Finance Bill
Andrew Gwynne Excerpts(10 years, 11 months ago)
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Cathy Jamieson
I thank the hon. Gentleman. He and I do not always agree on every matter that is discussed in the Chamber, but on this occasion I accept what he says.
We have heard disagreement on the Government Benches with the point that I was making, but the reality is that as of this April, 13,000 people earning more than £1 million a year are receiving a tax cut equivalent to £100,000. Another 254,000 people earning more than £150,000 a year are also seeing their income tax bills go down. At the same time, if we take into account the changes that the Tory-led Government have made to tax, tax credits and benefits, households in the UK will be an average of £891 a year worse off. That is the reality that people face. As I have said in a number of previous debates, that may not seem a lot of money to the millionaires who are getting a tax cut from the Government, or to those on the highest wages, but it is a lot of money for my constituents and, I am sure, for the constituents of other hon. Members. I see some heads nodding on the Government Benches. It is a huge amount for constituents throughout the country, who are being ruthlessly squeezed to pay for the Chancellor’s economic failure.
Andrew Gwynne (Denton and Reddish) (Lab)
It is indeed a lot of money for many of my constituents and my hon. Friend’s. Is she aware of the figures published by the Institute for Fiscal Studies showing that for a two-earner couple with children, the loss caused by the changes rises to £1,869.09?
Cathy Jamieson
Yes indeed. My hon. Friend makes an important point on which I will comment further in due course.
Cathy Jamieson
My hon. Friend speaks words of wisdom. I have repeatedly said today, and it has been said by others, that while we have accepted that, come 2015 if we are in government, we will have to take as a starting point the overall spending plans that have been laid out, that does not mean that we would have made the same choices or that we would make the same choices in the future.
Andrew Gwynne
I would not expect my hon. Friend to set out our tax policies two years before a general election, but is it not important to emphasise that there is a question of priorities here? The issue is that the Government have chosen to clobber some of the lowest-paid workers in my constituency and in hers with a council tax increase caused by their changes to council tax benefit?
Cathy Jamieson
My hon. Friend speaks with great passion on behalf of his constituents and he is correct to identify the fact that we need, in difficult times, to talk the language of priorities. That is why on previous occasions—from the Dispatch Box and elsewhere—I have asked the Government why they believe that it is fair to give the tax cut to the richest and, on top of that, to give those very same people the winter fuel allowance even if they happen to be pensioner millionaires. To me, that does not seem to be fair and reasonable, and I am sure it does not to my hon. Friend either.
Even where a council tax freeze has been put in place, people are seeing local services that they rely on being cut to the bone. They are not able to access educational opportunities, leisure opportunities, support via social services, library services, the arts and culture. It is all very well having a freeze, but in a range of areas people feel that they are not necessarily getting the services in return.
Andrew Gwynne
My hon. Friend is absolutely right, but the situation is even worse than that for 2.4 million low-paid families, who are losing some, if not all, of their council tax benefit. That is an in-work benefit, paid not just to people who are out of work. Those families will, for the first time, be getting a tax increase, because they will have to pay council tax.
Cathy Jamieson
Once again, my hon. Friend is absolutely right. He is a powerful advocate for his constituents and those on the lowest incomes. He is correct to identify the fact that, despite the rhetoric, the Government have, across the piece, consistently attacked the living standards of those in work and on low incomes. I need only refer again to tax credits, particularly for those working part-time hours. The Government seem to think it fairly straightforward for them simply to get additional hours of work, but we know that in many industries, it is not that easy; it is not possible to get the requisite number of hours. Many people who were, to use the Government’s mantra, doing the right thing—taking up employment, for however few hours and however low the wages, rather than doing nothing or sitting at home on benefits—found their working tax credits cuts. As my hon. Friend correctly says, that was compounded by changes to housing benefit, which mean that many of them are even worse off.
Let us look at the impact. I said that this Government will go down in history as a Government who divided; of the richest who are receiving a tax cut, 85% are estimated to be men, and about 70% of the revenue raised from direct tax and benefit changes will come from women. Some 52% of those benefiting are based in London and the south-east. I do not for a moment mean to suggest that there are not people there on extremely low incomes; of course there are, and many of my hon. Friends will no doubt wish to make that point. However, long-term unemployment, including in the north and Scotland, is on the rise.
Andrew Gwynne
My hon. Friend is being incredibly generous in giving way. She is right to emphasise the impact on low-income families, but the tax changes are also hitting moderate and middle-income families. She will be aware that the measures involve lowering the higher rate tax threshold to £41,450. Why is it that those on the lowest incomes and middle incomes are being clobbered, whereas those on the highest incomes are getting a tax cut?
Cathy Jamieson
Once again, my hon. Friend makes an important point, particularly in relation to many middle-income earners. The issue of the lowering of the threshold at which the higher rate of tax is paid has perhaps not had as much air time as some other topics, or other cuts that the Government are making, but the reality is that it affects many who would not see themselves as particularly well off, who have worked hard over the years and been promoted in a company or in the public sector, and who are trying to do the right thing for their family, and are feeling the squeeze.
To go back to the point about who will suffer most as a result of the Government’s policies, I emphasise that I know that in many places in London and the south-east, employment is not at the level that it is elsewhere, and incomes are being squeezed, but it is interesting to note the geographic spread.
Perhaps we should not be surprised to see the Tories operating in this way. I recall, on first entering this place, attending a debate on cutting and abolishing child trust funds. I was surprised that the Government thought that was the correct thing to do at that stage. They were once again attacking those who were trying to do the right thing and support their children and families. Under their approach, it is women and families— the very people they say they want to protect—who consistently suffer. The rhetoric and the reality are two very different things. We should perhaps not have been surprised by the Government’s proposals. It is an age-old Tory mantra that the poor—those on the lowest incomes—are expected to work harder; otherwise, they will be made poorer. At the same time, the rich will work harder only if we make them richer. In this instance, there seems to be one rule for the very richest and another for everyone else. This is arguably the same old out-of-touch Tories—this time, sadly, aided and abetted by the Liberal Democrats.
I always like to try to end on a positive note, however, and I come back to the point that the new clause is a relatively mild-mannered proposal. It seeks nothing more than that the Government should use their good offices to gather the necessary information to make an assessment of the impact of the changes and to produce a report. That does not seem an unreasonable request. Indeed, when the Exchequer Secretary to the Treasury was in opposition, he regularly requested such reports and no doubt regularly tabled amendments and new clauses to that effect. He is nodding his head. I hope that he will remember those days, and remember why it is so important to have such reports and assessments. I hope that he will show that he is not only a listening Minister but a Minister who is prepared to act, and that he will accept new clause 8.
Oral Answers to Questions
Andrew Gwynne Excerpts(10 years, 11 months ago)
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Andrew Gwynne (Denton and Reddish) (Lab)
T8. Why does the Office for Budget Responsibility say that the deficit this year will be the same as it was last year and the year before? Is not the truth that the Government’s stalled plan on jobs and growth has led to this appalling situation?
Mr Osborne
Let me tell the hon. Gentleman the appalling situation. It was an 11% budget deficit that the Opposition left us when they left office—11%. It is now going to be 7.7%. Borrowing—[Interruption.] The right hon. Member for Morley and Outwood (Ed Balls) asks how much money. I will tell him. The Opposition were borrowing £157 billion. We are now borrowing £118 billion. Borrowing is not going up. It came down from £157 billion to £118 billion, and if the right hon. Gentleman cannot do that maths, no wonder he left the country in such a mess.
Economic Growth
Andrew Gwynne Excerpts(11 years ago)
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Ed Balls
I have answered the hon. Gentleman’s question. For us to join him, or the Prime Minister, in committing ourselves now to a referendum four years ahead would lead to lost investment and lost jobs, and would be the wrong priority for Britain. Our amendment makes it absolutely clear that we disagree with that strategy.
If there were a treaty change that altered the balance of powers, we would support a referendum. I think it important for us to listen to and understand people’s concerns about Europe, and show that we can reform. I must say to the hon. Gentleman, however, that we will not get the reform that we need by walking out of the room in a flounce, as our Prime Minister did in December 2011. That was one of the worst pieces of statesmanship we have seen for many years.
Andrew Gwynne (Denton and Reddish) (Lab)
In order to be a member of the European economic area outside the European Union, would we not still have to pay a membership fee and accept most of the rules and regulations coming from Brussels? Would we not also lose our seat on the Commission, lose our seats in the European Parliament, and lose our voice on the Council of Ministers?
Jack Dromey
No, I do not believe that we should take the same approach as Fannie Mae and Freddie Mac in Britain. I will come in a moment to our proposal.
Three admirable young people in Castle Vale in my constituency told me recently that they were desperate to do an apprenticeship in the construction industry, as their dads and uncles had done, but they could not get one. R&C Williams, an excellent local building company, is surviving despite the problems in the construction sector. Nevertheless, its managing director told me that the previously successful companies run by his two best friends have now gone out of business.
I also see in my constituency the working poor—people on minimum wages and whose wages are being held down and sometimes cut—who end up having to claim housing benefit as their rents go up. It is a startling statistic that 10,000 households a month now go on to housing benefit, because struggling families cannot afford to pay their rent. Such things are pushing up the benefits bill, as is rising unemployment in the west midlands. The number of people unemployed rose in the last quarter by 16,000 to 253,000, which is up by 26,000 over the past year.
That is why Labour proposes urgent action now. The building of 100,000 homes would put 80,000 building workers back to work, create apprenticeships for young people who desperately want a future, lead to wealth in the supply chain—all those who manufacture bricks, glass and cement—and add 1% to GDP. The lesson of history is that our country has never had sustainable economic recovery after events such as the depression, the war and every recession since the war other than when there has been a major programme of public and private house building, and that is why Labour’s amendment proposes action to do precisely that.
Andrew Gwynne
Is not the set of measures mentioned by my hon. Friend in stark contrast to the Government’s own NewBuy scheme? We were promised that 100,000 families would have access to cheap mortgages, but only 1,500 families were able to take up that initiative.
Jack Dromey
My hon. Friend is right. The Government have a miserable track record of promising the moon and failing to deliver. I will say more about that in a moment.
There is growing demand for urgent action to stimulate the building of affordable housing from organisations ranging from the National Housing Federation to the CBI. There is a chronic lack of confidence not only in the economy, but in the Government’s housing policies. There have been four “Get Britain Building” launches and 300 separate initiatives, and yet the sorry saga of failure continues.
We now have Help to Buy. We are in favour of helping people to realise the dream of buying their own home. However, a powerful report by the Treasury Committee described the scheme as “unconvincing” and said that it was likely to push property prices up and unlikely to produce the significant lift in the supply of new homes that is badly needed. There is also the bitter irony that Help to Buy will help millionaires, fresh from their tax cut, to buy a second home worth up to £600,000—an absurd anomaly that stands to this day. There is one law for the rich and one room for the poor because of the bedroom tax.
That leads me to my concluding remarks. The Chancellor spoke earlier about the need to get benefits down, ignoring the reality that it is soaring rents and unemployment that are pushing benefits up. He has engaged in the most disgraceful debate that divides our country between shirkers and strivers. Only yesterday, Lord Freud said in a speech that people affected by the bedroom tax should—I kid thee not—get a job or sleep on a sofa. What would he say to the severely disabled couple who came to see me who can no longer sleep in the same room, but whose son has moved out? Because they have a “spare room”, they have to pay the bedroom tax. It is an immoral tax that will cost the taxpayer more because there will be a higher housing benefit bill as people are pushed out into the private sector and disabled people will be forced to move from adapted homes to unadapted homes that will then have to be adapted by local authorities and housing associations.
Instead of doing what they should be doing, the Government are seeking to divide the nation. They are driving more and more people into the trough of despair. The essential difference between them and us is this: they divide the nation, we will build one nation.
Oral Answers to Questions
Andrew Gwynne Excerpts(11 years ago)
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Danny Alexander
I welcome those figures. They suggest that the policies being pursued by this Government are having the desired effect.
Andrew Gwynne (Denton and Reddish) (Lab)
Q2. What assessment he has made of the effect of current fiscal policy on the level of youth unemployment.
The Chief Secretary to the Treasury (Danny Alexander)
The UK labour market is showing signs of recovery. More people are in work than under any previous Government.
Andrew Gwynne
The Chief Secretary says the economy is healing but he should take more seriously the fact that youth unemployment is growing again, with nearly 1 million young people unemployed for the last year. Will he explain why, in the past year, youth unemployment has grown by a staggering 355% since the Work programme was introduced? Is that not disgraceful? Should not the Government prioritise a compulsory jobs guarantee paid for from a bank bonus tax?
Danny Alexander
In this matter, a wee bit of humility from the Labour party would not go amiss, on the basis that youth unemployment has been a persistent problem in this country for many years—youth unemployment has been rising since 2003 or 2004. I note that, in the hon. Gentleman’s constituency between December 2010 and December 2012, youth unemployment fell by 11.8%. Through measures such as the Youth Contract and the Work programme, we are deploying considerable support for the task that he and I agree on, which is getting more young people into work.
Finance (No. 2) Bill
Andrew Gwynne Excerpts(11 years, 1 month ago)
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Cathy Jamieson
I want to make a bit more progress. I come back to the point raised by the hon. Member for Tiverton and Honiton about times being hard and the idea that somehow the problem is to clear up the mess left behind, as he described it. People out there in the real world are getting tired of hearing that same old mantra. The Government have responsibility for what is happening now. They have to take responsibility for policy decisions taken in Budgets that impact on the lives of ordinary people.
I go back to the research from the TUC. Some Government Members may look sceptical about it, but I assure them that many ordinary people in my constituency and those of my hon. Friends recognise the value of the work that the TUC and trade unions are doing in standing up for those finding that their individual and collective incomes are being affected.
The TUC research considers the impact of direct and indirect tax changes over the Parliament. It shows that a household with an average weekly income of £195.92, the lowest income band for working people, will gain £1.09 a week—that figure is underlined, so I have not made an error—from the above-inflation rise in the personal allowance by 2015. However, and importantly, the same family will lose £4.26 a week through the increase in VAT, which went up in January 2011, leaving them with a total annual loss of £164.84 as a result of the Government’s tax policy.
Many on the Government Benches may say, “Well, that is not a huge amount.” I repeat what I have said in previous debates: it may not be a huge amount for someone with a decent job and income—I include all of us here in that—but it is a huge amount for those trying to have a reasonable standard of living and ensure that their families have food on the table and that their kids have clothes.
Cathy Jamieson
I hope I am not being churlish in hoping that the hon. Gentleman will understand that most of those independent commentators also point to what is happening to those on the lowest incomes. Opposition Members feel strongly that those people are taking a disproportionate share. It is not a case of, “We’re all in it together.” When ordinary people see millionaires and those on the highest incomes getting a tax break or a tax cut, it seems unfair to them that their wages or incomes are hit hard by the Government’s policies.
Cathy Jamieson
I will take my hon. Friend’s intervention before I forget about him.
Andrew Gwynne
My hon. Friend is absolutely right to call for an assessment of the cost of living. Does she accept, though, that it should not be restricted to the impact of the fiscal changes announced in the Budget but should look more widely at the effect on families of expenses such as increasing fuel prices, increasing transport costs, and interest payments on payday loans?
Finance (No. 2) Bill
Andrew Gwynne Excerpts(11 years, 1 month ago)
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Chris Leslie
It could almost be said that there have been more announcements than new homes constructed under the present Administration. Let us consider a few of the schemes that they have announced.
My hon. Friend will recall the new homes bonus, which was part of the Government’s so-called localism agenda, because he and I have spent some time examining that particular set of policy options. The scheme, which the Government announced in 2010, was supposed to unleash growth and build at least 400,000 additional homes, but it has totally failed to deliver. The number of housing starts fell by 11% last year, to below 100,000—less than half the number required to meet housing need.
Andrew Gwynne (Denton and Reddish) (Lab)
How confident can we be that this new initiative will be any more successful than the others that my hon. Friend is beginning to outline? He will remember, as we do, the NewBuy scheme, which the Prime Minister promised would make 100,000 new properties available to people. In fact, only 1,500 people have secured new properties as a result of that initiative.
Chris Leslie
My hon. Friend has hit the nail on the head. Imagine announcing such a scheme, and then delivering only 1.5% of the goal that the Government set out so confidently at the inception of that project, which has clearly failed. We want to see the careful and detailed thought, piloting, workings and evidence that the Government have put into this latest venture.
Andrew Gwynne
Was my hon. Friend as amazed as I was at the corporation tax figures produced by Her Majesty’s Revenue and Customs? We were told—indeed, the Chancellor informed the House—that the corporation tax cut would be offset by the Government and that there would be no benefit to the banks.
Chris Leslie
This is the curious thing about the Government’s approach to the bank levy. They have consistently said, “Don’t worry, we’ll set the rate”—let us bear in mind that the levy is a charge on the balance sheets and a proportion of a certain set of liabilities—and said that it was designed to yield £2.5 billion, so it has taken some doing for the Treasury to have managed to net only £1.6 billion in the past year and to get the bank levy so wrong. If it had been my hon. Friend’s constituents who were due to pay a certain level of tax through PAYE or national insurance, does he imagine that the taxman or Treasury would have been so lax and said, “Oh, don’t worry, we’ll let you off that massive liability for the time being”? That is essentially what the Minister and his colleagues in the Treasury have been doing and saying to the banks.
Andrew Gwynne
My hon. Friend is absolutely right. Had it been my constituents who owed HMRC any sum of money, HMRC would have been down on them like a ton of bricks, whether they were businesses or individuals. Is not that the inherent unfairness? The Government say that the banks will not prosper from these changes, but clearly that is not the case.
Chris Leslie
I am afraid that the situation is even worse than my hon. Friend thinks. It is not only the past financial year in which the Minister and his colleagues took their eye off the ball on the bank levy: they did so in the financial year before that, too. In 2011-12, the combined shortfall from the bank levy, netting in £1.8 billion or so and added to the corporation tax cut, was £800 million less than Ministers promised. It is not good enough to say, “Oh well, this is an aberration, and it is something that we can tweak and correct.” Ministers are not going back as far as they should and correcting that shortfall in the steps they are taking in the Budget. It is just not good enough. They have not thought through the design of the bank levy carefully enough.
It is not as though Ministers were not warned. I am sorry that the Exchequer Secretary is not in his place, as I warned him in a debate in July 2010—it seems like only yesterday, but it was nearly three years ago—when I said, “The bank levy is too weak. It will not work and it will not have those yields.” It does not give me any satisfaction to say, “I told you so”, but I did tell them so, and Ministers cannot therefore claim that it was something that happened by chance.
Chris Leslie
No—that is a preposterous suggestion. The hon. Gentleman also needs to recognise that all banks have benefited from the implied guarantee of the taxpayer, even if they did not need to be bailed out. He knows very well that the whole banking sector has benefited for a long time, and continues to benefit, from the market expectation that, should a retail bank get into difficulty or become insolvent, the taxpayer will come to its rescue. That is an implied subsidy, for which the banks ought to compensate the taxpayer. That is part of the argument I am happy to make.
Andrew Gwynne
My hon. Friend is incisively highlighting that the Government have effectively given the banks a tax cut, because of the levy’s failure to bring in the resources they initially said it would. Moreover, bankers themselves are still receiving these eye-watering bonuses, while at the same time the Government are giving them a tax cut—the tax cut for millionaires. Is that not absolutely why we need this bank bonus tax to sit alongside the bank levy, so that we can reinvest that revenue in a jobs programme? Have we not shown that a bank bonus tax works?
Chris Leslie
Exactly, and never let Government Members claim again that we do not have a positive approach that would get young people off the dole and back into employment. This is the route that needs to be taken, and the choice presented to the public which they can see most starkly, particularly on a day when unemployment is rising.
Geraint Davies
That is right, and there would be widespread support for that across our communities and probably in the banking community. People are taking home an extra £1 million and asking themselves whether they should be paying income tax at 45p or 50p, at a time when we hear cases of people earning, say, £20 a week. As I mentioned at Prime Minister’s Question Time, a constituent who recently came to me was a chronically ill man who had £20 a week after paying his utility bills and his bus fare. This month he is down to about £14 a week due to benefit cuts. If such cases were brought to the attention of some of those wondering whether to buy their second yacht, I do not think they would mind paying a little more.
It has been insinuated that a 50p rate would discourage such people and be so painful for them that they would all get in their yachts and go off and live somewhere else, but in Britain today many people already pay more than 50p. Anyone who is earning more than £32,000 and less than £42,000 is paying 40% tax plus 12% national insurance. That is 52%. The only reason that they have to pay more than 50p and the millionaires do not is that they do not have their own personal accountants. That is not fair, is it?
These are sustainable levels of marginal taxation and it is right that they should be paid. It is right that members of the banking community, who have their backs covered, should pay more than their fair share. It is also right that the Government should get their act together to stop abuse by many members of that community who are taking the mickey.
Yesterday I had a meeting with a lawyer who specialises in giving advice to people facing charges of insider dealing and the like from the Financial Services Authority, which is now the Financial Conduct Authority. We were talking enormous amounts of money that people are trying to avoid paying. The point that she made to me is that the people in the FSA, now the FCA, do not have the resources and the clout, and have to deal with dozens of cases, while the defence lawyers deal with only a few cases because the amounts of money are so great. What is more—the Minister might want to do something about this—there is no system of precedent.
If the FSA says to a bank, “You have committed this offence and we are going to charge you £1 million”, which is small change for a bank, the FSA cannot set a precedent. The banking community knows that, if they do it, they will be charged; the FSA has to rehearse the same action again and again. I hope the Minister will look into this as it comes from the horse’s mouth—from people who are giving advice to people who are being defended. They also poach staff from the FSA or the FCA to work for them. They say, “We’ll give you three times as much. You’ve been charging us and you’re very good at it. You’re not paid enough for your success. Come over to our side. Have some of our bonus and we can do some insider dealing. The people at the Exchequer are making cuts at the tax office to save money, so we can have more.”
Andrew Gwynne
My hon. Friend should be a little more charitable towards the Government. There has been a thread of consistency in their approach. Had he been present for the first debate, he would have heard my hon. Friend the Member for Nottingham East (Chris Leslie) say from the Front Bench that the Prime Minister promised that under the Government’s New Buy scheme, 100,000 families would be helped and only 1,500 families were eventually helped through that scheme. In this debate we heard that the Prime Minister said that £2.5 billion would be raised by the bank levy, whereas we heard from my hon. Friend on the Front Bench that £1.1 billion was raised. Is there not a degree of consistency here? The Government are consistently incompetent.
Geraint Davies
That certainly would be a charitable way of putting it. If financial targets are set and are under-achieved, the Government clearly need to redouble their efforts to deliver those targets. We need to continue to focus on generating joined-up systems to ensure that the money that is available delivers economic outcomes such as opportunity and jobs. The amendment is designed to create imaginative ways of generating opportunity and jobs for the future by using the money that is recovered. We should join together to do that. It is a modest amendment that we should all agree on. We should work together to build a stronger Britain.
I fear that the Government will say, “Oh no, we can’t possibly consider that.” That, alongside their failure to raise the money, would show that they do not have the focus to ensure that those with the broadest shoulders pay their way towards a more prosperous Britain. I fear that the Government will go back to the old Tory ways and say, “Let’s use this as an opportunity to crush the so-called undeserving poor” and pretend that there are workers and shirkers, whereas people just want to get out and get a job. Let us move forward and create a united Britain—a one nation Britain, dare I say—to create a future that works and a future that cares.
Andrew Gwynne
My hon. Friend is right to highlight the differences between the Prime Minister’s statements and reality. May I give her a third example: the cut to corporation tax. We were told by the Prime Minister and Chancellor of the Exchequer that the banks would not benefit from that cut and that there would be some offsetting arrangements. Yet we now learn from Her Majesty’s Revenue and Customs that the banks have benefited to the tune of £200 million.
Alison Seabeck
I thank my hon. Friend for flagging up what is factually correct and can be substantiated, rather than something resulting from living in some fantasy land of figures, as Government Members seem to do.
The amendment seeks simply to have a review in six months’ time on whether a bank bonus tax within the bank levy would raise significant additional income that could then be reinvested in creating jobs—especially among young people, who have been so hard hit by the Government’s economic failure.
amendment of the law
Andrew Gwynne Excerpts(11 years, 2 months ago)
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Hilary Benn
I will happily confirm that we did not build enough council houses, although that began to change in 2007. Indeed, 70,000 affordable homes for which this Government have tried to take credit in their target of 170,000 were started by the Labour Government.
Andrew Gwynne (Denton and Reddish) (Lab)
I urge my right hon. Friend to resist the temptation raised by the Secretary of State to be too political, and commend to him the partnership work of Labour Tameside council and New Charter housing trust, which together have set the ambition and the reality of producing one affordable home a day for the next three years. That is Labour in action.
Hilary Benn
I welcome the efforts that my hon. Friend has described. I said a moment ago that this is a responsibility for all of us, but I cannot promise to resist the temptations presented by the Secretary of State, given what he had to say.
Ministers do not want to talk about housing starts, because the figures are bad, so instead they want to focus on completions. Let us have a look at them. The facts are pretty stark. The number of completions in England in each of the first two years of the coalition Government was lower than in any one of the 13 years of the Labour Government. In other words, we completed more homes in every one of those years than the Government have managed in either year since they were elected. Indeed, the Secretary of State has the dubious distinction of presiding over the lowest level of completions by any peacetime Government since the mid-1920s. That is some achievement. No wonder the construction industry has been so hard hit. Eighty thousand construction workers are out of work, and output has fallen by 8.2%, contributing a great deal to the absence of growth in the British economy. The rate of home ownership has fallen, and there are 136,000 fewer home owners than when the Government came to power. That is hitting the youngest hardest, because the average age of a first-time buyer is now 37.
Official statistics from the Secretary of State’s Homes and Communities Agency show that affordable housing starts collapsed in the last financial year by 68%; homelessness and rough sleeping are up by a third since the election; the number of families with children and/or a pregnant woman housed in bed-and-breakfast accommodation for six weeks or more has risen by over 800% since the coalition came together; and 125 councils have had families in bed-and-breakfast accommodation for six weeks or more. As private rents have continued their relentless rise and incomes are squeezed, more people in work have to claim housing benefit to help them pay the rent.
Budget Resolutions and Economic Situation
Andrew Gwynne Excerpts(11 years, 2 months ago)
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Vince Cable
The hon. Gentleman is right on both counts. I was recently in Nigeria supporting that effort. If we are to have momentum, it must come through small and medium-sized companies. Frankly, the export effort in many emerging markets was neglected for most of the past decade—the relationships are not there and must be built up. He is also right that the employment allowance, which will help 400,000 micro-companies, is a big step forward and a big incentive to them to take on that extra member of staff.
In my concluding section, I shall address some of the big strategic choices made in the Budget. We can argue about temporary changes, but it is important that the country has a sense of direction. First, the industrial strategy gives a sense of direction; secondly, the changes in money and banking policy are fundamental after the crisis; and thirdly, the tax agenda creates a greater level of fairness.
On the industrial strategy, I was teased earlier about the “compelling vision” for the British economy, but we clearly need a vision of the economy that goes beyond one Parliament and Government, and that stretches decades ahead. That is why we have made the commitment to long-term planning and working in partnership with business in those sectors of the economy that need such a framework. We have produced agreements with the aerospace industry, and will do so with the automotive and biological sciences industries, and with the supply chains in renewable and non-renewable energy, which were desperately hollowed out in the years when manufacturing was neglected under the previous Government. We are trying to rebuild those supply chains.
A Back-Bench colleague made the point that we have an extra 70,000 jobs in manufacturing after 1 million were lost in the decade of the Labour Government. Of course, the industrial strategy is not just about manufacturing; it is about key service sectors such as education and higher education, and professional and financial services, which are equally important in driving exports.
Andrew Gwynne (Denton and Reddish) (Lab)
In the right hon. Gentleman’s three years as Secretary of State for Business, Innovation and Skills, he has mastered being an apologist for the Conservative-led Government. May I politely remind him that he was elected in 2010 as a Liberal Democrat on the Liberal Democrat manifesto, in which, on page 15, he says:
“If spending is cut too soon, it would undermine the much-needed recovery”?
He was right then, but does he still believe he was right?
Vince Cable
I recommend that the hon. Gentleman look at the OBR’s figures to see what has happened to Government consumption in the past three years. In 2010, it grew by 0.5%; in 2011, it grew by 2.6%; and last year, it grew by 0.6%. It is true that aspects of Government spending have been cut in a way that has been damaging. The Chancellor has acknowledged, as I have, that capital spending cuts were a mistake. That was the one bit of fiscal consolidation that the Labour Government launched, and it has had damaging consequences, which is why we are now reversing it.
Andrew Gwynne (Denton and Reddish) (Lab)
It is a pleasure to follow the hon. Member for Aberconwy (Guto Bebb), whose analysis was wrong on so many levels. That is probably why he was rejected by Plaid Cymru, which, frankly, takes some doing.
It is worth remembering that in his June 2010 Budget, the Chancellor of the Exchequer stood at the Dispatch Box and announced that the growth rate for 2013 would be 2.9%. In his autumn statement, just a few months ago in December 2012, he stood at the same Dispatch Box and announced that the rate would be 1.2%. Yesterday, humiliatingly for the Chancellor, he had to announce to the country that the Office for Budget Responsibility’s own statistics show that the projected growth rate for this year is a miserly 0.6%. It does not get any better, because the 2010 Budget’s projected growth for 2014 was 2.5%, which was downgraded by the autumn statement to 2%, and yesterday the Chancellor said that it would be 1.8%, which is, frankly, optimistic. It is worth remembering that in 2010, actual growth was 1.8%. This is a real humiliation for the Chancellor, because he has had to admit that for the last three years his growth strategy has been a no growth strategy, because there has not been any growth in our economy.
Of course, the Business Secretary admitted to that last year, when he wrote to the Prime Minister and said that his Government lacked a “compelling vision” for growth. He was absolutely right. I was pleased to hear him finally acknowledge from the Dispatch Box today that the Chancellor and the coalition Government got it wrong in 2010 when they cut the investment that this country so desperately needed. I do not recall any apology from the Business Secretary or the Chancellor before today. I might have missed it because I am not an avid reader of the Evening Standard, but I do not think that it was pre-briefed that they have got it wrong for the past three years. It is three years too late for many of our constituents. The Government snuffed out the recovery that was beginning in 2010.
I will refer briefly to some of the local initiatives and challenges in my Denton and Reddish constituency. In the short time I have left, I will then recognise the positive ideas in Lord Heseltine’s “No Stone Unturned” strategy. To be fair to Lord Heseltine, unlike most Members on the Government Benches, he understands what is needed to drive up growth in the English regions. A number of his initiatives should be taken on board.
Nic Dakin (Scunthorpe) (Lab)
My hon. Friend is stating things very clearly. Does he believe that this Government will allow Lord Heseltine’s proactive approach to regenerate the regions?
Andrew Gwynne
I very much doubt it; we can but hope. There are some good ideas that build on the many regional initiatives that the last Labour Government left in place in May 2010. The strategy almost reinvents the wheel, but I do not care who reinvents the wheel; the fact is that the wheel should never have been smashed up in the first place.
My Denton and Reddish constituency has been badly affected by unemployment. The figures that were released yesterday showed an increase in those claiming jobseeker’s allowance over the past 12 months. There are now 2,642 unemployed claimants in my constituency, which is 6% of the economically active population. The longer-term picture is far worse. The number of those claiming jobseeker’s allowance over the past 12 months has now gone up 32%. The figure has gone up 44% for young people and, staggeringly, for people over 25 claiming jobseeker’s allowance, the figure has gone up 70% in the past year.
Barbara Keeley
Is my hon. Friend as concerned as I am to learn from the OBR forecasts that unemployment has not peaked? It will peak later this year or early next year, so the figures that he and I have quoted will get worse.
Andrew Gwynne
My hon. Friend is absolutely right. She may have read the Manchester Evening News research, which showed that Tameside, which is part of my constituency, is the worst place in the north-west of England for young people to access job opportunities. There are real issues here that need to be resolved by Government.
Some good local initiatives are being pushed through by my two local authorities. One is Tameside, a Labour local authority, and the other is Stockport, a Liberal Democrat authority. They are doing their best in very tight circumstances, not least because every man, woman and child in Tameside is losing the equivalent of £163 in central Government grant to the local authority and Stockport is losing £94 per head of population.
We are seeing initiatives such as the introduction of town teams in Denton—I am proud that my office is represented on the Denton town team—and a pooled apprenticeship scheme in Tameside, which enables firms to reduce the risk in taking on apprentices. That initiative has been ably led by the leader of Tameside council, Councillor Kieran Quinn, who set out an ambition to have every young person in work or training by 2020. Tameside council has done a deal with New Charter Housing, the local registered social landlord, to ensure that one affordable house is built per week for the next three years. Stockport has the Stockport Boost initiative, its town centre is a Portas pilot, and there are huge opportunities along the M60 corridor with its close proximity to the airport city enterprise zone and the Grand Central redevelopment. That initiative is being pushed forward by the Greater Manchester combined authority and the Association of Greater Manchester Authorities—a Labour-led, city region initiative.
Lord Heseltine talks about combined authorities and giving more responsibility to local enterprise partnerships, and that is where Greater Manchester takes a lead. He also mentions local leadership, which is a thorny issue. I personally support the idea of a Greater Manchester-wide mayor, and although I realise that others in the city region are not convinced, I at least welcome the debate started by Lord Heseltine in his report.
My final point—which I have already touched on—is about housing, which continues to be a big problem in my constituency. The new homes bonus announced by the Government in 2010 was supposed to unleash growth and help build at least 400,000 additional homes, but it has failed to deliver.
Andrew Gwynne
I will not as I do not have time. Housing starts fell by 11% last year to below 100,000—fewer than half the number required to meet housing need. The Government’s £10 billion guarantee scheme has yet to deliver a single penny of support for house building. There were a number of small things to be welcomed in the Budget, but there were no answers on growth or for communities such as Denton and Reddish. After three years of failure, it is time for a different approach.
Sheila Gilmore (Edinburgh East) (Lab)
Last Thursday when I was going home on the train I read in the Evening Standard an article pointing out that our debates on this Budget, the previous Budget and the ones before that are not just a reprise of each other, but a reprise of the 1930s. The argument that the way to cure the country’s economic problems is to cut, cut, cut, took place in the 1930s and was proved wrong, yet here we are again. If MPs from that time were in the Chamber today as ghosts, they would think that they were still alive and taking part in the debate.
That has not all happened by accident, and the Government are following an ideological path. They told us that the public sector is a drag on the economy and that if we did not cut it back the private sector would never spring into growth. In fact, the public sector is a huge customer of the private sector, both institutionally, from the construction works it undertakes right down to the stationery it buys, and individually, because a public sector worker is a private sector consumer. Individual workers contribute to their local economies by buying and furnishing their homes, buying new bikes and cars and spending on all sorts of other consumer durables. Cutting all that directly affects the private sector, which is exactly what we have seen for the past three years.
Andrew Gwynne
Is it not an absolute truth that in 2010 all the economic indicators, including consumer confidence, were heading in the right direction, yet almost immediately at the point that the Government turned off the taps and brought in their austerity Budget, consumer confidence plummeted?
Sheila Gilmore
As a result of the stimulus provided by the previous Government, all those measurements were turning in the right direction at that time—[Interruption.] Perhaps the Minister who is laughing ought to look, as I did last weekend, at the OBR report on the June 2010 pre-Budget report. He might not be laughing quite so hard then. The Government fail to analyse the problem correctly, so it is not surprising that they do not arrive at the right decision.
On jobs, it is not surprising that the Chancellor did not want to dwell on unemployment and this week’s increase. All we hear about is the increased number in employment. For once, I will not dwell on the statistics—others have done so, and I mentioned them in an intervention, but I want to highlight what the jobs situation means in the real world.
Last Saturday, I was out knocking on doors in my constituency. Within half an hour, I had met two people who were good examples of what the jobs situation means for them. One man had a 15-hour a week job in a local supermarket. No doubt these flexible short-term jobs are quite useful for the employer in meeting peak demand, and, of course, a person working 15 hours for the minimum wage will be below the national insurance threshold, which is another advantage for the employer. He had asked for more hours because he will be hit by the bedroom tax, but he was told that extra hours were not available.
Even if the hours were available, whom would they be taken from? My constituent might be given more hours, but unless there is a need for extra hours to be done in that job, another employee will get fewer hours, or another person would not get a job. Counting low-hour part-time jobs—we should remember that some so-called full-time jobs involve low hours—and saying, “Aren’t they wonderful?” is to forget that we are talking about real people. What effect does that have on them? The man is working and wants to work. More work in future would be good for his well-being, but he remains in poverty, like so many others.
Tax Fairness
Andrew Gwynne Excerpts(11 years, 2 months ago)
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Mr Russell Brown (Dumfries and Galloway) (Lab)
I apologise for the fact that, as I indicated to you, Mr Deputy Speaker, I shall need to leave the Chamber at about 2.30 pm, although I shall return, so thank you for calling me now.
I support the motion, the fundamentals of which simply call
“on the Government to bring forward proposals for”
a mansion tax “at the earliest opportunity”. It is a proposal—nothing more, nothing less—that I should have thought the junior coalition partner supported.
I should like to remind the House, especially the Liberal Democrats, of a speech on tax and fairness delivered last month by the Deputy Prime Minister, in which he said:
“I continue to believe we should ask for what would be a modest contribution from the very wealthy, either in the form of a Mansion tax—a 1% levy on properties worth more than £2m—applied just to the value over and above £2m; my preferred option. Or, alternatively, we could introduce new council tax bands at the top end, again, affecting properties worth over £2m. . . Nothing could do more to demonstrate a commitment to greater fairness in our tax system. I will continue to make this argument, in this Coalition and beyond. My approach is simple: taxes on mansions; tax cuts for millions.”
Only time will tell whether there is the slightest hint of sincerity in those words.
We are debating the issue today only because our nation’s economic uncertainty and problems mean it is right that we do so. What is the current problem? It is squeezed living standards and a flatlining economy. Families are working harder for longer and for less, yet almost daily they witness prices going up and up. The talents of millions of our young people are being wasted and small businesses, which will drive our economy, are being held back by banks and a Government who are not on their side.
Yesterday evening I met representatives of a number of small and medium-sized enterprises based in the London area. They told me and other Labour Members that banks need to work for them and not against them, which has been their experience of the past two or three years: banks are not lending to the most entrepreneurial businesses, and in their eyes everything is going backwards. The economy is not growing and has flatlined over the past two years, and the deficit is going up. Government borrowing is increasing as a result of economic failure. Those of us who watched closely in the ’80s and early ’90s saw what economic failure did to the nation. We are witnessing nothing short of trickle-down economics: the middle is being squeezed and almost daily there is a race to the bottom.
The Government’s economic vision is of a race to the bottom in wages and skills, rewarding only those at the very top and leaving everyone else squeezed as never before. Next week taxes will be cut by an average of £100,000 for 13,000 people earning more than £1 million, yet millions of working families will be asked to pay more as their tax credits are cut.
The Government refuse to stand up to the energy and train companies that are squeezing family budgets. Debates have been held in the House over a prolonged period, but nothing has been done to protect some of our poorest families and communities.
Andrew Gwynne (Denton and Reddish) (Lab)
From listening to everything said by Members on the Government Benches one would think that everything in the garden was rosy, but my hon. Friend makes a point that has been echoed by research from the Institute for Fiscal Studies: that under the measures in the Government’s autumn statement the poorest 40% in society are losing much more than the richest tenth.
Mr Brown
My hon. Friend is correct: the figures given by the IFS are there for all to see and cannot be disputed. We are seeing real pain and suffering, hard as never before, in many communities. I am sure that constituents of hon. Members on both sides of the House are looking to their MPs for guidance and support. I fear in particular for young families. Those of us who are slightly more senior in years know what it is like to be told that we have to tighten our belts, but younger families find it difficult to cope with such comments.
Over the past two years the Government’s approach has been shown to be not working, but Labour Members know that it can never work. Prosperity will be achieved only when everyone plays their part in building the economy—a recovery made by many, not just a few at the top who believe they are aiding some recovery. That is the lesson of history. In the industrial revolution, which I know was way back, it was those who went down the mines, spun the cotton, built ships and constructed bridges who drove the economy forward. The nation is crying out for a fairer tax system, which we will put at the heart of our new priorities. As well as cancelling the millionaires’ tax cut and the changes to tax credits this April, a Labour Budget would tax houses worth more than £2 million and use the money gathered to cut taxes for working people. A fairer tax system would send a message about how Britain will succeed in the years ahead that says: “When you play your part and make your contribution to the economy, you will be rewarded.”
The Labour party would tackle vested interests. We need to act when working people are paying more than they should. We have said that we would break the stranglehold of the big six energy companies, stop the price rip-offs of the train companies on the most popular routes and cap the interest on payday loans.
Our country has to change. We must end the culture that says that university is always best and that vocational education is second class. That simply is not true. We see the need to create a new technical baccalaureate to complement A-levels. We see the need to give employers, for the first time ever, control of the money for training. We see the demand for Britain’s employers to step up and offer real apprenticeships and proper training.
Today, we are increasingly two nations with high-skilled, high-paid jobs for those at the very top, but low-skilled, low-paid jobs that involve long hours for too many people. A one nation economy needs to support businesses that create sustainable middle-income jobs by introducing a modern industrial policy.
Economic Policy
Andrew Gwynne Excerpts(11 years, 3 months ago)
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Mr Osborne
What will help the economic recovery of the Humber are, first of all, the low interest rates, which, as I said earlier, are tested every day out there in the bond market. In addition, however, we have opened new enterprise zones in east Yorkshire, we have cut the bridge tolls on the Humber bridge—which I would have hoped that the hon. Lady would welcome—and we have invested in new road projects in and around the area, which had been demanded for years.
Andrew Gwynne (Denton and Reddish) (Lab)
In 2010, the Chancellor pledged to secure the recovery. By 2011, that had changed to maintaining Britain’s triple A credit rating. Is not the Chancellor’s failure to deliver on the first promise the reason for our losing the second?
Mr Osborne
We inherited an incredibly difficult situation. The economy had contracted by 6%; we were experiencing the deepest recession in the country’s modern history, and arguably the worst financial crisis in its entire history. Since then we have made difficult decisions, but they have seen interest rates stay low, they have seen the deficit come down, and they have seen the creation of a million jobs. The hon. Gentleman should be welcoming that.