Angus Brendan MacNeil
Main Page: Angus Brendan MacNeil (Independent - Na h-Eileanan an Iar)Department Debates - View all Angus Brendan MacNeil's debates with the Department for Transport
(11 years, 11 months ago)
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Mr Davey
I have been looking at the financial arrangements of the green deal. When we are able to announce even more details than we have already, I believe that people will see that it is a very attractive offer. I also believe that there are many low-income households that will actually welcome the rate of credit that will be asked through the green deal, compared with some of the rates of credit that they have to pay other lenders.
Mr Davey
I will not give way, because I want to make some progress and address the Queen’s Speech.
We need to make dramatic changes to our energy policies in the longer term. The right hon. Member for Don Valley said, in a rather bizarre passage towards the end of her speech, that we were not really reforming the electricity market—but we are making the biggest reform of the electricity market since privatisation. It is the sort of reform that Labour Members failed to get their head around and failed to deliver, despite 13 years in power.
There are huge challenges for our electricity market, with 20% of our power plants coming offline during the next decade. There is an energy security issue. We will have to ensure that the infrastructure is brought forward in the most competitive way, otherwise there will be a big impact on bills. We will have to attract more than £110 billion of investment in a way that ensures that low-carbon technology can be introduced, so that we can meet our carbon budgets. That is a heck of a challenge, and this Government have developed the policies to meet it.
If we do not act now, we estimate that by the mid-2020s up to 2.5 million households will be affected by blackouts, costing the economy more than £100 million a year. Even without interruptions to supply, our consumers would be exposed to volatile global energy markets if we did not do anything. Wholesale energy costs already make up half of the average consumer bill. Last year, the winter gas price was 40% higher than the year before. That is the real reason why bills have been going up so dramatically. We have to act and make the strategic changes to tackle that issue.
Mr MacNeil
Following on from the point made by the hon. Member for Upper Bann (David Simpson) about road fuel, what stage are the Government at in introducing a fair fuel regulator, which was much talked about while the two coalition parties were in opposition?
Malcolm Wicks
May I pursue my theme for a while? The hon. Gentleman must remind me later that I was going to give way to him.
This is not a painless revolution. I do not want to compete with the Secretary of State’s soundbite, but for many women and men there is what might be called a care-career collision.
Malcolm Wicks
The alliteration is better.
What I mean is that the time when young men and women in their mid-to-late twenties and thirties are working hard at their careers, and when their employers are watching them, is precisely the time when they think about the need to have children. That is a dilemma and a difficulty that we have not entirely thought through.
One consequence of the fact that women as well as men are working hard during their period of maximum fertility is the inability of many women to have families of the size that they would like. There is interesting evidence to that effect in a 2006 study by the Eurobarometer, the most recent that the Library could find for me. It states that in the UK in 2006 the mean ideal number of children for women—as it is an average, a funny statistic emerges—was 2.5, but the actual number of children achieved by women aged between 40 and 54 was only 1.9. As I have said, it is possible to laugh at such statistics, but we can see what lies behind them. Many women, and men, who would have preferred to have, say, three children end up with two, many who might have wanted two end up with one, and others may not be able to have children at all.
I am not suggesting that there is some Utopia in which everyone can achieve their ideal family size, but I do believe that there are economic and employment pressures that make achieving an ideal family size difficult in Britain and, indeed, throughout Europe. That ought to concern us, not least at a time when data show that birth rates are below replacement level in this country.
Another consequence of the care-career collision is the sheer hassle and difficulty that many families have to undergo in order to organise substitute child care. The growth of child care is wholly beneficial—it has improved the lot of families and, in many cases, children—but whenever I discuss the issue with younger families today, I have the impression that there is barrier after barrier. Often it is not just one substitute child carer whom parents need to employ. Because of career patterns, children may have to be dragged out of bed early and sent from one carer to another. What happens when a childminder is ill? What happens when the mother herself, who should be working, knows that her child is ill? Many parents have to resort to fibbing to their employers that they themselves are ill, rather than their children.
What I am saying—not too controversially, I hope—is that I do not believe the development of child care has led to some kind of nirvana. People may say, “It would be better if we had more child care, if the training and the quality of child care were better, and if it were cheaper”, and I understand their argument, but I want to challenge more fundamentally the proposition that we have reached a nirvana. I believe that family decisions made by men and women, by dads and mums, would be better decisions for families and for children if parental leave became a much more important feature of our employment and social policy. We have made some progress and I welcome that, but the average citizen of the 21st century will live until her eighties or nineties, and we are threatened with the possibility that many children born today will reach the age of 100. That is a long life span. Are we really saying that, during the two or three critical years after a child is born, substitute child care is the only way of ensuring the well-being of our children and their parents?
Now I will give way to the hon. Member for Strangford (Jim Shannon), as I promised to do a long time ago.
Mr Leigh
I am talking about total taxation, which is the important thing to understand. I know that it is difficult to compare countries. For instance, we often talk about Italy being a basket case in terms of Government borrowing, but private borrowing is very low in Italy. We have to address this problem by considering the total taxation of all output, because that is what is of interest to efficiency and an efficient Government.
As I was saying, big government is accompanied by big waste. I am sure that many hon. Members were shocked, as I was, by a National Audit Office report in January—or rather by a report of reports; I am sure that everybody in this House avidly reads what the NAO says every week. This report was published in January, so it was not an attack on the previous Labour Government; it relates to now and the situation this minute. It is about this apparently hard-hitting, right-wing Government who are cutting left, right and centre, and persecuting the people—that is the charge against the Government; I would not say anything like that, of course. The report suggests that there is waste, at the moment, of more than £31 billion across government. Hon. Members may recall that Philip Green carried out an efficiency review, after which he said:
“You could not be in business if you operated like this. It would be impossible.”
His review identified, among other things, £700 million in saving on the Government telephone bill alone. In the past two Parliaments, the Public Accounts Committee conducted more than 400 hearings on waste. Such hearings are carrying on in this Parliament, as they will in the next Parliament and the Parliament after that. Nobody can tell me that enormous opportunities to cut waste do not remain.
Why is that issue important, given that this is a debate on the cost of living? This is not some anorak issue in which only accountants or economists should be interested. Every taxpayer in this country should be interested in what is going on in government at the moment, because the public sector is funded from the pockets of ordinary people and ordinary firms—many of them small, struggling firms—across Britain. Spending money in such a way means that the public and firms are being hit by a double-whammy, as prices are inflated by wasteful government spending, and firms have less of their own money to invest and families have less to spend. That situation is not fair.
We have mentioned the complexities of the benefits system and discussed child benefit. In addition to a hugely wasteful government system, Britain suffers from a horrendously complex tax system. Our tax code is now the longest in the world. Do a Conservative Government find that satisfactory? Our tax code has recently overtaken India’s in length and has doubled in size since 1997. Our horrendously complex tax system may have allowed the previous Government to keep many of their taxes a secret, but it has led to Britain being ranked 89th in the world, behind Nigeria and Zimbabwe, on the burden of government regulation in a recent World Economic Forum report. That simply is not good enough. I know that my friends on the Treasury Bench are doing their best, but they are not trying hard enough. They have to do better, because ordinary people and ordinary firms are paying for all this.
That complexity is structurally biased against ordinary workers and small businesses, because they lack the resources to investigate all the available loopholes. According to the Centre for Policy Studies, the effective marginal tax rate for some people on low incomes is as high as 96%. We know that, because we have done all these studies; the right hon. Members for Croydon North and for Birkenhead (Mr Field) served with me on the Select Committee on Social Security for many years, and for many years the right hon. Member for Birkenhead has campaigned on the issue of the trap for ordinary people, particularly those at the bottom of the heap, of paying marginal tax rates of 96%. We are crushing our own people, and not just with the waste for which we are responsible in our own spending. We oversee that waste in this House of Commons—we are responsible for it; nobody else out there is responsible. We crush our own people under a hugely wasteful system of government inefficiency and with increasingly complex taxes and benefits.
The rich do not suffer from that. The marginal tax rate for top-rate taxpayers is just 57.8%—the very richest do not even pay that. They do not even pay 57%. With the benefit of having successful and hugely expensive accountants, they are paying 10% or 15%.
In the most recent global competitors report by the World Economic Forum, three of the four biggest problems facing UK businesses were identified as tax rates, tax regulations and inefficient Government bureaucracy. Let me set out what I believe we should have in the Government. Apparently we are going to have a reshuffle soon. What we need are Ministers—the Prime Minister has to check on their performance—who are, like a non-executive director on the board of a private company such as Tesco, obsessed not by policy but by efficiency. We have three excellent Ministers sitting on the Front Bench—the Secretary of State for Transport, the Minister of State, Department of Energy and Climate Change, my hon. Friend the Member for Wealden (Charles Hendry) and the Minister of State, Department of Health, my right hon. Friend the Member for Chelmsford (Mr Burns)—as well as our Whip. I am sure they are doing these sorts of things every day, but much more could be done. I hope the Whip is listening to all the kind comments I am making about the Ministers. I sincerely believe that this is one of the most important things the Government could do.
An obvious conclusion to reach, given what I have said, is that the tax system should be simplified. That would reduce costs and simultaneously be likely to increase revenues. As I have argued again and again, this is not necessarily a market-driven, right-wing point of view, because the lower-paid would benefit from it. The natural conclusion of such simplification would be a much flatter rate, or even a flat-rate tax system. Such a system has been successfully introduced in places as diverse as Serbia, Hong Kong and Russia. When I was in Russia recently, I spoke to a young entrepreneur. The flat-rate tax in Russia is 13%. How extraordinary that the former Soviet Union now has a more entrepreneurially based system than we have—a flat-rate tax of 13% in a large economy such as Russia.
There is a precedent for such an approach in this country. When the Thatcher Government more than halved the top tax rate, the proportion of income tax revenue paid by the highest earners rose. As I said in our debates on the Budget, I welcome what the Chancellor of the Exchequer did in cutting the top rate from 50% to 45%; indeed, I think it should be cut from 45% to 40%. Such people do not bury their money in the ground. If they are taxed less, there is more entrepreneurship and more of them stay in this country. They earn more and give more, and less effort is spent on tax evasion and tax avoidance.
As important as tax reform is, the key to Government finance is a reduction in spending. If we spend less, we can tax less—it is that simple. There is nothing inherently good about Government spending, although Ministers from parties on both sides of the House have apparently congratulated themselves on how much they have spent on the health service and education. They congratulate themselves on spending inefficiently what other people earn.
Mr MacNeil
The hon. Gentleman says there is nothing inherently good about Government spending, but good can come from Government spending if it is on assets in order to redevelop capacity in the economy. We could have that rather than the current austerity programme, which is starving the economy.
Mr Leigh
We all accept that the Government can usefully spend on assets. I do not deny that. There is nothing wrong with Government spending, but there is something wrong with wasteful Government spending. In a recent global competitiveness report, Britain was ranked an unbelievable 72nd in the world behind Ethiopia and Tajikistan on the wastefulness of Government spending. That simply is not good enough. If a private company was ranked so low in the pecking order, questions would be asked about the people serving on the board, would they not? We have to try harder and do better. Government money does not come from nowhere. Every pound wasted by Whitehall is a pound that could have been invested by a British company or spent by a British family.
Before I conclude, let me speak about a few other issues, including aspects of the Queen’s Speech which I welcome. The right hon. Member for Croydon North talked about family life. One reason I have supported a marriage tax allowance, which sadly was once again not in the Queen’s Speech, is that it would address precisely the point he was making—the tax disincentive for a parent, usually a woman, to stay at home to look after her children. Nobody pretends that a tax gets people married or keeps people married. It simply deals with the totally unjust situation that a married person, normally a woman, who stays at home and looks after her young children is uniquely attacked by the tax and benefit system. That cannot be right.
I am glad that the high-speed rail line was not in the Queen’s Speech. I will do a deal with my right hon. Friend the Transport Secretary, who will sum up the debate. I will support her high-speed line, which will admittedly cut the journey time between London and Birmingham—no doubt that is all very good and means spending the assets that the hon. Member for Na h-Eileanan an Iar (Mr MacNeil) spoke about—if she will support the building of a third runway at Heathrow airport.
Dr Julian Huppert (Cambridge) (LD)
It is entertaining to follow the speeches from the hon. Member for Gainsborough (Mr Leigh) and the right hon. Member for Manchester, Gorton (Sir Gerald Kaufman), who have shown that there is an obsession about House of Lords reform, at least in trying to stop it, among certain people who have been in this House for a very long time. It is a project that has been going on for a long time, too. It was in all three party manifestos. We can achieve it; it does not have to be an obsession for any of us.
Dr Huppert
If the Deputy Speaker does not object, I will happily take an intervention.
Mr MacNeil
Does the hon. Gentleman agree that House of Lords reform will not be meaningful in this place while there are a number of people hanging around who view the House of Lords as a political lifeboat when their careers here are finished?
Dr Huppert
I do agree, and at some point we can have the debate about why we need that reform to have a properly democratically accountable Chamber in the other place, but now is not that time.
We heard an interesting take from the hon. Member for Gainsborough on how the Government would be doing much better if they were a pure Conservative Government—they would be cutting much more—and we heard from the right hon. Member for Manchester, Gorton that they are cutting far too savagely. The truth is that a pure Conservative Government probably would be cutting more and we are acting as a restraint on that and trying to achieve the correct outcome, which lies somewhere between the—in my view—excessive cuts advocated by one side and the continued overspending advocated by the other.
There is often a debate about Keynesian economics. Keynes was a good Liberal and a good Cambridge man, and he said a number of very sensible things. One was about making sure that we spend in recessions, but the flip side of that is that we do not spend as much during the boom years, so that we have money left. We cannot spend in the boom and also have money to spend in the bust; it simply does not work. Keynes was also clear about how much could be spent and, indeed, the high priority on keeping bond yields low so all that could be afforded. He was a very complex man and his work should not be reduced to a simple catch phrase.
I want to talk about the cost of living in relation to transport, because it is one of the areas I focus on in this House and on which I lead for the Liberal Democrats, but also because it is one of the few parts of Government activity that affects most people pretty much every day of their lives. Transport has a huge effect on us, and the cost of travel affects a huge amount of what we do throughout our lives. Governments for many decades, when focusing on the cost of transport, have thought principally about cars; too little thought has been given to cycling, walking and public transport.
Albert Owen (Ynys Môn) (Lab)
It is pleasure to follow the hon. Member for Worcester (Mr Walker), who was courteous in giving way. I pay tribute to his late father, who was Secretary of State for Wales and an Energy Minister—I will discuss energy reforms later in my speech. When I lobbied him when he was Secretary of State and a Minister, I found that he agreed with me more than he agreed with Mrs Thatcher, his leader at the time.
The grocery market ombudsman is a very good inclusion in the Queen’s Speech. In the previous Parliament, I introduced a private Member’s Bill on a supermarket ombudsman, which gained cross-party support and went into Committee. We unfortunately ran out of time, but there was a consensus. The Conservative party said at the time that such an office would be a priority in government, as did the Liberal Democrats and the Labour party, and here we are, two years down the road. I am a bit disappointed that it has taken two years for the Government parties to achieve action on a “priority”, but I welcome the fact that it has been achieved.
If we are to have an adjudicator for the code of practice, it is important that it has the right tools and the teeth to do the job. The adjudicator should not exist in name only. We should work together to continue that consensus to ensure that our suppliers, producers and consumers get a better deal out of the code of conduct by having an independent adjudicator to oversee it. I look forward to scrutinising and improving the Bill.
As hon. Members know, the code of conduct has been in place for a couple of years, which is why it was a priority to have an adjudicator. I want the adjudicator to be more proactive in looking at the industry—not just waiting for there to be victims of rogue trading in the grocery market industry. It is important to include in the legislation provision for a third party to bring a problem to the attention of the grocery market adjudicator.
I welcome that proposed legislation, but given that it has been two years since the last Queen’s Speech—Her Majesty has not visited Parliament in only three years of her 60-year reign—many people, including me, were expecting this one to be a beefy Queen’s Speech. However, it is paper thin. The hon. Member for Cambridge (Dr Huppert), who is not in his place, said that we do not need a legislative programme to create growth and do many of the things we need to do in the country, but then he mentioned Liberal Democrat taxation policies. I must remind him that getting taxation measures through the House needs a Finance Bill, so he was not quite correct.
It is important that we have a programme, particularly after what has been described—not by Labour Members, but by the Tory-friendly press—as a botched Budget and a Queen’s Speech that lacked any strategy for growth and job creation. I welcome the drop in unemployment announced today, but it is not a trend and we should not get carried away. As the Prime Minister said in Question Time earlier, we must do more to stop the increasing number of part-time jobs. The rate of full-time equivalent employment is falling not rising. Many people are moving from full-time employment into part-time jobs, and as a result their cost of living is rising and their standard of living falling. We need to address that issue.
I want to mention the Chancellor’s botched Budget. Like the hon. Member for Worcester, I have been visiting businesses in my community, including Conservative businesses that have never been particularly Labour friendly. They have told me that the measures on VAT have reduced their capacity to invest, and that is hurting them. The fact that the Foreign Secretary, the Defence Secretary and others have said that businesses need to work a little harder shows, unfortunately, how out of touch the Government are. Those businesses are telling me that they are working flat out, while their costs are rising. Some of those rising costs are the result of external factors—I acknowledge that energy and wholesale prices have risen—but many extra burdens are not as a result of that.
For instance, the Budget contained a 20% increase in taxation on the caravan and hospitality industry. Many hon. Members either abstained or voted for that measure and did not vote against it. Operators have told me that it is a huge burden, because 60% of their turnover comes from the sale of caravans. In the past, it was from that profit that they could reinvest in their parks—and they invested substantial sums. In my constituency alone, an estimated 300 jobs will go if that measure is introduced, because operators will be unable to reinvest. That is a tax on jobs. Before the election, the Chancellor, with his political hat on, talked about a tax on jobs, yet now he has created a tax on jobs by increasing VAT.
Mr MacNeil
The hon. Gentleman mentioned the vote on VAT. Was it a mistake, therefore, for Labour not to vote with the Scottish National party and Plaid Cymru against the rise in VAT from 17.5% to 20% and instead to abstain?
Albert Owen
The hon. Gentleman knows that I do not always vote with my party, and if he checks the record, he will see that I have voted for several SNP measures. If they are sensible, I will vote for them, but not many are. [Interruption.] I cannot speak for the rest of Labour, but I can speak for myself very comfortably in this House, and have done from both the Government and Opposition Benches.
It was wrong to increase VAT. It took money out of the economy at a time when we needed a fiscal stimulus. That is what business is telling me. That is why it is disappointing that the Budget increased VAT instead of addressing the situation. As the Institute for Fiscal Studies said, VAT is a regressive tax which most hurts the poorest and most vulnerable in our society. The Prime Minister and the leader of the Liberal Democrats said as much before the general election, yet when they entered government, they increased it. That is what turned small economic growth into a double-dip recession. That is what business tells me. I am willing to stand up and speak for businesses, especially hard-working businesses. It is a disgrace for senior Ministers to say that businesses should simply work harder, given that the Government are increasing taxation and taking money out of the economy, as a result of which people are not spending on their businesses.
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP)
Mr Speaker, I am mindful of what you have said about time and self-restraint when it comes to interventions. I would like to focus my remarks on something that the Queen’s Speech seems to have flown past: the cost of living. Right hon. and hon. Members are no strangers to my concerns about the cost of living, particularly in Na h-Eileanan an Iar, an island constituency that feels the impact of UK Government changes harder than most. Fuel duty and VAT are exacerbated in remote, rural and island communities and businesses face ever-increasing costs for services. However, we do welcome the rural fuel derogation, which will hopefully lead to a better differential between fuel prices on the islands and on the mainland. I hope that the pilot projects for the change of 5p a litre prove a success so that it can become permanent and be extended to other areas on the mainland. I am sure that people in Sutherland, Caithness, Argyll, the Isle of Skye and other areas would welcome it.
Another problem recently is that companies delivering to my island constituency have been charging my constituents exorbitant rates simply because we live there. I would like the Government to act on that and ensure that people are treated equally no matter where they live in the kingdom. Those companies frequently cite distance and difficulty as the reasons for the ever-increasing prices. Ever since I came to this House, I have fought to ameliorate the cost of living for my constituents and those travel costs. That is why I have chosen to speak on that in the Queen’s Speech debate. I feel that, sadly, there is too little in the Queen’s Speech that will bring down the cost of living for Scottish families.
I will start with fuel. I know that the Government have put off the 3p duty rise until August and brought in the fuel duty derogation, as I have said. The 5p is very welcome, but we still have the ever-present problem of the high cost of fuel in rural Scotland. Some drivers in my constituency currently spend nearly a quarter of their yearly income on fuel. Some fill up their tanks only once a week, but others do so several times a week. As long as the UK has the highest petrol duty in Europe, we will still have to pay that price. We have heard the Chancellor speak about dealing with that through the fair fuel stabiliser, but to date we have seen very little action on this subject, and I hope that the Government bring that forward as a second leg to follow the welcome rural fuel derogation.
Additionally, VAT adds to the burden of the cost of fuel, and that 20% hits our pockets hard. It is a shame that the Labour party, with a couple of honourable exceptions, did not support the Scottish National party and Plaid Cymru in the Lobby by voting against the VAT increase. Instead, they abstained. As we know, VAT is no respecter of ability to pay; it is a tax that hits need and hits lower incomes disproportionately.
The list goes on. The cost of energy in general is increasing at an untenable rate, and in my constituency that means increasing costs for the basics, such as light and heat. Sadly, my constituency leads the UK fuel poverty statistics. The Government say that we cannot spend our way out of a recession and that in theory the Government and the people have to tighten their belts to survive until something happens to bring the economy back on track. Some might say that that is a good microeconomic plan for growth that follows the example of how an individual saves money, but I question it as a macroeconomic plan. Here is a quotation:
“Unemployment, and fear that it will spread, drives down wages, incomes, and consumption—and thus total demand. Decreased rates of household formation… depress housing prices, leading to still more foreclosures. States with balanced-budget frameworks are forced to cut spending as tax revenues fall”.
That is a destabiliser that Europe, and the UK specifically, seems intent on adopting. That quote was from the Nobel prize-winning economist, Joseph Stiglitz, who once worked in the Clinton team but has now gone on to higher and greater things: he is on the Scottish First Minister’s council of economic advisers. In essence, his words are a stinging rebuke to the Prime Minister, who has said that the answer to debt is not more debt. I think he sees that from the wrong perspective. Surely the answer to hunger is not greater starvation, and that is what is happening to the economy at the moment.
What we need is to get people back to work. When the private sector fails to provide jobs, surely the Government should look at jump-starting the economy by investing to create assets, as I said when I intervened on the hon. Member for Gainsborough (Mr Leigh). I am saying not that we should spend recklessly for its own sake, but that we should invest in the country’s long-term assets and make wealth by going from cash to assets in the long term. Joseph Stiglitz argues that countries that do that will enhance their long-term growth. That is why in Scotland we have £320 million-worth of shovel-ready projects, from Ullapool pier to Glasgow university and the Clyde gateway to name but a few. We are ready to put people back into work—to stimulate, to prime the economy. Those projects are ready to go and ready to create jobs.
That would surely help the wider economy and the cost of living. Everything that involves getting people back to work sees a community become more active and people off the streets—undertaking productive activities and gaining and providing long-term assets for their communities. It means that locals see an increase in people making purchases, from eggs to clothes and, of course, iPads, which have become a common feature in the House, and that in turn travels up the economy, letting the world know that it is okay to start spending again. Confidence will grow and we will, I hope, see prices moving in the right direction. Rather than waiting for the mystical something that I mentioned earlier, we need to ensure that the tangible something is happening, increasing capacity in our economy.
Mr Speaker, you might be interested to know that new figures point to Scotland having avoided a double-dip recession. How is that possible? The figures are tentative, and of course I make the proviso that success has many fathers and failure is an orphan, but it looks like a possible success. There will be many claims on it, but it is potentially because the Scottish Government have been investing, where we can, and taking economic decisions, where we can, to help alleviate the cuts from the UK Government, following the example and advice of economists such as Joseph Stiglitz and making the right decisions for Scotland.
Scotland needs to be able to grow confidence in our economy, and the only way to do that is to get people back to work. Unfortunately, we currently have to ask permission to help ourselves, but by autumn 2014 we will not need to do so: we will have removed the brakes from Westminster on the Scottish economy, and Scottish growth and recovery from current troughs will be faster and more efficient.
Ms Eagle
There is devolution in Wales, where they make the choices on the basis of the budgets assigned to them by this Government. We have been very clear that we abandoned flex and stopped it, and Lord Adonis made it clear that, because times were so tough, we were not going back to it. The current Government have reintroduced it, while pretending that they are cutting fares, which they are not. It is simply not true, as Ministers claim, that this is just an additional cost to the taxpayer. As the National Audit Office has said,
“there is a risk that the benefit of the resulting increase in passenger revenues will not be passed on to taxpayers fully, but will also result in increased Train Operating Company profits.”
This is a Government who are not just out of touch with the impact of these fare rises, but unwilling to stand up to the train companies and enforce even the cap they claim to have set. This is indeed a Government who are in hock to the TOCs.
The pressure on commuters is set to spiral over the next two years because Ministers have decided that next year’s fare rises are to be even higher—up to nearly 12% on the current rate of the retail prices index. That is nearly 12% in both 2013 and 2014, and the tender documents for the new franchises reveal even more pain on the way. Bidders are promised even more freedoms on fares, including the right to introduce a new super-peak fare at even higher prices, hitting hard-pressed commuters still further. Franchise bidders are promised that they can cut daily services by up to 10%. They are no longer required to improve performance over the life of the franchise and no longer required to maintain the same level of CCTV on trains.
As we exposed last month, a programme of ticket office closures has already been signed off by Ministers, but staffed ticket offices are not a waste or an inefficiency that can be cut out with no resulting impact on service. The impact will be passengers cheated out of the cheapest fares, which are not always clearly advertised or available at ticket machines. Those without access to the internet, often those seeking work or older people, are unable to get the better deals and are left to pay over the odds for their train tickets.
Ministers continue to deny that they have signed off these closures. At the last Transport questions, the Minister of State assured the House that “they are not happening”. That is what she said, yet we have seen the e-mail from the Department’s own rail fares and ticketing review, warning the Department’s press office not to deny that ticket office closures have been given the green light because
“the Minister has already decided to approve some ticket office closures…it’s just not been announced yet.”
I have a further leaked document with me. This is from London Midland, the company set to be the first to implement a closure programme—for the first of the 675 ticket offices across the country that we know have been earmarked for closure. This leaked document reveals that London Midland will save £1.25 million a year by closing 86 ticket offices—profits before passengers. It also refers to a payment of £200,000 from the Department for Transport. Perhaps the Secretary of State—or the Minister of State—can confirm when she closes the debate whether the Department for Transport is actually paying companies to push through these closures? A reference in this document suggests that that might be the case. The Minister of State can tell me now if she would like to intervene. She does not want to, so perhaps the Secretary of State will address the issue at the end of the debate. The future of rail under this Government will be higher fares, more overcrowding, less CCTV and fewer ticket offices.
If Ministers are out of the loop when it comes to what is happening to rail fares and ticket office closures, they are even more delusional when it comes to bus services. Last month the Under-Secretary of State for Transport, the hon. Member for Lewes, told the House that what had been said about bus cuts was “entirely untrue”, and claimed that
“there have not been the cuts that the Opposition are so keen to talk up.”—[Official Report, 19 April 2012; Vol. 543, c. 485.]
It is not the Opposition who are talking up bus cuts, but the major operators. Arriva told my hon. Friend the Member for Nottingham South (Lilian Greenwood) that
“with the 20% reduction in BSOG, the ongoing cuts to the concessionary fare scheme, and a reduction in tenders across the UK, this has put enormous pressure not only on Arriva, but the bus industry as a whole.”
These are real cuts. Evening and Sunday services have been withdrawn on Route 32 in Wycombe. The Saturday service has been withdrawn on Service 84 in Maidstone. Route 1 in Watford, Route X9 in Milton Keynes and Service 50 in Guildford have all been cut. In fact, one in five of all supported services have been lost, and fares are spiralling. The Under-Secretary of State should stop coming to the House and claiming, as he did during last week’s Transport questions, that there have not been any bus cuts, because there have.
The Government need to understand that not just buses but lifelines are being cut: lifelines connecting young people with colleges, parents with child care, and older people with shops and services. The loss of a bus service can have a devastating impact on those without cars, and on those in rural areas in particular. It can have a devastating impact on their lives, their chances, and their capacity to get out and about.
Like the train fare rises, the bus cuts are a direct consequence of the Government’s decision to cut the councils’ funds for local transport by 28%, and their decision to remove any requirement for what is left of that money actually to be spent on transport. At the same time, the Government have cut the subsidies given directly to bus companies by a fifth. The result is that not only are there additional pressures on family budgets, but young people are simply unable to reach their full potential.
Ministers need not take my word for that. They can listen to the Association of Colleges, which has warned of a drop in further education enrolment. They can listen to the 60% of colleges that report a drop in transport spending by their local authorities. They can listen to the Joseph Rowntree Foundation, which has revealed that 40% of young people say that their decisions on post-16 education were influenced by transport, not by courses. When students travel, on average, between nine and 35 miles to get to college, and when 72% of them rely on the bus to get them there, it is no wonder that the loss of bus services will hit them and their life chances hard.
The hon. Member for Lewes told the House that he had held discussions with bus companies about the costs of travel for young people. No doubt they delivered the same message to him as they have delivered to me when I have raised our own proposals for a concessionary fares scheme for 16 to 19-year-olds in education or training. I believe that the bus companies want to be helpful, but Brian Souter of Stagecoach told me—
Maria Eagle
He is a controversial man. Anyway, he told me,
“we do not believe we could fund this as BSOG is being cut by 20% next year”.
Let us be clear about the fact that it is the policies of the two parties on the Government Benches that are preventing us from reaching agreement with the bus companies on such a scheme.
Ministers should consider the impact on school transport. They should listen to the Campaign for Better Transport, which has demonstrated that almost three quarters of local education authorities have made cuts in school transport. As a result, parents are struggling to afford the fuel costs of the school run, or to juggle their jobs with getting the kids to school. The Government’s actions are adding to the burden on families. They should also take account of the impact on older people, and listen to Age UK and the National Pensioners Convention, which have said in a letter to the Prime Minister:
“Cuts to bus services will hit the poorest and most vulnerable hardest—contrary to the Government’s message that the cuts will be socially fair”.
They are not fair. The Prime Minister may think that he has stuck to his election pledge to protect free bus passes, but up and down the country pensioners are asking, “What is the point of a free bus pass if there is no bus?”
For motorists, too, the Government have created higher costs. Despite all the pre-election promises, they have failed to tackle the cost of fuel. Those on average incomes have seen the cost of running their cars reach 13% of household expenditure, and it now accounts for a quarter of the monthly budgets of those in the lowest income group. That is before we consider the huge rises in insurance premiums in the past year—up 74% for a small family car. Yet all the Government’s claims to have cut fuel duty have been wiped out by a VAT hike that has pushed up the price at the pump by more than 3p a litre: the wrong tax at the wrong time, hitting families and businesses hard, and all because Ministers stubbornly refuse to stand up to the banks and repeat the bank bonus tax that we imposed in government.
So on rail fares, on bus fares, on fuel costs, this is a Government out of touch with the impact of the rising costs of transport. Fare increases are outstripping wage increases several times over—if people are fortunate enough to see a wage rise at all. There are families now paying more on commuting than on the mortgage or rent. That is the cost of living crisis facing households up and down the country—families feeling squeezed across the board, energy and water bills rising, the cost of transport rising, nothing in the Budget to help, and nothing in the Queen’s Speech to help. Whether it is the energy companies or the train companies, this is a Government unwilling to stand up to vested interests. We will do so.
Justine Greening
Thank you very much, Madam Deputy Speaker. That was extremely helpful.
We have taken action to limit the rise in rail fares, but all in this House know that if we are really going to tackle the underlying reason why rail fares are pressured to go up year after year, we have to make the railway system that we inherited from Labour, which is costing us £3.5 billion a year more than it needs to, work more efficiently. That is the best way of bringing a long-term end to the era of inflation-busting increases in regulated fares.
I have to say that one of the most depressing things in this House is to hear Labour Members raise a whole load of problems but provide no solutions. Making the railway industry work more effectively together is another area where I have heard no solution from the hon. Member for Garston and Halewood (Maria Eagle). I recall that when I delivered my Command Paper oral statement she said, “I will be setting out our alternative shortly,” but she has never done so. I will not even talk about the response to the flex, because the Minister of State, Department for Transport, my right hon. Friend the Member for Chipping Barnet (Mrs Villiers), demolished the hon. Lady’s argument so comprehensively that there is no need to go over that, compounding injury with further insult. In addition, we are, of course, making huge investments in rail and road. Those things will not only tackle some of the challenges we face today, but will build our country for the future.
On fuel duty, my hon. Friend the Member for Rossendale and Darwen (Jake Berry) and my hon. and learned Friend the Member for Sleaford and North Hykeham (Stephen Phillips) made vital points about why it is important that we make sure that motoring remains affordable, and about some of the pressures on motorists arising from the high cost of fuel. We have all seen the oil price go up across the world and how that has fed into the price of petrol at the pumps. It is one of the reasons why, last April, we cut fuel duty, why we scrapped Labour’s automatic fuel duty escalator and why we have postponed the planned rise this January to August, as well as cancelling the next planned increase. As a result of that action from the Chancellor we have eased the burden on motorists by £2.5 billion this year. In fact, over the coming two years it will add up to £4.5 billion in motorists’ pockets that otherwise, under the previous Government’s plans, would have been in Treasury coffers.
Mr MacNeil
I am grateful to the right hon. Lady for giving way. Is there any news on the fair fuel stabiliser coming down the tracks at all?
Justine Greening
The hon. Gentleman will be pleased to know that we have done that. He knows that we introduced it in the Budget last year and that it was partly funded by the tax rise for oil companies. I know that he welcomed the rural fuel duty discount pilot and I was pleased to get that from him. It is an important pilot and we will see how it progresses over the coming months and years.
Let us make a comparison with what would have happened under Labour’s fuel duty plans. Labour would have had motorists paying £144 more and the average haulier would have been £4,400 worse off if we had not taken the action we have taken. When it comes to prices at the pumps, no one will forget Labour’s record: 12 increases in fuel duty while they were in office and a further six fuel duty hikes planned for after the election.
Let me address the very important issue of buses. I listened intently to the speech by the hon. Member for Darlington (Mrs Chapman) and I am happy to meet her to talk about her local issues. She asked whether we could have a Transport for London-type approach in the rest of the country, but local transport authorities have had the power to impose such a model locally since 2000 and the flexibility to do so should they want to do that. The Government think it is up to local authorities, rather than Whitehall, to take that decision, but I am very happy to talk to her about her particular local issues.
We have protected capital spending on transport but have also had to take difficult decisions regarding the bus service operators grant. Nevertheless, I am delighted that we continue to make improvements in bus services, not least through the £70 million for the better bus area fund, the £31 million for green bus funding to cut carbon emissions and support British jobs and, of course, the £560 million of local sustainable transport fund money that funded 35 successful bids in part, including for improvements to bus services. Some £200 million has been spent on local major bus schemes. There is £20 million going to community bus services and £15 million supporting the roll-out of smart ticketing technology across England’s bus fleets. There are lots of good things going on in buses and we are still taking the steps needed to tackle the fiscal deficit left by Labour.
To conclude, whether we are talking about an income tax cut for 24 million people, taking 2 million of the lowest-paid out of income tax altogether, freezing council tax, helping home owners with their energy bills or limiting increases in rail fares, the Government recognise the pressures on the cost of living. Wherever we can we will continue to take action to help further, but there is no getting away from the fact that we are operating in a financial straitjacket as a result of the deficit. As my hon. Friend the Member for Worcester (Mr Walker) pointed out, there is no magic wand we can wave; we have to work hard to sort out our public finances and get our economy back on track.
Perhaps the greatest tragedy of the Labour years in office was what we got for all the money that was wasted and all the debt that was racked up. Nothing. In addition, there was an infrastructure deficit that was as bad as the financial deficit. Long-term security of energy supplies? Nothing. Low-cost railway? No. Reform of the welfare system? Nothing. Sustainable pensions? Nothing.
The reality is that tackling the financial deficit is one of the problems the Government need to solve, but we will make sure that we help out on the cost of living wherever we can as we rebuild our country. It would be fundamentally wrong to continue with Labour’s failed policy—to spend more, borrow more and pass the buck for our debts to our children and the next generation.