Taxation (Living Wage)

Jim Cunningham Excerpts

Tuesday 22nd January 2013 Westminster Hall

[Robert Halfon]

That is where the philosophical difference between the right hon. Gentleman and me lies; I believe that we need to move away from a handout society, in which people’s taxes are recycled to hand out to various groups, to a hand-back society, in which people are handed back their own money through the tax system.

Some people on the right, especially in the think-tank world, oppose the 10p tax rate on the grounds that it is not radical enough. They say that it might undermine the case for a flat tax in some future Parliament. The problem with that—again, as the IFS has set out—is that a flat tax would be deeply regressive and it would be hard to defend as fair. While that remains true, a flat tax is unlikely to happen.

For example, the IFS has shown that merging income tax and national insurance contributions to a flat rate would literally take from the poor and give to the rich, unless the state was shrunk to a size that is politically impossible. Where I agree with people on the right, and with thoughtful commentators such as Ryan Bourne from the Centre for Policy Studies, is that the Government must do much more to generate support for broader tax cuts. My point, however, is that surely the best way to achieve that is to show that tax cuts are moral—to use a Blairite phrase, “for the many and not the few”—and that they will help millions of hard-working people, not just millionaires.

[Mr Jim Cunningham (Coventry South) (Lab)]

I do not have any difficulty with the hon. Gentleman’s proposal that there should be a 10p tax rate; in fact, it was a Labour Government who actually introduced that rate. Regarding a living wage, which the hon. Gentleman alluded to, I understand that there are no proposals—certainly, they would not be put forward by Labour—to legislate for a living wage. It is a voluntary thing, and it is down to employers, in fact, to decide whether to pay it.

The hon. Gentleman also referred to the minimum wage. I can certainly remember in my constituency many years ago that under the previous Conservative Government there was—what was it called? I think that it was called a “family supplement”, or something, for people on low wages. On one occasion, which really led Labour to legislate for a minimum wage—

[John Robertson (in the Chair)]

Order. Will the hon. Gentleman finish his intervention?

[Mr Cunningham]

I will do in a minute. The fact was that in my constituency we had people on £1 an hour. As I say, I have no difficulties with the hon. Gentleman’s proposal, but whatever Government are in power, at the end of the day, the big threat is from the Exchequer. It is the Exchequer that will probably try to torpedo his proposal.

[Robert Halfon]

I thank the hon. Gentleman for his intervention. As I said before, I agree fundamentally with the minimum wage; it is a moral right that people are paid a certain wage, and I am glad that my party now supports that, but I have questions about the living wage. First, how do we set it? I believe that it puts enormous burdens on smaller businesses; the big multinationals will be able to deal with it. I do not want it to act as a disincentive to employment, and I believe that the burden of responsibility for the living wage should not be on businesses but on the Government: the Government should reduce taxation.

[Mr Cunningham]

rose—

[Robert Halfon]

I give way again to the hon. Gentleman.

[John Robertson (in the Chair)]

I hope that the intervention will be shorter this time.

[Mr Cunningham]

Frankly, if it is voluntary, then it is not forced on small employers. It is the big employers who can pay it.

[Robert Halfon]

Of course, if businesses want to pay their employees a living wage, that is all well and good; I would be delighted at that and would have no problem with it whatever.

My hope is that once the threshold reaches £10,000, we will consider bringing back the 10p rate for the lower-paid. Some Liberal Democrats disagree; they have suggested that the best way to help families is to raise the personal allowance even further, to something like £12,500 a year. I absolutely agree the coalition should fulfil its £10,000 commitment, but it would be unwise to raise the personal allowance even further. Everyone should feel that they have a stake in the state, and they should have some stake in the tax system even if they pay only a small amount, because they need to realise that public services are not free and that there is no magic money tree. My fear is that the Liberal Democrats want to pay for their policy, which will cost £14 billion if applied to everyone, by dragging even more workers into the 40p band. That is what has happened historically. The problem is that we will soon have families with not very high wages paying a marginal rate of 40p, and that will include police officers, shop owners, managers and senior nurses in the national health service.

--- Later in debate ---

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Member for Harlow (Robert Halfon) on bringing this matter to the House for consideration. I want to give a Northern Ireland perspective and to discuss the importance of small and medium-sized businesses, particularly for my constituency, but also for constituencies across the rest of the United Kingdom.

Times are tough for many families throughout the UK. They face stagnating wages, coupled with rising costs. Many small businesses are struggling and cannot afford annual pay rises. The question in many families is, is it better to be in or out of work? The cold reality of the market out there has pressed many of them to make a decision about that.

The Government have shown that they are attempting to address the situation through the uplift of the personal allowance threshold. That should mean that approximately 250,000 workers on low pay no longer have to pay income tax, which has to be good news. The same uplift will also mean that most basic and higher-rate taxpayers will pay £47 less tax from April, after the Chancellor increased their tax-free limit to £9,440 a year.

The Chancellor has indicated that the steps the coalition has taken have increased the number of low earners lifted out of tax to 2.2 million. Again, that is good news, and things are going the right way. The amount of tax paid by people on the minimum wage will have been cut in half by next year. From next April, the personal allowance will rise by a further £235, so the total increase next year will be £1,335—the highest cash increase ever. Over the past two years, the Government have announced total increases to the personal allowance of £2,965, with the aim of reaching a £10,000 allowance in this Parliament.

I read the report of the debate about paying a living wage, which would help many people. Northern Ireland has the highest proportion of people earning below the living wage in the UK, at 24%, and is followed by Wales, at 23%. The lowest proportion of sub-living-wage earners is in London and the south-east; in both cases, it is 16%. However, the number of people affected in London is 570,000. In the north-west, it is also 570,000, while in the south-east, it is 530,000. In terms of the numbers, therefore, those are the most affected areas, but they do not compare with Northern Ireland in percentage terms.

A study showed that workers in the hospitality industry are the worst affected, with 90% of bar staff, and more than four out of five waiters and waitresses, or 85%, paid less than the living wage. The study also showed that 75% of kitchen and catering assistants, as well as launderers and dry cleaners, were paid less than the living wage. Similarly, 70% of cleaners and florists received less than the living wage. Clearly, those figures are of some concern.

[Mr Jim Cunningham]

There has been a whole range of price increases on things such as travel, as well as benefit cuts. In tax terms, would the reintroduction of the 10p tax rate offset that and take people to the level of the living wage?

The Economy

Jim Cunningham Excerpts

Tuesday 11th December 2012 Commons Chamber

[Mr William Bain (Glasgow North East) (Lab)]

Regrettably, the economy is on course for a lost decade under this most paradoxical of Chancellors: reckless on one hand, but complacent on the other; a historian, but with precious little grasp of learning its most obvious lessons; and a tactician, but now pursuing the basest strategy of all in politics—attempting to divide and rule by separating those on middle incomes from low-wage Britain, and the poorly paid from the unemployed. His Conservative predecessors, people such as Winston Churchill, Harold Macmillan and Iain Macleod, would surely recoil in horror if they could they see what this Chancellor is doing to the reputation of the party that once proudly stood for the principle of one nation, but does no longer.

There is no social group that this Chancellor will not exploit for perceived political gain, but he stands exposed in this debate: he has no idea of how to regenerate the missing growth in the UK economy; he has no clue on how to undo the damage he is doing to ordinary families’ living standards and slumping real wages; and he has no concept that his policies on welfare represent no more than a throwback to the worst excesses of harsh Victorian Toryism.

[Mr Jim Cunningham (Coventry South) (Lab)]

Does my hon. Friend not recall that when Government Members were in opposition, in the good years, as we might call them, they took the credit, but they will not take the credit for getting us into this mess in the bad years?

[Mr Bain]

I thank my hon. Friend for that. What I do remember is that when the right hon. Gentleman was shadow Chancellor he backed every single penny of the public spending plans of the Labour Government until the financial crisis hit. Indeed, he had the sauce to call them “eye-wateringly tight” on occasion in this House.

What we see is a Chancellor with a plan aimed at winning marginal seats at the next general election at any cost, but bringing in the cruellest sequence of benefit cuts since those of the national Government in 1931 and aiming his harshest measures at the most vulnerable in our society.

Our economy is suffering from the slowest journey out of recession since the 1870s. As a result of the extreme austerity measures that the Chancellor has introduced, it will now take nearly seven years to repair the lost output from this recession, compared with just four years during the great depression in the 1930s. We were told two and a half years ago that a policy of expansionary fiscal contraction would restore confidence, but instead nearly 4% of output has gone, the Chancellor’s supplementary target on debt falling as a share of GDP by the end of this Parliament has gone, and many economists, including at Citigroup, expect the loss of Britain’s triple A credit rating within the next 18 months, the retention of which the Chancellor made his principal criterion of credibility.

No wonder that on The New Yorker website last week, the Chancellor’s policies were dismissed as an example of what the US should avoid—a commitment to the deflationary economics of the 1930s, with the Reaganite trickle-down economics of the 1980s and the even harsher Benthamite economics of the 1830s. Instead of uniting this country in a crusade against long-term and youth unemployment and what Beveridge called the social evil of idleness, this Chancellor wants to divide society by demonising the unemployed in a way that no Government have done since the time of the Poor Law in 1834.

Despite the Bank of England running the loosest monetary policy in several generations and owning three tenths of our national debt through the use of its asset purchase facility, the OBR predicts that joblessness will rise by as much as 340,000 over its forecast period. So we can see that the US economy, having adopted a different policy from the austerity of this Government, yet described by the Nobel laureate Paul Krugman in The New York Times yesterday as

“still, by most measures, deeply depressed”,

has grown nearly three times as fast as the UK, and according to the Congressional Budget Office, will have a deficit next year of 4%, compared with a deficit of 6.1% in this country, and UK debt will be nearly 18% higher in 2015-16 as a share of GDP than that forecast by the OBR in 2010 on the EUROSTAT measure.

Make no mistake, this Chancellor’s policies on taxation, benefits and spending are cutting the incomes of the poorest tenth of households by 2.7%, at a time when the OECD forecasts that we will see barely half the rise in economic demand that will be seen in America next year, and barely a third of that the year after, despite the looming fiscal cliff. Despite the stream of measures unveiled in the autumn statement, the OBR’s verdict on their usefulness was as unerring as it was deadly for the Chancellor’s reputation—just a 0.1% rise in GDP over the next two years, at the same time as the OBR downgraded growth by 1.7% over the same period.

Increasingly, we see that this Chancellor’s legacy will be to turn the long-term prospects of the UK economy into those of a low-wage, low-skill, low-investment and low-productivity economy. On wages, this Government cannot answer positively the question posed by millions of ordinary people across the country: am I better off now than I was four years ago? The Government cannot answer positively the question: am I better off now than I was eight years ago? The reality is that with the median wage across the UK having fallen by a shocking 7.9% in real terms in this Chancellor’s first two years in office, and by 7.4% in Scotland, people are worse off now than they were 10 years ago. The Resolution Foundation, in evaluating the effects of the autumn statement, predicted that real wages in 2017 will be no higher than they were in 1999. This Government have made the wrong choices on who to help at a time of poor consumer confidence and weak demand. When they could have helped households with the cost of child care, which is rising in Scotland by 6% a year, boosted female employment and cut inequality, they decided to hurt the poorest 40% of the public harder, as a share of their income, than they will hurt the richest 10%. Lone parents who are in work and on tax credits, of whom there are 115,000 in Scotland, will be worse off by an average of £300 a year by 2015, according to the Resolution Foundation. Three quarters of the cuts in tax credits will hurt precisely the strivers the Chancellor purports to back.

The Chancellor’s legacy on investment is equally dire. Business investment is now lower than the Office for Budget Responsibility forecast a year ago, with manufacturing investment having dropped by 6.7% in the last quarter compared with a year ago. Despite funding for lending, there is precious little evidence that demand for lending in the economy is rising. Net lending by the banks to small and medium-sized businesses fell by a further £2.4 billion in the three months to August this year, according to the Bank of England.

The Government could have changed course in the autumn statement and acted to stem the £20 billion rise in the benefits bill during this Parliament by getting more of the 1,320 long-term jobless in my constituency back to work by cutting VAT and adopting more active labour market policies than their failing Work programme. They could have bolstered construction and housing by building as many as 100,000 homes across the UK by allocating the 4G proceeds to productive use rather than simply trying to cook the books with them. They could have done that, but they did not. They have let the country down, and that is the legacy not only of the Chancellor, but, sadly, of the entire Government.

Income Tax

Jim Cunningham Excerpts

Wednesday 28th November 2012 Commons Chamber

[Rachel Reeves]

I thank my hon. Friend, who is the shadow pensions Minister, for his intervention. I am sure he could add many other examples of pensioners being hard hit by the Government. The change in annuity rates is one example as the economy continues to flatline.

The rest of the taxpaying public look with disbelief on what the Government are doing, including the families with children, who are, on average, £450 a year worse off because of last year’s VAT rise, and another £511 a year worse off this year because of further cuts, freezes and reductions to benefits and tax credits; the couples with children who cannot increase their hours to the higher threshold introduced by the Government and who will have working tax credits withdrawn, which, in many cases will drop them below the poverty line; the families with incomes above £26,000, who are now losing all their child tax credit, contrary to the Prime Minister’s promises before the general election; and those on modest earnings with children at school, who will suffer cuts to services equivalent to 13% of their incomes.

The deterioration of the economic outlook on this Chancellor’s watch has led to the OBR revising projections on real disposable income per household down by £800 last year, by £1,100 this year and by £1,700 next year.

[Mr Jim Cunningham (Coventry South) (Lab)]

On tax credits, what does my hon. Friend think about a case I heard about two or three days ago, in which the application for tax credits was not even opened for three months?

[Rachel Reeves]

Given the cuts to departmental budgets, it is not surprising that some applications are not being processed and that, as a result, families are missing out on the tax credits to which they entitled, pushing them further into hardship.

How will households throughout the country feel next year, when those earning more than £1 million get a tax cut of £107,000? What is the Government’s message to people who work hard and want to get on in life? We remember when the Conservatives liked to think of themselves as the party of aspiration. Baroness Thatcher liked to claim she stood up for people who wanted to work their way up, and yet, under this Government, people who get a pay rise or promotion lose their child benefit. Imagine that! A person who earns £49,000 a year and has three children will lose thousands of pounds in child benefit if they take a pay rise or promotion. What a terrible position to put people in.

The truth about the Government is this: pensioners pay more, low-paid parents pay more, and a family working hard to get on in life and provide for their children pay more, but millionaires pay less. That tells us everything we need to know about the Government and their values. For many, 2012 will be remembered as the year the Chancellor’s drastic cuts began to hit home, but for the richest, 2013 will be remembered as the year they received their tax give-away from this Robin-Hood-in-reverse Chancellor.

Last week, the Prime Minister compared the economic situation we face to war. It is true that we are facing a period of national upheaval, but that is why it is crucial that the Government are a uniting force, not a dividing one. Is this really the time for a tax cut for the richest? During the second world war, the public queued to get their copy of the Beveridge report, because it set out the beginnings of a welfare state in which everyone had a stake. In the period of reconstruction after the war, that spirit and sense of national mission led to the creation of the national health service.

The Government do not understand the need for one nation politics, or the need to take people with them and share the burden of sacrifice fairly. Instead, they will be remembered as a Government who divided. Indeed, of the richest who are receiving the tax give-away, 85% are men, but around 70% of the revenue raised from direct tax and benefit changes will come from women. Fifty-two per cent. of those benefiting from the millionaires’ tax give-away are based in London and the south-east, but long-term unemployment is rising in the north. The poor are expected to work harder, because otherwise they will be made poorer, but the rich will work harder only if they are made richer. There is one rule for the very richest and another for everybody else. It is the same old out-of-touch Tories.

When the Chancellor came to the House to deliver his 2011 Budget, he said that

“now would not be the right time to remove it when we are asking others in our society on much lower incomes to make sacrifices”.—[Official Report, 23 March 2011; Vol. 525, c. 957.]

He was right then, and he is wrong now. He revealed his true colours in this year’s Budget.

Fuel Duty

Jim Cunningham Excerpts

Monday 12th November 2012 Commons Chamber

[Cathy Jamieson]

I can tell the hon. Gentleman that on about 13 occasions the Labour Government decided not to put up fuel duty, to delay an increase or to change it because of economic circumstances, which was absolutely the right thing to do. We looked at the economic circumstances, and made decisions to delay or cancel when that was the right thing to do, including at the height of the economic crisis.

[Mr Jim Cunningham (Coventry South) (Lab)]

I hope my hon. Friend noted that about a fortnight ago there was an Adjournment debate in the House with cross-party support for a freeze on the increase. Although Conservative Members may go on about the increase under Labour, we must remember that they are in government now and that they could have stopped this 18 months ago.

[Cathy Jamieson]

My hon. Friend makes a good point. It is regrettable that some hon. Members who only a few weeks ago called for the very thing that our motion calls for now seem to have cold feet. Given that the economic recovery is fragile, the Government should back the motion.

Beer Duty Escalator

Jim Cunningham Excerpts

Thursday 1st November 2012 Commons Chamber

[Andrew Griffiths]

I think I am in danger of breaking the record for the number of interventions taken, but I will give way to the hon. Member for Coventry South (Mr Cunningham).

[Mr Jim Cunningham (Coventry South) (Lab)]

I thank the hon. Gentleman for giving way. As he has said, since March 2008 the duty has gone up by 42%, which is surely not sustainable. It has had an effect on pubs since 2008, and over the past 10 years at least 18,000 pubs have closed.

[Andrew Griffiths]

The hon. Gentleman makes a valid point. We should consider the impact that the beer duty escalator has had on our brewers.

--- Later in debate ---

[Mr Hamilton]

I could not agree more. As a side issue, the central location of television soap operas is the pub. Things might be exaggerated on television, but pubs are about families and people getting together. Pubs are controlled environments where people look after one another. It is not uncommon for the bar steward to say to someone who is too drunk, “You’ve had enough. Away you go.” Somebody might look after someone who is too drunk in the pub. Drinking at home is uncontrolled and causes far more bother. Another problem we must face is that, nowadays, people—youngsters especially—meet in houses and get drink-fuelled before going out to the nightclubs.

[Mr Jim Cunningham]

Does my hon. Friend agree that one big problem with our high streets is the fact that there have been a lot of pub closures? Working men’s clubs are also affected. Are they not contributing factors to why we have ghost city centres, as we call them these days? A commission is looking into that.

[Mr Hamilton]

It is also the case that it is not just about pubs and the price of beer. Pubs, and especially clubs, have a far wider role. My local club, the Dalkeith miners club, has about 25 different organisations, including ones for kids, using its big halls during the day, and it is looking at other avenues. In many cases, clubs are community centres where no other community centre exists. They become the focal point for everyone.

I know that other hon. Members will raise a host of issues, but I have a specific point I wish to make. Surely it is not beyond the wit of the civil servants in the Department to come up with a mechanism that would tax a 50-pint cask of beer differently from anything else. That would allow draught beers to be taxed at a different rate—nobody is going to go to Tesco and buy a 50-pint cask and carry it home. Draught beers, ciders and lagers could be taxed differently.

--- Later in debate ---

[Grahame M. Morris]

My right hon. Friend makes a really good point, and I hope the Minister is taking note.

As we all know from our constituencies, pubs are a vital part of our social life and a social hub. No matter what sort of area we represent, be it Labour, Tory, Lib Dem or nationalist, be it in the north or the south, be it countryside or urban and be it wealthy or poor, public houses are the hubs of our communities. Just as important is the fact that pubs and brewing are vital to the UK economy. Other hon. Members have mentioned the figures, so I will not repeat them, but the sector makes a huge contribution—I believe it is in excess of £20 billion. I believe that the Minister acknowledges that the proposals in the beer duty escalator would be revenue-neutral—they would not generate any additional revenue for the Treasury—so what can be the justification for continuing with it? The only answer I can come up with is that this is part of another public policy agenda—perhaps the Minister can enlighten us. Might it be an issue of public health? Perhaps the Government think it desirable to force up the price of alcohol to dissuade people from consumption. We have heard from various hon. Members that the consequence has actually been the reverse, so perhaps this is a perverse application of policy, resulting in the public buying beer, wine and spirits from the supermarkets in cut-price deals, and consuming them at home. There is a strong case for reviewing the escalator.

[Mr Jim Cunningham]

Does my hon. Friend agree that this issue affects not only pubs, but working men’s clubs up and down the country? We are in danger of destroying our cultural heritage, whereby the family could go out on a Sunday and have an entertaining afternoon in the pub as a family unit. That whole thing is being destroyed, as we have lost a large number of working men’s clubs in Coventry, as well as pubs.

[Grahame M. Morris]

I absolutely agree with my hon. Friend, and a similar point was made by my hon. Friend the Member for Midlothian. I am a strong supporter of working men’s clubs and the whole ethos of inclusivity, so I completely agree with that point.

In the limited time available to me, I want to mention something that has been alluded to by one of my colleagues: it is time for the Government to be much more proactive, not only to help the pubs struggling now, but to boost growth in the pub and brewing industry, as it could be a vital engine of economic growth. If that is the strategy, we have an opportunity to pick up the baton and run with it. The previous Government went so far as to appoint a Minister with special responsibility for pubs, as has been mentioned. That was my right hon. Friend the Member for Wentworth and Dearne (John Healey), who came up with some excellent ideas in a 12-point plan, which was agreed with the trade and CAMRA. I hope that the current Minister is familiar with that; it would be beneficial if he could build on it. That would create vital jobs and build on a great UK manufacturing success story.

Our British beer is famous around the world and our pub culture is envied by many countries. There is also the multiplier effect: one job in brewing supports one in agriculture, one in retail, one in the beer supply chain and 18 in pubs and clubs. We are all concerned about the wider economic implications and I urge hon. Members on both sides of the House to support the motion.

Multiannual Financial Framework

Jim Cunningham Excerpts

Wednesday 31st October 2012 Commons Chamber

[Mr Dodds]

The hon. Gentleman is absolutely right that this is about fairness. It is also about being seen to connect with the electorate, the people who send us here, as the hon. Member for Vauxhall (Kate Hoey) said. One of the problems with Parliament and politicians generally is that people do not feel that we have any connection with them or relate to their day-to-day problems. The choice before the House tonight is clear: either we vote to send a clear message that enough is enough, we expect what applies to UK Government expenditure and the national budgets of other member states to apply to the European Union, and our choice is to be on the side of the taxpayer and our people, who are out there suffering daily as a result of the cuts—

[Mr Jim Cunningham (Coventry South) (Lab)]

rose—

[Mr Dodds]

I am sorry, but I have no more time to give way and other Members wish to speak.

The choice is whether or not to vote in favour of the Government’s motion, which has been couched in tough terms by the Minister, and I welcome the progression in Government thinking, because when I listened to the Opposition spokesman I was reminded that it was not long ago that we heard representatives of the same party arguing a very different case when it came to European expenditure. I accept that entirely, but the fact of the matter is that there is no reason why this House should not send out a united message saying that what is good enough for Britain and our constituents, for the people we represent, should also be good enough for the European Union and that there should be no special exemption or special rule for it. We must be on the side of taxpayers tonight and vote for the amendment tabled by the hon. Member for Rochester and Strood (Mark Reckless).

--- Later in debate ---

[Mr Jim Cunningham]

Does my hon. Friend agree that this is not a debate about whether we should be in or out of Europe? It is about the fact that, on the one hand, the British people have been told to tighten their belts and the Government’s borrowing has gone up, while on the other hand, the Government are leading us into a situation where there will be an increase, one way or another, in the EU budget. That is the real issue and it is not acceptable to the British people.

[Thomas Docherty]

My hon. Friend is correct. Whether people live in Coventry, Bournemouth, Tunbridge Wells, Ribble Valley, Dunfermline or Cardiff, education budgets, child care, housing budgets and defence of the realm are being cut, yet we are expected to hand more and more money to Brussels bureaucrats to spend on vanity projects that will then attack British industry and British farmers. The British public will not understand if Members of this House, who claim that they want the best for the British taxpayer and that they want to support British industry, do not vote according to their principles and their long-held consciences and allow themselves to be corralled by their Whips into voting for this coalition motion.

It is interesting that this is only the second time that we have seen a large Liberal Democrat turnout in the Chamber since the start of this parliamentary Session. The first time was when we debated House of Lords reform. That says it all about the quality of the motion. I urge hon. Members from all parties to listen to their taxpayers, British industry and their consciences and to vote for the amendment.

Public Service Pensions Bill

Jim Cunningham Excerpts

Monday 29th October 2012 Commons Chamber

[The Chief Secretary to the Treasury (Danny Alexander)]

I beg to move, That the Bill be now read a Second time.

The Public Service Pensions Bill represents the final building block of the Government’s commitment to reforming public service pensions. It is an important measure that will affect the pensions of millions of public service workers for decades to come. It is the culmination of a process that started more than two years ago when the coalition Government invited the former Labour Secretary of State for Work and Pensions, Lord Hutton of Furness, to undertake a fundamental review of public service pensions. Lord Hutton’s independent public service pensions commission undertook its responsibilities with thoroughness. It consulted and met a wide range of interests and considered a wealth of expertise and viewpoints, and more than 3,000 pages of evidence were submitted in response to it by more than 250 bodies.

[Mr Jim Cunningham (Coventry South) (Lab)]

Will the right hon. Gentleman give way?

[Danny Alexander]

I will give way, although it is rather early in my speech. Perhaps the hon. Gentleman wants to make an urgent point about Lord Hutton.

[Mr Cunningham]

I appreciate that the Government commissioned the Hutton report, but surely that report would not have been needed had they honoured the previous Government’s commitment to civil servants and public service workers.

[Danny Alexander]

I shall deal with the good reasons why further reform is needed later in my speech.

Lord Hutton’s conclusions of March 2011 set out a clear and compelling case for further reform. He found that the status quo was not tenable, that there had been an unfair sharing of costs between the employer, the employee and the taxpayer, and that previous reforms had not fully addressed the underlying issues of sustainability and fairness. His recommendations were equally compelling, and those for the future design of schemes fall into three broad categories, the first of which is safeguards to ensure that the long-term costs of pensions are sustainable. That is achieved through a link between the state pension age and normal pension ages in the majority of schemes, and a cost-cap mechanism to protect the taxpayer in the event of other unforeseen costs.

--- Later in debate ---

[Danny Alexander]

Yes, I agree. We need better pension provision across the work force. That is why I think the national employment savings trust scheme is an important step forward. That basic pension scheme, which is available to the 12 million or so members of the country’s work force who do not have any pension provision, was recently launched by the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Thornbury and Yate (Steve Webb), and had its origins under the previous Government. It is a good thing all round that we have agreed a reform to public service pensions that makes significant cost savings and ensures that public servants continue to have access to among the best pension schemes available.

We all wanted to find a solution that was sustainable, affordable and fair, as did the vast majority of trade unions and negotiators for the non-unionised work force. Thanks to both sides’ commitment to constructive talks, I am pleased to say that the final proposed designs have been issued for all major public service schemes. I thank Brendan Barber and his TUC negotiating team for the mature and constructive way in which they approached these talks. It has taken many hours of discussion to get where we are today, and I am grateful that the majority of trade unions brought sensible, workable solutions to the negotiating table, rather than grandstanding. The final scheme designs reflect that hard work.

The trade unions took those scheme designs to their memberships as the best that could be achieved through discussion, and the majority of the unions have accepted the proposed agreements. The turnout in the ballots held by the unions that rejected reform was low—less than 30% in most cases—which is hardly a compelling mandate for an ongoing dispute. The Public and Commercial Services Union decided to reject the offer before it was finalised, without first seeking the views of its membership, which was not a reasonable way to approach a set of reforms affecting more than six million public servants.

There is no point in further dispute or threats of strikes regarding public service pensions. We have set out a good and fair deal that protects those rights already earned and puts fairness at the heart of future pension provisions.

[Mr Jim Cunningham]

The comparison between private sector and public sector pension schemes is variable, as not all public sector schemes are good. However, what discussions has the right hon. Gentleman had about the various provisions in the Bill affecting employees? More importantly, if the Bill is passed, what method of consultation will he allow on changes to the various schemes?

[Danny Alexander]

We have taken great care to work with the TUC. We have taken it through the text of the Bill, listened to its concerns and made adjustments where necessary. This has not just been done through the scheme negotiations; we have also been open by sharing the Bill with trade union colleagues. Given the long-term nature of the reform and the fact that it affects so many people, it was important to engage properly. My departmental colleagues have engaged closely with representatives of the relevant work forces to ensure that that has happened.

The Bill sets out a framework for the schemes, with some restrictions, and in due course we will have to produce regulations to set out the design of each scheme. There are well-established processes within Departments for working with employers and employees on such details. My experience is that those processes work pretty well, and there is a pretty good co-operative spirit among the pensions experts around the table. I therefore do not foresee any problems but, of course, if the hon. Member for Coventry South (Mr Cunningham) does, I would be delighted for him to bring them to my attention so that I can try to resolve them.

Small Charitable Donations Bill

Jim Cunningham Excerpts

Tuesday 4th September 2012 Commons Chamber

[The Economic Secretary to the Treasury (Miss Chloe Smith)]

I beg to move, That the Bill be now read a Second time.

It is my pleasure to move Second Reading of the Bill, which is the product of many months of consideration and consultation, both formal and informal. I begin by thanking all who have worked so hard on it, including the voluntary and representative bodies, Her Majesty’s Revenue and Customs, and officials and lawyers, who have worked hard over the past months to produce the Bill.

The Bill provides the legislative framework for the gift aid small donations scheme, which was announced in Budget 2011. This scheme was announced as part of a significant package of measures to encourage charitable giving and philanthropy by donors from all walks of life, from the largest donors to those who give small amounts through charity bucket collections. The measures announced included reducing the rate of inheritance tax for individuals who leave 10% or more of their estate to charity, and a tax reduction in return for the donation of a pre-eminent object, or collection of objects, to the nation. Taken together, the 2011 Budget philanthropy package of measures represented the most radical and generous reforms to charitable giving for more than 20 years.

Crucially, at the centre of the package was the announcement of the gift aid small donation scheme.

[Mr Jim Cunningham (Coventry South) (Lab)]

The Minister might not be able to answer this, but I would accept an answer in letter form. Why have the Christian Brethren been denied charitable status? I have had many approaches from them.

[Miss Smith]

I hope you will forgive me, Mr Speaker, if I do not tackle that question in the context of this debate. I do not believe it is crucial to this scheme, but I will be happy to come back to the hon. Gentleman after the debate, if there is a pressing matter he needs answering.

[Mr Cunningham]

Why can the Minister not write to me about it or even meet me?

[Miss Smith]

I shall be happy to look into the matter, within my powers, and come back to him. However, it might well be a question for the Charity Commission, in which case the hon. Gentleman will know where to direct his inquiries. If there is information I can give him, though, I shall be happy to get back to him.

Finance Bill

Jim Cunningham Excerpts

Monday 2nd July 2012 Commons Chamber

[Sheila Gilmore]

We have very different views about how to stimulate and boost the economy. The Government have run demand into the ground, for example by raising VAT to 20%, which has had an effect on fuel. Ministers are reluctant to talk about that in any detail. It has to be remembered that prior to the election, the Conservatives were going around telling us that there would be no increase in VAT, and their coalition partners liked to stand in front of huge billboards saying that they feared there would be a VAT bombshell but were completely against it.

[Mr Jim Cunningham (Coventry South) (Lab)]

Has my hon. Friend noticed that oil and petrol prices have dropped by 28% over the past three months? That is not reflected at the petrol pumps, and surely the Government should do something about that.

[Sheila Gilmore]

My hon. Friend makes an important point. When the raw product goes up in price, the pump price goes up very quickly, but a downward turn seems to take a great deal longer to reach the consumer. We have made similar arguments about other energy price rises.

The hon. Member for Argyll and Bute (Mr Reid) suggested that it was all right for the Government to make U-turns such as this, because they had found savings elsewhere. That is nice to know, but if such savings could be found so easily, maybe the Government could have avoided some of the other things they have done. After all, we spent a lot of time in the Budget debate and before talking about the plight of couples who were losing tax credits because they were deemed not to be working enough hours. That change affects a small number of people—from memory, I believe it is about 500,000. We were told that if it were not implemented, it would cost the Treasury £500 million. We were told that it was impossible to go back on that decision, because money was so tight.

Like all Governments, the current Government are making choices. In the past two years, they have said that certain things have to be done and are not choices. They have said that they have been forced into them. However, all Governments make choices—that is part of governing.

--- Later in debate ---

[Cathy Jamieson]

I welcome the fact that it will make a difference for constituents, but once again, unfortunately, the way it was done did not suggest a Government who were organised or knew that they were going to make the announcement at that particular time. That is important in the context of how it will be paid for, but I shall come to that.

At the time, we expressed concern that the Chancellor’s Budget plan would mean a 3p hike in fuel duty in just five weeks. Previously, we had called for the Government to cut VAT, which would have knocked 3p a litre off fuel prices, as well as helping hard-pressed household budgets in other ways. We called for the August rise to be dropped because we believed that increasing the fuel duty at this time would have sent the wrong signal to retailers, who would have had to pass every penny on to drivers and put prices up just when they should have been cutting them.

We also made the point that with Britain now in a double-dip recession, the last thing our economy needed was another tax rise adding to the squeeze on household budgets and to the difficulties faced by many small businesses. The Government’s priority should have been to boost the economy, rather than to clobber families, businesses and pensioners just when they were feeling the squeeze the most. That is why we called on the Chancellor to stop the August fuel duty rise, at least until next January. We said that we would put that issue to a vote in Parliament, and that is why we tabled new clause 11.

[Mr Jim Cunningham]

One question that has never been answered is why the fuel duty decision was not taken in the Budget. Does my hon. Friend agree that the Government rushed into this without thinking about the consequences?

[Cathy Jamieson]

Indeed; my hon. Friend makes a good point. The way in which the decision was announced, and the aftermath of that announcement, does perhaps suggest that the Government were rushed into this. Also, many Government Back Benchers agreed that the fuel duty increase should be dropped. A number of them made that clear in a good Westminster Hall debate, and others publicly signed up to support the FairFuelUK campaign.

We tried to be helpful. We suspected that Ministers might say—as, indeed, they did—that they could not afford to stop the increase, even though they had found the money to give a tax cut to millionaires. As has been suggested, if there is money available, it ought to go to those whose household budgets are being squeezed the most. It is still astonishing to me that the Government seem intent on punishing families—especially those with children—while at the same time giving a massive tax cut to millionaires. [Interruption.] Government Back Benchers can shake their heads and look at the ceiling, but real people are being affected by this Government’s Budget, and those who are benefiting are the best off.

We suggested some ways of raising the necessary funds. We said that the Government could perhaps consider closing the tax loopholes that the Prime Minister had been condemning, and stopping hundreds of millions of pounds being lost through offshore tax havens. We also suggested that they might want to reverse the pension tax relief boost that they have given to people who are already well off—namely, those earning more than £150,000—and that they might want to use the £500 million underspent in the Olympics budget.

We were not being opportunistic. We understand that difficult decisions have to be made if we are to get the deficit down, and as a responsible Opposition we looked at the figures. We also recognised that, at difficult times in the past, Labour had put up fuel duty. On many occasions, however, we also delayed or cancelled planned fuel duty rises in the light of the circumstances at the time—including at the height of the global financial crisis —because it was the right thing to do to give assistance to the people who needed it most and to ensure that we balanced and grew the economy.

We know—and more and more commentators are agreeing with us—that raising taxes and cutting spending too far and too fast have backfired. Britain has been pushed into a double-dip recession, more people are out of work, and the result is a bigger benefits bill and £150 billion of extra borrowing. That is why we need a fairer and more balanced plan for our economy that will get people back to work, and why we are calling again for the Government to change course and put their efforts into tackling youth unemployment, as well as using the skills of people who have been made redundant, and who have something to give back, to support young people into the jobs market.

We agree with the Government that stopping August’s 3p rise in fuel duty is the right thing to do for British businesses and families. I do not know whether the Prime Minister and the Chancellor have ever had to worry about the cost of filling up their cars in the way that the nurse in my constituency does. She works night shifts, and she does not know whether she will have enough money left at the end of the month to fill up her car so that she can get to work. In response to the hon. Member for Dover (Charlie Elphicke), we are glad that the Government have at last started listening to those who face those difficulties, and we will therefore be supporting the Government tonight on this issue. As I said earlier, however, the manner in which the announcement was made raises a number of questions. It looked as though the issue had brought about the quickest U-turn in politics. The new benchmark for “a long time” in politics is no longer a week but overnight, with changes being made 24 hours after the initial announcement.

--- Later in debate ---

[Cathy Jamieson]

That is absolutely true. As I said earlier, that is exactly what happens to those who cannot work for the extra hours that would increase their working time to the 24 hours that would entitle them to maintain their working tax credit. These are people who want to work and pay their way—they want to do the right thing—but for some reason the Government have chosen to clobber them the hardest at the same time as giving millionaires a tax break. That makes no sense to me, although Government Members may say that it is a point of principle.

A commentator—I think that it was Fraser Nelson of The Spectator—recently suggested that the best definition of “Osbornism”, if there can be such a definition, had been provided by Groucho Marx:

“These are my principles. And if you don’t like them—well, I have others.”

I hope that the Government have received the message loud and clear from the Opposition and from the British public. We do not like the principles that are at the heart of the Government’s economic policy. We do not like, or accept, the principle of asking millions to pay more so that millionaires can pay less. That is why we are giving the Government the opportunity to put their well-practised U-turning skills to good use once again.

[Mr Jim Cunningham]

Should they not go further than that? Should we not deal with the amendment to existing legislation allowing the use of foreign countries as tax havens to avoid paying the debts of the developing countries, which can cost £4 billion a year?

[Cathy Jamieson]

My hon. Friend has made a good point. We will have an opportunity to discuss that subject in more detail tomorrow.

The Government once made much of their commitment to fiscal responsibility. Deficit reduction was to be their defining mission. Today, however, that task has been made even harder by the failure of their own economic plans, which involve £150 billion of extra borrowing. Their pledge to clear the deficit by the end of this Parliament has been blown to pieces, yet they still find the money for a tax giveaway to the top 1%.

Oral Answers to Questions

Jim Cunningham Excerpts

Tuesday 26th June 2012 Commons Chamber

[Mr Osborne]

My hon. Friend is right and I commend him and his group for the interesting ideas, many of which I agree with, that they are promoting. He is absolutely right to point out the increase in employment, including in manufacturing employment. An interesting recent statistic from an independent international body on the British economy showed that the share of manufacturing in the UK economy is increasing for the first time in a very long time, having almost halved under the previous Labour Government.

[Mr Jim Cunningham (Coventry South) (Lab)]

Why did not the Chancellor cut fuel duty sooner? Why has it taken him all this time? He has done about 33 U-turns as far as I can see.

[Mr Osborne]

Last year we cut fuel duty and froze it. This year, we have frozen it again and the hon. Gentleman should welcome that. I know that he is in a slightly difficult position in that he was one of the Labour MPs who voted for the increase that we have now delayed, but he should just get up and welcome these moves.