16:59 - The House divided: - Ayes: 232 / Noes: 269 - Question accordingly negatived.
17:13 - The House divided: - Ayes: 270 / Noes: 231 - Question accordingly agreed to.
Ed Balls
The argument that I am making is that if we as a House—those of us on the left and on the right—are to face up to the challenge of delivering more and better jobs for working people and if we are to see off the pressures for isolation and withdrawal, we cannot take the wrong-headed approach either of denying that there is a problem or of appeasing those who would try to walk away. We need a Queen’s Speech that rises to that challenge. My point is that, in putting all its energy into Europe and the referendum, the Conservative party has the wrong strategy to deal with the challenge that we face.
The Chancellor of the Exchequer (Mr George Osborne)
Just so that we can be absolutely clear, will the right hon. Gentleman make it clear from the Dispatch Box that Labour will not offer a referendum on Britain’s membership of the European Union now or in the manifesto at the general election and will therefore vote against any private Member’s Bill that proposes one?
Ed Balls
We have said very clearly that we do not believe in an ever-closer Union. If there is any proposal to transfer powers to Brussels from London, we will have a referendum in the next Parliament. Our position is clear. We are not turning our face against a referendum. What we are turning our face against is a referendum that would destabilise our country and cause it to lose investment and jobs.
Hon. Members do not have to take my word for it: let me read the conclusion, a year on from the Prime Minister’s decision, of the Chancellor’s biographer in the Financial Times. He stated that Downing street’s three objectives for the referendum were
“to pacify Tory MPs, sap the momentum of the fringe UK Independence party and put the troublesome subject of Europe to sleep until the general election in 2015. On all scores, it failed.”
That must qualify as the understatement of the year. [Interruption.] I have given my view.
Mr Osborne
I ask the shadow Chancellor to answer the question that I put to him. Does he rule out offering, now or in the Labour manifesto at the general election, an in-out referendum on Europe, and will the Labour party therefore vote against any private Member’s Bill that is introduced?
Ed Balls
The answer is no, of course we will not rule that out, because we have a clear commitment that if there is any proposal to transfer powers, we will have an in-out referendum in the next Parliament. That is our position. I gave the Chancellor the answer once, he did not listen and I gave it to him again.
Is not the reality that the Prime Minister’s attempt to appease Tory Back Benchers has failed and that it has not worked very well with the Front Benchers either? Just a few months ago, just after the Budget, the last time we had such a debate, we had read stories in the newspapers about the Education Secretary trying to undermine the leadership ambitions of the Mayor of London—it was briefed, I believe, to The Mail on Sunday at a lunch. Last week, it was the Home Secretary who was targeted by the Education Secretary, this time to The Times over lunch. The first time, the Education Secretary explained that he was tipsy. He has obviously been on the sauce again. There is a pattern here: a rival to the Chancellor tops the “ConservativeHome” leadership poll and the Education Secretary is sent out to try to stop them at all costs. Now we know that when the Chancellor and the Education Secretary have a late-night chat about the Prevent strategy, they are talking about a rather different prevent strategy from the one that we are talking about. It is pretty clear who the Chancellor has tried to prevent through all his interventions.
The Chancellor of the Exchequer (Mr George Osborne)
I rise to support the Queen’s Speech and its many measures that back business, savers and hard-working people. The shadow Chancellor has come with a new catchphrase. He talked about a “long-term economic plan”. I think it is good; it might catch on. It has a ring to it, but I am sure I have heard it before. That is the problem with his entire speech: he could not utter the inescapable truth that Britain has a long-term economic plan, and that that plan is working.
We are attracting more investment than Germany and creating jobs at a faster rate than the United States. We are expanding more than four times faster than the Government the right hon. Gentleman admired in France, and growing faster than any major economy in the world. Of course, there is much more to do to build our exports, back our businesses, encourage savings, build homes, secure investment, build our economic infrastructure and rebalance our economy, and the Bills in this Queen’s Speech take us forward in that direction.
Toby Perkins
The Chancellor says that the economic plan is working, but who is it working for? It might be working for his friends who he used to go boozing with at the Bullingdon club, but working people in my constituency find that it is harder and harder every single month to make work pay. What will the Chancellor do to make work pay under his Government?
Mr Osborne
That is what is so revealing about the Labour party’s performance in the past half hour. The shadow Chancellor started by reading out the article in the New Statesman this morning and trying his piece on new politics, but within about 10 minutes it all descended into Bullingdon club jokes, and the hon. Member for Dudley North (Ian Austin) having to withdraw his comment. The shadow Chancellor then descended into the normal slapdash that we have got used to in the House. Incidentally, there is a striking echo of what went wrong with the Leader of the Opposition’s speech at the beginning of the Queen’s Speech debate. That is because he is unable to engage in the serious economic argument about what needs to happen in this country.
Robert Halfon
When a hard-working person in Harlow considers the economy, he will leave his house in the morning on the way to work probably knowing that his mortgage is low and fuel duty is frozen. When he gets to work he will see more people in work and more apprentices, and when he looks at his pay packet, he will see that his tax bill has been cut by hundreds of pounds.
Mr Osborne
My hon. Friend is right. By reducing income tax and increasing the personal allowance, by freezing fuel duty—something he campaigned on powerfully in this Parliament—and above all by having an economy that creates rather than destroys jobs, we are holding out the prospect of economic security and better prosperity for our country in the decade ahead. That is what we all want to secure.
Mr Osborne
I will give way in a moment, but let me make some progress. I know that about 50 Members want to speak in this debate—[Hon. Members: “Not on your side.”] Well, we will hear. No doubt Labour Members can all get up on their feet and repeat what they said last year .
I have done something that I know we are not supposed to do in this place, because I actually bothered to read what the shadow Chancellor said in the House last year. Here we are in the privacy of the House of Commons where no one is listening, but what were his pearls of wisdom? In this exact debate last year he issued a stark warning that the British economy would “flatline” unless we abandoned our plan immediately. Since he made that prediction, we have stuck to our plan and our economy has grown by more than 3%.
Last year in this debate the shadow Chancellor said that business investment would “stall”, but it has since grown by almost 9%. He told us that unemployment would rise, but since he made that prediction more than 800,000 new jobs have been created. He warned ominously that youth unemployment would rise too, but it is down by 100,000 over the past 12 months. From re-reading the speeches of the shadow Chancellor, I have discovered that he performs a very useful function. He is an infallible guide to the future performance of the British economy: whatever he predicts, we can be sure that the exact opposite happens.
Mr Donohoe
Will the Chancellor answer a simple question about employment? How many people are on zero-hours contracts?
Mr Osborne
I do not have the number the hon. Gentleman asks for here, but there were zero-hours contracts under the previous Labour Government and there are Labour councils that use zero-hours contracts. As those on the Labour Front Bench have pointed out, not all zero-hours contracts are bad. One measure in the Queen’s Speech that was not mentioned by the shadow Chancellor—indeed, he did not actually address the speech in his remarks—will ban exclusivity with zero-hours contracts. Labour had 13 years; the shadow Chancellor was in charge of economic policy for 13 years and could have taken such a step, but he did not. I suggest that Labour Members hold their tongues and come with the Government through the Division Lobbies as we do something about an abuse that they did absolutely nothing to crack down on.
Christopher Pincher (Tamworth) (Con)
On the topic of pearls of wisdom from the shadow Chancellor, does my right hon. Friend agree that his rather careful formulation that a jobs tax is not his argument was rather too clever by half? We did not hear from the shadow Chancellor a clear commitment that a jobs tax is not Labour’s policy now or at the general election.
Mr Osborne
My hon. Friend is right. We listened carefully, but like the Leader of the Opposition the shadow Chancellor did not rule out a jobs tax. Why? Because it is Labour’s tax of choice. That is what they did in government when they increased national insurance, and what they proposed at the general election. A couple of years ago the shadow Chancellor admitted that he would be minded to do that as a means of bringing order to the public finances—his weapon of choice is a jobs tax. That is Labour’s answer to jobs: tax them, destroy them, make people unemployed. That is why every Labour Government in history have left unemployment higher than when they entered office.
Mr Osborne
Let me make a little progress and then I will take more interventions. In a debate after last year’s Queen’s Speech—[Interruption.] I am talking about this year because last year the shadow Chancellor urged me to do something this year. In the conclusion to his speech last year, he said that the Chancellor should listen to the International Monetary Fund. He also said that
“a sensible and economically literate chancellor would heed the IMF’s advice.”
I have reflected on that advice, and I think I will listen to the IMF. I have its most recent statement from last week and it states that growth in Britain is projected to be
“the fastest among the major advanced economies.”
It says that the economy has rebounded strongly, that inflation has fallen rapidly, that growth is becoming more balanced, that we are moving towards an investment-led economy, and that that good macro-economic performance is expected to persist. It stated that the news coming out of the UK recently has been “pretty much all good”, in contrast to the shadow Chancellor’s predictions, which were pretty much all bad. It concludes that our fiscal policy—the deficit reduction plan that the shadow Chancellor bets his entire economic credibility on opposing—is the “anchor” of Britain’s stability and economic success. My answer to the right hon. Gentleman is this: I am listening to the IMF, the CBI, the chambers of commerce, the Institute of Directors, the Federation of Small Businesses and the OECD. Who on earth is he listening to?
Helen Goodman (Bishop Auckland) (Lab)
Will the Chancellor listen to the IMF on the housing market, of which he has made a total mess? House prices are rising by 20% in London, and there is negative equity in the north. Not one property was sold for £600,000 in my constituency. Will the Chancellor now abandon the stupid Help to Buy scheme, which goes up to £600,000 for new home owners?
Mr Osborne
I will come on to say something about the housing market, and I am the first to say that we must be vigilant about housing. But to get a lecture from the party that presided over the biggest housing boom and bust in British history—
Mr Osborne
The shadow Chancellor says “what?” He might forget what happened in 2007-08 when the banks almost went bust because they extended housing loans that people could not afford, house prices fell, housing starts went off a cliff, and the people of Britain paid the price of an economic policy predicated on the fact that there would be no more boom and bust. The people of Britain are living with the consequences of that policy. Will he just accept now that basing an economic policy on the prediction that there would be no more boom and bust was an error of judgment?
Ed Balls
Will the Chancellor like to tell the House how many people went into negative equity after 2007, and how that compares with the number of people—the tens of thousands—who were put into negative equity after the Conservative housing crash of 1989? If he is going to make these statements he ought to be able to make them stand up. While we are here, will he tell us—
Madam Deputy Speaker (Dawn Primarolo)
No, no, no. Mr Balls, sit down. Not “While we are here.” One point at a time.
Mr Osborne
The right hon. Gentleman’s argument seems to be, “My crash was better than your crash.” That is a brilliant argument. I will tell him the answer. He was going to remove a temporary scheme that protects people from mortgage costs when they become unemployed. I extended it year after year after year. I have extended it again in the Budget to make sure that people do not find themselves having their homes repossessed. Can I also tell him that the housing market fell by almost 20%? The price of houses fell and there were people at Northern Rock—[Interruption.] His argument is literally, “I’m sorry we messed it up, but you messed it up in the past as well.” That is an absolutely hopeless argument. I have learned the lesson from the terrible mistake—
Mr Osborne
I was wrong? This is the man who presided over the deepest recession in British modern history and the biggest banking crisis since the Victorian age. He has the nerve to get up and say to the team that is turning the country around that we got it wrong. The truth is that he is the person who got it wrong.
There was a very interesting observation this week by Charles Clarke, who was the Home Secretary when Labour were in office. This is what he said:
“we have rested a great deal on assuming that the Conservative strategy wouldn’t succeed, that ‘plan A’…would not work and that has proved to be an unwise judgment because in fact, the Conservatives have succeeded in getting the economy onto a more positive path which leaves us”—
the Labour party—
“very little place”.
Alison McGovern
I think the Chancellor gave himself away at the beginning of his speech when he described “long-term economic plan” as just a catchphrase. He said he would close the budget deficit and he has not. If his policies are such a success, why not?
Mr Osborne
It is not a catchphrase; it is a plan that has cut the claimant count in the hon. Lady’s constituency by 45%. That is a plan that is working. The budget deficit has been halved. If her argument is that we should be cutting faster or trying to get the deficit down faster, that is a novel argument because it is not one I remember being made at any one of the economic debates when she and the rest of the Labour party trooped through the Division Lobby against every single change we have made to try to bring the public finances under control.
Mr Osborne
I will give way to my hon. Friend the Member for Portsmouth North (Penny Mordaunt) who made an absolutely brilliant opening to this Queen’s Speech debate.
Penny Mordaunt (Portsmouth North) (Con)
I can understand why the shadow Chancellor does not want to congratulate those on the Government Front Bench. Does my right hon. Friend agree that the people in Portsmouth—those who have taken a risk and set up a business, and the 2,000 people who have got back into work—ought to be praised for their achievements rather than have them dismissed by the Labour party?
Mr Osborne
I completely agree with my hon. Friend. The progress being made in Portsmouth—the jobs created, the businesses set up and the support people get from their Member of Parliament—is an example of how the long-term economic plan is working for the people of Portsmouth, and how we need to go on working with that plan, rather than abandoning it.
The hon. Member for Wirral South (Alison McGovern) asked me what we can do to get the budget deficit down. I suspect that even the shadow Chancellor does not know. He tabled a motion today, although he did not speak to it. The cost of implementing it would be £14 billion. There is not a single measure in it that would reduce public spending or pay for that £14 billion price tag. It is completely incredible.
Mr Osborne
I will make a little progress and then give way.
That speaks to a broader point. The shadow Chancellor is not a naturally retiring type. He likes to get out there and meet people. He likes to go to supermarkets and shake people’s hands. The truth, however, is that he has gone quiet in recent months and we do not see him so much on the television or hear him on the radio. I think that is because he knows—or rather his party leadership knows—that they have lost the macro-economic argument. He is now losing the micro-economic argument within his own party. The Leader of the Opposition does not want to talk anymore about Labour’s spending and borrowing plans, because he knows they are very unpopular. Instead, there is a whole series of populist initiatives on price controls, incomes policies, bans on foreign investment, renationalisation, and wars on business and enterprise. The truth is that the shadow Chancellor actually spent a considerable period of time, in Opposition in the 1990s and then in office, trying to get his party to reject these kinds of things. He knows that they will lead to higher prices, lower incomes, less investment and fewer businesses.
In fact, the shadow Chancellor makes no secret, if we read between the lines of his speech today and his article in the New Statesman, of the fact that he is not in favour of trying to restrict the open economy, and that he values foreign investment coming into the country. The problem is that the message being given out by the leader of the Labour party is the complete opposite of that—it is in a completely different direction. He jumps on every single issue to make the argument, essentially, that we need a more closed economy and that there is a dangerous race to the bottom. The truth is that I think the shadow Chancellor and I agree that it would be a disaster for Britain to head down that route.
The shadow Chancellor has a macro-economic argument, which is that Britain should be borrowing and spending more, and, if necessary, increasing taxes to pay for it, but the Labour leader will not allow him to make that argument anymore, so he has gone completely silent. Normally, he is there right behind the leader of the Labour party, right behind his shoulder blades waiting to support him. Instead, he has learned a trick from his old friend the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown): when the Labour party is doing badly, losing by-elections and the like, stay quiet and disappear. That is what he has attempted to do in the past couple of months. The truth is that the threat that his economic approach represents—higher taxes, and borrowing that would destroy our public finances and push interest rates up—does not go away just because he goes away. That is the plan he would put into practice were he ever to walk through the doors of the Treasury again.
Mr Barry Sheerman (Huddersfield) (Lab/Co-op)
Before the Chancellor moves on, he was giving us a history lesson earlier but could we have some proper history? He was criticising the shadow Chancellor for the period when the Chancellor alleges things went wrong with the banks and lending. He himself, the present Chancellor, was urging less control and less regulation. Let us get that history right. Will the Chancellor address one issue: why is productivity failing to improve?
Mr Osborne
I agree with the hon. Gentleman that productivity is one of the challenges for the British economy. I have to say that if offered the choice in the early stages of a recovery between productivity improvements and increased job numbers, I would take increased job numbers because of the considerable human damage and the potential serious long-term economic damage that high unemployment can cause. I am enormously proud of the record of the British business community in creating those jobs, and of the people who have got those jobs and are holding them. I agree that we want to make our economy more productive. We do that by having an open economy where we welcome investment, support enterprise and support business. The Labour party’s policy proposals on prices, incomes, new restrictions on foreign investment, higher taxes on business and a higher corporation tax are all the wrong approach and would make our economy less productive.
Mr Osborne
I will give way to my hon. Friend the Member for North West Norfolk (Mr Bellingham) and then make some progress.
Mr Bellingham
Earlier my right hon. Friend mentioned Charles Clarke, who knows quite a lot about what is happening in Norfolk and will be aware that unemployment in my constituency has fallen by 660 over the last year. That is 660 families with jobs, a wage packet and hope for the future. Is my right hon. Friend aware that the vast majority of those jobs are either full time or in self-employment?
Mr Osborne
My hon. Friend is absolutely right: there has been a remarkable jobs story in Norfolk as well, supported by the economic investment we are putting into new roads in the county. I have spoken to the chamber of commerce there and seen its ideas for attracting more investment into King’s Lynn and other key centres, and I congratulate my hon. Friend on all he is doing to back business there.
Oliver Colvile (Plymouth, Sutton and Devonport) (Con)
Does my right hon. Friend accept that his economic strategy has seen unemployment in my constituency fall by 25% over the last four years? The Government’s decision to grant a city deal to Plymouth will create 10,000 new jobs by releasing some of the land in the dockyard.
Mr Osborne
My hon. Friend is absolutely right. The city deal, which he championed and urged on us, has a real prospect of bringing more investment and jobs to Plymouth. It is great news that work is being created in that great city and I congratulate him on all the local leadership he is showing there.
Mr Osborne
I will take one more intervention from a Labour Member and then make some progress.
Debbie Abrahams (Oldham East and Saddleworth) (Lab)
Before the Chancellor descends further into his self-congratulatory speech and quotes statistics about my constituency to me, will he confirm that the employment rate is still below pre-recession levels and that a third of the jobs in my constituency are below the living wage?
Mr Osborne
Well, yes, the employment rate is below what it was before the economy crashed and we had the deepest recession since the 1920s and ’30s, but the good news, as the hon. Lady will have noted, is that there has been a sharp rise in the employment rate in the last year—800,000 new jobs created. The employment rate now is very close to its pre-recession peak, so I would suggest that she should not make too many predictions on that front.
I am absolutely explicit that I want to get the employment rate up. I want to ensure that our schools are providing kids with the right skills, that we are creating more apprenticeships—one of the great success stories of this Government—and that we have more students coming out of our universities with the right graduate qualifications, so that we get our employment rate up even higher and achieve the goal of full employment in this country.
One of the risks that will face any economy—particularly one such as the United Kingdom’s, with a large number of financial services in it—is any risk from financial markets. As we begin to see the slow withdrawal of monetary stimulus here in the UK and in the United States, and with the eurozone heading in the other direction, we might expect to see an increase in market volatility. That is all the more reason why the financial markets in foreign currencies, commodities and fixed income should be fair and effective. Tonight at Mansion House and here in the House of Commons, I want to set out briefly the steps that the Governor of the Bank of England and I are taking.
We will bring forward enhanced criminal sanctions to punish and deter market abuse, but we will not opt into European rules, instead developing our own tough domestic powers. We will extend the senior managers regime proposed by the Parliamentary Commission on Banking Standards—so ably chaired by my hon. Friend the Member for Chichester (Mr Tyrie)—so that it covers the branches of foreign banks. We will also use the legislation we asked Parliament to pass in the wake of the LIBOR scandal to regulate further benchmarks in areas such as foreign exchange, fixed income and commodities. The new review that the Governor and I are establishing, chaired by the former deputy managing director of the International Monetary Fund, Minouche Shafik—now the deputy governor of the Bank of England—and involving the Treasury and the Financial Conduct Authority, will provide further recommendations.
Let me be absolutely clear: the integrity of the City matters to the economy of Britain. Markets here set the interest rates for people’s mortgages, the exchange rates for our exports and holidays, and the commodity prices for the goods we buy. We are going to deal with abuses, tackle the unacceptable behaviour of the few and ensure that markets are fair for the many who depend on them. We are not going to wait for more financial scandals to hit; instead we are going to act now and get ahead. We will take these steps to build resilience in our financial markets and our economy.
Mr Julian Brazier (Canterbury) (Con)
I greatly welcome those steps. Will my right hon. Friend reassure the House that enforcement will be based on simple principles of integrity and not create a climate of box-ticking of the kind that we saw with the now discredited Financial Services Authority, which was introduced by the last Government?
Mr Osborne
My hon. Friend is absolutely right that what we need in our regulation is the exercise of judgment, rather than just process. One of the biggest errors of judgment was the abolition of the Bank of England as an authority that would oversee systemic risks in our economy and monitor levels of debt, and the creation of the tripartite regime, which we have abolished.
One of the new features of the financial regulation landscape is the Financial Policy Committee, which is the group, independent of the Government, that looks at systemic financial risks, seeks to spot asset booms and has the tools to do something about them—something that, sadly, was completely lacking six or seven years ago. We have given the Financial Policy Committee far-reaching powers over capital ratios and mortgage standards, with powers to recommend limits on loans-to-income and even loans-to-value. That is the answer to the question about housing and the impact of housing debt on our financial system and families. I am clear that the Bank of England should not hesitate to use those powers, and any others we make available, should it see serious risks emerging in the housing market. That is a fundamental improvement in the resilience of the British economy.
I agree that we need more homes as well, and the changes to our planning system are now increasing housing supply. Planning permissions and starts are now at a six-year high. The fundamental answer to the challenge of the British housing market is to see more homes built. Frankly, I would ask the Labour party, which opposed the planning changes when they were introduced a couple of years ago, to reconsider its position and confirm that they will remain in place. And by the way, as the hon. Member for Bishop Auckland (Helen Goodman)—who I think sits on her party’s Front Bench—said that Labour should get rid of the Help to Buy scheme, let me tell her that it is helping families across the country, overwhelmingly outside the south-east of England, to buy homes that are well below the national average house price. I am proud that this Government are helping people with the aspiration of buying their own home and providing the support for families who can afford it to get on the housing ladder.
Ed Balls
May I ask for a clarification of what the Chancellor is announcing to the House today and at Mansion House later? He wrote to the Governor of the Bank of England setting the remit for the Financial Policy Committee as recently as March. The Governor of the Bank of England wrote back to the Chancellor with his comments on the remit on 31 March. Is the Chancellor now, a couple of months later, having to add to, revise or supplement that remit? Is that a reflection of the fact that there is widespread and growing concern, including in the Bank of England, that what is happening in the housing market is destabilising, and does he regret that he did not face up to these issues earlier?
Mr Osborne
What the remit that I sent to the Financial Policy Committee said is that we need to be vigilant about risks emerging in the housing market. Last week the IMF said very clearly that there is not a credit-fuelled boom today, but we need to be vigilant, and I completely agree with that. More than that, I have created—Parliament legislated for—the system of that vigilance. The Financial Policy Committee did not exist before this Government came to office; there was no such thing as the remit that the shadow Chancellor has just referred to. We have given the Financial Policy Committee tools to look at mortgage standards, alter capital ratios and make recommendations on loan-to-income ratios and loan-to-value ratios, and I am clear that it should not hesitate to use them if it judges that to be necessary. That message goes out loud and clear from this Dispatch Box and it will go out loud and clear at Mansion House tonight.
Mike Thornton (Eastleigh) (LD)
I wonder whether the Chancellor is aware that when I worked for Northern Rock, I used to visit Newcastle and we used to see members of the Financial Services Authority leaving the chief executive’s offices and thanking him for his advice on how to do their jobs.
Mr Osborne
My hon. Friend brings his experience to bear in the Chamber. Northern Rock was the epitome of what went wrong—the 125% mortgages. It is the important link between rising house prices and mortgages that families find unaffordable if prices fall or they lose work and the risks to the balance sheets of banks that came together in a toxic combination in 2007 and 2008. The Financial Policy Committee exists to make sure that we spot those risks in advance.
Mr Osborne
Let me make a little progress, as I know many Members want to speak. I want to cover a couple of the key legislative measures in the Queen’s Speech.
I hope that the Bill to support small businesses and enterprise will receive support from across the House, as it will help those small businesses with their exports, reduce tribunal delays and open up even more Government procurement to them. We are, of course, going to help smaller businesses—and indeed all businesses—by taking under-21-year-olds out of the jobs tax altogether. That is in stark contrast to the jobs tax plan that the Labour party is developing.
Then there is the tax-free childcare Bill—a really important measure to help hard-working families. In this Parliament, we have already extended the free nursery care available to parents of three and four-year-olds to 15 hours. From this September, 260,000 two-year-olds from low-income families will be eligible for free hours as well. Now we are taking another big step forward in helping working parents. Once we pass this new Bill, all families with children under 12 will, in effect, be able to get tax relief for their child care costs—up to £2,000 of help every year for every child. That is a huge boost to working families in this country, and this tax-free child care is affordable only because of the difficult decisions we have taken to bring the public finances under control.
Mr Andrew Love (Edmonton) (Lab/Co-op)
The Chancellor mentioned help to small businesses, but surely the help they really need is an increase in net lending to them from the banking sector, yet it is continuing to fall. How does the Chancellor explain that in the light of the funding for lending scheme, which simply does not appear to be working?
Mr Osborne
Funding for lending is now, of course, skewed away from mortgages—a decision taken by the Governor of the Bank of England and me before Christmas—precisely to start to apply some macro-prudential controls to the housing market. It is heavily skewed towards small business lending in order to address the issue of an impaired banking system, still deeply damaged by what went on six or seven years ago. The good news is that a huge amount of progress has been made since this debate last year and since last year’s Mansion House speech; we are undertaking a major restructuring of the Royal Bank of Scotland and, of course, starting to return Lloyds to the private sector. All of that will help make sure that our financial system is functioning properly and supporting businesses that want to grow and expand.
Mr Osborne
Let me make this final point before taking another intervention.
I want to conclude by mentioning a measure that the shadow Chancellor—or, indeed, the Leader of the Opposition, which is pretty revealing—did not mention at all. I refer to the pensions tax Bill, which will give people real choices about what they do with their defined contribution pension pots, and ensure that they get free and impartial guidance on those choices. We have spent the last three months in consultation, and I have met pension providers and many consumer groups. The consultation closed yesterday, and I will announce next month the details of how the freedoms and the guidance will work. We will set out the implications for defined benefit pensions, too.
We want an economy in which effort is rewarded and those who save are trusted with their pension savings in retirement. We will enshrine all this in law; it heralds a revolution in pensions based on this simple principle: “you earned it; you saved it; now you have control over your own money”. Because it is such a simple principle, because it involves trusting people and because that is popular with people, the Labour Opposition have not got a clue about how to respond to it. From the moment that the Leader of the Opposition rose to give his dismal, pre-scripted reply to the Budget, they have been completely pole-axed by it.
Mr Osborne
Perhaps the hon. Gentleman will tell me whether he will support this Bill in the Division Lobbies.
Ian Lucas
Unlike the right hon. Gentleman, I ran my own business in the 1980s, and I remember the pension mis-selling and how many people lost their life savings as a result of reckless Conservative legislation and a lack of proper advice. This is a very serious matter, so rather than taking cheap political pot shots, will the right hon. Gentleman tell me what exactly will be the nature of the advice given to people about their life savings before he asks them to spend it?
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I think that the Chancellor has got the message.
Mr Osborne
Well, Mr Deputy Speaker, that was the definition of a cheap political pot shot, and it rather sums up the tone of Labour Members’ approach. They started with a whole spiel about new politics and having to engage with the disenchanted, but after only a few minutes, it has swiftly deteriorated.
Mr Osborne
Let me directly answer the hon. Gentleman’s point and then I shall take a final intervention from the shadow Chancellor before winding up.
We are very clear that we want impartial and free guidance—face to face if people want it. We are talking to consumer groups such as Which?, Saga, and Citizens Advice about how to ensure that we deliver such free and impartial advice through the industry and consumer groups all working together.
Ed Balls
We have welcomed annuities reform and the introduction of collective pension vehicles. The test for us is whether the sums will add up, whether it will cost more, whether it will work in a fair and equitable way and whether the advice and guidance will be sufficient. I put it to the Chancellor that this may be something on which we could try to get a cross-party consensus in the long term rather than play politics.
Mr Osborne
I certainly hope, in the spirit of new politics, that there will be agreement across the House and that the Labour party will support our reforms. There was no agreement on this issue when we were in opposition. My hon. Friends who were Opposition MPs at the time—when, indeed, the right hon. Gentleman was a Treasury Minister—will remember that we tried time and again to get the Treasury to open up annuities and to remove the compulsory requirement to annuitise. We remember the private Member’s Bill proposed by David Curry—and my right hon. Friend the Member for Croydon South (Sir Richard Ottaway) was involved, too—attempting to achieve this objective, with the Conservative party turning up en masse to try to deliver it. We tried. If the shadow Chancellor is telling me that he has had a change of heart and supports this measure, I can say “all well and good”. Perhaps that will help to address the disillusionment of Labour supporters that he he mentioned earlier—[Interruption.] The shadow Chancellor ends like he started. He wanted to give us a big new thing about new politics, but he cannot resist trading the blows across the Chamber.
Mr Osborne
I would argue that the best way to address people’s disillusionment is to create an economy that works for people and grows jobs for people. I enjoyed the right hon. Gentleman’s tour d’horizon of the global economy, and I certainly agree that the Google self-drive car will be an important intervention—and he will probably be one of the first customers for it.
We passed a milestone this week when we learned that 2 million new jobs had been created by our economic plan. We saw new surveys this week showing Britain attracting investment from around the world. The IMF said we would have the fastest- growing major advanced economy in the world and confirmed that deficit reduction strategy at the heart of our approach is the anchor of stability. We saw again today that the shadow Chancellor and the Labour party would be a disaster for the British economy, with more borrowing, more spending, more taxes and a war on business. In this Queen’s Speech, we reject these disastrous policies. Instead, we deliver on the long-term economic plan that is turning Britain around and offers a brighter future for all. I urge the House to support the Queen’s Speech.
The Financial Secretary to the Treasury (Nicky Morgan)
This Queen’s Speech builds on the Government’s long-term plan to create a stronger economy and a fairer society. We have had a debate, but the hon. Member for Nottingham East (Chris Leslie) did not appear to want to talk much about Labour’s amendment and he certainly did not want to talk about Labour’s plan, if it has one, for the economy.
Let me go back to the beginning of the debate and pay tribute to my hon. Friends the Members for Portsmouth North (Penny Mordaunt) and for Mid Dorset and North Poole (Annette Brooke) for their eloquent, articulate and, it has to be said, hugely entertaining speeches last week. As they affirmed, it was the first time that female Members of Parliament had both proposed and seconded the Loyal Address, and it is an honour for me to close the proceedings on it tonight. That is especially true at a time when our country can boast more women in employment than ever and more women working full time than ever. Those statistics are of course part of a wider picture in which not only has overall employment reached its highest level ever, but unemployment has reached its lowest level in more than five years.
Let me turn to the speeches—I counted 37 of them—in today’s debate. We started with the contributions of three distinguished Members: the right hon. Member for Derby South (Margaret Beckett), my hon. Friend the Member for Aldershot (Sir Gerald Howarth) and the right hon. Member for Blackburn (Mr Straw).
My hon. Friend the Member for Gainsborough (Sir Edward Leigh) talked about Labour’s waste during office. He would know a lot about that as the former Chair of the Public Accounts Committee.
My hon. Friend the Member for South West Bedfordshire (Andrew Selous) talked about the amnesia of Opposition Members—we can see it in some of their faces today—and the problems that they left behind for this Government to deal with. He spoke about investing in infrastructure. I am sure that he will welcome the Infrastructure Bill that was announced in the Gracious Speech last week.
Oliver Colvile
Does my right hon. Friend recognise that it is incredibly important that there is investment in the south-west, including in our railways and roads? That is how growth will be delivered in the south-west and in my Plymouth constituency.
Nicky Morgan
I thank my hon. Friend. The Labour party did nothing for the south-west. He has been a doughty champion of investment in the south-west since his election in 2010. The Treasury and other Departments continue to look at road and rail projects, which will make a huge difference. Of course, we saw the speedy rebuilding of the railway line following this year’s floods, which caused such disruption to the south-west. We did not hang around talking about it; we got on and delivered the investment that was needed.
Mr Straw
If the right hon. Lady is so critical of the Labour Government’s record, will she explain why the Chancellor, when he was shadow Chancellor, made the commitment in an article in The Times on 3 September 2007 that a Government under him would endorse Labour’s spending plans for the following three years?
Nicky Morgan
I thank the right hon. Gentleman very much indeed for his question. Although I was not in the House at the time, my party warned the Labour Government about excessive borrowing and spending. It is frankly rather pathetic of Labour Members to say, not just in this debate but in many debates, “You didn’t warn us. You didn’t tell us that we weren’t doing the right thing.” They were in government at the time and they were running the country.
The right hon. Member for Oldham West and Royton (Mr Meacher) showed in his opening paragraph—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. I want to hear the Financial Secretary, but I am struggling. I am sure that Members want to hear the answers.
Nicky Morgan
The right hon. Member for Oldham West and Royton showed in his opening paragraph that he understands the Government’s economic policy perfectly. It is a shame that he did not stop there, because he summed up so beautifully all the Government’s achievements over the past four years.
My hon. Friend the Member for Montgomeryshire (Glyn Davies) talked about the dairy industry in his constituency, and I heard what he had to say.
The hon. Member for Eastleigh (Mike Thornton) talked about the increase in the personal allowance. His kind offer to advise the Treasury on the reform of stamp duty has been noted and I am sure that we will take note of what he has to say in the run-up to the next fiscal event.
The hon. Member for Huddersfield (Mr Sheerman) offered to write the Labour party manifesto for the next election. I wonder whether those on the Labour Front Bench were listening.
My hon. Friend the Member for Richmond Park (Zac Goldsmith) talked about recall, about which he is passionate. I suspect that there will be many debates on that issue in this House before the recall Bill is passed.
My hon. Friends the Members for Rugby (Mark Pawsey) and for Stroud (Neil Carmichael) talked about how the Government are delivering for manufacturing and rebalancing manufacturing. It is worth noting that manufacturing is expanding faster in the UK than in any other country in the G7.
The hon. Member for Birmingham, Erdington (Jack Dromey), whom I cannot see in his place, spoke of an era of discontent and disconnection. I agree with him. There is an era of discontent and disconnection in the Labour party—discontent with the leadership and disconnection from what this country needs to rebuild the economy.
My hon. Friend the Member for Halesowen and Rowley Regis (James Morris) talked about the Labour party’s promise to end boom and bust. He was right to say that it delivered only one half of that promise.
My hon. Friend the Member for Bury St Edmunds (Mr Ruffley) talked about trusting people with their pension savings.
The hon. Member for Redcar (Ian Swales) talked about the successes and investment in his constituency, and mentioned the Tees valley city deal. I am sure that all Members wish him and everybody who will sign it next week the best of luck.
The hon. Member for Coventry South (Mr Cunningham) talked about the 10p tax rate. He laid claim to the fact that the last Government introduced it. The last Government also got rid of it, which caused great unfairness to those who were being taxed at that rate.
The hon. Member for Bolton South East (Yasmin Qureshi) made a spending commitment of £1.9 billion, which only reminds us that the amendment would cost £14 billion.
The hon. Member for Liverpool, Wavertree (Luciana Berger) talked about zero-hours contracts. I think she said that 1.4 million people are on zero-hours contracts. In fact, the ONS estimates that there are 1.4 million zero-hours contracts and that 583,000 people are on them. She should be careful, because the ONS recently warned the shadow Business Secretary about his interpretation of those figures.
The hon. Member for Hartlepool (Mr Wright) gave an eloquent speech and demonstrated to all of us the dangers of someone turning up at a local party meeting and saying, “I want to get involved.” Many years later, they find themselves here on the green Benches—we have all been there.
Many hon. Members made points about the cost of living. Of course the Government want to see rising living standards for households up and down the country, and we have helped households by freezing fuel duty and council tax, taking money off energy bills, capping rail fares and introducing free school meals. However, the best way to improve living standards is to stick to our long-term economic plan to improve productivity, get as many people in work as possible and ensure that they take home as much of their pay as possible.
As the House will know, we have already made real progress on that front, but this Queen’s Speech introduces measures that will further increase employment. It offers tax-free child care, which will make a return to work more financially viable for thousands of mothers and fathers and, for the first time, help those who are self-employed or setting up businesses. It offers a small business Bill, which will make it easier to establish and grow small businesses, and an Infrastructure Bill that will help businesses both large and small by creating the transport and digital networks that they will need to thrive in the long term. All those steps will help our businesses get more people into work, which will support our households and grow our economy.
Nicky Morgan
I cannot take any more interventions. [Interruption.] The hon. Gentleman has had plenty of time to make his arguments, but let us see how we get on. First, I want to respond to the points that hon. Members made about housing.
Of course we recognise that in some parts of the country, people are worried about house price rises over the past year. However, I point out, first, that real house prices are still below their pre-crisis peak; secondly, that the Government are committed to a number of new building schemes to increase housing supply, including the new garden city at Ebbsfleet; and thirdly, that through the Help to Buy scheme we are helping thousands of people who earn enough for a mortgage but are struggling to raise a deposit. The official statistics released last week show that Help to Buy is opening up home ownership to thousands across the country, with more than 94% of all completions outside London and more than 85% by first-time buyers. To the Opposition Member who dismissed the “stupid” Help to Buy scheme, I say that that is an attack on aspiration and on everybody who wants to own their own home.
Fourthly, I point out that the Financial Policy Committee is in a position to step in if it thinks we are seeing a return to unsustainable lending levels. We are monitoring the situation and taking action, and we are ready to take further action if we believe it has become necessary.
Chris Leslie
I thank the Minister; we do have a little bit of time left. Does the Minister believe that people in this country will be better off at the time of the general election in 2015 than they were at the time of the last general election? Does she agree with the IFS that they will not be?
Nicky Morgan
The whole country will be better off, because we are fixing the economy, getting more people into work and seeing wage levels going up and the inflation rate falling. If the hon. Gentleman was waiting to ask that question, he could have asked it during many other speeches this afternoon. He will have to do better than that next time.
It is worth noting that the hon. Gentleman gave a speech recently on efficiency savings, but no savings were identified. He listed a lot of ways to spend money, instead—£21,000 on keeping a police station open; the restoration of the spare room subsidy; the jobs guarantee for young people, which as we have heard today is a £1.4 billion commitment; a house building programme; and a British investment bank. The Government will not take lectures on how to run the economy.
This Queen’s Speech proves that this Government are just as radical in our fifth year as we were in our first. There were more Bills in this year’s Gracious Speech than there were in the last Government’s final Session, and they are serious Bills tackling serious issues—pensions, infrastructure, small business, child care payments, serious crime, modern slavery, the armed forces, social action and heroism, national insurance contributions and the recall of Members of Parliament.
This Queen’s Speech will be one further crucial step in the Government’s long-term economic plan. It will help those who want to work but are put off by child care costs, and those who are forced to work by the despicable practice of traffickers and slave masters. It will help small businesses access finance and savers access their pensions, and most importantly, it will keep employment rising and the deficit falling. That is why we reject the Opposition’s amendments and why I commend the Gracious Speech wholeheartedly to the House.
Question put, That the amendment be made.