Oral Answers to Questions
John Bercow Excerpts(12 years, 2 months ago)
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Miss Smith
It is absolutely extraordinary that the hon. Lady is unable to deal with any aspect of her own challenge on fiscal credibility. May I ask her whether she voted for the welfare cap that highlights the average family’s earnings within the example that she just gave?
Mr Speaker
I remind the House that Members ask the questions and Ministers answer them.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
2. What fiscal steps he is taking to assist women facing high child care costs.
Mr Speaker
Order. When the House has calmed down a bit, I will gently and kindly remind the Chancellor that answers are to be about the responsibility for Government policy. It is pretty straightforward.
Anna Soubry (Broxtowe) (Con)
T2. Many Conservative Members have long believed that lower-paid workers should be moved out of paying income tax. Will the Chancellor confirm that next month’s increase in personal allowances will have a real benefit for hard-working families in Broxtowe, and can they be increased even more come the Budget, please?
Matthew Hancock (West Suffolk) (Con)
Thank you, Mr Speaker.
Does my right hon. Friend agree with the statement made this morning:
“The last Labour government didn’t regulate the banks properly. That’s what caused the financial crisis”—
not my words but those of the right hon. Member for Doncaster North (Edward Miliband)—or does he, like me, think that it was caused not just by a failure to regulate the banks but by the Labour Government spending more money than they had?
Living Standards
John Bercow Excerpts(12 years, 2 months ago)
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James Morris (Halesowen and Rowley Regis) (Con)
It would be fair to say that the Government have had to make a number of very tough choices as a result of the economic and financial situation they inherited from the previous Government. As my hon. Friend the Member for Mid Norfolk (George Freeman) pointed out, this is not a question of the squeezed middle: we are all facing difficult times as a result of the difficult financial situation to which the Government have to face up—and they are facing up to it clearly. At the same time, they are making an effort to balance those tough decisions with decisions that are focused on fairness.
As other hon. Members have pointed out, the decision to provide the means for local authorities to freeze council tax is a measure that assists fairness and helps people on middle incomes who are struggling to keep control of one of the most important taxes they have to pay. Local authorities up and down the country—Conservative and Labour authorities—should accept the council tax freeze as an important component of their budgetary decisions.
As a result of other coalition Government decisions, we are able to live in a low interest rate environment, which is keeping mortgage rates low and allowing householders to continue to function and to continue to live in their homes without fear of repossession. That is a crucial achievement of the Government.
It is right, too, that the coalition Government have the ambition to take people on low incomes out of tax altogether. The Chancellor has taken significant steps in that direction in the recent Budget, and I urge the Front-Bench team to take further steps to take people out of tax altogether.
Although Labour Members seldom mention it, we have seen a substantial increase in the state pension as a result of decisions taken by the coalition Government. The triple lock—as I say, not much mentioned by Labour —guarantees a substantial increase in the state pension, which is relieving pressure on pensioners across Britain. That is something to be applauded.
Let me deal with the broad subject of tax credits. I see the shadow Chancellor in his place and he was one of the key architects of the previous Government’s tax credit policy. I know that tax credits have a role to play in certain areas, but one of the downsides of the policy is that it tends to focus on poverty alleviation as being something to do with income transfer. Clearly, that is important, but the coalition Government are doing something else, which is also significant. In his recent review of poverty, the right hon. Member for Birkenhead (Mr Field), who is not in his place said that we need to tackle some of the underlying causes of poverty, which goes beyond income transfer. What the Government have done with the pupil premium, for example, is fundamental to getting under some of the issues that cause low aspiration and create generational poverty in Britain.
Under the previous Government, we saw a rise in absolute poverty, despite the complex tax credit system put in place by the shadow Chancellor. So I think the coalition—
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
Let me begin by thanking everyone who has taken part in the debate. It is clear from the level of interest that has been shown, the number of Members who have spoken, and the number who were not able to do so that we were right to raise these issues in the House today.
We heard passionate speeches on behalf of constituents from my hon. Friend the Member for Wansbeck (Ian Lavery), the hon. Member for East Antrim (Sammy Wilson) and my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier). We also heard thoughtful contributions from my hon. Friends the Members for Edinburgh East (Sheila Gilmore), for Chesterfield (Toby Perkins), for Inverclyde (Mr McKenzie) and for Oldham East and Saddleworth (Debbie Abrahams)—and, indeed, from the right hon. Member for Wokingham (Mr Redwood), although I began to be worried about the number of occasions on which he seemed to be agreeing with the Labour party. Unfortunately, we also heard some of the same old rhetoric from, predominantly, Tory Members. It is time that the Government took responsibility for what is happening on their watch.
We heard from Members what their constituents tell them. We heard, for instance, that it is not simply a case of being able to secure an extra few hours for those who are on 16-hour contracts. We did not hear from Ministers where those extra hours were to come from, although they were pressed on the issue. We heard the views of charities such as the Child Poverty Action Group and organisations such as the Institute for Fiscal Studies, and those of trade unions, particularly the Union of Shop, Distributive and Allied Workers. We heard about the difficulties experienced by people who are already on low incomes and are trying to make ends meet, while fearing what will happen when their working tax credit is cut.
It is sad that we heard that same tired, out-of-touch rhetoric from many Government Members. It just shows that they do not understand what it is like for families who are trying to make ends meet while facing problems such as ever-rising prices. Some Government Members are shaking their heads. Let me deal with a few of the points made by the Exchequer Secretary in his opening speech. He seemed to suggest that it was reasonable for couples to work 24 hours rather than single parents working 16 hours, but, as I said earlier, he did not give us any indication of where those extra hours were to come from. In response to an intervention, it was suggested that people could simply change jobs and that there are always jobs out there. We Opposition Members are concerned about unemployment, and we would like to know where those jobs are now, and where they are going to come from—and I suggest that Government Members should try explaining that to the millions of people who are already out of work.
It was also suggested that the raising of the personal allowance was going to make a big difference. I gently say to those who made that point that people who are working 24 hours or fewer on the minimum wage will not benefit from that, and that this measure does not serve as an argument for cutting the working tax credits of people on low incomes.
The Exchequer Secretary and others used the word “fairness”; indeed, he suggested that it was at the heart of everything he did—and he said that with a straight face, which I found astonishing given what the Government are doing. Far from everyone being in this together, people cannot understand why David Cameron and George Osborne have chosen to give the banks a tax cut at the same time as their Budget measures are hitting women harder than men and are pushing up child poverty.
We heard during the course of the debate that families with children are set to lose an average of £580 a year from policies coming into effect this April alone. Some Government Members may think that £580 is not much money, as for them it may merely mean cutting back on a few luxuries, but for ordinary families in ordinary houses in ordinary streets in the cities, towns and villages Opposition Members represent, £580 may well make the difference between those families being able or not being able to pay their electricity or gas bill, or buy shoes for their children, or ensure that they can go on the school trip. That sum may be what enables them to provide a decent standard of living—not luxuries, but the necessities of family life.
Next month’s Budget must pass two tests: on jobs and growth, it must boost our economy and put in place the long-term reforms that we need; and on fairness, it must ensure that families on low and middle incomes do not bear the heaviest burden. The Government have not explained how it can be fair that working families on the lowest incomes who are trying to do the right thing are going to lose out.
I repeat our call for a plan for jobs and growth in the Budget, and I look the Economic Secretary in the eye and ask her whether she will press the Chancellor to think again on the changes to tax credits and child benefit, which will cost families with children up to £4,000 per year. Will she urge him to abandon the changes in eligibility for working tax credits that are set to hammer hundreds of thousands of parents in part-time work by up to £74 per week and put them in a situation where work will not pay? Will she say to both her constituents and mine that the Government will pull back from the plan under which, from April, couples who have children and who are earning less than about £17,700 will need to increase the number of hours they work from a minimum of 16 hours to 24 hours per week, or they will lose all their working tax credits? Will she say how she will create the fairness that her colleague, the Exchequer Secretary, talked about? If she believes people should be better off in work, how can she support a change that will penalise about 275 families in her constituency who are working and trying to do the right thing, but who cannot increase their working hours at a time when the economy is flatlining and unemployment is rising? Does she agree that this unfair and damaging change could, and should, be cancelled? We want a straight answer to that question from her.
I also press the Economic Secretary again on whether she has asked David Cameron and George Osborne to review urgently—
Mr Speaker
Order. May I gently say to the hon. Lady that she should refer to Members of the House not by name, but by their title?
Cathy Jamieson
I apologise, Mr Speaker. I am afraid I got carried away in the heat of the moment. I should have asked whether the Economic Secretary will press the Prime Minister and the Chancellor to review urgently their planned changes to child benefit, which are unfair, unworkable and ill thought through.
As we have heard time and again in this debate, it cannot be right that a two-earner family each earning £42,000—a total of £84,000—would keep all their child benefit, but a single-earner family on £43,000 would lose it all at a stroke. When the Exchequer Secretary was asked to explain that, he seemed to indicate that it was a bit of a challenge, but he did not say how he was going to solve it and how he would remove that burden from the poorest. The Government should put the implementation of their child benefit cuts on hold and conduct an urgent review that will report before their changes come into effect next January.
Labour Members did not come into this debate only to score political points in this Chamber, notwithstanding what some Government Members have said, or only to put this Government under pressure, although we have done both those things; we did so because we want the Government to listen. We want them to stop what they are doing, to re-examine the issues and to come back with a fairer alternative. There now seems to be some dispute at the heart of the Government; I listened to what was said in questions earlier today, when I heard the Secretary of State for Work and Pensions seem to blame the Treasury, and reports tonight suggest that No. 10 and the Treasury are at odds over this. The Government’s own internal brief is for them to sort out, but either way the problem is of their own making. Perhaps they thought they would get away with it —although, again, we are hearing reports tonight that perhaps the Chancellor never really intended to implement these changes but the problems in the economy mean he is now not able to back away from them. If the Government do not listen today and they fail to act, they will be confirming that they are out of touch and that they have no understanding of the realities of life for families. There are families up and down the country who simply will not forgive them.
Remuneration of EU Staff
John Bercow Excerpts(12 years, 2 months ago)
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Mr Speaker
With reference to the annual adjustment of the remuneration of EU staff, I feel certain.
Stephen Pound
On the subject of the annual adjustment of the remuneration of EU staff, my hon. Friend may be aware that when the MPs team won this morning, that was the sole topic of discussion.
Banking (Responsibility and Reform)
John Bercow Excerpts(12 years, 3 months ago)
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Mr Speaker
Order. The House will be aware of the level of interest, and therefore the imposition of an eight-minute limit on Back-Bench speeches.
Margot James
In fact, RBS has a reasonably good record of lending to small and medium-sized enterprises. It just missed its Merlin targets. It launched a new product at the end of last year for businesses with low fixed interest rates, no early repayment charges and no fees for the first three months. It is above the market average for small business loans. Some 40% of all SME loans are from RBS, which is—
Mr Speaker
Order. I say gently to the hon. Lady that interventions must be brief. There is substantial pressure on time and I would like to accommodate Members.
Mr Meacher
The hon. Lady has obviously received a detailed RBS briefing. However, what she describes is very different from the experience of our constituents, who complain about how difficult it is to get loans and about the prohibitive conditions that are attached to them.
I want to make one more point. It is little recognised that 85% of the British public’s money is held by just five banks, which are able to use that money with little or no accountability to the public. Investment in the UK economy therefore reflects the interests not of the public or of society, but of the senior decision makers at the five largest banks. Given that the total gross spending of the banking sector in the run-up to the crash exceeded by far total Government spending, the decision makers in those banks potentially have more spending power to shape the UK economy than the whole machinery of Government. That is a significant fact. In effect, control over the money supply and the allocation of credit has been largely privatised. That is central to Britain’s problems.
Britain needs above all to escape the dangerously mounting deficit in our traded goods account, which in the last two years has been up to £100 billion a year or 7% of GDP. The allocation of credit cannot be left in the hands of private commercial banks, which currently channel only 8% of the money supply into productive investment. Instead, they generate colossal asset bubbles through mortgages and household borrowing.
What is needed is the re-adoption of the rationing of bank credit through official guidance, enforced where necessary through quantitative ceilings. That prevailed successfully in this country until the 1971 competition and credit control measures, which inaugurated the era that said that the market always knows best and in which the deregulation of finance depended almost exclusively on the price mechanism and variable interest rates.
Bonus figures released last week show that the top 1,250 executives in the eight leading London banks received an average of £1.8 million in 2010. That is £34,000 a week. What is really needed in banks, as elsewhere, is whole company pay bargaining, whereby the pay at each level, including at the top, has to pass the examination and approval not just of shareholders, but of the employed staff who are the bedrock of the organisation.
Financial Services Bill
John Bercow Excerpts(12 years, 3 months ago)
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Mr Speaker
Order. The wind-ups from the Front Benchers begin at 9.40 pm, but before then two remaining Members are seeking to catch my eye, both of whom can be accommodated if they thoughtfully divide the time roughly equally between them.
Tax Avoidance (Public Servants)
John Bercow Excerpts(12 years, 3 months ago)
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Urgent Questions are proposed each morning by backbench MPs, and up to two may be selected each day by the Speaker. Chosen Urgent Questions are announced 30 minutes before Parliament sits each day.
Each Urgent Question requires a Government Minister to give a response on the debate topic.
This information is provided by Parallel Parliament and does not comprise part of the offical record
The Chief Secretary to the Treasury (Danny Alexander)
I am very grateful to the right hon. Gentleman for giving me the opportunity to set out the answer to this question. As hon. Members might be aware, departmental public spending encompassing the appointment of senior civil servants is audited against the Treasury’s “Managing Public Money” guidance. That document makes it clear that
“public sector organisations should avoid using tax advisers or tax avoidance schemes as any apparent savings can only be made at the expense of other taxpayers or other parts of the public sector.”
There is no place for tax avoidance in Government.
A recent case has highlighted those issues, and although I cannot comment on the specifics of an individual’s tax affairs, for reasons of which the right hon. Gentleman will be fully aware, I want to take the opportunity to explain the action that I have taken.
As hon. Members are already aware, for senior civil service appointments whose salary exceeds £142,500, terms and conditions are negotiated by the appointing Department and are presented to me for approval of the salary. Those arrangements are in place to control excessive pay.
In the light of that recent case, I have asked the Treasury urgently to review the appropriateness of allowing public sector appointees to be paid through that mechanism—[Interruption.] I have also asked the Treasury Officer of Accounts—[Interruption.]
Mr Speaker
Order. I granted this urgent question because I thought it warranted ministerial comment and scrutiny by the House. The House can rely upon me to ensure that there is plenty of time for Back Benchers, but as a matter of procedure, propriety and courtesy, we must hear what the Chief Secretary has to say, preferably without constant interruption and heckling.
Danny Alexander
I am grateful, Mr Speaker.
As I was saying, I have also asked the Treasury Officer of Accounts to write to all accounting officers across Whitehall to remind them that all appointments should, in line with existing guidance, consider the wider cost of lost revenue to the Exchequer when considering value for money.
Furthermore, I have requested that all Departments carry out an internal audit by the end of March. As my right hon. Friend the Minister for Universities and Science has said, the Student Loans Company will for the remainder of the contract in question change the arrangements and deduct tax and national insurance at source. Across Government, if any appointments that do not provide value for money are found, whether agreed by this Government or the previous one, I have urged Departments to seek to unwind them as quickly as possible and as quickly as is compatible with securing good value for public money.
At a time when we all have to pull in the same direction to tackle the country’s financial problems, it is essential we all pay our full and fair share. That is why I have taken this action to ensure that Government Departments do not support tax avoidance schemes.
Mr Speaker
Order. There is much interest in this subject, and if I am to accommodate it, brevity is required in both questions and answers.
Conor Burns (Bournemouth West) (Con)
Does my right hon. Friend understand that those genuinely working on the front line in the public sector will find these revelations obscene? When his review is complete, will he be able to tell us when such practices first entered the public sector, and whether it was under this Government or the previous one?
Mr Speaker
Order. I should just emphasise that the right hon. Gentleman will want to focus specifically on the terms of the urgent question, and I know that that is what he will do.
Danny Alexander
The question is a broad one about tax avoidance in Government. There are Government employees in other jurisdictions, and I am sure that the measures we have taken—for example, in relation to Switzerland and Lichtenstein, the non-dom levy that we have put in place, and so on—will ensure that any practices that might have been in place in the past no longer occur.
Danny Alexander
I can tell the hon. Gentleman what I have said already. I signed off the salary level in this case. The terms and conditions of the appointment were put forward by the Student Loans Company in the Department for Business, and came to me for approval in the usual way, given the salary level that was being proposed.
Mr Speaker
Order. I am grateful to the Chief Secretary to the Treasury, the Opposition Front-Bench team and the 34 right hon. and hon. Members who were able to question the Chief Secretary. [Interruption.] The hon. Member for St Helens North (Mr Watts) is thirsting to raise a point of order, but I am afraid he will have to wait until after business questions.
Oral Answers to Questions
John Bercow Excerpts(12 years, 3 months ago)
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Henry Smith
I welcome yesterday’s announcement by the Government on mitigating excessive executive pay. With regard to the UK honours system, may I seek an assurance from my right hon. Friend that the Government will be more circumspect in regard to the honours that are suggested, unlike the—
Mr Speaker
Order. I think that the hon. Gentleman might have been groping his way towards order, but he had not quite arrived. We will have to leave it there for today. We are specifically talking about excessive executive pay.
Nadhim Zahawi
In the forthcoming Financial Services Bill, should we not introduce criminal sanctions for gross negligence at the helm of a systemically important bank, to ensure that no rewards for failure would be forthcoming for those who are masters of nothing?
Danny Alexander
I am sorry if agreeing with a Government Minister makes the hon. Gentleman uncomfortable, but he is of course right that work is the best route out of poverty. That is the driving force behind our welfare reforms, the Work programme, which is the most extensive initiative ever undertaken to help people off benefits and into work, and our youth contract. Of course the country is in very difficult economic circumstances, but the Government are doing everything we can to support people off benefits and into work for precisely the reason he gives.
Mr Speaker
Order. I am sorry to disappoint colleagues, but questions to the Treasury team, rather analogous to questions to the Foreign Secretary and his colleagues, tend to beat the box office records. We must now move on.
Public Service Pensions
John Bercow Excerpts(12 years, 4 months ago)
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The Chief Secretary to the Treasury (Danny Alexander)
With permission, Mr Speaker, I would like to make a statement on the reform of public service pensions.
Seven weeks ago I reported to the House that in an effort to secure agreement, the Government were making a new offer to public service workers. Despite some unnecessary interruptions, scheme negotiators have been working hard to reach detailed heads of agreement by the end of the year deadline that we set. It has not been an easy task, but the Government have demonstrated that they will not shy away from taking difficult long-term decisions in the nation’s long-term interest.
We wish to see pensions for public service workers that are fair and sustainable, that provide dignity in retirement, and that are affordable for the workers and for taxpayers. That is why we committed in the coalition agreement to establish an independent commission to bring forward proposals for reform. Lord Hutton’s magisterial report did just that. We have stuck closely to the recommendations of the former Labour Secretary of State for Work and Pensions.
The case for reform is self-evident. The average 60-year-old lives longer now than in the 1970s. That means that people are living in retirement for longer. The life expectancy of a 60-year-old was 18 years in the 1970s; that has risen to 28 years today. As a result, the cost of public service pensions has risen to £32 billion a year—an increase of one third over the last 10 years.
We have already made some changes that deal with short-term pressures, including changing the basis of pension uprating to the consumer prices index and increasing member contributions by 3.2 percentage points, phased over three years. Those proposals are unchanged. Next year’s contributions increase is almost identical to that planned by the previous Government. The precise details of next year’s increase have been set out by Departments. All increases are tiered by income to protect the lower-paid. The Government will review the impact of next year’s increases, including on opt-outs and equality, before taking final decisions on how future increases will be delivered. Interested parties will have the opportunity to provide evidence and views to the Government.
I know that many Members of the House will be concerned about the pay and conditions of our armed forces. Let me be clear that members of the armed forces will continue to make no contributions towards their pensions and will be exempt from the increases announced at the spending review.
From the beginning of this process, we have committed to ensuring that public service pension schemes continue to offer a defined benefit pension that is based on the size of the worker’s salary and is not dependent on the market performance of a fund. That is not available to most people in the private sector. From the beginning, we have been clear that all accrued rights will be protected in full, and that the taxpayer needs to be properly protected from the risks associated with further increases in life expectancy by linking the scheme normal pension age to the state pension age. In November, we improved the offer to a 1/60th accrual rate, which is an increase of 8%. That is available only in the event of agreement being reached. We also agreed to protection for those who are 10 years from retirement.
I would like to pay tribute to the Minister for the Cabinet Office, the TUC and the scheme negotiators on both sides for their efforts to reach agreement. I am pleased to report that heads of agreement have now been established with most unions in the local government, health, civil service and teachers’ schemes. It will of course now be for union executives and memberships to decide their response.
The heads of agreement deliver the Government’s key objectives in full, and do so with no new money since our November offer. In future, scheme pension ages will match the state pension age and schemes will be on a career average basis; all the agreements are within the cost ceiling that I set in November, and will save the taxpayer tens of billions of pounds over the decades to come.
Because heads of agreement have been reached, the better offer that I made in November has been secured by trade unions for their members, including the “no change” guarantee for workers 10 years from retirement. The heads of agreement also deliver a number of the key objectives set out by the trade unions during the talks. Negotiations on them are now concluded, and we and the unions agree that this is the best outcome that can be achieved by negotiation. It is the Government’s final position, and we will bring forward legislation to the House in due course.
The full details of the heads of agreement in each scheme are today being set out in written statements by each Department. The key changes made are as follows. In the civil service, we have agreed to revalue each year’s contributions by the consumer prices index rather than earnings, allowing an accrual rate of 1/44th to be offered. That will cost the same as our original offer, but with a configuration preferred by the trade unions. As a consequence, the new scheme will be very similar to the Nuvos scheme that is already available in the civil service, except that in future the normal pension age will be linked to the state pension age as it rises. It is therefore deeply disappointing that the Public and Commercial Services Union has rejected the heads of agreement and walked away from the talks.
I have previously made the point that the local government scheme must be treated differently because it is a funded scheme. The Local Government Association and the trade unions have agreed that the pension age in the new scheme will be linked to the state pension age, and their preference is to deliver a career average scheme. Further discussions will take place over the next three months to agree the details.
In the health scheme, we have agreed to a revised revaluation factor of CPI plus 1.5%, which will allow the accrual rate to be improved to 1/54th. In education, we have agreed to a revised revaluation factor of CPI plus 1.6%, allowing for the accrual rate to be improved to 1/57th, along with modest improvements to early retirement factors. All those heads of agreement are within the cost ceiling that I set out in November, but in a configuration preferred by the unions.
Discussions on police, armed forces, judiciary and fire service schemes have been a separate process from the start, and proposals will be brought forward in due course.
Let me turn to some other aspects of the deals. All the agreements include a cap on taxpayer costs at two percentage points above or below the scheme valuation. That cap is symmetrical, so employees will benefit if costs fall. As Lord Hutton made clear, with the other aspects of reform now agreed there is no reason to believe that, under normal circumstances, that cap will need to be used. It is there as protection for taxpayers and for workers if extraordinary unpredictable events occur.
In the course of the talks, unions have stressed the importance of ensuring that their members will continue to be able to receive the benefits of their scheme if it is outsourced. That is the purpose of the fair deal policy, the future of which we have been consulting on. Because we have agreed to establish new schemes on a career average basis, I can tell the House that we have agreed to retain the fair deal provision and extend access for transferring staff. The new pensions will be substantially more affordable to alternative providers, and it is right that we offer workers continued access to them.
In addition, the Government will consider what practical options might be available to reform the terms of access to the NHS pension scheme, in particular for NHS staff who move to a non-NHS “any qualified provider” delivering NHS services. [Interruption.] That is something that the trade unions have suggested, so hon. Members should keep quiet and listen. [Interruption.]
Danny Alexander
Opposition Members never have any answers, so they chunter from the sidelines instead.
At the same time, by offering transferred staff the right to remain members of the public service scheme, we are no longer requiring private, voluntary and social enterprise providers to take on the risks of defined benefit that deter many from bidding for contracts in the first place. Replacing so-called bulk transfers of pensions with continued access to public sector schemes means that we continue to protect public service workers’ pensions, manage the risk to the taxpayer and forge ahead with our ambitious plans for public service reform.
I have made the commitment that these reforms will be sustained for at least 25 years. The Government intend to include provisions on the face of the forthcoming public service pensions Bill to ensure that a high bar is set for future Governments to change the design of the schemes.
What does this deal really mean? For our work force, it means that they will continue to receive the best-quality pensions available in this country—and rightly so. In the private sector, these pensions could be bought only at a cost of one third of salary. This is a proper reward for a lifetime’s commitment to serving the public. The new scheme is fairer to women too. By moving to career average, we will give a better pension in future to those, mainly women, who have low or steady salaries throughout their careers.
The Government have been clear that because we are living longer, public service workers must work a bit longer and pay a little more for their pensions. But in return we have also made an important commitment—that at retirement, those on low and middle incomes will get at least as good a pension as they do now. I can confirm today that we have met that commitment. For people who depend on our public services, it means that most unions will be asking their executives to lift the threat of further strike action while work is done to conclude the final agreement, and I hope that the remaining unions will do the same. For the taxpayer, it means that tens of billions of pounds extra that would have been spent on unreformed pensions over the next 30 years is now available for other pressing demands. These are reforms that significantly improve the long-term fiscal sustainability of this country, and reinforce the credibility of our fiscal stance.
The Office for Budget Responsibility will provide a forecast of the savings in its next fiscal sustainability report. For industrial relations, I believe this shows that it is possible to reach agreement through negotiation in good faith, based on clear objectives. That is the right way to approach relations between government and the trade unions. Sometimes the talks have been difficult, but it has been right to stay at the table. In these difficult times, it is important to show that people can come together to achieve genuine reform, preserving the best of the past, but recognising the realities of the future. This is a fair deal for public service workers, an affordable deal for the taxpayer, and a good deal for the country. I commend this statement to the House.
Banking Commission Report
John Bercow Excerpts(12 years, 4 months ago)
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Mr Speaker
Order. If I am to accommodate the level of interest in the statement, I will from now on require brevity, the textbook for which can be written by Sir Stuart Bell.
Sir Stuart Bell (Middlesbrough) (Lab)
Building on my right hon. Friend the shadow Chancellor’s statement on bank lending to the small and medium-sized enterprise sector, has the Chancellor made any study at all of the impact of what he calls bigger cushions—raising capital requirements from 7% to 9%—on bank lending to that sector? Can he offer the House a guarantee that he will consider that as part of his consultation leading to his White Paper in the spring?
Mr Speaker
Order. Still on the subject of brevity, I now turn to the person I would describe as the emeritus professor of that subject, Mr John Redwood.
Mr Speaker
Order. I think the hon. Member for Watford (Richard Harrington) has set a trend of leaning forward expectantly, and the hon. Member for Erewash (Jessica Lee) is now following in his wake.
Jessica Lee (Erewash) (Con)
Does my right hon. Friend agree that one key conclusion of the report is about customers’ ability to move their accounts more cheaply and easily? That will be well received by people in Erewash and elsewhere. Banks are there to provide a service, and that is the type of measure that will significantly increase competition and aid this country’s recovery.
Mr Speaker
Order. In framing his response, the Chancellor of the Exchequer should be aware that if it is related in any way to banks, he is welcome to answer, but he is not obliged to do so. The question must relate to the specifics of the statement. It is up to the Chancellor.
The Economy
John Bercow Excerpts(12 years, 5 months ago)
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Mr Speaker
Before I call the Chancellor, I remind the House that in view of the high level of interest in the debate I have imposed a six-minute limit on each Back-Bench contribution.
Sheila Gilmore (Edinburgh East) (Lab)
This debate is not about denying the deficit, and nor is it about never reducing public spending: it is about if and how we reduce the deficit and how we use public investment to grow the economy.
I intervened on the Chancellor earlier in this debate and asked the Chief Secretary to the Treasury a question at Question Time because they ignored an important part of the OBR report, which they have quoted extensively—indeed, the Chief Secretary is still ignoring this point. He argued that we do not have growth because the OBR discovered that the recession was deeper than previously thought. However, the OBR also said that the recovery had been quicker and stronger in 2009 than previously thought and that the decline in growth came in the latter part of 2010.
That is when the famous oil tanker that people have talked about threw out its anchors and started moving backwards. The 2009 recovery did not happen by accident or because the sun was shining; it happened because the previous Government took steps to stimulate the economy. Such steps can be taken. It is not true, as has been argued, that if we simply use Government money, we will never pay off the debt.
The National Housing Federation, which represents housing associations, has made a small but helpful suggestion. It says that if the Government put £1 billion towards shared-ownership housing, the housing association sector could put £8 billion towards it. That would grow 400,000 jobs and build the 66,000 shared-ownership houses that are hugely needed by many low-income families, and at the same time reduce spending on jobseeker’s allowance and housing benefit. Many who would live in shared-ownership houses would previously have lived in high-rent private sector housing, which causes the housing benefit bill, which the Government say they are worried about, to escalate.
That is just one small example. When we create jobs in that way, we create not just that one job. It is not a question of saying, “We spent all that money creating those jobs. Okay, those people will pay more tax and will not be on benefit, but that is not growing the economy.” Those people exist within local communities. If people have jobs and incomes, they will buy goods from other businesses.
It is no accident that many of the businesses in difficulty during the recession and after are related to the housing world. I know of one firm in Edinburgh that not only sold furniture but built it. The furniture-building side of the business has closed because the market has declined. People are not buying houses and they are not moving into new ones or redecorating, and they are not buying furniture.
Mr Speaker
Order. It is the height of discourtesy for an hon. Gentleman, who has just made a speech in the debate and who is fortunate to have done so, then to sit there, wittering away at other Members, completely ignoring another hon. Member on her feet. That hon. Gentleman should be thoroughly ashamed of his behaviour.
Sheila Gilmore
The ongoing effect of creating construction jobs would ripple far beyond the jobs themselves. That is what we mean by investing to grow the economy. We will not always borrow money for such things, but if we borrow on a short-term basis, we would still be borrowing for a purpose. Borrowing is not always bad. Many Government Members and others bemoan the fact that small businesses cannot borrow to expand. The Government can quite legitimately borrow to grow the economy. That is what we should be doing, but we have not been doing it for the past 18 months.
Mr Davey
Given that that comes from a former Treasury Minister in a Government who often got their figures wrong, I do not think that the OBR needs to listen to that. It is absolutely clear that the Labour party is taking the OBR’s figures seriously. It is significant that we can at last have a debate without the numbers being the issue—without the spin and the game playing that so debased the House’s deliberations in the past. The Labour party’s acceptance—grudging or otherwise—of our or the OBR’s forecasts presents Labour Members with a problem. Why do they not accept the underlying explanation of the OBR’s forecasts?
This House has heard that the OBR’s forecasts changed not because the Government’s policy has gone wrong, but because of three reasons outside this Government’s control: imported inflation, with higher oil and commodity prices; the huge uncertainty caused by problems in the eurozone; and, finally, the boom and bust that Labour once arrogantly told us they had abolished, which was worse under Labour than anyone had previously thought. The Labour party has to face up to this reality, yet the shadow Chancellor did not. This Government have, and have made the difficult choices in doing so.
Our strategy of loose monetary policy and fiscal consolidation, backed with some of the most ambitious supply-side reforms in generations, was not just right when we first announced it after the election; it is right now. Indeed, recent events have given even stronger confirmation that it is right. That is why, despite the changed forecast, our interest rates remain so low while countries all around us have seen their credit rating slashed, downgraded or put on negative watch. The markets have shown their confidence in the UK with the interest on our debt falling to historic lows.
In what was probably the most remarkable part of today’s debate, the shadow Chancellor was astonishingly dismissive of the low interest rates and our achievements. Never mind that Italy and Spain have seen their rates shoot above 6% while ours have fallen towards 2%; never mind the benefit to mortgage holders, businesses and taxpayers of that achievement. The shadow Chancellor seems to believe that the UK is in a liquidity trap—despite the fact that we have a credible central bank, despite the fact that quantitative easing has been judged effective and despite the major credit easing announced in the autumn statement. In the early 1930s, ahead of Keynesian rearmament, a monetary expansion with low rates combined with fiscal consolidation produced a significant recovery. Is that not the lesson from history that the shadow Chancellor simply has not learned?
Of course, we could have opted for another growth policy—some call it plan B—involving unfunded tax cuts, more borrowing and more spending. The details of that are never clear, but the consequences are higher interest rates. [Interruption.] Labour positions itself as the party of high interest rates, although a 1% rise in market interest rates adds £10 billion to mortgage bills—meaning that the average family with a mortgage will pay £1,000 more—and increases business rates by £7 billion and taxpayers’ costs by £21 billion. That would be the price of Labour government. [Interruption.]
I have looked around Europe for Governments or mainstream political parties that have opted for a policy such as plan B, but they are in short supply. Other Governments are now having to address their budget deficits—[Interruption.]
Mr Speaker
Order. Far too many private conversations are taking place in the Chamber. Let us hear the Minister.
Mr Davey
Other Governments, faced with rising interest rates on their debts, are now having to address their budget deficits. Often they are having to cut deeper than us. It is true that our deficit reduction, at 3.7% of GDP over the next four years, is the third highest in the G7. After all, in 2007 our structural deficit was the highest in the G7. Yet Italy is now making much deeper cuts, and France too is planning deeper cuts. Our deficit reduction is of course significantly less than that of Greece, Ireland, Portugal or Spain, so we will not be opting for plan B as suggested by the Labour party.
We heard many excellent speeches from Members in all parts of the House. I particularly commend those of my hon. Friend the Member for Chichester (Mr Tyrie) and of the hon. the Members for Skipton and Ripon (Julian Smith) and for Newton Abbot (Anne Marie Morris), all of whom referred to the importance of the supply-side reforms. The hon. Member for Skipton and Ripon mentioned the important employment law reforms which, I believe, will make a big difference to our efforts to return people to work, and the hon. Member for Newton Abbot spoke of the importance of ensuring that regulation was cut for micro-businesses. I can tell the hon. Lady that we are achieving that now, even at European level.
We also heard good speeches on the importance of infrastructure investment from the hon. Members for Folkestone and Hythe (Damian Collins), for Ochil and South Perthshire (Gordon Banks) and for Scunthorpe (Nic Dakin), and from the former Chancellor of the Exchequer, the right hon. Member for Edinburgh South West (Mr Darling). The significance of the infrastructure plans that we announced in the autumn statement is that they are well advanced, and some are even shovel-ready, so the problems that the shadow Chancellor worried about do not pertain.
This was an important debate. For once, it was not about the figures in the economic forecasts and the Budget questions. Thanks to the innovation of the Office for Budget Responsibility, it focused largely on analysis—although at times the analysis presented by the shadow Chancellor was more theoretical than academic—and it sharpened the differences between the coalition and the Opposition. While the Government are focused on keeping interest rates low, Labour’s priority is to spend and borrow more. While this Government—
Mr Alan Campbell (Tynemouth) (Lab)
claimed to move the Closure (Standing Order No. 36).
Mr Speaker
The Question is, That the Question be now put. [Interruption.] I think the Ayes have it. [Interruption.] Order. Hon. Members must calm themselves; it will be injurious to their health otherwise. The Question is, That the Question be now put. [Interruption.] It is simply a case of putting the Question. I will try once more. The Question is, That the Question be now put. I think the Ayes have it.
Question accordingly put, That this House has considered the matter of the economy.
Mr Speaker
That, I think, was a case of either a point of frustration or, as the right hon. Gentleman has a smiling countenance, him getting his point on the record.
Ed Balls (Morley and Outwood) (Lab/Co-op)
On a point of order, Mr Speaker. Given that the motion before the House today was on whether there has been a sufficient debate on the economy, given the failure of plan A, given the £158 billion of extra borrowing, given rising unemployment, and given the view of the House that more time is needed for this debate, could you advise on whether the will of the House could be expressed and there could be more time to debate the very important issues facing this House and the country?
Mr Speaker
I am grateful to the right hon. Gentleman. The allocation of time for parliamentary debates is not a matter for the Chair, but the right hon. Gentleman has recorded his view, as has the Deputy Chief Whip.
Dr Thérèse Coffey (Suffolk Coastal) (Con)
Further to that point of order, Mr Speaker. I seek your advice. Is it fair to say that anyone who has spoken in the debate and then voted against the motion is actually misleading the House by saying that it has not considered the motion?
Mr Speaker
The very simple answer to the hon. Lady is that the House has not been misled in any way. Nothing disorderly—[Interruption.] Order. I have just made the point, which brooks no contradiction, that the House has not been misled in any way. Nothing disorderly has taken place. The vote is what the vote is; it is not for me to interpret. Other hon. and right hon. Members and people outside the House are free to do so as they wish.
Andrew Miller (Ellesmere Port and Neston) (Lab)
On a point of order, Mr Speaker.
Andrew Miller
Mr Speaker, by a majority of 134, the House has determined that this House has not considered the matter of the economy. Have you heard from the Government Front Bench whether the Government intend to allocate more time to ensure that the House does consider the economy properly?