Steve Reed
Main Page: Steve Reed (Labour (Co-op) - Croydon North)Department Debates - View all Steve Reed's debates with the HM Treasury
(7 years, 2 months ago)
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John McDonnell
I will tell a quick anecdote. I was on the tube a month ago when a worker got on and sat down next to me. He was in his overalls as he was on the night shift. He had worked for Tube Lines before the company went bust. He is a rail maintenance worker, which is a skilled job, but he is now employed by an agency and does not know whether he will have work tomorrow, the next day or whenever. He has no sick pay and no holiday pay, and if he does not turn up for work, he does not get paid. He has to pay an accountant to deal with the tax on his salary payments. At the same time, he can be exploited by being sold on from agency to agency. That is not real self-employment; that is the exploitation of someone who has been forced into self-employment. Such issues must be addressed. This insecurity is not just because of the gig economy, but because of what has happened in recent years, with people being forced into self-employment. Those issues were not even addressed yesterday. There is a problem of employers shirking their responsibilities by forcing staff into self-employment.
Yesterday, we got not a package of measures designed to address the problems of the modern world of work, but a single, unilateral tax hike for the self-employed. People earning over £8,000 will be hit. The Chancellor tried to disguise that by bundling the measure in with the re-announcement of abolishing class 2 national insurance payments, but yesterday’s Budget documents are clear that this is a tax hike of £2 billion, targeted at the self-employed. Increasing the taxes paid by self-employed people does not move them to parity with the employed, because they do not receive the same benefits as the employed. The Chancellor says that he is concerned about the gap between different contribution rates, but the Labour party does not believe that the burden of closing that gap should fall on some of the lowest paid workers who are also those in the most precarious position in our society.
Mr Steve Reed (Croydon North) (Lab)
Does my right hon. Friend agree with the Conservative Croydon councillor, James Thompson, who tweets:
“Disgusted by this so-called Conservative government hitting the self-employed”.
John McDonnell
I find it interesting that the response to yesterday’s statement has been anxiety right across the political spectrum. I hope that the Chancellor is listening. I hope that the Labour party and others in the House will combine with some Conservatives who are concerned and that we will force the Chancellor to think again.
The Chancellor says that he is concerned about the gap between different contribution rates. We do not believe that the burden of closing the gap should fall on some of the lowest paid workers, but that is the consequence of yesterday’s decision. The Government are making minicab drivers pay more. They are taxing Uber drivers while at the same time cutting the taxes of Uber itself. A hairdresser earning £15,000 a year will be £137 worse off as a result of yesterday’s measures. That cannot be fair—it just cannot be right.
And, yes, this is a manifesto betrayal. There was a promise in the manifesto and it read like this:
“This means that we can commit to no increases in VAT, Income Tax or National Insurance. Tax rises on working people would harm our economy, reduce living standards and cost jobs.”
That was not me or Labour MPs, but the Tory manifesto. The Government have been trying to muddy the waters by talking about a Bill they brought forward in 2015. That Bill sought to cap class 1 contributions—Labour supported it—but it did not even allude to the idea that any other classes would see increases. To quote the current Chief Secretary to the Treasury speaking in Committee:
“we do not have further proposals other than those that we previously set out”.––[Official Report, National Insurance Contributions (Rate Ceilings) Public Bill Committee, 27 October 2015; c. 16.]
Some have tried to portray yesterday’s announcement as progressive, but what is progressive about raising taxes for low-paid drivers while the Government go ahead with cuts to capital gains tax for a tiny few? What is progressive about raising taxes for low-paid self-employed cleaners while the wealthiest families in the country get an inheritance tax cut? What is progressive about raising taxes for plumbers while multinational corporations see their tax bills slashed year after year? What is not fair is £70 billion of tax giveaways for the wealthiest and the corporations while taxes are hiked for middle and low earners. Just because the higher paid will pay a bit more, that does not make it right for the Government to clobber those on low incomes to plug a gap in their finances.
Interestingly, the Government have promised a review, but the tax hike is already scheduled. It may be that there is jam tomorrow on benefits, if one chooses to believe the Government, but who would believe them after they have broken a clear manifesto promise? The Government could not have made their interests more clear in hiking taxes for the self-employed while slashing taxes for the corporations. I quote the Federation of Small Businesses:
“Increasing this tax burden, effectively funded by a reduction in corporation tax over the same period, is the wrong way to go”—
I agree.
Meanwhile, the Government’s small, incremental reforms to business rates fall far short of the radical long-term reform that is needed. They are just trying delaying tactics. Business rates are a ticking time bomb that threatens to destroy many of our town centres. To be frank, this is a Government of the giant corporations and tax avoiders. It is not a Government for workers, not a Government for the self-employed and not a Government for small businesses.
Let me turn to the social care system and yesterday’s announcements. Our social care system is in crisis. I have an anecdote about a constituent I visited last week. She is a young woman who looks after her father, who has had seven strokes, and a mother with dementia. She is trying to hold down a job, but cannot get the care. As a result, she has cut her hours, rendering the income into her family and for her own children extremely tight. It is a difficult situation. That one example from my constituency exemplifies what is happening right across the country. People are suffering in that way in virtually every constituency.
According to the King’s Fund, social care needs £2 billion now just to cope with the emergency. The Chancellor failed to grasp the scale of the crisis. The money announced yesterday amounts to less than a third of what is needed. What I resented yesterday was that it had been trailed in the media that £2 billion was coming, but we were not told until the last minute that it would be over three years. That is nowhere near enough to meet the crisis that people are enduring at the moment. There are now more than a million people, mainly older people and frail people, who are desperate for social care but still cannot get it as a result of the failure to address the emergency we are facing.
Sajid Javid
My right hon. Friend the Chancellor talked about leaving the European Union. In fact, I think that that was one of the first things that he mentioned in his Budget statement. It is a shame that the hon. Gentleman was not listening.
Most important, the success that I have described is being felt in the pockets of ordinary working people, with real wages forecast to rise in every year up to 2020-21. Britain is home to more private sector businesses than ever before, and that is providing more jobs than ever before. We have gone from record-breaking recession to record levels of employment. But of course we are not complacent: there is much more to do. Going on a wild spending spree simply because of improved growth forecasts would be like going down the pub to celebrate the extension of an overdraft. Our focus on sustainable, stable public finances must continue, and the Budget provides for exactly that.
Mr Reed
The Secretary of State is lecturing the House on how finance works, but we would like to know more about how it works in his Department. He has denied offering Surrey County Council a sweetheart deal, but the BBC has now published a letter from officials in the Department for Communities and Local Government which shows that they did, in fact, offer Surrey more cash in a unique deal. Did the Secretary of State know about that letter when he issued his denial?
Sajid Javid
If the hon. Gentleman had cared to look at a written ministerial statement published on 9 February, he would have seen that it states very clearly that Surrey approached the Department, as do many other councils before a financial statement, asking for more money. It made a request for a business rates retention plan, which was firmly rejected.
Sajid Javid
I think my hon. Friend will understand that it would not be appropriate for me to comment on a particular planning application, but if he would care to furnish me with more information, I am sure that officials in the Department will take a look at it.
Sajid Javid
I will in a moment.
By maintaining a robust, growing economy, we will be well placed to make the most of the opportunities that Brexit will bring. The Budget also allows us to make additional commitments in a number of areas without putting our hard-won economic recovery at risk. The first of those areas is adult social care. The true measure of any society is how it cares for its most vulnerable citizens. Given advances in medical care and an ageing population, many councils have found it increasingly difficult to meet the costs of care in their communities.
Mr Reed
I am grateful, because social care was the subject of the correspondence with Surrey County Council. When the Secretary of State issued his denial, was he aware that his own director of local government finance, Matthew Style, had sent a letter to the council offering it a unique financial deal?
Sajid Javid
I think I have already answered that question for the hon. Gentleman: there was no deal available to Surrey that is not available to any other local authority.
I have been working on adult social care with my right hon. Friends the Secretary of State for Health and the Chancellor of the Exchequer. The result is a Budget that delivers £2 billion of additional funding for adult social care. Let me be very clear: every single council in England responsible for adult social care will benefit from this additional funding, rural or urban, north or south, Labour or Conservative. To allow councils to move fast so that they can put in place extra social care packages as soon as possible, we will publish the allocations later today. This additional money, front-loaded for 2017-18, will make an immediate difference to people in our communities who need care and support, and it will bring the total dedicated funding available for adult social care in England to £9.6 billion over the course of this Parliament.
I know that this is a novel concept for the Labour party, but more money is not the only answer. This Government are not just dedicated to sustainable economic growth; we also believe in sustainable public services. Demand for adult social care is not about to stop rising, and the challenge of paying for it is not going to go away. The £2 billion announced in this Budget will make a significant difference over the next three years, but the challenge will not suddenly vanish in 2020.
The funding model for the adult social care system is clearly in need of substantial reform and improvement; it has to be made fairer and more sustainable, and we are absolutely committed to doing just that. We are looking at all the options, and later this year we will be publishing a Green Paper setting out a long-term plan that will ensure that proper care is provided to everyone who needs it.
Mr Steve Reed (Croydon North) (Lab)
We are here to consider the Budget that the Government have put forward for the country. I want to speak about its impact on my constituents.
Like the rest of the country, Croydon is experiencing a social care crisis. Older and disabled people regularly visit my office to say they cannot get home care and that they do not get adequate support when they leave hospital. Local charities are telling me that the funding that they need has dried up as well.
After the Chancellor ignored the social care crisis in his autumn statement, we were hoping for better this time. Although £2 billion extra over three years is a welcome start, it goes absolutely nowhere near resolving this crisis. These services have already been cut by £5 billion since 2010. Some 26% fewer people receive help today, even though there are more older people needing such help. The King’s Fund projects a £2.8 billion funding gap every year by the end of this decade, but only £2 billion is being made available over three years, so all I can say to my older constituents and the disabled people who come to ask me what the Government are doing to help them is that the Chancellor has responded to their plight by imposing yet more cuts.
It is galling to see the Department for Communities and Local Government offering Surrey County Council a sweetheart deal that is denied to Croydon and people living in every other part of the country. It is not only Surrey that has this problem to deal with, but every local authority. Every community is struggling with it. I regret immensely that the Secretary of State failed to answer my question about whether he knew in advance about the letter that was sent from his Department to Surrey County Council offering it a sweetheart deal. We need to know whether he knew about that in advance of its being withdrawn. If he was party to it, the House needs to know that that is how he is attempting to operate within his Department and, if he did not know about it, the House needs to know that he has no grip on what his officials are up to. His constant evasion of the question will not suffice. We need answers from the Secretary of State; I am sure that in time we will get them.
Particularly painful to my constituents will be the planned hike in national insurance contributions for the self-employed. Croydon North is one of the most ethnically diverse constituencies in the country. Unfortunately, unemployment is particularly high among many minority communities. Their desire to work and their strong enterprising spirit means that many people from these communities set up their own businesses. Self-employed people work as taxi drivers, van drivers, hairdressers, plumbers, decorators, childminders—all sorts of jobs. They work very long hours, often for very modest pay. In Croydon, well over one in 10 workers are self-employed. It makes no sense whatsoever to clobber them with new tax rises. They need help and support, not further barriers to work.
Mr Jackson
So what does the hon. Gentleman say to the respected Institute for Fiscal Studies and the much respected Resolution Foundation, which are today stating specifically that the measures that he identifies are progressive and ameliorate inequality in the tax system between people on pay-as-you-earn and those who are self-employed?
Mr Reed
Perhaps Conservative Members, including the hon. Gentleman himself, should have thought about that before they stood for election on a manifesto that said absolutely categorically that there would be
“no increases in...National Insurance contributions”.
It does nothing for trust in politics when politicians say one thing to persuade people to vote for them but then, once they are elected, do the polar opposite. They are helping to further break trust in this House and trust in politics. This is not down to the IFS; it is down to Tory Central Office, the Prime Minister, the Chancellor of the Exchequer and—dare I say it?—the hon. Gentleman himself, if he is going to vote for the proposal. Given all the uncertainty about Brexit—it is shocking that the Chancellor had so little to say about Brexit in his statement—small businesses and the self-employed need reassurances, not broken promises.
I now turn to those in employment, because this Budget has very little to offer them either. Low pay and stagnant wages have become endemic. Most people have seen no growth in household incomes in the 10 years since the global financial crash; indeed, many have seen a real-terms cut. The British economy might be getting richer, but British working people are getting poorer. Ours is the only advanced economy in which wages fell while the economy grew between 2007 and 2015. In Croydon, average earnings have fallen by 7.6% in real terms, and today more than one third of my constituents earn less than a real living wage. So where has the money gone? Who has taken the proceeds of that growth? It is not the vast majority of people in Croydon or across Britain who work around the clock to pay the bills and put food on the table, but the shrinkingly small number of the super-rich whose interests this Government really represent. Wages are stuck and household debt is soaring, but the Chancellor had absolutely nothing to say about any of it.
Peter Dowd
Is my hon. Friend aware of today’s Resolution Foundation report that says that the UK is set for the worst decade for pay growth in 200 years?
Mr Reed
That is absolutely shocking, but it reflects what we are seeing in our constituencies and what our constituents are telling us.
Once upon a time in this country, there was a covenant between people and Government. People gave their consent to the system in return for a fair reward for the work they put in. There was an understanding that if people worked hard, they would do well. They could expect a decent home, security for their family, and healthcare when they fell ill or grew old, and that if they could not work, they would be looked after with dignity and respect. But today that covenant is broken. The unfairness and inequality that this Government stoke has bred resentment that has catapulted us out of the European Union and over a cliff edge into uncertainty.
Mr Jackson
I cannot allow the hon. Gentleman to propagate this myth. The gap between the poorest and richest 10% of our population was the highest that it has ever been under a Labour Government. This Government, I am proud to say, have delivered something that was never delivered in 13 years of a Labour Government: a national living wage to assist the poorest members of our community who are in work.
Mr Reed
This Government have absolutely divided the country. They have divided different parts of the country and communities from each other. I will give a statistic that shows how they have done it. Since they came to power in 2010, the 10 poorest councils in the country have experienced cuts 17 times bigger than those faced by the 10 richest. If that is not divisive, I do not know what is. This is happening on top of the fact that jobs have been lost to automation, factories have moved abroad, British people are denied the investment, skills and training that they need to compete in a global economy, and wages are stagnating. The Tories have made all this worse by targeting the poorest communities for the biggest scale of cuts. They have put the greatest burden on the weakest shoulders, and they have done so as a deliberate political tactic.
Adam Afriyie (Windsor) (Con)
The picture of doom and gloom that the hon. Gentleman paints is completely disconnected from the reality for people overall. Will he at least acknowledge that those in the lowest quartile have had a bigger tax cut than those in the highest quartile?
Mr Reed
We do not need to hear anything about tax cuts from Conservative Members, given that they have just broken their solemn electoral promise not to raise taxes if elected back into government. Only yesterday we saw the Chancellor standing at the Dispatch Box proposing to raise taxes. Conservative Members will have to vote on that, and it will be very interesting to see how many follow it through and how many do not.
The truth is that the Government have divided our country. With this Budget, they are doing absolutely nothing to bring it back together again.
Mr Stewart Jackson (Peterborough) (Con)
It is a pleasure to follow the hon. Member for Cardiff South and Penarth (Stephen Doughty).
The Labour party clearly has a rich vein of irony, as it is masquerading as the friend of the entrepreneur and the self-employed. Perhaps the white van man taskforce will be headed up by the right hon. Member for Islington South and Finsbury (Emily Thornberry), who has great affinity with white van man.
The fact of the matter is that Labour Members must be living on a different plant from the rest of us, because this Budget was actually a consolidation of seven years’ work to rescue this country’s fiscal credibility from the disastrous mess left by the Labour party, including the record peacetime debt that we had in 2010. I also have to say that in my 12 years in the House, I have rarely seen a poorer Budget response than that from the Leader of the Opposition—no wonder his own MPs had their heads in their hands.
Mr Jackson
I will not give way, if the hon. Gentleman will forgive me, as I have to make progress.
If we are talking about honesty and being upfront, even today the shadow Chancellor is quoted as saying that within 100 days of a Labour Government, we would see the end of nuclear power. That is rather different from what was being said two weeks ago in Copeland, when the Leader of the Opposition was saying that nuclear power was safe under Labour.
The Budget also consolidates this Government’s industrial strategy, which is a recognition that many people across our country, particularly outside London, felt that the benefits of globalisation were not flowing to them, and to their communities, infrastructure, towns and cities. It is right that we address that, and this Budget does so. Those people feel that some of the forces of globalisation had passed them by. That is a wider context of Brexit, but because of my departmental responsibilities, I will not go any further into that.
We have also witnessed a jobs miracle over the past seven years. In my constituency there has been record growth in private sector jobs, a drop in the number of NEETs—those not in education, employment or training—and youth unemployment, and an unemployment rate of 1.9% on the last figures, which is the lowest in eight years. We have also seen the highest increase in living standards in 14 years, and an increase in real wages over the last quarter or so. We have cut the deficit by two thirds—it was 10.1% of GDP under the previous Labour Government; it is now 4%. The Government have also tackled key issues relating to the skills agenda, with £500 million for skills. In my constituency, a university technical college is attracting new students. More money—£40 million—is being made available for reskilling and retraining the workforce. The Chancellor is also considering important issues such as infrastructure spending on roads and broadband.
Welfare is certainly an issue that transcends party politics, but I am proud that this Government have worked on the basis that the No. 1 priority for getting people out of the miserable cycle of poverty and welfare dependency is to get them into work. Taking people from workless households and giving them work is massively important if we are to change their lives. It does not help when Labour Members propagate the myth about zero-hours contracts. In any case, people who are on those contracts sometimes make the decision to work in that way themselves. That affects their lives, but it is their choice. In fact, 97.1% of people are not on zero-hours contracts, but we would not know that from listening to Labour Members.
I agree that the social care funding is vital. It builds on the precept that we have already put in place, and on the better care fund. However, in 13 years of benign economic circumstances, the Labour Government did nothing at all about social care. They sold the gold, they ruined our private pension schemes and they racked up record levels of debt.
We are spending serious money—£10 billion by the end of this Parliament—on schools improvement. Labour adopt a levelling-down approach, attacking people who are aspirational and ambitious for their children. They say that grammar schools are awful—that they are what the rich and the middle classes do. Actually, they are about equality, improving people’s lives and reducing those differences. It is about taking people from modest backgrounds and giving them a real stake in their future. Labour Members have always been against that. They have been against share ownership, against the right to buy and against grammar schools. For them, it is all about levelling down and sharing the misery among everyone. That is what socialism is all about.
We are dedicated to improving the living standards of all our people. As Disraeli said, the aim of the Conservative party is the enervation of the condition of the working class, and that is our watchword. This is about social progress. That is why 1 million people will get a £500 pay rise this year as the national living wage goes up to £7.50. The personal allowance has risen seven years in a row. We have frozen fuel duty for working people who need their cars to go to work. We have provided free childcare—[Interruption.] The hon. Member for Cardiff South and Penarth says that we have not, but we are also putting serious money into research and development, broadband and tackling traffic congestion at pinch points.
Of course we have had to make difficult choices. On the specific issue of national insurance contributions, this is about the regularisation and simplification of the tax system, but it is also about social equity and fairness. The hon. Member for Cardiff South and Penarth shakes his head, but the Resolution Foundation has not always supported a Conservative Government’s fiscal measures and yet it is doing so today, as is the Institute for Fiscal Studies. It is interesting that Labour Members should be against fiscal fairness. They are against us making the necessary changes to fund things like social care. I have asked questions to which I have not had an answer from their Front Bench, or from “continuity Blair” on the Back Benches. I like to see the dynamic duo from Ilford, the hon. Members for Ilford South (Mike Gapes) and for Ilford North (Wes Streeting). What we do not have from Labour is a coherent, comprehensive, plausible policy on tax or spending. It is just more tax, more borrowing, and more spending—more debt millstones for our children. That is the Labour party for you.
There are certain things that I would have liked to see in this Budget that I did not, such as more tax on high-strength cider and a higher tax on tobacco. I support the sugar tax. I am not a libertarian—I am a social conservative—and we should reflect the health impact caused by sugar in our diet. Like my hon. Friend the Member for Harrow East (Bob Blackman), I would like more help in the autumn statement on affordable housing to get younger people on the housing ladder. We need to do more on tax advantages for brownfield remediation. We need to put in place extra care facilities for older people, such as through real estate investment trusts. We need more smaller niche house builders to get back into the market and build more homes.
Some schools in my constituency are concerned about the impact of the new education funding formula on their baseline funding. It would be remiss of me not to say that the King’s School and Arthur Mellows Village College are worried about that, and I will be speaking quietly and privately to the Chancellor.
My party is proud of its achievements over the past seven years in turning this country around after we inherited the Labour party’s disastrous legacy. My party believes in social progress, prudent government and fiscal responsibility, and it falls to the Conservative party, as ever throughout history, to build a country that works for everyone.