Fuel Duty (Northern Ireland)

Stephen Pound Excerpts

Wednesday 22nd February 2012 Westminster Hall

[Ms Ritchie]

The hon. Gentleman brings me into an interesting debate about the devolution of tax-varying powers to Northern Ireland, which my party supports. He raises the other important issue of the block. No doubt, as with corporation tax, that matter will be decided by the Office for Budget Responsibility. Naturally, we in Northern Ireland would say, collectively across parties, that we are a special region within the UK, notwithstanding our political or identity differences. We are coming out of a legacy of conflict and that needs to be addressed for the people who live there.

[Stephen Pound (Ealing North) (Lab)]

Surely, the point is that Northern Ireland is the only part of the United Kingdom with a contiguous land border with another European country. Just as in Europe, there are variable tax rates on borders—between Luxembourg and Belgium, for example—so surely there is a case for recognising that the problem is not solely part of the rural differential, although that is significant. It is a cross-border issue. We must look to that as well. Surely, Her Majesty’s Government should be working in that direction.

[Ms Ritchie]

I thank my hon. Friend for his intervention. I wish to progress to the issue he mentioned, because we share a land border with the south of Ireland. There are differential tax rates and we in the north of Ireland need to be given a certain degree of comfort.

With specific reference to Northern Ireland, having brought attention to the general problem besetting the market, I now turn to our own constituencies and Northern Ireland in particular, where the situation is even more severe. I have already highlighted the general point in relation to Britain, but I emphasise that from January to December last year petrol and diesel prices in Northern Ireland were the most expensive, and in January this year the price of diesel was the most expensive in the European Union. The AA has recently demonstrated that Northern Ireland has higher fuel prices than any other region and that on average we pay 134.6p at the pump, while the average price in the UK is 133.5p.

Prices continue to rise in Northern Ireland. In December 2011, it cost £66 to fill a standard 50-litre engine—£70 for diesel—and within a year this has gone up to £70, a 6% increase. A family in my constituency that owned a Ford Galaxy car with a 70-litre engine recently told me they are faced with a £100 bill every time they refill their car. Such families will be faced with paying hundreds of pounds more than they used to every year, an amount that I guarantee the Minister is not insignificant for the vast proportion of people, at a time when they are already suffering, with welfare reform proposals coming down the line and with the cost of motor car insurance much higher in Northern Ireland, particularly in rural areas, compared with comparable regions in Britain.

The average family sends £680 a year to the Treasury in London just to cover fuel duty. Many families will be affected by the public sector pay freeze enacted by the very same Treasury. The high cost of fuel is particularly problematic for the poorest in society, for whom such an amount represents a significant proportion of income and for whom the use of a car is most important to remain economically active.

There is a discrepancy not just between regions but within them, with rural areas in Northern Ireland, including my constituency, particularly prone to high prices. Indeed, this problem is exacerbated by large retailers operating across many sites, charging different premiums by location, a practice that drives up prices in certain areas, particularly in rural locations, where the dependence on fuel is often the greatest.

The problem in rural areas can be compounded by the absence of large supermarkets to drive down the prices. For example, the AA cited the lack of Asda forecourts in Northern Ireland as a key contributory factor, meaning that price competition is not as keen as in the UK. I urge the Minister to review how location-specific pricing and the absence of large supermarkets distort the market and create an unfair playing field.

We cannot separate this problem from our investment in public transport services. It may interest the Minister to know that, historically, Northern Ireland has received the lowest spend per capita on transport infrastructure, leaving the car as king and often the only viable choice. A perfect example of this is the atrocious management of the rail link between our two biggest cities, Belfast and Derry, which has been compounded by the legacy of blinding ignorance to organising the network on an all-Ireland/island basis.

Simply put, people have no option but to get in their car. Those who are priced out of the market by high fuel prices are often left economically isolated and socially disfranchised. Indeed, there needs to be joined-up thinking on a north-south basis regarding the fuel duty regime to avoid striking disparities, particularly around the border, as my hon. Friend the Member for Ealing North (Stephen Pound) mentioned. This problem distorts the local market for fuel and leaves local retailers and consumers at a marked disadvantage.

These problems are faced not only by our people but by our businesses. We hear the Secretary of State for Northern Ireland and Treasury Ministers talk about rebalancing and growing the Northern Ireland economy. This seems to be rhetoric in search of a policy at the minute. Does the Minister not agree that one of the main things holding back business growth in Northern Ireland is the punitive price of petrol? Action here would be the ideal way for the Treasury to demonstrate its commitment to growing the Northern Ireland economy.

The Minister does not need to tell me the problems faced by small and medium-sized businesses in the current climate. Does she not agree that a cut in fuel duty would act as an immediate stimulus to the economy in Northern Ireland?

I do not want to create the impression, by focusing on these immediate measures, that I am ignoring the big picture. As a society, we must wean ourselves off dependence on oil. Without doing so we will have the same debate in the House year after year. Doing this will take foresight rather than expediency, and ambition rather than an “as you were” mentality, but until we reach that point, the Government must do more to help those in need; they must shoulder a fair share of the burden and not simply pass on price rises to consumers and local businesses. The Government must commit to their pledge to consult on a fuel duty stabiliser and cancel the planned duty increases scheduled for August.

In Northern Ireland this problem is particularly striking. We must address the basic problem, which is that our people pay more at the pump than in any region in the UK and, indeed, in the EU. There are clearly issues surrounding the operation of large retailers, which bring price competition, but not evenly across the board. As other hon. Members have clearly articulated, rural areas are often most vulnerable and often people and businesses in rural areas are most dependent on their cars. If the Treasury is serious about growing our local economy, would this not be an obvious place to start? I acknowledge that the Northern Ireland Executive at Stormont also have a major role to play.

These immediate measures must be buttressed by a sustainable approach to our energy future and transport infrastructure. My party and I are committed to proper investment in new, green energy technologies in Northern Ireland. I look forward to the Minister’s response.

Remuneration of EU Staff

Stephen Pound Excerpts

Tuesday 21st February 2012 Commons Chamber

[Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)]

It is a pleasure to face the Minister across the Dispatch Box this afternoon, after being side by side with her this morning at the Rehab Group’s parliamentary pancake breakfast. Neither of us was able to run in the race, so we did not have that kind of competition this morning.

[Stephen Pound (Ealing North) (Lab)]

Will my hon. Friend give way?

[Cathy Jamieson]

Indeed.

[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.

[Cathy Jamieson]

I had better not incur the wrath of the Speaker by commenting, other than to congratulate those MPs who were able to take part. I note that, apart from my hon. Friend, none of them is here to participate in the debate. Perhaps they are recovering.

I begin by thanking the European Scrutiny Committee for recommending this for debate on the Floor of the House and for the work it has done in scrutinising these documents. European institutions can sometimes seem remote and impenetrable, but as we are aware, the workings of the EU in general, and of the Commission, have a significant impact on a range of issues that affect us all. We also know that the EU produces a huge volume of documents, and members of the European Scrutiny Committee do us a service by examining a number of those in detail, and recommending debate on the Floor of the House where there are further questions for the Government to consider.

The Committee’s reason for drawing attention to these documents relates to a number of specific concerns: first, the process that has led us to the position where once again we might see a legal battle between the Commission and the Council in the European Court of Justice; secondly, the Commission’s view that there was no justification for invoking the exception clause; and thirdly, questions about what action the Government have taken, and will take, regarding the negotiations on the amendment of Annex XI.

As the European Scrutiny Committee recognised, the documents are technical in content, but they nevertheless raise issues of far greater political importance. In properly scrutinising these documents, it is important to understand their background and history. The Minister has already covered some of that territory and I will not seek to repeat it. However, it is worth highlighting some of the context again, because it is entirely linked to the wider economic situation we face.

In less difficult financial times such documents, which essentially put in place the necessary paperwork for salary upgrading, might have passed, if not entirely unnoticed—the Scrutiny Committee would always have had an eye on them—at least without significant comment, except from Members who view anything to do with Europe as by its nature a bad thing. I do not take that view, but we are in a climate where there is justified anger at excessive pay, outrage at bankers’ bonuses and a general feeling that staff who are already highly paid should not get extra rewards simply for doing their job properly.

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[Sammy Wilson]

I thank the hon. Lady for her intervention. If the Prime Minister wants his hand strengthened in his arguments with Europe on budgetary issues, and Europe’s interference with our courts and the rules affecting this country, one way of doing so is to have the backing of the people, in a referendum, for a different relationship with Europe. When one sees this kind of insular attitude being adopted, one understands why there will be increasing support for a referendum allowing for a change in the relationship.

[Stephen Pound]

As one who voted enthusiastically yes in the early ’70s, swept away, intoxicated by Margaret Thatcher’s endorsement of it, I can tell the hon. Gentleman that many people seeking a referendum simply wish to underline once and for all that this is no longer a question that we should return to every year, and that many of those seeking a referendum are pro-Europeans—a group among whom I proudly number myself.

[Sammy Wilson]

Ironically, the pro-Europeans are the people who have most vigorously opposed such a referendum. If the hon. Gentleman believed what he was saying, he would join me in saying, “Let’s have a referendum. Let’s hear what the people say,” although I suspect that he and many like him are afraid of what the people’s verdict might be. The one thing that I can be sure of is that this issue will reinforce the case that many of us in the House are making—that we ought to consider how our relationship with Europe can be altered so that we do not end up financing this kind of nonsense.

Oral Answers to Questions

Stephen Pound Excerpts

Tuesday 1st November 2011 Commons Chamber

[Mr Osborne]

We have indeed announced today the launch of the junior ISA, which will enable many millions of parents to save for their children up to £3,600 a year tax free. It should help more than 6 million children who will be eligible for it immediately and many more as they are born and grow up. It is all about trying to foster a savings culture after the age of irresponsibility and the culture of debt that we saw over the past decade.

[Stephen Pound (Ealing North) (Lab)]

T10. I can assure the Chancellor of the Exchequer that I am not looking for a job—unlike many of my constituents. He talked earlier about fiscal integration. Does he agree that the possibility of a differential rate of corporation tax within the United Kingdom contains severe dangers?

[Mr Osborne]

As the hon. Gentleman well knows, we are consulting on the possibility of introducing a different corporation tax rate in Northern Ireland, reflecting the fact that the Irish Republic has a much lower corporation tax rate. The consultation is ongoing, and we are of course in discussions with the Northern Ireland Executive. We are clear that Northern Ireland would have to bear the cost of that in forgone revenues, and an important part of the discussions will be working out what exactly those forgone revenues would be.

Finance Bill

Stephen Pound Excerpts

Tuesday 28th June 2011 Commons Chamber

[Mr Jones]

I am very pleased to hear that but I am not sure that that is very good news for the right hon. Member for Berwick-upon-Tweed (Sir Alan Beith) to whom I understand the Baroness is now married. However, I take the hon. Gentleman’s point.

Interestingly, the then Chief Secretary to the Treasury, Michael Portillo, concurred with Mrs Maddock’s view. The then Chancellor, who is now the Justice Secretary, recognised that and announced in his Budget speech that there would be a two-stage restriction of the MCA, stating:

“Now that husbands and wives are taxed independently—one of the best taxation reforms in recent years—the married couple's allowance is a bit of an anomaly.”—[Official Report, 30 November 1993; Vol. 233, c. 935.]

The important thing that this demonstrates is that change was taking place under a Conservative Government, and that it was not the wicked previous Labour Government who came up with this idea. However, the change did set off the forces who were arguing that the changes were wrecking marriages. In 1995, a major paper called “Farewell to the Family” appeared. It made much of the fact that the measure would change families and discourage people from marrying.

[Stephen Pound (Ealing North) (Lab)]

Does my hon. Friend agree that it is a pretty poor show if a couple united in love and affection for each other decide to get married simply for the sake of some miserable, mean, pusillanimous fiscal mechanism? Would it not be a more healthy world if we could get the accountant out of the couple’s marriage bed, and concentrate on the important thing: two people who love each other, not two people who are trying to save a few bob from the Treasury?

[Mr Jones]

As usual, my hon. Friend makes a very good point. He raises the idea of the accountant in the bed. I do not know of many couples who, when they are ready to get married, sit down with their accountant to work out the financial benefit to them. I am sure that for many, something other than money comes into the decision to marry or start a family—a point that I demonstrated earlier.

--- Later in debate ---

[Mr Jones]

That is complete nonsense. When the Secretary of State for Work and Pensions was in opposition, we saw him walking around the Easterhouse estate, saying how dreadful things were. That is not down to whether people are married; it is down to poverty. That is the key driver of the pressures that people face. It is all very fine talking about drug use, but I have worked with an organisation for parents of drug addicts in Durham, and most of those parents are middle class. They have stable homes, but they have drug-addict sons and daughters. They are not bad parents, and it is not down to whether they are married. The hon. Member for Peterborough (Mr Jackson) and the Centre for Social Justice report make the mistake of saying that the family units that he describes are the reason for poverty. They are not. Addressing poverty, which we were doing through measures such as tax credits, is the way forward, rather than social engineering, and £150 a year will not go very far in encouraging people to stay married—or, for that matter, alleviate child poverty at all.

[Stephen Pound]

Does my hon. Friend agree that there is not a person in this marvellous, glorious, gorgeous building who fails to accept that couples together often nurture and raise children in a happier and better way, although they are not the only ones? However, we are not arguing about the sanctity of marriage; we are arguing about a backhander from the state—a few bob. The hon. Member for Peterborough (Mr Jackson), who was a bank manager and may well have interposed himself in a few intimate relationships in his time, is speaking very much from the perspective of the Conservative who sees everything in terms of money and fiscal benefit. Is there not a better way?

[Mr Jones]

There is, but the new clause that we are debating—I do not know whether the hon. Member for Peterborough would agree with this—refers only to married couples; it does not refer to civil partnerships, for example. I know that the new Conservative party is supposed to be modern and reflective, but what about people in a civil partnership who have children, whether from previous marriages or afterwards? Are we saying that that is a worse family unit than marriage? This debate is not about the tax system for those who are married and those who are not; it is about what is in the best interests of the child. Single parents—they may be separated, or their partner or spouse may have died, as my hon. Friend the Member for Brent North (Barry Gardiner) said—work very hard. This is about the child. The problem with the proposal is that it would reward people with no children.

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[Mr Jones]

No, not at all. Many things in the north-east are obviously better than anywhere else in the country, but the statistics show that the number of people getting married is going down. The Secretary of State for Work and Pensions seems to think that a tax break of £150 a year will encourage people to get married, but that is not the case at all. He misses the main point.

The MCA was abolished in the Budget speech by the then Chancellor in 1999, and withdrawn in April 2000. Only married couples who reached the age of 65 by that date would be able to continue to claim the MCA. The additional personal allowance was also withdrawn at that time. The allowance equalised the MCA so it was given to lone parents, whether single, divorced or widowed, caring for one or more children under the age of 16.

Importantly, the then Labour Government introduced the child tax credit, which was vital to ensure that support went to the children. The Centre for Social Justice report suggested that marriage was important for keeping families together, but that is not the case. The important thing is how we support children. By introducing the tax credit system, we lifted thousands of children out of poverty by helping the families, whether they were married or not.

The credit took the form of an allowance which was then set at £5,200, on which relief was given at 10%. Families eligible to claim the child tax credit were able to cut their annual income tax not by £150, as is proposed, but by £520 a year. In April 2002 the credit was increased in line with inflation, making it worth £10 a week more. That was the fairest way of supporting families. I do not question the Secretary of State’s intention to help families, but the child tax credit was a far better way of doing it than through the married tax allowance.



The debate tonight has glossed over the cost of the proposal. We are told by the Government that we face hard times and that we must make every penny count. One reason given to explain why the proposal was not brought forward was the coalition Government; another was cost. The IFS estimated the cost of various options for introducing a transferable allowance based on different criteria. On the assumption that the allowance applied only at the basic rate of tax, which was due to be 20% in April 2008, the figures are eye-watering.

If the allowance applied to all married couples, the IFS estimates the cost at £3.2 billion. I am not sure where the Government would get such a sum from. If the allowance applied to all married couples but only half the personal allowance was transferred, that would cost £1.6 billion, so we are not talking about small amounts of money. If the object is to get that money to children, is this the best way? There is no realistic hope of the present Government doing this. I understand the annoyance of the hon. Member for Gainsborough, who thinks that he stood on a manifesto which will now not be implemented.

[Stephen Pound]

No one in this place would begrudge that sum if there was the slightest empirical evidence that it would be of any long-term benefit to society. There is no such evidence. Does my hon. Friend agree that that money could be far better spent on a raft of supportive mechanisms for families, particularly families with young children? That would ensure the longevity of the family unit.

[Mr Jones]

I agree. The money should be directed into Sure Start centres and the child tax credit, for example, but the Government are penalising single parents in some of their benefit proposals.

Another option that the IFS considered was targeting the allowance at married couples with dependant children or those receiving carer's allowance. The estimated cost of that was £1.5 billion. The final and cheapest option was that it would be given only to married couples with children under the age of six, which would cost £900 million. The various options illustrate the complexity of the policy and the questions that arise from it—whether it should apply to everyone or only to the groups that I outlined.

As the hon. Member for Gainsborough pointed out, whatever system is chosen, there are winners and losers. If we believe, as the hon. Member for Peterborough clearly does, that keeping people married is so important that everyone should get the allowance, the price tag is totally unaffordable, but doing anything less would undermine the main argument put forward.

It is worth recognising what that would translate into in cash terms. If it applied to the full personal allowance, the amount provided as an incentive to remain married would be quite meagre, at about £20 a week, which I am not sure is a great incentive. The rationale is that it needs to be fair and large enough to make a difference, but I do not think that a couple whose marriage is breaking down would stay together for an additional £20 a week. Whatever figure we come up with, I doubt whether it would actually make a real difference in determining not only whether a couple gets married in the first place, but whether they will separate after a period of marriage. When it comes to enabling families to stay together as a unit, clearly the important point is poverty. That pledge was made before the general election by the previous Prime Minister. I think that everyone, even those influenced by the darker forces on the traditional wing of the Conservative party, agrees that the modern family takes many forms.

[Stephen Pound]

My hon. Friend is young and has not been around for a enormously long time. When Mrs P and I were married in June 1976, virtually everyone got married just after the beginning of the financial year, which was a nonsensical system, with churches doubling the cost of altar servers. I assure him that one of the disadvantages of the married couple’s allowance was the great logjam of spring weddings. Despite that, Mrs P and I are still together.

[Mr Jones]

I have not had the pleasure of meeting Mrs P, but she certainly deserves a medal for the longevity of her marriage to my hon. Friend.

[Mr Jones]

It might have done, but clearly if it raised the cost of a wedding, any financial benefit that people got from their £150 would soon be used up as a result of the extra costs involved. It did nothing to ensure that people stayed together longer.

[Stephen Pound]

I appreciate that we are treading on you patience, Mr Deputy Speaker, but I should note that it was probably a fear of Father Padraig that kept Mrs P and I together for the first three decades, rather than any small financial advantage.

[Mr Jones]

I understand why my hon. Friend and Mrs P have stayed together. Although the allowance might be an incentive to get married, the important point is that it does nothing to ensure that people will stay together for longer than the tax year. As has been mentioned, what is proposed would be very unfair. What happens if someone loses a spouse though no fault of their own, for example as a result of a tragic accident? Why should someone who finds themselves suddenly bereaved through no fault of their own after an accidental death, possibly with young children, be penalised by the tax system? It would be very difficult to introduce flexibility into this system to take account of that, and if we compare that with the tax credit system we will see that the important point is to support families and their children.

I will turn to some of the statistics on marriage that the Conservative party is putting forward. The hon. Members for Gainsborough and for Mole Valley (Sir Paul Beresford) are not known as great state interventionists, but by arguing that the tax system should be used to encourage people to marry, they are suggesting that the state should determine a certain model of behaviour. I find that very strange coming from Conservatives who deplore the nanny state and argue that the state should not interfere in people’s lives. There is an inconsistency there that needs to be answered.

Finance (No. 3) Bill

Stephen Pound Excerpts

Tuesday 3rd May 2011 Commons Chamber

[Chris Leslie]

Indeed, and not only can we see the low yield figures in this country; we can also look at international comparisons and see that the rate is clearly very low indeed. Ministers have let it drift—as soon as it looks as though it might be a serious tax, back they come from the rate they have set, saying that it would raise too much and they must reduce it again.

[Stephen Pound (Ealing North) (Lab)]

Many contributions have shown that the shade of the right hon. Member for Twickenham (Vince Cable) is noticeable by its absence.

With the exception of the National Bank of Cuba when it was governed by Ernesto “Che” Guevara, can my hon. Friend think of any example of any country where the bankers have recoiled from the brutal fiscal hammering imposed upon them by a state legislature and taken their toys and left? Is there any such country in the history of the world that he could mention?

[Chris Leslie]

In financial services it is called regulatory arbitrage. People come up with terminology that makes things sound mystical and obscure, but regulatory arbitrage is basically the threat to leave the country that is often peddled when a bank does not like proposals. We have heard such threats time and again, but they are not carried out, because banks locate in this country for reasons other than taxation. We have Greenwich mean time and the civilised rule of law, and any number of decent public services that bankers themselves like to enjoy.

--- Later in debate ---

[Stephen Pound]

And royal weddings!

[Chris Leslie]

And royal weddings, as my hon. Friend suggests. This is a great place to do business, and the small changes in taxation that the Opposition advocate are certainly not enough to send banks abroad.

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[Ian Lavery]

“Only for the better.” Of course.

In future years, the Government should increase the bank levy to ensure that the banks continue to pay their fair share of tax, so that taxpayers are not left picking up the bill for a crisis caused by the irresponsible actions of those institutions. The OBR’s November 2010 forecast showed that the bonus tax brought in revenues of £3.5 billion in 2010-11.

[Stephen Pound]

My hon. Friend might be surprised to hear that he is engendering in me some sympathy for bankers. The sheer, overpowering, pressing agony of having to spend £28 million would put so much pressure and pain on a person; one has only to look at Wayne Rooney to see the consequences of that. Does my hon. Friend agree that if bank bonuses are not about money, they are actually about mutual approval and standards? We could simply give bankers a golden tick on a badge, or a sticker, to show that we love them, and get the £28 million back to refresh the economy and get jobs into his constituency and mine.

[Ian Lavery]

That is the first time I have been accused of being sympathetic to the bankers, but I thank my hon. Friend for his comments. I would much rather give the bankers a nice little tick or an A* for the way in which they perform—or perhaps in this particular case a C, D, E, F or a fail. At the moment, an F would still equate to many tens of thousands of pounds for most bankers.

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[Nic Dakin]

It is a pleasure to follow my hon. Friend the Member for Wansbeck (Ian Lavery), who gave a comprehensive account of why we should support the very precise amendment on the bank levy.

A banker writing in the 1920s wrote:

“April is the cruellest month, breeding

Lilacs out of the dead land, mixing

Memory and desire”,

and went on to talk about the present month as “depraved May”. I quote T. S. Eliot—

[Stephen Pound]

He was a bank clerk, not a banker.

[Nic Dakin]

I quote T. S. Eliot to remind us that bankers have played good parts in the world of culture, finance and many other things, and to remind us through his words of the pain of growth and rebirth. Economic growth is a difficult business. That is the business that we should be in, and we should make sure that bankers play their part in that.

Bankers were not always about bonuses, and conversations about banks were not always about bonuses. Sadly, since the credit crunch and the global financial crisis, more attention has been focused on how great the anomaly is. We have heard the telephone-number salaries quoted and compared with the situation of people in our constituencies who are doing their best to bring their families up to be aspirational and to move forward in their lives.

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[Nic Dakin]

I thank my hon. Friend for that observation. Project Merlin’s record is a sorry tale so far. We see a failure to deliver on bankers’ bonuses and a failure to reinvest the taxation from them in the economy. He is right that the record on lending to small and medium-sized enterprises is woeful. Small and medium-sized enterprises, as I think all Members recognise, are the lifeblood and the engine of our economy, and he is completely right to underline that point.

[Stephen Pound]

My hon. Friend refers to taxation arising from bankers’ bonuses flowing back into the economy. Would that that were so. Does he not agree that the ingenuity, skill and—I dare say—avarice of the average banker is best demonstrated by their ability to defer tax liability, so that the money, rather than coming back, tends to fructify in their pockets?

[Nic Dakin]

I thank my hon. Friend for his intervention. Clearly, the amendment aims to provoke a review of how we best ensure that bankers’ bonuses are taxed efficiently and effectively, rather than ineffectively, as the Government are currently, which is always a danger unless we are vigilant, as my hon. Friend suggests.

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[Mr Jones]

It does, and my hon. Friend makes a good point. The rhetoric from Conservative central office, now joined by the Liberal Democrats, is that we are in this economic mess because of the recklessness of the Labour Government, somehow forgetting both the international economic climate and the effects of the irresponsible lending by banks, on which the levy will now be imposed. My hon. Friend is quite right: I know that her constituency is facing a tough time at the moment, and not just in the public sector. A number of private sector companies are closing in Darlington as a direct result of the fiscal straitjacket that this coalition Government have put on the north-east region. Before the election the Prime Minister said that there would be a “day of reckoning” for bankers, but if this is a “day of reckoning”—[Interruption.]

[Stephen Pound]

Does my hon. Friend agree that we seem to have had an example today of the Sage of Twickenham being seduced by the subtle, perfumed blandishments of the banking industry? Might this not be time for us to say, “We’ve had enough of ‘Double Your Money’ and ‘Who Wants to Be a Millionaire?’ Let’s go for ‘Call My Bluff’”?

[Mr Jones]

That is exactly what the electorate will be doing: calling the bluff of this Government and asking whether they will live up to the promises that they made. Indeed, it is interesting that when I mentioned the Prime Minister’s “day of reckoning”, someone on the Government Benches said that it would be a bank holiday. If I was a banker, that is exactly what I would think this weak banking levy and these weak banking regulations were delivering.

The Deputy Prime Minister even joined in on the act, saying on Radio Sheffield that he wanted to

“wring the neck of these wretched people”.

I am not sure whether he was referring to the Conservatives or the bankers—or, after Thursday, some of his Cabinet colleagues, when the AV referendum delivers a no vote, which is how I recommend everyone should vote on Thursday. Despite all the overblown rhetoric, we have seen no action to follow it through. As was said earlier, many of our constituents cannot understand why, if we were going to tax the bankers through this levy—and thereby control their reckless behaviour, as my hon. Friend the Member for Hayes and Harlington said—they seem to have completely ignored it.

We need to consider that when thinking about the appearance of the head of Barclays before the Treasury Committee, when he said,

“there was a period of remorse and apology for banks.”

I am sure that many of our constituents are very grateful for that. However, he continued:

“I think that period needs to be over”.

It might be over for him, but it is not over for many of our constituents, including those running small businesses who are struggling to get loans from banks. He went on:

“we need our banks willing to take risks…so…we can create jobs”.

Well, lending money to those businesses would be a start. Another starting point for doing that might also be Barclay’s five top bankers. They have just received bonuses of £110 million, which does not—

[Stephen Pound]

Each?

[Mr Jones]

No—not yet.

Those bonuses do not reflect the behaviour of bankers who have been responsible in their lending.

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[Mr Jones]

Yes, possibly. The Government are getting used to performing U-turns on a daily basis: and after Thursday, the reinvigorated Liberal Democrats might be able to force a change and get the levy increased.

[Stephen Pound]

Irony!

[Mr Jones]

Indeed.

We need time to see whether the system is working, and whether it is a way of increasing the money that we get from the banks. At the end of the day, the taxpayer has put huge amounts of public money—rightly, in my opinion—into supporting the banking system. I do not agree with the suggestion made by the right hon. Member for Wokingham (Mr Redwood) that we should have let the banks fail three years ago. If that had happened we would certainly have had a real problem, not only with Northern Rock but with a large number of other banks. That would have ruined the UK banking system, and there would have been international implications as well.

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[Mr Jones]

Then let me remind the hon. Gentleman what it says. It refers to

“the Government’s analysis behind the rate and threshold chosen for the bank levy”—

we have not yet been given that analysis, a point made by my hon. Friend the Member for Nottingham East—and to

“the adequacy of the bank levy in the context of other reforms to the wider banking system”.

We have heard a good many statements on bank regulation and on how the bankers can be made to lend more responsibly, but if the hon. Gentleman thinks that he can obtain the information that he requires by means of parliamentary questions, he is a better man than I am.

[Stephen Pound]

According to the current edition of Private Eye, when the hon. Member for Ipswich (Ben Gummer) enters a room, it lights up. No doubt my hon. Friend agrees with me that when the hon. Member for Bradford East (Mr Ward) enters a room, a tenebrous gloom seems to hang around his shoulders. May I adjure my hon. Friend to resist the temptation presented by the hon. Member for Bradford East, and say quite simply that if the hon. Gentleman thinks that December 2011 is too late, we will happily consider an amendment from him that would introduce the damned thing next week?

[Mr Jones]

I agree, but I not am sure that it would help much. Given that subsection (c) of the amendment refers to

“the total tax revenues expected from banks across all categories of taxation in each year from 2011-12 to 2016-17”,

I think that that would be very difficult to do. However, I look forward to seeing all the written questions tabled by the hon. Member for Bradford East (Mr Ward). I am sure that his coalition partners in the Treasury are longing to get hold of them. May I suggest that the hon. Gentleman table his questions on a Wednesday on a named-day basis? That usually messes up Ministers’ weekend boxes.

[Stephen Pound]

He should not table them after 3 pm.

[Mr Jones]

No, because otherwise some Ministers might not get them in their weekend boxes. Anyway, it is nonsense to say that the information could be obtained in that way.

--- Later in debate ---

[Mr Jones]

My hon. Friend makes a good point. That small seedcorn funding made all the difference for small companies as they established themselves and grew. The problem we have in the north-east—I am not sure whether things are the same in my hon. Friend’s region—is the lack of confidence in the regional economy for the reasons mentioned by my hon. Friend the Member for Gateshead. The uncertainty about what will happen in the next few months as the public sector job cuts work their way through the economy means that there is no appetite to invest in small businesses. A few weeks ago, I was talking to someone from a small building company who relied for part of his turnover on school building contracts with the local council, which had suddenly been stopped, so the money is not available and people will have to be laid off. We have not yet seen the effects of such decisions.

If we add to that the fact that banks are not lending and are going to carry on in their own way, those involved with small businesses end up wondering why decent hard-working people like them who, in many cases, have built up businesses over many years are suddenly through no fault of their own having either to lay people off or to fold the businesses completely. These are family businesses which have been going for many years, and people see individuals getting bonuses that involve amounts of money of which they can only dream and which are equivalent to the turnover for their companies over two or three years, never mind one year.

[Stephen Pound]

My hon. Friend has teased out a very important element of the amendment. In Northern Ireland, the public sector accounts for approximately 74% of all economic activity and for perfectly sound and understandable reasons the private sector has not been able to generate economic activity. I implore my hon. Friend, following on from his points, to take on board the reality of the situation: a reduction in expenditure could have a disastrous effect, especially in Northern Ireland.

Oral Answers to Questions

Stephen Pound Excerpts

Tuesday 8th February 2011 Commons Chamber

[Mr Osborne]

We are seeking a more equitable balance. Lord Hutton is due to produce his final report just before the Budget, and we await that. However, we have already made it clear that we need to see savings for the taxpayer. Those were set out in the spending review, and, as I said, we are committed to them. However, in conversations with trade unions, I have been prepared to enter into discussions with them on an extended time frame—to June—about exactly how those savings can be found across schemes and different pay scales.

[Stephen Pound (Ealing North) (Lab)]

T2. The Chancellor of the Exchequer will be aware of the statement made by the Northern Ireland Justice Minister yesterday. Will he explain the reason for the continued failure to make a decision?

[Mr Osborne]

I assume that the hon. Gentleman is referring to the request for additional support for the security situation in Northern Ireland. It is a request that I have taken very seriously, and we are interrogating the request properly—[Laughter.] I know that it comes as a complete surprise to Labour Members that the Treasury should actually interrogate spending requests from Departments, but we have decided that there is new management in charge at the Treasury, and that we should start doing that. We will treat the request with due diligence, but I am clear that security comes first. That will be my priority.

National Insurance Contributions Bill

Stephen Pound Excerpts

Tuesday 23rd November 2010 Commons Chamber

[Mr Gauke]

The hon. Gentleman brings me on to the second part, to do with the national insurance holiday, which applies on a regional basis. If I can develop my arguments, I will turn in some detail to the precise point that he has set out.

[Stephen Pound (Ealing North) (Lab)]

rose—

[Mr Gauke]

I will give way to the hon. Gentleman, but before I do, may I congratulate him on his long-delayed but much-deserved promotion to the Labour Front Bench?

[Stephen Pound]

That is extremely generous of the Minister. All I can say is that if he was surprised, imagine how I felt.

The Minister just gave the figure for receipts following on from the increase in VAT. Are his figures based on current patterns of consumption or on an anticipated level of consumption? Most economists would say that the VAT increase will depress demand and reduce consumption.

[Mr Gauke]

The sums are based on the assessment made by the independent Office for Budget Responsibility at the time of the Budget. I hope that that provides some clarification to the hon. Gentleman.

Part 1 of the Bill provides for changes, which the previous Government announced in two instalments, to national insurance contributions from next April. Initially, a 0.5% increase in rates was announced in the 2008 pre-Budget report. That was then changed to a 1% increase in the pre-Budget report of the following year.

I am sure that Members will remember that reversing the most significant impacts of those rate rises was a key issue at the general election. The Federation of Small Businesses said that the policy would cost 57,000 jobs. Thirty business leaders supported our campaign to reverse the policy. When the letter from those 30 business leaders—many other business leaders followed shortly—was published, Tony Blair apparently considered that for Labour the game was up. Thankfully, he was right, and we now have in place a Government who are determined to bring down the deficit but also to put in place conditions favourable to private sector-led growth.

In June, we announced our plan to reverse the most damaging aspects of Labour’s jobs tax. There was a choice how best to do this—for example, we could have cancelled the rate and threshold rises—but we have chosen the option that best protects low earners. In the emergency Budget, my right hon. Friend the Chancellor confirmed that national insurance contribution rates would rise by 1%, that the personal allowance would increase by £1,000 from next April, and that the employer national insurance contribution threshold would rise by £21 a week plus indexation. The reform of employer national insurance contributions is exactly as set out in the 2010 Conservative party manifesto.

The Bill sets out how these rises will apply to the main rates of class 1 national insurance contributions. The employer rate will rise from 12.8% to 13.8% and the employee main rate will rise from 11% to 12%. The 1% increase will also apply to class 1A and 1B contributions that are paid on benefits in kind and pay-as-you-earn settlement agreements. The same 1% rise will apply to class 4 contributions paid by the self-employed, which will rise from 8% to 9%. Taking into account the increase in the personal allowances and employer threshold, the net effect of these changes will reverse the damaging £6 billion-a-year net increase in the cost of labour planned by Labour Members. Our package of measures entirely reverses this increase.

Compared with the plans that this Government inherited, no changes are being made to the rates. More than £3 billion a year is being returned to employers through the threshold increase, and even more to individuals through the increase in the personal allowance. Our actions will mean that some 880,000 low earners in the UK will be taken out of income tax altogether.

--- Later in debate ---

[Mr Hanson]

My hon. Friend makes a very valid point. I do not begrudge the people of Tatton anything, and I will tell him why. I was once a Labour councillor in the Tatton constituency. I represented the ward of Rudheath and Whatcroft, and I was the leader of the Labour council that covered half the constituency at that time. I have absolute faith in those areas, but there is deprivation in Tatton. In fact, Neil Hamilton, a former Member of this House for that area, was my pair when I first came here. Such is life! But that is another story.

Tatton has one of the lowest levels of unemployment in the country. That constituency, which is represented by the Chancellor of the Exchequer, will get the benefit of the national insurance holiday to start 10 employees, but Portsmouth North will not. Neither will Brent North, Edmonton or Lewisham. The constituency of my hon. Friend the Member for Leyton and Wanstead (John Cryer) will not get that benefit either—

[Stephen Pound]

Neither will Ealing.

[Mr Hanson]

Indeed, and neither will the constituencies of my hon. Friends the Members for West Ham (Lyn Brown) and for Ilford South (Mike Gapes). We are talking about encouraging growth and promoting job opportunities, and how we split the cake is very important, as the hon. Member for Central Devon (Mel Stride) has pointed out. My hon. Friend the Member for Brent North (Barry Gardiner) mentioned the different figures for jobseeker’s allowance across the country. We need to address those significant differences.

--- Later in debate ---

[Stephen Pound (Ealing North) (Lab)]

A common theme running through the debate—almost the golden thread of it—has been that of not seeking to oppose for the sake of opposition. Of course, I entirely subscribe to that emotion. However, although I rejoice in seeing a sinner repentant, and the Conservative party being converted once more to the policy of Keynesian fiscal incentives, I feel that the Bill is in many ways a disincentive and, even more seriously, a crude, clumsy and extremely complicated one.

Much has been made of geography and the fact that large parts of the country are excluded from the glorious sunshine of this Bill’s benefits, which will cause flowers to bloom and businesses to leap, as from the brow of Jove, into the marketplace fully formed. The excluded areas are not just the leafy shires where the only concern is getting one’s second au pair, or third Range Rover. They are also places such as Milton Keynes, Medway—Medway!—Portsmouth, Reading, Slough, Southampton, Luton, Peterborough and Thurrock. It is true that the Bill also excludes parts of the south-west London-Surrey border where people are so wealthy that they can afford the luxury of electing Liberal Democrats, but in excluding such a large area the Government are assuming that within the eastern region, the home counties and London there exists a seething tide of entrepreneurial energy, ready to burst forth at any minute, that needs no assistance.

The hon. Member for York Outer (Julian Sturdy) said that there was a message coming from the House tonight. Well, the message is, “London, the home counties, East Anglia: get lost. You can manage on your own, you don’t need any help.” That is desperately crude. In times of tight margins, small incentives make a huge difference. The geography of this country is so tight and small that whereas Hampshire is excluded from the benefits of the Bill, Dorset and Wiltshire are not. One does not have to read one’s Blackmore to know that the boundaries and borders in those areas are very close and tight. Is the coalition Government’s aim to empty out as much of London, the home counties and East Anglia as possible and send everybody flooding to Somerset, Wiltshire and Dorset?

[Jacob Rees-Mogg]

Hear, hear!

[Stephen Pound]

We have had some very successful imports from there in the House, particularly from North East Somerset. None the less, I am not entirely convinced that it should be the policy of Her Majesty’s Government of the United Kingdom to act in that crude way.

Talking of crudeness, advancing the idea that we can somehow assume that people will not move into a low-tax zone, like one of those Chinese economic zones, is simply not being serious about the realities of modern business. There are no Liberal Democrats in the House tonight—a happenstance that will doubtless be replicated on a longer-term basis after 2015. One thing that they tried, in one of their strange, clouded pipe dreams during the election campaign, was the suggestion that we could have geographically specific immigration—presumably with border posts on the M1, so that certain parts of the country could benefit from immigration while other parts could not. A quick glance at the map of this country shows that that simply is not possible. We will immediately have the difficulty of disincentivisation occurring in the south-east, while the benefits are transferred to the rest of the country.

The Bill is also ferociously complicated. Everybody thinks they know what a new business is, but nobody can define it. We heard in an intervention by the hon. Member for Newton Abbot (Anne Marie Morris) that apprentices are not covered.

I turn, as ever I do, to the explanatory notes, which have been written in the most extraordinary way. We read about Roy the carpenter; Sam the noble publican wishing to hand his business on to Tom; and Rosie and Jim the plumbers—none of whom is included in the Bill’s provisions. We read of an extraordinary ménage in what I had previously thought was the rather dull world of accountancy, in which Alan, Ben, Charles and David decide to link up with Ellen and Frances. In doing so, they also bring in a mutual friend, George. That is experience beyond that of most Members.

My particular favourite example is almost a Mills and Boon novel: John and Paul the dentists, who have been partners for many years but fall out. One imagines John and Paul, their eyes meeting over the face masks as they attend to a cavity together, their latex-covered digits brushing against each other. Then, one day, they fall out and set up alternative dental practices. John and Paul, once so close, are close no more. The explanatory notes should be published by Mills and Boon, not by the House of Commons.

After all those examples, what do we find? We find that the complicated reality of new businesses is such that the coda to that great, glorious, rather romantic tale is, to quote paragraph 46:

“The intended effect of this provision is that a person will be prevented from enjoying a holiday if, before beginning to carry on a business, the person enters into arrangements that mean that at some point after the person’s business has started he may undertake activities carried on by another business and, had the person been undertaking those activities at the time the business was started, a holiday would not have been allowed.”

That is reductio ad absurdum. How can we possibly even begin to take seriously a Bill that, leaving aside the romantic dentists and Rosie and Jim the entrepreneurial plumbers, creates such an incredibly complicated mechanism? That is not what we should be doing.

The Economic Secretary, as ever, cuts to the heart of the matter. I have great admiration for her. She is no stranger to the streets of Acton, where first we met. She had a reputation then for striking through all the persiflage that normally infests this place like wisteria—if that is not a painful subject for the Conservatives. She asked earlier, “Would it be better for this holiday to be extended across the whole country, or is it better for it to go to two thirds of the country?” I have to say that it should be all or nothing. The minute we try to set up those complicated differentials, there are immense problems. Why could the measure not be applied sectorally? Why could we not choose a particular sector and incentivise it? I am talking about those that employ large numbers and have a proven track record of entrepreneurial success. Why could we not continue with the enlightened work of the previous Labour Administration and provide start-up support for capital equipment and allow deferred VAT payments?

There are so many things that we could have done. What we have before us is probably—I say probably—rooted in decency and good, honest Keynesian politics. However, it has become so complicated that I fear that there will be very few businesses leaping to life in Liverpool, Manchester, Rotherham or wherever. There are some entrepreneurs in London who may say, “Without that additional advantage, why not relocate not only outside London but outside the UK?”

The hon. Member for Central Devon (Mel Stride) said that he was as comfortable operating a company in this country as he was in the United States. People will look at this measure in the context of a global economy. What we have here is crude, complicated and unfocused. I am not entirely sure that it will be the agency that will kill unemployment and bring us all into some glorious new future. I appreciate that hundreds of new civil servants will be employed to make this system work, and I welcome that; we need more work. How tragic is it that this Bill—the Bill to encourage the private sector outside the home counties—will end up employing more civil servants in London and, almost certainly, not providing that great entrepreneurial spark in the rest of the nation?

Finance (No.2) Bill

Stephen Pound Excerpts

Monday 8th November 2010 Commons Chamber

[Mr Mark Field (Cities of London and Westminster) (Con)]

The video games industry is very important. Its spiritual home is, in part, in my constituency, in places such so Soho and Covent Garden—

[Stephen Pound (Ealing North) (Lab)]

Hardly spiritual.

Finance Bill

Stephen Pound Excerpts

Tuesday 6th July 2010 Commons Chamber

[Owen Smith (Pontypridd) (Lab)]

It is

“A coalition of the heartless, the clueless and the confused”.

Those are not my words—as a Member new to the House I would not be so bold—but those of the Nobel laureate economist, Paul Krugman, when describing another right-wing cabal, in the US, and its attempt to slash welfare spending instead of increasing growth. His description might serve well to describe and characterise the callous collaborators on the Government Benches, and the war on welfare that they are launching tonight with the Finance Bill.

The coalition is heartless in its disregard for how VAT and the unprecedented spending cuts that we anticipate will hit the poorest in our society; it is clueless in the wrong-headed belief that we have heard repeated so often tonight that these savage public sector cuts will somehow liberate private sector surpluses, entrepreneurialism and growth in the economy; and it is confused. There is confusion at least on the part of the Liberal Democrats as to how they managed to enter the political fray at last, only to find themselves, as an old soldier in my constituency described it last week, on the side of the Axis powers. [Interruption.] I thought that it was pretty funny.

I do not, however, want to dwell on the heartlessness of the measures included in the Finance Bill, because so many people have done so with such eloquence this evening. I think that the public will be able to judge that heartlessness for themselves when they see the raising of VAT on essential goods for the poor, and Government Members cheering, as they did during the Budget speech, measures such as the decision to scrap the health in pregnancy grant designed to tackle malnourishment in pregnant mothers in the poorer sectors of our society. Opposition Members consider such provisions the hallmark of a civilised society, but Government Members clearly think they are a burden on economic efficiency.

I do not really want to talk about the heartlessness. I would rather talk about the cluelessness. [Hon. Members: “ You already have.] Yes I have, and I am going to do it again in a minute. We have heard lots of cluelessness this evening, mostly inspired by the primer on Milton Friedman that Government Members have all obviously read recently, and we have heard reiterated by the hon. Member for Woking (Jonathan Lord) and various others. The idea is that if we cut the public sector, which allegedly squeezes out private sector entrepreneurialism and growth, we somehow stimulate the private sector, and that leads to a flourishing of entrepreneurialism.

[Stephen Pound (Ealing North) (Lab)]

Does my hon. Friend agree that implicit within the Budget, the decapitation of Building Schools for the Future has resulted in the private sector not being able to mop up a pool of labour? That private sector has in fact been shot in the back of the head, driven out into the country and dumped in a lay-by.

[Mr Speaker]

Order. I would not want the hon. Member for Pontypridd (Owen Smith), who has made an auspicious start, to stray from the path of virtue. May I just say to him that it is a good rule of thumb to listen with great interest and enthusiasm to the hon. Member for Ealing North (Stephen Pound), but to recognise that sometimes his interventions have absolutely nothing to do with the matter under discussion?

[Owen Smith]

In this instance, I beg to differ. My hon. Friend’s intervention absolutely speaks to the case, because the philosophical underpinnings of what we hear from Government Members is that somehow we have a great dichotomy in our economy. The public sector is bad, of course—non-jobs, as I heard one Local Government Minister describe them recently. Well, many people in my constituency and elsewhere across the country rely on such jobs to feed their families. Private sector is, of course, good, and the thing that we all want to encourage. The construction industry is a wonderful example of the symbiosis between the two parts of our economy. If you cut one the other will bleed, and we will see £50 billion cut from the construction industry. The construction industry accounts for 10% of GDP, and that £50 billion will have a big impact right across the economy. So I think that private and public are linked.

The theory that we are testing now is the one that we have allegedly seen work in Canada and Sweden, whereby the Government make cuts and the economy flourishes. In those countries we saw a long-term reduction in spending on public sector vital services.

The other key lesson from those other examples of deficit reductions is that the conditions need to be right. Investor and consumer confidence have to be growing, and there has to be evidence of underemployed private sector capital. Exporters must be ready to grow and foreign markets must be ready to buy. Get it wrong and cut too deep when the conditions are unfavourable, and we have on our hands not a success story, but depression and bankruptcy. The historical examples of such failed experiments form a long and ignoble list, and Government Members would do well to read the history books and learn from them.

[Stephen Pound]

On that exact point about the Canadian experiment, does my hon. Friend agree that the conditions that prevailed in Canada—a massively economically expanding neighbour, in the same free trade association, to the south—are not remotely met here. Any comparison between this country and Canada, or even the Swedish model, are specious and possibly even mendacious.

[Mr Speaker]

Order. I am trying to help the hon. Member for Pontypridd and other hon. Members. I feel sure that is only a matter of seconds before he says something about corporation tax, capital gains tax, value added tax, insurance premium tax, pensions, income tax or any of the five schedules to the Bill.

--- Later in debate ---

[Owen Smith]

Thank you, Mr Speaker.

[Stephen Pound]

On the exact point that my hon. Friend was so tellingly making, he will be aware that in clause 4 we see an increase in insurance premium tax from 5% to 6%. Does he agree, particularly as an MP from a constituency that has given so much to energise the nation and keep us warm over the years, that that could have an appalling effect on pensioners who have standard gas central heating contracts? Is there not, in clause 4, an extremely unpleasant sting in the tail of the Bill?

[Owen Smith]

I cannot but agree wholeheartedly. I am sure that that is an apposite intervention. Throughout the Bill and the wider Budget, there are measures about which all the most vulnerable people in our society should be concerned. My constituents are deeply worried about the measures affecting not just pensions, but, equally, housing benefit, the most pernicious effects of which we will not see until much later in this Parliament, and VAT. The VAT increase will not be introduced until next year, but when it is, it will bite on ordinary working people throughout my constituency and throughout the country.

--- Later in debate ---

[Chris Williamson (Derby North) (Lab)]

There has been a degree of hysteria from Members on the Con-Dem Benches this evening. It might be the lateness of the hour, or there might be another reason, but I have been disturbed by the amount of sneering and laughing by Government Members at the serious points that Opposition Members, who are concerned about the Bill’s implications for their constituents throughout the length and breadth of this great nation, have made. A little humility from Government Members, and particularly from the Liberal Democrats, would not go amiss.

The Chancellor of the Exchequer, the Chief Secretary to the Treasury and all Government Members would benefit from some counselling from Gamblers Anonymous, because they are gambling massively with the British economy. Although history teaches us that their gamble is doomed to fail, they are ploughing on regardless—just like a wretched compulsive gambler betting on a course of action with incredibly long odds, in the vain hope that it will turn out all right in the end.

Crossing fingers and hoping for the best is not a credible economic prospectus. The Chancellor is pursuing the same old stale, worn out and inept Tory economic policies that have failed the country before and are set to fail it again. However, the Con-Dem coalition is not betting on a horse, but playing with the lives and livelihoods of the British people. Just like its Tory predecessors in the 1930s, the 1980s and the 1990s, this Con-Dem coalition is, yet again, making the wrong choice. It is risking the fragile recovery that the Labour Administration worked so hard to secure. [Laughter.] Yes, they like laughing—that is typical of the Con-Dem Benches.

The fact is that the Government’s corporation tax proposals provide inadequate support for businesses. The Chancellor’s very own Office for Budget Responsibility predicts that his Budget will result in lower growth not just this year, but next year as well. How will that help business? Are Government Members laughing at that? If growth declines, that will not help business at all. On top of that, the OBR says that unemployment will be caused. The OBR’s predictions remind me of two notorious Tory maxims coined by a previous Chancellor of the Exchequer and a former Prime Minister. One said that

“unemployment…is a price worth paying”

and the other, John Major, said:

“If it isn’t hurting, it isn’t working.”

However, as the shadow Chief Secretary pointed out earlier, the situation is even worse than is indicated by the OBR’s predictions. The number of people who will lose their jobs will be far higher than the figures that have surfaced so far.

The Chief Secretary to the Treasury says that Opposition Members are in denial. I put it to him and to other Government Members that they are in denial. It is their policies—those failed policies—that led to interest rates that averaged 10% during the Tories’ 18 years in power and that hit 15% on one occasion. I say to Government Members that they are in denial. Their failed policies, which they want to pursue again, resulted in record numbers of repossessions and millions of people ending up in negative equity. That, in turn, had a massive impact on the construction industry and the ancillary trades that rely on a buoyant housing market.

We all remember how the failed policies now being pursued again by Government Members resulted in unemployment that exceeded 3 million. Government Members are in denial about the fact that manufacturing was decimated by the policies that they are pursuing. They smashed the coal industry, nearly wiped out the steel industry, almost destroyed the British car industry and torpedoed British shipbuilding. They are in denial because they want to destroy the very instruments that will help the recovery, by undermining the regional development agencies and by taking away the loan to Sheffield Forgemasters, which would have had such a big impact in assisting the resurgence of the nuclear industry in this country.

The Con-Dem coalition is in denial because of its unrealistic expectation of growth in respect of the exports that it expects to achieve while the worldwide economy is in a fragile state.

[Stephen Pound]

My hon. Friend’s constituency is rightly known and admired far and wide for the quality of its Rolls-Royce engines. Has he done any research into the possible effect on demand for aero engines of an increase in insurance premium tax from 17.5 to 20%? Does he share my fear that that will dampen demand for travel and, ultimately, for the wondrous engines produced in his constituency?

[Chris Williamson]

I am very proud to have Rolls-Royce in the constituency adjacent to mine, Derby South. Indeed, many of my constituents work at Rolls-Royce, a company renowned for its excellence. My hon. Friend is right: the insurance tax rise is bound to have an impact. The cancellation of the loan to Sheffield Forgemasters will also have a big impact, because Rolls-Royce is seeking to diversify into the nuclear industry—to expand its operations in that regard—and was hoping to purchase equipment from Sheffield Forgemasters, but it will now be forced to look abroad. That is a direct result of the policies of Con-Dem Members, who should hang their heads in shame.

--- Later in debate ---

[Ms Eagle]

There is certainly a respectable mainstream economic argument that synchronised austerity is worse for growth and could achieve the opposite of its intended effects on the deficit by increasing rather than decreasing it. My hon. Friend is exactly right.

Here we have this tiny Bill of 11 clauses. After all the hysteria surrounding its creation, why is it that size? I think there is only one plausible explanation. The Bill before us contains just those measures that the Chancellor must be worrying that the Liberal Democrats will wobble on over the summer recess. I would be the first to admit that size is not everything, but we might reasonably have expected that a more complete set of measures would have been forthcoming if we really were in the emergency economic crisis about which the Chancellor has spent the last few weeks irresponsibly stoking up hysteria. Instead, we have a first instalment of the Finance Bill that has been especially designed to padlock the Liberal Democrats into the coalition so that they cannot get out and cause a mess over the summer. Looking at those on the Government Benches, I have to say that some of them seem to be more willing hostages than the others. The twitching has definitely begun somewhere over there, and we intend to encourage that as the Bill continues its passage through the House.

Other differences between the Government’s rhetoric and the grim reality have become clearer in recent days. We were promised a fair Budget: the Chancellor insisted that we would all be in this together. The Budget, we were told, would be progressive, not regressive, with tax rises evenly distributed among income groups. There would be progressive cuts. The pain of spending cuts would somehow be fairly spread, with the rich bearing their fair share as we all marched together towards the establishment of a zero deficit. One by one, those loud assertions have proved to be utterly false.

In an interview in the News of the World on 13 March, before the election, the Chancellor said:

“We are all in this together. I am not going to balance the budget on the backs of the poor”.

Then, on Budget day, he made great play of calculations about the effects of his measures which purported to show that he had delivered on that promise. On closer inspection, however, those assurances dissolved into empty Budget spin. [Interruption.]

[Stephen Pound]

On a point of order, Mr Deputy Speaker. I would never presume to teach you your job, but some of us on this side of the Chamber are having great difficulty in hearing the priceless words that the shadow Minister is enunciating because of the well-refreshed ejaculations that are coming from those on the Benches opposite.

[Mr Deputy Speaker]

I do not think I need to deal with that point of order.

Budget Resolutions and Economic Situation

Stephen Pound Excerpts

Tuesday 22nd June 2010 Commons Chamber

[Sammy Wilson (East Antrim) (DUP)]

First, we all must recognise that this is a very difficult Budget at a difficult time. Throughout the United Kingdom, people are talking about this Budget. They were fearful of what was going to come out, of its consequences and of the fallout from it. However, as the Chancellor said, with the announcement of the emergency Budget, at least we can now start to inject some certainty into the economic way forward, and from that point of view it must be welcome. Secondly, despite the background to the current situation, there is still immense economic uncertainty, even among those who have been professional economists, about the best way forward. I shall address that point when I discuss what we are looking for in the Budget.

Thirdly, I come from Northern Ireland, where the major party in the coalition was recently rejected by the electorate, so we do not have too much to fear from them; where the Labour party does not even stand; and where the Liberal Democrats do not have a presence, either, although they have a sister party in the Alliance party. Therefore, the political point scoring in the debate so far does not have to form part of my response. I sit on the Opposition Benches, but the Leader of the official Opposition’s hysterical reaction does not grace this debate with the seriousness that it deserves. There was not even any recognition of the role that the previous Government played. Although there were many other responsible factors, the previous Government played a role in the situation in which we now find ourselves. Indeed, there was not even any recognition that, as today’s figures point out, something similar would have had to be done if there had been a different outcome in the election. The Leader of the Opposition’s reaction was disappointing, and it is right that I make that point. However, I do not make it because I have to score party political points; I make it just as a general observation on a very serious situation.

[Stephen Pound (Ealing North) (Lab)]

I appreciate that the hon. Gentleman is rising above the fray in this debate, but, as a former economics lecturer, is he as concerned as I am about paragraph 2.108 of the Red Book, which refers to

“rebalancing the Northern Ireland economy”?

I suspect that I know what that means. What does the hon. Gentleman fear it means?

[Sammy Wilson]

I shall come on to the issue of rebalancing the Northern Ireland economy. My understanding is that it is in keeping with the Northern Ireland Executive’s programme for government, namely that we cannot for ever remain as dependent upon the public sector as we are at present. There must be a rebalancing, so that we have a structured economy that allows for greater private sector involvement and, therefore, leaves us less open to the dangers of what has had to be done today. I do believe that what has been announced today will be very detrimental to the Northern Ireland economy in the short term.

However, let me turn to what we were looking for in the Budget. We want a Budget that is effective at getting us out of the current economic situation. The Chancellor’s view is that, given the size of the debt, the interest that is accumulating on it and the fact that we have to finance it for a large number of years, we must show the financial markets that we are serious about getting the deficit down. That will ensure that our good credit rating continues, and that we do not have to borrow at punitive interest rates and, therefore, take even more money from that which we have for current spending. I have been able to have only a cursory look through the Budget statement, but it seems that the Chancellor’s assessment is that if we do not do this quickly, we will find that our credit ratings go down and we lose the confidence of the financial markets, with all the consequences of that.

The other side of the coin is that if that assessment is wrong—if our credit rating is good for a number of years because we show that we are starting to make efforts and we do not have to take draconian measures of the kind that have been announced today—then withdrawing public spending from the economy will lead to a downward multiplier effect. That will impact on the level of growth, thereby getting us into what has been called the double-dip recession, whereby tax revenues go down, welfare spending goes up, support for industry has to increase, and we get ourselves into an even bigger muddle.

--- Later in debate ---

[Simon Reevell (Dewsbury) (Con)]

I am grateful to you, Mr Deputy Speaker, for the opportunity to make my maiden speech this afternoon. It is both an honour and a privilege to make these observations on behalf of the constituency of Dewsbury, which sits proudly in the West Riding of Yorkshire and comprises, in its northern half, the towns of Dewsbury and Mirfield, and in its southern half the rural wards of Denby Dale and Kirkburton.

Dewsbury is a diverse constituency in both geography and population. It has many famous sons and daughters, but before I mention just a few of them I should pay tribute again to Corporal Stephen Curley of 40 Commando Royal Marines, who was from Dewsbury and who recently made the ultimate sacrifice for our country in Afghanistan. Those of our footballers in South Africa who hint that their poor performance may be attributed to being away from their families for a few weeks should reflect on the fact that our real heroes are serving six-month operational tours in Afghanistan.

I referred to sons and daughters of Dewsbury, and I cannot make reference to any of them without mentioning Betty Boothroyd, as was, who became Speaker in 1992 and remained so for eight years. Another Dewsbury politician is my predecessor as a candidate, Sayeeda Warsi, who is an inspiration to many young Muslim women in my constituency and beyond. I should mention Sir Owen Richardson, who won a Nobel prize in physics; Patrick Stewart, an outstanding actor on television, screen and stage; Eddie Waring, successful pre-war manager of Dewsbury’s rugby club and for so many years the voice of rugby league; and current British super-featherweight champion Gary Sykes.

Although it is interesting to note the achievements of the famous, the real issues that affect people’s lives are my primary concern. In the Denby Dale ward, the village of Birdsedge supports sustainable energy, but rightly cannot understand why anyone would try to site huge turbines so that they overshadow the village and village school. Renewables are important, but so is quality of life, and I am pleased that the planning process will soon reflect that. I support BOLT—Birdsedge and district Opposition to Large wind Turbines—the village’s action group.

The villages of Skelmanthorpe and Scisset recognise the need to provide homes to sustain their villages, but could not understand how anyone could suggest doubling them in size without addressing the infrastructure that thousands of new homes would necessitate. Thankfully, the regional spatial strategy is behind us, along with the local development framework, but the local authority must recognise local people’s legitimate concerns as it considers its plans. I am pleased to support Save Our Scisset and the Skelmanthorpe community action group.

In the Kirkburton ward, there are successful businesses supplying everything from mineral water to precision engineering components. There is a remarkable company, which manufactures a machine that can prevent hair loss—

[Stephen Pound]

Really?

[Simon Reevell]

It is good, but not that good. It can prevent hair loss for some chemotherapy patients.

I have given examples of enterprises that must be encouraged, and the same applies to those who farm in rural areas. Honest food labelling is a reasonable request from those who farm the southern half of my constituency. Those who maintain our countryside and those who build up private sector businesses deserve a tax system that recognises generations of careful investment.

In Mirfield, as everywhere, education is important. Mirfield’s Castle Hall and the Mirfield free grammar are two of the local authority’s top performing schools. It was acknowledged that any sort of merger would harm the standards in both, yet that was the local authority’s plan. Many groups and individuals fought those proposals, and this is an appropriate moment to pay tribute to my predecessor, Mr Malik, who, through this involvement, put party loyalty to one side and stood with parents, pupils, teachers and politicians of all parties to oppose the local authority’s proposal. It is a good example of how a constituency MP should and did put people before politics. The schools adjudicator threw out the proposals for Mirfield, and I hope that they never resurface, but against such a background, schools such as Mirfield free grammar now look to academy status.

Mirfield has an excellent Air Training Corps and Army Cadet Force. Those organisations teach young people discipline, self-confidence and respect. Their colleagues in the Sea Cadets and Army Cadets in Dewsbury do the same.

Let me consider the town of Dewsbury. It was in the news again last week when the local authority published the summary of its serious case review into the Shannon Matthews case. I am glad that the publication of the entire report will follow, but publication of the summary was sufficient to cause the media to descend once more on the town. The real story is that the people of the town of Dewsbury are no different from the people of Mirfield, Kirkburton or Denby Dale. The Shannon Matthews case concerned only two members of a single family, who behaved in a truly appalling way, but no two individuals can define a town. What defines Dewsbury is the fact that when the people of the town believed that a vulnerable young girl had been abducted, friends, neighbours and strangers spent hour after hour, night after night searching for her, just as they would do in Kirkburton, Mirfield or Denby Dale.

That is not to say that Dewsbury is without problems. Despite its fine Victorian buildings and the best market in the country, regeneration is a priority, and there is a growing feeling that there is an obligation on the local authority to consider carefully whether relocating part of its work force to Dewsbury, a town with first-rate road and rail access, would be a responsible contribution to that process. Some landlords must be more realistic about their rents and more proactive about their responsibilities to the town centre.

Dewsbury’s minster stands on a site of Christian worship going back to 672. In its walls nearly 900 years later, the Protestant faith replaced the Catholic faith. More recently came the chapels, and even more recently, the minster was joined on the skyline by the silhouette of the town’s mosques. That is a sign of a confident and tolerant place, and no one should be allowed to jeopardise that.

The minster’s most famous curate was an Irish immigrant born Patrick Brunty. His is an interesting story. In 1799, after his victory in Naples, Admiral Nelson received the title “Duke of Bronté” from a grateful King Ferdinand. Patrick Brunty changed his surname in honour of the great naval hero. As Patrick Brontë, he worked as curate at Dewsbury’s minster, then went with his daughters to the parsonage at Haworth. The novels written there by his daughters, the Brontë sisters, made their new surname famous the world over. The point is not that those who come to West Yorkshire should change their names to honour the hero of the hour, but that much of what we regard as a product of England, even its finest literature, has roots further afield.

Integration is important—it is not about where someone is from, but the extent to which people are prepared to mix, and ensuring that we respect one another, whatever our cultural differences. It is about asking ourselves if a particular course of action will be helpful or inflammatory; whether something we want to do or even want to wear can be better explained or even changed if it alienates others. It is a central issue in the town of Dewsbury. We are entitled to expect integration and to say to community gatekeepers that their role is to hold the gate open, not force it shut. I pay tribute to all the organisations that do so much already to pursue that course.

Many people in my constituency are fed up with working hard and doing their best, and seeing others who make little or no effort being better off because of the vagaries of the benefits system. The system is unfair and I am delighted that, under the coalition Government, it will change to reward those who strive in the face of adversity, rather than those who sit back and ask, “What can I have for as little effort as possible?”

I thank those who worked so hard to win in Dewsbury. No one had a better team than me. I recognise that alongside victory comes great responsibility. It is an enormous privilege to shoulder that responsibility on behalf of the constituents of Dewsbury.