Oral Answers to Questions

Philip Davies Excerpts

Tuesday 7th June 2016 Commons Chamber

[Damian Hinds]

Different countries will have different interests, and no doubt they would come to the surface during the two years of the article 50 negotiations. A very large majority of other countries using enhanced qualified majority voting would be needed to agree a deal. Fundamentally, however, I do not think that this is about the deficit that one country has with the EU, or vice versa; I think that it is about the relative size of the export market to that country. While 44% of our exports go to the EU, the EU figure is 8% in the other direction, which means that in any negotiation, the other side will have the better hand.

[Philip Davies (Shipley) (Con)]

Can the Minister explain why we are paying more than £10 billion net this year for a £68 billion trade deficit with a declining part of the world’s economy, when anyone with even an ounce of common sense knows that it is possible to have a £68 billion trade deficit with a declining part of the world’s economy for nothing?

[Damian Hinds]

I think that I detected a revised figure in my hon. Friend’s assessment of our net contribution to the European Union. The fact is that for every pound that is paid in tax in this country, a little over a penny goes to the European Union. That is a cost—it is not a trivial cost, and I do not belittle it—but what comes with it are the trade benefits, the enhancement of our economy and the protection of jobs and investment that we want to see.

UK Economy: Post-Referendum Assessment

Philip Davies Excerpts

Monday 23rd May 2016 Commons Chamber

[Mr Gauke]

The hon. Gentleman raises an important point. The increase in unemployment would affect every region of the UK, and the north-east of England would not be immune to that. Indeed, as an important exporting region, it might be particularly vulnerable. The Treasury assessment suggests that there would be something like 20,000 more unemployed people in the north-east of England as a consequence of leaving the EU.

[Philip Davies (Shipley) (Con)]

When the Chancellor set up the Office for Budget Responsibility, he said that

“the public and the markets have completely lost confidence in government economic forecasts.”

He went on to say:

“Again and again, the temptation to fiddle the figures, to nudge up a growth forecast here or reduce a borrowing number there to make the numbers add up has proved too great… But I am the first Chancellor to remove the temptation to fiddle the figures by giving up control over the economic and fiscal forecast.”

Why does the Minister now disagree with the Chancellor, and why does the Chancellor now disagree with himself?

[Mr Gauke]

The remit of the Office for Budget Responsibility is set out in legislation, and it can set out forecasts only in accordance with Government policy. Today’s report, however, as I said earlier, has been signed off by Sir Charles Bean, who said that

“this comprehensive analysis by HM Treasury, which employs best-practice techniques, provides reasonable estimates of the likely size of the short-term impact of a vote to leave on the UK economy.”

We have third parties endorsing the analysis, having worked through the details.

Budget Changes

Philip Davies Excerpts

Monday 21st March 2016 Commons Chamber

[Mr Gauke]

No, it is not. Local authorities will be compensated.

[Philip Davies (Shipley) (Con)]

I very much support the Chancellor in wanting to live within our means and trying to balance the budget as quickly as possible. In my normal spirit of helpfulness, may I suggest that the problem is that too many Government Departments’ budgets are ring-fenced, meaning that the other Departments face cuts year after year? Is it not time to end the ludicrous ring-fencing of the international aid budget?

[Mr Gauke]

As always, I appreciate my hon. Friend’s spirit of helpfulness but I am afraid that I do not agree with him. It was a manifesto commitment by our party that we would fulfil the 0.7% target.

EU Referendum: Timing

Philip Davies Excerpts

Tuesday 9th February 2016 Commons Chamber

[Mr Dodds]

Again, that illustrates the point. The hon. Lady and I may have different views on EU membership and so on, but we agree on the need for a full and comprehensive debate that is not caught up in the election campaigns for the devolved Administrations. I will discuss that in more detail shortly. .

[Philip Davies (Shipley) (Con)]

I commend the right hon. Gentleman and his party for the work that they have done to campaign for an EU referendum for many years, long before it was fashionable. Has he also taken into consideration the fact that there is a European Council meeting scheduled for 23 June—apparently, the Government’s favoured date for the EU referendum? Does he think it appropriate for a European Council meeting—and who knows what reports might come out from that meeting on the day—to be held on the same day as the EU referendum?

[Mr Dodds]

The hon. Gentleman, as always, makes an interesting point, which will no doubt have been listened to with great interest by his ministerial colleagues. It is a very valid point indeed.

--- Later in debate ---

[John Penrose]

I am coming to that, but I think it would be, at the very least, disrespectful to the principle behind the European Union Referendum Act 2015, which requires the date of the referendum to be set through a debate in the House on a statutory instrument, under the affirmative resolution procedure, in due course. When that point comes, there will be plenty of opportunities to debate the issue. I think that it would be premature to start ruling too many dates in or out, although I will be specifying the dates that we have already ruled out.

[Philip Davies]

Will my hon. Friend give way?

[John Penrose]

I will, but then I really must make some progress.

[Philip Davies]

I am grateful to my hon. Friend for giving way so early in his speech. I realise that we are not talking about a specific date proposed by the Government, but about the principle of opting for certain dates. Will my hon. Friend comment on the appropriateness of holding the referendum on the same date as a European Council meeting?

Small Businesses: Tax Reporting

Philip Davies Excerpts

Monday 25th January 2016 Westminster Hall

[Bill Esterson (Sefton Central) (Lab)]

Like the hon. Gentleman, I and, more importantly, my constituents would be fascinated to learn how increasing the rate of reporting to quarterly—whether that involves a full report or an update—reduces the amount of administration faced by businesses. That is a crucial point. Did he hear the estimates at the time of the Chancellor’s announcement that HMRC would collect an additional £600 million as a result of the policy? Is the purpose of the change really to increase tax returns from small businesses? Deals such as that with Google, which was the subject of today’s urgent question, have caused great unease and real anger not just in my constituency, but right across the country.

[Philip Davies (in the Chair)]

Order. Before Mr Kerevan resumes his speech, may I say that interventions should be somewhat shorter than they have been?

[George Kerevan]

I am happy to reinforce the hon. Gentleman’s point. Indeed, various Treasury papers suggest that the shift towards a paperless tax system will increase receipts by about £600 million. That is not a bad thing, and no one would oppose it if it happened, but the issue is that the Minister and HMRC are rushing to judgment in introducing the proposed system. They think that moves to put it in place will be so advanced by 2020 that they will be able to start instructing small businesses to update quarterly.

Buried in the small print of last November’s Treasury press notice is a suggestion as to one of the advantages that will come from the proposal:

“HMRC expects the number of calls”

to its various call centres

“to reduce from 38 million in 2015-16”

to a mere 15 million by 2020. Magically, as a result of the electronic vision being presented to us, about 23 million phone calls will no longer be made to HMRC. Does anyone here, the Minister included, actually believe those numbers?

In the run-up to introducing a new system, the likelihood is that things will go wrong. If we are lucky, we might make something like the proposed saving in calls 10 years from now, but I doubt that that will happen between now and 2020. I have great respect for the Minister, but I would like to hear him swear on his heart that he actually thinks we will deliver 23 million fewer calls.

Oral Answers to Questions

Philip Davies Excerpts

Tuesday 19th January 2016 Commons Chamber

[Mr Gauke]

I too welcome the new jobs being created in and near the hon. Lady’s constituency by Jaguar Land Rover. Indeed, my right hon. Friend the Chancellor visited that site recently. On our relationship with the European Union, the Government’s position is very clear: we want the benefits of access to the single market, but there are aspects of our relationship with the EU that can be improved. That is what we are seeking to do in our renegotiation.

[Philip Davies (Shipley) (Con)]

Given that we had a £62 billion trade deficit with the European Union last year, and given that if we left the EU the UK would be the EU’s single biggest export market, does the Minister think we could have a free trade agreement with the EU from outside it, without handing over £19 billion a year in membership fees?

[Mr Gauke]

I am sure that will be one of the issues discussed at length during the referendum debate. The point is that under this Government the British people will have an opportunity to express their views on where our future lies.

European Union Referendum Bill

Philip Davies Excerpts

Tuesday 8th December 2015 Commons Chamber

[Mrs Main]

The majority of Members in this House do not support extending the franchise, as has been shown in numerous votes. As my hon. Friend the Minister has said, if every 16, 17 and 18-year-old is allowed to do one thing, there is no obvious logical extension that allows them to do something else. We accept that some bizarre rules apply. On voting, however, many of us believe that it is a step too far to extend the franchise to 16 and 17-year-olds while at the same time exempting them from other things. I have not heard an SNP Member arguing for 16-year-olds to be Members of Parliament. For me, that is the logical extension of extending the voting franchise to them. I do not believe that a 16-year-old would have the experience, life skills or maturity to represent a constituency.

[Philip Davies (Shipley) (Con)]

On the matter of logic, does my hon. Friend agree that many of the Opposition Members who are arguing for this change are the same people who only a few years ago increased the smoking age from 16 to 18? If they think that 16-year-olds are not capable of making a decision as simple as whether or not to smoke, how on earth can they think that they are capable or mature enough to make a decision on the EU referendum or on how to vote in a general election?

[Mrs Main]

My hon. Friend makes a key point. Indeed, I wrote that exact thing in the notes I made before the debate.

Many of us accept that there are anomalies. The right hon. Member for Wolverhampton South East said that this is a once-in-a-generation vote. I have never voted on it, so I accept that: as someone in her late 50s, my time has come and I am looking forward to voting in the EU referendum. However, if the logic of the argument is to be based on this being a once-in-a-generation vote, what about 15 and 14-year-olds? Where do we stop? This House has accepted that there must be an age limit for voting in UK parliamentary elections. That age is 18, and therefore those young people below that age will live with the consequences.

Oral Answers to Questions

Philip Davies Excerpts

Tuesday 1st December 2015 Commons Chamber

[Mr Osborne]

We should all be proud of the fact that in this country jobs are being created and the economy is growing yet our carbon emissions fell by 8% in the past year. We are doubling our investment in renewable energy and at the same time putting investment into things such as low-carbon nuclear power and small modular reactors, which will be of real benefit to South Yorkshire and the north-west of England. My broader point is that we do not believe that the way to help save the Earth is by piling costs on people’s electricity bills, so we have also taken action to ensure that our home efficiency scheme is more efficient, so people’s household energy bills will go down by £30 as well.

[Philip Davies (Shipley) (Con)]

2. What estimate his Department made of the potential cost to the public purse of a HM Revenue and Customs regional hub being based at (a) Leeds and (b) Bradford.

[The Financial Secretary to the Treasury (Mr David Gauke)]

HMRC announced the planned locations of its future regional centres based on a number of key principles that will enable it to deliver more for less. In addition to cost, HMRC has taken account of the quality of local transport links, the local labour market and future workforce supply and the need to retain the staff and skills it needs to continue its transformation. The changes will reduce HMRC’s estates costs by around £100 million a year by 2025.

[Philip Davies]

Does the Minister accept that basing the HMRC regional hub in Bradford would be cheaper for the taxpayer, that there is a suitable location available in Bradford but not in Leeds, and that an effective northern powerhouse does not mean basing everything in West Yorkshire, in Leeds? Will he think again about that matter?

[Mr Gauke]

My hon. Friend is, as ever, a doughty advocate for the interests of his constituents. The point I would make to him is that this is a regional centre for the whole of the Yorkshire and Humber area. To retain as many members of staff as possible and reduce redundancy costs, HMRC’s assessment is that Leeds is a better location for those working in York, Sheffield and Hull from where there is a direct train service to Leeds.

HMRC Office Closures

Philip Davies Excerpts

Tuesday 24th November 2015 Commons Chamber

[Mr Gauke]

Yes, I think I can provide that reassurance to my right hon. Friend. An organisation that can make better use of technology and improve the way it works will find that there are some activities that it currently performs for which it requires large numbers of staff, but that it will not necessarily need those staff members in future. There are, however, a number of things that HMRC does that will mean that it requires those staff members. HMRC will become a more highly skilled organisation. It will need highly talented people to be able to ensure that we get the money in. My right hon. Friend provides a good example. There may be people currently working in, for example, Chelmsford who have skills that HMRC needs. They will be able to work in Stratford. I can point to other examples of similar circumstances throughout the United Kingdom.

[Philip Davies (Shipley) (Con)]

I do not disagree with the overall picture that my hon. Friend paints, but the decision to base the regional hub for Yorkshire in Leeds rather than in Bradford is crass. If it can be shown that locating the regional hub in the Bradford district will be cheaper for the taxpayer and offer better value for money, and that the calibre of the staff could be accommodated in and attracted to that base, will my hon. Friend give a commitment to revisit this decision and look at what the Bradford district can offer?

[Mr Gauke]

I welcome the fact that my hon. Friend supports the view that we should move to a smaller number of regional centres. I am conscious that there are different views on locating the hub in Leeds and Bradford. HMRC’s analysis is based on the fact that it has large numbers of staff who live and work in, for example, York, Harrogate or Sheffield. Returning to the point made by my right hon. Friend the Member for Chelmsford (Sir Simon Burns), if those people are to be redeployed, it is substantially easier for them to go to Leeds, because there is a direct train service to Leeds, than it would be for them to go to Bradford, for which they would have to travel into Leeds and change, and their commute could then be beyond what would constitute reasonable daily travel. In fact, I should have said Hull rather than Harrogate, but there are similar points as regards staff living in Harrogate, and in Doncaster, in that it is easier to get to Leeds than to Bradford. As always, I am more than happy to listen to the arguments made by my hon. Friend the Member for Shipley (Philip Davies), and by others. Indeed, I am to have a meeting with Bradford MPs over the course of the next week or two to hear the arguments that they wish to put.

--- Later in debate ---

[Philip Davies (Shipley) (Con)]

I am in a difficult position, because I did not agree with much of what the hon. Member for Livingston (Hannah Bardell) had to say in respect of her overall analysis of the situation. I tend to agree with the Minister’s view: it is preferable to save jobs rather than save buildings, if the choice comes down to that. However, I think the way in which HMRC has gone about this has been rather cack-handed, so I do not feel able to support the Government either. I shall have to reflect further before the Division at 7 o’clock.

I want to focus on the decision in West Yorkshire. In Shipley, a tax office employing 924 staff is due to close. In Bradford there are two further offices, one with 358 employees and the other with 632. HMRC currently employs a total of 2,300 people in the Bradford district. To close down all the offices in Bradford and locate a regional hub in Leeds makes absolutely no sense.

The Minister will say that of course everyone is going to be a nimby and argue for their own areas but he must look at the bigger picture, and I accept all that. I would not decry any of it. My starting point is this: what produces the best value for money for the taxpayer in the United Kingdom? That should be at the forefront of what the Government are trying to do, but what they are actually doing, in a rather bizarre way, is locating a regional hub in a place that will be more expensive for the taxpayer than a very feasible alternative. If this is all about value for money for the taxpayer, why on earth should the Government make that decision? They should be making decisions based on what will be cheapest for the taxpayer.

Let me explain to the Minister why it would be more sensible to base a regional hub in Bradford rather than Leeds, and draw his attention to the flaws in the Government’s decision. Accommodation costs in Bradford are at least 20% lower than those in Leeds. That, too, would be a considerable saving for the taxpayer, and I do not think the Minister should turn his nose up at it. Most of the staff who will be moved would commute over shorter distances, because so many existing workers are from the Bradford district, and it would be much better for most of the staff to stay there.

The Minister may or may not wish to confirm this, but the decision seems to have been made on the basis that the only way to recruit top-quality staff, or staff with a certain ability, is to locate the offices in Leeds rather than Bradford. Not only is that insulting to Bradford, but it is based on no facts whatsoever. It is complete and utter bunkum. Saltaire, in my constituency, contains one of the most technologically advanced businesses in the country, Pace International. It is the biggest provider of set-top boxes in the world, and it does not seem to have experienced any problems recruiting high-level and high-quality staff to the Bradford district. If HMRC’s argument made any sense, the Minister would be saying that companies like that could never locate in the Bradford district, and that they would have to go to Leeds to acquire staff of the necessary calibre. HMRC’s thinking has been flawed from the start.

If that has not persuaded the Minister, I suggest that he visit any of the stations on the Airedale line in the morning, and then visit Leeds station during the rush hour. If he does so, he will find legions and legions of people—thousands and thousands—who live in Airedale, in the Bradford district, and who would presumably prefer to work there but are making the journey into Leeds to their jobs. They are already attracted to the Bradford district. They are already living there. If the Minister and HMRC’s argument made any sense, they would all be living in Leeds. If that were the place to be, they would not be living in Bradford. Bradford is a place where many people choose and prefer to live, and it is ridiculous of HMRC to argue that the only way to attract quality staff is to base an office in Leeds.

It seems to me that this is all about what is in the best interests of the London-based HMRC staff. I am delighted that the hon. Members for Bradford East (Imran Hussain) and for Bradford South (Judith Cummins) are present. We will all work together, and I hope that the Minister will listen to the arguments and change his mind.

--- Later in debate ---

[Ian C. Lucas (Wrexham) (Lab)]

I say to the Minister that this was an absolutely appalling announcement. It was appalling in the way it was done. I was sitting in a conference at 2.14 pm—I thank my hon. Friend the Member for Bootle (Peter Dowd) for reminding me of the time—with two Tory Ministers talking to us in north Wales about rebalancing the economy when I received a missive, not from a Minister or the Government but from a civil servant telling me that 350 people in my constituency in Wrexham would be made redundant or transferred from north Wales to Liverpool, where they would be in hot competition with individuals from Bootle trying to find jobs. I was told by email what the Conservative Government think of north Wales.

Never has there been a sharper contrast between rhetoric and reality. This Government supposedly talk about rebalancing the economy. Other colleagues in the Chamber have made the point that the sites identified and set out in the letter that was sent to us do not yet exist. This was an ideal opportunity for the Government to take a sensible approach to rebalancing the economy with taxpayers’ money, by shifting jobs out of areas that are economically successful and expensive, such as London or Cardiff, to other areas, such as north Wales. In Wrexham there are places available to house highly skilled workers providing a first class service in a new online age. The House need not take my word for it. We have in Wrexham high quality service companies such as Moneypenny, which provides virtual office services, and DTCC Avox, which provides company search facilities not just within the UK, but right across the world. They are expanding and bringing jobs to Wrexham in order to be more competitive.

This Government do not know their backside from their elbow. They do not recognise that already we have 350 highly skilled people in Wrexham who are doing an excellent job. In addition, we have people in the local economy who have been identified by the private sector as being particularly skilled at providing exactly the services that this Government or any Government need to bring in more money to eliminate the deficit that the Minister told us in 2010 would be gone by today but is still there because of the economic incompetence of the Tory party.

[Philip Davies]

The hon. Gentleman made the point, as did the hon. Member for Bootle (Peter Dowd), that the sites were not known yet. A site is already available in the Bradford district that HMRC could move to, whereas in Leeds there is no identified site yet. Does the hon. Gentleman agree that it is very bad negotiation for the Government to say that they are going to go to a particular place without a site, because if they do identify a site the landowner will have them over a barrel when the negotiations take place?

[Ian C. Lucas]

I am grateful to the hon. Gentleman, and I commend him—which, I think, is a first in the 14 years I have been here—for his excellent speech. The points that he made mirrored many of the points I have been making and intend to make. It makes no sense whatsoever for the Government to approach the issue in the way they have.

I shall speak specifically about Wrexham because I am here to represent my constituents. It is incredible that the only HMRC service in Wales will be in Cardiff city centre. Cardiff city centre is boom town. The announcement from HMRC was followed last week by the BBC announcing the creation of its new centre for Wales in Cardiff city centre, so HMRC had better hurry up and find a site or there will be no room left in Cardiff.

The Minister is a reasonable man. I find it incredible that he has been in the Treasury since 2010, because he is a reasonable man. I ask him please to look at the announcement again. I mean it seriously. I cannot understand the rationale for the announcement economically, politically, intellectually or in any sense. He should listen to the sensible debate. I am grateful to the SNP for bringing the topic to the Floor of the House and I will certainly support the motion today.

We desperately need a fundamental rethink, because the Government are talking about our money—our money, taking jobs away from a place like Bootle! They should be using public money to support economic development in the parts of our country that need it most. That is common sense, I say to the hon. Member for Taunton Deane (Rebecca Pow). I ran my own business, and if I did it pursuing policies like this, I would have been bankrupt before I started.

--- Later in debate ---

[Imran Hussain]

I entirely agree. As I said in an intervention, this decision has been ill thought out, and no economic or social case has been made against Bradford and the surrounding region. The decision has come as something of a hammer blow to Bradford, as there is a clear case for siting the office there: a case that makes clear the positive reasons for doing so, as well as the danger of a negative economic impact if work is pulled out of the city. We have a talented and young workforce who are crying out for opportunities such as this, and, as we heard from the hon. Member for Shipley, we have an identified site next door to the transport interchange. As well as being close to four top universities, we have the internationally renowned Bradford University School of Management.

Nor can I find any good reason for moving the entire operation to Leeds. The Public and Commercial Services Union—the civil servants’ union—has already complained about the lack of consultation and the fact that no one has had a chance to see, let alone scrutinise, the figures that have been used to come up with this plan.

[Philip Davies]

Is there not every indication that Leeds does not want the hub to be based there, because it could attract private sector investment to any of the sites involved? Have the Government not effectively, and unnecessarily, crowded out private sector investment in Leeds?

[Imran Hussain]

The hon. Gentleman is quite right. This could have a detrimental effect on Leeds, and on the private sector in particular.

As I stand here representing Bradford, let me make clear my demand to see the figures and the argument for the move to Leeds. Such an important decision must be made openly, and in the full glare of public scrutiny, if we are to be persuaded that the move is not taking place for the convenience of London-based civil servants. Bradford has struggled for years to overcome the effects of de-industrialisation, and has had to tackle many problems. If HMRC relocated to Bradford, it would be a great help and a step on the road to the city’s way forward. It is just starting to show signs of recovery and a return of confidence, but the removal of these jobs will be a bitter blow.

I urge the Government to ask HMRC to reconsider its decision and look seriously at the compelling case for Bradford, and I ask them to be bold enough to change their minds.

--- Later in debate ---

[The Exchequer Secretary to the Treasury (Damian Hinds)]

I am not quite sure how to follow the hon. Member for Kirkcaldy and Cowdenbeath (Roger Mullin).

Protecting the country’s tax revenues is of course a vital part of our long-term economic plan. It is particularly important given the contributions that we expect the tax system to make to delivering an overall surplus in 2019-20. As an integral part of that, we strengthened HM Revenue and Customs’ ability to carry out its job as effectively and as efficiently as possible.

In 2009-10, the tax gap stood at 7.3%. By 2013-14, it had fallen to 6.4%, and that represents an additional £14.5 billion in cumulative tax collected. Over the past Parliament, HMRC has secured around £100 billion in additional compliance yield, including more than £38 billion from big businesses and £1.2 billion from the UK’s richest 6,000 people. Our investments, including £800 million in the summer Budget, helping HMRC to recover an additional £7.2 billion, have been vital to achieving that success. As well as that, it is clearly important that the structure and organisation of HMRC are fully fit for the 21st century, and that is what these changes are all about.

[Philip Davies]

Will my hon. Friend give way?

[Damian Hinds]

I will not just at the moment, if that is all right with my hon. Friend.

The primary objective is for HMRC to bring its workforce closer together in regional centres so that they can collaborate better, providing more opportunities for economies of scale and of scope and for individuals’ career progression. That will allow them to deliver higher quality public services at a lower cost to the taxpayer. It is simply not efficient to have HMRC’s 58,000 employees spread throughout 170 offices across the UK.

--- Later in debate ---

[Damian Hinds]

If the hon. Gentleman will forgive me, I will not give way.

Keeping HMRC’s valued employees fully engaged has been a central part of the transformation programme. The proposals were initially announced internally 18 months ago. Since then, HMRC has held about 2,000 events across the country, talking to and consulting colleagues on the changes.

[Philip Davies]

This is a really lazy reorganisation by HMRC, which appears to have picked either the biggest place in a region or the one that is easiest for the London staff to get to by train. Will the Exchequer Secretary consider what has been said in this debate and go away and look at the issues from a properly local perspective?

[Damian Hinds]

I assure my hon. Friend that that is not the way in which the process to identify the locations has been conducted. My hon. Friend the Financial Secretary mentioned earlier the combination of site and location-specific criteria. Critically, the process has also involved mapping out where HMRC staff live, in order to calculate reasonable travel distances and the locations to which those individuals can reasonably travel. In the case of HMRC staff employed in Leeds and Bradford, 130 live a more reasonable distance from Leeds than they do from Bradford.

Oral Answers to Questions

Philip Davies Excerpts

Tuesday 27th October 2015 Commons Chamber

[Mr Osborne]

I agree with my hon. Friend on the constitutional point, which is a matter that the whole House of Commons will want to address. I take very seriously the point he raises about his constituent. I have made it clear that we will listen with regard to how we make the transition to a lower welfare, higher wage economy. When we introduced controversial welfare changes in the last Parliament, such as the removal of child benefit from higher earners and the introduction of the welfare cap, we made changes, having listened to Parliament, to smooth the transition to both those important reforms. Of course we will listen to the House of Commons in this respect, but the end goal is clear: this country cannot have an unlimited welfare budget that squeezes out other areas of public expenditure. We cannot have a situation whereby we have 1% of the world’s population and 4% of the world’s economy, but 7% of the world’s welfare budget.

[Philip Davies (Shipley) (Con)]

May I urge the Chancellor to stick to his guns on tax credits? Gordon Brown spent billions of pounds he did not have on tax credits, to try to buy votes at the 2010 election. Does the Chancellor agree that there is no painless way out of huge debt and that people would do well to remember that before they ever elect a free-spending Labour Government again?

[Mr Osborne]

I completely agree with my hon. Friend. Spending on tax credits went up three times during the last Labour Government, yet working poverty increased during that period. In other words, it had completely the opposite effect from that intended. The people who suffer when the country loses control of its public finances are, indeed, the low paid. They are the people who get turned out of work. It is not the richest in the country or the trade union barons who lose their jobs when that happens; it is the poorest in the country. What we can deliver for them is economic security. So, yes, we will listen on the transition, but we are determined to deliver controlled welfare and economic security for the working people of this country.