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Oral Answers to Questions
(11 years, 1 month ago)
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Claire Perry (Devizes) (Con)
1. What recent assessment he has made of the UK’s business competitiveness.
The Chancellor of the Exchequer (Mr George Osborne)
Under this Government, Britain has moved into the top 10 of the most competitive places in the world to do business, according to the World Economic Forum; our tax system is seen as one of the most pro-business in the world; market interest rates are at record lows; red tape has been cut by almost £850 million in the past two years; and exports to China, India and Brazil are up by almost two thirds since 2009.
Claire Perry
I thank the Chancellor for that reply. Is he aware that, according to accountants KPMG, Britain is now the best place in the world to do business, for the first time ever? That is very welcome news for businesses in my constituency, but what more do we need to do to maintain and consolidate that position?
Mr Osborne
My hon. Friend refers to the remarkable survey by KPMG that found that in the space of three years Britain has gone from having one of the least competitive business tax systems in the world to having the most competitive one; we are ahead of Ireland, the Netherlands and Luxembourg, as well as, of course, the United States, France and Germany. That is because of the hard work we have done on corporation tax and on the controlled foreign companies regime. Of course, we have to go on making this country the most competitive place to do business, so that we can succeed in the global race.
Sheila Gilmore (Edinburgh East) (Lab)
Is it not the truth that demand has been so sucked out of the economy by the Government’s policies that there just is not the growth? Telling us how competitive we are is living in cloud cuckoo land, given that even the Office for Budget Responsibility says that growth is going to be very slow, even in the coming year.
Mr Osborne
To get a lecture from the Labour party on demand! The economy shrank by 6% when the shadow Chancellor was in the Cabinet, and we are picking up the pieces of the mess he and his party left behind. One of those pieces was the deeply uncompetitive business tax system which meant that companies were moving their headquarters out of the United Kingdom. Companies are now moving into the UK because of the changes we have made.
Mr Andrew Tyrie (Chichester) (Con)
It is small businesses in our constituencies that will hold the key to Britain’s economic revival. Does the Chancellor agree that they are simply not getting the support they need from the banks at the moment and that although the funding for lending scheme is good, most of the money is currently going into mortgages rather than businesses? I realise that he will not want to say much now, just before the Budget, but can he at least reassure the House that the needs of small businesses are right at the top of his agenda for this Budget?
Mr Osborne
My hon. Friend has that assurance. The funding for lending scheme, joint with the Bank of England, is now supporting the small and medium-sized business sector as well as the mortgage market, and is repairing the damage to the financial system caused by the financial crisis. He is also right to say that small businesses are the bedrock of our economic revival, which is why we have cut the small companies tax rate, which before the general election the Labour party wanted to put up. We have also carried on the relief for small businesses from business rates, and in the autumn statement we increased tenfold the annual investment allowance, so that small businesses can invest for the future and create jobs. The Government understand that there needs to be a private sector recovery in order not to repeat the mistakes of the past.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
The Chancellor boasts that all is going well for British business, but terrible figures out this morning show that manufacturing is down by 3% compared with last year’s figure. Business has lost all confidence to invest, so when will he pull his head out of the sand and see that his plan is clearly failing?
Mr Osborne
The manufacturing sector halved as a share of the British economy when Labour was in office and we had the fastest decline in British manufacturing in British history. The steps that we have taken to support manufacturers, to help with investment allowances and to ensure that they have access to fast-growing parts of the world, such as China and India, are all part of rebalancing and rebuilding the British economy. I was in the west midlands a couple of weeks ago, and there are 67,000 new private sector jobs in that region alone; I mention the region because private sector employment fell during the boom years under the previous Labour Government. We must get behind the private sector and we must get behind business: that is exactly what this Government are doing.
Nic Dakin (Scunthorpe) (Lab)
2. What recent assessment he has made of the UK’s credit rating; and if he will make a statement.
The Chancellor of the Exchequer (Mr George Osborne)
As I said to the House last month, the recent Moody’s decision was a stark reminder of the debt problems facing Britain and the clearest possible warning to anyone who thinks we can run away from confronting them. We will not do that.
Nic Dakin
When he was shadow Chancellor in 2009 and Standard & Poor’s put the UK on negative watch, the right hon. Gentleman was unequivocal in calling for a general election. Now that the UK has lost its triple A status on his watch, will he be consistent and urge his right hon. Friend the Prime Minister to go to the palace?
Mr Osborne
The advice from the rating agency could not be clearer: a reduced political commitment to fiscal consolidation would put Britain’s creditworthiness at risk. That reduced political commitment would come from the Opposition, who oppose every single spending cut, who have no credible economic policy and who, despite having promised for two years to produce a deficit reduction plan, still do not have one. We hear that a draft Labour manifesto is coming this July; perhaps then we will see a proper plan to deal with the deficit Labour created.
Mark Garnier (Wyre Forest) (Con)
Does my right hon. Friend agree that the only true measure of creditworthiness is the price paid by the Government to borrow? Gilt yields are still 16 points lower today than before Moody’s downgrade. Does that not reconfirm the international markets’ confidence in this country’s ability to pay its debts and the Chancellor’s programme to tackle Labour’s deficit crisis?
Mr Osborne
My hon. Friend is right that our credibility as a nation is tested every day when we seek to borrow money to pay for the deficit that the Opposition racked up. We can borrow at historically low rates, which means low rates for people’s mortgages and low rates for people’s small business loans. Of course, if we lost that credibility by pursuing the Opposition’s policies, interest rates would rocket, people would be put out of their homes and businesses would go bust. That is exactly what we will avoid.
Chris Leslie (Nottingham East) (Lab/Co-op)
I am sorry; we cannot let the Chancellor wriggle out that easily. Does he remember writing his pre-manifesto paper, “A New Economic Model: Eight Benchmarks for Britain”, just before the last general election? In it, he said that
“for the first time, the British people will have eight clear and transparent benchmarks—Benchmarks for Britain—against which they can judge the success or failure of their Chancellor and their government over the next Parliament. We will be accountable.”
Will he remind the House of his first benchmark test?
Mr Osborne
Our benchmark was to restore the fiscal credibility of this country and that credibility has earned us record low interest rates. The hon. Gentleman talks about wriggling out of things we did in the late period of the last decade, but he ran the leadership election campaign for the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown)—he was the campaign manager—and he should apologise for that disastrous premiership and the chancellorship that preceded it, which put this country in this mess in the first place.
Chris Leslie
We are all deeply moved by the Chancellor’s remorse and contrition, but let me remind him of his first benchmark test:
“We will safeguard Britain’s credit rating”.
He has failed on the other benchmark tests, too: he said that he would ensure greater availability of credit to small and medium-sized enterprises; he has failed on economic growth; he is failing on borrowing and the deficit; and he is failing on living standards. After three years of failure, when will it dawn on the Chancellor that his strategy is not working?
Mr Osborne
We have cut the deficit by a quarter, a million new jobs are being created in the private sector and there is record employment in our economy, as well as record female employment. We are rebalancing the British economy after all the problems of the past. The hon. Gentleman talks about remorse and contrition, but until we hear some remorse and contrition from those on the Labour Front Bench about the economic mistakes they made, no one will pay the slightest attention to what they, and in particular the shadow Chancellor, have to say.
Stephen Williams (Bristol West) (LD)
Given that the UK Government are able to borrow at historically low rates, may I urge my right hon. Friend to take advantage of that position in order to prioritise capital investment, particularly in the housing market, to give a strong fillip to growth?
Mr Osborne
We have increased capital investment from the period of the Labour Government. Capital spending as a percentage of our national income is more than under the Labour Government, and we have increased by £10 billion our spending on capital from the plans they left us. I agree that we should be using the Government’s credibility to do more, which is why the infrastructure guarantees and the housing guarantees are coming on stream. Guarantees are being written and that will help to build the infrastructure that this country needs.
Jim McGovern (Dundee West) (Lab)
3. What progress he has made on supporting victims of interest rate swap mis-selling.
The Financial Secretary to the Treasury (Greg Clark)
On 31 January, the Financial Services Authority published the findings of the pilot review into interest rate swap mis-selling. The full review of 40,000 cases is now under way, and the FSA says it should be completed within six months. Small business organisations played a major role in exposing the scandal, so I can announce to the House that from today bodies representing consumers, including small businesses, will be able to apply to make super-complaints to the Financial Conduct Authority, giving them fast-track access to the regulator. That important power should help to ensure that any future misconduct is detected quickly and put right.
Jim McGovern
I thank the Minister for that answer. My constituent, Mr James Boyle, has a contract with Clydesdale bank, which seems to be excluded from the review. The main banks—RBS, HSBC, Barclays and Lloyds—are all included. Why are the Clydesdale bank, and my constituent, excluded from the review?
Greg Clark
I can confirm that the Clydesdale bank has now become part of the review, as have all the other principal banks. The hon. Gentleman has raised the case of his constituent with me before; even though the product was not within the review’s terms of reference, Clydesdale has agreed to consider it as part of the review.
Andrew Bridgen (North West Leicestershire) (Con)
I have constituents who are concerned that the FSA may come under pressure from the banks to water down its findings and reduce the scope of the redress scheme, to their disadvantage. What can my right hon. Friend say to reassure my constituents about that important issue?
Greg Clark
My hon. Friend raises a very important point. The review is under the auspices of the Financial Services Authority, and each bank has had to appoint independent reviewers who are themselves accountable to the FCA. It is absolutely crucial that the objectivity they bring to bear cannot be compromised, and I have given the FSA clear feedback that it should have that in mind during the review.
Andrew Selous (South West Bedfordshire) (Con)
4. What steps he has taken to increase the amount of (a) lending and (b) equity financing to the real economy.
The Chief Secretary to the Treasury (Danny Alexander)
The funding for lending scheme is aimed at boosting bank lending to the real economy and has already led to some of the cheapest mortgage rates on record. Through the seed enterprise investment scheme, the Government provide generous tax relief for investment in firms with high growth potential, and we will deploy an additional £1 billion through the business bank.
Andrew Selous
Does the Chief Secretary agree that raising share capital is a vital way to help businesses grow, in addition to loan finance? Between 40 and 50 extra initial public offerings in technology companies could come to the UK in the next six months if we get conditions right, so in the forthcoming Budget will the Treasury do all it can to help businesses access share capital?
Danny Alexander
I certainly agree that there is a need to diversify the range of funding sources, including the one my hon. Friend describes, particularly for small businesses and businesses with high growth potential. That is the purpose of the seed enterprise investment scheme. The business bank has a remit to try to diversify the range of sources of finance available for small businesses, because in this country we are too dependent on solely bank finance. I shall certainly consider what my hon. Friend said.
Dr William McCrea (South Antrim) (DUP)
Small and medium-sized businesses are still finding it difficult to get banks to lend them essential finance. What further steps can the Minister take to reconnect banks with the reality of business? Up to now, it seems that banks have been a law unto themselves.
Danny Alexander
The hon. Gentleman makes a very good point. That is the purpose of a number of the schemes I mentioned earlier. The funding for lending scheme is designed to get banks to lend more to small businesses, and a complaints process has been put in place, allowing independent adjudication when cases go wrong. I encourage the hon. Gentleman to refer constituents to the scheme, which has overturned bank decisions in a large number of cases.
Mr Julian Brazier (Canterbury) (Con)
In welcoming the funding for lending scheme and the other measures my right hon. Friend mentioned, may I urge him to break up and sell off as soon as possible the publicly owned banks, so that we have more competition on the high street, and constituents of mine who are unable to borrow on good projects have more to choose from?
Danny Alexander
It is right that we own large chunks of two banks, because that was necessary to clear up the mess of the under-regulated, overheated banking system that was created under the present Opposition when the shadow Chancellor was City Minister. We are working as hard as we can to get those banks in good order and we are making progress in the direction that my hon. Friend suggests.
Cathy Jamieson (Kilmarnock and Loudoun) (Lab/Co-op)
The experience of small businesses across the UK does not match the rosy picture painted by the Chancellor earlier or by the Chief Secretary to the Treasury. Last week we learned that, despite the funding for lending scheme, net lending to businesses was down £4.5 billion in the last quarter. Will the Chancellor now act on Labour’s calls to reform the scheme immediately so that small and medium-sized enterprises get the funding that they so urgently need?
Danny Alexander
I am sorry that we did not hear the apology for the mess that was made in the financial system by the Opposition when they were in office. Many of the steps that we are taking are necessary to repair the damage that the hon. Lady and her Front-Bench colleagues did to the financial system and the banking system. She should also have noted that net lending to the real economy increased by £2.5 billion in January 2013. The schemes that we are putting in place are making a difference, but we are facing a continuing very challenging situation and that is why we will continue to look for further things to do to help small businesses.
Mrs Linda Riordan (Halifax) (Lab/Co-op)
5. What recent estimate he has made of unemployment levels in Halifax.
The Chief Secretary to the Treasury (Danny Alexander)
The claimant count in Halifax in December 2012 was 4,328. The UK has a lower rate of unemployment than either the US or the euro area and, as the Chancellor said earlier, we have created more than 1 million jobs in the private sector since 2010.
Mrs Riordan
I thank the Minister for that reply, but in reality the Government’s record on unemployment in Halifax since 2010 is that the number out of work has risen from 7.3% to 9.2%. Halifax cannot sustain those levels of unemployment for much longer. Can the Minister understand how angry people are? What action is he taking on unemployment in Halifax?
Danny Alexander
Of course I recognise what the hon. Lady says and that unemployment is a concern right across our economy. Unemployment rates across the economy have been coming down. She refers to the experience in her constituency. Since 2008-09 the number of apprentices in Halifax doubled, so some of the measures that the Government are taking, such as the investment in apprenticeships and the Work programme, are making a difference to her constituents. The most important thing that we can do to continue to support unemployment moving in the right direction is to maintain the credible fiscal policy that this Government have put in place, and not give up on it, as the Opposition would.
Tom Blenkinsop (Middlesbrough South and East Cleveland) (Lab)
6. What recent assessment he has made of progress on the Government’s target of public sector net debt falling as a share of GDP in 2015-16.
The Economic Secretary to the Treasury (Sajid Javid)
The independent Office for Budget Responsibility assesses the Government’s performance against the fiscal mandate and supplementary debt target. The OBR’s assessment is that the public sector net debt as a percentage of GDP will be falling by 2016-17.
Tom Blenkinsop
Will the Minister confirm that the Government will have more than doubled the national debt between 2010 and 2015, and that this Government will have increased the national debt by more in five years than it increased in the entire 13 years of the Labour Government?
Sajid Javid
Having brought the country to the brink of bankruptcy and having set the economy ablaze, the Opposition now throw stones at the firefighters. The country will never forget that we had the largest budget deficit when we came to power. We were borrowing £5,000 a second, and that deficit began in 2001, long before the financial crisis. Since then, we have cut it by a quarter, brought back confidence to Britain and created jobs at a record rate.
Mr Peter Bone (Wellingborough) (Con)
I congratulate the Government—the Conservative-led coalition—on reducing the deficit, but of course all that is slowing the rate of growth in the debt. When does the Minister think we will get to a budget that is balanced?
Sajid Javid
My hon. Friend makes a good point about how we must tackle the record national debt that we inherited. It went up threefold during the 13 years of the previous Government’s time in power. When we set out the Budget forecast next week, my hon. Friend will get a good answer.
Geraint Davies (Swansea West) (Lab/Co-op)
Businesses in Swansea are telling me that assessing net debt should include an assessment of net assets, and they have written to me and the Chancellor asking that Swansea be considered for superconnectivity status, namely that the Government invest in our broadband capability. Is that something he is willing to look at positively with the businesses involved?
Mr Speaker
That was very wide of the subject of public sector net debt falling as a share of GDP in 2015-16. The hon. Gentleman needs to do his research and have another go. Go back to the drawing board. We are grateful to him.
Charlie Elphicke (Dover) (Con)
Would it ever be a credible policy to borrow more in order to borrow less, or would it simply increase our debt, damage our credit rating and ensure that the country would be in even greater difficulties than it already is thanks to the Labour party?
Sajid Javid
My hon. Friend makes a good point. If the country were now following the Labour party’s plans, independent assessments show that the country would be borrowing £200 billion more: more debt, more deficit. As we bring the deficit under control we will be able to invest in things such as broadband plans in Swansea and help growth in this country.
Andy McDonald (Middlesbrough) (Lab)
7. What assessment he has made of the effect on child poverty of his changes to the uprating of tax credits and other payments announced in the autumn statement.
Mr David Hanson (Delyn) (Lab)
10. What assessment he has made of the effect on child poverty of his changes to the uprating of tax credits and other payments announced in the autumn statement.
The Economic Secretary to the Treasury (Sajid Javid)
The Government have protected poor and vulnerable groups while undertaking the urgent task of tackling the fiscal deficit. Work remains the best and most immediate way out of poverty, and we have continued to prioritise providing the best possible work incentives for welfare reform and increasing the personal allowance.
Andy McDonald
The Government’s own impact assessment says that 200,000 more children will be pushed into poverty as a result of the cuts to tax credits and benefits next month. The Children’s Society says that 40% of the children in my constituency now live in poverty. Will the Minister provide an assessment of how many more children in Middlesbrough will be in absolute poverty in 2016 as a result of the Chancellor’s failures, with not enough money for their food, warmth and shelter?
Sajid Javid
The hon. Gentleman knows that the official measure for child poverty is flawed. It is based on changes in relative income, which has meant, for example, that under Labour child poverty fell by 300,000 during a recession—clearly a nonsense. This Government are focused on the causes of child poverty, such as unemployment. I would have thought that the hon. Gentleman would welcome the fact that more people are employed in Britain today than at any time in our history.
Mr Hanson
The Institute for Fiscal Studies estimates that the changes that the Government are bringing in will cost a one-earner family with children around £534 from April this year. Will the Minister confirm that figure, and in doing so, will he confirm also that a one-earner family with children where the earner happens to be a millionaire will receive a £40,000 cut in April this year?
Sajid Javid
What I can confirm to the right hon. Gentleman is that this Government are focused on the causes of poverty, which is what he should be concerned about. I am surprised that he raises this question, because he highlights to his constituents that during the last term of the previous Government youth unemployment in his constituency went up 149%. Under this Government it is down 18%.
Mr James Clappison (Hertsmere) (Con)
Is it not a lamentable fact ignored by Opposition Members that for far too long this country has had too many children growing up in workless households, which means bad outcomes for those children over the longer term? Will my right hon. and hon. Friends redouble their efforts to make the tax system as simple as possible and to create incentives for people to work and set a good example for their children?
Sajid Javid
My hon. Friend is absolutely right, and that is why the Government have increased the personal allowance, cutting taxes for the low paid, helping 24 million people in the country. In addition, we are introducing universal credit to create the right incentives to get people back into work.
Neil Carmichael (Stroud) (Con)
On the subject of the personal allowance, does my hon. Friend agree that that has made a huge difference to a large number of people who are less well-off? In my constituency alone, 38,000 people have benefited.
Sajid Javid
My hon. Friend is absolutely right. The previous Government abolished the 10p tax rate. This Government have cut taxes for the lowest paid in this country, 24 million people have benefited and 2 million people have been taken out of taxation altogether.
Fiona Mactaggart (Slough) (Lab)
8. What plans he has to increase corporation tax payments in the UK by large multinational companies; and if he will make a statement.
Tim Loughton (East Worthing and Shoreham) (Con)
13. What steps he is taking to ensure that international companies pay the appropriate levels of tax on revenues earned in the UK.
Jane Ellison (Battersea) (Con)
15. What steps he is taking to improve international co-operation to tackle tax avoidance. [R]
The Exchequer Secretary to the Treasury (Mr David Gauke)
The Government are determined to ensure that multinational companies pay their fair share of tax. The UK is committed to taking multilateral action through the G20 and the OECD to tackle the issues of profit-shifting by multinationals and erosion of the corporate tax base. The OECD presented its initial report on addressing these issues at the G20 meeting in Moscow last month and will present a comprehensive action plan to tackle them at the G20 in July this year.
Fiona Mactaggart
Even if the OECD produces a decent action plan, nothing will happen before September, yet Britain is responsible for some of the biggest tax havens in the world: Barbados, Bermuda and the British Virgin Islands received more foreign direct investment than Germany and Japan in 2010. When did the Minister last talk to the Foreign Secretary about what he could do about these tax havens?
Mr Gauke
It is worth pointing out that these places are not simply colonies in which we can direct orders; they have a degree of independence. We are working with other countries at the G20 and the G8 and through the OECD to ensure that we have a modernised tax system, which includes addressing jurisdictions where there is a lack of transparency.
Tim Loughton
Does the Minister agree with me on this very simple principle: companies should expect to be liable for appropriate tax in the UK on goods and services paid for and used by people and organisations based in the UK?
Mr Gauke
The point I would make is that we want to have an international tax system under which economic activity is taxed where that economic activity takes place. The fact is that the international rules have not moved with the times, but they need to do so, and I am delighted that the Chancellor of the Exchequer is leading the way in this debate.
Jane Ellison
Many of my constituents—particularly younger constituents and Church groups—are very interested in this agenda and are closely following what the Government are hoping to achieve this year. Is the Minister optimistic that our international partners will respond positively to this agenda and we can make progress on it?
Mr Andrew Love (Edmonton) (Lab/Co-op)
Although I wish the Minister success in achieving the international objectives, does he agree that dismantling the ability of the UK tax authorities to deliver on that international agenda is not the way to go about it, and with 2,000 staff at Her Majesty’s Revenue and Customs already having been sacked, does he not worry that we will be unable to deliver on it?
Duncan Hames (Chippenham) (LD)
9. What recent assessment he has made of the effect of alcohol duty and fuel duty on the cost of living and household budgets.
The Chief Secretary to the Treasury (Danny Alexander)
As a result of Government actions on fuel duty, from April average pump prices will be 13p per litre lower than if we had implemented the previous Government’s plan to squeeze motorists, and will remain at least 10p per litre lower over the remainder of the Parliament, giving real help to millions of families and small businesses.
Duncan Hames
I certainly welcome the efforts that the coalition Government have already made, but with the price of fuel now once again nudging £1.50 per litre in some places, does my right hon. Friend recognise the anxiety that the continuing prospect of rises in fuel duty causes people in rural parts of Wiltshire, as much as in the highlands of Scotland, who find themselves with little alternative to running a car?
Danny Alexander
As my hon. Friend knows, as a fellow rural MP I fully understand the pressures he describes, which is why we have taken the action I set out in my previous answer. He will also know that the pressures on the public finances remain substantial. I would remind him and the House that 25 million working people in this country will see the largest ever increase in their income tax personal allowance, meaning that the income tax cuts delivered by this Government will amount to £50 a month from April.
Albert Owen (Ynys Môn) (Lab)
One of the biggest hits on petrol prices has been the VAT increase. The hon. Member for Chippenham (Duncan Hames) is absolutely right that there are now record prices at the pumps. Will the Minister consider temporarily lowering the VAT rate, to help hard-working families across the country?
Danny Alexander
With all respect to the hon. Gentleman, I am not sure that he has reflected upon the substantial fuel duty escalator that was baked into the public finances when his party was in office. We have dealt with those increases on a case-by-case basis and reduced fuel duty by a penny. I think that is the right action to support motorists, families and small businesses alike.
Alun Cairns (Vale of Glamorgan) (Con)
16. Does my right hon. Friend share my concern that minimum unit pricing for alcohol could hit responsible drinkers from some of the most deprived families?
Danny Alexander
That matter is under consideration, and announcements will be made in due course.
Mr Russell Brown (Dumfries and Galloway) (Lab)
But surely the Minister cannot run away from the fact that the largest single increase in fuel prices at the pumps was the VAT increase. Also, over the past two weeks the weakening pound has driven up prices at the pumps. That needs to be seriously considered.
Danny Alexander
I do not run away from any of the decisions the Government have made, and the hon. Gentleman should not run away from the fact that the ratchet on fuel prices planned by his party in the last Parliament, which was baked into the public finances, would have dwarfed the increase to which he refers.
Greg Mulholland (Leeds North West) (LD)
Turning to the other escalator, the nonsensical beer duty escalator, I can give my right hon. Friend good news: there are now around 1,000 breweries in this country, the highest number for 70 years, because of the explosion in micro-breweries due to fairer and lower beer duty. Now that the Government are rightly going to tackle overcharging by the pub companies, which will allow more access to market for the wonderful micro-breweries, may we also have some joined-up thinking with the abolition in the Budget of the beer duty escalator, which simply does not make sense?
Danny Alexander
I certainly share my hon. Friend’s admiration for micro-breweries: one in my constituency has recently produced a beer called Ginger Rodent, which sold out in its first run. I look forward to more sales when it is in the House of Commons bar in June. As for the rest of his question, I take it as a Budget representation.
Chi Onwurah (Newcastle upon Tyne Central) (Lab)
11. What recent estimate he has made of the extent to which the rate of increase of average earnings has kept in line with the rate of consumer price inflation.
The Financial Secretary to the Treasury (Greg Clark)
The average gross weekly earnings of full-time employees rose by 2.8% between the last quarter of 2011 and the last quarter of 2012, while consumer prices rose by 2.7%. As a result of the increases in the personal tax allowance and rising employment, average household disposable income has increased by 2.8% more than inflation.
Chi Onwurah
Clearly the Chancellor has no understanding of what it is like to get by on a low income when increases in prices such as VAT mean debt and hardship for many families. Equally, last week the Office for Budget Responsibility confirmed that the Prime Minister has no understanding of his economic policies either. Is that why the Chancellor is implementing a tax cut for millionaires—because he does not understand real life or economics?
Greg Clark
If the hon. Lady had a grasp of economics, she would understand the need to take people out of taxation, which is what we have done through the increase in the personal allowance. In fact, that increase affects the lowest paid most of all and is equivalent to a pay increase of 4.5% since the general election. A higher personal allowance is a better policy than the shadow Chancellor’s plan to introduce the 10p rate, which the Financial Times described as “a pretty basic howler”.
Miss Anne McIntosh (Thirsk and Malton) (Con)
The shadow Chancellor is a very gracious chap and, I am sure, would wish to commend the Government for taking 25 million people out of tax by the simple measure of increasing the personal allowance. Can my right hon. Friend share with the House what that means for an individual’s annual budget?
Greg Clark
Yes. By next month it will be worth £600 a year for every basic rate taxpayer, which is an enormous increase. For someone on median earnings, it is equivalent to a pay rise of 4.5%. I would have thought that the shadow Chancellor, who professes to be interested in helping the low-paid, would endorse the policy.
Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)
12. What estimate he has made of what the annual value of his planned reduction in the additional rate of income tax to 45% would be to a person earning £1 million a year.
The Exchequer Secretary to the Treasury (Mr David Gauke)
Owing to the significant behavioural responses to changes in marginal tax rates at high levels of income, the annual value of changing the additional rate of tax would not reflect the actual Exchequer impacts of the change. HMRC’s report “The Exchequer effects of the 50 per cent additional rate of income tax”, which was published alongside the 2012 Budget, set out that behavioural response in detail.
Gregg McClymont
Well, that was very clear, Mr Speaker. The answer, of course, is £40,000 a year. Why is a £40,000 a year tax cut for millionaires this Government’s priority?
Gavin Barwell (Croydon Central) (Con)
On the subject of priorities, how much does the Exchequer believe that cutting the higher rate of tax will cost compared with the cost of raising the personal allowance, which has benefited thousands of my constituents and millions of people across the country?
Mr Gauke
The costing for the cutting of the additional rate, according to Her Majesty’s Revenue and Customs and signed off by the Office for Budget Responsibility, was £100 million. The cost of raising the personal allowance is about £9 billion, and that is where our priorities lie.
Diana Johnson (Kingston upon Hull North) (Lab)
17. Instead of spending £3 billion on cutting the 50p rate for the richest, why not put the money towards 100,000 social rented homes of one and two bedrooms to make the coalition Government’s bedroom tax work?
Mr Gauke
This figure of £3 billion that is repeated time and again is simply inaccurate. It makes no assumption for behavioural effects whatsoever, and this was never the position of the Labour party. The fact is that the cost is £100 million, recouped several times over by other measures contained in the last Budget that are getting more money out of the wealthy.
Stephen Phillips (Sleaford and North Hykeham) (Con)
14. What progress his Department has made on ending the abuse of tax avoidance schemes.
The Exchequer Secretary to the Treasury (Mr David Gauke)
The Government are fully committed to tackling tax avoidance, taking all necessary steps to protect the Exchequer. Since 2010, the Government have introduced 26 changes to the law to close loopholes and tighten our legislation against tax avoidance. We are introducing a general anti-abuse rule in this year’s Finance Bill to tackle abusive avoidance schemes, and we will be consulting on measures to address high-risk promoters of avoidance schemes.
Stephen Phillips
I am grateful to my hon. Friend for that answer. One of the drivers of these aggressive tax avoidance schemes has been the cottage industry that has grown up among those who seek, for their own financial gain, to persuade those who want to pay their taxes to enter such schemes. What steps are the Government taking to deal with the promoters of these aggressive tax avoidance schemes?
Mr Gauke
My hon. and learned Friend is absolutely right to raise this issue, which the Government have focused on extensively in recent months. We have consulted on what we can do in this area, and I hope that we will be able to report back on that shortly. We have also strengthened the disclosure of tax avoidance schemes regime, making it increasingly difficult for people to peddle these artificial, contrived schemes that involve people not paying their fair share. We do not think that that is right and we are doing something about it.
Mr George Mudie (Leeds East) (Lab)
Two years ago Christine Lagarde gave the Treasury 6,000 names of UK nationals using Swiss bank HSBC to avoid paying tax. Two years later, one of them has been convicted. Is the case closed on the other 5,999, and if so, why?
Mr Gauke
I am not going to get drawn into individual cases, but I will say that under this Government the number of prosecutions will increase fivefold. We are giving additional resources to HMRC to help to deal with prosecutions, and we have strengthened its offshore team. Our record on dealing with tax evasion—dealing with those who have cheated the system—is one of which we are proud, and it compares very favourably with the record that we inherited.
Mr Nick Gibb (Bognor Regis and Littlehampton) (Con)
Private equity is an important source of investment for expanding businesses, but when they over-leverage it can lead to disasters such as that with Castlebeck. It can also lead to protracted negotiations with the Revenue over the deductability of interest and an erosion of the tax base. Will my hon. Friend consider the German approach of limiting the level of interest that can be deductible in any tax year as a proportion of a company’s profit—the so-called bright line?
Mr Gauke
We did look at interest deductibility when we first came into office. However, in the corporate tax road map that we set out in 2010, we took the view that we were not going to change the rules fundamentally with regard to interest deductibility. What we have done, of course, is favour equity more by cutting corporation tax. My hon. Friend also raises wider issues about private equity and leverage that the Banking Commission is considering.
Nick Smith (Blaenau Gwent) (Lab)
18. What recent progress has been made on implementing the national infrastructure plan.
The Chief Secretary to the Treasury (Danny Alexander)
We have made significant progress in implementing the national infrastructure plan and published an update in December’s autumn statement alongside the latest version of the infrastructure pipeline. A further detailed delivery update on the top 40 infrastructure projects will be published alongside the Budget.
Nick Smith
Why did the Government cut infrastructure investment by £12.8 billion more than the plans they inherited?
Danny Alexander
The hon. Gentleman will know that in the 2010 spending review and the 2011 and 2012 autumn statements, we increased spending on infrastructure compared with the plans for capital spending that we inherited from the previous Government. Consequently, investment in infrastructure in this country is higher as a share of GDP over this Parliament than it was on average during the previous Government’s time in office.
Mr Speaker
No, I was taking the hon. Gentleman on Question 18. Does he wish to come in on Question 18?
Mr Speaker
I am extremely grateful for the hon. Gentleman’s generosity, but I am afraid we are not going to take Question 19. We are moving on. [Hon. Members: “Shame!”] Oh, go on, then. I am not going to ruin the hon. Gentleman’s day.
George Freeman (Mid Norfolk) (Con)
19. What assessment he has made of the effect of measures he announced in the 2010 and 2011 Budgets.
The Exchequer Secretary to the Treasury (Mr David Gauke)
I am delighted to answer Question 19.
The Budget of June 2010 set out the Government’s plans to reduce the deficit and rebuild the economy. The Government’s strategy since then has provided the foundations for recovery. Market interest rates have fallen to near-record lows. The deficit has been reduced by a quarter over two years. Employment is at record highs and exports of goods to China, India and Brazil have increased by about a third.
George Freeman
The Government set out in 2010-11 some key initiatives in the all-important life science sector: the biomedical catalyst fund, the patent box and tax breaks for start-up companies. This week sees the publication of the catalyst fund’s first annual report, showing that more than £1 billion has been raised in five new early stage funds in the UK, with more than 50 innovative medical projects coming to the NHS. Does that not suggest that we are laying the foundations for a sustainable recovery?
Mr Gauke
My hon. Friend makes an excellent point and I am sure that the House is delighted to have heard him do so. I know that he has done some superb work with the biotech industry. I met representatives of the BioIndustry Association a few weeks ago and they recognised that the steps we have taken on the patent box and research and development tax credits have put in place a very favourable environment for that industry.
Mr Speaker
Unfortunately, we certainly do not have time for Question 20 from the hon. Member for North East Somerset (Jacob Rees-Mogg) on article 153(5) of the treaty on the functioning of the European Union, but you never know what topical questions might bring.
Mr Stephen Hepburn (Jarrow) (Lab)
T1. If he will make a statement on his departmental responsibilities.
The Chancellor of the Exchequer (Mr George Osborne)
The core purpose of the Treasury is to ensure the stability and prosperity of the economy. I am pleased to announce that I have decided to reappoint Martin Weale as external member to the Monetary Policy Committee. He is a wise and valued member of the committee and I am delighted he has agreed to continue his service.
The spending review will be published on Wednesday 26 June and its spending envelope will be set in next week’s Budget.
Mr Hepburn
Bankers’ bonuses are up £15 billion, executive boardroom pay is up by 27%, and the richest 1,000 people in this country have increased their wealth by £155 billion, yet there is still a tax cut on the way for the richest 1%. When is the Chancellor going to do something for the other 99% who are paying the bill to subsidise the lifestyle of his privileged chums?
Mr Osborne
We are increasing the personal allowance for 24 million people. Bankers’ bonuses were £15 billion a year when the shadow Chancellor was City Minister, but they have come down to just over £1 billion—a dramatic reduction as we now have a more responsible financial sector.
Mr David Amess (Southend West) (Con)
T5. With the whole of the United Kingdom getting behind Southend’s bid to be city of culture in 2017, will my right hon. Friend tell the House what economic benefits such an award would bring?
Mr Osborne
My Parliamentary Private Secretary, my hon. Friend the Member for Hastings and Rye (Amber Rudd), has just said in my ear that her constituency is also bidding. I will not take sides, but I know that Southend will put in a very strong bid, as will Hastings. The decision will be announced shortly.
Ed Balls (Morley and Outwood) (Lab/Co-op)
The Chancellor has had plenty of advice over the weekend on how to change his failing economic plan, and it has not all come from me. The former Defence Secretary says that he should cut capital gains tax, the Business Secretary wants a £15 billion housing boost, and even the Home Secretary is making speeches calling for a new growth plan. What is going on? Do Cabinet Ministers not realise that the Budget is in just eight days’ time, or have they lost confidence in the Chancellor of the Exchequer?
Mr Osborne
What people realise is that the right hon. Gentleman’s prescription of borrowing more as a solution to Britain’s borrowing problems is exactly the same prescription that got the country into this mess in the first place. He is like the snake oil salesman selling his miracle cures when people remember that his medicine almost killed the patient. We are not going to listen to him again.
Ed Balls
But it is the Chancellor’s plan that is failing. The Business Secretary said on Monday:
“Well we are already borrowing more”—
[Interruption.] Government Members may cheer behind the Chancellor in public, but they are not cheering in private. An e-mail from the right hon. Member for Wokingham (Mr Redwood) has fallen into my hands. It was sent around within half an hour of the Prime Minister’s speech last Thursday to set out alternative ideas for the Budget from Back Benchers, such as income tax cuts and capital gains tax cuts. He says that “one colleague” says that we should do
“more to help people with childcare costs.”
Just one colleague! It concludes that the Chancellor needs
“to stimulate greater confidence, more enterprise, and to relieve some of the squeeze on the private sector.”
Businesses and families are feeling the squeeze, so why will the Chancellor not act to stimulate the economy and why is it only millionaires who are getting a £3 billion tax cut from him? Is not the truth that his plan is failing? That is why all the Government Members are losing confidence.
Mr Osborne
I am tempted to say, “Look behind you.” With a week to go until the Budget, is that the best that the shadow Chancellor can do? He has produced an e-mail from Conservative Back Benchers who are perfectly entitled to ask for things in the Budget. In this party, we are perfectly prepared for people to express an opinion and to listen to the views of our colleagues, unlike him and the operation that he runs. He is the face of Labour’s economic failure. As long as he remains as shadow Chancellor, it is a great thing for my party.
Mr Philip Hollobone (Kettering) (Con)
Given that an improved export performance will be crucial to Britain’s economic success, may I share with the Chancellor the good news that in its fourth quarter economic review, the Northamptonshire chamber of commerce, which after all represents middle England at its best, reported that 41% of its manufacturing members reported increased exports and that 76% of service sector companies reported higher figures?
Mr Osborne
That is excellent news. I congratulate the businesses in my hon. Friend’s constituency and the people who work for them on the hard work that they are putting in. It is essential that Britain connects itself better to the fast-growing parts of our world. It is good news that exports to China, India, Brazil and the like are up by two thirds under this Government, but we still have much more to do in that space. That is why, in December’s autumn statement, we put more money into UK Trade & Investment, which will help the businesses in his constituency to get those export orders.
Steve Reed (Croydon North) (Lab)
T2. Is it not absurd that the Liberal Democrats, who claim that the mansion tax on homes worth more than £2 million is their policy, are poised to vote against a motion that argues for precisely that?
The Chief Secretary to the Treasury (Danny Alexander)
I note that the shadow Chancellor did not refer to his opportunistic motion this afternoon, because we would have had a chance to refer to Labour’s record of welfare for the wealthy during their time in office: a lower rate of corporation tax than for the person who cleans the offices of the private equity fund manager; a lower top rate of tax of 45p during Labour’s 13 years in office; loopholes in the stamp duty system; and the 10p tax rate fiasco. We will take no lessons on tax fairness from the Labour party, and we will vote for our amendment that confirms Liberal Democrat support for a mansion tax.
Andrea Leadsom (South Northamptonshire) (Con)
Will my right hon. Friend update the House on what measures the Government are taking to put right the unbelievably poor regulation by the previous Government, and say what the permanent bank levy will do to improve revenues to the Exchequer, over the bank bonus implemented by the previous Government?
Mr George Osborne
We are raising more in bank taxes every year of this Parliament than the previous Government raised in any one year during their time in office. My hon. Friend is right; those revenues help to support public services and deal with the deficit. We also have a better-regulated banking system, and with the arrival in April of the Bank of England’s new role as prudential regulator, and the Financial Services (Banking Reform) Bill currently before Parliament, we are putting right all that went wrong in the banking system.
Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab)
T3. Did the Business Secretary let the cat out of the bag yesterday? When asked on the “Today” programme whether his call for investment in infrastructure to kick-start the recovery would mean more borrowing, he replied:“Well we are already borrowing more”.
Mr Osborne
We are increasing capital spending more than in the plans we inherited from the Labour Government. This Government are spending more on roads than the previous Government did and, of course, the deficit has come down by 25%.
Jacob Rees-Mogg (North East Somerset) (Con)
Although article 153(5) of the treaty on the functioning of the European Union may be esoteric to some, it is rather important because it prohibits the European Union from running an incomes policy. It seems to me that the bonus limit is an incomes policy; it is not a power of the European Union and therefore ought to be resisted by the Government by all possible means. Will the Chancellor take it to the European Court of Justice?
The Financial Secretary to the Treasury (Greg Clark)
I am delighted to answer my hon. Friend’s question. We are looking carefully at the provisions of the treaty and at every aspect of the proposals. We think that this country has a particularly rigorous set of arrangements, and we do not want to see them diluted.
Nia Griffith (Llanelli) (Lab)
T4. Companies are telling me that with demand at rock bottom and infrastructure projects failing to get away from the starting blocks, they see little incentive for investment in UK industry. When drawing up the Budget, will the Chancellor consider expanding the scope of enhanced capital allowances to cover a broader range of investment, and therefore encourage companies to invest in the UK rather than take their money elsewhere?
The Exchequer Secretary to the Treasury (Mr David Gauke)
I shall take that as a Budget representation, but it is worth pointing out that at the last autumn statement the annual investment allowance was increased tenfold.
Stephen Mosley (City of Chester) (Con)
Has my right hon. Friend seen the recent report from Barnardo’s that highlights the reduction in child poverty in some inner-city areas such as inner London? That is because there are significantly more families in work than there were this time last year.
The Economic Secretary to the Treasury (Sajid Javid)
I thank my hon. Friend for that question. Like us, Barnardo’s is interested in reducing child poverty and understands that that is done by creating jobs. The private sector has created 1.2 million jobs over the past two years, which is more than were created during the last 10 years of the previous Government.
Teresa Pearce (Erith and Thamesmead) (Lab)
T6. Owing to the changes to child benefit for families with a higher-rate earner, as from 7 March, 370,000 parents have opted not to receive child benefit. Will the Chancellor say how many of those 370,000 parents are stay-at-home mums who will lose their national insurance credit to their state pension, which is linked to the receipt of child benefit? Were they advised before they made that decision?
Mr Gauke
As far as contributions to the state pension are concerned, the change will have no effect whatsoever on any of those who opt out. The system will not be affected by the change and the hon. Lady can be assured that that is not an issue. I also point out that all households affected by the high income charge on child benefit are in the top 15% to 20% in terms of earnings. It is right for the Government to take some difficult decisions to reduce the deficit.
Mark Reckless (Rochester and Strood) (Con)
House building approvals are up by two thirds. Does that reflect the success of the Government’s funding for lending schemes, the Financial Secretary’s successful planning reforms, or the sustained period of record low interest rates?
Mr Michael McCann (East Kilbride, Strathaven and Lesmahagow) (Lab)
T7. My weekend surgeries were dominated by constituents facing backdated payment demands from Her Majesty’s Revenue and Customs, despite the fact that they had discharged their responsibilities and had been assured that their tax affairs were in order. Does the Minister think it is right to put people through financial stress and misery because of HMRC mistakes and staff cuts?
Mr Gauke
There was an issue regarding end-of-year reconciliation, which is an errant part of the pay-as-you-earn system. When we came into office, 17 million cases needed to be dealt with. I think that backlog is about to be cleared—we have made great progress. We are reforming the PAYE system so that tax will be collected at the right rate at the right time, and much more accurately than in the past.
James Morris (Halesowen and Rowley Regis) (Con)
Does the Chancellor agree that increasing the personal allowance again will mean that a basic rate taxpayer in my constituency will pay £600 less in tax as a result of the measures taken by the Government?
Mr George Osborne
That is already planned and was announced last year. In April, people will be £600 a year —£50 a month—better off. We have also taken 2 million people out of tax altogether, which is a sign of our commitment to those on low incomes and a sign of our commitment to all those who work hard and want to get on.
Tristram Hunt (Stoke-on-Trent Central) (Lab)
T8. As the Chancellor puts the finishing touches to the Budget, may I, on behalf of the potteries of Stoke-on-Trent, make another plea for applying the mineralogical processing exemption in the taxation of energy products? That would be a helpful sign that the Government understand the needs of energy intensive sectors.
Mr George Osborne
I shall take that as a Budget representation. To be fair to the hon. Gentleman, he is always a powerful champion of the ceramics industry in his constituency.
Harriett Baldwin (West Worcestershire) (Con)
My constituents find it much easier to take out a payday loan than to open a savings account. What steps are the Government taking to make it much more difficult for my constituents to fall into that sort of temptation?
Sajid Javid
My hon. Friend will know that the Government commissioned an independent report from Bristol university on the high interest lending industry. That report shows severe consumer detriment and we have already taken action. We announced last week that we will be working on advertising content and placement, and we will be giving extra powers to the Financial Conduct Authority to impose fines and to close down firms in the most significant cases. She may have seen that last week the Office of Fair Trading announced it is investigating a number of firms: it has told a number of payday firms that they have 12 weeks to shape up; otherwise it will take severe action.
Bridget Phillipson (Houghton and Sunderland South) (Lab)
T9. Financing delays are holding up the Government’s new schools rebuilding programme. What steps is the Minister taking, together with colleagues in the Department for Education, to secure financing for this scheme and to support our construction industry, which is under real pressure at the moment?
Danny Alexander
The House will know that the Department for Education has already announced that the first 41 highest priority schools are being funded by direct capital. We will be in a position soon to make a statement about the rest, and we have announced recently additional investment in school places to expand school buildings in areas under pressure. All that adds up to an £18 billion investment programme in schools over the course of this Parliament, which I think is a credit to the Government.
Graham Evans (Weaver Vale) (Con)
Does my right hon. Friend agree that infrastructure projects such as the Mersey Gateway bridge, the northern rail hub and High Speed 2 are good news for my constituents, good news for greater Cheshire, and good news for the north of England as a whole?
Mr George Osborne
I absolutely agree with my constituency neighbour. The Mersey Gateway bridge, which has been talked about for many years, has now got the go-ahead. The northern hub, which MPs from all parties and on both sides of the Pennines have been calling for, is now funded and will be of particular benefit in the Greater Manchester area. High Speed 2 is controversial, but nevertheless will connect the biggest cities of our country and help reduce the north-south divide in our economy. One piece of good news in our economy recently has been the growth of private sector jobs in the north of England.
Ann McKechin (Glasgow North) (Lab)
T10. Has the Chancellor of the Exchequer managed to overcome the militant tendency within the Cabinet to allow him fully to implement the recommendations of the Heseltine review on growth and localism?
Mr George Osborne
We will set out next week our response to the Heseltine review. Michael Heseltine has set out a compelling vision of how we can operate as a more decentralised country and empower our great cities. I was with him in Birmingham just the other day, with the Labour leader of Birmingham council, working on how Birmingham could set out a report and act as a test case for other cities.
Mr Peter Bone (Wellingborough) (Con)
In the past, Chancellors have had to resign if Budgets are leaked. Given what happened last year, will the Chief Secretary tell the House what measures he has put in place to ensure it does not happen again?
Mr Osborne
Of course I want to ensure that the House of Commons is the first to hear the Budget, just as it was the first to hear the appointment of the new Governor of the Bank of England.
Mr Speaker
Order. I am sorry to disappoint colleagues, but demand always exceeds supply at Treasury questions.
Food Banks
Mr Iain McKenzie (Inverclyde) (Lab)
I rise to present a petition signed by hundreds of my constituents, who, like me, are concerned about the increasing number of food banks up and down the country and about the fact that the number of people visiting food banks has increased dramatically since last year. I visited a food bank in my constituency, the i58 project, run by a local church, and was astounded to find out that it had dealt with more than 1,000 people since last September. It assumed that demand for assistance would peak around Christmas, but that has not happened, and the numbers have continued to escalate. It was asked to sign this petition on the ongoing problems facing constituents having to attend food banks to make it through the week on their low incomes or benefits. The petition states:
The Petitioners therefore request that the House of Commons urges the Scotland Office and Department for Work and Pensions to work together to ensure there is an accurate count of the number of people using food banks in Scotland and that the Government take action to ensure that no families in the UK go hungry.
And the Petitioners remain, etc.
Following is the full text of the petition:
[The Petition of Inverclyde Constituents,
Declares that the Petitioners believe that as a result of the failings of both the Holyrood and Westminster Governments 13 million people live below the poverty line in Britain today; further that the reliance on food banks has dramatically increased in recent years with The Trussell Trust calculating that in 2011–12 food banks fed 128,687 people in the UK, an increase of over 100 per cent on the previous year. Excellent work is being undertaken throughout the country by national and local food bank providers to fill the void left by the failings of the Holyrood and Westminster Governments; however as one of the world's wealthiest countries we believe UK Citizens should not find themselves in this position.
The Petitioners therefore request that the House of Commons urges the Scotland Office and Department for Work and Pensions to work together to ensure there is an accurate count of the number of people using food banks in Scotland and that the Government take action to ensure that no families in the UK go hungry.
And the Petitioners remain, etc.]
[P001161]
Gordon Banks (Ochil and South Perthshire) (Lab)
This petition has arisen as a result of the growing number of food banks in the UK and the growing number of people in the UK in the 21st century having to resort to them to feed themselves and their families. I pay tribute to the organisations that run food banks, such as the Trussell Trust, but particularly to the Gate, which operates a food bank in Alloa, and to Activ8 and WISH—women in sport and health—which do likewise in Sauchie, both in my constituency, and for which I am running the Alloa half-marathon on Sunday. Two weeks ago at Prime Minister’s questions I asked the Prime Minister to sign the petition, but despite his agreement to look at it and two e-mails to No. 10 since, I am still waiting.
More than 200 of my Ochil and South Perthshire constituents have signed the petition, which states:
The Petitioners therefore request that the House of Commons urges the Scotland Office and Department for Work and Pensions to work together to ensure there is an accurate count of the number of people using food banks in Scotland and that the Government take action to ensure that no families in the UK go hungry.
And the Petitioners remain, etc.
Following is the full text of the petition:
[The Petition of Ochil and South Perthshire,
Declares that the Petitioners believe that as a result of the failings of both the Holyrood and Westminster Governments 13 million people live below the poverty line in Britain today; further that the reliance on food banks has dramatically increased in recent years with The Trussell Trust calculating that in 2011–12 food banks fed 128,687 people in the UK, an increase of over 100 per cent on the previous year. Excellent work is being undertaken throughout the country by national and local food bank providers to fill the void left by the failings of the Holyrood and Westminster Governments; however as one of the world’s wealthiest countries we believe UK Citizens should not find themselves in this position.
The Petitioners therefore request that the House of Commons urges the Scotland Office and Department for Work and Pensions to work together to ensure there is an accurate count of the number of people using food banks in Scotland and that the Government take action to ensure that no families in the UK go hungry.
And the Petitioners remain, etc.]
[P001163]
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
I, too, wish to present a petition on food banks on behalf of my constituents. The signatures were collected in the centre of Leith, a part of my constituency where, according to the latest figures, up to 30% of the population are income deprived and below the poverty line. Unsurprisingly, it is also where Edinburgh’s latest food bank is being set up. I pay tribute to those in the community who are helping to set it up and deal with the growing crisis of hunger that is affecting so many of our citizens, particularly families with children. Those setting up the food bank, like those who signed the petition, also want the UK and Scottish Governments to take action to ensure that no families go hungry.
The petition states:
The Petitioners therefore request that the House of Commons urges the Scotland Office and Department for Work and Pensions to work together to ensure there is an accurate count of the number of people using food banks in Scotland and that the Government take action to ensure that no families in the UK go hungry.
And the Petitioners remain, etc.
Following is the full text of the petition:
[The Petition of Edinburgh North and Leith Constituents,
Declares that the Petitioners believe that as a result of the failings of both the Holyrood and Westminster Governments 13 million people live below the poverty line in Britain today; further that the reliance on food banks has dramatically increased in recent years with The Trussell Trust calculating that in 2011–12 food banks fed 128,687 people in the UK, an increase of over 100 per cent on the previous year. Excellent work is being undertaken throughout the country by national and local food bank providers to fill the void left by the failings of the Holyrood and Westminster Governments; however as one of the world’s wealthiest countries we believe UK Citizens should not find themselves in this position.
The Petitioners therefore request that the House of Commons urges the Scotland Office and Department for Work and Pensions to work together to ensure there is an accurate count of the number of people using food banks in Scotland and that the Government take action to ensure that no families in the UK go hungry.
And the Petitioners remain, etc.]
[P001162]
National Commonwealth Military Day
Graham Evans (Weaver Vale) (Con)
I beg to move,
That leave be given to bring in a Bill to introduce a national day to raise awareness of the contribution of Commonwealth countries in military action of Great Britain and the Overseas Territories; and for connected purposes.
Thank you, Mr Speaker, for giving me this opportunity to raise an important issue for many Members of the House. I am grateful for the support I have received and hope to gain more support as I push this project forward.
Britain owes a debt of gratitude to the Commonwealth countries and those who have contributed to its military history. For centuries, that contribution by men and women, young and old, has shaped the nature of the British armed forces and their achievements. Of course, I am moving this motion on Commonwealth week, and I am delighted to note all the hard work that goes into this celebration, but I would like to push it forward with the formation of a new day. Sometimes unwittingly, these achievements, and the debt that the nation owes, are forgotten. History is written by the victors, they say, yet many acts of bravery have disappeared from our country’s consciousness, which, I believe, does a disservice to the memories of those who have served and protected our island nation.
The Government need to take more active steps to ensure that we recognise and reward those contributions, just as we honour those who are born on these shores. That is why I propose to create a day to commemorate contributions made by members of the Commonwealth in military action. It would be a day to consider not just the contribution to the world wars, but to look further back, a day for schools to encourage and teach alternative accounts of war and a chance for us to draw together communities whose families fought for Britain and countries across the globe that still contribute to our military and civilian life.
This national Commonwealth military day should include three distinct commitments. First, I hope for a ceremony to commemorate these contributions, although we should not limit our recognition to the two world wars. Secondly, I would like to encourage schools to take a view of these alternative historical viewpoints and to take the time to reposition an understanding of how modern Britain has come to take the shape it has. Thirdly, I would like the Ministry of Defence to review cases where heroism has been overlooked in a manner not befitting the contributions made. To demonstrate the importance of this issue, I shall draw the House’s attention to examples of bravery and valour that are, sadly, less known than they should be.
The first figure, who now lies in St Mary’s cemetery in Kensal Green, was not a soldier or sailor, did not fight with musket or blade and was not a military strategist or a straight shooter, but her contribution to the Crimean war came from a compulsion to aid the wounded and sick in the face of discrimination. Mary Seacole is often known as “the other Florence Nightingale”, but her dogged determination to care for British troops overcame the prejudice ingrained in our society at the time. Rebuffed in her attempts to join the nursing unit that had travelled to the Crimea—now part of Ukraine—and to gain charity funds, she travelled to the battlefields and financed her project herself. Her dedication to saving lives gained her prominence in contemporary London, but she was never formally recognised for her contribution and has only found recognition in recent years. The Mary Seacole award is an NHS award fund for specific health care projects that aim to improve the health outcomes of people from black and minority ethnic communities, but her story is less known outside health care professionals.
The second example concerns the battle of Saragarhi in 1897. This is a relevant example of a contribution made and swiftly forgotten. On 12 September, 21 members of the 36th Sikhs regiment were guarding the signalling post of Saragarhi between Fort Gulistan and Fort Lockhart when they were besieged by some 10,000 Afghan tribesmen. Saragarhi is recognised by military historians as one of the great last stands, with all 21 men choosing to fight to the death. When news of the battle reached this House, so extraordinary was the tale and so valiant the actions that the Members in this Chamber rose to their feet and gave a standing ovation. All the men were posthumously awarded the Indian Order of Merit, first class, which at the time was the highest gallantry award given to Indian troops. It was not until 1911 that Indian troops qualified for the Victoria Cross.
More than 4 million men and women from Britain’s colonies volunteered in the first and second world wars. For many Members, this is an issue of great pride. Indeed, the grandfather of my hon. Friend the Member for Wolverhampton South West (Paul Uppal), Jawala Singh Khela, fought in the still relevant theatre of Basra, in Mesopotamia, in the first world war.
As many of my hon. Friends will know, some of my main interests include British military history, football, beer and business. It is therefore of great significance to me to bring to the House’s attention the story of Walter Tull. I fully expect his name to come to further prominence this year, as a campaign for recognition of his achievements is taking place. Although he was born in England to an English mother, his father was from Barbados. As a footballer, he suffered considerable prejudice for his heritage, playing for Tottenham Hotspur and Northampton Town, before enlisting in the Army at the outbreak of world war one. Despite the ingrained prejudice that dictated that a man could become an officer only if he was of entirely European descent, Walter Tull became just that.
Walter Tull fought and died on the western front in 1918, during the last German offensive. He was recommended for the military cross for his gallantry and coolness under fire, but the medal was never awarded. Ninety-five years on from his death, he has become the unlikely subject of a new play by Michael Morpurgo, author of “War Horse”, and there is a petition for him to be finally awarded the recognition he deserves. To make the argument to review Walter Tull’s case all the more compelling, there is now even an ale brewed in his name by a Northampton brewery.
My initial interest in this issue came many years ago, when I visited the largely forgotten western front battlefields of 1915 at Loos and Neuve-Chapelle with the late, great military historian Professor Richard Holmes. Prime Minister Harold Macmillan fought and was wounded in the arm at the battle of Loos. Neuve-Chapelle was one of the first organised attacks, in which the Indian Army played a significant part. Today there stands the magnificent and imposing Indian memorial, dedicated to the 4,500 men killed in action and the hundreds of prisoners of war who ended their days in German prisoner of war camps, down coal mines a long way from home. Although the Commonwealth War Graves Commission does a great job maintaining the Indian memorial, it receives very few visitors, which is a great shame.
These are just a few examples of the phenomenal contributions made to the Britain Isles. I sincerely hope that these lesser known stories will allow us to reflect on the histories that are less well remembered. To better remember how we became the nation we are today, it is essential to look at the nation we once were. That is why I believe we should have a day to commemorate the contribution of Commonwealth countries to British military campaigns.
Question put and agreed to.
Ordered,
That Graham Evans, Paul Uppal, Rebecca Harris, Richard Harrington, Andrew Rosindell, Julian Smith, Keith Vaz, Seema Malhotra, Valerie Vaz, Mr Pat McFadden, Mr Virendra Sharma and Christopher Pincher present the Bill.
Graham Evans accordingly presented the Bill.
Bill read the First time; to be read a Second time on Friday 26 April, and to be printed (Bill 147).
Opposition Day
Tax Fairness
(11 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
15:58 - The House divided: - Ayes: 241 / Noes: 304 - Question accordingly negatived.
16:12 - The House divided: - Ayes: 301 / Noes: 246 - Question accordingly agreed to.
Mr Speaker
I inform the House that I have selected the amendment in the name of the Prime Minister.
Chris Leslie (Nottingham East) (Lab/Co-op)
I beg to move,
That this House believes that a mansion tax on properties worth over £2 million, to fund a tax cut for millions of people on middle and low incomes, should be part of a fair tax system; and calls on the Government to bring forward proposals for such a tax at the earliest opportunity.
Let us consider the contrast that now exists as a result of Government decisions. Those who are on low and middle incomes—that is, the vast majority of the British public—have seen their tax credits cut, their child benefits squeezed, their cost of living rise as a result of higher VAT and their wages fall in real terms. However, the richest 1%, including the lucky few who earn £1 million a year, will see an average tax cut of £100,000 in four weeks’ time, and banking executives will not have to pay that annoying bonus tax, all thanks to the Chancellor’s generosity. This is a tale of two societies, with hard-working earners on low and middle incomes paying for the Government’s failure to get the economy growing while the richest elite are being rewarded by the Chancellor with a tax cut worth nearly four times the average annual salary.
Mark Reckless (Rochester and Strood) (Con)
Is it not also a tale of two sides of the House? Will the hon. Gentleman explain why his speech today has proved so popular with Labour Members?
Chris Leslie
The hon. Gentleman really needs to focus on the issue at hand. If he is standing up for the millionaires’ tax cut, he should simply say so. It will take effect in about three weeks’ time, and a number of his constituents will be absolutely astonished that he has voted for an average £100,000 tax cut for millionaires while they have lost their tax credits, found themselves paying more and seen a decline in the quality of public services.
Harriett Baldwin (West Worcestershire) (Con)
I am sure that the massed ranks of the shadow Minister’s colleagues behind him today would like to know whether he will pledge to increase the top rate of tax to 50p in his manifesto.
Chris Leslie
We certainly voted against the tax cut, and if we were in government now, we would not be cutting that 50p rate to 45p in April. Heaven only knows what other horrors the Government have in store over the next two years. We do not know what kind of situation we are going to inherit in regard to the deficit and to borrowing, so it is impossible to predict the tax situation that we will be faced with, if and when we inherit that position at the next general election.
Chris Leslie
I want to make some progress. I will give way in a moment.
The divide between the richest and the least well off is getting broader, not narrower, and the situation is getting worse. The Government are cutting taxes for one group this year—the very richest in society—with 13,000 people earning £1 million a year getting a tax cut. That is astonishing. Could any other policy better typify the twisted logic of trickle-down economics than that one?
Caroline Lucas (Brighton, Pavilion) (Green)
I welcome the mansion tax as a step towards equality, but why will the Opposition not go further and tackle the absurdity of our council tax rates still being based on 1991 rates? A house valued at £1 million in 1991 pays only 0.3% of its worth, while a house valued at £40,000 pays 2.4%, which is eight times more. Does the hon. Gentleman agree that that is unfair and should be tackled?
Chris Leslie
It is important to listen to the Liberal Democrats’ proposal for a mansion tax. They believe that £2 billion could be raised in that way from properties worth £2 million or more to help those on low and middle incomes. In our view, any such revenue should fund the reintroduction of a 10p starting rate of income tax.
I would say to hon. Members, and particularly to Conservative Members who are struggling with the state of the current economic policy, that there are independent authorities and budget watchdogs to correct them when they wrongly assert that growth will not be affected by the cuts and the tax rises and that they are paying down the national debt, but they cannot pull the wool over the eyes of the public, who know what fairness is and who know that the choices made so far have been deeply unfair.
Mr Jim Cunningham (Coventry South) (Lab)
Does my hon. Friend recall that it was the Labour Government who introduced the 10p tax? Does he also think that it would help those in poverty, as well as motorists and the building industry, if there were a cut in VAT?
Chris Leslie
That is our view. We want to do more to help those on lower and middle incomes, and to ask those privileged and wealthy individuals in society—particularly if they have a property worth £2 million or more—to make a fair contribution. The debate today presents an opportunity and a challenge to Government Members to do the right thing and to back what some of them profess to believe in.
Let me remind Members what our motion says. It asks the House to resolve
“that a mansion tax on properties worth over £2 million, to fund a tax cut for millions of people on middle and low incomes, should be part of a fair tax system; and calls on the Government to bring forward proposals for such a tax at the earliest opportunity.”
That is the extent of the motion. It is very simple and straightforward. Liberal Democrats who are in the Chamber today—for some are actually present—have repeatedly claimed to back a mansion tax. After going along with the Chancellor’s tax cut for millionaires, a failing economic plan, a VAT rise and a trebling of tuition fees, they finally have a chance to vote for something that was in their manifesto.
Chris Leslie
I shall put to one side the fact that the Liberal Democrats said one thing in opposition—about, for example, tuition fees—and have done completely the opposite in government. The hon. Gentleman should know that circumstances are now getting worse, especially given the millionaires’ tax cut which will take effect in April. We must do something to revive the fairness of the tax system, and that is why I think it important for the Liberal Democrats to stick to their 2010 manifesto pledge to introduce
“a Mansion Tax at a rate of 1 per cent on properties worth over £2 million, paid on the value of the property above that level.”
Jane Ellison (Battersea) (Con)
The hon. Gentleman speaks of fairness. The mansion tax that he proposes would be profoundly unfair on a great many of my constituents who have done nothing more than live in the same house for several decades in an area which, in terms of its property prices, has changed unrecognisably. That applies to many parts of London. I am amazed that London Labour Members do not make similar points. What the hon. Gentleman proposes is akin to a tax on living in London.
Chris Leslie
If the hon. Lady thinks that everyone in London lives in a £2 million property, she must be almost as out of touch as her party’s Chancellor of the Exchequer. Of course there are ways of introducing a mansion tax that could take account of the specific circumstances in which people are asset-rich and cash-poor, but there would probably be very few such cases. The Liberal Democrats have thought very carefully about that particular proposition.
Gloria De Piero (Ashfield) (Lab)
The public constantly tell us that they hate the infantile, Punch and Judy nature of politics. However, I read in today’s briefing paper from the Liberal Democrats that they will not back us because we have copied them. Is that not exactly the kind of behaviour that turns the public off politics?
Chris Leslie
My hon. Friend is entirely right. We cannot win. When we oppose the policies advocated by the Liberal Democrats, we are attacked, and when we support those policies, they still attack us. It is difficult to know what to do—but I do know that honour and integrity matter to the Liberal Democrats, which is why I still think that they should join us in the Aye Lobby in a few hours’ time. After all, on 17 February, when asked whether the Liberal Democrats would support this proposition, the Business Secretary said:
“It depends entirely how they phrase it. If it is purely a statement of support for the principle of a mansion tax, I’m sure my colleagues would want to support it.”
We look forward to seeing them in the Lobby.
Mr Nick Gibb (Bognor Regis and Littlehampton) (Con)
I am waiting to hear the shadow Minister mention that this Government have taken £2.2 million of the lowest earners out of tax altogether. Does Labour’s support for a mansion tax signal its return to high-tax policies, and a end to the new Labour project so admirably led by Tony Blair and Peter Mandelson, which transformed Labour into an electable party? Are we now seeing signs of a return to the hard left, high-taxing Labour party of the past?
Chris Leslie
No. The hon. Gentleman is in a coalition with partners, whom he no doubt does not regard as hard lefties, who are advocating the very policy that we recommend in our motion. We took the advice of the Business Secretary, a Liberal Democrat, who said “Table a very simple motion, and we will support it.” According to any objective measure, even the hon. Gentleman can see that we have held back from party-political rhetoric. The motion is very plain and simple, as requested. We have tried to find some common ground. If those 57 Members of Parliament—and perhaps even some Conservatives; who knows?—were to join us in the Lobby tonight, that would make the mansion tax a reality.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
We are minded to support wealth taxes, and we therefore welcome the motion, but it is a bit thin on detail. Can the shadow Minister reassure me that farmers will not be dragged into the new tax because of the value of their land, and not necessarily because of the value of their property?
Chris Leslie
That is an important point. I am glad that we have the hon. Gentleman’s support on this issue. Obviously there is a difference between residential and corporate arrangements, but our motion says that we want the Treasury to bring forward proposals at the earliest possible opportunity. We have seen the proposition set out by the Liberal Democrats and used it as the basis for our motion, but let us see what further options can be drawn together. We think that it would be a good idea, for example, for the Chancellor to commission the Office for Budget Responsibility to present detailed suggestions of ways in which the arrangements might work.
Neil Carmichael
Will the shadow Minister remind the House exactly what the top rate of income tax was throughout most of the last Labour Government, and give us some insight into why it was at that level?
Chris Leslie
After the global financial crisis, we decided to introduce a 50p top rate of income tax so that those earning £150,000 and above would make a fairer contribution to society as a whole. Those people are the wealthiest 1% in society. How astonishing—how absolutely breathtaking—that in last year’s omnishambles of a Budget, the present Chancellor of the Exchequer decided to go for the right-wing trickle-down approach and cut the 50p rate to 45p. I hope that that decision will be reversed in the forthcoming Budget, in respect of which I take it that the hon. Gentleman’s intervention constituted a representation to the Chancellor.
Dame Angela Watkinson (Hornchurch and Upminster) (Con)
Will the shadow Minister remind the House how much was lost to the Treasury during the period of the 50p tax rate, and does he accept that 100% of 45% is more than 50% of 50%?
Chris Leslie
I am not sure about the hon. Lady’s maths, but we are still within the period of the 50p rate. Of course we want to see the details of what has been happening. However, while the Conservatives have the notion that for those who are very wealthy, the higher tax rates are a deterrent and create avoidance, they do not say the same about the poorest and the middle-income families in the rest of the country. They can pay VAT at 20%; they can pay higher taxes. The hon. Lady takes a view that is taken by so many Conservatives. There is one law for those who are very wealthy, but everyone else must suffer because of the Conservatives’ failure on revenue and borrowing.
Mr Geoffrey Robinson (Coventry North West) (Lab)
Does my hon. Friend not find it strange that the Government do not seem to understand that taxes are an element of economic policy that can be adjusted in line with economic circumstances? During the first period of the Labour Government, the prevailing circumstances meant that there was no case or need for taxes to be increased, by means of a mansion tax or by any other means. When the need appeared after the economic collapse, compounded by the financial crisis, it became clear that we had to do something, and of course the Government did. The trouble with this Government is that they think policies need not to be adjusted in line with circumstances, but they do need adjusting. Does my hon. Friend not agree with that?
Chris Leslie
I agree. It is instructive to observe the different choices that the different parties are making on this issue. The Conservatives choose to cut taxes for the richest—the millionaires in society—and to increase everyone else’s taxes. The Liberal Democrats have said that they believe in a mansion tax. Indeed, a fortnight ago the Liberal Democrat leader, the Deputy Prime Minister, said:
“Victor Hugo observed that it is near impossible to resist an idea once its time has come. Last week, he was again proved right as calls for a mansion tax, first proposed by the Liberal Democrats in 2009, gathered new momentum…I offer certainty: the mansion tax, or a version of it, will happen…The Conservatives and opponents of fairer taxes have a choice. They can dig their heels in and remain stuck in the past. Or they can join with the Liberal Democrats and the chorus of voices seeking to make our tax system fair.”
Well, here we are today. What more can we do? The issue is on the table, ready for that momentum to make it happen, so how can the Liberal Democrats resist that idea whose time has come?
Ian Swales (Redcar) (LD)
Is the shadow Minister going to acknowledge measures such as the raising of the tax threshold, the huge cut in pension tax relief and the huge rise in capital gains tax which have taken place under this Government? In a debate entitled “Tax Fairness” is his proposal really the only measure that his party could come up with?
Chris Leslie
The mansion tax is not our only measure, but is an important one and we think it is necessary. I had thought that the hon. Gentleman supported a mansion tax. It is there on the table and it cannot be put in simpler terms—it is a one-line motion.
Mr David Winnick (Walsall North) (Lab)
Is there not a contrast between the opposition of the Tories, in particular, to a mansion tax and their wholehearted enthusiasm for a bedroom tax? Does that not show the class divide on their side?
Chris Leslie
Absolutely, and I think that the contrast between the political parties is becoming clear. Let us contrast the Government’s approach where they feel they can get away with levying higher and more punitive costs—the bedroom tax being a classic example—with the enormous windfall that those earning £1 million a year will be getting from the cut to the top rate of income tax in only a few weeks’ time. It is grotesque.
Ms Karen Buck (Westminster North) (Lab)
My hon. Friend may be aware of current estimates that 60% of high-value properties in central London go to overseas buyers, and Conservative MPs, when they are being thoughtful, recognise that that is a serious problem. So he is right to look at the issue of high-value property taxes and getting a balance. Does he agree that there is scope to ensure that the small minority of people who have lived for a long time in areas with escalating property values and who are asset-rich but income-poor can be completely protected within a scheme such as he outlines?
Chris Leslie
It is entirely possible to design this scheme in a way that deals with those exceptional circumstances—the Liberal Democrats have said so. It is an important question that has to be addressed, and the Deputy Prime Minister answered it in his “Call Clegg” radio slot on London’s Biggest Conversation, which I know is becoming a popular, regular and welcome fixture in the media diary. He said that individuals in such circumstances might be able to defer payments until the house was sold or to “leverage” the value of the property by remortgaging. I am not sure that that strategy provides the complete solution to the conundrum, but I do think that those in the Treasury should turn their minds to how to tackle these rare circumstances. That is why our motion calls on the Government to bring forward proposals for us to consider in more detail.
Mr Rob Wilson (Reading East) (Con)
I have been listening carefully to what the hon. Gentleman has said so far. He seems to have two tax policies that are not yet full commitments, one of which comes from a failed previous Government who brought us to the edge of economic collapse and the other of which comes from the Liberal Democrats. Is that really a great recipe for success on economic policy?
Chris Leslie
I do not think the hon. Gentleman should be so partisan; he should look at the issues on their merits, as we have tried to do in our motion. We have stripped out all that party political rhetoric and put clearly on the table the proposition, “This House supports the principle of a mansion tax.”
Chris Leslie
We urge all Members, including the hon. Gentleman to whom I am about to give way, to support that proposition.
Chris Leslie
That was one of the solutions that the Deputy Prime Minister suggested. I think it is entirely possible to find solutions to deal with those rare circumstances. However, I ask the hon. Gentleman: what is he saying to all of his constituents who, like mine, face having to move out of their properties because of the bedroom tax that his Government are introducing in a few weeks’ time? Many of those people are probably still not aware what charge is going to hit them when the change to housing benefit comes in. He is expecting great upheaval—people having to move house—at one end of the spectrum but when the Deputy Prime Minister comes up with a particular solution his response is, “Oh no, that is entirely unworkable.” We need to get the Treasury and the Office for Budget Responsibility to think about these things in a detailed way.
We had hoped that Government Members would support the motion, but what does the Government amendment say? I urge hon. Members to pick up their Order Paper, turn to the relevant page and just look at the Government amendment—this pantomime amendment, whose logic is contorted. It proposes to delete the whole proposition of a mansion tax and replace it with a pleading defence of the different views held by different parts of the coalition. It would remove the resolve to back a mansion tax and retreat into a messy fudge as a means—I mix my metaphors—of brushing the whole issue under the carpet. It is an amendment that seeks to face both ways yet go nowhere. It is a push-me, pull-you amendment, and the Government should be deeply embarrassed at the drafting, which of course descends, as we can see, into a general attack on the Opposition.
Liberal Democrats need to grow some courage and stand up for themselves, for once. This measure is not just a bygone pledge from their now notorious 2010 manifesto; the Deputy Prime Minister made it the centrepiece of his leadership in the past few weeks. Kicking off the Eastleigh by-election last month, he called for
“taxes on mansions, tax cuts for millions”.
That is what is in our motion. He said:
“The mansion tax is an idea whose time has come.”
He said that opponents of it should
“join with the Liberal Democrats…seeking to make our tax system fair.”
Indeed, others have joined in that chorus.
On this Sunday’s “The Andrew Marr Show” Lord Ashdown said it would be “weird” if the Liberal Democrats did not vote in favour of the tax. The “Sunday Politics” had an interview with the Lib Dem president, the hon. Member for Westmorland and Lonsdale (Tim Farron), in which an interesting exchange took place. Andrew Neil said:
“It’s a simple motion. Will you vote for it?”
The hon. Gentleman said:
“Well, let’s say, I mean, when all’s said and done, that is pretty much Liberal Democrat policy”.
Andrew Neil then asked:
“Well, what part of that motion do you disagree with?”
The hon. Gentleman said, “None of it.”
Nic Dakin (Scunthorpe) (Lab)
Does my hon. Friend agree that the Liberal Democrats are in danger of being highly consistent? Having been against tuition fees they voted for them; having been against a bombshell VAT increase they voted for it; and now they appear to be for a mansion tax but are going to vote against it.
Chris Leslie
I hope that my hon. Friend is not accusing the Liberal Democrats of consistency in their inconsistency—that would be a step too far.
Caroline Lucas
The hon. Gentleman is talking about courage, so I wonder how far the official Opposition’s courage will go. Some £4.5 trillion is kept by the top 10% of wealthiest households, so the £2 billion that would be raised by a mansion tax, although welcome, is a tiny amount and would hardly bridge the chasm between the super-rich and the poorest. Given that, would the official Opposition support a genuine wealth tax?
Chris Leslie
I would be very interested to see the hon. Lady’s proposition, but I do not think it is necessary to go for that general approach that she takes. I say that because there are targeted ways in which we could try to build consensus on a property tax for high-value properties over £2 million and then use the revenue to help the vast majority of lower-income and middle-income families. That is the proposition before us today.
Mr Dennis Skinner (Bolsover) (Lab)
It was interesting to hear the remark by the Green Member of Parliament about the wealth tax and being brave. I looked at the list of candidates who stood at Eastleigh, where I thought it would be wide open for a Green to find a way through, and found that the party did not even put up a candidate—what courage!
Chris Leslie
We digress slightly, but that is an interesting observation. I did not realise that the Green party had fled from that Eastleigh by-election.
Mr Robinson
Before we leave the subject of the hapless Liberals and consistency, does my hon. Friend agree that they do show consistency in their inconsistency and in their insincerity—that is the only consistency we can identify?
Chris Leslie
There is time for those sinners to repent, and I hope that in three hours’ time they will re-examine the motion, seriously consider the outrageous stretch in the amendment, stick with their principles and support the motion. I accept that there is a need to flesh out the details of how the mansion tax arrangement would be designed. We need to commission the Treasury and the OBR to work on those particular details.
Some have suggested building on existing property tax systems, although that is not wholly straightforward. In New York City, apparently, a £2 million property owner can pay about £22,000 of property tax, but Lord Oakeshott, who, as we know, is a leading light in the Liberal Democrat firmament, argues against council tax banding as one way of approaching the question. He says:
“If you just put on one or two council tax bands, you can't make the superrich pay their fair share”.
Some Conservative Members, such as the hon. Member for Bognor Regis and Littlehampton (Mr Gibb), complain that a mansion tax is impractical, that it cannot be done and that it would be an administrative nightmare, but I simply refer them to their own Front Benchers. Unbeknown to most Government Members, Her Majesty’s Treasury is, with very little fanfare, actively talking about the viability of an annual charge on high-value residential properties and launched a consultation document last May entitled, “Ensuring the fair taxation of residential property transactions”. It contains a whole chapter about introducing an annual charge, as the Treasury calls it, as part of the regime to tackle the avoidance of tax on high-value residential properties, albeit for properties enveloped in non-natural person terms—in other words, those owned by a company or by partnerships or investment vehicles.
Let me draw the attention of the House to some sections of that Treasury publication, because it suggests that a mansion tax is entirely feasible. On page 8, it states:
“The aim of the new annual charge is both to deter avoidance and to ensure the owners of high value residential property pay their fair share of tax…The annual charge will be introduced in Finance Bill 2013.”
So, the measure is coming in the forthcoming Finance Bill at the other side of the Budget. The document states:
“The interest to which the charge will apply will be the freehold or leasehold interest”
and that the annual charge will be
“applied separately to the freehold (if valued over £2 million) and the leasehold (if valued over £2 million…)”.
It goes on to state that the value of the property interest is proposed to be the value determined on 1 April 2012 and, interestingly—let us remember that the document comes from the Treasury—states:
“Property valuations for the annual charge will be self-assessed by the persons liable to the charge and submitted to HMRC as part of their annual charge tax return. HMRC will have powers to enquire into returns and also to make assessments so that non-compliance can be effectively challenged… Properties will be re-valued every five years…The valuation required will be an assessment of the ‘market value’”.
It even goes on to give a helpful list of four bands of annual charge on properties worth more than £2 million. The Treasury knows in its heart of hearts—I do not know whether it has shared this with hon. Members—that the concept of a mansion tax has some feasibility.
Huw Irranca-Davies (Ogmore) (Lab)
That is tremendously welcome news, because clearly neither of the Government parties will vote for the amendment. I understand that the amendment suggests that the Liberal Democrats are in favour of the mansion tax but will vote against the motion, whereas the Conservatives are definitely against it so will on no account be voting for it. If they are both in favour of the tax, they can just support our motion.
Chris Leslie
I hope that the scales will fall from their eyes and they will see the light, but I do not know whether they will.
Chris Leslie
Perhaps the hon. Gentleman is changing his mind because of the weight of my argument.
Mr Wilson
The hon. Gentleman is being very generous and I thank him for giving way a second time. He might not remember that the Liberal Democrat proposals for a council tax were at one stage for properties worth over £1 million, not £2 million. Is not the concern that a Labour Government, desperate to raise tax, would row back to £1.5 million or £1 million? Can he give a cast-iron guarantee that there would be no rowing backwards from a figure of £2 million?
Chris Leslie
Absolutely. That is not our proposal, as we think that it is possible to develop a mansion tax proposition for properties worth £2 million and above. We could develop and build on the Treasury’s suggestions for how it might work and we hope also to build on the carefully thought through calculations made by the Liberal Democrats.
Andrew Miller (Ellesmere Port and Neston) (Lab)
Would my hon. Friend like to speculate on why the Government chose not to refer to the Treasury document in their amendment?
Chris Leslie
Let us be realistic: the amendment was getting rather long-winded, as it is about four or five times the length of the motion. In fact, it looks like a bit of a trashing exercise and does not add to the substance of policy choices before the House. Our view is that the circumstances are very simple.
Mr Jim Cunningham
My hon. Friend has been very generous in giving way. Does he think that now the Liberal Democrats have been exposed, they will probably hold off from voting against our proposals tonight but that when the Government bring forward their proposals, the Liberal Democrats will be in the Lobby with them?
Chris Leslie
Yes—especially on issues such as the bedroom tax, tax credit cuts and increase in VAT. Of course, let us not forget the tuition fee decisions that the Liberal Democrats have made. That is a matter for them, however. They must account to the electorate and they must go back and explain how they have voted today.
Let me say a little about how we would use the money raised from the mansion tax. Our view is that a fair tax system should include a 10p starting rate of income tax. We support the increases in the personal allowance, but a 10p band would mean a different tax rate for those on middle and lower incomes from that for those on higher incomes, helping the move towards a fairer tax system. Some argue that the 20p rate is adequate, but I believe that a steadier incline moving from zero tax to 10p and from 10p to 20p could be the bedrock of a more progressive tax system, sending out an important signal that tax cuts for working people are a priority.
The 10p starting rate would provide a tax incentive to enter work, especially for those on lower wages. It was a mistake to remove the 10p rate in 2007, even though it enabled the then 22p basic rate to be reduced to 20p, where it stands today. Reintroducing a 10p rate would be the right thing to do and, if the Liberal Democrats are correct that the mansion tax could raise £2 billion, the Chancellor could make that change next week in the Budget.
Just as there is support for a mansion tax from Members on the Government Benches, there is ample support for the return of a 10p starting rate for income tax, although strangely some of those Members have chosen not to take their place in the Chamber today. The hon. Member for Harlow (Robert Halfon) spoke about the 10p rate idea in his recent Adjournment debate, arguing that
“restoring the 10p rate would help the coalition to counter the war cry of its political opponents that it is only interested in cutting taxes for millionaires. It would prove to the public that ‘lower taxes for lower earners’ is not just a soundbite but that it can be a reality…the policy would be popular…it would be a symbol of the Government’s economic mission and…it would help to tackle the desperate stagnation in incomes that Britain has suffered”.—[Official Report, 22 January 2013; Vol. 557, c. 34-38WH.]
That argument was made by a Conservative Member.
Duncan Hames (Chippenham) (LD)
The hon. Gentleman is right that the previous Government were mistaken to scrap the 10p rate, but under this Government the income that would previously have been charged at the 10p rate is now charged at a 0p rate. If he supports the increases in the personal allowance, why is support for those increases totally absent from his motion in a debate on tax fairness?
Chris Leslie
We wanted to focus on the mansion tax proposition, because the hon. Gentleman’s Business Secretary suggested that we keep the motion simple and that if we did so, the Liberal Democrats would support it. That is what the Business Secretary said. We support the changes to the personal allowance, but in our view it is important to have that graduated step up. People go from the zero rate to the 20p rate and it is important to consider introducing a more graduated step as a work incentive, which is something we ought to have in the system.
Duncan Hames
Why does the hon. Gentleman think that a 10p tax rate is a greater incentive to go into work than a 0p tax rate?
Chris Leslie
The hon. Gentleman seems to think it is all or nothing, but we think that a progressive tax system argument needs to be developed. If people move from paying zero tax straight to 20p, there is a cliff edge. We think it is important to consider smoothing the transition to work and making work pay more effectively. That is not part of the motion; it is our preference for what we would do with the revenues from the mansion tax.
Chris Leslie
I will give way to the hon. Gentleman once more, if he wants to say whether he agrees with the text of our motion—not the flim-flam about the amendment. Does he agree with the text of our motion?
Duncan Hames
I will be voting for the amendment; it states Liberal Democrat policy, which I support. The hon. Gentleman has accepted that he wants to do something very different from us with his mansion tax, and on that basis I am not happy to support him.
Chris Leslie
What more can I say? I thought the hon. Gentleman supported the proposition in our motion, but clearly he does not. However cynical and defensive he may feel, Liberal Democrats should at least acknowledge that a principle of fair taxation is at stake today, and that it ought to transcend party differences as we try to create a more just society.
Geraint Davies (Swansea West) (Lab/Co-op)
Does my hon. Friend share my fear that the Liberal Democrats may become an endangered political species? Before 2010, they were very popular in Swansea but following the tuition fees, VAT and deep cuts turnaround, they lost the council. If they do not support the mansion tax, which was part of their manifesto, does he not think there is a real danger that we will never see them again in the political sphere?
Chris Leslie
It would be a great loss for the House to lose some of the skills and contributions of Liberal Democrat Members. Perhaps at our next Opposition day debate a Liberal Democrat protection order should be on the agenda. They may cling on in a number of ways in different places.
I am surprised that the Liberal Democrats do not support the mansion tax proposition. It is hardly surprising that Conservatives do not support the idea. After all, half of them are in politics to defend the wealth of the wealthiest, and the other half will probably need to declare an interest before they speak on the issue.
Let us consider the mansion tax in relation to the other tax benefits that the richest 1% receive. If the Lib Dem design for a mansion tax were to be enacted, it would just recoup a mere fraction of the money being given away to high net worth individuals in the millionaires’ tax cut from April—the first of too many examples of unfairness. In the last Budget, the Chancellor took the decision to hit pensioners with the so-called granny tax, which is more accurately described as a freeze on the old age personal allowance and has caused widespread disgust, especially because the Government chose to use the money to fund a cut in the higher rate of income tax. That is not fair and it is not right, and it certainly should not be part of the society we want to build. Even Liberal Democrats must know that it is deeply resented across the country, yet the Government continue to clobber lower and middle-income families, whether by freezing the maternity pay of new parents, taking child benefit away in a fiendishly complex tax assessment process or reducing the value of the tax credits on which so many working people rely. They cannot even ensure that the money men pay their fair share, with a bank levy that for two years running has undershot the supposed target of £2.5 billion that the Chancellor claimed it would collect.
On maternity pay, the bedroom tax and the cuts to tax credits, the Government have their priorities all wrong. They are handing a tax cut to millionaires when millions of hard-working families pay more. Voting for the motion is an opportunity, especially for the Liberal Democrats, to tell the Government that they need to rebalance their priorities.
Jim Shannon (Strangford) (DUP)
I thank the hon. Gentleman for introducing an admirable motion. Does he agree that it is not just about tax cuts for millions of people on middle and low incomes, but that it could also be an incentive for first-time buyers to get on to the first rung of the ladder? They do not want to buy a mansion, just a first house. Should the money be used for that too?
Chris Leslie
The hon. Gentleman makes an important point about finding ways to help those who aspire to own their home. I am certainly interested in discussing options for how that might be achieved, because it is important. It is becoming very difficult for people in those circumstances. They are the home owners that we really need to focus on. It is amazing that so many Government Members want to defend the massive super-wealth of those with properties of £2 million and above. All we want is that they pay their fair share, as the motion states in plain and simple terms. We are giving a timely pre-Budget opportunity for the House to express support for or opposition to a mansion tax as
“part of a fair tax system.”
It could not be more straightforward. The country is crying out for a tax system that focuses on helping the majority of the public and ensures that the wealthiest 1% pay their fair share.
First and foremost, Government Members have a duty to their constituents, who will be astonished if their MP flunks this opportunity to make real change because they are suppressing their principles in a bid to cling on to power.
Mr Speaker
I do not think the hon. Member for Nottingham East is giving way; he has completed his speech. I call Mr David Gauke.
The Exchequer Secretary to the Treasury (Mr David Gauke)
I beg to move an amendment, to leave out from “House” to the end of the Question and add:
‘notes that this Coalition Government has cut income tax for 25 million people, taking over 2.2 million low income individuals out of income tax altogether, while at the same time increasing taxes on the wealthy, including raising stamp duty on expensive properties and restricting tax reliefs; further notes that both parts of the Coalition continue to support tax cuts for people on low and middle incomes; notes that the part of the Coalition led by the Deputy Prime Minister also advocates a mansion tax on properties worth more than £2 million, as set out in his party’s manifesto, and the part of the Coalition led by the Prime Minister does not advocate a mansion tax; and further notes that the top rate of income tax will be higher under this Government than under any year of the previous administration and that the rich are now paying a higher percentage of income tax than at any time under the previous administration, demonstrating that it presided over an unfair tax system where the rich paid less and the poor paid more in tax than now, meaning nobody will trust the Opposition’s promises on tax fairness.’.
After listening to the speech of the hon. Member for Nottingham East (Chris Leslie), we might have thought that it was the last Labour Government who increased stamp duty land tax to 7% on residential properties costing £2 million or more. We might have thought it was Labour that introduced a 15% rate of stamp duty for properties owned through a corporate vehicle. We might have thought that it was the last Government who imposed a cap on reliefs, limiting the extent to which the wealthy can drive down their tax rate, and we might have thought it was the last Government who deployed more resources to Her Majesty’s Revenue and Customs to tackle evasion and avoidance, and closed down loopholes such as disguised remuneration that cost the Exchequer nearly £1 billion a year.
We might also have thought that the Labour Government had introduced the 50p rate of income tax in their first Budget, not their 13th. We might have thought it was the Labour Government who had taken more than 2 million low-paid earners out of income tax by raising the personal allowance.
Whatever the differences that may exist on the Government Benches, and there are differences on this matter, one thing is very clear: the Opposition are in no position to lecture the two parties on the Government Benches about how to put in place a fair tax system that provides support to working people and taxes the wealthy effectively.
Alex Cunningham (Stockton North) (Lab)
At Treasury questions, one of the Minister’s colleagues said that the Government are focused on the causes of poverty. Can the Minister tell me how many of his millionaire friends getting a huge tax cut this year are actually pleading poverty?
Mr Gauke
In the last Budget package we increased taxes on the wealthy—higher rates of stamp duty, closing loopholes and putting a cap on reliefs. That is getting far more money from the wealthiest than a 50p rate that failed to do what income tax is supposed to do, which is raise funds to pay for public services. It did not do that.
Stewart Hosie (Dundee East) (SNP)
One of the reliefs that has been reduced is on 40p tax, which went down from £37,000 to £34,000 and then to £32,000 this year. The Minister has squeezed the genuine middle class—the people earning just over £40,000—not the £400,000 a year middle class. That bit of cynicism will never be forgotten by those people.
Mr Gauke
I am afraid the hon. Gentleman is wrong. People earning just over £40,000 have seen tax cuts and a reduction in the total amount of income tax they pay, because the personal allowance has increased to more than compensate them. The higher-rate threshold has not increased as it might have done, because higher-rate taxpayers would gain more from the personal allowance than basic rate tax payers. Someone on between £40,000 and £44,000 a year is paying less income tax as a consequence of the Government’s policies than they would have done otherwise.
Geraint Davies
Will the Minister take this opportunity to confess that the reason why the Treasury predicts less will be generated by the 50p rate in the one year of its operation than the 45p rate is that he knows, as I do, that millionaires can move their money between tax years? As the rate only runs for one year, they will move their money to the lower tax year. He would raise more money if he kept the 50p going. It is a con for his mates.
Mr Gauke
There are two points. It is correct that the wealthy are often able to move income from one year to another, but the conclusion that HMRC and the Office for Budget Responsibility reached is that even taking into account the forestalling effect, the behavioural consequences of the 50p rate were so significant that it barely raised any revenue. That is the reality. It even takes into account the hon. Gentleman’s point about forestalling. That approach has been confirmed by the OBR. The 50p rate failed.
Anas Sarwar (Glasgow Central) (Lab)
The message that the Government have repeated over and over again is that we are all in this together. Take the example of families in my constituency who live just one mile apart. One has been handed a tax cut as a result of the scrapping of the 50p tax rate. One mile in the other direction families will be handed a food parcel. Does the Minister think that is fair?
Mr Gauke
Let us look at what was in the last Budget in respect of stamp duty and the cap on reliefs. We could also look at what we have done with regard to capital gains tax. The independent Institute for Fiscal Studies has made it clear that the top 20% are affected most by the fiscal consolidation policies that have been pursued in this Parliament. Those with broadest shoulders are bearing the greatest burden. However, we have an enormous deficit that we have to get down—a deficit that we inherited from the Opposition.
Mel Stride (Central Devon) (Con)
Will my hon. Friend confirm that the highest rate of income tax currently under this Government is higher than was the case in the previous Government’s 13 years, all bar the last couple of weeks?
Mr Gauke
My hon. Friend is right. The Labour Government were in office for 4,758 days. For all but 36 of those days, the highest rate of income tax was at 40p. Then it moved to 50p. There is a good question to ask the Opposition about why they kept it at 40p for so long. Why did they leave it until the fag-end of their Government, when it was clear that they would not be in government any more? The reason is that the 50p rate, predictably enough, did not do what it was supposed to do. It did not raise revenue, and an income tax that does not raise revenue is not something that a sensible Government would persevere with.
I turn to the mansion tax.
Mr Gauke
No. I shall make a little progress, devastating though the hon. Gentleman’s interventions so often are.
We have always been quite clear that the proposed mansion tax is an issue on which the two parties in the coalition have differing views. Our Liberal Democrat colleagues have supported the principle for some time. I am sure that the Under-Secretary of State for Communities and Local Government, my right hon. Friend the Member for Bath (Mr Foster) will make that clear when he winds up the debate. In contrast, Conservative Ministers have very real concerns over such a proposal. We have concerns that a third of the properties in London worth more than £2 million have been in the same ownership for over 10 years, and that a mansion tax could hit asset-rich but potentially income-poor households, a point made by my hon. Friend the Member for Battersea (Jane Ellison).
Dame Angela Watkinson
My hon. Friend will know that £2 million does not buy a mansion in London, and certainly not in outer London, where I have a number of constituents who moved out from inner London decades ago. Their homes have increased in value beyond their wildest dreams over a very long period, but they are in fact cash-poor, quite often living on a modest pension. The thought of paying very large amounts of tax every year for the privilege of owning a home that they have had for many years would be extremely frightening. Can the Minister think of any practical way that an elderly person in that position could possibly pay that tax?
Mr Gauke
I noticed that that very point was one that the hon. Member for Nottingham East seemed to struggling with. He seemed to suggest that there were ways in which the Opposition would address that. I am not sure whether that was included in the costings they have produced. There is an issue for the asset-rich, cash-poor which would need to be addressed in the design and would obviously have an impact on the costing.
Sheila Gilmore (Edinburgh East) (Lab)
Would the Minister suggest to people in those circumstances that they might want to take a lodger, just as it has been suggested to my 60-year-old constituent that the answer to the bedroom tax is to take a lodger?
Mr Gauke
I am not going to debate at length the spare-room subsidy, which is an area of public spending constraint that we need to engage in. There is a genuine issue in respect of the asset-rich, cash-poor that the hon. Member for Nottingham East appeared to recognise and which would have to be addressed.
The mansion tax would be administratively burdensome for HMRC to operate, not to mention intrusive for the person having their home inspected. We would have concerns that in Labour’s hands, the starting level for such a tax would not stay at £2 million for very long. What began as a mansion tax would soon become a homes tax. To coin a phrase, it would become a tax for the many, not for the few.
Chris Leslie
I am surprised the Minister thinks that “the many” own properties worth £2 million and above. I wanted to ask him about the Treasury’s own proposition that residential properties of £2 million and above, albeit owned by a company, should have an annual charge based on a self-assessed valuation, with a banding process. Is he saying that his own policy is administratively burdensome?
Mr Gauke
Let us be clear. One of the weaknesses in the tax system that we inherited was the fact that people were able to walk around the paying of stamp duty. On very valuable properties, it was all too easy for people to arrange their affairs thorough corporate vehicles and not pay stamp duty. In the last Budget this Government introduced measures that will deal with that enveloping and deal with one of the unfairnesses in our tax system. One of the ways in which we are going to do that, as well as a high stamp duty charge for properties held in corporate vehicles, is to bring in an annual residential property tax. That is focused only on properties worth more than £2 million held by a corporate vehicle. It would apply to only 6,000 properties, we estimate. It is a very narrowly focused policy that will enable us to deal with an area of avoidance that was allowed to carry on for far too long under Labour.
Caroline Lucas
As a tax that is much harder to evade or avoid, there is the land value tax. That is supported by one half of the coalition and by the OECD and the IMF. The IFS has said that the case for a land value tax is overwhelming because it is much fairer. Given that that is the case, can the Minister explain why his Government will not even do some basic research into it, as my private Member’s Bill requested?
Mr Gauke
We are left with the same issues of complexity of valuation across the board, and the issues of the asset-rich, cash poor. That is why my part of the coalition is not keen to proceed with that matter, but it is worth pointing out that we are raising more money from property. There is a stamp duty land tax of 7% on residential properties costing £2 million or more, a policy that is easy to administer and will not impact on existing home owners.
On the mansion tax, we have made no secret of the fact that the two parties disagree. If we did not disagree on some things, we would be one party, not two. But in the circumstances that we are in, it has been perfectly possible for two parties to work together in a sensible and mature way and to reach agreement on a host of measures that have made our tax system fairer, easier to understand and competitive. We heard much from the hon. Member for Nottingham East to the effect that we should do more to help low-income workers. May I just remind him and the House of the progress that we have made in raising the personal allowance? In 2010, someone on £6,500 was paying income tax at 20%. From next month, someone has to earn £9,440 before paying any income tax at all. Our measures on the personal allowance have provided a huge tax cut for millions of people and will take more than 2.2 million of the lowest earners out of income tax altogether. In fact, over the course of this Parliament, someone working full time on the national minimum wage will have seen their income tax bill cut in half.
Let us contrast our record with that of our predecessors. Let us remember that when the right hon. and absent Member for Kirkcaldy and Cowdenbeath (Mr Brown) did his last Budget, rather than cut taxes for the working poor, he increased them. People talk about the scrapping of the 10p rate, but Labour did not scrap it, they doubled it. They turned it into a 20p rate. For example, someone earning £9,000 a year in 2007 would have heard a Labour Chancellor stand up and announce that a Labour Government were going to increase their income tax bill by more than £200. Last year, someone on £9,000 a year would have heard a Conservative Chancellor stand up and announce that a coalition Government were going to take them out of income tax altogether. Our constituents on £9,000 a year will soon be paying no income tax at all, saving more than £500 since the coalition came to power. Labour turned a 10p rate of income tax into a 20p rate. This coalition has turned a 20p rate into a 0p rate.
Mr Russell Brown (Dumfries and Galloway) (Lab)
Will the Minister remind the House what he did with the personal allowance for pensioners? Am I not correct in saying that he froze that?
Mr Gauke
There is no particularly sensible reason why there should be a different personal allowance for someone who is 64, compared with 65 or 75. It is clearly a simpler and, I believe, fairer system that one personal allowance should apply to everybody. That was never an option available to the Labour party because the main personal allowance for someone under the age of 65 was so low. We have been able to increase it substantially so that one personal allowance can apply to everybody. That is a simpler and fairer way to deal with that issue. At the same time, we have increased pensions, thanks to the triple lock guarantee, by much more than we would have done if we had stuck with the plans that we inherited. Last year, pensioners saw their biggest increase in the state pension.
Mr Gibb
While my hon. Friend is on the subject of the last Labour Government, he will recall that in 2009-10, the last financial year of the last Labour Government, expenditure exceeded income by £159 billion, equal to 11% of the whole country’s income. Since he has been a Minister at the Treasury, have civil servants explained to him why that was allowed to happen, virtually bankrupting this country?
Mr Gauke
My hon. Friend makes a very good point. There is no explanation that civil servants can give for that. An explanation and an apology are due from the Opposition, but we await either of those. I think that they persist in the view that there was no structural deficit even before the crash—
Chris Leslie
There was certainly a global financial crisis. But can the Minister confirm that under the current Chancellor of the Exchequer, national debt has risen from £811 billion to £1.111 trillion? Has debt risen by that much—yes or no?
Mr Gauke
Debt is the accumulation of deficits. We inherited the largest deficit in our peacetime history, and every measure that we have taken to reduce that deficit the Opposition have opposed, and then they complain that debt is rising. That is the most absurd position. We are criticised for not borrowing enough, and then we are criticised for our debt going up. There is no consistency or credibility in the Opposition’s position, just as there was no credibility or consistency in their treatment of low-paid workers. In government, they raised the rate of income tax; in opposition, they make promises that they will cut it. When we remember the reality, why should those on low incomes ever trust Labour again?
Mr Alan Reid (Argyll and Bute) (LD)
In fairness of taxation, another area where this Government have done a great job is on fuel duty. The fuel duty is now 10p a litre lower on the mainland and 15p a litre lower on islands than it would have been if the Labour party had still been in power. I hope that my hon. Friend will continue that good work and that in the Budget there will be an announcement that the September fuel duty increase inherited from Labour will not go ahead.
Mr Gauke
I will take that as a Budget representation. It is perhaps worth pointing out that there was a measure that the previous Labour Government had to reduce the deficit, which was substantial increases in fuel duty over the course of this Parliament. That is a measure that we have been able to stop, and quite right too.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
Will the Minister explain why four out of five people feel that austerity is not working? Is it related to the downgrading of the economy yet again for 2013? Is it the shrinking of the economy in the last quarter of last year by 0.9%? Or is it that the OBR had to call the Prime Minister to task and give him an economics lesson?
Mr Gauke
This is a difficult time for all major economies, and the UK is no exception, but matters would be much worse if we were to abandon our desire to bring some control to the public finances. We must ensure that there is the political will to deal with the public finances, and that is what this Government will continue to demonstrate. The approach of ignoring the deficit, believing that this is all an issue that can be addressed at some future time, is economically irresponsible and unfair on future generations who will face the bill that they will have to pick up because we failed to address those problems now.
Geraint Davies
Is this not also about fairness? For instance, while the threshold changes that he has mentioned of £3,000, which deliver a saving of £11.50 a week to taxpayers, cost £9 billion, he will save half a billion pounds from inflicting that £11.50 on people for the empty bedroom tax. With a small amount of the money used to raise the tax threshold, he could have alleviated that for the very poorest. Is not this about values and not inflicting the most hardship on the most poor while giving a bung to the voters?
Mr Gauke
I take it from what the hon. Gentleman says that rather than raise the personal allowance, he would prefer us to spend more on the welfare bill. If that is the hon. Gentleman’s position, fair enough, but I do not agree. Raising the personal allowance, taking people out of income tax, and making sure that work pays, are all things that a sensible Government should do, and I am delighted that this coalition Government are able to do that.
I come now to the taxation of those on highest incomes, on which we have already touched. The top 1% of taxpayers, those with incomes of over £150,000 a year, will pay more than a quarter of all income tax, while the top 5% of taxpayers, those with income of £68,000 or more, will pay nearly half of income tax. We agree that it is important that we create a tax system that ensures that those who earn the most contribute the most, but it is also important that we create a tax system that works. Among other things, that means a tax system that does not damage our economy by undermining our international competitiveness.
The Government inherited a top rate of tax at 50p, a rate that our predecessors, who this afternoon have painted themselves as the party of taxing the rich more, had put in place for just 36 of their 4,758 days in power. The rate that they left us with was the highest top rate among major economies. The last Labour Chancellor had made it clear that it was temporary. It was also very clear that it was having an immediate impact on our competitiveness.
Let me say something that I hope is not controversial: the principal purpose of income tax is to raise revenue. So we commissioned HMRC to analyse just how effective the 50p rate was in raising revenue.
That HMRC report, laid before the House, set out thorough and compelling evidence on the impact of the 50p rate. It showed that the rate was uncompetitive, distortive and inefficient. Not only did it not raise much revenue, but it could even have cost the Exchequer money when the indirect impacts on other taxes were taken into account. This Government were not prepared to maintain a rate of income tax that was both ineffective at raising money and that left us with the highest statutory rate of income tax in the G20, so we acted, in the interests of the country, and the top rate of tax will fall to 45p from April this year. This will see our top rate of tax drop below that of Australia, Germany, Japan and Canada, which will send a signal to businesses taking decisions on investment and location that the UK is a competitive environment.
Rehman Chishti (Gillingham and Rainham) (Con)
Has the Minister seen the KPMG report that states that Britain’s competitiveness is better than that of Switzerland and the United States and that that is a consequence of the measures taken by the Government?
Mr Gauke
My hon. Friend is absolutely right to raise that point in the context of the changes we have made to our corporate tax system. In 2009 KPMG commissioned a survey of tax professionals, asking them to name the three most competitive countries. The UK was nominated by just 16% of respondents. In 2012 KPMG undertook the same survey and the UK was nominated by 72% of respondents. That is a dramatic change, which we are proud of, and it will help our economy grow. We have also had the courage to reduce the 50p rate, which will help our competitiveness, too.
Andrew George (St Ives) (LD)
One thing we do know is that mansions cannot emigrate if the tax rate goes up. Earlier my hon. Friend the Minister said that the problem with the mansion tax is that it becomes a home tax. Does he agree that the council tax is also a home tax, and may I understand from what he has been saying that the Conservatives are coming round to the Liberal Democrat view that we should consider introducing a local income tax as an alternative for financing local authorities?
Mr Gauke
No, I think my hon. Friend would be wrong to reach that conclusion from what I have said. There is an interesting debate on the balance between property and income taxes, however, and I note his suggestion in that context.
May I now return to the topic of the 50p rate, as I know the hon. Member for Nottingham East likes to focus on it? The Opposition may think that in this day and age 50p is the least the wealthy should pay in income tax. I want to put to them the question raised earlier by my hon. Friend the Member for West Worcestershire (Harriett Baldwin). In less than four weeks the 50p rate will have gone. The additional rate will be 45p. Will Labour seek to reverse that? I am happy to take an intervention on this point. Will Labour seek to reverse that after the next election?
Chris Leslie
The Minister is asking the Opposition what is going to happen in two years’ time, but can he tell us what will happen in next week’s Budget?
Mr Gauke
That is very amusing, but of course I am not going to do so. I am fairly confident, however, that at the next general election the Conservative party will not be advocating a 50p rate of income tax. The hon. Gentleman is calling for a 50p rate of income tax, however. He will not tell us why. He is now saying, “Well, we don’t know what the economic circumstances will be.” That is fair enough, but does he think that his party will make a manifesto commitment at the next general election to introduce a mansions tax? Is that a commitment? I am happy to give way again.
Chris Leslie
It is very simple: now, in 2013, we can see the deficit rising and getting worse and we can see borrowing increasing, growth flat-lining and living standards falling, and the Minister is asking us to predict what we are going to do in two years’ time. How on earth do we know what other horrors are in next week’s Budget box or, heaven forfend, in the spending review of 26 June? Can he tell us what is in that spending review?
Mr Gauke
This is starting to get interesting, because we have now learned that the Labour party has moved a motion trying to persuade Liberal Democrats to vote in support of a mansion tax, yet Labour will not confirm whether it thinks a mansion tax is a sensible policy for the next Parliament. The position of the Liberal Democrats is clear and the position of the Conservatives is clear; what is not clear is whether the Labour party, after all, supports a mansion tax. Will it be in its manifesto? That is a perfectly clear question.
Debbie Abrahams
The Minister is being very generous in giving way, but I want to ask him what his Government are doing. I tabled a written parliamentary question to his Department asking about the average tax rates for different groups of people, and he may be astounded to know—as I am sure many of my constituents in Oldham will be—that 6% of people on incomes over £10 million pay under 10% income tax. What is he doing to address that inequity?
Mr Gauke
That is exactly why in the last Budget this Government brought in a cap on reliefs preventing the wealthy from driving down their tax rate to such levels—something the Labour party never did in 13 years in government. I note, however, that I get no answers to my question.
Let us be clear: we hear lots of complaints about the 50p rate being reduced to 45p, but we get no indication as to whether the Labour party would or would not reverse that if it were to win the next election. I can only assume that that is because deep down it knows that campaigning on 50p might look good on a leaflet but is lousy for the economy; after all, that seemed to be Labour’s approach when it was in government. We have also learned this afternoon that the Labour party is not committed to a mansion tax in the next Parliament, after all. So what do we have? We have opportunism on the 50p rate and opportunism on the mansion tax.
Mr Gauke
I am going to press on.
This is what we have seen from the Labour party, therefore: we have a party that increases the tax rates on the low-paid and then lectures a Government who take the low-paid out of income tax; we have a party that is in uproar at our reducing the additional rate of income tax to 45p but that will not promise to reverse it; and we have a party that did little, or nothing, to tax expensive properties more now being converted to a mansion tax for the purposes of this afternoon’s vote for transparently political reasons, but refusing to confirm that it will be their policy at the next election. That is pathetic. It is insincere, it lacks any semblance of credibility, and it deserves to be defeated. I urge my hon. Friends to defeat the motion and support the amendment.
Mr Deputy Speaker (Mr Nigel Evans)
Order. There is to be a 10-minute limit on Back-Bench contributions with the usual injury time for two interventions.
Geraint Davies (Swansea West) (Lab/Co-op)
What a load of codswallop we have been listening to since the Minister got up on his hind legs! Obviously, this motion is setting out a direction of travel. We are saying that those with the broadest shoulders should take the biggest load and the poorest should not pay the cost of the bankers’ recklessness.
The myth that is habitually recited by Government Members is “What a fine mess you’ve left us in,” so it is important to remind people of the facts. I recently met people from the Bank of England, and I have in my hand a graph showing that our growth rate rose continuously between 1998 and 2008, but then dipped when there was the financial tsunami. The GDP growth under Labour was 37% before that dip. We then had the fiscal stimulus thanks to our friend Mr Obama and my right hon. Friend the Member for Kirkcaldy and Cowdenbeath (Mr Brown), which got us back to some fragile growth moving into 2010, but then the Tories came to power.
I also have a graph showing that two thirds of the deficit—the green bit—is from the bankers and the other third is the Government spending above their earnings in order to pump-prime, to avoid a depression and deliver a mild recession and a prosperous future for Britain. What happened? Obviously, George Osborne came along, announced that half a million people would be sacked but he did not say who they were, so public servants stopped spending—
Mr Deputy Speaker (Mr Nigel Evans)
Order. Please refer to the Chancellor by his title, not his name.
Geraint Davies
Exactly. The Chancellor, no less, decided to announce that half a million people would be sacked but did not say who they were, so people stopped spending and started saving, consumer confidence fell and the economy has been flatlining ever since.
Mel Stride
The hon. Gentleman refers to employment. Does he recognise the fact that there are 1 million new private sector jobs net, unemployment is falling and the level of employment, which is currently about 30 million, is the highest on record?
Geraint Davies
I am grateful to the hon. Gentleman for that intervention. If 1 million more people are in work but there is zero growth—in other words, there has been no overall increase in production—that implies that people who had been in full-time jobs are now in part-time jobs and that aggregate production has not increased, which is a complete failure. It is symptomatic of Tory Britain, with people scratching around for anything they can find in difficult times.
There has been some discussion of the 50p rate of tax. As I have mentioned, the reason the Treasury thinks it would not make any money from a 50p rate is that it knows that millionaires can move money between tax years, which is precisely what they have done. They knew that their Tory mates would reduce the top rate of tax the next year and so simply shifted their income to that year. The point that I had wanted to make in another intervention—I appreciate that two were taken—relates to the idea that the 50p rate does not work and is therefore dead. However, people earning between £32,000 and £42,000 already pay 52% marginal tax—12% for national insurance and 40% for income tax—but of course no one talks about that. How does that change their behaviour, and why is it fair that they pay the higher rate while people on £150,000 do not because they have accountants? It is ridiculous.
Geraint Davies
Does the hon. Gentleman want to intervene? Perhaps he earns £150,000; I do not know.
Mark Reckless
I want to develop the hon. Gentleman’s point. We currently have a tax band between £100,000 and £115,000 in which people face a marginal tax rate of 62%, with the personal allowance and national insurance. Is he suggesting that that is somehow justifiable, or more justifiable than the top rate tax he is suggesting for those earning more than £150,000?
Geraint Davies
I am simply saying that those with the broadest shoulders should take the greatest weight, that there is a strong case for a 50p rate of tax and that some people already pay the 50p rate. I am not saying that they should pay that. Our tax system is not very fair, and I will move on to that later.
The problem we face is that there is no growth in our economy because there is no consumer demand, and although the deficit—the rate at which the debt is increasing —has gone down by 25%, as we are constantly reminded, the overall debt continues to rise to unprecedented levels. We are almost back to a pre-1997 situation in which we are paying people to stay on the dole and, at the same time, cutting services. That is the old Tory vicious cycle. We want to get back to Labour’s virtuous cycle, with people in jobs and paying tax and with unprecedented growth.
The other point that is always made is that the banks were unregulated and that is why everything went wrong. The reality is that the Financial Services Authority—I know that it has had a bad name—was introduced in the teeth of opposition from the Tories, who said that there was too much regulation already. Then, when the banks started going bust, the Labour Government said that we had better nationalise them so that people could still get money out at the hole in the wall. The Tories said, “No, let them fall.” That would have been a complete catastrophe. So in other words, the previous Labour Government did a very good job. We now have a situation in which, instead of confronting the deficit, which is what we should be doing, the Government have the wrong balance between growth and cuts, and within the cuts there is the wrong balance—80% cuts and 20% tax.
As for the claim that we are all in this together, we are now in a situation in which the poor are paying the most. I mentioned in a brief intervention—I also raised this in Prime Minister’s questions—a man who came to see me who had £20 a week, after utility bills, for food and clothing. He now faces a further hit of about £7 a week for having an empty bedroom. How will he survive on £2 a day? Allegedly, that change will save the Government about half a billion pounds, but of course it will not, because obviously people will move to the private sector, where rents are higher, and there will be empty houses in the public sector because councils will be forced to evict people. It makes no economic sense at all. However, if it did raise half a billion pounds, which is about one twentieth of what the Chancellor is investing in the tax thresholds, the hit to the very poorest will be similar to the gain to a very large number of people, and that will cost a great deal of money.
The point I am trying to make is that what will probably result in no savings will inflict enormous hardship on the most vulnerable, which is unnecessary and wrong. Those people, because they are very poor, have no option but to spend all their money locally, which helps to boost growth. If that money is redistributed from the very poorest to the squeezed middle, which is obviously good for votes—a callous and cynical manoeuvre in difficult economic times—then clearly that is not in favour of growth either. In so far as it will push money right up the income scale to the millionaires who live in mansions—the people we have been talking about—what will they do with the extra money the Government will have bunged to them? The threshold has gone up, so those at the top will also gain as a result. They will hide it away offshore.
There are therefore difficult issues to confront. We need to invest in our productive economy, but what is a fair way to do that in a—dare I say it—one nation way? Britain wants a one nation future that works and a future that cares, and the question for us all in difficult times must be how we deliver that. How do we invest, as I mentioned during Treasury questions, in super-connectivity for the city of Swansea? We do it on the back of investment in universities, electrified rail and communications and by marketing city regions, and indeed Britain, for inward investment. Those are all important. The Minister mentioned some of the issues about marginal corporate taxation, but the research tends to show that the major inward investment drivers are around research and development skills and access to markets, and we are well positioned on that.
On corporate taxation, there is a lot to be said—to be fair to the Minister, he mentioned this—for the idea of taxing economic activity where it occurs, whether we are talking about Google, Amazon or other companies. Amazon is local to my constituency and provides valuable jobs, but it needs to be fair and there needs to be a level playing field. If people are buying on Amazon rather than at a local shop, it is important that the local shop knows that they are all playing the same game.
Let us take the example of Apple phones and all the technology in the phone I am holding in my hand. The internet was invented here, and the other stuff, such as touch-screen and voice-activated technology, was invented in the national institute of science in California. So Apple is being taken to court by California for $26 billion because it does not pay any tax. Apple has taken innovation from the public sector, repackaged it, branded it, manufactured it overseas and got it taxed somewhere else. A big issue is that global conglomerates need to be brought to account and to pay their contribution to the public services where people are consuming their products.
Some of these people obviously live in mansions. The issue about the mansion tax, of course, is that it is part of a more general review of council tax, as other Members have mentioned, which has not been uprated. There needs to be a progressive system of taxation. Obviously the mansion tax, which is a Liberal Democrat proposal, had not been completely thought out in all its intricacies, but it is a direction of travel. If someone lives in a £2 million house, it is not that difficult to find ways of getting income out of it. It can be rented out and, with the rental income, the owner could have a palatial place in south Wales and a profit, so they could sit by the sea and enjoy themselves. For those people who are stuck in £2 million cupboards in London, allegedly, and we feel sorry for them, there are ways of releasing equity, as they could be rented out and people will pay the market rate.
Gordon Birtwistle (Burnley) (LD)
I am listening to the hon. Gentleman make some progress on the mansion tax. Obviously it is a Liberal Democrat policy, and I am really looking forward perhaps to voting for it later. Can he explain to me—I am keen to know—whether it will be in the Labour party manifesto at the next election?
Geraint Davies
Sadly, I cannot confirm that at the moment because I am not quite in a position to be writing the party’s manifesto, although I have ambition.
In difficult times we should focus on growth and ensure that those with the broadest shoulders take the weight and that we do not just squeeze the poor for the bankers’ mistakes. This proposal is part of a tapestry of opportunity to move forward on that, and we call on the Liberal Democrats to support us on what is, after all, their idea. Locally in Swansea the Liberal Democrats have been a very strong party with control of the council. Since 2010, they have been in a woeful state because people are worried about their broken promises on tuition fees and so on. This is their chance to redeem themselves so that there can be some glimmer of belief in a future for the Liberal party. If they do not vote for their own policy, what hope is there? Very little, I am afraid.
Stephen Williams (Bristol West) (LD)
Thank you, Mr Deputy Speaker—indeed, a man from Swansea.
It is a pleasure to speak in favour of the Government amendment tabled by the Deputy Prime Minister and the Prime Minister, because it reflects the realities of coalition Government. The amendment is completely frank about the fact that there are two parties in coalition and that one of them—my party, the Liberal Democrats—supports a mansion tax while the other, the Conservative party, does not. When we conducted our coalition negotiations back in May 2010, the Liberal Democrats were successful in getting many of our policies into the coalition agreement that is now being implemented by the Government, but the mansion tax was resisted by the Conservative party, and that is why the Chancellor has not, thus far, put it forward in his Budgets. We accept that position. Our amendment reflects the realities of the coalition.
Anas Sarwar
Will the hon. Gentleman tell us what part of the Opposition motion he cannot support?
Stephen Williams
I will come to that, if the hon. Gentleman is patient.
The key sentences in the Opposition motion and in the coalition Government amendment are those which refer to our support for tax cuts for people on low and middle incomes; we have that in common. However, it rather depends on what one means by that. We know what we mean by it. At the last general election, the Liberal Democrats said that the most effective way to cut taxes for people on low and middle incomes was to raise the income tax threshold to £10,000. That policy was accepted by our coalition partners and it has now been delivered by the coalition Government. I listened carefully to what the Leader of the Opposition said in his speech just a month ago when, lo and behold, Labour was converted to a mansion tax. The purpose of that conversion was specifically to right the wrong that the hon. Member for Nottingham East (Chris Leslie) acknowledged was done in 2007—in other words, to reintroduce the 10p rate. That is what Labour’s policy is. The motion is not entirely clear about that, but we have heard the words of the Leader of the Opposition. We know that, yes, they are now in favour of a mansion tax, but specifically to fund a 10p tax rate, which we think will be completely ineffective.
Stephen Williams
Yes, it was. I said it on “Westminster Hour”, on Radio 5, on the “Daily Politics” show, and on other programmes as well. Indeed I could have written it myself. However, I know precisely what I mean by a mansion tax, but we have not heard spelled out in any detail what Labour Members think it should be. I know what I mean by a tax cut for low and middle-income earners, because that is what this Government are doing while we are in office. I am entirely clear what I mean by the text of the motion; the trouble is that it has not been exactly clear what Labour Members mean by their words.
Chris Leslie
We support the proposition that the hon. Gentleman has elucidated about a mansion tax, so, okay, we are clear about what we mean by a mansion tax. When the Business Secretary said that if the motion were
“purely a statement of support for the principle of a mansion tax, I’m sure my colleagues would want to support it”,
was he wrong?
Stephen Williams
The Business Secretary is never wrong; he is a very wise man. I do not see any great difference between what he said and what I said on the record several times yesterday and over the weekend. We know what we mean by a tax for low and middle-income earners. We know what Labour Members mean as well—a reintroduction of the 10p tax rate, and that is why we disagree with them.
Stephen Williams
I cannot give way again because I have now lost all my concessions.
The reason the Business Secretary—our shadow Chancellor, as he then was—proposed a mansion tax towards the end of 2009 was that property wealth in our country is woefully under-taxed. Our only property tax is council tax. In England, the top council tax band, band H, is twice the rate of the broadest band, band D, and three times that of the basic band, band A. That means, in effect, that in our only property tax the rate for a £10 million mansion is only three times the rate for a bedsit. That is clearly a ludicrous way to tax property. The band H top rate is only £320,000. Let us take as an example the royal London borough of Kensington and Chelsea, just along from where we are now. A £90 million mansion—I can see no other way to describe a £90 million house—in Kensington Palace gardens pays council tax of £2,151. That is the top rate of council tax that can possibly be paid in the London borough of Kensington and Chelsea—exactly the same as the rate for a small flat in that borough. That is a nonsensical property tax. That is why my party, the Liberal Democrats, backs the introduction of a mansion tax on properties with a value of over £2 million, with an annual levy of 1% on the excess over £2 million. That means that someone who had a £2.1 million mansion would pay mansion tax of £1,000 tax a year, while someone with a £3 million mansion would pay mansion tax of £10,000 a year.
The Minister and several other Members have asked what would happen to people who are asset-rich but income-poor. We have always had a very simple answer to that. In those cases, the tax would be rolled up and would crystallise once the property was sold and then be met from the sale price. That is a very simple concept for a very simple tax. We have also said that it should be a national tax, not a local tax. We have not hypothecated it to any particular tax measure, and we have not tied it to the reintroduction of a 10p tax rate as the Opposition have, which is why we do not support their motion. However, it could take us to the final milestone of getting to the £10,000 income tax-free threshold that I am reasonably confident will be announced very shortly. It could certainly contribute to getting the Liberal Democrats to where we wish to go next—that is, to making sure that every adult on the national minimum wage, which is currently £12,071, should not be caught in the income tax net. We may be able to make progress towards that in the latter days of this coalition, but it will certainly be in the Liberal Democrat manifesto in 2015; we are completely clear about that.
Labour Members have linked their mansion tax proposal—at least the concept, as they have not fleshed out what it really is—to the reintroduction of the 10p tax rate. I think it is fair to have a little look at Labour’s record on the 10p tax rate. I love Budget debates, and I have been in the House for all of them in the eight years that I have been an MP. In March 2007, I was sitting just where the hon. Member for Stockton North (Alex Cunningham) is sat on the Opposition Benches as I listened to last Budget speech of the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) in which he announced the abolition of the 10p tax rate. That was met on the then Government Benches with wild cheers and waving of Order Papers because it was to finance a cut in the basic rate of tax from 22% to 20%. Why was that being done? What was so crucial about its timing? As we know, the then Chancellor was heir apparent to the then Prime Minister, Tony Blair. He thought that there was going to be an autumn 2007 general election and that an income tax cut for better-off people in society, financed by the poorest, whom he assumed would always vote Labour, seemed like a good piece of populist politics—but it backfired and blew up in his face. Six years on, we are asked to believe that Labour wants to make good for that mistake.
There was another tax change in 2007 that does not get much attention. A lot of Labour Members here today were not Members of the House at that time, so I will forgive them for not remembering, but perhaps someone else on the Labour Benches wants to remind us of the other tax change that the former Prime Minister introduced in 2007. I see that there are no volunteers, so I will tell the House, because I can see that Members are now in suspense: it was a doubling of the inheritance tax threshold from £325,000 to £650,000 in a double-income household. That is Labour’s record in government: tax cuts for the wealthy. We know that they were completely discombobulated by the then shadow Chancellor’s announcement to the Conservative party conference of a cut in inheritance tax and were keen to match it.
I am sure that Labour Members love reading Polly Toynbee’s column every week and that it is compulsory reading at the breakfast table in Labour households and in the Tea Room. In her column in The Guardian this morning dear Polly said:
“Labour barely dared breathe on the riches that soared upwards on their watch.”
I could not agree more. At the time of its abolition, the 10p tax rate taxed incomes under £7,455 at 10%, but since taking office we have taken such incomes out of tax altogether. Surely it is better to be taxed at 0% than at 10%, so the coalition has been much fairer to people on low incomes.
That is not all that the coalition has done. We have restricted pension tax relief. Up to May 2010 under Labour someone could put more than £250,000 a year into their pension pot, whereas this year under the coalition the figure is only £40,000. We raised capital gains tax from 18% to 28% and stamp duty on properties worth more than £2 million to 7%. We might not have been able to persuade our coalition partners on an annual mansion tax, but we have persuaded them on a mansion duty when properties of that value are acquired.
We have done more to tackle avoidance. We set up an affluence unit in Her Majesty’s Revenue and Customs, which will examine in detail the affairs of 500,000 of the most wealthy people, and placed a 15% charge on domestic properties bought via a company—a classic example of avoidance that the previous Government did little to block, just as they did not block and, indeed, voted against disguised remuneration when we proposed to tackle it in one of our first Finance Bills.
We have been through many Opposition days, both in government and in opposition. When the votes are counted at 10 past 4, very little will have changed. What are the origins of this motion? We know that it is based on a policy stolen from the Liberal Democrats. I understand the right hon. Member for South Shields (David Miliband) also proposed it in his leadership bid, so one brother steals from the other as well as from the Liberal Democrats. This is pantomime politics, but nobody is laughing.
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.
Mr Deputy Speaker (Mr Nigel Evans)
Order. I hope that the hon. Gentleman’s question will be about the mansion tax, because it seems as though the speech is going somewhat wider.
Stewart Hosie
I very much agree with the tenor of what the hon. Gentleman is saying, particularly in relation to fair taxation. However, I remind him that barely any of the sensible things that he wants to do were achieved in the 13 years of the Labour Government. Some of what he says is therefore rather galling to listen to.
Mr Brown
The hon. Gentleman and others in this House have complained long and hard over many years about the investment that was made in this country by the Labour Government and the work that they did to stabilise and take forward the economy. There is a reluctance to remember what had to be done at the time of the crisis when the banks failed. We had to support the economy of this country by supporting those banks.
To conclude, I will return to the point that I made at the beginning of my speech. All we are asking is that the Government bring forward proposals for a mansion tax at the earliest opportunity. We are not asking that a mansion tax be introduced, but we need to engage in the debate. I would go further and say that what our nation needs and deserves above all else is an open discussion about taxation and what it means to our country. What can taxation deliver for the people of our nation? Our European neighbours have such discussions.
I hear what Liberal Democrat Members say, but any sincerity that they have must be shown in the Division later this afternoon.
Mark Reckless (Rochester and Strood) (Con)
It is a pleasure to follow the hon. Member for Dumfries and Galloway (Mr Brown), who ingeniously addressed the topics of both of this afternoon’s debates and some even broader topics.
I will confine my remarks to the taxation of high-value property. The motion refers to a mansion tax on properties worth more than £2 million. A serious problem with the motion is that the Government have already brought in a range of measures to increase the incidence of tax on the owners of properties worth more than £2 million. No definition of “mansion tax” per se is provided in the motion.
The Leader of the Opposition hypothecated the revenues that would purportedly be raised by the mansion tax to reintroduce the 10% rate of tax, which was abolished by the previous Government. The cost of that would be some £7.3 billion. Research that was published recently shows that to raise that amount of money, a so-called mansion tax would have to be introduced not on properties worth more than £2 million, but on properties worth more than £415,000. It may be that the Opposition wish to tax people in that class of income more. Perhaps they think that they are rich, are benefiting too much and need to pay more to the Government. I look forward to their fighting the next election on that basis.
Meanwhile, our coalition partners have said that there should be a mansion tax that applies only to residential property worth more than £2 million. However, we have also heard from the Liberal Democrats—I am not sure whether it came from the federal policy committee or quite how they develop these policies—that it would apply not just to mansions above £2 million, but to property generally above £2 million. It is therefore just as important for somebody who has 10 flats worth £200,000 each to pay the extra tax as somebody who has a so-called mansion worth £2 million. Apparently, they are going to go further and inspect the contents of jewellery boxes and levy taxes on those as well.
Stephen Williams
My hon. Friend is setting various hares flying across the field. Of course, I am not in favour of hunting, but those hares need to be stopped from running. The jewellery tax is complete nonsense. As I have said many times on the record, we are not in favour of a net wealth tax that allows HMRC to look beyond people’s front doors. On the property portfolio, if somebody owned 10 flats, the nine that they did not live in would probably be attracting rental income and so would already be taxed. A mansion tax would apply to somebody’s principal residence if it was worth more than £2 million.
Mark Reckless
I am grateful to my hon. Friend. He speaks about a person’s “principal residence”, so I assume that he would allow them to remain exempt from capital gains tax, notwithstanding the £2 million-plus property that they live in.
Mr Charles Walker (Broxbourne) (Con)
If it is somebody’s principal residence that will be taxed if it is worth more than £2 million, does my hon. Friend think that the threshold will be £4 million for husbands and wives who are living together in a home?
Mark Reckless
Who can tell with these things? My hon. Friend the Member for Bristol West (Stephen Williams) has given assurances, but the policy proposals that I cited have been submitted to the federal policy committee of his party. It is difficult as an outsider to judge how formal and important that is, but there are clearly Liberal Democrats who are talking about a broader tax on wealth and capital, including on jewellery. I think that would be a mistake.
It is unfortunate that the Opposition with this motion and our friends on the Liberal Democrat Benches have become so focused on the arbitrary sum of £2 million. The Government are doing very good things in raising tax from people who own high-value properties but have not been paying their fair share of tax. The Opposition and the Liberal Democrats seem to want to confine their efforts to rein in tax avoidance to those who own houses worth more than £2 million. I and my Conservative colleagues do not understand why we should be concerned about tax avoidance just when a person’s house is worth more than £2 million.
It is hugely welcome that the Government are bringing in the anti-avoidance measure of a 15% tax when homes that are worth more than £2 million are enveloped into a company, which is generally done for the purposes of tax avoidance. However, I am not entirely clear why we are doing that only for homes worth more than £2 million, except for the fact that that is the arbitrary number that has been chosen by the Liberal Democrats for such taxation. [Interruption.] The Opposition are calling out, but they did nothing about this matter for 13 years. It is a huge improvement that this Government are dealing with tax avoidance using properties worth more than £2 million.
Mark Reckless
If I may, I will continue for a while.
There have been consultation papers and draft legislation on how the anti-avoidance measure will be introduced. There will be self-assessment, so there will be no need for the great costs of revaluing properties. I am sure that the Minister is keen to raise more money, so will he say whether there is any hope that the Government will take action against people who avoid the 5% tax on a property that is worth between £1 million and £2 million by putting it into a company?
Perhaps the Minister will assist me on another point. Where people have enveloped houses into a company there will be an annual charge of between 0.3% and 0.7% of the property’s value, which is welcome. Many of the papers have suggested that the purpose of that is to encourage people—or in this case companies—to de-envelope their properties, and the measure will come in only after 1 April 2013. Do the Government expect stamp duty to be paid on those de-enveloping transactions, so that if the property’s value is more than £2 million there will be a 7% charge, or do they expect the sale to be from a controlled company to the person controlling that company, perhaps at a nominal rate that will not attract stamp duty, in order to recoup some of the avoidance they may have made over previous years? I would be interested to hear the Minister’s response to that.
As well as dealing with tax avoidance on properties under £2 million, I would also like non-residents to make a fairer contribution. I was first alerted to the issue by the Chancellor when in opposition. He said that he found the situation extraordinary, and there was a great deal of resentment when he explained how it worked and about the exemption from capital gains tax for non-residents. I do not understand why a resident of this country must pay capital gains tax on the sale of their property—unless it is their principal residence—yet a non-resident is exempt from that tax.
A huge flow of overseas money has come to this country as people fear the break-up of the eurozone and there is a rush to safety, and much of that has gone into property in central London. We say to people who own those homes, “As long as you don’t live there and you stay overseas, we will give you a tax break and you won’t have to pay capital gains tax.” When we go to Mayfair or parts of Belgravia, it sometimes feels as if not many people are about. We are subsidising and giving a tax break to people as long as they do not live in this country, and I have never understood the purpose of that.
Given that the Labour party did nothing about that situation for 13 years, I was pleased that the Budget and Finance Bill contained measures to extend stamp duty to at least some overseas residents. The Government consultation states:
“The Government announced in the Budget that it will extend the Capital Gains Tax (CGT) regime from April 2013 to gains on the disposal of UK residential property by non-resident non-natural persons, such as companies. The measure creates a more equal treatment in the CGT regime between UK residents and non-residents, and brings the UK’s tax policy in line with that of other countries, many of whom already tax non-residents’ gains.”
If we want an equal regime between UK residents and non-residents, why are we extending CGT only to non-resident, non-natural persons—basically companies? Surely we should also extend it to natural persons who are resident overseas. Other countries are doing that; India and China have made moves in that direction, so why not us? Some industrialised countries do not do it, but none of those have such a pool of property that acts as a free piggy bank for overseas residents. We keep their wealth and capital completely secure in central London yet they pay no capital gains tax on it. Could we perhaps consider going further in that area and look at extending capital gains tax to overseas non-residents who are natural persons, rather than concentrating simply on companies?
I welcome what the Government are doing. The Liberal Democrats refer to a mansion tax on properties worth more than £2 million, but the Government are already doing substantial work to obtain a more proper tax take from such properties and we could look at whether that could go further. Obviously, I do not expect answers about what will be in the forthcoming Budget, but in some areas higher tax would be a good thing. I am not generally in favour of that, but where people avoid tax by putting houses into companies, even if they are worth less than £2 million, we should try to get the proper tax. Where overseas residents are doing nicely by securing capital in the UK but paying very little for the privilege, by taxing the capital gains they make on later sales of those houses it would be welcome to see them paying their share and doing a little to help us close the deficit, which, of course, is the great uniting purpose of the coalition.
Sheila Gilmore (Edinburgh East) (Lab)
I am pleased to follow the hon. Member for Rochester and Strood (Mark Reckless) because much of this debate seems to have been spent in an argument between the two coalition partners about how they would define certain types of taxation, and the problem with the amendment is that it has to look two ways at once. The Liberal Democrats have been prepared to break rank on other issues, but this matter is clearly not one of those. Interestingly, it is often on crucial financial or welfare issues that they do not break ranks but keep voting with the Tory-dominated Government, which is regrettable.
These are issues of fairness. We have heard a lot from those on the Government Front Bench and the Liberal Democrats about the increase in the tax threshold, which they suggest is much better than anything else that could have happened—it is better than the 10p tax rate, so we should be satisfied with it. We must remember, however, that for many people that tax threshold was bought at the expense of big losses in things such as tax credits.
For many families, the net effect of such measures means not that they are better off but that they are worse off, and the Liberal Democrats in particular must face up to that. In order to get the tax threshold through —that was clearly part of the coalition agreement—the Liberal Democrats have had to accept some pretty unpalatable things that go with it and, on balance, a lot of low-income households are not particularly grateful for that. The increase in the threshold also has other consequences. It is an expensive way to help the low paid because of the way it goes to everyone, not just the low paid.
Barry Gardiner (Brent North) (Lab)
I am following my hon. Friend closely and she makes a powerful case. Does she agree that many of our constituents feel that the Liberal Democrats are not so much ameliorating the Conservative Government as facilitating it?
Sheila Gilmore
Indeed, and back in the beginning the decision to go into coalition with the Conservatives—rather than, for example, entering into a looser agreement —was to facilitate many of these measures. In crucial votes of the kind I have mentioned, the Liberal Democrats have not broken rank at all. We have heard a lot of warm words, particularly from the Deputy Prime Minister, about things such as the mansion tax, but when we get down to it, they turn out to be only warm words and not something that Liberal Democrat Members are prepared to stand up for in this House and within the coalition.
Fairness is a large part of what we must all be about. Over the past three years, the very poorest people, those on low earnings or those who, for example, are unable to work because of illness and disability, are bearing substantial contributions that we are told cannot be alleviated because our economic recovery will be put at risk. Over the past few weeks we have had heated debates about the bedroom tax. The issue has been raised on numerous occasions and we have been told time and again that it is essential to make those savings to reduce the deficit.
Mel Stride
Given the under-occupancy subsidy—after all, a tax is where one earns money and the state comes and takes it away, but that is not what we are dealing with—does the hon. Lady have no sympathy for the quarter of a million people living in overcrowded accommodation and the 2 million families on the housing waiting list who are desperate for bedrooms that can be freed up through this measure?
Sheila Gilmore
I have great sympathy for people who are overcrowded and for those on the housing waiting list. The majority of people waiting for housing in my city are looking for small houses, so that could also cause certain problems.
Fundamentally, however, this is not a housing issue. If we want to make the issue about housing, we should deal with it as a housing issue and look at ways of encouraging and facilitating moves for people who want them. That is not necessarily happening. People have asked me, “Well, if I did move who would help me pay for this move? Who will reimburse me for the fact that I put my own kitchen into this house? My landlord did not quite get around to it, so when I was working a few years ago I put in that new kitchen. Is somebody now going to reimburse me for that? Are they going to help me with the cost of moving my things? Are they going to help me with the cost of setting up in a new place? I don’t think so.” If a local authority—some do—decided that it wanted to encourage people to move once they had outgrown their homes, it could do so. It might have a cost, but it would have a benefit.
If every single person suffering from the bedroom tax was able to move—
Mr Deputy Speaker (Mr Nigel Evans)
Order. Is this a bedroom tax on mansions? This is an Opposition day motion. I think the hon. Lady is actually holding it in her hands. Has she read it, and, if she has, could she perhaps stick to it?
Sheila Gilmore
The point I was going to make in relation to the matter that was, after all, raised in an intervention is that if everybody moved successfully and reshuffled, there would be no saving, and that is odd because a saving is wanted. It is in that context that people are saying, “What sort of fairness is it that imposes such a great burden of trying to effect economic recovery on those who are least well off? Could we look at other measures to show that we really are all in this together?” That is where the mansion tax comes in.
The mansion tax enables us, in part, to really feel—as a community and as a country—that people are bearing a fair share of the burden. We have heard a lot about tax avoidance and tax evasion. It worries me greatly that the justification given for removing the 50p rate of tax is that people are not paying it. Instead of looking at why people are not paying it, and whether anything could be done to ensure that it was paid, we again hear, “Actually, we’ll just take it away because they aren’t paying it.” That is not a good message to put out.
We have also had reference—in relation to the mansion tax, Mr Deputy Speaker—to not wanting to have such a competitive tax regime that we risk people fleeing our shores. Reference was made to the PricewaterhouseCoopers report about competitive tax rates. There is an interesting coda to that report from some of those who were surveyed. The question then becomes: will the increased competitiveness lead to increased investment in this country, because that is what is really important? Many of the tax people thought it was crucial to turn improved tax relief on capital expenditure into investment in this country, and that it should be the No. 1 priority for the UK. In 2010, the Chancellor abolished capital allowances for investment in his first year in office. Perhaps he would like to look at the whole report, and not just the parts that suit him.
An argument has been made—as it always is with regard to rates and council tax—about people who are asset-rich and income-poor. It is usually raised as a reason for not putting up council tax banding, for example. In the old days, it was used as a reason for not making changes to the rating system. Yes, we can all come up with examples of people who are in that position. Usually, the example is a widow who cannot afford to pay. However, we cannot design our entire system of taxation around that, and there are ways it can be mitigated, as there are with council tax. If someone is genuinely as income poor as has been suggested, they would—at least until the Government decided to change the rules on council tax benefit—have been eligible for assistance with their council tax. There are always ways to help such people.
Earlier, I made what to some people might have seemed an unfair comparison. We were being asked to think about the widow who might struggle with a mansion tax. The 60-year-old widow I referred to is being asked to pay £13 per week out of an income of £71 a week, and the answer is that she should take in a lodger. If we want to be fair to both groups, we have to treat them with equal compassion.
Mr Charles Walker
As the hon. Lady will know, property values vary across the United Kingdom. A £2 million house in London may be the equivalent of a £500,000 or £750,000 house in Edinburgh. For the sake of fairness, does she think that there should be an additional tax on properties worth more than £750,000, so that people really do feel that we are all in it together and that this proposed tax will not just be borne by London and the south-east?
Sheila Gilmore
I am not convinced by that argument. If we were to enter into that, we would have do so in ways that I suspect the hon. Gentleman would not find particularly palatable.
There is nothing inherently wrong in levying a mansion tax. All the arguments made about the 50p tax do not apply to the same extent, because buildings do not disappear and cannot be shuffled around. It is a way of generating income and bringing in more tax revenue so that we can do all the things we want with public services, or, as we suggest, enable low-paid earners to have a 10p tax rate. Just because a mistake was made previously does not mean that we should not again consider a 10p tax.
Alex Cunningham (Stockton North) (Lab)
This is a debate about fairness, as well as a mansion tax. Unemployment in my constituency has been higher every single month compared with the previous year since the coalition Government came to power. There are 4,293 on jobseeker’s allowance, and many more want to work. My local authority, Stockton-on-Tees—we do not have many £2 million mansions—will shed 1,000 jobs before the current massive cuts are fully implemented. Councillors are working hard, but problems persist.
The Cleveland fire authority, which I met on Friday, faces tough decisions that could reduce the number of firefighters in the highest risk area in Europe because of the cuts and a funding formula that does not recognise the risk we face on Teesside. Other hon. Members have mentioned the unfairness of energy prices, train fares and payday loan sharks, and all are unfair, but it is the tax cut for millionaires that sticks in the craw. People see millionaires getting a tax cut at a time when working mothers face a £160 loss in their income. I could go on at much greater length about unfairness.
I hear from a friend of mine up on Tyneside, Ian Wilson, that Champagne Fever won the first race at the Cheltenham festival today. The partner of the horse’s owner earned £44 million in pay and bonuses last year. He is a banker. I am sure he can afford the mansion tax.
Kelvin Hopkins (Luton North) (Lab)
I have some suspicion about anyone who earns £44 million. They may have received £44 million a year, but they did not earn it.
Alex Cunningham
My hon. Friend is much skilled in these debates and I take his point entirely.
Time and again, Government Members have challenged us to make clear what tax changes we would make to rebalance the unfairness in the tax system. I am delighted, therefore, that the Labour Front-Bench team has backed the Lib Dem policy of a mansion tax, while going further by saying that the money could be used to fund a 10p tax rate, which would bring immense benefit to the lowest-paid in our communities. It would be a tremendous boost to many of the lowest-paid people across Teesside and the rest of the country, including all the people who have landed one of these low-paid, part-time jobs that the Government gleefully boast about. Those people are to be praised and helped. Their pay is derisory, yet they want to work hard and be in a job, so we should do something to help them. They already face the prospect of a cut in income from the changes to tax credits from the end of this month, and today the Lib Dems, and others, could join us in helping to correct that unfair tax change and in recognising their commitment to hard work.
We need action to tackle the unfairness in the system, to sort out the big six energy companies, to stop the rip-off rail fares condoned by the Government and to stop the poorest people—the most vulnerable in our society—being ripped off by payday loan companies and loan sharks. Let more of those with the assets, rather than those with none, pay the taxes. There is real poverty in our communities. One illustration is the increasing number of food banks. I will be opening another one on Monday at the New Life church in Billingham in my constituency. We should not have to be doing such things. We should not need food banks. I know that their use increased even when we were in government, but they should not be necessary.If we had a fair income tax system, we would not need food banks.
The mansion tax might mean £5 a week for some families. That would not buy a small glass of wine in a Canary Wharf bar, but it could make a huge difference to the people at the bottom of the earning scales. It would buy enough bread from Asda for a family of four for several days, yet the Tories—and, more shamefully, the Lib Dems—would miss the opportunity to put bread in the mouths of poor families by failing to send a message to the Chancellor that he should adopt this mansion tax in next week’s Budget. I am sure that people who own property worth more than £2 million could afford the extra charge to help the poor. If not, they can move to a less expensive property and dodge the tax. Like my hon. Friend the Member for Edinburgh East (Sheila Gilmore), I see a parallel with the bedroom tax. Thousands of people in my area are facing a cut in their income. The answer, apparently, is to move to a smaller property. Those with homes valued at more than £2 million but who cannot afford a mansion tax should do what the poor have to do and downsize.
I am one of those who supports higher taxes, particularly when people can afford to pay, so I plead guilty as charged. Earlier today, a Minister said that the Government were focused on the causes of poverty, but all the time cash is being shifted from the poorest to the wealthiest, just as the funds available to local authorities in the north of England are being shifted to the richer areas in the south. I said that unemployment was not falling in my constituency, but in some parts of the south it has fallen, albeit owing to part-time, low-paid jobs. The Government’s austerity measures have devastated local authorities in the north-east, and the contractors who build roads and houses and promote and deliver other services are the losers, being forced to pay off skilled workers who want to work and support their families.
Next Wednesday, the Chancellor will deliver his Budget for 2013-14. It is probably his last chance before the general election in 2015 to come up with a set of policies that could make a real difference to people’s lives. The biggest difference he could make would be to abandon his plan A, under which growth has stagnated, unemployment in areas such as mine has grown and deficit and debt reduction has become even harder, but we know he will not do it. He is tied to his ruinous plan A because he has staked his credibility on it—but there is no credibility in it. The Tories still talk about what will happen if the economy turns around, but if we return to growth, will ordinary people suddenly stop feeling the strain of higher costs and less money in their pockets? I very much doubt it.
This ignores the fact that the Chancellor’s plan has already failed on its own terms. Not only is the national debt far higher than it was when he took office, but he has failed, and failed again, on growth. The reason is that without a good level of growth it is difficult to reduce deficits and debt, and as the Chancellor’s own Office for Budget Responsibility pointed out last week, cutting spending and hiking up taxes for ordinary people has slowed and stopped economic growth. As the ratings agency Moody’s pointed out when it downgraded the UK’s credit rating, the country’s lack of growth has made it nearly impossible for the Government to meet the only real goal they set themselves, which was eradicating the structural deficit.
Although a return to growth would be welcome, only strong growth would be enough to make up for the lost years of economic stagnation under this Government and to keep up with the growing and ageing population. Unless economic growth is above population growth, we are all getting poorer. Add to that the fact that the Government are redistributing from the bottom to the top by cutting the top rate of tax for millionaires while capping welfare, increasing VAT and cutting public services, and the scale of their failure becomes all the more apparent.
In Stockton North, we know all too well the impact of the Government’s policies. Long-term unemployment has more than doubled in the past 12 months and youth unemployment remains stubbornly high. Next Wednesday, the Chancellor has a chance to change course, cut spending less quickly and focus on taxing obscene wealth in order to invest in young people. He is very keen to point to the past and the failures—as he sees it—of the Labour Government, but he has been in his role for nearly three years and has failed abysmally. There will be much for a Labour Government to do in 2015 to address the unfairness built into our country by the Conservative-Lib Dem alliance. I have talked about energy, rail fares and housing, and we are already making clear some of the things we would do. Today, Government Members can help us get our fairness agenda under way by backing a mansion tax and helping to fund lower taxes for those who need them most—I hope they will.
Nic Dakin (Scunthorpe) (Lab)
This debate is about tax fairness, with contributions from both sides having focused on that challenge. The year 2013 is not 2008 or 2001; we are in different times and facing different challenges and, therefore, different choices. We are undoubtedly in tough times, in difficult times; we are in a period of austerity, and, as a result, we have different choices to make.
Individuals also have different choices to make. I am being contacted, as I am sure every other right hon. and hon. Member is, by constituents living through these tough times and finding it difficult to make ends meet, owing to rising prices, fuelled by the hike in VAT, which was one of the very first decisions of this Conservative-led Administration. Despite describing it as a tax bombshell in the general election campaign, the Liberal Democrats sadly supported this most regressive of tax increases. Energy bills, fuel bills, food bills and rail fares are all rising, making it difficult for ordinary people and families to make ends meet.
Prices are rising and incomes are falling. Ordinary people are finding it difficult to make ends meet, because incomes are falling and people are losing their jobs or losing hours they want to work or reducing their pay in order to help businesses through these difficult times and to manage the situation together. That is what businesses in my constituency are doing—managing the situation with their work force—which often means reducing hours and pay, but keeping businesses and households afloat.
These are difficult times, with the squeeze on hard-working families worsened by the reduction in tax credit eligibility and the looming spectre of the bedroom tax, to which several right hon. and hon. Members have referred. People are struggling to make ends meet. They are doing their best to keep their heads above water. As my hon. Friend the Member for Stockton North (Alex Cunningham) said, we see the number of food banks expanding and child poverty rising. In 2013, these are things that none of us would wish to see in the United Kingdom—one of the richest countries in the world—on our collective watch. These are tough times in the real world.
Stephen Williams
Yes, in tough times we have to make tough choices. I recognise that some of them are uncomfortable, but does the hon. Gentleman lament the fact that in 2007, when budget revenues were increasing and the economy was perceived to be booming, the previous Labour Government decided to put up taxes on the very poorest?
Nic Dakin
The hon. Gentleman will be alert to the fact that I came into this House only in 2010. We can all look back with hindsight and be critical of decisions made at different times. One of the issues for us all in these difficult times is whether with hindsight on the decisions we are making today people will say we made the right decisions.
Mr Stewart Jackson (Peterborough) (Con)
Why does the hon. Gentleman think that between 1998 and 2010, in a period of sustained economic growth, the welfare bill under the party he supports went from £53 billion to £111 billion? Does that not speak to a failure to tackle endemic issues of welfare dependency, which this Government are addressing?
Sheila Gilmore
Let me say quickly that changes to demographic factors such as age are important in this respect, and 42% of the welfare budget goes on older people and pensions.
Mel Stride
The hon. Gentleman is being exceedingly generous in giving way. As he has said, he is keen to talk about tax fairness. He referred earlier to the iniquity of reducing the top rate of tax for higher earners from 50p in the pound to 45p, which is coming up this April. Does he therefore not accept that, in his terms, the last Labour Government acted totally unfairly in having a top rate of just 40p in the pound right the way through until the last 36 days of his Government?
Nic Dakin
I thank the hon. Gentleman for his intervention, but I have not yet said that—I am going to say it later, so I will come to his point when that is appropriate.
I was describing the difficult choices that hard-working families are having to make to keep their heads above water. The obligation we face—those of us who govern, as well as those on the Opposition Benches—is to make difficult choices about where revenue is raised. It is therefore right and proper to look at ways of taxing people who have significant wealth, such as people who own properties valued at more than £2 million. Therefore, it is right and proper to look at ways of ensuring that that part of our nation makes a contribution in these difficult times.
We know that people of great wealth are sometimes quite imaginative and inventive when it comes to avoiding taxes. I commend the work of Government over the ages to find ways of tackling tax avoidance—this Government have done a number of things that are to be welcomed. Property is obviously difficult to hide. One of the big advantages of a property tax—a mansion tax, as expounded over the years by the Liberal Democrats in particular—is that it is difficult to avoid paying, because property is visually identifiable. As my hon. Friend the Member for Westminster North (Ms Buck) said earlier—she is no longer in her place—60% of high-value properties in London are owned by people from overseas. Indeed, I note the comments of the hon. Member for Rochester and Strood (Mark Reckless) on this issue. He made an intelligent and helpful contribution to the debate.
I am pleased to see the hon. Member for Eastleigh (Mike Thornton) in his place and I very much welcome him to the House. I am sure he will continue to build on his excellent maiden speech and make good contributions to the work of the House. However, prior to the by-election, the Deputy Prime Minister, writing in The Observer, described the Prime Minister as being “stuck in the past” for opposing the mansion tax. The Observer commented that this came
“amid signs that the Liberal Democrats are ready to challenge the Tories more vigorously over key aspects of economic policy.”
Today’s debate is an ideal opportunity for them to do that. The Deputy Prime Minister attacked the Prime Minister in his article, saying that the Conservatives were instinctively against fairer taxation
“even as people on lower incomes feel the pinch”.
He said that the plan for a mansion tax on properties worth more than £2 million, which was being backed by the Labour party, was an idea “whose time has come”, and said it was a “certainty” that some levy on high-value properties would be introduced soon. He continued:
“The Conservatives and opponents of fairer taxes have a choice. They can dig their heels in and remain stuck in the past. Or they can join with the Liberal Democrats and the chorus of voices seeking to make our tax system fair. Far better, surely, to move with the times.”
I very much welcome the Deputy Prime Minister’s rather prophetic contribution to this debate. It puzzles me that the Liberal Democrats who have spoken so far have indicated that they might not support the motion. However, a number of them have been here for a large part of the debate, so I hope they will be persuaded by the power of argument.
It is worth noting that the motion says:
“That this House believes that a mansion tax on properties worth over £2 million, to fund a tax cut for millions of people on middle and low incomes, should be part of a fair tax system; and calls on the Government to bring forward proposals for such a tax at the earliest opportunity.”
As my hon. Friend the Member for Nottingham East (Chris Leslie) said from the Opposition Front Bench, nothing could be simpler. Indeed, this is the sort of simple motion that the Business Secretary called for and that the Deputy Prime Minister called for before the Eastleigh by-election. Indeed, the hon. Member for Bristol West (Stephen Williams) confirmed today that he could have written it himself, so one wonders why the Liberal Democrats cannot support it. One is helped to understand why they cannot do so by reading the rather entertaining amendment, the middle of which
“notes that the part of the Coalition led by the Deputy Prime Minister…advocates a mansion tax on properties worth more than £2 million, as set out in his party’s manifesto, and the part of the Coalition led by the Prime Minister does not advocate a mansion tax”.
We have a pushmi-pullyu Government, pushing in one way and pulling in the other. We have a real pantomime horse, as my hon. Friend the Member for Nottingham East said, from a pantomime Government, but this is not pantomime time. It is a serious time, and a serious time requires serious politics. The Liberal Democrats have an opportunity to stand by their principles—to stand on the side of honest, hard-working people—by coming into the Lobby this afternoon to support our motion, which could have been written by the hon. Member for Bristol West.
Kelvin Hopkins (Luton North) (Lab)
First, I apologise for arriving late for the debate. I had another commitment that was inescapable, but I want to make a contribution to this important discussion. I also congratulate the hon. Member for Eastleigh (Mike Thornton) on his election victory. I heard his maiden speech yesterday, and a very fine speech it was, too. Unfortunately, he left the Chamber—no doubt for a celebratory drink—before I had a chance to congratulate him, as it was my turn to speak. I remember that, on the day of the election, I was knocking on doors for the Labour party, as he would expect. We were delivering leaflets that said that it was a two-horse race. Sadly, Labour was not one of the two horses, but I was slightly comforted by the fact that the Conservative party was not one of them either.
Tax fairness is the subject of this debate, and I very much welcome the moves that our leadership is making in that direction. The decisions on the mansion tax and the 10p rate are important. They might be straws in the wind, but the wind is blowing in the right direction. The mansion tax is perhaps something of a slogan—an eye-catching, or thought-catching, idea—but I believe that property taxes are appropriate in a civilised society. Property has the advantage that it does not move, so we can always find it. As long as we can also find the owner, we can collect the taxes.
Property taxes, as with all taxes, have to be carefully designed. As the hon. Member for Broxbourne (Mr Walker) said, we have to be careful to ensure that such taxes are equitable. If there is inequity between regions, that should be looked at. The taxes have to be carefully designed to ensure that equity. Personally, I would like to go further and talk about a wealth tax. My party used to talk about that some years ago, and I would like to see a more general tax on wealth in order to do something about the grotesque inequalities in our society. Those inequalities have grown enormously during the time I have been active in politics. Had I been told when I was first active in my party in the late ’50s and early ’60s that we would be in this position now, I would not have believed it. We have moved in this direction, however, and it has been a retrograde step.
No doubt some hon. Members will have read a book entitled “The Spirit Level”, which identifies a strong correlation between income inequality and a whole range of social ills. I want to see a society that is much more equal in income terms, in order to reduce those social ills and because it is right in principle. It is interesting to note that that correlation applies in all societies, whatever the income levels. It does not just apply in rich societies or poor ones. In any society, income inequality correlates with greater social ills. I hope that when my party gets into office at the next election—that is when, not if—we will seriously address that question and try to make Britain a much more equal society again.
Tax has to be progressive. We have to tax the better-off, and we should tax the less well-off either very little or not at all. I have to say that I was disappointed in the previous Government. I was one of a small number of Labour Members—I think there were six of us—who voted against the abolition of the 10p rate, and I am delighted that our leadership has now chosen to reverse that decision and to put us back onside when it comes to looking after the less well-off. That decision is very welcome indeed.
Income tax is the most progressive form of tax. It is adjustable and, in the case of most people, it is collectable. Most of us are on PAYE, so there is no problem with collection. There is a problem, however, with collecting taxes from those who try to evade or avoid paying what is rightly due from them. We have heard from the tax justice movement, and from Richard Murphy in particular, an assessment that the tax gap is something like £120 billion. Some suggest that it could be even more than that. Even the Government accept that the figure is in the tens of billions. Small advances have been made in collecting that tax, but if were really to make inroads in that area, we would not need to look at changes in the tax rate because there would be so much more income to enable us to solve our problems.
Sheila Gilmore
We have heard a lot of the language around dealing with tax avoidance and with high-income earners. Does my hon. Friend not find it disappointing that, at almost the first opportunity to take action, the Chancellor went to Europe to argue against a cap on bonuses?
Kelvin Hopkins
Yes, that was absolutely regrettable. I know that my party will commit to introducing a cap on bonuses in our first few days in power after the next election.
Mr Stewart Jackson
The hon. Gentleman always makes a powerful point. Having served on the Public Accounts Committee and on the ongoing inquiries into tax avoidance, I concur with him. I am a defender not of crony capitalism but of popular capitalism. He might not agree with me on that, being slightly on the left. In order to tackle corporate tax avoidance, we need to look at multilateral, bilateral, international and domestic legislation, but would he acknowledge that the previous Government flunked every opportunity to look at those issues over 13 years?
Kelvin Hopkins
We have seen successive Governments going in for what is called light-touch regulation on all fronts. I have never believed in light-touch regulation; I believe in tough regulation. I believe in employing thousands more tax officers to ensure that we collect the taxes. At the beginning of my time in Parliament, I visited our local VAT office, and the inspectors there told me that if they had more tax inspectors, they could collect billions more in tax. Each of those VAT inspectors collected more than five times their salary. I wrote about this to the Chancellor of the Exchequer at the time, and got a letter back from a civil servant saying that the Treasury was trying to reduce costs by reducing staffing levels. That was a completely illogical non sequitur; it was complete nonsense. Reducing the number of tax officers will reduce income by more than the amount of their salaries.
I have made the point many times—and I shall continue to make it—that we need more tax officers and more rigorous regulation. We need more control over what the corporates and the fat cats get away with. The reality is that ordinary working-class people have to pay tax through PAYE. They cannot escape paying their tax, but the corporates and the fat cats can. So, I have agreed with the hon. Member for Peterborough (Mr Jackson) on one or two issues, and I am pleased about that, although we have different philosophical views when it comes to economics.
I want to talk about the deficit problem, because that is what taxation is about. I do not think that we actually have a deficit problem. We do not even have a spending problem. We have a revenue collection problem. That can be addressed either by collecting tax in the way that we do now, or by changing tax rates, as proposed in today’s motion.
Tax collection is a serious problem, and we could make serious changes there, but I want to look back to a time when taxes were more progressive. During the previous Parliament, I made suggestions in this Chamber about the kind of tax changes that I wanted to see. I went beyond what our leadership is now suggesting, although I welcome its proposals. I think we should go further, however. In the 1970s, Denis Healey was Chancellor of the Exchequer. He said that he wanted to
“tax the rich until the pips squeak”.
I cheered him for that, and we did not lose any votes because of his statement. In fact, a lot ordinary working-class people said, “Quite right too! We want those who can afford to pay more to do so. Those who can only afford to pay less should pay less.”
Mel Stride
Was Denis Healey the same Chancellor who had to go cap in hand to the International Monetary Fund in the 1970s because this country was bankrupt?
Kelvin Hopkins
He did indeed go to the IMF, but I think it has now been recognised that that was unnecessary. We did not need to kowtow to the IMF or to impose those strictures. In fact, remarkably, the economy survived quite well during that time, although a mistake was made at the end. I shall not go into that now, Mr Deputy Speaker, because you would call me to order if I did, but it was the reason why things went wrong in 1979. Nevertheless, we survived the 1970s, although the oil price rose by five times in a very short period, which affected the whole world including Britain.
At that time, I was working for the Trades Union Congress and then in the trade union movement. I was an economist, and was lobbying the Government. I was at the TUC General Council when the £6 pay policy was agreed to. That was an historic moment. I thought it amazing that the trade unions had agreed to a cap on pay increases for everyone, but the reason they agreed to it was that it was fair. Everyone would receive a £6 pay rise. For someone with a low income that was a big rise, while for someone with a high income it was not very much, but it was fair, and was seen to be fair across the board.
Other Members are too young to remember this, but in those days the top rate of tax was 83p in the pound, and there was also a 15% surcharge on unearned income. Some of those whose income was entirely unearned, perhaps in property, were paying a 98% rate on the top part of their income. I thought that was pretty fair, but of course we cannot go back to those days.
Sheila Gilmore
My hon. Friend has been revisiting the 1970s. A remarkable statistic is that in 1979, the inequality gap in this country was at its narrowest since the second world war. Perhaps, if we think that reducing inequality is a good thing, something was right at that time.
Kelvin Hopkins
Absolutely. I remember writing papers about the massive increase in inequality that occurred subsequently, during the 1980s, when there were big tax cuts for the rich along with rapidly rising unemployment. That resulted in the inequality for which we have not really been compensated since.
Mark Reckless
The hon. Gentleman has spoken of persuading Labour Front Benchers to adopt his policy on the 10p tax rate. Does he have similar hopes in respect of the 98% rate?
Kelvin Hopkins
No, no. I live in the real world, and I suspect that even my hon. Friends on the Front Bench will not start considering 98% marginal tax rates.
George Bernard Shaw, a witty man but a socialist, who was paying 98%, said, “I consider myself to be a tax collector for the Government, in return for which I receive a 2% premium.” I thought that that was one way of putting it. Shaw was, as I said, a socialist, who no doubt accepted that wealthy people such as himself should pay substantially more than the poor.
I realise that we will not return to that rate, but I will say that during a Budget debate in the last Parliament, on a cold Thursday afternoon when it was raining and there were about six people in the Chamber, I suggested that we could consider a 50% rate for those on £60,000 a year—this was then!—a 60% rate for those on £100,000, and a 70% rate for those on £200,000. That would have taken us nowhere near where we had been in the 1970s, but it would have been a substantial change from where we were then.
I did not get much of a reaction in the Chamber, but the Deputy Speaker spoke to me privately afterwards. I am giving away no secrets, because she is no longer a Member of Parliament. She said, “I do so agree with you. Why do the Government not just do as you say?” Well, if only; but I had said what I thought, and I thought that would be a reasonable move. I suggested the 50% rate for those on £60,000 because at least it would mean Members of Parliament paying a tiny bit extra on the top part of their income. I thought that was right then, and I still think it is right.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I fear that the hon. Gentleman has run out of time. Much as I was enjoying his speech, I must now call Catherine McKinnell.
Catherine McKinnell (Newcastle upon Tyne North) (Lab)
It is a pleasure to follow my hon. Friend the Member for Luton North (Kelvin Hopkins)
This has been a good debate on what is really quite a simple premise—that our taxation system should be based on fairness and equity—but there have been some disappointing, although I would also say unsurprising, contributions from Government Members. The Minister’s speech in particular seemed to confirm that the Government have their head in the sand when it comes to their disastrous economic policies and performance. Manufacturing has fallen by 3% since last year, business confidence and investment are plummeting, growth is flatlining, and the economy desperately needs some emergency care. Borrowing is going up, not down, and it is rising to pay the price of the Government’s failure. My hon. Friend the Member for Swansea West (Geraint Davies) described the position very passionately.
The hon. Member for Bristol West (Stephen Williams) complained bitterly that the Opposition had been stealing the Liberal Democrats’ policy. He now admits that it is his policy. In fact, he could have written it himself. I therefore still hope that the Liberal Democrats will go through the Lobbies with us today to support what will be a very measured step towards ensuring that the cost of deficit reduction is borne by those with the broadest shoulders as well as by those who can bear it least but who are, at present, bearing the brunt.
Mel Stride
The hon. Lady referred to the hon. Member for Bristol West (Stephen Williams), who asked a simple question of her Front-Bench team: will a mansion tax be in the next Labour party manifesto, yes or no?
Catherine McKinnell
We gave a simple response to that question—[Interruption.] First, we challenged the Minister to say what would be in the Government’s Budget next week. He will not specify that, so we are not able to announce at this stage what will be in our manifesto in two years’ time. If it is appropriate and a mansion tax will seek to deal with the mess that we anticipate this Government are going to leave this country’s finance in, it is certainly something we will consider.
Mel Stride
Is the hon. Lady seriously suggesting that just because a Minister will not make a serious breach of parliamentary protocol by leaking a Budget in advance she will not inform the House whether her party will have a mansion tax in its next manifesto?
Catherine McKinnell
No. That illustrates why the Government were not giving away what they are going to do in next week’s Budget, but we have said clearly that if we were in government now, we would not be cutting taxes for millionaires. We would be looking to put in place a mansion tax, which the Liberal Democrats would support, and we would be using that to take a measured approach to deficit reduction. Unfortunately, we are not in government. The Chancellor is presiding over a flatlining economy, so we are suggesting a way for him to try to get some growth back into the economy —we hope that the Liberal Democrats will support us today and proposals will come forward.
Jonathan Ashworth (Leicester South) (Lab)
My hon. Friend should take no lessons from Conservative Members, because when they were in opposition they refused to specify—apart from supporting Labour’s spending plans—any of the policies that would be in their 2010 manifesto.
Catherine McKinnell
I thank my hon. Friend for his impassioned slap-down of the hon. Member for Central Devon (Mel Stride). What is clear from today’s contributions is the gap between what Labour Members—and, we hope, Liberal Democrat Members—believe to be the fair and right thing to do, and what many Conservative Members believe.
As I said, the Opposition motion is based on a simple premise: a mansion tax on properties worth more than £2 million should be part of a fair taxation system and used to fund a tax cut for millions of people on middle and low incomes. Let us be honest—I know that Government Members cannot stay in denial of this any longer—those people are finding that their household budgets are seriously squeezed. An increasing number of hard-working families up and down the country are reaching breaking point. A number of hon. Members gave heartfelt accounts of the difficulties that many of their constituents are facing: the rise in the use of food banks; the VAT increase; rising energy and fuel bills, rail fares; and other household budget difficulties.
Catherine McKinnell
I will give way to the hon. Gentleman because he has been mentioned twice.
Stephen Williams
The hon. Lady again mentioned the tax cut for millions of people on middle and low incomes, which is in the Labour motion and indeed the coalition Government’s alternative. Will she confirm that the tax cut in the Labour motion matches up with what the Labour leader said last month when endorsing our policy of a mansion tax and that the tax cut that Labour is talking about is reintroducing the 10p tax rate?
Catherine McKinnell
We have made Labour’s approach clear. We have said that we would like to fund a 10p tax rate for the lowest earners. We have not specified that that is what the Government should do with this; we have said that it should be used to fund a tax cut for those on low and middle incomes. So if the Liberal Democrats want to support us in the Lobby, they can then pressure the Government to use that money in any way they see fit.
So let me remind the House of the context of today’s debate. Many of our constituents are struggling to make ends meet, due to a combination of under-employment, stagnating wages, rising food, fuel and child care costs, and of course the Government’s hike on VAT. Our constituents will be further hit by a £6.7 billion cut in working-age benefits and tax credits over the next four years. [Interruption.] The Under-Secretary of State for Communities and Local Government, the right hon. Member for Bath (Mr Foster)—the Liberal Democrat Minister—is groaning but that is the reality for many families up and down the country. At the same time, we read of hundreds of bankers at different financial institutions, including one owned by the state, earning more than £1 million per year. We have a Chancellor seeking but failing to use his ever-diminishing influence in Europe to fight against proposals to limit bankers’ bonuses to “just a year’s salary”. We have a coalition Government who will give the 13,000 people in this country earning more than £1 million a year a tax cut of £100,000 next month. No wonder people are angry and no wonder our economy is not growing when ordinary people cannot afford to spend and invest. We—or, more accurately, the Prime Minister—heard only last week from the OBR that fiscal consolidation measures have reduced economic growth over the past couple of years.
Stewart Hosie
The hon. Lady is absolutely right that the tax cut for millionaires is dreadfully unfair, but can she explain why, when the Labour party had the chance, it failed to oppose the tax cut for millionaires?
Catherine McKinnell
These arguments have been rehearsed many times and we have made clear our absolute opposition to cutting the top rate of tax at this time while slapping charges on the poorest in society. No wonder the hon. Member for Harlow (Robert Halfon) has spoken of the Government’s need to neutralise claims that they cut taxes for the rich.
Let us look at the Opposition motion, because I think the Liberal Democrats are dancing on the head of a pin when they say that they cannot support it. It calls for the introduction of a charge on properties worth more than £2 million, a mansion tax that the Liberal Democrats have estimated would raise £2 billion. We say that it could be used to fund a 10p tax band of up to £1,000, benefiting 25 million basic rate taxpayers to the tune of £100. We believe that Liberal Democrat Members should put aside their loyalty to the Conservatives and vote in favour of a principle—the principle of tax fairness at a time when so little of it is in evidence from this Government.
How could the Liberal Democrats do otherwise? Only last month, they made the introduction of a mansion tax the centrepiece of their Eastleigh by-election campaign. Recent media appearances have certainly suggested that they will support the principle, with the Business Secretary declaring that if the Opposition motion
“is purely a statement of support for the principle of a mansion tax I’m sure my colleagues would want to support it.”
Asked again at the weekend which part of the Opposition motion he disagreed with, the Liberal Democrat president, the hon. Member for Westmorland and Lonsdale (Tim Farron), replied, “None of it.” The former leader, the right hon. Lord Ashdown, declared that it would be “weird” if the Liberal Democrats voted against it. He is not the first person to call Liberal Democrats weird, but they have the opportunity to put that right today and to get on the road to normality by supporting their own policy.
Only yesterday, the hon. Member for Bristol West—I shall mention him one last time—said of the Opposition motion,
“I could have written it myself”,
yet today he complains that we have stolen his party’s policy. If such childishness gets in the way of the Liberal Democrats supporting their own policy in the Lobby, members of the public will be baffled and extremely disappointed.
Catherine McKinnell
I would give way, but I am running out of time.
We think that the Opposition motion presents those of us who believe in a fair and equitable taxation system with the opportunity to demonstrate that fact by voting in favour of it today. Will this be yet another example of the Liberal Democrats saying one thing to the electorate and doing something very different in government? What about their partners in crime—I am sorry, Mr Deputy Speaker, I mean partners in government—the Conservatives? We know that an increasing number of Conservative Members fear that they appear out of touch and that some, most notably the hon. Members for Harlow, for Camborne and Redruth (George Eustice), for Aberconwy (Guto Bebb) and for Cleethorpes (Martin Vickers), all of whom are noticeably absent from the Chamber, have argued that a way to counter that impression would be to reintroduce a 10p tax rate.
I have argued before that the best way to neutralise the impression that the Government are out of touch and only cut taxes for the rich is to stop cutting taxes for the rich, such as the millionaires’ tax cut that will take effect from April. I also acknowledge that it was a mistake to get rid of the 10p rate in 2007, although it enabled the 22p rate to be reduced to the 20p rate that is still in place today.
We believe that the best way to fund a new 10p tax band is through the mansion tax. Many right hon. and hon. Members have expressed concerns about how the mansion tax would work in practice, about how properties would be valued and about how people who live in £2 million properties but are apparently cash poor would pay. We have also heard, however, that the Treasury is drawing up detailed proposals for an annual charge on high-value residential properties owned by companies, partnerships or investment vehicles. It demonstrates that our plans—Liberal Democrat and Labour plans—for a mansion tax, an annual charge on high-value residential properties owned by private individuals, are entirely feasible, entirely realistic and entirely possible.
Our motion calls on the Government to bring forward proposals for a mansion tax, so that they can be considered in more detail by the House. The Opposition motion is simply expressed; it responds to Liberal Democrat concerns, and we still hope they will support us by voting for it. It calls for a tax on individuals fortunate enough to live in a high-value residential property, to support a tax cut for millions of hard-working low and middle-income families up and down the country at a time when they desperately need our support to put money back into household pockets and demand back into the economy. The motion provides all Members with the opportunity to demonstrate their support for a tax system based on fairness and equity, and I commend it to the House.
The Parliamentary Under-Secretary of State for Communities and Local Government (Mr Don Foster)
I begin by thanking those Members who gave a welcome to my hon. Friend the Member for Eastleigh (Mike Thornton). I join them by adding my own welcome.
The hon. Member for Newcastle upon Tyne North (Catherine McKinnell) is absolutely right. The debate may have been robust, but it was genuinely thoughtful. It is thus a great disappointment that when she closed the debate and the hon. Member for Nottingham East (Chris Leslie) opened it, they did not take the opportunity to apologise to the country for the Labour Government’s role in creating the economic difficulties in which we find ourselves. The hon. Member for Swansea West (Geraint Davies) was right too. On the Government Benches and in the country at large, we say “What a fine mess you’ve left us.”
I congratulate the Opposition on their proposal, because one good thing happened today: after three years of opposing our revenue-raising policies, three years of opposing our cuts and three years of failing to propose a single solution for the economic mess they left us, I am glad that in the Chamber today they have at last put forward an actual concrete policy. As we heard, it is a Liberal Democrat policy, but I am delighted that Labour Members now support our mansion tax. I shall be even more delighted when it takes pride of place in my party’s election manifesto in 2015—something I can say but they apparently cannot.
Mr Foster
Let me make a little progress and I will happily give way.
We have been perfectly up front: this is a matter on which the two parties in the coalition disagree. As my hon. Friend the Member for Bristol West (Stephen Williams) made clear in an excellent speech, the Conservatives have always been vocal in their opposition to such a scheme and Liberal Democrats have always been vocal in our support for it.
Catherine McKinnell
May I put a suggestion to the Minister? If Liberal Democrat Members support the motion and the Government bring forward proposals, they would not need to include the scheme in their next manifesto.
Mr Foster
I may return to the hon. Lady’s comments in a second.
We are supportive of the motion because we agree with Adam Smith, the father of free market economics. He supported higher taxes on property to reduce taxes on more industrious endeavours. We think it unfair that the richest people in the country pay the same council tax on their multi-million pound palaces as a family in a three-bedroom house in the suburbs. We agree on that.
Both parties in the coalition have been open about our disagreement, but the Opposition’s attempt to drive a wedge between us is infantile. Both parties know where we stand, and the public are clear about it too. The hon. Lady has to remember that all coalition tax policy is made by agreement between the Conservatives and the Liberal Democrats, and the mansion tax is an issue on which we simply could not agree. However much Liberal Democrats want a mansion tax, we know that the country’s economic future would be in severe jeopardy if the coalition fell apart on this issue. The country’s future is far too important for us to engage in the Opposition’s petty political games.
Chris Leslie
On the point about putting the coalition first, to save us a great deal of time and effort, can the Minister tell us if there is any circumstance in which he envisages that he could ever support any motion tabled by the Opposition?
Mr Foster
As I said, this is the first time in three years that we have had any positive proposal from the Opposition in the Chamber. If the hon. Gentleman comes forward with further proposals to help deal with the economic mess that his Government left us, we will seriously consider them.
Mr Foster
No, I will not give way to the hon. Lady.
It is worth reminding ourselves that although we as Liberal Democrats accept that a mansion tax would be a further step in creating greater fairness, by being part of the coalition with our Conservative colleagues we have made huge strides towards building a fairer society and a stronger economy. I agree with the hon. Members for Edinburgh East (Sheila Gilmore) and for Scunthorpe (Nic Dakin), who said that creating fairness is vital. Our achievements in doing so are in marked contrast to those of the Labour Government.
Mr Foster
No.
The previous Government introduced the fuel duty escalator, hitting the pockets of families and businesses, whereas we have taken steps that will make pump prices 13p per litre lower than they would have been under Labour. They abolished the 10p tax rate, hitting 800,000 single earners, whereas we are taking 2.2 million people out of paying tax altogether. Whereas in 2000 they gave pensioners a miserable 75p a week pension increase, last year we gave the biggest ever increase of £5.30 a week.
Mr Dave Watts (St Helens North) (Lab)
Will the Minister explain why he thinks it is fair that at the same time as they introduce the bedroom tax, the Government find money to give the richest people in the country a tax break?
Mr Foster
We are not here to discuss the under-occupancy arrangements. Let me remind the hon. Gentleman, who has breezed into the Chamber, that we have had discussions on many occasions about this. I am aware of 300,000-odd families with two or more spare bedrooms and 250,000 families who are overcrowded, so it is right and proper that we take action to try to help them out, and that is what we are doing. I am more than happy to talk about this Government’s record on fairness.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Mr Davies, you have spoken. It is up to the Minister when he gives way. It is not for you to keep reminding him, saying that he should give way.
Mr Foster
Thank you, Mr Deputy Speaker.
It is worth repeating yet again that the Opposition put the 50p tax rate in place for a whopping 36 out of their 4,758 days in power. As my hon. Friend the Exchequer Secretary made clear, a recent review showed that the additional rate is a distortive and economically inefficient way of raising revenue. So we have decided—sensibly, in my view—that it is neither efficient nor fair to maintain a tax rate that is not effective at raising revenue from high earners and risks damaging growth. That is why we have introduced a top rate of 45p, which will be higher than the top rate that existed under Labour for all but 36 days of their 13 years in office.
It is not true to suggest, as some have done, that the Government are not requiring the wealthiest to pay more. We have continually increased the tax contribution of the richest since the election. The 2010 Budget introduced a higher rate of capital gains tax; the 2011 Budget tackled avoidance through disguised remuneration; and the 2012 Budget increased stamp duty land tax to 7% on residential properties costing £2 million or more. We are also the Government who took action in the autumn statement to reduce the cost of pensions tax relief, and we introduced a 15% rate of stamp duty for properties owned through a corporate vehicle. I am grateful to my hon. Friend the Member for Rochester and Strood (Mark Reckless) for a number of suggestions of further measures that we can take in this area, which we will certainly consider, but I can confirm that if a property is taken out of a corporate envelope, SDLT will be paid in full.
As a result of the Government’s actions, the richest pay more tax on capital gains, more stamp duty on their homes, more tax on their pension contributions, and more on income tax. As the Institute for Fiscal Studies has confirmed, the rich are now paying a higher percentage of income tax than at any time under the previous Administration. Given our measures to boost compliance, more of the tax owed will be collected. I thank the hon. Member for Scunthorpe for his praise for our work in this area.
As well as making the wealthiest in society pay more, we are asking less of the poorest in this country. As the hon. Gentleman said, we are helping the hard-working families in this country. From April 2013, the income tax personal allowance will increase yet again by £1,335 in cash terms to £9,440. This change will benefit 24 million individuals, lift an additional 1.1 million out of income tax altogether, and provide a real-terms gain of £223 a year to basic rate taxpayers.
In total, the coalition’s actions since we came into office mean that 2.2 million people under the age of 65 will have moved out of paying income tax altogether, and there is a tax cut of £600 for more than 20 million people. We are proud of the way in which we are putting fairness firmly on the agenda. As the Secretary of State for Business, Innovation and Skills said earlier today, parties should be judged on what they deliver on fairer taxes, not on what they say about them. It is deeds not words.
The Labour party when in office failed to back our mansion tax proposals, and now we are not even clear whether it is willing to include a mansion tax in its 2015 manifesto. The Liberal Democrats have made it clear that we are in favour of such a scheme, but I urge my colleagues to support the Government’s amendment, which reiterates our party’s support for the mansion tax without putting the coalition Government at risk. It is the country’s economy and people that need a strong, co-operative and working Government, which this coalition Government are providing. The do not need a Labour party playing the exact kind of cynical political games that the public so revile. The hon. Member for Ashfield (Gloria De Piero) said that the public disliked infantile Punch and Judy politics. So do I, and that is why I urge the House to support the amendment.
Question put (Standing Order No. 31(2)), That the original words stand part of the Question.
Mr Liam Byrne (Birmingham, Hodge Hill) (Lab)
On a point of order, Mr Deputy Speaker. I wonder whether you have had any indication from the Government on whether they plan to make an oral statement on the subject of the bedroom tax. Yesterday, in questions to the Department for Work and Pensions, Ministers assured us that the scheme was running smoothly, yet this afternoon we have another rushed U-turn that offers no money and no protection for disabled children. Right hon. and hon. Members would have welcomed the opportunity to put those points directly to the Secretary of State, and expose today’s announcement for the shallow nonsense that it is.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I can tell the right hon. Gentleman that the Chair has received no notification that there will be a statement before the House. I am sure that those on the Treasury Bench and other Secretaries of State will have heard the comments that have been made, and the right hon. Gentleman is well aware that there are other avenues he may wish to pursue.
Apprenticeships
(11 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
18:59 - The House divided: - Ayes: 237 / Noes: 292 - Question accordingly negatived.
Mr Gordon Marsden (Blackpool South) (Lab)
I beg to move,
That this House notes National Apprenticeship Week, established by the previous Government, and held from 11 to 15 March 2013, which celebrates the value of apprenticeships, particularly in providing opportunities and developing skills; further notes the need to increase apprenticeship places; and therefore resolves that the Government uses the billions of pounds committed to public procurement to boost apprenticeships by requiring firms winning public contracts worth over £1 million to offer apprenticeship opportunities, implementing the recommendation of the Fifth Report of the Business, Innovation and Skills Committee, HC 83, on Apprenticeships.
It is a pleasure and honour for me as shadow Minister responsible for apprenticeships to open this debate in national apprenticeship week. Back in 2008, my right hon. Friend the Member for Southampton, Itchen (Mr Denham), then the Secretary of State for Innovation, Universities and Skills, launched apprenticeship week as a vehicle to promote the real and valuable opportunities that apprenticeships offer. It is a tribute to him that national apprenticeship week has since become a central part of the employment and skills calendar.
This is a week in which excellence and aspiration in learning, and acquiring skills and trades in areas as diverse as engineering, construction, the hospitality industry, joinery, accountancy, and health and social care, are showcased and celebrated. To see so many MPs from all sides of the House getting involved and celebrating apprenticeship achievements in their constituencies is a great thing. We must remember, however, that apprenticeships did not emerge from a blank canvas in 2010, as some Government Members have occasionally implied.
When Labour came to government in 1997 the apprenticeship programme was floundering. We resurrected that historic badge of excellence and made it fit for purpose in the 21st century. Under the previous Labour Government, the number of apprenticeships more than quadrupled. National apprenticeship week was launched to give expanded life chances and skills a focus for recognition and celebration, and the Labour Government also set up the National Apprenticeship Service to drive the project all year round.
Mr Stewart Jackson (Peterborough) (Con)
If it was all going so swimmingly under the previous Government, why in a period of continued economic growth did youth unemployment double and the number of those not in education, employment or training increase year on year?
Mr Marsden
The hon. Gentleman was obviously not listening to what I said because the Labour Government quadrupled the number of apprenticeships in that period. Let us be mature and grown-up about this: no Government of any persuasion have an exact monopoly of success or failure in any particular area. What matters are the intentions that are brought to the party, and our intentions were very strong and solid.
Mark Tami (Alyn and Deeside) (Lab)
Does my hon. Friend agree that we can all learn a lot from companies such as Airbus, which has trained thousands of apprentices over 30 years at both Broughton and Filton? Importantly, it has trained people in bad economic years as well as good. We need a consistent approach to apprenticeships, not the stop-start approach that we have seen over many years.
Mr Marsden
I entirely agree with my hon. Friend. Indeed, I would go further and say that a number of large companies—BAE Systems, for example, where I was last Thursday—have led the way on this issue including with their supply chain. It remains to be seen whether the Government take that message across a broader palette.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
My hon. Friend and I worked together on skills and apprenticeships for many years and, like me, he will know that the tragedy of our economy is that only about 10% of employers take on apprentices. If we could get the other 90% to take on an apprentice, we could really do something for young people in this country.
Mr Marsden
I had the enormous pleasure of serving under my hon. Friend when he was the Chair of the Children, Schools and Families Committee, and he has probably taught me as much as anyone in this House on this subject. He is absolutely right and he hits the nail on the head: a step-change in the number of apprenticeships is central. It is the focus of our motion.
We resurrected that historic badge of excellence, but this is not a matter for party politics. When the hon. Member for South Holland and The Deepings (Mr Hayes) was the Minister with responsibility for apprenticeships, he spoke movingly about what he had learned about the value of the skills of hand and eye from his father. I, too, saw those skills through the working life of my father as an engineer. When he was apprenticed at the age of 14 to the engineering company Crossley Brothers in Manchester just before the second world war, my grandfather told him, “Now Crossleys has taken you on, you will have a job for life.”
Today’s apprentices often face very different challenges and prospects, because many young people can expect to go through half a dozen job or career changes in their lifetime, some probably not even thought of when they start their apprenticeship. That means it is critical to get the mix of bespoke and portable skills right at the apprenticeship stage; and that the range, content and quality remain relevant to the businesses and local economies in which they are embedded. These are challenging issues that demand a co-ordinated and hands-on approach from government, as well as from businesses and educators.
Helen Goodman (Bishop Auckland) (Lab)
On what can be done at a local level to celebrate apprenticeships week, I am having a jobs and apprenticeships fair in Bishop Auckland on Friday. I expect 100 jobs and apprenticeships to be available to young people. Does my hon. Friend agree that the background need is to get the economy moving? Unemployment in my constituency is still rising, and seven people are looking at every vacancy.
Mr Marsden
My hon. Friend is absolutely right. Jobs and skills fairs give a sense of buzz and direction, but we need to look at the position of regional economies. That is a particular problem in the north-east, not least since the excellent lead given by One North East is no longer available.
Mr Marsden
I will make a bit more progress and then let the hon. Gentleman come in if he wishes.
As MPs, we rightly celebrate the individual successes we observe. I have seen it myself in the development of the 19-year-old women whom I took on in my office as an apprentice. She has come from the excellent Blackpool and Fylde college and is doing an NVQ3. I know that sense of engagement is shared by other parliamentary colleagues who have taken on apprentices, or who are in the process of doing so.
In my work inside and outside Westminster in the past year, I have seen the strength of diversity and quality in apprenticeships in the skillset schemes at the BBC’s MediaCity site and the food and hospitality apprentice achievements that People 1st celebrated here. Last week, I visited Hackney community college to hear about the new apprenticeship opportunities it is creating as a result of the Tech City developments, and in Lancashire, as I said, I talked to apprentices at BAE Systems’s engineering school, and at the defence company MBDA just outside Bolton. This Thursday, I will be handing out apprenticeships awards at—what better place? —Blackpool tower. Those experiences have reinforced—for me and, I think, for all of us—the need for a broad range of apprenticeship pathways that cover not just traditional manufacturing sectors, but professional and service sectors. The common denominator has to be quality.
Despite that good work—and that of other initiatives; we welcome the extra apprenticeships that Barclays has just announced—it cannot be the substitute for systematic broader government action. The take-up of apprenticeships remains challenging and, in some categories, dire. We have already seen the number of 16-to18-year-old apprenticeship starts fall by 9,200 in the first three months between August and October 2012, in comparison with the same period in 2011.
Steve McCabe (Birmingham, Selly Oak) (Lab)
Is my hon. Friend as shocked as I am to discover that the Department for Business, Innovation and Skills, with a staff of approximately 2,500, appears to employ only one apprentice under the age of 19? Would today not be a good day for the Minister to make an announcement that he will put that right, put his own house in order and set an example for everybody else?
Mr Marsden
We should never tempt providence, but I am sure the Minister has heard my hon. Friend’s remark, which I shall return to later.
The final figures for 2011-12 also show that the number of 16-to-18 apprenticeships has dropped in four of England’s nine regions, including by more than 2,000 in my own north-west region. The growth figures for other age groups—not least 19 to 24-year-olds, which is a crucial age when many, for whatever reason, have missed out first time around—are modest.
Mr Sheerman
I take a bipartisan approach to these things, but is not one worry the fact that it is difficult for people promoting apprenticeships to get into schools, many of which resist apprenticeships because they want to keep bums on seats in return for the financial reward? That is very common.
Mr Marsden
Like my hon. Friend the Member for Birmingham, Selly Oak (Steve McCabe), my hon. Friend the Member for Huddersfield (Mr Sheerman) is telepathic, because I shall be returning to that point later.
The Government are fond of saying that they have created more than 500,000 apprenticeships, but less fond of saying that in axing Train to Gain they also axed more than 500,000 training places. Many of these additional apprenticeships are merely relabelled and transferred in-work provision from Train to Gain, as Doug Richard, the entrepreneur behind the Government’s commissioned report, confirmed last week and as has been shown by detailed analysis from the sector publication, FE Week, which the Skills Minister and I read with great relish every week.
Government statistics in the Richard review have borne that out. The proportion of apprenticeships that are in-work apprenticeships rose to 70% in 2012 in comparison with 48% in 2007, so the Government’s figure of 500,000 hangs entirely on the huge growth in post-25 apprenticeships. If significant numbers of these fall away as a result of an adverse reaction to the Government’s controversial FE loans system, the fragility of their much-trumpeted figure of 500,000 will be rapidly exposed.
Mr Khalid Mahmood (Birmingham, Perry Barr) (Lab)
Will my hon. Friend join me in congratulating Willmott Dixon, a developer and construction company in my constituency, on having just invested £1 million in a new apprenticeships college? It has already had the privilege of being visited by the shadow Secretary of State, who has seen the good work it does. Will he support that?
Mr Marsden
I will indeed support what my hon. Friend has said, and would add that Willmott Dixon, among other companies, has had some interesting things to say about the role that social value can play in apprenticeships and procurement.
Addressing not just fall-out at post-24, but the ability to fall in at 16 to 18 and 19 to 24 should be a crucial part of any Government apprenticeships strategy. That means exposing them to the world of work and work experience at a much earlier age; giving space and dedicated funding in the curriculum for independent, face-to-face career guidance on apprenticeships; and making space for vital work-related learning skills, as the Federation of Small Businesses said in its publication, “The Apprenticeship Journey”.
The Prime Minister said yesterday in Buckinghamshire that he wanted to make apprenticeships a first-choice career move, so perhaps he could have a word with the Secretary of State for Education, who appropriately is in his place, but who has studiously ignored and devalued the arguments for vocational careers advice made by business groups and, indeed, by his own small and medium-sized enterprises apprenticeships adviser, Jason Holt, in his report last August.
No wonder businesses are dismayed. When the Government removed compulsory work-related learning from the key stage 4 curriculum in 2012, the FSB said:
“We remain deeply concerned that without it many schools may fail to teach these vital skills.”
The Prime Minister also said yesterday rather airily that he wanted Britain to be more like Germany in its attitude to apprenticeships, so perhaps he, too, should listen to Ofsted’s chief inspector, Sir Michael Wilshaw, who has come back from looking at Germany’s apprenticeships system and told FE Week this week that Germany’s “very effective” apprenticeships system is supported
“with a greater focus on vocational training”
in schools “earlier on.” If we want the broadest spectrum of young people, including those not in education, employment or training, to be able to take up apprenticeships, we must give them a fair chance to get there. We and others have been urging for months the need for a proper pre-training route.
Stephen Doughty (Cardiff South and Penarth) (Lab/Co-op)
My hon. Friend is making a strong speech. Perhaps the Prime Minister could take some lessons from Wales. I am proud to have ACT Training in my constituency, which is one of Wales’s largest apprenticeship training providers, training 5,000 apprentices last year, with a 90% completion rate. Will he join me in welcoming the announcement this afternoon by the Deputy Minister for Skills in the Welsh Labour Government? He has announced an additional £22 million of support over the next two years for apprenticeships, which is quite a contrast to the approach of the Government in this place.
Mr Marsden
That support is entirely welcome. Indeed, there might be more occasions when the current Government should look at examples from the devolved nations.
Ever since the Government admitted the need to guarantee that quality apprenticeships would have to be 12 months or longer, we have been pushing these points. That is the only way to ensure that social mobility and apprenticeship expansion can go hand in hand. However, the Government have dithered and dallied, and precious opportunities have been squandered for many young people. The traineeship consultation, which is welcome, was launched only at the beginning of this year, but now the Government have to spell out in detail how they will avoid it becoming a rerun of the youth training scheme of the 1980s, which merely recycled young people off the jobless figures.
The Labour party recognises, therefore, that we need a step change to expand apprenticeship opportunities for young people and to support smaller businesses to take part. That is why, this time last year in Blackpool, I laid out a series of apprenticeship initiatives from our Front-Bench team to do just that. They include Government expansion and encouragement of group training associations to aid smaller businesses and the promotion of best practice in buddying, with larger companies working with smaller ones in their supply chains to create apprenticeships, as well as a larger direct role for business and industry in creating and setting apprenticeship frameworks and direct involvement in careers advice and guidance.
Andrew Percy
I will not plug my jobs fair—which is taking place at 9.30 this Friday at the Vale of Ancholme school in Brigg—but one thing the shadow Minister has not mentioned is the important role of local government in supporting apprenticeships. I wonder whether he has had the opportunity to look at Conservative-run North Lincolnshire council, which created 60 apprenticeships last year and has this year put aside £250,000 to support local businesses in employing 120 apprentices.
Mr Marsden
I am glad that the hon. Gentleman has made what is not just a detailed point, but an important general point: that these things cannot simply be delivered and micro-managed in Whitehall. They need to be taken forward at the local and sub-regional level. He gave an example, and I welcome apprenticeships coming from councils of whatever political persuasion. I shall have a little more to say about that later.
Mr Marsden
I will take one more intervention from my hon. Friend and then I must make progress.
Mr Sheerman
Again, I am not trying to make party political points, but have we not all found that if we are to have apprenticeship champions, we have to locate them somewhere? Whether they are in local enterprise partnerships, chambers of commerce, local authorities, colleges or anywhere else, we have to have champions if we are to get the number of apprenticeships this country deserves.
Mr Marsden
My hon. Friend is quite right. When different places choose different champions in different sectors, the secret is getting them to co-operate with each other.
Last year we laid out all the measures I have set out in this debate, but the centrepiece is something that the Government could move to tomorrow if they wanted to: using the tens or even hundreds of billions of pounds of public procurement that come from Government contracts to create apprenticeships. That is the core of today’s motion. As far back as August 2011, we set out our stall, when the then shadow Business Secretary, my right hon. Friend the Member for Southampton, Itchen, announced that we would require all companies bidding for Government contracts above £1 million to put in place a scheme to create apprenticeships before they could get them. That is an initiative to do much of the heavy lifting that we need to provide the step change, the exponential shift, in the sheer volume of apprenticeship numbers. Since then, his successor, my hon. Friend the Member for Streatham (Mr Umunna), has taken that proposal forward on every possible occasion, not only on the ground of the economic necessity for growth but as an ethical imperative. That is why, last week at the EEF, he outlined our position, which is that it is simply unacceptable that two thirds of larger employers are still not offering apprenticeships.
It was my right hon. Friend the Member for Southampton, Itchen who laid out the direction of travel for this initiative when we were in government. Along with my hon. Friend the Member for Wallasey (Ms Eagle), he launched the official Office of Government Commerce guidance encouraging this approach. That Labour Government then proceeded with major projects such as the Kickstart housing scheme, launched by my right hon. Friend the Member for Wentworth and Dearne (John Healey), and Building Schools for the Future, as well as working with the contractors on the Olympic park, which resulted in the creation of thousands of new apprenticeship opportunities.
Andrew Gwynne (Denton and Reddish) (Lab)
My hon. Friend is making an important point. We have learned this week that young people in areas such as Tameside are now among those with the fewest opportunities to access the jobs market, yet it was Labour-controlled Tameside council, working with a Labour Government, that ensured that the contractors for schemes such as Building Schools for the Future took on apprenticeships as part of the Tameside Works First initiative.
Mr Marsden
My hon. Friend is absolutely right. As a native Mancunian, I am well aware that over the past 20 to 25 years, the local councils in the Greater Manchester area have done splendid work in this respect.
I was talking about Building Schools for the Future and the contractors on the Olympic park. It is also sometimes forgotten that it was our party, in government, that ensured that skills and apprenticeships would be an integral part of the Crossrail project that we had announced. It was our party that put in place the tunnelling academy and laid the framework for a procurement strategy based on taking apprentices from the local London boroughs.
That is what we believe, but more than that, it is what a raft of other bodies believe as well. Most recently and significantly, the cross-party Business, Innovation and Skills Committee ended its 11-month inquiry into apprenticeships and, in its recent report, called on the Government to adopt such a scheme. The Committee argued that the Government should aim for the benchmark used by many leading businesses in the construction sector, including Kier, Wilmott Dixon and Laing, whereby for every £1 million spent by Government Departments and their agencies on public procurement, at least one new apprenticeship place should be created.
That sensible approach has already attracted many supporters. The Union of Construction, Allied Trades and Technicians, the Association of Colleges, the National Union of Students, the North-East Federation of Small Businesses, the North-East chamber of commerce and many others endorsed the approach when it was set out by my hon. Friend the Member for Newcastle upon Tyne North (Catherine McKinnell) in her excellent private Member’s Bill last year. During the Select Committee sessions, organisations such as JTL and unionlearn also backed the procurement concept.
Despite all that, this Government continue to refuse to act. Their response to the Select Committee report cited rather vague unintended negative consequences as their excuse for ducking the issue. They said that they were
“currently working on guidance to encourage best practice amongst local authorities in relation to Apprenticeship conditions in construction contracts”.
Why has it taken them more than two and a half years to get to this point? After all, does not such a starting point already exist in the form of the OGC guidance that I referred to earlier? Why are the Government reinventing the wheel?
It has also been suggested that civil servants fear that they could fall foul of EU procurement rules. The Minister’s illustrious predecessor, the hon. Member for South Holland and The Deepings, ruefully admitted to the Select Committee last May that he felt that the Government could be more creative in their use of procurement. That position has also been confirmed by the House of Commons Library, which points out that the European Commission has a guidance note entitled “Buying Social: a Guide to Taking Account of Social Considerations in Public Procurement.” That guidance suggests that promoting “employment opportunities”, “decent work” and access to training can be taken into account. Those guidelines are surely compatible with promoting apprenticeships.
Rehman Chishti
Will the shadow Minister join me in paying tribute to Medway council, which has managed to obtain money from Europe to fund up to 500 apprenticeships under the success scheme?
Mr Marsden
I am delighted to do so. That is another indication that Conservatives down in Kent seem to do things rather differently from Conservatives in Government.
As I was saying, could it be—perish the thought—that some Ministers are simply using European Union law as a convenient smokescreen to disguise their reluctance to support this kind of active, intelligent Government initiative? If that is the case, what do they think that our French or German counterparts would do? Do they think that they would allow arcane, untested notions of EU law to prevent them from expanding apprenticeships, given the dire unemployment rates among young people that exist under this Government? Why, if that is the case, does one of the Government’s own Departments claim to be following an approach much like ours?
Since July 2011, the Department for Work and Pensions has been operating its apprenticeships and skills requirement contract schedule, which requires:
“The Contractor shall and shall procure that its Sub-contractors shall take all reasonable steps to ensure that 5% of their employees are on a formal apprenticeship programme.”
The apprenticeships Minister himself praised the DWP initiative in a recent House of Commons response. That is all well and good, but if the initiative is such a good idea, why have the Government not extended it to other Departments? Why has the Department for Business, Innovation and Skills, as the lead Department for apprenticeships, not taken matters any further in the 20 months since the launch of that initiative? Why have the Cabinet Office, the Deputy Prime Minister, and even the occupants of No. 10—who waxed eloquent yesterday about the value of apprenticeships being the new norm—done nothing? That is not exactly the equivalent of Churchill’s “action this day”. Are this Government so supine, so conflicted and so hung up that they prefer taking away people’s employment rights to creating career opportunities for them? Does it not boil down to the resistance of many, if not all, in the Tory-led coalition to any active, intelligent role for Government which would require them to strain every sinew to promote economic growth and expand young people’s life chances?
The Government cannot and should not micro-manage, but they must expand apprenticeship places more vigorously and systematically than they are at present. That is central to what we need to achieve as a country so that we can compete and thrive in the 21st-century world. It is no wonder that my right hon. Friend the Leader of the Opposition made the expansion of apprenticeships with employers and other stakeholders, and the introduction of the “tech bacc”, the central focus in his speech to the Labour party conference last year. He has also spelt out the way in which a future Labour Government could apply the same criterion to major infrastructure projects such as High Speed 2, with the objective of creating at least 33,000 additional apprenticeships.
We can see how the same formula could be applied directly elsewhere, and in other Departments beside the DWP. For example, there are four existing road projects announced by the Department for Transport—work on the A160 and A180 in Immingham, on the M6 in the west midlands, on the M3 in Surrey, and on the M275 in Portsmouth—with a combined contract value of more than £400 million, from which hundreds of apprenticeship places could be created. If the Government really want to expand apprenticeships, why will they not practise what they preach and implement these sensible proposals? After all, what better spur can there be for the two thirds of businesses that still do not offer apprenticeships than the knowledge that they are crucial to the Government, and also crucial to their working with the Government?
As Members have said, we need to see Government Departments themselves opening up and offering more apprenticeships. The most recent data available to us on BIS are those mentioned earlier by my hon. Friend the Member for Birmingham, Selly Oak. Spurred by the cogent arguments advanced repeatedly over the past year by my colleague in the other place, Lord Adonis, the Government should be introducing an apprenticeship fast stream for the civil service. Ministers have now announced belatedly that they will be running such a scheme, but we are still waiting to hear—and it would be interesting if we could hear today—just how committed to it individual Departments will be. The Cabinet Office, for example, was far from forthcoming when I asked parliamentary questions about this earlier this year. My right hon. Friend the Leader of the Opposition summed the position up perfectly in an article at the end of January in which he said:
“Whitehall takes 500 of the brightest graduates from our top universities every year and fast-tracks their careers on good salaries. Let’s give the same opportunities to youngsters who are ready to knuckle down and learn on the job, in tough apprenticeship schemes. It should start in the offices of ministers in the Government.”
We believe that any new apprenticeships created via this procurement route need to be high quality, a point echoed by the Doug Richard review recommendations.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
My hon. Friend is making a powerful speech. I am thinking in particular about the 16 to 18-year-olds in Oldham who are not in education, employment or training; the level there is more than 8.6%, which is well above the regional average. We have seen so many Government U-turns in the past few weeks, so is he hoping that they might do a U-turn on this issue, too?
Mr Marsden
We wait with bated breath to see what might occur in the Budget, and I hope that the Skills Minister might use his good offices with the Chancellor in that respect.
Labour Members believe that this apprenticeship route has to be a high-quality one. We have to have that because we have had problems in the past with the duration of apprenticeships, and it took some time for the Government to move on that. These issues of quality are being addressed by our Labour skills taskforce. It is taking forward details of our proposals, which the Leader of the Opposition announced last autumn, drawing on the practical experience of business, the further education sector and elsewhere. That is why we are seeking not only to boost the number of apprenticeship places available, but to address the situation pre-18 by introducing a new technical baccalaureate.
While the Government have been dithering nationally about how to expand apprenticeships and ignoring procurement policies, Labour local authorities have been leading the way. A number of Labour-run authorities are going ahead with public procurement to create new apprenticeships for young local people eager for those opportunities. For example, Sheffield city council has identified 233 additional apprenticeships that it can create via public procurement where it has set its requirements at £100,000. Sandwell’s council has done something similar, aiming to create just under 200 apprenticeships through public procurement in the next three years. Other councils, such as my local authority in Blackpool, are boosting numbers in other innovative ways. It already has 48 apprentices on the books, but my local council is working with other local public sector bodies, such as the police force and the NHS, to create shared apprenticeships across those bodies. One could add to that other Labour councils such as those in Reading and Plymouth that are actively engaging with local businesses to boost apprenticeship opportunities across their boroughs, as well as the city skills hubs of Manchester and Leeds.
What is telling about that story of activity in local government is that, as we have heard, even Conservative-run local authorities realise the merits of that approach. For example, Kent county council has put in place criteria whose details closely mirror ours: procurement for all contracts worth more than £1 million should create at least one additional apprenticeship place. Northamptonshire county council has also put in place mandatory requirements on all contracts over the value of £2 million. In addition, there are those in the Prime Minister’s own parliamentary party who have argued that something has to be done, with perhaps the sharpest example being the hon. Member for Harlow (Robert Halfon). Last year, that redoubtable Member made similar suggestions that government should be using public procurement to boost apprenticeships.
That shows the range of consensus on the need to act now. It is a consensus that has been built by a determination to do something to kick-start us out of a dire, flatlining economic situation, which has the potential to put thousands of young people at risk. The Opposition are advocating a useful change that has the potential to transform the life chances of thousands of young people. It offers them the opportunities they are crying out for, and sends a clear message to business that apprenticeships matter and add real value to a firm. If we will the ends, we must will the means. It is time for the Government to stop tying themselves in tortuous knots when they are put on the spot by the wise words of the Select Committee.
The Skills Minister has repeatedly said that apprenticeships are at the heart of the Government’s skills strategy. As many of his Tory colleagues in local government agree with our approach, why does he not take this modest proposal forward? He has the opportunity. We have a Department for Business, Innovation and Skills that already has a Minister with two brains and a Secretary of State in two minds about ring-fenced funding and economic growth. Now I wait with bated breath to see whether the Under-Secretary of State for Skills will be able to say the right thing for his two Departments this afternoon.
Abraham Lincoln—or perhaps it was Daniel Day-Lewis—famously said that when
“the occasion is piled high with difficulty”
we must rise to it, and
“As our case is new, so we must think anew, and act anew.”
That is our proposal today. When our economy and this Government’s strategy are flatlining, we must act anew. A public procurement policy for apprenticeships would start to transform the numbers and the life chances of tens of thousands of young people. It makes economic sense, but it is also the right thing to do. We believe in a one nation Britain with not only social cohesion and fairness but economic cohesion, in which apprenticeships have a firm stake. That is why we have put the proposal centre stage today and that is why I am proud to move the motion.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I warn hon. Members that it looks like there will be a five-minute limit on speeches due to the length of the opening speeches.
The Minister of State, Department for Business, Innovation and Skills (Michael Fallon)
I can join the hon. Member for Blackpool South (Mr Marsden) in making one point: we are all in the Chamber today to celebrate apprenticeships on the second day of national apprenticeship week. I was privileged this morning to meet Jenny Westworth, the apprentice of the year, who is an aeronautical engineer at BAE Systems near Preston.
Apprenticeships offer a huge amount. They work for the economy, they work for employers and they work for apprentices. In short, apprenticeships deliver. For the economy, apprenticeships improve productivity. For employers, apprenticeships increase morale and retention, not to mention the skills that employers need. They also work for the apprentices themselves and evidence published by the Centre for Economic and Business Research shows that the average higher apprentice increases his or her lifetime earnings by about £150,000, about as much as if he or she had gone to university.
Apprenticeships deliver and that is why over the past two years the number of apprentices starting has increased so sharply. In 2010, the coalition promised 50,000 more apprentices every year. I confirm to the House today that we have already not only delivered on that promise but exceeded it. We have all but doubled the number of apprentices starting each year, with more than 1 million starts under this Government.
Michael Fallon
I shall give way in a moment.
Apprenticeships deliver and we can now set out a more stretching goal, that is, the vision that on leaving school it will become the new norm to go either into an apprenticeship or to university. Gone are the days when a Prime Minister could set an arbitrary target for how many children should go to university, forcing some down a route that did not suit them and ignoring the rest. Gone are the days of Labour’s forgotten 50%. Gone are the days of youth unemployment rising even in the boom years. Gone are the days of uncontrolled immigration as the only answer to skill shortages, of dumbing down, of worklessness, of welfare and of the race to the bottom. Instead, the Government aspire that all the young people of this great nation should reach their personal best and that they should all succeed and fulfil their potential.
Of course, such a change is an economic imperative, as we cannot afford the drag anchor of the welfare bill in this global race, but there is also a moral imperative to support everyone in reaching their potential—for the many, not the few. How will we do that? Of course, the sharp increase in the quantity of apprentices is important, but alone it is not enough; despite unemployment falling, we still, shockingly, find both youth unemployment and skills shortages together in many towns in Britain. That points to a skills system that for too long has failed. For too long, the Government directed centrally the training that should be provided, at what level and where. The result was too much poor-quality training in skills employers did not need, and not enough high-quality training in skills employers do need.
The lodestars in reforming the apprenticeship system will be rigour and responsiveness: rigour to stretch, challenge and raise the expectations of apprentices and responsiveness to the needs of employers, public or private, large or small. The Richard review, which we published in the autumn, sets out a clear and specific guide to delivering those reforms, and we shall publish our formal response shortly.
What of Labour’s response today? I certainly welcome the Opposition’s general support for apprenticeships. I welcome their specific support for more employer ownership of skills, which has support across the spectrum, from trade unions, employers and the third sector alike. However, I am disappointed by the rather negative and carping tone that we heard from the hon. Member for Blackpool South. I turn to some of his specific points.
Michael Fallon
No. The hon. Gentleman has already made three interventions.
Michael Fallon
Others need to get into the debate.
The hon. Member for Blackpool South referred to an article written by the Leader of the Opposition. I grant that it was an unusual article; it actually set out some policies—on apprenticeships. I read it to find out exactly what was there. The first policy was to introduce a national application system for apprenticeships, rather like UCAS for universities. That is a good idea. It is such a good idea that we have already brought it in and linked it to UCAS. It is called the apprenticeship vacancy service; it is run by the National Apprenticeship Service and it was used by more than 1 million applicants last year—evidently none of them from the Labour party research department.
Mr Graham Stuart (Beverley and Holderness) (Con)
Will my right hon. Friend give way?
Mr Stuart
The hon. Gentleman is clearly wrong. My right hon. Friend is prepared to give way and I congratulate him. He may not know that my constituency has the highest number of adult apprenticeship starts, and overall has one of the highest numbers in the country. I congratulate him and his colleagues on increasing the number of apprenticeships and ensuring quality. Does he share my surprise that the hon. Member for Streatham (Mr Umunna) does not mention the tripling of apprenticeships that has occurred in his constituency since Labour left power?
Michael Fallon
My hon. Friend does the House a service by drawing attention to that rather revealing statistic.
I turn to the second policy we discovered in the Labour leader’s article. He said:
“Let’s respond to employers who say they can’t hire young people with the right skills, and put them in charge of how training money is spent.”
That is a good idea, but the Prime Minister launched the employer ownership pilot in November 2011. There are now some 26 of those pilot schemes. Only this morning another one was launched, for digital marketing. The support of the Opposition—a bit late—is very welcome.
Thirdly, let us turn to the idea of apprentices in Whitehall. I agree. In 2010, we found hardly any apprentices in Ministers’ offices. There are now 1,800 across Whitehall. We announced a fast-stream apprentice scheme that will take 500 apprentices—the same number as the graduate fast stream. Other of the Leader of the Opposition’s colleagues mentioned the number of apprentices in my Department. They were wrong; there are 79 apprentices in the Department for Business, Innovation and Skills and its Executive agencies, hired despite the broader hiring freeze. [Interruption.] Other than apprentices, the Department employs no one at all aged under 19.
Fourthly, we come to the policy on procurement. The Opposition say we should put apprentices into the procurement contracts for High Speed 2. Of course, HS2 has yet to go through the House so its contracts are yet to be signed, but the Department for Transport has already made it clear that it will ensure that any procurement for the construction of HS2 meets our wider Government commitments to deliver apprenticeships and training. In the case of Crossrail, the largest construction project in Europe, the contracts signed by this Government require apprentices. I think we now know where the Opposition got the idea for all these Labour policies—they looked up what we are doing and they are playing catch-up.
Andrea Leadsom (South Northamptonshire) (Con)
I am sure my right hon. Friend is aware how delighted the parliamentary apprentices are to have been invited to meet the Prime Minister tomorrow to celebrate apprenticeship week. There are a number of apprentices, including Daisy Peck in my office, who is the former head girl of Northampton school for boys—it takes girls in the sixth form—and she is thrilled to be invited by our Prime Minister to celebrate apprenticeship week at No. 10 tomorrow morning.
Michael Fallon
I am delighted to hear that. I understand that the apprentices will also attend Prime Minister’s Question Time tomorrow, so we must all be on our best behaviour.
Michael Fallon
No. The hon. Gentleman has had four—or is it five—goes.
On the motion, we are clear that we support the principle of apprenticeships within procurement, where they deliver value for money, and we are delivering apprenticeships within procurement, but I am sorry to point out that there is a problem with the Opposition motion. First, it requires the Government to put apprenticeship contracts into all public sector contracts. That would mean all local government contracts and all devolved Government contracts, and I am not sure that the hon. Member for Blackpool South or the Opposition intended that. In addition, the motion makes no mention of value for money. For Government Members value for money in procurement is essential. Of course the evidence shows that apprenticeships normally drive up value for money, but the motion would be a rather heavy-handed approach.
I ask the Opposition, as we jointly celebrate apprenticeship week, to accept the reassurances that we have given about the importance of procurement in national contracts, to understand that their motion is technically defective, not to push it to a vote, and instead to support the Government in their drive to increase apprenticeship numbers.
I urge the whole House to get behind the wider reforms that we are putting in place for apprenticeships. Following the Richard review, which was widely welcomed, we are setting out those reform plans so that as well as the welcome increase in quantity, we increase the quality, putting employers at the heart of apprenticeships and making the system more rigorous and more responsive to skills needs. We have published regulations to increase the level to which apprenticeships can be studied, introducing for the first time apprenticeships that can lead to the same exams to qualify as a solicitor, accountant or insurance professional. By putting employers in the driving seat, we are reshaping apprenticeships to fit the modern economy—a highly skilled, highly motivated work force where each and every one can aspire to fulfil their potential. That is what our reforms will do, and I commend apprenticeships to the House.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I have decided to introduce a six-minute limit to make sure that everybody who wishes to speak gets in.
Mr Adrian Bailey (West Bromwich West) (Lab/Co-op)
I will try to summarise my 11-month Business, Innovation and Skills Committee report and its recommendations within that time frame. I welcome this debate in national apprenticeship week. Notwithstanding the political differences that we may have between the parties, it is important that we take the opportunity to demonstrate and recommend to young people the advantages that come from an apprenticeship.
Recent figures show that it is anticipated that there will be about £3.4 billion-worth of additional growth per year in 2022 if we adopt a certain target for apprenticeships. Similarly, apprentices can expect to earn about £150,000 extra during a lifetime. Those are key figures that the House should be highlighting in order to underpin the Government’s drive to get more apprentices.
However, the Government have to recognise that there is also a perception problem. Fewer than one in five 16 to 19-year-olds think that apprenticeships offer the best career option for them, and the great majority still think that GCSEs and university do so. Fewer than one in 10 parents support apprenticeships. They still prefer the higher education route and still think of apprentices as being blue collar workers, whereas in fact the great majority are white collar workers.
Notwithstanding the obvious economic benefit and the drive and support from all parties in the Chamber, there is obviously a problem that has to be addressed in fulfilling the potential that is offered by this career route. With great respect to the Minister, I do not think that he did justice to some of the recommendations made by the Opposition and the Business, Innovation and Skills Committee to achieve that. I stress that the Select Committee has a Government majority and all its recommendations were passed unanimously.
The solution lies, first, in not just trying to drive up the number of apprenticeships, but in looking at our education system. The Prime Minister talked yesterday about an alternative career option. If we are to get young people to take it up, we must have some sort of parity of esteem between higher education and the apprenticeship route. The most depressing thing that the Committee heard was when an apprentice in Sheffield told us that he had the option to go to university, but when he told his school he wanted to take an apprenticeship, it ignored him and did not even invite him to its awards ceremony. That is symptomatic of a culture within our schools and education system that must be addressed if we are to change.
David Simpson (Upper Bann) (DUP)
There has been a system through the years where there has not been that close working relationship between educationists and industry, and educationists need to provide the courses that are relevant to today’s industry.
Mr Bailey
I agree entirely with the hon. Gentleman, and if I have time I will come to that very point.
One of the Select Committee’s recommendations was that the Ofsted assessment criteria should include the number of students that a school puts into vocational and further education. It is only by changing school targets that teachers will change the culture of schools to overcome this discrimination between higher education and the vocational route. Unfortunately, the Government declined to take up that invitation.
I pay tribute to the hon. Member for Beverley and Holderness (Mr Stuart) for a very good Select Committee report that highlighted the problems of the careers service. By delegating careers advice to schools, the existing bias within the education system to encourage students to take the higher education route rather than the vocational route is being reinforced. We need careers advisers who are aware of apprenticeships, aware of the benefits of vocational education, and prepared to advise students in schools that that is the best possible route for their particular range of aptitude.
Mr Graham Stuart
The point that the hon. Gentleman makes about careers advice is absolutely right. Does he agree that one of the Government’s successful initiatives has been the National Careers Service, and there could be a role for that service, working with schools, to ensure that they fulfil the duty that they have been given? All too often the institutional interest of the school and the individual interest of the young person are not the same, and that is why we need some kind of arbitration to make sure that the interests of the child are put first.
Mr Bailey
I read the recommendation of the hon. Gentleman’s Committee on that, and in the current situation I think it is probably the best option. I await the Government’s response to it with interest.
Work experience is another topic that has been raised. Removing the obligation on schools to have their students involved in work experience removes from those students an experience that potentially will enthuse them to pursue an apprenticeship. In my area, many of the apprentices in the foundries went there as a result of work experience they undertook. Removing this obligation undermines the overall thrust of the policy, which is to get young people into vocational education.
The hon. Member for Upper Bann (David Simpson) raised the issue of business involvement. That is another crucial element in developing a strategy that works. I believe that, first, there must be a vocational qualification, and the BTEC, as outlined by my hon. Friend the Member for Blackpool South (Mr Marsden), should provide that. I support the Government’s employer ownership scheme as I believe that our vocational qualifications must be determined, monitored and assessed by business, in conjunction with the education service. I also believe more group training associations and apprenticeship training associations should be developed so we can reach the smaller small and medium-sized enterprises, which are the hardest to reach and which otherwise would be unable to provide the resources for apprenticeship training.
I am not going to repeat my hon. Friend’s arguments in support of the Business, Innovation and Skills Committee recommendations, but I will emphasise that my local authority of Sandwell is pioneering in this area, and has so far obtained 250 apprentices, is playing a brokering role for students with local businesses, and has taken 300 people off the unemployment register by giving them work experience in a pre-apprenticeship scheme.
If local government can do this, why cannot the Government? The half-hearted response of the Government is to be lamented, and I hope we will get something more positive in future.
Mr Robin Walker (Worcester) (Con)
It is a pleasure to follow the Chair of the Business, Innovation and Skills Committee, the hon. Member for West Bromwich West (Mr Bailey), who made an excellent speech.
Apprenticeships are working for business and more young people are taking up apprenticeships in Worcestershire than ever before. In that context, I warmly welcome the start of another national apprenticeship week. Like many other MPs, I have employed an apprentice to work with me in my constituency office, and I will be meeting local employers in my constituency this week to discuss how we can strengthen the roll-out of apprenticeships, widen participation by businesses in supporting them, and continue to drive up quality for employers and apprentices alike.
Justin Tomlinson (North Swindon) (Con)
I know that my hon. Friend is a real advocate of apprenticeships. One of the ideas I hope he will push in that forum and with Ministers is to use the mailing of business rates. We already pay for those to go to every business every year. Simply inserting a leaflet setting out the benefits of apprenticeships would provide a real boost, and would serve to open the window for many other businesses and future apprentices.
Mr Walker
My hon. Friend comes up with an intriguing, and very creative, suggestion, and I am sure Ministers will respond to it in due course.
Although I welcome the fact that the Opposition have chosen apprenticeships as the topic for this debate, and I particularly welcome their support for the excellent report from the BIS Committee, which I was proud to join shortly after its inquiry into apprenticeships, I am afraid that their motion is very narrow and self-congratulatory and misses most of the important recommendations of that report, as the Committee Chair eloquently explained in his excellent speech.
As a proud member of the all-party group on apprenticeships, I have met a wide range of employers who want to take on apprentices and who value the opportunity to have people earn while they learn. I have also met some enormously impressive young people from all over the country who are undertaking apprenticeships and who recognise the huge opportunity they offer. It is very easy for a debate such as this to be dominated by statistics, and I am sure other Members will introduce plenty of them into the debate, but the overall story is undoubtedly one of strong growth under the coalition Government. A big rise in the number of apprenticeships in Worcester helps to explain the sharp fall in youth unemployment, which today is around 18% lower than it was at the time of the general election, and down more than a quarter since its peak under Labour.
However, I want to focus on quality, not just quantity, and on people, not just numbers. Suffice it to say, I welcome the fact that the numbers keep rising, which is testament to the Government’s commitment on apprenticeships. Apprenticeships are often seen as the first step in a career, but it is important to recognise where they can lead. We should see them not just as a route into the lower end of the jobs market, which they have sometimes been misrepresented as in the past.
When I look at local manufacturers in my constituency, I see that many of the bosses are former apprentices. Both the current and previous managing directors at Worcester Bosch, the biggest private sector employer in Worcester, started out as apprentices. In smaller local engineering firms, one reason why the bosses and owner-managers are so passionate about making today’s apprenticeships work is that they started their careers in old-fashioned apprenticeships.
We should not see apprenticeships as an end in themselves, but as a conduit into learning about work, good careers and wider opportunities. For many young people, staying in school or college until 18 or going to university are not necessarily enticing prospects. Some of the brightest young people can be disengaged from classroom study by the time they reach 16 and many would relish the challenge of being able to learn in the workplace.
In the past, apprenticeships served generations well as a means of entry into work, particularly in the manufacturing sector, but with the number of apprenticeships increasing across the advanced manufacturing, cyber, computer and service industries, I believe that they can serve the current generation of school leavers even better. Many young people are better suited to learning in the workplace, rather than the classroom, and will thrive best given the opportunity to succeed, work hard and learn in a working environment. I am glad that apprenticeships now offer a progression that can take people right up to degree level and provide an alternative route to that valuable level of qualification.
I was pleased to hear the Prime Minister say that apprenticeships should be seen as the “new normal”. In order for that to remain the case in the long term, however, we need to make some changes. We need to get the message through, as the Select Committee Chair has shown strongly, to all those in our education system who provide careers advice that apprenticeships are here to stay. I was shocked to hear from apprentices at BAE Systems that many of them, who had achieved that gold-standard apprenticeship, had been actively discouraged from applying for it by their teachers. My hon. Friend the Member for Burnley (Gordon Birtwistle), who unfortunately is not in the Chamber, has previously given the appalling example of one candidate whose teacher tore up their application for an apprenticeship with that fantastic employer because they did not want to see them “wasted there.” I have seen some of the outstanding facilities available to those apprentices.
Mr Bailey
I thank the hon. Gentleman for his kind words. Does he agree that because we have a system in which teachers are judged on their ability to get pupils into higher education, rather than into apprenticeships, we cannot really blame the teachers or the system for doing so? It is the Government who need to change the system. That is not a party political point, because it existed under the previous Government as well.
David Simpson
Does the hon. Gentleman also agree that one of the difficulties is that some industries have had a culture of employing agency workers, who are easy to employ and to dispose of, which means there is no investment, and that that culture has to change?
Mr Walker
I agree with that as well. I think there is the opportunity to show businesses the benefits of investing in skills and that that can be achieved through apprenticeships. Some of the strongest recommendations in the Select Committee’s report relate to the need to strengthen the brand of apprenticeships and the focus on them in careers advice. It also points out the need to increase engagement between the National Apprenticeship Service and schools. Disappointingly, the motion makes no mention of those issues at all.
I would go further than the Committee’s report. We need businesses to engage more closely with schools, to put their managers on to the governing bodies of schools at both primary and secondary levels, and to champion the advantages and opportunities of apprenticeships and work-based learning, just as university-educated teachers will always champion the benefits of going to university.
In my constituency, I have been pleased to see Yamazaki Mazak take an active role in supporting the Bishop Perowne Church of England academy, placing its managers on the governing bodies of the school and its primary feeders and proactively engaging with school children in order to advocate the benefits of vocational education. I am glad to see Worcester Bosch playing an active role in inspiring pupils at the Tudor Grange academy and was delighted to hold an apprenticeships and enterprise fair, sponsored by both companies, to bring schools, employers and apprenticeship providers together with young people to talk about apprenticeships in Worcester.
The Select Committee’s report made powerful representations about the need to engage small and medium-sized enterprises in the apprenticeship agenda and pointed out that 80% of apprentices are employed in the SME sector. Again, the motion is silent on this point. In Worcester, a proactive, Conservative-led city council has engaged with this agenda to support SMEs with extra grants so that when they take on apprenticeships they get double the support that is available from the Government. I was delighted that at my most recent business event a number of small companies present had already taken on apprentices and they valued the support they were offered. I have also been very pleased with the consistent support for this agenda from the local media, particularly the Worcester News, which has run the 100 in 100 apprenticeships campaign.
It is of course right that the Government consider public procurement as a way of encouraging apprenticeships, and I was pleased to hear the Minister reiterate their commitment to using it in that way. It is right that the Select Committee drew Ministers’ attention to this important area, as it did on pages 52 and 53 of its 90-page report. However, it is also right that the Government should have regard to the cost that making procurement conditional on apprenticeships might have for the public purse and private enterprise. The report says,
“we concede that some flexibility is required”,
and, with regard to the suggestion of looking for at least one apprenticeship per £1 million awarded,
“we have been told by the TUC that this is current policy in some construction procurement arrangements.”
It is notable that the recommendation on procurement did not form even one of the sub-headings in the conclusions and recommendations of the report.
I passionately support apprenticeships. I welcome the fact that we are celebrating national apprenticeship week and welcome the very important work of the BIS Committee, of which I am proud to be a member.
Richard Burden (Birmingham, Northfield) (Lab)
Like other hon. Members here today, I welcome national apprenticeship week. Last night I was pleased to be able to attend an event organised jointly by the Society of Motor Manufacturers and Traders and Semta on apprenticeships in the motor industry, where I met Carolyn Lee and James Doughty, two new apprentices working for Jaguar Land Rover. If anybody ever doubted the value of apprenticeships and what they can do to raise aspirations among young people, they just need to listen to the kind of things they were saying to me.
As chair of the all-party motor group, I have regular discussions with motor manufacturers and others in the motor industry. It is a sector where apprenticeships are taken very seriously and where a great deal is being done. The automotive sector is one of the largest providers of apprenticeships in our country. People in the sector certainly welcome a number of the initiatives that have taken place, but last night they told me something that it is important for us to bear in mind: we must not think that rhetoric about apprenticeships is exactly the same as reality, because they are different. We can support some of the things that are being done and still recognise that.
I am sorry that the Minister did not seek to engage with Labour Members on the issues that they wanted to raise with him. My first point about rhetoric not always matching reality is that people involved in the automotive sector and elsewhere are saying that small and medium-sized firms, in particular, have genuine concerns about how they can engage with the system: how they access apprenticeships, what they mean for them, and whether it is too difficult for them to get involved. The system is not joining up in the way that it should, and it is important that the Government listen to what those in industry are saying. They are not making political points; they are talking about the health of their businesses and the opportunities that should be available to young people.
My second point on the rhetoric is that it is okay for the Government to talk about the expansion in the number of apprenticeships that has occurred over the past few years, but often those apprenticeships are not tackling the issue of youth unemployment, even in terms of numbers. In the last academic year, the number of 16 to 18-year-old apprentices fell in four of England’s nine regions, including my own, the west midlands. Youth unemployment has sky-rocketed in my constituency; 1,260 young people are currently without a job and long-term youth unemployment has more than doubled. If we overlay that with access to apprenticeships, it does not make good reading. The Prince’s Trust has highlighted the fact that in some cases just 14% of apprenticeships were obtained by unemployed young people.
There are examples of good practice. I welcome the work of Birmingham city council. Last year it established a commission on youth unemployment, which produced pretty staggering and disturbing results: we are one of the youngest cities in Europe but we have 15,000 unemployed young people, 3,000 of whom have been unemployed for more than a year. The council and its partners set up a youth jobs fund to target funding on tackling long-term youth unemployment. There are issues involved in targeting funding: should it be targeted on young people, on the areas in which they live or on the areas in which employers operate, which form the catchment area for the young people? I have written to the council and I hope soon to receive replies to my questions.
We need more initiatives that bridge the gap between boosting apprenticeships and ensuring that they tackle long-term youth unemployment, and in that context I wholly endorse the comments made by my hon. Friend the Member for West Bromwich West (Mr Bailey) on behalf of the Select Committee. If we are to join up the system it is vital that our education system links with the necessary skills training and opportunities for young people.
The long-held perception in this country that the academic route is superior to the vocational route must end. I hope that Ministers will think a little about the messages they send young people. The rhetoric of the Secretary of State for Education over the past few years has pointed young people in a direction that has not encouraged them to believe that apprenticeships enjoy parity of esteem, whereas we must ensure not only that opportunities are available but that young people feel they can contribute the skills necessary if our country is going to be as competitive as it should be in future.
Mr David Ward (Bradford East) (LD)
The average unemployed person, especially young people who are seriously looking for employment, will not give a jot who should claim credit for rejuvenating apprenticeships. All parties should pat themselves on the back for trying to rejuvenate apprenticeships, which had almost disappeared. Wherever credit should lie, the fact that this initiative is being developed at pace is welcome.
Where did we go wrong? Over the past 20 or 30 years we failed to deal with huge structural issues in the labour market. Immigration played some part, especially in communities with rising young populations, but many businesses tell me they would have gone bust without immigrants, particularly over the past 10 years. Structural change to the labour market is important in a place such as Bradford. In the good years, 1998 to 2008, we lost 40%—15,000—of our manufacturing jobs. Hon. Members need only think what opportunities could have been offered for apprenticeships.
We are all aware of the tale of educational under-attainment from which we have suffered for many years. I worked in a university for about 20 years and always felt that the 50% target was absurd. It was not matched by an equivalent increase in funding, and the unit cost dropped. It became too easy to go to university, and when I started work in the 1980s there was no one in the class who did not want to be there, but by the time I left many young people were there simply because they did not know where else to be—it was a deferred decision. The most difficult thing I faced in dealing with admissions in the summer was my awareness of the huge attrition rate in the autumn as students drifted into other things and did not stay on the course. Those changes required fundamental changes to be made to the apprenticeships programme and they are now being made.
The briefing of the Association of Colleges to the Education Committee’s inquiry into careers guidance, which has been referred to by other Members, contained the statistic that
“only 7% of pupils are able to name apprenticeships as a post-GCSE qualification.”
That is simply not good enough. The report proposes changes.
The proportion of students who stayed on to the sixth form and went on to university became a means of comparing secondary schools. Bradford only has sixth forms; there are no sixth-form colleges. Schools wanted to have a very high proportion of young people who stayed on into the sixth form and went on to university and were in no mood to advise them to go down another route.
Ralf Dahrendorf’s book on life chances, which was published in the 1970s, had a profound impact on my views. It spoke of the need to create alternatives and possibilities for young people so that they could lead a fulfilled life. Apprenticeships offer something other than the route that young people are told is the only route that they should pursue. As we have said many times before, we reached the position where somebody who did not go to university was regarded as a failure. We cannot have that culture and it desperately needs to change.
There are many things that we need to do. The expansion of apprenticeship places has happened at such a pace that problems with quality are inevitable. That was identified by the Business, Innovation and Skills Committee. However, we are on a journey and are not there yet.
Clear evidence has been produced by organisations such as the Prince’s Trust of inequality in the apprenticeship places that are offered. Young people are disproportionately disadvantaged, as has been mentioned, as are those from black and minority ethnic communities. That is shown clearly in the statistics.
The growth of apprenticeships has been very well received in Bradford. I have one of the most deprived constituencies with one of the highest levels of youth unemployment. However, we are managing to get more than 1,000 people in my constituency and 5,000 people across the Bradford district into apprenticeships each year. That is extremely good news.
We are not there by a long way, but we are heading in the right direction—a direction that has been desperately needed for a long time.
Mr David Lammy (Tottenham) (Lab)
In contributing to this debate, I think back to 2008 when I launched national apprenticeship week as Minister for Skills. I recall debates in the Department at that time about why anything that we said about higher education would run right across the national newspapers and broadcasters, whereas it was very hard to get journalists to write even a small story about the importance of apprenticeships. That is largely because people in that sector, as is now the case with many politicians, have not experienced apprenticeships themselves. It has also been the case that many middle-class people in this country have not considered apprenticeships to be a preferred option for their children. For that reason, apprenticeships have languished behind.
I therefore welcome the cross-party nature of at least part of this debate, despite its being an Opposition day debate. I congratulate the Government on continuing to hold national apprenticeship week and on maintaining the National Apprenticeship Service, which I launched. It is important that the minimum length for an apprenticeship has been set at a year. All that progress is welcome.
It is important to introduce some fundamentals to this debate—otherwise, many young people searching for apprenticeships in our country might think that we have gone mad, and parents who are concerned about apprenticeships might feel that we are out of touch. At the heart of our system is the understanding that we must be there not only for our own children but for others. In a sense, we act in loco parentis, and navigating young people through a journey into work is important and necessary. For so many—indeed most—young people, going on such a journey alongside studying is essential.
We must remember that teachers spend time working and studying, just as I did when I was a young barrister. Across many job areas, the apprenticeship—an idea as old as the human being—is necessary. Why do we still have a fundamental problem? Largely, it goes back to the central debates of our times: what is growth; what is the industrial policy in this country; and where are our jobs to come from? I think we have some problems with those issues.
We should be concerned that when we talk about apprenticeships, a significant bulk of what we mean are level 2 apprenticeships—GSCE level. If we are serious about giving people the necessary life chances, and replicating what we see in countries such as Germany, Sweden and elsewhere, we need to do considerably better and have more apprenticeships at level 3 and beyond. Are we in this House content that when we look at growth over the past years, 100,000 of the new apprenticeships are in administration, more than 60,000 are in retail and fewer than one sixth are in engineering and construction? What does that say about the underlying problems in our economy? Many of those listening to this debate want to know that when we talk about apprenticeships, we are serious about what they are.
Given that 55% of young black men in this country are languishing as unemployed, we should be hugely concerned about the ethnic minority profile within apprenticeships and—when people do get apprenticeships —about where they tend to be. Given levels of unemployment among young people, we should be concerned that so much of the growth—75%—is among those older than 25. All parties can be guilty of playing politics, but I was Skills Minister with responsibility for Train to Gain, Unionlearn and Skilling up, and 70% of these new apprenticeships are taken by those who were already employed, and that is not progress. Those people already had jobs and—let us be serious—rebadging those jobs as apprenticeships is not actually progress. It is of huge concern that we are now using the term “apprenticeship”, when we are talking about the Train to Gain programme.
Jenny Chapman (Darlington) (Lab)
My right hon. Friend is making a superb speech and indicating that early decisions made by young people and supported by their parents and teachers are not going in the right direction for our economy. Is one main problem the lack of decent advice that young people receive?
Mr Lammy
My hon. Friend is absolutely right and we will not sort out that issue unless we get to grips with a serious problem in careers, information, advice and guidance. We struggled with that in government; we had the Connexions service but we got rid of it. I think it worked in certain parts of the country but not in others, and it was certainly good for more vulnerable young people. The situation now is that many schools with responsibility in that area are totally out of touch with the sectors into which we need young people to go if we are to be serious about apprenticeships.
The indication of decline is also significant. When Labour left office, my Department was spending about £2,400 in direct payments for each apprenticeship start.
That figure has now fallen to £1,600, and is part of the dressing up of what constitutes an apprenticeship.
I hope we will begin to get serious about what an apprenticeship is, and recognise that young people are concerned that they will just go round and round in circles and not end up with a proper job. A proper job is where we need to get to, and we should keep a close eye on both completion rates and success rates. If we go back in time, the legacy of a former Government was an apprenticeship that one did not finish, and one did not get a job at the end of it.
Gavin Williamson (South Staffordshire) (Con)
One great positive that we can take out of the debate so far is that many Members are very positive about apprenticeships. I accept that there will be disagreements, but what we can all take away from it is that we want apprenticeships to succeed and to work.
In my constituency in the past year, 1,070 apprenticeship places have been created—a vast 88% increase from 2010. That is ahead of the national average by 86%, but unfortunately it lags slightly behind the west midlands average of 91%. We should feel a great sense of pride at what has been achieved and we can do more. Apprenticeships have a vital role to play in driving down unemployment and getting young people into work.
In South Staffordshire, we are blessed not to have an exceptionally high rate of unemployment, but that is down to the fact that we are proactive in driving down unemployment. Since 2010, South Staffordshire district council has been running job clubs right across the constituency. South Staffordshire does not have a jobcentre and it is often difficult for people to access their services, so we have been running job clubs in Wombourne, Kinver, Codsall, Bilbrook, Great Wyrley and many other villages right across my constituency to help people both young and old to access employment. They are not just about guiding and encouraging people, telling them how to make their CVs better and giving them the confidence to go out and get a job; they bring employers to them. It is with great pride that, working with my district council, we will have a jobs fair at Perton civic centre on 26 April. Already, many major local employers have committed to attend, bringing jobs and employment opportunities to all in South Staffordshire. I hope it will be a great success, and I know that many Opposition Members have been doing similar things in their own constituencies.
Paul Farrelly (Newcastle-under-Lyme) (Lab)
Will the hon. Gentleman give some recognition to the efforts in north Staffordshire, where, to encourage more apprentices, on Thursday evening KMF Engineering from Newcastle-under-Lyme is hosting its young engineer of the year awards at the Britannia stadium in Stoke-on-Trent? The following day, with the national apprenticeship scheme, Newcastle borough council and Newcastle-under-Lyme college, we are launching the latest 100 in 100 campaign to recruit apprentices to local businesses.
Gavin Williamson
My fellow Staffordshire MP demonstrates how enthusiastic Staffordshire MPs are to encourage apprenticeships and bring employment to our constituencies regardless of our political colour. All such schemes make a genuine difference.
We have talked about public procurement. One of the biggest creators of apprenticeships in South Staffordshire is G4S, which has recently won the bid to run Oakwood prison near the village of Featherstone. As part of its winning bid, 190 offender management apprenticeship places have been created. That should be welcomed. The private sector is being highly proactive in looking at how we get more employment, more apprenticeships and how we start to give young people and older people the opportunity to get into work.
As I am sure other Members have found, far too often when we speak to local schools or colleges, either here in Parliament or in our constituencies, and ask them, “Who wants to go to university?” 90% or 95% of hands go up, but if we ask them, “Who wants to get an apprenticeship?” very few people put up their hand. We have to ensure that people understand that apprenticeships are as good, if not better than going to university.
The Engineering Employers Federation recently raised the depressing statistic that fewer than 50% of schoolteachers encourage people to go into manufacturing and engineering, and almost one quarter positively discourage them. Apprenticeships have an incredibly important role to play in encouraging and inspiring young people to enter the manufacturing sector, like I did when I left university in 1997. We need to encourage more people to enter manufacturing and engineering, not just when they leave university, but when they are at school or finishing college. That is the opportunity.
People often see an apprenticeship as second rate. I was recently looking at job adverts—not for me, I hope—and perusing the internet. Jaguar Land Rover, which is spending £500 million in my constituency building a new engine plant, will be employing more than 1,400 people and apprentices of different ages. It will be an enormous boost not just to South Staffordshire, but to the whole west midlands. I was looking at its higher apprenticeships programme and the qualifications needed: a minimum of five GCSEs at grade C or above, including in maths, English and a core science subject; an A-level at grade C or above in a mathematical subject; an A-level at grade C or above in a science, technology or an engineering-related subject.
I am afraid that most people in the Chamber would probably be precluded from applying. These are not second-rate jobs and apprenticeships are not second-rate careers; they are our future. It is all about encouraging employment in engineering and manufacturing. The Government have made massive strides, not just in South Staffordshire, but in the west midlands, where the number of apprenticeships has increased by 91%. I encourage the Minister to keep driving forward towards more advanced apprenticeships, because it will make the country grow and prosper.
Mr Speaker
Order. Eleven right hon. and hon. Members are still seeking to catch my eye. The Front-Bench winding-up speeches must begin at, or very close to, 6.40. To accommodate remaining colleagues, I am reducing the time limit on Back-Bench speeches, with immediate effect, to five minutes, though if Members can be briefer, that would help one and all.
Mrs Mary Glindon (North Tyneside) (Lab)
I was going to thank the last Labour Government for initiating national apprenticeship week, but I have now learned that more specifically I need to thank my right hon. Friend the Member for Tottenham (Mr Lammy), who was the Minister who brought in this wonderful celebration of apprentices, businesses and our economy. I am pleased to say that it is being celebrated in my constituency, culminating in North Tyneside’s showcase event on Saturday, “Get up and Go”, where young people, parents and carers can learn about local apprenticeship opportunities and what it is like to earn and learn across a spectrum of jobs.
This year, the borough’s apprentice employer of the year—for businesses employing more than 250 people—was insurethebox, a company based at Quorum business park at Longbenton in my constituency. It is a relatively new company that now employs 290 people from across the whole region. Its staff proactively enter schools and colleges in the area, teaching students about the world of work and offering work experience, with the aim of increasing the company’s apprenticeship work force to achieve a ratio of 1:10. Since 2011, the company has taken on 31 apprentices between the ages of 16 and 24, six of whom are now fully qualified. Once they are recruited by insurethebox, which accounts for two thirds of the UK telematics market, the apprentices get the opportunity to develop their careers, moving into areas such as human resources, claims handling and underwriting. I was happy to learn that this modern, forward-looking company wants to increase its apprenticeships even further as part of its recruitment drive.
As part of national apprenticeship week, I visited Fabricon Offshore Services, which is another company based at the Quorum business park. The company is a leading provider of brownfield engineering, procurement, construction and project management services to the offshore oil and gas industry, through a range of technical services and solutions. I was there to shadow one of the six first-year engineering apprentices, 18-year-old Darius Bahrami from Sunderland. Darius had studied A-levels at school, but unlike many of his friends he had decided to take up an engineering apprenticeship, as opposed to going to university. He told me that a number of his friends wished that they, too, had taken up an apprenticeship, as opposed to following a university career. Apart from experiencing how software is used in engineering, I attended a “Lesson learnt” presentation with Darius and other first-year apprentices, which was given by one of Fabricon’s now qualified apprentices, Carl Blewitt, who explained the process of going from being an apprentice to becoming a junior mechanical engineer. He is now at university. I saw in him a very good role model for his first-year colleagues.
Those apprentices are fortunate to be working at a fast-growing company such as Fabricon. They enjoy the best training possible and are up to scratch. As well as gaining sought-after experience, they receive HNC qualifications. However, Fabricon, like other companies in the industry, is fighting to fill a skills gap. One third of its staff are over 55. That is because businesses in the oil and gas industry cut back on the number of trainees and apprentices they took on in the ’80s and ’90s. Given the rapidly diminishing window to recruit people quickly enough to replace the ageing work force while still “downloading” skills and experience from people currently in post, companies such as Fabricon are battling. Because of the skills gap and its commitment to skills and development, Fabricon has launched its own dedicated offshore services academy, which is providing full training for apprentices and working with the universities in the area.
Another thing I would like to highlight is the fact that the Government now require those over 24 to apply for a 24+ advanced learning loan, which my local TyneMet college has said will be a barrier to people becoming mature apprentices. I have highlighted the fact that there are two fantastic things happening in North Tyneside—
Jackie Doyle-Price (Thurrock) (Con)
It is a pleasure to participate in this debate, which has been characterised by positive and constructive contributions from all parts of the House. That shows just how much support there is for more and better apprenticeships.
I am proud to represent a constituency with a strong manufacturing base and a strong and vibrant logistics industry. Apprenticeships have always been a feature of these industries. When I meet the wealth creators in Thurrock, without exception they are people who have learned their skills in the workplace. That fact needs to be understood. For many people, choosing an apprenticeship will be the most effective route to their personal advancement. I would like to highlight some successful local programmes and, in doing so, highlight some areas where the Government could do more to encourage better apprenticeships.
The port of Tilbury has always offered a number of apprenticeships each year, placing a high emphasis on skills and even establishing its own logistics academy to provide bespoke training that suits its business. This year the port has developed a new apprenticeship in health and safety, which is central to its business, as ports are hazardous places. The port has advised me, however, that the apprenticeship framework can often prove inflexible for the kind of training that it wishes to offer. I suggest to the Minister that we need to ensure that the framework focuses on equipping workers with the intended skill, rather than just ticking boxes.
In addition to the established industries, Thurrock also has an emerging centre of excellence in the creative industries. My hon. Friend the Minister saw this for himself only last week, when he visited the new Backstage Centre, which will provide a great deal of training through putting on live musical and theatrical events. The creative industries are a growing sector, but it is also a sector that is characterised by self-employment and small and medium-sized enterprises. That is another area in which the Government really need to do more work. It can be daunting for a sole trader to take on the onus and responsibility of managing an apprentice, but the National Skills Academy for Creative & Cultural has provided a collective framework to enable a number of SMEs and sole traders to come together and offer training to young people. There is a need to pass on those skills to other people if we are going to make the most of that growing industry, in which Britain leads the world.
I want to highlight the example of a particular individual who is currently going through his apprenticeship with the Royal Opera House. Not all Members will know this, but the Royal Opera House’s production park is in my constituency of Thurrock. Everything that those Members who enjoy going to the opera see on stage has been made in Thurrock—and very proud of that we are, too.
The Royal Opera House’s current apprentice is a young man named Jamie Ashwell. He decided to take up the offer of an apprenticeship rather than doing a stage management degree at university. For Jamie, the choice was simple. He is working for a world-leading arts organisation, getting experience of real projects and working with leading practitioners in the industry—and he is being paid, to boot. I envisage that, in the future, some of the strongest apprenticeship places will be as hotly contested as some of our most prestigious university places.
The apprenticeship route also suits the Royal Opera House. It needs people with real practical skills in the type of work that it does. People with arts degrees who apply for jobs in its costume or make-up departments, for example, do not necessarily have the required technical skills. By offering apprenticeships, the Royal Opera House can train people up in areas such as bespoke tailoring and wig-making—true crafts that are not available to those studying for degrees.
Fiona Mactaggart (Slough) (Lab)
I have had the privilege of visiting the set-up at Thurrock, but there was one thing that I really missed. Under the former future jobs fund, the Royal Opera House created a programme that went wider than the apprenticeships as a way of bringing in young people to learn the skills that the hon. Lady is describing. It had a wonderful group of young people studying there as a result of that scheme but, sadly, it is no longer available to young people who would like to learn about working at the Royal Opera House.
Jackie Doyle-Price
The hon. Lady makes a good point, but the Royal Opera House continues to engage in a really big outreach programme involving local schools. She makes an important point, however, because one of the ways of attracting young people and demonstrating the opportunities afforded by apprenticeships is to open their eyes. It has been pointed out that schools often place an emphasis on universities, but we really need to ensure that they take advantage of every opportunity to open young people’s eyes to what is on offer.
I encourage the Minister to look at what more can be done to support the efforts of smaller firms and, in particular, sole traders to offer apprenticeships. We need to unlock and encourage the entrepreneurism in those growing industries, and to look at the apprenticeship framework, but I think that all Members on both sides of the House can congratulate themselves on the renewed emphasis that we have placed on this important way of providing our young people with the skills that they need to make the best of themselves.
Mr Speaker
Order. I am sorry, but the time limit needs to be reduced to four minutes, as my exhortations to brevity have so far fallen on deaf ears.
Mr Iain McKenzie (Inverclyde) (Lab)
As we have heard today from Members on both sides of the House, the debate is extremely welcome in what is currently a tough economic climate, especially for young people. I shall refer not only to this apprenticeship week but to the apprenticeship week that we shall celebrate in Scotland in May, so I shall get two bites at the cherry.
I served a formal indentured apprenticeship. That meant that I was tied to my employer for the first five years of my working life, for which I received an extra £5 a week. I am therefore well aware of the value of an apprenticeship, and I believe that it means more than just learning a skill or trade. Like many other Members, I have been working with companies in the constituency, encouraging them to consider taking on more apprentices and starting apprenticeship programmes themselves. It has been successful to a degree, and it is one of the reasons why we in Inverclyde have so far escaped the worst ravages of youth unemployment. That, however, is not the case in Scotland overall or, as we have heard, in the United Kingdom as a whole, where youth unemployment has never been higher. The country’s youth continue to bear the brunt of the lack of jobs in the UK. We desperately need to get our young people into training and apprenticeships. They must be given every possible opportunity to improve and hone the skills that they require in order to obtain jobs in the future.
As we have heard, the Business, Innovation and Skills Committee, in a report published in the autumn of 2012, gave its backing to public procurement to boost apprenticeships. That would create tens of thousands of jobs, and would help to alleviate some of the vast youth unemployment that is currently rife throughout the UK. I implemented a procurement policy in 2007, when I was leader of my council in Inverclyde, and that may be where the Government got the idea. When we were renewing our school estates, we saw the need not just to have new schools but to secure jobs and apprenticeships for the pupils, and we wrote that into our terms and conditions. It was very successful, which is one of the other reasons why youth unemployment is being kept low in Inverclyde. It fell then by over 20%. We asked firms not only to take on apprentices, but to commit themselves to a percentage of local labour.
In the private sector, I have been supporting technology, most recently the 4G network. This week our local mobile phone company, Everything Everywhere, announced the launch of 13 modern apprenticeships. It is committed to continuing to employ young people, and to introducing an apprenticeship programme that we hope will run for many years and give them long-term jobs.
Another initiative that has been extremely successful in Inverclyde is our award-winning Recruit programme. As we have heard from many Members today, schools need more than just brief career advice from industry. We brought schools and industry together, and young people gave up their time to participate in what was probably the longest interview that they would ever have. The initiative has been running for more than five years and has been extremely successful, putting tens of young people into jobs and giving them the best possible start in life. It has been replicated by some neighbouring authorities, and has been seen across Scotland as a trail blazer.
Mike Crockart (Edinburgh West) (LD)
Thank you, Mr. Speaker. It is entirely apt that you are in the Chair, given your interest in this issue.
In some sectors, apprenticeships are not a new development, but have been around for a long time. For many years plumbers, construction workers and electricians have undertaken apprenticeships, whether centrally led or employer-led. Their industries have long acknowledged that learning on the job, building up knowledge and skills, gaining qualifications and earning money, all at the same time, is valuable and appealing to many young people.
Other sectors have been much slower to cotton on. Some remain entirely in the dark. It has been argued that companies are not taking on trainees because of the difficulty of offering places when there is no set qualification to work towards, but that has not actually been the case. I checked the National Apprenticeship Service website today. The “types of apprenticeships” are broken down into 10 categories covering everything from agriculture to the arts and from leisure to law. There are now hundreds, if not thousands, of different apprenticeships, which rather prompts the question to the companies “What is missing?”
I did find “Building Energy Management Systems”. Let me go off at a tangent for a moment in order to demonstrate that it is not just up to the Government to tackle this problem.
I recently met Scottish entrepreneur Sir William Haughey at an event in my constituency. He was wearing a gold “H” lapel pin, and I presumed, correctly, that that was not just because it was one of his initials, but because it related to his Youth with Hope scheme, which I am happy to support today by wearing a similar pin. Sir William is known for his straightforward ways; in his words, “2.9 million publicly listed companies. 1.3 million unemployed youths. You do the maths.” He seeks to motivate and inspire organisations of all capacities to play their part in addressing the needs and aspirations of the young. One flagship idea that he has launched is that of “green champions”, whereby young people are employed by large companies to promote sustainable building management, and energy and resource efficiency practices. Given that 40% of the UK’s carbon emissions are down to the way in which our buildings are lit, heated and run, it is easy to see how the green champions could soon pay their own way. In 2009, the audit of Government buildings—264 of them—found that they had an average F rating, with only two Departments managing a rating of D or above. So I hope I can tell the Youth with Hope team to expect a call from the Minister.
In a lot of industries, including competitive ones such as public relations, advertising, marketing and third sector fundraising, young people have been encouraged to work with companies to gain experience—it is just that they have expected the youngster to work for free. Indeed, many in this Chamber have been guilty of offering similar places—the opportunity to gain experience in a competitive field, with the incentive being a possible job at the end of it—and some possibly still do that. I am not claiming to be whiter than white; I offered a couple of short unpaid internships in my first year in the House. I was uneasy with that and I quickly moved to using the Speaker’s parliamentary placement scheme and the New Deal of the Mind’s parliamentary academy.
One of my apprentices, Alice Hannam, has given me a quote that states the benefits far better than I can:
“Being an apprentice has completely transformed me. It has given me a real boost in confidence. I have felt empowered to take on challenges which I would not have thought possible—such as a degree and securing a job in Parliament.
I really cannot stress enough how great it has been to receive on the job training whilst being paid to do a job I enjoy and receive a qualification at the end of it.”
May I finish by urging all hon. Members, both those in the Chamber, and those who are not here, to find out about these schemes, which give opportunities to people who, because of their background, would not normally be able to take up unpaid positions? I urge hon. Members to promote such schemes, not only in their own constituencies, but much closer to home. Until we put our own house in order, it is far more difficult to urge others to do the same.
Mr Jamie Reed (Copeland) (Lab)
We should see apprenticeships as one of the hallmarks of a good society. It is all well and good—probably in a stereotypical fashion—to consider apprenticeships to be the domain of blue-collar families. It is true that decades ago securing a good apprenticeship with good employment prospects was the pinnacle of achievement for many working-class families. De-industrialisation changed the dynamic, as did the rise in the number of students from working-class families attending university, but the situation is changing again. Where we used to describe young people from working-class families and communities as “blue collar”, admittedly using an American political affectation, we should now see them not as blue collar workers but as blue scholar workers from blue scholar families. They understand the need to learn constantly, to innovate and to change in order to keep themselves, their families, their communities, and our country and its economy among the world’s leaders. If we do not seek to provide opportunities for these young people, their communities and their families—families like my own—we will fail them, our economy and the nation.
When we talk about rebalancing our economy, we must acknowledge the national need for successful apprenticeships. We do not simply need a series of apprenticeship schemes; we need an apprenticeship culture, which should be embedded among our public and private sectors, and we should be able to interchange between the two. Looking to the future, we have to recognise that planning for economic growth and planning for economic success is not the same as having a planned economy. The energy sector will command billions of pounds of public money over a very long period, and it is only right that private companies in that sector and others like it, which are in receipt of public investment, should reciprocate with effective apprenticeship programmes.
In terms of effective corporate social responsibility, there are few better ways of leaving a lasting legacy, contributing towards the betterment of society and securing a loyal, committed and productive work force than by investing in continuous personal development. Apprenticeships are potentially the best way in which any company in any sector can do that. If the Government are as committed in practice as they claim to be in their rhetoric, surely they will demand that those undertaking large public contracts should have apprenticeship places for younger people written into those contracts. I urge this Government to do that, as I would the next Labour Government.
This issue is of particular importance to my constituency, which is home to the Sellafield nuclear facility, where £1.6 billion of public money is spent each year. The site is publicly owned by the Nuclear Decommissioning Authority and is operated privately by Nuclear Management Partners, the parent company of Sellafield Ltd. Sellafield Ltd takes on an average of 70 apprentices a year, one of the highest intakes in the country, and 18% of its engineering apprentices are young women compared with a national average of about 3%. Although that is nowhere near enough, credit should be given where it is due and I want to commend Sellafield Ltd on that achievement.
I mentioned Nuclear Management Partners, which holds one of the most important and lucrative public sector contracts in the UK and is currently in the throes of a contract renegotiation with the NDA. The Chair of the Public Accounts Committee has made a withering assessment of the fees earned from the public purse by NMP, which were £54 million in the last year alone. She points out:
“Public money to the tune of £1.6 billion is being spent at Sellafield each year. This is an area of considerable deprivation with high unemployment. We are looking for there to be clearer ambition that spending on this huge scale contributes to creating jobs and supports sustainable growth in the region and the UK.”
That is an accurate and succinct analysis of what needs to be done. Apprenticeships, job creation and significant capital investments are all part of the contribution identified by the Public Accounts Committee as being necessary from NMP. On the day the Government admit that they do not have the money they need to build the schools they have promised, it requires only a fairly simple exercise in joining the dots for NMP to understand one of the principal areas where its new contribution must be made.
I hope that Ministers, with and through the Nuclear Decommissioning Authority and as part of the ongoing contractual negotiation, will help to deliver a better, more constructive and equitable settlement for my community, for this country and for the taxpayer.
Stephen Lloyd (Eastbourne) (LD)
I have really enjoyed the debate, which has been constructive on both sides of the House. The challenge with such debates is always the shortage of time and, like many other Members, I could talk about apprenticeships for a long time. I shall keep my speech brief, however.
For me, this subject is all about jobs. I was planning an apprenticeship initiative well before I was elected and I am pleased that I was elected as it meant that I could implement it. I was one of the first Members to do a 100 apprenticeship in 100 days campaign and in Eastbourne we achieved 181 apprenticeships, which was superb for the town. That momentum continued strongly and, according to the latest figures, since the general election Eastbourne has recruited more than 2,100 new apprentices, more than any other town across the whole of the south-east and more than the constituencies in Brighton. It works.
A lot of that success is down to the partnership working between local businesses, training organisations and Sussex Downs college and to the focus on making apprenticeships work. That goes back to the jobs agenda. In Eastbourne, we are running at a conversion rate of about 90%, which is stunning. That means that 90% of people involved are in full-time work after their apprenticeships.
Irrespective of the party political disagreements, I think that Members are, broadly speaking, united in recognising modern apprenticeships. I pay tribute to the right hon. Member for Tottenham (Mr Lammy), who, along with the Labour Government, began to promote apprenticeships. I hope he agrees that we have carried that work on.
Let me flag up three issues that I urge the Government to consider closely, as we have the Minister here. We have talked about schools and I am sure he knows that unless there is a clear rationale for schools to tick a box to show that they are doing something, they will not do it. I work very closely with the secondary schools in Eastbourne, which are very pro-apprenticeships, but they say, bluntly, “Stephen, there is not a lot of point in our selling apprenticeships because we don’t get any bonus for getting 100 apprenticeships.” I urge the Minister to discuss that with the Secretary of State for Education; let us do some creative thinking.
The second issue is quality, particularly when expansion is so rapid, and everybody recognises that we must keep an eye on that. I ask the Minister to keep focusing on quality. In seven or eight years, if we keep up our commitment to apprenticeships, they will have the same gravitas as apprenticeships in Germany. We should not forget, however, that some young people do not have the most academic education or background, and we do not want to set the lower rung for apprenticeships so high that they cannot get on to it. We must keep a close eye on that.
The subsidy for small and medium-sized enterprises is a strong idea, and within nine months of the general election I was urging it on the Business Secretary. I am delighted that after consideration, the Government moved down that road. I think it involves 40,000 SMEs a year. Despite the challenges in the economic envelope, I urge the Government to keep expanding the scheme over the next few years. Many SMEs have taken on apprentices—about 10%—and if more can do so it would be utterly transformational.
Julie Hilling (Bolton West) (Lab)
Today I had the honour and privilege of spending a couple of hours with an amazing group of young people—some of the apprentices from MBDA, an advanced manufacturing company in my constituency. They are sitting in the Public Gallery listening to our debate.
Anyone visiting the apprentices at Lostock is blown away by their quality and competence, as well as by MBDA’s commitment to them, led by Bernie Waldron, the managing director of manufacturing, and Gareth Humphreys, the human resources adviser on education, both of whom started as apprentices at the company. MBDA does not just teach apprentices skills for the workplace, but concentrates on growing the whole person. Personal development is just as important as formal qualifications.
The young people are entered into competitions such as World Skills. The view that young people are diamonds in the rough that just need polishing shines through everything they do. They are currently taking part in the second year of the Brathay challenge; the aim of the regional stage is to raise the profile of apprenticeships and complete a community project. I wish all the competitors well, but I am keeping my fingers crossed that the apprentices from Lostock will be victorious, although I should like to persuade the organisers to change the final event to one of skill, not just strength, which militates against companies that ensure they have mixed-gender teams.
MBDA has 62 apprentices: 35 young women and 28 young men. It is a great achievement for an engineering company. MBDA runs a four-year programme, and the apprentices complete ONC, HNC, HND and NVQ level 4. Business apprentices complete a business management degree, NVQ 4 and the City and Guilds senior award. It is a fantastic programme, growing the next generation of employees.
MBDA apprentices go into schools to promote apprenticeships in engineering. It is a bit of a shock to pupils when beautifully turned-out young women tell them that they are engineers, but sadly, many schools still see apprenticeships as a choice for their less able students, not for their high flyers.
Jade told me about her experience. Following a visit to her college from MBDA apprentices, she decided to apply for an apprenticeship. Her electronics tutor supported her, but he was the only one. Other tutors said: “What are you doing an apprenticeship for when you could be going to university?”, “You’re too clever to do an apprenticeship”, and “You show too much potential. You need to go to university if you want to progress in a career.”
Some of those people changed their minds, but recently a teacher told a family friend of Jade’s:
“I always thought Jade would do better, would have gone to university and achieved good grades.”
Hurtfully, the teacher went on to say that they always knew that Jade would just float along in something easy and stick to what she knew, although she had the potential to do so much more.
As Jade says, her apprenticeship is far from easy:
“I am currently studying for my HNC, working three and a half days a week, training two nights for my rugby team.”
I forgot to say that she is in the England student team and plays at the weekend. She says that she is
“finding time for my friends and boyfriend. It takes a lot of hard work and I have to make sacrifices but the rewards all come at the end.”
Jade’s view is shared by Beth Sherbourne who recently won the higher apprentice of the year award. Beth said:
“Instead of a £40,000 debt I’ve got a first class honours degree, four years work experience, a well paid job and a Mini Cooper.”
The apprentices at MBDA show what can be achieved by young people. We need to do far more to encourage young people to undertake apprenticeships. Today I asked them if they had any regrets about going for an apprenticeship. Unanimously they said that they had no regrets at all.
Mr Speaker
Order. I am now reducing the time limit to three minutes to try to accommodate the remaining four would-be contributors.
Gordon Birtwistle (Burnley) (LD)
We all support apprenticeships and think they are a good idea, and we all congratulate the young people and the companies involved.
I have some questions about the motion. First, because there is so much support for apprenticeships, will the Opposition withdraw it so that we do not need to vote on it? Secondly, if there is to be a vote, will the Minister confirm its legality? As I understand the motion—I am not a legal expert—it commits not only the Government, but local authorities and others using public money to put the requirement to offer apprenticeships into contracts, and I am not sure whether we are allowed to do that. Will the Minister clarify whether that is a legal issue that we need to be concerned about before we vote? I am happy to support the trend of the motion but I would not like to vote for something that cannot be delivered for legal reasons. I am sure the Minister can take advice before he winds up and clarify whether we are able to commit local authorities, for example, to the requirement in the motion. I also question whether we would fall foul of value for money contracts by insisting on companies meeting the requirement. I would like clearance on that before I vote.
It is great that we have apprenticeships in progress. We already do what the motion calls for, apart from committing other authorities to the requirement to offer apprenticeship opportunities. The major companies that we deal with already do so and I support that, but I would like clarity from the Minister that we would be voting on a motion that could legally be implemented.
Jim Shannon (Strangford) (DUP)
I support the motion and thank the hon. Member for Blackpool South (Mr Marsden) for bringing it before the House. The House always excels when it debates a subject on which everyone agrees, and here we have a subject matter on which everyone can agree.
Apprenticeships are essential to give young people a start. In my constituency, many businesses have offered apprenticeships, whether in Bombardier Aerospace, Huddleston Engineering or even through the local technical college. As this is a devolved matter, in Northern Ireland £8 million has been allocated to Steps to Work and £5.8 million to a return to work programme. These are just two examples of good schemes that deliver.
On Monday I had the opportunity to visit the jobcentre in my constituency and I did so in order to hear what it was doing and to hear about the programmes it offers and the success it has achieved. It bases its success on job outcomes. It has a clear target which it aims to achieve. Whether through Steps to Work or Pathways to Work, young people are getting jobs, and that is important. Like other Members in their constituencies, we have issued challenges to businesses in our communities to take young people on. In my constituency, there is an opportunity for everyone in pharmaceuticals, food processing, light engineering and agri-food, which is a growth industry. Businesses and companies must step up to the bar and be prepared to take people on.
I hope that when the Minister replies he will give some indication of the incentives that the Government can offer businesses to encourage them to offer apprenticeships. If they do so, the young men and women of tomorrow can have jobs. Like other Members, I took on a young man as an apprentice in my office here. After he had spent three years on a course, I offered him a job because of the qualifications that he obviously had, but also because he had the ability and an interest in it, and he needed that opportunity.
The Prince’s Trust is one of the great organisations that we all know and love, and we all recognise the good work it does. The hon. Member for Vale of Clwyd (Chris Ruane) spoke some time ago about depression among young people. Among those who are not in work, 70% are depressed, and of those who are in work, 50% are depressed. It is a big problem that has not been touched on, but perhaps we can have an indication of what can be done about it.
In my constituency, 750 young people of 24 and under are unemployed. They need the opportunity offered by apprenticeships. The big employers are in agri-food, tourism, engineering and pharmaceuticals. If we can encourage each business to take someone on, that would help. We need to increase basic skill levels in literacy, numeracy and mechanics to help people fill in the forms to get a job. As parliamentarians we have a responsibility to help young people who are struggling. If we can deliver a vibrant and rigorous apprenticeship system, that will make a real difference to young people, to businesses and, in the long term, to the economy as a whole.
Chris Evans (Islwyn) (Lab/Co-op)
It is always a pleasure to follow the hon. Member for Strangford (Jim Shannon) and to hear his Irish accent. The Celtic fringe is present in force today in this debate.
I begin with the good news that apprenticeship week is being celebrated in Wales with £40 million being given by the Labour-led Welsh Assembly for expanding apprenticeships. Has the Minister had the chance to read the statement by the Welsh Assembly Minister announcing a one-off payment of £500 to small and micro-businesses to overcome the barriers to employing apprentices? I hope that he will think about introducing something similar throughout the country.
The idea of apprentices always conjures up romantic images from the ’50s and ’60s of the draughtsman, the plumber and the electrician taking a five-year apprenticeship. As much as I welcome apprentices and apprenticeship week, I am concerned that a number of people believe that they are following an apprenticeship when they are doing nothing of the sort. It is not the regeneration of apprenticeships, but the rebadging of apprenticeships. I think of Morrisons as the largest employer of apprentices in this country. One in 10 apprentices work at Morrisons, but what are they apprenticed to do? What profession will they come out with? Is it a meat cutter, a green grocer or a fishmonger? I do not know, and I hope that we will look into that.
Apprenticeships that last only a matter of weeks or months devalue great apprenticeship schemes such as those at Pensord Press in Pontllanfraith in my constituency and in Jaguar Land Rover in the constituency of the hon. Member for Stafford (Jeremy Lefroy). The Richard report bears that out. He noted two things that I have seen myself: the quality and the quantity of apprenticeships. I was hoping to develop this point further, but I have only a minute. At the moment we have box-ticking, and many companies do not appreciate the worth of apprenticeships. I hope that the Minister will look at the example of Germany, where apprentices take an exam at the end of their apprenticeship, like a driving test. There is a qualification standard for each and every sector, so that employers know exactly what they are getting.
Unless we grasp the nettle now and unless we bring about real quality apprenticeships, we risk falling even further behind India and China, and that is the worst thing that we could do for our young people.
Sarah Champion (Rotherham) (Lab)
Not every young person wants to go to university, or indeed can afford to. From a young age, we should be promoting the range of options available post-school, but the Government have seen fit to scrap work experience at key stage 4 and career guidance. Insufficient apprenticeships are available for those who want one, particularly for 16 and 17-year-olds. Rotherham college of arts and technology faces a cut in its funding that means that it will lose 280 places for this age group, despite 14.7% of young people in Rotherham being unemployed—twice the national average.
In Rotherham, we are particularly short of apprenticeship places for engineering, even though we have the advance manufacturing park in the area. The main obstacle employers cite when looking to take on an apprentice aged under 21 is the perceived bureaucracy involved. However, this week, Tata Steel in Rotherham has announced 29 apprenticeships, and other organisations there are also proactively looking to increase the number of apprentices they support. I understand that some employers are nervous about the investment that they will need to make in a young person before seeing any return. However, my experience is that this initial investment pays off tenfold, as employers have a worker who understands their systems and is keen to demonstrate commitment.
I urge the Government to use public procurement to boost apprenticeship numbers. For a company bidding for a public sector contract worth more than £1 million, part of its contractual obligation should be to provide apprenticeships. This recommendation was supported by the cross-party Business, Innovation and Skills Committee, but to date has not been acted on. I mentioned the lack of placements for engineering apprentices in Rotherham. If the Government adopted this policy in public procurement, High Speed 2, which will come through Rotherham, would create 33,000 new apprenticeships throughout the country, immediately making obsolete the problem of the lack of engineering places.
For me, the only way out of a recession is to work our way out. I urge the Government to support apprenticeships more fully to enable our young people to do that. Because of that, I support the motion.
Ms Karen Buck (Westminster North) (Lab)
We have two tasks to fulfil today and I believe that we have fulfilled them. The first, arguably the most important, was to celebrate national apprenticeship week and apprentices. We have had speeches from Members on both sides of the House doing exactly that. From the Opposition Benches we had strong speeches from my hon. Friends the Members for North Tyneside (Mrs Glindon), for Inverclyde (Mr McKenzie), and for Bolton West (Julie Hilling). They spoke of their constituency experiences and praised those involved in delivering apprenticeships, whether SMEs, large employers, training agencies, and colleges.
Further education colleges do not get the attention and praise they deserve in this House. They are central to the delivery of the skills agenda in respect of apprenticeships. Apprenticeships deliver £3.4 billion of value to the economy, so they are not only good for the people undertaking them; they are also good for the wider economy. We have given them the praise that they deserve today, and I hope people will pay attention to the fact that there is cross-party consensus on the value of apprenticeships.
Our second task, however, is to draw attention to what more needs to be done and to what we can do better—and there is a great deal that we can do better. The BIS Select Committee Chair, my hon. Friend the Member for West Bromwich West (Mr Bailey), mapped out the Committee’s important recommendations and drew attention to the core tasks we all face in raising the status of apprenticeships: the task of acquiring parity of esteem for people going through the apprenticeship pathway; and the importance of increasing capacity and the role procurement can play in that. Some Members may remember the Monty Python sketch involving a summary of Proust. My hon. Friend managed to summarise his Select Committee’s recommendations even more quickly, as I think Monty Python allowed a little longer than six minutes.
Opposition Members have critiqued the Government in a variety of ways, including by drawing attention to the worrying fall in the number of places for young people, especially those aged between 16 and 18. We have talked about the growth in apprenticeship numbers—there has been significant growth, which started well before 2010—but they include places that were rebadged, such as adult training schemes originally provided under Train to Gain. The abolition of Train to Gain may have led to the loss of as many as half a million training places, and included in the quarter of a million increase in the number of apprenticeships are a substantial number of adult apprenticeships that would previously have been classified as adult training. Adult training is important and valuable, but it is not the same as apprenticeships, as the Richard report makes clear.
We have a long way to go to deliver the quality and range of apprenticeships, particularly for young people, that the Richard review recommended. The Association of Colleges says:
“Currently there are insufficient apprenticeships available for those who want one, particularly for 16 and 17 year olds. Despite incentive programmes such as the Youth Contract, employers remain reluctant to employ ‘untested’ young people, preferring those with more experience.”
The National Apprenticeship Service has also drawn attention to the fact that there are 10 applications for every apprenticeship, so the level of unmet need is clearly significant.
We also need to take a careful look at the balance of available apprenticeships across sectors. That point was made in powerful speeches by my right hon. Friend the Member for Tottenham (Mr Lammy) and my hon. Friends the Members for Islwyn (Chris Evans) and for Birmingham, Northfield (Richard Burden). Welcome though apprenticeships may be in the fields of office work and administration, health and public services and retail and commercial enterprises, they account for 71% of all 19 to 24-year-old apprenticeship growth. There has been a recent fall in the number of construction apprenticeships and relatively modest growth in areas such as engineering. We will need greater growth in those vital sectors if we are going to help young men as well as young women and address some of the crises in youth unemployment and unemployment among black and minority ethnic communities.
There are other anxieties as well. Why in 2011-12 did achievement rates fall across all groups for the first time? The Minister must address that. How effective is the new careers advice and guidance regime in ensuring that the apprenticeship pathway is seen as a valued option for young people? The Association of Colleges says:
“As a flagship Government policy, apprenticeships must be effectively promoted. The general lack of awareness and understanding of apprenticeships amongst young people and the wider public is a serious issue.”
Several speakers on both sides of the House have mentioned the survey that found that just 7% of young people are able to name apprenticeships as a post-GCSE option. The Government must urgently address that.
Labour has a clear vision for vocational education and apprenticeships. We will introduce a technical baccalaureate at 18—a gold standard in vocational education, held in high esteem, that will command the confidence of business, parents and pupils. Through the measures outlined today we will confront head on the shortage of high-quality apprenticeships for young people. We will put business in the driving seat on skills and apprenticeships. Our taskforce, led by Professor Chris Husbands, will bring forward recommendations on apprenticeships and skills for 14 to 19-year-olds, a joined-up approach to the education and skills challenges we face as a country.
We need a stronger voice for business in delivering the skills agenda we need to compete in the global race. We need a system that is more responsive to the needs of local economies and that will drive forward the generation of new opportunities. Government procurement is one means to that end. We are confident that the procurement measures set out in our motion will do exactly what we expect them to do and will not fall foul of European rules or others.
We are looking at how to improve the quality of advice given to young people, following the shake-up of careers advice and guidance, which was heavily criticised by, among others, the Education Committee. We want to review the impact of the removal of the work experience requirement at key stage 4, which a number of Members have mentioned today. I want schools and colleges to provide apprenticeship taster days to teenagers. If pupils can take a few days out of the classroom to visit universities, I do not see why the same principle should not apply to apprenticeships. Young people from age 14 should be able to get the opportunity to visit companies that offer apprenticeships to see what is involved in the programme and understand the training and career opportunities available. That is Labour’s plan for apprenticeships, putting them at the heart of a new vision for vocational education in this country.
In this national apprenticeship week we want to see a commitment to using the powers of Government to boost apprenticeship numbers and, especially, to meet the needs of a young generation facing almost unprecedented challenges in the workplace. It is simply not good enough that just 7% of young people see apprenticeships as a post-GCSE alternative. It is not good enough that two thirds of large companies do not provide an apprenticeship programme. It is not good enough that the message on the ease of delivery of apprenticeships has not got through to nine out of 10 small and medium-sized employers. We must do better at making sure that the barriers in their way are removed.
It is simply not good enough to ignore the potential of the procurement process as an effective lever for opening up opportunities, particularly for young people, and particularly in the skills and trades that most of us recognise as being at the heart of an apprenticeship programme and that will enable us to compete in the modern economy with the developed countries that, in many cases, are providing apprenticeships at three, four or five times the rate available in this country. That is why the Opposition have put forward a motion that praises the culture of apprenticeships, wants to see more of them provided and wants to see equality of status for them. That is why I urge Members to support the motion.
The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)
It is a great pleasure to be here, in national apprenticeship week, celebrating apprenticeships. We have had an extremely positive debate, with almost all contributions being positive and huge support on both sides of the House for apprenticeships. Success has many fathers. We heard first the claim that apprenticeships really got going in 1997. I had planned to say that they were in fact first mentioned in Chaucer 651 years ago, but then we heard the even greater claim from the right hon. Member for Tottenham (Mr Lammy) that they are as old as human beings.
It has been a great national apprenticeship week so far. At 5.30 this morning I was learning from Morrisons apprentices how to fillet fish, and what brilliant apprentices they are. It is quite a skill they have with knives—I certainly cannot match it. I have only one note of mild disappointment, because the speech we just heard from the Opposition Front Bench was rather disappointing. I thought that the hon. Member for Westminster North (Ms Buck) sounded rather like the sultan of scepticism or the Eeyore of apprenticeships, only seeing the worst and determined to dampen, downgrade and darken the mood. But we will not darken the mood, Mr Deputy Speaker, because apprenticeships are a cause to celebrate, and celebrate them we will.
Let me turn to the many issues raised by Members across the Chamber. First, careers advice is vital, as the Chairman of the Select Committee, the hon. Member for West Bromwich West (Mr Bailey), said, as did the right hon. Member for Tottenham, in a powerful speech, and my hon. Friend the Member for Worcester (Mr Walker) and the hon. Member for Inverclyde (Mr McKenzie). We have introduced a new statutory duty on schools that came into force in September, and Ofsted has said that it is making it a priority to consider that. The new destination data that were brought in this summer not only highlight, as they have in the past, the proportion of pupils going to university but, for the first time, publish for all schools the proportion going into apprenticeships. That is an important step, as Members in all parts of the House will recognise. We look forward to Ofsted’s report in the summer on the implementation of the duty to provide independent and impartial careers advice.
The second issue, which was raised by many Members, is the importance of the link between youth unemployment and apprenticeships. It is a scandal that youth unemployment is as high as it is, falling though it may be, when there are skills shortages in key parts of our economy such as engineering and computing. This shows that the linkage between the education system and the skills system, on the one hand, and employers, on the other, has not been strong enough. As my hon. Friend the Member for Thurrock (Jackie Doyle-Price) so eloquently explained, increasing that employer focus is a vital part of the reforms that we are pursuing. Another part of those reforms is the introduction of traineeships so that as apprenticeships become more rigorous and more high-quality, there is a programme of support, alongside the DWP programmes, to make sure that people get the skills they need, including in English, maths and work preparation, to get a good job and to hold down a job. My hon. Friend the Member for South Staffordshire (Gavin Williamson), and the hon. Members for Newcastle-under-Lyme (Paul Farrelly), for Edinburgh West (Mike Crockart) and for Eastbourne (Stephen Lloyd) also talked about the link between youth unemployment and apprenticeships. Several Members mentioned their local jobs clubs, and I wish them well. I am having a jobs club in Newmarket on Friday and look forward to it very much.
The third issue is how much apprenticeships are valued. The Chair of the Select Committee mentioned the recently published statistic that, on average, a higher apprenticeship increases lifetime earnings by £150,000. Let that figure go out there and let us all present and explain it, because it shows the value of apprenticeships.
Matthew Hancock
I absolutely recognise that there have been increases in the number of apprenticeships over the past two and half years in level 2 and level 3, and we are going to introduce levels 4, 5 and 6. In every age group there have been increases in the number of apprenticeships, and we should celebrate that.
Matthew Hancock
I cannot, I am afraid; I have virtually no time left.
The hon. Members for Birmingham, Northfield (Richard Burden), for Rotherham (Sarah Champion), for Bradford East (Mr Ward), for North Tyneside (Mrs Glindon) and for Copeland (Mr Reed) talked about the value of apprenticeships. In particular, the hon. Member for Copeland spoke powerfully about how apprenticeships now reflect the modern economy and are spreading into relatively new areas of the economy. All this fits the argument made by the Prime Minister yesterday that there should be a new norm in our country whereby school leavers go to university or into an apprenticeship so that we have a high-skilled economy and a high-skilled work force, not only so that every individual can reach their potential—their personal best—but so that our economy can compete in the global race. I am glad to see cross-party consensus on the importance of the global race.
The hon. Member for Bolton West (Julie Hilling) mentioned many things; I was intrigued by her speech. I want to pick out her mention of the world skills competition, which is a brilliant, fascinating and exciting competition that everybody should watch; certainly, I thoroughly enjoyed watching it.
Members have mentioned the need to increase the number of apprenticeships and I can announce that, in addition to the three apprentices in my private offices, the Department for Business, Innovation and Skills will advertise tomorrow for three further apprentices in our communications department. The numbers are going up and up.
As my hon. Friend the Member for Burnley (Gordon Birtwistle) and the Minister of State, Department for Business, Innovation and Skills, my right hon. Friend the Member for Sevenoaks (Michael Fallon), have said, while we and many local authorities are broadly supportive of and, indeed, leading on procurement apprenticeships, such as those with Crossrail, I am concerned that the motion is defective, because it appears to call on the Government to exceed their legal powers. Given my assurances, I hope that the Opposition will not push for a vote.
Mr Marsden
The motion states that the Government should use
“the billions of pounds committed to public procurement”,
but our interpretation is that that does not automatically mean procurement in local government, although we believe that the Government have an important role to play in promoting that. I do not understand why the Minister thinks that the motion is defective.
Matthew Hancock
The phrase “public procurement” could easily be interpreted as including procurement in local government, national Government and agencies. The motion was tabled only late last night and it would not be advisable for the House of Commons to vote for something that might not be legal. I am afraid that we must resist the motion, but I hope that, given our reassurances, we can all agree on the need for procurement where possible and for it to represent good value for money. I hope there will not be a vote.
Finally, many Members, including the hon. Member for Islwyn (Chris Evans), mentioned the importance of increased quality and employer focus. Members discussed the cross-party desire for parity of esteem among vocational routes, apprenticeships and universities. It is my passionate belief that parity of esteem will come from parity of quality. We need to increase quality throughout the apprenticeship system so that all apprentices can be as good as the very best at MBDA, Morrisons and Rolls-Royce, which have been mentioned by many Members.
We have taken steps to increase quality: we have insisted that people need to continue with English and maths if they do not have a C grade at GCSE, and have said that there needs to be a minimum of a year in almost all circumstances and a job as part of an apprenticeship. The removal of programme-led apprenticeships has taken out 18,000 apprenticeship places, which is a far higher number than that for the decrease in apprenticeships for 16 to 19-year-olds over the past year. Under the previous Government some apprenticeships did not involve a job, so apprentices were training with no prospect of a job, and astonishingly, some apprenticeships involved jobs without training. At their heart, apprenticeships are about earning and learning at the same time. Increasing quality is vital and I will not apologise for that.
We will respond to the Richard review and are in favour of rigorous apprenticeships that are responsive to employers’ needs. We want to ensure a new norm that gives everyone a good opportunity to reach their potential. We should not use a target to push people into university when it may be best for them to go into an apprenticeship. Instead, let us provide the best possible opportunities for young people, through university and apprenticeships, and a ladder of progression from level 2 to levels 3, 4 and beyond to new areas of the economy, including legal services and accountancy, as well as the more traditional areas of engineering and construction. In that way, we can ensure that there is the potential for everybody to succeed.
Mr Alan Campbell (Tynemouth) (Lab)
claimed to move the closure (Standing Order No. 36).
Question put forthwith, That the Question be now put.
Question agreed to.
Main Question accordingly put.
Business without Debate
Delegated Legislation
Mr Deputy Speaker (Mr Lindsay Hoyle)
With the leave of the House, we shall take motions 7 to 12 together.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Legal Services
That the draft Damages-Based Agreements Regulations 2013, which were laid before this House on 21 January, be approved.
Pensions
That the draft Armed Forces and Reserve Forces (Compensation Scheme) (Consequential Provisions: Primary Legislation) Order 2013, which was laid before this House on 14 February, be approved.
Legal Aid and Advice
That the draft Civil Legal Aid (Merits Criteria) (Amendment) Regulations 2013, which were laid before this House on 4 February, be approved .
That the draft Legal Aid, Sentencing and Punishment of Offenders Act 2012 (Amendment of Schedule 1) Order 2013, which was laid before this House on 4 February, be approved.
Social Security
That the draft Guardian’s Allowance Up-rating Order 2013, which was laid before this House on 7 February, be approved.
That the draft Guardian’s Allowance Up-rating (Northern Ireland) Order 2013, which was laid before this House on 7 February, be approved.—(Anne Milton.)
Question agreed to.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Rating and Valuation
That the draft Non-Domestic Rating (Levy and Safety Net) Regulations 2013, which were laid before this House on 14 February, be approved.—(Anne Milton.)
The Deputy Speaker’s opinion as to the decision of the Question being challenged, the Division was deferred until Wednesday 13 March (Standing Order No. 41A).
Mr Deputy Speaker (Mr Lindsay Hoyle)
With the leave of the House, we shall take motions 14 to 17 together.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Contracting Out, Wales
That the draft Local Authorities (Contracting Out of Tax Billing, Collection and Enforcement Functions) (Amendment) (Wales) Order 2013, which was laid before this House on 6 February, be approved.
Representation of the People
That the draft Electoral Registration (Disclosure of Electoral Registers) Regulations 2013, which were laid before this House on 25 February, be approved.
That the draft Electoral Registration (Postponement of 2013 Annual Canvass) Order 2013, which was laid before this House on 25 February, be approved.
Immigration
That the draft Immigration and Nationality (Fees) Regulations 2013, which were laid before this House on 25 February, be approved.—(Anne Milton.)
Question agreed to.
Motion made, and Question put forthwith (Standing Order No. 118(6)),
Tax Credits
That the draft Tax Credits Up-rating, etc. Regulations 2013, which were laid before this House on 7 February, be approved.—(Anne Milton.)
The Deputy Speaker’s opinion as to the decision of the Question being challenged, the Division was deferred until Wednesday 13 March (Standing Order No. 41A).
Petitions
Mr Iain McKenzie (Inverclyde) (Lab)
I rise to present a petition signed by hundreds of my constituents, who, like me, are concerned about the increasing number of food banks up and down the country and about the fact that the number of people visiting food banks has increased dramatically since last year. I visited a food bank in my constituency, the i58 project, run by a local church, and was astounded to find out that it had dealt with more than 1,000 people since last September. It assumed that demand for assistance would peak around Christmas, but that has not happened, and the numbers have continued to escalate. It was asked to sign this petition on the ongoing problems facing constituents having to attend food banks to make it through the week on their low incomes or benefits. The petition states:
The Petitioners therefore request that the House of Commons urges the Scotland Office and Department for Work and Pensions to work together to ensure there is an accurate count of the number of people using food banks in Scotland and that the Government take action to ensure that no families in the UK go hungry.
And the Petitioners remain, etc.
Following is the full text of the petition:
[The Petition of Inverclyde Constituents,
Declares that the Petitioners believe that as a result of the failings of both the Holyrood and Westminster Governments 13 million people live below the poverty line in Britain today; further that the reliance on food banks has dramatically increased in recent years with The Trussell Trust calculating that in 2011–12 food banks fed 128,687 people in the UK, an increase of over 100 per cent on the previous year. Excellent work is being undertaken throughout the country by national and local food bank providers to fill the void left by the failings of the Holyrood and Westminster Governments; however as one of the world's wealthiest countries we believe UK Citizens should not find themselves in this position.
The Petitioners therefore request that the House of Commons urges the Scotland Office and Department for Work and Pensions to work together to ensure there is an accurate count of the number of people using food banks in Scotland and that the Government take action to ensure that no families in the UK go hungry.
And the Petitioners remain, etc.]
[P001161]
Gordon Banks (Ochil and South Perthshire) (Lab)
This petition has arisen as a result of the growing number of food banks in the UK and the growing number of people in the UK in the 21st century having to resort to them to feed themselves and their families. I pay tribute to the organisations that run food banks, such as the Trussell Trust, but particularly to the Gate, which operates a food bank in Alloa, and to Activ8 and WISH—women in sport and health—which do likewise in Sauchie, both in my constituency, and for which I am running the Alloa half-marathon on Sunday. Two weeks ago at Prime Minister’s questions I asked the Prime Minister to sign the petition, but despite his agreement to look at it and two e-mails to No. 10 since, I am still waiting.
More than 200 of my Ochil and South Perthshire constituents have signed the petition, which states:
The Petitioners therefore request that the House of Commons urges the Scotland Office and Department for Work and Pensions to work together to ensure there is an accurate count of the number of people using food banks in Scotland and that the Government take action to ensure that no families in the UK go hungry.
And the Petitioners remain, etc.
Following is the full text of the petition:
[The Petition of Ochil and South Perthshire,
Declares that the Petitioners believe that as a result of the failings of both the Holyrood and Westminster Governments 13 million people live below the poverty line in Britain today; further that the reliance on food banks has dramatically increased in recent years with The Trussell Trust calculating that in 2011–12 food banks fed 128,687 people in the UK, an increase of over 100 per cent on the previous year. Excellent work is being undertaken throughout the country by national and local food bank providers to fill the void left by the failings of the Holyrood and Westminster Governments; however as one of the world’s wealthiest countries we believe UK Citizens should not find themselves in this position.
The Petitioners therefore request that the House of Commons urges the Scotland Office and Department for Work and Pensions to work together to ensure there is an accurate count of the number of people using food banks in Scotland and that the Government take action to ensure that no families in the UK go hungry.
And the Petitioners remain, etc.]
[P001163]
Mark Lazarowicz (Edinburgh North and Leith) (Lab/Co-op)
I, too, wish to present a petition on food banks on behalf of my constituents. The signatures were collected in the centre of Leith, a part of my constituency where, according to the latest figures, up to 30% of the population are income deprived and below the poverty line. Unsurprisingly, it is also where Edinburgh’s latest food bank is being set up. I pay tribute to those in the community who are helping to set it up and deal with the growing crisis of hunger that is affecting so many of our citizens, particularly families with children. Those setting up the food bank, like those who signed the petition, also want the UK and Scottish Governments to take action to ensure that no families go hungry.
The petition states:
The Petitioners therefore request that the House of Commons urges the Scotland Office and Department for Work and Pensions to work together to ensure there is an accurate count of the number of people using food banks in Scotland and that the Government take action to ensure that no families in the UK go hungry.
And the Petitioners remain, etc.
Following is the full text of the petition:
[The Petition of Edinburgh North and Leith Constituents,
Declares that the Petitioners believe that as a result of the failings of both the Holyrood and Westminster Governments 13 million people live below the poverty line in Britain today; further that the reliance on food banks has dramatically increased in recent years with The Trussell Trust calculating that in 2011–12 food banks fed 128,687 people in the UK, an increase of over 100 per cent on the previous year. Excellent work is being undertaken throughout the country by national and local food bank providers to fill the void left by the failings of the Holyrood and Westminster Governments; however as one of the world’s wealthiest countries we believe UK Citizens should not find themselves in this position.
The Petitioners therefore request that the House of Commons urges the Scotland Office and Department for Work and Pensions to work together to ensure there is an accurate count of the number of people using food banks in Scotland and that the Government take action to ensure that no families in the UK go hungry.
And the Petitioners remain, etc.]
[P001162]
Falkland Islands Referendum
(11 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Guy Opperman (Hexham) (Con)
Today the Falkland islanders showed unity over their future, with a referendum in which 99.8% of the votes cast were in favour of remaining British. The referendum asked them:
“Do you wish the Falkland Islands to retain their current political status as an Overseas Territory of the United Kingdom?”
Only three people voted against. Argentina has now been beaten, I would suggest, both on the battlefield and at the ballot box. It is time for Argentina to accept that the islanders have a right to be there. They do not deserve to be bullied, threatened or intimidated by a close neighbour.
Michael Fabricant (Lichfield) (Con)
My hon. Friend makes a powerful point about how the Argentines should behave. Does he agree that now is the time for the United Nations also to accept the will of the Falkland islanders?
Guy Opperman
I entirely endorse my hon. Friend’s point. This process will definitely be watched with great interest by the United Nations when self-determination, which is surely what a referendum is all about, is being considered.
Jim Shannon (Strangford) (DUP)
I congratulate the hon. Gentleman on bringing this matter before the House. The referendum was clear: the Falkland islanders want to stay British. Does he feel that that message should be sent out from this House this evening to the Argentines—that the Falklands are British today, they will be British in 20 years’ time and they will be British for ever, as long as the people there want them to be?
Guy Opperman
I entirely endorse that point.
It is also right to remember those who passed away during the conflict 31 years ago, when 255 British troops died, 650 Argentinean troops passed away and three female islanders were also killed.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
Will my hon. Friend pay tribute to those members of the armed forces who gave their lives, especially those members of 3 Commando Brigade, which is based in my constituency and includes Royal Marines and the Royal Navy? They went out to the south Atlantic and did a deeply courageous job, and they should always be credited for all their hard work.
Guy Opperman
I entirely endorse that point.
Able Seaman Derek Armstrong, from the town of Prudhoe in my constituency, died when HMS Ardent was sunk on 22 May 1982. He was only 22 years of age. His memory is still celebrated by the fact that the most important award of the year given by his school, Prudhoe community high school, is the Derek Armstrong memorial award, which is presented each year to the best sportsperson. All troops, on all sides, should be remembered. We should pay particular tribute to those who are serving there and giving up their time to look after the Falkland Islands on an ongoing basis.
Mr Kevan Jones (North Durham) (Lab)
Will the hon. Gentleman also pay tribute to Colonel Tony Davies and to the Falkland Islands veterans association? The association’s Liberty Lodge in Stanley accommodates many of the veterans who return to the Falkland Islands to remember some of the experiences that they went through in 1992.
Guy Opperman
I totally agree. The way in which we look after the Falkland Islands has got better and better, under the previous Government and now under this one. The organisation that the hon. Gentleman mentions does a great job.
It is right to make it clear that the United Kingdom wants nothing more than peace, trade and prosperity with Argentina and the other south American countries. There are so many problems in this world, and it is surely wrong that we are in any way falling out over these islands. While we in this House stand four-square behind the residents of the Falkland Islands and their overwhelming vote in favour of self-determination, we must try to reach out to the Argentine and other south American peoples and stress that this is a matter entirely for the islanders.
Neil Carmichael (Stroud) (Con)
I welcome the overwhelming majority vote in favour of the Falklands remaining a British overseas territory. I suggest to my hon. Friend that that vote was in a way a reaffirmation of our position in Antarctica, and that it further underlines the importance and the peaceful nature of our activities in there.
Guy Opperman
Indeed, the 1959 Antarctic treaty froze all sovereignty claims there. I pay tribute to my hon. Friend, whose private Member’s Bill, the Antarctic Bill, has passed through the House and is now law.
Many Argentines continue to work in the United Kingdom, and many British people work in Argentina. They are able to get along in a positive way. Perhaps the wisest words spoken in the past two weeks were those of one of the international electoral observers, who said:
“The Falkland Islanders are citizens and they have the right to express themselves.”
Those were the words not of a local, but of Senor Jaime Trobo, the Uruguayan electoral observer.
I suggest that now is a good time to evaluate from where the right to self-determination originates. The principle is set out unequivocally in article 1.2 of the charter of the United Nations, which states that one of the purposes of the United Nations is
“To develop friendly relations among nations based on respect for the principle of equal rights and self-determination of peoples”.
Kate Hoey (Vauxhall) (Lab)
I congratulate the hon. Gentleman on securing a debate on such an important subject on such an important day for the Falkland islanders. Does he also think that this is a good time for the United States of America to show that it understands democracy, and for President Obama to come out in support of the rights of the Falklanders, rather than sitting on the fence as he seems to have been doing?
Guy Opperman
While we would all support President Obama, he seems to be acquiring some splinters by sitting on the fence for so long. The United States’ position is surely hypocritical, given that it uses and benefits from bases in British overseas territories such as Cyprus, Diego Garcia, Ascension and Gibraltar when it suits them. Because it does not use the Falkland Islands for those purposes, however, it is not so supportive of, or enthusiastic about, our claims and those of the Falkland islanders.
Henry Smith (Crawley) (Con)
I also congratulate my hon. Friend on securing this timely and important debate. I agree that the United States is being hypocritical in its approach to recognising the Falkland Islands’ sovereignty. However, we also need to pay tribute to Washington for recently refusing to agree to any more International Monetary Fund or World Bank loans to Buenos Aires—as have the British Government—because of the way in which Argentina has massively defaulted on previous loans.
Guy Opperman
The status of the World Bank loans and the international aid that was or was not going to Argentina over the last few years is indeed a matter of great regret and concern.
Mr Charles Walker (Broxbourne) (Con)
Is not the Argentine President playing a cruel trick on her electorate by trying to divert attention from her own failings? There is not a chance in hell that the Falkland Islands will return to Argentina during her presidency, or any other presidency.
Guy Opperman
That was the problem in 1982, was it not? A President struggling to maintain domestic order was trying to divert attention from the realities of problems at home by attracting it to matters abroad. One is nervous about the potential for that to happen again.
Oliver Colvile
Is my hon. Friend aware that Ewen Southby-Tailyour, who was very much a member of 3 Commando Brigade, did all the mapping around the Falklands in 1978, and that it could then be used by the troops when we went in? It was a very good job that he ended up doing.
Guy Opperman
Preparation is essential to all future military endeavour, as my hon. Friend rightly makes clear.
Under United Nations resolution 2065, which is linked with UN resolution 1514, it is crucial that the interests of the population of the Falkland Islands are observed. That has to be the most important consideration. Resolution 1514 states:
“All peoples have the right to self-determination; by virtue of that right they freely determine their political status and freely pursue their economic, social and cultural development…All armed action or repressive measures of all kinds directed against dependent peoples shall cease...and the integrity of their national territory shall be respected.”
Andrea Leadsom (South Northamptonshire) (Con)
My hon. Friend is making an extremely powerful speech about a very important subject. Does he agree that it is vital to the interests of the economic development of the Falkland Islands for there to be certainty about the sovereignty of those territories, so that businesses, including those in the fishing waters around the islands and those conducting oil exploration, can operate honestly for the foreseeable future in an atmosphere of security and good will?
Guy Opperman
The Foreign Secretary made the same point last year, when he wrote:
“There are many areas on which we”—
the two countries—
“can co-operate: on joint management of fish stocks, on hydrocarbon exploration and on strengthening air and sea links between the Falklands and South America. We used to do this in the 1990s and ought to be able to do it again.”
I am sure that the Falkland Islands Government want more trade links and a greater expansion of trade with their nearest neighbour.
Sir Gerald Howarth (Aldershot) (Con)
I congratulate my hon. Friend on securing the debate. There could be no more emphatic expression of the will of the Falkland Islands people than they have enunciated in the last 24 hours, and there can therefore be no doubt in the Argentine Government of the islanders’ determination to remain British. Does my hon. Friend agree, however, that we should now be seeking to appeal to the reasonable Argentines—many of whom have long-standing connections with this country, not least with the principality of Wales—and forging an alliance with them over the heads of the ridiculous Government of Argentina?
Guy Opperman
My hon. Friend makes his point most eloquently. I could not possibly improve on it. I will point out, however, that barely two weeks ago, before the referendum, Argentina’s Foreign Minister was saying that this was a
“British attempt to manipulate the Question of the Malvinas Islands through a vote by the population implanted by the United Kingdom”.
It is ridiculous to suggest that these people, some of whom have been there for nine generations, have been “implanted”. They are men and women who were born on the Falklands and have lived there for generations, had children, and made their lives together. Like the populations of most countries in Latin America, including Argentina, the Falklands population has grown through a flow of migration. The Falkland Islands constitutes a nation of immigrants who have developed a distinctive culture and identity. For Argentina to deny them the right to self-determination is for it to question the Argentines’ own claim to the rights that they take so seriously.
Michael Ellis (Northampton North) (Con)
Is it not the case that Argentina, sadly, does not have a particularly happy history on respecting the freedoms of its own people and democracy there? Will my hon. Friend join me in criticising Argentina for its actions against cruise lines and the predilection it appears to have developed in recent months for obstructing the free passage of civilian passenger vessels that happen to have any business or trade with the Falkland Islands?
Guy Opperman
The reality is that a blockade of protectionism and intimidation is taking place around the Falkland Islands. We have seen actions ranging from preventing the use of the Falkland Islands flag and disrupting shipping, as my hon. Friend made clear, to ongoing organisational protectionism. Do we really, in 2013, have large countries blocking free trade in that way?
Henry Smith
Does my hon. Friend also agree that it is anathema that Argentina is a member of the G20?
Guy Opperman
Given the state of Argentina’s finances and the insanity of its current financial situation, with inflation in excess of 25%, Argentina is hardly sending out any great lessons of financial propriety.
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. May I just suggest that we have to be careful, as this debate is about the referendum and we are being dragged over other different subjects? I know that Mr Opperman wants to keep to the subject of the debate, so I ask hon. Members not to distract him—that would be helpful.
Mark Menzies
My hon. Friend is making a powerful point in this debate. The people of the Falkland Islands have spoken and we must respect that. They should not feel intimidated, but if they do feel intimidated, the RAF, flying Typhoon aircraft built in west Lancashire, is more than capable of looking after their security.
Guy Opperman
Those aircraft will doubtless be backed up by some Sea King helicopters, a garrison of 1,200 soldiers, HMS Clyde and many other items under the water, not least a few submarines.
Let me deal with Europe and its role in determining this matter. I did not believe that the Lisbon treaty was good for much, but I was interested to read that it was good in that the European Union recognised the Falkland Islands as a “full associated territory”, like our other associated overseas territories, within part 4 of the treaty on the functioning of the European Union. Apparently the Argentines are upset with something from Europe—I think they can join a large club, but I knew that the Lisbon treaty was good for something.
The Argentines continue to dispute this matter on an ongoing basis, but I suggest that they must now take into account the interests and desires of the Falkland Islands’ inhabitants. What has happened is applicable not only to the Falkland Islands, as it has due relevance to the other British overseas territories, including the 293,000 people who reside on a permanent basis in the 14 British overseas territories, all of whom will take great heart from what we have seen in the Falkland Islands today.
Relations with Argentina were not always so bad. In 1995, the Argentine and British Governments issued a joint statement when a deal was signed that identified a discrete area for hydrocarbon and other exploration, and work together. That agreement was scrapped in 2007 by the Argentine Government, which was a great shame. However, the facts are these: the inhabitants of the Falklands overwhelmingly want to remain a British overseas territory; it is not up to Great Britain to give the Falklands away; and it is the Falklands islanders’ own right to decide where their sovereignty lies.
Andrew Rosindell (Romford) (Con)
My hon. Friend is absolutely right to say that it is the right of the people of the Falklands to determine their own destiny, but does he agree that other countries around the world should now accept that the decision that has been made is the freely chosen wish of the people of those islands? I am talking about not just the United States of America, but all those countries that have sat on the fence and have failed to support the Falklanders’ desires to determine their own future.
Guy Opperman
I am happy to pay tribute to my hon. Friend, who has ploughed a strong but lonely furrow as the champion of the British overseas territories, all of which pay due credit to his work.
It is right that we are investing in the islands, moving positively forward and attempting to ensure that, building on the referendum, there is a celebration of the culture of the Falkland Islands and promotion of the fantastic opportunities there. The south American countries are our friends, as we would like Argentina to be.
Sir Gerald Howarth
In the year of the 31st anniversary of the campaign, surely we should recall the 255 men of Her Majesty’s armed forces who gave their lives for the security of the people of the Falkland Islands, including so many members of the Parachute Regiment based in my constituency of Aldershot.
Guy Opperman
We all remember those who passed away on all sides. For example, the Argentine troops were gentlemen led by lambs. They were chronically under-equipped and very poorly trained for the job their country asked them to do.
The people have spoken and the decision is now made. Gone are the days when colonial possessions could be disposed of by giving away power and territory regardless of the view of inhabitants. Let us instead celebrate the unique history and culture of a small island people who choose to remain British—and so they shall. That position and their choice in the matter are non-negotiable.
The Minister of State, Foreign and Commonwealth Office (Mr Hugo Swire)
This has been a timely and useful debate and I congratulate my hon. Friend the Member for Hexham (Guy Opperman) on obtaining it and on his considered opening speech. I also thank hon. Members on both sides of the House for their contributions.
The Falkland islanders enjoy the support and friendship of Members from across the political divide in the British House of Commons. They will receive that message loud and clear as we debate this momentous day for the people of the Falkland Islands.
The referendum on the future of the Falkland Islands has been an event of momentous significance for that small community in the south Atlantic. An overwhelming majority, 99.8% of those voting, have chosen to retain the islands’ status as a British overseas territory, with an astonishingly high turnout—at which we can only look with jealousy, envy, amazement and, when it comes to our elections, incredulity—of 92%. Just three no votes were cast.
More than 50 international journalists have descended on Stanley. Those hon. Members who have visited Stanley, sometimes more than once, will know what pressure that has put on that place. They have been joined by academics, electoral experts and a formal observer mission made up of members from Latin America, the United States, Canada and New Zealand, who have confirmed that the poll was
“free and fair, reflecting the democratic will of the voters of the Falkland Islands.”
Mr Kevan Jones
Does the Minister agree that that is a very important point? The Falkland islanders can now argue not only that the election was free and fair but that the result shows the will of the people.
Mr Swire
My hon. Friend—I am sorry, Mr Deputy Speaker, I should say the hon. Gentleman, although he is also my friend—has visited the Falklands and what he says is absolutely the case. The world was watching, the Falkland islanders spoke and the world should therefore react accordingly. These were free and fair elections, observed by the international community, and the result is stronger because of that.
Not for the first time, the Falkland islanders find themselves the focus of intense political and media attention. Most will now understandably want life to return to normal, but they can do so secure in the knowledge that they have shown the world in no uncertain terms what political status they want for their home. The result of course reflected what the Falkland islanders have always asserted: their overwhelming wish is to maintain the islands’ status as a British overseas territory. The referendum was not some crude public relations stunt, as the Argentine Government sought to portray it. The islanders organised it not to indulge themselves in establishing the obvious, but to send the clearest possible message to those who either do not know or do not care about what future they want. Today’s absolutely decisive result undoubtedly achieved that and once again I congratulate the Falkland Islands people on their definitive act of self-determination.
The British Government backed the referendum from the outset. Support for the Falkland islanders is absolute, and the Prime Minister made that very clear in his statement earlier today welcoming the result. The Government would have respected whatever result emerged from Stanley but, as is reinforced by the interventions this evening, we are delighted by the overwhelming support for a continuing partnership with the United Kingdom, based on our shared values and mutual respect. For as long as the people of the Falklands wish their homeland to remain an overseas territory of the United Kingdom, we will stand by them.
Derek Twigg (Halton) (Lab)
Like everybody else in the House tonight, I am delighted with the result. It is not unexpected, but it sends a clear message. But for the sacrifices of our armed forces, the referendum could not have been held. Even today, many individuals still suffer from their physical and mental injuries. I am sure the Minister will give due praise to our armed forces for what they did, and to our armed forces serving there now.
Mr Swire
As a former Armed Forces Minister, the hon. Gentleman is right to make that point, which was also raised by my hon. Friend the Member for Aldershot (Sir Gerald Howarth). This is a time to remember all those who lost their life in the conflict, but particularly the British lives lost in re-securing freedom for the islanders.
It would be wrong not to acknowledge that the main factor that led the Falkland islanders to hold the referendum was the increasingly antagonistic behaviour of the Government of Argentina over recent months and years. In many ways President Kirchner herself inspired the referendum. Her aggressive policies motivated the Falkland islanders to stand up so proudly for who they are and what they want.
Like my hon. Friend the Member for Northampton North (Michael Ellis), I deeply regret the direction of Argentina’s policy. From harassing the Falklands fishing fleet, to threatening air links with the islands and issuing hostile letters to companies operating on the Falklands, it seems that the Argentine Government believe that the Falkland islanders can be bullied into submission, and that the British Government will eventually decide to negotiate away their rights. That is never going to happen.
Mr Kevan Jones
Does the Minister agree that when relatives of Argentines killed in the Falklands visit the islands, they receive a very warm and respectful welcome from the people of the islands?
Michael Ellis
Does my hon. Friend agree that the behaviour of Argentina that he has just particularised shows the arrogant colonial power that the Argentines attribute to others?
Mr Swire
My hon. Friend makes his point extremely well. Even better is the comment of the Argentine columnist Andrés Oppenheimer, who wrote recently:
“Argentina’s latest offensive against the islanders may go down in history as a text-book example of diplomatic incompetence.”
The clarity with which the Falkland islanders have voiced their wishes compels Argentina to cease its destructive and counter-productive behaviour. It is simply not credible in the 21st century to pretend that the people living on the Falklands can be ignored, or that they do not exist, as Hector Timerman, the Argentine Foreign Minister, outrageously claimed on his recent trip to London. So I say to the Argentine Government, “Listen to what the islanders have said and put an end to your campaign of intimidation and bullying.”
My hon. Friend the Member for Romford (Andrew Rosindell), who is a stalwart champion of many things, but particularly of the British overseas territories, was right. As well as sending the clearest possible message to Argentina, the result of the referendum sends a message to the rest of the world. Neither the British Government nor the Falkland Islands Government wish to draw other countries into this issue. We respect those countries who express no opinion or who have honest disagreements with us on the matter, but what we cannot accept is other countries being misled into accepting a distorted picture of the Falklands issue.
The Argentine Government have claimed that the islanders do not exist, that the British military is holding them hostage as part of a wider policy to militarise the entire south Atlantic, and that they would be perfectly happy living under Argentine rule. None of these things is true. The islanders have known this all along, but the referendum has taken this message to a worldwide audience and has put the question of their wishes beyond any possible doubt. So we urge all countries who uphold democracy and political rights to respect the wishes of the islanders and to accept the referendum as a clear and valid expression of their views.
Some people will ask whether this referendum will change anything. I believe that it will. No longer will anyone be able to question whether or not the islanders want the Falklands to remain a British territory, and no longer will Argentina be able to distort the facts of the matter, misrepresenting and ignoring what the islanders want. Politicians from the islands will be travelling far and wide in the coming weeks to raise awareness of the result and to dispel myths about their home, and the British Government will be offering them every support and assistance in doing so. But the biggest change of all would be for the Argentine Government to recognise that their bullying tactics have failed—