Finance Ministers’ Meeting (Ireland)

George Freeman Excerpts

Wednesday 17th November 2010 Commons Chamber

[Mr Hoban]

Indeed, and the hon. Lady makes an important argument about why we need to stand by the Irish Government and provide assistance if they request it.

[George Freeman (Mid Norfolk) (Con)]

Can the Minister provide my constituents and the markets with the reassurance that any British involvement will be conditional on the full involvement of the International Monetary Fund?

[Mr Hoban]

As no request has been made, I cannot comment on that. Where support is given to economies, it is commonplace for the IMF to be involved.

Oral Answers to Questions

George Freeman Excerpts

Tuesday 16th November 2010 Commons Chamber

[Justine Greening]

As the hon. Gentleman is aware, we are taking legislation through the House to get rid of the child trust funds. We think it is vital to support looked-after children, but the question is how best to do that while also tackling our fiscal deficit. We have come to the conclusion that what looked-after children need is support today, and that is what we will provide. Over the spending review period, £7 billion will go to supporting the most disadvantaged children in our country, including looked-after children. He will be aware that in the Department for Education, Eileen Munro is leading an inquiry into how social care can work better, including the support of looked-after children, and finally he will be aware that my hon. Friend the Financial Secretary will be considering proposals to bring forward a junior individual savings account, from which we will specifically ensure that looked-after children can benefit.

[George Freeman (Mid Norfolk) (Con)]

Does the Minister agree that it is appallingly disingenuous of Labour Members to posture as the friends of child savings, having left every man, woman and child in this country with debts of more than £22,000 each?

[Mr Speaker]

Order. The Minister, who is a dexterous Minister, will relate her answer to the policy of the Government, not that of the Opposition.

Savings Accounts and Health in Pregnancy Grant Bill

George Freeman Excerpts

Tuesday 26th October 2010 Commons Chamber

[George Freeman (Mid Norfolk) (Con)]

It is a pleasure to follow the hon. Member for Strangford (Jim Shannon). I am conscious of the number of Members who want to speak tonight, so I shall try to be brief. I want to make three key points. First, we need to draw breath and remind ourselves why we are having to take these measures. Secondly, I want to draw the House’s attention to some of what I believe to be the flawed thinking underlying the measures that we are withdrawing. Thirdly, I shall touch on the lack of support for them from a number of independent commentators whom one might have expected to be more vocal.

We heard a lot from Opposition Members earlier, accusing us in somewhat hysterical tones—it is nice that they have now calmed down a little—of unwarranted glee at cutting back from the most vulnerable in society. Those accusations almost reached the point of suggesting that that was what we had come into politics for, which is the most appalling and, frankly, shameful accusation, and one that they do not need to nod their heads at now.

It is worth reminding the House, and those listening in the Gallery, why the coalition is having to take these measures. It gives us no pleasure at all, but the truth is that we have inherited from Labour an historic crisis in our public finances. We have a debt of £700 billion, and debt interest would be set to rise to £67 billion a year if we had not set about tackling it, which these measures are part of. Our current debt interest payments are £120 million a day. Opposition Members need to bear all that in mind before they accuse the coalition of irresponsible measures. The irresponsibility is illustrated by the deficit that they bequeathed to us and to the future generations that we are all trying to help.

Without a plan to tackle the deficit, there would be a real risk that confidence in this country’s public finances would collapse, that international markets would lose confidence in our gilts, and that interest rates would start to rise. That would trigger the real catastrophe that we are trying to avoid. Everyone knows that we have to tackle the deficit. Surely no serious commentator, and no serious politician on the Opposition Benches, would suggest otherwise. It is simply disingenuous and mischievous to claim to be a serious party of government and then to scream foul when a responsible Government take the important measures to deal with the legacy that it has left us.

The flawed thinking behind some of the payments that the Bill covers can be seen as philosophical, economic and practical. First, as a number of speakers have highlighted, the measures do not target the poorest in society; they do not, in fact, do anything to tackle the really deep and challenging poverty traps into which many people fell through the complex layers of tax credits that the former Prime Minister insisted on imposing. They do nothing to undermine the dependency on the state, which all progressives in this House now seek to try to unravel. Anyone reading the work of Professor Giddens—new Labour’s philosopher-king—would understand that that is not an accident. In his seminal book—I commend it to Labour Members who have not read it—he sets about defining modern citizenship as a dependency on the state. It should be no surprise to us that the last Government took every opportunity they could to increase dependency on the state. Those of us in the coalition who want to release citizens from dependency would take issue with that philosophy.

Economically, there has been some flawed thinking. At a time when Labour Members were building up historic debt to £700 billion, some of my constituents might well have considered it something of a gimmick to set about giving back small amounts of money that the beneficiaries will not receive for 18 years in some form of apparent largesse when what people were really going to inherit was a historic deficit and all that went with it.

I defer to my hon. Friend the Member for Gloucester (Richard Graham) in respect of his earlier comments on the inefficiencies in management. I noticed in the Library briefing that management fees were running at £700 million, so it is odd to hear Labour Members defending putting money into the pockets of fund managers.

Finally, let me deal with the lack of support for these measures from independent commentators, whom we might have expected to be more vocal. When I went to the Library to find out what responses there had been to these cuts, I found two examples to which I would like to draw the House’s attention. Barnardo’s, commenting on the child poverty figures, said:

“We want to see child poverty reduced to 1.7 million by 2015—the missed 2010/11 target. The Government must now play catch-up. It can be done. Our Government has made the first step, by vowing to cut child tax credits to middle income families and the Child Trust Fund. To continue on the right foot all it has to do is invest that money saved in our country’s poorest children.”

The report of the Child Poverty Action Group—other Members have mentioned it—provides another example. Its briefing of 2005 pointed out that the child trust fund would not benefit children until they were 18, stating:

“Given ongoing problems with the administration of tax credits, and the much publicised inadequacies of the Social Fund, we believe it would be more appropriate and more effective to divert additional funds and administrative time and energies to improving elements of provision that are designed to support low income families rather than on a scheme which many commentators believe will disproportionately benefit higher income families.”

On the grounds of the nature of the deficit we have to deal with, the flawed thinking behind the policy and the lack of support for it, it seems to me that, far from being an hysterical over-reaction, these measures are perfectly reasonable and sensible, particularly in the light of the coalition’s commitment, set out in the Budget and the comprehensive spending review last week, to the retention of Sure Start, the introduction of the £7 billion pupil premium, the targeting of child benefit at the most needy families and tax credits. Some Members have already referred to them.

[Alison McGovern]

Will the hon. Gentleman give way?

[George Freeman]

I am just wrapping up.

Also important is the Institute for Fiscal Studies’ analysis, showing the Budget measures will not increase child poverty. Far from being irresponsible, I suggest to the House and to people more widely, that these are regrettable, but responsible, measures from a Government who take seriously their responsibilities to tackle the deficit left by the previous Government.

--- Later in debate ---

[Kate Green]

That is absolutely right on a number of fronts. First, as my hon. Friend says, this sort of grant is designed to help with specific expensive times in the course of people’s lives. It is important to recognise that specifying what it gets spent on is not necessary to ensure that it does good. In fact, there is a lot of evidence to show that if we give more money to parents, particularly to mothers, they will spend it on things that will help their kids.

I understand the concerns of Government Members about universal benefits, but this is a universal benefit. It goes to people who are financially better off as well as to those in greater need. As Opposition Members have repeatedly sought to explain, universal benefits are the most effective for reaching the poorest. They are the easiest to administer and the easiest to claim; there are no complicated cliff edges or recalculations. As such, I believe it is important to retain a range of universal benefits within the totality of support for families with children. I therefore think that the health in pregnancy grant has a useful role to play.

Even if we accept for a moment Government Members’ concerns that the benefit has been poorly targeted, that is hardly a case for scrapping it outright, especially when basic benefits are too low for the poorest women to be able to afford to eat healthily before their child is born. Surely, far from seeking to abolish the benefit, an ambitious Government who were keen to improve the outcomes of the poorest families and children would want to extend its scope or consider other ways of improving the adequacy of out-of-work benefits.

[George Freeman]

I am enjoying the hon. Lady’s speech and I acknowledge her expertise. In recommending the extension of the benefit, however, will she explain where she would get the money from?

[Kate Green]

There is work to be done to consider the balance of taxation versus spending cuts, as Labour Members have repeatedly pointed out. As for where the money is taken from, it is notable that the coalition Government, whether by accident or design—I suspect that it is more by accident, but I give them the benefit of the doubt—have taken more from women and children. An evening up of the way in which the spending axe fell might provide more scope.

Far from seeking to improve the financial position of some of the poorest in society—those who are reliant on safety-net benefits—some of the coalition’s measures will make matters worse: the changes to housing benefit; the VAT rise, which will reduce the spending power of the poorest; and the plans to link safety-net benefits to the consumer prices index, which will, over time, significantly reduce the value of those benefits to low-income families, and will therefore have an impact on the disposable incomes of the poorest women before conception, during pregnancy and after birth. I urge Government Members to think about how they would address that.

Finance (No. 2) Bill

George Freeman Excerpts

Monday 11th October 2010 Commons Chamber

[Alec Shelbrooke]

I am glad that I gave way to the hon. Gentleman, because he makes my point. You say that you want to keep the investment going on these capital projects, but you also say that you will reduce the capital budget. How? That does not add up. You simply cannot go on saying that you will spend money here and there, not raise taxes, and carry on borrowing. The argument simply does not add up. I became confused halfway through the speech made by the hon. Member for Bassetlaw—

[George Freeman (Mid Norfolk) (Con)]

So did he.

[Alec Shelbrooke]

Yes, so did he. He seemed to be saying that unless the Government employ everybody in the country, no money will ever be spent. He said, “You can’t reduce the number of people in the public sector, because they’re the people who have to go to the sandwich shop.” Of course, people in the private sector do not eat or buy anything; they have a robotic existence. I wonder what happened before there was such a large public sector. The hon. Member for Sefton went on to give examples of private industry in his constituency that have benefited from loans from the regional development agencies. That is where I think the confusion lay. He was talking about Government investment, not Government spending on public sector jobs and so on.

The hon. Gentleman talked about the regional development agencies, but there was provision for a regional growth fund in the Budget. The Government have also put measures in place in the Budget to reduce national insurance contributions for those setting up companies outside the south-east, and have reduced capital gains tax. As I pointed out in my intervention on the hon. Member for Wirral South (Alison McGovern), that helps investment from international business to come in.

Yorkshire Forward, a regional development agency, says at the bottom of its e-mails, “We have created more than 52,000 jobs.” No, it has not. Private business creates the job. If Government money is used, the job is not “created”; there was a subsidy that eventually has to be paid back.

Government money is just private money that the Government have nicked and are trying to put back. It is not our money. We do not earn it. We take it from the wealth creators. If we are not creating that wealth in the first place, how can we go on and spend it? The deficit deniers do not understand or do not accept that every one of us would like to stand here and say, “Do you know what? I’m going to replace every school in my constituency, and I want a first-class service.” Every one of us wants a first-class service—that is why we went into politics—but we must be realistic. We must be pragmatic. We must understand that we cannot go on spending money as we have been doing.

I take issue with the suggestion that the move to a 20% rate of VAT is permanent and that we have no intention of lowering it because ideologically we want to tax more. Ideologically we want to tax more? I have never heard such nonsense. We are the party of low taxation. We made it clear in every speech that at each Budget we would review and lower taxation if we could. It has never been said that VAT would remain at 20%. One would hope that we may be able to move to a lower taxation rate.

In the short time that I have left, I shall move on to a specific topic. The Bill refers to closing tax loopholes. Everybody in the Chamber wants to achieve that because there is a great deal of revenue out there that the Government are not getting. Let us look at the way money circulates in the economy. Representations have been made to me that red diesel be used in emergency service vehicles. We can see the sense in that. Emergency vehicles are paid for through Government money, VAT is paid, and money is being circulated and coming back. That is a sensible argument and would impose no cost on the Exchequer.

I make a plea to the Minister to consider something else. I am proud that we have an excellent Yorkshire air ambulance—indeed, we have two. They are on BBC 1 every day at 9.15 am, relating their exploits in rescuing people who have got into difficulties in areas such as the Yorkshire dales. That leads me to say what an excellent maiden speech my hon. Friend the Member for Skipton and Ripon (Julian Smith) made, describing that countryside, where people like to go hiking. We know that accidents can happen, so we have the air ambulance.

Yorkshire air ambulance costs £2.628 million a year to run and not one penny comes from Government. It is all raised through charitable giving. I therefore urge the Minister to consider, when the time is right, exempting from fuel duty Yorkshire air ambulance, the other air ambulances and the people who contribute to the emergency services? They would still raise their money through charitable giving, but that exemption on the 162,632 litres of fuel that the Yorkshire air ambulance used last year would help greatly to reduce overall costs.

I close with a further plea. We have had several Finance Bill debates and all we hear, all the time, is cherry-picking: “We don’t want to do this bit. We don’t want to do that bit. The Government are hitting the poorest here. They are not doing enough for the rich there.” Can we please start to look at the Finance Bill holistically? We have raised tax thresholds. We are reducing national insurance. We have raised capital gains tax. We are reducing corporation tax to bring in more businesses and create more jobs. We are putting in place regional growth funds. Can we please stop the cherry-picking, have a sensible debate and look at the arguments sensibly, holistically and in a grown-up way, and can we please stop denying that the deficit exists?

--- Later in debate ---

[George Freeman (Mid Norfolk) (Con)]

I start by congratulating my hon. Friend the Member for Skipton and Ripon (Julian Smith) on the magnificent maiden speech that he made earlier. If he is indeed the penultimate Conservative of the new intake to speak, it was certainly worth the wait. I am sure that the people of Skipton and Ripon can see that they have made an excellent choice. I also take a moment to congratulate the hon. Member for Nottingham East (Chris Leslie) on his elevation to the Labour Front Bench; like the Geoffrey Boycott of the debate, he has stood at the crease manfully as his colleagues behind have been skittled out.

In supporting this key plank of the coalition Government’s programme to tackle the deficit, I wanted to stress three key points in the time available. There is the seriousness of the crisis in our public finances that we inherited from the Opposition; I have to say that it is disappointing not to see more of the people responsible for the crisis here this evening. Secondly, there is the key role of the private sector in generating the growth that we now need to pay for the public services that we all cherish. Thirdly, there is the specific importance of the measures in clauses 10 and 12 to promote venture capital trusts and research and development relief for high-growth SMEs, which are especially important to the recovery for reasons that I will touch on in a moment. I emphasise the importance of high-growth companies as one who has come to the House after a 15-year career of supporting technology companies in the life sciences sector. I declare an interest in a number of small companies set out in the register.

In discussing the measures in the Bill, we need to remind ourselves of some hard facts. The deficit currently stands at £155 billion. It is the largest in our peacetime history. We have the largest deficit in the G20. This year alone, debt interest is set at £43 billion, and without the measures set out by the coalition Government and my right hon. Friend the Chancellor to tackle the deficit, interest payments alone would have risen to £70 billion a year.

To prevent interest rates from spiking—the true risk of that inheritance—the Government are right to commit to reducing public spending and increasing private sector growth. Labour Members talk of growth, but seem to forget that it is the private sector that is the source of all growth and that pays for any growth in the public sector that we or they may promise. It is private-sector business people up and down the country who pay for our promises, and they now need our support.

We need to think about where the growth will come from, and I should like to suggest two key sources. First, the millions of SMEs up and down the country, frankly, want us to do something simple—get off their backs, stop taxing and regulating them and allow them to grow and flourish as they will. I also want to turn to a second source of growth, which is the three key specialist sectors of which I have some experience. They are biomedicine, food science and environmental science, in which the country punches well above its weight; in many areas of those sectors it leads the world. As the world’s population rises inexorably, they will become enormous sectors of growth across the world.

High-growth companies in those sectors have the potential to lead our recovery and lead this country back into positions of world leadership, provided that we support them properly. High-growth SMEs in the sectors have very special financing needs. Unlike smaller, high-street SMEs, which are struggling so hard, they are not, typically, dependent on the banks. They tend to be dependent on entrepreneurs, on founders—often scientists or people around universities or research institutes, who are then backed up by angel investors who put their expertise and hard-earned money to good use, by venture capital trusts and by corporate venture investors. We need to recognise the importance of that very specific financing food chain and encourage it. I therefore warmly welcome the measures in clauses 10 and 12 on tax relief for research funding and SMEs and for encouraging venture capital trusts. More widely, I welcome the coalition Government’s measures to reduce corporation tax and to relieve entrepreneurs on capital gains tax.

Those are vital measures in a serious Government programme to tackle the deficit. It would be nice to hear from Labour Members what they would do to tackle the deficit were they to be in power.

Equitable Life (Payments) Bill

George Freeman Excerpts

Tuesday 14th September 2010 Commons Chamber

[George Freeman (Mid Norfolk) (Con)]

Let me add my name to the list of those congratulating my hon. Friend the Member for Congleton (Fiona Bruce) on her fine maiden speech.

It is an understatement to say that this is a complex and difficult issue. I think that we all recognise the reasons for that complexity, not least the difficulties that Equitable Life had with its guaranteed annuity product and issues to do with regulation and jurisdiction, compensation, mismanagement and delay. I welcome the speeches of Members from all parties who have talked straightforwardly about those difficulties.

In many ways, this is a story of our times. It is a story of boom and bust—the very boom and bust that the former Prime Minister promised us he had abolished. It ill behoves some Opposition Members to leap on the moral high horse after not dealing with this matter for so long and leaving us with the crisis in public finances that makes it so difficult to deal with. In this issue, above all, we are all in this together.

I welcome the coalition’s commitment to dealing with this matter so quickly. I welcome the transparency of the process and I sincerely welcome the Minister’s deep personal commitment to trying to resolve this issue as fairly as possible. I appreciate the complexity and the challenge of finding a fair settlement when we have inherited, in the words of the former Chief Secretary, no money.

As someone who signed the pledge in good faith, I urge the Minister, in considering the Government’s proposal, to recognise that this is not just about money. It is about something much more important. It is about trust—trust in our savings industry and its regulation; trust in Government; trust in this coalition’s commitment to financial responsibility and compassion; trust in the idea of the covenant between the generations, which sits at the heart of the big society; and trust in this Parliament and its commitment to do the right thing. I ask the Minister, as he considers the Government’s response, to explore any method he can to soften the blow—in particular the solution proposed by EMAG of offering some choice to those victims who want to take short-term compensation and to those who prefer to wait. In due course, when the Government’s finances return to rude health—as I have no doubt they will—some might choose to take a better return later.

The people have placed their trust in us; I am happy tonight to place my trust in the Minister and the Government and to support the Bill, in the expectation in good faith of a genuinely fair solution.

Finance Bill

George Freeman Excerpts

Tuesday 20th July 2010 Commons Chamber

[Mary Creagh]

I thank the hon. Gentleman for that clarification.

I now want to discuss the child trust fund, which is also being cut. When I visited Greenhill school in my constituency to talk about financial education, I asked 10 and 11-year-olds how much money they had saved up in their bank accounts and the answers given by those little 10-year-olds ranged from £50 to £80; that was their life savings. But those children knew that their little brothers and sisters had got £250, and in some cases £500, from the Government through the child trust fund.

[George Freeman (Mid Norfolk) (Con)]

Will the hon. Lady give way?

[Mary Creagh]

I will make my point first. I bet that there is not a single Member sitting on those green Government Benches whose children’s life savings amount to £50. I shall happily give way to any hon. Member for whom that is the case.

--- Later in debate ---

[Mary Creagh]

Interestingly, when the Red Book refers to the effects on child poverty it talks about the next couple of years but does not mention 2013 and 2014. Thanks to the work being done by my right hon. Friend the Member for Normanton, Pontefract and Castleford (Yvette Cooper), the shadow Secretary of State for Work and Pensions, we are finding that this Budget’s impact on women—in particular on poor women, low-paid women and public sector worker women, and therefore on their children—is likely to hit disproportionately hard. I leave the hon. Gentleman with that thought.

What is absent from the Budget and the Finance Bill is any mention of the poor. The changes to the disability living allowance gateway are to save £1 billion by 2014, but we need clarity about which groups of disabled people are going to be affected. The housing benefit move to the 30th percentile of average housing will have an impact on families across the country. Stringent changes are being made to the housing benefit rules to say that anyone who has been on jobseeker’s allowance for more than a year will automatically lose 10% of their housing benefit.

If that is done to people, there are three possible outcomes. The first is that the people involved find jobs—and good luck to them. I am sure that that is the stated aim of the Government’s policy. The second possible outcome is that those people cannot find jobs because a further 1.3 million people are on the dole as the public sector and private sector job losses kick in, so they are forced to borrow the money. However, we are talking about people with a low income or no income, so they will, in effect, be forced into the arms of loan sharks and will fall into debt. The third possible outcome is that these people will spend £10 a week less feeding their children, so their children will be pushed back into poverty. The arguments being made about child poverty will not wash with Labour Members, because both the second and the third possible outcomes will tip those families back into poverty.

[George Freeman]

The hon. Lady mentioned the child trust fund, and I think that all hon. Members would agree that establishing a culture of saving is a commendable thing. In principle, does she think it is better for children to learn to work and to save, or to learn that the way to acquire money is to be given it by the Government?

[Mary Creagh]

The beauty of the child trust fund is that both those things happened; this involved people who would never have thought of opening a trust fund. I count myself among them, because I had no idea what a trust fund was until I was “given it by the Government” when my son was born, but now that I understand what it is and I understand the secrets of how people save for their children in a tax-efficient way, it has enabled me to think carefully about how I plan for my children’s future. It enables families to do both those things.

Most families are using the child trust funds to put a little bit extra by. The parents who scrimp and save to put into the child trust fund will not let their children waste the money. The straw man that has been held up is that they will blow it all on their 18th birthday party, on buying fast cars and all the other things that 18-year-olds do—[Interruption.] That is certainly what has been stated by some Government Members as a reason for cutting the child trust fund; they have said, “You can’t give it to 18-year-olds because they won’t know what to do with it.” When their parents have paid into the fund they will make absolutely sure that that money, which for them is a life-changing sum, will be used wisely by their children.

Financial Services Regulation

George Freeman Excerpts

Wednesday 16th June 2010 Commons Chamber

[Mr Osborne]

The Bank of England has an inflation target, and I am not proposing to change the inflation-targeting regime.

[George Freeman (Mid Norfolk) (Con)]

Thank you, Mr Speaker, for calling me before I have made my maiden speech. For the record, this is not it. [Laughter.]

Given the gravity of the situation in which the last Government have left the finances, does my right hon. Friend the Chancellor agree that it behoves all parties to work together on this? Will he confirm whether he has received any positive contributions from Opposition Members, or whether, as it appears to Conservative Back Benchers, they are now reclined into abject criticism?

[Mr Osborne]

Well, it was a very good maiden intervention by my hon. Friend. I find it strange that the Labour party does not want to engage in this debate. One would have thought that the Labour party was interested in how banks will be regulated, in how we learn from the mistakes and what went wrong, and in the structure of banking in the future, but the shadow Chancellor has set it against that. However, individual Back-Bench Members of the Labour party will probably be more interested in this than their Front Benchers. Of course, by setting up an independent commission and, indeed, by having the debate in the Treasury Committee and on the Floor of the House, those contributions will be heard.

Office for Budget Responsibility

George Freeman Excerpts

Monday 14th June 2010 Commons Chamber

[Mr Osborne]

First, let me thank the hon. Lady for welcoming the creation of the Office for Budget Responsibility—I should have thanked the hon. Member for Leeds West (Rachel Reeves) for that as well. The change is a genuinely revolutionary step forward in the making of Budgets that fits with a wider agenda of trying to bring more transparency to the way that the Government do their business. On the point about investment, the hon. Member for Slough (Fiona Mactaggart) is right to point out that there was a fairly dramatic fall in investment under the Government whom she supported, but I would say this: the sustainable answer to the problem is a strong private sector recovery, and that is what we all have to work towards.

[George Freeman (Mid Norfolk) (Con)]

Does my right hon. Friend agree that the real significance of today’s independent report is the revelation of the extent of the structural deficit, with debt interest alone forecast to rise to £67 billion, strangling growth and enterprise, and at the same time destroying new Labour’s core claim to be the party of economic competence?

[Mr Osborne]

My hon. Friend is right—[Interruption.] I see one of the leadership contenders barracking from the Opposition Benches. I do not know whether the right hon. Member for Doncaster North (Edward Miliband) wrote the speech for the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown) in which he told the Labour party conference in 1996:

“Losing control of public spending doesn’t help the poor”.

That is one area in which I agree with the former Prime Minister.