Equitable Life (Payments) Bill

David Rutley Excerpts

Wednesday 10th November 2010 Commons Chamber

[David Rutley (Macclesfield) (Con)]

Like many others hon. Members, I have had a huge amount of correspondence on this issue. I have also met many of the policyholders and heard their sad tales and the way in which this drawn-out saga has affected their lives. I congratulate the Equitable Members Action Group on its hard-fought campaign and commend the great work that has been going on in the all-party parliamentary group. That has given many of us in this House, particularly new Members, an awareness of the situation. None the less, it has been a drawn-out saga, and I am delighted that the Minister has taken very speedy action to address the outstanding issues. He has made this Bill a priority and put forward £1.5 billion to assist with compensation at a very difficult time for the economy. Those are genuinely positive developments. As my hon. Friends the Members for Harrow East (Bob Blackman) and for Stratford-on-Avon (Nadhim Zahawi) have said, we have also had clarity on the tax treatment, which is welcomed by all of us.

I congratulate the Minister on his quick choice of National Savings & Investment to lead forward the speedy implementation. At the time of his ministerial statement, I remember his assuring the House that there would be a clear communication plan to help him inform policyholders on developments. I continue to urge both him and his Treasury officials to learn from previous compensation schemes to ensure that this one has flawless implementation. That is what the policyholders deserve after years of waiting. We cannot let them down at the point of implementation and operation.

Although it is essential to have clear information available through e-mails and websites, we must not forget the age profile of the people whom we seek to help. They are, typically, older—much older—and will need written communication and properly manned contact centres to ensure that they get the customer service that they need.

[Richard Graham (Gloucester) (Con)]

Does my hon. Friend not agree that it is a real scandal that no settlement was made during the long years of the previous Government while many thousands of innocent victims, including my mother, died, and that that should remain on the previous Government’s conscience for ever?

[David Rutley]

I agree. It is a tragedy that this has taken this long. Today’s debate has been reasonable, but I felt let down by the uncharacteristic tone that was struck by the hon. Member for Nottingham East (Chris Leslie).

Comprehensive Spending Review

David Rutley Excerpts

Thursday 28th October 2010 Commons Chamber

[David Rutley (Macclesfield) (Con)]

This is a vital debate, and the comprehensive spending review and its delivery will define this Parliament. The spending review charts a course that tackles the record budget deficit that we have inherited, it rebalances the shape of the economy and it sets out a path that will lead to lasting, sustainable economic growth.

To achieve sustainable growth, we need to rebalance the economy. That will mean less reliance on the public sector. It is unsustainable for public spending to account for nearly 48% of GDP, which clearly crowds out investment from the private sector. That is why the Government are right to bring public spending down to nearer 40% of GDP by the end of this Parliament.

The rebalanced economy must also be less dependent on financial services. In the last decade, the banking sector was allowed to become far too dominant. We need to ensure that future economic growth is more broadly based and not as closely linked to the performance of the City. Instead, we need to encourage the growth of high value-added manufacturing and high-tech industries. AstraZeneca and its skilled work force is vital to Macclesfield’s local economy, and it shows that we can still successfully make things in this country and compete in global marketplaces such as pharmaceuticals. It is good to see that the Government are creating the right economic conditions for the next generation of global competitors and providing support for the all-important small and medium-sized enterprise sector.

Rebalancing the economy also means that there will need to be a greater focus on the regions outside London and the south-east. There has been much talk about that in the Chamber today. There is no question that the north-west will benefit from the strong resurgence predicted in the private sector. Over the past decade in the north-west, the number of jobs in the public sector has grown much faster than in the private sector, and since 1999, the number of people employed in the public sector has grown by 100,000—a massive 17% growth. In contrast, over the same period, job creation in the private sector has broadly flatlined, only increasing by 24,000—just 1%.

Recent announcements in Macclesfield will sadly lead to job losses. The Cheshire building society is closing down its back-office operations, and more recently it has been announced that nearby BAE Woodford is to close. However, we are working hard to strengthen the local economy. It will clearly benefit from much stronger growth in the wider economy, which is why it is encouraging to see private sector job creation improving, with a 308,000 increase in the UK over the past three months. The increase in the north-west was 28,000, and for the last year, that figure comes to 40,000. That is encouraging news.

I am delighted that the Government are looking to build on those positive developments. I fully support the decision to scrap Labour’s tax on jobs, because it will help businesses to save £340 million in the north-west. The Government have gone further by giving new businesses new national insurance holidays outside the south-east worth £5,000 over the next three years, which could help up to 69,000 businesses in the north-west. The regional growth fund will also help to stimulate growth and provide sustainable private sector jobs in the north-west, and the new local enterprise partnerships, such as the Cheshire and Warrington LEP in my area, will put in place private sector-led recovery plans to stimulate economic growth, not just in major metropolitan areas such as Manchester and Liverpool, but in Macclesfield, east Cheshire and right across the north-west.

Labour’s opposition to the CSR shows how out of touch it is with reality. The only path it seems to offer is to ignore the deficit, to continue to borrow, to spend and to rack up yet more debt. That is a risk that we on the Government Benches are not prepared to take. We are taking the right approach to dealing with the deficit, but clearly there is more work ahead, and I think that we can draw inspiration from one of the great entrepreneurs in Macclesfield’s history—Charles Roe, from the 18th century—whose memorial in Christ church reads:

“Difficulties to others were incitements to action in him”.

We would do well to adopt that same spirit in responding to these challenging times, rather than the bleating we hear from the Labour Benches.

--- Later in debate ---

[Mr Hanson]

The hon. Gentleman was not a Member in March, but if he had been, he would have seen our proposals to make efficiencies in policing, for which I was responsible at the time, of about £1 billion. He would have seen proposed efficiencies through savings on back-office staff, police procurement, public sector pensions and pay caps—a range of issues. The Conservative and Liberal Democrat policy, which has been brought before the House today, and which, by the way, we have not had sufficient time to debate, has been shown to be misguided. The people who will find it hard to get back into work will be hit hardest. [Interruption.] The right hon. Member for Rayleigh and Wickford (Mr Francois) has not even been in the Chamber most of the afternoon. He will whip Conservative Members to vote against child tax credits, child trust funds and the health in pregnancy grant, but he will not sit here and listen to the arguments about those issues.

There will be cuts in working tax credits for child care and a freeze on working tax credits, and people on jobseeker’s allowance will be punished. As my right hon. Friends the Members for Barking (Margaret Hodge) and for Lewisham, Deptford (Joan Ruddock) and my hon. Friends the Members for Hackney North and Stoke Newington (Ms Abbott) and for Hammersmith (Mr Slaughter) said, cuts in housing benefit will exacerbate the problem. Women, children and the poorest in society will bear the brunt of these cuts.

As my hon. Friends the Members for Easington (Grahame M. Morris) and for Middlesbrough South and East Cleveland (Tom Blenkinsop) pointed out, the regions in the north of England will be hit the hardest, with the loss of the pregnancy grant, the ending of contributions to the child trust fund, the scrapping of the savings gateway scheme, and the cutting of child benefit, which, as my right hon. Friend the Member for Croydon North (Malcolm Wicks) so eloquently pointed out, is an unfair approach to tackling the deficit. My hon. Friend the Member for Hammersmith also said that that will raise serious issues. Even today the Chief Secretary to the Treasury stated very strongly that there was not a problem in the Treasury with enforcing these policies. Well, let us find out downstream whether there is a problem when we see how he ensures that there is fairness between those who earn a top rate of tax, with two incomes, and those who earn a lower rate of tax, with one income. I will be interested to see how that works in due course.

The poorest 10% of the population will be hit hardest by the deficit reduction plan proposed by the Conservatives and the Liberals. Members need not take my word for it—it comes from the Treasury’s own figures in the Red Book. Massive cuts to public spending will threaten vital local services, which my hon. Friend the Member for Stockton North (Alex Cunningham) mentioned with reference to the fire service. Capital spending benefits the private sector most, because it is not the public sector that spends money on building things in the economy—the private sector does that.

[David Rutley]

rose—

[Mary Macleod]

Will the right hon. Gentleman give way?

Comprehensive Spending Review

David Rutley Excerpts

Wednesday 20th October 2010 Commons Chamber

[Mr Osborne]

The right hon. Gentleman is obviously—I do not hold this against him—a centraliser rather than a localiser. He would like all these decisions to be taken by people doing my job and directed to elected local councils through grants. We take a different approach. We are sweeping away a lot of these grants. I have to say however—I am sure that this will be of interest to people in his constituency, as I know something of the nature of it—that the increase in the child tax credit will help. We have also, at the insistence of the Secretary of State for Communities and Local Government, put a great deal of resources into the Supporting People programme, which is particularly important in areas such as that represented by the right hon. Gentleman.

[David Rutley (Macclesfield) (Con)]

Does the Chancellor agree that the investments spelled out today in the regional growth fund will go a long way to help underpin growth and private sector jobs in the north-west, which we both represent?

[Mr Osborne]

As my hon. Friend is my local MP, I had better agree with him. His predecessor—people will remember the former Member for Macclesfield—was passionate about supporting manufacturing and I am glad that the torch has been passed to a new generation there. My hon. Friend is right. We need to see a private sector recovery and we need to see growth and investment in the north-west of England. We want to get away from the economy that we have seen over the past 10 years, where all the growth was focused on one sector and where, from memory, for every 10 jobs created in the south-east of England by the private sector one job was created in the midlands and the north. That is not a sustainable economic model.

Finance (No. 2) Bill

David Rutley Excerpts

Monday 11th October 2010 Commons Chamber

[David Rutley (Macclesfield) (Con)]

I think the phrase is, “Follow that.” What an amazing tour de force. I congratulate my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg) on his great remarks. I should like also to congratulate the hon. Member for Nottingham East (Chris Leslie) on his elevation and my hon. Friend the Member for Skipton and Ripon (Julian Smith) on a wonderful maiden speech. He represents a great part of the world, and I am sure that the people there will be well satisfied that he represents them well.

As has been discussed, the main purpose of the Bill is to enact a series of technical tax measures inherited from the previous Government. It is a wide-ranging Bill, and it is part of a package of measures that this Government are having to take to tackle the economic crisis. The first Finance Bill, this Bill and the comprehensive spending review will each assist us to address the economic challenges facing our country.

I shall begin by focusing on the clauses relating to Her Majesty’s Revenue and Customs. It is important that the necessary improvements be made to help income tax to be more effectively deducted at source, as set out in clause 8. We need to support HMRC in doing a better job of collecting the taxes that are owed. That is a critically important job, given the state of our public finances. That said, however, it is not just the legislation that needs to be updated. It is clear that HMRC’s senior management team has more work to do, given the recent huge problems with PAYE.

The Treasury Committee held a meeting in September to review HMRC’s operation of the PAYE system. Like other members of the Committee, I had the chance to probe the issues surrounding the new computer system, and the announcement that 1.4 million taxpayers would be receiving letters informing them that they had underpaid their taxes. The hearing also highlighted the much broader issue of HMRC’s mind-boggling backlog of 18 million open cases of overpayment and underpayment in previous years. Dealing with that must be a major priority. The senior management team will simply have to improve its communication skills, enhance the so-called customer journey—which for too many has felt like a short trip down a dead end—and prove its new system’s capability as it moves to full roll-out. Based on my postbag, and on conversations that I have had with HMRC staff in Macclesfield, I believe that much more work is required to improve taxpayer confidence in the organisation and to raise employee morale across its operations. I welcome the clauses in the Bill that will help HMRC to do its job, but these other challenges must be addressed to enable the Government to achieve the objectives that they have set out in their tax measures.

The challenges facing HMRC would not be so huge or so critical if the public finances were not in such a mess, however. That is why it is important to examine the context in which the Bill is before the House. This country’s record deficit has repeatedly been highlighted in the debate. It is not the product of a mythical global economic crisis. Even before the credit crunch, there was clear evidence that spending and the burden of tax were too high. The truth is that the previous Government were caught completely flat-footed as they faced the economic crisis. The scale of the challenge has now been starkly set out, and it is time for the coalition Government to pay back Labour’s debts.

It is against that backdrop that the Chancellor announced his emergency Budget, which included a clear fiscal consolidation plan that placed a priority on lowering spending, combined with tax measures to reduce the deficit and to reform the tax system. Clearly, this Bill has a role to play in that regard. Strong medicine is needed, and it must be taken in the months and years ahead. That is what the British public expect; they recognise that it must happen. The detail will be spelled out in the comprehensive spending review in a few days’ time. Radical welfare reform must be an essential part of the plans, and tough decisions on tax have also been made, with VAT having to be increased to 20% in January.

All that is necessary to get the public finances back under control and to get through the economic crisis, but we need to go further and create the conditions for sustainable economic growth that must be based on an expanding private sector. Colleagues have mentioned that in their speeches today. Growth comes from the private sector, not the public sector, and restoring national competitiveness must be a priority. It will be critical to give greater confidence to small and medium-sized enterprises, which form the backbone of our economy and are the engine of job creation. That is why I am pleased to support the Bill, as clause 13 sets out help for SMEs with tax relief for research and development.

It is good that the Chancellor is also taking forward other critical measures, including scrapping Labour’s tax on jobs, and reducing corporation tax year on year for four years, down to just 24% in 2014. It is good to see that Britain is definitely open for business once again, as it should be. All that must be underpinned by a change in direction in economic policy making. This is about asking the right questions, and about taking a new approach to getting the best possible answers.

Over the past 13 years, the previous Government and many in the media were simply asking the wrong questions. They wanted to know, “How much can we spend on this, and what steps are you taking to protect spending on that?” No one asked whether we could afford a particular policy, or how much it would increase the burden on taxation. Coming from the world of business, I find it obvious that a different question must be asked by most companies in competitive marketplaces day in, day out. The way in which it is asked may vary from business to business, but the substance of the question remains the same: “How can we give our customers more for less?”

That is not a question that businesses are ashamed to ask. It lies at the heart of how they compete and how they provide worthwhile work for their colleagues: it is ingrained in their culture. However, although some in the public sector have sought to take the question seriously, it has not been heard above the demands to spend, spend, spend that have come from Opposition Members. It is a tragedy that it has taken an economic crisis of this scale to enable it to be heard.

I am pleased that the right questions are being asked now, and that legislation such as this will help to address the challenges that we face. Behind the questions, however, there must be a new approach if we are to obtain the answers. Faced with big challenges following the general election, the Conservatives and the Liberal Democrats made a bold decision to work in coalition. That is not something for which I hoped at the time of the election, but it means that there must be give as well as take. It means that both parties must get around the table, and the evidence so far suggests that it has led to radical and bold solutions as both parties seek to work in the national interest.

I believe that, given the tough challenges that lie ahead, that approach will have wider applications. I believe that it will define new, creative ways of working between Government Departments, between businesses and Government, and between local councils and community groups. It is about people working together in new ways in the interests of their country and, indeed, their communities in this most difficult of times. We see it working in Macclesfield as residents, community groups, local businesses and Cheshire East council work together, strengthen the local economy and revitalise the town centre. Our new treacle market is a tremendous success, and I recommend it to the House. It is held on the last Sunday of every month, and I suggest that anyone interested come along.

At least the Bill sets out business initiated by the previous Government that needed to be progressed, but it is sad to note that not much more was worth progressing, and that so much was left undone. A complete mess was left for the present Government to clear up, and today’s evidence suggests that the Labour party, not notable for the huge number of its Members present, has nothing much to add to the debate. Faced with such challenges, unlike the coalition Government, they have chosen denial—or, as today’s attendance suggests, avoidance—rather than a constructive dialogue.

I am no psychoanalyst, but I understand—and I am sure that Members will be interested to hear this—that denial is a defence mechanism used by a person who is faced with a fact that is too uncomfortable to accept. Such a person will insist that something is not true despite overwhelming evidence to the contrary, and will often behave in ways that others see as quite bizarre. We see such behaviour on a regular basis on the Opposition Benches. To make matters worse, the Opposition are in double denial. They cannot see the scale of the crisis, and they are not willing to accept that they are responsible for it.

We might have hoped that things would improve with the birth of new-generation Labour—although that too is not obvious from today’s debate—but we have heard nothing to support that hope today. For once I agree with Alastair Campbell, who said over the weekend that what Labour needed was a proper economic narrative. We on the Government side of the House have been saying that for a long time, and I am pleased that the hon. Member for Bassetlaw (John Mann) joined us this afternoon.

I support the Bill, and support the work that the Government are doing in tackling the deficit. Difficult challenges and uncomfortable decisions lie ahead, but the right questions are finally being asked, and the Government are making important progress in the most difficult of circumstances.

Equitable Life (Payments) Bill

David Rutley Excerpts

Tuesday 14th September 2010 Commons Chamber

[David Rutley (Macclesfield) (Con)]

Thank you for giving me the chance to speak in this important debate, Mr Deputy Speaker. I, too, congratulate my hon. Friend and neighbour, the Member for Congleton (Fiona Bruce), on her excellent maiden speech. I can assure the House that she has replaced Lady Ann Winterton—not Ann Widdecombe, as was asserted earlier—who is a real legend in this party. I would also like to join my hon. Friends in congratulating the Financial Secretary on the sheer speed and pace at which he is seeking to address the urgent matters before us. I knew him for many years before I came to the House and I would have expected nothing less than the positive approach that he is taking.

The story of Equitable Life policyholders is without doubt a tragic one. I believe it was my hon. Friend the Member for Chatham and Aylesford (Tracey Crouch) who suggested that it was like a Shakespearean tragedy. Well, I am half Danish and am more familiar with some of the Viking sagas. What the policyholders have been through would fit well into any epic tale. It is like the famous Njáls saga with its series of gruesome feuds. Similarly, today’s story involves hardship and heroic campaigning—in this case by EMAG—but this tale is now in desperate need of a fitting conclusion.

I have not followed this case as long as other longer-serving Members, and I do not claim to have the same level of expertise on all the details that they possess. What is clear, however, is that maladministration has occurred, policyholders have suffered and compensation is due. It is absolutely right that this new coalition Government should respond, as they will. Sadly, the issue is yet another part of Labour’s lamentable legacy—this time, not the cost of the record budget deficit, but the price of an unmet moral obligation that needed to be addressed.

I am sure that hon. Members will agree that policyholders have shown real courage and that EMAG has conducted a hard-fought and professional campaign. Like many other Members, I have met affected policyholders in my advice surgeries. I have heard about the hardships they had to endure. I have received well-argued letters and e-mails setting out their case both during the general election campaign and now as the Member for Macclesfield. It is the strength of their case and their campaign that has encouraged me to learn more about the situation, to sign the EMAG pledge, as many of us have, and actively to stand up for their cause. What I am even more proud of is the fact that the strength of their argument won the attention it deserved from the Conservative Front-Bench team and the Liberal Democrats’ leadership before the general election. I am delighted that, working together, the new coalition Government have honoured their commitment and urgently brought this legislation before the House.

I welcome the Bill. It provides parliamentary authority for the payments schedule and scheme. It is a vital step, which I am sure will be widely welcomed on both sides of the House, as it has been welcomed today, but policyholders in Macclesfield and throughout the country want answers to important outstanding questions. How much will be paid? How should the scheme be designed, and how will it be administered? These questions now need to be fully addressed to ensure that policyholders get the best possible outcomes for their cases.

On the size of the payment, it is, sadly, a reality that in this challenging economic climate, the level of compensation will have to take into account the demands on the public purse. Like others who have said it repeatedly today, I urge the Financial Secretary to continue to consider the views of the parliamentary ombudsman in determining the final figure.

[Andrew Bridgen (North West Leicestershire) (Con)]

Does my hon. Friend agree that the majority of Members and the majority of the public out on the streets will not believe that a 10% payout even on a £5 billion liability is either a fair or equitable result for policyholders?

[David Rutley]

My hon. Friend makes an excellent point. It is vital for Ministers to take that into consideration and find the right level of payment in this difficult situation.

I also urge the Financial Secretary to continue to take a transparent approach to explaining the rationale used to calculate the final compensation figures. Such transparency is critical and I am sure that my hon. Friend will agree that it should not be allowed to get lost in the detail of the wider spending review as it gets reported.

I also congratulate my hon. Friend on creating an independent commission to advise on the allocation and the design of the payment scheme. It is another positive step forward and—like many others, I am sure—I am pleased to hear that the Select Committee on Public Administration will fully review the commission’s conclusion when it reports in January. It is a vital step.

I am keen to seek further assurances from my hon. Friend that his officials will provide the necessary action for the administration of the scheme when payments are made in the middle of next year. Given the likelihood of a large number of appeals, this will not be a simple task. The scheme must be designed to accommodate the needs of these particular policyholders, whose average age is, I think, 78. It must be clearly communicated—not just on websites or via e-mails, but via well-written, high-standard communications and effective, well-manned telephone contact centres.

As I have discussed with the Financial Secretary, the administrator must learn from the launches of other Government schemes. Many will remember the agonies associated with the Rural Payments Agency and, more recently, HMRC’s problems with new PAYE systems, which are fresh in our minds. We need to ensure that the Equitable Life scheme does not become another example of the administrative chaos that was the trademark of the previous Government.

Frankly, I am disappointed not to have heard an apology from Labour Members, but I am not surprised, as they have failed to apologise for the huge budget deficit and now it is the turn of Equitable Life policyholders. It is all part of a depressing pattern of denial.

I conclude by congratulating the Financial Secretary once again on the speed with which he has tackled this long-running saga. I hope that in addressing the concerns of the policyholders, he will help those in real need and—just as at the end of Njáls saga—bring about a meaningful reconciliation. It is what the policyholders deserve after the epic trials they have had to endure.

PAYE Contributions

David Rutley Excerpts

Wednesday 8th September 2010 Commons Chamber

[Mr Gauke]

On the last point, yes, interest is applicable and a statutory duty. We are not in a position to assess the costs to HMRC. It is worth putting the matter in perspective by saying that most people have had their tax calculated accurately through the PAYE system, and that more will receive repayments than will have to pay extra. People should wait until they receive their letters. It is worth pointing out also that the problem of underpayments has existed in previous years, and many hundreds of thousands of people have had to repay tax through the PAYE system, so the phenomenon is not entirely new, although the scale is somewhat greater now.

[David Rutley (Macclesfield) (Con)]

Have the appropriate risk assessments been undertaken of other key HMRC systems that were set up under the previous Labour Government to ensure that we do not have to clean up other messes such as this in future?

Equitable Life

David Rutley Excerpts

Thursday 22nd July 2010 Commons Chamber

[Mr Hoban]

The hon. Gentleman should listen more carefully to statements given in the House. The independent commission is at arm’s length from the Treasury and will be responsible for designing the payment scheme. I would have thought his constituents would welcome that independence and transparency, which was not evident in the ideas put forward by his colleagues.

[David Rutley (Macclesfield) (Con)]

Can the Minister provide more detail on the advice and guidance that will be provided to those affected by this sad situation, following his announcement and given the extreme passage of time?

[Mr Hoban]

My hon. Friend makes an important point. Some of the changes that I want to make to the process of ensuring that Equitable Life policyholders receive justice are to do with speed and transparency. More information will be available to policyholders on the Treasury website, where they will be able to see some of the work that Sir John has done and the letter that Towers Watson provided to us. There will also be questions and answers on the website to help address their concerns.

Finance Bill

David Rutley Excerpts

Thursday 15th July 2010 Commons Chamber

[Stewart Hosie (Dundee East) (SNP)]

I rise to speak to amendment 15 in my name and that of my friends. At face value, the increase in insurance premium tax in the Budget did not cause a huge stir, but as its consequences began to be felt, many representations were made by consumers and the industry. On balance, it is wise that we should have a report on the likely consequences of this tax rise on individuals, families, consumers and the sector. A number of concerns and predictions have been voiced. Eric Galbraith, the chief executive of the British Insurance Brokers Association, said that its research

“demonstrated that businesses and consumers were reducing insurance cover as a result of the recession”

and that

“we are concerned that increases to insurance premiums as a result of IPT could lead to even further underinsurance or even a lack of insurance protection. The last thing people need in a financial crisis is a higher insurance bill”.

That makes sense, given that taxes elsewhere, not least VAT, are going up. The insurance industry is worried that increased premiums may tempt people completely to stop insuring their homes, holidays or travel. Already, according to research by moneysupermarket.com, only one in five travellers always cover every trip they take here or abroad.

One consequence of underinsurance or non-insurance is that the number of illegal uninsured drivers is on the rise. According to the Motor Insurers Bureau, they already push up the average car premium for everybody else by £30 a year. If more people are underinsured or have no insurance at all, the premiums of those who pay the minimum third-party insurance will be pushed up even further. That is another burden that people really cannot do with in the middle of this recession, when times are tough. As the right hon. Member for East Yorkshire (Mr Knight) has made clear, in certain parts of the country, where the car is a necessity and people are honest, such premiums will be paid again and again. There will be a lot of hits to the honest insurer as a result of non-insurance elsewhere.

The Association of British Insurers has responded to the Budget by saying:

“Raising IPT is a direct tax increase for the vast majority of people who sensibly protect themselves and their families with insurance. This is regrettable and could have serious unintended consequences if it puts off consumers from protecting their homes, cars, holidays and everyday living.”

On uninsured trips, apparently some 2.9 million trips are made each year without adequate cover. Peter Hayman, the director of P J Hayman, expects that number to rise as more people opt to economise and use “free” cover as the cost of IPT increases. Perry Wilson, the founder of Insure and Go, has said:

“Our research suggests that the UK travel insurance industry receives over half a million claims for medical problems a year and nearly 400 000 for lost or stolen baggage. This tax rise will only act as a deterrent to those who sensibly want to insure themselves against these risks”.

Of course, the cost of not having insurance in certain circumstances can be extraordinarily expensive.

[David Rutley (Macclesfield) (Con)]

The hon. Gentleman makes an important point about underinsurance, as have other Members. Does he agree that this should not be just about the potential increase in IPT, but should also be about what we can do in terms of product design? Surely the onus should be on insurers to come up with products that help people, particularly younger drivers, to avoid this challenge. For example, they should look at opportunities for pay-as-you-go insurance and other possibilities. The argument is not just about IPT, but is about other product-related challenges and what can be put forward to mitigate the problems of underinsurance.

[Stewart Hosie]

I am a great supporter of innovative product design, marketing and pricing strategies, and I hope that all those things happen, but we are debating an amendment to the Finance Bill in which the Government are putting up IPT. I shall not strain the limits allowed by the Chair, but shall stick to the amendment and what is in the Bill, while supporting any innovation that the insurance sector, which is massively important in Scotland, might bring forward.

There is a deterrent effect on those who wish sensibly to insure themselves against many risks, and that effect will be enhanced as the cost of insurance rises. There are also specific consequences for individuals. Some 1.2 million people—about one in 20 motorists—regularly drive uninsured, and honest motorists pay the £30 premium I have mentioned, which is likely to go up. If someone is caught driving without insurance, the police are entitled to remove their vehicle from the road and charge them for the cost of transporting, storing or scrapping it. However, some cars may be worth less than the cost of insurance and there will be a burden on the public purse as a result of that removal, storage and scrapping of vehicles if people choose simply to abandon them.

People might also cut corners and opt for the “free” travel insurance offered by credit card companies, which might leave some travellers without the necessary levels of cover and might be costly in the long term. I do not intend to take up much of the Committee’s time on this issue, as this is a probing amendment, but this issue is more serious than I had initially imagined. I look forward to hearing the Minister’s comments on that last point in particular, because if people decide not to pay insurance premiums and instead settle for the “free” cover offered by their credit cards, they might be underinsured in certain circumstances. Also, business might be driven from the traditional, successful, good insurance companies, and I am conscious of what the net loss of jobs, revenue and profitability in that sector might be. So, putting up IPT will have consequences for the sector, for individuals and for jobs. All these points need to be answered properly and considerable comfort needs to be given that we are not going to turn into a nation that says, “We can’t afford insurance; we’ll do without it and let other people pick up the tab.” I shall listen very carefully to the Minister’s reply.

Oral Answers to Questions

David Rutley Excerpts

Tuesday 13th July 2010 Commons Chamber

[David Rutley (Macclesfield) (Con)]

6. What representations he has received from employers in the north-west on relief from national insurance contributions for new businesses; and if he will make a statement.

[The Exchequer Secretary to the Treasury (Mr David Gauke)]

The holiday on national insurance contributions will support enterprise and private sector job creation. Representations from employers have been supportive of reducing taxes on jobs, and 400,000 new businesses are expected to benefit from the holiday on employer national insurance contributions, including about 70,000 in the north-west.

[David Rutley]

It is clear that this important Budget proposal will help to generate much-needed jobs for small businesses. Does my hon. Friend agree that this is a much better way of supporting job creation in places such as Macclesfield and the north-west, and in other regions, than relying on the public sector, as the Labour party did?

[Mr Gauke]

My hon. Friend is right. We cannot rely on the public sector for growth, simply because we have run out of money.

Economic Affairs and Work and Pensions

David Rutley Excerpts

Tuesday 8th June 2010 Commons Chamber

[David Rutley (Macclesfield) (Con)]

Thank you, Mr Deputy Speaker, for inviting me to address the House this evening. We have already heard contributions of real quality from my hon. Friend the Member for Orpington (Joseph Johnson) and the hon. Member for Chesterfield (Toby Perkins). I hope that I can fulfil the same degree of quality in the words that I say.

Being elected to represent the wonderful constituency of Macclesfield is the greatest honour of my career. I will seek tirelessly to serve the people of Macclesfield and to honour the trust that they have put in me. Sir Nicholas Winterton is like few other predecessors—he could hardly be described as shy, even when he was retiring. He served as a hard-working constituency MP in Macclesfield for more than 39 years and, being elected in my 40s, I can assure the House and Macclesfield residents that that is a record I will not break.

At the start of the campaign, I canvassed one very short street in which three people told me about the way in which Nick Winterton helped them with real problems in their lives. That is the sort of constituency MP he was. In the House, he was a strong, independent parliamentarian, who gave long and legendary service. He was respected on both sides of the House and by many others who work here. Whether I am in Macclesfield or in the House, people constantly say to me, “You’ve got a hard act to follow and big shoes to fill.” Well, I wear size 11 shoes, so I am off to a reasonable start, but I have a lot to learn. I wish Sir Nicholas and Lady Winterton a long and fulfilling retirement.

Macclesfield is famous for silk. At one point, it was the world’s biggest producer of finished silk, with more than 100 mills and dye houses in the constituency. The fine silk tie that I am wearing was woven in Macclesfield and I am proud to wear it. Today, revitalising Macclesfield town centre is a real priority. Local residents and traders will be consulted on how that should be done in the months ahead, but further development must celebrate the town’s rich heritage and ideally be linked to the creation of a national silk centre in Macclesfield, where it belongs.

Macclesfield hospital is also an important priority in the community. Many people have fought to keep the accident and emergency and children’s services at the hospital, and I will continue to fight to ensure that they stay there. Macclesfield is also home of the mighty Macclesfield Town football club and Macclesfield rugby club, and I am proud to say that we were crowned champions of the national league 2 this season. Our communities are served well by the active Macclesfield Express, Canalside Community Radio and Silk FM. We enjoy great rail links; some people might describe them as first class, but I am very happy to travel standard, like many hon. Members.

The history of Poynton, in the north of the constituency, is rooted in coal. Many residents work in Manchester and continue to enjoy the sense of community that Poynton offers. Traffic congestion is a real challenge, and one that I will tackle as a major priority. In the far north-east, the vibrant village of Disley lies at the edge of the hills next to the magnificent Lyme park. Bollington, once known for cotton, nestles below the wonderful White Nancy and is known locally as “Happy Valley.” With its strong community spirit, it is easy to see why. Nearby Prestbury, sometimes famous for footballers, boasts one of the oldest parish churches in the country and has a magnificent conservation area.

As a keen walker and rock climber, I love spending time in the upland villages of the hill tribes of Kettleshulme, Rainow, Wildboarclough and Wincle. I also enjoy all that the Peak district has to offer in the east of the constituency. To the west, we move out to the fertile farmland of the Cheshire plain and the unique rural communities of Langley, Sutton, Gawsworth, Marton and Lower Withington. I will work to protect that beautiful countryside and support our farmers and those rural communities, which were overlooked for far too long by the previous Government.

The most impressive thing about the great part of Cheshire that I represent is the warm, generous, hard-working and enterprising people who work and live there. We have well-known residents who have achieved their aims in the world of commerce and industry, and famous footballers. We also have other heroes, who are mostly unsung and work selflessly in the community: our doctors, nurses and policemen and the volunteers who work actively in our churches, in the local talking newspaper, in the MAST—the medical and surgical trust—hospital appeal, at East Cheshire hospice, for the Gateway Project in Poynton and for the Friends of Bollington Recreation Ground, to name but a few. Those people genuinely inspire me and do so much for our area.

Let me turn to the debate in hand. Since the war, Macclesfield has turned from its focus on silk to pharmaceuticals, with ICI and now AstraZeneca. AstraZeneca demonstrates that we can still innovate, develop and make things in this country and, in turn, the pharmaceutical industry shows that we can compete in global markets. However, too many local businesses have announced job losses in recent years, and the latest announcement—of 250 job losses—came today from the Cheshire building society.

We have to get this economy working again, which means that we must focus on reducing the deficit. When I had the honour of being a special adviser in the Treasury, working with “canny Ken” as the Chancellor, I learnt a lesson: we cannot spend what we do not have. That lesson has not been lost on the Government side of the House.

Having worked in the real world of commerce and industry for more than 20 years in companies such as Asda and PepsiCo, it is clear to me that growth is not determined by state diktat, but based on the decisions of thousands of brave businesses. Growth is developed only in a truly competitive private sector. That is what we need to create jobs, provide valued public services and support those in genuine need. That task will always motivate me as long as I serve the people of Macclesfield in this House.