Women and the Cost of Living
Edward Leigh Excerpts(10 years, 5 months ago)
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Mr Speaker
I am grateful to the hon. Gentleman for his point of order. I have certainly received no indication that the Foreign Secretary is planning to come to the House to make a statement on the matter, but the hon. Gentleman’s timing is either well designed or fortuitous, because he is in the presence, as he raises his concern, of both the Government Chief Whip and the Leader of the House, so his words are on the record and will have been heard by those on the Treasury Bench. He will have patiently to await events.
Mr Speaker
Order. I do not know whether the hon. Gentleman is asking whether the point of order did any good or whether patiently awaiting the development of events does any good. He should not be too cynical; he has a service uninterrupted in this House of 30 years, and therefore I know that he believes passionately in Parliament.
Oral Answers to Questions
Edward Leigh Excerpts(10 years, 6 months ago)
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The Exchequer Secretary to the Treasury (Mr David Gauke)
We want to look at the evidence further, so that seems to be a sensible approach; we want to see whether the model is working. The final decision has not been taken on whether to extend it. This is about improving the service for the people who need it most. We believe that that is an important objective.
Sir Edward Leigh (Gainsborough) (Con)
T8. As you know, Mr Speaker, I am of a nervous disposition. I was therefore alarmed this year—not three years ago—to hear predictions that 1 million jobs would be lost, there would be a decade of lost growth and the recovery would be choked off as a result of the Government’s plans. Will the Chancellor allay my fears and explain what has happened in the real world?
Mr George Osborne
My hon. Friend is right that there were a lot of predictions from the Opposition Dispatch Box. They said that there would be a decade of lost growth, but the economy is now growing and we have had the fastest growth in the G7 this year. They predicted that 1 million jobs would be lost, but 1.4 million jobs have been created in the private sector and unemployment is down. Above all, they advocated—indeed, they continue to advocate, because it was in the speech that the shadow Chancellor made yesterday—increased borrowing, which would lead to higher taxes and higher interest rates. The biggest threat to the British recovery is sitting right opposite me.
National Insurance Contributions Bill
Edward Leigh Excerpts(10 years, 6 months ago)
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Mr Gauke
My hon. Friend makes a valuable point that is well worth highlighting. When running a deficit of the size that we were running, we face some tough decisions. We have taken a range of measures to reduce the deficit, and it has reduced by a third.
Ultimately, though, whoever was in government was going to have to take these difficult decisions. If we are not prepared to take difficult decisions on spending—there is no evidence that Labour Members would do so—the answer is that we have to increase taxes. When we look around to see what taxes are available, it is clear that some very difficult decisions have to be made. Labour Members chose to go for employers’ national insurance contributions; perhaps they considered that that option was less visible to the general public than some of the others. However, the consequences would have been higher unemployment, and this Government were not prepared to face that.
Sir Edward Leigh (Gainsborough) (Con)
What business hates more than anything else is the complexity of the tax system. We still have one of the longest tax codes and one of the most complex tax systems in the world. Will the Minister explain how we are still setting about our long-term objective of simplifying the tax system and achieving a much flatter rate of tax for the sake of business?
Mr Gauke
The Bill will result in a big simplification for 450,000 businesses, because they will no longer have to pay any employers’ national insurance contributions. That is significant progress. We have established the Office of Tax Simplification, which has produced a number of reports. Anyone who has studied recent Finance Acts closely will have seen that a whole range of measures have been introduced as a consequence of the OTS’s recommendations. Of course, there is more work to be done and we as a Government remain committed to that, but there have been a whole range of measures. The OTS is looking at employee benefits at the moment, and that is significant.
Trident Alternatives Review
Edward Leigh Excerpts(10 years, 9 months ago)
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Mr Kevan Jones (North Durham) (Lab)
I have to say at the outset that I have a little difficulty here, because the Chief Secretary to the Treasury either has a different report in front of him or he has read the report and not understood it. The Government commissioned the alternatives review into the future of UK nuclear deterrence back in 2011. It was part of the agreement in the shotgun marriage between the Conservatives and the Liberal Democrats following the 2010 general election. As he said, the Government’s stated position was to “maintain Britain’s nuclear deterrent”, but the Liberal Democrats had an opt-out in that they could be allowed to make the case for alternatives. So, more than two years later, we have finally been presented with those alternatives.
Sir Edward Leigh (Gainsborough) (Con)
Will the Labour party confirm its admirable commitment to continuous-at-sea deterrence in any coalition negotiations? Will the hon. Gentleman say that in Labour’s view this is non-negotiable?
Mr Jones
My position is very clear: I am working for a Labour victory at the next general election. But on the issue of continuous-at-sea deterrence, my answer is yes. Even though the report was commissioned by Her Majesty’s Government, its first line has the strange disclaimer:
“This…is not a statement of government policy.”
This must be the first time ever that the findings of a Government policy review have been abandoned at birth.
Finance Bill
Edward Leigh Excerpts(10 years, 10 months ago)
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Tim Loughton
I briefly give way to my hon. Friend, who has been a great champion of this measure for many years.
Sir Edward Leigh
Not just the Prime Minister in a faraway place, but the Chancellor of the Exchequer, in my own home, not 300 yards away, in front of 40 MPs, gave a solemn pledge that this was going to be brought in before the general election. This will and must happen.
Tim Loughton
So the mystery is why on earth it is not happening and the Prime Minister has not been able to say, “We back this amendment.” However, I trust what he has said. Those I do not trust are those who oppose the amendment, because those who oppose it as some sort of 1950s throwback are the ones who are being judgmental about how certain people choose to live their relationships. That view has been endorsed on many Labour party members’ blogs. Disgracefully, they seek, in effect, to pit working mums or dads against stay at home mums or dads, who are of course no less, and often more, hard-working.
My support for a transferable married couples tax allowance has never been based on some moral stance on types of relationship. My concern, as might be expected, is based on what is best for children. That is why I have suggested that it is limited in the first instance to families with children under the age of five. Two statistics say why. For a 15-year-old living at home with both birth parents, there is a 97% chance that those parents are married. For a five-year-old with parents at home, there is a one in 10 chance of those parents splitting up if they are married, but a one in three chance if they are not married. The cost of family breakdown is £46 billion and rising. That is what we need to attack.
Marriage accounts for 54% of births but only 20% of break-ups among families with children under five. We must recognise that in the tax system and we do not. That is what this modest amendment seeks to put in statute as a starting point to appreciate that.
Chris Leslie
I will be very brief. I want first to pay tribute to the hon. Member for East Worthing and Shoreham (Tim Loughton). I have to hand it to him: he has got the Government jumping around and on the run on this issue. However, I am afraid that the Opposition are not convinced that the millions of people who are separated, divorced, or indeed widowed, would benefit from this policy, let alone those married couples where both partners work. I am all in favour of marriage, and Mrs Leslie might at first glance like the idea of the £150 give-away, but because she works and earns above the personal allowance, it would not be of benefit in our circumstances.
Chris Leslie
I would rather hear from the Minister.
I think that the right hon. and learned Member for Rushcliffe (Mr Clarke) was right when he called this policy social engineering. He said that when he joined the Conservative party it was opposed to it. The hon. Member for East Worthing and Shoreham seems to have got a commitment that something will be done in the autumn, and we will hear what that happens to be in a moment. In a nutshell, the Opposition’s view is that if there is to be a tax break, it should be for all families, not just a select few, and for all households on lower and middle incomes. That is where tax breaks ought to be focused. I want to hear what the Minister has to say.
Jim Shannon
Transferable allowances work by families claiming against them for the previous year. Thus this year’s Finance Bill makes provision for transferable allowances for the financial year 2014-15. People will not be able to claim against them until the financial year 2015-16. I will be seeking from the Government an assurance that that will be addressed this year so that it can happen.
Sir Edward Leigh
This is simply a matter of justice. There are 2 million families where one partner is working and the other is not. They are uniquely disadvantaged in the benefits system, and it is a matter of justice—let’s do it.
Finance Bill
Edward Leigh Excerpts(10 years, 10 months ago)
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Cathy Jamieson
Once again, my hon. Friend makes an important point, particularly in relation to many middle-income earners. The issue of the lowering of the threshold at which the higher rate of tax is paid has perhaps not had as much air time as some other topics, or other cuts that the Government are making, but the reality is that it affects many who would not see themselves as particularly well off, who have worked hard over the years and been promoted in a company or in the public sector, and who are trying to do the right thing for their family, and are feeling the squeeze.
To go back to the point about who will suffer most as a result of the Government’s policies, I emphasise that I know that in many places in London and the south-east, employment is not at the level that it is elsewhere, and incomes are being squeezed, but it is interesting to note the geographic spread.
Perhaps we should not be surprised to see the Tories operating in this way. I recall, on first entering this place, attending a debate on cutting and abolishing child trust funds. I was surprised that the Government thought that was the correct thing to do at that stage. They were once again attacking those who were trying to do the right thing and support their children and families. Under their approach, it is women and families— the very people they say they want to protect—who consistently suffer. The rhetoric and the reality are two very different things. We should perhaps not have been surprised by the Government’s proposals. It is an age-old Tory mantra that the poor—those on the lowest incomes—are expected to work harder; otherwise, they will be made poorer. At the same time, the rich will work harder only if we make them richer. In this instance, there seems to be one rule for the very richest and another for everyone else. This is arguably the same old out-of-touch Tories—this time, sadly, aided and abetted by the Liberal Democrats.
I always like to try to end on a positive note, however, and I come back to the point that the new clause is a relatively mild-mannered proposal. It seeks nothing more than that the Government should use their good offices to gather the necessary information to make an assessment of the impact of the changes and to produce a report. That does not seem an unreasonable request. Indeed, when the Exchequer Secretary to the Treasury was in opposition, he regularly requested such reports and no doubt regularly tabled amendments and new clauses to that effect. He is nodding his head. I hope that he will remember those days, and remember why it is so important to have such reports and assessments. I hope that he will show that he is not only a listening Minister but a Minister who is prepared to act, and that he will accept new clause 8.
Sir Edward Leigh (Gainsborough) (Con)
The hon. Member for Kilmarnock and Loudoun (Cathy Jamieson) has waxed lyrical at some considerable length about the iniquity of the Government’s seeking to reduce the higher rate of tax, but the question that kept occurring to me was this: if she and her colleagues felt so strongly about this, why were the Labour Government quite happy to keep a maximum higher rate of tax of 40% for their entire 13 years in office?
Mark Field
I should just correct my hon. Friend: there was one month in that 13-year period when the rate was different. Does he agree, however, that it would be interesting, if the Minister were minded to accept the new clause, to see a full analysis of that 13-year period?
Sir Edward Leigh
I was going to go on to say that the Labour Government lasted 13 years, and that it was only in the last month that, under the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown), they felt so strongly that they had to impose a 50% rate.
This is an important point. For their first 10 years, that Labour Government were led by Tony Blair. When he and Lord Mandelson were planning for that Government, they made a conscious decision not to replicate the old-fashioned language of class warfare that we have heard so much of today. They made a conscious decision that, if the Labour party was ever to regain the trust of the British people and regain power after 18 years in opposition, it would have to reach out to the centre ground. One of the principal ways in which they did that was to commit themselves, before getting into government, to accepting the spending plans of the then Chancellor of the Exchequer, my right hon. and learned Friend the Member for Rushcliffe (Mr Clarke), now the Minister without Portfolio. They accepted his spending plans and made it absolutely clear that they would not raise the higher rate of tax during their term of office. That was a very sensible thing to do.
In truth, the only possible justification for raising the higher rate of tax above 40% is a political one. It is political because it appeals to the argument, which we have heard repeatedly today, that a right-wing, vicious, unpleasant Tory Government are only helping millionaires. At first sight that might seem quite an attractive argument for the Labour party to adopt in opposition, but if it is so attractive, why did the right hon. Tony Blair, when he was in opposition and planning for the greatest election landslide in Labour’s history, not follow it? He did not follow it because he realised that it was nonsense economically and, ultimately, nonsense politically.
Richard Fuller
My hon. Friend is making the point, very cogently, that elections are won on the middle ground. The old Labour party, under Tony Blair, understood that. What we are seeing today, in this new clause, is the new Labour party moving to the left and seeking to introduce more taxes. When we turn over the page in the amendment paper, we see that its next new clause proposes yet another tax. Is not this just the start of a further leftward lurch by the Labour party to tax people more and waste public money?
Sir Edward Leigh
I do not know why we are bothering to give the Labour party this friendly advice. Why are we trying to help it, when it is so obvious that its approach is increasingly to remain in its comfort zone on tax?
The speech we just heard was littered with the word “millionaire”. It is the old language of Denis Healey, going back to the 1970s, when they wanted to tax the rich until the pips squeak. It does not impress anybody, and one reason for that is that people think it is fundamentally hypocritical. The point has been made again and again: the Labour party is not making any commitment to reverse the changes. If Labour Front Benchers really felt so passionately about this matter, they could say now from the Dispatch Box that it is iniquitous and make an economic case against it.
Throughout the speech that we have just heard there was virtually a complete absence—a desert—of economic facts and justification on how much money would be raised. All we heard, constantly, was the mantra about millionaires getting richer. The truth is that the top 5% pay 25% of taxation. There is no evidence—Tony Blair understood this—that if we tax them more we will increase tax revenues for the Exchequer. All we would be doing is increasing avoidance. It is bad economically, bad politically and it does not make sense.
Mark Field
My hon. Friend has hit the nail on the head. I am afraid that the impulse has been a political one. If there was any understanding of economics on the Labour Front Bench—perhaps there was in the brief glimpse in 1996 and 1997 to which he referred—those Front Benchers would understand the Laffer curve and its operation and that reducing headline tax rates will bring in rather more money. That was the case in the 1970s and 1980s, as was mentioned earlier in the debate, and I am sure that it will prove to be the case again when we look at the numbers in the year ahead.
Sir Edward Leigh
We are all familiar with the Laffer curve and the point made by my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg). When taxes were reduced in the late 1970s and the 1980s, revenue increased. There is no economic case whatsoever for having a 50% tax rate. The only case, and I think it is very poor, is a political one. What I am seeking to argue—I do not know why I am seeking to help the Labour party—is that it impresses nobody.
One good point was made in the many interventions we heard from the Opposition side, and from the Government side: why are the Government dragging more people into the higher rate of tax at all? That is a fair point, and it leads me to an argument I have made many times: if we want to improve tax revenues and get more fairness in the tax system, we should move as much as possible towards a flat rate of tax. We have the longest tax code in history. If a Chancellor of the Exchequer on Budget day takes with one hand and gives with the other, and if has his little schemes to help investment or job creation, all he is doing is creating perverse incentives. A much better way of creating a modern, progressive and successful tax system would be to have as flat a rate of tax as possible, as is being done increasingly around the world. It is ridiculous that a deputy head teacher of a primary school, for example, has to pay a higher rate of tax. I think that shows some of the problems the country is in economically.
I do not want to repeat all the old arguments about who got us into this mess, but perhaps I will be forgiven for saying that unfortunately we have to pay our way, and the Government are therefore between a rock and a hard place. It is absurd to be dragging more people into higher rates of tax; what we should be trying to do, across the House, is to flatten the tax base and make it much simpler, much more coherent and much more understandable, so that people know that there is, to all intents and purposes, a single rate of tax. It does not matter whether they earn £30,000, £300,000 or even £3 million a year—they will be paying 35% of it in income tax. If we had such a modern tax system, it would generate a huge surge in productivity. The only people who suffered would be the chartered accountants, thousands of whom might lose their jobs; I pity the chartered accountants. I want to try to generate a modern, progressive tax system where people know that as they work harder they can increase the money coming into their family. If we are going to have a sensible debate as opposed to one based on party politics, these are the sorts of arguments that we should making. It is sad that we do not have the courage to do so.
Cathy Jamieson
I am listening to the hon. Gentleman with interest. I wonder what he would say in response to the Institute for Fiscal Studies, which has pointed out that the rise in receipts may be due to wealthier people trying to avoid the 50p tax rate. It says:
“Receipts in April will have been boosted by high income individuals shifting income such as bonuses and special dividends from 2012-13 to 2013-14 in anticipation of the fall in the top rate of income tax from 50 per cent to 45 per cent.”
Is he suggesting that the right way to deal with people avoiding paying their tax is to reward them with a tax cut?
Sir Edward Leigh
It is not a question of rewarding them. The truth is that the more complicated the tax system, the more it is the case that the only people who suffer are middle-income groups, often people in employment on pay-as-you-earn. The rich—the millionaires; let us talk about the group that the hon. Lady is always going on about—will always, through their expert accountants’ advice, seek to avoid paying tax, quite rightly, as it is perfectly legal and proper, and largely they will be successful. The people she is talking about—the millionaires—are precisely the sort of people who have income streams that are very mobile around the world. They are often foreign nationals. Does she honestly think that if we go on piling more and more tax on to these people they will just sit around doing nothing? Of course not; they will seek to avoid paying tax. It is a question not of rewarding avoidance but of accepting the facts of life. She might think it unfortunate—I do not—but we need these risk-takers, entrepreneurs and wealth creators in this country. Unfortunately we are in a highly competitive situation with other countries, particularly Ireland and other low-tax countries. Unless we attract these people here we will not create jobs and investment in the private sector.
We can go back to our comfort zone; we can lie in the warm bath of our own prejudices and dislike millionaires. We would probably all like to be millionaires. None of us are millionaires, unfortunately; we chose to go into public service and we are not going to become millionaires. We can have a pitch at millionaires and think that in doing so we are making ourselves popular with the rest of the population, but unfortunately they will not sit tight; they will simply leave and take that entrepreneurship and job creation away. That is what Tony Blair recognised and that is what we should recognise.
Barbara Keeley
I am surprised that the hon. Gentleman is not including the most obvious millionaires in this country. Does he really think that the risk-takers, the entrepreneurs and the wealth creators do not include football players, many of whom are earning multi-millions of pounds? Frankly, the notion that we need all these wealth creators—these people earning fantastic amounts in football—does not hold up.
Sir Edward Leigh
That is an absurd argument. I watched the Brazil match yesterday—did the hon. Lady? Millions of our constituents were watching it and enjoying it. I agree that these people are ludicrously overpaid, but they are men of 21 who have an amazing skill. What does it matter if they earn £1,000, £2,000, £3,000 or £100,000 a week or a month? It is none of our business; it does not matter. To claim that my argument is defeated because a few millionaires earn ridiculous sums of money and because there are footballers’ wives is such a ludicrous argument economically that it is barely worth answering.
Mr Graham Stuart
I am grateful to my hon. Friend for giving way; he is being most generous. I must correct him on one thing, if he meant income tax when he said that 25% was being paid by 5% of taxpayers. In fact, 40% of the Government’s largest single receipt—income tax—is paid by 5%, and that includes footballers, rock stars and entrepreneurs, all of whom left this country in the 1970s, leaving us all poorer. The hon. Member for Worsley and Eccles South (Barbara Keeley) and other Opposition Members are lurching to the left and want to send them out of this country again. That would impoverish all of us, but most of all the low-income people in our constituencies who rely on receipts from such people.
Richard Fuller
I am grateful to my hon. Friend for his generosity in giving way. He has highlighted the precise premise of the Opposition’s argument: they like talking about millionaires and football players because they realise that people perhaps do not like footballers and bankers earning lots of money. However, does my hon. Friend agree that, once they have started with bankers and footballers, they will then move on to judges, teachers and regional sales managers—the middle-income people who earn the money that produces the highest tax yield? Should we not all be aware of the danger in allowing Labour’s new tax policy to harm the middle classes and working people in this country?
Sir Edward Leigh
Of course. There should be a huge health warning on Labour’s proposal. British people should be warned that it is not footballers or bankers who will suffer, but middle England—people who work really hard to create small and successful companies, who are halfway up the corporate tree and who are near the top of the public sector. Moreover, it is those precise people in the public sector whom we need to incentivise to make efficiency savings, if we are to have a successful economy.
People should not swallow the lie that this is only about bankers and footballers. They can look after themselves in any country—they always have and they always will—and if there is a Labour Government, I predict that they will get richer and richer. We should forget them and concentrate on middle England.
Finally, if the Labour party wants to get back into power it should remember what Tony Blair did. He was its most successful leader ever, because he realised that politics had to be won on the centre ground. At the moment, Labour is going nowhere.
Chris Evans (Islwyn) (Lab/Co-op)
It is always a joy to follow the hon. Member for Gainsborough (Sir Edward Leigh). In a different life, when I worked for my predecessor, he was the Chairman of the Public Accounts Committee and I spent many a happy afternoon at the back of the room listening to him pontificating and taking on the tax dodgers and anyone else the National Audit Office thought was a little bit dodgy. I miss those days.
The more time I spend in this House and the more I listen to Government Members, the more I sense that all we do is talk about history and hark back to the past. Government Members like to talk about 13 years of Labour “misrule” and 18 golden years of Tory Government. The one conclusion that I have come to from studying economics at A-level and from listening to many hon. and right hon. Members speak in this House is that it is not possible to run the economy like a scientific discipline. It is not like that.
Hon. Members have mentioned the Laffer curve, which was meant to be the wonderful idea of its time. In 1980, a future US President—he was about to become vice-president at that time—said that trickle-down economics was voodoo economics. He was right then and he is right now. The hon. Member for Gainsborough gave the Labour party some advice and I want to do the same for his party. The Conservative party is still in the grip of an economic theory that failed.
I do not want to talk about history, even though I am an historian myself. I do not want to go back to the ’80s—there is no point in talking about that. It is a moot argument. I want to talk about the future, but in 1989 and 1990 we had the worst recession ever. That followed the recession in 1981, which, at the time, was the worst recession that we had had. Trickle-down economics is based on the mad belief that a tax cut for the very rich will somehow trickle down through society. It has never worked. Quite simply, that is common sense.
amendment of the law
Edward Leigh Excerpts(11 years, 1 month ago)
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Mr Edward Leigh (Gainsborough) (Con)
As usual, the Secretary of State is making a very good case. If most people do not notice any difference in the service provided by local government despite all the cuts, does that serve as a lesson for central Government as well?
Mr Pickles
My hon. Friend makes a very reasonable point. My own Department in central Government has reduced its running costs by 41% in real terms, so we have led by example.
The Government have set about turning things around. This is a complex area, and the solution requires action on multiple fronts. We have taken three important steps. First, we are radically reforming the planning system to crank up the engine and get things moving. Secondly, we are giving builders certainty so that they can get Britain building. Thirdly, we are intervening dramatically to help people step on to the first rung of the housing ladder. It may be helpful if I set out our approach to each of those issues.
Mr Peter Hain (Neath) (Lab)
Contrary to the Chancellor’s mantra, Britain’s return to recession was not made in Europe. It was made in Britain by the severe fiscal squeeze that the Chancellor launched nearly three years ago. Problems in the eurozone spell trouble for the UK economy—of course they do—but the Chancellor never mentions the fact that Britain has benefited from the recovery of the USA economy, which accounts for 20% of our trade, and is currently growing four times faster than the eurozone is slowing, because the USA took the route of economic stimulus and stuck to it. Britain set out on the same path under Labour after the banking crisis, and the economy began to pick up. However, the coalition veered off as soon as the Tories and Lib Dems took office, turning the road to recovery under Labour into the road to ruin.
Cutting too far and too fast means that the Chancellor has missed all his key targets. In the year that is ending, his target deficit—the cyclically adjusted current deficit as a share of gross domestic product—is twice what he originally said it would be. Next year, the Office for Budget Responsibility expects it to be four times what he planned. He has also missed his public sector debt target: instead of falling to 67% of GDP in 2015-16, under the Budget it will fall to 85% two years later, in 2017-18. That is a surreal definition of success: debt falling upwards. Salvador Dali would be proud.
Zero growth has forced the Chancellor to accept higher borrowing targets—more than £200 billion higher over five years than he planned in 2010. Most of the cuts that have been announced have yet to hit home. Cuts and austerity will continue Britain’s economic inertia, with more disastrous, scorched earth economics to come. Growth, not cuts, should be the priority. Sadly, there is plenty of spare capacity in the UK economy, which could easily grow quite quickly for a few years by taking up the slack, with borrowing, the deficit and debt falling. Jonathan Portes, former chief economist at the Cabinet Office, said:
“A few years of 3% growth—and given the amount of spare capacity in the UK economy, there is no reason that should be infeasible…—and much of the problem will simply vanish”.
Growth is the magic bullet for overcoming our deficit and debt problems.
Mr Hain
Cuts have fuelled the recession because they have driven demand out of the economy. Getting the economy growing again, as I said, is the key to cutting the deficit, then stabilising and bringing down the debt burden. Once the economy is growing again, it will be much easier to deliver any remaining tax rises or spending cuts that may still be necessary because, as Jonathan Portes says, jobs will be plentiful, real incomes will rise and companies will invest again.
The Tory charge is that Labour would increase borrowing. The answer is, yes, in the short term, we would, but to reduce borrowing in the long term. Borrowing more today can mean borrowing less tomorrow by getting the economy growing again. President Obama’s 2009 stimulus package added to the US federal deficit in the short term, but as US interest rates fell, spending and output rose, and dole queues shortened. As a proportion of America’s expanding GDP, its overall deficit has shrunk every year since 2009, contrary to what has happened to our deficit. A budget boost that triggered real recovery in Britain could follow the same pattern, speeding up the growth of UK national income, cutting the deficit as a proportion of GDP and causing the debt burden to fall.
That is what the Budget should have been about, but old habits die hard as the coalition partners continue to peddle their big deceit. First, they said that the entire global banking crisis was caused by Labour recruiting far too many nurses, doctors, teachers and police officers, and that the trigger for the world financial collapse—sub-prime mortgage defaults in the USA—was all Labour’s fault. The second big deceit is their claim that today’s public sector deficit was caused by excessive Labour spending. To quote utterances of almost every Conservative MP as if on a dreary looped tape, too much Labour borrowing led to too much national debt, so the cuts are all Labour’s fault. They never admit the truth. They never say why, if spending was “out of control” and wildly excessive, the Chancellor in September 2007 committed a Tory Government to matching Labour’s public spending plans for the next three years, up to 2010.
The Chancellor knew only too well that Labour’s spending was affordable, otherwise he would not have signed up to that. The Tories never acknowledge that, until the global banking crisis, British Government debt was low, below that of France, Germany, the USA and Japan, and lower than when we took over from the Tories in 1997. Ten years of steady economic growth under Labour allowed us to pay down debt by the equivalent of £90 billion today, saving taxpayers some £3 billion a year in interest payments. We did fix the roof while the sun was shining.
Between 1997 and 2007, annual Labour borrowing averaged only one third of annual borrowing by the Thatcher and John Major Governments. This is the fourth dreadful Budget by a dreadful Government. It is the same old story from the same old Tories: Budget day blues for Britain. The Chancellor is playing a peculiar game of leapfrog with himself. Every Budget brings worse news. Every autumn statement confirms that things are worse than expected. The Government are failing on growth, failing to improve living standards, and failing on their debt, borrowing and deficit targets. They have got to make way for Labour.
Fiona Bruce (Congleton) (Con)
I refer to my entry in the Register of Members’ Financial Interests.
I welcome the Budget on behalf of the almost 4,000 hard- working small and medium-sized enterprises in my constituency—companies such as Dutton Contractors in Middlewich, which I visited on Friday and had the privilege of opening two new warehouses for. It is a family business that was started in 1974 by the father, John Dutton, who is a farmer. It sells and transports building construction materials. The son, Richard Dutton, has so developed the business recently that it now has 80 employees. The decision in the Budget to further stop Labour’s planned fuel rises is worth £7 to every family each time they fill up a family car, but it is worth considerably more to companies such as Dutton Contractors, which has a fleet of vehicles, so it very much welcomes the Budget.
Dutton Contractors also welcomed the £2,000 national insurance allowance. It was also welcomed, in particular, by Neon Freight Ltd, which is based in Holmes Chapel. Honours go to Ian Mallon, the proprietor of that freight forwarding company, and currently its sole employee, for giving the fastest response to the Budget. He sent me an e-mail at 1.28 pm—the Chancellor can barely have sat down. The e-mail’s subject was, “Employers tax/Budget”, and it reads:
“Great news… please send my thanks to G.O… I will be taking on staff this year.”
That is what I call a result.
Having said that, however, I am disappointed that the Government appear once again to have done nothing to honour their manifesto commitment—it is a coalition commitment and certainly a Conservative manifesto commitment—to recognise marriage in the tax system through transferable tax allowances for couples where one partner stays at home. Many people are genuinely bemused that such an important commitment should remain completely untouched well into the second half of this Parliament. They are increasingly bemused by the announcement of the introduction of tax-free child care worth up to £1,200 every year for children aged up to 12, but obtainable only by either single parents working or couples where both partners work. The Prime Minister said:
“This is a boost direct to the pockets of hard-working families in what will be one of the biggest measures ever introduced to help with childcare costs.”
But do families with one parent who stays at home not work hard, too? That has not sent out a positive message to mothers and fathers who stay at home and commit themselves to parenting; it does not say to them, as I think we should, “We value you.”
Fiona Bruce
My hon. Friend is absolutely right. I am not criticising the Government’s decision to support child care costs; I am saying that they have got the balance wrong by doing that while not at the same time honouring the coalition commitment for transferable tax allowances for married couples.
I have massive respect for those mothers and fathers who stay at home. I have never stayed at home to work and have always worked outside the home, but many parents do so sacrificially, and many parents in one-earner families, as Department for Work and Pensions figures clearly show, stay at home because they have to. Many have significant child care responsibilities for very young children, or care for sick or disabled relatives. It is interesting that the Government quoted OECD figures in support of its decision last week. Let me quote some OECD figures: the tax burden on a one-earner, married couple family on an average wage in the UK is now 42% greater than the OECD average.
I have raised this issue in respect of every Budget since I have been in this House. Two years ago, having tabled an appropriate amendment to the Finance Bill, I received from my hon. Friend the Exchequer Secretary to the Treasury a letter that said:
“Dear Fiona
I am writing to about the new clause on transferable personal allowances for married couples that you have tabled for the Finance Bill. I agree entirely that marriage is a positive institution and it is clear from our manifesto that we believe this should be recognised in the tax system.
We are keen to send a clear message that family and marriage matters and that strong and healthy families help create a strong and healthy society. We must do more to support families and the tax system is one way in which this can be achieved…you can rest assured that our commitment to bringing forward these changes remains firm and that we are assessing various options with a range of different costs and will bring forward proposals at the appropriate time.”
I believe that that time is now. If we genuinely believe in choice—a word much trumpeted last week on the announcement of support for child care costs—we should not be making it more difficult for mothers to stay at home but should give them that choice, too. The Prime Minister has said:
“If we are going to get control of public spending in the long term…we should target the causes of higher spending, one of which is family breakdown. We should do far more to recognise the importance of families, commitment and marriage”.—[Official Report, 2 June 2010; Vol. 510, c. 429.]
This year, I again call on the Government, at the third time of asking—it sounds a bit like calling the banns of marriage, but that is quite appropriate—to insert a provision into the Finance Bill, this time by way of their own amendment, to introduce transferable allowances for married couples. That is quite simply the right and honourable thing to do.
Mr Edward Leigh (Gainsborough) (Con)
I hope that the hon. Member for Belfast East (Naomi Long) will forgive me if I do not follow on from what she said, but she spoke a lot of sense about air passenger duty and I agree with her.
One of the most powerful points made by the right hon. Member for Leeds Central (Hilary Benn), who led for the Opposition, was when he mentioned somebody who visited his constituency surgery only last week who, after serving in a job for 30 years, had been made unemployed. As it happens, I had a similar case of somebody who had served for 30 years but who had now, through no fault of her own, been made unemployed, could not find a job and was in negative equity. That brings home to all of us the human nature of what we are dealing with. Although we may bandy statistics across the House, we are dealing with a desperate situation—for which, by the way, I do not blame the Chancellor—and we should put at the forefront of our minds the appalling human tragedy of ordinary people who are being put out of work and who cannot find work.
In my view, the best way to recreate the conditions in which people can find work is to create a balanced economy that can recreate confidence. Unfortunately, our public spending is unbalanced: half of our £730 billion or £750 billion budget is taken up by health and welfare, which are ring-fenced, and that puts enormous stresses and strains on all other budgets.
Despite the attempt by the right hon. Member for Neath (Mr Hain), with characteristic chutzpah, to rewrite history, I am not sure that it is possible to argue that austerity has caused this recession when, in fact, we are spending more than ever before—despite the fact that the figures were manipulated for this Budget—and borrowing more than ever before. The central thrust of the Labour party’s argument, which is that the problems have been caused by this Government, does not add up and the British people do not think that it adds up. They want more positive suggestions from the Labour party that show what it would do better in the face of the desperate international situation.
Richard Graham
Did my hon. Friend find it curious that the hon. Member for Coventry North West (Mr Robinson) seemed to be unclear about why our exports are effectively stagnant, when they had been expected to rise by 6%? Surely he must know that exports to the EU have fallen off a cliff while other exports have risen.
Mr Leigh
Absolutely. That shows the sort of difficulties in the Labour party’s arguments. If it is to form a Government, it must come up with a viable alternative.
I do not support cutting for the sake of cutting. If Tesco has a problem in its bread department, it sells bread more efficiently; it does not cut the number of loaves it sells. I agree about that, but the Labour party cannot give simplistic solutions based on more wasteful spending, nor can it constantly say that our problems would be solved if we restored the 50% tax band, when every study proves that it reduced revenues to the Treasury. As we know, the top 1% of earners pay 24% of all tax revenues. Labour has to come up with something more intellectual and rational if it is to convince the British people that it is ready for government.
The situation is dire. The incomes of 2007 will not be seen again until 2019. According to the Institute for Fiscal Studies, we will need a further £9 billion of cuts to public services after the next election. In 2015, there will be £70 billion more borrowing than was predicted in 2010. Any Budget giveaways—I accept that this Budget is politically astute—will be soaked up by inflation rising faster than wages. That point has already been made about the 1p cut in beer duty. One would have to drink five pints every night for seven nights to save 35p a week. I am not sure that will impress anybody. The cut in corporation tax is welcome, but that is only a small part of the total cost to business. Business rates have increased by 13% in three years and are the prime motivator against growth in the small business economy.
The problems that we face are difficult, complex and international. I am still firmly convinced that we need a strategy based on levelling taxation as much as is possible. The attempt to bring corporation tax more in line with small business tax is a first step. We should try to flatten all capital taxes and business taxes. We should then move on to income taxes and get rid of the plethora of allowances, which fuels an industry based on evasion and avoidance.
At first sight, the excellent scheme that the Chancellor is trying to bring together to help with home loans is very good if it does not lead to a property bubble. However, it is a bit like somebody climbing a ladder with loads of our money, throwing it over the edge and saying, “May the fittest come and get it.” It is a bit like the person rushing towards the pool of Bethesda.
It would be much better to have a flatter, simpler form of taxation so that people make their own decisions and do not rely on Government handouts, and so that we do not have a huge industry based on evasion and avoidance.
We are creating a special child care allowance for people who want to put their children into child care. That is great, but why have we not fulfilled our pledge to introduce a married person’s tax allowance?
Fiona Bruce
Does my hon. Friend agree that we are out of line with international best practice in not recognising marriage in our income tax system?
Mr Leigh
We are out of line. I am quite prepared not to hold the Government to account on their solemn promise to bring in a married tax allowance if they get rid of the other allowances and restore universal child benefit and all the other things. They cannot have it both ways. They cannot make it tax and benefit advantageous for a mother—it is usually a mother—to go out to work if they do not help mothers who want to stay at home and add to the economy by looking after their own children. That is unfair and something has to be done about it.
We cannot carry on with Budgets that simply tweak things. We need a long-term strategy based on simplifying the tax system and on budgetary reform. We must remove as many of the allowances as possible. We must change the culture of constantly tweaking things with Budgets and instead look to the long term and create a more simplified and effective tax system.
Graeme Morrice (Livingston) (Lab)
I welcome the opportunity to speak in this important debate, because the Budget last week revealed the true scale of the Government’s economic failure. As the next election grows closer, the Chancellor faced a test. He needed to boost household incomes and help cut the cost of essentials, but neither of those was forthcoming and his Budget failed to do enough for low-income households.
With an eye fixed firmly on the next general election, the Chancellor is pinning his hopes on a housing boom. His make-or-break blueprint for rebuilding the economy is unlikely to make a difference to the nation’s finances, as the focus has clearly shifted towards manifesto writing, positioning and early electioneering ahead of 2015. More than ever, taxpayers will now underwrite the mortgages of hundreds of thousands of home buyers, and take stakes in newly built houses in a multi-billion pound attempt to stimulate the struggling economy. However, he risks causing another unsustainable boom in the housing market, putting billions of pounds of taxpayers’ money at risk and offering little hope to hard-pressed working families who are struggling to get on the housing ladder for the first time.
We face the biggest housing crisis in a generation, but the Government’s housing and economic policies will make it worse by stoking house prices rather than helping families find a home. The Government have insisted that homes sold through the right to buy scheme will be replaced with more affordable housing on a one-for-one basis, but the Budget included £4.5 billion of funding for housing, with only £225 million of that to be spent on affordable homes. If we do not tackle the fact that we are still not building enough homes, we will create another housing bubble that will continue to push house prices out of reach of the majority.
Not only is the Chancellor pressing ahead with a tax cut for millionaires, it now seems that his mortgage scheme will help people, no matter how high their income, to buy a subsidised second home worth up to £600,000. Surely people struggling to get a mortgage, and those who want to own their first home, must be the priority for help, rather than the small number who can afford to buy a second home. If the Government concentrated at least some effort on collecting taxes from international corporations that operate in this country, and closing some of the loopholes in the tax system, there would be more money to go around.
With the coalition’s axe in full swing, I am appalled that the Government place so much effort on reforming the benefits system and punishing the sick and most vulnerable in our society, while those at the very top have seen their incomes rise as never before. The financial sector is at the heart of the economy. Huge, multi-million pound payouts to “banksters”, while citizens cannot even afford to feed themselves, undermine any efforts to break with the past and are a timely reminder that the country is being run by the rich for the rich. As the rest of the country faces austerity, just an hour after the Chancellor delivered his Budget speech, Barclays bank paid nine fat cat bosses £40 million in share payments. That makes a complete mockery of claims that banks are cleaning up their act when it comes to their bonus culture.
At exactly the same time as the bedroom tax comes into force, the Government are prepared to give 13,000 millionaires, including the Prime Minister and the Chancellor, a tax cut of £100,000—£3 billion in total a year—while more than half a million households that are home to a disabled person will lose £700. That is simply not right.
Graeme Morrice
The hon. Gentleman clearly indicates how his Government have got their priorities wrong.
It is time for this Government to recognise what is very much evident: that they have got this horribly wrong and need to think again before it is too late. We need a lasting change of direction by the Government, to one that demonstrates compassion, puts ordinary people first, and recognises the right priorities, or —ideally—a change of Government itself.
Oral Answers to Questions
Edward Leigh Excerpts(11 years, 5 months ago)
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Mr Edward Leigh (Gainsborough) (Con)
1. What plans he has for future private finance initiatives.
The Chancellor of the Exchequer (Mr George Osborne)
Last week, the Government announced the details of a new approach to replace the private finance initiative with private finance initiative 2, which is a more transparent approach to securing investment in public infrastructure. The Government will become a shareholder in future projects. We can all see now that the public sector was sharing the risk under PFI. We will now ensure that we also share in the rewards.
Mr Leigh
I looked at PFI for nine years on the Public Accounts Committee. I am sure people will agree that it was a good system that was scandalously misused to rip off tomorrow’s taxpayers for the sake of today and to rip off the public sector in favour of the private sector. How can the Chancellor assure the House that, if he is to use PFI 2 to pay for large infrastructure projects, we will not repeat the mistakes of the past?
Mr Osborne
I sat on the PAC under my hon. Friend’s chairmanship and I remember our investigations into various hospital and prison schemes that had gone wrong. As we saw it, there were three problems. First, contracts were very inflexible, so it cost a huge amount to do things such as change light bulbs or clean hospitals and the like. Secondly, the private sector got all the upside of the projects and made more money than expected. Thirdly, there was no control on the overall off-balance sheet total. We are addressing all three: we are creating more flexible and transparent contracts; we will share in the upside by taking a public sector stake and having the public sector on the board; and at the Budget we will set out a control total for PFI 2 liabilities.
Oral Answers to Questions
Edward Leigh Excerpts(11 years, 6 months ago)
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Mr Speaker
Order. I am chairing these proceedings. Let me just make it abundantly obvious to the Minister: the hon. Member for Nottingham East (Chris Leslie) gets two questions. He does not get a third and it is not the business of the Opposition to answer questions in this Chamber—that is the responsibility of the right hon. Gentleman in respect of Government policy. Let us be clear about that.
Mr Edward Leigh (Gainsborough) (Con)
Notwithstanding what we have just heard, surely, given the still very high and worrying levels of public debt, is it not incumbent on all coalition Members, from whatever party, to continue to support the Chancellor in the very difficult decisions he may have to take in the coming months that may amount to further cuts to public spending?
Greg Clark
It is in everyone’s interest to support the path we have embarked on to pay down the deficit. We know that the confidence in the UK economy, which has led to record low interest rates, depends on credibility—a credibility that the policies of the Opposition, by borrowing more, would jeopardise.
Multiannual Financial Framework
Edward Leigh Excerpts(11 years, 6 months ago)
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Greg Clark
I cannot confirm that, but I noted from the right hon. Gentleman’s article in the New Statesman that he is calling for increases in the budget, especially for the structural funds.
The Commission’s proposal is totally unacceptable, so let me say very clearly to hon. Members, as well as those around Europe who might be watching, that it is not happening. On the MFF, we will accept no real-terms increase in the EU budget for the next seven years. We will veto any proposal that either does not cut the budget or does not at the very least freeze it for the whole of the period. There will be no more budgets that pursue ever closer union through ever higher spending.
Mr Edward Leigh (Gainsborough) (Con)
I am sure that the Financial Secretary heard the Prime Minister’s excellent words today calling for a cut in the budget, so will he resist the blandishments of a very polite gentleman who appears to be impersonating the Conservative Chief Whip, and join those patriotic Conservative Members who will be voting for a cut in the budget?
Greg Clark
I have great respect for my hon. Friend, with whom I served on the Public Accounts Committee, and I shall explain why the Prime Minister will indeed be arguing for a cut, and why we have our mandate.
Mr Edward Leigh (Gainsborough) (Con)
The figures we are talking about are truly enormous. In the three options—the EU proposal, a real-terms freeze and a cash freeze—we are talking about commitments of £990 billion, £885 billion and £771 billion, so these are very important matters, affecting every man and woman in this country. I have to say to my hon. Friend the Member for Banbury (Sir Tony Baldry), with whom I have spent 29 years in this House, that his speech was quite inflammatory. His main line of attack appears to be that those of us who are going to support the amendment are somehow putting our Government at risk by joining with the Labour party. I have heard the argument before; it was actually the argument put by Neville Chamberlain in the Norway debate, when he said that he could rely on his friends. Over the years we have been here, many Members of Parliament have taken the view that principle is sometimes more important than partisanship. We have consistently argued about these matters through difficult times and it is quite wrong to blame us—those who have taken an entirely consistent position— for putting the Government’s political position at risk.
Martin Horwood (Cheltenham) (LD)
Given his experience in this House, does the hon. Gentleman not think that nailing one’s colours to a wholly unrealistic negotiating position will weaken the position of the British Government going into this financial negotiation and result in a worse outcome for this country, for his constituents and for Europe? He needs not to lecture us about principle but to consider the genuine reality of the situation.
Mr Leigh
Let me first make one more comment to my hon. Friend the Member for Banbury, who made a very important point. He represents the Anglican tendency in this House and I represent the Catholic tendency. If someone goes to confession and repents, we should accept them into our fold. We should not turn them away. If the Labour party has changed its mind, it has repented.
Mr Leigh
Well, there we are. Contrary to what the hon. Member for Bolsover (Mr Skinner) said, I do not think that this manoeuvre is entirely cynical. We have come a long way—[Interruption.] People can scoff, but the Labour party is sensing a change of mood in the country. It is entitled as an Opposition party to sense that mood and to feel that the patience of the British people is at its limit as regards giving more money to the European Union. It might be cynical—surely Labour is entitled as an Opposition party to use parliamentary tactics if it wishes—but there might also have been a sea change in attitude in the country and in the House. That sea change is also reflected elsewhere in Europe.
The hon. Member for Cheltenham (Martin Horwood) said that our proposal was totally unrealistic, but he should consider what is happening in our country. Every single Member of Parliament has police officers coming to all our surgeries every week whose pensions have been changed halfway through their time. They are serving shifts at all hours of the day and night, and they are coming to our surgeries because we are having to make real cuts to our police force. As has been said, we are having to make real cuts to our armed forces. Our own people are coming to us and saying that this is surely the time to make a stand. Given what is happening to the budgets in Greece, Spain, Portugal and Ireland, and given that great legions of young people in those countries are unemployed, is it so unreasonable just to ask the leaders of Europe to insist in the Council of Ministers on a real cash freeze? Is that unreasonable? I do not think so—I think it is entirely reasonable.
Our friends in Europe take the House of Commons very seriously. As is known, I am happy to be a Francophile and I watch what happens in the Assemblée Nationale. This debate could not be replicated there. It is being watched, however. This is the House of Commons. We were created to guard the nation’s finances and look after the interests of our own taxpayers. Why cannot the House of Commons, on this great occasion, make a stand on behalf of the UK taxpayers? Why can we not say to our taxpayers that we stand with them? We are having to make appallingly difficult decisions about the police, the armed forces, education and health. All we are saying is that there should be a real freeze in the EU. This is not just about EU civil servants, 40% of whom earn more than £70,000 a year.
Mr Leigh
There is no time, I am afraid.
This is about real people in real places. For instance, I represent a farming constituency. The UK spends £7.1 billion a year on subsidising foreign farmers, giving some £33 billion and receiving £26 billion. On average, the UK receives £188 per hectare, compared with France, Germany and Holland, which receive £236, £251 and £346 respectively. Some 42% of the EU budget is spent on subsidising farming and fishing, despite their accounting for only 2% of European gross annual value. These are real issues that affect real people. The House of Commons now has a chance to take a stand and we should put principle before partisan politics.