Age-related Tax Allowances

Baroness Coffey Excerpts

Monday 9th September 2013 Westminster Hall

[Kelvin Hopkins (Luton North) (Lab)]

I beg to move,

That this House has considered the e-petition relating to age-related tax allowances.

It is a pleasure to serve under your chairmanship this afternoon, Mr Hollobone. We have been allocated three hours, but my speech will not last that long or anything like it. I am, however, pleased to have the opportunity to speak about age-related tax allowances, setting them in their historical context and in the context of today’s pension provision.

I first declare an interest as a person of pensionable age and as chair of the parliamentary support group of the National Pensioners Convention, the radical and progressive campaigning organisation that has been fighting to advance the cause of pensioners for more than 30 years.

The NPC’s first president was Jack Jones, the late and great former general secretary of the Transport and General Workers Union. Forty years ago, I worked for Jack Jones as a TUC staff member servicing the TUC’s transport industries committee, of which Jack was the chair. Jack had no equal in his principled commitment to the pensioners’ movement, such that, when he retired from his union’s leadership, he donated his entire leaving gift of some thousands of pounds to the National Pensioners Convention.

Speaking today, I am acutely conscious of the history of the NPC and of the struggles of the pensioner movement over the decades. Today’s debate has been prompted by the online petition on age-related allowances initiated by Arthur Streatfield on behalf of the NPC and all pensioners. The petition was signed by considerably more than 114,000 people before its closure in March, and it demonstrated the strength of feeling generated by the Government’s freeze on age-related allowances announced in the Chancellor’s March 2012 Budget.

I speak not only for myself or the active members of the National Pensioners Convention—even the thousands who signed the petition are only a fraction of those affected—as we in this House should always be conscious of the fact that there are more than 11 million pensioners in Britain, or nearly 20,000 per parliamentary constituency. Pensioners are among those who follow politics most closely and are some of our most well-informed electors. They are most likely to vote in elections, so we would all be wise to take proper and full account of their views.

The moral case for pensioners and their interests, however, is most important. They have spent a lifetime serving the economy in employment, sometimes serving the country in times of war, and giving their all in raising families. Elderly pensioners often become frail and live on low incomes; they have earned the right to be treated well by the society to which they have given so much. We should respect and care for our elders and ensure that they have the incomes necessary to live in comfort and security.

I have a few things to say on the timing of today’s debate. It was originally tabled to take place before the freeze on the age-related personal tax allowances had come into force, but the proroguing of Parliament, and the Queen’s Speech, denied us that opportunity. By the time the Backbench Business Committee had been re-elected and was able to allocate time, we had reached the summer recess. Although a debate may now seem something of an afterthought, it at least gives MPs the chance to discuss the matter in detail, which was never the case when the Chancellor made his initial announcement. It also provides us with the opportunity to see how the policy relates to the much wider issue of older people and the effect of austerity on their living standards and general well-being.

For decades there has been an acknowledgement of the need to provide additional support through the taxation system to older people in retirement. In 1925, old-age relief was introduced to help those aged over 64 with incomes of £500 a year or less. The Chancellor at the time, Winston Churchill, said that the modest savings of pensioners should be exempt from tax. The basis of today’s age-related allowance was introduced in 1975, and in 1987 further assistance was given by the introduction of an increased allowance for taxpayers aged over 80—reduced to those aged over 75 in 1989.

The decision by the Chancellor in the March 2012 Budget to freeze the age-related tax allowances, therefore, not only went against a widely held consensus that had been in place for more than 50 years, but caused serious concern about the future income levels of older people throughout the UK. The Chancellor announced in the House that he would freeze the age-related allowances from 6 April 2013 at the level of £10,500 for someone aged 65 to 74 and at £10,660 for someone aged 75 or over until those allowances aligned with the ordinary personal allowance. People retiring after that date—in effect, those born after 5 April 1948—are therefore to receive a lower personal tax allowance of £9,205, which is £1,295 less than they would have been expecting. It is estimated that the measure will save the Exchequer £3.3 billion by 2016-17 and, according to Treasury figures, will result in 4.4 million existing tax-paying pensioners losing between £63 and £83 a year, while future pensioners will suffer a loss of between £285 and £322 a year after tax.

Understandably, the announcement caught the headlines the following day, but it came as a surprise to many, and it was unexpected for a number of reasons. Only the year before, the Chancellor had told the House that the allowances would continue to rise for the lifetime of the Parliament in line with the retail prices index. There was no indication that he was preparing a change of policy. Twelve months later, he clearly decided to break that promise.

Astonishingly, while announcing a freeze on the tax allowances of pensioners at the same time, the Chancellor said that he would give those earning more than £150,000 a year a 5% cut in their tax rate, from 50% to 45%, which was an enormous windfall to those on the highest incomes. Someone on an income of £1 million taxable at the highest rate stood to benefit to the tune of £50,000 a year. It is hardly surprising, therefore, that older people felt as if those on modest incomes, seeing the purchasing power of their tax relief decreasing, were effectively subsidising a tax cut for the super-rich and for better-off pensioners. One blatant unfairness arising from the Chancellor’s decision was that while pensioners with annual incomes of less than £25,000 saw their tax bills rise, those with incomes in excess of £29,000 saw their tax relief increase by £268.

At the time of the announcement, there had been much erroneous nonsense in the media suggesting that older people had somehow escaped the effects of the Government’s austerity measures and that they needed to feel the pain just like everyone else. Think-tanks such as the Intergenerational Foundation and the Nuffield Foundation were quick to point out that older people were a burden on society’s finances, and individual politicians from the Deputy Prime Minister to the shadow Chancellor mentioned how universal benefits would have to be taken away from Britain’s apparently greedy older generation.

Since 2010, an argument has been put in some quarters suggesting that we can no longer afford older people. No doubt that background noise had some influence on the Chancellor’s decision in the 2012 Budget. The revenue collected by the state from older people, however, whether directly through a range of taxes or through costs that older people bear that would otherwise be paid by the state, adds up to a staggering £175.8 billion every year, compared with total expenditure on older people through pensions, welfare payments and health care of £136.2 billion. The overall net contribution by pensioners to the economy is, therefore, almost £40 billion and is estimated to rise to almost £75 billion by 2030. Most importantly, that is more than enough to pay for the current range of age-related benefits, as well as the personal tax allowances that we are debating today.

We have only to look at the voluntary and charitable sector to see how older people are keeping many of its organisations going, and how without them many of the networks of support that hold our communities together would start to crumble. Not only that, but millions of working families rely on the help of grandparents to provide unpaid child care, enabling parents to go out to work. Through volunteering, caring and of course paying taxes, Britain’s pensioners continue to give back to the country, rather than simply taking from it, as some would have us believe. As history often shows, however, an economic crisis can provide the conditions in which sections of society are scapegoated and blamed for the problems that we face. This time it appears to be pensioners and the elderly who are being targeted as the source of our economic woes, rather than the activities of a largely unregulated and irresponsible finance industry and the feeble Government policies to deal with it.

One of the biggest problems with the debate over the freeze on age-related tax allowances has been the myths that it has promoted. Following the Chancellor’s Budget statement, the newspapers dubbed the freeze the “granny tax”, although the truth is that around 60% of those affected are men. It has been widely acknowledged that our poorest pensioners tend to be women, many of whom do not even have enough income to pay any tax at all. A lifetime of caring responsibilities, or of part-time or low-paid work, means that many of them now struggle on less than £10,500 a year. Even the inadequate minimum wage would give people an income of over £12,800. Therefore, many older women are among the 6 million pensioners in this country who do not pay tax because they simply do not have enough money. To argue that they have escaped austerity when they have been living in austerity for years is outrageous nonsense. To suggest that someone on £15,000 is well off and can afford to face an increase in their tax bill when older people are facing many other financial pressures is either naive or callous, or both.

The inflationary impact on older people is higher than that which the country as a whole is experiencing, largely because pensioners spend a greater proportion of their limited income on things whose cost is rising fastest, such as food, fuel and health. It is estimated that average living costs for those over 75 have risen by 6.2%, which is considerably higher than the official consumer prices index would suggest.

The Chancellor was disingenuous to suggest that the freeze in the tax allowance was a mere simplification of the taxation system, when many people rightly saw it as a tax increase. Within hours of the Budget, a petition was set up on the Government’s website by retired civil servant Arthur Streatfield and was promoted by the National Pensioners Convention. I pay tribute to the NPC for its work in bringing this issue to the fore and for promoting tirelessly over the years other issues, such as pensions, social care, fuel poverty and universal benefits. I am grateful to it for its advice and assistance to me for today’s debate.

When the petition was launched, NPC’s general secretary, Dot Gibson, said:

“Since the Budget announcement, we have been inundated by messages from pensioners like Arthur who are outraged that the Chancellor has given a tax cut to those earning over £150,000 whilst pensioners on little more than £11,000 are having their tax allowance frozen. There has been a lot of nonsense about pensioners having been cushioned from the government’s austerity measures, but they’ve already seen cuts to their winter fuel allowance, a reduction of their state pension increase because it’s now linked to the lower Consumer Price Index rather than the Retail Price Index, rationing of care services in the community, closure of day care centres, changes to disability benefits and caps on housing support.”

Dot continued:

“It’s time we came out fighting and this petition is just the start. The government needs to recognise that older people are an asset not a burden. We not only need to reverse this latest attack, but also to campaign for higher state pensions, proper care and an end to fuel poverty.”

I absolutely agree with Dot.

In the Government’s mid-term spending review on 26 June, the Chancellor announced that universal benefits for older people, such as the winter fuel allowance and the concessionary bus pass, would for the first time be included in an overall cap on welfare spending. That seems to be just a way of cutting universal benefits by the back door. At the same time, the Department for Work and Pensions released figures showing that between 1.9 and 2.1 million older people are living below the official poverty line, and the older the age of the pensioner, the greater the likelihood of low income.

Pensioners living in a household where someone is disabled are almost three times as likely to suffer material deprivation as those living in a household where no one is disabled. Pensioners from minority backgrounds—there are many in my constituency—are also more likely to live on low incomes. When more than 1 million pensioners tell the DWP that they would be unable to pay an unexpected bill of £200, it speaks volumes about the need for a higher basic state pension for everyone and the need to take another look at the decision to freeze age-related tax allowances.

Despite what many might assume, we do not treat our older people with sufficient dignity. The UK state pension remains among the least adequate in Europe, with the risk of poverty among older people ranked fourth of the 28 EU countries. Some 5.6 million older people have savings of £10,000 or less. Nearly 2.5 million pensioner households live in fuel poverty and spend more than 10% of their income on fuel. That figure is rising. Almost a quarter of all pensioners—24%—do not go out at least once a month; 41% do not take a holiday away from home; 10% are unable to have their hair cut regularly; 5 million older people consider the television to be their only source of company; and one in 10 pensioners say they feel completely cut off from society, family and friends. That does not strike me as an impressive advertisement for Britain being a great place in which to grow old.

Despite that picture, the Chancellor’s decision to freeze age-related personal tax allowances has, for at least the next few years, penalised more than 4 million older people who are already struggling to cope. I agree there is merit in the long-term policy objective of securing a single personal tax allowance based on income rather than age, but it must be recognised that age-related personal tax allowances were designed to help with the additional expenses, such as home maintenance, that older people face. Such allowances will continue to be relevant for as long as the state pension remains disgracefully inadequate.

We have as a society recognised the need to provide additional assistance to older people because they face additional challenges brought on by ageing. We also recognise that after a lifetime of contributing to society, which continues in retirement, there are ways in which older people should be rewarded and justly so.

If the Chancellor had thought a bit harder, he might have realised that a much fairer way of achieving a change in the personal tax allowances would have been to uprate age-related allowances by inflation, and increase the under-65 allowance by more than inflation so that over time the two would eventually harmonise and older people would continue to get an increase in their allowance.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

Surely the hon. Gentleman accepts that one of the Government’s aims is to simplify tax allowances and have one allowance regardless of how old someone is. Is it sensible for an hon. Member over 65 to have higher take-home pay, simply because of age, than someone under 65?

--- Later in debate ---

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I did not intend to make a speech, but a year or so ago I co-authored a policy to try to simplify allowances and national insurance. I will not dwell on that today, but I thought it was important to put on record the fact that I support the Government’s proposals to simplify taxation, which is what this policy does.

I have received criticism from constituents because a quarter of them are over 65, which is a higher proportion than 10 years ago. Suffolk Coastal, like many coastal areas, is a place where many people choose to retire, partly because they are attracted by its wonderful scenery, lifestyle and so on. It is important to say that we will do what we can to help pensioners on low incomes, and also to make a start on tax simplification, which I believe this policy does.

I understand why the hon. Member for Luton North (Kelvin Hopkins) outlined pensioners’ concerns, including about inflation, but I am proud of what the Government have done, including by introducing the triple lock on pensions, meaning that they will rise by a minimum of 2.5%, by the consumer prices index or by average earnings, and through the pension reforms that will come into place in a few years whereby we move to a flat-rate system so that people will not be penalised for saving towards their own pension. That will also remove the burden of, and the embarrassment that some people feel about, trying to seek help through means-testing, credits and so on. I do not recognise the suggestion that the Government are turning their back on pensioners.

[Kelvin Hopkins]

I am following the hon. Lady’s speech with interest, but the fact is that some pensioners—more granddads than grannies, if I may say, and as a granddad myself, I feel this personally—will find that their incomes reduce as a result of the Government’s 2012 Budget, while those on the highest incomes will see their incomes increase. Is it right for pensioners on low incomes to see their income transferred to those on the highest incomes?

[Dr Coffey]

I hear what the hon. Gentleman is saying, but my understanding is that people will not be affected in cash terms, although they may be in real terms.

There is a significant increase in the number of people who continue to work beyond the age of 65. Some might say that that indicates that there is a pensions crisis as people cannot afford to stop working. It might be true that people have got used to a certain income and that, as other costs have risen, they continue to work if they can do so. They have been helped by the Government’s revolutionary change of scrapping the default retirement age, which was controversial on many fronts. To a large extent, people are working longer because we are healthier and living longer, which is why it is fixed in law that the default pension age will increase regularly.

As people will be working longer, I come back to the rather simplistic point of why somebody should have different take-home pay simply on the basis of their age, rather than any other criteria. I recognise that a number of people who have unearned income will be affected, but the hon. Gentleman will be aware that the age allowance is phased out when people’s income is above a certain amount.

I support the Government on the initiative. I do not believe in any way that old people are a burden—they are certainly not; they are an asset. However, everyone should do their bit to ensure that we continue to have a tax system that rewards appropriate levels of work and those who have worked, and we should continue to try to simplify the tax system as a whole. Although the hon. Gentleman talked about levelling up allowances, it has not been the policy of the Labour Opposition—or, certainly, of the previous Labour Government—significantly to increase tax allowances, as the coalition Government have done. We will get to an allowance of £10,000 sooner rather than later, and who knows what all the parties will offer in their 2015 manifestos? It was sensible to move to one tax allowance, on which point I shall conclude.

--- Later in debate ---

[Catherine McKinnell]

I thank my hon. Friend. The point that he and I make is that the concern about the Government’s change is the lack of notice that many pensioners have had of it. It has not been introduced gradually to give pensioners a chance to readjust their savings plans or earnings plans; they have not been given time to adjust to the change. I will go on to say just what a shock it was to many pensioners, and to the Office of Tax Simplification itself, when the change came about, but it is worth reflecting first on the number of pensioners affected.

We are talking about 4.41 million people who are worse off in real terms, with an average loss of £83. Those are the Government’s own impact figures, but in addition The Daily Telegraph has estimated that many people could be £479 worse off as a consequence, or £511 if they are aged over 75. It could cost a couple nearly £1,000. Those are not insignificant numbers for pensioners who are watching their household bills rise month on month. They are now watching their income diminish as a result of these changes.

It is also helpful to consider region by region the number of constituents affected by the changes. Many MPs have been contacted by constituents who are most aggrieved by the changes and, in particular, by the lack of notice that they were given of them. We know from written answers that the Minister was unable to identify exactly how many people would be affected by the change in the age-related allowance—the granny tax, as it has been dubbed, or indeed the granddad tax, as my hon. Friend the Member for Luton North rightly pointed out. However, Her Majesty’s Revenue and Customs has been able to produce figures for the number of people over 65 paying income tax by region. The House of Commons Library sensibly suggested that that could be used as a proxy to estimate the number of people in each region affected by the freeze, so we know that 170,000 of those affected live in the north-east, 480,000 in the north-west, 340,000 in Yorkshire and Humber, 320,000 in the east midlands, 370,000 in the west midlands, 450,000 in the east of England, 410,000 in London, 710,000 in the south-east, 460,000 in the south-west, 240,000 in Wales, 370,000 in Scotland and 90,000 in Northern Ireland. Those figures are something for everyone to consider when we think about the number of constituents in our own areas who are affected and the sheer volume of engaged voters up and down the country who, as my hon. Friend pointed out, will not forget these changes quickly.

However, the critical group of people whom we should be seriously concerned about are those reaching their 65th birthday this year. I would be grateful if the Minister could update us on whether the Treasury has undertaken any research to try to understand the true impact of the changes on that group, because it is a group of approximately 360,000 people who will be roughly £322 a year worse off as a result of being excluded from the age-related allowance. For that group, the incredibly short notice of the change has been completely unacceptable. We are talking about people who are very close to retirement age and have little chance to change their plans.

As I mentioned, at the time of the 2011 autumn statement the Chancellor made this categorical commitment:

“To ensure employers and older people do not lose out, for the duration of this Parliament the annual increases in the employer NICs threshold, and the age related allowance and other thresholds for older people, will be over-indexed compared to the CPI, and will increase by the equivalent of the RPI.”

Let me repeat that:

“To ensure...older people do not lose out, for the duration of this Parliament the annual increases in the...age related allowance....will be over-indexed compared to the CPI, and will increase by the equivalent of the RPI.”

And when was that statement made? It was made just four months before Budget 2012, when the Chancellor decided not to “over-index” the age-related allowance and not even to increase it by the RPI, but to freeze it permanently for those born before 6 April 1948 and scrap it altogether for those born on or after that date.

It was dressed up as a “simplification” measure. It was justified on the back of the Office of Tax Simplification’s interim “Review of pensioners’ taxation”. What the Chancellor did not mention at all in the statement was that that review stated:

“We would stress...that the OTS has not reached any conclusions as to the best way forward with age-related allowances, nor have we formulated detailed recommendations”.

Indeed, in his evidence on the 2012 Budget to the Select Committee on the Treasury, the director of the Office of Tax Simplification, John Whiting, commented:

“I was surprised that it was taken forward so quickly...The context is that we undertook to do a two-stage review of pensioner taxation. The first would document the problems and codify all the problems...Stage two was to go ahead and look at them and try to work out what might be the best way forward.”

Of course, we know why the Chancellor did not want to wait for the final OTS report, through which he could have properly understood the impact of the changes on current pensioners and particularly on those who are turning 65 this year. He needed a soft target for a tax grab to help to fund his indefensible tax cut for millionaires. This is a measure dressed up as tax simplification that will actually increase revenue to the Government by £360 million in 2013-14. That will rise to £1.25 billion in 2016-17.

[Dr Thérèse Coffey]

rose—

[Kelvin Hopkins]

rose—

[Catherine McKinnell]

I will give way to the hon. Lady and then to my hon. Friend.

[Dr Coffey]

Of course, the hon. Lady will recognise that the Government believe that they will increase the amount of tax that they take from the richest in society by reducing the rate, as opposed to trying to suggest that it is being taken from some of the poorest in our society.

[Catherine McKinnell]

I will give way to my hon. Friend the Member for Luton North and then deal with both points.

Investing in Britain’s Future

Baroness Coffey Excerpts

Thursday 27th June 2013 Commons Chamber

[Danny Alexander]

The Barnett consequentials of the 2015-16 public spending round were set out in the Chancellor’s statement yesterday. On the resource side, the Welsh Assembly Government will see a small reduction in their budget and, on the capital side, a small increase. I am sure that they will work with him to ensure that the money is used wisely for the benefit of the people of Wales.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

I welcome the A14 construction phase starting two years earlier, but I am particularly pleased by the publication of the draft strike prices. That should encourage SSE and ScottishPower to go ahead with their investment decisions in Galloper and the East Anglia Array, making Suffolk truly the green coast of the country.

[Danny Alexander]

The hon. Lady and I share a passionate commitment to green energy, and I hope that the strike prices now complete the picture for energy companies looking to invest. My message to the energy companies is, “You have the certainty you need, now bring forth the investment that the country needs.”

Economic Policy

Baroness Coffey Excerpts

Monday 25th February 2013 Commons Chamber

[Mr Osborne]

I said very clearly in my statement that that is a benchmark, but it is one of a number of benchmarks. The No. 1 benchmark was fiscal credibility and market credibility, which is precisely what the Government have delivered.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

Anyone running a household budget knows that they have to live within their means, and that to start paying off debts, they have to reduce spending if they are not getting as much income. Will my right hon. Friend confirm that households will be worried about higher mortgage rates if we pursue the Opposition’s plans?

[Mr Osborne]

My hon. Friend is absolutely right. If we lose that credibility in the markets and are unable to convince the world that we can pay our way—that would be the case if we had a reduced commitment to fiscal consolidation—interest rates would go up, which would affect families with mortgages and small businesses with those crucial loans that are helping them to expand and take people on.

Oral Answers to Questions

Baroness Coffey Excerpts

Tuesday 29th January 2013 Commons Chamber

[Mr Speaker]

Order. We are obliged to the Minister, but we will move on to one more question.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

16. What progress has been made in making compensation payments under the Equitable Life payment scheme.

[The Economic Secretary to the Treasury (Sajid Javid)]

The scheme continues to make good progress. A detailed report will be published next week, which I am pleased to announce will highlight the fact that the scheme has paid more than £500 million to policyholders. I know that the resolution of Equitable Life is an issue that interests many Members, so I can announce that the scheme will now be moving to quarterly progress reports, with the next one published in May.

[Dr Coffey]

I welcome that answer from my hon. Friend. I am proud that our Government have started the payment scheme, although there are still some people who have not yet been assessed. I would encourage him to work with his officials to ensure that that happens as quickly as possible.

[Sajid Javid]

My hon. Friend is right to be proud of the Government’s achievements on Equitable Life. The previous Government had a decade to help victims of this scandal and did absolutely nothing. As mentioned, more than £500 million of payments have already been made. I can assure my hon. Friend that I am in regular contact with the scheme administrators, and I will work closely with them on a regular basis to ensure that things can be improved.

Infrastructure (Financial Assistance) Bill

Baroness Coffey Excerpts

Monday 17th September 2012 Commons Chamber

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

I welcome the opportunity to contribute to this vital debate, because the Government are putting their money where their mouth is—long gone are the days of make do and mend. I have, dare I say it, a 12-year-old British-built, Japanese-designed Toyota that has done 199,000 miles. It deserves credit for lasting, but I am sure that with a newer model—which this Bill will be encouraging across the country—I would be using less oil and petrol. The point is that we need to get more bang for our buck when the Government spend taxpayers’ hard-earned money.

Sadly, there were too many examples of the previous Government’s seeming to throw money away without getting value for that money. Even the hon. Member for Liverpool, West Derby (Stephen Twigg), as reported by The Guardian in July 2012, suggested that they wasted money on school buildings—he did not regret that the buildings were built, I appreciate, but suggested that they got poor value for money. There was outcry initially, at the beginning of this Parliament, over the reduction in the amount of money available for Building Schools for the Future, but actually it was right to tell industry that we needed better value for money. For a scheme in my constituency, we had to go back to persuade the Government, and instead of the £31 million blank cheque—we should remember that at the start of this Parliament we were told that there was no money left—we managed to get a cheque for £18 million, and there will still be a good academy building built in my constituency. I consider that better value for money.

One of the biggest white elephants was probably the road sign project along the A14, signed off not long before the election and on which £70 million was spent. For a couple of years, there were no messages at all, and about three months ahead of the Olympics, one of the most helpful messages was still, “Plan your Journey Early for the Olympics”. It felt like a complete waste of money. It was probably symptomatic of a conversation I had with a senior Government adviser not long after the election, when he suggested that the best thing the Government could do was pay one lot of people to dig holes in the road, and pay another firm to refill them. Those were the exact words of the head of a senior government agency. I thought, “Oh my word, if that’s been the attitude and the level of desperation so far, no wonder we’re in this mess.”

The Bill is a great opportunity to consider areas where the Government are keen to develop infrastructure. One is telecoms. I am sure that everybody welcomes the money that the Government are giving to broadband in rural areas and for super-connected cities. I know that there are still one or two problems with state aid that the Government are working hard to solve, but it is vital that everybody in the country is connected to a good speed network, if not a superfast network, because it will help to diversify jobs and enable people to work from home. Every part of the country must be connected. That could help not only with wealth and job creation but with public service reform by enabling better value for money in the delivery of public services. That is something we all need to do.

I am conscious that the A143 in Suffolk, which is not in my constituency but which is still an important artery, is one of the roads nominated for improved mobile coverage. It is vital that we roll out that programme. The roll-out of 2G masts will also benefit 4G coverage, on which we need to keep pressing Ofcom to ensure that the auction goes ahead as soon as possible. I give credit to other telecoms operators that have already started to use their research and development to ensure that 4G can start to be rolled out on existing frequencies, and to Ofcom for allowing that to happen, despite the law suits that could have been launched because it was perceived to be unfair. It is right that every barrier to innovation in the use of infrastructure be removed.

In their update to the national infrastructure plan, the Government rightly refer to the preparations at Hinkley C. As a result of that work, a significant chunk of change has already been spent in the north Somerset economy. I hope that the same will follow in my constituency at Sizewell. I ask, however, that all Departments work together—I asked my right hon. Friend the Chancellor this the other day—and strain every sinew to enable these investment decisions by our partners, including EDF and others, and ensure that they can go ahead with certainty in respect of the next stages of development of nuclear power stations. I have not looked at the other projects, but I draw the attention of the House to the inquiry by the all-party group on off-gas grid that is about to be launched. At the moment, we are still not connecting enough people to the mains gas grid. Perhaps we should consider that as part of our inquiry in providing the Government with ideas.

I know that my hon. Friend the Member for Witham (Priti Patel) will speak adroitly about rail. There is no question but that we need to invest in the infrastructure of the east of England, which we all believe has the opportunity to become the California of Europe, with its diverse economic centres, its focus on research and development, innovation, manufacturing and software, and its position as a key link to London. One of the things that the Government have to do—I am sure that they will under the new Transport Secretary—is continue the journey towards how we reduce costs. Rail desperately needs to be done in a cheaper way. I do not have the time to tell a story about the amount of time and cost involved when three MPs tried to be part of the ground-digging at a platform with our county councillors. It was all done in the interests of safety when common sense would have dictated otherwise for something that should have been as simple as walking along a pavement. There are orders for rolling stock and other franchises, and we want to see some of that on the great eastern main line.

The A14 is a critical road connecting the midlands to the east of England. I know that the Government have been considering different options, but I would offer a word of caution. I do not think that many Conservative Members of Parliament are opposed to tolling for new capacity, but I am concerned, because we do not want the people of the east of England to end up as the sole pilots if those in other ports or key infrastructure areas throughout the country are not subject to potential tolling in the future. It is not just about the port of Felixstowe, in which Hutchison Whampoa has invested a lot of money, creating the deepest berths in the country and taking the biggest boats from around the world, but about ensuring that there is a level playing field when we introduce the plans, which I hope the Secretary of State will announce before the end of the year.

It is key that money is spent on assets that will be used. That may seem like a ridiculous thing to say and I may be a lonely voice, but business people regularly complain to me about empty property rates. I have been trying to persuade the Government that they should put their scarce resources—while allowing for some time to find new tenants—into assets that generate wealth, not assets that are sitting empty and not producing. That is a key point.

One of the most inspired decisions of the Government reshuffle was the appointment of Paul Deighton, the chief executive of the London Organising Committee of the Olympic Games and Paralympic Games who presided over the great delivery of the Olympics and Paralympics, of which we are all proud. He is certainly not a bulldozer—I see him as a bridge builder—but I notice that he has been given a remit to do whatever it takes to clear away not the cobwebs but the barriers, in order to make sure that the national infrastructure plan is delivered. The Government may also wish to take note of his friend, Sir John Armitt, the chairman of the Olympic Delivery Authority, which built the infrastructure that put in place as many small projects as possible, not just the big games in town. On that note, I am delighted to support the Bill’s Second Reading.

Oral Answers to Questions

Baroness Coffey Excerpts

Tuesday 11th September 2012 Commons Chamber

[Mr Osborne]

The right hon. Gentleman talks about unemployment; 900,000 private sector jobs have been created in this economy over the past two years, and we are rebalancing the economy away from the dependence on debt and the unaffordable public sector that he presided over when he was in the Treasury. [Interruption.] He says that borrowing has gone up, but we have cut the deficit by 25%. He has also said that Labour needs a credible deficit reduction plan. He has had all summer to think of one. Where is it?

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

T3. Building our energy infrastructure is a key element of the national infrastructure plan. Preparations by EDF are already under way at Hinkley, and I hope that they will soon start at Sizewell in my constituency. Will my hon. Friend assure me that the Treasury will strain every sinew to ensure that EDF can make a positive investment decision later this year and build the power stations that that lot on the Labour Benches did not build?

[The Economic Secretary to the Treasury (Sajid Javid)]

My hon. Friend is passionate about this issue, and she will be pleased to hear that the Government are removing unnecessary obstacles to investment in nuclear power plants and that new power stations will come forward. For example, the Government are undertaking electricity market and planning reforms and introducing an energy Bill. As it happens, I am meeting representatives of EDF later this afternoon, and I would be happy to share her concerns with the company.

Bank of England (Appointment of Governor) Bill

Baroness Coffey Excerpts

Friday 6th July 2012 Commons Chamber

[John McDonnell]

I shall come to that almost Jesuitical distinction between Executive roles.

It is critical that the right person be appointed to the crucial role of Governor of the Bank of England in this coming period. The new Governor will need to demonstrate not only that he or she is professionally competent, but that they can exercise sound ethical judgment. They must be able to convince the public and the markets that they can turn the liner that is financial services around. To have any credibility they will need to demonstrate that they have the confidence of not only the Chancellor of the Exchequer but of Parliament as a whole, and that they are independent—no crony, no place person, no political appointee—and able and willing to give robust independent advice. Given the scale of the task facing the new Governor and the heightened political atmosphere and context in which the banking reforms are to be developed, now, more than ever, this critical appointment cannot be left in the hands of a single Minister.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

I understand what the hon. Gentleman is saying, but there is a significant difference between having confidence in the Treasury Committee and having its consent. At the moment, Select Committees have the power to suggest changes, but I am not aware that they have a veto.

[John McDonnell]

The hon. Lady needs to recognise that the Treasury Committee has a veto over the appointment of senior members of the OBR, but I will come to that point, because it is a valid one and was also raised by the hon. Member for Watford (Richard Harrington).

Finance Bill

Baroness Coffey Excerpts

Monday 2nd July 2012 Commons Chamber

[Miss Smith]

My hon. Friend is an ardent voice on behalf of small businesses in his constituency and elsewhere. He is right to point to the nuances in the costs of running a business.

Deferring the August rise will cost about £550 million this year. We will finance that through greater than expected savings in Government spending. That will avoid increasing the national debt, which is vital to our country’s well-being. That is our tough but fair plan to deal with Britain’s debts. Our actions to reduce the deficit and to rebuild the economy have secured interest rates at near record lows, benefiting businesses and families and keeping mortgage rates low.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

This morning, my hon. Friend and I were together on the train pressing the case for investment in rail. Are the Government, of whom she is a proud member, not showing the right example to the country by taking their foot off the accelerator and driving more economically? Will this measure bring the growth that the FairFuelUK campaign said it would?

[Miss Smith]

This morning, I was indeed speaking in my constituency capacity about my wish that our regional economy will not be left in the sidings. The same is true of our national economy. We must ensure that Britain remains competitive. Our actions, which are part of a credible national plan, have kept Britain safe from the global turmoil around us. It is within that plan that we have listened and acted.

New clause 1 will defer the fuel duty increase that was planned on 1 August this year to 1 January 2013. As the Chancellor said last week, and as my hon. Friend the Member for Harlow (Robert Halfon) has noted, this decision means that pump prices are 10p a litre cheaper than they would have been if we had not abolished the previous Government’s fuel duty escalator. It is a real help for families, businesses and motorists across the country. The AA has said that it is

“great news for all motorists”.

The RAC Foundation has said that it is

“good news for drivers and good news for the country.”

The Government have taken action upon action to support motorists and have done more than any other Government. We have avoided the two years’ worth of increases planned by the previous Government. More than that, last year we abolished Labour’s fuel duty escalator, which increased fuel duty by above inflation every year until 2013. We have successively cancelled and deferred duty to deliver the longest period of unchanged fuel duty for more than five years. As a result of that repeated action, average pump prices are now approximately 10p a litre lower than they would have been. To put that in context, a typical Ford Focus driver will be £159 better off and an average haulier £4,900 better off between 2011 and 2013 than they would have been under the plans left by the previous Government.

This support for motorists is part of our broader plan of helping with the cost of living and promoting business growth, while reducing the deficit and rebalancing the economy. That has included freezing council tax and raising the personal allowance.

Green Economy

Baroness Coffey Excerpts

Thursday 28th June 2012 Commons Chamber

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

I congratulate my hon. Friend the Member for South Thanet (Laura Sandys) who crafted such a genius motion, covering so many strands and industries and laying open the field for us to speak on a number of topics. I have been beaten by my hon. Friend the Member for Waveney (Peter Aldous), however, who has already given a full and comprehensive speech on the merits of Suffolk, supported by my hon. Friend the Member for Central Suffolk and North Ipswich (Dr Poulter).

I said in my maiden speech that I hoped our coast, the Suffolk coastal area combined with the coast around Lowestoft in the constituency of my hon. Friend the Member for Waveney and round into Yarmouth, would be known as the green coast, and I am delighted to say that our county councils, working with the local enterprise partnership, as has already been mentioned, are doing their bit to try and make sure that that vision becomes a reality. That was further enhanced when an enterprise zone was granted in a neighbour’s constituency and has been designated one of the centres for offshore renewable engineering.

I am delighted to say that the Suffolk-Norfolk rivalries are not quite as strong as they once were: we now reach across the border and our county councils, our LEP and, I understand, Essex county council work together to make sure that we have an energy skills strategy that reaches right across our area. That was evidenced by the decision to allow Norfolk university technical college to be based in Norwich, the city represented by my hon. Friend the Economic Secretary. That is a great opportunity and I am delighted to say that Suffolk and Norfolk are getting a grip on it.

With regard to the fiscal and regulatory framework, I was not surprised by the speech made by my right hon. Friend the Member for Hitchin and Harpenden (Mr Lilley), because I know that he holds strong views on these matters. I understand perfectly why he feels that energy costs are unnecessarily high: he blames the subsidy and thinks it is a problem for other industries. I take a very different view: that if we are to encourage self-reliance in energy, we have to invest in our energy infrastructure. It is not about subsidy; it is about an incentive to attract investors from around the world, and nowhere more so than at Sizewell C. I have seen the strong commitment of EDF and British Gas to continuing their planning application work not only at Hinkley Point, but at Sizewell C. Frankly, all the talk about subsidy is nonsense. It is an incentive to have green energy infrastructure on which we can all rely.

I hope that we in Suffolk Coastal will be vying with my hon. Friend and neighbour across the river with the coming online of the Greater Gabbard, Galloper, and East Anglia wind farms and so on, as many of those come onshore in my constituency. That does not mean pylons in my constituency, although sadly it does in one nearby. We are seeing for ourselves the future of green energy, and we are proud to be part of it.

I say to the Minister—she has heard me talk about this before—that it would be lovely if the contribution those communities are making to green growth was reflected in the allocations from the coastal communities fund. They deserve the lion’s share of that money. Frankly, I feel that we should get our share of the revenue that the Crown Estate secures from offshore wind farms and other such activities. [Interruption.] I am delighted that my hon. Friend the Member for South Thanet seemed to say, “Hear, hear” to that.

On other routes to market, I think it is telling that one aspect of green growth is trying to reduce the amount of energy we need for anything. I am delighted that the Government have put in place the money for rural broadband roll-out. I hope that the director general for competition in the European Commission does not put a spanner in the works by trying to prevent that money—our money—being used to ensure that we get broadband throughout the country. The other investment that my right hon. Friends in the Government are making, of course, is the investment in rail. I am sure that the Minister will not mind if I plug the future launch, which we hope will be very soon, of our prospectus for increased investment in rail, because we believe that it will generate a huge economic return for our region and the country.

I will mention briefly the contribution from my hon. Friend the Member for Selby and Ainsty (Nigel Adams). I have a lot of sympathy with his dedication to biomass. We have an anaerobic digestion plant at Adnams near Southwold and more are planned, but there is concern in East Anglia that biomass plants will be powered by straw that is sourced locally, because that would increase the price of straw for farmers elsewhere. With increasing welfare standards, which we all welcome, agricultural production will require more straw, which will start to become a scarce commodity. I have raised the issue with hon. Friends elsewhere—indeed, I am meeting the Minister to discuss the point—because we need to bear in mind the risk of distorting practices elsewhere through incentives on one side.

Finally, I will turn to the planning debate. There is no question but that I prefer offshore turbines to onshore ones, even though they are more expensive—the cost is coming down, as has been mentioned—especially as half my constituency is in an area of outstanding natural beauty. A very unpopular planning application was granted only the other day in Levington, which is in an AONB, and I was rather shocked and surprised that the four councillors outvoted three and the one who abstained. It was a great shame, because one of the things we need to do is get our communities behind the energy revolution and to share in it. Elsewhere in the constituency, communities have come together in wanting a turbine, so that they can use the proceeds from it. We need to develop an element of consensus on wind farms, because once they are in place, as my hon. Friend the Member for Waveney will know with the Kessingland turbines, there are still issues for residents that need to be solved.

I shall use part of my contribution to this debate to call on my local district councils and indeed councils throughout the country to take advantage of the recent Department for Communities and Local Government guidance on including a supplementary planning document specifically on renewable energy. Instead of councillors being beset by every single application and the Planning Inspectorate overturning decisions, I would like to see local councils develop their activities in a planned and structured way and be part of the process of making sure that the future is as green as the luscious fields that we have enjoyed since all this rain fell.

The future is green. One of our party’s slogans was “Vote Blue, Go Green” and I would like to think that under this coalition Government, we are doing more than ever to promote the green economy.

LIBOR (FSA Investigation)

Baroness Coffey Excerpts

Thursday 28th June 2012 Commons Chamber

[Mr Osborne]

First, the Opposition voted against the creation of the tripartite regime. Secondly, I remember the joyous occasion, when I was shadow Chancellor, at Mansion House in 2007 of all years, when the former Prime Minister, the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), told us about the

“new golden age for the City”,

and the right hon. Member for Morley and Outwood (Ed Balls) praised the virtues of the light-touch regulatory regime of which he claimed sole authorship, although these days, funnily enough, he does not talk about that very much.

[Dr Thérèse Coffey (Suffolk Coastal) (Con)]

Does my right hon. Friend agree that, as the report by the Economic Affairs Committee showed, under Labour’s failed system, it was unclear who was in charge of regulating the banks? Is it fair to say that, sadly, Labour just dropped the ball on this one?

[Mr Osborne]

It is true that the tripartite regulatory system—and one of the three parts was the Government of the day—failed. That is self-evident, which is why we are making these changes. It is disappointing that they do not command the full support of the Opposition Front Bench, but perhaps the hon. Member for Nottingham East (Chris Leslie), on his 40th birthday, will reconsider his position now that he has reached a new age of maturity.