Oral Answers to Questions

Simon Danczuk Excerpts

Tuesday 25th June 2013 Commons Chamber

The Chancellor of the Exchequer was asked—

[Simon Danczuk (Rochdale) (Lab)]

1. What recent assessment he has made of the effect on economic growth of the level of bank lending to businesses.

[Mark Tami (Alyn and Deeside) (Lab)]

11. What recent assessment he has made of the effect on economic growth of the level of bank lending to businesses.

[The Chancellor of the Exchequer (Mr George Osborne)]

The Government are committed to creating a banking system that supports the British economy, rather than being supported by it. Two months ago, the Government and the Bank of England extended the funding for lending scheme, with a particular focus on small business lending. Last week, the Office of Fair Trading announced its review into how to make that lending more competitive, and at the Mansion House, I announced a plan for taxpayer shareholdings in RBS and Lloyds that will return these banks fully to the private sector, get value for the taxpayer and support the economy.

[Simon Danczuk]

Last Monday, I met businesses at Greater Manchester chamber of commerce and heard how banks were often failing them, thereby having an adverse impact on business performance. Does the Chancellor accept that bank lending to businesses has fallen over the past year and that the Government’s funding for lending scheme has totally failed businesses in Greater Manchester and the United Kingdom?

--- Later in debate ---

[Mr Gauke]

There is a substantial saving to the Exchequer through child benefit. It was not that long ago when the Leader of the Opposition said that millionaires should receive child benefit because

“it’s a cornerstone of our system to have universal benefits”.

It appears that that is no longer the case, although all we have is briefing. On winter fuel payments, the Prime Minister made it clear that they would continue in the course of this Parliament and we will fulfil that commitment.

[Simon Danczuk (Rochdale) (Lab)]

T1. If he will make a statement on his departmental responsibilities.

[The Chancellor of the Exchequer (Mr George Osborne)]

The core purpose of the Treasury is to ensure the stability and prosperity of the economy.

[Simon Danczuk]

In his March Budget, the Chancellor boasted that Government borrowing fell last year. Will he confirm that figures published by the Office for National Statistics on Friday show that Government borrowing last year actually did not go down, but went up?

[Mr Osborne]

The Office for National Statistics revised down borrowing for 2010-11, 2011-12 and 2013-14; that is actually good news.

Homelessness

Simon Danczuk Excerpts

Tuesday 12th June 2012 Westminster Hall

[Simon Danczuk (Rochdale) (Lab)]

I thank my hon. Friend the Member for Westminster North (Ms Buck) for securing this important debate on homelessness.

I have two basic reasons for wanting to speak in the debate. First, I have some knowledge of the subject, which I will touch on in a moment. Secondly, as has already been indicated, the increase in homelessness both locally in Rochdale—I will come to that—and across the country will have a devastating effect. As my hon. Friend pointed out, there is no doubt that the situation is getting worse.

I worked as a social researcher for about 10 years from 1997 until 2007. I started off with the Big Issue in the North, which is a homelessness agency and charity. From there, I went on to do lots of homelessness research projects across the country for a variety of agencies; for example, Crisis, the Rough Sleepers Unit, Shelter and local authorities such as Camden, Islington and many others. There is probably not an elected Member who has visited more homelessness projects than me right across the UK over a 10-year period.

I mention that because I made three significant observations while doing that research. First, it will not surprise anyone who has an interest in the subject to hear that homelessness is not just about housing; it is about drug treatment, mental health, alcohol and a whole range of different issues. We must not forget that. As we are now seeing, housing—the number of houses, flats and different types of accommodation provided—is critical, but it is not the only issue. That is my first observation.

From the research I have conducted, my second observation is about clustering. I have seen very little on that subject, but the clustering of homelessness services in a particular area for historical reasons is significant. Let me give three examples. In south Yorkshire—with the exception of Sheffield, which has many homelessness services—Doncaster has a lot of homelessness services, while Barnsley and Rotherham have very few. So Doncaster is an area where there is clustering in the provision of homelessness services. Another example is Blackburn, where there is a disproportionately high number of homelessness services. However, in Accrington, Burnley and other surrounding towns, there are fewer such services. Rochdale is another place where there is a high proportion of homelessness services, whereas the number in Bury and Oldham is disproportionately low.

The clustering of homelessness provision is important. I am not being partisan in saying that; I am making an important observation. We should either celebrate the fact that those towns and cities are providing homelessness services, hold them up as beacons and give them additional resources because they are carrying a disproportionate responsibility for homelessness in that sub-region, or we should try to ensure that local authorities who are not doing as much increase provision. It should be one or the other. That is an important observation that people have tended to miss in such debates.

By coincidence, I started social research into homelessness in 1997 and continued right up to 2007. My third observation is that, as has been pointed out, there is no doubt that the Labour Government were very successful during that time. First, they tackled the critical issue of rough sleeping. They appointed Louise Casey, who is a great civil servant, to deal with the problem. I am pleased that the Government have chosen her to lead the challenge on troubled families.

The Labour Government dramatically reduced rough sleeping, and they then moved on to the issue of bed- and-breakfast accommodation. Through a systematic approach, homelessness was reduced by 70% during the Labour Government. I am not being partisan about it; those are the facts. I studied the subject during that time and we could see homelessness reduced to the point that the Labour Government were moving on to try to address other issues, such as people in temporary accommodation and bed and breakfasts. As with unemployment, some people will always fall into homelessness. There is some inevitability about that, and people will inevitably find themselves sleeping rough on the streets. However, we can reduce the problem. The Labour Government did a fantastic job of reducing homelessness to somewhere near the lowest level it could be, and we should give them credit for that.

There is no doubt that homelessness is increasing again. The statistics and the facts show that we are going backwards. In 2011, homelessness increased by 14% and rough sleeping by 23%. As I mentioned, the number of houses being built is a significant problem. My hon. Friend the Member for Westminster North mentioned the Homes and Communities Agency figures. There has been a 68% reduction in the building of affordable houses in the past financial year. That, in addition to the cuts and the Government’s inability to get the economy going, is absolutely devastating news for the homeless.

I talked earlier about other factors that push people into homelessness. There has been an increase in unemployment, lower living standards and house repossessions, all of which move people toward homelessness. As a consequence, the number of people who are homeless and sleeping rough is increasing. My hon. Friend mentioned benefits. This morning I spoke with Dennis Skelton, the co-ordinator of Petrus, a Rochdale-based homelessness charity. Shared-room rents and the reduction of housing benefit are a massive concern, and perpetuate the problem of increased homelessness.

Homelessness is not just a national issue; cuts to local government and related agencies are having a significant impact. Drug treatment provision is being cut. Provision for mental health services, hostels and day care centres is being stretched. Homeless Link’s most recent survey shows that the number of clients using homeless day centres has risen by nearly a third. On average, there are 22% fewer empty beds in emergency accommodation for homeless people, per night. Charities, voluntary groups and other agencies that support and provide assistance to homeless people are being affected by the cuts. We are seeing a return to the 1980s, with more people sleeping rough, more people going into bed and breakfast, and more people sofa-surfing. That is the reality of how the Government’s policies are affecting people at the bottom of the pile who are struggling and finding things really difficult.

We should not politicise or play politics with homelessness. In May 2008, before he was Prime Minister, the right hon. Member for Witney (Mr. Cameron) said:

“I think that it is simply a disgrace that in the fifth-biggest economy in the world that we have people homeless, people sleeping on the streets, sofa-surfers, people in hospitals.”

He said it was a disgrace. The problem with playing politics with this type of issue is becoming a hostage to fortune. He made those comments when the previous Government had taken radical steps forward to reduce homelessness and it was probably at an all-time low. In 2012, as Prime Minister he is overseeing a dramatic increase in homelessness, yet he is doing very little to stop the problem. In fact, all indications suggest that it will get worse. There are no indications that the problem will stop.

According to research undertaken by Shelter last year, my constituency of Rochdale is the 10th-worst place in the country for repossessions. In December 2010, 53 people presented to the local authority as homeless. In December 2011, the number had gone up to 160—a 200% increase, and the biggest rise in Greater Manchester. We are seeing real problems. Thirteen local agencies that provide homelessness services have had their contracts cut, and their services are being reduced. More people going into bed and breakfast in Manchester and Burnley are being placed outside the borough.

I am not saying that the council has got it exactly right. It has had a very difficult time, with one of the worst settlements from central Government, compared with some of the more leafy suburbs in Conservative-controlled local authorities in the south of England. Where we have poverty and difficulty, we have seen some of the worst cuts to local authorities; Rochdale is an example. The council has removed the ring-fence from the Supporting People programme budget and it has been salami-slicing homelessness budgets, so it has not got it exactly right. I am happy to be critical of the local authority—even a Labour-controlled authority; it should have awarded more contracts to local charities, which have a better grass-roots understanding of homelessness, yet some contracts have been awarded to national homeless charities. That is a mistake, but there is no doubt that Rochdale council, like many other local authorities, is operating in an exceptionally difficult climate that has been created by the Government. If the Government are genuinely serious about tackling homelessness—there are no indications yet that they are—they have to do something radically different to get on top of the issue.

Changes to the Budget

Simon Danczuk Excerpts

Monday 11th June 2012 Commons Chamber

[Mr Gauke]

I am grateful to my hon. Friend for his comments, and I am sure that his constituents are grateful to him for the work he has done on this matter.

[Simon Danczuk (Rochdale) (Lab)]

What estimate has the Minister made of the damage done to the bakery industry as a result of announcing a policy that has now been reversed?

[Mr Gauke]

Given that the policy does not come into effect until 1 October, we do not think any damage will have been done through the policy. We think that addressing the anomalies is the right thing to do, and we have taken the opportunity to improve the policy we initially announced.

Hot Takeaway Food (VAT)

Simon Danczuk Excerpts

Wednesday 23rd May 2012 Westminster Hall

[Simon Danczuk (Rochdale) (Lab)]

May I say “Well done” to the hon. Member for St Austell and Newquay (Stephen Gilbert), who I will call my hon. Friend, for securing this important debate? He has made an exceptionally intelligent contribution to a significant discussion.

I will speak only for a couple of minutes, but I want to register my concerns about the tax under discussion, and touch on the impact that it will have on the high street and hard-working families. As my hon. Friend the Member for North Tyneside (Mrs Glindon) pointed out, it is possible that 300 shops will close as a result of this proposal. The current rate of retail vacancies in shops across our high streets stands at around 14%, and I cannot help thinking that this proposal will have a further impact.

As has been said, we want more bakeries and a diverse range of shops across the high street, yet this proposal puts at risk retailers such as Greggs and Greenhalgh’s in my constituency, as well as independent shops such as Wells bakery on Oldham road in Rochdale, which is a fantastic bakery that makes the best meat and potato pie that people can get their hands on. We want a retail mix and vibrancy, but this proposal creates a real problem and puts a burden on those businesses. It comes on top of the 5.6% increase in business rates—the largest increase in 20 years—that retailers and other businesses have experienced since it was brought in last September and applied this financial year, and we are adding further taxes to that.

In the context of diversity, one point that has not yet been raised is the impact of this tax on other segments of the retail mix, in particular Asian sweet centres. A number of such places in my constituency, particularly on Milkstone road, sell not only Asian sweets but samosas and pakoras. Will the Minister say whether this tax burden will also apply to those products? I have no doubt that my constituents will be interested to hear whether this is also a samosa tax, as well as a pasty tax.

Finally, let me look at the impact of this tax on hard-working families, because I get the impression that the Government do not understand ordinary working people’s lives. Yesterday, the Deputy Prime Minister spoke about snobbery in education, but I believe that snobbery is also attached to pies, pasties and samosas.

Members might be aware of a lady from Rochdale called Gillian Duffy who challenged my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown) during the last general election. Gillian is a very good friend of mine, she occasionally bakes me a cheese and onion pie, which I enjoy. For some unknown reason, The Guardian newspaper got hold of that information and ran a story about it, ridiculing me for eating Gillian Duffy’s cheese and onion pies, as though that was in some way inappropriate. People are snobbish about the fact that people, perhaps in northern towns or in Cornwall, like and enjoy pies and pasties.

[John Mann]

They are all sushi eaters.

[Simon Danczuk]

That’s right; absolutely. In reality, pies, pasties and samosas are part of the staple diet of ordinary people, and we should not forget that. The Government are placing an additional burden on hard-working families. People in Rochdale I speak to think that this tax is absolutely absurd. They laugh at the Government and find it peculiar that such a tax would be applied. It feeds the public perception that the Government just do not get it and are on a different planet, and I urge them to drop these proposals.

--- Later in debate ---

[Mr Gauke]

I am grateful for that intervention. There is a carve-out in this measure that relates to bread. My hon. Friend refers to pretzels made from a dough mixture. HMRC will provide guidance on the definition of bread, so that matter will be covered once final decisions have been made.

Before I turn to some of the arguments against the proposal, I should like to step back and remind hon. Members of why we have proposed this change. As I announced to the House on 18 April, we extended the consultation period until last Friday in the light of the responses received and I have, of course, been listening to the contributions to this debate and will ensure that they are taken into account in the Chancellor’s decisions.

Ensuring that VAT will apply to the sale of all hot food—to the extent that it does not already do so—is one of a series of VAT measures announced in the Budget designed to make the VAT system fairer to all traders, and to make it easier to administer and comply with.

The current rules on the VATability of hot takeaway food have been made particularly complex and unfair by a patchwork of different legal decisions over the decades, as my hon. Friend the Member for St Austell and Newquay pointed out. VAT has always applied to food consumed on the supplier’s premises, notably in restaurants and cafes, and was extended to hot takeaway food in 1984. The definition of hot takeaway food in the 1984 legislation is that the food

“has been heated for the purposes of enabling it to be consumed at a temperature above ambient air temperature”

and that it

“is above that temperature at the time it is provided to the customer.”

There have been repeated efforts since the 1980s to chip away at this boundary. A number of businesses have argued in litigation that, although the food they provide to their customers is hot and is taken away, it should not be taxed as “hot takeaway food”, but it should instead be zero rated.

Some have argued that, in heating the food, their intention was not to provide their customers with food to be eaten hot, but to follow rules of hygiene, to finish the cooking process, to provide evidence of freshness, to create an aroma, or to improve appearance, crispiness or texture of the product. Such arguments have not always been successful, but where they have been, they have allowed some businesses to secure VAT-free treatment for a range of hot food products such as hot rotisserie chickens, meat pies, pasties and panini. However, other businesses have continued to apply VAT to the similar hot food products that they sell. They have accepted, or the courts have ruled, that their intention is to heat their food products so that their customer can eat them hot. Under the current rules, the VAT rate applied to hot takeaway food depends on the particular supplier’s purpose in heating the food.

In reference to a point made by my hon. Friend the Member for Montgomeryshire (Glyn Davies), a small independent fish and chip shop will have to charge 20% VAT on its hot chicken, but a major supermarket will argue that its rotisserie chickens are zero rated. One baker who keeps his sausage rolls in a hot cabinet to provide his customers with a hot snack will charge tax, but the baker next door who also keeps them hot and argues that this is to maintain an appealing aroma will claim that they are zero rated.

The current situation is unfair, and it is right that we seek to change it. There was some agreement on that point from at least some hon. Members. That is why we are introducing new rules to ensure a level playing field. We have proposed the removal of the subjective element of the zero-rate definition, which has led to these anomalies, to provide more consistency in the taxation of hot food. As I mentioned earlier, we are adding a simple carve-out that bread, irrespective of its temperature, will not be liable.

[Simon Danczuk]

rose—

[Mr Gauke]

I will give way, but I am keen to proceed quickly.

[Simon Danczuk]

Will the Minister address the point that I made about the samosa tax issue?

[Mr Gauke]

On that point, our proposal is that if food is sold at above ambient temperature, it is standard-rated, which is the same as takeaway food from Indian restaurants.

We have heard a number of arguments about why businesses will find it difficult to apply the test on ambient temperature. The test to determine whether takeaway food is hot is not new; it has been in place since 1984. However, I accept that, in many cases, suppliers do not need to ask themselves that question because they accept that their takeaway food is meant to be eaten hot and thus they pay tax even if, on a handful of occasions, the food may not actually be hot. They may make use of one of the other arguments about the purpose of the heating, and thus do not pay tax, even if the food is hot. However, the test is reasonably straightforward and will be policed in a pragmatic way.

Some hot food will have been kept hot or provided straight from the oven and will obviously be standard-rated under our proposals. In most other cases, people know when something is hotter than the air around it. A leading high street bakery chain, which has campaigned against these changes, said on its own website that customers who want a hot sausage roll should test whether the sausage roll is hot enough by feeling the temperature through the bag.

It is important to inject some common sense into this potentially trivial debate about food that at one moment is hot and at another is at ambient air temperature. We are not expecting staff to take detailed temperature readings every time they sell a pasty. HMRC will take a pragmatic approach and provide businesses with guidance, taking into account businesses’ responses on how to implement the change.

Amendment of the Law

Simon Danczuk Excerpts

Monday 26th March 2012 Commons Chamber

[Simon Danczuk (Rochdale) (Lab)]

Much has been said over the past few days about how the Budget will adversely affect pensioners, those on middle incomes and the less well off. There is no doubt that the vast majority of people living in Rochdale will be worse off, rather than better off, as a result of the Budget. But it is not just individuals who will be worse off; there is no doubt that businesses, especially small businesses, could have received much more assistance from the Chancellor. I want to concentrate on that subject this evening.

We are all aware that small and medium-sized enterprises create the most jobs in our economy. Given the present record levels of unemployment, I would have hoped that the Chancellor would do more to help small businesses, rather than just the larger corporations. The Government’s actions to stimulate the economy so far have failed, and if the Office for Budget Responsibility is to be believed, little in this Budget will improve growth. It is predicting growth of 0.8% this year, as opposed to its initial prediction of 2.5%. The cut in corporation tax might well encourage additional investment by larger corporations, but it will do little, if anything, to help SMEs to grow their businesses and create jobs.

I accept that there is some potentially good news in the Budget. Tax simplification for small businesses could work, enterprise loans for young people sound promising, and the expansion of UK export finance is a good thing in principle.

[Jim Dowd]

My hon. Friend mentions tax simplification. What does he make of the tax simplification for pensioners?

--- Later in debate ---

[Simon Danczuk]

My hon. Friend is absolutely right to mention pensioners and the disadvantages to them of the Chancellor’s proposals.

The Government could get things right for small business by simplifying the processes, but none of those proposals will be enough to stimulate the economy. It is also fair to say that a number of this Government’s initiatives to help business have not worked. It has been pointed out that Project Merlin has failed to hit the mark, for example. It failed to provide £10 billion of investment for SMEs. The regional growth fund continues to fail to pay the money that it should be awarding. There is nothing to suggest that the Government initiatives—of which there are certainly many—will actually work. The Budget has also done nothing to allay the fears expressed by small businesses about fuel duty and fuel costs, which continue to go up. Related to that are the Government’s proposals to privatise the road network, which could place further costs on businesses.

Probably one of the biggest disappointments in the Budget relates to business rates. This April, they will increase by 5.6%, the biggest increase in 20 years. Business rates are the elephant in the room—one of what I would call the big three: costs to businesses are wages, accommodation and business rates. Greater Manchester chamber of commerce recently carried out research which showed that the 5.6% increase will add £54.4 million to the business rates that businesses across the region will have to pay, which equates to 2,407 jobs. In Rochdale, businesses will have to pay an extra £3.3 million, over and above what they are already paying, which will equate to 141 jobs. This is a real concern for local economic growth.

It is therefore not surprising that the British Retail Consortium, the British Independent Retailers Association and the British Chambers of Commerce are all calling for the hike in business rates to be revised downwards. It is no coincidence that retailers in particular are calling for reform of business rates, because they are the ones that carry the greatest burden. It is also worth pointing out that it is retailers that provide much of the employment for young people and women, so the Government could have done much more to help to stimulate employment for those two groups by reforming business rates. They could have used the Budget to really support and encourage small businesses, but they failed to do so. Instead of taking an active approach, they used the Budget to take a laissez-faire approach.

Tax Avoidance (Public Servants)

Simon Danczuk Excerpts

Thursday 2nd February 2012 Commons Chamber

[Simon Danczuk (Rochdale) (Lab)]

My understanding is that a service company managed the arrangement for Mr Lester. Can the Minister tell the House what fees were paid to that company?

[Danny Alexander]

I cannot give a detailed answer about the fees paid to that company. My understanding of the arrangement that was in place is similar to that which the hon. Gentleman has described.

Autumn Statement

Simon Danczuk Excerpts

Tuesday 29th November 2011 Commons Chamber

[Mr Osborne]

We are giving specific support to new satellite manufacturing, which is a real success story in Britain—it is one of those untold stories. I know that the sector is particularly successful in the area that my hon. Friend represents. From memory—I will certainly correct the record if I have got this wrong—we are providing £25 million to support the development of new satellites, as a result bringing, we think, an additional £150 million of private sector investment into the small satellites sector, which I think is also taking place in the area that she represents. That is a good example of the Government trying to encourage the private sector and get jobs across the country.

[Simon Danczuk (Rochdale) (Lab)]

The retail sector is finding it extremely difficult and is being hammered in the current economic climate, yet it is a sector that usually provides lots of jobs for young people. Did the Chancellor not consider a scheme to help underwrite credit insurance, in particular to help independent retailers?

[Mr Osborne]

If the hon. Gentleman has specific proposals on credit insurance, I will be very happy to look at them. When it comes to credit easing more broadly, I have set a £40 billion envelope, although I have committed only £21 billion today, as it covers the two schemes that were ready to go: the national loan guarantee scheme and the business finance partnership. We are looking at partnership schemes and other things that might work within the envelope, and of course we are vigilant about conditions in the broader economy—including issues such as trade finance—that might be affected by the eurozone crisis.

Banking

Simon Danczuk Excerpts

Wednesday 9th February 2011 Commons Chamber

[Mr Osborne]

My hon. Friend is absolutely right. For me, in these discussions the absolute key has been the additional commitment to lend to small and medium-sized businesses. Over the past couple of years, all Members have had people in our constituencies come to us with very difficult stories about the failure of banks to lend to such businesses, and we now have a commitment to increase the lending available by 15%, which is a substantial increase. Alongside that—I did not have time to go into all the detail, but it is being published this afternoon—there will be a new code of practice for the banks to treat their customers much more fairly: for example, they should engage with small businesses a full year before an overdraft comes up for renewal. For me, dealing with that crucial area of the economy—getting credit to small and medium-sized businesses—has been one of the most important parts of the new settlement.

[Simon Danczuk (Rochdale) (Lab)]

We now have the big society shrinking before our eyes, and voluntary organisations seeing their budgets cut left, right and centre. At the same time, we still have bankers’ bonuses well beyond most people’s dreams, and on top of that we learn today that the City and organisations in it, as my hon. Friend the Member for Bolsover (Mr Skinner) pointed out, have been stuffing money into the Tory party’s coffers. Is this a series of coincidences, or should the public be more suspicious?

[Mr Osborne]

I just pointed out that a Lehman Brothers executive was one of the biggest donors to the shadow Chancellor’s campaign, and I think the hon. Member for Bolsover (Mr Skinner) shouted at that point, “Well, I didn’t vote for him.” [Interruption.] He repeats it; in fact, he probably did not vote for the Labour party leader, because as far as I can tell virtually no Labour MP did. That brings me to this point: the key thing about the Labour party and its fundraising is that it gets money from the trade unions and changes policy as a result.

Savings Accounts and Health in Pregnancy Grant Bill

Simon Danczuk Excerpts

Tuesday 26th October 2010 Commons Chamber

[Simon Danczuk (Rochdale) (Lab)]

I wish to turn my attention to the child trust fund, in particular, and to start by quoting the Chancellor. In a speech made just 12 months ago to the Conservative party conference, he said:

“We should continue paying them to the poorest families who often have no savings, and encourage them to use them more”.

As we have heard tonight from Conservative Members, many of them believe that the benefits we are discussing tonight should not be universal and that we should target them much more closely. That has been a common theme throughout this evening’s debate.

Only the Liberal Democrats have never really been in favour of the child trust fund. They have continually proposed to scrap it, although they have not had the decency to turn up to this debate in number. So we have to ask ourselves what the situation really is. Who is the driving force in the coalition Government in terms of punishing the poor? Is it the Conservatives, who want to target their benefits more closely, as we have heard today, or is it the Liberal Democrats, who are happy and enthusiastic about increasing VAT, raising tuition fees and cutting the child trust fund?

The reality of the Chancellor’s logic in scrapping the child trust fund is that the most vulnerable will be hit hardest. I can tell colleagues that the child trust fund is neglected in terms of the attention it gets, as has been shown by Conservative Members during today’s debate. The fund is a very important tool to encourage saving, particularly for the less well-off. I know that from speaking to parents across my constituency, particularly mothers. It has continually encouraged them to start saving on behalf of their children and it has started them thinking about the future for their children. We cannot underestimate the importance of the child trust fund in that regard. Although I readily accept that what children will receive is between £500 and £1,000, which is never going to pull people out of poverty in a short time, there is absolutely no doubt that it has been a catalyst to get people to start saving. As has been said, it has also encouraged families and friends to start contributing to the savings of young children.

I have described the trust fund as one of the best hand-ups, rather than handouts. As has been said, the Save Child Savings alliance has described the child trust fund as

“the most successful saving scheme ever.”

There is irony in the Government cutting the child trust fund at this time, because one of the key reasons for its introduction was to encourage people to engage with financial institutions. People are suspicious of such institutions and, if ever there were a time when we needed to encourage them, it is certainly now. Yet, the Government are scrapping this initiative and the other initiatives dealt with in this Bill, which actually encourage that engagement.

The Government’s decision to scrap the child trust fund will, in effect, create a situation where—we heard about this just before I spoke—the elite in society will be continually pumping and stashing thousands of pounds into the personal, private child trust funds that many of the wealthy already have. That dichotomy will continue. What we will have in poorer communities—in parts of Rochdale—is poor families who will be unable to get that start in life for their children, with no £250 or £500 to kick-start their saving. Although the wealthy will continue to have their opportunities in life, the poorer and more vulnerable will not have those opportunities. Come 18, when the children from the wealthier families have the chance to have a good time at university and have a better opportunity to go off on a gap year, to buy a car or take driving lessons, which is all well and good, the reality for the poorer people and the more vulnerable, whom we often see in Rochdale, is that because of these cuts, which could have been avoided, they will not have those opportunities. They are being taken away from them by the Conservatives, ably assisted—especially in this instance—by the Liberal Democrats.

The contrast could not be more obvious. In many respects, the axing of the child trust fund defines the differences between the Labour Government and the coalition Government. The Labour Government were intent on providing a hand-up and not a handout, whereas the coalition Government are not prepared to provide either a hand-up or a handout.

[Harriett Baldwin (West Worcestershire) (Con)]

I am trying to follow the intellectual train of the hon. Gentleman’s very powerfully expressed argument. I noted that it had something to do with targeting and Liberal Democrats, but perhaps I am picking up the wrong sequence of words. He started with an eloquent argument in favour of universal benefits. Does that mean that he is in favour of continuing to give these grants to my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg)?

[Simon Danczuk]

I will be quite clear about the position I take in that regard. Let me clarify my point: I was stating that many Conservatives have identified tonight that they do not believe in universal benefits and that they are prepared to have more targeted benefits. If that is the case, why did they not put that in the Bill? That is the reality. My point is that the only people in the coalition Government who want to scrap the benefits altogether are the Liberal Democrats, so is it the Liberal Democrats who are pushing the Conservatives more to the right, towards scrapping benefits completely?

This type of Bill, like the CSR, will confirm to the people of Rochdale that the coalition Government are not on the side of fairness, but are on the side of the wealthy.

Comprehensive Spending Review

Simon Danczuk Excerpts

Wednesday 20th October 2010 Commons Chamber

[Mr Osborne]

I completely agree with my hon. Friend. It is striking that in all the responses and everything that we have heard today from Labour Front Benchers and Back Benchers there has not been a single positive proposal as to how to reduce the deficit that they all sat there and allowed to grow.

[Simon Danczuk (Rochdale) (Lab)]

What will the increase in train fares do to get people out of their cars and on to the trains?

[Mr Osborne]

What I would say to the hon. Gentleman is that, again, we have to take a realistic decision about investment in our railways. We are going to invest £14 billion in them and we also want to invest in new rolling stock, on which I was asked a question by the hon. Member for Sedgefield (Phil Wilson), who has now left his place. That has required a tough decision on rail fares, but I hope that passengers will at least understand that if we want investment in rail stock we have to be able to afford it, and the people who use the rail stock should make a contribution to that.