Oral Answers to Questions
William Bain Excerpts(9 years, 2 months ago)
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Mr William Bain (Glasgow North East) (Lab)
For hard-pressed taxpayers, the real test of whether the Government are committed to cracking down on tax evasion and avoidance will be whether this month’s Finance Bill contains legal penalties for breach of the general anti-abuse rule. Will the Financial Secretary tell us whether those will feature in the Finance Bill—yes or no?
Danny Alexander
The hon. Gentleman will have to wait for the Finance Bill to be published and to hear the Budget statement next week. He should reflect on his party’s record in office on these matters. Frankly, when the coalition Government came to office, we inherited a tax system like a Swiss cheese: it was so full of holes that tax was leaking all over the place. We have plugged a lot of those holes and there is more work to be done, but I do not think that he should give us any lectures.
Future Government Spending
William Bain Excerpts(9 years, 2 months ago)
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Mr Bain
I am most grateful to the hon. Gentleman for giving way at last.
The “Charter for Budget Responsibility” states that the Treasury will balance the current budget
“by the end of the third year of the rolling, 5-year forecast period.”
Can the Minister point out the reference to 2017-18? If he cannot, his figure of £30 billion of cuts is entirely bogus.
Mr Gauke
It is by looking at where we are and then adding three years. It is really not that difficult.
In the motion, the Opposition attempt to evade the hard choice between more tax or more borrowing facing those who oppose spending cuts by saying they will grow the economy faster so that wages go up and the problem is solved, despite this being a structural issue. Every Government want the economy to grow faster. When François Hollande came to power, with a new economic model praised by the Leader of the Opposition, I have no doubt that he wanted the French economy to grow faster, but it did not, and I have no doubt that in 2008 the Labour Government also wanted the economy to grow faster, but that did not prevent it from shrinking by 6%. Wanting an economy to grow is not the same as achieving economic growth, and nor is it an excuse for not making the hard decisions necessary to reduce the deficit.
Where is Labour’s plan for growth? If we examine the motion, do we find a single policy that would help economic growth? One specific policy is mentioned, about punishing high earners, but that is hardly a policy for growth. After five years, where are these policies for growth? They could mention increasing the number of apprenticeships, reforming banking regulation and increasing infrastructure investment, except that those are policies delivered by this Government. Or they could set out how they would encourage business investment by putting in place competitive business taxes and reducing regulatory burdens, except those are policies they intend to reverse. Or they could mention improving education standards or securing the future of universities, except that they would abandon the progress we have made, not least with their shambolic policy on tuition fees.
Labour’s policies have three characteristics: they are not long term, they are not economic, and they do not constitute a plan. The motion reveals a vacuous Opposition horribly ill-prepared for government. The motion, like the Opposition, has little to say on macro-economic policy and nothing to say on supply-side policy. It is evasive on the deficit and incoherent on economic growth. The motion, like the Opposition, is destined for a heavy defeat.
Mr William Bain (Glasgow North East) (Lab)
It has been a pleasure to listen to the whole of this debate and to make a contribution at this stage. It has been a revealing debate, showing the paucity of the Government and the Conservatives’ argument for re-election. It comes down to this: “We have nearly doubled the debt, we have completely broken our promise on the deficit, we have stripped growth out of the economy for the first three years, we have been the worst Government for 140 years on wages and living standards—now go on, vote for us and give us a second term.” That is it: no positive policies; no vision of how the economy can be different; no vision of how to get more people involved in work, in decent, good paying jobs; no vision of high skill, high investment, high exports. No; instead, we have just had negativity and fear and I suspect that that is what will do for this Government on 7 May.
Mark Hendrick
My hon. Friend omitted to mention the fact that voters will, on average, be £1,600 per person worse off than they were at the last general election. What sort of Government can present a spectacle of people being worse off by that amount and still expect to get re-elected?
Mr Bain
Indeed, and as the Institute for Fiscal Studies said this morning, this has been the slowest recovery in living standards in history. I do not think any reasonable Government would expect to be re-elected with that kind of record, and those are the facts.
What was extraordinary about the debate was the way in which the Government, having twice moved the goalposts on their deficit target, again tried to pull this extraordinary trick over the eyes of the country today. As I said in an intervention, the “Charter for Budget Responsibility”, which this House endorsed in January, made no reference to balancing the current Budget by 2017-18. It talked about a rolling five-year forecast, yet it was used today by the Financial Secretary, who is no longer in his place, to refer to a bogus sum saying that £30 billion in cuts were implied by that charter. That type of approach shows that the view of the Conservative party and this Government is, “This is as good as it gets”, and that we should have no ambition for our country of higher growth, higher skills and higher investment than that which they have been able to provide. My constituents and Opposition Members reject that completely.
Let us look at what the International Monetary Fund is saying on growth. It says that next year growth will fall compared with this year and that it will still be falling the year after. Is that really as good as it gets for Britain in this early stage of the 21st century? The next Government should follow policies that see us have higher growth, higher wages and higher skills.
It was also revealing in this debate that the Minister could not say whether he supported the Office for Budget Responsibility evaluating the fiscal plans of any other party, and small wonder because the National Institute of Economic and Social Research, the one organisation that has evaluated the plans and looked at the difference between the Conservative spending plans and those that would be followed by Labour, has said that there will be more growth, more jobs, and faster rises in wages under Labour’s spending plans than under those of the Tories. So there it is: confirmation that if we want to have ambition for our country, a fairer society, better public spending and better living standards and outcomes for our constituents, seeing an end to this Government is absolutely critical.
We also need in this debate a recognition that the way the Government have tried to reduce the deficit in this Parliament has brought exceptional hardship to our constituents. Anyone who has held the hand of a disabled person, as I have, having to pay the wicked, pernicious bedroom tax, with tears in her eyes, wondering how any decent Government could ever inflict that on any of its citizens, knows that the course the country has been on for the past five years is wrong and needs to change. Anyone who has seen, as I have in my surgery, people on low incomes with family members suffering sanctions imposed through targets from the Department for Work and Pensions knows that we are a better country than that and the next Government can do better for all of its people and produce much more fairness.
It is key that we get more people into work, abolish long-term unemployment among our young people and those over the age of 25, and ensure that we have an economy with more productivity leading to rises in wages and higher living standards for all. We need an economy that is based more on exports and investment than on the racking up of public and private debt that this Government have presided over.
I believe that there is a better way, and that the people of this country will vote for it on 7 May. The hon. Member for Peterborough (Mr Jackson) talked about fear. As we approach this critical general election, we should remember the words of Franklin Roosevelt in his inauguration speech of 1932. He said:
“The only thing we have to fear is fear itself.”
I do not believe that the British people will be fearful on 7 May. I believe that they will be purposeful in voting out this Government, in voting for change and in voting for a Labour Government.
Bankers’ Bonuses and the Banking Industry
William Bain Excerpts(9 years, 2 months ago)
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Mr William Bain (Glasgow North East) (Lab)
I think it is fair to say that many of us have been speaking to ever-rising numbers of constituents in the past few weeks, and I am confident that that will continue in the weeks to come. Members will acknowledge that the sense on the doorstep and on high streets is that there will be a recovery that genuinely touches every part of our country only when the talent that is wasting away in each of our communities can find fulfilment again in the dignity of decent work.
Welcome though the recent falls in unemployment are—although, worryingly, youth unemployment rose in the last quarter—they conceal the scale of long-term unemployment, particularly among young people. In my constituency, some 520 people have been out of work for either a year or more in the case of 18 to 24-year-olds, or two years or more in the case of over-25s. That accounts for one fifth of the jobseeker’s allowance claimant count in my constituency.
I have met the families of many young people, who have told me exactly the same story: those young people have gone to college and undertaken good vocational training, but ended up in long-term unemployment at the end of it. They have done the right thing but ended up without work for long periods, so now the Government must do the right thing by them and act to restore their right to a decent job. They are people with ambition, aspiration and great prospects, but they are currently denied the right to work by a way of running the economy that lets inequality rip, with the majority of the gains from growth going to people at the top of society, while low pay, insecure hours and increasingly insecure terms and conditions at work leave a persistent gap between rich and poor.
Mr Iain McKenzie (Inverclyde) (Lab)
My hon. Friend has started exactly where this debate should start—with who needs to benefit, which is young people who are looking for work but have been out of work for some time. Does he agree that it is not only about giving them jobs, but about giving them the opportunity for careers and long-term employment? The Conservative party says that it is the party of opportunity, after all.
Mr Bain
My hon. Friend’s point will have as much salience in Inverclyde as it does in Glasgow North East and, I believe, in every constituency. When the maximum number of people in this country are involved in the economy, we have a broader tax base and more tax revenue coming in. That is the only credible plan for reducing the deficit in a fair way in the next Parliament. Any Chancellor who wants to have a credible deficit reduction plan has to have a credible plan for abolishing long-term and youth unemployment.
Ian Swales (Redcar) (LD)
I am aware that the hon. Gentleman was not here during the last Parliament—at least, I do not think he was—but how does he feel about the fact that his party was in government for 13 years to deliver its vision, yet youth unemployment rose and inequality widened? Why should we believe that it will be different in the future?
Mr Bain
I was here for four months of the previous Parliament, when a tax on bankers’ bonuses brought in £3.4 billion in revenue and we introduced a 50p top rate of tax for people earning £150,000 a year or more. The next Parliament should reintroduce that to ensure that the wealthiest in society make a fairer contribution to getting our deficit down, and so that we bring back opportunities for young people who have been denied them during this Parliament.
Mr Stewart Jackson
I admire the hon. Gentleman’s sincerity, but his argument would carry more weight were it not for the fact that under the previous Government—run by the party of which he is a member and supports—during a period of economic growth 5.2 million people were left on out-of-work benefits and youth unemployment doubled. The gap between the richest and poorest 10% widened. That is his Government’s record, and it ill behoves him to lecture our Government who have done a lot to address those key issues.
Mr Bain
The Government whom the previous Labour Government replaced were content to leave a wages structure in place in this country in which security guards earned less than £1 an hour. That inequality had to be tackled, and that gap reduced during the previous Parliament. People will want to hear during this debate about the next Parliament, and about our vision for the future of a high-skill, higher wage, higher investment economy. I believe that the Labour party has the more convincing vision.
Guy Opperman
I have here the House of Commons unemployment statistics for February 2015 for Glasgow North East. Surely this Government’s long-term economic plan has done something when the number of total claimants has reduced by 19.6% in the hon. Gentleman’s constituency, youth unemployment for 18 to 24-year-olds has reduced by 27%, and those unemployed for more than 12 months—a more difficult area—have reduced by 37%. Are we doing something right?
Mr Bain
The hon. Gentleman cites figures that demonstrate that in the last month—[Interruption.] Well, I will give him figures from the Office for National Statistics. In the past month, unemployment in my constituency rose by nearly 50 people. He does not cite the International Labour Organisation figures. If he genuinely believes that unemployment of 2,500 people in my constituency should be tolerated by any Government, he misjudges not just the attitude of my constituents, but the good sense of the British people.
Charlie Elphicke
Does the hon. Gentleman agree that welfare reforms, the long-term economic plan, and the jobs revolution that we have seen have been great at getting people back into work so that they can fulfil and achieve their potential? Does he not welcome that?
Helen Goodman
Is my hon. Friend aware that the Government have manipulated the jobseeker’s allowance figures by increasing the number of sanctions, which are now affecting some 25% of people who go to the jobcentre?
Mr Bain
I agree with my hon. Friend. In this country people want targets for abolishing long-term youth and adult unemployment, not targets in jobcentres for sanctions. We see that in our constituency offices when people arrive in a desperate state having been sanctioned because of edicts from the office of the Secretary of State for Work and Pensions.
The vision of a different economy was picked up by the OECD yesterday in its report. It stated that future growth and rises in living standards in this country will come only if our economy sees increases in productivity, exports and levels of investment. We must improve our skills record and, importantly, sort out more secure and long-term pathways to finance for business and industry in this country—real structural reform for our banks must happen in the next Parliament.
A high-skill, high-investment, higher-wage economy cannot be built when thousands of people are locked outside the labour market for long periods, with skills going to waste and promise left unfulfilled. In 10 weeks’ time—10 weeks tomorrow—my constituents and the rest of the country will go to the polling stations in the hope that change is on the way with a new Government. However, the House does not have to wait that long. By passing the motion today, it can send a powerful message to the Chancellor that a Budget that will command support in the country in a few weeks’ time must have the purpose of abolishing the scourge of long-term unemployment that is so destructive of long-term income prospects, and corrosive of the human spirit.
The House should do more. We must restore fairness to our taxation system and reintroduce that tax on highly paid financiers who have pocketed some of the biggest gains from this Government over the past five years. With the 50p tax cut, for the last few years they have had a Government who have been on their side. Now the British people, who are meeting the burden of high long-term unemployment costs through our social security system, need a new Government who are on their side instead.
With as much as £34 billion a year in taxes going uncollected under this Government, we need policies that maximise revenues and encourage excluded parts of our society back into the labour market. Sweden’s equivalent of the jobs guarantee policy was first introduced in 1983 under a social democratic Government, and it helped balance the books there in the mid-1990s while restoring the right to work to thousands of people. That jobs guarantee was followed in Norway, Finland and Denmark. We should match that ambition in this country by having more people in work and paying into the system, and becoming better off and improving our public finances at the same time.
With bonuses paid by the financial sector since the onset of the financial crisis in 2007 having reached £100 billion this year, and with a few at the top pocketing the biggest gains, the case for asking for a greater contribution from those people—given the taxpayer assistance that has been provided to the banks and financial sector since 2008—is unanswerable. With the Office for Budget Responsibility having revised down by £48 billion at the autumn statement the levels of revenue from income tax and national insurance from the next financial year until 2018-19, the case for more people being in work, and for the super-rich to pay their fair share, makes best economic sense. That is why it is right to increase the clawback period for bonuses paid to people guilty of misconduct in the financial sector from seven years to 10 years, and—crucially—to introduce penalties in law for breaches of the general anti-abuse rule on avoidance.
As the High Pay Centre has shown in recent months, the link between company performance and executive remuneration and bonuses at the very top is tenuous at best. Reform of corporate governance so as to have an employee representative on remuneration committees would help secure greater accountability over what highly rewarded executives receive, and the wider commercial and social obligations that they should have in mind.
Too often, pay structures reward failure when instead there must be a greater relationship with long-term performance. That can be dealt with by the Financial Conduct Authority and greater legal transparency on bonuses, and secured by reform of the laws and corporate governance. Through the taxation system, we in this House can do a great deal more to discourage irresponsibility in the financial sector, and secure justice for the disadvantaged by raising £1.5 billion to £2 billion through a repeat of the bank bonus tax, to fund the jobs guarantee policy that will help so many long-term and young unemployed people. But as has also come up in this debate, we also need to deal with the structural reforms in the banking system which are needed to restore proper channels of finance to small and medium businesses.
A British investment bank, constructed for the purpose and capitalised by some of the revenues we can expect from 3G and 4G licences in the future, is the best way to deal with the gap in the British economy and ensure stable finance for small businesses. As the OECD pointed out yesterday, ensuring consistent lending for businesses is vital for future growth, and policies such as funding for lending have not bridged the gap. They have not delivered the necessary impetus to net lending and the next Parliament and Government need to be much more ambitious on that front.
Mr Stewart Jackson
The hon. Gentleman is elucidating another straw man, which was articulated by the shadow Minister—that we somehow have a crisis in lending. The fact is that businesses of all sizes hold unprecedented levels of cash reserves and they will spend if we have a benign macro-economic policy framework. That is not what is being offered by his party, so any accusations of missing lending targets obscures the bigger picture.
Mr Bain
I am citing evidence—I hope that the hon. Gentleman has been listening carefully—from the OECD and Bank of England reports that net lending to business has continued to fall. The OECD said yesterday that weak lending is a structural problem in the British economy. He might think that I am raising a straw man, but I hope that he is not accusing those organisations of doing so. It is their argument that this Government have left unsolved that structural weakness in the past five years. Tougher action is needed in the next Parliament to secure stable finance for our businesses, because that is how we will get the jobs and growth that will generate the tax revenues and lower the deficit.
Helen Goodman
If it is the case that some firms have high cash balances and others face shortages in investment, it is far from being an example of the success of the current banking system: it is a demonstration of its failure.
Mr Bain
Businesses have told me that the absence of a strong investment bank, such as they have in Germany, France, and South Korea and as the Federal Reserve acts in the US economy, is equivalent to our business having one hand tied behind its back. It is that structural flaw that must be addressed in the next Parliament, but it is absent from the Government’s thinking, given what the Minister said.
The OECD also raised a further problem—the risks that the shadow banking sector could cause to our banking sector. We heard nothing from the Minister about closing loopholes that hedge funds have been able to exploit or about strengthening the tools to oversee the shadow banking sector, given the potential risk to financial stability that the OECD mentioned.
The debate is important because the Government have the perfect opportunity in the coming weeks to aim for fairness, with a proper jobs guarantee policy, and a bank bonus tax that would extend opportunity as well as responsibility. If they fail to take that opportunity, Labour will take our case for change to the country and the British people. I am confident that they will vote for change and vote for a new Government on 7 May.
Charter for Budget Responsibility
William Bain Excerpts(9 years, 4 months ago)
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Mr William Bain (Glasgow North East) (Lab)
Nothing says more about why we need change in 16 weeks’ time than the Government’s cynical attempt in this debate to divide Parliament and the country by tactical tricks and wheezes as a cover for their failure on the deficit and their inaction on the other big challenges that face our country: wages, productivity, inequality and banking reform.
This is a debate that the Chancellor has been plotting for months as his election battleground, but just last week we saw his attack on the fiscal policies of the Labour party collapse within hours. In 2010, he pledged to eliminate the deficit within five years, but now, having borrowed £200 billion more than he planned, he presents a watered-down charter for budget responsibility in a desperate attempt to ensnare the Opposition on tactics. This is a Chancellor who makes billions of pounds of unfunded tax commitments but refuses to allow the impartial OBR to cost all parties’ election spending promises. Today, his guile has deserted him and his economic failure has rebounded on him. From iron Chancellor to boomerang Chancellor in just five years: Britain surely deserves better than this.
When the OBR slashes its forecasts for receipts from income tax and national insurance contributions as comprehensively as it did in December, we have the proof that the Government are taking the country down the wrong path. In December, the OBR downgraded its forecasts for income tax receipts and national insurance contribution receipts for this and the next four fiscal years by a staggering £39 billion and £53 billion respectively, compared with its forecasts from March 2014. The bulk of that shift was down to much lower than predicted wage growth. That shows that our economy under this Government is simply not generating the scale and number of higher wage, higher skilled jobs that modern Britain needs to succeed in the world. That failure on skills and prosperity is led by a Chancellor who has been the worst for the nation’s pay packets since the 1870s.
Mr Jim Cunningham (Coventry South) (Lab)
When we look at the general trend over the past five years, we can see that the Chancellor thought that the problem was confined to Britain. He has consistently made excuses every time his targets have not been met because the Tories cannot face up to the fact that the crisis started internationally, particularly in America, but unless they face up to that, they will never get the economy right. They will tinker with it, but they will not get it right and as a consequence the cost of living has gone up and wage values have gone down by 6%.
Mr Bain
My hon. Friend makes an incredibly powerful point. The historic weakness of wage growth under this Government, the disastrous levels of productivity, the growth of insecure work, the failure of the Government to meet their targets on export-led growth and the fact this is a country in which the number of apprenticeships fell, rather than rose, in 2013-14 are not factors that any Chancellor who wants to get the deficit down should ignore. Tackling them will be central to any credible plan to get our deficit down and to move forward the living standards of millions of ordinary people in this country.
The reason for this Government’s failure on wages and tax receipts was explained to me by a constituent I met on her doorstep in Ruchazie last Saturday morning. It is important that the voices and experiences of ordinary people are brought into this debate. Her husband works as a security guard and earns barely above the minimum wage. He does not earn a living wage. She told me that life is tougher for her family than it was five years ago. They are working harder, but they have less to show for it. They do the right thing and get up early and go to work, but they have never felt so insecure. They keep going, but they speak for millions of people in this country who have suffered the same fate. In just 16 weeks, they will have the opportunity for change.
Like the Prime Minister chickening out of televised debates, the Chancellor is ducking out of an independent evaluation of our spending proposals because, like the Prime Minister, he knows that he would be the loser. All the Government have left are weeks of cynical tactics rather than a vision of hope for our country, but political stunts are no substitute for a national strategy for increasing our nation’s productivity, increasing the minimum wage over the next few years, restoring the promise of our young people with a credible plan for skills and rising apprenticeships, and making a plan for a fairer economy with rising living standards. If the Government find that task beyond them, they should get ready to move aside because others are ready to offer hope in place of fear in just 16 weeks’ time.
Autumn Statement
William Bain Excerpts(9 years, 5 months ago)
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Mr Osborne
Of course, Labour economic policy would increase unemployment, reduce GDP and potentially put Britain back into recession. We know that its feeble commitments on borrowing would allow at least £26 billion of extra borrowing every single year, and as has been demonstrated over the past hour or so, every Labour MP actually wants to spend more money and increase welfare bills. That is the real Labour party, and of course it would bankrupt the country again.
Mr William Bain (Glasgow North East) (Lab)
The Chancellor made just one passing reference to wages in his statement, some 42 minutes in, and small wonder. Will he confirm that the OBR has this afternoon revised down its forecast for income tax and national insurance contribution receipts through to 2018-19 by a further £11.8 billion, with £9 billion of that down to lower than forecast growth in wages? How can the worst Chancellor on wages for 140 years ever be the answer to higher living standards in the next Parliament?
Mr Osborne
I actually talked about tax receipts and earnings early on in the statement. I pointed out that although tax receipts were lower, crucially they were offset by lower debt interest payments, which is why we have not seen the big deterioration in the public finances that was forecast. Borrowing was lower towards the end of the period than was forecast at the last Budget; the surplus is higher than predicted; and the structural deficit is on course for the reductions we set out. That is because although tax receipts were lower, debt interest payments were also lower.
The Economy
William Bain Excerpts(9 years, 5 months ago)
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Mr William Bain (Glasgow North East) (Lab)
It is very important to have this debate today, a week before the autumn statement. It is very important that this House can show, through the debate, that we get it. We understand that offering people hope and having an economy where more ordinary people have more opportunities to get work, to progress in work and to get better wages, where there is more prosperity and more shared prosperity, is the only way we will have an economy that will work in this century.
This has been a very interesting debate. I was particularly struck by a couple of counter-intuitive contributions from the hon. Member for Watford (Richard Harrington), who is no longer in his place, and the hon. Member for Winchester (Steve Brine), who quoted Bill Clinton. I am going to do something counter-intuitive as well, which is to quote Ronald Reagan. [Interruption.] I am not sure there will be cheering by the end of the quote, which I think goes to the heart of the problem that will face the Government when they go to the electorate next May. In the famous debate of 1980, Ronald Reagan said:
“Ask yourself, are you better off now than you were four years ago? Is it easier for you to go and buy things in the stores than it was four years ago?”
We know that in every constituency in the land the answer to both those questions is a resounding no. That is the heart of the economic problems our constituents face on a weekly basis. Those problems are faced by the young man whose mother spoke to me in Springburn two weeks ago. She said that he had been offered insecure, part-time work that paid even less than the national minimum wage—he was being offered work at just over £2 an hour. They are the problems faced by the man I met in April on the doorstep in Blackhill in my constituency, who told me that despite working for 15 months with the same employer he had no guaranteed hours at work. An economy that fails those people is one that fails the entire country.
The Exchequer Secretary offered support for a particular industry: revisionist historians. She said that poverty was falling. I am not sure whether she has had time to look at the latest research produced this week by the Institute for Fiscal Studies on behalf of the Northern Ireland Executive. It states that in the years between 2012 and 2015-16 child poverty will have risen. It will rise in Northern Ireland and across the UK, so we are not seeing falling poverty occur with the economic policies followed by this Government. She appeared to indicate that the previous Government had made no difference at all on these matters. The truth is that we saw a massive fall in child poverty under the previous Government. As my hon. Friend the Member for Edinburgh East (Sheila Gilmore) alluded to in her speech, pensioner poverty was halved under the policies of the previous Government. So we have done it before, and next May I hope we will show again that a change of Government can change many people’s circumstances.
The recent ONS data on public borrowing released last week showed that a Government without a proper industrial policy for creating sufficient high-skilled, high-paying jobs are a Government without a policy to decrease public borrowing on the scale required. It remains a great deficiency of the Government that they have not yet responded properly to last year’s damning report from the OECD on the skills deficiency and crisis across the country. Only when we have a Government prepared to reform the banks; set up institutions such as a British investment bank; boost our infrastructure planning; and tackle other such fundamental problems in the economy will we see the greater prosperity and equality that is so crucial.
In Scotland, there are some welcome signs—52,000 jobs have been created in the past year—but manufacturing is still 5.6% below its pre-recession peak, and there is a worrying surge in insecure, self-employed work that is simply not meeting people’s needs or paying the bills. We are also a seeing a worrying rise in household debt because people are coping with declining wages by running down savings or running up more debt. The debt ratio has risen to 170% in the last year. These are worrying statistics.
The upcoming autumn statement is the Chancellor’s last chance to show that he is listening and capable of change. If he is not—if we need to change our policies on living standards—it is becoming clearer that we need a change of Government.
EU Budget (Surcharge)
William Bain Excerpts(9 years, 6 months ago)
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Mr William Bain (Glasgow North East) (Lab)
Since the Council meeting on Friday, the Finance Ministers of Ireland, Austria and the Netherlands have all said that the UK will still pay the full amount. Is the Chancellor seriously arguing that they are wrong, and if so, can he point to a single measure that will cut the overall bill for the UK taxpayer over the next two years?
Mr Osborne
We were presented with a bill for £1.7 billion and we are going to pay about £850 million, so in my book that is a cut.
Oral Answers to Questions
William Bain Excerpts(9 years, 6 months ago)
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Mr Osborne
I know that my hon. Friend the Member for Gloucester (Richard Graham) has worked with local employers to improve skills, and I visited a successful apprenticeship and training scheme with him. We want to ensure that local employers are involved in shaping those apprenticeships and further education courses, and that is precisely what we are now setting up.
Mr William Bain (Glasgow North East) (Lab)
T6. The Institute for Fiscal Studies has forecast that under the Chancellor’s current policies 900,000 more children will be in relative poverty by 2020 compared with 2011. Is his real attitude towards the working poor in this country too much stick and too little carrot?
The Chief Secretary to the Treasury (Danny Alexander)
The hon. Gentleman raises an important point about child poverty, which under this Government is down. That does not in any way reduce the need for us to continue taking steps to reduce child poverty, the most important of which is having an economy that creates jobs. In the end, for most people the best route out of poverty is to get back into employment.
Oral Answers to Questions
William Bain Excerpts(10 years ago)
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Mr Osborne
Our economic plan is delivering stability, and it is now also delivering the economic growth and jobs that we all want to see. We are coming out of the very deep mess in which the shadow Chancellor and his team left the country, with the result that in Kettering the claimant count is down by 30%, and 1,500 new jobs have been created in the last year. As my hon. Friend well knows—because, as an assiduous Member of Parliament, he has lobbied hard for them—major improvements have been made in the road and rail infrastructure in the Kettering area, to ensure that there is a balanced economic recovery.
Mr William Bain (Glasgow North East) (Lab)
T3. The Chancellor spends taxpayers’ money in Brussels on defending big bank bonuses, but he has not lifted a finger in four years to deal with the falling real wages of millions of ordinary working people. Is he not just presiding over recovery by the few, of the few, and for the few?
Mr Osborne
Well, I do not think the hon. Gentleman is Abraham Lincoln, but the point I would make is that we can only see an increase in the living standards of the British people if the British economy is growing and jobs are created. That is exactly what our economic plan is delivering.
Finance (No. 2) Bill
William Bain Excerpts(10 years, 1 month ago)
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Danny Alexander
That is an important question. The measures to lift the personal allowance, from a little over £6,500 when we came into office to £10,500 as it will be in April next year, will mean that about 3 million people in this country—most of the people to whom he refers—are lifted out of paying income tax altogether. That is a serious benefit to those individuals. It also helps to improve incentives to work and to progress in work in this country and bears some responsibility for the stronger employment performance that we have seen in recent years.
Mr Bain
On that point, the Chief Secretary to the Treasury has omitted to mention thus far that the Government will freeze the work allowance in universal credit for the next three years. That means that a person on a low income will not benefit in full from the rise in the personal allowance. Is it not the case that he is giving with one hand and taking with the other?
Danny Alexander
The way that universal credit is structured means not only that we have a much simpler system, but that most people in the benefits and tax credits system will keep more of their additional earnings as they progress in work than they would have done under the extremely complicated, confusing system that we inherited from the hon. Gentleman’s party. The work incentive clearly has a positive effect overall.
Mr William Bain (Glasgow North East) (Lab)
It is always a pleasure to follow the hon. Member for Dover (Charlie Elphicke), who offers such insight and entertainment value to the House. He called for optimism, and I hope to paint him a picture of the sunlit uplands of a Britain changing under the next Labour Government, elected next year.
Today is a day of anniversaries that demonstrate the difference in values between this coalition Government and the previous Labour Government—and, indeed, the different values of the next Labour Government. Fifteen years ago today, the national minimum wage came into effect. We had seen people in this country paid less than £1 an hour, with some of the most disgraceful poverty pay to be found in a large developed European country. But of course, last year, this day was the day on which the iniquitous and vile bedroom tax came into force. Anyone who has dealt with constituents—anyone who, as I did last year, has held the hand of a disabled lady with tears in her eyes, who was wondering how any Government could visit such an iniquitous tax on people like her—will recognise the differences in those values and the significance of those two anniversaries.
Those different values are written throughout this Finance Bill. This is not the Finance Bill that this country needed or with which it should have been presented. It is a damp squib of a Finance Bill—a no-change Finance Bill from a bedraggled Government who are increasingly all at sea.
Ian Mearns (Gateshead) (Lab)
It is appropriate to remember the anniversary of the minimum wage today of all days, because let us not forget that its introduction was opposed absolutely by the Conservative party. Some people were being paid less than £1 an hour—people living on my street were being paid 70p an hour for doing jobs in the security industry 15 years ago.
Mr Bain
We remember the tooth-and-nail opposition of the Conservative party to the minimum wage and the lack of support for it from Scottish nationalists—none of whom are present—when the previous Labour Government legislated on it.
The Government are all at sea as to how to reverse the decline in living standards over which they have presided. Under this Prime Minister, living standards have fallen more sharply and for longer than under any Prime Minister since the second world war, including Heath, Thatcher, Wilson, Callaghan, Eden, Macmillan, Douglas-Home and Churchill. If this Government were a football club, the team would be at the bottom of the league, facing relegation at the end of the season, with rising clamours for the manager to be given the sack. Some have even called for the return of the special one to come and lead the blues—no, not José Mourinho, but Boris Johnson—and speculation is rife as to which Government Member will be sent to the subs bench in order to let him get back in the team after the next general election.
Ian Swales
I agree that the minimum wage was one of the great achievements of the previous Government and I think that more should be done to police its implementation even today. However, does the hon. Gentleman share my regret that his Government took more than £1,000 a year in tax and national insurance away from people on the minimum wage? The reduction of £700 a year in their tax bill has given them a real-terms net increase.
Mr Bain
I hope the hon. Gentleman will use his undoubted influence to speak to the Business Secretary, whose Department has presided over a 10% drop in the real value of the minimum wage since 2010. Indeed, if the hon. Gentleman wants to build on the success of the minimum wage, he ought to speak to the Secretary of State about how he is going to reverse that trend, because the small rise announced by the Low Pay Commission simply will not do the job. How on earth will there be a £7-an-hour minimum wage by next October? That was the Chancellor’s pledge at the beginning of the year, but it is hard to see it happening, given the remit involved and without this Government taking firm action on enforcing and improving the national minimum wage.
I welcome some aspects of the Bill, such as the tax concessions for participants in the Glasgow grand prix. I believe they will attract a world-class field for that athletics meeting and ensure that those athletes stay on for the Commonwealth games. That will add to the economic growth of my city, Scotland and, indeed, all of the United Kingdom.
I am sure that any hon. Member who has witnessed the scourge of the rise of fixed odds betting terminals on high streets up and down the country will support the increase in machine games duty. Anything that discourages people from spending their hard-earned wages on those machines—I am sure that every hon. Member is aware of this issue—should be welcomed. The Government should be going much further, of course, in regulating the way in which those machines operate. They take a terrible toll on some of the poorest communities in the country, including in my constituency.
Ultimately, this Finance Bill is soft on the banks and hard on ordinary working families. It fails the national economic interest in three main ways. First, it does nothing to boost growth. According to the OBR, its measures and the Budget that it will enact contribute nothing in terms of an uplift in growth and, in relation to trade and exports, there will be no contribution to growth from net trade over the next five years. The Budget also fails to raise levels of business investment, which are currently among the worst in the EU and the G20.
Secondly, this Finance Bill does not meet the challenge of our times in that it fails to tackle our growing crisis of long-term youth unemployment—up by 50% since 2010—and it takes no measures to deal with under-employment. The Institute for Public Policy Research has today identified that as a growing crisis for our country, with more than 1 million people going to work for low wages and seeking more hours, but unable to get them in this weak economy.
Thirdly, this Finance Bill entrenches the inequities of its predecessors in this Parliament by failing to repeal the hated bedroom tax, which has devastated 2,500 people in my constituency and 600,000 people across the whole country. It fails to reintroduce a 50p rate of income tax for those earning more than £150,000 a year, or to introduce a 10p starting rate of income tax, which would benefit 24 million taxpayers.
All that at a time when the Bill offers banks a further tax concession in the bank levy and when the Government are failing to get to grips with the skills revolution that is needed if we are permanently to earn our way to higher living standards. At an event in London only today, the IPPR has said that Britain’s performance on skills has been worse than that of our leading competitors since the beginning of the economic crisis. If we are to get people into better-paying jobs, fill in our hollowed-out jobs market and repair the losses of jobs in construction and manufacturing, this Government and their Labour successors next year will clearly have to do much more on skills. The lack of any incentives in the Bill to improve skills in the workplace or to improve apprenticeships is a serious omission that does not serve the national interest well.
The conclusion one has to reach on examining the entirety of the Bill—all 295 clauses and 34 schedules—is that it is long on detail, but short on real action. It does nothing to raise the incomes of people in the rest of the country, while it perpetrates a recovery simply for those at the very top of society. If the International Monetary Fund—those well-known crypto-leftists—and President Obama get the point that cutting the gap between rich and poor is vital to having a recovery for every one of us, it is a matter of regret that this Government do not seem to get it.
Ian Swales
The hon. Gentleman is making a point about inequality, but does he not welcome the fact that the Red Book states that
“inequality is at its lowest level since 1986”?
Does he regret that inequality widened under the 13 years of a Labour Government, which is a truly shameful record?
Mr Bain
I hope that when the hon. Gentleman speaks to his constituents in Redcar, he will remind them of the entirety of the record of the previous Government, who of course oversaw a dramatic decline in pensioner poverty and a huge fall in child poverty. Those policies did work. The inheritance we were left on both counts in 1997 was a disgrace that should have shamed Conservatives who were Members of that Parliament.
Charlie Elphicke
In fact, in the previous Parliament the relative figures for child poverty rose and the gap between rich and poor rose, but those numbers have reduced since this Government have been in power.
Jacob Rees-Mogg
There is a union between those of us who have “North East” in the title of our constituencies, and we always give way to each other politely and gracefully.
We need to be very careful on the issue of inequality, because it turns out that it can be narrowed by having a deep recession. That surely cannot be the object of any Government’s policy. We should therefore look at the figures with care. The same is true of relative poverty—it can be reduced through a recession.
Mr Bain
There is a degree of wisdom in what the hon. Gentleman says. I encourage him to look at the work of the social mobility and child poverty commission, which has come up with some interesting conclusions. It is critical that there is better investment in skills. My constituency was once powered by the railway industry. The economic heart of my constituency is now the college that is across from my constituency office. That is the means by which children in a ward with one of the highest levels of child poverty in Scotland will get the skills that they need to succeed in the jobs that we want to create in a modern economy.
Julie Hilling
Before my hon. Friend moves on from statistics, does he agree that one of the cunning ploys of the Government is to change the way in which they measure things? There are fewer people in poverty because they have shifted the point at which they declare that people are in poverty, and fewer people are waiting in A and E because the measure for waiting times has been shifted.
Mr Bain
My hon. Friend is entirely correct. It is shameful that the Secretary of State for Work and Pensions has abandoned the child poverty targets of the previous Government and is instead trying to finesse them with some unspecified alternatives. Yesterday, he disgracefully called the bedroom tax a success. That will be long remembered by the 600,000 people across the country and their families and friends who see it not as a success, but as an abhorrence that should be scrapped without delay.
Let me deal with some of the specific measures that are set out in the Bill. On the personal income tax allowance, it has been established by the IFS and the Resolution Foundation that four fifths of the benefit go to people in the top half of the income distribution. As I said to the Deputy Prime Minister in questions last week, the sneaky freezing of the work allowance by this Government, which was announced in the autumn statement and confirmed in the Budget and the Finance Bill, means that £600 million will be removed from the post-tax incomes of hundreds of thousands of people on low incomes. That is another example of the Government giving with one hand through the personal tax allowance, but taking two thirds of it away with the other.
The Government have not taken the steps that are needed to enforce the minimum wage and ensure that there is a real wages recovery for people in the lower half of the income scale. Liberal Democrat Members have spoken in this debate about taking people out of tax, but in the next financial year, 1.6 million low-paid people will still pay national insurance contributions and higher VAT. People will not forget that they have not been made better off by this Government’s fiscal policies, but have been made worse off. This is the first Government in over a century who will have to go back to the electorate with that record.
Despite the changes on individual savings accounts, people have seen the savings ratio in this country fall over the past few years by 3%. People have been forced to draw down their savings to make ends meet. The collapse in real wages has been compensated for by the reduction in the savings ratio.
The measures in the Bill will not be enough for an increase in savings. That is not surprising because people would need to earn more than £125,000 a year to get full benefit from the changes to ISAs. The Government should have come forward with more radical measures to increase saving, particularly for low earners—policies such as the Saving Gateway that was introduced by the previous Government and scrapped almost immediately by this Government in 2010.
The Chief Secretary was quick to boast of the effects the Bill will have on income from tax avoidance schemes, but as the Office for Budget Responsibility and the Institute for Fiscal Studies confirmed after the Budget, there are higher up-front taxes payments, although in a sense they are over-balanced by reduced revenues from 2019-20 onwards. The average benefit of the policy is a mere £90 million a year.
The Government should have been far bolder in the Bill in bringing forward more ambitious provisions to tackle avoidance and evasion. Where are the clauses that would have introduced mandatory company-by-company reporting of taxes paid and profits made? Where are the provisions on beneficial ownership of companies? They were promised by the Prime Minister at the G8 summit, but we have seen nothing of their delivery.
For some of these policies, the IFS has noticed a worrying trend. Yes, the Government have provided extra child care assistance for people through universal credit, but how is that paid for? By £200 million a year cuts to other, unspecified, parts of universal credit. The IFS has said that that is happening across a range of policy areas: permanent giveaways are funded by temporary increases in revenue, but there is no long-term plan about where the money is coming from. With that kind of financial planning, it is unsurprising that the Government are borrowing £190 billion more over this Parliament than they predicted at its beginning.
For business, we welcome the reverse in cuts to capital and investment allowances, but it is stark to consider that the Government’s policy goes up only to 2016. Business needs certainty and does not know what the Government’s plans will be after 2016 for capital and investment allowances. Imagine if we are back in the same position as in 2011 when this Government cut those allowances? I hope that when he responds to the debate, the Exchequer Secretary will offer assurances to business that there will be certainty in investment and capital allowances for the rest of the OBR’s forecast period, because that is certainly not in the Bill.
If we consider the effect of these policies on business investment, the OBR finds that there will be no appreciable increase in investment in the economy as a whole, or by businesses in particular, until 2018. The recovery was supposed to be fuelled by business investment; instead, it is fuelled by consumption, and led by people getting into debt or running down their savings as wages have slumped. That cannot be a balanced recovery in the economic well-being of our country. I also welcome some of the changes made to research and development tax credits, but even after those, this country will have one of the lowest levels of investment in innovation and science, in both public and private terms, of any major developed country. The Bill should have done far more to tackle that record.
Another omission from the Bill is—oddly—the provisions on tax-free child care. They have been much trumpeted by the Government but we do not see them reflected in the Bill, and one can only presume that the Government intend to make them the centrepiece of what will otherwise be a threadbare Queen’s Speech in June. If we consider the details of that policy there are worrying issues. I am pleased that the Government at least did not continue with their stated policy of leaving up to 1 million working poor people on universal credit without any assistance through the tax and benefit system to deal with their child care costs, particular as the child care tax credit was decimated by the Government in 2011.
What about the sustainability of this policy? Where is the provision in the Bill to increase the supply of child care places? As we see child care costs go up for families across the United Kingdom, the cry we hear from constituents is about the lack of affordable places. The Bill could have made progress on that, but the Government simply did not meet the challenge.
I believe that a Finance Bill that concentrated on jobs, child care, a lower starting rate of tax and bringing fairness to our tax system again by introducing a higher 50p rate would have begun the job of securing a recovery for everyone, not just a few at the top. National debt is rising, long-term youth unemployment is doubling, exports and productivity are stagnating, and investment is slumping. This is the damp squib Finance Bill of a failing and lethargic coalition slithering its the way out of office. Our country deserves better. Next May, it will get it with a Labour Government.