are in favour of maintaining the 50p tax rate for those who earn more than £3,000 a week. Indeed, unlike the overwhelming majority of the official Opposition—there are two honourable exceptions—I put my disagreement with the policy on record in the vote on 26 March. It cannot be right for the Government to offer a tax cut to those who earn the most while announcing a £10 billion cut to the welfare budget. Clearly, we are not all in this together.
Amendment of the Law
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Vince Cable
I will take the intervention in a moment.
A narrative has developed in which one man was responsible for this fiasco, but it was a genuine team effort, and the shadow Chancellor was an absolutely key member of that team. Being lectured now on how to manage an economy is a little bit like being given a talk on seamanship by the captain of the Costa Concordia—another believer in light-touch steering.
Mr Russell Brown (Dumfries and Galloway) (Lab)
The Secretary of State talked earlier about indebtedness. Can he share with the House how much of the debt was down to the previous Government having supported the banks and the finance houses to get through the potential economic crisis?
Vince Cable
It was actually on the back of an uncontrolled housing boom. Personal indebtedness as a share of people’s incomes doubled in the period of the last Government. Of course the process of deregulation beforehand did not help, but the core increase—the fundamental problem of indebtedness—arose when the shadow Chancellor was a key decision maker in that Government.
I want to talk about the Government’s basic economic strategy, but before I do, I want to address the issue of unfairness and distribution. There were two allegations. One was that the policies have had a damaging effect on the so-called squeezed middle; the other was about the millionaires. Let me deal with each in turn. On the squeezed middle, if hon. Members look at the distribution charts, they will see that the squeezed middle has been squeezed a great deal less than the squeezed top. The major cash impact of the Budget was on low and middle-income families, as a result of lifting the threshold to over £9,200, with £220 for more than 20 million taxpayers. That was right, not just because of the fairness involved, but because it gives a significant economic stimulus, and at the margin—the 1 million people being lifted out of tax—it is a major incentive to work. The policy also contrasts favourably with the strategy that the Labour Government adopted in office—which we discussed many times—of using tax credits. By increasing tax allowances in the way we have, we are giving people the freedom to choose how to spend their own money, not taking it from them and then giving it back to them, through a complex, means-tested system, with high marginal rates of withdrawal.
Mr Russell Brown (Dumfries and Galloway) (Lab)
The Chancellor’s Budget statement yesterday was for the entire country, but for so many individuals, households and communities, it will result in many different outcomes. I want to concentrate on the impact that it will have on my constituency and the Dumfries and Galloway region as a whole. Yesterday, local people were looking for indications of potential growth in the economy and potential creation of jobs.
In the past 20 months unemployment in my constituency has risen month after month. It is a sad reflection that youth unemployment is at its highest level since 1996. Dumfries and Galloway is a rural constituency, which means that the two largest employers are the national health service and the local council. The shedding of jobs in those two specific areas has now been going on for four years, and for those who think that everything north of the border is fine under a Scottish National party Government, let me tell them that that is four years of cuts in the public sector. Yet the block grant that we all talk about—that Barnett formula, the Barnett consequentials—has been reduced only in the financial year that is about to come to an end. So there has been a lot of pain in Scotland that sometimes people do not read about in the wider UK press. The pain of loss of income spreads into the local economy. It spreads on to the high street. I regret to say that some of the pressure on households in my constituency is down to the fact that it is very much a low wage economy.
So the Budget statement cannot be taken in isolation, although that is what we are here to discuss today. We need to look at what has happened and what is about to happen. My hon. Friend the Member for Foyle (Mark Durkan) said that the welfare cuts would have an impact. That is happening at the moment. Let no one be under any illusion that only the current coalition Government have introduced welfare cuts and reforms. Our Government did on three occasions. They were trying to make those adjustments that said to people, “Work does pay. There is an opportunity there, despite any disability that you have. There is help and support to get you back into the workplace, perhaps not doing what you did in the past but it is there if you wish to seize the opportunity.” The big challenge will be in the next two weeks when so many households lose working tax credits. With the reductions in service provision through the voluntary sector that my local area has experienced, with welfare rights budgets being cut and with Citizens Advice services being cut, I am finding that more and more constituents are coming to my office for help and support.
Let me give the entire House a warning: colleagues had better batten down the hatches, because they are about to be inundated with households that are about to lose their working tax credit. The increase in tax allowance announced yesterday, which will mean £2 or £3 a week, will make not one iota of difference to households that will potentially lose £50, £60 or £70 a week. In no way whatsoever can the increase compensate for that.
The other point is that people will need to move from working 16 hours a week to 24 hours in order to avoid losing their tax credit. How on earth will that happen when people have voluntarily reduced their working hours over the past couple of years just to hold on to their jobs? Unfortunately, many of those people will be unable to keep a hold of their tax credit.
The granny tax grab, as it has been described today in the press, the changes to the age-related personal allowance, which when introduced took 680,000 pensioners out of tax altogether, is being done at the wrong time, if indeed it has to be done at all, with low interest rates and maturing annuities not delivering what people had expected.
In a rural locality fuel prices are vital, so I want to ask the Minister what has happened to the fair fuel stabiliser. FairFuelUK expected more from the coalition Government, who need to be honest about what has gone wrong. We were all inundated with e-mails from constituents about the report commissioned by FairFuelUK. I asked the Economic Secretary last week—she did not leak anything to me—what she and her officials thought of the report, but she said that she could not speak to me about it because the Budget was just a few days away. I would like to hear what Treasury Ministers and officials make of the report, because I have doubts about a 2.5p reduction in fuel duty creating 175,000 jobs; it verges on some sort of economic fantasy.
I would have loved to have seen, as I am sure would most of my constituents, an announcement yesterday of a temporary reversal in the VAT rise, because £450 extra for families would have been of real benefit to them and it would also have helped motorists. I am, and always have been, totally opposed to any kind of regional variations in these matters. I sat on the Committee that introduced the national minimum wage back in 1998 and—the Secretary of State for Business, Innovation and Skills is no longer in the Chamber—even then there were Liberal Democrat Members who wanted regional variations in the national minimum wage. It is not acceptable.
Mr Tom Clarke
Does my hon. Friend recall that the hospitality and tourism industries, which I know are very important in his constituency, were warned that the national minimum wage would cost them jobs, and does he agree that the opposite was the case?
Mr Brown
My right hon. Friend is absolutely right. In 1996 and 1997, when the Labour party was talking about a national minimum wage, the Conservative Government and others were saying that we would lose 1 million jobs as a result. In fact, the opposite happened and it created around 1.5 million jobs, especially in the service sector, so he touches on a relevant point.
My right hon. Friend mentions tourism, and it is on that point that I will bring my remarks to a close. I represent a rural constituency, and for many of my constituents using public transport is an absolute impossibility and they depend on their cars. The area is heavily dependent on agriculture and forestry. Hidden away on page A101 of “Overview of Tax Legislation and Rates” is the bombshell—it is a bombshell—that as of this October VAT will be levied on static holiday caravans. A £40,000 van will cost £48,000. There are many of these businesses in my constituency—nowhere in my constituency can someone be more than eight to 10 miles away from a static caravan site. Owners of these sites will find it much more difficult to upgrade and invest in their businesses and, importantly, those holidays will become much more expensive for hard-working families.
Public Service Pensions
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Danny Alexander
The actuarial factors have not changed. Early retirement pensions will still be calculated on an actuarially fair basis, although of course that in itself changes over time according to the actuarial assumptions. The only exception is the teachers’ scheme. There has been discussion about modest enhancements to early retirement factors at the cost of the accrual rate for retirement ages over 65, as and when the state pension age exceeds 65. The teaching unions made that a priority in their negotiations, and we have chosen to agree with them.
Mr Russell Brown (Dumfries and Galloway) (Lab)
I hope the Chief Secretary is beginning to realise that the very thing that is likely to destabilise some pension funds is the decision of members to opt out of them.
The right hon. Gentleman has made great play of the position of the PCS and that of my own trade union, Unite, but has made very few comments about the Prison Officers Association, except when the issue was raised by my hon. Friend the Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont). The Chief Secretary said that two unions had not signed the formal heads of agreement. Will he confirm that the POA has not signed it?
Danny Alexander
I interpret the position of the Prison Officers Association more positively, which is why I did not mention the association in my statement. However, as I said to the hon. Member for Cumbernauld, Kilsyth and Kirkintilloch East (Gregg McClymont), who is no longer present, there is a specific outstanding issue in the arrangements relating to mechanisms allowing prison officers to retire before reaching the state pension age, and we are continuing to engage in discussions with the Prison Officers Association.
I bow to none in my respect for the work of prison officers. I think it right for my right hon. Friend the Minister for the Cabinet Office and Paymaster General to continue to engage in those discussions, because this issue is both important and specific to that particular work force.
Fuel Prices
Russell Brown Excerpts(13 years ago)
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Mr Russell Brown (Dumfries and Galloway) (Lab)
I too want to thank the hon. Member for Harlow (Robert Halfon) for securing the debate today. Like many others in the House, I have received a multitude of e-mails supporting the FairFuelUK campaign. Expectations in my constituency and right across the country are very high indeed, and I think that some people are expecting fuel prices to fall at 7 o’clock this evening, on the back of this debate. That is not going to happen, however, and I have had to make my constituents aware that the wording of the motion will not provide a quick fix to the problems that they are facing.
Let me quickly raise one or two issues. Crude oil today is less than $115 a barrel; in 2008, oil was $147 a barrel. We have to ask about market speculation and what it is doing to the price of fuel and thus to our constituents. Like others who have spoken this afternoon, I represent a rural area, where people often have off-grid heating. That means they suffer more, not just from having to fill up their vehicles.
Heather Wheeler (South Derbyshire) (Con)
Do people in the hon. Gentleman’s constituency suffer as we do in South Derbyshire from fuel thefts, which are common in rural areas? This applies to heating oil in particular, but transport companies also have their stocks of oil stolen regularly, and yet the police do not seem to be able to trace them.
Mr Brown
Dumfries and Galloway constabulary is first class at tracking and tracing thieves. The hon. Lady is absolutely right. We often face this situation when the value of the product rises and people try to steal heating oil and all the rest of it. People have to heat their homes, whether it be with heating oil or liquefied petroleum gas, and they also have to use their vehicles. In some locations, there is no other form of transport whatever. For some, there is a bus until 5 or 6 o’clock in the evening, which can be very difficult when people need to travel a distance to visit other family members or friends in hospital. A car is thus an absolute necessity for many households.
We are seeing price differentials and we are certainly seeing them with some supermarkets. I am not going to name the supermarkets on this occasion, as the last time I mentioned just the word “supermarkets”, two or three of them were quick to write to me to express their anger. Supermarkets drive the price in our local communities: prices tend to fix around what local supermarkets are bidding from their customers.
Here we are getting towards the back end of the year and we see another price differential between diesel and unleaded petrol. The difference has gone up from what it was in the late summer—about 2p or 3p a litre—to up to 6p, 7p or 8p a litre today. I recognise that lies partly with the refineries, but surely in this day and age more investment should be forthcoming so that the price differential does not create an even greater problem for those who have decided to drive diesel vehicles.
Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)
My hon. Friend is setting out the complexity of this issue. Does he agree that, given that complexity, the simplest way to relieve the pressure on families and businesses would be temporarily to reverse the rise in VAT?
Mr Brown
My hon. Friend is exactly right, and I was about to come on to that point. That was the most significant single increase of the last 12 months. The increase in VAT drove up the price by some 3.2p a litre. We could give families that amount back if we took off the extra 2.5% on VAT. I ask the Economic Secretary to consider that measure temporarily. My other plea to her and her Treasury colleagues relates to future increases in the pipeline, as outlined in the Budget. I sincerely hope that she and her colleagues will listen to what we are saying this afternoon, as we do not want the proposed increases finding their way through. She should be bold, as the previous Government were bold. That Labour Government took some flak on duty increases, but there were 11 occasions over nine years when the Labour Government either froze, postponed or totally abandoned increases that were in the pipeline because the price of crude oil was rising.
I sincerely hope that some Department will speak to the oil companies about what we are witnessing. I come back to the speculation going on in the marketplace, which is hurting our constituents and hurting businesses, particularly small businesses. I realise that because those who are VAT-registered will get the VAT back, any reduction will not affect them, but others are being hurt very badly. Like other Members, perhaps, I know of people in remote areas who have discovered that travelling to work is becoming far too costly, and some of them are considering giving up work altogether.
Nia Griffith (Llanelli) (Lab)
Does my hon. Friend agree that immediate action is required to stimulate economic growth, and that we need a Government who will respond to what is happening?
Scotland Bill
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Mr Gauke
I have to make a confession to the House: I have come only relatively recently to these issues. My understanding, however, is that the Scottish National party has been interested in this policy for some years. I am sure that if it is a priority, and I understand that it is, we will receive the paper very soon. I look forward to receiving it.
Mr Russell Brown
Perhaps I should be directing this question not to the Minister but to the Secretary of State for Scotland, because he has been engaged in this process. Has there been any indication of how long we can expect to wait for these figures?
Iain Stewart
Having been born and brought up in Hamilton, which is between Glasgow and Edinburgh, I am in something of a no man’s land on that point and wary of intruding on private grief. The hon. Gentleman’s point is an important one. The analysis should be not only among Scotland, England, Wales and Northern Ireland, but among the regions and cities in each nation. I do not intend to press my amendment to a vote, but I would be grateful if the Minister could suggest some alternative working or make some statement.
Mr Brown
I thank the hon. Gentleman for giving way. My intervening on him is causing disruption behind me. Will he look again at his amendment and explain exactly what it means? I am a little perturbed, and I know that he has mentioned sleeper trains and everything, but will he explain again exactly what it means?
Iain Stewart
My amendment is very simple and would remove any ambiguity. If a passenger were on a cross-border overnight journey, irrespective of when the border was crossed, they would be deemed to be in Scotland at the end of the day when that service departed. It may not be the most elegant or precise of solutions, but I felt that in the debate in Committee there was some ambiguity about the position, so the amendment is my attempt to clarify it.
Mr Russell Brown
I want to put the record straight for my right hon. Friend and his constituents. He talks about free prescriptions in Scotland, which we now have, but I hasten to remind him that there was a period of two to three years when people south of the border with cancer-related problems got their medication free, while people in Scotland were paying for their prescriptions. This is about priorities. The Labour Government rightly made that decision, and it was just a shame that the Scottish Government did not follow suit at the time.
Mr Field
Much as I admire my hon. Friend, I obviously should not have given way, because he is distracting me from the argument that I wish to make, which is a simple one. I am not convinced of the basis for those differences, and neither are many of my constituents. I have affection for the way our different nations have been grouped into the United Kingdom, but I am anxious, because unless we start to face these questions and answer them soon a general sourness will enter into English politics, and we will not be able to judge where that sourness will lead us.
Michael Moore
I welcome the hon. Gentleman to the proceedings on the Scotland Bill, albeit belatedly, and commend him for his ever sharp eye, looking for opportunities to raise matters European in the Chamber. Perhaps with some disappointment, we will have to agree to disagree on the fundamentals, but I point out that we are indeed considering human rights legislation in this country. I am sure that we will have a proper debate about that over many days and weeks.
Let me outline the key changes that we introduced on Report. First, we will bring forward to this financial year access to finance to allow work on projects, such as the Forth replacement crossing, to begin. We are removing the requirement for Scottish Ministers to absorb the first £125 million of tax forecasting variation within their budget. That will give Scottish Ministers more flexibility to decide how best to respond to any variations in tax receipts compared with forecasts. We will also allow Scottish Ministers to make discretionary payments into the Scottish cash reserve for the next five years, up to an overall total of £125 million. That will help manage any variation in Scottish income tax receipts, compared with forecasts in the initial phase of the new system.
As debated on Report, we have included a provision in the Bill to enable the Government to amend the way in which Scottish Ministers can borrow to include bond issuance. Without that power, further primary legislation would have been necessary to allow bonds to be issued by Scottish Ministers. Before that power is transferred, the Government will conduct a review of the costs and benefits of bond issuance over other forms of borrowing.
We have also strengthened the non-financial sections of the package to enable Scottish Ministers to approve the appointments of MG Alba board members, and to provide for reciprocal consultation between UK and Scottish Ministers when either make changes to electoral administration that impact on their respective responsibilities. We are devolving the power to make an order to disqualify persons from membership of the Scottish Parliament, and we intend to strengthen intergovernmental dialogue in areas of mutual interest in welfare.
Importantly, as my right hon. and learned Friend the Member for North East Fife (Sir Menzies Campbell) indicated, we are implementing the findings of the expert group appointed by the Advocate-General. There is a consensus that there is a problem with the role of the Lord Advocate under existing legislation. The Scotland Act 1998 did not properly recognise that the Lord Advocate fulfils two separate roles: one as chief prosecutor in Scotland, and the second as a Scottish Minister. Our amendment separates those two roles while retaining the consistent application of the protection of fundamental rights for those in Scotland, as exists for those in the rest of the United Kingdom. We believe that it strikes the correct balance.
We believe that the package of the Bill as amended and the supporting non-legislative measures provides the right balance of powers and responsibility for Scotland within the United Kingdom. Today’s debate marks the end of the first stage of debate on, and scrutiny of, the Bill in the House of Commons, but it is by no means the end of the process. There will be further opportunities to consider, debate and amend the Bill in their lordships’ House.
However, as hon. Members will be aware, the Scottish Government have asked for further amendments to the Bill. We have made it clear that we will listen and that we are willing to consider further amendments if they satisfy some key tests. First, any further amendments must be based on detailed proposals. We must be convinced, by evidence and detailed analysis, to support any amendments to a package that we believe provides Scotland with the right balance of responsibility and accountability. Secondly, any further amendments must demonstrate that they will deliver clear benefits to Scotland, without prejudice to the rest of the United Kingdom. Thirdly, any further amendments must generate cross-party consensus, which the measures set out in the Bill have achieved.
Mr Russell Brown
The Liberal Democrats, the Conservatives and the Labour party want this legislation, but the Secretary of State is talking about further amendments. Does he recognise that members of the public wonder why we are going ahead with the Bill, when what lies in front of us at some given point is a referendum on independence? The point has been made to me, by an admittedly small number of my constituents, that we should have parked the Bill, waited for a referendum, and resurrected it thereafter if necessary. Does he recognise that some outside this place will have concerns about further amendments?
Michael Moore
I have just set out the criteria against which we would assess any suggested further amendments. There is scope within the passage of the Bill to consider those points further.
On the hon. Gentleman’s fundamental point, my argument right from the start, which I believe has had a degree of cross-party consensus, is that it is important that we empower Scottish Ministers and the Scottish Parliament with these new arrangements to enable them to get on with their jobs. The measures enhance Ministers’ economic powers and the accountability of the Scottish Parliament. I do not believe that delaying those measures is in anybody’s interest. We do not know what the terms of any referendum will be or what type of independence will be offered.
Pete Wishart
We said on Second Reading that we would seek to strengthen and improve the Bill, offer real scrutiny and support any measures that brought significant and substantial new powers to Scotland. We are pleased that, in a number of areas, this is a better Bill today than the one presented on Second Reading.
I would also like to pay tribute to many Members who participated in the debates, particularly to those who participated in the Calman commission, and to thank people for all the hard work that was done in the Scottish Parliament Bill Committee. Although we did not necessarily agree with everything that was said, I appreciated the conscientious and diligent approach to the work.
Is this the Bill that Scotland urgently requires? I have to say that, unfortunately, the answer is no. Although we have managed to secure some more job-creating powers, this Bill falls way short of the ambitions of the Scottish people as directly expressed only a few short weeks ago, and it still lacks the measures that could have helped to develop our economy and make it grow.
Some of the new provisions are, of course, welcome. We welcome the acceptance of the amendments on borrowing as well as the devolution measures on airguns, speed limits and drink-driving, which will make Scotland a safer place. However, the Unionist parties seem almost incapable of preventing themselves from making re-reservations, which are a million miles away from where the Scottish people are in questions about their constitutional future.
Mr Russell Brown
I thank the hon. Gentleman for giving way; he obviously has some time left. I hope that in the next few minutes he will explain what Bill the people of Scotland are looking for.
Pete Wishart
I think that we had something a few weeks ago that was called an election, and manifestos were presented for it. One manifesto had plans for including job-creating powers in the Scotland Bill and the other manifesto was produced by the Calman commission parties. I think that the Scottish people made clear which direction of travel they support.
Pete Wishart
I will not give way to the hon. Gentleman again.
We know what the Scottish people want when it comes to such matters. I was disappointed to hear what was almost a rant from the hon. Member for Glasgow North (Ann McKechin). Members’ personal attacks on the First Minister suggest that they have learnt absolutely nothing. Negativity does not win elections, but we hear continued, incessant negativity.
Oral Answers to Questions
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Mr Osborne
My hon. Friend is right, and, in the case of the Opposition, their plan is plan B for bankruptcy.
Mr Russell Brown (Dumfries and Galloway) (Lab)
T9. About 20,000 UK citizens, including some of my constituents, have lost their savings by investing in the fund management company, Arch Cru. Will the Chancellor step in and investigate the role of the Financial Services Authority in the failure of that company?
The Financial Secretary to the Treasury (Mr Mark Hoban)
The hon. Gentleman may well be aware that today an announcement was made of a voluntary scheme that we have put together to make available £54 million of compensation to Arch Cru investors. That, together with a previous payment to consumers, means that they will have recovered about 70% of the value of their holdings in Arch Cru funds as of the date when the funds’ trading was suspended. That is a welcome move for Arch Cru investors, the FSA is continuing to look at the matter, and it would be inappropriate to make any further comment on it.