amendment of the law

David Wright Excerpts

Tuesday 25th March 2014 Commons Chamber

[The Secretary of State for Work and Pensions (Mr Iain Duncan Smith)]

Last week the Chancellor presented his Budget, reiterating this Government’s commitment to a long-term economic plan. [Interruption.] I will say that again—a long-term economic plan, something that Labour does not have or is in search of, I am not sure. We are restoring the public finances and supporting businesses while providing security and stability for Britain’s families. I must say that today’s other news that inflation is down to 1.7% is very good news for hard-working families.

Following Labour’s great recession, which, I remind the House, wiped out 7.2% of our economy, worth £112 billion or £3,000 for every household in the country—it is still in denial—last week we learned that our economic recovery is now established and taking hold faster than originally forecast.

[David Wright (Telford) (Lab)]

Will the right hon. Gentleman give way?

[Mr Duncan Smith]

I will give way, but many Members want to speak, so first I want to make a little progress.

A year ago, the Office for Budget Responsibility predicted that growth in 2014 would be 1.8%. Now, the forecast is 2.7%, the biggest upward revision between Budgets for at least three decades. The deficit has fallen by a third in three years, and is forecast to halve by next year. By 2018-19, the OBR expects the public finances to move into surplus by some £4.8 billion for the first time in 18 years. Before that, in 2017-18, the fiscal mandate will be met a year early. Employment has been revised up and unemployment revised down in every year of the forecast.

[David Wright]

The right hon. Gentleman was talking earlier about the process under the previous Government, and he claimed that it was Labour’s recession. When he was leader of the Conservative party was there any point at which he did not agree with the spending plans of the then Chancellor of the Exchequer?

[Mr Duncan Smith]

I remind the hon. Gentleman that when one goes into government one is responsible for what happens. I know it is hard to take, but I have always believed that one wants to go into government to take responsibility for all the things that take place while one is government. He may not want to know it, but the reality is that the Labour was in government, the recession was very hard, and people have suffered.

There is still more to do—we have not done enough—if we are to secure Britain’s future. That is why the Budget set out further investment to ensure a resilient economy that delivers the promise for business that it can compete with the best in the world, and hope for families—this is important—about their prospects now, and for their children’s futures. From next week, corporation tax will be down to 21% from the 28% inherited from Labour, and will be down again to 20% next year—the joint lowest in the G20—making it competitive to invest in Britain, which is good for jobs and good for young people.

That will be matched by the best export finance, doubling direct lending to £3 billion and the investment allowance to £500,000, so that British business can take advantage of the best opportunities at home and abroad. Again, that is good for investment and good for growing jobs.

We are cutting tax not just for business but for Britain’s hard-working people, ensuring all can share in the benefits of Britain’s growth. By raising the personal allowance threshold to £10,500 next year, we are taking some 3 million of the lowest paid out of tax altogether and ensuring 25 million people pay less.

As a result of those changes since 2010, the typical taxpayer is £800 better off—something that Labour’s simple measure of real earnings fails to recognise. Similarly, through new child care support, we are helping families overcome prohibitive costs and ensuring that more parents find that it pays to get a job. Under universal credit, we have already invested £200 million to remove the 16-hour rule, so that 100,000 families in mini-jobs or part-time work receive help for the first time. Now, we are going further still, increasing child care support from 70% to 85% of costs so that work pays more for half a million families.

It pays to work, and now, finally, it pays to save, reversing the damaging trend whereby for too long Britain has borrowed too much and saved too little. The radical changes to retirement saving announced in the Budget are possible only because of the significant pensions reforms the Government have already delivered: a triple lock on the state pension; auto-enrolment to make saving the norm, helping up to 9 million save in a workplace pension—over 3 million are already saving, and I give due credit to the Minister of State, my hon. Friend the Member for Thornbury and Yate (Steve Webb) for that—and, vitally, the single-tier pension, for which I again give credit to my hon. Friend, set above the level of the means test, so that those who have contributed for 35 years have a secure basic income, without having to resort to additional state support in later life.

--- Later in debate ---

[David Wright (Telford) (Lab)]

I enjoyed the speech of the hon. Member for Penrith and The Border (Rory Stewart). He focused on issues relating to older people, and I think that many of the points he made were welcome. No doubt we shall have opportunities to explore them over the coming months and years. However, I have to dispute, for reasons that I shall explain shortly, his opening remark that the Budget had focused on young people.

As we know, this year’s Budget followed a huge global financial crisis and several years of flatlining in our economy. The growth that we are now seeing is very welcome, but I think we must acknowledge that, outside the M25 collar around London, it is quite patchy. In many areas, local communities are struggling to secure balanced growth in their economies, and it is undeniable that many people are experiencing a cost of living crisis. In Telford, which has a history of low wages, a history of temporary working and a history of agency working, people are still struggling to make ends meet. There has been some growth in the banking sector—the food banking sector, that is. More people are having to resort to the food bank in Telford, for a variety of reasons. I pay tribute to the volunteers who work at the food bank. I also say “Well done” to the local authority for funding it, and for recognising its contribution.

[Andrew Griffiths]

I understand the point that the hon. Gentleman is making—I too represent a northern, or midlands, constituency—but does he not welcome the fact that unemployment in his constituency has decreased by 25.6%?

[David Wright]

I intend to talk about unemployment, and about youth unemployment in particular. I know that the hon. Gentleman represents a northern seat, although I do not know how much further north it is than mine, if at all. Let me add that I enjoyed his comments about the brewing industry. I welcomed the Chancellor’s policy announcements about the industry, which I think were very positive, and, as a supporter of CAMRA, I agreed with much of what the hon. Gentleman had to say.

[Andrew Griffiths]

Will the hon. Gentleman give way?

--- Later in debate ---

[David Wright]

I want to develop my argument before I give way again.

Telford has a particularly good and proactive Labour council, which is driving forward investment projects that will have a very positive effect on our local community. Hundreds of millions of pounds have been invested in the Southwater scheme in the town centre as a result of a partnership between the public and private sectors. That is what a proactive Labour council can do to deliver jobs and investment in the community.

Let me now say a little about what was in the Budget, what was not in it, and what could have been in it. I think that we can give a cautious welcome to what the Government have said about pensions reform, but I also think that the devil will be in the detail. A number of Members have referred to the mis-selling scandals that have taken place over the past few decades. There are significant problems involving fees, and we shall need to look at the regulatory regime more broadly in relation to the pensions market and the pensions sector. I assume that a Bill will be announced in the Queen’s Speech.

There are serious issues to consider in respect of how the pensions sector sits alongside social care, and how we should fund social care in the long term. I am not making a party point. If we are to reform the pensions structure and change the way in which people receive resources and assets, there are serious questions to be asked about the echoes of that when it comes to how we should pay for longer-term care for the people who will need it as our population ages.

[Mark Tami (Alyn and Deeside) (Lab)]

Does my hon. Friend not think that it would have been better for the Government to explore some of those issues before announcing a policy that had clearly had not been fully thought through?

[David Wright]

I agree. I think that the Government could have made an announcement much earlier. They could have conducted a consultation exercise across the pensions sector, and we could then have reached a consensus in the House. The Chancellor is clearly attempting to use this issue as a political tool. We need to have a long-term debate, because these matters will affect our constituents in the very long term. I do trust people with their pension pots; I do trust people to make the right decisions. The people I do not particularly trust are those in the financial sector who will be coming up with new products to sell to people as the pension environment changes. That worries me, and we must think very carefully about how we regulate that sector.

The welfare cap is another issue that came up in the Budget. I do not have a problem with the welfare cap in principle as long as it acknowledges the prevailing economic circumstances that people face in local communities. A blanket cap that does not acknowledge changes in the economy or what is happening in the wider economy just will not work.

I also welcome the development on ISAs. The raising of the threshold to £15,000 is a good thing and gives a positive message about savings, but I have to say that the Conservative party seems to be living in a different world from me. Not many people in Telford can afford to invest £15,000 a year in an ISA, and I cannot think of many couples who can invest double the amount.

[Mr Raab]

Will the hon. Gentleman give way?

[David Wright]

No, I will not.

For many people in Telford £15,000 will be an annual income on a part-time job. People will struggle to be able to invest the kind of money the Conservative party clearly thinks they have got swilling around in their coffers, but never mind; they can go and enjoy themselves at the bingo.

Immediately after the Budget, I took part in a Federation of Small Businesses event—a phone-in debate and panel discussion at a hotel in Telford. I have to say that the small business community, and certainly the people I spoke to in the phone-in, were quite disappointed. They were concerned that there had not been more movement on business rates and that a lot of the initiatives the Chancellor was talking about were targeted at larger businesses. They felt they were getting a bit of a raw deal and they were being ignored. My view has always been that in our modern economy the strength of our future economy and of our nation will depend very much on the success of small and medium-sized enterprises. We must, therefore, think much more about support for small businesses.

There were two glaring omissions from the Budget, the first of which relates to young people. Unemployment rates among young people in Telford and Wrekin remain stubbornly high and hundreds more young people are underemployed. The Chancellor spent little time in his speech talking about young people, but it should have been his top priority. It is for us in Telford. The local authority is investing £1.3 million specifically to target youth unemployment, and the job junction initiative is helping people in towns across the borough, providing support for them to get back into work. We also have other partners, such as Telford college of arts and technology, which have programmes targeted at getting young people who have found formal education difficult back into education and into securing skills and training. I recently had the pleasure of opening a campus facility for the college in Dawley.

The other omission from the Budget was any discussion of the need for a significant increase in the provision of social sector housing units for rent. Understandably, we all want to talk about affordable housing for sale in this country, but we face a real dilemma in that we do not have enough properties for rent in the social housing sector. The next Labour Government must have an enormous drive to build more social housing, to ensure that we deal with what is one of the biggest issues for my constituents.