Budget Resolutions and Economic Situation
(Limited Text - Ministerial Extracts only)
Read Full debate
Ed Balls
For absolute clarity, I asked the Chancellor and the Business Secretary whether the scheme applied to buy-to-let properties, and whether it would allow second homes. Neither of them knew. The Business Secretary said that it had not been decided, but in fact the document has been published and states that the scheme does not apply to buy-to-let properties, but it does allow second homes. The accusation stands. Is that true? It is not in the document; are they going to amend it?
The Parliamentary Under-Secretary of State for Skills (Matthew Hancock)
Is it in the document or not?
The Economic Secretary to the Treasury (Sajid Javid)
I am grateful for the opportunity to respond to this debate. We have heard from my right hon. Friend the Secretary of State for Business, Innovation and Skills, from 30 Back Benchers—if I counted correctly—and from one comedian, also known as the shadow Chancellor. His speech was full of jokes and invective, but there was not a single idea about how to deal with the problems in the economy—the very problems that he and his friends helped to create. He might be taking heart from the Italian election, in which a comedian did rather well. He might think the same will work with the British people, but it will not.
It is worth taking a step back and reminding ourselves of the context. The Government inherited the largest deficit in peacetime history. The Government were borrowing one in every £4 they were spending. We have now cut the deficit by a third, but the shadow Chancellor’s plans would take that off track. It is worth recalling his own record on borrowing. As my hon. Friends the Members for Bournemouth East (Mr Ellwood), for Mid Norfolk (George Freeman) and for Bedford (Richard Fuller) reminded us, the previous Government were running a deficit from 2001 onwards—long before the financial crisis. The IMF said that at the height of the debt-fuelled boom, we were running a structural deficit of 5% of GDP. Only Greece and Ireland were in a worse position.
The shadow Chancellor still does not accept that he spent too much and borrowed too much. He cannot even admit that under Labour’s plans, according to the IFS, the debt would be £200 billion higher. He really believes that we can borrow less by borrowing more. This country will never forget that, true to form, Labour brought our country to the brink of bankruptcy by the end of its term. After 13 years, we were left with the largest deficit since the second world war, the deepest recession of any industrialised country and the largest banking bail-out this country had ever seen—a bail-out that was the direct result of the previous Government’s reckless decisions on financial regulation. I was hoping to hear an apology from Opposition Members for all the disaster they created, but there was not a single one.
Barbara Keeley
Does the Minister not think it is time to stop living in the past? Will he give an answer to the point of order I raised about the new Help to Buy scheme? Can it be used for second mortgages? The information about it states that a borrower could be remortgaging an existing property with a new lending institution. It is a very confusing scheme.
Sajid Javid
I shall come to the Help to Buy scheme in a moment. I was hoping the hon. Lady would offer an apology, but no such luck.
As my right hon. Friend the Business Secretary stated, yesterday’s Budget had economic growth at its heart. The economy is still feeling the impact of Labour’s disastrous policies, but we continue to find practical ways to turn the economy around and to restore growth. Through the private sector, we have created 1.25 million new jobs since we came into power—more new jobs in three years than were created under the last 10 years of Labour. Under this Government, private sector employment has been growing more quickly in the north-east, the north-west and Yorkshire than across the country as a whole. There are more people in employment today than at any other time in our history. We did not hear a single Opposition Member mention that fact.
We might think that Labour Members would have welcomed that development, but they did not. Instead, we heard cheap political talk. They asked about employment, which of course we all want to fall, but they avoided the facts.
On their behalf, I have looked at the change in youth unemployment in the constituencies represented by virtually every Opposition Member who spoke today and mentioned unemployment. Let us look at the facts. This is what happened to youth unemployment during the last term of the Labour Government in those constituencies. In Paisley and Renfrewshire North it was up 150%; in Clwyd South up 103%; in Feltham and Heston up 77%; in Worsley and Eccles South up 124%; in Luton South up 45%; in Birmingham, Selly Oak up 96%; in Edinburgh North and Leith up 60%; in Scunthorpe up 135%; in Edinburgh East up 87%; and in Denton and Reddish up a record 148%. In each of those constituencies, youth unemployment rocketed during the last term of the Labour Government and in every one of them it is down under this Government.
Let me turn to the employment allowance, which a number of hon. Members mentioned. We are proud to be introducing the £2,000 employer national insurance contributions allowance, which will benefit 1.5 million companies throughout the country and take almost a third—450,000 of the smallest businesses—out of NICs altogether. Cutting this payroll tax will be a boost for employment, but our tax changes do not stop there. We are overseeing a system of competitive tax rates that will be strictly enforced—a system that encourages companies to invest and employ here. That is why we are reducing the main corporation tax rate by April 2015 by an additional 1% to 20%, making it the lowest in the G7 and the joint lowest in the G20.
Let me turn briefly to Lord Heseltine and his report, “No Stone Unturned”. As hon. Members are aware, this week the Government published their full response to the report. I am sure that hon. Members have seen the impact Lord Heseltine made on the docklands and in Merseyside. We all know that he is a man with a vision for cities. I am sure that Members will join me in wishing Lord Heseltine, who turns 80 today, a very happy birthday. To help to celebrate, the Government have accepted, in full or in part, 81 of the 89 recommendations he made in his excellent report.
While I have time, I want to turn to aspiration. We know that businesses, buildings and companies start with the vision of individuals. Yesterday’s Budget was for an aspiration nation. It is a Budget that will support people who want to work hard and get on, by preventing higher costs of child care and disincentives to work, creating a simpler system for retirement and giving people a real opportunity to buy their homes, through the help to buy scheme, the extension of the right to buy scheme and our further investment in affordable homes.
Lastly, I want to turn to the cost of living. This Budget also recognises the pressures on the cost of living, as my hon. Friends the Members for North Swindon (Justin Tomlinson), for Harrow East (Bob Blackman), for Henley (John Howell), for Tiverton and Honiton (Neil Parish) and for Hexham (Guy Opperman) all outlined. We have cancelled September’s planned fuel duty rise. Fuel duty will no longer be 10p a litre lower than the previous Government had intended; it will be 13p a litre lower from April this year. We have also cancelled Labour’s hated beer duty escalator and gone one step further by taking a penny off beer duty. I thank my hon. Friends the Members for Burton (Andrew Griffiths) and for North Swindon for raising the issue and campaigning on it so hard.
We have also achieved our commitment to take the personal allowance to £10,000 by April 2014, a year ahead of schedule, which will be a further tax cut for 24 million people up and down the country. Together, these tax allowance changes have taken 2.7 million people out of taxation altogether. Someone working full time on the minimum wage would see their tax bill more than halve because of the measures this Government have taken. As we heard from my right hon. Friend the Chancellor yesterday, every individual who was benefiting from the 10p tax rate under the previous Government is now on a zero per cent tax rate.
Yesterday’s Budget put faith in hard-working people. It was a Budget that told businesses that they are welcome to set up here and encouraged to employ people here. It was a Budget that told individuals up and down the country that if they want to work hard, they will be rewarded in our aspiration nation. I commend these Budget resolutions to the House.
Ordered, That the debate be now adjourned.—(Greg Hands.)
Debate to be resumed tomorrow.