Oral Answers to Questions
John Bercow Excerpts(10 years, 1 month ago)
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Danny Alexander
It is striking how little the Scottish National party appears to have learned from what has happened in the eurozone. The truth is that when setting up a new country, the last thing anyone wants to do is to abandon all the levers that control the economy. The first few decades of independence would be a risky, dangerous and uncertain phase, and embarking on it without the ability to control interest rates or an exchange rate that can, for example, adjust to oil price fluctuations, and with your hands bound on tax and spending—one of the lessons of the eurozone crisis—is an utterly ridiculous proposition.
The Chief Secretary to the Treasury (Danny Alexander)
Employment in the United Kingdom is increasing—
Mr Speaker
Order. I know that the Chief Secretary is an important man with many important matters on his mind, but none is more important than the grouping of questions 3 and 11. Am I right?
The Financial Secretary to the Treasury (Sajid Javid)
The Government are protecting the incomes of low-income households by freezing fuel duty and taking 2.7 million people out of tax by increasing their personal allowance. The best way to raise—[Interruption.]
Mr Speaker
Order. I think that the Minister is a tad confused. We are on Question 6, which is about membership of the Monetary Policy Committee of the Bank of England.
Sajid Javid
I beg your pardon, Mr Speaker.
The Monetary Policy Committee consists of the individuals who are best qualified to make the decisions necessary to achieve the Government’s monetary policy objectives: the Governor of the Bank of England, the two deputy governors, two members of the Bank with responsibility for monetary policy and market operations, and four external members who are appointed by the Chancellor. All appointments are made on merit.
Mr Speaker
Order. I am sorry to disappoint colleagues. There are some appetites that remain unsatisfied, but such is the nature, I fear, of Treasury questions in particular.
We come now to the 10-minute rule motion and when Members have filed out of the Chamber in a seemly way, the hon. Member for Heywood and Middleton (Jim Dobbin) can enjoy the rapt attention of the House.
Point of Order
John Bercow Excerpts(10 years, 2 months ago)
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Mr Winnick
The Minister shakes his head. I can well understand his embarrassment, because we are constantly told that we are all in it together. Why can we not have a statement about what is happening in the banking industry? If the Minister is not willing to respond to my point of order, may I suggest that we should have some opportunity to raise the issue in the Chamber?
Mr Speaker
I am grateful to the hon. Gentleman for his point of order. I understand that Ministers from the Department for Business, Innovation and Skills, who may be thought to have some interest in the matter, will be answering questions in the Chamber next week, and that the tabling of Treasury questions will take place next Wednesday. I know that the hon. Gentleman will agree with me that it is always useful to have a bit of information, and I therefore proffer that to him and to the House.
The hon. Gentleman has made his point, and the Exchequer Secretary has certainly heard it—
Mr Speaker
He has not chosen to respond. We do not always have debates by means of point-of-order exchanges. However, the point has been registered very forcefully, and Ministers will be conscious of what the hon. Gentleman has said.
The hon. Gentleman is an extremely ingenious character. I feel sure that he will be present at business questions, and—I say this in the friendliest possible spirit—I know that when he has a bone in his mouth, he is inclined to chew on it, and to chew on it relentlessly. I feel sure that that is what he will do in this instance.
If there are no further points of order, we will come now to the ten-minute rule motion, and to the ever-patient Mr Benedict Gummer.
Fairness and Inequality
John Bercow Excerpts(10 years, 2 months ago)
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Oral Answers to Questions
John Bercow Excerpts(10 years, 3 months ago)
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Sheila Gilmore (Edinburgh East) (Lab)
Of course, 0.7% is lower than 0.8% in the previous quarter, but leaving that aside—[Interruption.] With construction—[Interruption.]
Mr Speaker
Order. The hon. Member for Rochford and Southend East (James Duddridge) should go and lie down in a dark room. Take a tablet and restore your health—I am very anxious about your condition, and I suspect that the House will be too.
Sheila Gilmore
Construction is down as well, but to return to the question—[Interruption.] Well, the Chancellor did not return to it. Support through tax credits and child care tax credits has been crucial for many women going into self-employment for the first time. Proposed universal credit rules will make it a lot more difficult for self-employed people. Will the Chancellor speak to the Secretary of State for Work and Pensions to help him to get this right for women entrepreneurs?
Ed Balls (Morley and Outwood) (Lab/Co-op)
After three damaging years of flatlining in our economy—[Interruption.]
Mr Speaker
Order. Some people are slow learners, so I will say it slowly: keep calm, be patient; Government Members, you have got the man at the Box for whom you were waiting, and now you should just listen. In tennis, new balls come after the first seven games of a match and subsequently after every nine, so patience is required.
Ed Balls
After three damaging years of flatlining, today’s growth figures are welcome, but everything we have seen today from the Chancellor shows he just does not understand that for working people facing a cost of living crisis, this is still no recovery at all. Last week, the Chancellor and the Prime Minister tried to use dodgy figures to tell people they had never had it so good. Why will he not today admit the truth: he has failed to get the deficit down, and since he came to office, working people have been not better off, but worse off?
Mr Speaker
Order. Mr Cryer will be heard. The House should hear him. His constituents should hear him. It is really just a matter of courtesy.
John Cryer
The Liberal Minister used to be a loyal servant of Britain in Europe. Does he still agree with its founding principles?
Pub Companies
John Bercow Excerpts(10 years, 3 months ago)
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Mr Speaker
I must inform the House that I have selected the amendment In the name of the Prime Minister.
Toby Perkins
I certainly do share my hon. Friend’s disappointment. My sense is that there is a lot of sympathy on this issue across the House and I want to bring people together rather than tear us apart. It is fair to say that a year ago the Government did a U-turn. I was not disappointed with that at all; I was delighted. They told the House that they were going to get on with the consultation. Many people were celebrating, and they went out drinking in the pubco pubs around the country that night. A few months later the consultation started and it finished about six months ago, yet despite the overwhelming response in favour of what we are proposing today and what the Government seemed minded to consider, we still have not actually had any action. We have not changed the situation on the ground for hard-pressed publicans and all those people who have seen their life-savings disappear and who want to know that the regime is going to improve for the people who follow them.
As I was saying, we can bemoan the situation, we can join the campaigns, or we can act. We can take court action on the cause of the closures. We have within our grasp today the opportunity to prove that actions speak louder than words and stand united across the House on behalf of our communities, but also on behalf of the hundreds who are looking to us to act. In just four days since Friday, 26,762 people have signed the 38 Degrees petition on the great British pub scandal.
CAMRA is an immensely important and well-respected body. It has the best interests of the pub in its heart and in its DNA; that is its raison d’être. It boasts a membership of almost 160,000, a staggering demonstration of the importance of real ale and pubs to people across our country. If I was seeking to make a political point, I might have mischievously pointed out that, with almost 160,000 members, CAMRA is bigger than the recently reported membership of the Conservative and Liberal Democrats parties combined, but as I said I wanted to be consensual, I am not going to mention that.
We all know that a fairer relationship between pub companies and their landlords is not a panacea that will end all the challenges faced by the trade. There are others and there will continue to be asks of us in Parliament even if we take action on this scandal today, but the fact that we cannot solve every problem does not mean we should not solve this major one. From the Federation of Small Businesses to the GMB, from CAMRA to the Forum of Private Business, from Fair Pint and the all-party save the pub group to Unite the Union, a diverse coalition of interests has consistently called for a new statutory code of regulation.
Let no one say that this House or the Business, Innovation and Skills Committee have rushed to judgment. Over four reports and eight exhaustive years, the Committee gave the major pub-owning companies every opportunity to make the changes that were needed to put their house in order, yet at every turn it found that the industry moved at a glacial pace, and always reluctantly, and only because of the scrutiny of the Committee.
Although I want to pay tribute to everyone involved in the work of the Select Committee and to say that I think the work done on pubco is a shining example of the Select Committee system at its best, it should not have to be the role of a Committee not only to investigate an issue but to be the body that constantly has to chase to see whether the assurances made to it have been kept. Following the final 2011 Select Committee report, there was widespread disappointment when the right hon. Member for Sutton and Cheam (Paul Burstow) came to the House to defend opting for a self-regulatory regime. In January 2012 this House felt it had seen enough. We believed that voluntary regulation had failed and we voted unanimously for a statutory code, a vote that was ignored by the Government. Frankly, at every stage it has felt as though the Opposition and the Select Committee, ably supported by Members across the House, have had to make the running.
During oral questions to the Secretary of State for Business, Innovation and Skills in November 2012, there were three Labour pubco questions and it was suddenly announced that there would be an investigation into the success of self-regulation. A day before the Opposition day debate in 2013, the Government finally announced that they would consult on introducing a code to deliver a fairer balance between pub companies and their tenants. The response to the consultation was overwhelming: over 7,000 people responded, 96% were in favour of regulation, 67% were in favour of a mandatory free-of-tie option, 92% were in favour of open market rent assessment, and there was widespread support for a stronger independent adjudicator.
The strength of feeling was overwhelming, with 91% of respondents who ran a pub saying that the beer tie was one of the three biggest challenges facing their business, and more than nine in 10 saying they would take a free-of-tie option even if it meant paying a higher rent. It is therefore a little odd for the Government to say, as they do in their amendment, that they want to take more time to learn from the consultation. They chose the questions to ask and they got a big response. On almost all the big questions, the level of support was so overwhelming that even Robert Mugabe would have thought it was a bit one-sided, yet the Government then commissioned a report from London Economics, which critics felt was deeply flawed, apparently to try to persuade themselves against the view they appeared to have taken before their consultation. Nothing could more clearly demonstrate the failure of the big pub companies than the desire to leave them on the part of the very people they consider to be their business partners. But for all the warm words expended on the Floor of this House and elsewhere, still nothing has changed in legal terms, and every week 26 pubs close.
If the Government do not introduce a Bill on this issue in the Queen’s Speech, it is impossible to imagine that there will be sufficient parliamentary time to pass one in this Parliament. As my right hon. Friend the Member for Doncaster North (Edward Miliband) said on Sunday’s “The Andrew Marr Show”, if this Government fail the challenge set them today, everyone who feels strongly about this issue will know that, for all the rhetoric, only voting for a Labour Government will bring about the fairness that so many people so desperately want. Hon. Members will today have an opportunity to choose whether to be part of the solution or, I am sad to say, part of the problem.
There is no doubt that the existence of large pub companies, which own the vast majority of British pubs and often force their licensees to buy beer only from them, are distorting the market. As we consider their devastating impact, let us remember that 57% of Britain’s pubco publicans, people who often work among the longest hours of anyone in our communities, earn less than £10,000. The Federation of Small Businesses, brilliant advocates but hardly Marxist radicals, found in 2013 that a mandatory rent-only option would generate £78 million for the UK economy, that 98% of respondents would have more confidence in the success of their pubs and that almost 10,000 would take on extra staff or give their staff extra hours of work. Hon. Members will know that the FSB does not propose additional regulation lightly.
My own Chesterfield pubs survey mirrored many of those encouraging statistics, but also sounded a deadly warning about the cost of inaction, with many pubs saying that they were on the brink of closure and that increased rents and beer prices were key issues. This morning, the British Beer & Pub Association claimed that tied tenants’ pubs were cheaper, but that is far removed from the reality that people see in their community. At The Nags Head in Dunston in Chesterfield, I dealt with a Marston’s tenant who was competing with Marston’s managed houses just across the road that were selling the same product at up to £1 a pint less. The big pub companies and the BBPA will tell us, “Yes, there is the odd problem, but it is not typical.” They say, “You can’t offer general criticisms. We need to know about specific cases.” However, when we bring them specific cases they say, “Well, that’s just a one-off.” It seems that no evidence is good enough for them to recognise the reality of what people are seeing in their pubs. The BBPA and the pub companies are saying, “Mainly it’s just people who have failed in their businesses wanting to blame someone else.” I do not think that stands up to any sensible scrutiny.
Many businesses and industries have undergone tough times, particularly in the past five years or so, but they have not all universally claimed that they have been misled by their suppliers. Corner shops have closed, but MPs are not besieged by former Londis or Spar shopkeepers claiming they have been ripped off by Londis or Spar. People in business generally know the difference between tough market conditions and plainly misleading practices.
On that note, the BIS consultation last year was sobering reading for anyone who thought that the threat of regulation would cause the industry leopards to change their spots. It told of a married couple who produced a careful budget plan before signing a lease, only to find on the day they received the keys that their pub company increased the prices, meaning the couple can only afford to pay themselves one salary. We also heard about the couple who ploughed—
Mr Speaker
Order. May I say gently to the hon. Gentleman, to whose speech I am listening with close attention and great interest, that I know he will want to take into account the fact that several hon. Members on both sides of the House also wish to take part?
Toby Perkins
That has been preoccupying me for several minutes, Mr Speaker. None the less, I would not like the couple who ploughed their life savings into acquiring a pub only to find the agreed credit order with their pubco was unilaterally withdrawn, leaving the business in ruins, to be left out of my contribution. I am glad that they found their way in.
Our motion calls for three key steps to be taken that will ultimately lead to a better future for Britain’s boozers. First, we need a mandatorv free-of-tie option. The beer tie, whereby landlords can buy products only from their pubco, works for some licensees, but for many others it means that they can buy only limited products at inflated prices. We want every landlord to have the choice of whether to go free of tie. The hon. Member for East Dunbartonshire (Jo Swinson), whom we all miss terribly, although she will be back with us soon, has previously said that she is
“committed to stamping out abuse of the beer tie”.
Clearly, there is only one way to do that.
The Government have previously committed to the principle that no landlord should be worse off than they would be in an otherwise free-of-tie pub, but the behaviour of the pub companies suggests to me that that will not happen without allowing the market to decide. Members who are worrying that such a measure would go against their free market principles should have no fear. What the pubcos are defending is an old- fashioned closed shop, whereas what we are proposing is a genuinely competitive market solution that stands up for the rights of the small entrepreneur.
Secondly, we need independent rent reviews. When a new licensee takes over a pub, or when an existing rent contract expires and is renegotiated, there should be a fully transparent and independent rent review, completed by a qualified surveyor. That would deal with so many of the horror stories that we have heard in this debate and previously.
Finally, there must be a truly independent body to monitor the regulations and adjudicate in disputes between licensees and pubcos. There is little confidence in how PICAS, the Pubs Independent Conciliation and Arbitration Service, or PIRRS, the Pubs Independent Rent Review Scheme, are operating, with many of the people going through the PICAS process unhappy with the outcome.
Those are our tests, which are grounded in the principles of building a market that works, with rules to prevent restrictive practices and big companies unfairly using their size in an uncompetitive way. I know that Members across the House share this vision, so let us unite today behind this vital British industry and this vital British institution, and deliver the change that publicans, licensees, business groups, trade unionists, beer enthusiasts and the great British public are crying out for. I commend the motion to the House.
Banking
John Bercow Excerpts(10 years, 3 months ago)
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Chris Leslie
There they go again, denying that the banks had any responsibility whatever for the global financial crisis. Obviously, it was Labour’s investment in schools and hospitals that caused the devastation in dozens of countries worldwide and recession across—[Interruption.]
Mr Speaker
Order. The hon. Member for Hereford and South Herefordshire (Jesse Norman) is usually the epitome of the cerebral philosopher; an air of calm usually exudes from his every orifice. He has become uncharacteristically over-excited. He must calm himself, consider the merits of yoga and listen to what the shadow Chief Secretary has to say.
Chris Leslie
I now have an image in my mind, Mr Speaker, but we will move on.
I want to pin down the position that the Prime Minister was trying to spin in Prime Minister’s questions. The market expectations are that the loss-making RBS will pay about £500 million in bonuses in 2013, despite the string of allegations about LIBOR fixing and the accusations that it forced viable businesses into default in a bid to seize their assets on the cheap. When life is getting harder for so many households and bank lending to businesses is falling, it cannot be right for the Chancellor to approve a doubling of the bank bonus cap when the taxpayer has a stake.
Mr MacNeil
Does the Minister agree that, as with the debate on the bedroom tax before Christmas, this debate is really one about the symptoms of inequality in our society. Since the 1970s, we have seen 80% of the gains in productivity going to the top 1%—an inequality level roughly equivalent to that of the 1920s. Governments all over Europe and in the United States are not getting to grips with inequality and the hampering of life chances that it is causing. What does the Minister think should happen? The bankers should not receive the bonuses they are getting and people should not have their life chances halted by the bedroom tax. Are this Government going to do anything serious on this issue?
Mr Speaker
I assume that the hon. Gentleman will not seek to make a speech in the debate, on the grounds that he has already done so.
Financial Services (Banking Reform) Bill
John Bercow Excerpts(10 years, 4 months ago)
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Mr Speaker
I must draw the House’s attention to the fact that financial privilege is involved in Lords amendments 35, 37, 40, 64, 149, 150, 162, 163, 169, 171, 172, 173 and 175. If the House agrees to any of these amendments, I shall ensure that the appropriate entry is made in the Journal.
After Clause 12
Part 4
The Financial Secretary to the Treasury (Sajid Javid)
I beg to move, That this House disagrees with Lords amendment 41.
Sajid Javid
It is a pleasure to introduce these amendments. Much work has been undertaken in this House and in the other place since my predecessor closed the Second Reading debate in March. That work has improved the Bill. The Bill has expanded greatly in length and content since it left this House. In large part, the variety of new issues that it covers reflects the Government’s acceptance of the vast majority of the recommendations that were made by the Parliamentary Commission on Banking Standards, which published its final report after the Committee stage in the Commons.
I pay tribute to the members of the PCBS and especially those who sit in this House: my hon. Friend the Member for Chichester (Mr Tyrie), the right hon. Member for Wolverhampton South East (Mr McFadden), the hon. Member for Caithness, Sutherland and Easter Ross (John Thurso), the hon. Member for Edmonton (Mr Love) and my hon. Friend the Member for Wyre Forest (Mark Garnier). It was their hard work that led to the reports.
I will speak in support of the amendments that resulted from the work of the parliamentary commission, but ask the House to reject the Opposition amendment that was made in the other place, Lords amendment 41. I will begin by explaining how the former amendments will deliver the goal of improving the standards of conduct in banking.
The Parliamentary Commission on Banking Standards concluded that the current system for approving those who hold senior positions in banks, the approved persons regime, had failed. The commission’s central recommendation was the creation of a senior persons regime that applies to senior bankers. The Government accepted that recommendation. The amendments will deliver on the recommendation by putting in place a senior managers regime with five key features.
First, the regime will reverse the burden of proof so that senior bankers can be held to account for regulatory breaches in their area of responsibility, without the need to prove that they were personally involved in the wrongdoing. Secondly, there will be mandatory statements of responsibility for senior managers. Thirdly, the regulators will be able to make conduct rules for senior managers in banks. Fourthly, there will be provision for time-limited and conditional approvals of senior bankers. Fifthly, the financial services register, which is kept by the Financial Conduct Authority, will state who is a senior manager in a bank and give details of the regulatory action that has been taken against them. The amendments will provide a clear and effective system for raising standards and increasing accountability among the country’s senior bankers.
Lords amendment 53 introduces a certification regime for bank staff. That will apply to all staff below senior management level who have roles in which they could seriously harm the firm or its customers. The Prudential Regulation Authority and the FCA will therefore be given a far-reaching new power to make enforceable rules of conduct for all employees in a bank. Banks will have to verify that employees who have roles in which they could do significant harm to a bank or its customers are fit and proper for those roles. Banks will have to do that on appointment and annually thereafter. They will have to issue certificates, which may be electronic, to those employees, confirming that they are fit and proper for their role.
The Government have always supported the spirit and substance of the commission’s licensing regime recommendations. However, we do not consider it appropriate to call it a licensing regime. That would imply that the individuals concerned had been given licences by a regulator. That is precisely the opposite of what the commission recommended. We therefore cannot use the words “licence” or “licensing”. It is in order to refer to “certificates” and “certification” because certificates will be issued by the banks. Banks will also have to notify employees of the banking standards rules that apply to them and take steps to ensure that they understand them.
I would like to say something about the firms that are covered by the senior managers regime and the new obligations under the certified persons regime. The parliamentary commission naturally focused on banks. However, the definition was extended to include systemically important investment firms that do not take deposits, but that are regulated by the PRA. We have also included a power to extend the senior managers and certified persons regimes to cover UK branches of foreign banks and investment firms if it is considered appropriate to do so. Some large branches of foreign banks and investment firms operate from London, so it is prudent to equip ourselves to bring them into the new regime.
Mr Tyrie
The fact that an individual is found responsible should not in any way exculpate the institution from its own responsibilities. On the other hand, a key recommendation of the Banking Commission was to restore individual responsibility. To return to a situation where it is primarily the institution that carries the can for what had been a series of individual pieces of bad behaviour would be a profound mistake. There is a lot behind the exchange we have just had that I am not going to go into now, but which we thought about quite deeply on the commission. I shall now move on as there are a few more remarks I want to make about this group of amendments.
Everyone now seems to be agreed that the APR adds little or nothing, yet over the past few weeks we have discovered that the discredited APR will survive in legislation. In doing that, the regulators are perpetuating a myth that the APR affords any real protection. It will continue to apply to several groups. First, about 20,000 people in the financial services industry outside banking will still be covered, mainly in fund management and insurance.
This is unfinished business. The Banking Commission had the remit to look only at banking. It would be absurd to retain a system for one part of financial services that has so clearly failed in another. The Government and Parliament both need to encourage the regulator to look at this and do what is necessary to extend the coverage of the new regime and to remove the APR from other parts of financial services. To rely on the APR is asking for trouble.
It is also regrettable that the APR will remain in a few isolated pockets within the banking industry. This is because the APR will continue to apply to firms’ LIBOR submitters and to persons with anti-money laundering responsibilities in banks. This amounts, I gather, to only a few dozen people, but I think it would be far better if we removed what amounts to “triple running”. We will have three layers: the senior persons regime, now called the senior managers regime, licensing, now called certification, and the APR in the case of these people. The extra APR layer confers no extra protection, but adds bureaucracy and creates a business cost. There will be plenty of scope for legal wrangling in the event of a regulatory failure, given the great scope for confusion, and for an equal measure of recrimination by regulators who will say they were asked to do too much by Parliament. Banks will have a point when they complain about that. For all those reasons, I hope that the Government will come back to this issue and remove the APR from banking entirely in due course.
The Banking Commission’s proposals do not guarantee better standards. Much will depend on the judgment of regulators and the common sense of the banks, but identifying responsibility for key roles offers a much better prospect of higher standards than does retaining the APR. The commissioners are delighted that our proposals on this are now going to be put on the statute book.
Mr Speaker
The hon. Gentleman’s speech is characterised, as always, by a combination of scholarship and erudition. May I just inquire whether we are now nearer to the end of his speech than to the beginning?
Mr Tyrie
I can give you a firm assurance, Mr Speaker, that I am coming very close to the end of my remarks. Indeed, I am no closer than I would have been before that intervention, unless I had been told to sit down, because I really am almost at the end.
I just want to say a word about the Opposition amendment before I sit down. It draws on a number of the Banking Commission’s proposals and, by seeking to put it on the face of the Bill, the Opposition have contributed something by forcing the Government to think again about their rejection of our proposals on licensing. The amendment was therefore probably worth while. However, the Government have now thought again and are implementing our proposals.
There are two aspects of Lords amendment 41 that would make me cautious about supporting it. The first is it would require regulators to pre-approve all people covered by licensing—or what is now going to be called certification. I fear that would risk recreating many of the problems we had with the APR—the box-ticking bureaucratic culture that we are trying to get rid of.
My other concern with the amendment is that it appears to mix up licensing with the professionalisation of the banking industry. It would be imprudent to link professionalisation to licensing too closely. Licensing needs to happen now. Professionalisation is not a substitute for it. Even if banking is something that could acquire the characteristics of a profession—which many people are not yet convinced of—it would, as the commission reported, take a generation to build that sense of a professional standard.
For those reasons, although I strongly sympathise with the intent of the Opposition amendment, it is not a Banking Commission proposal and I shall not be supporting it. The House could do better by implementing the commission’s proposals, which are now embodied in Government amendments.
Mr Speaker
Order. I should explain to the House that I have exercised some latitude so that the hon. Member for Chichester (Mr Tyrie) could offer a bit of background on the parliamentary investigation. I did that because I thought that it would be genuinely helpful to the House and because there would be no other opportunity for those observations to be made. That said, I would not want it to be thought that that will be the normal rubric on these occasions. The normal rule of thumb, which must continue to apply, is that Members should attend to and focus their remarks exclusively on the amendments and should not engage in what might be called a wider dilation. I hope that that is helpful to the House.
Yasmin Qureshi (Bolton South East) (Lab)
I will bear in mind your observations, Mr Speaker, but I hope you will indulge me if I occasionally say something a bit different. I will of course spend most of my time on the amendment.
I want to set the matter in context. I volunteered to serve on the Bill Committee. I am told that it is traditional for Members to have to be nudged into serving on Committees for Finance Bills, unless of course they are Ministers or shadow Ministers. I wanted to serve on the Committee perhaps because I am a bit geeky or because I am interested in esoteric things; perhaps it is because of my legal background that I am interested in these matters.
I also had a more serious reason for volunteering. We need to bear in mind that this country’s economy relies heavily on the financial services industry, and that a massive banking and financial crisis occurred in 2008, not only in the UK but in similar economies around the world. We know that the crisis started as a result of the collapse of Lehman Brothers and of the sub-prime mortgage market in the United States, which led to the collapse of many banks around the world. Economies like ours—in the USA, Japan, France and Germany, for example—suffered as well.
Oral Answers to Questions
John Bercow Excerpts(10 years, 5 months ago)
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Danny Alexander
Insofar as I as I could hear what the hon. Lady was saying—
Mr Speaker
Order. Insofar as the Chief Secretary was having trouble hearing what the hon. Lady was saying, it was because of extreme and frankly discourteous noise from his own Benches, a fact of which I know the Government’s deputy Chief Whip will have taken full note.
Danny Alexander
Wherever the noise was coming from, I should say that, of course, house building and construction is important in every sector, social and private. That is why, in the autumn statement last week, we announced both the increase in the housing revenue account—something for which my party, the Liberal Democrats, has campaigned for some time—and the extra funding for large sites to unlock another 250,000 new homes in the private sector.
Mr Speaker
Order. I said a moment ago that the hon. Member for Rotherham (Sarah Champion) should be heard. The Chief Secretary similarly must be heard.
Danny Alexander
We have made a commitment to one-for-one replacement. Housing starts, under the planning system, cannot be started instantly, which is surely a lesson that the hon. Gentleman should have learned during his many years in this House. The commitment is there and every one of those homes sold will be replaced by a newly built home.
Sajid Javid
I agree with my hon. Friend. I understand that the Co-op bank has made donations to at least three members of the shadow Treasury team. It has been reported that the shadow Chancellor used his £50,000 donation from the Co-op group last year to hire a speaker—
Mr Speaker
Order. That has absolutely nothing to do with the Minister’s responsibility for a proposed cap on bank bonuses. I think he probably knew that; if he did not, he certainly does now.
Mr Russell Brown (Dumfries and Galloway) (Lab)
22. I am bitterly disappointed by the Chief Secretary’s response to my hon. Friend the Member for Edinburgh East (Sheila Gilmore). He basically said that people on low wages were being written off. [Interruption.] If the Chief Secretary checks Hansard tomorrow, he will see that. In my area, wages are 24% lower than the national average. These people do not qualify for the—
Mr Speaker
Is that the end of the hon. Gentleman’s question? Has he reached the end of the sentence?
Danny Alexander
First, may I say what a great pleasure it is for those on this side of the House to see the shadow Chancellor in his place, and may I join him in condemning the unattributable briefing against him from the people behind him—something that never happened in his day?
The whole reason millions of Britons—[Interruption.]
Mr Speaker
Order. At the moment I cannot hear the Chief Secretary’s reply, but I intend to do so, however long it takes; it is very straightforward.
Danny Alexander
I would like you to be able to hear it as well, Mr Speaker.
The whole reason millions of Britons are under financial pressure is that Labour’s economic mess cost every household in this country £3,000. Because our plan is working, we can cut income tax, we can cut fuel duty, we can put the triple-lock on pensions, we can freeze council tax and we can take money off people’s energy bills. The only way to raise people’s living standards in this country is to have a sustainable economic recovery.
National Insurance (Contributions) Bill
John Bercow Excerpts(10 years, 5 months ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Speaker
With this it will be convenient to discuss
New clause 2—Administrative and compliance costs review
‘(1) Her Majesty’s Revenue and Customs must, after six months of the Act coming into force, prepare a review which the Minister shall lay before Parliament.
(2) The review must consider—
(a) whether there are any administrative or compliance costs associated with the employment allowance being reported by those applying for it; and
(b) whether businesses, charities and sports clubs are having any problems in claiming the employment allowance.’.
Autumn Statement
John Bercow Excerpts(10 years, 5 months ago)
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The Chancellor of the Exchequer (Mr George Osborne)
Britain’s economic plan is working, but the job is not done. We need to secure the economy for the long term, and the biggest risk to that comes from those who would abandon the plan. We seek a responsible recovery, one in which we do not squander the gains we have made, but go on taking the difficult decisions, and one in which we do not repeat the mistakes of the past, but this time spot the debt bubbles before they threaten financial stability. We seek a responsible recovery, in which we do not pretend we can make this nation better off by writing cheques to ourselves, and instead make the hard choices. We need a Government who live within their means, in a country that pays its way in the world.
Three and a half years ago, I set out our long-term economic plan in the emergency Budget. That plan restored stability in a fiscal crisis, but it was also designed to address the deep-seated problems of unsustainable spending, uncompetitive taxes and unreformed public services for which there are no quick fixes. Over the last three years we have stuck to our guns and worked through the plan. We have done so in the face of a sovereign debt crisis abroad, and at home in the face of opposition from those who got Britain into this mess in the first place and have resisted every cut, every reform, and every effort to get us out of that mess. We have held our nerve while those who predicted there would be no growth until we turned the spending taps back on have been proved comprehensively wrong.
Thanks to the sacrifice and endeavour of the British people, I can today report the hard evidence that shows our economic plan is working, but I also report the hard truth that the job is not yet done. Yes, the deficit is down, but it is still far too high, and today we take more difficult decisions. Yes, the forecasts show that growth is up, but the same forecasts show growth in productivity is still too low, and today we set out further economic reforms. Yes, jobs are up and unemployment is down, but too many of our young people lack the skills to fill those jobs and the opportunities to acquire them, so now we take bold steps to remove that cap on aspiration. Yes, businesses are expanding, but business taxes are still too high and exports are too low and we must address that. And yes, real household disposable income is rising, but the effects of the financial crash on family budgets and the cost of living are still being felt. So where we can afford to help hardworking families, we will continue to do so—[Interruption.]
Mr Speaker
Order. Mr Ruane, calm yourself, man. Your bellicose barracking is detectable several miles away.
Mr Osborne
The hard work of the British people is paying off, and we will not squander their efforts. We will secure the economy for the long term, and this statement sets out how.
Let me turn to the report from the Office for Budget Responsibility. Again, I thank Robert Chote and his team for their rigorous and independent work. The OBR report notes that the Office for National Statistics has reassessed the depth of the great recession. The fall in GDP from peak to trough between 2008 and 2009 was not 6.3% as previously thought, but was instead an even more staggering 7.2%; £112 billion was wiped off our economy—about £3,000 for every household in this country—in one of the sharpest falls in the national income of any economy in the world. That is a reminder of the economic calamity that befell Britain and of the simple fact that our country remains poorer as a result of it. A lot of work still remains to be done to put that right. The data revisions also showed something else: there was no double-dip recession.
Let me turn to the future. At the time of the Budget in March, the OBR forecast that growth this year would be 0.6%. Today, it more than doubles that forecast and the estimate for growth will be 1.4%. Next year, instead of growth of 1.8%, it is now forecasting 2.4%. Faster growth now means that it has revised the following four years to 2.2%, 2.6%, 2.7% and 2.7%, so growth over the forecast period is significantly up. It is still not as strong as we would like it to be, but this is the largest improvement to current year economic forecasts at any Budget or autumn statement for 14 years. I can report that Britain is currently growing faster than any other major advanced economy: faster than France, which is contracting; faster than Germany; and faster even than America. That contrast itself points to the risks that remain for the UK from abroad, and the weakness of many of our main trading partners.
The first risk the OBR identified to our economic recovery is a recurrence of the damaging instability in the eurozone. Even with the relative calm of recent months, the OBR still forecasts that the euro area as a whole will shrink by 0.4% this year. Its growth forecasts for the US and emerging markets have also been revised down, and world trade has been weaker than it expected in March. While our exports are growing, they are not growing as fast as we would like. That is because we are too dependent on markets in Europe and north America. The Prime Minister’s visit to China this week is the latest step in the Government’s determined plan to increase British exports to the faster growing emerging markets, something our country should have done many years ago. Today, I am doubling to £50 billion the export finance capacity available to support British businesses, expanding the help available to firms in these emerging markets and ensuring that our excellent new trade Minister, Lord Livingston, has all the firepower he needs.
Let me turn to the forecast for employment. Today in Britain, employment is at an all-time high and the OBR has revised up its forecast for the future. It was expecting jobs to stay flat over the year, but it now expects the total number of jobs to rise by 400,000 this year. This is being felt right across the country. Since 2010, the number of jobs in Carlisle and on the Wirral, and from Selby to south Tyneside, has grown faster than in London. Meanwhile, the number of people claiming unemployment benefit has fallen by more than 200,000 in the past six months—the largest such fall for 16 years. Unemployment is also lower than in 2010, and is forecast to fall further from 7.6% this year to 7% in 2015, before falling even further to 5.6% by 2018. We have the lowest proportion of workless households for 17 years.
There were those who said it was a “fantasy” to believe that businesses could create jobs more quickly than the public sector would have to lose them. What they should have said was that it would be fantastic if it happened. So I have good news for them. Businesses have already created three jobs for every one lost in the public sector, and the OBR report today forecasts that this will continue, with 3.1 million more jobs being created by businesses by 2019, which, in its words, “more than offsets” the million or so reduction in the public sector headcount. Far from the mass unemployment predicted, we have a record number of people in work, hundreds of thousands fewer on welfare, and unemployment lower than when we came to office, and we will have 2 million more jobs than in 2010—an economic plan that is working and a Government who are seeking a job-rich recovery for all.
Let me turn now to the forecasts for Government borrowing and debt. When this Government came into office, the deficit was 11% of GDP. That was the highest level in our peacetime history. One pound in every four was being borrowed, and a former Chancellor and a former Prime Minister have now joined the consensus that spending was too high. The borrowing posed a huge risk to the economic stability and credibility of the United Kingdom, and we have taken many difficult decisions to bring that deficit down—every one contested and opposed.
I can report today, however, that the effort is paying off. The OBR uses a measure of what it calls “underlying public sector net borrowing”, which excludes the impact of the Royal Mail pension scheme and asset purchase facility transfers. I can tell the House that this underlying measure of the deficit, like the other deficit measure, has been revised down substantially since March. From the 11% back in 2010, the underlying deficit now falls to 6.8% this year, instead of the 7.5% the OBR forecast back in March. It then falls to 5.6% next year, then 4.4%, 2.7% and, in 2017-18, 1.2%. By 2018-19, on this measure, the OBR does not expect a deficit at all. Instead, it expects Britain to run a small surplus. These numbers mean that the Government will meet their fiscal mandate to bring the structural current budget into balance and meet it one year early.
Let me turn to the forecasts for cash borrowing on this same underlying basis. At the autumn statement last year, there were repeated predictions that borrowing would go up. Instead, borrowing is down—and down significantly more than was forecast. In their last year in office, the previous Government borrowed £158 billion. This year, we will borrow £111 billion, which is £9 billion less than was feared in March. That falls next year to £96 billion, then down to £79 billion in 2015-16, £51 billion the year after and £23 billion the year after that. So we are set to borrow £73 billion less over the period than was forecast in March. That means that we are borrowing the equivalent of £2,500 less for every household in this country.
In 2018-19, on this cash measure too, the OBR forecasts that the Government will not have to borrow anything at all. Instead, we will run a small cash surplus. Of course, this will only happen if we go on working through our long-term plan, delivering the reductions in the deficit we plan this year, next year and in the three years after. If we gave up on the plan now, we would be saddled with a deficit still among the highest in Europe, and the Government side of the House is not prepared to take that risk.
While the deficit remains, it adds to our national debt every year. The OBR today expects debt this year to come in at 75.5% of GDP, which is £18 billion lower than was forecast in March. It rises to 78.3% next year, before peaking at 80% the next year—5% lower than forecast at the Budget. In 2016-17, it then falls, albeit slightly, to 79.9%; then falls again to 78.4% and then to 75.9%. By 2017-18, debt is over £80 billion pounds lower than forecast in March. The supplementary debt target is for debt to be falling in 2015-16. At the Budget, the OBR forecast debt to be falling in 2017-18. It is now forecast to fall in 2016-17, which is one year earlier.
But let me enter this note of caution. The OBR is clear that this is a cyclical improvement. The forecast for the continuing fall in the structural deficit has not improved. The structural deficit is the borrowing that stays behind even when the economy improves. Thanks to our actions, it has fallen from the 8.7% we inherited to 4.4% today—more than in any other major advanced economy. It goes on falling, but no faster than was previously expected because, as we have always argued, the central task of reforming government and controlling spending does not simply dissolve when growth returns. It supports the case we have made all along that economic growth alone was never going to be enough to repair Britain’s broken public finances. An improving economy does not let us off the hook for taking the difficult decisions to make sure that the Government live within their means.
The single most important economic judgement I make today is this: we will not let up in dealing with our country’s debts; we will not spend the money from lower borrowing; we will not squander the hard-earned gains of the British people. The stability and low mortgage rates, the lower deficit and falling borrowing have been hard won by this country, but let us be clear that they could easily be lost. That is why we must work through our plan to secure the British economy for the long term.
So this autumn statement is fiscally neutral across the period. Indeed, I can announce today that we will take three new steps to entrench Britain’s commitment to sound public finances. First, we will bring forward next year an updated charter for budget responsibility and ask Parliament to support it. I can say today that both parties of the coalition have agreed that we must ensure that debt continues to fall as a percentage of GDP, including using surpluses in good years, for this purpose. In other words, this time we will fix the roof when the sun is shining.
We will look to see whether the five-year time horizon of the fiscal mandate could be shorter and even more binding now that the public finances are closer to balance, and we will see how fiscal credibility could be further enhanced by a stronger parliamentary commitment to the path of consolidation already agreed for 2016-17 and 2017-18. The answers will be written into an updated charter for budget responsibility, which will be presented to Parliament a year from now and voted upon.
The second step we take today to entrench Britain’s commitment to sound public finances is this: we will cap overall welfare spending. Welfare budgets were completely out of control when we came to office and the number of households where no one had ever worked nearly doubled. We have taken very difficult decisions to bring benefit bills down; we have saved £19 billion a year for the taxpayer. We need to maintain that discipline. The percentage of spending in the UK subject to fixed spending controls is very low by international standards—at just 50%. So from next year, we will introduce a new cap on total welfare spending.
I have had representations that the basic state pension should be included within that cap, but that would mean cutting pensions for those who have worked hard all their lives because the costs on, say, housing benefit for young people had got out of control. That is not fair, so we will not include the state pension, which is better controlled over a longer period. We will also exclude from the cap the most cyclical of benefits for jobseekers. All other benefits—from tax credits to income support to the vast majority of housing benefit—will be included in the cap.
At the beginning of each Parliament, the Chancellor of the day will set the welfare cap for the coming years, and will ask the House of Commons for its support. If the cap is breached, the Chancellor will have to explain why, and hold a vote in the House. The principle is clear: the Government have a responsibility to taxpayers to control their spending on welfare, and Parliament has a responsibility to the country to hold the Government to account for it.
That brings me to our third step. Ultimately, the test of fiscal credibility is whether you are prepared actually to make the difficult decisions that will keep spending under control. Tight discipline means that most Departments are now living well within their set budgets. This year they are expected to underspend by £7 billion, which is testimony to good financial management. We can therefore be confident in reducing the contingency reserve by £1 billion this year, and reducing departmental budgets by a similar amount in the next two years. That will save a further £3 billion in total. The protections for the NHS and schools will apply, and the security and intelligence agencies and Her Majesty’s Revenue and Customs will be exempt. The Barnett formula means that over the next two years, the budgets for Scotland, Northern Ireland and Wales will see a net increase. We will not apply those additional savings to local authorities, because we expect them to freeze council tax next year.
This year, Britain becomes the first G8 country to meet our promise to the poorest in the world to spend 0.7% of our national income on development., but we do not have to increase the budget of the Department for International Development further in order to do that. The effectiveness of the British Government’s aid effort in the Philippines, matched by the generosity of the British public, is a reminder of what marks us out as a nation, and we in this country can be very proud of it.
We are also immeasurably proud of the work of Britain’s armed forces. As they wind down their operations in Afghanistan, the budget that we spend there is also falling fast, so we can reduce the military special reserve by a further £900 million this year while still funding all operational costs. To reflect our society’s debt of gratitude to our servicemen and women and their families, I want to make a further £100 million of LIBOR fines available to our brilliant military charities, and to extend that support to those who care for the work of our police, fire and ambulance services. I think the whole House will agree that the terrible events in Glasgow this weekend, and the work that those services are doing right now to cope with the adverse weather conditions, remind us how much we owe to them.
Discipline with the public finances means more than just words. It means making difficult decisions, and being prepared to stick to them. It means using surpluses in good years to keep debt falling, so that we fix that roof when the sun is shining. It means capping welfare to keep it under control, and, when we do want to spend more money, it means finding extra ways in which to pay for it.
One of the biggest single items of Government spending is the basic state pension. I am proud to be in a Government who have introduced a triple lock that ensures a fair and generous increase in the state pension every year for those who have worked hard all their lives. I can confirm that next April the state pension will rise by a further £2.95 a week. That increase, and the other increases that have been made under this Government, mean that pensioners will be more than £800 better off every year. I can announce that we are also going to offer current pensioners an opportunity to make voluntary national insurance contributions to boost their income in retirement, and that we will extend that opportunity to those who reach pension age before the introduction of the single-tier pension. That will help those who have not built up much entitlement to the additional state pension, especially women and the self-employed.
However, we must also guarantee that the basic state pension is affordable in the future, even as people live longer and our society grows older, and the only way in which to do that is to ensure that the pension age keeps pace with life expectancy. The Pensions Bill, which is currently going through Parliament, puts in place reviews of the pension age every five years. We have set the principle that will underpin those reviews. We think that a fair principle is that, as now, people should expect to spend up to a third of their adult lives in retirement. Based on the latest life expectancy figures, applying that principle would mean an increase in the state pension age to 68 in the mid-2030s and to 69 in the late 2040s. The exact dates will be set by the future statutory reviews and in line with the most up-to-date demographic data, of which the next update is published next week. This is one of those difficult decisions that Governments have to take if they are serious about controlling the public finances. Future taxpayers will be saved around £500 billion. Young people will know that our country can afford to give them a proper pension when they retire. That is this generation fulfilling its obligations for fiscal responsibility to the next generation, not saddling them with the debts and the decisions we were not prepared to deal with ourselves.
Having sound public finances also means making sure that we collect the taxes that are due. Most wealthy people pay their taxes and make a huge contribution to funding our public services; the latest figures show that 30% of all income tax is paid by just 1% of taxpayers. We have given incentives to enterprise and cut punitive tax rates, and this year the rich pay a greater share of the nation’s income taxes than was the case in any year under the last Labour Government. But alongside those paying the most tax are those who try to avoid paying their fair share of tax. So today we set out in detail the largest package of measures to tackle tax avoidance, tax evasion, fraud and error so far this Parliament. Together it will raise over £9 billion over the next five years.
We are going to tackle the growth of intermediaries disguising employment as false self-employment, depriving work forces of basic employment rights such as the minimum wage in a bid to avoid employer national insurance. We will halve the final period exemption for capital gains tax private residence relief. We will end the abuse of dual contracts, offshore oil and gas contracting, derivatives linked to profits and share buy-backs. And we will ensure the tax advantages of partnerships are not abused either. We are introducing a new, limited power that requires people to pay their taxes up front where the scheme they used has already been struck down by the courts. We are going to strengthen Whitehall’s capacity to prevent error and tackle fraud in the benefit and tax credit systems, and expand its efforts to recover money that is owed.
There is one personal tax change we make today which is not about avoidance, but is about fairness. Britain is an open country that welcomes investment from all over the world, including investment in our residential property. But it is not right that those who live in this country pay capital gains tax when they sell a home that is not their primary residence while those who do not live here do not—that is unfair. So from April 2015, we will introduce capital gains tax on future gains made by non-residents who sell residential property here in the UK.
I can also announce that from 1 January next year the rate of the bank levy will rise to 0.156% and its base will be broadened in ways we have consulted on. The levy will raise £2.7 billion in 2014-15 and £2.9 billion each year from 2015-16. The country stood behind the banks in the crisis, and now it is right that they support the country in recovery.
Having a Government who live within their means is essential to secure the economy for the long term, but it is not sufficient. Britain has to earn its way in the world. Our infrastructure needs to be overhauled. We have to help our businesses compete. Above all, our young people need the skills to succeed in the modern world. This autumn statement takes the next big steps in all these areas.
Let me start with infrastructure. We are going to be spending more on capital as a proportion of national income on average over this decade than over the whole period of the last Government. That has involved making tough choices about priorities in spending and sticking to them. But that is not the most difficult decision in this area. We have to decide whether we are serious as a country about competing in the modern world and say to people that we need the new roads and the new railways, including the northern hub and High Speed 2. We have to say that we are prepared to push the boundaries of scientific endeavour, including in controversial areas, because Britain has always been a pioneer. We should say that the country that was the first to extract oil and gas from deep under the sea should not turn its back on new sources of energy such as shale gas because it is all too difficult, and the country with the world’s first civil nuclear programme should not be a country that says we can do this no longer.
Yesterday, my right hon. Friend the Chief Secretary and Lord Deighton published the update to the national infrastructure plan. That includes a co-operation agreement with Hitachi on the next nuclear power station in Anglesey and a deal with the insurance industry to invest at least £25 billion in UK infrastructure. We published the strike prices that support long-term investment in offshore wind and prioritise it over onshore wind. Today we go further, with a commitment to invest in quantum technology, and a new tax allowance to encourage investment in shale gas that halves tax rates on early profits. In the week in which Professor Peter Higgs travels to Stockholm to collect his Nobel prize for physics, we commit to build a new centre in his name at Edinburgh university, because science is a personal priority of mine.
Some of the most important infrastructure for British families is housing and we must confront this simple truth: if we want more people to own a home, we have to build more homes. The Office for Budget Responsibility is absolutely right today to draw attention to the weakness of housing supply in this country. The good news is that the latest survey data showed residential construction growing at its fastest rate for a decade. Our hard-won planning reforms are delivering a 35% increase in approvals for new homes, but we need to do more.
This week, we are announcing a billion pounds of loans to unblock large housing developments on sites in Manchester and Leeds and across the country. We will increase the housing revenue account borrowing limit by £300 million. Aspiration is not only for people who can afford their own home. We want to regenerate some of our most run-down urban housing estates. Councils will sell off the most expensive social housing, so they can house many more families for the same money. We are going to give working people in social housing a priority right to move if they need to for a job.
Right-to-buy applications have doubled under this Government, and we will expand it more. The very same spirit of aspiration that underpins right to buy is what drives this Government with Help to Buy. It is not enough to build more houses if families who can afford mortgages do not have the large deposits that the banks have demanded. Help to Buy is now helping thousands to own their own home. I can today announce that Aldermore and Virgin, two challenger banks, expect to join the scheme this month.
Help to aspiring families and building more homes: that is what we stand for. We must also avoid the mistakes of the past decade. We want a responsible recovery. That is why I am the first Chancellor to give the Bank of England the responsibility and the power not only to monitor overall debt levels, but to take action to deal with asset bubbles if they threaten our stability.
We want a functioning, stable housing market. The OBR’s latest house price forecast today, while higher, still has real house prices 3.1% lower in 2018 than at their peak in 2007. Together with Governor Carney, I acted last week to focus the funding for lending scheme away from mortgages on to small business lending, where its support is still needed. It is precisely because the authorities can act in this targeted and pre-emptive way, and because our public finances are under control, that the Bank can keep overall interest rates lower for longer and support the rest of the economy.
Investing in the physical infrastructure of our country is critical to our future. But in this global economy, it is better education and skills that hold the key to long-term national success. This week’s programme for international student assessment—PISA—scores show how much ground this country has to make up. My right hon. Friend the Education Secretary is doing more to transform school standards and raise the aspirations of pupils from the poorest families than anyone who has done that job before him. His expansion of free schools and academies has the full backing of this Chancellor.
We also know that children do better at school when they have a proper meal inside them. This autumn statement has found the financial resources to fund the expansion of free school meals to all school children in reception, year 1 and year 2, announced by the Deputy Prime Minister and supported by me.
But today we also focus on what happens when our young people leave school—and we do more to help them. First, we will not abandon those who leave school with few or no qualifications. At present, Jobcentre Plus does almost nothing to help 16 and 17-year-olds who are not in work or education. We will change that and will now fund the jobcentres to support these very young adults to find an apprenticeship or a traineeship.
Without basic maths or English, there is a limited chance any young person will be able to stay off welfare, so we are taking a new approach. Starting in some areas at first, anyone aged 18 to 21 signing on without those basic skills will be required to undertake training from day one or lose their benefits. If they are still unemployed after six months, they will have to start a traineeship, take work experience or do a community work placement—and if they do not turn up, they will lose their benefits.
A culture of worklessness becomes entrenched when young people can leave school and go straight on to the dole with nothing expected in return. That option is coming to an end in our welfare system.
The second reform is to apprenticeships. We have doubled the number of apprenticeships and now we will transform the way they are provided by funding employers directly through HMRC. I can tell the House there will now be an additional 20,000 higher apprenticeships over the next two years. I can also announce a big expansion of start-up loans, through which a new generation of entrepreneurs is being created: 50,000 more people will be helped to fulfil their aspiration to start their own business. We are extending the new enterprise allowance, too.
This year is also the 50th anniversary of the Robbins report, which challenged the nonsense that university was suitable only for a small few. In 1963, Robbins said:
“Courses of higher education should be available for all those who are qualified by ability and attainment to pursue them and who wish to do so.”
That was true then, and I believe it should remain true today. Our reforms to student loans, difficult as they were, have put our universities on a secure footing. Some predicted that applications from students from poor backgrounds would fall. Instead, I can report that this year we have had the highest ever proportion of young people from disadvantaged backgrounds applying to university.
But there is still a cap on aspiration. Each year, about 60,000 young people who have worked hard at school, got the results, want to go on learning and want to take out a loan to pay for it are prevented from doing so because of an arbitrary cap. That makes no sense when we have a lower proportion of people going to university than even the United States, let alone countries such as South Korea. Access to higher education is a basic tenet of economic success in the global race, so today I can announce that next year we will provide 30,000 more student places, and the year after we will abolish the cap on student numbers altogether.
Extra funding will be provided to science, technology, and engineering courses. The new loans will be financed by selling the old student loan book, allowing thousands more to achieve their potential.
Education underpins opportunity. It is business that provides those opportunities and the best way to help business is by lowering the burden of tax. KPMG’s report last week confirmed for the second year running that Britain has the most competitive business tax system in the world. Some in this House suggest that our response to this good news should be to increase corporation tax from 20%. Today, we publish the first of our studies of the dynamic effects of tax changes that shows that our corporation tax cuts increase investment and raise productivity—so much so that more than half the cost of the tax cut to the Treasury will be recovered because of higher growth. Putting up corporation tax hits investment, cuts productivity, costs jobs and raises much less. We thank the hon. Members for their submission, but we think it would be economic madness to pursue it.
Quite the reverse, today we take further steps to make our business taxes yet more competitive. The Budget announcement that we would abolish stamp duty on AIM shares was applauded around the world. Today, we also abolish stamp duty for shares purchased in exchange traded funds to encourage those funds to locate in the UK. We are making our successful film tax relief even more generous, and looking to extend the principle, including to regional theatre. We set out major reforms to encourage employee ownership of the kind that makes John Lewis such a success. And from April, we will be one of the first countries in the world to introduce a new tax relief for investment in social enterprises and new social impact bonds. I want to thank Sir Ronnie Cohen and the charities Minister, my hon. Friend the Member for Ruislip, Northwood and Pinner (Mr Hurd), for all their help in putting this innovative scheme together.
Business rates impose a heavy burden on businesses of all sizes. Today, we will help ease that burden—and here is how. The last Government wanted to halve small business rates relief—a relief that helps cut rates bills for half a million companies and means a third of a million of the smallest businesses pay no rates at all. If we had followed that plan, small businesses would have faced a rate increase of up to £3,375. So we have rejected that plan. Instead, we have extended that rate relief scheme year after year. It was due to expire next April. We will now extend it for another whole year. We have also listened to the small business groups and will relax the rules that discourage these firms from expanding and opening extra premises.
But that does not go far enough. All businesses are expecting rates to rise by 3.2% next year. Instead, I will cap the inflation increase in business rates for all premises at 2% from next April. We will also allow businesses to pay their rates in 12 monthly instalments. We will clear almost all the backlog of valuation appeals by July 2015, with reform of business rates on the agenda for 2017 revaluation.
There is one group of businesses that has found the recession especially hard, as it has coincided with a rising challenge from the internet that is only getting stronger. These are our local retailers—the shops, the pubs and the cafés that make up our high streets across Britain. With small business Saturday this weekend, I want the Government to do all we can to help them. We are already changing the planning rules to help town centres compete. To get the vacant shops that blight too many town centres to open again, I am introducing a new reoccupation relief that will halve the rates for new occupants.
But we can do more, and I want to thank my hon. Friends the Members for Wolverhampton South West (Paul Uppal), for Nuneaton (Mr Jones), for Hastings and Rye (Amber Rudd) and for Brentford and Isleworth (Mary Macleod) and many others for their campaign. Like them, I also want to help those who have struggled hard on our high streets—often working long hours for not enough in return. So I can announce today that for the next two years every retail premise in England with a rateable value of up to £50,000 will get a discount on their business rates. This discount will be worth £1,000 off their bills.
This is what we offer: business rates capped; for the smallest firms, no rates at all; and help for the high street, with £1,000 off for small shops, pubs, cafés and restaurants across our country. The people in these businesses epitomise the hard-working values this Government support, and we are backing British businesses all the way.
And we are backing British families. Next April, the personal allowance will reach £10,000. This Government are delivering an income tax cut worth up to £700 a year to over 25 million hard-working people. Under the last Government, council tax doubled. We are now helping councils freeze it for the whole of this Parliament. Tax-free child care is being introduced and free school meals are on their way. But there is more we are doing to help.
This autumn statement confirms that from April 2015 we will introduce a new transferable tax allowance for married couples. Available to all basic rate taxpayers, it enables people to transfer £1,000 of their personal allowance to their wife, husband or civil partner. It is just a start. And I confirm today that we will introduce a new uprating mechanism that ensures the new married couples tax allowance is automatically increased in proportion to the personal allowance. Four million families will benefit, many of them among the poorest working families in our country. This measure, along with the others we take today, ensures that across this Parliament our policies are progressive, showing that we are all in this together, with the very rich paying the most.
We are also helping families with their energy bills, not with a transparent con by pretending that we can control the world oil price, but instead by focusing on the thing that Government can and should control—the levies and charges that previous Energy Secretaries piled on bills. [Interruption.] This week we deliver on the promise made by the Prime Minister—[Interruption.]
Mr Osborne
This week we deliver on the promise made by the Prime Minister to roll back those levies. The result: an average of £50 off family bills. We are doing this in a way that supports the lowest income families, reduces carbon, supports investment in our energy infrastructure and, as the document shows, does not add a penny to the tax bills that families pay. My political philosophy is clear: instead of penalising people with more taxes and more regulation, give them incentives by reducing their taxes and their bills. As I have often said, going green does not have to cost the earth.
That brings me on to fuel duty. We inherited from the previous Government the hated fuel duty escalator that would have inflicted hardship on families and small firms alike. Instead of those rises, we abolished the escalator, and we have cut and then frozen fuel duty. I have had further representations from many, many hon. Friends, from my hon. Friends the Members for Blackpool North and Cleveleys (Paul Maynard) and for Argyll and Bute (Mr Reid), and of course my hon. Friend the Member for Harlow (Robert Halfon), who is a champion of the people he represents.
I said earlier this autumn that if we could find the money, I would like to go on freezing duty. Today I can report that because we have taken difficult decisions to control the public finances, I can deliver on that promise. Next year’s fuel duty rise will be cancelled. Instead of petrol taxes going up by 2p a litre, they will stay frozen. That means that, compared with the previous Government’s plans, petrol will be 20p a litre less. That is £11 less every time you fill up—a saving for drivers over this Parliament of £680, and double that for a small business with a van.
Cancelling fuel duty rises has been a major priority of the Government—a £22 billion demonstration that we are on the side of hard-working people in this country. A married couples allowance; £50 off energy bills. We are helping those who drive a car and we are helping those who get the train, too. Fares next January were going to go up by 1% above inflation. We are going to keep average fares flat in real terms.
We on the Government Benches know that there is one thing more than any other that has supported families through these difficult times, and that is being in work. At the heart of our economic plan is support for the creation of more jobs. That is why we opposed the last Government’s plan to increase the jobs tax. That is why we reversed the most damaging part of that increase in the very first Budget after we came to office. That is also why in the last Budget I introduced the employment allowance, which eliminates the jobs tax for half a million small businesses. And that is why we will go further still. We are going to abolish the jobs tax on young people under the age of 21. Employer national insurance contributions will be removed altogether on a million and a half jobs for young people. We are not going to leave young people behind as the economy grows. We are going to have a responsible recovery for all.
The cost for a business of employing a young person on a salary of £12,000 will fall by over £500. For someone on £16,000, that is over £1,000 off. I want to commend my hon. Friends the Members for Braintree (Mr Newmark) and for Carlisle (John Stevenson) and the Million Jobs campaign for highlighting this issue. The change requires legislation. It will come into force in April 2015, and it will not apply beyond the upper earnings limit.
This country is working through its long-term plan: bringing down the deficit and dealing with the debt; spending less on welfare and making the big decisions on infrastructure; living within our means and cutting tax on business; making work pay and letting people keep more of what they earn; and with confidence in the next generation, as they make their way in education and in the workplace. This statement shows that the plan is working. It is a long-term plan for a grown-up country. But the job is not done. By doing the right thing, we are heading in the right direction. Britain is moving again. Let us keep going.
Ed Balls (Morley and Outwood) (Lab/Co-op)
The whole country will have seen today that for all his boasts and all his breathtaking complacency—[Interruption.]
Mr Speaker
Order. I appeal to the House—[Interruption.] Order. I do not need any sedentary comments from either side of the House. What I said in respect of the Chancellor applies equally in respect of the shadow Chancellor. Let us have a bit of calm and a bit of order. Following the response, as usual, I will facilitate the widest possible opportunity for questioning. Let us have courtesy, please.
Ed Balls
The whole country will have seen today that for all his boasts and all his utterly breathtaking complacency, the Chancellor is in complete denial about the central fact defining this Government in office: under this Chancellor and this Prime Minister, for most people in our country living standards are not rising, but falling year on year.
Let me ask the Chancellor to demonstrate, because he did not mention it, that he is not completely out of touch with the cost of living crisis facing millions of people in our country. Can he confirm that, on average, working people in our country are £1,600 a year worse off than they were when the Government came into office in 2010, that prices will continue to rise faster than wages this year and into next year and that, as a result, people will be worse off in 2015 than they were in 2010? [Interruption.] Is not this the truth: after three damaging years of flatlining, after the slowest recovery for over 100 years—[Interruption.]
Mr Speaker
Order. However long it takes, the response—[Interruption.] Order. Mr Morris, I do not require your assistance. Calm down. Take up yoga, or whatever is necessary. However long it takes, the response, like the statement, will be heard. The sooner Members on both sides of the House grasp that very simple fact, the better.
Ed Balls
There is a cost of living crisis, even if Government Members will not admit it in this House, and we all know why: after three damaging years of flatlining and the slowest recovery for over 100 years, from a Chancellor and a Prime Minister who said that we were all in this together and then gave a huge tax cut to millionaires, do we not know the truth? Working people are not better off under the Tories, but worse off. For all their complacent boasts, after three damaging and wasted years for most people in the constituencies of hon. Members on both sides of the House there is still no recovery at all.
Let me ask the Chancellor about the promises he made to the House on growth and living standards three years ago. He said then that the economy would grow by more than 8.4% by the end of this year, but even after today’s welcome upward revisions, growth is set to be half that—lower growth than he forecast in 2010 this year, next year, and the year after as well.
Did not the Chancellor pledge to get the banks lending, yet net lending to business is now down by £100 billion compared with May 2010? Did he not make the No. 1 test of his economic credibility keeping the triple A credit rating, yet it has been downgraded not once but twice? As for his promise to balance the books by 2015, did he not confirm today that in 2015 he will not be balancing the books but borrowing £79 billion? For all his smoke and mirrors—[Interruption.] For all his smoke and mirrors, he is borrowing £198 billion more than he planned in 2010: more borrowing to pay for three years of economic failure; more borrowing in just three years under this Chancellor than under the previous Government in 13 years. He used to say that he would balance the books in 2015; now he wants us to congratulate him on saying he will do it in 2019. With this Government, it is clearly not just the badgers that move the goalposts.
On energy bills, after the Government’s panicked and half-baked attempt to steal Labour’s clothes, we know that they are not only not very good at shooting badgers, but not very good at shooting other people’s foxes either. What is the truth? For three months, the Leader of the Opposition has been calling for an energy price freeze, and did the Chancellor announce an energy price freeze? No, he did not. Can he confirm that while the energy companies have already announced price rises of £120 this year, his policy will still see energy prices rise by £70 this winter? Under this Chancellor, the only freeze this winter will be for millions of families and pensioners with rising bills struggling to heat their homes. Does he really think he can get away with tinkering at the edges, moving green levies his own party introduced off the bills and on to the taxpayer, and—surprise, surprise—letting the energy companies completely off the hook? They are not paying a penny. Does he not realise that for millions of hard-pressed families, pensioners and businesses across our country, nothing less than a freeze will do? Rather than hard-pressed taxpayers, it should be the excess profits of the energy companies that pick up the tab.
As for the Prime Minister’s flagship policy for families—a tax break for marriage—why will not the Chancellor admit the truth and tell the Prime Minister that the policy will not even help the families the Prime Minister says it will? His own Treasury Minister has let the cat out of the bag: I have it here in black and white. The Exchequer Secretary says that just under one third of married couples will get the married couples tax allowance. Just one in six families with children will benefit. Contrary to the Prime Minister’s claim in this House a few weeks ago, a married couple both paying basic-rate income tax will get no benefit at all. [Interruption.] No wonder his own Chancellor of the Exchequer has this week told The Daily Telegraph that he thinks the Prime Minister’s policy is
“a turkey of an idea”.
The Chancellor thinks the Prime Minister’s policy is a turkey. Merry Christmas, Prime Minister, Merry Christmas! [Interruption.]
Mr Speaker
Order. It is very simple; this just lengthens the proceedings. It does not bother me; I very much enjoy chairing the proceedings. [Interruption.] I think that what Members on both sides of the House will wish to consider is how this conduct is regarded by the public we are here to represent.
Ed Balls
I think that on this one the Chancellor is right—it is a turkey of an idea.
On the cost of living crisis, on energy, on supporting families, this Government just do not get it. There is a reason why this Prime Minister and this Chancellor—the Chancellor said it in his statement—believe that people are better-off: it is that the people on their Christmas card lists have seen their bonuses rise and their taxes cut. They have shown that they are willing to stand up for the interests of the energy companies—[Interruption.] We have a Prime Minister and a Chancellor who will stand up for the energy companies, stand up for the hedge funds, and stand up for people earning over £150,000—who get a tax cut—but will not stand up for millions of families and pensioners in our country: people struggling with rising energy bills, falling wages, and rising child care costs.
We all know and agree that rising life expectancy means we are going to have to work longer and that the Chancellor’s failure on growth and the deficit means more tough spending decisions in the next Parliament. But when the country is crying out for a Government who will work with business to promote investment and wealth creation and build an economy that works for the many and not just the few, does this Chancellor really think he can get away with tinkering at the edges, letting the free market rip, and waiting for the wealth to trickle down? Is not what the Chancellor has announced today the clearest evidence yet that the Government just do not understand the scale of the challenge we face to get an investment-led recovery that works for all and not just a few—a strong recovery built to last?
Let me ask the Chancellor—[Interruption.] With the permission of the House, let me ask the Chancellor this: with house building under this Government at its lowest level since the 1920s, does he not see that his Help to Buy scheme to boost mortgage demand can deliver a strong and balanced recovery only if he does what we and the IMF have urged and invests in housing supply—more affordable homes. [Interruption.] Government Members sneer at building more affordable homes. Can the Chancellor tell the House why infrastructure output has actually fallen by 15% since 2010? No wonder the CBI is so upset.
On investment, why has not the Chancellor used the money from the planned increase in spectrum licence fees to endow a proper business investment bank? On tax avoidance, will he tell the House why HMRC has reported that the amount of uncollected tax actually rose last year?
Almost 1 million young people are unemployed; a record number who want to work full time are being forced to accept part-time work; the Work programme is a flop; the welfare bill is rising; and, as we have learned today, universal credit is a complete and utter shambles. There was no mention of universal credit in the statement: IDS—in deep shambles.
Is it not the fact that, for all the shambles and chaos and rising welfare bills, what the Chancellor has announced on youth unemployment is too little, too late? There will be help for under-21s only, and only in the last weeks of this Government in 2015. Why is he not being more ambitious? Why will he not repeat the successful tax on bank bonuses to pay for a compulsory job for all young people—a job they will take or lose?
Why will the Chancellor not remove the winter allowance from the richest 5% of pensioners? Why will he not reverse his tax cut for hedge funds and protect disabled people in our country by scrapping the unfair and perverse bedroom tax this Prime Minister introduced? Why will he not go further on the bank levy and expand free child care for working parents, make work pay and use it to help working parents?
Is not this the truth: will the Chancellor confirm that even after what he has announced today on fuel duty and increases in the personal allowance, his VAT rise, his cuts to tax credits and his cuts to child benefit mean that, on average, families with children are worse off because of his Budgets? That is the truth—giving with one hand, taking away much, much more with the other.
With energy bills still rising this winter, no real action to tackle the cost of living crisis, no proper plan to earn our way to rising living standards for all, surely Britain can do better than this.
This complacent Chancellor sits there and thinks he deserves a pat on the back. I have to say that, with bank bonuses rising and millionaires enjoying a big tax cut, this is a policy that is working for a few. But as this autumn statement shows, with this out-of-touch Chancellor and Prime Minister, hard-working people are worse off under the Tories.
David Morris (Morecambe and Lunesdale) (Con)
I congratulate the Chancellor on pulling us out of the mire the last Government left us in. To help bolster growth and provide the building materials needed for what is going on thanks to his efforts, a brickworks that closed down in 2010 in my constituency on the borders will reopen at the end of this month. I invite the Chancellor to come to the reopening. I also congratulate him on helping to get youth unemployment down by 15% in the last three months in Morecambe and on his comments about business rates for shops. The Visitor newspaper has been running regular articles on getting our shops restarted in Morecambe, and this will help immeasurably. May I also—
Mr Speaker
Order. The hon. Gentleman really has overdone it. I exercised a degree of leniency. I wonder whether he was seeking an Adjournment and then realised he had already had it.
Mr Osborne
Mr Speaker, there are so many good things happening in Morecambe that I am not surprised my hon. Friend wants to bring them to the attention of the House. Under this Government, not only is unemployment down and not only will many businesses be helped by the measures we have announced today on business rates, but, as he said, the construction materials industry is doing well, as construction continues apace. If I come and visit the beautiful Morecambe bay area with him, I will ensure we pop into the brickworks.
Mr Osborne
I agree with my hon. Friend. The good news is that businesses are expanding, and jobs are being created in Halesowen and across the black country. We have got to make sure we support that, with enterprise zones, with transport links, with links to the rest of the country and, indeed, with the European continent, through High Speed 2, and by investing in important things such as his local hospital. In all these areas we are backing his constituents, and because they have him as their Member of Parliament, they are heard in this place.