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Oral Answers to Questions
(7 years, 1 month ago)
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Stuart C. McDonald (Cumbernauld, Kilsyth and Kirkintilloch East) (SNP)
The Secretary of State for Wales (Alun Cairns)
I encourage the whole House to recognise that today is International Women’s Day. Events are taking place here in Parliament and across government.
I have regular discussions with the Secretary of State for Exiting the European Union to ensure that our exit from the EU is a success. As members of the European Union Exit and Trade Cabinet Committee and the Joint Ministerial Committee (EU Negotiations), we are committed to working closely with the devolved Administrations to ensure that exiting the EU has a fair and strong outcome.
Stuart C. McDonald
I join the Secretary of State in welcoming International Women’s Day.
At yesterday’s sitting of the Exiting the EU Committee, the Welsh Finance Secretary, Mark Drakeford, voiced concerns about the UK Government using Brexit to grab new powers over such things as farming and fishing, which should without question go directly to Cardiff and Edinburgh under the existing devolution settlements. Can the Secretary of State give a cast-iron guarantee that there will be no such attempt to undermine and row back on devolution?
Alun Cairns
We have already said that no decisions currently taken by the devolved Administrations will be removed from them. We will use the return of decision making from Europe back to the UK to strengthen devolution and the Union.
Sir Edward Leigh (Gainsborough) (Con)
On behalf of the people of Wales, will my right hon. Friend tell the Secretary of State for Exiting the European Union that nobody—not the unelected House of Lords or anybody else—is going to stand in the way of the will of the Welsh people to have their freedom?
Alun Cairns
My hon. Friend reminds us that Wales voted to leave the European Union at the recent referendum. There is an obligation on the Government and on both Houses of Parliament to accept its outcome.
Nick Smith (Blaenau Gwent) (Lab)
Alun Cairns
I will happily meet the hon. Gentleman, although I do not necessarily recognise his message about our approach to Brexit—we want a deal that works for every part of the United Kingdom.
I am sure that the hon. Gentleman would welcome the fact that unemployment across Wales is lower than the UK average, which is remarkable considering the industrial heritage of constituencies in Wales such as the hon. Gentleman’s. I will happily work with him on the issues he raises in connection with the Department for Work and Pensions.
Jonathan Edwards (Carmarthen East and Dinefwr) (PC)
In his evidence to the Brexit Select Committee yesterday, Cabinet Secretary Mark Drakeford also said that the Welsh Government were, disgracefully, not made aware of the UK Government’s 12-point Brexit plan or their White Paper. What is the Secretary of State doing to ensure that the Plaid Cymru-Welsh Government Brexit White Paper is fed into the article 50 letter and accompanying documents?
Alun Cairns
The Welsh Government’s White Paper on exiting the European Union was considered by the Joint Ministerial Committee at the end of February, and we have a significant amount of common ground. The Welsh Government talk about “unfettered access”, while my right hon. Friend the Prime Minister has talked about “frictionless” access and trade. We can work on the basis of a lot of common ground, and I am optimistic that we will continue to work in a positive environment with the Welsh Government and the other devolved Administrations to secure a Brexit deal that works for every part of the United Kingdom.
Ian C. Lucas (Wrexham) (Lab)
The Parliamentary Under-Secretary of State for Wales (Guto Bebb)
My right hon. Friend the Secretary of State and I hold regular discussions with colleagues from across Government to champion the people and businesses of north Wales. Our commitment to north Wales is demonstrated by the Government’s £212 million investment in HMP Berwyn, and we have opened the door to a north Wales growth deal further to strengthen the region’s economy.
Ian C. Lucas
The Mersey Dee Alliance meets tomorrow in Wrexham at Glyndwr University. It has presented a coherent and effective transport plan for improving links between north Wales and the rest of the country. Will the Government give us not just warm words, but a financial commitment to north Wales to match the investment put in by the Welsh Government?
Guto Bebb
The hon. Gentleman knows that the plans that he supports for better connectivity between north Wales and the north-west of England are also strongly supported by the Wales Office. The proposals made by stakeholders in north Wales are being given serious consideration, but I would not want to prejudge any financial decision made by other Departments here in Westminster.
Dr James Davies (Vale of Clwyd) (Con)
Is the Minister aware of significant concerns among local authorities covering north Wales, west Cheshire, east Cheshire, Warrington and other areas abut the inadequacy of the current proposals for the HS2 station at Crewe, in terms of both line routeing and platform and junction arrangements? Will he undertake to represent those concerns at the highest level to ensure that a fit-for-purpose Crewe hub station can bring regional connectivity and economic benefits?
Guto Bebb
I pay tribute to my hon. Friend for his work in respect of the importance of connectivity between north Wales and the north-west of England, as well as more widely. He is clearly aware of the potential of HS2 to open the door to better connectivity. I recognise his concern about the Crewe hub. We are discussing the issue at a ministerial level, but I would be delighted to meet him to discuss it further at any point.
Albert Owen (Ynys Môn) (Lab)
I look forward to welcoming the Secretary of State to my constituency tomorrow so that he can see the importance of connectivity between Wales, Ireland and the rest of the United Kingdom. On the broadband universal service obligation, has the Minister made the case to other Departments for finance to roll out superfast broadband to the extra 5%?
Guto Bebb
The hon. Gentleman is well known for championing Anglesey. I thoroughly agree with him about the importance of connectivity, both digital and by road and rail. The Wales Office is continually making the case for a scheme to ensure that the whole UK is well served by digital connectivity as we exit the European Union.
Chris Davies (Brecon and Radnorshire) (Con)
Given the interconnective nature of the Wales-England border to constituencies such as mine, does my hon. Friend agree that collaboration between local leaders and industry is essential for people living on the borders?
Liz Saville Roberts (Dwyfor Meirionnydd) (PC)
Guto Bebb
The hon. Lady highlights an issue that is in the news today. It should be emphasised that the Swansea Bay region city deal has a bottom-up agenda. Lord Heseltine did contribute significant expertise during a challenge session, and I am confident that we will have a city deal for the region, followed by further growth deals for Wales as a result of the Government’s work to ensure that Wales benefits from investment in the same way as any other part of the United Kingdom.
Alison McGovern (Wirral South) (Lab)
May I bring the Minister back to north Wales and raise the issue of its connectivity through my constituency? In his response to my hon. Friend the Member for Wrexham (Ian C. Lucas), he seemed to pass the buck to another part of the Government, and that is not good enough. Will he ensure that the Government and their silos do not restrict connectivity between Wales and English cities, and will he arrange a cross-governmental meeting with Members of Parliament who want more investment in the connection between north Wales and Merseyside?
Guto Bebb
As a north Wales Member, I am very happy to be brought back to north Wales—that is nothing other than a pleasure.
The Government are moving ahead with a cross-border growth deal that will benefit north Wales and the north-west of England. The aim is to improve connectivity between north Wales and the cities of Liverpool and Manchester. I am proud of the fact that 57 trains a week now travel from my constituency to Manchester, but we need more of that to improve the economies of north Wales and the north-west of England.
Christina Rees (Neath) (Lab/Co-op)
I wish a happy International Women’s Day to all the women in the world, especially my daughter, Angharad, who has been my inspiration.
Last week, Economy and Infrastructure Minister Ken Skates launched “Moving North Wales Forward”, the Welsh Government’s “Vision for North Wales and the North East Wales Metro”. When will the Minister launch his vision for north Wales?
Guto Bebb
I welcome the hon. Lady to her post, and I am delighted to respond to her question on International Women’s Day. However, I am disappointed that the Welsh Government’s “Vision for North Wales” seems to be a vision for north-east Wales. The Department and the Government have a vision of connectivity throughout north Wales.
Henry Smith (Crawley) (Con)
The Parliamentary Under-Secretary of State for Wales (Guto Bebb)
I was delighted that, on St David’s day, the House resolved that the use of Welsh be permitted in parliamentary proceedings of Select Committees and of the Welsh Grand Committee held in both Wales and here at Westminster. That is just one example of the work that we are doing to promote the Welsh language throughout the UK.
Henry Smith
I might represent an English constituency, but I am also proud of my Welsh ancestry. Does the Minister welcome the increased viewing figures for S4C in England?
Guto Bebb
My hon. Friend makes an important point. It was highlighted to me at a recent reception in the Wales Office that since the partnership between S4C and the BBC has seen S4C programmes being available on the iPlayer, the largest area of S4C viewing figure growth has been in England—a 25% rise over the last year alone. This must be welcomed by everybody who cares about the Welsh language and culture.
Mr David Hanson (Delyn) (Lab)
The funding last year for S4C was £6.7 million; the funding for next year is £6.1 million. How does that square with the manifesto commitment that the Minister stood on in 2015 to protect funding for S4C?
Guto Bebb
The right hon. Gentleman will be aware that the commitment was that the funding for S4C would be frozen until after the delivery of a review of S4C, and I am quite certain that there will be an announcement that the funding will be frozen until after the review has taken place.
Michael Fabricant (Lichfield) (Con)
I proudly served on the Bill Committee that considered the Welsh Language Act 1993, during the John Major Government, so I am fully in favour of the use of the Welsh language, but may we have some consistency in Wales on road signs? In some areas Welsh is first followed by English; in other areas it is vice versa—that does make life complicated.
Guto Bebb
I think that the whole House is aware of my hon. Friend’s commitment to and support for Wales—and certainly his support for Welsh questions. He makes an interesting point, but with road signs in Wales it is very much a case of localism—this is a devolved issue. If a local authority wants Welsh first, Welsh is first, but if an authority, because of the linguistic nature of the area, prefers to have English first, it can choose to do so.
Mr Mark Williams (Ceredigion) (LD)
May I press the Minister a bit further? He says that he is “quite certain” that a positive announcement will be made, but can he guarantee that the freeze will be carried on until the review of S4C is concluded? S4C does marvellous work not only in Wales but across the world, and it needs the reassurance that its funding will be frozen again.
Guto Bebb
The hon. Gentleman is well known for his support for S4C and the Welsh language, but I have stated very clearly that this Department is committed to ensuring that that manifesto commitment is delivered. More importantly, we need a long-term agreement on the future of S4C, and the whole point of this review is to ensure that S4C not only has a decent financial situation for this year, but is on a strong footing for the future.
Paul Flynn (Newport West) (Lab)
This institution has spent four centuries disrespecting the Welsh language, which existed and was a sophisticated literary language for 1,000 years before English existed, so we pay tribute to the late Wyn Roberts and my hon. Friend the Member for Clwyd South (Susan Elan Jones) for this step forward now: “O bydded i’r hen iaith barhau.”
Mr Speaker
Order. I say to the hon. Gentleman that the deployment of another language should in all courtesy be immediately followed by a translation for those who would benefit from it—but the hon. Gentleman can save that delight up for us for another occasion.
Guto Bebb
The hon. Gentleman finished his comments by saying, “Long may the language live,” and I subscribe to that viewpoint. I am very grateful to him for highlighting the work of my predecessor Lord Roberts of Conwy in relation to the Welsh Language Act 1993 and Welsh language education. The fact of the matter is that the Welsh language is no longer a political football, and it should never be a political football again. We need to support it in all parties across Wales.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
All in the Scottish National party support the Welsh language and Sianel Pedwar Cymru—S4C. Will the Minister use his good offices to reciprocate the good wishes of the SNP and urge the BBC to fund BBC Alba to the same levels as Sianel Pedwar Cymru so that we have the same support for Welsh and Gaelic across the UK, as they rightfully should have?
Guto Bebb
I have a very fond recollection of a holiday on the isle of Barra when I was 10 years old where I heard Scots-Gaelic being spoken in the streets. I understand that an increase of £1 million for BBC Alba has been announced, which is to be welcomed, and I would say that people in Scotland want to support that language in Scotland in the same way as people in Wales want to support the Welsh language.
Charlie Elphicke (Dover) (Con)
The Secretary of State for Wales (Alun Cairns)
Wales is an exporting nation. Welsh lamb, Penderyn whisky and Anglesey sea salt are all known well beyond our own borders, but we can do more. On Monday I hosted a business export summit in Cardiff to ensure that businesses in Wales have full access to UK Government business support for exports.
Charlie Elphicke
What steps is the Secretary of State taking to engage with and understand the needs of smaller businesses in Wales as we negotiate to leave the European Union?
Alun Cairns
My hon. Friend recognises this Government’s global trading ambition. There are 1,200 staff in the Department for International Trade, across 109 countries. Any businesses based in Swansea are as entitled to the same sort of support as businesses based in Swindon, and I encourage them to use the Department for International Trade.
Geraint Davies (Swansea West) (Lab/Co-op)
Some 44% of trade goes to the EU, but the amount from Wales is 70%. Last week in Swansea, the CBI and producers told me that it is imperative that we retain access to the single market and the customs union. The people of Wales did not vote to leave them. Will the Secretary of State assure us that he will do everything he can to keep that going so that our exports are free to continue?
Alun Cairns
I remind the hon. Gentleman that on Monday I held an event to promote exports to not only Europe but all parts of the globe. Clearly there are great opportunities, and last year 4,000 Welsh companies took their first steps towards exporting. Europe is an important market. We want frictionless trade with Europe, and we also want to look to the great opportunities that exiting the European Union will bring to not only Welsh businesses but businesses across the whole United Kingdom. [Interruption.]
Mr Speaker
Order. An excessive number of rather noisy private conversations are taking place. I understand the sense of anticipation, but it is very unfair on Members asking questions and the Minister answering. Let us have a decent audience for Mr Stephen Crabb.
Stephen Crabb (Preseli Pembrokeshire) (Con)
Despite Wales having world-leading companies that contribute to humanitarian efforts in some of the poorest nations on earth, no Welsh company has been able to secure a contract with the Department for International Development. Will my right hon. Friend look into that and work with the excellent International Development Secretary to make DFID not only more pro-business, but more pro-Welsh business?
Alun Cairns
My right hon. Friend raises an extremely important point. Not only has he been a strong champion for Wales over many years, but he has shown a strong interest in overseas development. I will happily work with him and my right hon. Friend the International Development Secretary on overseas aid to ensure that Welsh businesses get the same opportunity as any other UK business to win contracts to help to support and develop those nations.
Christina Rees (Neath) (Lab/Co-op)
At a St David’s day celebration, Wales’s First Minister, Carwyn Jones, declared that Wales is open for business. Last week he spent four days in America, boosting post-Brexit trade between the USA and Wales. Does the Secretary of State plan to visit the USA and recruit more business for Wales?
Alun Cairns
May I welcome the hon. Lady to the Dispatch Box for her first Welsh questions? Last week GE Aviation announced a £20 million investment in Nantgarw. The UK and Welsh Governments worked together to land that significant employment opportunity, which will secure 1,200 jobs for more than two decades. My right hon. Friend the Secretary of State for International Trade always rightly underlines that every business in Wales is entitled to the same support as any business in England, and I am working closely with him on not only that but trade missions.
Nick Thomas-Symonds (Torfaen) (Lab)
The Secretary of State for Wales (Alun Cairns)
I recently met the unions. Following the positive outcome of the recent ballot, it is now vital that all parties work together to deliver the agreed proposals. We will continue to engage with the sector, as well as with the unions, the devolved nations and other partners, as we seek to find a long-term viable solution for the industry.
Nick Thomas-Symonds
The International Trade Secretary is said to have stated that the Government should ignore those who argue for protection. Will the Welsh Secretary agree to argue for a proper trade defence mechanism for steel, if that is what is required?
Alun Cairns
I hope that the hon. Gentleman will look to this Government’s positive record, in spite of the scaremongering of many Opposition Members. There are already 41 trade defence measures in place and the outcomes speak for themselves. Rebar coming into the European Union has reduced by 99%, as has wire rod—the statistics speak for themselves. This Government are determined to take the right action to support not only free trade but Welsh and UK businesses and industry.
Bob Blackman (Harrow East) (Con)
Will my right hon. Friend update the House on what action has been taken to ensure that Welsh steel is used in British procurements across the UK?
Alun Cairns
My hon. Friend is absolutely right to suggest that significant steps have been taken since 12 months ago when the crisis broke. Energy-intensive industry support has meant that £134 million has now been paid to the steel sector, and I have already mentioned the fact that 41 trade defence measures are in place. We have also introduced flexibility over EU emissions regulations. We are determined to ensure that everything will be done to make the steel industry sustainable over the longer term.
Gerald Jones (Merthyr Tydfil and Rhymney) (Lab)
There has been much discussion in the past week about the automotive industry, particularly about Ford in Bridgend and the acquisition of Vauxhall by PSA, which are of major importance in south Wales and north Wales respectively. The presence of a domestic steel industry is key to our automotive industry, so will the Minister tell us what discussions he has had with his Cabinet colleagues about the automotive and steel industries and what assurances he can give to both industries about the Government’s commitment to their sustainability?
Alun Cairns
My right hon. Friend the Secretary of State for Business, Energy and Industrial Strategy and I are in regular communication, not only about steel but about the automotive sector. Although Ellesmere Port is not in Wales, there are clearly a significant number of Welsh employees in the workforce there. I hope that the hon. Gentleman will take encouragement from major investments such as that being made by Nissan in Sunderland. There are 100 automotive component industries based in Wales that will have access to those contracts—
Chris Bryant (Rhondda) (Lab)
The Parliamentary Under-Secretary of State for Wales (Guto Bebb)
The Government have confirmed their commitment to contribute £125 million to the Cardiff city deal, which will provide an investment fund for the region and support for the electrification of the valleys lines. The project has the potential to broaden employment opportunities for those living in some of Wales’s most deprived communities and to act as a significant incentive for business investment. The scope, planning and delivery of electrification are matters for the Welsh Government.
Chris Bryant
That is a pitiful answer. It does not answer the question at all. The former Secretary of State for Transport, the right hon. Member for Derbyshire Dales (Sir Patrick McLoughlin), who is talking to the present Secretary of State for Transport, told the House in October 2012 that the project would be finished by May 2015, but it has not even started. When will the Minister ensure that my constituents get the proper service that they require, with clean trains, disabled access, proper toilets and services that do not break down?
Mr Speaker
Order. There is far too much noise in the Chamber. One cannot fail to hear the hon. Member for Rhondda (Chris Bryant), but I want to hear the Minister’s reply.
Guto Bebb
It would appear that the hon. Gentleman does not understand the way devolution works. The city deal has been agreed with the Welsh Government, and the scope, planning and delivery of electrification are matters for the Welsh Government. I advise him to speak to his colleagues in the Welsh Labour Government.
Byron Davies (Gower) (Con)
With the arrival of electrification in south Wales and the Government’s investment in the new bimodal trains, which have been greatly welcomed in my constituency, we need the correct infrastructure to ensure that people in south-west Wales can benefit. This could be realised by the creation of a Parkway station at Swansea. Will the Minister meet me to discuss this, please?
Guto Bebb
I congratulate my hon. Friend on the work he is doing to ensure that south-west Wales also benefits from the electrification of the Great Western main line. I would be delighted to meet him to discuss the proposals for a Swansea Parkway station, which would be a huge boost for that city as it moves towards a city deal.
Patrick Grady (Glasgow North) (SNP)
The Secretary of State for Wales (Alun Cairns)
The White Paper, “Securing Wales’ Future”, was presented to the Joint Ministerial Committee on EU negotiations in late February, and we are discussing the detailed proposals with the Welsh Government.
Patrick Grady
Does the Minister realise that there is a difference between discussing a paper and taking action on it? When are the devolved Governments going to have any tangible action taken on their Brexit strategies; or are the devolved Assemblies not going to be part of empire 2.0 and instead be left with the scraps from the table?
Alun Cairns
I hope the hon. Gentleman will recognise that there is a significant amount of common ground between the Welsh Government’s paper and the 12 principles that my right hon. Friend the Prime Minister has outlined. This Government are determined to deliver a deal that works for every part of the United Kingdom. We have already said that no decisions currently taken by the devolved Administrations will be removed from them and that we will use the return of powers from Europe to the United Kingdom to strengthen devolution and the Union of the United Kingdom.
Hywel Williams (Arfon) (PC)
Over 5,000 EU students study in Wales and over 1,300 EU academics teach and do research, greatly adding to our national wellbeing. The Welsh Government’s EU White Paper makes it clear that their position must be secured. Why will the Secretary of State’s Government not adopt that elementary piece of economic good sense?
Alun Cairns
My right hon. Friend the Prime Minister and others have said that we want to seek the earliest agreement to secure the status of EU nationals living in the UK and of UK nationals living in the EU. It is not in our interests to undermine any one sector. We would like to press for an early agreement, but it takes two people to come to an agreement.
Hywel Williams
Today, on International Women’s Day, my constituent Shiromini Satkunarajah will be studying for her final exams in electrical engineering. She is likely to get a first in her field, in which there is a world shortage of qualified people, women in particular. Had this Government had their way, she would have been deported last week. How would her deportation have steadied the Chancellor’s dodgy post-Brexit spreadsheet?
Alun Cairns
The hon. Gentleman will know that we do not comment on individual cases, but he will know the detail and the latest situation. I hope that he will recognise, on International Women’s Day, that no other nation across the European Union has lower unemployment among women than Wales.
Mrs Sheryll Murray (South East Cornwall) (Con)
The Prime Minister (Mrs Theresa May)
I am sure that Members across the House will wish to join me in marking International Women’s Day, as we celebrate the social, economic, cultural and political achievements of women both here and around the world. We are also redoubling our efforts to tackle the problems that women all too often still face.
This morning, I had meetings with ministerial colleagues and others. In addition to my duties in this House, I shall have further such meetings later today.
Mrs Murray
I join the Prime Minister in celebrating International Women’s Day. Since 2010, Conservatives in government have a proud record of protecting and supporting both the victims and those at risk of domestic violence and abuse. I saw that myself when I visited my local police, and I thank them for the difficult job that they do. The evil is that far too many women are still at risk and are still suffering. What more can the Prime Minister do to tackle this abhorrent crime?
The Prime Minister
My hon. Friend raises a serious issue. It is one in which I have taken a particular personal interest, and I attach great importance to the issue. Tackling domestic violence and abuse is a key priority for the Government. What we have already done in government has the potential to transform the way in which we think about and tackle these terrible crimes when they take place. We have already committed to bringing forward new legislation, and I have confirmed today an additional £20 million to support organisations working to tackle domestic violence and abuse. This means that the total funding available for our strategy to end violence against women and girls will be over £100 million in this Parliament.
Jeremy Corbyn (Islington North) (Lab)
May I start by wishing all women a very happy International Women’s Day today? I am proud that the Labour party has more women MPs than all other parties in this House combined and a shadow Cabinet of which half the members are women.
A month ago, I raised the question of the leaked texts between the leader of Surrey County Council and Government officials about social care. The Prime Minister’s response was to accuse me of peddling “alternative facts”. Will she explain the difference between a sweetheart deal and a gentleman’s agreement?
The Prime Minister
First, the right hon. Gentleman references women in this House, and I point out to him that, actually, the Conservative party has recently taken a further measure in relation to women in this House by replacing a Labour male MP with a female Conservative.
The right hon. Gentleman asks about the issue in relation to Surrey County Council. The substance of what he asks is whether there has been a particular deal with Surrey County Council that is not available to other councils, and the answer is no. As I have said before, the ability to raise a social care precept of 3% is available to every council. The ability to retain 100% of business rates will be available to a number of councils in April. Let us look at them: Liverpool, Manchester and London. What do we know about those councils? They are all under Labour control. So what he is actually asking me is why a Conservative council should have access to an arrangement that is predominantly currently available to Labour councils.
Jeremy Corbyn
My question was about the arrangement between the Government and Surrey County Council. A recording has now emerged showing that the leader of Surrey County Council, David Hodge, said that there was a “gentleman’s agreement” between him and the Government that meant that the council would not have to go ahead with a referendum. My question is: what deal was done with Surrey County Council? There is an acute social care crisis affecting every council, with £4.6 billion of cuts made to social care since 2010. Can the Prime Minister tell every other council in England what gentleman’s agreement is available for them?
The Prime Minister
On today of all days, if the right hon. Gentleman could just be a little patient and wait half an hour for the Budget, he will find out what social care funding is available to all councils. If he is asking me whether there was a special deal for Surrey that was not available to other councils, the answer is no. If he is looking to uncover a conspiracy, I suggest he look behind him.
Jeremy Corbyn
If all the arrangements are so clear and above board, will the Prime Minister place in the Library of the House a record of all one-to-one meetings between the Secretary of State for Communities and Local Government and the Chancellor and any council leader or chair of social services anywhere in England? If there is no special deal, can she explain why Surrey is the only county council to be allowed into the business rates retention pilot when it has been denied to others?
The Prime Minister
The business rates retention pilot will come into force for a number of councils this April, and that includes, as I have already said, Liverpool, Greater Manchester, Greater London and others. In 2019-20, it will be available to 100% of councils. Councils will be able to apply to be part of a further pilot in 2018-19, and that goes for all councils across the country.
Jeremy Corbyn
The text said that there was a memorandum of understanding, and the Prime Minister said that there was no deal. She is now unclear about that. Did she actually know what arrangement was made with Surrey County Council? She is not keen to answer questions about that.
There is another area of deep concern across the whole country. Can the Prime Minister tell us how many new school places will be needed by 2020?
The Prime Minister
The right hon. Gentleman really should listen to the answers I give before he asks the next question. He said I did not answer the question about a special deal for Surrey; I think that I have now answered it three times, but I shall do it a fourth time: there was no special deal for Surrey that was not available to other councils.
Jeremy Corbyn
The Prime Minister was also asked just a moment ago about the number of new school places needed by 2020. Perhaps she could explain why we have a crisis in school places and class sizes are soaring, thanks to her Government. What is the answer on the number of new school places needed, Prime Minister?
The Prime Minister
This Government have a policy that is about not only increasing the number of school places but doing more than that. I want to increase the number of good school places, so that every child has an opportunity to go to a good school. That is what the money we are putting into education is about. It includes money for new free schools, which will be faith schools, university schools, comprehensives, grammar schools and maths schools. There will be a diversity, because what I want is a good school place for every child and for parents to have a choice. What the right hon. Gentleman wants is for parents to take what they are given, good or bad.
Jeremy Corbyn
The National Audit Office tells us that a very large number of new school places are needed—420,000. Nothing the Prime Minister has said gets anywhere near to that. Instead, she proposes a flagship scheme to build the wrong schools in the wrong places, spending millions on vanity projects such as grammar schools and free schools, while at the same time per-pupil funding is falling in real terms. Is it not time that this colossal waste of money was addressed? It is doing nothing to help the vast majority of children and nothing to solve the crisis of school places and soaring class sizes. That is what every parent wants, not vanity projects from her Government.
The Prime Minister
It is no vanity project to want every child to have a good school place. The majority of free schools that have been opened have been in areas where there is a need for school places, and the majority have been opened in areas of disadvantage, where they are helping the very children we want to see have the opportunity to get on in life. I have to say to the right hon. Gentleman that this is about a fairer society. On this Budget day, we see that we are securing the economy; Labour wants to weaken it. We are working for a fairer society; Labour opposes every single reform. We are fighting for the best deal for Britain; Labour Members are fighting among themselves. That is Labour: weak, divided and unfit to govern this great country.
Maggie Throup (Erewash) (Con)
The Prime Minister
My hon. Friend has raised an important issue. I assure her that the NHS wants to continue to build on the successes of the current stroke strategy. We all recognise that there have been huge improvements in stroke care over the past decade, and we want to deliver our ambition for truly world-leading care. On the particular treatment to which she refers, I understand that the NHS has already approved the use of mechanical clot retrieval in specific cases. The NHS rigorously audits the quality of stroke care throughout the country, so that we can ensure we are delivering on our commitments. We have some of the fastest improvements in hospital recovery rate for strokes and heart attacks in Europe.
Angus Robertson (Moray) (SNP)
On International Women’s Day, we wish all campaigners for equality well, including those from the Women Against State Pension Inequality Campaign. The cross-party Brexit Committee has recommended that the UK must guarantee the status of EU nationals living in the UK and act unilaterally, if necessary. The Committee went on to say:
“The current process for consideration of permanent residency applications is not fit for purpose and, in the absence of any concrete resolution to relieve the anxiety felt by the estimated three million EU citizens resident in the UK, it is untenable to continue with the system as it stands.”
Given the massive positive contribution that European nationals make to this country, what concrete plans does the Prime Minister have to deal with this matter?
The Prime Minister
As the right hon. Gentleman knows, we want to have an early agreement that will enable us to guarantee the status of EU citizens living in the UK, but also we need to guarantee the status of UK citizens living in the European Union. On the process of application, the Home Office is looking at that and at how it can improve the systems and simplify them, which it regularly does.
Angus Robertson
Since 2010, the Home Office has seen its full-time equivalent staff cut by 10%, so, at current rates of processing applications for permanent residency, it would take the Home Office more than 50 years to deal with 3.2 million European nationals living in the UK. That is clearly totally and utterly unacceptable. Will the Prime Minister tell us how quickly she hopes to be able to guarantee all European nationals permanent residency?
The Prime Minister
The right hon. Gentleman cannot just stand up and say that because the Home Office is getting more efficient, it will take longer for answers to be given. Yes, the Home Office is getting more efficient at dealing with these things. I do not know whether he has ever heard about technology, but these days people apply online and they are dealt with online.
Chris Green (Bolton West) (Con)
The Prime Minister
Again, this is a very serious issue that my hon. Friend has raised. The Government are taking a comprehensive approach to tackling terrorism and violent extremism at source, but also, through our counter-extremism strategy, we are looking at extremism more widely. We want to defeat not just terrorism and violent extremism but extremism wherever it occurs. We will shortly be publishing a new counter-terrorism strategy. In the coming months, we will be responding to Dame Louise Casey’s report on integration. That is backed up by additional investment in our security and intelligence agencies—£2.5 billion over five years—and I am clear that the Government are doing everything they can to tackle issues around integration, extremism and terrorism.
Tracy Brabin (Batley and Spen) (Lab)
The Prime Minister
May I first congratulate the hon. Lady on securing a Westminster Hall debate on this important topic? At the end of her question, she refers to the issue of payments. I am sure she realises that the vaccine damage payment scheme is not a compensation scheme, but a one-off tax-free lump sum that is paid to help to ease the burden of those who are disabled as a result of vaccination, and it is part of a range of support that is provided. She has raised a very specific case. Obviously she has had that Westminster Hall debate, but we want to ensure that the process is open and fair at every stage. The Department for Work and Pensions does look at every claim based on its own facts. If she wants to write with the details, I am sure that my hon. Friend the Minister for Disabled People, Health and Work will look into the specific case that she has raised.
Michael Fabricant (Lichfield) (Con)
The Prime Minister
Although I will not speculate on the statement that my right hon. Friend the Chancellor will make very shortly, I can assure my hon. Friend that the fundamentals of our economy are strong. Since 2010, employment in the west midlands has risen by 215,000 and private sector employment alone grew by 80,000 in the past year. We have also seen schools and police budgets being protected, and more doctors and nurses in his local hospitals.
Michael Fabricant (Lichfield) (Con)
And of course we have also witnessed the post-Brexit vote of confidence from Nissan, Boeing and Dyson investing in other parts of the country, but will my right hon. Friend say a little bit more about firms like Jaguar Land Rover in the west midlands?
The Prime Minister
I am happy to say to my hon. Friend that in the wider sense, of course, our plans for the midlands engine show that we want an economy that works for everyone. We have already confirmed over £330 million in the growth deal funding and money is going into the midlands engine investment fund and the Birmingham rail hub, but it is also important to recognise the investment that is being made in the UK by companies like Jaguar Land Rover, which will be building its new Range Rover model in Solihull. That is very good news for the west midlands and also for the British economy. It is a sign of the confidence that Jaguar Land Rover has in the UK for the future.
Gordon Marsden (Blackpool South) (Lab)
The Prime Minister
If the hon. Gentleman is referring to the decision that has been taken in relation to the courts and personal independence payments, as I explained to the House last week, and as has been explained by the Secretary of State, this is about restoring the system to the state that was intended when Parliament agreed it. It was agreed by the coalition Government and by Parliament after extensive consultation.
Mark Menzies (Fylde) (Con)
The Prime Minister
My hon. Friend raises a very important issue. As we look to the future, we want to ensure that people here in the UK have the skills they need for the economy of the future, and degree apprenticeships will be an important part of that. Companies such as BAE System, which he referred to specifically, have been right at the forefront of developing these new programmes. I am pleased to say that the apprenticeship levy will take the total investment in England to £2.45 billion, which is double what was spent in 2010. That means more opportunities for young people to gain the skills they need for their future.
Dan Jarvis (Barnsley Central) (Lab)
The Prime Minister
The hon. Gentleman raises a very important point. The unveiling of the memorial will be a very significant ceremony. I think that all of us across this House should pay tribute to those recognised by the memorial for the sacrifice they made—those in our armed forces and all those civilians who worked to deliver aid, healthcare and education. It is important that we recognise the sacrifices made by our armed forces and by their families. That will be a significant moment tomorrow. We are very clear that we do need to learn lessons from the past, and that is exactly what we will do.
Johnny Mercer (Plymouth, Moor View) (Con)
The Prime Minister
I thank my hon. Friend, because I know that this is an issue that he has championed and that is very close to his area of concern—he has done a lot of work on mental health. He talks about parity of esteem, which the Government have introduced, which is very important. More money is going into mental health provision than ever before. I would certainly be delighted to see the work being done in Plymouth, provided my diary allows for that.
Julie Cooper (Burnley) (Lab)
The Prime Minister
Let us be clear about what the Government have done. Record amounts of funding are going into education. It was a Conservative-led Government that introduced the pupil premium and it is a Conservative Government that has protected the core schools budget. The new money that will be going into schools as a result of today’s announcements is not about a return to a binary system of grammar schools and secondary moderns. That is not what we are going to do. What we are doing is ensuring that there is a diversity of provision—so, yes, some grammar schools, but also comprehensives, faith schools, university schools and maths schools. I want a good school place for every child and, more than that, the right school place for every child.
Amanda Milling (Cannock Chase) (Con)
The Prime Minister
I thank my hon. Friend for her question. When I stood on the steps of Downing Street back in July and talked about a country that works for everyone, I meant that. That is why we are taking a number of measures, including on International Women’s Day today. We are setting up a new fund to help mothers returning to work after a long career break. Returnships are important. They are open to men and women, but we should all recognise that the majority of those who take time out of a career are women who devote themselves to motherhood for a period. Getting back into employment is often very difficult for them; they find that it is closed off. That is why, as well as making economic sense, it is right and fair for those women that we provide for returnships to enable them to get back into the workplace.
Yasmin Qureshi (Bolton South East) (Lab)
The Prime Minister
The hon. Lady talks about the 30 hours that is being introduced, but let us look at what we are doing on childcare. We have already introduced 15 hours of free childcare a week for all three and four-year-olds, 15 hours of free childcare a week for disadvantaged two-year-olds, help with up to 70% of childcare costs for people on low incomes, and shared parental leave. We will spend a record £6 billion on childcare support by the end of this Parliament. That is a Conservative Government, and it is Conservatives in Government who have a record of supporting parents with childcare needs.
Alec Shelbrooke (Elmet and Rothwell) (Con)
The Prime Minister
As my hon. Friend knows, it is of course for the directly elected police and crime commissioner for West Yorkshire to decide what to do about the police precept of council tax, as it is in every area that has a police and crime commissioner, but I would always encourage those commissioners to look at ways to introduce efficiencies into their forces before looking to increase local taxes. Over the past six years, we have seen that police forces can find sensible savings and reduce crime at the same time.
Geraint Davies (Swansea West) (Lab/Co-op)
The Prime Minister
As the hon. Gentleman will know, we are looking at the measures that we need to introduce to improve air quality. There have been improvements in recent years, but we do need to go further, and that is what the Government are looking at across Departments, obviously with the Department for Environment, Food and Rural Affairs paying most attention to that, because it is within its remit. We will be bringing forward proposals on air quality in due course.
Victoria Atkins (Louth and Horncastle) (Con)
International Women’s Day is a chance to reflect on how Governments and democracies across the world serve women. Will my right hon. Friend confirm that, when it comes to female Prime Ministers, it is 2:0 to the Conservatives?
The Prime Minister
I am grateful to my hon. Friend for having pointed that out, which I refrained from doing earlier in response to questions. I think it is very telling that the Labour party spends a lot of time talking about rights for women, giving support to women and getting women on, whereas it is the Conservative party that is the party in this House that has provided two female Prime Ministers.
Deidre Brock (Edinburgh North and Leith) (SNP)
The Prime Minister
I am not sure whether the hon. Lady is referring to discussions that are currently taking place about the powers that might be available to the devolved Administrations once we have left the European Union, but she knows full well that we undertake full discussions with the Scottish Government on measures that are reserved matters and on measures where we are negotiating on behalf of the whole of the United Kingdom.
Simon Hoare (North Dorset) (Con)
Crowdcomms, a business in my constituency, operates out of the small market town of Sturminster Newton; it also has offices in Seattle and Sydney. It employs 24 people, providing high-quality IT jobs, and it avails itself of high-tech, fast rural broadband and mobile telephone communication. That is the recipe for growing our rural economy. Will my right hon. Friend undertake to ensure that her Government do all they can to fill the blackspots in our rural areas?
The Prime Minister
I can assure my hon. Friend that we very much want to ensure that we are doing that. My right hon. Friend the Secretary of State for Culture, Media and Sport is looking at our digital strategy and ensuring that broadband is available in rural areas and, indeed, at good speeds in other areas, which might be less rural than my hon. Friend’s constituency.
Mr Speaker
Finally, Mr Tim Farron. [Interruption.] Order. I do not know whether Members are cheering because it is “finally” or because of the popularity of the hon. Gentleman, but he is going to be heard.
Tim Farron (Westmorland and Lonsdale) (LD)
You are all so very, characteristically, kind.
On International Women’s Day, we stand with women and girls across the world and note with resolve that we must not take for granted the progress we have made towards equality over the last few decades.
Yesterday, we heard that hundreds of families of soldiers who died in Iraq and Afghanistan have been denied seats at tomorrow’s unveiling of the memorial to our fallen troops. Inviting a relative of each of those killed in Iraq and Afghanistan would have taken up fewer than a third of the 2,500 seats at that event. Will the Prime Minister now apologise to those families for what I assume is a careless oversight and rectify that mistake immediately so that bereaved families can come and pay their respects to their fallen loved ones?
The Prime Minister
May I reassure the hon. Gentleman that charities and groups representing the bereaved were asked to put forward names of attendees, and we look forward to welcoming them so that we can publicly acknowledge the sacrifice that their loved ones made on our behalf? Over half of those attending tomorrow are actually current or former members of the armed forces. No one from the bereaved community has been turned away, and everyone who has applied to attend has been successful, but I have been reassured that if there are any bereaved families who wish to attend, the Ministry of Defence will make every effort to ensure that they are able to do so.
Unfinished Dwellings in Heol Berwyn, Cefn Mawr
Susan Elan Jones (Clwyd South) (Lab)
I rise to present this petition concerning Harron Homes and unfinished developments and dwellings in Heol Berwyn, Cefn Mawr. In so doing, I wish to pay a special tribute to Councillor Derek Wright for all his work on this issue.
The petition states:
The petition of residents of Cefn Mawr in the constituency of Clywd South,
Declares that the petitioners believe that it is unacceptable that Harron Homes has only part finished the construction of residential dwellings in Heol Berwyn, Cefn Mawr; further declares that part finished construction sites may become magnets for anti-social behaviour and infestations of rats due to partially constructed sewers; and further that such part finished construction sights are a blight upon communities.
The petitioners therefore request that the House of Commons urges the Government to declare and enforce that part finished construction sites be completed, sold outright, part sold or gifted to the Local Authority or a Housing Association.
And the petitioners remain, etc.
[P002025]
Proposed Development of Two Distribution Buildings on Land South of Meadow Lane, Raunds
Tom Pursglove (Corby) (Con)
I rise to present a petition on behalf of residents of Raunds and Stanwick, in the names of Geoff Dyne and Sue Göksu, relating to the proposed development of two distribution buildings on land south of Meadow Lane in Raunds.
The petition states:
The petition of residents of the UK,
Declares that residents of Raunds and Stanwick wish to oppose the planning application Ref.16/02119/FUL for a proposed development of two distribution buildings, on land South of Meadow Lane; further that at a meeting in the town and at the town Council there was very strong support for refusal of this development; further notes that the grounds for refusal include that this is a protected open space listed in the proposed Neighbourhood Plan; further that the plans are contrary to the aims of the Nene Valley Nature Improvement Plan recently adopted by East Northamptonshire Council; further that the proposed development is close to a designated Site of Special Scientific Interest; further that the transport assessment has calculated there will be daily just under 800 HGV movements as well as employees’ cars, including during the night, with significant pollution effects and that the increase in traffic to the site and along the A45 will have a detrimental effect upon local air conditions; further that reversing alarms, loading and unloading and vehicle movements will cause significant noise pollution day and night; further that light pollution will inevitably increase, especially with a 24-hour operation; further that there is a considerable hydrology and flood risk; further that the development will create an industrial feel to anyone walking down Meadow Lane, which could not be mitigated by any planting due to the height of the proposed building and earth formed platform approaching 29 metres above ground level; further that as employees at the current site near Northampton are to be given inducements to move their work place to Raunds, there would be minimal employment opportunities for local people; further that the proposed large visually solid buildings will have a detrimental effect on the setting for Stanwick Lakes as they will be clearly visible from this country park and will also have considerable impact on the setting for Raunds and Stanwick; further declares that the submitted Neighbourhood Plan seeks to protect this area of land from development, to protect the rural character of the area and those who regularly use Meadow Lane to connect to Stanwick Lakes; further that allowing this development will seriously undermine the Neighbourhood Plan objectives and will be against the wishes of the local community.
The petitioners therefore request that the House of Commons urges the Government to urge East Northamptonshire Council to refuse the planning application Ref. 16/02119/FUL for a proposed development of two distribution buildings, on land South of Meadow Lane.
And the petitioners remain, etc.
[P002026]
Ways and Means
Financial Statement
(7 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Mr Deputy Speaker (Mr Lindsay Hoyle)
Before I call the Chancellor of the Exchequer, I remind hon. Members that copies of the Budget resolutions will be available in the Vote Office at the end of the Chancellor’s speech. I also remind hon. Members that it is not the norm to intervene on the Chancellor of the Exchequer or the Leader of the Opposition.
The Chancellor of the Exchequer (Mr Philip Hammond)
I report today on an economy that has continued to confound the commentators with robust growth, a labour market delivering record employment and a deficit down by over two thirds. As we start our negotiations to exit the European Union, this Budget takes forward our plan to prepare Britain for a brighter future. It provides a strong and stable platform for those negotiations; it extends opportunity to all our young people; it delivers further investment in our public services; and it continues the task of getting Britain back to living within its means. We are building the foundations of a stronger, fairer, more global Britain.
As the House knows, this will be the last spring Budget. The Treasury has helpfully reminded me that I am not the first Chancellor to announce the “last spring Budget”. Twenty-four years ago Norman Lamont also presented what was billed then as “the last spring Budget”. He reported on an economy that was growing faster than any other in the G7, and he committed to continued restraint in public spending. The then Prime Minister described it as the
“right Budget, at the right time, from the right Chancellor”.
What the Treasury failed to remind me was that 10 weeks later the Chancellor was sacked. So, wish me luck today!
Last year, the British economy grew faster than the United States, faster than Japan and faster than France. Indeed, among the major advanced economies Britain’s economic growth in 2016 was second only to Germany. Employment is at a record high; unemployment is at an 11-year low, with over 2.7 million more people enjoying the security and dignity of work than in 2010—a very far cry from the 3 million unemployed predicted by the Labour party. I am pleased to report, on International Women’s Day, that there is now a higher proportion of women in the workforce than ever before. I am even more pleased to report that, as my right hon. Friend the Prime Minister has remarked, since 23 February there is a higher proportion of women in work in the parliamentary Conservative party.
But, Mr Deputy Speaker, there is no room for complacency, and you will not find any on these Benches. As we prepare for our future outside the EU, we cannot rest on our past achievements. We must focus relentlessly on keeping Britain at the cutting edge of the global economy. The deficit is down, but debt is still too high. Employment is up, but productivity remains stubbornly low. Too many of our young people are leaving formal education without the skills they need for today’s labour market, and too many families are still feeling the squeeze, almost a decade after the crash. So our job is not done, and our task today is to take the next steps in preparing Britain for a global future—to equip our young people with the skills they need, to support our public services and to help ordinary working families as we build an economy that works for everyone.
I thank the Office for Budget Responsibility under Robert Chote for its report received today. Let me also take this opportunity to thank my right hon. Friend the Chief Secretary and my ministerial team, who really are the unsung heroes of the Budget, doing much of the heavy lifting over the last few weeks, and of course my excellent Parliamentary Private Secretary, my hon. Friend the Member for Salisbury (John Glen).
I turn now, Mr Deputy Speaker, to the OBR forecasts. This is the spreadsheet bit, but bear with me because I have a reputation to defend. The OBR forecasts the level of gross domestic product in 2021 to be broadly the same as at autumn statement. However, the path by which we get there has changed. Reflecting the recent strength in the economy, the OBR has upgraded its forecast for growth next year from 1.4% to 2%, and I do not see too many people on the Opposition Front Bench indicating flatlining. In 2018-19, growth is forecast to slow to 1.6%, before picking up to 1.7%, then 1.9% and returning to 2% in 2021.
Resilience in the economy is reflected in a strong labour market. Since 2010, the employment rate has risen from 70.2% to 74.6%, with positive news for all parts of the United Kingdom. Unemployment has fallen fastest in Yorkshire and the Humber, and Wales; wages have grown fastest in Northern Ireland; and productivity has grown fastest in Scotland and in the north-east. This positive trend is set to continue over the forecast period. The number of people in employment is set to grow in every year, with a further two thirds of a million people in work by 2021. The OBR forecasts inflation at 2.4% this year, then 2.3% next year and 2% in 2019. Most importantly, despite higher than target inflation, real wages continue to rise in every year of the forecast.
While the economic forecasts are broadly unchanged since the autumn, the OBR has substantially revised down its short-term forecast of public sector net borrowing. The OBR attributes this change to a number of one-off factors that it does not expect to lead to a structural improvement over the forecast period. Combining these factors with the higher short-term forecast for growth and taking into account the measures that I shall announce today, the OBR now forecasts borrowing in 2016-17 to be £16.4 billion lower than forecast in the autumn at £51.7 billion, then £58.3 billion in 2017-18, £40.8 billion in 2018-19, £21.4 billion, £20.6 billion and, finally, £16.8 billion in 2021-22—all lower than forecast at autumn statement.
Overall, public sector net borrowing as a percentage of GDP is predicted to fall from 3.8% last year to 2.6% this year. For those who care about such things, it means we are forecast to meet our 3% EU stability and growth pact target this year for the first time in almost a decade, but I will not hold my breath for my congratulatory letter from Jean-Claude Juncker. Borrowing is then forecast to be 2.9% in 2017-18, and then to fall over the remainder of the Parliament to 1.9% in 2018-19, then 1% and 0.9%, before reaching 0.7% of GDP in 2021-22, its lowest level in two decades.
The OBR expects cyclically adjusted public sector net borrowing to be 0.9% in 2020-21, giving us £26 billion of headroom against the headline 2% target in our new fiscal rules, maintaining our fiscal resilience over the period. The OBR’s forecast of lower near-term borrowing, coupled with recent strength in the economy, means lower debt across the period. The OBR now forecasts that debt will rise to 86.6% this year, before peaking at 88.8% next year, 1.4 percentage points lower than forecast in the autumn. It then falls in 2018-19—for the first time since 2001-02—to 88.5%, and continues to decline to 86.9% in 2019-20, 83% in 2020-21 and then reaches 79.8% in 2021-22.
At the autumn statement, I set out our plan to return the public finances to balance in the next Parliament—a plan that is now underpinned by our new fiscal rules. That plan strikes the right balance between reducing our deficit, preserving fiscal flexibility and investing in Britain’s future. Some have argued that lower borrowing this year makes a case for more unfunded spending in the future. I disagree. Britain has a debt of nearly £1.7 trillion—almost £62,000 for every household in the country. Each year, we are spending £50 billion on debt interest—more than we spend on defence and policing combined. Borrowing over the forecast period is still set to be £100 billion higher than predicted at Budget 2016.
So the only responsible course of action is to continue with our plan, undeterred by any short-term fluctuations and undistracted—[Interruption.]—by the reckless policies advanced by the Opposition. We on this side of the House will not saddle our children with ever-increasing debts. [Interruption.] Mr Deputy Speaker, I think Opposition Members may need to have a word with their own Front Benchers, who propose borrowing another half a trillion pounds with which to saddle our children and burden their futures. So the Budget that I set out today will again fund all additional spending decisions over the forecast period.
A strong economy needs a fair, stable and competitive tax system, creating the growth that will underpin our future prosperity. My ambition is for the UK to be the best place in the world to start and grow a business. Under the last Labour Government, corporation tax was 28%. By the way, they don’t call it the “last” Labour Government for nothing. From April this year, corporation tax will fall to 19%, the lowest rate in the G20. In 2020, it will fall again to 17%, sending the clearest possible signal that Britain is open for business.
I am listening to the voice of business.
Mr Hammond
The one place where I will not hear the voice of business is on the Opposition Benches.
I committed at the autumn statement to review, with business, our R and D tax credit regime. We have done so and concluded that it is globally competitive. But to make the UK even more attractive for R and D, we have accepted industry calls for a reduction in administrative burdens around the scheme and will shortly bring forward measures to deliver that.
In a digital age, it is right that we develop a digital tax system, but in response to concerns about the timetable expressed by business organisations and by several of my right hon. Friends, including the Chairman of the Treasury Committee, I have decided that for businesses with turnover below the VAT registration threshold I will delay by one year the introduction of quarterly reporting, at a cost to the Exchequer of £280 million.
I have heard, too, the calls by North sea oil and gas producers and the Scottish Government to provide further support for the transfer of late-life assets. As UK oil and gas production declines, it is essential that we maximise the exploitation of remaining reserves, so we will publish a formal discussion paper on the options in due course.
There is one further area in which I can announce action to back British businesses. My right hon. Friend the Communities and Local Government Secretary and I have listened to the concerns raised by colleagues in this House and by businesses about the effects of the 2017 business rates revaluation. Business rates raise £25 billion per year, all of which, by 2020, will be going to fund local government, so we cannot abolish them, as some have suggested; but it is certainly true in the medium term that we have to find a better way of taxing the digital part of the economy—the part that does not use bricks and mortar. In the meantime, there is scope to reform the revaluation process, making it smoother and more frequent to avoid the dramatic increases that the present system can deliver. We will set out our preferred approach in due course and will consult on it before the next revaluation is due.
The revaluation itself is by law fiscally neutral. Ahead of this revaluation, the Government committed to a package of cuts to business rates now worth nearly £9 billion, permanently doubling the rate of small business rate relief to 100%, and raising the thresholds so that 600,000 small businesses are taken out of paying rates altogether. The revaluation has undoubtedly raised some hard cases, especially for those businesses coming out of small business rates relief, so today, as I promised many of my right hon. Friends, I address those concerns with three measures which apply to the national business rates system for England. First, any business coming out of small business rate relief will benefit from an additional cap. No business losing small business rate relief will see their bill increase next year by more than £50 a month, and the subsequent increases will be capped at either the transitional relief cap or £50 a month, whichever is higher.
Secondly, recognising the valuable role that local pubs play in our communities, I will provide a £1,000 discount on business rates bills in 2017 for all pubs with a rateable value of less than £100,000—that is 90% of all pubs in England. Thirdly, on top of these two measures, I will provide local authorities with a £300 million fund to deliver discretionary relief to target individual hard cases in their local areas. This fund will be allocated to local authorities by formula, and my right hon. Friend the Communities and Local Government Secretary will set out details in due course. Taken together, this is a further £435 million cut in business rates, targeted at those small businesses facing the biggest increases, protecting our pubs, and giving local authorities the resource to respond flexibly to local circumstances.
Just as a strong economy requires a tax system that is competitive, a strong society requires one that is fair; and because I have committed to funding my spending decisions in this Budget rather than borrowing more, I make no apology for raising additional revenues and for doing so in ways which enhance the fairness of the system. First and foremost, that means collecting the taxes that are due. Since 2010, we have secured £140 billion in additional tax revenue by taking robust action to tackle avoidance, evasion, and non-compliance.
These actions have helped the UK achieve one of the lowest tax gaps in the world, but there is more that we can do. In this Budget, we set out further actions to stop businesses converting capital losses into trading losses; to tackle abuse of foreign pension schemes; and to introduce UK VAT on roaming telecoms outside the EU, in line with international standard practice. From July, we will introduce a tough new financial penalty for professionals who enable a tax avoidance arrangement that is later defeated by Her Majesty’s Revenue and Customs. Taken together, these measures will raise £820 million over the forecast period.
As well as collecting taxes that are due, a fair system ensures that those with the broadest shoulders bear the heaviest burden. As a result of the changes we have made since 2010, the top 1% of income tax payers now pay 27% of all income tax, a higher proportion than in any year under the last Labour Government. But a fair system will also ensure fairness between individuals, so that people doing similar work for similar wages and enjoying similar state benefits pay similar levels of tax. As our economy responds to the challenges of globalisation, shifts in demographics, and the emergence of new technologies, we have seen a dramatic increase in the number of people working as self-employed or through their own companies. Indeed, many of our most highly paid professionals work through limited liability partnerships and are treated as self-employed. There are many good reasons for choosing to be self-employed or for working through a company—indeed, I have done both in my time—and I will always encourage and support the entrepreneurs and the innovators who are the lifeblood of our economy.
People should have choices about how they work, but those choices should not be driven primarily by differences in tax treatment. My right hon. Friend the Prime Minister has asked Matthew Taylor, chief executive of the RSA—the Royal Society for the encouragement of Arts, Manufactures and Commerce—to consider the wider implications of different employment practices. I look forward to his final report in the summer, and am grateful to him for sharing his preliminary thoughts. He is clear that differences in tax treatment are a key driver behind the trends we are observing—a conclusion shared by the Institute for Fiscal Studies and the Resolution Foundation.
An employee earning £32,000 will incur, between him and his employer, £6,170 of national insurance contributions. A self-employed person earning the equivalent amount will pay just £2,300—significantly less than half as much. Historically, the differences in NICs between those in employment and the self-employed reflected differences in state pension entitlement and contributory welfare benefits, but with the introduction of the new state pension last year, these differences have been very substantially reduced. Self-employed workers now build up the same entitlement to the state pension as employees—a big pension boost to the self-employed.
The most significant remaining area of difference is in relation to parental benefits, and I can announce today that we will consult in the summer on options to address the disparities in this area, as the Federation of Small Businesses and others have proposed. The difference in national insurance contributions is no longer justified by the difference in benefit entitlements. Such dramatically different treatment of two people earning essentially the same undermines the fairness of the tax system. Employed and self-employed alike use our public services in the same way, but they are not paying for them in the same way. The lower national insurance paid by the self-employed is forecast to cost our public finances over £5 billion this year alone. This is not fair to the 85% of workers who are employees.
The abolition of class 2 NICs for self-employed people announced by my right hon. Friend the Member for Tatton (Mr Osborne) in 2016 and due to take effect in 2018 would further increase the gap between employment and self-employment. To be able to support our public services in this Budget, and to improve the fairness of the tax system, I will act to reduce the gap to better reflect the current differences in state benefits. I have considered the possibility of simply reversing the decision to abolish class 2 contributions, but the class 2 NIC is regressive and outdated—it is absolutely right that it should go—so, instead, from April 2018, when the class 2 NIC is abolished, the main rate of class 4 NICs for the self-employed will increase by 1% to 10%, with a further 1% increase in April 2019.
The combination of the abolition of class 2 and the class 4 increases I have announced today raises a net £145 million a year for our public services by 2021-22. That is an average of around 60p a week per self-employed person in this country. Since class 2 contributions are payable at a flat rate while class 4 is chargeable as a proportion of profits, all self-employed people earning less than £16,250 will still see a reduction in their total NICs bill. This change reduces the unfairness in the NICs system and reflects more accurately the current differences in benefits available from the state.
Alongside the gap between employees and the self-employed, there is a parallel unfairness in the treatment of those working through their own companies. Britain has the most competitive corporate tax regime in the G7, and we are determined to make Britain the most attractive place to start and grow a business, but to do that, we must ensure that our corporate tax regime does not encourage people across the economy to form companies simply to reduce tax liabilities, pushing the burden of financing our public services on to others.
HMRC estimates that existing incorporations cost the public finances over £6 billion a year, and the OBR forecasts that at the current rate of increase, an additional annual cost to the Exchequer will occur from those choosing to incorporate of £3.5 billion a year by 2021-22. The gap in total tax and NICs between an employed worker and one who has set up his own company will normally be greater even than the gap with the self-employed, and there are several perfectly legal ways in which that gap can be made bigger still. This is not fair, and it is not affordable. Fairness demands that this discrepancy in treatment be addressed, just as I have addressed the discrepancy with the self-employed.
The dividend allowance has increased the tax advantage of incorporation. It allows each director/shareholder to take £5,000 of dividends out of their company tax-free, over and above the personal allowance. It is also an extremely generous tax break for investors with substantial share portfolios. I have decided to address the unfairness around director/shareholders’ tax advantage, and at the same time raise some much-needed revenue to fund the measures I shall announce today, by reducing the tax-free dividend allowance from £5,000 to £2,000 with effect from April 2018. About half the people affected by this measure are director/shareholders of private companies. The rest are investors in shares with holdings typically worth over £50,000 outside individual savings accounts. Of course, everyone will benefit from the generous £4,760 increase in the annual ISA allowance to £20,000, and the further increase in the personal allowance to £11,500 from April.
I now turn to duties and levies. Unusually for a Chancellor, I am delighted to announce a reduction in the expected yield of a tax—the soft drinks levy. I can confirm today the final rates of 18p and 24p per litre for the main and higher bands respectively, but producers are already reformulating sugar out of their drinks, which means a lower revenue forecast for this tax. This is good news for our children. In further good news for them today, I can confirm that we will none the less fund the Department for Education with the full £1 billion that we originally expected from the levy this Parliament, to invest in school sports and healthy living programmes.
I am freezing for another year both the vehicle excise duty rates for hauliers and the heavy goods vehicle road user levy. I am introducing a new minimum excise duty on cigarettes, based on a pack price of £7.35, and I can also confirm that I will make no changes to previously planned upratings of duties on alcohol and tobacco. The tax measures I have announced enhance the sustainability of our public services into the future and, by improving the fairness of the system, help us to keep tax rates low.
Economic policy does not exist in a vacuum, and economic growth is a means, not an end in itself. The objective of our economic policy is to support ordinary working families and to build an economy that works for them. Government Members know that we can achieve rising living standards and deliver investment in our vital public services only if we have a strong economy and sustainable public finances. It is a simple proposition, yet one that Opposition Front-Benchers seem to find strangely difficult to understand.
We start from a strong base: real wages have grown for 27 straight months; the wages of the lowest-paid grew faster last year than in any of the previous 20 years; and the poorest households have seen their labour incomes rise more since 2010 in the UK than in any other country in the G7. Last year, we delivered a pay rise to over a million of the lowest-paid through the national living wage, and next month we take more steps to support working families with the cost of living. The national living wage will rise again to £7.50 in April, which is over £500 more for a full-time worker than this year and £1,400 more than when the national living wage was introduced. The personal allowance will rise for the seventh year in a row to £11,500, and the higher rate threshold to £45,000; 29 million people will be better off, with a typical basic rate taxpayer paying £1,000 less than in 2010. We will meet our manifesto commitment to increasing the thresholds to £12,500 and £50,000 respectively by the end of this Parliament.
I can also confirm today that the new National Savings and Investments bond that I announced in the autumn statement will be available from April, and will pay 2.2% on deposits up to £3,000—a welcome break for hard-pressed savers. The universal credit taper rate will be reduced in April from 65% to 63%, cutting tax for 3 million families on low incomes.
Next month, we will see the introduction of our flagship tax-free childcare policy, which will allow working families across the UK to receive up to £2,000 a year towards the cost of childcare for each child under 12. The scheme will be rolled out to all eligible parents by the end of the year, and in addition, from September, working parents with three and four-year-olds will get their free childcare entitlement doubled to 30 hours a week. That is worth around £5,000 a year to a young family with a three-year-old and both parents working. By the end of this Parliament, this Government will be spending on childcare £6 billion a year.
These childcare measures represent a further huge step forward in support for ordinary working families, and for women in the workplace. I am delighted to use the occasion of International Women’s Day to announce three additional measures—well, not quite announce them, because my right hon. Friend the Prime Minister has already announced two of them.
Mr Hammond
It says here that I will commit a further £20 million of Government funding to support the campaign against violence against women and girls, which, as my right hon. Friend the Prime Minister said earlier, takes the Government’s commitment to this campaign to over £100 million in this Parliament. That is on top of the tampon tax, which today delivers another £12 million in support of women’s charities across the UK. The Prime Minister also mentioned earlier that the Government will commit a further £5 million to promoting returnships to the public and private sector, helping people back into employment after a career break.
Next year is the centenary of the Representation of the People Act 1918, which was the decisive step in the political emancipation of women in this country. I will commit a further £5 million to projects to celebrate this centenary, and to educate young people about its significance.
As well as knowing that the Government are on their side, people want to know that they are getting a good deal from private markets. A well-functioning market economy is the best way to deliver prosperity and security to working families, and the litany of failed attempts at state control of industry by Labour leaves no one in any doubt about that—except, apparently, the right hon. Member for Islington North (Jeremy Corbyn), who is now so far down a black hole that even Stephen Hawking has disowned him.
The Government recognise that sometimes markets, particularly in fast-developing areas of the economy, can fail people. Sometimes the market does not deliver the outcome that the textbooks suggest that it should. When that happens, the Government will not hesitate to intervene. We will shortly present a Green Paper on protecting the interests of consumers, but ahead of the Green Paper we will take the first steps to protect consumers from unexpected fees or unfair clauses, to simplify terms and conditions, and to give consumer bodies greater enforcement powers. Together, those measures will boost incomes, help family budgets to stretch a little further, support parents back into work, and tackle some of the frustrations that sometimes make it seem that the dice are loaded against ordinary people going about their everyday lives.
The House knows that the only sustainable way to raise living standards is to improve our productivity growth. Put simply, higher productivity means higher pay. The stats are well known: we are 35% behind Germany and 18% behind the G7 average, and the gap is not closing. Investment in training and in infrastructure will start to close that gap. The Government place addressing the UK’s productivity challenge at the very heart of their economic plan, because the cornerstone of an economy that works for everyone must be rising living standards for ordinary working people.
A key element of our plan is the £23 billion of additional infrastructure and innovation investment that I announced in the autumn statement. Today, to enhance the UK’s position as a world leader in science and innovation, I am allocating £300 million of that fund to support the brightest and the best research talent. That includes support for 1,000 new PhD places and fellowships, focused on STEM subjects: science, technology, engineering and maths. I am allocating £270 million to keep the UK at the forefront of disruptive technologies such as biotech, robotic systems and driverless vehicles—a technology that I believe the Labour party knows something about. There will be £16 million for a new 5G mobile technology hub, and £200 million for local projects to leverage private sector investment in full-fibre broadband networks.
On transport, I am today announcing £90 million for the north and £23 million for the midlands from a £220 million fund that addresses pinch points on the national road network, and I am launching a £690 million competition for local authorities across England to tackle urban congestion and get local transport networks moving again. My right hon. Friend the Transport Secretary will announce details shortly.
Because we believe that local areas understand local productivity barriers better than central Government, we will make further progress with our plans to bolster the regions. In May, powerful Mayors will be elected in six of our great cities. Across Britain, local areas will take control of their own economic destiny, and we will support them. I can inform the House that I have reached a deal with the Mayor of London on further devolution. Tomorrow, I will follow the launch of the northern powerhouse strategy in the autumn statement by publishing our midlands engine strategy, which will address productivity barriers across the midlands.
For the devolved Administrations, our announcements today deliver additional funding of £350 million for the Scottish Government—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Let us just move on. We are doing very well; let us not spoil a good day. Come on, Chancellor of the Exchequer.
Mr Hammond
Wait for it: there will be £200 million for the Welsh Government and almost £120 million for an incoming Northern Ireland Executive, demonstrating once again that we are stronger together in this great, United Kingdom.
Perhaps the single most important thing that a Government can do to support ordinary working families is invest in the future, so that their children and grandchildren can make the most of the opportunities ahead. That means addressing the skills gap, and ensuring that every child, regardless of background, has the opportunity to go to a good or outstanding school. In the autumn statement, I focused on investment in infrastructure and research and development. The next step today in our plan to raise productivity and living standards is to focus on the quality of our children’s education and the teaching of technical skills.
While investing in education and skills of course helps to tackle our productivity gap, delivering greater prosperity, it does something else as well. It delivers greater fairness, because investing in skills and education is the key to inclusive growth—to an economy that works for everyone. If you talk to people from any background and any part of the country about their hopes and their aspirations for the future, you will hear a recurring concern for the next generation. Will they have the qualifications to find a job?
Will they have the skills to retrain as that job changes, and changes again, over a working lifetime? Will they be able to get on to the housing ladder, or save for a pension? In short, the question that concerns so many people is, “Will our children enjoy the same opportunities as we did?” Our job is to make sure that they do, and that is why we are investing in education and skills to ensure that every young person, whatever their background and wherever they live, has the opportunity to succeed and prosper.
The proportion of young people not in work or education is now the lowest since records began. That is a good base on which to build, but it is only by equipping them for the jobs of tomorrow that we ensure that they will have real economic security. We have put education reform at the heart of our agenda since 2010, and that commitment is already paying off: 89% of schools in England are now rated “good” or “outstanding”, which is the highest proportion ever recorded. That means that 1.8 million more children are being taught in good or outstanding schools than when the Labour party left office in 2010.
Our forthcoming schools White Paper will ask universities and private schools to sponsor new free schools. It will remove the barriers that prevent more good faith-based free schools from opening, and it will enable the creation of new selective free schools so that the most academically gifted children—from every background—have the specialist support that they need to fulfil their potential. Today I can announce funding for a further 110 new free schools, on top of the current commitment to 500. That will include new specialist maths schools to build on the clear success of Exeter Mathematics School and King’s College London Mathematics School, which my right hon. Friend the Prime Minister visited earlier this week.
We are committed to that programme because we understand that choice is the key to excellence in education, but we recognise that for many parents, the cost of travel can be a barrier to exercising that choice. Pupils typically travel three times as far to attend selective schools, so we will extend free school transport to include all children on free school meals who attend a selective school, because we are resolved that talent alone should determine the opportunities that a child enjoys. [Interruption.] Before Labour Members get too excited, let me add that we will invest in our existing schools too. [An Hon. Member: “No, you won’t.”] Oh yes, we will—by providing an additional £216 million over the next three years, which will take total investment in school condition to well over £10 billion in this Parliament.
Good schools are the bedrock of our education system, but we need to do more to support our young adults into quality jobs and help them to gain world-class skills, and while we have an academic route in this country that is undeniably one of the best in the world, the truth is that we languish near the bottom of the international league tables for technical education. Our rigorous, well-recognised system of A-levels provides students with the qualifications to move into our world-class higher education system, and we support this route further today by offering maintenance loans to part-time undergraduates and doctoral loans in all subjects for the first time. But long ago our competitors in Germany, the US and elsewhere realised that in order to compete in the fast-moving global economy, they had to link technical skills to jobs, and I am pleased to report, in national apprenticeship week, that our apprenticeship route is now, finally, delivering that ambition here, with 2.4 million apprenticeship starts in the last Parliament and the launch of our apprenticeship levy in April supporting a further 3 million apprenticeships by 2020.
But there is still a lingering doubt about the parity of esteem attaching to technical education pursued through the further education route. Today, we end that doubt for good with the introduction of T-levels. Thanks to the work of Lord Sainsbury, Baroness Wolf and other experts in this field, we have a blueprint to follow. Their review concluded that students need a much clearer system of qualifications: one that is designed and recognised by employers, with clear routes into work, more time in the classroom, and good quality work placements; and one that replaces the 13,000 or so different qualifications with just 15 clear, career-focused routes. Delivering on those recommendations is the third part of our plan, so today we will invest to deliver, in full, these game-changing reforms. We will increase by over 50% the number of hours of training for 16 to 19-year-old technical students, including a high-quality three-month work placement for every student, so that when they qualify, they are genuinely “work-ready.”
Once this programme is fully rolled out, we will be investing an additional £500 million a year in our 16 to 19-year-olds. To encourage and support the best of them to go on to advanced technical study, we will offer maintenance loans for those undertaking higher level technical qualifications at the new institutes of technology and national colleges, just as we do for those attending university—putting the next generation first, to safeguard their future and to secure our economy.
Because changing labour markets will mean that retraining is vital—with many of our young people today needing to retrain at least once, and perhaps more often, during a working life that may span more than 50 years—we will consider how best to deliver high-quality learning and training throughout working lives. The Department for Education will invest up to £40 million in pilots to test the effectiveness of different approaches to lifelong learning, so that we can identify what works best and help the next generation learn and train throughout their lives.
Just as the principle that every child should have the opportunity to fulfil his or her potential is central to this Government’s values, so is the principle that everyone has access to our national health service when they need it, and that everyone should enjoy security and dignity in old age. Today, our social care system cares for over 1 million people, and I want to pay tribute to the hundreds of thousands of carers who work in it. But the system is clearly under pressure, and this in turn puts pressure on our NHS. Today, there are half a million more people aged over 75 than there were in 2010, and there will be 2 million more in 10 years’ time. That is why the Government have already delivered more than £7 billion of extra spending power to the system over the next three years, and it is why we are ensuring that local authorities and the NHS work more closely together to enable elderly patients to be discharged when they are ready, freeing up precious NHS beds and ensuring that elderly people are receiving the appropriate care for their needs. So today I am committing additional grant funding of £2 billion to social care in England over the next three years; that is £2 billion over the next three years, with £1 billion available in ’17-18. This will allow local authorities to act now to commission new care packages and forms a bridge to the better care funding that becomes available towards the end of the Parliament.
Of course, this is not only about money. While there are many excellent examples of best practice around the country, at the other end of the scale just 24 local authorities are responsible for over half of all delayed discharges to social care. Alongside additional funding, the Health and Communities Secretaries will announce measures to identify and support authorities which are struggling and to ensure more joined-up working with the NHS.
These measures, and greater collaborative working under NHS sustainability and transformation plans, will bring short and medium-term benefits, but the long-term challenges of sustainably funding care in older age requires a strategic approach, and the Government will set out their thinking on the options for the future financing of social care in a Green Paper later this year. For the avoidance of doubt, I would like to make it clear that those options do not include, and never have included, exhuming Labour’s hated death tax.
The social care funding package that I have announced today will deliver immediate benefit to the NHS, allowing it to re-focus on delivering the NHS England forward view plan—a plan which this Government have supported with the £10 billion increase in annual funding by 2020, £4 billion of it in this year alone. We recognise the progress that the NHS is making in developing sustainability and transformation plans, and we recognise, too, that in addition to the funding already committed, some of those plans will require further capital investment. The Treasury will work closely with the Department of Health over the summer as the STPs are progressed and prioritised, and at autumn Budget I will announce a multi-year capital programme to support the implementation of approved high-quality STPs across our health service in England. In the meantime, my right hon. Friend the Health Secretary expects that a small number of the strongest STPs might be ready ahead of autumn Budget, so today I am allocating an additional £325 million of capital to allow the first selected plans to proceed.
I have one further announcement related to the NHS. The social care package I have announced today will help to free up beds by easing the discharge of elderly patients. That is one of the two big pressures on our hospitals. The other is inappropriate A&E attendances by people of all ages. Experience has shown that on-site GP triage in A&E departments can have a significant and positive impact on A&E waiting times. I am therefore making a further £100 million of capital available immediately for new triage projects at English hospitals in time for next winter.
This Government back the NHS’s plan. We are funding it with a £10 billion above-inflation increase by 2020. We have addressed the pressures on the NHS from the social care system with a total of £9.25 billion in additional resources. We will protect the NHS from the effects of the changed personal injury discount rate, and have set aside £5.9 billion across the forecast period to do so, and today we have made a clear new commitment to fund the capital programme for the implementation of high-quality STPs, with a first down-payment for the early pioneers. As the voters of Copeland so clearly understood, we are the party of the NHS—we are the party of the NHS because we have not just the commitment and the will, but also the economic plan that will secure the future of our most important public service.
Last November I set out our plan to build an economy that works for everyone, to enhance our productivity and protect our living standards, to restore our public finances to balance and to invest for our future. Today’s OBR report confirms the continued resilience of the British economy. At this Budget we continue with our plan, building on the foundation of our economic strength, reaching out to seize the opportunities that lie ahead, backing our public services, supporting Britain’s families, investing in the skills of our young people and making Britain the best place in the world to do business.
Our United Kingdom has a proud history. We have done remarkable things together, but we look forwards, not backwards, confident that our greatest achievements lie ahead of us. Today, we reaffirm our commitment to invest in Britain’s future. We embark on this next chapter of our history, confident in our strengths and clear in our determination to build a stronger, fairer, better Britain. I commend this Budget to the House.
Provisional Collection of Taxes
Motion made, and Question put forthwith (Standing Order No. 51(2)),
That, pursuant to section 5 of the Provisional Collection of Taxes Act 1968, provisional statutory effect shall be given to the following motions:—
(a) Pensions (offshore transfers) (motion no. 12);
(b) Alcoholic liquor duties (rates) (motion no. 40);
(c) Tobacco products duty (rates) (motion no. 42).—(Mr Philip Hammond.)
Question agreed to.
Mr Deputy Speaker (Mr Lindsay Hoyle)
I now call on the Chancellor of the Exchequer to move the motion entitled “Amendment of the Law”. It is on this motion that the debate will take place today and on succeeding days. The Questions on this motion, and on the remaining motions, will be put at the end of the Budget debate on Tuesday 14 March.
Budget Resolutions
Jeremy Corbyn (Islington North) (Lab)
This is a Budget of utter complacency about the state of our economy, utter complacency about the crisis facing our public services, and complacency about the reality of daily life for millions of people in this country. It is entirely out of touch with the reality of life for millions.
This morning, over 1 million workers will have woken up not knowing whether they will work today, tomorrow or next week. Millions more workers know that their next pay packet will not be enough to make ends meet. Millions are struggling to pay rent or a mortgage, with private renters on average paying nearly half their income in rent. Yesterday, more than 3,000 people in this country will have queued up at food banks to feed themselves and their families. Last night, over 4,000 people will have slept rough on the streets of this country. And the Chancellor makes his boast about a strong economy.
But who is reaping the rewards of this economy? For millions, it is simply not working. It is not working for the NHS, which is in its worst crisis ever, with funding being cut next year. It is not working for our children’s schools, where pupil funding continues to be cut. It is not working for our neighbourhoods, which have lost 20,000 police officers, leaving the force in a perilous state in many parts of the country. It is not working for our public services and the dedicated people who work in them—nurses, firefighters and teachers; no pay rise in seven years for them—or for people with disabilities, who are twice as likely to be living in poverty, and whom this Government are denying the support that the courts say they need.
There are 4 million children living in poverty, and that figure will rise by another 1 million in the coming years. The economy is not working for the thousands of young people who cannot get anywhere to live, cannot get on the housing ladder and, in many cases, cannot leave the parental home. Parents of grown-up children whom they would expect to be debt-free by now are having to bail out student debt, or are trying to help them with a deposit to get housing, if they can manage it. A million elderly people—I will come on to this again—are being denied the social care that they need due to the £4.6 billion of cuts made by the Chancellor’s Government, with the support of the Lib Dems, over the past five years. The economy is not working for pensioners, for whom the security of the triple lock remains in doubt.
This is the reality facing Britain today: a Government cutting services and the living standards of the many, to continue to fund the tax cuts of the few. Some people are doing very well under the Conservative Government. The chief executives of big companies are now paid 180 times more than the average worker and being taxed less. Big corporations are making higher profits and being taxed less. Speculators are making more and being taxed less. The wealthiest families are taxed less due to cuts in inheritance tax. All that adds up to £70 billion of tax giveaways over the next five years to those who need it the least. This Government have the wrong priorities.
Let me give three examples. The pain of losing a child is unimaginable for most of us, but for those who do lose a child, their pain is worsened by the stress of having to pay for their own child’s funeral. I pay tribute to my hon. Friend the Member for Swansea East (Carolyn Harris) for her campaign to establish a children’s funeral fund, but far from establishing such a fund, which would cost just £10 million a year, the Government are instead cutting support for bereaved families—three in four bereaved families will receive less. That is utterly heartless.
Despite generous tax giveaways at the top end, there was no money either for the 160,000 people with disabilities whom a court has ruled deserve a higher rate of personal independence payments. These are people with debilitating mental health conditions such as dementia, schizophrenia and post-traumatic stress disorder. The Prime Minister came to office talking about fighting “burning injustices”. Less than nine months later, she seems to have forgotten all about them, because none of them is being fought today.
Low pay holds people back and is holding our country back. We are the only major developed country in which economic growth has returned yet workers are worse off. Wages are still below 2008 levels. Inflation is rising and there is an urgent need to address the pressure on people’s incomes. Personal debts are rising massively and there are rising energy bills, and the costs of the weekly shop, transport and housing are all rising.
The Chancellor faced a series of tests as to whether he would stand on the same side as the people or not. He could have raised the minimum wage to the level of the living wage—the real living wage of £10 an hour—as we, the Labour party, have pledged to do. That would give a pay rise to 6 million people in this country, 62% of whom are women. He failed to do that.
Since 2010, millions of public sector workers have endured a pay freeze and then a pay cap. The dedicated public servants who keep our services going have lost over 9% of their real wages, or will have done by 2020. The Chancellor could have ended the public sector pay cap, as we have pledged to do, and given a pay rise to the 5 million dedicated public servants whom we all rely on—day in, day out—in our hospitals, our health service in general and our local government. He failed to do that. It is an insult to say that they deserve falling living standards when we all know that those in the public sector are working harder than ever, covering the jobs of those who have gone.
There is a crisis, too, in job security. Millions of workers do not know whether they will be working from one day to the next. Millions of workers do not know how many hours they will be working this week or next week. Just imagine what it is like to try to plan your life if you do not know what your income is going to be from one week to the next. That is the reality—[Interruption.]
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. Can I just say to Members on the Government Benches that I want to hear the Leader of the Opposition? I do not want him to be shouted down. You might not be interested, but our constituents out there want to hear what the alternative is, so please—[Interruption.] If the Whip wants to be funny, he can go and get a cup of tea now. Let us show the same respect that was given to the Chancellor of the Exchequer.
Jeremy Corbyn
Thank you, Mr Deputy Speaker.
There is nothing funny about being one of the 900,000 workers on zero-hours contracts, 55% of whom are women. The Chancellor could have announced a ban on zero-hours contracts, as we have pledged to do, but again he failed. Zero-hours contracts are only the tip of the iceberg, with 4.5 million workers in Britain in insecure work, 2.3 million working variable shift patterns and 1.1 million on temporary contracts. We have long argued for a clampdown on bogus self-employment, but today the Chancellor seems to have put the burden on self-employed workers instead. There has to be a something-for-something deal, so I hope the Chancellor will bring forward extra social security in return. One policy that Labour backs is extending statutory maternity pay to self- employed women, which is likely to cost just £10 million a year.
Low pay and insecure work have consequences for us all. In reality, we all pay for low pay. A million working households have to claim housing benefit. Let me repeat that figure: 1 million working households have to claim housing benefit because their wages are not enough to pay the rent. There are 3 million working families who rely on tax credits simply to make ends meet. This is modern Britain.
The most effective way of boosting wages and increasing job security is, as all studies show, to improve collective bargaining through a trade union. Those are words that the Chancellor did not use in his speech; instead, the Trade Union Act 2016 will further shackle unions and perpetuate the chronic low pay that costs us all a lot of money through in-work benefits. We will promote collective bargaining and repeal the Trade Union Act. This is a Chancellor and a Government who are not on the side of the workers, and not on the side of the taxpayers who pick up the bill for low pay and insecure work.
On International Women’s Day, did the Chancellor deliver a Budget that works for women? According to House of Commons Library analysis that was commissioned by my hon. Friend the Member for Rotherham (Sarah Champion), who is doing a brilliant job speaking up for women from our Front Bench, 86% of the savings to the Treasury from tax and benefit changes have fallen on women. Women’s lives have been made more difficult through successive policies of this Government. Women are struggling with more caring responsibilities due to the continuing state of emergency in social care. The WASPI women born in the 1950s are, with little notice, having to face a crisis in their retirement that they could not possibly have predicted. Some 54,000 women a year are forced out of their jobs through maternity discrimination, but they cannot afford this Government’s extortionate fees to take their employer to a tribunal in search of justice.
Women up and down the country will have to wait another 60 years before the gender pay gap is closed. Hundreds of women are being turned away from domestic violence shelters every year due to a lack of space or appropriate services, or simply because the shelters have closed. Mothers who are already struggling are being put under more pressure through cuts to universal credit and tax credits. As if it was not bad enough to cut benefits to children whose only crime is to be born third or fourth in a family, as of next month, most shamefully, women will have to prove that their third child is a product of rape if they wish to qualify for child tax credits for that child. I pay tribute to my hon. Friend the Member for Rotherham and to the hon. Member for Glasgow Central (Alison Thewliss) for their campaigning on this issue, and I hope that the Chancellor will reverse that cut.
This country has a housing crisis—a crisis of supply and of affordability. Since 2010, house building has fallen to its lowest rate in peacetime since the 1920s. The building of social homes for rent is at its lowest level for a quarter of a century. Did the Chancellor empower councils to tackle the housing crisis by allowing them to borrow to build council housing, as we have pledged to do? No. Have the Government replaced council houses sold under the right to buy, as they promised? No; just one in six have been replaced. And was there any commitment to return to councils the £800 million of right to buy proceeds that the Treasury has taken back, which would be enough to build 12,000 homes? No. Did the Chancellor scrap the unfair bedroom tax, as we have pledged to do? No. Did he reverse housing benefit cuts that would take away support from 10,000 young people? No, despite opposition from Shelter, Crisis, Centrepoint and even the hon. Member for Enfield, Southgate (Mr Burrowes), who has correctly described the policy as “catastrophic”.
Last week, the Institute for Government said that there were “clear warning signs” of the damaging impact of the Government’s cuts on schools, prisons, and health and social care. This Government have taken a sledgehammer to public services in recent years, yet the Chancellor now expects praise for patching up a small part of that damage. This Budget did not provide the funding necessary now to deal with the crisis in our NHS, which the British Medical Association reckons needs an extra £10 billion. The Budget did not provide the funding necessary to end now the state of emergency in social care, which needs £2 billion a year just to plug the gaps, according to the King’s Fund. Those needs will not be met by £2 billion over three years—the money is needed now. More than a million people, mainly elderly people, are desperate for social care and still cannot get it. The money ought to be made available now.
This Government duck the really tough choices, such as asking corporations to pay a little more in tax. Not every local authority can just text Nick and get the deal it wants. Other council services are suffering as well. Our communities are stronger when we have good libraries. They are valuable for children, obviously, but also for the entire community. However, 67 libraries closed last year because of local government underfunding, and 700 Sure Start centres closed because of a lack of local authority funding, denying the life chances that a Labour Government delivered with the opening of Sure Start centres in the 1990s. Six hundred youth centres have closed as well. These painful decisions are being taken by councils not because they want to do it, but because they just do not have enough money even to keep essential services running, following the slashing of their budgets year on year. And it goes on—this affects our communities and lives in so many ways. Last year, councils proposed the sell-off of school playing fields with the equivalent size of 500 football pitches— 500 pitches unavailable for young people to indulge in sport. Surely it is our duty as a community to ensure that all our young people, wherever they live, have a decent chance to grow up with a library, a playing field and a Sure Start centre. It is not a lot to ask.
The Chancellor boasts of a strong economy, but he abandoned the previous Chancellor’s targets, so let me give a more realistic context for today’s figures. The deficit was going to be eradicated in 2015—do we all remember the long-term economic plan?—and debt was going to peak at 80% of GDP and then start falling. Our economy is not prepared for Brexit. It still suffers from underinvestment, an over-reliance on consumer spending, and wholly unsustainable levels of personal and household debt. Investment must be evenly spread around our country. Despite today’s announcements, London continues to receive six times as much investment as the north-east. Labour is backing a fair funding formula for investment so that every area gets its fair share of capital spending. What has been announced today does not achieve that. The Government cannot build a northern powerhouse or a midlands engine if investment does not follow the soundbite.
Our country spends 1.7% of GDP on research and development, which is well below the OECD average. The strongest economies spend over 3%. In the immediate term, the Chancellor must focus his attention—he did not have much to say about this—on the precarious future of skilled workers’ jobs at Vauxhall in Ellesmere Port and Luton, and at Ford in Bridgend. Exporting businesses would have more confidence if the Government clearly committed to negotiating for tariff and impediment-free access to the single market and dropped the reckless threat of turning Britain into a tax haven on the shores of Europe.
One of the biggest challenges facing our country is environmental—climate change. The Government are failing to lead and failing to drive a mission-led industrial strategy, which our Business, Energy and Industrial Strategy Committee has recommended. The Chancellor failed to make energy efficiency a national infrastructure priority. There was no commitment to establish zero-carbon standards on new buildings, and he was unclear about investment in public transport that will definitely reduce pollution. The poor air quality is appalling. It is killing thousands of people in this country and taking away the life chances of many children who grow up alongside polluted roads. The good work being done by Labour’s London Mayor, Sadiq Khan, and by the Welsh Labour Government has rightly recognised air quality as a public health crisis, particularly for children. We have to deal with this crisis urgently.
There cannot be an industrial strategy or productivity gains without serious investment in skills. Adult skills training has been cut by 54% and further education by 14%. The small amounts committed today are long overdue, but woefully insufficient. The schools budget is being cut by 8% over the coming years. Does the Chancellor want fewer teachers and teaching assistants, larger classes or shorter school days? Which is it? I agree with the Prime Minister that every child deserves a decent education and every community deserves a decent school, but we should achieve that by working with communities to provide those schools, not by plonking in selective schools that communities are not demanding. The money announced by the Prime Minister yesterday for new grammar schools is, frankly, a vanity project. The Government should cancel this gimmick and reject selection and segregation. Why do they not honour their own 2015 manifesto pledge to protect per pupil funding, which has clearly not happened?
This Budget lacks ambition for this country and fairness. It demonstrates again this Government’s appalling priorities: another year of tax breaks for the few and public service cuts for the many. When the Prime Minister took office, she said:
“If you’re one of those families, if you’re just managing, I want to address you directly.”
This Budget did not address them; it failed them. This Budget does nothing to tackle low pay, nothing to solve the state of emergency that persists for the many people who demand and need health and social care now, and nothing to make a fair economy that truly works for everyone. It is built on unfairness and on a failure to tackle unfairness in our society.
Mr Andrew Tyrie (Chichester) (Con)
I do not think that there is a great deal of concord in the House about that speech, but I think that there is some agreement across the House about a number of things that the Chancellor said. In fact, I think that there has been a quiet consensus in this place for steady deficit reduction ever since Alistair Darling’s Budget of 2010, and I am delighted that the Chancellor is persisting with that reduction.
Before picking up on a few of the measures, particularly those that affect small businesses, I want to make one point about overall fiscal policy. The Chancellor does not have much room for manoeuvre. He is pretty heavily boxed in, and I see him nodding in agreement. On the spending side, three quarters of public spending is covered by manifesto pledges, so every round of savings has to fall on a progressively smaller area, which makes it painful for it to absorb. On the tax side, he is just as constrained. In fact, he is even more constrained, because he has inherited the tax lock—the statutory prohibition on any reduction or increase in a number of taxes—and a commitment to reduce corporation tax to 15%. That puts over 80% of revenue beyond his reach should he need to raise more money later. Of course, there is also the fuel duty freeze—I think it is a freeze—that was announced in the autumn statement. All those tax and spending pledges are the fallout of an electoral bidding war, but dealing with that is a matter for another day.
I want to pick up on a few detailed measures that we just heard about, particularly on those, as I said, that affect small businesses, because I am particularly concerned about them. I was delighted to hear some good news, but first it is worth going through the list of things that small businesses are having to deal with at the moment: the doubling of insurance premium tax that was announced last year; automatic enrolment for pensions; the extra cost of the living wage; the infrastructure levy; the revaluation of rates—I will come on to the proposals that have just been announced in a moment—and the “Making tax digital” plan. In addition, there are the proposals for class 4 national insurance contributions.
Chris Leslie (Nottingham East) (Lab/Co-op)
The right hon. Gentleman is providing a good analysis so far. On the increase in national insurance contributions for the self-employed, does he think that the Chancellor needs to explain why he is breaking a 2015 general election manifesto pledge?
Mr Tyrie
The Chancellor set out his reasons quite carefully. He thinks that there is a strong argument for matching what people get out of NICs on the receipt side to the contribution side. I will look carefully at the hon. Gentleman’s point about the specific manifesto pledge, about which the Chancellor and I will no doubt have a further discussion when he comes before the Treasury Committee.
The Chancellor announced some quite important changes to “Making tax digital”, and we need to be clear about the problem that he seeks to address. Until today’s statement, several million people, mostly small traders, would have been required by law from 2018 to fill in their tax returns electronically for the first time. Some of those traders will not even have a smartphone, let alone a computer. The plan’s effect would have been to impose a massive, unfair burden on small businesses and some of the smallest traders, so it is good news that the Chancellor made a concession today, one which appears to be aligned with at least one of the suggestions made in a Treasury Committee report on this subject. The most important thing that the Chancellor is doing is keeping the starting threshold for another year at the VAT threshold of £83,000. That is the good news, but the not so good news is that the relief is only for a year.
May I ask the Chancellor to consider phasing in the lower threshold over a run of three or four years? He has suggested a lower threshold of £10,000, which seems extremely low—he looks puzzled, but he will find that that is what HMRC has been talking about. Dropping the VAT threshold dramatically from £83,000, or whatever it becomes, in one year strikes me as unreasonable. Of course I understand why the Chancellor is doing that—he needs the money—and I am sure that HMRC has told him that there is a huge amount of money waiting to be collected. He is nodding in agreement with that, too.
I think that I am right to say that HMRC previously suggested that £2 billion of uncollected tax is available, but I doubt that figure, and so does the Treasury Committee. If the Chancellor is brutal about introducing the measure, he might not got very much money. Some businesses will go into the grey economy, and some will cease trading altogether, so the pot of gold might not be there at all.
Wes Streeting
I agree with the right hon. Gentleman that merely delaying by a year is insufficient. Does he agree that the Chancellor should enact the Treasury Committee’s other recommendations and that, unless he does, today’s Budget will be good news for accountants and bad news for small businesses?
Mr Tyrie
The hon. Gentleman makes a powerful point, and of course I support his support for the proposals that we worked up together on “Making tax digital”. I will continue to make those points as vigorously as I can on behalf of the Committee, and I am sure that the Chancellor is listening. We should welcome his acknowledgment that the pre-existing proposals were not workable, and we have already had a bit of adjustment. Now that the door is ajar, perhaps we could have another conversation through the gap.
Kit Malthouse (North West Hampshire) (Con)
Like my right hon. Friend, I welcome the easing for businesses below the VAT threshold, but does he recognise that for those businesses over the VAT threshold, and they are not necessarily enormous businesses, that are struggling with some of the additional burdens that he mentioned, not least auto-enrolment, business rates and the changes to dividend taxation, particularly for owner-managers—I declare an interest as an owner-manager—accommodating the new system within the next 12 months will be a challenge and have a significant compliance cost?
Mr Tyrie
My hon. Friend, who is also a member of the Treasury Committee, makes the point that modest or slightly larger businesses will also find the bureaucratic burden introduced by the “Making tax digital” proposals pretty tough. The Committee has taken a lot of evidence on that. In the very long run, digital returns will be the future, but the question is how we get there. This is a generational change, and it is important not to sour relations between small businesses and the Revenue, which can easily happen if we hit small businesses over the head in the hope of getting a bit of extra money in years 1 and 2, or years 2 and 3. With a little more caution, small businesses can be brought into the system and yield a higher long-term revenue because we have their co-operation.
The second change—I will not linger too long on this because I lingered on “Making tax digital”—is to business rates. The Chancellor has announced a welcome relief for those businesses hit by revaluation. He has announced three concessions, which will cost quite a bit of money taken collectively. The concessions are not only important but essential. The small businesses that are being hit by the business rate changes are the lifeblood of the local economy in all our constituencies, and the measures will give them some relief from the pressure.
The Red Book suggests that the Chancellor might consider proposals for more frequent revaluation of business rates. I am pleased about that, because the big problem is the cliff edge created by revaluations every five or seven years. In a nutshell, we require both more frequent revaluation and quicker appeals. We need both. It cannot be beyond the wit of man to devise a reform that can deliver them.
While I am thanking the Chancellor, I thank him for agreeing, as he did when he came before the Treasury Committee recently, to publish the distributional analysis of the Budget measures on a basis comparable to that published in the last Parliament. The Committee will look carefully at the distributional analysis and other tax measures, and it will do so in a slightly more considered and less rushed way than we have in the past.
Mr David Burrowes (Enfield, Southgate) (Con)
In the spirit of thanking the Chancellor, will my right hon. Friend join me in thanking him for saying on page 35 of the Red Book that he wants to consult on introducing a new duty band for still cider just below the 7.5% band that targets white ciders? Many Members on both sides of the House will know that white cider is particularly damaging to young people and homeless people, and the consultation is a great signal of intent that we will get to grips with the issue, so that we do not have this harmful, damaging and too-cheap white cider on our high streets and particularly in our off-licences.
Mr Tyrie
My hon. Friend has made his point, and he may well be right. I never talk about cider for long in the House of Commons because, whatever I say, I have always found that it results in a great deal of correspondence. I will avoid cider altogether.
I end on a couple of larger points about the backdrop to the Budget. The Chancellor is having to deal with two big risks. First among those, and by far the biggest, is the risk to the economic prosperity of our constituents and the stability of the west from the resurgence of economic nationalism. There is a bit of that in Britain and a great deal more elsewhere in the world. Protectionism has been on the rise for some time, and it is already affecting global growth. It is worth bearing in mind that global growth has been anaemic over the past five years compared with the average of the past 30 years, and that includes the effects of the financial crash. There is a big difference between those two numbers.
Global trade growth has been even weaker. Global trade is now declining as a share of world economic activity, and we should all be concerned about that. The link between prosperity and trade does not seem to have registered with President Trump, at least not yet. He has withdrawn from the Trans-Pacific Partnership, and the Transatlantic Trade and Investment Partnership looks to be in trouble. He has called the World Trade Organisation “a disaster,” and he is threatening to withdraw from that, too. But not the Prime Minister. She has made it clear that Britain should be the firmest advocate for free trade anywhere in the world, and she is right. If it were all to go wrong and we were to return to full-blooded protectionism, we would not have to look into a crystal ball; we could read the book of the 1930s.
Geraint Davies
Is the right hon. Gentleman disappointed, as I am, that the Chancellor did not mention that real wages and asset values were reduced at a stroke by 15% through devaluation? Although devaluation secures more exports in the short term, it will be offset by tariffs in the future. What are the prospects for trade when the single market hits us over the head with tariffs?
Mr Tyrie
I will end with a word or two about Brexit, but I will not comment on the exchange rate except to say that devaluation makes the country poorer, but devaluations can come and go. We need to look at it as a shock absorber that the market has put in place as a consequence of the Brexit decision and in a much more long-term framework rather than judging it, as we are now, so soon after the event. Brexit does pose the risk of a trade shock.
Mr Tyrie
If the hon. Lady will forgive me, I would rather wind up. I am sure she will want to make her own speech in a moment.
There certainly will be a trade shock if we revert to WTO rules, so I am pleased that the Prime Minister has made it clear that she is working for what she calls a “bold and ambitious” deal with the EU. Deep engagement, political and economic, from outside the EU almost certainly commands a majority in the House and in the country; cutting off Britain almost certainly does not. Hopefully all parties to the negotiations grasp the importance of securing a deal, but wanting a comprehensive deal and getting one in what will amount to 18 months of negotiations are not the same thing. Getting one will be a massive undertaking. Businesses know that, which is why many of them will not wait around to find out whether there will be a deal; they will protect themselves. They will start to move economic activity out before 2019 and the supply chains will start to adjust, too—to the UK’s detriment.
I shall make one further point. There is a straightforward way to safeguard the UK from the risk I have just described, and the UK must ask for it in the negotiations. It almost certainly requires only qualified majority voting, and it is available under article 50 of the treaty. The UK should make it clear, now, that after leaving the EU—that is, having repealed the European Communities Act 1972 —the UK’s first requirement is that a standstill on the implementation of the detailed terms of any deal should be put in place. That is a crucial ingredient to bring stability and certainty during the negotiations.
When the Conservatives first came into power in 2010, there was a 10% budget deficit, ballooning public debt and the second-lowest growth in the G7. That all amounted to a massive challenge. Now, the public finances are stronger—only after six years of hard work—but the two risks to which I have alluded could amount to a cocktail scarcely less difficult to handle, particularly if mistakes are made. The Chancellor has told us that he has taken a cautious approach by steadily reducing borrowing; I strongly support him in that, and he has my strong support to persist, even if he hits heavy weather.
Several hon. Members rose—
Mr Deputy Speaker (Mr Lindsay Hoyle)
Order. After this next speech, the time limit on speeches will be 10 minutes.
Stewart Hosie (Dundee East) (SNP)
In many ways, the Chancellor did not disappoint us. We had the self-effacing jokes about spreadsheets and the spun lines about being stronger together, and then it went downhill. There was barely a mention of Brexit—the most momentous challenge facing the UK—and, more importantly, what the Chancellor would do to mitigate the damage that we expect as a consequence. Before I come to that, though, I had very much hoped to welcome a concrete package of measures for the oil and gas sector, and particularly for end-of-life fields; instead, we have been offered an options paper. One of my sharp-eyed assistants told me that that is exactly the same promise as the one made in 2016, so perhaps at some point the Chancellor will actually deliver the paper and set out some concrete measures.
Stewart Hosie
Not at the moment.
Budgets can sometimes be assessed more by what is omitted than by what is included. I thought there would have been more reference made to the city deals and how important they are for the areas that are negotiating them.
Stewart Hosie
I shall give way in a moment.
Although in passing the Chancellor mentioned fairness and, indeed, living standards, he did not dwell for very long—in fact, not at all—on the counter-analysis to his assertions, which is that child poverty will increase by 30% by 2021-22. That is entirely explained by the direct impact of tax and benefit reforms. He spoke about an increase to the minimum wage, which is of course welcome, but ignored the assessment that says that real average earnings are forecast to rise by less than 5% between now and 2020-21. In essence, that will mean more than a decade without real earnings growth.
Andy Burnham (Leigh) (Lab)
On the subject of omissions from the Chancellor’s statement, the hon. Gentleman will know that hundreds of women have travelled to Westminster today from Scotland, Greater Manchester and all over the country to campaign against the unfairness of their not being properly informed about changes to their state pension. Does he agree that it is disrespectful to say the very least that on International Women’s Day those women fighting for justice on their pensions got no mention at all from the Chancellor of the Exchequer?
Stewart Hosie
The final omission is any redress for the WASPI women. That is absolutely correct.
Stewart Hosie
Not at the moment.
It is worth reminding ourselves how we got to where we are today. It is not all the fault of this Chancellor, but the Tory targets on debt, deficit and borrowing that were promised in 2010 simply were not met. I shall demonstrate the scale of the failure. We were told that debt would begin to fall as a share of GDP in 2014-15, that the current account would be in balance the following year, and that public sector net borrowing would be barely £20 billion in that same year. Of course, as many of us warned it would not at the time, that did not happen. Debt will not begin to fall as a share of GDP until 2018-19, the current account will not be in the black until the same year, and public sector net borrowing in 2015-16 was not the barely £20 billion promised, but £72 billion. In short, the Scottish National party argues that the first five years of Tory austerity failed, and we have little confidence that the second five years will be any better.
I turn to the present, and then the future. Last autumn, the Chancellor told us that net debt would peak at 90% of GDP, or £1.84 trillion—that is 12 zeros. Today, he gave us the startling news about the huge progress: it will now peak at £1.83 trillion. Borrowing is down a few hundred million for 2017-18, and the current budget, due to be in surplus by £18.5 billion in 2019-20, has barely changed. The forecasts are as bad as they were promised to be in the autumn and have barely changed from last spring.
What growth there is seems to be driven in large measure by an assessment of increased business investment of around 4% over the next few years. The Office for Budget Responsibility says that there will be
“a 0.1% fall in business investment in 2017, before uncertainty begins to dissipate”.
We are about to have article 50 invoked, followed by a tortuous 18-month to two-year negotiation, and the OBR and the Treasury are telling us that the uncertainty will dissipate sometime at the back end of this year. That almost beggars belief.
John Redwood (Wokingham) (Con)
Can the hon. Gentleman explain why he and his party thought before and immediately after the referendum that there would be a sharp slowdown or recession this winter? Were they not completely wrong then, and are they not wrong now about article 50?
Stewart Hosie
The right hon. Gentleman is completely wrong. I can say with absolute certainty that there was never, ever a threat of an immediate collapse. Indeed, I am on record as saying there would be no problem in week one, month one or year one, or even in year two or year three, which gets us to just beyond the negotiation. The danger was always the long-term risk of decreases in foreign direct investment and trade, and of loss of GDP from reduced migration, to which I shall turn because the Chancellor did not.
Much of the previous failure came about because the last Tory Government strangled the lifeblood from recovery by cutting too much or too quickly, with little or no regard to the consequences. That error was set in stone by the old fiscal charter and its requirement to run a permanent surplus quickly, almost irrespective of the economic conditions. The new fiscal charter, which was not really given a look-in today, is certainly more flexible than the last one, but it still targets a surplus early in the next Parliament. The numbers and the timescale look precarious. The forecasts for a current account surplus are tiny, not even reaching 1.5% of GDP in this Parliament. If there is any external shock or any capital flight, if we suffer more devaluation, which is quite likely, or if the negotiations go badly, the figures could fall apart very quickly indeed.
These numbers are being delivered before the full impact of a hard Tory Brexit are felt. We cannot even assess properly what the consequences of that will be, because the OBR tells us
“there is no meaningful basis for predicting the precise end-point of the negotiations as a basis for our forecast.”
That is a central assumption that pretends Brexit does not exist—a ridiculous thing to do with the invocation of article 50 looming.
The OBR’s central forecast is in rather stark contrast to what we already know. The Treasury had reported previously that the UK could lose up to £66 billion from a hard Brexit, and that GDP could fall by almost 10% if the UK reverted to WTO rules, which echoes what the Chair of the Treasury Committee said. Other assessments mirror that. The London School of Economics says:
“In the long run, reduced trade lowers productivity.”
That is a huge problem for the UK. It went on to say:
“That increases the cost of Brexit to a loss of between 6.5% and 9.5% of GDP.”
It puts a range of figures on that of between £4,500 and £6,500 per household.
Last year’s PricewaterhouseCoopers report suggested that employment could fall by 600,000. The figures for Scotland produced by the Fraser of Allander Institute suggest that a hard Tory Brexit could result in 80,000 lost Scottish jobs and a drop in wages averaging £2,000 in a decade. If we add to that the report by senior executives in the FTSE 500 saying that Brexit is already having a negative impact on business, and the British Chambers of Commerce reporting that half the businesses surveyed have already seen a hit to margins due to devaluation, we can see the scale of the problem. What we should have seen today is mitigation to match that.
To be fair to the Chancellor, he did move a little last autumn with announcements of additional support for capital investment and research and development. Today, he reiterated some of the R and D statements and put some flesh on the bone of other investment, no doubt taking his cue from the IMF, which had said previously that the Treasury had done enough to stabilise finances for the Government to embark on extra investment spending. However, the figures from last year’s autumn statement show public sector net investment falling in 2017-18 to 2018-19 and not recovering again until we are in the next Parliament. The figures today for public sector gross investment show them falling this coming year, 2017-18, to the forecast made only three and a half months ago. The money should be spent now to mitigate that rather than waiting for the OBR to say that the damage has been done.
However, it is not all about broken promises on debt, deficit and borrowing. It is not even about repeating the mistakes of the past on investment. We are now in such uncertain times that, to protect jobs and the current account, trade should be front and centre, but little was said about that today. The Red Book tells us already that the current account is in negative territory for the entire forecast period. The impact of net trade will be zero or a drag on GDP growth for almost every year in the forecast period. That is after an average 15% devaluation in sterling since the EU referendum.
George Kerevan (East Lothian) (SNP)
Is my hon. Friend aware that the Red Book also points out that, over the forecast period, the cumulative current account deficit is more than 13% of GDP? We will have to sell an awful lot of UK companies to fund that.
Stewart Hosie
That is precisely the point. The choices are that we grow and we take exports seriously, or we do what Tory Governments have always done, which is to sell off the family silver.
Growth is forecast to be based on heroic levels of business investment after the uncertainty of Brexit ends this year. It will be propped up by household consumption with a commensurate rise in household indebtedness, central Government investment, which I welcome, and fixed investment in private dwellings, but with house prices forecast to rise at two or three times the rise of inflation. The Budget report seems to make merit of that: people will feel wealthy, it says. We know what happens when prices fall, and we know what the impact is on youngsters trying to get on the property ladder. On household debt in particular, the Chancellor should have been much more aware of the concerns that, even after excluding mortgage payments, household debt has now reached record levels. This is not a balanced recovery.
However, it is the issue of trade that is most worrying. The figures are clear. The last full year for which we have figures—2015—saw a current account deficit of £80 billion, and a deficit in the trade in goods of £120 billion. At least the Chancellor did not repeat the claims of his predecessor that we could double exports by the end of this decade to £1 trillion. Perhaps he should enlighten the Secretary of State for International Trade, who still thinks that it is sensible to keep the target even though he does not believe that it can be met. This is not all the fault of this Chancellor. Many of these failings have been embedded in the UK economy for decades. It is not just about exports, but about support for innovation, which I welcome, and manufacturing as well as boosting productivity across the board.
We should have had specific plans today—the Chancellor has had enough time in office—for substantial GDP growth, not the less than 2% in every year for the forecast period, which is lower than the pre-crisis trend. We should have had measures to boost productivity. In Scotland, productivity is 4% higher than the 2007 level, compared with next to nothing in the UK. We should have had targeted support for high-growth export-focused small and medium-sized enterprises. The Chancellor should have taken more businesses out of business rates entirely in England rather than offering just a bit more help for a short period of time.
I welcome what the Chancellor said about education. If we tackle the attainment gap, we can get inclusive growth. We will not get inclusive growth if people are struggling to put food on the table because the welfare cap is squeezing people’s real incomes.
Caroline Lucas (Brighton, Pavilion) (Green)
Earlier, the hon. Gentleman was talking about significant omissions. Does he share my deep concern about other omissions? There was nothing at all in this statement about the climate crisis; nothing about investing in green energy; nothing about energy efficiency; nothing about reversing the solar tax hike; and nothing about the public health emergency caused by air pollution. Does he agree that that is a reckless and irresponsible squandering of a vital opportunity?
Stewart Hosie
The pattern that we have seen over the past few years confirms that. It is not just about the photovoltaics and the contracts for difference changes, which were not helpful, but all the other issues that the hon. Lady has raised too. She is right to keep on making those points.
One reason why the Government cannot fund their policies is to do with the yield from taxes. I believe in tax competition, but if we look at the corporation tax yield, we can see that it has flatlined and fallen in real terms for the past four years of the forecast period. In order to make amends today, or to make the numbers stack up, we have seen a scandalous attack on aspiration and on the self-employed by taxing more and making more changes to national insurance contributions to the tune of £4.2 billion or so. The party of aspiration is taxing those who are self-employed, pouring in active, real hard disincentives to starting businesses, to employing people, and to stepping out on one’s own. That is a decision that will come back to haunt this Chancellor.
Charlie Elphicke (Dover) (Con)
Does the hon. Gentleman not agree that, if people work, they should be taxed equally? There is a non-level playing field when it comes to taxing people who are employed and taxing those who are self-employed. Does he think that that is fair or sustainable?
Stewart Hosie
This is the problem with Tories. They talk about business as if they know it. They assume that every businessman is a multi-billionaire. When most self-employed business people start, they earn less than the minimum wage. If they can take out £1,000 or £2,000 in a dividend to help them make ends meet at the end of the year, that is the right thing for them to be able to do. If they become half a Microsoft in the future, they pay taxes, employ tens of thousands of people, and we all get to benefit. None of these people will now do that automatically. They will take a second look, have a pause, and wonder whether the risk is worth taking because of the disincentive put in place today.
Stewart Hosie
I will not give way for the moment, because I want to make a little progress.
The Chancellor also announced some £350 million for Scotland. [Interruption.] I thought that he might want me to welcome that. The problem is that it is all smoke and mirrors. Even after today’s announcement, Scotland’s discretionary spending will still be down £1 billion between this year, 2016-17, and the end of this Parliament, and more than £2.5 billion down in the Tory decade since 2010. Every little helps, but we will not be putting out the bunting to celebrate the Chancellor’s largesse.
The key point I want to make is about Brexit. The hard Tory Brexit—the elephant in the room barely mentioned by the Chancellor—is approaching quickly. It means that we will revert to WTO rules, with all the tariffs and other regulatory barriers, if a better deal cannot be struck, and I have no confidence at all in this Government’s ability to deliver that deal.
Stewart Hosie
Not at the moment.
There is no guarantee that a deal will be done. If the Chancellor expects that the plans outlined today can cope with the consequence of a cliff-edge Brexit, which the Prime Minister plans, then the whole Government are in for a very rude awakening.
Let us look at some facts. The economic value of EU citizens working in the UK is enormous. PricewaterhouseCoopers told us last year that the impact of migration restrictions alone due to Brexit could lead to a loss of over 1% of GDP. That 1% fall would more than halve the Government’s GDP growth forecasts for every single year of this forecast period, rendering them meaningless.
Just to put some colour into that, my hon. Friend the Member for Dundee West (Chris Law) today met representatives of the computer games industry, who said that 98.4% of the companies that responded to them had said that the Government should immediately guarantee the status of EU nationals working in the UK. That would have been, if not a fiscal measure, an active and positive economic one for the Chancellor to have announced today. It would have been an active and positive economic measure to guarantee that the UK would fully replace lost EU funding post-2020, specifically the less favoured area support scheme, particularly if the UK leaves the EU before the closure window in 2019. It would have been a positive economic measure today to confirm the UK’s intention to negotiate substantial and long transitional arrangements for the financial sector, to avoid the loss of jobs, income, headquarters and tax.
Philip Boswell (Coatbridge, Chryston and Bellshill) (SNP)
Was my hon. Friend as concerned as I was at the announcement just six days ago in the Irish press that since the Brexit vote over 100,000 UK companies have registered, or taken steps to register, offices in Ireland?
Stewart Hosie
I am not shocked or surprised by that. What we need to do is ensure, certainly in Scotland, and in the UK if the Government can find the will to do it, that we make this country as attractive as possible as a place to continue to invest in and run businesses in, and for us that means staying in the single market and, frankly, staying in the EU.
Finally, I want to refer to announcements made in relation to the Budget over the past week. There was the decision to have extra departmental spending cuts, and the decision on personal independence payments and other welfare measures. The latter, we believe, demonstrates the real impact of the welfare cap in punishing the most vulnerable and balancing the books on the backs of the poor, confirming many predictions that the UK is set to become more unequal than it has been since the days of Margaret Thatcher, and further confirming that this Government have learnt nothing. They are tweaking the numbers to fit the ideology, driven by an austerity agenda and failing to realise that they cannot cut their way to growth. At its heart, the real tragedy of this Budget, only a week or so before article 50 is invoked, is that Brexit was the word that dared not speak its name, and this country is completely unprepared for the economic tsunami that this Government will unleash.
Several hon. Members rose—
Mr Deputy Speaker (Mr Lindsay Hoyle)
There is now a 10-minute time limit on speeches.
John Redwood (Wokingham) (Con)
I draw the House’s attention to my entry in the Register of Members’ Financial Interests.
The good news is in the forecasts. I am delighted that the Government have gone back to the forecasts they put to us in March 2016, when they rightly said that the UK economy would grow by 2% in 2016, and by little over 2% in 2017. I welcomed those forecasts at the time and held to them throughout the past year. I am delighted that the Treasury has now largely backed those more sensible forecasts.
However, we need to ask why the Treasury, the Office for Budget Responsibility, the Bank of England and many other independent forecasters got the forecasts so comprehensively wrong in the summer of 2016, and why the autumn statement forecasts were still so wrong at the end of last year. I wonder whether we need some efficiency improvements in their economic forecasting departments. Do we really need all those forecasters in the OBR, the Treasury and the Bank of England, if they are going to get it so comprehensively wrong and make the Chancellor’s job so difficult? He is trying to chart a consistent and stable course through a set of forecasts that are rather like a wild ride to some kind of nightmare world, only to discover that there is no nightmare but rather a good outlook.
Alison McGovern (Wirral South) (Lab)
The right hon. Gentleman says that we ought to get rid of forecasters in the OBR and the Bank of England if they get the forecasts wrong. Plenty of modellers and forecasters in the City of London got their forecasts wrong before the crash in 2008, but I am sure he does not believe that we should end the banking trade in the City of London.
John Redwood
I do not think that the hon. Lady was listening to what I said. I asked whether we have too many of them, because we do not need quite so many to get it wrong; I think that we could be more economical in getting it wrong, if that is what they persist in doing. Certainly, the official forecasters completely missed the banking crash of 2008-09, which some of us did not miss. Then, of course, they got the Brexit impact completely wrong. The Scottish National party is redefining what it believed at the time of the remain campaign. I remember quite clearly it supporting a campaign that said, in terms, that those official forecasts were right—that confidence would be damaged, and therefore consumer expenditure would fall, whereas it has actually gone up very strongly. It said that investment would collapse, but it did not, because the demand was there, and companies need to meet it.
George Kerevan
I clearly remember being in the Treasury Committee when we interviewed the Chancellor, and clearly remember holding him to account for his bogus forecasts, which were clearly over the top, clearly bound to turn people off and clearly led to the wrong result on 23 June.
John Redwood
I am delighted that the hon. Gentleman shared my scepticism. I just wish that he had said rather more at the time when we were fighting the referendum campaign, because I do not remember him being on my side or making similarly helpful comments before people went to vote.
Mr Prisk
One of the difficulties I found when I was Minister with responsibility for construction was that statistics from the Office for National Statistics are often incomplete and based on only partial information. Does my right hon. Friend agree that if forecasts were more infrequent, we might get the numbers right more often?
John Redwood
That might be worth looking at. We need to consider why the forecasts went so comprehensively wrong on this occasion. We also need to probe further why they went so wrong in 2007-08, when they disrupted the world economy in the west. They disrupted the Labour Government very dramatically, because there was absolutely no foresight about the consequences of the actions they were taking over the banking system, first allowing it to expand too fast and then collapsing it far too quickly, with awful consequences, as we know. I am delighted that I can fully support the Government’s latest forecasts, because they are in line with where I have been throughout.
That brings me neatly to the monetary situation. The Government need to recognise that there is a new move afoot. We will probably see an interest rate rise in the United States of America next week, and we might see two or three rises of 25 basis points over the course of this year, because it recognises that its recovery is sufficiently advanced. There is quite a bit more inflation in the American system, and it needs to start to normalise interest rates a little more. We might even hear from the European Central Bank tomorrow that it is no longer thinking of cutting rates further; they are already negative. It might need to think in due course about tapering its rather generous quantitative easing programme.
We are moving into a world where interest rates tend to go upwards, rather than going downwards or staying stable. If we are too slow in responding to that mood, we will find undue pressure on the pound. I do not think that has anything to do with Brexit; I think it is to do with interest rate differentials. The pound started to fall away in the summer of 2015, and most of the devaluation we have seen to date actually took place by April last year, before the vote, but there has been more pressure in recent weeks. When people look at these interest rate differentials, they will say, “Why don’t I hold my money in dollars? Not only will I immediately get a pick-up in interest, but I think there will be further rate rises in America.” We need to factor that in. That is why I welcome the Government’s decision to increase public spending in certain areas. As a constituency MP, I want more money spent on social care. I represent a high-cost area of the country, where the shoe is pinching and there are more people needing that assistance. The Government were right to make a sensible contribution, and I look forward to seeing the details.
John Redwood
I am running out of time, so I cannot take any more interventions.
I welcome the decision to have more money for schools and the NHS, because there, too, my area has been poorly funded for many years. We are looking forward to getting a much better settlement for our schools under fairer funding, and I hope that there will be something for our schools as a result of the Chancellor’s sensible decision to make some increases. I think that colleagues will generally welcome the Government’s attention to schools, the NHS and social care funding. I hope that the rate relief fund will be generous, because I represent an area where there are likely to be substantial increases in the rates, but where businesses are not necessarily generating the extra turnover that makes it easy to pay those sharp increases. We particularly need to look after small and growing businesses. I hope that the fund will be well targeted and will deal with what will otherwise be a series of tough, hard cases.
I welcome the extra spending and relief on tax, because I am not as worried as some about the level of UK debt. We need to remember that the figures the Government are giving us are for the gross debt. They are saying that the debt, at 86% of GDP, is high and needs to be brought down, but of course quite a bit of that debt is owned by the Bank of England on our behalf, so we owe the money to ourselves. The adjusted figure is about 65%, which is a perfectly reasonable level, particularly at a time of very low interest rates. Whatever happens with advanced country monetary policies, we all think that interest rates will remain abnormally low for quite a long period of time—well below the averages we were used to before the banking crash.
This is not a bad time for the state to borrow, particularly if it is investing in projects that we need and that may have some return. We definitely need better transport and strengthened broadband, much of which can be done by private finance. We also need better flood control and, at the same time, more water reserves for the fast-growing areas of the country. We need a lot of extra housing, which brings with it the need for more provision of schools and hospitals.
If we are to carry on growing at something like the rate at which we have done in recent years, we have to accept that there is a backlog of infrastructure requirements—everything from roads to water supply, through to getting our broadband up to speed and sufficient in capacity. I want as much of that as possible to be financed in the private sector, and a lot can and will be, but the Government have an important role in all these areas. They have to offer licences and organise planning permissions. They may need to pump-prime. Parts of the networks may not be financially viable without Government money. That is certainly true of our road system, because we have a system that is free at the point of use, owned by the state in all its manifestations. As we need better roads, Her Majesty’s Government clearly need to invest a decent amount in roads.
I note that the Budget was mercifully short of measures on the tax side, although I am always in favour of measures that cut taxes, rather than increase them, and I would have welcomed rather more of those. The Chancellor understandably wishes to go to having one Budget a year, in the autumn. We look forward to a Budget that deals with taxation in the autumn. He has set out a number of ideas for consultation, or perhaps pre-announcements; I trust that there might be some modification to those by the time we get to the proper Budget in the autumn. I urge him to understand just how crucial flexibility is to our economy, and that flexibility comes from having so much, and a growing volume of, self-employment. We need to ensure that it is as easy as possible to get into self-employment, and that it is as worthwhile as possible when people are successful.
I always think it is a good idea to try to confine taxes, and certainly tax rises, to things that we do not approve of very much. We have quite a number of sin taxes, which are rather easier to sell to the public. We should not go out of our way to tax work, enterprise and success. I know we have to do some of that, because we need a lot of revenue for the range of public services we offer, but our taxes on those things are quite high enough. We might actually find that we raised more revenue from more work and more enterprise if the rates were lower, because there is definitely a beneficial effect if we can get our rates to a competitive level worldwide. We need to understand that other countries around the world are getting the idea of cutting tax rates. The new President of the United States of America is working with Republicans on the hill on a major set of tax proposals that could cut American corporate tax rates and income tax rates dramatically, which would give America an important competitive advantage and make it a much more attractive place for talent and inward investment. We need to bear that in mind as we go into our autumn Budget cycle here, because I want the UK to be the most competitive major economy in the world.
My last point, in response to the previous speaker from the Scottish National party, the hon. Member for Dundee East (Stewart Hosie), is that he should not start painting this picture of misery and collapse in three years’ time, given that there was no collapse immediately after the vote. Were we to end up on World Trade Organisation terms, we would collect £12 billion in tariff revenue, which we could give back to businesses and consumers here; other countries would collect only £5 billion in tariff revenue from our exports to them, so we would be better off financially in that transaction. We would also be better off because if countries placed large tariffs on food exports to us, which would be an extraordinary type of self-harm on their part, we would presumably substitute a lot of imported food from cheaper parts of the world.
Rachel Reeves (Leeds West) (Lab)
The Chancellor spoke today about his determination to tackle the dangers lurking in the small print of contracts, so let us look at the small print of the Chancellor’s Budget. Inflation is up, wages are stagnating, household debt is rising, and the NHS and social care system are on their knees. Social care has been cut by £4.6 billion in the past five years. A £2 billion increase was announced today, but that is not enough to deal with an ageing population and the huge cuts faced by local authorities.
The issue of Europe is not even in the small print of the Budget; there was not a single mention by the Chancellor of the European Union or the negotiations that we presume will begin at the end of this month. There is increasing concern that a hard Tory Brexit, in which we fall back on WTO rules and tariffs, will further harm our exports and inward investment, yet there was nothing today to assure businesses and investors that we will have a system that works for them in the years ahead.
Today is International Women’s Day, but there is very little in the Budget that does anything at all to help women. It is women who have borne 86% of the cuts—benefit cuts and cuts to in-work benefits—and tax rises over the past few years. Some £80 billion a year has been taken out of the pockets of women over the past seven years under this Tory-led Government, yet the Budget does nothing to reverse that trend.
When it comes to household debt, the figures are startling. The whole forecast is dependent on consumers continuing to spend, but that consumption is based on consumers continuing to rack up the debts. Our savings ratio has been falling since 2010, and is now at a record low. Unsecured debt went up by 10% last year. The household debt to income ratio is now at 145%, up 6% in just one year.
John Redwood
Is not it a good thing if a young person with a reasonable job takes out a mortgage? Is not it sensible to borrow?
Rachel Reeves
Unsecured debt, as the right hon. Gentleman knows, grew by 10% last year. That is not secured against anything solid at all. The household income ratio, which is back to being close to the levels of 2008, should sow seeds of doubt in all our minds about the sustainability of our economy. I am concerned about the ability of consumers to carry on bearing this burden. To do so, they will have to increase their debts or have real wage increases, but this Budget sees real wage growth contract sharply because of the sharp increases in inflation as a result of the depreciation of our currency. This is not an economy that is well placed to withstand the strains and shocks that lie ahead.
My argument today is that this dangerous reliance on borrowing and debt is directly connected to the Government’s failure to put wealth and opportunity in the hands of the many rather than just the few. While those on the Government Front Bench keep saying that they are on the side of ordinary people, they have not shown it in their actions today.
Last week, the Institute for Fiscal Studies reported that we are on course for a rapid rise in inequality over the next five years. The bottom 10% of the earnings distribution—those who already have the least—will see their incomes fall in the next few years, particularly due to cuts to universal credit. Meanwhile, those with the most—the top 10%—will see their take-home pay increase by 10%. That is a direct consequence of the Government’s failure to reverse our economy’s growing reliance on low-paid work and low productivity, with one in five people now paid less than the living wage, and deep cuts to in-work benefits, which make it harder for those families in work to make ends meet. That cannot be right.
However, that is not all. The Government have now ignored two independent court rulings by cutting access to disability benefits for over 160,000 people, which will save them £3.7 billion. There is no mention at all of that in the Budget. Switching people from disability living allowance to personal independence payments has also seen nearly 50,000 people lose their Motability cars because their benefits have been cut under the blatantly unfair changes to the assessment rules. That is not the sort of country I want to live in, and I do not think it is the sort of country our constituents want to live in either. Not only is this a betrayal of the hard-working majority the Government promised to put first, but it shows a callous disregard for the poorest and most vulnerable in all our communities. It is also not the way to build the better balanced and more broad-based economy we need to build for the more turbulent times we are bound to see ahead.
Let me set out a few areas where today’s decisions have been misjudged, and how the Government could have delivered a fairer Budget. First, the Government are going ahead with a £1 billion cut to inheritance tax for the richest people in our country. That money should instead be spent on expanding free childcare for families, particularly those on the lowest incomes. Almost half of this inheritance tax giveaway will go to London and the south-east; in fact, 96 of the top 100 constituencies that will benefit are in London and the south-east. But what about our constituencies in the north of England, Scotland, Wales and Northern Ireland—in the rest of the UK, which does not benefit by one penny from these cuts in inheritance tax?
Lucy Frazer (South East Cambridgeshire) (Con)
The hon. Lady said it was important to spend more on childcare. When the Chancellor delivered his speech, did she hear that the Government spend £6 billion a year on childcare?
Rachel Reeves
The hon. and learned Lady will also know that the manifesto promise the Conservative party was elected on has been delayed time and again. If she really thinks that the support that will, we hope, come forward in September will be enough to help women get back to work and to deliver the high-quality childcare we need for all children, I am afraid she is deluded.
Cutting inheritance tax is unfair and misguided, and this blatantly unfair policy is further evidence of the Government’s warped sense of priorities at a time when we should be doing far more to help the millions of families struggling with childcare costs. Just one in 2,500 people in England and Wales will benefit from this cut, which will lift 26,000 of the richest families out of inheritance tax. This measure will only deepen the north-south divide, and it is another Tory policy benefiting the already well-off, when we could be investing in the future of all our people.
Secondly, I would like to turn to the issue of the self-employed. Today, the Chancellor made changes to national insurance contributions for the self-employed. I am all in favour of cracking down on bogus self-employment, especially when employers effectively force employees to become self-employed and to lose out on the security and benefits that go with being employed. I am also all in favour of cracking down on tax avoidance as a result of individuals incorporating rather than being direct employees.
However, I am worried about these changes. My back-of-the-envelope calculations suggest that a self-employed person on £20,000 a year will end up paying £20 extra a month because of these changes in national insurance. We also know from the Budget documents and from previous announcements in Budgets that the cuts to corporation tax are worth £3.8 billion and will primarily benefit the largest businesses, yet in this Budget, we are increasing taxes on the self-employed by £2 billion. That seems to be the wrong priority: we should be doing more to help the self-employed and small businesses, and less to help the big businesses already making large profits. In the Budget documents, the Chancellor also speaks about tax avoidance, but the tax avoidance measures amount to £810 million. Again, we have this huge discrepancy: we are taking £810 million from tax avoidance, but asking the self-employed to pay an extra £2 billion.
While it is right for the Chancellor to say that we should look at access to maternity and paternity benefits for the self-employed, what about the other benefits that people take for granted if they are direct employees, such as sickness benefits, out-of-work benefits and access to universal credit? Will the Chancellor look at access to those for the self-employed, as well as ensuring that the self-employed can get a mortgage and a private pension—things that too many self-employed people find are denied to them?
Kevin Foster (Torbay) (Con)
I am listening with interest to the hon. Lady. She made reference to a number of benefits; she might recall that in late 2013, the Labour party’s then shadow Secretary of State for Work and Pensions said that Labour would be tougher than the Tories on benefits. Is that still her party’s approach?
Rachel Reeves
I am sure that the hon. Gentleman read that article; I said I would be tougher than the Tories in controlling the rising costs of benefits. For all the cuts we have seen from the Tories, the benefits bill keeps rising. Why is that? More young people are out of work, more is being spent on housing benefit because we are not building social housing, and one in five people is not paid a living wage. I will take no lectures at all from the Tories on controlling social security benefits; in fact, they have breached their social security cap, and they have had to come back to Parliament to explain themselves.
Thirdly, I welcome the announcement that the Government want to crack down on the small print in contracts, but I have a specific request, which the Minister at the Dispatch Box knows about. In 2013, Parliament capped charges on payday loans, resulting in a maximum charge of £24 a month if someone borrows £100. However, if someone goes overdrawn with their high street bank, they can be charged as much as £5 a day—almost £100 a month. If the Government are serious about protecting consumers from unscrupulous business practices, they should get tough on the banks that are using excessive overdraft charges to exploit customers, particularly those who are vulnerable and getting into debt.
Finally, I want to say something about grammar schools. The Budget documents say that the Government will spend £1 billion on new schools—presumably, those will be primarily grammar schools—but only £260 million on all other schools combined. How can that possibly be right? How can that new spending be fair and ensure that all our children get access to good schools? Instead of spending £25 million on bussing children to these new grammar schools, why do we not do more to ensure that all our children have the best possible start in life? That would be a fair Budget; that would be a Budget that addressed the concerns of all our constituents. We will not get it from the Conservatives; we will get it only from a Labour Government.
Charlie Elphicke (Dover) (Con)
It is a pleasure to follow the hon. Member for Leeds West (Rachel Reeves), who spoke with greater passion, far greater clarity and much more intellectual and policy coherence than the leader of her party some moments ago.
This Budget is important for three key reasons. First, I have campaigned for a long time on avoidance, and I care deeply about the issue. Secondly, Brexit will touch and concern my constituency very deeply, and I will set out why we need to be ready on day one, two years hence, for all eventualities. Finally, I am going to talk about the cost of motoring and the need to make sure that we have a fair deal for car drivers. Given that 90% of all journeys in this country are made on our roads, it is important to be fair to people who travel on them.
On avoidance, I have long felt passionately that it is fair, right and proper to have a level playing field for internet retailers, big businesses, big multinationals and the like that trade in this country but do not contribute to the tax system, including Amazon, Apple, Google, Starbucks and all the rest of them. I have talked about this on many occasions. I am also deeply concerned that for too long there has been a serious problem with internet retailers from overseas—outside the European Union—not accounting for VAT and customs duties on their imports into the United Kingdom, and that needs to change. The Government calculate that that is worth about £2 billion; according to my calculation, the gap since 2005 is closer to £7 billion. Either way, it is a serious problem, and that gap needs to be closed. I welcome the fact that the National Audit Office is investigating this.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
Does the hon. Gentleman agree that that problem simply hammers small businesses in the UK that are trying to do a good thing, and that it creates such an un-level playing field that it really is time for the Government to act?
Charlie Elphicke
The Chair of the Public Accounts Committee makes a powerful point. That is why I greatly welcome the call for evidence on the VAT split payment model in paragraph 3.49 on page 37 of the Red Book. I am glad that the Government are looking at this. That is absolutely right and absolutely welcome. The work of the many campaigners is encouraging the Government, Her Majesty’s Revenue and Customs, the Public Accounts Committee and the NAO to look at the situation closely. I am more confident than I have been for a very long time that we may yet see a more level playing field to enable British businesses to compete fairly and squarely against those from overseas in internet retail.
It is also important to have a level playing field for workers, be they employed or self-employed. I heard the remarks of the Leader of the Opposition and the SNP spokesman, the hon. Member for Dundee East (Stewart Hosie), about how appalling it all is. Surely, however, there should be a level playing field for the self-employed and the employed. That is something about which I feel quite strongly, and I think that the Chancellor was right to introduce measures to that effect today.
Stella Creasy
What will the hon. Gentleman say to the 10,000 self-employed people in my constituency and the 3,500 self-employed people in his constituency who read the Conservative manifesto, which pledged four times that there would be no increases in national insurance?
Charlie Elphicke
The hon. Lady knows that we have legislated to place a lock on class 1 national insurance contributions, VAT and income tax, but I think that class 4 contributions—as part of creating a more level playing field—are a different matter. For me, it is about fairness and pragmatism. The playing field is so skewed that social justice, fairness and doing the right thing must come first. I regret the fact that the Labour party does not seem to take that position or agree with it.
Jonathan Reynolds (Stalybridge and Hyde) (Lab/Co-op)
I would not usually intervene in such a situation, but I must say to the hon. Gentleman that self-employed people do not have equal access to in-work benefits such as holiday pay, sick pay, auto-enrolment and parental leave. How, then, can it be right to put up the tax on self-employed people?
Charlie Elphicke
It is absolutely fascinating, is it not? One moment, the Labour party and the trade unions say, “Isn’t it outrageous? We have got to stop the gig economy”, and the next moment they say, “Isn’t it outrageous? We have got to make sure we protect the self-employed.” There is no intellectual coherence in today’s Labour party. It is completely and utterly unfit for government.
Let me turn to the matter of Brexit. In my constituency of Dover last summer we had a taster of what will come if we are not ready. We saw queues of traffic all the way down the motorways, and some say that that was a tea party compared with what will happen if we are not ready. That is why I am making the case again today for more and faster investment in lorry parks off the M20, for widening and strengthening the M20, for dualling the A2 and for the lower Thames crossing. We need the infrastructure in the channel ports as well to make sure that we are ready on day one.
I know that there are Labour Members who look forward to that day, and who like to warn about it and, frankly, feast on it. I take a different view. We need to be ready and prepared so that the worst does not happen. That is why I call for investment to be brought forward, for the lower Thames crossing to be built quickly, and for us to get on with it. We should make an investment in the port of Dover that is similar to, and greater than, that which we have most graciously made in Calais in recent years. It is time we put Britain, and Britain’s border, at the forefront of our policy.
In addition, we need to be ready on day one if we do not get a deal. I hope that we will get a deal in two years’ time. I hope that the Commission will negotiate in good faith. So far, the way in which it has gone about dealing with legally non-existent liabilities makes me think that it will not necessarily do so. Even if we get a deal from the Commission, the European Parliament has to vote for it, and the European Parliament is in an even worse emotional place than the European Commission. After that, a qualified majority vote of the 27 will be required.
I hope that we will manage to do the deal, and I believe that this Government’s Prime Minister is the only leader who could possibly deliver such a deal, but it may be that we do not manage that in two years’ time, because on top of that we will have the French and German election cycles. We have to be ready if the European Union is unable to do a deal. Although we are ready and able, the European Union will not necessarily be, and if that is the case, we must make sure that we can maintain a seamless flow of trade. That is why I am also looking with industry experts at how to manage a seamless flow of traffic through Dover and Calais—we have very good relations with France and the French authorities at Calais—and how we can make that work.
It is important that Members from all parts of the House are heavily invested in making that work, because it needs to work for all of us. It will not be much good for Scottish Members if we have a queue at Dover, because they will not be able to get Scottish whisky out of the country by road at any great pace. It will not be very good for the northern powerhouse if it cannot get the things it needs to power itself. The midlands engine will conk out if it cannot get the components it needs at pace. That is why we all need to be invested in making sure that the channel ports continue to work. I will set out detailed proposals and ideas about what we can do, and we need to debate the matter to make sure that we are ready on day one. This matters to all of us in England, Scotland, Wales and the whole of the United Kingdom, and it matters to Ireland as well. We are all in this together, and we need it to work for the good of us all.
Geraint Davies
I am listening carefully to the hon. Gentleman, but does he not agree that after we trigger article 50, it will be for the other EU 27 member states to decide among themselves what is good for them and to stop other people leaving the EU? If we hold the line on migration, we will not be in the single market or the customs union, and that will be it. The people deserve a final say on the exit package, because that is not what they voted for.
Charlie Elphicke
The hon. Gentleman has long had a strong position on the matter. He knows as well as I do that people of this nation, whether he likes it or not, voted for an end to unchecked migration and an end to the billions of pounds for Brussels bureaucrats and to the payments to Brussels. Frankly, the vote meant that we would not be able to stay in the single market, because that aim was not compatible with the single market. Equally, it was clear that we would have to leave the customs union if we were to have a successful Department for International Trade. I am simply saying that if on day one no free trade deal has been agreed, we need to be ready to play our part. I believe that we can, should and must be, and I am setting out how we can help to deliver that for the good of this nation.
Finally, let me talk about motoring. I welcome the fact that we have had a freeze in fuel duty for more than seven years. I am proud of the work that has been done by the all-party group for fair fuel for motorists and hauliers, which I chair. My predecessor chairman, my hon. Friend the Member for Colne Valley (Jason McCartney), worked very hard on the matter. The freeze is great, because it means drivers spend £130 less. That is a good thing for the hard-working classes of modern Britain who travel by road, and as I said 90% of all journeys are by road.
It is important that we are fair and just to the owners of diesel cars. I hear people say, “We have got to put more taxes on the drivers of these cars,” but let us not forget that after Kyoto people were encouraged to buy such cars by the previous Government. It is right that we support those people to get replacement cars, if a replacement is necessary. It would be wrong to demonise them. We must make the right decisions. I think that we should increase the tax on gas guzzlers, but it is important that we are sensitive and careful.
We must also look at the statistics, which are clear. In London, diesel cars are 10% of the problem. We do not hear about polluting planes, which are also 10% of the problem. We do not hear about dirty diggers and construction sites, which are more than 10% of the problem. We do not hear about clapped-out London buses, which are 10% of the problem, or about ageing trains chuffing up fumes at various mainline stations, which are getting on for 10% of the problem. We need to look across the whole piece, rather than just picking 10% and saying, “Let’s bully these people and ignore the rest.” We need to deal with it holistically for the benefit of everyone, so that we all get fresher and cleaner air and can breathe more easily.
We need to invest more in roads to ease congestion, not to allow congestion to increase. It is very important to look beyond the strategic road network to the wider road network around the country. Regional bottlenecks and the problems of congestion across the country cost the country and the economy money. The air pollution problem also costs the country money. If we keep traffic flowing smoothly, we can reduce pollution. If we invest in the modern technology of the future—electric cars—we will reduce pollution. If we treat motorists fairly and encourage them to make the right decisions, we will reduce pollution. We can have a very positive future for motoring. Modern technology, modern vehicles, reduced pollution and effective roads will make our economy more successful and productive, and enable our children to have a better future in terms of economic prosperity and health.
Chris Leslie (Nottingham East) (Lab/Co-op)
It is always good to try to find an area of the Budget on which we can show that there is some common ground, so I want to say at the outset how much I am pleased that the Chancellor focused on the midlands engine. I will talk about that on another occasion.
I want to mention a couple of facts that particularly stand out. There is a shocking 20% cut in local authority spending from £8.2 billion in 2016-17 to £6.5 billion in the following year. A 20% drop in council funding in one year is incredibly difficult for local authorities to cope with, given the services that depend on that money. The other point, which was mentioned by my hon. Friend the Member for Leeds West (Rachel Reeves) —I very much associate myself with her analysis of the Budget statement—is the incongruence between the £1 billion given to free schools for capital spending, and the £260 million—only a quarter of that amount—provided for the thousands of other schools that our constituents and children use. I think that is typical of the Government’s priorities.
In the short time that I have, however, I want to talk about the two key issues that stand out for me in the Budget speech. One is the issue of the self-employed, and I will come on to that later. The other is the looming hurricane on the horizon, and the fact that the Government have decided not to veer around it, but to head straight towards it by failing to try to negotiate on our ability to stay in the single market. For a Chancellor of the Exchequer, at this point of the economic cycle, to fail even to mention Brexit—our imminent exit from the European Union—is incredible. For our potential exit from the single market not to be part of the core analysis of the economic outlook, let alone for him not to be finding ways to bolster our economy so that we are prepared for the storm, is a real betrayal of the interests of our economy and our constituents.
Dr Andrew Murrison (South West Wiltshire) (Con)
The hon. Gentleman clearly has not read the report on the Budget, because its very first sentence, on page 1, starts:
“As the UK begins the formal process of exiting the European Union”.
He can hardly argue that the Treasury Bench has not taken into account our departure from the EU, can he?
Chris Leslie
Why did the Chancellor not mention it in his speech? It is true, as somebody said recently, that this is a “mono-purpose” Government, and that everything has been blown out of the water because of Brexit. Why be so coy about it? They are pretending that it is not an issue, saying, “It’s fine. We’ll cope. Don’t worry, there’s nothing to see here.” But Brexit will be at the front and centre of our considerations.
Let us look at what has happened since sterling has been devalued so significantly. Consumer spending, which has propped up our economy so much in recent months, has started to feel the squeeze. Retail sales are already starting to head down. If we do not have consumers with such spending power—if living standards are squeezed, and wages do not keep pace with that—we should not be surprised if our economy starts to shudder. The OBR says on page 6 of its report that we will see a squeeze on GDP growth in the year ahead.
We know that we have a productivity problem, and at least the Chancellor acknowledged that, but unless we can find some way to catch up with the Germans and the French and to narrow the productivity gap—they produce in four days what our employees in this country take five days to produce—we will not generate the wages we need to ensure that there is growth and prosperity.
The uncertainty hanging over businesses that export and depend on trade for their income is immense. That is not just about market access, because services account for 80% of our economy, and whatever free trade agreements Ministers manage to get—they had jolly well better get a free trade agreement—such agreements tend not to deal with service sector trading issues. The National Institute of Economic and Social Research predicts that there may be a 61% fall in our trade in services, even with a free trade agreement. Ministers have got their work cut out, and I think it is astonishing that the Chancellor did not mention Brexit. That is the big issue in the Budget.
Sammy Wilson (East Antrim) (DUP)
I hate to deflate the hon. Gentleman’s main argument, but the Chancellor did actually mention Brexit. In fact, in the second sentence of his Budget speech, he said: “As we start our negotiations to exit the European Union, this Budget takes forward our plan…for a brighter future.”
Chris Leslie
The Brexit analysis that should be in the Budget should take into account the drivers that produce economic growth. Brexit will affect consumers, as we know—the Chancellor did not touch on those issues. It will affect business investment—he did not touch on some of those issues. Trade will obviously be affected and, of course, public sector investment and public service expenditure will be radically affected by it. The reason I keep banging on about the impact on the financial services sector is that it generates £67 billion of revenue for our Exchequer. I need that in my constituency of Nottingham East to pay for the schools, hospitals and vital public services, and the Economic Secretary knows that. Brexit therefore has to be at the centre of our analysis and our policy expectations, and I am astonished that the Government are trying to skirt around it. They do not want to talk about it; they are hoping that it will just disappear.
Labour Members have to acknowledge that there is no magic money tree to deal with all the issues that lie ahead. We know that debt is very high and that borrowing is high. In fact, the Chancellor did not talk about the fact that he is projecting borrowing actually to rise—to go up—in the next financial year from £51 billion to £58 billion. We have to be very prudent and careful with taxpayers’ money. That is absolutely the case, and the OBR predicts real problems over the next 20, 30 or 40 years, because of the ageing population and health expenditure questions.
Just as there is no magic money tree, however, there is also no such thing as the “Have your cake and eat it” world outside the single market. I have to say to those on the fringes of politics and the hard Brexiteers who think they can continue our economic relationship with the 27 other European Union countries with no economic effect whatsoever that they are living in cloud cuckoo land. We should be doing all we can to salvage our relationship with the single market and to preserve the frictionless tariff-free trade that very much serves as the cornerstone of many of our industries, particularly manufacturing ones such as the car industry.
The other big issue I want to talk about is self-employment. There are 5 million self-employed people in this country, and I have 5,100 self-employed people in Nottingham East. They will have seen the Chancellor’s decision to break the solemn manifesto promise made at the last general election, when the Conservatives promised that there would be no increase in national insurance contributions. They have ripped up that promise. I feel that people will see the increase in national insurance contributions for the self-employed—it is not a 1% increase; it is going up to 11%—as a betrayal of the offer or promise that was made by the Conservatives at the last general election.
Those 5 million self-employed people have a number of disadvantages, relative to those with stable salaried employment contracts, that make their lives more precarious. These are the entrepreneurs who generate much of the wealth and prosperity that this country needs. As my hon. Friend the Member for Leeds West said, they do not necessarily have the opportunities of holiday pay and sick pay that exist in full-time salaried employment. They are less likely to be able to save for the long term and often do not have the company pensions and so forth that exist in other forms of employment. They face enormous risks if they fall ill, given the poor insurance coverage for loss of earnings. The self-employed also find it much harder to get a mortgage because their income is far less predictable than is the case for those on stable salaried contracts.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
The hon. Gentleman is making a telling point about the self-employed. Is the change not also an attack on rural communities, where many people are not able to access employment and have to be self-employed?
Chris Leslie
That is exactly right.
The self-employed do not have the same security, which is why we have had the discrepancy in the levels of taxation historically. Nearly half of those who are self-employed in the UK are on low pay, compared with a fifth of those in employment. Social Market Foundation research suggests that 1.7 million self-employed people earn less than the national living wage, yet the Government’s new universal credit rules will cap self-employed recipients on the assumption that they receive the living wage over a standard working week, which is not necessarily the case in seasonal work and elsewhere.
The self-employed, who work longer despite earning less, and twice as many of whom work 50 hours each week than those in employment, will be paying a significant price. If they take home £27,000 of profit, they will be hit by an extra £30 a month because of this decision. I say to my hon. Friends that another change that the Chancellor announced—cutting the dividend allowance to just £2,000—is also a hit on the self-employed because the dividend allowance is part of how they derive their income.
It is a double whammy for the self-employed, who are hit by a broken promise from the Conservatives—they said they would not increase national insurance and they are doing so—and hit again by the cut in the dividend allowance. That will harm those running small businesses by really hitting their incomes and devalue the trust that should exist in politics. When politicians make a promise, they ought to be able to keep it. This erodes the trust that people have in the words of Ministers. I say on behalf of my 5,100 self-employed constituents in Nottingham East and the 5 million self-employed people nationwide, they will not forget this betrayal.
Dr Andrew Murrison (South West Wiltshire) (Con)
It is a great pleasure to follow the hon. Member for Nottingham East (Chris Leslie). It is also a pleasure to support the statement and the OBR’s “Economic and fiscal outlook”, which supports it and gives generally very good news and confounds many of the doomsayers who have been prognosticating so luridly over the past several months.
I say from the outset that, although I agree with the statement and some of the things that were announced, I have some small concerns about national insurance. On that matter, I find myself in agreement with the concerns expressed by the hon. Members for Nottingham East and for Leeds West (Rachel Reeves). It is very important to ensure that we do not disadvantage self-employed people. The Conservative party always has been and, I hope, always will be the party that supports white van man and—may I say on this particular day?—white van woman.
It is vital that in abolishing class 2 NICs and instituting class 4 NICs, we do not disadvantage those individuals covered by them. My back of a cigarette packet calculations support the concerns expressed by the hon. Lady. Her figures were more or less the same as mine. I hope very much that we will have some reassurance from Treasury Ministers that plumbers, electricians, plasterers and people of that sort will not be disadvantaged, particularly as we consider further measures to equilibrate them with employed people, such as those who have been described on parental benefits and the like, which of course ignore the fact that employed people have advantages that the self-employed very often do not.
I do not have a university in my constituency, but I do have a further education college. I know that the principal of Wiltshire College will warmly welcome today’s announcement on T-levels. We have long ignored technical education in this country, to our great disadvantage, and I suspect that our poor productivity compared with our European competitors is in large part due to the fact that we have not skilled our workforce in the way we should since 1945. I therefore very much welcome this development.
I also welcome the funding for children who wish to access selective education. I think that the hon. Lady missed the point that it is money for children on free school meals, so it is not generally available. It is a measure that seeks to improve the chances of the poorest. I would have thought that the Labour party welcomed that. However, I oppose further grammar schools. They would not be good for areas like mine. I fear this development because its flipside is an increase in the number of secondary modern schools. That has not been positive in the past and I would not like to see it visited on areas such as mine in the future. I would be concerned if the measures announced today, which appear to advantage disproportionately free schools seeking to select their intake, introduced grammar schools by the back door.
I am particularly concerned for health and social care. I very much welcome the positive announcements that have been made today. By my reckoning, they mean £2.4 billion over three years for health and social care, which will be very helpful, over and above the announcements that have been made previously—in particular, the increase in the social care precept to 3%. To sound a cautionary note, I think that it would be wrong in principle if we were to shift from raising money for social care from general taxation, which is the current situation, to a system based on property. The reason for that is very obvious: the most disadvantaged areas are the least capable of sustaining that kind of tax burden. However, £2.4 billion over three years is a great deal of money.
I am particularly pleased that the Chancellor suggested in his statement that there will be more in his autumn statement, in particular to fund the capital costs of sustainability and transformation plans. Many of us in areas that will be profoundly affected by STPs are concerned that those capital costs simply are not being met. The revenue savings that are necessary over the years to guarantee the five year forward view will not be possible without the injection of significant sums, of which I hope this is the start. I therefore very much welcome the £300 million announced for those capital costs and look forward to even more in the autumn statement.
The £100 million announced for accident and emergency is extremely welcome. We have got off relatively lightly this winter—it has been a relatively mild winter—but we cannot expect that to be the case in future. I welcome the Chancellor’s ambition to get the money in place to deal with next winter’s pressures. That is ambitious and I hope that he can achieve that and a system of triage to ensure that people are treated appropriately and by the right practitioner. Luton and Dunstable hospital is an example of very best practice in that respect, and one that should be mirrored, copied and emulated elsewhere.
We are still left with a big problem: the future funding of our national health service. When William Beveridge made his report in the mid-1940s, he tried to address society’s five great evils as best he could and suggested that spending on healthcare would reduce over time the costs of the NHS. How wrong he was. That is an example of how we can get our predictions so badly wrong with devastating consequences. Clem Attlee’s Government rapidly realised that that was wrong, which led to Nye Bevan’s resignation in fairly short order over what became known as teeth and specs.
The fact of the matter is that the burden of disease is going up because of our ageing population, as are patients’ expectations. We welcome the ageing population and the increase in patient expectations. Innovations and medical advances are also increasing, but all that costs a great deal of money, which the OBR makes clear. It makes it clear that we need to find a great deal of money over the next several years—eye-watering sums—but what is happening now is important as well as the future. Compared with countries such as Germany, France and the Netherlands—countries with which most people in this country would wish to be compared—our healthcare outcomes are significantly worse. In my view, there is a causal link between the amount of money we are prepared to spend on healthcare and the outcomes we will eventually get. The amount of money we spend on healthcare is very much less than the amount spent in the aforementioned countries.
Ministers will rely on the OECD average and say that we are doing relatively well in that respect, which is perfectly true. However, the OECD contains countries such as Mexico, Turkey, Hungary and Poland. They are great countries but have healthcare economies that are surely less advanced than ours and that do not therefore present reasonable comparators. We find that poor little five-year-old Ashya King had to go to the Czech Republic for his proton beam therapy for medulloblastoma. That would strike most people in this country as being distinctly odd. We find that cancer drugs that are routinely available on the continent are not available here or, if they are available, that they take much longer to appear on the market than they take in comparable countries. We find that cancer staging is delayed in this country, with obvious consequences for people’s chances of survival. It is hardly surprising that the much-cited Commonwealth Fund puts the UK 10th out of 11 in terms of healthcare outcomes for conditions amenable to healthcare.
Last year, the Office for National Statistics perfectly reasonably tweaked the figures so that the UK health spend related better to the OECD methodology. That rolled in publicly funded social care costs, which is also perfectly reasonable, but it bumped up the UK spend on healthcare a few notches in the international league table—it went from 8.7% to 9.9%, and meant we overtook Spain, Portugal and Greece, but we are still well behind France, Germany and the Netherlands.
The question for me is how on earth we close that gap. Many right hon. and hon. Members have suggested that we ask a commission to examine the long-term future funding. We need that level of public conversation to enable us to examine how we will lever in the significant funds necessary to close that gap. I hope that just as we are having a Green Paper on social care, which is welcome, the Government are open to suggestions from the public on how we can fund healthcare through hypothecated taxation or the various other mechanisms open to them.
Meg Hillier (Hackney South and Shoreditch) (Lab/Co-op)
Today’s Budget makes promises on NHS investment and on investing in education, and promises to tackle businesses rates and look at the security and dignity of work, to quote the Chancellor. We have had promises to put areas in charge of their local economic destiny. Those headlines may seem appealing, but I want to unpick the figures behind them, starting with the national health service.
The Public Accounts Committee has spent a lot of time in the past year and a half raising concerns about the underinvestment and lack of a sustainable plan for the NHS, particularly in the light of the increasing demand of a growing ageing population. The figures speak for themselves. We need look only at the financial data for NHS England trusts and clinical commissioning groups in the past few years. The deficit for trusts increased from £91 million in 2013-14 to a whopping £2.5 billion in 2015-16. There were huge shenanigans as the Department of Health struggled to ensure that the books balanced. The measures were criticised by the National Audit Office and the Comptroller and Auditor General as one-off and unsustainable, as even the permanent secretary acknowledged.
The Public Accounts Committee is concerned about the funding. Any additional funding is welcome, but let us look at what the Chancellor has promised on social care. He promised £2 billion over three years—front loaded because £1 billion is available in 2017—but the Local Government Association, representing local authorities that have to spend the money on social care estimates that the current shortfall is £1.3 billion. Even the 2017 figure, then, is not enough, and it drops off after that.
It is an irony that this injection of cash follows a 10% reduction in social care funding since this Government came to power in 2010. The latest survey of local authority directors of social care says that only around a third believe that they can deliver their statutory duties this year—and it falls to 8% next year. Even with the injection of cash, I do not think that local government can have 100% confidence that social care can be delivered.
Let us look at the capital injection that the Chancellor promised for sustainability and transformation plans. That may be helpful—£300 million sounds like a lot of money—but if it is spread across the 44 STPs around England, it is very little to fund what might be needed. The fact that capital budgets were raided for resource funding in the last Budget settlement shows a contrary approach and a lack of planning. We keep seeing pots of money thrown at different parts of the NHS and social care system, but what we need is a long-term sustainable solution. I hope that the Treasury will watch closely as the Department of Health and local health bodies spend this money to make sure that it is spent as sustainably as possible. What we really need is that long-term settlement.
On education, I proudly represent the Borough of Hackney, which has excellent schools. We have some of the best results and some schools in the top 1% in the country. The Chancellor talks about focusing on the quality of our children’s education, but we are already doing that in Hackney—without a grammar school in sight. The focus on the creation of selective grammar schools is disappointing, partly because we can show what works in Hackney and other boroughs that have excellent education, but also because if we look at the existing free school programme, we see a real problem.
Let us debunk the myth that the Government are putting more money into education. Yes, they are in cash terms, but with pupil numbers increasing, this amounts to an effective cut per pupil of over 8%. That poses a key question about how the Government present their figures, as well as a key question about what price the Government place on choices.
In making this announcement, the concerns expressed in the NAO’s recent report on the capital funding of schools have not been taken into account. By 2015, the Department for Education had spent £1.8 billion on 305 free schools; winding back to what was promised, it was estimated that the Government would spend £900 million on 315 of them, so it has doubled in price already, and this compares with the total estimate for the existing programme of £9.7 billion by 2021.
The Education Funding Agency is one of the biggest purchasers of land nationally. We have a property market going on, with land prices often increasing because of a bidding war in which the EFA plays a role. If, as my hon. Friend the Member for Leeds West (Rachel Reeves) highlighted, we measure this, we find that the cost of improving other schools is substantial. The estimated bill for returning all school buildings in England to a satisfactory or better condition—satisfactory rather than very good—is £6.7 billion, with an estimated further £7.1 billion to bring parts of school buildings up to satisfactory or good conditions. This applies to a school that might be generally good but has an area that needs attention. I recognise that more school places might be needed in some parts of the country, but free schools are not always located in the areas of the greatest demographic need, and there are too many of them.
Mr Kevan Jones (North Durham) (Lab)
Does my hon. Friend agree that this means diverting funds from schools that badly need improvement? St Leonard’s School in the constituency of my hon. Friend the Member for City of Durham (Dr Blackman-Woods), for example, also serves some of my constituents, and it has been in need of capital improvements for many years, but the need will not be met because of the diversion of funds to free schools.
Meg Hillier
My hon. Friend raises an important point. It is a matter of concern when too many free schools do not fill their places and in many cases are not required to pay back to the Government—indeed to the taxpayer—for those empty spaces. Some 46 secondary free schools—a fifth or 21% of the total—are in local authority areas in which no new capacity is needed up to 2020. Free school places are also much more expensive than places provided by local authorities, mainly because of the land purchasing that the EFA is pursuing.
A place in a primary free school opening in 2014-15 cost an average of £14,400—a third more than one created by a local authority through a more planned programme. A place in a secondary free school cost £19,100, 50% more than a local authority place. Taxpayers’ money is being overspent, and it is not delivering results. We have seen a number of failures of free schools, and we have seen free schools undersubscribed. In Suffolk, for instance, more than half the total number of places in three free schools have not been filled. Two schools in Greater Manchester are also having problems. My hon. Friend the Member for Oldham East and Saddleworth (Debbie Abrahams) mentioned Collective Spirit, which is set to be broken up because of educational and financial failings.
In Hackney, what has worked is good leadership, good education and committed pupils and parents. The structure of a school is much less important than those things. However, spending this amount of money on a hell-for-leather delivery of 500 schools, a numerical target that must be met by 2020 whatever the cost, is not sensible, and spending money on selective free schools—grammar schools—on top of that beggars belief.
Business rates are a big issue in my inner London constituency. There were more than 10,000 signatures to a petition from small businesses throughout east London that we presented to Downing Street yesterday. Those businesses are concerned about the impact of business rate increases of up to 250%. It is very difficult for someone who is running a bike shop, a coffee shop or a small jewellery company to increase prices to cover such overheads. The reliefs are welcome, but we need to know more about the long-term review and what it will mean for businesses. One year of relief will do no more than stave off problems and save them up for the future.
The problem is that the Government have banked that money in their local government settlement, and councils cannot then reduce business rates themselves. There is no magic pot of money, and they did not see this coming. In our area, we are proud of our diverse high streets with their many small independent businesses. More than 96% of businesses in my constituency employ fewer than six people, and most employ only one or two. Because they are so small, the business rate increases are a real issue for them.
Mr Clive Betts (Sheffield South East) (Lab)
My hon. Friend is right: these measures may be welcome, but they are temporary. The Government have said that they will compensate local authorities for any loss of income resulting from the changes. Will the Public Accounts Committee try to ensure that the compensation does not last for only one year or two years, but is permanently built into the system?
Meg Hillier
My hon. Friend has raised a very important point. In the coming weeks, the Public Accounts Committee will be looking into the proposal for retention of business rates, and how effective and efficient that would be. I will keep my hon. Friend and other Members informed, because this is a cross-party issue that concerns many of us. I welcome the changes, but I worry that they do not go far enough and that there may be hidden costs.
The Chancellor mentioned tax, but I was disappointed that he did not say whether the Government would be considering tax reliefs. The Public Accounts Committee does a fair amount of work on tax, as does the Treasury Committee. There are many tax reliefs out there that cost more than was budgeted for them, some of which lie fallow in the system for too long without challenge. When we have challenged HMRC to publish its list of reliefs, it has been very reluctant to do so. We find that extraordinary, because transparency would enable effective and serious change to take place. It is possible that, quite often, industries, individuals and companies point out that some of the tax reliefs are no longer fit for purpose. I believe that the black beer tax relief, which had been on the statute book for more than 100 years, was dropped only recently. Perhaps that is the pace at which some of these matters are considered, and perhaps we should urge the Government to think a bit faster about whether tax reliefs are delivering what they set out to deliver.
The Chancellor talked a great deal about the security and dignity of people at work. I echo what some of my hon. Friends have said about the impact on the self-employed, of whom there are a large number in my constituency, but I was particularly disappointed that the Chancellor did not refer to people in low-paid, part-time jobs. Many of them want to work more hours, but their employers do not create full-time jobs because of disincentives in the tax system and, in particular, the national insurance system.
Those people, many of whom are doing multiple part-time jobs, are at the difficult end of the scale. They are working hard, and they are paying tax because they are over the threshold, so they do not receive free benefits such as dental care. They are struggling to survive: “just about managing” barely covers it. They find it very hard to reach the next rung of the ladder. I think that it behoves the Treasury to have a close look at that situation, and I intend to take it up with the Minister outside the Chamber.
The national living wage is very welcome in my constituency, but we do need to look at the knock-on effects. It is already causing huge challenges—for example, in delivering social care. I hope the Treasury is working across government to look at how it can ameliorate the impact on the costs of provision in some sectors.
This is not a Budget that is really on the side of ordinary people, because of the impact on the self-employed, the lack of action on the lowest paid, the smoke and mirrors on funding for the NHS and social care, and the facts that there are too many short-term cash injections into the NHS, that it is not looking at the evidence before injecting more money into programmes like the free school programme and that there are no measures to support stability in low-paid jobs. The Budget therefore leaves many questions unanswered. In particular, there is the fact that, as many Members have pointed out, the Chancellor did not really address the elephant in the room: how will Brexit affect our economy and what measures will he take at the Treasury to make sure he provides a buffer?
Mr Jacob Rees-Mogg (North East Somerset) (Con)
The hon. Member for Hackney South and Shoreditch (Meg Hillier) lays down the challenge that not enough was said on Brexit, so let me try to put that right; it is a challenge I am happy to rise to. If one thinks back to just a few months ago, we were expecting this to be the “punishment Budget,” and that my right hon. Friend the Member for Tatton (Mr Osborne) was going to be telling us that it was all doom and gloom. I have looked up a quotation from one Mr Angel Gurría, the secretary-general of the OECD, which yesterday gave us a little good news. He said there would be a Brexit tax of £2,200 per person and went on to tell us:
“The costs are piling up, and we are still two months away from the referendum.”
He said it was getting worse and worse.
I rather feel as the diners must have felt at Belshazzar’s feast, when the words appeared written on the wall, “Mene, Mene, Tekel, Upharsin,” and Daniel came and translated them and said, “You have been weighed in the balances and found wanting.” After the feast they all went to bed and woke up the next morning, and instead of Darius the Mede having taken over, Belshazzar carried on as normal. It was business as normal, and that is what is so impressive about this Budget.
We are, indeed, in a period of transition with Brexit; we are heading out of the door, I am glad to say, in spite of their lordships’ obstructionism, but we are doing so from a position of extraordinary strength and remarkable stability. And that stability is deliberate and is part of Government policy.
It is worth looking at page 57 of the Red Book, because we see there the percentage of GDP that is anticipated to come in as public sector receipts. It will be consistently between 36% and 37.5% over the period we are looking at. If we look back over a much longer time period, all the way to Harold Wilson’s prime ministership, we see that public sector receipts remain in the region of 34.5% to 38.5%.
However detailed, pernickety and fiddly the changes in taxation, it is remarkably difficult to raise that taxation much above current levels, and therefore what we are talking about in this Budget is more a question of how the cloth is cut than whether there should be more taxation or not. Expenditure must then fit in with that, and to ensure that expenditure remains under control remains the business of government, whether they are this Conservative Government, they were the last coalition Government, or, heaven forfend, they are a socialist Government, should Labour ever manage to return from its current sorry state.
Geraint Davies
Does the hon. Gentleman not agree that the Brexit vote reduced the size of the cloth at a stroke? It shrank by 15% through devaluation—of the value of our economy, our wages, our savings and our assets. Moreover, after the short-term window of export growth because of that devaluation, we are going to face tariffs that clobber us again.
Mr Rees-Mogg
That really depends on how we measure our cloth. I am in favour of measuring my cloth in imperial measures—that is to say, pounds and ounces, inches and feet and so on, and therefore of using sterling as my base for measuring things. If we do that, our international assets have gone up enormously, because any dollar assets we hold are worth 15% more in pounds. That is more income coming in, and that helps reduce the current account deficit; it is good news for the British economy. Our exporters are 15% more competitive. That deals with any tariffs that may be imposed—if any are imposed. What is more, we are at the front of the queue for a trade deal with the strongest and biggest economy in the world, so, actually, post-Brexit we are fighting fit. The Chancellor of the Exchequer said that he would ensure that we were fighting fit, and we are. We are open for business with the world. With the continuing cuts in corporation tax, we are showing that we are absolutely willing to compete with anybody in attracting capital investment and that we are ready to do business in a way that investors will like.
Rob Marris (Wolverhampton South West) (Lab)
May I sound for the hon. Gentleman two notes of caution? First, he has just said that post-Brexit we are fighting fit. May I remind him that we have not even triggered article 50 yet? We are a member state of the European Union and are likely to remain so for the next two years and two weeks. Secondly, he prays in aid the Red Book, but I cannot see in it—perhaps he can tell me otherwise—any forecasts caveated with a statement that when we do Brexit, the situation may change for the better or for the worse. There are no caveats at all.
Mr Rees-Mogg
The forecasts are taken from the OBR and if the hon. Gentleman looks at its rather thicker report, he will see its comments in relation to Brexit and trade deals. The OBR is still rather negative on trade deals and I think that it is wrong. I have the greatest respect for the OBR, because it is the one body that during the Brexit campaign behaved properly and within its remit and did not dabble its fingers into the politics of the Brexit debate. Its view is cautious on trade. It thinks that over the next 10 years, post-Brexit, our trade position will be less good. I happen to think that that is wrong.
Helen Goodman
The hon. Gentleman should give way not to me, but to the OBR, which he has been complimenting so much. Paragraph 4.6 on page 86 of its report states:
“Given the uncertainty regarding how the Government will respond to the choices and trade-offs with which it will be confronted in the negotiations, there is no meaningful basis for predicting the precise end-point on which to base for our forecast.”
Mr Rees-Mogg
That was broadly the point I was making—the OBR is quite cautious. I was not disputing that it is cautious, but I am not cautious. I am sorry to say that, much though I respect the OBR and much though I think it does its work diligently, it got it hopelessly wrong a year ago and had to raise its forecasts for GDP growth consistently, because it did not manage to get them right. It revised down the November autumn statement and has had to revise back up again now. I think it is a terrible mistake, though earlier I quoted holy scripture, to take forecasts from these people as holy writ. They are not.
This comes down to a question of judgment, both political and economic. The political judgment is on whether this Government are going to be competent to negotiate well and effectively. I have complete confidence that they will do that—that they will be able to negotiate in the councils of Europe more effectively than anybody else could on our behalf. The economic judgment is on the balance between what we get from the European Union and what we can do with the rest of the world. I expect that, if we trade more freely with the rest of the world, that will more than compensate for the risks that we may take in having harder terms of trade with the European Union.
Having taken up the challenge from the hon. Members for Hackney South and Shoreditch (Meg Hillier) and for Nottingham East (Chris Leslie), who both wanted a Government view on Brexit—I cannot claim to speak for the Government, but I can at least say something about Brexit—I want to go through some of the details. This Budget has some very good news about the deficit. Although £51.8 billion, the deficit for this year, is still a very large amount of money, as a percentage of GDP we are now back within the norms of the types of deficits that Governments can run with. That is not to say that I think having a deficit is a good thing in principle, but GDP growth is near 2.6% and this is about remaining steady with total debt and GDP. If we go no further than that, it is an amount that can be lived with. That is important, because although there is more to be done, the vast bulk of what was necessary to live within our means has now been done.
I want to make some little points about certain areas of concern. I would encourage the Government not to proceed with the personal injury discount rate reduction to minus 0.75%. The idea that awards against the Government should be calculated with a negative time cost of money is wrong. It would be better and cheaper for the Government to underwrite annual payments, rather than making lump-sum payments with a discount rate of a negative kind—[Interruption.] The hon. Member for Wolverhampton South West (Rob Marris) mutters that I do not understand this. I do understand it, and I know that the Government are obliged by law to do this, but they have the ability to introduce new laws in this House and can often do that as part of the Finance Bill.
Rob Marris
I will tell the hon. Gentleman what I was chuntering on about. He talks about periodic payments. They are called structured settlements, and in order to calculate the future value, we have to use a discount rate. That is what it is all about.
Mr Rees-Mogg
We can set rates in a different way. We can set them, then adjust them for inflation at a lower initial rate, rather than having a payment based on a capital sum. Reducing the rate from 2.5% to minus 0.75% is a mistake and will result in an undue cost to the Exchequer.
I also have concerns about the probate tax. I see that it is likely to be judged by the national statistics people as a tax rather than as a charge, and I do not think it right that the Government should introduce stealth taxes. Probate charges should relate to the cost of the probate work, which is broadly irrelevant to the size of the estate. There might be some more work for bigger estates, but the difference will not necessarily be as large as has been proposed.
The biggest issue is national insurance contributions. I see the logic in what the Government want to do, because there is an unfairness between self-employment and employment, but the question is not so much one of revenue as of whether having a structure in the economy that encourages self-employment is beneficial overall, and whether that is a price worth paying. If we look at what has happened since 2008, we can see that unemployment in this country remained so low as we went through a deep and challenging session partly because of the great flexibility within our labour market. Part of that flexibility comes from self-employment, because employers do not have to take on all the risks of full employment, with all the benefits such as holiday and sickness pay that that entails. That means that the self-employed are a major contributor to the flexibility of the economy.
I very much doubt that increasing the national insurance contributions for the self-employed by 1% and subsequently 2% will fundamentally change the balance, but in economics, things often happen at the margins rather than being an easily identifiable inflection point when we are starting out. I would therefore be cautious about this change, and I urge the Government to look at the whole question of the relationship between national insurance and income tax in the round. National insurance represents about £130 billion of revenue. It is an enormously important source of funding for what the Government wish to do, but its relationship to income tax creates confusion and distortion within the system. This is just one of those distortions, and I am not sure that making a minor change at the edges is the right way to go about changing the relationship in taxation between the self-employed and the ordinarily employed. Those are the three minor cautions that I would offer on the Budget, but I remember a Conservative party slogan, “Britain’s on the right track, don’t turn back”, and that seems to me to be where we are.
Sammy Wilson (East Antrim) (DUP)
The Chancellor started his Budget speech in an appropriate way by making a confession. He said that the commentators, including himself, his predecessor and many others in this House, had got it wrong when it came to the growth of the UK economy. In fact, he started by saying that the economy had “continued to confound the commentators with robust growth” since the historic vote to leave the European Union and that that growth was predicted to continue over the next number of years.
Several Members have already said that the Chancellor made no mention of Brexit, but many Members still feel that Brexit has been properly mentioned only if it is referred to in negative terms. They do not want to hear the good news that Brexit and the decision to leave the EU has not and will not destroy our economy. The Chancellor pointed out at the start of his statement that the Budget was designed to prepare the United Kingdom for a brighter future and to provide a stable platform for the negotiations. While I do not agree with everything in the Budget, we must accept that the spending on infrastructure development, innovation, research and development, and education, including the changes to technical education, is designed to make our economy more competitive and to enable us to take the opportunities that will be presented when we are free of the EU and therefore able to make trade deals with countries across the world. It is wrong to say that the Budget did not mention, does not cater for, or does not acknowledge the challenges that we will face when we leave the EU.
There are several things in the Budget that I particularly welcome. I will not go into all of them in detail in the short time available to me, but we have raised “Making tax digital” with the Treasury on a number of occasions, and the line in Westminster Hall debates has been much harder than what was announced today. I am glad that the Chancellor accepts that the strategy was going to create huge problems for many small businesses. I trust that the arguments for extending and delaying its introduction for one year will apply in future years because, as has been pointed out, many businesses do not have the necessary facilities or even access to the internet. They rely on accountants and would have found it either impossible or costly to meet the requirement.
I welcome the extra £200 million for innovative broadband initiatives. In rural areas such as my constituency, despite BT’s monopoly and the money that it has received, we still do not have proper broadband coverage. Indeed, innovation is sometimes stifled by BT’s monopoly and its control of the network. I hope that we will see innovation there.
I also welcome the £120 million that will be available to the Northern Ireland Executive. However, the attitude that Sinn Féin has adopted over the past couple of days means that anybody—including the Secretary of State for Northern Ireland—who does not accede to what they want is accused of waffle; their members then walk out. If we do not get the Assembly up and running, will the money be held? I fear that it may be some time before the Executive are in a position to spend that money, so will interest be added to it?
The forecast for growth still heavily depends on consumer spending, which depends on consumer borrowing. By 2021, consumer borrowing will reach 153% of household income, and I have a problem with the Government here. I understand that they have to control public spending and borrowing, but why is it okay for growth to be fuelled by high levels of consumer debt? In fact, consumer debt is twice the level of Government debt as a percentage of GDP. Why is it okay for consumers to continue borrowing to fuel growth, but not for the Government to accept that there may be arguments, in a low-interest-rate regime, for marginal increases in spending on the plenty of good infrastructure projects that could provide a good return for the economy through increased productivity?
Rob Marris
As the hon. Gentleman may be aware, according to the Library briefing paper, an OECD working paper in 2012 found that
“when household debt levels rise above trend the likelihood of a recession increases.”
The International Monetary Fund found that recessions preceded by large increases in household debt were “more severe and protracted.” There are real dangers here.
Sammy Wilson
There are real dangers. Consumer spending is a huge component of GDP, and of course we need buoyant consumer spending, which is one reason why the constant talking down of the economy is not good for future economic growth. At the same time, we have to recognise that focused public investment in the economy is, first, affordable and, secondly, desirable, yet the Chancellor seems to be resistant to undertaking such investment.
George Kerevan
On that point, does the hon. Gentleman agree that, rather than the Chancellor keeping his investment war chest for another two years, it would be better to spend the money now on infrastructure and offset anything that might come in future?
Sammy Wilson
There is a strong case for saying that, especially given the way in which Government fixed capital spending is due to fall over the next year. Of course, as interest rates are low and are predicted to go up, now is the time to borrow and spend.
My second issue has been raised by a number of Members, but it needs to be restated, because it is so important to constituencies like mine, that there will be an increase in tax, through national insurance contributions, for the self-employed. I serve a constituency that is about half rural. Many of my constituents depend on self-employment for work. We have lost a number of jobs through big manufacturing closures over the past couple of years, and many of the people who lost their job have moved into self-employment. Local enterprise agencies in my constituency, according to figures they recently gave me, have encouraged some 1,400 people into self-employment through training. Many of those people start by taking a risk with their redundancy money. They work long hours for not a great deal of money, and they do not have the benefits and security that people in full-time employment have.
The Government say, “The system has been abused, so we have to level up the tax paid.” We do not do that in other areas of taxation. The BBC, for example, gets its top presenters to go into self-employment to avoid taxation. If that is an abuse, stop it, but do not impose additional costs on people who help to bring up the United Kingdom’s employment figures and bring down the unemployment figures by taking risks and going into self-employment. The Chancellor tried to downplay the amount of money involved, but many self-employed people are struggling at the margins because they are trying to get businesses up and running. The difference in taxation will be significant for them. The Government have got that one wrong. Hopefully, the issue will not come back to bite them; it has not been very well explained.
The last issue I shall raise is housing. One way to increase employment and, of course, productivity in the economy is by having a good housing stock that enables people to move around easily. However, if we look at the figures, we find that housing investment is due to fall by 50% this year and stay at a low level. The statistics attached to the Budget indicate that house prices will go up by more than twice the rate of inflation as a result. That will make the average house price around nine times the average salary, which will mean that many young people will never have the chance to own their own house. At the same time, the restrictions on buy to let mean there will be increased costs for the rental market. It is disappointing that the Chancellor did not make any proposals on how he will deal with the housing issue, because it is as much part of making the economy fit for the future as it is part of giving people the opportunity to have a decent home.
Several hon. Members rose—
Madam Deputy Speaker (Mrs Eleanor Laing)
Order. Unfortunately, I have to reduce the time limit for Back-Bench speeches to eight minutes.
Nigel Mills (Amber Valley) (Con)
Like the hon. Member for East Antrim (Sammy Wilson), I welcome the overall message and direction of the Budget. I would not be so cruel as to say it was a boring Budget; perhaps we could say it was a sensible and cautious Budget. When, between Budgets, we think about what an ideal Budget would look like, most of us think it should basically be a sensible evolution of previous policies, and that we should not have expensive rabbits pulled out of hats for the purposes of political grandstanding, but when we get one of those Budgets, we cannot quite work out what to say about it, so we try to talk about—and moan about—all the things that are not in it.
It is absolutely right for the Government to carry on along the course they have previously set. We know that there will be uncertainty over the next two years while we work out precisely what deal we will get with the EU and its impact, so it would have been totally the wrong time to have made big tax cuts or spent loads of money; we might have found out in a couple of years that that was not the right thing to do.
We should welcome the fact that the Budget statement shows that the growth in the economy is stronger than we thought it would be even only three months ago, at the autumn statement, and that for the coming year it is back up to the 2% mark. Many people doubted that we would get to that mark by next year, so that is a welcome sign. The extra growth will allow the deficit to come back down by the end of the Parliament and fall as a percentage of GDP, which is what we promised.
We should note a couple of things about that trajectory. First, between this financial year and the end of the forecast period, tax receipts will rise by 20% to £802 billion in 2021-22. Given the level of growth and how much can be taken out of it, I suspect that that is an optimistic assumption. Secondly, public spending is set to rise over the same period by only 14.6%—I say only, but that is probably quite a large amount. That is how we close the deficit down: with higher tax receipts from economic growth than the increase in spending.
It is worth noting that the increase in public spending in the coming financial year will be 4%, which is quite high and in excess of inflation by quite a lot. It is pretty hard to say it is an austerity Budget when public spending will increase by 4% next year.
I shall spend the rest of my time talking about measures of particular interest to people in Amber Valley. It is probably easy to gloss over, as perhaps the Chancellor did, important measures such as the increase in the national living wage to £7.50, the rise in the personal allowance and the higher rate tax threshold, and all the childcare measures that are coming in. Those measures are extremely important for people’s everyday income, and contribute to the increase in households’ surplus income that we will see each year. It is welcome that wages are still going to increase at a higher rate than inflation.
I also welcome the various measures to mitigate the business rates revaluation. The official numbers show that business rates in Amber Valley will fall by just over 5% after the revaluation, but it is still right that there are measures to help the businesses with the individual highest rises. I welcome the discretionary fund, and I welcome the measure to support pubs by £1,000 a year. It is a pity that the beer duty freezes of recent years have stopped, but I guess that £1,000 off business rates will help with that.
I welcome the funding for the midlands engine and the potential for increased transport funding. I look forward to hearing how those funds will be spent to help the east midlands in particular. I am always a bit nervous when we talk about the midlands, because I tend to think that the west midlands believes that it is the midlands and that the east midlands is the east midlands.
I hope that a fair proportion of that midlands engine funding finds its way to the east side of the midlands. I especially welcome the measures to transform technical education—both the quality of it and the esteem in which it is held. It is really important in places such as Amber Valley that people can get quality technical education and the skills that they need to get a decently paid job. It is right that we do all we can to help people achieve that.
I welcome the increase in social care funding. I agree with the Chair of the Public Accounts Committee that in an ideal world it would have been done on a long-term basis, but there was a clear and compelling case for some short-term money to get us over the current situation. Ironically, my local county council sent a letter to all Derbyshire MPs during the Budget statement, calling for an increase of £2.3 billion over the rest of this Parliament. I am sure that it will be very glad to have an increase of £2.4 billion over the next three years. I suspect that that will not fix the problem; I am not sure how much money it would take to fix the issues that we have with social care completely, but it is, none the less, a welcome step until we can find a permanent solution.
I welcome the funding for NHS transformation plans. The one in Derbyshire has perhaps not had as much attention as it might have done. That is probably because the issues are quite complicated. There is a clear need for capital funding and for allowing the measures in the Budget to be effective. In the case of Amber Valley, I hope that the money that was promised to allow us to rebuild Heanor memorial hospital so that it may be used for more out-patient appointments can now be found, and that the project can be definitely confirmed. A key part of relieving the pressure on our hospitals is having more work done in the community, rather than in the hospitals themselves.
There is a lot of concern in my constituency about the strategy, “Making tax digital”. I always thought that it should not be applied to those companies operating below the VAT threshold. It may not be easy for businesses that do not regularly account for VAT to get accounting records for use under the strategy. I am not sure whether, in a year’s time, that situation will have changed greatly. I hope that there is some kind of delay while we work out the right solution for that level of business. May I also suggest that if we go ahead we make the scheme voluntary for those very small businesses? If there really are clear advantages for companies to keeping better records and knowing what their tax bill will be in real time, let them choose to opt in and find those benefits, rather than our trying to make them do it, as that would boost their confidence in the reform. I am not sure how many would choose to opt in, but perhaps it would help if we showed them that the benefits were there.
I have some concern about schools capital funding. I have no ideological objection to grammar schools and selection; if they can help to improve school standards in Amber Valley, let us give them a try. What I am not so sure about are the mechanisms for making that change. Amber Valley has issues with school standards. The league tables last year were pretty disappointing. I am not sure how areas such as mine get those new schools and therefore gain access to that funding. We have to find a plan that works for the areas that need to improve their educational standards and then fund it, rather than hoping that, somewhere, there are parents with enough money and time to do something—I certainly have seen no evidence of that. I look forward to the Government showing us how their plans will work to benefit areas such as mine.
Finally, I have a few remarks on self-employment. Clearly, a tax rise that discourages any kind of activity is not attractive, especially when our economy is quite reliant on self-employment. If we put it in context, though, we see that national insurance for people who are in employment is somewhere just under 26%, if we take into account employees and employers, so a rise to 11% for the self-employed is nothing like levelling out the situation. Although there are advantages that those in self-employment do not get, they do not equate to a gap of that size. None the less, that rise will be unwelcome news to people who are probably struggling and not getting all the rights to which they are entitled.
Diana Johnson (Kingston upon Hull North) (Lab)
As it is International Women’s Day, I want to start my remarks by paying tribute to Mary Denness, one of the “headscarf revolutionaries” of Hessle Road in Hull, who sadly died a few days ago. She fought to improve safety in the trawling industry after many husbands, sons and brothers died while at work. She won that battle.
I want to quote another formidable woman, the late Barbara Castle, who said:
“In politics, guts is all.”
I pay tribute to the women of the WASPI lobby, who are here today, for their guts in standing up and saying that an injustice has been done to them, and in continuing to campaign. I am very disappointed that there is nothing in the Budget to deal with that injustice.
I want to make two points at the outset. First, I was very surprised indeed that the Chancellor made no mention of Brexit in his statement, given that it is the major issue facing the country. Secondly, the Government have clearly broken their party’s 2015 manifesto pledge by introducing the rise in national insurance contributions for the self-employed. They stated four times in their manifesto—I checked—that they would not raise those contributions. Many of the 9,200 self-employed people in my constituency—the hairdressers, plumbers and electricians—are already just about managing. They are part of the group of people the Prime Minister said she wanted to be on the side of. I think this is a real kick to that group.
I want to focus on three issues today. The first is social care. I welcome what the Chancellor said about the need for a review. Of course we need a review and a long-term strategy for dealing with social care. In my view, the time has come to set up a national care service akin to the national health service created in 1948. However, the announcement made by the Chancellor—to spend £1.2 billion in 2017-18, £800 million in 2018-19 and £400 million in 2019-20—will overall close only half the gap that we already know exists in social care, and there are no specifics on how the money will be distributed.
Disadvantaged areas such as Hull face a crisis in social care. We are the third most disadvantaged area in the country, we have more people in need of social care than other areas, and we have fewer people who are able to self-fund. The Government have so far introduced an increase in the council tax precept of up to 3% to deal with the demands on social care. In Kingston upon Hull, because of our low council tax base, that will raise only £8.01 per head. Contrast that with Kingston upon Thames, where it could raise £15.27 per head. Clearly that policy will not meet the needs of areas that have such a low council tax base. I want the Minister to set out some clear guarantees about the most disadvantaged areas getting funding from the pot of money that has been made available.
We know that in politics it is all about making choices. One policy area that I thought the Government could have looked at for filling the gap in social care has been put forward by the Women’s Budget Group. It has said how successive cuts in corporation tax by 2021 will amount to about £13 billion per annum, and it has compared and contrasted that with the cost of free social care for those with critical care needs, which would cost £14 billion. The Government could have taken different decisions about how they raise money and spend it than the ones set out in the Budget.
On investment in the north, the Red Book contains just one reference to the northern powerhouse and the north-south regional divide. It states:
“As set out in the Industrial Strategy green paper, the government’s ambition is to support growth in all areas of the UK. The government will shortly be announcing the Midlands Engine Strategy, and is continuing to build the Northern Powerhouse.”
The latest Treasury figures show that transport investment in London is £1,943 per head of population, but in Yorkshire and the Humber it is £190. There is a real gap in the investment going into the north. The Chancellor said that £90 million is being made available to “the north”. The north is such a large area. It just goes to show that the Government really do not have a handle on the needs—
Diana Johnson
And the money is for over four years, as my hon. Friend rightly points out.
No money was identified to help Hull, particularly with the electrification that we have been fighting for over many years, even though we put together our own plan to bring in private sector money. There was no mention of trying to assist with that. There was also no mention of devolution for Yorkshire and the Humber. That would obviously be a way of accessing funds, but no decision has been made about that.
On education and skills, we all want our children and young people to have access to the best high-quality education possible. The renewables industry is very important to Hull, so we want young people to come through with the skills for that industry. I am really disappointed that the money allocated for education is for the ideological pursuit of free schools and selective education, rather than ensuring that the schools we have are properly funded. There is likely to be a cut of £380 per pupil by 2020 in Hull; 8% of the budget is going. The announcement about busing children who are on free schools meals to selective schools does not help us because there are no selective schools in Hull. If the Government are serious about social mobility, that money would have been much better spent on nursery school funding. It was announced that there were 2.4 million apprenticeship starts in the last Parliament, but today is International Women’s Day, and we know that young women in apprenticeships are paid less and that there are fewer of them in science, technology, engineering and maths.
This Budget is a bit of a damp squib. Hull will have to carry on making its own luck, as it has done for many years. We have been fortunate with the City of Culture and the investment from Siemens. In the spirit of where I started—the headscarf revolutionaries—we will continue to battle for a fair deal for our city from this Government, because we are certainly not getting it at the moment.
David Rutley (Macclesfield) (Con)
It is always a pleasure to participate in a Budget debate, and that is no less the case today. It is an honour to be sitting close to a good friend of mine, my hon. Friend the Member for Fareham (Suella Fernandes), whom I have known for decades.
I am pleased to follow the hon. Member for Kingston upon Hull North (Diana Johnson), who characteristically made an impassioned speech for her constituents and for the north. However, it is only fair to say that, although there were not as many references to the northern powerhouse in this Budget, the autumn statement contained a policy and a statement about what the northern powerhouse would be doing in the years ahead. An investment programme of £90 million has been set out, which should be seen against the context of the hundreds of millions of pounds that are being invested in rail and roads across the north.
David Rutley
The hon. Gentleman is shaking his head vigorously. I would welcome an intervention, if he wants to speak. If we compare the narrative for the north created by the Conservative party in recent years with the Labour party’s woeful track record on infrastructure and its narrative for the north when it was in power, the truth is that we are heads and shoulders above what Labour put in place.
Ian C. Lucas
I hope to catch Madam Deputy Speaker’s eye shortly, and this topic will be a big part of my speech. I would just point out that not one penny piece has been invested in transport in north Wales by this Government; and after today, it still has not been invested.
David Rutley
There are interesting schemes ahead, which I am sure the hon. Gentleman is also working on, to try to improve the interconnectivity of rail in north Wales and in Cheshire. He is aware that we are moving those plans further forward. I look forward to hearing his speech.
The Budget statement highlights the resilience of the UK economy, and seeks to ensure that we build on the clarity, certainty and confidence that business needs as we seek to forge a new role for Britain on a truly global scale and stage. Our first task after the vote to leave the EU is to reassure the markets. Britain has to be seen, and is being seen, as welcoming. It remains firmly open for business, and the Chancellor has done an outstanding job today in that respect. We have already talked about infrastructure projects, which the Chancellor highlighted. Importantly, on skills—I look forward to saying more on this in a few minutes—we will deliver millions of quality apprenticeships during this Parliament, making sure there are 15 clear, meaningful career paths linked to defined industrial sectors. There is also action on science, as we saw in the autumn statement. Some £2 billion a year of extra funding is promised for science, which will make a huge difference to what we are seeking to achieve.
Overarching all of this has to be the need to control our public finances. It has been, and continues to be, a long and hard slog to reduce the deficit left to us by Labour in 2010. I therefore applaud the Chancellor’s commitment to continuing on a sensible path to a global Britain that pays its way in the world.
In leaving the EU, we can become a global champion of enterprise and free trade, but we must recognise that Brexit, combined with other world events, has created heightened uncertainty in the short term, and that requires national economic assumptions and policies to be revisited. In its latest quarterly small business index, the Federation of Small Businesses has found that, while confidence is improving—getting back to pre-referendum levels, according to the FSB’s chairman, Mike Cherry—actual investment intentions remain somewhat subdued in the face of an uncertain landscape.
The Government are therefore right to take measures to steady the ship and to revive confidence after the momentous vote to leave the EU. As we know, buoyant consumer confidence has boosted the economy by more than was predicted in the aftermath of the referendum, but we need long-term investment too. The Government stepped up to the plate with infrastructure projects that will boost the capacity of the economy—notably, in transport policy, and I have already talked about the extra £90 million of investment that is being made available to address pinch points in the north.
We now need to make sure that we boost business spending and much-needed business investment too. Some of that will come through leveraged funds—from projects the Government support or enable. The £1 billion investment in Manchester airport over the next 10 years is a classic example of how, by clarifying things and building confidence, the Government will encourage business to invest in these vital infrastructure projects.
Underlying the measures the Chancellor has taken today is the Prime Minister’s clear plan for leaving the EU, which will work hand in glove with the modern industrial strategy. That strategy is modern because it will create an economic environment that enables winners to emerge without being picked. It is a healthy mix of horizontal and sectoral measures that enables the Government and businesses to drive forward with determination and commitment.
Those actions are solid foundations for the clarity and certainty that businesses need, establishing strong links with the place-based, sub-regional strategies of local enterprise partnerships and combined authorities, with their newly devolved powers. This comprehensive, joined-up approach stands in stark contrast to the chaotic, sloganeering and uncosted spending plans we heard from the shadow Chancellor at the weekend and again from the Leader of the Opposition today—woeful!
The way our modern industrial strategy is shaped is just as important as the end result. The strategy needs to be not only ambitious but effective, and businesses must be fully engaged, so it is good to see that the Chancellor and the Secretary of State for Business, Energy and Industrial Strategy are taking the lead in developing stronger, more trusting relationships with many businesses. Establishing a modern industrial strategy in that way creates the clarity we need to counter uncertainty and to build confidence and trusting relationships so that we can seize the economic opportunities that lie ahead.
That rightly puts a clear focus on productivity. I was pleased to hear what the Chancellor said today about the national productivity investment fund, and particularly about investment in skills and the commitment to improving the reputation of technical skills, which has been left undone for decades. The new T-levels will be vital and will make a real difference to social mobility and life chances, regardless of where people live in the country.
In the spirit of improving productivity and life chances across the country, I also welcome the Chancellor’s action—this was not mentioned too much in his speech—to boost broadband, as set out on page 43 of the Red Book, where there are proposals for connection vouchers, which will be welcome in parts of the country that have felt overlooked in recent years.
I am pleased to see the Chancellor’s continued commitment to the northern powerhouse, despite the comments of the Opposition, and particularly to the Cheshire science corridor, which is pivotal to the growth that we want in constituencies in Macclesfield and across Cheshire. It is worth noting that the ONS has set out that R and D spending by businesses is much greater in the north-west than it is in London. We have a really solid base of investment in the private sector, as well as in the public sector, in the north-west. The single largest area of R and D expenditure for businesses is in pharmaceuticals, which are critical not just for the science corridor in Cheshire, but to ensure that the whole country achieves its full potential.
We must continue to foster and support the gross value added that is created by pharmaceutical manufacturing, which contributes massively to our country—more so than in any other country except Germany. Cheshire East has a higher GVA per head than east Surrey, and we want to see a similar improvement in productivity throughout the entire north-west. We will make sure that that happens through the innovative work that is being done in technical training. We must do more to improve skills. Setting out 15 clear career pathways for apprentices is vital and the new T-levels that are being talked about are very welcome, as is the £500 million investment in tech skills for 16 to 19-year-olds. That will help to transform their experience and help us to be ready for the challenges ahead. For those reasons, I give my full support to this very important Budget.
Rob Marris (Wolverhampton South West) (Lab)
In his response to the Budget, the Leader of the Opposition set out an impressive list of spending commitments. Unfortunately, he ran out of time, so he was unable to spend much time on macroeconomic matters, wealth creation or setting out an alternative economic strategy.
The context of the Budget is that there are some good things in the economy. Growth has been better than many of us had expected, and better than most people forecast before the Brexit vote, were it to be a Brexit vote. The unemployment figures are singularly impressive: 2.6 million more jobs in the past seven years, one in five of them on zero-hours contracts, and the majority of those working part time do not wish to work full time. Inflation is up, and most economists say that a little bit of inflation is a good thing. The Government are prepared, quite rightly, to guarantee the triple lock on pensions only until 2020, because of their concern about intergenerational imbalance.
On the other side of the balance sheet, however, we have economic positives bought on a sea of debt. The Government have been spending money for the past seven years like a drunken sailor. The national debt has gone up almost 70% in the past seven years. We are still running a huge deficit on current expenditure, and the Government forecast that we will continue to do so. The Government have been sweating the infrastructure for the past seven years, so it is wearing out. We only need to look at all the potholes around the United Kingdom to see that.
The Government keep saying, “We are trying to cut debt for the benefit of the next generation,” when in fact they have loaded debt on the next generation—not only the national debt, which is up 70%, as I said, but student loans, which are a massive burden on the next generation, and of course the failure to address the market failure in housing across the United Kingdom has meant that the cost of renting or buying has shot up massively in the past seven years. Who does that hit the hardest? The next generation. It is nonsense to talk about lifting the economic burden on the next generation, because we have market failure.
The hon. Member for East Antrim (Sammy Wilson) said—to use my phrase, not his—that when we look at Brexit, we need to look at the silver linings: the things that we can do differently when we leave the European Union. There are some positives, and I say that as someone who thought we should remain in the European Union. We are not going to do so. Outside the European Union, we can adopt a more collectivist approach. We can have a bigger role for the state in our country. For example, we could have a state investment bank. In appropriate circumstances, the state could take equity stakes in our enterprises and could own patents—not just financing research and development, but owning patents—as a source of collective wealth for us in the future. The Budget does not address the imbalances of wealth and power in our society, which is what Labour Members want to use the economic levers of the state to do.
On wealth creation, which I mentioned earlier, we welcome the spending on productivity announced in the autumn statement and rehashed again today, but the state ought to take a stake in some of that investment in STEM matters. Similarly, on broadband, the Chancellor glibly trotted out his encouragement for 5G today, which sounds great. There is not yet even a standard on 5G, but the Government keep banging on about it.
I welcome cutting down the number of skills qualifications from 13,000 or so to 15, because some of them, frankly, are Mickey Mouse qualifications. That continues the Government’s drive—their fetish—about having 3 million more apprenticeships. For many years, our country has been bad at workforce planning, as we can see in the NHS. Workforce planning in relation to skills for the future will be made worse by the Chancellor appropriating to himself powers over schools. We will have a worse school system in England, which will make skills provision and workforce planning worse.
The Budget totally failed to mention housing once not only in relation to its cost but as a driver of economic growth and an investment for the future. We should allow councils to borrow to build council houses—a state-owned asset that provides a return for us all for the future, as well as better lives for people. We should look at rebalancing the economy away from London and the south-east, as was mentioned by my hon. Friend the Member for Kingston upon Hull North (Diana Johnson), and we could do that with much better and targeted infrastructure spending.
On the taxation side, there were—as ever—many missed opportunities in this Budget. There will be fewer HMRC staff in fewer offices, which will increase the likelihood of tax avoidance continuing. We need stronger measures on financial wrongdoing—we have not had any—so that those doing wrong in the City go to prison; prison is the big disincentive. For example, wrongdoing in Mitie’s accounts has just been uncovered, which the Financial Reporting Council did nothing about.
We have missed the opportunity to address the whole structure—for the future, in a digital age—of taxation on businesses. We keep banging on about corporation tax, but the Chancellor should be investigating a turnover tax on business. Such a tax lessens the chance of tax avoidance. If it was done the right way, the Government could do away with business rates and corporation tax. If they wanted to be really inventive, they could even do away with employer’s national insurance contributions—a tax on job creation—and have a turnover tax, which is much fairer and taxes virtual companies, as well as bricks-and-mortar companies. It is not just me saying that from left field—I tell hon. Members that I am from left field—but the Federation of Small Businesses, which has floated the idea of a turnover tax in relation to business rates. We ought to align taxation for simplification purposes, so that instead of playing around—as the Chancellor did, with £2,500 or £5,000 on some dividend tax break—we should align the rate of tax on dividends with that on capital gains tax and income tax.
We should split up the banks that are too big to fail. The Chancellor has ducked that one; in fact, he is going into reverse and weakening financial protections for us all. The Government should have announced that they were abandoning the private finance initiative. They are still investing in these disastrous projects. These are missed opportunities for thinking big about the future, while in the context of Brexit—the whole world is going to change—the Chancellor is still looking backwards. He did not even mention Brexit because he just does not know what to do: he is a rabbit in the headlights.
Mr Alan Mak (Havant) (Con)
It is a pleasure to follow the hon. Member for Wolverhampton South West (Rob Marris). I am pleased to speak in support of today’s Budget. It puts Britain in a strong position as we leave the European Union, and it positions Britain and areas like Havant to take advantage of the fourth industrial revolution, as new technologies transform economies and societies around the world, including our own.
I welcome the fact that the Budget is given against the backdrop of an economy that has shown itself to be extremely resilient, confounding expectations by performing strongly in 2016. Britain is one of the world’s fastest growing advanced economies, the deficit has been cut by more than two thirds, the growth forecast is up and there is record employment, with 2.7 million more people in employment than in 2010. This Budget builds on the huge progress and strength in the economy that this Government have delivered.
I welcome the £500 million of new funding for technical skills and the introduction of T-levels. Those measures will upskill the workforce, build an economy that works for everybody and, ultimately, boost productivity. They will prepare British workers to succeed in the economy of the future, which will be underpinned by the fourth industrial revolution. Of course, all those measures build on the Government’s strong track record in education and skills generally, from the new university technical colleges to the 2.9 million apprenticeship starts since 2010.
The new £500 million of funding is particularly necessary, given the impact of automation on the labour market. I will focus on that point for the rest of my speech. Historically, the impact of automation has largely been felt in blue collar industries, such as manufacturing and mining, that involve repetitive tasks. As we enter the fourth industrial revolution, which is characterised by increasingly capable automation, artificial intelligence and sophisticated robotics, jobs in a vast array of services will be affected.
We must not be Luddite or downbeat about that development. The emerging technologies that are part of the fourth industrial revolution can be harnessed to catalyse economic growth and generate long-term prosperity. Today’s Budget will help us to do that. In Britain, we have to be the first to seize this opportunity. That means taking a proactive, high-investment approach to the challenge of automation. This Budget will help us to do that.
The Bank of England has estimated that up to 15 million British jobs may be at risk of automation, suggesting profound structural changes in the nature of our labour market in the decades ahead in this new industrial age. The potential job losses are largely in roles where a pattern of work can be replicated by a clever algorithm, a ready supply of data or a ready supply of energy. That led Professor Mary Cummings, the director of Duke University’s humans and autonomy lab, to say, paradoxically, that
“the more certainty your job entails the more likely is to be automated out”.
However, Britain has cause to be optimistic because of the measures announced in the Budget.
From the printing press to the personal computer, and now to the advent of artificial intelligence, driverless cars, 3D printing, robotics and advanced manufacturing that we see today, Britain’s economic history has been a continuous story of technology substituting for human labour across all sectors of our economy, as increasingly sophisticated machines displace workers at a fraction of the cost. From farm automation to the big bang in the City, we have always embraced technology. That technological progress has also led to rising productivity gains, as new jobs are created in new industries. If we want the words “invented in Britain”, “manufactured in Britain” and “designed in Britain” to be our hallmark in the 21st century, we have to continue investing in skills and technical education. That is what this Budget does.
The answer to what John Maynard Keynes called “technological unemployment” has always been the same. Today’s Budget reaffirms our answer as a Conservative party: we have to embrace the efficiencies brought by innovation; we have to reach for the future; and we have to help people learn new skills, so that they can take up the jobs created by economic growth.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
By mentioning John Maynard Keynes, the hon. Gentleman tempts me too much. Surely, John Maynard Keynes would have eschewed austerity and looked for a fiscal stimulus instead. That is what the Government, and particularly the previous Chancellor, should have been doing, rather than the austerity cult we have had for years.
Mr Mak
I thank the hon. Gentleman. I think that John Maynard Keynes’s economic theory is now largely discredited. As Conservatives, we prefer a pro-innovation, free-market, low-tax economy that helps entrepreneurs and businesses to grow. As we enter the fourth industrial revolution, our job is not to hold things back and yearn for the past, but to reach for the future. That is what investing in skills and T-levels will do. That is why I am so pleased that the Government have decided to invest in T-levels and in streamlining the 15,000 courses down to just 15 routes that are linked to the needs of employers in a modern economy. I prefer Adam Smith to John Maynard Keynes. He is much more relevant to the modern economy that we want to build in this country, and he was a Scotsman.
As we move to a more automated digital economy based on the free market and innovation, the supply of workers with science, technology, engineering and maths skills—STEM skills—will be critical to Britain’s ability to compete in the world, harness the fourth industrial revolution to our benefit and project an image to the world as we leave the European Union of a bold, confident and technologically enabled modern country. The Budget helps because it helps our skills base to get fit for the future.
As we leave the EU, develop a new industrial strategy and adopt an outward-looking global trade policy, we must continue investing in skills and reforming our education system to ensure that people have the right skills to succeed in future. As we do that, we will build on a position of tremendous strength. We have world-class universities, sixth forms and further education colleges, including South Downs in my constituency; a strong base of scientific research; and an extra 1.8 million children going to good or outstanding schools since 2010.
We build on very strong foundations, but to equip Britain to lead the fourth industrial revolution we need fully to understand its implications on our labour force and skills base. Our approach must therefore be strategic and long term. I hope that Ministers in the Treasury and other Departments, including in the Department for Work and Pensions, will consider my proposals for a detailed review of the nation’s skills base to be conducted at the start of every Parliament—a future skills review backed by the Treasury. I hope that my hon. Friend the Financial Secretary considers that as a representation for the next Budget.
Just as the strategic defence and security review examines the country’s long-term security needs, and just as the comprehensive spending review sets out our long-term spending priorities, so a new national future skills review will help us to futureproof our economy and skills base. That future skills review will look above the horizon and examine our long-term skills needs. It will also identify the sectors and industries that are vulnerable to automation, and the opportunities for new technology to help drive economic growth. The review would give us valuable data to identify skills gaps, inform national policy making and help educational institutions to plan for the future, particularly to meet the needs of employers.
In the long term, a new wave of jobs will be created by businesses harnessing the power of the fourth industrial revolution. They will harness that power to expand and provide new jobs and products, from British-made 3D printers to British-designed driverless cars. Mastering and leading the fourth industrial revolution must begin with closing the skills gap, so that Britain’s workers are equipped to take up those new jobs. A first step is investing in skills, fully understanding the challenge of automation, and responding decisively and strategically through a skills review and new investment. Those are the steps that will get Britain to the future first.
I invite right hon. and hon. Members with an interest to the launch of the new all-party group on the fourth industrial revolution on 20 March, where the Chancellor will speak from the platform about how the Government are committed to helping to deliver an economy fit for the future. In the meantime, I am proud to support the Budget and will be delighted to support the Finance Bill as it progresses through the House because it helps Britain to futureproof its economy and improve its skills base.
Ian C. Lucas (Wrexham) (Lab)
It is a pleasure to follow the hon. Member for Havant (Mr Mak), who spoke about the fourth industrial revolution. We still have lessons to learn from the first.
This is the eighth Budget delivered by a Conservative Chancellor since 2010. Those of us who are old enough to remember will know that the first was rather cheekily called an emergency Budget. It said boldly that, by 2015, the deficit would be gone. Today, we heard that, by 2022, the deficit will be £19 billion. The Government have a record of failure. That target was set by the Government and they failed to meet it. They knew what the task ahead was, set a target and failed.
David Rutley
Does the hon. Gentleman recall that, shortly after the Budget speech given by the former Chancellor, the OBR set out clearly how it had underestimated the scale of the deficit and the impact of Labour’s management?
Ian C. Lucas
Strangely, I do not remember that; but the Government certainly got their excuses in early.
What we had from the Chancellor Alistair Darling in 2010 was a really excellent costed plan to reduce the deficit in a measured and sensible way. What we got from the Conservatives was an increase in VAT, deflation of the economy, stopping investment in infrastructure projects—a mess that has led to increased failure and decreased capacity delivering in the economy.
Ian C. Lucas
Let me make some progress.
I recently saw an example of the problems in our economy, and I want to talk about the difference between investment in the economy in the south-east of England and failure to invest in the economy in the rest of the country.
I recently had the great pleasure of going to Belfast. I flew from Manchester airport and I caught the excellent mini-bus from Wrexham station to the airport. It is really good, but holds only about 12 people. It got me there well. When I came back, I flew to London City airport, and from there I seamlessly drifted on to the docklands light railway, which came through investment in the local economy. I then moved seamlessly on to the Jubilee line, and I was here in 45 minutes. Wrexham is a 45-minute drive from Manchester airport, but can we get a rail connection to Manchester airport from north Wales, where some of the best businesses in the country are based? In the present system, that is absolutely impossible, and the reason for it relates to the 1980s, to where we need to look back.
In 1985, I was a newly qualified solicitor. I ran my own business and employed 12 people, so I do not need lectures from the Tories. When I started off, we had wonderful institutions such as the Halifax building society, the Leeds Permanent building society and Northern Rock—do Members remember them? They were all destroyed by demutualisation. Not only were they the main lenders to house buyers—to young people who wanted to start up new businesses; they were great regional institutions. The Halifax building society was an incredibly important regional institution. In the 1980s, those institutions were destroyed, and all the power was sucked into the south-east of England and the City. Now we have about three banks in the country from which everybody borrows. That is at the root of the problem we face.
The right hon. Member for Tatton (Mr Osborne) talked a good game: he talked about devolution and about the northern powerhouse—I was pleased to hear that. I am delighted to see that the Minister for the Northern Powerhouse has just arrived. He obviously got word that my speech was coming. It is really good to see him; he must come to Wrexham. If he does, I will look after him very well, as he knows. What we want in Wrexham, in north-east Wales and in Cheshire—the hon. Member for Macclesfield (David Rutley) is no longer in his place, but would benefit from this—is a local functioning infrastructure system that supports our local businesses.
As we have heard in the Chamber today, Germany is at the top of the list as the most efficient economy in the G7. Germany has lots of regional centres: Hamburg, Munich, Frankfurt, Düsseldorf, Stuttgart—I could go on. All those regional economies have regional banks, Sparkassen, which are required to invest in their local economies. I live in Wrexham, and if there were a Sparkasse there, I could pay my salary into it and I would know that the money was being invested in my local economy.
We need a fundamental reassessment of how to support local areas. Let me explain why. The private sector does not invest in this country’s regions. There is a market failure, as my hon. Friend the Member for Wolverhampton South West (Rob Marris) says. He made an excellent speech, and I am grateful that he is coming forward with sensible, radical economic thinking. We need new institutions through which local people can choose to invest in their local economy, because the present system is not working.
The only way of getting money from this Government—I am afraid it was the same with the Labour Government—is to go to the Treasury with a begging bowl and say, “We want some public investment in services in our area.” I have been an MP for 16 years and I have done this every year. It is very unsuccessful. It was announced today that over the next four years £200 million would be invested in public sector projects in Wales. Not one penny piece has been invested by the UK Government in transport projects in north Wales, although we have major businesses such as Airbus, and just over the border is General Motors, which needs Government support over the next few years in order to preserve jobs and be efficient. It is virtually impossible to get money from the Government, and it is virtually impossible to get private sector investment. That is because we do not have the institutional framework that enables us, if not to receive money from the Government, to borrow the money. I saw that in the 1980s in the north-east of England, where I was brought up.
Ian C. Lucas
I cannot give way; I have very little time.
In the 1970s, an excellent public transport system, the Tyne and Wear Metro, was built on Tyneside. That is what we need in north-east Wales. It was created by the Tyne and Weir passenger transport executive. Mrs Thatcher abolished that body because it was successful, and because it was a threat to her centralisation programme, which was a massive step. Not only was the private sector centralised; the public sector was centralised as well. What we need to see in this country is a radical change. We need to get away from the small-scale tinkering that took place today, and start investing in our local economy.
Let me end by mentioning a company in Wrexham called Dee Valley Water, It was doing an excellent job in Wrexham and Chester, but I am afraid that in the last three months, against the wishes of its own workforce and against the wishes of local people, it has been taken over by Severn Trent, which will now provide monopoly water services in our area. I cannot remember exactly what Severn Trent pays its chief executive, but it is either £2.4 million or £2.6 million, and we, the people who pay for water in the area, have to contribute to that sum. This was done over our heads: we had no say.
We need a change in the corporate governance system relating to businesses so that such obscenities end. We need the devolution of powers to local communities, which have been waiting for far too long. We have had centralisation under both Governments. The horrors of the 1980s need to be swept away, so that we can make real progress for our people.
Kevin Foster (Torbay) (Con)
It is a great pleasure to follow the hon. Member for Wrexham (Ian C. Lucas). I felt as though I were being given a history lesson rather than engaging in a Budget day debate. However, one part of the history was missing: the years between 1997 and 2010, when the hon. Gentleman sat on this side of the House as part of a Labour Government. If certain things were so bad, the Labour Government would surely have rushed to change them, but, of course, they did not.
As for the idea that there are “only three banks”, the hon. Gentleman might want to pay a visit to a branch of the Nationwide Building Society some time soon, or even visit the Coventry Building Society, which is not so well known throughout the country, but which now has customers in virtually every postcode district. It is also proud to say that it was the largest lender not to lose money on the sub-prime market.
However, it was not the history lesson on which I was planning to comment. I was planning to comment on what has been said so far in the Budget debate, and to welcome what we heard from the Chancellor earlier today. In particular, I note the growth projections. Given some of the prophecies of doom that we were hearing from all sides this time last year, when we were being told what might happen if we voted to leave the European Union, the rise in those projections is welcome.
Kevin Foster
I hear a heckle. It is true that we have not left yet, but most businesses do not look at what is happening immediately; they look at what will happen in a year’s time, or in two or three years’ time. The fact that businesses are still prepared to invest—and we have seen major investments coming into this country—shows that there is a confidence in the economy that has not been shaken by the vote, which is very positive.
George Kerevan
I thank the hon. Gentleman. I realise that he has only just begun his speech. If he alludes to the shift in the growth projections in the Office for Budget Responsibility document, he also needs to know that, on page 87, the OBR has reduced its forecast for wages and salaries growth, and that on page 61 it has lowered its forecast for household disposable income.
Kevin Foster
I am sure that, as ever, the hon. Gentleman was seeking to be helpful with that intervention. Let us be blunt: the root of our economy is its size and overall growth. That is what we base our public services and funding on, and what we build our whole economic structure on, and it is strange to say that that is negative. Actually, we should be looking at things such as the living wage, and the fact that we are implementing and targeting tax changes for those on lower salaries; many people in my constituency of Torbay will benefit from that. I can understand, however, why there might be some uncertainty about the future among employers north of the border, particularly given the SNP Government’s intention to try to rip Scotland away from the single market of the United Kingdom. If anything is going to take growth down for Scottish companies, that will. [Interruption.] Well, we hear the shouting—
Mr MacNeil
Canada exports 75% of its products to the United States of America. Is the hon. Gentleman arguing that a country should be united, with the same Government, with its chief export destination? That logic will ultimately lead to one global Government, as all countries will have to join with the country they are majorly exporting to. The hon. Gentleman is promoting a fallacy—a Tory fallacy, obviously.
Kevin Foster
It is interesting to hear the example of Canada; of course, there is a part of Canada called Quebec that rightly rejected nationalist arguments in two referendums, and I hope there will be a parallel situation in Scotland if the SNP is daft enough to call another referendum.
I say this about international trade and how we do well: I know the hon. Gentleman will be greatly looking forward to working as Chair of the International Trade Committee and as part of the United Kingdom to make sure we get the best deal we can out of Brexit. We will all look forward to receiving his Committee’s reports.
Kevin Foster
I will not give way again, because I have already given way twice in the first two minutes of my speech.
The Chancellor made a joke about spreadsheets and his nickname of “Spreadsheet Phil,” but what I quite liked were the tables, and in particular chart 1.2 showing the consistent reduction in unemployment. That again shows one thing that we have always known about Conservative Governments: we find unemployment a lot higher than it was when we left office, and then proceed to reduce it again while in office, giving more people the stability of an income, and making a difference.
To focus on the key issues for my constituency, I greatly welcome the additional funding for social care. I am a member of the Public Accounts Committee, and we published our report on the NHS and social care last week. There is clearly a need for a long-term debate about how we manage the future liabilities and pressures that will come on those services.
We debated what that means for the future of local government in the Local Government Finance Bill Committee. All of us want to know that when we or our loved ones reach our 70s, 80s or 90s—one of the greatest successes of the NHS is that more people are doing so—the social care will be there. [Interruption.] I will not be cruel enough to point to one particular Member who was making these comments—[Interruption.]—although I will mention the hon. Member for Wolverhampton South West (Rob Marris), who is chuntering from a sedentary position. To return to the subject, it is right that the Chancellor recognised that challenge, particularly in communities such as Torbay; we do need to make sure the funding is in place.
I would, however, disagree with some of the comments about having a national care service, because I want to see an integrated care service. If we were setting up the NHS and social care system today, we would not set it up with a split between local government and the national health service for services which we would all refer to as healthcare services.
I particularly welcome the measures on business rates. The discount for pubs is welcome, but I am keen that we must not penalise those who have been most successful. When we look at how we value these things in future, moving away from purely property taxes, we must not hit those who have been very successful, and there has been a debate about that in relation to pubs. The revaluation is broadly welcome, however. Torbay was not served well at all by the revaluation in 2008; our high street was clobbered with rates that are totally beyond likely rental incomes, particularly given that landlords end up offering discount “pay the business rates” deals rather than rent in order to get units occupied. The revaluations will see much of that corrected.
Looking ahead to the future, it is easy to say, “Let’s consider a fundamental change,” but as those of us on the Public Accounts Committee who had the pleasure of taking part in the inquiry into Google know, there is an issue with how we make sure that taxation follows the modern economy. It is much easier to say that a physical building on a high street or an industrial estate should pay x amount of tax, but that is more of a challenge with regard to websites based on overseas servers that allow companies to route their orders and billing and invoicing operations more easily. I hope we can have a sensible and positive cross-party debate about that.
I have two grammar schools in my constituency and one just outside it, so I welcome the support for them. The funding formula presents a challenge, in that a lower percentage of pupils in Torbay grammar schools are on free school meals than those in other secondary schools in the area. The plans to encourage them to increase that rate are welcome, and the three headteachers are absolutely committed to doing that. It is unlikely that we will see a new grammar school in the bay—that has always been clear—but Government support for them is welcome and positive.
Although I felt that going to university was the right choice for me, it is vital that we up-value technical education, so I was pleased to hear about the proposed T-levels. Tomorrow night I will be at the South Devon College apprenticeship awards, presenting awards to those who have done an apprenticeship. It is good to think about how we can get them more recognised. As has been said, they are solid qualifications that an employer can look at and understand in the same way as a degree, an A-level and a GCSE. They also have appropriate rigour. Some people think that a technical qualification is easier, but it is not. When I first spoke about encouraging degree-level apprenticeships, someone wrote on my Facebook page, “Is that like a YTS?” That just showed a complete lack of knowledge about how demanding a top-end apprenticeship is compared with quite a lot of university degrees. It is absolutely vital that people know what is available.
The Chancellor has put forward a solid and effective plan. I welcome the fact that we will continue to meet our manifesto pledges on allowances, particularly the basic allowance on income tax. I also welcome the overall tenor of the Budget: it is a positive statement about Britain’s economic future and many people will want to get behind it. We have only to look at this morning’s opinion polls to see that people have confidence in this Conservative Government and no confidence in the alternatives.
Several hon. Members rose—
Madam Deputy Speaker (Natascha Engel)
Order. Before I call the next speaker, who will maintain the eight-minute limit, I should warn Members that after that the limit will go down to seven minutes and it may have to come down a little lower.
Mr Alistair Carmichael (Orkney and Shetland) (LD)
I am grateful to you, Madam Deputy Speaker, for the opportunity to take part in this debate. It can occasionally be a dangerous debate in which to speak. In my experience, Budgets that are welcomed on Wednesday are often damned by Sunday, but I do not know what would need to happen between now and Sunday for this one to be described as exciting.
Other Members have referred to Brexit as the elephant in the room. It is important that we understand and explain to those on the Treasury Bench why the Chancellor’s failure to address Brexit was so important. As a member of the Select Committee on Exiting the European Union, it is rarely necessary for me these days to stick my hand in my pocket to pay for bacon and eggs. Just about everybody wants to buy me breakfast to explain why Brexit is going to be so difficult for their sector. The one recurring message, whichever sector I speak to, whether it is the Corporation of London or farmers, crofters and fishermen in Orkney and Shetland, is that a hard Brexit and the determination to leave the single market and the customs union, possibly without securing a trade deal, which would leave us on World Trade Organisation rules, would be disastrous for them.
This is the first day since the Prime Minister made her speech at Mansion House on which the Chancellor of the Exchequer has had an opportunity to give some reassurance, and to tell the various sectors of our economy that there was an understanding of their position, but he failed to do that. His failure to say anything on the subject was culpable and could ultimately be catastrophic.
It was also disappointing for Opposition Members that the Chancellor seemed to have nothing to say about the need to tackle climate change. There are so many possible measures, many of which are not particularly expensive. There could have been more measures to encourage energy efficiency, and only a small amount of money would be necessary to develop renewable energy—most notably, in my constituency, through wave and tidal power generation—but there was absolutely no mention of those things. At a time when there are so many other pressures calling for the Government’s attention, it is more important than ever that the long-term issues—of which climate change is probably the most clamant—should not be forgotten.
I am not, however, one of those who think that a determination to tackle climate change means that we should turn our back on hydrocarbons. They remain an important part of our economy, particularly in my constituency in the Northern Isles. I was a little underwhelmed by the Chancellor’s offer of a discussion document, especially since it was the second such offer, but on reflection, and having heard a few other emerging details, I believe that this at least shows an understanding of the need to take continued, serious action to help the North sea oil and gas industry.
The Chancellor did not refer to it, but I understand that the Government have today laid before Parliament a statutory instrument—I have not yet had sight of it—to extend the definition of investment expenditure for certain categories of operating and leasing expenditure. That will be welcomed by the industry. [Interruption.] The Financial Secretary to the Treasury has just indicated that it will be backdated. This measure could have a significant effect on our continued exploitation of resources on the UK continental shelf. We will await the Government’s discussion document with interest and see what it says.
The real story that will emerge from this Budget is the Chancellor’s lack of understanding of small businesses. He is really out of touch, and at no time was that more transparent than when he spoke about the changes to national insurance contributions for self-employed people. There are abuses of self-employed status. In the so-called gig economy, employers such as Uber are taking people on as self-employed agents when they are, to all intents and purposes, employees. That needs to be tackled, and it is something that the Chancellor could usefully have taken on today.
In fact, the Chancellor has introduced a tax increase for some of the most hard-pressed people in our communities. I think he has done this because he just does not understand what life is like for people who work as builders, plumbers, window cleaners or hairdressers, and for the many others who will be affected by this change. He says that this is about levelling the playing field between employment and self-employment, but we all know that that playing field will never be level, and that fact has to be recognised in our tax structures. Self-employed people take risks, sometimes putting their house on the line. The reality is that if a sole trader does not work, they get no sick pay. If their business goes bust, no one will step in and give them a redundancy payment.
Geraint Davies
Does the right hon. Gentleman agree that millions of these people are, in essence, not self-employed by choice? They have just been let out by big companies to save those companies paying national insurance and all the other benefits. They have been left on their own in a position that they do not want to be in, and now they are being punished by the Government.
Mr Carmichael
That was the point I was making about Uber and other companies that take on people as nominally self-employed agents, when to all intents and purposes they are employees. That must be tackled, but this Chancellor seems to have no great enthusiasm for tackling the big corporates. The change will not hurt them; it will hurt the small sole traders who are working in their own right, rather than as agents of a bigger corporate.
Rob Marris
The right hon. Gentleman talked earlier about waking up tomorrow and having another look at the Budget; may I suggest that he does that with regard to this issue? According to the Chancellor’s figures—I do not know whether they are accurate—the increase will raise £146 million a year, and national insurance tax breaks for the self-employed are £5 billion a year. Proportionally, on the Chancellor’s figures, that is not a big increase.
Mr Carmichael
That brings us back to the same crux of the problem, which is that we are treating everybody with self-employed status as though they were living in the same way, but they are manifestly not. There is a distinction to be drawn between risk-takers and entrepreneurs, and those who are effectively employed but are treated as self-employed. That is the issue, but it will not be tackled by today’s change.
Likewise, the digitisation of tax will affect many sole traders and small business people. It is welcome that the proposal has been delayed for a year, but we all know about the problems that will make it difficult and, frankly, I do not see many of them being resolved in a year. All we have done is kick the can down the road.
The Liberal Democrats welcome the extra money for social care, but I fear that it will ultimately be inadequate, and that we will be in the middle of another NHS winter crisis this time next year. I wonder how many more crises our NHS will be able to sustain while retaining good-quality staff and providing the service that we enjoy at present.
My final point is about spirits duty—[Interruption.] I do hope that I am not intruding on the shadow Chancellor.
Madam Deputy Speaker (Natascha Engel)
Order. I do not think that the shadow Chancellor is aware of how loudly he is speaking. It is quite difficult to hear the right hon. Member for Orkney and Shetland (Mr Carmichael).
Mr Carmichael
I am grateful, Madam Deputy Speaker. The shadow Chancellor may not have been aware, but I was.
Mr Carmichael
I am an easy person to miss.
Spirits duty is being increased by 3.9%, which has already been rightly condemned by the Scotch Whisky Association. Not only will that affect an enormously important manufacturing sector for my constituency and for the Scottish and UK economies, but the effect will go beyond Scotch whisky. When I was first elected to the House in 2001, my constituency had what would be called one and a half whisky distilleries. We now have two full-time whisky distilleries and three gin distilleries. [Laughter.] I am not claiming responsibility or credit for that, but we all know that the market supplies when demand increases. The point is that that is typical of many areas of the country. It is a growth area with small, growing businesses that deserve support; they do not need to be clobbered in this way.
Kit Malthouse (North West Hampshire) (Con)
I must confess that I feel as though the Chancellor has dusted off the black polo neck that he apparently used to wear as a young man and has delivered to us a box of Milk Tray, such are the delights that we heard about this morning. I want to run through a few of them before I get to the coffee cream and the nutty centre, which may provide a little more grist to the mill.
On schools and skills, more money in the system is extremely welcome. I particularly welcome the formalisation of training in the new T-levels. A huge number of young people in my constituency will look to those new qualifications with glee and will be pleased to participate in them. Such careers are increasingly developing as an alternative to going to university. A lot of young people want to get straight into the workforce, so the qualifications will be extremely welcome.
Similarly, the new money for the social care system will be welcome in constituencies such as mine, where the average age is higher than the national average. I have a large number of older people, and they often get trapped in the health service and look to the Government to help them to transfer back home, and back to a happy life.
Although the vast majority of businesses in my constituency are seeing a reduction in their business rates bill—hooray!—some smaller pubs in which there has been particular investment, and that have had success in trading over the past few years, have been presented with quite large rises, notwithstanding the transitional relief available. It is extremely welcome that the Government are making more money available to those pubs, and a foaming pint will be raised to the Chancellor at The Wellington Arms in Baughurst this evening.
I will now pick out and welcome one or two of the more obscure items mentioned by the Chancellor that have not been part of the general debate. His commitment to science as part of the British economic mix over the next few years is extremely welcome. His predecessor had a similar commitment, but the current Chancellor has made a point of mentioning science in pretty much every announcement he has made.
The £300 million allocation towards more PhDs and more research into innovative technologies, particularly in academia, is extremely welcome, as is the crucial simplification of research and development tax credits. If we are to bring together the alchemy of private capital and publicly backed science, we need to make it as simple and as easy as possible, so the encouragement to companies to invest capital in order to take advantage of R and D tax credits in a simplified way is extremely welcome.
The Chancellor also announced a Green Paper on consumer markets, which will be critical over the coming years, because notwithstanding the fact that the internet has disrupted a number of consumer markets, including insurance and energy, there is too little uptake by consumers of the advantages that the internet provides in markets such as energy and telecoms. Some 90% of people have yet to consider switching their energy provider, but by doing so, they could save a huge amount of money. Those areas need to be looked at, and I will participate in the Green Paper with enthusiasm.
The NHS capital programme is absolutely key, and it is brilliant that we are getting more support. In North West Hampshire, we are looking at a whole new model of operation around a new critical treatment hospital at junction 7 of the M3. The clinical commissioning group is wrestling with the issue at the moment, so more resources to help it would be fantastic.
Finally, domestic violence is an issue with which we have struggled. When I was doing the policing job at City Hall, we were the world’s first major capital city to introduce a strategy to address violence against women and girls, and we did so with our own resources. That was followed shortly thereafter by the Government, under the leadership of the then Home Secretary, now Prime Minister. It is fantastic to see her ongoing commitment, through the Chancellor, to investing in this important area.
Now on to the coffee creams. I am grateful to the Financial Secretary—this is part of her responsibilities—and the Chancellor for listening to the howls of anguish about “Making tax digital”, the prospect of quarterly returns of information to the Inland Revenue, and the burden that would place on small businesses. The extra year for those below the VAT threshold is extremely welcome. Nevertheless, I am sure that the Financial Secretary will appreciate that many of the small businesses that will be left out of the easing of that obligation will now feel that they should be included. I hope that she and her colleague, the Chancellor of the Exchequer, will be open to more conversations about how the system can be improved.
I accept that the path, in reporting business taxation, should be towards digital, as there will be enormous savings for the Government and for businesses, but I encourage the Financial Secretary to listen to the professional and business organisations that still think the Government can go further to make the system work. I am more than happy to sit down with her to talk about that, but I am grateful for the fact that she has listened to the campaign by me and others.
Finally, it will come as an enormous relief to an awful lot of businesses that the predictions of doom and gloom before the referendum have not come to pass, and that the macroeconomic picture is improving, forecast by forecast. Every organisation, from the OECD and the OBR to the Bank of England and, indeed, a lot of private forecasters, have revised their ideas about the economy upwards with every month and quarter that passes. That is a great relief.
Suella Fernandes (Fareham) (Con)
Is my hon. Friend pleased that Donald Tusk’s prediction did not come true? He said in June last year that Brexit would bring about not only the “destruction of…the EU” but the end of “western political civilisation”.
Kit Malthouse
Yes. Of course, given the comparative economic situation in the EU, his words seem even more hollow.
The economic picture is looking better and better as each forecast is delivered. Having said that, I am enormously reassured by the Chancellor’s continued commitment to sorting out the deficit and trying to get our public debt under control. I know I am not the only person in the House who, on seeing the figures he presented, was reassured about the economy’s path but remained terrified by the level of our national debt and the speed with which it is growing. We accrue national debt of around £5,000 a second. We are spending enormous amounts of money over and above what we earn, and unless we get that under control, we will leave a dreadful legacy to our children and grandchildren. It would have been easy for the Chancellor to ease up a bit—to try to keep Members happy, or happier, by splurging a bit of money here and there and spending even more on the chocolate box—but the fact that he did not, and instead prioritised the notion that we should get our house in order, is enormously reassuring. In the early days of his chancellorship, he is showing great promise in helping us to turn the country around.
North West Hampshire is a part of the county of Hampshire, which is teeming with small businesses. We do not have that many large ones—one or two—but we have hundreds, if not thousands, of small businesses that are extremely sensitive to movements in the national economy. The fact that we are in the hands of a Chancellor who is committed to steering the economy on a steady path, without lurches one way or the other, will be an enormous reassurance to them and will set the course for future success.
Helen Goodman (Bishop Auckland) (Lab)
I am pleased to follow the hon. Member for North West Hampshire (Kit Malthouse), with whom I am happy to serve on the Treasury Committee. I agreed entirely with what he said about science and about “Making tax digital”. He ended with some remarks about the forecast, which is where I shall begin.
I think everybody agrees that the most interesting thing about the Chancellor’s speech was what he did not say. The biggest economic change in the past year has been the 12% fall in the exchange rate since the Brexit vote. For the past six months, the uncertainty about our future trading relationship with the EU has damaged business investment, but it has not damaged consumption, which is why growth has continued faster than expected. Nevertheless, as the independent OBR’s forecast shows, that will not continue. As inflation rises, it will put a squeeze on real incomes. The boost we are currently seeing in export earnings is likely to be followed by a squeeze on margins for many businesses over the next few months. I notice that the Chancellor has put aside £26 billion, which is half what Michel Barnier says he will ask for in the negotiations. Meanwhile, public services are showing serious signs of strain, and we need to tackle the UK’s poor productivity record.
The best thing the Chancellor could do is to start to win battles on Brexit in the Cabinet. He needs to start to win the arguments on the customs union and on the need for harmonised regulation for industry on everything from medicines and chemicals to aviation and railway safety. It is uncertainty about those things that is causing the economic uncertainty and the fall in the exchange rate. New barriers will make real dents in our economic efficiency that we cannot afford, and they will be felt in lost jobs and lost opportunities.
The Chancellor’s money for productivity is welcome; this is a time not for short-term fixes but for long-term reform to address economic weaknesses and social discontent. His extra money for adult skills is welcome as far as it goes, but he is not yet offering maintenance loans for people in further education. Parity of esteem with higher education means parity of treatment.
On the money for schools, the Chancellor began by saying that education is the key to inclusive growth, but then went on to spend a lot of money on selective grammar schools—surely shome mistake. My constituents will be appalled by that move. In St Helen Auckland, where 48% of children are on free school meals, each child will get £609 less over the course of this Parliament. In Woodhouse Close, where 83% of children are on free school meals, there will be a cut of £571 per child. In Butterknowle, the cut is £1,881 per child. It is totally unfair to pour all the money into a tiny number of schools. The measures on school transport are unfair as well, as they do not take account of the long bus journeys that people have to make in rural areas.
The Resolution Foundation has published some interesting work recently, showing that the incomes of pensioners have overtaken those of working-age people. That problem will get worse over the next few months. We know that, for people in the bottom 10%, £1 in £6 is spent on food; for people in the top 10%, it is £1 in £12. At this moment, when we have higher inflation, the Government have decided to go ahead with a freeze on tax credits and child benefits, which are the income supports for the low-wage working poor. The Chancellor could have unfrozen those benefits to help millions of people had he not been committed to going ahead with inheritance tax cuts.
George Kerevan
Does hon. Lady agree that one of the other things that the Chancellor failed to mention was inflation and the fact that it is going through the roof?
Helen Goodman
Absolutely. The Chancellor said very little about Brexit, the exchange rate or inflation. Those are the major changes in the economy over the past six months.
The Chancellor could have unfrozen those benefits that go to the low-paid working poor had he not been committed to going ahead with cuts to inheritance tax, capital gains tax and corporation tax. To cut corporation tax to 19% may be good for competitiveness, but to cut it to 17% is surely unnecessary at this moment.
I want to throw a lifeline of support to the Treasury team who seem somewhat embattled on the issue of national insurance. I do not know whether they want a lifeline from me, but I will offer it to them anyway. It is reasonable, on equity grounds, to even up the tax that is paid by people in employment and by those in self-employment. We need to look at that whole matter more closely.
I am pleased also that the Chancellor has eschewed the gimmicks of his predecessor. The commitment not to raise income tax and national insurance whatever the circumstance was exactly one such gimmick. However, if we are to look at national insurance, let us look at the fact that it kicks in at £8,000, below the personal allowance.
The one thing on which we all agree across the House is the importance of tackling tax avoidance. What the Chancellor did not say was that the largest amount of money that he is taking in—this is in the final section of the chapter—is an extra £500 million from tax credits, which amounts to another cut in tax credits. The Red Book says that it is a pre-announced cut, but it cannot be pre-announced because the extra savings of £500 million are new.
One of the problems with the Government’s productivity plan is that it is not sufficiently inclusive in respect of workers and people at the top, and of the regions. The Government should really start thinking about making this country more equal, both as an economic efficiency measure and as a social justice measure. The fact is that people with predictable and secure incomes can take on more commitments, and that in turn will boost the economy in the medium term.
Lucy Frazer (South East Cambridgeshire) (Con)
“It is not the strongest of the species that survive, nor the most intelligent, but the ones most responsive to change.” That is the theory of the great evolutionist, Charles Darwin. That theory is now very relevant, because we are facing a technological revolution. We have recently seen the rise and fall of various technologies, from Polaroid and PalmPilot to vinyl and video. The pace of change is so extreme that economists predict that two thirds of children starting school today will be in jobs that do not yet exist. The countries that can adapt and change will be the most successful.
As the Chancellor highlighted, in order to give our children the best opportunities we need to think carefully about how we train them. That training must not only encompass the ability to write, read and calculate, and include the capacity for thought, judgment and responsibility; it must also incorporate the practical, technical training needed to support our local economies.
As I represent an area with a thriving bio and agri-tech industry, I am delighted by the Chancellor’s focus on the importance of technical education, because his announcement in and of itself recognises the value of those skills. He is right to identify their worth, in circumstances where ICM Research states that employers rate higher apprentices as 25% more employable than others. His proposal to streamline such qualifications, putting them on a par with academic qualifications, makes them of equal weight and more comprehensible to employers. His announcement of £500 million a year to give 16 to 19-year-olds the necessary technical skills is also most welcome.
For many years we have talked about technical education. Today the Chancellor has given it the support and respect it deserves, but should we go further and be even more ambitious? Responding to change, linking up with business and inspiring innovation should start not as children leave their formal education but much earlier, in our primary and secondary schools. That needs to be facilitated by our dedicated teaching workforce. We need to link up our businesses with our teachers and to incentivise our innovative and technological industries to play a role in supporting, training and informing teachers of the work they are doing at the cutting edge of industry. When we fully embrace this, we will truly become a flexible, responsive and competitive country.
Mr David Hanson (Delyn) (Lab)
I am pleased to follow the hon. and learned Member for South East Cambridgeshire (Lucy Frazer), who made a shorter speech than I was expecting—it is always good to be ready to go when called to speak, Madam Deputy Speaker.
The Chancellor of the Exchequer undoubtedly has some laudable aims: he wants to support growth, have an economy that works for everyone, support infrastructure investment and improve productivity, but when he sat down after making his statement, I thought, “Is that it?” I share those objectives, because I want to support growth and aspiration, tackle poverty and improve public services, but his statement contained no strategy for how to achieve them. I believe that my right hon. Friend the Member for Hayes and Harlington (John McDonnell) and the Labour party have a definitive plan to do that, rather than the smoke and mirrors we saw today from the Chancellor.
For example, the first item was supporting growth. I think that this year’s “golden pasty” for the quickest unravelling of a policy set out in the Budget will go to the rise in national insurance contributions—it might even be called the golden caravan, because that was also a policy that unravelled several years ago.
The Chancellor today announced a 2% to 5% increase in national insurance contributions for 5 million people. How does that support growth? Those 5 million people, including 3,000 in my constituency—7% of the workforce in my area of north Wales—are the hairdressers, window cleaners, builders, plumbers, electricians, small shopkeepers, gardeners and market traders who are taking risks, being entrepreneurial and not necessarily having the holidays that those in the employment of major companies would have. They are taking risks with their own capital and are not earning when they fall ill. Yet, in supporting business growth, the Chancellor has put an additional tax on those individuals, amounting to about £20 a month for someone earning £20,000, £30 a month for someone earning £27,000, £45 a month for those with a £35,000 income and £55 a month for those with a £42,000 income.
The golden pasty award relates to the Conservative party’s manifesto commitment not to raise national insurance contributions. People in my constituency will have put a cross next to the Conservative candidate’s name on the basis of no tax rises and no national insurance rises. If a Conservative Government have broken that promise, how can we trust them on anything else? The Financial Secretary to the Treasury has said that the changes were not to class 1 but to class 4 contributions, so it did not matter because that was not a manifesto commitment. I would like to see her explain that to the small businesses in the small towns in my constituency when I go back there this weekend.
I welcome the £435 million movement on rates, but it does not go far enough to deal with the impact on businesses in my constituency. For example, the Government have offered £1,000 to local pubs in constituencies such as mine. I was contacted last week by a pub whose rates on 1 April will have gone from £22,000 to £66,000. That is unbearable for a small business, and the Government should revisit that in due course if they can.
The Chancellor talked about investment in infrastructure. I want a growth deal for north Wales. In fact, the north Wales growth deal is mentioned in paragraph 4.29 of the Red Book, which says:
“The government…looks forward to…a North Wales Growth Deal.”
Exactly one year ago this month, the Secretary of State for Wales came to north Wales and said, “I want to push forward with a growth deal for north Wales. I want north Wales to come up with proposals for a growth deal.” Well, north Wales has come up with and submitted proposals for a growth deal.
North Wales sees the benefit to job creation of infrastructure investment in roads, transport and broadband. It wants the partnership between the state at local council, Welsh Government and UK Government level to make that growth deal happen, yet there is nothing in the Budget to support a growth deal but warm words. Why does this matter? It matters because the Government have promised in the Red Book a £200 million uplift to expenditure in Wales over the next four years. Let me put that into context. Inflation is currently running at 1.8%. The actual cost of that £200 million is about 1.3% of the total Welsh budget. Even with the Government’s figures on inflation—at 1.8% now, rising to 2.4% by 2017—the level of investment increase in the Welsh Government is below the rate of inflation. It will not meet the needs of our community. That matters because I want investment in infrastructure.
Before I came to London last Monday morning, I went to see a local £30 million investment by the Welsh Government and Flintshire County Council in a brand-new secondary school under the Building Schools for the Future programme, which is not now operational in England, but is operational under Labour’s Welsh Government. That £30 million is investment in schoolchildren and parents, but, conversely, it is actually investment in Galliford Try, a private sector building company, and in the people who make and paint schools. It is investment in carpets, computer technology and construction, all of which are done by the private sector. We can therefore boost local employment by public spending on infrastructure, as in the example of that school.
The £200 million is welcome, but let me finish by saying one thing: we will not be spending any of it on grammar schools in Wales, because the Labour Government believe in equality of opportunity and will invest that money in secondary education, supporting every pupil, rather than those who just happened to pass an exam at the age of 11.
Several hon. Members rose—
Madam Deputy Speaker (Natascha Engel)
Order. I am going to leave the limit at seven minutes for the next speaker, but after that it is going to come down to six minutes.
Tom Tugendhat (Tonbridge and Malling) (Con)
What we have here is a Budget that sets out a transformational moment in our history. As many people have mentioned, we have spoken a lot about Brexit—about leaving the European Union—not just today, but over many of the weeks and months past. The idea that the Chancellor has somehow dodged the question is therefore frankly a little odd, in the same way that it would be odd to describe how we speak about democracy in that way—of course, the whole element is democratic. It is absolutely absurd to pick out bits and pretend they have not been picked on.
There are a few areas of the Budget I would like to pick out, which I am particularly keen on. The digital infrastructure budget of £740 million—much of it going into 5G and broadband—will be absolutely essential in constituencies such as mine. Rural communities such as mine have huge amounts of innovation and enterprise but little of the infrastructure to hold them together, and this money will allow them to communicate with not just each other but the world. As we open ourselves up to the world, and as the Department for International Trade makes such extraordinary efforts to link us very much to communities on the other side of the planet, it seems quite absurd that I could get 3G and 4G signals very easily in Kabul and Khartoum, but that, in Kent, getting a phone call at all is pretty tricky.
That money is very welcome, and so too is the spending on national roads infrastructure, because, of course, we do need to communicate internally. However, one area I have not heard enough about, which I would like to hear more about, is rail. So often, we focus on the economics of rail as though rail paid for itself through the ticket prices, but, of course, it does not. Trains pay for themselves not through the ticket prices paid by the travelling public but through the economic development they allow. I therefore hope very much that we will look again at rail infrastructure and look very seriously at how much more we can put in.
There are, of course, other areas. As an investor in a few start-ups in this country—I refer you to my entry in the Register of Members’ Financial Interests, Madam Deputy Speaker—I am pleased to see the £100 million for the global research talent pool and the £250 million of talent funding going to PhDs and suchlike. Attracting the best and the brightest to our community is about starting those businesses and generating that enterprise and innovation that will turn us into not just a more advanced, better and richer society but the think-tank and the start-up capital of the world, and I think that we can get there.
Alison Thewliss (Glasgow Central) (SNP)
The case the hon. Gentleman is making about attracting the brightest and the best is a good one, and I agree with him on that, but does he agree that the Home Office has to play its part? In my constituency, I have two entrepreneurs who were brought here on entrepreneurial visas to start their business, and they are now being thrown out.
Tom Tugendhat
I am not going to comment, obviously, on the individual case the hon. Lady raises, but she is absolutely right that we will have to look with imagination at how we bring migrants into this country. As she will know, I was on the remain side of the argument, but many people on the leave side would say the same as I say now, which is that we must be open and much freer in how we look at this. Instead of focusing so much on European migration, we should perhaps go more global. I understand the argument, and I would rather have had freer European migration as well, but we are, as they say, where we are, and the vote has been cast. So, yes, the hon. Lady is absolutely right that the Home Office must play its part.
As we look through the various areas in which investment will happen, there are a few I would like to highlight a little more. First, I want to highlight the combating of domestic violence. Domestic Abuse Volunteer Support Services, which operates out of Tunbridge Wells, does a great deal to help victims of domestic violence to present themselves to court, to ensure that they get appropriate legal representation and to defend their interests properly against their abusers.
If we look in greater detail at devolution, we see that there is a lot of talk in the Red Book about city deals and about extra money going to Scotland, Wales and Northern Ireland, all of which I welcome, but there is not so much on devolution to Kent, for example. There is not so much on devolution to our boroughs and parishes, where a lot of our centralised efforts could be placed.
I want to highlight a few areas that contain perhaps a small element that I would work on. The Budget is not simply a collection of numbers; it is not an exercise in accounting; and it is not a spreadsheet. It is a political document, and it speaks to the areas in which we as a community, a Government and a nation wish to see investment and effort. It is a political work. That is why I find the emphasis on national insurance slightly concerning. I come from a political tradition that believes in small government and low taxes and that seeks to encourage entrepreneurship and enterprise. Although the figures that we are discussing are very minor—a percentage point here and there, or two over two years—they speak to a tone that is not entirely helpful, and in that I urge a rethink. We should be encouraging the self-employed, start-ups and people who are taking risks and carrying those risks themselves. We should recognise that through support, yes, but we should do so particularly through taxation.
That brings me to quarterly tax returns. I understand that the Chancellor has been generous in delaying their introduction by a year, but let us not kid ourselves that £85,000 a year is a particularly large turnover for a business; it is not. I would very much welcome a rethink about how we can assist those who do not have large budgets to pay accountants and who are not running businesses that will definitely generate millions in the future. We are talking about people who are experimenting. It may be two or three friends trying out an innovative idea, or two or three business partners experimenting with a new area of technology, who may indeed be the next Google but who are now in a garage somewhere in Manchester. It is worth thinking about what we can do to make sure that they have opportunities.
If we start putting burdens on businesses at a sum as low as £85,000, we will have to be careful that we do not discourage qualities that we Conservatives value—I know that the Chancellor, in his youth, demonstrated these—the innovation, the entrepreneurialism and the talent to succeed in this now-liberated Britain.
Karin Smyth (Bristol South) (Lab)
It is an honour to follow the hon. Member for Tonbridge and Malling (Tom Tugendhat). Bristol South has a proud industrial and economic heritage. It is part of the west of England economy, which contributes more than £10 million to the Treasury every year, but it is also home to some of the greatest health inequalities in England. The last Labour Government recognised the contribution made by the people of Bristol South to our prosperity. The last Labour Government invested in our future, in our young people and in the fabric of our city, but they also recognised the severe economic need that people faced. This Government continue to short-change the people of Bristol South, and today is no exception.
Let us consider the contrast between the 13 years of the last Labour Government and what has happened since 2010. In health, investment in doctors and nurses meant the shortest waiting times that NHS has ever experienced, with demonstrable improvements in health outcomes. The money allocated by the Labour Government meant that after more than 50 years of campaigning, the people in my community finally got the hospital that they had been waiting for—the excellent and well-appreciated South Bristol community hospital.
In education, teachers, support staff and teaching assistants improved educational outcomes for children. Every secondary school was rebuilt under Labour, with new classrooms, laboratories and other facilities in Bedminster Down and Ashton Park schools, as well as in schools in Whitchurch, Hengrove, Hartcliffe and Withywood. Families from across Bristol South benefited hugely from Sure Start, and a brand new £30 million state-of-the-art post-16 campus was an investment in our further education. Further education was thriving, with a wealth of adult skills opportunities.
But what has life been like since 2010? On health and social care, the Public Accounts Committee, of which I am a member, has asked for an end to the bickering about funding. The money is not enough for the programme of work that is expected, and the Government need to start being honest with the public about that. Today does not alter that position.
In education, our children face school funding cuts—every school in my constituency will lose out—and children’s services are under threat. Headteachers have told me their concerns about losing £1.9 million in cuts across the city, with a £1.8 million cut in the education services grant and a reduction in special needs funding as well. This Government have cut 40% from the adult skills budget, and there is now a gaping hole in adult training provision. We expected some social care money and that money is welcome, but over three years it is not enough. I look forward to the Green Paper, but it bodes ill that the Government have already said they do not want to talk about a death tax. Such talk will not help the future of older people in our society.
Under Labour, child benefit went up and child tax credits were introduced. We cut long-term unemployment and introduced the national minimum wage. Pensioners were lifted out of poverty, and children were lifted out of relative poverty. Now, under this Government, the one in five households in Bristol South that rely on tax credits have lost out. The Library has shown that the bedroom tax has cost Bristol South people some £3.6 million. Some 9% of people in my constituency are hard-working, entrepreneurial self-employed people, and today is a devastating blow for them.
With some hubris, the Chancellor said today that
“they don’t call it the ‘last’ Labour Government for nothing.”
I assure him and the people of Bristol South that the next Labour Government will once again reward their hard work, recognise their endeavour and deliver for them all.
Suella Fernandes (Fareham) (Con)
I am pleased to respond to the Budget. I welcome the Chancellor’s commitment to consolidating the UK economy and investing in the next generation through education, skills and innovation.
I have two main points to make. First, support provided for ordinary families, children and young people is only possible because of a resilient economy. I am delighted by the various forecasts and upgrades that were set out at the beginning of the speech delivered by my right hon. Friend the Chancellor. As well as the OBR having updated growth this year from 1.4% to 2%, we should note the jobs miracle in this country and the upturn in employment since the Conservatives were elected to power in 2010. The fact that employment has risen from 70.2% to 74.6%, with a further two thirds of a million in work by 2021, has not happened by accident. It has happened because of a concerted effort to get people off welfare and into work and to create a jobs climate in which employment pays. Despite the higher than target inflation, real wages will also continue to rise in every year of the forecast.
The positive picture is further reflected in the predicted fall in public sector net borrowing and in relation to the debt we still face in this country. When Labour left office in 2010, we were borrowing £1 in every £5 we spent, which was unsustainable and irresponsible. This year, it is set to be £1 in every £15, so we are back on track towards living within our means.
All those elements contribute to and add up to a strong economy. Since the referendum, that strength has been undeniable. We heard today about Nissan and Google investing in the UK, but it goes much further. Despite the predictions this time last year about a recession, with a cost per family of £4,300, and of negative forecasts from the IMF, the IFS, the OECD and the Bank of England, the reality has been very different indeed. UK manufacturing has hit a two-and-a-half-year high, and services are seeing similar growth. The UK was the fastest-growing economy of the G7 last year, and PwC predicts that we will be the fastest-growing economy until 2050. Other companies are making significant commitments to the UK: Jaguar Land Rover, McDonald’s, Facebook, Adobe, IBM, Ford and Toyota have all made commitments to significant job creation and investment in the UK. I say that “Project Fear” is over and that it is time for “Project Cheer”.
Kit Malthouse
Does my hon. Friend agree that the fact that economists and forecasters systematically underestimate the growth in the British economy reflects the fact that they cannot quite believe that the British people who voted so overwhelmingly for Brexit feel optimistic about the future and are therefore reacting in that way economically? That is what is driving growth forward. Does she think that if they embraced the idea that the British are optimistic about Brexit, they might get their forecasts a bit more accurate?
Suella Fernandes
I agree entirely. The facts and figures and the behaviour in our economy since the referendum reflect the strength and resilience of our consumers, our economy and our businesses. That is laying the ground for a successful future as we leave the European Union.
My second point relates to education and skills. Education is the engine of aspiration and one of the core reasons that I am a Conservative. I believe in self-improvement, personal responsibility and hard work. This Conservative Government have notable achievements, such as 1.8 million children now being in good or outstanding schools. Of course, the job is not done. Much of that success can be linked to the free schools revolution. Today, we have seen £320 million of capital investment to create new free schools and extend this success story, which is empowering teachers and improving standards in schools. Some 70,000 new school places will be created following today’s announcement.
As someone who co-founded, set up and now chairs a free school, I am a fan of them. I have seen in the three years in which I have founded and chaired Michaela Community School, in an area of deprivation in inner-city London, how our teachers have been freed to pioneer new teaching methods and how they have gained more power and autonomy over their spending, curriculum and teaching methods. We are seeing fantastic results.
Free schools work. They perform above average: 28% of free schools inspected by Ofsted have been graded outstanding, compared with 14% of those maintained by the council. Free schools are popular among parents: secondary free schools attract, on average, 3.5 applicants per place, compared with 2.3 applications to maintained schools. Free schools are not just for the middle class: two thirds of free schools have opened in deprived areas. They are also cost-effective, as the National Audit Office found recently. Free schools signify a revolution in education, liberating teachers and communities to deliver high quality, high expectations and high standards for their children.
That leads me to selection and grammar schools. We know that grammar schools also work very well, with 90% of them being good or outstanding. The Select Committee on Education has examined considerable evidence of their effectiveness in achieving high progress rates for their children. In the Netherlands, selection takes place at 12 and it does better than us in the PISA tables, which shows that selection is compatible with good results. The Sutton Trust has showed that there would be no adverse effect on non-grammar schools and ResPublica recently commissioned an independent study that showed that a grammar school would have a transformative effect on a deprived area like Knowsley.
I am a Conservative because I believe in aspiration, in rewarding effort and in fairness. The Budget reflects those values and I am pleased to support it.
Chris Evans (Islwyn) (Lab/Co-op)
I congratulate the hon. Member for Fareham (Suella Fernandes) on her speech, which summed up the Conservative philosophy of rewarding effort. Today’s Budget puts that reputation in doubt. The Conservative party’s reputation for being on the side of business hangs by a thread tonight. Can anybody who fought the 2015 election, or any previous election, believe that today the Conservative party, the party of the small business, the party that worships at the altar of the daughter of a greengrocer from Lincolnshire, has put up national insurance by 11%? Somebody earning £27,000 a year will pay an extra £30 a month. That is the reality of what the Conservative party has done.
The Conservatives have gone further. They have decreased the threshold of the dividend on profits from £5,000 to £2,000, which is more money out of the small businessman’s pocket. We are not talking about Facebook, Costa, Google or Starbucks. We are talking about the painter, the decorator, the tradesman, the greengrocer and the IT set-up. Those people, day to day, run our economy. Can hon. Members imagine what that greengrocer’s daughter from Grantham would say? She would say: “Think again.” As much as Conservatives worship Lady Thatcher, she would not have endorsed the Budget today. She would not have endorsed that tax on small business people. Hon. Members have stood up today and said that they are Tories because they believe in effort and self-worth, and in taking a punt, as the former Prime Minister said once. Those people are being penalised for taking a punt. Unless they U-turn on this, never again can Conservatives say that theirs is the party of business or of small business. That is a cheek. Tonight in my constituency of Islwyn, 3,300 small business people will be directly affected by that change. So much for “Steady Phil” or “Spreadsheet Phil”, as the Chancellor is called.
More in hope than anything, I expected that this would be the most momentous Budget we would ever see in this country, but what did we get? The Chancellor seemed to totally forget that, on 23 June, this country voted for its desire to leave the European Union. We heard no mention of that in his speech. It is okay saying that he touched on it and is aware of it, but more damning is the Office for Budget Responsibility “Economic and fiscal outlook”, which states in paragraph 3.2 that the Government directed it to two recent statements that set out in greater length their objectives for exiting the European Union. Paragraph 3.3 states:
“While the Government has now set out some of its objectives more formally, there is understandably little detail about how it intends to achieve them. In many areas the policy outcome will depend not just on decisions made by the UK Government, but also on those of the parties that it will be negotiating with”.
In other words, nobody is any the wiser about what is happening.
At the same time, for all the lauding of the success of business and the economy, tucked away on page 8, paragraph 1.7, the Red Book says:
“Business investment fell 1.0% in Q4 2016, following a modest increase of 0.7% in Q3 2016. This resulted in a 1.5% decline in business investment in 2016. Private business surveys cited uncertainty about future demand and the outcome of the EU negotiations as weighing on activity and investment.”
The Prime Minister, who campaigned to stay in the European Union, is as much a prisoner of her Back Benchers as the rest of the Conservative party, but business needs to plan. Business needs five to 10 years to work out where it wants to go. That inertia helps no one. The worrying thing is that the Budget should not have lauded how great the Conservative party is at running the economy. It should have been a road map for how we leave the European Union. All we get, as usual, as we have seen in the debate, is the Tory party patting itself on the back and saying how wonderful it is doing.
I notice in the back of the Red Book that the Government say we have the biggest railway infrastructure developments since the Victorian age. The electrification of the rail lines to Wales, which is very important to my constituency for investment, is overspent by £1.2 billion. It is all very well talking about those projects, but the fact is that many have overrun and are overspent. The National Audit Office said that one third of infrastructure projects might not be achieved at all. When the Chancellor makes those announcements in future, I hope we have a report on whether the projects are still on track and whether they will be achieved.
For me, the Budget was a huge disappointment. I was expecting something better. Britain deserves better, and business above all deserves better than what it got today.
Andrew Selous (South West Bedfordshire) (Con)
I am pleased to see the continued progress that the Government have been able to make in reducing the deficit from the enormous 9.9% of GDP that the coalition Government inherited in 2010, to a forecast 0.7% of GDP in 2020-21. It has taken longer than we thought, and we have faced stronger headwinds than we thought, but it is absolutely the right thing to be doing. As the Chancellor rightly reminded us, it is not right for this generation to load more and more debt on to the shoulders of our children and grandchildren, who will have restricted public spending in their time if we do not get on top of this and start to live within our means as a country.
I am pleased, too, that the Chancellor has continued his focus on increasing productivity—an area on which we have not focused enough in the past. The Chancellor was absolutely right to point out that the UK’s productivity is significantly worse than that of the average of our international competitors and much worse—some 35% worse—than that of Germany, which is one of our major competitors.
The way to improve productivity is to focus on skills and infrastructure in particular. It is excellent news that whereas we were 33rd in the world in the quality of our infrastructure—behind countries such as Namibia and Slovenia—we are now seventh in the world, and we must carry on trying to improve and move further up the league table. We should note and celebrate the success we have had in this area.
Productivity is also an issue of social justice. At the moment, British workers on lower rates of pay are having to work longer to produce the same as a German worker. If we can increase productivity, we can pay people more and they can work for less time and produce the same amount of wealth. That is why this issue matters so much.
The Government are absolutely right to focus their attention on artificial intelligence, robotics and battery technology, which is particularly important for the electric vehicles of the future that we will need to deal with the serious air quality issues that we face.
The Government are right, too, to focus their attention on better broadband connectivity and on the roll-out of national 5G, and indeed on ensuring that those people who live in rural areas have the ability to use their mobile phones—something that is still not possible in large areas of my constituency, although I am pleased to note that the Minister with responsibility for digital affairs has said that we should see a significant improvement by the end of this calendar year.
I was pleased, too, about the Chancellor’s emphasis on everyone paying their fair share of tax and about the fact that we have raised an extra £140 billion of tax revenues through clamping down on evasion, which is very welcome. I was, however, visited by someone about to set up a major business in my constituency in an area of service provision that can be found in every high street in the country. He told me only yesterday morning how the practice in that industry is to pay people cash in hand, and that when he has tried to recruit people as an above-the board legitimate business owner, they have complained about not being paid cash. Clearly, avoidance of tax, including VAT, is happening. I believe that we need to sustain a continued focus on this issue, so that a level playing field can be established for decent businesses that do the right thing. We need to make sure that we collect all the tax revenue that we should have.
The focus on T-levels is excellent. Although we have climbed the international league table on infrastructure, we are near the bottom of the international league table for technical education—notwithstanding the efforts of previous Governments in this area. This is absolutely the right thing to do, as is our focus on ensuring quality apprenticeships for the future.
I am very pleased about the extra investment in social care, and about the capital funds that will be provided to ensure that the NHS sustainability and transformation plans are successful. I am particularly pleased that the sterling work done by Luton and Dunstable hospital in its urgent care centre is to be replicated, so that similar GP urgent care will be available at accident and emergency departments in hospitals across England. I welcome the extra £216 million in capital funding for schools. I also welcome the transitional relief for business rates, although in my area the average business rate is set to fall by a very welcome 7.4%.
Simon Danczuk (Rochdale) (Ind)
It is a pleasure to follow the hon. Member for South West Bedfordshire (Andrew Selous).
In my speech, I shall concentrate mostly on business rates. The Chancellor was right to say that the business rates scheme must better reflect the digital economy—firms such as Amazon have had an unfair advantage over high-street companies for far too long—but I suspect that some business people will be sceptical about the Chancellor’s announcement that he is to conduct a review of business rates. The previous Chancellor, the right hon. Member for Tatton (Mr Osborne), proposed a review in the run-up to the 2015 general election, but we have seen nothing of it.
We must also bear it in mind that the Chancellor is now trying to repair a business rates scheme which the Government damaged by refusing to carry out the previous revaluation. It is because they did not publish revaluation results in 2015, delaying until this year, that businesses in towns such as Rochdale had to carry a disproportionate burden for additional years when their rateable value had actually fallen as a result of the impact of the recession. Businesses in London, and particularly in the south-east, were advantaged by the revaluation cancellation. Businesses in Rochdale and similar towns will now be sceptical about the new £50 cap on any business rates increase, not least because no such limit was offered to them when they were experiencing difficulties in 2014, 2015 and 2016.
CAMRA, the Campaign for Real Ale, has been right to raise concerns about business rates affecting public houses. As Members will know, pubs’ business rates are based on turnover rather than rateable values. It does not matter whether they are profitable. In many respects, that is a tax on entrepreneurialism, because someone who builds up a business will pay a lot more in business rates. I think that those who conduct the review should consider looking into how pubs’ business rates are determined.
The Chancellor has announced a £1,000 discount for what we are told will be about 90% of pubs. While I am sure that that will be welcome, I suspect that it will not go very far, and that it will be “small beer” for pubs that face major business rate increases this year. The Baum in Rochdale, which was the national CAMRA pub of the year in 2012, faces a rateable value rise of a whopping 377%. I cannot help thinking that a £1,000 discount will not go that far in helping that business.
The Chancellor also announced a £300 million discretionary fund for local government. Rochdale council has already led the way in devising a business rates reduction scheme to help new independent retailers in our town centre, so I understand the logic, but we now need to see how that £300 million will be shared among local authorities across the country. If it follows other Government funding for councils, it could well fail to reach the parts of the country that really need it.
Talking of business rates and local government, I believe that the Government were right to adopt a 50% business rate retention scheme for local authorities, and I welcome the piloting of a 100% retention scheme. That should help to drive local economic development, and I hope that councils will step up to the mark. I would make the general observation that Surrey council’s situation is clearly a sweetheart deal; no other such authority has been offered that kind of deal so far.
Let me conclude by making a couple of brief points. First, there must be a proper review of the whole business rates scheme, including the Valuation Office Agency, which clearly is not fit for purpose. Secondly, I welcome councils retaining business rates, but the Government must now give local authorities more freedom over how they allocate, set and collect this tax. Thirdly, to avoid any more scepticism around business rates among business people, the Government need finally to overhaul them to the point where they are seen as fair and equitable across all towns and cities in the country, not just some.
Mr David Lammy (Tottenham) (Lab)
May I begin, as a former Minister with responsibility for higher education, by welcoming the Government’s decision to award maintenance grants to those in part-time education? I also welcome the changes to business rate caps, the recognition that urgent action is needed to avoid a further meltdown in our health service and in social care, and the steps taken to boost technical education and improve its standing compared with that of our universities. I welcome the lifelong learning fund and the recognition that we are living longer; we will need to retrain and reskill throughout our careers, and we will certainly need to do much more to improve our skills base when we leave the single market.
It is difficult to celebrate massively overdue action on social care when the chair of the National Care Association says:
“We are now beyond the crisis point. We really are at the edge of the cliff now.”
When hospital beds are blocked by elderly patients with nowhere to go; when local authority budgets have been cut to the bone; when expenditure on social care has dropped by more than a fifth in real terms since 2005; and when £4.6 billion has been cut from social care budgets since 2010, it is difficult to be optimistic about this investment.
On technical education, the pledge to make vocational qualifications equal to A-levels or higher education was not fully explained by the Chancellor. This year, nine of the 10 most popular apprenticeships will be cut by between 27% and 43%. It is difficult to believe the spin about T-levels and streamlining qualifications when we have heard it all before. Less than 1% of apprenticeships are up to the Government’s much-vaunted new apprenticeships standards, first announced back in 2014.
A fund of up to £40 million to pilot new approaches to encouraging lifelong learning sounds good, but we need to put it in its proper context. The Association of Colleges has warned that adult education will disappear by 2020. The total number of adult learners is falling by over 10% a year, the number of adults getting a level 4 qualification has fallen by a staggering 75% in two years, and we have had a 40% cut to the adult skills budget between 2010 and 2015. We do not need a fund of a few million pounds; we need a rescue package to bring back night schools and bring back adult education.
The reason this is so important today is that we are about to trigger article 50. It is very simple: if we are to leave the single market, businesses will no longer be able to recruit from the continent to plug skills gaps. Much more will need to be done to reskill and retrain people in our country. We heard very little—in fact, nothing—about that in this Budget, because the emphasis was on young people, not adults.
The situation is already dire. Skills shortages account for a quarter of all job vacancies. Over two thirds of businesses are worried that they will not be able to find the talent to fill the jobs. We are living in an ageing society. In the modern economy, there is no such thing as a job for life; people will be changing jobs and careers for far longer. We should have heard more about those who have been left behind and have not benefited from globalisation. It is unrealistic to expect people with a mortgage and kids to drop everything and do a university course for £9,000 a year. Where was the articulation of the adult skills need in this country? We are talking about people who have lost out because of the loss of manufacturing and the hoarding of money in London and the south-east. There are no colleges for adults in seaside towns in particular. The Chancellor said nothing about that in his Budget statement.
This Budget is important because we are embarking on a journey that is so immense that the country has not really experienced anything like it, certainly not in my 45 years on the planet. The Chancellor talks about continuing to reduce the deficit, investing in the future and ensuring that we have a strong economy, but let us be clear: exiting the single market is the only show in town. It is the economic issue of our time; everything else is just window dressing. Growth, trade, inflation, public finances, jobs, wages and investment—every single aspect of our economy is vulnerable to Brexit and the leap into the great unknown outside the single market. That is the reality. That is where we are as we prepare to trigger article 50. To pretend otherwise is a totally ignorant view of what is going on. From what we have heard today, the Government have not grasped that.
Everything that the Chancellor talked about today should have been wrapped up in Brexit and the fact that we are leaving the single market. What do the Government mean when they brief the newspapers that they have put aside £60 billion? What are the consequences of having to put aside £60 billion? What does it mean for our surplus and our reserves? What impact does it have on the economy as a whole? The Chancellor said nothing about that. We have let the country down at this critical point in our history.
Mr Clive Betts (Sheffield South East) (Lab)
I want to address two issues, social care and business rates, which are related to inquiries undertaken by the Select Committee on Communities and Local Government.
On social care, the Chancellor mentioned the rising number of elderly people in this country. People are living longer, which is obviously to be welcomed. What he did not say, of course, is that cuts to local council budgets mean that they have reduced spending on social care by 7%, despite prioritising it since 2010. He did not mention the extra costs of the minimum wage or the Care Act 2014, or the fact that councils are now, in the words of the Comptroller and Auditor General, Amyas Morse, moving from doing more for less to doing “less for less”.
When our cross-party Committee looked at the issue, we had a range of forecasts for the gap in next year’s social care funding. Age UK believes that more than 1 million people in this country should be receiving social care but are not. That range of forecasts led the Committee to say that we need £1.5 billion to bridge the gap next year. Although I welcome the fact that the Chancellor recognises that more needs to be done, I am disappointed that the more he has identified is not sufficient to deal with the problem.
I am also disappointed that the Chancellor has not taken up another of our suggestions: that we ask the National Audit Office to undertake a review of the funding gap for the rest of this spending round. I do not believe that the extra £500 million that has been allocated for the next two years is sufficient, given that the Local Government Association says that the total gap in local government funding will be £5 billion by the end of this Parliament. We need the NAO to conduct an independent review.
I am pleased that the Government are prepared to undertake a long-term review of spending for social care, but I am disappointed that the Chancellor has, at the beginning, effectively ruled out one of the options. There are clearly a limited number of ways to raise money to fund social care properly in the long term. The money could be raised from general taxation, from people’s direct contributions to the care they receive, from a new system of discrete taxation through increased national insurance contributions, as happens in Germany, or from an increase in the tax on people’s estates when they die. The Chancellor ruled out the last of those options, even though people might be taxed on their estate, depending on whether they end up in residential care. That is an arbitrary tax. It depends on whether someone ends up in social care because they have dementia, for example, or whether they die of a heart attack without having needed that kind of care at all. The way in which someone’s life ends can determine whether their house and other assets make a contribution to the Treasury.
Karin Smyth
Does my hon. Friend agree that the opportunity has been missed to give us an understanding of what postponing part 2 of the Care Act will mean, and of the Conservative party manifesto commitment that people would not have to sell their house to fund their care, once their spending on care had gone above a certain level?
Mr Betts
Absolutely. That is clearly a major problem with the system, and it needs to be addressed. I think my hon. Friend is referring to the Dilnot recommendation that people should pay no more than £72,000 in total for their care. When the Minister with responsibility for social care came to the Select Committee, he said that Dilnot would be implemented, but I am not sure how that fits in with this long-term review. I hope that the Government can explain that better in their Green Paper.
There has been no commitment to a cross-party look at this issue. The Chair of the Health Committee, the hon. Member for Totnes (Dr Wollaston), and the Chair of the Public Accounts Committee, my hon. Friend the Member for Hackney South and Shoreditch (Meg Hillier), have requested a cross-party review before the publication of the Green Paper, or at least an element of cross-party scrutiny of its proposals. At some point, we have to look at this issue for the long term, assuming that the Conservatives will not be in office for ever.
I also want to address the issue of business rates. The Government have brought this problem on themselves by extending the period between revaluations from five to seven years. That has made the problem worse, because the difference between what businesses were paying before the revaluation and the new rates is wider as a result of the period being longer. We need a commitment to more frequent revaluations. The Government mentioned that in 2015, but it seems to have fallen off the radar. The Select Committee agreed with the Government at the time, so let us have a commitment to more regular and more frequent revaluations.
Will the Government give an absolute commitment that the extra money that they have brought in to help with the revaluation, which I welcome, will not cost local government a single penny, either next year or thereafter? The Treasury should pay for it all. I also agree with the point made by my hon. Friend the Member for Rochdale (Simon Danczuk) that we need to know how the extra money that will be given to local government for discretionary reliefs is to be allocated between councils. Will it be allocated on a fair and transparent basis? When will we be given that information?
I have said to the Communities and Local Government Secretary that if the Government are looking for a fairer way of conducting valuations for business rates—to ensure that the digital services and online shopping sectors pay more, for example—we in the Select Committee will help with that review. It is also clear that there is something wrong with the proportion of payments being made by shops on the high street and by shops in out-of-town centres, and we need to look at that as well.
In 2010, the Conservative Chancellor at the time said that after five years of austerity he would have balanced the budget. Seven years later, after an awful lot more austerity than most of us could possibly have imagined, another Conservative Chancellor is saying that there will be five more years of austerity, after which he will still not have balanced the budget. That is an awful lot of pain for my constituents for very little gain, and there is no sign at all that austerity will end while this Government are in power.
Gavin Newlands (Paisley and Renfrewshire North) (SNP)
It is fair to say that the Chancellor’s style is somewhat different from the bombastic approach taken by the right hon. Member for Tatton (Mr Osborne), but the song sounds the same. This Chancellor’s first Budget completely decimates any notion of this being a one nation Government—whichever nation that might be. His tone when he announced the additional Barnett consequentials for the devolved nations was akin to that of a nursery teacher dishing out sweets to children. Of course we welcome the additional £350 million, but Members must excuse me if my enthusiasm is tempered by the real-terms cut of £2.9 billion over the last 10 years by a Tory Government that Scotland did not vote for.
This Budget is designed to deal with the mess that the Government and their forerunners have gotten us into. For the past seven years, this Tory Government have mishandled the economy, missed their own economic targets, and forced those with the least to pay for their right-wing ideological desires. Nothing encapsulates that better than Brexit, which the Chancellor mentioned only once in his statement. The EU argument was an internal Tory party squabble that has, over time, been visited upon the rest of the country, the consequence of which is self-imposed economic vandalism. The country now faces a situation in which the elderly, the young, the disabled, and ordinary working people will pay the price for a hard Tory Brexit.
The Prime Minister called it a red, white and blue Brexit, but the reality facing her is that there is nothing blue about it. Scotland voted remain with a clear 24 percentage-point majority. If we sit back and allow this folly to happen to us, the independent Fraser of Allander Institute predicts that a hard Tory Brexit will threaten 80,000 Scottish jobs and cost Scotland’s economy up to £11 billion a year by 2030. The Prime Minister is in receipt of “Scotland’s Place in Europe”, a document containing a set of compromise proposals to ensure that Scotland’s vote is, in part, recognised, and that we are allowed to remain in the single market, if not the EU itself. The ball is very much in the Prime Minister’s court, but if she fails to act she can rest assured that the First Minister will not be so reticent. In shamefully failing to address Brexit, the Chancellor singularly failed to provide any answers to the problems that exiting the EU and the single market will visit upon us.
I am most disappointed, but not entirely surprised, that the Budget contains no provision for the tens of thousands of disabled people whose Motability vehicles are being removed by this Government. At Prime Minister’s Questions a couple of weeks ago, I raised the case of a constituent, Mrs Margaret Gibson, who was due to lose her Motability car despite having been on the higher rate of disability living allowance for 20 years. I spoke to Margaret on Monday, and she explained that her Motability vehicle is a lifeline, and that if it was ever removed, she would be forced to become housebound. Last November, the Minister for Disabled People, Health and Work announced that the Government were looking at ways to enable PIP claimants to keep their vehicle pending appeal, and were exploring options to allow those not in receipt of the higher-rate mobility component of DLA access to the Motability scheme.
However, just a few days after I asked that question at PMQs, Margaret’s mobility component was restored, resulting in her being able to keep her car. Margaret was lucky, but the U-turn was purely down to the fact that I had been drawn in the PMQs raffle and was able to help her. Tens of thousands of disabled people are not so fortunate. The Chancellor had the opportunity to provide some relief to people in the same position as Margaret and many more of my constituents, but as per usual with this callous Government we are met with deafening silence when it comes to the needs of our most vulnerable.
I am also disappointed that the Budget refused to acknowledge the pleas of the 2.6 million WASPI women. Today, those women have travelled from across the UK to make their voices heard outside Parliament. I accept that the WASPI issue is not of the Chancellor’s own making, but his continued aversion to introducing transitional arrangements to help the 2.6 million affected women, including over 8,000 in Renfrewshire, makes him as culpable as those who brought in the 1995 and 2011 Pension Acts. The Tories cannot hide from this; the WASPI women and their supporters inside this place will not go away. They should do the right thing and provide relief and dignity in retirement for the millions of women who have been affected.
This Budget lays bare seven years of Tory mishandling of our public finances. It lays bare the fact that, despite all the Prime Minister’s rhetoric, those with the least will pay the highest price. The Resolution Foundation reported only this month that the Tory Government’s tax and social security policies would
“drive the biggest increase in inequality since Thatcher.”
A separate report from the IFS projected that child poverty would increase to 30% by 2021-22, and said that that is
“entirely explained by the direct impact of tax and benefit reforms”.
This Budget lays bare the fact that the price of a hard Tory Brexit will be paid by those who have the least throughout this United Kingdom. If that is the price of staying in this dysfunctional Union, I am not buying, and neither will Scotland.
Drew Hendry (Inverness, Nairn, Badenoch and Strathspey) (SNP)
My hon. Friend the Member for Paisley and Renfrewshire North (Gavin Newlands) covered many key issues, and my hon. Friend the Member for Dundee East (Stewart Hosie) gave a forensic critique of the statement’s flaws earlier, so I intend to confine my remarks to what was said, or rather what was not said, about universal credit in the Budget.
The Chancellor opened by saying that he wanted to produce something that was for “women in work” and for people “feeling the squeeze”, and “an economy that works for everyone.” Well, those words ring particularly hollow for people in my constituency who are at the sharp end of the universal credit full service roll-out. My constituency has been one of the first to deal with the roll-out.
People are going months without money, and there is little help in the Budget for them. There is nothing on investment to sort out the system boorach. Highland Council reports that the average housing arrears accrued to date by someone on universal credit is now around £900 and rising. Imagine, they are forced into debt through no fault of their own, and not many landlords are patient with folk who are three months in arrears because of universal credit. Failure to address that today is symptomatic of a failed austerity agenda, a failure to listen and a failure to comprehend the pain that ideological Tory austerity is inflicting. It is causing stress that is impossible to imagine and is leaving families without money for months.
Alison Thewliss
My hon. Friend is highlighting the issues with universal credit in Inverness in his constituency. Only 73 homeless people in total are on universal credit in Glasgow, and they have racked up £144,000 in arrears between them. Does he agree that this is just not working for the most vulnerable people in society?
Drew Hendry
I completely agree with my hon. Friend. The Budget could have been an opportunity to stop that manifest injustice, but it is another failure. The shambolic universal credit roll-out is pushing women who are returning to work, low-income families, the disabled, those looking for work and the most vulnerable into desperate situations.
By the start of the Chancellor’s statement today, four people had visited my constituency office in tears over universal credit. The DWP service standard for universal credit applications is supposed to be six weeks, but in reality that is the minimum that most people wait. People usually have to wait for months.
I received an email at 11.15 am today from a constituent, Natalie:
“Dear Drew,
I’m writing with an update to the ongoing case.
I attended the jobcentre appointment on Monday morning to advise that the issue with the Childcare payments had still not been attended to. At that point my journal entries had still not been read. I had also been advised for the 3rd time, by the UC call centre, that a mistake had been made and would be escalated urgently. 9 days had passed since I was told this would be corrected.
At the job centre I met with a gentleman”—
I will call him Mr X.
“I first explained the problem, he could also see…the notes from the UC call centre agents agreeing that a mistake had been made. He then looked further into the system and noticed that my most recent declaration of childcare was not on the system. This caused major confusion as there are notes on the system referring to the most recent one, along with the invoices and receipts being on the system. Also, none of the previous 4 agents I had dealt with had flagged up the…declaration was missing. At this point”
Mr X
“decided to add the declaration himself. A message then comes up on the screen to say that the declaration has not been made within the award period. Which essentially means it will not be paid. At that point…the JobCentre manager looks into it and also agrees that the notes from the agents indicate that they are aware a mistake has been made and it needs to be dealt with.”
He
“raises the issue with the UC…manager. He then phones me to advise that he has to escalate the issue even higher as no one has responded to his request to look into the matter.”
Natalie finishes by saying:
“It’s now the morning of the 8th, still no resolution. This issue was raised on Friday 24 February, the date that payment was due. The date that any errors need to be corrected to enable…payment to be issued within the award period. Since then I have been continually fobbed off. Admittedly I am…fobbed off in the politest of ways with each and every person advising that they are going to help and have this addressed within 24hrs. It’s now been 287hrs since my original phone call and I’m still waiting.
I’m at my wits’ end here. I’ve followed their procedure, none of them are following theirs.”
Do not take my word for it or, indeed, Natalie’s. Citizens Advice says:
“Universal Credit is failing to live up to its promise. Right from the outset people have experienced problems…delays to claims and errors in their payments.”
As I have said, my team and I see that for ourselves every single day, with people facing months of anguish and hell.
The Chancellor could have helped people today, but he has not. He has failed to take any action, other than to tinker with the taper rate, which will not stop the continuing and damning litany of failure, confusion and heartache, or the crushing drive to increase poverty that the universal credit system is creating. It is a shambles. There are long delays to payments, short payments, lost sick notes, misplaced documents and data, and failures to respond, and there is confusion between departments and crushed morale. Please spare a thought for the poor Jobcentre Plus staff at the centre of this. There is an inability to act on common sense.
In Inverness, we held a roundtable with the local welfare support team, the housing department at Highland Council, Citizens Advice and local DWP staff, to try to deal with this mess. The problem is not with local staff; it is with the system. I have invited the Secretary of State for Work and Pensions to come to my constituency to hear these people and see what is happening at first hand, but to date I have had no response. Perhaps the Chancellor would like to come to see what the failure to address the problems with universal credit is actually doing.
The introduction of the universal credit full service is failing. It is adding to poverty for children and families, and it is time to halt it. Today’s Budget will simply accelerate poverty and suffering.
Judith Cummins (Bradford South) (Lab)
The Budget is remarkable for what it fails to mention. I listened carefully to the Chancellor’s statement, and was really worried not to hear a single mention of policing. Funding increases for the police were a staple of previous Budgets. Under the previous Labour Government, we witnessed strong investment in the police; consequently, in many areas crime fell to the lowest levels in generations. Sadly, that investment in the determined fight against crime now appears to be consigned to the past.
With a funding crisis in the NHS, adult social care, local government and many other areas of the public sector, the police are one more victim of this Government. The police should be fighting crime, not fighting for funding. The Chancellor has offered no respite to the culture of cuts that has gripped every police force in the country. The police have faced multi-year budget cuts, which has meant plummeting numbers of frontline officers.
West Yorkshire police, which serve my constituency, Bradford South, have not been immune to the cuts. Since 2010, their budget has been cut by nearly a third, which amounts to £147 million. The Government think the police can weather the cuts by trimming budgets, tackling waste and shrinking the back office, all with no impact on frontline services. This is nonsense. The challenges can be met only through frontline cuts, so further frontline reductions in policing are now unavoidable.
West Yorkshire police have 2,000 fewer officers and support staff. They are under-resourced and understaffed. Let us be clear about this: fewer police officers means that people are less safe, and people feel less safe.
Rob Marris
Does my hon. Friend agree that the work of the police is made even more difficult by the funding cuts and chaos in the prisons? That has meant that rehabilitation in prisons has plummeted, so criminals are coming out of prison and starting to commit crime again. The underfunding of prisons makes it harder for the police.
Judith Cummins
I absolutely agree with my hon. Friend.
Neighbourhood policing has arguably suffered the most. It is the basic building block of our police service, underpinning all the work the police do. It provides the first point of contact, and the bobbies on the beat are the eyes and ears that inform how the police work. It is the frontline—the most visible and important aspect of our police service.
Policing in this country is done by consent, central to which is trust. Without the trust and confidence of local people, the police cannot police. Cuts to neighbourhood policing impact directly on that trust and confidence. Without trust, the police lose local intelligence and a feel for the communities they serve. The gaining of trust does not happen overnight; it takes months, sometimes years, to develop. This familiarity allows police officers to detect if something is amiss or out of the ordinary. Knowing their communities well informs their judgment, which means that they are well placed to detect crime and to tackle it swiftly and effectively. As neighbourhood policing is eroded by wave after wave of cuts, trust is undermined, as is the idea of policing by consent.
Bradford is a complex city with complex challenges, and we need a police service that is equipped to meet them. The police in Bradford are determined to meet those challenges and maintain that trust. They are reaching out to communities—they have a target of making sure that every child in the district knows a police officer by name.
One complex challenge the police face in my constituency relates to the availability and use of firearms. Incidents involving firearms have risen substantially—by a third—over the past four years. To their credit, West Yorkshire police are rising to that challenge. Their efforts have been commendable, but diminishing resources impede their ability to get those weapons off the streets of Bradford. Adequate funding as well as strong local intelligence are vital in tackling this.
The demands on police resources go beyond everyday crime. The landscape of policing in Bradford has altered radically. Modern policing means that our police officers spend a great deal of time and public money on increasingly complex, costly and time-consuming things such as safeguarding issues, missing persons, issues relating to mental health, child sexual exploitation, human trafficking, domestic violence, and abuse of the elderly, to name but a few. Those are officer and money-intensive issues that cannot and should not be ignored.
Our police are being asked to do more and more, but are being given less and less with which to do it. West Yorkshire police are committed to dealing with and meeting these challenges, but strong commitment is not enough. To meet these new, complex and costly challenges, they need officers and they need to invest in those officers. Without investment, the service will be ill equipped to tackle the emerging demands on its resources. As budgets continue to contract, I fear that the absence of investment will mean that the communities that the police serve—and indeed that we serve here in this House—will be less safe than they should be.
Ordered, That the debate be now adjourned.—(Christopher Pincher.)
Debate to be resumed tomorrow.
Petitions
Susan Elan Jones (Clwyd South) (Lab)
I rise to present this petition concerning Harron Homes and unfinished developments and dwellings in Heol Berwyn, Cefn Mawr. In so doing, I wish to pay a special tribute to Councillor Derek Wright for all his work on this issue.
The petition states:
The petition of residents of Cefn Mawr in the constituency of Clywd South,
Declares that the petitioners believe that it is unacceptable that Harron Homes has only part finished the construction of residential dwellings in Heol Berwyn, Cefn Mawr; further declares that part finished construction sites may become magnets for anti-social behaviour and infestations of rats due to partially constructed sewers; and further that such part finished construction sights are a blight upon communities.
The petitioners therefore request that the House of Commons urges the Government to declare and enforce that part finished construction sites be completed, sold outright, part sold or gifted to the Local Authority or a Housing Association.
And the petitioners remain, etc.
[P002025]
Tom Pursglove (Corby) (Con)
I rise to present a petition on behalf of residents of Raunds and Stanwick, in the names of Geoff Dyne and Sue Göksu, relating to the proposed development of two distribution buildings on land south of Meadow Lane in Raunds.
The petition states:
The petition of residents of the UK,
Declares that residents of Raunds and Stanwick wish to oppose the planning application Ref.16/02119/FUL for a proposed development of two distribution buildings, on land South of Meadow Lane; further that at a meeting in the town and at the town Council there was very strong support for refusal of this development; further notes that the grounds for refusal include that this is a protected open space listed in the proposed Neighbourhood Plan; further that the plans are contrary to the aims of the Nene Valley Nature Improvement Plan recently adopted by East Northamptonshire Council; further that the proposed development is close to a designated Site of Special Scientific Interest; further that the transport assessment has calculated there will be daily just under 800 HGV movements as well as employees’ cars, including during the night, with significant pollution effects and that the increase in traffic to the site and along the A45 will have a detrimental effect upon local air conditions; further that reversing alarms, loading and unloading and vehicle movements will cause significant noise pollution day and night; further that light pollution will inevitably increase, especially with a 24-hour operation; further that there is a considerable hydrology and flood risk; further that the development will create an industrial feel to anyone walking down Meadow Lane, which could not be mitigated by any planting due to the height of the proposed building and earth formed platform approaching 29 metres above ground level; further that as employees at the current site near Northampton are to be given inducements to move their work place to Raunds, there would be minimal employment opportunities for local people; further that the proposed large visually solid buildings will have a detrimental effect on the setting for Stanwick Lakes as they will be clearly visible from this country park and will also have considerable impact on the setting for Raunds and Stanwick; further declares that the submitted Neighbourhood Plan seeks to protect this area of land from development, to protect the rural character of the area and those who regularly use Meadow Lane to connect to Stanwick Lakes; further that allowing this development will seriously undermine the Neighbourhood Plan objectives and will be against the wishes of the local community.
The petitioners therefore request that the House of Commons urges the Government to urge East Northamptonshire Council to refuse the planning application Ref. 16/02119/FUL for a proposed development of two distribution buildings, on land South of Meadow Lane.
And the petitioners remain, etc.
[P002026]
Vinovium House
(7 years, 1 month ago)
Commons ChamberRead Full debate Read Hansard Text Read Debate Ministerial Extracts
Helen Goodman (Bishop Auckland) (Lab)
I am very pleased to have this opportunity to raise the proposed closure of Vinovium House, the office in Bishop Auckland that administers part of the child maintenance system, with the consequent loss of between 85 and 100 jobs. I have tabled early-day motion 1,001, which hon. Members are most welcome to sign.
To set the debate in context, the reforms to child support introduced by the Tory-led Government in the last Parliament were highly controversial, appearing to rely on good will, which is sadly lacking in all too many cases. None the less, it was agreed that the administration of the old system should continue, so that children could receive their legal entitlements. According to the Department for Work and Pensions December 2016 statistics, there are 1.1 million cases in the Child Support Agency system, and arrears now totalling £3.4 billion. It is vital for those million families—probably 1.5 million children—that this money is recovered and paid to them.
There is no published plan for how the debt cases currently administered at Vinovium House will be administered if the closure goes ahead. The team at Vinovium House had secured the debt work until 2020. In a four-year programme, surely it does not make financial sense to relocate and retrain staff to undertake that work if the current staff will no longer do the job. What exactly is the Department’s plan? How does it intend to run it, or is the plan to let the old child support system wither on the vine, irrespective of the impact on the 1 million families receiving their money?
The staff are extremely well respected. They were a top five office when they administered incapacity benefit. They are currently the highest performing office. They have the highest engagement score. They provide telephone cover from 8 o’clock in the morning until 8 o’clock at night—hours that are not covered in other offices. The telephone system went down when the announcement was made, and the entire national system crashed as it was unable to cope with the volume of calls without those staff. This does not bode well for the future. Child poverty is increasing under this Government, and further delays in Department for Work and Pensions systems for child support will undoubtedly tip some families over the edge.
In correspondence with me, the Minister for Employment said that he has conducted an equality impact assessment. I find that difficult to believe given that 69 of the staff are women and 14 are men. There are also support staff. The one-to-one interviews currently being conducted are a sham. Staff are asked to say whether they want to be transferred to other jobs or to leave on voluntary redundancy, but they are not being told where else they might work.
Phil Wilson (Sedgefield) (Lab)
Quite a few of the staff who work at Vinovium House live in Sedgefield. I have had several emails from staff who have a deep anxiety about the way they have been treated, their futures and where they might be transferred to. This is not just an issue for Bishop Auckland and Sedgefield. The staff live all over County Durham, and a lot of families will be affected.
Helen Goodman
My hon. Friend is absolutely right. There is a lot of anxiety, and I will read out an email from someone who works there to explain to the Minister why:
“On the day the closure was announced to us, we were told there would be an option between a job if we were prepared to travel, or an exit package if not—a small lifeline to me that may have cushioned the closure up to my pension age, but the next day the package offer was revoked with a statement that failure to accept a compulsory transfer could result in disciplinary action.”
Will the Minister please tell us exactly what is going on? What offers are being made to people?
Jim Shannon (Strangford) (DUP)
I congratulate the hon. Lady on bringing this issue to the House for consideration. Surely, if someone has a contract of employment with a Department and that contract is changed, the rights of the individual must be retained. Therefore, should not the option of a package to leave still be on the table? Should not the Government endorse and deliver that earlier commitment?
Helen Goodman
The hon. Gentleman makes an excellent point. I agree, which is why I want to know what is going on in the Department for Work and Pensions.
The underlying issues are travel times and costs, the lack of affordable childcare and the fact that most people who work at Vinovium House combine their job with some caring responsibilities. Many work part-time close to home, as they have caring responsibilities for children or elderly parents. The Tory party claims to be the party of the family. This change will adversely affect at least 85 families and will have a devastating impact.
Let me give one example. I talked to a woman who was very young—well, I think she was very young because she was in her 30s—and a widow with two children. Unfortunately, her partner died a year ago. At the moment, she drops her children off at school, gets to work by 9 o’clock and works until 6 o’clock, but she is given time to pick her children up at 3.30 pm. If she has to go to work in another town or another place, there is no possibility that this arrangement can continue. Her children are beyond three and four years old, when free childcare is available, but are too young to leave at home after school.
One thing Ministers need to bear in mind is the pay. The highest full-time pay is £18,000, and many of these people are on £12,000. They simply cannot afford to take home less, because they have to fork out on travel costs or childcare. There is also little other office work in the area, which is why the DWP is a valuable employer.
As my hon. Friend the Member for Sedgefield (Phil Wilson) suggested, a third of these people come from other villages round about. There is currently a bus connection into Bishop, but if the Bishop office closes, there is no guarantee people will be able to get transport onwards to other locations. The Department’s Darlington and Peterlee offices are already scheduled for closure. I strongly suggest that the Minister’s officials stop looking on Google Maps and that she send them up to the north to start looking at the geographical problems. Let them try to get a bus at 8 o’clock in the morning to Washington, near Sunderland, or to Newcastle, and get back in time to collect children from school at 3 o’clock. It is frankly impossible; it is a five-hour trip, including eight different buses. Of course, there is the massive devastation of public transport. What is being proposed is intolerable for these families.
There are many unanswered questions. The DWP guideline for staff travel times is one hour. How many sites are available for the staff to transfer to that are within an hour’s travel by public transport? What happens to people who received travel costs for three years if they go to work at another site? What happens after that? I suppose they will have to pay for themselves. Is there capacity in other offices nearby to take on these workers? Will they need to be retrained? What will that cost?
I am extremely grateful to the Public and Commercial Services Union for arranging for me to visit the office in February. I met a large number of staff, and they said things like this: “My husband is due to leave the armed forces later this year, so that could be two of us without a job,” “I moved here specifically to be close to my elderly parents,” “There is no childcare for children over 10-years-old,” “I have a child with disabilities, which results in lots of appointments. I couldn’t manage to meet them if I had to travel further afield,” “I’m dependent on my mum for childcare. If I had to leave earlier to travel further, she might not be able to manage, because she is dependent on getting to my children on the bus,” “I’m on maternity leave. I’ve worked here for nine years, and my future is up in the air. Will I have a job to come back to?” “I live in the Dales, where there is limited and often no public transport. How could I travel further afield? If I finished work in Newcastle at half-past seven, it would be physically impossible for me to get home at night,” and “I have a child starting university in September. How can I afford to support my child if I lose my job?”
The Minister must understand that these are significant problems for people. These people are not simply cogs in a machine or units of production; these are real people with real families. Many of the staff said that, in effect, they had to put their lives on hold, because they do not know what the upshot is going to be. They have had to cancel their holidays and things like that.
I want to propose a better way forward to the Minister. Historically, the jobcentre was in Vinovium House, and it would be much better in the long term if, instead of the medical assessment team moving to the jobcentre in the marketplace, the jobcentre people moved to Vinovium House and held on to the lease with the CSA people. There is already information and communications technology, telephones and security. That move would be much more cost-effective than what is being proposed at the moment.
There is, of course, another aspect: the impact on the rest of the town. I have had a letter from the Auckland Castle Trust. I do not know whether the Minister is aware that a philanthropist called Jonathan Ruffer has put at least £50 million into restoring and regenerating Auckland castle, with a view to building up the tourist industry. The Auckland Castle Trust says that it has moved into the upper five floors of Vinovium House, and it requires that office space until 2020. It has been told that if the DWP moves, it will also have to move, and that will cost it a great deal of money. If it has to spend money moving, it will have less money for the regeneration project that it is undertaking.
The DWP decision is doubly bad; it threatens unemployment for the 80 people employed by the DWP, and at exactly the moment when the trust is bending every sinew to regenerate the town, the DWP is pulling the rug from under it. The staff are 100% committed to the local area. They have done a lot of work for local charities, and they have counted up how much they spend every week, which is about £2,000. We know from that that local shops will be extremely badly affected and there will be job losses there, too.
I think the Government should take a more holistic approach. The problem is that Whitehall lives in departmental silos, but people do not. I understand the pressure to save money, but I do not understand why Bishop Auckland is always at the sharp end. We have lost our magistrates court. We have lost our driving test centre. We have lost an HMRC officer. For once, if there is going to be centralisation, could it be into Bishop Auckland instead? I simply do not believe that the Minister can find a place where rents are cheaper than they are in Bishop; that is not credible. People in Bishop Auckland feel very strongly about this, and thousands are currently collecting signatures for a petition. As a hard-working, long-serving staff member said to me,
“It’s become about the building not the service and the staff”.
I am sure the Minister will agree that that is not the right approach.
The Parliamentary Under-Secretary of State for Welfare Delivery (Caroline Nokes)
I thank the hon. Member for Bishop Auckland (Helen Goodman) for securing this debate. Its subject, as she has passionately and ably outlined, is Vinovium House in Bishop Auckland, one of the Department’s back-of-house processing sites for child maintenance claims. From the outset of the debate, I want to be clear that the services provided by the Department for Work and Pensions matter to millions of people every single day. But for the Department to continue to deliver its critical services and support across the country, it is vital that arrangements are put in place to protect the long-term sustainability of our services.
There is near-universal agreement that the Department for Work and Pensions needs to continue to provide excellent services for its customers while providing good value for money for the taxpayer. Reducing the amount of under-utilised space that the Department occupies is an excellent way of making sure that the Department is delivering value for money, both for those using its services and for the taxpayer.
On 31 March next year, DWP’s 20-year contract, which covers the majority of its current property portfolio of more than 900 sites, will expire. That portfolio includes Vinovium House, in the hon. Lady’s constituency. To put that into context, the DWP currently occupies about 1.5 million square metres of office space, and we must acknowledge that at least 20% of that is under-occupied. The falling claimant count and the increased use of our online services in recent years means that 20% of the money that the Department is spending on rent is going towards space that we are not using. By paying only for the space that we need and the services required to operate from it, we anticipate saving £180 million per annum over the next 10 years.
In response to the changing demands facing the Department, we have redesigned our estate in a way that delivers better value for the taxpayer. The expiry of the property contract has presented both a unique opportunity and an essential requirement to review our estate. Let me be clear: this is not about reducing services; it is about taking the opportunity to stop spending taxpayers’ money on empty space so that we can spend more on supporting those in most need.
We have carefully considered the challenges that we anticipate in the Department, but the jobs landscape and the way people work have changed significantly in the past 20 years. The Department’s services always have adapted and always will adapt to social trends. Nearly 90% of universal credit claims are made online, and more of our services are moving online. We want to continue making the most of the opportunities that new technologies present to help best meet our claimants’ needs. It is right that we reflect not only the impact of such a digital revolution on meeting our claimants’ needs, but the realities of a more flexible labour market and the significant falls in unemployment since 2010. The employment rate is at 74.6%—a new record high—and unemployment is down 913,000 since 2010, as the economy has grown. Only by building a more modern and more dynamic DWP estate can we take full advantage of new opportunities and ensure that we have sufficient flexible capacity to allow us to expand in the event of an economic downturn.
In every case where change is proposed, including that of Vinovium House, we have sought to minimise disruption and to listen carefully to those who might be affected. As I have already said, Vinovium House is a back-of-house processing site for child maintenance claims. It is a comparatively small processing site, which has total capacity for only about 135 people, and is currently only 64% used. As a result of modernisation and efficiencies, the Department’s Child Maintenance Service now takes fewer people to deliver than it did previously. Across the whole of the DWP estate, there is significantly more capacity than is needed, and it is only right that we consider our options.
Delivering a modern and dynamic service to claimants requires modern and dynamic working environments, and we are striving to work towards that as part of our vision for the DWP in 2020. Our aim is to maintain and improve the services offered across the country, and we recognise how important DWP staff are to achieving that aim. In fact, DWP staff are our most valuable resource. It is as a result of their immense effort that the Department is able to provide such a high level of service to our customers. The hon. Lady is absolutely right to point out the high performance of our staff at this location and to comment on the office’s top-five rating. I recognise and celebrate how great our staff are, and I reassure her that our staff are our highest priority. My colleagues and I have been clear that the proposals put forward for the DWP’s redesigned estate do not mean a reduction in the number of frontline staff. In fact, we are recruiting, and we expect to have more work coaches in every nation and region in March 2018 than we have today.
For staff at Vinovium House, we are currently working through options with each individual, identifying relocation opportunities in the event of closure, but, most of all, listening carefully to them to understand fully the impact on staff. To that end, every member of staff has been offered a face-to-face meeting with their manager as part of the current consultation. This will allow us to hear the opinions of any of the staff members who would be impacted by the proposed changes. We are listening to the views that the staff are expressing. The hon. Lady was good enough to write to the Department in advance of this debate, and she has highlighted in her letter and this evening the concerns that the staff have already raised. I want to reassure her that we are taking those concerns very seriously indeed.
In the event of site closure, the Department has already made a commitment to support anyone who chooses to relocate, including the payment of additional travel expenses for up to three years. However, the fact remains that the Department has significantly more capacity across its network than is needed to serve the needs of child maintenance group clients.
Vinovium House in Bishop Auckland accommodates a team of Child Support Agency staff working on the 2003 scheme cases. These staff ensure that compliance is maintained on ongoing cases. We recognise the vital importance of compliance and of as many children as possible benefiting from the maintenance they are owed by their non-resident parent. Although we do not envisage this, should the closure of Vinovium House result in a shortfall of staff, we are committed to deploying appropriate resources to make sure we continue to keep the money flowing for the children.
Helen Goodman
Before the hon. Lady moves on to another aspect of this problem, may I say that when someone phones up non-resident parents to get them to pay the money that the parent with care is entitled to receive, they have to have a bit of a negotiation. It is not like applying for child benefit—I agree that people can apply for child benefit online—because, as she must know, such discussions are particular, personalised and specific. All this about being able to do it online is irrelevant to the work done by these people in this office.
Caroline Nokes
The hon. Lady is absolutely right. I have sat with Child Maintenance Service officers, listening to the calls that they make to non-resident parents. My first visit as a Minister in the Department for Work and Pension was to the north-east. I went to Cobalt House and saw the Child Maintenance Service in action. I have also been to the compliance unit in Hastings. She is right that those discussions are not easy—they are negotiations. That is something the staff made very clear to me. I want her to understand that one of my highest priorities is ensuring that we keep the money flowing to the children who are owed it by their non-resident parents.
I emphasise the need to cleanse the cases on the old CSA system that we are transferring to the new CMS caseload. While compliance work is immediate and happens, the arrears cleanse process can be undertaken as resources are available. We will, therefore, be able to flex our rate of cleanse in line with the amount of resources needed, to ensure that compliance work is not affected.
The overriding story to be told about the child maintenance group is one of immense improvement. All ongoing maintenance liabilities, like those managed by Vinovium House, will be managed by the Child Maintenance Service once all case closure is complete. We are seeing non-resident parents contributing to maintenance liability in seven out of eight cases. That has resulted in nearly 90% of the money due being paid towards the liability. Arrears growth is slowing and is down to 13% of total liability from 17% in 2015. Those figures reflect the Department’s commitment to improving the performance of the Child Maintenance Service.
We have made a number of changes in line with the recommendations of the Henshaw report. We have simplified the administration of the service; we have made our calculations faster and simpler through the use of HMRC income information; and we have introduced new applications in a staged pathfinder approach to ensure smooth delivery of the new scheme. All of those measures have put collaboration between parents and increased parental responsibility at the heart of the Child Maintenance Service. I am proud to say that, according to the latest figures, approximately 250,000 children are benefiting from maintenance, in part due to the excellent work of the DWP’s child maintenance service.
The proposed changes—I emphasise to the hon. Lady that they are proposed changes—are the result of careful analysis and planning. I appreciate the hon. Lady’s concerns about the proposals and thank her again for this debate, but the rationale for them is very clear: Vinovium House is currently only 64% utilised, and across the whole DWP estate 20% of the occupied space is underutilised. We are striving towards a more modern, dynamic DWP estate. That will ensure that we continue to have sufficient flexible capacity and to deliver the best services we can to our customers. To that end, we are considering whether the work currently undertaken at Vinovium House could be redistributed across the existing DWP network. In the event that that course of action is required, we would expect it to have no impact on the services we continue to provide to child maintenance group users. It is important to stress again that the closure of Vinovium House is still only a proposal at this stage, and we are continuing the consultation process with our staff to assess how each of them might be affected.
Question put and agreed to.