National Infrastructure Plan
Sheila Gilmore Excerpts(10 years, 10 months ago)
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Danny Alexander
My hon. Friend draws attention to a very serious problem. Like him, I represent a large rural constituency, so I am very aware of these issues. Back in June, I announced additional funding to extend the target for the proportion of the population with access to superfast broadband. Today, we are announcing a small fund to stimulate innovation to find the best and cheapest technological solutions for getting superfast broadband to absolutely everybody, no matter how far they live from an exchange. We will get as far as we can towards that objective. If my hon. Friend has any ideas or if innovative companies in his constituency have any thoughts about that, I would be glad for them to contribute to the process.
Sheila Gilmore (Edinburgh East) (Lab)
Will the Chief Secretary rethink his view that housing does not have a place in infrastructure planning, particularly in relation to direct investment in affordable housing? Such investment would be a real win-win-win situation, because it provides the necessary houses, improves construction skills in apprenticeships and helps to bring down housing benefit spending far more effectively than the Government’s engaging in the kind of tinkering, such as the bedroom tax, that so much affects individuals, but makes no real saving.
Danny Alexander
I am very glad that the hon. Lady has given me the chance to talk about affordable housing, because I can refer to the fact that the number of affordable houses in this country fell by 421,000 during Labour’s time in office. We now have the largest annual house building programme for affordable homes through housing associations for two decades. I would have hoped that she would welcome rather than criticise that.
Cost of Living
Sheila Gilmore Excerpts(10 years, 10 months ago)
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Chris Leslie
The trouble for the hon. Gentleman is that an awful lot of Conservative councils have metaphorically stuck two fingers up to the Secretary of State for Communities and Local Government and, indeed, the Chancellor by deciding to increase council tax because the Government’s approach to local government finance has squeezed services. Even Conservative councils and authorities are finding themselves in a position where they are raising council tax.
Sheila Gilmore (Edinburgh East) (Lab)
The Social Mobility and Child Poverty Commission has stated that the fiscal consolidation has been regressive. Does my hon. Friend think that that should be taken into account?
Mr Newmark
The Government have already reduced energy bills by £193 by removing the green levies imposed by the Leader of the Opposition and are ensuring that energy companies offer the lowest tariffs to customers, thereby reducing the cost of living.
The Government have frozen fuel duty for the longest period in more than 20 years, with pump prices 13p per litre lower than when Labour was in power. Indeed, the average motorist will save at least £170, the average van driver will save £340 and the average haulier will save £5,200 each year as a result, thereby reducing the cost of living.
Sheila Gilmore (Edinburgh East) (Lab)
The hon. Gentleman and his party must be greatly relieved to be able to report an increase in GDP, given that in June 2010 the Office for Budget Responsibility was predicting that it would be 2.5%, 2.5% and 2.6% in the three years coming. So it must be a big relief to have at last turned the corner.
Mr Newmark
Yes, it is a big relief, but as anyone in business knows—I had been in business for 20 years before I came to this place—turning around a business, particularly in an economy that was as messed up as that created by the Labour Government, takes a while. Progress is not necessarily linear. What we do have is growth returning. That is recognised by the Governor of the Bank of England, the OECD and the International Monetary Fund.
Ian Swales
The hon. Gentleman has an excellent memory. I think that people will judge the council on how it is spending the money that it raises.
This Government have also scrapped Labour’s national insurance hike and, above all, implemented the Lib Dem policy of raising the tax threshold to £10,000.
Ian Swales
I am sorry; I have taken two interventions already.
We hear a lot from Labour about wages, but it is what ends up in people’s pay packets that really counts. When Labour left office, people on the minimum wage were paying a massive £35 a week in tax and national insurance. Since then, the minimum wage has gone up by £20 a week, but the national insurance bill for those people has gone down by £9 a week, with a further cut to come in April.
Ian Swales
I certainly agree with that. I wish that my area was as fortunate with employment, but my hon. Friend makes an excellent point. That is the direction we should be taking.
I helped to launch an event for the Living Wage Foundation two weeks ago. It has stated that it
“supports moves to increase the personal allowance for the low-paid”—
because they—
“could make the Living Wage easier to attain.”
The living wage is about net pay, not gross pay.
I have talked about tax and spend measures. I also mentioned interfering in industry. I welcome today’s announcement on payday lending, following an amendment tabled by a Lib Dem peer the other day. The Government have stepped in quickly to do something about the problem. We interfere in industry at our peril, however. The Opposition motion mentions an “energy price freeze”. I worked at a senior level in business, finance and industry for more than 25 years, five of which were spent working as an accountant in the electricity industry. I could scarcely believe Labour’s proposal for a price freeze. In three and a half years in this place, I have never heard a policy announcement so guaranteed to achieve the opposite effect to the one intended.
It has been obvious from the start that any business faced with having its prices fixed but its costs varying dramatically, as they do in the electricity industry, would have real problems. Prices would increase before the freeze and after it. Prices that had been frozen could not decrease if the costs reduced. Above all, less investment will take place, especially from new players. So what has happened since Labour’s announcement? We have seen huge price hikes, which I am sure include hedging just in case the public are stupid enough to elect a Labour Government.
Ian Swales
I have already given way and I am in my own time now. Two weeks ago, National Grid said that half of proposed investment in energy was now on hold because of political uncertainty. This week, RWE abandoned the Atlantic array. This is what is happening in the real world of business as a result of the irresponsible announcement from Labour. At Dod’s energy lunch a Cross-Bench peer described how this policy was disastrous for commercial confidence, and he is absolutely right.
As the hon. Member for Tamworth (Christopher Pincher) said, the irony is that the policy protects the big six. When I mentioned that before, the shadow Energy Secretary, the right hon. Member for Don Valley (Caroline Flint), said from a sedentary position that we were protecting the big six by challenging the policy, but that is not true. In my constituency, three new energy investors want to invest—two in fossil fuels and one in renewables. There are US, Japanese and Korean investors behind these projects, but the projects are now in danger because their bankers are wondering what on earth is going to happen to this country’s electricity industry. So this irresponsible announcement by Labour threatens investment and security of supply, and, above all, it will raise prices, both in the short term and the long term. So I urge the Opposition to withdraw the policy as soon as possible to avoid more damage to consumers and to the electricity industry.
We do need to do things about our energy future. One key thing that must happen is that we must have genuine competition, based on more players. The fact that pay levels are too high in many industries, including the electricity industry, is clear. However, at least this Government are taxing capital gains at a higher rate, taxing pension contributions at a much higher rate and taxing income at a rate 5% higher than under the previous Government.
A few weeks ago, the shadow Health Secretary made a point about Front Benchers of all parties—I think he was thinking partly of his own. He said that we now see policies developed by people who have been trained—this is about career politicians—to write press releases rubbishing the opposition. We can tell the lack of strategic thinking behind that announcement. The Opposition have shown that they know how to write headlines, but they do not understand business and finance. As always is the case, we cannot trust Labour with the economy.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
I am grateful for the opportunity to speak in this important debate. Over the past few months, we have seen the spectre of the Chancellor and the Prime Minister on repeated occasions suggesting that everything is rosy and that hundreds of thousands of jobs are sloshing around. It is the old attitude of, “Crisis, what crisis?” Unfortunately, such a view is completely out of touch with the daily, lived experience of many of my constituents and thousands of others across Wales, who have seen one of the greatest falls in real average earnings—a staggering drop of £1,669, or 8%, since the general election, when this Government came to power. They see this Government as out of touch, patronising and complacent; they see a Government on the side of the rich, of millionaires and of banking and energy bosses, as we heard aptly demonstrated by the hon. Member for Redcar (Ian Swales). It is Labour Members who are on the side of the British people, with solutions such as capping the cost of credit and payday loans, and freezing energy prices. These real measures would help the real lives that many on the Treasury Bench seem to have little understanding of.
Sheila Gilmore
Does my hon. Friend share my incredulity that the price rises that the energy companies started to announce are being blamed on us because we announced our policy on an energy freeze?
Stephen Doughty
My hon. Friend is right to point out that the energy price scandal has been going on for some time, and that the Government have done nothing to deal with it.
I welcome any growth and any new jobs in the economy, and I hope that any positive movement in the economy will help people in my area address the massive drop in earnings since this Government came to power. However, I caution that illusions are simply not good enough. The Government repeatedly fail to answer questions about how many new jobs are part-time and, of those, how many are on zero-hours contracts. They also do not say in what sectors those jobs are being created. The truth is that half the new jobs are in low-paid sectors, and that the minimum wage is not always being enforced.
When I hear the Chancellor crowing about recovery, I am always tempted to ask, whose recovery and what sort of recovery. Is it a recovery benefiting my constituents who are struggling to find well-paid jobs, to pay those soaring energy bills and to put food on the table for their children? Is it helping those who are struggling to cope with the bedroom tax? One well-known local Liberal Democrat member in Cardiff recently said in a tweet that she knew that it was difficult for some people, yet many Liberal Democrats proudly voted for the bedroom tax in this House the other night. It is not just difficult but increasingly impossible for many families across my constituency.
Let me share with the House three stories that I have come across recently. First—I hope that the hon. Member for Redcar is listening—one of my constituents came to me saying that his monthly direct debit to npower had been increased from £197 to £254 just after he had been reimbursed an overpayment. I contacted npower and found that that was on top of the price rise of 10.4%. For him, the rise is 28.9%, which is extraordinary. That is the sort of issue that is affecting people in the country. How will that man make ends meet over the next few months? [Interruption.] The hon. Member for Redcar is chuntering from a sedentary position. As he does not seem to be interested, perhaps he would like to intervene and respond to that sort of example.
Alec Shelbrooke (Elmet and Rothwell) (Con)
This is indeed a very important debate. We can hear stories from any part of the House about the struggles that our constituents are going through. Indeed, constituents who one might deem to be on very good salaries are struggling, too. Whether someone is on a good salary or unemployed, if they are on a fixed income—including even those on good salaries who have had them frozen—a rise in the cost of living has a direct impact on their lives.
We must recognise the things we have to try to do to change the situation for the long term. Unemployment in my constituency has reduced by 32% since the Government came to power. We should welcome not only that reduction but the transfer of jobs from the public to the private sector, as quite a few small industrial bases in my constituency are supplying those jobs. As the economy is now turning a corner, growth in the economy and in the productivity of companies will allow wages to go up in line. What I do not support is a false rise in wages.
The minimum wage is very important; it ensures that people are not exploited, and as the Prime Minister outlined earlier today, if companies are found to have broken the minimum wage legislation, they will be fined a huge amount of money. We hope that will crack down on some of the more ruthless employers. We talk about a living wage—we would all hope to achieve a living wage—but it should not be specified in statute. By increasing wages falsely—in London, by 40%—we ensure that a living wage is always just out of reach.
Sheila Gilmore
I wonder whether the hon. Gentleman remembers that exactly the same arguments were advanced, mainly by members of his party, before the minimum wage was introduced. We were told that jobs would be lost—that it would be a terrible thing—but those predictions did not come true, so perhaps the hon. Gentleman is exaggerating his case.
Alec Shelbrooke
I am most grateful for the hon. Lady’s intervention because she makes the point that I wanted to make. I did not say that the living wage would cost jobs; I said that it would inflate wages. Many would argue that a lot of people already earn the living wage, and that a statutory living wage would benefit all those underneath. But we are all well aware how many people, especially our friends in the unions, would demand a 40% pay rise if it was to go through.
Ultimately, there is nothing to be gained by inflating wages artificially, as we did in the 1970s. I remember my parents telling me that when they were teachers in the 1970s, they got a 25% pay rise when Harold Wilson came to power in 1975 but it was worthless the following year. The goal is always slightly out of reach. We must tackle the cost of living, and ensure that people’s real wages and real net income can advance to meet it.
Sheila Gilmore (Edinburgh East) (Lab)
I am not at all surprised that the Government Members who have spoken in this debate on the cost of living—all of whom, interestingly, are men, with the exception of the Minister who will respond—seem so delighted and thrilled that they can come here and talk about a recovery, because something very strange has happened over the past three and a half years.
In June 2010, the Office for Budget Responsibility made its first pre-Budget forecast before the emergency Budget that we were rushed into because we had to do something about the economy. It predicted that GDP growth would be 2.1% in 2010-11, 2.6% in 2011-12, 2.9% in 2012-13 and 2.7% in 2013-14. It was assumed that inflation would be at its highest at 4.1%. I seem to remember that it hit 5.2% or thereabouts. Of course, the higher-than-predicted inflation was the only reason why the Government were able to boast about record increases in pensions.
Something happened between June 2010 and now. The thing that happened was the Government’s economic policy. Instead of improving the economy over the past two and a half years—
Sheila Gilmore
Time is very limited, so I will not take any interventions. During that period, economic growth has gone backwards and we have found ourselves in a position of stagnation—[Interruption.]
Mr Speaker
Order. The hon. Member for Braintree (Mr Newmark) should calm down, relax, and lower the temperature. He should not get too excited; there is no need.
Sheila Gilmore
That stagnation is why so many of our constituents are suffering so much. I was astonished by some of the comments made this afternoon. The hon. Member for Harlow (Robert Halfon) managed to suggest that unemployment was not down to the recession but down to the entire period of the Labour Government. In fact, when the global financial crisis hit in 2008, unemployment was a little over 5% at 1.6 million, but by the end of 2009 it had risen by 1 million to 2.5 million. The cause of that rising unemployment, so suddenly and over such a short period, was the economic recession, not the Labour Government. Such rewriting of history is constantly going on. Recently, however, that rewriting seems not just to be about what caused the recession, but tries to read back to the Labour Government and put things into that period that were not the case.
The stock answer from the Government on what they have done to help people in the cost of living crisis is to talk about the increase in the tax threshold. The problem with that policy is that it unduly helps those who are already better off, and does not help those with the lowest income levels in our communities. Two thirds of the billions of pounds that have been spent on raising the tax threshold has gone to people in the top half of the income scale, because the policy benefits people on higher incomes as much—if not more—as those on lower incomes.
What has been the quid pro quo? There have been cuts to benefit payments and tax credits, which has cancelled out the rise in the tax threshold for those at the lower end of the income scale. Not only have those paying no tax not benefited, but those at the bottom end who have apparently benefited a little have had that cancelled out. That is what we must all remember. Those with the lowest earnings have not benefited from the policy. Both Government parties constantly say that the tax threshold is being raised because they want to help the lowest earners. In fact, that policy has not benefited the lowest earners, because in order to pay for it—it is very expensive—there have been constant cuts to people’s benefits.
At the extreme end, those who say there has been no change should look around their towns and cities. I have never seen so many quick lenders, payday lenders, and companies such as BrightHouse spring up in such a short period. It was not happening before. Food banks are new in my lifetime—they were something I read about in the history books of the 1930s. One of the Prime Minister’s favourite statements about food banks is, “But usage of food banks went up tenfold under a Labour Government.” The problem with that arithmetic is that 10 times a very small number is still a very small number—from 4,000 in 2005 when the Trussell Trust started up, to 40,000 in 2010. Last year, that figure rose to 347,000, and in the first six months of this year, it has risen to 350,000. That very big number is down to the policies of this Government.
Nicky Morgan
I am not going to give way to the hon. Lady, because she did not give way to anyone during her speech.
My hon. Friends the Members for Elmet and Rothwell (Alec Shelbrooke) and for Bedford (Richard Fuller) talked about work being the key to recovery, the need to create more jobs and making work pay, which is a critical part of our welfare reforms.
We heard from the hon. Member for Makerfield (Yvonne Fovargue), who talked about breaking the stranglehold of the big six. It was the last Labour Government who left us with the big six; we started with more and ended up with six.
I listened carefully to the speeches of the hon. Members for Dundee East (Stewart Hosie) and for Swansea West (Geraint Davies), of the right hon. Member for Oldham West and Royton (Mr Meacher), and of the hon. Members for Edinburgh East (Sheila Gilmore), for West Ham (Lyn Brown) and for South Shields (Mrs Lewell-Buck). What struck me most—I have referred to it before in this place—was the collective amnesia and total lack of understanding among Labour Members of how we ended up with the largest deficit since the second world war, which this Government have tackled by taking tough and difficult decisions.
Women and the Cost of Living
Sheila Gilmore Excerpts(10 years, 10 months ago)
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Nicky Morgan
I am going to carry on for now.
As I said, we are now recovering from the most damaging financial crisis in a generation. I am afraid that the hon. Member for Ashfield (Gloria De Piero) did not mention that financial crisis at all, but it was overseen by the Labour party—although I appreciate that she was not a Member of this House at that time. It was overseen by the last Government, who built a decade of growth on unsustainable debt. When our country is trying to overturn the largest deficit since the second world war at the same time as our largest trading partner, the EU, has been in recession, it is unfortunately highly likely that women and men will feel the pinch.
Sheila Gilmore (Edinburgh East) (Lab)
Does the Minister agree that in her view of the world the last Labour Government must have had tremendous power as they apparently brought about a financial crash not just in Britain but across the world? The situation would not have been any different whichever party was in government—and we must remember that the current Government do not want to regulate anything any more and said we regulated too much.
Nicky Morgan
That intervention shows the extent of the collective amnesia on the Opposition Benches. First, on the banking crisis the point is that the necessary reserves to deal with the unforeseen consequences were not set aside. Secondly, the last Government systematically over many years spent more than they were raising in taxes, so there were not the reserves to deal with this.
Tessa Munt (Wells) (LD)
The Liberal Democrats are doing what they can to build a stronger economy and a fairer society. We recognise that households are under pressure, which is why we have taken action to try to support women with the cost of living.
The Lib Dems want to help women on low and medium incomes by letting them keep more of the salaries they earn. By April 2014, 1.5 million women—60% of the overall figure of 2.7 million people—will have been taken out of paying tax altogether by the rise in the tax threshold to £10,000. We are also giving a tax cut of more than £700 a year to more than 20 million lower and middle earners, the majority of whom are women. The Deputy Prime Minister is planning to put a further £100 back into people’s pockets through the workers’ bonus, which could increase the tax allowance to £10,500 by the next election.
Sheila Gilmore
The problem with the hon. Lady’s presentation of the issue is that it is very one-sided, because in order to pay for that tax cut there have been cuts to tax credits and other benefits, so on balance the lowest earners have lost, not gained.
Tessa Munt
I could not disagree more. The most important thing is that we raise the tax threshold so that those women who are working get the benefit of keeping the money they earn.
Sheila Gilmore (Edinburgh East) (Lab)
The Government’s response to all questions about falling living standards and rising costs is to talk about the raising of the income tax threshold. At least one part of the coalition is promising even more of the same and saying that that is how we help the lowest earners, many of whom are women. However, if the main aim is to assist the lowest earners, it is an extremely poorly targeted policy. It is an expensive tax cut. Three quarters of the billions of pounds that have been spent on raising the tax threshold have gone to the top half of earners in our country.
Harriett Baldwin
Is the hon. Lady arguing that the income tax threshold ought to be brought back to £6,475, as it was under her Government?
Sheila Gilmore
I will continue with what I was saying, because it is important to realise the cost of this policy to many women.
This generous gesture, which has advantaged more people on upper earnings, has been balanced by taxes and cuts elsewhere, such as the raising of VAT. Many of the cuts have affected women in particular. The cuts in tax credits have more than cancelled out the rise in the tax threshold for the lower-paid. People who have been affected by that will not be saying, “It was great that the tax threshold was raised.” They would probably rather have stayed in exactly the same position as they were in before.
Mr Donohoe
Surely a consequence of that is that fewer women are able to put their children in day care and get back to work.
Sheila Gilmore
Indeed; the work incentives that were provided by tax thresholds, particularly to single parents, cannot be underestimated.
The hon. Member for Wells (Tessa Munt) brushed aside my intervention in which I said that the gains from raising the tax threshold had been more than cancelled out for the lowest-paid, but they have been. The argument is made that raising the tax threshold allows people to keep more of their earnings, instead of tax being taken away with one hand and paid back with the other. The problem is that the policy has not been even-handed. Some people have ended up worse off as a result of it. Those who used to benefit and have lost out are predominantly women.
Tessa Munt
Is the hon. Lady saying that she would return the tax situation to the way it was before or is she saying that this policy has no effect whatsoever?
Sheila Gilmore
The hon. Lady has told the House that the path onwards involves more raising of tax thresholds, regardless of who will or will not benefit from that. A further rise in tax thresholds, however, will do absolutely nothing for many who already earn below that level, particularly women who are part-time workers. How will that further generosity—which, as I have said, benefits more those whose earnings are in the upper brackets—be paid for? On the basis of the past three and a half years, presumably it will be paid for by yet more cuts to benefits and services that help a lot of women.
Sheila Gilmore
I will not give way again.
In future—assuming, of course, that universal credit ever materialises, which is far from certain at the moment—low-paid people will benefit even less as the tax threshold increases. Universal credit will be calculated on net, rather than gross earnings. Therefore, if a taxpayer who claims universal credit receives a tax cut of £100, they will automatically lose £65 of benefits. The lowest paid taxpayers are going to suffer more, and a solution would be to commit to increase the amount someone can earn before universal credit payments are reduced every time tax thresholds go up. Those who advocate the solution for low-paid workers have told us time and again that the reason for raising tax thresholds is not to benefit everyone but to benefit low-paid workers. However, it will not benefit those workers to anything like that extent—indeed, for many of them probably not at all.
We are constantly being told that we have to make tough choices—the hon. Member for South Basildon and East Thurrock (Stephen Metcalfe), who wanted to intervene, has constantly risen to speak about the need to deal with the deficit. Choices are being made in the way the Government are proceeding, including the choice to give those generous tax cuts and wanting to continue to do so, but that does not sound like a terribly tough choice for some people to make.
There are other uses for the money if it is available. We could give a tax break to businesses that agree to pay the living wage, which would benefit women in particular. We could increase help with child care costs now. Child care tax credits were cut from 80% to 70% by the coalition. I know the Government say that they will restore that for recipients of universal credit when—if—it comes in, and the new child care tax relief starts in 2015. Why not now, however, especially with universal credit receding somewhere over the horizon? Further to that, the Social Mobility and Child Poverty Commission suggests that the Government should reallocate the 2013 Budget funding for child care tax relief from higher rate tax payers to those on universal credit. That would be over and above existing plans—this is a recent report from the commission—to help those who want to work and need help with child care.
Gingerbread, which will obviously advocate on behalf of families with one parent, 90% of whom are women, has made proposals for improving universal credit that would make work pay and encourage the progression through employment that is desired by us all. The old 16-hour rule that Government parties tend to dismiss was to ensure that going back to work really improved people’s situation, rather than the mini-jobs that, frankly, leave people poor.
Gingerbread has suggested that we increase the amount a claimant can earn before universal credit starts to be withdrawn, and reduce the rate at which benefits are reduced—the taper rate. Those proposals cost money, but if money is available—clearly it is for those who advocate another increase in the basic tax threshold—I urge the Government to consider measures such as those advocated by Gingerbread genuinely to help the lowest earners improve their position.
One point I completely refute is the suggestion that if we say that life under this Government is hard for many women, we are calling women victims. Far from being victims, women are struggling to bring up their children despite the difficulties that they face. It is completely wrong to suggest that we are therefore painting them as victims—far from it.
Harriett Baldwin
The previous Government, as we heard from the hon. Member for Edinburgh East, thought it was appropriate to tax people earning only £6,500 per year, and to give them their own money back in the form of tax credits. I believe it is more important that we do not take that money in the first place.
I want to demolish what the hon. Member for Ashfield (Gloria De Piero) said on disposable incomes. Since the start of the economic downturn, the average equivalised household income has fallen by about £1,200 since 2007-08. The Opposition talked about the average fall, but the richest fifth of households have seen largest fall. In contrast, after accounting for inflation and household composition, the average income for the poorest fifth of households has grown in the same period by 6.9%—a statistic from the Office for National Statistics. I refute the argument inherent in the motion that we have had a particularly serious impact on the cost of living for women.
I would also like to demolish the claim in the motion that the Chancellor has made
“women pay three times more than men to bring down the deficit”.
I have taken the trouble to look at the Full Fact website, which I recommend to Opposition Members. It makes a line-by-line demolition of their claims. For example, women such as me, who earn more than £60,000, no longer receive child benefit. That is counted as a negative, but I would argue that that is a sensible way to reallocate scarce resources. The Opposition count it as a negative that the income tax cut does not help women as much as men, whereas I think it is a good thing that women are given a tax break.
The third point I would like to demolish is that it is a problem for more women than ever before to be in work. I welcome it. One reason this has been a successful area of welfare reform is that the number of lone parents out of work—I accept that the number of lone parents out of work declined under the previous Government—has declined sharply since 2010, falling by 26% to just under 500,000. I agree that that is still too high and we have more to do, but we are doing an enormous amount—providing free child care and helping lone parents into work—to help them to lift their own families out of poverty. There are other positive aspects of welfare reform for women in the workplace. Although well intentioned, a terrible consequence of Labour’s approach to welfare is that it trapped many women in 16-hour-a-week jobs. I have met many women in my constituency who have said, “I have been offered more hours, but it does not make economic sense for me to take them.”
Harriett Baldwin
I do not have enough time, I am afraid.
In fact, we were paying a lot of women to maintain 16-hour-a-week jobs. That may be ideal for some people’s family situation, but it sends a poor message, through the welfare system, that we need to tackle. We need to allow women to progress up the income scale in the same way as men so that—I do not often argue for higher taxes—men and women pay the same amount of income tax. At the moment, women pay approximately 60% less income tax and I would like to see progress on that.
The motion is full of holes. I urge right hon. and hon. Members to vote against it.
Jo Swinson
The hon. Lady will be aware that we have the fastest growing economy in the developed world. I hope that she will not be as churlish as some of those on the Opposition Front Bench—although not those on the Front Bench today—and welcome that news rather than feel glum at the idea that the Government’s economic policies might actually be working.
Employment and work are the best way to drive up living standards. We have 446,000 more women in employment since the general election. We had some interesting exchanges about the numbers of women in employment and employment rates. Different individuals bring forward different figures to support their arguments. I argue that both the numbers and the rate are important. We have more women in work than ever before—fewer women are economically inactive—but the employment rate is also increasing. It has gone up 1.2% for women to 66.8% since May 2010, which is very close to its highest rate ever.
Sheila Gilmore
The Minister stated that work is the best way for people to progress and improve their position, but, as she will see if she reads the work of the Social Mobility and Child Poverty Commission, the problem is that the rate of poverty among children in working households is going up and three quarters of people in such households are in full-time work.
Jo Swinson
We absolutely need to help more people into work. When people want to work extra hours, we need to make that easier and we have a raft of measures aimed at assisting people into work. Yes, we also want to ensure that when people are in work their jobs are of a higher quality and that they can have higher pay, but we need to do that in a way that does not threaten to increase unemployment figures.
The pay gap has been mentioned, and rightly so. The Government have given employment tribunals the powers to force equal pay audits on rogue employers who have been breaking the law on equal pay. Our Think, Act, Report initiative now covers nearly 2 million employees across 130 major companies to drive forward standards in gender equality in the workplace. The recommendations of and the Government’s actions in response to the Women’s Business Council report, the extension of the right to request flexible working and the introduction of shared parental leave are all important factors that will also support women in work.
Various Members raised the issue of pregnancy discrimination. I do not know whether I need to declare an interest in order to say that I think that is an appalling and horrendous practice. I have met Maternity Action on these issues and we have commissioned research through the Equality and Human Rights Commission to ensure that we have up-to-date figures on which to take the issue forward.
I want to reply to the point made by some hon. Members about the £1,200 fee for employment tribunals. It is simply misleading to suggest that that is what any woman will have to pay in order to take up a claim. That is not what they have to pay to lodge a claim—that figure is £200. There is a remissions regime for people who cannot afford to pay that amount and only in cases that go to a full hearing—a tiny percentage of the number of cases overall, and only about 300 each year—will the full amount be paid. Even in those cases, if people win it is likely that costs will be awarded and they will not have to pay. Although I accept that the Opposition should make legitimate points, it is important to be clear about the facts.
My hon. Friend the Member for Stevenage (Stephen McPartland) talked about women in sectors in which they are not usually well represented, such as engineering. We recently had Tomorrow’s Engineers week where that was a major theme. The Government also launched the Perkins review, which outlined how important it is to get more women and girls interested in engineering.
The hon. Member for Rotherham (Sarah Champion) mentioned role models and they are important throughout the STEM industries. Of course, there is the Inspiring the Future initiative, which I encourage hon. Members and those watching the debate to sign up to so that they can go into schools and act as a role model by talking about their careers and what they do. That will inspire the next generation so that they know that there is no glass ceiling and that they can do whatever they want.
We are providing significant support for child care, increasing early education for free for three and four-year-olds to 15 hours a week and extending it to four in 10 two-year-olds from the most hard-pressed households, as well as providing the £1,200 per child per year tax rebate on child care costs. The rising cost of child care is an issue and it was not addressed under the previous Government. We are addressing it by extending the support for new child care businesses and increasing the number of childminders by making childminder agencies possible.
I want to mention Labour’s plans a little. Some sound very good, but one wonders where the costing comes from. Things will be paid for by the bank levy, but Labour’s bank levy has now been spent more than 10 times over. Here are the things that will be paid for by Labour’s bank levy: the youth jobs guarantee, reversing the VAT increase, more capital spending, reversing the child benefit savings, reversing tax credit savings, more regional growth funding, cutting the deficit, turning empty shops into community centres, spending on public services, more housing and child care. The same money cannot be spent twice, let along 10 times. The numbers do not add up.
We have improved the situation for older women, particularly pensioners, who suffered previously. Those who have taken time out of work to look after children faced significant injustice under the previous system. Our triple lock, which is raising the state pension—
Oral Answers to Questions
Sheila Gilmore Excerpts(10 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Sheila Gilmore (Edinburgh East) (Lab)
Why should we believe from the Minister that the present scheme for dealing with national insurance contributions will be any more successful than his previous scheme, where take-up was extremely poor and did nothing to increase jobs?
Mr Gauke
I do not know whether Labour is opposing the scheme. That was not the impression I got. This is a very simple scheme. It does not require applications or involve any of the complexities that we saw with two of the Labour national insurance contribution schemes. We are confident that the current scheme will work. It has been widely supported by business groups and I think it will make a big difference to small businesses.
National Insurance Contributions Bill
Sheila Gilmore Excerpts(10 years, 11 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Gauke
I do agree. Given that we want to increase employment, it would not have been sensible to undertake the increase in national insurance contributions that the previous Government intended. That was clearly a mistake. I am sure that my hon. Friend will be delighted to know that not only are he and I in agreement but Tony Blair said last week that he thought it was a mistake.
Sheila Gilmore
Can the Minister explain how a measure that was not actually implemented destroyed jobs, as the hon. Member for Dover (Charlie Elphicke) suggested?
Mr Gauke
To have implemented the policy we inherited would have destroyed jobs. It did not do businesses in the United Kingdom any good to have the prospect of an increase, sending the wrong message that we were going in the wrong direction. I am pleased to say that we have reversed that direction of travel by not implementing the previous Government’s policy in full. We have increased thresholds for national insurance contributions, which has clearly helped. Now, through this Bill, we are providing an employment allowance of £2,000.
Sheila Gilmore (Edinburgh East) (Lab)
It is a pleasure to follow the hon. Member for Redcar (Ian Swales). As so often when members of his party speak in these debates, they talk about what was happening to the economy in the period before the general election and after it as if they were two completely different things. Many of the views the hon. Gentleman has just expressed were certainly not those on which he and his party leader stood, so far as the manifesto is concerned, in the period leading up to the election.
Anyone walking into this debate would think that it was yet another general debate on the economy—and, indeed, on the record of the last Government. Now that we are three and a half years into this Government, that seems somewhat strange. To me, it looks like diversionary tactics. Government Members are saying, “Let’s not talk about what we’ve done; let’s hark back yet again not just to the previous Government, but to proposals that never even came into effect”, suggesting that those proposals were somehow the cause of our economic difficulties. That clearly could not be the case.
Caroline Dinenage (Gosport) (Con)
I am grateful to the hon. Lady for giving way. I can understand why she would not want anybody to hark back to the 13 years of the Labour Government, when anyone who ran a business saw it become more and more uncompetitive, when our country slipped down the league for international and global competitiveness and when our businesses were shackled by endless amounts of red tape and bureaucracy. Has she had the chance to speak to any businesses at all about that record and how things have significantly improved over the last three years?
Sheila Gilmore
I thank the hon. Lady for her intervention, but I am certainly not going to say that many of my constituents did not benefit from the record of the last Government, and I am not going to accept her characterisation of that Government as not having helped the majority of people in this country. Yes, I have spoken to local businesses, and many of them have been struggling, particularly over the last three and a half years, to get loan finance to get their businesses functioning. Many have found it extremely difficult to operate in an economy that has been sent into decline by many of the measures that the incoming Government imposed. The picture presented by the hon. Lady is wrong.
As I was saying, the concentration on what happened during the last Labour Government is a reflection of the fact that this Government know that their previous proposals on national insurance contributions simply did not work. We have heard a lot about predictions, and some people have suggested that the Opposition’s predictions about the economy were wrong, so the Government’s predictions, presumably by extension, must be right.
However, what the Government told us in 2010 and 2011 was that they were going to eliminate, not just reduce, the deficit over the course of one Parliament. What we now hear over and over again is that the deficit has been reduced by one third, but it seems to have reached a plateau. That figure of one third has been invoked for a very long time now, which suggests that the Government’s original intentions and purposes have not been achieved. They have clearly accepted not only that they will not eliminate the deficit by 2015, but that everything has stalled and that deficit reduction has, as I say, reached a plateau. In 2010-11, it was predicted that we would see economic growth in 2010-12, not that we would be still waiting for it in 2013. Even now, the amount of growth we are seeing is very limited.
Ian Swales
Is the hon. Lady happy about the fact that she stood on a manifesto which included a national insurance policy that independent observers said would take 57,000 jobs out of our economy?
Sheila Gilmore
We do not know that that policy would have taken jobs out of the economy, because we did not have the opportunity to implement it.
Another issue that is subject to repeated predictions is jobs. The number of new private sector jobs is constantly being put at about 1.4 million, but, interestingly, in January 2011 the Government were already saying that 500,000 jobs had been created. It is clear to anyone that even if those figures are accurate, and even if factors such as the re-categorisation of jobs into different sectors are taken into account, the pace of job creation is not quite as dramatic or as effective as we might think.
We were told that the earlier proposal for a national insurance holiday was intended to create jobs. The fascinating aspect of that was the very low take-up. If all those new employers had set up new companies and provided new jobs, why did they not want to take advantage of it? Why did so few come forward? That surely casts doubt on the notion that numerous people were desperate to start up new businesses and to take on employees. In December 2012, there were only 20,365 applicants for the scheme. The Minister has told us that eventually there were 26,000, but the initial prediction was 400,000. There is a considerable difference between those figures.
It is not surprising that the Minister was reluctant to respond to interventions from his own Back Benchers and to say what he thought might be the outcome of his current proposals, because he knows how poor earlier predictions have been. It is not just in respect of the national insurance holiday that predictions have been wildly at odds with the reality. For example, the Youth Contract, which involved offering money to employers to take on people aged between 18 and 25, was apparently going to be one of the major answers to youth unemployment. It was designed, we were told, to help 53,000 young people per year. However, in the first year of its operation it helped only 4,690. That was another not very successful policy that we had been asked to believe would help people in an important way. In that context, I think it significant that only last week the Work and Pensions Committee heard from the CBI that it would have liked to see extra money for training, rather than cash incentives for employers to take on young people. Perhaps the Government should listen to what people think would help create jobs.
The Institute for Fiscal Studies has pointed out that the current proposals do not guarantee any additional jobs and that this is simply a tax cut. A tax cut may be beneficial and may bring about more jobs, but in itself it will not necessarily do so. Again, I would point to the previous record. The IFS says we do not know whether this proposal will have any effect on job creation as it will not be piloted and will be almost impossible to evaluate, and that we will therefore be unlikely to know whether it will be money well spent. We must bear in mind the previous history, which I have mentioned, of two schemes that both failed to help create employment, and we must ask the Government to monitor and evaluate this new proposal as much as they can if they are going to introduce it.
The Government must realise that the creation of jobs is extremely important for many parts of this country. Many Government members and Back Benchers have expressed pleasure at the reductions in unemployment in their own constituencies, which is all very well, but unemployment levels in many parts of the country are still extremely high. What is even more important for many people is the lack of quality jobs and the fact that they often cannot work the number of hours they want to. We currently have the highest recorded level of people working part time who want to work more hours. That means people have low incomes and are often dependent on top-ups from Government benefits.
The Government sometimes wonder why things like housing benefit keep going up rather than down, despite the reforms they put in place. The main reason is that people in part-time, low-income jobs on zero-hours contracts have no choice but to apply for such benefits, so even the jobs that are out there are often ones that leave people with a cost-of-living crisis. That causes real suffering, and there is no point in pretending otherwise.
I ask the Government to indicate the likely take-up of this scheme—reluctant though they are to do—and to accept that their previous measures in this field have not been successful. Three years on, their initiatives have simply not been successful, and we see the results in the state of our economy today. Of course it is good that growth is beginning to return, but such low-level growth after such a long time can hardly be hailed as a success. If we want to argue about whose predictions were right, perhaps, at best, we have to say that nobody’s were. The Government’s predictions on coming to power in 2010 were certainly not borne out, and people have been suffering the results of that in the past three years.
Margot James
I thank my hon. Friend for that intervention. Indeed, what he has observed might explain why British exports to China have risen at a record rate in the past 12 months.
Another aspect of Government support for the small businesses that are crucial to employment and many of the new jobs that have been created has been the reduction in the small companies tax rate to 20%. The small business rate relief scheme was doubled until 14 April and we have also had the start-up loans scheme and the new enterprise allowance, which I have already mentioned. All those measures were designed to have, and have had, a positive effect on the livelihood of our small businesses.
Of course, not just employers have benefited from such measures. Employees have benefited too. In my constituency, 3,794 people have been removed from income tax altogether. A vast number of people in my constituency—33,000—are now paying less tax and that is an important development, freeing people to spend more money on the high street, which is where the economy is starting to grow again.
It is instructive to recall the Opposition’s record. The shadow Business Secretary makes the laughable claim that Labour is now the party of small business, but I think that small business people judge Governments, Oppositions and former Governments on their actions, not their words. The Opposition have a long way to go before they can put themselves up as people who understand the needs of businesses. As I said earlier, I think that it was indicative of their deeply flawed management of our economy that they felt in 2011 that they needed to put up taxes by putting up national insurance, rather than cutting public spending, which, of course, is what—only the other day—Tony Blair said they should have done. We all know how the economy ended up.
Sheila Gilmore
Is it not in fact the case that the incoming Government put taxes up? In particular, they put up VAT and that was the choice that they made. To say that no taxes went up would not be true.
Margot James
I would apologise if I felt that I had said that no taxes had gone up. Let me clarify in response to that intervention. I was making the point that the previous Government proposed to increase national insurance, presumably because they could not face the public expenditure cuts that this country really needed. The hon. Lady is quite right that the Government were driven to put up VAT, but the important point is that in getting a grip on the public finances we had a rough ratio. Spending cuts delivered approximately two thirds of what was required and the tax increases, regrettable though they were, were necessary and delivered the other third. I fear I digress somewhat, Madam Deputy Speaker, and I feel your watchful gaze so I shall return to the subject of the Bill.
I congratulate the Government on introducing this important measure. I would have benefited hugely from it when I was in business and I welcome it on behalf of the many small businesses and sole traders in my constituency.
Richard Fuller (Bedford) (Con)
It is truly a great pleasure to follow my hon. Friend the Member for Stourbridge (Margot James), who is a mighty champion for our small businesses that are trying to access international markets. It is no wonder that her region leads the country in increasing exports to developing and developed nations around the world. She spoke most eloquently about the benefits for small businesses and echoed some of the points made by my hon. Friend the Minister about the impact of the Bill on the willingness of employers to add to their labour force.
I want to focus on the Bill’s impact not on the quantity of people who will be employed but on the price of labour, and on how the Bill might be used to implement some of the efforts to create a living wage across the United Kingdom. The Treasury team have come across a useful tool in implementing that change, and it is up to them to see how much courage they might have to move forward with this initiative to achieve it. That marks the difference between those on the Opposition Benches, who wish to posture over changes in the economy on employment and wages, and Government Members, who are interested in taking action to achieve change.
If I may, I shall consider the record of the previous Labour Government. As we have heard often today, the Labour Government were interested in increasing the tax on employment, and indeed went into the general election calling for increases in the jobs tax. Despite the words we have heard today, we have not heard one word of apology from the Labour party for saying at the last election that the right way to increase employment was to increase the tax on jobs. Still no apology on that, but it was part of a pattern that impacted negatively on the price of employment.
Labour abolished the 10p tax rate. It created a tax credits system that was an incredibly complex way to give people a post-tax income on which they could live. Any of us with constituents who have been caught up with tax credits when they went wrong knows how hard it is for families when the tax credits office claws those tax credits back and savings have to be found. Why on earth was that system a good system? Underpinning it—
Richard Fuller
I will give way in a second; I would love to hear from the hon. Lady.
Underpinning that system was Labour’s creation of a benefits system that discouraged work. We had hundreds of thousands of workers in our country going out to work on the minimum wage or a little more and seeing people living on benefits when they could have worked and ending up with a lifestyle that those people in work could not afford. Labour has not apologised for that policy and has opposed even the benefits cap.
Sheila Gilmore
Does the hon. Gentleman accept that the intention behind tax credits was indeed to encourage people to enter employment and that 350,000 single parents entered employment as a direct result of the introduction of the tax credits system?
Richard Fuller
The hon. Lady makes a point, but not a particularly good one. If the economy was borrowing so much money to stimulate employment, it was not a particularly outstanding outcome to achieve an increase in one part of the labour force of 350,000, especially when we consider the fact that every Labour Government have left office with unemployment higher than when they came to office.
Richard Fuller
That is the bigger picture to which I guess the hon. Lady wishes to return, as she is one of, I think, just two Labour Back Benchers in the Chamber.
Sheila Gilmore
I thank the hon. Gentleman for giving way again and being so generous with his time. That myth about every Labour Government leaving office with unemployment higher than when it came to office is not entirely accurate. For example, unemployment was extremely low at the end of the period in office of the 1945-51 Labour Government. Under the Tory Governments of 1979 to 1997, unemployment was more than 10% in the majority of those years.
Caroline Dinenage
And their family. I am pleased that the Bill makes that moment so much more likely. There are many statistics that show how great an impact the change will have. We have heard some amazingly powerful statistics this afternoon; for example, over a year, employers with fewer than 10 employees will have their national insurance contribution bill cut by 80%. However, it is easy to get bogged down in figures. What does the Bill mean for charities and small businesses up and down the country? It means that the small-time cupcake seller who works out of their kitchen and wants to expand, but is not sure that they can afford to, is now £2,000 more likely to give a young person their first foot on the jobs ladder. It means that the mechanic who needs another pair of hands to deal with a recent increase in demand can take someone on and pay them up to £22,000 without having to pay any jobs tax. It means that the Government are continuing to deliver exactly the kind of policies that have, so far, created 1.4 million private sector jobs and put the country on the path to prosperity.
There are so many ways in which the Government have helped small businesses to flourish. Locally, I have been involved in a really successful regional growth fund bid—a partnership between The News, which is our local newspaper, and the Solent local enterprise partnership. The Bridging the Gap scheme is a pot of money that new start-ups and small firms can bid for to help grow their business and create jobs. I recently visited three of the Bridging the Gap success stories in my constituency, including Kev Jones and Son, an independent convenience store at the heart of the community, which is, you will be interested to hear, Madam Deputy Speaker, the go-to shop for your Christmas meat hamper. The people there had very ambitious plans to expand. With a little bit of extra money, they were able to bring those plans forward, and they have now doubled their floor space and created some of the new jobs the area so desperately needs. These are exactly the kinds of businesses that we will be supporting through this Bill. That is absolutely the right thing to do, because they are not just the backbone of our economy but the lifeblood of our communities. The Bill is a key part of the wider programme to make Britain the most small-business-friendly environment in Europe.
By cutting Labour’s deficit, the Government have secured record low interest rates for hard-working families and small businesses across the country. From April 2015, corporation tax will be cut to 20%—the lowest in the G20. As a result of the Government’s policies, the UK recently topped KPMG’s list of the most competitive countries in which to do business, beating Switzerland, the USA and France for the first time ever. This hard work is getting results. The latest figures from the Office for National Statistics showed strong growth of 0.8% for the third quarter of 2013. That proves that the only way to create real prosperity and to raise living standards is not through quick-fix gimmicks but through straightforward solutions: backing businesses to create growth, cutting taxes to boost growth, and supporting hard-working people.
Labour Members have presented this as being somehow their idea. That appears to show brass neck of almost biblical proportions. Anyone who ran a business under the previous Labour Government, as I did for 13 years, will know that we were shackled by endless amounts of bureaucracy as the country fell deeper into debt and slipped down the international competitive league tables. We cannot escape the fact that they got it very badly wrong on the economy as well. They said we would lose 1 million jobs. Instead, we have seen the creation of 1 million net jobs—three in the private sector for every one lost in the public sector. Because this Government have cut taxes, slashed red tape and unleashed innovation, we have seen record levels of small business creation and employment. I am confident that the Government will continue to deliver the right policies.
Sheila Gilmore
Does the hon. Lady accept that the rate of employment has not yet reached the level it had reached prior to the recession, even if some numbers, many relating to part-time work, have gone up?
Caroline Dinenage
The hon. Lady can throw facts and figures around as much as she likes, but unemployment was so high when we came into government purely as a result of the Labour party’s economic policies over 13 years. Everything we have done until now has been to try to put the brakes on and reverse that, bringing employment back to households that may not have had it for over a decade.
I am confident that the Government will continue to deliver jobs and deliver the right policies, such as this Bill, backing small businesses to create the jobs we need and keeping us on the path to prosperity.
Nicky Morgan
Perhaps I should repeat my comments. This Government should get enormous credit for introducing a GAAR in the first place. The last Government had 13 years to introduce one and failed to do so. The important point about the panel is that it is independent. It was recommended by Graham Aaronson, and its members are independent from the Government. The gentleman in question has resigned. It is an important safeguard in the operation of the system that the panel’s independence is maintained.
I turn now to the excellent contributions from Back Benchers, especially on this side of the House. My hon. Friend the Member for Stourbridge (Margot James) talked about charities benefiting from the Bill. It is very welcome that they will benefit as they employ 800,000 people. She also talked about the huge step of taking on the responsibility for that first employee. She is absolutely right about that and I am sure that all hon. Members will wish the very best to the lady who is opening the new floristry business in my hon. Friend’s constituency.
My hon. Friend the Member for Redcar (Ian Swales) was right to say the Bill offers real help to small businesses, and that taking on the first employee and worrying about how to pay their national insurance puts firms off growing. This is an important measure to support the next step on the employment journey.
The hon. Member for Edinburgh East (Sheila Gilmore) found it strange that we were looking at the Labour party’s national insurance policy. First, her party wants to be the next Government, so it should not be a surprise that we scrutinise its policies. Secondly, we are still having to deal with the legacy of the previous Government. All the tough decisions we take are framed by having to deal with that legacy. I should, however, congratulate her on being the only Labour Back Bencher to speak in the debate. She asked whether the employment allowance would create jobs. The Federation of Small Businesses expects 29% of small businesses to use it to boost staff wages, 28% to use it to employ additional staff and 24% to use it to invest in resources—it is welcomed by business organisations. It is estimated that 90% of businesses that employ people will take up the employment allowance. I am sure the hon. Lady will welcome businesses in her constituency taking up the employment allowance.
My hon. Friend the Member for Bedford (Richard Fuller) asked whether tax credits had been factored into the system. We do not believe that tax credits have been factored into this calculation, but the Office for Budget Responsibility considers the net impact of all Government policies on the economy. This policy has been subject to that scrutiny and I am sure we can discuss any further questions he has. He made a thoughtful contribution on the price of labour and the affordability of the living wage. I am sure that that is something we want to consider further. He is right to say that the employment allowance is a small but important start along the road of getting more people into employment. He was right about the encouragement of welfare dependency by the previous Government. By 2010, nine out of 10 families with children were reliant on the state. We want to make work pay. For example, our policy of raising the income tax threshold is all about ensuring that work pays and that people keep more of their earnings so they can spend them in a way that is right for them and their families.
Sheila Gilmore
Will the Minister reflect on the fact that many households are worse off as a result of the Government’s policies on tax and tax credits? Many families are not seeing any benefit—quite the reverse.
Nicky Morgan
Of course the Government recognise that living standards are under pressure and that household budgets are being squeezed, but it is interesting that the Labour party’s calculations on household income and wages and earnings never factor in tax cuts. We are factoring in tax cuts and ensuring that people keep more of their own money.
My hon. Friend the Member for Gosport (Caroline Dinenage) made a characteristically excellent speech. She talked about the support the Bill will give by extending the employment allowance to small businesses and charities, and mentioned that she had been a small business owner herself. It is noticeable that many Government Members have run their own businesses. She rightly said that we want to make Britain business-friendly.
My hon. Friend the Member for Skipton and Ripon (Julian Smith), who also ran his own business before entering this House, did a sterling job in delivering his speech despite having lost a contact lens—none of us noticed. He made an important point about communicating with small businesses via Her Majesty’s Revenue and Customs, something I am sure Ministers will bear in mind. He also talked about making the employment allowance simple to administer. As my hon. Friend the Exchequer Secretary said in his opening remarks, the employment allowance will be delivered through employers’ standard payroll software and HMRC’s real-time information system. There will be no need for a separate application form or an annual return to report deductions. There will, I hope, be no extra forms, which is good news for small businesses.
Finance Bill
Sheila Gilmore Excerpts(11 years, 3 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Cathy Jamieson
My hon. Friend makes an important point. New build is of course important, but so too is bringing existing dwellings up to modern standards and ensuring that families have decent accommodation. That is a useful point to which I hope the Minister can respond.
Given that the National Audit Office report was so damning, by no stretch of the imagination could the new homes bonus be called a success. If we couple that with the rest of the record I have described, we might even call it unforgiveable.
Then there is the Help to Buy scheme, which the Treasury Committee dubbed a “work in progress”. It took us some time to get any real answers from the Minister when we probed how the scheme would work in practice. The Opposition desperately want to help first-time buyers, but the Government are making the crisis worse. As I have said, affordable house building is down. Indeed, many commentators, including those the Government might well have assumed would be on their side, are concerned that the scheme is pricing people out of the market. The Government need to take action on the supply side by building more affordable homes, just as the International Monetary Fund has been arguing. I wonder whether the Minister agreed with the IMF when it said:
“There is a risk that, in the absence of an adequate supply response, the result would ultimately be mostly house price increases that would work against the aim of boosting access to housing.”
Let us take a look at how well the affordable rent programme has worked. Labour invested £8.4 billion in the three years from 2008 to 2011, while the Tories will invest just £4.5 billion in the four years from 2011 to 2015. The Government have cut the budget for new affordable homes by 60%. No doubt they will try to argue that they are getting more for less and that this is all about lean Government, but that is not borne out in reality. Affordable housing starts have collapsed—not stalled, not flatlined, but collapsed. The Government like to claim that they are going to deliver 170,000 affordable homes by 2015, but the NAO report confirms that despite the relentless spin, over 70,000 of those were commissioned by the previous Labour Government.
Sheila Gilmore (Edinburgh East) (Lab)
If it is about getting more for less, the result will be to push up rents, so these so-called affordable homes will not be affordable. That, in turn, will push up the cost of housing benefit, which will undermine many of the other claims the Government are making on reducing the housing benefit bill.
Cathy Jamieson
My hon. Friend makes an important point. She spent a long period working on housing issues in Scotland and taking forward a number of very positive policies in her previous life at Edinburgh city council, so I always listen carefully to what she has to say, and I hope that the Minister does the same. We have to ensure that policies have no unintended consequences. That is why, in this very mild-mannered amendment, we are suggesting a review to look more broadly at the impact of these policies as regards taxation and the Government’s record on housing, to produce information, and to put it in the House of Commons Library so that we can all be aware of it in looking to the future.
This Government appear to care more about spin than substance. Even with a record that shows they have failed on issue after issue, there is more, because their failure to deliver also extends to the NewBuy scheme. So far, 12 months in, the scheme has delivered fewer than 2.5% of the promised 100,000 mortgages. At this rate, they will not meet their target until 2058. In September last year, the Government announced £10 billion-worth of housing guarantees that were due to open for bids in April 2013. However, as the Financial Times reported recently, the plans are in disarray because no financial group has come forward to run the scheme.
On right to buy, the Government extended the discounts, promising one-for-one replacement. Notwithstanding the rhetoric, the reality is that since the extension of right to buy, 3,495 homes have been sold but just 384 homes have started to be built or have been acquired as replacement stock.
Jack Dromey
Let me spell out the facts: 2 million new homes; 1 million more mortgage holders; half a million more affordable homes; and 1.6 million social homes brought up to a decent homes standard after our Government inherited a £19 billion backlog in housing repairs. In the 1980s, the hon. Gentleman’s Government stood back and allowed a tidal wave of mortgage repossessions. In 2008, we took action to keep people in their homes and, through the kick-start programme, sustained the building industry against collapse and got Britain building again. I will compare that record favourably anytime to the miserable track record of failure of the hon. Gentleman’s Government.
Sheila Gilmore
Does my hon. Friend share my perplexity about the figure for the amount of homes lost that Government Members have come up with in recent debates on housing? If social homes are lost, they are lost through the right to buy. The Government have decided to increase the size of discounts and further encourage the right to buy, so they will probably lose more social homes than they build. We cannot compare net figures with gross figures.
Jack Dromey
Indeed, when the former Housing Minister, the right hon. Member for Welwyn Hatfield (Grant Shapps)—a man who gives hubris a bad name—launched the new enhanced right-to-buy campaign, he said that there would be one-for-one replacement. One for nine is what is happening. In addition, as freedom of information requests have just shown, Labour councils are building council homes at twice the rate of Conservative and Liberal Democrat councils.
Mr Raynsford
I entirely agree. As my hon. Friend the Member for Birmingham, Erdington pointed out, it is important to support the private rented sector, but it must be helped to do the job it does best, which is providing for people whose incomes are higher than the incomes of those who have traditionally depended on social housing.
The Government have created a problem for themselves by trying to use the private rented sector, with high rents, as a substitute for social housing, with lower rents. That is inevitably a recipe for more dependence on housing benefit. It traps people who are dependent on benefit, which is bad for them, and it increases the bill for housing benefit. What we need are policies that encourage both the growth of a private rented sector for people who can afford to pay a market rent for their housing and will not be dependent on benefit, and, in parallel, the revival of a social housing sector that meets the needs of those who require housing at sub-market rents.
Sheila Gilmore
Sometimes the issue of private rents is presented as though it involved people living in mansions, but many of those high private rents are actually charged in former council properties. Ironically, two tenants living next door to each other may both be receiving housing benefit, but the rents involved may be very different. People who are not living in mansions are simply having to pay high rents.
Mr Raynsford
My hon. Friend has made a fair point about the fact that the rise in rent levels means that many people are paying above the odds for accommodation that is not particularly good. However, that is a product of shortage. We need an increased supply of good-quality private rented housing which commands a market rent. There will be people who are perfectly happy to pay that rent, and to benefit from good-quality accommodation as a result.
As my hon. Friend the Member for Birmingham, Erdington said, we need to bear down on exploitative landlords who are letting substandard properties and charging above the odds for them. We also need to ensure that councils and housing associations provide an adequate supply of alternative housing for people who genuinely cannot afford to pay a market rent, and who would otherwise be left either dependent on housing benefit or homeless.
Finance Bill
Sheila Gilmore Excerpts(11 years, 3 months ago)
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Cathy Jamieson
The hon. Gentleman started by trying to pay me some sort of compliment, saying that I was making a powerful speech, but I simply do not accept his assertion that what outrages the public is politicians standing up to make passionate speeches on their behalf. The points that I am making are the very ones that have been made by my constituents, by the constituents of my hon. Friends and—I am sure—by many of the hon. Gentleman’s own constituents.
It is not good enough for Government Members simply to sit there and say, “What is the Labour party going to do two years from now?” when they are taking no responsibility whatever for what they are doing at the moment. It is a responsible position for us as the Opposition to say, “We understand that there will be an overall spending limit; that will be our starting point, but that does not mean that we have committed to it as an end point, and it does not mean that we are committed to doing exactly what the Government would do.” I am sure that as we move forward, a number of initiatives will be developed and outlined in greater detail.
Sheila Gilmore (Edinburgh East) (Lab)
Does my hon. Friend agree that what is going to annoy many of our constituents is that they were told three years ago that all the measures put in place then were for a purpose, that the deficit would be brought down by the end of this Parliament and that we were all in it together, when that has simply not happened?
Cathy Jamieson
Once again, my hon. Friend is absolutely correct. When we heard the spending review announcements last week, many members of the public recognised that this was a spending review brought forward not because it was part of some grand plan by the Government or something that they were always going to do, but because of the Government’s own failures on the economy—their failure to get the deficit down as promised; their failure to deal with borrowing; and, indeed, their failure to get growth back into the economy.
Sheila Gilmore
We have been asked that question over and over again. Had we been asked it two years ago, and had we based our answers on the projections that we were given by the Government, that answer would be very different from the one we would have to give now. That might well be the case in two years’ time.
Cathy Jamieson
My hon. Friend speaks words of wisdom. I have repeatedly said today, and it has been said by others, that while we have accepted that, come 2015 if we are in government, we will have to take as a starting point the overall spending plans that have been laid out, that does not mean that we would have made the same choices or that we would make the same choices in the future.
Chris Leslie
Obviously I believe every word that the Exchequer Secretary utters, because it would be unparliamentary to do otherwise, Madam Deputy Speaker, but I am asking for just a little bit more from him. I just want to see the detail that the Treasury has produced on the mansion tax proposition. It would be entirely possible for him to put that in the public domain. I am sure that even Liberal Democrats would like to see it and would find it of interest, as would other hon. Members.
Sheila Gilmore
Does my hon. Friend agree that we seem to have got involved in a debate that is certainly not the debate that the Deputy Prime Minister was engaged in as recently as February when he talked about the advantages of a 1% levy on properties over £2 million or the possibility of extending council tax bands? It seems a bit strange that he was in favour of that and, presumably, his hon. Friends are in favour of it. Perhaps that is what we should really be talking about.
Chris Leslie
On 24 February the Deputy Prime Minister said:
“Victor Hugo observed that it is near impossible to resist an idea once its time is come…He was again proved right as calls for a mansion tax, first proposed by the Liberal Democrats in 2009, gathered new momentum…I offer certainty: the mansion tax, or a version of it, will happen.”
We all know that when he is determined to get these things through, he is a very persuasive individual.
In clause 97—on page 57 at about line 27, for those who are interested—there is a table of the amount chargeable under the mansion tax for homes owned by companies, which is, in essence, what the Government are proposing. For properties worth between £2 million and £5 million, the annual chargeable amount would be £15,000 a year; for those worth between £5 million and £10 million, it would be £35,000; for those worth between £10 million and £20 million, it would be £70,000; and for those worth more than £20 million, it would be £140,000. That is the Government’s half-hearted attempt at a mansion tax. Thankfully, we have it in black and white—well, black and green—in this Bill. We tabled the new clause because we would like to see equivalent detail on how a mansion tax would work on a range of different widths of the 10p tax rate band, and then we can make a judgment about what change it is reasonable and prudent to implement.
My hon. Friends are right to start to focus on the other part of the pantomime horse. I am sure that the Liberal Democrats are sometimes in the lead on these issues in the coalition. They are in a very precarious position on the mansion tax. Having advocated it for so long, they have consistently found ways and means to vote against it whenever it has been presented to the House. I do not know whether the Liberal Democrat present in the Chamber, the hon. Member for Eastleigh (Mike Thornton), wants to say how he is going to vote today, but I live in hope. In a spirit of cross-party consensus, I hope that he will agree with his noble Friend Lord Ashdown, who warned those in his party before the last time they changed their minds on this issue that it would be “weird” for fellow Liberal Democrats to vote against such things. The Business Secretary said:
“It depends entirely on how they phrase it. If it is purely a statement of support for the principle of the mansion tax I’m sure my colleagues would want to support it.”
That was like the version of the amendment that we tabled previously. We did not get very far with it on that occasion, so this time we have tried a proposal that explicitly talks about passing on the revenue to those who need it most of all through the 10p rate of income tax.
The proposal has not been plucked from the air. Other jurisdictions have equivalent property charges at certain levels. I gather that in New York City, which is hardly a bastion of socialism, owners of properties worth more than $3 million—roughly £2 million—can find that they need to pay the equivalent of £22,000 a year under their form of mansion tax. The Treasury’s own documents have blown apart the argument that the Exchequer Secretary used to deploy, which was “This stuff isn’t workable; it would mean mass revaluations of council tax.” All those things have been pushed to one side as the Government propose their brand-new tax—the annual tax on enveloped dwellings. That is clear as the light of day. It has four bands, which suggests that it is entirely feasible.
The documentation on ATED states:
“The aim of the new annual charge is both to deter avoidance and to ensure the owners of high value residential property pay their fair share of tax.”
We can all go along with that. The document continues:
“The interest to which the charge will apply will be the freehold or leasehold interest”.
So far, so good. It also notes that the annual charge will be applied separately to the freehold and the leasehold and that the value of the property interest
“which will be relevant for the annual charge”
will be its value on 1 April 2012.
Geraint Davies
I am grateful for your expert advice, Madam Deputy Speaker. I will move quickly back to the mansion tax.
At the moment, foreign investors are buying mansions for capital appreciation. A properly worked-out mansion tax would not be a simplistic flat rate of £36,000. That was the Government’s arithmetic—it was laughable, wasn’t it? It was, “Oy, what yer gonna do? ’Ave I got this roight? We want £2 billion, we’ve got 55,000 mansions, so you divoid it in—that’s it, it’s £36,000, innit? That’s what you’re gonna do.” Obviously, that would not be the strategy. It would be to have an escalating rate according to capital values, which would change over time.
The system would obviously have to be refined and played with, and as my hon. Friend the Member for Nottingham East (Chris Leslie) pointed out, the impact would depend on the delivery. To a certain extent, £2 billion is just a ballpark figure. That is why he asked for more detailed figures. There are various factors driving demand for such properties, and they have a range of prices in the marketplace, so the likely yield would change over time. We therefore need to consider a sophisticated system. However, it is clear that it is the right direction of travel for the very richest to make a contribution at the most difficult times, to make work pay for everybody else.
It is clear from international examples, such as in New York city, which already charges a mansion tax on $3 million properties, that the tax is tried and tested. We can learn from our friends and colleagues in America how to apply it correctly. We should come together—I know that the Liberal Democrats have always been keen on the tax, and I hope that they will join us in the Lobby to support it.
Sheila Gilmore
When the debates took place on whether the 50p tax should be changed, Government Members were keen to tell us that we could make up a lot of what was lost, and perhaps make even more, through various forms of property taxation. They obviously had in mind changes in stamp duty, ways of dealing with companies that buy very expensive houses and so on. We were told how much better a property tax would be than a tax on income, and that we would get far more money from it. However, when we follow that train of thought and suggest that there is merit in considering a mansion tax, we are suddenly told, “No, no, that would be terrible.” We are told either that it would be terribly expensive, and people would not be able to afford it, or that it would simply be the wrong thing to do. It seems that when we come to talk about something real, the Government run backwards as fast as they can.
We have had some figures thrown at us that are not mentioned in our new clause. They come not from anything that we have said but from what the Government have said, yet we are being told that we have to justify them. We are being told that figures such as a £2 billion yield and 55,000 houses are correct, which will mean people having to pay £36,000. I do not know whether 55,000 houses is the correct number of those that would be affected, but I do know that at the moment, according to Zoopla, there are 3,847 properties on the market for £2.1 million or more in London. That is not all the properties of that price but just those that are for sale. On that basis the figure of 55,000 is perhaps a conservative estimate, but the whole debate has been based on that figure.
Mr Jim Cunningham (Coventry South) (Lab)
In relation to the mansion tax, does my hon. Friend not think that there is too much looking at London and not enough looking at how the rest of the country would fare? It often strikes me that debates on legislation apply only to London, even though they matter to the rest of the country. I agree with a mansion tax, but the Government are split on it—the Conservatives do not support it; the Liberals do.
Sheila Gilmore
We had certainly always understood that the Liberals supported a mansion tax, but every time the opportunity comes up to consider it, vote on it or even speak about it, they seem conspicuously absent.
The differences between London and the rest of the country, on property prices and other issues, are a serious matter. The gap is increasing, and we should all be seriously concerned about the impact of that on the whole UK. It has happened during nearly all previous recessions, after which Governments of all parties have sought to restore some balance and encourage economic growth in places outside the south-east. We always seem to be running to stand still. The situation is serious, and we should consider it.
Jobs and people are being sucked southwards in quite a big way, and local government finance now works in such a way that there are huge differences. In many areas, for example the north-east of England, the loss of public sector jobs and income for local government means that there are no jobs for people who have just qualified as teachers, for instance. All the jobs are in the south-east. We should be worried about that. We should not wait for three, five or 10 years and then say that we have to do something to redress the balance.
Property taxes do have significant advantages over income taxes. We hear a lot about the mobility of income. One argument that has always been made against raising income tax rates—it was made against the 50p tax rate when it was introduced and has been made in favour of reducing it—has been that people will leave the country or not come here. It has been argued that, faced with that tax, people will simply move elsewhere and we will not attract people here. The one advantage of a property tax—it has been an advantage of council tax and its predecessor the rates—is that it is much harder to evade or avoid, because the property is actually there. There is a significant place in our fiscal balance for property taxation.
Chris Leslie
My hon. Friend is making a powerful point about the mansion tax. Has she followed the Government’s argument on clauses 97 and beyond, which are about the annual tax on enveloped dwellings? Has she noticed over the past hour that Government Members have not made a single argument against the administration and operation of a mansion tax? All that they can come up with is particular cases and arguments about how many properties will be affected. The administration of a mansion tax would not involve changes to council tax or other such matters. The annual charge could be used as a broad foundation of a mansion tax.
Sheila Gilmore
I thank my hon. Friend for that helpful steer towards the point that it might not be as difficult as some people assert to implement something of that kind. The advantage of property taxation is that it is more solid than income taxation, as we have clearly seen. Worryingly, the biggest reason some people give for why the 50p tax rate does not raise as much as they thought it would is that people were able to move income forward and back. Income is quite mobile.
Geraint Davies
Using that argument, people have said, “Oh well, we’ll raise more with a 45p rate than a 50p rate” yet my hon. Friend will know that year on year, bankers’ bonuses went up 64%. Does she agree that bankers were moving their income from a 50p year into a 45p year, and that if we had kept that rate up we would have raised that money? We should have done that as well as the mansion tax.
Sheila Gilmore
It certainly sounds on the face of it as if some sort of income arrangement was possible. For a lot of us, including people on PAYE, that would be difficult to do, but it is easier for other people. I have advocated not running away from a tax on property too easily. Not long ago we had that debate at some length in Scotland after a proposal by the Scottish Government to move to local income tax—again, they decided not to proceed with that. Some of the problems with local income tax concern the mobility of individuals’ incomes and the fact that some wealthy people might be able to avoid paying that tax. Those of us in political parties in Scotland that opposed moving to local income tax argued strongly the advantages of a property tax. Interestingly, the SNP Government, from 2007, backed away from their proposal in the face of those arguments.
Geraint Davies
I am grateful for my hon. Friend’s enormous generosity in giving way. She may know that in the past two years, the top 10% have seen their income rise by 5.5% each year—that is 11% in two years while everyone else is being squeezed. The rich are getting richer and richer, and the Tories are cutting the top rate of tax. Given that people are buying bigger and bigger houses with the great huge buckets of money they are getting, is it not right that they should face a mansion tax?
Sheila Gilmore
I was looking through the property pages of The Sunday Times yesterday, and interestingly it was full of descriptions about valuable houses and how property prices are rising. Since property prices at the top end were rising so much—driven partly by investment from abroad—it was argued that that would be good for everyone because it would lever up property prices for all. The argument is that high property prices are always beneficial, but those who tried to buy homes up and down the country long before the credit crunch know that high property prices are a double-edged sword because many could not get on the property ladder at all. In many parts of the country, not just in London, the amount that must be earned to buy even an average-priced house is more than people can earn in that area.
Mr Jim Cunningham
As property prices go up, rents also start to go through the roof. That has been reflected up and down the country and it will make it more difficult for people to rent property.
Sheila Gilmore
There has undoubtedly been a huge increase in the private rented sector. When I was elected as a councillor and became interested in housing, all the housing authorities and textbooks said that the private rented sector had become a residual sector and was disappearing. It might perhaps be there as a niche for young professionals or students, but it was not expected to be an important part of the housing mix. Within a short period—probably 10 to 15 years—we have seen an explosion in the private rented sector and in private sector rents. That is another issue for young people, particularly those who might wish to settle permanently. They cannot afford to buy a home because house prices are too high or they cannot get a mortgage. In the meantime they pay very high rents, which makes it difficult to save. I am not entirely convinced that high property prices are always a great bonus, and we should be looking for a more stable property market.
Geraint Davies
I am grateful for my hon. Friend’s enormous generosity in giving way again. Is she aware—I am sure she is—that property prices in London have grown so much that some local authorities have greater asset value than the entirety of Wales? Therefore, the mansion tax is a sort of cap—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Mr Davies, you were right when you said that you have intervened a lot. I do not mind you intervening but please do not take up so much time that you are almost making a speech.
Sheila Gilmore
I was not aware of the figure to which my hon. Friend the Member for Swansea West (Geraint Davies) refers, but if that is the case, it is a fascinating reflection on the huge differences between different parts of the country. If we do not do something about that soon, we will regret it in the near future.
Labour Members are constantly berated about the fact that we—the previous Government—abolished the 10p tax rate. At the same time, the current Government do not seem that keen on reintroducing it. We are accused of changing our mind, but it now appears that the Government are changing theirs. When the 10p tax rate was abolished, they attempted to make great political capital out of the issue—fair enough; that is what politics is about—and they have done so since by saying that it was a bad thing for us to have done and should not have happened. Now we are talking about reintroducing a 10p tax rate, and suddenly that is a bad thing to do. For people in low-paid employment—of whom there are many—there are advantages in having a more graduated taxation system that enables them to build up disposable income as they go. As we know, disposable income has fallen for many households in this country, which is a serious matter.
Looking specifically at the new clause, I hope it is not unreasonable to suggest that we consider and study such a measure. It perhaps prompts the question of why the Government are so against it, because if they are sure that a study would show that it would not be practicable or successful, there is nothing much to lose. From what the Minister said during an intervention, it sounds as if the Government may have already done some work on the provision, and on that basis, it should not be so difficult. People in the country want to see whether the measure could be a feasible means of ensuring that those who have asset wealth pay their fair share.
Sheila Gilmore
And Scottish farmers, I am sure, and so on.
A mansion tax—I think my colleagues on the Front Benches would agree—is about residential property, not business property, which is already taxed in various ways. Obviously, a whole raft of taxes are appropriate for businesses, and that would be the best way to deal with the issue, rather than a mansion tax. If a mansion tax is a way of ensuring that we can appropriately tax wealth, we should consider it very seriously, given that it is probably a better basis for taxation than income, which people can move around—I have yet to see a house be dragged offshore. That may not be impossible, but in this country we generally do not put houses on wheels and move them, unlike in the United States—at least, so we see in the movies. A mansion tax would be a way to help the low-paid, through the introduction of the 10p rate.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
My hon. Friend has made a strong speech so far, but is she—as I am—completely bemused by the position of the Liberal Democrats? In February, the Deputy Prime Minister said:
“My approach is simple: taxes on mansions; tax cuts for millions.”
It is more like no taxes on mansions and tax cuts for millionaires.
Sheila Gilmore
I suspect that that policy got lost in the negotiations that are part of a coalition. I have also heard the Deputy Prime Minister say that he would flex his muscles on all kinds of issues, the most recent being the number of children that could be cared for. The Deputy Prime Minister was keen to tell the country that he had flexed his party’s muscles and prevented that change from being introduced, but he has not flexed them on the mansion tax. Either it is possible for the junior partner in the coalition to flex its muscles successfully or it is not. There are other areas in which the Liberal Democrats have seemingly not thought it necessary to use the muscle they claim to have.
In relation to the mansion tax we will doubtless hear a lot about income-poor people—how will they be able to afford it? Would we expect them to sell their homes or move elsewhere? We cannot have that debate, however, without talking about the bedroom tax. A constituent of mine is 59 and has recently been made redundant. She is looking for work, but with a retirement age of 63 she will not easily find another job. She has been living in her home for 18 years, but it has a relatively small single second bedroom. The kitchen opens off the living room, which militates against taking in a lodger—one of the things people have been advised to do. Her current income is less than £72 a week. From that, she is paying £14 towards her rent as a result of the bedroom tax. That is a significant proportion of her income.
My constituent does not want to leave her home, as she has put a lot of effort into it and she lived there with her husband until she was widowed about four years ago. She has looked into the possibility of moving, but there is a shortage of one-bedroom homes in the city. Two weeks ago, 23 one-bedroom homes were advertised—the total from all the social landlords in the city, the housing associations and the council. Those homes attracted varying numbers of applications, but the lowest was 45 and the highest was 370. Four had more than 200, and another seven had between 100 and 200. My constituent’s prospects of being rehoused are, therefore, not great. Our city also has a large number of people waiting for this kind of housing who are living in expensive private rented housing or temporary accommodation that costs far more in housing benefit than the rent being charged to my constituent.
People like my constituent are being asked to make some serious sacrifices, and they do not have an easy choice. It is not easy to downsize, because there is nowhere to downsize to—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I am sure that the hon. Lady must be getting to the point at which she links her remarks with the new clause. I am struggling to see the link at the moment.
Sheila Gilmore
The link is that some would argue that a mansion tax would be oppressive on people who may live in a house that is valued at more than £2 million, but have a very low income, and they should not be expected to find that payment. As has been suggested to my constituent and others, such people may wish to consider taking in a lodger, releasing some of their equity or downsizing. I suspect that downsizing with that type of property would be easy. I would hope, therefore, that such arguments would not be made against a mansion tax. I hope that the Government will support the new clause, because if their arguments are as strong as they say, they will be able to disprove our case very quickly.
Chris Evans
I feel as though this is part two of my speech. I listen to Government Members, and I hear the sound of the creation of two Britains. We have the Britain of the elite who are protected by the Government, who bring about tax cuts for the most affluent in our society. Then we have the other Britain—people who are playing by the rules but have seen their benefits squeezed, their tax credits cut and their council tax benefits cut. When they go shopping, their bills have increased because of the VAT increase. Nor is this society encouraging work, because work does not pay. Those people in work can be reliant on the benefits system, but the policies of the coalition Government are skewed against them—the vast majority of people in this country who are playing by the rules and want something better from their lives.
I feel sorry for the hon. Member for Eastleigh (Mike Thornton), who has not been a Member for very long. He is in his place alone as we challenge the Liberal Democrats on their approach to the mansion tax. As on tuition fees, VAT, tax avoidance and the tax cut for the most affluent, what they said in opposition, when they sat on this side of the House with no hope of being in government, was a different kettle of fish from what they say in government.
I can never clear my mind of the image of the Deputy Prime Minister, in a party political broadcast, implying—I do not wish to use unparliamentary language—that anyone who was not a Liberal Democrat was a teller of mistruths. Students remember that party political broadcast saying that tuition fees would not go up under any Liberal Democrat Government. It was a different matter when they found themselves in government.
In February, the Deputy Prime Minister said:
“I continue to believe we should ask for what would be a modest contribution from the very wealthy, either in the form of a Mansion tax—a 1% levy on properties worth more than £2m—applied just to the value over and above £2m; my preferred option. Or, alternatively, we could introduce new council tax bands at the top end, again, affecting properties worth over £2m…Nothing could do more to demonstrate a commitment to greater fairness in our tax system. I will continue to make this argument, in this Coalition and beyond. My approach is simple: taxes on mansions; tax cuts for millions.”
What did the Deputy Prime Minister do in the coalition? Did he sit there and fight for a mansion tax? No, the evidence—and we have to go on the evidence—is against it. In every major decision that the coalition has made, many of them unpopular, the Deputy Prime Minister has been found wanting. Let me explain something to the hon. Member for Eastleigh, who, in fairness, is the only Liberal Democrat Member who has sat through this entire debate. If that is who his leader is—if that is what his leader is about—he should ask whether the Deputy Prime Minister is equipped to lead the Liberal Democrats into the next election.
Investing in Britain’s Future
Sheila Gilmore Excerpts(11 years, 3 months ago)
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Danny Alexander
There is a broadband plan in Northumberland that has been negotiated by the local authority with the supplier, funded partly by national Government and partly by local government. Today’s announcement is about extending broadband to reach 95% of the population of Northumberland and to work with the industry to find ways to get broadband, whether mobile or 4G, to 99% of the population. We will keep my hon. Friend updated on that.
Sheila Gilmore (Edinburgh East) (Lab)
I fear that the Chief Secretary does not really understand housing finance. The homes to be built from 2015 have a subsidy level of under £20,000 per unit, and that is how he is able to announce that there are suddenly double the number that there might otherwise have been. The problem with that, as he knows full well, is that it requires much higher rent levels, and that will have a knock-on effect on the housing benefit budget for years into the future. Is that sensible?
Danny Alexander
The move from social rents to affordable rents for homes newly built by housing associations is a right and fair way to ensure that there is a balance between the subsidy given to the individual and the capital subsidy given to the builder of the house. It allows us to build many more houses for the amount of money that we have available, and the hon. Lady should be grateful for that.
Spending Review
Sheila Gilmore Excerpts(11 years, 3 months ago)
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Mr Osborne
I think that they have better economic prospects than they did under the previous Government.
Sheila Gilmore (Edinburgh East) (Lab)
The best way to reduce the housing benefit bill is to tackle the structural reasons for the rise in spending. What steps has the Chancellor taken in the statement to ensure that that happens? Not by building houses at 80% of market rent, I suggest.
Mr Osborne
I agree with the hon. Lady, as one of the things that we need to do is build more homes, and that is what we have set out to do. The housing benefit budget ballooned under the Labour Government, and we have taken action to curb it. If she is against any of our housing benefit reforms she can always let us know. As far as I can see, the Labour party has not made a commitment to reverse any of them at the moment, but who knows, that might change.
Economic Growth
Sheila Gilmore Excerpts(11 years, 4 months ago)
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Sheila Gilmore (Edinburgh East) (Lab)
The Chief Secretary and his party leader have chosen to flex their muscles on a couple of issues, including Europe and child care ratios. Can we therefore assume that they support all the other unfair measures on which they have chosen not to flex their muscles, such as the bedroom tax and people losing contributory employment allowance after a year?
Danny Alexander
I have to say to the hon. Lady that I think the fact that we inherited a welfare system where for too many people it did not pay to work is one of the greatest scandals of Labour’s time in government, so I make no apology whatever for reforming the welfare system and putting in place a universal credit where everybody on benefits knows they would be better off in work. That is the right thing for the country, and I am happy to support it.
The measures in the Queen’s Speech will also help all those workers who want to get on and plan for their futures. Our changes to the single-tier pension will provide millions of people—particularly women with broken work records, the low paid and the self-employed—with a firm foundation to support their saving for retirement. The single tier will be implemented from April 2016, and I am sure Members will join me in congratulating the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb), on his excellent work in bringing this policy forward to this stage.
The Queen’s Speech recognises that if we want our economy to succeed in the 21st century, we need to make significant changes to our business environment. We will not succeed in the 21st century if our businesses are slowed down by regulation, which is why we are taking steps through the deregulation Bill to remove excessive red tape from small businesses and to repeal legislation that no longer serves a practical use.