Mortgage Market

Liz Kendall Excerpts

Tuesday 13th June 2023 Commons Chamber

[Andrew Griffith]

The hon. Lady is, I am afraid, completely incorrect. The Conservative party is absolutely on the side of home ownership. It is why we have always supported the right to buy, in the face of opposition not just from the Labour party but from Labour-controlled local councils. It is also why we continue to have a wide range of schemes in the market to help first-time buyers.

[Liz Kendall (Leicester West) (Lab)]

Santander is the latest major bank to temporarily pull its mortgage deals for new borrowers, just days after HSBC did the same. The Minister shrugs his shoulders as if to say that there is nothing to see here, but is it not the truth that this degree of turbulence is not normal, that inflation is significantly worse here than in Europe and the United States, and that ordinary people across the country will look at his denials today and wonder what planet he is living on?

[Andrew Griffith]

I honestly think that contribution from the hon. Member is unworthy. I would not go so far as to ask her to withdraw it, but if she looks at my comments she will see that I absolutely understand the anxiety that people have about their mortgages. It is a very significant part of people’s household finances. That is why we are using all the tools at our disposal: both providing public spending to protect and shield households at this difficult time, and making the tough decisions to get the economy growing again and to keep debt under control, which is the action that will result in interest rates falling sooner.

--- Later in debate ---

[Liz Kendall]

I am responding to—

[Madam Deputy Speaker]

No, you are not. That question is finished. There is a danger that the House might not be able to hear the question from the hon. Member for Strangford (Jim Shannon).

Spring Statement

Liz Kendall Excerpts

Tuesday 13th March 2018 Commons Chamber

[Mr Hammond]

Actually, while watching Russia Today, I saw a very interesting piece on the Venezuelan economy—apparently everything is going swimmingly.

[Liz Kendall (Leicester West) (Lab)]

In response to my hon. Friend the Member for Wallasey (Ms Eagle), the Chancellor suggested that our economy will be stronger once there is greater certainty over Brexit. Can he confirm that the Treasury analysis published last week showed that under all the Government’s Brexit options, long-term growth will be lower than it would otherwise have been? Does he not realise that that will be the true legacy of his Government and his party, which can no longer claim to act in the national economic interest?

[Mr Hammond]

Just to correct the hon. Lady on a couple of points, the report that she refers to, which was published by the Exiting the European Union Committee, was not done by HM Treasury. It was prepared, as I think she knows very well, by a cross-departmental group of Government economics professionals in response to the criticism that had been levied at the Treasury model that was used before the referendum. Of course it did not model the Government’s preferred outcome scenario; it modelled a couple of standardised outcome scenarios that the Prime Minister has already rejected. We are not going for a Norway model or a Canada model. We are negotiating with the EU for a bespoke solution. When we have made progress in those negotiations, we will model the outcome that we expect to get, and when Parliament comes to vote on this issue—hopefully later this year—it will have in front of it the output of that modelling.

Budget Resolutions

Liz Kendall Excerpts

Wednesday 22nd November 2017 Commons Chamber

[Ms Dorries]

Absolutely. I was coming to exactly that point. I have spoken to members of staff here, and one of the most startling facts about them is that they have to wait until they are in at least their mid-30s before they can even think of putting their feet on the property ladder. I hope the measures announced today—the abolition of stamp duty and so on—will help them become homeowners.

[Liz Kendall (Leicester West) (Lab)]

I am listening carefully to the hon. Lady, and I have been a long-standing champion of people being able to own their own homes, but has she read what the OBR says about the stamp duty measure—that it will not help first-time buyers but push up prices by far more than people will save?

[Ms Dorries]

The Chancellor made the point that other measures, such as on investment, would need to be implemented in conjunction with the abolition of stamp duty.

--- Later in debate ---

[Liz Kendall (Leicester West) (Lab)]

It is a pleasure, as always, to follow the hon. Member for North East Somerset (Mr Rees-Mogg). The challenge facing any Government, and any Budget, is to boost our strengths, tackle our weaknesses and prepare the country for the future. I am afraid that the Government have failed to rise to these challenges, and not just in this inadequate Budget, but through their damaging approach to Brexit. I want to take each of those points in turn.

First, on our economic strengths, we are rightly proud of our world-leading car manufacturers, pharmaceutical and aerospace companies, creative industries, universities and financial services. We want and need those to expand and thrive, create more good-quality jobs and help us fund our vital public services, yet they all face huge uncertainties because of the Government’s determination to pull us out of the single market and the customs union, and not just because of their acceptance that we might leave the EU with no deal and have to fall back on World Trade Organisation rules, but because of the active desire of some Government Members to do so. The risk of new tariffs and custom barriers, of financial services losing their passporting rights, and of restrictions on our trading with the largest market of 500 million consumers on our doorstep is a major cause of the lower than expected levels of business investment, productivity and growth that we heard in the Budget statement. The Government cannot escape that, no matter how much they want to sweep it under the carpet.

It is not only that the Government’s approach to Brexit is risking our economic strengths; they are also failing to address our underlying economic weaknesses. To be clear: many of these weaknesses existed before Brexit and, indeed, before the financial crisis, but I fear that the Government’s approach to Brexit will make them far worse. The fundamental problem is that the British economy is no longer delivering rising earnings for the majority of the population. We are in the longest period of wage stagnation for 150 years. I hugely welcome the high levels of employment, but many of the jobs are insecure and low paid, and child poverty is rising.

Britain has one of the most geographically unbalanced economies in Europe, with 40% of our economic output coming from London and the south-east. Indeed, those are the only two regions in the country that have seen their economies get back to pre-crisis levels. We are also one of the most unequal economies, not only in income inequality but in wealth inequality which, as the International Monetary Fund says, really matters, because more unequal countries have shorter and weaker periods of growth. For far too long, our economy has been plagued by short-termism, poor productivity and low levels of public and private investment. I am afraid nothing the Chancellor said today indicates that the Government understand the sheer scale of the problem or have a plan to reform our economy—to reform capitalism so that it works for the majority of people in every single part of the country.

That brings me to my final point about preparing the country for the future. We face big challenges alongside that of Brexit: deeper globalisation as emerging economies to the east and south increasingly compete on high-value products and services, not just on basic manufacturing; our ageing population and the implications for pensions, the NHS and social care; technological change, which is opening up huge opportunities for some but risks leaving behind those without the skills they need; and the continuing need to tackle climate change.

I am glad that the Chancellor announced measures to encourage more young people to take A-level maths, along with investment in artificial intelligence and driverless cars, but where was the plan to transform skills in this country? Where was the plan to invest in early years so that every child starts school ready to learn? When children from the poorest parts of my constituency start school 20 months behind where they should be, they play catch-up for the rest of their lives. Where was the plan to help the 5 million adults without basic skills who will never cope with the changes brought by technology and globalisation?

The Chancellor said that there will be £2.8 billion extra for the NHS over the next three years. That is pathetically inadequate! It is less than the £3 billion being spent on preparing for Brexit. There was nothing in the Budget for social care, to give older and disabled people and their families, who are desperately struggling to cope, the help and support that they need.

All that brings me back to Brexit. The single most important thing we learned from the Budget is that there will be slower growth every year for five years. That means there will be £65 billion less than we thought just a year ago to spend on transforming this country and the life chances of the people we represent. On any economic test, the forecasts are a disaster, and the Government have only themselves to blame.

[Several hon. Members rose—]

Leaving the EU: Financial Services

Liz Kendall Excerpts

Thursday 3rd November 2016 Commons Chamber

[Liz Kendall (Leicester West) (Lab)]

I beg to move,

That this House has considered the effect of the UK leaving the EU on financial and other professional services.

I start by thanking the Backbench Business Committee for granting this debate and for giving us time on the Floor of the House to discuss this important issue.

The UK’s financial and related professional services are critical to our economy. Together they account for almost 12% of GDP, employ more than 2 million people and contribute £66 billion a year in tax revenues. That is 11% of the total annual tax take, which is the largest contribution of any sector and essential for funding our public services.

While London benefits hugely from those sectors, two thirds of the jobs in financial and professional services are based outside Greater London. Some 160,000 people are employed in Scotland, with Edinburgh’s economy more reliant on financial services than any other UK city, including London. More than 54,000 people are employed in those sectors in Wales. Elsewhere, major employers include Citigroup in Belfast, Deutsche Bank in Birmingham, Aviva in Norwich, American Express in Brighton, and J.P. Morgan in Bournemouth. Overall, there are 22 towns and cities in the UK that each employs more than 10,000 people in financial and professional services, including Manchester, Leeds and Liverpool, Sheffield, Reading and Bristol, and Norwich, Portsmouth and Poole.

[James Berry (Kingston and Surbiton) (Con)]

Does the hon. Lady agree that keeping the financial services passport is vital for many people who work in the sector, not least a lot of my constituents, and that people in business would be the first to say that in financial negotiations it is not wise to give a running commentary?

[Liz Kendall]

I agree with the hon. Gentleman’s first point and I will come on to the issue of passporting later. I believe that businesses really want certainty, which is why it is right that hon. Members raise issues in the House.

In my own fabulous city of Leicester, almost 7,000 people are employed in financial and professional services, including by HSBC, Santander and Hastings Direct. Those people are not the extremely wealthy bankers or hedge fund managers that we often read about in the papers. They are ordinary people on modest wages who work in customer services, call centres and office administration, and who pay their taxes and spend their money in the local community.

[Sir Desmond Swayne (New Forest West) (Con)]

I do not want to diminish the importance of the financial sector, particular that which operates and needs to continue to operate in Europe, but overwhelmingly domestic financial services have no involvement with the continent at all. Their export potential is virtually nil, in the words of the Commission itself. To what extent does the impressive list of employees that the hon. Lady has given divide between those that are involved entirely in the domestic market and those that are involved in transactions overseas?

[Liz Kendall]

The businesses in my constituency and those that I have talked about so far are deeply concerned about losing their membership of the single market and their passporting rights. I care about those jobs and the contribution that those companies make to our economy. It is right for us to raise questions, and it would be wrong to suggest that leaving the European Union does not give rise to serious concerns.

[Mr Ben Bradshaw (Exeter) (Lab)]

Does my hon. Friend agree that today’s excellent ruling in the High Court gives the Government a chance to reflect on the invocation of article 50 and the impact that it is already having on the financial services employers to which she refers, particularly with regard to the uncertainty about our future membership of the single market?

[Liz Kendall]

My right hon. Friend is right. Many companies have been planning for months, even before the referendum, to try to mitigate the risks of Brexit. There is a mandate to leave the European Union, but there is no mandate about the terms. The Court’s decision today should allow this House to have its say, to raise the important issues and to hold the Government to account, and I hope that the Government listen.

[Joanna Cherry (Edinburgh South West) (SNP)]

In answer to the right hon. Member for New Forest West (Sir Desmond Swayne), does the hon. Lady agree that this is not just about passporting rights, but about the vital regulatory framework that the EU provides for the financial and banking sector?

[Liz Kendall]

I agree with the hon. and learned Lady, and I will come on to that point later in my speech.

As well as playing a crucial role in our domestic economy, the UK’s financial and professional services have an unrivalled reach and influence across the globe. The UK is the world’s leading exporter of financial services. We have the world’s fourth largest banking sector, third largest insurance industry, second largest fund management sector, and second largest legal services industry.

Many people believe that the British economy is too dependent on financial services and that, despite the significant number of jobs outside the City, that predominantly benefits London and the south-east. I agree. I have long argued that we need to rebalance our economy, develop a modern industrial strategy, and devolve power to our cities, towns and counties to boost jobs and growth in every region, in every part of the UK.

However, strong and effectively regulated financial services are crucial. They directly create jobs and growth, and support employment in related sectors such as legal and accountancy services. They are the bloodstream of the wider economy, pumping money through the country by lending to local businesses. They attract huge levels of inward investment, including about £100 billion over the past decade—more than any other sector—and they are crucial for our pensions and mortgages, and for funding the public services on which we all rely. That is why I am so grateful to the Backbench Business Committee for granting today’s debate, because the decision to leave the European Union has serious implications for the future of this vital sector.

Membership of the single market has brought huge benefits. In particular, it has entitled financial services to use the passport—the mechanism that gives companies the legal right to provide services across the EU, without having to obtain separate authorisation from other member states. Those passports are the foundation of the single market for financial services, and they are essential for investment banks and international insurance companies. Many are now deeply concerned about losing their passporting rights, but I am afraid that some leading hard-line Brexiteers have poured scorn on the idea that we need passporting at all and say that third-country equivalence will do.

Equivalence is when the European Commission recognises that a country’s rules and oversight of a specific area of business are as tough as its own. It is true that some countries outside the EU have been granted equivalence in some areas of financial services, but the Commission is under no obligation to grant it. It can also take years to negotiate, be time-limited, and withdrawn at short notice, and it does not cover areas that are crucial for UK financial services, such as insurance, bank lending and bank deposits.

The new Under-Secretary of State for International Trade and envoy for financial services—I am disappointed that he is not here today—admitted the problems with equivalence in his recent interview with Bloomberg. He said that the UK will probably lose its current legal rights to provide services in the EU after Brexit, and that equivalence will not be “good enough”. He told Bloomberg that the Government want a better version of equivalence, but that in return we may have to accept future EU regulations handed down from Brussels. The problem with that is that we will not have a seat at the table when the EU decides how to regulate our financial services. We will therefore lose our ability to influence regulatory decisions for the better.

The risks of losing our membership of the single market and our passporting rights for financial services are clear. While passporting is permanent, equivalence is precarious. The UK will move from being a rule maker to being a rule taker, and that is not what our financial and professional services want. Although they may hope for the best, they must plan for the worst, and they cannot wait until the last minute to find out what deal they might eventually get. That would not be right for their business, their employees or their customers, who expect them to take action to mitigate any potential risks now. It takes three to five years to move operations to a different country. That is why most international banks, many asset fund managers and other financial services are now working out which operations they might need to move to ensure that they can continue to service their customers, how best to do it, and by when they should do it. The chief executive of Morgan Stanley has said:

“It really isn’t terribly complicated. If we are outside the EU and we don’t have what would be a stable and long-term commitment to access the single market then a lot of the things we do today in London, we’d have to do inside the EU 27”.

Other countries have not been slow to try to exploit the uncertainty. France and Spain have already launched campaigns to lure companies to Paris and Madrid after Brexit. The more likely risk is that some jobs will move to Dublin, Luxembourg or Frankfurt, and even more will move to New York or Asia, unless the Government get their strategy right.

The impact of losing passporting rights and the risks of relying on so-called equivalence are not the only major worries for our financial services. They are also deeply concerned about the Government’s plans for freedom of movement.

[Mr Chuka Umunna (Streatham) (Lab)]

I congratulate my hon. Friends the Members for Leicester West (Liz Kendall) and for Nottingham East (Chris Leslie) on instigating this excellent debate. Of course, people want financial services to make a bigger contribution to the Exchequer, but they already make a massive contribution, which is why it is right to have this debate.

In respect of the point that my hon. Friend the Member for Leicester West just made about the benefits and other issues beyond passporting, the desire of other EU member states to take part of the City’s market is illustrated by the fact that we have already had a tussle with the European Union over the City’s role as the clearing house for euro-denominated transactions. That has already been the subject of court action. If we leave the single market, it will not simply be a question of access; the likelihood of our losing the ability to be the clearing house for euro-denominated transactions is only likely to increase.

[Liz Kendall]

My hon. Friend puts that point extremely well. There are a huge number of risks on the issue he raised as well as on access to services, but the Government have so far had virtually nothing to say. Businesses cannot wait to get that certainty. Their regulators, their boards, their customers and their clients want to know what will happen. This will have a huge knock-on effect on the rest of the economy.

[Stephen Timms (East Ham) (Lab)]

My hon. Friend is making a very important case. If the Government get this wrong and we lose substantial financial services business, is not the likelihood that that business will go to New York? New York has the capacity to take it on and already has the equivalence agreement in place.

[Liz Kendall]

I cannot read the minds of those in charge of the many companies that are considering those options, but my right hon. Friend is probably right to say that there may be a greater likelihood that New York will benefit, although I think some jobs will move to the EU, too.

Financial services greatly rely on employing people from across Europe and the rest of the world. Many people in the sector were dismayed and, quite frankly, appalled by speeches made during the Conservative party conference. They do not care about where people come from; they care about what people can contribute. They understand that the success of their business depends on getting people with the right skills in the right place at the right time. They know that we cannot somehow separate freedom of movement from what is best for businesses and the wider economy, because the two are inextricably linked. Companies in the sector are clear: if they lose their ability to get the best person for the job, when and where they need that person, they will simply take their work elsewhere.

Even worse, young people just starting out in their careers, such as the 700 apprentices that HSBC takes on each year, may no longer have the chances that they currently do to travel and develop their skills. Brexit risks placing an unnecessary limit on our young people’s ambitions and opportunities.

[Mr Alistair Carmichael (Orkney and Shetland) (LD)]

The hon. Lady makes an important point. Is she aware of the particular importance of freedom of movement to the so-called Fintech sector? In the region of 30% of chief financial officers and chief executive officers in one of the major expanding areas of our financial services sector come from countries in other parts of the EU. Does that not illustrate what is at stake?

[Liz Kendall]

It absolutely does. The right hon. Gentleman raises an extremely important point. This growing and developing sector is driven by skilled people from across the globe, and we do not want to miss out on those possibilities.

[Norman Lamb (North Norfolk) (LD)]

The hon. Lady referred to the rhetoric at the Conservative party conference. Does she agree that such rhetoric causes a reaction, and that the reaction across Europe was wholly negative? That makes the politics all the more difficult as we try to secure a good deal for this country.

[Liz Kendall]

The right hon. Gentleman is absolutely right. It was a huge strategic mistake for the Prime Minister and the Home Secretary to say what they did at the Conservative party conference. That has not helped us to work better with our EU allies, with whom we need to get a deal. It has made people across the world think that Britain no longer wants people to come here to live and work. It has put off many people who already work in this country and are now thinking about going home.

Businesses in all parts of our economy want certainty, above all. There are things that the Government could be doing to give businesses greater certainty during the inevitably complex, difficult and lengthy process of leaving the EU, and I shall conclude by outlining three of them for the Minister. First, Ministers should set out the broad framework and priorities for their negotiations. Is the objective to secure for financial services their existing rights to trade in the single market; or have Ministers already accepted the loss of passporting rights, as the Trade Minister said in his Bloomberg interview, and do they seek instead to secure a different or hybrid version of passporting or equivalence? What are their objectives on freedom of movement for people working in financial and related professional services? Is this a priority area for the Government in reducing the number of people coming into this country? Do the Government seek to set quotas in this sector, require people to have visas, or both?

Secondly, the Government must commit to a transitional agreement—this has been raised time and again by those who work in financial services—to ensure that there is no cliff edge at the end of the article 50 process. It took four years to reach an equivalence deal on one small aspect of commodity futures dealing with the United States, so it will be impossible to agree a deal covering all the many complex areas of the UK’s financial services industry with the remaining 27 EU countries within two years. Without transitional arrangements, companies may have their passporting rights suddenly removed with nothing put in their place, which would create legal doubt for huge parts of their business. A transitional agreement is therefore essential, and it must come soon. We need at least a joint statement of intent from the UK and the EU before article 50 is triggered to give financial services the certainty they need. That should happen before politicians in France and Germany inevitably start focusing on their own elections next year.

Finally, the Government must make it a priority that they ensure that the remaining EU countries understand the benefits of maintaining an integrated market in financial services. Some £1.1 trillion has been lent to businesses in the remaining 27 countries by banks based in the UK. Putting up barriers to trade would be a self-inflicted wound that would make us all worse off—not just in the UK, but in mainland Europe.

One of the most important complaints I have heard during the past seven years is that nurses and teachers did not cause the financial crisis. That is true, but it was also not the fault of the call centre worker in a big insurance company or the bank teller in the local building society. Plenty of British people do a decent job working in our financial services, and they could be on the front line when it comes to Brexit. The Government must provide more clarity about their plans so that businesses can plan for the future, and so that we protect jobs and growth, and get the best possible deal for Britain.

[Several hon. Members rose—]

--- Later in debate ---

[Liz Kendall]

Once again, I thank the Backbench Business Committee for granting this debate. We heard many excellent contributions. I am only sorry that we did not have more time and that some Members could not speak for as long as they wanted to.

I do not think we learned any more from the Minister’s comments than we knew before the debate—[Interruption.] My hon. Friend the Member for Nottingham East (Chris Leslie) says that the Minister may regard that as a triumph. I am glad the Minister said that passporting is important, but he did not say that the Government would set out the broad framework and their objectives for the Brexit negotiations. He did not say that it was a priority to get the same access as we currently have to the single market for financial services, and he did not commit to a transitional agreement, let alone such an agreement any time soon. That is a huge mistake. If we want to protect this vital industry as well as jobs and growth, the Government need to act now, because businesses cannot wait. They have to plan for the future. Their customers, their regulators and their boards demand it. I ask the Minister to think again.

Question put and agreed to.

Resolved,

That this House has considered the effect of the UK leaving the EU on financial and other professional services.

[Joanna Cherry]

On a point of order, Madam Deputy Speaker. It is 49 years today since my colleague Mrs Winifred Ewing won the Hamilton by-election and came to this House as a solitary Scottish National party MP, and of course that means 49 years of SNP representation in this House, although we are rather more than one now. How would it be appropriate for me to mark this illustrious occasion in the history of my party and have it entered in the record?

Comprehensive Spending Review

Liz Kendall Excerpts

Thursday 28th October 2010 Commons Chamber

[Liz Kendall (Leicester West) (Lab)]

I shall address two issues: first, whether the Government have kept their commitment to protect the NHS budget, and secondly, how their proposed reforms will affect the NHS’s ability to live within its budget in the next four years.

Before the election, the Government promised that the NHS budget would increase in real terms over the spending review period, and last week the Chancellor announced the headline figure that the NHS will receive 0.1% more than inflation in each of the next four years. That is the lowest four-year increase for the NHS since 1951 to 1956.

The Chancellor also announced that £1 billion from the NHS budget will be transferred to local councils to spend on social care. Social care services play a vital role in improving health and reducing NHS costs, for example by helping older people to stay mobile and independent in their own homes. However, the £1 billion going to local councils is not ring-fenced, so there is no guarantee that it will be spent on social care, especially when councils face a 28% cut in their budgets over the next four years. The spending review removed a further £5.5 billion from the NHS by taking its underspend. The NHS has accumulated £1.8 billion of capital underspend and £3.7 billion of revenue underspend—money that it would normally be allowed to keep to reinvest in patient care or to help deal with future overspends. But the spending review abolished the year-end flexibility for the first time.

Far from the Government protecting the NHS budget, the fine print of the Green Book shows that they will reduce the NHS’s budget by 0.5% during the spending review period. These cuts come after a period of significant increases in NHS funding, from some 6.6% of GDP in 1997 to 8.7% in 2009-10. While those increases are substantial, NHS spending as a proportion of GDP remains below the OECD average, and pressures on the NHS budget will increase because of our ageing population, new technologies and rising expectations. Meeting those challenges while continuing to provide universal health care free at the point of use means that the NHS will need to make big improvements in productivity over the next four years. The chief executive of the NHS has said that that will be the equivalent of £20 billion of savings or some 5% of the NHS’s budget in each of the next four years. The NHS has never achieved that, under any Government.

The question for coalition Members is whether the proposed reforms to the NHS will help or hinder in making those substantial productivity and efficiency savings. The Government are about to embark on major structural change to the NHS, despite promising before the election that there would be no more top-down reorganisations in the NHS. GPs will be given responsibility for commissioning £80 billion of NHS services, and PCTs and strategic health authorities will be abolished. Even when major reorganisations are well organised, they usually mean that health services stand still for a period, rather than progress. If structural change is poorly managed, patient care and finances suffer.

I fully support involving clinicians more in decisions about how services are shaped, but changes such as GP fundholding took time and significant management support to develop. The scale and pace of change that the Government are pressing ahead with pose significant risks. Major structural reforms are not cost-free, and the King’s Fund estimates that these reforms will cost £3 billion over the next four years. Many patient groups and professional organisations are rightly worried that having yet another major structural reorganisation, when the NHS faces the biggest financial challenge of its life, will not be good for patient care or for finances. I ask the Government to think again.

Savings Accounts and Health in Pregnancy Grant Bill

Liz Kendall Excerpts

Tuesday 26th October 2010 Commons Chamber

[Mr Hoban]

My hon. Friend makes an important point. The Government have had to go through this challenging spending process with care, examining both spending and welfare decisions. We have had to take decisions that are not straightforward, not easy and not ones that we would have wanted to take, but we have had to do so because of the financial problem that we inherited from our predecessors.

Let me give another example of targeted support that is available, because the hon. Member for Washington and Sunderland West (Mrs Hodgson) talked about means-tested grants. I am sure that she will be aware of the Healthy Start scheme, which is a statutory scheme providing a nutritional safety net and encouragement for breastfeeding and healthy eating to more than 500,000 pregnant women and to children under the age of four in low-income and disadvantaged families across the UK. The scheme is tied carefully because, unlike the health in pregnancy grant, it provides vouchers for people to put towards the cost of milk, fresh fruit and vegetables, and infant formula milk at 30,000 retail outlets. So measures are in place to support the groups that she is most concerned about, and it is right that that is so. The health in pregnancy grant is unfocused and untargeted.

[Liz Kendall (Leicester West) (Lab)]

The Healthy Start scheme is a good, targeted one, but will the Minister admit that the Government are also restricting the Sure Start maternity grant, abolishing the baby element of the tax credit and not going ahead with the toddler tax credit? Pregnancy and the first year of life is vital for a child’s development; if we can give children the best start in life, it saves us all in the long run. So will he reconsider his abolition of these schemes?

Comprehensive Spending Review

Liz Kendall Excerpts

Wednesday 20th October 2010 Commons Chamber

[Mr Osborne]

I agree with my hon. Friend.

[Liz Kendall (Leicester West) (Lab)]

Cutting funds for local councils by 28.4% over four years will decimate services in Leicester West, and allowing councils to borrow against business rates will further widen inequalities, as areas with more private businesses can borrow more to improve services. Can the Chancellor explain to me, and to my constituents, how that is fair?

[Mr Osborne]

I am sorry that the hon. Lady is opposed to more freedom for local government—[Interruption.] Well, that is what my increment financing proposal means. Along with our other decisions about grants, it means more freedom for local government. As I have said, this is a challenging settlement for local government. [Interruption.] Let me repeat that the Labour party created the budget deficit, and if the Labour party does not have a plan, it is in no position to criticise those who are trying to sort out this mess.

Proposed Public Expenditure Cuts

Liz Kendall Excerpts

Monday 13th September 2010 Commons Chamber

[Mr Osborne]

My hon. Friend is absolutely right. The Labour party has opposed the £13 billion VAT increase, even though we now know that the shadow Chancellor, Tony Blair and Peter Mandelson all supported that increase; and it has opposed some of the other measures to which my hon. Friend refers. There is a difference when it comes to the NHS: I believe it is the official policy of the Labour party that the NHS should not be protected from cuts and should not have a real increase in funding. I happen to disagree with that policy, and we will see what the public think about it.

[Liz Kendall (Leicester West) (Lab)]

The Chair of the Treasury Committee asked the Chancellor to publish new details of the distributional impact of the Budget, including the proposed cuts to housing benefit and disability living allowance. Is the Chancellor aware that the Institute for Fiscal Studies produced such an analysis last month? Is he aware that it says that

“the overall effect of the new reforms announced in the June 2010 Budget is regressive, whereas the tax and benefit reforms announced by the previous Government” —

for the same period—

“are progressive”?

In the light of that evidence, will he explain whether he still claims that his Budget and his Government are progressive?

[Mr Speaker]

Order. There were three questions there, but one answer will suffice.

Capital Gains Tax (Rates)

Liz Kendall Excerpts

Wednesday 23rd June 2010 Commons Chamber

[Vince Cable]

The Government did look at the possibility of raising capital gains tax further. They did serious analysis and the conclusion was that it would not raise any more revenue. That was the problem. It certainly would not have raised anything remotely like £10 billion. That is why we cannot evade this issue.

Let me turn to the central concern about value added tax, which is expressed on both sides of the House: the worry about regressiveness. I checked back on what independent analysts were saying about value added tax and its income distribution effects. It is worth looking at the work of the Institute for Fiscal Studies, which has conducted a distributional analysis based on expenditure. It came to the conclusion—this is its word, not mine—that value added tax was fairly “progressive” because of the exemptions that are given for zero rating, as food, children’s clothing and other essentials are key items in the expenditure patterns of poorer people. [Interruption.] The top 10% of the population pay three times as much in value added tax as the bottom 10%. [Interruption.]

Opposition Members are expressing righteous indignation about what they regard as regressive measures. Let me tell them which is the most regressive tax: it is council tax. Do they remember what happened to council tax under the Labour Government? On average, it went up 70%. Taking into account rebates, for the poorest 10% of the population it rose by 93%. It is the most regressive tax of all, yet they lecture us in this sanctimonious way about regressive taxation. They have no basis for doing that.

Finally, let me turn to the crucial issue of growth, which the shadow Chancellor raised. He is right that growth does not happen automatically; of course it does not. How do we proceed from the austerity that has to happen—from cuts in public spending—to growth in business investment and net exports, which we want to see? That is a genuinely important question, to which there are no simple answers. The perfectly fair point has been made that there are risks involved here, just as there are risks, which we judge to be bigger, in doing nothing, so let me try to answer this question seriously. If we are going to get growth, it will come partly through demand and partly through supply. How do we sustain demand? Essentially, we do so through monetary policy. That is what happened under the last Government. The reason why the economy kept on going through the recession was not Government fiscal stimulus. That was trivial, and it has now been withdrawn anyway. It was not for that reason; it was because we had very low interest rates, the expansion of money through quantitative easing and, of course, a big devaluation.

Those factors drove the economy in terms of demand and they will continue to do so. There is a reason for believing that that is what will happen: the Governor of the Bank of England called for this Budget and has now got it, and he has every reason to understand the need for monetary policy to support recovery.

[Liz Kendall (Leicester West) (Lab)]

Will the right hon. Gentleman give way?

[Vince Cable]

Is it on that point?

[Liz Kendall]

Yes.

[Vince Cable]

Okay.

[Liz Kendall]

The right hon. Gentleman says that the Budget will increase growth, but the Office for Budget Responsibility says in the Red Book, at paragraph C.18, that

“economic activity is weaker than in the pre-Budget forecast…this reflects Budget measures which restrain government spending and real household disposable income, holding back consumer demand.”

Does he agree with the OBR or does he now admit that the Budget will not increase growth?

[Vince Cable]

That was not on the point I was speaking about. I know that the hon. Lady is a new Member, but I am sorry that she felt the need to read out her question in the way that she did. Nevertheless, there is a very simple answer on page 94 of the Red Book. It is a technical point made by Sir Colin Budd, who drew up this part. These issues are not comparable. Had the Labour plans been implemented, interest rates would have been higher than they now are, which would have dragged down the rate of growth and pushed up the level of unemployment beyond what it is. That is the distinction he makes. He also refers to the fact that there is a basic confusion. I noticed that the Chancellor did not repeat the point in his speech, but it was raised yesterday. That explains the hon. Lady’s genuine misunderstanding.

In addition to issues about how to stimulate demand, there is an issue about how to get business investment moving—how to get supply, and an understanding of the supply side of the economy. A lot of the Budget’s stronger points were about that issue. The Budget was about creating a tax environment within which business is confident to invest. It is about doing the things that my Department is now starting to do in conjunction with the Cabinet Office, such as looking at the 20,000-plus additional regulations that were built in by the last Government and which are shackling small business. It is about addressing the issue of bank credit that was lamentably neglected by our predecessors, and investing in things like apprenticeships, which we have started to do even within our few weeks in office.